Gainful Employment Understanding the Metrics and Release of Informational Rates 1

Topics  Goals of Gainful Employment Initiative  Status of Gainful Employment Regulations  Statutory and Regulatory Framework  Informational Rates  GE Informational Debt Measures and Loan Medians  Repayment Rate  Debt-to-Earnings Ratios  Informational Rates Results  Additional Information  Questions 2

GOALS OF GAINFUL EMPLOYMENT INITIATIVE 3

Growing Concerns with Program Integrity  Rising default rates  Stagnant or falling graduation rates  Growing exposure  Increased investments in Federal student financial aid  Student loan program changes  Incentive Compensation  Misrepresentation  State Authorization  Credit Hour Definition  Ability to Benefit  High School Diplomas  Gainful Employment Tightened regulationsConcern Concerns 4

 Gainful Employment calculation results can be used -  To provide information to schools that is actionable on their part.  To provide information for schools to make improvements and perform self- assessments.  To provide information to students and families on effectiveness of programs. Improving Programs 5

 Schools can improve their GE Programs by working with employers to –  Ensure that the program’s training meets their manpower needs  Determine what they need from the program’s graduates so that their earnings can support the student and taxpayer investment Improving Programs 6

Employer Feedback  Do students need better training in some areas for you to be willing to pay them more?  What additional training do my former students need?  What different kinds of programs should we be offering that would prepare students for better paying jobs? Improving Programs 7

Student Feedback  Is there something about the program that impacts whether you are able to repay your student loans?  Given the training and costs, are you earning what you expected?  Was the training worth the cost?  Is there additional training that could be provided that would help you earn more and be better able to repay your student loans? 8 Improving Programs

 Schools can improve their GE Programs by –  Comparing their program’s GE metrics of similar programs at other schools  Determine how those schools provide the program with better results. Improving Programs School Review 9

STATUS OF GAINFUL EMPLOYMENT REGULATIONS 10

 On June 30, 2012, a District Court vacated most of the gainful employment regulations.  Court’s decision based on ED’s rationale for setting the Repayment Rate failure threshold.  Because of the interrelationship of the gainful employment requirements, the Court vacated most of the gainful employment regulations – GE Metrics, GE Reporting, Adding new GE Programs.  Court left in place GE disclosure requirements.  See other GE session here at NASFAA District Court Decision

ED Statement in Response to Decision "The court upheld our authority to regulate career college programs while urging a clearer rationale for standards around repayment rates. We are reviewing our legal and policy options to move forward in a way that best protects students and taxpayers while advancing our national goal of helping more Americans get the skills they need to compete in the global economy." 12

GAINFUL EMPLOYMENT STATUTORY FRAMEWORK 13

The HEA provides that to be Title IV eligible an educational program must be offered by:  Generally, all non-degree programs must lead to gainful employment A public or non-profit postsecondary educational institution and leads to a degree; or Any institution and “to prepare students for gainful employment in a recognized occupation”  Generally, most programs at for-profit institutions must lead to gainful employment The Law

The Regulations  October 29, Two sets of Final Rules published with effective dates of July 1,  Disclosures  Reporting  Adding New Programs  June 13, Final Rules on metrics to define gainful employment programs published with effective date of July 1,

INFORMATIONAL DEBT MEASURES AND LOAN MEDIANS 16

Informational Debt Measures Per a June 30, 2012 court decision, all three metrics and the reporting regulations were vacated. This means that the metrics are unenforceable and institutions are not required to report to the Department the information listed in the reporting regulations. The Department issued the Informational Rates prior to the court’s decision. They were always intended to be used only for informational purposes, never carried any potential sanctions, and that remains true following the court’s decision.

Informational Debt Measures  Released to schools June  SAIG Mailbox if designated by school  Letters with Rates  Back-Up Detail Files  Available on NSLDS  Rates  Request Back-Up Detail Files  Released to Public on June 26  FSA Data Center  No student detail 18

Key Differences from Process to Calculate Official Rates  No challenge process for institutions after submitting final data  No ability for institutions to potentially substitute alternative income measures in debt-to-earnings calculation  No PSLF  No allowance for IBR/ICR in repayment rate  No 4 year cohort period 19 Informational Debt Measures

 2 year cohort period (2YP) is FY 07 and FY 08  October 1, 2006 through September 30, 2008  Repayment Rate – Program’s former students who entered repayment in the 2YP  Debt-to-Earnings – Program’s former students who completed the program in the 2YP 20

Informational Debt Measures OPEID School name Street address City State Zip Code Institution type CIP Code CIP Name Credential Level  Repayment Rate  Numerator  Denominator 21 School and Program Identification Information  Debt-to-Earnings Annual Ratio  Numerator  Denominator  Debt-to-Earnings Discretionary Ratio  Numerator  Denominator Program Specific Debt Measures

Loan Medians OPEID School name Street address City State Zip Code Institution type CIP Code CIP Name Credential Level  Title IV Loan Median 22 School and Program Identification Information  Private Loan Median  Institutional Loan Median Program Specific Loan Medians

Cohort Period  GE metrics use information on the educational debt of a cohort of the GE Program’s former students  Generally, the cohort consists of students who left the program during the two federal fiscal years that are the third and fourth years prior to the most recently completed Federal fiscal year (the “GE Calculation Year”) 23

