DRAFT for discussion purposes 9.6.13

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Methodology for Informational Debt-to-Earnings and Repayment Rate Calculations

To inform the discussion at the gainful employment negotiated rulemaking committee meetings, 

the Department has provided to the negotiators and posted on our website debt-to-earnings and 

repayment rate informational data for gainful employment programs. The following is a 

description of the methodology that was used to create that information. 

Programmatic information (CIP Program Name, CIP Code, Credential Level) associated with 

each debt-to-earnings and repayment rate calculation has been provided in the informational data 

files except in cases where there were fewer than three programs that have the same CIP Code. 

In those instances, to protect the anonymity of the program, CIP Program Name and CIP Code 

are not included. Institutional identifiers (institution name, OPEID, address, state, etc.) have not 

been included in the data files.

*The methodologies used for the informational data calculations depart slightly in some areas 

from the methodology provided in the draft regulation. 

Debt-to-Earnings Rates

annual debt-to-earnings = annual loan payment

annual earnings

discretionary debt-to-earnings = annual loan payment _

 annual earnings − 1.5  Poverty Guideline

• Both the annual debt-to-earnings (aDTE) and discretionary debt-to-earnings (dDTE) rates 

were calculated by program for two cohorts of former students: 1) Title IV aided students 

who completed the gainful employment program between October 1, 2006 and September 

30, 2008 (the 07/08 DTE Cohort), and 2) Title IV aided students who completed the gainful 

employment program between October 1, 2007 and September 30, 2009 (the 08/09 DTE

Cohort). 

• For both Cohorts, rates were not calculated for programs having fewer than 10 students 

meeting the Cohort definitions provided above.

• For the 07/08 DTE Cohort**, the Social Security Administration (SSA) provided, at the 

program level, 2010 calendar year mean and median annual earnings of the members of the 

Cohort. For the 08/09 DTE Cohort, the SSA provided, at the program level, the 2011 

calendar year mean and median annual earnings of the members of the Cohort. For both

Cohorts, the higher of the mean or median was used as the annual earnings component of 

the aDTE and dDTE calculations.
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**The 2010 median annual earnings (at a program level) of students who completed a gainful 

employment program between October 1, 2006 and September 1, 2008 were previously 

provided by the SSA so that the Department could calculate DTE rates when the prior gainful 

employment rule was in effect. For this most recent set of calculations, earnings information 

was requested from the SSA for the subset of the old cohort that received Title IV aid. The 

subset of the original group could only be resubmitted to the SSA if, at a program level, the 

difference in the sizes of the two groups were large enough to meet SSA protocols designed 

to protect the privacy of information regarding the students who were removed. Of the close 

to 6,000 programs that were previously submitted to SSA, over 4,000 did not meet these

protocols and could not be resubmitted. These programs have been excluded from the new 

calculations. Additionally, there were over 5,000 programs that were not previously 

submitted to the SSA because the student count was fewer than the previous rule’s minimum 

program size of 30 but now meet the new minimum of 10 students under the draft 

regulation. With the addition of these new programs and the exclusion of the programs that 

could not be resubmitted to the SSA, informational DTE rates for a total of 5,922 programs 

were calculated for the 07/08 DTE Cohort.

Annual loan payment was calculated by determining the median loan debt for both DTE 

Cohorts and amortizing that median debt amount over a 10-year repayment period using an 

annual interest rate of 6.8% (the interest rate on Direct Unsubsidized Loans at the time of the 

data run). Loan debt includes both FFEL and Direct Loans (except PLUS Loans made to 

parents or Direct Unsubsidized loans that were converted from TEACH Grants), private 

loans, and institutional loans that a student received for attendance in the gainful employment 

program. 

• In cases where students completed multiple gainful employment programs at the same 

institution, all loan debt was attributed to the highest credentialed program and, the student 

was not included in the calculation of rates for the lower credentialed programs. 

• In calculating median loan debt, the loan debt associated with a student was capped at an 

amount equivalent to the program’s tuition and fees if: 1) tuition and fees information was 

provided by the institution, and 2) if the amount of tuition and fees was less than the 

student’s loan debt. This tuition and fee cap applied to approximately 17% of student records 

for the 07/08 DTE Cohort and 15% of student records for the 08/09 DTE Cohort. 

• For the dDTE calculations, the Poverty Guideline is the federal poverty guidelines for an 

individual person in the continental United States as issued by the U.S. Department of Health 

and Human Services. The figures used for the calculations are $11,170 (2012 guidelines) for 

the 07/08 DTE Cohort and $11,490 (2013 guidelines) for the 08/09 Cohort. 

• Excluded from the calculations are students whose loans were in military deferment or who 

were enrolled at an institution of higher education for any amount of time in the calendar 

year for which earnings were retrieved or whose loans were discharged because of disability 

or death.
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Repayment Rates

borrower-based repayment rate = borrowers paid in full  borrowers actively repaying

 borrowers whose loans entered repayment

dollar-based repayment rate = loans paid in full + loans in active repayment 

original outstanding principal balance

 

• Both the borrower-based and dollar-based repayment rates were calculated by program and 

use the outcomes of Title IV aided students who entered repayment between October 1, 2006 

and September 30, 2008 (the 07/08 RR Cohort) on FFEL or Direct Loans received for 

attendance in the gainful employment program.

• For the borrower-based repayment rate, borrowers whose loans entered repayment is the 

number of students, by program, from the 07/08 RR Cohort. Borrowers paid in full is the 

subset of the borrowers whose loans entered repayment who have fully repaid all of their 

loans. Borrowers actively repaying is the subset of borrowers whose loans entered

repayment who, between October 1, 2010 and September 30, 2011, made loan payments 

sufficient to reduce the outstanding principal balance on all of their loans by at least onedollar. 

• For the dollar-based repayment rate, the original outstanding principal balance is the total 

amount of FFEL or Direct Loans owed by students in the 07/08 RR Cohort by program on 

the date those loans first entered repayment. Loans paid in full is the original outstanding 

principal balance of loans by program that have never been in default and that are fully paid. 

Loans in active repayment is the original outstanding principal balance of loans by program 

that have never been in default and, for the period between October 1, 2010 and September 

30, 2011 whose balance was lower at the end of the period than at the beginning. To account 

for negative amortization loans, 3% of the original outstanding principal balance in the 

denominator was added to the numerator.

• Excluded from the calculations are students whose loans were in military deferment or who 

were enrolled at an institution of higher education for any amount of time in the calendar 

year for which earnings were retrieved or whose loans have been discharged because of 

disability or death.