Vol. 79 Tuesday, 

No. 57 March 25, 2014 

Part II 

Department of Education 

34 CFR Parts 600 and 668 

Program Integrity: Gainful Employment; Proposed Rule 

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16426 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

DEPARTMENT OF EDUCATION 

34 CFR Parts 600 and 668 

[Docket ID ED–2014–OPE–0039] 

RIN 1840–AD15 

Program Integrity: Gainful Employment 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Secretary proposes to 

amend the regulations on institutional 

eligibility under the Higher Education 

Act of 1965, as amended (HEA), and the 

Student Assistance General Provisions 

to establish measures for determining 

whether certain postsecondary 

educational programs prepare students 

for gainful employment in a recognized 

occupation, and the conditions under 

which these educational programs 

remain eligible under the Federal 

Student Aid programs authorized under 

title IV of the HEA (title IV, HEA 

programs). 

DATES: We must receive your comments 

on or before May 27, 2014. 

ADDRESSES: Submit your comments 

through the Federal eRulemaking Portal 

or via postal mail, commercial delivery, 

or hand delivery. We will not accept 

comments 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. 

• 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 ‘‘Are you new to the site?’’ 

• 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, 

1990 K Street NW., room 8037, 

Washington, DC 20006–8502. 

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: John 

Kolotos, U.S. Department of Education, 

1990 K Street NW., Room 8018, 

Washington, DC 20006–8502. 

Telephone: (202) 502–7762 or by email: 

gainfulemploymentregulations@ed.gov. 

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 under 

‘‘§ 668.401 Scope and purpose,’’ the 

proposed regulations are intended to 

address growing concerns about 

educational programs that, as a 

condition of eligibility for title IV, HEA 

program funds, are required by statute 

to provide training that prepares 

students for gainful employment in a 

recognized occupation (GE programs), 

but instead are leaving students with 

unaffordable levels of loan debt in 

relation to their earnings, or leading to 

default. GE programs include nearly all 

educational programs at for-profit 

institutions of higher education, as well 

as non-degree programs at public and 

private non-profit institutions such as 

community colleges. 

Specifically, the Department is 

concerned that a number of GE 

programs: (1) Do not train students in 

the skills they need to obtain and 

maintain jobs in the occupation for 

which the program purports to provide 

training, (2) provide training for an 

occupation for which low wages do not 

justify program costs, and (3) are 

experiencing a high number of 

withdrawals or ‘‘churn’’ because 

relatively large numbers of students 

enroll but few, or none, complete the 

program, which can often lead to 

default. We are also concerned about the 

growing evidence, from Federal and 

State investigations and qui tam 

lawsuits, that many GE programs are 

engaging in aggressive and deceptive 

marketing and recruiting practices. As a 

result of these practices, prospective 

students and their families are 

potentially being pressured and misled 

into critical decisions regarding their 

educational investments that are against 

their interests. 

For these reasons, through this 

regulatory action, the Department seeks 

to establish: (1) An accountability 

framework for GE programs that will 

define what it means to prepare 

students for gainful employment in a 

recognized occupation by establishing 

measures by which the Department 

would evaluate whether a GE program 

remains eligible for title IV, HEA 

program funds, and (2) a transparency 

framework that would increase the 

quality and availability of information 

about the outcomes of students enrolled 

in GE programs. Better outcomes 

information would benefit: students, 

prospective students, and their families, 

as they make critical decisions about 

their educational investments; the 

public, taxpayers, and the Government, 

by providing information that would 

enable better protection of the Federal 

investment in these programs; and 

institutions, by providing them with 

meaningful information that they could 

use to help improve student outcomes 

in their programs. 

The accountability framework is 

designed to define what it means to 

prepare students for gainful 

employment by establishing measures 

that would assess whether programs 

provide quality education and training 

to their students that lead to earnings 

that will allow students to pay back 

their student loan debts. For programs 

that perform poorly under the measures, 

institutions would need to make 

improvements in the initial years of the 

rule, or lose program eligibility for title 

IV, HEA program funds. For programs 

that are not among the very worst, but 

nonetheless do not have outcomes that 

meet minimum acceptable levels of 

performance, institutions would be 

required to make improvements after 

the regulations become effective to 

avoid losing eligibility, but would be 

given a relatively greater amount of time 

to do so. 

The transparency framework is 

designed to establish reporting and 

disclosure requirements that would 

increase the transparency of student 

outcomes of GE programs so that 

information is disseminated to students, 

prospective students, and their families 

that is accurate and comparable and 

could help them make better informed 

decisions about where to invest their 

time and money in pursuit of a 

postsecondary degree or credential. 

Further, this information would provide 

the public, taxpayers, and the 

Government with relevant information 

to better safeguard the Federal 

investment in these programs. Finally, 

the transparency framework would 

provide institutions with meaningful 

information that they could use to 

improve student outcomes in these 

programs. 

Authority for This Regulatory Action: 

To accomplish these two primary 

goals of accountability and 

transparency, the Secretary proposes to 

amend parts 600 and 668 of title 34 of 

the Code of Federal Regulations (CFR). 

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The Department’s authority for this 

regulatory action is derived primarily 

from three sources, which are discussed 

in more detail in ‘‘§ 668.401 Scope and 

purpose’’ and ‘‘§ 668.403 Gainful 

employment framework.’’ First, sections 

101 and 102 of the HEA define an 

eligible institution, as pertinent here, as 

one that provides an ‘‘eligible program 

of training to prepare students for 

gainful employment in a recognized 

occupation.’’ 20 U.S.C. 1001(b)(1), 

1002(b)(1)(A)(i), (c)(1)(A). Section 481(b) 

of the HEA defines ‘‘eligible program’’ 

to include a program that ‘‘provides a 

program of training to prepare students 

for gainful employment in a recognized 

profession.’’ 20 U.S.C. 1088(b). Briefly, 

this authority establishes the 

requirement that the educational 

programs that are eligible for title IV, 

HEA program funds under these 

sections must provide training to 

prepare students for gainful 

employment in a recognized 

occupation—the requirement that the 

Department seeks to define through the 

proposed regulations. 

Second, section 410 of the General 

Education Provisions Act provides the 

Secretary with authority 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. 

Furthermore, under section 414 of the 

Department of Education Organization 

Act, the Secretary is authorized 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. These 

authorities thus include promulgating 

regulations that, in this case: set 

measures to determine the eligibility of 

GE programs for title IV, HEA program 

funds; require institutions to report 

information about the program to the 

Secretary; and require the institution to 

disclose information about the program 

to students, prospective students, and 

their families, the public, taxpayers, and 

the Government, and institutions. 

As also explained in more detail in 

‘‘§ 668.401 Scope and purpose,’’ the 

Department’s authority for the 

transparency framework is further 

supported by section 431 of the 

Department of Education Organization 

Act, which provides authority to the 

Secretary, in relevant part, to inform the 

public regarding federally supported 

education programs; and collect data 

and information on applicable programs 

for the purpose of obtaining objective 

measurements of the effectiveness of 

such programs in achieving the 

intended purposes of such programs. 20 

U.S.C. 1231a. 

