FORBES: Education Department’s ‘Gainful Employment’ Rule is Futile Tinkering That Misses Root Problems

Career College Central Summary:

  • At the end of October, the Department of Education released its much-awaited “gainful employment” rule. It is supposed to fix (or at least improve) the problem that many students who pursue vocational training with federal student aid money wind up without a job that pays well enough for them to meet their student loan payments.
  • As I’ll explain, the rule won’t solve that problem, but only limit the range of choice for students.
  • The Higher Education Act of 1965 allows students to use federal grants and loans to enroll in programs that are supposed to prepare them “for gainful employment in a recognized occupation.” Numerous for-profit colleges and training institutes sprung up to take advantage of the opportunity to teach young people the skills they need for such jobs as dental assistant, graphic designer, pharmacy technician and cosmetologist. At present, the federal government gives about $6 billion in Pell grants and lends about $22 billion annually for students to attend these schools.
  • Few politicians paid any attention to those schools until the last few years, when students who borrowed substantial amounts for college (non-profit and for-profit alike) have had great difficulty finding employment that pays well enough for them to meet their debt obligations. Once the “student debt crisis” became national news, however, politicians and regulators began to focus on the for-profit sector.
  • Senator Tom Harkin of Iowa, chairman of the Senate Committee on Health, Education, Labor and Pensions led the attack with hearings that began in 2010 and culminated in a scathing report issued in July 2012. That report highlighted the reprehensible tactics that some of the for-profit schools used to lure in students and cash their federal grants and loans. Many of the students never graduated, but even those who did had trouble finding “gainful employment.”

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