The Department of Education (ED) on Wednesday unveiled a forthcoming Notice of Proposed Rulemaking (NPRM) for an overhaul of gainful employment, with top department officials calling the regulations the “strongest-ever” safeguard for students. ED also announced a new data collection initiative that would seek to provide more transparency across all sectors of postsecondary education.
During a call with stakeholders on Wednesday, Education Secretary Miguel Cardona said the proposed regulations would help prevent future students from being saddled with unaffordable student loan debt.
“We need to protect students from winding up with unaffordable debt in the first place. We need a higher education system that is affordable and accountable to students and taxpayers,” Cardona said. “Investing in a college degree or career certificate is supposed to pay off. Instead, too many students are getting ripped off.”
The gainful employment regulations would apply to non-degree programs at all institutions and degree programs at private for-profit colleges and would require those programs to meet certain performance standards on two measures to maintain Title IV aid eligibility.
Under the proposed regulations, ED would require programs to meet a debt-to-earnings (DTE) ratio and demonstrate that half of graduates have higher earnings than a typical high school graduate in their state’s labor force between the ages of 25 and 34 who never pursued a postsecondary education.
According to ED, the DTE ratio must be equal to or less than 8% of annual earnings, or equal to or less than 20% of their discretionary earnings (i.e., their annual earnings above 150% of the Federal poverty guideline for a single individual).
“We're proposing this earnings premium test for a reason — we know that students overwhelmingly say they're going to college in search of a better job or to make more money,” said Under Secretary James Kvaal. “We think it's entirely reasonable, then, to require that career programs show that their graduates are better off financially than those who never went to college at all.”
The gainful employment regulations were issued in tandem with a proposal to collect new information from all colleges and programs about costs (including tuition and fees, books, and supplies), non-federal grant aid, typical borrowing amounts (both private and federal), earnings, any applicable occupational and licensing requirements, and licensure exam passage rates (where relevant).
The package also includes financial responsibility, certification, ability to benefit (ATB), and administrative capability regulations, which ED says would assist the department in engaging in “targeted and proactive accountability” efforts.
According to ED, if a program fails to meet either or both metrics in a single year it would then be required to provide a warning to students that the program could be at risk of losing eligibility for federal aid in subsequent years. If a program fails the same metric in two of three consecutive years, the program would then have its eligibility to participate in the federal aid programs formally revoked.
This proposal ties into EDs process of developing an annual list of low-financial-value programs that will apply to all programs at all institutions of postsecondary education and is significantly more expansive than gainful employment regulations.
“We need to hold colleges accountable for unaffordable costs and better protect students from programs that fail to deliver real value and upward mobility,” Cardona said. "The rules proposed today are about helping ensure that when students invest in a postsecondary education, they get a solid return on investment and a greater shot at the American dream.”
According to ED, the newly collected information would be made publicly available through a department-run website. Institutions must provide a link to the disclosure website and require students to acknowledge having seen this information prior to federal financial aid being disbursed if they are enrolled in or planning to enroll in programs that “consistently leave participants with high debt burdens.”
“We are proposing to dramatically increase transparency across higher education for all institutions, whether they're public or private, whether they're for-profit or nonprofit,” Cardona said of the data request. “Our goal is to empower students and families with more data than ever before about the true cost of college.”
Career Education Colleges and Universities (CECU), the organization representing proprietary institutions, said the proposed rule does not go far enough, and that it “continues to exempt the majority of postsecondary education programs and fails to protect millions of students.”
“The rule unfairly targets programs at proprietary institutions and fails to account for the unique challenges facing students and communities that career-oriented programs serve,” said Jason Altmire, CECU’s president and CEO, in a statement. “During the public comment phase, we urge the Department to consider sensible changes that improve the rule to protect all students and hold public, private nonprofit, and for-profit institutions equally accountable for their outcomes.”
Rep. Virginia Foxx (R-N.C.), chairwoman of the House Committee on Education and the Workforce, said that the proposed regulations fail to protect students and taxpayers and instead attack proprietary schools.
“I welcome accountability and transparency in postsecondary education. It is desperately needed,” Foxx said in a statement. “But this regulatory package is simply the same witch hunt we’ve seen the Biden administration carry out over the last two years to undercut an entire sector of institutions that serves the needs of veterans, minorities, and other disadvantaged students that Democrats claim they care about.”
The NPRM will have a 30-day public comment period and is slated to be officially published in the Federal Register on May 19. Comments can be submitted through regulations.gov and/or to [email protected]. ED expects to finalize these rules later this year, and if final rules are published by Nov. 1, 2023, they would go into effect July 1, 2024.
Stay tuned to Today’s News for a follow-up deep dive article on these topics.
Publication Date: 5/18/2023