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Gainful Employment Negotiations Day 1 Liveblog

Published:  September 9, 2013

The U.S. Department of Education kicked off its first day of negotiation sessions on how to define what it means to provide a program of training designed to lead to "gainful employment in a recognized occupation." The morning was spent mostly with logistical issues, with the only highlights being the rejection of attempts to add three more members to the committee from a Florida law school, the Chamber of Commerce, and Bridgepoint University. A summary of the regulatory text under consideration is here.

Here are links to liveblogs from Day 2 Morning, Day 2 Afternooon, and Day 3.


Here's the order of items for discussion that the panel hopes to cover by the end of midday Wednesday:

  1. Department overview
  2. Upfront Eligibility
  3. Department accountability metrics (should they be phased in?)
  4. Other accountability metrics
  5. Consequences (including for students)
  6. Data correction, challenges, appeals
  7. Reporting requirements
  8. Disclosure requirements
  9. Approval of new programs
  10. Other
  11. Recognition and rewards--exceptional performance
  12. Conforming regulatory changes--second session

What follows are occasional updates on what's going on at the negotiation sessions, which will not have a transcript or audio recording produced.

1:55 p.m. Upfront Eligibility Requirements?

After a quick synopsis of the Department's proposed regulatory language, which Higher Ed Watch covered last week, the first new idea comes from Barmak Nassirian, who is representing public four-year institutions on behalf of AASCU. His argument is that gainful employment is not just a backwards looking requirement, but also something that should have upfront requirements as well so that programs cannot start up "willy nilly" and then wait for us to find out later whether they are providing gainful employment. He highlights concerns with sitting back while letting programs experiment, kicking them out post facto and then "saying to the victims 'good luck.'"

Brian Jones, the general counsel at Strayer University, pushes back on Nassirian's idea saying that the Department already does engage in a lot of upfront checking and that Strayer cannot just start up a new program option right away. He cites the rigor of Strayer's accreditor, Middle States, as a sign of how hard it is to start new offerings.

Nassirian responds saying that none of the accreditors do a specific assessment of what gainful employment means beyond what they already do for approving a new program.

2:05 p.m.

Jones continues to discuss how Strayer evaluates its programs upfront in response to a similar line of questioning on what upfront checks should be done by Della Justice, from the Kentucky Attorney General's office. One of his points is that Strayer may be different from a more occupationally focused provider. This tracks with similar arguments Strayer had made in its comments, which argued that Strayer more closely resembles a traditional institution than one with a more short-term focus on strict vocations.

Justice also brings up a question about what goes into the program participation agreement and whether that might provide a way to get at this issue.

Kolotos weighs in--says the Department uses the program participation agreement as a way of affirming that an institution is offering the programs it says it is, but does not look beyond the details of agreement.

2:15 p.m. Still on Upfront Eligibility

The upfront discussion has been going on for about 20 minutes now, but it's still largely conceptual. Kolotos asks Nassirian for more details on what he's actually proposing.

Margaret Reiter, who is representing consumer advocacy organizations, suggests talking about the need for programmatic accreditation. She also suggests having schools do a survey of expected wages and what's being charged. She also closes with a question that takes the idea of debt-to-earnings ratios a step further to ask whether it is gainful employment to prepare someone for a job that earns minimum wage, poverty level income, or 150 percent of poverty.

2:22 p.m. Do we need to define gainful employment?

Raymond Testa, who is from Empire Education Group, which runs some beauty schools, questions whether there should be a need to define gainful employment. He notes that it's two words and has been around for a long period of time. This is the second formal concern raised about the idea of doing a regulation to define gainful employment entirely. The first came this morning from Belle Whelan, the president of the Southern Association of Colleges and Schools Commission on Colleges. He notes that beauty schools have been required to deal with licensing and placement issues for a long time anyway.

Testa continues with concerns about the ability of students to borrow beyond what his schools can control. This is a common argument raised last time this rule was debated. The Department responded to it by allowing programs to limit debt to the amounts of tuition and fees. That cap was taken off in the Department's proposal.

