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For years, the for-profit industry against the U.S. Department of Education’s gainful employment (GE) rule, an accountability measure designed to ensure that students enrolled in undergraduate certificate programs earned enough to pay off the debt they took on. One of the industry’s primary was that the rule unfairly singled out the sector and that all programs should be held to the same standard.

Given that, these associations should be thrilled with the Education Department’s latest regulatory proposal on accountability, which builds on a policy framework established in the One Big Beautiful Bill Act (OBBBA). For the first time, earnings-based accountability measures would apply at all types of institutions and degree programs. Instead, the for-profit industry is for undergraduate certificate programs to be excluded entirely. If the Department continues to apply measures to undergraduate certificate programs, the industry is calling for the standards to be significantly weakened, a call supported more broadly by other higher education associations.

If you listened only to industry lobbyists, you would think the Education Department had proposed a new, more aggressive accountability regime. In reality, the Department’s draft rule includes earnings tests that are much easier for all undergraduate programs to pass, doesn’t penalize moderate-earning but unaffordable-debt programs, and has consequences that are less punitive than those in the current GE rule. Despite expanding an earnings measure across all institutions and programs, the proposal would erode student protections, boost federal aid to low-earning programs (particularly for Pell Grant recipients enrolled in for-profit colleges), and will cost taxpayers billions of dollars.

As the Education Department works on a final rule, here are five consequences of its proposal that policymakers and the public should be aware of. 

1. Despite projections that the accountability standard passed by Congress would save taxpayers money, the Education Department’s rule would instead cost $6 billion over the next decade.

According to the Education Department’s cost estimate, the rule will cost taxpayers $6 billion over 10 years. Most of that projected cost ($5 billion) comes from the Pell program. That’s because, in a significant departure from both current regulation and statutory interpretation, the Department has proposed to allow low-earning GE programs that fail the accountability measure to continue receiving Pell grants and other federal financial aid dollars. 

Under the current GE rule, any program that fails accountability metrics two out of three consecutive years will lose access to all federal financial aid, which includes student loans and Pell Grants (known as “Title IV aid”). Instead, under the Department’s proposal, programs that fail earnings measures will be ineligible to accept student loans, but could maintain their Pell Grant access, resulting in the increased costs.

That stands in contrast to what Congress expected, which left the gainful employment rules untouched and assumed the GE rules would continue to withdraw all federal financial aid from failing GE programs. When OBBBA passed, these new rules were taxpayers almost $1 billion over 10 years, not result in additional costs. The savings came from the public and private nonprofit programs anticipated to lose student loan eligibility that were not previously subject to any earnings test under the GE regulation.

Instead, the Education Department re-regulated GE in addition to developing proposed regulations for the OBBBA provisions, with the stated goal of trying to “harmonize” the two. Because OBBBA required only that programs (other than undergraduate certificate programs, which were by the GE rules) lose eligibility for student loans, the Department walked back its existing GE regulations to include a lesser sanction related to loans, not all Title IV. While some alignment between the OBBBA and existing GE frameworks–for instance, aligning the earnings measures so they are consistent across programs–makes sense, “harmonizing” sanctions across the two authorities is both inconsistent with Congress’s intent and costly to taxpayers. 

2. The rule would increase costs to the Pell program at a time when it is projected to run short on funds. 

The proposed rule is projected to increase the cost of the Pell Grant program at the same time it faces major long-term funding shortfalls. The Pell Grant, which helps low-income students pay for college, is staring down an shortfall, the Congressional Budget Office has projected. That gap is expected to be roughly $5.45 billion this year and will widen in the years ahead, over the next decade, according to the office’s initial analysis. When the Pell program faces a shortfall, policymakers often face difficult choices which can include cutting the maximum award amount, or limiting how many students can receive the grants. These changes will increase the pressure on the Pell program and likely impact its sustainability. 

3. The earnings test would be significantly easier to meet for undergraduate certificate programs and for-profit schools.

