The rules define gainful employment in two ways, one using debt-to-income ratios and another using loan repayment rates. In all, there are three tests that a program can pass to gain at least “restricted” access to Title IV funds — the debt-to-earnings ratio, the debt-to-discretionary income ratio, and the loan repayment rate.
If a program does better than the department’s preferred standard on any one metric — 8 percent debt-to-earnings, 20 percent debt-to-discretionary income, 45 percent repayment rate — then it is fully eligible for Title IV. If it meets none, it becomes totally ineligible, unless an appeal is successful. If it meets the minimum standards for one metric — a debt-to-earnings ratio between 8 and 12 percent, a debt-to-discretionary income ratio between 20 and 30 percent, or a loan repayment rate between 35 and 45 percent — it gains access to the federal financial aid programs on a “restricted” basis.
Based on Education Department, 85 percent of for-profit would be eligible for Title IV funds (albeit with many required to disclose debt loads to students), 10 percent would be restricted from growing, and 5 percent would be ineligible. Those estimates, the department admits, are based on limited, institution-level — rather than program-level — data, and may turn out to be inaccurate