Gainful Employment Understanding the Metrics and Release of Informational Rates

1. Gainful EmploymentUnderstanding the MetricsandRelease of Informational Rates

2. Topics • Goals of Gainful Employment Initiative • Status of Gainful Employment Regulations • Statutory and Regulatory Framework • Informational Rates • GE Informational Debt Measures and Loan Medians • Repayment Rate • Debt-to-Earnings Ratios • Informational Rates Results • Additional Information • Questions

3. GOALS OF GAINFUL EMPLOYMENT INITIATIVE

4. Concerns Growing Concerns with Program Integrity Concern Tightened regulations • Incentive Compensation • Misrepresentation • State Authorization • Credit Hour Definition • Ability to Benefit • High School Diplomas • Gainful Employment • Rising default rates • Stagnant or falling graduation rates • Growing exposure • Increased investments in Federal student financial aid • Student loan program changes

5. Improving Programs • Gainful Employment calculation results can be used - • To provide information to schools that is actionable on their part. • To provide information for schools to make improvements and perform self-assessments. • To provide information to students and families on effectiveness of programs.

6. Improving Programs • Schools can improve their GE Programs by working with employers to – • Ensure that the program’s training meets their manpower needs • Determine what they need from the program’s graduates so that their earnings can support the student and taxpayer investment

7. Improving Programs Employer Feedback • Do students need better training in some areas for you to be willing to pay them more? • What additional training do my former students need? • What different kinds of programs should we be offering that would prepare students for better paying jobs?

8. Improving Programs Student Feedback • Is there something about the program that impacts whether you are able to repay your student loans? • Given the training and costs, are you earning what you expected? • Was the training worth the cost? • Is there additional training that could be provided that would help you earn more and be better able to repay your student loans?

9. Improving Programs School Review • Schools can improve their GE Programs by – • Comparing their program’s GE metrics of similar programs at other schools • Determine how those schools provide the program with better results.

10. STATUS OF GAINFUL EMPLOYMENT REGULATIONS

11. District Court Decision • On June 30, 2012, a District Court vacated most of the gainful employment regulations. • Court’s decision based on ED’s rationale for setting the Repayment Rate failure threshold. • Because of the interrelationship of the gainful employment requirements, the Court vacated most of the gainful employment regulations – GE Metrics, GE Reporting, Adding new GE Programs. • Court left in place GE disclosure requirements. • See other GE session here at NASFAA 

12. ED Statement in Responseto Decision "The court upheld our authority to regulate career college programs while urging a clearer rationale for standards around repayment rates. We are reviewing our legal and policy options to move forward in a way that best protects students and taxpayers while advancing our national goal of helping more Americans get the skills they need to compete in the global economy."

13. GAINFUL EMPLOYMENT STATUTORY FRAMEWORK

14. The Law The HEA provides that to be Title IV eligible an educational program must be offered by: • A public or non-profit postsecondary educational institution and leads to a degree; or • Generally, all non-degree programs must lead to gainful employment • Generally, most programs at for-profit institutions must lead to gainful employment • Any institution and “to prepare students for gainful employment in a recognized occupation”

15. The Regulations • October 29, 2010 -Two sets of Final Rules published with effective dates of July 1, 2011- • Disclosures • Reporting • Adding New Programs • June 13, 2011 - Final Rules on metrics to define gainful employment programs published with effective date of July 1, 2012

16. Informational debt measures and loan medians

17. Informational Debt Measures Per a June 30, 2012 court decision, all three metrics and the reporting regulations were vacated.  This means that the metrics are unenforceable and institutions are not required to report to the Department the information listed in the reporting regulations.  The Department issued the Informational Rates prior to the court’s decision.  They were always intended to be used only for informational purposes, never carried any potential sanctions, and that remains true following the court’s decision.

18. Informational Debt Measures • Released to schools June 21 - 25 • SAIG Mailbox if designated by school • Letters with Rates • Back-Up Detail Files • Available on NSLDS • Rates • Request Back-Up Detail Files • Released to Public on June 26 • FSA Data Center • No student detail

19. Informational Debt Measures Key Differences from Process to Calculate Official Rates • No challenge process for institutions after submitting final data • No ability for institutions to potentially substitute alternative income measures in debt-to-earnings calculation • No PSLF • No allowance for IBR/ICR in repayment rate • No 4 year cohort period

20. Informational Debt Measures • 2 year cohort period (2YP) is FY 07 and FY 08 • October 1, 2006 through September 30, 2008 • Repayment Rate – Program’s former students who entered repayment in the 2YP • Debt-to-Earnings – Program’s former students who completed the program in the 2YP

21. Informational Debt Measures School and Program Identification Information Program Specific Debt Measures • OPEID • School name • Street address • City • State • Zip Code • Institution type • CIP Code • CIP Name • Credential Level • Repayment Rate • Numerator • Denominator • Debt-to-Earnings Annual Ratio • Numerator • Denominator • Debt-to-Earnings Discretionary Ratio • Numerator • Denominator

22. Loan Medians School and Program Identification Information Program Specific Loan Medians • OPEID • School name • Street address • City • State • Zip Code • Institution type • CIP Code • CIP Name • Credential Level • Title IV Loan Median • Private Loan Median • Institutional Loan Median

23. Cohort Period • GE metrics use information on the educational debt of a cohort of the GE Program’s former students • Generally, the cohort consists of students who left the program during the two federal fiscal years that are the third and fourth years prior to the most recently completed Federal fiscal year (the “GE Calculation Year”)

24. Cohort Period • For the GE Informational Rates, the GE Calculation Year was FY 2011 and the cohort years were FY2007 and FY2008 (October 1, 2006 through September 30, 2008). • Repayment Rate – GE Program’s former students who entered repayment on their Title IV loans during the cohort period. • Debt-to-Earnings – GE Program’s former students who completed the program during the cohort period.

