[Federal Register Volume 83, Number 157 (Tuesday, August 14, 2018)]
[Proposed Rules]
[Pages 40167-40183]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17531]


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DEPARTMENT OF EDUCATION

34 CFR Parts 600 and 668

[Docket ID ED-2018-OPE-0042]
RIN 1840-AD31


Program Integrity: Gainful Employment

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to rescind the gainful employment (GE) 
regulations, which added to the Student Assistance General Provisions

[[Page 40168]]

requirements for programs that prepare students for gainful employment 
in a recognized occupation. The Department plans to update the College 
Scorecard, or a similar web-based tool, to provide program-level 
outcomes for all higher education programs, at all institutions that 
participate in the programs authorized by title IV of the Higher 
Education Act of 1965, which would improve transparency and inform 
student enrollment decisions through a market-based accountability 
system.

DATES: We must receive your comments on or before September 13, 2018.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments submitted by fax or by email or those submitted after 
the comment period. To ensure that we do not receive duplicate copies, 
please submit your comments only once. In addition, please include the 
Docket ID at the top of your comments.
    <bullet> Federal eRulemaking Portal: Go to www.regulations.gov to 
submit your comments electronically. Information on using 
Regulations.gov, including instructions for accessing agency documents, 
submitting comments, and viewing the docket, is available on the site 
under ``Help.''
    <bullet> Postal Mail, Commercial Delivery, or Hand Delivery: The 
Department strongly encourages commenters to submit their comments 
electronically. However, if you mail or deliver your comments about the 
proposed regulations, address them to Ashley Higgins, U.S. Department 
of Education, 400 Maryland Ave. SW, Mail Stop 294-20, Washington, DC 
20202.

    Privacy Note: The Department's policy is to make all comments 
received from members of the public available for public viewing in 
their entirety on the Federal eRulemaking Portal at 
www.regulations.gov. Therefore, commenters should be careful to 
include in their comments only information that they wish to make 
publicly available.


FOR FURTHER INFORMATION CONTACT: Scott Filter, U.S. Department of 
Education, 400 Maryland Ave. SW, Room 290-42, Washington, DC 20024. 
Telephone: (202) 453-7249. Email: <a href="/cdn-cgi/l/email-protection#becdddd1caca90d8d7d2cadbccfedbda90d9d1c8"><span class="__cf_email__" data-cfemail="80f3e3eff4f4aee6e9ecf4e5f2c0e5e4aee7eff6">[email protected]</span></a>.
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION: 
    Executive Summary:
    Purpose of This Regulatory Action:
    As discussed in more detail later in this notice of proposed 
rulemaking (NPRM), the proposed regulations would rescind the GE 
regulations and remove them from subpart Q of the Student Assistance 
and General Provisions in 34 CFR part 668.
    We base our proposal to rescind the GE regulations on a number of 
findings, including research results that undermine the validity of 
using the regulations' debt-to-earnings (D/E) rates measure to 
determine continuing eligibility for participation in the programs 
authorized by title IV of the Higher Education Act of 1965, as amended 
(title IV, HEA programs). These findings were not accurately 
interpreted during the development of the 2014 GE regulations, were 
published subsequent to the promulgation of those regulations, or were 
presented by committee members at negotiated rulemaking sessions. The 
Department has also determined that the disclosure requirements 
included in the GE regulations are more burdensome than originally 
anticipated and that a troubling degree of inconsistency and potential 
error exists in job placement rates reported by GE programs that could 
mislead students in making an enrollment decision. Additionally, the 
Department has received consistent feedback from the community that the 
GE regulations were more burdensome than previously anticipated through 
the disclosure and reporting requirements that were promulgated in 
2014.
    Finally, the Department has determined that in order to adequately 
inform student enrollment choices and create a framework that enables 
students, parents, and the public to hold institutions of higher 
education accountable, program-level outcomes data should be made 
available for all title IV-participating programs. The Department plans 
to publish these data using the College Scorecard, or its successor 
site, so that students and parents can compare the institutions and 
programs available to them and make informed enrollment and borrowing 
choices. However, the College Scorecard is not the subject of this 
regulation. For a more detailed discussion, see Significant Proposed 
Regulations.
    Section 410 of the General Education Provisions Act (GEPA) 
authorizes the Secretary to make, promulgate, issue, rescind, and amend 
rules and regulations governing the manner of operations of, and 
governing the applicable programs administered by, the Department (20 
U.S.C. 1221e-3). Additionally, section 414 of the Department of 
Education Organization Act authorizes the Secretary to prescribe such 
rules and regulations as the Secretary determines necessary or 
appropriate to administer and manage the functions of the Secretary or 
the Department (20 U.S.C. 3474).
    Summary of the Major Provisions of This Regulatory Action: As 
discussed under ``Purpose of This Regulatory Action,'' the proposed 
regulations would rescind the GE regulations. Please refer to the 
Summary of Proposed Changes section of this NPRM for more details on 
the major provisions contained in this NPRM.
    Costs and Benefits: As further detailed in the Regulatory Impact 
Analysis, the benefits of the proposed regulations would include a 
reduction in burden for some institutions, costs in the form of 
transfers as a result of more students being able to enroll in a 
postsecondary program, and more educational program choices for 
students where they can use title IV aid.
    Invitation to Comment: We invite you to submit comments regarding 
these proposed regulations.
    To ensure that your comments have maximum effect in developing the 
final regulations, we urge you to identify clearly the specific section 
or sections of the proposed regulations that each of your comments 
addresses, and provide relevant information and data whenever possible, 
even when there is no specific solicitation of data and other 
supporting materials in the request for comment. We also urge you to 
arrange your comments in the same order as the proposed regulations. 
Please do not submit comments that are outside the scope of the 
specific proposals in this NPRM, as we are not required to respond to 
such comments.
    We invite you to assist us in complying with the specific 
requirements of Executive Orders 12866 and 13563 and their overall 
requirement of reducing regulatory burden that might result from these 
proposed regulations. Please let us know of any further ways we could 
reduce potential costs or increase potential benefits while preserving 
the effective and efficient administration of the Department's programs 
and activities.
    During and after the comment period, you may inspect all public 
comments about the proposed regulations by accessing Regulations.gov. 
You may also inspect the comments in person at 400 Maryland Ave. SW, 
Washington, DC, between 8:30 a.m. and 4 p.m., Eastern Time, Monday 
through Friday of each week except Federal holidays. To schedule a time 
to inspect comments, please contact the person listed under FOR FURTHER 
INFORMATION CONTACT.
    Assistance to Individuals with Disabilities in Reviewing the

[[Page 40169]]

Rulemaking Record: On request, we will provide an appropriate 
accommodation or auxiliary aid to an individual with a disability who 
needs assistance to review the comments or other documents in the 
public rulemaking record for the proposed regulations. To schedule an 
appointment for this type of accommodation or auxiliary aid, please 
contact the person listed under FOR FURTHER INFORMATION CONTACT.

Background

    The Secretary proposes to amend parts 600 and 668 of title 34 of 
the Code of Federal Regulations (CFR). The regulations in 34 CFR parts 
600 and 668 pertain to institutional eligibility under the Higher 
Education Act of 1965, as amended (HEA), and participation in title IV, 
HEA programs. We propose these amendments to remove the GE regulations, 
including the D/E rates calculations and the sanctions and alternate 
earnings appeals related to those calculations for GE programs, as well 
as the reporting, disclosure, and certification requirements applicable 
to GE programs.
    The Department seeks public comment on whether the Department 
should amend 34 CFR 668.14 to require, as a condition of the Program 
Participation Agreement, that institutions disclose, on the program 
pages of their websites and in their college catalogues that, if 
applicable, the program meets the requirements for licensure in the 
State in which the institution is located and whether it meets the 
requirements in any other States for which the institution has 
determined whether the program enables graduates to become licensed or 
work in their field; net-price, completion rates, withdrawal rates, 
program size, and/or any other items currently required under the GE 
disclosure regulations. The Department also asks whether it should 
require institutions to provide links from each of its program pages to 
College Scorecard, its successor site, or any other tools managed by 
the Department.

Public Participation

    On June 16, 2017, we published a notice in the Federal Register (82 
FR 27640) announcing our intent to establish a negotiated rulemaking 
committee under section 492 of the HEA to develop proposed regulations 
to revise the GE regulations published by the Department on October 31, 
2014 (79 FR 64889). We also announced two public hearings at which 
interested parties could comment on the topics suggested by the 
Department and propose additional topics for consideration for action 
by the negotiated rulemaking committee. The hearings were held on--
    July 10, 2017, in Washington, DC; and
    July 12, 2017, in Dallas, TX.
    Transcripts from the public hearings are available at https://www2.ed.gov/policy/highered/reg/hearulemaking/2017/index.html.
    We also invited parties unable to attend a public hearing to submit 
written comments on the proposed topics and to submit other topics for 
consideration. Written comments submitted in response to the June 16, 
2017, Federal Register notice may be viewed through the Federal 
eRulemaking Portal at www.regulations.gov, within docket ID ED-2017-
OPE-0076. Instructions for finding comments are also available on the 
site under ``Help.''

Negotiated Rulemaking

    Section 492 of the HEA, 20 U.S.C. 1098a, requires the Secretary to 
obtain public involvement in the development of proposed regulations 
affecting programs authorized by title IV of the HEA. After obtaining 
extensive input and recommendations from the public, including 
individuals and representatives of groups involved in the title IV, HEA 
programs, the Secretary in most cases must subject the proposed 
regulations to a negotiated rulemaking process. If negotiators reach 
consensus on the proposed regulations, the Department agrees to publish 
without alteration a defined group of regulations on which the 
negotiators reached consensus unless the Secretary reopens the process 
or provides a written explanation to the participants stating why the 
Secretary has decided to depart from the agreement reached during 
negotiations. Further information on the negotiated rulemaking process 
can be found at: www2.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html.
    On August 30, 2017, the Department published a notice in the 
Federal Register (82 FR 41197) announcing its intention to establish 
two negotiated rulemaking committees and a subcommittee to prepare 
proposed regulations governing the Federal Student Aid programs 
authorized under title IV of the HEA. The notice set forth a schedule 
for the committee meetings and requested nominations for individual 
negotiators to serve on the negotiating committee.
    The Department sought negotiators to represent the following 
groups: Two-year public institutions; four-year public institutions; 
accrediting agencies; business and industry; chief financial officers 
(CFOs) and business officers; consumer advocacy organizations; 
financial aid administrators; general counsels/attorneys and compliance 
officers; legal assistance organizations that represent students; 
minority-serving institutions; private, proprietary institutions with 
an enrollment of 450 students or less; private, proprietary 
institutions with an enrollment of 451 students or more; private, non-
profit institutions; State higher education executive officers; State 
attorneys general and other appropriate State officials; students and 
former students; and groups representing U.S. military service members 
or veteran Federal student loan borrowers. The Department considered 
the nominations submitted by the public and chose negotiators who would 
represent the various constituencies.
    The negotiating committee included the following members:
    Laura Metune, California Community Colleges, and Matthew Moore 
(alternate), Sinclair Community College, representing two-year public 
institutions.
    Pamela Fowler, University of Michigan-Ann Arbor, and Chad Muntz 
(alternate), The University System of Maryland, representing four-year 
public institutions.
    Anthony Mirando, National Accrediting Commission of Career Arts and 
Sciences, and Mark McKenzie (alternate), Accreditation Commission for 
Acupuncture and Oriental Medicine, representing accrediting agencies.
    Roberts Jones, Education & Workforce Policy, and Jordan Matsudaira 
(alternate), Urban Institute and Cornell University, representing 
business and industry.
    Sandy Sarge, SARGE Advisors, and David Silverman (alternate), The 
American Musical and Dramatic Academy, representing CFOs and business 
officers.
    Whitney Barkley-Denney, Center for Responsible Lending, and 
Jennifer Diamond (alternate), Maryland Consumer Rights Coalition, 
representing consumer advocacy organizations.
    Kelly Morrissey, Mount Wachusett Community College, and Andrew 
Hammontree (alternate), Francis Tuttle Technology Center, representing 
financial aid administrators.
    Jennifer Blum, Laureate Education, Inc., and Stephen Chema 
(alternate), Ritzert & Layton, PC, representing general counsels/
attorneys and compliance officers.
    Johnson M. Tyler, Brooklyn Legal Services, and Kirsten Keefe 
(alternate), Empire Justice Center, representing legal

