Gainful Employment Understanding the Metrics and Release of Informational Rates

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Gainful EmploymentUnderstanding the
MetricsandRelease of Informational Rates
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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

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• GOALS OF GAINFUL EMPLOYMENT INITIATIVE

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Growing Concerns with Program Integrity
Concerns
Tightened regulations
Concern

• 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

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Improving Programs

• 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.

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Improving Programs

• Schools can improve their GE Programs by working
  with employers to
• Ensure that the programs training meets their
  manpower needs
• Determine what they need from the programs
  graduates so that their earnings can support the
  student and taxpayer investment

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Employer Feedback
Improving Programs

• 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?

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Student Feedback
Improving Programs

• 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?

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School Review
Improving Programs

• Schools can improve their GE Programs by
• Comparing their programs GE metrics of similar
  programs at other schools
• Determine how those schools provide the program
  with better results.

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• STATUS OF GAINFUL EMPLOYMENT REGULATIONS

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District Court Decision

• On June 30, 2012, a District Court vacated most
  of the gainful employment regulations.
• Courts decision based on EDs 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 

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• 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."

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• GAINFUL EMPLOYMENT STATUTORY FRAMEWORK

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The Law
The HEA provides that to be Title IV eligible an
educational program must be offered by
A public or non-profit postsecondary educational
institution and leads to a degree or

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

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

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

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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

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Informational debt measures and loan medians
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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 courts decision.  They were always
  intended to be used only for informational
  purposes, never carried any potential sanctions,
  and that remains true following the courts
  decision.

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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

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Key Differences from Process to Calculate
Official Rates
Informational Debt Measures

• 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

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Informational Debt Measures

• 2 year cohort period (2YP) is FY 07 and FY 08
• October 1, 2006 through September 30, 2008
• Repayment Rate Programs former students who
  entered repayment in the 2YP
• Debt-to-Earnings Programs former students who
  completed the program in the 2YP

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Informational Debt Measures
School and Program Identification Information
Program Specific Debt Measures

• Repayment Rate
• Numerator
• Denominator

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

• Debt-to-Earnings Annual Ratio
• Numerator
• Denominator
• Debt-to-Earnings Discretionary Ratio
• Numerator
• Denominator

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Loan Medians
School and Program Identification Information
Program Specific Loan Medians

• Title IV Loan Median

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

• Private Loan Median
• Institutional Loan Median

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Cohort Period

• GE metrics use information on the educational
  debt of a cohort of the GE Programs 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)

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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 Programs former students who
  entered repayment on their Title IV loans during
  the cohort period.
• Debt-to-Earnings GE Programs former students
  who completed the program during the cohort
  period.

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GE Debt Measures

• Repayment Rate
• A percentage the GE Programs 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.

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Repayment Rate
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Repayment Rate

• 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.

• The percentage of a Gainful Employment Programs
  former students who are repaying their Title IV
  student loans each year.

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Repayment Rate

• 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

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Repayment Rate

• Payments Made Loans
• Loans 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.

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Repayment Rate

• Example
• Former Student OOPB
• Student A 2,000
• Student B 3,000
• Student C 5,000
• Student 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

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Repayment Rate

• 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

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Debt-to-Earnings Ratios
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Debt-to-Earnings Ratios

• 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 students average annual
  earnings two to three years after completing the
  GE program

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Debt-to-Earnings Ratios

• Annual Debt-to-Earnings Ratio
• Discretionary Debt-to-Earnings Ratio

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If the school reported the students tuition and
fees, ED will use the lower of the tuition and
fees charged the student for the program or the
students total loan debt incurred for
program.Tuition and Fee amount is for the
students entire enrollment in the GE Program
Debt-to-Earnings Ratios
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Debt-to-Earnings Ratios

• SSA will provide the median and mean earnings of
  programs completers.
• Calculation uses the higher of the two
• ED does not receive student level earnings
  information.

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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 Associates
  program.
• 15 years for baccalaureate and masters programs.
• 20 years for a doctoral or first professional
  graduate program

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Debt-to-Earnings Ratios

• 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

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Informational Rates Results
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Process Overview
ED provides institutions with debt measures
ED computes debt measures
SSA returns median mean earnings by program
ED sends student identifiers to SSA
Institutions report students by program
Earnings information aggregated by program by
institution (no student specific data returned by
SSA)
Information on each student enrolled in the
Gainful Employment Programs reported to ED
Repayment rates and debt-to-earnings ratios
returned along with backup data
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Informational Rates Results
27,583 Programs 3,612 Schools
6,423 Programs 2,197 Schools
3,695 Programs 1,336 Schools
Unique educational programs where metrics were
calculated because there were at least 31
students for both debt measures.
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
5,504 Programs
4,614 Programs
Individual educational programs that had the
Debt-to-Earnings Ratios calculated
Individual educational programs that had a
Repayment Rate calculated
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Repayment Rate
Informational Rates Results
Number of Programs
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Annual Debt-to-Earnings
Informational Rates Results
Number of Programs
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Discretionary Debt-to-Earnings
Informational Rates Results
Number of GE programs
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ADDITIONAL GAINFUL EMPLOYMENT INFORMATION
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For More GE Information

• IFAP Gainful Employment Page http//ifap.ed.gov/G
  ainfulEmploymentInfo/ or from IFAP Homepage
• Regulations
• Dear Colleague Letters and Electronic
  Announcements
• Frequently Asked Questions
• Training
• Resources

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QUESTIONS?