September 28, 2023
The Biden administration is cracking down on college programs that don’t adequately prepare graduates for gainful employment. On Wednesday, the U.S. Education Department announced new federal regulations that aim to hold for-profit colleges accountable for student outcomes.
“Higher education is supposed to be an invaluable investment in your future. There is nothing valuable about being ripped off or sold on a worthless degree,” Education Secretary Miguel Cardona said at a press briefing announcing the final rules.
The gainful employment rule is meant to safeguard students from making a bad investment at for-profit institutions and non-degree, certificate programs. If programs don’t earn their graduates adequate pay, or if graduates’ earnings are too low to afford their student loan payments, programs could lose access to federal money.
“Too often, students and parents navigate decisions without a clear picture of which schools offer the best value for your money,” Cardona said. “This rule would make sure students know they’re about to take out loans for programs known to leave graduates with unaffordable debt and poor career prospects.”
Starting next school year – July 1, 2024 – programs will have to demonstrate that graduates are able to afford their student debt payments and make more money than an adult in their state who didn’t go to college. If a program fails either of those metrics, students will get a warning before they take out federal student loans. If a program fails the same metric twice in a three-year period, it will lose eligibility to collect federal student aid money from students. The first year this could happen to a program is 2026.