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assistance organizations that represent students.
    Thelma L. Ross, Prince George's Community College, and John K. 
Pierre (alternate), Southern University Law Center, representing 
minority-serving institutions.
    Jessica Barry, School of Advertising Art, and Neal Heller 
(alternate), Hollywood Institute of Beauty Careers, representing 
private, proprietary institutions with an enrollment of 450 students or 
less.
    Jeff Arthur, ECPI University, and Marc Jerome (alternate), Monroe 
College, representing private, proprietary institutions with an 
enrollment of 451 students or more.
    C. Todd Jones, Association of Independent Colleges & Universities 
in Ohio, and Tim Powers (alternate), National Association of 
Independent Colleges and Universities, representing private, non-profit 
institutions.
    Christina Whitfield, State Higher Education Executive Officers 
Association, representing State higher education executive officers.
    Christopher Madaio, Office of the Attorney General of Maryland, and 
Ryan Fisher (alternate), Office of the Attorney General of Texas, 
representing State attorneys general and other appropriate State 
officials.
    Christopher Gannon, United States Student Association, and Ahmad 
Shawwal (alternate), University of Virginia, representing students and 
former students.
    Daniel Elkins, Enlisted Association of the National Guard of the 
United States, and John Kamin (alternate), The American Legion's 
National Veterans Employment & Education Division, representing groups 
representing U.S. military service members or veteran Federal student 
loan borrowers.
    Gregory Martin, U.S. Department of Education, representing the 
Department.
    The negotiated rulemaking committee met to develop proposed 
regulations on December 4-7, 2017, February 5-8, 2018, and March 12-15, 
2018.
    At its first meeting, the negotiating committee reached agreement 
on its protocols and proposed agenda. The protocols provided, among 
other things, that the committee would operate by consensus. Consensus 
means that there must be no dissent by any member in order for the 
committee to have reached agreement. Under the protocols, if the 
committee reached a final consensus on all issues, the Department would 
use the consensus-based language in its proposed regulations. 
Furthermore, the Department would not alter the consensus-based 
language of its proposed regulations unless the Department reopened the 
negotiated rulemaking process or provided a written explanation to the 
committee members regarding why it decided to depart from that 
language.
    During the first meeting, the negotiating committee agreed to 
negotiate an agenda of eight issues related to student financial aid. 
These eight issues were: Scope and purpose, gainful employment metrics 
(later renamed debt-to-earnings metrics), debt calculations, sanctions, 
alternate earnings appeals, program disclosures, reporting 
requirements, and certification requirements. Under the protocols, a 
final consensus would have to include consensus on all eight issues.
    During committee meetings, the committee reviewed and discussed the 
Department's drafts of regulatory language and the committee members' 
alternative language and suggestions. At the final meeting on March 15, 
2018, the committee did not reach consensus on the Department's 
proposed regulations. For this reason, and according to the committee's 
protocols, all parties who participated or were represented in the 
negotiated rulemaking and the organizations that they represent, in 
addition to all members of the public, may comment freely on the 
proposed regulations. For more information on the negotiated rulemaking 
sessions, please visit: https://www2.ed.gov/policy/highered/reg/hearulemaking/2017/gainfulemployment.html.

Data Correction

    During the third meeting of the negotiated rulemaking committee, 
the Department provided negotiators with a number of scatterplots in 
response to a request from several negotiators to compare student loan 
repayment rates between Pell Grant recipients and students who did not 
receive a Pell Grant at individual institutions. The Department 
incorrectly concluded that the repayment rate between Pell Grant 
recipients and Pell Grant non-recipients at all institutions was 1:1. 
While the repayment rates of Pell Grant recipients and non-recipients 
are correlated, there is not a 1:1 relationship between them. The 
Department's analysis shows the difference between the repayment rates 
of Pell Grant recipients and non-recipients is about 20 percentage 
points on average. At institutions with low repayment rates among all 
students, the gap between Pell Grant recipients and non-recipients is 
relatively higher. The gap shrinks among institutions with very high 
overall repayment rates; however, many of these institutions serve 
small proportions of Pell Grant recipients and are highly selective 
institutions (based on mean SAT math scores). The negotiators have been 
informed of the earlier error and the updated scatterplots are 
available on the Department's GE negotiated rulemaking website.

Summary of Proposed Changes

    The proposed regulations would rescind the GE regulations in 
subpart Q of 34 CFR part 668, which establish the eligibility 
requirements for a program that prepares students for gainful 
employment in a recognized occupation, including the D/E rates 
measures, alternate earnings appeals, reporting and disclosure 
requirements, and certifications.

Significant Proposed Regulations

    We group major issues according to subject. We discuss other 
substantive issues under the sections of the proposed regulations to 
which they pertain. Generally, we do not address proposed regulatory 
provisions that are technical or otherwise minor in effect.

Origin and Purpose of the Gainful Employment Regulations

    The definition of ``gainful employment'' established in the 2014 
regulations created a new metric that established bright-line standards 
for a GE program's continuing participation in title IV, HEA programs.
    The GE regulations establish a methodology for calculating mean D/E 
rates for programs that prepare students for gainful employment in a 
recognized occupation. The GE regulations also establish a range of 
acceptable D/E rates programs must maintain in order to retain 
eligibility to participate in the title IV, HEA programs. GE programs 
include non-degree programs at public and non-profit institutions and 
all programs (including undergraduate, graduate, and professional 
degree programs) at proprietary institutions.
    Under the regulations, GE programs must have a graduate debt-to-
discretionary earnings ratio of less than or equal to 20 percent or 
debt-to-annual earnings ratio of less than or equal to 8 percent to 
receive an overall passing rate. Programs with both a discretionary 
earnings rate greater than 30 percent (or a negative or zero 
denominator) and an annual earnings rate greater than 12 percent (or a 
zero denominator) receive an overall failing rate. Programs that fail 
the D/E rates measure for two out of three consecutive years lose title 
IV eligibility. Non-passing programs that have debt-to-discretionary 
income ratios greater than 20 percent and less than or equal to 30 
percent or debt-to-annual income ratios greater than 8 percent and

[[Page 40171]]

less than or equal to 12 percent are considered to be in the ``zone.'' 
Programs with a combination of zone or failing overall rates for four 
consecutive years lose title IV eligibility.
    The first D/E rates were published in 2017, and the Department's 
analysis of those rates raises concern about the validity of the metric 
and how it affects the opportunities for Americans to prepare for high-
demand occupations in the healthcare, hospitality, and personal 
services industries, among others. At a time when 6 million jobs remain 
unfilled due to the lack of qualified workers,\1\ the Department is re-
evaluating the wisdom of a regulatory regime that creates additional 
burden for, and restricts, programs designed to increase opportunities 
for workforce readiness. We further believe the GE regulations 
reinforce an inaccurate and outdated belief that career and vocational 
programs are less valuable to students and less valued by society, and 
that these programs should be held to a higher degree of accountability 
than traditional two- and four-year degree programs that may have less 
market value.
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    \1\ U.S. Department of Labor--Bureau of Labor Statistics. (July 
10, 2018). Economic News Release: Job Openings and Labor Turnover 
Summary. Available at www.bls.gov/news.release/jolts.nr0.htm.
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Research Findings That Challenge the Accuracy and Validity of the D/E 
Rates Measure

