Program Integrity: Gainful Employment, 31392-31453 [2019-13703]

Download as PDF 31392 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations 34 CFR Parts 600 and 668 changes, see the Implementation Date of These Regulations section of this document. [Docket ID ED–2018–OPE–0042] FOR FURTHER INFORMATION CONTACT: DEPARTMENT OF EDUCATION RIN 1840–AD31 Program Integrity: Gainful Employment Office of Postsecondary Education, Department of Education. ACTION: Final regulations. AGENCY: The Secretary of the Department of Education (Department) amends the regulations on institutional eligibility under the Higher Education Act of 1965, as amended (HEA), and the Student Assistance General Provisions to rescind the Department’s gainful employment (GE) regulations (2014 Rule). DATES: Effective date: These regulations are effective July 1, 2020. Implementation date: For the implementation date of these regulatory SUMMARY: Scott Filter, U.S. Department of Education, 400 Maryland Avenue SW, Room 290–42, Washington, DC 20202. Telephone (202) 453–7249. Email: scott.filter@ed.gov. If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free at 1–800–877– 8339. SUPPLEMENTARY INFORMATION: Executive Summary Purpose of This Regulatory Action: This regulatory action rescinds the GE regulations and removes and reserves subpart Q of the Student Assistance General Provisions in 34 CFR part 668. This regulatory action also rescinds subpart R of the Student Assistance and General Provisions in 34 CFR part 668. As discussed in the sections below, the Department has determined that the GE regulations rely on a debt-toearnings (D/E) rates formula that is fundamentally flawed and inconsistent with the requirements of currently available student loan repayment programs, fails to properly account for factors other than institutional or program quality that directly influence student earnings and other outcomes, fails to provide transparency regarding program-level debt and earnings outcomes for all academic programs, and wrongfully targets some academic programs and institutions while ignoring other programs that may result in lesser outcomes and higher student debt. Although the GE regulation applies to less-than-degree programs at non-profit institutions, this represents a very small percentage of academic programs offered by non-profit institutions. TABLE 1–1—REPORTING OVERVIEW OF GAINFUL EMPLOYMENT PROGRAMS School classification GE Programs qualifying for calculation (based on NSLDS reporting) GE programs published Percent of GE programs published (%) GE programs not published Percent of GE programs not published (%) Failing GE programs Failure rate (%) Proprietary .................... Non-profit ..................... Foreign ......................... 9,838 18,962 17 5,676 2,956 5 57.70 15.60 29.40 4,162 16,006 12 42.30 84.40 70.60 727 16 0 12.80 0.50 0.00 Total ...................... 28,817 8,637 30.00 20,180 70.00 743 8.60 khammond on DSKBBV9HB2PROD with RULES2 Data from Federal Student Aid. As table 1–1 shows only 16 percent (2,956) of the 18,962 GE programs at non-profit institutions meet the 30student cohort size requirement. Therefore, only a small minority of those programs are subject to the D/E rates calculation and certain reporting requirements. On the other hand, all programs at proprietary institutions— including undergraduate, graduate, and professional programs—are considered to be GE programs, and 58 percent (5,676) of programs meet the minimum student threshold to report outcomes to the public. As a result, the GE regulations have a disparate impact on proprietary institutions and the students these institutions serve. The regulations also fail to provide transparency to students enrolled in poorly performing degree programs at non-profit institutions and fail to provide comparison information for students who are considering enrollment options at both non-profit and proprietary institutions. Specifically, the VerDate Sep<11>2014 20:10 Jun 28, 2019 Jkt 247001 Department’s review of research findings published subsequent to the 2014 Rule, our review of the 2015 Final GE rates (published in 2017),1 and our review of a sample of GE disclosure forms published by proprietary and non-profit institutions, has led the Department to conclude the following: (1) As a cornerstone of the GE regulations, the D/E rates measure 2 is an inaccurate and unreliable proxy for program quality and incorporates factors into the calculation that inflate student debt relative to actual repayment requirements; (2) the D/E rates thresholds, used to differentiate between ‘‘passing,’’ ‘‘zone,’’ and ‘‘failing’’ programs, lack an empirical basis; and (3) the disclosures required 1 ‘‘Gainful Employment Information,’’ Federal Student Aid, studentaid.ed.gov/sa/about/datacenter/school/ge?src=press-release. 2 Note: The term ‘‘D/E rates measure’’ is used in the 2014 Rule. Although the Department views this term as redundant, we use it here for clarity and consistency. PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 by the GE regulations include some data, such as job placement rates, that are highly unreliable and may not provide the information that students and families need to make informed decisions about higher education options. In addition, since the Social Security Administration (SSA) has not signed a new Memorandum of Understanding (MOU) with the Department to share earnings data, the Department is currently unable to calculate D/E rates, which serve as the basis of the 2014 Rule’s accountability framework.3 The GE regulations specify that SSA data must be used to calculate D/E rates, meaning that other government data sources cannot be used to calculate those rates. Because the Department was 3 ‘‘Amended Information Exchange Agreement Between the Department of Education and the Social Security Administration for Aggregate Earnings Data, ED Agreement No. 10012, SSA IEA No. 325,’’ www.warren.senate.gov/imo/media/doc/ ED%20Agreements1.pdf. E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations unaware at the time of negotiated rulemaking and publication of the notice of proposed rulemaking (NPRM) (83 FR 40167) that SSA would not renew the MOU, we did not address this issue, nor did we suggest, or seek comment on, the potential use of earnings data from the Internal Revenue Service (IRS) or the Census Bureau to calculate D/E rates. Therefore, switching to IRS or Census Bureau data for the purpose of calculating D/E rates would require additional negotiated rulemaking. However, since the Department has decided to rescind the GE regulations, the data source for calculating D/E rates is moot. The 2014 Rule was developed in response to concerns about poor outcomes among GE programs that left students with debt that was outsized, relative to student earnings in the early years of student loan repayment. For example, the Department pointed to cohort default rates (CDRs) that were disproportionately high among students who enrolled at or completed their educational programs at proprietary institutions as an indication that the education provided was of lower quality.4 However, research published in 2014—and discussed throughout this document—but not considered during the Department’s development of the 2014 Rule, confirms that CDRs are largely influenced by the demographics and socioeconomic status of borrowers, and not necessarily institutional quality.5 This makes CDRs a poor proxy for institutional quality, and therefore insufficiently justifies the GE regulations. The 2014 paper also shows that CDRs disproportionately single-out institutions that serve larger percentages of African-American students or single mothers, since these demographic groups default at higher rates and sooner after entering repayment than other borrowers.6 The authors of this study point to reduced parental wealth transfers to minority students as the reason that defaults are higher among this group. As a result, institutions that 4 79 FR 64908. Lochner and Alexander Monge-Naranjo, ‘‘Default and Repayment Among Baccalaureate Degree Earners, National Bureau of Economic Research,’’ NBER working paper 19882, Revised, March 2014, www.nber.org/papers/w19882. 6 Lance Lochner and Alexander Monge-Naranjo, ‘‘Default and Repayment Among Baccalaureate Degree Earners, National Bureau of Economic Research,’’ NBER working paper 19882, Revised, March 2014, www.nber.org/papers/w19882; see also: Government Accountability Office, ‘‘Proprietary Schools: Stronger Department of Education Oversight Needed to Help Ensure Only Eligible Students Receive Federal Student Aid,’’ August 2009, www.gao.gov/new.items/d09600.pdf. khammond on DSKBBV9HB2PROD with RULES2 5 Lance VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 serve larger proportions of minority students will likely have higher CDRs than an institution of equal quality that serves mostly white or more socioeconomically advantaged students. Thus, higher CDRs among minority students may be a strong sign of lingering societal inequities among different racial groups, but not conclusive evidence that an institution is failing its students. The Department now recognizes that a number of studies used to support its earlier rulemaking efforts relied on comparisons between costs and debt levels among students who enrolled at community colleges and those who enrolled at proprietary institutions. However, this is an illegitimate comparison since in 2014, 53 percent of proprietary institutions were four-year institutions, and 63 percent of students enrolled at proprietary institutions were enrolled at four-year institutions.7 Therefore, with regard to costs and student debt levels, comparisons with four-year institutions are more appropriate. Comparisons between students who attend community colleges and those who attend proprietary institutions may be appropriate, especially since both are generally open-enrollment institutions. However, research published by the Brown Center in 2016 shows that there are considerable differences between the characteristics of students who enroll at proprietary institutions and those who enroll at two-year public institutions.8 Students who enroll at proprietary institutions are far more likely to be financially independent (80 percent vs. 59 percent); part of an underrepresented minority group (52 percent vs. 44 percent); or a single parent (33 percent vs. 18 percent) than students enrolled at community colleges. Students enrolled at proprietary institutions are also slightly less likely to have a parent who completed high school (84 percent vs. 87 percent); and are much less likely to have a parent who completed a bachelor’s degree or higher (22 percent vs. 30 percent). These differences in characteristics may explain disparities in student outcomes, including higher borrowing levels and student loan defaults among students who enroll at proprietary institutions. Research published in 2015 by Sandy Baum and Martha Johnson pointed to student and family demographics, as 7 Stephanie Riegg Cellini and Rajeev Davolia, Different degrees of debt: Student borrowing in the for-profit, nonprofit, and public sectors. Brown Center on Education Policy at Brookings. June 2016. 8 Stephanie Riegg Cellini and Rajeev Davolia, Different degrees of debt: Student borrowing in the for-profit, nonprofit, and public sectors. Brown Center on Education Policy at Brookings. June 2016. PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 31393 well as length of time in school, as key determinants of borrowing.9 Therefore, research published subsequent to promulgation of the 2014 Rule showed that differences in borrowing levels and student outcomes may well be attributable to student characteristics and may not accurately indicate institutional quality or be influenced by institutional tax status. The Department has also come to realize that unlike CDRs that measure borrower behavior in the first three years of repayment, lifecycle loan repayment rates more accurately illustrate the challenges that the majority of students are having in repaying their student loan debt and the need to look beyond one sector of higher education to solve this problem. In 2015, the Department began calculating institution-level student loan repayment rates in order to include those rates in its newly introduced College Scorecard and reported that the majority of borrowers at most institutions were paying down their principal and interest. However, in January 2017, the Department reported that it had discovered a coding error, making the repayment data it had published earlier incorrect.10 Though the Department’s announcement downplayed the magnitude of this error, both Robert Kelchen, assistant professor of higher education at Seton Hall, and Kim Dancy, a New America policy analyst, independently found that the error was significant.11 Prior to correcting the error, it was determined that three years into repayment, 61 percent of borrowers were paying down their loans—meaning that these borrowers had reduced their principal by at least one dollar. This reinforced the belief that only a 9 Sandy Baum and Martha Johnson. Student Debt: Who Borrows Most? What Lies Ahead? Urban Institute, April 2015, www.urban.org/sites/default/ files/alfresco/publication-pdfs/2000191-StudentDebt-Who-Borrows-Most-What-Lies-Ahead.pdf. 10 ‘‘Updated Data for College Scorecard and Financial Aid Shopping Sheet,’’ Published: January 13, 2017, ifap.ed.gov/eannouncements/011317 UpdatedDataForCollegeScorecardFinaid ShopSheet.html; Dancy, Kim and Ben Barrett, ‘‘Fewer Borrowers Are Repaying Their Loans Than Previously Thought,’’ New America, January 13, 2017, www.newamerica.org/education-policy/ edcentral/fewer-borrowers-are-repaying-their-loanspreviously-thought/; Kelchen, Robert, ‘‘How Much Did A Coding Error Affect Student Loan Repayment Rates?’’ Personal Blog Post, January 13, 2017, robertkelchen.com/2017/01/13/how-much-did-acoding-error-affect-student-loan-repayment-rates/. 11 Paul Fain, ‘‘College Scorecard Screwup,’’ Inside Higher Ed, Published: January 16, 2017, www.insidehighered.com/news/2017/01/16/fedsdata-error-inflated-loan-repayment-rates-collegescorecard; see also: Robert Kelchen, Higher Education Accountability (Baltimore: John Hopkins University Press, 2018), 54–55. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31394 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations minority of borrowers were struggling to repay debt—such as borrowers who attended proprietary institutions. However, once the error was corrected, it became clear that repayment rates were actually much lower. The corrected data reveals that only 41 percent of borrowers in their third year of repayment were paying down their loan balances by at least one dollar. As noted by Dancy, ‘‘the new data reveal that the average institution saw less than half of their former students managing to pay even a dollar toward their principal loan balance three years after leaving school.’’ 12 The 2017 corrected repayment rate data led the Department to conclude that the transparency and accountability frameworks created by the GE regulations were insufficient to address the student borrowing and underpayment problem of this magnitude, as the GE regulations apply to only a small proportion of higher education programs.13 In order to enable all students to make informed enrollment and borrowing decisions, the Department sought an alternative to the GE regulations that would include all title IV-eligible institutions and programs. The GE regulations failed to equitably hold all institutions accountable student outcomes, such as student loan repayment. However, the Department could not simply expand the GE regulations to include all title IV programs since the term ‘‘gainful employment’’ is found only in section 102 of the HEA. This section extends title IV eligibility to non-degree programs at non-profit and institutions and all programs at proprietary institutions, and at the same time restricts the application of the GE regulations to those same programs and institutions. Therefore, without a statutory change, there was no way to expand the GE regulations to apply to all institutions. As a result, the Department engaged in negotiated rulemaking to evaluate the accuracy and usefulness of the GE regulations and to explore the possibility of creating a ‘‘GE-like’’ regulation that could be applied to all institutions and programs. The Department sought to develop a new transparency and accountability framework that would apply to all institutions and programs, likely 12 Dancy and Barrett, www.newamerica.org/ education-policy/edcentral/fewer-borrowers-arerepaying-their-loans-previously-thought/. 13 www.higheredtoday.org/2018/01/12/increasingcommunity-college-completion-rates-among-lowincome-students//. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 through the Program Participation Agreement (PPA). Unfortunately, negotiations ended having failed to reach consensus on how to improve the accuracy, validity, and reliability of the GE regulations, and having failed to develop a valid GE-like standard that could serve as the basis for an appropriate and useful accountability and transparency framework for all title IV-participating programs. In 2018, the Department’s office of Federal Student Aid (FSA) determined that the student loan repayment situation was more dire than we originally thought. Analysis of 2018 third quarter data showed that only 24 percent of loans, or $298 billion, are being reduced by at least one dollar of principal plus interest, and that 43 percent of all outstanding loans, or $505 billion, are in distress, meaning they are at risk, either through negatively amortizing Income-Driven Repayment (IDR) plans, 30 plus days delinquent, or in default.14 These data reinforce the need for an accountability and transparency framework that applies to all title IV programs and institutions. Failing to have reached consensus during negotiations, the Department determined that the best way to improve transparency and inform students and parents was through the development of a comprehensive, market-based, accountability framework that provides program-level debt and earnings data for title IV programs. The College Scorecard was selected as the tool for delivering those data, and by expanding the Scorecard to include program-level data, all students could make informed enrollment and borrowing decisions. Given the Department’s general authority to collect and report data related to the performance of title IV programs, the Department is not required to engage in rulemaking to modify the College Scorecard. However, to address concerns that by rescinding the 2014 Rule some students would be more likely to make poor educational investments, the Department describes in this document our preliminary plans for the expansion of the College Scorecard. As outlined in President Trump’s Executive Order on Improving Free Inquiry, Transparency, and Accountability at Colleges and 14 ‘‘U.S. Secretary of Education Betsy DeVos Warns of Looming Crisis in Higher Education,’’ Published: November 27, 2018, www.ed.gov/news/ press-releases/us-secretary-education-betsy-devoswarns-looming-crisis-higher-education; Analysis of FSA Loan portfolio with NSLDS Q12018, Federal Reserve Economic Data (Credit card delinquencies average for all commercial banks). PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 Universities,15 the Department plans to expand the College Scorecard to include the following program-level data: (1) Program size; (2) the median Federal student loan debt and the monthly payment associated with that debt based on a standard repayment period; (3) the median Graduate PLUS loan debt and the monthly payment associated with that debt based on a standard repayment period; (4) the median Parent PLUS loan debt and the monthly payment associated with that debt based on a standard repayment period; and (5) student loan default and repayment rates. In addition to the information above, College Scorecard will continue to include institution-level data, such as admissions selectivity, student demographics, and student socioeconomic status. This information will provide important context to help students compare outcomes among institutions that serve demographically matched populations or that support similar educational missions. The College Scorecard ensures that accurate and comparable information is disclosed about all programs and institutions. It provides a centralized access point that enables students to compare outcomes easily without visiting multiple institution or program websites and with the certainty that the data they are reviewing were produced by a Federal agency. This eliminates the potential for institutions to manipulate or exaggerate data, which is possible when data are self-reported by institutions. As a result of these changes, students and parents will have access to comparable information about program outcomes at all types of title IVparticipating institutions, thus expanding higher education transparency. Students will be able to make enrollment choices informed by debt and earnings data, thus enabling a market-based accountability system to function. These changes will also help taxpayers understand where their investments have generated the highest and lowest returns. Summary of the Major Provisions of This Regulatory Action: The Department rescinds 34 CFR part 668, subpart Q— Gainful Employment Programs.16 The 15 www.whitehouse.gov/presidential-actions/ executive-order-improving-free-inquirytransparency-accountability-colleges-universities/ 16 Note: Agencies ‘‘obviously’’ have broad discretion when reconsidering a regulation. Clean Air Council v. Pruitt, 862 F.3d 1, 8 (D.C. Cir. 2017). As the Supreme Court has noted: ‘‘An initial agency interpretation is not instantly carved in stone,’’ rather an agency ‘‘must consider varying interpretations and the wisdom of its policy on a E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations term ‘‘gainful employment’’ was added to the HEA in 1968 to describe training programs that gained eligibility to participate in title IV, HEA programs. The 2014 Rule defined ‘‘gainful employment’’ based on economic circumstances rather than educational goals, created a new D/E rates measure to distinguish between passing and failing programs, and established other reporting, disclosure, and certification requirements applicable only to GE programs. By rescinding subpart Q, the Department is eliminating the D/E rates measure, which is an inaccurate and unreliable proxy for quality, including the use of the 8 percent debt-to-earnings threshold and the 20 percent debt-todiscretionary-income threshold as the requirement for continued eligibility of GE programs. By rescinding subpart Q, we also eliminate the requirement for institutions to issue warnings, including hand-delivered notifications, in any year in which a program is at risk of losing title IV eligibility based on the next year’s D/E rates. Rescinding the GE regulations also eliminates the need for institutions to report certain data elements to the Department in order to facilitate the calculation of D/E rates. It also eliminates requirements for GE programs to publish disclosures that include the following: Program length; program enrollment; loan repayment rates; total program costs; job placement rates; percentage of enrolled students who received a title IV or private loan; median loan debt of those who completed and those who withdrew from the program; program-level cohort default rates; annual earnings; whether or not the program meets the educational prerequisites for professional licensure or certification in each State within the institution’s metropolitan service area or for any State for which the institution has determined that the program does not meet those requirements; whether the program is programmatically accredited and the name of the accrediting agency; and a link to the College Navigator website. The table in Appendix A compares the information that was made available to students and parents through the 2017 GE disclosure template with the information that will be provided through the expanded College Scorecard or other consumer continuing basis.’’ Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837, 864–865 (1984). Significantly, this is still true in cases where the agency’s review is undertaken in response to a change in administrations. National Cable & Telecommunications Ass’n. v. Brand X Internet Services, 545 U.S. 967, 981 (2005). VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 information tools, such as College Navigator. Disclosure requirements are also being included in other rulemaking efforts, including Borrower Defense regulations and Accreditation and Innovation regulations. In addition, by rescinding subpart Q, the Department is also eliminating requirements regarding alternate earnings appeals, reviewing and correcting program completer lists, and providing certification by the institution’s most senior executive officer that the programs meet the prerequisite education requirements for State licensure or certification. Finally, the Department rescinds 34 CFR part 668, subpart R—Program Cohort Default Rate, including instructions for calculating those rates and disputing or appealing incorrect rates provided by the Secretary. As the Department only contemplated calculating those rates as part of the disclosures under the GE regulations, we can find no compelling reason to maintain subpart R and did not identify public comments to this aspect of the proposed regulations. We note that the HEA requires the Department to calculate institutional cohort default rates, and regulations regarding the calculation of those rates are in 34 CFR 668.202. Authority for this Regulatory Action: Section 410 of the General Education Provisions Act provides the Secretary with authority to make, promulgate, issue, rescind, and amend rules and regulations governing the manner of operations of, and governing the applicable programs administered by, the Department. 20 U.S.C. 1221e–3. Furthermore, under section 414 of the Department of Education Organization Act, the Secretary is authorized to prescribe such rules and regulations as the Secretary determines necessary or appropriate to administer and manage the functions of the Secretary or the Department. 20 U.S.C. 3474. These authorities, together with the provisions in the HEA, permit the Secretary to disclose information about title IV, HEA programs to students, prospective students, and their families, the public, taxpayers, and the Government, and institutions. Further, section 431 of the Department of Education Organization Act provides authority to the Secretary, in relevant part, to inform the public about federally supported education programs and collect data and information on applicable programs for the purpose of obtaining objective measurements of the effectiveness of such programs in achieving the intended purposes of such programs. 20 U.S.C. 1231a. PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 31395 For the reasons described in the NPRM and below, the Department believes that the GE regulations do not align with the authority granted by section 431 of the Department of Education Organization Act since the D/ E rates measure that underpins the GE regulations does not provide an objective measure of the effectiveness of such programs. Costs and Benefits: The Department believes that the benefits of these final regulations outweigh the costs. There will be one primary cost and several outweighing benefits associated with rescinding the GE regulations. The primary cost is that some programs that may have failed the D/E rates measure, and as a result lose title IV eligibility, will continue to participate in title IV, HEA programs. In instances in which the program failed because it truly was a low-quality program, there is a cost associated with continuing to provide title IV support to such a program, especially if doing so burdens students with debt they cannot repay or an educational credential that does not improve their employability. However, there are numerous benefits associated with eliminating the GE regulations, including: (1) Programs producing poor earnings outcomes will not escape notice simply because taxpayer subsidies make the program less costly to students; (2) programs that prepare students for high-demand careers will be less likely to lose title IV eligibility just because those high-demand careers do not pay high wages; (3) students will not inadvertently select a non-GE program with less favorable student outcomes than a comparable GE program simply because non-GE programs are not subject to the GE regulations; (4) institutions will save considerable time and money by eliminating burdensome reporting and disclosure requirements; (5) all students will retain the right to enroll in the program of their choice, rather than allowing government to decide which programs are worth of a student’s time and financial investment; and (6) by providing debt and earnings data for all title IV programs through the College Scorecard, all students will be able to identify programs with better outcomes or limit borrowing based on what they are likely to be able to repay. The Department believes that the benefits outweigh the costs since all students will benefit from choice and transparency. Implementation Date of These Regulations: These regulations are effective on July 1, 2020. Section 482(c) of the HEA requires that regulations affecting programs under title IV of the E:\FR\FM\01JYR2.SGM 01JYR2 31396 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 HEA be published in final form by November 1, prior to the start of the award year (July 1) to which they apply. However, that section also permits the Secretary to designate any regulation as one that an entity subject to the regulations may choose to implement earlier, as well as the conditions for early implementation. The Secretary is exercising her authority under section 482(c) of the HEA to designate the regulatory changes to subpart Q and subpart R of the Student Assistance General Provisions at title 34, part 668, of the Code of Federal Regulations, included in this document, for early implementation beginning on July 1, 2019, at the discretion of each institution. Public Comment: In response to our invitation in the NPRM, 13,921 parties submitted comments on the proposed regulations. In this preamble, we respond to those comments, which we have grouped by subject. Generally, we do not address technical or other minor changes. Analysis of Public Comments: An analysis of the public comments received follows. Scope and Purpose Comments: Many commenters indicated they supported rescinding the GE regulations because defining ‘‘gainful employment’’ using a brightline debt-to-earnings standard is complicated and does not accurately differentiate between high-quality and low-quality programs, or programs that do and do not meet their learning objectives. A number of commenters also supported the Department’s decision to rescind the GE regulations because they believe the regulations discriminate against career and technical education (CTE) programs and the students who enroll in them. Some suggested that the GE regulations signal to students that CTE is less valuable than traditional liberal arts education since the Department, as a result of the GE regulations, was holding traditional degree programs to a lower standard. Other commenters expressed concern that the GE regulations discriminate against institutions based on their tax status. Several commenters stated that the GE regulations threaten to limit access to necessary workforce development programs at community colleges and at proprietary schools, as a result of the increased accountability for CTE programs as compared to liberal arts and humanities programs. Another commenter expressed concern that the D/E rates measure ignores or exempts a significant number of programs with the VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 worst outcomes, simply because those programs are offered by public and nonprofit institutions or receive taxpayer subsidies in the form of direct appropriations rather than or in addition to Pell grants and title IV loans. Multiple commenters supported the rescission of the GE regulations because, in their opinion, the GE regulations would otherwise force the closure of programs and potentially entire institutions that serve minority, lowincome, adult, and veteran students. One commenter highlighted the lack of guidance from Congress on the meaning of ‘‘gainful employment,’’ and asserted that in the absence of that guidance, the Department contrived a complicated regulation that has yielded ‘‘a patchwork of complicated and inconsistent rules that have left schools buried in paperwork with no real measure of whether students have benefited.’’ Some commenters suggested that any institution could ensure that they will pass the D/E rates measure by lowering tuition. Several commenters submitted a joint comment opposing the rescission of the 2014 Rule. They argued that the rescission is arbitrary and capricious because it ignores both the benefits of the 2014 Rule and the data analysis supporting the 2014 Rule. The commenters noted that Congress had reason to require that for-profit programs be subject to increased supervision. They cited a post on the Federal Reserve Bank of New York’s blog that states that attending a fouryear private for-profit college is the strongest predictor of default, even more so than dropping out.17 They cited evidence that students who attend forprofit institutions are 50 percent more likely to default on a student loan than students who attend community colleges.18 The commenters also argued that a rise in enrollment in the for-profit sector corresponded with reports of fraud, low earnings, high debt, and a disproportionate amount of student loan defaults. They claimed that of the 10 percent of institutions with the lowest repayment rates, 70 percent were forprofit institutions. They argued that because poor outcomes are concentrated in for-profit programs, the 2014 Rule is justified. 17 Rajashri Chakrabarti, Nicole Gorton, Michelle Jiang, and Wilbert van der Klaauw, ‘‘Who is Likely to Default on Student Loans?’’ Liberty Street Economics, November 20, 2017, libertystreeteconomics.newyorkfed.org/2017/11/ who-is-more-likely-to-default-on-studentloans.html. 18 Scott-Clayton, Judith (2018). ‘‘What accounts for gaps in student loan default, and what happens after.’’ Brookings Evidence Speaks Reports, 2(57). PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 Commenters also noted that students enrolled in programs that close generally re-enroll in nearby non-profit or public institutions and that shifting aid to better performing institutions will result in positive impacts for students. They also cited evidence 19 that, after enrollment in for-profit programs declined in California, local community colleges increased their capacity. They argued that in light of these examples, the 2014 Rule would not reduce college access for students but would rather direct them into programs that are more beneficial in the long term. One commenter disagreed with the Department for citing the Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover Survey as evidence that certain jobs are ‘‘unfilled due to the lack of qualified workers.’’ 20 The commenter also stated that there is no evidence that the job openings in the BLS survey relate in any way to GE programs. Another commenter stated that the Department should withdraw its claim based on this study because the BLS press release did not note any relation to gainful employment. Discussion: The Department appreciates the support received from many commenters who agreed that the D/E rates measure is a fundamentally flawed and unreliable quality indicator and that the limited applicability of the 2014 Rule to some, but not all, higher education programs makes it an inadequate solution for informing consumer choice and addressing loan default issues. Further, the Department agrees that the formula for deriving D/ E rates is complicated and that it may be difficult for students and parents to understand how it was calculated and how to apply it to their own situation to determine what their likely debt and earnings outcomes will be. The Department shares the concern of commenters who predicted that the GE regulations would result in reduced access to certain CTE focused programs. However, since no programs have lost eligibility as of yet, it is impossible to know for certain what longer-term impacts the GE regulations would have had. That said, some commenters have pointed to programs like Harvard’s graduate certificate program in theater,21 which was discontinued in part because the university knew that 19 Cellini, Stephanie Riegg (2010). ‘‘Financial Aid and For-Profit Colleges: Does Aid Encourage Entry?’’ Journal of Policy Analysis and Management. 29(3): 526–52. 20 U.S. Department of Labor. July 2018. ‘‘Job Openings and Labor Turnover Summary.’’ www.bls.gov/news.release/jolts.nr0.htm. 21 https://www.nytimes.com/2017/07/17/theater/ harvard-graduate-theater-art-paulus.html. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations the program would not pass the D/E rates measure, and large closures among art and design or culinary schools as evidence that some schools voluntarily discontinued programs in order to avoid sanctions under the GE regulations. The Department agrees with commenters that the D/E rates measure does not accurately differentiate between high- and low-quality programs or eliminate programs that produce the worst outcomes, since programs that generate much lower earnings can pass the D/E rates measure simply because taxpayers rather than students pay some of the cost of the education provided, thus reducing the price students pay. For example, a Colorado public community college’s massage therapy program passed the D/E rates measure despite having mean annual earnings of $9,516, whereas a comparable program at a Colorado proprietary institution that resulted in earnings of $15,929 failed the D/E rates measure. The Department understands that high student loan debt can be burdensome to students, especially to those who earn low wages. However, it is difficult to argue that the program yielding earnings of $9,516 is higher quality than one that yields earnings of $15,929. As is the case with four-year public and private institutions, tuition is higher at institutions that receive fewer public subsidies. To provide another example, consider that in Ohio, a medical assistant program at a community college passed the D/E rates measure even though its graduates had median annual earnings of $14,742. Meanwhile, a medical assistant program at a proprietary institution in Ohio failed the D/E rates measure even though its graduates posted median earnings of $21,737. In Arizona, two proprietary institutions’ interior design programs failed the D/E rates measure, despite having significantly higher median annual earnings ($31,844 and $32,046) than a nearby community college program ($19,493). As stated by Cooper and Delisle with regard to the D/E rates measure, ‘‘the danger here is that a program at a public institution may provide a low return on investment from a societal perspective, but pass the GE rule anyway because a large portion of the cost of providing it is not taken into account.’’ 22 Cooper and Delisle state that this creates a distortion effect that may render student 22 Cooper, Preston and Jason D. Delisle, ‘‘Measuring Quality or Subsidy? How State Appropriations Rig the Federal Gainful Employment Test,’’ American Enterprise Institute, March 2017, www.luminafoundation.org/files/ resources/measuring-quality-or-subsidy.pdf. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 choices as rational for themselves, but disadvantageous to society.23 In other words, while taxpayer subsidies to public institutions ensure that they pass the D/E rates measure, that may hide from students and taxpayers the amount of funding that is being used to administer ineffective programs and may fool students into enrolling in a program that has passing D/E rates without realizing that the earnings generated by the program do not justify the direct, indirect, or opportunity costs of obtaining that education. Although there are low-performing programs in all sectors, students have received only limited information about them because the GE regulations do not apply to programs in all sectors. As is the case among all private institutions, the absence of State and local taxpayer subsidies means that students bear a larger portion of the cost of education, which generally means that tuition and fees are higher than at public institutions. Even at public institutions, students who are from outside of the State or the country pay tuition and fees that more closely resemble those of private institutions, thus demonstrating the impact of direct appropriations on subsidizing tuition costs for State residents. Yet title IV programs do not limit financial aid to students who select a public institution or the lowest cost institution available. Instead, title IV programs provide additional sources of aid, including additional funding programs (such as campus-based aid programs), to ensure that low-income students can pick the college of their choice, even if doing so means that the student needs more taxpayer-funded grants and loans. Congress created the campus-based aid programs, in part, so that lowincome students would not be limited to public institutions.24 The campus-based aid programs provide the largest allocations to private, non-profit institutions that have been long-term participants in the program. Creating a system of sanctions that penalizes private institutions for charging more than public institutions is contrary to the foundation of the title IV programs, which were designed to promote freedom of institutional choice. Prices will vary among institutions, as will debt levels among students based on the 23 Ibid. Note: The authors also suggest that the application of the 2014 Rule to public institutions would also be insufficient. Since public institutions still benefit from direct appropriations, the uneven playing field would still exist and disadvantage some institutions over others. 24 NASFAA Issue Brief, ‘‘Campus-Based Aid Allocation Formula,’’ January 2019, www.nasfaa.org/issue_brief_campus-based_aid. PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 31397 socioeconomic status and demographics of students served.25 But those variances do not, themselves, serve as accurate indicators or program quality. Students make decisions about where to attend college based on many different factors, and they do so understanding that costs vary from one institution to the next. Students also make independent decisions about borrowing, and those decisions are influenced by any number of factors, including family socioeconomic status, cost of attendance, and the degree to which the student is required to support himself or herself and his or her family while enrolled in school. The Department believes that it is important to help inform those decisions so that students understand the impact of their decisions on their longer-term financial status. The Department recognizes that overborrowing for a low-value education that does not improve earnings is a serious challenge that could have longterm negative consequences for individual students, and it urges institutions to rein in escalating costs. However, it is unreasonable to sanction institutions simply because they serve students who take advantage of Federal Student Aid programs that Congress has made available to them, or because they operate without generous direct contributions from taxpayers.26 Students have the right to know what the cost of attendance is at any institution they are considering, which is already required by law. The Department agrees with commenters who expressed concern that the GE regulations established policies that unfairly target career and technical education programs. For example, under the GE regulations, student loan debt is calculated using an amortization term that assumes these borrowers, unlike others, are required to repay their loans in 10 years if they earned an associate’s degree or less, 15 years if they earned a baccalaureate or master’s degree, and 20 years if they earned a doctoral or professional degree. However, the law provides for students enrolled in both GE and non-GE programs to have as many as 20 or 25 years to repay their loans, and receive loan forgiveness for the balance, if any, 25 Sandy Baum and Martha Johnson. Student Debt: Who Borrows More? What Lies Ahead? Urban Institute, April 2015. 26 Note: This is not to suggest that institutions have no role to play in establishing reasonable tuition and fee costs. Even so, many public institutions have tuition and fees dictated to them by State legislators and many private institutions establish tuition and fees based on the actual cost of providing the education as well as the many amenities today’s consumers demand. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31398 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations that remains at the end of the repayment period. The amortization terms used to calculate D/E rates are in direct conflict with the amortization terms made available by Congress, and the Department in the case of the Revised Pay As You Earn (REPAYE) repayment plan, to all borrowers. Therefore, for students, especially those sufficiently distressed to provide low repayment, the GE regulations create an inconsistent standard that suggests students who enroll in GE programs should be expected to repay their student loan debts more rapidly than students who enroll in non-GE programs. Therefore, the Department agrees with commenters who expressed concern that the GE regulations send a strong message that those pursing career and technical education are less worthy of taxpayer investment, or that they have greater, or at least faster, repayment obligations than students who enroll in other kinds of programs. This contradicts the purpose of title IV, HEA programs, which were developed to expand opportunity to low-income students. These students are served disproportionately by institutions offering CTE programs. The Administration does not believe that students who enroll at proprietary institutions are unaware that other options are available, and the assertion that they are unsophisticated is condescending and based on false stereotypes. According to analysis provided by Federal Student Aid, in 2018, 42.2 percent of students currently enrolled at proprietary institutions had enrolled at a non-profit institution during a prior enrollment,27 which suggests that these students are well aware that other, lower cost options exist. Perhaps better access to programs of choice, more flexible scheduling, more convenient locations, or a more personalized college experience compels students to pay more for their education. This is not unlike wealthier students who select an elite private institution over a public institution that offers the same programs at lower cost. The Department believes it is important to provide earnings information to all students for as many title IV participating programs as possible so that no student or family— regardless of their socioeconomic status—is misled about likely earnings after completion. A program that yields low earnings is no less a problem for low- or middle-income students enrolled in a general studies or an arts and humanities program than it is for a 27 Federal Student Aid, 2018. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 low-or middle-income student enrolled in a CTE-focused program. While the goals of programs may differ, nearly all students who go to college today do so with the expectation of increasing their economic opportunity, and all students, regardless of institution type, are expected to repay their loans. The Department’s review of student loan repayment rates makes it clear that the problem of students borrowing more than they can repay through a standard repayment period is a problem that is not limited to students who attend proprietary institutions or who participate in CTE. Regardless of institutional type or institutional tax status, colleges that serve large numbers and proportions of low-income students, minority students, and adult learners are likely to have outcomes that are not as strong as those of institutions that serve a more advantaged student population. Therefore, any effort to place sanctions on institutions that does not also take into account the socioeconomic status and demographics of students served unfairly targets those institutions that are expanding access and opportunity to students who are not served by more selective institutions. While the 2014 Rule emphasized that low-income and minority students who go to more elite institutions have better outcomes, it is difficult to know if that is because the institution has done something remarkable or unique, or because the selective admissions process already culls students who are less likely to succeed. Wealthy institutions that enroll small numbers of high-need students also have the ability to have devote significantly more resources to those students than an open-enrollment institution that serves large numbers of high-need students. There are many reasons why a student might elect to attend a proprietary institution. For example, it is very possible that the insightful student selects a proprietary institution because of the more personalized learning experience and higher graduation rates than might be found at many public, open-enrollment institutions.28 Proprietary institutions are more likely to offer accelerated programs, preestablished course sequences, more 28 Cellini and Davolia, ‘‘Different degrees of debt: Student borrowing in the for-profit, nonprofit and public sectors. Brown Center on Education Policy at Brookings.’’; Gilpin, G. A., Saunders, J., & Stoddard, C., ‘‘Why has for-profit colleges’ share of higher education expanded so rapidly? Estimating the responsiveness to labor market changes,’’ Economics of Education Review 45, 2015, scholarworks.montana.edu/xmlui/bitstream/ handle/1/9186/Gilpin_EER_2015_ A1b.pdf;sequence=1. PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 flexible class schedules and delivery models, and more personalized student services.29 The Department is also aware of recent studies that conclude proprietary institutions are more responsive to labor market changes in comparison to community colleges, which may lead students to choose proprietary institutions over their local, public, two-year counterparts.30 The GE regulations also unfairly target proprietary institutions, as explained in the NPRM, because if the D/E rates measure considered the total cost of education relative to graduate earnings, a number of GE programs offered by public institutions would fail the measure.31 The low price of public, two-year colleges may mean that fewer students need to borrow to enroll at those schools, but lower borrowing rates may also be due to the fact that a lower proportion of community college students are Pell eligible, or financially independent students, as compared to students at proprietary institutions.32 Despite assertions that community colleges and proprietary institutions serve the same students, as stated above, the data reveal that proprietary institutions serve a much larger population of low-income, older, and minority students.33 It is important to consider that despite lower proportions of student borrowers, given the total size 29 Cellini and Turner; Note: (pg. 5): ‘‘For-profit schools may have better counseling compared to community colleges . . . the for-profit sector has been quicker to adopt online learning technologies for undergraduate education compared to less selective public colleges.’’ 30 Gregory Gilpin, et al., ‘‘Why has for-profit colleges’ share of higher education expanded so rapidly? Estimating the responsiveness to labor market changes,’’ Economics of Education Review 45 (April 2015): 53–63; See also: Grant McQueen, ‘‘Closing Doors: The Gainful Employment Rule as Over-Regulation of For-Profit Higher Education That Will Restrict Access to Higher Education for America’s Poor,’’ Georgetown Journal on Poverty Law & Policy, Volume XIX, Number 2, Spring 2012: ‘‘The for-profit higher education industry has filled a rapidly expanding demand for higher education in American society that public and non-profit institutions of higher education have not been able to meet.’’ (pg. 330) 31 Ibid.; also see: Schneider, Mark, ‘‘Are Graduates from Public Universities Gainfully Employed? Analyzing Student Loan Debt and Gainful Employment,’’ American Enterprise Institute, 2014, www.aei.org/publication/aregraduates-from-public-universities-gainfullyemployed-analyzing-student-loan-debt-and-gainfulemployment/. 32 Jennifer Ma and Sandy Baum, Trends in Community Colleges: Enrollment, Prices, Student Debt, and Completion. College Board Research Brief, April 2016. 33 Cellini, Stephanie and Nicholas Turner, ‘‘Gainfully Employed? Assessing the Employment and Earnings for For-Profit College Students Using Administrative Data,’’ National Bureau of Economic Research, January 2018, www.nber.org/papers/ w22287. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations of many public institutions, those institutions leave many more borrowers with debt and pose a higher aggregate loan burden and non-repayment risk to students and taxpayers. For example, a public college with 30,000 students and a 17 percent borrowing rate will produce 5,100 borrowers whereas a proprietary institution that serves 500 students and has a 90 percent borrowing rate will produce 450 borrowers. The same is true for small private, non-profit colleges that may have a higher percentage of students who need to borrow to pay tuition, but based on a small total student population, produce fewer total borrowers than public institutions that serve large numbers of students. Unaffordable student loan debt is an issue across all sectors, including public institutions. The 2015 follow-up to the 1995–96 and 2003–04 Beginning Postsecondary Survey showed that despite the lower percentage of students who borrow at community colleges, among those who do borrow, their debts may be debilitating. For example, among borrowers who enrolled at community colleges in the 2003–04 cohort, twelve years later not only did they have a larger outstanding debt ($21,000) than students who enrolled at proprietary institutions ($14,600), but the level of debt held represented 90 percent of the original loan balance for students who enrolled at community colleges and 82 percent for those who enrolled at proprietary institutions.34 Therefore, it is as important for students at non-GE institutions or who are enrolled in non-GE programs to understand their likely earning outcomes so that they can borrow at a level that will not leave them struggling for decades after graduation. Also, the Department is concerned that some community colleges do not participate in the Federal Student Loan programs because of concerns that high default rates would end the institution’s participation in the Pell grant program.35 According to data from FSA, 38 community colleges do not participate in the loan programs. While this may be beneficial to students, it may also have a number of unintended consequences, including necessitating students to use more expensive forms of credit—such as credit cards and payday loans—to pay their tuition and fees. Or it may prevent low-income students 34 nces.ed.gov/pubs2018/2018410.pdf. 35 www.jamesgmartin.center/2017/06/collegesallowed-limit-students-federal-loans/; www.washingtonpost.com/news/grade-point/wp/ 2016/07/01/the-surprising-number-of-communitycollege-students-without-access-to-federal-studentloans/?noredirect=on&utm_term=.cd4dd8528001. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 from having access to higher education at lower cost institutions. An institution that elects to prevent students from taking Federal student loans will automatically pass the D/E rates measure, even if there are no earnings benefits associated with program completion. In some instances, the student may be better off in the long run by borrowing to attend a program he or she is more likely to complete, or that provides a more personalized experience, or that leads to a higher paying job. Despite the Department’s interest in reducing student debt levels, it is noteworthy that a recent study showed that increased borrowing among community colleges may have a positive impact on completion and transfer to four-year institutions.36 Student enrollment and borrowing decisions are as complex as the decisions that graduates make about where they want to work, what they want to do for a living, and how many hours a week they want to work. Until the Department has more sophisticated analytical tools that take into account the many variables other than institutional quality that impact both cost and outcomes, it is inappropriate to develop a scheme that imposes highstakes sanctions without understanding the longer term impact of those sanctions on students and the production of ample workers for occupations that may pay lower wages but are in high demand (such as cosmetology, culinary arts, allied health, social work, and early childhood education). While some commenters suggested that any institution could ensure that they will pass the D/E rates measure by lowering tuition, such a view oversimplifies college financing realities. In addition to the lack of direct taxpayer subsidies, proprietary institutions may have a higher perstudent delivery cost since CTE-focused education can be four or five times more expensive to administer than liberal arts or general studies education.37 During times of high enrollment pressure or constrained resources, community colleges tend to reduce the number of vocational programs offered so that they can serve a large number of students in lower-cost general studies and liberal 36 www.higheredtoday.org/2018/01/12/increasingcommunity-college-completion-rates-among-lowincome-students/. 37 Shulock, Nancy, Jodi Lewis, and Connie Tan, ‘‘Workforce Investments: State Strategies to Preserve Higher-Cost Career Education Programs in Community and Technical Colleges,’’ Institute for Higher Education Leadership and Policy, California State University, Sacramento, August 2013, eric.ed.gov/?id=ED574441. PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 31399 arts programs.38 In addition, as noted by Shulock, Lewis, and Tan, comprehensive institutions have the added benefit of cross-subsidizing higher cost CTE programs with low-cost general studies programs that typically enroll larger numbers of students.39 Since proprietary institutions are, for the most part, not permitted to offer lower cost general studies programs, the full cost of providing CTE is paid by the student without the benefit of crosssubsidizations from other students enrolled in lower-cost programs. Therefore, the Department agrees with the commenter who stated that by focusing on GE programs, the Department has ignored worse outcomes generated by other programs. For example, as explained in the NPRM under ‘‘Covered Institutions and Programs,’’ numerous researchers have emphasized the importance of picking the right major in order to optimize earnings.40 According to Holzer and Baum’s 2017 publication, community college liberal arts and general studies degrees have no market value for the majority of students who earn them, but the students will never transfer to a four-year institution.41 Nonetheless, these programs, and more at the baccalaureate level, were not covered by the GE regulations. According to a 2018 Q3 breakdown of FSA’s federally serviced portfolio, 24 percent of the dollars in the portfolio, or $272 billion, are in IDR plans that are current, but negatively amortizing. This substantial percentage of borrowers whose loans are growing rather than shrinking due to their enrollment in an IDR plan are of serious concern.42 This is a problem of a magnitude and importance that any action the Department takes must include all borrowers at all title IV participating institutions. Of course, participation in an IDR plan may not be a sign that a student’s program was of low quality but could instead be a sign that the student borrowed recklessly or made 38 Ibid. 39 Ibid. 40 Carnevale, Anthony, et al., ‘‘Learning While Earning: The New Normal,’’ Center on Education and the Workforce, Georgetown University, 2015, 1gyhoq479ufd3yna29x7ubjn-wpengine.netdnassl.com/wp-content/uploads/Working-LearnersReport.pdf; see also: Holzer, Harry J. and Sandy Baum, Making College Work: Pathways to Success for Disadvantaged Students (Washington, DC: Brookings Institution Press, 2017). 41 Holzer and Baum. 42 Analysis of FSA Loan portfolio with NSLDS Q12018, Federal Reserve Economic Data (Credit card delinquencies average for all commercial banks). E:\FR\FM\01JYR2.SGM 01JYR2 31400 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 lifestyle decisions that result in lower earnings. Since the REPAYE program eliminates the income hardship test and allows any borrower to sign up for a student loan payment that is 10 percent of his or her income, it cannot be said that a borrower in an IDR plan is one who has been harmed by his or her program or institution. In some instances, borrowers may elect to pursue a lower paying job in order to benefit from IDR-derived loan forgiveness. Nonetheless, since so many students are enrolled in IDR programs, the Department believes that any transparency and accountability framework must apply to all title IV programs, which it plans to do through the expanded College Scorecard. A Department review of the 2015 D/ E rates shows that cosmetology and medical assisting programs were disproportionately represented among the programs that failed the D/E rates measure in the first year that D/E rates were calculated under the GE regulations.43 Yet both of these occupations are considered by the U.S. Department of Labor to be ‘‘bright outlook’’ occupations,44 suggesting that it is possible that GE-related program closures could reduce availability of CTE-focused programs needed to fill high-demand occupations. The Department agrees with the commenter who discussed the complicated patchwork of regulations that the Department has created, without any direction to do so by Congress. The 2015 Senate Task Force on Higher Education Regulation Report reinforces that point, and highlights the GE regulations as an example of the Department’s ‘‘us[ing] the regulatory process to set its own policy agenda in the absence of any direction from Congress, and in the face of clear opposition to that policy from one house of Congress.’’ 45 By rescinding the GE regulations, we begin to correct that problem. The Department disagrees that the BLS Job Openings and Labor Turnover Survey does not provide sufficient evidence to support the Department’s assertion that many good jobs are currently unfilled, including jobs for which individuals could, in some cases, 43 Federal Student Aid, ‘‘Gainful Employment Information,’’ studentaid.ed.gov/sa/about/datacenter/school/ge?src=press-release. 44 ONet OnLine, ‘‘Bright Outlook Occupations,’’ www.onetonline.org/help/bright/. Note: ‘‘Bright Outlook’’ Occupations are defined as matching at least one of the following criteria: (1) Projected to grow faster than average (employment increase of 10 percent or more) over the period 2016–2026; or (2) projected to have 100,000 or more job openings over the period 2016–2026. 45 Task Force Report at 14. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 prepare for by completing a GE program. The Department pointed to the BLS survey to illustrate that the Department cannot predict the long-term impact of removing programs from title IV, including potential workforce shortages that could be caused by eliminating high-quality programs that fail the D/E rates measure for reasons beyond the control of the institution. The Department disagrees with the commenters who said that the rescission of the GE regulations is arbitrary and capricious. Under the Administrative Procedure Act (APA), an agency ‘‘must show that there are good reasons for the new policy.’’ 46 However, ‘‘it need not demonstrate to a court’s satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better.’’ 47 (emphasis in original) Additionally, the Department provided ample evidence that any transparency and accountability framework must be expanded to include all title IV programs since student loan repayment rates are unacceptably low across all sectors of higher education and because a student may unknowingly select a non-GE program with poor outcomes because no data are available. If we want students to make informed decisions, then we need to provide information about all of the available options. Since the GE regulations cannot be expanded to include all institutions, and since negotiators could not come to consensus on a GE-like accountability and transparency framework that was substantiated by research and applicable to all title IV programs, the Department decided to take another approach. The Department acknowledges evidence that students enrolled at proprietary institutions may be at higher risk for default and that, on average, students who attended a proprietary institution are more likely to default on their loans than students who enrolled at a community colleges. However, the Department provided ample data in the NPRM and in this document that higher defaults among students who enrolled a proprietary institution could be the result of these institutions serving higher risk students. A much higher proportion of students enrolled at proprietary colleges exhibit many more risk factors—such as being over 25, being a single parent, working full-time while being enrolled, being financially 46 FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009). 47 Id. PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 independent, and being Pell eligible— than students enrolled at other institutions, including community colleges.48 The Department agrees that during the Great Recession, proprietary institutions likely grew too rapidly, and some have been accused of committing fraud, but the most rapid growth in the sector was by online institutions, where relatively few programs failed the D/E rates measure. During the Great Recession, many students sought relief by enrolling in college, and the Department does not deny that some institutions took advantage of that. However, there are other mechanisms, such state attorneys general, consumer protection agencies, civil legal proceedings, internal resolution arrangements, and borrower defense to repayment regulations that enable students to take action against institutions that have committed fraud. However, a failing outcome under the D/E rates measure in no way signals, demonstrates, or proves that the institutions committed fraud. The Department is aware of research demonstrating that as enrollments in California proprietary institutions went down, there was a commensurate increase in enrollments at local community colleges.49 California is a State rich with community colleges, so it is not surprising that students were able to find alternatives to proprietary institutions. However, not all States and regions have as many options as those in California. In addition, a student who does not have the opportunity to attend a proprietary institution may be limited to a general studies program at a community college, which may disadvantage the student. Since, on average, graduation rates at proprietary institutions are higher than those at community colleges, a student may not be served if the lower-cost institution reduces the student’s chances of completing his or her credential. The Department agrees that some proprietary institutions serve students poorly and produce unimpressive results. However, there are institutions among all sectors that serve students poorly and produce unimpressive results, and yet the GE regulations do nothing to expose those programs or institutions or protect students from enrolling in them since the GE regulations are limited in their coverage. 48 Deming, David, Claudia Goldin, and Lawrence Katz, ‘‘For-Profit Colleges,’’ The Future of Children, Vol. 23, No 1, Spring 2013, scholar.harvard.edu/ files/lkatz/files/foc_dgk_spring_2013.pdf. 49 Cellini, Stephanie Riegg (2010). ‘‘Financial Aid and For-Profit Colleges: Does Aid Encourage Entry?’’ Journal of Policy Analysis and Management. 29(3): 526–52. E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 The point is not to ignore the legitimate challenges among institutions in the proprietary sector but is instead to expand the reach of a new accountability and transparency system to ensure that all students, regardless of institutional sector, can obtain information to inform their enrollment and borrowing decisions. Changes: None. Is there a need to define gainful employment? Comments: One commenter stated that the Department must establish a definition for the term ‘‘gainful employment in a recognized occupation,’’ rather than leaving the term undefined. Other commenters stated that the Department is violating the law by failing to differentiate between institutions that do and do not prepare students for gainful employment, and that by eliminating the GE regulations, the Department is no longer following the requirements of the HEA in differentiating between GE programs and non-GE programs. Discussion: The Department does not agree that it needs to define the term ‘‘gainful employment’’ beyond what appears in statute. Since it was added to the HEA in 1968, the term ‘‘gainful employment’’ has been widely understood to be a descriptive term that differentiates between programs that prepare students for named occupations and those that educate students more generally in the liberal arts and humanities, including all degree programs offered by public and private, non-profit institutions. Congress reaffirmed this interpretation when it added a provision to the 2008 Higher Education Opportunity Act (HEOA) that allowed a small number of proprietary institutions to offer baccalaureate degrees in liberal arts.50 Had Congress intended the term ‘‘gainful employment’’ to mean something other than a limitation on HEA section 102 institutions from offering programs that are not CTEfocused, it would not have needed to create a statutory exception to allow some HEA section 102 institutions to offer liberal arts programs. Therefore, contrary to suggestions by commenters that the Department needs to develop a new definition in order to enforce the law or differentiate between GE and non-GE programs, the Department confirms that it, in fact, is enforcing the law as written and as intended, because it disallows proprietary institutions, other than 50 20 U.S.C 1002(b). VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 31401 those exempted by the above-mentioned provision of the HEOA, to offer general studies, liberal arts, humanities, or other programs not intended to prepare students for a named occupation. The Department will continue to enforce the law in this regard—in the same way it enforced it between 1968 and 2011. In promulgating the 2014 Rule, the Department cited Senate debate in the 1960s as evidence that the GE regulations are consistent with congressional intent. The Senate Report accompanying the National Vocational Student Loan Insurance Act (NVSLI), Public Law 89–287, captured testimony delivered by University of Iowa professor Kenneth B. Hoyt that supported the ‘‘concept’’ of making loans available to students pursuing vocational training. He described findings from a sample of students whose earnings data were collected two years after completing their training, and based on those data, he concluded that ‘‘in terms of this sample of students, sufficient numbers were working for sufficient wages so as to make the concept of student loans to be [repaid] following graduation a reasonable approach to take.’’ 51 The Senate report made no mention of how quickly the student would need to repay his or her loan, and it referred to the ‘‘concept’’ of student loan repayment rather than a particular repayment amortization term or a particular debt-to-earnings threshold. Moreover, the Senate report was focused on legislation other than the HEA and the conversation had a very different focus when Congress was contemplating the inclusion of proprietary institutions in all HEA programs. What the Department neglected to include in its recounting of the early history of student loans, is that in 1972 when the National Vocational Student Loan Insurance Act (NVSLIA) was passed, Congress decided to incorporate vocational education programs into the HEA, by allowing their participation in the Educational Opportunity Grants as well as the student loan programs. Here the House conference report is clear that the new legislation ‘‘not only extends existing programs but creates exciting and long needed (sic) new ones. For the first time, the bill commits the Federal Government to the principle that every qualified high school student graduate, regardless of his family income, is entitled to higher education, whether in community colleges, vocational institutes or the traditional 4-year college or university.’’ 52 Vocational institutions in this context included proprietary colleges that would, for the first time ever, be eligible to participate in title IV grants as well as loans. The inclusion of proprietary schools in the HEA was an important step toward achieving the goals of providing equitable access to postsecondary education, for all students, regardless of whether their interests were in the traditional trades or vocations, or in typical degree programs. The Department points out that Congress intends for all Federal student loan borrowers to repay their loans, not just those who borrow to attend ‘‘vocational training’’ programs. However, Congress has elected to address concerns about unmanageable student loan debt by providing numerous extended repayment and income-driven repayment programs that reduce monthly and annual payments and provide loan forgiveness if, after 20 (or in some cases 25) years of incomedriven repayment, an outstanding loan balance remains. While the Department agrees that some of these repayment programs lead to undesirable outcomes for borrowers and taxpayers, in that they allow students to accumulate more debt (through negative amortization) rather than paying down their original student loan balances, the intent of Congress is clear. In fact, in introducing the Income Dependent Educational Assistance (IDEA) Act, which ultimately became the income-based repayment (IBR) program in the College Cost Reduction and Access Act of 2007 (CCRAA), Congressman Tom Petri (R–WI) stated: 51 ‘‘Gainful Employment,’’ 79 FR 65035, October 31, 2014. 52 www.govinfo.gov/content/pkg/GPO-CRECB1972-pt16/pdf/GPO-CRECB-1972-pt16-2-2.pdf. PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 Unfortunately, little has been done by way of providing more flexible repayment options for borrowers after graduation. Traditionally it has been expected that the borrower will pay the amortized loan over a standard period, usually 10 years, with the same repayment amount on day one as on the last day. However, this model of repayment fails to take into account that students often face periods of significant unemployment or underemployment during the first years after leaving college . . . I believe the IDEA Act does just that. This legislation would allow any Stafford loan borrower the ability to consolidate into a direct IDEA loan with a repayment schedule that corresponds to the borrower’s income once in repayment. This new schedule requires regular payments; however, it ensures that such payments reflect the borrowers’ capacity to repay under their current income status. This feature would be particularly useful for those pursuing lower-income, public-service careers. It also would help relieve some of the stress that borrowers face during periods E:\FR\FM\01JYR2.SGM 01JYR2 31402 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations of unemployment or underemployment following graduation.53 Support for income-driven repayment during the 2007 HEA reauthorization was bipartisan, with Congressman George Miller (D–CA) stating that IBR was created because ‘‘knowing that they will face a mountain of debt after graduation, some students feel compelled to major in areas that will lead to a high-paying career. The hope is that income-based repayment will encourage students to pursue their real interests, even if careers in the major of their choice don’t provide a high income.’’ 54 Congressional support for IBR in the CCRAA in 2007, and for the Pay As You Earn (PAYE) income-driven repayment program in 2012, makes it clear that Congress does not wish for a student to feel compelled to select the highest paying major or job, to select the lowest cost educational opportunity, or to abandon his or her interests in lowerpaying careers, such as public service careers, in order to meet student loan repayment obligations under the standard, 10-year repayment plan. Therefore, the Department’s original determination the GE regulations are based upon or align with congressional intent was based on an incomplete review of the legislative record. It should have been clear to the Department that the GE regulations did not comport with congressional intent when a bipartisan group of 113 Members of the House of Representatives, led by Congressman Alcee Hastings (D–FL), sent a letter in 2011 to President Obama asking him to withdraw the GE regulations.55 Further, the Department should have noted that the House of Representatives passed House Amendment 94 to House Resolution 1, the Disaster Relief Appropriations Bill of 2013, with a vote of 289 to 136.56 This amendment would have prohibited the Department from implementing the 2011 GE rule. 53 153 Cong. Rec. 13777 (2007). Grace, ‘‘The College Cost Reduction and Access Act of 2007,’’ Community College Review, August 7, 2018, www.communitycollegereview.com/ blog/the-college-cost-reduction-and-access-act-of2007. 55 Alcee L. Hastings, ‘‘Over 100 Members Send Bipartisan Letter to President Obama Urging Withdrawal of ‘Gainful Employment’ Regulation,’’ April 26, 2011, alceehastings.house.gov/news/ documentsingle.aspx?DocumentID=327789. 56 Amendment 241 to H.R. 1 (www.congress.gov/ amendment/112th-congress/house-amendment/94), was offered by Chairman John Kline (R–MN2) in 2011, and passed by the full House of Representatives. Amendment 241 was not included in the final Consolidated Appropriations Act (www.congress.gov/bill/112th-congress/house-bill/ 2055/amendments), www.congress.gov/ amendment/112th-congress/house-amendment/94). khammond on DSKBBV9HB2PROD with RULES2 54 Chen, VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 Although the amendment was not included in the final bill, the amendment should have given the Department pause before claiming that the GE regulations were consistent with Congress’ intent. Despite numerous reauthorizations of the HEA between 1964 and 2008, Congress never attempted to define ‘‘gainful employment’’ based on a mathematical formula nor did it attempt to define the term using threshold debtto-earnings ratios. Congress never attempted to prohibit students who attended GE programs from participating in IDR programs. In addition, the GE regulations were also identified in 2015 by the bipartisan Senate Task Force on Higher Education Regulation as a glaring example of the Department’s ‘‘increasing appetite’’ for regulation.57 Despite previous assertions, the Department now recognizes that it had incorrectly described congressional intent and engaged in regulatory overreach, as discussed throughout these final regulations, and for those reasons, and the others described in the NPRM and these final regulations, it is rescinding the GE regulations. Changes: None. Protecting Students Comments: A number of commenters disagreed with the Department’s decision to rescind the GE regulations, arguing that minority, low-income, adult, and veteran students are particularly vulnerable and, therefore, need additional protections from unscrupulous institutions and from programs with inferior outcomes, as well as to eliminate waste, fraud, and abuse. Discussion: The Department shares the concern of commenters who highlighted the need to protect lowincome students and taxpayers from programs with poor outcomes, and from waste, fraud, and abuse. However, we do not believe the GE regulations are an effective tool for either of those purposes. First, the GE regulations do not accurately identify programs with poor outcomes. Many programs that had poor earnings outcomes passed the D/E rates measure due to large public subsidies that reduce the cost of enrollment to students. At the same time, programs that resulted in much higher earnings failed the D/E rates measure since the lack of public subsidies required the 57 Senate Task Force on Higher Education Regulations, ‘‘Recalibrating Regulation of Colleges and Universities,’’ www.help.senate.gov/imo/ media/Regulations_Task_Force_Report_2015_ FINAL.pdf, pg. 13. PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 students to pay the full cost.58 The Department believes that the best way to protect all students is to acknowledge that they select their college and major based on a variety of factors, but provide clear and accurate information about debt and earnings to enable them to compare likely outcomes among the institutions and programs they are considering. Second, although the Department acknowledges that it plays an important financial stewardship role, and has the responsibility of reducing waste, fraud, and abuse, the GE regulations did not support that goal. Many programs are not subject to the GE regulations, so the regulation would play no role in preventing waste, fraud, and abuse among those programs. The Department does not agree that by charging students for the full cost of their education, rather than accepting direct appropriations and other taxpayer subsidies, is an act of waste, fraud, or abuse. Were that the case, then the Department would need to apply the D/ E rates measure to all private institutions, including private, nonprofit institutions, since those institutions generally have the highest annual tuition, including for programs that result in modest earnings. The Department is committed to ensuring that students are provided with accurate outcomes data. All students should be able to view accurate and unbiased outcomes data from a reliable source. The Department seeks to make it much more difficult for institutions to mislead students by making reliable data readily available to all students about the institutions they are considering attending or are attending. There are many instances of fraud that would never be detected by the GE regulations, either because the programs or institutions are not subject to the GE regulations or student earnings are sufficient to mask misrepresentation that took place. Therefore, complacency based on the mistaken belief that the GE regulations will obviate the need for other efforts to detect and eliminate waste, fraud, and abuse could have serious consequences. The Department acknowledges that it plays an important financial stewardship role, and has the responsibility of reducing waste, fraud, and abuse. However, the GE regulations did not support that goal. Moreover, the GE regulations do not necessarily identify instances of fraud or 58 Cooper and Delisle, www.luminafoundation.org/files/resources/ measuring-quality-or-subsidy.pdf. E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 abuse since programs designed to prepare, for example, teachers, community health workers, and allied health professionals may result in low wages simply because the prevailing wages in those fields are low. Therefore, a program could fail the D/E rates measure not because of fraudulent or abusive practices on the part of institutions, but because a number of high-demand occupations pay low wages, especially in the early years of employment, or because in some occupations there is an induction period of several years before a graduate can be fully licensed or be paid at the level of experienced professionals. There are ample examples of institutions that committed acts of fraud that would never be detected by the D/ E rates measure. For example, the Nebraska Attorney General alleges that Bellevue University misrepresented the truth about the accreditation of its nursing program,59 City Colleges of Chicago inflated their graduation rates,60 Maricopa Community College was found guilty of falsifying student volunteer hours to allow students to receive an education award through the Americorps program,61 and a number of law schools admitted to inflating job placement rates 62 in order to attract more students. Yet the GE regulations would identify none of these acts of misrepresentation. The Department will continue to employ its usual fraud prevention mechanisms, such as program reviews, to identify institutions that are not abiding by title IV rules and regulations. In addition, it will continue to rely on States to execute their consumer protection functions and accrediting agencies to evaluate program quality so that the regulatory triad will retain its importance and shared responsibility in the oversight of institutions of higher education. Finally, the Department seeks to make it much more difficult for institutions to mislead students by ensuring that all students are able to view accurate and unbiased outcomes 59 Paul Fain, ‘‘Nebraska AG Sues Bellevue Over Nursing Program,’’ Inside Higher Ed, February 28, 2019, www.insidehighered.com/quicktakes/2019/ 02/28/nebraska-ag-sues-bellevue-over-nursingprogram. 60 David Kidwell, ‘‘The Graduates*,’’ Better Government Association, November 1, 2017, projects.bettergov.org/the-graduates/. 61 Office of Public Affairs, ‘‘Maricopa County Community College District Agrees to Pay $4 Million for Alleged False Claims Related to Award of AmeriCorps Education Awards,’’ Office of Public Affairs, December 1, 2014, www.justice.gov/opa/pr/ maricopa-county-community-college-districtagrees-pay-4-million-alleged-false-claims-related. 62 Paul Campos, ‘‘Served,’’ The New Republic, April 25, 2011, newrepublic.com/article/87251/lawschool-employment-harvard-yale-georgetown. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 data from a reliable source, and the Department will continue to work with accreditors to try to identify and stop institutions that are reporting false outcomes data. Changes: None. Accountability Comments: Some commenters disagreed with the Department’s proposal to rescind the GE regulations, arguing that the GE regulations provide the only standard by which programs might be held accountable for outcomes. Another commenter stated that by eliminating the GE regulations, proprietary institutions would be held to a lower standard than non-GE institutions. One commenter acknowledged that CDRs currently serve as an accountability standard for all institutions of higher education, but expressed concern that defaults are not an accurate indicator of program quality or an accurate measure of a student’s or taxpayer’s return on investment. Another commenter stated that research shows that income increases with the level of degree earned. For example, the research found that students with an associate’s degree saw their quarterly incomes increase by more than $2,300 for women and nearly $1,500 for men, while those with a short-term certificate saw an increase of only around $300 per quarter. The commenter also cited a study finding that among certificate holders, workers in female-dominated occupations (healthcare and education) earned less than those in male dominated occupations (technology-based).63 Discussion: The Department strongly disagrees with the commenter who suggested that by eliminating the GE regulations, there will be no more program-level accountability measures. It is the role of accreditors and States, not the Department, to evaluate program quality, and, in some instances, specialized or programmatic accreditors establish quality assurance measures, enrollment caps, and licensure pass rates that determine whether or not specific programs will continue to be accredited. The Department will continue to rely on accreditors and State authorizing agencies to evaluate program quality. The Department also does not agree with the commenters who argued that by eliminating the GE regulations, proprietary institutions would be held 63 Institute for Women’s Policy Research, ‘‘Fact Sheet: The Gender Wage Gap by Occupation 2017 and by Race and Ethnicity,’’ April 2018, iwpr.org/ wp-content/uploads/2018/04/C467_2018Occupational-Wage-Gap.pdf. PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 31403 to a lower standard than non-GE institutions. In addition to meeting CDR requirements like all institutions and financial responsibility standards like all non-public institutions, proprietary institutions must also meet requirements that limit title IV revenue to 90 percent of total revenue (the 90– 10 Rule). The requirements regarding annual audits and the types of jobs Federal Work Study students can be placed in are also stricter for proprietary institutions. So, they remain subject to additional regulatory requirements. As pointed out by at least one commenter, CDRs are one of the metrics that Congress has established to determine continuing eligibility for an institution, including proprietary institutions, to participate in title IV programs. We agree that CDRs are misleading indicators of program quality or the current status and risk associated with the outstanding Federal student loan portfolio. As noted earlier in this document, updated repayment rate data revealed, in January 2017, that less than half of all borrowers were paying down a dollar of principal by their third year of repayment, and more recent portfolio analysis has revealed that of the nearly $1.2 trillion in outstanding student loans, only 24 percent, or $298 billion, are in a positive repayment status, meaning that interest and principal are being paid down. The remaining loans are in post-enrollment grace, default, forbearance, deferment, or negative amortization due to incomedriven repayment, and 43 percent, or $505 billion, are in distress, as previously mentioned.64 Despite these grim statistics, it is noteworthy that the most recent CDR is only 10.8 percent (the 2018 three-year CDR for the 2015 cohort).65 Accordingly, although the Department will continue to enforce the law by restricting title IV eligibility to those institutions, including proprietary institutions, that pass the CDR test, it also seeks to expand transparency and market-based accountability through the College Scorecard. Regarding the comment about credential inflation, the 768 programs that failed the D/E rates measure based on the 2015 D/E rates published in 2017, more than 100 were medical assisting or similar programs and more 64 Stirgus, Eric, ‘‘Rising Student Loan Debt a ‘crisis,’ DeVos Says,’’ Atlanta Journal-Constitution, November 27, 2018, www.ajc.com/news/localeducation/rising-student-loan-debt-crisis-devossays/kgGX56hb11yhIpOyQURlSJ/; Analysis of FSA Loan portfolio with NSLDS Q12018, Federal Reserve Economic Data (Credit card delinquencies average for all commercial banks). 65 Federal Student Aid, ‘‘Official Cohort Default Rates for Schools,’’ www2.ed.gov/offices/OSFAP/ defaultmanagement/index.html. E:\FR\FM\01JYR2.SGM 01JYR2 31404 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations than 90 were cosmetology/barbering programs. This suggests that these occupations may not pay a wage that is commensurate with the educational requirements for licensure or certification, but institutions do not determine or set those requirements. States and occupational licensing boards or credentialing organizations establish those requirements. The Department agrees that the financial rewards associated with a postsecondary credential, in general, increase as the credential level increases. However, there are bachelor’s, master’s, and doctoral degree programs that result in relatively low earnings and that require borrowers to rely on income-driven repayment. In fact, some researchers have pointed out that it is recipients of graduate degrees who are in greatest need of, and who will benefit most from, these programs.66 Therefore, the Department continues to believe that the best way to expand transparency and accountability to all students is to expand the College Scorecard to the program-level for all categories (GE and non-GE) of title IV programs. Changes: None. khammond on DSKBBV9HB2PROD with RULES2 Which institutions should be included? Comments: A number of commenters stated that they fully support the original intent of the GE regulations and that schools must be held accountable to provide equitable value to their students. However, others asserted that given the limited reach of the GE regulations, students may not have had sufficient information to accurately compare the outcomes of a GE program to a non-GE program that was not subject to the regulations. These commenters agreed with the Department that the 2014 Rule should be rescinded. Other commenters noted that they supported the GE regulations, but indicated that all schools and programs, including proprietary institutions and non-profit institutions, should be held to the same standards and requirements. Those commenters were split on whether the Department should expand the regulations to include all institutions or rescind the regulations. Several commenters took the position that any new regulations, whether they require a specific outcome threshold, additional disclosures, or overall transparency, should apply equally to all institutions. Of those commenters who favored uniform application of new regulations, some voiced support for a 66 Delisle, Jason, ‘‘Costs and Risks in the Federal Student Loan Program,’’ American Enterprise Institute, January 30, 2018, www.help.senate.gov/ imo/media/doc/Delisle.pdf. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 disclosure-only protocol that would provide students with program-level data about all participating institutions regardless of the type of control. Discussion: The Department agrees that the same standards and reporting requirements should apply to all institutions, regardless of tax status. However, the Department could not simply expand the GE regulations to include all title IV programs since the term ‘‘gainful employment’’ is found only in section 102 of the HEA, which refers to vocational institutions and programs (meaning non-degree programs at non-profit and public institutions and all programs at proprietary institutions). Therefore, there was no way to expand the GE regulations to apply to all institutions. Moreover, although the negotiating committee considered adopting a ‘‘GElike’’ solution that could be applied to all institutions, the negotiators were unable to reach consensus on an accurate, valid, and reliable outcomes standard that could serve as the basis for an appropriate and useful accountability and transparency framework for all title IV participating programs. The Department agrees with the commenters that stated that the most effective method to increase accountability and transparency, under current law, for all programs is through a disclosure-only protocol, and it plans to do so using the College Scorecard to make program-level data readily available and in a format that enables easy comparative analysis. Only when students can consider comparable information about all of the institutions and programs they are considering, and that are available to them, can students begin to make data-driven decisions. Part of our goal is to end information asymmetry between institutions and students. Changes: None. Location Matters Comments: One commenter noted that while the Department correctly cites research showing that most students do, in fact, stay close to home for college, the commenter disagrees with the assertion made in the NPRM that eliminating a failing GE program could eliminate the opportunity for a student to gain a credential if a passing program is located farther away. The commenter suggested that this research should not be used as a justification for eliminating the 2014 Rule, but rather to support keeping the GE regulations in effect in order to protect consumers. Discussion: The Department does not believe that the NPRM mischaracterizes these research findings. The Department PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 continues to believe that since location is important in influencing student enrollment decisions, a less expensive option may be of no benefit for a student who would need to travel too far from home to enroll in it. In addition, the 2015 GE data provides numerous examples of programs that pass the D/ E rates measure because they are heavily taxpayer subsidized, even though they result in earnings that are substantially less than the earnings associated with programs provided by proprietary institutions that charge students the full price of educational delivery. The Department stands by its original point, which is that location matters and that the elimination of a program that fails the D/E rates measure may not result in better long-term outcomes for students if another option doesn’t exist in that place. On the other hand, a student who has only one option may decide, when better informed about debt and earnings, that it is best to forfeit that option and find a different workforce preparation pathway. The Department believes that all institutions should provide high-quality educational options to students, but without public subsidies, some of those options could result in higher tuition and fees and increased borrowing. Regardless of whether information about program outcomes encourages program improvements, encourages institutional selectivity, or encourages students to pursue other kinds of career preparation, the Department believes that, especially when a student has very limited institutional or programmatic options, he or she needs access to data about all available options to better inform enrollment and borrowing decisions. We are aware that the researcher who wrote the paper about the role of location in student enrollment decisions disagrees with our position on the GE regulations, and does not wish his research to be used to support our conclusions. However, we did not misrepresent his research findings and still believe that they are relevant in explaining that students with limited options in their local geographic area could be better off attending a program that results in debt but also elevates wages, as opposed to attending no postsecondary program at all. We continue to believe that if the program in which a student is interested in enrolling loses title IV eligibility under the D/E rates measure, and there are no other options to enroll in that program within a reasonable commuting distance, the student may not be well served by the elimination of the program, even if the student would have E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations required more than 10 years to repay their student loan debt. Changes: None. khammond on DSKBBV9HB2PROD with RULES2 Proprietary Institution Outcomes Comments: Commenters cited a number of studies on outcomes at proprietary institutions, in support of their position that the GE regulations should not be rescinded. One commenter provided an appendix with research citations believed to be relevant to the GE regulations. The commenter referenced research by Cellini and Turner that found that students who attend proprietary certificate programs experience small, statistically insignificant gains in annual earnings.67 Chou, Looney, and Watson found that proprietary schools have relatively poor cohort loan repayment rates, with almost no schools in that sector having a repayment rate above 20 percent.68 Looney and Yannelis found that between 2000 and 2011 there was substantial growth in both proprietary college enrollment and student loan default rates.69 Armona et al. found that those who enroll in for-profit four-year institutions have the worst outcomes, including more educational debt, worse labor market outcomes, and higher default rates than students attending similarly selective public institutions.70 Research citations in the appendix also included work by Darolia et al. who found that employers were less likely to hire applicants with degrees from proprietary institutions, even compared to those with no degrees.71 Chakrabarti and Jiang found that attending a 67 Cellini, Stephanie and Nicholas Turner, ‘‘Gainfully Employed? Assessing the Employment and Earnings for For-Profit College Students Using Administrative Data,’’ National Bureau of Economic Research, January, 2018, www.nber.org/papers/ w22287. 68 Chou, Tiffany, Adam Looney, and Tara Watson, ‘‘Measuring Loan Outcomes at Postsecondary Institutions: Cohort Repayment Rates as an Indicator of Student Success and Institutional Accountability,’’ National Bureau of Economic Research, February, 2017, www.nber.org/papers/ w23118. 69 Looney, Adam and Constantine Yannelis, ‘‘A Crisis in Student Loans? How Changes in the Characteristics of Borrowers and in the Institutions They Attended Contributed to Rising Loan Defaults,’’ Brookings Papers on Economic Activity, Fall 2015, www.brookings.edu/wp-content/uploads/ 2016/07/PDFLooneyTextFallBPEA.pdf. 70 Armona, Luis, Rajashri Chakrabarti, and Michael F. Lovenheim, ‘‘How Does For-Profit College Attendance Affect Student Loans, Default, and Labor Market Outcomes?’’ Federal Reserve Bank of New York Staff Report No. 811, September 2018, www.newyorkfed.org/medialibrary/media/ research/staff_reports/sr811.pdf?la=en. 71 Darolia, Rajeev, et al., ‘‘Do Employers Prefer Workers Who Attend For-Profit Colleges? Evidence from a Field Experiment,’’ RAND Corporation, 2014, onlinelibrary.wiley.com/doi/pdf/10.1002/ pam.21863. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 proprietary college yields earnings that are 17 percent lower that earnings of those who attend private, not-for-profit four-year colleges.72 Commenters stated that in the 2014 Rule, the Department showed that in 27 percent of GE programs, the average graduate had an income lower than a full-time worker making the Federal minimum wage. The commenters also noted a study demonstrating that since 2014, 350,000 students graduated from certain GE programs with nearly $7.5 billion in student debt. Discussion: The Department appreciates the bibliography provided by the commenter and agrees that these papers conclude that students who attend proprietary institutions, in many instances, have outcomes that are inferior to students who attend other institutions. However, the Department believes that our analysis of the outstanding student loan portfolio demonstrates that poor outcomes are not limited to these institutions or the small number, relative to total postsecondary enrollment, of students who attend them. For this reason, the Department believes that it must implement a transparency and accountability system that applies equally to all title IV programs, and that enables all students to make informed enrollment and borrowing decisions. The Department is aware of the survey results showing that many employers ‘‘do not prefer’’ graduates of proprietary institutions,73 or may be less likely to interview a candidate who completed an online degree at one of the well-known, large, online proprietary institutions.74 However, the ‘‘do not prefer’’ study shows that employers similarly did not prefer to hire community college graduates over proprietary school graduates. And while employers may have been less likely to interview a candidate who attended one of the large, online, proprietary institutions, there was not an observed bias against graduates of smaller, ground-based proprietary institutions. It is difficult to know if employers were skeptical of large, online proprietary institutions because of negative experiences with prior employees, or 72 Chakrabarti, Rajashri and Michelle Jiang, ‘‘Education’s Role in Earnings Employment and Economic Mobility,’’ Liberty Street Economic Blog, Federal Reserve Bank of New York, September 5, 2018, libertystreeteconomics.newyorkfed.org/2018/ 09/educations-role-in-earnings-employment-andeconomic-mobility.html. 73 www.goodcall.com/news/employers-dontprefer-for-profit-over-community-college-graduatesreveals-new-study-04948. 74 www.usnews.com/news/articles/2014/10/17/ employers-shy-away-from-online-for-profitgraduates. PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 31405 because of negative media coverage of, and political opposition to, well-known proprietary schools. The Department also believes that many of the studies cited have serious limitations that, in some cases, reduce the validity and reliability of their conclusions. For example, a Cellini study found that proprietary institutions are more expensive than community colleges, when tuition as well as opportunity cost is considered.75 However, Cellini assumed in this study that it takes students the same amount of time to complete programs at proprietary institutions and community colleges, even though in subsequent publications she cites research showing that students at proprietary institutions tend to complete at higher rates and more quickly than students at community colleges. Since opportunity cost could reasonably be seen as a considerable part of the expense of attending college for adult learners who must leave the workforce or reduce the number of hours worked in order to attend college, the ability to accelerate completion could generate substantial savings compared to a lower cost program that takes longer to complete. In her more recent work to compare pre- and post-earnings of community college and proprietary certificate programs, Cellini admits that the Great Recession could have introduced bias into her research results, and that the kinds of certificates offered by community colleges and proprietary institutions differ.76 In other words, she was comparing what employees earn in fields that may pay very different prevailing wages. She also admits that her methodology for creating demographically matched comparison groups relied on the use of zip codes and birthdates, but every one of the same age in the same zip code is not otherwise socioeconomically and demographically matched. Moreover, she relied on a data set made available exclusively to her, meaning that it is not available for full peer review. Without the advantages of peer review and the ability of other researchers to replicate or challenge her findings, it is difficult to know how credible they are. That said, she concluded in her report that when it came to cosmetology certificates, it appeared that those who completed those certificates at 75 Cellini and Turner, www.nber.org/papers/ w22287. 76 Cellini, S.R. and Turner, N. (January 2018). ‘2018 Gainfully Employed? Assessing the Employment and Earnings of For-Profit College Students Using Administrative Data’ National Bureau of Economic Research working paper series. Available at: www.nber.org/papers/w22287. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31406 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations proprietary institutions had higher earnings gains than those who completed those certificates at community colleges, which she attributes to the number of proprietary cosmetology colleges that are affiliated with high-end salons and channel graduates to jobs at those salons. What her study fails to show, however, are earnings gains realized by students who are unable to enroll in the career and technical education program of their choice at a public institution, and instead enroll in a general studies program. Importantly, her study compared the outcomes of students who enrolled in CTE programs at public and proprietary institutions, but the study did not consider the outcomes of students who are unable to enroll in the career and technical education programs of their choice at a public institution, and instead enroll in a general studies program. What matters to a student may not be how the earnings compare between a CTE program offered by a public and private institution, but instead how the earnings compare between the CTE program available at the private institution, and the general studies program available at the public institution. We believe that the best way to inform student choice is by providing comparable information about all of the choices a student might have. This is another reason why we are rescinding the GE regulations and proposing to expand the College Scorecard. The Department agrees with the commenter that the GE regulations could have the unintended consequence of creating workforce shortages in occupations of high societal value. For example, according to the Department of Labor’s ONET database, there were 634,000 medical assistants employed in the United States in 2016, with the projected need of almost 95,000 additional workers in this field by 2026. This makes medical assisting a ‘‘bright outlook’’ occupation, meaning that it will experience fast growth in the coming decade. Unfortunately, medical assisting is also a field that had a median pay of $33,610 per year in 2018.77 Yet, medical assistant program costs are rising, possibly because only medical assistants who complete a program accredited by the Accrediting Board of Health Education Schools (ABHES) or the Commission on Accreditation of Allied Health Education Programs (CAAHEP) are eligible to sit for the Certified Medical Assisting exam. Thus, 77 www.bls.gov/ooh/healthcare/medicalassistants.htm. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 programmatic accreditation may be the driver of escalating program costs given the requirements that accreditors impose on educational institutions. It is unclear whether the relatively large number of medical assisting programs that failed the D/E rates measure did so because they are lowquality programs, they are overly expensive, high workforce demand in general results in a larger number of these programs (thus the higher failure rate is proportional to the larger number of programs offered) or if the educational requirements for entry to the field are disproportionately high relative to the wages employers pay. The medical assisting programs that failed the D/E rates measure may be overly expensive or of low quality. However, medical assistant programs prepare students to work in a field necessary to keep our healthcare system working and where employment opportunities are readily available, although they generate low wages. While the Department agrees that a student could benefit from having access to a low-cost medical assisting program, such as by attending a program at a community college, or apprenticeships, National Center for Educational Statistics (NCES) data show that of the 103,589 medical assistants who completed programs in 2013, 84,463 or 82 percent completed programs at proprietary institutions.78 In response to the commenters who raised concerns about the 350,000 students who graduated from career education programs with $7.5 billion in debt, the Department shares the concern that many students take on too much debt. However, by dividing the total debt by the number of students, the average debt for each of the 350,000 students in that group would be $21,429, which is actually lower than the average loan debt for the Class of 2017 ($39,400) 79 and the Class of 2016 ($37,172).80 Because proprietary institutions confer associate, baccalaureate, graduate, and professional degrees, comparisons of student debt levels must include not just community colleges, but also fouryear and graduate institutions. In response to the comment citing the Department’s statistic from the 2014 Rule that 27 percent of GE programs 78 nces.ed.gov/surveys/ctes/xls/P155_2013.xls. 79 ‘‘A Look at the Shocking Student Loan Debt Statistics for 2018,’’ Published May 1, 2018, studentloanhero.com/student-loan-debt-statistics/. 80 Zach Friedman, ‘‘Student Loan Debt Statistics in 2018: A $1.5 Trillion Crisis,’’ Published June 13, 2018, www.forbes.com/sites/zackfriedman/2018/06/ 13/student-loan-debt-statistics-2018/ #53efceb77310. PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 resulted in lower earnings than those of a full-time worker who earns the Federal minimum wage, the Department has further considered this statistic and determined that it was based on an invalid comparison. In calculating annual earnings for minimum-wage workers, the Department assumed that minimum wage workers all work forty hours per week, fifty-two weeks per year. However, employment statistics for low-skilled workers show that unemployment is higher among this group than others, making the full-time, year-round employment assumption overly generous. This calculation did not include part-time workers or unemployed workers in proportion to actual employment rates, but instead considered only the wage that would be earned by those who work full time. Consider that in 2017, the real median earnings for males was $44,408 and for females was $31,610, and the real median earnings for males working full time, year-round, was $52,146 and for females was $41,977. These data make clear the impact of part-time work on wages, and do not include individuals who are not in the workforce, either by choice or not. On the other hand, the D/E rates calculation includes, not only full-time workers, but also part-time workers and those who are not in the workforce, perhaps by choice in order to raise children or care for an elderly family member. Among the 10,727,000 married couples with children under the age of 6, there are 3,811,000 in which the husband works but the wife does not but only 339,000 in which the wife works but the husband does not.81 This demonstrates the significant impact that age and gender have on workforce participation.82 Additionally, as pointed out by Witteveen and Attwell in their 2017 analysis of Beginning Postsecondary Survey (BPS) data, institutional selectivity and college major, as well as student gender and socioeconomic status, have a significant impact on earnings outcomes.83 If the D/E rates measure, like the projected earnings of minimum wage workers, included only full-time workers, it is likely that the comparison would have yielded very different outcomes. Changes: None. 81 www.census.gov/library/publications/2018/ demo/p60-263.html. 82 www.census.gov/data/tables/time-series/demo/ families/families.html, table MC–1. 83 Dirk Wittenveen and Paul Attewell, The Earnings Payoff from Attending a Selective College, Social Science Research 66 (2017), 154–169. E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 D/E Rates Thresholds and Sanctions Comments: A number of commenters supported the Department’s proposal to rescind the GE regulations due to a lack of evidence that an 8 percent debt-toincome ratio sufficiently differentiates between high-quality and low-quality, or between effective and ineffective, programs. These commenters agreed that the lack of an empirical basis for the 8 percent threshold makes it inappropriate to use in determining whether or not a program should be allowed to continue participating in title IV programs. One commenter stated that currently there is not enough data to identify appropriate sanctions for any institution and that this was evident when the 2014 Rule was being negotiated. Other commenters agreed with the Department that the GE regulations have several shortcomings, including the D/E rates thresholds, but argued that there are aspects of the GE regulatory framework that provide a reasonable and simple methodology for determining whether a program is preparing students for gainful employment. The commenter offered alternative D/E rates and thresholds for consideration, including using a 10% debt-to-income threshold with a 10-year repayment term or a 15% or 20% debtto-income thresholds. Several commenters recommended that the Department revise the GE regulations rather than eliminate them. Another commenter asserted that sanctions should not apply only to proprietary institutions. One commenter argued that while there is no justification for eliminating the rule, changes should be made to the measures and thresholds, with the Secretary given discretion to provide relief to programs experiencing the effects of lasting economic trends that might distort the measure or limit its reliability. Several commenters stated that they thought efforts to reduce an institution’s regulatory burden should be made, while also maintaining sanctions for poorly performing programs or, conversely, while maintaining the GE regulations. One commenter acknowledged the challenges associated with the GE regulations, but argued that these challenges are not insurmountable and that low-performing GE programs should be identified through some means and be subject to sanctions. One commenter stated that while they understood the validity of the D/E rates measure was questionable, without it in place, low-income students would continue to be able to enroll in programs VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 that are at high risk of not providing the students the education they deserve. At least two commenters stated that the Department only addresses its concerns with the annual D/E rates metric but did not provide any justification for rescinding the discretionary D/E rates measure. A few commenters were strongly in favor of retaining sanctions, including the loss of title IV program eligibility, for those programs with failing D/E rates. One of these commenters stressed that taxpayers should not pay for educational programs that ‘‘don’t work well when there are plenty of programs that do work well,’’ and that it is the government’s job to ‘‘provide regulations that put the right incentives in place to protect consumers.’’ Another commenter writing in favor of retaining an accountability framework inclusive of program sanctions recommended that the Department leave the 2014 Rule in place as currently written. The commenter offered that students enrolled at proprietary institutions and in other GE programs have lower employment and earnings gains than students in similar programs in other sectors and are saddled with greater debt for these high-cost programs that they cannot reasonably be expected to repay. Several commenters pointed to studies that control for student demographics, and still find that students in for-profit GE programs have lower employment and earnings outcomes than students in similar programs in other sectors. Many commenters pointed to a blog post written by Sandy Baum as evidence that the Department mischaracterized research that she and Schwartz published as evidence that the 8 percent D/E rates threshold was an inappropriate or invalid threshold to use in establishing student borrowing limits. Discussion: The Department appreciates support from the many commenters who agreed that the 8 percent threshold lacks sufficient accuracy and validity to serve as a highstakes standard that determines whether or not a program may continue to participate in title IV programs. The Department continues to believe that our more careful recent review of the Baum and Schwartz paper confirms that the 8 percent D/E rates threshold is not appropriate to use in determining a program’s continuing eligibility in title IV programs. The Department appreciates Dr. Baum’s confirmation that the Department accurately reported the findings of her 2006 paper, including the recommendation that the 8 percent debt-to-income standard is a PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 31407 mortgage standard and one that ‘‘has no particular merit or justification’’ for use in establishing student borrowing limits.84 The Department understands that Dr. Baum does not wish her paper to be used to support the Department’s decision to rescind the GE regulations; however, the Department has never asserted that Dr. Baum supports our decision. Instead, the Department has pointed out that the source it referenced to justify the 8 percent threshold in 2010 and in 2014 is her paper, which states explicitly that 8 percent ‘‘has no particular merit or justification’’ for establishing student borrowing limits. Therefore, the Department has no empirical basis for the 8 percent threshold and will, therefore, no longer use it to determine title IV program eligibility. The Department also recognizes that in its 2011 GE regulation, it used a different set of thresholds that included 12 percent as the passing rate rather than 8 percent. This further demonstrates the absence of a reasoned methodology for distinguishing between passing and failing programs. In the 2014 Rule, the Department failed to provide a sufficient, objective, and reliable basis for the 20 percent threshold for the debt-to-discretionary income standard. However, in 2015, the Department promulgated regulations to establish a new income-driven student loan repayment program (REPAYE), and it established 10 percent as the debt-todiscretionary income threshold that is used to determine a borrower’s monthly payment obligation.85 The REPAYE program renders the 20 percent debt-todiscretionary income threshold in the 2014 Rule obsolete since no borrower would ever be required to pay more than 10 percent of their discretionary income. Instead, REPAYE provides a longer repayment period at the 10 percent payment level in order to help borrowers manage their repayment obligations, and after 20 to 25 years (depending upon the level of the credential earned), the remaining debt is forgiven and considered taxable income.86 The Department agrees with the commenter who stated that all institutions should be held to the same 84 Baum, Sandy and Saul Schwartz, ‘‘How Much Debt is Too Much? Defining Benchmarks for Manageable Student Debt,’’ The College Board, 2006, files.eric.ed.gov/fulltext/ED562688.pdf. 85 ‘‘Student Assistance General Provisions, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program,’’ 80 FR 67204, October 30, 2015. 86 ‘‘Student Assistance General Provisions, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program,’’ 80 FR 67205, October 30, 2015. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31408 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations standards. This is why we attempted, through negotiated rulemaking, to identify thresholds that could be used to determine the continuing eligibility for all title IV programs. However, despite robust discussion and the Department’s willingness to consider the use of other metrics to determine program outcomes, including a proposal from one negotiator to use a one-to-one ratio to report debt-to-earnings, there was no consensus around that proposal. Similarly, negotiators could not identify a threshold that they agreed should be used to determine title IV eligibility for all programs. The Department appreciates the recommendations from commenters to establish a new threshold for triggering sanctions, but we are not persuaded that any of those recommendations have merit, especially because borrowers have multiple student loan repayment options that use different formulas for determining how much a borrower must pay each month. None of the sanction recommendations properly accounted for differences in repayment rates among the available repayment options. The Department agrees that students and taxpayers should not continue investing in failing programs. However, the Department does not believe that the D/E rates measure accurately distinguishes between programs that ‘‘do or do not work’’ since the majority of title IV programs are not subject to the GE regulations. Also, it is difficult to argue that a program resulting in higher earnings does not work, simply because the cost of attending that program is paid by students rather than taxpayers, which results in higher student loan debt. The Department also believes that providing direct appropriations and other tax subsidies to low-value programs creates the same financial risks to taxpayers as student loans. Therefore, any future sanctions should also take into account the amount that taxpayers contribute through direct appropriations and preferential tax benefits to programs that do not result in better student or societal outcomes. Our review of the 2015 D/E rates reveals that a number of programs whose graduates have exceptionally low earnings passed the D/E rates measure simply because taxpayers provide substantial subsidies to students enrolled in those programs in order to reduce the portion of program costs that students pay through tuition. For example, cosmetology programs offered by non-profit institutions in Puerto Rico, such as at Institucion Chaviano de Mayaguez and Leston College, resulted in the lowest earnings among any GE VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 programs in that field.87 Yet, these programs passed the D/E rates measure because the taxpayer carried most of the burden of paying the costs of program delivery. Just because the taxpayer covered the majority of the cost of the program, does not change the fact that its graduates earn exceptionally low wages. Even if these students took no loans, the taxpayer’s contributions may not have been well spent and will not necessarily generate returns commensurate with investment. The Department is not surprised that students who attend proprietary institutions accumulate more debt than those who attend public institutions because the same is also true of students who attend private, non-profit institutions versus public, non-profit institutions. In fact, national data indicate that students who attend proprietary institutions, which include four-year institutions and graduate institutions, accumulate less debt on average than those who attend private, non-profit institutions.88 The Department also notes that a number of GE programs offered by public institutions did not meet the minimum cohort size and, therefore, did not report outcomes. For example, as of 2017–2018 award year, 14,476 of 18,184 GE programs, or 79.6%, at public institutions have fewer than 10 graduates. Unable to demonstrate that the D/E rates measure is an accurate indicator of program quality and unable to identify an alternative threshold that is supported by empirical evidence, the Department is rescinding the GE regulations and plans to report directly to the public the median debt and earnings of program completers. This enables students, parents, and taxpayers to evaluate program value and make informed enrollment and investment decisions. Perhaps, in time, researchers can develop evidence-based recommendations for thresholds and sanctions that take into account all of the factors that influence program outcomes. More accurate and valid thresholds must also take into account differences in earnings among workers in different fields, the societal benefits afforded by some lower-paying occupations, the educational qualifications demanded by employers (which may exceed the level of education technically required to do a 87 Institucion: $1,984, Leston: $2,322, per 2015 GE Final Rates. 88 The College Board, ‘‘Median Debt by Institution Type, 2013–2014,’’ Trends in Higher Education, trends.collegeboard.org/student-aid/figures-tables/ median-debt-institution-type-2013-14. PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 particular job), and the education requirements associated with State or professional licensure or certification. Since the Department is rescinding the GE regulations, it will no longer use arbitrary thresholds that lack an empirical basis to establish continuing title IV eligibility. However, through the expanded College Scorecard, students and taxpayers will, for the first time, have access to debt and earnings data for the graduates of all categories of title IV programs, which will help students, families, taxpayers, and institutions, determine which investments generate the highest return. The Department clearly stated in the NPRM that neither it nor negotiators were able to identify a D/E metric that was sufficiently valid and accurate to serve as a high-stakes quality test or to become a new, non-congressionally mandated, eligibility criteria for title IV. Regardless of whether gross income or discretionary income forms the basis of the D/E calculation, the methodology is inaccurate and fails to control for the many other factors other than program quality that influence debt and earnings. The Department does not agree that it can overlook the limitations of the GE regulations and instead rely on the Secretary to grant relief to institutions facing particular challenges or extenuating circumstances. While identifying a more accurate metric or formula for evaluating program quality may not be insurmountable, the Department does not currently have tools that can differentiate between outcomes that are the result of program quality and outcomes that are the result of institutional selectivity or student demographics. Changes: None. Concerns About the Validity and Complexity of the D/E Rates Calculation Comments: A number of commenters agreed with the Department’s decision to rescind the GE regulations due to inaccuracies in the D/E rates formula. Many commenters agreed with the Department’s proposal to rescind the GE regulations because the D/E rates calculation is overly complicated and not easily understood by students or parents, which led those commenters to state it would be unwise to continue using those rates to determine title IV eligibility. Another commenter said that a study used to illustrate the impact of student demographics on earnings was inappropriate since it did not isolate graduates of GE programs or distinguish them from other individuals. Discussion: The Department agrees that the D/E rates calculation is too E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations complicated for many students and parents to understand how to translate D/E rates into a meaningful and useful data point. The Department referenced College Board information in their Trends in Higher Education research series to substantiate our claim that earnings are impacted by a number of factors, including gender, race, geographic location, and socioeconomic status.89 The Department agrees that the research does not single out graduates of GE programs, but it need not do that to be relevant to the Department’s concerns about the many factors other than institutional quality that can impact D/ E rates. The data supports our position that earnings outcomes are influenced by a number of factors, which may include program quality. Changes: None. khammond on DSKBBV9HB2PROD with RULES2 Amortization and Interest Rates Comments: Among those who agreed with the Department that the GE regulations should be rescinded were commenters who were concerned about the use of amortization terms and interest rates that could have a significant impact on D/E rates outcomes. A few commenters disagreed with the Department’s position expressed in the NPRM that it is not appropriate to use an amortization period in the D/E rates calculation of less than 20 years for any undergraduate program or of less than 25 years for any graduate program, given that the REPAYE program provides 20to 25-year amortization periods, depending upon the level of the credential earned. The commenters maintained that it is inappropriate to apply the 20- or 25-year amortization period associated with REPAYE to associates or certificate programs since those programs are shorter-term and should be less costly than four-year or graduate programs. However, another commenter agreed with the Department’s position on the amortization period that should be used to calculate D/E rates for two-year and certificate programs, offering that though switching to a 20-year amortization period would allow some low-performing programs to pass the D/ E rates measure, it is reasonable given that the Department offers a repayment plan of that length. Another commenter strongly objected to the Department’s statement in the NPRM that the problem of unaffordable 89 Ma, J., et al., ‘‘Education Pays 2016: The Benefits of Higher Education and Society,’’ College Board, trends.collegeboard.org/sites/default/files/ education-pays-2016-full-report.pdf. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 debt levels has been ameliorated by the creation of IDR plans. The commenter asserted that IDR plans are not a solution to the problem of unaffordable for-profit educational programs and that there is no evidence to suggest IDR plans have improved the landscape of GE programs. One commenter contended that PAYE, REPAYE, and other IDR plans set programs up to fail the D/E rates measure since these repayment plans often lower monthly payments to the point where the minimum payment consists only of interest or, in some cases, allows the loan to negatively amortize. Discussion: The Department appreciates support from commenters who agree that it would be arbitrary for the Department to use an amortization term for the purpose of calculating D/E rates that differs from the amortization terms made available to borrowers under the law and the Department’s REPAYE regulations. The Department agrees that it is desirable for students who completed shorter-term programs to repay their debts more quickly, but it is equally desirable for all borrowers to repay their debts over a standard 10year repayment plan. However, Congress has created IDR plans to help borrowers manage debt and ensure that student loan payments will always be a fixed percent of discretionary income. For example, in the REPAYE program, introduced by the Department in 2015, the fixed percent of discretionary income is 10 percent. The Department does not agree that IDR plans lead to a program’s failure to meet the required D/E standard, since the D/E formula is a mathematical calculation and not a measure of the amount of debt borrowers are actually paying. However, the Department believes that student participation in IDR plans will negatively impact repayment rates, since it is possible that a student making the required payment is paying so little that the payment will not keep pace with accumulating interest. We share the commenter’s concern about the impact of IDR plans on borrowers and outstanding debt, but IDR plans do not have an impact on calculating a program’s D/E rate. Changes: None. Earnings Data and Tip-Based Occupations Comments: Numerous commenters raised concerns that earnings data used to calculate D/E rates were not accurate or reliable for a number of reasons, including that SSA data excludes unreported tip income and some selfemployment earnings. Several commenters noted that tip-based careers PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 31409 and commission-based employment may adversely impact a program’s D/E rates. Others commented that since data collected by the SSA is used to administer the Social Security Act and not evaluate college or university performance, it should not be used to determine continuing title IV eligibility. Another commenter pointed out that SSA data cannot differentiate between wages earned by those working full time versus part time, including when parttime work is the option preferred by the program completer. On the other hand, one commenter stated that the Department should not make accommodations for the underreporting of tipped income. The commenter argued that those who underreport tipped income are committing an illegal act and the Department should not protect those individuals. Discussion: The Department agrees with the commenters’ critiques of the D/ E rates calculation and that institutions may not have the ability to control for the many variables that impact earnings. The Department does not believe that it should sanction institutions for aspects of student debt and earning outcomes that are outside of the institution’s control. The Department provided detailed explanations regarding its concerns about the accuracy of the D/E rates formula in the NPRM, including that second- and third-year earnings do not accurately reflect long-term earnings associated with program completion; macro-economic conditions can have a significant impact on D/E rates, even if there are no changes in the program’s content or quality; and prevailing wages may differ significantly from one occupation to the next and one part of the country to the next. The Department also agrees that the exclusion of tip-based income— especially in heavily tip-influenced professions, such as cosmetology—some self-employment income, and household income from the D/E rates measure renders the earnings portion of the D/E calculation subject to significant errors. It also agrees that institutions should encourage graduates to report all income accurately to the IRS; however, institutions do not complete tax returns for students and cannot guarantee accurate reporting. While the Department agrees that individuals who receive tip income should report that income fully and pay required taxes on that income, it is not the fault of institutions of higher education that many individuals do not. The IRS often assesses the fact that many tipped workers often underreport income, which further demonstrates E:\FR\FM\01JYR2.SGM 01JYR2 31410 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations that the D/E rates calculation is subject to numerous sources of error. The Department provided a means for institutions to survey program graduates to obtain an alternate earnings appeal for the program in instances where IRS data underreported actual earnings.90 However, that mechanism proved more problematic and burdensome to administer than anticipated, and, in American Association of Cosmetology Schools (AACS) v. DeVos, a Federal court ruled that the Department’s standard for such appeals was inappropriately high.91 The administrative burden and complexity of accounting for underreported income for the purpose of the D/E rates measure is another factor that supports the rescission of the 2014 Rule.92 While not expanding the application of its holding beyond AACS cosmetology programs, in AACS v. DeVos, the D.C. Circuit noted, in dicta, that the problem of underreported income is not reserved solely to cosmetology programs. The court stated: ‘‘The problem of underreporting [income] extends across multiple industries and even across individual entities within those industries. While cosmetology schools’ graduates engage in, on average, a certain amount of underreporting, other industries likely also experience different levels of underreporting based on factors like the amount of tips their graduates earn, how frequently their graduates are selfemployed, and the amount of taxcompliance training their graduates receive. Within these industries, individual schools experience varying levels of underreporting.’’ 93 The consequence of this phenomenon, regardless of the existence of civil and criminal penalties, was an artificial devaluing of programs subject to graduates underreporting their income.94 As stated above, to remedy the underreporting issue impacting a program’s D/E rates, the 2014 Rule offered an alternate earnings appeal process. Here, the D.C. Circuit found the process reasonable ‘‘on the surface,’’ but identified the assumption that every khammond on DSKBBV9HB2PROD with RULES2 90 79 FR 64995. 91 American Association of Cosmetology Schools v. DeVos, 258 F.Supp.3d 50 (D.D.C. 2017). 92 As the court stated in AACS v. DeVos: ‘‘by inexplicably requiring high response rates to submit state-sponsored or survey-based alternate earnings calculations, the DOE narrowly circumscribed the alternate-earnings appeal process, making it unfeasible for certain programs to appeal their designations.’’ Id. at 57. 93 Id. at 74. 94 The AACS court noted that the existence of penalties is ‘‘irrelevant’’ to the issue of undercounting income. Id. at 56. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 program would be capable of mounting an appeal ‘‘the fly in the DOE’s reasoned decision-making ointment.’’ 95 The problem, the court found, was AACS’s evidence that showed that cosmetology schools were ‘‘simply unable to mount appeals.’’ 96 When considering that, according to the reported 2015 GE data, there were over 950 cosmetology programs that could not accurately report graduate income, plus additional GE programs that rely heavily on tips such as massage therapy, hair styling, and barbering, it is difficult to justify a metric that punishes a program harshly, while not fairly, accurately, or without undue burden measuring the value of the program.97 Further, the Department agrees with the commenters that SSA data may be inaccurate, especially for students who are self-employed and for workers in occupations that are highly dependent upon tip income, which may be underreported. SSA data similarly does not provide information about household earnings, which may be adequate to support a family without needing the graduate to work outside of the home. Penalizing programs because the students they serve may decide, for example, to work fewer hours in order to be with children is absurd, especially since daycare challenges and costs may make it economically advantageous to work part-time when family members can provide free or low-cost childcare. However, SSA has not renewed its MOU with the Department and, therefore, will not currently share earnings data. As a result, the Department is unable to calculate future D/E rates unless it changes the GE regulations to rely on a different data source for earnings information. The 2014 Rule specifically states that earnings data must come from the SSA. Considering the lack of a sufficient alternative data source and that the Department has decided to rescind the GE regulations, it is not necessary to identify a new data source for calculating D/E rates. 95 Id. at 74. 96 Id. 97 The Department notes that the 2014 Rule has been challenged numerous times in court proceedings, notably in Association of Private Sector Colleges and Universities v. Duncan, 640 Fed.Appx. 5 (D.C.C. 2016) and Association of Proprietary Colleges v. Duncan, 107 F. Supp.3d 332 (S.D.N.Y. 2015). The argument in these cases is nearly identical. The Department observes that in the Southern District of New York case, the court rejected APC’s hypothetical ‘‘absurd’’ results because it was not an ‘‘as applied’’ challenge to the rule. 107 F.Supp.3d at 367. As a result, the court left the door open to a challenge arising out of an as-applied circumstance, such as the one made by AACS two years after the Southern District of New York’s ruling, referenced above. PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 Changes: None. Short-Term vs. Long-Term Earnings Comments: Multiple commenters noted that the D/E rates measure, as established in the GE regulations, did not account for long-term earnings that accurately reflect the full earnings premium associated with college completion. Discussion: The Department agrees that D/E rates, based on earnings in the third and fourth year following completion of a program, do not accurately predict how much a graduate will earn over a lifetime. Changes: None. Impact of Macroeconomic Changes Comments: One commenter stated that the earnings data used to calculate D/E rates were not sensitive to macroeconomic changes beyond the institution’s control. Another commenter stated that the impact of economic issues, such as how recessions would be accounted for, are sufficiently addressed in the 2014 Rule by using a cohort that includes multiple years of graduates and considers results over several years. The commenter stated that the Department has not explained why it changed its interpretation of the rule regarding these issues. The commenter also stated that the Department fails to disprove the 2014 Rule’s research on adult students and D/E rates in its justification to rescind the GE regulations. One commenter stated that using the impact of economic recessions to justify the rescission of the GE regulations is inappropriate, because data collected during a recession would be an outlier and would not have a long-term impact on rates or program sanctions. Another commenter said that by the Department’s own words, the Great Recession was an exceptional event and exceptional events should not be relied upon as a baseline in policy making. One commenter stated that the Department misinterpreted research by Abel and Dietz 98 in using these data to explain its concerns about the impact of recessions on earnings and employment. The commenter stated that this research is not particularly relevant to the gainful employment conversation and only includes bachelor’s degree recipients. The commenter stated that there is a connection between educational qualifications and pay that the Department did not consider. The 98 Abel, Jaison & Richard Dietz, ‘‘Underemployment in the Early Career of College Graduates Following the Great Recession’’, National Bureau of Economic Research, September 2016, www.nber.org/papers/w22654. E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 commenter noted that Abel and Dietz looked at what graduates actually earned. The commenter also took issue with the CNN Money research that the Department cited in the NPRM since the methodology relied upon in that article was not available for review. Discussion: The Department disagrees that the D/E rates measure under the 2014 Rule sufficiently controls for the impact of recessions. The Great Recession provides a recent example of how prolonged economic challenges coupled with high unemployment and a jobless recovery—with both phenomena lasting longer than the 3-year period afforded to institutions by the 2014 Rule—can have a considerable impact on D/E rates outcomes. It may be true that prolonged recessions of this magnitude are outlier events, but nonetheless, there could be long-lasting consequences of an outlier event eliminating large numbers of higher education programs that will be needed after the recession is over and unemployment declines.99 Used as an example, the Great Recession was highly instructive, and we cannot assume that similar recessions will not occur again in the future. Not only did the Great Recession create downward pressure on wages, it also ushered in wide-spread credential inflation such that jobs that once required only a high school diploma now required a bachelor’s degree simply because employers were using degrees as a filter to screen large numbers of resumes.100 99 Note: The Court in APC v. Duncan (2015) stated that the Plaintiff’s argument that the 2014 Rule failed to adjust for economic cycles was ‘‘just a red herring.’’ 