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Program Integrity: Gainful Employment-Debt Measures rule (2012)

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The Program Integrity: Gainful Employment-Debt Measures rule is a significant rule issued by the U.S. Department of Education effective July 1, 2012, that amended department regulations concerning institutional eligibility under the Higher Education Act of 1965 and the Student Assistance General Provisions. The rule aimed to improve information disclosure and to establish measures for determining educational program eligibility.[1]

HIGHLIGHTS
  • Name: Program Integrity: Gainful Employment-Debt Measures
  • Agency: Office of Postsecondary Education, Department of Education
  • Type of significant rule: Economically significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    • July 1, 2012: The final rule took effect.[1]
    • January 23, 2012: The Department of Education published a correction to the final rule.[2]
    • June 13, 2011: The Department of Education published a final rule.[1]
    • September 9, 2010: The Department of Education closed the comment period on the second proposed rule.[3]
    • August 2, 2010: The Department of Education closed the comment period on the first proposed rule.[4]
    • July 26, 2010: The Department of Education published a notice of proposed rulemaking to establish measures for program eligibility and opened the comment period.[3]
    • June 18, 2010: The Department of Education published a notice of proposed rulemaking to improve program integrity and opened the comment period.[4]
    • September 9, 2009: The Department of Education announced the establishment of two negotiated rulemaking committees to prepare proposed regulations to implement changes made to the Higher Education Act of 1965.[5]

    Background

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    President Lyndon Johnson (D) signed the Higher Education Act (HEA) into law on November 8, 1965, in an effort to strengthen educational resources and financial assistance for college students by increasing federal grants to universities, creating low-interest student loans, and issuing scholarships. Title IV of the HEA established standards for offering financial assistance to college students, which governed Student Assistance General Provisions regulations.[6]

    In response to amendments made to the HEA, the Department of Education issued two proposed rules in an effort to further the stated goals of the HEA. After reviewing comments from the two proposed rules, the department issued three separate final regulations to address issues with program integrity, gainful employment, and measures for determining educational program eligibility.[1]

    The regulations regarding gainful employment programs were further amended by the Obama administration in 2015. The 2015 rule was later rescinded in 2019 by the Trump administration.

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:

    “ The Secretary amends the Student Assistance General Provisions regulations to improve disclosure of relevant information and to establish minimal measures for determining whether certain postsecondary educational programs lead to gainful employment in recognized occupations, and the conditions under which these educational programs remain eligible for the student financial assistance programs authorized under title IV of the Higher Education Act of 1965, as amended (HEA).[1][7] ”

    Summary of provisions

    The following is a summary of the provisions from the rule's entry in the Federal Register:[4]

