NASFAA

Neg Reg Day 4: Negotiators Debate Proposals on Alternate Earnings Appeals Process, Certain Disclosure Requirements, Institutional Reporting

By Joelle Fredman, Communications Staff

Higher education stakeholders gathered Thursday for the last time this month to rewrite the federal regulations of gainful employment (GE), which they will pick up again during a final session in March. After debating the Department of Education’s (ED) proposals to eliminate the alternate earnings appeals process, alter disclosure requirements, and remove reporting burdens, negotiators offered their own proposals for ED to consider as it rewrites GE regulations over the next few weeks. Negotiators also revisited a previous debate about the expansiveness of proposed disclosures applying to all educational programs.

Federal negotiator Greg Martin opened a discussion on ED’s proposal to remove the alternate earnings appeal process, explaining that this proposal was made in the context of a disclosure-only environment, where amended notification language explaining that debt-to-earnings rates could be skewed for programs with significant numbers of graduates with non-reported income like tips or self-employment would obviate the need for alternate earnings appeals. However, given yesterday’s progress that put administrative sanctions back on the table, Martin saw a need to discuss appeals once again. Under the current regulation, if an institution’s GE program was deemed “failing” or in the “zone” the school would have the opportunity to file an alternate earnings appeal and request that ED recalculate its debt-to-earnings rate using data from a survey conducted by the institution. Looking forward, Martin said that ED envisioned itself removed from the appeals process, continuing with the survey and attestation in the current regulations, but with a review by an auditor rather than ED.

While a few negotiators supported striking the appeals process, many favored preserving appeals despite the cost and institutional burden the process imposed. Martin indicated that he expected institutions to wish to reinstate the appeals process based on discussions held behind closed doors yesterday, in which a two-tiered system of evaluating programs, including administrative sanctions– short of loss of Title IV eligibility– was proposed.

A handful of negotiators questioned ED’s rationale behind its proposal to strike the requirement for institutions to distribute program disclosures directly to prospective students as well as to confirm receipt, which Martin said was an effort to remove burden from schools. Andrew Hammontree, director of financial aid at the Francis Tuttle Technology Center, supported this proposal, arguing that, despite his support for efforts at transparency, the acknowledgment of disclosure receipt is difficult for all institutions to comply with. Hammontree said, given that gainful employment represents only a small part of compliance with the Higher Education Act, he believes the acknowledgment piece takes up a disproportionate share of institutional resources. “We are setting schools up to fail on that piece,” he said.

Other negotiators, however, argued that the acknowledgment is key because, when faced with a sea of disclosures, the acknowledgment requirement distinguishes it as important, and that students need this information before making large financial commitments. They requested that ED perform consumer testing to determine the optimal time and way to notify students.

Negotiators did express their support, however, for ED’s proposal to add a disclosure item to the regulation that would require institutions to show that its program prepares students for licensure in their field of study. “We propose to add a disclosure item for a link to any web page containing the State’s mandatory qualifications for licensure, if the program prepares students for fields requiring licensure,” ED summarized in an issue paper.

“If you don’t have right licensure, you cannot be gainfully employed,” Johnson Tyler, representing legal assistance organizations, said.

Negotiators also revisited a debate from earlier in the week around eliminating institutional reporting requirements and instead using data already available to ED through the National Student Loan Data System (NSLDS) to calculate metrics. This would eliminate the possibility of ED including data on institutional and private loans as well as factoring tuition into the metrics because those data are not available in NSLDS. While a few negotiators expressed concern that this may cause bad actors to push students into institutional and private loans to exclude that debt from their debt-to-earnings rate, Martin said that ED has methods to determine whether institutions are doing so.

United States Student Association (USSA) Vice President Christopher Gannon cautioned that excluding private and institutional loan data from the metrics would be a disservice to low-income students because they would not be afforded a true narrative of what it would cost to attend certain programs. Jeff Arthur, representing private, for-profit institutions, said that while this information is not reported to ED for the sake of determining this metric, it does not mean it is not recorded and available.

