Gainful Employment Rule Expected to Hit For-Profits Hardest

The new gainful employment rule survived a legal challenge and took effect July 1st. Despite the misinformation many people have been spreading, the gainful employment rule applies to all non-degree-granting programs at non-profit, public, and proprietary schools. However, 99% of the programs that are expected to not meet the requirements are at for-profit colleges. This is because most career training programs are at community colleges and for-profit schools. Community college students usually do not have the high debt-to-income ratio that for-profit college students have.

Of course, the for-profit college industry says these rules are unfair because, if they were applied to all degree programs, then many non-profit universities would fail. When schools do not meet the standards under the new gainful employment rule, they will lose access to federal financial aid.

Obama Administration's Gainful Employment Rule Holding For-Profit Schools Highly Accountable Takes Effect : News : ISchoolGuide

Federal Court Sides With Education Department on Gainful Employment Rule - US News

Obama Administration's Gainful Employment Rules Upset Student Groups, For-Profits - US News

 

According to this article, schools will start seeing repercussions in late 2017 or early 2018. The for-profit college industry is challenging the ruling that said this regulation is constitutional.

For-Profit Colleges: Gainful Employment Rule Takes Effect, Sparking Change For Schools And Students

 

I will be curious to see who rises and falls with these new requirements. I suspect the for-profit schools that will survive are those that have adequately prepared themselves for such a transition (rather than banking on a successful legal challenge). CEC is already divesting themselves of career training holdings. UofP is downsizing. I think a lot of fat will be trimmed and a leaner, meaner for-profit system will be in place, tbh.