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1. Katherine Brodie, Vice President for Government and Legal Affairs Association of Private Sector Colleges & Universities 2.

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2 Katherine Brodie, Vice President for Government and Legal Affairs Association of Private Sector Colleges & Universities 2

3 Federal Trends Affecting Career Education ABHES 9 th National Conference on Allied Health Education February 22-24, 2012 Federal Trends Affecting Career Education ABHES 9 th National Conference on Allied Health Education February 22-24, 2012 Katherine Brodie, Vice President for Government and Legal Affairs 3

4 OVERVIEW The current focus of policymakers on reducing unemployment and creating jobs showcases positively the long-recognized strengths of career education, including – Alignment of curriculum to high-demand occupations Access to the postsecondary education needed to compete for jobs At the same time, national and state fiscal pressures – combined with a coordinated campaign by some against the for- profit college sector – require all stakeholders in career education to demonstrate as persuasively as possible the value proposition to students and taxpayers. 4

5 Washington is talking about … The 90/10 Rule Two Senate bills and two House bills (so far) propose to make a bad 90/10 rule worse through ratio changes and including military benefits in the “90,” None are likely to become law this year but are place markers for Higher Education Act reauthorization proposals. APSCU is opposed to any legislation that would negatively alter the 90/10 ratio (i.e., 85/15) or change the formula calculation (i.e., counting military or veteran education benefits in the 90 percent). APSCU is working to reach agreement among APSCU members and external stakeholders, and promote externally, the need for an outcomes-based quality measurement across all of higher education as an alternative to 90/10 Rule. 5

6 Washington is talking about … Veterans/Servicemember Education APSCU is working with Veterans Service Organizations regarding legislative and non-legislative alternatives that promote disclosure and transparency to veteran students in a manner that does not change the 90/10 ratio. Veterans protection is an election issue for many Members of Congress. Veterans issues are a potential “wedge” with Republicans. APSCU is working to build a database of positive veteran student stories and to identify veteran student advocates who tell their story the best. 6

7 Washington is talking about … The Future of Pell Funding Strong support among Democrats to maintain maximum Pell. FY 2012 Maximum was retained, but with eligibility changes ATB students are ineligible for grants and loans as of 7/1/2012 Creation of APSCU ATB Task Force FY 2013 President has proposed increasing and protecting maximum Pell Republicans continue to have concerns about size and growth of Pell program What will their Pell proposal look like for FY 13? 7

8 Washington is talking about … Gainful Employment Rule How will the court rule? June 30 deadline What will the true impact be? Will the rule resurface in HEA discussions? If so, how? Is traditional higher education concerned? 8

9 Washington is talking about ….. Single Definition under Higher Education Act Equal definitional treatment under HEA Basis of opposition to single definition in the past How we make the case: data collection and advocacy 9

10 Fiscal Year 2013 Budget Request The President’s budget request proposes: An $85 increase to Pell Grants, making the maximum Pell Grant $5,635 for Academic Year ; Maintaining subsidized interest rates at 3.4 % for an additional year; Making the American Opportunity Tax Credit permanent, a partially refundable tax credit worth up to $2500 per year; Limiting in-school interest subsidy to Subsidized Stafford loan borrowers to 150 percent of the normal time required to complete borrowers’ educational programs whereby borrowers beyond that time frame would begin to accrue interest at the non-subsidized rate; Increasing the amount of aid for campus based aid (Perkins Loans), Supplemental Educational Opportunity Grants (SEOG), and Federal Work Study (FWS) to $10 Billion annually, which includes an improved formula aimed at funding those institutions which set “responsible” tuition, provide “good value” in education, and ensure higher numbers of lower income students complete their education;” 10

11 Creates a $1 Billion “Race to the Top” program for postsecondary education, which incentives states to revamp state financing of higher education, align entry and exit standards for K-12 to facilitate on-time completion, and maintain adequate levels of funding for higher education to address long-term causes of cost growth; Creates a $55 Million program called “First in World competition” available to non-profit organizations to “develop, validate, or scale up innovative and effective strategies for boosting productivity and enhancing quality on campuses”; Creates transparency through the creation of the “College Scorecard” for all degree granting institutions making it easier for students and families to choose a college which best fits their needs; and Proposes $2.6 Billion for Workforce Investment Act. 11

12 White House Non-legislative options Department of Education Credit Hour/Clock Hour interpretation Consumer Financial Protection Bureau Private lending Department of Justice Fraud Task Force For-profit college focus Federal Trade Commission Marketing & Advertising (lead generation) State Attorneys General Other Concerns …. 12

13 APSCU Goals & Themes 2012 Access: Career colleges are essential to providing necessary postsecondary access to meet national workforce education goals. Value: Career colleges are a cost-effective option to the taxpayer and meet the needs of students. Equal Treatment: All institutions of higher education should be subject to similar rules. Data-Driven Policy: Better data collection and reporting needed to strengthen advocacy. 13

14 Contact Info Contact Information: Katherine Brodie Vice President of Government and Legal Affairs Association of Private Sector Colleges and Universities (202) (direct line) 14

15 Sharon H. Bob, Ph.D. Higher Education Specialist Powers Pyles Sutter & Verville, PC 15

16 Presented by: Sharon H. Bob, Ph.D. Powers Pyles Sutter & Verville, PC February 23, 2012 Las Vegas, Nevada Las Vegas, Nevada Powers Pyles Sutter & Verville, PC 1501 M Street, NW, Seventh Floor Washington, DC Telephone: (202) Fax: (202)

17 Omnibus FY 2012 Appropriations Bill (P.L ) Signed into Law – 12/16/2011 – See DCL GEN & GEN Annual Pell Grant maximum remains at $5,550 for (P-12-01) ; No Pell Grant if amount determined to be less than 10% of maximum award; Maximum period for Pell Grants reduced from 18 to 12 semesters for all students beginning not just first- time Pell Grant recipients (no one grandfathered in); AGI to qualify for automatic zero: EFC reduced from $30,000 to $23,000 for ; Grace period interest subsidy on new Subsidized Loans made between 7/1/2012 and 6/30/2014 eliminated; and 17