    In promulgating the 2011 and 2014 regulations, the Department cited 
as justification for the 8 percent D/E rates threshold a research paper 
published in 2006 by Baum and Schwartz that described the 8 percent 
threshold as a commonly utilized mortgage eligibility standard.\2\ 
However, the Baum & Schwartz paper makes clear that the 8 percent 
mortgage eligibility standard ``has no particular merit or 
justification'' when proposed as a benchmark for manageable student 
loan debt.\3\ The Department previously dismissed this statement by 
pointing to Baum and Schwartz's acknowledging the ``widespread 
acceptance'' of the 8 percent standard and concluding that it is ``not 
unreasonable.'' 79 FR 64889, 64919. Upon further review, we believe 
that the recognition by Baum and Schwartz that the 8 percent mortgage 
eligibility standard ``has no particular merit or justification'' when 
proposed as a benchmark for manageable student loan debt is more 
significant than the Department previously acknowledged and raises 
questions about the reasonableness of the 8 percent threshold as a 
critical, high-stakes test of purported program performance.
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    \2\ Baum, S. & Schwartz, S. How Much Debt is Too Much? Defining 
Benchmarks for Manageable Student Debt. College Board, 2008. 
Available at https://files.eric.ed.gov/fulltext/ED562688.pdf.
    \3\ Ibid.
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    Research published subsequent to the promulgation of the GE 
regulations adds to the Department's concern about the validity of 
using D/E rates as to determine whether or not a program should be 
allowed to continue to participate in title IV programs. As noted in 
the 2014 proposed rule, the Department believed that an improvement of 
quality would be reflected in the program's D/E rates (79 FR 16444). 
However, the highest quality programs could fail the D/E rates measure 
simply because it costs more to deliver the highest quality program and 
as a result the debt level is higher.
    Importantly, the HEA does not limit title IV aid to those students 
who attend the lowest cost institution or program. On the contrary, 
because the primary purpose of the title IV, HEA programs is to ensure 
that low-income students have the same opportunities and choices in 
pursuing higher education as their higher-income peers, title IV aid is 
awarded based on the institution's actual cost of attendance, rather 
than a fixed tuition rate that limits low-income students to the lowest 
cost institutions.\4\
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    \4\ Gladieux, L. Federal Student Aid Policy: A History and an 
Assessment. Financing Postsecondary Education: The Federal Role. 
October 1995. Available at https://www2.ed.gov/offices/OPE/PPI/FinPostSecEd/gladieux.html.
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    Other research findings suggest that D/E rates-based eligibility 
creates unnecessary barriers for institutions or programs that serve 
larger proportions of women and minority students. Such research 
indicates that even with a college education, women and minorities, on 
average, earn less than white men who also have a college degree, and 
in many cases, less than white men who do not have a college degree.\5\
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    \5\ Ma, J., Pender, M. & Welch, M. Education Pays 2016: The 
Benefits of Higher Education for Individuals and Society, 
CollegeBoard, 2016. Fig. 2.4.
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    Disagreement exists as to whether this is due to differences in 
career choices across subgroups, time out of the workforce for 
childcare responsibilities, barriers to high-paying fields that 
disproportionately impact certain groups, or the interest of females or 
minority students in pursuing careers that pay less but enable them to 
give back to their communities. Regardless of the cause of pay 
disparities, the GE regulations could significantly disadvantage 
institutions or programs that serve larger proportions of women and 
minority students and further reduce the educational options available 
to those students.
    It is also important to highlight the importance of place in 
determining which academic programs are available to students. A 
student may elect to enroll in a program that costs more simply because 
a lower-cost program is too far from home or work or does not offer a 
schedule that aligns with the student's work or household 
responsibilities. The average first-time undergraduate student 
attending a two-year public institution enrolls at an institution 
within eight miles of his or her home. The distance increases to 18 
miles for the average first-time undergraduate student enrolling at a 
four-year public institution.\6\ Accordingly, we believe that while it 
is important for a student to know that a program could result in 
higher debt, it is not appropriate to eliminate the option simply 
because a lower-cost program exists, albeit outside of the student's 
reasonable travel distance. In the same way that title IV programs 
enable traditional students to select the more expensive option simply 
because of the amenities an institution offers, or its location in the 
country, they should similarly enable adult learners to select the more 
expensive program due to its convenience, its more personalized 
environment, or its better learning facilities. We support providing 
more information to students and parents that enables them to compare 
the outcomes achieved by graduates of the programs available to them. 
However, due to a number of concerns with the calculation and relevance 
of the debt level included in the rates we do not believe that the D/E 
rates measure achieves a level of accuracy that it should alone 
determine whether or not a program can participate in title IV 
programs.
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    \6\ Hillman, N. & Weichman, T. Education Deserts: The Continued 
Significance of ``Place'' in the Twenty-First Century, American 
Council on Education, 2016. Available at www.acenet.edunews-room/
Pages/CPRS-Viewpoints-Education-Deserts.aspx.
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    While the Department denied the impact of these other factors in 
the 2014 GE regulations, it now recognizes a number of errors included 
in its prior analysis. For example, in the 2014 final rule (79 FR 
64889, 65041-57), the Department stated that changes in economic 
outlook would not cause a program to fail the D/E rates measure or 
remain in the zone for four years. This conclusion was based on the 
finding that the average recession lasted for 11.1 months, which would 
not be long enough to impact a program's outcomes

[[Page 40172]]

for the number of years required to go from ``zone'' to failing. 
However, the Great Recession lasted for well over two years, and was 
followed by an extended ``jobless'' recovery, which would have 
significantly impacted debt and earnings outcomes for a period of time 
that would have exceeded the zone period, had the GE regulations been 
in place during that period.\7\ The Great Recession had an unusually 
profound impact on recent college graduates, who were underemployed at 
an historic rate, meaning that graduates were working in jobs that 
prior to the Great Recession did not require a college credential.\8\ 
The Department concedes that an extended recession coupled with rampant 
underemployment, could have a significant impact on a program's D/E 
rates for a period of time that would span most or all of the zone 
period. Underemployment during the Great Recession was not limited to 
the graduates of GE programs, but included graduates of all types of 
institutions, including elite private institutions.\9\
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    \7\ www.federalreservehistory.org/essays/great_recession_of_200709.
    \8\ Abel, Jaison & Deitz, Richard. Underemployment in the Early 
Career of College Graduates Following the Great Recession, Working 
Paper No. 22654, National Bureau of Economic Research, September 
2016. Available at www.nber.org/papers/w22654.
    \9\ https://money.cnn.com/2011/05/17/news/economy/recession_lost_generation/index.htm.
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    The GE regulations were intended to address the problem of programs 
that are supposed to provide training that prepares students for 
gainful employment in a recognized occupation, but were leaving 
students with unaffordable levels of loan debt compared to the average 
program earnings (79 FR 16426). However, the Department believes there 
are other tools now available to enable students with lower incomes to 
manage high levels of debt. While the existence of income-driven 
repayment plans does not address the high cost of college--and, in 
fact, could make it even easier for students to borrow more than they 
need and institutions to charge high prices--the Department's plans to 
increase transparency will help address these issues. Furthermore, the 
increased availability of these repayment plans with longer repayment 
timelines is inconsistent with the repayment assumptions reflected in 
the shorter amortization periods used for the D/E rates calculation in 
the GE regulations.
    In addition, a program's D/E rates can be negatively affected by 
the fact that it enrolls a large number of adult students who have 
higher Federal borrowing limits, thus higher debt levels, and may be 
more likely than a traditionally aged student to seek part-time work 
after graduation in order to balance family and work responsibilities. 
The Department recognizes that it is inappropriate to penalize 
institutions simply because the students they serve take advantage of 
the higher borrowing capacity Congress has made available to those 
borrowers. It is also inappropriate to penalize institutions because 
students seek part-time work rather than full-time work, or are 
building their own businesses, which may result in lower earnings early 
on. Regardless of whether students elect to work part-time or full-
time, the cost to the institution of administering the program is the 
same, and it is the cost of administering the program that determines 
the cost of tuition and fees. In general, programs that serve large 
proportions of adult learners may have very different outcomes from 
those that serve large proportions of traditionally aged learners, and 
yet the D/E rates measure fails to take any of these important factors 
into account.
    Most importantly, the first set of D/E rates, published in 2016, 
revealed that D/E rates, and particularly earnings, vary significantly 
from one occupation to the next, and across geographic regions within a 
single occupation. The Department had not predicted such substantial 
differences in earnings due to geography, which may have been 
exacerbated by the Great Recession and the speed with which individual 
States reduced their unemployment rate.
    While the Department intended for D/E rates to serve as a mechanism 
for distinguishing between high- and low-performing programs, data 
discussed during the third session of the most recent negotiated 
rulemaking demonstrated that even a small change in student loan 
interest rates could shift many programs from a ``passing'' status to 
``failing,'' or vice versa, even if nothing changed about the programs' 
content or student outcomes. The Department believes that examples such 
as that illustrated here should be corrected and our justifications in 
the 2014 GE regulation did not adequately take these nuances into 
account sufficiently. Table 1 shows how changes in interest rate would 
affect outcomes under the D/E rates measure. For example, if the 
interest rate is seven percent, 831 programs would fail compared to 
only 716 programs if the interest rate is six percent.
---------------------------------------------------------------------------

    \10\ The count of programs includes programs that had 
preliminary rates calculated, but were not designated with an 
official pass, zone, or fail status due to reaccreditation and 
reinstatements of eligibility during the validation process of 
establishing D/E rates.

            Table 1--Number and Percentage of GE 2015 Programs That Would Pass, Fail, or Fall Into the Zone Using Different Interest Rates 10
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Number of programs                            Percentage of programs
                    Interest rate (%)                    -----------------------------------------------------------------------------------------------
                                                               Pass            Zone            Fail            Pass            Zone            Fail
--------------------------------------------------------------------------------------------------------------------------------------------------------
3.......................................................           7,199             998             440              83              12               5
4.......................................................           7,030           1,085             522              81              13               6
5.......................................................           6,887           1,135             615              80              13               7
6.......................................................           6,720           1,201             716              78              14               8
7.......................................................           6,551           1,255             831              76              15              10
8.......................................................           6,326           1,353             958              73              16              11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Department analysis of GE 2015 rates.

    The Department agrees with a statement made by a negotiator that 
any metric that could render a program ineligible to participate in 
title IV, HEA programs simply because the economy is strong and 
interest rates rise is faulty. The Department believes that it is 
during these times of economic growth, when demand for skilled workers 
is greatest, that it is most critical that shorter-term career and 
technical programs are not unduly burdened or eliminated.
    In addition, the Department now recognizes that assigning a 10-year 
amortization period to graduates of

[[Page 40173]]

certificate and associate degree programs for the purpose of 
calculating D/E rates creates an unacceptable and unnecessary double 
standard since the REPAYE plan regulations promulgated in 2015 provide 
a 20-year amortization period for these same graduates. The REPAYE plan 
acknowledges that undergraduate completers may well need to extend 
payments over a longer amortization period, and makes it clear that 
extended repayment periods are an acceptable and reasonable way to help 
students manage their repayment obligations. Therefore, it is not 
appropriate to use an amortization period of less than 20 years for any 
undergraduate program D/E rates calculations or of less than 25 years 
for any graduate program D/E rates calculations.

Concerns About Disclosures Required Under the GE Regulations

    As the Department is proposing to rescind the GE regulations in 
total, the disclosures required under the current regulations also 
would be rescinded. Generally, we are concerned that it is not 
appropriate to require these types of disclosures for only one type of 
program when such information would be valuable for all programs and 
institutions that receive title IV, HEA funds. However, we cannot 
expand the GE regulations to include programs that are not GE programs. 
In that regard, as indicated above, we are interested in comments on 
whether the Department should require that all institutions disclose 
information, such as net price, program size, completion rates, and 
accreditation and licensing requirements, on their program web pages, 
or if doing so is overly burdensome for institutions.
    The Department has also discovered a variety of challenges and 
errors associated with the disclosures required under the GE 
regulations. For example, there is significant variation in 
methodologies used by institutions to determine and report in-field job 
placement rates, which could mislead students into choosing a lower 
performing program that simply appears to be higher performing because 
a less rigorous methodology was employed to calculate in-field job 
placement rates.
    In some cases, a program is not required to report job placement 
outcomes because it is not required by its accreditor or State to do 
so. In other cases, GE programs at public institutions in some States 
(such as community colleges in Colorado) define an in-field job 
placement for the purpose of the GE disclosure as any job that pays a 
wage, regardless of the field in which the graduate is working. 
Meanwhile, institutions accredited by the Accrediting Commission of 
Career Schools and Colleges must consider the alignment between the job 
and the majority of the educational and training objectives of the 
program, which can be a difficult standard to meet since educational 
programs are designed to prepare students broadly for the various jobs 
that may be available to them, but jobs are frequently more narrowly 
defined to meet the needs of a specific employer.\11\
---------------------------------------------------------------------------

