The gainful employment rule, as finalized in by the Obama Administration in October 2014, was created to strengthen institutional accountability by requiring career training and certificate programs to demonstrate that completers met minimum debt-to-earnings ratios. Career training and certificate programs at for-profit, non-profit, and public institutions unable to meet the minimum threshold four years in a row lose their federal financial aid eligibility because, according to the rule, they fail to provide reliable opportunities for gainful employment for graduates. In early January 2017, the Education Department (ED) released the first debt-to-earnings rates for career training programs. Over 2,000 programs, 98 percent of which were offered by for-profit institutions, fell under “fail” or “zone” rates. The first year of data demonstrate the need to keep these programs accountable to the success of their students; however, the Trump Administration continues to initiate efforts to scale back measures of accountability.
As outlined in NASPA blogpost “Borrower Protections: Update from November Borrower Defense Committee Meeting,” the implementation of key provisions of both gainful employment and the borrower defense to repayment rules were delayed by the Trump Administration, under Secretary of Education Betsy DeVos’s promise of a regulatory reset, until at least July 2018. Both rules are currently subjects of on-going negotiated rulemaking processes. This post will provide a summary of the first meeting of the Gainful Employment Negotiated Rulemaking Committee as well as updates on recent legislative activity related to the gainful employment rule.
The Gainful Employment Negotiated Rulemaking Committee sessions are underway, with their first meeting completed December 4-7, 2017; the Committee is scheduled to meet two more times, on February 5-8, 2018 and March 12-15, 2018. Gainful employment session transcripts from the first meeting are available on the department website and audio recordings will be available soon. A deeper dive into the transcripts offers up a high-level overview of gainful employment critiques, issues, and topics under consideration by the Committee. (Note: transcripts will be referenced by date and page number in the paragraphs below).
On the first day of the Committee session, December 4, discussion centered on establishing an overview of the issues and gaining a deeper understanding of what would be negotiated in the upcoming session dates. Over the next three days 18 primary negotiators from diverse career backgrounds discussed questions from issue briefs, also available on the website. Topics that received significant attention are highlighted in this post.
Gainful Employment Program Expansion
Participants considered whether the requirements are punitive to career training programs by not extending gainful employment program requirements to all institutional programs. Several participants discussed that gainful employment programs are defined in statute (Dec. 4, 118), and expansion of the rule to all four-year bachelor degree programs may require Congressional intervention. One participant pointed out that perhaps gainful employment programs need not include private institutions, as these institutions are subject to stringent accountability measures of which career technical training schools are not (Dec. 4, 132). Still other participants felt program expansion would be a useful way to address a growing national conversation to hold institutions more accountable across the board (Dec. 4, 124).
Industry Earnings Variation
Differences in overall earnings based on profession was an issue that came up repeatedly over the course of the four days. One major issue participants had with a standard debt-to-earnings ratio was the difficulty in measuring earnings in professions that tend to result in inconsistent or delayed earnings such as with the military, performing arts, culinary arts, or cosmetology. Participants reasoned that a one-size-fits-all regulation standard in terms of metrics, disclosure, and reporting would unfairly punish institutions for variations in industry standards (Dec. 5-Dec. 7).
The Committee also discussed whether ED should retain, amend, or eliminate the accountability framework of the gainful employment rule (Dec. 4, 143). An economist in the group pointed out that the gainful employment accountability standard addresses the “lemons problem,” of school choice. The “lemons problem” is a term in economics relating to asymmetric information between buyer and seller; in this case, students are the buyers and are often unable to determine the true quality of the institution they attend (Dec. 4, 143). Another negotiator noted that while disclosure as a rule increases transparency, having a policy centering on disclosure without an accountability component would fail to address inevitable issues of compliance (Dec. 4, 152). Participants who pushed back against the accountability framework continued to express concern that the accountability framework was punitive toward less lucrative professions such as teaching versus business (Dec. 4, 149).
The Gainful Employment Committee is gearing up for the second session which will begin in early February, 2018. Discussions around disclosure may be subject to change in the next session in response to ED scaling back the gainful employment rule provision which required career training programs to list median incomes of graduates on their websites. While these data are still available, students will now have to go searching for them on the Federal Student Aid and ED websites, download the spreadsheet, and scour them for specific information. Therefore, while the outcomes of negotiated rulemaking remain up in the air until sessions draw to a close in mid-March, additional deregulation since the start of the New Year, continues to weave a Departmental agenda of loosening measures of institutional oversight
Around the same time the Committee started negotiations, the House Education and the Workforce Committee marked up new legislation proposed to reauthorize the Higher Education Act (HEA) of 1965. News outlets began questioning proposed cuts to financial aid programs and institutional oversight, including that of the gainful employment rule. On December 6, Forbes postured that the “Promoting Real Opportunity, Success, and Prosperity through Education Reform” (PROSPER) Act would “benefit for-profit institutions” and highly impact students interested in public service work. On December 7, the Center for American Progress noted that the bill would “eliminate safeguards” and “weaken the repayment safety net.” Higher education associations noticed the proposed cuts and responded with advocacy efforts, such as those statements made by NASPA and the American Council on Education (ACE) directing Congress to consider the massive impact the PROSPER Act would have on students. In the new year staff, faculty, and students alike may be gearing up for the next battle after tax reform. NASPA signed onto multiple statements of protest (links available in the December policy update), released a detailed blogpost, and just earlier today provided further insight through a live briefing, but at the same time acknowledges that the future of certain regulations, like that of gainful employment, have been held under scrutiny since the start of the Trump Administration.
The Gainful Employment Committee is scheduled to meet again in both February and March, 2018. During the times between these sessions ED will amend regulatory language based on recommendations from the committee. A new draft of the regulatory language will be made available to negotiators before each of the upcoming sessions. Assuming a consensus is reached by the end of committee meetings in March, ED will use this final regulatory language to produce its NPRM where after receiving public input, the remaining process is left in the hands of ED to receive final comments and determine a final ruling. Additional information on this process is available on ED’s website. The Policy and Advocacy Team will be tracking the committee meetings and regulation procedure on borrower defense to repayment in the coming months.