7,500 Comments Don't Get As Much Change As You Might Think

ED releases final Gainful Employment and Financial Value Transparency rules

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Today the US Department of Education (ED) released its final Gainful Employment (GE) and Financial Value Transparency (FVT) rules.

The Biden-Harris Administration today released final regulations that establish the most effective set of safeguards ever against unaffordable debt or insufficient earnings for postsecondary students. The final rule has two key parts:

* A revitalized and strengthened Gainful Employment (GE) rule, that will protect approximately 700,000 students a year from career training programs that leave graduates with unaffordable loan payments or earnings no better than what someone who did not pursue postsecondary education earns in their state.

* A new Financial Value Transparency (FVT) framework will give students in all programs the most detailed information ever available about the net costs of postsecondary programs, and the financial outcomes they can expect. It will also help prospective students understand the potential risks involved in their program choices by requiring them to acknowledge viewing this information before enrolling in certificate or graduate programs whose graduates have been determined to face unaffordable debt levels.

The unofficial 775-page version of the new regulations (it will be condensed due to formatting once the official version comes out in the Federal Register) describes the rules, ED’s justifications, and ED’s responses to a subset of the thousands of public comments. tl;dr - yada, yada, yada, we’re changing nothing of significance.

In mid August I shared an update that caused a few questions, as it was based on me connecting some dots:

There are no changes between the proposed Gainful Employment rule submitted in May 2023 and the final proposed rules based on the thousands of comments. ED is supposed to review all comments and respond, and even with the abbreviated 3,906 posted comments, that is a short time, which I suspect is based on the need to pass final review by November 1st so that the rules can be in place by July 2024.

I overstated my confidence in that post, but now that the final rules are out, that view turned out to be 99% correct. From the ED fact sheet, these are the only changes from the draft rule worth comment.

The Department has made some modifications to the final GE program accountability framework in response to public comments on the proposed rule. The changes include:

• We exempt institutions from all reporting requirements and coverage of the rule with no programs large enough to calculate the metrics underlying the GE program accountability framework. This will alleviate reporting burdens for nearly 700 small institutions (accounting for less than 1% of all Federally aided students), including many small Tribally Controlled Colleges and Universities, proprietary, private non-profit, and foreign institutions.

• We exempt institutions in Puerto Rico and other Territories and Freely Associated States from the accountability provisions of the rule, but still require reporting under the Financial Value Transparency framework. Data used to calculate both high school earnings and discretionary earnings (i.e., the federal poverty line) are not currently available, so the Department will not sanction programs based on their debt and earnings outcomes relative to the thresholds described in the rule.

• We establish a data-driven process to identify fields where measuring earnings over a longer time horizon is necessary, potentially including graduate programs focused on mental health, due to lengthy post-graduate training requirements that limit graduates’ early career earnings potential.

The rules become effective July 1, 2024, and the first program metrics will be released in early 2025.

I cannot emphasize enough: compared to the 2014-era GE rules, there are two big differences in scope.

  • There is an entirely new metric called an Earnings Premium (EP) that is outside of the scope of student loan debt, per se. It just looks at program earnings compared to state-aggregated earnings of high school graduates, and this metric will have a bigger impact on vocational programs than actual debt-to-earnings (D/E).

  • The FVT rules apply to virtually all schools and all programs, not just those directly covered in GE. In other words, these rules will impact the vast majority of US higher education, not just for-profit institutions. For failing programs “prospective students must acknowledge that they have viewed the information provided through the program informationwebsite established and maintained by the Secretary [ED].”

I obviously have only scanned the rules document and will update as we look at the details. In particular I plan to look at how ED defines earnings data to be used in calculations.

I recommend reading Inside Higher Ed’s coverage today as well.

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