Presentation on theme: "Abhes 12th annual national conference – February 2015"— Presentation transcript:
1 Abhes 12th annual national conference – February 2015 The ‘gainful employment’ final rule: key components and compliance considerationsAbhes 12th annual national conference –February 2015
2 disclaimerThe Views Expressed In This Presentation Are Those Of The Speaker(s) Only.The Contents Of This Presentation Does Not Constitute Legal Or Regulatory Advice. No One Should Act Or Refrain From Acting On The Basis Of This Presentation Without Seeking Individualized, Professional Counsel As Appropriate.
3 KEY DATESJanuary 31, 2015: Deadline for use of updated GE Disclosure template for disclosures (utilizing disclosures under current regulation).[May 20, 2015: Hearing in APSCU v. Duncan]July 1, 2015: Effective Date of Final Rule; all GE Program reporting data due for 2008/2009 Award Year through 2013/2014 Award Year. [Programs with medical and dental residencies report 2007/2008 also]October 1, 2015: GE Program reporting data due for 2013/2014 Award Year.December 31, 2015: Program Certification deadline for all GE Programs (more information from ED on mechanics to be released).Schools receive list of completers based on GE data submittedSchools may challenge completer list dataSchools receive median/mean earnings information from SSA (no challenge)
4 KEY DATES[Summer 2016] – Draft D/E Rates Released – Rates and backup up detail will be distributed to schools by NSLDS.Challenge period for draft rates begins, then …Final Rates issued, then …Schools may notify ED of intent to submit Alternate Earnings Appeals within 14 days with documents due within 60 days.* Become familiar with challenge and appeals time frames and procedures now.January 1, 2017 – New GE Disclosures contained in Final Rule required to be implemented (updated template will be issued by ED prior).
5 GE REPORTINGED’s 1/13/15 and 1/15/15 Webinars on GE Reporting are posted – slides, audio and transcripts: IFAP/Gainful Employment Information WebsiteNSLDS and SAIG data transmission functionality is now LIVENSLDS: GE Submittal Spreadsheet Upload or GE Online AddSAIG: Batch FileUpdated NSLDS GE User Guide and Instruction Guide has been postedSpreadsheet template for use with NSLDS data transmission has been posted (spreadsheet use voluntary, not required)
6 GE REPORTINGOnly submit data on students enrolled in GE Program (note: not just completers)Only submit data on Title IV aid recipients (excluding FWS only recipients)Only submit for GE programs that exist as of July 1, 2015Date provided by schools in 2011 is not available for re-use and no longer accessible through EDGet started now!!
7 1. ConsequencesGE Programs lose T4 eligibility for 3 calendar years when:it fails both D/E rates in any 2 out of 3 consecutive AYs for which rates are calculated; orit is in the zone (or has a combination of zone & failing rates) for 4 consecutive AYs for which rates are calculated.You Must give warnings when a GE Program could become ineligible for the next AY“This program has not passed standards established by the U.S. Department of Education. The Department based these standards on the amounts students borrow for enrollment in this program and their reported earnings. If in the future the program does not pass the standards, students who are then enrolled may not be able to use federal student grants or loans to pay for the program, and may have to find other ways, such as private loans, to pay for the program.”Liability for misrepresentations made on required GE Disclosures.
9 1. D/E RATEs - THRESHOLDSFor each GE Program offered by an institution, ED calculates for each Award Year (AY) both an Annual Earnings Rate and Discretionary Income Rate for the applicable Two-Year or Four-Year Cohort.PASS: Annual Earnings Rate is less than or equal to 8% OR Discretionary Income Rate is less than or equal to 20%ZONE: Annual Earnings Rate is greater than 8% and less than or equal to 12% OR Discretionary Income Rate is greater than 20% and less than or equal to 30%FAIL: Annual Earnings Rate is greater than 12% or the denominator of the rate (annual earnings) is zero AND Discretionary Income Rate is greater than 30%
11 2. What IS A GE PROGRAM?Nearly all educational programs at for-profit institutions of higher education AND most non-degree programs at public and private non- profit institutions such as community colleges. “Institution of higher education” is the institution as it is known to ED by its Office of Postsecondary Education ID number (OPEID) (including main and additional locations). The GE Rule applies to GE Programs offered by the IHE: “An educational program identified by a combination of the institution’s six- digit Office of Postsecondary Education ID (OPEID) number, the program’s six-digit CIP code as assigned by the institution or determined by the Secretary, and the program’s credential level.” 34 CFR §
12 2. What IS A GE PROGRAM?CIP Code: Classification of instructional program (CIP) code – A taxonomy of instructional program classifications and descriptions developed by the U.S. Department of Education’s National Center for Education Statistics (NCES). The CIP code for a program is six digits. See “Institutions are expected to identify a CIP code for their programs that represents the occupations for which the institution has designed its program. The Bureau of Labor Statistics (BLS) has developed a crosswalk that identifies the occupations (SOCs) associated with the education and training provided by a program (www.onetonline.org/crosswalk), and these would be “recognized occupations” for the purposes of these regulations.”
