[Federal Register Volume 83, Number 157 (Tuesday, August 14, 2018)]
[Proposed Rules]
[Pages 40167-40183]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17531]
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DEPARTMENT OF EDUCATION
34 CFR Parts 600 and 668
[Docket ID ED-2018-OPE-0042]
RIN 1840-AD31
Program Integrity: Gainful Employment
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Secretary proposes to rescind the gainful employment (GE)
regulations, which added to the Student Assistance General Provisions
[[Page 40168]]
requirements for programs that prepare students for gainful employment
in a recognized occupation. The Department plans to update the College
Scorecard, or a similar web-based tool, to provide program-level
outcomes for all higher education programs, at all institutions that
participate in the programs authorized by title IV of the Higher
Education Act of 1965, which would improve transparency and inform
student enrollment decisions through a market-based accountability
system.
DATES: We must receive your comments on or before September 13, 2018.
ADDRESSES: Submit your comments through the Federal eRulemaking Portal
or via postal mail, commercial delivery, or hand delivery. We will not
accept comments submitted by fax or by email or those submitted after
the comment period. To ensure that we do not receive duplicate copies,
please submit your comments only once. In addition, please include the
Docket ID at the top of your comments.
Federal eRulemaking Portal: Go to www.regulations.gov to
submit your comments electronically. Information on using
Regulations.gov, including instructions for accessing agency documents,
submitting comments, and viewing the docket, is available on the site
under ``Help.''
Postal Mail, Commercial Delivery, or Hand Delivery: The
Department strongly encourages commenters to submit their comments
electronically. However, if you mail or deliver your comments about the
proposed regulations, address them to Ashley Higgins, U.S. Department
of Education, 400 Maryland Ave. SW, Mail Stop 294-20, Washington, DC
20202.
Privacy Note: The Department's policy is to make all comments
received from members of the public available for public viewing in
their entirety on the Federal eRulemaking Portal at
www.regulations.gov. Therefore, commenters should be careful to
include in their comments only information that they wish to make
publicly available.
FOR FURTHER INFORMATION CONTACT: Scott Filter, U.S. Department of
Education, 400 Maryland Ave. SW, Room 290-42, Washington, DC 20024.
Telephone: (202) 453-7249. Email: [email protected].
If you use a telecommunications device for the deaf (TDD) or a text
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.
SUPPLEMENTARY INFORMATION:
Executive Summary:
Purpose of This Regulatory Action:
As discussed in more detail later in this notice of proposed
rulemaking (NPRM), the proposed regulations would rescind the GE
regulations and remove them from subpart Q of the Student Assistance
and General Provisions in 34 CFR part 668.
We base our proposal to rescind the GE regulations on a number of
findings, including research results that undermine the validity of
using the regulations' debt-to-earnings (D/E) rates measure to
determine continuing eligibility for participation in the programs
authorized by title IV of the Higher Education Act of 1965, as amended
(title IV, HEA programs). These findings were not accurately
interpreted during the development of the 2014 GE regulations, were
published subsequent to the promulgation of those regulations, or were
presented by committee members at negotiated rulemaking sessions. The
Department has also determined that the disclosure requirements
included in the GE regulations are more burdensome than originally
anticipated and that a troubling degree of inconsistency and potential
error exists in job placement rates reported by GE programs that could
mislead students in making an enrollment decision. Additionally, the
Department has received consistent feedback from the community that the
GE regulations were more burdensome than previously anticipated through
the disclosure and reporting requirements that were promulgated in
2014.
Finally, the Department has determined that in order to adequately
inform student enrollment choices and create a framework that enables
students, parents, and the public to hold institutions of higher
education accountable, program-level outcomes data should be made
available for all title IV-participating programs. The Department plans
to publish these data using the College Scorecard, or its successor
site, so that students and parents can compare the institutions and
programs available to them and make informed enrollment and borrowing
choices. However, the College Scorecard is not the subject of this
regulation. For a more detailed discussion, see Significant Proposed
Regulations.
Section 410 of the General Education Provisions Act (GEPA)
authorizes the Secretary to make, promulgate, issue, rescind, and amend
rules and regulations governing the manner of operations of, and
governing the applicable programs administered by, the Department (20
U.S.C. 1221e-3). Additionally, section 414 of the Department of
Education Organization Act authorizes the Secretary to prescribe such
rules and regulations as the Secretary determines necessary or
appropriate to administer and manage the functions of the Secretary or
the Department (20 U.S.C. 3474).
Summary of the Major Provisions of This Regulatory Action: As
discussed under ``Purpose of This Regulatory Action,'' the proposed
regulations would rescind the GE regulations. Please refer to the
Summary of Proposed Changes section of this NPRM for more details on
the major provisions contained in this NPRM.
Costs and Benefits: As further detailed in the Regulatory Impact
Analysis, the benefits of the proposed regulations would include a
reduction in burden for some institutions, costs in the form of
transfers as a result of more students being able to enroll in a
postsecondary program, and more educational program choices for
students where they can use title IV aid.
Invitation to Comment: We invite you to submit comments regarding
these proposed regulations.
To ensure that your comments have maximum effect in developing the
final regulations, we urge you to identify clearly the specific section
or sections of the proposed regulations that each of your comments
addresses, and provide relevant information and data whenever possible,
even when there is no specific solicitation of data and other
supporting materials in the request for comment. We also urge you to
arrange your comments in the same order as the proposed regulations.
Please do not submit comments that are outside the scope of the
specific proposals in this NPRM, as we are not required to respond to
such comments.
We invite you to assist us in complying with the specific
requirements of Executive Orders 12866 and 13563 and their overall
requirement of reducing regulatory burden that might result from these
proposed regulations. Please let us know of any further ways we could
reduce potential costs or increase potential benefits while preserving
the effective and efficient administration of the Department's programs
and activities.
During and after the comment period, you may inspect all public
comments about the proposed regulations by accessing Regulations.gov.
You may also inspect the comments in person at 400 Maryland Ave. SW,
Washington, DC, between 8:30 a.m. and 4 p.m., Eastern Time, Monday
through Friday of each week except Federal holidays. To schedule a time
to inspect comments, please contact the person listed under FOR FURTHER
INFORMATION CONTACT.
Assistance to Individuals with Disabilities in Reviewing the
[[Page 40169]]
Rulemaking Record: On request, we will provide an appropriate
accommodation or auxiliary aid to an individual with a disability who
needs assistance to review the comments or other documents in the
public rulemaking record for the proposed regulations. To schedule an
appointment for this type of accommodation or auxiliary aid, please
contact the person listed under FOR FURTHER INFORMATION CONTACT.
Background
The Secretary proposes to amend parts 600 and 668 of title 34 of
the Code of Federal Regulations (CFR). The regulations in 34 CFR parts
600 and 668 pertain to institutional eligibility under the Higher
Education Act of 1965, as amended (HEA), and participation in title IV,
HEA programs. We propose these amendments to remove the GE regulations,
including the D/E rates calculations and the sanctions and alternate
earnings appeals related to those calculations for GE programs, as well
as the reporting, disclosure, and certification requirements applicable
to GE programs.
The Department seeks public comment on whether the Department
should amend 34 CFR 668.14 to require, as a condition of the Program
Participation Agreement, that institutions disclose, on the program
pages of their websites and in their college catalogues that, if
applicable, the program meets the requirements for licensure in the
State in which the institution is located and whether it meets the
requirements in any other States for which the institution has
determined whether the program enables graduates to become licensed or
work in their field; net-price, completion rates, withdrawal rates,
program size, and/or any other items currently required under the GE
disclosure regulations. The Department also asks whether it should
require institutions to provide links from each of its program pages to
College Scorecard, its successor site, or any other tools managed by
the Department.
Public Participation
On June 16, 2017, we published a notice in the Federal Register (82
FR 27640) announcing our intent to establish a negotiated rulemaking
committee under section 492 of the HEA to develop proposed regulations
to revise the GE regulations published by the Department on October 31,
2014 (79 FR 64889). We also announced two public hearings at which
interested parties could comment on the topics suggested by the
Department and propose additional topics for consideration for action
by the negotiated rulemaking committee. The hearings were held on--
July 10, 2017, in Washington, DC; and
July 12, 2017, in Dallas, TX.
Transcripts from the public hearings are available at https://www2.ed.gov/policy/highered/reg/hearulemaking/2017/index.html.
We also invited parties unable to attend a public hearing to submit
written comments on the proposed topics and to submit other topics for
consideration. Written comments submitted in response to the June 16,
2017, Federal Register notice may be viewed through the Federal
eRulemaking Portal at www.regulations.gov, within docket ID ED-2017-
OPE-0076. Instructions for finding comments are also available on the
site under ``Help.''
Negotiated Rulemaking
Section 492 of the HEA, 20 U.S.C. 1098a, requires the Secretary to
obtain public involvement in the development of proposed regulations
affecting programs authorized by title IV of the HEA. After obtaining
extensive input and recommendations from the public, including
individuals and representatives of groups involved in the title IV, HEA
programs, the Secretary in most cases must subject the proposed
regulations to a negotiated rulemaking process. If negotiators reach
consensus on the proposed regulations, the Department agrees to publish
without alteration a defined group of regulations on which the
negotiators reached consensus unless the Secretary reopens the process
or provides a written explanation to the participants stating why the
Secretary has decided to depart from the agreement reached during
negotiations. Further information on the negotiated rulemaking process
can be found at: www2.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html.
On August 30, 2017, the Department published a notice in the
Federal Register (82 FR 41197) announcing its intention to establish
two negotiated rulemaking committees and a subcommittee to prepare
proposed regulations governing the Federal Student Aid programs
authorized under title IV of the HEA. The notice set forth a schedule
for the committee meetings and requested nominations for individual
negotiators to serve on the negotiating committee.
The Department sought negotiators to represent the following
groups: Two-year public institutions; four-year public institutions;
accrediting agencies; business and industry; chief financial officers
(CFOs) and business officers; consumer advocacy organizations;
financial aid administrators; general counsels/attorneys and compliance
officers; legal assistance organizations that represent students;
minority-serving institutions; private, proprietary institutions with
an enrollment of 450 students or less; private, proprietary
institutions with an enrollment of 451 students or more; private, non-
profit institutions; State higher education executive officers; State
attorneys general and other appropriate State officials; students and
former students; and groups representing U.S. military service members
or veteran Federal student loan borrowers. The Department considered
the nominations submitted by the public and chose negotiators who would
represent the various constituencies.
The negotiating committee included the following members:
Laura Metune, California Community Colleges, and Matthew Moore
(alternate), Sinclair Community College, representing two-year public
institutions.
