The Biden administration released a discussion draft of a gainful employment (GE) rule earlier this year that included a new minimum earnings test based on high school graduates’ earnings. Data show that one in five certificate programs at public institutions and nearly 70 percent of certificate programs at for-profit institutions would fail this test, causing them to lose eligibility for federal aid. Understanding the characteristics of these programs and the students they enroll can inform the ongoing development of the GE rule.
Key Findings
- Twenty percent of undergraduate certificate programs at public institutions and 70 percent of certificate programs at private for-profit institutions fail the high school earnings test. Under the previous GE rule, virtually every program at public institutions would have passed and only 20 percent of programs at for-profit institutions would have failed the test.
- Average earnings among certificate programs at public institutions that fail the test are only $18,348, much lower than the average of $34,669 among all certificate programs at public institutions.
- Cosmetology programs make up 36 percent of those failing the high school earnings test but just 7 percent of all the certificate programs public institutions offer. Similarly, despite accounting for only 7 percent of certificate programs, allied health and medical assisting services account for 13 percent of programs failing the high school earnings test.
- Programs at public institutions that would fail a high school earnings test enroll a much higher proportion of Black students, a higher share of women, and a slightly higher share of Hispanic students, on average, than certificate programs across all public institutions.
- Many of the programs at public institutions that fail the high school earnings test are located in communities where median household income is lower than it is in communities where programs pass.
- Failing programs at public institutions enroll much higher shares of Black students and much lower shares of Hispanic students than failing programs at private for-profit institutions.
Implications
The Biden administration cited weak student outcomes at for-profit colleges as a major motivation for establishing a GE rule, but the proposed high school earnings test would expand the policy’s reach, causing more certificate programs to fail overall, including one in five of those offered at public institutions.
These figures indicate that the high school earnings test might be overly broad and could lead institutions to shutter worthwhile programs. For example, programs that have large numbers of Black and female students may fail the test as the result of systemically lowered wages, even if those students are earning more than they would have without that certificate. But the data also show that failing programs at public institutions are concentrated in certain fields of study and overlap with those failing in the for-profit sector. This could suggest that credentials in these fields are more likely to produce low earnings regardless of what type of institution offers them, meaning the high school earnings test is effectively identifying low-payoff programs regardless of sector.
It is unclear whether the proposed high school earnings test will be included in the final GE rule. But a better understanding of the programs at public institutions at risk of failing that test should help policymakers assess whether the test will have the effects they intend.
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Additional Resources
- Tuition-to-Earnings Limits: An Alternative to the Gainful Employment Rule for Higher Education Accountability
- Measuring Quality or Subsidy? How State Appropriations Rig the Federal Gainful Employment Test
- GE by the Numbers: How Students Fared at Programs Covered Under the Gainful Employment Rule
- Disparities by Gender Complicate Proposed Accountability Metrics
- Student outcomes at community colleges: What factors explain variation in loan repayment and earnings?