The Department’s authority for the 

proposed regulations is also informed 

by the legislative history of these 

provisions, as discussed in ‘‘§ 668.403 

Gainful employment framework,’’ as 

well as the rulings of the U.S. District 

Court for the District of Columbia in 

Association of Private Sector Colleges 

and Universities v. Duncan, 870 

F.Supp.2d 133 (D.D.C. 2012), and 930 

F.Supp.2d 210 (D.D.C. 2013). Notably, 

the court specifically considered the 

Department’s authority to define what it 

means to prepare students for gainful 

employment and to require institutions 

to report and disclose relevant 

information about their GE programs. 

Summary of the Major Provisions of 

This Regulatory Action: 

As discussed under ‘‘Purpose of This 

Regulatory Action,’’ the proposed 

regulations would establish an 

accountability framework and a 

transparency framework. 

The accountability framework would, 

among other things, create a 

certification process by which an 

institution would establish a GE 

program’s eligibility for title IV, HEA 

program funds, as well as a process by 

which the Department would determine 

whether a program remains eligible. 

First, an institution would establish the 

eligibility of a GE program by certifying 

that the program is included in the 

institution’s accreditation and satisfies 

any applicable State or Federal programlevel accrediting and licensing 

requirements for the occupations for 

which the program purports to prepare 

students to enter. This requirement 

would serve as a baseline protection 

against the harm that students could 

experience by enrolling in programs that 

do not meet all State or Federal 

accrediting standards and licensing 

requirements necessary to secure the 

jobs associated with the training. 

Under the accountability framework, 

we also propose two complementary yet 

independent measures—the debt-toearnings (D/E) rates measure and the 

program cohort default rate (pCDR) 

measure—that would be used to 

determine whether a GE program 

remains eligible for title IV, HEA 

program funds. 

The D/E rates measure would evaluate 

the amount of debt students who 

completed a GE program incurred to 

attend that program in comparison to 

those same students’ discretionary and 

annual earnings after completing the 

program. The proposed regulations 

would establish the standards by which 

the program would be assessed to 

determine, for each year rates are 

calculated, whether it passes or fails the 

D/E rates measure or is ‘‘in the zone.’’ 

Under the proposed regulations, to pass 

the D/E rates measure, the GE program 

must have a discretionary income rate 

less than or equal to 20 percent or an 

annual earnings rate less than or equal 

to 8 percent. The proposed regulations 

would also establish a zone for GE 

programs that have a discretionary 

income rate between 20 percent and 30 

percent or an annual earnings rate 

between 8 percent and 12 percent. GE 

programs with a discretionary income 

rate over 30 percent and an annual 

earnings rate over 12 percent would fail 

the D/E rates measure. Under the 

proposed regulations, a GE program 

would become ineligible for title IV, 

HEA program funds, if it fails the D/E 

rates measure for two out of three 

consecutive years, or has a combination 

of D/E rates measures that are in the 

zone or failing for four consecutive 

years. We propose the D/E rates measure 

and the thresholds, as explained in 

more detail in ‘‘§ 668.403 Gainful 

employment framework,’’ to assess 

whether a GE program has indeed 

prepared students to earn enough to 

repay their loans, or was sufficiently 

low cost, such that students are not 

unduly burdened with debt, and to 

better safeguard the Federal investment 

in the program. 

In addition to the D/E rates measure, 

the proposed regulations would 

establish a pCDR measure. The pCDR 

measure would evaluate the default rate 

of former students enrolled in a GE 

program, regardless of whether they 

completed the program. Under the 

proposed regulations, a program would 

lose eligibility if its GE program has a 

pCDR of 30 percent or greater for three 

consecutive fiscal years. We propose the 

pCDR measure and the thresholds, as 

explained in more detail in ‘‘§ 668.403 

Gainful employment framework,’’ to 

identify those programs that may pass, 

or may not be evaluated by, the D/E 

rates measure, but whose students incur 

debt they cannot repay and ultimately 

default on their loans. Unlike the D/E 

rates measure, the pCDR measure would 

include students who did not complete 

their programs and therefore could 

disqualify programs with low 

completion rates that, regardless of the 

earnings of students who complete the 

program, leave a significant number of 

students without credentials and with 

unmanageable debt. 

The proposed regulations would also 

establish procedures for the calculation 

of the D/E rates and pCDR measures, as 

well as a process for challenging the 

information used to calculate the D/E 

rates and pCDR measures and appealing 

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those determinations. For the D/E rates 

measure, the proposed regulations also 

would establish a transition period for 

the first four years of the rule to allow 

institutions an opportunity to pass the 

D/E rates measure by taking immediate 

steps to improve otherwise failing GE 

programs by reducing the loan debt of 

currently enrolled students. 

For a GE program that could become 

ineligible in an immediately succeeding 

year, based on the program’s 

performance in prior years, the 

proposed regulations would require the 

GE program to warn students and 

prospective students of the potential 

loss of eligibility for title IV, HEA 

program funds, as well as the 

implications of such loss. Specifically, 

institutions would be required to 

provide written warnings to students 

that describe the options available to 

continue their education at the 

institution, or at another institution, in 

the event that the program loses its 

eligibility and whether the students will 

be able to receive a refund of tuition and 

fees. The proposed regulations also 

provide that, for a GE program that loses 

eligibility for title IV, HEA program 

funds, as well as any failing or zone 

program that is discontinued by the 

institution, the loss of eligibility is for 

three calendar years. 

Through these provisions, we intend 

to: Ensure that, in the initial few years 

after the proposed regulations become 

effective, institutions would have a 

meaningful opportunity and reasonable 

time to improve their programs and to 

ensure that those improvements would 

be reflected in the D/E rates; protect 

students and prospective students and 

ensure that they are informed about 

programs that are failing or could 

potentially lose eligibility; and provide 

institutions and other interested parties 

with clarity as to how the calculations 

would be made, the opportunities 

institutions would have to ensure the 

information used in the calculations is 

accurate, and the consequences of 

failing a measure and losing eligibility. 

In addition to the accountability 

framework, the proposed regulations 

would establish a transparency 

framework. First, the proposed 

regulations would establish reporting 

requirements, under which institutions 

would report information related to 

their GE programs to the Secretary. The 

reporting requirements would both 

facilitate the Department’s evaluation of 

the GE programs under the 

accountability framework, as well as 

support the goals of the transparency 

framework. Second, the proposed 

regulations would require institutions to 

disclose relevant information and data 

about the GE programs through a 

disclosure template developed by the 

Secretary. The proposed disclosure 

requirements would help ensure 

students, prospective students, and their 

families, the public, taxpayers, and the 

Government, and institutions have 

access to meaningful and comparable 

information related to student outcomes 

and overall performance of GE 

programs. 

Costs and Benefits: 

There would be two primary benefits 

of the proposed regulations. Because the 

proposed regulations would establish an 

accountability framework that assesses 

program performance we would expect 

students, prospective students, 

taxpayers, and the Federal Government 

to receive a better return on money 

spent on education. The proposed 

regulations would also establish a 

transparency framework designed to 

improve market information that would 

assist students, prospective students, 

and their families in making critical 

decisions about their educational 

investment and in understanding 

potential outcomes of that investment. 

