Negotiators Reconvene to Debate Expanding Gainful Employment, Striking Sanctions, Simplifying Amortization Period

By Joelle Fredman, Communications Staff

Higher education stakeholders reconvened in D.C. Monday to begin the second of three sessions of negotiated rulemaking to rewrite the federal regulations on gainful employment, jumping into debates on a host of new proposals the Department of Education (ED) released last week in a series of issue papers, such as expanding the regulation to all educational programs and removing sanctions.

In its first issue paper, ED proposed changing the scope of the regulations from programs that prepare students for gainful employment, to “all educational programs.” Under these proposed rules, all programs would now be subject to the debt-to-earnings ratio calculation, but without the threat of losing eligibility to participate in the Title IV student aid programs.

While federal negotiator Greg Martin said that ED’s rationale behind expanding the regulation to all programs is to allow students to make comparisons between a larger pool of programs, many negotiators expressed concern about a ‘one-size fits all’ approach.

Todd Jones, representing private, non-profit institutions, argued that comparing students’ debt-to-earnings ratios at programs that are intended to lead to specific professions to those with more open-ended career paths does not produce valuable data. Jones argued that, unlike those in certificate programs, students earning bachelor’s degrees do not always choose a career in their field of study and therefore debt-to-earning ratios will be extremely varied to the point that a student would be unable to make a conclusion as to the success of that program.

However Jeff Arthur, representing private, for-profit institutions, argued that because only 6 percent of students enrolled in higher education programs attend for-profit schools, expanding this regulation to include all schools is the only way to allow students to compare programs.

“There's a still real misunderstanding of students attending for-profit schools. If we truly want to inform students, we should do this across higher ed,” Arthur said.

Negotiators also spent a significant amount of time debating ED’s proposal to cease the practice of determining a program’s eligibility for Title IV funds based on the metric of debt-to-earnings ratios and instead require programs to disclose their status to students as “acceptable” and “low-performing” with no further sanctions. ED proposed to swap current statuses of “passing,” “zone,” and “failing” with these new terms.  

Whitney Barkley-Denney, senior policy counsel at the Center for Responsible Learning (CRL), said she was “shocked” by ED’s proposal to strike the sanctions because she left the first round of negotiations with an understanding that the majority of negotiators favored some sort of sanctions.

Martin explained that ED decided to remove the sanctions because it did not think one metric, the debt-to-earnings ratios, was enough to determine if a program should remain eligible for federal dollars, especially due to the new array of programs that will fall under these requirements if the regulation is expanded. Further, Martin said that ED has found that simply disclosing how a program is performing has had a big impact on students' decisions in the past.

Many negotiators expressed concern over how, without the ability to remove eligibility for federal funds, ED plans to sanction programs that mislead students by leaving them unprepared for the workforce. Martin assured negotiators that ED has other ways of reviewing schools and taking away their Title IV eligibility.

“The potential loss of Title IV eligibility is not the only tool the Department has,” Martin said. “I don’t believe it is true that absent these metrics being applied to program eligibility...we are bereft of any compliance enforcement.”

A majority of negotiators also argued that the new terms ED proposed may be misleading because labeling a program “low-performing” alludes to a program’s quality, while these metrics are only intended to point to the length of time it takes to pay off student debt. And while negotiators did not come to a consensus on what terms may be fit to replace the ones ED proposed, a handful of negotiators supported Arthur's suggestion to present students’ debt-to-earnings ratios on the College Scorecard, which hosts a variety of data on programs, in order to give students a more holistic perspective.

Some negotiators, however, rejected this idea because of outstanding issues with the College Scorecard, as well the need to revamp the resource if they wanted to feature program-level data, which it currently does not do.

One point of consensus was support for ED’s proposal to eliminate the practice of placing schools in ‘zones,’ a form of probation, if their debt-to-earnings ratios fell between passing and failing under the current regulations. Under the current regulation, for example, a program with debt-to-discretionary earnings rates between 20 percent to 30 percent or a debt-to-total earnings rate between 8 and 12 percent would become ineligible for federal funds if it continued as such, had failing rates, or had some combination of zone and failing rates for four consecutive years.

In the afternoon, negotiators debated the merits and drawbacks of ED’s proposal to institute a loan repayment amortization period of 15 years for calculating debt-to-earnings rates for all programs, which moved away from former language that proposed 10 years for a certificate program, 15 years for an undergraduate program, and 20 years for a doctoral or professional degree program. And while Martin attributed this new proposed regulation to an effort to simplify the rules, a majority of negotiators expressed concern about whether this would skew the data on debt-to-earnings ratios.

“By making it straightforward, you’re making it less straightforward,” Jennifer Blum, representing general counselors and attorneys, said. “Now is not the time to simplify the metric.”

Negotiators argued that it is unreasonable to assume the same amortization rate for a student in a one-year certificate program as a student in a professional degree program, because the former student should be able to pay off his or her loans in a shorter amount of time than the other student who will have accrued significantly more debt in the time it takes to earn their advanced degree.

Negotiators concluded the first day of this session with a debate around ED’s proposal to discontinue the practice of including students’ private and institutional loans, as well as tuition, fees and living expenses, from the data on students’ debt. This was a direct result of ED’s proposal to strike reporting requirements for programs and determine its metrics based on data from the Social Security Administration and the National Student Loan Data System (NSLDS). Martin said ED’s intentions are to relieve institutions of the burden of reporting.

While some negotiators supported this proposal, others argued that it would be a disservice to students to exclude this data, despite the amount of time and resources that would be to dedicated to collecting these figures.

Blum, for example, argued that living expenses should be excluded from the data because students will incur those costs no matter which program they decide to attend, though other negotiators disagreed and said that including the data will give students the option of deciding whether to attend school or not in the first place.

In the final moments of the session, negotiators debated whether ED’s proposal to lower the number of students in a program required to report these metrics from 30 to 10 had merit, and many around of the table argued that 10 students was far too small a sample size to produce usable data.   

The negotiated rulemaking process will pick back up tomorrow as higher education stakeholders continue to work through the remaining issue papers.


Publication Date: 2/6/2018

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