2014 Gainful Employment Regulations Rescinded
On June 28, 2019, the U.S. Department of Education (Department) announced it is officially rescinding the 2014 gainful employment (GE) regulations and permitting affected institutions to implement the rescission immediately.
The final GE rule, officially published in the Federal Register on July 1, 2019, is available here.
The Department is rescinding the GE regulations at 34 CFR 668, subpart Q (Gainful Employment Programs) and subpart R (Program Cohort Default Rate).
Exercising her allotted discretion under the Higher Education Act, Education Secretary Betsy DeVos is also allowing institutions to implement the rescission of subpart Q and subpart R beginning on Monday, July 1, 2019. CECU fiercely advocated for this early implementation provision in both letters and meetings with officials from the Trump administration.
In an Electronic Announcement accompanying the final GE rule, the Department states that “[a]n institution that early implements the rescission must document its early implementation internally. It does not have to publish its decision to do so; however, it must make such documentation available upon request by the Department. Institutions that do not early implement the rule are expected to comply with the 2014 rule until the rescission becomes effective on July 1, 2020.”
CECU developed a template memorandum that can be used to internally document an institution’s decision to implement the rescission early. The template, which includes helpful directions in the form of comment bubbles, is available for download here. Institutions should modify the template as needed and consult with their legal counsel, if necessary.
Institutions that early implement the rescission of the GE rule will not be required to report GE data for the 2018-2019 award year to NSLDS, which will be due October 1, 2019. Additionally, those institutions that early implement will not be required to comply with the current requirements in 34 CFR 668.412 (d) and (e) that require institutions to include the disclosure template, or a link thereto, in their GE program promotional materials and directly distribute the disclosure template to prospective students, which will be required starting on July 1, 2019. Institutions that early implement will no longer be required to post the GE Disclosure Template and may remove the template and any other GE disclosures that are required under 34 CFR 668.412 from their web pages. Finally, an institution that early implements will not be required to comply with the certification requirements for GE programs under 34 CFR 668.414.
An institution that does not early implement the rescission on July 1, 2019 remains obligated to comply with the 2014 GE regulations until such date the institution chooses to implement the rescission or July 1, 2020, whichever date is earlier.
The Department explains in the preamble to final GE rule that the GE regulations rely on a debt-to earnings rates formula that is fundamentally flawed and inconsistent with the requirements of currently available student loan repayment programs, fails to properly account for factors other than institutional or program quality that directly influence student earnings and other outcomes, fails to provide transparency regarding program-level debt and earnings outcomes for all academic programs, and wrongfully targets some academic programs and institutions while ignoring other programs that may result in lesser outcomes and higher student debt.
The Department also confirms in the final GE rule its plan to improve transparency and inform student choice by expanding the College Scorecard to include: program size; the median Federal student loan debt and the monthly payment associated with that debt based on a standard repayment period; the median Graduate PLUS loan debt and the monthly payment associated with that debt based on a standard repayment period; the median Parent PLUS loan debt and the monthly payment associated with that debt based on a standard repayment period; and student loan default and repayment rates.
Rescission of the Obama-era GE regulations culminates the Trump administration’s effort to right-size the burdensome standards for a GE program’s continuing participation in the title IV programs. The regulations were promulgated under the previous administration to unfairly target proprietary institutions. However, after a federally appointed negotiating committee failed to reach consensus on a rewrite of the regulations in 2018 that would have held all institutions to the same standards, the Department proposed to rescind the regulations altogether.
The Department considered more than 13,900 public comments on the proposed recession – thousands of which were submitted by CECU members, before ultimately deciding on the rescission. CECU’s comments are available here.
CECU is pleased with and appreciative of Secretary DeVos’s decision on the GE regulations, which acknowledges the many concerns our stakeholders have expressed in various forums for nearly a decade.
Throughout multiple rounds of rulemaking dating back to 2009, various meetings with officials spanning two administrations, countless letters, and litigation, CECU and its members have advocated for strong accountability and transparency standards that protect students and taxpayers. Unlike the GE regulations, any such standards that link federal student aid eligibility and student outcomes must be well justified and apply fairly and equitable to all participating institutions. In short, the GE regulations were simply partisan politics, not good public policy.
Although recession of the GE regulation is long-awaited, CECU’s work does not slow. We remain focused on our work with policymakers and stakeholders to ensure any future regulations and legislation best serve students’ needs and hold accountable all institutions regardless of tax status. The Department’s immediate plan toward increased transparency through the College Scorecard is a step in the right direction.
CECU hosted a webinar on July 2, 2019 that provided a presentation on the Department’s final rule, the slides and recording of which are available on demand in the Member Resource Center here.
Please direct any questions regarding the gainful employment regulations to Nicholas Kent, Senior Vice President of Policy and Research, at (571) 800-6524 or Nicholas.Kent@career.org.