S. 5021: Protecting Students from Worthless Degrees Act

This bill would change federal higher education rules to try to prevent students and federal aid from being used on programs that leave graduates with high debt and low earnings, or that do not prepare students for the licensing or certification needed to work in a chosen field.

What it would do

• Sets new limits for some career-focused programs. Colleges and training programs that receive federal education aid would have to meet new debt-to-earnings standards. These standards compare graduates’ loan payments with their earnings.
• Blocks aid to low-performing programs. If a program fails the debt-to-earnings test for 2 out of 3 consecutive years, the school could lose eligibility to send federal aid to students in that program.
• Requires programs to actually prepare students for licensing. For programs that are meant to lead to licensed or regulated jobs, the school would have to make sure graduates are qualified to sit for required exams and meet other licensing prerequisites in the student’s state, and in states where the school markets the program for work.
• Requires clinical and similar placements. Schools would need to provide timely access to required internships, clinical placements, apprenticeships, or other pre-licensure training requirements.
• Requires warnings to students. Schools would have to notify students and prospective students if a program does not meet the standards or is at risk of failing them.
• Adds certification rules for gainful-employment programs. Schools would have to certify that covered programs are properly accredited, meet licensing requirements, and are not too similar to a recent program that failed the standards or lost eligibility.
• Extends earnings-based oversight to some certificate programs. The bill would apply certain federal “earnings outcomes” rules to undergraduate certificate and diploma programs.
• Limits re-entry after failure. If a program loses eligibility under these rules, the school generally could not try to restore eligibility, or create a substantially similar replacement program, for 3 years.
• Applies rules evenly across professions. The bill says the Education Department cannot delay or soften these requirements for any particular profession unless the law specifically allows it.
• Restricts distance education from operating across state lines without authorization. Schools offering online or correspondence courses would need to be legally authorized in each state where their students are located, unless covered by a state reciprocity agreement that also preserves state complaint-handling and enforcement powers.
• Directs new regulations and data reporting. The Education Department would have to issue rules within one year and publish annual debt-to-earnings results for programs.

Practical effect

In plain terms, the bill would make it harder for colleges and training programs to keep receiving federal aid if graduates tend to earn too little compared with what they borrowed, or if the program does not really qualify students for the jobs it advertises. It would also increase oversight of online programs operating across state lines.

Relevant Companies

• LRN — Stride, Inc.: could be affected if any of its online education offerings fall under the bill’s state-authorization or program-eligibility rules.
• LOPE — Grand Canyon Education, Inc.: could be affected through colleges or programs it supports that rely on federal aid and must meet the new debt-to-earnings and licensure requirements.
• ATGE — Adtalem Global Education Inc.: could be affected because of its career-focused and graduate/professional programs that depend on federal student aid and licensure outcomes.
• STRA — Strategic Education, Inc.: could be affected if programs it offers or supports are subject to the bill’s earnings and licensing standards.
• COE — China Online Education Group: could be affected if U.S.-relevant distance education programs are subject to expanded state authorization or federal aid eligibility requirements.