The public, taxpayers, the Government, 

and institutions would also gain 

relevant and useful information about 

GE programs, allowing them to better 

evaluate their investment in these 

programs. Institutions would largely 

bear the costs of the proposed 

regulations, which would fall into two 

categories: paperwork costs associated 

with institutions complying with the 

proposed regulations, and other costs 

that could be incurred by institutions if 

they attempt to improve their GE 

programs and due to changing student 

enrollment. In addition, if programs that 

provided valuable education to students 

shut down as a result of the proposed 

regulations, then the foregone value of 

that service would be another cost to 

society. See ‘‘Discussion of Costs, 

Benefits, and Transfers’’ in the 

regulatory impact analysis in Appendix 

A to this document for a more complete 

discussion of the costs and benefits of 

the proposed regulations. 

Invitation to Comment: We invite you 

to submit comments regarding the 

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. 

Please do not submit comments outside 

the scope of the specific proposals in 

this notice of proposed rulemaking. We 

will not respond to comments that do 

not specifically relate to the proposed 

regulations. See ‘‘ADDRESSES’’ for 

instructions on how to submit 

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 the 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 in room 

8037, 1990 K Street NW., Washington, 

DC, between 8:30 a.m. and 4:00 p.m., 

Washington, DC time, Monday through 

Friday of each week except Federal 

holidays. If you want to schedule time 

to inspect comments, please contact the 

person listed under FOR FURTHER

INFORMATION CONTACT. 

Assistance to Individuals with 

Disabilities in Reviewing the 

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. If 

you want to schedule an appointment 

for this type of accommodation or 

auxiliary aid, please contact the person 

listed under FOR FURTHER INFORMATION

CONTACT. 

Background of the Proposed 

Regulations, Public Participation, and 

Negotiated Rulemaking 

Background 

The Secretary proposes to amend 

parts 600 and 668 of title 34 of the CFR. 

The regulations in 34 CFR part 600 and 

668 pertain to institutional eligibility 

under the HEA and participation in title 

IV, HEA programs. We propose these 

amendments to establish measures for 

determining whether certain 

postsecondary educational programs 

prepare students for gainful 

employment in a recognized occupation 

and the conditions under which these 

educational programs remain eligible 

under the title IV, HEA programs. 

Negotiated Rulemaking Requirement 

Section 492 of the HEA, 20 U.S.C. 

1098a, requires the Secretary, before 

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publishing any proposed regulations for 

programs authorized by title IV of the 

HEA, to obtain public involvement in 

the development of proposed 

regulations. After obtaining advice and 

recommendations from the public, 

including individuals and 

representatives of groups involved in 

the title IV, HEA programs, the 

Secretary 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: http://www2.ed.gov/policy/

highered/reg/hearulemaking/hea08/negreg-faq.html. 

Prior Negotiated Rulemaking 

Between November 2009 and January 

2010, the Department held three 

negotiated rulemaking sessions aimed at 

improving program integrity in the title 

IV, HEA programs, and that discussed 

gainful employment and 13 other 

program integrity topics. As a result of 

those discussions, during which 

consensus was not reached on issues 

related to gainful employment, the 

Department published three notices of 

proposed rulemaking (NPRM) related to 

the topic of gainful employment. 

Notably, those proposed regulations 

included two debt measures to 

determine whether a program provides 

training that prepares students for 

gainful employment in a recognized 

occupation. One measure was based on 

the Federal student loan repayment 

rates of students enrolled in the 

program, and the other measure was 

based on the debt-to-earnings ratios of 

students who completed the program. 

On October 29, 2010, and June 13, 

2011, the Department published final 

regulations on gainful employment: 

‘‘Program Integrity: Reporting/

Disclosure Requirements for GE 

Programs’’; ‘‘Program Integrity: Gainful 

Employment—New Programs’’; and 

‘‘Gainful Employment: Gainful 

Employment—Debt Measures’’ (75 FR 

66832; 75 FR 66665; 76 FR 34385). In 

this document, we refer to those final 

regulations, when discussing them 

collectively, as the ‘‘2011 Final Rules.’’ 

We did not publish final regulations for 

the NPRM published on September 27, 

2011, relating to the application and 

approval process for new programs that 

prepare students for gainful 

employment in a recognized 

occupation. 

Among other things, with respect to 

the two debt measures for determining 

whether a program provides training 

that prepares students for gainful 

employment in a recognized 

occupation, the 2011 Final Rules 

established a maximum debt-to-earnings 

ratio of 30 percent of discretionary 

income and 12 percent of annual 

earnings and a minimum standard of 35 

percent for the loan repayment rate. 

The chart below summarizes the past 

NPRMs and 2011 Final Rules. 

Date NPRM Date Final rule 

June 18, 2010 ............. Program Integrity Issues (75 FR 34806) ........ Oct. 29, 2010 ............. Reporting/Disclosure Requirements for GE 

Programs. Effective on July 1, 2011 (75 FR 

66832). 

July 26, 2010 ............... Gainful Employment (75 FR 43616) ............... Oct. 29, 2010 ............. Gainful Employment—New Programs (75 FR 

66665). 

June 13, 2011 ............ Gainful Employment—Debt Measures (76 FR 

34385). 

Sept. 27, 2011 ............. Application and Approval Process for New 

Programs (76 FR 59864).

..................................... (No final rule published). 

Litigation on the 2011 Final Rules 

In July 2011, immediately after the 

first set of final regulations for gainful 

employment took effect, the Association 

of Private Sector Colleges and 

Universities (APSCU), an industry 

organization representing for-profit 

institutions, brought suit against the 

Department in the U.S. District Court for 

the District of Columbia challenging, 

among other things, the debt measures, 

reporting and disclosure requirements, 

and new program approval 

requirements in the 2011 Final Rules. 

On June 30, 2012, the court struck down 

most of the 2011 Final Rules, finding 

that the threshold for the loan 

repayment measure lacked a reasoned 

basis. Association of Private Sector 

Colleges and Universities v. Duncan, 

870 F.Supp.2d 133 (D.D.C. 2012). We 

refer to the case in this document as 

‘‘APSCU v. Duncan.’’ Although the 

court rejected APSCU’s argument that 

the debt-to-earnings measure was not 

the product of reasoned decisionmaking, the court nonetheless found 

that the two debt measures and other 

provisions of the regulations were so 

intertwined that the threshold in the 

loan repayment measure could not be 

severed from the debt measures and 

other parts of the regulations. For this 

reason, the court vacated almost all of 

the 2011 Final Rules. 

Notably, however, the disclosure 

requirements survived and are still in 

effect. Under the disclosure 

requirements, for each GE program, an 

institution must disclose the occupation 

that the program prepares students to 

enter; the on-time graduation rate for 

students completing the program; the 

tuition and fees charged; and the 

placement rate and median loan debt for 

students completing the program. The 

court held that the disclosure 

requirements are within the 

Department’s authority under the HEA 

and are not arbitrary or capricious. 

Additionally, the court noted in its 

opinion that the Secretary enjoys broad 

authority to make, promulgate, issue, 

rescind, and amend the rules and 

regulations governing the applicable 

programs administered by the 

Department and that the Secretary is 

‘‘authorized 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.’’ APSCU v. 

