Gainful Employment Debt Measures for FY 2011

To qualify for Title IV assistance, undergraduate and graduate programs of study for which a public or private nonprofit institution awards a credential other than a degree must prepare students for gainful employment in a recognized occupation. Virtually all programs, degree or nondegree, at for-profit institutions are subject to the gainful employment requirement.

Rules that attempt to define and measure gainful employment (GE) become effective July 1, 2012. The rules use two sets of debt measures as a proxy for measuring whether the program’s graduates have obtained gainful employment:

  • A loan repayment rate for all students who borrowed to attend the program; and
  • Two debt-to-earnings ratios using the average loan repayment amount and the higher of the mean or median annual earnings for program completers as calculated by the Social Security Administration (SSA)

Reporting requirements for the GE debt measures became effective July 1, 2011; schools had to report student-level data for each of their educational programs subject to GE rules last fall (summarized in Dear Colleague Letter GEN-11-10). The Department of Education (ED) uses that data to calculate the debt measures for a school’s GE programs. The measures are calculated for individual programs unless more than one program at the school prepares students for employment in the same CIP code fields and is on the same educational level. (A GE program is identified by a combination of the institution’s six-digit OPEID number, the program’s six-digit Classification of Instructional Program (CIP) code fields and is on the same educational level. (A GE program is identified by a combination of the institution’s six-digit OPEID number, the program’s six-digit CIP code as assigned by the institution, and credential level. Programs with identical identifiers would be combined for one set of debt measures.)

On March 21, 2012, ED announced its intention to release FY 2011 GE debt measures under the new rules sometime this spring. Although these measures will be made public, they will not result in punitive action against schools. The FY 2011 calculations are deemed to be for informational purposes only, as a dry run of the metrics and to give institutions some advance warning about which of their programs might be in danger in future years.

To receive the FY 2011 GE notification packages, institutions must sign-up on the SAIG Enrollment website by April 27, 2012. Institutions that do not sign up to receive the GE notification package by April 27 will be able to view their GE Informational Rates and request their GE back-up data by accessing the NSLDS Professional Access website; however, the GE rate letters will not be available on the NSLDS Professional Access website. As a result, institutions that do not sign up for the GE notification package will not have access to the additional descriptive information about their rates that will be provided in the GE rate letters. Signing up by April 27 also ensures that the packages are sent to the proper recipient.

Because the FY 2011 rates are for informational purposes only, some of the procedural elements that will apply to future years’ rates will not be used for the FY 2011 informational rates. For example, in future years schools will be given an opportunity to review and correct the list of students whose data is used to calculate the debt-to-earnings ratios before draft ratios are released. Post-draft correction processes will also be available for both sets of debt measures. Although schools will be able to see the back-up data for the FY 2011 informational rates, including the lists of students whose information has been used, there will be no formal GE corrections process and the informational rates will not be rerun based on revised data.

It is important to note, however, that because data from multiple years underlie the calculations, half of the data used to calculate the FY 2011 informational rates will also be used to calculate the FY 2012 rates, which will eventually impact program eligibility. Thus, schools should review the FY 2011 back-up data and make corrections, if any are needed, through NSLDS. ED plans to offer a webinar explaining the back-up data; a forthcoming announcement will provide further information on the webinar.

Unlike cohort default rates, not all of the underlying data can be confirmed or challenged by the school. For example, ED obtains mean and median annual earnings information from the SSA; SSA calculates those figures using earnings information for the list of program completers provided by ED. Because of privacy laws, neither ED nor the school can see that data on an individual basis. Thus, the process for correcting errors used for FY 2012 and later rates is limited to ensuring that the institution provided an accurate list of program completers, that the list of program completers was accurate when it was provided to SSA, and that the calculation by SSA was made for those individuals.

In addition to the final regulations and explanatory preamble published on June 13, 2011, the following resources from ED's Gainful Employment Information webcenter may be helpful:

 

Publication Date: 4/17/2012

View Desktop Version