13 2. What IS A GE PROGRAM?The same program offered by institutions with different OPEIDs are separate GE Programs.If the credential level and six digit CIP are the same, ED treats the programs as one GE Program (without regard to program length). But a separate GE disclosure template is required for same GE Programs of differing length.Programs at different credential levels but same six digit CIP are different GE Programs.Programs with same credential level but different six digit CIP are different GE Programs.Note: New 34 CFR § (a)(11) requires IHEs to update their E-App within 10 days regarding loss of eligibility of a GE Program; a change in the GE Program’s name, CIP or credential level; or any updates to the required certification.
14 2. What IS A GE PROGRAM?“Substantially similar” programs: two GE Programs are substantially similar to one another if they share the same four-digit CIP code (without regard to credential level or program length). Institutions may not establish a new program that shares the same four-digit CIP code as a program that became ineligible or was voluntarily discontinued when it was in the zone or failing within the last three years. An institution may establish a new program with a different four-digit CIP code that is not substantially similar to an ineligible or discontinued program, and provide an explanation of how the new program is different when it submits the certification for the new program.
15 3. DETERMINING THE APPLICABLE COHORT OF 3. DETERMINING THE APPLICABLE COHORT OF STUDENTS FOR D/E RATE calculationUnder the regulations, ED will create a list of students who completed a GE program during the applicable cohort period from data reported by the institution. The list will indicate whether the list is of students who completed the program in the two-year cohort period or in the four-year cohort period, and it will also indicate which of the students on the list will be excluded from the D/E calculations under 34 § (e).
16 3. DETERMINING THE APPLICABLE COHORT FOR D/E RATES The institution can propose corrections to the student cohort list within 45 days of receipt (no second chances).After receiving the institution’s proposed corrections, the Secretary will notify the institution whether a proposed correction is accepted and will use any corrected information to create the final list.ED does not issue draft or final D/E rates for a GE program if fewer than 30 students completed the program during the four-year cohort period. In that case, the GE Program maintains the same pass/zone/fail status that it had in the last award year for which a rate was calculated. After four or more consecutive award years of no D/E rate calculation, ED will disregard the previous D/E rates for any award year prior to that four year period. 34 CFR § (c)(5).
17 4. Annual LOAN PAYMENTThe “Annual Loan Payment” is the Numerator in the Annual Earnings Rate and Discretionary Income Rate D/E Rates. Under 34 CFR § (b)(1): (i) The Secretary calculates the annual loan payment for a GE Program by determining the median loan debt of the students who completed the program during the cohort period, based on: the lesser of : (a) the actual loan debt incurred by each student and (b) the total amount of tuition and fees assessed the student for the student’s entire enrollment in the GE Program AND the total amount of allowances for books, supplies and equipment included in the student’s Title IV Cost of Attendance for each award year the student was enrolled in the GE Program (or higher amount if assessed by the institution). (ii) Removing, if applicable, the appropriate number of highest loan debts as described in 34 CFR § (e)(2); and (iii) Calculating the median (middle) of the remaining amounts.
