FINANCIAL VALUE TRANSPARENCY
The Higher Education Act acknowledges there are differences across programs and colleges, and this means we have different tools available to promote these goals in different contexts. The final rule therefore creates a Financial Value Transparency (FVT) Framework that will provide information to all students in all programs on the typical earnings outcomes, borrowing amounts, cost of attendance, and sources of financial aid to help students make more informed choices.
In advancing this FVT framework, the Department is not dismissing the myriad (of) non-financial benefits generated by a postsecondary education, including better health, job satisfaction, overall happiness, increased civic participation, and innumerable intangible benefits that elude quantification. For many students, financial considerations would, appropriately, be just one of many factors used in deciding whether and where to enroll. However, with college tuition at historically high levels and the growing need for student loans to finance these costs, it is critical for students, families, and taxpayers alike to have accurate and transparent information about the possible financial consequences of their postsecondary program options when choosing where to enroll.
FINANCIAL VALUE TRANSPARENCY
The Department will help students be better informed by hosting a new program information website that provides standardized information about program costs (including tuition and fees, books, and supplies), non-Federal grant aid, loan burden (including both private and Federal loans), earnings of completers, and applicable occupational and licensing requirements. This website will give students and families a personalized estimate of what they’ll pay out-of-pocket to earn credentials in specific postsecondary programs, along with key information on the debt and earnings outcomes of program graduates.
Past research has underscored the importance of ensuring information is proactively delivered to borrowers at salient moments in their decision-making. In situations where students may face higher risks of poor financial outcomes, the FVT provides added protections for prospective students. The framework requires that such students acknowledge having seen the financial information on the website, including a plain language description of the fact that the program leaves its graduates with high debt burdens, before the student can enroll in the program. These requirements will apply to prospective students at certificate and graduate degree programs. The Department chose to exclude undergraduate degree programs from this provision in the final rule to better target the acknowledgment requirements to programs to which students tend to directly apply. In addition, our empirical analysis shows that high-debt-burden programs are relatively rare among undergraduate degree programs outside the proprietary sector.
FINANCIAL VALUE TRANSPARENCY
Some commenters on the rule expressed concern that programs that produce important societal benefits, but may lead to less remunerative careers, might be negatively affected by being disproportionately labeled high-debt-burden or low-earning. It is rarely the case, however, that such programs fail to meet the minimum standards outlined in the rule. For example, education training programs are less likely to fail the D/E rates or EP measure than other programs. Indeed, data from the National Education Association’s Teacher Salary Benchmark Report indicate that even States with the lowest salaries have average starting salaries at least $5,000 higher than the State’s EP threshold. Similarly, healthcare professions fail at low rates—about 8.2% and 2.0% of GE and non-GE programs did not pass the D/E rates or the EP measure. Finally, arts programs do fail at a slightly higher rate than the average program, but the overall failure rate is low and the difference is small (3.7% vs. 1.2% for non-GE programs, with a smaller difference among GE programs (5.5% vs. 5.3%)).
The reporting requirements for these transparency provisions will start July 1, 2024, but the new website will be built and launched afterwards with the first acknowledgment requirements starting in 2026.
Subpart Q – Financial Value Transparency
§ 668.401 Financial Value Transparency Scope and Purpose
(a) General. Except as provided under paragraph (b) of this section, this subpart applies to a GE program or eligible non-GE program offered by an eligible institution, and establishes the rules and procedures under which—
(1) An institution reports information about the program to the Secretary; and
(2) Except as provided in paragraph (b)(1) of this section, the Secretary assesses the program’s debt and earnings outcomes.
(1) This subpart does not apply to institutions located in U.S. Territories or freely associated states, except that such institutions are subject to the reporting requirements in § 668.408 and the Secretary will follow the procedures in §§ 668.403(b) and (d) and 668.405(b) and (c) to calculate median debt and obtain earnings information for their GE programs and eligible non-GE programs.
(2) For each award year that the Secretary calculates D/E rates or the earnings premium measure under § 668.402, this subpart does not apply to an institution if, over the most recently completed four award years, it offered no groups of substantially similar programs, defined as all programs in the same four-digit CIP code at an institution, with 30 or more completers.
§ 668.402 Financial Value Transparency Framework
The Secretary assesses the program’s debt and earnings outcomes using debt-to-earnings rates (D/E rates) and an earnings premium measure.
(b) Debt-to-earnings rates.
The Secretary calculates for each award year two D/E rates for an eligible program, the discretionary debt-to-earnings rate, and the annual debt-to-earnings rate, using the procedures in §§ 668.403 and 668.405.