Pamela Fowler, University of Michigan-Ann Arbor, and Chad Muntz
(alternate), The University System of Maryland, representing four-year
public institutions.
Anthony Mirando, National Accrediting Commission of Career Arts and
Sciences, and Mark McKenzie (alternate), Accreditation Commission for
Acupuncture and Oriental Medicine, representing accrediting agencies.
Roberts Jones, Education & Workforce Policy, and Jordan Matsudaira
(alternate), Urban Institute and Cornell University, representing
business and industry.
Sandy Sarge, SARGE Advisors, and David Silverman (alternate), The
American Musical and Dramatic Academy, representing CFOs and business
officers.
Whitney Barkley-Denney, Center for Responsible Lending, and
Jennifer Diamond (alternate), Maryland Consumer Rights Coalition,
representing consumer advocacy organizations.
Kelly Morrissey, Mount Wachusett Community College, and Andrew
Hammontree (alternate), Francis Tuttle Technology Center, representing
financial aid administrators.
Jennifer Blum, Laureate Education, Inc., and Stephen Chema
(alternate), Ritzert & Layton, PC, representing general counsels/
attorneys and compliance officers.
Johnson M. Tyler, Brooklyn Legal Services, and Kirsten Keefe
(alternate), Empire Justice Center, representing legal
[[Page 40170]]
assistance organizations that represent students.
Thelma L. Ross, Prince George's Community College, and John K.
Pierre (alternate), Southern University Law Center, representing
minority-serving institutions.
Jessica Barry, School of Advertising Art, and Neal Heller
(alternate), Hollywood Institute of Beauty Careers, representing
private, proprietary institutions with an enrollment of 450 students or
less.
Jeff Arthur, ECPI University, and Marc Jerome (alternate), Monroe
College, representing private, proprietary institutions with an
enrollment of 451 students or more.
C. Todd Jones, Association of Independent Colleges & Universities
in Ohio, and Tim Powers (alternate), National Association of
Independent Colleges and Universities, representing private, non-profit
institutions.
Christina Whitfield, State Higher Education Executive Officers
Association, representing State higher education executive officers.
Christopher Madaio, Office of the Attorney General of Maryland, and
Ryan Fisher (alternate), Office of the Attorney General of Texas,
representing State attorneys general and other appropriate State
officials.
Christopher Gannon, United States Student Association, and Ahmad
Shawwal (alternate), University of Virginia, representing students and
former students.
Daniel Elkins, Enlisted Association of the National Guard of the
United States, and John Kamin (alternate), The American Legion's
National Veterans Employment & Education Division, representing groups
representing U.S. military service members or veteran Federal student
loan borrowers.
Gregory Martin, U.S. Department of Education, representing the
Department.
The negotiated rulemaking committee met to develop proposed
regulations on December 4-7, 2017, February 5-8, 2018, and March 12-15,
2018.
At its first meeting, the negotiating committee reached agreement
on its protocols and proposed agenda. The protocols provided, among
other things, that the committee would operate by consensus. Consensus
means that there must be no dissent by any member in order for the
committee to have reached agreement. Under the protocols, if the
committee reached a final consensus on all issues, the Department would
use the consensus-based language in its proposed regulations.
Furthermore, the Department would not alter the consensus-based
language of its proposed regulations unless the Department reopened the
negotiated rulemaking process or provided a written explanation to the
committee members regarding why it decided to depart from that
language.
During the first meeting, the negotiating committee agreed to
negotiate an agenda of eight issues related to student financial aid.
These eight issues were: Scope and purpose, gainful employment metrics
(later renamed debt-to-earnings metrics), debt calculations, sanctions,
alternate earnings appeals, program disclosures, reporting
requirements, and certification requirements. Under the protocols, a
final consensus would have to include consensus on all eight issues.
During committee meetings, the committee reviewed and discussed the
Department's drafts of regulatory language and the committee members'
alternative language and suggestions. At the final meeting on March 15,
2018, the committee did not reach consensus on the Department's
proposed regulations. For this reason, and according to the committee's
protocols, all parties who participated or were represented in the
negotiated rulemaking and the organizations that they represent, in
addition to all members of the public, may comment freely on the
proposed regulations. For more information on the negotiated rulemaking
sessions, please visit: https://www2.ed.gov/policy/highered/reg/hearulemaking/2017/gainfulemployment.html.
Data Correction
During the third meeting of the negotiated rulemaking committee,
the Department provided negotiators with a number of scatterplots in
response to a request from several negotiators to compare student loan
repayment rates between Pell Grant recipients and students who did not
receive a Pell Grant at individual institutions. The Department
incorrectly concluded that the repayment rate between Pell Grant
recipients and Pell Grant non-recipients at all institutions was 1:1.
While the repayment rates of Pell Grant recipients and non-recipients
are correlated, there is not a 1:1 relationship between them. The
Department's analysis shows the difference between the repayment rates
of Pell Grant recipients and non-recipients is about 20 percentage
points on average. At institutions with low repayment rates among all
students, the gap between Pell Grant recipients and non-recipients is
relatively higher. The gap shrinks among institutions with very high
overall repayment rates; however, many of these institutions serve
small proportions of Pell Grant recipients and are highly selective
institutions (based on mean SAT math scores). The negotiators have been
informed of the earlier error and the updated scatterplots are
available on the Department's GE negotiated rulemaking website.
Summary of Proposed Changes
The proposed regulations would rescind the GE regulations in
subpart Q of 34 CFR part 668, which establish the eligibility
requirements for a program that prepares students for gainful
employment in a recognized occupation, including the D/E rates
measures, alternate earnings appeals, reporting and disclosure
requirements, and certifications.
Significant Proposed Regulations
We group major issues according to subject. We discuss other
substantive issues under the sections of the proposed regulations to
which they pertain. Generally, we do not address proposed regulatory
provisions that are technical or otherwise minor in effect.
Origin and Purpose of the Gainful Employment Regulations
The definition of ``gainful employment'' established in the 2014
regulations created a new metric that established bright-line standards
for a GE program's continuing participation in title IV, HEA programs.
The GE regulations establish a methodology for calculating mean D/E
rates for programs that prepare students for gainful employment in a
recognized occupation. The GE regulations also establish a range of
acceptable D/E rates programs must maintain in order to retain
eligibility to participate in the title IV, HEA programs. GE programs
include non-degree programs at public and non-profit institutions and
all programs (including undergraduate, graduate, and professional
degree programs) at proprietary institutions.
Under the regulations, GE programs must have a graduate debt-to-
discretionary earnings ratio of less than or equal to 20 percent or
debt-to-annual earnings ratio of less than or equal to 8 percent to
receive an overall passing rate. Programs with both a discretionary
earnings rate greater than 30 percent (or a negative or zero
denominator) and an annual earnings rate greater than 12 percent (or a
zero denominator) receive an overall failing rate. Programs that fail
the D/E rates measure for two out of three consecutive years lose title
IV eligibility. Non-passing programs that have debt-to-discretionary
income ratios greater than 20 percent and less than or equal to 30
percent or debt-to-annual income ratios greater than 8 percent and
[[Page 40171]]
less than or equal to 12 percent are considered to be in the ``zone.''
Programs with a combination of zone or failing overall rates for four
consecutive years lose title IV eligibility.
The first D/E rates were published in 2017, and the Department's
analysis of those rates raises concern about the validity of the metric
and how it affects the opportunities for Americans to prepare for high-
demand occupations in the healthcare, hospitality, and personal
services industries, among others. At a time when 6 million jobs remain
unfilled due to the lack of qualified workers,\1\ the Department is re-
evaluating the wisdom of a regulatory regime that creates additional
burden for, and restricts, programs designed to increase opportunities
for workforce readiness. We further believe the GE regulations
reinforce an inaccurate and outdated belief that career and vocational
programs are less valuable to students and less valued by society, and
that these programs should be held to a higher degree of accountability
than traditional two- and four-year degree programs that may have less
market value.
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\1\ U.S. Department of Labor--Bureau of Labor Statistics. (July
10, 2018). Economic News Release: Job Openings and Labor Turnover
Summary. Available at www.bls.gov/news.release/jolts.nr0.htm.
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Research Findings That Challenge the Accuracy and Validity of the D/E
Rates Measure
In promulgating the 2011 and 2014 regulations, the Department cited
as justification for the 8 percent D/E rates threshold a research paper
published in 2006 by Baum and Schwartz that described the 8 percent
threshold as a commonly utilized mortgage eligibility standard.\2\
However, the Baum & Schwartz paper makes clear that the 8 percent
mortgage eligibility standard ``has no particular merit or
justification'' when proposed as a benchmark for manageable student
loan debt.\3\ The Department previously dismissed this statement by
pointing to Baum and Schwartz's acknowledging the ``widespread
acceptance'' of the 8 percent standard and concluding that it is ``not
unreasonable.'' 79 FR 64889, 64919. Upon further review, we believe
that the recognition by Baum and Schwartz that the 8 percent mortgage
eligibility standard ``has no particular merit or justification'' when
proposed as a benchmark for manageable student loan debt is more
significant than the Department previously acknowledged and raises
questions about the reasonableness of the 8 percent threshold as a
critical, high-stakes test of purported program performance.
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\2\ Baum, S. & Schwartz, S. How Much Debt is Too Much? Defining
Benchmarks for Manageable Student Debt. College Board, 2008.
Available at https://files.eric.ed.gov/fulltext/ED562688.pdf.
\3\ Ibid.
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Research published subsequent to the promulgation of the GE
regulations adds to the Department's concern about the validity of
using D/E rates as to determine whether or not a program should be
allowed to continue to participate in title IV programs. As noted in
the 2014 proposed rule, the Department believed that an improvement of
quality would be reflected in the program's D/E rates (79 FR 16444).
However, the highest quality programs could fail the D/E rates measure
simply because it costs more to deliver the highest quality program and
as a result the debt level is higher.
Importantly, the HEA does not limit title IV aid to those students
who attend the lowest cost institution or program. On the contrary,
because the primary purpose of the title IV, HEA programs is to ensure
that low-income students have the same opportunities and choices in
pursuing higher education as their higher-income peers, title IV aid is
awarded based on the institution's actual cost of attendance, rather
than a fixed tuition rate that limits low-income students to the lowest
cost institutions.\4\
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\4\ Gladieux, L. Federal Student Aid Policy: A History and an
Assessment. Financing Postsecondary Education: The Federal Role.
October 1995. Available at https://www2.ed.gov/offices/OPE/PPI/FinPostSecEd/gladieux.html.