Cohort Period  For the GE Informational Rates, the GE Calculation Year was FY 2011 and the cohort years were FY2007 and FY2008 (October 1, 2006 through September 30, 2008).  Repayment Rate – GE Program’s former students who entered repayment on their Title IV loans during the cohort period.  Debt-to-Earnings – GE Program’s former students who completed the program during the cohort period. 24

GE Debt Measures  Repayment Rate –  A percentage the GE Program’s former students who are repaying their Title IV student loans each year (weighted for loan amount).  Debt-to-Earnings Ratios –  The annual repayment amount based on the median educational loan debt of the students who completed the GE Program as a proportion of their average annual earnings after two to three years. 25

REPAYMENT RATE 26

Repayment Rate The percentage of a Gainful Employment Program’s former students who are repaying their Title IV student loans each year. 27  NSLDS data used to identify students and to attribute loan amounts.  Repayment is a reduction in the outstanding principal balance over a one year period.

28 Calculated annually using the following formula:  OOPB = Original Outstanding Principal Balance when Title IV loan entered repayment  LPF = Loans Paid in Full  PML = Payments Made Loans OOPB of LPF plus OOPB of PML OOPB Repayment Rate

 Payments Made Loans –  Loan’s balance is reduced by at least $1.00 over the year;  Loan is on track to being forgiven under the Public Service Loan Repayment Plan;  Borrower is making payments under an interest ‐ only or income ‐ based repayment plan, but limited to no more than 3% of the OOPB;  For post-baccalaureate programs, is a consolidation loan and all interest accrued over the course of the year has been paid. 29 Repayment Rate

30  Example: Former StudentOOPB Student A$ 2,000 Student B 3,000 Student C 5,000 Student D 10,000  OOPB = $20,000 (total amount for all borrowers in 2YP)  Only student D is successful in repaying  Repayment rate = $10,000 / $20,000 = 50% Repayment Rate

31  For the most recently completed fiscal year, excludes from formula:  Loans in an in-school deferment or a military- related deferment  Loans discharged, or pending discharge, for death or total and permanent disability

DEBT-TO-EARNINGS RATIOS 32

Debt-to-Earnings Ratios 33  Repayment amount for all student loans - not just Title IV loans.  Schools identify students and non-Title IV loan amounts.  NSLDS identifies Title IV debt.  The average annual earnings is the higher of the mean or median annual earnings from the SSA.  Average discretionary earnings is the average annual earnings less 150% of the HHS poverty amount for a single person. The median educational loan annual repayment amount of students who completed the GE Program as a proportion of those student’s average annual earnings two to three years after completing the GE program

Debt-to-Earnings Ratios 34 Annual Debt-to-Earnings Ratio Discretionary Debt-to-Earnings Ratio Average Annual Loan Payment Amount Mean or Median Annual Earnings Average Annual Loan Payment Amount Mean or Median Annual Earnings less 1.5 X poverty guideline

 If the school reported the student’s tuition and fees, ED will use the lower of the tuition and fees charged the student for the program or the student’s total loan debt incurred for program. Tuition and Fee amount is for the student’s entire enrollment in the GE Program Debt-to-Earnings Ratios 35

Debt-to-Earnings Ratios  SSA will provide the median and mean earnings of program’s completers.  Calculation uses the higher of the two  ED does not receive student level earnings information. 36

Debt-to-Earnings Ratios  Calculating of the annual loan payment—  Uses the program's median loan debt,  Amortized at 6.8% over –  10 years for a certificate or Associate’s program.  15 years for baccalaureate and master’s programs.  20 years for a doctoral or first professional graduate program 37

Debt-to-Earnings Ratios 38  Exclude students who, during the earnings year –  Had one or more loans in a military-related deferment status  Had loans discharged, or pending discharge, for death or total and permanent disability  Were enrolled in school

INFORMATIONAL RATES RESULTS 39

Process Overv iew 40 ED provides institutions with debt measures ED computes debt measures SSA returns median & mean earnings by program ED sends student identifiers to SSA Institutions report students by program Information on each student enrolled in the Gainful Employment Programs reported to ED Earnings information aggregated by program by institution (no student specific data returned by SSA) Repayment rates and debt-to- earnings ratios returned along with backup data

27,583 Programs 3,612 Schools 6,423 Programs 2,197 Schools 3,695 Programs 1,336 Schools Unique educational programs that had students in the relevant 2-year measurement period (FY2007 and FY 2008) Unique educational programs where there were at least 31 students for either of the debt measures Unique educational programs where metrics were calculated because there were at least 31 students for both debt measures. Informational Rates Results 5,504 Programs Individual educational programs that had the Debt-to-Earnings Ratios calculated 4,614 Programs Individual educational programs that had a Repayment Rate calculated 41

42 Repayment Rate Number of Programs Informational Rates Results

43 Annual Debt-to-Earnings Number of Programs Informational Rates Results

44 Discretionary Debt-to-Earnings Number of GE programs Informational Rates Results

ADDITIONAL GAINFUL EMPLOYMENT INFORMATION 45

For More GE Information  IFAP Gainful Employment Page: or from IFAP Homepage  Regulations  Dear Colleague Letters and Electronic Announcements  Frequently Asked Questions  Training  Resources 46

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