Accountability for All Programs: Aligning America’s Outcomes-Based Standards
For more than a decade, higher education policymakers have contemplated ways to hold postsecondary education programs responsible for ensuring adequate outcomes of their graduates. The most significant of these efforts was in regulating “gainful employment” programs–defined in the Higher Education Act as non-degree (certificate) programs in any sector, and degree-granting programs in the for-profit sector–by requiring that their graduates have affordable levels of debt, and clear a minimum threshold of earnings. The emphasis on these gainful employment (GE) programs was well-warranted; the Department of Education noted, for instance, that while GE programs comprise just 15 percent of federally aided students in colleges, they account for nearly two in three of those who default on their federal student loans. Still, degree programs in the not-for-profit sector have largely escaped scrutiny and accountability, since the Education Department cannot apply the gainful employment rule outside of those programs.
The scope of outcomes-based accountability was broadened in the summer of this year, when Congress passed the One Big Beautiful Bill Act (OBBBA), which created the first explicit statutory requirement that programs must lead to adequate earnings in order to be eligible for federal student loans. Yet the OBBBA earnings standard inexplicably was designed to apply to all postsecondary programs except for undergraduate certificate programs. The choice to exempt these short-term credentials is even stranger considering that a subset of very-short-term (shorter than 15 weeks) undergraduate certificate programs was made eligible for ‘Workforce Pell’ Grants for the first time by OBBBA, and a different accountability standard was created that limits tuition as a function of graduates’ discretionary earnings. In sum, the OBBBA creates new minimum requirements for higher education programs to be able to access federal student loans that will apply to both for-profit and non-for-profit programs alike in nearly all sectors. Only undergraduate certificate programs that were already eligible for Title IV aid are exempt from the statutory scheme, and are left covered only by the accountability metrics (including both an earnings premium and a debt-to-earnings standard) of the gainful employment regulations.
This maze of separate, overlapping accountability measures raises questions about how policymakers can, and should, ensure students in all sectors and programs benefit from these protections. Those questions are set to be addressed via an upcoming regulatory process led by the Department of Education, where the agency has announced it will not only seek to draft regulations to implement the OBBBA earnings and short-term certificate earnings standards, but will also revisit the Gainful Employment rule and the related Financial Value Transparency (FVT) rule.
The Trump Administration has so far signaled an interest in ensuring higher education accountability, but the forthcoming rulemaking will put that to the test. Absent regulations for gainful employment programs, undergraduate certificate programs–when they fall between 15 weeks and two years in length–would be the sole sector of higher education not subject to accountability. Yet, as we outlined in a recent brief, students in those undergraduate certificate programs make up more than half (52 percent) of students in programs where median earnings of graduates fall short of the OBBBA earnings standard, despite comprising only 8 percent of overall enrollment. In other words, without the gainful employment regulations, fewer students would end up being protected from the harm of low-value programs by accountability provisions after the passage of OBBBA than before.
The gainful employment regulations complement the protections newly created in the OBBBA accountability plan, so that together the statutory and regulatory accountability rules would provide some protection from low-value programs for students in every sector of higher education. In this report, we model the extent to which several alternative, likely modifications to GE would erode these protections. The Department—and, ultimately, Congress—should use its authority to regulate with a goal of ensuring that all programs, including undergraduate certificate programs, face consequences for poor student outcomes and wasted taxpayer investments.
