Federal Judge Refuses to Restore Key 'Gainful Employment' Provisions

Federal Judge Refuses to Restore Key 'Gainful Employment' Provisions

March 20, 2013

In a ruling issued on Tuesday, a federal judge refused to restore several key provisions of the U.S. Education Department's "gainful employment" rule.

The regulation, released in June 2011, would limit federal student aid money to vocational programs that failed to meet certain benchmarks. 

In June 2012, the U.S. District Court for the District of Columbia vacated several provisions of the controversial rule, one day before the new regulations were set to take effect. While the court ruled that the department had the authority to compel vocational programs to disclose their debt-repayment rates and debt-to-income ratios, it said that the agency had failed to provide sufficient evidence to justify its requirement that at least 35 percent of a program's former students repay their federal student loans. It also voided two other provisions that rely, in part, on the debt-repayment measure: one that requires institutions seeking to offer a new vocational program to get prior approval from the Education Department, and one that requires institutions to provide data to the department for calculating the debt measures.

The department filed a motion in August 2012 requesting that the federal court reinstate some reporting requirements of the "gainful employment" rule. The motion argued that the court incorrectly threw out the reporting aspect of the rule, based on a "misunderstanding" of the complexities of the regulations and how the debt measures are calculated.

Tuesday's ruling rejects the department's request for the court to reinstate the provisions that were invalidated. Judge Rudolph Contreras argued that the gainful employment data the department seeks to collect would violate a federal ban on federal unit record data systems. In 2008, Congress barred the creation of a national unit record tracking system, which would have collected academic and other data about students at the individual level, citing concerns about privacy and mandatory data collection.

The department released a statement Wednesday saying that it was reviewing the decision with the help of the U.S. Department of Justice. The judge's two decisions back the department's overarching desire to protect students and federal financial aid programs, as the statement noted.


Related Links:

The U.S. District Court for the District of Columbia Memorandum Opinion


The Chronicle of Higher Education


Inside Higher Ed


Michelle Cormier Mott

In the Courts