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Neg Reg Day 3: Closed Caucus Comes to Tentative Agreement on Some GE Proposals

By Joelle Fredman, Communications Staff

After a two-hour weather delay followed by a three-hour caucus closed to the public, negotiators finally came to a tentative agreement Wednesday on some of the Department of Education’s (ED) proposals related to expanding gainful employment (GE) regulations and removing sanctions.

Many negotiators expressed their frustration during the first two days of this session, convened to rewrite the federal regulations, with the interconnectivity of issues and a lack of consensus on proposals from day one.

Federal negotiator Greg Martin attempted to clear up some confusion from yesterday’s session around applying sanctions. While some negotiators suggested Tuesday that ED continue to impose sanctions on GE programs and not on comparable non-GE programs, Martin stated Wednesday that ED was not willing to adopt bifurcated rules. Lacking the statutory authority to impose GE sanctions on non-GE programs, this essentially takes sanctions off the table. Martin did say, however, that ED was open to instituting ramifications— short of total loss of Title IV program eligibility—  for all programs as a consequence of poor performance on metrics, as well as to considering the possibility of using other metrics, in addition to debt-to-earnings ratios, to determine a program’s status as “acceptable” or “low-performing.” ED’s clarification of its position on sanctions prompted questions from several negotiators about the intent of the rules, the distinction between GE programs and non-GE programs in the law, and the purpose of this negotiating session.

This short discussion was immediately followed by a closed caucus, in which the public was asked to leave the session for three hours as negotiators came to some agreements on certain proposals that have been debated throughout the week, such as expanding the debt-to-earnings calculation and required notifications to include all educational programs. Once the public was invited back into the room, moderators explained that the negotiators agreed that ED should expand the regulations to all undergraduate programs while excluding graduate and professional programs.

They also revealed that negotiators suggested that ED establish a two-tiered system of evaluating programs. The first tier would use both debt-to-earning-ratios as well as loan repayment rates as a trigger to further action by ED. They proposed that if a program failed the set thresholds of either of these metrics, ED take corrective actions against the institution such as program reviews, heightened cash monitoring, or any of the other compliance tools ED has available.

In an effort to address data requests from the negotiators from earlier in the week regarding how programs are faring with the current metrics, ED representative Sara Hay presented the group with some information regarding debt-to-earnings ratios and repayment rates. She cautioned, however, that the data came from two sources– the College Scorecard and the National Student Loan Data System (NSLDS)– and that there are significant differences in those data, such as whether data exists at the program or institutional level, whether it includes all students or just completers, whether it includes non-federal debt, and other factors.

Using data from the College Scorecard, which tracks information on an institutional level, Hay explained that ED found that debt-to-earnings rates were not strongly correlated with repayment rates. In the report, ED concluded that “because repayment rate did not appear to be highly correlated with debt to earnings, prospective students may benefit from multiple metrics when choosing an institution.” ED also found that students in failing programs had much higher debt and much lower incomes.

Hay also presented 2015 NSLDS data on GE programs and determined whether they would be considered “passing,” “failing,” or in the “zone,” as outlined in the current legislation. Of the 33,000 GE programs ED examined, only 8,650 had cohorts of 30 or more and would be required to report debt-to-earnings ratios. ED found that 74 percent of those programs would earn “passing” statuses, 15 percent would be considered in the “zone,” and 10 percent would be considering “failing.”

ED suggested that negotiators bring questions on this data tomorrow, the final day of this second of three sessions convened to rewrite the federal regulation of GE, as well as prepare to work through the remaining four issue papers.