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Other research findings suggest that D/E rates-based eligibility
creates unnecessary barriers for institutions or programs that serve
larger proportions of women and minority students. Such research
indicates that even with a college education, women and minorities, on
average, earn less than white men who also have a college degree, and
in many cases, less than white men who do not have a college degree.\5\
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\5\ Ma, J., Pender, M. & Welch, M. Education Pays 2016: The
Benefits of Higher Education for Individuals and Society,
CollegeBoard, 2016. Fig. 2.4.
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Disagreement exists as to whether this is due to differences in
career choices across subgroups, time out of the workforce for
childcare responsibilities, barriers to high-paying fields that
disproportionately impact certain groups, or the interest of females or
minority students in pursuing careers that pay less but enable them to
give back to their communities. Regardless of the cause of pay
disparities, the GE regulations could significantly disadvantage
institutions or programs that serve larger proportions of women and
minority students and further reduce the educational options available
to those students.
It is also important to highlight the importance of place in
determining which academic programs are available to students. A
student may elect to enroll in a program that costs more simply because
a lower-cost program is too far from home or work or does not offer a
schedule that aligns with the student's work or household
responsibilities. The average first-time undergraduate student
attending a two-year public institution enrolls at an institution
within eight miles of his or her home. The distance increases to 18
miles for the average first-time undergraduate student enrolling at a
four-year public institution.\6\ Accordingly, we believe that while it
is important for a student to know that a program could result in
higher debt, it is not appropriate to eliminate the option simply
because a lower-cost program exists, albeit outside of the student's
reasonable travel distance. In the same way that title IV programs
enable traditional students to select the more expensive option simply
because of the amenities an institution offers, or its location in the
country, they should similarly enable adult learners to select the more
expensive program due to its convenience, its more personalized
environment, or its better learning facilities. We support providing
more information to students and parents that enables them to compare
the outcomes achieved by graduates of the programs available to them.
However, due to a number of concerns with the calculation and relevance
of the debt level included in the rates we do not believe that the D/E
rates measure achieves a level of accuracy that it should alone
determine whether or not a program can participate in title IV
programs.
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\6\ Hillman, N. & Weichman, T. Education Deserts: The Continued
Significance of ``Place'' in the Twenty-First Century, American
Council on Education, 2016. Available at www.acenet.edunews-room/
Pages/CPRS-Viewpoints-Education-Deserts.aspx.
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While the Department denied the impact of these other factors in
the 2014 GE regulations, it now recognizes a number of errors included
in its prior analysis. For example, in the 2014 final rule (79 FR
64889, 65041-57), the Department stated that changes in economic
outlook would not cause a program to fail the D/E rates measure or
remain in the zone for four years. This conclusion was based on the
finding that the average recession lasted for 11.1 months, which would
not be long enough to impact a program's outcomes
[[Page 40172]]
for the number of years required to go from ``zone'' to failing.
However, the Great Recession lasted for well over two years, and was
followed by an extended ``jobless'' recovery, which would have
significantly impacted debt and earnings outcomes for a period of time
that would have exceeded the zone period, had the GE regulations been
in place during that period.\7\ The Great Recession had an unusually
profound impact on recent college graduates, who were underemployed at
an historic rate, meaning that graduates were working in jobs that
prior to the Great Recession did not require a college credential.\8\
The Department concedes that an extended recession coupled with rampant
underemployment, could have a significant impact on a program's D/E
rates for a period of time that would span most or all of the zone
period. Underemployment during the Great Recession was not limited to
the graduates of GE programs, but included graduates of all types of
institutions, including elite private institutions.\9\
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\7\ www.federalreservehistory.org/essays/great_recession_of_200709.
\8\ Abel, Jaison & Deitz, Richard. Underemployment in the Early
Career of College Graduates Following the Great Recession, Working
Paper No. 22654, National Bureau of Economic Research, September
2016. Available at www.nber.org/papers/w22654.
\9\ https://money.cnn.com/2011/05/17/news/economy/recession_lost_generation/index.htm.
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The GE regulations were intended to address the problem of programs
that are supposed to provide training that prepares students for
gainful employment in a recognized occupation, but were leaving
students with unaffordable levels of loan debt compared to the average
program earnings (79 FR 16426). However, the Department believes there
are other tools now available to enable students with lower incomes to
manage high levels of debt. While the existence of income-driven
repayment plans does not address the high cost of college--and, in
fact, could make it even easier for students to borrow more than they
need and institutions to charge high prices--the Department's plans to
increase transparency will help address these issues. Furthermore, the
increased availability of these repayment plans with longer repayment
timelines is inconsistent with the repayment assumptions reflected in
the shorter amortization periods used for the D/E rates calculation in
the GE regulations.
In addition, a program's D/E rates can be negatively affected by
the fact that it enrolls a large number of adult students who have
higher Federal borrowing limits, thus higher debt levels, and may be
more likely than a traditionally aged student to seek part-time work
after graduation in order to balance family and work responsibilities.
The Department recognizes that it is inappropriate to penalize
institutions simply because the students they serve take advantage of
the higher borrowing capacity Congress has made available to those
borrowers. It is also inappropriate to penalize institutions because
students seek part-time work rather than full-time work, or are
building their own businesses, which may result in lower earnings early
on. Regardless of whether students elect to work part-time or full-
time, the cost to the institution of administering the program is the
same, and it is the cost of administering the program that determines
the cost of tuition and fees. In general, programs that serve large
proportions of adult learners may have very different outcomes from
those that serve large proportions of traditionally aged learners, and
yet the D/E rates measure fails to take any of these important factors
into account.
Most importantly, the first set of D/E rates, published in 2016,
revealed that D/E rates, and particularly earnings, vary significantly
from one occupation to the next, and across geographic regions within a
single occupation. The Department had not predicted such substantial
differences in earnings due to geography, which may have been
exacerbated by the Great Recession and the speed with which individual
States reduced their unemployment rate.
While the Department intended for D/E rates to serve as a mechanism
for distinguishing between high- and low-performing programs, data
discussed during the third session of the most recent negotiated
rulemaking demonstrated that even a small change in student loan
interest rates could shift many programs from a ``passing'' status to
``failing,'' or vice versa, even if nothing changed about the programs'
content or student outcomes. The Department believes that examples such
as that illustrated here should be corrected and our justifications in
the 2014 GE regulation did not adequately take these nuances into
account sufficiently. Table 1 shows how changes in interest rate would
affect outcomes under the D/E rates measure. For example, if the
interest rate is seven percent, 831 programs would fail compared to
only 716 programs if the interest rate is six percent.
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\10\ The count of programs includes programs that had
preliminary rates calculated, but were not designated with an
official pass, zone, or fail status due to reaccreditation and
reinstatements of eligibility during the validation process of
establishing D/E rates.
Table 1--Number and Percentage of GE 2015 Programs That Would Pass, Fail, or Fall Into the Zone Using Different Interest Rates 10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of programs Percentage of programs
Interest rate (%) -----------------------------------------------------------------------------------------------
Pass Zone Fail Pass Zone Fail
--------------------------------------------------------------------------------------------------------------------------------------------------------
3....................................................... 7,199 998 440 83 12 5
4....................................................... 7,030 1,085 522 81 13 6
5....................................................... 6,887 1,135 615 80 13 7
6....................................................... 6,720 1,201 716 78 14 8
7....................................................... 6,551 1,255 831 76 15 10
8....................................................... 6,326 1,353 958 73 16 11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Department analysis of GE 2015 rates.
The Department agrees with a statement made by a negotiator that
any metric that could render a program ineligible to participate in
title IV, HEA programs simply because the economy is strong and
interest rates rise is faulty. The Department believes that it is
during these times of economic growth, when demand for skilled workers
is greatest, that it is most critical that shorter-term career and
technical programs are not unduly burdened or eliminated.
In addition, the Department now recognizes that assigning a 10-year
amortization period to graduates of
[[Page 40173]]
certificate and associate degree programs for the purpose of
calculating D/E rates creates an unacceptable and unnecessary double
standard since the REPAYE plan regulations promulgated in 2015 provide
a 20-year amortization period for these same graduates. The REPAYE plan
acknowledges that undergraduate completers may well need to extend
payments over a longer amortization period, and makes it clear that
extended repayment periods are an acceptable and reasonable way to help
students manage their repayment obligations. Therefore, it is not
appropriate to use an amortization period of less than 20 years for any
undergraduate program D/E rates calculations or of less than 25 years
for any graduate program D/E rates calculations.
Concerns About Disclosures Required Under the GE Regulations
As the Department is proposing to rescind the GE regulations in
total, the disclosures required under the current regulations also
would be rescinded. Generally, we are concerned that it is not
appropriate to require these types of disclosures for only one type of
program when such information would be valuable for all programs and
institutions that receive title IV, HEA funds. However, we cannot
expand the GE regulations to include programs that are not GE programs.
In that regard, as indicated above, we are interested in comments on
whether the Department should require that all institutions disclose
information, such as net price, program size, completion rates, and
accreditation and licensing requirements, on their program web pages,
or if doing so is overly burdensome for institutions.
The Department has also discovered a variety of challenges and
errors associated with the disclosures required under the GE
regulations. For example, there is significant variation in
methodologies used by institutions to determine and report in-field job
placement rates, which could mislead students into choosing a lower
performing program that simply appears to be higher performing because
a less rigorous methodology was employed to calculate in-field job
placement rates.
In some cases, a program is not required to report job placement
outcomes because it is not required by its accreditor or State to do
so. In other cases, GE programs at public institutions in some States
(such as community colleges in Colorado) define an in-field job
placement for the purpose of the GE disclosure as any job that pays a
wage, regardless of the field in which the graduate is working.
Meanwhile, institutions accredited by the Accrediting Commission of
Career Schools and Colleges must consider the alignment between the job
and the majority of the educational and training objectives of the
program, which can be a difficult standard to meet since educational
programs are designed to prepare students broadly for the various jobs
that may be available to them, but jobs are frequently more narrowly
defined to meet the needs of a specific employer.\11\
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\11\ ACCSC Standards of Accreditation, Appendix VII--Guidelines
for Employment Classification, 2015, Available at www.accsc.org/UploadedDocuments/July%202015/Guidelines%20for%20Employment.pdf.
