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Gainful Employment Regulations Should Strengthen Opportunity for Low-Income Students

Sep 21, 2010

By Amy Ellen Duke-Benfield

Student loans have become a way of life for students across the economic spectrum. But, quite literally, loans can come at too steep a cost if students enter postsecondary programs but drop out, or if they receive a credential that holds no real value in the jobs marketplace. When this happens, students may be saddled with debt without the requisite skills to land a job that pays sufficient wages to both meet their family's basic needs and repay the loan.

In July, the Department of Education announced proposed federal regulations that aim to prevent students from accumulating insurmountable debt and failing to secure a job after completing a credential that should lead to one. The proposed regulations would hold career programs at for-profit higher education institutions and non-degree career programs at nonprofit colleges, including community colleges, accountable for ensuring student success by basing institutions' eligibility for federal financial aid on former students' loan repayment history.

These regulations would particularly affect low-income students who attend such institutions at a higher rate than students with more financial resources. Inside Higher Ed last week published an objective, in-depth piece about the regulations.


The comment period on the regulations closed in early September. CLASP submitted comments that support the Department of Education's effort to protect low-income students from unmanageable student debt without the promise of a good job. Our comments request that the department's final regulations ensure low-income students have more access--not less--to postsecondary credentials. Further, we believe the standard for measuring how these institutions are performing could be tighter. Rather than just assess debt-to-income ratio and student loan repayment rates as a measure of gainful employmet as the proposed regulations suggest, the Department of Education should go one step further and also weigh student completion rates. It is reasonable to hold schools accountable by defining a minimum standard for completion rates.

One of the biggest risks that the gainful employment regulations present is that they could render many students at postsecondary education and training institutions ineligible for much-needed federal aid and interrupt these students' educational paths. To minimize this risk, the regulations should require ineligible institutions to provide students with information on approved programs and provide incentives to institutions that enroll displaced students.

We commend the department for its efforts to limit fraud and abuse in programs that receive federal student aid. This is particularly important for low-income students who are most likely to be in the targeted programs. Eliminating federal aid for institutions or programs with a weak or non-existing link to gainful employment will ensure more students succeed in the long run. 

View CLASP's comments on the Department of Education Proposed Regulations on Gainful Employment.

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