ED to Publish Proposed Rule on Gainful Employment and New Information Collection

By Hugh T. Ferguson, NASFAA Senior Staff Reporter

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

James T | 5/19/2023 12:49:32 PM

To bad we no longer have student accountability, if it sounds to good to be true it is..simple rule. Also, buyer beware, what happened to common sense? Rules and more rules willnot solve the problem. To many institutions' are chasing to much money for anything to change.. life goes on.

Cliff S | 5/18/2023 4:3:45 PM

It is kind of ironic that a proprietary institution that serves low income students and has low a COA that is covered by Pell and FSEOG would pass the GE measure with flying colors only to fail the 90/10 calculation.

David S | 5/18/2023 1:43:45 PM

“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 information at https://www.opensecrets.org/news/2012/04/student-loan-industry-finances-virginia-foxx/ might shed some light on why Rep Foxx seems so protective of an entire sector of institutions.

Brittany T | 5/18/2023 1:39:06 PM

ED should utilize the current enrollment reporting that all institutions submit at graduation and their IRS data sharing agreement to cross-reference income by social security number and compile a report by program. Additional reporting to a separate entity would be cumbersome and redundant.

David S | 5/18/2023 1:36:44 PM

Nedi - I'm not sure that this is coming home to roost slowly...in fact I think many in power have the pedal to the metal. As for who gets the blame, colleges are on the list but share it with others. The #1 reason college is so expensive in this country is that we have lost the concept of higher education as a public good. Countries around the world where a degree is affordable recognize that all of society and its economy benefit from having well educated citizens.

Here, since the HEA was first signed (ie, in my lifetime), we've gone from a civil rights-based public commitment to increasing the number of Americans with college degrees to "well, let's cut the higher ed budget while we're giving tax breaks to the rich" to Congresswoman Foxx appearing on a NASFAA podcast promoting her party's belief that fewer Americans should go to college to the likes of Ron DeSantis punishing colleges because they're too "woke." We may be the only country in the world moving backwards on this, and part of that is because that's what an increasing number of those in power want.

James C | 5/18/2023 1:9:42 PM

The US Department of Education has information on loan repayment and default rates by institution. The focus needs to be on schools who have graduates that are not able to pay back loans (once we go into repayment) and have it apply to every institution offering Title IV loans. The Department even has the CIP code information on the loan records so they could sanction programs within schools. There needs to be more stringent thresholds and sanctions on institutions with low loan repayment rates and high loan default rates instead of massive new regulations. Also, accrediting agencies need more accountability in accrediting schools and programs.

Nedi G | 5/18/2023 11:58:57 AM

There are of course many expeptions, but in general, our own failure to control rising costs is slowly coming home to roost. When politicians and bureaucrats step in to fix us, you can be sure that problems for both our students and us will get a lot worse. Next few decades will be very very difficult for higher education. We have no one to blame but orselves.

Donna W | 5/18/2023 10:50:15 AM

In order to calculate the DTE we need to know income and earnings? How are schools going to get the earnings from former students? The graduates will not complete survey's we ask to complete. How are we going to receive earnings if we do not have any additional documents that would identify earnings?

Joel T | 5/18/2023 9:23:55 AM

There should be a clause that says, "If an institution does not participate in the Federal Direct Loan program they are exempt from these regulations." Our tuition is $76 per credit hour (plus fees) and we can cover almost all needs with federal, state, or institutional grants/scholarships.

There's no need to subject smaller, cost effective institutions (like community colleges) to this level of regulation and administrative burden when it's clear we are not the issue and do not offer loans.

Jeff A | 5/18/2023 8:34:59 AM

100+ EAs, dozens of training events, mass confusion to look forward to again?

A 1000+ page NPRM. 30 days to comment seems about right.
Probably will go smoothly given how well TPS guidance went.

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