11/21/2014. Gainful Employment 2.0 More Questions Than Answers. More Questions Than Answers. More Questions Than Answers. December 2013 Draft GE 2.

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1 Gainful Employment 2.0 December 2013 Draft GE 1.0 Federal NPRM Summary and Analysis of Concerns w/ Current Status AACS Annual Convention & Expo Phoenix Convention Center Phoenix, Arizona Saturday, November 15, 2014 Next Steps GE Draft NPRM Annual () Discretionary () Eligibility Metrics Programmatic Annual Loan Repayment (ALR) Cohort Default Rates pcdr (pcdr) D/E Eligibility Thresholds 12% 30% Failing: is 12% denominator of the rate is zero. 30% denominator of thr rate is negative or zero. Passing: 8% 20% Zone: between 8-12% between 20-20% Zone: between 8-12% between 20-30% Falling: pcdr Eligibility Threshold pcdr 30% D/E Ineligibility Trigger pcdr Ineligibility Threshold Eligibility Determinations Loss of eligibility for three years in BOTH metrics failed for 3 our of 4 years Loss of eligibility for three years if; BOTH metrics failed for 2 out of 3 years At least one metric remains in the zone for a period of 4 consecutive years without achieving a passing score. Loss of eligibility for three years if the 3 most recent years pcdr is greater or equal to 30%. A program loses A program loses eligibility eligibility upon failure of by failing either or both all three metrics D/E mertics pcdr A program loses eligibility by failing both D/E metrics. Debt Amortized based upon Type of Program: Debt Amortized based upon Type of Program: 10-Year Repayment Period = Undergraduate 10 Years = Certificate/Diploma Certificate/Diploma Debt Amortized over 10 Year period for ALL Associate's Degree D/E Calculation: Associate s Degree types of programs. Amortization 15-Year Repayment Period = 15 Years = Bachelor's Degree Bachelor's Degree Masters Degree 20 Years = Graduate Degree 20-Year Repayment Period = Doctoral First-Professional Degree Based upon the average of the Federal District Unsubsidized Loan statutory interest rate for the Based upon the average of the Based upon the average three-year period prior to the end Federal District Unsubsidized of the Federal District Based upon the average of the of the cohort period for Loan statutory interest rate for Unsubsidized Loan Federal District Unsubsidized Certificate/Diploma D/E Calculation: the six-year period prior to the statutory interest rate for Loan statutory interest rate for the Associate's Degree Programs. Interest Rate end of the cohort period for all the six-year period prior six-year period prior to the end of programs. to the end of the cohort the cohort period for all programs. Based upon the average of the period for all programs. Federal District Unsubsidized Loan statutory interest rate for the six-year period prior to the end of the cohort period for Bachelor's Degrees. Debt capped at total cost of Debpt capped at total cost Debt capped at total of tuition and Debt capped at total tuition and D/E Calculation: tuition and fees of tuition and fees. fees, books and supplies, and fees, books and supplies, Debt equipment. equipment, and assessed charges. Higher of the mean or median Higher of the mean or 1

2 Summary & Analysis of Key Changes From NPRM to Final Rule pcdr Shifted From Eligibility Metric to Disclosure Requirement Determination of Median Loan Debt Calculation Significantly Revised Student Debt Interest Rate Modified from 6-yr. to 3-yr. average Student Debt Now Includes Loan Debt and Assessed Charges Transitional Eligibility Period Now Based Upon Program Length Disclosures Measures Enrollment Cohort Cohort Sizes pcdr Key Holdovers From NPRM to Final Rule GE Program Defined Program Certification Requirements Three-tiered (D/E) Eligibility Metric D/E Assessment Periods Student Debt Warning Requirements Ineligibility Triggers and Terms of Ineligibility An educational program established for the purpose of providing gainful employment in a recognized occupation as identified by a combination of The institutions six-digit OPEID number; The program s six-digit CIP code; and The program s credential level Establishment/Reestablishment of Program Eligibility D/E Appeals Prospective Student Defined GE Framework An Individual Who: A. Has contacted an eligible institution for the purpose of requesting information about enrolling in a GE program B. Has been contacted directly by the institution or by a third party on behalf of the institution about enrolling in a GE program A GE program meets the eligibility framework if the program- Satisfies the certification requirements; and Is not an ineligible program under the D/E rates measure 2