In its final issue paper of this session, ED proposed to require that an institution certify in its program participation agreement (PPA) that any program that prepares students for an occupation that requires a certification or licensure is approved by an accrediting agency and meets state or federal requirements. Laura Metune, representing two-year public institutions, offered two proposals to ED to improve upon the current certification requirements to ensure that GE programs prepare students for work in their chosen field.

“Ensuring career education programs have the proper educational components to meet licensure requirements and accreditation standards is vital to the success of our colleges and the students we serve,” she wrote in a memo.

Metune proposed that ED require GE programs to certify that they meet professional licensure or certification requirements in any state from which the institution enrolls students to ensure that students could be employed in their own states, as well as that institutions be required to certify that they are programmatically accredited as required in any state in which the institution enrolls students.

Jennifer Blum, representing general counselors and attorneys, cautioned that requiring that GE programs meet certification requirements for each state in which students are enrolled will be an issue for distance learning programs which may enroll students from every state. Other negotiators, such as Assistant Attorney General of Maryland Christopher Madaio, argued that schools should be aware of where their students are coming from.

Negotiators spent the final hours of this session revisiting fundamental issues from earlier in the week, such as expanding GE regulations to include all educational programs. In yesterday’s closed session, negotiators discussed whether to include graduate programs in the regulations, but it is unclear if this was in the context of expanding the regulations to include all programs, which ED has expressed from the start as the direction it wishes to see the regulations rewritten. Today, negotiators reopened a debate around the original intent of the regulations, questioning the statutory basis for expanding them to include all institutions. Many negotiators argued that there are fundamental differences in the missions of proprietary institutions and non-profit institutions, and that they should not be grouped together while others supported ED’s proposal for expansion.

“People need more protections, not less,” Whitney Barkley-Denney, representing consumer advocacy organizations, said. “That means we need to do more for these kids.”

Chad Muntz, representing four-year public institutions, proposed that if ED intends to expand GE regulations and use a one-size-fits-all approach, that it should be simple. He proposed that institutions disclose their students’ total debt and total earnings instead of debt-to-earnings ratios and to let the student decide how to use that data. These data would be provided at the institutional, versus program, level. His proposal was based in part on the ongoing disagreement about how to calculate a meaningful debt-to-earnings metric, with negotiators getting caught up in the details of which interest rate or amortization period to use. While he received some support from the table, other negotiators were concerned about institutional-level data masking programmatic issues. However, on a “temperature check” of the committee’s response to the proposal, the proposal received all positive or neutral responses without any thumbs down indicating lack of support.

Jordan Matsudaira, representing business and industry, alternatively suggested that ED maintain some of the current structure of the original GE rule, where poor performance on an improved set of metrics including debt-to-earnings rate and loan repayment rate would trigger the automatic loss of eligibility for federal funds. Acknowledging that focusing only on GE programs could give non-GE programs a competitive advantage, he recommended that non-GE programs publish the same metrics as GE programs and that ED institute programmatic reviews or administrative sanctions if they are found to be problematic. Matsudaira said he believed an asymmetrical process best reflects the data that shows that failing programs are highly concentrated in the for-profit sector. Yesterday, however, Martin said ED would not entertain the proposal of bifurcated rules so it is not clear how this proposal would fit with ED’s position. Negotiators who disagreed with Matsudaira’s proposal referred back to ED’s position on bifurcated rules as the reason for their lack of support.

Mark McKenzie, representing accrediting agencies, suggested that ED apply the tiered process that negotiators tentatively agreed to yesterday to current GE programs and expand the regulations to all programs in four years. He proposed that this would allow time for ED to collect data on how programs are faring under this new system before making any decisions to expand it. Marc Jerome, representing private, for-profit institutions, cautioned that this would just extend the period time in which programs are taking advantage of students with no consequences and also objected to the concept of sticking to program-level data instead of institution-level data as a starting point.

ED will now have a few weeks to rewrite the GE regulations, which they will present to negotiators for a final review at the last four-day session beginning March 12.