107 F.Supp.3d at 368. The court agreed with the Department at the time that recessions lasted, on average, 11.1 months, while the GE regulations gave ‘‘struggling programs multiple years to improve their results before they lose HEA eligibility.’’ Id. The Department points out that the Great Recession lasted eighteen months. Importantly, the Center on Budget and Policy Priorities cited that while, technically, the recession lasted from December 2007 to June 2009, the unemployment rate did not fall to where it was at the start of the recession (5%) until late 2015. (CBPP, ‘‘Chart Book: The Legacy of the Great Recession,’’ May 7, 2019, www.cbpp.org/research/ economy/chart-book-the-legacy-of-the-greatrecession.) Using that unemployment data—the metric that would have the most profound impact on D/E rates outcomes—the three-year window afforded to institutions in the 2014 Rule would come up desperately short of a jobless recovery that lasted eight years. 100 Burning Glass Technologies, ‘‘Moving the Goalposts: How Demand for a Bachelor’s Degree is Reshaping the Workforce,’’ September 2014, www.burning-glass.com/wp-content/uploads/ Moving_the_Goalposts.pdf. (‘‘65% of postings for Executive Secretaries and Executive Assistants now call for a bachelor’s degree. Only 19% of those currently employed in these roles have a B.A.’’) (pg. 5) VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 The Department does not believe that any studies used to make and support our decision to rescind the GE regulations were misinterpreted. The Abel and Dietz study was used to support the point that during the high unemployment of the Great Recession, credential inflation may have resulted in graduates taking jobs with earnings much lower than expected simply because other unemployed individuals with higher level credentials were plentiful. The study also points to the fact that job placement rates may have been skewed during the recession because credentials that may have technically qualified a person for a job were not sufficient enough to compete with other applicants. For example, while executive assistant jobs in the past did not require a college credential, a Burning Glass study of job postings showed that while only about a third of current executive assistants had a college credential, two-thirds of current job postings for executive assistants required at least a bachelor’s degree.101 Credential inflation could have a significant impact on job placement rates reported by institutions since it can take years for institutions to gain approval to raise the credential level of their programs. The Department understands the concerns about the lack of information regarding the methodology that underlies the CNN Money article.102 The article was included in the NPRM for the purpose of illustrating the point that economic recessions impact graduates of all institutions, not just GE programs. Even without relying on the CNN article, however, we still believe that the D/E rates calculation has numerous flaws and sources of error for reasons explained elsewhere in this document. The Department notes that bachelor’s degree programs are included as GE programs if they are offered by proprietary institutions. In fact, the largest enrollments in the proprietary sector are at online institutions that offer degrees through the doctorate level, all of which are considered to be GE programs. During the Great Recession, there were many factors that made it harder for students to get jobs, or that required them to obtain a higher degree than would otherwise be expected. All of this had a negative 101 Burning Glass Technologies, www.burningglass.com/wp-content/uploads/Moving_the_ Goalposts.pdf. 102 Chris Isidore, ‘‘The Great Recession’s Lost Generation,’’ CNN Money, May 17, 2011, money.cnn.com/2011/05/17/news/economy/ recession_lost_generation/index.htm; cited on 34 FR 40172. PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 31411 impact on earnings and potentially the D/E rates of some programs. Now that the economy has recovered and unemployment is low, it is reasonable to expect that the lack of access to workers with sufficient education and credentials could hold organizations back from growth they could otherwise support. The Department believes that it is dangerous and inappropriate for it to use two words in the HEA to create an approach to institutional accountability, that could potentially be used to manipulate the higher education marketplace. We think consumers should make those decisions for themselves, aided by information the Department plans to make available through the College Scorecard. Changes: None. Geographic Disparities Comments: One commenter stated that pay disparities based on location and geography would impact a program’s D/E rates but would be beyond the institution’s control. On the other hand, another commenter stated that the Department has conducted no analysis to demonstrate that there is a connection between geography and D/E rates. Discussion: A review of published GE earnings data, if sorted by program, show that earnings differ widely among both community colleges and proprietary institutions (for certificate programs offered by both institutions), with some community college graduates earning more than proprietary graduates in some instances, and proprietary graduates earning more than community college graduates in others. A close examination of these data reveal that geography could be responsible for earnings differences.103 For example, not a single cosmetology program in Oregon passed the D/E rates measure, whereas almost all programs in Maryland passed.104 While programs in Puerto Rico resulted in the lowest earnings among all GE programs, nearly all passed the D/E rates measure because of the significant subsidies that public institutions receive. It therefore appears that geography can, in fact, have an impact on wages. In some instances, it may be difficult to fully appreciate the impact of geography on D/E rates because large, national institutions may have, in addition to a main campus in one state, 103 https://studentaid.ed.gov/sa/about/datacenter/school/ge?src=press-release. 104 11 out of 15 cosmetology programs in Maryland passed, while four were in the zone. No cosmetology program in Maryland had a failing score. E:\FR\FM\01JYR2.SGM 01JYR2 31412 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 additional locations in multiple States. Yet program outcomes are reported in aggregate and attributed to the main campus at its location. The Department of Labor’s ONET database provides evidence that geography has an impact on earnings. For each occupation, ONET lists wages by State, and those data make it clear that many occupations have prevailing wages that differ from one State or region of the country to another. For example, the ONET page for cosmetologists provides wage data by State showing that cosmetologists in Alaska earn more than the U.S. average, whereas cosmetologists in Mississippi earn less than the U.S. average.105 Therefore, we believe the evidence is substantial that even within a given occupation, salaries can vary from one geographic region of the country to another, and yet the D/E rates measure fails to take those differences into account. This is another example of why a bright-line standard is inappropriate and invalid since the D/E rates calculation does not control for general differences in wages across States. Note that when calculating the Estimated Family Contribution, FSA considers differences in taxes and the cost of living across States. That the Department didn’t similarly build in a correction factor for differences in prevailing wages from one State to the next in calculating D/E rates was an unfortunate omission with potentially devastating impacts on students. Changes: None. Cohort Sizes Comments: Some commenters expressed concerns that the small size of some program cohorts could result in year-to-year fluctuations in D/E rates due to the career decision or performance of a single student, whereas the impact of a single student’s career decision or performance would not have a noticeable impact on larger cohorts. Discussion: The Department agrees with the commenters that cohort sizes can have an impact on year-to-year changes in outcomes, since smaller cohorts can be significantly impacted by the decision of just a small number of graduates to work part time or to take time out of the workforce. This means that year-over-year outcomes could differ, even if there are no changes in program content or quality. Given the large number of low-enrollment GE programs, a single student’s earnings or career choices could have a significant 105 www.onetonline.org/link/summary/39- 5012.00. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 impact on outcomes for a number of programs and institutions. We agree that this is yet another weakness of the D/E rates methodology and appreciate the commenters for bringing it to our attention. Changes: None. Influence of Student Demographics Comments: One commenter stated that D/E rates can be affected by the percentage of adult students enrolled in a GE program because of their higher loan limits. The commenter recommended either reporting D/E rates separately for independent and dependent students or capping the amount of independent student borrowing at a lower level, rather than rescinding the GE regulations. Many commenters supported the proposed rescission of the 2014 Rule due to the impact that various types of employment have on their programs’ D/ E rates. For example, one commenter stated the 2014 Rule hurts students who are on State assistance due to health issues but want to prepare for a new occupation that could accommodate their individual health needs and allow them to work, even if they cannot work full time. The commenter opined that educating such students would unfairly affect that program’s metrics. Another commenter stated that the GE regulations create a disincentive to enroll students with the greatest financial need since they would be most likely to borrow to pay for the education, and the level of a student’s borrowing is beyond the institution’s or program’s control. One commenter noted that much of the total borrowing by students is used for living expenses and not tuition and fees. Another commenter stated that students who are pregnant or have young families may unfairly and negatively impact a program’s D/E rates, because their focus may be on their family rather than on finding a job with high earnings. One commenter noted that the proposed regulations contradict the statement in the 2014 Rule that the GE regulations ‘‘do not disproportionately negatively affect programs serving minorities, economically disadvantaged students, first-generation college students, women, and other underserved groups of students.’’ A few commenters objected to the Department’s assertion that title IV eligibility based on D/E rates creates unnecessary barriers for institutions or programs that serve larger portions of women and minority students. One commenter asserted that the NPRM misrepresents the experiences of historically disadvantaged groups, PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 including in its suggestions regarding women and students of color. The commenter contended that rescission of the 2014 Rule will exacerbate genderbased and race-based disparities in wealth, income, and employment. Another commenter stated that the NPRM falsely asserts that the 2014 Rule limits postsecondary access based on geographic, racial, and gender considerations. The commenter contended that many proprietary institutions have a track record of enrolling disproportionate numbers of minorities, lower-income individuals, and single mothers, not because of a lack of accessible options elsewhere, but rather because the programs successfully target underserved communities and low-information consumers. One commenter stated that the College Board chart used to show inherent earnings differences linked to race, gender, and family socioeconomic status relies on Current Population Survey data that is not limited to those students who graduated from gainful employment programs and received Federal financial aid. The commenter claimed that the Department provided no real analysis as to how the data in this chart should be interpreted or applied to the rescission of the GE regulations, while an earlier version of the report was used in 2014 to reflect the point that higher education provides returns for students overall. One commenter provided citations from NCES and the Brookings Institution—cited elsewhere in this document—to refute the Department’s assertion that student demographics and socioeconomic status play a significant role in determining student outcomes, and suggested that these data similarly refute our claim that student demographics rather than program quality could be responsible for GE outcomes. Discussion: The Department agrees that the percentage of independent students enrolled in a program could impact the calculation of D/E rates because of the higher loan limits Congress has provided to those students. Congress has established student loan limits at $31,000 for dependent students and $57,500 for independent students, recognizing that independent students are less likely to receive financial assistance from parents and are more likely to have higher housing and dependent care costs than dependent students.106 Because 106 Federal Student Aid, ‘‘Subsidized and Unsubsidized Loans,’’ studentaid.ed.gov/sa/types/ loans/subsidized-unsubsidized#how-much. E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 borrowing limits are based not just on the cost of tuition, fees, and books, but also include housing, transportation, and dependent care expenses, independent students may rely on student loans to offset lost wages and pay costs of living during periods of postsecondary enrollment. The Department wishes to point out that the amount of debt utilized for calculating the debt portion of the D/E rates is the lower of mean/median debt or total direct educational costs— tuition, fees, books, supplies, and equipment—so that loans taken for nondirect expenses may be excluded from the calculation. Still, adults with higher borrowing limits who borrow to generate a credit balance must first borrow enough to pay all of the direct costs of education since the credit balance is generated only after those other expenses are paid. As described earlier, independent students borrow more frequently and at higher levels than dependent students.107 Therefore, institutions that serve higher proportions of independent students will likely have higher student loan medians and averages. Proprietary institutions serve a disproportionate number of independent students (80% vs. 59% and 36%), as compared to community colleges or four-year public institutions, which will impact their D/ E rates.108 The 2015 follow-up survey to the 2003–04 Beginning Postsecondary Survey shows that after twelve years of loan repayment, independent students across all institutional sectors still owed between 78.1 percent (average) and 96 percent (median) of their original loan balance.109 The 1994 follow-up survey of the 1989–90 BPS showed that independent learners are less likely to complete their programs, especially if they also have dependents other than a spouse, enroll part time, or work full time while in school.110 Clearly student age is one factor that impacts both borrowing levels and completion rates. While one commenter recommended that a separate D/E rate be calculated for independent students, since the Department is rescinding the GE regulations for the reasons discussed 107 Baum, Sandy and Martha Johnson, ‘‘Student Debt: Who Borrows Most? What Lies Ahead?’’ Urban Institute, April 2015, www.urban.org/sites/ default/files/alfresco/publication-pdfs/2000191Student-Debt-Who-Borrows-Most-What-LiesAhead.pdf. 108 Stephanie Riegg Cellini and Rajeev Davolia, Different degrees of debt: Student borrowing in the for-profit, nonprofit and public sectors. Brown Center on Education Policy at Brookings, June 2016. 109 nces.ed.gov/pubs2018/2018410.pdf. 110 nces.ed.gov/pubs/web/97578g.asp. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 elsewhere, this distinction is no longer necessary. The Department agrees with commenters about the negative, unintended consequences that the 2014 Rule could have on the lives of students and on the national economy. As noted in the NPRM, and elsewhere in this document, the Department is aware that some students take time out of employment or elect part-time work over full-time work to care for children, care for other family members, manage a personal health condition, start a business, or pursue other personal lifestyle choices.111 The Department concurs that students who may not want to or be able to work full time should not be denied an educational opportunity. The Department also agrees with commenters who expressed concern that the GE regulations could deter programs from enrolling students with high financial need, minority students, or women because they are more likely to borrow more and to have greater challenges in earning equal pay to men and non-minority students who complete similar programs. Thus, these students could make it more difficult for the institutions’ programs to pass the D/ E rates measure, regardless of program quality.112 According to the Census Bureau, real median earnings differ by race, with Asians ($81,331) and whites ($68,145) earning more than Hispanics ($50,486) or African Americans ($40,258), and with males ($44,408) earning more than females ($31,610).113 While these data are not limited to students who participate in GE programs, we believe it is likely that the disparities that exist among the population at large are also reflected in the subpopulation of students who enroll in GE programs, and may even be greater. Moreover, programs serving women who are pregnant or who have young children are less likely to pass the D/E rates measure because women with children under the age of 6 are more likely to leave the workforce in order to 111 Carnevale, Anthony, et al., ‘‘Learning While Earning: The New Normal,’’ Center on Education and the Workforce, Georgetown University, 2015, 1gyhoq479ufd3yna29x7ubjn-wpengine.netdnassl.com/wp-content/uploads/Working-LearnersReport.pdf. 112 Guida, Anthony J. and David Figuli, ‘‘Higher Education’s Gainful Employment and 90/10 Rules: Unintended ‘‘Scarlet Letters’’ for Minority, LowIncome, and Other At-Risk Students,’’ The University of Chicago Law Review, 2012, lawreview.uchicago.edu/publication/highereducation%E2%80%99s-gainful-employment-and9010-rules-unintended-%E2%80%9Cscarletletters%E2%80%9D. 113 www.census.gov/library/publications/2018/ demo/p60-263.html, Table A1. PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 31413 care for children. According to the Census Bureau, in 2017, among married couples with children under the age of 6, 36 percent rely solely on the husband’s income to support the family.114 In such a case, the D/E rates for the program from which the wife graduated would be negatively impacted by zero earnings for that graduate, even though she is part of a household with sufficient income to support her decision to leave the workforce.115 Therefore, two programs of equal quality could have significantly different outcomes under the D/E rates measure simply because one serves a higher proportion of married female students with children than the other. Almost four million families with a female head of household and no husband present live below the poverty level, whereas only 793,000 families with a male head of household and no wife present live below the poverty level.116 In 2018, 30 percent of households with children under the age of 18 are led by a single mother.117 These data also have implications on student loan repayment rates since a borrower in an income-driven repayment plan will have a monthly payment based on a percentage of discretionary income, which varies by the number of people in a family. Therefore, a borrower who is a parent may have a smaller portion of income available for student loan payments, potentially resulting in negative amortization of their loans. College Board data confirm that achievement gap disparities exist between men and women and between children from wealthier families and children of low-income families.118 Additionally, a 2017 report released by NCES confirmed the persistence of achievement gaps between non-minority students and minority students.119 Therefore, if programs are incentivized to serve more advantaged students to ensure better D/E rates outcomes, they would likely follow the lead of more selective non-profit institutions that enroll small proportions of low-income, minority, and non-traditional students. 114 www.census.gov/data/tables/time-series/ demo/families/families.html, Table SHP1. 115 www.census.gov/data/tables/time-series/ demo/families/families.html, Table SHP1. 116 www.census.gov/data/tables/time-series/ demo/families/families.html, Pov-table4. 117 www.census.gov/data/tables/time-series/ demo/families/families.html, Figure FM–1. 118 Jennifer Ma, et al., ‘‘Education Pays 2016: The Benefits of Higher Education for Individuals and Society,’’ CollegeBoard, trends.collegeboard.org/ sites/default/files/education-pays-2016-fullreport.pdf. 119 nces.ed.gov/pubs2017/2017051.pdf. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31414 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations The Department has not analyzed participation in GE programs by students with health conditions that preclude them from working full time, but any student who works less than full time will earn wages that reduce the mean and potentially the median earnings used for the D/E calculation. Therefore, the Department agrees with the commenter who suggested that programs may be less interested in serving students with chronic health conditions or disabilities, since doing so could reduce mean or median earnings among a cohort of completers. The Department wishes to clarify that in the 2014 Rule, it stated that ‘‘student characteristics do not overly (emphasis added) influence the performance of programs in the D/E rates measure.’’ 120 However, the Department acknowledges that this statement was based on an incomplete analysis of the data available to the Department and considered only students enrolled in GE programs without controlling for other variables that may have impacted GE outcomes. NCES data confirm the impact of student characteristics on outcomes, and the Department erred in ignoring those findings when making this claim in the 2014 Rule.121 Moreover, a review of the final GE data reported in 2017 confirms that programs that prepare students for occupations that are dominated by males rarely fail the D/E rates measure, whereas occupations dominated by women are represented disproportionately. This would suggest that gender does have a larger impact on D/E rates than the Department originally anticipated. When full student populations are analyzed, such as through the Beginning Postsecondary Survey, we see over and over again that student characteristics have a considerable impact on student outcomes.122 It was misleading for the Department to make a statement in the 2014 Rule that does not accurately reflect the consistent findings of the National Center for Education Statistics, which conclude that student demographics and characteristics have a considerable impact on student outcomes. The Department disagrees with the commenter who said that College Board data showing disparities in earnings based on gender, race, or ethnicity does not apply to the GE regulations because these data are not limited to students who complete GE programs or students who receive financial aid. The point of sharing the College Board data was to 120 79 FR 64910. 121 https://nces.ed.gov/pubs/web/97578g.asp. 122 nces.ed.gov/pubs/web/97578g.asp. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 illustrate that pay disparities exist among women and minorities across the population, which supports our assertion that programs with larger proportions of women and minorities may achieve poorer outcomes under the D/E rates measure. It is unlikely that students who complete GE programs are not subjected to the same gender and race pay disparities that exist across the general population. The Department agrees with commenters that historical and continuing discrimination has unfairly depressed the earnings of historically disadvantaged groups. We did not mean to suggest that women and minorities wish to earn less money or select occupations in order to earn less. We simply were making a statement of fact, which is that women and minorities still earn less than non-Hispanic whites and men, even when they graduate from the same institutions. We applaud first generation college students, women, and minorities who wish to leverage their own hard work and opportunities to give back to their communities by working in occupations that have high societal value, even if these jobs pay low wages. In the NPRM, we were simply pointing out that nationally, women and minorities enroll in majors associated with lower wages than those selected, on average, by white males, and that the GE regulations could reduce the number of options available to women and minorities despite their interest in pursuing certain careers and the benefits that those individuals and occupations provide to society because occupations that pay lower wages are more likely to fail the D/E rates measure. Although some institutions have implemented differential pricing so that students pay tuition based on the program in which they enroll, many institutions do not offer different tuition levels for different majors. Unfortunately, the earnings gap between female-dominated and maledominated occupations persist, making it more likely that programs serving mostly women will fail the D/E rates measure. The Department does not agree with the commenter that by continuing the GE regulations, women will benefit since the programs that failed the D/E rates measure were far more likely to serve female students rather than male students. Eliminating programs that predominately serve women, and that prepare large numbers of them for rewarding occupations, is not the solution to the lack of pay equity in this country. While the commenter may be implying that women who are shut out of healthcare and childcare occupations, PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 for example, will be more likely to pursue higher earning occupations, such as computer science or advanced manufacturing, there are no data to support that conclusion. Instead, women who lack access to the academic programs of interest to them may be reluctant to pursue higher education. The Department disagrees with commenters who suggested that by rescinding the GE regulations, the Department will exacerbate genderbased and race-based disparities in wealth, income, and employment. Since many GE programs serve high proportions of women and minorities, sanctions that would eliminate these programs could reduce postsecondary opportunities, thereby contributing to the earnings and opportunity gap. The Department agrees that proprietary institutions serve a disproportionate share of underserved communities, and that this could be as much the result of nefarious targeted marketing efforts 123 as it is the result of bona fide efforts to serve a population of students not served by traditional institutions. We have seen no national effort on the part of traditional four-year institutions to serve, en masse, the population of students who have been served by community colleges and proprietary institutions. While the Department shares the commenter’s concern about exploitative practices, many proprietary institutions employ pedagogical strategies—such as block scheduling, predetermined course sequences, year-round scheduling, and accelerated completion pathways—that may be more appealing to nontraditional students.124 The Department has not analyzed the racial or ethnic demographics of students served by programs that failed the 2015 D/E calculations. However, given that a large number of programs that failed the D/E rates measure, or that were discontinued by institutions that expected they would fail the D/E rates measure in the future, were medical assisting and related programs, or cosmetology programs—both femaledominated professions—it seems clear that women will be impacted more significantly by program closures than 123 Bonadies, Genevieve, et al., ‘‘For-Profit Schools’ Predatory Practices and Students of Color: A Mission to Enroll Rather than Educate,’’ Harvard Law Review Blog, July 30, 2018, blog.harvardlawreview.org/for-profit-schoolspredatory-practices-and-students-of-color-amission-to-enroll-rather-than-educate/. 124 Sugar, Tom, ‘‘Boosting College Completion at Community Colleges: Time, Choice, Structure and the Significant Role of States,’’ Complete College of America, www2.ed.gov/PDFDocs/collegecompletion/05-boosting-college-completion-atcommunity-colleges.pdf. E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 men. Also, given the high percentage of Pell grant recipients enrolled in programs with failing 2015 D/E rates, there is evidence that program closures would have a disproportionate impact on low-income students. Programs that serve high-income students would not fail the D/E rates measure because those students are far less likely to take student loans and, in addition, are more likely to receive financial support from parents during the early years of repayment.125 The Department continues to believe that the GE regulations could significantly disadvantage institutions or programs that serve these already underserved communities, further reducing the educational options available to them. The data are clear that proprietary institutions serve higher proportions of non-traditional and low-income students, as demonstrated by the fact that nearly 87 percent of students enrolled at proprietary institutions are Pell eligible, as opposed to 45 percent at community colleges and even lower percentages at public or private fouryear institutions.126 As College Scorecard expands to the program-level for all categories (GE and non-GE) of title IV programs, it will be important to keep in mind student demographics when comparing outcomes, including among openenrollment institutions that typically serve higher proportions of low-income and minority students. Many of these institutions attract low-income populations to increase enrollment, but the Department believes that most also do it to fulfill their mission to improve educational opportunities for all students. The Department does not disagree that low-income and minority students have poorer educational and employment outcomes, and it does not disagree that proprietary institutions serve large proportions of these students than any other institutional sector. Compared to public two-years, public four-years, and private non-profits, proprietary institutions serve greater numbers of females, minorities, financially independent, and single parents.127 The Department encourages more selective institutions to do a better 125 Lochner and Monge-Naranjo, www.nber.org/ papers/w19882. 126 U.S. Department of Education, September 2015, NCES 2015–601. Trends in Pell Grants Receipt and the Characteristics of Pell Grant Recipients: Selected Years, 1999–2000 to 2011–12. 127 Stephanie Riegg Cellini and Rajeev Davolia, Different degrees of debt: Student borrowing in the for-profit, nonprofit and public sectors. Brown Center on Education Policy at Brookings, June 2016. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 job of serving this population of students, but recognizes the unique opportunities provided by institutions that are designed to serve the needs of non-traditional students and may be more aware of their unique challenges and needs. Changes: None. Role of Tuition in Determining D/E Rates Comments: One commenter noted that the GE regulations do not prohibit institutions from lowering tuition, which would also increase a program’s chances of passing the D/E rates measure. The commenter suggested that focusing on cost is one way to avoid the impacts that macroeconomic trends have on earnings. Several disagreed with conclusions they believe were drawn in the NPRM regarding program cost relative to value. These commenters suggested the Department focused only on one half of the D/E rates calculation to make its point, and that it inaccurately suggested that a program of higher cost is necessarily of higher quality. One commenter stated that ‘‘a program that has low costs but results in higher earnings to students obviously has higher quality than one that has high costs and low earnings.’’ This commenter suggested that the Department’s assertion reflects a rampant fallacy in higher education that a higher cost program is a higher quality program. Another commenter stated that the Department seems to be skeptical that program costs and earnings are reliable measures of success. Multiple commenters disagreed with the Department’s contention that highquality GE programs could potentially fail the D/E rates measure, because it costs more to provide high-quality education in certain fields or disciplines. One commenter specifically mentioned that community colleges provide high-quality GE programs despite their low tuition and fees. Discussion: The Department agrees that the GE regulations do not prohibit an institution from lowering tuition for a program, and that doing so could favorably impact GE outcomes. And the Department agrees that just because a program is higher cost, it is not necessarily higher quality. However, in some instances the higher cost is associated with better equipment and facilities, more highly qualified faculty, better quality or more plentiful supplies, and more abundant or convenient student support services. In some instances, if an institution were forced PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 31415 to lower its prices, it would be unable to provide the unique learning environment or well-equipped facilities that distinguish the institution. The Department commends community colleges for the tireless and vitally important work they do. However, as pointed out by the CSU Sacramento report,128 as well as data collected by the Department through IPEDS, many community colleges have small or shrinking CTE programs and may not be able to meet workforce needs or accommodate adult learners who may prefer accelerated scheduling, more personalized support services, smaller campus environments, more frequent program start dates, and predetermined course schedules that are more common among proprietary institutions.129 A review of 2015 GE data reveal that in some instances, graduates of proprietary institutions enjoy significantly higher earnings than graduates of community college programs, which may indicate that the higher cost program might be a higher quality program, or that the institution has valuable partnerships with employers or has better job placement services.130 As Cellini pointed out, despite several limitations of the data she used, students who earn a cosmetology certificate at a proprietary institution are more likely to earn higher wages, perhaps due to the affiliation of some proprietary institutions with highend salons.131 At the same time, the graduates of many proprietary institutions achieve lower earnings gains than the graduates of other institutions, including community colleges or four-year institutions. And similarly, even among programs with the same CIP code, the GE data illustrate that there are vast earnings differences among community colleges and among proprietary institutions. Students may find that public colleges offer smaller numbers of CTE programs 128 Shulock, N., Lewis, J., & Tan, C. (2013). Workforce Investments: State Strategies to Preserve Higher-Cost Career Education Programs in Community and Technical Colleges. California State University: Sacramento. Institute for Higher Education Leadership & Policy. 129 Cellini and Turner, www.nber.org/papers/ w22287. See: ‘‘For profit-schools may have better counseling compared to community colleges . . . for-profit sector has been quicker to adopt online learning technologies . . . for-profits respond to local labor market demand.’’ (pg. 5); Richard Kazis, et al., ‘‘Adult Learners in Higher Education: Barriers to Success and Strategies to Improve Results, Employment and Training Administration,’’ Occasional Paper 2007–03, March 2007. files.eric.ed.gov/fulltext/ED497801.pdf. 130 studentaid.ed.gov/sa/about/data-center/ school/ge. 131 Cellini and Turner, www.nber.org/papers/ w22287. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31416 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations than private or proprietary institutions. Nationally, the largest community college majors are liberal arts or general studies, which could signal that the majority of students are interested in transferring to a four-year program or that vocational programs are limited. In other instances, entry-level CTE programs might be offered only through the institution’s non-credit or continuing education programs. These programs are not eligible for title IV funding and do not result in academic credit, which can disadvantage students who wish to continue their education and earn a college degree. The Department is concerned that at many public colleges, students who are enrolled in pre-professional programs have nowhere to turn if they are not admitted to the professional program of interest. For example, many students enroll at a two- or four-year institution with the goal of studying nursing, physical therapy (or physical therapy assistant), or occupational therapy (or occupational therapy assistant); however, these programs are often highly competitive, and the majority of applicants are not admitted. The absence of other allied health options at some institutions may require those who are not admitted to professional programs to either pursue a general studies major or to transfer to another institution that offers a larger number of related programs that enable a student to stay in their field of interest even if it means pursuing a different occupation in that field. The Department encourages institutions to work hard to reduce costs, encourages states to continue subsidizing higher education to reduce the price of public institutions, and encourages employers to provide more generous education benefits to reduce out-of-pocket costs to students. As stated earlier, public institutions offer lower tuition and fees because of the public subsidies they receive from state and local governments. However, at some public institutions out-of-state students who may be more academically gifted or who pay higher tuition and fees take priority over lower-income or less prepared in-state students because out-of-state students are perceived as being necessary to improve the institution’s finances and reputation.132 Research shows that the administrative costs for CTE programs are typically higher because of the need for specialized facilities, expensive 132 www.jkcf.org/research/state-university-nomore-out-of-state-enrollment-and-the-growingexclusion-of-high-achieving-low-income-studentsat-public-flagship-universities/. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 equipment or supplies, smaller class sizes (due to space and/or safety concerns), and the higher cost of faculty with advanced technical skills.133 And as pointed out by Shulock, Lewis, and Tan, community colleges often reduce the number of CTE programs or the number of enrollment slots in the CTE programs they administer when budgets are tight. As already discussed, the largest community college major is general studies or liberal arts, which according to Holzer and Baum has no market value for the majority of students who earn this degree and then do not transfer to complete a four-year degree. It is, therefore, difficult to know whether a general studies program is a worthwhile investment, if a student’s goal is to earn a two-year degree that will lead to a higher paying job. A students may be better off paying more to attend an institution that increases the likelihood that the student will be able to enroll in an occupationally-focused program, or will be more likely to complete their program, than attending the lower tuition school if doing so limits the student’s opportunity to pursue occupational education. In conducting the current rulemaking effort, the Department considered tuition and fees charged by all institutions since our goal was to expand the accountability and transparency framework to include all institutions. Nearly all private institutions charge higher tuition and fees than public institutions, and a growing number of students who enroll at public institutions attend an institution outside of their own state. Out-of-state tuition at public institutions mirrors the tuition charged at private institutions. Negotiators representing private, non-profit institutions made it clear that D/E rates will differ between private and public institutions due to differences in the level of public subsidies an institution receives. An institution’s geographic location, campus facilities, and engagement in research and graduate education could impact the tuition and fees that students are charged. The Department sought through rulemaking a data-driven solution that could be applied to all institutions of higher education to better inform students and families about likely costs, borrowing, and earnings. Over the years, policymakers of both major political parties have admonished institutions to lower their costs, but proposals that would impose federally mandated price controls have never 133 Shulock, Lewis, and Tan, eric.ed.gov/ ?id=ED574441. PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 gained sufficient support to become law.134 For example, in order to help families make better decisions about where to enroll and how much to borrow, Congress proposed in the College Access and Affordability Act of 2005 the creation of a College Affordability Index (CAI) which would have identified institutions whose tuition increases outpaced inflation. In the House Report 109–231 at 159, Congress stated that the CAI: ‘‘simply ask[s] that an institution of higher education provide additional information to allow for a clear and informed decision by consumers. If a student decides to attend an institution that increases tuition and fees that exceed the College Affordability Index, they do so fully aware and educated. It is the Committee’s position that the Federal government does not currently have the authority to dictate tuition and fee rates for institutions of higher education. . . . The provisions in the bill simply serve as a means by which additional information can be provided to students and their families so that they can make informed and educated decisions about their postsecondary education options.’’ 135 Therefore, the Department believes that creating a system of sanctions that are so closely linked to the tuition and fees a college charges would exceed the Department’s current authority and run counter to the authorities laid out by Congress to inform decisions, but not dictate what prices a college can charge. As a result, the Department continues to believe that a program could fail the D/ E rates measure not because it is of poor quality or because it is over-priced relative to the cost of delivering the program, but instead because the cost of educational delivery is high or because an institution does not receive public subsidies. Changes: None. Challenges in Predicting Future Earnings Comments: One commenter urged the Department to apply any outcomes metrics equitably to all institutions, rather than singling out or discriminating against one type of institution. The commenter also urged the Department to use simple, easy to understand formulas and to keep in mind that it is impossible for colleges to predict future changes in the economy or career areas. 134 Committee on Education and the Workforce, Report 109–231, www.congress.gov/109/crpt/ hrpt231/CRPT-109hrpt231.pdf. 135 Ibid. E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 Discussion: The Department agrees, as we discussed earlier in this document, that the widespread problem of student loan debt makes it important to apply the same transparency and accountability metrics to all institutions. We also agree that we should avoid the use of complex formulas or those that allow the Department to manipulate outcomes by defining variables that are inconsistent with the requirements of student loan repayment programs. The Department agrees with the commenter that because the GE regulations do not calculate D/E rates until years after a student is admitted—sometimes as many as nine years after a student enrolls in a bachelor’s degree program— an institution must be able to predict macro-economic conditions, future earnings, and various other factors that influence employment and earnings well in to the future in order to establish a price that will guarantee passing D/E rates, a nearly impossible task. Institutions that receive generous taxpayer subsidies can reduce the price students pay such that graduates pass almost any earnings test, but taxpayers also deserve to know if the price they are paying for a student’s tuition is justified by the outcomes students achieve. The Department has determined that the best way to establish an equitable and meaningful transparency framework is by reporting debt and earnings income for all types of title IV programs to the public so that a market-based accountability system can flourish. Changes: None. Impact of the 90/10 Rule Comments: One commenter expressed concern that the 2014 Rule may be in tension with the 90/10 requirement. The commenter believed logic from the Department or others indicating the 2014 Rule could encourage schools to reduce tuition is faulty because it puts schools at risk of noncompliance with the 90/10 rule without giving these schools tools necessary to reduce student borrowing. Many commenters argued that some colleges use aggressive marketing and recruiting to target veterans and service members in an effort to supplement title IV funds with GI Bill funds because the latter do not count against institutions for purposes of 90/10 rule compliance. Another commenter mentioned law enforcement investigations and actions regarding proprietary institutions. Three of the investigations specifically reference court cases where some institutions were under investigation for misrepresenting their compliance with the 90/10 rule. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 31417 Some commenters, who were in favor of rescinding the regulations, argued that they do not treat all educational institutions the same. One commenter argued that public institutions are afforded much more leniency in the same industry, and that these public universities and community colleges are already being given a strategic advantage of not being accountable to metrics such as retention, placement, and 90/10. Discussion: Schools that misrepresent their compliance with 90/10 are in violation of the Department’s regulations, regardless of whether we rescind the GE regulations. The Department strongly believes these institutions should be held accountable and takes action against schools out of compliance with 90/10—as is required by law—including loss of title IV participation. The Department appreciates comments that point out the upward pressure that the 90/10 rule places on tuition costs at proprietary institutions and demonstrate the perverse incentives these regulations create that are not helpful to students. Because of the statutory requirement that proprietary institutions generate at least 10 percent of their revenue from non-title IV sources, coupled with the inability for an institution to establish lower student loan borrowing limits or to deny a student the right to borrow, an institution serving large majorities of low-income students will find it challenging to pass the 90/10 requirement if they lower tuition well beneath federally established borrowing limits. Also, since independent students have higher borrowing limits than dependent students, and since the title IV loan programs enable students to borrow enough to pay for living expenses, an institution may be unable to prevent students from borrowing a more reasonable amount and working to pay some of the costs in cash because doing so will interfere with the student’s ability to receive a credit balance to use for rent, food, and other costs of living. Since borrowing limits are based not just on tuition and fees, but also include housing, food, dependent care, and transportation, lowering tuition may not have a dramatic impact on borrowing. Even among community college borrowers where tuition is low, the average debt is $13,830, which shows the impact of non-tuition costs on student borrowing.136 Therefore, the Department believes that providing program-level debt and earnings information for all categories (GE and non-GE) of title IV participating programs is the best way to help all students make better informed decisions. Although certainly there may be instances in which veterans were targeted to help meet the 90/10 requirement, it is inappropriate to suggest that schools serving thousands of veterans are somehow not delivering on their promises or providing opportunities veterans want and need. Some institutions that ‘‘target’’ veterans do so because they provide unique program opportunities, student services, or adult learning environments better suited to the needs of veterans. Some proprietary institutions are more attractive to veterans than other institutions because they are designed around the needs of adult learners, serve large populations of veterans who share certain values and life experiences, provide additional training to faculty on the unique needs of veteran students, are more likely to accept credits earned from other institutions, and they are more likely to give credit for skills learned during military service. Student veterans made tremendous sacrifices to earn their GI Bill benefits and should be able to use their benefits to attend any school that works well for them. The Department appreciates the comments on 90/10; however, that rule is not the subject of this rulemaking. Changes: None. 136 Community College Review, ‘‘Average Community College Debt for Graduating Students,’’ www.communitycollegereview.com/average-collegedebt-stats/national-data. PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 Reporting and Compliance Burdens for GE Programs Comments: Several commenters expressed concern that if the Department chose to expand GE-like requirements to include all institutions, it would add significant reporting and compliance burden to all institutions. Some commenters expressed a desire to limit the applicability of the GE regulations to the programs covered by the definition of ‘‘institution of higher education’’ in section 102 of the HEA. One commenter discussed other Department requirements that institutions are already subject to, such as enrollment reporting and requested the Department carefully consider the implications of expanding disclosure requirements to all title IV-eligible programs. Several commenters discussed how the reporting burden from the 2014 Rule took away resources from efforts that E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31418 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations would actually improve student outcomes. Other commenters described the problems that would be presented by the requirement to directly distribute disclosures to prospective students by specified procedures at the correct stage of the matriculation process and to maintain all the records to document compliance. Commenters also expressed concerns about protecting student privacy and managing data associated with the records retention requirements. On the other hand, other commenters stated that burden reduction was not a sufficient reason to justify the proposed regulatory changes. One commenter stated that the Department misrepresents the stance of the American Association of Community Colleges (AACC) in relation to the burden associated with the reporting and disclosure requirements of the GE regulations and that community colleges have been supportive of the GE regulations. Several commenters stated that they thought efforts to reduce regulatory burden should be made while also maintaining sanctions for poorly performing programs or while maintaining the GE regulations. Several commenters affirmed that meeting disclosure requirements using the standardized GE Disclosure Template posted to individual program web pages presented a much greater administrative burden than was reflected in the 2014 Rule’s Regulatory Impact Analysis. Some commenters described how the burden from GE reporting requirements impacted student services at their school, with one commenter stating that it slowed down responsiveness to student and business needs at community colleges. Another commenter described services that were impacted by resources needed to fulfill GE reporting requirements, explaining that resources were taken away from activities that would help students achieve gainful employment such as providing student counseling and making efforts that would assist students with completion. Some commenters pointed out that the costs of compliance are reflected in higher program costs passed on to students and taxpayers. Another commenter emphasized the need for the Department to carefully consider costs when establishing any future disclosure framework. One commenter indicated that it would be unlikely for institutions to save much money from the reduced administrative burden from the regulatory change. The commenter also VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 indicated that it would be unlikely that any savings passed to students would be enough to change student decisionmaking. The commenter expressed concern that removing the extra costs would provide proprietary institutions with a wider profit margin to operate and would encourage expansion. Multiple commenters stated that the Department should encourage maximum transparency by requiring all programs at all institutions to disclose the same information so that students could have a baseline in which to compare information. Some commenters suggested that the Department should publish information from data that it already has access to, sparing institutions from having to meet additional reporting requirements. Some commenters emphasized that program disclosures should be easy to find. Some of these commenters expressed concern that the direct distribution requirement in the GE regulations would take away ease and flexibility that students need in the application process and that students may be overwhelmed by disclosures. Some commenters expressed concern regarding inconsistencies in the way that job placement rates are determined and reported under the GE disclosure requirements. Several commenters suggested that the Department standardize the methodology for calculating in-field job placement rates the same way that accreditors have done. Many commenters expressed the desire to see fair and consistent disclosures allowing students to make apples-to-apples comparisons among programs. Several commenters explained the difficulty of manually gathering GE reporting data, such as job placement rates, as is required by the 2014 Rule. One commenter stated that they were not confident in the reliability of data calculated by thousands of institutions according to their own interpretations of the 2014 Rule, especially with regard to the definitions and calculations of job placement rates. Multiple commenters emphasized the importance of avoiding disclosure of metrics such as job placement rates that are not comparable due to differences in State and accreditor definitions. Others were opposed to requiring GEstyle disclosures of all institutions but did agree that there is a need for greater transparency which could be achieved by the Department through the College Scorecard. One commenter would prefer that any net price disclosures focus on tuition PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 and fees, independent of living expenses. One commenter stated that the Department had not adequately explained why direct disclosures should not be provided to prospective and enrolled students or included in promotional and advertising materials. Discussion: The Department thanks the commenters for sharing their insight into how the GE regulations are affecting schools and their ability to serve students. The Department’s decision to rescind the GE regulations will enable institutions to redirect resources to other institutional functions and priorities. We strongly encourage institutions to do so. The Department agrees with the commenter who stated that proprietary institutions could use the cost savings generated from rescinding GE to increase their profit margin, but that is true of any institution that has GE programs. The Department sincerely hopes that institutions apply the savings generated to education and student services, but it acknowledges that it cannot control how institutions utilize cost savings. In addition to reducing the cumbersome reporting burden associated with the reporting provisions of the GE regulations, by rescinding the regulations, institutions will no longer be required to engage in the direct distribution of disclosures or maintain records to prove that students receive those disclosures. The Department agrees with the commenter who pointed out that it can be difficult to find GE disclosures on many websites. In our own efforts to review GE disclosures, we found that many of them are more than one or two clicks away from the program page, and some are not even referenced on the program pages, but instead are under a separate page for institutional research or consumer information. The College Scorecard, focusing on tuition and fees, will provide ‘‘one stop shopping’’ to students and families seeking information about institutions and programs, and it will allow the student to select multiple campuses and programs for the purpose of comparing information on the same screen. The Department acknowledges that the AACC has been generally supportive of the concept of the GE regulations; however, they have not spoken favorably about the administrative burden the regulations have placed on their own members. Due to taxpayer subsidies, which reduce the price students pay, their programs will likely pass the D/E rates measure even if earnings or program quality are very low. In fact, the Department points to E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations this as one of the reasons why the D/E rates measure is not an accurate indicator of quality since programs with exceptionally low earnings will pass the measure as long as those programs continue to be subsidized by taxpayers. In addition, given the small number of community college GE programs that met the minimum cohort size, the Department agrees that the burden of reporting was not justified by the information provided. For many programs, D/E rates were not issued because of small cohort sizes and many data items on the GE Disclosure Template output would appear as ‘‘not applicable’’ because a group contained fewer than 10 students. Of the 18,184 GE programs offered by non-profit institutions in 2017–18, only 3,708 have cohort sizes of 10 or more. This means that relatively few GE programs offered by non-profit institutions would be subject to the D/E rates measure or disclosure requirements, but it also means that there are relatively few opportunities for students to engage in occupationally focused education at non-profit institutions. This fact may be the single most important clue as to why proprietary institutions have become increasingly attractive to students seeking occupational education and credentials. A program that graduates less than 10 students per year is obviously quite small, either because of enrollment caps that the institution or its accreditor places on the program or because students at the institution are largely unaware that the program exists. Clearly, the majority of GE programs accommodate a very small group of students as table 1–1 previously showed, which may suggest that the programs available at non-profit institutions simply do not provide the supply of enrollment opportunities that meet student or workplace demand. The Department notes that AACC states in its comments that ‘‘implementing the gainful employment regulation has been hugely burdensome for community colleges’’ and that ‘‘any future GE regimen must be extremely sensitive to cost.’’ 137 Therefore, we do not believe that we have misrepresented the position of AACC regarding the reporting and disclosure burden. We agree that the GE regulations have been overly burdensome to schools and to the Department, and that all regulations 137 Walter G. Bumphus and J. Noah Brown, American Association of Community Colleges and the Association of Community College Trustees Comments on the NPRM on Gainful Employment, (Docket ID ED–2018–OPE–0042), September 13, 2018, www.aacc.nche.edu/wp-content/uploads/ 2018/09/GE_nprm_final_comments_AACC_ACCT_ 091318.pdf. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 should be sensitive to cost and burden. By rescinding the GE regulations, the cost and burden associated with GE reporting has been permanently removed. The Department did not receive quantitative estimates of costs associated with changing web architecture or updating GE disclosures on institutional websites each year, so we cannot comment on whether the burden estimates in the 2014 Rule were accurate or not. Because the Department is rescinding the GE regulations, institutions will no longer be required to post disclosures of program outcomes on their websites. The Department will now provide outcomes data to all students using the College Scorecard, or its successor, which has the advantage of reducing the burden on institutions and allowing students to more easily compare outcomes among the institutions and programs available to them. The Department thanks the commenters for their feedback and points out that the Senate Task Force on Higher Education Regulations similarly pointed to the GE regulations as being particularly burdensome regulations that outstrip legislative requirements and intent.138 Administering the GE regulations, particularly alternate earnings appeals, has also turned out to be much more burdensome to the Department than was originally anticipated. Although, the Department has changed disclosure templates in an effort to make them user friendly, we are not convinced that the GE disclosures are useful to students. Consumer testing has revealed that students mostly want to know how students like them have done in the program.139 In developing any future transparency framework, the Department will focus on using administrative data sets and Department-developed data tools to minimize burden on institutions and to allow students to compare all of the institutions and programs they are considering by accessing a single website. This website will be accessible to individuals with disabilities, in accordance with section 508 of the Rehabilitation Act. This will ensure that students with disabilities will be able to use the website tools and have equal access to the data that are available to all other students. 138 www.help.senate.gov/imo/media/Regulations_ Task_Force_Report_2015_FINAL.pdf. (pg. 29) 139 Bozeman, Holly, Meaghan Mingo, and Molly Hershey-Arista, ‘‘Summary Report for the 2017 Gainful Employment Focus Group,’’ Westat, https:// www2.ed.gov/about/offices/list/ope/summaryrpt 2017gefocus317.pdf. PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 31419 The Department agrees that as a result of differences in definitions by States and accreditors, including not only differences in how jobs are defined but also in which students are to be included in or excluded from the measurement cohort, the job placement rates reported in current GE disclosures are not comparable. In addition, the results of a 2013 Technical Review Panel highlighted that job placement determinations are highly subjective and error prone, since there is no reliable data source available to institutions for the purpose of determining or verifying job placements. Until a reliable data source is available for determining job placements, the Department believes that earnings data is the most reliable information that can be made available to students to give them a sense of graduate earnings, even if those data do not specify the precise type of job graduates have secured. The Department agrees with the commenter that the Department should encourage maximum transparency by ensuring that institutions provide the same information to all students and prospective students. The Department has determined that an expanded College Scorecard, or its successor, not direct disclosures to students, is the appropriate way to share this information, and plans to do so by adding program-level outcomes data for completers of as many title IV programs as possible without compromising student privacy. Although the Department does not require regulatory changes to implement or modify the College Scorecard, we appreciate the many comments we received in response to the NPRM and will consider them as we plan our Scorecard modifications. Changes: None. Scorecard The Department is not required to engage in rulemaking in order to make changes to the College Scorecard. Therefore, the following section of this final rule is not subject to the APA or the requirements of rulemaking. However, because we believe that the Scorecard is a critical tool to improving transparency and informing a marketbased accountability system, we sought feedback from the public regarding recommended content for the Scorecard. We are providing a summary of the comments and our responses to better inform the public, but we are not creating regulations related to the College Scorecard. Comments: Many commenters supported the Department’s efforts to expand the College Scorecard to include E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31420 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations program level data. One commenter stated that placing the information in a central location will be more effective than allowing institutions to comply with disclosure requirements by placing them in obscure sections of their websites. Another commenter supported moving all consumer data to the College Scorecard. Several commenters had questions or concerns regarding College Scorecard data. Some commenters expressed concerns that College Scorecard data are based only on undergraduate students and that this results in inaccurate data for many institutions. One commenter expressed concern that small cohorts are not excluded from the calculation and that the data may contain discrepancies between cohorts and methodologies used for each of the metrics or rates provided. The commenter gave the examples of such discrepancies, including their belief that: Debt amounts are based only on students with Federal loans, but earnings information is based on all students attending the institution; debt includes debt for indirect costs in addition to direct expenses; some metrics are based on completers only while others include all students; and retention and graduation rates are based on first-time, full-time students only, which is not representative of the current student population. The commenter then expressed concerns that students will not know that the outcomes data are based on different student cohorts. Many commenters stated that they would like to see the Department’s data collection efforts expanded beyond firsttime, full-time students. Given the increase in part-time students, transfer students, and students who stop-out for various reasons, some commenters pointed out that by including only firsttime, full-time students, the majority of students at some institutions are excluded from the data. One commenter requested that the Department develop a mechanism that would authorize institutions to forward student data to the Department of the Treasury so that Treasury can disclose to the Department information about the earnings of all program completers and not just those who participated in title IV programs. One commenter stated that calculators and other financial management tools that can be customized to an individual student’s situation provide better information than mandatory standardized disclosures on program pages. Another commenter suggested that the Department publish a calculator allowing students to understand debt, VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 the application of compound interest, and the expected income of a career choice. Some commenters stated that although they value transparency and are encouraged by the Department’s aims to provide more relevant information via an online portal, they believe that there is no replacement for in-person disclosures, which ensure that a student receives information and has an opportunity to ask questions and understand metrics being provided. Several commenters expressed that they were skeptical that institutions would provide accurate information on institutional disclosures, and these commenters were concerned that institutions would put the disclosures in obscure portions of their website. Several commenters supported the idea of adding a link to the College Scorecard from institutional program pages. One commenter suggested that the Department create a standardized icon for hyperlinking to the data disclosure portal, mandate that schools use it on their websites and set requirements for its size and prominence. Other commenters suggested that the Department require links to Department data on school websites. One commenter stated that such a link should only be to the main College Scorecard page and that requiring specific links based on program would cause undue burden. One commenter stated that the centralized Scorecard approach would be less burdensome than updating websites and catalogs. Another advocated for measurements to be added to a national website and require that the link should be included in Admissions paperwork, Free Application for Federal Student Aid (FAFSA) documents and student catalogs. One commenter recommended that the Outcome Measures Survey for 200 percent of time to completion be used to calculate the graduation rate data and then made recommendations for how to augment the IPEDS data collection. Many commenters stated that disclosures should be part of the PPAs for all schools, and that all participating schools should be required to link to College Scorecard or a similar national website containing standardized disclosures. Commenters stated that such disclosures would be easy for students to use and would result in meaningful comparisons. Another commenter pointed out that disclosure requirements exist for other large transactions, such as buying a car, and students need this information when making life-impacting decisions. The PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 commenter thought it was especially important that disclosure requirements be applied to programs subject to the 2014 Rule given past history of predatory practices at some schools. Many commenters discussed items that they thought should be included in any upcoming disclosure framework, including: Whether a program meets State requirements for graduates to obtain licensure in the field; information about programmatic accreditation requirements, program costs, and program size; data on program outcomes such as completion rates and withdrawal rates; earnings data for program graduates after a set period of time in the job market; the percentage of students who complete the program or transfer out within 100/ 150/200 percent of the normal time to complete; the percentage of Pell recipients who complete the program or transfer out within 100/150/200 percent of the normal time to complete; institution-level success rates parsed out by credential level; the percentage of program graduates earning above a particular income threshold after a set period of time in the job market; and the percentage of students receiving Pell grants. One commenter expressed concerns that the Department had not discussed any plans to include other data in the College Scorecard, such as: Primary occupation for which a program is designed to prepare students, program length, completion and withdrawal rates, loan repayment rates, program costs, percentage of title IV or private student loan borrowers enrolled in a program, median loan debt, mean or median earnings, program cohort default rates, or State licensure information, which are disclosure items covered under the GE regulations. One commenter stated that the Department needed to provide a rationale for the decision to not continue each item required for disclosure under the 2014 Rule. Some commenters listed questions that they would want answered if the Department establishes disclosures via the College Scorecard or other means. These questions included: How the Department will gather the information for the centralized data portal; what requirements there would be to submit data to the centralized data portal; what format the information would need to be disclosed in; how frequently information would need to be submitted to the Department; whether the Department would make it possible to submit data more frequently to ensure that the best possible data are available to students; whether the data would be E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations disclosed on a rolling basis or with deadline requirements; how the College Scorecard or other website would indicate missing information; what enforcement mechanism might be used and how it would work; how institutions would have access to monitor and update disclosure information; what privacy controls would be used; what evidence institutions would be required to provide to support their disclosures and whether those documents would be viewable by the general public; how the Department would explain the data collection period used; what action the Department would take if it found during an audit that an institution misrepresented disclosure information; whether the Department would regularly review which data items would be disclosed for usefulness to students and; what role stakeholders would play in such a review process. Several commenters stated that an informational solution alone, was not adequate protection for students. Some of these commenters believed that relying solely on the College Scorecard places the burden on students to find and interpret information on programs. One commenter stated that no evidence supports the conclusion that publishing more outcome data will lead to better decision making on the part of students and that most college students would not use the information anyway. One commenter cited research that indicated that upper-income students were more likely to use Federal data in their college decision-making process.140 One commenter noted that the College Scorecard is not implemented through regulation and, therefore, is not a good disclosure tool to expand for programmatic disclosure purposes. Another stated that the College Scorecard will not be as effective as a disclosure template and will not lead to loss of eligibility or include a direct warning from an institution to a student considering a poor-performing program. Another commenter questioned the Department’s assertion in the NPRM that the College Scorecard will provide more accurate and reliable data than the GE Disclosure Template. Finally, several commenters expressed concerns that the College Scorecard will not be enough to dissuade students from enrolling in a program if high pressure sales tactics, advertisements, commission-based compensation, and ‘‘pain points’’ are used in recruiting tactics. 140 Hurwitz, Michael and Jonathan Smith, ‘‘Student Responsiveness to Earnings Data in the College Scorecard,’’ SSRN, September 1, 2017, papers.ssrn.com/sol3/papers.cfm?abstract_ id=2768157. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 Another commenter asked how the Department will balance the need for data with privacy protections in cases of programs with less than ten students. One commenter asked whether the Department will relax privacy protections if it provides program-level data through the College Scorecard. Without doing so, any disclosures through the College Scorecard would still not have program-level data for programs with fewer than ten completers. Several commenters suggested various metrics for inclusion in the College Scorecard, while others noted that privacy laws will prevent students from getting a truly clear picture of programmatic outcomes. One commenter suggested differentiating earnings between those who complete and those who do not complete. Another commenter pointed out that the College Scorecard does not provide information on a programmatic level and instead provides information at the institution level. One commenter expressed concerns that the College Scorecard cannot be updated with program-level data soon. The commenter then stated that the Department should clarify if it intends to keep the same time horizon of six to ten years after entering schools, whether it will disaggregate earnings for completers and non-completers, and whether it will group very small majors in similar content areas to ensure it is able to produce data covering as many students as possible. Finally, the commenter suggested that the Department conduct consumer testing, consider holding a technical review panel with behavioral economists, designers, and other experts, and construct a data download tool for users who wish to access files with the data in smaller chunks than the current large zip file. One commenter requested that the Department make sure that the reporting accurately accounts for the enrollment patterns of community college students who may take longer than the traditional time to complete. Another commenter expressed concerns that because most of the key College Scorecard data are based on title IV recipients, information would be made available for a minority of community college students, as fewer than four out of ten community college students receive any Federal financial student aid. The commenter went on to state that this minority of students is unrepresentative of the larger population of community college students—title IV aid recipients are generally less affluent and likelier to PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 31421 have worse outcomes than their betterresourced colleagues. Many commenters pointed out that cosmetology schools and other certificate programs are not included in the current College Scorecard. One commenter asked that if the College Scorecard approach is adopted, that cosmetology schools should be included in a sensible way or be exempted from the requirement. Additionally, the commenter contended that programlevel earnings data will not be representative of the income made by graduates because many completers work part-time, are building businesses, or fail to include tips in their reported earnings. One commenter asked that the Department hold off on requiring certificate programs from having to include a link to the College Scorecard until it contains data regarding certificate programs. One commenter suggested that the Department adopt language in the College Scorecard that addresses occupational circumstances and geographic differences that have the potential to impact the accuracy and validity of the data. Another commenter suggested that the Department provide earnings information only for program completers, which differs from the current College Scorecard because the earnings information encompasses both completers and non-completers. The commenter argued that the purpose of the College Scorecard’s earnings data is to inform students of what they may expect to earn if they complete a given program and that including noncompleters’ earnings is confusing. One commenter suggested incorporating a risk-adjusted model for presenting data based upon variables such as socioeconomic demographics and geographical location of students and the institution. Another commenter expressed concerns that including self-reported data on the College Scorecard would invite misrepresentation. One commenter suggested reporting median earnings of graduates by program. Another commenter suggested integrating analytic insights derived from unique, consumer-level data maintained by other sources. Another commenter suggested using the Credential Transparency Description Language schema in the College Scorecard and providing the data on the institution’s website. Some commenters stated that they did not believe it necessary for the Department to require institutions to publish information such as net price, program size, completion rates, and accreditation and licensing E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31422 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations requirements because this information could be added to an FAQ page published to the College Scorecard site so that students could ask the schools the questions if they so choose. One commenter expressed concern that the College Scorecard website would not include all of the information a student might need to effectively select a school. The commenter explained that disclosures are more effective when they are produced by government regulators to further policy goals rather than from an institution whose goal is to limit liability. One commenter stated that the Department has not negotiated in good faith, because the Department has not committed to update the College Scorecard with program-level data. Several commenters expressed concern that increasing the profile of the College Scorecard would increase burden on institutions since there would be more reporting requirements for an expanded College Scorecard. One commenter stated that requiring individual programs to track and disclose information such as programmatic outcomes, program size, completion rates, and net price would result in costs that the institutions would then pass on to students in the form of higher tuition and fees. Several commenters expressed concern over whether students would know where to find program-level information on the College Scorecard after it was added and how to interpret the information. One commenter expressed concern that there is currently no law or regulation requiring that the program-level information be added to the College Scorecard. Discussion: The Department very much appreciates the suggestions, ideas, and potential inclusions and exclusions in the future College Scorecard, or similar tool. The Department continues to believe that the best way to create a transparency and market-based accountability system that serves all students is by expanding the College Scorecard to include program-level outcomes data for all categories (GE and non-GE) of title IV participating programs, so that students can make informed decisions regardless of which programs or institutions they are considering. The Department is also working towards providing more information to students and parents about the level of Parent PLUS borrowing. Only when parent borrowing is included can students fully understand the level of borrowing in which families engage at a particular institution. This also provides families with more complete and meaningful VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 expectations of educational costs and students and parents should be aware of this when making enrollment decisions. Parents in the later years of their career may be less able to manage student loan repayment than their children who have an entire career ahead of them, yet borrowing limits on Parent PLUS loans are exceedingly high regardless of the parent’s income, which could have dire results as parents near their retirement years.141 We intend to list Parent PLUS debt separate from student debt, but nonetheless believe that it is an important addition to consider in the expanded College Scorecard. The Department notes that several negotiators recommended that if earnings are to be reported by the Department, those earnings should be considered at 5 or 10 years postgraduation, since earnings in the early years after completion may not reflect the true earnings gains that individuals will realize from their college credential. The Department agrees that earnings at the 5- and 10-year mark, or within a similar timeframe, will provide more meaningful information about a borrower’s likelihood to repay his or her loans throughout the standard repayment period. The three- and fouryear earnings data currently used to calculate D/E rates were an aspect of the GE regulations that made it an unreliable proxy for program quality since it is not unusual for a graduate to take a few years to hit their career stride, especially if they enter the job market during a time of high unemployment. Therefore, the Department intends to integrate earnings data closer to the suggested 5- and 10-year earnings data into the expanded College Scorecard. However, since the Department does not have program-level data prior to 2014– 15, it will report shorter-term earnings during the first year of Scorecard expansion, and will increase the number of years following graduation that are captured in the data until it reaches the target post-completion metric. Because students who do not complete the program will not benefit from the full program or curriculum, it is inappropriate to include the earnings of non-completers in the determination of program outcomes. While we encourage institutions to take action to increase program completion rates, the Department recognizes that there are many factors that influence a student’s 141 See: Andriotis, AnnaMaria, ‘‘Over 60, and Crushed by Student Loan Debt,’’ Wall Street Journal, February 2, 2019, www.wsj.com/articles/ over-60-and-crushed-by-student-loan-debt11549083631. PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 decision or ability to persist and complete the program. Since the HEA is designed to increase access, and since loans are made available to all students regardless of their level of academic preparedness, institutions that adhere to open-enrollment admissions policies and institutions that are minimally selective will likely have lower completion rates than highly selective institutions that serve mostly students who are economically-advantaged, traditionally-aged, and academically well-prepared for college-level work. It is not appropriate to penalize institutions because they take on the difficult work of serving high risk students. The Department is sympathetic to the concern that by including only title IV participating students, some institutions will not have a representative sample of students included in the earnings calculation and the populations on which earnings are reported are likely to be lower earners. The Department agrees that students from socioeconomically disadvantaged backgrounds tend to have lower earnings in the early years after graduation. However, the Department is permitted to collect data only on title IV participants, unless Congress passes legislation to lift the current data collection prohibitions. Both debt and earnings data presented in the Scorecard will be limited to title IV participating students; however, the Department will work to help students understand why earnings data are being reported for a different cohort for students (i.e., those who graduated 5 or 10 years ago) than the cohort for which median borrowing levels are reported (the most recent cohort of graduates for which data are available). Since college costs can change dramatically over time, we believe that median debt from the most recent cohort of graduates will more closely approximate what a current or prospective student might need to borrow, whereas the amount a student borrowed many years ago may not be meaningful if the tuition and fees are considerably higher now or the demographics of students served have shifted over time (such as because the institution has become more or less selective over time). The Department does not believe it has the authority to include in its MOU with the Department of Treasury a request for institutions to provide Social Security numbers for non-title IV participants in order to include their earnings data in the Scorecard. We will continue to explore what options, if any, might be available to us so that non-title IV students can be included in Scorecard. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations The Department agrees that calculators and financial management tools can be useful to students. Already, the Department has debt calculators on the FSA website, and as the Department launches the NextGen Financial Services Environment, it will include additional borrower education opportunities. We will explore ways to connect those tools to the College Scorecard so that students can manipulate data from the Scorecard as part of their exploration. The Department is not suggesting that the College Scorecard replace person-toperson meetings or conversations between campus staff and prospective students and does not intend for the College Scorecard to replace those interactions. We do believe, however, that students who have access to the Scorecard, and who receive Scorecard information as they complete their FAFSA, will be able to identify which institutions they may want to attend and to enable outcomes comparisons between institutions that serve demographically matched populations or that support similar educational missions. Our goal is to go beyond a passive website and to connect Scorecard to the MyStudentAid mobile app so that Scorecard data becomes part of the experience and not an ancillary tool that students may or may not utilize. While the Department encourages all institutions to post links to the Scorecard on their institutional websites and likes the idea of developing a recognizable icon so that students know where to find the link, we are not including those requirements here. We believe that by linking the College Scorecard to electronic or mobile FAFSA completion, and by providing Scorecard data in an API format so that others, such as Google, can develop new ways to make these data available to consumers, more students will interact with these data and have the opportunity to use them in their personal decision-making process. The Department agrees that if institutions are left on their own to calculate and disclose their own outcomes, the data may be less accurate and reliable since different data sources could be used to produce those data, since human error could be introduced, and since dishonest institutions could misrepresent the truth. However, it must be noted that IPEDS data are similarly self-reported, and the Department has often pointed out its concern about the likely presence of errors in those data. Still, IPEDS reporting is the best data available to the Department, and we believe that as those data become more VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 readily available to students for use in enrollment decision-making, institutions will be incentivized to further assure the accuracy of those data. Still, the Department believes that the best way to provide accurate and comparable data to students and parents is to expand the College Scorecard to provide program-level outcomes data for title IV participating programs at all credential levels and regardless of institutional type. We agree with the commenter who stated that a centralized tool like the College Scorecard will be easier to update than websites and catalogs. We appreciate the commenter who suggested that Outcome Measures Survey data be included in Scorecard, which has more comprehensive graduation rate information including rates for non-first time and part-time students, and the Department will take this recommendation under advisement as it develops the expanded Scorecard. The Department acknowledges that disclosures are often made available to consumers making large financial transactions. We nonetheless believe that the College Scorecard is the optimal way to share information to student and to ensure that comparable data are made available to students and parents. The Department will explore the possibility of separating debt and earnings data for Pell and non-Pell students at the program-level by examining to what extent these data can be made available while maintaining student privacy. As for concerns about data privacy, the Department notes that it receives earnings data in aggregate, not at the student level. Therefore, there was no potential for a breach of privacy regarding earnings. The Department has no plans of changing this policy and rescinding the regulation will not change any students’ privacy safeguards, regardless of the size of the program in question. The Department will continue to include information about institutional costs on the College Scorecard and will explore the feasibility of including program-level cost data. The Department has also explored calculating program-level completion rates for title-IV students but believes there will be challenges to creating entry cohorts because students can transfer from program to program within an institution, which makes it difficult to determine which students to include in an entry cohort. The Department is also exploring ways to provide information on program size to help students understand how competitive it might be to be admitted to, how many different PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 31423 class sections will be available, and how likely it is that the program is actually offered each semester. This will also help to reduce the use of tactics that lure a student to an institution and then redirect that student to a different program. The Department is concerned that some institutions may be advertising highly sought programs in order to attract students, but once students enroll at the institution, they then find that the program either is not enrolling more students, has entrance requirements substantially more rigorous than entrance requirements to the institution, or has a long waiting list, at which point the institution may then encourage them to enroll in a different program, such as a general studies program or a lower-level applied program. By publishing program size, students may get important clues about the likelihood of their program of choice being available to them. It may also help explain why proprietary institutions have entered into markets where the uninformed believe a community college is meeting career and technical training needs simply because they list having a program in their catalog. The Department will consider the usefulness of IPEDS completion rate data to the Scorecard and appreciates the recommendations regarding the 100/ 150/200 percent completion rates. The Department does not have access to data that provides accurate information about the primary occupations for which a program prepares a student, and in non-CTE programs, it is difficult to determine what does or does not constitute a primary occupation. Therefore, we will likely not include information about primary occupations on the College Scorecard. Similarly, current plans do not include job placement rates because we do not have access to accurate data on this. Our goal is to encourage accreditors and states to stop relying on subjective, and error prone job placement rate determinations to evaluate program outcomes, and to instead encourage the use of College Scorecard earnings data to more accurately inform students about the earnings of prior graduates. The Department is planning to include program-level information such as median debt, loan repayment rates, monthly payment associated with that debt, and cohort default rates in the Scorecard, although initially some of those data points may be calculated at the institution level rather than the program level. The Department does not have plans to include information about private loans in the College Scorecard, since we do not have access to those data without requiring institutions and E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31424 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations students to report additional data to the Department. The Department believes it has provided sufficient rationale for not including every element of the 2014 Rule disclosures in the expanded College Scorecard. However, we have described more generally throughout this document, and in this and the earlier section about GE disclosures, why we will no longer be requiring GE disclosures. Since our goal is to develop a transparency framework that can be applied to all categories (GE and nonGE) of title IV programs, we are concerned that such disclosures could be too burdensome to large institutions that offer hundreds of programs. Therefore, we will not require any institutions to post GE-type disclosures as a result of this final rule. The Department plans to begin with annual updates to the College Scorecard and will consider whether more frequent updates are appropriate. College Scorecard will continue to adhere to the Department’s privacy standards and suppress values with small cohort sizes and will consider aggregating data from multiple years if necessary, to achieve larger cohort sizes. The Department plans to engage in consumer testing of the College Scorecard. We hope that more students will use the College Scorecard since we have mechanisms to disseminate data to students through the mobile app and other NextGen FSA tools. We also believe that by providing data in API format, other developers will find novel and innovative ways of making data available to students in a user-friendly format and in ways the Department is unlikely to explore with its own limited resources. We agree that the College Scorecard will not prevent high pressure sales tactics or pain point recruiting, but it will provide information that makes it difficult for institutions to misrepresent the truth about their outcomes. By rescinding this rule, we are making no changes to the incentive compensation regulations; therefore, we are not proposing any changes to prohibitions on commission-based compensation. We will work towards expanding the College Scorecard to include programslevel metrics, including for certificate programs, undergraduate programs, graduate programs and professional programs. The Department is not currently planning to separate total debt from debt associated with tuition and fees; however, we will continue to consider the request to do so. The Department plans to continue providing institution level information VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 to help students understand the impact of variables, such as geographic differences, on outcomes. In addition, other contextual information, such as institutional selectivity or percent of Pell recipients to help students compare similar institutions. We will consider ways in which we might interact with other databases, such as credit bureau data or student outcomes data. The Department has negotiated in good faith and has committed to updating and expanding the College Scorecard. Since we are still developing the tool and are not required to publish regulations in order to produce the College Scorecard, we will not commit to all of the particulars of its content in this final regulation. However, we will consider the recommendations we received through the public comments as we update and expand the College Scorecard. The Department will continue to enforce disclosure and reporting requirements that remain part of the PPA. In addition, the Department will continue to be mindful of the reporting burdens placed upon institutions for all reporting or disclosure requirements. Certification of GE Programs Comments: One commenter stated that institutions of higher education should be required to certify programs that lead to careers with State licensure requirements actually meet those State licensure standards. Discussion: The Department considered disclosures related to licensure and certification, as well as accreditation, as part of its Accreditation and Innovation negotiated rulemaking package and, therefore, will not include regulations related to disclosures of this information in this rulemaking. Changes: None. Continued Implementation of the GE Regulations Prior to Rescission Comments: One commenter representing a coalition of members of advocacy groups stated that until a rescission of the 2014 Rule is effective, the Department is obligated to follow the law as it exists but has failed to do so. Alternately, two commenters requested that the Department suspend any further requirements to comply with the GE regulations, including the GE data reporting requirements, publication, or revisions to the disclosure template, and requirements to submit appeals information. Discussion: The GE regulations remain in effect until this regulation is final and the 2014 Rule is rescinded. PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 However, the Department does not have access to the SSA earnings data necessary to calculate future D/E rates. As a result, the Department cannot take action to remove programs from title IV participation since no program will have failed the D/E rates measure for two out of three consecutive years or had a combination of fail and zone rates for four consecutive years. The Department will produce a modified disclosure template that institutions must use to disclose information, as prescribed by the GE regulations. Changes: None. Rulemaking Process Comments: One commenter stated that the Department did not conduct a reasoned rulemaking since it has proposed to eliminate all sanctions. One commenter stated that the proposed regulations are arbitrary and capricious, because the Department failed to justify its regulatory choices. Specifically, the commenter referred to the removal of the sanctions for poor-performing programs and the removal of disclosures to students about program outcomes. The commenter stated that Executive Order 12866 was not followed because the Department did not issue a regulation where the benefits of the new policy outweigh the costs. The commenter also stated that the Department has not presented rigorous analysis and evidence to support its claims. A commenter stated that the Department did not negotiate in good faith because it refused to hold a fourth session of negotiations after tentative consensus on the proposal was reached. One commenter accused the Department of ignoring and disregarding years of public input on GE matters. One commenter provided an appendix in which he quoted from the 2014 NPRM but did not provide a comment to explain its inclusion. The commenter also provided research by Libassi and Miller about how the GE regulations reduce loan forgiveness costs, but again did not provide any explanation as to its inclusion.142 Discussion: The Department disagrees with the commenter who asserted that the Department is advancing a policy where the risks outweigh the benefits. Throughout the NPRM, and this document, we have provided sufficient evidence that the benefits of the final regulation—including ensuring that all students are free to choose the school 142 Libassi, C.J. and Miller, B. (8 June 2017). How Gainful Employment Reduces the Government’s Loan Forgiveness Costs. Center for American Progress. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations and program of their choice—outweigh the risks. In fact, we have been clear that by expanding the College Scorecard to improve program-level outcomes data for all title IV-participating programs, we will expand the benefits of transparency to all students and not just those who seek enrollment in a GE program. The Department also disagrees with the commenter who said that it did not provide rigorous analysis to support its position. The Department has provided a more than rigorous review of data that was not considered in connection with the 2014 Rule and disagrees with earlier claims. The Department disagrees with the suggestion that it did not conduct a good faith, open, and reasoned rulemaking. The Department proposed the removal of sanctions at the first negotiating session, explaining that the numerous sources of error in the D/E rates measure make it an invalid proxy for program quality. Nonetheless, when a negotiator proposed the use of one-toone debt-to-earnings ratios that would be more easily understood by students, the Department supported this approach and voted favorably. Although the Department hoped for consensus among the members of the negotiating committee, it was not reached. A number of negotiators, including representatives of non-profit institutions, discussed the many reasons why sanctions are not appropriate based on the inaccuracies of the D/E rates measure as a proxy for quality since the rates may be influenced by many factors outside of the institution’s control. The Department believes it is inappropriate to sanction institutions and eliminate opportunities for students based on metrics that are influenced by factors outside of the control of institutions, such as student loan interest rates. The Department also disagrees with the assertion that a program that fails the D/E rates measure is automatically and necessarily a poor performing program. As noted in the NPRM, there are a plethora of factors that influence a program’s D/E rates. As such, the Department does not believe that failing the D/E rates measure is an accurate indicator that the program is a poor performing program. In addition, given the number of passing programs that have associated earnings below the poverty level, the Department does not believe that passing the D/E rates measure indicates that the program is a good program or that students are benefiting themselves by completing it. The Department also believes that stewardship of taxpayer dollars includes providing information that allows taxpayers to understand not only the VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 number of dollars at risk through the student loan program, but the number of dollars that are directed through State and local appropriations to programs that yield low earnings. Students also have the right to know, regardless of whether they pay cash, use other forms of credit, or use Federal student loans to pay for their programs, if doing so is likely to generate financial benefits. Employers similarly should be able to review program outcomes before spending their hard-earned dollars to provide employee education and professional development. Therefore, the Department believes that its decision to use the College Scorecard or its successor as the mechanism to increase transparency and inform a market-based accountability system that continues to honor student choice is reasonable. The Department recognizes that students select institutions and programs, including GE and non-GE programs, for many different reasons, of which future earnings may be only one of many deciding factors. Even without currently having access to all program-level data for non-GE programs, as stated elsewhere, the Department believes that the benefits of rescinding the GE regulations outweigh the potential costs, since GE programs represent just a small portion of title IV programs available to students. In order to ensure that all students make better informed enrollment and borrowing decisions, a comprehensive approach is required. Because the Department does not yet have access to program-level data, we cannot accurately estimate savings associated with reduced enrollments in undergraduate and graduate programs across all institutional sectors as a result of unimpressive outcomes. The Department’s review of the outstanding student loan portfolio has provided ample evidence that the problem of borrowing more than a student can repay in 10 years extends well beyond proprietary institutions and includes institutions from all sectors. According to Jason Delisle and Alex Holt, income-driven repayment programs actually provide disproportional advantage to higher income students, which is not the population for whom IDR programs were designed.143 Student loan nonrepayment poses considerable costs to taxpayers, regardless of which 143 Delisle, Jason and Alex Holt, ‘‘Safety Net or Windfall? Examining Changes to Income-Based Repayment for Federal Student Loans,’’ New American Foundation, October 2012, static.newamerica.org/attachments/2332-safety-netor-windfall/NAF_Income_Based_Repayment. 18c8a688f03c4c628b6063755ff5dbaa.pdf. PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 31425 institutions are the source of loans in non-repayment. While the Department did not approve of a fourth negotiating session, we believe we engaged in a good faith effort to negotiate and reach consensus. The Department does not believe that there was tentative consensus on the proposal during the third session or that a fourth session would have brought the group closer to consensus. To the contrary, the Department made considerable compromises in order to arrive at consensus, but it was clear by the end of the third session that consensus would not be achieved. Also, a number of negotiators expressed opposition to the idea of adding another session. There were several negotiators who made it clear that they would never concur with any regulation that did not include program sanctions and one negotiator stated that he would never agree to a regulation without first knowing which programs would pass or fail, so that he could be sure that only the truly ‘‘bad’’ programs would fail, since some ‘‘good’’ programs could fail if the formula was not properly designed. The Department believes that it is not appropriate to evaluate the validity of a methodology by reviewing the results to see if they align with a more subjective view of which programs should pass or fail. Either the methodology is valid, or it is not, and while it would be helpful to know which and how many programs would be impacted by a valid methodology, those results are not what determine the accuracy of the methodology. The Department acknowledges that it was able to provide only very limited data to negotiators and could not provide earnings data for nonGE programs since the Department was unable to obtain additional earnings data from SSA. However, neither negotiators nor the Department could identify a new accountability metric that is supported by research and appropriately controls for factors that impact student debt or program earnings. Further, additional data were not needed to develop the methodology. Rather, additional data would have only enabled negotiators to determine which programs would be on the ‘‘right’’ side of the formula. The Department negotiated in good faith, including putting forth a proposal during the third session that deviated significantly from our original proposal and took into account many of the suggestions made by negotiators. However, even with all of those changes, consensus was not reached. From the time that the negotiated rulemaking committee was announced, E:\FR\FM\01JYR2.SGM 01JYR2 31426 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 negotiators knew that the Department was planning to hold three negotiating sessions. Three sessions provided ample opportunity to fully discuss the issues and determine whether consensus could be reached. Discussion has continued about the GE regulations since the first rulemaking effort commenced in 2010, and that discussion continued through a second rulemaking effort and this current negotiated rulemaking and public comment. The Department does not believe that uniform consensus about the validity of the GE regulations has ever been achieved, and it notes that there has been vociferous disagreement among those who support and those who oppose the 2014 Rule. More recently, we have been unable to enter into an updated MOU with SSA, which means that we are unable to obtain earnings data to continue calculating D/E rates. Therefore, the Department has no choice other than to cease D/E calculations and reporting using the methodology defined by the GE regulations. Most importantly, the GE regulations cannot be expanded to include all title IV programs. The Department has determined that the 2014 Rule is fundamentally flawed and does not provide a reliable methodology for identifying poorly performing programs and, therefore, should not serve as the basis for high stakes sanctions that negatively impact institutions and students. Changes: None. Information Quality Act (IQA) Comments: A commenter stated that the NPRM relied upon ‘‘inaccurate, misleading, and unsourced information in violation of the Information Quality Act.’’ Additionally, the commenter stated that the Department did not meet the clear standards set forth in both the ED Guidelines related to the IQA and the IQA itself because the data and research cited lacked objectivity since the NPRM was filled with examples of information that was not supported by sources, do not stand for the proposition cited, failed to explain the methodology used, or were not accompanied by information that allows an external user to understand clearly the analysis and be able to reproduce it, or understand the steps involved in producing it. Discussion: The Department separately addresses each of the specific comments and requests related to compliance with the IQA below. Changes: None. Comments: A commenter questions the Department’s statement ‘‘The first D/ E rates were published in 2017, and the Department’s analysis of those rates VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 raises concerns about the validity of the metric, and how it affects opportunities for Americans to prepare for highdemand occupations in the healthcare, hospitality, and personal services industries, among others.’’ The commenter stated that this assertion fails to clearly describe the research study approach or data collection technique, fails to clearly identify data sources, fails to confirm and document the reliability of the data and acknowledge any shortcomings or explicit errors, fails to undergo peer review, and fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: The Department is referring to data tables published on the Department’s website, based upon the methodology described in the 2014 Rule.144 Our statement in the NPRM was based upon our analysis of the data in the published D/E rates data table, as discussed above in the Geographic Disparities and the D/E Thresholds and Sanctions sections. Changes: None. Comments: A commenter questioned the Department’s statement ‘‘In promulgating the 2011 and 2014 regulations, the Department cited as justification for the eight percent D/E rates threshold a research paper published in 2006 by Baum and Schwartz that described the eight percent threshold as a commonly used mortgage eligibility standard. However, the Baum & Schwartz paper makes clear that the eight percent mortgage eligibility standard ‘has no particular merit or justification’ when proposed as a benchmark for manageable student loan debt. Upon further review, we believe that the recognition by Baum and Schwartz that the eight percent mortgage eligibility standard ‘has no particular merit or justification’ when proposed as a benchmark for manageable student loan debt is more significant than the Department previously acknowledged and raises questions about the reasonableness of the eight percent threshold as a critical, high-stakes test of purported program performance.’’ The commenter states that the Department fails to present conclusions that are strongly supported by the data, which has been highlighted recently by Sandy Baum, the co-author of the 2006 study cited by the Department, who stated that ‘‘the 144 See: studentaid.ed.gov/sa/sites/default/files/ GE-DMYR-2015-Final-Rates.xls and studentaid.ed.gov/sa/about/data-center/school/ge. PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 Department of Education has misrepresented my research, creating a misleading impression of evidencebased policymaking. The Department cites my work as evidence that the GE standard is based on an inappropriate metric, but the paper cited in fact presents evidence that would support making the GE rules stronger.’’ The commenter further asserts that ‘‘[the Department is] correct that we were skeptical of [the eight percent] standard for determining affordable payments for individual borrowers, but incorrect in using that skepticism to defend repealing the rule. In fact, our examination of a range of evidence about reasonable debt burdens for students would best be interpreted as supporting a stricter standard.’’ Discussion: The Department is aware of and respects Ms. Baum’s opinion that the 2014 Rule should not be rescinded. However, that does not change the fact that in their earlier paper, Baum’s and Schwartz’s state that the eight percent mortgage eligibility standard has ‘‘no particular merit or justification’’ as a benchmark for manageable student loan debt. Since this paper was cited in the 2014 Rule as the source of the eight percent threshold, it is relevant that even the authors of the paper are skeptical of the merit of the 8 percent threshold as a student debt standard. It is not only appropriate, but essential, that the Department points out that upon a more careful reading of the paper, we realize that the paper does not support the eight percent threshold, but instead clearly refutes it for the purpose of establishing manageable student loan debt. As for the notion that the Baum & Schwartz paper supported a stricter standard, the commenter did state that the 2014 Rule was too permissive, but did not provide a specific threshold for what the number should be and the negotiating committee similarly was unable to identify a reliable threshold for the D/E rates measure. Changes: None. Comments: Several commenters expressed the opinion that research and evidence cited in the NPRM was misinterpreted by the Department or used selectively in an attempt to mislead. One commenter specifically asserted that the NPRM cites evidence in a way that leads to factual errors, does not attempt to justify key choices, and ignores hundreds of pages of evidence in favor of citations that have no bearing on the claims asserted. Another commenter offered that the 2014 Rule is based on extensive research and evidence, which the NPRM fails to adequately refute, showing that some GE programs were accepting E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations Federal financial aid dollars and enrolling students while consistently failing to train and prepare those students for employment. Discussion: The Department disagrees with the commenter’s interpretation of the data provided in the NPRM. We continue to believe that the NPRM included adequate justification for its conclusion that the D/E rates measure is an unreliable proxy for program quality for all of the reasons described, including that the Department’s selection of an amortization term that could significantly skew pass or fail rates, and the Department’s selection of a 10-, 15-, or 20-year amortization term that does not align with the amortization terms provided by Congress and the Department through its various extended and income-based repayment programs. Similarly, the Department has provided sufficient evidence to support its position that while program quality could have an impact on earnings, so too could a variety of other factors outside of the institution’s control, including discriminatory practices that have resulted in persistent earnings gaps between men and women, between individuals from underrepresented minority groups and whites; geographic differences in prevailing wages; difference in prevailing wages from one occupation to the next; micro- and macro-economic conditions; and other factors. Changes: None. Comments: One commenter disagreed with the Department’s statement that, ‘‘Research published subsequent to the promulgation of the GE regulations adds to the Department’s concern about the validity of using D/E rates to determine whether or not a program should be allowed to continue to participate in title IV programs.’’ The commenter believed that the Department failed to identify data sources, including whether a source is peer-reviewed and scientific evidence-based, failed to confirm and document the reliability of the data and acknowledge any shortcomings or explicit errors, and failed to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: The Department has used well-respected, peer-reviewed references to substantiate its reasons throughout these final regulations for believing that D/E rates could be influenced by a number of factors other than program quality. As such, the D/E rates measure is scientifically invalid VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 because it fails to control or account for the confounding variables that could influence the relationship between the independent (program quality) and dependent variable (D/E rates) or render the relationship between the independent and dependent variables as merely correlative, not causal. Changes: None. Comments: One commenter disagreed with the Department’s assertion that ‘‘the highest quality programs could fail the D/E rates measures simply because it costs more to deliver the highest quality program and as a result the debt level is higher.’’ The commenter stated that the Department ‘‘Fails to identify data sources and fails to be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: As stated above, where a higher quality program requires better facilities, more highly qualified instructors, procurement of expensive supplies, small student-to-teacher ratios, and specialized equipment to provide high-quality education, someone must pay the cost. Although taxpayers may pay some of these costs on behalf of students enrolled at public institutions, private institutions typically pass all or most of these costs on to students, which results in high tuition. However, there is no correlation between the cost to deliver a high-quality education and wages paid to program graduates. The Department cites research from CSU Sacramento that serves as evidence that high quality career and technical education programs can be more than four times as expensive to run as general studies programs.145 Changes: None. Comments: One commenter disagreed with the Department’s statement that, ‘‘Other research findings suggest that D/E rates-based eligibility creates unnecessary barriers for institutions or programs that serve larger proportions of women and minority students. Another commenter claimed that studies demonstrated that rescinding the 2014 Rule could exacerbate gender and race wage gaps. Such research indicates that even with a college education, women and minorities, on average, earn less than white men who also have a college degree, and in many cases, less than white men who do not have a college degree.’’ The commenter went on to state that the Department fails to draw upon peer-reviewed sources, fails to acknowledge any 145 Shulock, PO 00000 Frm 00037 Lewis and Tan. Fmt 4701 Sfmt 4700 31427 shortcomings or explicit errors in the data, fails to present conclusions that are strongly supported by the data. The commenter stated that the source cited by the Department does not draw the same conclusion as the Department reached. For example, the cited table appears to relate to graduates of bachelor’s degree programs, and not gainful employment programs. The commenter also states that the statement fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: The Department emphasizes that bachelor’s degree programs are included as GE programs if offered by proprietary institutions. Moreover, the NPRM cites data provided by the College Board that points to disparities in earnings between men and women and people of color. The College Board is a reliable and trusted source of data, and its publications undergo rigorous peer review prior to publication. The citation provided links to the College Board’s report and data tables, which are robust, and which include information about data sources and methodology used. The data sourced from the U.S. Census Bureau’s Current Population Survey which calculated median earnings based on race/ethnicity, gender and educational level, includes disaggregated earnings based on other characteristics, such as having less than a high school diploma, a high school diploma, some college, no degree, associate degree, bachelor’s degree, and advanced degree. While this research did not address GE programs specifically, the point is that there are general earnings disparities based on race and gender. Programs that serve large proportions of women and minorities, therefore, would likely post lower earnings than programs of similar quality primarily serving whites and males, simply because of wage advantages certain groups have had for centuries. The Department agrees that our statement is an extrapolation of the data provided, but this extrapolation is well reasoned and supported by other research. Given that proprietary institutions serve the largest proportions of women and minority students, and that some GE programs (such as those in medical assisting, massage therapy, and cosmetology) serve much larger proportions of female students, it is likely that student demographics will impact earnings among these programs. This is not an unreasonable extrapolation to make, since the impact E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31428 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations of gender and race on earnings is welldocumented and the subject of considerable policy discussion and public debate. Changes: None. Comments: A commenter has concerns about the Department’s statement ‘‘[D]ue to a number of concerns with the calculation and relevance of the debt level included in the rates[,] we do not believe that the D/E rates measure achieves a level of accuracy that it should [to] alone determine whether or not a program can participate in title IV programs.’’ The commenter states that the Department fails to clearly describe the research study approach, fails to identify data sources, fails to confirm and document the reliability of the data, fails to undergo peer review, fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: As was discussed during the 2014 negotiations and continuing through the more recent negotiations, public hearings, and public comment, the debt metric can change significantly depending upon the amortization term used, interest rates and congressionally determined student loan lending limits. No research is needed to show that a student in a 20-year repayment plan will pay a lower monthly and annual payment than one in a 10-year repayment plan as this is a well understood mathematical fact. Since REPAYE created an opportunity for all students to qualify for a 20- to 25-year repayment term, depending upon their credential level attainment, it is unreasonable to use a 10- or 15-year amortization period to calculate the annual cost of student loan repayment just because GE programs tend to serve a larger proportion of non-traditional students. Even if using a 10-year repayment term was justified for certificate or associate degree programs, which we do not believe is the case, there is no possible justification that borrowers in bachelor’s programs should be evaluated based on a 15-year amortization period whereas students who complete the same credentials at non-profit and private institutions can qualify for 20-, 25-, or even 30-year repayment terms based on the level of their degree and the amount they owe. The Department sees no basis for such a double standard. The Department does not believe it is appropriate to use REPAYE as the tool to help some students manage a debt load disproportionate to their earnings, VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 imposing no sanctions on the institutions that led the borrower to this position, while penalizing other institutions by eliminating a program because the students who need income driven repayment assistance happened to graduate from a school that pays taxes rather than consuming direct taxpayer subsidies. The 2015 REPAYE regulations, coupled with the gainful employment rule, established a double standard that sanctions proprietary institutions if their graduates need income driven repayment programs to repay their loans, and promises graduates of non-profit institutions income-based repayment and loan forgiveness in return for irresponsibly borrowing. Changes: None. Comments: One commenter has concerns with the Department’s statement ‘‘[I]ncreased availability of [income-driven] repayment plans with longer repayment timelines is inconsistent with the repayment assumptions reflected in the shorter amortization periods used for the D/E rates calculation in the GE regulation.’’ The commenter states that the Department fails to rely upon peerreviewed, scientific evidence-based research, fails to identify data sources, fails to confirm and document the reliability of the data, fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: This comment is a statement of fact, which is substantiated by information provided on the Federal Student Aid website.146 Changes: None. Comments: One commenter raised issues about the Department’s statement ‘‘[A] program’s D/E rates can be negatively affected by the fact that it enrolls a large number of adult students who have higher Federal borrowing limits, thus higher debt levels, and may be more likely than a traditionally aged student to seek part-time work after graduation in order to balance family and work responsibilities.’’ The commenter continued that the Department fails to rely upon peerreviewed, scientific evidence-based research, fails to identify data sources, and fails to confirm and document the reliability of the data. Discussion: It is a statement of fact that independent students have higher Federal loan borrowing limits, because 146 See: studentaid.ed.gov/sa/repay-loans/ understand/plans. PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 Congress has established those higher limits for independent students (which include students over the age of 25, graduate students, married students, and students with dependents).147 Independent students can borrow up to $57,500 for undergraduate studies whereas dependent students can borrow only $31,000. Simple mathematics explain that if a larger proportion of students can borrow $57,500 rather than $31,000 to complete a bachelor’s degree, the median debt level will be higher at an institution that serves a large portion of independent students than dependent students.148 As Baum points out in her 2015 publication, 70 percent of students who hold student loan debt of $50,000 or more are independent students. This is not a surprising fact since it is only those students who have borrowing limits over $50,000. These datasets are derived from NCES data reports and were compiled by Sandy Baum. Therefore, it is not surprising that institutions serving larger proportions of independent students will have higher median borrowing levels, and since proprietary institutions serve the highest portion of independent students, it is not unreasonable that these institutions would have higher median debt levels, which they do. Data reported by Pew proves that the percentage of college graduates who work part-time rather than full-time increased from 15 percent in 2000 to 23 percent in 2011. We have addressed concerns about data regarding adult students working part-time and the gender gap in earnings earlier in these final regulations. Research provided by the Center for American Progress substantiates that even among college graduates, women tend to earn less than men, in part because they tend to select lower paying majors and in part because of time spent out of the workforce raising children.149 The Pew Research Center confirms that a higher percentage of women take time out of their career or work part-time because of childrearing responsibilities.150 Changes: None. Comments: One commenter raised issues about the Department’s statement ‘‘[I]t is the cost of administering the program that determines the cost of tuition and fees.’’ The commenter continued that the Department fails to 147 See: studentaid.ed.gov/sa/fafsa/filling-out/ dependency. 148 www.urban.org/sites/default/files/alfresco/ publication-pdfs/2000191-Student-Debt-WhoBorrows-Most-What-Lies-Ahead.pdf. 149 cdn.americanprogress.org/wp-content/ uploads/2016/09/06111119/HigherEdWageGap.pdf. 150 www.pewsocialtrends.org/2013/12/11/10findings-about-women-in-the-workplace/. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations rely upon peer-reviewed, scientific evidence-based research, fails to identify data sources, fails to confirm and document the reliability of the data, fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: The Department did not state that it is the cost of administering academic programs that determines tuition and fees. To the contrary, the Department made clear in the NPRM that at most non-profit institutions, direct taxpayer appropriations and tuition surpluses generated from the low-cost programs the institution administers are used to offset the financial demands of higher cost programs. In this case, the cost of administering the program does not directly drive the cost of tuition and fees. Were that the case, liberal arts programs would charge lower tuition and fees than laboratory science and clinical health sciences programs— which is not the case at most non-profit institutions. Instead, what the NPRM said is that in some cases, the cost of tuition and fees is driven by the higher cost of administering some programs. The Shulock, Lewis and Tan study provides peer reviewed research to support this position.151 Changes: None. Comments: One commenter raised concerns about the Department’s statement ‘‘Programs that serve large proportions of adult learners may have very different outcomes from those that serve large proportions of traditionally aged learners.’’ The commenter continued that the Department fails to rely upon peer-reviewed, scientific evidence-based research, fails to identify data sources, fails to confirm and document the reliability of the data, fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: The Department offers as evidence to support the statement made in the NPRM data from the NCES Study of Persistence and Attainment of Nontraditional Students.152 NCES is a 151 Shulock, N., Lewis, J., & Tan, C. (2013). Workforce Investments: State Strategies to Preserve Higher-Cost Career Education Programs in Community and Technical Colleges. California State University: Sacramento. Institute for Higher Education Leadership & Policy. 152 nces.ed.gov/pubs/web/97578g.asp. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 reliable and trusted source of higher education data. Changes: None. Comments: One commenter raised issues about the Department’s statement ‘‘Data discussed during the third session of the most recent negotiated rulemaking demonstrated that even a small change in student loan interest rates could shift many programs from a ‘passing’ status to ‘failing,’ or vice versa, even if nothing changed about the programs’ content or student outcomes.’’ The commenter continued that the Department fails to clearly describe the research study approach and data collection technique, fails to identify data sources, fails to confirm and document the reliability of the data, fails to undergo peer review, fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: The Department points the commenter to our website, where data provided by the negotiator during the third negotiating session show the change in outcomes based on a small shift in interest rates.153 The negotiator is an economist at Columbia University, Cornell University, and the Urban Institute, and is thus a trusted source of data. However, any loan amortization table will show that when interest rates change, payments on debt increase. Again, this is a basic mathematical fact that requires no statistical study or peer review to be proven true. Changes: None. Comments: One commenter challenged the Department’s statement ‘‘There is significant variation in methodologies used by institutions to determine and report infield job placement rates, which could mislead students into choosing a lower performing program that simply appears to be higher performing because a less rigorous methodology was employed to calculate in-field job placement rates.’’ The commenter continued by stating the Department fails to clearly describe the research study approach and data collection technique, fails to clearly identify data source, fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ 153 See: ‘‘Minimum Earnings Necessary to Pass D/ E, Various Measures,’’ Submitted by Jordan Matsudaira, www2.ed.gov/policy/highered/reg/ hearulemaking/2017/gainfulemployment.html. PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 31429 Discussion: The Department cited in the NPRM the findings of the Technical Review Panel (TRP), convened in response to the 2011 GE regulations to address the confusion created by multiple job placement rate definitions. This TRP is a trusted source, as is the external research that was retained to provide background research on job placement rates.154 Changes: None. Comments: One commenter raised concerns about the Department’s statement ‘‘The Department also believes that it underestimated the burden associated with distributing the disclosures directly to prospective students. A negotiator representing financial aid officials confirmed our concerns, stating that large campuses, such as community colleges that serve tens of thousands of students and are in contact with many more prospective students, would not be able to, for example, distribute paper or electronic disclosures to all the prospective students in contact with the institution.’’ The commenter continued that the Department fails to draw upon peer-reviewed, scientific-evidence based research and fails to confirm and document the reliability of the data. Discussion: The Department continues to assert that the negotiator who made this statement is a reliable authority on the burden institutions would face if required to distribute disclosures. The point of having negotiators is to consider the opinions of experts in the field. However, the Department did not require the negotiator to provide data to substantiate her claim. Nonetheless, while the Department cited regulatory burden as a contributing factor to its decision to rescind the GE regulations, it was not the primary reasons for making this decision. The primary reason for rescinding the GE regulations, as stated earlier, is evidence that the D/ E rates measure is not a reliable proxy for quality since many factors other than quality can impact both the debt and earnings elements of the equation. Changes: None. Comments: One commenter raised concerns about the Department’s statement ‘‘The Department believes that the best way to provide disclosures to students is through a data tool that is populated with data that comes directly from the Department, and that allows prospective students to compare all institutions through a single portal, ensuring that important consumer information is available to students 154 nces.ed.gov/npec/data/Calculating_ Placement_Rates_Background_Paper.pdf. E:\FR\FM\01JYR2.SGM 01JYR2 31430 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 while minimizing institutional burden.’’ The commenter continued that the Department fails to draw upon peerreviewed, scientific evidence-based research and fails to identify data sources. Specifically, in the 2014 Rule, the Department stated that it ‘‘would conduct consumer testing’’ to determine how to make student disclosures as meaningful as possible. The NPRM fails to acknowledge whether such testing occurred, including the results of that testing. The NPRM also fails to state any other basis for the Department’s conclusions.’’ Discussion: The Department did conduct consumer testing on the disclosure template after the 2014 Rule went into effect, the results of which proved that disclosures are typically very confusing to students, that the results presented are frequently misinterpreted, and that in general, students find disclosures most meaningful when they provide information about the students included in the disclosures, including what course loads the students were taking.155 The Department points to a number of commenters who said that the current GE disclosures can be difficult to find on institutional websites, which the Department has found to be the case in its own attempts to identify GE disclosures when reviewing websites. In addition, the Department points to statutory requirements for the College Navigator which emphasize the importance of using a standardized data tool to provide comparable data to students and that allow students to compare multiple institutions.156 Changes: None. Comments: One commenter raised issues about the Department’s statement ‘‘[T]he Department does not believe it is appropriate to attach punitive actions to program-level outcomes published by some programs but not others. In addition, the Department believes that it is more useful to students and parents to publish actual median earnings and debt data rather than to utilize a complicated equation to calculate D/E rates that students and parents may not understand and that cannot be directly compared with the debt and earnings outcomes published by non-GE 155 Bozeman, Holly, and Meaghan Mingo, ‘‘Summary Report for the Gainful Employment Focus Groups,’’ Prepared for the U.S. Department of Education, February 10, 2016, www2.ed.gov/ about/offices/list/ope/summaryrptgefocus216.pdf. Note: Student also ranked the following as ‘‘most important’’: job placement rate, annual earnings rate, and completion rates for full-time and parttime students. 156 The Higher Education Opportunity Act of 2008, Public Law 110–315. 122 Stat. 3102. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 programs.’’ The commenter continued that the Department fails to draw upon peer-reviewed, scientific evidence-based research and fails to identify data sources. Discussion: Elsewhere in this document, the Department has provided adequate support for its assertion that the D/E rates measure is not sufficiently accurate or reliable to serve as the sole determinant of punitive action against a program or institution. The Department conducted significant consumer testing prior to the launch of the College Scorecard to better understand which data are most relevant to students and parents and will continue to conduct consumer testing. However, the Department is committed to providing data that can reduce the reporting burden to institutions while still providing additional information to students. Changes: None. Comments: One commenter challenged the Department’s statement ‘‘The Department has reviewed additional research findings, including those published by the Department in follow-up to the Beginning Postsecondary Survey of 1994, and determined that student demographics and socioeconomic status play a significant role in determining student outcomes.’’ The commenter continued that the Department fails to identify data sources. Specifically, the website cited by the Department links to the Beginning Postsecondary Survey of 1994’s findings, and not the ‘‘additional research’’ mentioned by the Department, including the Department’s own ‘‘follow-up.’’ Additionally, the Department fails to confirm and document the reliability of the data, and fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: The Department misstated the name of the reference from which it drew data regarding outcomes of nontraditional students. The NPRM should have said that ‘‘The Department has reviewed additional research findings, including the 1994 follow-up on 1989– 90 Beginning Postsecondary Survey, which determined that student demographics and socioeconomic status play a significant role in determining student outcomes.’’ Other research reviewed included publications by the American Association of Colleges and Universities on the needs of adult PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 learners,157 a publication about Adult Learners in Higher Education produced by the U.S. Department of Labor 158 and another research study that focused specifically on the needs of adult learners enrolled in online programs.159 Changes: None. Comments: One commenter raised issues with the Department’s statement ‘‘The GE regulation failed to take into account the abundance of research that links student outcomes with a variety of socioeconomic and demographic risk factors.’’ The commenter continued that the Department fails to identify data sources and fails to confirm and document the reliability of the data. Discussion: This sentence refers to the same NCES study referenced in the NPRM and above. Changes: None. Comments: One commenter raised concerns about the Department’s statement that ‘‘the GE regulation underestimated the cost of delivering a program and practices within occupations that may skew reported earnings. According to Delisle and Cooper, because public institutions receive State and local taxpayer subsidies, even if a for-profit institution and a public institution have similar overall expenditures (costs) and graduate earnings (returns on investment), the for-profit institution will be more likely to fail the GE rule, since more of its costs are reflected in student debt. Non-profit, private institutions also, in general, charge higher tuition and have students who take on additional debt, including enrolling in majors that yield societal benefits, but not wages commensurate with the cost of the institution.’’ The commenter stated that the study mentioned did not support the conclusion that the GE regulations underestimated the cost of delivering a program and the NPRM failed to identify the data sources. Discussion: The Department relied on the Delisle and Cooper’s research and analysis to substantiate that public institutions are often able to charge less for enrollment than private and proprietary institutions because they receive direct appropriations from a State or local government, are not required to purchase or rent their primary campus buildings or land, and enjoy substantial tax benefits. As such, they can charge the student a lower price for a program that has similar 157 www.aacu.org/publications-research/ periodicals/research-adult-learners-supportingneeds-student-population-no. 158 files.eric.ed.gov/fulltext/ED497801.pdf. 159 eric.ed.gov/?id=ED468117. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations overall expenditures as another program sponsored by a private institution that does not receive direct subsidies, have endowment holdings, or benefit from preferential tax treatment. Specifically, Delisle and Cooper state that ‘‘[o]ne shortcoming of the 2014 Rule is that it does not take into account society’s full investment in credentials produced by public institutions of higher education.’’ 160 As noted in their research, the data sources used by Delisle and Cooper were Department GE Data and data from IPEDS. Changes: None. Comments: A commenter raised concerns about the Department’s statement ‘‘In the case of cosmetology programs, State licensure requirements and the high costs of delivering programs that require specialized facilities and expensive consumable supplies may make these programs expensive to operate, which may be why many public institutions do not offer them. In addition, graduates of cosmetology programs generally must build up their businesses over time, even if they rent a chair or are hired to work in a busy salon.’’ The commenter continued that the Department fails to identify data sources and fails to confirm and document the reliability of the data. Discussion: Our statement was intended to give further examples of ways that cosmetology programs have been challenged in implementing the GE regulations. The Department received these comments from multiple commenters in connection with the 2014 Rule, as well as this rulemaking, and heard these arguments from negotiators and speakers at negotiations and other public forums. It is unclear why public institutions do not operate cosmetology programs in greater numbers, but NCES data point to the limited number of enrollments in cosmetology programs among public colleges and universities. It is well known that cosmetologists typically must build their own clientele, even when working in a salon owned by another operator, and that tip income is an important part of the total earnings of cosmetologists. As a blog posted by a cosmetology program explains, if an individual does not make an effort to get clients, the individual may ‘‘have to sit around for hours waiting for a client to walk in and this is likely to affect your income. On the other hand, if you have reliable repeat customers, you can make sure that you have a steady stream of income throughout the year.’’ 161 Changes: None. Comments: One commenter raised concerns with the Department’s statement ‘‘[S]ince a great deal of cosmetology income comes from tips, which many individuals fail to accurately report to the Internal Revenue Service, mean and median earnings figures produced by the Internal Revenue Service underrepresent the true earnings of many workers in this field in a way that institutions cannot control.’’ The commenter continued that the Department fails to present conclusions that are strongly supported by the data. The commenter noted that the Internal Revenue Service (IRS) tax gap study cited by the Department does not support the Department’s specific conclusions about cosmetology graduates as it is from 2012 and covers tax year 2006 only. Additionally, the commenter stated that the Department failed to confirm and document the reliability of the data. Discussion: Throughout the 2014 and 2018 negotiations, as well as between those negotiations, the Department has heard from cosmetology programs and their representatives on this matter. These stakeholders have regularly informed the Department that cosmetologists regularly under-report their earnings and hide a portion of their tipped earnings. In the 2014 Rule, the Department admitted that individuals who work in barbering, cosmetology, food service, or web design may under report their income (79 FR 64955) and hoped that the alternate earnings appeal would provide an opportunity to correct earnings in those fields for the purpose of the D/E rates.162 However, the Department lost a lawsuit filed by the American Association of Cosmetology Schools (AACS) and is no longer able to deny earnings appeals based on the failure of institutions to meet the survey response rates dictated by the 2014 Rule. Changes: None. Comments: One commenter raised concerns about the Department’s statement ‘‘While the GE regulations include an alternate earnings appeals process for programs to collect data directly from graduates, the process for developing such an appeal has proven to be more difficult to navigate than the Department originally realized. The Department has reviewed earnings appeal submissions for completeness 160 Delisle and Cooper, www.aei.org/wp-content/ uploads/2017/03/Measuring-Quality-orSubsidy.pdf. 161 www.evergreenbeauty.edu/blog/how-to-buildclientele-in-cosmetology/. 162 79 FR 64955. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 31431 and considered response rates on a caseby-case basis since the response rate threshold requirements were set aside in the AACS litigation. Through this process, the Department has corroborated claims from institutions that the survey response requirements of the earnings appeals methodology are burdensome given that program graduates are not required to report their earnings to their institution or to the Department, and there is no mechanism in place for institutions to track students after they complete the program. The process of Departmental review of individual appeals has been timeconsuming and resource-intensive, with great variations in the format and completeness of appeals packages.’’ The commenter continued that the Department fails to present conclusions that are strongly supported by the data. The commenter notes that despite asserting that the alternate appeals process is ‘‘time-consuming and resource-intensive, with great variations in the format and completeness of appeals packages,’’ the Department then ‘‘estimates that it would take Department staff [only] 10 hours per appeal to evaluate the information submitted.’’ Additionally, the commenter states that the Department fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: The Department has received numerous inquiries about how to file an appeal, and the inquirers have expressed confusion, frustration, and have described excessive burden on their institutions (especially small institutions) in filing an appeal. Additionally, this has come up multiple times at public hearings, in comments received, and at the negotiations themselves. Institutions have had difficulty gathering the earnings information for their appeal because there is no formal mechanism in place for students to report their income to their programs. Even at 10 hours per appeal, the Department has insufficient resources to review appeals in a timely manner. Of the 326 appeals submitted in response to the 2014 earnings data, the Department has completed the review and rendered a decision on only 101 of those claims. Rescinding the regulations will mitigate the flaw in the D/E rates measure that is associated with underreported income or earnings appeals. Changes: None. Comments: One commenter raised concerns about the Department’s E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31432 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations statement ‘‘We believe that the analysis and assumptions with respect to earnings underlying the GE regulation is flawed.’’ The commenter continued that the Department fails to draw upon peerreviewed, scientific evidence-based research and fails to confirm and document the reliability of the data. Discussion: The Department has provided sufficient evidence to support the conclusion that the D/E rates measure is a flawed metric. As noted earlier, the Department is referring to a claim made in the 2014 Rule that graduates of many GE programs were earning less than those of the average high school dropouts. Upon further review of the Department of Labor data used to make this claim, the Department has determined that the claim was inaccurate. First, the Department did not differentiate between program completers and program drop-outs in calculating earnings outcomes, which is inappropriate because program dropouts will not reap the full benefits of the program. In addition, the figure used to represent the earnings of high school dropouts was derived by multiplying a weekly earnings figure by 52, assuming that all high school dropouts will work a full 52 weeks or benefit from paid vacation or sick leave during some of that time. However, the BLS report on Contingent Workers shows that individuals without a high school diploma are more likely to be part of the contingent workforce than the noncontingent workforce, meaning that they are more likely to have employment that is not expected to last or that is described as temporary.163 Therefore, calculating earnings for high school drops outs based on an assumption that high school drop outs work 52 weeks per year inflates the likely earnings of high school drop outs. Yet, in addition to not differentiating between program completers and program drop-outs, the inflated figure that assumed all workers work 52 weeks per year was compared to SSA earnings data for GE program graduates that included individuals working full-time, part-time, individuals who are self-employed, and those who may not report some or all of their earned income. It is illogical that students would earn less after completing a postsecondary program than they would have had they not completed high school. Even if the postsecondary education provides zero earnings gains, the program graduate should earn a wage comparable with that of high school dropouts. Therefore, 163 www.bls.gov/spotlight/2018/contingent- workers/home.htm. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 this conclusion defies logic, and was the result of a poorly designed comparison. Changes: None. Comments: One commenter raised issues with the Department’s ‘‘Table 1— Number and Percentage of GE 2015 Programs That Would Pass, Fail, or Fall into the Zone Using Different Interest Rates.’’ The commenter stated that the Department fails to clearly describe the research study approach and data collection technique, fails to identify data sources, fails to confirm and document the reliability of the data, fails to undergo peer review, and fails to ‘‘be accompanied by supporting documentation that allows an external user to understand clearly the information and be able to reproduce it, or understand the steps involved in producing it.’’ Discussion: ‘‘Table 1—Number and Percentage of GE 2015 Programs That Would Pass, Fail, or Fall into the Zone Using Different Interest Rates’’ from the NPRM illustrates how a change in interest rates would change the results of the 2015 GE rates, altering the number of programs that would pass, fail, or fall into the zone based on debt and earnings data published in 2015. Although the impact of a change in interest rates on the debt portion of the D/E calculation is obvious, these data were provided by a negotiator who is an economist at Columbia and Cornell Universities and the Urban Institute, and who was one of the designers of the College Scorecard during the Obama Administration. Although he built his own model to calculate the impact of changing interest rates, the source of the underlying debt and earnings data was provided by the Department in the data files provided along with the 2015 GE results. Changes: None. Comments: Several researchers submitted a joint comment opposing the rescission of the 2014 Rule. They argued that the rescission is arbitrary and capricious, because it ignores both the benefits of the 2014 Rule and the data analysis supporting the 2014 Rule. The commenters noted that Congress had reason to require that for-profit programs be subject to increased supervision. They cite a post on the Federal Reserve Bank of New York’s blog that states that attending a fouryear private for-profit college is the strongest predictor of default, even more so than dropping out. They cited evidence that students who attend forprofit institutions are 50 percent more likely to default on a student loan than students who attend community colleges. The commenters also argued that a rise in enrollment in the for-profit PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 sector corresponded with reports of fraud, low earnings, high debt, and a disproportionate amount of student loan defaults. They cited an example that stated that, of the 10 percent of institutions with the lowest repayment rates, 70 percent were for-profit institutions. They argued that because poor outcomes are concentrated in forprofit programs, the 2014 Rule is justified. Discussion: The Department does not disagree with the findings cited by some commenters, including the Federal Reserve Bank of New York’s blog, but instead calls attention to the fact that these outcomes may be the result of the demographics of the students served rather than the quality of the educational program. A National Bureau of Economic Research (NBER) study of student loan repayment rates makes clear that race, financial dependency status and parental wealth transfer are the strongest predictors of default and non-repayment.164 Further, the Department’s own research found that being over 25, having a child, being a single parent, and working full-time while in college are each factors that increase the risk of non-completion, and that the more risk factors a student demonstrates, the less likely the student is to complete the program and repay loans.165 Given that proprietary institutions serve a population of students that include a much higher percentage of Pell eligible, nontraditional and minority students, the results of these research papers are not surprising. The Department agrees with these researchers that non-profit institutions must do more to serve this population of students so that they enjoy the benefits of taxpayer subsidized tuition. As discussed earlier, the majority of students enrolled in proprietary institutions is enrolled in bachelor’s or graduate degree programs, not associate degree programs, making comparisons with community colleges irrelevant. In addition, since most proprietary institutions have open-enrollment policies, they cannot be compared directly with most public four-year institutions, that do not typically have open enrollment policies. These institutions are unique and serve a highrisk population. If other institutions are not willing to serve them, the question must be asked about whether or not these individuals should have the opportunity to go to college. The Department agrees that for many of 164 Lochner and Monge-Naranjo, www.nber.org/ papers/w19882. 165 nces.ed.gov/pubs/web/97578g.asp. E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 these students, a work-based learning opportunity or a shorter-term training program could provide a more costeffective option. However, apprenticeship programs are not openenrollment opportunities, and many have considerable academic entrance requirements, including performance on mathematics tests. In addition, there are not enough of these opportunities to serve all interested participants. It may be convenient to ignore the many confounding variables that impact student outcomes, and to ignore that the demographics of students enrolled at proprietary institutions are quite different than those of public or private non-profit two- and four-year schools, but the Department cannot ignore those facts, which our own data, published in 2017, substantiates.166 The Department believes that more must be done to improve outcomes for high-risk students, and more options must be made available to students for whom college is not the best or preferred option, but in the meantime, the conclusion that institutional quality is the cause for lower outcomes is not substantiated by fact. There is clearly a crisis among minority students, with predictions for defaults among African American students to reach 70 percent in the next 20 years.167 It is true that defaults are higher among African Americans as compared to other demographics. It is also true that African Americans attend proprietary institutions in higher proportions than other demographics. But the question is one of cause and effect. Do African American students default at higher rates because they attend proprietary institutions, or are default rates among proprietary institutions higher because these institutions are more likely to serve African-American students? We simply do not currently know. We are not persuaded by the data commenters cited because the studies did not suppress or control for the many confounding variables that influence student outcomes, nor did they rely on carefully constructed matched comparison groups to better isolate the impact of the institution’s tax status on student outcomes. These papers also fail to consider the unique structure of 166 Caren A. Arbeit and Sean A. Simone, ‘‘A Profile of the Enrollment Patterns and Demographic Characteristics of Undergraduates at For-Profit Institutions,’’ Stats in Brief, February 2017, nces.ed.gov/pubs2017/2017416.pdf. 167 Judith Scott-Clayton, ‘‘The Looming Student Loan Default Crisis is Worse Than We Thought,’’ Brookings Institute, January 11, 2018, www.brookings.edu/research/the-looming-studentloan-default-crisis-is-worse-than-we-thought/. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 proprietary institutions that enable many of them to offer both associate degrees and bachelor’s degrees—making them unlike typical public community colleges or typical four-year institutions. In addition, comparisons are further complicated by the number of proprietary institutions that offer online education, which is well-known to have results that are very different than those achieved by ground-based institutions.168 The Department is not suggesting that all proprietary institutions offer highquality opportunities, or that these institutions should not be held accountable for the outcomes their students achieve. Instead, the Department understands that evaluating college outcomes is an incredibly complicated undertaking, and even with all of the data available to Department researchers, it has been impossible to develop a methodology that allows us to accurately and reliably assess program quality or to make scientifically valid claims of causality between program quality and student outcomes. For that reason, the Department has determined that sanctions limited to a small percentage of institutions and programs—while ignoring other programs whose graduates similarly default on loans or find themselves in a negative amortization repayment situation—are an inappropriate remedy. Changes: None. Comments: Commenters also noted that students enrolled in programs that close generally re-enroll in nearby nonprofit or public institutions and that shifting aid to better performing institutions will result in positive impacts for students. They also cited evidence that, after enrollment in for profit programs declined in California, local community colleges increased their capacity. They argued that in light of these examples, the 2014 Rule would 168 See: Matthew J. Werhner, ‘‘A Comparison of the Performance of Online Versus Traditional OnCampus Earth Science Student on Identical Exams,’’ Journal of Geoscience Education, 2010, files.eric.ed.gov/fulltext/EJ1164616.pdf; Anna Ya Ni, ‘‘Comparing the Effectiveness of Classroom and Online Learning: Teaching Research Methods,’’ Journal of Public Affairs Education, 2013, w.naspaa.org/JPAEmessenger/Article/VOL19-2/03_ Ni.pdf; Alsaaty, Falih, et al., ‘‘Traditional Versus Online Learning in Institutions of Higher Education: Minority Business Students’ Perceptions,’’ Business and Management Research, 2016, www.sciedupress.com/journal/index.php/ bmr/article/view/9597/5817; Steven Stack, ‘‘Learning Outcomes in an Online vs Traditional Course,’’ International Journal for the Scholarship of Teaching and Learning, January 2015, digitalcommons.georgiasouthern.edu/cgi/ viewcontent.cgi?article=1491&context=ij-sotl; Caroline M. Hoxby, ‘‘The Returns to Online Postsecondary Education,’’ NBER, February 2017, www.nber.org/papers/w23193. PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 31433 not reduce college access for students but would rather direct them into programs that are more beneficial in the long term. Discussion: The California study referenced by the commenter is limited to students who were enrolled at proprietary institutions in that State. Given the large public community college and university system in California, it is not surprising that students closed out of one option in that State found their way to another. However, the Department has recently provided automatic closed school loan discharges for over 15,000 students whose institution closed, and three years later still had not enrolled at another institution. This provides more convincing evidence to us that some students find it harder than others to find a new program. Also, research produced by CSU Sacramento suggests that even among those who find a new home at a lower cost community college, they are likely to be ushered into a general studies program which may result in lower debt, but has no market value unless the student transfers and completes a four-year degree. In the same way that the Department does not require students seeking a liberal arts education to pursue that degree at the lowest cost institution available, the Department similarly does not require that students interested in occupationally focused education pursue the lowest cost option available. Moreover, it is entirely unclear whether a student is better off attending a lower cost institution if the only program option available to them is a general studies program, which has little or no market value, rather than a CTE program, which might yield better results.169 A 2014 study by CSU Sacramento shows that as enrollments increased in the California Community College system during the Great Recession, there was a decrease in enrollment slots in career and technical programs since more students could be served in lower-cost general studies programs.170 Even so, it is not the Department’s role under the HEA to evaluate program quality—as accreditors are charged with that responsibility. Nor does the HEA require students to attend the lowest cost institution available or enroll in the program generating the highest earnings. Students enrolled in CTE-focused 169 Holzer and Baum, Making College Work: Pathways to Success for Disadvantaged Students, Brookings Institute, 2017. 170 Shulock, Lewis and Tan, eric.ed.gov/ ?id=ED574441. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31434 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations programs are guaranteed by section 102 of the HEA to have equal access to title IV programs and benefits. The GE regulations deny students interested in CTE-focused programs the same rights as students who enroll in traditional, liberal arts programs. Changes: None. Comments: As further justification for the 2014 Rule, commenters stated that there has been a dramatic increase in the number of borrowers who leave school with high debt and low earnings. In one study, a researcher noted that many such programs left students earning less than they did before entering their program. Another study found that the average change in earnings 5 to 6 years post-attendance for over 1.4 million students attending GE programs between 2006 and 2008 was negative for students at for-profit certificate, associates, and bachelor’s degree programs. It also found that earnings gains for students in for-profit certificate programs were much lower than for students who attended public institutions even after for controlling for student characteristics. They also stated that at institutions with high D/E rates, students of all income types had poor outcomes, suggesting that the characteristics of the institution are responsible for the poor outcomes. This study also compared students at forprofit certificate programs to demographically similar students who never attended college and found no earnings gains in attendance, suggesting that these students would have been better off choosing not to obtain a postsecondary credential. Another study cited by the commenters controlled for differences in students’ background and characteristics and found that earnings outcomes for students at for-profit programs are typically lower than, or at best equal, to lower-cost programs at public institutions. They cited two studies that found that the poor outcomes of students attending forprofit programs remain even after controlling for family income, race, age, and academic preparation. Discussion: The Department contends that institutions with high D/E rates exist across all sectors of higher education.171 It makes sense that the change in earnings for 2006–2008 program graduates would be negative since this coincides with the Great Recession, which had a more dramatic 171 Kelchen, Robert, ‘‘The Relationship Between Student Debt and Earnings,’’ Brookings Institute, Brown Center Chalkboard, September 23, 2016, https://www.brookings.edu/blog/brown-centerchalkboard/2016/09/23/the-relationship-betweenstudent-debt-and-earnings/. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 impact on low-income and minorities than it did on wealthier, white individuals.172 In addition, it is impossible for the researcher in the cited studies to have assembled demographically matched comparison groups since the data required to do this is not publicly available.173 The Department notes that several of these studies are based on the unauthorized use of a dataset that was made available by a former Department of Treasury employee to himself and a limited number of outside, like-minded researchers. The Department has been unable to review the data files that were removed from Department of Treasury, since the combined Education-Treasury datafiles were not made available to the Department of Education, to confirm their accuracy or completeness, or to ensure that the data were not manipulated by the person who removed those data from government safekeeping. The Department questions the reliability of research results that are based upon the unauthorized use and the unauthorized release of a dataset since other researchers, including Department of Education researchers, are unable to replicate the calculations to confirm the validity of the methodology or the accuracy of the conclusions. Regardless, the Department believes that the D/E rates measure is a flawed metric that inflates a borrower’s monthly or annual repayment obligation above that which is required by the law and does not accurately distinguish between high-quality and low-quality programs. Changes: None. Comments: Commenters criticized the Department’s efforts to analyze relevant data related to the NPRM’s assertions that, if the D/E rates measure was applied to all degree programs, it would show poor outcomes across all sectors. They argued that if the Department believes this to be the case, it should calculate D/E rates for all programs using available data in NSLDS and with SSA and prove that this is the case. They also criticized the Department’s reliance on institutional-level College Scorecard data in lieu of more specific 172 Paul Taylor, et al., ‘‘Wealth Gaps Rise to Record Highs Between Whites, Blacks, and Hispanics,’’ Pew Social & Demographic Trends, July 26, 2011, www.pewresearch.org/wp-content/ uploads/sites/3/2011/07/SDT-Wealth-Report_7-2611_FINAL.pdf. 173 Note: Study referenced here used a data set that is of questionable quality and not publicly available. In addition, the study relied on the use of birthdates and zip codes, which is not sufficient to establish matched comparison groups, since people of the same age, living in the same zip code, can substantially differ in other ways. PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 NSLDS data during the negotiated rulemaking process. They further argued that in the absence of such data, the Department has a responsibility to protect students where it has the authority to do so. Discussion: The Department was unable to obtain SSA earnings data during this rulemaking and continues to be unable to obtain those data. The IRS continues to be willing to provide data for our College Scorecard effort, but § 668.405 of the GE regulations does not allow the use of IRS data to calculate D/ E rates. The Department does not currently have program-level earnings data for programs other than GE programs. The Department fulfilled as many data requests as possible, but outdated systems, prohibitions on student unit records, and the inability to get additional earnings data from SSA made it impossible to fulfill all of the requests. However, the Department has access to sufficient data to determine that the D/E rates measure is influenced by a variety of variables other than quality, and that the debt calculation methodology is inconsistent with loan repayment programs available to students. That is sufficient evidence to support our decision to rescind the GE regulations. Changes: None. Comments: Commenters disagreed with the statement that for-profit programs would have better D/E rates but for student characteristics outside the institution’s control. They argued that it is easy to control for these characteristics and produce adjusted D/ E rates, but that the Department had not done so. They believe that such an adjustment would not result in significant numbers of failing programs passing the D/E rates measure. On the point that D/E rates are sensitive to economic conditions, the commenters stated that the Department could use multiple cohorts of rates across institutions to show how changes in the local economy affect D/E rates. They also state that even in large recessions there are not large declines of employed workers and that wages usually do not fall. They argued that because of this, it is likely that only a small number of programs that would have otherwise passed would fail solely due to a recession. They also disagreed with our conclusion in the NPRM that D/E rates are flawed because they are sensitive to tuition and interest rates. These commenters stated this is a desirable outcome because high interest rates and tuition reduce either the government’s return on investment or the ability of borrowers to repay. E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations Discussion: The Department has not been able to develop a methodology to accurately control for or repress confounding variables, such as student demographic characteristics, to isolate the impact of institutional quality on student outcomes, more accurately attribute student outcomes to a single variable, such as institutional quality. In the past, the Department has performed single variant analysis to identify nontraditional student characteristics that increase the risk of non-completion or student loan defaults. However, the Department has not performed multivariant analysis to develop an algorithm that would allow it to isolate independent variables and examine causal relationships between those variables and student outcomes. In addition, the negotiators were unable to recommend or reach a consensus on such a methodology. Therefore, the Department is rescinding the 2014 Rule that relies on the flawed D/E rates measure to impose sanctions on institutions and remove them from title IV participation. Changes: None. Comments: Commenters argued that while disclosures are beneficial, a disclosure-only regime is unlikely to result in the same benefits that the 2014 Rule provides. As evidence, the commenters cited a study that the College Scorecard had small impacts overall on college application behavior and none in less affluent high schools, households with low parental education, and underserved groups. They also noted that similar studies find little impact of informational disclosures on enrollment behavior, but they provided suggestions on how to improve disclosures. They also stated that removing the disclosure requirements prior to enrollment is a mistake. Discussion: The Department disagrees with the commenters who state that removing the disclosure requirements prior to enrollment is a mistake and has provided ample explanation above for our disagreement. The Department agrees that disclosures have not been informative to students, especially when comparable information is not provided for all institutions or programs. However, the Department is pursuing a number of options for making College Scorecard data readily available to students, such as through the MyStudentAid mobile app. In addition, the Department believes that an online tool that allows students to compare multiple institutions or programs on a single screen is more user friendly than trying to find disclosures in each institution’s or program’s web page. Perhaps ease of use will promote increased utilization of important program-level data. Perhaps one of the most important features of the College Scorecard is that it provides downloadable data files that can be used by researchers, consumer advocacy groups, and technology companies to develop new data tools 31435 that are user-friendly and easily accessible to students and parents. Data tools may prove to be more effective in informing student decisions, especially if third parties help students digest and interpret those data, that traditional paper disclosures could. Changes: None. Comments: Commenters stated that the Department has not provided enough evidence that the administrative burden is higher than expected or so high as to outweigh the benefits of the 2014 Rule to students. They pointed out that simple adjustments to the D/E rates calculation would reduce burden by allowing the Department to calculate D/E rates using administrative data instead of institutional reporting, although it may not be advisable to do so. Discussion: The Department disagrees that it has not provided enough evidence that the administrative burden of the GE regulations was higher than expected. In addition, negotiators representing institutions not subject to the GE regulations were adamant that it would be too burdensome for them if we expanded the scope of the 2014 Rule to cover all programs. While simple adjustments to the D/E rates might reduce the administrative burden to institutions, there is no evidence that such adjustments would improve the accuracy and validity of the D/E rates measure. Changes: None. khammond on DSKBBV9HB2PROD with RULES2 APPENDIX A 2017 Gainful employment disclosures Current scorecard Expanded scorecard Gainful employment programs All undergraduate institutions All title IV programs Completion ..................................... Percent of students graduating on time for each program. Same as current Scorecard plus: Expanded Scorecard could include total awards conferred at the program level. Cost ................................................ Program costs (in-state, out-ofstate, books and supplies, offcampus room and board, etc.). Debt ............................................... Percent of students who borrow money to pay for the program. Institution level data that includes the percentage of first-time, fulltime undergraduate students who graduated within 150 percent of the published credential length. Students may also view and can select part-time, fulltime, transfer, and first-time institution level graduation rates. Institution level net price for firsttime, full-time undergraduate students who received TIV Federal financial student aid. For public schools, this includes only in-state tuition costs. Institution level data on the percent of undergraduate students who borrow TIV Federal student loan. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 E:\FR\FM\01JYR2.SGM Same as current Scorecard. Same as current Scorecard, plus: Program level total number of title IV borrowers who complete the program. 01JYR2 31436 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations APPENDIX A—Continued 2017 Gainful employment disclosures Current scorecard Expanded scorecard Gainful employment programs All undergraduate institutions All title IV programs Median debt of TIV Federal financial aid recipients who completed for each program. Median debt includes private, institutional and TIV Federal student loan debt. Institution level data on median TIV Federal student loan debt of undergraduate borrowers who completed. Does not include Parent PLUS. Estimated monthly loan payment of the median private, institutional and TIV Federal student loan debt for TIV Federal financial aid recipients who completed for each program. Institution level data on the estimated monthly payment of the median TIV Federal student loan debt for TIV Federal financial aid undergraduate borrowers who completed. Earnings ......................................... Median earnings two- and threeyears post-completion of TIV Federal financial aid recipients who completed for each program. Institution level data on median earnings of TIV federal financial aid recipients, 10 years after they began their enrollment. Job Placement ............................... Job placement rates for students who completed reported to the relevant accreditor and/or state for each program. Fields that employ students who complete for each program. Licensure requirements—at least in the state in which the institution is located. None ............................................. Same as current Scorecard, plus: Program level median TIV Federal student loan debt among completers who borrowed to attend college. Future expanded Scorecard could add median debt among Parent PLUS borrowers who borrowed on behalf of a student in the program and median Grad PLUS debt for graduate and professional programs. Same as current Scorecard, plus: Program level estimated monthly payment of the median TIV Federal student loan debt for TIV Federal financial aid borrowers who completed. Future Scorecard could include median monthly payment for Parent PLUS borrowers. Same as current Scorecard, plus: Program level data on median earnings of TIV Federal financial aid recipients who completed some number of years after completion (number of years not yet determined, but likely at 1, 5, and 10 years after completion). None. Programs that fail the D/E rates test include a warning that students may not be able to use Federal financial aid for that program in the future. No ................................................. None ............................................. Link to relevant occupational information such as O*NET. The consensus achieved during the recent Accreditation and Innovation Negotiated Rulemaking directs all institutions to disclose to students enrolled in programs that lead to occupational licensing whether the program does or does not prepare a student for licensure requirements in the state in which the student is located, or if the institution does not know, and how a student could find this information if he or she relocates. (This will not be on Scorecard.) None. Yes ................................................ Same. No ................................................. Yes ................................................ Same. No No No No No Yes Yes Yes Yes Yes ................................................ ................................................ ................................................ ................................................ ................................................ Same. Same. Same. Same. Same. Yes ................................................ Yes ................................................ Same. Same. Licensure Requirements ................ khammond on DSKBBV9HB2PROD with RULES2 Warning .......................................... Student Demographics (Institution level). SAT/ACT Test Scores (Institution level). Most popular academic programs Institutional type ............................. Institutional size ............................. Geographic location ....................... Institutional control (public, private, proprietary). Link to FAFSA ............................... Link to data about GI Bill benefits VerDate Sep<11>2014 18:51 Jun 28, 2019 ................................................. ................................................. ................................................. ................................................. ................................................. No ................................................. No ................................................. Jkt 247001 PO 00000 Frm 00046 Fmt 4701 None ............................................. None ............................................. Sfmt 4700 E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations 31437 APPENDIX A—Continued Net price calculator ........................ 2017 Gainful employment disclosures Current scorecard Expanded scorecard Gainful employment programs All undergraduate institutions All title IV programs No ................................................. Yes ................................................ Same. khammond on DSKBBV9HB2PROD with RULES2 Note: This proposed list provides potential data that the Department plans to include in its expanded College Scorecard or other educational data tools. As a result, this proposed list is provided for informational purposes and is subject to change without notice. Regulatory Impact Analysis (RIA) Under Executive Order 12866, the Office of Management and Budget (OMB) must determine whether this regulatory action is ‘‘significant’’ and, therefore, subject to the requirements of the Executive Order and subject to review by OMB. Section 3(f) of Executive Order 12866 defines a ‘‘significant regulatory action’’ as an action likely to result in a rule that may— (1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities in a material way (also referred to as an ‘‘economically significant’’ rule); (2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles stated in the Executive order. This final regulatory action will have an annual effect on the economy of more than $100 million because elimination of the ineligibility provision of the GE regulations impacts transfers among borrowers, institutions, and the Federal Government and elimination of paperwork requirements decreases costs. Therefore, this final action is ‘‘economically significant’’ and subject to review by OMB under section 3(f)(1) of Executive Order 12866. Notwithstanding this determination, we have assessed the potential costs and benefits, both quantitative and qualitative, of this final regulatory action and have determined that the benefits justify the costs. Under Executive Order 13771, for each new regulation that the Department proposes for notice and comment or otherwise promulgates that is a significant regulatory action under Executive Order 12866 and that imposes total costs greater than zero, it must VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 identify two deregulatory actions. These regulations are a deregulatory action under E.O. 13771 and are estimated to yield $160 million in annualized cost savings at a 7 percent discount rate, discounted to a 2016 equivalent, over a perpetual time horizon. We have also reviewed these regulations under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency— (1) Propose or adopt regulations only on a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify); (2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account—among other things and to the extent practicable—the costs of cumulative regulations; (3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and (5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or provide information that enables the public to make choices. Executive Order 13563 also requires an agency ‘‘to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.’’ The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include ‘‘identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.’’ PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 We are issuing these final regulations only on a reasoned determination that their benefits justify their costs. Based on the analysis that follows, the Department believes that these final regulations are consistent with the principles in Executive Order 13563. We also have determined that this regulatory action does not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions. In accordance with OMB circular A–4, we compare the final regulations to the 2014 Rule. In this regulatory impact analysis, we discuss the need for regulatory action, the potential costs and benefits, net budget impacts, assumptions, limitations, and data sources, as well as regulatory alternatives we considered. As further detailed in the Net Budget Impacts section, this final regulatory action has an annual effect on the economy at the 7 percent discount rate of approximately $518 million in increased transfers among borrowers, institutions, and the Federal government primarily related to the elimination of the ineligibility provision of the GE regulations. This figure does not take into account that a number of large proprietary chains have closed since the 2014 Rule was promulgated, nor the fact that college enrollments have declined dramatically since 2014— especially at proprietary institutions— meaning that with or without the GE regulations, there are significantly fewer GE programs available to students and students likely to enroll in the programs that remain available than when the 2014 Rule was developed. Therefore, transfers to borrowers and institutions may be lower than anticipated by the Net Budget Impact statement. In addition, our analysis does not include any reductions in transfers to students and institutions that may result from the market-based accountability system that the expanded College Scorecard will enable. Even in the absence of sanctions or loss of eligibility, programs that yield unfavorable outcomes may be significantly less attractive to students who, prior to expansion of the E:\FR\FM\01JYR2.SGM 01JYR2 31438 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations Scorecard, may have been misled by more generalized claims about the earnings advantage of a college degree.174 In general, college enrollments have dropped significantly since 2014, and in particular, enrollments at proprietary institutions have decreased markedly since 2014, due in part to the significant public campaign against those institutions and to the well-publicized closure of Corinthian Colleges. According to the National Student Clearinghouse Research Centers, declines in enrollments at proprietary institutions have been sharper than declines in other sectors:175 Semester Percent enrollment decline relative to previous year at 4-year, forprofit institutions (%) ¥0.4 ¥4.9 ¥13.7 ¥9.3 ¥14.5 ¥10.1 Fall 2014 ......................... Spring 2015 .................... Fall 2015 ......................... Spring 2016 .................... Fall 2016 ......................... Spring 2017 .................... khammond on DSKBBV9HB2PROD with RULES2 As noted in the Net Budget Impacts section of this RIA, this enrollment decline may reflect institutional response to the 2014 Rule or other factors such as the sensitivity of nontraditional student enrollment to economic conditions. Therefore, it is possible that the cost of eliminating the 2014 Rule to taxpayers is lower than the estimate provided in our Regulatory Impact Statement. We estimate $209 million in benefits due to reduced burden from eliminating paperwork requirements. Additionally, we estimate $593 million at a 7 percent discount rate in annualized increased transfers to Pell Grant recipients and borrowers. This economic estimate was produced by comparing the regulation to the PB2020 budget. The required Accounting Statement is included in the Net Budget Impacts section. Elsewhere, under Paperwork Reduction Act of 1995, we identify and explain burdens specifically associated with information collection requirements. 1. Need for Regulatory Action A number of factors compel the Department to take this regulatory 174 See blog.ed.gov/2011/12/in-americaeducation-is-still-the-great-equalizer/ and www.census.gov/prod/2002pubs/p23-210.pdf. 175 National Student Clearinghouse Term Enrollment Estimates, Spring 2017. National Student Clearinghouse Research Center. nscresearchcenter.org/wp-content/uploads/ CurrentTermEnrollment-Spring2017.pdf. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 action including concerns about the validity of the D/E metric and the integration of factors in the D/E equation, such as repayment terms, that are inconsistent with requirements of the student loan program. In addition, the Department has recognized that by providing consumer information on only a small portion of higher education programs, it fails in providing information that consumers can use to compare all programs available to them, and that enables all students to make informed decisions. The Department believes that in the 2014 GE regulation it underestimated the burden associated with this regulation and ignored the conclusions of a technical review panel that made clear how unreliable, subjective and inaccurate job placement reporting is in the absence of standardized definitions, reliable data sources and a single calculation methodology. The Department attempted to resolve the current challenges associated with job placement rate reporting, but the technical review panel assembled failed to do so. Therefore, it is inappropriate for the Department to require institutions to publicly report job placement rates knowing that direct comparisons between institutions could easily mislead consumers since different institutions are required to calculate these rates in different ways. Also, the Department’s 2014 burden estimate did not include an assessment of burden on the government. Perhaps most importantly, now that the Department is aware that the majority of student borrowers are not repaying their loans using a standard 10 year repayment plan, and many are in income driven repayment plans that lead to negative amortization, it is imperative to implement a transparency framework that provides comparable information to all students and parents to inform the enrollment and borrowing decisions of all consumers. The Department has determined that a more effective and comprehensive solution to the problem of student loan underrepayment is the expansion of the College Scorecard to provide programlevel debt and earnings data for all title IV eligible academic programs. Such a transparency framework will support a market-based accountability system that respects consumer choice while enabling more informed decisionmaking. In addition, by using administrative data rather than requiring institutions to report and review additional data, the College Scorecard will ensure that consumers are provided with information that is PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 consistent, accurate and reliable. It will also enable consumers to more easily compare outcomes among the institutions and programs available to them and reduce costly reporting burden to institutions. As cited earlier in these final regulations, the Department’s determination that only 24 percent of loans in the current $1.2 trillion Direct Loan portfolio are paying down at least a dollar of principal points to the need for a more comprehensive transparency and accountability framework. The Department considered through rulemaking how it might apply GE-like requirements to all institutions by amending the regulations for the Program Participation Agreement; however, negotiators could not agree on which, if any, of the metrics, thresholds, or disclosure requirements included in the GE regulations should be applied to all title IV participating institutions. Upon further review of studies published subsequent to the 2014 Rule as well as our review of the research paper that originally led to the Department’s decision to use an 8 percent D/E rate as the ‘‘passing’’ score led the Department to the conclusion that the D/E methodology was fundamentally flawed, as were the thresholds for ending a school’s title IV participation.176 In addition, the Department’s decision to use its regulatory authority to create a sweeping new student loan repayment program, the REPAYE program, provided the Department with an opportunity to revisit student debt management opportunities and establish new student loan repayment levels and terms. The choices made in establishing the repayment term for REPAYE render the amortization term used for GE calculations of debt-to-earnings inappropriate and obsolete. The GE regulations essentially held GE programs to a student loan repayment standard that no student would be held to by law or regulation. At a minimum, the Department would have needed to adjust the D/E calculation to adopt the amortization terms of REPAYE since any borrower could elect to enter into REPAYE repayment, a program that eliminates an income test for eligibility. However, this adjustment would not solve for the other problems with the validity of the D/E calculation. The Department’s review of the only set of D/E data published to date also reveals the serious weaknesses of the GE 176 Note: Association of Proprietary Colleges v. Duncan (2015), suffers from this same limitation of not having access to studies conducting following the passage of the rule. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations methodology since programs with very low earnings passed the D/E rate simply because taxpayers were providing significant financial support to those programs. These data call into question whether taxpayers should continue to subsidize these programs, and also highlight that direct subsidies are every bit a risk to taxpayer investments that do not yield benefits as are student loans that cannot be repaid. While having lower debt is certainly better for students, the Department must weigh the impact of having debt with the impact of achieving higher earnings. From a student perspective, higher earnings may be preferable to lower debt, especially since Congress and the Department have created student loan repayment management programs to help students repay their loans. In some cases, the amount of Federal debt a student could accumulate (due to limits imposed on undergraduate borrowing) would be offset by added earnings (relative to programs in the same field that resulted in lower earnings) just a few years into the student loan amortization period. The GE data made it clear to the Department that there is wide earnings variability among programs within all sectors (non-profit, public, and for-profit), and the Department can no longer assume that this variability accurately reflects differences in program quality. This variability could also be the result of geographic differences in prevailing wages, demographic and socioeconomic differences in student populations, and salary differences from one occupational field to the next. Since the Department is not satisfied that the D/E rates are a reliable or accurate proxy for program quality, the Department is not justified in its use of those data as the determinant for applying sanctions to institutions or eliminating them from title IV participation. The Department recognizes that some GE programs have inferior outcomes to others, that proprietary institutions like almost all non-public institutions charge higher tuition than public institutions, that earlier comparisons between proprietary institutions and community colleges are misleading since the majority of students enrolled in proprietary institutions are enrolled in four-year programs, and that students who attend proprietary institutions, in general, default at higher rates. However, as pointed out by a recent Brown Center study, proprietary institutions also serve a much higher proportion of high-risk students, lowincome and minority students, and students over the age of 25 who by law VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 have significantly higher borrowing limits, than non-profit institutions, which may explain differences in observed outcomes. The Brown Center study also pointed to challenges in comparing data from non-profit institutions and proprietary institutions since non-profit institutions rarely offer both 2-year and 4-year degrees, whereas many proprietary institutions offer both, making comparisons between these institutions and community colleges improper and inaccurate.177 A more informative and appropriate comparison between proprietary institutions and non-profit institutions, especially with regard to cost and student debt, would need to include non-profit, private 4-year institutions, since the lack of public subsidies makes their cost structure more similar to many proprietary institutions than two-year or four-year public institutions (except for out-of-State students who receive fewer benefits of taxpayer subsidies and therefore pay a higher cost). Institutional comparisons must also take into account institutional selectivity and student demographics because student borrowing behaviors and earnings outcomes are influenced by many factors other than program quality. Finally, since the SSA has not renewed the MOU with the Department to provide future earnings data, the Department cannot calculate or report future D/E rates. At a minimum the Department would have had to consider different data sources as part of its rulemaking effort, but at the time of rulemaking, it was not yet apparent that SSA would not provide additional earnings data. Therefore, the Department did not seek comment on the risks or benefits of utilizing Census or IRS data to determine earnings, or the impact of the use of those earnings on the validity of the D/E rates calculation or the comparison between D/E rates based on SSA data and the rates that would be calculated using IRS or Census data. Unable to get the data needed to make those determinations, the Department decided to rescind the 2014 Rule and develop a new tool—the expanded College Scorecard—to implement a transparency framework for GE and non-GE programs that will enable a more robust market-based accountability system to thrive. 177 Stephanie Riegg Cellini and Rajeev Davolia, Different degrees of debt: Student borrowing in the for-profit, nonprofit and public sectors. Brown Center on Education Policy at Brookings, June 2016. PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 31439 2. Summary of Comments and Changes From the NPRM The Department is making no changes from the NPRM. Comments received by the Department relative to the regulatory impact analysis are summarized and discussed below. Summary: Commenters stated that the Department failed to discuss regulatory alternatives that it considered. Commenters offered alternatives for the Department to consider as discussed earlier in the document. Discussion: We thank the commenter for identifying that we inadvertently omitted the Regulatory Alternatives Considered section from the NPRM prior to publication. We have included it in this final rule. Comments: Commenters stated that the NPRM ignored research showing that students are likely to find and attend another institution if a GE program closes because of sanctions or other adverse actions against a for-profit institution.178 Discussion: The Department agrees that in California, where the study was conducted, there are many choices of two-year colleges that may enable students to find a new program at a public institution if their GE program closes. However, the study does not demonstrate that students were able to find a similar CTE or applied program when moving to the community college. If those students moved from an applied program at a proprietary institution to a general studies or liberal arts program at a two year college (the largest majors at most community colleges nationally according to NCES data), they may not be better off since Holzer and Baum have determined that these programs have no market value to students who do not complete a four-year degree at another institution.179 Nonetheless, the Department has always assumed a high level of transfers related to gainful employment disclosures and institutional closures. As noted in the Net Budget Impacts section, the estimates in the PB2020 baseline for the 178 Cellini, S. R. ‘‘2018 Gainfully Employed? Assessing the Employment and Earnings of ForProfit College Students Using Administrative Data,’’ www.nber.org/papers/w22287; Cellini, S. R., Darolia, R., and Turner, N. (December 2016). ‘‘Where do students go when for-profit colleges lose federal aid?’’ National Bureau of Economic Research working paper series. Available at: www.nber.org/papers/w22967; and Blagg, K., & Chingos, M. (2016). Choice Deserts: How Geography Limits the Potential Impact of Earnings Data on Higher Education. Urban Institute. Available at: www.urban.org/sites/default/files/publication/ 86581/choice_deserts_1.pdf). 179 NCES, nces.ed.gov/pubs2017/2017051.pdf; Holzer and Baum, Making College Work: Pathways to Success for Disadvantaged Students. E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31440 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations impact on Pell Grants derive from the assumptions about students who would not pursue their education in response to programs’ gainful employment results. These assumptions ranged from 5 percent stopping for the first disclosure of a zone result to 20 percent for a second failure.180 The Department believes this is consistent with the high degree of transfers reflected in the research cited by the commenters. Additionally, even if the percentage of students who lose access to programs is small, the Department maintains that there are significant consequences to students whose educational plans are disrupted by gainful employment related transfers. As recent experience with institutional closures demonstrates, having to find an alternative program that fits with the other restrictions in students’ lives is a stressful process. Not all programs, especially those with specific equipment or other resource requirements, are immediately available for students whose programs would be ineligible for Federal aid. Students may be delayed in pursuing their education or may choose another field, both outcomes that could reduce their earnings potential. Comments: Several commenters contended that the Department raised questions about the GE regulations without acknowledging the extensive public record on GE topics, ignored evidence compiled through years of analysis and study, and failed to acknowledge its own factual findings on economic benefits and educational value. The commenters stated the Department did not rely upon its own data or research to formulate its policy. Discussion: The Department considered an abundance of data, including a number of studies that did not exist at the time the Department promulgated the 2014 GE regulation, and NCES data produced by the Department, when trying to develop a methodology for expanding the GE transparency and accountability framework to include all title IV participating programs. While there is an abundance of research comparing proprietary college outcomes with nonprofit college outcomes, these studies all have omissions and limitations that make it unclear whether inferior outcomes, where they exist, are the result of program quality or other factors, such as student demographics. These studies also often times compare proprietary colleges with community 180 See Table 3.4: Student Response Assumptions, 79 FR 211 p. 65077. Available at www.govinfo.gov/ content/pkg/FR-2014-10-31/pdf/2014-25594.pdf. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 colleges even though many proprietary institutions offer four-year programs, which makes comparisons with community colleges inappropriate. There is a dearth of research on the low student loan repayment rates across the entire student loan portfolio. The Department recognizes the need to create a transparency and accountability framework that includes all title IV programs and institutions since the problem of student loan over-borrowing and under-repayment impacts all sectors of higher education. However, the Department identified a number of flaws in the D/E rates methodology and thresholds, and excessive burden associated with GE disclosures, making it clear that expanding the components of the GE regulations to all institutions could not be supported by data. The Department believes that in order for consumers to be able to compare their options, all programs they are considering must be subjected to the same analysis and students must have access to comparable data. The Department did consider data available to it when deciding to rescind the 2014 Rule. In particular, it considered that the data and research presented in conjunction with the 2014 Rule did not support the use of an 8 percent threshold for differentiating between passing and zone or failing programs since the research used to justify the 8 percent threshold specifically pointed out that the 8 percent threshold—a mortgage standard—would not be justified for use in establishing student loan limits. The 2014 Rule also ignored the role of taxpayer subsidies in allowing programs that generate very low earnings to pass the D/E rates measure. This could give students the inaccurate impression that if a program passes the D/E rates measure, it is high quality and will yield strong outcomes. However, the Department’s review of the D/E rates published in 2017 showed that a number of programs that yield earnings below the poverty rate for a family of four passed the test simply because the taxpayer, rather than the student, took on the larger burden of paying for the program. We do not believe that we should mask low earning programs simply by suggesting that if the taxpayer continues to pay for these programs, somehow students benefit. Given the Department’s realization that a sizable percentage of loans in the outstanding student loan portfolio are not shrinking due to student payments, a more comprehensive strategy is required. The GE regulations cannot be expanded to include all programs, and the Department’s negotiated rulemaking PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 did not result in consensus on a methodology for applying sanctions or requiring disclosures of all institutions that could be supported by research or justify the potential cost of the added burden or the loss of program options to students. Applying the GE regulations to all institutions could have profound negative impacts on all private institutions, regardless of whether they are non-profit or proprietary, since the absence of direct appropriations naturally pushes the cost burden to students. The Department now believes it is better to use administrative data to provide comparable debt, earnings, default and repayment information across all programs to consumers and taxpayers. Since the Department could not get earnings data for all students in all title IV programs to support this rulemaking effort, the Department is unable to test the impact of applying GE-like metrics to all title IV programs, and would be impetuous to apply GElike metrics to all title IV programs absent such test data given the sweeping impact that such an action could have. Comments: Commenters stated that the Department’s discussion of costs and benefits in the RIA section of the NPRM did not acknowledge the loss of competitive advantage that institutions face if the GE regulations are rescinded because a program with good D/E rates could market that their rates are good and attract more students versus nearby institutions with poor D/E rates. Meanwhile, other commenters submitted data analyses countering these claims. Discussion: After reviewing the published GE rates produced in 2017, the Department does not believe that passing D/E rates should be viewed by consumers as the mark of a ‘‘good’’ program since a number of programs that generated lower earnings than failing programs passed the test simply because the taxpayer heavily subsidized the program. The Department is concerned about the false effect that the D/E rates measure could have on a program’s or institution’s reputation, and that students could be misled to enroll in a program that generates lower earnings without fully understanding the long-term impact of that decision on earnings across a lifetime. The Department agrees that there may be positive reputational effects lost as a result of rescinding the GE regulations; however, the Department believes that some of these positive reputational effects were inappropriate and harmful since taxpayer generosity rather than program quality is responsible for those outcomes. However, those programs that enjoyed earned positive reputational E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations effects will see them continue as the College Scorecard will provide debt and earnings data for all programs. This may improve the reputational effects for a larger number of deserving programs and institutions. Comments: Commenters stated that the Department did not consider in the NPRM the full costs of the rescission of the 2014 Rule, including costs that accrue to students with high debt in failing programs and to taxpayers when students default. Commenters further stated that controlling for demographics, location, and major field of study, students in proprietary GE certificate programs earned $2,100 less annually than students in non-profit GE certificate programs. Commenters also expressed concern that, in rescinding the GE regulations, the Department has failed to consider the cost to borrowers that are not gainfully employed and who may default as a result of unsustainable debt. Commenters cited research and stated that these borrowers would be saddled with capitalized interest and high collection fees, which would require them to pay more per month than borrowers in good standing.181 Discussion: The Department agrees that student loan debt is costly to students and undermines the earnings benefits that many students would otherwise enjoy. However, this problem is not limited to students who enrolled at proprietary institutions. This is a widespread problem that needs a solution that includes all title IV participating programs. The Department agrees that taxpayers need to understand the risks and benefits associated with investing in higher education, but we believe that includes the money that taxpayers invest directly in higher education, including through direct appropriations and State student aid and scholarship programs. Those dollars were ignored in the methodology selected for the 2014 Rule, which was a major shortcoming of the regulation. The Department has reviewed the research showing that students who complete certificate programs at proprietary institutions earn around $2,100 less per year than those who complete certificate programs at nonprofit institutions. However, certificate programs represent only a proportion of higher education programs and it is not clear that those results would persist if the study were expanded to include all degree programs. Also, the research on 181 Cellini, S. R. ‘2018 Gainfully Employed? Assessing the Employment and Earnings of ForProfit College Students Using Administrative Data’ www.nber.org/papers/w22287. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 certificate programs attempted to conduct matched comparison group studies, but it did not accomplish that goal since broad comparisons based on student age and zip codes were used to establish comparison groups, and factors other than that are critical to identifying student matched comparison groups. Even within a single zip code there can be considerable socioeconomic diversity. The study also did not compare outcomes between particular kinds of certificates for particular occupations, meaning that the outcomes could be the result of more students at non-profit institutions pursuing certificates in IT, practical nursing, or the traditional trades, as opposed to more students at proprietary institutions pursuing certificates in allied health professions (other than nursing) or cosmetology. Schools with larger proportions of students in IT and nursing certificate programs will certainly post higher average earnings than those with larger proportions of students in other certificate programs, and yet State nursing boards and accreditors may disallow those institutions to offer programs in higher wage occupations. However, when the study compared earnings outcomes among graduates of certificate programs in cosmetology, it turned out that graduates of proprietary cosmetology programs had higher earnings than graduates of community college cosmetology programs. Therefore, we must interpret the results of the study with caution. We must also understand that students may have limited options due to location or scheduling convenience, so we need to understand not only whether a student has better earnings potential if she completes a certificate program at a community college versus a proprietary institution, but if she would suffer from lower employability or earnings if in the absence of the proprietary program, the student was unable to complete a career and technical education program at all, or if in the absence of an opportunity to enroll in a certificate program at the community college, she could enroll only in a general studies program. Chances of completing the program could be lower and the market value of doing so could be null. So, we need to also compare the outcomes of general studies programs at community colleges with the outcomes of CTE programs at proprietary institutions since the number of community college GE programs with less than 10 students suggests that only small numbers of students have access to those programs. PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 31441 The largest major at most community colleges is general studies or liberal arts. Therefore, it may not be relevant to compare the outcomes of a proprietary and a non-profit certificate program if the student who enrolls at the non-profit institution is more likely to be ushered into a general studies or liberal arts program than the equivalent certificate program. The Department does not disagree that the cost of college is a serious concern, but that concern extends well beyond proprietary institutions. The Department is not ignoring that a higher proportion of students at proprietary institutions take on more debt than at community colleges; however, given the size of many community colleges, a lower percent does not translate into fewer students (in whole numbers) taking on debt or defaulting on loans. Total student loan portfolio analysis proves that over-borrowing and underrepayment extends far beyond students who enrolled at proprietary institutions. The Department is taking a new approach to reducing defaults across the portfolio by implementing better student loan origination and servicing information and support through our Next Generation Financial Services Environment. The Department also believes that by providing comparable information about all programs, enrollment reductions in poor performing programs in all sectors could generate substantial savings. In the near term, transfers to students and institutions could increase since failing D/E rates will not eliminate the participation of certain programs. However, we have never been able to predict the macro-economic impact of those closures over time. In addition, over the longer-term, the Department believes that the expanded College Scorecard will result in greater savings to students and taxpayers when consumers have earnings and debt data for all title IV programs and can make better choices as a result. The Department also wishes to point out that macro-economic conditions may have a greater impact on higher education costs and savings to students and taxpayers since college enrollments, in general, have been reduced significantly, especially among students over the age of 24. Comments: Commenters stated that the Department could use data from the National Student Loan Database (NSLDS) and compute consistently measured D/E rates across all programs and not rely on institutional-level data from the College Scorecard which uses different definitions and is not a reliable cross-sector comparison of programs. E:\FR\FM\01JYR2.SGM 01JYR2 31442 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations Additionally, this NSLDS data could be used to substantiate the Department’s claim that whether programs pass or fail the D/E rates measure is unduly affected by the enrollment of disadvantaged students. This was presented for the 2014 Rule. Discussion: The Department made NSLDS data available during the negotiated rulemaking sessions.182 It should be noted that the earnings data obtained from SSA was anonymous and in the aggregate, so there was no way to disaggregate earnings data to test the impact of disadvantaged students on rates as the commenter describes. The Department currently does not have program-level data for non-GE programs, as it requires obtaining data from a different department. If the commenter is referring to estimates provided in the 2011 GE regulations, the Department wishes to point out that those estimates included title IV and non-title IV programs, since, at the time, IPEDS was the only source of program-level data and it included a larger number of programs. The Department believes that the commenter misunderstands the use of the expanded College Scorecard, which is not to take data from the Scorecard to calculate D/E rates but is instead to use the Scorecard to provide program-level debt and earnings data for GE and nonGE programs. We agree that the current Scorecard would not inform D/E rates calculations since the current Scorecard includes all students, not just completers, and provides institutionlevel data only. The expanded Scorecard will report program-level median debt and earnings data for GE and non-GE programs at all credential levels. The Department plans to rely on the IRS, rather than SSA as was the case in the GE regulations, to provide aggregate earnings data and NSLDS will continue to serve as the data source for debt data. Since the GE regulations apply only to GE programs, and the full GE regulations cannot be applied to non-GE programs, the only way to provide cross-sector comparisons based on comparable data is by eliminating the GE regulations and developing a new transparency tool that can be applied to all title IV programs. The College Scorecard will serve as that tool. The Department is currently considering ways to develop riskadjusted outcomes metrics that leverage the power of regression techniques to control for differences in student-level risk factors such as age, socioeconomic status, or high school preparation when comparing student outcomes. In the meantime, we believe that by providing institution—level selectivity ratings and student demographics, we can begin to put outcomes in the context of differences in student demographics and institutional selectivity. Comments: A commenter stated that during the first year of the D/E calculation GE programs declined from 39,000 to 27,000 programs indicating that failing programs dropped out. Discussion: We were unable to replicate the findings the commenter referenced, and the commenter provided no documentation or data to support this assertion. In the 2014 Rule, the Department did report a total of 37,589 programs for which institutions reported enrollment in FY2010, of which 5,539 met the 30 completer threshold to be included in the 2012 D/E rates calculations.183 Several factors contribute to the decline in programs for 2008–09 from the first GE reporting reflected in the 2012 informational rates and the data presented for this regulation. As institutions became more familiar with the reporting requirements, they may have changed 6-digit OPEIDS, CIP codes or updated students’ enrollment status, all of which could consolidate the number of programs reported. Some of the decline likely was in response to anticipated non-passing gainful employment results, but mergers and changes in program offerings occur on a regular basis for a variety of business reasons, especially when considering the small size of many of the programs captured in the GE reporting. Therefore, we do not agree with the commenter that the reduction in the number of programs is due exclusively to institutions’ decisions to discontinue programs that would have failed. However, even in the absence of the GE regulation, when students are able to compare earnings and debt outcomes among all of their options, low-performing programs may suffer from such low enrollments that schools will discontinue them even in the absence of Department sanctions. During negotiated rulemaking the Department provided184 Table 3.1 Program and Enrollment Counts during the second negotiated rulemaking session which included GE programs counts from the 2008–2009 thru 2015– 2016 year, copied below in Table 3. TABLE 3—NUMBER OF GE PROGRAMS AND ENROLLEES BY AWARD YEAR Award year 2008–2009 2009–2010 2010–2011 2011–2012 2012–2013 2013–2014 2014–2015 2015–2016 Programs ............................................................................................................................................................... ............................................................................................................................................................... ............................................................................................................................................................... ............................................................................................................................................................... ............................................................................................................................................................... ............................................................................................................................................................... ............................................................................................................................................................... ............................................................................................................................................................... 27,611 30,674 32,908 34,252 35,075 35,905 35,399 32,970 Enrollment 2,787,260 3,613,730 3,892,590 3,767,430 3,515,210 3,326,340 3,077,970 2,529,190 khammond on DSKBBV9HB2PROD with RULES2 Enrollment values rounded to the nearest 10. The number of GE programs and enrollment in them changed over time, but do not show a decline from 39,000 to 27,000 programs. During the time period shown above, program count peaked in 2013–2014 and enrollment peaked in 2010–2011. Comments: Commenters stated that during the one year that the 2014 Rule was implemented, results of the rule showed that 98 percent of over 800 programs that failed were offered by forprofit institutions. Commenters stated that risk-based compliance efforts appropriately target proprietary 182 U. S. Department of Education. (February 2018). Gainful employment: background data analysis. Available at: www2.ed.gov/policy/ highered/reg/hearulemaking/2017/ geprogramdata.docx. 183 79 FR 211 p. 65037. Available at www.govinfo.gov/content/pkg/FR-2014-10-31/pdf/ 2014-25594.pdf. 184 U.S. Department of Education. (February 2018). Gainful employment: background data analysis. Available at: www2.ed.gov/policy/ highered/reg/hearulemaking/2017/ geprogramdata.docx. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 E:\FR\FM\01JYR2.SGM 01JYR2 31443 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations institutions. Commenters asserted that the Department relied on the premise that there are justifiable reasons to provide title IV funds to students enrolled in low-quality programs. Commenters claim that data show that the GE regulations affect institutional behavior with respect to zone and fail programs. Commenters also submit data analyses supporting expanding the application of the D/E rates measure to all programs at all institutions or rescinding it entirely. Discussion: The table below is based on data the Department distributed 185 during the second session of negotiated rulemaking, February 2018 ‘Gainful Employment Data Analysis’ section 6, table 3.2. TABLE 4—NUMBER AND PERCENT OF PROGRAMS THAT FAILED GE GE programs—all programs Number Sector Fail Total Percent fail (%) LCL (%) UCL (%) Public ................................................................................... Private .................................................................................. Proprietary ............................................................................ 1 24 878 2,493 476 5,681 0.04 5.04 15.46 ¥0.04 3.08 14.52 0.12 7.01 16.40 Overall ........................................................................... 903 8,650 10.44 9.79 11.08 GE programs—certificate only Number Sector Certificate level Fail Public .................................. Public .................................. Public .................................. Private ................................. Private ................................. Private ................................. Proprietary ........................... Proprietary ........................... Proprietary ........................... Undergraduate ................... Post baccalaureate ............ Graduate ............................ Undergraduate ................... Post baccalaureate ............ Graduate ............................ Undergraduate ................... Post baccalaureate ............ Graduate ............................ Overall Certificate Programs khammond on DSKBBV9HB2PROD with RULES2 Percent and confidence interval We used the published data to produce the tables above, which compare GE programs by sector— public, private, and proprietary—and level-undergraduate, post baccalaureate, and graduate. Overall totals from the table show that there are 8,650 (Proprietary 65.7 percent, Private 28.8 percent & Public 5.5 percent) total GE programs of which 903 or 10.44 percent failed the D/E rates measure. When significance tests are run at the sector level on this data at the 95 percent confidence interval producing lower (LCL) and upper (UCL) confidence limits, the three sectors appear to be significantly different because their confidence intervals do not overlap. However, these data contain noncomparable data in the reported totals because only degree programs are only counted as GE programs in the proprietary sector. When the proprietary data are subset to certificate-only, 198 programs of 3288 failed, resulting in 6.02 percent failing with a confidence interval ranging from 5.21 percent to 6.84 percent; this interval overlaps with that of private, non-profit institutions. Because there are no comparable data at Percent and confidence interval Total Percent fail (%) 18:51 Jun 28, 2019 Jkt 247001 2,428 17 48 405 27 44 3,260 5 23 0.04 0.00 0.00 5.19 0.00 6.82 6.01 0.00 8.70 ¥0.04 0.00 0.00 3.03 0.00 ¥0.63 5.20 0.00 ¥2.82 0.12 0.00 0.00 7.34 0.00 14.27 6.83 0.00 20.21 223 6,257 3.56 3.10 4.02 the degree levels, a valid comparison is not possible with Department data. The second part of the table subsets the data to certificate programs and further breaks down certificates by level. There were 6,257 GE certificate programs of which 223 or 3.56 percent failed the D/E rates measure. When degree programs are removed from proprietary programs (computed using addition), the resulting percentage of proprietary certificate programs failing is 6.02 percent (198/3288) with a confidence interval of 5.21 to 6.84 percent. This overlaps with the private, non-profit certificate confidence interval of 3.08 to 7.01 percent. Therefore, there is no statistical difference between private and proprietary certificate program GE failure rates. Further, we found no significant differences between the percentages of failing certificate programs at non-profit private and proprietary private institutions, regardless of level under examination. Public GE certificate programs had significantly lower failure rates than both private and proprietary GE certificate programs. However, as was pointed out earlier in this document, GE PO 00000 Frm 00053 Fmt 4701 UCL (%) 1 0 0 21 0 3 196 0 2 programs offered by taxpayer subsidized public institutions may have passed, despite very low earnings by program graduates, simply because taxpayers take on the largest portion of cost burden. While we agree that taxpayer support benefits students, the masking effect of direct appropriations reduces the accountability of publicly subsidized programs when they are producing sub-optimal earnings outcomes, which is disadvantageous to both students and taxpayers. In other words, a program that passes the D/E rates measure because of taxpayer funding may not impose overwhelming debt burden on students; however, those programs may reduce students’ full earning potential and may be directing scarce taxpayer resources to lowperforming programs rather than high performing programs. Summary: Commenters stated that this regulatory action will cost taxpayers $5.3 billion over 10 years. Discussion: Comments related to the cost of the regulations are addressed in the Net Budget Impacts section of this document. 185 Ibid. VerDate Sep<11>2014 LCL (%) Sfmt 4700 E:\FR\FM\01JYR2.SGM 01JYR2 khammond on DSKBBV9HB2PROD with RULES2 31444 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations Comments: Commenters requested information relative to the budget estimate. Commenters requested the Department clarify the assumptions it used to produce its estimate and incorporate the effect of changed institutional behavior. Commenters also requested that the effects of rescission on default rate and resulting costs to borrowers, society, and the economy be reflected in the budget estimate. Commenters requested modifications to the budget estimate to adjust for IDR, loan forgiveness, and default. Discussion: Comments related to the cost of the regulation are addressed in the Net Budget Impacts section of this document. Comments: Commenters stated that the Department did not justify the rescission of the discretionary D/E rate. Other commenters provided evidence to support its rescission. Discussion: The Department clearly stated in the NPRM that neither it nor non-Federal negotiators could identify a D/E metric that was sufficiently valid and accurate to serve as a high-stakes quality test or to become a new, noncongressionally mandated, eligibility criteria for title IV participation. Regardless of whether gross income or discretionary income forms the basis of the D/E rates calculation, the methodology is inaccurate and fails to control for the many other factors other than program quality that influence debt and earnings. Comments: Commenters stated the Department failed to comply with E.O. 12291 because it did not estimate either the number of or dollar impact to students or institutions nor did it match costs to benefits. A commenter asserted that the RIA failed to show why rescission is beneficial. Discussion: Executive Order 12291 was revoked by Executive Order 12866 on September 30, 1993. Further, the monetized estimates in the Regulatory Impact Analysis are based on the budget estimates, which can be found in the Net Budget Impacts section. Other impacts, including expected burdens and benefits are discussed in the Costs, Benefits, and Transfers and Paperwork Reduction Act of 1995 sections. The Department believes it is in compliance with Executive Order 12866. Comments: Commenters asserted that the regulatory text does not support the transparency argument from E.O. 13777 because the regulatory text does not include disclosures. Discussion: The Department agrees with the commenter and has revised its Need for Regulatory Action. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 3. Analysis of Costs and Benefits These regulations affect prospective and current students; institutions with GE programs participating in the title IV, HEA programs; and the Federal government. The Department expects institutions and the Federal government to benefit as this action eliminates reporting, administrative costs, and sanctions. As detailed earlier, pursuant to this regulatory action, the Department removes the GE regulations and adopts no new ones. 3.1 Students Based on 2015–16 Department data from the National Student Loan Data System (NSLDS), about 520,000 students would be affected annually by the rescission of the GE regulation. The Department estimates this rescission will result in both costs and benefits to students, including the costs and benefits associated with continued enrollment in zone and failing GE programs and the benefit of eliminating paperwork burden. Eliminating sanctions against institutions based on the D/E rates measure will impact students. Under the GE regulations, if a GE program became ineligible to participate in the title IV, HEA programs, its students would not be able to receive title IV aid to enroll in that program. Because D/E rates have been calculated under the GE regulations for only one year, no programs have lost title IV, HEA eligibility. However, 2,050 programs were identified as failing programs or programs in the zone based on their 2015 GE rates and would have been at risk of losing eligibility under the GE regulation. NSLDS data from 2015–16 shows 329,250 students were enrolled in zone GE programs and 189,920 students were enrolled in failing programs (about 520,000 total). These students will not lose access to title IV Federal financial aid at their initially chosen program. As further explained in the Net Budget Impacts section, the Department estimates that there will be an annual increase in Direct Loan and Pell grant transfers from the Federal government to students of $593 million at the 7 percent discount rate when compared to the GE regulations under PB2020. There are further costs and benefits to students who continue enrollment in a program that would have been in the zone or failing under the GE regulations, which the Department was unable to monetize because the actual outcome for these students is unknown. This includes the impact that students will not lose access to title IV aid for those PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 programs, which is a benefit of continued financial aid but could also be a cost if the investment is not as fruitful as it might be at a similar nearby program. What the Department is unable to determine for the purpose of these costs estimates is what number of students displaced from a GE program that loses title IV eligibility will be able to find a similar program at another institution or will enroll in a nonapplied program, a different applied program of study, or a general studies program that yields even poorer outcomes. However, given that the large majority of GE programs have less than 10 students suggests that a significant number of students who lose access to a GE program will end up in a community college general studies program, where we do not have D/E outcomes data to inform our analysis. Other impacts relate to whether students would have transferred, found alternate funding, or discontinued postsecondary education as a result of their program losing title IV eligibility under the GE regulation. As a result of the rescission, students would not face this stressful choice, which could be seen as a benefit of continued postsecondary education and not having to transfer institutions, but also a potential cost of completing a program that may be judged less favorably than a similar program at a nearby institution. The Department will also discontinue GE information collections, which is detailed further in the Paperwork Reduction Act of 1995 section of this preamble. Two of these information collections impact students—OMB control number 1845–0123 and OMB control number 1845–0107. By removing these collections, the regulations will reduce burden on students by 2,167,129 hours annually. The burden associated with these information collections is attributed to students being required to read warning notices and certify that they received them. Therefore, using an individual hourly rate of $16.30,186 the benefit due to reduced burden for students is $35,324,203 annually (2,167,129 hours per year * $16.30 per hour). With the elimination of the disclosures and the ineligibility sanction that would have removed students’ program choices, students, 186 PRA calculations based on recession of information collection requests associated with existing GE requirements and use the same wage rates as the 2014 GE rule. The $16.30 rate for students was the 2012 median weekly wage rate for high school diplomas of $652 divided by 40 hours. Available at http://www.bls.gov/emp/ep_chart_ 001.htm as accessed in January 2014. E:\FR\FM\01JYR2.SGM 01JYR2 31445 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations their parents, and other interested members of the public will have to seek out the information that interests them about programs they are considering. Affordability and earnings associated with institutions and programs continues to be an area of interest. The College Scorecard is one source of comparative data, but others are available, so students will have the opportunity to incorporate the information into their decisions and rely on their own judgement in choosing a program based on a variety of factors. To the extent non-passing programs remain accessible with the rescission of the 2014 Rule, some students may programs they are considering, and regardless of whether the institution is proprietary, non-profit, or public. choose sub-optimal programs. Whatever the reason, these programs have demonstrated a lower return on the student’s investment, either through higher upfront costs, reduced earnings, or both. As some commenters have noted, this could lead to greater difficulty in repaying loans, increasing the use of income-driven repayment plans or risking defaults and the associated stress, increased costs, and reduced spending and investment on other priorities. These regulations emphasize choice and access for all students, and we encourage students to make informed enrollment decisions regardless of which institutions or 3.2 Institutions Based on 2015 GE program rates from the National Student Loan Data System (NSLDS), about 2,600 institutions will be affected annually by the removal of the GE regulation. These institutions will have a reduced paperwork burden and no longer be subject to potential GE sanctions that caused loss of title IV eligibility. The table below shows the distribution of institutions administering GE programs by sector. TABLE [1]—INSTITUTIONS WITH 2015 GE PROGRAMS 187 Type Institutions Programs Public ............................................................................................................... Private .............................................................................................................. Proprietary ........................................................................................................ 865 206 1,546 33% 8% 59% 2,493 476 5,681 29% 5% 66% Total .......................................................................................................... 2,617 ........................ 8,650 ........................ All 2,617 institutions with GE programs will benefit from the elimination of GE reporting requirements. As discussed further in the Paperwork Reduction Act of 1995 section of this preamble, reduction in burden associated with removing the GE regulatory information collections for institutions is 4,758,499 hours. Institutions would benefit from these proposed changes, which would reduce their costs by $173,923,138 annually using the hourly rate of $36.55.188 There are 778 institutions administering 2,050 zone or failing GE programs that will benefit because they no longer will be subject to sanctions that would result in the loss of title IV eligibility. As further explained in the Net Budget Impacts section, the Department estimates this change will increase Pell grant and Direct Loan transfers from students to institutions by $518 million annually under the 7 percent discount rate when compared to PB2019. Although the Department was unable to monetize this impact, institutions further benefit from the elimination of the need to appeal failing or zone D/E rates. The table below shows the distribution of institutions with zone and failing programs by institutional type, which represents 24 percent of the 8,650 2015 GE programs and 30 percent of the 2,617 institutions with GE programs. TABLE [2]—INSTITUTIONS WITH 2015 GE ZONE OR FAILING PROGRAMS 189 khammond on DSKBBV9HB2PROD with RULES2 Type Institutions Zone programs Failing programs Zone or failing programs Public ............................................................................................................... Private .............................................................................................................. Proprietary ....................................................................................................... 9 34 735 9 68 1,165 ........................ 21 787 9 89 1,952 Total .......................................................................................................... 778 1,242 808 2,050 Table [3] shows the most frequent types of programs with failing or zone D/E rates. Cosmetology undergraduate certificate programs had the most programs in the zone or failing categories, which represented 40 percent of all of these programs. The proportion of programs in zone or fail shown in the table below ranged from 17 to 82 percent. These programs and their institutions would be most significantly affected by the proposed removal of GE sanctions as they would continue to be eligible to participate in title IV, HEA programs. 187 The count of programs includes programs that had preliminary rates calculated, but were not designated with an official pass, zone, or fail status due to reaccreditation and reinstatements of eligibility during the validation process of establishing D/E rates. 188 PRA calculations based on recession of information collection requests associated with existing GE requirements and use the same wage rates as the 2014 GE rule. The $36.55 was calculate for the 2014 GE Rule based on an assumption that 75 percent of the work would be done by staff at a wage rate equivalent to information industries sales and office workers of $33.46 and 25 percent of the work would involve those paid the equivalent of Education Services—managers with a wage rate of $45.81. Wage rates taken from http:// www.bls.gov/ncs/ect/sp/ecsuphst.pdf as accessed for calculation in January 2014. 189 The count of programs includes programs that had preliminary rates calculated, but were not designated with an official pass, zone, or fail status due to reaccreditation and reinstatements of eligibility during the validation process of establishing D/E rates. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 E:\FR\FM\01JYR2.SGM 01JYR2 31446 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations TABLE [3]—ZONE OR FAILING 2015 GE PROGRAMS BY FREQUENCY OF PROGRAM TYPES 190 CIP Credential level Cosmetology/Cosmetologist, General Medical/Clinical Assistant ................. Medical/Clinical Assistant ................. Massage Therapy/Therapeutic Massage. Business Administration and Management, General. Legal Assistant/Paralegal ................. Barbering/Barber ............................... Graphic Design ................................. Criminal Justice/Safety Studies ........ Massage Therapy/Therapeutic Massage. All other programs ............................ Undergraduate Certificate ................ Associates Degree ........................... Undergraduate Certificate ................ Undergraduate Certificate ................ 270 35 78 43 91 56 12 4 361 91 90 47 895 119 424 270 Associates Degree ........................... 24 22 46 74 Associates Degree ........................... Undergraduate Certificate ................ Associates Degree ........................... Associates Degree ........................... Associates Degree ........................... 20 22 16 20 8 25 16 17 11 19 45 38 33 31 27 58 96 45 41 33 ........................................................... 706 535 1,241 6,595 Total ........................................... ........................................................... 1,242 808 2,050 8,650 khammond on DSKBBV9HB2PROD with RULES2 While programs with non-passing results will benefit from avoiding ineligibility and potentially reputational contagion to other programs at the institution that performed better, programs with passing results could lose the benefit of their comparatively strong performance, although the Department believes that comparatively strong performance will be revealed through program-level College Scorecard outcomes as well. Consistently strong earnings or low costs would likely be an attractive draw for students in a given region or field of study, as long as the low-cost program is available to students and offers the same scheduling flexibility, convenience, and student support services as the higher-cost program offered. While there will not be an established standard to be categorized as passing, the Department does believe that programs with strong outcomes could still gain from their strong performance. Presumably, if a large percentage of programs at their institutions do well on gainful employment measures, the earnings, debt levels, and other items reported in the College Scorecard will be strong compared to their peers with similar offerings. As information and analytical tools become more accessible, the Department believes the lost potential reputational benefit from gainful employment can be replaced. 3.3 Federal Government Under the proposed regulations, the Federal government will benefit from reduced administrative burden 190 The count of programs includes programs that had preliminary rates calculated, but were not designated with an official pass, zone, or fail status due to reaccreditation and reinstatements of eligibility during the validation process of establishing D/E rates. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 Zone Fail associated with removing provisions in the GE regulations and from discontinuing information collections. As discussed in the Net Budget Impacts section, the Federal government will incur annual costs to fund more Pell Grants and title IV loans, including the costs of income-driven repayment plans and defaults. Reduced administrative burden due to the proposed regulatory changes will result from elimination of sending completer lists to institutions, adjudicating completer list corrections, adjudicating challenges, and adjudicating alternate earnings appeals. Under the GE regulations, the Department estimated about 500 Notices of Intent to Appeal, and each one took Department staff about 10 hours to evaluate. Using the hourly rate of a GS– 13 Step 1 in the Washington, DC area of $46.46,191 the estimated benefit due to reduced costs from eliminating earnings appeals is $232,300 annually (500 earnings appeals * 10 hours per appeal * $46.46 per hour). Similarly, the Department sent out 31,018 program completer lists to institutions annually, which took about 40 hours total to complete. Using the hourly rate of a GS– 14 Step 1 in the Washington, DC area of $54.91,192 the estimated benefit due to reduced costs from eliminating sending completer lists is $2,196 annually (40 * 54.91). Likewise, the Department processed 90,318 completer list corrections and adjudicated 2,894 challenges. The Department estimates it took Department staff 1,420 hours total to make completer list corrections. Similarly, the Department estimates it took $1,500,000 in contractor support 191 Salary Table 2018–DCB effective January 2018. Available at www.opm.gov/policy-data-oversight/ pay-leave/salaries-wages/salary-tables/pdf/2018/ DCB_h.pdf. 192 Ibid. PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 Zone or fail All programs and 1,400 hours of Federal staff time total to adjudicate the challenges. Using the hourly rate of a GS–13 step 1 in the Washington, DC area of $46.46, the estimated benefit due to reduced costs from eliminating completer lists, corrections, and challenges is $1,631,017 ($1,500,000 contractor support + (1,420 + 1,400) staff hours * $46.46 per hour). Additionally, the Department will rescind information collections with OMB control numbers 1845–0121, 1845–0122, and 1845–0123. This will result in a Federal government benefit due to reduced contractor costs of $23,099,946 annually. Therefore, the Department estimates an annual benefit due to reduced administrative costs under the regulations of $24,965,459 ($232,300 + $2,196 + $1,631,017 + $23,099,946). Finally, the Department will also incur increased budget costs due to increased transfers of Pell Grants and title IV loans, as discussed further in the Net Budget Impacts section. The estimated annualized costs of increased Pell Grants and title IV loans from eliminating the GE regulations is approximately $518 to $527 million at 7 percent and 3 percent discount rates, respectively. 4. Net Budget Impacts The Department received a number of comments related to its estimated net budget impact for the regulations proposed in the NPRM that rescinded the current GE regulation. In particular, some commenters presented analysis of the potential effect on defaults and loan forgiveness as a cost of the regulation not accounted for in the Department’s analysis. One such commenter’s analysis modeled IDR usage at gainful employment programs using the debt and earnings data published for gainful E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations khammond on DSKBBV9HB2PROD with RULES2 employment programs and found that many borrowers in non-passing programs would qualify for IDR plans and their payments under REPAYE would be $1.5 billion less than under a 10-year standard plan on a net present value basis.193 The Department appreciates the analysis presented and acknowledges that there are potential interactions between gainful employment, student program choice, repayment outcomes, and other factors that could affect the estimates presented. Other commenters noted the effect of the current gainful employment regulations on institutional behavior, noting that institutions closed or revised programs anticipated not to pass the gainful employment measures and the loss of this deterrent should be factored into the Department’s estimates.194 However, the Department never attributed any savings to default reductions or decreased loan forgiveness in relation to the 2014 GE Regulations. The increased volume in the 2-year proprietary risk group estimated from rescinding the gainful employment regulations, as described in the NPRM and reiterated below, is subject to the relatively high default and incomedriven repayment plan assumptions. Therefore, we do not anticipate a significant change in those areas from these final regulations. As indicated in the NPRM published August 14, 2018, The Department proposes to remove the GE regulations, which include provisions for GE programs’ loss of title IV, HEA program eligibility based on performance on the D/E rates measure. In estimating the impact of the GE regulations at the time they were developed and in subsequent budget estimates, the Department attributed some savings in the Pell Grant program based on the assumption that some students, including prospective students, would drop out of postsecondary education as their programs became ineligible or imminently approached ineligibility. This assumption has remained in the baseline estimates for the Pell Grant program, with an average of approximately 123,000 dropouts annually over the 10-year budget window from FY2019 to FY2028. By applying the estimated average Pell 193 Center for American Progress, How Gainful Employment Reduces the Government’s Loan Forgiveness Costs, June 18, 2017. Available at www.americanprogress.org/issues/educationpostsecondary/reports/2017/06/08/433531/gainfulemployment-reduces-governments-loan-forgivenesscosts/. 194 New America Foundation comments on GE Regulations, pp. 17–18 available at www.regulations.gov/document?D=ED-2018-OPE0042-13659. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 Grant per recipient for proprietary institutions ($4,468) for 2019 to 2028 in the PB2020 Pell Baseline, the estimated net budget impact of the GE regulations in the PB2020 Pell baseline is approximately $¥5.2 billion. As was indicated in the Primary Student Response assumption in the 2014 Rule,195 much of this impact was expected to come from the warning that a program could lose eligibility in the next year. If we attribute all of the dropout effect to loss of eligibility, it would generate a maximum estimated Federal net budget impact of the final regulations of $5.2 billion in costs by removing the GE regulations from the PB2020 Pell Grant baseline. The Department also estimated an impact of warnings and ineligibility on Federal student loans in the analysis for the 2014 Rule, that, due to negative subsidy rates for PLUS and Unsubsidized loans at the time, offset the savings in Pell Grants by $695 million.196 The effect of the GE regulations is not specifically identified in the PB2020 baseline, but it is one of several factors reflected in declining loan volume estimates. The development of GE regulations since the first negotiated rulemaking on the subject was announced on May 26, 2009, has coincided with demographic and economic trends that significantly influence postsecondary enrollment, especially in career-oriented programs classified as GE programs under the GE regulation. Enrollment and aid awarded have both declined substantially from peak amounts in 2010 and 2011. As classified under the GE regulations, GE programs serve nontraditional students who may be more responsive to immediate economic trends in making postsecondary education decisions. Non-consolidated title IV loans volume disbursed at proprietary institutions declined 48 percent between AY2010–11 and AY2016–17, compared to a 6 percent decline at public institutions, and a 1 percent increase at private institutions. The average annual loan volume change from AY2010–11 to AY2016–17 was ¥10 percent at proprietary institutions, ¥1 percent at public institutions, and 0.2 percent at private institutions. If we attribute all of the excess decline at 195 See 79 FR 211, Table 3.4: Student Response Assumptions, p. 65077, published October 31, 2014. Available at www.regulations.gov/ document?D=ED-2014-OPE-0039-2390. The dropout rate increased from 5 percent for a first zone result and 15 percent for a first failure to 20 percent for the fourth zone, second failure, or ineligibility. 196 See 79 FR 211, pp. 65081–82, available at www.regulations.gov/document?D=ED-2014-OPE0039-2390. PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 31447 proprietary institutions to the potential loss of eligibility under the GE regulations and increase estimated volume in the 2-year proprietary risk group that has the highest subsidy rate in the PB2020 baseline by the difference in the average annual change (12 percent for subsidized and unsubsidized loans and 9 percent for PLUS), then the estimated net budget impact of the removal of the ineligibility sanction in the final regulations on the Direct Loan program is a cost of $1.04 billion. Therefore, the total estimated net budget impact from the final regulations is $6.2 billion cost in increased transfers from the Federal government to Pell Grant recipients and student loan borrowers and subsequently to institutions, primarily from the elimination of the ineligibility provision of the GE regulation. As in all previous estimates related to Gainful Employment regulations, the estimated effects are associated with borrowers who could no longer enroll in a GE program that loses title IV eligibility and would not enroll in a different program that passes the D/E rates measure, but would instead opt out of a postsecondary education experience. Some commenters submitted research analyzing how CDR-related sanctions in the 1990s resulted in small declines in the aggregate enrollment.197 Other commenters have suggested that 10 percent of students would not enroll in a different program. The transfer rates estimated for the 2014 Rule which ranged from 5 percent for a first zone result to 20 percent for potential ineligibility were in line with the high transfer rate suggested by the commenters. Given the potential for several programs to become ineligible in the same timeframe and for the loss of eligibility to affect grant and loan programs, the Department believes the transfer and dropout rates it used in developing the GE estimates that are now being rescinded are reasonable. The long-term impact to the student and the government of the decision to pursue no postsecondary education could be significant but cannot be estimated for the purpose of this analysis, which does not include longterm macro-economic impacts, such as long-term tax revenue impacts of a workforce with less education. 197 Stephanie R. Cellini, Rajeev Darolia, and Lesley J. Turner, Where Do Students Go When ForProfit Colleges Lose Federal Aid? NBER Working Paper No. 22967 December 2016 JEL No. H52, I22, I23, I28. Available at www.nber.org/papers/ w22967.pdf. Finds a 3 percent decrease in overall enrollment within counties of Pell Grant recipients from sanctions on for-profit institutions. E:\FR\FM\01JYR2.SGM 01JYR2 31448 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations This is a maximum net budget impact and could be offset by student and institutional behavior in response to disclosures in the College Scorecard and other resources. In the 2014 GE rule, the Department stated: ‘‘The costs of program changes in response to the regulations are difficult to quantify generally as they would vary significantly by institution and ultimately depend on institutional behavior.’’ 198 In these final regulations, we follow pervious Department practice where we do not attribute a significant budget impact to disclosure requirements absent substantial evidence that such information will change borrower or institutional behavior. Other factors that could affect these estimates include recent institutional closures, particularly of proprietary institutions whose programs would have been subject to the gainful employment measures. Depending upon where the students who would have attended those programs in the future decide to go instead, the amount of Pell Grants or loans they receive may vary and their earnings and repayment outcomes could also change. The budget impact associated with the rescission of the gainful employment rule would also be affected if significant closures continue and those students pursue programs not subject to the 2014 Rule or leave postsecondary education altogether. 5. Accounting Statement As required by OMB Circular A–4 we have prepared an accounting statement showing the classification of the expenditures associated with this final rule (see Table 4). This table provides our best estimate of the changes in annual monetized transfers as a result of the final rule. The estimated reduced reporting and disclosure burden equals the $¥209 million annual paperwork burden calculated in the Paperwork Reduction Act of 1995 section (and also appearing on page 65004 of the regulatory impact analysis accompanying the 2014 Rule). The annualization of the paperwork burden differs from the 2014 Rule as the annualization of the paperwork burden for that rule assumed the same pattern as the 2011 rule that featured multiple years of data being reported in the first year with a significant decline in burden in subsequent years. TABLE [4]—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES [In millions] Category Benefits Discount rate 7% Reduced reporting and disclosure burden for institutions with GE programs under the GE regulation ................ 3% $209.3 Category $209.3 Costs Discount rate 7% 3% Reduced market information about gainful employment programs; offset by development of College Scorecard for wider range of programs ................................................................................................................................ Unquantified. Category Transfers Discount rate 7% Increased transfers to Pell Grant recipients and student loan borrowers from elimination of ineligibility provision of GE regulation ................................................................................................................................................... 6. Regulatory Alternatives Considered In response to comments received and the Department’s further internal consideration of these final regulations, the Department reviewed and considered various changes to the final regulations detailed in this document. The changes made in response to comments are described in the Analysis of Comments and Changes section of this preamble. We summarize below the major proposals that we considered but which we ultimately declined to implement in these regulations. In particular, the Department extensively reviewed outcome metrics, institutional accountability, sanctions, 3% $593 $608 data disclosure, data appeals, and warning provisions in deciding to rescind the GE regulations. In developing these final regulations, the Department considered the budgetary impact, administrative burden, and effectiveness of the options it considered. khammond on DSKBBV9HB2PROD with RULES2 TABLE [5]—SUMMARY OF ALTERNATIVES Topic Baseline Alternatives NPRM proposal Universe of Coverage .................... GE Programs ................................. None; GE Programs; all programs at all institutions (IHEs); all programs at all IHEs except graduate programs; and all programs at all IHEs except professional dental, and veterinary. None .............. 198 79 FR 65080. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 E:\FR\FM\01JYR2.SGM 01JYR2 Final regs. None. 31449 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations TABLE [5]—SUMMARY OF ALTERNATIVES—Continued Topic Baseline Alternatives NPRM proposal Disclosures: Calculations and posting location. IHEs calculate and post on their website using a Department-provided template. None .............. None. Occupational ments. require- List States where licensure is required and indicate whether program meets requirements. None .............. None. Cohort lists and challenges ........... Lists by Department, challenges available to IHEs. None .............. None. Earnings appeals ........................... Available to IHE and adjudicated by Department. Automatic loss of title IV eligibility in certain circumstances. None; IHEs calculate and post on their website using a Department-provided template; IHEs and Department calculate and IHEs post on program homepage in any format; Department calculates and posts all disclosures on program-level College Scorecard and IHEs post link to College Scorecard on program homepage; and Department calculates and posts all disclosures on program-level College Scorecard and IHEs post mean debt, mean earnings, and a link to College Scorecard on program homepage. None; List States where licensure is required and indicate whether program meets requirements; For State in which institution is located, indicate whether the program meets any certification requirements and list other States for which the institution is aware the program meets certification requirements; and List States where program meets requirements. None; Lists by Department, challenges available to IHEs; Lists by Department, no challenges;. None; and Available to IHE and adjudicated by Department. None; and Automatic loss of title IV eligibility in certain circumstances. None; and Required in certain circumstances. None .............. None. None .............. None. None .............. None. licensure Sanctions ....................................... Warnings ........................................ khammond on DSKBBV9HB2PROD with RULES2 6.1 Required in certain circumstances Baseline We use the 2014 Rule as the baseline. Under the GE regulations, institutions must certify that each of their GE programs meets State and Federal licensure, certification, and accreditation requirements. Also, to maintain title IV, HEA program eligibility, GE programs must meet minimum standards under the D/E rates measure. Programs must issue warnings to their students if they could lose their title IV, HEA program eligibility based on their next year’s D/E rates. Institutions are required to disclose a program’s student outcomes and information such as costs, earnings, debt, and completion rates, and whether the program leads to licensure on the program’s home page. Institutions compute these statistics and enter them into the Department’s GE Disclosure Template. Then, the institution posts the template on its website. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 6.2 Summary of the Final Regulations The Department’s final regulations rescind the 2014 Rule. 6.3 Discussion of Alternatives During negotiated rulemaking, the Department considered expanding the universe of institutions and programs to which the regulations would apply. This would have expanded the burden on institutions compared to the baseline. Various alternatives considered would have affected slightly different groups of institutions by excluding special populations. The final regulations rescind the GE regulations and therefore remove the institutional burden associated with it. Under various universe options, cohort lists would have been created; further, the Department did consider permitting and not permitting challenges to those lists. Ultimately, the lists are eliminated and also the need to challenge them because no cohorts are created under the rescission. PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 Final regs. The Department considered multiple options regarding which metrics to disclose, which entity bears the burden of computing them, and how to disseminate them to students and the public. One option has the Department computing all metrics administratively and publishing them on its College Scorecard and requiring institutions to post a link to the Scorecard on their program pages. Another option shared burden for metric computation by requiring institutions to compute some and the Department to compute the rest administratively; we considered either having institutions develop their own format for posting the data on their websites or providing them a general format to follow, including links to the College Scorecard. Metrics of specific concern included earnings and the appeals thereof as well as occupational licensure requirements. The Department considered eliminating the appeals process to reduce burden on institutions and the Department and allow for E:\FR\FM\01JYR2.SGM 01JYR2 31450 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations smaller cohort sizes, keeping the appeals process to allow institutions to contest earnings reported to the IRS but thereby causing increased burden to the institution and also to the Department, and replacing the appeals process with secondary metrics like repayment rate thereby increasing burden on the Department to compute extra metrics but to a much smaller amount than adjudicating alternate earnings appeals. Ultimately, the Department chose to rescind these regulations; without regulating it, the Department plans to expand its College Scorecard in order to report data at the program level in the future. In accordance with Executive Order 13864, this would accomplish the presidential mandates both to increase transparency and also to deregulation. Finally, the Department considered alternative sanctions scenarios. One option was to make no change relative to the baseline, while another made the sanction discretionary. Further, the Department considered options for when and how to deliver warnings to students when a program is zone or failing. Some options discussed included delivering warnings only by email or only posting on the institution’s website. Other options included only providing the warning upon matriculation whereas others would have required a reminder annually. Under rescission, the sanctions and associated warnings are eliminated. 7. Regulatory Flexibility Act (RFA) Certification The U.S. Small Business Administration (SBA) Size Standards define proprietary institutions as small businesses if they are independently owned and operated, are not dominant in their field of operation, and have total annual revenue below $7,000,000. Nonprofit institutions are defined as small entities if they are independently owned and operated and not dominant in their field of operation. Public institutions are defined as small organizations if they are operated by a government overseeing a population below 50,000. The Department lacks data to identify which public and private, non-profit institutions qualify as small based on the SBA definition. Given the data limitations and to establish a common definition across all sectors of postsecondary institutions, the Department uses its proposed data driven definitions for ‘‘small institutions’’ (Full-time enrollment of 500 or less for a two-year institution or less than two-year institution and 1,000 or less for four-year institutions) in each sector (Docket ID ED–2018–OPE–0027) to certify the RFA impacts of this final rule. The basis of this size classification was described in the NPRM published in the Federal Register July 31, 2018 for the proposed borrower defense rule (83 FR 37242, 37302). The Department has discussed the proposed standard with the Chief Counsel for Advocacy of the Small Business Administration, and while no change has been finalized, the Department continues to believe this approach better reflects a common basis for determining size categories that is linked to the provision of educational services. TABLE 5—SMALL ENTITIES UNDER ENROLLMENT BASED DEFINITION Level khammond on DSKBBV9HB2PROD with RULES2 2-year 2-year 2-year 4-year 4-year 4-year Type Small Total Percent .............................................................. .............................................................. .............................................................. .............................................................. .............................................................. .............................................................. Public .............................................................. Private ............................................................ Proprietary ...................................................... Public .............................................................. Private ............................................................ Proprietary ...................................................... 342 219 2,147 64 799 425 1,240 259 2,463 759 1,672 558 28 85 87 8 48 76 Total ......................................................... ......................................................................... 3,996 6,951 57 When an agency promulgates a final rule, the RFA requires the agency to ‘‘prepare a final regulatory flexibility analysis’’.’’ (5 U.S.C. 604(a)). Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the final rule is not expected to have a significant economic impact on a substantial number of small entities. These final regulations directly affect all institutions with GE programs participating in title IV aid. There were 2,617 institutions in the 2015 GE cohort, of which 1,357 are small entities. The Department has determined that the impact on small entities affected by these final regulations would not be a significant burden and will generate savings for small institutions. For these 1,357 institutions, the effect of these final regulations would be to eliminate GE paperwork burden and potential loss of title IV eligibility. Across all institutions, the net result of the institutional disclosure changes is VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 estimated savings of $209,247,341 annually. Using the 57 percent figure for small institutions in Table 5, the estimated savings of the disclosures in the proposed regulations for small institutions is $119.3 million annually. We believe that the economic impacts of the paperwork and title IV eligibility changes would be beneficial to small institutions. Accordingly, the Secretary hereby certifies that these final regulations would not have a significant economic impact on a substantial number of small entities. 8. Paperwork Reduction Act of 1995 As part of its continuing effort to reduce paperwork and respondent burden, the Department provides the general public and Federal agencies with an opportunity to comment on proposed or continuing, or the discontinuance of, collections of information in accordance with the PRA (44 U.S.C. 3506(c)(2)(A)). This helps ensure that: The public understands the PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 Department’s collection instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Department can properly assess the impact of collection requirements on respondents. Respondents also have the opportunity to comment on the Department’s burden reduction estimates. A Federal agency may not conduct or sponsor a collection of information unless OMB approves the collection under the PRA and the corresponding information collection instrument displays a currently valid OMB control number. Notwithstanding any other provision of law, no person is required to comply with, or is subject to penalty for failure to comply with, a collection of information if the collection instrument does not display a currently valid OMB control number. Comments: One commenter asserted that the Department relied upon E:\FR\FM\01JYR2.SGM 01JYR2 31451 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations anecdote to support its claim of burden being higher than expected upon institutions of higher education regarding providing disclosures to students. The commenter stated that this claim was not substantiated in the Paperwork Reduction Act section of the NPRM. Further, the commenter argued that the Department made no effort to quantify or substantiate its anecdotally supported claims. Discussion: As stated above, while administrative burden is not the only reason that the Department is rescinding the GE regulations, the Department believes that the regulations do impart reporting burdens upon institutions and that requiring all institutions to adhere to GE-like regulations would add considerable burden to institutions and, in turn, costs to students. However, the Department has determined that not only will expanding the College Scorecard provide more comprehensive and useful data to current and prospective students, but since the Department can populate the Scorecard using data schools already reported for other purposes, it will be less burdensome to institutions. Since the Department will provide all of the data, we can be sure it was calculated using the same formula, and that it has the same level of reliability. Further, the final regulations will rescind the GE regulations. That action will eliminate the burden as assessed to the GE regulations in the following previously approved information collections. We will prepare Information Collection Requests, which will be published in the Federal Register upon the effective date of this final rule, to discontinue the currently approved information collections noted below. Changes: None. 1845–0107—GAINFUL EMPLOYMENT DISCLOSURE TEMPLATE * Respondents Burden hours eliminated Individuals ................................................................................................................................................................ For-profit institutions ................................................................................................................................................ Private Non-Profit Institutions .................................................................................................................................. Public Institutions ..................................................................................................................................................... ¥13,953,411 ¥2,526 ¥318 ¥1,117 ¥1,116,272 ¥1,798,489 ¥27,088 ¥176,311 Total .................................................................................................................................................................. ¥13,957,372 ¥3,118,160 1845–0121—GAINFUL EMPLOYMENT PROGRAM—SUBPART R—COHORT DEFAULT RATES Respondents and responses Burden hours eliminated For-profit institutions ................................................................................................................................................ Private Non-Profit Institutions .................................................................................................................................. Public Institutions ..................................................................................................................................................... ¥1,434 ¥47 ¥78 ¥5,201 ¥172 ¥283 Total .................................................................................................................................................................. ¥1,559 ¥5,656 1845–0122—GAINFUL EMPLOYMENT PROGRAM—SUBPART Q—APPEALS FOR DEBT TO EARNINGS RATES Respondents Responses Burden hours eliminated For-profit institutions .................................................................................................................... Private Non-Profit Institutions ...................................................................................................... Public Institutions ......................................................................................................................... ¥388 ¥6 ¥2 ¥776 ¥12 ¥4 ¥23,377 ¥362 ¥121 Total ...................................................................................................................................... ¥396 ¥792 ¥23,860 1845–0123—GAINFUL EMPLOYMENT PROGRAM—SUBPART Q—REGULATIONS khammond on DSKBBV9HB2PROD with RULES2 Respondents Burden hours eliminated Individuals ................................................................................................................................................................ For-profit institutions ................................................................................................................................................ Private Non-Profit Institutions .................................................................................................................................. Public Institutions ..................................................................................................................................................... ¥11,793,035 ¥28,018,705 ¥442,348 ¥2,049,488 ¥1,050,857 ¥2,017,100 ¥76,032 ¥633,963 Total .................................................................................................................................................................. ¥42,303,576 ¥3,777,952 The total burden hours and change in burden hours associated with each OMB VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 Control number affected by the final rule follows: PO 00000 Frm 00061 Fmt 4701 Sfmt 4700 E:\FR\FM\01JYR2.SGM 01JYR2 31452 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations OMB control No. Regulatory section § 668.412 ............................................................................................................................... §§ 668.504, 668.509, 668.510, 668.511, 668.512 ................................................................. § 668.406 ............................................................................................................................... §§ 668.405, 668.410, 668.411, 668.413, 668.414 ................................................................. 1845–0107 1845–0121 1845–0122 1845–0123 ¥3,118,160 ¥5,656 ¥23,860 ¥3,777,952 ¥$91,364,240 ¥206,727 ¥872,083 ¥116,804,291 Total ................................................................................................................................ ........................ ¥6,925,628 ¥209,247,341 Intergovernmental Review These programs are not subject to Executive Order 12372 and the regulations in 34 CFR part 79. Assessment of Educational Impact In accordance with section 411 of GEPA, 20 U.S.C. 1221e–4, the Secretary particularly requests comments on whether the proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available. Accessible Format: Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or compact disc) on request to the program contact person listed under FOR FURTHER INFORMATION CONTACT. Electronic Access to This Document: The official version of this document is the document published in the Federal Register. You may access the official edition of the Federal Register and the Code of Federal Regulations at www.govinfo.gov. At this site you can view this document, as well as all other documents of this Department published in the Federal Register, in text or Adobe Portable Document Format (PDF). To use PDF, you must have Adobe Acrobat Reader, which is available free at the site. You may also access documents of the Department published in the Federal Register by using the article search feature at: www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department. (Catalog of Federal Domestic Assistance Number does not apply.) List of Subjects khammond on DSKBBV9HB2PROD with RULES2 Burden hours Estimated cost $36.55/hour for institutions; $16.30/hour for individuals 34 CFR Part 600 Colleges and universities, Foreign relations, Grant programs-education, Loan programs-education, Reporting and recordkeeping requirements, Selective Service System, Student aid, Vocational education. VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 34 CFR Part 668 Administrative practice and procedure, Aliens, Colleges and universities, Consumer protection, Grant programs-education, Loan programs-education, Reporting and recordkeeping requirements, Selective Service System, Student aid, Vocational education. Dated: June 24, 2019. Betsy DeVos, Secretary of Education. PART 600—INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT OF 1965, AS AMENDED 1. The authority citation for part 600 continues to read as follows: ■ Authority: 20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, and 1099c, unless otherwise noted. 2. Section 600.10 is amended by revising paragraph (c)(1) and (2) to read as follows: ■ § 600.10 Date, extent, duration, and consequence of eligibility. * * * * * (c) Educational programs. (1) An eligible institution that seeks to establish the eligibility of an educational program must— (i) Pursuant to a requirement regarding additional programs included in the institution’s program participation agreement under 34 CFR 668.14, obtain the Secretary’s approval; (ii) For a direct assessment program under 34 CFR 668.10, and for a comprehensive transition and postsecondary program under 34 CFR 668.232, obtain the Secretary’s approval; and (iii) For an undergraduate program that is at least 300 clock hours but less than 600 clock hours and does not admit as regular students only persons Frm 00062 Fmt 4701 3. Section 600.21 is amended by revising the introductory text of paragraph (a)(11) to read as follows: ■ For the reasons discussed in the preamble, and under the authority at 20 U.S.C. 3474 and 20 U.S.C. 1221e-3, the Secretary of Education amends parts 600 and 668 of title 34 of the Code of Federal Regulations as follows: PO 00000 who have completed the equivalent of an associate degree under 34 CFR 668.8(d)(3), obtain the Secretary’s approval. (2) Except as provided under § 600.20(c), an eligible institution does not have to obtain the Secretary’s approval to establish the eligibility of any program that is not described in paragraph (c)(1) of this section. * * * * * Sfmt 4700 § 600.21 Updating application information. (a) * * * (11) For any program that is required to provide training that prepares a student for gainful employment in a recognized occupation— * * * * * PART 668—STUDENT ASSISTANCE GENERAL PROVISIONS 4. The authority citation for part 668 continues to read as follows: ■ Authority: 20 U.S.C. 1001–1003, 1070a, 1070g, 1085, 1087b, 1087d, 1087e, 1088, 1091, 1092, 1094, 1099c, and 1099c–1, 1221e–3, and 3474; Pub. L. 111–256, 124 Stat. 2643; unless otherwise noted. § 668.6 ■ [Removed and Reserved] 5. Remove and reserve § 668.6. 6. Section 668.8 is amended by revising paragraphs (d)(2)(iii) and (d)(3)(iii) to read as follows: ■ § 668.8 Eligible program. * * * * * (d) * * * (2) * * * (iii) Provide training that prepares a student for gainful employment in a recognized occupation; and (3) * * * (iii) Provide undergraduate training that prepares a student for gainful employment in a recognized occupation; * * * * * E:\FR\FM\01JYR2.SGM 01JYR2 Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules and Regulations Subpart Q—[Removed and Reserved] Subpart R—[Removed and Reserved] 7. Remove and reserve subpart Q, consisting of §§ 668.401 through 668.415. ■ ■ 8. Remove and reserve subpart R, consisting of §§ 668.500 through 668.516. [FR Doc. 2019–13703 Filed 6–28–19; 4:15 pm] khammond on DSKBBV9HB2PROD with RULES2 BILLING CODE 4000–01–P VerDate Sep<11>2014 18:51 Jun 28, 2019 Jkt 247001 PO 00000 Frm 00063 Fmt 4701 Sfmt 9990 E:\FR\FM\01JYR2.SGM 01JYR2 31453

