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The “gainful employment” definition was established in regulations to stop program abuse occurring largely in the career college sector.

Federal administrators were concerned that a significant number of gainful employment programs were not providing students the skills needed to gain employment in the occupation for which a program was supposedly designed.  Further, there was concern that the jobs students got were low-paying, and thus not worth the expense of the education, leaving many of these students with debt on which they often defaulted. Thus, the gainful employment regulations were designed to ensure that students don’t take on large amounts of debt for training programs that lead to jobs with earnings too low for them to repay their loans.

Certificate programs at private, nonprofit and public institutions, and nearly all for-profit degree and certificate programs must prepare students for “gainful employment in a recognized occupation” in order for those students to be eligible for federal student aid.  Any institution with a gainful employment program must provide a significant amount of information about its student body to the Department of Education and make disclosures about the success of its programs to the public.

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