Author: Tom Netting
Overview
With literally just days remaining until the Final Rules published by the U.S. Department of Education last October go into effect; Fame wanted to take a moment to remind you of the two packages of regulatory revisions and encourage you to take another look at the regulations and the guidance provided by the Department. To assist you, here is a brief summary with several resources.
Final Rules Effective July 1, 2024: Gainful Employment
As you know, on October 10, 2023, the Federal Register published a Final Rule entitled, “Financial Value Transparency and Gainful Employment.” The primary focus of the rules was the reconstitution of a new version of the Gainful Employment (GE) requirements for all proprietary institution programs and programs below the associates degree level for other sectors of the higher education community to abide by. The regulations bring back the use of debt-to-earnings metrics based upon annual and discretionary income in relations to debt, while also adding a new earnings premium test that measures whether the typical graduate from a program who received Federal Aid is earning at least as much as a typical high school graduate in the labor force (i.e., either working or unemployed) in their State between the ages of 25 and 34.
In addition to the revisions to the GE requirements, the updated regulations also added consumer protection information entitled “Financial Value Transparency.” This new rule mandates calculation, tracking and public disclosure of the same data as the GE eligibility requirements, without penalties, for all programs at every institution of higher education participating in the Title IV: Federal Student Financial Aid programs.
To assist all institutions in planning and implementing changes to comply with the regulations the Department developed and continues to update a Gainful Employment “Fact Sheet” and also provides information on all updated related to the Gainful Employment and Financial Value Transparency regulations within the Knowledge Center.
Financial Responsibility, Administrative Capability, Certification Procedures, and Ability-to-Benefit
Three weeks later, second Federal Register Final Rule entitled, “Accountability for College Costs including Financial Responsibility, Certification Procedures, Administrative Capability, and Ability to Benefit (ATB)” was published. This voluminous set of regulatory additions and revisions. In summation, the regulations made the following changes to each category as described by the Department below.
Financial Responsibility
The U.S. Department of Education amends §§ 668.15 and 668.23 and subpart L of part 668. We are removing all regulations under § 668.15 and reserving that section. We have revised the financial responsibility factors applicable to institutional changes in ownership, currently in § 668.15, and moved them to § 668.176. As a result, all financial responsibility requirements are located in subpart L.
The U.S. Department of Education also amends § 668.23 to update references to the Office of Management and Budget’s (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. As this circular is no longer used, we update the reference to 2 CFR part 200, subpart F. Further, we establish the submission deadline for an institution to submit its compliance audit and audited financial statements as the earlier of six months after the last day of the institution’s fiscal year or 30 days after the date of the later auditor’s report. This new submission deadline will not impact submission deadlines established by the Single Audit Act.
Finally, we amend regulations under subpart L of part 668 to improve our ability to assess whether institutions are able to meet their financial obligations. We establish new mandatory and discretionary triggers that will provide the Department earlier notice that an institution may not be able to meet its financial responsibilities. We revise the regulations governing our assessment of financial responsibility for institutions undergoing a change in ownership to better align with current Departmental practices and consolidate all related regulations in § 668.176.
Administrative Capability
The U.S. Department of Education amends § 668.16 to improve our ability to evaluate the capability of institutions to participate in the Title IV, HEA programs. The changes will benefit students by strengthening financial aid communications to include the institution’s cost of attendance, the source and type of aid offered, whether aid must be earned or repaid, the net price, and deadlines for accepting, declining, or adjusting award amounts.
The regulations also state that administrative capability means that an institution is providing students adequate career services and clinical or externship opportunities, as applicable. Under the final regulations, administrative capability also means that an institution is making timely disbursements of funds to students and that less than half of an institution’s total Title IV, HEA revenue in the most recent award year comes from programs that fail to meet gainful employment (GE) requirements under the GE program accountability framework. Being administratively capable also means not: engaging in aggressive recruitment, making misrepresentations, being subject to negative action by a State or Federal agency, or losing eligibility to participate in another Federal educational assistance program due to an administrative action against the institution.
Additionally, under the final regulations, institutions must certify when they sign the PPA that no principal or affiliate has been convicted of or committed fraud. Finally, institutions must have adequate procedures to evaluate the validity of a student’s high school diploma and outline criteria to identify an invalid high school diploma.
Certification Procedures
The U.S. Department of Education amends §§ 668.13 and 668.14 so that certification is not automatically renewed after 12 months without a decision from the Department and adds new events that cause an institution to become provisionally certified and new requirements for provisionally certified institutions. We also expand the entities that must sign a PPA to include higher level owners of institutions. Institutions must also certify that they meet additional requirements when signing the PPA, as applicable. For example, institutions must certify that their gainful employment programs are not longer than 100 percent of the length required for licensure in a recognized occupation in either the State where the institution is located or another State if the institution establishes that certain criteria apply.
Institutions must also certify that, in each State where they are located or where they enroll students through distance education, they meet applicable programmatic accreditation and licensure requirements and comply with all State laws related to closure. We also amend § 668.43 to clarify how provisions in the certification procedures section interact with existing institutional disclosure requirements related to informing students about the States in which a given program meets the educational requirements for licensure or certification.
In addition, institutions must certify that they will not withhold transcripts or take other negative actions against a student due to an error on the school’s part, and that upon a student’s request, they will provide an official transcript that includes all the credit or clock hours for payment periods in which the student received Title IV, HEA funds and for which all institutional charges were paid at the time the request is made. Institutions must also certify that they will not maintain policies and procedures that condition institutional aid or other student benefits in a manner that induces a student to limit the amount of Federal student loans that the student receives. We also add conditions for institutions initially certified as a nonprofit or that seek to become one following a change in ownership. These additional conditions will help address the consumer protection concerns that have occurred when some for-profit institutions converted to nonprofit status for improper benefit.
Ability To Benefit (ATB)
In §§ 668.2, 668.32, 668.156, and 668.157, the U.S. Department of Education amends the student eligibility requirements for individuals who do not have a high school diploma or a recognized equivalent.
Specifically, in these regulations, we (1) codify the definition of an “eligible career pathway program,” which largely mirrors the statutory definition, (2) make technical updates to the student eligibility regulations, (3) amend the State ATB process (“State process”) to allow time for participating institutions to collect outcomes data while establishing new safeguards, (4) establish documentation requirements for institutions that want to begin or maintain eligible career pathway programs for ATB use, and (5) establish that the Secretary will verify at least one career pathway program at each postsecondary institution intending to use ATB to increase regulatory compliance.
Once again, the U.S. Department of Education developed and has continued to update a “Fact Sheet” and other information within the Knowledge Center.
What Can You Do & What’s Next
Fame encourages you to take some time to go back over the regulations and the guidance, keeping in mind that several implementation dates have been extended (e.g. GE reporting) and some of the Final Rules are the basis for litigation filed in courts across the country.
About the Author:
Tom Netting
CEO, TEN Government Strategies
Tom Netting has more than 30 years of experience working in government relations and public policy and has established himself as a leader in strategic policy development and advocacy in the fields of higher education and workforce development, elementary and secondary education, healthcare, veterans’ affairs, and the procurement of federal appropriations. Tom has also directed government relations activities of several associations and higher education organizations.
