About 5% of vocational programs that are subject to the U.S. Department of Education’s controversial gainful-employment rule failed to meet the regulation’s three key benchmarks that eventually will be required for them to receive federal student aid. Measured against the benchmarks issues last June, the graduates of 193 programs at 93 different for-profit institutions are carrying debt-to-income ratios that are too high and have loan-repayment rates that are too low.
The failing programs will not be sanctioned as the data were released for informational purposes only. Full enforcement of the regulations will be phased in over the next several years. Starting in 2013, the affected vocational programs must meet at least one of three benchmarks in at least three out of four consecutive years in order to remain eligible for federal student aid.
In order to meet the first benchmark, at least 35% of a program’s graduates must be actively repaying their student loans. Also, the median student-debt burden of a program’s graduates cannot exceed 12% of those students’ aggregate annual total income, nor 30% of their annual discretionary income.
The gainful-employment rule applies only to nondegree-granting vocational programs, which include 42,000 programs at U.S. public and private colleges, and approximately 13,000 programs at for-profit colleges. Many vocational programs are exempt from the regulation, however, because they have fewer than 30 student-loan borrowers.