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Proposed Rule2023-09647

Financial Value Transparency and Gainful Employment (GE), Financial Responsibility, Administrative Capability, Certification Procedures, Ability to Benefit (ATB)

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Published

May 19, 2023

Issuing agencies

Education Department

Abstract

The Secretary is proposing new regulations to promote transparency, competence, stability, and effective outcomes for students in the provision of postsecondary education. Using the terminology of past regulatory proposals, these regulations seek to make improvements in the areas of gainful employment (GE); financial value transparency; financial responsibility; administrative capability; certification procedures; and Ability to Benefit (ATB).

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<title>Federal Register, Volume 88 Issue 97 (Friday, May 19, 2023)</title>
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[Federal Register Volume 88, Number 97 (Friday, May 19, 2023)]
[Proposed Rules]
[Pages 32300-32511]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-09647]

[[Page 32299]]

Vol. 88

Friday,

No. 97

May 19, 2023

Part II

Department of Education

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34 CFR Parts 600 and 668

Financial Value Transparency and Gainful Employment (GE), Financial
Responsibility, Administrative Capability, Certification Procedures,
Ability to Benefit (ATB); Proposed Rule

Federal Register / Vol. 88 , No. 97 / Friday, May 19, 2023 / Proposed
Rules

[[Page 32300]]

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DEPARTMENT OF EDUCATION

34 CFR Parts 600 and 668

[Docket ID ED-2023-OPE-0089]
RIN 1840-AD51, 1840-AD57, 1840-AD64, 1840-AD65, and 1840-AD80

Financial Value Transparency and Gainful Employment (GE),
Financial Responsibility, Administrative Capability, Certification
Procedures, Ability to Benefit (ATB)

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary is proposing new regulations to promote
transparency, competence, stability, and effective outcomes for
students in the provision of postsecondary education. Using the
terminology of past regulatory proposals, these regulations seek to
make improvements in the areas of gainful employment (GE); financial
value transparency; financial responsibility; administrative
capability; certification procedures; and Ability to Benefit (ATB).

DATES: We must receive your comments on or before June 20, 2023.

ADDRESSES: Comments must be submitted via the Federal eRulemaking
Portal at <a href="http://regulations.gov">regulations.gov</a>. Information on using Regulations.gov,
including instructions for finding a rule on the site and submitting
comments, is available on the site under ``FAQ.'' If you require an
accommodation or cannot otherwise submit your comments via
<a href="http://regulations.gov">regulations.gov</a>, please contact one of the program contact persons
listed under FOR FURTHER INFORMATION CONTACT. The Department will not
accept comments submitted by fax or by email or comments submitted
after the comment period closes. To ensure that the Department does not
receive duplicate copies, please submit your comment only once.
Additionally, please include the Docket ID at the top of your comments.
Privacy Note: The Department's policy is to generally make comments
received from members of the public available for public viewing in
their entirety on the Federal eRulemaking Portal at <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Therefore, commenters should be careful to include
in their comments only information about themselves that they wish to
make publicly available. Commenters should not include in their
comments any information that identifies other individuals or that
permits readers to identify other individuals. If, for example, your
comment describes an experience of someone other than yourself, please
do not identify that individual or include information that would
facilitate readers identifying that individual. The Department reserves
the right to redact at any time any information in comments that
identifies other individuals, includes information that would
facilitate readers identifying other individuals, or includes threats
of harm to another person.

FOR FURTHER INFORMATION CONTACT: For financial value transparency and
GE: Joe Massman. Telephone: (202) 453-7771. Email: <a href="/cdn-cgi/l/email-protection#80caefe5aecde1f3f3ede1eec0e5e4aee7eff6">[email&#160;protected]</a>.
For financial responsibility: Kevin Campbell. Telephone: (214) 661-
9488. Email: <a href="/cdn-cgi/l/email-protection#7b301e0d121555381a160b191e17173b1e1f551c140d">[email&#160;protected]</a>. For administrative capability:
Andrea Drew. Telephone: (202) 987-1309. Email: <a href="/cdn-cgi/l/email-protection#95d4fbf1e7f0f4bbd1e7f0e2d5f0f1bbf2fae3">[email&#160;protected]</a>. For
certification procedures: Vanessa Gomez. Telephone: (202) 453-6708.
Email: <a href="/cdn-cgi/l/email-protection#6c3a0d02091f1f0d422b030109162c0908420b031a">[email&#160;protected]</a>. For ATB: Aaron Washington. Telephone:
(202) 987-0911. Email: <a href="/cdn-cgi/l/email-protection#4e0f2f3c212060192f3d262720293a21200e2b2a60292138">[email&#160;protected]</a>. The mailing address for
the contacts above is U.S. Department of Education, Office of
Postsecondary Education, 400 Maryland Avenue SW, 5th floor, Washington,
DC 20202.
If you are deaf, hard of hearing, or have a speech disability and
wish to access telecommunications relay services, please dial 7-1-1.

SUPPLEMENTARY INFORMATION:
Directed Questions: The Department invites you to submit comments
on all aspects of the proposed regulations, as well as the Regulatory
Impact Analysis. The Department is particularly interested in comments
on questions posed throughout the Preamble, which are collected here
for the convenience of commenters, with a reference to the section in
which they appear. The Department is also interested in comments on
questions posed in the Regulatory Impact Analysis.

Calculating Earnings Premium Measure (Sec. 668.404)

We recognize that it may be more challenging for some programs
serving students in economically disadvantaged locales to demonstrate
that graduates surpass the earnings threshold when the earnings
threshold reflects the median statewide earnings, including locales
with higher earnings. We invite public comments concerning the possible
use of an established list, such as list of persistent poverty counties
compiled by the Economic Development Administration, to identify such
locales, along with comments on what specific adjustments, if any, the
Department should make to the earnings threshold to accommodate in a
fair and data-informed manner programs serving those populations.

Student Disclosure Acknowledgments (Sec. 668.407)

The Department is aware that in some cases, students may transfer
from one program to another or may not immediately declare a major upon
enrolling in an eligible non-GE program. We welcome public comments
about how to best address these situations with respect to
acknowledgment requirements. The Department also understands that many
students seeking to enroll in non-GE programs may place high importance
on improving their earnings and would benefit if the regulations
provided for acknowledgements when a non-GE program is low-earning. We
further welcome public comments on whether the acknowledgement
requirements should apply to all programs, or to GE programs and some
subset of non-GE programs, that are low-earning.
The Department is also aware that some communities face unequal
access to postsecondary and career opportunities, due in part to the
lasting impact of historical legal prohibitions on educational
enrollment and employment. Moreover, institutions established to serve
these communities, as reflected by their designation under law, have
often had lower levels of government investment. The Department
welcomes comments on how we might consider these factors, in accord
with our legal obligations and authority, as we seek to ensure that all
student loan borrowers can make informed decisions and afford to repay
their loans.

Financial Responsibility--Reporting Requirements (Sec.
668.171)(f)(i)(iii)

We specifically invite comments as to whether an investigation as
described in Sec. 668.171(f)(1)(iii) warrants inclusion in the final
regulations as either a mandatory or discretionary financial trigger.
We also invite comment as to what actions associated with the
investigation would have to occur to initiate the financial trigger.

Provisional Certification (Sec. 668.13(c))

Proposed Sec. 668.13(c)(2)(ii) requires reassessment of
provisionally certified institutions that have significant consumer
protection concerns (i.e., those arising from claims under consumer
protection laws) by the end of their second year of receiving
certification. We invite comment about whether to maintain the proposed
two-

[[Page 32301]]

year limit or extend recertification to no more than three years for
provisionally certified schools with major consumer protection issues.

Approved State Process (Sec. 668.156(f))

As agreed by Committee consensus, we propose a success rate
calculation under proposed Sec. 668.156(f). To further inform the
final regulations, we specifically request comments on the proposed 85
percent threshold, the comparison groups in the calculation, the
components of the calculation, and whether the success rate itself is
an appropriate outcome indicator for the State process.

Executive Summary

Purpose of This Regulatory Action

The financial assistance students receive under the title IV, HEA
programs for postsecondary education and training represent a
significant annual expenditure by the Federal government. When used
effectively, Federal aid for postsecondary education and training is a
powerful tool for promoting social and economic mobility. However, many
programs fail to effectively enhance students' skills or increase their
earnings, leaving them no better off than if they had never pursued a
postsecondary credential and with debt they cannot afford.
The Department is also aware of a significant number of instances
where institutions shut down with no warning and is concerned about the
impact of such events for students. For instance, one recent study
shows that, of closures that took place over a 16-year period, 70
percent of the students at such institutions (100,000 individuals)
received insufficient warning that the closures were coming.\1\ These
closures often come at a significant cost to taxpayers. Students who
were enrolled at or close to the time of closure and did not graduate
from the shuttered institution may receive a discharge of their Federal
student loans. The cost of such discharges is rarely fully reimbursed
because once the institution closes there are often few assets to use
for repaying Federal liabilities. For example, the Department recouped
less than 2 percent of the $550 million in closed school discharges
awarded between January 2, 2014, to June 30, 2021, to students who
attended private for-profit colleges.\2\ While these closures may have
occurred without notice for the students, they were often preceded by
months if not years of warning signs. Unfortunately, existing
regulations do not provide the Department the necessary authority to
rely on those indicators of risk to take action and unfortunately,
despite observing these signs, the Department has lacked authority
under existing regulations to take action based on those indicators of
risk in order to secure financial protection before the institution
runs out of money and closes.
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\1\ <a href="https://nscresearchcenter.org/wp-content/uploads/SHEEO-NSCRCCollegeClosuresReport.pdf">https://nscresearchcenter.org/wp-content/uploads/SHEEO-NSCRCCollegeClosuresReport.pdf</a>.
\2\ Figure excludes the $1.1 billion in additional closed school
discharges for ITT Technical Institute announced in August 2021.
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The Department's inability to act also has implications for
students. Students whose colleges close tend to have high default rates
and are highly unlikely to continue their educational journeys
elsewhere. Those who enrolled well before the point of closure may have
been misled into taking on loans through admissions and recruitment
efforts based on misrepresentations about the ability of attendees to
obtain employment or transfer credit. Acting more swiftly in the future
to obtain financial protection would help either deter risky
institutional behavior or ensure the Department has more funds in place
to offset the cost to taxpayers of closed schools or borrower defense
discharges.
There are also institutions that operate title IV, HEA programs
without the administrative capability necessary to successfully serve
students, for example, where institutions that lack the resources
needed to deliver on promises made about career services and
externships or where institutions employ principals, affiliates, or
other individuals who exercise substantial control over an institution
who have a record of misusing title IV, HEA aid funds. A lack of
administrative capability can also result in insufficient institutional
controls over verifying students' high school diplomas, which are a key
criterion for title IV, HEA eligibility.
Furthermore, there have been instances where institutions have
exhibited material problems yet remained fully certified to participate
in the Federal student aid programs. This full certification status can
limit the ability of the Department to remedy problems identified
through monitoring until it is potentially too late to improve
institutional behavior or prevent a school closure that ends up wasting
taxpayer resources in the form of loan discharges, as well as the lost
time, resources, and foregone opportunities of students.
To address these concerns, the Department convened a negotiated
rulemaking committee, the Institutional and Programmatic Eligibility
Committee (Committee), that met between January 18, 2022, and March 18,
2022, to consider proposed regulations for the Federal Student Aid
programs authorized under title IV of the HEA (title IV, HEA programs)
(see the section under Negotiated Rulemaking for more information on
the negotiated rulemaking process). The Committee operated by
consensus, defined as no dissent by any member at the time of a
consensus check. Consensus checks were taken by issue, and the
Committee reached consensus on the topic of ATB.
These proposed regulations address five topics: financial value
transparency and GE, financial responsibility, administrative
capability, certification procedures, and ATB.
Proposed regulations for financial value transparency would address
concerns about the rising cost of postsecondary education and training
and increased student borrowing by establishing an accountability and
transparency framework to encourage eligible postsecondary programs to
produce acceptable debt and earnings outcomes, apprise current and
prospective students of those outcomes, and provide better information
about program price. Proposed regulations for GE would establish
eligibility and certification requirements to address ongoing concerns
about educational programs that are required by statute to provide
training that prepares students for gainful employment in a recognized
occupation, but instead are leaving students with unaffordable levels
of loan debt in relation to their earnings. These programs often lead
to default or provide no earnings benefit beyond that provided by a
high school education, thus failing to fulfill their intended goal of
preparing students for gainful employment. GE programs include nearly
all educational programs at for-profit institutions of higher
education, as well as most non-degree programs at public and private
non-profit institutions.
The proposed financial responsibility regulations establish
additional factors that will be viewed by the Department as indicators
of an institution's lack of financial responsibility. When one of the
factors occurs, the Department may seek financial protection from the
institution, most commonly through a letter of credit. The indicators
of a lack of financial responsibility proposed in this NPRM are events
that put an institution at a higher risk of financial instability and
sudden closure. Particular emphasis will be made regarding events that
bring about a major change in an institution's composite score, the
metric used to

[[Page 32302]]

determine an entity's financial strength based on its audited financial
statement as described in Sec. 668.172 and Appendices A and B in
subpart L of part 668. Other examples of high-risk events that could
trigger a finding of a lack of financial responsibility are when an
institution is threatened with a loss of State authorization or loses
eligibility to participate in a Federal educational assistance program
other than those administered by the Department.
The events linked to the proposed financial triggers are often
observed in institutions facing possible or probable closure due to
financial instability. By allowing the Department to take certain
actions in response to specified financial triggers, the proposed
regulations provide the Department with tools to minimize the impact of
an institution's financial decline or sudden closure. The additional
financial protections established in these regulations are critical to
offset potential losses sustained by taxpayers when an institution
closes and better ensure the Department may take actions in advance of
a potential closure to better protect taxpayers against the financial
costs resulting from an institutional closure. These protections would
also dissuade institutions from engaging in overly risky behavior in
the first place. We also propose to simplify the regulations by
consolidating the financial responsibility requirements for changes in
ownership under proposed part 668, subpart L and removing and reserving
current Sec. 668.15.
We propose several additional standards in the administrative
capability regulations at Sec. 668.16 to ensure that institutions can
appropriately administer the title IV, HEA programs. While current
administrative capability regulations include a host of requirements,
the Department proposes to address additional concerns which could
indicate severe or systemic administrative problems that negatively
impact student outcomes and are not currently reflected in those
regulations. The Department already requires institutions to provide
adequate financial aid counseling to students, for instance. However,
many institutions provide financial aid information to students that is
confusing and misleading. The information that institutions provide
often lacks accurate information about the total cost of attendance,
and groups all types of aid together instead of clearly separating
grants, loans, and work study aid. The proposed administrative
capability regulations would address these issues by specifying
required elements to be included in financial aid communications.
We also propose to add an additional requirement for institutions
to provide adequate career services to help their students find jobs,
particularly where the institution offers career-specific programs and
makes commitments about job assistance. Adequate services would be
evaluated based on the number of students enrolled in GE programs at
the school, the number and distribution of career services staff, the
career services the institution promised to its students, and the
presence of partnerships between institutions and recruiters who
regularly hire graduates. We believe this requirement would help ensure
that institutions provide adequate career services to students. The
proposed revisions and additions to Sec. 668.16 address these and
other concerns that are not reflected in current regulations.
The proposed certification procedures regulations would create a
more rigorous process for certifying institutions for initial and
ongoing participation in the title IV, HEA programs and better protect
students and taxpayers through a program participation agreement (PPA).
The proposed revisions to Sec. 668.2, 668.13, and 668.14 aim to
protect the integrity of the title IV, HEA programs and to protect
students from predatory or abusive behaviors. For example, in Sec.
668.14(e) we propose requiring institutions that are provisionally
certified and that we determine to be at risk of closure to submit an
acceptable teach-out plan or agreement to the Department, the State,
and the institution's recognized accrediting agency. This would ensure
that the institution has an acceptable plan in place that allows
students to continue their education in the event the institution
closes.
Finally, the Department proposes revisions to current regulations
for ATB. These proposed changes to Sec. 668.156 would clarify the
requirements for the approval of a State process. The State process is
one of the three ATB alternatives (see the Background section for a
detailed explanation) that an individual who is not a high school
graduate could fulfill to receive title IV, HEA, Federal student aid
for enrollment in an eligible career pathway program. The proposed
changes to Sec. 668.157 add documentation requirements for eligible
career pathway programs.
Summary of the Major Provisions of this Regulatory Action: The
proposed regulations would make the following changes.

