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MEDIA ADVISORY: Heartland Institute Experts React to the Finalized "Gainful Employment Rule"

June 2, 2011

The Obama Administration’s Department of Education has released final language for the controversial “Gainful Employment” rule, which applies only to for-profit colleges.

The Obama Administration’s Department of Education has released final language for the controversial “Gainful Employment” rule, which applies only to for-profit colleges. The rule allows the federal government to deny typical college loans to any student attending a for-profit college if the student is deemed unlikely to be able to repay the loan.

While the final language contains some major concessions to for-profit colleges, it still targets them rather than applying to all forms of higher education. A for-profit college must meet one of the following metrics; if it does not, students attending that college will not be eligible for loans, effectively making the program unaffordable.

  • At least 35 percent of former students are repaying their loans (defined as reducing the loan balance by at least $1);
  • The estimated annual loan payment of a typical graduate does not exceed 30 percent of his or her discretionary income; or
  • The estimated annual loan payment of a typical graduate does not exceed 12 percent of his or her total earnings.


The following statements may be used for attribution. For additional comment, please contact the experts identified below or Jim Lakely, director of communications, jlakely@heartland.org, or Tammy Nash, media relations manager, tnash@heartland.org, at 312/377-4000.


“The gainful employment rules released today by the Obama Administration will have the greatest effect on groups that are most in need of non-traditional higher education choices. Students who lack the financial resources or the desire to attend a traditional non-profit college will unfortunately see more of these educational opportunities taken away from them.”

John Nothdurft
Director of Government Relations
The Heartland Institute
312/377-4000
jnothdurft@heartland.org


“Attacking the industry most responsible for popularizing higher education among the disadvantaged seems to be at odds with the Obama Administration’s goal of getting more kids into college.

“Any policy that applies only to for-profit higher education institutions is problematic. When the same policy ignores the fact that public higher education is subsidized by local, state, and federal grants, as well as subsidized loans, it is completely irrational. If the Department of Education applied the rule to all types of schools and added other government subsidies into the equation, public universities would be the first to close their doors.

“Government clearly has vested interests in reshaping the higher education space. Billions are sunk into public universities, subsidized student-lending interest is a major funding element of Obamacare, and politicians are cozy with investment firms that stand to make millions on the collapse of for-profit colleges.

“At a time when state budgets are $140 billion in the hole and federal legislators are debating how to raise the debt ceiling, any reform of student lending should apply to every college and university and extend to public university subsidies as well.”

Marc Oestreich
Legislative Specialist - Education
The Heartland Institute
312/377-4000
moestreich@heartland.org


The Heartland Institute is a 27-year-old national nonprofit organization with offices in Chicago and Washington, DC. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site at http://www.heartland.org or call 312/377-4000.

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John Nothdurft joined the staff of The Heartland Institute in May 2008 and left in January of 2019.