Did Gainful Employment Regulations Result in College and Program Closures?

Abstract

For decades, the federal government has expected vocationally-focused programs in higher education, especially among for-profit colleges, to lead to gainful employment in a profession. In the mid-2010s, the U.S. Department of Education developed gainful employment (GE) regulations that sought to tie a program's federal financial aid eligibility to graduates’ debt-to-earnings ratios. We use a regression discontinuity design to examine whether for-profit programs’ performance on GE was associated with the likelihood of closing the program or college. Although the regulations were repealed before any program lost federal funding, we find that passing GE was associated with a lower likelihood of program and college closures.