The Department of Education (ED) last week released its proposed regulations for establishing Title IV student aid eligibility for individuals who lack a high school diploma or equivalent, commonly referred to as the ability to benefit (ATB) regulations.
ED negotiated ATB in a rulemaking session held in early 2022, where it also discussed institutional and programmatic eligibility topics, including the 90/10 rule, gainful employment, financial responsibility, certification procedures, and administrative capability. This is the second article in a three-part series delving deeper into the specific provisions of the proposed rules. See previous coverage on the 90/10 rule, released as a final rule on Oct. 28, 2022 and on the proposed gainful employment rules also released last week.
The ability to benefit alternative was introduced in the Higher Education Act (HEA) in 1991 and allowed prospective financial aid recipients without a high school diploma or equivalent to pass an exam approved by ED to establish Title IV student aid eligibility. The 1992 HEA amendments expanded on that to also allow a state process by which students could receive Title IV aid for postsecondary education, and the 2008 HEA amendments added a third ATB alternative — successful completion of six credits, or the equivalent, toward a degree or certificate at the institution. In 2011, the ATB rules were repealed entirely for students enrolling on or after July 1, 2012, but students who were already enrolled could continue to receive federal student aid under the ATB rules that were in place when they first enrolled.
In 2014 the three ATB alternatives were restored, with a new provision that students must be enrolled in an eligible career pathways program (ECPP) in order to receive Title IV aid under the ATB alternatives.
While ED had issued guidance on ATB since those legislative changes, it had not yet issued regulations, which was the impetus behind developing the proposed rule released last week. Negotiators reached consensus on ATB, so the proposed language has no substantive alterations from what was agreed upon last year.
The proposal makes clear the distinction between students enrolled prior to July 1, 2012, whose eligibility under the ATB rules in place when they first enrolled remains unchanged, and students enrolled on or after July 1, 2012, who must now also be enrolled in a ECPP in addition to meeting one of the three ATB alternatives.
The proposed rules focus mainly on changes to the state process ATB alternative since the other two pathways are fairly straightforward. They establish a regulatory definition of an eligible career pathways program, which largely matches the legislative definition in the Workforce Innovation and Opportunity Act (WIOA) and includes such requirements as aligning with the skill and hiring needs of industries in the state or region, and including academic and career counseling to support the student’s educational and career goals.
ED’s proposal also includes what states must include in their application for ED approval of their state process. That would include:
Listing all institutions that would be eligible to participate in the state process
Describing the requirements participating institutions must meet to offer eligible career pathway programs under the state process
Certifying that each proposed eligible career pathway program meets the ECPP definition and documentation requirements as of the application submission date
Listing the criteria used to determine student eligibility in the state process
Excluding institutions from the state process if their withdrawal rate among regular undergraduate students exceeds 33%
ED is separating the state process application into an initial application process with a two-year approval period, followed by a subsequent regular application process which, if approved, would be effective for five years. This change addresses an issue in current regulations that requires applications to include a success rate calculation which states are unlikely to have calculated prior to having a state process in place. This has been a barrier to states applying under current regulations. Moving forward, states would have the two years after the initial application process to calculate the success rate for their subsequent application.
Enrollments in the state process ATB alternative would be limited to the higher of 25 students or 1% of total enrollment at each institution.
Currently, participating institutions under the state process must demonstrate a success rate for non-high school graduates that is within 95% of the success rate of high school graduates. The success rate is the percentage of students who complete the program, remain enrolled in the program, or transfer to another institution but remain enrolled for the award year. ED proposes to lower the success rate threshold for students enrolled under the state process to 85% of the success rate of students with a high school diploma or equivalent.
The success rate would also be calculated separately for each institution under ED’s proposal as opposed to for the whole state, as is the case under current regulations. Institutions not meeting success rate requirements would be permitted up to three years to come into compliance. If 50% or more of participating institutions nationally are found to not meet the success rate threshold, ED would have the discretion to lower it to 75% for two years.
ED indicated it is especially interested in comments related to the success rate calculation. The proposal is open for public comment until June 20, 2023. If ED publishes a final rule by Nov. 1, 2023, the rule would become effective July 1, 2024. Read Today’s News for more coverage of the remaining issues for which proposed regulations were released in this package.
Publication Date: 5/23/2023