Gainful Employment

  • ED to Pursue New Higher Education Regulations
    By Jenna Schuette Talbot
    April 22, 2013

    The U.S. Department of Education announced late last week that it will pursue new higher education regulations this year.  Read more

  • Education Insider: ESEA, RttT, Early Learning Childhood, Waivers, and 2012 Presidential Race
    June 24, 2011 - 3:00pm

    This month's survey explored a number of federal issues including:

    • Has ESEA reauthorization stalled?
    • What current Federal policies should be waived?  What shouldn't be waived?  
    • Which state is most likely to win the next RttT competition?
    • What are Insider reactions to the new early childhood education grant?
    • Is the elimination of federal literacy programs just a blip or a signal of a shifting federal priorities away from literacy?
    • Are we experiencing a technology bubble in K12 education?
    • What is next for the Gainful Employment regulation?  Do Insiders believe there will be legal and legislative action taken to stop its implementation?

    And much more including a new regular feature tracking the 2012 Presidential Election Cycle.   Read more

  • Chart of Gainful Employment Changes
    By John Bailey
    June 3, 2011
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  • Final Gainful Employment Regulation
    By John Bailey
    June 2, 2011

    Secretary Duncan released the final gainful employment regulation this morning. Read more

  • CNBC's College Debt Crisis
    By John Bailey
    December 21, 2010

    CNBC is running a special series around the college debt crisis with a number of stories the premiere of "Price of Admission: America's College Debt Crisis," a CNBC original documentary, Tuesday, December 21 at 9pm ET.  The trailer is below.  

    One of the articles references a recent Education Insider report concerning gainful employement:

    The incoming Republican chairman of the House Education Committee, John Kline of Minnesota, said he hopes the Education Department would ease the final version of the gainful employment rule.

    “The Republicans taking over the House makes it more likely that there will be some sort of Congressional action to try and block the implementation of the regulation," says John Bailey, an industry analyst and director at the lobbying firm Dutko Worldwide.

    A recent survey conducted by the firm found that 82 percent of key Washington insiders expect the Republican House to try and stop the gainful employment regulation.

     

     

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  • Forecasting Gainful Employment
    By John Bailey
    December 9, 2010

    Given the debate around the Department of Education's proposed Gainful Employment regulation, we decided to ask our Insiders a few questions to get their thoughts on what is likely to happen. 

    In last month's survey, Insiders were unanimous that Republicans taking control of the House of Representatives makes it more likely they they will try to block the implementation of the regulation.  Some suggested this could be done by attaching riders on an appropriations bill.  But this may not be as easy given that it would have to survive the Democratic controlled Senate and also a possible Presidential veto.  

    We also asked Insiders if they thought the Department will move forward and publish a final regulation or would they delay or even scrap it altogether.  Thirty-two percent of the Insiders thought the Department would move forward with a final regulation in 2011, but that it would have changes that would be more favorable to the for-profits. Only 5% thought the industry would face a regulation that was worse then what was proposed.  

    Some charts and quotes from the surveys are below.   

     

    Gainful Employment

     

    GEOutcome

    Insider Insights:

    • “The administration is already staked out on this one. Pulling back would be another off-shore drilling flip-flop.”

    • “Administration will back down with the change in the House as a compromise on other fronts.”

    • “I don't know what makes the Department think that they have a right to circumvent state authority. While there are problems in the for-profit sector, there are also some good models (e.g., Western Governors University). Let's not stifle the marketplace! We can't count on the traditional universities to lead the type of change that's needed so that we can put Americans back to work.”

    • “The regulation would absolutely bring more accountability to a for-profit system that has run amok and exploited low-income students all over the country. What is proposed is fair and should be promulgated.”

    • “They can't ignore this much pressure, especially with the new Congressional alignment.”

    • “The Administration has backed itself into a corner and now doesn't know what to do to get out. There are ways to get out of the box and make good policy (e.g., drop the regulation and push for legislation that gets at the worst institutions of higher ed, both for-profit and non-profit, in terms of completion rates and cohort default rates); however, so far the Administration appears headed for a yearly battle on the appropriations front where the House will insert appropriations riders.”

    • “They've got nothing to lose and they are true believers in destroying the for-profit industry. They could not care less what any Member of Congress thinks.”

      Read more

  • Sizing Up The Midterm Elections...
    By John Bailey
    November 12, 2010

    lection results and what they mean for policy areas such as education.  

