Authors: Sally Samuels and Tom Netting

Issue Paper 1 – Ability to Benefit

Department’s Primary Goal: Establishment of State Process for Review of Eligible Career Pathways Programs (ECPP)

Outcome: Consensus Reached

Summary:  Following revisions to the Eligible Career Pathways Program (ECPP) State process for institutional assessment during the initial two-year assessment and on-going assessment over a five-year period and revisions to make the ECPP regulations and integrated education and training programs consistent consensus was supported by the Committee.

Comments:  Adoption of the proposed regulations should make it easier for institutions, with a state process for a career pathway program to understand the actual requirements.

 

The big question is – Will the States embrace the new responsibilities it would require them to fulfill in order to provide institutions serving students without a high school diploma or GED access under the ECPPs?

 

Issue Paper 2 – Administrative Capability

Department’s Primary Goal:  Addition of Six New Essential Review Criteria

Outcome: No Consensus Reached

Summary:  Had the Department attempted to review each of the six proposals individually instead of adoption of the entire group of proposals as a whole, several of the additions would have been supported by the Committee (e.g. Clinical/Externship, Validation of High School Transcripts, and Gainful Employment).  However, when requested to vote on all of them together concerns and opposition were expressed on topics including new Career Service Assessment, Timely Disbursement of Federal Aid, and Misrepresentation and Aggressive Recruitment proposals.

Comments:  In each of the five areas where consensus was not achieved, the Department now have the authority to write the regulation as it sees fit – informed by the negotiations – and publish their proposals for public comment in a Notice of Proposed Rulemaking (NPRM).  Hopefully the Department’s proposals won’t make things harder for institutions to comply with. It will not be in the best interest of our industry.

 

Issue Paper 3 – Gainful Employment

Department’s Primary Goal:  Re-establish & Update Federal Gainful Employment Regulations

Outcome: No Consensus Reached

Summary: Despite requests from negotiators representing all perspectives to use the 2014 regulations as the foundation for re-introduction and revision regulations requiring specific programs to meet earnings assessments, the Department chose to propose regulations that simply could not be supported by the effected institutions.  Key issues of opposition include but are not limited to the addition of a new Earnings Threshold measure (comparing the earnings of GE programs to the state and national high school earnings data), restrictions on the passing thresholds used to determine annual and discretionary debt-to-earnings (D/E) criteria, revisions to the equations used to determine D/E determinations (including proposals to limit the earnings and increase the debt), and so much more.  Given the multitude of concerns and the Department’s lack of flexibility in responding to alternative proposals, the package as a whole was opposed.

Comments:  GE will be major issue for our schools.

 

The debt-to-income rates of 8 and 12 will be difficult for many of them to meet.  Use of a 4-digit CIP code (classification of program) will lump many like programs into the same bucket (cosmos., nails, barbering, esthetics, etc. into one group) so if one program fails, they could all fail.  Requiring just the median annual earnings and addition of Parent PLUS loans as debt combined will make it harder for all programs to achieve a passing score.  And finally, the newly introduced Earnings Threshold measure is highly problematic as well.

 

If the Department’s NPRM contains all of these, and their mindset isn’t changed during the comment period, potentially many schools could lose Title IV eligibility in the next few years.

 

Issue Paper 4 – Financial Responsibility 

Department’s Primary Goal: To Enhance the Criteria Used to Assess Institution’s Fiscal Risk

Outcome: No Consensus Reached

Summary:  The Department proposed a series of revisions and addition to both the mandatory and discretionary triggers used to assess the fiscal status of institutions participating in the Federal Student Financial Aid Programs.  Concerns with many of the proposals were expressed by individuals representing the institutions of higher education community, but the only dissenting vote when it came time to determine consensus came from the proprietary institution of higher education representative.

Comments:  Once again, the Department is at liberty to include whatever language they want to achieve the ultimate goal of protecting federal funds. These financial triggers would require more schools to end up on HCM1 and increased letters of credit for the financial triggers.

 

Issue Paper 5 – Changes In Ownership

Department’s Primary Goal: Constrain Transitions from For-profit to Non-profit Educational Status and Strengthen Review of Changes of Ownership/Control

Outcome: No Consensus Reached

Summary: While concerns were raised with the Department’s efforts to obtain greater financial information and shorten the submission process for review and determinations of Change of Ownership/Control; the two primary areas of dissent within this package were based upon the ramifications of the Department’s proposed changes to the Definition of a Non-Profit Institution and new Distance Education requirements that the Department had a hard time justifying.

 

Ultimately it was the other sectors of the higher education institutional community, as well as others, who opposed consensus on this issue paper.

Comments:  The Department’s proposals would make it almost impossible for an institution to switch from a for profit to not for profit, for three years institutions seeking to convert would still be subject to for profit rules and if the switch was made would eliminate any involvement of the prior principles in the new not for profit. Requiring the corporate principles to sign the PPA and be financially responsible is also a problem.

 

Issue Paper 6 – Certification Procedures

Department’s Primary Goal:  To Enhance the Provisional Certification and Program Participation Agreement Requirements

Outcome: No Consensus Reached

Summary:  Throughout the negotiations a growing list of new assessment criteria were proposed to be added to the Secretary’s review under the Program Participation Agreement.  By the end of the negotiations the issue paper failed to obtain support due to these additions.  Key areas of serious concern for our community are the Department’s efforts to limit the title IV eligibility for programs leading to licensure to unrealistic benchmarks which harm students and institutions and revisions to the state authorization requirements that could undermine the existing NC-SARA process.  Other topics where opposition was clear included Withholding of Transcripts for Failure to Pay Institutional Debt Obligations and Inducements To Limit Student Aid Access.

Comments:  If the NPRM includes all of the proposals it will be very disconcerting.

 

Elimination of the ability to use NC-SARA for DE programs is a major concern (as it will be very difficult to get the process and rules from each state the institution might enroll students from).

 

Limiting length of programs that require licensure, which would also supplant the 150% rule now in place, is extremely problematic. Schools could have a state licensing requirement of 1800 hours, but only be allowed to fund 1200 hours, if that is the national average. Cosmetology programs would be affected the most.

 

Issue Paper 7 – 90-10

Department’s Primary Goal:  Implement Revisions to the Definition of Federal Education Assistance Funds Under the 90/10 Rule

Outcome: Consensus Reached

Summary:  Working behind the scenes throughout the entire week of Session 3, our community’s representatives and the Department (along with support from various national and state organizations/associations, industry partners, the House and Senate Education Committee leaders who wrote the statutory revision to the definition, and other advocates) worked on compromise language that aligned with the intent of Congress.

 

While our community initially opposed the Department’s efforts to go beyond the new statutory authority given to the Secretary with respect to making revisions to what is counted as revenue.  The determination was made that it would be better to work with the Department to set parameters that we could live with on the revenue side, while limiting the eligible Federal funds on the other side of the equation.

 

While not a perfect outcome, the compromise prohibits the Department from having carte blanche to write the new regulation as it otherwise may have attempted to do.

Comments: While the negotiated compromise is far from perfect, it is something we can live with and most schools with planning will still be able to comply, even though it only affects the for profit sector.