ACCT Statement on Gainful Employment and Financial Value Transparency Rule
Contact: Carrie Warick-Smith
On Wednesday, September 28, 2023, the Department of Education (The Department) released its regulatory rule concerning Gainful Employment (GE) and Financial Value Transparency. The rule establishes a two-tier accountability system for GE programs: a debt-to-earnings metric and an earnings premium.
The debt-to-earnings metric dictates that to pass and maintain Tile IV eligibility, graduates from a GE program who incurred debt for the program must pay no more than 8% of their annual income or no more than 20% of their discretionary income per year.
The Earnings Premium measure introduces a new metric in this GE rule. The metric will assess the earnings of graduates from GE programs who received federal financial aid. The metric will determine whether these graduates can earn at least as much as a typical high school graduate from the same state, based on the performance in the labor force of those workers between the ages of 25 and 34.
While the current posting is the unofficial rule, the official rule is expected to be published in the federal register by the end of this week. The rule will take effect starting on July 1, 2024. It largely reflects the proposed rule published during the Notice of Proposed Rulemaking (NPRM) period. However, the final rule does make some minor, modest changes that should benefit some of our smallest institutions.
In response to the announced rule, ACCT President and CEO Jee Hang Lee said the following:
“As an overarching principle, ACCT supports consumer information for students and strives to support our community colleges in providing the best possible education and training programs.
“For many years, we have advocated for a measure that is focused on student borrowers and their ability to repay their debt as the most important student and taxpayer protection. The inclusion of this new earnings metric will likely limit access to open access institutions in fields necessary to our communities but in lower-wage fields.
“We are concerned about the decision not to include an alternate earnings appeal process. Further, our under-resourced institutions will have to absorb an increased administrative burden even beyond former GE rules given that previously programs without borrowers were exempt.
“We do appreciate the provision that institutions without any programs large enough to calculate the metrics will be exempt from all reporting requirements. Exempting institutions in the U.S. territories from the accountability provisions will also support continued access for students in those locations. We also applaud the inclusion of all Title IV-eligible aid programs, and not just select workforce credential programs, in the Financial Value Transparency metric.”
Programs that fail to meet either metric in a single year will have to notify students in the program about the risks of losing Title IV eligibility. Programs that fail the same metric in two out of three consecutive years will become ineligible for Title IV aid.
To calculate the metrics, the Department will look at program cohorts two-years long where at least 30 students completed the programs and received federal financial aid. If programs don’t meet that threshold, then the Department will look at programs with cohorts four-years long where at least 30 students completed the programs and received federal financial aid.
The rule also establishes a new Financial Value Transparency metric that will require nearly all GE and non-GE programs to report data to the Department to determine debt-to-earnings and earnings premium metrics. This data will then be available to all students and prospective students via a website run by the Department. Only GE programs will be at risk of losing Title IV eligibility.