2023 Gainful Employment
Overview
On May 26, 2021, the Department of Education (ED) announced its intent to establish negotiated rulemaking committees covering a wide swath of topics, one of which was Gainful Employment. Public hearings were held on June 21, 23, and 24, and ED on December 8, 2021 issued a solicitation for negotiator nominations and a schedule for negotiations that will include Gainful Employment among other topics related to Institutional and Programmatic Eligibility. Negotiations were held virtually over three sessions in 2022: January 18-21, February 14-18, and March 14-18. Negotiators failed to reach consensus on gainful employment.
On May 19, 2023, the Department of Education issued draft rules on gainful employment for public comment. Similar to the 2014 GE rules, the proposed rule would:
- Use an annual and a discretionary debt-to-earnings (D/E) ratio as metrics to assess a program’s eligibility to participate in the Title IV programs
- Set the discretionary D/E ratio passage threshold at ≤ 20% and the annual D/E ratio at ≤ 8%
- Trigger a program’s automatic loss of Title IV eligibility for three years if it failed the metrics in 2 of 3 consecutive years
- Use a 2-year cohort period, or a 4-year cohort for programs with fewer than 30 completers in the 2-year cohort
Several significant changes were introduced from prior iterations of GE regulations, including:
- A new gainful employment metric, the earnings premium, which compares median program completer earnings to median earnings of high school graduates in the state
- Use of median program completers’ earnings rather than the greater of the mean or median
- Use of 6-digit CIP code for distinguishing programs
- Students enrolled in prison education programs (PEP) or comprehensive transition and postsecondary programs (CTP) are excluded from D/E and EP rate calculations
- Students whose loans are in a military-related deferment would now be included in a program’s D/E ratios
- Capping loan debt for D/E ratios at net direct costs (tuition, fees, books, equipment, and supplies less institutional grants and scholarships)
- Source of earnings data can include the Internal Revenue Service (IRS), Social Security Administration (SSA), Department of Health and Human Services (HHS), and the Census Bureau (ED indicates a preference to use IRS data)
- No alternate earnings appeal
The proposed rule abandoned several of ED’s proposals introduced during negotiations, including:
- A small programs debt-to-earnings rate, which would have combined all of an institution’s programs with fewer than 30 completers to calculate a single small programs debt-to-earnings rate
- Including parent PLUS debt in the debt portion of the debt-to-earnings calculation
Also new and separate, but related, to the proposed gainful employment rules is a financial value transparency framework which would apply GE metrics and reporting requirements to non-GE programs. ED would calculate gainful employment metrics (the debt-to-earnings ratio and the earnings premium) for non-GE programs, make that information publicly available, and require students at non-GE programs to acknowledge they were aware their program is a “high debt burden” program. Unlike for GE programs, however, a non-GE program’s failure of the GE metrics would not result in automatic loss of Title IV eligibility.
Final rules, released in October 2023, retained the same GE metrics as the proposed rule. It adds exceptions to the accountability provisions of the rule for institutions in U.S. territories and freely associated states and for institutions with no group of programs that share the same four-digit CIP code with 30 or more completers in total over the most recent four award years. Under the final financial value transparency regulations, ED excludes undergraduate degree-granting programs from collecting student acknowledgments when those programs fail the debt-to-earnings metric.
NASFAA Public Comments
- NASFAA Submits Comments to ED on Proposed Institutional and Programmatic Eligibility Regulations
- NASFAA Comments on Proposed Low-Financial-Value Programs List
Department of Education Resources
- Final Rule: Gainful Employment and Financial Value Transparency
- Draft Rule: Financial Value Transparency and Gainful Employment (GE), Financial Responsibility, Administrative Capability, Certification Procedures, Ability to Benefit (ATB)
- Request for Information Regarding Public Transparency for Low-Financial-Value Postsecondary Programs
- ED 2021–22 Negotiated Rulemaking page: Issue papers, negotiator proposals, negotiation recordings & transcripts
- ED Announces Dates for Negotiated Rulemaking Public Hearings
- ED Announces Intent to Establish Negotiated Rulemaking Committee
NASFAA Coverage of the 2021-22 Gainful Employment process
- Deep Dive: ED Releases Unofficial Final Rule on Gainful Employment and Financial Value Transparency Framework
- Deep Dive: ED’s Proposed Financial Value Transparency and Gainful Employment Regulations
- OTC AskRegs Experts: Deep Dive on Proposed GE Regs and Removal of Housing Question on FAFSA
- Off The Cuff GE negotiated rulemaking update
- Neg Reg Session 1, Day 2 GE Discussions Summary
- Neg Reg Session 2, Day 2 GE Discussions Summary
- Neg Reg Session 2, Day 3 GE Discussions Summary
- Neg Reg Session 3, Day 2 GE Discussions Summary
- Neg Reg Session 3, Day 2 GE Discussions Summary
- Institutional and Programmatic Eligibility Neg Reg Committee Summary Article
- As Biden Administration Takes Hold, Some Speculate on the Return of Gainful Employment
- Letter Shows Biden Administration Will Not Reverse DeVos’ Gainful Employment Repeal
- Negotiated Rulemaking Hearings Wrap Up As ED Looks to Tackle Ambitious Regulatory Agenda
Other Resources