Neg Reg Day 2: Committee Focuses on Gainful Employment and New Data from ED

By Hugh T. Ferguson, NASFAA Managing Editor

By Owen Daugherty and Hugh T. Ferguson, NASFAA Staff Reporters

The second day of the final session of the Institutional and Programmatic Eligibility negotiated rulemaking committee started with a presentation from the Department of Education (ED) of data related to gainful employment (GE), a key topic being covered by the committee.

The data detailed Tuesday was an updated version of the data distributed to negotiators on Sunday evening before the week of discussions kicked off. Additionally, the data was updated Tuesday morning just minutes before the session began, drawing the ire of several committee members who expressed their displeasure with not having enough time to review the data in advance.

Brian Fu, a program analyst at ED who presented on the data, fielded questions from negotiators and provided additional clarity on total GE programs, GE programs with passing and failing debt-to-earnings (D/E) metrics, and GE programs with passing and failing earnings threshold metrics based on the department's proposal.

In the materials distributed to negotiators and during discussions, he noted the limitations of the data for the purposes of evaluating ED's proposed GE regulations, noting that ED does not have some data, such as private and institutional loan debt and the amount of tuition, fees, books, and supplies for purposes of capping individual borrowing amounts in the debt-to-earnings ratios.

Adam Looney, a non-voting advisor to the committee, said the data is very similar to what he presented in an earlier session and that there are no significant changes from the 2015 data the committee has already reviewed.

Broadly negotiators expressed frustration with the lack of time given to consider the data, as well as with ED's inability to explain how the data inform and support their proposed changes. 

Following more discussion, Greg Martin, a negotiator on behalf of ED, said the department will not be able to provide any more data at this time and urged the committee to move forward with discussions on GE based on the data that is available.

Negotiators then moved on to the GE issue paper, starting on the fourth page and going through various definitions.

Brad Adams, a negotiator on behalf of proprietary institutions, pushed for ED to include a debt-to-earnings metric on disclosures for all programs, not just GE programs, noting that GE metrics are not specifically mentioned in statute and that ED has broad authority to require disclosures, but Martin indicated  the department would not be adding such a disclosure. Adams also suggested shifting the first two-year cohort period so the department is not basing its first year of GE metrics on 2020 earnings, noting that using a year in the pandemic where huge employment disruption occurred could be problematic.

Barmak Nassirian, a negotiator on behalf of groups representing student veterans, said he strongly supported the measures ED is intending to use for GE, specifically on ED's addition of a third GE metric based on earnings as compared to a high school graduate. In Nassirian's view, someone with a postsecondary credential should end up earning at least more than a high school graduate.

“These are postsecondary programs intended to place people in jobs, and if those jobs end up earning less than they would have before they went in, that is that is the hill I will die on,” he said. 

Nassirian also raised concern about ED giving too much benefit of the doubt to institutions at the potential harm of students by allowing GE programs to continue to fail GE metrics, provided they don't fail in two of three years. He argued that the students enrolled in these programs that fail GE metrics but maintain Title IV eligibility would suffer harm and that ED should provide some relief for these students, such as curing their debt.

The committee returned from lunch break and picked up where it left off, with the intention of taking a consensus vote on the entire issue paper by the end of the day. 

ED underscored that it would not consider removing the gainful employment issue paper from the week's agenda and that another weeklong session, to further consider that regulatory framework, would not be scheduled.

Anne Kress, a negotiator on behalf of two-year public institutions of higher education, reminded ED that there was a clear message from committee members in the first week of discussions that a return to the 2014 GE standards would be supported, but that ED chose to make several significant changes from the 2014 rule that negotiators are now struggling with.

Kress expressed concern that discussions over the details of ED's deviations from the 2014 GE rule would become the focus of the afternoon's conversation — instead of accountability — and urged a return to the 2014 rule, noting that ED never had the ability to assess the full impact of that rule on students.

Adams raised the issue of cosmetology programs, which ED's data shows 50% would fail GE metrics. He noted the issue of unreported earnings, which has come up in prior GE rulemaking sessions and was a reason for ED permitting alternate earnings appeals in the previous rule.