    \11\ ACCSC Standards of Accreditation, Appendix VII--Guidelines 
for Employment Classification, 2015, Available at www.accsc.org/UploadedDocuments/July%202015/Guidelines%20for%20Employment.pdf.
---------------------------------------------------------------------------

    The original 2011 GE regulations required NCES to ``develop a 
placement rate methodology and the processes necessary for determining 
and documenting student employment.'' \12\ This requirement arose out 
of negotiator concerns about the complexity and subjectivity of the 
many job placement definitions used by States, institutional 
accreditors, programmatic accreditors and institutions themselves to 
evaluate outcomes. The Department convened a Technical Review Panel 
(TRP), but in 2013 the TRP reported that not only were job placement 
determinations ``highly subjective'' in nature, but that the TRP could 
not come to consensus on a single, acceptable definition of a job 
placement that could be used to report this outcome on GE disclosures, 
nor could it identify a reliable data source to enable institutions to 
accurately determine and report job placement outcomes.\13\ In light of 
the failure of the TRP to develop a consistent definition of a job 
placement, and well-known instances of intentional or accidental job 
placement rate misrepresentations, the Department believes it would be 
irresponsible to continue requiring institutions to report job 
placement rates. Instead, the Department believes that program-level 
earnings data that will be provided by the Secretary through the 
College Scorecard or its successor is the more accurate and reliable 
way to report job outcomes in a format that students can use to compare 
the various institutions and programs they are considering.
---------------------------------------------------------------------------

    \12\ https://nces.ed.gov/npec/data/Calculating_Placement_Rates_Background_Paper.pdf.
    \13\ https://www2.ed.gov/policy/highered/reg/hearulemaking/2012/ipeds-summary91013.pdf.
---------------------------------------------------------------------------

    The Department also believes that it underestimated the burden 
associated with distributing the disclosures directly to prospective 
students. In 2018, the Department announced that it was allowing 
institutions additional time to meet the requirement in Sec.  
668.412(e) to directly distribute the disclosure template to 
prospective students, as well as the requirement in Sec.  668.412(d) to 
include the disclosure template or a link thereto in program 
promotional materials, pending negotiated rulemaking (82 FR 30975; 83 
FR 28177). A negotiator representing financial aid officials confirmed 
our concerns, stating that large campuses, such as community colleges 
that serve tens of thousands of students and are in contact with many 
more prospective students, would not be able to, for example, 
distribute paper or electronic disclosures to all the prospective 
students in contact with the institution. Although in decades past, 
institutions may have included these materials in the packets mailed to 
a prospective student's home; many institutions no longer mail paper 
documents, and instead rely on web-based materials and electronic 
enrollment agreements. The Department notes that Sec.  668.412(e) 
requires that disclosures be made only to a prospective student before 
that individual signs an enrollment agreement, completes registration, 
or makes a financial commitment to the institution and that the 
institution may provide the disclosure to the student by hand-
delivering the disclosure template to the prospective student or 
sending the disclosure template to the primary email address used by 
the institution for communicating with the prospective student. 
However, ED recognizes that even this requirement has an associated 
burden, especially since institutions are required to retain 
documentation that each student acknowledges that they have received 
the disclosure. The Department believes that the best way to provide 
disclosures to students is through a data tool that is populated with 
data that comes directly from the Department, and that allows 
prospective students to compare all institutions through a single 
portal, ensuring that important consumer information is available to 
students while minimizing institutional burden.
    Finally, more than a few disclosures exclude outcomes because the 
program had fewer than 10 graduates in the award year covered by the 
disclosure template. Because the Department does not collect data from 
the disclosures through a central portal or tool, it has been unable to 
compare the number of completers reported on the GE disclosures posted 
by programs with the number reported through other survey tools. 
Therefore, it is difficult to know if these reports of less than 10 
graduates are accurate.

[[Page 40174]]

Covered Institutions and Programs

    Under its general authority to publish data related to title IV 
program outcomes, and in light of changes to the National Student Loan 
Data System related to the 150% subsidized loan rules requiring 
institutions to report program CIP codes, the Department believes that 
it is important and necessary to publish program-level student outcomes 
to inform consumer choice and enable researchers and policy makers to 
analyze program outcomes. The Department does not believe that GE data 
can adequately meet this goal or inform consumer choice since only a 
small proportion of postsecondary programs are required to report 
program-level outcomes data and, even among GE programs, many programs 
graduate fewer than 10 students per year and are not required to 
provide student outcome information on the GE disclosure. In addition, 
the Department does not believe it is appropriate to attach punitive 
actions to program-level outcomes published by some programs but not 
others. In addition, the Department believes that it is more useful to 
students and parents to publish actual median earnings and debt data 
rather than to utilize a complicated equation to calculate D/E rates 
that students and parents may not understand and that cannot be 
directly compared with the debt and earnings outcomes published by non-
GE programs. For all the reasons set forth in this NPRM, the Department 
believes it would be unwise policy to continue using the D/E rates for 
reporting or eligibility purposes.
    In addition, the GE regulations targeted proprietary institutions, 
aiming to eliminate poor performers and ``bad actors'' in the sector. 
While bad actors do exist in the proprietary sector, the Department 
believes that there are good and bad actors in all sectors and that the 
Department, States, and accreditors have distinct roles and 
responsibilities in holding all bad actors accountable. Prior to 2015, 
when the Department started collecting program-level data for all 
completers, the GE regulations provided a unique opportunity for the 
Department to calculate program-level outcomes. Now that the Department 
collects program information for all completers, it can easily expand 
program-level outcomes reporting for all institutions. Therefore, not 
only does the Department believe that the D/E rates calculation is not 
an appropriate measure for determining title IV eligibility, the 
availability of program-level data for all completers makes it possible 
to provide median earnings and debt data for all programs, thereby 
providing a more accurate mechanism for providing useful information to 
consumers.
    Further, the Department has reviewed additional research findings, 
including those published by the Department in follow-up to the 
Beginning Postsecondary Survey of 1994, and determined that student 
demographics and socioeconomic status play a significant role in 
determining student outcomes.\14\ The GE regulations failed to take 
into account the abundance of research that links student outcomes with 
a variety of socioeconomic and demographic risk factors, and similarly 
failed to acknowledge that institutions serving an older student 
population will likely have higher median debt since Congress has 
provided higher borrowing limits for older students who are less likely 
than traditional students to receive financial support from parents.
---------------------------------------------------------------------------

    \14\ https://nces.ed.gov/pubs/web/97578g.asp.
---------------------------------------------------------------------------

    Students select institutions and college majors for a wide variety 
of reasons, with cost and future earnings serving as only two data 
points within a more complex decision-making process. For the reasons 
cited throughout this document, the Department has reconsidered its 
position.
    Well-publicized incidents of non-profit institutions 
misrepresenting their selectivity levels, inflating the job placement 
rates of their law school graduates, and even awarding credit for 
classes that never existed demonstrate that bad acts occur among 
institutions regardless of their tax status.<SUP>15 16 17 18</SUP>
---------------------------------------------------------------------------

    \15\ www.forbes.com/sites/stevecohen/2012/09/29/the-three-biggest-lies-in-college-admission/#9ed5ccc1754f.
    \16\ www.nytimes.com/2012/02/01/education/gaming-the-college-rankings.html.
    \17\ www.cnn.com/2014/10/22/us/unc-report-academic-fraud/index.html.
    \18\ www.wsj.com/articles/temple-university-fires-a-dean-over-falsified-rankings-data-1531498822.
---------------------------------------------------------------------------

    The GE regulations underestimated the cost of delivering a program 
and practices within occupations that may skew reported earnings. 
According to Delisle and Cooper, because public institutions receive 
State and local taxpayer subsidies, ``even if a for-profit institution 
and a public institution have similar overall expenditures (costs) and 
graduate earnings (returns on investment), the for-profit institution 
will be more likely to fail the GE rule, since more of its costs are 
reflected in student debt.'' \19\ Non-profit, private institutions 
also, in general, charge higher tuition and have students who take on 
additional debt, including enrolling in majors that yield societal 
benefits, but not wages commensurate with the cost of the institution.
---------------------------------------------------------------------------

    \19\ Delisle, J. and Cooper, P. (2017). Measuring Quality or 
Subsidy? How State Appropriations Rig the Federal Gainful Employment 
Test. Do state subsidies for public universities favor the affluent? 
Brookings Institute. Available at www.aei.org/publication/measuring-quality-or-subsidy-how-state-appropriations-rig-the-federal-gainful-employment-test/.
---------------------------------------------------------------------------

    Challenges have been brought alleging cosmetology and hospitality 
programs have felt a significant impact due to the GE regulations. In 
the case of cosmetology programs, State licensure requirements and the 
high costs of delivering programs that require specialized facilities 
and expensive consumable supplies may make these programs expensive to 
operate, which may be why many public institutions do not offer them. 
In addition, graduates of cosmetology programs generally must build up 
their businesses over time, even if they rent a chair or are hired to 
work in a busy salon.
    Finally, since a great deal of cosmetology income comes from tips, 
which many individuals fail to accurately report to the Internal 
Revenue Service, mean and median earnings figures produced by the 
Internal Revenue Service under-represent the true earnings of many 
workers in this field in a way that institutions cannot control.\20\ 
Litigation filed by the American Association of Cosmetology Schools 
(AACS) asserting similar claims highlighted the importance of the 
alternate earnings appeal to allow institutions to account for those 
earnings.
---------------------------------------------------------------------------

    \20\ https://www.irs.gov/newsroom/irs-releases-new-tax-gap-estimates-compliance-rates-remain-statistically-unchanged-from-previous-study.
---------------------------------------------------------------------------

    While the GE regulations include an alternate earnings appeals 
process for programs to collect data directly from graduates, the 
process for developing such an appeal has proven to be more difficult 
to navigate than the Department originally planned. The Department has 
reviewed earnings appeal submissions for completeness and considered 
response rates on a case-by-case basis since the response rate 
threshold requirements were set aside in the AACS litigation. Through 
this process, the Department has corroborated claims from institutions 
that the survey response requirements of the earnings appeals 
methodology are burdensome given that program graduates are not 
required to report their earnings to their institution or to the 
Department, and there is no mechanism in place for institutions to 
track students after they complete the program. The process of 
Departmental review of individual appeals has been time-

