Closer Look at ‘Gainful Employment’

Today’s issue of the Federal Register includes the U.S. Department of Education’s notice of proposed rule making on "gainful employment," explaining the rationale and anticipated effects that the regulations will have on all of higher education but, in particular, on the swelling for-profit sector.

Friday’s reports were based on limited information from a news release and a briefing phone call for reporters, but with the full NPRM released, Inside Higher Ed has been able to examine the proposal line by line to determine what the proposed regulation is intended to do — and what it isn’t. Much about the potential impact of the rules, however, is likely to remain in doubt for weeks, if not months — much to the likely consternation of officials at for-profit colleges, who are left to wonder how serious the implications might be for their institutions.

As scrutiny of the for-profit college sector by members of Congress, the news media and investors has grown in recent months, the release of the proposed gainful employment rules has been built up as a significant moment in the Obama administration’s attempts to regulate — and arguably rein in — the sector. Because most programs offered at for-profit colleges qualify for federal financial aid funding under Title IV of the Higher Education Act of 1965 by preparing students for "gainful employment in a recognized occupation," the NPRM has been regarded as a significant step toward understanding the administration’s intentions.

On Friday, stocks of the publicly traded schools soared. The uncertainty of just how harsh the regulations would be was gone, at least for the time being, and early indications, based on merely the news release and some secondhand reports, were interpreted by some analysts and others as a significant softening from previous proposals by the department.

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