Agencies

[Federal Register Volume 84, Number 126 (Monday, July 1, 2019)]
[Rules and Regulations]
[Pages 31392-31453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13703]



[[Page 31391]]

Vol. 84

Monday,

No. 126

July 1, 2019

Part II





 Department of Education





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34 CFR Parts 600 and 668





 Program Integrity: Gainful Employment; Final Rule

Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules 
and Regulations

[[Page 31392]]


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DEPARTMENT OF EDUCATION

34 CFR Parts 600 and 668

[Docket ID ED-2018-OPE-0042]
RIN 1840-AD31


Program Integrity: Gainful Employment

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Final regulations.

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SUMMARY: The Secretary of the Department of Education (Department) 
amends the regulations on institutional eligibility under the Higher 
Education Act of 1965, as amended (HEA), and the Student Assistance 
General Provisions to rescind the Department's gainful employment (GE) 
regulations (2014 Rule).

DATES: 
    Effective date: These regulations are effective July 1, 2020.
    Implementation date: For the implementation date of these 
regulatory changes, see the Implementation Date of These Regulations 
section of this document.

FOR FURTHER INFORMATION CONTACT: Scott Filter, U.S. Department of 
Education, 400 Maryland Avenue SW, Room 290-42, Washington, DC 20202. 
Telephone (202) 453-7249. Email: [email protected].
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll free at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION:

Executive Summary

    Purpose of This Regulatory Action: This regulatory action rescinds 
the GE regulations and removes and reserves subpart Q of the Student 
Assistance General Provisions in 34 CFR part 668. This regulatory 
action also rescinds subpart R of the Student Assistance and General 
Provisions in 34 CFR part 668.
    As discussed in the sections below, the Department has determined 
that the GE regulations rely on a debt-to-earnings (D/E) rates formula 
that is fundamentally flawed and inconsistent with the requirements of 
currently available student loan repayment programs, fails to properly 
account for factors other than institutional or program quality that 
directly influence student earnings and other outcomes, fails to 
provide transparency regarding program-level debt and earnings outcomes 
for all academic programs, and wrongfully targets some academic 
programs and institutions while ignoring other programs that may result 
in lesser outcomes and higher student debt. Although the GE regulation 
applies to less-than-degree programs at non-profit institutions, this 
represents a very small percentage of academic programs offered by non-
profit institutions.

                                              Table 1-1--Reporting Overview of Gainful Employment Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            GE Programs
                                          qualifying for
                                            calculation     GE programs    Percent of GE    GE programs    Percent of GE    Failing GE     Failure rate
          School classification              (based on       published       programs      not published   programs not      programs           (%)
                                               NSLDS                       published (%)                   published (%)
                                            reporting)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proprietary.............................           9,838           5,676           57.70           4,162           42.30             727           12.80
Non-profit..............................          18,962           2,956           15.60          16,006           84.40              16            0.50
Foreign.................................              17               5           29.40              12           70.60               0            0.00
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................          28,817           8,637           30.00          20,180           70.00             743            8.60
--------------------------------------------------------------------------------------------------------------------------------------------------------
Data from Federal Student Aid.

    As table 1-1 shows only 16 percent (2,956) of the 18,962 GE 
programs at non-profit institutions meet the 30-student cohort size 
requirement. Therefore, only a small minority of those programs are 
subject to the D/E rates calculation and certain reporting 
requirements. On the other hand, all programs at proprietary 
institutions--including undergraduate, graduate, and professional 
programs--are considered to be GE programs, and 58 percent (5,676) of 
programs meet the minimum student threshold to report outcomes to the 
public. As a result, the GE regulations have a disparate impact on 
proprietary institutions and the students these institutions serve. The 
regulations also fail to provide transparency to students enrolled in 
poorly performing degree programs at non-profit institutions and fail 
to provide comparison information for students who are considering 
enrollment options at both non-profit and proprietary institutions. 
Specifically, the Department's review of research findings published 
subsequent to the 2014 Rule, our review of the 2015 Final GE rates 
(published in 2017),\1\ and our review of a sample of GE disclosure 
forms published by proprietary and non-profit institutions, has led the 
Department to conclude the following: (1) As a cornerstone of the GE 
regulations, the D/E rates measure \2\ is an inaccurate and unreliable 
proxy for program quality and incorporates factors into the calculation 
that inflate student debt relative to actual repayment requirements; 
(2) the D/E rates thresholds, used to differentiate between 
``passing,'' ``zone,'' and ``failing'' programs, lack an empirical 
basis; and (3) the disclosures required by the GE regulations include 
some data, such as job placement rates, that are highly unreliable and 
may not provide the information that students and families need to make 
informed decisions about higher education options.
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    \1\ ``Gainful Employment Information,'' Federal Student Aid, 
studentaid.ed.gov/sa/about/data-center/school/ge?src=press-release.
    \2\ Note: The term ``D/E rates measure'' is used in the 2014 
Rule. Although the Department views this term as redundant, we use 
it here for clarity and consistency.
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    In addition, since the Social Security Administration (SSA) has not 
signed a new Memorandum of Understanding (MOU) with the Department to 
share earnings data, the Department is currently unable to calculate D/
E rates, which serve as the basis of the 2014 Rule's accountability 
framework.\3\ The GE regulations specify that SSA data must be used to 
calculate D/E rates, meaning that other government data sources cannot 
be used to calculate those rates. Because the Department was

[[Page 31393]]

unaware at the time of negotiated rulemaking and publication of the 
notice of proposed rulemaking (NPRM) (83 FR 40167) that SSA would not 
renew the MOU, we did not address this issue, nor did we suggest, or 
seek comment on, the potential use of earnings data from the Internal 
Revenue Service (IRS) or the Census Bureau to calculate D/E rates. 
Therefore, switching to IRS or Census Bureau data for the purpose of 
calculating D/E rates would require additional negotiated rulemaking. 
However, since the Department has decided to rescind the GE 
regulations, the data source for calculating D/E rates is moot.
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    \3\ ``Amended Information Exchange Agreement Between the 
Department of Education and the Social Security Administration for 
Aggregate Earnings Data, ED Agreement No. 10012, SSA IEA No. 325,'' 
www.warren.senate.gov/imo/media/doc/ED%20Agreements1.pdf.
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    The 2014 Rule was developed in response to concerns about poor 
outcomes among GE programs that left students with debt that was 
outsized, relative to student earnings in the early years of student 
loan repayment. For example, the Department pointed to cohort default 
rates (CDRs) that were disproportionately high among students who 
enrolled at or completed their educational programs at proprietary 
institutions as an indication that the education provided was of lower 
quality.\4\
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    \4\ 79 FR 64908.
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    However, research published in 2014--and discussed throughout this 
document--but not considered during the Department's development of the 
2014 Rule, confirms that CDRs are largely influenced by the 
demographics and socioeconomic status of borrowers, and not necessarily 
institutional quality.\5\ This makes CDRs a poor proxy for 
institutional quality, and therefore insufficiently justifies the GE 
regulations.
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    \5\ Lance Lochner and Alexander Monge-Naranjo, ``Default and 
Repayment Among Baccalaureate Degree Earners, National Bureau of 
Economic Research,'' NBER working paper 19882, Revised, March 2014, 
www.nber.org/papers/w19882.
---------------------------------------------------------------------------

    The 2014 paper also shows that CDRs disproportionately single-out 
institutions that serve larger percentages of African-American students 
or single mothers, since these demographic groups default at higher 
rates and sooner after entering repayment than other borrowers.\6\ The 
authors of this study point to reduced parental wealth transfers to 
minority students as the reason that defaults are higher among this 
group. As a result, institutions that serve larger proportions of 
minority students will likely have higher CDRs than an institution of 
equal quality that serves mostly white or more socioeconomically 
advantaged students. Thus, higher CDRs among minority students may be a 
strong sign of lingering societal inequities among different racial 
groups, but not conclusive evidence that an institution is failing its 
students. The Department now recognizes that a number of studies used 
to support its earlier rulemaking efforts relied on comparisons between 
costs and debt levels among students who enrolled at community colleges 
and those who enrolled at proprietary institutions. However, this is an 
illegitimate comparison since in 2014, 53 percent of proprietary 
institutions were four-year institutions, and 63 percent of students 
enrolled at proprietary institutions were enrolled at four-year 
institutions.\7\ Therefore, with regard to costs and student debt 
levels, comparisons with four-year institutions are more appropriate.
---------------------------------------------------------------------------

    \6\ Lance Lochner and Alexander Monge-Naranjo, ``Default and 
Repayment Among Baccalaureate Degree Earners, National Bureau of 
Economic Research,'' NBER working paper 19882, Revised, March 2014, 
www.nber.org/papers/w19882; see also: Government Accountability 
Office, ``Proprietary Schools: Stronger Department of Education 
Oversight Needed to Help Ensure Only Eligible Students Receive 
Federal Student Aid,'' August 2009, www.gao.gov/new.items/d09600.pdf.
    \7\ Stephanie Riegg Cellini and Rajeev Davolia, Different 
degrees of debt: Student borrowing in the for-profit, nonprofit, and 
public sectors. Brown Center on Education Policy at Brookings. June 
2016.
---------------------------------------------------------------------------

    Comparisons between students who attend community colleges and 
those who attend proprietary institutions may be appropriate, 
especially since both are generally open-enrollment institutions. 
However, research published by the Brown Center in 2016 shows that 
there are considerable differences between the characteristics of 
students who enroll at proprietary institutions and those who enroll at 
two-year public institutions.\8\ Students who enroll at proprietary 
institutions are far more likely to be financially independent (80 
percent vs. 59 percent); part of an underrepresented minority group (52 
percent vs. 44 percent); or a single parent (33 percent vs. 18 percent) 
than students enrolled at community colleges. Students enrolled at 
proprietary institutions are also slightly less likely to have a parent 
who completed high school (84 percent vs. 87 percent); and are much 
less likely to have a parent who completed a bachelor's degree or 
higher (22 percent vs. 30 percent). These differences in 
characteristics may explain disparities in student outcomes, including 
higher borrowing levels and student loan defaults among students who 
enroll at proprietary institutions.
---------------------------------------------------------------------------

    \8\ Stephanie Riegg Cellini and Rajeev Davolia, Different 
degrees of debt: Student borrowing in the for-profit, nonprofit, and 
public sectors. Brown Center on Education Policy at Brookings. June 
2016.
---------------------------------------------------------------------------

    Research published in 2015 by Sandy Baum and Martha Johnson pointed 
to student and family demographics, as well as length of time in 
school, as key determinants of borrowing.\9\ Therefore, research 
published subsequent to promulgation of the 2014 Rule showed that 
differences in borrowing levels and student outcomes may well be 
attributable to student characteristics and may not accurately indicate 
institutional quality or be influenced by institutional tax status.
---------------------------------------------------------------------------

    \9\ Sandy Baum and Martha Johnson. Student Debt: Who Borrows 
Most? What Lies Ahead? Urban Institute, April 2015, www.urban.org/sites/default/files/alfresco/publication-pdfs/2000191-Student-Debt-Who-Borrows-Most-What-Lies-Ahead.pdf.
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    The Department has also come to realize that unlike CDRs that 
measure borrower behavior in the first three years of repayment, 
lifecycle loan repayment rates more accurately illustrate the 
challenges that the majority of students are having in repaying their 
student loan debt and the need to look beyond one sector of higher 
education to solve this problem. In 2015, the Department began 
calculating institution-level student loan repayment rates in order to 
include those rates in its newly introduced College Scorecard and 
reported that the majority of borrowers at most institutions were 
paying down their principal and interest.
    However, in January 2017, the Department reported that it had 
discovered a coding error, making the repayment data it had published 
earlier incorrect.\10\ Though the Department's announcement downplayed 
the magnitude of this error, both Robert Kelchen, assistant professor 
of higher education at Seton Hall, and Kim Dancy, a New America policy 
analyst, independently found that the error was significant.\11\
---------------------------------------------------------------------------

    \10\ ``Updated Data for College Scorecard and Financial Aid 
Shopping Sheet,'' Published: January 13, 2017, ifap.ed.gov/eannouncements/011317UpdatedDataForCollegeScorecardFinaidShopSheet.html; Dancy, Kim 
and Ben Barrett, ``Fewer Borrowers Are Repaying Their Loans Than 
Previously Thought,'' New America, January 13, 2017, 
www.newamerica.org/education-policy/edcentral/fewer-borrowers-are-repaying-their-loans-previously-thought/; Kelchen, Robert, ``How 
Much Did A Coding Error Affect Student Loan Repayment Rates?'' 
Personal Blog Post, January 13, 2017, robertkelchen.com/2017/01/13/how-much-did-a-coding-error-affect-student-loan-repayment-rates/.
    \11\ Paul Fain, ``College Scorecard Screwup,'' Inside Higher Ed, 
Published: January 16, 2017, www.insidehighered.com/news/2017/01/16/feds-data-error-inflated-loan-repayment-rates-college-scorecard; see 
also: Robert Kelchen, Higher Education Accountability (Baltimore: 
John Hopkins University Press, 2018), 54-55.
---------------------------------------------------------------------------

    Prior to correcting the error, it was determined that three years 
into repayment, 61 percent of borrowers were paying down their loans--
meaning that these borrowers had reduced their principal by at least 
one dollar. This reinforced the belief that only a

[[Page 31394]]

minority of borrowers were struggling to repay debt--such as borrowers 
who attended proprietary institutions.
    However, once the error was corrected, it became clear that 
repayment rates were actually much lower. The corrected data reveals 
that only 41 percent of borrowers in their third year of repayment were 
paying down their loan balances by at least one dollar. As noted by 
Dancy, ``the new data reveal that the average institution saw less than 
half of their former students managing to pay even a dollar toward 
their principal loan balance three years after leaving school.'' \12\
---------------------------------------------------------------------------

    \12\ Dancy and Barrett, www.newamerica.org/education-policy/edcentral/fewer-borrowers-are-repaying-their-loans-previously-thought/.
---------------------------------------------------------------------------

    The 2017 corrected repayment rate data led the Department to 
conclude that the transparency and accountability frameworks created by 
the GE regulations were insufficient to address the student borrowing 
and under-payment problem of this magnitude, as the GE regulations 
apply to only a small proportion of higher education programs.\13\ In 
order to enable all students to make informed enrollment and borrowing 
decisions, the Department sought an alternative to the GE regulations 
that would include all title IV-eligible institutions and programs.
---------------------------------------------------------------------------

    \13\ www.higheredtoday.org/2018/01/12/increasing-community-college-completion-rates-among-low-income-students//.
---------------------------------------------------------------------------

    The GE regulations failed to equitably hold all institutions 
accountable student outcomes, such as student loan repayment. However, 
the Department could not simply expand the GE regulations to include 
all title IV programs since the term ``gainful employment'' is found 
only in section 102 of the HEA. This section extends title IV 
eligibility to non-degree programs at non-profit and institutions and 
all programs at proprietary institutions, and at the same time 
restricts the application of the GE regulations to those same programs 
and institutions. Therefore, without a statutory change, there was no 
way to expand the GE regulations to apply to all institutions.
    As a result, the Department engaged in negotiated rulemaking to 
evaluate the accuracy and usefulness of the GE regulations and to 
explore the possibility of creating a ``GE-like'' regulation that could 
be applied to all institutions and programs. The Department sought to 
develop a new transparency and accountability framework that would 
apply to all institutions and programs, likely through the Program 
Participation Agreement (PPA).
    Unfortunately, negotiations ended having failed to reach consensus 
on how to improve the accuracy, validity, and reliability of the GE 
regulations, and having failed to develop a valid GE-like standard that 
could serve as the basis for an appropriate and useful accountability 
and transparency framework for all title IV-participating programs.
    In 2018, the Department's office of Federal Student Aid (FSA) 
determined that the student loan repayment situation was more dire than 
we originally thought. Analysis of 2018 third quarter data showed that 
only 24 percent of loans, or $298 billion, are being reduced by at 
least one dollar of principal plus interest, and that 43 percent of all 
outstanding loans, or $505 billion, are in distress, meaning they are 
at risk, either through negatively amortizing Income-Driven Repayment 
(IDR) plans, 30 plus days delinquent, or in default.\14\ These data 
reinforce the need for an accountability and transparency framework 
that applies to all title IV programs and institutions.
---------------------------------------------------------------------------

    \14\ ``U.S. Secretary of Education Betsy DeVos Warns of Looming 
Crisis in Higher Education,'' Published: November 27, 2018, 
www.ed.gov/news/press-releases/us-secretary-education-betsy-devos-warns-looming-crisis-higher-education; Analysis of FSA Loan 
portfolio with NSLDS Q12018, Federal Reserve Economic Data (Credit 
card delinquencies average for all commercial banks).
---------------------------------------------------------------------------

    Failing to have reached consensus during negotiations, the 
Department determined that the best way to improve transparency and 
inform students and parents was through the development of a 
comprehensive, market-based, accountability framework that provides 
program-level debt and earnings data for title IV programs. The College 
Scorecard was selected as the tool for delivering those data, and by 
expanding the Scorecard to include program-level data, all students 
could make informed enrollment and borrowing decisions.
    Given the Department's general authority to collect and report data 
related to the performance of title IV programs, the Department is not 
required to engage in rulemaking to modify the College Scorecard. 
However, to address concerns that by rescinding the 2014 Rule some 
students would be more likely to make poor educational investments, the 
Department describes in this document our preliminary plans for the 
expansion of the College Scorecard.
    As outlined in President Trump's Executive Order on Improving Free 
Inquiry, Transparency, and Accountability at Colleges and 
Universities,\15\ the Department plans to expand the College Scorecard 
to include the following program-level data: (1) Program size; (2) the 
median Federal student loan debt and the monthly payment associated 
with that debt based on a standard repayment period; (3) the median 
Graduate PLUS loan debt and the monthly payment associated with that 
debt based on a standard repayment period; (4) the median Parent PLUS 
loan debt and the monthly payment associated with that debt based on a 
standard repayment period; and (5) student loan default and repayment 
rates.
---------------------------------------------------------------------------

    \15\ www.whitehouse.gov/presidential-actions/executive-order-improving-free-inquiry-transparency-accountability-colleges-universities/
---------------------------------------------------------------------------

    In addition to the information above, College Scorecard will 
continue to include institution-level data, such as admissions 
selectivity, student demographics, and student socioeconomic status. 
This information will provide important context to help students 
compare outcomes among institutions that serve demographically matched 
populations or that support similar educational missions.
    The College Scorecard ensures that accurate and comparable 
information is disclosed about all programs and institutions. It 
provides a centralized access point that enables students to compare 
outcomes easily without visiting multiple institution or program 
websites and with the certainty that the data they are reviewing were 
produced by a Federal agency. This eliminates the potential for 
institutions to manipulate or exaggerate data, which is possible when 
data are self-reported by institutions.
    As a result of these changes, students and parents will have access 
to comparable information about program outcomes at all types of title 
IV-participating institutions, thus expanding higher education 
transparency. Students will be able to make enrollment choices informed 
by debt and earnings data, thus enabling a market-based accountability 
system to function. These changes will also help taxpayers understand 
where their investments have generated the highest and lowest returns.
    Summary of the Major Provisions of This Regulatory Action: The 
Department rescinds 34 CFR part 668, subpart Q--Gainful Employment 
Programs.\16\ The

[[Page 31395]]

term ``gainful employment'' was added to the HEA in 1968 to describe 
training programs that gained eligibility to participate in title IV, 
HEA programs. The 2014 Rule defined ``gainful employment'' based on 
economic circumstances rather than educational goals, created a new D/E 
rates measure to distinguish between passing and failing programs, and 
established other reporting, disclosure, and certification requirements 
applicable only to GE programs.
---------------------------------------------------------------------------

    \16\ Note: Agencies ``obviously'' have broad discretion when 
reconsidering a regulation. Clean Air Council v. Pruitt, 862 F.3d 1, 
8 (D.C. Cir. 2017). As the Supreme Court has noted: ``An initial 
agency interpretation is not instantly carved in stone,'' rather an 
agency ``must consider varying interpretations and the wisdom of its 
policy on a continuing basis.'' Chevron U.S.A. Inc. v. NRDC, Inc., 
467 U.S. 837, 864-865 (1984). Significantly, this is still true in 
cases where the agency's review is undertaken in response to a 
change in administrations. National Cable & Telecommunications 
Ass'n. v. Brand X Internet Services, 545 U.S. 967, 981 (2005).
---------------------------------------------------------------------------

    By rescinding subpart Q, the Department is eliminating the D/E 
rates measure, which is an inaccurate and unreliable proxy for quality, 
including the use of the 8 percent debt-to-earnings threshold and the 
20 percent debt-to-discretionary-income threshold as the requirement 
for continued eligibility of GE programs. By rescinding subpart Q, we 
also eliminate the requirement for institutions to issue warnings, 
including hand-delivered notifications, in any year in which a program 
is at risk of losing title IV eligibility based on the next year's D/E 
rates.
    Rescinding the GE regulations also eliminates the need for 
institutions to report certain data elements to the Department in order 
to facilitate the calculation of D/E rates. It also eliminates 
requirements for GE programs to publish disclosures that include the 
following: Program length; program enrollment; loan repayment rates; 
total program costs; job placement rates; percentage of enrolled 
students who received a title IV or private loan; median loan debt of 
those who completed and those who withdrew from the program; program-
level cohort default rates; annual earnings; whether or not the program 
meets the educational prerequisites for professional licensure or 
certification in each State within the institution's metropolitan 
service area or for any State for which the institution has determined 
that the program does not meet those requirements; whether the program 
is programmatically accredited and the name of the accrediting agency; 
and a link to the College Navigator website. The table in Appendix A 
compares the information that was made available to students and 
parents through the 2017 GE disclosure template with the information 
that will be provided through the expanded College Scorecard or other 
consumer information tools, such as College Navigator. Disclosure 
requirements are also being included in other rulemaking efforts, 
including Borrower Defense regulations and Accreditation and Innovation 
regulations.
    In addition, by rescinding subpart Q, the Department is also 
eliminating requirements regarding alternate earnings appeals, 
reviewing and correcting program completer lists, and providing 
certification by the institution's most senior executive officer that 
the programs meet the prerequisite education requirements for State 
licensure or certification.
    Finally, the Department rescinds 34 CFR part 668, subpart R--
Program Cohort Default Rate, including instructions for calculating 
those rates and disputing or appealing incorrect rates provided by the 
Secretary. As the Department only contemplated calculating those rates 
as part of the disclosures under the GE regulations, we can find no 
compelling reason to maintain subpart R and did not identify public 
comments to this aspect of the proposed regulations. We note that the 
HEA requires the Department to calculate institutional cohort default 
rates, and regulations regarding the calculation of those rates are in 
34 CFR 668.202.
    Authority for this Regulatory Action: Section 410 of the General 
Education Provisions Act provides the Secretary with authority to make, 
promulgate, issue, rescind, and amend rules and regulations governing 
the manner of operations of, and governing the applicable programs 
administered by, the Department. 20 U.S.C. 1221e-3. Furthermore, under 
section 414 of the Department of Education Organization Act, the 
Secretary is authorized to prescribe such rules and regulations as the 
Secretary determines necessary or appropriate to administer and manage 
the functions of the Secretary or the Department. 20 U.S.C. 3474. These 
authorities, together with the provisions in the HEA, permit the 
Secretary to disclose information about title IV, HEA programs to 
students, prospective students, and their families, the public, 
taxpayers, and the Government, and institutions. Further, section 431 
of the Department of Education Organization Act provides authority to 
the Secretary, in relevant part, to inform the public about federally 
supported education programs and collect data and information on 
applicable programs for the purpose of obtaining objective measurements 
of the effectiveness of such programs in achieving the intended 
purposes of such programs. 20 U.S.C. 1231a.
    For the reasons described in the NPRM and below, the Department 
believes that the GE regulations do not align with the authority 
granted by section 431 of the Department of Education Organization Act 
since the D/E rates measure that underpins the GE regulations does not 
provide an objective measure of the effectiveness of such programs.
    Costs and Benefits: The Department believes that the benefits of 
these final regulations outweigh the costs. There will be one primary 
cost and several outweighing benefits associated with rescinding the GE 
regulations. The primary cost is that some programs that may have 
failed the D/E rates measure, and as a result lose title IV 
eligibility, will continue to participate in title IV, HEA programs. In 
instances in which the program failed because it truly was a low-
quality program, there is a cost associated with continuing to provide 
title IV support to such a program, especially if doing so burdens 
students with debt they cannot repay or an educational credential that 
does not improve their employability. However, there are numerous 
benefits associated with eliminating the GE regulations, including: (1) 
Programs producing poor earnings outcomes will not escape notice simply 
because taxpayer subsidies make the program less costly to students; 
(2) programs that prepare students for high-demand careers will be less 
likely to lose title IV eligibility just because those high-demand 
careers do not pay high wages; (3) students will not inadvertently 
select a non-GE program with less favorable student outcomes than a 
comparable GE program simply because non-GE programs are not subject to 
the GE regulations; (4) institutions will save considerable time and 
money by eliminating burdensome reporting and disclosure requirements; 
(5) all students will retain the right to enroll in the program of 
their choice, rather than allowing government to decide which programs 
are worth of a student's time and financial investment; and (6) by 
providing debt and earnings data for all title IV programs through the 
College Scorecard, all students will be able to identify programs with 
better outcomes or limit borrowing based on what they are likely to be 
able to repay. The Department believes that the benefits outweigh the 
costs since all students will benefit from choice and transparency.
    Implementation Date of These Regulations: These regulations are 
effective on July 1, 2020. Section 482(c) of the HEA requires that 
regulations affecting programs under title IV of the

[[Page 31396]]

HEA be published in final form by November 1, prior to the start of the 
award year (July 1) to which they apply. However, that section also 
permits the Secretary to designate any regulation as one that an entity 
subject to the regulations may choose to implement earlier, as well as 
the conditions for early implementation.
    The Secretary is exercising her authority under section 482(c) of 
the HEA to designate the regulatory changes to subpart Q and subpart R 
of the Student Assistance General Provisions at title 34, part 668, of 
the Code of Federal Regulations, included in this document, for early 
implementation beginning on July 1, 2019, at the discretion of each 
institution.
    Public Comment: In response to our invitation in the NPRM, 13,921 
parties submitted comments on the proposed regulations. In this 
preamble, we respond to those comments, which we have grouped by 
subject. Generally, we do not address technical or other minor changes.
    Analysis of Public Comments: An analysis of the public comments 
received follows.