(c) Outcomes of the D/E rates.
(1) A program passes the D/E rates if—
- Its discretionary debt-to-earnings rate is less than or equal to 20 percent;
- Its annual debt-to-earnings rate is less than or equal to 8 percent; or
- The denominator (median annual or discretionary earnings) of either rate is zero and the numerator (median debt payments) is zero.
§ 668.405 Process for Obtaining Data and Calculating D/E Rates and Earnings Premium Measure
The Secretary uses the administrative data to—
- Compile a list of students who completed each program during the cohort period. The Secretary—
- Removes from those lists students who are excluded under § 668.403(e) or § 668.404(c);
- Provides the list to institutions; and
- Allows the institution to correct the information reported by the institution on which the list was based, no later than 60 days after the date the Secretary provides the list to the institution;
- Obtain from a Federal agency with earnings data the median annual earnings of the students on each list, as provided in paragraph (c) of this section; and
- Calculate the D/E rates and the earnings premium measure and provide them to the institution.
Obtaining Earnings Data
For each list submitted to the Federal agency with earnings data, the agency returns to the Secretary—
- The median annual earnings of the students on the list whom the Federal agency with earnings data has matched to earnings data, in aggregate and not in individual form; and
- The number, but not the identities, of students on the list that the Federal agency with earnings data could not match.
Calculating D/E Rates and Earnings Premium Measure
- If the Federal agency with earnings data includes reports from records of earnings on at least 30 students, the Secretary uses the median annual earnings provided by the Federal agency with earnings data to calculate the D/E rates and earnings premium measure for each program.
- If the Federal agency with earnings data reports that it was unable to match one or more of the students on the final list, the Secretary does not include in the calculation of the median loan debt for D/E rates the same number of students with the highest loan debts as the number of students whose earnings the Federal agency with earnings data did not match.
For example, if the Federal agency with earnings data is unable to match three students out of 100 students, the Secretary orders by amount the debts of the 100 listed students and excludes from the D/E rates calculation the three largest loan debts
§ 668.406 Determination of the D/E Rates and Earnings Premium Measure
For each award year for which the Secretary calculates D/E rates and the earnings premium measure for a program, the Secretary issues a notice of determination.
The notice of determination informs the institution of the following:
- The D/E rates for each program as determined under § 668.403.
- The earnings premium measure for each program as determined under § 668.404.
- The determination by the Secretary of whether each program is passing or failing, as described in § 668.402, and the consequences of that determination.
- Whether the student acknowledgment is required under § 668.407.
- For GE programs, whether the institution is required to provide the student warning under § 668.605.
- For GE programs, whether the program could become ineligible under subpart S of this part based on its final D/E rates or earnings premium measure for the next award year for which D/E rates or the earnings premium measure are calculated for the program.
§ 668.407 Student Acknowledgments
(a) Beginning on July 1, 2026, if an eligible program, other than an undergraduate degree program, has failing D/E rates, the Secretary notifies the institution under § 668.406(b)(4) that student acknowledgments are required for such program in the manner specified in this section.
(b)(1) If student acknowledgements are required, prospective students must acknowledge that they have viewed the information provided through the program information website established and maintained by the Secretary described in § 668.43(d).
(2) The Department will administer and collect the acknowledgment from students through the program information website.
(3) Prospective students must provide such acknowledgments until:
- The Secretary notifies the institution pursuant to § 668.406 that the program has passing D/E rates; or
- Three years after the institution was last notified that the program had failing D/E rates, whichever is earlier.
(c)(1) A prospective student must provide the acknowledgment before the institution enters into an agreement to enroll the student.
(2) The Secretary monitors the institution’s compliance with the requirements in paragraph (c)(1) of this section through audits, program reviews, or other investigations.
(d) The acknowledgment required in paragraph (c)(1) of this section does not mitigate the institution’s responsibility to provide accurate information to students concerning program status, nor will it be considered as dispositive evidence against a student’s claim if applying for a loan discharge.
§ 668.408 Reporting Requirements
In accordance with procedures established by the Secretary, an institution offering any group of substantially similar programs, defined as all programs in the same four-digit CIP code at an institution, with 30 or more completers in total over the four most recent award years must report to the Department—
(1) For each GE program and eligible non-GE program, for its most recently completed award year—
- The name, CIP code, credential level, and length of the program;
- Whether the program is programmatically accredited and, if so, the name of the accrediting agency;
- Whether the program meets licensure requirements or prepares students to sit for a licensure examination in a particular occupation for each State in the institution’s metropolitan statistical area;
- The total number of students enrolled in the program during the most recently completed award year, including both recipients and non-recipients of title IV, HEA funds; and
- Whether the program is a qualifying graduate program whose students are required to complete postgraduate training programs, as described in the definition under § 668.2.
