GAINFUL EMPLOYMENT PART II

Gainful Employment, Part IIHoward Leslie, VP FA Berkeley CollegeNYSFAAA 2013AGENDAWhat is GE all about?

What WERE the final rules?

What is currently in place?

Whats next?

What is GE all about?

What is GE all about?

It is about loan debt butWhat is GE all about?

The Higher Education Act of 1965 (HEA) was legislation signed into law on November 8, 1965

The law was intended to strengthen the educational resources of colleges and universities and to provide financial assistance for students in postsecondary and higher education.

The Higher Education Act of 1965 was reauthorized in 1968, 1971, 1972, 1976, 1980, 1986, 1992, 1998, and 2008. Current authorization for the programs in the Higher Education Act expires at the end of 2013.

What is GE all about?

So what???What is GE all about?

The Higher Education Act of 1965 requires for-profit colleges to provide an eligible program of trainingto prepare students for gainful employment in a recognized occupation but does not definegainful employment.

As part of the Program Integrity Regulations of 2010 the department has defined expectations for Gainful Employment by creating metric/outcomes which, if not obtained, would lead to program level loss of TIV.

Gainful Employment Time Line Notices of Proposed Rulemaking published 6/18/10 & 7/26/10

Two sets of Final Rules published on 10/29/10 with effective date of 7/01/11Program Integrity; Gainful Employment Reporting and DisclosuresGainful Employment New Programs

One set of Final Rules published on 06/13/11 Performance metrics

8Gainful Employment Time Line On June 30, 2012, the U.S. District Court for the District of Columbia issued a decision that vacated most of the gainful employment regulations

The department pursued a reversal of this ruling it was denied.

A Bi-partisan groups calls for Reauthorization to include GE regs but it should be for all sectors.Gainful Employment Time Line On September 3, 2013 the department released Draft Rules for the negotiators

On September 9, 2013 the negotiators start the process.

Summary of Negotiated Rule Making Process

Summary of Negotiated Rule Making ProcessGuideline for negotiations are publishedNegotiations begin Generally 3 sets of 3 days (this time 2 sets of 3 days)Negotiators are chosen by the department from each sectorThere are federal negotiators as wellIf everyone (school sectors and FSA) agree, the proposed rule will be published as agreed upon.If agreement is not reached, then the department can publish proposed rules as they pleaseSummary of Negotiated Rule Making ProcessThe department publishes proposed rulesThere is a comment period usually 60 daysIn the final rules package the department must respond to all comments and questions received during the comment period. READ THE PREAMBLEFinal rules that are published before November 1st can go into effect July 1st. If not published by November 1st then regs CANNOT GO INTO EFFECT until the following July 1st.Schools/Programs Impacted by the Current Gainful Employment regulationsAll programs at for-profit schools

Any program at a public or not-for-profit school that is not A program leading to degreeA transfer program of at least two yearsGainful Employment Annual SubmissionVACATEDInstitutions must annually submit information on students enrolled in programs leading to gainful employment in a recognized occupationGainful Employment DisclosuresNOT VACATEDDisclosures must be in promotional materials made available to prospective students AND on its website

Program home page websiteInformation simple and meaningfulContain direct link to any other webpage with general, academic or admission information about the programInformation in an open format that can be retrieved, downloaded, indexed, and searched

Gainful Employment DisclosuresNOT VACATEDInstitution is required to disclose:1.) Occupations (by name and SOC codes) its programs prepare students to enterLinks to occupational profiles on O*NET2.) Costs tuition/fees, room/board and books and suppliesMay include additional costs

Gainful Employment DisclosuresNOT VACATEDInstitution is required to disclose:3.) On-time completion rate for each program4.) Placement rate for students completing each program

Gainful Employment DisclosuresNOT VACATEDInstitution is required to disclose:5.) Median loan debt incurred by students as provided by EDIdentified separately as Title IV loan debt, private educational loan debt and debt from institutional finance plansInstitutional finance plan - amount student obligated to pay at completion of program

Gainful Employment New ProgramsVACATEDInstitutions must notify ED at least 90 days before the first day of class when it intends to offer a new educational program that leads to gainful employment in a recognized occupation

Metric/Performance TestsVACATEDRepayment Rate - is a percentage of the Title IV loan amounts that a GE Programs former students are repaying Debt to Income Ratio - For the GE Programs completers, the median educational loan annual repayment amount as a percentage of the average (mean or median) completers incomeTwo measuresAnnual and Discretionary

Whats in the Draft Regs?

Whats in the Draft Regs? The proposed draft rule reflects significant changes from the final rule that was published in 2011, and then largely vacated in a federal District Court ruling in 2012.

Would seem to expand the rules scope and put many more programs at risk Whats in the Draft Regs?Elimination of one of three debt measures (the Loan Repayment Rate);

Establishment of new thresholds for the two surviving rates (the Debt to Earnings Rates) based on a measurement period that could be as short as two years (rather than the three-year minimum under the prior rule); Whats in the Draft Regs?Creation of separate non-contiguous scores for passing and failing, with a new zone status for educational programs that neither pass nor fail;

Change in the definition of covered programs by reducing the minimum number of completers. This change alone is calculated to roughly double the number of educational programs subject to this rule,Whats in the Draft Regs?Creation of a new definition of covered students to exclude all data for students who did not receive Title IV federal student aid funding in the form of a grant or loan, while continuing to include private and institutional loan data for students who did receive a Title IV loan or grant;

Establishment of new standards for passing and failing scores that, according to EDs estimate, would render approximately 9% of all programs ineligible and approximately 12% of all programs in the zone;

Whats in the Draft Regs?For those schools that fail the Debt to Earnings Rates in a single year, imposition of enrollment caps.

