Neg Reg Preview: Committee Members Talk Gainful Employment, What to Expect From the Rulemaking Process

By Owen Daugherty, NASFAA Staff Reporter

As the Department of Education (ED) begins a negotiated rulemaking session this week with the committee tackling a number of topics, the Biden administration’s higher education priorities will begin to get ironed out and set the terms for how colleges and universities can operate when it comes to accessing federal funding.

ED’s Institutional and Programmatic Eligibility Committee is convening in an attempt to reach consensus on draft proposals from the department aimed at overhauling key higher education policies, with gainful employment sure to catch the attention of financial aid administrators and elicit a strong response.

The  rule, which was first proposed and finalized during President Barack Obama’s administration, has been ensnared in a more than 10-year saga that ended with the rule being rescinded by the department under former Education Secretary Betsy DeVos.

The rule as originally written was intended to ensure that higher education institutions improved their employment outcomes for students in non-degree-granting programs and programs offered by for-profit institutions. Those that underperformed were at risk of losing access to federal student aid.

NASFAA Creates Gainful Employment Web Center Ahead of Neg Reg Session

While the department did not include a drafted rule in the materials distributed to the committee in advance of this week’s session, the Biden administration has said it is seeking to reinstate the Obama-era gainful employment rule in some form.

David Peterson, the assistant vice provost for enrollment management at the University of Cincinnati and a NASFAA member, will serve as an alternate for the committee, representing financial aid administrators.

He was pleased to see the lack of a draft proposal from ED because to him it shows the department is approaching this important — and at-times complicated — topic with an open mind.

Instead, the department distributed a document that summarized the issue and posed several questions to the committee members. 

“I'm sure we will end up talking about the rules that were in place, but at the same time [the department] seems to be looking at this as a conversation,” he added. “They're wanting to have some questions answered.”

Aid administrators say the back-and-forth that occurred over the past few years regarding gainful employment made implementing the rule at aid offices difficult. Beyond keeping track of changes to the rule itself, adhering to the gainful employment rule was time- and labor-intensive for aid offices.

“It was a lot of manual effort trying to figure out for these programs, what are the specific costs and what is the number of students in the program,” said Marvin Smith, UCLA’s executive director of financial aid & scholarships and an FAAC®. “It was so labor intensive. And then you'd look at the numbers that enrolled in the programs and think, ‘Is this even worth the effort?’”

See NASFAA’s Coverage of the Negotiated Rulemaking Process for Gainful Employment

Smith, who will represent four-year public universities as a negotiator, said financial aid professionals are in support of enhanced accountability that the gainful employment rule is attempting to achieve, but a “one-size-fits-all” approach isn't likely to work considering the wide variety of aid offices and sectors of higher education the rule will apply to.

The gainful employment regulations have been a target of frequent criticism since their public roll out. Some have argued they unfairly target for-profit institutions and should be expanded to include all institutional programs, while others have lamented about the heavy burden of the reporting requirements and alternate earnings appeals.

In its issue paper on the topic, ED said its aim is to craft new gainful employment rules “that promote better labor market outcomes, create value for students’ investments in higher education, protect students from acquiring debts they cannot afford to repay, and safeguard the interests of taxpayers.”

Peterson said he looks forward to listening to other members so the committee can hopefully craft a thoughtful rule that improves on previous iterations.

“If you listen to all the different negotiators, there will be some themes that come out in that discussion. And when those themes start coming out to the forefront, that's going to hopefully shape what direction we're going to be taking when it comes to gainful employment,” Peterson said. 

Other notable topics the committee will discuss include standards of administrative capability, what happens when for-profit institutions convert to non-profits, and how schools can certify to participate in federal aid programs, among the seven issue papers slated to be discussed. 

The department is also looking to establish regulations regarding the so-called “90/10” rule, which currently prohibits for-profit institutions from collecting more than 90% of their revenue from federal student aid programs.

The American Rescue Plan (ARP) Act included major changes to the 90/10 rule — essentially closing the “loophole” by modifying the Higher Education Act to include “federal funds that are disbursed or delivered to or on behalf of a student to be used to attend such institution.” The ARP allowed for delayed implementation of the rule until 2023 to give the department time to craft details surrounding the policy, with input from negotiators shaping ED’s thinking on the issue.

Both Smith and Peterson said the issue of administrative capability also stood out to them and is in some ways tied to gainful employment, as it will largely set the terms for how aid offices comply with regulations.

But above all else, it appears the issue of gainful employment will garner the most attention and focus.

“I don't think you can be opposed to accountability,” Smith said. “The devil’s in the details and now we are going to get into the details on what are reasonable expectations [for financial aid offices].”


Publication Date: 1/18/2022

Peter G | 1/18/2022 5:33:13 PM

I was surprised by the broadness in several areas - not just GE, but also proposed rules around Career Services and "timely Disbursement" (as proposed 668.16(k)) that I'm concerned may fly under the radar.

I'm concerned about the latter particularly from a community college viewpoint, where the reason most schools set later disbursement dates isn't about administrative capability but balancing harms created by other rules like SAP, pell census, cancelling aid for no shows, etc.

Is NASFAA collecting commentary and/or researching any of these topics, or does it have additional insight into what specifically is being proposed and what the motivations are?

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