Neg Reg Day 2: Negotiators Debate Implications of Disclosures, Removing Sanctions

By Joelle Fredman, Communications Staff

After working through three issue papers Monday related to expanding federal gainful employment (GE) regulations to include all programs and standardizing amortization rates, higher education stakeholders spent the majority of the second day of this negotiated rulemaking session debating the Department of Education's (ED) proposed language for disclosures and plan to stop revoking programs’ Title IV eligibility.   

At the conclusion of yesterday’s session, negotiators debated the merits and drawbacks of ED’s proposal to reduce the number of completers in a program’s cohort for debt-to-earnings ratios to be calculated from 30 to 10. Their arguments focused on concerns that the sample size is too small to produce valuable data and the potential for the violation of students’ privacy. ED representative Sara Hay explained Tuesday that presenting the debt-to-earnings of even a small number of students is not a privacy concern because rates are based on median values, not the individual results of each student, and that changing the minimum number of completers from 30 to 10 captures almost twice as many programs, allowing students more options for comparison.

Before tackling the proposal to eliminate sanctions, negotiators took issue with part of ED’s proposed language for program disclosures, specifically the requirement to include a disclaimer after disclosing a “low-performing” status that reads: “Please note, however, that this program measure could be affected if a significant number of students who completed our program graduates did not report all of their income, such as tip income, or were self-employed and had business expenses that reduced the earnings being reported.” Federal negotiator Greg Martin said that ED thought to add this language to compensate for its proposal to strike the appeals process.  

While some negotiators did support instituting this portion of the disclosure, many argued that it should not be a widespread requirement because not all programs lead to occupations where tips or self-employment are common. Sandy Sarge, representing chief financial officers and business officers, suggested that programs be able to opt in to adding this portion to their disclosure as they see fit, while assistant Attorney General Christopher Madaio suggested altering the proposal to establish that programs must prove that this part of the disclosure applies to their students before including it.

Negotiators also expressed concerns about ED’s proposal to strike the requirement for programs to notify prospective students about their statuses of ”low-performing” prior to enrollment, which would be in addition to their first contact with the student. Martin explained that ED proposed to do this to reduce redundancy, though Kelly Morrissey, director of financial aid at Mount Wachusett Community College, argued that information that may determine a student's ability to repay his or her loans is valuable enough to be repeated.   

Continuing the discussion on disclosures, the group debated the definition of “first contact” and when the optimal time is to notify prospective students of a program’s status. And while many negotiators agreed that waiting until a student inquires about financial aid and is seriously considering enrolling in a program may be too late, others raised the concern that it would be difficult to notify thousands of prospective students who may not even be considering certain programs, especially at large, public universities in the event that GE regulations are expanded to all educational programs as ED proposed.

The negotiators did agree, however, to restore language ED had stricken in their proposed regulations related to the timing of special warnings (or, in the language of the proposed rules, “notifications,”) required to be sent to prospective students. The language specifies that an institution may not “enroll, register, or enter into a financial commitment with the prospective student with respect to the program earlier than three business days after the institution first provides the student warning to the prospective student or if more than 30 days have passed from the date the institution first provided the student warning to the prospective student, three business days after the institution provides another warning as required by this paragraph.”

To kick off the discussion on ED’s proposal to remove sanctions, Martin opened the floor to suggestions on how to flag programs that fail GE metrics without revoking their Title IV eligibility.

Sarge proposed that ED view the metrics as benchmarks and if a program falls below the benchmark then it is required to improve its rates, to which Jennifer Blum, representing general counsels and attorneys, added that there should be a time limit in which a program must show it has taken steps to improve.

Mark McKenzie and Roberts Jones, representing accrediting agencies and business and industry respectively, suggested that ED turn to accrediting agencies to flag problematic programs, given that there is an existing framework for them to assess compliance issues, though Laura Metune, representing two-year public institutions, said she would be cautious in considering accreditor oversight sufficient to address compliance issues.

On the other hand, some negotiators suggested that ED revive the sanctions for GE programs, arguing that disclosures will not influence students in their decisions to attend flagged programs, nor will it inspire programs to improve.

“A lot of schools will be very responsive to bad ratings but that's not going to influence the institutions that don't care about it,” Johnson Tyler, representing for legal assistance organizations for students, said. “Sanctions will.”

Many negotiators continued to express their frustration with debating isolated proposals in the regulations without coming to a consensus on items in earlier issue papers. For example, negotiators took issue with attempting to debate ED’s proposal to remove sanctions without knowing where the group stood on expanding GE regulations to apply to all educational programs, as outlined in the first paper. In order to address this issue, ED invited negotiators to place written comments on different aspects of the regulation on a wall, which it said it will consider in further sessions.


Publication Date: 2/7/2018

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