Financial Value Transparency and Gainful Employment (Sec. 600.10,
600.21, 668.2, 668.43, 668.91, 668.401, 668.402, 668.403, 668.404,
668.405, 668.406, 668.407, 668.408, 668.409, 668.601, 668.602, 668.603,
668.604, 668.605, and 668.606)

<bullet> Amend Sec. 600.10(c) to require an institution seeking to
establish the eligibility of a GE program to add the program to its
application.
<bullet> Amend Sec. 600.21(a) to require an institution to notify
the Secretary within 10 days of any change to information included in
the GE program's certification.
<bullet> Amend Sec. 668.2 to define certain terminology used in
subparts Q and S, including ``annual debt-to-earnings rate,''
``classification of instructional programs (CIP) code,'' ``cohort
period,'' ``credential level,'' ``debt-to-earnings rates (D/E rates),''
``discretionary debt-to-earnings rates,'' ``earnings premium,''
``earnings threshold,'' ``eligible non-GE program,'' ''Federal agency
with earnings data,'' ``gainful employment program (GE program),''
``institutional grants and scholarships,'' ``length of the program,''
``poverty guideline,'' ``prospective student,'' ``student,'' and
``Title IV loan.''
<bullet> Amend Sec. 668.43 to establish a Department website for
the posting and distribution of key information and disclosures
pertaining to the institution's educational programs, and to require
institutions to provide the information required to access that website
to a prospective student before the student enrolls, registers, or
makes a financial commitment to the institution.
<bullet> Amend Sec. 668.91(a) to require that a hearing official
must terminate the eligibility of a GE program that fails to meet the
required GE metrics, unless the hearing official concludes that the
Secretary erred in the calculation.
<bullet> Add a new Sec. 668.401 to provide the scope and purpose
of newly established financial value transparency regulations under
subpart Q.
<bullet> Add a new Sec. 668.402 to provide a framework for the
Secretary to determine whether a GE program or eligible non-GE program
leads to acceptable debt and earnings results, including establishing
annual and discretionary D/E rate metrics and associated outcomes, and
establishing an earnings premium metric and associated outcomes.
<bullet> Add a new Sec. 668.403 to establish a methodology to
calculate annual and discretionary D/E rates, including parameters to
determine annual loan payments, annual earnings, loan debt

[[Page 32303]]

and assessed charges, as well as to provide exclusions and specify when
D/E rates will not be calculated.
<bullet> Add a new Sec. 668.404 to establish a methodology to
calculate a program's earnings premium measure, including parameters to
determine median annual earnings, as well as to provide exclusions and
specify when the earnings premium measure will not be calculated.
<bullet> Add a new Sec. 668.405 to establish a process by which
the Secretary will obtain the administrative and earnings data required
to issue D/E rates and the earnings premium measure.
<bullet> Add a new Sec. 668.406 to require the Secretary to notify
institutions of their financial value transparency metrics and
outcomes.
<bullet> Add a new Sec. 668.407 to require current and prospective
students to acknowledge having seen the information on the disclosure
website maintained by the Secretary if an eligible non-GE program has
failed the D/E rates measure, to specify the content and delivery of
such acknowledgments, and to require that students must provide the
acknowledgment before the institution may disburse any title IV, HEA
funds.
<bullet> Add a new Sec. 668.408 to establish institutional
reporting requirements for students who enroll in, complete, or
withdraw from a GE program or eligible non-GE program and to define the
timeframe for institutions to report this information.
<bullet> Add a new Sec. 668.409 to establish severability
protections ensuring that if any financial value transparency provision
under subpart Q is held invalid, the remaining provisions of that
subpart and of other subparts would continue to apply.
<bullet> Add a new Sec. 668.601 to provide the scope and purpose
of newly established GE regulations under subpart S.
<bullet> Add a new Sec. 668.602 to establish criteria for the
Secretary to determine whether a GE program prepares students for
gainful employment in a recognized occupation.
<bullet> Add a new Sec. 668.603 to define the conditions under
which a failing GE program would lose title IV, HEA eligibility, to
provide the opportunity for an institution to appeal a loss of
eligibility only on the basis of a miscalculated D/E rate or earnings
premium, and to establish a period of ineligibility for failing GE
programs that lose eligibility or voluntarily discontinue eligibility.
<bullet> Add a new Sec. 668.604 to require institutions to provide
the Department with transitional certifications, as well as to certify
when seeking recertification or the approval of a new or modified GE
program, that each eligible GE program offered by the institution is
included in the institution's recognized accreditation or, if the
institution is a public postsecondary vocational institution, the
program is approved by a recognized State agency.
<bullet> Add a new Sec. 668.605 to require warnings to current and
prospective students if a GE program is at risk of a loss of title IV,
HEA eligibility, to specify the content and delivery requirements for
such notifications, and to provide that students must acknowledge
having seen the warning before the institution may disburse any title
IV, HEA funds.
<bullet> Add a new Sec. 668.606 to establish severability
protections ensuring that if any GE provision under subpart S is held
invalid, the remaining provisions of that subpart and of other subparts
would continue to apply.

Financial Responsibility (Sec. Sec. 668.15, 668.23, and 668, subpart L
Sec. Sec. 171, 174, 175, 176 and 177)

<bullet> Remove and reserve Sec. 668.15 thereby consolidating all
financial responsibility factors, including those governing changes in
ownership, under part 668, subpart L.
<bullet> Amend Sec. 668.23(a) to require that audit reports are
submitted in a timely manner, which would be the earlier of 30 days
after the date of the report or six months after the end of the
institution's fiscal year.
<bullet> Amend Sec. 668.23(d) to require that financial statements
submitted to the Department must match the fiscal year end of the
entity's annual return(s) filed with the Internal Revenue Service. We
would further amend Sec. 668.23(d) to require the institution to
include a detailed description of related entities with a level of
detail that would enable the Department to readily identify the related
party. Such information must include, but is not limited to, the name,
location and a description of the related entity including the nature
and amount of any transactions between the related party and the
institution, financial or otherwise, regardless of when they occurred.
Section 668.23(d) would also be amended to require that any domestic or
foreign institution that is owned directly or indirectly by any foreign
entity holding at least a 50 percent voting or equity interest in the
institution must provide documentation of the entity's status under the
law of the jurisdiction under which the entity is organized.
Additionally, we would amend Sec. 668.23(d) to require an institution
to disclose in a footnote to its financial statement audit the dollar
amounts it has spent in the preceding fiscal year on recruiting
activities, advertising, and other pre-enrollment expenditures.
<bullet> Amend Sec. 668.171(b) to require institutions to
demonstrate that they are able to meet their financial obligations by
noting additional cases that constitute a failure to do so, including
failure to make debt payments for more than 90 days, failure to make
payroll obligations, or borrowing from employee retirement plans
without authorization.
<bullet> Amend Sec. 668.171(c) to revise the set of conditions
that automatically require posting of financial protection if the event
occurs as prescribed in the regulations. These mandatory triggers are
designed to measure external events that pose risk to an institution,
financial circumstances that may not appear in the institution's
regular financial statements, or financial circumstances that may not
yet be reflected in the institution's composite score. Some examples of
these mandatory triggers include when, under certain circumstances,
there is a withdrawal of owner's equity by any means and when an
institution loses eligibility to participate in another Federal
educational assistance program due to an administrative action against
the institution.
<bullet> Amend Sec. 668.171(d) to revise the set of conditions
that may, at the discretion of the Department, require posting of
financial protection if the event occurs as prescribed in the
regulations. These discretionary triggers are designed to measure
external events or financial circumstances that may not appear in the
institution's regular financial statements and may not yet be reflected
in the institution's composite score. An example of these discretionary
triggers is when an institution is cited by a State licensing or
authorizing agency for failing to meet State or agency requirements.
Another example is when the institution experiences a significant
fluctuation between consecutive award years or a period of award years
in the amount of Federal Direct Loan or Federal Pell Grant funds that
cannot be accounted for by changes in those title IV, HEA programs.
<bullet> Amend Sec. 668.171(f) to revise the set of conditions
whereby an institution must report to the Department that a triggering
event, described in Sec. 668.171(c) and (d), has occurred.
<bullet> Amend Sec. 668.171(h) to adjust the language regarding an
auditor's opinion of doubt about the institution's ability to continue
operations to clarify that the Department may independently assess
whether the auditor's concerns have

[[Page 32304]]

been addressed or whether the opinion of doubt reflects a lack of
financial responsibility.
<bullet> Amend Sec. 668.174(a) to clarify the language related to
compliance audit or program review findings that lead to a liability of
greater than 5 percent of title IV, HEA volume at the institution, so
that the language more clearly states that the timeframe of the
preceding two fiscal years timeframe relates to when the reports
containing the findings in question were issued and not when the
reviews were actually conducted.
<bullet> Add a new proposed Sec. 668.176 to consolidate financial
responsibility requirements for institutions undergoing a change in
ownership under Sec. 668, subpart L.
<bullet> Redesignate the existing Sec. 668.176, establishing
severability, as Sec. 668.177 with no change to the regulatory text.

Administrative Capability (Sec. 668.16)

<bullet> Amend Sec. 668.16(h) to require institutions to provide
adequate financial aid counseling and financial aid communications to
advise students and families to accept the most beneficial types of
financial assistance available to enrolled students that includes clear
information about the cost of attendance, sources and amounts of each
type of aid separated by the type of aid, the net price, and
instructions and applicable deadlines for accepting, declining, or
adjusting award amounts.
<bullet> Amend Sec. 668.16(k) to require that an institution not
have any principal or affiliate whose misconduct or closure contributed
to liabilities to the Federal government in excess of 5 percent of that
institution's title IV, HEA program funds in the award year in which
the liabilities arose or were imposed.
<bullet> Add Sec. 668.16(n) to require that the institution has
not been subject to a significant negative action or a finding by a
State or Federal agency, a court, or an accrediting agency, where in
which the basis of the action or finding is repeated or unresolved,
such as non-compliance with a prior enforcement order or supervisory
directive; and to further require that the institution has not lost
eligibility to participate in another Federal educational assistance
program due to an administrative action against the institution.
<bullet> Amend Sec. 668.16(p) to strengthen the requirement that
institutions must develop and follow adequate procedures to evaluate
the validity of a student's high school diploma.
<bullet> Add Sec. 668.16(q) to require that institutions provide
adequate career services to eligible students who receive title IV, HEA
program assistance.
<bullet> Add Sec. 668.16(r) to require that an institution provide
students with accessible clinical, or externship opportunities related
to and required for completion of the credential or licensure in a
recognized occupation, within 45 days of the successful completion of
other required coursework.
<bullet> Add Sec. 668.16(s) to require that an institution timely
disburses funds to students consistent with the students' needs.
<bullet> Add Sec. 668.16(t) to require institutions to meet new
standards for their GE programs, as outlined in regulation.
<bullet> Add Sec. 668.16(u) to require that an institution does
not engage in misrepresentations or aggressive and deceptive
recruitment.

Certification Procedures (Sec. Sec. 668.2, 668.13, and 668.14)

Ability To Benefit (Sec. Sec. 668.2, 668.32, 668.156, and 668.157)

<bullet> Amend Sec. 668.2 to add a definition of ``eligible career
pathway program.''
<bullet> Amend Sec. 668.32 to differentiate between the title IV,
HEA aid eligibility of non-high school graduates that enrolled in an
eligible program prior to July 1, 2012, and those that enrolled after
July 1, 2012.
<bullet> Amend Sec. 668.156(b) to separate the State process into
an initial two-year period and a subsequent period for which the State
may be approved for up to five years.
<bullet> Amend Sec. 668.156(a) to strengthen the Approved State
process regulations to require that: (1) The application contain a
certification that each eligible career pathway program intended for
use through the State process meets the proposed definition of an
eligible career pathway program in regulation; (2) The application
describe the criteria used to determine student eligibility for
participation in the State process; (3) The withdrawal rate for a
postsecondary institution listed for the first time on a State's
application not exceed 33 percent; (4) That upon initial

[[Page 32305]]

application the Secretary will verify that a sample of the proposed
eligible career pathway programs meet statutory and regulatory
requirements; and (5) That upon initial application the State will
enroll no more than the greater of 25 students or one percent of
enrollment at each participating institution.
<bullet> Amend Sec. 668.156(c) to remove the support services
requirements from the State process which include: orientation,
assessment of a student's existing capabilities, tutoring, assistance
in developing educational goals, counseling, and follow up by teachers
and counselors.
<bullet> Amend the monitoring requirement in Sec. 668.156(c)(4) to
provide a participating institution that did not achieve the 85 percent
success rate up to three years to achieve compliance.
<bullet> Amend Sec. 668.156(c)(6) to prohibit an institution from
participating in the State process for title IV, HEA purposes for at
least five years if the State terminates its participation.
<bullet> Amend Sec. 668.156 to clarify that the State is not
subject to the success rate requirement at the time of the initial
application but is subject to the requirement for the subsequent
period, reduce the required success rate from the current 95 percent to
85 percent, and specify that the success rate be calculated for each
participating institution. Also, amend the comparison groups to include
the concept of ``eligible career pathway programs.''
<bullet> Amend Sec. 668.156 to require that States report
information on race, gender, age, economic circumstances, and
educational attainment and permit the Secretary to release a Federal
Register notice with additional information that the Department may
require States to submit.
<bullet> Amend Sec. 668.156 to update the Secretary's ability to
revise or terminate a State's participation in the State process by (1)
providing the Secretary the ability to approve the State process once
for a two-year period if the State is not in compliance with a
provision of the regulations and (2) allowing the Secretary to lower
the success rate to 75 percent if 50 percent of the participating
institutions across the State do not meet the 85 percent success rate.
<bullet> Add a new Sec. 668.157 to clarify the documentation
requirements for eligible career pathway programs.
Costs and benefits: The Department estimates that the proposed
regulations would generate benefits to students, postsecondary
institutions, and the Federal government that exceed the costs. The
Department also estimates substantial transfers, primarily in the form
of reduced net title IV, HEA spending by the Federal government. Net
benefits are created primarily by shifting students from low-financial-
value to high-financial-value programs or, in some cases, away from
low-financial-value postsecondary programs to non-enrollment. This
shift would be due to improved and standardized market information
about all postsecondary programs that would facilitate better decision
making by current and prospective students and their families; the
public, taxpayers, and the government; and institutions. Furthermore,
the GE component would improve the quality of options available to
students by directly eliminating the ability of low-financial-value GE
programs to receive title IV, HEA funds. This enrollment shift and
improvement in program quality would result in higher earnings for
students, which would generate additional tax revenue for Federal,
State, and local governments. Students would also benefit from lower
accumulated debt and lower risk of default. The proposed regulations
would also generate substantial transfers, primarily in the form of
title IV, HEA aid shifting between students, postsecondary
institutions, and the Federal government, generating a net budget
savings for the Federal government. Other components of this proposed
regulation related to financial responsibility would provide benefits
to the Department and taxpayers by increasing the amount of financial
protection available before an institution closes or incurs borrower
defense liabilities. This would also help dissuade unwanted behavior
and benefit institutions that are in stronger financial shape by
dissuading struggling institutions from engaging in questionable
behaviors to gain a competitive advantage in increasing enrollment.
Similarly, the changes to administrative capability and certification
procedures would benefit the Department in increasing its quality of
oversight of institutions so that students have more valuable options
when they enroll. Finally, the ATB regulations would provide needed
clarity to institutions and States on how to serve students who do not
have a high school diploma.
The primary costs of the proposed regulations related to the
financial value transparency and GE accountability requirements are the
additional reporting required by institutions, the time for students to
acknowledge having seen disclosures, and additional spending at
institutions that accommodate students who would otherwise have decided
to attend failing programs. The proposed regulations may also dissuade
some students from enrolling that otherwise would have benefited from
doing so. For the financial responsibility portion of the proposed
regulations, costs would be primarily related to the expense of
providing financial protection to the Department as well as transfers
that arise from shifting the cost and burden of closed school
discharges from the taxpayer to the institution and the entities that
own it. Costs related to certification procedures and administrative
capability would be related to any necessary steps to comply with the
added requirements. Finally, States and institutions would have some
added administrative expenses to administer the proposed ability-to-
benefit processes.
Invitation to Comment: We invite you to submit comments regarding
these proposed regulations. To ensure that your comments have maximum
effect in developing the final regulations, we urge you to clearly
identify the specific section or sections of the proposed regulations
that each of your comments addresses and to arrange your comments in
the same order as the proposed regulations.
We invite you to assist us in complying with the specific
requirements of Executive Orders 12866 and 13563 and their overall
requirement of reducing regulatory burden that might result from these
proposed regulations. Please let us know of any further ways we could
reduce potential costs or increase potential benefits while preserving
the effective and efficient administration of the Department's programs
and activities. The Department also welcomes comments on any
alternative approaches to the subjects addressed in the proposed
regulations.
During and after the comment period, you may inspect public
comments about these proposed regulations on the Regulations.gov
website.
Assistance to Individuals with Disabilities in Reviewing the
Rulemaking Record: On request, we will provide an appropriate
accommodation or auxiliary aid to an individual with a disability who
needs assistance to review the comments or other documents in the
public rulemaking record for these proposed regulations. If you want to
schedule an appointment for this type of accommodation or auxiliary
aid, please contact one of the persons listed under FOR FURTHER
INFORMATION CONTACT.

[[Page 32306]]

Background

Financial Value Transparency and Gainful Employment (Sec. Sec. 600.10,
600.21, 668.2, 668.43, 668.91, 668.401, 668.402, 668.403, 668.404,
668.405, 668.406, 668.407, 668.408, 668.409, 668.601, 668.602, 668.603,
668.604, 668.605, and 668.606)

Postsecondary education and training generate important benefits
both to the students pursuing new knowledge and skills and to the
Nation overall. Higher education increases wages and lowers
unemployment risk,\3\ and leads to myriad non-financial benefits
including better health, job satisfaction, and overall happiness.\4\ In
addition, increasing the number of individuals with postsecondary
education creates social benefits, including productivity spillovers
from a better educated and more flexible workforce,\5\ increased civic
participation,\6\ improvements in health and well-being for the next
generation,\7\ and innumerable intangible benefits that elude
quantification. The improvements in productivity and earnings lead to
increases in tax revenues from higher earnings and lower rates of
reliance on social safety net programs. These downstream increases in
net revenue to the government can be so large that public investments
in higher education more than pay for themselves.\8\
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\3\ Barrow, L., & Malamud, O. (2015). Is College a Worthwhile
Investment? Annual Review of Economics, 7(1), 519-555.
Card, D. (1999). The causal effect of education on earnings.
Handbook of labor economics, 3, 1801-1863.
\4\ Oreopoulos, P., & Salvanes, K.G. (2011). Priceless: The
Nonpecuniary Benefits of Schooling. Journal of Economic
Perspectives, 25(1), 159-184.
\5\ Moretti, E. (2004). Workers' Education, Spillovers, and
Productivity: Evidence from Plant-Level Production Functions.
American Economic Review, 94(3), 656-690.
\6\ Dee, T.S. (2004). Are There Civic Returns to Education?
Journal of Public Economics, 88(9-10), 1697-1720.
\7\ Currie, J., & Moretti, E. (2003). Mother's Education and the
Intergenerational Transmission of Human Capital: Evidence from
College Openings. The Quarterly Journal of Economics, 118(4), 1495-
1532.
\8\ Hendren, N., & Sprung-Keyser., B. (2020). A Unified Welfare
Analysis of Government Policies. The Quarterly Journal of Economics,
135(3), 1209-1318.
---------------------------------------------------------------------------

