Sleepwalking Through Gainful Employment's Growing Impact

GE is growing in scope despite data limitations; plus two data corrections

Author

Phil Hill
October 13, 2023

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We have a few topics in the queue (weekly interesting reads, Educause conference notes, commentary on OPM market chaos, etc), but I think it is important to offer a quick update on what we’re learning about Gainful Employment (GE). Namely, the scope is growing, and I need to make two corrections.

Sleepwalking

Too much of the higher ed community in the US tends to think of Gainful Employment still in terms of protecting students from poor-performing career training programs, and oh yeah, some broader disclosures. There is growing awareness that non-GE programs will have new reporting requirements through the new Financial Value Transparency (FVT) portion of the rules, but by and large I see too many people missing the significance of the expansion in scope.

I have described in some detail many of the data limitations and poor assumptions behind the GE & FVT rules, including that a large majority of programs do not have valid debt or earnings data and pass by not-failing (rather than pass by metrics). To its credit, the US Department of Education (ED) acknowledges the problem in the Regulatory Impact Analysis section of the final GE & FVT rules.

The Department is subject to limitations in data access that necessitate our approach.

What is important to note, however, is that the myriad data limitations are not causing ED to be more cautious in the usage of GE metrics. Instead, ED is expanding the scope of GE’s usage despite the problems. The first example is of course the FVT disclosures and student acknowledgement forms.

But there are signs that there is more to come. Consider the implied or suggested usage of GE metrics to determine student loan discharge as discussed in this week’s negotiated rulemaking. As described in an update from Career Education Colleges and Universities:

The Department then quickly wrapped up question #4 and moved to question #3:

How should the Department consider debts taken out by students to attend programs when we later find that such programs did not provide a minimum level of financial value sufficient to make loans affordable for many or most borrowers?

In framing question #3, the Department mentioned Gainful Employment as a method to assess financial value and suggested that if a school failed Gainful Employment their students could have their loans forgiven. The Department noted that schools would not face liability for any debt that is forgiven because the school failed Gainful Employment.

A summary from the National Association of Student Financial Aid Administrators also described how negotiators not only picked up on this topic be discussed an expansion of usage (remember that GE and FVT rules are only based on program completers):

The committee then moved back to the third question of the issue paper, which asked how ED should consider debts taken out by borrowers who attend programs with a low level of financial value. Multiple negotiators brought up ED’s new gainful employment rules as a possible resource for ED to provide relief to borrowers who attended programs with low financial value.

[Kyra Taylor, a negotiator representing legal assistance organizations] suggested ED consider non-completion as a basis to discharge borrower’s debt, in addition to schools where the income premium is not proportional to the amount of debt that the borrower has taken.

“Legal aids have long been in support of using things like the gainful employment rule to provide students with relief,” Taylor said. “I think that is extraordinarily important. However, I think we should also consider that borrowers who have debt and earn less than a high school graduate in their state should also be entitled to relief.”

No one in neg reg or at ED seems concerned that they are relying on very limited data.

There are quite a few regulations and executive actions by ED that fall into the protect students from poor-performing programs, and hold these programs accountable theme. Increasingly, GE metrics are being used or being considered as a method to define which programs are performing poorly. Despite the numerous data limitations.

It would be a mistake for higher ed administrators to use complacency to not understand the impact of this scope expansion in the usage of GE metrics. Understand the data being used, understand the risks to schools, understand student loan cancellation implications, understand potential impacts on prospective students.

Errata

My two recent posts on the final GE & FVT rules included two descriptions that need correction.

The first is that I minimized the scope of FVT on Wednesday by describing the exemption of undergraduate degree programs. Alert reader (some might say my secret QA resource) Erika Swain from the University of Colorado pointed out that while ED’s fact sheet was vague on the subject, the rules show that all undergraduate programs will need to disclose their GE metrics and have them available on the public government website. The exemption is that undergraduate degree programs will not need to obtain student acknowledgement for programs that fail GE metrics. In other words, the exemption is only for notification and acknowledgement, not for disclosure.

Erika is correct, and I have updated Wednesday’s post.

The second correction is that I have not shown the difference between the College Scorecard data and the Program Performance Data (PPD 2022) in how median debt is calculated. The GE & FVT rules (and regulatory impact analysis) is based on PPD 2022, and that data includes non-borrowers in the median debt determination. The College Scorecard has better data overall, but its median debt fields do not include non-borrowers. I discovered this oversight based on a comment in the final GE & FVT rules.

The methodology for calculating median debt differ in the two data sources because in the College Scorecard, median debt is measured only among borrowers, whereas in the PPD programs that have completers who graduate with debt have those students' lack of debt factored into their median debt amounts.

I had made the mistake of not calling out this difference based on the confusing CS data dictionary that includes conflicting statements.

Scorecard field of study debt metrics are provided for all graduates …

AND

Data users should exercise caution in making comparisons between Scorecard monthly earnings and debt estimates with the threshold in the GE regulation because the data generating process for both debt and earnings is substantially different. For example, the median loan debt that was used in GE was calculated using all federal financial aid recipients, whereas in Scorecard, this is calculated only for federal borrowers.

There is no access to the underlying data, meaning that institutions (and analysts) have to rely on ED for both the data and data descriptions, both of which need improvement. Moving forward, I will either directly use PPD 2022 data when available or at least note this discrepancy in data methodology in descriptions of charts.

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