Duncan, 870 F.Supp.2d at 141; see 20 

U.S.C. 3474 (2006). Furthermore, in 

responding to the question of whether 

the Department’s regulatory effort to 

define gainful employment is within the 

Department’s authority, the court agreed 

with the Department and concluded that 

the phrase ‘‘gainful employment in a 

recognized occupation’’ is ambiguous 

and that in enacting it Congress 

delegated interpretive authority to the 

Department. Id. at 146. 

The Department subsequently filed a 

motion to alter or amend the judgment, 

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16430 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

1http://www2.ed.gov/policy/highered/reg/

hearulemaking/2012/index.html. 

asking the court to reinstate the vacated 

reporting requirements, as they were 

required for the Department to comply 

with its obligations under the provisions 

relating to the disclosure requirements. 

The court denied this motion on March 

19, 2013. 

In its opinion, the court refused to 

reinstate the reporting requirements for 

the reason that they required 

institutions to report to the Department 

information about students enrolled in 

GE programs who did not apply for or 

receive title IV, HEA program funds. 

The court concluded that the 

Department was prohibited under 

section 134 of the HEA, 20 U.S.C. 1015c, 

from maintaining information about 

those students in the Department’s 

National Student Loan Data System 

(NSLDS), as planned. APSCU v. 

Duncan, 930 F.Supp.2d 210 (D.D.C. 

2013). Neither the Department nor 

APSCU appealed the court’s rulings. 

As a result of APSCU v. Duncan, 

certain sections of the 2011 Final Rules 

were vacated either in whole or in part. 

For the purpose of this NPRM, when 

referencing a section that was vacated in 

part, we treat the entire section as 

vacated. Throughout this document, we 

refer to the sections that were vacated or 

are treated here as vacated as part of the 

‘‘2011 Prior Rule.’’ Although the text of 

these vacated sections remains in the 

CFR and we refer to them in this 

document in the present tense, these 

sections are of no effect. Section 

668.6(b) of the 2011 Final Rules, relating 

to disclosure requirements for GE 

programs, was not vacated as a result of 

APSCU v. Duncan. This section remains 

in effect, and we refer to this section in 

this document as the ‘‘2011 Current 

Rule.’’ In discussing the current 

regulations and proposed regulations 

under ‘‘Significant Proposed 

Regulations,’’ we discuss relevant parts 

of the 2011 Final Rules, but we 

distinguish between sections that are 

part of the 2011 Prior Rule and sections 

that are part of the 2011 Current Rule. 

New Negotiated Rulemaking 

On May 1, 2012, the Department 

published a document in the Federal 

Register (77 FR 25658) announcing its 

intent to establish a negotiated 

rulemaking committee under section 

492 of the HEA, 20 U.S.C. 1098a, to 

develop proposed regulations designed 

to prevent fraud and otherwise ensure 

proper use of title IV, HEA program 

funds. In particular, we announced our 

intent to propose regulations to address 

the use of debit cards and other banking 

mechanisms for disbursing title IV, HEA 

program funds, and to improve and 

streamline the campus-based Federal 

Student Aid programs. We also 

announced two public hearings at 

which interested parties could comment 

on the topics suggested by the 

Department and suggest additional 

topics for consideration for action by the 

negotiated rulemaking committee. 

Those hearings were held on May 23, 

2012, in Phoenix, Arizona, and on May 

31, 2012, in Washington, DC. We 

invited parties to comment and submit 

topics for consideration in writing, as 

well. 

On April 16, 2013, we published a 

document in the Federal Register (78 

FR 22467, as corrected at 78 FR 25235), 

announcing additional topics for 

consideration for action by the 

negotiated rulemaking committee. 

Those additional topics for 

consideration included cash 

management of funds provided under 

the title IV, HEA programs; State 

authorization for programs offered 

through distance education or 

correspondence education; State 

authorization for foreign locations of 

institutions located in a State; clock to 

credit hour conversion; gainful 

employment; changes made by the 

Violence Against Women 

Reauthorization Act of 2013, Public Law 

113–4, to the campus safety and security 

reporting requirements in the HEA; and 

the definition of ‘‘adverse credit’’ for 

borrowers in the Federal Direct PLUS 

Loan Program. We also announced three 

public hearings at which interested 

parties could comment on the new 

topics suggested by the Department and 

suggest additional topics for 

consideration for action by the 

negotiating committee. 

On May 13, 2013, we announced in 

the Federal Register (78 FR 27880) the 

addition of a fourth hearing. The four 

hearings were held in May 2013, in 

Washington, DC, Minneapolis, 

Minnesota, and San Francisco, 

California; and in June 2013, in Atlanta, 

Georgia. We also invited parties unable 

to attend a public hearing to submit 

written comments on the additional 

topics and to submit other topics for 

consideration. Transcripts from all six 

public hearings are available at http://

www2.ed.gov/policy/highered/reg/

hearulemaking/2012/index.html. 

Written comments submitted in 

response to the May 1, 2012, and April 

16, 2013, notices may be viewed 

through the Federal eRulemaking Portal 

at www.regulations.gov. Instructions for 

finding comments are available on the 

site under ‘‘How to Use 

Regulations.gov’’ in the Help section. 

Individuals can enter docket ID ED– 

2012–OPE–0008 in the search box to 

locate the appropriate docket. 

On June 12, 2013, we announced in 

the Federal Register (78 FR 35179) our 

intent to establish a negotiated 

rulemaking committee to prepare 

proposed regulations for the title IV, 

HEA programs. The proposed 

regulations would establish measures 

for programs that prepare students for 

gainful employment in a recognized 

occupation. The notice requested 

nominations of individuals for 

membership on the committee who 

could represent the interests of key 

stakeholder constituencies. 

The Department considered 

nominations submitted between the 

time of the publication of the notice on 

June 12, 2013, and July 12, 2013. 

Negotiators were sought to represent 

constituencies that generally included 

students; legal assistance organizations 

that represent students; consumer 

advocacy organizations; financial aid 

administrators at postsecondary 

institutions; State higher education 

executive officers; State Attorneys 

General and other appropriate State 

officials; business and industry; 

institutions of higher education eligible 

to receive Federal assistance under title 

III, parts A, B, and F and title V of the 

HEA, which include Historically Black 

Colleges and Universities, HispanicServing Institutions, American Indian 

Tribally Controlled Colleges and 

Universities, Alaska Native and Native 

Hawaiian-Serving Institutions, 

Predominantly Black Institutions, and 

other institutions with a substantial 

enrollment of needy students as defined 

in title III of the HEA; two-year public 

institutions of higher education; fouryear public institutions of higher 

education; private, non-profit 

institutions of higher education; private, 

for-profit institutions of higher 

education; and regional accrediting 

agencies, national accrediting agencies, 

and specialized accrediting agencies. 

Each constituency selected would have 

a primary and an alternate member. On 

August 2, 2013, the Department 

published the list of negotiators who 

were selected on its Web site.1

The negotiated rulemaking committee 

met to develop proposed regulations on 

September 9–11 and November 18–20, 

2013. The latter session was 

rescheduled from October 21–23, due to 

the shutdown of the Federal 

Government from October 1–16, which 

resulted from a lapse in appropriations. 