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.\9\ As we
illustrate in the Regulatory Impact Analysis of this proposed rule,
even among the same types of programs--that is, among programs with
similar academic levels and fields of study--both the costs and the
outcomes for students differ widely. Most postsecondary programs
provide benefits to students in the form of higher wages that help them
repay any loans they may have borrowed to attend the program. But too
many programs fail to increase graduates' wages, having little, or even
negative, effects on graduates' earnings.\10\ At the same time, too
many programs charge much higher tuition than similar programs with
comparable outcomes, leading students to borrow much more than they
could have had they attended a more affordable option.
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\9\ Hoxby, C.M. 2019. The Productivity of US Postsecondary
Institutions. In Productivity in Higher Education, C.M. Hoxby and
K.M. Stange (eds). University of Chicago Press: Chicago, 2019.
Lovenheim, M. and J. Smith. 2023. Returns to Different
Postsecondary Investments: Institution Type, Academic Programs, and
Credentials. In Handbook of the Economics of Education Volume 6, E.
Hanushek, L. Woessmann, and S. Machin (Eds). New Holland.
\10\ Cellini, S. and Turner, N. 2018. Gainfully Employed?
Assessing the Employment and Earnings of For-Profit College Students
Using Administrative Data. Journal of Human Resources. 54(2).
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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 career options
when choosing whether and where to enroll. Providing information on the
typical earnings outcomes, borrowing amounts, cost of attendance, and
sources of financial aid--and providing it directly to prospective
students in a salient way at a key moment in their decision-making
process--would help students make more informed choices and would allow
taxpayers and college stakeholders to better monitor whether public and
private resources are being well used. For many students these
financial considerations would, appropriately, be just one of many
factors used in deciding whether and where to enroll.
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. Although making
information available has been shown to improve consequential financial
choices across a variety of settings, it is a limited remedy,
especially for more vulnerable populations that may have less support
in interpreting and acting upon the relevant
information.11 12 We believe that providing more detailed
information about the debt and earnings outcomes of specific
educational programs would assist students in making better informed
choices about whether and where to enroll.
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\11\ Dominique J. Baker, Stephanie Riegg Cellini, Judith Scott-
Clayton, and Lesley J. Turner, ``Why information alone is not enough
to improve higher education outcomes,'' The Brookings Institution
(2021). <a href="http://www.brookings.edu/blog/brown-center-chalkboard/2021/12/14/why-information-alone-is-not-enough-to-improve-higher-education-outcomes/">www.brookings.edu/blog/brown-center-chalkboard/2021/12/14/why-information-alone-is-not-enough-to-improve-higher-education-outcomes/</a> outcomes/.
\12\ Mary Steffel, Dennis A. Kramer II, Walter McHugh, Nick
Ducoff, ``Information disclosure and college choice,'' The Brookings
Institution (2019). <a href="http://www.brookings.edu/wp-content/uploads/2020/11/ES-11.23.20-Steffel-et-al-1.pdf">www.brookings.edu/wp-content/uploads/2020/11/ES-11.23.20-Steffel-et-al-1.pdf</a>.
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To address these issues, the Department proposes to amend
Sec. Sec. 600.10, 600.21, 668.2, 668.13, 668.43, and 668.98, and to
establish subparts Q and S of part 668. Through this proposed
regulatory action, the Department seeks to establish the following
requirements:
(1) In subpart Q, a financial value transparency framework that
would 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. The framework
establishes measures of the earnings premium that typical program
graduates experience relative to the earnings of typical high school
graduates, as well as the debt service burden for typical graduates. It
also establishes performance benchmarks for each measure, denoting a
threshold level of performance below which the program may have adverse
financial consequences to students. This information would be made
available via a website maintained by the Department, and in some cases
students and prospective students would be required to acknowledge
viewing these disclosures before receiving title IV, HEA funds to
attend programs with poor outcomes. Further, the website would provide
the public, taxpayers, and the government with relevant information to
better safeguard the Federal investment in these programs. Finally, the
transparency framework would provide institutions with meaningful
information that they could use to benchmark their performance to other
institutions and improve student outcomes in these programs.
(2) In subpart S, we propose an accountability framework for career
training programs (also referred to as gainful employment, or GE,
programs)

[[Page 32307]]

that uses the same earnings premium and debt-burden measures to
determine whether a GE program remains eligible for title IV, HEA
program funds. The GE eligibility criteria are designed to define what
it means to prepare students for gainful employment in a recognized
occupation, and they tie program eligibility to whether GE programs
provide education and training to their title IV, HEA students that
lead to earnings beyond those of high school graduates and sufficient
to allow students to repay their student loans. GE programs that fail
the same measure in any two out of three consecutive years for which
the measure is calculated would lose eligibility for participation in
title IV, HEA programs.
Sections 102(b) and (c) of the HEA define, in part, a proprietary
institution and a postsecondary vocational institution as one that
provides an eligible program of training that prepares students for
gainful employment in a recognized occupation. Section 101(b)(1) of the
HEA defines an institution of higher education, in part, as any
institution that provides not less than a one-year program of training
that prepares students for gainful employment in a recognized
occupation. The statute does not further specify this requirement, and
through multiple reauthorizations of the HEA, Congress has neither
further clarified the concept of gainful employment, nor curtailed the
Secretary's authority to further define this requirement through
regulation, including when Congress exempted some liberal arts programs
offered by proprietary institutions from the gainful employment
requirement in the Higher Education Opportunity Act of 2008.
The Department previously issued regulations on this topic three
times. In 2011, the Department published a regulatory framework to
determine the eligibility of a GE program based on three metrics: (1)
Annual debt-to-earnings (D/E) rate, (2) Discretionary D/E rate, and (3)
Loan repayment rate. We refer to that regulatory action as the 2011
Prior Rule (76 FR 34385). Following a legal challenge, the program
eligibility measures in the 2011 Prior Rule were vacated on the basis
that the Department had failed to adequately justify the loan repayment
rate metric.\13\ In 2014, the Department issued new GE regulations,
which based eligibility determinations on only the annual and
discretionary D/E rates as accountability metrics, rather than the loan
repayment rate metric that had been the core source of concern to the
district court in previous litigation, and included disclosure
requirements about program outcomes. We refer to that regulatory action
as the 2014 Prior Rule (79 FR 64889). The 2014 Prior Rule was upheld by
the courts except for certain appeal procedures used to demonstrate
alternate program earnings.14 15 16
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\13\ Ass'n of Priv. Colleges & Universities v. Duncan, 870 F.
Supp. 2d 133 (D.D.C. 2012).
\14\ Ass'n of Proprietary Colleges v. Duncan, 107 F. Supp. 3d
332 (S.D.N.Y. 2015).
\15\ Ass'n of Priv. Sector Colleges & Universities v. Duncan,
110 F. Supp. 3d 176 (D.D.C. 2015), aff'd, 640 F. App'x 5 (D.C. Cir.
2016) (per curiam).
\16\ Am. Ass'n of Cosmetology Sch. v. DeVos, 258 F. Supp. 3d 50
(D.D.C. 2017).
---------------------------------------------------------------------------

The Department rescinded the 2014 Prior Rule in 2019 based on its
judgments and assessments at the time, citing: the inconsistency of the
D/E rates with the requirements of other repayment options; that the D/
E rates failed to properly account for factors other than program
quality that affect student earnings and other outcomes; a lack of
evidence for D/E thresholds used to differentiate between ``passing,''
``zone,'' and ``failing'' programs; that the disclosures required by
the 2014 Prior Rule included some data, such as job placement rates,
that were deemed unreliable; that the rule failed to provide
transparency regarding debt and earnings outcomes for all programs,
leaving students considering enrollment options about both non-profit
and proprietary institutions without information; and relatedly, that a
high percentage of GE programs did not meet the minimum cohort size
threshold and were therefore not included in the debt-to-earnings
calculations.\17\ In light of the Department's reasoning at the time,
the 2019 Prior Rule (i.e., the action to rescind the 2014 Prior Rule)
eliminated any accountability framework in favor of non-regulatory
updates to the College Scorecard on the premise that transparency could
encourage market forces to bring accountability to bear.
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\17\ 84 FR 31392.
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This proposed rule departs from the 2019 rescission, as well as the
2014 Prior Rule, for reasons that are previewed here and elaborated on
throughout this preamble.\18\ At the highest level, the Department
remains concerned about the same problems documented in the 2011 and
2014 Prior Rules. Too many borrowers struggle to repay their loans,
evidenced by the fact that over a million borrowers defaulted on their
loans in the year prior to the payment pause that was put in place due
to the COVID-19 pandemic. The Regulatory Impact Analysis (RIA) shows
these problems are more prevalent among programs where graduates have
high debts relative to their income, and where graduates have low
earnings. While both existing and proposed changes to income-driven
repayment plans (``IDR'') for Federal student loans partially shield
borrowers from these risks, such after-the-fact protections do not
address underlying program failures to prepare students for gainful
employment in the first place, and they exacerbate the impact of such
failures on taxpayers as a whole when borrowers are unable to pay. Not
all borrowers participate in these repayment plans and, where they do,
the risks of nonpayment are shifted to taxpayers when borrowers'
payments are not sufficient to fully pay back the loans they borrowed.
This is because borrowers with persistently low incomes who enroll in
IDR--and thereby make payments based on a share of their income that
can be as low as $0--will see their remaining balances forgiven at
taxpayer expense after a specified number of years (e.g., 20 or 25) in
repayment.
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\18\ We discuss potential reliance interests regarding all parts
of the proposed rule below, in the ``Reliance Risks'' section.
---------------------------------------------------------------------------

The Department recognizes that, given the high cost of education
and correspondingly high need for student debt, students, families,
institutions, and the public have an acute interest in ensuring that
higher education investments are justified through positive repayment
and earnings outcomes for graduates. The statute acknowledges there are
differences across programs and colleges and this means we have
different tools available to promote these goals in different contexts.
Recognizing this fact, for programs that the statute requires to
prepare students for gainful employment in a recognized occupation, we
propose reinstating a version of the debt-to-earnings requirement
established under the 2014 Prior Rule and adding an earnings premium
metric to the GE accountability framework. At the same time, we propose
expanding disclosure requirements to all eligible programs and
institutions to ensure all students have the benefit of access to
accurate information on the financial consequences of their education
program choices.
First, the proposed rule incorporates a new accountability metric--
an earnings premium (EP)--that captures a distinct aspect of the value
provided by a program. The earnings premium measures the extent to
which the typical graduate of a program out-earns the typical
individual with only a high school diploma or equivalent in the same
State the program is located. In

[[Page 32308]]

order to be considered a program that prepares students for gainful
employment in a recognized occupation, we propose that programs must
both have graduates whose typical debt levels are affordable, based on
a similar debt-to-earnings (D/E) test as used in the 2014 Prior Rule,
and also have a positive earnings premium.
Second, we propose to calculate and require disclosures of key
information about the financial consequences of enrolling in higher
education programs for almost all eligible programs at all
institutions. As we elaborate below and in the RIA, we believe this
will help students understand differences in the costs, borrowing
levels, and labor market outcomes of more of the postsecondary options
they might be considering. It is particularly important for students
who are considering or attending a program that may carry a risk of
adverse financial outcomes to have access to comparable information
across all sectors so they can explore other options for enrollment and
potentially pursue a program that is a better financial value.
As further explained in the significant proposed regulations
section of this Notice and in the RIA, there are several connected
reasons for adding the EP metric to the proposed rule.\19\ First, the
Department believes that, for postsecondary career training programs to
be deemed as preparing students for gainful employment, they should
enable students to secure employment that provides higher earnings than
what they might expect to earn if they did not pursue a college
credential. This position is consistent with the ordinary meaning of
the phrase ``gainful employment'' and the purposes of the title IV, HEA
programs, which generally require students who receive assistance to
have already completed a high school education,\20\ and then require GE
programs ``to prepare'' those high school graduates for ``gainful
employment'' in a recognized occupation.\21\ Clearly, GE programs are
supposed to add to what high school graduates already have achieved in
their preparation for gainful employment, not leave them where they
started. We propose to measure that gain, in part, with an
administrable test that is pegged to earnings beyond a typical high
school graduate. This approach is likewise supported by the fact that
the vast majority of students cite the opportunity for a good job or
higher earnings as a key, if not the most important, reason they chose
to pursue a college degree.\22\
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\19\ For further discussion of the earnings premium metric and
the Department's reasons for proposing it, see below at ''Authority
for this Regulatory Action,'' and at ''668.402 Financial value
transparency framework'' and ``668.602 Gainful employment criteria''
under the Significant Proposed Regulations section of this Notice.
Those discussions also address the D/E metric.
\20\ See, for example, 20 U.S.C. 1001(a)(1), 1901.
\21\ 20 U.S.C. 1002(b)(1)(A), (c)(1)(A). See also 20 U.S.C.
1088(b)(1)()(i), which refers to a recognized profession.
\22\ For example, a recent survey of 2,000 16 to 19 year olds
and 2,000 22 to 30 year old recent college graduates rated
affordable tuition, higher income potential, and lower student debt
as the top 3 to 4 most important factors in choosing a college
(<a href="https://www.nytimes.com/2023/03/27/opinion/problem-college-rankings.html">https://www.nytimes.com/2023/03/27/opinion/problem-college-rankings.html</a>). The RIA includes citation to other survey results
with similar findings.
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Furthermore, the EP metric that we propose would set only
reasonable expectations for programs that are supposed to help students
move beyond a high school baseline. The median earnings of high school
graduates is about $25,000 nationally, which corresponds to the
earnings level of a full-time worker at an hourly wage of about $12.50
(lower than the State minimum wage in 15 States).\23\ While the 2014
Prior Rule emphasized that borrowers should be able to earn enough to
afford to repay their debts, the Department recognizes that borrowers
need to be able to afford more than ''just'' their loan payments, and
that postsecondary programs should help students reach a minimal level
of labor market earnings. Exceeding parity with the earnings of
students who never attend college is a modest expectation.
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\23\ See <a href="https://www.dol.gov/agencies/whd/mw-consolidated">https://www.dol.gov/agencies/whd/mw-consolidated</a>.
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Another benefit of adding the EP metric is that it helps protect
students from the adverse borrowing outcomes prevalent among programs
with very low earnings. Research conducted since the 2014 Prior Rule as
well as new data analyses shown in this RIA illustrate that, for
borrowers with low earnings, even small amounts of debt (including
levels of debt that would not trigger failure of the D/E rates) can be
unmanageable. Default rates tend to be especially high among borrowers
with lower debt levels, often because these borrowers left their
programs and as a result have very low earnings.\24\ Analyses in this
RIA show that the default rate among students in programs that pass the
D/E thresholds but fail the earnings premium are very high--even higher
than programs that fail the D/E measure but pass the earnings premium
measure.
---------------------------------------------------------------------------

\24\ See <a href="https://libertystreeteconomics.newyorkfed.org/2015/02/looking_at_student_loan_defaults_through_a_larger_window/">https://libertystreeteconomics.newyorkfed.org/2015/02/looking_at_student_loan_defaults_through_a_larger_window/</a>.
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Finally, as detailed further below, the EP measure helps protect
taxpayers. Borrowers with low earnings are eligible for reduced loan
payments and loan forgiveness which increase the costs of the title IV,
HEA loan program to taxpayers.
While the EP and D/E metrics are related, they measure distinct
dimensions of gainful employment, further supporting the proposal to
require that programs pass both measures. For example, programs that
have median earnings of graduates above the high school threshold might
still be so expensive as to require excessive borrowing that students
will struggle to repay. And, on the other hand, even if debt levels are
low relative to a graduate's earnings, those earnings might still be no
higher than those of the typical high school graduate in the same
State.
As noted above, the D/E metrics and thresholds in the proposed rule
mirror those in the 2014 Prior Rule and are based on both academic
research about debt affordability and industry practice. Analyses in
the Regulatory Impact Analysis (RIA) of this proposed rule illustrate
that borrowers who attended programs that fail the D/E rates are more
likely to struggle with their debt. For example, programs that fail the
proposed D/E standards (including both GE and non-GE programs) account
for just 4.1 percent of title IV enrollments (i.e., Federally aided
students), but 11.19 percent of all students who default within 3 years
of entering repayment. GE programs represent 15.2 percent of title IV,
HEA enrollments overall, but 49.6 percent of title IV, HEA enrollments
within the programs that fail the D/E standards and 65.6 percent of the
defaulters. These facts, in part, motivate the Department's proposal to
calculate and disclose D/E and EP rates for all programs under proposed
subpart Q, while establishing additional accountability for GE programs
with persistently low performance in the form of loss of title IV, HEA
eligibility under proposed subpart S.
In addition to ensuring that career training programs ensure that
graduates attain at least a minimal level of earnings and have
borrowing levels that are manageable, the two metrics in the proposed
rule also protect taxpayers from the costs of low financial value
programs. For example, the RIA presents estimates of loan repayment
under the hypothetical assumption that all borrowers pay on either (1)
the most generous repayment plan or (2) the most generous plan that
would be available under the income-driven repayment rule proposed by
the Department in January (88 FR 1894). These analyses show that both
D/E rates and the

[[Page 32309]]

earnings premium metrics are strongly correlated with an estimated
subsidy rate on Federal loans, which measures the share of a disbursed
loan that will not be repaid, and thus provides a proxy for the cost of
loans to taxpayers. In short, the D/E and earnings premium metrics are
well targeted to programs that generate a disproportionate share of the
costs to taxpayers and negative borrower outcomes that the Department
seeks to improve.
We have also reconsidered the concerns raised in the 2019 Prior
Rule about the effect of some repayment options on debt-to-earnings
rates. We recognize that some repayment plans offered by the Department
allow borrowers to repay their loans as a fraction of their income, and
that this fraction is lower for some plans than the debt-to-earnings
rate used to determine ineligibility under this proposed rule and the
2014 Prior Rule. For example, under the Revised Pay-As-You-Earn
(REPAYE) income-driven repayment plan, borrowers' monthly payments are
set at 10 percent of their discretionary income, defined as income in
excess of 150 percent of the Federal poverty guideline (FPL). Noting
that many borrowers continue to struggle to repay, the Department has
proposed more generous terms, allowing borrowers to pay 5 percent of
their discretionary income (now redefined as income in excess of 225
percent of the FPL) to repay undergraduate loans, and 10 percent of
their discretionary income to repay graduate loans.\25\
---------------------------------------------------------------------------

\25\ 88 FR 1902 (Jan. 11, 2023).
---------------------------------------------------------------------------

Income driven repayment plans are aimed at alleviating the burden
of high debt for students who experience unanticipated circumstances,
beyond an institution's control, that adversely impact their ability to
repay their debts. While the Department believes it is critical to
reduce the risk of unexpected barriers that borrowers face, and to
protect borrowers from delinquency, default and the associated adverse
credit consequences, it would be negligent to lower our accountability
standards across the entire population as a result and to permit
institutions to encumber students with even more debt while expecting
taxpayers to pay more for poor outcomes related to the educational
programs offered by institutions. Instead, we view the D/E rates as an
appropriate measure of what students can borrow and feasibly repay. Put
another way, the D/E provisions proposed in this rule define a maximum
amount of borrowing as a function of students' earnings that would
leave the typical program graduate in a position to pay off their debt
without having to rely on payment assistance programs like income-
driven repayment plans.
The concerns raised by the 2019 Prior Rule about the effect of
student demographics on the debt and earnings measures used in the 2014
Prior Rule (which we also propose to use in this NPRM) are addressed at
length in this NPRM's RIA. The Department has considered that
discrimination based on gender identity or race and ethnicity may
influence the aggregate outcomes of programs that disproportionately
enroll members of those groups. However, our analyses, and an ever-
increasing body of academic research, strongly rebut the claim that
differences across programs are solely or primarily a reflection of the
demographic or other characteristics of the students enrolled.\26\
Moreover, consistent with recurring allegations in student complaints
and qui tam lawsuits (a type of lawsuit through which private
individuals who initiate litigation on behalf of the government can
receive for themselves all or part of the damages or penalties
recovered by the government), through our compliance oversight
activities including program reviews, the Department has concluded that
many institutions aggressively recruit individuals with low income,
women, and students of color into programs with substandard quality and
poor outcomes and then claim their outcomes are poor because of the
``access'' they provide to such individuals. An analysis of the effects
on access presented in the RIA demonstrates that more than 90 percent
of students enrolled in failing programs have at least one non-failing
option within the same geographic area, credential level, and broad
field. These alternative programs usually entail lower borrowing,
higher earnings, or both.
---------------------------------------------------------------------------

