Attorney General Bonta Applauds Department of Education’s Strongest-Ever Proposed Gainful Employment Rule

OAKLAND — California Attorney General Rob Bonta today led a coalition of 21 attorneys general in submitting a comment letter to the U.S. Department of Education, applauding its strongest-ever 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 of career-training programs at nonprofit colleges earn enough money to meaningfully 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. Former Education Secretary Betsy DeVos was hostile to the Obama-era Gainful Employment Rule and repealed the entire Rule in 2019. The Biden Administration is now proposing a new Gainful Employment Rule that strengthens federal efforts to hold accountable predatory colleges.

“It's a no-brainer: any institution that wants access to federal financial aid must provide some value to its students,” said Attorney General Bonta. “With its proposed Gainful Employment Rule, the U.S. Department of Education is taking bold, necessary action to make that goal a reality. I commend Education Secretary Miguel Cardona and the Biden Administration, and I look forward to continuing to work with them to ensure our students are not taken advantage of by unscrupulous for-profit schools.”

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. The U.S. Department of Education announced its latest proposed Gainful Employment Rule on May 17, 2023 and requested public comment. Today’s letter responds to that request.

In its proposed Gainful Employment Rule, the U.S. Department of Education would establish the following protections:

• A debt-to-earnings ratio that post-secondary institutions must pass. This includes a requirement 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 outside a particular locale, should not be subject to any such reductions.

In submitting the comment letter, Attorney General Bonta was joined by the attorneys general of Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin.

A copy of the comment letter can be found here.