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1) Sept 27 [press release] Biden-Harris Administration Announces Landmark Final Rules to Protect Consumers from Unaffordable Student Debt and Increase Transparency

The Biden-Harris Administration today released final regulations that establish the most effective set of safeguards ever against unaffordable debt or insufficient earnings for postsecondary students. The final rule has two key parts:

-- A revitalized and strengthened Gainful Employment (GE) rule, that will protect approximately 700,000 students a year from career training programs that leave graduates with unaffordable loan payments or earnings no better than what someone who did not pursue postsecondary education earns in their state.
-- A new Financial Value Transparency (FVT) framework will give students in all programs the most detailed information ever available about the net costs of postsecondary programs, and the financial outcomes they can expect. It will also help prospective students understand the potential risks involved in their program choices by requiring them to acknowledge viewing this information before enrolling in certificate or graduate programs whose graduates have been determined to face unaffordable debt levels. . . .

The Department estimates that the final rules will protect nearly 700,000 students annually who would otherwise enroll in one of nearly 1,700 low-performing programs. Not counting students already covered by the GE accountability provisions, the FVT framework would result in acknowledgments for an estimated 400 graduate programs that enroll about 120,000 students. . . .

-- Gainful Employment Program Accountability Framework

Under the final rule, the Department assesses whether programs offered by private for-profit institutions and certificate programs at all types of colleges meet the statutory requirement to prepare students for gainful employment in a recognized occupation using two separate measures. Specifically:

-- The share of annual earnings the typical graduate needs to devote to paying their debt (i.e., their “debt-to-earnings ratio”) must be less than or equal to 8 percent, or less than or equal to 20 percent of their discretionary earnings (defined as their annual earnings minus 150 percent of the federal poverty guideline).This metric captures whether a program’s debt is affordable.
-- At least half of graduates have higher earnings than a typical high school graduate in their state’s labor force who never enrolled in postsecondary education. This "earnings premium" assesses whether the program enhances its students’ earnings potential.

Programs will be assessed separately on each metric. Programs that fail either will need to warn students that the program is at risk of losing access to the federal student aid programs. Those that fail to meet the standards on the same metric twice in a three-year period will not be eligible to participate in the Department's Federal student aid programs.

-- Financial Value Transparency for All Students and Families

The final rules also include the FVT framework. It will provide students and families across the country with the most detailed information ever available about what they are likely to pay out-of-pocket for programs, how much debt they can expect to take on, and how much money students are likely to earn after graduation. The FVT framework also includes provisions to ensure prospective students are aware, before they enroll, of risks associated with selecting a certificate or graduate program that is likely to leave them with unaffordable debt.

Students will receive this enhanced transparency for programs through new reporting requirements for institutions related to costs (including tuition and fees, books, and supplies), non-federal grant aid, and typical borrowing amounts (for both private and federal loans). The Department will also calculate typical earnings for program graduates. This information will be made publicly available to students on a website run by the Department.

The Department focused the FVT acknowledgements on certificate and graduate programs in the final rule because they are the programs where unaffordable debt is most common, and students tend to enroll directly into particular programs. By contrast, many students seeking undergraduate degrees do not select a program when they enter the institution.

The Department issued these final rules after careful consideration of more than 7,500 public comments received over the summer. The GE accountability and FVT reporting provisions will go into effect on July 1, 2024. The first official financial outcome rates will be published in early 2025. Programs that fail the same GE metric in the first two years the rates are issued will become ineligible in 2026.

Fact sheet: https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/gainful-employment-and-transparency-fact-sheet.pdf
Press release: https://www.ed.gov/news/press-releases/biden-harris-administration-announces-landmark-final-rules-protect-consumers-unaffordable-student-debt-and-increase-transparency

2) Oct 10 FRN -- The Federal Government makes significant annual investments under title IV of the HEA through programs that provide financial assistance to help students pay for postsecondary education and training. This includes both Federal grants and Federal loans, with the largest amount of such aid flowing through Pell Grants and Direct Loans. These investments in education amount to well over $100 billion in new Pell Grants and Direct Loans in total made each year.

The Federal Government's commitment to postsecondary education and training is well-justified. Postsecondary education and training generate important benefits both to the students pursuing new knowledge and skills and to the Nation overall. . . . These benefits are not guaranteed, however. Research has demonstrated that the returns, especially the gains in earnings students enjoy as a result of their education, vary dramatically across institutions and among programs within those institutions. . . . While increased borrowing is indicative of higher education costs-of-attendance, financing the costs of postsecondary education and training with Federal student loans creates significant risk for borrowers and the Federal Government (as well as taxpayers). . . . With college tuition consistently rising faster than inflation, and given the growing necessity of a postsecondary credential to compete in today's economy, it is critical for students, families, and taxpayers alike to have accurate and transparent information about the possible financial consequences of their postsecondary program options.

For programs that consistently produce graduates with very low earnings, or with earnings that are too low to repay the amount the typical graduate borrows to complete a credential, additional measures are needed to protect students from financial harm. Making information available has been shown to improve consequential financial choices across a variety of settings. But it has also been shown to be a limited remedy, especially for more vulnerable populations who may struggle to access the information, or who have less support in interpreting and acting upon the relevant information.

To address these issues, the Department establishes subparts Q and S of part 668, and makes supporting amendments to §§ 600.10, 600.21, 668.2, 668.13, 668.43, and 668.91.

(1) In subpart Q, we establish a financial value transparency framework. That framework will increase the quality and availability of information provided directly to students about the costs, sources of financial aid, and outcomes of students enrolled in all eligible programs. . . .

(2) In subpart S, we establish an accountability and eligibility framework for gainful employment programs. . . .

The financial value transparency framework covers all programs that participate in the title IV, HEA programs, and it will dramatically enhance the quality of information available to all students so that they may better assess the financial consequences of their education choices. . . .

With respect to GE programs, the Department remains concerned about the same problems that motivated our 2011 and 2014 Prior Rules. These included the growth in student loan debt generally, and especially increased borrowing at private for-profit colleges, increasingly high rates of default, higher costs, and lawsuits and investigations into the deceptive practices of many institutions.

Overall, the amount of outstanding student loan debt is even higher than it was at the time of the 2014 Prior Rule. Then we cited a total portfolio of $1,096.5 billion. It is now 49 percent larger—at $1,634 billion outstanding. The number of individuals with outstanding student loans is also 3.5 million higher. . . .  

In light of the HEA differentiation between career training (GE) programs and other eligible programs, through statutory language that defines title IV-eligible career training programs as those that prepare students for gainful employment, the Department has different responsibilities with respect to GE programs and different tools available in administering the title IV, HEA programs. . . .

While the financial value transparency framework and the GE program accountability framework are both designed to improve student financial outcomes, they differ in scope and approach, derive from the Department's exercise of different regulatory authorities. The two frameworks are intended to function independently, and their respective components are intended to be severable. . . .

FRN: https://www.federalregister.gov/d/2023-20385 [190 pages]

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