Scope and Purpose

    Comments: Many commenters indicated they supported rescinding the 
GE regulations because defining ``gainful employment'' using a bright-
line debt-to-earnings standard is complicated and does not accurately 
differentiate between high-quality and low-quality programs, or 
programs that do and do not meet their learning objectives. A number of 
commenters also supported the Department's decision to rescind the GE 
regulations because they believe the regulations discriminate against 
career and technical education (CTE) programs and the students who 
enroll in them. Some suggested that the GE regulations signal to 
students that CTE is less valuable than traditional liberal arts 
education since the Department, as a result of the GE regulations, was 
holding traditional degree programs to a lower standard. Other 
commenters expressed concern that the GE regulations discriminate 
against institutions based on their tax status.
    Several commenters stated that the GE regulations threaten to limit 
access to necessary workforce development programs at community 
colleges and at proprietary schools, as a result of the increased 
accountability for CTE programs as compared to liberal arts and 
humanities programs. Another commenter expressed concern that the D/E 
rates measure ignores or exempts a significant number of programs with 
the worst outcomes, simply because those programs are offered by public 
and non-profit institutions or receive taxpayer subsidies in the form 
of direct appropriations rather than or in addition to Pell grants and 
title IV loans.
    Multiple commenters supported the rescission of the GE regulations 
because, in their opinion, the GE regulations would otherwise force the 
closure of programs and potentially entire institutions that serve 
minority, low-income, adult, and veteran students.
    One commenter highlighted the lack of guidance from Congress on the 
meaning of ``gainful employment,'' and asserted that in the absence of 
that guidance, the Department contrived a complicated regulation that 
has yielded ``a patchwork of complicated and inconsistent rules that 
have left schools buried in paperwork with no real measure of whether 
students have benefited.''
    Some commenters suggested that any institution could ensure that 
they will pass the D/E rates measure by lowering tuition. Several 
commenters submitted a joint comment opposing the rescission of the 
2014 Rule. They argued that the rescission is arbitrary and capricious 
because it ignores both the benefits of the 2014 Rule and the data 
analysis supporting the 2014 Rule. The commenters noted that Congress 
had reason to require that for-profit programs be subject to increased 
supervision. They cited a post on the Federal Reserve Bank of New 
York's blog that states that attending a four-year private for-profit 
college is the strongest predictor of default, even more so than 
dropping out.\17\ They cited evidence that students who attend for-
profit institutions are 50 percent more likely to default on a student 
loan than students who attend community colleges.\18\ The commenters 
also argued that a rise in enrollment in the for-profit sector 
corresponded with reports of fraud, low earnings, high debt, and a 
disproportionate amount of student loan defaults. They claimed that of 
the 10 percent of institutions with the lowest repayment rates, 70 
percent were for-profit institutions. They argued that because poor 
outcomes are concentrated in for-profit programs, the 2014 Rule is 
justified.
---------------------------------------------------------------------------

    \17\ Rajashri Chakrabarti, Nicole Gorton, Michelle Jiang, and 
Wilbert van der Klaauw, ``Who is Likely to Default on Student 
Loans?'' Liberty Street Economics, November 20, 2017, 
libertystreeteconomics.newyorkfed.org/2017/11/who-is-more-likely-to-default-on-student-loans.html.
    \18\ Scott-Clayton, Judith (2018). ``What accounts for gaps in 
student loan default, and what happens after.'' Brookings Evidence 
Speaks Reports, 2(57).
---------------------------------------------------------------------------

    Commenters also noted that students enrolled in programs that close 
generally re-enroll in nearby non-profit or public institutions and 
that shifting aid to better performing institutions will result in 
positive impacts for students. They also cited evidence \19\ that, 
after enrollment in for-profit programs declined in California, local 
community colleges increased their capacity. They argued that in light 
of these examples, the 2014 Rule would not reduce college access for 
students but would rather direct them into programs that are more 
beneficial in the long term.
---------------------------------------------------------------------------

    \19\ Cellini, Stephanie Riegg (2010). ``Financial Aid and For-
Profit Colleges: Does Aid Encourage Entry?'' Journal of Policy 
Analysis and Management. 29(3): 526-52.
---------------------------------------------------------------------------

    One commenter disagreed with the Department for citing the Bureau 
of Labor Statistics (BLS) Job Openings and Labor Turnover Survey as 
evidence that certain jobs are ``unfilled due to the lack of qualified 
workers.'' \20\ The commenter also stated that there is no evidence 
that the job openings in the BLS survey relate in any way to GE 
programs. Another commenter stated that the Department should withdraw 
its claim based on this study because the BLS press release did not 
note any relation to gainful employment.
---------------------------------------------------------------------------

    \20\ U.S. Department of Labor. July 2018. ``Job Openings and 
Labor Turnover Summary.'' www.bls.gov/news.release/jolts.nr0.htm.
---------------------------------------------------------------------------

    Discussion: The Department appreciates the support received from 
many commenters who agreed that the D/E rates measure is a 
fundamentally flawed and unreliable quality indicator and that the 
limited applicability of the 2014 Rule to some, but not all, higher 
education programs makes it an inadequate solution for informing 
consumer choice and addressing loan default issues. Further, the 
Department agrees that the formula for deriving D/E rates is 
complicated and that it may be difficult for students and parents to 
understand how it was calculated and how to apply it to their own 
situation to determine what their likely debt and earnings outcomes 
will be.
    The Department shares the concern of commenters who predicted that 
the GE regulations would result in reduced access to certain CTE 
focused programs. However, since no programs have lost eligibility as 
of yet, it is impossible to know for certain what longer-term impacts 
the GE regulations would have had. That said, some commenters have 
pointed to programs like Harvard's graduate certificate program in 
theater,\21\ which was discontinued in part because the university knew 
that

[[Page 31397]]

the program would not pass the D/E rates measure, and large closures 
among art and design or culinary schools as evidence that some schools 
voluntarily discontinued programs in order to avoid sanctions under the 
GE regulations.
---------------------------------------------------------------------------

    \21\ https://www.nytimes.com/2017/07/17/theater/harvard-graduate-theater-art-paulus.html.
---------------------------------------------------------------------------

    The Department agrees with commenters that the D/E rates measure 
does not accurately differentiate between high- and low-quality 
programs or eliminate programs that produce the worst outcomes, since 
programs that generate much lower earnings can pass the D/E rates 
measure simply because taxpayers rather than students pay some of the 
cost of the education provided, thus reducing the price students pay.
    For example, a Colorado public community college's massage therapy 
program passed the D/E rates measure despite having mean annual 
earnings of $9,516, whereas a comparable program at a Colorado 
proprietary institution that resulted in earnings of $15,929 failed the 
D/E rates measure. The Department understands that high student loan 
debt can be burdensome to students, especially to those who earn low 
wages. However, it is difficult to argue that the program yielding 
earnings of $9,516 is higher quality than one that yields earnings of 
$15,929. As is the case with four-year public and private institutions, 
tuition is higher at institutions that receive fewer public subsidies.
    To provide another example, consider that in Ohio, a medical 
assistant program at a community college passed the D/E rates measure 
even though its graduates had median annual earnings of $14,742. 
Meanwhile, a medical assistant program at a proprietary institution in 
Ohio failed the D/E rates measure even though its graduates posted 
median earnings of $21,737. In Arizona, two proprietary institutions' 
interior design programs failed the D/E rates measure, despite having 
significantly higher median annual earnings ($31,844 and $32,046) than 
a nearby community college program ($19,493).
    As stated by Cooper and Delisle with regard to the D/E rates 
measure, ``the danger here is that a program at a public institution 
may provide a low return on investment from a societal perspective, but 
pass the GE rule anyway because a large portion of the cost of 
providing it is not taken into account.'' \22\ Cooper and Delisle state 
that this creates a distortion effect that may render student choices 
as rational for themselves, but disadvantageous to society.\23\ In 
other words, while taxpayer subsidies to public institutions ensure 
that they pass the D/E rates measure, that may hide from students and 
taxpayers the amount of funding that is being used to administer 
ineffective programs and may fool students into enrolling in a program 
that has passing D/E rates without realizing that the earnings 
generated by the program do not justify the direct, indirect, or 
opportunity costs of obtaining that education. Although there are low-
performing programs in all sectors, students have received only limited 
information about them because the GE regulations do not apply to 
programs in all sectors.
---------------------------------------------------------------------------

    \22\ Cooper, Preston and Jason D. Delisle, ``Measuring Quality 
or Subsidy? How State Appropriations Rig the Federal Gainful 
Employment Test,'' American Enterprise Institute, March 2017, 
www.luminafoundation.org/files/resources/measuring-quality-or-subsidy.pdf.
    \23\ Ibid. Note: The authors also suggest that the application 
of the 2014 Rule to public institutions would also be insufficient. 
Since public institutions still benefit from direct appropriations, 
the uneven playing field would still exist and disadvantage some 
institutions over others.
---------------------------------------------------------------------------

    As is the case among all private institutions, the absence of State 
and local taxpayer subsidies means that students bear a larger portion 
of the cost of education, which generally means that tuition and fees 
are higher than at public institutions. Even at public institutions, 
students who are from outside of the State or the country pay tuition 
and fees that more closely resemble those of private institutions, thus 
demonstrating the impact of direct appropriations on subsidizing 
tuition costs for State residents. Yet title IV programs do not limit 
financial aid to students who select a public institution or the lowest 
cost institution available. Instead, title IV programs provide 
additional sources of aid, including additional funding programs (such 
as campus-based aid programs), to ensure that low-income students can 
pick the college of their choice, even if doing so means that the 
student needs more taxpayer-funded grants and loans.
    Congress created the campus-based aid programs, in part, so that 
low-income students would not be limited to public institutions.\24\ 
The campus-based aid programs provide the largest allocations to 
private, non-profit institutions that have been long-term participants 
in the program. Creating a system of sanctions that penalizes private 
institutions for charging more than public institutions is contrary to 
the foundation of the title IV programs, which were designed to promote 
freedom of institutional choice. Prices will vary among institutions, 
as will debt levels among students based on the socioeconomic status 
and demographics of students served.\25\ But those variances do not, 
themselves, serve as accurate indicators or program quality.
---------------------------------------------------------------------------

    \24\ NASFAA Issue Brief, ``Campus-Based Aid Allocation 
Formula,'' January 2019, www.nasfaa.org/issue_brief_campus-based_aid.
    \25\ Sandy Baum and Martha Johnson. Student Debt: Who Borrows 
More? What Lies Ahead? Urban Institute, April 2015.
---------------------------------------------------------------------------

    Students make decisions about where to attend college based on many 
different factors, and they do so understanding that costs vary from 
one institution to the next. Students also make independent decisions 
about borrowing, and those decisions are influenced by any number of 
factors, including family socioeconomic status, cost of attendance, and 
the degree to which the student is required to support himself or 
herself and his or her family while enrolled in school. The Department 
believes that it is important to help inform those decisions so that 
students understand the impact of their decisions on their longer-term 
financial status.
    The Department recognizes that over-borrowing for a low-value 
education that does not improve earnings is a serious challenge that 
could have long-term negative consequences for individual students, and 
it urges institutions to rein in escalating costs. However, it is 
unreasonable to sanction institutions simply because they serve 
students who take advantage of Federal Student Aid programs that 
Congress has made available to them, or because they operate without 
generous direct contributions from taxpayers.\26\
---------------------------------------------------------------------------

    \26\ Note: This is not to suggest that institutions have no role 
to play in establishing reasonable tuition and fee costs. Even so, 
many public institutions have tuition and fees dictated to them by 
State legislators and many private institutions establish tuition 
and fees based on the actual cost of providing the education as well 
as the many amenities today's consumers demand.
---------------------------------------------------------------------------

    Students have the right to know what the cost of attendance is at 
any institution they are considering, which is already required by law.
    The Department agrees with commenters who expressed concern that 
the GE regulations established policies that unfairly target career and 
technical education programs. For example, under the GE regulations, 
student loan debt is calculated using an amortization term that assumes 
these borrowers, unlike others, are required to repay their loans in 10 
years if they earned an associate's degree or less, 15 years if they 
earned a baccalaureate or master's degree, and 20 years if they earned 
a doctoral or professional degree. However, the law provides for 
students enrolled in both GE and non-GE programs to have as many as 20 
or 25 years to repay their loans, and receive loan forgiveness for the 
balance, if any,

[[Page 31398]]

that remains at the end of the repayment period. The amortization terms 
used to calculate D/E rates are in direct conflict with the 
amortization terms made available by Congress, and the Department in 
the case of the Revised Pay As You Earn (REPAYE) repayment plan, to all 
borrowers.
    Therefore, for students, especially those sufficiently distressed 
to provide low repayment, the GE regulations create an inconsistent 
standard that suggests students who enroll in GE programs should be 
expected to repay their student loan debts more rapidly than students 
who enroll in non-GE programs. Therefore, the Department agrees with 
commenters who expressed concern that the GE regulations send a strong 
message that those pursing career and technical education are less 
worthy of taxpayer investment, or that they have greater, or at least 
faster, repayment obligations than students who enroll in other kinds 
of programs. This contradicts the purpose of title IV, HEA programs, 
which were developed to expand opportunity to low-income students. 
These students are served disproportionately by institutions offering 
CTE programs.
    The Administration does not believe that students who enroll at 
proprietary institutions are unaware that other options are available, 
and the assertion that they are unsophisticated is condescending and 
based on false stereotypes.
    According to analysis provided by Federal Student Aid, in 2018, 
42.2 percent of students currently enrolled at proprietary institutions 
had enrolled at a non-profit institution during a prior enrollment,\27\ 
which suggests that these students are well aware that other, lower 
cost options exist. Perhaps better access to programs of choice, more 
flexible scheduling, more convenient locations, or a more personalized 
college experience compels students to pay more for their education. 
This is not unlike wealthier students who select an elite private 
institution over a public institution that offers the same programs at 
lower cost.
---------------------------------------------------------------------------

    \27\ Federal Student Aid, 2018.
---------------------------------------------------------------------------

    The Department believes it is important to provide earnings 
information to all students for as many title IV participating programs 
as possible so that no student or family--regardless of their 
socioeconomic status--is misled about likely earnings after completion. 
A program that yields low earnings is no less a problem for low- or 
middle-income students enrolled in a general studies or an arts and 
humanities program than it is for a low-or middle-income student 
enrolled in a CTE-focused program. While the goals of programs may 
differ, nearly all students who go to college today do so with the 
expectation of increasing their economic opportunity, and all students, 
regardless of institution type, are expected to repay their loans.
    The Department's review of student loan repayment rates makes it 
clear that the problem of students borrowing more than they can repay 
through a standard repayment period is a problem that is not limited to 
students who attend proprietary institutions or who participate in CTE.
    Regardless of institutional type or institutional tax status, 
colleges that serve large numbers and proportions of low-income 
students, minority students, and adult learners are likely to have 
outcomes that are not as strong as those of institutions that serve a 
more advantaged student population. Therefore, any effort to place 
sanctions on institutions that does not also take into account the 
socioeconomic status and demographics of students served unfairly 
targets those institutions that are expanding access and opportunity to 
students who are not served by more selective institutions. While the 
2014 Rule emphasized that low-income and minority students who go to 
more elite institutions have better outcomes, it is difficult to know 
if that is because the institution has done something remarkable or 
unique, or because the selective admissions process already culls 
students who are less likely to succeed. Wealthy institutions that 
enroll small numbers of high-need students also have the ability to 
have devote significantly more resources to those students than an 
open-enrollment institution that serves large numbers of high-need 
students.
    There are many reasons why a student might elect to attend a 
proprietary institution. For example, it is very possible that the 
insightful student selects a proprietary institution because of the 
more personalized learning experience and higher graduation rates than 
might be found at many public, open-enrollment institutions.\28\ 
Proprietary institutions are more likely to offer accelerated programs, 
pre-established course sequences, more flexible class schedules and 
delivery models, and more personalized student services.\29\ The 
Department is also aware of recent studies that conclude proprietary 
institutions are more responsive to labor market changes in comparison 
to community colleges, which may lead students to choose proprietary 
institutions over their local, public, two-year counterparts.\30\
---------------------------------------------------------------------------

    \28\ Cellini and Davolia, ``Different degrees of debt: Student 
borrowing in the for-profit, nonprofit and public sectors. Brown 
Center on Education Policy at Brookings.''; Gilpin, G. A., Saunders, 
J., & Stoddard, C., ``Why has for-profit colleges' share of higher 
education expanded so rapidly? Estimating the responsiveness to 
labor market changes,'' Economics of Education Review 45, 2015, 
scholarworks.montana.edu/xmlui/bitstream/handle/1/9186/Gilpin_EER_2015_A1b.pdf;sequence=1.
    \29\ Cellini and Turner; Note: (pg. 5): ``For-profit schools may 
have better counseling compared to community colleges . . . the for-
profit sector has been quicker to adopt online learning technologies 
for undergraduate education compared to less selective public 
colleges.''
    \30\ Gregory Gilpin, et al., ``Why has for-profit colleges' 
share of higher education expanded so rapidly? Estimating the 
responsiveness to labor market changes,'' Economics of Education 
Review 45 (April 2015): 53-63; See also: Grant McQueen, ``Closing 
Doors: The Gainful Employment Rule as Over-Regulation of For-Profit 
Higher Education That Will Restrict Access to Higher Education for 
America's Poor,'' Georgetown Journal on Poverty Law & Policy, Volume 
XIX, Number 2, Spring 2012: ``The for-profit higher education 
industry has filled a rapidly expanding demand for higher education 
in American society that public and non-profit institutions of 
higher education have not been able to meet.'' (pg. 330)
---------------------------------------------------------------------------

    The GE regulations also unfairly target proprietary institutions, 
as explained in the NPRM, because if the D/E rates measure considered 
the total cost of education relative to graduate earnings, a number of 
GE programs offered by public institutions would fail the measure.\31\
---------------------------------------------------------------------------

    \31\ Ibid.; also see: Schneider, Mark, ``Are Graduates from 
Public Universities Gainfully Employed? Analyzing Student Loan Debt 
and Gainful Employment,'' American Enterprise Institute, 2014, 
www.aei.org/publication/are-graduates-from-public-universities-gainfully-employed-analyzing-student-loan-debt-and-gainful-employment/.
---------------------------------------------------------------------------

    The low price of public, two-year colleges may mean that fewer 
students need to borrow to enroll at those schools, but lower borrowing 
rates may also be due to the fact that a lower proportion of community 
college students are Pell eligible, or financially independent 
students, as compared to students at proprietary institutions.\32\ 
Despite assertions that community colleges and proprietary institutions 
serve the same students, as stated above, the data reveal that 
proprietary institutions serve a much larger population of low-income, 
older, and minority students.\33\ It is important to consider that 
despite lower proportions of student borrowers, given the total size

[[Page 31399]]

of many public institutions, those institutions leave many more 
borrowers with debt and pose a higher aggregate loan burden and non-
repayment risk to students and taxpayers. For example, a public college 
with 30,000 students and a 17 percent borrowing rate will produce 5,100 
borrowers whereas a proprietary institution that serves 500 students 
and has a 90 percent borrowing rate will produce 450 borrowers. The 
same is true for small private, non-profit colleges that may have a 
higher percentage of students who need to borrow to pay tuition, but 
based on a small total student population, produce fewer total 
borrowers than public institutions that serve large numbers of 
students.
---------------------------------------------------------------------------

    \32\ Jennifer Ma and Sandy Baum, Trends in Community Colleges: 
Enrollment, Prices, Student Debt, and Completion. College Board 
Research Brief, April 2016.
    \33\ Cellini, Stephanie and Nicholas Turner, ``Gainfully 
Employed? Assessing the Employment and Earnings for For-Profit 
College Students Using Administrative Data,'' National Bureau of 
Economic Research, January 2018, www.nber.org/papers/w22287.
---------------------------------------------------------------------------

    Unaffordable student loan debt is an issue across all sectors, 
including public institutions. The 2015 follow-up to the 1995-96 and 
2003-04 Beginning Postsecondary Survey showed that despite the lower 
percentage of students who borrow at community colleges, among those 
who do borrow, their debts may be debilitating. For example, among 
borrowers who enrolled at community colleges in the 2003-04 cohort, 
twelve years later not only did they have a larger outstanding debt 
($21,000) than students who enrolled at proprietary institutions 
($14,600), but the level of debt held represented 90 percent of the 
original loan balance for students who enrolled at community colleges 
and 82 percent for those who enrolled at proprietary institutions.\34\ 
Therefore, it is as important for students at non-GE institutions or 
who are enrolled in non-GE programs to understand their likely earning 
outcomes so that they can borrow at a level that will not leave them 
struggling for decades after graduation.
---------------------------------------------------------------------------

    \34\ nces.ed.gov/pubs2018/2018410.pdf.
---------------------------------------------------------------------------

    Also, the Department is concerned that some community colleges do 
not participate in the Federal Student Loan programs because of 
concerns that high default rates would end the institution's 
participation in the Pell grant program.\35\ According to data from 
FSA, 38 community colleges do not participate in the loan programs. 
While this may be beneficial to students, it may also have a number of 
unintended consequences, including necessitating students to use more 
expensive forms of credit--such as credit cards and payday loans--to 
pay their tuition and fees. Or it may prevent low-income students from 
having access to higher education at lower cost institutions. An 
institution that elects to prevent students from taking Federal student 
loans will automatically pass the D/E rates measure, even if there are 
no earnings benefits associated with program completion. In some 
instances, the student may be better off in the long run by borrowing 
to attend a program he or she is more likely to complete, or that 
provides a more personalized experience, or that leads to a higher 
paying job. Despite the Department's interest in reducing student debt 
levels, it is noteworthy that a recent study showed that increased 
borrowing among community colleges may have a positive impact on 
completion and transfer to four-year institutions.\36\
---------------------------------------------------------------------------

    \35\ www.jamesgmartin.center/2017/06/colleges-allowed-limit-
students-federal-loans/; www.washingtonpost.com/news/grade-point/wp/2016/07/01/the-surprising-number-of-community-college-students-without-access-to-federal-student-loans/?noredirect=on&utm_term=.cd4dd8528001.
    \36\ www.higheredtoday.org/2018/01/12/increasing-community-college-completion-rates-among-low-income-students/.
---------------------------------------------------------------------------

    Student enrollment and borrowing decisions are as complex as the 
decisions that graduates make about where they want to work, what they 
want to do for a living, and how many hours a week they want to work. 
Until the Department has more sophisticated analytical tools that take 
into account the many variables other than institutional quality that 
impact both cost and outcomes, it is inappropriate to develop a scheme 
that imposes high-stakes sanctions without understanding the longer 
term impact of those sanctions on students and the production of ample 
workers for occupations that may pay lower wages but are in high demand 
(such as cosmetology, culinary arts, allied health, social work, and 
early childhood education).
    While some commenters suggested that any institution could ensure 
that they will pass the D/E rates measure by lowering tuition, such a 
view oversimplifies college financing realities. In addition to the 
lack of direct taxpayer subsidies, proprietary institutions may have a 
higher per-student delivery cost since CTE-focused education can be 
four or five times more expensive to administer than liberal arts or 
general studies education.\37\ During times of high enrollment pressure 
or constrained resources, community colleges tend to reduce the number 
of vocational programs offered so that they can serve a large number of 
students in lower-cost general studies and liberal arts programs.\38\ 
In addition, as noted by Shulock, Lewis, and Tan, comprehensive 
institutions have the added benefit of cross-subsidizing higher cost 
CTE programs with low-cost general studies programs that typically 
enroll larger numbers of students.\39\ Since proprietary institutions 
are, for the most part, not permitted to offer lower cost general 
studies programs, the full cost of providing CTE is paid by the student 
without the benefit of cross-subsidizations from other students 
enrolled in lower-cost programs.
---------------------------------------------------------------------------

    \37\ Shulock, Nancy, Jodi Lewis, and Connie Tan, ``Workforce 
Investments: State Strategies to Preserve Higher-Cost Career 
Education Programs in Community and Technical Colleges,'' Institute 
for Higher Education Leadership and Policy, California State 
University, Sacramento, August 2013, eric.ed.gov/?id=ED574441.
    \38\ Ibid.
    \39\ Ibid.
---------------------------------------------------------------------------

    Therefore, the Department agrees with the commenter who stated that 
by focusing on GE programs, the Department has ignored worse outcomes 
generated by other programs. For example, as explained in the NPRM 
under ``Covered Institutions and Programs,'' numerous researchers have 
emphasized the importance of picking the right major in order to 
optimize earnings.\40\ According to Holzer and Baum's 2017 publication, 
community college liberal arts and general studies degrees have no 
market value for the majority of students who earn them, but the 
students will never transfer to a four-year institution.\41\ 
Nonetheless, these programs, and more at the baccalaureate level, were 
not covered by the GE regulations.
---------------------------------------------------------------------------

    \40\ Carnevale, Anthony, et al., ``Learning While Earning: The 
New Normal,'' Center on Education and the Workforce, Georgetown 
University, 2015, 1gyhoq479ufd3yna29x7ubjn-wpengine.netdna-ssl.com/wp-content/uploads/Working-Learners-Report.pdf; see also: Holzer, 
Harry J. and Sandy Baum, Making College Work: Pathways to Success 
for Disadvantaged Students (Washington, DC: Brookings Institution 
Press, 2017).
    \41\ Holzer and Baum.
---------------------------------------------------------------------------

    According to a 2018 Q3 breakdown of FSA's federally serviced 
portfolio, 24 percent of the dollars in the portfolio, or $272 billion, 
are in IDR plans that are current, but negatively amortizing. This 
substantial percentage of borrowers whose loans are growing rather than 
shrinking due to their enrollment in an IDR plan are of serious 
concern.\42\ This is a problem of a magnitude and importance that any 
action the Department takes must include all borrowers at all title IV 
participating institutions. Of course, participation in an IDR plan may 
not be a sign that a student's program was of low quality but could 
instead be a sign that the student borrowed recklessly or made

[[Page 31400]]

lifestyle decisions that result in lower earnings.
---------------------------------------------------------------------------

    \42\ Analysis of FSA Loan portfolio with NSLDS Q12018, Federal 
Reserve Economic Data (Credit card delinquencies average for all 
commercial banks).
---------------------------------------------------------------------------

    Since the REPAYE program eliminates the income hardship test and 
allows any borrower to sign up for a student loan payment that is 10 
percent of his or her income, it cannot be said that a borrower in an 
IDR plan is one who has been harmed by his or her program or 
institution. In some instances, borrowers may elect to pursue a lower 
paying job in order to benefit from IDR-derived loan forgiveness. 
Nonetheless, since so many students are enrolled in IDR programs, the 
Department believes that any transparency and accountability framework 
must apply to all title IV programs, which it plans to do through the 
expanded College Scorecard.
    A Department review of the 2015 D/E rates shows that cosmetology 
and medical assisting programs were disproportionately represented 
among the programs that failed the D/E rates measure in the first year 
that D/E rates were calculated under the GE regulations.\43\ Yet both 
of these occupations are considered by the U.S. Department of Labor to 
be ``bright outlook'' occupations,\44\ suggesting that it is possible 
that GE-related program closures could reduce availability of CTE-
focused programs needed to fill high-demand occupations. The Department 
agrees with the commenter who discussed the complicated patchwork of 
regulations that the Department has created, without any direction to 
do so by Congress. The 2015 Senate Task Force on Higher Education 
Regulation Report reinforces that point, and highlights the GE 
regulations as an example of the Department's ``us[ing] the regulatory 
process to set its own policy agenda in the absence of any direction 
from Congress, and in the face of clear opposition to that policy from 
one house of Congress.'' \45\ By rescinding the GE regulations, we 
begin to correct that problem.
---------------------------------------------------------------------------

    \43\ Federal Student Aid, ``Gainful Employment Information,'' 
studentaid.ed.gov/sa/about/data-center/school/ge?src=press-release.
    \44\ ONet OnLine, ``Bright Outlook Occupations,'' 
www.onetonline.org/help/bright/. Note: ``Bright Outlook'' 
Occupations are defined as matching at least one of the following 
criteria: (1) Projected to grow faster than average (employment 
increase of 10 percent or more) over the period 2016-2026; or (2) 
projected to have 100,000 or more job openings over the period 2016-
2026.
    \45\ Task Force Report at 14.
---------------------------------------------------------------------------

    The Department disagrees that the BLS Job Openings and Labor 
Turnover Survey does not provide sufficient evidence to support the 
Department's assertion that many good jobs are currently unfilled, 
including jobs for which individuals could, in some cases, prepare for 
by completing a GE program. The Department pointed to the BLS survey to 
illustrate that the Department cannot predict the long-term impact of 
removing programs from title IV, including potential workforce 
shortages that could be caused by eliminating high-quality programs 
that fail the D/E rates measure for reasons beyond the control of the 
institution.
    The Department disagrees with the commenters who said that the 
rescission of the GE regulations is arbitrary and capricious. Under the 
Administrative Procedure Act (APA), an agency ``must show that there 
are good reasons for the new policy.'' \46\ However, ``it need not 
demonstrate to a court's satisfaction that the reasons for the new 
policy are better than the reasons for the old one; it suffices that 
the new policy is permissible under the statute, that there are good 
reasons for it, and that the agency believes it to be better.'' \47\ 
(emphasis in original) Additionally, the Department provided ample 
evidence that any transparency and accountability framework must be 
expanded to include all title IV programs since student loan repayment 
rates are unacceptably low across all sectors of higher education and 
because a student may unknowingly select a non-GE program with poor 
outcomes because no data are available. If we want students to make 
informed decisions, then we need to provide information about all of 
the available options. Since the GE regulations cannot be expanded to 
include all institutions, and since negotiators could not come to 
consensus on a GE-like accountability and transparency framework that 
was substantiated by research and applicable to all title IV programs, 
the Department decided to take another approach.
---------------------------------------------------------------------------

    \46\ FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 
(2009).
    \47\ Id.
---------------------------------------------------------------------------

    The Department acknowledges evidence that students enrolled at 
proprietary institutions may be at higher risk for default and that, on 
average, students who attended a proprietary institution are more 
likely to default on their loans than students who enrolled at a 
community colleges. However, the Department provided ample data in the 
NPRM and in this document that higher defaults among students who 
enrolled a proprietary institution could be the result of these 
institutions serving higher risk students. A much higher proportion of 
students enrolled at proprietary colleges exhibit many more risk 
factors--such as being over 25, being a single parent, working full-
time while being enrolled, being financially independent, and being 
Pell eligible--than students enrolled at other institutions, including 
community colleges.\48\
---------------------------------------------------------------------------

    \48\ Deming, David, Claudia Goldin, and Lawrence Katz, ``For-
Profit Colleges,'' The Future of Children, Vol. 23, No 1, Spring 
2013, scholar.harvard.edu/files/lkatz/files/foc_dgk_spring_2013.pdf.
---------------------------------------------------------------------------

    The Department agrees that during the Great Recession, proprietary 
institutions likely grew too rapidly, and some have been accused of 
committing fraud, but the most rapid growth in the sector was by online 
institutions, where relatively few programs failed the D/E rates 
measure. During the Great Recession, many students sought relief by 
enrolling in college, and the Department does not deny that some 
institutions took advantage of that. However, there are other 
mechanisms, such state attorneys general, consumer protection agencies, 
civil legal proceedings, internal resolution arrangements, and borrower 
defense to repayment regulations that enable students to take action 
against institutions that have committed fraud. However, a failing 
outcome under the D/E rates measure in no way signals, demonstrates, or 
proves that the institutions committed fraud.
    The Department is aware of research demonstrating that as 
enrollments in California proprietary institutions went down, there was 
a commensurate increase in enrollments at local community colleges.\49\ 
California is a State rich with community colleges, so it is not 
surprising that students were able to find alternatives to proprietary 
institutions. However, not all States and regions have as many options 
as those in California. In addition, a student who does not have the 
opportunity to attend a proprietary institution may be limited to a 
general studies program at a community college, which may disadvantage 
the student. Since, on average, graduation rates at proprietary 
institutions are higher than those at community colleges, a student may 
not be served if the lower-cost institution reduces the student's 
chances of completing his or her credential.
---------------------------------------------------------------------------

    \49\ Cellini, Stephanie Riegg (2010). ``Financial Aid and For-
Profit Colleges: Does Aid Encourage Entry?'' Journal of Policy 
Analysis and Management. 29(3): 526-52.
---------------------------------------------------------------------------

    The Department agrees that some proprietary institutions serve 
students poorly and produce unimpressive results. However, there are 
institutions among all sectors that serve students poorly and produce 
unimpressive results, and yet the GE regulations do nothing to expose 
those programs or institutions or protect students from enrolling in 
them since the GE regulations are limited in their coverage.

[[Page 31401]]

The point is not to ignore the legitimate challenges among institutions 
in the proprietary sector but is instead to expand the reach of a new 
accountability and transparency system to ensure that all students, 
regardless of institutional sector, can obtain information to inform 
their enrollment and borrowing decisions.
    Changes: None.

Is there a need to define gainful employment?

    Comments: One commenter stated that the Department must establish a 
definition for the term ``gainful employment in a recognized 
occupation,'' rather than leaving the term undefined.
    Other commenters stated that the Department is violating the law by 
failing to differentiate between institutions that do and do not 
prepare students for gainful employment, and that by eliminating the GE 
regulations, the Department is no longer following the requirements of 
the HEA in differentiating between GE programs and non-GE programs.
    Discussion: The Department does not agree that it needs to define 
the term ``gainful employment'' beyond what appears in statute. Since 
it was added to the HEA in 1968, the term ``gainful employment'' has 
been widely understood to be a descriptive term that differentiates 
between programs that prepare students for named occupations and those 
that educate students more generally in the liberal arts and 
humanities, including all degree programs offered by public and 
private, non-profit institutions.
    Congress reaffirmed this interpretation when it added a provision 
to the 2008 Higher Education Opportunity Act (HEOA) that allowed a 
small number of proprietary institutions to offer baccalaureate degrees 
in liberal arts.\50\ Had Congress intended the term ``gainful 
employment'' to mean something other than a limitation on HEA section 
102 institutions from offering programs that are not CTE-focused, it 
would not have needed to create a statutory exception to allow some HEA 
section 102 institutions to offer liberal arts programs.
---------------------------------------------------------------------------

    \50\ 20 U.S.C 1002(b).
---------------------------------------------------------------------------

    Therefore, contrary to suggestions by commenters that the 
Department needs to develop a new definition in order to enforce the 
law or differentiate between GE and non-GE programs, the Department 
confirms that it, in fact, is enforcing the law as written and as 
intended, because it disallows proprietary institutions, other than 
those exempted by the above-mentioned provision of the HEOA, to offer 
general studies, liberal arts, humanities, or other programs not 
intended to prepare students for a named occupation. The Department 
will continue to enforce the law in this regard--in the same way it 
enforced it between 1968 and 2011.
    In promulgating the 2014 Rule, the Department cited Senate debate 
in the 1960s as evidence that the GE regulations are consistent with 
congressional intent. The Senate Report accompanying the National 
Vocational Student Loan Insurance Act (NVSLI), Public Law 89-287, 
captured testimony delivered by University of Iowa professor Kenneth B. 
Hoyt that supported the ``concept'' of making loans available to 
students pursuing vocational training. He described findings from a 
sample of students whose earnings data were collected two years after 
completing their training, and based on those data, he concluded that 
``in terms of this sample of students, sufficient numbers were working 
for sufficient wages so as to make the concept of student loans to be 
[repaid] following graduation a reasonable approach to take.'' \51\
---------------------------------------------------------------------------

    \51\ ``Gainful Employment,'' 79 FR 65035, October 31, 2014.
---------------------------------------------------------------------------

    The Senate report made no mention of how quickly the student would 
need to repay his or her loan, and it referred to the ``concept'' of 
student loan repayment rather than a particular repayment amortization 
term or a particular debt-to-earnings threshold. Moreover, the Senate 
report was focused on legislation other than the HEA and the 
conversation had a very different focus when Congress was contemplating 
the inclusion of proprietary institutions in all HEA programs.
    What the Department neglected to include in its recounting of the 
early history of student loans, is that in 1972 when the National 
Vocational Student Loan Insurance Act (NVSLIA) was passed, Congress 
decided to incorporate vocational education programs into the HEA, by 
allowing their participation in the Educational Opportunity Grants as 
well as the student loan programs. Here the House conference report is 
clear that the new legislation ``not only extends existing programs but 
creates exciting and long needed (sic) new ones. For the first time, 
the bill commits the Federal Government to the principle that every 
qualified high school student graduate, regardless of his family 
income, is entitled to higher education, whether in community colleges, 
vocational institutes or the traditional 4-year college or 
university.'' \52\ Vocational institutions in this context included 
proprietary colleges that would, for the first time ever, be eligible 
to participate in title IV grants as well as loans. The inclusion of 
proprietary schools in the HEA was an important step toward achieving 
the goals of providing equitable access to postsecondary education, for 
all students, regardless of whether their interests were in the 
traditional trades or vocations, or in typical degree programs.
---------------------------------------------------------------------------

    \52\ www.govinfo.gov/content/pkg/GPO-CRECB-1972-pt16/pdf/GPO-CRECB-1972-pt16-2-2.pdf.
---------------------------------------------------------------------------

    The Department points out that Congress intends for all Federal 
student loan borrowers to repay their loans, not just those who borrow 
to attend ``vocational training'' programs.
    However, Congress has elected to address concerns about 
unmanageable student loan debt by providing numerous extended repayment 
and income-driven repayment programs that reduce monthly and annual 
payments and provide loan forgiveness if, after 20 (or in some cases 
25) years of income-driven repayment, an outstanding loan balance 
remains.
    While the Department agrees that some of these repayment programs 
lead to undesirable outcomes for borrowers and taxpayers, in that they 
allow students to accumulate more debt (through negative amortization) 
rather than paying down their original student loan balances, the 
intent of Congress is clear. In fact, in introducing the Income 
Dependent Educational Assistance (IDEA) Act, which ultimately became 
the income-based repayment (IBR) program in the College Cost Reduction 
and Access Act of 2007 (CCRAA), Congressman Tom Petri (R-WI) stated:

    Unfortunately, little has been done by way of providing more 
flexible repayment options for borrowers after graduation. 
Traditionally it has been expected that the borrower will pay the 
amortized loan over a standard period, usually 10 years, with the 
same repayment amount on day one as on the last day. However, this 
model of repayment fails to take into account that students often 
face periods of significant unemployment or underemployment during 
the first years after leaving college . . . I believe the IDEA Act 
does just that. This legislation would allow any Stafford loan 
borrower the ability to consolidate into a direct IDEA loan with a 
repayment schedule that corresponds to the borrower's income once in 
repayment. This new schedule requires regular payments; however, it 
ensures that such payments reflect the borrowers' capacity to repay 
under their current income status. This feature would be 
particularly useful for those pursuing lower-income, public-service 
careers. It also would help relieve some of the stress that 
borrowers face during periods

[[Page 31402]]

of unemployment or underemployment following graduation.\53\
---------------------------------------------------------------------------

    \53\ 153 Cong. Rec. 13777 (2007).

    Support for income-driven repayment during the 2007 HEA 
reauthorization was bipartisan, with Congressman George Miller (D-CA) 
stating that IBR was created because ``knowing that they will face a 
mountain of debt after graduation, some students feel compelled to 
major in areas that will lead to a high-paying career. The hope is that 
income-based repayment will encourage students to pursue their real 
interests, even if careers in the major of their choice don't provide a 
high income.'' \54\
---------------------------------------------------------------------------

    \54\ Chen, Grace, ``The College Cost Reduction and Access Act of 
2007,'' Community College Review, August 7, 2018, 
www.communitycollegereview.com/blog/the-college-cost-reduction-and-access-act-of-2007.
---------------------------------------------------------------------------

    Congressional support for IBR in the CCRAA in 2007, and for the Pay 
As You Earn (PAYE) income-driven repayment program in 2012, makes it 
clear that Congress does not wish for a student to feel compelled to 
select the highest paying major or job, to select the lowest cost 
educational opportunity, or to abandon his or her interests in lower-
paying careers, such as public service careers, in order to meet 
student loan repayment obligations under the standard, 10-year 
repayment plan. Therefore, the Department's original determination the 
GE regulations are based upon or align with congressional intent was 
based on an incomplete review of the legislative record.
    It should have been clear to the Department that the GE regulations 
did not comport with congressional intent when a bipartisan group of 
113 Members of the House of Representatives, led by Congressman Alcee 
Hastings (D-FL), sent a letter in 2011 to President Obama asking him to 
withdraw the GE regulations.\55\ Further, the Department should have 
noted that the House of Representatives passed House Amendment 94 to 
House Resolution 1, the Disaster Relief Appropriations Bill of 2013, 
with a vote of 289 to 136.\56\ This amendment would have prohibited the 
Department from implementing the 2011 GE rule. Although the amendment 
was not included in the final bill, the amendment should have given the 
Department pause before claiming that the GE regulations were 
consistent with Congress' intent.
---------------------------------------------------------------------------

    \55\ Alcee L. Hastings, ``Over 100 Members Send Bipartisan 
Letter to President Obama Urging Withdrawal of `Gainful Employment' 
Regulation,'' April 26, 2011, alceehastings.house.gov/news/documentsingle.aspx?DocumentID=327789.
    \56\ Amendment 241 to H.R. 1 (www.congress.gov/amendment/112th-congress/house-amendment/94), was offered by Chairman John Kline (R-
MN2) in 2011, and passed by the full House of Representatives. 
Amendment 241 was not included in the final Consolidated 
Appropriations Act (www.congress.gov/bill/112th-congress/house-bill/2055/amendments), www.congress.gov/amendment/112th-congress/house-amendment/94).
---------------------------------------------------------------------------

    Despite numerous reauthorizations of the HEA between 1964 and 2008, 
Congress never attempted to define ``gainful employment'' based on a 
mathematical formula nor did it attempt to define the term using 
threshold debt-to-earnings ratios. Congress never attempted to prohibit 
students who attended GE programs from participating in IDR programs. 
In addition, the GE regulations were also identified in 2015 by the 
bipartisan Senate Task Force on Higher Education Regulation as a 
glaring example of the Department's ``increasing appetite'' for 
regulation.\57\
---------------------------------------------------------------------------

    \57\ Senate Task Force on Higher Education Regulations, 
``Recalibrating Regulation of Colleges and Universities,'' 
www.help.senate.gov/imo/media/Regulations_Task_Force_Report_2015_FINAL.pdf, pg. 13.
---------------------------------------------------------------------------

    Despite previous assertions, the Department now recognizes that it 
had incorrectly described congressional intent and engaged in 
regulatory overreach, as discussed throughout these final regulations, 
and for those reasons, and the others described in the NPRM and these 
final regulations, it is rescinding the GE regulations.
    Changes: None.

Protecting Students

    Comments: A number of commenters disagreed with the Department's 
decision to rescind the GE regulations, arguing that minority, low-
income, adult, and veteran students are particularly vulnerable and, 
therefore, need additional protections from unscrupulous institutions 
and from programs with inferior outcomes, as well as to eliminate 
waste, fraud, and abuse.
    Discussion: The Department shares the concern of commenters who 
highlighted the need to protect low-income students and taxpayers from 
programs with poor outcomes, and from waste, fraud, and abuse. However, 
we do not believe the GE regulations are an effective tool for either 
of those purposes.
    First, the GE regulations do not accurately identify programs with 
poor outcomes. Many programs that had poor earnings outcomes passed the 
D/E rates measure due to large public subsidies that reduce the cost of 
enrollment to students. At the same time, programs that resulted in 
much higher earnings failed the D/E rates measure since the lack of 
public subsidies required the students to pay the full cost.\58\ The 
Department believes that the best way to protect all students is to 
acknowledge that they select their college and major based on a variety 
of factors, but provide clear and accurate information about debt and 
earnings to enable them to compare likely outcomes among the 
institutions and programs they are considering.
---------------------------------------------------------------------------

    \58\ Cooper and Delisle, www.luminafoundation.org/files/resources/measuring-quality-or-subsidy.pdf.
---------------------------------------------------------------------------

    Second, although the Department acknowledges that it plays an 
important financial stewardship role, and has the responsibility of 
reducing waste, fraud, and abuse, the GE regulations did not support 
that goal. Many programs are not subject to the GE regulations, so the 
regulation would play no role in preventing waste, fraud, and abuse 
among those programs. The Department does not agree that by charging 
students for the full cost of their education, rather than accepting 
direct appropriations and other taxpayer subsidies, is an act of waste, 
fraud, or abuse. Were that the case, then the Department would need to 
apply the D/E rates measure to all private institutions, including 
private, non-profit institutions, since those institutions generally 
have the highest annual tuition, including for programs that result in 
modest earnings.
    The Department is committed to ensuring that students are provided 
with accurate outcomes data. All students should be able to view 
accurate and unbiased outcomes data from a reliable source. The 
Department seeks to make it much more difficult for institutions to 
mislead students by making reliable data readily available to all 
students about the institutions they are considering attending or are 
attending.
    There are many instances of fraud that would never be detected by 
the GE regulations, either because the programs or institutions are not 
subject to the GE regulations or student earnings are sufficient to 
mask misrepresentation that took place. Therefore, complacency based on 
the mistaken belief that the GE regulations will obviate the need for 
other efforts to detect and eliminate waste, fraud, and abuse could 
have serious consequences.
    The Department acknowledges that it plays an important financial 
stewardship role, and has the responsibility of reducing waste, fraud, 
and abuse. However, the GE regulations did not support that goal.
    Moreover, the GE regulations do not necessarily identify instances 
of fraud or

[[Page 31403]]

abuse since programs designed to prepare, for example, teachers, 
community health workers, and allied health professionals may result in 
low wages simply because the prevailing wages in those fields are low. 
Therefore, a program could fail the D/E rates measure not because of 
fraudulent or abusive practices on the part of institutions, but 
because a number of high-demand occupations pay low wages, especially 
in the early years of employment, or because in some occupations there 
is an induction period of several years before a graduate can be fully 
licensed or be paid at the level of experienced professionals.
    There are ample examples of institutions that committed acts of 
fraud that would never be detected by the D/E rates measure. For 
example, the Nebraska Attorney General alleges that Bellevue University 
misrepresented the truth about the accreditation of its nursing 
program,\59\ City Colleges of Chicago inflated their graduation 
rates,\60\ Maricopa Community College was found guilty of falsifying 
student volunteer hours to allow students to receive an education award 
through the Americorps program,\61\ and a number of law schools 
admitted to inflating job placement rates \62\ in order to attract more 
students. Yet the GE regulations would identify none of these acts of 
misrepresentation.
---------------------------------------------------------------------------

    \59\ Paul Fain, ``Nebraska AG Sues Bellevue Over Nursing 
Program,'' Inside Higher Ed, February 28, 2019, 
www.insidehighered.com/quicktakes/2019/02/28/nebraska-ag-sues-bellevue-over-nursing-program.
    \60\ David Kidwell, ``The Graduates*,'' Better Government 
Association, November 1, 2017, projects.bettergov.org/the-graduates/.
    \61\ Office of Public Affairs, ``Maricopa County Community 
College District Agrees to Pay $4 Million for Alleged False Claims 
Related to Award of AmeriCorps Education Awards,'' Office of Public 
Affairs, December 1, 2014, www.justice.gov/opa/pr/maricopa-county-community-college-district-agrees-pay-4-million-alleged-false-claims-related.
    \62\ Paul Campos, ``Served,'' The New Republic, April 25, 2011, 
newrepublic.com/article/87251/law-school-employment-harvard-yale-georgetown.
---------------------------------------------------------------------------

    The Department will continue to employ its usual fraud prevention 
mechanisms, such as program reviews, to identify institutions that are 
not abiding by title IV rules and regulations. In addition, it will 
continue to rely on States to execute their consumer protection 
functions and accrediting agencies to evaluate program quality so that 
the regulatory triad will retain its importance and shared 
responsibility in the oversight of institutions of higher education. 
Finally, the Department seeks to make it much more difficult for 
institutions to mislead students by ensuring that all students are able 
to view accurate and unbiased outcomes data from a reliable source, and 
the Department will continue to work with accreditors to try to 
identify and stop institutions that are reporting false outcomes data.
    Changes: None.

Accountability

    Comments: Some commenters disagreed with the Department's proposal 
to rescind the GE regulations, arguing that the GE regulations provide 
the only standard by which programs might be held accountable for 
outcomes. Another commenter stated that by eliminating the GE 
regulations, proprietary institutions would be held to a lower standard 
than non-GE institutions.
    One commenter acknowledged that CDRs currently serve as an 
accountability standard for all institutions of higher education, but 
expressed concern that defaults are not an accurate indicator of 
program quality or an accurate measure of a student's or taxpayer's 
return on investment.
    Another commenter stated that research shows that income increases 
with the level of degree earned. For example, the research found that 
students with an associate's degree saw their quarterly incomes 
increase by more than $2,300 for women and nearly $1,500 for men, while 
those with a short-term certificate saw an increase of only around $300 
per quarter. The commenter also cited a study finding that among 
certificate holders, workers in female-dominated occupations 
(healthcare and education) earned less than those in male dominated 
occupations (technology-based).\63\
---------------------------------------------------------------------------

    \63\ Institute for Women's Policy Research, ``Fact Sheet: The 
Gender Wage Gap by Occupation 2017 and by Race and Ethnicity,'' 
April 2018, iwpr.org/wp-content/uploads/2018/04/C467_2018-Occupational-Wage-Gap.pdf.
---------------------------------------------------------------------------

    Discussion: The Department strongly disagrees with the commenter 
who suggested that by eliminating the GE regulations, there will be no 
more program-level accountability measures. It is the role of 
accreditors and States, not the Department, to evaluate program 
quality, and, in some instances, specialized or programmatic 
accreditors establish quality assurance measures, enrollment caps, and 
licensure pass rates that determine whether or not specific programs 
will continue to be accredited. The Department will continue to rely on 
accreditors and State authorizing agencies to evaluate program quality.
    The Department also does not agree with the commenters who argued 
that by eliminating the GE regulations, proprietary institutions would 
be held to a lower standard than non-GE institutions. In addition to 
meeting CDR requirements like all institutions and financial 
responsibility standards like all non-public institutions, proprietary 
institutions must also meet requirements that limit title IV revenue to 
90 percent of total revenue (the 90-10 Rule). The requirements 
regarding annual audits and the types of jobs Federal Work Study 
students can be placed in are also stricter for proprietary 
institutions. So, they remain subject to additional regulatory 
requirements.
    As pointed out by at least one commenter, CDRs are one of the 
metrics that Congress has established to determine continuing 
eligibility for an institution, including proprietary institutions, to 
participate in title IV programs. We agree that CDRs are misleading 
indicators of program quality or the current status and risk associated 
with the outstanding Federal student loan portfolio. As noted earlier 
in this document, updated repayment rate data revealed, in January 
2017, that less than half of all borrowers were paying down a dollar of 
principal by their third year of repayment, and more recent portfolio 
analysis has revealed that of the nearly $1.2 trillion in outstanding 
student loans, only 24 percent, or $298 billion, are in a positive 
repayment status, meaning that interest and principal are being paid 
down. The remaining loans are in post-enrollment grace, default, 
forbearance, deferment, or negative amortization due to income-driven 
repayment, and 43 percent, or $505 billion, are in distress, as 
previously mentioned.\64\ Despite these grim statistics, it is 
noteworthy that the most recent CDR is only 10.8 percent (the 2018 
three-year CDR for the 2015 cohort).\65\ Accordingly, although the 
Department will continue to enforce the law by restricting title IV 
eligibility to those institutions, including proprietary institutions, 
that pass the CDR test, it also seeks to expand transparency and 
market-based accountability through the College Scorecard.
---------------------------------------------------------------------------

    \64\ Stirgus, Eric, ``Rising Student Loan Debt a `crisis,' DeVos 
Says,'' Atlanta Journal-Constitution, November 27, 2018, 
www.ajc.com/news/local-education/rising-student-loan-debt-crisis-devos-says/kgGX56hb11yhIpOyQURlSJ/; Analysis of FSA Loan portfolio 
with NSLDS Q12018, Federal Reserve Economic Data (Credit card 
delinquencies average for all commercial banks).
    \65\ Federal Student Aid, ``Official Cohort Default Rates for 
Schools,'' www2.ed.gov/offices/OSFAP/defaultmanagement/index.html.
---------------------------------------------------------------------------

    Regarding the comment about credential inflation, the 768 programs 
that failed the D/E rates measure based on the 2015 D/E rates published 
in 2017, more than 100 were medical assisting or similar programs and 
more

[[Page 31404]]

than 90 were cosmetology/barbering programs. This suggests that these 
occupations may not pay a wage that is commensurate with the 
educational requirements for licensure or certification, but 
institutions do not determine or set those requirements. States and 
occupational licensing boards or credentialing organizations establish 
those requirements.
    The Department agrees that the financial rewards associated with a 
postsecondary credential, in general, increase as the credential level 
increases. However, there are bachelor's, master's, and doctoral degree 
programs that result in relatively low earnings and that require 
borrowers to rely on income-driven repayment. In fact, some researchers 
have pointed out that it is recipients of graduate degrees who are in 
greatest need of, and who will benefit most from, these programs.\66\ 
Therefore, the Department continues to believe that the best way to 
expand transparency and accountability to all students is to expand the 
College Scorecard to the program-level for all categories (GE and non-
GE) of title IV programs.
---------------------------------------------------------------------------

    \66\ Delisle, Jason, ``Costs and Risks in the Federal Student 
Loan Program,'' American Enterprise Institute, January 30, 2018, 
www.help.senate.gov/imo/media/doc/Delisle.pdf.
---------------------------------------------------------------------------

    Changes: None.

Which institutions should be included?

    Comments: A number of commenters stated that they fully support the 
original intent of the GE regulations and that schools must be held 
accountable to provide equitable value to their students. However, 
others asserted that given the limited reach of the GE regulations, 
students may not have had sufficient information to accurately compare 
the outcomes of a GE program to a non-GE program that was not subject 
to the regulations. These commenters agreed with the Department that 
the 2014 Rule should be rescinded.
    Other commenters noted that they supported the GE regulations, but 
indicated that all schools and programs, including proprietary 
institutions and non-profit institutions, should be held to the same 
standards and requirements. Those commenters were split on whether the 
Department should expand the regulations to include all institutions or 
rescind the regulations.
    Several commenters took the position that any new regulations, 
whether they require a specific outcome threshold, additional 
disclosures, or overall transparency, should apply equally to all 
institutions. Of those commenters who favored uniform application of 
new regulations, some voiced support for a disclosure-only protocol 
that would provide students with program-level data about all 
participating institutions regardless of the type of control.
    Discussion: The Department agrees that the same standards and 
reporting requirements should apply to all institutions, regardless of 
tax status. However, the Department could not simply expand the GE 
regulations to include all title IV programs since the term ``gainful 
employment'' is found only in section 102 of the HEA, which refers to 
vocational institutions and programs (meaning non-degree programs at 
non-profit and public institutions and all programs at proprietary 
institutions). Therefore, there was no way to expand the GE regulations 
to apply to all institutions. Moreover, although the negotiating 
committee considered adopting a ``GE-like'' solution that could be 
applied to all institutions, the negotiators were unable to reach 
consensus on an accurate, valid, and reliable outcomes standard that 
could serve as the basis for an appropriate and useful accountability 
and transparency framework for all title IV participating programs.
    The Department agrees with the commenters that stated that the most 
effective method to increase accountability and transparency, under 
current law, for all programs is through a disclosure-only protocol, 
and it plans to do so using the College Scorecard to make program-level 
data readily available and in a format that enables easy comparative 
analysis. Only when students can consider comparable information about 
all of the institutions and programs they are considering, and that are 
available to them, can students begin to make data-driven decisions. 
Part of our goal is to end information asymmetry between institutions 
and students.
    Changes: None.

Location Matters

    Comments: One commenter noted that while the Department correctly 
cites research showing that most students do, in fact, stay close to 
home for college, the commenter disagrees with the assertion made in 
the NPRM that eliminating a failing GE program could eliminate the 
opportunity for a student to gain a credential if a passing program is 
located farther away. The commenter suggested that this research should 
not be used as a justification for eliminating the 2014 Rule, but 
rather to support keeping the GE regulations in effect in order to 
protect consumers.
    Discussion: The Department does not believe that the NPRM 
mischaracterizes these research findings. The Department continues to 
believe that since location is important in influencing student 
enrollment decisions, a less expensive option may be of no benefit for 
a student who would need to travel too far from home to enroll in it. 
In addition, the 2015 GE data provides numerous examples of programs 
that pass the D/E rates measure because they are heavily taxpayer 
subsidized, even though they result in earnings that are substantially 
less than the earnings associated with programs provided by proprietary 
institutions that charge students the full price of educational 
delivery.
    The Department stands by its original point, which is that location 
matters and that the elimination of a program that fails the D/E rates 
measure may not result in better long-term outcomes for students if 
another option doesn't exist in that place. On the other hand, a 
student who has only one option may decide, when better informed about 
debt and earnings, that it is best to forfeit that option and find a 
different workforce preparation pathway. The Department believes that 
all institutions should provide high-quality educational options to 
students, but without public subsidies, some of those options could 
result in higher tuition and fees and increased borrowing.
    Regardless of whether information about program outcomes encourages 
program improvements, encourages institutional selectivity, or 
encourages students to pursue other kinds of career preparation, the 
Department believes that, especially when a student has very limited 
institutional or programmatic options, he or she needs access to data 
about all available options to better inform enrollment and borrowing 
decisions.
    We are aware that the researcher who wrote the paper about the role 
of location in student enrollment decisions disagrees with our position 
on the GE regulations, and does not wish his research to be used to 
support our conclusions. However, we did not misrepresent his research 
findings and still believe that they are relevant in explaining that 
students with limited options in their local geographic area could be 
better off attending a program that results in debt but also elevates 
wages, as opposed to attending no postsecondary program at all.
    We continue to believe that if the program in which a student is 
interested in enrolling loses title IV eligibility under the D/E rates 
measure, and there are no other options to enroll in that program 
within a reasonable commuting distance, the student may not be well 
served by the elimination of the program, even if the student would 
have

[[Page 31405]]

required more than 10 years to repay their student loan debt.
    Changes: None.

Proprietary Institution Outcomes

    Comments: Commenters cited a number of studies on outcomes at 
proprietary institutions, in support of their position that the GE 
regulations should not be rescinded.
    One commenter provided an appendix with research citations believed 
to be relevant to the GE regulations. The commenter referenced research 
by Cellini and Turner that found that students who attend proprietary 
certificate programs experience small, statistically insignificant 
gains in annual earnings.\67\ Chou, Looney, and Watson found that 
proprietary schools have relatively poor cohort loan repayment rates, 
with almost no schools in that sector having a repayment rate above 20 
percent.\68\ Looney and Yannelis found that between 2000 and 2011 there 
was substantial growth in both proprietary college enrollment and 
student loan default rates.\69\ Armona et al. found that those who 
enroll in for-profit four-year institutions have the worst outcomes, 
including more educational debt, worse labor market outcomes, and 
higher default rates than students attending similarly selective public 
institutions.\70\
---------------------------------------------------------------------------

    \67\ Cellini, Stephanie and Nicholas Turner, ``Gainfully 
Employed? Assessing the Employment and Earnings for For-Profit 
College Students Using Administrative Data,'' National Bureau of 
Economic Research, January, 2018, www.nber.org/papers/w22287.
    \68\ Chou, Tiffany, Adam Looney, and Tara Watson, ``Measuring 
Loan Outcomes at Postsecondary Institutions: Cohort Repayment Rates 
as an Indicator of Student Success and Institutional 
Accountability,'' National Bureau of Economic Research, February, 
2017, www.nber.org/papers/w23118.
    \69\ Looney, Adam and Constantine Yannelis, ``A Crisis in 
Student Loans? How Changes in the Characteristics of Borrowers and 
in the Institutions They Attended Contributed to Rising Loan 
Defaults,'' Brookings Papers on Economic Activity, Fall 2015, 
www.brookings.edu/wp-content/uploads/2016/07/PDFLooneyTextFallBPEA.pdf.
    \70\ Armona, Luis, Rajashri Chakrabarti, and Michael F. 
Lovenheim, ``How Does For-Profit College Attendance Affect Student 
Loans, Default, and Labor Market Outcomes?'' Federal Reserve Bank of 
New York Staff Report No. 811, September 2018, www.newyorkfed.org/medialibrary/media/research/staff_reports/sr811.pdf?la=en.
---------------------------------------------------------------------------

    Research citations in the appendix also included work by Darolia et 
al. who found that employers were less likely to hire applicants with 
degrees from proprietary institutions, even compared to those with no 
degrees.\71\ Chakrabarti and Jiang found that attending a proprietary 
college yields earnings that are 17 percent lower that earnings of 
those who attend private, not-for-profit four-year colleges.\72\
---------------------------------------------------------------------------

    \71\ Darolia, Rajeev, et al., ``Do Employers Prefer Workers Who 
Attend For-Profit Colleges? Evidence from a Field Experiment,'' RAND 
Corporation, 2014, onlinelibrary.wiley.com/doi/pdf/10.1002/pam.21863.
    \72\ Chakrabarti, Rajashri and Michelle Jiang, ``Education's 
Role in Earnings Employment and Economic Mobility,'' Liberty Street 
Economic Blog, Federal Reserve Bank of New York, September 5, 2018, 
libertystreeteconomics.newyorkfed.org/2018/09/educations-role-in-earnings-employment-and-economic-mobility.html.
---------------------------------------------------------------------------

    Commenters stated that in the 2014 Rule, the Department showed that 
in 27 percent of GE programs, the average graduate had an income lower 
than a full-time worker making the Federal minimum wage. The commenters 
also noted a study demonstrating that since 2014, 350,000 students 
graduated from certain GE programs with nearly $7.5 billion in student 
debt.
    Discussion: The Department appreciates the bibliography provided by 
the commenter and agrees that these papers conclude that students who 
attend proprietary institutions, in many instances, have outcomes that 
are inferior to students who attend other institutions. However, the 
Department believes that our analysis of the outstanding student loan 
portfolio demonstrates that poor outcomes are not limited to these 
institutions or the small number, relative to total postsecondary 
enrollment, of students who attend them. For this reason, the 
Department believes that it must implement a transparency and 
accountability system that applies equally to all title IV programs, 
and that enables all students to make informed enrollment and borrowing 
decisions.
    The Department is aware of the survey results showing that many 
employers ``do not prefer'' graduates of proprietary institutions,\73\ 
or may be less likely to interview a candidate who completed an online 
degree at one of the well-known, large, online proprietary 
institutions.\74\ However, the ``do not prefer'' study shows that 
employers similarly did not prefer to hire community college graduates 
over proprietary school graduates. And while employers may have been 
less likely to interview a candidate who attended one of the large, 
online, proprietary institutions, there was not an observed bias 
against graduates of smaller, ground-based proprietary institutions. It 
is difficult to know if employers were skeptical of large, online 
proprietary institutions because of negative experiences with prior 
employees, or because of negative media coverage of, and political 
opposition to, well-known proprietary schools.
---------------------------------------------------------------------------

    \73\ www.goodcall.com/news/employers-dont-prefer-for-profit-over-community-college-graduates-reveals-new-study-04948.
    \74\ www.usnews.com/news/articles/2014/10/17/employers-shy-away-from-online-for-profit-graduates.
---------------------------------------------------------------------------

    The Department also believes that many of the studies cited have 
serious limitations that, in some cases, reduce the validity and 
reliability of their conclusions. For example, a Cellini study found 
that proprietary institutions are more expensive than community 
colleges, when tuition as well as opportunity cost is considered.\75\ 
However, Cellini assumed in this study that it takes students the same 
amount of time to complete programs at proprietary institutions and 
community colleges, even though in subsequent publications she cites 
research showing that students at proprietary institutions tend to 
complete at higher rates and more quickly than students at community 
colleges. Since opportunity cost could reasonably be seen as a 
considerable part of the expense of attending college for adult 
learners who must leave the workforce or reduce the number of hours 
worked in order to attend college, the ability to accelerate completion 
could generate substantial savings compared to a lower cost program 
that takes longer to complete.
---------------------------------------------------------------------------

    \75\ Cellini and Turner, www.nber.org/papers/w22287.
---------------------------------------------------------------------------

    In her more recent work to compare pre- and post-earnings of 
community college and proprietary certificate programs, Cellini admits 
that the Great Recession could have introduced bias into her research 
results, and that the kinds of certificates offered by community 
colleges and proprietary institutions differ.\76\ In other words, she 
was comparing what employees earn in fields that may pay very different 
prevailing wages. She also admits that her methodology for creating 
demographically matched comparison groups relied on the use of zip 
codes and birthdates, but every one of the same age in the same zip 
code is not otherwise socioeconomically and demographically matched. 
Moreover, she relied on a data set made available exclusively to her, 
meaning that it is not available for full peer review. Without the 
advantages of peer review and the ability of other researchers to 
replicate or challenge her findings, it is difficult to know how 
credible they are. That said, she concluded in her report that when it 
came to cosmetology certificates, it appeared that those who completed 
those certificates at

[[Page 31406]]

proprietary institutions had higher earnings gains than those who 
completed those certificates at community colleges, which she 
attributes to the number of proprietary cosmetology colleges that are 
affiliated with high-end salons and channel graduates to jobs at those 
salons.
---------------------------------------------------------------------------

    \76\ Cellini, S.R. and Turner, N. (January 2018). `2018 
Gainfully Employed? Assessing the Employment and Earnings of For-
Profit College Students Using Administrative Data' National Bureau 
of Economic Research working paper series. Available at: 
www.nber.org/papers/w22287.
---------------------------------------------------------------------------

    What her study fails to show, however, are earnings gains realized 
by students who are unable to enroll in the career and technical 
education program of their choice at a public institution, and instead 
enroll in a general studies program. Importantly, her study compared 
the outcomes of students who enrolled in CTE programs at public and 
proprietary institutions, but the study did not consider the outcomes 
of students who are unable to enroll in the career and technical 
education programs of their choice at a public institution, and instead 
enroll in a general studies program.
    What matters to a student may not be how the earnings compare 
between a CTE program offered by a public and private institution, but 
instead how the earnings compare between the CTE program available at 
the private institution, and the general studies program available at 
the public institution. We believe that the best way to inform student 
choice is by providing comparable information about all of the choices 
a student might have. This is another reason why we are rescinding the 
GE regulations and proposing to expand the College Scorecard.
    The Department agrees with the commenter that the GE regulations 
could have the unintended consequence of creating workforce shortages 
in occupations of high societal value. For example, according to the 
Department of Labor's ONET database, there were 634,000 medical 
assistants employed in the United States in 2016, with the projected 
need of almost 95,000 additional workers in this field by 2026. This 
makes medical assisting a ``bright outlook'' occupation, meaning that 
it will experience fast growth in the coming decade.
    Unfortunately, medical assisting is also a field that had a median 
pay of $33,610 per year in 2018.\77\ Yet, medical assistant program 
costs are rising, possibly because only medical assistants who complete 
a program accredited by the Accrediting Board of Health Education 
Schools (ABHES) or the Commission on Accreditation of Allied Health 
Education Programs (CAAHEP) are eligible to sit for the Certified 
Medical Assisting exam. Thus, programmatic accreditation may be the 
driver of escalating program costs given the requirements that 
accreditors impose on educational institutions.
---------------------------------------------------------------------------

    \77\ www.bls.gov/ooh/healthcare/medical-assistants.htm.
---------------------------------------------------------------------------

    It is unclear whether the relatively large number of medical 
assisting programs that failed the D/E rates measure did so because 
they are low-quality programs, they are overly expensive, high 
workforce demand in general results in a larger number of these 
programs (thus the higher failure rate is proportional to the larger 
number of programs offered) or if the educational requirements for 
entry to the field are disproportionately high relative to the wages 
employers pay.
    The medical assisting programs that failed the D/E rates measure 
may be overly expensive or of low quality. However, medical assistant 
programs prepare students to work in a field necessary to keep our 
healthcare system working and where employment opportunities are 
readily available, although they generate low wages. While the 
Department agrees that a student could benefit from having access to a 
low-cost medical assisting program, such as by attending a program at a 
community college, or apprenticeships, National Center for Educational 
Statistics (NCES) data show that of the 103,589 medical assistants who 
completed programs in 2013, 84,463 or 82 percent completed programs at 
proprietary institutions.\78\
---------------------------------------------------------------------------

    \78\ nces.ed.gov/surveys/ctes/xls/P155_2013.xls.
---------------------------------------------------------------------------

    In response to the commenters who raised concerns about the 350,000 
students who graduated from career education programs with $7.5 billion 
in debt, the Department shares the concern that many students take on 
too much debt. However, by dividing the total debt by the number of 
students, the average debt for each of the 350,000 students in that 
group would be $21,429, which is actually lower than the average loan 
debt for the Class of 2017 ($39,400) \79\ and the Class of 2016 
($37,172).\80\ Because proprietary institutions confer associate, 
baccalaureate, graduate, and professional degrees, comparisons of 
student debt levels must include not just community colleges, but also 
four-year and graduate institutions.
---------------------------------------------------------------------------

    \79\ ``A Look at the Shocking Student Loan Debt Statistics for 
2018,'' Published May 1, 2018, studentloanhero.com/student-loan-debt-statistics/.
    \80\ Zach Friedman, ``Student Loan Debt Statistics in 2018: A 
$1.5 Trillion Crisis,'' Published June 13, 2018, www.forbes.com/sites/zackfriedman/2018/06/13/student-loan-debt-statistics-2018/#53efceb77310.
---------------------------------------------------------------------------

    In response to the comment citing the Department's statistic from 
the 2014 Rule that 27 percent of GE programs resulted in lower earnings 
than those of a full-time worker who earns the Federal minimum wage, 
the Department has further considered this statistic and determined 
that it was based on an invalid comparison. In calculating annual 
earnings for minimum-wage workers, the Department assumed that minimum 
wage workers all work forty hours per week, fifty-two weeks per year.
    However, employment statistics for low-skilled workers show that 
unemployment is higher among this group than others, making the full-
time, year-round employment assumption overly generous. This 
calculation did not include part-time workers or unemployed workers in 
proportion to actual employment rates, but instead considered only the 
wage that would be earned by those who work full time. Consider that in 
2017, the real median earnings for males was $44,408 and for females 
was $31,610, and the real median earnings for males working full time, 
year-round, was $52,146 and for females was $41,977. These data make 
clear the impact of part-time work on wages, and do not include 
individuals who are not in the workforce, either by choice or not.
    On the other hand, the D/E rates calculation includes, not only 
full-time workers, but also part-time workers and those who are not in 
the workforce, perhaps by choice in order to raise children or care for 
an elderly family member. Among the 10,727,000 married couples with 
children under the age of 6, there are 3,811,000 in which the husband 
works but the wife does not but only 339,000 in which the wife works 
but the husband does not.\81\ This demonstrates the significant impact 
that age and gender have on workforce participation.\82\
---------------------------------------------------------------------------

    \81\ www.census.gov/library/publications/2018/demo/p60-263.html.
    \82\ www.census.gov/data/tables/time-series/demo/families/families.html, table MC-1.
---------------------------------------------------------------------------

    Additionally, as pointed out by Witteveen and Attwell in their 2017 
analysis of Beginning Postsecondary Survey (BPS) data, institutional 
selectivity and college major, as well as student gender and 
socioeconomic status, have a significant impact on earnings 
outcomes.\83\
---------------------------------------------------------------------------

    \83\ Dirk Wittenveen and Paul Attewell, The Earnings Payoff from 
Attending a Selective College, Social Science Research 66 (2017), 
154-169.
---------------------------------------------------------------------------

    If the D/E rates measure, like the projected earnings of minimum 
wage workers, included only full-time workers, it is likely that the 
comparison would have yielded very different outcomes.
    Changes: None.

[[Page 31407]]

D/E Rates Thresholds and Sanctions

    Comments: A number of commenters supported the Department's 
proposal to rescind the GE regulations due to a lack of evidence that 
an 8 percent debt-to-income ratio sufficiently differentiates between 
high-quality and low-quality, or between effective and ineffective, 
programs. These commenters agreed that the lack of an empirical basis 
for the 8 percent threshold makes it inappropriate to use in 
determining whether or not a program should be allowed to continue 
participating in title IV programs. One commenter stated that currently 
there is not enough data to identify appropriate sanctions for any 
institution and that this was evident when the 2014 Rule was being 
negotiated.
    Other commenters agreed with the Department that the GE regulations 
have several shortcomings, including the D/E rates thresholds, but 
argued that there are aspects of the GE regulatory framework that 
provide a reasonable and simple methodology for determining whether a 
program is preparing students for gainful employment. The commenter 
offered alternative D/E rates and thresholds for consideration, 
including using a 10% debt-to-income threshold with a 10-year repayment 
term or a 15% or 20% debt-to-income thresholds. Several commenters 
recommended that the Department revise the GE regulations rather than 
eliminate them. Another commenter asserted that sanctions should not 
apply only to proprietary institutions.
    One commenter argued that while there is no justification for 
eliminating the rule, changes should be made to the measures and 
thresholds, with the Secretary given discretion to provide relief to 
programs experiencing the effects of lasting economic trends that might 
distort the measure or limit its reliability.
    Several commenters stated that they thought efforts to reduce an 
institution's regulatory burden should be made, while also maintaining 
sanctions for poorly performing programs or, conversely, while 
maintaining the GE regulations. One commenter acknowledged the 
challenges associated with the GE regulations, but argued that these 
challenges are not insurmountable and that low-performing GE programs 
should be identified through some means and be subject to sanctions.
    One commenter stated that while they understood the validity of the 
D/E rates measure was questionable, without it in place, low-income 
students would continue to be able to enroll in programs that are at 
high risk of not providing the students the education they deserve.
    At least two commenters stated that the Department only addresses 
its concerns with the annual D/E rates metric but did not provide any 
justification for rescinding the discretionary D/E rates measure.
    A few commenters were strongly in favor of retaining sanctions, 
including the loss of title IV program eligibility, for those programs 
with failing D/E rates. One of these commenters stressed that taxpayers 
should not pay for educational programs that ``don't work well when 
there are plenty of programs that do work well,'' and that it is the 
government's job to ``provide regulations that put the right incentives 
in place to protect consumers.'' Another commenter writing in favor of 
retaining an accountability framework inclusive of program sanctions 
recommended that the Department leave the 2014 Rule in place as 
currently written. The commenter offered that students enrolled at 
proprietary institutions and in other GE programs have lower employment 
and earnings gains than students in similar programs in other sectors 
and are saddled with greater debt for these high-cost programs that 
they cannot reasonably be expected to repay. Several commenters pointed 
to studies that control for student demographics, and still find that 
students in for-profit GE programs have lower employment and earnings 
outcomes than students in similar programs in other sectors.
    Many commenters pointed to a blog post written by Sandy Baum as 
evidence that the Department mischaracterized research that she and 
Schwartz published as evidence that the 8 percent D/E rates threshold 
was an inappropriate or invalid threshold to use in establishing 
student borrowing limits.
    Discussion: The Department appreciates support from the many 
commenters who agreed that the 8 percent threshold lacks sufficient 
accuracy and validity to serve as a high-stakes standard that 
determines whether or not a program may continue to participate in 
title IV programs. The Department continues to believe that our more 
careful recent review of the Baum and Schwartz paper confirms that the 
8 percent D/E rates threshold is not appropriate to use in determining 
a program's continuing eligibility in title IV programs. The Department 
appreciates Dr. Baum's confirmation that the Department accurately 
reported the findings of her 2006 paper, including the recommendation 
that the 8 percent debt-to-income standard is a mortgage standard and 
one that ``has no particular merit or justification'' for use in 
establishing student borrowing limits.\84\ The Department understands 
that Dr. Baum does not wish her paper to be used to support the 
Department's decision to rescind the GE regulations; however, the 
Department has never asserted that Dr. Baum supports our decision. 
Instead, the Department has pointed out that the source it referenced 
to justify the 8 percent threshold in 2010 and in 2014 is her paper, 
which states explicitly that 8 percent ``has no particular merit or 
justification'' for establishing student borrowing limits. Therefore, 
the Department has no empirical basis for the 8 percent threshold and 
will, therefore, no longer use it to determine title IV program 
eligibility. The Department also recognizes that in its 2011 GE 
regulation, it used a different set of thresholds that included 12 
percent as the passing rate rather than 8 percent. This further 
demonstrates the absence of a reasoned methodology for distinguishing 
between passing and failing programs.
---------------------------------------------------------------------------

    \84\ Baum, Sandy and Saul Schwartz, ``How Much Debt is Too Much? 
Defining Benchmarks for Manageable Student Debt,'' The College 
Board, 2006, files.eric.ed.gov/fulltext/ED562688.pdf.
---------------------------------------------------------------------------

    In the 2014 Rule, the Department failed to provide a sufficient, 
objective, and reliable basis for the 20 percent threshold for the 
debt-to-discretionary income standard. However, in 2015, the Department 
promulgated regulations to establish a new income-driven student loan 
repayment program (REPAYE), and it established 10 percent as the debt-
to-discretionary income threshold that is used to determine a 
borrower's monthly payment obligation.\85\ The REPAYE program renders 
the 20 percent debt-to-discretionary income threshold in the 2014 Rule 
obsolete since no borrower would ever be required to pay more than 10 
percent of their discretionary income. Instead, REPAYE provides a 
longer repayment period at the 10 percent payment level in order to 
help borrowers manage their repayment obligations, and after 20 to 25 
years (depending upon the level of the credential earned), the 
remaining debt is forgiven and considered taxable income.\86\
---------------------------------------------------------------------------

    \85\ ``Student Assistance General Provisions, Federal Family 
Education Loan Program, and William D. Ford Federal Direct Loan 
Program,'' 80 FR 67204, October 30, 2015.
    \86\ ``Student Assistance General Provisions, Federal Family 
Education Loan Program, and William D. Ford Federal Direct Loan 
Program,'' 80 FR 67205, October 30, 2015.
---------------------------------------------------------------------------

    The Department agrees with the commenter who stated that all 
institutions should be held to the same

[[Page 31408]]

standards. This is why we attempted, through negotiated rulemaking, to 
identify thresholds that could be used to determine the continuing 
eligibility for all title IV programs. However, despite robust 
discussion and the Department's willingness to consider the use of 
other metrics to determine program outcomes, including a proposal from 
one negotiator to use a one-to-one ratio to report debt-to-earnings, 
there was no consensus around that proposal. Similarly, negotiators 
could not identify a threshold that they agreed should be used to 
determine title IV eligibility for all programs.
    The Department appreciates the recommendations from commenters to 
establish a new threshold for triggering sanctions, but we are not 
persuaded that any of those recommendations have merit, especially 
because borrowers have multiple student loan repayment options that use 
different formulas for determining how much a borrower must pay each 
month. None of the sanction recommendations properly accounted for 
differences in repayment rates among the available repayment options.
    The Department agrees that students and taxpayers should not 
continue investing in failing programs. However, the Department does 
not believe that the D/E rates measure accurately distinguishes between 
programs that ``do or do not work'' since the majority of title IV 
programs are not subject to the GE regulations. Also, it is difficult 
to argue that a program resulting in higher earnings does not work, 
simply because the cost of attending that program is paid by students 
rather than taxpayers, which results in higher student loan debt. The 
Department also believes that providing direct appropriations and other 
tax subsidies to low-value programs creates the same financial risks to 
taxpayers as student loans. Therefore, any future sanctions should also 
take into account the amount that taxpayers contribute through direct 
appropriations and preferential tax benefits to programs that do not 
result in better student or societal outcomes.
    Our review of the 2015 D/E rates reveals that a number of programs 
whose graduates have exceptionally low earnings passed the D/E rates 
measure simply because taxpayers provide substantial subsidies to 
students enrolled in those programs in order to reduce the portion of 
program costs that students pay through tuition. For example, 
cosmetology programs offered by non-profit institutions in Puerto Rico, 
such as at Institucion Chaviano de Mayaguez and Leston College, 
resulted in the lowest earnings among any GE programs in that 
field.\87\ Yet, these programs passed the D/E rates measure because the 
taxpayer carried most of the burden of paying the costs of program 
delivery. Just because the taxpayer covered the majority of the cost of 
the program, does not change the fact that its graduates earn 
exceptionally low wages. Even if these students took no loans, the 
taxpayer's contributions may not have been well spent and will not 
necessarily generate returns commensurate with investment.
---------------------------------------------------------------------------

    \87\ Institucion: $1,984, Leston: $2,322, per 2015 GE Final 
Rates.
---------------------------------------------------------------------------

    The Department is not surprised that students who attend 
proprietary institutions accumulate more debt than those who attend 
public institutions because the same is also true of students who 
attend private, non-profit institutions versus public, non-profit 
institutions. In fact, national data indicate that students who attend 
proprietary institutions, which include four-year institutions and 
graduate institutions, accumulate less debt on average than those who 
attend private, non-profit institutions.\88\
---------------------------------------------------------------------------

    \88\ The College Board, ``Median Debt by Institution Type, 2013-
2014,'' Trends in Higher Education, trends.collegeboard.org/student-aid/figures-tables/median-debt-institution-type-2013-14.
---------------------------------------------------------------------------

    The Department also notes that a number of GE programs offered by 
public institutions did not meet the minimum cohort size and, 
therefore, did not report outcomes. For example, as of 2017-2018 award 
year, 14,476 of 18,184 GE programs, or 79.6%, at public institutions 
have fewer than 10 graduates.
    Unable to demonstrate that the D/E rates measure is an accurate 
indicator of program quality and unable to identify an alternative 
threshold that is supported by empirical evidence, the Department is 
rescinding the GE regulations and plans to report directly to the 
public the median debt and earnings of program completers. This enables 
students, parents, and taxpayers to evaluate program value and make 
informed enrollment and investment decisions.
    Perhaps, in time, researchers can develop evidence-based 
recommendations for thresholds and sanctions that take into account all 
of the factors that influence program outcomes. More accurate and valid 
thresholds must also take into account differences in earnings among 
workers in different fields, the societal benefits afforded by some 
lower-paying occupations, the educational qualifications demanded by 
employers (which may exceed the level of education technically required 
to do a particular job), and the education requirements associated with 
State or professional licensure or certification.
    Since the Department is rescinding the GE regulations, it will no 
longer use arbitrary thresholds that lack an empirical basis to 
establish continuing title IV eligibility. However, through the 
expanded College Scorecard, students and taxpayers will, for the first 
time, have access to debt and earnings data for the graduates of all 
categories of title IV programs, which will help students, families, 
taxpayers, and institutions, determine which investments generate the 
highest return.
    The Department clearly stated in the NPRM that neither it nor 
negotiators were able to identify a D/E metric that was sufficiently 
valid and accurate to serve as a high-stakes quality test or to become 
a new, non-congressionally mandated, eligibility criteria for title IV. 
Regardless of whether gross income or discretionary income forms the 
basis of the D/E calculation, the methodology is inaccurate and fails 
to control for the many other factors other than program quality that 
influence debt and earnings.
    The Department does not agree that it can overlook the limitations 
of the GE regulations and instead rely on the Secretary to grant relief 
to institutions facing particular challenges or extenuating 
circumstances. While identifying a more accurate metric or formula for 
evaluating program quality may not be insurmountable, the Department 
does not currently have tools that can differentiate between outcomes 
that are the result of program quality and outcomes that are the result 
of institutional selectivity or student demographics.
    Changes: None.