At the request of the committee, the 

Department added a third and final 

session held on December 13, 2013. 

These sessions, unlike the sessions 

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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16431 

2Available at: http://studentaid.ed.gov/about/

data-center/school/ge/data. 

3Available at: http://www2.ed.gov/policy/

highered/reg/hearulemaking/2012/2013-debtearnings-data.xls and http://www2.ed.gov/policy/

highered/reg/hearulemaking/2012/2013-repaymentrate-data.xls; also accessible through http://

www2.ed.gov/policy/highered/reg/hearulemaking/

2012/gainfulemployment.html. 

involving the 2011 Final Rules, were 

focused solely on the topic of gainful 

employment. 

At its first meeting, the committee 

reached agreement on its protocols, 

which generally set out the committee 

membership, the topics of discussion 

and negotiation, and the standards by 

which the committee would operate. 

These protocols provided, among other 

things, that the non-Federal negotiators 

would represent in negotiations the 

organizations listed after their names in 

the protocols. The committee included 

the following members: 

Rory O’Sullivan, Young Invincibles, 

and Kalwis Lo (alternate), United States 

Students Association, representing 

students. 

Eileen Connor, New York Legal 

Assistance Group, and Whitney Barkley 

(alternate), Mississippi Center for 

Justice, representing legal assistance 

organizations that represent students. 

Margaret Reiter, a California-based 

consumer protection attorney, and Tom 

Tarantino (alternate), Veterans of 

America, representing consumer 

advocacy organizations. 

Kevin Jensen, College of Western 

Idaho, and Rhonda Mohr (alternate), 

California Community Colleges 

Chancellor’s Office, representing 

financial aid administrators. 

Jack Warner, South Dakota Board of 

Regents, and Sandra Kinney (alternate), 

Louisiana Community and Technical 

College System, representing State 

higher education executive officers. 

Della Justice, Office of the Kentucky 

Attorney General, and Libby DeBlasio 

(alternate), Office of the Colorado 

Attorney General, representing State 

attorneys. 

Ted Daywalt, VetJobs, and Thomas 

Kriger (alternate), AFL–CIO, 

representing the business and labor 

communities. 

Helga Greenfield, Spelman College, 

and Ronnie Higgs (alternate), California 

State University at Monterey Bay, 

representing minority-serving 

institutions. 

Richard Heath, Anne Arundel 

Community College, and Glen Gabert 

(alternate), Hudson County Community 

College, representing two-year public 

institutions. 

Barmak Nassirian, American 

Association of State College and 

Universities, and Barbara Hoblitzell 

(alternate), University of California, 

representing four-year public 

institutions. 

Jenny Rickard, University of Puget 

Sound, and Thomas Dalton (alternate), 

Excelsior College, representing private, 

non-profit institutions. 

Brian Jones, Strayer University, and 

Raymond Testa (alternate), Empire 

Education Group, representing private, 

for-profit institutions—publicly traded. 

Marc Jerome, Monroe College, and 

Justin Berkowitz (alternate), Daytona 

College, representing private, for-profit 

institutions—not publicly traded. 

Belle Wheelan, Southern Association 

of Colleges and Schools Commission on 

Colleges, and Neil Harvison (alternate), 

American Occupational Therapy 

Association, representing accrediting 

agencies. 

John Kolotos, U.S. Department of 

Education, representing the Federal 

Government. 

The protocols also provided that, 

unless agreed to otherwise, consensus 

on all issues in the proposed regulations 

had to be achieved for consensus to be 

reached on the entire proposed rule. 

The protocols also specified that 

consensus means that there must be no 

dissent by any members. 

During each of the committee 

meetings, the committee reviewed and 

discussed the Department’s drafts of 

proposed regulations and the committee 

member’s alternative proposals and 

suggestions. At the final meeting on 

December 13, 2013, the committee did 

not reach consensus on the 

Department’s proposed regulations. For 

that reason, and according to the 

committee’s protocols, all parties who 

participated or were represented in the 

negotiated rulemaking, 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: http:// 

www2.ed.gov/policy/highered/reg/

hearulemaking/2012/gainful

employment.html. 

Summary of Relevant Data Available 

The Gainful Employment Data 

After the effective date of the 2011 

Final Rules on July 1, 2011, the 

Department received, pursuant to the 

reporting requirements of the 2011 Final 

Rules, information from institutions on 

their GE programs for award years 

2006–2007 through 2010–2011 (GE 

Data). The GE Data included 

information on students who received 

title IV, HEA program funds, as well as 

students who did not. After the 

decisions in APSCU v. Duncan, the 

Department removed from NSLDS and 

destroyed the data on students who did 

not receive title IV, HEA program funds. 

The 2011 GE Informational Rates 

In June 2012, the Department released 

the ‘‘2011 GE informational rates.’’ 2 The 

2011 GE informational rates include 

informational debt-to-earnings rates and 

dollar-based loan repayment rates for 

GE programs. The 2011 informational 

debt-to-earnings rates were calculated 

by program and based on the debt and 

earnings of students who completed GE 

programs between October 1, 2006, and 

September 30, 2008—the ‘‘07/08 2011 

D/E rates cohort’’. The annual loan 

payment component of the debt-toearnings formulas was calculated for 

each program using information from 

the GE Data and NSLDS. For the annual 

earnings figures that were used to make 

the debt-to-earnings calculations, the 

Department obtained from the Social 

Security Administration (SSA) the 2010 

annual earnings, by program, of the 07/ 

08 2011 D/E rates cohort. The 2011 

informational dollar-based loan 

repayment rates were calculated by 

program for students who entered 

repayment between October 1, 2006, 

and September 30, 2008—the ‘‘07/08 

2011 repayment rates cohort’’—on loans 

under the Federal Family Education 

Loan (FFEL) Program and under the 

William D. Ford Direct Loan (Direct 

Loan) Program for attendance in a GE 

program. The repayment rate 

calculations were made using student 

loan information for the 07/08 2011 

repayment rates cohort from the GE Data 

and NSLDS. 

The 2011 GE informational rates had 

no effect on the eligibility of GE 

programs. This information was 

intended to help institutions understand 

how their programs might fare under the 

2011 Final Rules when they became 

effective. 

The Session 1 2012 GE Informational 

Rates 

On August 29, 2013, prior to the first 

meeting of the negotiated rulemaking 

committee for the new negotiated 

rulemaking, the Department released the 

‘‘Session 1 2012 GE informational 

rates’’ 3 to inform the committee’s 

discussion of the Department’s 

proposals. The Session 1 2012 GE 

informational rates include two sets of 

informational debt-to-earnings rates, 

informational dollar-based repayment 

rates, and informational borrower-based 

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16432 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

4Available at: http://www2.ed.gov/policy/

highered/reg/hearulemaking/2012/2013- 

methodology.doc, also accessible through http://

www2.ed.gov/policy/highered/reg/hearulemaking/

2012/gainfulemployment.html. 

5Available at: http://www2.ed.gov/policy/

highered/reg/hearulemaking/2012/s3-gedatafile121113.xls, also accessible through http://

www2.ed.gov/policy/highered/reg/hearulemaking/

2012/gainfulemployment.html. 

