Negotiators Discuss the Scope of Gainful Employment Regulations as Deliberations Begin

By Allie Bidwell, Communications Staff

Higher education stakeholders gathered in Washington, DC on Monday to begin deliberations to renegotiate federal gainful employment (GE) regulations, just weeks after negotiated rulemaking, or "neg reg" began for the borrower defense rules. Meanwhile, House Republicans are attempting to prohibit the Education Secretary from implementing any regulations related to gainful employment through their proposed legislation to reauthorize the Higher Education Act (HEA).

Negotiated rulemaking is the process by which the federal government writes regulations by bringing together representatives from different interested parties. In this case, representatives from different sectors of higher education – four- and two-year institutions from the private nonprofit, public, and proprietary sectors, for example – as well as consumer advocates, student representatives, state attorneys general, and others came together for the first of four days of negotiations. After this first session, the committee will gather again for two more four-day sessions to discuss, revise, and ideally come to a consensus on regulations.

The GE regulations were intended to ensure students in non-degree-granting programs were well-served and could find work in their fields of study which could support the level of debt they incurred in earning their credentials. The rule made those programs subject to certain metrics – including student debt-to-income ratios and default rates – that ED said were intended to measure how well the schools serve students. Since the Obama administration first attempted to implement GE regulations in 2010, they have been highly criticized. In particular, some said they unfairly targeted for-profit institutions and that any GE regulations should be applied to all institutions. Others worried that the regulations were overly burdensome for institutions.

In fact, Education Secretary Betsy DeVos in June announced the department would halt the implementation of the 2014 GE regulations, which went into effect July 1, 2015. Certain disclosure requirements under the rule were set to take effect July 1, 2017. In a June press release, ED said that as it worked to implement the regulation, "it became clear that, as written, it is overly burdensome and confusing for institutions of higher education."

As in the first day of negotiations for borrower defense regulations, the committee members on Monday spent a significant amount of time debating whether to allow audience members to livestream the discussions. Consumer advocates argued that the sessions are open to the public, those not in the District or unable to attend still have the right to see the negotiations happen in real time. However, other members of the committee – primarily those representing for-profit institutions – expressed some concern at the idea of livestreaming the discussions. Doing so, they said, could push negotiators to "grand stand" for their constituents, and lead to combative commentary on social media.

In the end, however, Department of Education (ED) officials reluctantly agreed to allow livestreaming for the time being. During last month’s borrower defense negotiations, ED only allowed for audio from the sessions to be recorded and released at another date. One negotiator – Whitney Barkley-Denney of the Center for Responsible Lending – noted that the recordings from the borrower defense negotiations still have not been released, although ED officials said they would be made available within two weeks. Some negotiators expressed concern that the public would not have adequate time to fully review and analyze the audio recordings before the next neg reg sessions.

Before moving on to discussion on the main issues related to the regulations, the committee voted to add two members – Thelma Ross and John Pierre – to represent minority-serving institutions.

Following those votes, the negotiators moved on to the first of several "issue papers" containing the major questions to be addressed during their deliberations. First, the committee members discussed the scope and purpose of the regulations – whether any GE regulation should apply to all institutions, to just the for-profit sector or to non-degree-granting programs.

Barkley-Denney questioned whether ED has the statutory authority to apply a gainful employment rule to all institutions. ED’s position was that the accountability framework – including sanctions – is applicable only to GE programs. However, disclosures could be separate from sanctions and could be required for all institutions. ED officials then asked to set aside statutory considerations and discuss generally whether GE rules should apply to all institutions.

Christopher Madaio, Maryland’s assistant attorney general, asked what statutory basis would give ED the authority to require disclosures from non-gainful employment programs and that moving in that direction without a statutory basis would set the rules up for a legal challenge. Looking at the GE section of the HEA, he said, there is a distinction among institutions.

Marc Jerome, president of Monroe College, said the group should think in terms of students, not institutions. Once new data comes out, he said, it will inform the conversation because it may show that other non-gainful employment programs would fail the accountability metrics laid out in the current regulations.

The committee also discussed whether to keep, revise, or eliminate debt-to-earnings rates within the regulations. In the first iteration of GE regulations, a federal judge in 2012 vacated a core element of the regulations – the debt measures, which the judge said were "arbitrary and capricious." When the rules were re-written with new measures, they were again challenged in court. But the courts shot down the lawsuit in time for the July 1, 2015 effective date.

As in all neg reg proceedings, the first sessions are intended for federal officials to gather information from the stakeholders present. ED officials would then take that information back and come to the second session – scheduled for mid-February for gainful employment – with a draft of the regulations that negotiators would discuss in more detail and revise through further negotiations.


Publication Date: 12/5/2017

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