Another driver of additional costs to taxpayers is that the proposed rule is significantly easier to pass than existing GE regulations. The Department’s own this , which shows that more certificate programs pass and that more students are enrolled in programs that pass the proposed earnings test compared to current regulations – even as the new standards apply to a larger set of higher education programs. Compared to existing GE regulations the proposal measures earnings four years after completion instead of three (while keeping the pass/fail threshold the same for undergraduate programs), excludes unemployed graduates from the earnings calculation altogether, allows failing programs to regain eligibility faster, makes it easier for institutions to create similar programs to replace the failing ones even when they likely still potentially fail the earnings measure, and permits failing programs to continue teaching out enrolled students and capturing their student federal aid, despite likely failure. The Department’s analysis of program failures is also likely overstated. Researchers found that the Department estimated to fail would probably pass after discovering an error in the data. Not all of these changes are fully accounted for in the Department’s cost estimate, too, so likely raise costs further. 

4. Despite covering more programs, the proposed rule would protect fewer students enrolled in low-earning programs. 

Because the rule proposes a bar that is significantly easier to meet for certificate programs subject to the GE rule, it would protect fewer students. This, too, is a point the Education Department has acknowledged in its own analysis. The Department found that the impact is greatest on students enrolled in undergraduate certificate programs. Under existing regulations, 39 percent of students enrolled in low-earning programs would be protected from using their aid at a program that doesn’t pay off, compared to 25 percent under the proposed rule. The reduced sanctions for GE programs – affecting only loan dollars, rather than all Title IV aid – especially contributes to a reduction in impact. This analysis is supported by independent research from the Postsecondary Education & Economics Research Center at American University, protect over 600,000 students from using federal aid to attend low-earning programs, compared to only about 300,000 student loan borrowers under the proposed rule, covering only half of the number of students at risk of enrolling in programs that don’t pay off. Here too, the Education Department has acknowledged the impact, noting in its analysis that students will face additional costs from attending programs that would otherwise fail the current measure. In a striking admission, the department has admitted some students attending programs that would pass under the new framework “” them at all. 

5. The proposed rule would result in more federal aid dollars flowing to failing for-profit programs.

The Education Department’s analysis shows that while it would reduce federal aid to nonprofit colleges, the opposite would be true for for-profit institutions. Under the proposed rules, these schools would see a funding boost, both because the rule’s metrics are easier to pass than under existing regulations, and because programs that do fail can keep Pell Grant access. According to the Education Department’s data, roughly $2.4 billion dollars more in taxpayer-funded federal student aid would flow to for-profit colleges’ low-earning programs over the next decade than under current regulations. 

The Department is framing its proposal as a meaningful and durable expansion of higher education accountability because it applies earnings measures to programs across all sectors of higher education. But expanding the number of programs covered means little if the standards themselves are substantially weaker, and designed to protect fewer students. Even those substantially weakened standards have of the higher education associations, which called for a lower threshold for GE programs and for protecting schools’ Pell Grant and other Title IV revenue from being implicated when their programs have very low wages. 

No doubt much to the for-profit industry’s pleasure, under the proposal the Department will soon finalize, more low-earning programs would maintain access to federal aid, more taxpayer dollars would reach programs that don’t pay off for students, and fewer students would be protected from enrolling in programs that leave them no better off financially. The result is not stronger accountability; it is a permissive system that preserves the appearance of oversight while scaling back actual consequences. 

That matters not only for taxpayers, but also for students, especially those from low-income backgrounds who rely on the Pell Grant to improve their economic futures. And at a time when the Pell program faces financial pressure, policymakers should question whether federal funds are being directed toward programs that truly provide value to students.

The Education Department can correct this in its final rule. Unless the Department limits access to all federal aid for failing GE programs (as it is legally obligated to do, and as the policy rationale clearly warrants), what was intended to save taxpayers money and protect students may instead become a costly exercise in accountability—by name only.