Gainful Employment
Understanding the Metricsand
Release of Informational Rates
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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
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GOALS OF GAINFUL EMPLOYMENT INITIATIVE
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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
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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
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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
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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
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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?
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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 ProgramsSchool Review
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STATUS OF GAINFUL EMPLOYMENT REGULATIONS
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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."
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GAINFUL EMPLOYMENT STATUTORY FRAMEWORK
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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, 2010 -Two sets of Final Rules published with effective dates of July 1, 2011- Disclosures Reporting Adding New Programs
June 13, 2011 - Final Rules on metrics to define gainful employment programs published with effective date of July 1, 2012
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INFORMATIONAL DEBT MEASURES AND LOAN
MEDIANS
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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 21 - 25
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
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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
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Informational Debt Measures
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
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Informational Debt Measures
• OPEID• School name• Street address• City• State• Zip Code• Institution type• CIP Code• CIP Name• Credential Level
Repayment Rate Numerator Denominator
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School and Program Identification Information
Debt-to-Earnings Annual Ratio Numerator Denominator
Debt-to-Earnings Discretionary Ratio Numerator Denominator
Program SpecificDebt Measures
Loan Medians
• OPEID• School name• Street address• City• State• Zip Code• Institution type• CIP Code• CIP Name• Credential Level
Title IV Loan Median
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School and Program Identification Information
Private Loan Median
Institutional Loan Median
Program SpecificLoan 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”)
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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.
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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.
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REPAYMENT RATE
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Repayment Rate
The percentage of a Gainful Employment Program’s former students who are repaying their Title IV student loans each year.
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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.
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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.
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Repayment Rate
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Example:Former Student OOPB
Student A $ 2,000Student B 3,000Student C 5,000Student 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
Repayment Rate
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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
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Debt-to-Earnings Ratios
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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
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Annual Debt-to-Earnings Ratio
Discretionary Debt-to-Earnings Ratio
Average Annual Loan Payment AmountMean 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
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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.
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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
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Debt-to-Earnings Ratios
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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
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Process Overview
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ED provides institutions
with debt measures
ED computes debt measures
SSA returns median & mean earnings
by program
ED sendsstudent
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 ProgramsIndividual educational programs that had the
Debt-to-Earnings Ratios calculated
4,614 Programs
Individual educational programs that had a
Repayment Rate calculated
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Repayment Rate
Number of Programs
Informational Rates Results
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Annual Debt-to-EarningsNumber of Programs
Informational Rates Results
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Discretionary Debt-to-Earnings
Number of GE programs
Informational Rates Results
ADDITIONAL GAINFUL EMPLOYMENT INFORMATION
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For More GE Information
IFAP Gainful Employment Page: http://ifap.ed.gov/GainfulEmploymentInfo/ or from IFAP Homepage Regulations Dear Colleague Letters and Electronic
Announcements Frequently Asked Questions Training Resources
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