Biden administration announces stricter higher education paid employment rules

The Biden administration released the final version of its competitive employment rules on Wednesday. It provides a stricter version of regulations first put in place during the Obama administration but later repealed by Donald Trump’s Department of Education.

The rule cracks down on programs at for-profit institutions and other schools that provide job training that leave students with unpayable debt or income comparable to what someone who did not attend post-secondary education would earn in the state. It is something.

The final rule, which the administration has been developing for more than two years, included two key parts.

  • The Department of Education said strengthened Gainful Employment (GE) rules will protect around 700,000 students a year from low-performing career training programs.
  • The new Financial Value Transparency (FVT) framework provides students in all programs with detailed information about the net costs of their higher education programs and the financial outcomes they can expect. Additionally, if a graduate is facing an unaffordable level of debt, prospective students will be asked to allow them to see this information before enrolling in a certificate or graduate program.

“Today’s final rule answers President Biden’s call to hold colleges accountable for rising costs and protect students from unaffordable college debt,” U.S. Secretary of Education Miguel Cardona said in the department’s announcement. Stated. “We are fixing a broken system so that college programs let students know before they take out loans that their graduates are saddled with high debt, low incomes, and poor career prospects.”Biden The Harris Administration believes that when students invest in higher education, they receive a solid return on that investment and a greater chance at achieving the American Dream.”

Paid employment regulations

Under the final rule, the Department will determine whether programs offered by private, for-profit institutions and all types of university accredited programs meet legal requirements to prepare students for meaningful employment in recognized professions. will be judged using two separate criteria. in particular:

  • The percentage of annual income a typical graduate needs to repay debt (i.e., the “debt-to-income ratio”) must be no more than 8% of discretionary power, or no more than 20%. Income (defined as annual income minus 150% of the federal poverty guidelines). This metric captures whether a program’s debt is affordable.
  • At least half of graduates earn more than the typical high school graduate in the state’s workforce without any higher education. This “earnings premium” evaluates whether a program increases a student’s earning potential.

Programs are evaluated separately on each scale. Students who fail either test should be warned that the program is at risk of losing federal student aid. Students who fail to meet the criteria on the same indicator twice in a three-year period are not eligible to participate in the Department’s federal student aid programs.

Financial value transparency

The FVT framework provides guidance to students and their families about how much the department is likely to pay out-of-pocket for the program, how much debt to expect, and how much the student is likely to pay. , provides what we call the most detailed information ever available. There is a high possibility of earning money after graduation. ” It also includes provisions to help students understand the risks involved in choosing a graduate certificate or postgraduate program before enrolling.

This increased transparency includes new reporting to institutions related to costs (tuition, fees, books, supplies), non-federal grant aid, and general borrowing amounts (both private and federal loans). It is realized through obligation. The department also calculates the typical earnings of program graduates and makes all this information available to students on a website operated by the department.

The department said FVT focuses on certificate programs and graduate programs because these programs are where unpayable debt is most common and students tend to enroll directly in these specific programs. He said that. In contrast, many students pursuing an undergraduate degree do not select a program upon entering college.

GE’s accountability and FVT reporting provisions will become effective on July 1, 2024, and the first official financial result rates are expected to be published in early 2025. Programs that did not meet the same GE metrics during the first two years in which the rate was issued are ineligible. In 2026.

An unofficial copy of the regulations can be found here.

Reaction to the final rule was mixed. For example, Rep. Virginia Foxx of North Carolina, chair of the House Education and Labor Committee, reported criticizing the rule. Inside Higher Education. “For an institution that purports to serve the needs of veterans, minorities, and other disadvantaged students, the department’s announcement today is full of hypocrisy,” she was quoted as saying. “The government has proven time and time again that it would rather march to the beat of its own bureaucratic drum than commit to promoting both accountability and transparency in post-secondary education. ”

Career Education and Universities (CECU), an organization representing the independent sector of higher education, issued the following statement: “Once again, the Department overlooked important issues and rushed the process, resulting in the final gainful employment regulations. CECU continues to scale to circumvent established procedures and advance partisan rules that fail to protect the majority of students. CECU has continually advocated for regulations that ensure and maintain the protection of all students. Equal accountability for public, private nonprofit, and for-profit institutions is a goal that cannot be achieved by this rule. ”

But many consumer advocacy groups and higher education officials welcomed the new rules. Kelly McManus said: “These liability rules set the strongest standards ever for student performance, provide important protections for students and borrowers, and ensure that real value is created. “We will ensure that taxpayer dollars are not wasted on educational programs that don’t work.” Arnold Ventures.

The Institute For College Access & Success praised the rule, saying, “This rule is a powerful tool that protects students from low-quality, high-cost programs and protects taxpayers from wasting their money on programs that make students’ lives worse.” “We have long supported the Gainful Employment (GE) rule.” . We welcome the new final rule. This is important because it balances accountability where it is needed most with greater transparency for prospective students, especially when there is a risk of incurring excessive debt in certificate or graduate programs. furthering these goals in new ways. ”

The new rules are a welcome step toward holding more career training programs accountable for the value they bring, or fail to deliver, to students. This regulation also ensures that students enrolled in various certificate and graduate programs have the information they need before investing time and money in programs that may not be profitable. .

Ensuring that career college programs meet their promises is a critical component of an effective education regulatory scheme. U.S. Department of Education Under Secretary James Kvale said of the new rules: “Overwhelmingly, students say they go to college to find a good job and build financial security, but their programs do not provide any financial benefit compared to students who do not receive any post-secondary education. Too many of us are underprivileged. These rules prevent taxpayers from funneling taxpayer money to schools that continue to burden students with debt they cannot afford. We’re making sure you have more information to make the right choices.”

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