Johnson Tyler, a negotiator on behalf of the legal assistance organizations, applauded the efforts with updates in the regulatory language and argued that the GE metric could offer students clearer choices when entering a given career path by substituting in part for labor market demand in a field. He noted his own suspicions that limited demand in cosmetology fields might be leading graduates of these programs into lower-paying fields and that this may be the driver of the GE metric failures, and not unreported earnings as others have argued.

For the GE rule, Nassirian indicated openness to ED providing a safe harbor for worthy programs that fail the GE metrics by including a repayment rate metric as a fallback. This suggestion was supported by Adams and the two negotiators expressed interest in submitting language for ED to review.

Some negotiators expressed concerns over ED including Parent PLUS debt in the median debt figure for the debt-to-earnings rate calculation. ED stressed that its position is that this prevents a loophole where institutions could direct students to have their parents borrow PLUS loans as a way to achieve compliance with the debt-to-earnings metrics. Emmanual Guillory, representing private, nonprofit institutions of higher education, reiterated a suggestion made by Adams in an earlier week of discussions to include parental income if ED chose to retain parent debt in the median debt. 

Marvin Smith, FAAC®, representing four-year public institutions of higher education, looked to garner insight from ED on data concerning small program rates. Smith asked if ED would share detailed data on the programs grouped into the small program rates so schools would have a sense of which specific small programs were performing well and which were not.

Guillory also weighed in on small program rates, noting that while ED has assured negotiators that small program rates won't impact schools, they can be used as a supplemental measure for ED to consider in institutions' Program Participation Agreements (PPAs) and, as such, do impact Title IV eligibility even if failing small program rates would not lead to automatic loss of eligibility.

At the completion of the day's negotiations ED elected to defer the consensus vote on the GE issue paper until the start of Wednesday's session. However, committee members expressed some concern with the process.

Debbie Cochrane — a negotiator representing state higher education executive officers, state authorizing agencies, and/or state regulators of institutions of higher education and/or loan servicers — noted that many issues raised by negotiators that could determine their consensus votes remained unaddressed, and wanted to know how the department would address those questions before holding a final consensus check. 

Committee members have worked through the bulk of the issue paper, but could use the morning session on Wednesday to continue with discussions, with ED potentially offering more finalized language that could reflect a number of questions posed during Tuesday's session.

During the public comment portion of the session, members of the public provided testimony on veterans benefits and the 90/10 rule, how the previous GE rule impacted institutions, income-share agreements, and adverse experiences with practice of transcript withholding.

Stay tuned to NASFAA's Today's News for more coverage of negotiated rulemaking sessions throughout the week, and read up on our previous rulemaking coverage


Publication Date: 3/16/2022

Ben R | 3/21/2022 12:32:56 PM

A bunch of schools failing the metric would actually be a successful implantation of the rule and an improvement over the zero accountability we have now. It would be a complete failure if after months of negotiating, the department implemented something so weak or with such subjective enforcement that no schools went out of business.

When you are the primarily financier holding $1.7 trillion in loans much of which is uncollectable and requires constant bailouts or subsidized payments, you have the right to put your foot down and say "no more", much like a parent providing an allowance to a child who is not doing their chores.

Rivka W | 3/18/2022 3:18:59 PM

"Adams raised the issue of cosmetology programs, which ED's data shows 50% would fail GE metrics."

Actually, what he initially said was that 43% of the failing programs were cosmetology programs. He then inferred that means that almost half (and then later just said half) of cosmetology programs would fail. This is a staggering lack of statistical comprehension, and I expect better from NASFAA's coverage, even if the negotiator doesn't understand statistics.

Kyle R | 3/16/2022 11:54:19 AM

I agree with you Ryan. This is entire process is designed so that ED can say, "yeah, we went through the process" but then impose their will on institutions. What a joke.

Ryan W | 3/16/2022 10:50:06 AM

Is the term "negotiated" in this rulemaking process accurate? Or is this just basically a time to get together for ED to tell everyone how they're going to do things regardless of feedback from anyone else? The bit I've watched online and read doesn't particularly seem like there is much negotiation happening.

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