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(Or, Uncertainty in the Face of the
Gainful Employment Debt to Earnings Rates)

It was a long time coming!  But, the first calculation of the Gainful Employment (GE) draft Debt-to-Earnings (D/E) rates have arrived!  Almost six years to the date after the publication of the original October 29, 2010, Program Integrity Regulations which contained the original version of GE regulations, the U.S. Department of Education (ED) recently released the long-awaited draft GE D/E rates!  Without doubt, many schools opened that message in their Student Aid Internet Gateway (SAIG) mailbox with much trepidation when it arrived!  So that we may assist in alleviating any apprehension, let us review the overall GE D/E rate process, including current options as well as upcoming ones.

Draft GE/DE Rates

The draft GE D/E rates were calculated by the U.S. Department of Education (ED) after allowing institutions the opportunity to review and submit corrections to the GE Completers List this past summer.  The final submission of the GE Completers List was due July 28, 2016.  This GE Completers List was for the cohort period (either 2-year or 4-year, as applicable) for the 2014-2015 calculation year.  After ED decided on whether to accept the corrections schools submitted to the Completers List, a final version of the GE Completers List was used to obtain the annual earnings from the Social Security Administration (SSA). The earnings data from the SSA, along with loan data from NSLDS, was used to calculate the Draft GE Debt-to-Earnings Rates.

Debt-to-Earnings (D/E) rates are the result of an evaluation of the amount of debt students who completed a GE program incurred to attend the GE program in comparison to those same students’ discretionary and annual earnings after completing the program.  For more specific details on how the D/E rates measures (e.g., Annual Earning Rate and Discretionary Income Rate) are calculated, you will want to look at the attachment to the GE Operations Manual, “Explanation of Debt Measures,” beginning on page 29.[1]  It is interesting to note that if the total of the amount of the students’ tuition, fees, books, equipment, and supplies costs for the program are lower than the total amount of student loan debt incurred, that amount will be used in the calculations instead of the actual debt amount.

Once the D/E rates calculations were completed, schools received a rate for each GE program with at least 30 students in the cohort. There were three possible outcomes: Passing, Zone, or Failing.

There are various rates and amounts that are calculated which may be viewed on the NSLDS Professional Access Web site.  These rates include the D/E Annual, D/E Discretionary, Transitional D/E Annual, and Transitional D/E Discretionary, as well as the Annual Loan Payment amount.[2]  All programs with a qualifying number of students receive an Annual rate and Discretionary rate.

Transitional Draft D/E Rates

The Transitional Draft rates are calculated when the GE program was Failing, or in the Zone.  The Transitional Draft rates are an alternative rate that ED is allowed to calculate based upon the regulations at 34 CFR 668.404(g) during what is called the “transition period” of implementing the GE D/E rate calculations.  The Transitional Draft rates were included on the letter ED sent to the school president, and which was distributed to schools via their SAIG mailbox.  These rates are also available for viewing on the NSLDS Professional Access Web site.  Before delving into the transitional rates a bit, let us first clarify how the standard or regular D/E rates are calculated.[3]

The standard cohort periods are, for most programs, two years.  The two-year cohort consists of students who were program “completers” during the third and fourth award years prior to the award year for which ED calculates the D/E rates.  So, for the calculations for 2014-2015 (which are the ones recently released in October 2016), the two-year cohort period is 2010-2011 and 2011-2012.  (As a “heads up,” for the calculations for 2015-2016, the two-year cohort period is made up of completers in 2011-12 and 2012-2013.)  So, the standard D/E rates are calculated based upon the Annual Earnings Rate and Annual Loan Payment of the students who completed the program during the standard cohort period (as described above).

The transition period, for GE programs of one year or less in length, is considered to be the first 5 award years for which D/E rates are calculated.  So, for such GE programs, the “transition period” will be until 2020 when the 2018-2019 D/E rates are calculated.  Schools will receive a “Completers List” from ED each year for your review before submitting it back to ED, similar to what was done this past summer.

During the transition period, the alternative transitional rates are based upon the median loan debt of students who completed the program in the most recently completed award year, instead of the median loan debt for the applicable two-year cohort period referenced earlier.  The “final” D/E rates will be whichever rate is lower, the regularly calculated draft D/E rates or the “transitional” draft D/E rates.

Data Challenges

Schools may determine if they have reason to submit a challenge to certain underlying data used in calculating the D/E rates.  See GE Electronic Announcement #92 (dated 10/12/2016).

If a school is going to submit a challenge, it must be submitted during the allowed 45-day period of October 24, 2016, through December 7, 2016.  (See GE EA #94 dated 10/21/2016.)

The three primary reasons[4] why a school may want to submit a challenge are as follows:

  • The loan does not belong to the student or to the institution;
  • Incorrect loan period dates;
  • The Loan Debt Amount is incorrect (although the Loan Debt Amount is not challengeable, the Loan Debt Amount can be updated by challenging the Loan Amount, Cancellation Amount, and/or Refund Amount).

If an institution chooses to challenge the applicable data, it must do so via the NSLDS Professional Access site.  For detailed instructions on submitting these challenges, refer to Chapter 9 of the updated NSLDS Gainful Employment User Guide[5], available on the NSLDS User Documentation page on the IFAP Website.

