The Department of Education (ED) on Monday released the final gainful employment debt-to-earnings rates data, which are calculated for each program subject to the regulations, and showed that more than 800 programs failed the accountability standards. The rates are intended to measure the ability of program completers to reasonably repay their student loan debt.
The new data comes nearly two months after ED released earnings data that appeared to show that graduates of public career training programs out-earned those who attended for-profit programs, both overall and within the same field. The new data released on Monday showed that more than 800 programs failed the debt-to-earnings standards, with annual loan payments for a typical graduate exceeding 30 percent of his or her discretionary income, and greater than 12 percent of his or her total earnings. Nearly all of those programs (98 percent) were offered by for-profit institutions, ED said.
“When a student makes a personal and financial decision to attend college, the student must feel confident that it is a sound investment in his or her future, not a liability that will further defer his or her dreams,” said Education Secretary John B. King Jr., in a statement “These rates shed a bright light on which career training programs are most likely to prepare students for repaying their student loan debt, and which programs might leave them worse off than when they started.”
Another 1,239 programs fell into the “zone” category, with annual loan payments between 20 and 30 percent of discretionary income, or between 8 and 12 percent of total earnings. Programs that fail in any two of three consecutive years, or are in the “zone” for four consecutive years become ineligible for federal student aid.
ED used the data to argue that community colleges serve as a better option for students, compared with similar programs at for-profit colleges.
“As these new data depict, when student debt is taken into account, community colleges—where students borrow at lower rates and lower dollar amounts—perform particularly well when matched up against comparable for-profit programs,” ED said.
ED also suggested that community colleges may be a better option for students when it released the gainful employment earnings data in November.
“In the career training program marketplace, accurate and straightforward information about costs and benefits helps students make well-informed decisions about where to invest their time and resources,” said Under Secretary of Education Ted Mitchell, in a statement. “These data will also be important for institutions as they seek to improve their programs to better serve students and to deliver on the promises they make.”
Steve Gunderson, president and CEO of Career Education Colleges and Universities (formerly the Association of Private Sector Colleges and Universities, or APSCU), said in a statement that ED’s release of the data was “disappointing and disrespectful.” Schools have 14 days after notification of the final rate to indicate their intention to file an appeal and 60 days to actually file the appeal, which could result in an alternate D/E rate calculation as stipulated in regulation. Gunderson said that while ED “has every right” to share the data, it should have waited until the period for institutions to file appeals had closed before publicly disclosing the data.
“The Department’s decision to publish a list of schools failing their initial calculations before the process is complete makes clear this is all about political motivations and harming institutions, and has nothing to do with expanding higher education access and opportunity, or creating sound public policy,” Gunderson said. “We had hoped this Department would comply with the timelines and procedures it had established. Unfortunately we should not have expected even this minimum level of decency from them.”
ED said in an Electronic Announcement last week that if an institution challenged any underlying loan data used to calculate the rates during a 45-day challenge period, the final rates would reflect any approved changes.
Publication Date: 1/9/2017