The so-called gainful employment regulations require that a typical graduate of a career college (mostly for-profit schools) – or school that trains students specifically for employment — get a job that makes them enough money to pay back their loans to keep their alma mater eligible for federal financial aid funding. Specifically, a typical graduate’s annual loan payments need to be less than 8% of their earnings or less than 20% of their discretionary income. Programs that don’t meet these requirements would be at risk of losing their federal financial aid funding.
The regulations are part of a years-long push from the Obama administration to increase scrutiny on for-profit colleges, amid accusations that the schools persuade often low-income students to take on high debt loads with empty promises of a successful career. Critics argue that the rules amount to a government overreach and that by forcing programs to close, they’ll curtail access to higher education for non-traditional students who require flexibility often not offered at non-profit universities.