The rules impose new extensive reporting requirements on postsecondary institutions and could cause 1,700 programs to lose Title IV eligibility as early as 2026.
TAKEAWAYS
- The Education Department will begin collecting information concerning student debt and career outcomes from all postsecondary institutions beginning July 2024.
- Postsecondary institutions should begin compiling the data they will need to report and assess internally how well they are performing on relevant metrics.
- The “Gainful Employment Rule” will remove a postsecondary institution’s Title IV eligibility if its graduates’ debt or earnings do not meet certain metrics.
On September 27, 2023, after receiving over 7,500 public comments, the U.S. Department of Education (ED) announced final regulations concerning the Gainful Employment Rule and the financial value transparency (FVT) framework it had proposed in May. The final regulations were published in the Federal Register on October 10, 2023, and will take effect on July 1, 2024.
Financial Value Transparency Reporting Obligations
The FVT regulations require all postsecondary institutions to report data to the ED concerning the costs and career outcomes of their programs, which will then be published on a website created by the ED. Institutions will need to report a significant amount of data at both the program- and student-level. The data include, among other things, the name, length, and number of students enrolled in the program, as well as, for each enrolled student, the date they initially enrolled in the program, the total tuition and fees they have been assessed, and the amounts of institutional, public, and private grants and loans they have received. The full list of data that institutions will be required to report is available at 34 CFR § 668.408 of the final regulations.
Institutions will also be responsible for ensuring that prospective students in programs with higher risks of poor financial outcomes have been provided with the relevant information on the ED’s website and will be required to provide an acknowledgment from each prospective student that they have done so before enrolling.
Institutions’ first annual reporting under the FVT regulations will be due by July 31, 2024. The ED intends to launch the “program information” website that publishes this information sometime thereafter. Beginning in 2026, institutions will be required to obtain their students’ acknowledgement of being provided with access to the program information website.
Gainful Employment Rule
The Gainful Employment Rule will remove Title IV eligibility for Gainful Employment programs—i.e., programs that “prepare students for gainful employment in a recognized profession,” see, e.g., 20 U.S.C. § 1088(b)(1)(A)(i)—that do not meet independent metrics established by the ED to measure the median annual debt and the median annual earnings of program graduates. A program that fails the same metric twice within a three-year period will lose its Title IV eligibility for at least three years. The ED estimates that approximately 1,700 programs will fail at least one of the two metrics that make up the new Gainful Employment Rule in the first year.
Further Regulations
The additional proposed rules issued in May, grouped under the topics of financial responsibility, administrative capability, certification procedures and ability to benefit, remain pending. The ED intends to publish another final rule on those topics at a later date.
Next Steps
Based on the volume and tenor of comments received by the ED, there is a reasonable likelihood that some or all of the regulations will be litigated, as were prior Gainful Employment regulations issued under the Obama administration. For example, the final Gainful Employment Rule issued by the ED on June 13, 2011, was challenged and ultimately struck down by the U.S. District Court for the District of Columbia in 2012. Ass’n of Priv. Colleges & Universities v. Duncan, 870 F. Supp. 2d 133, 158 (D.D.C. 2012). The subsequent Gainful Employment regulations issued on October 31, 2014, were also subject to repeated litigation until they were ultimately rescinded by the Trump administration in 2019.
Nonetheless, institutions should ensure they have a strategy in place to gather the required information to satisfy their reporting obligations and to assess their compliance with the benchmarks established by the ED. Even schools that are not subject to the Gainful Employment Rule could face significant criticism if their data reported under the FVT regulations do not compare favorably.
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