For-Profit Colleges and Gainful Employment - What You Need to Know

By: Coach James The past few years have seen tremendous changes in the higher education industry. In the wake of  Corinthian College’s and ITT Tech’s closures, many students and parents might be wondering if for-profit colleges are even viable options. Additionally, with the recently released federal reports concerning programs in danger of losing funding due to gainful employment standards, it is understandable that families of high school students would be concerned.   The Obama administration’s gainful employment regulations were spurred by the growing concerns within the higher education community that some institutions, mainly for-profit institutions, were not providing a quality education, which was measured by comparing students’ future earnings against the cost of their education. This is especially relevant to for-profit colleges, whose focus tends to be on career-oriented programs. The gainful employment rules, then, are meant to protect students from individual programs that charge students a high cost for an education, which ultimately may not lead to well-paid careers. If a program does not show enough of a difference between the debt the student acquires to participate and the earnings they receive afterwards, then that program may lose federal funding. Programs in danger of losing funding are required to disclose this to their current and prospective students.   It is important to note that, under current regulations, there are stricter standards in place for private institutions, as their programs are not regulated by state governments. For-profit institutions feel the brunt of these standards, so it is no surprise that 98% of the programs that did not meet standards in the latest gainful employment report were from for-profit institutions.   While this may seem like a lot, there were many for-profit schools that were not even on the list. If fact, many for-profit colleges do not seem concerned  with gainful employment at all. Another thing to consider is that some very popular schools also made the list, such as Harvard, Johns Hopkins, and the University of Southern California. We would be remiss to judge these entire institutions just because one or two of their programs made the list.   However, gainful employment regulations have shed light on what many in the higher education community had already suspected: overall, for-profit-schools are more prone to underserving students at inflated prices.   The bottom line is, for-profit colleges are designed to profit from higher education, and students need to weigh the risk of any postsecondary investment. While there may be quality for-profit programs available, they are not always easy to recognize. Gainful employment disclosures can be a good warning sign for some programs, at least while they are still enforced, but the risks are still high.   If any of our clients have questions concerning for-profit colleges or gainful employment, please feel free to contact our coaching team.