Winter 2011 ISFAA Conference Gainful Employment

1. Winter 2011 ISFAA ConferenceGainful Employment

2. Background of Gainful Employment Regs… • Final regulations published in the Federal Register on October 29, 2010 require institutions to follow the new gainful employment regulations • Institutions are required to report information about students that are enrolled in programs that lead to gainful employment • Regulations also require that certain information must be disclosed to prospective students that are interested in enrolling in gainful employment programs

3. What is a Gainful Employment Program? • All non-degree programs offered by public and non-profit institutions and virtually all academic programs offered by market funded institutions • All institutions must be aware of these regulations not only market funded schools – fewer than 1,000 out of approximately 6,000 institutions do not have GE programs

4. Reporting Requirement for Gainful Employment Programs • First reports must be submitted to the Department no later than October 1, 2011, (change to November 15, 2011) and must include information on students who were enrolled in GE programs during the 06/07, 07/08, 08/09, 09/10, and 10/11 award years • All students must be reported if they are enrolled in a GE program regardless of whether they received Title IV funding or not • Must report SSN, First, middle, and last name, DOB • Must report OPEID (8 digit) where student attended • Must report name of program, CIP code, credential, start date and grad date

5. Disclosure Requirements for each GE Program • Occupations (by name and SOC code)that program prepares students to enter • Links to occupational profiles on O*NET • Program costs – • Tuition and fees • Room and board • Books and supplies • On-time completion rate • Numerator – Number of students who completed within normal time (not 150% of normal time) • Denominator – Number of students who completed program during the most recent award year

6. Disclosure Requirements for each GE Program • Job placement rates for students completing the program • Use the formula of the institutional accreditor, program accreditor, or the state requires • Must be disclosed on a program basis • Median loan debt incurred by students who complete the program • Title IV loan debt • Private educational loan debt • Institutional finance plans

7. Gainful Employment Metrics • Repayment Rate • Percentage of the loan amounts that a GE program’s former students are repaying • Debt to Earnings Ratio • For the GE program’s completers, the average educational loan annual repayment amount as a proportion of the average borrowers’ income

8. Repayment Rate OOPB of LPF plus OOPB of PML OOPB • OOPB = Original Outstanding Principal Balance • LPF = Loans Paid in Full • PML =Payments Made on Loans • Typically includes loans in 3rd and 4th year of repayment

9. Repayment Rate • Loan is successfully being repaid if: • Its balance is reduced by $1 over the year or the loan is paid in full • It is on track to being forgiven due to public service employment • Borrower is making payments under an interest-only or IBR plan, but limited to no more than 3% of the OOPB EXAMPLE: Jim owes $2,000 If only Jen is repaying her loan the Jan owes $3,000 school would have a 50% repayment Jeff owes $5,000 rate. $10,000/$20,000 = 50% Jen owes $10,000

10. Debt-to-Earnings Rate Earnings Rate Average Annual Loan Payment Amount Mean or Median Annual Earnings Discretionary Income Rate Average Annual Loan Payment Rate Mean or Median Annual Earnings – 1.5 X poverty line Typically includes students in the 3rd and 4th year after completion

11. Debt-to-Earnings Rate • SSA will provide the median and mean earnings of program graduates • Schools can verify the lists of individuals submitted to SSA, but cannot dispute the earnings amounts from the SSA – will be able to use earnings data in lieu of SSA if it is: • State sponsored data • Institutional survey conducted by NCES standards • Bureau of Labor Statistics data

12. Debt-to-Earnings Rate • Calculating of the annual loan payment • Uses the program’s median loan debt • Amortized at 6.8% over • 10 years for a certificate or associate’s program • 15 years for a baccalaureate program, or • 20 years for a graduate program • Excludes students with: • Military deferments • In-school deferments • Loans discharged or pending discharge for death or total and permanent disability

13. Performance Requirements • A program must pass at least one of the three rates to be a Gainful Employment program eligible for Title IV funding • Repayment rate of at least 35% • Debt-to-Earnings rate of less than • 12% of total earnings, or • 30% of discretionary income

14. Performance Requirements • A program is a failing program for year if it does not meet any of the minimum standards • After one year’s failure institution must – • Disclose to students and prospective students the amounts by which the program did not meet the minimum standards and any plans for improvement; • Establish a three day waiting period before students can enroll

15. Performance Requirements • After two years out of three as a failing program, institutions must tell students that – • Their debts may be unaffordable • The program may lose eligibility, and • What transfer options exist • If a failing program for three of four years, the program loses eligibility for federal student aid • FY 2015 would be the first year that any programs could lose Title IV eligibility

16. Additional Resources to Clarify GE • IFAP – Gainful Employment FAQ page • 27 Electronic Announcements have been published on GE and can be located on IFAP • 1 Dear Colleague Letter has been published (GEN11-10) • Regulations – • Program Integrity: Gainful Employment Debt Measures (6/13/11) • Program Integrity: Gainful Employment – New Programs (10/29/10) • Program Integrity Issues: Final Rule (10/29/10)