GainfulEmploymentPar..

Report
NYSFAAA 2013
AGENDA
 What is GE all about?
 What WERE the final rules?
 What is currently in place?
 What’s next?
What is GE all about?
What is GE all about?
It is about loan debt but…
What is GE all about?
 The Higher Education Act of 1965 (HEA) was legislation
signed into law on November 8, 1965
 The law was intended to strengthen the educational
resources of colleges and universities and to provide
financial assistance for students in postsecondary and
higher education.
 The Higher Education Act of 1965 was reauthorized in
1968, 1971, 1972, 1976, 1980, 1986, 1992, 1998, and 2008.
Current authorization for the programs in the Higher
Education Act expires at the end of 2013.
What is GE all about?
So what???
What is GE all about?
 The Higher Education Act of 1965 requires for-profit
colleges to provide “an eligible program of training
to prepare students for gainful employment in a
recognized occupation” but does not define
gainful employment.
 As part of the Program Integrity Regulations of
2010 the department has defined expectations for
Gainful Employment by creating metric/outcomes
which, if not obtained, would lead to program level
loss of TIV.
Gainful Employment Time Line
 Notices of Proposed Rulemaking published 6/18/10 &
7/26/10
 Two sets of Final Rules published on 10/29/10 with
effective date of 7/01/11
 Program Integrity; Gainful Employment Reporting and
Disclosures
 Gainful Employment – New Programs
 One set of Final Rules published on 06/13/11

Performance metrics
Gainful Employment Time Line
 On June 30, 2012, the U.S. District Court for the
District of Columbia issued a decision that vacated
most of the gainful employment regulations
 The department pursued a reversal of this ruling – it
was denied.
 A Bi-partisan groups calls for Reauthorization to
include GE regs but it should be for all sectors.
Gainful Employment Time Line
 On September 3, 2013 the department released Draft
Rules for the negotiators
 On September 9, 2013 the negotiators start the process.
Summary of Negotiated Rule
Making Process
Summary of Negotiated Rule
Making Process
 Guideline for negotiations are published
 Negotiations begin
 Generally 3 sets of 3 days (this time 2 sets of 3 days)
 Negotiators are chosen by the department from each sector
 There are federal negotiators as well
 If everyone (school sectors and FSA) agree, the proposed
rule will be published as agreed upon.
 If agreement is not reached, then the department can
publish proposed rules as they please
Summary of Negotiated Rule
Making Process
 The department publishes proposed rules
 There is a comment period – usually 60 days
 In the final rules package the department must
respond to all comments and questions received
during the comment period. READ THE PREAMBLE
 Final rules that are published before November 1st can
go into effect July 1st.
 If not published by November 1st then regs CANNOT
GO INTO EFFECT until the following July 1st.
Schools/Programs Impacted by the Current
Gainful Employment regulations
 All programs at for-profit schools
 Any program at a public or not-for-profit school
that is not
-
A program leading to degree
A transfer program of at least two years
Gainful Employment Annual Submission
VACATED
 Institutions must annually submit information on
students enrolled in programs leading to gainful
employment in a recognized occupation
Gainful Employment Disclosures
NOT VACATED
• Disclosures must be in promotional materials
made available to prospective students AND on its
website
• Program home page website
- Information simple and meaningful
- Contain direct link to any other webpage with general,
academic or admission information about the program
- Information in an open format that can be retrieved,
downloaded, indexed, and searched
Gainful Employment Disclosures
NOT VACATED
 Institution is required to disclose:
1.) Occupations (by name and SOC codes) its programs
prepare students to enter

Links to occupational profiles on O*NET
2.) Costs – tuition/fees, room/board and books and
supplies

May include additional costs
Gainful Employment Disclosures
NOT VACATED
 Institution is required to disclose:
3.) On-time completion rate for each program
4.) Placement rate for students completing each program
Gainful Employment Disclosures
NOT VACATED
 Institution is required to disclose:
5.) Median loan debt incurred by students as provided
by ED