Once any applicable challenge has been entered in NSLDS, the system will prompt you to enter a detailed comment explaining the reason for the challenge for each loan challenged.  Note that there will only be one comment box per student.  If the student has more than one loan that is to be challenged, the comments (reason) must be entered for each loan for which data is being challenged.[6]

The school must also include the required documentation.  ED has provided a resource called the “Documentation for Challenges to Draft D/E Rates”[7] on the “Resources” page of the GE Information Page on IFAP.  The documentation must be obtained and then submitted via e-mail to  It must be remembered that failure to submit the required documentation will result in ED denying the challenge.

You will find that Chapters 8 and 9 of the GE User Guide will be helpful in reviewing data and submitting challenges if you have any to submit.  We would also recommend a thorough review of GE EAs #90 through #96 on IFAP’s GE Information Page.

Looking Ahead

So, we find that the GE D/E rates have proven to provide an interesting exercise in the analysis of our students’ level of indebtedness, completion, and ability to repay student loan debt, as defined in the regulation.  But, the publication of the draft GE D/E rates and submitting any potential challenges are not the last step in the determination of the “final” GE D/E rates for the 2015 Debt Measures Year (DMYR).  There is yet the potential for the upcoming Alternate Earnings Appeals.

ED anticipates issuing the “final” GE D/E rates for the 2015 DMYR in January 2017.  Once the final GE D/E rates are released, if a school’s GE program’s D/E rate would change from zone to pass, or from fail to zone, were the alternate earnings data used, then the school may choose to file an alternate earnings appeal.  If a school anticipates submitting such an appeal, it must file a Notice of Intent to appeal with ED not later than 14 days after the “final” GE D/E rates are released.  Then, once the Intent to Appeal is filed, the school has 60 days from the date the final rates were released to submit the documentation to validate the appeal.

Although the school has 60 days from the date of the final D/E rates being released, a school may submit their “Notice of Intent to File an Alternate Earnings Appeal” upon the release of the “draft” D/E rates.  So, if an institution is likely to file an appeal, it may submit its Notice of Intent to Appeal now.[8]

If a school elects to submit an alternate earnings appeal (i.e., use an approved alternate source of earnings for students other than the data from the SSA), it will need to provide the data for, and calculate, the program’s final D/E rates using the higher of the mean or median alternate earnings when submitting the appeal.

A school may utilize alternate data it obtains from an Institutional Earnings Survey or from a State-sponsored data system.  Schools that choose to use an institutional earnings survey to obtain alternate earnings data must ensure that they use the Recent Graduates Employment and Earnings Survey (RGEES), or that the survey that is used, if not RGEES, is developed in adherence to the survey standards of the RGEES developed by the National Center for Education Statistics (NCES).  NCES has also developed a Best Practices Guide that is available on the “Resources” section of the Gainful Employment Information Page on IFAP.  The school must ensure that it follows the instructions provided in GE EA #95 when submitting alternate earnings data and certifications.

Again, it is important to note that the alternate earnings appeal will only be of benefit if the use of the alternate earnings data would cause a GE program’s D/E rates to change from zone to pass, or from a fail to being in the “zone.”  If a school anticipates filing an alternate earnings appeal, it should now be planning and conducting the RGEES (or comparably designed institutional earnings survey) or working on obtaining the alternate earnings data from a state-sponsored data system (if available).  The time currently available for obtaining alternate earnings data will quickly dissipate if appropriate actions are not taken now.

On the Bright Side

Although few, if any, schools have enjoyed the whole process of GE reporting, the Completers List review and submission, analysis and/or challenge of the draft GE D/E rates, or preparation for obtaining alternate earnings data, the bright side is that there are transitional Annual Earnings rates and transitional Discretionary Income rates still to be calculated for the next few years yet.  This will give schools, although challenging to do so, some opportunity for programs that are failing or in the zone, to explore ways to reduce indebtedness and/or lower tuition and fees during the years of the transitional period.  (This would thereby likely reduce the amount students borrow, which in turn, will likely result in a potentially lower annual loan payment amount in the transitional calculations).[9]

Adaptable.  That is one word that describes those who work with programs such as our GE programs.  While not all of the events and requirements of the last 6 years have been enjoyable since the initial regulations were first promulgated in regard to GE, the industry has proven to be flexible, resilient, and creative.  Undoubtedly, as we are soon to be approaching the end of the first year’s full effect with the D/E rates being calculated and published, the top-notch colleagues of the postsecondary industry will remain uniquely adept at staring trepidation in the face and adapting to make the necessary postsecondary education available to the many thousands of students being assisted across the country.  Kudos to the flexibility and tenacity of the professionals who, in spite of the challenges and, at times, uncertainties of Gainful Employment, are involved in assisting so many fulfill their educational dreams and becoming productive members of society!


This material is presented for informational and educational purposes only and should not be considered to be giving legal advice.

[1]GE Operations Manual, “Explanation of Debt Measures,” November 2015, page 29; U.S. Department of Education.

[2] Dear Colleague Letter GEN-15-12, June 30, 2015; U.S. Department of Education.

[3] GE Operations Manual, “Explanation of Debt Measures,” November 2015, pages 29-35; U.S. Department of Education.

[4] GE Electronic Announcement #94, October 21, 2016; U.S. Department of Education.

[5] NSLDS Gainful Employment User Guide, October 20, 2016; U.S. Department of Education.

[6] GE Electronic Announcement #94, October 21, 2016; U.S. Department of Education.

[7] Documentation for Challenges to Draft D/E Rates, October, 2016; U.S. Department of Education.

[8] GE Electronic Announcement #95, October 26, 2016; U.S. Department of Education.

[9] Dear Colleague Letter GEN-15-12, page 6 of PDF version, June 30, 2015; U.S. Department of Education.


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