22 June 2023- Attorney General Michelle Henry announced that her office joined a 21-state coalition of Attorneys General in submitting a comment letter to the U.S. Department of Education applauding its proposed Gainful Employment Rule.
Originally issued by the Obama Administration in 2012, the Gainful Employment Rule aims to protect students by, among other things, establishing expectations that graduates of for-profit colleges and career-training programs at nonprofit colleges earn enough money to successfully pay back their federal student loans.
In doing so, the Gainful Employment Rule also protects taxpayers by ensuring that low-quality programs — largely concentrated at for-profit institutions — are cutoff from access to taxpayer funds in the form of federal student aid.
The Gainful Employment Rule was repealed in 2019. Pennsylvania OAG led a coalition of states in suing the Trump Administration over the repeal. That litigation has been stayed, pending the new Gainful Employment Rule proposed by the Biden Administration.
“The first – and, oftentimes, most challenging – hurdle facing students entering the workforce is unsurmountable school debt,” Attorney General Henry said. “Our office has been at the forefront of ongoing litigation in this matter, fighting against the repeal of the original Gainful Employment Rule and now, supporting its reinstatement. This new proposed rule would protect hundreds of thousands of students from entering programs at institutions that do not offer a pay-off upon completion.”
Separately, Pennsylvania OAG has engaged, in recent years, in enforcement actions relating to multiple for-profit institutions.
The U.S. Department of Education announced its latest proposed Gainful Employment Rule on May 17, 2023, and requested public comment. The multistate letter responds to that request.
Under the Higher Education Act, post-secondary institutions are required to “prepare students for gainful employment in a recognized occupation.” If an institution does not, it risks losing access to federal financial aid.
In its proposed Gainful Employment Rule, the U.S. Department of Education would establish the following protections:
- Requirements that post-secondary institutions must meet. These involve standards related to what students can borrow and feasibly pay back, and require that graduates must earn more than a typical high-school graduate in the state between the ages of 25 and 34;
- An expansion of disclosure requirements — such as a new website that would provide students and their families with information on the costs of a particular program, how much they are likely to earn after graduation, and typical borrowing amounts in federal and private loans — to empower them to make informed decisions; and
- A requirement that schools certify they are in compliance with certain state consumer-protection laws.
In their comment letter, the Attorneys General commend the above proposals, and also:
- Urge the U.S. Department of Education to both expand and clarify its proposed requirements regarding institutional compliance with state consumer-protection laws by, among other things, requiring schools that offer programs in multiple states to comply with all state consumer-protection laws in each state where the school enrolls students; and
- Urge the U.S. Department of Education to limit any relaxation of standards within the Gainful Employment Rule — like the decreased earnings threshold it is proposing for programs serving students in economically disadvantaged locales — to avoid institutional abuse. The Attorneys General underscore that online programs, which can provide instruction to students at any locale, should not be able to claim that they are serving an economically disadvantaged location.
In submitting the comment letter, Attorney General Henry joined the Attorneys General of California, Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, and Wisconsin.
Read the letter HERE.