2) For each student—
- Information needed to identify the student and the institution;
- The date the student initially enrolled in the program;
- The student’s attendance dates and attendance status (e.g., enrolled, withdrawn, or completed) in the program during the award year;
- The student’s enrollment status (e.g., full time, three-quarter time, half time, less than half time) as of the first day of the student’s enrollment in the program;
- The student’s total annual cost of attendance (COA);
- The total tuition and fees assessed to the student for the award year;
- The student’s residency tuition status by State or district;
- The student’s total annual allowance for books, supplies, and equipment from their COA under HEA section 472;
- The student’s total annual allowance for housing and food from their COA under HEA section 472;
- The amount of institutional grants and scholarships disbursed to the student;
- The amount of other State, Tribal, or private grants disbursed to the student; and
- The amount of any private education loans disbursed to the student for enrollment in the program that the institution is, or should reasonably be, aware of, including private education loans made by the institution;
(3) If the student completed or withdrew from the program during the award year—
- The date the student completed or withdrew from the program;
- The total amount the student received from private education loans, as described in § 668.403(d)(1)(ii), for enrollment in the program that the institution is, or should reasonably be, aware of;
- The total amount of institutional debt, as described in § 668.403(d)(1)(iii), the student owes any party after completing or withdrawing from the program;
- The total amount of tuition and fees assessed the student for the student’s entire enrollment in the program;
- The total amount of the allowances for books, supplies, and equipment included in the student’s title IV, HEA COA for each award year in which the student was enrolled in the program, or a higher amount if assessed the student by the institution for such expenses; and
- The total amount of institutional grants and scholarships provided for the student’s entire enrollment in the program; and
Initial and Annual Reporting
(1) Except as provided under paragraph (c) of this section, an institution must report the information required under paragraph (a) of this section no later than—
- (i) For programs other than qualifying graduate programs, July 31, following July 1, 2024, for the second through seventh award years prior to July 1, 2024;
- (ii) For qualifying graduate programs, July 31, following July 1, 2024, for the second through eighth award years prior to July 1, 2024; and
- (iii) For subsequent award years, October 1, following the end of the award year, unless the Secretary establishes different dates in a notice published in the Federal Register.
(2) For any award year, if an institution fails to provide all or some of the information required under paragraph (a) of this section, the institution must provide to the Secretary an explanation, acceptable to the Secretary, of why the institution failed to comply with any of the reporting requirements.
Transitional Reporting Period and Metrics
- For the first six years for which D/E rates and the earnings premium are calculated under this part, institutions may opt to report the information required under paragraph (a) of this section for its eligible programs either—
- For the time periods described in paragraphs (b)(1)(i) and (ii) of this section; or
- For only the two most recently completed award years.
- If an institution provides transitional reporting under paragraph (c)(1)(ii) of this section, the Department will calculate transitional D/E rates and earnings premium measures using the median debt for the period reported and the earnings for six years.
About the Authors:
Materials and content originate from the Department of Education posting, with insights and summaries provided by Tom Netting and Sally Samuels.
Sally Samuels, Director of Compliance, Fame
Sally is one of the country’s leading authorities on Federal financial aid administration with more than 43 years of “in the trenches” experience. As a respected Industry leader, she is frequently called upon to speak at School, Accrediting, Regional and State conferences as well as to act as school liaison during program reviews and compliance audits.
Having processed, reviewed and taught financial aid for over 40 years Sally brings real life experiences, observations and illustrations to her audience adding a touch of humor to regulatory compliance. Her style makes the sometime complex topics easy to understand and audiences always come away with practical knowledge that they can apply to their everyday situations. Sally has been published many times in various Higher Education periodicals providing her expertise and insight on administering Federal funding based on compliance with the Federal statutes.
Tom Netting, President/CEO, TEN Government Strategies, Co-Executive Director, CSPEN
Having spent all of his professional career devoted to higher education policy oversight and implementation, Tom Netting has an extensive knowledge of the laws and regulations governing all aspects of higher education. His considerable background and experience have afforded him the opportunity to view the development and implementation of federal higher education and workforce development policy in their entirety – including issues related to higher education and workforce development, health care, veteran affairs policies and the procurement of federal appropriations.