18 4. ANNUAL LOAN PAYMENT – LOAN DEBT 34 CFR § (d) (1) - In calculating actual loan debt, the Secretary includes— (i) The amount of Title IV loans that the student borrowed (total amount disbursed less any cancellations or adjustments) to attend the GE Program (Federal PLUS Loans, Direct PLUS Loans, and Direct Unsubsidized Loans that are converted TEACH Grants are excluded); (ii) Any private education loans (as defined in 34 CFR § 601.2) that the student borrowed for enrollment in the GE Program; and (iii) The amount outstanding, as of the student’ completion date, on any other credit (including any unpaid charges) extended by or on behalf of the institution for enrollment in any GE program attended at the institution that the student is obligated to repay after completing the GE program.Note attribution rule – to highest credentialed undergraduate or graduate program completed as the case may be
19 4. ANNUAL LOAN PAYMENT – LOAN DEBT ATTRIBUTION 34 CFR § (d)(2) -- The Secretary attributes all of the loan debt incurred by the student, and attributes the amount reported for the student under § (a)(2)(iv) and (v), for enrollment in any- (i) Undergraduate GE program at the institution to the highest credentialed undergraduate GE program subsequently completed by the student at the institution as of the end of the most recently completed award year prior to the calculation of the draft D/E rates under this section; and (ii) Graduate GE program at the institution to the highest credentialed graduate GE program completed by the student at the institution as of the end of the most recently completed award year prior to the calculation of the draft D/E rates under this section. The Secretary excludes any loan debt incurred by the student for enrollment in programs at other institutions. However, the Secretary may include loan debt incurred by the student for enrollment in GE Programs at other institutions if the institution and the other institutions are under common ownership or control, as determined by the Secretary in accordance with 34 CFR §
20 4. ANNUAL LOAN PAYMENT – AMORTIZATION OF LOAN DEBT 10 Year Repayment Periodundergraduate certificatepost-baccalaureate certificatean associate degreegraduate certificate (including post-graduate certificate)15 Year Repayment PeriodBachelor's degree Master’s degree20 Year Repayment PeriodDoctoral or first-professional degree
21 4. ANNUAL LOAN PAYMENT – AVERAGE ANNUAL INTEREST RATE 34 CFR § (b)(2) (ii) – In calculating Annual Loan Payment, the Secretary uses an annual interest rate that is the average of the annual statutory interest rates on Federal Direct Unsubsidized Loans that were in effect during-- (A) The three-year period prior to the end of the cohort period, for undergraduate certificate, post-baccalaureate certificate, and associate degree programs. For these programs, the Secretary uses the Federal Direct Unsubsidized Loan interest rate applicable to undergraduate students; (B) The three-year period prior to the end of the cohort period, for graduate/post-graduate certificate and master’s degree programs. For these programs, the Secretary uses the Federal Direct Unsubsidized Loan interest rate applicable to graduate students; (C) The six-year period prior to the end of the cohort period, for bachelor’s degree programs. For these programs, the Secretary uses the Federal Direct Unsubsidized Loan interest rate applicable to undergraduate students; and (D) The six-year period prior to the end of the cohort period, for doctoral programs and first professional degree programs. For these programs, the Secretary uses the Federal Direct Unsubsidized Loan interest rate applicable to graduate students.
22 5. Annual EARNINGS 34 CFR § 668.404(c) (1) The Secretary obtains from the Social Security Administration (SSA), under § , the most currently available mean and median annual earnings of the students who completed the GE program during the cohort period and who are not excluded from the cohort; and(2) The Secretary uses the higher of the mean or median annual earnings to calculate the D/E rates.For the Award Year D/E Rates, ED will use 2014 SSA earnings data.D/E rates are not calculated by ED for a GE Program if the SSA is unable to provide the mean and median earnings for the program (and if there are fewer than 30 completers in both the 2Y and 4Y cohorts)
23 6. DISCRETIONARY INCOMEDiscretionary Income: Annual Earnings minus (1.5 x Poverty Guideline for single person)The Secretary applies the Poverty Guideline for the calendar year immediately following the calendar year for which annual earnings are obtained. For example, for the Award Year, the Secretary uses 2014 SSA earnings data and the Poverty Guideline (which reflects price changes in 2014).Poverty Guideline available at
24 7. TRANSITIONAL RATES34 CFR § (g) If a GE Program is failing or in the zone based on its draft D/E rates for any award year during the transition period, the Secretary calculates transitional draft D/E rates for that award year by using: (i) The median loan debt of the students who completed the program during the most recently completed award year (i.e., for AY D/E rates, data from completers in AY); and (ii) The earnings used to calculate the draft D/E rates. For any award year for which the Secretary calculates transitional draft D/E rates for a program, the Secretary determines the final D/E rates for the program based on the lower of the draft or transitional draft D/E rates. An institution may challenge or appeal the draft or transitional draft D/E Rates, or both, under the procedures in § and § , respectively.
