Work requirements create what economists would recognize as a captive market. Expansion adults need qualifying hours. Education counts. The institution providing those hours does not need to provide anything else of value for the compliance transaction to occur. For the 18.5 million expansion adults facing monthly compliance obligations beginning December 2026, this structural reality will attract both legitimate educational providers and predatory actors seeking new revenue streams from populations with limited alternatives.
The for-profit higher education sector’s history of targeting vulnerable populations is extensively documented. A 2012 Senate investigation found recruiters pressured to meet enrollment quotas. GAO investigations revealed widespread deceptive statements about job placement rates, potential earnings, and credit transferability. The Consumer Financial Protection Bureau has pursued enforcement actions against institutions for predatory lending. The demographic targeting is particularly relevant: research consistently finds for-profit institutions concentrate recruitment in low-income communities and among populations of color. Black and Hispanic students make up nearly half of for-profit enrollment despite representing about one-third of all college students. This targeted population substantially overlaps with the Medicaid expansion population facing work requirements.
Outcome disparities compound the targeting concern. Students at for-profit institutions borrow more, default on loans at higher rates, and experience worse employment outcomes than peers at public institutions even after controlling for demographic characteristics. A Harvard Law Review analysis noted that graduates from some large for-profit institutions faced essentially the same employment prospects as if they had never attended, plus lifetime debt. These patterns matter because work requirements create new market opportunities for institutions whose business model depends on enrollment volume rather than student outcomes.
The perverse incentive structure deserves explicit attention. Under work requirements, what matters for maintaining coverage is enrollment and attendance, not completion, credential attainment, or employment outcomes. A student who enrolls, attends for two years, accumulates $20,000 in debt, and drops out without completing has successfully maintained compliance throughout. The compliance function is satisfied regardless of educational outcomes. An institution optimized for enrollment rather than completion has no business reason to invest in student success beyond the minimum necessary to maintain accreditation.
The marketing will be predictable. “Keep your Medicaid coverage while training for a new career.” “Flexible schedules for working students.” “Financial aid available.” These messages will target the same communities through the same media channels that have historically carried for-profit college advertising. The difference is that Medicaid compliance adds urgency that previous marketing lacked. Under work requirements, choosing not to enroll may mean losing healthcare coverage, amplifying vulnerabilities that expansion adults already face.
States hold substantial discretion in defining which programs qualify for work requirement compliance, and this definitional authority represents the primary protection tool. Accreditation provides one filter but is insufficient alone, as the ACICS experience demonstrated when the Department of Education terminated recognition of an accreditor that had certified problematic institutions. The Department of Education’s gainful employment rule provides a more robust framework, requiring career training programs to demonstrate that graduates’ annual loan payments do not exceed 8 percent of income and that at least half of graduates earn more than typical high school graduates. Approximately 1,700 programs enrolling nearly 700,000 students were projected to fail at least one metric, with roughly 90 percent at for-profit institutions.
States designing work requirement rules could adopt gainful employment metrics as qualifying thresholds, creating automatic alignment between federal consumer protection and state compliance administration. Completion rates offer another useful metric. Mandatory disclosure requirements including graduation rates, employment outcomes, median earnings, and student debt levels for approved programs would enable informed enrollment decisions. Independent program evaluation panels including employer representatives, workforce development professionals, and student advocates could provide quality assessment that no single metric captures comprehensively.
Community colleges, industry certification programs, registered apprenticeships, and employer-sponsored training share a common thread of external validation beyond self-reported institutional claims. Community colleges answer to state oversight. Industry certifications reflect employer consensus. Registered apprenticeships require employer partnership. Employer-sponsored training involves direct employer investment. Each provides quality signals that institutions accountable primarily to shareholders rather than students often lack.
The deeper policy question is what responsibility the state bears when it creates compliance requirements driving vulnerable populations toward potentially harmful choices. Work requirements create not just obligations but markets, and the state bears some responsibility for ensuring market participants serve the populations the state has directed toward them.