Tracking the Gains of Higher Education: A Review of Gainful Employment Policy

• In Event: Policy Change and Reform in Higher Education: Historical, Regional, and Legal Perspectives

Proposal

Purpose of the Inquiry

Policymakers have increasingly recognized employment outcomes as a crucial element in evaluating institutional and student success in higher education. The Gainful Employment (GE) Rules, proposed in 2009, brought college graduates’ employment outcomes to the federal-level policymaking process and set up metrics to decide certain institutions’ eligibility for federal funding. Debt-to-earnings ratios became the core indicator for college-level career training programs’ financial value and quality, regulating for-profit institutions and non-degree programs’ eligibility for federal financial aid (Department of Education, 2015). This rule has embarked on a turbulent journey, crossing multiple controversial topics, e.g., for-profit colleges, institutional accountability, career training, data collaboration, and financial transparency in the higher education world. Despite the current discussion centered around its impacts on for-profit colleges (Cellini, 2021; Kelchen & Liu, 2022; MacQueen, 2012), this paper intends to examine its broader missions, dissect the sociopolitical origins, and propose recommendations for future regulations. This research was conducted through a comprehensive review of congressional documentation, scholarly literature, policy reports, and public opinions, examining main policy and research databases. Particularly, this paper aims to answer the following questions: What factors and stakeholders contributed to the formation and changes of the GE rules in the past decade? Which groups of individuals and institutions have been underrepresented in the process? What could have been done better to improve college outcomes?

Historical and Theoretical Foundations

The historical evolution of “gainful employment” in the Higher Education Act of 1965 and its amendments provides an important context for understanding the current debates and challenges surrounding these regulations. In the 1972 amendment to the HEA, for-profit colleges and universities were included as higher education institutions. The amendments to the definition were applied for federal-level grants, including the basic and the supplemental education opportunity grant, the direct loan, and the college work-study program to include career and technical training programs in for-profit institutions (Campbell, 1972).

Behind the historical changes, neoliberalism views and financialization have been acting as the underlying driving forces for directing federal funds toward career training programs and for-profit institutions. One main impact of neoliberalism is the increasing emphasis on the economic purpose and extrinsic outcomes of higher education (Robinson, 2018; Saunders, 2010). An ideal gainful college degree should lead to a high-paying job that benefits individuals’ living conditions and societies’ economic development. The government documentation around “gainful employment” supported the neoliberal views by strengthening the economic values of higher education and providing federal support to those for-profit institutions for their career training programs. The market orientation and profit-taking nature of the neoliberalist views, however, are against policymaking to clearly define/regulate what is gainful employment, what should be a satisfactory outcome of higher education, and any negative impacts on institutions leading to potentially unsatisfactory outcomes, which is originated from their support for free competition and supports individualism (Hodgman, 2018; Saunders, 2010). For-profit colleges, therefore, have been greatly bolstered by neoliberalism.

Consensus and Conflicts in the Contemporary Policy Evolvement

This paper summarizes the key changes in the GE rules throughout the past decade, providing evidence to the following discussion around conflicts and consensus in policymaking and researching. Deciding whether higher education institutions lead to “gainful employment” has been a “checkbox” step in U.S. practice. It took nearly five decades to become federal-level regulations, as the 2011 GE rules went into effect during the Obama administration. Nevertheless, it has failed to reach consensus in Congress multiple times in the past decade, including two times during Obama-era rules-making, one time during Trump’s repealing, and one re-consideration during Biden-era (NASFAA, 2023). Still, the GE rule represents recent federal practices in evaluating and monitoring labor market outcomes (Caddell, 2021). Notably, the latest 2024 rules kept debt-to-earnings (D/E) ratios as its core metrics while adding earnings premium tests (to exceed high school graduates' average earnings), thus making it tougher than its predecessors and leading to more programs failing (Knott, 2023).

Further, the continuation of the GE regulations is supported by the scholarly literature emphasizing the necessity of bringing additional accountability measures to protect the students going to for-profit colleges (Cellini, 2021), who have been over-represented among the nation’s students who default on student loans for a decade (MacQueen, 2012). Nevertheless, when it comes to the evidence of the regulations’ impacts, very few studies have provided rigorous evidence, e.g., passing GE regulations was associated with a lower likelihood of program and college closures (Kelchen & Liu, 2022). More rigorous studies can be expected to uncover the policy’s impacts. As the controversy around the GE rules continues to unfold, this paper also summarizes the key lawsuits and reveals the stakeholders. The main arguments include that the regulations force one-size-fits-all metrics to measure student outcomes of various programs; and it can become a penalty to under-resourced institutions and socioeconomically marginalized groups. For-profit institutions have disproportionately lower‐income, older, women, students of color, veterans, and single-parent students (Cellini, 2021), highlighting the need for equity-mindedness in regulations like the GE rules.

Conclusion

As mentioned above, this paper reveals both the historical and contemporary contexts of GE policies, including the theoretical debates and policymaking challenges. Over a decade of ups and downs of the GE rules, conflicts remain on the regulations’ range and the specific metrics for GE programs crossing various occupational fields and student bodies. Concluded by multifaceted policy recommendations toward the key metrics and considerations for future policy, the study encourages further attention to the future research agenda.

Author

• Chenjun Yu, University of Michigan Ann Arbor