Advocacy Alert: USDE Proposes Rule on Gainful Employment and Financial Value Transparency

As part of the Middle States Commission on Higher Education (MSCHE) strategic priority to promote advocacy initiatives for its members and others, we want to bring to the attention of all constituents the United States Department of Education (USDE) notice of a proposed Gainful Employment (GE) rule and new proposals to require reporting for nearly all undergraduate and graduate degree programs. Institutions should provide feedback based on how this would impact their institutions and constituents. Read USDE’s Notice.

According to the notice,

The Higher Education Act requires that certificate programs at all institutions and degree programs at private for-profit colleges must provide training that prepares students for gainful employment in a recognized occupation. The regulations propose that programs covered by this requirement would have to meet certain performance standards on two measures to maintain access to Federal financial aid. Specifically, programs would have to show that:

Graduates can afford their yearly debt payments. In particular, the share of their annual earnings needed to devote to paying their debt (i.e., their “debt-to-earnings ratio”) must be equal to or less than 8 percent, or equal to or less than 20 percent of their discretionary earnings (i.e., their annual earnings above 150 percent of the Federal poverty guideline).

At least half of graduates have higher earnings than a typical high school graduate in their State’s labor force who never pursued a postsecondary education.

Programs would be assessed separately on each metric. Programs that fail at least one metric would need to warn students that the program is at risk of losing access to Federal aid. Those that fail to meet the standards on the same metric twice in a three-year period would lose access to Federal aid.

In addition, the regulation will establish new reporting requirements for institutions in all sectors of higher education:

the regulation proposes to collect new information on all colleges and programs about costs (including tuition and fees, books, and supplies), non-Federal grant aid, typical borrowing amounts (both private and Federal loans), earnings, any applicable occupational and licensing requirements, and licensure exam passage rates (where relevant). This information would be made publicly available on a website run by the Department, and students would need to acknowledge viewing these disclosures before receiving loans to attend programs that consistently leave participants with high debt burdens.

Submitting Public Comments

Institutions should submit written comments via the Federal Rulemaking Portal by June 20, 2023.