The Department of Education’s Financial Value Transparency and Gainful Employment Regulations to take effect this summer

On October 10, 2023, the Department of Education published final regulations that apply to most educational programs that are eligible to participate in the student financial assistance programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA). These Financial Value Transparency (FVT) and Gainful Employment (GE) regulations are scheduled to be implemented on July 1, 2024.  Recently, the DOE published an overview of the proposed new regulations. 

The proposed rules from FVT and GE aim to improve regulations concerning career-training programs. These changes focus on addressing issues with some educational programs that are supposed to help students secure well-paying jobs but instead leave them with high levels of student debt or earnings that do not improve compared to people who only finished high school. Additionally, the Department of Education wants to make it easier for students to understand the financial costs and benefits of almost all college and university programs that qualify for federal student aid under Title IV of the HEA.

The FVT regulations are designed to improve the quality and availability of information provided directly to students about the costs, sources of financial aid, and outcomes of students enrolled in all Title IV HEA eligible programs. These FVT regulations establish two measures: the debt-to-earnings measure and the earnings premium measure. The regulations also establish performance benchmarks for each measure to determine whether the program may have adverse financial consequences to students.

The GE regulations establish an accountability framework for GE programs that use the same earnings premium and debt-to-earnings measures to determine whether a GE program remains eligible for Title IV HEA funds. These requirements can affect program eligibility and apply only to GE programs.

Summary of the significant requirements in the FVT/GE regulations

The regulations generally –

• Define a student, for the purposes of the FVT/GE regulations and the disclosure regulations under the HEA, as an individual who received Title IV funds for enrolling in an educational program.
• Define a “qualifying graduate program” as a graduate program in which students must complete required post graduation training to enter certain occupational fields, where at least half of the program’s graduates obtain licensure in a state where those training requirements apply, and that meets necessary accreditation requirements for licensure. For such programs, the DOE will use a standard cohort comprised of graduates who completed the program in earlier award years than are used for the cohorts of completers for other programs. This will result in earnings being measured a longer period of time after graduation, giving completers time to finish their postgraduation training and begin their careers.

The FVT regulations –

• Require institutions to report information about students who enrolled in each of the institutions’ Eligible Non-GE programs and GE programs (defined as all non-degree programs (e.g., certificate programs, diploma programs) that lead to recognized credentials at public and private nonprofit institutions are GE programs except for CTP programs (defined below) and prison education programs) to enable the DOE to calculate the program’s debt-to-earnings (D/E) and earnings premium (EP) measures and other information that institutions may be required to disclose or the DOE may disclose.
• Exclude students from consideration in either measure if they are enrolled in  comprehensive transition and postsecondary (CTP) programs, prison education programs, or programs or coursework that do not lead to a recognized credential.
• Exclude students from consideration in either measure if they qualify for total and permanent disability or if they have died.
• Establish D/E rates that compare the amount of debt program graduates incurred to attend that program to the discretionary and annual earnings of graduates after completing the program.  Two D/E rates are calculated, one based on annual earnings and one based on discretionary income.
• Establish an EP measure that evaluates the extent to which a graduate of a program out-earns the median annual earnings of individuals with only a high school diploma or equivalent in the same state the program is located, or nationally, if 50 percent or more of the students in the program were located outside that state.
• Provide that for the first six years the regulations are in effect, institutions may choose whether to report student-specific data either using the standard methodology (requiring data for several recently completed award years) or a transitional methodology (requiring data from only the two most recently completed award years).
• Require the DOE to establish a website to disclose to current and prospective students information about the institutions’ Eligible Non-GE programs and GE programs.
• Require prospective students to acknowledge having seen the information on the DOE’s  website if a non-degree or graduate-level program has failed the D/E rates before entering an enrollment agreement with an institution.

The GE regulations –

• Provide that a GE program loses Title IV eligibility if it either fails the D/E rates measure in two out of any three consecutive award years for which rates are calculated or the EP measure in two out of any three consecutive award years for which rates are calculated.
• Provide the opportunity for an institution to appeal a GE program’s loss of eligibility solely on the basis of a miscalculated D/E rate or earnings premium.
• Establish a three-year period of ineligibility for failing GE programs that have been voluntarily discontinued or withdrawn from Title IV eligibility by an institution, or that lose eligibility as a result of failing the D/E rates or EP metric, during which the DOE will not approve a substantially similar program in the same 4-digit CIP code range as the failing program.
• Require institutions to provide warnings to current and prospective students for GE programs that are at risk of a loss of Title IV eligibility due to having failed one of the metrics in one of the two most recent award years for which the program received metrics, content and delivery of which to be specified by the DOE, and provide that students must acknowledge having seen these warnings before the institution may enter into an enrollment agreement with the student or disburse any Title IV funds.

Reporting Deadlines

• Institutions will have the ability to start reporting FVT/GE data through a new DOE system starting July 1, 2024.
• Institutions will have until October 1, 2024, to provide all required reporting.
• Following the initial reporting, institutions must report data annually by October 1 following the end of the award year (e.g., October 1, 2025, for the 2024-2025 award year), unless the DOE establishes a different reporting date.