Gainful Employment Recision

Regulation

The Secretary proposes to rescind the gainful employment (GE) regulations (removal entirety of Subpart Q).  The gainful employment program requires the Secretary to collect information from institutions, to create a report for prospective, and current students about previous students debt and earnings after graduation.  The measure and information has the intent to inform students if the program prepares them for gainful employment.

This is important as the Gainful Employment Program is one of many requirements for the authorization of a beneficiary from Higher Education Act (HEA) Program Funds, such as Federal Student Aid programs (grants, loans, and work-study programs).

Due to this requirement, funds are limited to the extent an institution can have high performing Gainful Employment performance.

This makes sure schools receive funding from the government, if they continuously work to make their programs fulfill requirements in the market so their alumni can be of employ.

The Department plans TO RESCIND THIS REQUIREMENT to change the College Scorecard, or other ranking tool to provide outcomes for all higher education programs at all participating institutions with authorization from title IV of the Higher Education Act of 1965.

The change is said to be in order to improve transparency, and inform student enrollment through a market-based accountability system.

Section 401 establishes subpart Q as the gainful employment regulations, which requires an incentive for institutions to reports information to the secretary, and disclose the information about the program to prospective and enrolled students.

(D) 1 – Eligible programs can declare approval by recognition state agency, in lieu of accreditation.

(D) 3 – Recognition, that the program it offers satisfies the applicable educational outcomes to assist towards professional licensure or certification requirements.

What is a D/E Rate and Why Is It Important,

The D/E rate is a measure given to prospective students that tells them the amount of debt of past students, and their earnings.  This measure is to help a atudent figure if a program is worth the amount of debt they are signing to pay.  The Debt-Earnings rate actually comes from two rates.  The Discretionary Income Rate (must be less than or equal to 20%) and the Annual Earnings Rate (or less than or equal to 8%).  The rates are important in the determination of eligibility of program submissions from institutions.  Failure determines the institution (DIR) is greater than 30%, or the income for the denominator of the rate(discretionary earnings)) is negative or zero; and AER is greater than 12% or the denominator of the rate (annual earnings) is zero

D/E Eligibility Methodology 

ineligibility occurs when the institution’s program fails in two out of three consecutive award years with calculation of D/E rates.  Ineligible still, if it remains in combination at, or between the failure and pass rates for four consecutive years with D/E calculation.

If the secretary does not complete rate calculation for a given year, the program receives receives no result status for that year.  The standing carries over from the most recent year with calculation.

It also limits institutions from applying for funds for a program that is similar to one that has been ineligible due to failure in D/E measure, or a self-discontinued program from the Institution.  The institution also has the burden to provide and submit an explanation of how the program is not similar to a previous ineligible one.

Possible Impacts

If this program is rescinded, opportunity will be made for low quality educational institutions to receive public financed funding, without the incentive, and requirement to make their programs end in gainful employment.

This program recision puts government grants, loans, and work-study programs at risk, as it removes a limitation that necessitates institutions to make sure programs end in gainful employment.

The Gainful employment programs necessitate transparency, and education of the programs.

Public funds may become accessible to future institutions, and have no requirement to work with employers, to improve and compete in gainful employment performance.

The gainful employment program is a outside review of the success of an institutions program.

Reason

The Gainful Employment Program is an incentive for, and measure of; how well institutions of higher education are meeting the demands of the labor market.

Significance

This program can be an incentive to higher education institutions to reach out to employers and create programs that meet their needs.  There is more for the program to improve, and to better distribute information regarding employment needs and education quality. 

This measure increases the quality of: education students receive, the trained and educated personnel Domestic market participants have access to.

The program’s methodology helps inform decisions around the financial health of previous borrower, but not whether the institution’s  program satisfies some labor market need.

Significant Measures

Completion Rates (# full time students in enrollment cohort, complete program within 100% of program’s length / number of full time students in the enrollment cohort.  Another rate again but within 150% of program time length, and again for less than full time students and within 200% of program time length and again for 300% of program time length

Withdrawal Rate

For each enrollment cohort there are two withdrawal rates the first the percentage of students in enrollment cohort which withdrew within 100% of program time length and the second for within 150% of program

Loan Repayment Rate

number of borrowers paid in full plus number of borrowers in active payment) / number of borrowers entering payment.  (total number of borrows who entered repayment during the two-year cohort period on FFEL or Direct Loans received for enrollment in the program.)

Other Measures Given By Gainful Employment Measures

  • number of borrowers paid in full,
  • in active repayment,
  • loan defaults,
  • repayment rates for borrowers who completed or withdrew
    exclusions
  • Median Loan debt for students completed the program
  • Median Loan debt for students withdrawn from the GE program
    completed and withdrew
  • Mean and Median earnings for students who complete program.

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