Report: Public Money Skews Gainful-Employment Rule

Roughly three-quarters of for-profit programs pass the rule, the report said, compared to a relatively small number of nonprofits that are covered under gainful employment. Direct public funding drives much of that disparity, according to the report’s authors.

“Higher tuition at for-profits means students take on more debt, while public institutions have the luxury of charging lower tuition due to their direct appropriations,” the report said. “Therefore, even if a for-profit institution and a public institution have similar overall expenditures (costs) and graduate earnings (returns on investment), the for-profit institution will be more likely to fail the gainful-employment rule, since more of its costs are reflected in student debt.”

Congressional Republicans and the Trump administration have said they will seek to roll back gainful employment and other Obama-era regulations aimed at for-profits. But such nixing of the rules likely will take time. And this week the U.S. Education Department defended gainful employment in federal court.