    ProspectsOn Wednesday, Andy Rotherham and I hosted our fourth Education Insider webinar, this one focused on the midterm elections.  Alyson Klein over at Politics K-12 covered some of the top line findings as did Rick Hess. Some results that caught my attention:

    • State Elections:  For those involved in education, the real political shakeup didn't happen in Congress but at the state level.  Republicans picked up the governor’s office in 12 states (including key 2012 Presidential swing states) and now control more legislative seats than at any other point since 1928. Federal policies like the Common Assessments and national efforts such as Common Core, might face some additional scrutiny and challenges in this new political landscape.

    • Voter Frustration:  The exit polls revealed that seven out of 10 voters were dissatisfied with the way federal government is working.  Other polling shows that voters think the stimulus programs have helped big banks and institutions but did little to help low- and middle-income families.  That helps to explain why voters want to see some spending restraint.  They are not going to support increased federal spending when they believe the government isn’t working and isn't pursuing policies that benefit them.

    • Insiders Are Pessimistic About ESEA Reauthorization:  54% expect reauthorization will take place after 2012 with 46% believing it will take place in 2013 after the next Presidential election.  

    • But There Is Hope:   The President highlighted education as one of the areas he could work with the Republicans.  The White House has sent stronger signals over the last week that they want to work on ESEA reauthorization then they have all of last year.  Insiders also pointed out that incoming Speaker Boehner is passionate about education reform, having worked with Sen. Kennedy on NCLB. If both sides want to show voters that they can work together on something, education could be as good of an issue as any. Insiders said that if we don't see a bill by August, then we're most likely looking at a reauthorization after January 2013.  

    • Funding:  We have likely see the high-water mark for education funding.  More than 45 states have 2011 budget shortfalls totaling $125 billion with additional shortfalls projected for next fiscal year as well.  State revenues are decreasing while Medicaid enrollment is increasing making matters even worse.  At the Federal level, we're likely to see a pivot from stimulus to austerity measures.  Eric Cantor has called for holding reverting the budget back to FY 2008 levels (pre-bailout/stimulus).  The President attacked this saying it would result in a 20% cut in education funding, but then his Fiscal Responsibility Commission issued a similar recommendation of holding the budget to FY 2010 levels with 1% reductions over three years.  Our Insiders were split 50/50 if this will mean cuts for Federal education dollars or just level funding. 

    Much more in our 47 page report found here.  

    We also spoke with investors and analysts about the elections as part of Stifel, Nicolaus & Company hosted event.  There were a lot of questions around what the elections mean for the higher education community, particularly the pending gainful employment regulations.  We happened to have asked Insiders this very question and found that more than 82% believe it is likely that the Republicans will try to block the implementation of Gainful Employment. what surprised me was the number of times Insiders referenced Gainful Employment in other areas of our survey.  Meaning how the Administration handles this controversial regulations has implications for the politics around ESEA reauthorization.  

    We also just finished a summary of the education platforms of the 37 governors that won their election last week. Will be available soon...

    Finally, our colleagues at Dutko Grayling State and Local hosted an event discussing the election with Nathan Daschle, Democratic Governors Association; Phil Cox, Republican Governors Association, and Josh Kraushaar, National Journal.  You can watch it online at C-SPAN.  

     

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  • Assorted Links
    By John Bailey
    October 18, 2010

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  • Department Announces Delay in Gainful Employment But Promises to Press On
    By John Bailey
    September 24, 2010

    The Department announced today that they will delay release of the final gainful employment regulation.  The press release included a strongly worded quote from the Secretary insisting that they plan to move forward in early 2011:

    Education Secretary Arne Duncan said, "Let me be clear: we're moving forward on gainful employment regulations. While a majority of career colleges play a vital role in training our workforce to be globally competitive, some bad actors are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use."

    "These schools and their investors benefit from billions of dollars in taxpayers subsidies, and in return, taxpayers have a right to know that all of these programs are providing solid preparation for a job," Duncan continued. "We want to be as thoughtful as possible as we move forward. We're taking additional time to analyze all the feedback we've received to help us strike the right balance between holding these programs accountable to protect students and taxpayers from abuse and making sure we keep whole those programs that are doing a good job."

    This tracks with what we were expecting (more on this in yesterday's post) but it is somewhat surprising that the statement is so strongly worded.  There are a number of other questions this raises as well, particularly given the likelihood of the Administration facing a Republican controlled House and how the politics of this issue effect the Administration's ability pull together a bipartisan coalition to advance ESEA reauthorization.  