18 Omnibus FY 2012 Appropriations Bill (P.L ) Signed into Law – 12/16/2011 – See DCL GEN & GEN-12-03, cont. Title IV eligibility for ATB students eliminated for students who first enroll in a program on or after 7/1/2012. (Neither ATB testing nor earning 6 credits applicable to a degree or certificate will count.) The law makes an exception for those who completed secondary school in a home school setting that is treated as a home school under State law. 18

19 President Announces Two New Student Loan Programs to Help Students Manage Debt On 10/26/2011, President Obama announced two loan initiatives: “Pay as You Earn” Repayment Plan – provides for an acceleration of the Income-Based Repayment Plan enacted under SAFRA that would have taken affect on or after 7/1/2014 but will go into effect in 2012, which provides for a: Lower income-based payment (10% of discretionary income rather than 15%); and Shorter time until full forgiveness takes place (20 years rather than 25 years). 19

20 President Announces Two New Student Loan Programs to Help Students Manage Debt, cont. “Special Direct Consolidation Loan Program” – Beginning 1/2012 and for 6 months, borrowers would receive 0.25% interest rate reduction on their consolidated FFEL loans and additional 0.25% interest rate reduction on entire consolidated FFEL and DL. An electronic announcement is at: SpecialDCLInfoInitial.html SpecialDCLInfoInitial.html 20

21 ED Works with Consumer Financial Protection Bureau (CFPB) ED and CFPB are launching a new “Know Before You Owe” Project aimed at creating a model financial aid disclosure form, the Financial Aid Shopping Sheet that schools will use to help students understand the types and amounts of aid they qualify for and can compare packages across institutions. The form is available at: knowbeforeyouowe/ knowbeforeyouowe/ 21

22 ED Works with Consumer Financial Protection Bureau (CFPB), cont. On 11/17/2011, CFPB and ED published a joint notice in the Federal Register requesting information on Private Education Loans and Private Education Lenders to prepare a future report to Congress on private education loans and lenders. Comments due: 1/17/2012. A more informal request is available at: On 1/12/2012, CFPB Director, Richard Cordray, compared the practices of some parts of the student loan business to the subprime mortgage lending practices. 22

23 DOD Requires Institutions Participating in Military Tuition Assistance to Have a MOU with DOD A signed MOU was to be sent to DOD to be on the “List of Participating Institutions” by 1/1/2012, but delayed until 3/31/2012. Delay made at request of 52 Senators and members of the higher education community because MOU provisions inconsistent with “well-established academic policies:” Academic credit; In-school residency; Tuition policies; and Payment processing. See 23

24 Program Integrity Regulations October 1,

25 Credit Hour §§600.2, , , and (DCL GEN-11-06) 25

26 Why Establish a Credit Hour Definition? There was no definition; Establishes consistent measure of eligibility for Federal funding; and Final Rules: Provides that a credit hour is an institutionally established equivalency of amount of work that reasonably approximates not less than the measures in the definition for federal funding purposes. 26

27 Definition of Credit Hour Credit hour is defined as an amount of work represented in intended learning outcomes and verified by evidence of student achievement that is an institutionally established equivalency that reasonably approximates: One hour of classroom or direct faculty instruction and a minimum of two hours of out of class student work each week for approximately 15 weeks for one semester or trimester of credit, or 10 to 12 weeks for one quarter credit, or equivalent amount of work over a different amount of time; or 27

28 Definition of Credit Hour, cont. Credit hour is defined as follows (cont.): At least an equivalent amount of work as required in the first paragraph for other academic activities including laboratory work, internships, practica, studio work, and other academic work leading to the award of credit hours. 28

29 Clock-Hour Program The regulations require certain credit-hour programs to be considered clock-hour programs for Title IV purposes if: The program is required to measure student progress in clock hours when receiving federal or state approval or licensure to offer the program; or The program is required to measure student progress in clock hours when completing clock hours is a requirement for graduates to apply for licensure or the authorization to practice the occupation that the student is intending to pursue; or The credit hours awarded are not in compliance with the proposed definition found in 34 CFR

30 Clock-to-Credit-Hour Conversion Required for non-degree programs at any type of institution if each course in non-degree program does not transfer into at least a 2-year degree program; have enrolled students; and graduates. Except in certain cases discussed below, the method of converting clock hours to credit hours is modified using 900 clock hours as the minimum. Therefore, a semester hour will be based on 37.5 clock hours and a quarter hour will be based on 25 clock hours. 30

31 Clock-to-Credit-Hour Conversion, cont. The institution’s conversions to establish a minimum number of clock hours of instruction per credit hour may be less than 37.5 or 25 clock hours if, for participation in Title IV programs, neither the accrediting agency nor the state agency has identified deficiencies with the institution’s policies and procedures or its implementation for determining credit hours as defined in 34 CFR so long as: The institution’s students’ work outside of class combined with the clock hours of instruction meet or exceed the numeric requirements in the conversion formula; and: 31

32 Clock-to-Credit-Hour Conversion, cont. A semester or a trimester hour must include at least 30 clock hours of instruction; and A quarter hour must include at least 20 clock hours of instruction. 32

33 Responsibilities of an Accrediting Agency The responsibilities of an accrediting agency are to conduct an effective review and evaluation of an institution’s policies and procedures for the assignment of credit hours and the institution’s application of its policies and procedures in assigning credits. The accrediting agency meets the requirement if it reviews each institution’s: Policies and procedures for determining credit hours that the institution awards for courses and programs; Application of the institution’s policies and procedures to its courses and programs; 33

34 Responsibilities of an Accrediting Agency, cont. Makes a reasonable determination of whether the institution’s assignment of credit hours conforms to commonly accepted practice in higher education; The accrediting agency may make use of sampling or other methods in the evaluation; The accrediting agency must take appropriate actions to address any deficiencies; If an agency finds systemic noncompliance, the agency must promptly notify ED; and Accreditation reviews occur for initial or renewal of accreditation; however, during the interim, an institution is held responsible and accountable for meeting definition. 34

