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U.S. Department of Education Proposes to Rescind Gainful Employment Regulations

On August 10, 2018, the U.S. Department of Education (the “Department”) released a Notice of Proposed Rulemaking (the “Proposed Rule”) which would rescind its Gainful Employment (“GE”) regulations and related requirements. The Proposed Rule is available in pre-publication form here and is scheduled to be published in the Federal Register on August 14, 2018. Public comments to the Proposed Rule are due within 30 days of the Federal Register publication date.

Under Title IV of the Higher Education Act of 1965, as amended (“Title IV”), all postsecondary educational programs at for-profit institutions, and all non-degree programs at public and private nonprofit institutions must “prepare students for gainful employment in a recognized occupation” in order to participate in the federal student financial aid programs. In 2014, the Department promulgated regulations requiring that GE programs satisfy specific debt-to-earnings metrics in order to retain their Title IV eligibility. The Department’s GE regulations further include extensive reporting and disclosure requirements concerning GE programs.

Between December 2017 and March 2018, the Department conducted a negotiated rulemaking process to revise the GE regulations promulgated in 2014. At its final meeting, the negotiated rulemaking committee failed to reach consensus on the Department’s proposed regulatory changes; thus, the Department is permitted to develop and issue its own proposed regulations for public comment. As noted above, the Proposed Rule released on August 10, 2018 would rescind the Department’s current GE regulations. The Department specifically cites the following as among the reasons underlying its proposed rescission:

  • Subsequent research findings that debt-to-earnings metrics are inappropriate for determining an institution’s continuing eligibility for Title IV participation;
  • Inconsistencies in the way that job placement rates are determined and reported by institutions under the GE program disclosure requirements;
  • The use of a standardized GE program disclosure template and the physical distribution of disclosures to students being more burdensome than the Department originally predicted; and
  • Data revealing disparate impacts of the current GE regulation on some academic programs.

The specific effects of the Proposed Rule would be to remove from the Department’s regulations the debt-to-earnings metric calculations for GE programs, and sanctions and alternate earnings appeals related to those calculations, as well as the reporting, disclosure, and certification requirements applicable to GE programs.

The Department also seeks comment on whether it should require all institutions participating in the federal student financial aid programs to disclose, on the program pages of their websites and in their college catalogues that, if applicable, the program meets the requirements for licensure in the state in which the institution is located and whether it meets the requirements in any other states for which the institution has determined whether the program enables graduates to become licensed or work in their field. Similarly, the Department seeks comment on whether all such institutions should be required to disclose net price, completion rates, withdrawal rates, program size, and/or any other items currently required under the GE disclosure regulations.

Finally, the Proposed Rule also requests comment on whether all institutions should be required to provide web links from each of their program web pages to the College Scorecard website or its successor site, or to any other public information tools managed by the Department.

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About this Author

John Przypyszny, Drinker Biddle Law Firm, Public Education Attorney

John R. Przypyszny counsels institutions of higher education, education companies as well as accrediting agencies on the broad range of legal issues and education law related issues that impact their institutions and businesses on a day-to-day basis. He advises clients on education law matters involving the U.S. Department of Education, accrediting bodies, state agencies and other government regulators. He also has extensive experience advising institutions of higher education on the statutory and regulatory requirements of federal student financial aid...

(202) 842-8858
Jonathan Tarnow, Education and Government affairs lawyer, Drinker Biddle

Jonathan D. Tarnow advises clients on a wide range of education law matters involving the U.S. Department of Education, accrediting bodies, state agencies and other government regulators. He has extensive experience advising public, non-profit and proprietary institutions of higher education on the statutory and regulatory requirements of federal student financial aid programs under Title IV of the Higher Education Act, and has represented institutions in Title IV compliance reviews and audits, including administrative hearings and appeals related to findings of non-compliance. Jonathan is a partner in the firm's Government and Regulatory Affairs Group and a member of the Education Team and the Privacy and Data Security Team.

He frequently represents private equity funds, private investors, publicly traded and privately held education companies, and financial institutions that serve postsecondary educational institutions on transactions in the education sector. This includes purchases and sales of institutions or their assets, conversions of private institutions from proprietary to non-profit status, credit facilities to support acquisitions or ongoing operations, and other complex transactions involving colleges and universities.

(202) 354-1357