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Data Biden-Harris Administration Announces Landmark Final Rules to Protect Consumers from Unaffordable Student Debt and Increase Transparency
                                                          Biden-Harris Administration Announces Landmark Final Rules to Protect Consumers from Unaffordable Student Debt and Increase Transparency
New actions answer President Biden’s call to hold colleges accountable for rising costs and will protect approximately 700,000 students a year from unaffordable debt and poor earnings outcomes at career programs
September 27, 2023
**Contact:** Press Office, (202) 401-1576, press@ed.gov
The Biden-Harris Administration today released final  regulations that establish the most effective set of safeguards ever against  unaffordable debt or insufficient earnings for postsecondary students. The  final rule has two key parts:
A revitalized and       strengthened Gainful Employment (GE) rule, that will protect approximately       700,000 students a year from career training programs that leave graduates       with unaffordable loan payments or earnings no better than what someone       who did not pursue postsecondary education earns in their state.
  A new Financial Value       Transparency (FVT) framework will give students in all programs the most       detailed information ever available about the net costs of postsecondary       programs, and the financial outcomes they can expect. It will also help       prospective students understand the potential risks involved in their       program choices by requiring them to acknowledge viewing this information       before enrolling in certificate or graduate programs whose graduates have       been determined to face unaffordable debt levels.“Today’s final rules answer President Biden’s call to  hold colleges accountable for rising costs and protect students from  unaffordable college debt,” said U.S. Secretary of Education Miguel Cardona.  “We are fixing a broken system and making sure that students know, before they  take out loans, when college programs have a history of leaving graduates with  high debts, low earnings, and poor career prospects. The Biden-Harris  administration believes that when students invest in higher education, they  should get a solid return on their investment and a greater shot at the  American dream.”
The Department estimates that the final rules will  protect nearly 700,000 students annually who would otherwise enroll in one of  nearly 1,700 low-performing programs. Not counting students already covered by  the GE accountability provisions, the FVT framework would result in  acknowledgments for an estimated 400 graduate programs that enroll about  120,000 students.
“These protections  are about ensuring career college programs live up to higher education’s  promise as a pathway to a better a life,” said U.S. Department of Education  Under Secretary James Kvaal. “Students overwhelmingly say that they’re going to  college to find a good job and build financial security, but too often their  programs leave them no better off financially than those with no postsecondary  education at all. These rules will stop taxpayer dollars from going to schools  that continually saddle students with unaffordable debt. Separately, we’re  ensuring all students have increased information to make good choices.”
These final regulations are part of the Biden-Harris  Administration’s work to ensure that postsecondary education remains an engine  for equal opportunity, upward mobility, and global competitiveness. The Administration  has already approved more than $117 billion in student loan forgiveness for  over 3.4 million borrowers. The Biden-Harris Administration has also championed  the largest increase to Pell Grants in a decade and is fighting to put the  grant on a path to doubling the maximum award by 2029. President Biden will  also continue to fight for tuition-free community college and tuition  assistance at Historically Black Colleges and Universities, Tribal Colleges and  Universities, and Minority-Serving Institutions.
**Gainful Employment Program Accountability Framework**
Under the final rule,  the Department assesses whether programs offered by private for-profit  institutions and certificate programs at all types of colleges meet the  statutory requirement to prepare students for gainful employment in a  recognized occupation using two separate measures. Specifically:
The share of annual       earnings the typical graduate needs to devote to paying their debt (i.e.,       their “debt-to-earnings ratio”) must be less than or equal to 8 percent,       or less than or equal to 20 percent of their discretionary earnings       (defined as their annual earnings minus 150 percent of the federal poverty       guideline).This metric captures whether a program’s debt is affordable.
  At least half of       graduates have higher earnings than a typical high school graduate in       their state’s labor force who never enrolled in postsecondary       education. This "earnings premium" assesses whether the       program enhances its students’ earnings potential.Programs will be assessed separately on each metric.  Programs that fail either will need to warn students that the program is at  risk of losing access to the federal student aid programs. Those that fail to  meet the standards on the same metric twice in a three-year period will not  be eligible to participate in the Department's Federal student aid programs.
**Financial Value Transparency for All Students and Families**
The final rules also  include the FVT framework. It will provide students and families across the  country with the most detailed information ever available about what they are  likely to pay out-of-pocket for programs, how much debt they can expect to take  on, and how much money students are likely to earn after graduation. The FVT  framework also includes provisions to ensure prospective students are aware,  before they enroll, of risks associated with selecting a certificate or  graduate program that is likely to leave them with unaffordable debt.
Students will receive this enhanced transparency for  programs through new reporting requirements for institutions related to costs  (including tuition and fees, books, and supplies), non-federal grant aid, and  typical borrowing amounts (for both private and federal loans). The Department  will also calculate typical earnings for program graduates. This information  will be made publicly available to students on a website run by the Department.
The Department focused the FVT acknowledgements on  certificate and graduate programs in the final rule because they are the  programs where unaffordable debt is most common, and students tend to enroll  directly into particular programs. By contrast, many students seeking  undergraduate degrees do not select a program when they enter the institution.
The Department issued these final rules after careful  consideration of more than 7,500 public comments received over the summer. The  GE accountability and FVT reporting provisions will go into effect on July 1,  2024. The first official financial outcome rates will be published in early  2025. Programs that fail the same GE metric in the first two years the rates  are issued will become ineligible in 2026.
The final regulations will be on public inspection in the  Federal Register tomorrow and published on October 10, 2023. An official copy  of the regulations can be found here. A fact sheet on the final rule can be  found here. The Department released comprehensive  data on the estimated effects of the rule on most specific postsecondary  programs in May. Those data can be found here, along with a description of the data, and a data codebook.
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