On June 13, 2011, the U.S. Department of Education (Department) released final regulations requiring career college programs to demonstrate that they are preparing students for “gainful employment.” Programs that fail to meet the Department’s new requirements risk losing access to federal financial aid.

Title IV of the Higher Education Act of 1965 currently requires certain postsecondary programs, including most for-profit colleges and certificate programs at non-profit and public institutions, to prepare students for gainful employment in a recognized occupation in order to qualify for federal financial aid. The new regulations define what it means to provide training that leads to gainful employment. Under the new regulations, a program is considered to lead to gainful employment if it meets at least one of the following three measures: 1) at least 35 percent of former students are repaying their loans; 2) the estimated annual loan payment of a typical graduate does not exceed 30 percent of his or her discretionary income; or 3) the estimated annual loan payment of a typical graduate does not exceed 12 percent of his or her total earnings.