Concerns About the Validity and Complexity of the D/E Rates Calculation

    Comments: A number of commenters agreed with the Department's 
decision to rescind the GE regulations due to inaccuracies in the D/E 
rates formula.
    Many commenters agreed with the Department's proposal to rescind 
the GE regulations because the D/E rates calculation is overly 
complicated and not easily understood by students or parents, which led 
those commenters to state it would be unwise to continue using those 
rates to determine title IV eligibility.
    Another commenter said that a study used to illustrate the impact 
of student demographics on earnings was inappropriate since it did not 
isolate graduates of GE programs or distinguish them from other 
individuals.
    Discussion: The Department agrees that the D/E rates calculation is 
too

[[Page 31409]]

complicated for many students and parents to understand how to 
translate D/E rates into a meaningful and useful data point.
    The Department referenced College Board information in their Trends 
in Higher Education research series to substantiate our claim that 
earnings are impacted by a number of factors, including gender, race, 
geographic location, and socioeconomic status.\89\ The Department 
agrees that the research does not single out graduates of GE programs, 
but it need not do that to be relevant to the Department's concerns 
about the many factors other than institutional quality that can impact 
D/E rates. The data supports our position that earnings outcomes are 
influenced by a number of factors, which may include program quality.
---------------------------------------------------------------------------

    \89\ Ma, J., et al., ``Education Pays 2016: The Benefits of 
Higher Education and Society,'' College Board, 
trends.collegeboard.org/sites/default/files/education-pays-2016-full-report.pdf.
---------------------------------------------------------------------------

    Changes: None.

Amortization and Interest Rates

    Comments: Among those who agreed with the Department that the GE 
regulations should be rescinded were commenters who were concerned 
about the use of amortization terms and interest rates that could have 
a significant impact on D/E rates outcomes.
    A few commenters disagreed with the Department's position expressed 
in the NPRM that it is not appropriate to use an amortization period in 
the D/E rates calculation of less than 20 years for any undergraduate 
program or of less than 25 years for any graduate program, given that 
the REPAYE program provides 20- to 25-year amortization periods, 
depending upon the level of the credential earned. The commenters 
maintained that it is inappropriate to apply the 20- or 25-year 
amortization period associated with REPAYE to associates or certificate 
programs since those programs are shorter-term and should be less 
costly than four-year or graduate programs. However, another commenter 
agreed with the Department's position on the amortization period that 
should be used to calculate D/E rates for two-year and certificate 
programs, offering that though switching to a 20-year amortization 
period would allow some low-performing programs to pass the D/E rates 
measure, it is reasonable given that the Department offers a repayment 
plan of that length.
    Another commenter strongly objected to the Department's statement 
in the NPRM that the problem of unaffordable debt levels has been 
ameliorated by the creation of IDR plans. The commenter asserted that 
IDR plans are not a solution to the problem of unaffordable for-profit 
educational programs and that there is no evidence to suggest IDR plans 
have improved the landscape of GE programs. One commenter contended 
that PAYE, REPAYE, and other IDR plans set programs up to fail the D/E 
rates measure since these repayment plans often lower monthly payments 
to the point where the minimum payment consists only of interest or, in 
some cases, allows the loan to negatively amortize.
    Discussion: The Department appreciates support from commenters who 
agree that it would be arbitrary for the Department to use an 
amortization term for the purpose of calculating D/E rates that differs 
from the amortization terms made available to borrowers under the law 
and the Department's REPAYE regulations. The Department agrees that it 
is desirable for students who completed shorter-term programs to repay 
their debts more quickly, but it is equally desirable for all borrowers 
to repay their debts over a standard 10-year repayment plan. However, 
Congress has created IDR plans to help borrowers manage debt and ensure 
that student loan payments will always be a fixed percent of 
discretionary income. For example, in the REPAYE program, introduced by 
the Department in 2015, the fixed percent of discretionary income is 10 
percent.
    The Department does not agree that IDR plans lead to a program's 
failure to meet the required D/E standard, since the D/E formula is a 
mathematical calculation and not a measure of the amount of debt 
borrowers are actually paying. However, the Department believes that 
student participation in IDR plans will negatively impact repayment 
rates, since it is possible that a student making the required payment 
is paying so little that the payment will not keep pace with 
accumulating interest. We share the commenter's concern about the 
impact of IDR plans on borrowers and outstanding debt, but IDR plans do 
not have an impact on calculating a program's D/E rate.
    Changes: None.

Earnings Data and Tip-Based Occupations

    Comments: Numerous commenters raised concerns that earnings data 
used to calculate D/E rates were not accurate or reliable for a number 
of reasons, including that SSA data excludes unreported tip income and 
some self-employment earnings. Several commenters noted that tip-based 
careers and commission-based employment may adversely impact a 
program's D/E rates. Others commented that since data collected by the 
SSA is used to administer the Social Security Act and not evaluate 
college or university performance, it should not be used to determine 
continuing title IV eligibility. Another commenter pointed out that SSA 
data cannot differentiate between wages earned by those working full 
time versus part time, including when part-time work is the option 
preferred by the program completer.
    On the other hand, one commenter stated that the Department should 
not make accommodations for the underreporting of tipped income. The 
commenter argued that those who underreport tipped income are 
committing an illegal act and the Department should not protect those 
individuals.
    Discussion: The Department agrees with the commenters' critiques of 
the D/E rates calculation and that institutions may not have the 
ability to control for the many variables that impact earnings. The 
Department does not believe that it should sanction institutions for 
aspects of student debt and earning outcomes that are outside of the 
institution's control. The Department provided detailed explanations 
regarding its concerns about the accuracy of the D/E rates formula in 
the NPRM, including that second- and third-year earnings do not 
accurately reflect long-term earnings associated with program 
completion; macro-economic conditions can have a significant impact on 
D/E rates, even if there are no changes in the program's content or 
quality; and prevailing wages may differ significantly from one 
occupation to the next and one part of the country to the next.
    The Department also agrees that the exclusion of tip-based income--
especially in heavily tip-influenced professions, such as cosmetology--
some self-employment income, and household income from the D/E rates 
measure renders the earnings portion of the D/E calculation subject to 
significant errors. It also agrees that institutions should encourage 
graduates to report all income accurately to the IRS; however, 
institutions do not complete tax returns for students and cannot 
guarantee accurate reporting.
    While the Department agrees that individuals who receive tip income 
should report that income fully and pay required taxes on that income, 
it is not the fault of institutions of higher education that many 
individuals do not. The IRS often assesses the fact that many tipped 
workers often underreport income, which further demonstrates

[[Page 31410]]

that the D/E rates calculation is subject to numerous sources of error. 
The Department provided a means for institutions to survey program 
graduates to obtain an alternate earnings appeal for the program in 
instances where IRS data underreported actual earnings.\90\
---------------------------------------------------------------------------

    \90\ 79 FR 64995.
---------------------------------------------------------------------------

    However, that mechanism proved more problematic and burdensome to 
administer than anticipated, and, in American Association of 
Cosmetology Schools (AACS) v. DeVos, a Federal court ruled that the 
Department's standard for such appeals was inappropriately high.\91\ 
The administrative burden and complexity of accounting for 
underreported income for the purpose of the D/E rates measure is 
another factor that supports the rescission of the 2014 Rule.\92\
---------------------------------------------------------------------------

    \91\ American Association of Cosmetology Schools v. DeVos, 258 
F.Supp.3d 50 (D.D.C. 2017).
    \92\ As the court stated in AACS v. DeVos: ``by inexplicably 
requiring high response rates to submit state-sponsored or survey-
based alternate earnings calculations, the DOE narrowly 
circumscribed the alternate-earnings appeal process, making it 
unfeasible for certain programs to appeal their designations.'' Id. 
at 57.
---------------------------------------------------------------------------

    While not expanding the application of its holding beyond AACS 
cosmetology programs, in AACS v. DeVos, the D.C. Circuit noted, in 
dicta, that the problem of underreported income is not reserved solely 
to cosmetology programs. The court stated: ``The problem of 
underreporting [income] extends across multiple industries and even 
across individual entities within those industries. While cosmetology 
schools' graduates engage in, on average, a certain amount of 
underreporting, other industries likely also experience different 
levels of underreporting based on factors like the amount of tips their 
graduates earn, how frequently their graduates are self-employed, and 
the amount of tax-compliance training their graduates receive. Within 
these industries, individual schools experience varying levels of 
underreporting.'' \93\ The consequence of this phenomenon, regardless 
of the existence of civil and criminal penalties, was an artificial 
devaluing of programs subject to graduates underreporting their 
income.\94\
---------------------------------------------------------------------------

    \93\ Id. at 74.
    \94\ The AACS court noted that the existence of penalties is 
``irrelevant'' to the issue of undercounting income. Id. at 56.
---------------------------------------------------------------------------

    As stated above, to remedy the underreporting issue impacting a 
program's D/E rates, the 2014 Rule offered an alternate earnings appeal 
process. Here, the D.C. Circuit found the process reasonable ``on the 
surface,'' but identified the assumption that every program would be 
capable of mounting an appeal ``the fly in the DOE's reasoned decision-
making ointment.'' \95\
---------------------------------------------------------------------------

    \95\ Id. at 74.
---------------------------------------------------------------------------

    The problem, the court found, was AACS's evidence that showed that 
cosmetology schools were ``simply unable to mount appeals.'' \96\ When 
considering that, according to the reported 2015 GE data, there were 
over 950 cosmetology programs that could not accurately report graduate 
income, plus additional GE programs that rely heavily on tips such as 
massage therapy, hair styling, and barbering, it is difficult to 
justify a metric that punishes a program harshly, while not fairly, 
accurately, or without undue burden measuring the value of the 
program.\97\
---------------------------------------------------------------------------

    \96\ Id.
    \97\ The Department notes that the 2014 Rule has been challenged 
numerous times in court proceedings, notably in Association of 
Private Sector Colleges and Universities v. Duncan, 640 Fed.Appx. 5 
(D.C.C. 2016) and Association of Proprietary Colleges v. Duncan, 107 
F. Supp.3d 332 (S.D.N.Y. 2015). The argument in these cases is 
nearly identical. The Department observes that in the Southern 
District of New York case, the court rejected APC's hypothetical 
``absurd'' results because it was not an ``as applied'' challenge to 
the rule. 107 F.Supp.3d at 367. As a result, the court left the door 
open to a challenge arising out of an as-applied circumstance, such 
as the one made by AACS two years after the Southern District of New 
York's ruling, referenced above.
---------------------------------------------------------------------------

    Further, the Department agrees with the commenters that SSA data 
may be inaccurate, especially for students who are self-employed and 
for workers in occupations that are highly dependent upon tip income, 
which may be underreported. SSA data similarly does not provide 
information about household earnings, which may be adequate to support 
a family without needing the graduate to work outside of the home. 
Penalizing programs because the students they serve may decide, for 
example, to work fewer hours in order to be with children is absurd, 
especially since daycare challenges and costs may make it economically 
advantageous to work part-time when family members can provide free or 
low-cost childcare.
    However, SSA has not renewed its MOU with the Department and, 
therefore, will not currently share earnings data. As a result, the 
Department is unable to calculate future D/E rates unless it changes 
the GE regulations to rely on a different data source for earnings 
information. The 2014 Rule specifically states that earnings data must 
come from the SSA. Considering the lack of a sufficient alternative 
data source and that the Department has decided to rescind the GE 
regulations, it is not necessary to identify a new data source for 
calculating D/E rates.
    Changes: None.

Short-Term vs. Long-Term Earnings

    Comments: Multiple commenters noted that the D/E rates measure, as 
established in the GE regulations, did not account for long-term 
earnings that accurately reflect the full earnings premium associated 
with college completion.
    Discussion: The Department agrees that D/E rates, based on earnings 
in the third and fourth year following completion of a program, do not 
accurately predict how much a graduate will earn over a lifetime.
    Changes: None.

Impact of Macroeconomic Changes

    Comments: One commenter stated that the earnings data used to 
calculate D/E rates were not sensitive to macroeconomic changes beyond 
the institution's control.
    Another commenter stated that the impact of economic issues, such 
as how recessions would be accounted for, are sufficiently addressed in 
the 2014 Rule by using a cohort that includes multiple years of 
graduates and considers results over several years. The commenter 
stated that the Department has not explained why it changed its 
interpretation of the rule regarding these issues. The commenter also 
stated that the Department fails to disprove the 2014 Rule's research 
on adult students and D/E rates in its justification to rescind the GE 
regulations.
    One commenter stated that using the impact of economic recessions 
to justify the rescission of the GE regulations is inappropriate, 
because data collected during a recession would be an outlier and would 
not have a long-term impact on rates or program sanctions. Another 
commenter said that by the Department's own words, the Great Recession 
was an exceptional event and exceptional events should not be relied 
upon as a baseline in policy making.
    One commenter stated that the Department misinterpreted research by 
Abel and Dietz \98\ in using these data to explain its concerns about 
the impact of recessions on earnings and employment. The commenter 
stated that this research is not particularly relevant to the gainful 
employment conversation and only includes bachelor's degree recipients. 
The commenter stated that there is a connection between educational 
qualifications and pay that the Department did not consider. The

[[Page 31411]]

commenter noted that Abel and Dietz looked at what graduates actually 
earned. The commenter also took issue with the CNN Money research that 
the Department cited in the NPRM since the methodology relied upon in 
that article was not available for review.
---------------------------------------------------------------------------

    \98\ Abel, Jaison & Richard Dietz, ``Underemployment in the 
Early Career of College Graduates Following the Great Recession'', 
National Bureau of Economic Research, September 2016, www.nber.org/papers/w22654.
---------------------------------------------------------------------------

    Discussion: The Department disagrees that the D/E rates measure 
under the 2014 Rule sufficiently controls for the impact of recessions. 
The Great Recession provides a recent example of how prolonged economic 
challenges coupled with high unemployment and a jobless recovery--with 
both phenomena lasting longer than the 3-year period afforded to 
institutions by the 2014 Rule--can have a considerable impact on D/E 
rates outcomes. It may be true that prolonged recessions of this 
magnitude are outlier events, but nonetheless, there could be long-
lasting consequences of an outlier event eliminating large numbers of 
higher education programs that will be needed after the recession is 
over and unemployment declines.\99\
---------------------------------------------------------------------------

    \99\ Note: The Court in APC v. Duncan (2015) stated that the 
Plaintiff's argument that the 2014 Rule failed to adjust for 
economic cycles was ``just a red herring.'' 107 F.Supp.3d at 368. 
The court agreed with the Department at the time that recessions 
lasted, on average, 11.1 months, while the GE regulations gave 
``struggling programs multiple years to improve their results before 
they lose HEA eligibility.'' Id. The Department points out that the 
Great Recession lasted eighteen months. Importantly, the Center on 
Budget and Policy Priorities cited that while, technically, the 
recession lasted from December 2007 to June 2009, the unemployment 
rate did not fall to where it was at the start of the recession (5%) 
until late 2015. (CBPP, ``Chart Book: The Legacy of the Great 
Recession,'' May 7, 2019, www.cbpp.org/research/economy/chart-book-the-legacy-of-the-great-recession.) Using that unemployment data--
the metric that would have the most profound impact on D/E rates 
outcomes--the three-year window afforded to institutions in the 2014 
Rule would come up desperately short of a jobless recovery that 
lasted eight years.
---------------------------------------------------------------------------

    Used as an example, the Great Recession was highly instructive, and 
we cannot assume that similar recessions will not occur again in the 
future. Not only did the Great Recession create downward pressure on 
wages, it also ushered in wide-spread credential inflation such that 
jobs that once required only a high school diploma now required a 
bachelor's degree simply because employers were using degrees as a 
filter to screen large numbers of resumes.\100\
---------------------------------------------------------------------------

    \100\ Burning Glass Technologies, ``Moving the Goalposts: How 
Demand for a Bachelor's Degree is Reshaping the Workforce,'' 
September 2014, www.burning-glass.com/wp-content/uploads/Moving_the_Goalposts.pdf. (``65% of postings for Executive 
Secretaries and Executive Assistants now call for a bachelor's 
degree. Only 19% of those currently employed in these roles have a 
B.A.'') (pg. 5)
---------------------------------------------------------------------------

    The Department does not believe that any studies used to make and 
support our decision to rescind the GE regulations were misinterpreted. 
The Abel and Dietz study was used to support the point that during the 
high unemployment of the Great Recession, credential inflation may have 
resulted in graduates taking jobs with earnings much lower than 
expected simply because other unemployed individuals with higher level 
credentials were plentiful. The study also points to the fact that job 
placement rates may have been skewed during the recession because 
credentials that may have technically qualified a person for a job were 
not sufficient enough to compete with other applicants. For example, 
while executive assistant jobs in the past did not require a college 
credential, a Burning Glass study of job postings showed that while 
only about a third of current executive assistants had a college 
credential, two-thirds of current job postings for executive assistants 
required at least a bachelor's degree.\101\ Credential inflation could 
have a significant impact on job placement rates reported by 
institutions since it can take years for institutions to gain approval 
to raise the credential level of their programs.
---------------------------------------------------------------------------

    \101\ Burning Glass Technologies, www.burning-glass.com/wp-content/uploads/Moving_the_Goalposts.pdf.
---------------------------------------------------------------------------

    The Department understands the concerns about the lack of 
information regarding the methodology that underlies the CNN Money 
article.\102\ The article was included in the NPRM for the purpose of 
illustrating the point that economic recessions impact graduates of all 
institutions, not just GE programs. Even without relying on the CNN 
article, however, we still believe that the D/E rates calculation has 
numerous flaws and sources of error for reasons explained elsewhere in 
this document.
---------------------------------------------------------------------------

    \102\ Chris Isidore, ``The Great Recession's Lost Generation,'' 
CNN Money, May 17, 2011, money.cnn.com/2011/05/17/news/economy/recession_lost_generation/index.htm; cited on 34 FR 40172.
---------------------------------------------------------------------------

    The Department notes that bachelor's degree programs are included 
as GE programs if they are offered by proprietary institutions. In 
fact, the largest enrollments in the proprietary sector are at online 
institutions that offer degrees through the doctorate level, all of 
which are considered to be GE programs. During the Great Recession, 
there were many factors that made it harder for students to get jobs, 
or that required them to obtain a higher degree than would otherwise be 
expected. All of this had a negative impact on earnings and potentially 
the D/E rates of some programs.
    Now that the economy has recovered and unemployment is low, it is 
reasonable to expect that the lack of access to workers with sufficient 
education and credentials could hold organizations back from growth 
they could otherwise support. The Department believes that it is 
dangerous and inappropriate for it to use two words in the HEA to 
create an approach to institutional accountability, that could 
potentially be used to manipulate the higher education marketplace. We 
think consumers should make those decisions for themselves, aided by 
information the Department plans to make available through the College 
Scorecard.
    Changes: None.

Geographic Disparities

    Comments: One commenter stated that pay disparities based on 
location and geography would impact a program's D/E rates but would be 
beyond the institution's control.
    On the other hand, another commenter stated that the Department has 
conducted no analysis to demonstrate that there is a connection between 
geography and D/E rates.
    Discussion: A review of published GE earnings data, if sorted by 
program, show that earnings differ widely among both community colleges 
and proprietary institutions (for certificate programs offered by both 
institutions), with some community college graduates earning more than 
proprietary graduates in some instances, and proprietary graduates 
earning more than community college graduates in others. A close 
examination of these data reveal that geography could be responsible 
for earnings differences.\103\ For example, not a single cosmetology 
program in Oregon passed the D/E rates measure, whereas almost all 
programs in Maryland passed.\104\ While programs in Puerto Rico 
resulted in the lowest earnings among all GE programs, nearly all 
passed the D/E rates measure because of the significant subsidies that 
public institutions receive. It therefore appears that geography can, 
in fact, have an impact on wages.
---------------------------------------------------------------------------

    \103\ https://studentaid.ed.gov/sa/about/data-center/school/ge?src=press-release.
    \104\ 11 out of 15 cosmetology programs in Maryland passed, 
while four were in the zone. No cosmetology program in Maryland had 
a failing score.
---------------------------------------------------------------------------

    In some instances, it may be difficult to fully appreciate the 
impact of geography on D/E rates because large, national institutions 
may have, in addition to a main campus in one state,

[[Page 31412]]

additional locations in multiple States. Yet program outcomes are 
reported in aggregate and attributed to the main campus at its 
location.
    The Department of Labor's ONET database provides evidence that 
geography has an impact on earnings. For each occupation, ONET lists 
wages by State, and those data make it clear that many occupations have 
prevailing wages that differ from one State or region of the country to 
another. For example, the ONET page for cosmetologists provides wage 
data by State showing that cosmetologists in Alaska earn more than the 
U.S. average, whereas cosmetologists in Mississippi earn less than the 
U.S. average.\105\
---------------------------------------------------------------------------

    \105\ www.onetonline.org/link/summary/39-5012.00.
---------------------------------------------------------------------------

    Therefore, we believe the evidence is substantial that even within 
a given occupation, salaries can vary from one geographic region of the 
country to another, and yet the D/E rates measure fails to take those 
differences into account. This is another example of why a bright-line 
standard is inappropriate and invalid since the D/E rates calculation 
does not control for general differences in wages across States. Note 
that when calculating the Estimated Family Contribution, FSA considers 
differences in taxes and the cost of living across States. That the 
Department didn't similarly build in a correction factor for 
differences in prevailing wages from one State to the next in 
calculating D/E rates was an unfortunate omission with potentially 
devastating impacts on students.
    Changes: None.

Cohort Sizes

    Comments: Some commenters expressed concerns that the small size of 
some program cohorts could result in year-to-year fluctuations in D/E 
rates due to the career decision or performance of a single student, 
whereas the impact of a single student's career decision or performance 
would not have a noticeable impact on larger cohorts.
    Discussion: The Department agrees with the commenters that cohort 
sizes can have an impact on year-to-year changes in outcomes, since 
smaller cohorts can be significantly impacted by the decision of just a 
small number of graduates to work part time or to take time out of the 
workforce. This means that year-over-year outcomes could differ, even 
if there are no changes in program content or quality. Given the large 
number of low-enrollment GE programs, a single student's earnings or 
career choices could have a significant impact on outcomes for a number 
of programs and institutions.
    We agree that this is yet another weakness of the D/E rates 
methodology and appreciate the commenters for bringing it to our 
attention.
    Changes: None.

Influence of Student Demographics

    Comments: One commenter stated that D/E rates can be affected by 
the percentage of adult students enrolled in a GE program because of 
their higher loan limits. The commenter recommended either reporting D/
E rates separately for independent and dependent students or capping 
the amount of independent student borrowing at a lower level, rather 
than rescinding the GE regulations.
    Many commenters supported the proposed rescission of the 2014 Rule 
due to the impact that various types of employment have on their 
programs' D/E rates. For example, one commenter stated the 2014 Rule 
hurts students who are on State assistance due to health issues but 
want to prepare for a new occupation that could accommodate their 
individual health needs and allow them to work, even if they cannot 
work full time. The commenter opined that educating such students would 
unfairly affect that program's metrics. Another commenter stated that 
the GE regulations create a disincentive to enroll students with the 
greatest financial need since they would be most likely to borrow to 
pay for the education, and the level of a student's borrowing is beyond 
the institution's or program's control. One commenter noted that much 
of the total borrowing by students is used for living expenses and not 
tuition and fees. Another commenter stated that students who are 
pregnant or have young families may unfairly and negatively impact a 
program's D/E rates, because their focus may be on their family rather 
than on finding a job with high earnings.
    One commenter noted that the proposed regulations contradict the 
statement in the 2014 Rule that the GE regulations ``do not 
disproportionately negatively affect programs serving minorities, 
economically disadvantaged students, first-generation college students, 
women, and other underserved groups of students.''
    A few commenters objected to the Department's assertion that title 
IV eligibility based on D/E rates creates unnecessary barriers for 
institutions or programs that serve larger portions of women and 
minority students. One commenter asserted that the NPRM misrepresents 
the experiences of historically disadvantaged groups, including in its 
suggestions regarding women and students of color. The commenter 
contended that rescission of the 2014 Rule will exacerbate gender-based 
and race-based disparities in wealth, income, and employment.
    Another commenter stated that the NPRM falsely asserts that the 
2014 Rule limits postsecondary access based on geographic, racial, and 
gender considerations. The commenter contended that many proprietary 
institutions have a track record of enrolling disproportionate numbers 
of minorities, lower-income individuals, and single mothers, not 
because of a lack of accessible options elsewhere, but rather because 
the programs successfully target underserved communities and low-
information consumers.
    One commenter stated that the College Board chart used to show 
inherent earnings differences linked to race, gender, and family 
socioeconomic status relies on Current Population Survey data that is 
not limited to those students who graduated from gainful employment 
programs and received Federal financial aid. The commenter claimed that 
the Department provided no real analysis as to how the data in this 
chart should be interpreted or applied to the rescission of the GE 
regulations, while an earlier version of the report was used in 2014 to 
reflect the point that higher education provides returns for students 
overall.
    One commenter provided citations from NCES and the Brookings 
Institution--cited elsewhere in this document--to refute the 
Department's assertion that student demographics and socioeconomic 
status play a significant role in determining student outcomes, and 
suggested that these data similarly refute our claim that student 
demographics rather than program quality could be responsible for GE 
outcomes.
    Discussion: The Department agrees that the percentage of 
independent students enrolled in a program could impact the calculation 
of D/E rates because of the higher loan limits Congress has provided to 
those students. Congress has established student loan limits at $31,000 
for dependent students and $57,500 for independent students, 
recognizing that independent students are less likely to receive 
financial assistance from parents and are more likely to have higher 
housing and dependent care costs than dependent students.\106\ Because

[[Page 31413]]

borrowing limits are based not just on the cost of tuition, fees, and 
books, but also include housing, transportation, and dependent care 
expenses, independent students may rely on student loans to offset lost 
wages and pay costs of living during periods of postsecondary 
enrollment.
---------------------------------------------------------------------------

    \106\ Federal Student Aid, ``Subsidized and Unsubsidized 
Loans,'' studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#how-much.
---------------------------------------------------------------------------

    The Department wishes to point out that the amount of debt utilized 
for calculating the debt portion of the D/E rates is the lower of mean/
median debt or total direct educational costs--tuition, fees, books, 
supplies, and equipment--so that loans taken for non-direct expenses 
may be excluded from the calculation. Still, adults with higher 
borrowing limits who borrow to generate a credit balance must first 
borrow enough to pay all of the direct costs of education since the 
credit balance is generated only after those other expenses are paid.
    As described earlier, independent students borrow more frequently 
and at higher levels than dependent students.\107\ Therefore, 
institutions that serve higher proportions of independent students will 
likely have higher student loan medians and averages. Proprietary 
institutions serve a disproportionate number of independent students 
(80% vs. 59% and 36%), as compared to community colleges or four-year 
public institutions, which will impact their D/E rates.\108\
---------------------------------------------------------------------------

    \107\ Baum, Sandy and Martha Johnson, ``Student Debt: Who 
Borrows Most? What Lies Ahead?'' Urban Institute, April 2015, 
www.urban.org/sites/default/files/alfresco/publication-pdfs/2000191-Student-Debt-Who-Borrows-Most-What-Lies-Ahead.pdf.
    \108\ Stephanie Riegg Cellini and Rajeev Davolia, Different 
degrees of debt: Student borrowing in the for-profit, nonprofit and 
public sectors. Brown Center on Education Policy at Brookings, June 
2016.
---------------------------------------------------------------------------

    The 2015 follow-up survey to the 2003-04 Beginning Postsecondary 
Survey shows that after twelve years of loan repayment, independent 
students across all institutional sectors still owed between 78.1 
percent (average) and 96 percent (median) of their original loan 
balance.\109\ The 1994 follow-up survey of the 1989-90 BPS showed that 
independent learners are less likely to complete their programs, 
especially if they also have dependents other than a spouse, enroll 
part time, or work full time while in school.\110\ Clearly student age 
is one factor that impacts both borrowing levels and completion rates.
---------------------------------------------------------------------------

    \109\ nces.ed.gov/pubs2018/2018410.pdf.
    \110\ nces.ed.gov/pubs/web/97578g.asp.
---------------------------------------------------------------------------

    While one commenter recommended that a separate D/E rate be 
calculated for independent students, since the Department is rescinding 
the GE regulations for the reasons discussed elsewhere, this 
distinction is no longer necessary.
    The Department agrees with commenters about the negative, 
unintended consequences that the 2014 Rule could have on the lives of 
students and on the national economy. As noted in the NPRM, and 
elsewhere in this document, the Department is aware that some students 
take time out of employment or elect part-time work over full-time work 
to care for children, care for other family members, manage a personal 
health condition, start a business, or pursue other personal lifestyle 
choices.\111\ The Department concurs that students who may not want to 
or be able to work full time should not be denied an educational 
opportunity.
---------------------------------------------------------------------------

    \111\ Carnevale, Anthony, et al., ``Learning While Earning: The 
New Normal,'' Center on Education and the Workforce, Georgetown 
University, 2015, 1gyhoq479ufd3yna29x7ubjn-wpengine.netdna-ssl.com/wp-content/uploads/Working-Learners-Report.pdf.
---------------------------------------------------------------------------

    The Department also agrees with commenters who expressed concern 
that the GE regulations could deter programs from enrolling students 
with high financial need, minority students, or women because they are 
more likely to borrow more and to have greater challenges in earning 
equal pay to men and non-minority students who complete similar 
programs. Thus, these students could make it more difficult for the 
institutions' programs to pass the D/E rates measure, regardless of 
program quality.\112\
---------------------------------------------------------------------------

    \112\ Guida, Anthony J. and David Figuli, ``Higher Education's 
Gainful Employment and 90/10 Rules: Unintended ``Scarlet Letters'' 
for Minority, Low-Income, and Other At-Risk Students,'' The 
University of Chicago Law Review, 2012, lawreview.uchicago.edu/publication/higher-education%E2%80%99s-gainful-employment-and-9010-rules-unintended-%E2%80%9Cscarlet-letters%E2%80%9D.
---------------------------------------------------------------------------

    According to the Census Bureau, real median earnings differ by 
race, with Asians ($81,331) and whites ($68,145) earning more than 
Hispanics ($50,486) or African Americans ($40,258), and with males 
($44,408) earning more than females ($31,610).\113\ While these data 
are not limited to students who participate in GE programs, we believe 
it is likely that the disparities that exist among the population at 
large are also reflected in the subpopulation of students who enroll in 
GE programs, and may even be greater.
---------------------------------------------------------------------------

    \113\ www.census.gov/library/publications/2018/demo/p60-263.html, Table A1.
---------------------------------------------------------------------------

    Moreover, programs serving women who are pregnant or who have young 
children are less likely to pass the D/E rates measure because women 
with children under the age of 6 are more likely to leave the workforce 
in order to care for children. According to the Census Bureau, in 2017, 
among married couples with children under the age of 6, 36 percent rely 
solely on the husband's income to support the family.\114\ In such a 
case, the D/E rates for the program from which the wife graduated would 
be negatively impacted by zero earnings for that graduate, even though 
she is part of a household with sufficient income to support her 
decision to leave the workforce.\115\ Therefore, two programs of equal 
quality could have significantly different outcomes under the D/E rates 
measure simply because one serves a higher proportion of married female 
students with children than the other.
---------------------------------------------------------------------------

    \114\ www.census.gov/data/tables/time-series/demo/families/families.html, Table SHP1.
    \115\ www.census.gov/data/tables/time-series/demo/families/families.html, Table SHP1.
---------------------------------------------------------------------------

    Almost four million families with a female head of household and no 
husband present live below the poverty level, whereas only 793,000 
families with a male head of household and no wife present live below 
the poverty level.\116\ In 2018, 30 percent of households with children 
under the age of 18 are led by a single mother.\117\ These data also 
have implications on student loan repayment rates since a borrower in 
an income-driven repayment plan will have a monthly payment based on a 
percentage of discretionary income, which varies by the number of 
people in a family. Therefore, a borrower who is a parent may have a 
smaller portion of income available for student loan payments, 
potentially resulting in negative amortization of their loans.
---------------------------------------------------------------------------

    \116\ www.census.gov/data/tables/time-series/demo/families/families.html, Pov-table4.
    \117\ www.census.gov/data/tables/time-series/demo/families/families.html, Figure FM-1.
---------------------------------------------------------------------------

    College Board data confirm that achievement gap disparities exist 
between men and women and between children from wealthier families and 
children of low-income families.\118\ Additionally, a 2017 report 
released by NCES confirmed the persistence of achievement gaps between 
non-minority students and minority students.\119\ Therefore, if 
programs are incentivized to serve more advantaged students to ensure 
better D/E rates outcomes, they would likely follow the lead of more 
selective non-profit institutions that enroll small proportions of low-
income, minority, and non-traditional students.
---------------------------------------------------------------------------

    \118\ Jennifer Ma, et al., ``Education Pays 2016: The Benefits 
of Higher Education for Individuals and Society,'' CollegeBoard, 
trends.collegeboard.org/sites/default/files/education-pays-2016-full-report.pdf.
    \119\ nces.ed.gov/pubs2017/2017051.pdf.

---------------------------------------------------------------------------

[[Page 31414]]

    The Department has not analyzed participation in GE programs by 
students with health conditions that preclude them from working full 
time, but any student who works less than full time will earn wages 
that reduce the mean and potentially the median earnings used for the 
D/E calculation. Therefore, the Department agrees with the commenter 
who suggested that programs may be less interested in serving students 
with chronic health conditions or disabilities, since doing so could 
reduce mean or median earnings among a cohort of completers.
    The Department wishes to clarify that in the 2014 Rule, it stated 
that ``student characteristics do not overly (emphasis added) influence 
the performance of programs in the D/E rates measure.'' \120\ However, 
the Department acknowledges that this statement was based on an 
incomplete analysis of the data available to the Department and 
considered only students enrolled in GE programs without controlling 
for other variables that may have impacted GE outcomes. NCES data 
confirm the impact of student characteristics on outcomes, and the 
Department erred in ignoring those findings when making this claim in 
the 2014 Rule.\121\ Moreover, a review of the final GE data reported in 
2017 confirms that programs that prepare students for occupations that 
are dominated by males rarely fail the D/E rates measure, whereas 
occupations dominated by women are represented disproportionately. This 
would suggest that gender does have a larger impact on D/E rates than 
the Department originally anticipated.
---------------------------------------------------------------------------

    \120\ 79 FR 64910.
    \121\ https://nces.ed.gov/pubs/web/97578g.asp.
---------------------------------------------------------------------------

    When full student populations are analyzed, such as through the 
Beginning Postsecondary Survey, we see over and over again that student 
characteristics have a considerable impact on student outcomes.\122\ It 
was misleading for the Department to make a statement in the 2014 Rule 
that does not accurately reflect the consistent findings of the 
National Center for Education Statistics, which conclude that student 
demographics and characteristics have a considerable impact on student 
outcomes.
---------------------------------------------------------------------------

    \122\ nces.ed.gov/pubs/web/97578g.asp.
---------------------------------------------------------------------------

    The Department disagrees with the commenter who said that College 
Board data showing disparities in earnings based on gender, race, or 
ethnicity does not apply to the GE regulations because these data are 
not limited to students who complete GE programs or students who 
receive financial aid. The point of sharing the College Board data was 
to illustrate that pay disparities exist among women and minorities 
across the population, which supports our assertion that programs with 
larger proportions of women and minorities may achieve poorer outcomes 
under the D/E rates measure. It is unlikely that students who complete 
GE programs are not subjected to the same gender and race pay 
disparities that exist across the general population.
    The Department agrees with commenters that historical and 
continuing discrimination has unfairly depressed the earnings of 
historically disadvantaged groups. We did not mean to suggest that 
women and minorities wish to earn less money or select occupations in 
order to earn less. We simply were making a statement of fact, which is 
that women and minorities still earn less than non-Hispanic whites and 
men, even when they graduate from the same institutions. We applaud 
first generation college students, women, and minorities who wish to 
leverage their own hard work and opportunities to give back to their 
communities by working in occupations that have high societal value, 
even if these jobs pay low wages.
    In the NPRM, we were simply pointing out that nationally, women and 
minorities enroll in majors associated with lower wages than those 
selected, on average, by white males, and that the GE regulations could 
reduce the number of options available to women and minorities despite 
their interest in pursuing certain careers and the benefits that those 
individuals and occupations provide to society because occupations that 
pay lower wages are more likely to fail the D/E rates measure. Although 
some institutions have implemented differential pricing so that 
students pay tuition based on the program in which they enroll, many 
institutions do not offer different tuition levels for different 
majors. Unfortunately, the earnings gap between female-dominated and 
male-dominated occupations persist, making it more likely that programs 
serving mostly women will fail the D/E rates measure.
    The Department does not agree with the commenter that by continuing 
the GE regulations, women will benefit since the programs that failed 
the D/E rates measure were far more likely to serve female students 
rather than male students. Eliminating programs that predominately 
serve women, and that prepare large numbers of them for rewarding 
occupations, is not the solution to the lack of pay equity in this 
country. While the commenter may be implying that women who are shut 
out of healthcare and childcare occupations, for example, will be more 
likely to pursue higher earning occupations, such as computer science 
or advanced manufacturing, there are no data to support that 
conclusion. Instead, women who lack access to the academic programs of 
interest to them may be reluctant to pursue higher education.
    The Department disagrees with commenters who suggested that by 
rescinding the GE regulations, the Department will exacerbate gender-
based and race-based disparities in wealth, income, and employment. 
Since many GE programs serve high proportions of women and minorities, 
sanctions that would eliminate these programs could reduce 
postsecondary opportunities, thereby contributing to the earnings and 
opportunity gap.
    The Department agrees that proprietary institutions serve a 
disproportionate share of underserved communities, and that this could 
be as much the result of nefarious targeted marketing efforts \123\ as 
it is the result of bona fide efforts to serve a population of students 
not served by traditional institutions. We have seen no national effort 
on the part of traditional four-year institutions to serve, en masse, 
the population of students who have been served by community colleges 
and proprietary institutions.
---------------------------------------------------------------------------

    \123\ Bonadies, Genevieve, et al., ``For-Profit Schools' 
Predatory Practices and Students of Color: A Mission to Enroll 
Rather than Educate,'' Harvard Law Review Blog, July 30, 2018, 
blog.harvardlawreview.org/for-profit-schools-predatory-practices-and-students-of-color-a-mission-to-enroll-rather-than-educate/.
---------------------------------------------------------------------------

    While the Department shares the commenter's concern about 
exploitative practices, many proprietary institutions employ 
pedagogical strategies--such as block scheduling, predetermined course 
sequences, year-round scheduling, and accelerated completion pathways--
that may be more appealing to non-traditional students.\124\
---------------------------------------------------------------------------

    \124\ Sugar, Tom, ``Boosting College Completion at Community 
Colleges: Time, Choice, Structure and the Significant Role of 
States,'' Complete College of America, www2.ed.gov/PDFDocs/college-completion/05-boosting-college-completion-at-community-colleges.pdf.
---------------------------------------------------------------------------

    The Department has not analyzed the racial or ethnic demographics 
of students served by programs that failed the 2015 D/E calculations. 
However, given that a large number of programs that failed the D/E 
rates measure, or that were discontinued by institutions that expected 
they would fail the D/E rates measure in the future, were medical 
assisting and related programs, or cosmetology programs--both female-
dominated professions--it seems clear that women will be impacted more 
significantly by program closures than

[[Page 31415]]

men. Also, given the high percentage of Pell grant recipients enrolled 
in programs with failing 2015 D/E rates, there is evidence that program 
closures would have a disproportionate impact on low-income students. 
Programs that serve high-income students would not fail the D/E rates 
measure because those students are far less likely to take student 
loans and, in addition, are more likely to receive financial support 
from parents during the early years of repayment.\125\
---------------------------------------------------------------------------

    \125\ Lochner and Monge-Naranjo, www.nber.org/papers/w19882.
---------------------------------------------------------------------------

    The Department continues to believe that the GE regulations could 
significantly disadvantage institutions or programs that serve these 
already underserved communities, further reducing the educational 
options available to them.
    The data are clear that proprietary institutions serve higher 
proportions of non-traditional and low-income students, as demonstrated 
by the fact that nearly 87 percent of students enrolled at proprietary 
institutions are Pell eligible, as opposed to 45 percent at community 
colleges and even lower percentages at public or private four-year 
institutions.\126\
---------------------------------------------------------------------------

    \126\ U.S. Department of Education, September 2015, NCES 2015-
601. Trends in Pell Grants Receipt and the Characteristics of Pell 
Grant Recipients: Selected Years, 1999-2000 to 2011-12.
---------------------------------------------------------------------------

    As College Scorecard expands to the program-level for all 
categories (GE and non-GE) of title IV programs, it will be important 
to keep in mind student demographics when comparing outcomes, including 
among open-enrollment institutions that typically serve higher 
proportions of low-income and minority students. Many of these 
institutions attract low-income populations to increase enrollment, but 
the Department believes that most also do it to fulfill their mission 
to improve educational opportunities for all students.
    The Department does not disagree that low-income and minority 
students have poorer educational and employment outcomes, and it does 
not disagree that proprietary institutions serve large proportions of 
these students than any other institutional sector. Compared to public 
two-years, public four-years, and private non-profits, proprietary 
institutions serve greater numbers of females, minorities, financially 
independent, and single parents.\127\ The Department encourages more 
selective institutions to do a better job of serving this population of 
students, but recognizes the unique opportunities provided by 
institutions that are designed to serve the needs of non-traditional 
students and may be more aware of their unique challenges and needs.
---------------------------------------------------------------------------

    \127\ Stephanie Riegg Cellini and Rajeev Davolia, Different 
degrees of debt: Student borrowing in the for-profit, nonprofit and 
public sectors. Brown Center on Education Policy at Brookings, June 
2016.
---------------------------------------------------------------------------

    Changes: None.

Role of Tuition in Determining D/E Rates

    Comments: One commenter noted that the GE regulations do not 
prohibit institutions from lowering tuition, which would also increase 
a program's chances of passing the D/E rates measure. The commenter 
suggested that focusing on cost is one way to avoid the impacts that 
macroeconomic trends have on earnings.
    Several disagreed with conclusions they believe were drawn in the 
NPRM regarding program cost relative to value. These commenters 
suggested the Department focused only on one half of the D/E rates 
calculation to make its point, and that it inaccurately suggested that 
a program of higher cost is necessarily of higher quality. One 
commenter stated that ``a program that has low costs but results in 
higher earnings to students obviously has higher quality than one that 
has high costs and low earnings.'' This commenter suggested that the 
Department's assertion reflects a rampant fallacy in higher education 
that a higher cost program is a higher quality program.
    Another commenter stated that the Department seems to be skeptical 
that program costs and earnings are reliable measures of success. 
Multiple commenters disagreed with the Department's contention that 
high-quality GE programs could potentially fail the D/E rates measure, 
because it costs more to provide high-quality education in certain 
fields or disciplines.
    One commenter specifically mentioned that community colleges 
provide high-quality GE programs despite their low tuition and fees.
    Discussion: The Department agrees that the GE regulations do not 
prohibit an institution from lowering tuition for a program, and that 
doing so could favorably impact GE outcomes. And the Department agrees 
that just because a program is higher cost, it is not necessarily 
higher quality. However, in some instances the higher cost is 
associated with better equipment and facilities, more highly qualified 
faculty, better quality or more plentiful supplies, and more abundant 
or convenient student support services. In some instances, if an 
institution were forced to lower its prices, it would be unable to 
provide the unique learning environment or well-equipped facilities 
that distinguish the institution.
    The Department commends community colleges for the tireless and 
vitally important work they do. However, as pointed out by the CSU 
Sacramento report,\128\ as well as data collected by the Department 
through IPEDS, many community colleges have small or shrinking CTE 
programs and may not be able to meet workforce needs or accommodate 
adult learners who may prefer accelerated scheduling, more personalized 
support services, smaller campus environments, more frequent program 
start dates, and predetermined course schedules that are more common 
among proprietary institutions.\129\
---------------------------------------------------------------------------

    \128\ Shulock, N., Lewis, J., & Tan, C. (2013). Workforce 
Investments: State Strategies to Preserve Higher-Cost Career 
Education Programs in Community and Technical Colleges. California 
State University: Sacramento. Institute for Higher Education 
Leadership & Policy.
    \129\ Cellini and Turner, www.nber.org/papers/w22287. See: ``For 
profit-schools may have better counseling compared to community 
colleges . . . for-profit sector has been quicker to adopt online 
learning technologies . . . for-profits respond to local labor 
market demand.'' (pg. 5); Richard Kazis, et al., ``Adult Learners in 
Higher Education: Barriers to Success and Strategies to Improve 
Results, Employment and Training Administration,'' Occasional Paper 
2007-03, March 2007. files.eric.ed.gov/fulltext/ED497801.pdf.
---------------------------------------------------------------------------

    A review of 2015 GE data reveal that in some instances, graduates 
of proprietary institutions enjoy significantly higher earnings than 
graduates of community college programs, which may indicate that the 
higher cost program might be a higher quality program, or that the 
institution has valuable partnerships with employers or has better job 
placement services.\130\ As Cellini pointed out, despite several 
limitations of the data she used, students who earn a cosmetology 
certificate at a proprietary institution are more likely to earn higher 
wages, perhaps due to the affiliation of some proprietary institutions 
with high-end salons.\131\ At the same time, the graduates of many 
proprietary institutions achieve lower earnings gains than the 
graduates of other institutions, including community colleges or four-
year institutions. And similarly, even among programs with the same CIP 
code, the GE data illustrate that there are vast earnings differences 
among community colleges and among proprietary institutions.
---------------------------------------------------------------------------

    \130\ studentaid.ed.gov/sa/about/data-center/school/ge.
    \131\ Cellini and Turner, www.nber.org/papers/w22287.
---------------------------------------------------------------------------

    Students may find that public colleges offer smaller numbers of CTE 
programs

[[Page 31416]]

than private or proprietary institutions. Nationally, the largest 
community college majors are liberal arts or general studies, which 
could signal that the majority of students are interested in 
transferring to a four-year program or that vocational programs are 
limited. In other instances, entry-level CTE programs might be offered 
only through the institution's non-credit or continuing education 
programs. These programs are not eligible for title IV funding and do 
not result in academic credit, which can disadvantage students who wish 
to continue their education and earn a college degree.
    The Department is concerned that at many public colleges, students 
who are enrolled in pre-professional programs have nowhere to turn if 
they are not admitted to the professional program of interest. For 
example, many students enroll at a two- or four-year institution with 
the goal of studying nursing, physical therapy (or physical therapy 
assistant), or occupational therapy (or occupational therapy 
assistant); however, these programs are often highly competitive, and 
the majority of applicants are not admitted. The absence of other 
allied health options at some institutions may require those who are 
not admitted to professional programs to either pursue a general 
studies major or to transfer to another institution that offers a 
larger number of related programs that enable a student to stay in 
their field of interest even if it means pursuing a different 
occupation in that field.
    The Department encourages institutions to work hard to reduce 
costs, encourages states to continue subsidizing higher education to 
reduce the price of public institutions, and encourages employers to 
provide more generous education benefits to reduce out-of-pocket costs 
to students. As stated earlier, public institutions offer lower tuition 
and fees because of the public subsidies they receive from state and 
local governments. However, at some public institutions out-of-state 
students who may be more academically gifted or who pay higher tuition 
and fees take priority over lower-income or less prepared in-state 
students because out-of-state students are perceived as being necessary 
to improve the institution's finances and reputation.\132\
---------------------------------------------------------------------------

    \132\ www.jkcf.org/research/state-university-no-more-out-of-state-enrollment-and-the-growing-exclusion-of-high-achieving-low-income-students-at-public-flagship-universities/.
---------------------------------------------------------------------------

    Research shows that the administrative costs for CTE programs are 
typically higher because of the need for specialized facilities, 
expensive equipment or supplies, smaller class sizes (due to space and/
or safety concerns), and the higher cost of faculty with advanced 
technical skills.\133\ And as pointed out by Shulock, Lewis, and Tan, 
community colleges often reduce the number of CTE programs or the 
number of enrollment slots in the CTE programs they administer when 
budgets are tight.
---------------------------------------------------------------------------

    \133\ Shulock, Lewis, and Tan, eric.ed.gov/?id=ED574441.
---------------------------------------------------------------------------

    As already discussed, the largest community college major is 
general studies or liberal arts, which according to Holzer and Baum has 
no market value for the majority of students who earn this degree and 
then do not transfer to complete a four-year degree. It is, therefore, 
difficult to know whether a general studies program is a worthwhile 
investment, if a student's goal is to earn a two-year degree that will 
lead to a higher paying job. A students may be better off paying more 
to attend an institution that increases the likelihood that the student 
will be able to enroll in an occupationally-focused program, or will be 
more likely to complete their program, than attending the lower tuition 
school if doing so limits the student's opportunity to pursue 
occupational education.
    In conducting the current rulemaking effort, the Department 
considered tuition and fees charged by all institutions since our goal 
was to expand the accountability and transparency framework to include 
all institutions. Nearly all private institutions charge higher tuition 
and fees than public institutions, and a growing number of students who 
enroll at public institutions attend an institution outside of their 
own state. Out-of-state tuition at public institutions mirrors the 
tuition charged at private institutions. Negotiators representing 
private, non-profit institutions made it clear that D/E rates will 
differ between private and public institutions due to differences in 
the level of public subsidies an institution receives. An institution's 
geographic location, campus facilities, and engagement in research and 
graduate education could impact the tuition and fees that students are 
charged. The Department sought through rulemaking a data-driven 
solution that could be applied to all institutions of higher education 
to better inform students and families about likely costs, borrowing, 
and earnings.
    Over the years, policymakers of both major political parties have 
admonished institutions to lower their costs, but proposals that would 
impose federally mandated price controls have never gained sufficient 
support to become law.\134\ For example, in order to help families make 
better decisions about where to enroll and how much to borrow, Congress 
proposed in the College Access and Affordability Act of 2005 the 
creation of a College Affordability Index (CAI) which would have 
identified institutions whose tuition increases outpaced inflation. In 
the House Report 109-231 at 159, Congress stated that the CAI: ``simply 
ask[s] that an institution of higher education provide additional 
information to allow for a clear and informed decision by consumers. If 
a student decides to attend an institution that increases tuition and 
fees that exceed the College Affordability Index, they do so fully 
aware and educated. It is the Committee's position that the Federal 
government does not currently have the authority to dictate tuition and 
fee rates for institutions of higher education. . . . The provisions in 
the bill simply serve as a means by which additional information can be 
provided to students and their families so that they can make informed 
and educated decisions about their postsecondary education options.'' 
\135\
---------------------------------------------------------------------------

    \134\ Committee on Education and the Workforce, Report 109-231, 
www.congress.gov/109/crpt/hrpt231/CRPT-109hrpt231.pdf.
    \135\ Ibid.
---------------------------------------------------------------------------

    Therefore, the Department believes that creating a system of 
sanctions that are so closely linked to the tuition and fees a college 
charges would exceed the Department's current authority and run counter 
to the authorities laid out by Congress to inform decisions, but not 
dictate what prices a college can charge. As a result, the Department 
continues to believe that a program could fail the D/E rates measure 
not because it is of poor quality or because it is over-priced relative 
to the cost of delivering the program, but instead because the cost of 
educational delivery is high or because an institution does not receive 
public subsidies.
    Changes: None.

Challenges in Predicting Future Earnings

    Comments: One commenter urged the Department to apply any outcomes 
metrics equitably to all institutions, rather than singling out or 
discriminating against one type of institution. The commenter also 
urged the Department to use simple, easy to understand formulas and to 
keep in mind that it is impossible for colleges to predict future 
changes in the economy or career areas.

[[Page 31417]]

    Discussion: The Department agrees, as we discussed earlier in this 
document, that the widespread problem of student loan debt makes it 
important to apply the same transparency and accountability metrics to 
all institutions. We also agree that we should avoid the use of complex 
formulas or those that allow the Department to manipulate outcomes by 
defining variables that are inconsistent with the requirements of 
student loan repayment programs. The Department agrees with the 
commenter that because the GE regulations do not calculate D/E rates 
until years after a student is admitted--sometimes as many as nine 
years after a student enrolls in a bachelor's degree program--an 
institution must be able to predict macro-economic conditions, future 
earnings, and various other factors that influence employment and 
earnings well in to the future in order to establish a price that will 
guarantee passing D/E rates, a nearly impossible task. Institutions 
that receive generous taxpayer subsidies can reduce the price students 
pay such that graduates pass almost any earnings test, but taxpayers 
also deserve to know if the price they are paying for a student's 
tuition is justified by the outcomes students achieve. The Department 
has determined that the best way to establish an equitable and 
meaningful transparency framework is by reporting debt and earnings 
income for all types of title IV programs to the public so that a 
market-based accountability system can flourish.
    Changes: None.

Impact of the 90/10 Rule

    Comments: One commenter expressed concern that the 2014 Rule may be 
in tension with the 90/10 requirement. The commenter believed logic 
from the Department or others indicating the 2014 Rule could encourage 
schools to reduce tuition is faulty because it puts schools at risk of 
noncompliance with the 90/10 rule without giving these schools tools 
necessary to reduce student borrowing.
    Many commenters argued that some colleges use aggressive marketing 
and recruiting to target veterans and service members in an effort to 
supplement title IV funds with GI Bill funds because the latter do not 
count against institutions for purposes of 90/10 rule compliance.
    Another commenter mentioned law enforcement investigations and 
actions regarding proprietary institutions. Three of the investigations 
specifically reference court cases where some institutions were under 
investigation for misrepresenting their compliance with the 90/10 rule.
    Some commenters, who were in favor of rescinding the regulations, 
argued that they do not treat all educational institutions the same. 
One commenter argued that public institutions are afforded much more 
leniency in the same industry, and that these public universities and 
community colleges are already being given a strategic advantage of not 
being accountable to metrics such as retention, placement, and 90/10.
    Discussion: Schools that misrepresent their compliance with 90/10 
are in violation of the Department's regulations, regardless of whether 
we rescind the GE regulations. The Department strongly believes these 
institutions should be held accountable and takes action against 
schools out of compliance with 90/10--as is required by law--including 
loss of title IV participation.
    The Department appreciates comments that point out the upward 
pressure that the 90/10 rule places on tuition costs at proprietary 
institutions and demonstrate the perverse incentives these regulations 
create that are not helpful to students. Because of the statutory 
requirement that proprietary institutions generate at least 10 percent 
of their revenue from non-title IV sources, coupled with the inability 
for an institution to establish lower student loan borrowing limits or 
to deny a student the right to borrow, an institution serving large 
majorities of low-income students will find it challenging to pass the 
90/10 requirement if they lower tuition well beneath federally 
established borrowing limits.
    Also, since independent students have higher borrowing limits than 
dependent students, and since the title IV loan programs enable 
students to borrow enough to pay for living expenses, an institution 
may be unable to prevent students from borrowing a more reasonable 
amount and working to pay some of the costs in cash because doing so 
will interfere with the student's ability to receive a credit balance 
to use for rent, food, and other costs of living. Since borrowing 
limits are based not just on tuition and fees, but also include 
housing, food, dependent care, and transportation, lowering tuition may 
not have a dramatic impact on borrowing. Even among community college 
borrowers where tuition is low, the average debt is $13,830, which 
shows the impact of non-tuition costs on student borrowing.\136\
---------------------------------------------------------------------------

    \136\ Community College Review, ``Average Community College Debt 
for Graduating Students,'' www.communitycollegereview.com/average-college-debt-stats/national-data.
---------------------------------------------------------------------------

    Therefore, the Department believes that providing program-level 
debt and earnings information for all categories (GE and non-GE) of 
title IV participating programs is the best way to help all students 
make better informed decisions.
    Although certainly there may be instances in which veterans were 
targeted to help meet the 90/10 requirement, it is inappropriate to 
suggest that schools serving thousands of veterans are somehow not 
delivering on their promises or providing opportunities veterans want 
and need. Some institutions that ``target'' veterans do so because they 
provide unique program opportunities, student services, or adult 
learning environments better suited to the needs of veterans.
    Some proprietary institutions are more attractive to veterans than 
other institutions because they are designed around the needs of adult 
learners, serve large populations of veterans who share certain values 
and life experiences, provide additional training to faculty on the 
unique needs of veteran students, are more likely to accept credits 
earned from other institutions, and they are more likely to give credit 
for skills learned during military service. Student veterans made 
tremendous sacrifices to earn their GI Bill benefits and should be able 
to use their benefits to attend any school that works well for them. 
The Department appreciates the comments on 90/10; however, that rule is 
not the subject of this rulemaking.
    Changes: None.

Reporting and Compliance Burdens for GE Programs

    Comments: Several commenters expressed concern that if the 
Department chose to expand GE-like requirements to include all 
institutions, it would add significant reporting and compliance burden 
to all institutions. Some commenters expressed a desire to limit the 
applicability of the GE regulations to the programs covered by the 
definition of ``institution of higher education'' in section 102 of the 
HEA.
    One commenter discussed other Department requirements that 
institutions are already subject to, such as enrollment reporting and 
requested the Department carefully consider the implications of 
expanding disclosure requirements to all title IV-eligible programs.
    Several commenters discussed how the reporting burden from the 2014 
Rule took away resources from efforts that

[[Page 31418]]

would actually improve student outcomes.
    Other commenters described the problems that would be presented by 
the requirement to directly distribute disclosures to prospective 
students by specified procedures at the correct stage of the 
matriculation process and to maintain all the records to document 
compliance. Commenters also expressed concerns about protecting student 
privacy and managing data associated with the records retention 
requirements.
    On the other hand, other commenters stated that burden reduction 
was not a sufficient reason to justify the proposed regulatory changes.
    One commenter stated that the Department misrepresents the stance 
of the American Association of Community Colleges (AACC) in relation to 
the burden associated with the reporting and disclosure requirements of 
the GE regulations and that community colleges have been supportive of 
the GE regulations.
    Several commenters stated that they thought efforts to reduce 
regulatory burden should be made while also maintaining sanctions for 
poorly performing programs or while maintaining the GE regulations.
    Several commenters affirmed that meeting disclosure requirements 
using the standardized GE Disclosure Template posted to individual 
program web pages presented a much greater administrative burden than 
was reflected in the 2014 Rule's Regulatory Impact Analysis.
    Some commenters described how the burden from GE reporting 
requirements impacted student services at their school, with one 
commenter stating that it slowed down responsiveness to student and 
business needs at community colleges. Another commenter described 
services that were impacted by resources needed to fulfill GE reporting 
requirements, explaining that resources were taken away from activities 
that would help students achieve gainful employment such as providing 
student counseling and making efforts that would assist students with 
completion.
    Some commenters pointed out that the costs of compliance are 
reflected in higher program costs passed on to students and taxpayers. 
Another commenter emphasized the need for the Department to carefully 
consider costs when establishing any future disclosure framework.
    One commenter indicated that it would be unlikely for institutions 
to save much money from the reduced administrative burden from the 
regulatory change. The commenter also indicated that it would be 
unlikely that any savings passed to students would be enough to change 
student decision-making. The commenter expressed concern that removing 
the extra costs would provide proprietary institutions with a wider 
profit margin to operate and would encourage expansion.
    Multiple commenters stated that the Department should encourage 
maximum transparency by requiring all programs at all institutions to 
disclose the same information so that students could have a baseline in 
which to compare information.
    Some commenters suggested that the Department should publish 
information from data that it already has access to, sparing 
institutions from having to meet additional reporting requirements.
    Some commenters emphasized that program disclosures should be easy 
to find.
    Some of these commenters expressed concern that the direct 
distribution requirement in the GE regulations would take away ease and 
flexibility that students need in the application process and that 
students may be overwhelmed by disclosures.
    Some commenters expressed concern regarding inconsistencies in the 
way that job placement rates are determined and reported under the GE 
disclosure requirements. Several commenters suggested that the 
Department standardize the methodology for calculating in-field job 
placement rates the same way that accreditors have done.
    Many commenters expressed the desire to see fair and consistent 
disclosures allowing students to make apples-to-apples comparisons 
among programs. Several commenters explained the difficulty of manually 
gathering GE reporting data, such as job placement rates, as is 
required by the 2014 Rule. One commenter stated that they were not 
confident in the reliability of data calculated by thousands of 
institutions according to their own interpretations of the 2014 Rule, 
especially with regard to the definitions and calculations of job 
placement rates. Multiple commenters emphasized the importance of 
avoiding disclosure of metrics such as job placement rates that are not 
comparable due to differences in State and accreditor definitions.
    Others were opposed to requiring GE-style disclosures of all 
institutions but did agree that there is a need for greater 
transparency which could be achieved by the Department through the 
College Scorecard.
    One commenter would prefer that any net price disclosures focus on 
tuition and fees, independent of living expenses.
    One commenter stated that the Department had not adequately 
explained why direct disclosures should not be provided to prospective 
and enrolled students or included in promotional and advertising 
materials.
    Discussion: The Department thanks the commenters for sharing their 
insight into how the GE regulations are affecting schools and their 
ability to serve students. The Department's decision to rescind the GE 
regulations will enable institutions to redirect resources to other 
institutional functions and priorities. We strongly encourage 
institutions to do so. The Department agrees with the commenter who 
stated that proprietary institutions could use the cost savings 
generated from rescinding GE to increase their profit margin, but that 
is true of any institution that has GE programs. The Department 
sincerely hopes that institutions apply the savings generated to 
education and student services, but it acknowledges that it cannot 
control how institutions utilize cost savings.
    In addition to reducing the cumbersome reporting burden associated 
with the reporting provisions of the GE regulations, by rescinding the 
regulations, institutions will no longer be required to engage in the 
direct distribution of disclosures or maintain records to prove that 
students receive those disclosures.
    The Department agrees with the commenter who pointed out that it 
can be difficult to find GE disclosures on many websites. In our own 
efforts to review GE disclosures, we found that many of them are more 
than one or two clicks away from the program page, and some are not 
even referenced on the program pages, but instead are under a separate 
page for institutional research or consumer information. The College 
Scorecard, focusing on tuition and fees, will provide ``one stop 
shopping'' to students and families seeking information about 
institutions and programs, and it will allow the student to select 
multiple campuses and programs for the purpose of comparing information 
on the same screen.
    The Department acknowledges that the AACC has been generally 
supportive of the concept of the GE regulations; however, they have not 
spoken favorably about the administrative burden the regulations have 
placed on their own members. Due to taxpayer subsidies, which reduce 
the price students pay, their programs will likely pass the D/E rates 
measure even if earnings or program quality are very low. In fact, the 
Department points to

[[Page 31419]]

this as one of the reasons why the D/E rates measure is not an accurate 
indicator of quality since programs with exceptionally low earnings 
will pass the measure as long as those programs continue to be 
subsidized by taxpayers.
    In addition, given the small number of community college GE 
programs that met the minimum cohort size, the Department agrees that 
the burden of reporting was not justified by the information provided. 
For many programs, D/E rates were not issued because of small cohort 
sizes and many data items on the GE Disclosure Template output would 
appear as ``not applicable'' because a group contained fewer than 10 
students. Of the 18,184 GE programs offered by non-profit institutions 
in 2017-18, only 3,708 have cohort sizes of 10 or more. This means that 
relatively few GE programs offered by non-profit institutions would be 
subject to the D/E rates measure or disclosure requirements, but it 
also means that there are relatively few opportunities for students to 
engage in occupationally focused education at non-profit institutions. 
This fact may be the single most important clue as to why proprietary 
institutions have become increasingly attractive to students seeking 
occupational education and credentials. A program that graduates less 
than 10 students per year is obviously quite small, either because of 
enrollment caps that the institution or its accreditor places on the 
program or because students at the institution are largely unaware that 
the program exists. Clearly, the majority of GE programs accommodate a 
very small group of students as table 1-1 previously showed, which may 
suggest that the programs available at non-profit institutions simply 
do not provide the supply of enrollment opportunities that meet student 
or workplace demand.
    The Department notes that AACC states in its comments that 
``implementing the gainful employment regulation has been hugely 
burdensome for community colleges'' and that ``any future GE regimen 
must be extremely sensitive to cost.'' \137\ Therefore, we do not 
believe that we have misrepresented the position of AACC regarding the 
reporting and disclosure burden. We agree that the GE regulations have 
been overly burdensome to schools and to the Department, and that all 
regulations should be sensitive to cost and burden. By rescinding the 
GE regulations, the cost and burden associated with GE reporting has 
been permanently removed.
---------------------------------------------------------------------------

    \137\ Walter G. Bumphus and J. Noah Brown, American Association 
of Community Colleges and the Association of Community College 
Trustees Comments on the NPRM on Gainful Employment, (Docket ID ED-
2018-OPE-0042), September 13, 2018, www.aacc.nche.edu/wp-content/uploads/2018/09/GE_nprm_final_comments_AACC_ACCT_091318.pdf.
---------------------------------------------------------------------------

    The Department did not receive quantitative estimates of costs 
associated with changing web architecture or updating GE disclosures on 
institutional websites each year, so we cannot comment on whether the 
burden estimates in the 2014 Rule were accurate or not. Because the 
Department is rescinding the GE regulations, institutions will no 
longer be required to post disclosures of program outcomes on their 
websites. The Department will now provide outcomes data to all students 
using the College Scorecard, or its successor, which has the advantage 
of reducing the burden on institutions and allowing students to more 
easily compare outcomes among the institutions and programs available 
to them.
    The Department thanks the commenters for their feedback and points 
out that the Senate Task Force on Higher Education Regulations 
similarly pointed to the GE regulations as being particularly 
burdensome regulations that outstrip legislative requirements and 
intent.\138\ Administering the GE regulations, particularly alternate 
earnings appeals, has also turned out to be much more burdensome to the 
Department than was originally anticipated.
---------------------------------------------------------------------------

    \138\ www.help.senate.gov/imo/media/Regulations_Task_Force_Report_2015_FINAL.pdf. (pg. 29)
---------------------------------------------------------------------------

    Although, the Department has changed disclosure templates in an 
effort to make them user friendly, we are not convinced that the GE 
disclosures are useful to students. Consumer testing has revealed that 
students mostly want to know how students like them have done in the 
program.\139\
---------------------------------------------------------------------------

    \139\ Bozeman, Holly, Meaghan Mingo, and Molly Hershey-Arista, 
``Summary Report for the 2017 Gainful Employment Focus Group,'' 
Westat, https://www2.ed.gov/about/offices/list/ope/summaryrpt2017gefocus317.pdf.
---------------------------------------------------------------------------

    In developing any future transparency framework, the Department 
will focus on using administrative data sets and Department-developed 
data tools to minimize burden on institutions and to allow students to 
compare all of the institutions and programs they are considering by 
accessing a single website. This website will be accessible to 
individuals with disabilities, in accordance with section 508 of the 
Rehabilitation Act. This will ensure that students with disabilities 
will be able to use the website tools and have equal access to the data 
that are available to all other students.
    The Department agrees that as a result of differences in 
definitions by States and accreditors, including not only differences 
in how jobs are defined but also in which students are to be included 
in or excluded from the measurement cohort, the job placement rates 
reported in current GE disclosures are not comparable. In addition, the 
results of a 2013 Technical Review Panel highlighted that job placement 
determinations are highly subjective and error prone, since there is no 
reliable data source available to institutions for the purpose of 
determining or verifying job placements. Until a reliable data source 
is available for determining job placements, the Department believes 
that earnings data is the most reliable information that can be made 
available to students to give them a sense of graduate earnings, even 
if those data do not specify the precise type of job graduates have 
secured.
    The Department agrees with the commenter that the Department should 
encourage maximum transparency by ensuring that institutions provide 
the same information to all students and prospective students. The 
Department has determined that an expanded College Scorecard, or its 
successor, not direct disclosures to students, is the appropriate way 
to share this information, and plans to do so by adding program-level 
outcomes data for completers of as many title IV programs as possible 
without compromising student privacy. Although the Department does not 
require regulatory changes to implement or modify the College 
Scorecard, we appreciate the many comments we received in response to 
the NPRM and will consider them as we plan our Scorecard modifications.
    Changes: None.

Scorecard

    The Department is not required to engage in rulemaking in order to 
make changes to the College Scorecard. Therefore, the following section 
of this final rule is not subject to the APA or the requirements of 
rulemaking. However, because we believe that the Scorecard is a 
critical tool to improving transparency and informing a market-based 
accountability system, we sought feedback from the public regarding 
recommended content for the Scorecard. We are providing a summary of 
the comments and our responses to better inform the public, but we are 
not creating regulations related to the College Scorecard.
    Comments: Many commenters supported the Department's efforts to 
expand the College Scorecard to include

[[Page 31420]]

program level data. One commenter stated that placing the information 
in a central location will be more effective than allowing institutions 
to comply with disclosure requirements by placing them in obscure 
sections of their websites. Another commenter supported moving all 
consumer data to the College Scorecard.
    Several commenters had questions or concerns regarding College 
Scorecard data. Some commenters expressed concerns that College 
Scorecard data are based only on undergraduate students and that this 
results in inaccurate data for many institutions.
    One commenter expressed concern that small cohorts are not excluded 
from the calculation and that the data may contain discrepancies 
between cohorts and methodologies used for each of the metrics or rates 
provided. The commenter gave the examples of such discrepancies, 
including their belief that: Debt amounts are based only on students 
with Federal loans, but earnings information is based on all students 
attending the institution; debt includes debt for indirect costs in 
addition to direct expenses; some metrics are based on completers only 
while others include all students; and retention and graduation rates 
are based on first-time, full-time students only, which is not 
representative of the current student population. The commenter then 
expressed concerns that students will not know that the outcomes data 
are based on different student cohorts.
    Many commenters stated that they would like to see the Department's 
data collection efforts expanded beyond first-time, full-time students. 
Given the increase in part-time students, transfer students, and 
students who stop-out for various reasons, some commenters pointed out 
that by including only first-time, full-time students, the majority of 
students at some institutions are excluded from the data.
    One commenter requested that the Department develop a mechanism 
that would authorize institutions to forward student data to the 
Department of the Treasury so that Treasury can disclose to the 
Department information about the earnings of all program completers and 
not just those who participated in title IV programs.
    One commenter stated that calculators and other financial 
management tools that can be customized to an individual student's 
situation provide better information than mandatory standardized 
disclosures on program pages. Another commenter suggested that the 
Department publish a calculator allowing students to understand debt, 
the application of compound interest, and the expected income of a 
career choice.
    Some commenters stated that although they value transparency and 
are encouraged by the Department's aims to provide more relevant 
information via an online portal, they believe that there is no 
replacement for in-person disclosures, which ensure that a student 
receives information and has an opportunity to ask questions and 
understand metrics being provided.
    Several commenters expressed that they were skeptical that 
institutions would provide accurate information on institutional 
disclosures, and these commenters were concerned that institutions 
would put the disclosures in obscure portions of their website.
    Several commenters supported the idea of adding a link to the 
College Scorecard from institutional program pages. One commenter 
suggested that the Department create a standardized icon for 
hyperlinking to the data disclosure portal, mandate that schools use it 
on their websites and set requirements for its size and prominence. 
Other commenters suggested that the Department require links to 
Department data on school websites. One commenter stated that such a 
link should only be to the main College Scorecard page and that 
requiring specific links based on program would cause undue burden.
    One commenter stated that the centralized Scorecard approach would 
be less burdensome than updating websites and catalogs. Another 
advocated for measurements to be added to a national website and 
require that the link should be included in Admissions paperwork, Free 
Application for Federal Student Aid (FAFSA) documents and student 
catalogs.
    One commenter recommended that the Outcome Measures Survey for 200 
percent of time to completion be used to calculate the graduation rate 
data and then made recommendations for how to augment the IPEDS data 
collection.
    Many commenters stated that disclosures should be part of the PPAs 
for all schools, and that all participating schools should be required 
to link to College Scorecard or a similar national website containing 
standardized disclosures. Commenters stated that such disclosures would 
be easy for students to use and would result in meaningful comparisons. 
Another commenter pointed out that disclosure requirements exist for 
other large transactions, such as buying a car, and students need this 
information when making life-impacting decisions. The commenter thought 
it was especially important that disclosure requirements be applied to 
programs subject to the 2014 Rule given past history of predatory 
practices at some schools.
    Many commenters discussed items that they thought should be 
included in any upcoming disclosure framework, including: Whether a 
program meets State requirements for graduates to obtain licensure in 
the field; information about programmatic accreditation requirements, 
program costs, and program size; data on program outcomes such as 
completion rates and withdrawal rates; earnings data for program 
graduates after a set period of time in the job market; the percentage 
of students who complete the program or transfer out within 100/150/200 
percent of the normal time to complete; the percentage of Pell 
recipients who complete the program or transfer out within 100/150/200 
percent of the normal time to complete; institution-level success rates 
parsed out by credential level; the percentage of program graduates 
earning above a particular income threshold after a set period of time 
in the job market; and the percentage of students receiving Pell 
grants.
    One commenter expressed concerns that the Department had not 
discussed any plans to include other data in the College Scorecard, 
such as: Primary occupation for which a program is designed to prepare 
students, program length, completion and withdrawal rates, loan 
repayment rates, program costs, percentage of title IV or private 
student loan borrowers enrolled in a program, median loan debt, mean or 
median earnings, program cohort default rates, or State licensure 
information, which are disclosure items covered under the GE 
regulations.
    One commenter stated that the Department needed to provide a 
rationale for the decision to not continue each item required for 
disclosure under the 2014 Rule.
    Some commenters listed questions that they would want answered if 
the Department establishes disclosures via the College Scorecard or 
other means. These questions included: How the Department will gather 
the information for the centralized data portal; what requirements 
there would be to submit data to the centralized data portal; what 
format the information would need to be disclosed in; how frequently 
information would need to be submitted to the Department; whether the 
Department would make it possible to submit data more frequently to 
ensure that the best possible data are available to students; whether 
the data would be

[[Page 31421]]

disclosed on a rolling basis or with deadline requirements; how the 
College Scorecard or other website would indicate missing information; 
what enforcement mechanism might be used and how it would work; how 
institutions would have access to monitor and update disclosure 
information; what privacy controls would be used; what evidence 
institutions would be required to provide to support their disclosures 
and whether those documents would be viewable by the general public; 
how the Department would explain the data collection period used; what 
action the Department would take if it found during an audit that an 
institution misrepresented disclosure information; whether the 
Department would regularly review which data items would be disclosed 
for usefulness to students and; what role stakeholders would play in 
such a review process.
    Several commenters stated that an informational solution alone, was 
not adequate protection for students. Some of these commenters believed 
that relying solely on the College Scorecard places the burden on 
students to find and interpret information on programs. One commenter 
stated that no evidence supports the conclusion that publishing more 
outcome data will lead to better decision making on the part of 
students and that most college students would not use the information 
anyway. One commenter cited research that indicated that upper-income 
students were more likely to use Federal data in their college 
decision-making process.\140\
---------------------------------------------------------------------------

    \140\ Hurwitz, Michael and Jonathan Smith, ``Student 
Responsiveness to Earnings Data in the College Scorecard,'' SSRN, 
September 1, 2017, papers.ssrn.com/sol3/papers.cfm?abstract_id=2768157.
---------------------------------------------------------------------------

    One commenter noted that the College Scorecard is not implemented 
through regulation and, therefore, is not a good disclosure tool to 
expand for programmatic disclosure purposes. Another stated that the 
College Scorecard will not be as effective as a disclosure template and 
will not lead to loss of eligibility or include a direct warning from 
an institution to a student considering a poor-performing program. 
Another commenter questioned the Department's assertion in the NPRM 
that the College Scorecard will provide more accurate and reliable data 
than the GE Disclosure Template. Finally, several commenters expressed 
concerns that the College Scorecard will not be enough to dissuade 
students from enrolling in a program if high pressure sales tactics, 
advertisements, commission-based compensation, and ``pain points'' are 
used in recruiting tactics.
    Another commenter asked how the Department will balance the need 
for data with privacy protections in cases of programs with less than 
ten students. One commenter asked whether the Department will relax 
privacy protections if it provides program-level data through the 
College Scorecard. Without doing so, any disclosures through the 
College Scorecard would still not have program-level data for programs 
with fewer than ten completers. Several commenters suggested various 
metrics for inclusion in the College Scorecard, while others noted that 
privacy laws will prevent students from getting a truly clear picture 
of programmatic outcomes.
    One commenter suggested differentiating earnings between those who 
complete and those who do not complete. Another commenter pointed out 
that the College Scorecard does not provide information on a 
programmatic level and instead provides information at the institution 
level. One commenter expressed concerns that the College Scorecard 
cannot be updated with program-level data soon. The commenter then 
stated that the Department should clarify if it intends to keep the 
same time horizon of six to ten years after entering schools, whether 
it will disaggregate earnings for completers and non-completers, and 
whether it will group very small majors in similar content areas to 
ensure it is able to produce data covering as many students as 
possible. Finally, the commenter suggested that the Department conduct 
consumer testing, consider holding a technical review panel with 
behavioral economists, designers, and other experts, and construct a 
data download tool for users who wish to access files with the data in 
smaller chunks than the current large zip file.
    One commenter requested that the Department make sure that the 
reporting accurately accounts for the enrollment patterns of community 
college students who may take longer than the traditional time to 
complete. Another commenter expressed concerns that because most of the 
key College Scorecard data are based on title IV recipients, 
information would be made available for a minority of community college 
students, as fewer than four out of ten community college students 
receive any Federal financial student aid. The commenter went on to 
state that this minority of students is unrepresentative of the larger 
population of community college students--title IV aid recipients are 
generally less affluent and likelier to have worse outcomes than their 
better-resourced colleagues.
    Many commenters pointed out that cosmetology schools and other 
certificate programs are not included in the current College Scorecard. 
One commenter asked that if the College Scorecard approach is adopted, 
that cosmetology schools should be included in a sensible way or be 
exempted from the requirement. Additionally, the commenter contended 
that program-level earnings data will not be representative of the 
income made by graduates because many completers work part-time, are 
building businesses, or fail to include tips in their reported 
earnings. One commenter asked that the Department hold off on requiring 
certificate programs from having to include a link to the College 
Scorecard until it contains data regarding certificate programs.
    One commenter suggested that the Department adopt language in the 
College Scorecard that addresses occupational circumstances and 
geographic differences that have the potential to impact the accuracy 
and validity of the data. Another commenter suggested that the 
Department provide earnings information only for program completers, 
which differs from the current College Scorecard because the earnings 
information encompasses both completers and non-completers. The 
commenter argued that the purpose of the College Scorecard's earnings 
data is to inform students of what they may expect to earn if they 
complete a given program and that including non-completers' earnings is 
confusing. One commenter suggested incorporating a risk-adjusted model 
for presenting data based upon variables such as socioeconomic 
demographics and geographical location of students and the institution.
    Another commenter expressed concerns that including self-reported 
data on the College Scorecard would invite misrepresentation.
    One commenter suggested reporting median earnings of graduates by 
program. Another commenter suggested integrating analytic insights 
derived from unique, consumer-level data maintained by other sources. 
Another commenter suggested using the Credential Transparency 
Description Language schema in the College Scorecard and providing the 
data on the institution's website.
    Some commenters stated that they did not believe it necessary for 
the Department to require institutions to publish information such as 
net price, program size, completion rates, and accreditation and 
licensing

[[Page 31422]]

requirements because this information could be added to an FAQ page 
published to the College Scorecard site so that students could ask the 
schools the questions if they so choose.
    One commenter expressed concern that the College Scorecard website 
would not include all of the information a student might need to 
effectively select a school. The commenter explained that disclosures 
are more effective when they are produced by government regulators to 
further policy goals rather than from an institution whose goal is to 
limit liability.
    One commenter stated that the Department has not negotiated in good 
faith, because the Department has not committed to update the College 
Scorecard with program-level data.
    Several commenters expressed concern that increasing the profile of 
the College Scorecard would increase burden on institutions since there 
would be more reporting requirements for an expanded College Scorecard. 
One commenter stated that requiring individual programs to track and 
disclose information such as programmatic outcomes, program size, 
completion rates, and net price would result in costs that the 
institutions would then pass on to students in the form of higher 
tuition and fees. Several commenters expressed concern over whether 
students would know where to find program-level information on the 
College Scorecard after it was added and how to interpret the 
information. One commenter expressed concern that there is currently no 
law or regulation requiring that the program-level information be added 
to the College Scorecard.
    Discussion: The Department very much appreciates the suggestions, 
ideas, and potential inclusions and exclusions in the future College 
Scorecard, or similar tool. The Department continues to believe that 
the best way to create a transparency and market-based accountability 
system that serves all students is by expanding the College Scorecard 
to include program-level outcomes data for all categories (GE and non-
GE) of title IV participating programs, so that students can make 
informed decisions regardless of which programs or institutions they 
are considering. The Department is also working towards providing more 
information to students and parents about the level of Parent PLUS 
borrowing. Only when parent borrowing is included can students fully 
understand the level of borrowing in which families engage at a 
particular institution. This also provides families with more complete 
and meaningful expectations of educational costs and students and 
parents should be aware of this when making enrollment decisions.
    Parents in the later years of their career may be less able to 
manage student loan repayment than their children who have an entire 
career ahead of them, yet borrowing limits on Parent PLUS loans are 
exceedingly high regardless of the parent's income, which could have 
dire results as parents near their retirement years.\141\ We intend to 
list Parent PLUS debt separate from student debt, but nonetheless 
believe that it is an important addition to consider in the expanded 
College Scorecard.
---------------------------------------------------------------------------

    \141\ See: Andriotis, AnnaMaria, ``Over 60, and Crushed by 
Student Loan Debt,'' Wall Street Journal, February 2, 2019, 
www.wsj.com/articles/over-60-and-crushed-by-student-loan-debt-11549083631.
---------------------------------------------------------------------------

    The Department notes that several negotiators recommended that if 
earnings are to be reported by the Department, those earnings should be 
considered at 5 or 10 years post-graduation, since earnings in the 
early years after completion may not reflect the true earnings gains 
that individuals will realize from their college credential. The 
Department agrees that earnings at the 5- and 10-year mark, or within a 
similar timeframe, will provide more meaningful information about a 
borrower's likelihood to repay his or her loans throughout the standard 
repayment period. The three- and four-year earnings data currently used 
to calculate D/E rates were an aspect of the GE regulations that made 
it an unreliable proxy for program quality since it is not unusual for 
a graduate to take a few years to hit their career stride, especially 
if they enter the job market during a time of high unemployment.
    Therefore, the Department intends to integrate earnings data closer 
to the suggested 5- and 10-year earnings data into the expanded College 
Scorecard. However, since the Department does not have program-level 
data prior to 2014-15, it will report shorter-term earnings during the 
first year of Scorecard expansion, and will increase the number of 
years following graduation that are captured in the data until it 
reaches the target post-completion metric.
    Because students who do not complete the program will not benefit 
from the full program or curriculum, it is inappropriate to include the 
earnings of non-completers in the determination of program outcomes. 
While we encourage institutions to take action to increase program 
completion rates, the Department recognizes that there are many factors 
that influence a student's decision or ability to persist and complete 
the program. Since the HEA is designed to increase access, and since 
loans are made available to all students regardless of their level of 
academic preparedness, institutions that adhere to open-enrollment 
admissions policies and institutions that are minimally selective will 
likely have lower completion rates than highly selective institutions 
that serve mostly students who are economically-advantaged, 
traditionally-aged, and academically well-prepared for college-level 
work. It is not appropriate to penalize institutions because they take 
on the difficult work of serving high risk students.
    The Department is sympathetic to the concern that by including only 
title IV participating students, some institutions will not have a 
representative sample of students included in the earnings calculation 
and the populations on which earnings are reported are likely to be 
lower earners. The Department agrees that students from 
socioeconomically disadvantaged backgrounds tend to have lower earnings 
in the early years after graduation. However, the Department is 
permitted to collect data only on title IV participants, unless 
Congress passes legislation to lift the current data collection 
prohibitions. Both debt and earnings data presented in the Scorecard 
will be limited to title IV participating students; however, the 
Department will work to help students understand why earnings data are 
being reported for a different cohort for students (i.e., those who 
graduated 5 or 10 years ago) than the cohort for which median borrowing 
levels are reported (the most recent cohort of graduates for which data 
are available). Since college costs can change dramatically over time, 
we believe that median debt from the most recent cohort of graduates 
will more closely approximate what a current or prospective student 
might need to borrow, whereas the amount a student borrowed many years 
ago may not be meaningful if the tuition and fees are considerably 
higher now or the demographics of students served have shifted over 
time (such as because the institution has become more or less selective 
over time).
    The Department does not believe it has the authority to include in 
its MOU with the Department of Treasury a request for institutions to 
provide Social Security numbers for non-title IV participants in order 
to include their earnings data in the Scorecard. We will continue to 
explore what options, if any, might be available to us so that non-
title IV students can be included in Scorecard.