---------------------------------------------------------------------------
The original 2011 GE regulations required NCES to ``develop a
placement rate methodology and the processes necessary for determining
and documenting student employment.'' \12\ This requirement arose out
of negotiator concerns about the complexity and subjectivity of the
many job placement definitions used by States, institutional
accreditors, programmatic accreditors and institutions themselves to
evaluate outcomes. The Department convened a Technical Review Panel
(TRP), but in 2013 the TRP reported that not only were job placement
determinations ``highly subjective'' in nature, but that the TRP could
not come to consensus on a single, acceptable definition of a job
placement that could be used to report this outcome on GE disclosures,
nor could it identify a reliable data source to enable institutions to
accurately determine and report job placement outcomes.\13\ In light of
the failure of the TRP to develop a consistent definition of a job
placement, and well-known instances of intentional or accidental job
placement rate misrepresentations, the Department believes it would be
irresponsible to continue requiring institutions to report job
placement rates. Instead, the Department believes that program-level
earnings data that will be provided by the Secretary through the
College Scorecard or its successor is the more accurate and reliable
way to report job outcomes in a format that students can use to compare
the various institutions and programs they are considering.
---------------------------------------------------------------------------
\12\ https://nces.ed.gov/npec/data/Calculating_Placement_Rates_Background_Paper.pdf.
\13\ https://www2.ed.gov/policy/highered/reg/hearulemaking/2012/ipeds-summary91013.pdf.
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The Department also believes that it underestimated the burden
associated with distributing the disclosures directly to prospective
students. In 2018, the Department announced that it was allowing
institutions additional time to meet the requirement in Sec.
668.412(e) to directly distribute the disclosure template to
prospective students, as well as the requirement in Sec. 668.412(d) to
include the disclosure template or a link thereto in program
promotional materials, pending negotiated rulemaking (82 FR 30975; 83
FR 28177). A negotiator representing financial aid officials confirmed
our concerns, stating that large campuses, such as community colleges
that serve tens of thousands of students and are in contact with many
more prospective students, would not be able to, for example,
distribute paper or electronic disclosures to all the prospective
students in contact with the institution. Although in decades past,
institutions may have included these materials in the packets mailed to
a prospective student's home; many institutions no longer mail paper
documents, and instead rely on web-based materials and electronic
enrollment agreements. The Department notes that Sec. 668.412(e)
requires that disclosures be made only to a prospective student before
that individual signs an enrollment agreement, completes registration,
or makes a financial commitment to the institution and that the
institution may provide the disclosure to the student by hand-
delivering the disclosure template to the prospective student or
sending the disclosure template to the primary email address used by
the institution for communicating with the prospective student.
However, ED recognizes that even this requirement has an associated
burden, especially since institutions are required to retain
documentation that each student acknowledges that they have received
the disclosure. The Department believes that the best way to provide
disclosures to students is through a data tool that is populated with
data that comes directly from the Department, and that allows
prospective students to compare all institutions through a single
portal, ensuring that important consumer information is available to
students while minimizing institutional burden.
Finally, more than a few disclosures exclude outcomes because the
program had fewer than 10 graduates in the award year covered by the
disclosure template. Because the Department does not collect data from
the disclosures through a central portal or tool, it has been unable to
compare the number of completers reported on the GE disclosures posted
by programs with the number reported through other survey tools.
Therefore, it is difficult to know if these reports of less than 10
graduates are accurate.
[[Page 40174]]
Covered Institutions and Programs
Under its general authority to publish data related to title IV
program outcomes, and in light of changes to the National Student Loan
Data System related to the 150% subsidized loan rules requiring
institutions to report program CIP codes, the Department believes that
it is important and necessary to publish program-level student outcomes
to inform consumer choice and enable researchers and policy makers to
analyze program outcomes. The Department does not believe that GE data
can adequately meet this goal or inform consumer choice since only a
small proportion of postsecondary programs are required to report
program-level outcomes data and, even among GE programs, many programs
graduate fewer than 10 students per year and are not required to
provide student outcome information on the GE disclosure. In addition,
the Department does not believe it is appropriate to attach punitive
actions to program-level outcomes published by some programs but not
others. In addition, the Department believes that it is more useful to
students and parents to publish actual median earnings and debt data
rather than to utilize a complicated equation to calculate D/E rates
that students and parents may not understand and that cannot be
directly compared with the debt and earnings outcomes published by non-
GE programs. For all the reasons set forth in this NPRM, the Department
believes it would be unwise policy to continue using the D/E rates for
reporting or eligibility purposes.
In addition, the GE regulations targeted proprietary institutions,
aiming to eliminate poor performers and ``bad actors'' in the sector.
While bad actors do exist in the proprietary sector, the Department
believes that there are good and bad actors in all sectors and that the
Department, States, and accreditors have distinct roles and
responsibilities in holding all bad actors accountable. Prior to 2015,
when the Department started collecting program-level data for all
completers, the GE regulations provided a unique opportunity for the
Department to calculate program-level outcomes. Now that the Department
collects program information for all completers, it can easily expand
program-level outcomes reporting for all institutions. Therefore, not
only does the Department believe that the D/E rates calculation is not
an appropriate measure for determining title IV eligibility, the
availability of program-level data for all completers makes it possible
to provide median earnings and debt data for all programs, thereby
providing a more accurate mechanism for providing useful information to
consumers.
Further, the Department has reviewed additional research findings,
including those published by the Department in follow-up to the
Beginning Postsecondary Survey of 1994, and determined that student
demographics and socioeconomic status play a significant role in
determining student outcomes.\14\ The GE regulations failed to take
into account the abundance of research that links student outcomes with
a variety of socioeconomic and demographic risk factors, and similarly
failed to acknowledge that institutions serving an older student
population will likely have higher median debt since Congress has
provided higher borrowing limits for older students who are less likely
than traditional students to receive financial support from parents.
---------------------------------------------------------------------------
\14\ https://nces.ed.gov/pubs/web/97578g.asp.
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Students select institutions and college majors for a wide variety
of reasons, with cost and future earnings serving as only two data
points within a more complex decision-making process. For the reasons
cited throughout this document, the Department has reconsidered its
position.
Well-publicized incidents of non-profit institutions
misrepresenting their selectivity levels, inflating the job placement
rates of their law school graduates, and even awarding credit for
classes that never existed demonstrate that bad acts occur among
institutions regardless of their tax status.15 16 17 18
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\15\ www.forbes.com/sites/stevecohen/2012/09/29/the-three-biggest-lies-in-college-admission/#9ed5ccc1754f.
\16\ www.nytimes.com/2012/02/01/education/gaming-the-college-rankings.html.
\17\ www.cnn.com/2014/10/22/us/unc-report-academic-fraud/index.html.
\18\ www.wsj.com/articles/temple-university-fires-a-dean-over-falsified-rankings-data-1531498822.
---------------------------------------------------------------------------
The GE regulations underestimated the cost of delivering a program
and practices within occupations that may skew reported earnings.
According to Delisle and Cooper, because public institutions receive
State and local taxpayer subsidies, ``even if a for-profit institution
and a public institution have similar overall expenditures (costs) and
graduate earnings (returns on investment), the for-profit institution
will be more likely to fail the GE rule, since more of its costs are
reflected in student debt.'' \19\ Non-profit, private institutions
also, in general, charge higher tuition and have students who take on
additional debt, including enrolling in majors that yield societal
benefits, but not wages commensurate with the cost of the institution.
---------------------------------------------------------------------------
\19\ Delisle, J. and Cooper, P. (2017). Measuring Quality or
Subsidy? How State Appropriations Rig the Federal Gainful Employment
Test. Do state subsidies for public universities favor the affluent?
Brookings Institute. Available at www.aei.org/publication/measuring-quality-or-subsidy-how-state-appropriations-rig-the-federal-gainful-employment-test/.
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Challenges have been brought alleging cosmetology and hospitality
programs have felt a significant impact due to the GE regulations. In
the case of cosmetology programs, State licensure requirements and the
high costs of delivering programs that require specialized facilities
and expensive consumable supplies may make these programs expensive to
operate, which may be why many public institutions do not offer them.
In addition, graduates of cosmetology programs generally must build up
their businesses over time, even if they rent a chair or are hired to
work in a busy salon.
Finally, since a great deal of cosmetology income comes from tips,
which many individuals fail to accurately report to the Internal
Revenue Service, mean and median earnings figures produced by the
Internal Revenue Service under-represent the true earnings of many
workers in this field in a way that institutions cannot control.\20\
Litigation filed by the American Association of Cosmetology Schools
(AACS) asserting similar claims highlighted the importance of the
alternate earnings appeal to allow institutions to account for those
earnings.
---------------------------------------------------------------------------
\20\ https://www.irs.gov/newsroom/irs-releases-new-tax-gap-estimates-compliance-rates-remain-statistically-unchanged-from-previous-study.
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While the GE regulations include an alternate earnings appeals
process for programs to collect data directly from graduates, the
process for developing such an appeal has proven to be more difficult
to navigate than the Department originally planned. The Department has
reviewed earnings appeal submissions for completeness and considered
response rates on a case-by-case basis since the response rate
threshold requirements were set aside in the AACS litigation. Through
this process, the Department has corroborated claims from institutions
that the survey response requirements of the earnings appeals
methodology are burdensome given that program graduates are not
required to report their earnings to their institution or to the
Department, and there is no mechanism in place for institutions to
track students after they complete the program. The process of
Departmental review of individual appeals has been time-
[[Page 40175]]
consuming and resource-intensive, with great variations in the format
and completeness of appeals packages. The contents of some of these
review packages would suggest continued confusion about requirements on
the part of schools that would be problematic if those earnings were
still tied to any kind of eligibility threshold.
Executive Order 13777 instructs agencies to reduce unnecessary
burden on regulated entities, while at the same time emphasizing the
need for greater transparency. The Department believes that its
proposed rescission of the GE regulations is consistent with Executive
Order 13777 because the GE regulations place tremendous burden upon
certain programs and institutions, as evidenced by comments from
negotiators representing institutions not currently covered by the GE
regulations that extending the regulations to include their institution
would impose tremendous and costly burden. As noted by various
associations and institutions in response to the Department's request
for public feedback on which regulations should be repealed, modified,
or replaced, a large number of community colleges whose GE programs
have not been in danger of failing the D/E rates measure have
complained about the cost of complying with the GE regulations, which
has been viewed as far out of proportion with the corresponding student
benefits. For example, the American Association of Community Colleges
pointed to the regulations' extensive reporting and disclosure
requirements.\21\ Despite this additional burden to GE programs, the GE
regulations provide only limited transparency since the regulations
apply to a small subset of title IV-eligible programs. Instead, the
Department believes that its efforts to expand the College Scorecard,
which includes all programs that participate in the title IV, HEA
programs, to include program-level earnings, debt, and other data, will
better accomplish our goal of increasing transparency.
