Program Integrity: Gainful Employment, 31392-31453 [2019-13703]
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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
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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
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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.
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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.
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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.
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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.
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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.
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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//.
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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).
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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
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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).
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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.
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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
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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
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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).
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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).
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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.
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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.
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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.
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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).
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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.
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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
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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).
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54 Chen,
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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.
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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.
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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.
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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.
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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/.
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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.
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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.
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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
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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
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required more than 10 years to repay
their student loan debt.
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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
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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.
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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
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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.
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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
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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.
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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.
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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
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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
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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
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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.
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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.
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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.
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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)
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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.
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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.
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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-
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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,
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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.
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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.
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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.
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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.
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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.
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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,
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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.
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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.
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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
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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.
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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/.
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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.
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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.
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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.
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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.
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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
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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
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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
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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
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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.
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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.
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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
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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,
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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
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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
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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.
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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
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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
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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
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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.
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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.
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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
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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
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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
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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
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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.
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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.
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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
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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.
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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,
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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
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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.
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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
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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
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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,
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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
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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,
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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.
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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/.
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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.
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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.
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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.
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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.
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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
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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.
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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.
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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
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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.
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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
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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.
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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/.
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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.
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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.
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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/.
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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.
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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.
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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.
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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.
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Same as current Scorecard.
Same as current Scorecard, plus:
Program level total number of
title IV borrowers who complete
the program.
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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 ................
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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
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No .................................................
No .................................................
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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.
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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
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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.’’
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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
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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 ....................
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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.
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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
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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.
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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
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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.
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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.
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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.
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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
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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
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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.
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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.
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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.
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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
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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.
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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
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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
(%)
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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
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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.
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(%)
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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.
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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
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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 https://www.bls.gov/emp/ep_chart_
001.htm as accessed in January 2014.
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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
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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 https://
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.
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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
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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.
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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.
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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
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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.
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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.
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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.
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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.
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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.
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None.
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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 ........................................
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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.
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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.
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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
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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
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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
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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
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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
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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
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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
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Control number affected by the final
rule follows:
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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
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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
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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;
*
*
*
*
*
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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]
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BILLING CODE 4000–01–P
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]]>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
-----------------------------------------------------------------------
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]]
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\4\ 79 FR 64908.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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/.
---------------------------------------------------------------------------
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 https://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 https://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
(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
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