[[Page 31423]]

    The Department agrees that calculators and financial management 
tools can be useful to students. Already, the Department has debt 
calculators on the FSA website, and as the Department launches the 
NextGen Financial Services Environment, it will include additional 
borrower education opportunities. We will explore ways to connect those 
tools to the College Scorecard so that students can manipulate data 
from the Scorecard as part of their exploration.
    The Department is not suggesting that the College Scorecard replace 
person-to-person meetings or conversations between campus staff and 
prospective students and does not intend for the College Scorecard to 
replace those interactions. We do believe, however, that students who 
have access to the Scorecard, and who receive Scorecard information as 
they complete their FAFSA, will be able to identify which institutions 
they may want to attend and to enable outcomes comparisons between 
institutions that serve demographically matched populations or that 
support similar educational missions. Our goal is to go beyond a 
passive website and to connect Scorecard to the MyStudentAid mobile app 
so that Scorecard data becomes part of the experience and not an 
ancillary tool that students may or may not utilize.
    While the Department encourages all institutions to post links to 
the Scorecard on their institutional websites and likes the idea of 
developing a recognizable icon so that students know where to find the 
link, we are not including those requirements here. We believe that by 
linking the College Scorecard to electronic or mobile FAFSA completion, 
and by providing Scorecard data in an API format so that others, such 
as Google, can develop new ways to make these data available to 
consumers, more students will interact with these data and have the 
opportunity to use them in their personal decision-making process.
    The Department agrees that if institutions are left on their own to 
calculate and disclose their own outcomes, the data may be less 
accurate and reliable since different data sources could be used to 
produce those data, since human error could be introduced, and since 
dishonest institutions could misrepresent the truth. However, it must 
be noted that IPEDS data are similarly self-reported, and the 
Department has often pointed out its concern about the likely presence 
of errors in those data. Still, IPEDS reporting is the best data 
available to the Department, and we believe that as those data become 
more readily available to students for use in enrollment decision-
making, institutions will be incentivized to further assure the 
accuracy of those data.
    Still, the Department believes that the best way to provide 
accurate and comparable data to students and parents is to expand the 
College Scorecard to provide program-level outcomes data for title IV 
participating programs at all credential levels and regardless of 
institutional type. We agree with the commenter who stated that a 
centralized tool like the College Scorecard will be easier to update 
than websites and catalogs.
    We appreciate the commenter who suggested that Outcome Measures 
Survey data be included in Scorecard, which has more comprehensive 
graduation rate information including rates for non-first time and 
part-time students, and the Department will take this recommendation 
under advisement as it develops the expanded Scorecard.
    The Department acknowledges that disclosures are often made 
available to consumers making large financial transactions. We 
nonetheless believe that the College Scorecard is the optimal way to 
share information to student and to ensure that comparable data are 
made available to students and parents. The Department will explore the 
possibility of separating debt and earnings data for Pell and non-Pell 
students at the program-level by examining to what extent these data 
can be made available while maintaining student privacy.
    As for concerns about data privacy, the Department notes that it 
receives earnings data in aggregate, not at the student level. 
Therefore, there was no potential for a breach of privacy regarding 
earnings. The Department has no plans of changing this policy and 
rescinding the regulation will not change any students' privacy 
safeguards, regardless of the size of the program in question.
    The Department will continue to include information about 
institutional costs on the College Scorecard and will explore the 
feasibility of including program-level cost data. The Department has 
also explored calculating program-level completion rates for title-IV 
students but believes there will be challenges to creating entry 
cohorts because students can transfer from program to program within an 
institution, which makes it difficult to determine which students to 
include in an entry cohort. The Department is also exploring ways to 
provide information on program size to help students understand how 
competitive it might be to be admitted to, how many different class 
sections will be available, and how likely it is that the program is 
actually offered each semester. This will also help to reduce the use 
of tactics that lure a student to an institution and then redirect that 
student to a different program. The Department is concerned that some 
institutions may be advertising highly sought programs in order to 
attract students, but once students enroll at the institution, they 
then find that the program either is not enrolling more students, has 
entrance requirements substantially more rigorous than entrance 
requirements to the institution, or has a long waiting list, at which 
point the institution may then encourage them to enroll in a different 
program, such as a general studies program or a lower-level applied 
program. By publishing program size, students may get important clues 
about the likelihood of their program of choice being available to 
them. It may also help explain why proprietary institutions have 
entered into markets where the uninformed believe a community college 
is meeting career and technical training needs simply because they list 
having a program in their catalog.
    The Department will consider the usefulness of IPEDS completion 
rate data to the Scorecard and appreciates the recommendations 
regarding the 100/150/200 percent completion rates. The Department does 
not have access to data that provides accurate information about the 
primary occupations for which a program prepares a student, and in non-
CTE programs, it is difficult to determine what does or does not 
constitute a primary occupation. Therefore, we will likely not include 
information about primary occupations on the College Scorecard. 
Similarly, current plans do not include job placement rates because we 
do not have access to accurate data on this. Our goal is to encourage 
accreditors and states to stop relying on subjective, and error prone 
job placement rate determinations to evaluate program outcomes, and to 
instead encourage the use of College Scorecard earnings data to more 
accurately inform students about the earnings of prior graduates.
    The Department is planning to include program-level information 
such as median debt, loan repayment rates, monthly payment associated 
with that debt, and cohort default rates in the Scorecard, although 
initially some of those data points may be calculated at the 
institution level rather than the program level. The Department does 
not have plans to include information about private loans in the 
College Scorecard, since we do not have access to those data without 
requiring institutions and

[[Page 31424]]

students to report additional data to the Department.
    The Department believes it has provided sufficient rationale for 
not including every element of the 2014 Rule disclosures in the 
expanded College Scorecard. However, we have described more generally 
throughout this document, and in this and the earlier section about GE 
disclosures, why we will no longer be requiring GE disclosures. Since 
our goal is to develop a transparency framework that can be applied to 
all categories (GE and non-GE) of title IV programs, we are concerned 
that such disclosures could be too burdensome to large institutions 
that offer hundreds of programs. Therefore, we will not require any 
institutions to post GE-type disclosures as a result of this final 
rule.
    The Department plans to begin with annual updates to the College 
Scorecard and will consider whether more frequent updates are 
appropriate. College Scorecard will continue to adhere to the 
Department's privacy standards and suppress values with small cohort 
sizes and will consider aggregating data from multiple years if 
necessary, to achieve larger cohort sizes. The Department plans to 
engage in consumer testing of the College Scorecard.
    We hope that more students will use the College Scorecard since we 
have mechanisms to disseminate data to students through the mobile app 
and other NextGen FSA tools. We also believe that by providing data in 
API format, other developers will find novel and innovative ways of 
making data available to students in a user-friendly format and in ways 
the Department is unlikely to explore with its own limited resources.
    We agree that the College Scorecard will not prevent high pressure 
sales tactics or pain point recruiting, but it will provide information 
that makes it difficult for institutions to misrepresent the truth 
about their outcomes. By rescinding this rule, we are making no changes 
to the incentive compensation regulations; therefore, we are not 
proposing any changes to prohibitions on commission-based compensation.
    We will work towards expanding the College Scorecard to include 
programs-level metrics, including for certificate programs, 
undergraduate programs, graduate programs and professional programs. 
The Department is not currently planning to separate total debt from 
debt associated with tuition and fees; however, we will continue to 
consider the request to do so.
    The Department plans to continue providing institution level 
information to help students understand the impact of variables, such 
as geographic differences, on outcomes. In addition, other contextual 
information, such as institutional selectivity or percent of Pell 
recipients to help students compare similar institutions. We will 
consider ways in which we might interact with other databases, such as 
credit bureau data or student outcomes data.
    The Department has negotiated in good faith and has committed to 
updating and expanding the College Scorecard. Since we are still 
developing the tool and are not required to publish regulations in 
order to produce the College Scorecard, we will not commit to all of 
the particulars of its content in this final regulation. However, we 
will consider the recommendations we received through the public 
comments as we update and expand the College Scorecard. The Department 
will continue to enforce disclosure and reporting requirements that 
remain part of the PPA. In addition, the Department will continue to be 
mindful of the reporting burdens placed upon institutions for all 
reporting or disclosure requirements.

Certification of GE Programs

    Comments: One commenter stated that institutions of higher 
education should be required to certify programs that lead to careers 
with State licensure requirements actually meet those State licensure 
standards.
    Discussion: The Department considered disclosures related to 
licensure and certification, as well as accreditation, as part of its 
Accreditation and Innovation negotiated rulemaking package and, 
therefore, will not include regulations related to disclosures of this 
information in this rulemaking.
    Changes: None.

Continued Implementation of the GE Regulations Prior to Rescission

    Comments: One commenter representing a coalition of members of 
advocacy groups stated that until a rescission of the 2014 Rule is 
effective, the Department is obligated to follow the law as it exists 
but has failed to do so.
    Alternately, two commenters requested that the Department suspend 
any further requirements to comply with the GE regulations, including 
the GE data reporting requirements, publication, or revisions to the 
disclosure template, and requirements to submit appeals information.
    Discussion: The GE regulations remain in effect until this 
regulation is final and the 2014 Rule is rescinded. However, the 
Department does not have access to the SSA earnings data necessary to 
calculate future D/E rates. As a result, the Department cannot take 
action to remove programs from title IV participation since no program 
will have failed the D/E rates measure for two out of three consecutive 
years or had a combination of fail and zone rates for four consecutive 
years. The Department will produce a modified disclosure template that 
institutions must use to disclose information, as prescribed by the GE 
regulations.
    Changes: None.

Rulemaking Process

    Comments: One commenter stated that the Department did not conduct 
a reasoned rulemaking since it has proposed to eliminate all sanctions. 
One commenter stated that the proposed regulations are arbitrary and 
capricious, because the Department failed to justify its regulatory 
choices. Specifically, the commenter referred to the removal of the 
sanctions for poor-performing programs and the removal of disclosures 
to students about program outcomes. The commenter stated that Executive 
Order 12866 was not followed because the Department did not issue a 
regulation where the benefits of the new policy outweigh the costs. The 
commenter also stated that the Department has not presented rigorous 
analysis and evidence to support its claims.
    A commenter stated that the Department did not negotiate in good 
faith because it refused to hold a fourth session of negotiations after 
tentative consensus on the proposal was reached.
    One commenter accused the Department of ignoring and disregarding 
years of public input on GE matters.
    One commenter provided an appendix in which he quoted from the 2014 
NPRM but did not provide a comment to explain its inclusion. The 
commenter also provided research by Libassi and Miller about how the GE 
regulations reduce loan forgiveness costs, but again did not provide 
any explanation as to its inclusion.\142\
---------------------------------------------------------------------------

    \142\ Libassi, C.J. and Miller, B. (8 June 2017). How Gainful 
Employment Reduces the Government's Loan Forgiveness Costs. Center 
for American Progress.
---------------------------------------------------------------------------

    Discussion: The Department disagrees with the commenter who 
asserted that the Department is advancing a policy where the risks 
outweigh the benefits. Throughout the NPRM, and this document, we have 
provided sufficient evidence that the benefits of the final 
regulation--including ensuring that all students are free to choose the 
school

[[Page 31425]]

and program of their choice--outweigh the risks. In fact, we have been 
clear that by expanding the College Scorecard to improve program-level 
outcomes data for all title IV-participating programs, we will expand 
the benefits of transparency to all students and not just those who 
seek enrollment in a GE program. The Department also disagrees with the 
commenter who said that it did not provide rigorous analysis to support 
its position. The Department has provided a more than rigorous review 
of data that was not considered in connection with the 2014 Rule and 
disagrees with earlier claims.
    The Department disagrees with the suggestion that it did not 
conduct a good faith, open, and reasoned rulemaking. The Department 
proposed the removal of sanctions at the first negotiating session, 
explaining that the numerous sources of error in the D/E rates measure 
make it an invalid proxy for program quality. Nonetheless, when a 
negotiator proposed the use of one-to-one debt-to-earnings ratios that 
would be more easily understood by students, the Department supported 
this approach and voted favorably.
    Although the Department hoped for consensus among the members of 
the negotiating committee, it was not reached. A number of negotiators, 
including representatives of non-profit institutions, discussed the 
many reasons why sanctions are not appropriate based on the 
inaccuracies of the D/E rates measure as a proxy for quality since the 
rates may be influenced by many factors outside of the institution's 
control. The Department believes it is inappropriate to sanction 
institutions and eliminate opportunities for students based on metrics 
that are influenced by factors outside of the control of institutions, 
such as student loan interest rates.
    The Department also disagrees with the assertion that a program 
that fails the D/E rates measure is automatically and necessarily a 
poor performing program. As noted in the NPRM, there are a plethora of 
factors that influence a program's D/E rates. As such, the Department 
does not believe that failing the D/E rates measure is an accurate 
indicator that the program is a poor performing program. In addition, 
given the number of passing programs that have associated earnings 
below the poverty level, the Department does not believe that passing 
the D/E rates measure indicates that the program is a good program or 
that students are benefiting themselves by completing it.
    The Department also believes that stewardship of taxpayer dollars 
includes providing information that allows taxpayers to understand not 
only the number of dollars at risk through the student loan program, 
but the number of dollars that are directed through State and local 
appropriations to programs that yield low earnings. Students also have 
the right to know, regardless of whether they pay cash, use other forms 
of credit, or use Federal student loans to pay for their programs, if 
doing so is likely to generate financial benefits. Employers similarly 
should be able to review program outcomes before spending their hard-
earned dollars to provide employee education and professional 
development. Therefore, the Department believes that its decision to 
use the College Scorecard or its successor as the mechanism to increase 
transparency and inform a market-based accountability system that 
continues to honor student choice is reasonable. The Department 
recognizes that students select institutions and programs, including GE 
and non-GE programs, for many different reasons, of which future 
earnings may be only one of many deciding factors.
    Even without currently having access to all program-level data for 
non-GE programs, as stated elsewhere, the Department believes that the 
benefits of rescinding the GE regulations outweigh the potential costs, 
since GE programs represent just a small portion of title IV programs 
available to students. In order to ensure that all students make better 
informed enrollment and borrowing decisions, a comprehensive approach 
is required. Because the Department does not yet have access to 
program-level data, we cannot accurately estimate savings associated 
with reduced enrollments in undergraduate and graduate programs across 
all institutional sectors as a result of unimpressive outcomes.
    The Department's review of the outstanding student loan portfolio 
has provided ample evidence that the problem of borrowing more than a 
student can repay in 10 years extends well beyond proprietary 
institutions and includes institutions from all sectors. According to 
Jason Delisle and Alex Holt, income-driven repayment programs actually 
provide disproportional advantage to higher income students, which is 
not the population for whom IDR programs were designed.\143\ Student 
loan non-repayment poses considerable costs to taxpayers, regardless of 
which institutions are the source of loans in non-repayment. While the 
Department did not approve of a fourth negotiating session, we believe 
we engaged in a good faith effort to negotiate and reach consensus. The 
Department does not believe that there was tentative consensus on the 
proposal during the third session or that a fourth session would have 
brought the group closer to consensus. To the contrary, the Department 
made considerable compromises in order to arrive at consensus, but it 
was clear by the end of the third session that consensus would not be 
achieved. Also, a number of negotiators expressed opposition to the 
idea of adding another session. There were several negotiators who made 
it clear that they would never concur with any regulation that did not 
include program sanctions and one negotiator stated that he would never 
agree to a regulation without first knowing which programs would pass 
or fail, so that he could be sure that only the truly ``bad'' programs 
would fail, since some ``good'' programs could fail if the formula was 
not properly designed.
---------------------------------------------------------------------------

    \143\ Delisle, Jason and Alex Holt, ``Safety Net or Windfall? 
Examining Changes to Income-Based Repayment for Federal Student 
Loans,'' New American Foundation, October 2012, 
static.newamerica.org/attachments/2332-safety-net-or-windfall/NAF_Income_Based_Repayment.18c8a688f03c4c628b6063755ff5dbaa.pdf.
---------------------------------------------------------------------------

    The Department believes that it is not appropriate to evaluate the 
validity of a methodology by reviewing the results to see if they align 
with a more subjective view of which programs should pass or fail. 
Either the methodology is valid, or it is not, and while it would be 
helpful to know which and how many programs would be impacted by a 
valid methodology, those results are not what determine the accuracy of 
the methodology. The Department acknowledges that it was able to 
provide only very limited data to negotiators and could not provide 
earnings data for non-GE programs since the Department was unable to 
obtain additional earnings data from SSA. However, neither negotiators 
nor the Department could identify a new accountability metric that is 
supported by research and appropriately controls for factors that 
impact student debt or program earnings. Further, additional data were 
not needed to develop the methodology. Rather, additional data would 
have only enabled negotiators to determine which programs would be on 
the ``right'' side of the formula.
    The Department negotiated in good faith, including putting forth a 
proposal during the third session that deviated significantly from our 
original proposal and took into account many of the suggestions made by 
negotiators. However, even with all of those changes, consensus was not 
reached. From the time that the negotiated rulemaking committee was 
announced,

[[Page 31426]]

negotiators knew that the Department was planning to hold three 
negotiating sessions. Three sessions provided ample opportunity to 
fully discuss the issues and determine whether consensus could be 
reached.
    Discussion has continued about the GE regulations since the first 
rulemaking effort commenced in 2010, and that discussion continued 
through a second rulemaking effort and this current negotiated 
rulemaking and public comment. The Department does not believe that 
uniform consensus about the validity of the GE regulations has ever 
been achieved, and it notes that there has been vociferous disagreement 
among those who support and those who oppose the 2014 Rule.
    More recently, we have been unable to enter into an updated MOU 
with SSA, which means that we are unable to obtain earnings data to 
continue calculating D/E rates. Therefore, the Department has no choice 
other than to cease D/E calculations and reporting using the 
methodology defined by the GE regulations. Most importantly, the GE 
regulations cannot be expanded to include all title IV programs. The 
Department has determined that the 2014 Rule is fundamentally flawed 
and does not provide a reliable methodology for identifying poorly 
performing programs and, therefore, should not serve as the basis for 
high stakes sanctions that negatively impact institutions and students.
    Changes: None.

Information Quality Act (IQA)

    Comments: A commenter stated that the NPRM relied upon 
``inaccurate, misleading, and unsourced information in violation of the 
Information Quality Act.'' Additionally, the commenter stated that the 
Department did not meet the clear standards set forth in both the ED 
Guidelines related to the IQA and the IQA itself because the data and 
research cited lacked objectivity since the NPRM was filled with 
examples of information that was not supported by sources, do not stand 
for the proposition cited, failed to explain the methodology used, or 
were not accompanied by information that allows an external user to 
understand clearly the analysis and be able to reproduce it, or 
understand the steps involved in producing it.
    Discussion: The Department separately addresses each of the 
specific comments and requests related to compliance with the IQA 
below.
    Changes: None.
    Comments: A commenter questions the Department's statement ``The 
first D/E rates were published in 2017, and the Department's analysis 
of those rates raises concerns about the validity of the metric, and 
how it affects opportunities for Americans to prepare for high-demand 
occupations in the healthcare, hospitality, and personal services 
industries, among others.'' The commenter stated that this assertion 
fails to clearly describe the research study approach or data 
collection technique, fails to clearly identify data sources, fails to 
confirm and document the reliability of the data and acknowledge any 
shortcomings or explicit errors, fails to undergo peer review, and 
fails to ``be accompanied by supporting documentation that allows an 
external user to understand clearly the information and be able to 
reproduce it, or understand the steps involved in producing it.''
    Discussion: The Department is referring to data tables published on 
the Department's website, based upon the methodology described in the 
2014 Rule.\144\ Our statement in the NPRM was based upon our analysis 
of the data in the published D/E rates data table, as discussed above 
in the Geographic Disparities and the D/E Thresholds and Sanctions 
sections.
---------------------------------------------------------------------------

    \144\ See: studentaid.ed.gov/sa/sites/default/files/GE-DMYR-2015-Final-Rates.xls and studentaid.ed.gov/sa/about/data-center/school/ge.
---------------------------------------------------------------------------

    Changes: None.
    Comments: A commenter questioned the Department's statement ``In 
promulgating the 2011 and 2014 regulations, the Department cited as 
justification for the eight percent D/E rates threshold a research 
paper published in 2006 by Baum and Schwartz that described the eight 
percent threshold as a commonly used mortgage eligibility standard. 
However, the Baum & Schwartz paper makes clear that the eight percent 
mortgage eligibility standard `has no particular merit or 
justification' when proposed as a benchmark for manageable student loan 
debt. Upon further review, we believe that the recognition by Baum and 
Schwartz that the eight percent mortgage eligibility standard `has no 
particular merit or justification' when proposed as a benchmark for 
manageable student loan debt is more significant than the Department 
previously acknowledged and raises questions about the reasonableness 
of the eight percent threshold as a critical, high-stakes test of 
purported program performance.'' The commenter states that the 
Department fails to present conclusions that are strongly supported by 
the data, which has been highlighted recently by Sandy Baum, the co-
author of the 2006 study cited by the Department, who stated that ``the 
Department of Education has misrepresented my research, creating a 
misleading impression of evidence-based policymaking. The Department 
cites my work as evidence that the GE standard is based on an 
inappropriate metric, but the paper cited in fact presents evidence 
that would support making the GE rules stronger.'' The commenter 
further asserts that ``[the Department is] correct that we were 
skeptical of [the eight percent] standard for determining affordable 
payments for individual borrowers, but incorrect in using that 
skepticism to defend repealing the rule. In fact, our examination of a 
range of evidence about reasonable debt burdens for students would best 
be interpreted as supporting a stricter standard.''
    Discussion: The Department is aware of and respects Ms. Baum's 
opinion that the 2014 Rule should not be rescinded. However, that does 
not change the fact that in their earlier paper, Baum's and Schwartz's 
state that the eight percent mortgage eligibility standard has ``no 
particular merit or justification'' as a benchmark for manageable 
student loan debt. Since this paper was cited in the 2014 Rule as the 
source of the eight percent threshold, it is relevant that even the 
authors of the paper are skeptical of the merit of the 8 percent 
threshold as a student debt standard. It is not only appropriate, but 
essential, that the Department points out that upon a more careful 
reading of the paper, we realize that the paper does not support the 
eight percent threshold, but instead clearly refutes it for the purpose 
of establishing manageable student loan debt. As for the notion that 
the Baum & Schwartz paper supported a stricter standard, the commenter 
did state that the 2014 Rule was too permissive, but did not provide a 
specific threshold for what the number should be and the negotiating 
committee similarly was unable to identify a reliable threshold for the 
D/E rates measure.
    Changes: None.
    Comments: Several commenters expressed the opinion that research 
and evidence cited in the NPRM was misinterpreted by the Department or 
used selectively in an attempt to mislead. One commenter specifically 
asserted that the NPRM cites evidence in a way that leads to factual 
errors, does not attempt to justify key choices, and ignores hundreds 
of pages of evidence in favor of citations that have no bearing on the 
claims asserted. Another commenter offered that the 2014 Rule is based 
on extensive research and evidence, which the NPRM fails to adequately 
refute, showing that some GE programs were accepting

[[Page 31427]]

Federal financial aid dollars and enrolling students while consistently 
failing to train and prepare those students for employment.
    Discussion: The Department disagrees with the commenter's 
interpretation of the data provided in the NPRM. We continue to believe 
that the NPRM included adequate justification for its conclusion that 
the D/E rates measure is an unreliable proxy for program quality for 
all of the reasons described, including that the Department's selection 
of an amortization term that could significantly skew pass or fail 
rates, and the Department's selection of a 10-, 15-, or 20-year 
amortization term that does not align with the amortization terms 
provided by Congress and the Department through its various extended 
and income-based repayment programs.
    Similarly, the Department has provided sufficient evidence to 
support its position that while program quality could have an impact on 
earnings, so too could a variety of other factors outside of the 
institution's control, including discriminatory practices that have 
resulted in persistent earnings gaps between men and women, between 
individuals from underrepresented minority groups and whites; 
geographic differences in prevailing wages; difference in prevailing 
wages from one occupation to the next; micro- and macro-economic 
conditions; and other factors.
    Changes: None.
    Comments: One commenter disagreed with the Department's statement 
that, ``Research published subsequent to the promulgation of the GE 
regulations adds to the Department's concern about the validity of 
using D/E rates to determine whether or not a program should be allowed 
to continue to participate in title IV programs.'' The commenter 
believed that the Department failed to identify data sources, including 
whether a source is peer-reviewed and scientific evidence-based, failed 
to confirm and document the reliability of the data and acknowledge any 
shortcomings or explicit errors, and failed to ``be accompanied by 
supporting documentation that allows an external user to understand 
clearly the information and be able to reproduce it, or understand the 
steps involved in producing it.''
    Discussion: The Department has used well-respected, peer-reviewed 
references to substantiate its reasons throughout these final 
regulations for believing that D/E rates could be influenced by a 
number of factors other than program quality. As such, the D/E rates 
measure is scientifically invalid because it fails to control or 
account for the confounding variables that could influence the 
relationship between the independent (program quality) and dependent 
variable (D/E rates) or render the relationship between the independent 
and dependent variables as merely correlative, not causal.
    Changes: None.
    Comments: One commenter disagreed with the Department's assertion 
that ``the highest quality programs could fail the D/E rates measures 
simply because it costs more to deliver the highest quality program and 
as a result the debt level is higher.'' The commenter stated that the 
Department ``Fails to identify data sources and fails to be accompanied 
by supporting documentation that allows an external user to understand 
clearly the information and be able to reproduce it, or understand the 
steps involved in producing it.''
    Discussion: As stated above, where a higher quality program 
requires better facilities, more highly qualified instructors, 
procurement of expensive supplies, small student-to-teacher ratios, and 
specialized equipment to provide high-quality education, someone must 
pay the cost. Although taxpayers may pay some of these costs on behalf 
of students enrolled at public institutions, private institutions 
typically pass all or most of these costs on to students, which results 
in high tuition. However, there is no correlation between the cost to 
deliver a high-quality education and wages paid to program graduates. 
The Department cites research from CSU Sacramento that serves as 
evidence that high quality career and technical education programs can 
be more than four times as expensive to run as general studies 
programs.\145\
---------------------------------------------------------------------------

    \145\ Shulock, Lewis and Tan.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter disagreed with the Department's statement 
that, ``Other research findings suggest that D/E rates-based 
eligibility creates unnecessary barriers for institutions or programs 
that serve larger proportions of women and minority students. Another 
commenter claimed that studies demonstrated that rescinding the 2014 
Rule could exacerbate gender and race wage gaps. Such research 
indicates that even with a college education, women and minorities, on 
average, earn less than white men who also have a college degree, and 
in many cases, less than white men who do not have a college degree.'' 
The commenter went on to state that the Department fails to draw upon 
peer-reviewed sources, fails to acknowledge any shortcomings or 
explicit errors in the data, fails to present conclusions that are 
strongly supported by the data. The commenter stated that the source 
cited by the Department does not draw the same conclusion as the 
Department reached. For example, the cited table appears to relate to 
graduates of bachelor's degree programs, and not gainful employment 
programs. The commenter also states that the statement fails to ``be 
accompanied by supporting documentation that allows an external user to 
understand clearly the information and be able to reproduce it, or 
understand the steps involved in producing it.''
    Discussion: The Department emphasizes that bachelor's degree 
programs are included as GE programs if offered by proprietary 
institutions. Moreover, the NPRM cites data provided by the College 
Board that points to disparities in earnings between men and women and 
people of color. The College Board is a reliable and trusted source of 
data, and its publications undergo rigorous peer review prior to 
publication. The citation provided links to the College Board's report 
and data tables, which are robust, and which include information about 
data sources and methodology used.
    The data sourced from the U.S. Census Bureau's Current Population 
Survey which calculated median earnings based on race/ethnicity, gender 
and educational level, includes disaggregated earnings based on other 
characteristics, such as having less than a high school diploma, a high 
school diploma, some college, no degree, associate degree, bachelor's 
degree, and advanced degree. While this research did not address GE 
programs specifically, the point is that there are general earnings 
disparities based on race and gender. Programs that serve large 
proportions of women and minorities, therefore, would likely post lower 
earnings than programs of similar quality primarily serving whites and 
males, simply because of wage advantages certain groups have had for 
centuries. The Department agrees that our statement is an extrapolation 
of the data provided, but this extrapolation is well reasoned and 
supported by other research. Given that proprietary institutions serve 
the largest proportions of women and minority students, and that some 
GE programs (such as those in medical assisting, massage therapy, and 
cosmetology) serve much larger proportions of female students, it is 
likely that student demographics will impact earnings among these 
programs. This is not an unreasonable extrapolation to make, since the 
impact

[[Page 31428]]

of gender and race on earnings is well-documented and the subject of 
considerable policy discussion and public debate.
    Changes: None.
    Comments: A commenter has concerns about the Department's statement 
``[D]ue to a number of concerns with the calculation and relevance of 
the debt level included in the rates[,] we do not believe that the D/E 
rates measure achieves a level of accuracy that it should [to] alone 
determine whether or not a program can participate in title IV 
programs.'' The commenter states that the Department fails to clearly 
describe the research study approach, fails to identify data sources, 
fails to confirm and document the reliability of the data, fails to 
undergo peer review, fails to ``be accompanied by supporting 
documentation that allows an external user to understand clearly the 
information and be able to reproduce it, or understand the steps 
involved in producing it.''
    Discussion: As was discussed during the 2014 negotiations and 
continuing through the more recent negotiations, public hearings, and 
public comment, the debt metric can change significantly depending upon 
the amortization term used, interest rates and congressionally 
determined student loan lending limits. No research is needed to show 
that a student in a 20-year repayment plan will pay a lower monthly and 
annual payment than one in a 10-year repayment plan as this is a well 
understood mathematical fact. Since REPAYE created an opportunity for 
all students to qualify for a 20- to 25-year repayment term, depending 
upon their credential level attainment, it is unreasonable to use a 10- 
or 15-year amortization period to calculate the annual cost of student 
loan repayment just because GE programs tend to serve a larger 
proportion of non-traditional students. Even if using a 10-year 
repayment term was justified for certificate or associate degree 
programs, which we do not believe is the case, there is no possible 
justification that borrowers in bachelor's programs should be evaluated 
based on a 15-year amortization period whereas students who complete 
the same credentials at non-profit and private institutions can qualify 
for 20-, 25-, or even 30-year repayment terms based on the level of 
their degree and the amount they owe. The Department sees no basis for 
such a double standard.
    The Department does not believe it is appropriate to use REPAYE as 
the tool to help some students manage a debt load disproportionate to 
their earnings, imposing no sanctions on the institutions that led the 
borrower to this position, while penalizing other institutions by 
eliminating a program because the students who need income driven 
repayment assistance happened to graduate from a school that pays taxes 
rather than consuming direct taxpayer subsidies. The 2015 REPAYE 
regulations, coupled with the gainful employment rule, established a 
double standard that sanctions proprietary institutions if their 
graduates need income driven repayment programs to repay their loans, 
and promises graduates of non-profit institutions income-based 
repayment and loan forgiveness in return for irresponsibly borrowing.
    Changes: None.
    Comments: One commenter has concerns with the Department's 
statement ``[I]ncreased availability of [income-driven] repayment plans 
with longer repayment timelines is inconsistent with the repayment 
assumptions reflected in the shorter amortization periods used for the 
D/E rates calculation in the GE regulation.'' The commenter states that 
the Department fails to rely upon peer-reviewed, scientific evidence-
based research, fails to identify data sources, fails to confirm and 
document the reliability of the data, fails to ``be accompanied by 
supporting documentation that allows an external user to understand 
clearly the information and be able to reproduce it, or understand the 
steps involved in producing it.''
    Discussion: This comment is a statement of fact, which is 
substantiated by information provided on the Federal Student Aid 
website.\146\
---------------------------------------------------------------------------

    \146\ See: studentaid.ed.gov/sa/repay-loans/understand/plans.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter raised issues about the Department's 
statement ``[A] program's D/E rates can be negatively affected by the 
fact that it enrolls a large number of adult students who have higher 
Federal borrowing limits, thus higher debt levels, and may be more 
likely than a traditionally aged student to seek part-time work after 
graduation in order to balance family and work responsibilities.'' The 
commenter continued that the Department fails to rely upon peer-
reviewed, scientific evidence-based research, fails to identify data 
sources, and fails to confirm and document the reliability of the data.
    Discussion: It is a statement of fact that independent students 
have higher Federal loan borrowing limits, because Congress has 
established those higher limits for independent students (which include 
students over the age of 25, graduate students, married students, and 
students with dependents).\147\ Independent students can borrow up to 
$57,500 for undergraduate studies whereas dependent students can borrow 
only $31,000. Simple mathematics explain that if a larger proportion of 
students can borrow $57,500 rather than $31,000 to complete a 
bachelor's degree, the median debt level will be higher at an 
institution that serves a large portion of independent students than 
dependent students.\148\ As Baum points out in her 2015 publication, 70 
percent of students who hold student loan debt of $50,000 or more are 
independent students. This is not a surprising fact since it is only 
those students who have borrowing limits over $50,000. These datasets 
are derived from NCES data reports and were compiled by Sandy Baum.
---------------------------------------------------------------------------

    \147\ See: studentaid.ed.gov/sa/fafsa/filling-out/dependency.
    \148\ www.urban.org/sites/default/files/alfresco/publication-pdfs/2000191-Student-Debt-Who-Borrows-Most-What-Lies-Ahead.pdf.
---------------------------------------------------------------------------

    Therefore, it is not surprising that institutions serving larger 
proportions of independent students will have higher median borrowing 
levels, and since proprietary institutions serve the highest portion of 
independent students, it is not unreasonable that these institutions 
would have higher median debt levels, which they do.
    Data reported by Pew proves that the percentage of college 
graduates who work part-time rather than full-time increased from 15 
percent in 2000 to 23 percent in 2011. We have addressed concerns about 
data regarding adult students working part-time and the gender gap in 
earnings earlier in these final regulations. Research provided by the 
Center for American Progress substantiates that even among college 
graduates, women tend to earn less than men, in part because they tend 
to select lower paying majors and in part because of time spent out of 
the workforce raising children.\149\ The Pew Research Center confirms 
that a higher percentage of women take time out of their career or work 
part-time because of child-rearing responsibilities.\150\
---------------------------------------------------------------------------

    \149\ cdn.americanprogress.org/wp-content/uploads/2016/09/06111119/HigherEdWageGap.pdf.
    \150\ www.pewsocialtrends.org/2013/12/11/10-findings-about-women-in-the-workplace/.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter raised issues about the Department's 
statement ``[I]t is the cost of administering the program that 
determines the cost of tuition and fees.'' The commenter continued that 
the Department fails to

[[Page 31429]]

rely upon peer-reviewed, scientific evidence-based research, fails to 
identify data sources, fails to confirm and document the reliability of 
the data, fails to ``be accompanied by supporting documentation that 
allows an external user to understand clearly the information and be 
able to reproduce it, or understand the steps involved in producing 
it.''
    Discussion: The Department did not state that it is the cost of 
administering academic programs that determines tuition and fees. To 
the contrary, the Department made clear in the NPRM that at most non-
profit institutions, direct taxpayer appropriations and tuition 
surpluses generated from the low-cost programs the institution 
administers are used to offset the financial demands of higher cost 
programs. In this case, the cost of administering the program does not 
directly drive the cost of tuition and fees. Were that the case, 
liberal arts programs would charge lower tuition and fees than 
laboratory science and clinical health sciences programs--which is not 
the case at most non-profit institutions. Instead, what the NPRM said 
is that in some cases, the cost of tuition and fees is driven by the 
higher cost of administering some programs. The Shulock, Lewis and Tan 
study provides peer reviewed research to support this position.\151\
---------------------------------------------------------------------------

    \151\ Shulock, N., Lewis, J., & Tan, C. (2013). Workforce 
Investments: State Strategies to Preserve Higher-Cost Career 
Education Programs in Community and Technical Colleges. California 
State University: Sacramento. Institute for Higher Education 
Leadership & Policy.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter raised concerns about the Department's 
statement ``Programs that serve large proportions of adult learners may 
have very different outcomes from those that serve large proportions of 
traditionally aged learners.'' The commenter continued that the 
Department fails to rely upon peer-reviewed, scientific evidence-based 
research, fails to identify data sources, fails to confirm and document 
the reliability of the data, fails to ``be accompanied by supporting 
documentation that allows an external user to understand clearly the 
information and be able to reproduce it, or understand the steps 
involved in producing it.''
    Discussion: The Department offers as evidence to support the 
statement made in the NPRM data from the NCES Study of Persistence and 
Attainment of Nontraditional Students.\152\ NCES is a reliable and 
trusted source of higher education data.
---------------------------------------------------------------------------

    \152\ nces.ed.gov/pubs/web/97578g.asp.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter raised issues about the Department's 
statement ``Data discussed during the third session of the most recent 
negotiated rulemaking demonstrated that even a small change in student 
loan interest rates could shift many programs from a `passing' status 
to `failing,' or vice versa, even if nothing changed about the 
programs' content or student outcomes.'' The commenter continued that 
the Department fails to clearly describe the research study approach 
and data collection technique, fails to identify data sources, fails to 
confirm and document the reliability of the data, fails to undergo peer 
review, fails to ``be accompanied by supporting documentation that 
allows an external user to understand clearly the information and be 
able to reproduce it, or understand the steps involved in producing 
it.''
    Discussion: The Department points the commenter to our website, 
where data provided by the negotiator during the third negotiating 
session show the change in outcomes based on a small shift in interest 
rates.\153\ The negotiator is an economist at Columbia University, 
Cornell University, and the Urban Institute, and is thus a trusted 
source of data. However, any loan amortization table will show that 
when interest rates change, payments on debt increase. Again, this is a 
basic mathematical fact that requires no statistical study or peer 
review to be proven true.
---------------------------------------------------------------------------

    \153\ See: ``Minimum Earnings Necessary to Pass D/E, Various 
Measures,'' Submitted by Jordan Matsudaira, www2.ed.gov/policy/highered/reg/hearulemaking/2017/gainfulemployment.html.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter challenged the Department's statement 
``There is significant variation in methodologies used by institutions 
to determine and report infield job placement rates, which could 
mislead students into choosing a lower performing program that simply 
appears to be higher performing because a less rigorous methodology was 
employed to calculate in-field job placement rates.'' The commenter 
continued by stating the Department fails to clearly describe the 
research study approach and data collection technique, fails to clearly 
identify data source, fails to ``be accompanied by supporting 
documentation that allows an external user to understand clearly the 
information and be able to reproduce it, or understand the steps 
involved in producing it.''
    Discussion: The Department cited in the NPRM the findings of the 
Technical Review Panel (TRP), convened in response to the 2011 GE 
regulations to address the confusion created by multiple job placement 
rate definitions. This TRP is a trusted source, as is the external 
research that was retained to provide background research on job 
placement rates.\154\
---------------------------------------------------------------------------

    \154\ nces.ed.gov/npec/data/Calculating_Placement_Rates_Background_Paper.pdf.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter raised concerns about the Department's 
statement ``The Department also believes that it underestimated the 
burden associated with distributing the disclosures directly to 
prospective students. A negotiator representing financial aid officials 
confirmed our concerns, stating that large campuses, such as community 
colleges that serve tens of thousands of students and are in contact 
with many more prospective students, would not be able to, for example, 
distribute paper or electronic disclosures to all the prospective 
students in contact with the institution.'' The commenter continued 
that the Department fails to draw upon peer-reviewed, scientific-
evidence based research and fails to confirm and document the 
reliability of the data.
    Discussion: The Department continues to assert that the negotiator 
who made this statement is a reliable authority on the burden 
institutions would face if required to distribute disclosures. The 
point of having negotiators is to consider the opinions of experts in 
the field. However, the Department did not require the negotiator to 
provide data to substantiate her claim. Nonetheless, while the 
Department cited regulatory burden as a contributing factor to its 
decision to rescind the GE regulations, it was not the primary reasons 
for making this decision. The primary reason for rescinding the GE 
regulations, as stated earlier, is evidence that the D/E rates measure 
is not a reliable proxy for quality since many factors other than 
quality can impact both the debt and earnings elements of the equation.
    Changes: None.
    Comments: One commenter raised concerns about the Department's 
statement ``The Department believes that the best way to provide 
disclosures to students is through a data tool that is populated with 
data that comes directly from the Department, and that allows 
prospective students to compare all institutions through a single 
portal, ensuring that important consumer information is available to 
students

[[Page 31430]]

while minimizing institutional burden.'' The commenter continued that 
the Department fails to draw upon peer-reviewed, scientific evidence-
based research and fails to identify data sources. Specifically, in the 
2014 Rule, the Department stated that it ``would conduct consumer 
testing'' to determine how to make student disclosures as meaningful as 
possible. The NPRM fails to acknowledge whether such testing occurred, 
including the results of that testing. The NPRM also fails to state any 
other basis for the Department's conclusions.''
    Discussion: The Department did conduct consumer testing on the 
disclosure template after the 2014 Rule went into effect, the results 
of which proved that disclosures are typically very confusing to 
students, that the results presented are frequently misinterpreted, and 
that in general, students find disclosures most meaningful when they 
provide information about the students included in the disclosures, 
including what course loads the students were taking.\155\ The 
Department points to a number of commenters who said that the current 
GE disclosures can be difficult to find on institutional websites, 
which the Department has found to be the case in its own attempts to 
identify GE disclosures when reviewing websites. In addition, the 
Department points to statutory requirements for the College Navigator 
which emphasize the importance of using a standardized data tool to 
provide comparable data to students and that allow students to compare 
multiple institutions.\156\
---------------------------------------------------------------------------

    \155\ Bozeman, Holly, and Meaghan Mingo, ``Summary Report for 
the Gainful Employment Focus Groups,'' Prepared for the U.S. 
Department of Education, February 10, 2016, www2.ed.gov/about/offices/list/ope/summaryrptgefocus216.pdf. Note: Student also ranked 
the following as ``most important'': job placement rate, annual 
earnings rate, and completion rates for full-time and part-time 
students.
    \156\ The Higher Education Opportunity Act of 2008, Public Law 
110-315. 122 Stat. 3102.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter raised issues about the Department's 
statement ``[T]he Department does not believe it is appropriate to 
attach punitive actions to program-level outcomes published by some 
programs but not others. In addition, the Department believes that it 
is more useful to students and parents to publish actual median 
earnings and debt data rather than to utilize a complicated equation to 
calculate D/E rates that students and parents may not understand and 
that cannot be directly compared with the debt and earnings outcomes 
published by non-GE programs.'' The commenter continued that the 
Department fails to draw upon peer-reviewed, scientific evidence-based 
research and fails to identify data sources.
    Discussion: Elsewhere in this document, the Department has provided 
adequate support for its assertion that the D/E rates measure is not 
sufficiently accurate or reliable to serve as the sole determinant of 
punitive action against a program or institution. The Department 
conducted significant consumer testing prior to the launch of the 
College Scorecard to better understand which data are most relevant to 
students and parents and will continue to conduct consumer testing. 
However, the Department is committed to providing data that can reduce 
the reporting burden to institutions while still providing additional 
information to students.
    Changes: None.
    Comments: One commenter challenged the Department's statement ``The 
Department has reviewed additional research findings, including those 
published by the Department in follow-up to the Beginning Postsecondary 
Survey of 1994, and determined that student demographics and 
socioeconomic status play a significant role in determining student 
outcomes.'' The commenter continued that the Department fails to 
identify data sources. Specifically, the website cited by the 
Department links to the Beginning Postsecondary Survey of 1994's 
findings, and not the ``additional research'' mentioned by the 
Department, including the Department's own ``follow-up.'' Additionally, 
the Department fails to confirm and document the reliability of the 
data, and fails to ``be accompanied by supporting documentation that 
allows an external user to understand clearly the information and be 
able to reproduce it, or understand the steps involved in producing 
it.''
    Discussion: The Department misstated the name of the reference from 
which it drew data regarding outcomes of non-traditional students. The 
NPRM should have said that ``The Department has reviewed additional 
research findings, including the 1994 follow-up on 1989-90 Beginning 
Postsecondary Survey, which determined that student demographics and 
socioeconomic status play a significant role in determining student 
outcomes.'' Other research reviewed included publications by the 
American Association of Colleges and Universities on the needs of adult 
learners,\157\ a publication about Adult Learners in Higher Education 
produced by the U.S. Department of Labor \158\ and another research 
study that focused specifically on the needs of adult learners enrolled 
in online programs.\159\
---------------------------------------------------------------------------

    \157\ www.aacu.org/publications-research/periodicals/research-adult-learners-supporting-needs-student-population-no.
    \158\ files.eric.ed.gov/fulltext/ED497801.pdf.
    \159\ eric.ed.gov/?id=ED468117.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter raised issues with the Department's 
statement ``The GE regulation failed to take into account the abundance 
of research that links student outcomes with a variety of socioeconomic 
and demographic risk factors.'' The commenter continued that the 
Department fails to identify data sources and fails to confirm and 
document the reliability of the data.
    Discussion: This sentence refers to the same NCES study referenced 
in the NPRM and above.
    Changes: None.
    Comments: One commenter raised concerns about the Department's 
statement that ``the GE regulation underestimated the cost of 
delivering a program and practices within occupations that may skew 
reported earnings. According to Delisle and Cooper, because public 
institutions receive State and local taxpayer subsidies, even if a for-
profit institution and a public institution have similar overall 
expenditures (costs) and graduate earnings (returns on investment), the 
for-profit institution will be more likely to fail the GE rule, since 
more of its costs are reflected in student debt. Non-profit, private 
institutions also, in general, charge higher tuition and have students 
who take on additional debt, including enrolling in majors that yield 
societal benefits, but not wages commensurate with the cost of the 
institution.'' The commenter stated that the study mentioned did not 
support the conclusion that the GE regulations underestimated the cost 
of delivering a program and the NPRM failed to identify the data 
sources.
    Discussion: The Department relied on the Delisle and Cooper's 
research and analysis to substantiate that public institutions are 
often able to charge less for enrollment than private and proprietary 
institutions because they receive direct appropriations from a State or 
local government, are not required to purchase or rent their primary 
campus buildings or land, and enjoy substantial tax benefits. As such, 
they can charge the student a lower price for a program that has 
similar

[[Page 31431]]

overall expenditures as another program sponsored by a private 
institution that does not receive direct subsidies, have endowment 
holdings, or benefit from preferential tax treatment. Specifically, 
Delisle and Cooper state that ``[o]ne shortcoming of the 2014 Rule is 
that it does not take into account society's full investment in 
credentials produced by public institutions of higher education.'' 
\160\ As noted in their research, the data sources used by Delisle and 
Cooper were Department GE Data and data from IPEDS.
---------------------------------------------------------------------------

    \160\ Delisle and Cooper, www.aei.org/wp-content/uploads/2017/03/Measuring-Quality-or-Subsidy.pdf.
---------------------------------------------------------------------------

    Changes: None.
    Comments: A commenter raised concerns about the Department's 
statement ``In the case of cosmetology programs, State licensure 
requirements and the high costs of delivering programs that require 
specialized facilities and expensive consumable supplies may make these 
programs expensive to operate, which may be why many public 
institutions do not offer them. In addition, graduates of cosmetology 
programs generally must build up their businesses over time, even if 
they rent a chair or are hired to work in a busy salon.'' The commenter 
continued that the Department fails to identify data sources and fails 
to confirm and document the reliability of the data.
    Discussion: Our statement was intended to give further examples of 
ways that cosmetology programs have been challenged in implementing the 
GE regulations. The Department received these comments from multiple 
commenters in connection with the 2014 Rule, as well as this 
rulemaking, and heard these arguments from negotiators and speakers at 
negotiations and other public forums.
    It is unclear why public institutions do not operate cosmetology 
programs in greater numbers, but NCES data point to the limited number 
of enrollments in cosmetology programs among public colleges and 
universities. It is well known that cosmetologists typically must build 
their own clientele, even when working in a salon owned by another 
operator, and that tip income is an important part of the total 
earnings of cosmetologists. As a blog posted by a cosmetology program 
explains, if an individual does not make an effort to get clients, the 
individual may ``have to sit around for hours waiting for a client to 
walk in and this is likely to affect your income. On the other hand, if 
you have reliable repeat customers, you can make sure that you have a 
steady stream of income throughout the year.'' \161\
---------------------------------------------------------------------------

    \161\ www.evergreenbeauty.edu/blog/how-to-build-clientele-in-cosmetology/.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter raised concerns with the Department's 
statement ``[S]ince a great deal of cosmetology income comes from tips, 
which many individuals fail to accurately report to the Internal 
Revenue Service, mean and median earnings figures produced by the 
Internal Revenue Service underrepresent the true earnings of many 
workers in this field in a way that institutions cannot control.'' The 
commenter continued that the Department fails to present conclusions 
that are strongly supported by the data. The commenter noted that the 
Internal Revenue Service (IRS) tax gap study cited by the Department 
does not support the Department's specific conclusions about 
cosmetology graduates as it is from 2012 and covers tax year 2006 only. 
Additionally, the commenter stated that the Department failed to 
confirm and document the reliability of the data.
    Discussion: Throughout the 2014 and 2018 negotiations, as well as 
between those negotiations, the Department has heard from cosmetology 
programs and their representatives on this matter. These stakeholders 
have regularly informed the Department that cosmetologists regularly 
under-report their earnings and hide a portion of their tipped 
earnings. In the 2014 Rule, the Department admitted that individuals 
who work in barbering, cosmetology, food service, or web design may 
under report their income (79 FR 64955) and hoped that the alternate 
earnings appeal would provide an opportunity to correct earnings in 
those fields for the purpose of the D/E rates.\162\ However, the 
Department lost a lawsuit filed by the American Association of 
Cosmetology Schools (AACS) and is no longer able to deny earnings 
appeals based on the failure of institutions to meet the survey 
response rates dictated by the 2014 Rule.
---------------------------------------------------------------------------

    \162\ 79 FR 64955.
---------------------------------------------------------------------------

    Changes: None.
    Comments: One commenter raised concerns about the Department's 
statement ``While the GE regulations include an alternate earnings 
appeals process for programs to collect data directly from graduates, 
the process for developing such an appeal has proven to be more 
difficult to navigate than the Department originally realized. The 
Department has reviewed earnings appeal submissions for completeness 
and considered response rates on a case-by-case basis since the 
response rate threshold requirements were set aside in the AACS 
litigation. Through this process, the Department has corroborated 
claims from institutions that the survey response requirements of the 
earnings appeals methodology are burdensome given that program 
graduates are not required to report their earnings to their 
institution or to the Department, and there is no mechanism in place 
for institutions to track students after they complete the program. The 
process of Departmental review of individual appeals has been time-
consuming and resource-intensive, with great variations in the format 
and completeness of appeals packages.'' The commenter continued that 
the Department fails to present conclusions that are strongly supported 
by the data. The commenter notes that despite asserting that the 
alternate appeals process is ``time-consuming and resource-intensive, 
with great variations in the format and completeness of appeals 
packages,'' the Department then ``estimates that it would take 
Department staff [only] 10 hours per appeal to evaluate the information 
submitted.'' Additionally, the commenter states that the Department 
fails to ``be accompanied by supporting documentation that allows an 
external user to understand clearly the information and be able to 
reproduce it, or understand the steps involved in producing it.''
    Discussion: The Department has received numerous inquiries about 
how to file an appeal, and the inquirers have expressed confusion, 
frustration, and have described excessive burden on their institutions 
(especially small institutions) in filing an appeal. Additionally, this 
has come up multiple times at public hearings, in comments received, 
and at the negotiations themselves. Institutions have had difficulty 
gathering the earnings information for their appeal because there is no 
formal mechanism in place for students to report their income to their 
programs. Even at 10 hours per appeal, the Department has insufficient 
resources to review appeals in a timely manner. Of the 326 appeals 
submitted in response to the 2014 earnings data, the Department has 
completed the review and rendered a decision on only 101 of those 
claims. Rescinding the regulations will mitigate the flaw in the D/E 
rates measure that is associated with underreported income or earnings 
appeals.
    Changes: None.
    Comments: One commenter raised concerns about the Department's

[[Page 31432]]

statement ``We believe that the analysis and assumptions with respect 
to earnings underlying the GE regulation is flawed.'' The commenter 
continued that the Department fails to draw upon peer-reviewed, 
scientific evidence-based research and fails to confirm and document 
the reliability of the data.
    Discussion: The Department has provided sufficient evidence to 
support the conclusion that the D/E rates measure is a flawed metric. 
As noted earlier, the Department is referring to a claim made in the 
2014 Rule that graduates of many GE programs were earning less than 
those of the average high school dropouts.
    Upon further review of the Department of Labor data used to make 
this claim, the Department has determined that the claim was 
inaccurate. First, the Department did not differentiate between program 
completers and program drop-outs in calculating earnings outcomes, 
which is inappropriate because program drop-outs will not reap the full 
benefits of the program. In addition, the figure used to represent the 
earnings of high school dropouts was derived by multiplying a weekly 
earnings figure by 52, assuming that all high school dropouts will work 
a full 52 weeks or benefit from paid vacation or sick leave during some 
of that time. However, the BLS report on Contingent Workers shows that 
individuals without a high school diploma are more likely to be part of 
the contingent workforce than the non-contingent workforce, meaning 
that they are more likely to have employment that is not expected to 
last or that is described as temporary.\163\ Therefore, calculating 
earnings for high school drops outs based on an assumption that high 
school drop outs work 52 weeks per year inflates the likely earnings of 
high school drop outs. Yet, in addition to not differentiating between 
program completers and program drop-outs, the inflated figure that 
assumed all workers work 52 weeks per year was compared to SSA earnings 
data for GE program graduates that included individuals working full-
time, part-time, individuals who are self-employed, and those who may 
not report some or all of their earned income.
---------------------------------------------------------------------------

    \163\ www.bls.gov/spotlight/2018/contingent-workers/home.htm.
---------------------------------------------------------------------------

    It is illogical that students would earn less after completing a 
postsecondary program than they would have had they not completed high 
school. Even if the postsecondary education provides zero earnings 
gains, the program graduate should earn a wage comparable with that of 
high school dropouts. Therefore, this conclusion defies logic, and was 
the result of a poorly designed comparison.
    Changes: None.
    Comments: One commenter raised issues with the Department's ``Table 
1--Number and Percentage of GE 2015 Programs That Would Pass, Fail, or 
Fall into the Zone Using Different Interest Rates.'' The commenter 
stated that the Department fails to clearly describe the research study 
approach and data collection technique, fails to identify data sources, 
fails to confirm and document the reliability of the data, fails to 
undergo peer review, and fails to ``be accompanied by supporting 
documentation that allows an external user to understand clearly the 
information and be able to reproduce it, or understand the steps 
involved in producing it.''
    Discussion: ``Table 1--Number and Percentage of GE 2015 Programs 
That Would Pass, Fail, or Fall into the Zone Using Different Interest 
Rates'' from the NPRM illustrates how a change in interest rates would 
change the results of the 2015 GE rates, altering the number of 
programs that would pass, fail, or fall into the zone based on debt and 
earnings data published in 2015. Although the impact of a change in 
interest rates on the debt portion of the D/E calculation is obvious, 
these data were provided by a negotiator who is an economist at 
Columbia and Cornell Universities and the Urban Institute, and who was 
one of the designers of the College Scorecard during the Obama 
Administration. Although he built his own model to calculate the impact 
of changing interest rates, the source of the underlying debt and 
earnings data was provided by the Department in the data files provided 
along with the 2015 GE results.
    Changes: None.
    Comments: Several researchers submitted a joint comment opposing 
the rescission of the 2014 Rule. They argued that the rescission is 
arbitrary and capricious, because it ignores both the benefits of the 
2014 Rule and the data analysis supporting the 2014 Rule. The 
commenters noted that Congress had reason to require that for-profit 
programs be subject to increased supervision. They cite a post on the 
Federal Reserve Bank of New York's blog that states that attending a 
four-year private for-profit college is the strongest predictor of 
default, even more so than dropping out. They cited evidence that 
students who attend for-profit institutions are 50 percent more likely 
to default on a student loan than students who attend community 
colleges. The commenters also argued that a rise in enrollment in the 
for-profit sector corresponded with reports of fraud, low earnings, 
high debt, and a disproportionate amount of student loan defaults. They 
cited an example that stated that, of the 10 percent of institutions 
with the lowest repayment rates, 70 percent were for-profit 
institutions. They argued that because poor outcomes are concentrated 
in for-profit programs, the 2014 Rule is justified.
    Discussion: The Department does not disagree with the findings 
cited by some commenters, including the Federal Reserve Bank of New 
York's blog, but instead calls attention to the fact that these 
outcomes may be the result of the demographics of the students served 
rather than the quality of the educational program. A National Bureau 
of Economic Research (NBER) study of student loan repayment rates makes 
clear that race, financial dependency status and parental wealth 
transfer are the strongest predictors of default and non-
repayment.\164\ Further, the Department's own research found that being 
over 25, having a child, being a single parent, and working full-time 
while in college are each factors that increase the risk of non-
completion, and that the more risk factors a student demonstrates, the 
less likely the student is to complete the program and repay 
loans.\165\ Given that proprietary institutions serve a population of 
students that include a much higher percentage of Pell eligible, non-
traditional and minority students, the results of these research papers 
are not surprising. The Department agrees with these researchers that 
non-profit institutions must do more to serve this population of 
students so that they enjoy the benefits of taxpayer subsidized 
tuition.
---------------------------------------------------------------------------

    \164\ Lochner and Monge-Naranjo, www.nber.org/papers/w19882.
    \165\ nces.ed.gov/pubs/web/97578g.asp.
---------------------------------------------------------------------------

    As discussed earlier, the majority of students enrolled in 
proprietary institutions is enrolled in bachelor's or graduate degree 
programs, not associate degree programs, making comparisons with 
community colleges irrelevant. In addition, since most proprietary 
institutions have open-enrollment policies, they cannot be compared 
directly with most public four-year institutions, that do not typically 
have open enrollment policies. These institutions are unique and serve 
a high-risk population. If other institutions are not willing to serve 
them, the question must be asked about whether or not these individuals 
should have the opportunity to go to college. The Department agrees 
that for many of

[[Page 31433]]

these students, a work-based learning opportunity or a shorter-term 
training program could provide a more cost-effective option. However, 
apprenticeship programs are not open-enrollment opportunities, and many 
have considerable academic entrance requirements, including performance 
on mathematics tests. In addition, there are not enough of these 
opportunities to serve all interested participants.
    It may be convenient to ignore the many confounding variables that 
impact student outcomes, and to ignore that the demographics of 
students enrolled at proprietary institutions are quite different than 
those of public or private non-profit two- and four-year schools, but 
the Department cannot ignore those facts, which our own data, published 
in 2017, substantiates.\166\
---------------------------------------------------------------------------

    \166\ Caren A. Arbeit and Sean A. Simone, ``A Profile of the 
Enrollment Patterns and Demographic Characteristics of 
Undergraduates at For-Profit Institutions,'' Stats in Brief, 
February 2017, nces.ed.gov/pubs2017/2017416.pdf.
---------------------------------------------------------------------------

    The Department believes that more must be done to improve outcomes 
for high-risk students, and more options must be made available to 
students for whom college is not the best or preferred option, but in 
the meantime, the conclusion that institutional quality is the cause 
for lower outcomes is not substantiated by fact. There is clearly a 
crisis among minority students, with predictions for defaults among 
African American students to reach 70 percent in the next 20 
years.\167\ It is true that defaults are higher among African Americans 
as compared to other demographics. It is also true that African 
Americans attend proprietary institutions in higher proportions than 
other demographics.
---------------------------------------------------------------------------

    \167\ Judith Scott-Clayton, ``The Looming Student Loan Default 
Crisis is Worse Than We Thought,'' Brookings Institute, January 11, 
2018, www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/.
---------------------------------------------------------------------------

    But the question is one of cause and effect. Do African American 
students default at higher rates because they attend proprietary 
institutions, or are default rates among proprietary institutions 
higher because these institutions are more likely to serve African-
American students? We simply do not currently know.
    We are not persuaded by the data commenters cited because the 
studies did not suppress or control for the many confounding variables 
that influence student outcomes, nor did they rely on carefully 
constructed matched comparison groups to better isolate the impact of 
the institution's tax status on student outcomes. These papers also 
fail to consider the unique structure of proprietary institutions that 
enable many of them to offer both associate degrees and bachelor's 
degrees--making them unlike typical public community colleges or 
typical four-year institutions. In addition, comparisons are further 
complicated by the number of proprietary institutions that offer online 
education, which is well-known to have results that are very different 
than those achieved by ground-based institutions.\168\
---------------------------------------------------------------------------

    \168\ See: Matthew J. Werhner, ``A Comparison of the Performance 
of Online Versus Traditional On-Campus Earth Science Student on 
Identical Exams,'' Journal of Geoscience Education, 2010, 
files.eric.ed.gov/fulltext/EJ1164616.pdf; Anna Ya Ni, ``Comparing 
the Effectiveness of Classroom and Online Learning: Teaching 
Research Methods,'' Journal of Public Affairs Education, 2013, 
w.naspaa.org/JPAEmessenger/Article/VOL19-2/03_Ni.pdf; Alsaaty, 
Falih, et al., ``Traditional Versus Online Learning in Institutions 
of Higher Education: Minority Business Students' Perceptions,'' 
Business and Management Research, 2016, www.sciedupress.com/journal/index.php/bmr/article/view/9597/5817; Steven Stack, ``Learning 
Outcomes in an Online vs Traditional Course,'' International Journal 
for the Scholarship of Teaching and Learning, January 2015, 
digitalcommons.georgiasouthern.edu/cgi/viewcontent.cgi?article=1491&context=ij-sotl; Caroline M. Hoxby, 
``The Returns to Online Postsecondary Education,'' NBER, February 
2017, www.nber.org/papers/w23193.
---------------------------------------------------------------------------

    The Department is not suggesting that all proprietary institutions 
offer high-quality opportunities, or that these institutions should not 
be held accountable for the outcomes their students achieve. Instead, 
the Department understands that evaluating college outcomes is an 
incredibly complicated undertaking, and even with all of the data 
available to Department researchers, it has been impossible to develop 
a methodology that allows us to accurately and reliably assess program 
quality or to make scientifically valid claims of causality between 
program quality and student outcomes. For that reason, the Department 
has determined that sanctions limited to a small percentage of 
institutions and programs--while ignoring other programs whose 
graduates similarly default on loans or find themselves in a negative 
amortization repayment situation--are an inappropriate remedy.
    Changes: None.
    Comments: Commenters also noted that students enrolled in programs 
that close generally re-enroll in nearby non-profit or public 
institutions and that shifting aid to better performing institutions 
will result in positive impacts for students. They also cited evidence 
that, after enrollment in for profit programs declined in California, 
local community colleges increased their capacity. They argued that in 
light of these examples, the 2014 Rule would not reduce college access 
for students but would rather direct them into programs that are more 
beneficial in the long term.
    Discussion: The California study referenced by the commenter is 
limited to students who were enrolled at proprietary institutions in 
that State. Given the large public community college and university 
system in California, it is not surprising that students closed out of 
one option in that State found their way to another. However, the 
Department has recently provided automatic closed school loan 
discharges for over 15,000 students whose institution closed, and three 
years later still had not enrolled at another institution. This 
provides more convincing evidence to us that some students find it 
harder than others to find a new program. Also, research produced by 
CSU Sacramento suggests that even among those who find a new home at a 
lower cost community college, they are likely to be ushered into a 
general studies program which may result in lower debt, but has no 
market value unless the student transfers and completes a four-year 
degree.
    In the same way that the Department does not require students 
seeking a liberal arts education to pursue that degree at the lowest 
cost institution available, the Department similarly does not require 
that students interested in occupationally focused education pursue the 
lowest cost option available.
    Moreover, it is entirely unclear whether a student is better off 
attending a lower cost institution if the only program option available 
to them is a general studies program, which has little or no market 
value, rather than a CTE program, which might yield better 
results.\169\ A 2014 study by CSU Sacramento shows that as enrollments 
increased in the California Community College system during the Great 
Recession, there was a decrease in enrollment slots in career and 
technical programs since more students could be served in lower-cost 
general studies programs.\170\ Even so, it is not the Department's role 
under the HEA to evaluate program quality--as accreditors are charged 
with that responsibility. Nor does the HEA require students to attend 
the lowest cost institution available or enroll in the program 
generating the highest earnings. Students enrolled in CTE-focused

[[Page 31434]]

programs are guaranteed by section 102 of the HEA to have equal access 
to title IV programs and benefits. The GE regulations deny students 
interested in CTE-focused programs the same rights as students who 
enroll in traditional, liberal arts programs.
---------------------------------------------------------------------------

    \169\ Holzer and Baum, Making College Work: Pathways to Success 
for Disadvantaged Students, Brookings Institute, 2017.
    \170\ Shulock, Lewis and Tan, eric.ed.gov/?id=ED574441.
---------------------------------------------------------------------------

    Changes: None.
    Comments: As further justification for the 2014 Rule, commenters 
stated that there has been a dramatic increase in the number of 
borrowers who leave school with high debt and low earnings. In one 
study, a researcher noted that many such programs left students earning 
less than they did before entering their program. Another study found 
that the average change in earnings 5 to 6 years post-attendance for 
over 1.4 million students attending GE programs between 2006 and 2008 
was negative for students at for-profit certificate, associates, and 
bachelor's degree programs. It also found that earnings gains for 
students in for-profit certificate programs were much lower than for 
students who attended public institutions even after for controlling 
for student characteristics. They also stated that at institutions with 
high D/E rates, students of all income types had poor outcomes, 
suggesting that the characteristics of the institution are responsible 
for the poor outcomes. This study also compared students at for-profit 
certificate programs to demographically similar students who never 
attended college and found no earnings gains in attendance, suggesting 
that these students would have been better off choosing not to obtain a 
postsecondary credential.
    Another study cited by the commenters controlled for differences in 
students' background and characteristics and found that earnings 
outcomes for students at for-profit programs are typically lower than, 
or at best equal, to lower-cost programs at public institutions. They 
cited two studies that found that the poor outcomes of students 
attending for-profit programs remain even after controlling for family 
income, race, age, and academic preparation.
    Discussion: The Department contends that institutions with high D/E 
rates exist across all sectors of higher education.\171\ It makes sense 
that the change in earnings for 2006-2008 program graduates would be 
negative since this coincides with the Great Recession, which had a 
more dramatic impact on low-income and minorities than it did on 
wealthier, white individuals.\172\ In addition, it is impossible for 
the researcher in the cited studies to have assembled demographically 
matched comparison groups since the data required to do this is not 
publicly available.\173\
---------------------------------------------------------------------------

    \171\ Kelchen, Robert, ``The Relationship Between Student Debt 
and Earnings,'' Brookings Institute, Brown Center Chalkboard, 
September 23, 2016, https://www.brookings.edu/blog/brown-center-chalkboard/2016/09/23/the-relationship-between-student-debt-and-earnings/.
    \172\ Paul Taylor, et al., ``Wealth Gaps Rise to Record Highs 
Between Whites, Blacks, and Hispanics,'' Pew Social & Demographic 
Trends, July 26, 2011, www.pewresearch.org/wp-content/uploads/sites/3/2011/07/SDT-Wealth-Report_7-26-11_FINAL.pdf.
    \173\ Note: Study referenced here used a data set that is of 
questionable quality and not publicly available. In addition, the 
study relied on the use of birthdates and zip codes, which is not 
sufficient to establish matched comparison groups, since people of 
the same age, living in the same zip code, can substantially differ 
in other ways.
---------------------------------------------------------------------------

    The Department notes that several of these studies are based on the 
unauthorized use of a dataset that was made available by a former 
Department of Treasury employee to himself and a limited number of 
outside, like-minded researchers. The Department has been unable to 
review the data files that were removed from Department of Treasury, 
since the combined Education-Treasury datafiles were not made available 
to the Department of Education, to confirm their accuracy or 
completeness, or to ensure that the data were not manipulated by the 
person who removed those data from government safekeeping. The 
Department questions the reliability of research results that are based 
upon the unauthorized use and the unauthorized release of a dataset 
since other researchers, including Department of Education researchers, 
are unable to replicate the calculations to confirm the validity of the 
methodology or the accuracy of the conclusions.
    Regardless, the Department believes that the D/E rates measure is a 
flawed metric that inflates a borrower's monthly or annual repayment 
obligation above that which is required by the law and does not 
accurately distinguish between high-quality and low-quality programs.
    Changes: None.
    Comments: Commenters criticized the Department's efforts to analyze 
relevant data related to the NPRM's assertions that, if the D/E rates 
measure was applied to all degree programs, it would show poor outcomes 
across all sectors. They argued that if the Department believes this to 
be the case, it should calculate D/E rates for all programs using 
available data in NSLDS and with SSA and prove that this is the case. 
They also criticized the Department's reliance on institutional-level 
College Scorecard data in lieu of more specific NSLDS data during the 
negotiated rulemaking process. They further argued that in the absence 
of such data, the Department has a responsibility to protect students 
where it has the authority to do so.
    Discussion: The Department was unable to obtain SSA earnings data 
during this rulemaking and continues to be unable to obtain those data. 
The IRS continues to be willing to provide data for our College 
Scorecard effort, but Sec.  668.405 of the GE regulations does not 
allow the use of IRS data to calculate D/E rates. The Department does 
not currently have program-level earnings data for programs other than 
GE programs. The Department fulfilled as many data requests as 
possible, but outdated systems, prohibitions on student unit records, 
and the inability to get additional earnings data from SSA made it 
impossible to fulfill all of the requests. However, the Department has 
access to sufficient data to determine that the D/E rates measure is 
influenced by a variety of variables other than quality, and that the 
debt calculation methodology is inconsistent with loan repayment 
programs available to students. That is sufficient evidence to support 
our decision to rescind the GE regulations.
    Changes: None.
    Comments: Commenters disagreed with the statement that for-profit 
programs would have better D/E rates but for student characteristics 
outside the institution's control. They argued that it is easy to 
control for these characteristics and produce adjusted D/E rates, but 
that the Department had not done so. They believe that such an 
adjustment would not result in significant numbers of failing programs 
passing the D/E rates measure. On the point that D/E rates are 
sensitive to economic conditions, the commenters stated that the 
Department could use multiple cohorts of rates across institutions to 
show how changes in the local economy affect D/E rates. They also state 
that even in large recessions there are not large declines of employed 
workers and that wages usually do not fall. They argued that because of 
this, it is likely that only a small number of programs that would have 
otherwise passed would fail solely due to a recession. They also 
disagreed with our conclusion in the NPRM that D/E rates are flawed 
because they are sensitive to tuition and interest rates. These 
commenters stated this is a desirable outcome because high interest 
rates and tuition reduce either the government's return on investment 
or the ability of borrowers to repay.

[[Page 31435]]

    Discussion: The Department has not been able to develop a 
methodology to accurately control for or repress confounding variables, 
such as student demographic characteristics, to isolate the impact of 
institutional quality on student outcomes, more accurately attribute 
student outcomes to a single variable, such as institutional quality. 
In the past, the Department has performed single variant analysis to 
identify non-traditional student characteristics that increase the risk 
of non-completion or student loan defaults. However, the Department has 
not performed multi-variant analysis to develop an algorithm that would 
allow it to isolate independent variables and examine causal 
relationships between those variables and student outcomes.
    In addition, the negotiators were unable to recommend or reach a 
consensus on such a methodology. Therefore, the Department is 
rescinding the 2014 Rule that relies on the flawed D/E rates measure to 
impose sanctions on institutions and remove them from title IV 
participation.
    Changes: None.
    Comments: Commenters argued that while disclosures are beneficial, 
a disclosure-only regime is unlikely to result in the same benefits 
that the 2014 Rule provides. As evidence, the commenters cited a study 
that the College Scorecard had small impacts overall on college 
application behavior and none in less affluent high schools, households 
with low parental education, and underserved groups. They also noted 
that similar studies find little impact of informational disclosures on 
enrollment behavior, but they provided suggestions on how to improve 
disclosures. They also stated that removing the disclosure requirements 
prior to enrollment is a mistake.
    Discussion: The Department disagrees with the commenters who state 
that removing the disclosure requirements prior to enrollment is a 
mistake and has provided ample explanation above for our disagreement. 
The Department agrees that disclosures have not been informative to 
students, especially when comparable information is not provided for 
all institutions or programs. However, the Department is pursuing a 
number of options for making College Scorecard data readily available 
to students, such as through the MyStudentAid mobile app. In addition, 
the Department believes that an online tool that allows students to 
compare multiple institutions or programs on a single screen is more 
user friendly than trying to find disclosures in each institution's or 
program's web page. Perhaps ease of use will promote increased 
utilization of important program-level data.
    Perhaps one of the most important features of the College Scorecard 
is that it provides downloadable data files that can be used by 
researchers, consumer advocacy groups, and technology companies to 
develop new data tools that are user-friendly and easily accessible to 
students and parents. Data tools may prove to be more effective in 
informing student decisions, especially if third parties help students 
digest and interpret those data, that traditional paper disclosures 
could.
    Changes: None.
    Comments: Commenters stated that the Department has not provided 
enough evidence that the administrative burden is higher than expected 
or so high as to outweigh the benefits of the 2014 Rule to students. 
They pointed out that simple adjustments to the D/E rates calculation 
would reduce burden by allowing the Department to calculate D/E rates 
using administrative data instead of institutional reporting, although 
it may not be advisable to do so.
    Discussion: The Department disagrees that it has not provided 
enough evidence that the administrative burden of the GE regulations 
was higher than expected. In addition, negotiators representing 
institutions not subject to the GE regulations were adamant that it 
would be too burdensome for them if we expanded the scope of the 2014 
Rule to cover all programs. While simple adjustments to the D/E rates 
might reduce the administrative burden to institutions, there is no 
evidence that such adjustments would improve the accuracy and validity 
of the D/E rates measure.
    Changes: None.

                                                   Appendix A
----------------------------------------------------------------------------------------------------------------
                                       2017 Gainful employment     Current scorecard        Expanded scorecard
                                             disclosures       -------------------------------------------------
                                      -------------------------
                                          Gainful employment       All undergraduate      All title IV programs
                                               programs               institutions
----------------------------------------------------------------------------------------------------------------
Completion...........................  Percent of students      Institution level data   Same as current
                                        graduating on time for   that includes the        Scorecard plus:
                                        each program.            percentage of first-     Expanded Scorecard
                                                                 time, full-time          could include total
                                                                 undergraduate students   awards conferred at
                                                                 who graduated within     the program level.
                                                                 150 percent of the
                                                                 published credential
                                                                 length. Students may
                                                                 also view and can
                                                                 select part-time, full-
                                                                 time, transfer, and
                                                                 first-time institution
                                                                 level graduation rates.
Cost.................................  Program costs (in-       Institution level net    Same as current
                                        state, out-of-state,     price for first-time,    Scorecard.
                                        books and supplies,      full-time
                                        off-campus room and      undergraduate students
                                        board, etc.).            who received TIV
                                                                 Federal financial
                                                                 student aid. For
                                                                 public schools, this
                                                                 includes only in-state
                                                                 tuition costs.
Debt.................................  Percent of students who  Institution level data   Same as current
                                        borrow money to pay      on the percent of        Scorecard, plus:
                                        for the program.         undergraduate students   Program level total
                                                                 who borrow TIV Federal   number of title IV
                                                                 student loan.            borrowers who complete
                                                                                          the program.

[[Page 31436]]

 
                                       Median debt of TIV       Institution level data   Same as current
                                        Federal financial aid    on median TIV Federal    Scorecard, plus:
                                        recipients who           student loan debt of     Program level median
                                        completed for each       undergraduate            TIV Federal student
                                        program. Median debt     borrowers who            loan debt among
                                        includes private,        completed. Does not      completers who
                                        institutional and TIV    include Parent PLUS.     borrowed to attend
                                        Federal student loan                              college. Future
                                        debt.                                             expanded Scorecard
                                                                                          could add median debt
                                                                                          among Parent PLUS
                                                                                          borrowers who borrowed
                                                                                          on behalf of a student
                                                                                          in the program and
                                                                                          median Grad PLUS debt
                                                                                          for graduate and
                                                                                          professional programs.
                                       Estimated monthly loan   Institution level data   Same as current
                                        payment of the median    on the estimated         Scorecard, plus:
                                        private, institutional   monthly payment of the   Program level
                                        and TIV Federal          median TIV Federal       estimated monthly
                                        student loan debt for    student loan debt for    payment of the median
                                        TIV Federal financial    TIV Federal financial    TIV Federal student
                                        aid recipients who       aid undergraduate        loan debt for TIV
                                        completed for each       borrowers who            Federal financial aid
                                        program.                 completed.               borrowers who
                                                                                          completed. Future
                                                                                          Scorecard could
                                                                                          include median monthly
                                                                                          payment for Parent
                                                                                          PLUS borrowers.
Earnings.............................  Median earnings two-     Institution level data   Same as current
                                        and three-years post-    on median earnings of    Scorecard, plus:
                                        completion of TIV        TIV federal financial    Program level data on
                                        Federal financial aid    aid recipients, 10       median earnings of TIV
                                        recipients who           years after they began   Federal financial aid
                                        completed for each       their enrollment.        recipients who
                                        program.                                          completed some number
                                                                                          of years after
                                                                                          completion (number of
                                                                                          years not yet
                                                                                          determined, but likely
                                                                                          at 1, 5, and 10 years
                                                                                          after completion).
Job Placement........................  Job placement rates for  None...................  None.
                                        students who completed
                                        reported to the
                                        relevant accreditor
                                        and/or state for each
                                        program.
                                       Fields that employ       None...................  Link to relevant
                                        students who complete                             occupational
                                        for each program.                                 information such as
                                                                                          O*NET.
Licensure Requirements...............  Licensure requirements-- None...................  The consensus achieved
                                        at least in the state                             during the recent
                                        in which the                                      Accreditation and
                                        institution is located.                           Innovation Negotiated
                                                                                          Rulemaking directs all
                                                                                          institutions to
                                                                                          disclose to students
                                                                                          enrolled in programs
                                                                                          that lead to
                                                                                          occupational licensing
                                                                                          whether the program
                                                                                          does or does not
                                                                                          prepare a student for
                                                                                          licensure requirements
                                                                                          in the state in which
                                                                                          the student is
                                                                                          located, or if the
                                                                                          institution does not
                                                                                          know, and how a
                                                                                          student could find
                                                                                          this information if he
                                                                                          or she relocates.
                                                                                          (This will not be on
                                                                                          Scorecard.)
Warning..............................  Programs that fail the   None...................  None.
                                        D/E rates test include
                                        a warning that
                                        students may not be
                                        able to use Federal
                                        financial aid for that
                                        program in the future.
Student Demographics (Institution      No.....................  Yes....................  Same.
 level).
SAT/ACT Test Scores (Institution       No.....................  Yes....................  Same.
 level).
Most popular academic programs.......  No.....................  Yes....................  Same.
Institutional type...................  No.....................  Yes....................  Same.
Institutional size...................  No.....................  Yes....................  Same.
Geographic location..................  No.....................  Yes....................  Same.
Institutional control (public,         No.....................  Yes....................  Same.
 private, proprietary).
Link to FAFSA........................  No.....................  Yes....................  Same.
Link to data about GI Bill benefits..  No.....................  Yes....................  Same.

