Today, the U.S. Department of Education released its final regulations on “gainful employment” requirements for postsecondary institutions offering career-related programs—impacting their eligibility for title IV federal student aid programs. The finalized regulations are the culmination of several years of intense debate among higher education stakeholders and the department that included a federal court ruling which struck down a previous version of the regulations in 2012.
Federal law requires that certain educational programs offered at some postsecondary institutions, including for-profit institutions, community and technical colleges, and area CTE centers, must provide training programs that prepare students for “gainful employment in a recognized occupation” in order to participate in federal financial aid programs. Nearly all educational programs at for-profit higher education institutions, as well as non-degree programs at public and private nonprofit institutions, like community colleges and area CTE centers, will be subject to these rules once they go into effect on July 1, 2015. The regulations outline how the department will evaluate a program’s effectiveness in preparing students for gainful employment after program completion. Moreover, they sets requirements for programs to make certain performance and outcomes data, including program costs, earnings information and completion rates, available to the public.
A key change from previous draft versions of the regulations is the elimination of program cohort default rate (pCDR) as an accountability metric, which focused solely on those students receiving financial aid. Since 91 percent of certificate-seeking students enrolled in community colleges and 82 percent of those in less-than-two-year institutions do not receive any federal student loans, community colleges and other short-term training providers argued that the pCDR would unfairly penalize programs that have only a small number of student borrowers. Institutions will still have to report their program-level default rates and make that information available to the public and prospective students. The department will move forward with its planned debt-to-earnings accountability metric, which will evaluate the amount of debt that students incur to attend a program in comparison to their annual earnings after completion. We will continue to provide updates on the implementation of the gainful employment regulations on our CTE Policy Watch Blog.
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