This morning, the U.S. Department of Education (ED) released a Notice of Proposed Rulemaking on its package of accountability regulations for so-called gainful employment (GE) programs, which include all non-degree, Title IV eligible programs at community colleges. In large part, the proposed rules released today are similar to the last draft proposal the department released during negotiated rulemaking sessions late last year, and not radically different from the regulations promulgated in 2011 that were subsequently struck down in court. However, there are significant new additions and deletions, as well as smaller tweaks, which change the face of the rule to an extent.
This is not a comprehensive summary of the regulations. AACC will provide further information in the coming days. Once published in the Federal Register, there will be a 60 day comment period. AACC will file comments and urges its member institutions to do so, as well.
As with the last draft proposal, the NPRM includes three metrics: debt to earnings and discretionary earning (DtE) rates, and program-level student loan cohort default rates (pCDR). Repeated failure on any of these metrics, as detailed below, renders a program ineligible to participate in the Title IV student aid programs for three years.
- DtE Rates: In order to pass these metrics, the ratio of a program’s completers’ aggregate loan payments must be below 8% of the completers’ aggregate mean or median income (whichever is more), and below 20% of the completers’ discretionary income (defined as total income minus 1.5 x the federal poverty line). Programs with annual earnings rates from 8% to 12%, or discretionary income rates from 20% to 30%, respectively, are deemed to be in the “zone” between passing and failing. Programs with ratios above 12% or 30%, respectively, are deemed failing. Failure on these metrics in two out of three years, or either failure or being in the zone for four straight years renders a program ineligible for Title IV.
The metrics are based on two-year or four-year cohorts, depending on program size. DtE rates are not calculated for programs where fewer than 30 Title IV recipients completed the program during the four-year cohort period. This is modified from the last proposal, which would have calculated rates for any program that had 10 Title IV completers within a two-year period, and closer to the regulations promulgated in 2011. Certain completers are not counted, including those that enroll in another program during the same award year (with no requirement as to enrollment intensity or duration, as under prior proposals) and those that complete a higher level program during that year.
The annual loan payment for the program is calculated by determining the median loan debt of the completers in the cohort (but only up to the amount attributable to tuition, fees, books, equipment and supplies for that particular program), and then amortizing that debt over a repayment period that differs depending on the type of program (10 years for an undergraduate certificate program), using the average interest rate of federal unsubsidized loans over the six years prior to the end of the relevant cohort period.
- Programs with Low Borrowing Rates: For community colleges, the most significant addition to these proposed regulations are provisions that allow institutions to show “mitigating circumstances” that warrant a program that is in the zone or failing in a particular year to instead be counted as passing the DtE metrics. Specifically, if an institution can show that the borrowing rate for all Title IV and non-Title IV completers over the relevant cohort period is less than 50% (i.e. less than half of the completers took out loans), than the Secretary of Education may accept this showing and deem the program passing. While short of the outright exemption from these regulations for these programs that AACC has long advocated, this is a step in the right direction. Unfortunately, this provision only applies to the DtE, and not the pCDR, metrics. The pCDR metric has different provisions to address small programs and programs with low borrowing rates.
- pCDR Metric: The pCDR metric is calculated in the same way as the existing institutional CDR, only at the program level. It is a three-year CDR, and as with its institutional cousin, a program is deemed to have failed this metric if the pCDR is above 30%, and to be Title IV ineligible if the program fails for three straight fiscal years. However, in this case a pCDR above 40% in one year does not render a program ineligible, as it does under the institutional rate. All of the appeals that are available under the institutional rate apply here as well, including a participation rate index appeal for programs with low borrowing rates, and an appeal available to programs that had 30 or fewer borrowers, in total, in the three most recent cohorts used to calculate the pCDR. These appeals are only available at the point that a program is deemed ineligible.
Reporting and Disclosure Requirements
The regulations continue to have substantial, burdensome reporting and disclosure requirements for institutions offering GE programs.
Reporting: The reporting requirements do not differ substantially from the 2011 regulations and the drafts offered by department during negotiated rulemaking, but there are a few new additions (noted with a *) and changes. Institutions are required to report to ED, for each Title IV recipient in a GE program in a given reward year:
- Information needed to identify the student and the institution.
- The name, CIP code, credential level, and length of the program.
- Whether the program is a medical or dental program that requires an internship or residency.
- The date the student initially enrolled in the program.
- The student’s attendance dates and attendance status (enrolled, withdrawn, completed) in the program during the award year. *
- The student’s enrollment status (full-time, part-time, etc.) as of the first day of the student’s enrollment in the program.
- If a student completed or withdrew from the program during the award year:
- The date the student completed or withdrew from the program
- The total amount the student received from private loans for enrollment in the program that the institution is, or should reasonably be, aware of
- The total amount of institutional debt the student owes
- The total amount of tuition and fees assessed the student for the student’s entire enrollment in the program.
- The total amount of the allowances for books, supplies and equipment included in the student’s Title IV Cost of Attendance for each award year in which the student was enrolled in the program.*
These items must be reported by July 31 following the date the regulations take effect, for the second through seventh award years prior to that date. This is a longer look-back period than under prior iterations of the regulations.
Disclosure: Again, the institution is required to disclose to prospective students, for each GE program, a long list of items (too long to be repeated here), using a template established by ED. Prospective students now include those that the institution contacts, in addition to those that contact the institution.
Additions to this list in the latest proposal include:
- Completion rates disaggregated by full-time and less-than-full-time students.
- Length of the program in calendar time, as well as the number of clock or credit hours.
- The percentage of students enrolled in the most recent award year that incurred debt. (This is a positive step.)
- The most recent pCDR.
- The most recent annual earnings rate.
Other Items of Note
The regulations jettison provisions calling for borrower relief and enrollment limits for programs that are at risk of becoming ineligible. The regulations also streamline provisions governing the implementation of new GE programs, cutting back on the instances in which institutions must seek prior approval to start new GE programs.