[[Page 31437]]

 
Net price calculator.................  No.....................  Yes....................  Same.
----------------------------------------------------------------------------------------------------------------
Note: This proposed list provides potential data that the Department plans to include in its expanded College
  Scorecard or other educational data tools. As a result, this proposed list is provided for informational
  purposes and is subject to change without notice.

Regulatory Impact Analysis (RIA)

    Under Executive Order 12866, the Office of Management and Budget 
(OMB) must determine whether this regulatory action is ``significant'' 
and, therefore, subject to the requirements of the Executive Order and 
subject to review by OMB. Section 3(f) of Executive Order 12866 defines 
a ``significant regulatory action'' as an action likely to result in a 
rule that may--
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
Tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule);
    (2) Create serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlement grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles stated in the 
Executive order.
    This final regulatory action will have an annual effect on the 
economy of more than $100 million because elimination of the 
ineligibility provision of the GE regulations impacts transfers among 
borrowers, institutions, and the Federal Government and elimination of 
paperwork requirements decreases costs. Therefore, this final action is 
``economically significant'' and subject to review by OMB under section 
3(f)(1) of Executive Order 12866. Notwithstanding this determination, 
we have assessed the potential costs and benefits, both quantitative 
and qualitative, of this final regulatory action and have determined 
that the benefits justify the costs.
    Under Executive Order 13771, for each new regulation that the 
Department proposes for notice and comment or otherwise promulgates 
that is a significant regulatory action under Executive Order 12866 and 
that imposes total costs greater than zero, it must identify two 
deregulatory actions. These regulations are a deregulatory action under 
E.O. 13771 and are estimated to yield $160 million in annualized cost 
savings at a 7 percent discount rate, discounted to a 2016 equivalent, 
over a perpetual time horizon.
    We have also reviewed these regulations under Executive Order 
13563, which supplements and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, Executive Order 
13563 requires that an agency--
    (1) Propose or adopt regulations only on a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    We are issuing these final regulations only on a reasoned 
determination that their benefits justify their costs. Based on the 
analysis that follows, the Department believes that these final 
regulations are consistent with the principles in Executive Order 
13563.
    We also have determined that this regulatory action does not unduly 
interfere with State, local, and tribal governments in the exercise of 
their governmental functions.
    In accordance with OMB circular A-4, we compare the final 
regulations to the 2014 Rule. In this regulatory impact analysis, we 
discuss the need for regulatory action, the potential costs and 
benefits, net budget impacts, assumptions, limitations, and data 
sources, as well as regulatory alternatives we considered.
    As further detailed in the Net Budget Impacts section, this final 
regulatory action has an annual effect on the economy at the 7 percent 
discount rate of approximately $518 million in increased transfers 
among borrowers, institutions, and the Federal government primarily 
related to the elimination of the ineligibility provision of the GE 
regulations. This figure does not take into account that a number of 
large proprietary chains have closed since the 2014 Rule was 
promulgated, nor the fact that college enrollments have declined 
dramatically since 2014--especially at proprietary institutions--
meaning that with or without the GE regulations, there are 
significantly fewer GE programs available to students and students 
likely to enroll in the programs that remain available than when the 
2014 Rule was developed. Therefore, transfers to borrowers and 
institutions may be lower than anticipated by the Net Budget Impact 
statement.
    In addition, our analysis does not include any reductions in 
transfers to students and institutions that may result from the market-
based accountability system that the expanded College Scorecard will 
enable. Even in the absence of sanctions or loss of eligibility, 
programs that yield unfavorable outcomes may be significantly less 
attractive to students who, prior to expansion of the

[[Page 31438]]

Scorecard, may have been misled by more generalized claims about the 
earnings advantage of a college degree.\174\ In general, college 
enrollments have dropped significantly since 2014, and in particular, 
enrollments at proprietary institutions have decreased markedly since 
2014, due in part to the significant public campaign against those 
institutions and to the well-publicized closure of Corinthian Colleges. 
According to the National Student Clearinghouse Research Centers, 
declines in enrollments at proprietary institutions have been sharper 
than declines in other sectors:\175\
---------------------------------------------------------------------------

    \174\ See blog.ed.gov/2011/12/in-america-education-is-still-the-great-equalizer/ and www.census.gov/prod/2002pubs/p23-210.pdf.
    \175\ National Student Clearinghouse Term Enrollment Estimates, 
Spring 2017. National Student Clearinghouse Research Center. 
nscresearchcenter.org/wp-content/uploads/CurrentTermEnrollment-Spring2017.pdf.

------------------------------------------------------------------------
                                                            Percent
                                                           enrollment
                                                        decline relative
                       Semester                         to previous year
                                                        at 4-year, for-
                                                             profit
                                                        institutions (%)
------------------------------------------------------------------------
Fall 2014............................................               -0.4
Spring 2015..........................................               -4.9
Fall 2015............................................              -13.7
Spring 2016..........................................               -9.3
Fall 2016............................................              -14.5
Spring 2017..........................................              -10.1
------------------------------------------------------------------------

    As noted in the Net Budget Impacts section of this RIA, this 
enrollment decline may reflect institutional response to the 2014 Rule 
or other factors such as the sensitivity of non-traditional student 
enrollment to economic conditions. Therefore, it is possible that the 
cost of eliminating the 2014 Rule to taxpayers is lower than the 
estimate provided in our Regulatory Impact Statement.
    We estimate $209 million in benefits due to reduced burden from 
eliminating paperwork requirements. Additionally, we estimate $593 
million at a 7 percent discount rate in annualized increased transfers 
to Pell Grant recipients and borrowers. This economic estimate was 
produced by comparing the regulation to the PB2020 budget. The required 
Accounting Statement is included in the Net Budget Impacts section.
    Elsewhere, under Paperwork Reduction Act of 1995, we identify and 
explain burdens specifically associated with information collection 
requirements.

1. Need for Regulatory Action

    A number of factors compel the Department to take this regulatory 
action including concerns about the validity of the D/E metric and the 
integration of factors in the D/E equation, such as repayment terms, 
that are inconsistent with requirements of the student loan program. In 
addition, the Department has recognized that by providing consumer 
information on only a small portion of higher education programs, it 
fails in providing information that consumers can use to compare all 
programs available to them, and that enables all students to make 
informed decisions. The Department believes that in the 2014 GE 
regulation it underestimated the burden associated with this regulation 
and ignored the conclusions of a technical review panel that made clear 
how unreliable, subjective and inaccurate job placement reporting is in 
the absence of standardized definitions, reliable data sources and a 
single calculation methodology. The Department attempted to resolve the 
current challenges associated with job placement rate reporting, but 
the technical review panel assembled failed to do so. Therefore, it is 
inappropriate for the Department to require institutions to publicly 
report job placement rates knowing that direct comparisons between 
institutions could easily mislead consumers since different 
institutions are required to calculate these rates in different ways. 
Also, the Department's 2014 burden estimate did not include an 
assessment of burden on the government.
    Perhaps most importantly, now that the Department is aware that the 
majority of student borrowers are not repaying their loans using a 
standard 10 year repayment plan, and many are in income driven 
repayment plans that lead to negative amortization, it is imperative to 
implement a transparency framework that provides comparable information 
to all students and parents to inform the enrollment and borrowing 
decisions of all consumers. The Department has determined that a more 
effective and comprehensive solution to the problem of student loan 
under-repayment is the expansion of the College Scorecard to provide 
program-level debt and earnings data for all title IV eligible academic 
programs. Such a transparency framework will support a market-based 
accountability system that respects consumer choice while enabling more 
informed decision-making. In addition, by using administrative data 
rather than requiring institutions to report and review additional 
data, the College Scorecard will ensure that consumers are provided 
with information that is consistent, accurate and reliable. It will 
also enable consumers to more easily compare outcomes among the 
institutions and programs available to them and reduce costly reporting 
burden to institutions.
    As cited earlier in these final regulations, the Department's 
determination that only 24 percent of loans in the current $1.2 
trillion Direct Loan portfolio are paying down at least a dollar of 
principal points to the need for a more comprehensive transparency and 
accountability framework. The Department considered through rulemaking 
how it might apply GE-like requirements to all institutions by amending 
the regulations for the Program Participation Agreement; however, 
negotiators could not agree on which, if any, of the metrics, 
thresholds, or disclosure requirements included in the GE regulations 
should be applied to all title IV participating institutions.
    Upon further review of studies published subsequent to the 2014 
Rule as well as our review of the research paper that originally led to 
the Department's decision to use an 8 percent D/E rate as the 
``passing'' score led the Department to the conclusion that the D/E 
methodology was fundamentally flawed, as were the thresholds for ending 
a school's title IV participation.\176\ In addition, the Department's 
decision to use its regulatory authority to create a sweeping new 
student loan repayment program, the REPAYE program, provided the 
Department with an opportunity to revisit student debt management 
opportunities and establish new student loan repayment levels and 
terms. The choices made in establishing the repayment term for REPAYE 
render the amortization term used for GE calculations of debt-to-
earnings inappropriate and obsolete. The GE regulations essentially 
held GE programs to a student loan repayment standard that no student 
would be held to by law or regulation. At a minimum, the Department 
would have needed to adjust the D/E calculation to adopt the 
amortization terms of REPAYE since any borrower could elect to enter 
into REPAYE repayment, a program that eliminates an income test for 
eligibility. However, this adjustment would not solve for the other 
problems with the validity of the D/E calculation.
---------------------------------------------------------------------------

    \176\ Note: Association of Proprietary Colleges v. Duncan 
(2015), suffers from this same limitation of not having access to 
studies conducting following the passage of the rule.
---------------------------------------------------------------------------

    The Department's review of the only set of D/E data published to 
date also reveals the serious weaknesses of the GE

[[Page 31439]]

methodology since programs with very low earnings passed the D/E rate 
simply because taxpayers were providing significant financial support 
to those programs. These data call into question whether taxpayers 
should continue to subsidize these programs, and also highlight that 
direct subsidies are every bit a risk to taxpayer investments that do 
not yield benefits as are student loans that cannot be repaid. While 
having lower debt is certainly better for students, the Department must 
weigh the impact of having debt with the impact of achieving higher 
earnings. From a student perspective, higher earnings may be preferable 
to lower debt, especially since Congress and the Department have 
created student loan repayment management programs to help students 
repay their loans. In some cases, the amount of Federal debt a student 
could accumulate (due to limits imposed on undergraduate borrowing) 
would be offset by added earnings (relative to programs in the same 
field that resulted in lower earnings) just a few years into the 
student loan amortization period. The GE data made it clear to the 
Department that there is wide earnings variability among programs 
within all sectors (non-profit, public, and for-profit), and the 
Department can no longer assume that this variability accurately 
reflects differences in program quality. This variability could also be 
the result of geographic differences in prevailing wages, demographic 
and socioeconomic differences in student populations, and salary 
differences from one occupational field to the next. Since the 
Department is not satisfied that the D/E rates are a reliable or 
accurate proxy for program quality, the Department is not justified in 
its use of those data as the determinant for applying sanctions to 
institutions or eliminating them from title IV participation.
    The Department recognizes that some GE programs have inferior 
outcomes to others, that proprietary institutions like almost all non-
public institutions charge higher tuition than public institutions, 
that earlier comparisons between proprietary institutions and community 
colleges are misleading since the majority of students enrolled in 
proprietary institutions are enrolled in four-year programs, and that 
students who attend proprietary institutions, in general, default at 
higher rates. However, as pointed out by a recent Brown Center study, 
proprietary institutions also serve a much higher proportion of high-
risk students, low-income and minority students, and students over the 
age of 25 who by law have significantly higher borrowing limits, than 
non-profit institutions, which may explain differences in observed 
outcomes. The Brown Center study also pointed to challenges in 
comparing data from non-profit institutions and proprietary 
institutions since non-profit institutions rarely offer both 2-year and 
4-year degrees, whereas many proprietary institutions offer both, 
making comparisons between these institutions and community colleges 
improper and inaccurate.\177\ A more informative and appropriate 
comparison between proprietary institutions and non-profit 
institutions, especially with regard to cost and student debt, would 
need to include non-profit, private 4-year institutions, since the lack 
of public subsidies makes their cost structure more similar to many 
proprietary institutions than two-year or four-year public institutions 
(except for out-of-State students who receive fewer benefits of 
taxpayer subsidies and therefore pay a higher cost). Institutional 
comparisons must also take into account institutional selectivity and 
student demographics because student borrowing behaviors and earnings 
outcomes are influenced by many factors other than program quality.
---------------------------------------------------------------------------

    \177\ Stephanie Riegg Cellini and Rajeev Davolia, Different 
degrees of debt: Student borrowing in the for-profit, nonprofit and 
public sectors. Brown Center on Education Policy at Brookings, June 
2016.
---------------------------------------------------------------------------

    Finally, since the SSA has not renewed the MOU with the Department 
to provide future earnings data, the Department cannot calculate or 
report future D/E rates. At a minimum the Department would have had to 
consider different data sources as part of its rulemaking effort, but 
at the time of rulemaking, it was not yet apparent that SSA would not 
provide additional earnings data. Therefore, the Department did not 
seek comment on the risks or benefits of utilizing Census or IRS data 
to determine earnings, or the impact of the use of those earnings on 
the validity of the D/E rates calculation or the comparison between D/E 
rates based on SSA data and the rates that would be calculated using 
IRS or Census data. Unable to get the data needed to make those 
determinations, the Department decided to rescind the 2014 Rule and 
develop a new tool--the expanded College Scorecard--to implement a 
transparency framework for GE and non-GE programs that will enable a 
more robust market-based accountability system to thrive.

2. Summary of Comments and Changes From the NPRM

    The Department is making no changes from the NPRM. Comments 
received by the Department relative to the regulatory impact analysis 
are summarized and discussed below.
    Summary: Commenters stated that the Department failed to discuss 
regulatory alternatives that it considered. Commenters offered 
alternatives for the Department to consider as discussed earlier in the 
document.
    Discussion: We thank the commenter for identifying that we 
inadvertently omitted the Regulatory Alternatives Considered section 
from the NPRM prior to publication. We have included it in this final 
rule.
    Comments: Commenters stated that the NPRM ignored research showing 
that students are likely to find and attend another institution if a GE 
program closes because of sanctions or other adverse actions against a 
for-profit institution.\178\
---------------------------------------------------------------------------

    \178\ Cellini, S. R. ``2018 Gainfully Employed? Assessing the 
Employment and Earnings of For-Profit College Students Using 
Administrative Data,'' www.nber.org/papers/w22287; Cellini, S. R., 
Darolia, R., and Turner, N. (December 2016). ``Where do students go 
when for-profit colleges lose federal aid?'' National Bureau of 
Economic Research working paper series. Available at: www.nber.org/papers/w22967; and Blagg, K., & Chingos, M. (2016). Choice Deserts: 
How Geography Limits the Potential Impact of Earnings Data on Higher 
Education. Urban Institute. Available at: www.urban.org/sites/default/files/publication/86581/choice_deserts_1.pdf).
---------------------------------------------------------------------------

    Discussion: The Department agrees that in California, where the 
study was conducted, there are many choices of two-year colleges that 
may enable students to find a new program at a public institution if 
their GE program closes. However, the study does not demonstrate that 
students were able to find a similar CTE or applied program when moving 
to the community college. If those students moved from an applied 
program at a proprietary institution to a general studies or liberal 
arts program at a two year college (the largest majors at most 
community colleges nationally according to NCES data), they may not be 
better off since Holzer and Baum have determined that these programs 
have no market value to students who do not complete a four-year degree 
at another institution.\179\ Nonetheless, the Department has always 
assumed a high level of transfers related to gainful employment 
disclosures and institutional closures. As noted in the Net Budget 
Impacts section, the estimates in the PB2020 baseline for the

[[Page 31440]]

impact on Pell Grants derive from the assumptions about students who 
would not pursue their education in response to programs' gainful 
employment results. These assumptions ranged from 5 percent stopping 
for the first disclosure of a zone result to 20 percent for a second 
failure.\180\ The Department believes this is consistent with the high 
degree of transfers reflected in the research cited by the commenters. 
Additionally, even if the percentage of students who lose access to 
programs is small, the Department maintains that there are significant 
consequences to students whose educational plans are disrupted by 
gainful employment related transfers. As recent experience with 
institutional closures demonstrates, having to find an alternative 
program that fits with the other restrictions in students' lives is a 
stressful process. Not all programs, especially those with specific 
equipment or other resource requirements, are immediately available for 
students whose programs would be ineligible for Federal aid. Students 
may be delayed in pursuing their education or may choose another field, 
both outcomes that could reduce their earnings potential.
---------------------------------------------------------------------------

    \179\ NCES, nces.ed.gov/pubs2017/2017051.pdf; Holzer and Baum, 
Making College Work: Pathways to Success for Disadvantaged Students.
    \180\ See Table 3.4: Student Response Assumptions, 79 FR 211 p. 
65077. Available at www.govinfo.gov/content/pkg/FR-2014-10-31/pdf/2014-25594.pdf.
---------------------------------------------------------------------------

    Comments: Several commenters contended that the Department raised 
questions about the GE regulations without acknowledging the extensive 
public record on GE topics, ignored evidence compiled through years of 
analysis and study, and failed to acknowledge its own factual findings 
on economic benefits and educational value. The commenters stated the 
Department did not rely upon its own data or research to formulate its 
policy.
    Discussion: The Department considered an abundance of data, 
including a number of studies that did not exist at the time the 
Department promulgated the 2014 GE regulation, and NCES data produced 
by the Department, when trying to develop a methodology for expanding 
the GE transparency and accountability framework to include all title 
IV participating programs. While there is an abundance of research 
comparing proprietary college outcomes with non-profit college 
outcomes, these studies all have omissions and limitations that make it 
unclear whether inferior outcomes, where they exist, are the result of 
program quality or other factors, such as student demographics. These 
studies also often times compare proprietary colleges with community 
colleges even though many proprietary institutions offer four-year 
programs, which makes comparisons with community colleges 
inappropriate. There is a dearth of research on the low student loan 
repayment rates across the entire student loan portfolio. The 
Department recognizes the need to create a transparency and 
accountability framework that includes all title IV programs and 
institutions since the problem of student loan over-borrowing and 
under-repayment impacts all sectors of higher education. However, the 
Department identified a number of flaws in the D/E rates methodology 
and thresholds, and excessive burden associated with GE disclosures, 
making it clear that expanding the components of the GE regulations to 
all institutions could not be supported by data. The Department 
believes that in order for consumers to be able to compare their 
options, all programs they are considering must be subjected to the 
same analysis and students must have access to comparable data.
    The Department did consider data available to it when deciding to 
rescind the 2014 Rule. In particular, it considered that the data and 
research presented in conjunction with the 2014 Rule did not support 
the use of an 8 percent threshold for differentiating between passing 
and zone or failing programs since the research used to justify the 8 
percent threshold specifically pointed out that the 8 percent 
threshold--a mortgage standard--would not be justified for use in 
establishing student loan limits.
    The 2014 Rule also ignored the role of taxpayer subsidies in 
allowing programs that generate very low earnings to pass the D/E rates 
measure. This could give students the inaccurate impression that if a 
program passes the D/E rates measure, it is high quality and will yield 
strong outcomes. However, the Department's review of the D/E rates 
published in 2017 showed that a number of programs that yield earnings 
below the poverty rate for a family of four passed the test simply 
because the taxpayer, rather than the student, took on the larger 
burden of paying for the program. We do not believe that we should mask 
low earning programs simply by suggesting that if the taxpayer 
continues to pay for these programs, somehow students benefit.
    Given the Department's realization that a sizable percentage of 
loans in the outstanding student loan portfolio are not shrinking due 
to student payments, a more comprehensive strategy is required. The GE 
regulations cannot be expanded to include all programs, and the 
Department's negotiated rulemaking did not result in consensus on a 
methodology for applying sanctions or requiring disclosures of all 
institutions that could be supported by research or justify the 
potential cost of the added burden or the loss of program options to 
students. Applying the GE regulations to all institutions could have 
profound negative impacts on all private institutions, regardless of 
whether they are non-profit or proprietary, since the absence of direct 
appropriations naturally pushes the cost burden to students. The 
Department now believes it is better to use administrative data to 
provide comparable debt, earnings, default and repayment information 
across all programs to consumers and taxpayers. Since the Department 
could not get earnings data for all students in all title IV programs 
to support this rulemaking effort, the Department is unable to test the 
impact of applying GE-like metrics to all title IV programs, and would 
be impetuous to apply GE-like metrics to all title IV programs absent 
such test data given the sweeping impact that such an action could 
have.
    Comments: Commenters stated that the Department's discussion of 
costs and benefits in the RIA section of the NPRM did not acknowledge 
the loss of competitive advantage that institutions face if the GE 
regulations are rescinded because a program with good D/E rates could 
market that their rates are good and attract more students versus 
nearby institutions with poor D/E rates. Meanwhile, other commenters 
submitted data analyses countering these claims.
    Discussion: After reviewing the published GE rates produced in 
2017, the Department does not believe that passing D/E rates should be 
viewed by consumers as the mark of a ``good'' program since a number of 
programs that generated lower earnings than failing programs passed the 
test simply because the taxpayer heavily subsidized the program. The 
Department is concerned about the false effect that the D/E rates 
measure could have on a program's or institution's reputation, and that 
students could be misled to enroll in a program that generates lower 
earnings without fully understanding the long-term impact of that 
decision on earnings across a lifetime.
    The Department agrees that there may be positive reputational 
effects lost as a result of rescinding the GE regulations; however, the 
Department believes that some of these positive reputational effects 
were inappropriate and harmful since taxpayer generosity rather than 
program quality is responsible for those outcomes. However, those 
programs that enjoyed earned positive reputational

[[Page 31441]]

effects will see them continue as the College Scorecard will provide 
debt and earnings data for all programs. This may improve the 
reputational effects for a larger number of deserving programs and 
institutions.
    Comments: Commenters stated that the Department did not consider in 
the NPRM the full costs of the rescission of the 2014 Rule, including 
costs that accrue to students with high debt in failing programs and to 
taxpayers when students default. Commenters further stated that 
controlling for demographics, location, and major field of study, 
students in proprietary GE certificate programs earned $2,100 less 
annually than students in non-profit GE certificate programs.
    Commenters also expressed concern that, in rescinding the GE 
regulations, the Department has failed to consider the cost to 
borrowers that are not gainfully employed and who may default as a 
result of unsustainable debt. Commenters cited research and stated that 
these borrowers would be saddled with capitalized interest and high 
collection fees, which would require them to pay more per month than 
borrowers in good standing.\181\
---------------------------------------------------------------------------

    \181\ Cellini, S. R. `2018 Gainfully Employed? Assessing the 
Employment and Earnings of For-Profit College Students Using 
Administrative Data' www.nber.org/papers/w22287.
---------------------------------------------------------------------------

    Discussion: The Department agrees that student loan debt is costly 
to students and undermines the earnings benefits that many students 
would otherwise enjoy. However, this problem is not limited to students 
who enrolled at proprietary institutions. This is a widespread problem 
that needs a solution that includes all title IV participating 
programs. The Department agrees that taxpayers need to understand the 
risks and benefits associated with investing in higher education, but 
we believe that includes the money that taxpayers invest directly in 
higher education, including through direct appropriations and State 
student aid and scholarship programs. Those dollars were ignored in the 
methodology selected for the 2014 Rule, which was a major shortcoming 
of the regulation.
    The Department has reviewed the research showing that students who 
complete certificate programs at proprietary institutions earn around 
$2,100 less per year than those who complete certificate programs at 
non-profit institutions. However, certificate programs represent only a 
proportion of higher education programs and it is not clear that those 
results would persist if the study were expanded to include all degree 
programs. Also, the research on certificate programs attempted to 
conduct matched comparison group studies, but it did not accomplish 
that goal since broad comparisons based on student age and zip codes 
were used to establish comparison groups, and factors other than that 
are critical to identifying student matched comparison groups. Even 
within a single zip code there can be considerable socioeconomic 
diversity. The study also did not compare outcomes between particular 
kinds of certificates for particular occupations, meaning that the 
outcomes could be the result of more students at non-profit 
institutions pursuing certificates in IT, practical nursing, or the 
traditional trades, as opposed to more students at proprietary 
institutions pursuing certificates in allied health professions (other 
than nursing) or cosmetology. Schools with larger proportions of 
students in IT and nursing certificate programs will certainly post 
higher average earnings than those with larger proportions of students 
in other certificate programs, and yet State nursing boards and 
accreditors may disallow those institutions to offer programs in higher 
wage occupations. However, when the study compared earnings outcomes 
among graduates of certificate programs in cosmetology, it turned out 
that graduates of proprietary cosmetology programs had higher earnings 
than graduates of community college cosmetology programs. Therefore, we 
must interpret the results of the study with caution.
    We must also understand that students may have limited options due 
to location or scheduling convenience, so we need to understand not 
only whether a student has better earnings potential if she completes a 
certificate program at a community college versus a proprietary 
institution, but if she would suffer from lower employability or 
earnings if in the absence of the proprietary program, the student was 
unable to complete a career and technical education program at all, or 
if in the absence of an opportunity to enroll in a certificate program 
at the community college, she could enroll only in a general studies 
program. Chances of completing the program could be lower and the 
market value of doing so could be null. So, we need to also compare the 
outcomes of general studies programs at community colleges with the 
outcomes of CTE programs at proprietary institutions since the number 
of community college GE programs with less than 10 students suggests 
that only small numbers of students have access to those programs. The 
largest major at most community colleges is general studies or liberal 
arts. Therefore, it may not be relevant to compare the outcomes of a 
proprietary and a non-profit certificate program if the student who 
enrolls at the non-profit institution is more likely to be ushered into 
a general studies or liberal arts program than the equivalent 
certificate program.
    The Department does not disagree that the cost of college is a 
serious concern, but that concern extends well beyond proprietary 
institutions. The Department is not ignoring that a higher proportion 
of students at proprietary institutions take on more debt than at 
community colleges; however, given the size of many community colleges, 
a lower percent does not translate into fewer students (in whole 
numbers) taking on debt or defaulting on loans. Total student loan 
portfolio analysis proves that over-borrowing and under-repayment 
extends far beyond students who enrolled at proprietary institutions.
    The Department is taking a new approach to reducing defaults across 
the portfolio by implementing better student loan origination and 
servicing information and support through our Next Generation Financial 
Services Environment. The Department also believes that by providing 
comparable information about all programs, enrollment reductions in 
poor performing programs in all sectors could generate substantial 
savings.
    In the near term, transfers to students and institutions could 
increase since failing D/E rates will not eliminate the participation 
of certain programs. However, we have never been able to predict the 
macro-economic impact of those closures over time. In addition, over 
the longer-term, the Department believes that the expanded College 
Scorecard will result in greater savings to students and taxpayers when 
consumers have earnings and debt data for all title IV programs and can 
make better choices as a result.
    The Department also wishes to point out that macro-economic 
conditions may have a greater impact on higher education costs and 
savings to students and taxpayers since college enrollments, in 
general, have been reduced significantly, especially among students 
over the age of 24.
    Comments: Commenters stated that the Department could use data from 
the National Student Loan Database (NSLDS) and compute consistently 
measured D/E rates across all programs and not rely on institutional-
level data from the College Scorecard which uses different definitions 
and is not a reliable cross-sector comparison of programs.

[[Page 31442]]

Additionally, this NSLDS data could be used to substantiate the 
Department's claim that whether programs pass or fail the D/E rates 
measure is unduly affected by the enrollment of disadvantaged students. 
This was presented for the 2014 Rule.
    Discussion: The Department made NSLDS data available during the 
negotiated rulemaking sessions.\182\ It should be noted that the 
earnings data obtained from SSA was anonymous and in the aggregate, so 
there was no way to disaggregate earnings data to test the impact of 
disadvantaged students on rates as the commenter describes. The 
Department currently does not have program-level data for non-GE 
programs, as it requires obtaining data from a different department.
---------------------------------------------------------------------------

    \182\ U. S. Department of Education. (February 2018). Gainful 
employment: background data analysis. Available at: www2.ed.gov/policy/highered/reg/hearulemaking/2017/geprogramdata.docx.
---------------------------------------------------------------------------

    If the commenter is referring to estimates provided in the 2011 GE 
regulations, the Department wishes to point out that those estimates 
included title IV and non-title IV programs, since, at the time, IPEDS 
was the only source of program-level data and it included a larger 
number of programs.
    The Department believes that the commenter misunderstands the use 
of the expanded College Scorecard, which is not to take data from the 
Scorecard to calculate D/E rates but is instead to use the Scorecard to 
provide program-level debt and earnings data for GE and non-GE 
programs. We agree that the current Scorecard would not inform D/E 
rates calculations since the current Scorecard includes all students, 
not just completers, and provides institution-level data only. The 
expanded Scorecard will report program-level median debt and earnings 
data for GE and non-GE programs at all credential levels. The 
Department plans to rely on the IRS, rather than SSA as was the case in 
the GE regulations, to provide aggregate earnings data and NSLDS will 
continue to serve as the data source for debt data. Since the GE 
regulations apply only to GE programs, and the full GE regulations 
cannot be applied to non-GE programs, the only way to provide cross-
sector comparisons based on comparable data is by eliminating the GE 
regulations and developing a new transparency tool that can be applied 
to all title IV programs. The College Scorecard will serve as that 
tool.
    The Department is currently considering ways to develop risk-
adjusted outcomes metrics that leverage the power of regression 
techniques to control for differences in student-level risk factors 
such as age, socioeconomic status, or high school preparation when 
comparing student outcomes. In the meantime, we believe that by 
providing institution--level selectivity ratings and student 
demographics, we can begin to put outcomes in the context of 
differences in student demographics and institutional selectivity.
    Comments: A commenter stated that during the first year of the D/E 
calculation GE programs declined from 39,000 to 27,000 programs 
indicating that failing programs dropped out.
    Discussion: We were unable to replicate the findings the commenter 
referenced, and the commenter provided no documentation or data to 
support this assertion. In the 2014 Rule, the Department did report a 
total of 37,589 programs for which institutions reported enrollment in 
FY2010, of which 5,539 met the 30 completer threshold to be included in 
the 2012 D/E rates calculations.\183\ Several factors contribute to the 
decline in programs for 2008-09 from the first GE reporting reflected 
in the 2012 informational rates and the data presented for this 
regulation. As institutions became more familiar with the reporting 
requirements, they may have changed 6-digit OPEIDS, CIP codes or 
updated students' enrollment status, all of which could consolidate the 
number of programs reported. Some of the decline likely was in response 
to anticipated non-passing gainful employment results, but mergers and 
changes in program offerings occur on a regular basis for a variety of 
business reasons, especially when considering the small size of many of 
the programs captured in the GE reporting. Therefore, we do not agree 
with the commenter that the reduction in the number of programs is due 
exclusively to institutions' decisions to discontinue programs that 
would have failed. However, even in the absence of the GE regulation, 
when students are able to compare earnings and debt outcomes among all 
of their options, low-performing programs may suffer from such low 
enrollments that schools will discontinue them even in the absence of 
Department sanctions.
---------------------------------------------------------------------------

    \183\ 79 FR 211 p. 65037. Available at www.govinfo.gov/content/pkg/FR-2014-10-31/pdf/2014-25594.pdf.
---------------------------------------------------------------------------

    During negotiated rulemaking the Department provided\184\ Table 3.1 
Program and Enrollment Counts during the second negotiated rulemaking 
session which included GE programs counts from the 2008-2009 thru 2015-
2016 year, copied below in Table 3.
---------------------------------------------------------------------------

    \184\ U.S. Department of Education. (February 2018). Gainful 
employment: background data analysis. Available at: www2.ed.gov/policy/highered/reg/hearulemaking/2017/geprogramdata.docx.

       Table 3--Number of GE Programs and Enrollees by Award Year
------------------------------------------------------------------------
               Award year                    Programs       Enrollment
------------------------------------------------------------------------
2008-2009...............................          27,611       2,787,260
2009-2010...............................          30,674       3,613,730
2010-2011...............................          32,908       3,892,590
2011-2012...............................          34,252       3,767,430
2012-2013...............................          35,075       3,515,210
2013-2014...............................          35,905       3,326,340
2014-2015...............................          35,399       3,077,970
2015-2016...............................          32,970       2,529,190
------------------------------------------------------------------------
Enrollment values rounded to the nearest 10.

    The number of GE programs and enrollment in them changed over time, 
but do not show a decline from 39,000 to 27,000 programs. During the 
time period shown above, program count peaked in 2013-2014 and 
enrollment peaked in 2010-2011.
    Comments: Commenters stated that during the one year that the 2014 
Rule was implemented, results of the rule showed that 98 percent of 
over 800 programs that failed were offered by for-profit institutions. 
Commenters stated that risk-based compliance efforts appropriately 
target proprietary

[[Page 31443]]

institutions. Commenters asserted that the Department relied on the 
premise that there are justifiable reasons to provide title IV funds to 
students enrolled in low-quality programs. Commenters claim that data 
show that the GE regulations affect institutional behavior with respect 
to zone and fail programs. Commenters also submit data analyses 
supporting expanding the application of the D/E rates measure to all 
programs at all institutions or rescinding it entirely.
    Discussion: The table below is based on data the Department 
distributed \185\ during the second session of negotiated rulemaking, 
February 2018 `Gainful Employment Data Analysis' section 6, table 3.2.
---------------------------------------------------------------------------

    \185\ Ibid.

                             Table 4--Number and Percent of Programs That Failed GE
----------------------------------------------------------------------------------------------------------------
    GE programs--all programs                 Number                      Percent and confidence interval
----------------------------------------------------------------------------------------------------------------
                                                                   Percent fail
             Sector                    Fail            Total            (%)           LCL (%)         UCL (%)
----------------------------------------------------------------------------------------------------------------
Public..........................               1           2,493            0.04           -0.04            0.12
Private.........................              24             476            5.04            3.08            7.01
Proprietary.....................             878           5,681           15.46           14.52           16.40
                                 -------------------------------------------------------------------------------
    Overall.....................             903           8,650           10.44            9.79           11.08
----------------------------------------------------------------------------------------------------------------


--------------------------------------------------------------------------------------------------------------------------------------------------------
                      GE programs--certificate only                                   Number                      Percent and confidence interval
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           Percent fail
                  Sector                          Certificate level            Fail            Total            (%)           LCL (%)         UCL (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public....................................  Undergraduate...............               1           2,428            0.04           -0.04            0.12
Public....................................  Post baccalaureate..........               0              17            0.00            0.00            0.00
Public....................................  Graduate....................               0              48            0.00            0.00            0.00
Private...................................  Undergraduate...............              21             405            5.19            3.03            7.34
Private...................................  Post baccalaureate..........               0              27            0.00            0.00            0.00
Private...................................  Graduate....................               3              44            6.82           -0.63           14.27
Proprietary...............................  Undergraduate...............             196           3,260            6.01            5.20            6.83
Proprietary...............................  Post baccalaureate..........               0               5            0.00            0.00            0.00
Proprietary...............................  Graduate....................               2              23            8.70           -2.82           20.21
                                                                         -------------------------------------------------------------------------------
                      Overall Certificate Programs                                   223           6,257            3.56            3.10            4.02
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We used the published data to produce the tables above, which 
compare GE programs by sector--public, private, and proprietary--and 
level-undergraduate, post baccalaureate, and graduate. Overall totals 
from the table show that there are 8,650 (Proprietary 65.7 percent, 
Private 28.8 percent & Public 5.5 percent) total GE programs of which 
903 or 10.44 percent failed the D/E rates measure. When significance 
tests are run at the sector level on this data at the 95 percent 
confidence interval producing lower (LCL) and upper (UCL) confidence 
limits, the three sectors appear to be significantly different because 
their confidence intervals do not overlap. However, these data contain 
non-comparable data in the reported totals because only degree programs 
are only counted as GE programs in the proprietary sector. When the 
proprietary data are subset to certificate-only, 198 programs of 3288 
failed, resulting in 6.02 percent failing with a confidence interval 
ranging from 5.21 percent to 6.84 percent; this interval overlaps with 
that of private, non-profit institutions. Because there are no 
comparable data at the degree levels, a valid comparison is not 
possible with Department data.
    The second part of the table subsets the data to certificate 
programs and further breaks down certificates by level. There were 
6,257 GE certificate programs of which 223 or 3.56 percent failed the 
D/E rates measure. When degree programs are removed from proprietary 
programs (computed using addition), the resulting percentage of 
proprietary certificate programs failing is 6.02 percent (198/3288) 
with a confidence interval of 5.21 to 6.84 percent. This overlaps with 
the private, non-profit certificate confidence interval of 3.08 to 7.01 
percent. Therefore, there is no statistical difference between private 
and proprietary certificate program GE failure rates. Further, we found 
no significant differences between the percentages of failing 
certificate programs at non-profit private and proprietary private 
institutions, regardless of level under examination. Public GE 
certificate programs had significantly lower failure rates than both 
private and proprietary GE certificate programs. However, as was 
pointed out earlier in this document, GE programs offered by taxpayer 
subsidized public institutions may have passed, despite very low 
earnings by program graduates, simply because taxpayers take on the 
largest portion of cost burden. While we agree that taxpayer support 
benefits students, the masking effect of direct appropriations reduces 
the accountability of publicly subsidized programs when they are 
producing sub-optimal earnings outcomes, which is disadvantageous to 
both students and taxpayers. In other words, a program that passes the 
D/E rates measure because of taxpayer funding may not impose 
overwhelming debt burden on students; however, those programs may 
reduce students' full earning potential and may be directing scarce 
taxpayer resources to low-performing programs rather than high 
performing programs.
    Summary: Commenters stated that this regulatory action will cost 
taxpayers $5.3 billion over 10 years.
    Discussion: Comments related to the cost of the regulations are 
addressed in the Net Budget Impacts section of this document.

[[Page 31444]]

    Comments: Commenters requested information relative to the budget 
estimate. Commenters requested the Department clarify the assumptions 
it used to produce its estimate and incorporate the effect of changed 
institutional behavior. Commenters also requested that the effects of 
rescission on default rate and resulting costs to borrowers, society, 
and the economy be reflected in the budget estimate. Commenters 
requested modifications to the budget estimate to adjust for IDR, loan 
forgiveness, and default.
    Discussion: Comments related to the cost of the regulation are 
addressed in the Net Budget Impacts section of this document.
    Comments: Commenters stated that the Department did not justify the 
rescission of the discretionary D/E rate. Other commenters provided 
evidence to support its rescission.
    Discussion: The Department clearly stated in the NPRM that neither 
it nor non-Federal negotiators could identify a D/E metric that was 
sufficiently valid and accurate to serve as a high-stakes quality test 
or to become a new, non-congressionally mandated, eligibility criteria 
for title IV participation. Regardless of whether gross income or 
discretionary income forms the basis of the D/E rates calculation, the 
methodology is inaccurate and fails to control for the many other 
factors other than program quality that influence debt and earnings.
    Comments: Commenters stated the Department failed to comply with 
E.O. 12291 because it did not estimate either the number of or dollar 
impact to students or institutions nor did it match costs to benefits. 
A commenter asserted that the RIA failed to show why rescission is 
beneficial.
    Discussion: Executive Order 12291 was revoked by Executive Order 
12866 on September 30, 1993. Further, the monetized estimates in the 
Regulatory Impact Analysis are based on the budget estimates, which can 
be found in the Net Budget Impacts section. Other impacts, including 
expected burdens and benefits are discussed in the Costs, Benefits, and 
Transfers and Paperwork Reduction Act of 1995 sections. The Department 
believes it is in compliance with Executive Order 12866.
    Comments: Commenters asserted that the regulatory text does not 
support the transparency argument from E.O. 13777 because the 
regulatory text does not include disclosures.
    Discussion: The Department agrees with the commenter and has 
revised its Need for Regulatory Action.

3. Analysis of Costs and Benefits

    These regulations affect prospective and current students; 
institutions with GE programs participating in the title IV, HEA 
programs; and the Federal government. The Department expects 
institutions and the Federal government to benefit as this action 
eliminates reporting, administrative costs, and sanctions. As detailed 
earlier, pursuant to this regulatory action, the Department removes the 
GE regulations and adopts no new ones.
3.1 Students
    Based on 2015-16 Department data from the National Student Loan 
Data System (NSLDS), about 520,000 students would be affected annually 
by the rescission of the GE regulation. The Department estimates this 
rescission will result in both costs and benefits to students, 
including the costs and benefits associated with continued enrollment 
in zone and failing GE programs and the benefit of eliminating 
paperwork burden.
    Eliminating sanctions against institutions based on the D/E rates 
measure will impact students. Under the GE regulations, if a GE program 
became ineligible to participate in the title IV, HEA programs, its 
students would not be able to receive title IV aid to enroll in that 
program. Because D/E rates have been calculated under the GE 
regulations for only one year, no programs have lost title IV, HEA 
eligibility. However, 2,050 programs were identified as failing 
programs or programs in the zone based on their 2015 GE rates and would 
have been at risk of losing eligibility under the GE regulation. NSLDS 
data from 2015-16 shows 329,250 students were enrolled in zone GE 
programs and 189,920 students were enrolled in failing programs (about 
520,000 total). These students will not lose access to title IV Federal 
financial aid at their initially chosen program. As further explained 
in the Net Budget Impacts section, the Department estimates that there 
will be an annual increase in Direct Loan and Pell grant transfers from 
the Federal government to students of $593 million at the 7 percent 
discount rate when compared to the GE regulations under PB2020.
    There are further costs and benefits to students who continue 
enrollment in a program that would have been in the zone or failing 
under the GE regulations, which the Department was unable to monetize 
because the actual outcome for these students is unknown. This includes 
the impact that students will not lose access to title IV aid for those 
programs, which is a benefit of continued financial aid but could also 
be a cost if the investment is not as fruitful as it might be at a 
similar nearby program. What the Department is unable to determine for 
the purpose of these costs estimates is what number of students 
displaced from a GE program that loses title IV eligibility will be 
able to find a similar program at another institution or will enroll in 
a non-applied program, a different applied program of study, or a 
general studies program that yields even poorer outcomes. However, 
given that the large majority of GE programs have less than 10 students 
suggests that a significant number of students who lose access to a GE 
program will end up in a community college general studies program, 
where we do not have D/E outcomes data to inform our analysis. Other 
impacts relate to whether students would have transferred, found 
alternate funding, or discontinued postsecondary education as a result 
of their program losing title IV eligibility under the GE regulation. 
As a result of the rescission, students would not face this stressful 
choice, which could be seen as a benefit of continued postsecondary 
education and not having to transfer institutions, but also a potential 
cost of completing a program that may be judged less favorably than a 
similar program at a nearby institution.
    The Department will also discontinue GE information collections, 
which is detailed further in the Paperwork Reduction Act of 1995 
section of this preamble. Two of these information collections impact 
students--OMB control number 1845-0123 and OMB control number 1845-
0107. By removing these collections, the regulations will reduce burden 
on students by 2,167,129 hours annually. The burden associated with 
these information collections is attributed to students being required 
to read warning notices and certify that they received them. Therefore, 
using an individual hourly rate of $16.30,\186\ the benefit due to 
reduced burden for students is $35,324,203 annually (2,167,129 hours 
per year * $16.30 per hour).
---------------------------------------------------------------------------

    \186\ PRA calculations based on recession of information 
collection requests associated with existing GE requirements and use 
the same wage rates as the 2014 GE rule. The $16.30 rate for 
students was the 2012 median weekly wage rate for high school 
diplomas of $652 divided by 40 hours. Available at http://www.bls.gov/emp/ep_chart_001.htm as accessed in January 2014.
---------------------------------------------------------------------------

    With the elimination of the disclosures and the ineligibility 
sanction that would have removed students' program choices, students,

[[Page 31445]]

their parents, and other interested members of the public will have to 
seek out the information that interests them about programs they are 
considering. Affordability and earnings associated with institutions 
and programs continues to be an area of interest. The College Scorecard 
is one source of comparative data, but others are available, so 
students will have the opportunity to incorporate the information into 
their decisions and rely on their own judgement in choosing a program 
based on a variety of factors.
    To the extent non-passing programs remain accessible with the 
rescission of the 2014 Rule, some students may choose sub-optimal 
programs. Whatever the reason, these programs have demonstrated a lower 
return on the student's investment, either through higher upfront 
costs, reduced earnings, or both. As some commenters have noted, this 
could lead to greater difficulty in repaying loans, increasing the use 
of income-driven repayment plans or risking defaults and the associated 
stress, increased costs, and reduced spending and investment on other 
priorities. These regulations emphasize choice and access for all 
students, and we encourage students to make informed enrollment 
decisions regardless of which institutions or programs they are 
considering, and regardless of whether the institution is proprietary, 
non-profit, or public.
3.2 Institutions
    Based on 2015 GE program rates from the National Student Loan Data 
System (NSLDS), about 2,600 institutions will be affected annually by 
the removal of the GE regulation. These institutions will have a 
reduced paperwork burden and no longer be subject to potential GE 
sanctions that caused loss of title IV eligibility. The table below 
shows the distribution of institutions administering GE programs by 
sector.

                               Table [1]--Institutions With 2015 GE Programs \187\
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Type                                                      Institutions
                                                            Programs
----------------------------------------------------------------------------------------------------------------
Public........................................             865              33%           2,493             29%
Private.......................................             206               8%             476              5%
Proprietary...................................           1,546              59%           5,681             66%
                                               -----------------------------------------------------------------
    Total.....................................           2,617   ..............           8,650  ...............
----------------------------------------------------------------------------------------------------------------

    All 2,617 institutions with GE programs will benefit from the 
elimination of GE reporting requirements. As discussed further in the 
Paperwork Reduction Act of 1995 section of this preamble, reduction in 
burden associated with removing the GE regulatory information 
collections for institutions is 4,758,499 hours. Institutions would 
benefit from these proposed changes, which would reduce their costs by 
$173,923,138 annually using the hourly rate of $36.55.\188\
---------------------------------------------------------------------------

    \187\ The count of programs includes programs that had 
preliminary rates calculated, but were not designated with an 
official pass, zone, or fail status due to reaccreditation and 
reinstatements of eligibility during the validation process of 
establishing D/E rates.
    \188\ PRA calculations based on recession of information 
collection requests associated with existing GE requirements and use 
the same wage rates as the 2014 GE rule. The $36.55 was calculate 
for the 2014 GE Rule based on an assumption that 75 percent of the 
work would be done by staff at a wage rate equivalent to information 
industries sales and office workers of $33.46 and 25 percent of the 
work would involve those paid the equivalent of Education Services--
managers with a wage rate of $45.81. Wage rates taken from http://www.bls.gov/ncs/ect/sp/ecsuphst.pdf as accessed for calculation in 
January 2014.
---------------------------------------------------------------------------

    There are 778 institutions administering 2,050 zone or failing GE 
programs that will benefit because they no longer will be subject to 
sanctions that would result in the loss of title IV eligibility. As 
further explained in the Net Budget Impacts section, the Department 
estimates this change will increase Pell grant and Direct Loan 
transfers from students to institutions by $518 million annually under 
the 7 percent discount rate when compared to PB2019. Although the 
Department was unable to monetize this impact, institutions further 
benefit from the elimination of the need to appeal failing or zone D/E 
rates. The table below shows the distribution of institutions with zone 
and failing programs by institutional type, which represents 24 percent 
of the 8,650 2015 GE programs and 30 percent of the 2,617 institutions 
with GE programs.
---------------------------------------------------------------------------

    \189\ The count of programs includes programs that had 
preliminary rates calculated, but were not designated with an 
official pass, zone, or fail status due to reaccreditation and 
reinstatements of eligibility during the validation process of 
establishing D/E rates.

                       Table [2]--Institutions With 2015 GE Zone or Failing Programs \189\
----------------------------------------------------------------------------------------------------------------
                                                                                                      Zone or
                      Type                         Institutions    Zone programs      Failing         failing
                                                                                     programs        programs
----------------------------------------------------------------------------------------------------------------
Public..........................................               9               9  ..............               9
Private.........................................              34              68              21              89
Proprietary.....................................             735           1,165             787           1,952
                                                 ---------------------------------------------------------------
    Total.......................................             778           1,242             808           2,050
----------------------------------------------------------------------------------------------------------------

    Table [3] shows the most frequent types of programs with failing or 
zone D/E rates. Cosmetology undergraduate certificate programs had the 
most programs in the zone or failing categories, which represented 40 
percent of all of these programs. The proportion of programs in zone or 
fail shown in the table below ranged from 17 to 82 percent. These 
programs and their institutions would be most significantly affected by 
the proposed removal of GE sanctions as they would continue to be 
eligible to participate in title IV, HEA programs.

[[Page 31446]]



                 Table [3]--Zone or Failing 2015 GE Programs by Frequency of Program Types \190\
----------------------------------------------------------------------------------------------------------------
              CIP               Credential level       Zone            Fail        Zone or fail    All programs
----------------------------------------------------------------------------------------------------------------
Cosmetology/Cosmetologist,      Undergraduate                270              91             361             895
 General.                        Certificate.
Medical/Clinical Assistant....  Associates                    35              56              91             119
                                 Degree.
Medical/Clinical Assistant....  Undergraduate                 78              12              90             424
                                 Certificate.
Massage Therapy/Therapeutic     Undergraduate                 43               4              47             270
 Massage.                        Certificate.
Business Administration and     Associates                    24              22              46              74
 Management, General.            Degree.
Legal Assistant/Paralegal.....  Associates                    20              25              45              58
                                 Degree.
Barbering/Barber..............  Undergraduate                 22              16              38              96
                                 Certificate.
Graphic Design................  Associates                    16              17              33              45
                                 Degree.
Criminal Justice/Safety         Associates                    20              11              31              41
 Studies.                        Degree.
Massage Therapy/Therapeutic     Associates                     8              19              27              33
 Massage.                        Degree.
All other programs............  ................             706             535           1,241           6,595
                                                 ---------------------------------------------------------------
    Total.....................  ................           1,242             808           2,050           8,650
----------------------------------------------------------------------------------------------------------------

    While programs with non-passing results will benefit from avoiding 
ineligibility and potentially reputational contagion to other programs 
at the institution that performed better, programs with passing results 
could lose the benefit of their comparatively strong performance, 
although the Department believes that comparatively strong performance 
will be revealed through program-level College Scorecard outcomes as 
well. Consistently strong earnings or low costs would likely be an 
attractive draw for students in a given region or field of study, as 
long as the low-cost program is available to students and offers the 
same scheduling flexibility, convenience, and student support services 
as the higher-cost program offered. While there will not be an 
established standard to be categorized as passing, the Department does 
believe that programs with strong outcomes could still gain from their 
strong performance. Presumably, if a large percentage of programs at 
their institutions do well on gainful employment measures, the 
earnings, debt levels, and other items reported in the College 
Scorecard will be strong compared to their peers with similar 
offerings. As information and analytical tools become more accessible, 
the Department believes the lost potential reputational benefit from 
gainful employment can be replaced.
---------------------------------------------------------------------------

    \190\ The count of programs includes programs that had 
preliminary rates calculated, but were not designated with an 
official pass, zone, or fail status due to reaccreditation and 
reinstatements of eligibility during the validation process of 
establishing D/E rates.
---------------------------------------------------------------------------

3.3 Federal Government
    Under the proposed regulations, the Federal government will benefit 
from reduced administrative burden associated with removing provisions 
in the GE regulations and from discontinuing information collections. 
As discussed in the Net Budget Impacts section, the Federal government 
will incur annual costs to fund more Pell Grants and title IV loans, 
including the costs of income-driven repayment plans and defaults.
    Reduced administrative burden due to the proposed regulatory 
changes will result from elimination of sending completer lists to 
institutions, adjudicating completer list corrections, adjudicating 
challenges, and adjudicating alternate earnings appeals. Under the GE 
regulations, the Department estimated about 500 Notices of Intent to 
Appeal, and each one took Department staff about 10 hours to evaluate. 
Using the hourly rate of a GS-13 Step 1 in the Washington, DC area of 
$46.46,\191\ the estimated benefit due to reduced costs from 
eliminating earnings appeals is $232,300 annually (500 earnings appeals 
* 10 hours per appeal * $46.46 per hour). Similarly, the Department 
sent out 31,018 program completer lists to institutions annually, which 
took about 40 hours total to complete. Using the hourly rate of a GS-14 
Step 1 in the Washington, DC area of $54.91,\192\ the estimated benefit 
due to reduced costs from eliminating sending completer lists is $2,196 
annually (40 * 54.91). Likewise, the Department processed 90,318 
completer list corrections and adjudicated 2,894 challenges. The 
Department estimates it took Department staff 1,420 hours total to make 
completer list corrections. Similarly, the Department estimates it took 
$1,500,000 in contractor support and 1,400 hours of Federal staff time 
total to adjudicate the challenges. Using the hourly rate of a GS-13 
step 1 in the Washington, DC area of $46.46, the estimated benefit due 
to reduced costs from eliminating completer lists, corrections, and 
challenges is $1,631,017 ($1,500,000 contractor support + (1,420 + 
1,400) staff hours * $46.46 per hour).
---------------------------------------------------------------------------

    \191\ Salary Table 2018-DCB effective January 2018. Available at 
www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2018/DCB_h.pdf.
    \192\ Ibid.
---------------------------------------------------------------------------

    Additionally, the Department will rescind information collections 
with OMB control numbers 1845-0121, 1845-0122, and 1845-0123. This will 
result in a Federal government benefit due to reduced contractor costs 
of $23,099,946 annually. Therefore, the Department estimates an annual 
benefit due to reduced administrative costs under the regulations of 
$24,965,459 ($232,300 + $2,196 + $1,631,017 + $23,099,946).
    Finally, the Department will also incur increased budget costs due 
to increased transfers of Pell Grants and title IV loans, as discussed 
further in the Net Budget Impacts section. The estimated annualized 
costs of increased Pell Grants and title IV loans from eliminating the 
GE regulations is approximately $518 to $527 million at 7 percent and 3 
percent discount rates, respectively.

4. Net Budget Impacts

    The Department received a number of comments related to its 
estimated net budget impact for the regulations proposed in the NPRM 
that rescinded the current GE regulation. In particular, some 
commenters presented analysis of the potential effect on defaults and 
loan forgiveness as a cost of the regulation not accounted for in the 
Department's analysis. One such commenter's analysis modeled IDR usage 
at gainful employment programs using the debt and earnings data 
published for gainful

[[Page 31447]]

employment programs and found that many borrowers in non-passing 
programs would qualify for IDR plans and their payments under REPAYE 
would be $1.5 billion less than under a 10-year standard plan on a net 
present value basis.\193\ The Department appreciates the analysis 
presented and acknowledges that there are potential interactions 
between gainful employment, student program choice, repayment outcomes, 
and other factors that could affect the estimates presented. Other 
commenters noted the effect of the current gainful employment 
regulations on institutional behavior, noting that institutions closed 
or revised programs anticipated not to pass the gainful employment 
measures and the loss of this deterrent should be factored into the 
Department's estimates.\194\ However, the Department never attributed 
any savings to default reductions or decreased loan forgiveness in 
relation to the 2014 GE Regulations. The increased volume in the 2-year 
proprietary risk group estimated from rescinding the gainful employment 
regulations, as described in the NPRM and reiterated below, is subject 
to the relatively high default and income-driven repayment plan 
assumptions. Therefore, we do not anticipate a significant change in 
those areas from these final regulations.
---------------------------------------------------------------------------

    \193\ Center for American Progress, How Gainful Employment 
Reduces the Government's Loan Forgiveness Costs, June 18, 2017. 
Available at www.americanprogress.org/issues/education-postsecondary/reports/2017/06/08/433531/gainful-employment-reduces-governments-loan-forgiveness-costs/.
    \194\ New America Foundation comments on GE Regulations, pp. 17-
18 available at www.regulations.gov/document?D=ED-2018-OPE-0042-13659.
---------------------------------------------------------------------------

    As indicated in the NPRM published August 14, 2018, The Department 
proposes to remove the GE regulations, which include provisions for GE 
programs' loss of title IV, HEA program eligibility based on 
performance on the D/E rates measure. In estimating the impact of the 
GE regulations at the time they were developed and in subsequent budget 
estimates, the Department attributed some savings in the Pell Grant 
program based on the assumption that some students, including 
prospective students, would drop out of postsecondary education as 
their programs became ineligible or imminently approached 
ineligibility.
    This assumption has remained in the baseline estimates for the Pell 
Grant program, with an average of approximately 123,000 dropouts 
annually over the 10-year budget window from FY2019 to FY2028. By 
applying the estimated average Pell Grant per recipient for proprietary 
institutions ($4,468) for 2019 to 2028 in the PB2020 Pell Baseline, the 
estimated net budget impact of the GE regulations in the PB2020 Pell 
baseline is approximately $-5.2 billion. As was indicated in the 
Primary Student Response assumption in the 2014 Rule,\195\ much of this 
impact was expected to come from the warning that a program could lose 
eligibility in the next year. If we attribute all of the dropout effect 
to loss of eligibility, it would generate a maximum estimated Federal 
net budget impact of the final regulations of $5.2 billion in costs by 
removing the GE regulations from the PB2020 Pell Grant baseline.
---------------------------------------------------------------------------

    \195\ See 79 FR 211, Table 3.4: Student Response Assumptions, p. 
65077, published October 31, 2014. Available at www.regulations.gov/document?D=ED-2014-OPE-0039-2390. The dropout rate increased from 5 
percent for a first zone result and 15 percent for a first failure 
to 20 percent for the fourth zone, second failure, or ineligibility.
---------------------------------------------------------------------------

    The Department also estimated an impact of warnings and 
ineligibility on Federal student loans in the analysis for the 2014 
Rule, that, due to negative subsidy rates for PLUS and Unsubsidized 
loans at the time, offset the savings in Pell Grants by $695 
million.\196\ The effect of the GE regulations is not specifically 
identified in the PB2020 baseline, but it is one of several factors 
reflected in declining loan volume estimates. The development of GE 
regulations since the first negotiated rulemaking on the subject was 
announced on May 26, 2009, has coincided with demographic and economic 
trends that significantly influence postsecondary enrollment, 
especially in career-oriented programs classified as GE programs under 
the GE regulation. Enrollment and aid awarded have both declined 
substantially from peak amounts in 2010 and 2011.
---------------------------------------------------------------------------

    \196\ See 79 FR 211, pp. 65081-82, available at 
www.regulations.gov/document?D=ED-2014-OPE-0039-2390.
---------------------------------------------------------------------------

    As classified under the GE regulations, GE programs serve non-
traditional students who may be more responsive to immediate economic 
trends in making postsecondary education decisions. Non-consolidated 
title IV loans volume disbursed at proprietary institutions declined 48 
percent between AY2010-11 and AY2016-17, compared to a 6 percent 
decline at public institutions, and a 1 percent increase at private 
institutions. The average annual loan volume change from AY2010-11 to 
AY2016-17 was -10 percent at proprietary institutions, -1 percent at 
public institutions, and 0.2 percent at private institutions. If we 
attribute all of the excess decline at proprietary institutions to the 
potential loss of eligibility under the GE regulations and increase 
estimated volume in the 2-year proprietary risk group that has the 
highest subsidy rate in the PB2020 baseline by the difference in the 
average annual change (12 percent for subsidized and unsubsidized loans 
and 9 percent for PLUS), then the estimated net budget impact of the 
removal of the ineligibility sanction in the final regulations on the 
Direct Loan program is a cost of $1.04 billion.
    Therefore, the total estimated net budget impact from the final 
regulations is $6.2 billion cost in increased transfers from the 
Federal government to Pell Grant recipients and student loan borrowers 
and subsequently to institutions, primarily from the elimination of the 
ineligibility provision of the GE regulation. As in all previous 
estimates related to Gainful Employment regulations, the estimated 
effects are associated with borrowers who could no longer enroll in a 
GE program that loses title IV eligibility and would not enroll in a 
different program that passes the D/E rates measure, but would instead 
opt out of a postsecondary education experience. Some commenters 
submitted research analyzing how CDR-related sanctions in the 1990s 
resulted in small declines in the aggregate enrollment.\197\ Other 
commenters have suggested that 10 percent of students would not enroll 
in a different program. The transfer rates estimated for the 2014 Rule 
which ranged from 5 percent for a first zone result to 20 percent for 
potential ineligibility were in line with the high transfer rate 
suggested by the commenters. Given the potential for several programs 
to become ineligible in the same timeframe and for the loss of 
eligibility to affect grant and loan programs, the Department believes 
the transfer and dropout rates it used in developing the GE estimates 
that are now being rescinded are reasonable. The long-term impact to 
the student and the government of the decision to pursue no 
postsecondary education could be significant but cannot be estimated 
for the purpose of this analysis, which does not include long-term 
macro-economic impacts, such as long-term tax revenue impacts of a 
workforce with less education.
---------------------------------------------------------------------------

    \197\ Stephanie R. Cellini, Rajeev Darolia, and Lesley J. 
Turner, Where Do Students Go When For-Profit Colleges Lose Federal 
Aid? NBER Working Paper No. 22967 December 2016 JEL No. H52, I22, 
I23, I28. Available at www.nber.org/papers/w22967.pdf. Finds a 3 
percent decrease in overall enrollment within counties of Pell Grant 
recipients from sanctions on for-profit institutions.

---------------------------------------------------------------------------

[[Page 31448]]

    This is a maximum net budget impact and could be offset by student 
and institutional behavior in response to disclosures in the College 
Scorecard and other resources. In the 2014 GE rule, the Department 
stated: ``The costs of program changes in response to the regulations 
are difficult to quantify generally as they would vary significantly by 
institution and ultimately depend on institutional behavior.'' \198\ In 
these final regulations, we follow pervious Department practice where 
we do not attribute a significant budget impact to disclosure 
requirements absent substantial evidence that such information will 
change borrower or institutional behavior.
---------------------------------------------------------------------------

    \198\ 79 FR 65080.
---------------------------------------------------------------------------

    Other factors that could affect these estimates include recent 
institutional closures, particularly of proprietary institutions whose 
programs would have been subject to the gainful employment measures. 
Depending upon where the students who would have attended those 
programs in the future decide to go instead, the amount of Pell Grants 
or loans they receive may vary and their earnings and repayment 
outcomes could also change. The budget impact associated with the 
rescission of the gainful employment rule would also be affected if 
significant closures continue and those students pursue programs not 
subject to the 2014 Rule or leave postsecondary education altogether.

5. Accounting Statement

    As required by OMB Circular A-4 we have prepared an accounting 
statement showing the classification of the expenditures associated 
with this final rule (see Table 4). This table provides our best 
estimate of the changes in annual monetized transfers as a result of 
the final rule. The estimated reduced reporting and disclosure burden 
equals the $-209 million annual paperwork burden calculated in the 
Paperwork Reduction Act of 1995 section (and also appearing on page 
65004 of the regulatory impact analysis accompanying the 2014 Rule). 
The annualization of the paperwork burden differs from the 2014 Rule as 
the annualization of the paperwork burden for that rule assumed the 
same pattern as the 2011 rule that featured multiple years of data 
being reported in the first year with a significant decline in burden 
in subsequent years.

      Table [4]--Accounting Statement: Classification of Estimated
                              Expenditures
                              [In millions]
------------------------------------------------------------------------
                Category                             Benefits
------------------------------------------------------------------------
              Discount rate                     7%              3%
------------------------------------------------------------------------
Reduced reporting and disclosure burden           $209.3          $209.3
 for institutions with GE programs under
 the GE regulation......................
------------------------------------------------------------------------


 
                Category                               Costs
------------------------------------------------------------------------
              Discount rate                     7%              3%
------------------------------------------------------------------------
Reduced market information about gainful
 employment programs; offset by
 development of College Scorecard for
 wider range of programs................           Unquantified.
------------------------------------------------------------------------


 
                Category                             Transfers
------------------------------------------------------------------------
              Discount rate                     7%              3%
------------------------------------------------------------------------
Increased transfers to Pell Grant                   $593            $608
 recipients and student loan borrowers
 from elimination of ineligibility
 provision of GE regulation.............
------------------------------------------------------------------------

6. Regulatory Alternatives Considered

    In response to comments received and the Department's further 
internal consideration of these final regulations, the Department 
reviewed and considered various changes to the final regulations 
detailed in this document. The changes made in response to comments are 
described in the Analysis of Comments and Changes section of this 
preamble. We summarize below the major proposals that we considered but 
which we ultimately declined to implement in these regulations.
    In particular, the Department extensively reviewed outcome metrics, 
institutional accountability, sanctions, data disclosure, data appeals, 
and warning provisions in deciding to rescind the GE regulations. In 
developing these final regulations, the Department considered the 
budgetary impact, administrative burden, and effectiveness of the 
options it considered.

                                       Table [5]--Summary of Alternatives
----------------------------------------------------------------------------------------------------------------
             Topic                   Baseline         Alternatives        NPRM proposal          Final regs.
----------------------------------------------------------------------------------------------------------------
Universe of Coverage..........  GE Programs......  None; GE           None................  None.
                                                    Programs; all
                                                    programs at all
                                                    institutions
                                                    (IHEs); all
                                                    programs at all
                                                    IHEs except
                                                    graduate
                                                    programs; and
                                                    all programs at
                                                    all IHEs except
                                                    professional
                                                    dental, and
                                                    veterinary.

[[Page 31449]]

 
Disclosures: Calculations and   IHEs calculate     None; IHEs         None................  None.
 posting location.               and post on        calculate and
                                 their website      post on their
                                 using a            website using a
                                 Department-        Department-
                                 provided           provided
                                 template.          template; IHEs
                                                    and Department
                                                    calculate and
                                                    IHEs post on
                                                    program homepage
                                                    in any format;
                                                    Department
                                                    calculates and
                                                    posts all
                                                    disclosures on
                                                    program-level
                                                    College
                                                    Scorecard and
                                                    IHEs post link
                                                    to College
                                                    Scorecard on
                                                    program
                                                    homepage; and
                                                    Department
                                                    calculates and
                                                    posts all
                                                    disclosures on
                                                    program-level
                                                    College
                                                    Scorecard and
                                                    IHEs post mean
                                                    debt, mean
                                                    earnings, and a
                                                    link to College
                                                    Scorecard on
                                                    program homepage.
Occupational licensure          List States where  None; List States  None................  None.
 requirements.                   licensure is       where licensure
                                 required and       is required and
                                 indicate whether   indicate whether
                                 program meets      program meets
                                 requirements.      requirements;
                                                    For State in
                                                    which
                                                    institution is
                                                    located,
                                                    indicate whether
                                                    the program
                                                    meets any
                                                    certification
                                                    requirements and
                                                    list other
                                                    States for which
                                                    the institution
                                                    is aware the
                                                    program meets
                                                    certification
                                                    requirements;
                                                    and List States
                                                    where program
                                                    meets
                                                    requirements.
Cohort lists and challenges...  Lists by           None; Lists by     None................  None.
                                 Department,        Department,
                                 challenges         challenges
                                 available to       available to
                                 IHEs.              IHEs; Lists by
                                                    Department, no
                                                    challenges;.
Earnings appeals..............  Available to IHE   None; and          None................  None.
                                 and adjudicated    Available to IHE
                                 by Department.     and adjudicated
                                                    by Department.
Sanctions.....................  Automatic loss of  None; and          None................  None.
                                 title IV           Automatic loss
                                 eligibility in     of title IV
                                 certain            eligibility in
                                 circumstances.     certain
                                                    circumstances.
Warnings......................  Required in        None; and          None................  None.
                                 certain            Required in
                                 circumstances.     certain
                                                    circumstances.
----------------------------------------------------------------------------------------------------------------

6.1 Baseline
    We use the 2014 Rule as the baseline. Under the GE regulations, 
institutions must certify that each of their GE programs meets State 
and Federal licensure, certification, and accreditation requirements. 
Also, to maintain title IV, HEA program eligibility, GE programs must 
meet minimum standards under the D/E rates measure. Programs must issue 
warnings to their students if they could lose their title IV, HEA 
program eligibility based on their next year's D/E rates.
    Institutions are required to disclose a program's student outcomes 
and information such as costs, earnings, debt, and completion rates, 
and whether the program leads to licensure on the program's home page. 
Institutions compute these statistics and enter them into the 
Department's GE Disclosure Template. Then, the institution posts the 
template on its website.
6.2 Summary of the Final Regulations
    The Department's final regulations rescind the 2014 Rule.
6.3 Discussion of Alternatives
    During negotiated rulemaking, the Department considered expanding 
the universe of institutions and programs to which the regulations 
would apply. This would have expanded the burden on institutions 
compared to the baseline. Various alternatives considered would have 
affected slightly different groups of institutions by excluding special 
populations. The final regulations rescind the GE regulations and 
therefore remove the institutional burden associated with it. Under 
various universe options, cohort lists would have been created; 
further, the Department did consider permitting and not permitting 
challenges to those lists. Ultimately, the lists are eliminated and 
also the need to challenge them because no cohorts are created under 
the rescission.
    The Department considered multiple options regarding which metrics 
to disclose, which entity bears the burden of computing them, and how 
to disseminate them to students and the public. One option has the 
Department computing all metrics administratively and publishing them 
on its College Scorecard and requiring institutions to post a link to 
the Scorecard on their program pages. Another option shared burden for 
metric computation by requiring institutions to compute some and the 
Department to compute the rest administratively; we considered either 
having institutions develop their own format for posting the data on 
their websites or providing them a general format to follow, including 
links to the College Scorecard. Metrics of specific concern included 
earnings and the appeals thereof as well as occupational licensure 
requirements. The Department considered eliminating the appeals process 
to reduce burden on institutions and the Department and allow for

[[Page 31450]]

smaller cohort sizes, keeping the appeals process to allow institutions 
to contest earnings reported to the IRS but thereby causing increased 
burden to the institution and also to the Department, and replacing the 
appeals process with secondary metrics like repayment rate thereby 
increasing burden on the Department to compute extra metrics but to a 
much smaller amount than adjudicating alternate earnings appeals. 
Ultimately, the Department chose to rescind these regulations; without 
regulating it, the Department plans to expand its College Scorecard in 
order to report data at the program level in the future. In accordance 
with Executive Order 13864, this would accomplish the presidential 
mandates both to increase transparency and also to deregulation.
    Finally, the Department considered alternative sanctions scenarios. 
One option was to make no change relative to the baseline, while 
another made the sanction discretionary. Further, the Department 
considered options for when and how to deliver warnings to students 
when a program is zone or failing. Some options discussed included 
delivering warnings only by email or only posting on the institution's 
website. Other options included only providing the warning upon 
matriculation whereas others would have required a reminder annually. 
Under rescission, the sanctions and associated warnings are eliminated.

7. Regulatory Flexibility Act (RFA) Certification

    The U.S. Small Business Administration (SBA) Size Standards define 
proprietary institutions as small businesses if they are independently 
owned and operated, are not dominant in their field of operation, and 
have total annual revenue below $7,000,000. Non-profit institutions are 
defined as small entities if they are independently owned and operated 
and not dominant in their field of operation. Public institutions are 
defined as small organizations if they are operated by a government 
overseeing a population below 50,000.
    The Department lacks data to identify which public and private, 
non-profit institutions qualify as small based on the SBA definition. 
Given the data limitations and to establish a common definition across 
all sectors of postsecondary institutions, the Department uses its 
proposed data driven definitions for ``small institutions'' (Full-time 
enrollment of 500 or less for a two-year institution or less than two-
year institution and 1,000 or less for four-year institutions) in each 
sector (Docket ID ED-2018-OPE-0027) to certify the RFA impacts of this 
final rule. The basis of this size classification was described in the 
NPRM published in the Federal Register July 31, 2018 for the proposed 
borrower defense rule (83 FR 37242, 37302). The Department has 
discussed the proposed standard with the Chief Counsel for Advocacy of 
the Small Business Administration, and while no change has been 
finalized, the Department continues to believe this approach better 
reflects a common basis for determining size categories that is linked 
to the provision of educational services.

                            Table 5--Small Entities Under Enrollment Based Definition
----------------------------------------------------------------------------------------------------------------
                 Level                            Type                 Small           Total          Percent
----------------------------------------------------------------------------------------------------------------
2-year................................  Public..................             342           1,240              28
2-year................................  Private.................             219             259              85
2-year................................  Proprietary.............           2,147           2,463              87
4-year................................  Public..................              64             759               8
4-year................................  Private.................             799           1,672              48
4-year................................  Proprietary.............             425             558              76
                                                                 -----------------------------------------------
    Total.............................  ........................           3,996           6,951              57
----------------------------------------------------------------------------------------------------------------

    When an agency promulgates a final rule, the RFA requires the 
agency to ``prepare a final regulatory flexibility analysis''.'' (5 
U.S.C. 604(a)). Section 605 of the RFA allows an agency to certify a 
rule, in lieu of preparing an analysis, if the final rule is not 
expected to have a significant economic impact on a substantial number 
of small entities.
    These final regulations directly affect all institutions with GE 
programs participating in title IV aid. There were 2,617 institutions 
in the 2015 GE cohort, of which 1,357 are small entities.
    The Department has determined that the impact on small entities 
affected by these final regulations would not be a significant burden 
and will generate savings for small institutions. For these 1,357 
institutions, the effect of these final regulations would be to 
eliminate GE paperwork burden and potential loss of title IV 
eligibility. Across all institutions, the net result of the 
institutional disclosure changes is estimated savings of $209,247,341 
annually. Using the 57 percent figure for small institutions in Table 
5, the estimated savings of the disclosures in the proposed regulations 
for small institutions is $119.3 million annually. We believe that the 
economic impacts of the paperwork and title IV eligibility changes 
would be beneficial to small institutions. Accordingly, the Secretary 
hereby certifies that these final regulations would not have a 
significant economic impact on a substantial number of small entities.

8. Paperwork Reduction Act of 1995

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department provides the general public and Federal agencies 
with an opportunity to comment on proposed or continuing, or the 
discontinuance of, collections of information in accordance with the 
PRA (44 U.S.C. 3506(c)(2)(A)). This helps ensure that: The public 
understands the Department's collection instructions, respondents can 
provide the requested data in the desired format, reporting burden 
(time and financial resources) is minimized, collection instruments are 
clearly understood, and the Department can properly assess the impact 
of collection requirements on respondents. Respondents also have the 
opportunity to comment on the Department's burden reduction estimates.
    A Federal agency may not conduct or sponsor a collection of 
information unless OMB approves the collection under the PRA and the 
corresponding information collection instrument displays a currently 
valid OMB control number. Notwithstanding any other provision of law, 
no person is required to comply with, or is subject to penalty for 
failure to comply with, a collection of information if the collection 
instrument does not display a currently valid OMB control number.
    Comments: One commenter asserted that the Department relied upon

[[Page 31451]]

anecdote to support its claim of burden being higher than expected upon 
institutions of higher education regarding providing disclosures to 
students. The commenter stated that this claim was not substantiated in 
the Paperwork Reduction Act section of the NPRM. Further, the commenter 
argued that the Department made no effort to quantify or substantiate 
its anecdotally supported claims.
    Discussion: As stated above, while administrative burden is not the 
only reason that the Department is rescinding the GE regulations, the 
Department believes that the regulations do impart reporting burdens 
upon institutions and that requiring all institutions to adhere to GE-
like regulations would add considerable burden to institutions and, in 
turn, costs to students. However, the Department has determined that 
not only will expanding the College Scorecard provide more 
comprehensive and useful data to current and prospective students, but 
since the Department can populate the Scorecard using data schools 
already reported for other purposes, it will be less burdensome to 
institutions. Since the Department will provide all of the data, we can 
be sure it was calculated using the same formula, and that it has the 
same level of reliability.
    Further, the final regulations will rescind the GE regulations. 
That action will eliminate the burden as assessed to the GE regulations 
in the following previously approved information collections. We will 
prepare Information Collection Requests, which will be published in the 
Federal Register upon the effective date of this final rule, to 
discontinue the currently approved information collections noted below.
    Changes: None.

           1845-0107--Gainful Employment Disclosure Template *
------------------------------------------------------------------------
                                                           Burden hours
                                            Respondents     eliminated
------------------------------------------------------------------------
Individuals.............................     -13,953,411      -1,116,272
For-profit institutions.................          -2,526      -1,798,489
Private Non-Profit Institutions.........            -318         -27,088
Public Institutions.....................          -1,117        -176,311
                                         -------------------------------
    Total...............................     -13,957,372      -3,118,160
------------------------------------------------------------------------


 1845-0121--Gainful Employment Program--Subpart R--Cohort Default Rates
------------------------------------------------------------------------
                                            Respondents    Burden hours
                                           and responses    eliminated
------------------------------------------------------------------------
For-profit institutions.................          -1,434          -5,201
Private Non-Profit Institutions.........             -47            -172
Public Institutions.....................             -78            -283
                                         -------------------------------
    Total...............................          -1,559          -5,656
------------------------------------------------------------------------


              1845-0122--Gainful Employment Program--Subpart Q--Appeals for Debt to Earnings Rates
----------------------------------------------------------------------------------------------------------------
                                                                                                   Burden hours
                                                                    Respondents      Responses      eliminated
----------------------------------------------------------------------------------------------------------------
For-profit institutions.........................................            -388            -776         -23,377
Private Non-Profit Institutions.................................              -6             -12            -362
Public Institutions.............................................              -2              -4            -121
                                                                 -----------------------------------------------
    Total.......................................................            -396            -792         -23,860
----------------------------------------------------------------------------------------------------------------


      1845-0123--Gainful Employment Program--Subpart Q--Regulations
------------------------------------------------------------------------
                                                           Burden hours
                                            Respondents     eliminated
------------------------------------------------------------------------
Individuals.............................     -11,793,035      -1,050,857
For-profit institutions.................     -28,018,705      -2,017,100
Private Non-Profit Institutions.........        -442,348         -76,032
Public Institutions.....................      -2,049,488        -633,963
                                         -------------------------------
    Total...............................     -42,303,576      -3,777,952
------------------------------------------------------------------------

    The total burden hours and change in burden hours associated with 
each OMB Control number affected by the final rule follows:

[[Page 31452]]



----------------------------------------------------------------------------------------------------------------
                                                                                                 Estimated cost
                                                                                                $36.55/hour for
                      Regulatory section                         OMB control    Burden hours     institutions;
                                                                     No.                        $16.30/hour for
                                                                                                  individuals
----------------------------------------------------------------------------------------------------------------
Sec.   668.412...............................................       1845-0107      -3,118,160       -$91,364,240
Sec.  Sec.   668.504, 668.509, 668.510, 668.511, 668.512.....       1845-0121          -5,656           -206,727
Sec.   668.406...............................................       1845-0122         -23,860           -872,083
Sec.  Sec.   668.405, 668.410, 668.411, 668.413, 668.414.....       1845-0123      -3,777,952       -116,804,291
                                                              --------------------------------------------------
    Total....................................................  ..............      -6,925,628       -209,247,341
----------------------------------------------------------------------------------------------------------------

Intergovernmental Review

    These programs are not subject to Executive Order 12372 and the 
regulations in 34 CFR part 79.

Assessment of Educational Impact

    In accordance with section 411 of GEPA, 20 U.S.C. 1221e-4, the 
Secretary particularly requests comments on whether the proposed 
regulations would require transmission of information that any other 
agency or authority of the United States gathers or makes available.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or compact disc) on request to the program contact person 
listed under FOR FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations at www.govinfo.gov. At this site you can view this 
document, as well as all other documents of this Department published 
in the Federal Register, in text or Adobe Portable Document Format 
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available free at the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

(Catalog of Federal Domestic Assistance Number does not apply.)

List of Subjects

34 CFR Part 600

    Colleges and universities, Foreign relations, Grant programs-
education, Loan programs-education, Reporting and recordkeeping 
requirements, Selective Service System, Student aid, Vocational 
education.

34 CFR Part 668

    Administrative practice and procedure, Aliens, Colleges and 
universities, Consumer protection, Grant programs-education, Loan 
programs-education, Reporting and recordkeeping requirements, Selective 
Service System, Student aid, Vocational education.

    Dated: June 24, 2019.
Betsy DeVos,
Secretary of Education.

    For the reasons discussed in the preamble, and under the authority 
at 20 U.S.C. 3474 and 20 U.S.C. 1221e-3, the Secretary of Education 
amends parts 600 and 668 of title 34 of the Code of Federal Regulations 
as follows:

PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT 
OF 1965, AS AMENDED

0
 1. The authority citation for part 600 continues to read as follows:

    Authority:  20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, 
and 1099c, unless otherwise noted.


0
2. Section 600.10 is amended by revising paragraph (c)(1) and (2) to 
read as follows:


Sec.  600.10  Date, extent, duration, and consequence of eligibility.

* * * * *
    (c) Educational programs. (1) An eligible institution that seeks to 
establish the eligibility of an educational program must--
    (i) Pursuant to a requirement regarding additional programs 
included in the institution's program participation agreement under 34 
CFR 668.14, obtain the Secretary's approval;
    (ii) For a direct assessment program under 34 CFR 668.10, and for a 
comprehensive transition and postsecondary program under 34 CFR 
668.232, obtain the Secretary's approval; and
    (iii) For an undergraduate program that is at least 300 clock hours 
but less than 600 clock hours and does not admit as regular students 
only persons who have completed the equivalent of an associate degree 
under 34 CFR 668.8(d)(3), obtain the Secretary's approval.
    (2) Except as provided under Sec.  600.20(c), an eligible 
institution does not have to obtain the Secretary's approval to 
establish the eligibility of any program that is not described in 
paragraph (c)(1) of this section.
* * * * *

0
3. Section 600.21 is amended by revising the introductory text of 
paragraph (a)(11) to read as follows:


Sec.  600.21  Updating application information.

    (a) * * *
    (11) For any program that is required to provide training that 
prepares a student for gainful employment in a recognized occupation--
* * * * *

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

0
4. The authority citation for part 668 continues to read as follows:

    Authority:  20 U.S.C. 1001-1003, 1070a, 1070g, 1085, 1087b, 
1087d, 1087e, 1088, 1091, 1092, 1094, 1099c, and 1099c-1, 1221e-3, 
and 3474; Pub. L. 111-256, 124 Stat. 2643; unless otherwise noted.


Sec.  668.6  [Removed and Reserved]

0
 5. Remove and reserve Sec.  668.6.

0
6. Section 668.8 is amended by revising paragraphs (d)(2)(iii) and 
(d)(3)(iii) to read as follows:


Sec.  668.8  Eligible program.

* * * * *
    (d) * * *
    (2) * * *
    (iii) Provide training that prepares a student for gainful 
employment in a recognized occupation; and
    (3) * * *
    (iii) Provide undergraduate training that prepares a student for 
gainful employment in a recognized occupation;
* * * * *

[[Page 31453]]

Subpart Q--[Removed and Reserved]

0
7. Remove and reserve subpart Q, consisting of Sec. Sec.  668.401 
through 668.415.

Subpart R--[Removed and Reserved]

0
8. Remove and reserve subpart R, consisting of Sec. Sec.  668.500 
through 668.516.

[FR Doc. 2019-13703 Filed 6-28-19; 4:15 pm]
 BILLING CODE 4000-01-P