AFR Statement: Dismantling the gainful employment rule will unleash a new wave of waste, fraud, and abuse


Alexis Goldstein
(202) 973-8005

“The Department of Education’s action today to eviscerate the Gainful Employment rule is a yet another example of Secretary Betsy DeVos working for wealthy for-profit college executives instead of students striving for a better life,” said Alexis Goldstein, Senior Policy Analyst at Americans for Financial Reform.

The Gainful Employment rule advances a common-sense principle: schools that consistently leave students worse off than when they first enroll shouldn’t receive federal financial aid. The rule works to ensure that taxpayers aren’t subsidizing schools that bury their students in debt for a useless degree. The first set of Gainful Employment’s career education program rates, published in January 2017, made clear the utility of this data. Some of the programs that consistently left students with more debt than they could repay were at schools that have since collapsed, such as Westwood College and ITT Tech. Prior to its collapse, ITT faced lawsuits and investigations from regulators and law enforcement alike.

The Department’s decision today not only gives schools with failing programs until February 2018 to appeal its program rates, it also lets schools off the hook completely from warning its students about their failing programs, so long as the school intends to file a notice of intent to appeal. This is an astonishing abdication of responsibility by the Department that we expect to be challenged in court.

Dismantling the Gainful Employment rule will do nothing more than unleash a new wave of waste, fraud, and abuse, leaving taxpayers and former students paying for fraudsters for high-priced but worthless classes. The Department’s actions today will only further line the pockets of the CEOs of proprietary institutions that sell failing programs to students who are simply trying to get an education.