The federal regulatory fire hose
Take effect July 1, 2024 and the reporting deadline is just 30 days later.
The Biden Administration has been churning out regulations that campuses are still trying to comprehend the impact of and develop mechanisms for responding.
At the end of September the U.S. Department of Education issued the final versions of its Financial Value Transparency and Gainful Employment regulations that are intended to give families a better sense of what a graduate can expect to earn, particularly regarding debt. While that sounds simple enough, the regulations required 775 pages.
My apologies, but there’s no way to make all this any simpler.
Campuses will be required to report two metrics for every degree and certificate program that qualifies for federal aid. The “debt-to-earnings rate” is the annual amount a typical graduate needs to devote to their student loans must be equal to or less than 8% of annual earnings, or equal to or less than 20% of their discretionary earnings.
The new “earnings premium” test would require at least half of program graduates to have higher earnings than a typical high school graduate in their state’s labor force who never enrolled in postsecondary education.
The Financial Value Transparency regulations require SCICU member institutions to report the information, while for-profit institutions must also inform students of the federal disclosure website before enrollment and require students enrolled in programs with “high debt burden” to sign an acknowledgement before receiving federal financial aid.
For gainful employment programs, meaning those title IV eligible educational programs offered by proprietary (for-profit) colleges and certificate programs (whether undergraduate or graduate level) offered by nonprofit and public institutions, the final rule provides that poor performance on either the debt-to-earnings rate or earnings premium measure can lead to loss of federal student aid access for that program.
But the 775 pages were just the first part of this regulatory package. This week the remaining regulations were released. They’re only 695 pages long.
The one getting the most attention directs that if colleges want to participate in federal financial aid they will have to agree not to withhold transcripts from students taking courses funded by federal money and who paid off the balance for the term.
The new regulations also reflect the Department of Education’s concern regarding students being left in the lurch when colleges close suddenly and unexpectedly. Campuses that show financial risk, for example failing to meet debt obligations, will trigger the Department of Education requiring a letter of credit. The regulations also authorize the Department of Education to require colleges exhibiting financial warning signs to require a “teach out plan” which provides for students attending other institutions should the colleges close. The department can also limit the addition of new programs and locations.
All these regulations go into effect July 1, with reporting due just 30 days later.