     

     

    Department on Track to Implement Gainful Employment Regulations; New Schedule Provides Additional Time to Consider Extensive Public Input

    September 24, 2010

     
    Contact: Justin Hamilton, (202) 401-1576, press@ed.gov

    The Department of Education today announced that it is on schedule to implement new regulations of the for-profit education sector dealing with gainful employment and 13 other issues to protect students and taxpayers. The regulations will be released in two phases.

    Final regulations to ensure program integrity in federal financial aid programs are scheduled for publication on or around November 1, 2010, and will go into effect on July 1, 2011. These regulations will address sections of our gainful employment proposal as well as 13 other issues in an effort to protect students from aggressive or misleading recruiting practices and to provide consumers with better information about the effectiveness of career college and training programs.

    The Department plans to publish final regulations in early 2011 on the remaining portions of our gainful employment proposals dealing with a program's eligibility to receive federal student aid. These regulations were originally scheduled to be published Nov. 1, 2010. We are taking additional time to consider the comments we received and to host several meetings and public hearings in the coming weeks. These meetings will allow interested parties to clarify the comments they've submitted and respond to questions from Department officials while allowing for the regulations to go into effect on or around July 1, 2012, as planned.

    Education Secretary Arne Duncan said, "Let me be clear: we're moving forward on gainful employment regulations. While a majority of career colleges play a vital role in training our workforce to be globally competitive, some bad actors are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use."

    "These schools and their investors benefit from billions of dollars in taxpayers subsidies, and in return, taxpayers have a right to know that all of these programs are providing solid preparation for a job," Duncan continued. "We want to be as thoughtful as possible as we move forward. We're taking additional time to analyze all the feedback we've received to help us strike the right balance between holding these programs accountable to protect students and taxpayers from abuse and making sure we keep whole those programs that are doing a good job."

    Additional information on the Department's planned public sessions will be released in the coming weeks.

    Below is a summary of the Department's proposed regulations, as published in the notice of proposed rulemaking, to ensure program integrity in higher education. These proposed regulations are on schedule to be published on or around November 1, 2010, and are subject to modification prior to publication.

    Holding Programs Accountable for Preparing Students for Gainful Employment

    • Graduation Rate and Job Placement Disclosures: As proposed, this rule would require proprietary institutions of higher education and postsecondary vocational institutions to provide prospective students with each eligible program's graduation and job placement rates, and that colleges provide the Department with information that will allow determination of student debt levels and incomes after program completion.

    • Approval of Additional Programs: As proposed, this rule would require institutions to provide: 5 year enrollment projections; documentation from employers not affiliated with the institution that the program's curriculum aligns with recognized occupations at those employers' businesses; and that there are projected job vacancies or expected demand for those occupations at those businesses before new programs can become eligible to participate in federal student aid.

    Ensuring that only eligible students receive federal funds. Generally students are eligible for aid only if they have a high school diploma or pass an "ability to benefit" test, and only if their academic standing is satisfactory. As proposed, the regulations would make the following clarifications:

    • High School Diploma: The proliferation of high school diploma mills has called the validity of some secondary school credentials into question. As proposed, this rule would require institutions to develop and follow procedures to evaluate the validity of a student's high school diploma if the institution or the Secretary has reason to believe that the diploma is not valid or was not obtained from an entity that provides secondary school education.

    • College Credits: As proposed, this rule would extend eligibility for federal student aid to students without high school diplomas after they successfully complete six credits of college work. This implements a provision that was included in the Higher Education Opportunity Act of 2008.

    • Ability to Benefit: The Department is responsible for approving test materials developed by testing companies. The Government Accountability Office recommended a number of ways that the Department could improve its oversight of how ATB tests are approved and administered. As proposed, this rule would follow up on those recommendations.

    • Satisfactory Academic Progress: Every institution is required to have satisfactory academic progress policies. Audits and institutional program reviews have uncovered policies that meet the current regulatory standards but permit students to receive funds even though they may not be meeting the institution's progress standards. As proposed, this rule would require a structured and consistent approach to evaluating a student's academic work, while continuing to provide flexibility to institutions in establishing their policies.

    • Verification: Each year, a number of students are required to confirm the information on their Free Application for Federal Student Aid (FAFSA). Due to changes in the law and a new data retrieval process with the Internal Revenue Service, as proposed, this rule would, in many cases, reduce the amount of information students would have to provide to institutions.