2:37 p.m. A reminder of the court's ruling

For what it's worth, the question of whether the Department could define the phrase "gainful employment" even though it's been on the books for a while is something that the court did consider when the rule produced in 2011 was challenged. In that ruling, Judge Rudolph Contreras noted that the gainful employment phrase was a place of statutory ambiguity where the Department did have the authority to provide a definition. Obviously all parts of a court's decision could be challenged again, but this was addressed in the last go around.

2:40 p.m. Moving on

Nothing has been decided, but there's a desire from the moderator to move on to other issues. Kolotos suggests that the upfront eligibility issue can be addressed again when the new programs issue comes up.

2:45 p.m. Department Accountability Metrics

We've moved on to the discussion of the accountability metrics. And Kolots starts by emphasizing the period of time looked at. It's the period of time for people in the third and fourth years after entering repayment. This means measures for 2014-15 would be people who completed in 2010-11 or 2011-12. The exception is medical or dental programs with a residency, which aren't measured until six or seven years out.

Kolotos also clarifies what it takes to fail. The first is pretty clear--fail to meet the standards on both metrics for two years in any three-year period. The second is to be in the middle zone for four straight years. This was strongly implied by the language, but had been a bit confusing due to how the langauge was drafted.

2:50 p.m. Clarifying questions

There are a couple of clarifying questions from various negotiators:

Question--Now that the proposal is to use 10 completers, do those have to be broken down by any particular amount in a given year? In other words, can it be seven grads one year and three the next? Kolotos clarifies that it's any combination that adds up to 10.

Richard Heath from Anne Arundel Community College asks what a college could actually do to improve a program, noting they can't control borrowing, don't have placement offices. Kolotos responds that you can lower the cost of programs so that debt students take on can go down, among other changes.

Heath continues with concerns about students over borrowing or coming in with lots of debt from other programs. The second issue should not be a concern, Kolotos notes, because debt incurred for other unaffiliated schools are not considered for debt-to-earnings rates.

3:00 p.m. A different take from Monroe College

Marc Jerome, who is from Monroe College in New York and represents that state's proprietary colleges, returns to the question of what it could do in response to failing. Jermone notes that he does believe the debt-to-income information is totally relevant, saying it is what they do and they don't want students to take on too much debt. But he is concerned that the rates are too retrospective. Says that the change they've implemented in overborrowing would not affect students who already finished. Said Monroe lowered cost of attendance, will not enroll a student with too much prior debt if they do not think the degree will pay off. Jerome wants ability to go back and lower the debts of all incoming students to "make the programs accomplish what they want instead of having a penalty that actors with bad intentions will figure out how to get around."

"I consider this regulation by hijack," he continues. Jerome mentions how he's concerned that they cannot see the income data underlying the measures. He asks for them to just be told if they are providing too much debt and not enough salary so they can start doing what needs to get done.

3:05 p.m. Alternative details needed

Jerome finishes up a strong critique of the debt-to-earnings ratios in terms of how they are calculated by calling for another path, but when he pressed by the moderator he says they have six days to figure out what that path would be. This is a common issue that seems to be coming up today--negotiators are raising new philosophical ideas, but there's very little in the way of specific content to debate. As a result, it creates a lot of individuals talking past each other or not engaging in the kind of nitty gritty details discussion that's probably going to be needed to come to any sort of consensus.

3:10 p.m. Further pushback on how to improve

Kevin Jensen, from the College of Western Idaho, also pushes on the idea of what a program can really do to improve if it has Pell eligible students getting additional waivers or aid that makes the program free. At that point, the only thing they could do is improve earnings. He calls for ways to show that programs are improving.

3:15 p.m. What about the community colleges?

We're still ping-ponging around without much getting decided, but Margaret Reiter weighs in with another issue that came up last time--what to do about programs with low incidence of borrowing. She cites how the exclusion of students who do not get Title IV aid will now hurt community colleges that have low rates of borrowing.

She then returns to a point that she had raised earlier about the need to phase in levels. She suggests how the 8 percent and 20 percent threshold that had been suggested as the "passing" level is actually the maximum that a student is supposed to take on. Therefore, she argues that the Department can start at that higher level of 30 percent and 12 percent, but should phase up to the higher one. She closes with a question about why the Department didn't use a family size of more than one to determine what the discretionary earnings level should be.

