Gainful Employment Neg Reg Day 3: Sanctions, Earnings Appeals, Reporting Requirements

By Allie Bidwell, Communications Staff

Negotiators made strides in tackling key issues in rewriting a federal gainful employment (GE) regulation on Wednesday, discussing the value of a process to develop sanctions, earnings appeals, and reporting requirements for institutions.

After discussing the scope and purpose of a GE rule, as well as the merits and drawbacks of keeping in place the current debt-to-earnings metric, negotiators moved on to debating whether the Department of Education (ED) should retain or amend regulations providing for sanctions if a program fails the debt-to-earnings metric. Currently, programs that fail in any two of three consecutive years, or are in the "zone" for four consecutive years would become ineligible to receive Title IV funds.

Some negotiators were concerned with keeping the current sanctions without also changing the debt-to-earnings measure, which they said is flawed and would lead to sanctions being imposed incorrectly on high-quality institutions while letting off poor-performing institutions.

"If the metric accurately identified poorly-performing programs, I would be more comfortable with the sanctions," said Marc Jerome, president of Monroe College.

Likewise, Jessica Barry, president of the School of Advertising Art, said the debt-to-earnings metrics "are imperfect, they’re failing" and should not be used as the single indicator of a program’s success. Rather than doing away with the sanctions entirely, she said, they could be amended to allow for schools to make improvements to their programs before losing Title IV eligibility. David Silverman, chief financial officer and director of business affairs at the American Musical and Dramatic Academy, said that, if the sanctions are retained, the new regulations should include a broader appeals process than the current alternate earnings appeal, where schools with unique circumstances can plead their cases to ED.

Many other negotiators said they were in favor of keeping the current sanctions, but would be open to discussing amending them later on. Laura Metune, vice chancellor of external affairs for the California Community Colleges system, said it’s also important to balance the burden of reporting with the public interest and student benefit.

However, student representative Chris Gannon, vice president of the United States Student Association, said that disclosures and sanctions are both necessary to protect students, and that taking them away would put the burden on students to protect themselves.

Stemming from that discussion, ED officials asked the negotiators whether disclosures would be enough on their own without imposing sanctions on failing programs.

Whitney Barkley-Denney of the Center for Responsible Lending, made the argument that "disclosures are just not enough" and that students are inherently at a disadvantage when receiving information from another entity.

"The sanctions piece is really important when it comes to protecting consumers," she said.

Several committee members also took issue with the current process in place for appealing earnings data. Many negotiators again said that the earnings data pulled from the Social Security Administration can be inaccurate because some graduates – particularly those working in fields where they would receive cash tips – may under-report their incomes. Some negotiators pushed back on that notion, however, and questioned how prevalent the practice is among graduates. Gannon also noted that not reporting tips as income violates federal law, and said "it’s insulting" to assume that it’s a common practice for students to break the law.

Ideally, some negotiators said, the process for collecting earnings data should be amended to include other sources and paint a more accurate picture.

 Negotiators also discussed reporting requirements for institutions and whether those could be adjusted to relieve some administrative burden on schools. ED proposed calculating median debt administratively, using data already reported by schools to the National Student Loan Data System (NSLDS) via the Common Origination and Disbursement (COD) system. While negotiators were supportive of the concept and the associated relief of institutional burden, ED acknowledged that the tradeoff of pushing GE reporting from schools to ED would be the loss of data that only schools can provide — private and institutional debt, and tuition, fees, books, and supplies. Negotiators were split on their willingness to accept that tradeoff. Jordan Matsudaira, assistant professor at Cornell University and nonresident fellow at the Urban Institute, cited the possibility that institutions would be incentivized to push students toward private versus federal loans if private loans were no longer factored into the accountability metrics.

Currently, programs must certify that they are approved by a recognized accrediting agency, and that it satisfies educational prerequisites for licensure or certification for a particular occupation, among other requirements. There was general agreement that these certification requirements are appropriate, but some argued that they can present challenges for institutions. Challenges cited included the fact that individuals, not programs, are approved by licensure boards and, as such, institutions can have difficulty confirming that their programs meet licensure requirements.

On Thursday, the fourth and final day of the first GE negotiated rulemaking session, the committee members will discuss program information disclosures and address questions regarding what information should be included, how the data should be collected, and how the disclosures should be provided to prospective and enrolled students.


Publication Date: 12/7/2017

Peter G | 12/7/2017 6:38:18 PM

"cited the possibility that institutions would be incentivized to push students toward private versus federal loans if private loans were no longer factored into the accountability metrics."

One approach to deal with that is to waive the requirement if a program has less than x% of students in the program known by the institution to utilize such sources.

That would defeat the incentive to move students in that direction, while meaning schools where that number is 1% don't have to go scrounging for data that is barely a blip. If the median is going to be 0 regardless of what the individual numbers are, why bother?

You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.
View Desktop Version