    Protecting consumers from misleading or overly aggressive recruiting practices, and clarifying State oversight responsibilities. As proposed, the regulations will strengthen three current rules that are designed to protect students and taxpayers:

    • Misrepresentation: During public hearings and negotiated rulemaking sessions, the Department heard numerous complaints from students enrolled in programs where they felt misled on what was and was not being offered, the way programs could be paid for, and their job prospects upon completion. To protect consumers, as proposed, this rule would strengthen the Department's authority to take action against institutions engaging in deceptive advertising, marketing, and sales practices.

    • Incentive Compensation: The Department heard reports of aggressive recruiting practices resulting in students being encouraged to take out loans they could not afford, or enroll in programs where they were either unqualified or could not succeed. Though current laws prohibit schools from compensating admissions recruiters based solely on success in securing student enrollment, regulations known as "safe harbors" allowed this practice to go on under certain circumstances, which we believe violate the spirit of the law. As proposed, this rule would remove all the "safe harbor" provisions.

    • State Authorization: State authorization is required by the Higher Education Act for a postsecondary institution to participate in federal student aid, and other federal funding programs. Some states have failed to establish how they approve and monitor postsecondary programs. As proposed, this rule would clarify this important State responsibility.

    Clarifying the courses that are eligible for federal aid, and the amount of aid that is appropriate.

    • Credit Hour: Credit hours are the metric used by the Department to measure eligibility for federal funding. Currently there is no standard definition for a credit hour, which has led to reports of institutions awarding more credits (and drawing down more federal funds) than are deserved. To address this issue, the regulations as proposed would define a credit hour and establish procedures for accrediting agencies to determine whether an institution's assignment of a credit hour is acceptable. Recognizing that "seat time" is not the goal, the proposal allows for equivalent measurement of learning outcomes.

    • Written Agreements: A postsecondary institution is allowed to deliver a portion of another institution's educational program through a written arrangement. Problems have surfaced when the two institutions are controlled by the same entity or do not meet certain participation requirements. As proposed, this rule would limit the amount of a program that can be provided by a school in an arrangement and prohibit arrangements between ineligible institutions that have had their Federal student aid participation revoked.

    • Retaking Coursework: Currently students who repeat coursework cannot have the course they repeat count towards the calculation of a full-time course load. As proposed, this rule would expand the definition of full-time student by allowing such courses to count if the student is in a program that registers by the term or semester.

    • Determining When a Student Has Withdrawn: Currently, loopholes complicate the measure of how much federal funding must be paid back if a student drops out of a program. As proposed, this rule would eliminate loopholes and clarify the calculation of returning federal funds to the Department by defining when a student is considered to have withdrawn from a program. It will also clarify the circumstances under which an institution is required to take attendance for the purpose of calculating a return of federal funds.

    • Disbursing Federal Student Aid Funds: Under current rules, many students are not receiving their Federal student aid funds in enough time to obtain their books and before the start of school. As proposed, this rule would ensure that the neediest recipients could acquire books and supplies by the seventh day of their payment period.

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  • Gainful Employment Regulation Delayed?
    By John Bailey
    September 23, 2010

    Some interesting developments related to the Administration's gainful employment proposal.  

    There's a good discussion over at the National Journal's Education Expert's blog about the issue.  My response ishere (also below). 

    I've been struck by the 80,000 comments this proposal generated.  It is the most comments generated for any Department of Education regulation. And it is exceedingly high when compared to other agencies too.  For example, DOL's proposed FMLA changes generated 20,000 comments back in 2008 and the Federal Reserve's 2008 proposed credit card reforms generated 56,000 comments.  More recently the Administration's proposed Meaningful Use standards for electronic medical records generated only 2,500 comments.  So the volume by itself is significant.

    And the concerns are coming from an odd, bipartisan mix: Democrats form the Congressional Black Caucus,Republicans, the U.S. Chamber of Commerce, a former Brigadier General, just to name a few.  Lanny Davis, a former Special Counsel to President Bill Clinton, raised questions about the proposal over at the Huffington Post:

    Suppose that a conservative Republican Administration, in the middle of high unemployment and an economic slowdown, proposed new regulations that would most hurt lower income people and minority groups and the for-profit colleges and universities that serve them? Can you imagine the cries of outrage from liberal critics, condemning "hard-hearted" Republicans targeting the most vulnerable young people in our society?  ...

    If any regulation is necessary, then Mr. Duncan owes it to the most vulnerable students who will be disproportionately hurt by the current version to use a scalpel, not a hatchet, and to address the issue of excessive student debt at all higher education institutions - not just at for-profits, but at non-profits and public universities as well.