6Available at: http://www2.ed.gov/policy/

highered/reg/hearulemaking/2012/s3- 

informational-rates-methodology121113.doc, also 

accessible through http://www2.ed.gov/policy/

highered/reg/hearulemaking/2012/

gainfulemployment.html. 

7Available at: http://www2.ed.gov/policy/

highered/reg/hearulemaking/2012/

gainfulemployment.html. 

repayment rates for GE programs. The 

Department also issued an explanation 

of the methodology used to make the 

Session 1 2012 GE informational rates 

calculations.4 The first set of Session 1 

2012 GE informational debt-to-earnings 

rates were calculated by program and 

based on the debt and earnings of 

students receiving title IV, HEA program 

funds who completed GE programs 

between October 1, 2006, and 

September 30, 2008—the ‘‘07/08 2012 

D/E rates cohort.’’ The second set of 

Session 1 2012 GE informational debtto-earnings rates were calculated by 

program and based on the debt and 

earnings of students receiving title IV, 

HEA program funds who completed GE 

programs between October 1, 2007, and 

September 30, 2009—the ‘‘08/09 2012 

D/E rates cohort.’’ 

The annual loan payment component 

of the debt-to-earnings formula for both 

sets of Session 1 2012 GE informational 

debt-to-earnings rates were calculated 

for each program using information 

from the GE Data and other information 

in NSLDS. For the annual earnings 

figures that were used in the debt-toearnings calculations, the Department 

obtained from SSA the 2011 annual 

earnings, by program, of the 07/08 2012 

D/E rates cohort and the 08/09 2012 D/ 

E rates cohort. Both Session 1 2012 GE 

informational debt-to-earnings rates 

were calculated using the following 

criteria: 

• N-size: 10 

• Amortization schedule: 10 years for 

all credential levels 

• Interest rate: 6.8 percent 

See ‘‘§ 668.404 Calculating D/E rates’’ 

for an explanation of these criteria. The 

Session 1 2012 GE informational debtto-earnings rates files also include rates 

calculated using variations of the n-size 

and amortization schedule criteria for 

comparative purposes. 

The Session 1 2012 GE informational 

dollar-based and borrower-based loan 

repayment rates were calculated by 

program for students receiving title IV, 

HEA program funds who entered 

repayment between October 1, 2006, 

and September 30, 2008—the ‘‘07/08 

2012 repayment rates cohort’’—on FFEL 

and Direct Loans for enrollment in a GE 

program. The repayment rate 

calculations were made using student 

loan information for the 07/08 2012 

repayment rates cohort from the GE Data 

and NSLDS. 

The Session 1 2012 GE informational 

rates include information on the sector 

and institution type for each program 

based on NSLDS records as of August 

2013. 

The Session 3 2012 GE Informational 

Rates 

Prior to the third rulemaking session 

in December 2013, the Department 

released the ‘‘Session 3 2012 GE 

informational rates.’’ 5 The Session 3 

2012 GE informational rates include a 

revised version of one of the Session 1 

2012 GE informational debt-to-earnings 

rates and, additionally, informational 

program cohort default rates for GE 

programs. The Department also issued 

an explanation of the methodology used 

to make the 2012 Session 3 GE 

informational rate calculations.6

As described above, one set of the 

Session 1 2012 GE informational debtto-earnings rates is based on the debt 

and earnings of the 08/09 2012 D/E rates 

cohort. For Session 3, this set of 

informational debt-to-earnings rates was 

revised to remove a small group of nonGE programs that were included in the 

Session 1 2012 GE informational rates 

by error and, also, recalculated using an 

interest rate of 3.37 percent. The Session 

3 2012 GE informational rates files also 

include debt-to-earnings rates calculated 

using variations of the n-size and 

amortization schedule criteria for 

comparative purposes. 

The Session 3 2012 GE informational 

program cohort default rates were 

calculated by program for students 

receiving title IV, HEA program funds 

who entered repayment between 

October 1, 2008, and September 30, 

2009—the ‘‘09 2012 program cohort 

default rates cohort’’—on FFEL and 

Direct Loans for enrollment in a GE 

program. The program cohort default 

rate calculations were made using 

student loan information for the 09 2012 

program cohort default rates cohort from 

the GE Data and NSLDS. 

The Session 3 2012 GE informational 

rates include information on the sector 

and institution type for each program 

based on NSLDS records as of August 

2013 for programs with D/E rates data. 

Sector and institution type for programs 

with pCDR data but no D/E rates data 

were based on NSLDS records as of 

November 2013. 

The 2012 GE Informational Rates 

With this NPRM, the Department has 

released the ‘‘2012 GE informational 

rates.’’ 7 The 2012 GE informational 

rates include a recalculated version of 

the Session 3 2012 GE informational 

debt-to-earnings rates using the 

following criteria: 

• N-size: 30 

• Amortization schedule: 10 years for 

certificate and associate degree 

programs, 15 years for bachelor’s and 

master’s degree programs, and 20 

years for doctoral and first 

professional programs 

• Interest rate: 5.42 percent 

See ‘‘§ 668.404 Calculating D/E rates’’ 

for an explanation of these criteria. The 

2012 GE informational debt-to-earnings 

rates files also include debt-to-earnings 

rates calculated using variations of the 

n-size and amortization schedule 

criteria for comparative purposes. In 

addition to the 2012 GE informational 

debt-to-earnings rates, the 2012 GE 

informational rates also include the 

same informational program cohort 

default rates released as a part of the 

Session 3 2012 GE informational rates. 

The Department’s D/E rates analysis and 

pCDR analysis in this NPRM are based 

on the 2012 GE informational rates 

unless otherwise specified. 

The 2012 GE informational rates 

include information on the sector and 

institution type for each program based 

on NSLDS records as of November 2013 

for all informational rate programs. 

Summary of Proposed Regulations 

The proposed regulations would— 

• Define what it means for a program 

to provide training that prepares 

students for gainful employment in a 

recognized occupation. 

• Create a process by which an 

institution establishes the eligibility of a 

GE program by certifying that the GE 

program satisfies applicable accrediting 

and licensing requirements for the 

occupations for which the program 

purports to prepare students. 

• Establish an accountability 

framework, in which two 

complementary yet independent 

measures—the D/E rates measure and 

the pCDR measure—would be used to 

determine whether a GE program 

remains eligible for title IV, HEA 

program funds. 

• Establish the process by which a GE 

program would be evaluated and the 

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standards by which the program would 

be assessed, under the accountability 

framework using— 

Æ The D/E rates measure to evaluate 

the amount of debt students completing 

a GE program incurred in the program 

in comparison to their discretionary and 

annual earnings after completing the 

program. 

Æ The pCDR measure to evaluate the 

default rate of former students enrolled 

in a GE program, regardless of whether 

they completed the program. 

• Require institutions with GE 

programs that could become ineligible 

in an immediately succeeding year to 

provide a written warning to students 

and prospective students of the 

potential loss of ineligibility and the 

implications. 

• Provide that, for a GE program that 

loses eligibility for title IV, HEA 

program funds, as well as any program 

that is not passing the D/E rates measure 

and the pCDR measure and that is 

discontinued by the institution, the loss 

of eligibility is for three calendar years. 

