What is the Financial Value Transparency and Gainful Employment rule in higher education?
Gainful employment regulations are disclosures that post-secondary institutions must provide to prospective students about their programs that prepare them for gainful employment in a recognized occupation.
These disclosures contain information about program expenses, debt, earnings and completion rates are meant to assist families and students in making educated judgments about their educational alternatives. These are also meant to help students steer clear of programs that could leave them with unsustainable debt and unfavorable career prospects.
The U.S. Department of Education has been updating and releasing a new gainful-employment rule for almost two years, building on an Obama-era initiative that was shelved under the Trump administration.
The final rule, titled the Financial Value Transparency and Gainful Employment, is thought by many to be more stringent than the one that the previous rule, which will result in more programs failing. Some of the key changes and updates include:
- A new federal rule that aims to give families greater information about the costs and hazards associated with programs will require students who enroll in an academic program that leaves them with debt they can’t manage to sign a disclosure notice as of 2026.
- Part of the new rule requires programs in any sector to show that graduate students can afford the debt payments. They will also show graduates they are earning more than the average adult in their state who did not attend college. These programs need to pass those tests in two consecutive years to keep their access to federal financial aid.
- With the new disclosure requirements, the department estimates roughly 400 graduate programs, and 120,000 students would be affected by this.
- These proposed regulations would make it simpler for the government to take action against institutions and impose new requirements on institutions before they could receive federal financial aid.
- Along with the general gainful-employment rule, the new reporting obligations will go into force in July of next year. According to experts and supporters, this profitable rule is stricter than earlier versions and would offer crucial protections for students.
- The fact sheet states that the first metrics for gainful employment will be released in the first quarter of 2025. In 2026, certain programs might lose their access to financial aid.
The new disclosure requirement is part of the United States education department’s new financial value transparency and gainful-employment rule, that was confirmed in September 2023 and explains how to prepare graduating students for successful careers.
“Our goal is to empower students and families with more data than ever before about the true cost of college,” stated Miguel Cardona, Secretary of Education. “This rule would make sure students know if they’re about to take out loans for programs known to leave graduates with unaffordable debt and poor career prospects.”
Multiple education groups are opposing the disclosure, while consumer protection advocates are showing continued support over the changes and some higher education associations claiming that emphasizing student economic outcomes does not correctly assess the true value of gaining college degrees.
According to the department, 1,700 programs that serve close to 700,000 students would not pass the earnings level or the debt-to-earnings ratio test, which is based on how much adults who did not attend college make.
About Schneider Downs Higher Education Services
The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.
To learn more, visit our Higher Education Industry Group page.
