Universal Mentors Association

Regulations would give Ed Dept. more authority to yank financial aid access


Colleges and universities and those representing them in Washington, D.C., are concerned about a set of proposals from the Education Department that could potentially usher in a new era of accountability for all types of programs.

Under the plan, the department would report more data about all programs on students’ debt loads and earnings and could potentially use that information to revoke an institution’s eligibility to access federal financial aid. Colleges and universities generally support the new transparency requirements but say the other aspects are vague and subjective.

Supporters of the department’s plans say the additional program-level data will be useful in seeing how students fare after college and that more accountability is needed for all programs.

The deadline to submit comments on the plan is today.

Higher education experts and lobbyists see the department’s proposals, which require institutions meet new conditions to access federal financial aid, as a step toward creating a federal rating system that would identify poor-performing programs, building on the administration’s plans to create a list of programs it says provide a low financial value to students.

The Biden administration is proposing to calculate and report whether students can afford their yearly debt payments and that they are making more than an adult who didn’t go to college for all postsecondary programs with more than 30 graduates or completers. Only those programs at for-profit institutions as well as nondegree programs in any sector could lose access to federal financial aid if they fail either of the tests in two consecutive years under the new proposed gainful-employment rule.

However, under a separate section of the regulations, the education secretary could consider how a program fared on those gainful-employment tests when deciding whether to end an institution’s eligibility for federal financial aid. Some experts questioned the department’s authority to carry out that change.

“The secretary is going to come in and you’re up for Title IV and you don’t know what they’re going to do,” said Sarah Flanagan, vice president for government relations and policy development at the National Association of Independent Colleges and Universities. “They can take any of these things and pull the Title IV plug on you. If you pull the Title IV plug, your school’s going to close. This is not a minor thing.”

Title IV of the Higher Education Act of 1965 authorizes federal financial aid programs.

The department said in the draft regulations that the proposed metrics provide useful information on the value of an institutions’ programs and student outcomes.

“To safeguard the interests of students and taxpayers, we believe it is important that the department consider this information when making decisions about whether to certify or condition an institution’s Title IV, HEA participation,” the regulations say. “Codifying these supplemental performance measures would also provide additional clarity and transparency to institutions regarding the types of information the department will likely consider when making certification decisions.

The proposed changes are part of a sweeping, 1,000-page package of regulations released last month that includes new eligibility requirements for Title IV funding and rules for financial responsibility and administrative capability.

What concerns Flanagan and others about the proposed supplemental performance measures is that those terms don’t have standards, making it difficult for institutions to figure out whether they are compliant. For example, the secretary will be able to consider how much an institution is spending on instruction, academic support and support services, recruiting, advertising, and other expenditures.

“There’s nothing that tells me what’s the standard that I need to meet to pass,” she said.

Aaron Lacey, a lawyer who leads Thompson Coburn’s higher education practice, said the department’s proposal would increase risk for institutions in that the changes make it easier for the department to take action against them. The regulations feed into a larger two-year effort that he sees from the department to build a stronger accountability system.

“All of that is about codifying the department’s discretion and giving it more flexibility to place institutions on provisional certification or to request letters of credit, which sounds great when you hold the stick, but it’s a little shortsighted,” he said. “I think creating regulatory frameworks that diminish the due process of the regulated community is always a risky gambit.”

Lacey said there are “no shortage of legal issues” with the proposed regulations, adding that he’s not against any accountability.

“But the problem is just the devil’s in the details,” he said. “There are a lot of things that are being proposed here that have very real potential consequences, and they’re not really thought through.”


Emmanual Guillory, senior director of government relations at the American Council on Education, said the “writing was on the wall” that the administration was going to take action to increase transparency about all programs.

He said he was shocked last spring when he saw a version of the proposal, which at the time was only focused on career education and nondegree programs.

“If those programs failed, the department would be able to remove their [program participation agreement]. I was like, ‘Are you kidding me?’” Guillory said. “But now, it’s all programs, so it’s still concerning as it has been. Our biggest question that we have with it is where’s the authority coming from for them to do that?”

He said that he understands that the department’s goal is to protect students, but he has several questions and is worried about unintended consequences. ACE is seeing more clarity on a range of provisions, from changes related to state consumer protection laws to the reporting requirements and making sure that institutions have enough capacity to comply.

“With it being now on every single program, that’s just an increased responsibility on the institutions when it comes to having to comply,” he said.

To Flanagan, with NAICU, the department’s proposal seems “insensitive” to what’s happening on college campuses right now.

“They’re still not recovered from the pandemic,” she said. “Students have incredible learning loss. Students are having this food insecurity. Faculty, staff and administrators are absolutely exhausted. The federal money has run out. Enrollments are down. Low-income students have bigger gaps than ever before, and people are trying to shift the resources that they have on campus as much towards those needs as possible. All of a sudden you have this big weight dropping.”

She later added, “I’m not sure that all of us in Washington can fully understand the incredible pressures going on on campuses right now.”

