Department of Education rule threatens viability of for-profit colleges

Washington Examiner 

Jeremiah Poff

October 6, 2023

The United States Department of Education finalized a new regulation last week that critics say could have a catastrophic effect on the long-term viability of for-profit career colleges.

The so-called gainful employment rule was finalized last week, less than five months after it was proposed in May. The new rule requires for-profit and career colleges to prove that graduates of a given program make enough money to make payments on their student loans and earn more money than someone without a college degree.

The regulation requires graduates of for-profit institutions to make enough that their debt payments do not exceed 20% of their discretionary income. The regulation also requires that at least half of an institution’s graduates in a given program are earning more money than “a typical high school graduate” who did not attend college.

If colleges fail to meet the metrics, the regulation stipulates they will be forbidden from participating in the federal student aid system.

The Biden administration said the new regulations, which build on a similar rule implemented by the Obama administration, will help students avoid crippling debt from education programs that do not lead to job opportunities that will allow them to successfully pay off their debt.

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