35 ED Guidance on Clock-Credit Hour Conversion Per page of the Preamble of the 10/29/2010 final regulations, institution must require students to complete clock hours that are the basis for the credit hours awarded when an institution converts to credit hours. Programs must contain clock hours that support the conversion. Institutions may permit excused absences. ED recommends that institutions not provide grades until underlying clock hours are complete. 35

36 ED Guidance on Clock-Credit Hour Conversion, cont. New courses may be started but clock hours under new courses may not count toward completion of the previous courses. If a state agency provides a clock-to-credit-hour conversion formula in their statutes and regulations that did not address outside preparation, then the programs regulated by the agency must be offered in clock hours. ED is examining various state laws and plans to call the state agencies to determine whether outside preparation is used to determine what constitutes a credit hour. 36

37 ED Guidance on Clock-Credit Hour Conversion, cont. ED plans to issue DCL to address these various clock and credit hour issues. 37

38 38

39 State Authorization Requirement In order for an institution to be eligible to participate in the Title IV, HEA programs, it must be legally authorized to provide postsecondary education by the State in which it is located. ED sought to clarify what is required for an institution to be considered legally authorized by a State for purposes of Federal programs. 39

40 Clarification of State Authorization Requirements Requirements are clarified based on whether the institution is: Established by name as an educational institution; Authorized to conduct business; or Authorized to operate as a nonprofit charitable organization. Federal, tribal, and religious institutions are exempt from these requirements. Requirements imposed on institutions providing distance education to students in a state in which it is not physically located.(7/12/11 District Court ruling struck down requirement that colleges offering online programs in other states needed approval from those states.) 40

41 Institution is Established by Name as an Educational Institution If established as an educational institution by a State, it: Must be established by name as an educational institution by a State through a charter, statute, constitutional provision, or other action issued by the State agency and is authorized to operate educational programs beyond secondary education, including programs leading to a degree or certificate; Must comply with any applicable State approval or licensure requirements; and 41

42 Institution is Established by Name as an Educational Institution, cont. State may exempt the institution from State approval or licensure requirements based on: The institution’s accreditation if agency recognized by the Secretary; or The institution being in operation for at least 20 years. School must provide some type of authorization as a postsecondary institution by the State; and a letter issued by the State naming the institution would not satisfy requirements. 42

43 Institution is Authorized to Conduct Business in the State or to Operate as a Nonprofit Charitable Organization If established on the basis of an authorization to conduct business in the State or to operate as a nonprofit charitable organization: Must comply with the State approval or licensure requirements; Must be approved or licensed by name to offer programs beyond secondary education, including programs leading to a degree or certificate; and May not be exempt from the State approval or licensure based on accreditation, years in operation, or a comparable exemption. 43

44 State Must Establish Complaint Process The State must have a process applicable to all institutions: To review and address complaints, independent of the school’s process, directly or through referrals; and The State may fulfill this role through a State agency, the State Attorney General as well as other appropriate State officials; or The State may use a combination of agencies. State must remain responsible for responding to complaints, but may refer them to other entities (i.e., an accrediting agency for final resolution). But all relevant officials or agencies must be included in an institution’s institutional information that is disclosed under §668.43(b). 44

45 Gainful Employment §§600.2, 600.4, 600.5, 600.6, 668.6, 668.7, and (http://ifap.ed.gov/gainfulemployment/info/, which includes DCLs and FAQs)http://ifap.ed.gov/gainfulemployment/info/ 45

46 Gainful Employment in a Recognized Occupation Prior Rules: A proprietary institution of higher education, and a postsecondary vocational school, and one-year programs at institutions of higher education must provide eligible programs of training that prepare students for “gainful employment in a recognized occupation.” A “recognized occupation” is listed in the “occupational division” of the latest edition of the Dictionary of Occupational Titles. Gainful employment is not defined. 46

47 Gainful Employment in a Recognized Occupation, cont. Final Rules: A “recognized occupation” is re-defined by a Standard Occupational Classification (SOC) code established by the Office of Management and Budget (OMB) or an Occupational Information Network O* NET- SOC code established by the Department of Labor and available at: 47

48 Gainful Employment Reporting to the Department of Education and Disclosures to Prospective Students Gainful employment rules apply to: Programs that do not result in a degree at public and private non-profit institutions; and Degree and non-degree programs at for-profit institutions (except for some liberal arts programs). Non-Title IV programs are not subject to the gainful employment disclosure and reporting requirements. 48

49 Gainful Employment Reporting to the Department of Education and Disclosures to Prospective Students, cont. A listing of CIP codes is available at: Standard Occupational Classification (SOC) codes are published by the Department of Labor and are available at: There is a crosswalk between CIP and SOC codes that can be found at 49

50 Annual Submission An institution must annually submit information to the Department for each student who is enrolled in a program that prepares students for gainful employment in a recognized occupation during an award year, the institution must provide to the Department the following: Information that identifies the student, the institution, the program, and the credential; If a student began attending a program during the award year, provide the name, Classification of Instructional Program (CIP) code of that program, and the credential; 50

51 Annual Submission, cont. If the student completed a program during the award year: The name, CIP code, and credential of that program and the date the student completed the program; The total amounts the student received from private education loans and the amount from institutional financing plans that the student owed the institution upon completing the program (any school financing that remains upon graduation); and 51

52 Annual Submission, cont. Whether the student matriculated to a higher credentialed program at the institution, or, if available, evidence that the student transferred to a higher credentialed program at another institution; AND For each program, by name and CIP code, offered by the institution, the total number of students enrolled in the program at the end of the award year and identifying information for those students. 52

53 Annual Submission, cont. Reporting deadline: November 15, 2011: award year information if available; , , , and award year information. 53

