Friday Follow Up

Since the OBBB reconciliation bill debates are in full swing and likely to impact nearly all institutions in the US, we are moving this week’s Friday Follow Up to all subscribers in front of the paywall.

There has been a lot of analysis this week with the US Senate Committee on Health, Education, Labor and Pensions (HELP)’s release of its own reconciliation bill proposal that is quite different than that in the US House. Inside Higher Ed in particular provided a nice table-based comparison between the House and Senate bill provisions.

I think it would be useful to do a deeper dive on the institutional accountability portions, following up on my initial analysis of the House risk-sharing proposals. What I’m hearing from feedback on those two posts are that people could use more clarity even on the key metrics involved, in a digestible format.

Three Accountability Approaches

I think we should compare three approaches to better understand institutional accountability. The idea in all cases is that student debt levels are too high and that higher ed institutions should be accountable more directly for this problem.

The Financial Value Transparency & Gainful Employment (FVT & GE) regulations were proposed in 2021 under the Biden Administration and finalized in 2023, targeting primarily the for-profit sectors. This approach built on earlier Democratic administration GE regulations started in 2011, but the FVT portion added transparency for all programs in all sectors, and it added a new Earnings Premium (EP) metric that was not directly tied to Title IV student loan debt. This set of regulations is on the books right now, with initial reporting from schools due in September and initial impacts starting in 2026.

The House Risk-Sharing reconciliation bill proposal takes a different approach, requiring colleges and universities to reimburse a portion of the student loan debt in non-repayment status. These reimbursements are offset by PROMISE grants that are based on formulas (non-discretionary and automatic) designed to financially encourage lowering of college costs and increasing of access and student completion.

The Senate reconciliation bill proposal is essentially the EP portion of GE regulations applied to all sectors and attempting to fix the biggest GE problems. At its core, it attempts to cut off financial for programs that do not increase student earnings sufficiently.

Disclosure: I have provided a declaration in the lawsuit against the FVT & GE regulations, analyzing the data provided. I am also providing visualizations and data analysis of the new proposals to clients.

In all cases, there is a heavy reliance on the concept of Earnings Premium (aka Return on Investment of the College Premium) which measures graduate earnings several years after program completion. This requires a comparison group to measure how earnings have increased due to the program, thus the premium or return.

FVT & GE are the current regulations, and the House and Senate versions of accountability are being debated in the One Big Beautiful Bill reconciliation debates expected to come to resolution in July or August. Note: If and when the OBBB is signed into law, the House version would eliminate FVT & GE while the Senate version would technically not.

Comparison of Key Concepts

Here is a summary of the key concepts behind each of these three institutional accountability approaches.

A few notes:

• There are big differences in Scope. GE is primarily based on regulating for-profit institutions, and FVT was added as transparency-only in a broader sense. The House bill proposal applies to all programs in all sectors. The Senate bill proposal is similar to the House one but it excludes undergraduate certificate programs. This is quite relevant to entry-level workforce programs such as Cosmetology and Allied Health ones.

• There are also big differences in Level of Impact. All three approaches are measured along programs, but the House risk-sharing aggregates those programs metrics for a direct impact on the institution. FVT & GE and the Senate bill only directly impact the eligibility for Title IV financial aid for specific programs.

• Both the FVT & GE and the Senate bill include student notification of programs failing metrics (a disclosure of shame) in the interim before the program lose access to financial aid eligibility.

• My summary of the Narrative also shows differences. FVT & GE is focused on reining in predatory programs. The House bill seeks to create direct incentives for colleges and universities to lower costs, increase access, and help student complete programs at a greater rate. The Senate bill is essentially the Earnings Premium portion of GE on a sector-neutral basis but seeking to fix some of the main flaws of GE. A better GE for all, more or less.

Comparison of Metrics Directly Used

Here is a summary of the key metrics that are directly used in each of these three institutional accountability approaches. For example, net program price is directly used in the House risk-sharing bill proposal, but it only indirectly impacts the other approaches.

A few notes:

• The definition of Cohorts are different, where FVT & GE only looks at program completers, whereas the two reconciliation bill approaches also includes non-completers.

• In terms of Debt, FVT & GE looks at median debt levels per program cohort, whereas the House Risk-Sharing looks at non-repayment portion of program cohort debt, and the Senate GE for All does not look directly at debt. Interestingly, the House version excludes student debt in default status.

• For the Comparison Earnings, for undergrad programs both FVT & GE use High School graduates without a college credential, age 25-34, per state (although the Senate allows metropolitan adjustment at the Department of Ed’s discretion). For grad programs they use equivalent bachelor’s degree holders age 25-34. The House instead uses federal poverty guidelines (150% for undergrad programs, 300% for grad programs).

• Further, there are Additional Metrics only seen in the House Risk-Sharing in its attempt to directly incentivize schools. These include net program price (tuition and fees and supplies and living expenses minus federal grants), total amount of Pell Grants awarded per program cohort, and “on-time” program completion rates.

I’ll continue analyzing these proposals over the coming weeks.

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