Judge Upholds Biden-Era Gainful Employment Rule

"A federal judge rejected an effort to overturn the gainful-employment rule, which was put in place during the Biden administration. Under the rules, for-profit and nondegree programs have to prove that their graduates can afford their loan payments and earn more than a high school graduate. Those that fail the tests in two consecutive years could lose access to federal financial aid. The regulations also included new reporting requirements for all colleges under the financial value transparency framework."

"In an opinion issued Thursday, Judge Reed O'Connor from the Northern District of Texas sided with the Education Department on every point. One of the plaintiffs, a trade association representing cosmetology schools, had argued in its lawsuit that the regulations jeopardized the "very existence" of cosmetology schools and used flawed measures to determine whether graduates of career education programs are gainfully employed. The lawsuit started under the Biden administration, and Trump officials opted to defend the regulations in court and urged the judge to keep the rules in place."

A federal judge rejected an effort to overturn the gainful-employment rule put in place during the Biden administration. Judge Reed O'Connor of the Northern District of Texas sided with the Education Department on every point. A trade association representing cosmetology schools argued the regulations jeopardized the "very existence" of those schools and used flawed measures to judge graduates' employment. Under the rules, for-profit and nondegree programs must show graduates can afford loan payments and earn more than a high school graduate, with repeated failures risking loss of federal financial aid. Congress passed legislation requiring most programs to pass a similar earnings test, and the Education Department will begin rule-making later this year.

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