54 Annual Disclosures to Prospective Students For each program with the same CIP code and credential offered by the institution, the institution must provide prospective students with the following information: The occupations by name and SOC codes (SOC = Standard Occupational Classification) that the programs prepare students to enter: With links to occupational profiles on O*NET [Enter the program CIP codes on the O*NET crosswalk at 54

55 Annual Disclosures to Prospective Students, cont. The on-time graduation rate for the students completing the program: On-time graduation represents the percentage of students who completed the program “no later than its published length.” (See page of the Preamble of the final regulations.) NOTE: In other words, it is not completion within 150% of the normal timeframe for first-time, first year undergraduate students as provided under the Student Right-to-Know Act; 55

56 Annual Disclosures to Prospective Students, cont. The tuition and fees it charges a student for completing the program within the normal time, the typical costs for books and supplies (unless those costs are included as part of tuition and fees), and the cost of room and board, if applicable. The institution may include information on other costs, such as transportation and living expenses, but The institution must provide a Web link, or access, to the program cost information the institution makes available under the consumer disclosures. 56

57 Annual Disclosures to Prospective Students, cont. The placement rate for students completing the program as determined by a methodology developed by the NCES (NCES has not as yet determined a placement methodology): In the meantime, if the institution is required by its accrediting agency or State agency to calculate a placement rate on a program basis, it must disclose that rate as well as identify the accrediting agency or State agency under whose requirements the rate was calculated (If an institution is required to calculate placement rates for both the State and accrediting agency, it must report both rates); and 57

58 Annual Disclosures to Prospective Students, cont. If the accrediting agency or State agency requires an institution to calculate a placement rate at the institutional level or other than on a program basis, the institution must use that same methodology to calculate a placement rate for each program and disclose that rate. 58

59 Annual Disclosures to Prospective Students, cont. The median loan debt incurred by students who completed the program “as provided by the Secretary” as well as any other information the Secretary provided to the institution about that program. The median loan debt is segregated by: FFEL/Direct Loans; Private education loans; and Institutional financing plans (i.e., the amount student is obligated to pay at completion of program). 59

60 Annual Disclosures to Prospective Students, cont. The disclosures described above must be in “promotional materials” made available to prospective students: Page of the Preamble of the final regulations states that these disclosures should be made “available in promotional materials conveyed to prospective students and the disclosure must be simple and meaningful;” Section 668.6(b)(2)(iv) and page of the Preamble also state that the Department intends to develop a disclosure form, but until a form is developed and approved, institutions must comply with the disclosure requirements independently. [NOTE: The Department has developed a disclosure template and is currently seeking public comment about the design of the form through the information collection process under the Paperwork Reduction Act of Information about the process and a draft of the form can be found at: 60

61 Annual Disclosures to Prospective Students, cont. Page of the Preamble states that institutions must provide “clear and prominent notice delivered to students at appropriate times and in promotional materials prior to enrollment;” NOTE: The FAQs state that if an “invitation, advertisement, or solicitation mentions or otherwise refers to a specific educational program or programs, the disclosure information must be included whenever feasible. If providing the information is not feasible because of the size or structure of the invitation, advertisement, or solicitation, an institution may include either the printed URL or a live link to the website where the required information is located, with a clear explanation of the information that is available at the website. An example of a compliant disclosure under the guidance could include the following text: “For more information about our graduation rates, the median debt of students who completed the program, and other important information, please view our website at, 61

62 Annual Disclosures to Prospective Students, cont. The disclosures must be provided prominently in a simple and meaningful manner on the “home page of [the institution’s] program Web site” as well as via a link on any other Web page containing general, academic, or admissions information about the program. The information must: Be in an open format that can be retrieved, downloaded, indexed and searched by commonly used Web search applications. An open format is one that is platform- independent, is machine readable, and is made available to the public without restrictions that would impede reuse of the information. 62

63 Annual Disclosures to Prospective Students, cont. The FAQs state that institutions may initially use information from the award year for the disclosures that are required by July 1, “However, within a reasonable amount of time once information is available, institutions must update their disclosure information.” 63

64 Procedures for Reporting New Educational Programs that Prepare Students for Gainful Employment in a Recognized Occupation Final regulations published on October 29, 2010 at 34 C.F.R (d) provide that if an institution intends to add a new GE program to its list of Title IV-eligible programs, it must notify the Department of its intent at least 90 days prior to the first day of class of the proposed program. The Department issued Gainful Employment Electronic Announcements #5 and #16 to describe the procedures, including the electronic application instructions and the Notice Format. 64

65 Procedures for Reporting New Educational Programs that Prepare Students for Gainful Employment in a Recognized Occupation, cont. When reviewing application for a new program, the Secretary will look at the following: Institution’s financial responsibility and administrative capability; Whether program(s) will replace several similar programs currently provided; Whether number of additional program(s) is consistent with historic growth and operations; and Whether the process and determination by institution to offer program(s) is sufficient. 65

66 Procedures for Reporting New Educational Programs that Prepare Students for Gainful Employment in a Recognized Occupation, cont. Notice to Secretary of new GE program must include: Description of how institution determined need for program and how the program was designed to meet local market needs or for online program, regional or national market needs; Wage analysis the institution may have performed, including BLS data; Description of how program was reviewed or approved by business advisory committees, program integrity boards, public or private oversight or regulatory agencies, and businesses that would likely employ graduates; Submit documentation of accrediting agency approval; Submit documentation of state approval; and Provide date of the first day of class of the new program. 66

67 NPRM for Seeking Approval of New GE Programs – 9/27/2011 Limit new GE programs notification requirements for: Failing programs that were voluntarily discontinued. A program that became ineligible; or Substantially similar program to a failing program for any 1 of 2 most recent FYs. 67

68 Final Regulations to Gainful Employment – 6/13/2011 On June 13, 2011, the Department of Education issued final regulations in the Federal Register requiring programs that prepare students for gainful employment in a recognized occupation to “better prepare students for ‘gainful employment’ or risk losing access to Federal student aid.” The final regulations apply to most non-degree and degree- granting programs at for-profit institutions (except for some liberal arts baccalaureate programs that meet the exception) and all nondegree programs at nonprofit and public institutions. 68

