Deep Dive: ED Releases Unofficial Final Rule on Gainful Employment and Financial Value Transparency Framework

By Jill Desjean, Senior Policy Analyst

Last week, the Department of Education (ED) released its unofficial final rule on Gainful Employment (GE) and its new Financial Value Transparency framework, which it plans to officially release in the Federal Register on October 10, 2023. The rule represents ED’s fourth effort, over more than a decade, to establish gainful employment standards, and ED’s first attempt at applying gainful employment metrics to non-GE programs, albeit without the associated penalties applicable to GE programs.

While the proposed rule released in May included draft regulations on financial responsibility, administrative capability, certification procedures, and ability to benefit, those regulations are currently under review at the Office of Management and Budget (OMB) and will be published separately at a later date.

Gainful Employment

The GE final rule largely mirrors what ED proposed in May. The department has retained the new earnings premium (EP) metric from the proposed rule, which will be calculated along with the debt-to-earnings (D/E) rate to determine GE program eligibility to participate in the Title IV student aid programs. Those metrics will also be used to provide information only to non-GE programs as part of the financial value transparency regulations, detailed later in this article.

The final GE rule does include several significant changes from the draft rule. First, the accountability provisions of the GE rules will not apply to institutions in U.S. territories or the freely associated states. ED’s rationale for the change included the fact that the U.S. territories lack the high school earnings data ED would need in order to calculate the earnings premium. These institutions will still be required to comply with the GE data reporting requirements, and ED will publish data on earnings, median debt, and price, but not the GE metrics (debt-to-income rate earnings premium).

The GE accountability framework will also not apply to institutions that do not have any group of programs that share the same four-digit CIP code with 30 or more completers in total over the most recent four award years. 

ED adds to the final rule that they will disregard any D/E rates that were calculated more than five calculation years prior in determining a program’s eligibility.

ED also modifies from the draft rule the definition of “cohort period” for programs that require postgraduate training in order to obtain licensure. While the proposed rule accounted for medical and dental programs where graduates must complete a residency, allowing for a six-year lag before ED measures earnings to account for lower incomes during such training, the final rule permits this longer measurement period to apply also to completers of other “qualifying graduate programs.”

Qualifying graduate programs will include not only medical and dental programs, but also several mental health fields like clinical psychology, and marriage and family counseling that also require additional training, after which graduates generally experience a significant earnings boost. ED will also continue to update the fields of study that qualify for this extended cohort period as it gathers more data about such programs.

Institutions would be required to attest that at least half of a program’s graduates obtain licensure in a state with post-graduation requirements in order for those programs to qualify for the extended cohort period.

ED also changed transitional reporting requirements to give all programs the option to report transitional rates for the first six years after the rule is in effect.

ED has also changed the institutional deadline to respond to the GE completers list from 60 days after end of the award year to 60 days after ED provides the institution with the completers list, in acknowledgment of the fact that institutions cannot respond to the completers list until they have it and that the timing of their receipt of the list may not coincide with the end of the award year.

Institutions are required to begin issuing GE warnings effective July 1, 2026.

Financial Value Transparency

The proposed financial value transparency regulations and the final rule are similar in that they include a framework for non-GE programs to require institutional reporting of student-level data that the department will disclose on a website it develops by July 1, 2026. ED still plans to calculate D/E rates and an EP for non-GE programs, and to require programs that fail the debt-to-earnings measure to collect an acknowledgment from students that they understand the program has a high debt burden.

The financial value transparency regulations apply to all programs that participate in the Title IV federal student aid programs. A significant change from the proposed rule, however, is that the acknowledgment for failure of the D/E metric will be required only of non-GE programs that do not lead to an undergraduate degree. Undergraduate degree programs would continue to be subject to the financial value transparency reporting requirements and continue to have debt-to-earnings rates and earnings premiums calculated. They would only be exempt from collecting acknowledgments.

For those programs still required to collect acknowledgments, that requirement is effective July 1, 2026. While the proposed rule indicated the acknowledgment must be provided by the student prior to the institution disbursing aid, the final rule changes that timeframe to require the acknowledgment to be made prior to the institution entering into an enrollment agreement with the student. 

Another significant change is that, as with the GE rules, the financial value transparency rules will not apply to institutions located in U.S. territories or the freely associated states. The reporting requirements associated with the financial value transparency rules will apply to these institutions, and ED will continue to calculate median debt and to obtain earnings data, but no D/E rate or EP will be calculated and no student acknowledgments would be required.

Again in line with the GE rules, the financial value transparency regulations, including associated reporting requirements, will not apply to institutions that do not have any group of programs that share the same four-digit CIP code with 30 or more completers in total over the most recent four award years.

Important Dates and Deadlines

The regulations are effective July 1, 2024. Relevant dates and deadlines include:

  • July 31, 2024: First annual institutional data reporting due

  • December 31, 2024: GE program certification deadline

  • July 1, 2026: Deadline for ED to create program information website

  • July 1, 2026: Financial value transparency acknowledgments for high debt burden programs begin to be issued by institutions

  • July 1, 2026: GE warnings begin to be issued by institutions

Read Today’s News for updates on Gainful Employment (GE) and the new Financial Value Transparency framework.


Publication Date: 10/5/2023

Nathaniel P | 10/9/2023 4:59:59 PM

This paragraph confuses me, due to multiple "no" and "nots." Can NASFAA rephrase it please:

"Again in line with the GE rules, the financial value transparency regulations, including associated reporting requirements, will not apply to institutions that do not have any group of programs that share the same four-digit CIP code with 30 or more completers in total over the most recent four award years."

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