Kolotos notes that they do not have the size of the family at the time data are sent to the Social Security Administration. While that information is on the FAFSA, the individuals' circumstances considered may have changed in the years since graduation. He doesn't categorically reject this idea, but it seems unlikely that the Department would alter its stance here.

3:20 p.m.

Nassirian, the most quotable man in higher education, throws out this gem: "Looking at it from the outside ... it looks like the Department is almost grasping at straws, picking numbers and putting gigantic fudge factors" in conservative process concerns for its constituents, the schools. He notes that this is like looking at the night sky, because we are looking at the past. But does say he would agree with Jerome if the measures were so nuanced that the slightly deviation from the perfect penalized people, but he says the fudge factors are already so generous that it's only a consideration of the worst of the lot. He suggests some other penalties for being in the zone--caps on executive salaries, letters of credit, no dividends for publicly traded organizations. He calls the acceptable level thrown out by Sandy Baum as the "entrance to purgatory" in the Department's idea.

Jerome says he will have a formal proposal out tonight that will affect students, lower debt, and in the way lower institutional revenue.

3:50 p.m. Back from snack break

Eileen Connor from the New York Legal Assistance Group echoes a call made earlier by Rory O'Sullivan to focus on just the median earnings of students and not use either the mean or median since that makes it harder to compare across schools.

Raymond Testa challenges the Baum paper, saying that it actually says the 8 percent standard is potentially problematic. He instead argues for using 13.8 percent based upon what Mark Kantrowitz said is the point at which debt burden affects default. He also says the Department is not consistent in its expectations for loan debt as share of income, since income-based repayment allows for 10 percent of income [note: that figure is discretioanry, not annual]. Testa challenges the exclusion of non-Title IV students and the reduction in the cohort size from 30 to 10 on the grounds that it's too small. He does like the mean vs. median usage because at smaller cohorts it has big effects. For those reasons, he cals for using mean or median debt as well. Testa says that even if it can't store the info on non-Title IV recipients, but since the school have the ability to calculate that debt for all completers it should be used. Finally, he notes, that the trailing earnings figure means that businesses don't know what target to hit, so argues for using Bureau of Labor Statistics data instead because it is a real number that can be identiified.

4:20 p.m. Overborrowing?

The discussion of overborrowing has been going on for a while now, with arguments coming from both sides about how often it does or does not occur. It's speaking to the fact that there's a philosophical question about what role colleges and the federal government should have in helping people deal with the non-direct academic expenses that stand in the way of finishing. It's clear that for some people, the need to find other sources of aid to cover living expenses so they can go at a greater intensity than they otherwise would. But unlike tuition and fee charges it's less clear what that amount is, since living expenses can vary depending upon housing situation, transportation expesnes, etc. This likely speaks to broader work that needs to be done on how to handle cost of attendance calculations. One negotiator noted that the school does set out the cost of attendance, so that figure is some of their responsibility. Jerome responds by noting that some students may have housing covered, but still borrow. Unfortunately, there's little in the way of data being discussed here and it's mostly anecdotal.

4:30 p.m.

Rhonda Mohr, an alternate negotiator from the California Community College system, raises the idea of tying annual borrowing amounts more to attendance status. This is an important point. Pell Grants vary depending on your attendance status once you get above half time. Loans do not. Once you exceed six credits, you can take out the full amount. The result is the opportunity to borrow a great deal with little academic momentum. It's unclear how much this occurs, but it is something that gets raised a lot anecdotally.

4:40 p.m.

Kevin Jensen from the College of Western Idaho throws out the idea that some sort of borrowing rate should be used to decide whether programs should be either considered passing or exempted.

Nassirian agrees that he thinks it's OK to have an out for people who showed up to borrow and live off money that goes beyond. But he wants the behavior of the institution prior to the student showing up to be considered.

Jack Warner from South Dakota calls for a repayment rate that could act as a trigger for gainful employment and debt-to-earnings ratios, but have the issue start with a defensible rate of repayment for students that are borrowing. The call is if a loan repayment rate is less than 75 percent, then it should trigger these metrics. He says a reasonable rate of repayment is a trigger, with consequence being that a whole cluster of other metrics come into play that you would otherwise be exempted from.

4:50 p.m. That's a wrap

No one from the peanut gallery wants to weigh in and that wraps up the session. Back tomorow at 9 a.m.


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