• Require institutions to report 

relevant information related to its GE 

programs to the Secretary. 

• Require an institution to disclose, 

including to students and prospective 

students, relevant information about its 

GE programs through a disclosure 

template developed by the Secretary. 

Significant Proposed Regulations 

We discuss substantive issues under 

the sections of the proposed regulations 

to which they pertain. Generally, we do 

not address proposed regulatory 

changes that are technical or otherwise 

minor in effect. 

Section 668.401 Scope and Purpose 

Current Regulations: There is no 

equivalent provision in the 2011 Final 

Rules. 

Proposed Regulations: Proposed 

§ 668.401 establishes the scope and 

purpose for subpart Q of the proposed 

regulations. Subpart Q would establish 

the rules and procedures under which 

the Secretary determines a GE program’s 

eligibility for title IV, HEA program 

funds; an institution reports information 

about the GE program to the Secretary; 

and the institution discloses 

information about the GE program to 

students and prospective students. 

We note that the terms ‘‘gainful 

employment program’’ or ‘‘GE 

program,’’ ‘‘student,’’ and ‘‘prospective 

student,’’ which are defined in proposed 

§ 668.402, are first substantively used in 

proposed § 668.401 and are therefore 

explained here. Proposed § 668.402, as 

in § 668.7(a)(2) of the 2011 Prior Rule, 

provides that a ‘‘gainful employment 

program’’ or ‘‘GE program’’ is an 

educational program offered by an 

institution under § 668.8(c)(3) or (d) that 

is identified by using a combination of 

the institution’s six-digit Office of 

Postsecondary Education ID (OPEID) 

number, the program’s six-digit 

Classification of instructional program 

(CIP) code, and credential level. 

Proposed § 668.401 defines a GE 

program, for the purpose of subpart Q, 

as an educational program offered by an 

eligible institution that prepares 

students for gainful employment in a 

recognized occupation and that meets 

the title IV, HEA program eligibility and 

other requirements in the proposed 

regulations. 

Under the proposed regulations, the 

term ‘‘student’’ would refer to an 

individual who received title IV, HEA 

program funds for enrolling in the 

applicable GE program. Although we 

did not specifically define the term 

‘‘student’’ in the 2011 Final Rules, 

operationally, ‘‘student’’ included any 

individual enrolled in a GE program, 

regardless of whether the individual 

received title IV, HEA program funds. 

Limiting the term ‘‘student’’ to refer to 

an individual who received title IV, 

HEA program funds is a significant 

difference between the proposed 

regulations and the 2011 Final Rules. 

The proposed regulations also define 

the term ‘‘prospective student’’ to refer 

to an individual who has contacted an 

eligible institution for the purpose of 

requesting information about enrolling 

in a GE program or who has been 

contacted directly by the institution or 

indirectly through advertising about 

enrolling in a GE program. In the 2011 

Final Rules, the definition of 

‘‘prospective student’’ in § 668.41(a) was 

used in connection with the disclosure 

requirements in § 668.6(b) and the 

warning requirements in § 668.7(j). That 

definition refers only to individuals 

who have contacted the institution 

requesting institutional admission 

information. 

Reasons: 

Scope 

Through this rulemaking, the 

Department seeks to establish standards 

for title IV, HEA eligibility of 

postsecondary educational programs 

that prepare students for ‘‘gainful 

employment’’ in a recognized 

occupation, which include nearly all 

educational programs at for-profit 

institutions of higher education 

regardless of program length or 

credential level, as well as non-degree 

programs at public and private nonprofit institutions such as community 

colleges. Common GE programs provide 

training for occupations in cosmetology, 

business administration, interior design, 

graphic design, medical assisting, dental 

assisting, nursing, and massage therapy. 

Based on information in the 

Department’s databases, we estimate 

that there are approximately 50,000 GE 

programs at postsecondary institutions 

around the country. We estimate that 

about 60 percent of these programs are 

at public institutions, 10 percent at 

private non-profit institutions, and 30 

percent at for-profit institutions. The 

Federal investment in students 

attending these programs is significant. 

We estimate that in fiscal year 2010, 

approximately 4 million students 

receiving title IV, HEA program funds 

were enrolled in GE programs. These 

students received approximately $9.7 

billion in Federal student aid grants and 

approximately $26 billion in loans. 

Purpose 

The proposed regulations are 

intended to address growing concerns 

about educational programs that, as a 

condition of eligibility for title IV, HEA 

program funds, are required by statute 

to provide training that prepares 

students for gainful employment in a 

recognized occupation (GE programs), 

but instead are leaving students with 

unaffordable levels of loan debt in 

relation to their earnings, or leading to 

default. Many GE programs are 

producing positive student outcomes. 

But a disproportionate number are 

failing to do so. 

The Department’s primary concerns, 

which drive both the accountability and 

transparency frameworks, are that a 

number of GE programs: (1) do not train 

students in the skills they need to obtain 

and maintain jobs in the occupation for 

which the program purports to train 

students, (2) provide training for an 

occupation for which low wages do not 

justify program costs, and (3) are 

experiencing a high number of 

withdrawals or ‘‘churn’’ because 

relatively large numbers of students 

enroll but few, or none, complete the 

program, which can often lead to 

default. The causes of these problems 

for students are numerous, including 

excessive costs, low completion rates, a 

failure to satisfy requirements that are 

necessary for students to obtain higher 

paying jobs in a field such as licensing, 

work experience, and programmatic 

accreditation, a lack of transparency 

regarding program outcomes, and 

aggressive or deceptive marketing 

practices. 

Our analysis of the D/E rates 

component of the 2012 GE 

informational rates reveals these poor 

outcomes among some GE programs. For 

example, 27 percent of GE programs 

evaluated produced graduates with 

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16434 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

8At the Federal minimum wage of $7.25 per hour 

(www.dol.gov/whd/minimumwage.htm), an 

individual working 40 hours per week for 52 weeks 

per year would have annual earnings of $15,080. 

9 2012 GE informational rates. Our analysis by 

sector shows the following: Of the 5,539 programs 

evaluated with earnings data, 30 percent of forprofit programs and 13 percent of public non-profit 

programs produced graduates with average annual 

earnings below a Federal minimum wage worker. 

10Based on a weekly wage of $471 (http://

www.bls.gov/emp/ep_chart_001.htm) for 52 weeks. 

11 2012 GE informational rates. Our analysis by 

sector shows the following: Of the 5,539 programs 

evaluated with earnings data, 72 percent of forprofit programs and 32 percent of public non-profit 

programs produced graduates with average annual 

earnings less than the earnings of individuals who 

have not obtained a high school degree. 

12 2012 GE informational rates. 

13 IPEDS First Look (July 2013), table 2. Average 

costs (in constant 2012–13 dollars) associated with 

attendance for full-time, first-time degree/

certificate-seeking undergraduates at Title IV 

institutions operating on an academic year calendar 

system, and percentage change, by level of 

institution, type of cost, and other selected 

characteristics: United States, academic years 2010– 

11 and 2012–13. 

14 Id. 

15National Postsecondary Student Aid Study 

2012. 

