The Department of Education’s Gainful Employment Rule is in Effect: What Does That Mean for Students?

Gainful Employment Rule

One of our missions here at Climb is to make sure the schools we partner with provide education in a way that improves earning potential and justifies the cost of that education. We also go beyond that, though; we keep up to date on the ever-changing rules and regulations for education, and we want our borrowers to be informed about them as well. One such rule instated by the Department of Education which can greatly benefit students is the Gainful Employment Rule. We’re here to give you an in-depth look at what it is and what it means for you.

Some schools are dedicated to providing education that provides meaningful changes in students’ lives, but there are sometimes bad apples that are more interested in profit than education. Sometimes these schools are called diploma mills, and they often mislead students about the effectiveness of the education provided. These schools typically promise jobs and/or increased salary in exchange for high tuition. However, in reality they fail to provide meaningful education, and students leave without having learned marketable skills. Students have a difficult time finding a job and have been heavily indebted by tuition. It’s like buying a car and finding out afterwards it’s missing its engine!

To combat this problem, the Department of Education is beginning to enforce data-driven standards that aim to protect students from misleading education providers. Is the Department of Education going to assess every program at every school to make sure the education is sufficient? Yes. The Department of Education is going to collect tuition and debt data from every skills-based postsecondary program across the country that receives financial aid from the US Government. They are also going to collect salary data from the Social Security Administration, which they will then analyze against the amount of money it costs to attend to ensure the schools are not charging students for programs that do not lead to Gainful Employment. For schools which have programs that do not pass this debt-to-Income test, the Department of Education will limit their ability to offer federal financial aid to students.

The Gainful Employment (GE) Rule will produce some valuable information for all interested in postsecondary education. Here are some benefits of the Gainful Employment Rule:


GE Rule for Students: the Gainful Employment Rule is extremely helpful to students for a few reasons.

  • Firstly, the findings will be made public, so students will be able to measure and compare different schools based on the salary and job placement. Students will be able to make more informed decisions when applying to school.

  • Secondly, federal funding will not be offered at schools where students are not sufficiently benefitting from the education. While taking out a loan always bears risk, this will help protect students from the difficult scenario described earlier. (And for those who are worried about losing federal funding at your school, don't worry — federal financial aid restrictions are not enforced until three years of data have been collected, and this is just the first.)


The GE Rule Holds Schools Accountable:

  • Many students use federal financial aid to pay for education in the United States, which means that a large portion of revenue received by school is from federal financial aid. If a school were to lose this offering, it would likely lose the capital to operate. This rule forces schools to refocus their efforts on educating students above all else.

Department of Education

Here at Climb, we are excited about the Gainful Employment initiative and the public metrics that will be published in early 2017, as we are also focused on quality education. Similar to the Department of Education, Climb looks to identify and partner with quality programs, as well as avoid and discredit predatory education.  

We’re happy to see outcomes becoming a greater focus from various stakeholders, as evident with the Gainful Employment rule. Our goal is to make quality education more accessible!


This post was written by Charlie Edler, Former Partnership Development at Climb Credit.