3 GE Rate Calculations (a) Annual Loan Payment (b) Annual Loan Payment the higher of the mean or median annual earnings Annual Loan Repayment the higher of the mean or median annual earnings minus (1.5 x Poverty Guideline) Median Loan Debt of the students who completed the program during the cohort period Removing, if applicable, the appropriate number of highest loan debts equivalent to the number of students within the cohort period for which the IRS was unable to match the students with earnings data Calculating the median of the remaining students Determination of Median Loan Debt (b)(1)(i) Loan Debt and Assessed Charges (b) Median Loan Debt is the Lesser of: (on a student by student basis) Loan Debt and Assessed Charges Total Amount for Tuition and Fees, Books, Equipment, and Supplies Loan Debt Includes - Amount of Title IV loans borrowed (total amount disbursed less any cancellations of adjustments); Private loans (institutional and external) reported by the institution as required under the Reporting Requirements; and The amount outstanding, as of date of completing, on any credit (including any unpaid charges) extended by or on behalf of the institution. Amortization of Median Loan Debt Student Exclusions (c) Students are not included in either the numerator or the denominator when: Relevant Part: The median loan debt is amortized over a 10-year repayment period for a program that leads to an undergraduate certificate, using an annual interest rate that is the average of the three-year period prior to the end of the cohort period. One or more of the student s title IV loans were in military-related deferment status at any time during the calendar year The student was enrolled in another eligible institution or another institution during the calendar year One of more of the student s title IV loans are under consideration, or have been approved, for a total and permanent disability discharge The student completed a higher credentialed undergraduate GE program at the institution subsequent to completing the program as of the end of the most recently completed award year The student completed a higher credentialed graduate GE program The student died 3

4 Transition Rates (f) Transitional Rate Calculation (f) Based upon the length of the GE program, if a GE program is failing or in the zone based upon the draft D/E rates, the Secretary will also calculate a transitional draft of D/E rate for that award year. Transitional draft D/E rates are determined using- Median loan debt for students who completed the program during the most recently completed award year, Applying the same mean or median annual earnings denominators used for the D/E rates measure For each GE program, based upon the cohort of title IV, HEA students enrolled during that award year: The Secretary creates a list a title IV, HEA students who completed the program during the cohort period and provides the list to the institution; The institution has 45 days to submit corrections for Secretary consideration; The Secretary either approves or denies an institution s corrections and develops a final list; The Secretary submits the final list to the SSA, who in return provides the Secretary with: Aggregated mean and median annual earnings of the students on the final list; and The number of students on the list the SSA could not match If SSA earnings data is provided for at least 30 students, the secretary used the higher of the mean or median annual earning to calculate draft D/E rates; The Secretary calculates the draft D/E rate measures ( and ); The Secretary notifies the institution of the draft D/E rates and provides the mean and median annual earnings data from SSA and the individual student loan information, including the loan debt for each student that was used to calculate the rates; The institution has 45 days to challenge the accuracy of the loan debt information used to calculate the median loan debt; After the 45-day period and subject to resolution of any challenge, the draft rate becomes final D/E rates; The Secretary provides a notice of determination for each GE program s final rate to the institution 4

5 GE Rate Measures Requirements DE Rates Alternate Earnings Appeals Draft D/E rates and the data are not considered public information Only after the notice of determination for each program s final D/E rates are provided to the institution are they to be published An institution can file an alternate earnings appeal of final D/E rates by requesting a recalculation of program s most recent final D/E rate for the same calendar year upon which the earnings data was calculated by SSA D/E Rates Alternate Earnings Appeals Appeals Procedures (e) An institution can appeal based upon data collected from An institutional survey; A State-sponsored data system No later than 14 days after the Secretary issues a notice of determination, an institution can notify the Secretary of its intent to submit an appeal*; and No later than 60 days after the Secretary issues a notice of determination, the institution must submit the recalculated D/E rates, all certifications, and specified supporting documentation for determination. * A school may start the surveying process much earlier than after the Secretary issues a notice of determination Appeals Determinations Final Determination Notices The notice of determination for each GE program will include: Prior to any determinations, an institutional program that is at risk of loss of eligibility is not subject to the consequences until a determination is provided The final D/E rates for the program The final determination of the program's status as passing, failing, or in the zone as well as whether the program is ineligible and the consequences of that determination Whether the program could become ineligible based upon its final D/E rates for the next award year Whether the program is required to provide the student warnings as part of their disclosures Instructions on how to make an alternate earnings appeal, if the program's final D/E rates are failing or in the zone 5