The U.S. District Court for the District of Columbia has vacated part of the U.S. Department of Education’s gainful employment regulations related to the debt-repayment measure. Under the regulations, career training programs that receive federal financial aid must show that they “prepare students for gainful employment in a recognized occupation.” One measure schools were asked to use to show this was that 35 percent of their graduates are repaying their loans. The court ruled that 35 percent is “arbitrary and capricious,” and not based on any expert study or industry standard. While the court ruled that the Department had the authority to issue gainful employment regulations, they will now have to reexamine their benchmarks for loan repayment rates.
The court also struck down other provisions of the regulations, including one that requires institutions to get approval from the U.S. Education Department before offering new career training programs. Meanwhile, the court upheld reporting requirements related to program costs, on-time graduation rates, placement rates, and median loan debt.
Nancy Conneely, Public Policy Manager