Transcript Document

GAINFUL EMPLOYMENT
WASFAA 2014
Tom Babel & Kevin Jensen
A brief history . . .
• 1965 - The Higher Education Act of 1965 was signed
into law on November 8, 1965 as part of President
Lyndon Johnson’s “Great Society” domestic agenda.
– “gainful employment” has been in the HEA from the very beginning
• 2009, 2010 – “Program Integrity” Negotiated
Rulemaking
– Gainful Employment is one of 14 Program Integrity topics addressed
A brief history . . .
• 2010 – Department of Education publishes final
program integrity regulations, including gainful
employment.
• 2011 – Department of Education publishes a
correction to the final regulations.
• 2012 – A federal court vacates major portions of the
gainful employment rule.
A brief history . . .
• 2013 – Department of Education holds a second
round of gainful employment negotiated rulemaking
sessions.
• 2014 – Department of Education issues new version
of gainful employment rules.
According to the Department . . .
“…the proposed regulations are intended to address
growing concerns about educational programs that, as a
condition of eligibility for title IV, HEA program funds, are
required by statute to provide training that prepares
students for gainful employment in a recognized
occupation (GE programs), but instead are leaving
students with unaffordable levels of loan debt in relation
to their earnings, or leading to default. GE programs
include nearly all educational programs at for-profit
institutions of higher education, as well as non-degree
programs at public and private non-profit institutions
such as community colleges…”
Negotiated Rulemaking
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•
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•
•
“NegReg” Process
Negotiators
Negotiating Sessions
Interim Final Rules and Public Comment
Final Rules
https://www2.ed.gov/policy/highered/reg/hearulemaking/2012/gainfulemployment.html
Notice of Proposed Rulemaking
• RIN 1840 – AD15
• Posted March 25, 2014
• Comments Due May 27, 2014
– www.regulations.gov
– Ashley Higgins
U. S. Department of Education
1990 K Street NW., room 8037
Washington, DC 20006-8502
Comparison to 2011 Final Rule
Provision
2011 Final Rule
2014 Proposed Rule
Applicable Programs
Most proprietary school
programs and non-degree
programs at public and
private not-for-profit
schools.
Most proprietary school
programs and non-degree
programs at public and
private not-for-profit
schools.
Metrics Requirements
Must pass either annual
earnings rate or
discretionary income rate
or repayment rate
Must pass either annual
earnings rate or
discretionary income rate
and program cohort
default rate
Whose Measured
All graduates (D/E) and all
borrowers (LRR)
All graduates who received
Title IV (D/E) and all
borrowers (pCDR)
Comparison to 2011 Final Rule
D/E passing threshold
Annual debt burden ≤ 12%
of actual income, or
Annual debt burden ≤ 30%
of discretionary income
Annual debt burden ≤ 8%
of actual income, or
Annual debt burden ≤ 20%
of discretionary income
D/E failing threshold
Annual debt burden > 12%
of actual income, or
Annual debt burden > 30%
of discretionary income
Annual debt burden > 12%
of actual income, or
Annual debt burden > 30%
of discretionary income
pCDR passing threshold
Not applicable
Program Cohort Default
Rate (pCDR) < 30%
Debt to Earnings (D/E) Cohorts
• If cohort ≥ 30 students: use graduates from
3rd and 4th years prior (e.g., For 14-15 award
year, the D/E rates would include graduates
from the 10-11 and 11-12 award years)
• If cohort < 30 students: use graduates from
3rd, 4th, 5th and 6th years prior
• For medical and dental programs: use 6th & 7th
year if ≥ 30 students or use 6th, 7th, 8th & 9th
Debt to Earnings (D/E) Calculations
Annual Loan Payment
Annual Earnings
Or
Annual Loan Payment
Discretionary Income
Annual Loan Payment:
• All Title IV debt, including Perkins; Private Loans; Institutional debt
• All loan debt incurred for a GE program attributed to highest credentialed GE
program with undergraduate and graduate programs treated separately
• Lower of total debt or total tuition, fees, books, supplies and equipment incurred
for enrollment in relevant GE programs.
• Determine median loan debt (MLD) for applicable cohort
• Calculate Repayment terms using:
• 10-year term for certificates and associate degrees
• 15-year term for bachelor and master degrees
• 20-year term for doctoral and first professional degrees
• Average interest rate for Direct Unsubsidized Loans for 6 most recent years
Annual Earnings: Higher of mean or median earnings for cohort as reported to SSA
Discretionary Income: Annual earnings less 150% of the Poverty Guideline for a
single person
Other D/E provisions
• Transition period
– 1st four years regulation is in effect
– Use MLD of completers from most recent completed award year
• Population Exclusions
– Borrowers with military or education deferments
– Completed higher credentialed programs
– Total and permanent disability or death
• Rate Appeals
– 45 days from receipt of student list to be included in the D/E calculations to
challenge population
– 45 days from draft D/E notice to challenge MLD calculation
• Alternate Earnings Appeal
– Any year with failing or zone D/E rates
– State earnings database (must match 50% and ≥ 30 students) or NCES survey
standards
• Mitigating circumstances = Pass
– Borrowing rate < 50% of all completers
Program Cohort Default Rate (pCDR)
• Different cohort and measuring periods from
D/E calculation
• Cohort is population of all students entering
repayment in the 3rd fiscal year preceding the
reporting year (e.g., if pCDR is calculated in
2016, then borrowers entering repayment in
FY13 will be used)
• If < 30 borrowers, include borrowers who
entered repayment in the two preceding years
Title IV Eligibility Disqualification
• Fails D/E measures for two of three successive
award years
• Fails or is in the zone for the D/E for four
consecutive award years
• pCDR ≥ 30% for three successive years
– Appeal bases:
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•
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Low participation rate
New or erroneous data
Loan servicing issues
Economically disadvantaged
Use of average rates
< 30 borrowers
Timeline
First 2 year cohorts
AY 2010-11 & 2011-12
First Earnings
Year
2014
GE Effective
July 1, 2015
D/E Rates issued
January 2016?
