ED Adopts New Financial Value Transparency and Gainful Employment Requirements
Jonathan D. Tarnow and Sarah L. Pheasant
January 12, 2024
At a Glance
The final regulations are substantively consistent with earlier proposed regulations from ED, including definitions and thresholds for calculating debt-to-earnings (D/E) and earnings premium (EP) metrics.
Unprecedented program-level data reporting, disclosures, and student acknowledgements will be required of nearly all higher education institutions.
Absent intervening judicial action or other delay, the Final Rule is effective July 1, 2024.
On October 10, 2023, the U.S. Department of Education (ED) published a Final Rule in the Federal Register (88 FR 70004) adopting new “Financial Value Transparency” (FVT) reporting and disclosure requirements for nearly all programs at all higher education institutions — and also reinstating a “Gainful Employment” (GE) accountability framework for non-degree programs at public and nonprofit institutions and for nearly all programs at proprietary institutions.
In their final form, these regulations require that in order to maintain participation in federal student financial aid programs under Title IV of the Higher Education Act (Title IV), any GE program must meet both a debt-to-earnings (D/E) rate measure and also an earnings premium (EP) benchmark. The Final Rule represents ED’s third attempt in recent years to define the Title IV eligibility of GE programs based on specific debt and earnings metrics. Several aspects of the D/E rate calculations resemble the GE rule that was promulgated in 2014 (2014 Rule) that was subsequently rescinded. However, the Final Rule’s adoption of an EP benchmark, which purports to measure a program’s value by comparing median graduate earnings to those of working high school graduates in the same state, is a substantial addition to the previously effective GE regime and is unchanged from the Proposed Rule. Although these regulations do not directly affect the continued Title IV eligibility of non-GE programs, at its core the FVT framework does involve the unprecedented calculation and disclosure of D/E and EP metrics for non-GE programs.