---------------------------------------------------------------------------
\21\ American Association of Community College. (September 20,
2017). Comments of the American Association of Community Colleges.
Docket ID: ED-2017-OS-0074. Available at https://www.regulations.gov/document?D=ED-2017-OS-0074-15336.
---------------------------------------------------------------------------
The GE regulations include, among other things, a complicated
formula for calculating a program's D/E rates, a set of thresholds that
are used to determine whether a program's D/E rates are passing,
failing, or in the zone, and a number of disclosure requirements. The
D/E rates measure compares median student loan debt (including
institutional, private, and Federal loan debt), as reported by
institutions and the National Student Loan Data System, to the higher
of mean and median earnings obtained from the Social Security
Administration.
Further, we believe that the analysis and assumptions with respect
to earnings underlying the GE regulations are flawed. In 2014, upon the
introduction of the GE regulations, the Department claimed that
graduates of many GE programs had earnings less than those of the
average high school dropout.\22\ The Washington Post highlighted
several errors in this comparison including that the Department failed
to explain that the three-year post-graduation GE earnings compared the
earnings of recent graduates with the earnings of a population of high
school graduates that could include those who are nearing the end of
40-year careers or who own successful long-existing businesses.\23\
Further comparisons to non-college graduates need to be contextualized,
given that the average person who completes a registered apprenticeship
earns a starting salary of more than $60,000 per year, and some college
graduates who pursue careers in allied health, education, or human
services--regardless of what college they attended--earn less than non-
college graduates who complete an apprenticeship program.\24\
---------------------------------------------------------------------------
\22\ www.ed.gov/news/press-releases/obama-administration-takes-action-protect-americans-predatory-poor-performing-ca/.
\23\ www.washingtonpost.com/news/fact-checker/wp/2014/04/11/the-obama-administrations-claim-that-72-percent-of-for-profits-programs-have-graduates-making-less-than-high-school-dropouts/
\24\ Ibid.
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The Census Bureau, in its landmark 2002 report, The Big Payoff, was
careful to explain that individual earnings may differ significantly
due to a variety of factors, including an individual's work history,
college major, personal ambition, and lifestyle choices.\25\ The report
also pointed out that even some individuals with graduate degrees, such
as those in social work or education, may fail to earn as much as a
high school graduate who works in the skilled trades. In other words,
both debt and earnings outcomes depend on a number of factors other
than program quality or institutional performance. There are tremendous
complexities involved in comparing earnings, especially since
prevailing wages differ significantly from one occupation to the next
and one geographic region to the next.\26\ Therefore, a bright-line D/E
rates measure ignores the many research findings that were either not
taken into account in publishing the GE regulations or that were
published since the GE regulations were promulgated, that have
demonstrated over and over again that gender, socioeconomic status,
race, geographic location, and many other factors affect earnings.\27\
\28\ \29\ Even among the graduates of the Nation's most prestigious
colleges, earnings vary considerably depending upon the graduate's
gender, the field the graduate pursued, whether or not the graduate
pursued full-time work, and the importance of work-life balance to the
individual.\30\ And yet, the Department has never contended that the
majors completed by the lower-earning graduates were lower performing
or lower quality than those that result in the highest wages.
---------------------------------------------------------------------------
\25\ Cheeseman Day, J. & Newburger, E. The Big Payoff:
Educational Attainment and Synthetic Estimates of Work-Life
Earnings, Current Population Reports, U.S. Department of Commerce,
Economics and Statistics Administration, U.S. Census Bureau, 2002.
Available at www.census.gov/content/dam/Census/ibrary/publications/2002/demo/p23-210.pdf.
\26\ nces.ed.gov/pubs2006/2006321.pdf.
\27\ www.brookings.edu/wp-content/uploads/2016/07/Deconstructing-and-Reconstructing-the-College-Scorecard.pdf.
\28\ trends.collegeboard.org/sites/default/files/education-pays-2016-full-report.pdf.
\29\ nces.ed.gov/pubs/web/97578g.asp.
\30\ Witteveen, D. & Attewell, P. The earnings payoff from
attending a selective college. Social Science Research 66 (2017)
154-169. Available at www.sciencedirect.com/science/article/pii/S0049089X16301430.
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Additional Disclosures
The Department published in the Federal Register on November 1,
2016, regulations known as the Borrower Defenses to Repayment (BD)
regulations (81 FR 75926). The effective date of the BD regulations was
most recently delayed until July 1, 2019 (83 FR 6458) to allow for
additional negotiated rulemaking to reconsider those regulations.
Following the conclusion of the negotiated rulemaking process, on July
31, 2018, the Department published in the Federal Register a notice of
proposed rulemaking in which the Department proposes, among other
things, to withdraw (i.e., rescind) specified provisions of the BD
regulations already published but not yet effective.
Among these BD regulations are two disclosures that were included
among the topics for negotiation by the GE negotiating committee, as
part of the larger discussion about the disclosure requirements in the
GE regulations. One of these provisions would have required proprietary
institutions to provide a warning to students if the loan repayment
rate for the institution did not meet a specified bright-line
[[Page 40176]]
standard. The other provision would have required institutions to
notify students if the institution was required under other provisions
of the BD regulations to provide the Department with financial
protection, such as a letter of credit.
In response to the 2016 Borrower Defense proposed regulations, the
Department received many comments contending that the regulations
unfairly targeted proprietary institutions (81 FR 75934). Others
commented that the loan repayment rate disclosure reflected financial
circumstances and not educational quality. The Department believes that
these comments are in line with how the Department views GE and the
reasons provided for rescinding it. As such, the Department also
proposes to remove the requirement for institutions to disclose
information related to student loan repayment rates. With respect to
the financial protection disclosure, the Department believes that
matters such as the calculation of an institution's composite score and
requirements regarding letters of credit are complex and beyond the
level of understanding of a typical high school graduate considering
enrollment in a postsecondary education program. Therefore, a student
may misjudge the meaning of such a disclosure to indicate the imminent
closure of the institution, which is not necessarily the case. While in
certain instances, a letter of credit may serve as an indicator of
financial risk to taxpayers, there are other instances where this may
not be the case. Therefore, the Department proposes to remove the
requirement for institutions to disclose that they are required to post
a letter of credit and the related circumstances.
In discussion with the negotiators, those representing attorneys
general, legal organizations, and student advocacy groups opposed
eliminating these disclosures because they believed the disclosures
would benefit students. However, the Department believes that these
disclosures will not provide meaningful or clear information to
students, and will increase cost and burden to institutions that would
have to disclose this information.
Although these two disclosures were discussed by the negotiated
rulemaking committee convened to consider the GE regulations, because
they are formally associated with the borrower defense regulations,
their proposed withdrawal is addressed through the proposed regulatory
text in the 2018 notice of proposed rulemaking relating to the BD
regulations.
In summary, the Department proposes to rescind the GE regulations
for a number of reasons, including:
Research findings published subsequent to the promulgation
of the regulation confirm that the D/E rates measure is inappropriate
for determining an institution's continuing eligibility for title IV
participation;
A review of GE disclosures posted by institutions over the
last two years has revealed troubling inconsistencies in the way that
job placement rates are determined and reported;
The use of a standardized disclosure template and the
physical distribution of disclosures to students is more burdensome
than originally predicted; and
GE outcomes data reveal the disparate impact that the GE
regulation has on some academic programs.
In July 2018, the Department published a notice of proposed
rulemaking that more appropriately addresses concerns about
institutional misrepresentation by providing direct remedies to
students harmed by such misrepresentations (83 FR 37242). In addition,
the Department believes that by publishing outcomes data through the
College Scorecard for all title IV participating programs, it will be
more difficult for institutions to misrepresent likely program
outcomes, including earnings or job placement rates, which should not
be determined or published until such time that a reliable data source
is identified to validate such data. For the reasons cited above, the
Department proposes to amend or rescind the GE regulations.
Scope of the Proposed Regulations
1. Removal of GE Regulations
The Department proposes to rescind the GE regulations because,
among other things, they are based on a D/E metric that has proven to
not be an appropriate proxy for use in determining continuing
eligibility for title IV participation; they incorporate a threshold
that the researchers whose work gave rise to the standard questioned
the relevance of to student loan borrowing levels; and they rely on a
job placement rate reporting requirement that the Department was unable
to define consistently or provide a data source to ensure its
reliability and accuracy and that has since been determined is
unreliable and vulnerable to accidental or intentional misreporting. In
addition, because the GE regulations require only a small portion of
higher education programs to report outcomes, they do not adequately
inform consumer choice or help borrowers compare all of their available
options.
Therefore, the Department proposes to rescind the GE regulations.
Removal of the GE regulations would include removing the provisions in
Sec. 668.401 through Sec. 668.415, including the provisions regarding
the scope and purpose of those regulations (Sec. 668.401), the gainful
employment framework (Sec. 668.403), calculating D/E rates, issuing
and challenging those rates, and providing for a D/E rates alternate
earnings appeal (Sec. 668.404-Sec. 668.406). Consequently, by
removing the provisions pertaining to the D/E rates measure, the
consequences of the D/E rates measure would also be removed from the
regulations (Sec. 668.410), as well as the required certifications
(Sec. 668.414). In addition, current sections that condition title IV
eligibility on outcomes under the D/E rates measure, the methodology
for calculating the D/E rates, the reporting requirements necessary to
calculate D/E rates and certain other certifications and disclosures,
and subpart R pertaining to program cohort default rates, a potential
disclosure item, would no longer be required, and the Department
proposes to remove those sections, as well (Sec. Sec. 668.411-668.413;
subpart R).
2. Technical and Conforming Changes
Proposed Sec. 600.10(c)(1) would remove current paragraph (i) and
redesignate the remaining paragraphs. Current Sec. 600.10(c)(1)(i)
establishes title IV eligibility for GE programs. The Department's
proposed regulations would remove the GE regulations referenced in this
paragraph, and therefore we are proposing to remove this paragraph and
renumber this section. This technical correction was proposed during
the negotiations because the Department proposed removing the GE
regulations and moving to a disclosure-only framework. Discussion
related to the removal of sanctions and the disclosure framework is
summarized above, but there were no additional comments made solely on
this technical change. Additionally, proposed Sec. 600.10(c)(1)(iii)
would require programs that are at least 300 clock hours but less than
600 clock hours and do not admit as regular students only persons who
have completed the equivalent of an associate's degree to obtain the
Secretary's approval to be eligible for title IV aid student loans.
This is consistent with Sec. 668.8(d) where programs of at least 300
clock hours are referenced and is consistent with the statute. This
proposal was also made during the negotiations, but the
[[Page 40177]]
committee did not have comments related to this aspect of the
proposals.