\26\ Christensen, Cody and Turner, Lesley. (2021) Student
Outcomes at Community Colleges: What Factors Explain Variation in
Loan Repayment and Earnings? The Brookings Institution. Washington,
DC. <a href="https://www.brookings.edu/wp-content/uploads/2021/09/Christensen_Turner_CC-outcomes.pdf">https://www.brookings.edu/wp-content/uploads/2021/09/Christensen_Turner_CC-outcomes.pdf</a>. lack, Dan A., and Jeffrey A.
Smith. ``Estimating the returns to college quality with multiple
proxies for quality.'' Journal of labor Economics 24.3 (2006): 701-
728.
Cohodes, Sarah R., and Joshua S. Goodman. ``Merit aid, college
quality, and college completion: Massachusetts' Adams scholarship as
an in-kind subsidy.'' American Economic Journal: Applied Economics
6.4 (2014): 251-285.
Andrews, Rodney J., Jing Li, and Michael F. Lovenheim.
``Quantile treatment effects of college quality on earnings.''
Journal of Human Resources 51.1 (2016): 200-238.
Dillon, Eleanor Wiske, and Jeffrey Andrew Smith. ``The
consequences of academic match between students and colleges.''
Journal of Human Resources 55.3 (2020): 767-808.
---------------------------------------------------------------------------

The Department has also reconsidered concerns raised in the 2019
Prior Rule about the basis for proposed thresholds for debt-to-earnings
rates. We have re-reviewed the research underpinning those thresholds.
This includes considering concerns raised by one researcher about the
way the Department interpreted one of her studies in the 2019 Prior
Rule.\27\ From this, we have proposed using one set of thresholds that
are based upon research and industry practice. This departs from prior
approaches that distinguished between programs in a ``zone'' versus
``failing.''
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\27\ <a href="http://www.urban.org/urban-wire/devos-misrepresents-evidence-seeking-gainful-employment-deregulation">www.urban.org/urban-wire/devos-misrepresents-evidence-seeking-gainful-employment-deregulation</a>.
---------------------------------------------------------------------------

The 2019 Prior Rule also raised concerns about the inclusion of
potentially unreliable metrics. We agree with this conclusion with
respect to job placement and thus do not propose including job
placement rates among the proposed disclosures required from
institutions.\28\ Because inconsistencies in how institutions calculate
job placement rates limit their usefulness to students and the public
in comparing institutions and programs, until we find a meaningful and
comparable measure, the Department does not rely upon job placement
rates in this proposed rule.
---------------------------------------------------------------------------

\28\ These rates were not required disclosures under the 2014
Prior Rule, but rather among a list of items that the Secretary may
choose to include.
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The Department also considered concerns raised in the 2019 Prior
Rule that the accountability framework was flawed because many programs
did not have enough graduates to produce data. Since many programs
produce only a small number of graduates each year, it is unavoidable
that the Department will not be able to publish debt and earnings based
aggregate statistics for such programs to protect the privacy of the
individual students attending them or to ensure that the data from
those programs are adequately reliable. As further explained in our
discussion of proposed Sec. 668.405, the IRS adds a small amount of
statistical noise to earnings data for privacy protection purposes,
which would be greater for populations smaller than 30.
While the Department is mindful of the fractions of programs likely
covered, we also are concentrating on the numbers of people who may
benefit from the metrics: enrolled students, prospective students,
their families, and others. Despite the data limitations noted above,
under the proposed regulations, we estimate that programs representing
69 and 75 percent of all title IV, HEA enrollment in eligible non-GE
programs and GE programs,

[[Page 32310]]

respectively, would have debt and earnings measures available to
produce the metrics. We further estimate the share of enrollment that
would additionally be covered under the four-year cohort approach
(discussed later in this NPRM) by examining the share of enrollment in
programs that have fewer than 30 graduates in our data for a two-year
cohort, but at least 30 in a four-year cohort. Under this approach, we
estimate that an additional 13 percent of eligible non-GE enrollment
and 8 percent of GE enrollment would be covered. All told, the metrics
could be produced for programs that enroll approximately 82 percent of
all students. These students are enrolled in 34 percent of all eligible
non-GE programs and 26 percent of all GE programs.\29\
---------------------------------------------------------------------------

\29\ These figures use four-year cohorts to compute rates. The
comparable share of programs with calculatable metrics using only
the two-year cohorts is 19 and 15 percent for non-GE and GE
programs, respectively.
---------------------------------------------------------------------------

The metrics that we could calculate, therefore, would show results
for postsecondary education programs that are attended by the large
majority of enrolled students. Those numbers would be directly relevant
to those students. And it seems reasonable to further conclude that the
covered programs will be the primary focus of attention for the
majority of prospective students, as well. The programs least likely to
be covered will be the smallest in terms of the number of completers
(and likely enrollment), which is correlated with the breadth of
interest among those considering enrolling in those programs. We
acknowledge that these programs represent potential options for future
and even current enrollees, and that relatively small programs might be
different in various ways from programs with larger enrollments. At the
same time, the Department does not view the fraction of programs
covered by D/E and EP as the most important metric. The title IV, HEA
Federal student aid programs, after all, provide aid to students
directly, making the share of students covered a natural focus of
concern. The Department believes that the benefits of providing this
information to millions of people about programs that account for the
majority of students far outweighs the downside of not providing data
on the smallest programs. Furthermore, even for students interested in
smaller programs, the outcome measures for other programs at the same
institution may be of interest.
The Department continues to agree with the stance taken in the 2019
Prior Rule that publishing metrics that help students, families, and
taxpayers understand the financial value of all programs is important.
Prospective students often consider enrollment options at public, for
profit, and non-profit institutions simultaneously and deserve
comparable information to assess the financial consequences of their
choices. A number of research studies show that such information, when
designed well, delivered by a trusted source, and provided at the right
time can help improve choices and outcomes.\30\ However, as further
discussed under ``Sec. 668.401 Financial value transparency scope and
purpose,'' merely posting the information on the College Scorecard
website has had a limited impact on enrollment choices. Consequently,
our proposed rule, in subpart Q below, outlines a financial value
transparency framework that proposes measures of debt-to-earnings and
earnings premiums that would be calculated for nearly all programs at
all institutions. To help ensure students are aware of these outcomes
when financial considerations may be particularly important, the
framework includes a requirement that all students receive a link to
program disclosures including this information, and that students
seeking to enroll in programs that do not meet standards on the
relevant measures would need to acknowledge viewing that information
prior to the disbursement of title IV, HEA funds.
---------------------------------------------------------------------------

\30\ For an overview of research findings see, for example,
<a href="http://ticas.org/files/pub_files/consumer_information_in_higher_education.pdf">ticas.org/files/pub_files/consumer_information_in_higher_education.pdf</a>.
---------------------------------------------------------------------------

At the same time, the Department believes that the transparency
framework alone is not sufficient to protect students and taxpayers
from programs with persistently poor financial value
outcomes.31 32 The available information continues to
suggest that graduates of some GE programs have earnings below what
could be reasonably expected for someone pursuing postsecondary
education. In the Regulatory Impact Analysis, the Department shows that
about 460,000 students per year, comprising 16 percent of all title IV,
HEA recipients enrolled in GE programs annually, attend GE programs
where the typical graduate earns less than the typical high school
graduate, and an additional 9 percent of those enrolled in GE programs
have unmanageable debt.\33\ These rates are much higher among GE
programs than eligible non-GE programs, where 4 percent of title IV,
HEA enrollment is in programs with zero or negative earnings premiums
and 2 percent are in programs with unsustainable debt levels.
---------------------------------------------------------------------------

\31\ Dominique J. Baker, Stephanie Riegg Cellini, Judith Scott-
Clayton, and Lesley J. Turner, ``Why information alone is not enough
to improve higher education outcomes,'' The Brookings Institution
(2021). <a href="http://www.brookings.edu/blog/brown-center-chalkboard/2021/12/14/why-information-alone-is-not-enough-to-improve-higher-education-outcomes/">www.brookings.edu/blog/brown-center-chalkboard/2021/12/14/why-information-alone-is-not-enough-to-improve-higher-education-outcomes/</a> outcomes/.
\32\ Mary Steffel, Dennis A. Kramer II, Walter McHugh, Nick
Ducoff, ``Information disclosure and college choice,'' The Brookings
Institution (2019). <a href="http://www.brookings.edu/wp-content/uploads/2020/11/ES-11.23.20-Steffel-et-al-1.pdf">www.brookings.edu/wp-content/uploads/2020/11/ES-11.23.20-Steffel-et-al-1.pdf</a>.
\33\ A similar conclusion was reached in a recent study that
found that about 670,000 students per year, comprising 9 percent of
all students that exit postsecondary programs on an annual basis,
attended programs that leave them worse off financially. See Jordan
D. Matsudaira and Lesley J. Turner. ``Towards a framework for
accountability for federal financial assistance programs in
postsecondary education.'' The Brookings Institution. (2020)
<a href="http://www.brookings.edu/wp-content/uploads/2020/11/20210603-Mats-Turner.pdf">www.brookings.edu/wp-content/uploads/2020/11/20210603-Mats-Turner.pdf</a>.
---------------------------------------------------------------------------

Researchers have found that while providing information alone can
be important and consequential in some settings, barriers to
information and a lack of support for interpreting and acting upon
information can limit its impact on students' education choices,
particularly among more vulnerable populations.\34\ We are also
concerned about evidence from Federal and State investigations and qui
tam lawsuits indicating that a number of institutions offering GE
programs engage in aggressive and deceptive marketing and recruiting
practices. As a result of these practices, prospective students and
their families are potentially being pressured and misled into critical
decisions regarding their educational investments that are against
their interests.
---------------------------------------------------------------------------

\34\ See discussion in section ''Outcome Differences Across
Programs'' of the Regulatory Impact Analysis for an overview of
these research findings.
---------------------------------------------------------------------------

We therefore propose an additional level of protection for GE
programs that disproportionately leave students with unsustainable debt
levels or no gain in earnings. We accordingly include an accountability
framework in subpart S that links debt and earnings outcomes to GE
program eligibility for title IV, HEA student aid programs. Since these
programs are intended to prepare students for gainful employment in
recognized occupations, tying eligibility to a minimally acceptable
level of financial value is natural and supported by the relevant
statutes; and as detailed above and in the RIA, these programs account
for a disproportionate share of students who complete programs with
very low earnings and unmanageable debt. This approach has been
supported by a number of researchers who have recently suggested
reinstating the 2014 GE rule with an added layer of accountability
through a high school

[[Page 32311]]

earnings metric.\35\ We further explain the debt-to-earnings (D/E) and
earnings premium (EP) metrics in discussions above and below.
---------------------------------------------------------------------------

\35\ Stephanie R. Cellini and Kathryn J. Blanchard, ``Using a
High School Earnings Benchmark to Measure College Student Success
Implications for Accountability and Equity.'' The Postsecondary
Equity and Economics Research Project. (2022).
<a href="http://www.peerresearchproject.org/peer/research/body/2022.3.3-PEER_HSEarnings-Updated.pdf">www.peerresearchproject.org/peer/research/body/2022.3.3-PEER_HSEarnings-Updated.pdf</a>.
---------------------------------------------------------------------------

Consistent with our statutory authority, this proposed rule limits
the linking of debt and earnings outcomes to program eligibility for
programs that are defined as preparing students for gainful employment
in a recognized occupation rather than a larger set of programs. The
differentiation between GE and non-GE programs in the HEA reflects that
eligible non-GE programs serve a broader array of goals beyond career
training. Conditioning title IV, HEA eligibility for such programs to
debt and earnings outcomes not only would raise questions of legal
authority, it could increase the risk of unintended educational
consequences. However, for purposes of program transparency, we propose
to calculate and disclose debt and earnings outcomes for all programs
along with other measures of the true costs of programs for students.
Since students consider both GE and non-GE programs when selecting
programs, providing comparable information for students would help them
find the program that best meets their needs across any sector.
While we propose reinstating the consequential accountability
provisions, including sanctions of eligibility loss, proposed in the
2011 and 2014 Prior Rules, we depart from those regulations in several
ways in addition to those already mentioned above. First, we decided
against using measures of loan repayment, like the one proposed in the
2011 Prior Rule. Even with an acceptable basis for setting such a
threshold, we recognize that changes to the repayment options available
to borrowers may cause repayment rates to change, and as a result such
a measure may be an imperfect, or unstable, proxy for students'
outcomes and program quality.
We also propose changes relative to the 2014 Prior Rule, including
elimination of the ``zone'' and changes to appeals processes. Based on
the Department's analyses and experience administering the 2014 Rule,
these provisions added complexity and burden in administering the rule
but did not further their stated goals and instead unnecessarily
limited the Department's ability to remove low-value programs from
eligibility. We further explain those choices below.\36\
---------------------------------------------------------------------------

\36\ See the discussions below at [TK].
---------------------------------------------------------------------------

Finally, the Department proposes to measure earnings using only the
median of program completers' earnings, rather than the maximum of the
mean or median of completers' earnings. This approach reflects an
updated assessment that the median is a more appropriate measure,
indicating the earnings level exceeded by a majority of the programs'
graduates. The mean can be less representative of program quality since
it may be elevated or lowered by just a few ''outlier'' completers with
atypically high or low earnings outcomes. Furthermore, in aggregate
National or State measures of earnings, mean earnings are always higher
than median earnings due to the right skew of earnings distributions
and the presence of a long right tail, when a small number of
individuals earn substantially more than the typical person does.\37\
As a result, using mean values, rather than medians, would
substantially increase the state-level earnings thresholds derived from
the earnings of high school graduates. Aggregated up to the State
level, the mean earnings of those in the labor force with a high school
degree is about 16 percent higher than the median earnings. By State,
this difference between mean and median earnings ranges from 9 percent
(in Delaware and Vermont) to 28 percent (in Louisiana).
---------------------------------------------------------------------------

\37\ Neal, Derek and Sherwin Rosen. (2000) Chapter 7: Theories
of the distribution of earnings. Handbook of Income Distribution.
Elsevier. Vol. 1. 379-427. <a href="https://doi.org/10.1016/S1574-0056">https://doi.org/10.1016/S1574-0056</a>(00)80010-X.
---------------------------------------------------------------------------

The use of means as a comparison earnings measure within a State
would set a much higher bar for programs, driven largely by the
presence of high-earning outliers. In contrast, the use of mean
earnings, rather than medians, for individual program data typically
has a more muted effect. Using 2014 GE data, the typical increase from
the use of mean, rather than median earnings, is about 3 percent across
programs. Further, some programs have lower earnings when measured
using a mean rather than median. Programs at the 25th percentile in
earnings difference have a mean that is 3 percent less than the median,
and programs at the 75th percentile have a mean than is 12 percent
higher than the median. On balance, we believe that using median
earnings for both the measure of program earnings and the earnings
threshold measure used to calculate the earnings premium leads to a
more representative comparison of earnings outcomes for program
graduates.

Financial Responsibility (Sec. Sec. 668.15, 668.23, 668.171, and
668.174 Through 668.177) (Section 498(c) of the HEA)

Section 498(c) of the HEA requires the Secretary to determine
whether an institution has the financial responsibility to participate
in the title IV, HEA programs on the basis of whether the institution
is able to:
<bullet> Provide the services described in its official
publications and statements;
<bullet> Provide the administrative resources necessary to comply
with the requirements of the law; and
<bullet> Meet all of its financial obligations.
In 1994, the Department made significant changes to the regulations
governing the evaluation of an institution's financial responsibility
to improve our ability to implement the HEA's requirement. The
Department strengthened the factors used to evaluate an institution's
financial responsibility to reflect statutory changes made in the 1992
amendments to the HEA.
In 1997, we further enhanced the financial responsibility factors
with the creation of part 668, subpart L that established a financial
ratio requirement using composite scores and performance-based
financial responsibility standards. The implementation of these new and
enhanced factors limited the applicability of the previous factors in
Sec. 668.15 to only situations where an institution is undergoing a
change in ownership.
These proposed regulations would remove the outdated regulations
from Sec. 668.15 and reserve that section. Proposed regulations in a
new Sec. 668.176, under subpart L, would be specific to institutions
undergoing a change in ownership and detail the precise financial
requirements for that process. Upon implementation, all financial
responsibility factors for institutions, including institutions
undergoing a change in ownership, would reside in part 668, subpart L.
In 2013, the Office of Management and Budget's Circular A-133,
which governed independent audits of public and nonprofit, private
institutions of higher education and postsecondary vocational
institutions, was replaced with regulations at 2 CFR part 200--Uniform
Administrative Requirements, Cost Principles, And Audit Requirements
For Federal Awards. In Sec. 668.23, we would replace all references to
Circular A-133 with the current reference, 2 CFR part 200--Uniform
Administrative Requirements, Cost Principles, And Audit Requirements
For Federal Awards.

