GAINFUL EMPLOYMENT WASFAA 2014 Tom Babel & Kevin Jensen

A brief history 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 – Department of Education publishes final program integrity regulations, including gainful employment – Department of Education publishes a correction to the final regulations – A federal court vacates major portions of the gainful employment rule.

A brief history – Department of Education holds a second round of gainful employment negotiated rulemaking sessions – 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 “NegReg” Process Negotiators Negotiating Sessions Interim Final Rules and Public Comment Final Rules

Notice of Proposed Rulemaking RIN 1840 – AD15 Posted March 25, 2014 Comments Due May 27, 2014 – – Ashley Higgins U. S. Department of Education 1990 K Street NW., room 8037 Washington, DC

Comparison to 2011 Final Rule Provision2011 Final Rule2014 Proposed Rule Applicable ProgramsMost proprietary school programs and non-degree programs at public and private not-for-profit schools. Metrics RequirementsMust 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 MeasuredAll graduates (D/E) and all borrowers (LRR) All graduates who received Title IV (D/E) and all borrowers (pCDR)

D/E passing thresholdAnnual 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 thresholdAnnual 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 thresholdNot applicableProgram Cohort Default Rate (pCDR) < 30% Comparison to 2011 Final Rule

Debt to Earnings (D/E) Cohorts If cohort ≥ 30 students: use graduates from 3 rd and 4 th years prior (e.g., For award year, the D/E rates would include graduates from the and award years) If cohort < 30 students: use graduates from 3 rd, 4 th, 5 th and 6 th years prior For medical and dental programs: use 6 th & 7 th year if ≥ 30 students or use 6 th, 7 th, 8 th & 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 – 1 st 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 3 rd 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: Low participation rate New or erroneous data Loan servicing issues Economically disadvantaged Use of average rates < 30 borrowers

Timeline GE Effective July 1, 2015 FY 12 CDR Sep 2015 First 2 year cohorts AY & First Earnings Year 2014 Range for completers to begin earnings year Traditional calendar: 19 – 31 months D/E Rates issued January 2016? pCDR Measuring period Oct 1, 2011 – Sep 30, 2014

Other GE Provisions Debt Warnings – Two levels: 1 st year and 2 nd year Reporting – By July 31 of 1 st year, information for 2 nd – 7 th 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 – 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 Debt Type of MLD Annual Earnings aDTE Rate dDTE RatepCDR D/E Test pCDR Test PROGRAM OVERALL Approx. Debt Reduction to Pass aDTE Approx. Debt Reduction to Pass dDTE % Increase in Earnings to Pass aDTE % Increase in Earnings to Pass dDTE MLD (Trans/Lvl) MLD (Stnd/Lvl) Diff. b/t Lvl & Prog MLD (Stnd) Program A53$19,700 Stnd. $20, %91.0%17.6%FailPassFAIL$7,828$15,373 $23,156$19,700$3,448 Program B350$32,140 Stnd. $38, %21.1%9.6%ZonePassZONE$9,831$1,719 $32,278$32,140$47 Program C175$54,560 Trns. $53, %16.1%12.4%Pass PASS$14,315$0 $54,560$54,771$3,633 Program D144$32,278 Trns. $47,9639.3%14.6%7.4%Pass PASS$4,493$0 $32,278$32,330$0 Program E372$38,090 Stnd. $57,8959.1%13.0%2.2%Pass PASS$4,551$0 $47,685$38,090$1,676 Program F58$27,157 Stnd. $42,1008.9%15.2%6.7%Pass PASS$2,768$0 $29,101$27,157$0 Program G89$22,244 Trns. $34,7268.8%17.8%9.2%Pass PASS$2,127$0 $22,244$22,813$0 Program H184$32,805 Stnd. $52,0438.7%13.1%5.4%Pass PASS$2,656$0 $35,067$32,805$561 Program I27$34,336 Stnd. $42,3538.6%14.7%10.2%Pass PASS$2,528$0 $40,439$34,336$6,216 Program K10$20,743 Trns. $34,5608.3%16.8%0.0%Pass PASS$722$0 $20,743$28,900$22,334 Program L255$32,209 Stnd. $63,7095.4%7.4%3.5%Pass PASS$0 $34,846$32,209$2,137 Program M81$21,633 Stnd. $45,2205.1%8.3%7.0%Pass PASS$0 $27,776$21,633-$103 Program N785$33,040 Stnd. $71,7364.9%6.5%4.4%Pass PASS$0 $33,531$33,040$1,896 Program O78$21,341 Stnd. $69,2564.3%5.7%3.7%Pass PASS$0 $21,688$21,341$4,003 Program P755$27,559 Stnd. $71,4124.1%5.4%5.9%Pass PASS$0 $28,046$27,559$2,924

GE Infographic Employment-Rule/145519/