pCDR Measuring period
Oct 1, 2011 – Sep 30, 2014
Range for completers to begin earnings year
Traditional calendar: 19 – 31 months
FY 12 CDR
Sep 2015
Other GE Provisions
• Debt Warnings
– Two levels: 1st year and 2nd year
• Reporting
– By July 31 of 1st year, information for 2nd – 7th years prior
– By October 1, for all subsequent years
• Disclosures
– Number of new items. ED will calculate and issue
completion, withdrawal and loan repayment rates, median
loan debt and median earnings
– Like reporting, data restricted to Title IV recipients only
Other GE Provisions – cont.
• Certification
–
–
–
–
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Program length and educational content
Metropolitan Statistical Area (MSA)
Programmatic accreditation
Licensure and certification requirements
Transitional certification
• New Programs
– No formal approval process…subject to PPA
certification
• Reinstatement of disqualified programs
Getting Ready
• Program Analysis
• Prepare for Reporting and Disclosure
requirements
• Provide Comment
Program Analysis
Currently
Active DVG
Programs
#Grads
Median
Total Type of Annual
Debt
MLD Earnings
aDTE
Rate
dDTE
Rate
pCDR
D/E
Test
Approx.
Approx.
Debt
Debt
% Increase % Increase
Reduction Reduction in Earnings in Earnings
Diff. b/t Lvl
pCDR PROGRAM to Pass
to Pass
to Pass
to Pass
MLD
MLD
& Prog
Test OVERALL
aDTE
dDTE
aDTE
dDTE
(Trans/Lvl) (Stnd/Lvl) MLD (Stnd)
Program A
53
$19,700
Stnd.
$20,493
13.3%
91.0%
17.6%
Fail
Pass
FAIL
$7,828
$15,373
$23,156
$19,700
$3,448
Program B
350
$32,140
Stnd.
$38,510
11.5%
21.1%
9.6%
Zone
Pass
ZONE
$9,831
$1,719
$32,278
$32,140
$47
Program C
175
$54,560
Trns.
$53,587
10.8%
16.1%
12.4%
Pass
Pass
PASS
$14,315
$0
$54,560
$54,771
$3,633
Program D
144
$32,278
Trns.
$47,963
9.3%
14.6%
7.4%
Pass
Pass
PASS
$4,493
$0
$32,278
$32,330
$0
Program E
372
$38,090
Stnd.
$57,895
9.1%
13.0%
2.2%
Pass
Pass
PASS
$4,551
$0
$47,685
$38,090
$1,676
Program F
58
$27,157
Stnd.
$42,100
8.9%
15.2%
6.7%
Pass
Pass
PASS
$2,768
$0
$29,101
$27,157
$0
Program G
89
$22,244
Trns.
$34,726
8.8%
17.8%
9.2%
Pass
Pass
PASS
$2,127
$0
$22,244
$22,813
$0
Program H
184
$32,805
Stnd.
$52,043
8.7%
13.1%
5.4%
Pass
Pass
PASS
$2,656
$0
$35,067
$32,805
$561
Program I
27
$34,336
Stnd.
$42,353
8.6%
14.7%
10.2%
Pass
Pass
PASS
$2,528
$0
$40,439
$34,336
$6,216
Program K
10
$20,743
Trns.
$34,560
8.3%
16.8%
0.0%
Pass
Pass
PASS
$722
$0
$20,743
$28,900
$22,334
Program L
255
$32,209
Stnd.
$63,709
5.4%
7.4%
3.5%
Pass
Pass
PASS
$0
$0
$34,846
$32,209
$2,137
Program M
81
$21,633
Stnd.
$45,220
5.1%
8.3%
7.0%
Pass
Pass
PASS
$0
$0
$27,776
$21,633
-$103
Program N
785
$33,040
Stnd.
$71,736
4.9%
6.5%
4.4%
Pass
Pass
PASS
$0
$0
$33,531
$33,040
$1,896
Program O
78
$21,341
Stnd.
$69,256
4.3%
5.7%
3.7%
Pass
Pass
PASS
$0
$0
$21,688
$21,341
$4,003
Program P
755
$27,559
Stnd.
$71,412
4.1%
5.4%
5.9%
Pass
Pass
PASS
$0
$0
$28,046
$27,559
$2,924
GE Infographic
http://chronicle.com/article/The-GainfulEmployment-Rule/145519/