69 Final Regulations to Gainful Employment, cont. §668.7 Gainful employment in a recognized occupation: Minimum Standards: The rule states that a program is considered to provide training that leads to gainful employment in a recognized occupation if it meets one of the following three measures: The program has a loan repayment rate of at least 35 percent (Loan Repayment Rate assesses whether the FFEL and Direct Loan debt incurred by a particular cohort of borrowers to attend the program (graduates and withdrawals) is being repaid at a rate that implies gainful employment.); 69

70 Final Regulations to Gainful Employment, cont. The program has an annual loan payment that is less than or equal to 30 percent of discretionary income (Discretionary Income Threshold determines whether the annual loan repayment required on loan debt attributable to the academic program by those who completed the program is reasonable compared to their discretionary income); or The program has an annual loan payment that is less than or equal to 12 percent of annual earnings (Actual Earnings Threshold establishes whether the annual loan repayment required on loan debt attributable to the academic program by those who completed the program is reasonable when compared to their actual annual earnings). 70

71 Final Regulations to Gainful Employment, cont. An academic program that passes any one standard is considered to be preparing students for gainful employment. A program that fails all three standards for a given year is considered to have failed to demonstrate that it meets the gainful employment condition of program eligibility for that year. A program that fails all three standards for three out of four years loses Title IV eligibility. (The Department’s position is that a good program could have a bad year, but it is far less likely that a good program could have three bad years out of four years. Consequently, the first year that a program could lose eligibility under the final rules is early 2015 when ED issues the debt measures for FY 2014.) 71

72 Final Regulations to Gainful Employment, cont. Debt measures refer to the loan repayment rate and debt-to- earnings ratios. A fiscal year (FY) is the 12-month period starting October 1 and ending September 30. For example, FY 2013 is from October 1, 2012 to September 30, A two-year period is the period covering two consecutive FYs that occurs on: The third and fourth FYs (2YP) prior to the most recently completed FY for which the debt measures are calculated. For example, if the most recently completed FY is 2012, the 2YP is FYs 2008 and 2009; or 72

73 Final Regulations to Gainful Employment, cont. For FYs 2012, 2013, and 2014, the first and second FYs (2YP- A) prior to the most recently completed FY for which the loan repayment rate is also calculated during a transition period. For example, if the most recently completed FY is 2012, the 2YP-A is FYs 2010 and

74 Final Regulations to Gainful Employment, cont. Discretionary income is the difference between the mean or median annual earnings and 150 percent of the most current Poverty Guideline for a single person in the U.S., which are published by HHS and are available at: 74

75 Final Regulations to Gainful Employment, cont. Loan Repayment Rate: The annual loan repayment rate for an academic program is the percentage of loans borrowed to attend that program that are in satisfactory payment three to four years after entering repayment. For example, the loan repayment rate for FY 2012 (October 1, 2011 through September 30, 2012) will be determined based on loans that entered repayment during either FY 2008 or FY 2009 (October 1, 2007 through September 30, 2009) and were in acceptable repayment status during the period October 1, 2011 through September 30, [NOTE: The FY 2012 period used to determine the acceptable repayment status is four years after the loans entered repayment during FY 2008 and three years after the loans entered repayment during FY 2009.] 75

76 Final Regulations to Gainful Employment, cont. For the most recently completed FY, the Secretary will calculate the loan repayment rate as follows: OOPB of LPF plus OOPB of PML OOPB Original Outstanding Principal Balance (OOPB) is the amount of the outstanding balance, including capitalized interest, on FFEL or Direct Loans owed by students (graduates and withdrawals) for attendance in the program on the date those loans first entered repayment. 76

77 Final Regulations to Gainful Employment, cont. For consolidation loans, the OOPB is the OOPB of the FFEL and Direct Loans attributable to a borrower’s attendance in the program; For FYs 2012, 2013, and 2014 only, the Secretary will calculate two loan repayment rates for a program, one with the 2YP and one with the 2YP-A (if more than 30 borrowers entered repayment). The Secretary will determine if the program meets minimum loan repayment rate under either rate. 77

78 Final Regulations to Gainful Employment, cont. Loans Paid in Full (LPF) are loans that have never been in default, including a consolidation loan and its underlying loans. Consolidation loans must be paid in full to be considered LPF. Payments Made Loans (PML) are loans that have never been in default, including a consolidation loan and its underlying loans, and: PML are payments made by a borrower during the most recently completed FY that reduce the outstanding balance of the loan, including the outstanding balance of a consolidation loan, to an amount that is less than the outstanding balance of the loan at the beginning of that FY by $1.00. The outstanding balance includes unpaid accrued interest that has not been capitalized. 78

79 Final Regulations to Gainful Employment, cont. A borrower is in the process of qualifying for Public Service Loan forgiveness and submits an employment certification to the Secretary. 79

80 Final Regulations to Gainful Employment, cont. A borrower in the income-based repayment plan (IBR), income contingent repayment plan (ICR), or any other repayment plan makes scheduled payments during the most recently completed FY for an amount that is equal to or less than the interest that accrues on the loan during the FY. The Secretary limits the dollar amount of these interest-only or negative amortization loans in the numerator of the ratio to no more than 3% of the total amount of OOPB in the denominator of the ratio. (Because the objective of the gainful employment regulations is to determine whether borrowers can actually pay off their loans, ED is limiting the amount of loans that can be in an acceptable repayment status when the payments made over the fiscal year do not actually achieve a reduction in the principal balance (i.e., interest only or negative amortization loans). The Secretary will include in the numerator 3% of the OOPB in the denominator until more data is available on which the program’s borrowers have scheduled payment that are equal to or less than accruing interest.) 80

81 Final Regulations to Gainful Employment, cont. Exclusions from the numerator and denominator include: Loans that were made to parent borrowers; Loans that were in an in-school deferment status during any part of the FY; Loans that were in a military-related deferment status during any part of the FY; Loans that were discharged as a result of the death of the borrower; and Loans that were assigned or transferred to ED for total and permanent discharge. 81