The Department also proposes to remove references to subpart Q in
Sec. 600.21(a)(11) as part of its proposed removal of the GE
regulations. Likewise, we propose technical edits to Sec. 668.8(d) to
remove references to subpart Q. The Department also proposes to remove
and reserve current Sec. 668.6, which lists disclosure requirements
for GE programs that ceased to have effect upon the effective date of
the disclosure requirements under the 2014 GE regulations.
Executive Orders 12866, 13563, and 13771
Under Executive Order 12866, it must be determined whether this
regulatory action is ``significant'' and, therefore, subject to the
requirements of the Executive order and subject to review by the Office
of Management and Budget (OMB). Section 3(f) of Executive Order 12866
defines a ``significant regulatory action'' as an action likely to
result in a rule that may--
(1) Have an annual effect on the economy of $100 million or more,
or adversely affect a sector of the economy, productivity, competition,
jobs, the environment, public health or safety, or State, local, or
Tribal governments or communities in a material way (also referred to
as an ``economically significant'' rule);
(2) Create serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlement grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles stated in the
Executive order.
This proposed regulatory action is an economically significant
regulatory action subject to review by OMB under section 3(f) of
Executive Order 12866 because it would have an annual effect on the
economy of over $100 million.
Under Executive Order 13771, for each new regulation that the
Department proposes for notice and comment or otherwise promulgates
that is a significant regulatory action under Executive Order 12866 and
that imposes total costs greater than zero, it must identify two
deregulatory actions. For FY 2018, any new incremental costs associated
with a new regulation must be fully offset by the elimination of
existing costs through deregulatory actions, unless required by law or
approved in writing by the Director of the OMB. Because these proposed
regulations do not impose total costs greater than zero, the
requirement to offset new regulations in Executive Order 13771 would
not apply.
We have also reviewed these regulations under Executive Order
13563, which supplements and explicitly reaffirms the principles,
structures, and definitions governing regulatory review established in
Executive Order 12866. To the extent permitted by law, Executive Order
13563 requires that an agency--
(1) Propose or adopt regulations only on a reasoned determination
that their benefits justify their costs (recognizing that some benefits
and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society,
consistent with obtaining regulatory objectives and taking into
account--among other things, and to the extent practicable--the costs
of cumulative regulations;
(3) In choosing among alternative regulatory approaches, select
those approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather
than the behavior or manner of compliance a regulated entity must
adopt; and
(5) Identify and assess available alternatives to direct
regulation, including economic incentives--such as user fees or
marketable permits--to encourage the desired behavior, or provide
information that enables the public to make choices.
Executive Order 13563 also requires an agency ``to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible.'' The Office of
Information and Regulatory Affairs of OMB has emphasized that these
techniques may include ``identifying changing future compliance costs
that might result from technological innovation or anticipated
behavioral changes.''
We are issuing this proposed regulatory action only on a reasoned
determination that its benefits justify its costs. In choosing among
alternative regulatory approaches, we selected those approaches that
would maximize net benefits. Based on the analysis that follows, the
Department believes that these proposed regulations are consistent with
the principles in Executive Order 13563.
We also have determined that this regulatory action would not
unduly interfere with State, local, and Tribal governments in the
exercise of their governmental functions.
Regulatory Impact Analysis
In accordance with the Executive orders, the Department has
assessed the potential costs and benefits, both quantitative and
qualitative, of this regulatory action. This proposed regulatory action
would have an annual economic benefit of approximately $209 million in
reduced paperwork burden and increased transfers to Pell Grant
recipients and student loan borrowers and subsequently institutions of
about $518 million annually at the 7 percent discount rate, as further
explained in the Analysis of Costs and Benefits section.
A. Need for Regulatory Action
This regulatory action is necessary to comply with Executive Order
13777, whereby the President instructed agencies to reduce unnecessary
burden on regulated entities and to increase transparency. Because the
GE regulations significantly burden certain programs and institutions
but provide limited transparency at only a small subset of title IV-
eligible programs, the Department proposes to rescind them.
Furthermore, when developing the GE regulations, the Department, as
noted in feedback received from multiple institutions, underestimated
the burden on institutions associated with the use of a standardized
disclosure template in publishing program outcomes and distributing
notifications directly to prospective and current students. For
example, the estimate did not include an assessment of burden on the
government to support the development of an approved disclosure
template and the distribution of the template populated with the
appropriate data. The Department has determined that it would be more
efficient to publish data using the College Scorecard, not only to
reduce reporting burden but to enable students to more readily review
the data and compare institutions.
B. Analysis of Costs and Benefits
These proposed regulations would affect prospective and current
students; institutions with GE programs participating in the title IV,
HEA programs; and the Federal government. The Department expects
institutions and the Federal government would benefit as the action
would remove highly burdensome reporting, administrative costs, and
sanctions. The Department has also analyzed the costs of this
regulatory action and has determined that it would impose no additional
costs ($0). As detailed earlier,
[[Page 40178]]
pursuant to this proposed regulatory action, the Department would
remove the GE regulations and adopt no new ones.
1. Students
The proposed removal of the GE regulations may result in both costs
and benefits to students, including the costs and benefits associated
with continued enrollment in zone and failing GE programs and the
benefit of reduced information collections. Students may see costs from
continued enrollment in programs that may have, if the GE regulations
were in effect, lost title IV eligibility and the student would have
discontinued enrollment. Students may also see benefits from not having
to transfer to another institution in cases where their program would
have lost title IV eligibility. Burden on students will be reduced by
not having to respond to schools to acknowledge receipt of disclosures.
There are student costs and benefits associated with enrollment in
a program that would have otherwise lost eligibility to participate in
the title IV, HEA programs under the GE regulations; however, the
actual outcome for students enrolled in failing or zone programs under
the GE regulations is unknown. Under the GE regulations, if a GE
program becomes ineligible to participate in the title IV, HEA
programs, students would not be able to receive title IV aid to enroll
in it. Because D/E rates have been calculated under the GE regulations
for only one year, no programs have lost title IV, HEA eligibility.
However, 2,050 programs were identified as failing programs or programs
in the zone based on their 2015 GE rates and are at risk of losing
eligibility under the GE regulations. In 2015-16, 329,250 students were
enrolled in zone GE programs and 189,920 students were enrolled in
failing programs.
Under the proposed regulations, the Department would discontinue
certain GE information collections, which is detailed further in the
Paperwork Reduction Act of 1995 section of this preamble. Two of these
information collections impact students--OMB control number 1845-0123
and OMB control number 1845-0107. By removing these collections, the
proposed regulations would reduce burden on students by 2,167,129 hours
annually. The burden associated with these information collections is
attributed to students being required to read the warning notices and
certify that they received them. Therefore, using the individual hourly
rate of $16.30, the benefit due to reduced burden for students is
$35,324,203 annually (2,167,129 hours per year * $16.30 per hour).
2. Institutions
The proposed regulations would also benefit institutions
administering GE programs. These institutions would have a reduced
paperwork burden and no longer be subject to a potential loss of title
IV eligibility. The table below shows the distribution of institutions
administering GE programs by sector.
Table 2--Institutions With 2015 GE programs \31\
------------------------------------------------------------------------
Type Institutions Programs
------------------------------------------------------------------------
Public.................................. 865 2,493
Private................................. 206 476
Proprietary............................. 1,546 5,681
Total............................... 2,617 8,650
------------------------------------------------------------------------
All 2,617 institutions with GE programs would see savings from
reduced reporting requirements due to removal of the GE regulations. As
discussed further in the Paperwork Reduction Act of 1995 section of
this preamble, reduction in burden associated with removing the GE
regulatory information collections for institutions is 4,758,499 hours.
Institutions would benefit from these proposed changes, which would
reduce their costs by $173,923,138 annually using the hourly rate of
$36.55.
Under the proposed regulations, programs that had or have D/E rates
that are failing or in the zone could see benefits because they would
no longer be subject to sanctions, incur the cost of appealing failing
or zone D/E rates, or be at risk of losing their title IV eligibility.
Specifically, 778 institutions administering 2,050 zone or failing GE
programs would receive these benefits, which represents 24 percent of
the 8,650 2015 GE programs. Disaggregation of these program counts and
counts by institutional type are provided in the table below.
Table 3--Institutions With 2015 GE zone or Failing Programs \32\
----------------------------------------------------------------------------------------------------------------
Zone or
Type Institutions Zone programs Failing failing
programs programs
----------------------------------------------------------------------------------------------------------------
Public....................................... 9 9 .............. 9
Private...................................... 34 68 21 89
Proprietary.................................. 735 1,165 787 1,952
------------------------------------------------------------------
Total.................................... 778 1,242 808 2,050
----------------------------------------------------------------------------------------------------------------
Cosmetology undergraduate certificate programs are the most common
type of program in the zone or failing categories. Among the 895
cosmetology undergraduate certificate programs with
---------------------------------------------------------------------------
\31\ The count of programs includes programs that had
preliminary rates calculated, but were not designated with an
official pass, zone, or fail status due to reaccreditation and
reinstatements of eligibility during the validation process of
establishing D/E rates.
\32\ The count of programs includes programs that had
preliminary rates calculated, but were not designated with an
official pass, zone, or fail status due to reaccreditation and
reinstatements of eligibility during the validation process of
establishing D/E rates.
---------------------------------------------------------------------------
a 2015 GE rate, 91 failed the D/E rates measure and 270 fell into the
zone. Table 4 shows the most frequent types of programs with failing or
zone D/E rates. These programs and their institutions would be most
significantly affected by the proposed removal of GE sanctions as they
would continue to be eligible to participate in title IV, HEA programs.
As indicated in the Accounting Statement, the money received by these
institutions is a transfer from the taxpayers through students who
choose to attend the institutions' programs.
[[Page 40179]]
Table 4--Zone or Failing 2015 GE Programs by Frequency of Program Types \33\
----------------------------------------------------------------------------------------------------------------
CIP Credential level Zone Fail Zone or Fail All programs
----------------------------------------------------------------------------------------------------------------
Cosmetology/Cosmetologist, General. Undergraduate 270 91 361 895
Certificate.
Medical/Clinical Assistant......... Associates Degree.... 35 56 91 119
Medical/Clinical Assistant......... Undergraduate 78 12 90 424
Certificate.
Massage Therapy/Therapeutic Undergraduate 43 4 47 270
Massage.. Certificate.
Business Administration and Associates Degree.... 24 22 46 74
Management, General..
