Gainful Employment

Understanding the Metricsand

Release of Informational Rates

1

Topics Goals of Gainful Employment Initiative Status of Gainful Employment Regulations Statutory and Regulatory Framework Informational Rates GE Informational Debt Measures and Loan Medians

Repayment Rate Debt-to-Earnings Ratios

Informational Rates Results Additional Information Questions

2

GOALS OF GAINFUL EMPLOYMENT INITIATIVE

3

Growing Concerns with Program Integrity

Rising default rates Stagnant or falling

graduation rates Growing exposure

Increased investments in Federal student financial aid

Student loan program changes

Incentive Compensation Misrepresentation State Authorization Credit Hour Definition Ability to Benefit High School Diplomas Gainful Employment

Tightened regulationsConcern

Concerns

4

Gainful Employment calculation results can be used - To provide information to schools that is

actionable on their part. To provide information for schools to make

improvements and perform self-assessments.

To provide information to students and families on effectiveness of programs.

Improving Programs

5

Schools can improve their GE Programs by working with employers to – Ensure that the program’s training meets

their manpower needs Determine what they need from the

program’s graduates so that their earnings can support the student and taxpayer investment

Improving Programs

6

Employer Feedback

Do students need better training in some areas for you to be willing to pay them more?

What additional training do my former students need?

What different kinds of programs should we be offering that would prepare students for better paying jobs?

Improving Programs

7

Student Feedback Is there something about the program that impacts

whether you are able to repay your student loans? Given the training and costs, are you earning

what you expected? Was the training worth the cost?

Is there additional training that could be provided that would help you earn more and be better able to repay your student loans?

8

Improving Programs

Schools can improve their GE Programs by – Comparing their program’s GE metrics of

similar programs at other schools Determine how those schools provide

the program with better results.

Improving ProgramsSchool Review

9

STATUS OF GAINFUL EMPLOYMENT REGULATIONS

10

On June 30, 2012, a District Court vacated most of the gainful employment regulations.

Court’s decision based on ED’s rationale for setting the Repayment Rate failure threshold.

Because of the interrelationship of the gainful employment requirements, the Court vacated most of the gainful employment regulations – GE Metrics, GE Reporting, Adding new GE Programs.

Court left in place GE disclosure requirements. See other GE session here at NASFAA 

District Court Decision

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

12

GAINFUL EMPLOYMENT STATUTORY FRAMEWORK

13

The HEA provides that to be Title IV eligible an educational program must be offered by:

Generally, all non-degree programs must lead to gainful employment

A public or non-profit postsecondary educational institution and leads to a degree; or

Any institution and “to prepare students for gainful employment in a recognized occupation”

Generally, most programs at for-profit institutions must lead to gainful employment

The Law

The Regulations

October 29, 2010 -Two sets of Final Rules published with effective dates of July 1, 2011- Disclosures Reporting Adding New Programs

June 13, 2011 - Final Rules on metrics to define gainful employment programs published with effective date of July 1, 2012

15

INFORMATIONAL DEBT MEASURES AND LOAN

MEDIANS

16

Informational Debt Measures

Per a June 30, 2012 court decision, all three metrics and the reporting regulations were vacated.  This means that the metrics are unenforceable and institutions are not required to report to the Department the information listed in the reporting regulations. 

The Department issued the Informational Rates prior to the court’s decision.  They were always intended to be used only for informational purposes, never carried any potential sanctions, and that remains true following the court’s decision.

Informational Debt Measures Released to schools June 21 - 25

SAIG Mailbox if designated by school Letters with Rates Back-Up Detail Files

Available on NSLDS Rates Request Back-Up Detail Files

Released to Public on June 26 FSA Data Center No student detail

18

Key Differences from Process to Calculate Official Rates

No challenge process for institutions after submitting final data

No ability for institutions to potentially substitute alternative income measures in debt-to-earnings calculation

No PSLF No allowance for IBR/ICR in repayment rate No 4 year cohort period

19

Informational Debt Measures

Informational Debt Measures

2 year cohort period (2YP) is FY 07 and FY 08 October 1, 2006 through September 30, 2008

Repayment Rate – Program’s former students who entered repayment in the 2YP

Debt-to-Earnings – Program’s former students who completed the program in the 2YP

20

Informational Debt Measures

• OPEID• School name• Street address• City• State• Zip Code• Institution type• CIP Code• CIP Name• Credential Level

Repayment Rate Numerator Denominator

21

School and Program Identification Information

Debt-to-Earnings Annual Ratio Numerator Denominator

Debt-to-Earnings Discretionary Ratio Numerator Denominator

Program SpecificDebt Measures

Loan Medians

• OPEID• School name• Street address• City• State• Zip Code• Institution type• CIP Code• CIP Name• Credential Level

Title IV Loan Median

22

School and Program Identification Information

Private Loan Median

Institutional Loan Median

Program SpecificLoan Medians

Cohort Period

GE metrics use information on the educational debt of a cohort of the GE Program’s former students

Generally, the cohort consists of students who left the program during the two federal fiscal years that are the third and fourth years prior to the most recently completed Federal fiscal year (the “GE Calculation Year”)

23

Cohort Period

For the GE Informational Rates, the GE Calculation Year was FY 2011 and the cohort years were FY2007 and FY2008 (October 1, 2006 through September 30, 2008).