82 Final Regulations to Gainful Employment, cont. NOTE: Loans that are in deferment or forbearance are not excluded. Example for FY 2012: LPF is $10,000 plus PLM is $40,000 in FY 2012 = 50% OOPB is $100,000 for loans entering repayment in FY 2008 and FY 2009 The Loan Repayment Rate measures whether former students (graduates and withdrawals) can repay their loans. The threshold is set at 35 percent. 82

83 Final Regulations to Gainful Employment, cont. Debt-to-Earnings Ratios: Discretionary Income rate: Annual loan payment based on median loan debt Higher of Mean or Median Annual Earnings – (1.5 X Poverty Guideline) Earnings Rate: Annual loan payment based on median loan debt Higher of Mean or Median Annual Earnings Mean is the average of all the values divided by the number of items added. 83

84 Final Regulations to Gainful Employment, cont. Median is the middle value of a list arranged in order of value and the highest and lowest values cancel each other out. (See Q&A #5 of the Gainful Employment – FAQs at NOTE: The final regulations consider programs with a median loan debt of zero to be meeting the measures since there is no debt burden on the students in the program. 84

85 Final Regulations to Gainful Employment, cont. The program’s Annual Loan Repayment must be less than or equal to: 30 percent of discretionary income; or 12 percent of annual earnings. Cohort of Program Completers: The debt-to-earnings ratio uses the income earned during the calendar year preceding the most recently completed fiscal year by former students who completed the program during an earlier period of time. Programs will be assessed based on two years of performance, unless a program has fewer than 30 program completers in a two-year period. If so, the program will be based on a four-year period. 85

86 Final Regulations to Gainful Employment, cont. In general, most programs will use a cohort of former students who completed the program in the two-year period (2YP) consisting of the third and fourth fiscal years prior to the fiscal year for which the debt measures are calculated. For example, for FY 2012, the cohort of graduates will be the 2YP (fiscal year 2008 and fiscal year 2009). The earnings from calendar year 2011 will be used for those students who completed the program from October 1, 2007 through September 30,

87 Final Regulations to Gainful Employment, cont. Annual Loan Payment is based on the median loan debt for each student who completed the program during the 2YP, the 2YP-R, the 4YP, or the 4YP-R, using the lesser of: The amount of loan debt incurred by the student; or If tuition and fee information is provided by the institution, the tuition and fees the institution charged the student enrolled in all programs at the institution; and 87

88 Final Regulations to Gainful Employment, cont. Using the median loan debt for the program and the current annual interest rate on Unsubsidized Direct Loans (6.8%) on a: 10-year repayment schedule for a program that leads to an undergraduate or post-baccalaureate certificate or to an associate’s degree; 15-year repayment schedule for a program that leads to a bachelor’s degree or master’s degree; or 20-year repayment schedule for a program that leads to a doctoral or first-professional degree. 88

89 Final Regulations to Gainful Employment, cont. Loan debt includes: FFEL and Direct Loans (except for parent PLUS or TEACH Grant-related loans), including capitalized interest owed by the student for attendance in the program; Any private education loans (reported to ED via NSLDS no later than 10/1/2011- See 34 C.F.R ); or Debt obligations arising from institutional financial plans (reported to ED via NSLDS no later than 10/1/2011 – See 34 C.F.R ). 89

90 Final Regulations to Gainful Employment, cont. Annual earnings will be obtained from the Social Security Administration (SSA) or another Federal agency and the Secretary will obtain the most currently available mean and median annual earnings of the students who completed the program during the 2YP, the 2YP-R, the 4YP, or the 4YP-R, as applicable. 90

91 Final Regulations to Gainful Employment, cont. Draft debt measures process for the Debt-to-Earnings ratios: Beginning with the FY 2012, the Secretary will issue draft results of the debt measures for each program offered by the institution, which may be corrected by the institution. (1) Pre-draft corrections process for the Debt-to-Earnings Ratios: Before issuing draft results of the debt measures, the Secretary will provide a list of the students who will be included in the applicable two-year or four-year period; 91

92 Final Regulations to Gainful Employment, cont. No later than 30 days after the date the Secretary provided the list, the institution must: Provide evidence that a student should be included or excluded from the list; or Correct or update the identity information, such as the name, SSN, or date of birth. After the 30-day correction period, the institution may no longer challenge the list or update the identity of the students. The updated list will be used to create a final list of students that ED submits to SSA. The Secretary will calculate the draft Debt-to-Earnings ratios based on the mean and median earnings provided by SSA (cannot be challenged by institution). 92

93 Final Regulations to Gainful Employment, cont. (2) Post-draft Corrections Process for Debt Measures: No later than 45 days after the Secretary issues the draft results of the Debt-to-Earnings ratios for a program and no later than 45 days after the Secretary issues the draft results of the loan repayment rate for a program, an institution: May challenge the accuracy of the loan data for a borrower that was used to calculate the draft loan repayment rate or the median loan debt for the program that was used in the numerator of the draft-to-earnings ratios, by submitting evidence showing that the borrower loan data or the program median loan debt is inaccurate; and 93

94 Final Regulations to Gainful Employment, cont. May challenge: The accuracy of the list of borrowers used to calculate the loan repayment rate by providing evidence that a borrower should be included or excluded from the list; or Correct or update the identity information provided for a borrower on the list, such as name, SSN, or date of birth. (3) Recalculated Results: The information provided by the institution will be used, unless the SSA is unable to include in its calculation of the mean and median earnings for the program one or more students. Under these circumstances, the median will be adjusted by removing the highest loan debt associated with the number of students SSA is unable to include. 94

95 Final Regulations to Gainful Employment, cont. Final Debt Measures: The Secretary notifies the institution of the results of any corrections and will provide the final debt measures: Alternative Earnings: If the program fails to meet the debt measure requirements for a FY, the institution may provide alternative earnings using: State data: For FY 2012 and any subsequent year, institution may use State data for more than 50% of the students earnings data from State-sponsored data system; 95

