The Still Overlooked Financial Value Transparency Rules
What about the non-Gainful Employment disclosures coming to a government website near you?
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Update 10/13 - I have updated this post to correct the undergraduate exemption. Associates and bachelors degree programs will be required to disclosure program metrics but will not require student acknowledgement form. I apologize for this error.
With recent publication of the final Gainful Employment (GE) rules, there is still an overlooked aspect of the rules’ impact on nonprofit colleges and universities. Many of those schools’ certificate programs fall under GE, where programs failing GE metrics for two years could lose access to federal financial aid; however, there is also an impact on the more traditional part of these programs, as described in a Department of Education (ED) fact sheet [emphasis added].
Financial Value Transparency
In a nutshell, the FVT will measure academic programs at nonprofit colleges and universities against the GE metrics:
Programs that fail either of these metrics will have to have prospective students sign an acknowledgement that they have seen these failure rates before signing up.
There are two big changes since the draft rules were submitted in May, largely based on across-the-board complaints of trade associations (those representing colleges and universities) during the comment period.
Undergraduate degree programs are no longer included from the student acknowledgement requirements. [Updated]
Select licensed fields have a different, more complicated timeframe for measuring earnings (beyond the 2-4 years for other programs).
The big limitation on all of the data is that programs cohorts smaller than 30 students (measured in a two-year period) will not be measured due to privacy concerns. But it is even more restrictive - that is 30 completers who took out federal financial aid. For non-GE programs:
61% of programs are exempted from reporting; and
15% of enrolled students are in these exempted programs.
The following chart attempts to capture an overview of these nonprofit programs subject to FVT disclosure and acknowledgement. Undergraduate degree programs will be required to disclose data but not require students to sign acknowledgement forms for failing programs. [Updated] Note the following when reading the charts below:
I use public College Scorecard data that has a broader coverage than the data formally used in the rule-making.
I have set the vertical axis to measure pass-fail on debt-to-earnings and the horizontal axis to measure pass-fail on earnings premium (aligned to state-level data).
The size of the bubbles represent the cohort size of specific programs, and the color coding represents the credential level (e.g., master’s, doctoral, first-professional).
I have removed undergraduate degree programs based on the FVT rules.
I have removed the fields using longer timeframes from this view: “medicine, osteopathy, dentistry, clinical psychology, marriage and family therapy, clinical social work, and clinical counseling”. These programs are still part of FVT, but I have not figured out a way to show them accurately, yet.
ED uses a four-digit Classification of Instructional Programs (CIP) coding that may aggregate several related programs together.
Like GE, to pass FVT means to pass both metrics. In the chart above, to be below the $0 vertical mark and to the right of the $0 horizontal mark. The bottom right quadrant.
From first observations:
It is primarily for undergraduate certificate programs (many of which will also be subject to GE) that fail the earnings premium test (to the left of $0 line).
It is primarily master’s degrees and first professional degrees that fail the debt-to-earnings test.
Specific Institutional Views
To get a sense of how this applies to real institutions, consider this view highlighting the University of Southern California.
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