25. GE Debt Measures • Repayment Rate – • A percentage the GE Program’s former students who are repaying their Title IV student loans each year (weighted for loan amount). • Debt-to-Earnings Ratios – • The annual repayment amount based on the median educational loan debt of the students who completed the GE Program as a proportion of their average annual earnings after two to three years.

26. Repayment Rate

27. Repayment Rate • NSLDS data used to identify students and to attribute loan amounts. • Repayment is a reduction in the outstandingprincipal balance over a one year period. The percentage of a Gainful Employment Program’s former students who are repaying their Title IV student loans each year.

28. Repayment Rate • Calculated annually using the following formula: • OOPB = Original Outstanding Principal Balance when Title IV loan entered repayment • LPF = Loans Paid in Full • PML = Payments Made Loans OOPB of LPF plus OOPB of PML OOPB

29. Repayment Rate • Payments Made Loans – • Loan’s balance is reduced by at least $1.00 over the year; • Loan is on track to being forgiven under the Public Service Loan Repayment Plan; • Borrower is making payments under an interest‐only or income‐based repayment plan, but limited to no more than 3% of the OOPB; • For post-baccalaureate programs, is a consolidation loan and all interest accrued over the course of the year has been paid.

30. Repayment Rate • Example: • Former StudentOOPB • Student A $ 2,000 • Student B 3,000 • Student C 5,000 • Student D 10,000 • OOPB = $20,000 (total amount for all borrowers in 2YP) • Only student D is successful in repaying • Repayment rate = $10,000 / $20,000 = 50%

31. Repayment Rate • For the most recently completed fiscal year, excludes from formula: • Loans in an in-school deferment or a military-related deferment • Loans discharged, or pending discharge, for death or total and permanent disability

32. Debt-to-Earnings Ratios

33. Debt-to-Earnings Ratios • Repayment amount for all student loans - not just Title IV loans. • Schools identify students and non-Title IV loan amounts. • NSLDS identifies Title IV debt. • The average annual earnings is the higher of the mean or median annual earnings from the SSA. • Average discretionary earnings is the average annual earnings less 150% of the HHS poverty amount for a single person. • The median educational loan annual repayment amount of students who completed the GE Program as a proportion of those student’s average annual earnings two to three years after completing the GE program

34. Debt-to-Earnings Ratios • Annual Debt-to-Earnings Ratio • Discretionary Debt-to-Earnings Ratio • Average Annual Loan Payment Amount • Mean or Median Annual Earnings less 1.5 X poverty guideline • Average Annual Loan Payment Amount • Mean or Median Annual Earnings

35. Debt-to-Earnings Ratios If the school reported the student’s tuition and fees, ED will use the lower of the tuition and fees charged the student for the program or the student’s total loan debt incurred for program.Tuition and Fee amount is for the student’s entire enrollment in the GE Program

36. Debt-to-Earnings Ratios • SSA will provide the median and mean earnings of program’s completers. • Calculation uses the higher of the two • ED does not receive student level earnings information.

37. Debt-to-Earnings Ratios • Calculating of the annual loan payment— • Uses the program's median loan debt, • Amortized at 6.8% over – • 10 years for a certificate or Associate’s program. • 15 years for baccalaureate and master’s programs. • 20 years for a doctoral or first professional graduate program

38. Debt-to-Earnings Ratios • Exclude students who, during the earnings year – • Had one or more loans in a military-related deferment status • Had loans discharged, or pending discharge, for death or total and permanent disability • Were enrolled in school

39. Informational Rates Results

40. Process Overview Institutions report students by program ED sends student identifiers to SSA SSA returns median & mean earnings by program ED computes debt measures ED provides institutions with debt measures • Earnings information aggregated by program by institution • (no student specific data returned by SSA) • Information on each student enrolled in the Gainful Employment Programs reported to ED • Repayment rates and debt-to-earnings ratios returned along with • backup data

41. Informational Rates Results 27,583 Programs 3,612 Schools 3,695 Programs 1,336 Schools 6,423 Programs 2,197 Schools Unique educational programs where metrics were calculated because there were at least 31 students for both debt measures. Unique educational programs that had students in the relevant 2-year measurement period (FY2007 and FY 2008) Unique educational programs where there were at least 31 students for either of the debt measures 4,614 Programs 5,504 Programs Individual educational programs that had the Debt-to-Earnings Ratios calculated Individual educational programs that had a Repayment Rate calculated

42. Informational Rates Results Repayment Rate Number of Programs

43. Informational Rates Results Annual Debt-to-Earnings Number of Programs

44. Informational Rates Results Discretionary Debt-to-Earnings Number of GE programs

45. ADDITIONAL GAINFUL EMPLOYMENT INFORMATION

46. For More GE Information • IFAP Gainful Employment Page: http://ifap.ed.gov/GainfulEmploymentInfo/ or from IFAP Homepage • Regulations • Dear Colleague Letters and Electronic Announcements • Frequently Asked Questions • Training • Resources

47. QUESTIONS?