    All of the concerns raised by these comments and individuals might explain why the Administration is considering a delay of the regulation.  Secretary Duncan hinted at this yesterday but we've heard from some Congressional contacts that a delay could be announced as early as this evening. 

     

    Regulation Should Be Delayed

    At a time when the Obama Administration is searching for additional stimulus ideas in response to a struggling economic recovery, it is ironic that the Administration would consider advancing a proposal that will only contribute more economic uncertainty and limit important job training efforts moving forward.

    Career colleges play an important role in our diverse system of higher education. They offer flexible course schedules and use online technologies to meet the unique needs of working adults, single parents, and other non-traditional students many of whom have been hit the hardest by the recession.

    The proposed gainful employment regulation risks disrupting career opportunities for millions of these Americans, many of whom are minorities. It also undercuts the President’s goal of leading the world in college graduates by 2020. Here are a few of the flaws with this proposal:

    • Only Targets One Segment of the Higher Education System.  Protecting students and taxpayers from low-quality programs and unwieldy debt burdens should be a priority, but these are issues we face across the whole system of higher education. Yet, the Administration has decided to only target the career colleges sector with a series of tests that many public institutions could not meet. For example, Harvard’s Medical School would fail to meet the loan repayment standard given their current repayment rate is 24%. And it is not just career college students who may struggle with their loans. At CNBC’s Town Hall meeting with the President held earlier this week, a law school student expressed his frustrations with managing his student loan debt, mortgages, and having a family.

    •  Penalizes Schools for Broader Economic Trends: Michael Mandel pointed out that college debt has become more burdensome for students because of flattening wages. While college costs have risen faster than the rate of inflation, the real earnings of college graduates – regardless of the institution they attended - have gone down since 2000, particularly during the recession. The proposed gainful employment equation doesn’t reflect this and instead penalizes institutions for economic trends outside their control.

    • May Decrease Low-income and Minority Student Access:Instead of increasing low-income and minority student access to higher education, the proposed rules will limit capacity and opportunity. The new rules could also create the perverse incentive for institutions to discriminate against lower income students or anyone who might be a credit risk. This would be a bitter pill to swallow since many of these same individuals probably have the most to gain.

    • Insufficient Analysis: The proposed regulation would introduce far-reaching changes with repercussions for both students and employers but the Department lacks sufficient data to assess the full impact of this complicated and confusing regulation on the economy, students, and the broader system of higher education. There also remain unanswered questions about how public institutions could absorb so many displaced students at a time of declining public funding. 

    • Targeting the Wrong Problem at the Wrong Time. The Administration’s concern for unwieldy debt is also laudable, but the focus of such effort should be on housing. As the Federal Reserve Bank of New York's report on household debt and credit shows, the major debt challenges are not student loans, but rather mortgages which account for 74% of all household debt. More than 24% of all residential mortgages are in negative equity – meaning they owe more than their house is worth – and more than eight million home loans are in delinquency, default or foreclosure. This is not only slowing the broader economic recovery but it also contributes to lower repayment rates on other forms of debt, such as student loans, especially as individuals shift more of their income to mortgage payments to prevent foreclosure. If helping individuals manage unwieldy debt is a concern, the Administration should focus their efforts here, especially after so many have acknowledged that the HAMP program has failed to provide any meaningful assistance.

    For all these reasons, it is not surprising that the proposal has attracted broad, bipartisan opposition ranging from students, to brigadier generals, to the Rev. Jesse Jackson. More than 80 members of Congress, including members of the Congressional Black and Hispanic Caucuses, have expressed concerns. The U.S. Chamber of Commerce argued that the “Administration is attempting to regulate America into an economic recovery and causing tremendous uncertainty in yet another sector of the economy.” Local chambers in innovation centers such as Silicon Valley and Redmond, Washington have expressed concerns that the regulation could hurt our nation’s global competitiveness. And more than 80,000 individual comments were filed, the most in the Department of Education’s history.

    The Administration should delay enacting this regulation. At minimum, more time should be given until there is better data upon which to craft a proposal and assess its full effects, especially because of the number of aspiring students and job seekers that would be impacted during very challenging economic times. The Administration should also look for ways to encourage more private sector investment in our education system, not less, particularly in developing the job training programs needed to keep our nation’s innovation edge. And any discussion of quality must include all segments of the system, not just the career colleges.

     

    (Full disclosure, we work with a number of groups involved in both for-profit higher education as well as community colleges and public institutions of higher education.  We also work with investors who have been tracking higher education regulations). 

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