Issue Paper 2

Session 2: February 5-8, 2018

Issue: D/E Rates

Statutory cites: 20 U.S.C. § 1221e-3; 20 U.S.C. § 3474; 20 U.S.C. § 1231a; 20 U.S.C. 

§§ 1001(b)(1), 1002(b)(1)(A)(i), (c)(1)(A); 20 U.S.C. § 1088(b)

Regulatory cites: 34 CFR §668.403 

Summary of 

Changes: We propose to amend section 668.403 so that programs are no longer 

considered to be “passing” or failing” based on their debt-to-earnings rates. Instead, we propose 

to refer to programs as “acceptable” if they meet the established standards, and “lowperforming” if they do not meet the established standards. We also propose to remove the 

concept of a “zone” from the regulations. Finally, we propose to remove the provision that a 

program is no longer eligible to participate in the title IV, HEA programs based on poor debt-toearnings rates. We also propose that if the Secretary does not calculate or issue D/E rates for an 

award year, an educational program would disclose the program’s D/E rates for the previous 

year. 

§668.403 Gainful employment program framework.

(a) General. A program provides training that prepares students for gainful employment in a 

recognized occupation if the program—

(1) Satisfies the applicable certification requirements in §668.414; and

(2) Is not an ineligible program under the D/E rates measure.

(b) Debt-to-earnings rate framework.

(a) Debt-to-earnings rates (D/E rates). For each award year and for each eligible 

GEeducational program offered by an institution, the Secretary calculates two D/E rates, the 

discretionary income rate and the annual earnings rate, using the procedures in §§668.404 

throughand 668.406.405. 
(c) Outcomes ofb) Comparison threshold for the D/E rates measure. (1) A GE An 

educational program is “passing” the Dconsidered to have an acceptableD/E rates measure if—--

(i) Its discretionary income rate is less than or equal to 20 percent; or

(ii) Its annual earnings rate is less than or equal to eight percent.

(2) A GE An educational program is “failing”deemed to be a low-performing program 

under the D/E rates measure if—--

(i) Its discretionary income rate is greater than 3020 percent or the income for the 

denominator of the rate (discretionary earnings) is negative or zero; and

(ii) Its annual earnings rate is greater than 128 percent or the denominator of the rate 

(annual earnings) is zero.

 (3) A GE program is “in the zone” for the purpose of the D/E rates measure if it is not a 

passing GE program and its—

(i) Discretionary income rate is greater than 20 percent but less than or equal to 30 percent; 

or

(ii) Annual earnings rate is greater than eight percent but less than or equal to 12 percent.

(4) For the purpose of the D/E rates measure, subject to paragraph (c)(5) of this section, a 

GE program becomes ineligible if the program either—

(i) Is failing the D/E rates measure in two out of any three consecutive award years for 

which the program's D/E rates are calculated; or
(ii) Has a combination of zone and failing D/E rates for four consecutive award years for 

which the program's D/E rates are calculated.

(5) If award year that the Secretary does not calculate or issue D/E rates for a program for 

an award year, theeducational program receives no result under the D/E rates measure for thatan

award year and remains inpursuant to §668.404(f), the same status underinstitution discloses the 

program’s D/E rates measure asfor the previous award year; provided that if the Secretary does 

not calculate D/E rates for the program for four or more consecutive award years, the Secretary 

disregards the program's D/E rates for any award year prior to the four-year period in 

determining the program's eligibility., if available.

(Authority: 20 U.S.C. 1001, 1002, 1088)