Gainful Employment regulations and student loans

See A Retrospective on Gainful Employment by Andrew Gillen. He is a senior policy analyst for the Next Generation Texas initiative at the Texas Public Policy Foundation and an adjunct professor of economics at Johns Hopkins University. Excerpts:

"Although colleges receive funds from student loans, they have largely escaped accountability for their role when students take on unaffordable student loan debt. One partial exception was a set of regulations called “Gainful Employment” that sought to hold some higher education programs accountable for excessive student loan debt. If a targeted program’s students had too much debt relative to their income, the program would lose access to the federal financial aid programs. Gainful Employment is no longer in effect, but some policymakers are considering reviving the regulations.

This study explores the approach used by Gainful Employment to help policymakers develop the next iteration of accountability for higher education. We use new U.S. Department of Education College Scorecard data (U.S. Department of Education, n.d.) and an updated approach called “Gainful Employment Equivalent” to help policymakers envision better accountability mechanisms for higher education by building on Gainful Employment’s successes while avoiding its flaws."

"Federal and state policymakers should hold programs accountable for their role in excessive student loan debt. The most important federal attempt to do so is known as the Gainful Employment regulations. Gainful Employment pioneered two improvements to the accountability landscape that should be used in future accountability approaches: focusing on program-level rather than institution-level accountability and including labor market outcomes such as earnings.

But policymakers should also avoid repeating Gainful Employment’s mistakes. Gainful Employment was only selectively applied, targeting for-profit colleges almost exclusively. Yet if Gainful Employment were applied today and restricted to for-profit colleges, it would miss 89 percent of failing programs and 73 percent of student borrowers graduating from failing programs."