“For-profit institutions play a vital role in training young people and adults for jobs and for-profits will continue to help families secure a better future for themselves,” Education Secretary Arne Duncan said in remarks he made during a May 2010 DeVry policy forum.

The U.S. Department of Education today released its proposed regulations to define gainful employment. To qualify for federal aid, the current law requires that career colleges and training programs prepare students for gainful employment in recognized occupations. The 97-page notice of proposed rulemaking and 68 pages of appendices outline a complex system. The Department proposed a two-part test to determine whether private sector college programs are preparing their students for gainful employment. The first part of the test involves measuring the relationship between student loan debt and average earnings after a postsecondary education training program. The second test examines the rate at which all students, regardless of completion, repay their loans on time. 

Based on the results of these measures, programs would be grouped into three categories on their ability to qualify for federal aid: fully eligible programs, ineligible programs, and restricted programs. According to the Department’s analysis, If the rule were put into effect today, an estimated 5 percent of all programs would no longer be eligible to offer their students federal student aid and 55 percent of all programs would be required to inform their students about high debt-to-earnings ratios. 

The great unknown is what kind of impact these regulations will have on individual companies and programs. Accountability and transparency in higher education are important. However, unduly burdensome rules which are aimed specifically a small portion of the higher education sector raise some serious concerns.