[[Page 32312]]

Audit guides developed by and available from the Department's
Office of Inspector General contain the requirements for independent
audits of for-profit institutions of higher education, foreign schools,
and third-party servicers. Traditionally, these audits have had a
submission deadline of six months following the end of the entity's
fiscal year. These proposed regulations would establish a submission
deadline that would be the earlier of two dates:
<bullet> Thirty days after the date of the later auditor's report
with respect to the compliance audit and audited financial statements;
or
<bullet> Six months after the last day of the entity's fiscal year.
The Department primarily monitors institutions' financial
responsibility through the ``composite score'' calculation, a formula
derived through a final rule published in 1997 that relies on audited
financial statements and a series of tests of institutional
performance. The composite score is only applied to private nonprofit
and for-profit institutions. Public institutions are generally backed
by the full faith and credit of the State or equivalent governmental
entity and, if so, are not evaluated using the composite score test or
required to post financial protection.
The composite score does not effectively account for some of the
ways in which institutions' financial difficulties may manifest,
however, because institutions submit audited financial statements after
the end of an institution's fiscal year. An example of this would be
when the person or entity that owns the school makes a short-term cash
contribution to the school, thereby increasing the school's composite
score in a way that allows what would have been a failing composite
score to pass. We have seen examples of this activity occurring when
that same owner withdraws the same or similar amount after the end of
the fiscal year and after the calculation of a passing composite score
based on the contribution. The effect is that the institution passes
just long enough for the score to be reviewed and then goes back to
failing. This is the type of manipulation that the proposed regulation
seeks to address.
As part of the 2016 Student Assistance General Provisions, Federal
Perkins Loan Program, Federal Family Education Loan Program, William D.
Ford Federal Direct Loan Program, and Teacher Education Assistance for
College and Higher Education Grant Program regulations \38\ (referred
to collectively as the 2016 Final Borrower Defense Regulations), the
Department introduced, as part of the financial responsibility
framework, ``triggering events'' to serve as indicators of an
institution's lack of financial responsibility or the presence of
financial instability. These triggers were used in conjunction with the
composite score and already existing standards of financial
responsibility and offset the limits inherent in the composite score
calculation. Some of the existing standards include that:
---------------------------------------------------------------------------

\38\ 81 FR 75926.
---------------------------------------------------------------------------

<bullet> The institution's Equity, Primary Reserve, and Net Income
ratios yield a composite score of at least 1.5;
<bullet> The institution has sufficient cash reserves to make
required returns of unearned title IV, HEA program funds;
<bullet> The institution is able to meet all of its financial
obligations and otherwise provide the administrative resources required
to comply with title IV, HEA program requirements; and
<bullet> The institution or persons affiliated with the institution
are not subject to a condition of past performance as outlined in 34
CFR 668.174.
The triggering events introduced in the 2016 Final Borrower Defense
Regulations were divided into two categories: mandatory and
discretionary.
Some required an institution to post a letter of credit or provide
other financial protection when that triggering event occurred. This
type of mandatory trigger included when an institution failed to
demonstrate that at least 10 percent of its revenue derived from
sources other than the title IV, HEA program funds (the 90/10 rule).
Other mandatory triggers required a recalculation of the institution's
composite score, which would result in a request for financial
protection only if the newly calculated score was less than 1.0. An
example of the latter type of trigger was when an institution's
recalculated composite score was less than 1.0 due to its being
required to pay any debt or incur any liability arising from a final
judgment in a judicial proceeding or from an administrative proceeding
or determination, or from a settlement.
The 2016 Final Borrower Defense Regulations also introduced
discretionary triggers that only required financial protection from the
institution if the Department determined it was necessary. An example
of such a trigger was if an institution had been cited by a State
licensing or authorizing agency for failing that entity's requirements.
In that case, the Department could require financial protection if it
believed that the failure was reasonably likely to have a material
adverse effect on the financial condition, business, or results of
operations of the institution.
In 2019, as part of the Student Assistance General Provisions,
Federal Family Education Loan Program, and William D. Ford Federal
Direct Loan Program \39\ (2019 Final Borrower Defense Regulations) the
Department revised many of these triggers, moving some from being
mandatory to being discretionary; eliminating some altogether; and
linking some triggers to post-appeal or final events. An example of a
mandatory 2016 trigger that was removed entirely in 2019 was when an
institution's recalculated composite score was less than 1.0 due to its
being sued by an entity other than a Federal or State authority for
financial relief on claims related to the making of Direct Loans for
enrollment at the institution or the provision of educational services.
In amending the financial responsibility requirements in the 2019 Final
Borrower Defense Regulations, the Department reasoned that it was
removing triggers that were speculative, such as triggers based on the
estimated dollar value of a pending lawsuit, and limiting triggers to
events that were known and quantified, such as triggers based on the
actual liabilities incurred from a defense to repayment discharge. The
rationale for the 2019 Final Borrower Defense Regulations was also
based on the idea that some of the 2016 triggers were not indicators of
the institution's actual financial condition or ability to operate.
However, after implementing the financial responsibility changes from
the 2019 Final Borrower Defense Regulations, the Department has
repeatedly encountered institutions that appeared to be at significant
risk of closure where we lacked the ability to request financial
protection due to the more limited nature of the triggers. To address
this fact, these proposed regulations would reinstate or expand
mandatory and discretionary triggering events that would require an
institution to post financial protection, usually in the form of a
letter of credit. Discretionary triggers would provide the Department
flexibility on whether to require a letter of credit based on the
financial impact the triggering event has on the institution, while the
specified mandatory triggering conditions would either automatically
require the institution to obtain financial surety or require that the
composite score be recalculated to determine if an institution would
have to provide surety because it no longer passes. These proposed new
triggers would increase

[[Page 32313]]

the Department's ability to monitor institutions for issues that may
negatively impact their financial responsibility and to better protect
students and taxpayers in cases of institutional misconduct and
closure.
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\39\ 84 FR 49788.
---------------------------------------------------------------------------

Administrative Capability (Sec. 668.16)

Under section 487(c)(1)(B) of the HEA, the Secretary is authorized
to issue regulations necessary to provide reasonable standards of
financial responsibility, and appropriate institutional administrative
capability to administer the title IV, HEA programs, in matters not
governed by specific program provisions, including any matter the
Secretary deems necessary to the administration of the financial aid
programs. Section 668.16 specifies the standards that institutions must
meet in administering title IV, HEA funds to demonstrate that they are
administratively capable of providing the education they promise and of
properly managing the title IV, HEA programs. In addition to having a
well-organized financial aid office staffed by qualified personnel, a
school must ensure that its administrative procedures include an
adequate system of internal checks and balances. The Secretary's
administrative capability regulations protect students and taxpayers by
requiring that institutions have proper procedures and adequate
administrative resources in place to ensure fair, legal, and
appropriate conduct by title IV, HEA participating schools. These
procedures are required to ensure that students are treated in a fair
and transparent manner, such as receiving accurate and complete
information about financial aid and other institutional features and
receiving adequate services to support a high-quality education. A
finding that an institution is not administratively capable does not
necessarily result in immediate loss of access to title IV aid. A
finding of a lack of administrative capability generally results in the
Department taking additional proactive monitoring steps, such as
placing the institution on a provisional PPA or HCM2 as necessary.
Through program reviews, the Department has identified
administrative capability issues that are not adequately addressed by
the existing regulations. The Department proposes to amend Sec. 668.16
to clarify the characteristics of institutions that are
administratively capable. The proposed changes would benefit students
in several ways.
First, we propose to improve the information that institutions
provide to applicants and students to understand the cost of the
education being offered. Specifically, we propose to require
institutions to provide students financial aid counseling and
information that includes the institution's cost of attendance, the
source and type of aid offered, whether it must be earned or repaid,
the net price, and deadlines for accepting, declining, or adjusting
award amounts. We believe that these proposed changes would make it
easier for students to compare costs of the schools that they are
considering and understand the costs they are taking on to attend an
institution.
Additionally, the Department proposes that institutions must
provide students with adequate career services and clinical or
externship opportunities, as applicable, to enable students to gain
licensure and employment in the occupation for which they are prepared.
We propose that institutions must provide adequate career services to
create a pathway for students to obtain employment upon successful
completion of their program. Institutions must have adequate career
service staff and established partnerships with recruiters and
employers. With respect to clinical and externship opportunities where
required for completion of the program, we propose that accessible
opportunities be provided to students within 45 days of completing
other required coursework.
We also propose that institutions must disburse funds to students
in a timely manner to enable students to cover institutional costs.
This proposed change is designed to allow students to remain in school
and reduce withdrawal rates caused by delayed disbursements.
The Department proposes that an institution that offers GE programs
is not administratively capable if it derives more than half of its
total title IV, HEA funds in the most recent fiscal year from GE
programs that are failing. Similarly, an institution is not
administratively capable if it enrolls more than half of its students
who receive title IV, HEA aid in programs that are failing under the
proposed GE metrics. Determining that these institutions are not
administratively capable would allow the Department to take additional
proactive monitoring steps for institutions that could be at risk of
seeing significant shares of their enrollment or revenues associated
with ineligible programs in the following year. This could include
placing the institution on a provisional PPA or HCM2.
The Department also proposes to prohibit institutions from engaging
in aggressive and deceptive recruitment and misrepresentations. These
practices are defined in Part 668 Subpart F and Subpart R. The former
was amended by the borrower defense regulations published on November
1, 2022 (87 FR 65904), while the latter was created in that regulation.
Both provisions are scheduled to go into effect on July 1, 2023. The
scope and definition of misrepresentations was first discussed during
the 2009-2010 negotiated rulemaking session. We are now proposing to
include aggressive and deceptive recruitment tactics or conduct as one
of the types of activities that constitutes substantial
misrepresentation by an eligible institution.
We propose that institutions must confirm that they have not been
subject to negative action by a State or Federal agency and have not
lost eligibility to participate in another Federal educational
assistance program due to an administrative action against the
institution. Additionally, we propose that institutions certify when
they sign their PPA that no principal or affiliate has been convicted
of or pled nolo contender or guilty to a crime related to the
acquisition, use, or expenditure of government funds or has been
determined to have committed fraud or any other material violation of
law involving those funds.
Finally, the Department proposes procedures that we believe would
be adequate to verify the validity of a student's high school diploma.
This standard was last addressed during negotiated rulemaking in 2010.
In these proposed regulations, we identify specific documents that can
be used to verify the validity of a high school diploma if the
institution or the Secretary has reason to believe that the high school
diploma is not valid. We also propose criteria to help institutions
with identifying a high school diploma that is not valid.

Certification Procedures (Sec. Sec. 668.2, 668.13, and 668.14)

Certification is the process by which a postsecondary institution
applies to initially participate or continue participating in the title
IV, HEA student aid programs. To receive certification, an institution
must meet all applicable statutory and regulatory requirements in HEA
section 498. Currently, postsecondary institutions use the Electronic
Application for Approval to Participate in Federal Student Financial
Aid Programs (E-App) to apply for designation as an eligible
institution, initial participation, recertification, reinstatement, or
change in ownership, or to update a current

[[Page 32314]]

approval. Once an institution submits its application, we examine three
major factors about the school--institutional eligibility,
administrative capability, and financial responsibility.
Once an institution has demonstrated that it meets all
institutional title IV eligibility criteria, it must enter into a PPA
to award and disburse Federal student financial assistance. The PPA
defines the terms and conditions that the institution must meet to
begin and continue participation in the title IV programs. Institutions
can be fully certified, provisionally certified, or temporarily
certified under their PPAs. Full certification constitutes the standard
level of oversight applied to an institution under which financial and
compliance audits must be completed and institutions are generally
subject to the same standard set of conditions.
Provisionally certified institutions are subject to more frequent
oversight (i.e., a shorter timeframe for certification), and have one
or more conditions applied to their PPA depending on specific concerns
about the school. For instance, we may require that an institution seek
approval from the Department before adding new locations or programs.
Institutions that are temporarily certified are subject to very short-
term, month-to-month approvals and a variety of conditions to enable
frequent oversight and reduce risk to students and taxpayers.
We notify institutions six months prior to the expiration of their
PPA, and institutions must submit a materially complete application
before the PPA expires. The Department certifies the eligibility of
institutions for a period of time that may not exceed three years for
provisional certification or six years for full certification. The
Department may place conditions on the continued participation in the
title IV, HEA programs for provisionally certified institutions.
As part of the 2020 final rule for Distance Education and
Innovation,\40\ the Department decided to automatically grant an
institution renewal of certification if the Secretary did not grant or
deny certification within 12 months of the expiration of its current
period of participation. At the time, we believed this regulation would
encourage prompt processing of applications, timely feedback to
institutions, proper oversight of institutions, and speedier remedies
of deficiencies. However, HEA section 498 does not specify a time
period in which certification applications need to be approved, and we
have since determined that the time constraint established in the final
rule for Distance Education and Innovation negatively impacted our
ability to protect program integrity. Furthermore, a premature decision
to grant or deny an application when unresolved issues remain under
review creates substantial negative consequences for students,
institutions, taxpayers, and the Department. Accordingly, we propose to
eliminate the provision that automatically grants an institution
renewal of certification after 12 months without a decision from the
Department. Eliminating this provision would allow us to take
additional time to investigate institutions thoroughly prior to
deciding whether to grant or deny a certification application and
ensure institutions are approved only when we have determined that they
are in compliance with Federal rules.
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\40\ 85 FR 54742
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Our proposed changes to the certification process would better
address conditions that create significant risk for students and
taxpayers, such as institutions that falsely certify students'
eligibility to receive a loan and subsequently close. Students expect
their programs to be properly certified and for their institutions to
continue operating through the completion of their programs and beyond.
In fact, the value of an educational degree is heavily determined by
the reputation of the issuer, thus when institutions mislead students
about their certification status, students may invest their money and
time in a program that they will not be able to complete, which
ultimately creates financial risk for students and taxpayers.
Our proposed changes would also address institutions undergoing
changes in ownership while being at risk of closure. We propose to add
new events that would require institutions to be provisionally
certified and add several conditions to provisional PPAs to increase
oversight to better protect students. For example, we propose that
institutions that we determine to be at risk of closure must submit an
acceptable teach-out plan or agreement to the Department, the State,
and the institution's recognized accrediting agency. This would ensure
that the institution has an acceptable plan in place that allows
students to continue their education in the event the institution
closes.
We also propose that, as part of the institution's PPA, the
institution must demonstrate that a program that prepares a student for
gainful employment in a recognized occupation and requires programmatic
accreditation or State licensure, meets the institution's home State or
another qualifying State's programmatic and licensure requirements.
Another State's requirements could only be used if the institution can
document that a majority of students resided in that other State while
enrolled in the program during the most recently completed award year
or if a majority of students who completed the program in the most
recently completed award year were employed in that State. In addition,
if the other State is part of the same metropolitan statistical area
\41\ as the institution's home State and a majority of students, upon
enrollment in the program during the most recently completed award
year, stated in writing that they intended to work in that other State,
then that other State's programmatic and licensure requirements could
also be used to demonstrate that the program prepares a student for
gainful employment in a recognized occupation. For any programmatic and
licensure requirements that come from a State other than the home
State, the institution must provide documentation of that State meeting
one of three aforementioned qualifying requirements and the
documentation provided must be substantiated by the certified public
accountant who prepares the institution's compliance audit report as
required under Sec. 668.23. In addition, we propose to require that
institutions inform students about the States where programs do and do
not meet programmatic and licensure requirements. The Department is
proposing these regulations because we believe students deserve to have
relevant information to make an informed decision about programs they
are considering. We also believe programs funded in part by taxpayer
dollars should meet the requirements for the occupation for which they
prepare students as a safeguard of the financial investment in these
programs.
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\41\ Metropolitan statistical area as defined by the U.S. Office
of Management and Budget (OMB), <a href="http://www.census.gov/programs-surveys/metro-micro.html">www.census.gov/programs-surveys/metro-micro.html</a>.
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Additionally, as discussed in the 2022 final rule on changes in
ownership,\42\ the Department has seen an increase in the number of
institutions applying for changes in ownership and has determined that
it is necessary to reevaluate the relevant policies to accommodate the
increased complexity of changes in ownership arrangements and increased
risk to students and to taxpayers that arises when institutions

[[Page 32315]]

do not provide adequate information to the Department. For example,
approving a new owner who does not have the financial and other
necessary resources to successfully operate the institution jeopardizes
the education of students and increases the likelihood of closure.
Consequently, we propose a more rigorous process for certifying
institutions to help address this issue. Namely, we propose to mitigate
the risk of institutions failing to meet Federal requirements and
creating risky financial situations for students and taxpayers by
applying preemptive conditions for initially certified nonprofit
institutions and institutions that have undergone a change of ownership
and seek to convert to nonprofit status. These preemptive conditions
would help us monitor risks associated with some for-profit college
conversions, such as the risk of improper benefit to the school owners
and affiliated persons and entities. Examples of such benefits include
having additional time to submit annual compliance audit and financial
statements and avoiding the 90/10 requirements that for-profit colleges
must comply with. Under these proposed regulations, we would monitor
and review the institution's IRS correspondence and audited financial
statements for improper benefit from the conversion to nonprofit
status.
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\42\ 87 FR 65426.
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Lastly, we recognize that private entities may exercise control
over proprietary and private, nonprofit institutions, and we propose to
increase coverage of an institution's liabilities by holding these
entities to the same standards and liabilities as the institution. For
instance, owners of private, nonprofit universities and teaching
hospitals may greatly influence the institution's operations and should
be held liable for losses incurred by the institution.

