Transcript Slide 1
Winter 2011 ISFAA Conference
Gainful Employment
December 8, 2011
Background of Gainful Employment Regs…
• Final regulations published in the Federal Register
on October 29, 2010 require institutions to follow the
new gainful employment regulations
• Institutions are required to report information about
students that are enrolled in programs that lead to
gainful employment
• Regulations also require that certain information
must be disclosed to prospective students that are
interested in enrolling in gainful employment
programs
What is a Gainful Employment Program?
• All non-degree programs offered by public and nonprofit institutions and virtually all academic programs
offered by market funded institutions
• All institutions must be aware of these regulations
not only market funded schools – fewer than 1,000
out of approximately 6,000 institutions do not have
GE programs
Reporting Requirement for Gainful Employment
Programs
• First reports must be submitted to the Department
no later than October 1, 2011, (change to November
15, 2011) and must include information on students
who were enrolled in GE programs during the 06/07,
07/08, 08/09, 09/10, and 10/11 award years
• All students must be reported if they are enrolled in
a GE program regardless of whether they received
Title IV funding or not
– Must report SSN, First, middle, and last name, DOB
– Must report OPEID (8 digit) where student attended
– Must report name of program, CIP code, credential, start
date and grad date
Disclosure Requirements for each GE Program
• Occupations (by name and SOC code)that program
prepares students to enter
• Links to occupational profiles on O*NET
• Program costs –
– Tuition and fees
– Room and board
– Books and supplies
• On-time completion rate
– Numerator – Number of students who completed within
normal time (not 150% of normal time)
– Denominator – Number of students who completed
program during the most recent award year
Disclosure Requirements for each GE Program
• Job placement rates for students completing the
program
– Use the formula of the institutional accreditor, program
accreditor, or the state requires
– Must be disclosed on a program basis
• Median loan debt incurred by students who
complete the program
– Title IV loan debt
– Private educational loan debt
– Institutional finance plans
Gainful Employment Metrics
• Repayment Rate
– Percentage of the loan amounts that a GE program’s
former students are repaying
• Debt to Earnings Ratio
– For the GE program’s completers, the average
educational loan annual repayment amount as a
proportion of the average borrowers’ income
Repayment Rate
OOPB of LPF plus OOPB of PML
OOPB
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•
•
•
OOPB = Original Outstanding Principal Balance
LPF = Loans Paid in Full
PML = Payments Made on Loans
Typically includes loans in 3rd and 4th year of
repayment
Repayment Rate
• Loan is successfully being repaid if:
– Its balance is reduced by $1 over the year or the loan is
paid in full
– It is on track to being forgiven due to public service
employment
– Borrower is making payments under an interest-only or
IBR plan, but limited to no more than 3% of the OOPB
EXAMPLE:
Jim owes $2,000
If only Jen is repaying her loan the
Jan owes $3,000
school would have a 50% repayment
Jeff owes $5,000
rate. $10,000/$20,000 = 50%
Jen owes $10,000
Debt-to-Earnings Rate
Earnings Rate
Average Annual Loan Payment Amount
Mean or Median Annual Earnings
Discretionary Income Rate
Average Annual Loan Payment Rate
Mean or Median Annual Earnings – 1.5 X poverty line
Typically includes students in the 3rd and 4th year after
completion
Debt-to-Earnings Rate
• SSA will provide the median and mean earnings of
program graduates
• Schools can verify the lists of individuals submitted
to SSA, but cannot dispute the earnings amounts
from the SSA – will be able to use earnings data in
lieu of SSA if it is:
– State sponsored data
– Institutional survey conducted by NCES standards
– Bureau of Labor Statistics data
Debt-to-Earnings Rate
• Calculating of the annual loan payment
– Uses the program’s median loan debt
– Amortized at 6.8% over
• 10 years for a certificate or associate’s program
• 15 years for a baccalaureate program, or
• 20 years for a graduate program
• Excludes students with:
– Military deferments
– In-school deferments
– Loans discharged or pending discharge for death or
total and permanent disability
Performance Requirements
• A program must pass at least one of the
three rates to be a Gainful Employment
program eligible for Title IV funding
– Repayment rate of at least 35%
– Debt-to-Earnings rate of less than
• 12% of total earnings, or
• 30% of discretionary income
Performance Requirements
• A program is a failing program for year if it does not
meet any of the minimum standards
• After one year’s failure institution must –
– Disclose to students and prospective students the
amounts by which the program did not meet the
minimum standards and any plans for improvement;
– Establish a three day waiting period before students can
enroll
Performance Requirements
• After two years out of three as a failing program,
institutions must tell students that –
– Their debts may be unaffordable
– The program may lose eligibility, and
– What transfer options exist
• If a failing program for three of four years, the
program loses eligibility for federal student aid
• FY 2015 would be the first year that any programs
could lose Title IV eligibility
Additional Resources to Clarify GE
• IFAP – Gainful Employment FAQ page
• 27 Electronic Announcements have been published
on GE and can be located on IFAP
• 1 Dear Colleague Letter has been published
(GEN11-10)
• Regulations –
– Program Integrity: Gainful Employment Debt Measures
(6/13/11)
– Program Integrity: Gainful Employment – New Programs
(10/29/10)
– Program Integrity Issues: Final Rule (10/29/10)