Flanagan said making sure that students understand the consequences of debt is important, but the department is proposing to do more than just inform students. She’s worried that first-generation and low-income students would be discouraged from pursuing a postsecondary education because of the department’s focus on debt and earnings.

“It trips a lot of the value wires, and they’re trying to do an immediate snapshot of one number and then it’s going to send a signal that is way beyond what that one number can tell you,” she said. “I don’t think there are any simple solutions to this, but whenever we try to come up with simple solutions, the question is: Does it do more harm than good?”

More Program-Level Information

Through all the changes in the proposed regulations, the Biden administration wants to protect students from winding up with unaffordable debt. Officials see more information as a key way to do that.

That’s why the Education Department wants to create a new website separate from the College Scorecard that would include information on the program costs, nonfederal grant aid, student debt and earnings of completers, and licensure pass rates, among other data points. The department will calculate debt-to-earnings rates and data on the earnings premium metric and report that information on the website.

Historically, the department has only calculated debt-to-earnings rates for those programs subject to gainful-employment requirements.

Michelle Dimino, deputy director of education at Third Way, a center-left think tank, said the proposed financial transparency framework makes sense. Third Way and others recommended earlier this year that the department use the gainful-employment metrics to determine whether a program provides a low financial value.

“I think making that information available and having that level of interaction where a student has to attest to having seen that before getting grants or loans to go to a program that fails one of those tests, that’s really significant,” she said. “That’s a real step forward in providing students with actionable information that they’re wanting to be able to consider when they’re choosing a college.”

About 1.3 percent of postsecondary programs not subject to gainful-employment rules would fail either of the tests outlined in the proposed regulation, according to an analysis of department data.

Nicholas Kent, chief policy officer at Career Education Colleges and Universities, said that the department’s data released with the proposed regulations highlight the need to hold all programs to the same standards.

“We see in that spreadsheet for the first time a lot of public and nonprofit programs that are failing, and it’s just astonishing to us,” he said. “That you can literally set two of the same programs next to each other with the same exact outcomes, and one will lose eligibility for Title IV and the other will not. That is not what Congress had in mind when they passed the HEA.”

CECU, which represents for-profit institutions, has recently stepped up its calls for the department to apply gainful-employment rules to all programs. Other Republican lawmakers have begun to echo that call, saying that all programs should be held to the same standards.

Kent said that the notion that the department doesn’t have the authority to apply the gainful-employment rule to all problems is “disingenuous.”

“The characterization of what is in front of us is like the canary in the coal mine where the proprietary institutions are the canaries,” he said. “The department is saying that all of this data is really important and that it’s important for students and families and taxpayers to see what programs are paying off and which ones are not. Yet they’re letting the for-profit schools go forward to see how the rule will actually impact them.”

Potential Impact

For programs that fail the debt-to-earnings test, students will have to sign something that acknowledges they saw the information. Creating that acknowledgment form and ensuring students sign it will be the institution’s responsibility. A similar requirement is not in place for the earnings premium, because the department said the non-GE programs “are more likely to have nonpecuniary goals.”

Rachel Fishman, acting director of education policy at New America, a left-leaning think tank, said requiring students to sign a disclosure form could give the policy change some teeth.

“I think for the institutions that have failing programs, it’s not going to feel good to tell students to actively attest to something that enrolling in this program means there’s a good chance they can’t pay their loans back and there’s a good chance that their earnings would be really low,” she said.

Robert Kelchen, professor and head of the educational leadership and policy studies department at the University of Tennessee at Knoxville, said required disclosures could have an effect on students.

“Required disclosures about things like graduation rates haven’t been terribly effective in the past, because a lot of students think that they’re going to do better than average,” he said. “Will that hold for something like debt and earnings? I don’t really know.”

Still, he said the additional reporting requirements and data on programs will give colleges information they didn’t have before. His research on a previous version of the gainful-employment rule found that institutions opted to close some programs that failed the first round of tests. The federal government never actually shut down programs under the 2014 gainful-employment rule, which the Trump administration rescinded.

“Some of it is responding to information and some of it is embarrassment,” he said. “A perpetual question about gainful employment or any of these accountability metrics is will the federal government actually be willing to use them to shut down programs or colleges? Historically, the federal government has backed down when push comes to shove there.”

Kelchen added that the broader changes to certification of Title IV eligibility raise questions about the department’s bandwidth to carry out the regulations and how much the seesaw across administrations will affect institutions.

Kelchen sees the department’s proposed financial transparency framework and the other changes in the regulations as creating a version of a ratings system.

“But this was essentially what was proposed 10 years ago, except it’s at the program level instead of at the institutional level,” he said. “Unlike 10 years ago, the data infrastructure exists for this already.”

Kelchen thinks that the focus on programs instead of entire institutions will make the regulations “easier to swallow now.”

“There’ll be pushback from programs saying there are things you can’t measure about our program’s value,” he said. “It’s some of the same arguments that the for-profits have used on gainful employment.”


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