Identified separately as Title IV loan debt,
private educational loan debt and debt from
institutional finance plans
 Institutional finance plan - amount
student obligated to pay at completion of
program
Gainful Employment New Programs
VACATED
 Institutions must notify ED at least 90 days before
the first day of class when it intends to offer a new
educational program that leads to gainful
employment in a recognized occupation
Metric/Performance Tests
VACATED
 Repayment Rate - is a percentage of the Title IV loan
amounts that a GE Program’s former students are
repaying
 Debt to Income Ratio - For the GE Program’s
completers, the median educational loan
annual repayment amount as a percentage of
the average (mean or median) completers’
income
 Two measures
o Annual and Discretionary
What’s in the Draft Regs?
What’s in the Draft Regs?
 The proposed draft rule reflects significant changes
from the final rule that was published in 2011, and then
largely vacated in a federal District Court ruling in
2012.
 Would seem to expand the rule’s scope and put
many more programs at risk
What’s in the Draft Regs?
 Elimination of one of three debt measures (the
Loan Repayment Rate);
 Establishment of new thresholds for the two
surviving rates (the Debt to Earnings Rates)
based on a measurement period that could be as
short as two years (rather than the three-year
minimum under the prior rule);
What’s in the Draft Regs?
 Creation of separate non-contiguous scores for
passing and failing, with a new “zone” status for
educational programs that neither pass nor fail;
 Change in the definition of covered programs by
reducing the minimum number of completers.
This change alone is calculated to roughly double
the number of educational programs subject to
this rule,
What’s in the Draft Regs?
 Creation of a new definition of covered students to
exclude all data for students who did not receive Title
IV federal student aid funding in the form of a grant or
loan, while continuing to include private and
institutional loan data for students who did receive a
Title IV loan or grant;
 Establishment of new standards for passing and failing
scores that, according to ED’s estimate, would render
approximately 9% of all programs ineligible and
approximately 12% of all programs in “the zone;”
What’s in the Draft Regs?
 For those schools that fail the Debt to Earnings Rates
in a single year, imposition of enrollment caps.
 The draft rule suggests that ED intends to put the GE
Rule into effect immediately after the expected July 1,
2015 effective date.
What’s in the Draft Regs?
 ED would require institutions to submit their first data
reports by July 31, 2015. The first set of GE rates would be
published in final form for the 2014-15 award year, based on
student information for the 2010-11 and 2011-12 award years.
These rates would incorporate “the most currently
available” earnings data for these students.
 While the first rates might not be published for several
years, most of the data used to calculate those rates,
especially the data on educational debt, seems to be fixed
at this time.
What’s in the Draft Regs?
 The draft rule suggests that ED intends to put the GE
Rule into effect immediately after the expected July 1,
2015 effective date.
 ED would require institutions to submit their first data
reports by July 31, 2015. The first set of GE rates would
be published in final form for the 2014-15 award year,
based on student information for the 2010-11 and 201112 award years.
What’s in the Draft Regs?
 If ED is able to follow the timeline as suggested in the
proposed draft rule, it is quite possible that the first set
of GE rates would be issued in draft form in early
calendar year 2016 and published in final form later in
that year.
 As a result, institutions with failing programs would be
subject to enrollment caps and be required to issue
student warnings in late 2016
What’s in the Draft Regs?
 Based on the shorter measurement period, could be
subject to loss of eligibility in 2017.
 These time frames are of course, at this point, subject
to many variables – certainly including what will
actually happen in the pending Neg Reg process.
What’s in the Draft Regs?
Loss of Eligibility, Mandatory Conditions
and the Zone
 Rather than a single standard to measure passing and
failing, as under the prior rule, the new draft rule
would set one standard for passing and another for
failing, with a “zone” status for programs that are in
between.
What’s in the Draft Regs?
Loss of Eligibility
 While the prior rule required a program to fail the debt
measures in three out of four years, the draft GE Rule
would shorten this period to two out of three years.
 A program that fails both of the D/E Rates for two
consecutive years or two out of any three consecutive
years would be found ineligible for continued Title IV
funding, and that period of ineligibility would extend
for at least three years.
What’s in the Draft Regs?
Loss of Eligibility
 Extended status in the zone can also lead to a loss of
eligibility. If a program is in the zone for four
consecutive years, because it cannot reach a passing
rate under either the Debt to Annual Earnings or Debt
to Discretionary Earnings Rates in any of those four
years, it too would lose eligibility.
What’s in the Draft Regs?
Mandatory Conditions for “Failing Programs”
 If a program fails both of the D/E Rates in a single year
(due to a Debt to Annual Earning Rate above 12% and a
Debt to Discretionary Earnings Rate above 30%), the
institution would be required to meet two difficult
conditions.
What’s in the Draft Regs?
Mandatory Conditions for “Failing Programs”
 First, it would have to provide current and prospective students
with written warnings, in language prescribed by the Secretary,
that the students may not be able to obtain Title IV funding to
complete their program at the institution and describing the
options available to the student, including transferring to
another program or another institution.
 Second, such a program would be subject to an immediate
enrollment cap that would limit enrollments of Title IV students
in the next 12 months to the population of such students in the
prior 12 months. Note, however, that this would not cap nonTitle IV enrollments.
What’s in the Draft Regs?
The Zone
 The draft rule would also create a “zone” for programs that
are neither passing nor failing.
 A program that does not pass either of the D/E Rates but has
a Debt to Annual Earnings Rate between 8% and 12% or a
Debt to Discretionary Earnings Rate between 20% and 30%
would fall into the zone.
 This status would not trigger any conditions such as warnings
or enrollment caps.
 The duration of the zone status would be limited,
What’s in the Draft Regs?
Other Provisions
 Annual Data Reporting: Institutions would be
obligated to file annual reports with detailed
information about their students enrolled in GE
programs, with the first such report due on July 31,
2015.
 Disclosures: The draft rule proposes expanded
disclosure requirements,.
What’s in the Draft Regs?
Other Provisions
 Completion Rates: ED indicates that it will calculate, and
require disclosure of, two completion rates – the first for
students who complete a program within 100% of normal
time and the second for students who complete within
150% of normal time.
 New Programs: The Department did not provide any
proposed draft language on the procedures for institutions
to apply to have new gainful employment programs –
HOWEVER….
What are the Negotiators
Talking About?
 Proprietary sector negotiators are pushing for more
sensible measures while non-proprietary sector
members are pushing for more stringent measures
 One negotiator wants schools to submit letters of
credit to the department when in the zone and/or
failing.
 One negotiator wants to empower the department to
decide what programs a college can continue to run
based on economic settings – even if the program is
not failing.
What are the Negotiators
Talking About?
 Breaking out into separate committees:
 Repayment rates--led by Jack Warner from the South Dakota





Board of Regents
Placement rates--led by Della Justice from the Kentucky Attorney
General's office
Transition periods/opportunities to improve--led by Belle
Wheelan from SACS and Marc Jerome from Monroe College
Program level cohort default rates--led by Brian Jones from
Strayer University
Upfront requirements--led by Barmak Nassirian from AASCU
Student consequences--led by Eileen Connor from the New York
Legal Assistance Group
What are the Negotiators
Talking About?
Next 3 day session
NEXT WEEK!!
Howard Leslie
Vice President, Financial Aid
[email protected]
212.933.6700 Ext. 1205

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