96 Final Regulations to Gainful Employment, cont. Survey data: For FY 2012 and any subsequent year, may use data from institutional survey conducted of the students in the applicable period and the data is for more than 30 students. Submit copy of survey, a certification that the survey met NCES standards, and examination-level attestation by an independent CPA; BLS data: For FY 2012, 2013, and 2014, an institution may use BLS earnings to recalculate the ratios by providing documentation of the occupation by SOC code in which more than 50% of the students in the period were placed or found employment and that the number of students is more than

97 Final Regulations to Gainful Employment, cont. After the Secretary calculates the final debt measures: Institution must disclose the final debt measures for each program; and ED may disseminate the final debt measures. Failing Program: Starting with the debt measures calculated for FY 2012, the program is a failing program if it does not meet any of the minimum standards. [NOTE: Students enrolled in a failing program remain eligible for Title IV funds.] Ineligible Program: A failing program becomes ineligible, if starting with the debt measures calculator for FY 2012, it does not meet any of the minimum standards for three out of the four most recent FYs. 97

98 Final Regulations to Gainful Employment, cont. Debt Warnings: A failing program must warn in a timely manner currently enrolled and prospective students of the consequences of failure: First-year failure: The institution must provide to each enrolled and prospective student a warning prepared in plain language and presented in an easy to understand format that: Explains the debt measures and show the amount by which the program did not meet the minimum standards; and Describes any actions the institution plans to take to improve the program’s performance under the debt measures. 98

99 Final Regulations to Gainful Employment, cont. Is delivered orally [face-to-face conversation] or in writing directly to the student. If orally delivered, it must maintain documentation of the student’s presence and how the information was provided to the student. Debt Warning must be provided until the Secretary notifies the institution otherwise. 99

100 Final Regulations to Gainful Employment, cont. Second year failure: The institution must provide to each enrolled and prospective student a warning prepared in plain language and presented in an easy to understand format that: Provides first-year Debt Warnings; Provides plans to take to respond to the second failure [If the institution plans to discontinue the program voluntarily, it must provide the timeline for doing so and the student options] ; Provides the risks associated with enrolling and continuing in the program and options available if the program becomes ineligible for Title IV; 100

101 Final Regulations to Gainful Employment, cont. Provides the resources available, including so that the student can research other educational options and compare program costs; and Provides a clear and conspicuous statement that a student who enrolls or continues in the program should expect to have difficulty repaying his/her student loans. Institution must continue to provide Debt Warnings until program has met minimum standards for two of the last three years. 101

102 Final Regulations to Gainful Employment, cont. Timely Warnings: The institution must provide the warnings: No more than 30 days after ED notice to enrolled students that the program has failed; and To prospective students at the time they first contact the institution. May not enroll prospective students until 3 days after debt warnings are first provided; and If more than 30 days pass from the date of the debt warning, debt warnings must be issued again to prospective students for 3 additional days. 102

103 Final Regulations to Gainful Employment, cont. Web site and promotional materials: For second year debt warning, institution must prominently display debt warning on the program home page of its Web site and include on all promotional materials made available to prospective students. [NOTE: The preamble states that “promotional materials” are defined broadly and include course catalogues, brochures, television ads, and poster advertisements that mention or list the program. However, if a poster is an advertisement for the institution as a whole or for other institutional programs that have not failed the minimum standards for more than one of the three most recent fiscal years, the warning is not required.] 103

104 Final Regulations to Gainful Employment, cont. Voluntarily discontinued failing program: Must promptly notify students when ED notified. [The date of written notification to the Secretary is the date the institution relinquishes eligibility.] 104

105 Final Regulations to Gainful Employment, cont. Transition year: The earliest a program can become ineligible is in early 2015 after the Department has calculated the debt measures for FYs 2012, 2013, and However, the final regulations provide for a transition year during which the number of programs losing Title IV eligibility will be limited to no more than 5% of the total number of students who completed their programs during FY The regulations apply the cap to each of three institutional categories – public, private nonprofit, and proprietary – to ensure that no sector bears more than 5%. Within each institutional category, loan repayment rates will be sorted from lowest to highest. Starting with the lowest repayment rate, ED will identify ineligible programs until the 5% cap is reached, but not exceeded. [NOTE: Although no sanctions will be applied during the transition year to ineligible programs that have a rate over the cap, the program’s rate during the transition year will count as a failing year in subsequent years.] 105

106 FFEL/Direct Loan Cohort Default Rates 106

107 What is the CDR Calculation? A cohort default rate is the percentage of the number of the school’s FFEL and Direct Loan borrowers who enter repayment in one Federal Fiscal Year (October 1 through September 30) who default in that federal fiscal year or by the end of the next federal fiscal year. 107

108 HEOA Changes Increases the CDR monitoring period from two to three years. Beginning with the 2009 cohort, the calculation will be: Borrowers who default in that federal fiscal year or by the end of the next two federal fiscal years. Establishes a three-year transition period for sanctions. 108

109 2-Year Versus 3-Year Calculation The Numerator is the number of borrowers from the denominator who default within a cohort period The Denominator is the number of borrowers who enter repayment within a cohort period or 7.1% or 12.1% 5,000 FY-09FY ,000 FY-09FY-11FY

110 Transition Period 110

111 Questions?? Sharon H. Bob, Ph.D. – Powers Pyles Sutter & Verville PC 1501 M Street NW, Seventh Floor | Washington, DC tel | fax February 23,