Ability To Benefit (Sec. Sec. 668.2, 668.32, 668.156, and 668.157)

Prior to 1991, students without a high school diploma or its
equivalent were not eligible for title IV, HEA aid. In 1991, section
484(d) of the HEA was amended to allow students without a high school
diploma or its recognized equivalent to become eligible for title IV,
HEA aid if they could pass an independently administered examination
approved by the Secretary (Pub. L. 102-26) (1991 amendments). These
examinations were commonly referred to as ``ability to benefit tests''
or ``ATB tests.''
In 1992, Public Law 102-325 amended section 484(d) to provide
students without a high school diploma or its recognized equivalent an
additional alternative pathway to title IV, HEA aid eligibility through
a State-defined process (1992 amendments). The State could prescribe a
process by which a student who did not have a high school diploma or
its recognized equivalent could establish eligibility for title IV, HEA
aid. The Department required States to apply to the Secretary for
approval of such processes. Unless the Secretary disapproved a State's
proposed process within six months after the submission to the
Secretary for approval, the process was deemed to be approved. In
determining whether to approve such a process, the HEA requires the
Secretary to consider its effectiveness in enabling students without a
high school diploma or its equivalent to benefit from the instruction
offered by institutions utilizing the process. The Secretary must also
consider the cultural diversity, economic circumstances, and
educational preparation of the populations served by such institutions.
In 1995, the Department published final regulations \43\ to
implement the changes made to section 484(d). Under the final rule, in
Sec. 668.156, the Department would approve State processes if (1) the
institutions participating in the State process provided services to
students, including counseling and tutoring, (2) the State monitored
participating institutions, which included requiring corrective action
for deficient institutions and termination for refusal to comply, and
(3) the success rate of students admitted under the State process was
within 95 percent of the success rates of high school graduates who
were enrolled in the same educational programs at the institutions that
participated in the State process.
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\43\ 60 FR 61830.
---------------------------------------------------------------------------

In 2008, Public Law 110-315 (2008 amendments) further amended
section 484(d) of the HEA to allow students without a high school
diploma or its recognized equivalent a third alternative pathway to
title IV, HEA aid eligibility: satisfactory completion of six credit
hours or the equivalent coursework that are applicable toward a degree
or certificate offered by the institution of higher education.
In 2011, the Consolidated Appropriations Act of 2012 (Pub. L. 112-
74) (2011 amendments) further amended section 484(d) by repealing the
ATB alternatives created by the 1991, 1992, and 2008 amendments.
Notably, Congress stipulated that the amendment only applied ``to
students who first enroll in a program of study on or after July 1,
2012.''
In 2014, Public Law 113-235 amended section 484(d) (2014
amendments) to create three ATB alternatives, effectively restoring
significant elements of the alternatives that were in the statute prior
to the enactment of the 2011 amendments, using substantially identical
text. However, the 2014 amendments made a significant change to the ATB
processes in that they required students to be enrolled in eligible
career pathway programs, in contrast to the pre-2011 statutory
framework which permitted students to enroll in any eligible program.
In 2015, Public Law 114-113 amended the definition of an ``eligible
career pathway program'' in section 484(d) to match the definition in
Public Law 113-128, the Workforce Innovation and Opportunity Act (2015
amendments). Specifically, the 2015 amendments defined the term
``eligible career pathway program'' as a program that combines rigorous
and high-quality education, training, and other services and that:
<bullet> Aligns with the skill needs of industries in the economy
of the State or regional economy involved;
<bullet> Prepares an individual to be successful in any of a full
range of secondary or postsecondary education options, including
apprenticeships registered under the Act of August 16, 1937 (commonly
known as the ``National Apprenticeship Act''; 50 Stat. 664, chapter
663; 29 U.S.C. 50 et seq.);
<bullet> Includes counseling to support an individual in achieving
the individual's education and career goals;
<bullet> Includes, as appropriate, education offered concurrently
with and in the same context as workforce preparation activities and
training for a specific occupation or occupational cluster;
<bullet> Organizes education, training, and other services to meet
the particular needs of an individual in a manner that accelerates the
educational and career advancement of the individual to the extent
practicable;
<bullet> Enables an individual to attain a secondary school diploma
or its recognized equivalent, and at least one recognized postsecondary
credential; and
<bullet> Helps an individual enter or advance within a specific
occupation or occupational cluster.
The Department proposes to amend Sec. Sec. 668.2, 668.32, 668.156,
and 668.157. These proposed changes would amend the requirements for
approval of a State process and establish a regulatory

[[Page 32316]]

definition of ``eligible career pathway programs.''
As discussed, fulfilling one of the three ATB alternatives grants a
student without a high school diploma or its recognized equivalent
access to title IV, HEA aid for enrollment in an eligible career
pathway program. Although the Department released Dear Colleague
Letters GEN 15-09 (May 15, 2015) \44\ and GEN 16-09 (May 9, 2016) \45\
explaining the statutory changes, the current ATB regulations do not
reflect the 2014 amendments to the HEA that require a student to enroll
in an eligible career pathway program in addition to fulfilling one of
the ATB alternatives. We are now proposing to codify those changes in
regulation.
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\44\ <a href="http://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2015-05-22/gen-15-09-subject-title-iv-eligibility-students-without-valid-high-school-diploma-who-are-enrolled-eligible-career-pathway-programs">fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2015-05-22/gen-15-09-subject-title-iv-eligibility-students-without-valid-high-school-diploma-who-are-enrolled-eligible-career-pathway-programs</a>.
\45\ <a href="http://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2016-05-09/gen-16-09-subject-changes-title-iv-eligibility-students-without-valid-high-school-diploma-who-are-enrolled-eligible-career-pathway-programs">fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2016-05-09/gen-16-09-subject-changes-title-iv-eligibility-students-without-valid-high-school-diploma-who-are-enrolled-eligible-career-pathway-programs</a>.
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Specifically, we propose to: (1) add a definition of ``eligible
career pathway program''; (2) make technical updates to student
eligibility; (3) amend the State process to allow for time to collect
outcomes data while establishing new safeguards against inadequate
State processes; (4) establish documentation requirements for
institutions that wish to begin or maintain title IV, HEA eligible
career pathway programs; and (5) establish a verification process for
career pathway programs to ensure regulatory compliance.

Reliance Interests

Given that the Department proposes to adopt rules that are
significantly different from the current rules, we have considered
whether those current rules, including the 2019 Prior Rule, engendered
serious reliance interests that must be accounted for in this
rulemaking. For a number of reasons, we do not believe that such
reliance interests exist or, if they do exist, that they would justify
changes to the proposed rules.
First of all, the Department's prior regulatory actions would not
have encouraged reasonable reliance on any particular regulatory
position. The 2019 Prior Rule was written to rescind the 2014 Prior
Rule at a point where no gainful employment program had lost
eligibility due to failing outcome measures. Furthermore, as various
circumstances have changed, in law and otherwise, and as more
information and further analyses have emerged, the Department's
position and rules have changed since the 2011 Prior Rule. With respect
to the proposed regulations in this NPRM, the Department provided
notice of its intent to regulate on December 8, 2021. As the proposed
regulations would not be effective before July 1, 2024, we believe
institutions will have had sufficient time to take any internal actions
necessary to comply with the final regulations.
Even if relevant actors might have relied on some prior regulatory
position despite this background, the extent of alleged reliance would
have to be supported by some kind of evidence. The Department aims to
ensure that any asserted reliance interests are real and demonstrable
rather than theoretical and speculative. Furthermore, to affect
decisions about the rules, reliance interests must be added to a
broader analysis that accords with existing statutes. Legitimate and
demonstrable reliance interests, to the extent they exist, should be
considered as one factor among a number of counter-balancing
considerations, within applicable law and consistent with sound policy.
We do not view any plausible reliance interests as nearly strong enough
to alter our proposals in this NPRM.
In any event, the Department welcomes public comment on whether
there are serious, reasonable, legitimate, and demonstrable reliance
interests that the Department should account for in the final rule.

Public Participation

The Department has significantly engaged the public in developing
this NPRM, including through review of oral and written comments
submitted by the public during five public hearings. During each
negotiated rulemaking session, we provided opportunities for public
comment at the end of each day. Additionally, during each negotiated
rulemaking session, non-Federal negotiators obtained feedback from
their stakeholders that they shared with the negotiating committee.
On May 26, 2021, the Department published a notice in the
<ls-thn-eq>Federal Register (86 FR 28299) announcing our intent to
establish multiple negotiated rulemaking committees to prepare proposed
regulations on the affordability of postsecondary education,
institutional accountability, and Federal student loans.
The Department proposed regulatory provisions for the Institutional
and Programmatic Eligibility Committee (Committee) based on advice and
recommendations submitted by individuals and organizations in testimony
at three virtual public hearings held by the Department on June 21 and
June 23-24, 2021.
The Department also accepted written comments on possible
regulatory provisions that were submitted to the Department by
interested parties and organizations as part of the public hearing
process. You may view the written comments submitted in response to the
May 26, 2021, and the October 4, 2021, <ls-thn-eq>Federal Register
notices on the Federal eRulemaking Portal at <a href="http://www.regulations.gov">www.regulations.gov</a>,
within docket ID ED-2021-OPE-0077. Instructions for finding comments
are also available on the site under ``FAQ.''
You may view transcripts of the public hearings at <a href="http://www2.ed.gov/policy/highered/reg/hearulemaking/2021/index.html">www2.ed.gov/policy/highered/reg/hearulemaking/2021/index.html</a>.

Negotiated Rulemaking

Section 492 of the HEA requires the Secretary to obtain public
involvement in the development of proposed regulations affecting
programs authorized by title IV of the HEA. After obtaining extensive
input and recommendations from the public, including individuals and
representatives of groups involved in the title IV, HEA programs, the
Department, in most cases, must engage in the negotiated rulemaking
process before publishing proposed regulations in the
<ls-thn-eq>Federal Register. If negotiators reach consensus on the
proposed regulations, the Department agrees to publish without
substantive alteration a defined group of proposed regulations on which
the negotiators reached consensus--unless the Secretary reopens the
process or provides a written explanation to the participants stating
why the Secretary has decided to depart from the agreement reached
during negotiations. You can find further information on the negotiated
rulemaking process at: <a href="http://www2.ed.gov/policy/highered/reg/hearulemaking/2021/index.html">www2.ed.gov/policy/highered/reg/hearulemaking/2021/index.html</a>.
On December 8, 2021, the Department published a notice in the
<ls-thn-eq>Federal Register (86 FR 69607) announcing its intention to
establish a Committee, the Institutional and Programmatic Eligibility
Committee, to prepare proposed regulations for the title IV, HEA
programs. The notice set forth a schedule for Committee meetings and
requested nominations for individual negotiators to serve on the
negotiating Committee and announced the topics that Committee would
address.
The Committee included the following members, representing their
respective constituencies:
<bullet> Accrediting Agencies: Jamienne S. Studley, WASC Senior
College and

[[Page 32317]]

University Commission, and Laura Rasar King (alternate), Council on
Education for Public Health.
<bullet> Civil Rights Organizations: Amanda Martinez, UnidosUS.
<bullet> Consumer Advocacy Organizations: Carolyn Fast, The Century
Foundation, and Jaylon Herbin (alternate), Center for Responsible
Lending.
<bullet> Financial Aid Administrators at Postsecondary
Institutions: Samantha Veeder, University of Rochester, and David
Peterson (alternate), University of Cincinnati.
<bullet> Four-Year Public Institutions of Higher Education: Marvin
Smith, University of California, Los Angeles, and Deborah Stanley
(alternate), Bowie State University.
<bullet> Legal Assistance Organizations that Represent Students
and/or Borrowers: Johnson Tyler, Brooklyn Legal Services, and Jessica
Ranucci (alternate), New York Legal Assistance Group.
<bullet> Minority-Serving Institutions: Beverly Hogan, Tougaloo
College (retired), and Ashley Schofield (alternate), Claflin
University.
<bullet> Private, Nonprofit Institutions of Higher Education: Kelli
Perry, Rensselaer Polytechnic Institute, and Emmanual A. Guillory
(alternate), National Association of Independent Colleges and
Universities (NAICU).
<bullet> Proprietary Institutions of Higher Education: Bradley
Adams, South College, and Michael Lanouette (alternate), Aviation
Institute of Maintenance/Centura College/Tidewater Tech.
<bullet> State Attorneys General: Adam Welle, Minnesota Attorney
General's Office, and Yael Shavit (alternate), Office of the
Massachusetts Attorney General.
<bullet> State Higher Education Executive Officers, State
Authorizing Agencies, and/or State Regulators of Institutions of Higher
Education and/or Loan Servicers: Debbie Cochrane, California Bureau of
Private Postsecondary Education, and David Socolow (alternate), New
Jersey's Higher Education Student Assistance Authority (HESAA).
<bullet> Students and Student Loan Borrowers: Ernest Ezeugo, Young
Invincibles, and Carney King (alternate), California State Senate.
<bullet> Two-Year Public Institutions of Higher Education: Anne
Kress, Northern Virginia Community College, and William S. Durden
(alternate), Washington State Board for Community and Technical
Colleges.
<bullet> U.S. Military Service Members, Veterans, or Groups
Representing them: Travis Horr, Iraq and Afghanistan Veterans of
America, and Barmak Nassirian (alternate), Veterans Education Success.
<bullet> Federal Negotiator: Gregory Martin, U.S. Department of
Education.
The Department also invited nominations for two advisors. These
advisors were not voting members of the Committee; however, they were
consulted and served as a resource. The advisors were:
<bullet> David McClintock, McClintock & Associates, P.C. for issues
with auditing institutions that participate in the title IV, HEA
programs.
<bullet> Adam Looney, David Eccles School of Business at the
University of Utah, for issues related to economics, as well as
research, accountability, and/or analysis of higher education data.
The Committee met for three rounds of negotiations, the first of
which was held over four days, while the remaining two were five days
each. At its first meeting, the Committee reached agreement on its
protocols and proposed agenda. The protocols provided, among other
things, that the Committee would operate by consensus. The protocols
defined consensus as no dissent by any member of the Committee and
noted that consensus checks would be taken issue by issue. During its
first week of sessions, the legal aid negotiator petitioned the
Committee to add a Committee member representing the civil rights
constituency to distinguish that constituency from the legal aid
constituency. The Committee subsequently reached consensus on adding a
member from the constituency group, Civil Rights Organizations.
The Committee reviewed and discussed the Department's drafts of
regulatory language, as well as alternative language and suggestions
proposed by Committee members. During each negotiated rulemaking
session, we provided opportunities for public comment at the end of
each day. Additionally, during each negotiated rulemaking session, non-
Federal negotiators obtained feedback from their stakeholders that they
shared with the negotiating committee.
At the final meeting on March 18, 2022, the Committee reached
consensus on the Department's proposed regulations on ATB. The
Department has published the proposed ATB amendatory language without
substantive alteration to the agreed-upon proposed regulations.
For more information on the negotiated rulemaking sessions please
visit <a href="http://www2.ed.gov/policy/highered/reg/hearulemaking/2021/index.html">www2.ed.gov/policy/highered/reg/hearulemaking/2021/index.html</a>.

Summary of Proposed Changes

The proposed regulations would make the following changes to
current regulations.

Financial Value Transparency and Gainful Employment (Sec. Sec. 600.10,
600.21, 668.2, 668.43, 668.91, 668.401 Through 668.409, 668.601 Through
668.606) (Sections 101 and 102 of the HEA)

<bullet> Amend Sec. 600.10(c) to require an institution seeking to
establish the eligibility of a GE program to add the program to its
application.
<bullet> Amend Sec. 600.21(a) to require an institution to notify
the Secretary within 10 days of any change to the information included
in the GE program's certification.
<bullet> Amend Sec. 668.2 to define certain terminology used in
subparts Q and S, including ``annual debt-to-earnings rate,''
``classification of instructional programs (CIP) code,'' ``cohort
period,'' ``credential level,'' ``debt-to-earnings rates (D/E rates),''
``discretionary debt-to-earnings rates,'' ``earnings premium,''
``earnings threshold,'' ``eligible non-GE program,'' ``Federal agency
with earnings data,'' ``gainful employment program (GE program),''
``institutional grants and scholarships,'' ``length of the program,''
``poverty guideline,'' ``prospective student,'' ``student,'' and
``Title IV loan.''
<bullet> Amend Sec. 668.43 to establish a Department website for
the posting and distribution of key information and disclosures
pertaining to the institution's educational programs, and to require
institutions to provide the information required to access the website
to a prospective student before the student enrolls, registers, or
makes a financial commitment to the institution.
<bullet> Amend Sec. 668.91(a) to require that a hearing official
must terminate the eligibility of a GE program that fails to meet the
GE metrics, unless the hearing official concludes that the Secretary
erred in the calculation.
<bullet> Add a new Sec. 668.401 to provide the scope and purpose
of newly established financial value transparency regulations under
subpart Q.
<bullet> Add a new Sec. 668.402 to provide a framework for the
Secretary to determine whether a GE program or eligible non-GE program
leads to acceptable debt and earnings results, including establishing
annual and discretionary D/E rate metrics and associated outcomes, and
establishing an earnings premium metric and associated outcomes.
<bullet> Add a new Sec. 668.403 to establish a methodology to
calculate annual and

[[Page 32318]]

discretionary D/E rates, including parameters to determine annual loan
payments, annual earnings, loan debt, and assessed charges, as well as
to provide exclusions and specify when D/E rates will not be
calculated.
<bullet> Add a new Sec. 668.404 to establish a methodology to
calculate a program's earnings premium measure, including parameters to
determine median annual earnings, as well as to provide exclusions and
specify when the earnings threshold measure will not be calculated.
<bullet> Add a new Sec. 668.405 to establish a process by which
the Secretary will obtain the administrative and earnings data required
to calculate the D/E rates and the earnings premium measure.
<bullet> Add a new Sec. 668.406 to require the Secretary to notify
institutions of their financial value transparency metrics and
outcomes.
<bullet> Add a new Sec. 668.407 to require current and prospective
students to acknowledge having seen the information on the disclosure
website maintained by the Secretary if an eligible non-GE program has
failed the D/E rates measure, to specify the content and delivery of
such acknowledgments, and to require that students must provide the
acknowledgment before the institution may disburse any title IV, HEA
funds.
<bullet> Add a new Sec. 668.408 to establish institutional
reporting requirements for students who enroll in, complete, or
withdraw from a GE program or eligible non-GE program and to establish
the timeframe for institutions to report this information.
<bullet> Add a new Sec. 668.409 to establish severability
protections ensuring that if any financial value transparency provision
under subpart Q is held invalid, the remaining provisions continue to
apply.
<bullet> Add a new Sec. 668.601 to provide the scope and purpose
of newly established GE regulations under subpart S.
<bullet> Add a new Sec. 668.602 to establish criteria for the
Secretary to determine whether a GE program prepares students for
gainful employment in a recognized occupation.
<bullet> Add a new Sec. 668.603 to define the conditions under
which a failing GE program would lose title IV, HEA eligibility, to
provide the opportunity for an institution to appeal a loss of
eligibility only on the basis of a miscalculated D/E rate or earnings
premium, and to establish a period of ineligibility for failing GE
programs that lose eligibility or voluntarily discontinue eligibility.
<bullet> Add a new Sec. 668.604 to require institutions to provide
the Department with transitional certifications, as well as to certify
when seeking recertification or the approval of a new or modified GE
program, that each eligible GE program offered by the institution is
included in the institution's recognized accreditation or, if the
institution is a public postsecondary vocational institution, the
program is approved by a recognized State agency.
<bullet> Add a new Sec. 668.605 to require warnings to current and
prospective students if a GE program is at risk of losing title IV, HEA
eligibility, to specify the content and delivery requirements for such
notifications, and to provide that students must acknowledge having
seen the warning before the institution may disburse any title IV, HEA
funds.
<bullet> Add a new Sec. 668.606 to establish severability
protections ensuring that if any GE provision under subpart S is held
invalid, the remaining provisions would continue to apply.