Repayment Rate – GE Program’s former students who entered repayment on their Title IV loans during the cohort period.

Debt-to-Earnings – GE Program’s former students who completed the program during the cohort period.

24

GE Debt Measures

Repayment Rate – A percentage the GE Program’s former students

who are repaying their Title IV student loans each year (weighted for loan amount).

Debt-to-Earnings Ratios – The annual repayment amount based on the

median educational loan debt of the students who completed the GE Program as a proportion of their average annual earnings after two to three years.

25

REPAYMENT RATE

26

Repayment Rate

The percentage of a Gainful Employment Program’s former students who are repaying their Title IV student loans each year.

27

NSLDS data used to identify students and to attribute loan amounts.

Repayment is a reduction in the outstanding principal balance over a one year period.

28

Calculated annually using the following formula:

OOPB = Original Outstanding Principal Balance when Title IV loan entered repayment

LPF = Loans Paid in Full PML = Payments Made Loans

OOPB of LPF plus OOPB of PML

OOPB

Repayment Rate

Payments Made Loans – Loan’s balance is reduced by at least $1.00 over

the year; Loan is on track to being forgiven under the Public

Service Loan Repayment Plan; Borrower is making payments under an interest‐

only or income‐based repayment plan, but limited to no more than 3% of the OOPB;

For post-baccalaureate programs, is a consolidation loan and all interest accrued over the course of the year has been paid.

29

Repayment Rate

30

Example:Former Student OOPB

Student A $ 2,000Student B 3,000Student C 5,000Student D 10,000

OOPB = $20,000 (total amount for all borrowers in 2YP)

Only student D is successful in repaying Repayment rate = $10,000 / $20,000 = 50%

Repayment Rate

Repayment Rate

31

For the most recently completed fiscal year, excludes from formula: Loans in an in-school deferment or a military-

related deferment Loans discharged, or pending discharge, for

death or total and permanent disability

DEBT-TO-EARNINGS RATIOS

32

Debt-to-Earnings Ratios

33

Repayment amount for all student loans - not just Title IV loans.

Schools identify students and non-Title IV loan amounts.

NSLDS identifies Title IV debt. The average annual earnings is

the higher of the mean or median annual earnings from the SSA.

Average discretionary earnings is the average annual earnings less 150% of the HHS poverty amount for a single person.

The median educational loan annual repayment amount of students who completed the GE Program as a proportion of those student’s average

annual earnings two to three years after completing the

GE program

Debt-to-Earnings Ratios

34

Annual Debt-to-Earnings Ratio

Discretionary Debt-to-Earnings Ratio

Average Annual Loan Payment AmountMean or Median Annual Earnings

Average Annual Loan Payment Amount Mean or Median Annual Earnings less 1.5 X poverty guideline

If the school reported the student’s tuition and fees, ED will use the lower of the tuition and fees charged the student for the program or the student’s total loan debt incurred for program.

Tuition and Fee amount is for the student’s entire enrollment in the GE Program

Debt-to-Earnings Ratios

35

Debt-to-Earnings Ratios

SSA will provide the median and mean earnings of program’s completers. Calculation uses the higher of the two

ED does not receive student level earnings information.

36

Debt-to-Earnings Ratios

Calculating of the annual loan payment— Uses the program's median loan debt, Amortized at 6.8% over –

10 years for a certificate or Associate’s program.

15 years for baccalaureate and master’s programs.

20 years for a doctoral or first professional graduate program

37

Debt-to-Earnings Ratios

38

Exclude students who, during the earnings year – Had one or more loans in a military-related

deferment status Had loans discharged, or pending discharge, for

death or total and permanent disability Were enrolled in school

INFORMATIONAL RATES RESULTS

39

Process Overview

40

ED provides institutions

with debt measures

ED computes debt measures

SSA returns median & mean earnings

by program

ED sendsstudent

identifiers to SSA

Institutions report students by

program

Information on each student enrolled in

the Gainful Employment

Programs reported to ED

Earnings information

aggregated by program by institution

(no student specific data returned by

SSA)

Repayment rates and debt-to-

earnings ratios returned along with

backup data

27,583 Programs

3,612 Schools

6,423 Programs

2,197 Schools

3,695 Programs

1,336 Schools

Unique educational programs that had students in the

relevant 2-year measurement period (FY2007 and FY 2008)

Unique educational programs where there were at least 31

students for either of the debt measures

Unique educational programs where metrics were calculated because there were at least 31

students for both debt measures.

Informational Rates Results

5,504 ProgramsIndividual educational programs that had the

Debt-to-Earnings Ratios calculated

4,614 Programs

Individual educational programs that had a

Repayment Rate calculated

41

42

Repayment Rate

Number of Programs

Informational Rates Results

43

Annual Debt-to-EarningsNumber of Programs

Informational Rates Results

44

Discretionary Debt-to-Earnings

Number of GE programs

Informational Rates Results

ADDITIONAL GAINFUL EMPLOYMENT INFORMATION

45

For More GE Information

IFAP Gainful Employment Page: http://ifap.ed.gov/GainfulEmploymentInfo/ or from IFAP Homepage Regulations Dear Colleague Letters and Electronic

Announcements Frequently Asked Questions Training Resources

46

47