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GAINFUL EMPLOYMENT

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.

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GAINFUL EMPLOYMENT

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  1. GAINFUL EMPLOYMENT WASFAA 2014 Tom Babel & Kevin Jensen

  2. 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

  3. 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.

  4. 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.

  5. 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…”

  6. Negotiated Rulemaking • “NegReg” Process • Negotiators • Negotiating Sessions • Interim Final Rules and Public Comment • Final Rules https://www2.ed.gov/policy/highered/reg/hearulemaking/2012/gainfulemployment.html

  7. 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

  8. Comparison to 2011 Final Rule

  9. Comparison to 2011 Final Rule

  10. 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

  11. Debt to Earnings (D/E) Calculations Annual Loan Payment Discretionary Income Annual Loan Payment Annual Earnings Or • 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

  12. 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

  13. 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

  14. 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

  15. 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? FY 12 CDR Sep 2015 pCDR Measuring period Oct 1, 2011 – Sep 30, 2014 Range for completers to begin earnings year Traditional calendar: 19 – 31 months

  16. 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

  17. 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

  18. Getting Ready • Program Analysis • Prepare for Reporting and Disclosure requirements • Provide Comment

  19. Program Analysis

  20. GE Infographic http://chronicle.com/article/The-Gainful-Employment-Rule/145519/

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