Financial Responsibility (Sec. Sec. 668.15, 668.23, 668.171, and
668.174 Through 668.177) (Section 498(c) of the HEA)

<bullet> Remove all regulations currently under Sec. 668.15 and
reserve that section.
<bullet> Amend Sec. 668.23 to establish a new submission deadline
for compliance audits and audited financial statements not subject to
the Single Audit Act, Chapter 75 of title 31, United States Code, to be
the earlier of 30 days after the date of the auditor's report, with
respect to the compliance audit and audited financial statements, or 6
months after the last day of the entity's fiscal year.
<bullet> Replace all references to the ``Office of Management and
Budget Circular A-133'' in Sec. 668.23 with the updated reference, ``2
CFR part 200--Uniform Administrative Requirements, Cost Principles, And
Audit Requirements For Federal Awards.''
<bullet> Amend Sec. 668.23(d)(1) to require that financial
statements submitted to the Department must match the fiscal year end
of the entity's annual return(s) filed with the Internal Revenue
Service.
<bullet> Add new language to Sec. 668.23(d)(2)(ii) that would
require a domestic or foreign institution that is owned directly or
indirectly by any foreign entity to provide documentation stating its
status under the law of the jurisdiction under which it is organized.
<bullet> Add new Sec. 668.23(d)(5) that would require an
institution to disclose in a footnote to its financial statement audit
the dollar amounts it has spent in the preceding fiscal year on
recruiting activities, advertising, and other pre-enrollment
expenditures.
<bullet> Amend Sec. 668.171(b)(3)(i) so that an institution would
be deemed unable to meet its financial or administrative obligations
if, in addition to the already existing factors, it fails to pay title
IV, HEA credit balances, as required.
<bullet> Further amend Sec. 668.171(b)(3) to establish that an
institution would not be able to meet its financial or administrative
obligations if it fails to make a payment in accordance with an
existing undisputed financial obligation for more than 90 days; or
fails to satisfy payroll obligations in accordance with its published
schedule; or it borrows funds from retirement plans or restricted funds
without authorization.
<bullet> Amend Sec. 668.171(c) to establish additional mandatory
triggering events that would determine if an institution is able to
meet its financial or administrative obligations. If any of the
mandatory trigger events occur, the institution would be deemed unable
to meet its financial or administrative obligations and the Department
would obtain financial protection.
<bullet> Amend Sec. 668.171(d) to establish additional
discretionary triggering events that would assist the Department in
determining if an institution is able to meet its financial or
administrative obligations. If any of the discretionary triggering
events occur, we would determine if the event is likely to have a
material adverse effect on the financial condition of the institution,
and if so, would obtain financial protection.
<bullet> Amend Sec. 668.171(e) to recognize the liability or
liabilities as an expense when recalculating an institution's composite
score after a withdrawal of equity.
<bullet> Amend Sec. 668.171(f) to require an institution to notify
the Department, typically no later than 10 days, after any of the
following occurs:
[ssquf] The institution incurs a liability as described in proposed
Sec. 668.171(c)(2)(i)(A);
[ssquf] The institution is served with a complaint linked to a
lawsuit as described in Sec. 668.171(c)(2)(i)(B) and an updated notice
when such a lawsuit has been pending for at least 120 days;
[ssquf] The institution receives a civil investigative demand,
subpoena, request for documents or information, or other formal or
informal inquiry from any government entity;
[ssquf] As described in proposed Sec. 668.171(c)(2)(x), the
institution makes a contribution in the last quarter of its fiscal year
and makes a distribution in the first or second quarter of the
following fiscal year;
[ssquf] As described in proposed Sec. 668.171(c)(2)(vi) or
(d)(11), the U.S Securities and Exchange Commission (SEC) or an
exchange where the entity's

[[Page 32319]]

securities are listed takes certain disciplinary actions against the
entity;
[ssquf] As described in proposed Sec. 668.171(c)(2)(iv),
(c)(2)(v), or (d)(9), the institution's accrediting agency or a State,
Federal or other oversight agency notifies it of certain actions being
initiated or certain requirements being imposed;
[ssquf] As described in proposed Sec. 668.171(c)(2)(xi), there are
actions initiated by a creditor of the institution;
[ssquf] A proprietary institution, for its most recent fiscal year,
does not receive at least 10 percent of its revenue from sources other
than Federal educational assistance programs as provided in Sec.
668.28(c)(3) (This notification deadline would be 45 days after the end
of the institution's fiscal year);
[ssquf] As described in proposed Sec. 668.171(c)(2)(ix) or
(d)(10), the institution or one of its programs loses eligibility for
another Federal educational assistance program;
[ssquf] As described in proposed Sec. 668.171(d)(7), the
institution discontinues an academic program;
[ssquf] The institution fails to meet any one of the standards in
Sec. 668.171(b);
[ssquf] As described in proposed Sec. 668.171(c)(2)(xii), the
institution makes a declaration of financial exigency to a Federal,
State, Tribal, or foreign governmental agency or its accrediting
agency;
[ssquf] As described in proposed Sec. 668.171(c)(2)(xiii), the
institution or an owner or affiliate of the institution that has the
power, by contract or ownership interest, to direct or cause the
direction of the management of policies of the institution, is
voluntarily placed, or is required to be placed, into receivership;
[ssquf] The institution is cited by another Federal agency for not
complying with requirements associated with that agency's educational
assistance programs and which could result in the institution's loss of
those Federal education assistance funds;
[ssquf] The institution closes more than 50 percent of its
locations or any number of locations that enroll more than 25 percent
of its students. Locations for this purpose include the institution's
main campus and any additional location(s) or branch campus(es) as
described in Sec. 600.2;
[ssquf] As described in proposed Sec. 668.171(d)(2), the
institution suffers other defaults, delinquencies, or creditor events;
<bullet> Amend Sec. 668.171(g) to require public institutions to
provide documentation from a government entity that confirms that the
institution is a public institution and is backed by the full faith and
credit of that government entity to be considered as financially
responsible.
<bullet> Amend Sec. 668.171(h) to provide that an institution is
not financially responsible if the institution's audited financial
statements include an opinion expressed by the auditor that was
adverse, qualified, disclaimed, or if they include a disclosure about
the institution's diminished liquidity, ability to continue operations,
or ability to continue as a going concern.
<bullet> Amend Sec. 668.174(a) to clarify that an institution
would not be financially responsible if it has had an audit finding in
either of its two most recent compliance audits that resulted in the
institution being required to repay an amount greater than 5 percent of
the funds the institution received under the title IV, HEA programs or
if we require it to repay an amount greater than 5 percent of its title
IV, HEA program funds in a Department-issued Final Audit Determination
Letter, Final Program Review Determination, or similar final document
in the institution's current fiscal year or either of its preceding two
fiscal years.
<bullet> Add Sec. 668.174(b)(3) to state that an institution is
not financially responsible if an owner who exercises substantial
control, or the owner's spouse, has been in default on a Federal
student loan, including parent PLUS loans, in the preceding five years
unless certain conditions are met when the institution first applies to
participate in Title IV, HEA programs, or when the institution
undergoes a change in ownership.
<bullet> Amend Sec. 668.175(c) to clarify that we would consider
an institution that did not otherwise satisfy the regulatory standards
of financial responsibility, or that had an audit opinion or disclosure
about the institution's liquidity, ability to continue operations, or
ability to continue as a going concern, to be financially responsible
if it submits an irrevocable letter of credit to the Department in an
amount we determine. Furthermore, the proposed regulation would clarify
that if the institution's failure is due to any of the factors in Sec.
668.171(b), it must remedy the issues that gave rise to the failure.
<bullet> Add Sec. 668.176 to specify the financial responsibility
standards for an institution undergoing a change in ownership. The
proposed regulations would consolidate financial responsibility
requirements in subpart L of part 668 and remove the requirements that
currently reside in Sec. 668.15.
<bullet> Add a new Sec. 668.177 to contain the severability
statement that currently resides in Sec. 668.176.

Administrative Capability (Sec. 668.16) (Section 498(a) of the HEA)

<bullet> Amend Sec. 668.16(h) to require institutions to provide
adequate financial aid counseling and financial aid communications to
enrolled students that advises students and families to accept the most
beneficial types of financial assistance available to them and includes
clear information about the cost of attendance, sources and amounts of
each type of aid separated by the type of aid, the net price, and
instructions and applicable deadlines for accepting, declining, or
adjusting award amounts.
<bullet> Amend Sec. 668.16(k) to require that an institution not
have any principal or affiliate that has been subject to specified
negative actions, including being convicted of or pleading nolo
contendere or guilty to a crime involving governmental funds.
<bullet> Add Sec. 668.16(n) to require that the institution has
not been subject to a significant negative action or a finding by a
State or Federal agency, a court or an accrediting agency, where the
basis of the action is repeated or unresolved, such as non-compliance
with a prior enforcement order or supervisory directive; and the
institution has not lost eligibility to participate in another Federal
educational assistance program due to an administrative action against
the institution.
<bullet> Amend Sec. 668.16(p) to strengthen the requirement that
institutions must develop and follow adequate procedures to evaluate
the validity of a student's high school diploma.
<bullet> Add Sec. 668.16(q) to require that institutions provide
adequate career services to eligible students who receive title IV, HEA
program assistance.
<bullet> Add Sec. 668.16(r) to require that an institution provide
students with accessible clinical, or externship opportunities related
to and required for completion of the credential or licensure in a
recognized occupation, within 45 days of the successful completion of
other required coursework.
<bullet> Add Sec. 668.16(s) to require that an institution
disburse funds to students in a timely manner consistent with the
students' needs.
<bullet> Add Sec. 668.16(t) to require institutions that offer GE
programs to meet program standards as outlined in regulation.
<bullet> Add Sec. 668.16(u) to require that an institution does
not engage in misrepresentations or aggressive recruitment.

[[Page 32320]]

Certification Procedures (Sec. Sec. 668.2, 668.13, and 668.14)
(Section 498 of the HEA)

<bullet> Amend Sec. 668.2 to add a definition of ``metropolitan
statistical area.''
<bullet> Amend Sec. 668.13(b)(3) to eliminate the provision that
requires the Department to approve participation for an institution if
it has not acted on a certification application within 12 months so the
Department can take additional time where it is needed.
<bullet> Amend Sec. 668.13(c)(1) to include additional events that
lead to provisional certification.
<bullet> Amend Sec. 668.13(c)(2) to require provisionally
certified schools that have major consumer protection issues to
recertify after two years.
<bullet> Add a new Sec. 668.13(e) to establish supplementary
performance measures the Secretary may consider in determining whether
to certify or condition the participation of the institution.
<bullet> Amend Sec. 668.14(a)(3) to require an authorized
representative of any entity with direct or indirect ownership of a
proprietary or private nonprofit institution to sign a PPA.
<bullet> Amend Sec. 668.14(b)(17) to provide that all Federal
agencies and State attorneys general have the authority to share with
each other and the Department any information pertaining to an
institution's eligibility for participation in the title IV, HEA
programs or any information on fraud, abuse, or other violations of
law.
<bullet> Amend Sec. 668.14(b)(18)(i) and (ii) to add to the list
of reasons for which an institution or third-party servicer may not
employ, or contract with, individuals or entities whose prior conduct
calls into question the ability of the individual or entity to adhere
to a fiduciary standard of conduct. We also propose to prohibit owners,
officers, and employees of both institutions and third-party servicers
from participating in the title IV, HEA programs if they have exercised
substantial control over an institution, or a direct or indirect parent
entity of an institution, that owes a liability for a violation of a
title IV, HEA program requirement and is not making payments in
accordance with an agreement to repay that liability.
<bullet> Amend Sec. 668.14(b)(18)(i) and (ii) to add to the list
of situations in which an institution may not knowingly contract with
or employ any individual, agency, or organization that has been, or
whose officers or employees have been, ten-percent-or-higher equity
owners, directors, officers, principals, executives, or contractors at
an institution in any year in which the institution incurred a loss of
Federal funds in excess of 5 percent of the institution's annual title
IV, HEA program funds.
<bullet> Amend Sec. 668.14(b)(26)(ii)(A) to limit the number of
hours in a gainful employment program to the greater of the required
minimum number of clock hours, credit hours, or the equivalent required
for training in the recognized occupation for which the program
prepares the student, as established by the State in which the
institution is located, if the State has established such a
requirement, or as established by any Federal agency or the
institution's accrediting agency.
<bullet> Amend Sec. 668.14(b)(26)(ii)(B) as an exception to
paragraph (A) that limits the number of hours in a gainful employment
program to the greater of the required minimum number of clock hours,
credit hours, or the equivalent required for training in the recognized
occupation for which the program prepares the student, as established
by another State if: the institution provides documentation,
substantiated by the certified public accountant that prepares the
institution's compliance audit report as required under Sec. 668.23,
that a majority of students resided in that other State while enrolled
in the program during the most recently completed award year or that a
majority of students who completed the program in the most recently
completed award year were employed in that State; or if the other State
is part of the same metropolitan statistical area as the institution's
home State and a majority of students, upon enrollment in the program
during the most recently completed award year, stated in writing that
they intended to work in that other State.
<bullet> Amend Sec. 668.14(b)(32) to require all programs that
prepare students for occupations requiring programmatic accreditation
or State licensure to meet those requirements and comply with all State
consumer protection laws.
<bullet> Amend Sec. 668.14(b)(33) to require institutions to not
withhold transcripts or take any other negative action against a
student related to a balance owed by the student that resulted from an
error in the institution's administration of the title IV, HEA
programs, returns of funds under the Return of Title IV Funds process,
or any fraud or misconduct by the institution or its personnel.
<bullet> Amend Sec. 668.14(b)(34) to prohibit institutions from
maintaining policies and procedures to encourage, or conditioning
institutional aid or other student benefits in a manner that induces, a
student to limit the amount of Federal student aid, including Federal
loan funds, that the student receives, except that the institution may
provide a scholarship on the condition that a student forego borrowing
if the amount of the scholarship provided is equal to or greater than
the amount of Federal loan funds that the student agrees not to borrow.
<bullet> Amend Sec. 668.14(e) to establish a non-exhaustive list
of conditions that the Secretary may apply to provisionally certified
institutions.
<bullet> Amend Sec. 668.14(f) to establish conditions that may
apply to institutions that undergo a change in ownership seeking to
convert from a for-profit institution to a nonprofit institution.
<bullet> Amend Sec. 668.14(g) to establish conditions that may
apply to an initially certified nonprofit institution, or an
institution that has undergone a change of ownership and seeks to
convert to nonprofit status.

ATB (Sec. Sec. 668.2, 668.32, 668.156, and 668.157 (Section 484(d) of
the HEA)

<bullet> Amend Sec. 668.2 to codify a definition of ``eligible
career pathway program.''
<bullet> Amend Sec. 668.32(e) to differentiate between the title
IV, HEA aid eligibility of non-high school graduates who enrolled in an
eligible program prior to July 1, 2012, and those that enrolled after
July 1, 2012.
<bullet> Amend Sec. 668.156(b) to separate the State process into
an initial two-year period and a subsequent period for which the State
may be approved for up to five years.
<bullet> Amend Sec. 668.156(a) to strengthen the Approved State
process regulations to require that: (1) The application contains a
certification that each eligible career pathway program intended for
use through the State process meets the proposed definition of an
``eligible career pathway program''; (2) The application describes the
criteria used to determine student eligibility for participation in the
State process; (3) The withdrawal rate for a postsecondary institution
listed for the first time on a State's application does not exceed 33
percent; (4) Upon initial application the Secretary will verify that a
sample of the proposed eligible career pathway programs are valid; and
(5) Upon initial application the State will enroll no more than the
greater of 25 students or one percent of enrollment at each
participating institution.
<bullet> Remove current Sec. 668.156(c) to remove the support
services requirements from the State process--orientation, assessment
of a student's existing capabilities, tutoring, assistance in
developing educational goals,

[[Page 32321]]

counseling, and follow up by teachers and counselors--as these support
services generally duplicate the requirements in the proposed
definition of ``eligible career pathway programs.''
<bullet> Amend the monitoring requirement in current Sec.
668.156(d), now redesignated proposed Sec. 668.156(c) to provide a
participating institution that has failed to achieve the 85 percent
success rate up to three years to achieve compliance.
<bullet> Amend current Sec. 668.156(d), now redesignated proposed
Sec. 668.156(c) to require that an institution be prohibited from
participating in the State process for title IV, HEA purposes for at
least five years if the State terminates its participation.
<bullet> Amend current Sec. 668.156(b), now redesignated proposed
Sec. 668.156(e) to clarify that the State is not subject to the
success rate requirement at the time of the initial application but is
subject to the requirement for the subsequent period, reduce the
required success rate from the current 95 percent to 85 percent, and
specify that the success rate be calculated for each participating
institution. Also, amend the comparison groups to include the concept
of ``eligible career pathway programs.''
<bullet> Amend current Sec. 668.156(b), now redesignated proposed
Sec. 668.156(e) to require that States report information on race,
gender, age, economic circumstances, and education attainment and
permit the Secretary to publish a notice in the Federal Register with
additional information that the Department may require States to
submit.
<bullet> Amend current Sec. 668.156(g), now redesignated proposed
Sec. 668.156(j) to update the Secretary's ability to revise or
terminate a State's participation in the State process by (1) providing
the Secretary the ability to approve the State process once for a two-
year period if the State is not in compliance with a provision of the
regulations and (2) allowing the Secretary to lower the success rate to
75 percent if 50 percent of the participating institutions across the
State do not meet the 85 percent success rate.
<bullet> Add a new Sec. 668.157 to clarify the documentation
requirements for eligible career pathway programs.

Significant Proposed Regulations

We discuss substantive issues under the sections of the proposed
regulations to which they pertain. Generally, we do not address
proposed regulatory provisions that are technical or otherwise minor in
effect.

