NASFAA Seeks Member Comment on ED Proposal to Rescind Gainful Employment Regulations

By Jill Desjean, Policy and Federal Relations Staff

Today the Department of Education (ED) published its Notice of Proposed Rulemaking (NPRM) for the Gainful Employment (GE) regulations, which were negotiated over the winter of 2017 and 2018.

The proposed rules rescind the GE regulations, consistent with ED’s position during negotiated rulemaking that it was not open to a bifurcated rule that limited sanctions to only certain postsecondary programs and, yet, that it could not impose GE regulations on non-GE programs—leaving only the option of removing the GE rules entirely.

ED’s rationale behind scrapping the GE regulations includes concerns about the validity of the debt-to-earnings (D/E) ratio based on its own analysis of the first round of published D/E rates from 2017. It cites the prolonged length of the Great Recession, as well as the impact of small interest rate changes on D/E rates—from data provided by negotiators at the 2017-18 negotiating rulemaking sessions—as examples of how D/E rates can fluctuate due to circumstances beyond an institution’s control and, as such, cannot be relied upon in an accountability framework. Another concern with the D/E rate stems from the selection of the 8 percent D/E rate threshold in creating the 2011 and 2014 regulations. The 8 percent threshold is based on a mortgage eligibility standard, and comes from a 2006 College Board paper. While minimizing the importance of an acknowledgement in that paper that the 8 percent standard “has no particular merit or justification” during the last two rounds of rulemaking, ED now concludes that this detail is significant enough to call into question the use of the 8 percent threshold.

Other reasons ED cites behind discarding the GE regulations entirely include reducing the administrative burden of compliance with the GE reporting and disclosure regulations, acknowledging stakeholder feedback, as well as Executive Order 13777, which instructs agencies to reduce unnecessary burden on regulated entities. Finally, ED expressed concern with institutions’ methodologies in determining job placement rates, resulting in inaccurate data that could mislead potential students.

The removal of the GE rule also eliminates all GE-related sanctions, relying instead on a transparency framework that ED expects to inform students’ decisions about their enrollment choices. Program-level outcomes data (median earnings and debt data) would be published by ED for all Title IV-participating institutions on the College Scorecard, which currently only provides institution-level data, for undergraduate degrees only.

While the entire rule is open for public comment, ED noted in the NPRM that it is especially seeking comment on a proposal that certain institutional disclosures currently required under the GE regulations (such as graduation rates, withdrawal rates, and whether a program meets state licensure requirements) would instead become a condition of the institution’s Program Participation Agreement. ED proposes that these items be required only on program websites and in catalogs instead of via direct distribution to students as is required under GE rules. ED also seeks comment on whether institutions should be required to provide links to the College Scorecard from each of its program webpages.

ED estimates that rescinding the GE regulations will result in administrative expense savings for the Department of just under $25 million. It also estimates a $5.3 billion net cost to the federal government from increased spending under the Pell Grant and Direct Loan programs, primarily due to the removal of sanctions that, under current GE rules, were expected to reduce the number of Title IV-eligible institutions and, presumably, the number of Title IV aid recipients. This was based on the assumption that students attending institutions that lost eligibility under the GE sanctions would not enroll at another institution. ED noted in the NPRM that it welcomes comment on its net budget impact analysis.

Public comments are due Thursday, September 13. NASFAA is interested in your comments, especially as related to the following questions:

  1. Do you agree with the removal of eligibility sanctions in favor of disclosures for programmatic outcomes?

  2. Do you agree with the decision for ED to disclose programmatic outcomes data for all programs, and not just those leading to gainful employment?

  3. Does administrative reporting of outcomes data alleviate concerns about including all programs?

  4. Do you believe adding programmatic outcomes data to the College Scorecard will influence student enrollment behavior?

  5. Do you believe adding programmatic outcomes data to the College Scorecard will be useful for policymakers?

  6. How could programmatic outcomes be addressed in reauthorization?

Please submit your thoughts to [email protected] by Friday, August 31.


Publication Date: 8/14/2018

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