Department of Education Proposes Warning for ‘Low Financial Value’ Programs

Education officials want to create a list of college programs that leave students with high debt and low earnings.
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Published on January 11, 2023
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  • The Department of Education wants to create a list of college programs that "provide the least financial value to students," according to a press release.
  • Students would be warned if a program is on that proposed list before receiving financial aid.
  • Institutions with low financial value programs on the eventual list would need to submit "improvement plans" to the Education Department.
  • Those warnings would be sent regardless of whether a program is subject to gainful employment accountability requirements, according to a fact sheet.

The Department of Education wants to warn student borrowers if a program has a "low financial value" and might leave them with excessive debt, officials said Tuesday.

Education officials want to create a list of programs at colleges and universities that "provide the least financial value to students" as part of proposed regulations unveiled Tuesday. The Education Department plans to put out a request for public feedback on ways to identify low financial value programs, according to a press release.

"We cannot return to the same broken system we had before the pandemic, when a million borrowers defaulted on their loans a year and snowballing interest left millions owing more than they initially borrowed," U.S. Secretary of Education Miguel Cardona said in the release.

Students would receive a warning before they receive federal aid to attend low-value programs, according to a fact sheet. Officials hope a list of programs would draw the public's attention to "programs that consistently leave students with too much debt compared to their expected earnings."

"The Department recognizes that some postsecondary programs promote goals other

than financial returns for students," the fact sheet reads. "However, a misalignment of prices charged to financial benefits received may cause particularly acute harm for student loan borrowers who may struggle to repay their debts after discovering too late that their postsecondary programs did not adequately prepare them for the workforce."

Institutions with low financial value programs on the eventual list would need to submit "improvement plans" to the Education Department, according to the release.

Those warnings would be sent regardless of whether a program is subject to gainful employment accountability requirements, according to the fact sheet. The Department of Education is set to publish new gainful employment regulations in 2023, BestColleges previously reported.

They are part of a government oversight program that looks to protect students from high student loan debt and ensure students are prepared for "gainful employment in a recognized occupation," according to the Federal Student Aid office. That gainful employment rule was repealed during the Trump administration, and Education Department officials met with stakeholders last year to mull reimplementing the rule.

Representatives for public, private, and for-profit institutions opposed the Department of Education's proposed rules last year, BestColleges reported.