Published on 2012/06/29

Five Percent of Vocational Programs Fail Gainful Employment Test

The Education Department released a report on Tuesday condemning 193 vocational programs—distributed across 93 institutions—for not meeting the Department’s gainful employment rule.

The department has set three key benchmarks by which they will be judging institutions who want to remain eligible for federal student aid, with sanctions beginning in 2013. These benchmarks require at least 35 percent of a program’s graduates to be actively repaying student loans, the median student debt burden for a program’s graduates must be below 12 percent of those students’ aggregate annual income and below 30 percent of their annual discretionary income.

The gainful employment rule only applies to non-degree granting vocational programs with more than 30 student-loan borrowers; amounting to approximately 42,000 programs at public and private colleges and 13,000 programs at for-profit colleges. All of the 193 programs that did not make the grade in this year’s “test run” came from for-profit institutions.

The rule was established to ensure that federal dollars were helping students to attend programs that would be considered “good investments”, in that they would lead graduates to well-paying jobs and careers.

In response to the criticism of the rule, which has mostly come from the for-profit sector, Education Secretary Arne Duncan said in a statement that it was a matter of accountability.

“Career colleges have a responsibility to prepare people for jobs at a price they can afford. Schools that cannot meet these very reasonable standards are on notice: Invest in your students’ success, or taxpayers can no longer invest in you.”

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