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Gainful Employment: Weighed in the Balance

Gainful employment. This has developed into one of the most debated topics in modern Title IV regulatory history.  Ever since before their publication in the Federal Register, the October 29, 2010 Final Rules (also known as the Program Integrity Regulations), have been a hot topic.  The 10/29/2010 regulations, along with the June 13, 2011 Final Rule on the Gainful Employment – Debt Measures, have provided plenty of fodder for ongoing dialog and debate in the higher education industry.

Legal Proceedings

But, of course, the dialog and debate did not just remain in the realm of the higher education industry.  It has wound its course into the legal system as well.  After an early suit in July 2011 filed by the Association of Private Sector Colleges and Universities (APSCU) not long after the last of the GE regulations were published, the results of the suit have been decisions from the Courts and appeals by the U.S. Department of Education (ED).  Last June the U.S. District Court for the District of Columbia reached a decision regarding APSCU’s challenge to the Department of Education’s GE regulations wherein the Court vacated (made legally null and void) most of the provisions of the regulations related to the loan repayment test, as well as the provisions related to GE reporting by institutions, and certain requirements for approval from ED for new academic programs institutions may wish to implement.

Subsequent to the initial decision by the Court, ED filed an appeal to the Court’s decision.  During that time many institutions have anxiously awaited the outcome of ED’s appeal.  Just recently, on March 19, 2013, the Court rejected in total ED’s appeal to amend the prior judgment against the Department last June.  Therefore, the GE regulations to a large extent have been weighed in the balance and found to be wanting.

Current Requirements

So, what is the current state of the GE regulations after the legal proceedings?  Following is a brief synopsis of the GE requirements at present.


The Court did leave intact the aspects of GE related to “disclosures”, in contrast to the GE “reporting” requirements.  Therefore, institutions do still have to comply with the GE Program Integrity Regulations in regard to the matters of information that an institution must disclose.  In fact, institutions were to have updated the GE disclosure information by January 31, 2013 for the completed 2011-2012 academic year.  As referenced in the January 2013 issue of the FAME Inside Report, until ED provides its template for providing disclosure information, schools must make the disclosure information available in a format it has decided upon.  The Department reminded schools of the information still to be disclosed under GE requirements in the GE Electronic Announcement #42 dated November 23, 2012.  These points include the following:

  • Occupations (by names and SOC Codes) that the program prepares students to enter;
  • Normal time to complete the program (e.g., one year certificate program);
  • On-time graduation rate for completers (on-time completion is defined in 34 CFR 668.6(c));
  • Tuition and fees for completing the program in the normal time, costs for book and supplies, and costs for room and board, if applicable;
  • Placement rate for completers, if required by state or accreditor; and
  • Median educational loan debt incurred by completers, disclosed in three separate categories: Title IV loans, private loans, and institutional debt.


As referenced above, the provisions of the GE Program Integrity Regulations have been vacated by the March 19, 2013 Court decision rendered to ED’s appeal of the Court decision in June 2012.  Therefore, schools are not required to fulfill the reporting requirements associated with the GE regulations that would have been necessary for calculating an institutional loan repayment rate and the debt-to-income gainful employment metrics that were to go into effect on July 1, 2012.  This, therefore, negates the reporting requirements for the 2011-2012 academic year and forward.  However, schools have already completed reporting for 2010-2011 and a number of prior years back to 2006-2007.   It is noted that institutions may “voluntarily” submit corrections to previously reported information for those years if it has discovered inaccuracies in its earlier reported information.

New Gainful Employment Programs

Since the Court’s decision on ED’s appeal vacated most provisions of the GE requirements, the advance reporting of new Gainful Employment academic programs to the Department is also not required.  Had the Department’s appeal been upheld, schools would have been required to notify ED of its intent to offer a new GE program 90 days in advance of starting the proposed program.  Therefore, schools are now only required to get ED approval for new programs as indicated in the regulations in effect prior to July 1, 2011.  Schools may also refer to the 2012-2013 Federal Student Aid Handbook, page 2-91, for instances in which schools must otherwise gain ED’s approval before disbursing Title IV funds to students in such new program.

What Lies Ahead

The question of what lies ahead is anyone’s guess.  But, the Court’s recent March 19, 2013 decision may make it more challenging for ED to easily overcome the decision.  This is because much of the reporting requirement provisions that were vacated would have relied upon reporting student-specific academic and other data.  The Court held that ED has no authority to collect such data based upon a law enacted by Congress in 2008 which banned collection of data to create what is called, in essence, a national “student unit record system”.  Yet, ED is currently reviewing its options since it interprets the judge’s decisions to indicate that the Court agrees that ED has the backing to work to ensure that students and the federal student aid programs are protected.  What will be the next steps?  Again, it is a bit uncertain at this point, but ED may choose some further appeals after its analysis that is being done in concert with the Department of Justice.  Or, it may opt to pursue further progress in gaining authority to require GE reporting through changes in the law itself as the reauthorization of the Higher Education Act is scheduled to occur in 2013.  ED has also recently announced that it will likely include GE in upcoming hearings across the country next month.  The financial aid community will have to stay tuned to see how ED’s desires for GE reporting play out.  But, for the moment, it has been weighed in the balance.

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