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What You Need to Know About the Gainful Employment Rule Rescission

August 30, 2018 Teri Lyn Hinds Director of Policy Research & Advocacy

As part of ongoing efforts by the Trump administration to roll back regulations across the federal government, Secretary of Education Betsy DeVos has opened a Notice of Proposed Rulemaking (NPRM) to rescind the gainful employment regulations established during the Obama administration. The proposal has been expected for some time and follows previous delays and the reopening of negotiated rulemaking in late 2017 and early 2018.

While the gainful employment rule has perceived flaws, the proposal by Secretary DeVos to remove it entirely without providing for an alternative regulatory framework has drawn criticism from higher education leaders and student advocacy groups. It is the role of the federal government to protect the interests of students and safeguard federal investment in financial aid programs by creating and enforcing an appropriate regulatory framework governing institutional performance and outcomes. The history of the gainful employment rule has been tumultuous and sorting through the differing perspectives among institutions, advocates, and researchers can be difficult. This post will summarize some of the major concerns and promises of the gainful employment rule to help inform those who may wish to respond to the call for comment, which closes on September 13, 2018.

Role of ED in Establishing an Appropriate Regulatory Framework

The primary mission of the Department of Education is to promote student achievement. In their proposal to rescind the gainful employment rule, ED makes the case in several places that "the Department is reevaluating the wisdom of a regulatory regime that creates additional burden for, and restricts, programs designed to increase opportunities for workforce readiness." This focus on programs, as opposed to students, raises questions about the appropriate role of the Department in regulating and enforcing quality. Care must be taken to balance the risks of implementing an overly-proscriptive regulatory framework and the risks of leaving students without recourse when unscrupulous actors abuse the system.

The Department raises a general argument in their proposed rescission that the gainful employment rules applied unfairly to for-profit institutions. They posit that there are bad actors in all sectors of higher education and that exempting non-profit sectors is inefficient and unfair. The Office of the Inspector General, however, has noted that “[the for-profit sector], unlike public and nonprofit schools, must produce profit for owners and stockholders, which can create an incentive to evade compliance with obligations to students and taxpayers."

This concern is shared by others who have experience in both for-profit and non-profit education as well as veterans. Instead of removing accountability entirely, as the rescission of the gainful employment rule would do, the Department could work with the higher education community to identify and define a series of appropriate metrics that could be used together to determine which programs, regardless of tax-filing status, which are inappropriately burdening students with debt beyond what they can be expected to repay.

Concerns Regarding Institutional Burden

The primary accountability metric – debt-to-earning calculations (D/E calculations) – used in the gainful employment rule is unquestionably burdensome for institutions. It requires use of data for which neither ED nor institutions have reliable sources, namely post-graduation earnings for program completers. In rescinding the rule, the Department would relieve significant burden for many campuses, especially community colleges, but the proposal to add mandatory program-level disclosures would add burden for all institutions.

ED asks for public comment on whether they should "require that all institutions disclose information, such as net price, program size, completion rates, and accreditation and licensing requirements, on their program web pages, or if doing so is overly burdensome for institutions" (83 FR 47073). Depending on the definitions of many of those items, requiring every institution to disclose that information for every program could add significant institutional burden and result in confusion about what the metrics, such as program net price and program completion rates, mean. Care should be taken, for example, to allow for pooling or average program sizes across multiple years for smaller programs. Completion rates would need clear definitions of how and when the initial cohort should be determined. If a model similar to that used to calculate the federal graduation rate is employed, for instance, a student who starts in one program but moves – and graduates from – another program would be counted as a failure for the first program and not at all for the second program. This hardly seems an accurate representation of either program. Net price calculations should be allowed to refer to or be anchored in institutional net price plus or minus any required program fees rather than separate net price calculations for each type of student enrolled in the program or necessitate the creation of a program level net price calculators. These decisions would be best made by a Technical Review Panel comprised of higher education experts across all types of institutions so that clear definitions could be drafted and circulated to institutions.

The limitations on data availability, while significant, are unfortunately not easily addressed by the Department without Congressional action to remove the ban on student-level data collection. NASPA has been an active supporter of legislation that would remove the ban, which would allow the Department to effectively model several possible metrics without unduly burdening campuses. While lifting the ban on student-level data collection would also allow the Department to report much of this information consistently, until the ban is lifted, requiring mandatory program-level disclosures seems ill-advised.

Proposed Enhancements to the College Scorecard

As partial replacement for the data collected under the current gainful employment rule, the Department has proposed a plan to enhance the College Scorecard. Despite evidence that merely reporting data does not protect consumers for bad actors, the Department asserts that providing program-level outcomes for all programs on the College Scorecard is a better option. While NASPA supports improvements to the Scorecard, however due to the previously mentioned ban on ED’s ability to collect student-level data, the information the Department is proposing to report are incomplete at the federal level. ED has, via the National Student Loan Data System (NSLDS), program-level data for students who have completed since 2015 (at the CIP-code level) for students who received federal aid or took out a federal loan only. That's only about 70% of students, and is disproportionately skewed toward students in longer credential programs. This means the availability of these data for the programs currently targeted under the GE rule is lower than for programs at four-year institutions. 

Next Steps: Submitting Comments

We encourage NASPA members to work with their campus leadership and government affairs staff to discuss whether to submit comments on behalf of their institution. If your institution decides not to submit comments, you are still welcome to submit comments based on your own professional experience on your own. If you choose to submit comments, you may want to revisit our tips on drafting effective comments as well as suggestions for engaging in public policy as a private citizen. Comments must be submitted via regulations.gov by Thursday, September 13, 2018.