Gainful employment compliance will cost $51 per student, says one expert

Cost driven by new administrative burden

Implementing the Department of Education's (DOE) "gainful employment" regulations will cost schools, on average, $51.55 per student annually, reports Campus Technology.

Jim Farmer, a higher education IT researcher, crunched the numbers on the cost of complying with gainful employment rules. Last week the DOE published the final rules, which Farmer estimates will cost colleges a total of $205 million per year in additional administrative work, "a substantial amount for revenue-constrained institutions."

DOE announces 'gainful employment' regulations, receives criticism from all sides

Background on the new requirements

The new rules seek to create:

  • Accountability for preparing students for gainful employment; and
  • Transparency so prospective students can make informed decisions regarding where to attend college.

The law assigns grades to programs based on comparing typical graduates' annual loan payments compared to their annual salary:

  • Pass: Loan payments below 8% of total (or 20% of discretionary) earnings.
  • Zone: Loan payments fall between 12% and 8% of total (or 20% and 30% of discretionary) earnings.
  • Fail: Loan payments above 12% of total and 30% of discretionary earnings.

Programs that receive a failing grade two out of three consecutive years or stay in the warning zone for four consecutive years are ineligible for Title IV funding.
Schools must also make public former students' wages, graduation rates, and debt accumulation via a not-yet-revealed "disclosure template" designed to make data comparable among institutions.

Cost breakdown by sector 

  • Private for-profit schools will be $150,801,900;
  • Private non-profit schools will be $4,559,262; and
  • Public schools will be $50,589,106.

The costs stem from additional administrative tasks, such as submitting certification documents to DOE and submitting corrections to the department's NSLDS, formerly known as the National Student Loan Data Systems. Schools must also make the cost of fees, tuition, books, equipment data, and supplies available, which may require integration among data systems—another hidden cost.

To prepare for 2015, affected schools should begin organizing data and developing plans to implement the regulations, says Farmer. Data systems may need to be modified and extended, and curriculum and enrollment policies reviewed, he says (Farmer, Campus Technology, 11/4; U.S. Department of Education media release, 10/30).

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