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What’s In A New Regulation Targeting For-Profit Colleges, Trade Schools

What’s In A New Regulation Targeting For-Profit Colleges, Trade Schools


Preston Cooper
May 19, 2023
Two important pieces of higher education news hit headlines on Wednesday. First, the University of Idaho will acquire the University of Phoenix, a for-profit giant, and manage it as a fully-online nonprofit entity going forward. Phoenix will maintain its current leadership.
Second, the Biden administration released its proposed Gainful Employment (GE) rule, which would deny federal funding to certain higher education programs where graduates’ debts are too high or their earnings are too low. While more accountability for federally-funded colleges is a welcome step, the rule is narrow in scope: it applies only to for-profit institutions and certificate programs.
That limitation means that Phoenix, which would have previously been subject to GE as a for-profit, will soon be exempt as a nonprofit. Even though 13 of Phoenix’s degree programs would have lost federal funding under GE due to excessive debt or low earnings, those programs will now maintain access to federal grants and loans—even if their outcomes don’t change.
What’s in the Gainful Employment rule
The 1,077-page proposed regulation closely resembles a draft GE framework that the Education Department (ED) published early last year. After the rule is formally published in the federal register, the public will have 30 days in which to submit comments. ED aims to finalize the rule by November 1 and implement it in July 2024.
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