Legal Assistant/Paralegal.......... Associates Degree.... 20 25 45 58
Barbering/Barber................... Undergraduate 22 16 38 96
Certificate.
Graphic Design..................... Associates Degree.... 16 17 33 45
Criminal Justice/Safety Studies.... Associates Degree.... 20 11 31 41
Massage Therapy/Therapeutic Associates Degree.... 8 19 27 33
Massage..
All other programs................. ..................... 706 535 1,241 6,595
----------------------------------------------------------------------------
Total.......................... ..................... 1,242 808 2,050 8,650
----------------------------------------------------------------------------------------------------------------
3. Federal Government
Under the proposed regulations, the Federal government would
benefit from reduced administrative burden associated with removing
provisions in the GE regulations and from discontinuing information
collections. The Federal government would incur annual costs to fund
more Pell Grants and title IV loans, as discussed in the Net Budget
Impact section.
---------------------------------------------------------------------------
\33\ The count of programs includes programs that had
preliminary rates calculated, but were not designated with an
official pass, zone, or fail status due to reaccreditation and
reinstatements of eligibility during the validation process of
establishing D/E rates.
---------------------------------------------------------------------------
Reduced administrative burden due to the proposed regulatory
changes would result from removing the provisions in the GE regulations
regarding sending completer lists to institutions, adjudicating
completer list corrections, adjudicating challenges, and adjudicating
alternate earnings appeals. Under the GE regulations, the Department
expects to receive about 500 earnings appeals annually and estimates
that it would take Department staff 10 hours per appeal to evaluate the
information submitted. Using the hourly rate of a GS-13 Step 1 in the
Washington, DC area of $46.46,\34\ the estimated benefit due to reduced
costs from eliminating earnings appeals is $232,300 annually (500
earnings appeals * 10 hours per appeal * $46.46 per hour). Similarly,
the Department sends out 31,018 program completer lists to institutions
annually and estimates that it takes about 40 hours total to complete.
Using the hourly rate of a GS-14 Step 1 in the Washington, DC area of
$54.91,\35\ the estimated benefit due to reduced costs from eliminating
sending completer lists is $2,196 annually (40*54.91). Institutions can
correct and challenge the lists, and for the 2015 D/E rates the
Department processed 90,318 completer list corrections and adjudicated
2,894 challenges. The Department estimates it took Department staff
1,420 hours total to make completer list corrections. Similarly, the
Department estimates it took $1,500,000 in contractor support and 1,400
hours of Federal staff time total to adjudicate the challenges. Using
the hourly rate of a GS-13 step 1 in the Washington, DC area of $46.46,
the estimated benefit due to reduced costs from eliminating completer
lists, corrections, and challenges is $1,631,017 ($1,500,000 contractor
support + (1420 + 1400) staff hours * $46.46 per hour).
---------------------------------------------------------------------------
\34\ Salary Table 2018-DCB effective January 2018. Available at
www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2018/DCB_h.pdf.
\35\ Ibid.
---------------------------------------------------------------------------
Finally, under the proposed regulations, the Department would
rescind information collections with OMB control numbers 1845-0121,
1845-1022, and 1845-0123. This would result in a Federal government
benefit due to reduced contractor costs of $23,099,946 annually.
Therefore, the Department estimates an annual benefit due to reduced
administrative costs under the proposed regulations of $24,965,459
($232,300 + $2,196 + $1,631,017 + $23,099,946).
The Department would also incur increased budget costs due to
increased transfers of Pell Grants and title IV loans, as discussed
further in the Net Budget Impacts section. The estimated annualized
costs of increased Pell Grants and title IV loans from eliminating the
GE regulations is approximately $518 to $527 million at 7 percent and 3
percent discount rates, respectively. The Department recognizes that
this may be offset by student and institutional response to
institutional and program level disclosures in the College Scorecard
and other resources, but, as discussed in the Net Budget Impact
section, the Department does not specifically quantify those impacts.
C. Net Budget Impacts
The Department proposes to remove the GE regulations, which include
provisions for GE programs' loss of title IV, HEA program eligibility
based on performance on the D/E rates measure. In estimating the impact
of the GE regulations at the time they were developed and in subsequent
budget estimates, the Department attributed some savings in the Pell
Grant program based on the assumption that some students, including
prospective students, would drop out of postsecondary education as
their programs became ineligible or imminently approached
ineligibility.
This assumption has remained in the baseline estimates for the Pell
Grant program, with an average of approximately 123,000 dropouts
annually over the 10-year budget window from FY2019 to FY2028. By
applying the estimated average Pell Grant per recipient for proprietary
institutions ($3,649) for 2019 to 2028 in the PB2019 Pell Baseline, the
estimated net budget impact of the GE regulations in the PB2019 Pell
baseline is approximately $-4.5 billion. As was indicated in the
Primary Student Response assumption in the 2014 GE final rule,\36\ much
of this impact was expected to come from the warning that a program
could lose eligibility in the next year. If we attribute all of the
dropout effect to loss of eligibility, it would generate a maximum
estimated Federal net budget impact of the proposed regulations of $4.5
billion in
[[Page 40180]]
costs by removing the GE regulations from the PB2019 Pell Grant
baseline.
---------------------------------------------------------------------------
\36\ See 79 FR 211, Table 3.4: Student Response Assumptions, p.
65077, published October 31, 2014. Available at www.regulations.gov/document?D=ED-2014-OPE-0039-2390. The dropout rate increased from 5
percent for a first zone result and 15 percent for a first failure
to 20 percent for the fourth zone, second failure, or ineligibility.
---------------------------------------------------------------------------
The Department also estimated an impact of warnings and
ineligibility in the analysis for the final 2014 GE rule, that, due to
negative subsidy rates for PLUS and Unsubsidized loans at the time,
offset the savings in Pell Grants by $695 million.\37\ The effect of
the GE regulations is not specifically identified in the PB2019
baseline, but it is one of several factors reflected in declining loan
volume estimates. The development of GE regulations since the first
negotiated rulemaking on the subject was announced on May 26, 2009, has
coincided with demographic and economic trends that significantly
influence postsecondary enrollment, especially in career-oriented
programs classified as GE programs under the GE regulations. Enrollment
and aid awarded have both declined substantially from peak amounts in
2010 and 2011.
---------------------------------------------------------------------------
\37\ See 79 FR 211, pp 65081-82, available at
www.regulations.gov/document?D=ED-2014-OPE-0039-2390.
---------------------------------------------------------------------------
As classified under the GE regulations, GE programs serve non-
traditional students who may be more responsive to immediate economic
trends in making postsecondary education decisions. Non-consolidated
title IV loans made at proprietary institutions declined 48 percent
between AY2010-11 and AY2016-17, compared to a 6 percent decline at
public institutions, and a 1 percent increase at private institutions.
The average annual loan volume change from AY2010-11 to AY2016-17 was -
10 percent at proprietary institutions, -1 percent at public
institutions, and 0.2 percent at private institutions. If we attribute
all of the excess decline at proprietary institutions to the potential
loss of eligibility under the GE regulations and increase estimated
volume in the 2-year proprietary risk group that has the highest
subsidy rate in the PB2019 baseline by the difference in the average
annual change (12 percent for subsidized and unsubsidized loans and 9
percent for PLUS), then the estimated net budget impact of the removal
of the ineligibility sanction in the proposed regulations on the Direct
Loan program is a cost of $848 million.
Therefore, the total estimated net budget impact from the proposed
regulations is $5.3 billion cost in increased transfers from the
Federal government to Pell Grant recipients and student loan borrowers
and subsequently to institutions, primarily from the elimination of the
ineligibility provision of the GE regulations. However, this estimate
assumes that a borrower who could no longer enroll in a GE program that
loses title IV eligibility would not enroll in a different program that
passes the D/E rates measure, but would instead opt out of a
postsecondary education experience. The long-term impact to the student
and the government of the decision to pursue no postsecondary education
could be significant, but cannot be estimated for the purpose of this
analysis.
This is a maximum net budget impact and could be offset by student
and institutional behavior in response to disclosures in the College
Scorecard and other resources. Generally, the Department does not
attribute a significant budget impact to disclosure requirements absent
substantial evidence that such information will change borrower or
institutional behavior. The Department welcomes comments on the net
budget impact analysis. Information received will be considered in
development of the Net Budget Impact analysis of the final rule.
D. Accounting Statement
As required by OMB Circular A-4 we have prepared an accounting
statement showing the classification of the expenditures associated
with the provisions of the proposed regulations (see Table 5). This
table provides our best estimate of the changes in annual monetized
transfers as a result of the proposed regulations. The estimated
reduced reporting and disclosure burden equals the -$209 million annual
paperwork burden calculated in the Paperwork Reduction Act of 1995
section (and also appearing on page 65004 of the regulatory impact
analysis accompanying the 2014 final rule). The annualization of the
paperwork burden differs from the 2014 final rule as the annualization
of the paperwork burden for that rule assumed the same pattern as the
2011 rule that featured multiple years of data being reported in the
first year with a significant decline in burden in subsequent years.
Table 5--Accounting Statement: Classification of Estimated Expenditures
[In millions]
------------------------------------------------------------------------
------------------------------------------------------------------------
Category Benefits
------------------------------------------------------------------------
Discount Rate........................... 7% 3%
Reduced reporting and disclosure burden $209 $209
for institutions with GE programs under
the GE regulations.....................
------------------------------------------------------------------------
Category Costs
------------------------------------------------------------------------
Discount Rate........................... 7% 3%
Costs................................... .............. ..............
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Discount Rate........................... 7% 3%
Increased transfers to Pell Grant $518 $527
recipients and student loan borrowers
from elimination of ineligibility
provision of GE regulations............
------------------------------------------------------------------------
[[Page 40181]]
Regulatory Flexibility Act (RFA) Certification
The U.S. Small Business Administration (SBA) Size Standards define
proprietary institutions as small businesses if they are independently
owned and operated, are not dominant in their field of operation, and
have total annual revenue below $7,000,000. Nonprofit institutions are
defined as small entities if they are independently owned and operated
and not dominant in their field of operation. Public institutions are
defined as small organizations if they are operated by a government
overseeing a population below 50,000.
The Department lacks data to identify which public and private,
nonprofit institutions qualify as small based on the SBA definition.
Given the data limitations and to establish a common definition across
all sectors of postsecondary institutions, the Department uses its
proposed data-driven definitions for ``small institutions'' (Full-time
enrollment of 500 or less for a two-year institution or less than two-
year institution and 1,000 or less for four-year institutions) in each
sector (Docket ID ED-2018-OPE-0027) to certify the RFA impacts of these
proposed regulations. Using this definition, there are 2,816 title IV
institutions that qualify as small entities based on 2015-2016 12-month
enrollment.
