Posted Date: July 6, 2012

Author:  Jeff Baker, Director, Policy Liaison and Implementation, Federal Student Aid

Subject: Gainful Employment Electronic Announcement #39 - Status of Gainful Employment Regulations

On June 30, 2012, the U.S. District Court for the District of Columbia, in the Association of Private Sector Colleges and Universities (APSCU) v. Duncan, issued a decision that vacated most of the gainful employment regulations that the Department published on October 29, 2010 and June 13, 2011 and remanded those regulations to the Department for further action. The following is the statement the Department released in response to that ruling:

"The court clearly upheld the authority to regulate college career programs, but found that the Department had not provided enough explanation of its debt repayment measure, so it has given the Department an opportunity to address that concern. 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."

The Department is reviewing the details of the Court’s decision in consultation with the Department of Justice and evaluating appropriate next steps.

The following is some background on the Court’s decision.

It is important to note that while the Court vacated most of the gainful employment regulations based upon one issue raised during the court case, it upheld the Department’s authority to regulate gainful employment programs. The Court determined that the Department did not provide a sound reason for setting the repayment rate failure threshold at 35 percent. And, because of the interrelationship of that provision with most of the other gainful employment requirements, the Court vacated the repayment rate metric as well as the debt-to-income gainful employment metrics that would have gone into effect July 1st 2012. The Court also vacated the gainful employment program reporting requirements and requirements about adding new gainful employment programs that previously went into effect on July 1, 2011. The Court left in place the gainful employment disclosure provisions that require institutions to disclose certain information on their web pages for each gainful employment program, including on time completion rates and information about tuition and costs.

As we continue to analyze the Court’s decision, we will provide updated information on how the decision impacts postsecondary institutions. At this time we are providing the following guidance.

Reporting– As noted, the Court’s decision vacated the gainful employment reporting requirements in 34 CFR 668.6(a). Therefore, institutions are not required to submit gainful employment reports for the just ended 2011-2012 award year.

In response to requests from several institutions, institutions may voluntarily submit corrections to previously reported gainful employment information. System changes to the National Student Loan Data System (NSLDS) that are scheduled to be available in late July will also make it easier for institutions to update previously reported gainful employment information if they choose to do so. A separate IFAP announcement explaining those changes to NSLDS will be posted shortly.

New Gainful Employment Programs – As noted, the Court vacated the gainful employment new program requirements of the regulations. Thus, the revisions made to 34 CFR 600.10(c) and 34 CFR 600.20 that went into effect July 1, 2011 are no longer applicable and institutions should refer to those regulatory sections as they existed prior to July 1, 2011. Institutions do not have to provide the Department with the 90 day notice of intent to offer a new gainful employment program, and approvals for new programs are only required as indicated in the regulations in effect prior to July 1, 2011.

Disclosures - As discussed above, the Court left in place the October 29, 2010 regulations at 34 CFR 668.6(b) that require institutions to disclose certain information about each of their Gainful Employment Programs. Those regulations took effect July 1, 2011 and state that institutions must use the disclosure template provided by the Department when it becomes available. We are reviewing the disclosure template to ensure that it complies with the Court’s decision, and will announce further information on this issue soon. Institutions are not required to update their disclosures until further information is provided later this month.

We will continue to post additional updates to the IFAP website (ifap.ed.gov) about the status of the gainful employment regulations and the continuing program disclosure requirements.

The Webinar scheduled for July 11 on understanding the GE Information Rates will take place, and the Department will respond to questions to assist institutions in understanding and using the gainful employment informational rates as a program assessment aid for institutions.

Thank you for your continued cooperation and understanding.

 

   

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