A Fatal Mistake in the Gainful Employment Rule
Real Clear Education
March 17, 2022
This week marks the final round of the U.S. Department of Education’s negotiated rulemaking session addressing the critical issue of accountability in higher education. One of the issues under consideration is the Gainful Employment Rule, an Obama-era regulation that sought to strengthen accountability in higher education.
Gainful Employment tried to identify college programs where students accumulated excessive student loan debt. The regulations would then cut off future federal financial aid for programs in which recent graduates did not earn enough to allow them to afford their student loan payments.
Higher education does need tougher accountability, and the 2014 gainful employment regulations got two important things right.
The first was its focus on programs rather than entire institutions. A program is defined as a combination of credential, major, and college, such as a bachelor’s degree in biology at Texas A&M. Focusing on outcomes aggregated across an entire institution (e.g., Ohio State University) paints with too broad a brush. With institution-level analysis, low-performing programs could escape accountability if they were located at generally high-performing institutions, and high-performing programs could nevertheless face sanctions if they were located at low-performing institutions. Gainful Employment was the first federal accountability policy that avoided these problems by focusing on program-level outcomes.
The second improvement that Gainful Employment pioneered was the use of earnings outcomes as an accountability metric. As New America’s Rachel Fishman documents, around 90% of students rate getting a good job or earning more money as an important reason for going to college, yet until Gainful Employment, these outcomes were ignored by federal policy.
As the Biden administration considers reviving the Gainful Employment regulation, it should replicate these two improvements while avoiding a repeat of its major mistake.