The "Gainful Employment" Regulation Will Cost Taxpayers Over $1.7 Billion


Education Secretary Arne Duncan has acknowledged that private sector institutions are "helping us meet the explosive demand for skills that public institutions cannot always meet." However, the U.S. Department of Education's proposed "gainful employment" regulation will severely limit private sector institutions' ability to meet these expanding needs. The "gainful employment" regulation will result in our nation seeing a gaping hole in educational capacity.

Research by Drs. Jonathan Guryan of Northwestern University and Matthew Thompson of Charles River Associates estimates that over 7.5 million students will be displaced by program closures resulting from the "gainful employment" regulation by 2024. The Department unrealistically and unconvincingly expects that 90 percent of displaced students will find comparable alternatives – Drs. Guryan and Thompson examining several scenarios found comparable alternatives at best for between 25 and 50 percent of displaced students.

Contrary to the Department's claims, the "gainful employment" regulation promises to be just as costly to taxpayers as it is to student access. A recent study by Jorge Klor de Alva and Mark Schneider from the Nexus Research and Policy Center found that if states were to educate the students displaced from failed and zoned programs by the regulation, New York alone would have to appropriate an additional $68 million for one graduating class. A state like Arizona would face a crippling $509 million in costs if it had to educate the 2012 graduates in their own two or four-year institutions. Even taking into account state funding that some proprietary institutions receive for the benefit of individual students, taxpayers across the country would foot a total bill of nearly $1.7 billion per year in additional expenditures.
 

 The “gainful employment” regulation will force states into an unpalatable choice between hiking taxes to cover the excess education expenditures, raising tuition, or simply turning away the students from unfunded programs. The likely result is a significant decrease in educational access, which promises to have severe individual and national economic consequences down the road. The Department’s ill-advised regulation is a lose-lose for students and taxpayers.

These staggering numbers multiplied over future graduating classes would strap states with billions of dollars in extra expenditures. The "gainful employment" regulation will force states into an unpalatable choice between hiking taxes to cover the excess education expenditures, raising tuition, or simply turning away the students from unfunded programs. The likely result is a significant decrease in educational access, which promises to have severe individual and national economic consequences down the road. The Department's ill-advised regulation is a lose-lose for students and taxpayers.


APSCU Facts

800k graduates

PSCUs open doors to many of the 9.1 million unemployed and 90 million undereducated Americans by providing a skills-based education. To remain competitive over the next decade, we must identify between 8 and 23 million new workers with postsecondary skills.PSCUs are a necessary part of that solution, having produced over 800,000 degrees last year alone.