[[Page 40175]]

consuming and resource-intensive, with great variations in the format 
and completeness of appeals packages. The contents of some of these 
review packages would suggest continued confusion about requirements on 
the part of schools that would be problematic if those earnings were 
still tied to any kind of eligibility threshold.
    Executive Order 13777 instructs agencies to reduce unnecessary 
burden on regulated entities, while at the same time emphasizing the 
need for greater transparency. The Department believes that its 
proposed rescission of the GE regulations is consistent with Executive 
Order 13777 because the GE regulations place tremendous burden upon 
certain programs and institutions, as evidenced by comments from 
negotiators representing institutions not currently covered by the GE 
regulations that extending the regulations to include their institution 
would impose tremendous and costly burden. As noted by various 
associations and institutions in response to the Department's request 
for public feedback on which regulations should be repealed, modified, 
or replaced, a large number of community colleges whose GE programs 
have not been in danger of failing the D/E rates measure have 
complained about the cost of complying with the GE regulations, which 
has been viewed as far out of proportion with the corresponding student 
benefits. For example, the American Association of Community Colleges 
pointed to the regulations' extensive reporting and disclosure 
requirements.\21\ Despite this additional burden to GE programs, the GE 
regulations provide only limited transparency since the regulations 
apply to a small subset of title IV-eligible programs. Instead, the 
Department believes that its efforts to expand the College Scorecard, 
which includes all programs that participate in the title IV, HEA 
programs, to include program-level earnings, debt, and other data, will 
better accomplish our goal of increasing transparency.
---------------------------------------------------------------------------

    \21\ American Association of Community College. (September 20, 
2017). Comments of the American Association of Community Colleges. 
Docket ID: ED-2017-OS-0074. Available at https://www.regulations.gov/document?D=ED-2017-OS-0074-15336.
---------------------------------------------------------------------------

    The GE regulations include, among other things, a complicated 
formula for calculating a program's D/E rates, a set of thresholds that 
are used to determine whether a program's D/E rates are passing, 
failing, or in the zone, and a number of disclosure requirements. The 
D/E rates measure compares median student loan debt (including 
institutional, private, and Federal loan debt), as reported by 
institutions and the National Student Loan Data System, to the higher 
of mean and median earnings obtained from the Social Security 
Administration.
    Further, we believe that the analysis and assumptions with respect 
to earnings underlying the GE regulations are flawed. In 2014, upon the 
introduction of the GE regulations, the Department claimed that 
graduates of many GE programs had earnings less than those of the 
average high school dropout.\22\ The Washington Post highlighted 
several errors in this comparison including that the Department failed 
to explain that the three-year post-graduation GE earnings compared the 
earnings of recent graduates with the earnings of a population of high 
school graduates that could include those who are nearing the end of 
40-year careers or who own successful long-existing businesses.\23\ 
Further comparisons to non-college graduates need to be contextualized, 
given that the average person who completes a registered apprenticeship 
earns a starting salary of more than $60,000 per year, and some college 
graduates who pursue careers in allied health, education, or human 
services--regardless of what college they attended--earn less than non-
college graduates who complete an apprenticeship program.\24\
---------------------------------------------------------------------------

    \22\ www.ed.gov/news/press-releases/obama-administration-takes-action-protect-americans-predatory-poor-performing-ca/.
    \23\ www.washingtonpost.com/news/fact-checker/wp/2014/04/11/the-obama-administrations-claim-that-72-percent-of-for-profits-programs-have-graduates-making-less-than-high-school-dropouts/
    \24\ Ibid.
---------------------------------------------------------------------------

    The Census Bureau, in its landmark 2002 report, The Big Payoff, was 
careful to explain that individual earnings may differ significantly 
due to a variety of factors, including an individual's work history, 
college major, personal ambition, and lifestyle choices.\25\ The report 
also pointed out that even some individuals with graduate degrees, such 
as those in social work or education, may fail to earn as much as a 
high school graduate who works in the skilled trades. In other words, 
both debt and earnings outcomes depend on a number of factors other 
than program quality or institutional performance. There are tremendous 
complexities involved in comparing earnings, especially since 
prevailing wages differ significantly from one occupation to the next 
and one geographic region to the next.\26\ Therefore, a bright-line D/E 
rates measure ignores the many research findings that were either not 
taken into account in publishing the GE regulations or that were 
published since the GE regulations were promulgated, that have 
demonstrated over and over again that gender, socioeconomic status, 
race, geographic location, and many other factors affect earnings.\27\ 
\28\ \29\ Even among the graduates of the Nation's most prestigious 
colleges, earnings vary considerably depending upon the graduate's 
gender, the field the graduate pursued, whether or not the graduate 
pursued full-time work, and the importance of work-life balance to the 
individual.\30\ And yet, the Department has never contended that the 
majors completed by the lower-earning graduates were lower performing 
or lower quality than those that result in the highest wages.
---------------------------------------------------------------------------

    \25\ Cheeseman Day, J. & Newburger, E. The Big Payoff: 
Educational Attainment and Synthetic Estimates of Work-Life 
Earnings, Current Population Reports, U.S. Department of Commerce, 
Economics and Statistics Administration, U.S. Census Bureau, 2002. 
Available at www.census.gov/content/dam/Census/ibrary/publications/2002/demo/p23-210.pdf.
    \26\ nces.ed.gov/pubs2006/2006321.pdf.
    \27\ www.brookings.edu/wp-content/uploads/2016/07/Deconstructing-and-Reconstructing-the-College-Scorecard.pdf.
    \28\ trends.collegeboard.org/sites/default/files/education-pays-2016-full-report.pdf.
    \29\ nces.ed.gov/pubs/web/97578g.asp.
    \30\ Witteveen, D. & Attewell, P. The earnings payoff from 
attending a selective college. Social Science Research 66 (2017) 
154-169. Available at www.sciencedirect.com/science/article/pii/S0049089X16301430.
---------------------------------------------------------------------------

Additional Disclosures

    The Department published in the Federal Register on November 1, 
2016, regulations known as the Borrower Defenses to Repayment (BD) 
regulations (81 FR 75926). The effective date of the BD regulations was 
most recently delayed until July 1, 2019 (83 FR 6458) to allow for 
additional negotiated rulemaking to reconsider those regulations. 
Following the conclusion of the negotiated rulemaking process, on July 
31, 2018, the Department published in the Federal Register a notice of 
proposed rulemaking in which the Department proposes, among other 
things, to withdraw (i.e., rescind) specified provisions of the BD 
regulations already published but not yet effective.
    Among these BD regulations are two disclosures that were included 
among the topics for negotiation by the GE negotiating committee, as 
part of the larger discussion about the disclosure requirements in the 
GE regulations. One of these provisions would have required proprietary 
institutions to provide a warning to students if the loan repayment 
rate for the institution did not meet a specified bright-line

[[Page 40176]]

standard. The other provision would have required institutions to 
notify students if the institution was required under other provisions 
of the BD regulations to provide the Department with financial 
protection, such as a letter of credit.
    In response to the 2016 Borrower Defense proposed regulations, the 
Department received many comments contending that the regulations 
unfairly targeted proprietary institutions (81 FR 75934). Others 
commented that the loan repayment rate disclosure reflected financial 
circumstances and not educational quality. The Department believes that 
these comments are in line with how the Department views GE and the 
reasons provided for rescinding it. As such, the Department also 
proposes to remove the requirement for institutions to disclose 
information related to student loan repayment rates. With respect to 
the financial protection disclosure, the Department believes that 
matters such as the calculation of an institution's composite score and 
requirements regarding letters of credit are complex and beyond the 
level of understanding of a typical high school graduate considering 
enrollment in a postsecondary education program. Therefore, a student 
may misjudge the meaning of such a disclosure to indicate the imminent 
closure of the institution, which is not necessarily the case. While in 
certain instances, a letter of credit may serve as an indicator of 
financial risk to taxpayers, there are other instances where this may 
not be the case. Therefore, the Department proposes to remove the 
requirement for institutions to disclose that they are required to post 
a letter of credit and the related circumstances.
    In discussion with the negotiators, those representing attorneys 
general, legal organizations, and student advocacy groups opposed 
eliminating these disclosures because they believed the disclosures 
would benefit students. However, the Department believes that these 
disclosures will not provide meaningful or clear information to 
students, and will increase cost and burden to institutions that would 
have to disclose this information.
    Although these two disclosures were discussed by the negotiated 
rulemaking committee convened to consider the GE regulations, because 
they are formally associated with the borrower defense regulations, 
their proposed withdrawal is addressed through the proposed regulatory 
text in the 2018 notice of proposed rulemaking relating to the BD 
regulations.
    In summary, the Department proposes to rescind the GE regulations 
for a number of reasons, including:
    <bullet> Research findings published subsequent to the promulgation 
of the regulation confirm that the D/E rates measure is inappropriate 
for determining an institution's continuing eligibility for title IV 
participation;
    <bullet> A review of GE disclosures posted by institutions over the 
last two years has revealed troubling inconsistencies in the way that 
job placement rates are determined and reported;
    <bullet> The use of a standardized disclosure template and the 
physical distribution of disclosures to students is more burdensome 
than originally predicted; and
    <bullet> GE outcomes data reveal the disparate impact that the GE 
regulation has on some academic programs.
    In July 2018, the Department published a notice of proposed 
rulemaking that more appropriately addresses concerns about 
institutional misrepresentation by providing direct remedies to 
students harmed by such misrepresentations (83 FR 37242). In addition, 
the Department believes that by publishing outcomes data through the 
College Scorecard for all title IV participating programs, it will be 
more difficult for institutions to misrepresent likely program 
outcomes, including earnings or job placement rates, which should not 
be determined or published until such time that a reliable data source 
is identified to validate such data. For the reasons cited above, the 
Department proposes to amend or rescind the GE regulations.