Financial Value Transparency and Gainful Employment

Authority for This Regulatory Action: The Department's authority to
pursue financial value transparency in GE programs and eligible non-GE
programs and accountability in GE programs is derived primarily from
three categories of statutory enactments: first, the Secretary's
generally applicable rulemaking authority, which includes provisions
regarding data collection and dissemination, and which applies in part
to title IV, HEA; second, authorizations and directives within title
IV, HEA regarding the collection and dissemination of potentially
useful information about higher education programs, as well as
provisions regarding institutional eligibility to benefit from title
IV; and third, the further provisions within title IV, HEA that address
the limits and responsibilities of gainful employment programs.
As for crosscutting rulemaking authority, Section 410 of the
General Education Provisions Act (GEPA) grants the Secretary authority
to make, promulgate, issue, rescind, and amend rules and regulations
governing the manner of operation of, and governing the applicable
programs administered by, the Department.\46\ This authority includes
the power to promulgate regulations relating to programs that we
administer, such as the title IV, HEA programs that provide Federal
loans, grants, and other aid to students, whether to pursue eligible
non-GE programs or GE programs. Moreover, section 414 of the Department
of Education Organization Act (DEOA) authorizes the Secretary to
prescribe those rules and regulations that the Secretary determines
necessary or appropriate to administer and manage the functions of the
Secretary or the Department.\47\
---------------------------------------------------------------------------

\46\ 20 U.S.C. 1221e-3.
\47\ 20 U.S.C. 3474.
---------------------------------------------------------------------------

Moreover, Section 431 of GEPA grants the Secretary additional
authority to establish rules to require institutions to make data
available to the public about the performance of their programs and
about students enrolled in those programs. That section directs the
Secretary to collect data and information on applicable programs for
the purpose of obtaining objective measurements of the effectiveness of
such programs in achieving their intended purposes, and also to inform
the public about Federally supported education programs.\48\ This
provision lends additional support for the proposed reporting and
disclosure requirements, which will enable the Department to collect
data and information for the purpose of developing objective measures
of program performance, not only for the Department's use in evaluating
programs but also to inform the public--including enrolled students,
prospective students, their families, institutions, and others--about
relevant information related to those Federally-supported programs.
---------------------------------------------------------------------------

\48\ 20 U.S.C. 1231a(2)-(3). The term ``applicable program''
means any program for which the Secretary or the Department has
administrative responsibility as provided by law or by delegation of
authority pursuant to law. 20 U.S.C. 1221(c)(1).
---------------------------------------------------------------------------

As for provisions within title IV, HEA, several of them address the
effective delivery of information about higher education programs. In
addition to older methods of information dissemination, for example,
section 131 of the Higher Education Opportunity Act, as amended, and
\49\ taken together, several provisions declare that the Department's
websites should include information regarding higher education
programs, including college planning and student financial aid,\50\ the
cost of higher education in general, and the cost of attendance with
respect to all institutions of higher education participating in title
IV, HEA programs.\51\ Those authorizations and directives expand on
more traditional methods of delivering important information to
students, prospective students, and others, including within or
alongside application forms or promissory notes for which
acknowledgments by signatories are typical and longstanding.\52\
Educational institutions have been distributing information to students
at the direction of the Department and in accord with the applicable
statutes for decades.\53\
---------------------------------------------------------------------------

\49\ 20 U.S.C. 1015(a)(3), (b), (c)(5), (e), (h). See also
section 111 of the Higher Education Opportunity Act (20 U.S.C.
1015a), which authorizes the College Navigator website and successor
websites.
\50\ E.g., 20 U.S.C. 1015(e).
\51\ 20 U.S.C. 1015(a)(3), (b), (c)(5), (e), (h). See also
section 111 of the Higher Education Opportunity Act (20 U.S.C.
1015a), which authorizes the College Navigator website and successor
websites.
\52\ E.g., 20 U.S.C. 1082(m), regarding common application forms
and promissory notes or master promissory notes.
\53\ A compilation of the current and previous editions of the
Federal Student Aid Handbook, which includes detailed discussion of
consumer information and school reporting and notification
requirements, is posted at <a href="https://fsapartners.ed.gov/knowledge-center/fsa-handbook">https://fsapartners.ed.gov/knowledge-center/fsa-handbook</a>.
---------------------------------------------------------------------------

The proposed rules also are supported by the Department's statutory
responsibilities to observe eligibility limits in the HEA. Section 498
of the HEA requires institutions to establish eligibility to provide
title IV, HEA funds

[[Page 32322]]

to their students. Eligible institutions must also meet program
eligibility requirements for students in those programs to receive
title IV, HEA assistance.
One type of program for which certain types of institutions must
establish program-level eligibility is ``a program of training to
prepare students for gainful employment in a recognized occupation.''
54 55 Section 481 of the HEA articulates this same
requirement by defining, in part, an ``eligible program'' as a
``program of training to prepare students for gainful employment in a
recognized profession.'' \56\ The HEA does not more specifically define
''training to prepare,'' ``gainful employment,'' ''recognized
occupation,'' or ''recognized profession'' for purposes of determining
the eligibility of GE programs for participation in title IV, HEA. At
the same time, the Secretary and the Department have a legal duty to
interpret, implement, and apply those terms in order to observe the
statutory eligibility limits in the HEA. In the section-by-section
discussion below, we explain further the Department's interpretation of
the GE statutory provisions and how those provisions should be
implemented and applied.
---------------------------------------------------------------------------

\54\ 20 U.S.C. 1001(b)(1).
\55\ 20 U.S.C. 1002(b)(1)(A)(i), (c)(1)(A).
\56\ 20 U.S.C. 1088(b).
---------------------------------------------------------------------------

The statutory eligibility limits for GE programs are one part of
the foundation of authority for disclosures and/or warnings from
institutions to prospective and enrolled GE students. In the GE
setting, the Department has not only a statutory basis for pursuing the
effective dissemination of information to students about a range of GE
program attributes and performance metrics,\57\ the Department also has
authority to use certain metrics to determine that an institution's
program is not eligible to benefit, as a GE program, from title IV, HEA
assistance. When an institution's program is at risk of losing
eligibility based on a given metric, there should be no real doubt that
the Department may require the institution that operates the at-risk
program to alert prospective and enrolled students that they may not be
able to receive title IV, HEA assistance at the program in question.
Without a direct communication from the institution to prospective and
enrolled students, the students themselves risk losing the ability to
make educational decisions with the benefit of critically relevant
information about programs, contrary to the text, purpose, and
traditional understandings of the relevant statutes.
---------------------------------------------------------------------------

\57\ Ass'n of Priv. Sector Colleges & Universities v. Duncan,
110 F. Supp. 3d 176, 198-200 (D.D.C. 2015) (recognizing statutory
authority to require institutions to disclose certain information
about GE programs to prospective and enrolled GE students), aff'd,
640 F. App'x 5, 6 (D.C. Cir. 2016) (per curiam) (unpublished)
(indicating that the plaintiff's challenge to the GE disclosure
provisions was abandoned on appeal).
---------------------------------------------------------------------------

The above authorities collectively empower the Secretary to
promulgate regulations to (1) Require institutions to report
information about GE programs and eligible non-GE programs to the
Secretary; (2) Require institutions to provide disclosures or warnings
to students regarding programs that do not meet financial value
measures established by the Department; and (3) Define the gainful
employment requirement in the HEA by establishing measures to determine
the eligibility of GE programs for participation in title IV, HEA.
Where helpful and appropriate, we will elaborate on the relevant
statutory authority in our overviews and section-by-section discussions
below.

Financial Value Transparency Scope and Purpose (Sec. 668.401)

Statute: See Authority for This Regulatory Action.
Current Regulations: None.
Proposed Regulations: We propose to add subpart Q, which would
establish a financial value transparency framework for the Department
to calculate measures of the financial value of eligible programs,
categorize programs based on those measures as low-earning or high-
debt-burden, provide information about the financial value of programs
to students, and require, when applicable, acknowledgments from
students who are enrolled--and prospective students who are seeking to
enroll--in programs with high debt burdens. The proposed regulations
would establish rules and procedures for institutions to report
information to the Department and for the Department to calculate these
measures. The regulations would apply to all educational programs that
participate in the title IV, HEA programs except for approved prison
education programs and comprehensive transition and postsecondary
programs. Proposed Sec. 668.401 would establish the scope and purpose
of these financial value transparency regulations in subpart Q.
Reasons: The Department recognizes that with the high cost of
attendance for postsecondary education and resulting need for high
levels of student borrowing, students, families, institutions, and the
public have a strong interest in ensuring that higher education
investments are justified through their benefits to students and
society.
Choosing whether and where to pursue a postsecondary education is
one of the most important and consequential investments individuals
make during their lifetimes. The considerations are not purely, or in
many cases even primarily, financial in nature: an education requires
time away from other pursuits, the possibility of increased family
stress, and the hard work required to master new knowledge. Aside from
the potential for improved career prospects and higher earnings, a
college education has also been shown to improve health, life
satisfaction, and civic engagement among other non-financial
benefits.\58\
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\58\ Oreopoulos, P. & Salavanes, K. (2011). Priceless: The
Nonpecuniary Benefits of Schooling. Journal of Economic
Perspectives. 25(1) 159-84. Marken, S. (2021). Ensuring a More
Equitable Future: Exploring the Relationship Between Wellbeing and
Postsecondary Value. Post Secondary Value Commission. Ross, C. & Wu,
C. (1995). The Links Between Education and Health. American
Sociological Review. 60(5) 719-745. Cutler, D. & Lleras-Muney, A.
(2008). Education and Health: Evaluating Theories and Evidence. In
Making Americans Healthier: Social and Economic Policy as Health
Policy. House, J. et al (Eds). Russel Sage Foundation. New York.
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The financial consequences of the choice of whether and where to
enroll in higher education, however, are substantial. In the 2020-21
award year, the average cost of attendance for first-time, full-time
degree seeking undergraduate student across all 4-year institutions was
$27,200, and the top 25 percent of students paid more than $44,800.
According to NCES data, median total debt at graduation among students
who borrow for degrees was around $23,000 for undergraduates competing
in 2017-18 \59\ and $67,000 for graduate students,\60\ with the top 25
percent of students leaving school with more than $33,000 \61\ and
$118,000,\62\ respectively. There is significant heterogeneity in debt
outcomes and costs across programs, even among credentials at the same
level and in the same field.
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\59\ <a href="http://nces.ed.gov/datalab/powerstats/table/ugaxgt">nces.ed.gov/datalab/powerstats/table/ugaxgt</a>.
\60\ <a href="http://Nces.ed.gov/datalab/powerstats/table/uuaklv">Nces.ed.gov/datalab/powerstats/table/uuaklv</a>.
\61\ <a href="http://nces.ed.gov/datalab/powerstats/table/ugaxgt">nces.ed.gov/datalab/powerstats/table/ugaxgt</a>.
\62\ <a href="http://Nces.ed.gov/datalab/powerstats/table/uuaklv">Nces.ed.gov/datalab/powerstats/table/uuaklv</a>.
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The typical college graduate enjoys substantial financial benefits
in the form of increased earnings from their degree. Research has shown
that the typical bachelor's degree recipient earns twice what a typical
high school graduate earns over the course of their career.\63\ But
here too, there are enormous

[[Page 32323]]

earnings differences across different credential levels and fields of
study, and across similar programs at different institutions.\64\ For
example, measures of institutional productivity (assessed using wage
and salary earnings, employment in the public or nonprofit sector, and
innovation in terms of contributions to research and development) vary
substantially within institutions of similar selectivity, especially
among less-selective institutions.\65\ Typical returns to enrollment
vary widely across selected fields, even after accounting for
individual student characteristics that may affect selection into a
given major or pre-enrollment earnings. These differences are large and
consequential over an individual's lifetime. For example, one study
found that even after controlling for differences in the
characteristics of enrolled students, students at four-year
institutions in Texas who majored in high-earning fields earned $5,000
or more per quarter more than students who majored in the lowest
earning field of study even 16 to 20 years after college.\66\
Similarly, another study found that those who earned master's degrees
in Ohio experienced earnings increases ranging from a 24 percent
increase for degrees in high earning fields such as health to
essentially no increase, relative to baseline earnings, for some lower-
value fields.\67\
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\63\ Hershbein, B., and Kearney, M. (2014). Major Decisions:
What Graduates Earn Over Their Lifetimes. The Hamilton Project.
Brookings Institution. Washington, DC.
\64\ Webber, D. (2016). Are college costs worth it? How ability,
major, and debt affect the returns to schooling, Economics of
Education Review, 53, 296-310.
\65\ Hoxby, C.M. 2019. The Productivity of US Postsecondary
Institutions. In Productivity in Higher Education, C. M. Hoxby and
K. M. Stange(eds). University of Chicago Press: Chicago, 2019.
\66\ Andrews, R.J., Imberman, S.A., Lovenheim, M.F. & Stange,
K.M. (2022), ``The returns to college major choice: Average and
distributional effects, career trajectories, and earnings
variability,'' NBER Working Paper w30331.
\67\ Heterogeneity in Labor Market Returns to Master's Degrees:
Evidence from Ohio. (EdWorkingPaper: 22-629). Retrieved from
Annenberg Institute at Brown University: <a href="http://doi.org/10.26300/akgd-9911">doi.org/10.26300/akgd-9911</a>.
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Surveys of current and prospective college students indicate that
overwhelming majorities of students consider the financial outcomes of
college as among the very most important reasons for pursuing a
postsecondary credential. A national survey of college freshmen at
baccalaureate institutions consistently finds students identifying ``to
get a good job'' as the most common reason why students chose their
college.\68\ Another survey of a broader set of students found
financial concerns dominate in the decision to go to college with the
top three reasons identified being ``to improve my employment
opportunities,'' ``to make more money,'' and ``to get a good job.''
\69\
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\68\ Stolzenberg, E. B., Aragon, M.C., Romo, E., Couch, V.,
McLennan, D., Eagan, M.K., Kang, N. (2020). ``The American Freshman:
National Norms Fall 2019,'' Higher Education Research Institute at
UCLA, <a href="http://www.heri.ucla.edu/monographs/TheAmericanFreshman2019.pdf">www.heri.ucla.edu/monographs/TheAmericanFreshman2019.pdf</a>.
\69\ Rachel Fishman (2015), ``2015 College Decisions Survey:
Part I Deciding To Go To College,'' New America,
<a href="http://static.newamerica.org/attachments/3248-deciding-to-go-to-college/CollegeDecisions_PartI.148dcab30a0e414ea2a52f0d8fb04e7b.pdf">static.newamerica.org/attachments/3248-deciding-to-go-to-college/CollegeDecisions_PartI.148dcab30a0e414ea2a52f0d8fb04e7b.pdf</a>.
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Great strides have been made in providing accurate and comparable
information to students about their college options in the last decade.
The College Scorecard, launched in 2015, provided information on the
earnings and borrowing outcomes of students at nearly all institutions
participating in the title IV, HEA aid programs. Recognizing the
important variation in these outcomes across programs of study, even
within the same institution, program-level information was added to the
Scorecard in 2019. The dissemination of this information has
dramatically improved the information available on the financial value
of different programs, and enabled a new national conversation on
whether, how, and for whom higher education institutions provide
financial benefit.\70\
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\70\ For example, the work of the Postsecondary Value Commission
(<a href="http://postsecondaryvalue.org/">postsecondaryvalue.org/</a>), the Hamilton Project
(<a href="http://www.hamiltonproject.org/papers/major_decisions_what_graduates_earn_over_their_lifetimes">www.hamiltonproject.org/papers/major_decisions_what_graduates_earn_over_their_lifetimes</a>),and
Georgetown University`s Center on Education and the Workforce
(<a href="https://cew.georgetown.edu/">https://cew.georgetown.edu/</a>).
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Still, the Department recognizes that merely posting the
information on the College Scorecard website has had a limited impact
on student choice. For example, one study \71\ found the College
Scorecard influenced the college search behavior of some higher income
students but had little effect on lower income students. Similarly, a
randomized controlled trial inviting high school students to examine
program-level data on costs and earnings outcomes had little effect on
students' college choices, possibly due to the fact that few students
accessed the information outside of school-led sessions.\72\
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\71\ Hurwitz, Michael, and Jonathan Smith. ``Student
responsiveness to earnings data in the College Scorecard.'' Economic
Inquiry 56, no. 2 (2018): 1220-1243. Also Huntington-Klein 2017.
<a href="http://nickchk.com/Huntington-Klein_2017_The_Search.pdf">nickchk.com/Huntington-Klein_2017_The_Search.pdf</a>.
\72\ Blagg, Kristin, Matthew M. Chingos, Claire Graves, and Anna
Nicotera. ``Rethinking consumer information in higher education.''
(2017) Urban Institute, Washington DC. <a href="http://www.urban.org/research/publication/rethinking-consumer-information-higher-education">www.urban.org/research/publication/rethinking-consumer-information-higher-education</a>.
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It is critical to provide students and families access to
information that is consistently calculated and presented across
programs and institutions, especially for key metrics like program-
level net price estimates. When institutions report net price to
students, there can be substantial variation in how the prices are
calculated,\73\ and in how institutions characterize these values,
making it difficult for prospective students to compare costs across
programs and institutions.\74\
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\73\ Anthony, A., Page, L. and Seldin, A. (2016) In the Right
Ballpark? Assessing the Accuracy of Net Price Calculators. Journal
of Student Financial Aid. 46(2). 3.
\74\ The Institute for College Access & Success (TICAS). (2012).
Adding it All Up 2012: Are College Net Price Calculators Easy to
Find, Use, and Compare? <a href="http://ticas.org/files/pub_files/Adding_It_All_Up_2012.pdf">ticas.org/files/pub_files/Adding_It_All_Up_2012.pdf</a>.
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Applicants' use of data at key points during the college decision-
making process has been a consistent challenge with other transparency-
focused initiatives that the Department administers. Students can often
receive information concerning their eligibility for financial aid that
is inconsistent or difficult to compare.\75\ The College Navigator also
provides critical data on college pricing, completion rates, default
rates, and other indicators, but there is little evidence that it
affects college search processes or enrollment decisions. Similarly, we
also administer lists of institutions with the highest prices and
changes in price measured in a few ways, but there is no indication
that the presence of such lists alters institutional or borrower
behavior.\76\
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\75\ Burd, S. et al. (2018) Decoding the Cost of College: The
Case for Transparent Financial Aid Award Letters. New America.
Washington, DC. <a href="https://www.newamerica.org/education-policy/policy-papers/decoding-cost-college/">https://www.newamerica.org/education-policy/policy-papers/decoding-cost-college/</a>. Anthony, A., Page, L., & Seldin, A.
(2016) In the Right Ballpark? Assessing the Accuracy of Net Price
Calculators. Journal of Student Financial Aid. 46(2) 3. <a href="https://files.eric.ed.gov/fulltext/EJ1109171.pdf">https://files.eric.ed.gov/fulltext/EJ1109171.pdf</a>.
\76\ Baker, D. J. (2020). ``Name and Shame'': An Effective
Strategy for College Tuition Accountability? Educational Evaluation
and Policy Analysis, 42(3), 393-416. <a href="http://doi.org/10.3102/0162373720937672">doi.org/10.3102/0162373720937672</a>.
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A broader set of research has, however, illustrated that providing
information on the financial value of college options can have
meaningful impacts on college choices. The difference in effectiveness
of information interventions has been studied extensively and informs
our proposed approach to the financial transparency framework.\77\ To
affect

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college decision-making, information must be timely, personalized, and
easy to understand.
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\77\ Steffel, M., Kramer, D., McHugh, W., & Ducoff, N. (2020).
Informational Disclosure and College Choice. Brookings. Washington,
DC <a href="http://www.brookings.edu/research/information-disclosure-and-college-choice/">www.brookings.edu/research/information-disclosure-and-college-choice/</a>; Robertson, B. & Stein, B. (2019). Consumer Information in
Higher Education. The Institute for College Access & Success
(TICAS). <a href="http://ticas.org/files/pub_files/consumer_information_in_higher_education.pdf">ticas.org/files/pub_files/consumer_information_in_higher_education.pdf</a>; Morgan, J. & Dechter,
G. (2012). Improving the College Scorecard. Using Student Feedback
to Create an Effective Disclosure. Center For American Progress,
Washington, DC.
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The timing of when applicants receive information about
institutions and programs is critical--data should be available at key
points during the college search process and applicants should have
sufficient time and resources to process new information. Informational
interventions work best when they arrive at the right moment and are
offered with additional guidance and support.\78\ For example,
unemployment insurance (UI) recipients who received letters informing
them of Pell Grant availability and institutional support were 40
percent more likely to enroll in postsecondary education.\79\ Families
who received information about the FAFSA, as well as support in
completing it while filing their taxes, were more likely to submit
their aid applications, and students from these families were more
likely to attend and persist in college.\80\
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\78\ Carrel, S. & Sacerdote, B. (2017). Why Do College-Going
Interventions Work? American Economic Journal; Applied Economics.
1(3) 124-151.
\79\ Barr, A. & Turner, S. (2018). A Letter and Encouragement:
Does Information Increase Postsecondary Enrollment of UI Recipients?
American Economic Journal: Economic Pol

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