Dive Brief:

• A federal judge dismissed a case Thursdaythat challenged the legality of the Biden administration’s gainful employment rule,which aims to ensure that graduates of career education programs earn enough to pay off their student loan debt.
• U.S. District Judge Reed O’Conner— a George W. Bush appointee — rejected arguments from cosmetology school groups that the gainful employment rule overstepped the U.S. Department of Education’s authority and violated their constitutional rights.
• Although the Biden-era rule survived the legal challenge,the Trump administration is considering potential changes to the gainful employment regulations in the coming months.

The Biden administration finalized the gainful employment rule in 2023. Under the rule, career education programs must prove that they provide graduates with an earnings bump and don’t leave borrowers with more debt than they can manage.

To do so, the gainful employment rule establishes two separate tests.Under one, the median program graduate must pay no more than 8% of their annual earnings or 20% of their discretionary income toward their debt. Under the other, at least half of a program’s graduates must outearn workers in their state with only a high school diploma.

College programs that fail either of these metrics in two out of three consecutive years risk losing access to federal financial aid. The rule primarily impacts programs at for-profit colleges, but also applies to certificates at all...

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