Scope of the Proposed Regulations

1. Removal of GE Regulations
    The Department proposes to rescind the GE regulations because, 
among other things, they are based on a D/E metric that has proven to 
not be an appropriate proxy for use in determining continuing 
eligibility for title IV participation; they incorporate a threshold 
that the researchers whose work gave rise to the standard questioned 
the relevance of to student loan borrowing levels; and they rely on a 
job placement rate reporting requirement that the Department was unable 
to define consistently or provide a data source to ensure its 
reliability and accuracy and that has since been determined is 
unreliable and vulnerable to accidental or intentional misreporting. In 
addition, because the GE regulations require only a small portion of 
higher education programs to report outcomes, they do not adequately 
inform consumer choice or help borrowers compare all of their available 
options.
    Therefore, the Department proposes to rescind the GE regulations. 
Removal of the GE regulations would include removing the provisions in 
Sec.  668.401 through Sec.  668.415, including the provisions regarding 
the scope and purpose of those regulations (Sec.  668.401), the gainful 
employment framework (Sec.  668.403), calculating D/E rates, issuing 
and challenging those rates, and providing for a D/E rates alternate 
earnings appeal (Sec.  668.404-Sec.  668.406). Consequently, by 
removing the provisions pertaining to the D/E rates measure, the 
consequences of the D/E rates measure would also be removed from the 
regulations (Sec.  668.410), as well as the required certifications 
(Sec.  668.414). In addition, current sections that condition title IV 
eligibility on outcomes under the D/E rates measure, the methodology 
for calculating the D/E rates, the reporting requirements necessary to 
calculate D/E rates and certain other certifications and disclosures, 
and subpart R pertaining to program cohort default rates, a potential 
disclosure item, would no longer be required, and the Department 
proposes to remove those sections, as well (Sec. Sec.  668.411-668.413; 
subpart R).
2. Technical and Conforming Changes
    Proposed Sec.  600.10(c)(1) would remove current paragraph (i) and 
redesignate the remaining paragraphs. Current Sec.  600.10(c)(1)(i) 
establishes title IV eligibility for GE programs. The Department's 
proposed regulations would remove the GE regulations referenced in this 
paragraph, and therefore we are proposing to remove this paragraph and 
renumber this section. This technical correction was proposed during 
the negotiations because the Department proposed removing the GE 
regulations and moving to a disclosure-only framework. Discussion 
related to the removal of sanctions and the disclosure framework is 
summarized above, but there were no additional comments made solely on 
this technical change. Additionally, proposed Sec.  600.10(c)(1)(iii) 
would require programs that are at least 300 clock hours but less than 
600 clock hours and do not admit as regular students only persons who 
have completed the equivalent of an associate's degree to obtain the 
Secretary's approval to be eligible for title IV aid student loans. 
This is consistent with Sec.  668.8(d) where programs of at least 300 
clock hours are referenced and is consistent with the statute. This 
proposal was also made during the negotiations, but the

[[Page 40177]]

committee did not have comments related to this aspect of the 
proposals.
    The Department also proposes to remove references to subpart Q in 
Sec.  600.21(a)(11) as part of its proposed removal of the GE 
regulations. Likewise, we propose technical edits to Sec.  668.8(d) to 
remove references to subpart Q. The Department also proposes to remove 
and reserve current Sec.  668.6, which lists disclosure requirements 
for GE programs that ceased to have effect upon the effective date of 
the disclosure requirements under the 2014 GE regulations.

Executive Orders 12866, 13563, and 13771

    Under Executive Order 12866, it must be determined whether this 
regulatory action is ``significant'' and, therefore, subject to the 
requirements of the Executive order and subject to review by the Office 
of Management and Budget (OMB). Section 3(f) of Executive Order 12866 
defines a ``significant regulatory action'' as an action likely to 
result in a rule that may--
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
Tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule);
    (2) Create serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlement grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles stated in the 
Executive order.
    This proposed regulatory action is an economically significant 
regulatory action subject to review by OMB under section 3(f) of 
Executive Order 12866 because it would have an annual effect on the 
economy of over $100 million.
    Under Executive Order 13771, for each new regulation that the 
Department proposes for notice and comment or otherwise promulgates 
that is a significant regulatory action under Executive Order 12866 and 
that imposes total costs greater than zero, it must identify two 
deregulatory actions. For FY 2018, any new incremental costs associated 
with a new regulation must be fully offset by the elimination of 
existing costs through deregulatory actions, unless required by law or 
approved in writing by the Director of the OMB. Because these proposed 
regulations do not impose total costs greater than zero, the 
requirement to offset new regulations in Executive Order 13771 would 
not apply.
    We have also reviewed these regulations under Executive Order 
13563, which supplements and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, Executive Order 
13563 requires that an agency--
    (1) Propose or adopt regulations only on a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things, and to the extent practicable--the costs 
of cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    We are issuing this proposed regulatory action only on a reasoned 
determination that its benefits justify its costs. In choosing among 
alternative regulatory approaches, we selected those approaches that 
would maximize net benefits. Based on the analysis that follows, the 
Department believes that these proposed regulations are consistent with 
the principles in Executive Order 13563.
    We also have determined that this regulatory action would not 
unduly interfere with State, local, and Tribal governments in the 
exercise of their governmental functions.

Regulatory Impact Analysis

    In accordance with the Executive orders, the Department has 
assessed the potential costs and benefits, both quantitative and 
qualitative, of this regulatory action. This proposed regulatory action 
would have an annual economic benefit of approximately $209 million in 
reduced paperwork burden and increased transfers to Pell Grant 
recipients and student loan borrowers and subsequently institutions of 
about $518 million annually at the 7 percent discount rate, as further 
explained in the Analysis of Costs and Benefits section.

A. Need for Regulatory Action

    This regulatory action is necessary to comply with Executive Order 
13777, whereby the President instructed agencies to reduce unnecessary 
burden on regulated entities and to increase transparency. Because the 
GE regulations significantly burden certain programs and institutions 
but provide limited transparency at only a small subset of title IV-
eligible programs, the Department proposes to rescind them.
    Furthermore, when developing the GE regulations, the Department, as 
noted in feedback received from multiple institutions, underestimated 
the burden on institutions associated with the use of a standardized 
disclosure template in publishing program outcomes and distributing 
notifications directly to prospective and current students. For 
example, the estimate did not include an assessment of burden on the 
government to support the development of an approved disclosure 
template and the distribution of the template populated with the 
appropriate data. The Department has determined that it would be more 
efficient to publish data using the College Scorecard, not only to 
reduce reporting burden but to enable students to more readily review 
the data and compare institutions.

B. Analysis of Costs and Benefits

    These proposed regulations would affect prospective and current 
students; institutions with GE programs participating in the title IV, 
HEA programs; and the Federal government. The Department expects 
institutions and the Federal government would benefit as the action 
would remove highly burdensome reporting, administrative costs, and 
sanctions. The Department has also analyzed the costs of this 
regulatory action and has determined that it would impose no additional 
costs ($0). As detailed earlier,

[[Page 40178]]

pursuant to this proposed regulatory action, the Department would 
remove the GE regulations and adopt no new ones.
1. Students
    The proposed removal of the GE regulations may result in both costs 
and benefits to students, including the costs and benefits associated 
with continued enrollment in zone and failing GE programs and the 
benefit of reduced information collections. Students may see costs from 
continued enrollment in programs that may have, if the GE regulations 
were in effect, lost title IV eligibility and the student would have 
discontinued enrollment. Students may also see benefits from not having 
to transfer to another institution in cases where their program would 
have lost title IV eligibility. Burden on students will be reduced by 
not having to respond to schools to acknowledge receipt of disclosures.
    There are student costs and benefits associated with enrollment in 
a program that would have otherwise lost eligibility to participate in 
the title IV, HEA programs under the GE regulations; however, the 
actual outcome for students enrolled in failing or zone programs under 
the GE regulations is unknown. Under the GE regulations, if a GE 
program becomes ineligible to participate in the title IV, HEA 
programs, students would not be able to receive title IV aid to enroll 
in it. Because D/E rates have been calculated under the GE regulations 
for only one year, no programs have lost title IV, HEA eligibility. 
However, 2,050 programs were identified as failing programs or programs 
in the zone based on their 2015 GE rates and are at risk of losing 
eligibility under the GE regulations. In 2015-16, 329,250 students were 
enrolled in zone GE programs and 189,920 students were enrolled in 
failing programs.
    Under the proposed regulations, the Department would discontinue 
certain GE information collections, which is detailed further in the 
Paperwork Reduction Act of 1995 section of this preamble. Two of these 
information collections impact students--OMB control number 1845-0123 
and OMB control number 1845-0107. By removing these collections, the 
proposed regulations would reduce burden on students by 2,167,129 hours 
annually. The burden associated with these information collections is 
attributed to students being required to read the warning notices and 
certify that they received them. Therefore, using the individual hourly 
rate of $16.30, the benefit due to reduced burden for students is 
$35,324,203 annually (2,167,129 hours per year * $16.30 per hour).
2. Institutions
    The proposed regulations would also benefit institutions 
administering GE programs. These institutions would have a reduced 
paperwork burden and no longer be subject to a potential loss of title 
IV eligibility. The table below shows the distribution of institutions 
administering GE programs by sector.

            Table 2--Institutions With 2015 GE programs \31\
------------------------------------------------------------------------
                  Type                     Institutions      Programs
------------------------------------------------------------------------
Public..................................             865           2,493
Private.................................             206             476
Proprietary.............................           1,546           5,681
    Total...............................           2,617           8,650
------------------------------------------------------------------------

    All 2,617 institutions with GE programs would see savings from 
reduced reporting requirements due to removal of the GE regulations. As 
discussed further in the Paperwork Reduction Act of 1995 section of 
this preamble, reduction in burden associated with removing the GE 
regulatory information collections for institutions is 4,758,499 hours. 
Institutions would benefit from these proposed changes, which would 
reduce their costs by $173,923,138 annually using the hourly rate of 
$36.55.
    Under the proposed regulations, programs that had or have D/E rates 
that are failing or in the zone could see benefits because they would 
no longer be subject to sanctions, incur the cost of appealing failing 
or zone D/E rates, or be at risk of losing their title IV eligibility. 
Specifically, 778 institutions administering 2,050 zone or failing GE 
programs would receive these benefits, which represents 24 percent of 
the 8,650 2015 GE programs. Disaggregation of these program counts and 
counts by institutional type are provided in the table below.

                        Table 3--Institutions With 2015 GE zone or Failing Programs \32\
----------------------------------------------------------------------------------------------------------------
                                                                                                      Zone or
                     Type                         Institutions     Zone programs      Failing         failing
                                                                                     programs        programs
----------------------------------------------------------------------------------------------------------------
Public.......................................                  9               9  ..............               9
Private......................................                 34              68              21              89
Proprietary..................................                735           1,165             787           1,952
                                              ------------------------------------------------------------------
    Total....................................                778           1,242             808           2,050
----------------------------------------------------------------------------------------------------------------

    Cosmetology undergraduate certificate programs are the most common 
type of program in the zone or failing categories. Among the 895 
cosmetology undergraduate certificate programs with
---------------------------------------------------------------------------

    \31\ The count of programs includes programs that had 
preliminary rates calculated, but were not designated with an 
official pass, zone, or fail status due to reaccreditation and 
reinstatements of eligibility during the validation process of 
establishing D/E rates.
    \32\ The count of programs includes programs that had 
preliminary rates calculated, but were not designated with an 
official pass, zone, or fail status due to reaccreditation and 
reinstatements of eligibility during the validation process of 
establishing D/E rates.
---------------------------------------------------------------------------

a 2015 GE rate, 91 failed the D/E rates measure and 270 fell into the 
zone. Table 4 shows the most frequent types of programs with failing or 
zone D/E rates. These programs and their institutions would be most 
significantly affected by the proposed removal of GE sanctions as they 
would continue to be eligible to participate in title IV, HEA programs. 
As indicated in the Accounting Statement, the money received by these 
institutions is a transfer from the taxpayers through students who 
choose to attend the institutions' programs.