When an agency issues a rulemaking proposal, the RFA requires the
agency to ``prepare and make available for public comment an initial
regulatory flexibility analysis'' which will ``describe the impact of
the proposed rule on small entities.'' (5 U.S.C. 603(a)). Section 605
of the RFA allows an agency to certify a rule, in lieu of preparing an
analysis, if the proposed rulemaking is not expected to have a
significant economic impact on a substantial number of small entities.
The proposed regulations directly affect all institutions with GE
programs participating in title IV aid. There were 2,617 institutions
in the 2015 GE cohort, of which 1,357 are small entities. This
represents approximately 20 percent of all title IV-participating
institutions and 48 percent of all small institutions. Therefore, the
Department has determined that the proposed regulations would not have
a significant economic impact on a substantial number of small
entities.
Further, the Department has determined that the impact on small
entities affected by the proposed regulations would not be significant.
For these 1,357 institutions, the effect of the proposed regulations
would be to eliminate GE paperwork burden and potential loss of title
IV eligibility. We believe that the economic impacts of the proposed
paperwork and title IV eligibility changes would be beneficial to small
institutions. Accordingly, the Secretary hereby proposes to certify
that these proposed regulations, if promulgated, would not have a
significant economic impact on a substantial number of small entities.
The Department invites comment from members of the public who believe
there will be a significant impact on small institutions.
Paperwork Reduction Act of 1995
As part of its continuing effort to reduce paperwork and respondent
burden, the Department provides the general public and Federal agencies
with an opportunity to comment on proposed or continuing, or the
discontinuance of, collections of information in accordance with the
Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This
helps ensure that: The public understands the Department's collection
instructions, respondents can provide the requested data in the desired
format, reporting burden (time and financial resources) is minimized,
collection instruments are clearly understood, and the Department can
properly assess the impact of collection requirements on respondents.
Respondents also have the opportunity to comment on our burden
reduction estimates.
A Federal agency may not conduct or sponsor a collection of
information unless OMB approves the collection under the PRA and the
corresponding information collection instrument displays a currently
valid OMB control number. Notwithstanding any other provision of law,
no person is required to comply with, or is subject to penalty for
failure to comply with, a collection of information if the collection
instrument does not display a currently valid OMB control number.
The proposed regulations would rescind the GE regulations. That
action would eliminate the burden as assessed to the GE regulations in
the following previously approved information collections.
1845-0107--Gainful Employment Disclosure Template
Individuals--13,953,411 respondents for a total of 1,116,272 burden
hours eliminated.
For Profit Institutions--2,526 respondents for a total of 1,798,489
burden hours eliminated.
Private Non Profit Institutions--318 respondents for a total of
27,088 burden hours eliminated.
Public Institutions--1,117 respondents for a total of 176,311
burden hours eliminated.
1845-0121--Gainful Employment Program--Subpart R--Cohort Default Rates
For Profit Institutions--1,434 respondents for a total of 5,201
burden hours eliminated.
Private Non Profit Institutions--47 respondents for a total of 172
burden hours eliminated.
Public Institutions--78 respondents for a total of 283 burden hours
eliminated.
1845-0122--Gainful Employment Program--Subpart Q--Appeals for Debt to
Earnings Rates
For Profit Institutions--388 respondents for a total of 23,377
burden hours eliminated.
Private Non Profit Institutions--6 respondents for a total of 362
burden hours eliminated.
Public Institutions--2 respondents for a total of 121 burden hours
eliminated.
1845-0123--Gainful Employment Program--Subpart Q--Regulations
Individuals--11,793,035 respondents for a total of 1,050,857 burden
hours eliminated.
For Profit Institutions--28,018,705 respondents for a total of
2,017,100 burden hours eliminated.
Private Non Profit Institutions--442,348 respondents for a total of
76,032 burden hours eliminated.
Public Institutions--2,049,488 respondents for a total of 633,963
burden hours eliminated.
The total burden hours and proposed change in burden hours
associated with each OMB Control number affected by the proposed
regulations follows:
[[Page 40182]]
----------------------------------------------------------------------------------------------------------------
Estimated cost
$36.55/hour
for
Regulatory section OMB control Burden hours institutions;
No. $16.30/hour
for
individuals
----------------------------------------------------------------------------------------------------------------
Sec. 668.412.................................................. 1845-0107 -3,118,160 -$91,364,240
Sec. Sec. 668.504, 668.509, 668.510, 668.511, 668.512........ 1845-0121 -5,656 -206,727
Sec. 668.406.................................................. 1845-0122 -23,860 -872,083
Sec. Sec. 668.405, 668.410, 668.411, 668.413, 668.414........ 1845-0123 -3,777,952 -116,804,291
-----------------------------------------------
Total....................................................... .............. -6,925,628 -209,247,341
----------------------------------------------------------------------------------------------------------------
We have prepared Information Collection Requests which will be
filed upon the effective date of these proposed regulations to
discontinue the currently approved information collections noted above.
Note: The Office of Information and Regulatory Affairs in OMB
and the Department review all comments posted at
www.regulations.gov.
We consider your comments on discontinuing these collections of
information in--
Evaluating the accuracy of our estimate of the burden
reduction of the proposed discontinuance, including the validity of our
methodology and assumptions;
Enhancing the quality, usefulness, and clarity of the
information we collect; and
Minimizing the burden on those who must respond. This
includes exploring the use of appropriate automated, electronic,
mechanical, or other technological collection techniques.
OMB is required to make a decision concerning the collections of
information contained in these proposed regulations between 30 and 60
days after publication of this document in the Federal Register.
Therefore, to ensure that OMB gives your comments full consideration,
it is important that OMB receives your comments on these Information
Collection Requests by September 13, 2018. This does not affect the
deadline for your comments to us on the proposed regulations.
If your comments relate to the Information Collection Requests for
these proposed regulations, please indicate ``Information Collection
Comments'' on the top of your comments.
Intergovernmental Review
These programs are not subject to Executive Order 12372 and the
regulations in 34 CFR part 79.
Assessment of Educational Impact
In accordance with section 411 of GEPA, 20 U.S.C. 1221e-4, the
Secretary particularly requests comments on whether the proposed
regulations would require transmission of information that any other
agency or authority of the United States gathers or makes available.
Accessible Format: Individuals with disabilities can obtain this
document in an accessible format (e.g., Braille, large print,
audiotape, or compact disc) on request to the person listed under FOR
FURTHER INFORMATION CONTACT.
Electronic Access to This Document: The official version of this
document is the document published in the Federal Register. You may
access the official edition of the Federal Register and the Code of
Federal Regulations via the Federal Digital System at: www.gpo.gov/fdsys. At this site you can view this document, as well as all other
documents of this Department published in the Federal Register, in text
or Portable Document Format (PDF). To use PDF you must have Adobe
Acrobat Reader, which is available free at the site.
You may also access documents of the Department published in the
Federal Register by using the article search feature at:
www.federalregister.gov. Specifically, through the advanced search
feature at this site, you can limit your search to documents published
by the Department. (Catalog of Federal Domestic Assistance Number does
not apply.)
List of Subjects
34 CFR Part 600
Colleges and universities, Foreign relations, Grant programs-
education, Loan programs-education, Reporting and recordkeeping
requirements, Selective Service System, Student aid, Vocational
education.
34 CFR Part 668
Administrative practice and procedure, Aliens, Colleges and
universities, Consumer protection, Grant programs-education, Loan
programs-education, Reporting and recordkeeping requirements, Selective
Service System, Student aid, Vocational education.
Dated: August 9, 2018.
Betsy DeVos,
Secretary of Education.
For the reasons discussed in the preamble, and under the authority
at 20 U.S.C. 3474 and 20 U.S.C. 1221e-3, the Secretary of Education
proposes to amend parts 600 and 668 of title 34 of the Code of Federal
Regulations as follows:
PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT
OF 1965, AS AMENDED
0
1. The authority citation for part 600 continues to read as follows:
Authority: 20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b,
and 1099c, unless otherwise noted.
0
2. Section 600.10 is amended by revising paragraphs (c)(1) and (2) to
read as follows:
Sec. 600.10 Date, extent, duration, and consequence of eligibility.
* * * * *
(c) * * *
(1) An eligible institution that seeks to establish the eligibility
of an educational program must--
(i) Pursuant to a requirement regarding additional programs
included in the institution's program participation agreement under 34
CFR 668.14, obtain the Secretary's approval;
(ii) For a direct assessment program under 34 CFR 668.10, and for a
comprehensive transition and postsecondary program under 34 CFR
668.232, obtain the Secretary's approval; and
(iii) For an undergraduate program that is at least 300 clock hours
but less than 600 clock hours and does not admit as regular students
only persons who have completed the equivalent of an associate degree
under 34 CFR 668.8(d)(3), obtain the Secretary's approval.
(2) Except as provided under Sec. 600.20(c), an eligible
institution does not have to obtain the Secretary's approval to
establish the eligibility of
[[Page 40183]]
any program that is not described in paragraph (c)(1) of this section.
* * * * *
0
3. Section 600.21 is amended by revising the paragraph (a)(11)
introductory text to read as follows:
Sec. 600.21 Updating application information.
(a) * * *
(11) For any program that is required to provide training that
prepares a student for gainful employment in a recognized occupation--
* * * * *
PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS
0
4. The authority citation for part 668 continues to read as follows:
Authority: 20 U.S.C. 1001-1003, 1070g, 1085, 1088, 1091, 1092,
1094, 1099c, and 1099c-1, unless otherwise noted.
Sec. 668.6 [Removed and Reserved]
0
5. Remove and reserve Sec. 668.6.
0
6. Section 668.8 is amended by revising paragraphs (d)(2)(iii) and
(d)(3)(iii) to read as follows:
Sec. 668.8 Eligible program.
* * * * *
(d) * * *
(2) * * *
(iii) Provide training that prepares a student for gainful
employment in a recognized occupation; and
(3) * * *
(iii) Provide undergraduate training that prepares a student for
gainful employment in a recognized occupation;
* * * * *
Subpart Q--[Removed and Reserved]
0
7. Remove and reserve subpart Q, consisting of Sec. Sec. 668.401
through 668.415.
Subpart R--[Removed and Reserved]
0
8. Remove and reserve subpart R, consisting of Sec. Sec. 668.500
through 668.516.
[FR Doc. 2018-17531 Filed 8-10-18; 4:15 pm]
BILLING CODE 4000-01-P