Takeaways from DOE’s Gainful Employment Ruling

October 30th marked the release of the final version of The Education Department’s “Gainful Employment” rule. The long awaited ruling has been a topic of much discussion and is still being contested by the Association of Private Sector College and Universities (APSCU).

While the debate ensues, here are some takeaways from the ruling:

1. Career programs are no longer accountable for their cohort default rates. The cohort default rate represents the percentage of borrowers defaulting on their student loans.

2. Instead, career programs will be weighed only for their graduates’ debt-to-earnings ratios. The debt-to-earnings ratio measures the ability of a borrower to manage payments and repay debts based on their income.

3. The Education Department expects nearly 1,400 programs to fail the rule in the first year. Programs that fail the test on multiple reviews will not be able to award federal aid to students.

The For-Profit college sector has already taken action against the Education Department. APSCU officially filed suit against the Department’s Gainful Employment ruling last week. The suit asks that the United States District Court declare the regulation unlawful and set aside the regulation.

A briefing schedule is expected to be set in the next few months.

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