GE Breaking News!

Gainful Employment Regulatory Options:
Institutional Decision Time

Audio version of this articles is attached below for your convenience.  

One would be hard pressed to find an employee of a Title IV-eligible postsecondary institution that has gainful employment (GE) programs that is happy about the amount of time and energy necessary to fulfill regulatory requirements and other essential guidance from the U.S. Department of Education (ED) pertaining to GE.  In the years since the first required GE reporting, back in 2011, the topic of GE has remained at the forefront of thoughts and dialog at affected institutions.  But, there is welcome news to those who have borne the brunt of the GE regulatory obligations!

Change is Coming

ED announced that on Monday, July 1, 2019, a final rule will be published in the Federal Register that will rescind ED’s Gainful Employment regulations (called the 2014 Rule).  ED made the announcement via the Gainful Employment Electronic Announcement (GE EA) #122 posted on IFAP on Friday afternoon, June 28, 2019.

The Higher Education Act (HEA) of 1965, as amended, requires that regulations affecting programs under Title IV of the HEA be published in final form by November 1, prior to the start of the award year (July 1) to which they become effective.  [See Section 482(c) of the HEA.]  So, normally, the final rule announcing the rescission published on July 1, 2019, would become effective for the award year beginning on July 1, 2020.  But, ED continued the welcome tone of this Electronic Announcement by stating that the Secretary of Education has exercised the authority granted in the HEA to allow early implementation of provisions of this final rule.

Early Implementation Option

As indicated in the GE EA, with the July 1, 2019, final rule, ED has designated regulatory changes to subpart Q and subpart R of the Student Assistance General Provisions at Title 34, part 668 of the Code of Federal Regulations (CFR) as being eligible for early implementation by institutions.  The regulatory changes remove and reserve subpart Q [Gainful Employment (GE) Programs] and rescind subpart R (Program Cohort Default Rate).  Again, institutions may elect to implement the provisions of the July 1, 2019, final rule immediately, effective upon the July 1, 2019, publication of the final rule in the Federal Register.

Early Implementation Impact

There are implications for those who choose to implement the July 1, 2019, final rule early (i.e., prior to the mandatory effective date of July 1, 2020).  These are highlighted below:

• The institution must document its early implementation internally.  For example, the institution should keep an official record of its decision to implement (i.e., retain a copy of the minutes of the meeting making the decision, etc.).  It is likely that such a significant decision be signed off on/authorized by the president/chief executive officer (CEO) of the institution.  Note that this decision does not have to be forwarded to ED, but it must be available upon request from ED.
• Those implementing the final rule early will not be required to report GE data for the 2018-2019 award year (which otherwise will be due October 1, 2019).
• Institutions electing early implementation of the final rule will not be required to comply with the requirements of 34 CFR 668.412(d) and (e).  Those paragraphs of the regulations otherwise require institutions to include the GE disclosure template, or a link thereto, in their GE program promotional materials and directly distribute the disclosure template to prospective students, starting on July 1, 2019, if they do not elect early implementation of the final rule.
• Institutions that early implement the final rule will no longer be required to post the GE Disclosure Template and may remove the template and any other GE disclosures that are required under 34 CFR 668.412 from their web pages.
• An institution that early implements will not be required to comply with the certification requirements for GE programs under 34 CFR 668.414 (e.g., GE program eligibility certifications, among others).

Electing Not to Early Implement

It is crucial that institutions keep in mind that those who elect not to early implement the rule ARE expected to comply with the 2014 rule until the rescission becomes effective on July 1, 2020.

Institutional Decision Time

Each institution must make the determination as to whether electing to implement the rule early or not is to their advantage.  If the decision to implement early is made, it must be officially documented and that documentation retained.  If the institution chooses not to implement the final rule early, it must still comply with the 2014 regulations, including those that otherwise would become effective on July 1, 2019, as highlighted earlier.

Immediate Action Steps to Take

In light of the tight time constraints of the impact of an institution’s decision regarding early implementation of the GE rescission final rule or not, there are some actions that each Title IV-eligible institution that has GE programs should take:

• Communicate immediately with the institution’s president/CEO the impact of the options available to the institution depending on whether it chooses to early implement the GE rescission final rule or not.
• If the institution elects to early implement the GE rescission rule, have the president/CEO immediately sign an authorizing statement to that effect applicable to the institution, including its appropriate OPEID.
  • The statement should likely reference the guidance put forth by ED in the June 28, 2019, Electronic Announcement, and the final rule published in the Federal Register on July 1, 2019, both of which allow an affected GE institution to early implement the rescission of subpart Q and subpart R as soon as July 1, 2019.  See the Implementation Date of These Regulations section of 84 Federal Register, No. 126, page 31395 (July 1, 2019).
  • (It is recommended that such action be taken and signed on July 1, 2019, if the institution chooses to early implement, so there is no conflict between the option afforded once an institution elects to early implement and the effective date of the disclosures requirements required by not later than July 1, 2019, if early implementation of the GE rescission is not accomplished on July 1, 2019.)
• If early implementation of the GE rescission final rule is implemented, determine steps necessary at your institution to remove all otherwise required disclosure templates and disclosure materials that would have been necessary to begin distributing to prospective students on July 1, 2019.
• If your institution does not elect to early implement the GE rescission final rule, ensure that you have appropriately begun all necessary disclosures required in 34 CFR 668.412(d) and (e) by July 1, 2010.

Example Language of an Internal Memorandum for Early Rescission of the GE Program Final Rule

Internal Memorandum

July 1, 2019

The U.S. Department of Education (ED) published the amendment to the Gainful Employment (GE) Final Regulations in the Federal Register on July 1, 2019.  This final rule has an effective date of July 1, 2020.  However, in this final rule, the Secretary of Education—in accordance with authority granted the Secretary in Section 482(c) of the HEA—has authorized early implementation of the provisions of this final rule.  This final rule rescinds the GE regulations and removes and reserves subpart Q of the Student Assistance General Provisions in 34 CFR part 668.  This regulatory action also rescinds subpart R of the Student Assistance and General Provisions in 34 CFR part 668.

Based upon the authority granted institutions by the Secretary of Education to adopt early implementation of the above mentioned final rule pertaining to the GE regulations, and in concurrence with the guidance ED also provided in its Gainful Employment Electronic Announcement #122 on June 28, 2019, ABC School (OPEID _________) hereby elects to immediately implement the final rules dated July 1, 2019, related to the GE programs.  [See the Implementation Date of These Regulations section of 84 Federal Register, No. 126, page 31395 (July 1, 2019).]

We immediately implement the GE final rule effective July 1, 2019, and document such implementation by this internal memorandum.

Consult with your institution’s legal counsel should you have any questions related to the legal implications of your decision to either implement the GE final rule early or not.

After years of seemingly endless time and energy expended to maintain compliance with the GE regulations, it is a certainty that most institutions will be happy to see early relief made available to institutions through this new GE final rule.

Should you have any additional questions regarding this topic, please feel free to contact FAME Customer Service through the Client Solution Center.

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