What Do “Gainful Employment” Regulations Accomplish?

The James G. Martin Center for Academic Renewal 

Andrew Gillen

August 18, 2023

Funding-eligibility tests can do real good if used universally, not selectively.

The Biden administration will soon implement a set of regulations that are commonly known as “Gainful Employment.” These regulations would restrict some college programs’ eligibility to participate in federal financial-aid programs like Pell grants and student loans.

The Higher Education Act, originally passed in 1965 and amended many times over the years, includes a provision that requires “vocational” programs to prepare students for “gainful employment.” The law defines vocational programs as any program at a for-profit college, as well as any non-degree program (e.g., certificate programs) at public and private non-profit colleges.

As a matter of logic, this definition fails miserably. Under it, a master’s in business administration from the Wharton School is not considered vocational, but a master’s degree in social work from a for-profit college is. Unfortunately, when you pit logic against the law, the law wins. Thus, we are stuck with this definition of vocational education until Congress remedies the flaw.

But the law is silent on the definition of “gainful employment,” and, until 2010, no presidential administration had bothered to try to define it. That year, the Obama administration tried to do so in large part by utilizing student-loan repayment rates, the logic being that if a program succeeds in preparing its students for vocational success, then those students should be able to repay their loans. Programs where the repayment rate was too low would lose eligibility for federal financial aid.

Continue Reading