25 8. CERTIFICATIONS34 CFR § An institution must establish the eligibility of a GE Program listed on its Eligibility and Certification Approval Report (ECAR) through certification: →For Each GE Program →By Institution’s Most Senior Executive Officer An institution must update the certification through the ECAR within 10 days if there are any changes in the approvals for a program, or other changes for a GE Program, that make an existing certification no longer accurate.
26 8. CERTIFICATIONThe institution certifies that: (1) Each GE Program is approved by a recognized accrediting agency or is included in the institution’s grant of accreditation; (2) Each GE Program programmatically accredited, if required by a Federal governmental entity/State governmental entity. (3) Each GE program it satisfies the educational prerequisites for professional licensure or certification for the State in which the institution is located; and (4) New GE programs are not substantially similar to a program offered by the institution that became ineligible for Title IV under the D/E rates, or was discontinued while failing, or in the Zone.
27 8. CERTIFICATIONSENFORCEMENT RISKS RELATED TO CERTIFICATIONS – FROM PREAMBLE:“The certification requirements have the added benefit of creating an enforcement mechanism for the Department to take action if a required approval has been lost, or if a certification that was provided was false”“Federal and State law enforcement agencies may be able to prosecute any misrepresentations made by institutions in their own investigations and enforcement actions”“An important goal of the certification requirements is to ensure that institutions assess on an ongoing basis whether their programs meet all required Federal, State, and accrediting standards.”“If a program does not meet the certification requirements in any State where an institution is located, then the program as a whole would be considered deficient and could not be certified.”False Claims Act risk based on certifications as part of PPA.Certifications are an entirely separate accountability metric that goes to GE program eligibility separate and apart from D/E rates with the potential for serious consequences for false or inaccurate certifications.
28 8. CHALLENGES/APPEAL34 CFR §If a GE Program is failing or in the zone, an IHE may file an alternate earnings appeal. That alternate earnings data must be for the same calendar year as the SSA data.Notice of intent to file the appeal must be filed with ED no later than 14 days after issuance of Notice of Determination including final DTE rates. All documentation must be submitted no later than 60 days after the Notice of Determination.The IHE may submit alternate earnings from: (1) an institutional survey (using a survey consistent with a survey form to be developed by NCES) that is accompanied by an auditor’s attestation or (2) from a State-sponsored data system.
29 9. COMPLIANCE RECOMMENDATIONS Start preparing GE Program reporting data now if you have not yet started.Develop an internal system to collect and store all required GE Program data, including information necessary to estimate D/E rates.Evaluate whether GE Program CIP and related SOC codes are accurate.Remove any inactive GE Programs on E-App by July 1, 2015 and add any new accreditor, state approved GE Programs that will be offered as of July 1, 2015.Implement graduate employment surveys to collect job titles, student salary, employer and other relevant GE Program rate information. Continue surveys for at least 4 years post-graduation.Develop policies and procedures to regularly review GE Program disclosures (including website and marketing collateral) to ensure information is compliant.Continue student counseling on repayment of debt.Develop in-house expertise on the GE Rule to back up and oversee any third party assistance: ultimate responsibility is with the institution.
30 Peter LEYTONPeter is co-founder of the Washington, D.C. area law firm of Ritzert & Leyton, P.C. and head of the firm’s education practice group. Since 1980, Peter has represented many institutions of higher education, publicly traded companies, private investment groups and others with respect to resolving regulatory/compliance matters as well as with respect to achieving desired transactional results through mergers, acquisitions and reorganizations. The firm has eight attorneys involved in work involving the postsecondary education sector and is regularly involved with the U.S. Department of Education (DOE), national, regional and programmatic accrediting agencies, state licensing and other regulatory agencies and other third parties. Peter has served three two-year terms on the Association of Private Sector Colleges and Universities and predecessor board of directors. He received his law degree from Catholic University School of Law in 1980, a master's degree in public administration from American University in 1974, and a bachelor's degree in political science from Antioch College in Ritzert & Leyton, P.C., Random Hills Road, Suite 400, Fairfax, Virginia 22030; (703)