    “ The final regulations will:
    • Give all programs three years to improve their performance. The Department will begin by giving institutions data to help them identify and improve their failing programs and to help current and prospective students make informed choices. The first programs could lose eligibility based upon their performance under the debt measures calculated for fiscal year (FY) 2014 and released in 2015, rather than FY 2012 as proposed.
    • Target only the worst performing failing programs by:
    (1) Permitting an institution to maintain a program's title IV, HEA program eligibility until the program fails both the debt-to-earnings ratios and repayment rate measures for three out of four FYs, similar to the multi-year measures used to assess cohort default rates (CDRs) at an institution;
    (2) Limiting the number of programs that will lose eligibility based on the debt measures calculated for only FY 2014 under § 668.7(k) to the worst performing 5 percent of programs (weighted by enrollment); and
    (3) Eliminating enrollment restrictions that the Department had proposed in the July 26, 2010 NPRM to apply to all programs with repayment rates below 45 percent and an annual loan payment that is more than 20 percent of discretionary income or 8 percent of annual earnings.
    • Improve the repayment rate and debt-to-earnings ratios measures based on extensive public comment by:
    (1) Revising the measures such that a program is now considered to lead to gainful employment if it has a repayment rate of at least 35 percent or its annual loan payment under the debt-to-earnings ratios is 12 percent or less of annual earnings or 30 percent or less of discretionary income;
    (2) Allowing institutions to demonstrate that their programs meet the debt-to-earnings ratios with alternative reliable earnings information, including use of State data, survey data, or Bureau of Labor Statistics (BLS) data during a transitional period;
    (3) Measuring performance in years three and four of repayment, rather than years one through four, to examine more typical years in the life cycle of a loan (with a provision to use years three through six where necessary to ensure that more than 30 borrowers or completers are included in the measurement and additional adjustments to address the needs of programs that are improving their performance, graduate programs, and medical and dental programs);
    (4) Measuring debt burdens based on an assumption that loans are repaid over 10 to 20 years depending on the level of degree, rather than 10 years for all programs as was originally proposed. Loan debt will be amortized over 10 years for undergraduate or post-baccalaureate certificate and associate's degree programs, 15 years for bachelor's and master's degree programs, and 20 years for programs that lead to a doctoral or first-professional degree;
    (5) Limiting debt in the debt-to-earnings ratio calculation to tuition and fee charges for a specific educational program, if this information is provided by the institution, thereby providing programs relief for loans taken for indirect educational costs, including living expenses;
    (6) Providing that borrowers who meet their obligations under income-sensitive repayment plans are considered to be successfully repaying their loans even if their payments are smaller than accrued interest, so long as the program at issue does not have unusually large numbers of students in those categories; and
    (7) Providing that a program is considered to satisfy the debt measures if the number of students who completed the program or the number of borrowers whose loans entered repayment during the relevant four-year period is 30 or fewer.
    • Improve the disclosure of information about programs by:
    (1) Providing in § 668.7(g)(6) that the Secretary may disseminate the final debt measures and information about, or related to, the debt measures to the public in any time, manner, and form, including publishing information that will allow the public to ascertain how well programs perform under the debt measures and other appropriate objective metrics. The Department is considering appropriate ways to provide these metrics and other key indicators to facilitate access to the information and the comparison of programs;
    (2) Requiring that an institution with a failing program that does not meet the minimum standards specified in the regulations must provide warnings to enrolled and prospective students;
    (3) Requiring that the debt warnings for prospective students must be provided at the time the student first contacts the institution to request information about the program. The institution may not enroll the student until three days after the debt warnings are first provided to the student. If more than 30 days pass from the date the debt warnings are first provided to the student and the date the student seeks to enroll in the program, the institution must provide the debt warnings again and may not enroll the student until three days after the debt warnings are most recently provided to the student; and
    (4) Requiring an institution to disclose the repayment rate and the debt-to-earnings ratio (based on total earnings) of its gainful employment programs.
    • Establish restrictions on reestablishing eligibility of ineligible programs, new programs that are substantially similar to an ineligible program, and failing programs that are voluntarily discontinued by the institution.

    In sum, the Department has revised these regulations to promote disclosure, to encourage institutions to improve their occupational programs, and to provide more time for this improvement before revoking eligibility. The Department believes that institutions will strengthen their educational programs to meet these higher standards, and relatively few programs will fail. Programs that offer a rewarding education at an affordable price will prosper, and institutions will continue to innovate to serve students and taxpayers.[7]

    		”

    Significant impact

    See also: Significant regulatory action

    The Office of Management and Budget (OMB) deemed this rule economically significant pursuant to Executive Order 12866. An agency rule can be deemed a significant rule if it has had or might have a large impact on the economy, environment, public health, or state or local governments. The term was defined by E.O. 12866, which was issued in 1993 by President Bill Clinton.[1]

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Federal Register, "Program Integrity: Gainful Employment-Debt Measures," June 13, 2011
    2. ↑ Federal Register, "Program Integrity: Gainful Employment-Debt Measures; Correction," January 23, 2012
    3. ↑ 3.0 3.1 Federal Register, "Program Integrity: Gainful Employment," July 26, 2010
    4. ↑ 4.0 4.1 4.2 Federal Register, "Program Integrity Issues," June 18, 2010
    5. ↑ Federal Register, "Office of Postsecondary Education; Notice of Negotiated Rulemaking for Programs Authorized Under Title IV of the Higher Education Act of 1965, as Amended," September 9, 2009
    6. ↑ Federal Student Aid, "Gainful Employment Information," accessed May 2, 2023
    7. ↑ 7.0 7.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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