The Temporary Fate of Gainful Employment

This posting is more for the FA administrators than anyone else. There has been a lot of talk lately as to what is and isn't still required, and there seems to be confusing answers that seem to contradict what's out there. So, what's really going on?

There are four main points to discuss: disclosures, reporting, new programs, and the metrics.

1. The Metrics. These were a series of figures that came out from the Dept this year for the first time. They were based partly on the massive report (explained below) from last October/November and partly on information from the Social Security Administration. This information translated to if a school was meeting expectations on three areas for programs: repayment rate and two debt-to-earnings ratios. If a school failed all three for three out of four years, then they would lose Title IV eligibility for that program (failures once and twice had varying degrees of severity and sanctions). The court ruling in June stated that the Dept had failed to accurately define where their rates came from. For example, the court didn't understand where the students' payments couldn't be above 30% of their discretionary income. In other words, the rates seemed to have been picked simply for the sake of knowing that roughly 25% of schools couldn't pass these rates chosen, as opposed to any actual evidence of why these rates were beneficial. So the Metrics were thrown out as being legal.

2. The Report. Beginning last year, schools had to submit a massive report each October with information on the previous year's student's enrollments (last year's actually dated back five years). This massive report wanted to know things like name, SSN, enrollment dates, enrollment status at the end of the year, and information of what happened to the student after they left school. If schools didn't have any kind of a computerized database, this turned into a disaster to complete. The purpose of this report was to partially create the metrics, but since the metrics were thrown out, so was the report.

3. New Programs. Another component of the rules was the new programs rule. The fear from the Dept was that schools would create a new program that was identical to a failing program, so to stop this, schools had to jump through all sorts of new hoops for programs to be approved. Part of this included having to submit the program information to the Dept at least 90 days before the first day of the new program (and this had to be after the program had obtained approval from the accrediting agency). Since there won't be failing programs, then there is no need for this part of the rule, so this was thrown out.

4. The Disclosures. The judge ruled that the wording of 'gainful employment' in the original HEA of 1965 was vague enough that the Dept could make rules on the gainful employment of schools, so a requirement to disclose information about those programs was within the rights of the Dept. So the disclosures part of the rule was upheld, and schools still have to disclose information about the programs, such as on-time graduation rate, placement rate, median loan debt, SOC codes for potential jobs, etc.

The future of the Gainful Employment rules are up in the air for the time being. The Dept has 60 days from the date of the ruling to appeal, which would be the end of August. However, it is expected that the Dept won't appeal and instead focus more on re-creating the rules for next year or the year after. It is generally agreed that a lot of the future of the rules depend a lot on who is elected President. We will see what the future holds!