The draft rule suggests that ED intends to put the GE Rule into effect immediately after the expected July 1, 2015 effective date.

Whats in the Draft Regs?ED would require institutions to submit their first data reports by July 31, 2015. The first set of GE rates would be published in final form for the 2014-15 award year, based on student information for the 2010-11 and 2011-12 award years. These rates would incorporate the most currently available earnings data for these students.

While the first rates might not be published for several years, most of the data used to calculate those rates, especially the data on educational debt, seems to be fixed at this time.

Whats in the Draft Regs?The draft rule suggests that ED intends to put the GE Rule into effect immediately after the expected July 1, 2015 effective date. ED would require institutions to submit their first data reports by July 31, 2015. The first set of GE rates would be published in final form for the 2014-15 award year, based on student information for the 2010-11 and 2011-12 award years.Whats in the Draft Regs?If ED is able to follow the timeline as suggested in the proposed draft rule, it is quite possible that the first set of GE rates would be issued in draft form in early calendar year 2016 and published in final form later in that year.

As a result, institutions with failing programs would be subject to enrollment caps and be required to issue student warnings in late 2016

Whats in the Draft Regs?Based on the shorter measurement period, could be subject to loss of eligibility in 2017.

These time frames are of course, at this point, subject to many variables certainly including what will actually happen in the pending Neg Reg process. Whats in the Draft Regs?Loss of Eligibility, Mandatory Conditions and the Zone

Rather than a single standard to measure passing and failing, as under the prior rule, the new draft rule would set one standard for passing and another for failing, with a zone status for programs that are in between.

Whats in the Draft Regs?Loss of Eligibility

While the prior rule required a program to fail the debt measures in three out of four years, the draft GE Rule would shorten this period to two out of three years.

A program that fails both of the D/E Rates for two consecutive years or two out of any three consecutive years would be found ineligible for continued Title IV funding, and that period of ineligibility would extend for at least three years.

Whats in the Draft Regs?Loss of Eligibility

Extended status in the zone can also lead to a loss of eligibility. If a program is in the zone for four consecutive years, because it cannot reach a passing rate under either the Debt to Annual Earnings or Debt to Discretionary Earnings Rates in any of those four years, it too would lose eligibility. Whats in the Draft Regs?Mandatory Conditions for Failing Programs If a program fails both of the D/E Rates in a single year (due to a Debt to Annual Earning Rate above 12% and a Debt to Discretionary Earnings Rate above 30%), the institution would be required to meet two difficult conditions. Whats in the Draft Regs?Mandatory Conditions for Failing Programs First, it would have to provide current and prospective students with written warnings, in language prescribed by the Secretary, that the students may not be able to obtain Title IV funding to complete their program at the institution and describing the options available to the student, including transferring to another program or another institution.

Second, such a program would be subject to an immediate enrollment cap that would limit enrollments of Title IV students in the next 12 months to the population of such students in the prior 12 months. Note, however, that this would not cap non-Title IV enrollments. Whats in the Draft Regs?The Zone

The draft rule would also create a zone for programs that are neither passing nor failing. A program that does not pass either of the D/E Rates but has a Debt to Annual Earnings Rate between 8% and 12% or a Debt to Discretionary Earnings Rate between 20% and 30% would fall into the zone. This status would not trigger any conditions such as warnings or enrollment caps.

The duration of the zone status would be limited, Whats in the Draft Regs?Other Provisions

Annual Data Reporting: Institutions would be obligated to file annual reports with detailed information about their students enrolled in GE programs, with the first such report due on July 31, 2015.

Disclosures: The draft rule proposes expanded disclosure requirements,.

Whats in the Draft Regs?Other Provisions

Completion Rates: ED indicates that it will calculate, and require disclosure of, two completion rates the first for students who complete a program within 100% of normal time and the second for students who complete within 150% of normal time.

New Programs: The Department did not provide any proposed draft language on the procedures for institutions to apply to have new gainful employment programs HOWEVER.What are the Negotiators Talking About?Proprietary sector negotiators are pushing for more sensible measures while non-proprietary sector members are pushing for more stringent measuresOne negotiator wants schools to submit letters of credit to the department when in the zone and/or failing.One negotiator wants to empower the department to decide what programs a college can continue to run based on economic settings even if the program is not failing.What are the Negotiators Talking About?Breaking out into separate committees:

Repayment rates--led by Jack Warner from the South Dakota Board of Regents Placement rates--led by Della Justice from the Kentucky Attorney General's office Transition periods/opportunities to improve--led by Belle Wheelan from SACS and Marc Jerome from Monroe College Program level cohort default rates--led by Brian Jones from Strayer University Upfront requirements--led by Barmak Nassirian from AASCU Student consequences--led by Eileen Connor from the New York Legal Assistance Group

What are the Negotiators Talking About?Next 3 day session

NEXT WEEK!!QUESTIONS? Howard LeslieVice President, Financial Aidhdl@berkeleycollege.edu212.933.6700 Ext. 1205