[[Page 40179]]



                  Table 4--Zone or Failing 2015 GE Programs by Frequency of Program Types \33\
----------------------------------------------------------------------------------------------------------------
                CIP                     Credential level       Zone       Fail     Zone or Fail    All programs
----------------------------------------------------------------------------------------------------------------
Cosmetology/Cosmetologist, General.  Undergraduate                270         91             361             895
                                      Certificate.
Medical/Clinical Assistant.........  Associates Degree....         35         56              91             119
Medical/Clinical Assistant.........  Undergraduate                 78         12              90             424
                                      Certificate.
Massage Therapy/Therapeutic          Undergraduate                 43          4              47             270
 Massage..                            Certificate.
Business Administration and          Associates Degree....         24         22              46              74
 Management, General..
Legal Assistant/Paralegal..........  Associates Degree....         20         25              45              58
Barbering/Barber...................  Undergraduate                 22         16              38              96
                                      Certificate.
Graphic Design.....................  Associates Degree....         16         17              33              45
Criminal Justice/Safety Studies....  Associates Degree....         20         11              31              41
Massage Therapy/Therapeutic          Associates Degree....          8         19              27              33
 Massage..
All other programs.................  .....................        706        535           1,241           6,595
                                    ----------------------------------------------------------------------------
    Total..........................  .....................      1,242        808           2,050           8,650
----------------------------------------------------------------------------------------------------------------

3. Federal Government
    Under the proposed regulations, the Federal government would 
benefit from reduced administrative burden associated with removing 
provisions in the GE regulations and from discontinuing information 
collections. The Federal government would incur annual costs to fund 
more Pell Grants and title IV loans, as discussed in the Net Budget 
Impact section.
---------------------------------------------------------------------------

    \33\ The count of programs includes programs that had 
preliminary rates calculated, but were not designated with an 
official pass, zone, or fail status due to reaccreditation and 
reinstatements of eligibility during the validation process of 
establishing D/E rates.
---------------------------------------------------------------------------

    Reduced administrative burden due to the proposed regulatory 
changes would result from removing the provisions in the GE regulations 
regarding sending completer lists to institutions, adjudicating 
completer list corrections, adjudicating challenges, and adjudicating 
alternate earnings appeals. Under the GE regulations, the Department 
expects to receive about 500 earnings appeals annually and estimates 
that it would take Department staff 10 hours per appeal to evaluate the 
information submitted. Using the hourly rate of a GS-13 Step 1 in the 
Washington, DC area of $46.46,\34\ the estimated benefit due to reduced 
costs from eliminating earnings appeals is $232,300 annually (500 
earnings appeals * 10 hours per appeal * $46.46 per hour). Similarly, 
the Department sends out 31,018 program completer lists to institutions 
annually and estimates that it takes about 40 hours total to complete. 
Using the hourly rate of a GS-14 Step 1 in the Washington, DC area of 
$54.91,\35\ the estimated benefit due to reduced costs from eliminating 
sending completer lists is $2,196 annually (40*54.91). Institutions can 
correct and challenge the lists, and for the 2015 D/E rates the 
Department processed 90,318 completer list corrections and adjudicated 
2,894 challenges. The Department estimates it took Department staff 
1,420 hours total to make completer list corrections. Similarly, the 
Department estimates it took $1,500,000 in contractor support and 1,400 
hours of Federal staff time total to adjudicate the challenges. Using 
the hourly rate of a GS-13 step 1 in the Washington, DC area of $46.46, 
the estimated benefit due to reduced costs from eliminating completer 
lists, corrections, and challenges is $1,631,017 ($1,500,000 contractor 
support + (1420 + 1400) staff hours * $46.46 per hour).
---------------------------------------------------------------------------

    \34\ Salary Table 2018-DCB effective January 2018. Available at 
www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2018/DCB_h.pdf.
    \35\ Ibid.
---------------------------------------------------------------------------

    Finally, under the proposed regulations, the Department would 
rescind information collections with OMB control numbers 1845-0121, 
1845-1022, and 1845-0123. This would result in a Federal government 
benefit due to reduced contractor costs of $23,099,946 annually. 
Therefore, the Department estimates an annual benefit due to reduced 
administrative costs under the proposed regulations of $24,965,459 
($232,300 + $2,196 + $1,631,017 + $23,099,946).
    The Department would also incur increased budget costs due to 
increased transfers of Pell Grants and title IV loans, as discussed 
further in the Net Budget Impacts section. The estimated annualized 
costs of increased Pell Grants and title IV loans from eliminating the 
GE regulations is approximately $518 to $527 million at 7 percent and 3 
percent discount rates, respectively. The Department recognizes that 
this may be offset by student and institutional response to 
institutional and program level disclosures in the College Scorecard 
and other resources, but, as discussed in the Net Budget Impact 
section, the Department does not specifically quantify those impacts.

C. Net Budget Impacts

    The Department proposes to remove the GE regulations, which include 
provisions for GE programs' loss of title IV, HEA program eligibility 
based on performance on the D/E rates measure. In estimating the impact 
of the GE regulations at the time they were developed and in subsequent 
budget estimates, the Department attributed some savings in the Pell 
Grant program based on the assumption that some students, including 
prospective students, would drop out of postsecondary education as 
their programs became ineligible or imminently approached 
ineligibility.
    This assumption has remained in the baseline estimates for the Pell 
Grant program, with an average of approximately 123,000 dropouts 
annually over the 10-year budget window from FY2019 to FY2028. By 
applying the estimated average Pell Grant per recipient for proprietary 
institutions ($3,649) for 2019 to 2028 in the PB2019 Pell Baseline, the 
estimated net budget impact of the GE regulations in the PB2019 Pell 
baseline is approximately $-4.5 billion. As was indicated in the 
Primary Student Response assumption in the 2014 GE final rule,\36\ much 
of this impact was expected to come from the warning that a program 
could lose eligibility in the next year. If we attribute all of the 
dropout effect to loss of eligibility, it would generate a maximum 
estimated Federal net budget impact of the proposed regulations of $4.5 
billion in

[[Page 40180]]

costs by removing the GE regulations from the PB2019 Pell Grant 
baseline.
---------------------------------------------------------------------------

    \36\ See 79 FR 211, Table 3.4: Student Response Assumptions, p. 
65077, published October 31, 2014. Available at www.regulations.gov/document?D=ED-2014-OPE-0039-2390. The dropout rate increased from 5 
percent for a first zone result and 15 percent for a first failure 
to 20 percent for the fourth zone, second failure, or ineligibility.
---------------------------------------------------------------------------

    The Department also estimated an impact of warnings and 
ineligibility in the analysis for the final 2014 GE rule, that, due to 
negative subsidy rates for PLUS and Unsubsidized loans at the time, 
offset the savings in Pell Grants by $695 million.\37\ The effect of 
the GE regulations is not specifically identified in the PB2019 
baseline, but it is one of several factors reflected in declining loan 
volume estimates. The development of GE regulations since the first 
negotiated rulemaking on the subject was announced on May 26, 2009, has 
coincided with demographic and economic trends that significantly 
influence postsecondary enrollment, especially in career-oriented 
programs classified as GE programs under the GE regulations. Enrollment 
and aid awarded have both declined substantially from peak amounts in 
2010 and 2011.
---------------------------------------------------------------------------

    \37\ See 79 FR 211, pp 65081-82, available at 
www.regulations.gov/document?D=ED-2014-OPE-0039-2390.
---------------------------------------------------------------------------

    As classified under the GE regulations, GE programs serve non-
traditional students who may be more responsive to immediate economic 
trends in making postsecondary education decisions. Non-consolidated 
title IV loans made at proprietary institutions declined 48 percent 
between AY2010-11 and AY2016-17, compared to a 6 percent decline at 
public institutions, and a 1 percent increase at private institutions. 
The average annual loan volume change from AY2010-11 to AY2016-17 was -
10 percent at proprietary institutions, -1 percent at public 
institutions, and 0.2 percent at private institutions. If we attribute 
all of the excess decline at proprietary institutions to the potential 
loss of eligibility under the GE regulations and increase estimated 
volume in the 2-year proprietary risk group that has the highest 
subsidy rate in the PB2019 baseline by the difference in the average 
annual change (12 percent for subsidized and unsubsidized loans and 9 
percent for PLUS), then the estimated net budget impact of the removal 
of the ineligibility sanction in the proposed regulations on the Direct 
Loan program is a cost of $848 million.
    Therefore, the total estimated net budget impact from the proposed 
regulations is $5.3 billion cost in increased transfers from the 
Federal government to Pell Grant recipients and student loan borrowers 
and subsequently to institutions, primarily from the elimination of the 
ineligibility provision of the GE regulations. However, this estimate 
assumes that a borrower who could no longer enroll in a GE program that 
loses title IV eligibility would not enroll in a different program that 
passes the D/E rates measure, but would instead opt out of a 
postsecondary education experience. The long-term impact to the student 
and the government of the decision to pursue no postsecondary education 
could be significant, but cannot be estimated for the purpose of this 
analysis.
    This is a maximum net budget impact and could be offset by student 
and institutional behavior in response to disclosures in the College 
Scorecard and other resources. Generally, the Department does not 
attribute a significant budget impact to disclosure requirements absent 
substantial evidence that such information will change borrower or 
institutional behavior. The Department welcomes comments on the net 
budget impact analysis. Information received will be considered in 
development of the Net Budget Impact analysis of the final rule.

D. Accounting Statement

    As required by OMB Circular A-4 we have prepared an accounting 
statement showing the classification of the expenditures associated 
with the provisions of the proposed regulations (see Table 5). This 
table provides our best estimate of the changes in annual monetized 
transfers as a result of the proposed regulations. The estimated 
reduced reporting and disclosure burden equals the -$209 million annual 
paperwork burden calculated in the Paperwork Reduction Act of 1995 
section (and also appearing on page 65004 of the regulatory impact 
analysis accompanying the 2014 final rule). The annualization of the 
paperwork burden differs from the 2014 final rule as the annualization 
of the paperwork burden for that rule assumed the same pattern as the 
2011 rule that featured multiple years of data being reported in the 
first year with a significant decline in burden in subsequent years.