112 Sharon H. Bob, Ph.D. Sharon H. Bob, Ph.D., Higher Education Specialist on Policy and Regulation, is a member of the Education Group at the Washington, D.C. law firm of Powers Pyles Sutter & Verville, P.C. Dr. Bob advises all sectors of higher education regarding strategic issues pertaining to their participation in the federal student financial assistance programs, accreditation, licensure, education tax benefits, and related regulatory matters. Dr. Bob advises public and private colleges and universities, as well as private and publicly- traded companies. In this role, she provides clients with detailed technical guidance related to compliance with applicable statute and regulations. She regularly assists postsecondary educational institutions on issues relating to institutional eligibility, program eligibility, student eligibility, financial responsibility and administrative capability standards, changes of ownership, adding locations and programs, program reviews and compliance audits, and institutional responsibilities for the education tax benefits. Through training seminars and on-site reviews, she assists clients in complying with the federal requirements for administering federal student financial assistance. Dr. Bob has authored numerous articles on federal financial aid issues for The Career Education Review, NASFAA's Journal of Student Financial Aid, NASFAA's Student Aid Transcript, the Career College Link, and other higher education publications and frequently speaks at meetings of college officials and student aid administrators. Dr. Bob received her undergraduate degree summa cum laude from the State University of New York at Buffalo and was elected to Phi Beta Kappa. She received her doctorate from the University of Maryland. Powers Pyles Sutter & Verville is a Washington, D.C.-based law firm that focuses on health care, education, and the law of tax-exempt organizations. Practice Areas: Education Title IV Eligibility & Compliance Program Reviews and IG Audits Accreditation Mergers & Acquisitions Public Policy & Government Relations State Licensing Education Policy Member: NASFAA CCA Education: Ph.D., University of Maryland, 1976 BA, State University of Buffalo, 1971, summa cum laude 112

113 Mary Hale Barry Vice President, Academic Affairs American Career College 113

114 February 24,

115 A School’s Perspective General  Continuing anxiety over interpretation of regulations  Impact on all areas of the organization  Ever-increasing administrative burden and costs 115

116 Select Issues Employee Compensation Plans Clock/Credit Hour Conundrum Gainful Employment ATBs Program Outcomes 116

117 Employee Compensation Eliminated incentive payments of any kind for enrolling or re- entering students, processing financial aid, and retaining/completing students Developed different language and measures for coaching, evaluating performance/merit raises, terminating employment – quantitative to qualitative Updated on-boarding process for all employees, increased training, developed policies and employee attestations to address misrepresentation and other compliance issues 117

118 Clock/Credit Hour Conundrum Preliminary review in early 2011 revealed contact hours (classroom + outside) in core 720 hour programs were well in excess of 1,000 hours in programs needing to qualify Required renewed commitment to standardization, full documentation, and tracking of all activities Moving away from manual processes to reduce vulnerability to instructor vagaries – e.g., electronic grade book May consider adding a qualifying associates degree 118

119 Gainful Employment Program Approval Requirement to notify USDOE may double the time to market for new programs (research, time to review) First program has been submitted for review Biggest concern is sufficiency of market justification Reporting/Disclosures Clear, prominent notice – on time completion, placement, median loan debt – not the issue Updated agreements with marketing partners Enormous burden of mining, validating and upkeep of data Why does USDOE ignore conflict between 90-10, amount of eligible aid, gainful employment regs? Looming issues – debt load/ graduate wages; source of wage data; SOC codes and related placements 119

120 Discontinuation of ATBs Impact varies with portion of ATB students – some major organizations already withdrew from this segment in previous years; some are in at rates up to 40% Possibly the most misguided policy coming out of the regulations – especially in a market such as Los Angeles with 40% of high school students failing to graduate Where will they go? 120

121 Program Outcomes The continuing economic recession, the heightened scrutiny on the for-profit education sector, USDOE’s re-recognition of the major accreditors, and gainful employment regulations have put enormous pressure on completion and graduate placement outcomes Requires careful program planning – such as using an enrollment/graduate/placement yield model to carefully build each portfolio The traditional ways of matching graduates to employers is no longer sufficient Third Party Placement Verification (outside the CS Office) 121

122 Elise Scanlon Elise Scanlon Law Group 122

123 Draft Final Report Analysis ABHES 2012 Annual Conference Elise Scanlon Elise Scanlon Law Group 123

124 Topics Considered 1. The Triad of actors in educational quality assurance States Accrediting Agencies U.S. Department of Education 2. The scope, alignment and accountability of accreditation activity 3. The regulatory burden and data needs 124

125 25 Recommendations Overarching recommendation: To retain accreditation as a gatekeeper in the institutional eligibility process. Accreditors are the most experienced source of information about academic quality Academic specialists required in judgments about quality Accreditation deploys extraordinary academic talent in the service of quality assurance in a cost-effective manner. 125

126 Several Themes Strengthening the TRIAD (collaboration/communication/cooperation) Rebalancing of Roles of the TRIAD partners Examining the state and federal role in quality assurance Review the structure and organization of the accreditation enterprise Examine the use of data in quality assurance A note about NACIQI 126

127 Strengthening the TRIAD Hints at expansion of the Federal role Federal government’s responsibility includes quality as well as financial considerations Federal government as a “convener” to promote communication and collaboration among the TRIAD partners (Kanter: Search for “Islands of Innovation”) Greater federal role in data collection and use Define a specific set of data needed to address the federal interest and/or institutional improvement IPEDS Data more accurate, timely and useful Unit Records System 127

128 States State laws inconsistent with “newer” methods of education that are not tied to land boundaries Develop models that promote greater engagement and consistency across states. Encourage state effort to assure the adequacy of consumer information and the accountability of institutions and programs providing education with in the state. 128

129 Accreditation Provide more support (indemnification) to reduce legal risk and burden Explore aligning accreditation with mission rather than geography (regional accreditation) Add differentiation in review process between “institutions with a longstanding competent performance on quality indicators and those that might be “fragile, unstable, low-performing, rapidly expanding or newly-approved.” Encourage gradations in accreditation decisions Encourage systems for expedited review 129

130 Questions and Comments 130

131 Contact Information Katherine Brodie Vice President for Government and Legal Affairs Association of Private Sector Colleges & Universities (APSCU) (202) Sharon H. Bob, Ph.D. Higher Education Specialist Powers Pyles Sutter & Verville, PC (202) Mary Hale Barry, JD, MBA Vice President, Academic Affairs, American Career College (949) Elise Scanlon Elise Scanlon Law Group (202)


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