 Table 5--Accounting Statement: Classification of Estimated Expenditures
                              [In millions]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                Category                             Benefits
------------------------------------------------------------------------
Discount Rate...........................        7%              3%
Reduced reporting and disclosure burden        $209            $209
 for institutions with GE programs under
 the GE regulations.....................
------------------------------------------------------------------------
                Category                               Costs
------------------------------------------------------------------------
Discount Rate...........................        7%              3%
Costs...................................  ..............  ..............
------------------------------------------------------------------------
                Category                             Transfers
------------------------------------------------------------------------
Discount Rate...........................        7%              3%
Increased transfers to Pell Grant              $518            $527
 recipients and student loan borrowers
 from elimination of ineligibility
 provision of GE regulations............
------------------------------------------------------------------------


[[Page 40181]]

Regulatory Flexibility Act (RFA) Certification

    The U.S. Small Business Administration (SBA) Size Standards define 
proprietary institutions as small businesses if they are independently 
owned and operated, are not dominant in their field of operation, and 
have total annual revenue below $7,000,000. Nonprofit institutions are 
defined as small entities if they are independently owned and operated 
and not dominant in their field of operation. Public institutions are 
defined as small organizations if they are operated by a government 
overseeing a population below 50,000.
    The Department lacks data to identify which public and private, 
nonprofit institutions qualify as small based on the SBA definition. 
Given the data limitations and to establish a common definition across 
all sectors of postsecondary institutions, the Department uses its 
proposed data-driven definitions for ``small institutions'' (Full-time 
enrollment of 500 or less for a two-year institution or less than two-
year institution and 1,000 or less for four-year institutions) in each 
sector (Docket ID ED-2018-OPE-0027) to certify the RFA impacts of these 
proposed regulations. Using this definition, there are 2,816 title IV 
institutions that qualify as small entities based on 2015-2016 12-month 
enrollment.
    When an agency issues a rulemaking proposal, the RFA requires the 
agency to ``prepare and make available for public comment an initial 
regulatory flexibility analysis'' which will ``describe the impact of 
the proposed rule on small entities.'' (5 U.S.C. 603(a)). Section 605 
of the RFA allows an agency to certify a rule, in lieu of preparing an 
analysis, if the proposed rulemaking is not expected to have a 
significant economic impact on a substantial number of small entities.
    The proposed regulations directly affect all institutions with GE 
programs participating in title IV aid. There were 2,617 institutions 
in the 2015 GE cohort, of which 1,357 are small entities. This 
represents approximately 20 percent of all title IV-participating 
institutions and 48 percent of all small institutions. Therefore, the 
Department has determined that the proposed regulations would not have 
a significant economic impact on a substantial number of small 
entities.
    Further, the Department has determined that the impact on small 
entities affected by the proposed regulations would not be significant. 
For these 1,357 institutions, the effect of the proposed regulations 
would be to eliminate GE paperwork burden and potential loss of title 
IV eligibility. We believe that the economic impacts of the proposed 
paperwork and title IV eligibility changes would be beneficial to small 
institutions. Accordingly, the Secretary hereby proposes to certify 
that these proposed regulations, if promulgated, would not have a 
significant economic impact on a substantial number of small entities. 
The Department invites comment from members of the public who believe 
there will be a significant impact on small institutions.

Paperwork Reduction Act of 1995

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department provides the general public and Federal agencies 
with an opportunity to comment on proposed or continuing, or the 
discontinuance of, collections of information in accordance with the 
Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This 
helps ensure that: The public understands the Department's collection 
instructions, respondents can provide the requested data in the desired 
format, reporting burden (time and financial resources) is minimized, 
collection instruments are clearly understood, and the Department can 
properly assess the impact of collection requirements on respondents. 
Respondents also have the opportunity to comment on our burden 
reduction estimates.
    A Federal agency may not conduct or sponsor a collection of 
information unless OMB approves the collection under the PRA and the 
corresponding information collection instrument displays a currently 
valid OMB control number. Notwithstanding any other provision of law, 
no person is required to comply with, or is subject to penalty for 
failure to comply with, a collection of information if the collection 
instrument does not display a currently valid OMB control number.
    The proposed regulations would rescind the GE regulations. That 
action would eliminate the burden as assessed to the GE regulations in 
the following previously approved information collections.

1845-0107--Gainful Employment Disclosure Template

    Individuals--13,953,411 respondents for a total of 1,116,272 burden 
hours eliminated.
    For Profit Institutions--2,526 respondents for a total of 1,798,489 
burden hours eliminated.
    Private Non Profit Institutions--318 respondents for a total of 
27,088 burden hours eliminated.
    Public Institutions--1,117 respondents for a total of 176,311 
burden hours eliminated.

1845-0121--Gainful Employment Program--Subpart R--Cohort Default Rates

    For Profit Institutions--1,434 respondents for a total of 5,201 
burden hours eliminated.
    Private Non Profit Institutions--47 respondents for a total of 172 
burden hours eliminated.
    Public Institutions--78 respondents for a total of 283 burden hours 
eliminated.

1845-0122--Gainful Employment Program--Subpart Q--Appeals for Debt to 
Earnings Rates

    For Profit Institutions--388 respondents for a total of 23,377 
burden hours eliminated.
    Private Non Profit Institutions--6 respondents for a total of 362 
burden hours eliminated.
    Public Institutions--2 respondents for a total of 121 burden hours 
eliminated.

1845-0123--Gainful Employment Program--Subpart Q--Regulations

    Individuals--11,793,035 respondents for a total of 1,050,857 burden 
hours eliminated.
    For Profit Institutions--28,018,705 respondents for a total of 
2,017,100 burden hours eliminated.
    Private Non Profit Institutions--442,348 respondents for a total of 
76,032 burden hours eliminated.
    Public Institutions--2,049,488 respondents for a total of 633,963 
burden hours eliminated.
    The total burden hours and proposed change in burden hours 
associated with each OMB Control number affected by the proposed 
regulations follows:

[[Page 40182]]



----------------------------------------------------------------------------------------------------------------
                                                                                                  Estimated cost
                                                                                                    $36.55/hour
                                                                                                        for
                       Regulatory section                           OMB control    Burden hours    institutions;
                                                                        No.                         $16.30/hour
                                                                                                        for
                                                                                                    individuals
----------------------------------------------------------------------------------------------------------------
Sec.   668.412..................................................       1845-0107      -3,118,160    -$91,364,240
Sec.  Sec.   668.504, 668.509, 668.510, 668.511, 668.512........       1845-0121          -5,656        -206,727
Sec.   668.406..................................................       1845-0122         -23,860        -872,083
Sec.  Sec.   668.405, 668.410, 668.411, 668.413, 668.414........       1845-0123      -3,777,952    -116,804,291
                                                                 -----------------------------------------------
    Total.......................................................  ..............      -6,925,628    -209,247,341
----------------------------------------------------------------------------------------------------------------

    We have prepared Information Collection Requests which will be 
filed upon the effective date of these proposed regulations to 
discontinue the currently approved information collections noted above.

    Note: The Office of Information and Regulatory Affairs in OMB 
and the Department review all comments posted at 
www.regulations.gov.

    We consider your comments on discontinuing these collections of 
information in--
    <bullet> Evaluating the accuracy of our estimate of the burden 
reduction of the proposed discontinuance, including the validity of our 
methodology and assumptions;
    <bullet> Enhancing the quality, usefulness, and clarity of the 
information we collect; and
    <bullet> Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques.
    OMB is required to make a decision concerning the collections of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives your comments on these Information 
Collection Requests by September 13, 2018. This does not affect the 
deadline for your comments to us on the proposed regulations.
    If your comments relate to the Information Collection Requests for 
these proposed regulations, please indicate ``Information Collection 
Comments'' on the top of your comments.

Intergovernmental Review

    These programs are not subject to Executive Order 12372 and the 
regulations in 34 CFR part 79.

Assessment of Educational Impact

    In accordance with section 411 of GEPA, 20 U.S.C. 1221e-4, the 
Secretary particularly requests comments on whether the proposed 
regulations would require transmission of information that any other 
agency or authority of the United States gathers or makes available.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., Braille, large print, 
audiotape, or compact disc) on request to the person listed under FOR 
FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations via the Federal Digital System at: www.gpo.gov/fdsys. At this site you can view this document, as well as all other 
documents of this Department published in the Federal Register, in text 
or Portable Document Format (PDF). To use PDF you must have Adobe 
Acrobat Reader, which is available free at the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department. (Catalog of Federal Domestic Assistance Number does 
not apply.)

List of Subjects

34 CFR Part 600

    Colleges and universities, Foreign relations, Grant programs-
education, Loan programs-education, Reporting and recordkeeping 
requirements, Selective Service System, Student aid, Vocational 
education.

34 CFR Part 668

    Administrative practice and procedure, Aliens, Colleges and 
universities, Consumer protection, Grant programs-education, Loan 
programs-education, Reporting and recordkeeping requirements, Selective 
Service System, Student aid, Vocational education.

    Dated: August 9, 2018.
Betsy DeVos,
Secretary of Education.

    For the reasons discussed in the preamble, and under the authority 
at 20 U.S.C. 3474 and 20 U.S.C. 1221e-3, the Secretary of Education 
proposes to amend parts 600 and 668 of title 34 of the Code of Federal 
Regulations as follows:

PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT 
OF 1965, AS AMENDED

0
1. The authority citation for part 600 continues to read as follows:

    Authority: 20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, 
and 1099c, unless otherwise noted.

0
2. Section 600.10 is amended by revising paragraphs (c)(1) and (2) to 
read as follows:


Sec.  600.10  Date, extent, duration, and consequence of eligibility.

* * * * *
    (c) * * *
    (1) An eligible institution that seeks to establish the eligibility 
of an educational program must--
    (i) Pursuant to a requirement regarding additional programs 
included in the institution's program participation agreement under 34 
CFR 668.14, obtain the Secretary's approval;
    (ii) For a direct assessment program under 34 CFR 668.10, and for a 
comprehensive transition and postsecondary program under 34 CFR 
668.232, obtain the Secretary's approval; and
    (iii) For an undergraduate program that is at least 300 clock hours 
but less than 600 clock hours and does not admit as regular students 
only persons who have completed the equivalent of an associate degree 
under 34 CFR 668.8(d)(3), obtain the Secretary's approval.
    (2) Except as provided under Sec.  600.20(c), an eligible 
institution does not have to obtain the Secretary's approval to 
establish the eligibility of

[[Page 40183]]

any program that is not described in paragraph (c)(1) of this section.
* * * * *
0
3. Section 600.21 is amended by revising the paragraph (a)(11) 
introductory text to read as follows:


Sec.  600.21  Updating application information.

    (a) * * *
    (11) For any program that is required to provide training that 
prepares a student for gainful employment in a recognized occupation--
* * * * *

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

0
 4. The authority citation for part 668 continues to read as follows:

    Authority: 20 U.S.C. 1001-1003, 1070g, 1085, 1088, 1091, 1092, 
1094, 1099c, and 1099c-1, unless otherwise noted.


Sec.  668.6  [Removed and Reserved]

0
5. Remove and reserve Sec.  668.6.
0
6. Section 668.8 is amended by revising paragraphs (d)(2)(iii) and 
(d)(3)(iii) to read as follows:


Sec.  668.8  Eligible program.

* * * * *
    (d) * * *
    (2) * * *
    (iii) Provide training that prepares a student for gainful 
employment in a recognized occupation; and
    (3) * * *
    (iii) Provide undergraduate training that prepares a student for 
gainful employment in a recognized occupation;
* * * * *

Subpart Q--[Removed and Reserved]

0
7. Remove and reserve subpart Q, consisting of Sec. Sec.  668.401 
through 668.415.

Subpart R--[Removed and Reserved]

0
8. Remove and reserve subpart R, consisting of Sec. Sec.  668.500 
through 668.516.

[FR Doc. 2018-17531 Filed 8-10-18; 4:15 pm]
BILLING CODE 4000-01-P


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