16 Id. 

17 Id. 

18 Id. 

19Based on the Department’s analysis of the 

three-year cohort default rates for fiscal year 2010, 

U.S. Department of Education, available at 

www.ed.gov/news/press-releases/default-ratescontinue-rise-federal-student-loans. 

20Postsecondary Education: Student Outcomes 

Vary at For-Profit, Nonprofit, and Public Schools 

(GAO–12–143), GAO, December 7, 2011. 

21 Id. 

22For Profit Higher Education: The Failure to 

Safeguard the Federal Investment and Ensure 

Student Success, Senate HELP Committee, July 30, 

2012. 

23 Id. 

24 Id. 

25U.S. Department of Education, National Center 

for Education Statistics (NCES), 2003–04 Beginning 

Postsecondary Students Longitudinal Study, 

Second Follow-up (BPS:04/09) (cumulative 

certificate, associate’s degree, and bachelor’s degree 

attainment at any institution). 

26 Deming, D., Goldin, C., and Katz, L., The ForProfit Postsecondary School Sector: Nimble Critters 

or Agile Predators?, Journal of Economic 

Perspectives, vol. 26, no. 1, Winter 2012. 

27 Id. 

average annual earnings below those of 

a full-time worker earning no more than 

the Federal minimum wage ($15,080).8 9

Sixty-four percent of GE programs 

evaluated produced graduates with 

average annual earnings less than the 

earnings of individuals who have not 

obtained a high school diploma 

($24,492).10 11 Of programs with average 

earnings below those of a high school 

dropout, approximately 24 percent of 

former students defaulted on their 

Federal student loans within the first 

three years of entering repayment.12

As we noted in connection with the 

2011 Prior Rule, the outcomes of 

students who attend for-profit 

educational institutions are of particular 

concern. 76 FR 34386. There is growing 

evidence of troubling practices at many 

of these institutions, such as some 

proprietary institutions overstating job 

placement rates. There has been growth 

in the number of qui tam lawsuits 

brought by private parties alleging 

wrongdoing at these institutions and 

numerous investigations brought by 

other Federal and State oversight 

agencies. Such activity only increases 

the Department’s concerns about poor 

outcomes in GE programs. 

For-profit institutions typically charge 

higher tuitions than do public 

postsecondary institutions. 76 FR 

34386. Average tuition and fees at lessthan-two-year for-profit institutions are 

more than double the average cost at 

less-than-two-year public institutions.13

Attending a two-year for-profit 

institution costs a student four times as 

much as attending a community 

college.14 Not surprisingly then, 

students enrolled in for-profit 

institutions accumulate far greater debt 

than students at public institutions. 76 

FR 34386. In 2011–2012, 86 percent of 

students who earned certificates from 

for-profit institutions took out student 

loans compared to 35 percent of 

certificate recipients from public twoyear institutions.15 Of those who 

borrowed, the median loan amount 

borrowed of for-profit certificate 

recipients was $11,000 as opposed to 

$8,000 for certificate recipients from 

public two-year institutions.16 Eightyeight percent of associate degree 

graduates from for-profit institutions 

took out student loans, while only 40 

percent of associate degree recipients 

from public two-year institutions took 

out student loans.17 Of those who 

borrowed, for-profit associate degree 

recipients had a median loan amount 

borrowed of $23,590 in comparison to 

$10,000 for students who received their 

degrees from public two-year 

institutions.18 Approximately 22 

percent of borrowers who attended forprofit institutions default on their 

Federal student loans within the first 

three years of entering repayment as 

compared to about 13 percent of 

borrowers who attended public 

institutions.19

Although more expensive, there is 

growing evidence that many for-profit 

programs may not prepare students as 

well as comparable programs at public 

institutions. 75 FR 43618. A 2011 GAO 

report reviewed results of licensing 

exams for 10 occupations that are, by 

enrollment, among the largest fields of 

study.20 The GAO report showed that 

for 9 out of 10 licensing exams, 

graduates of for-profit institutions had 

lower rates of passing than graduates of 

public institutions.21 Many for-profit 

institutions devote greater resources to 

recruiting and marketing than they do to 

instruction or to student support 

services.22 An investigation by the U.S. 

Senate Committee on Health, Education, 

Labor & Pensions (Senate HELP 

Committee) of thirty prominent forprofit institutions found that they spend 

almost 23 percent of their revenues on 

marketing and recruiting, but merely 17 

percent on instruction.23 Among the 

institutions that provided useable data 

to the committee, schools employed 

35,202 recruiters compared with 3,512 

career services staff and 12,452 support 

services staff.24

Lower rates of completion in many 

four-year for-profit institutions are also 

a cause for concern. 76 FR 34409. The 

six-year graduation rate of first-time 

undergraduate students who began at a 

four-year degree-granting institution in 

2003–2004 was 34 percent at for-profit 

institutions in comparison to 65 percent 

at public institutions. However, for firsttime undergraduate students who began 

at a two-year degree-granting institution 

in 2003–2004, the six-year graduation 

rate was 40 percent at for-profit 

institutions in comparison to 35 percent 

at public institutions.25

The higher costs of for-profit 

institutions, and the consequently 

greater amounts of debt incurred by 

their former students, together with 

generally lower rates of completion, 

continue to raise concerns about 

whether for-profit programs lead to 

earnings that justify the investment 

made by students. See 75 FR 43617. As 

we stated in connection with the 2011 

Prior Rule, this ‘‘value proposition’’ is 

what ‘‘distinguishes programs ‘that lead 

to gainful employment in a recognized 

occupation.’ ’’ 76 FR 34386. Analysis of 

data collected on the outcomes of 2003– 

2004 first-time beginning postsecondary 

students as a part of the Beginning 

Postsecondary Students Longitudinal 

Study shows that students who attend 

for-profit institutions are more likely to 

be idle, not working or in school, six 

years after starting their programs of 

study in comparison to students who 

attend other types of institutions.26

Further, for-profit students no longer 

enrolled in school six years after 

beginning postsecondary education 

have lower earnings at the six-year mark 

than students who attend other types of 

institutions.27

These outcomes are troubling for two 

reasons. First, some students will have 

earnings that will not support the debt 

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28See section 401(c)(5) of the HEA, 20 U.S.C. 

1070a(c)(5), for Pell Grant limitation; see section 

455(q) of the HEA, 20 U.S.C. 1087e(q), for the 150 

percent limitation. 

29For-Profit Colleges: Undercover Testing Finds 

Colleges Encouraged Fraud and Engaged in 

Deceptive and Questionable Marketing Practices 

(GAO–10–948T), GAO, August 4, 2010 (reissued 

November 30, 2010). 

30 Id. 

31For Profit Higher Education: The Failure to 

Safeguard the Federal Investment and Ensure 

Student Success, Senate HELP Committee, July 30, 

2012. 

32 Id. 

33 ‘‘A.G. Schneiderman Announces 

Groundbreaking $10.25 Million Dollar Settlement 

with For-Profit Education Company That Inflated 

Job Placement Rates to Attract Students,’’ press 

release, Aug. 19, 2013. Available at: www.ag.ny.gov/ 

press-release/ag-schneiderman-announcesgroundbreaking-1025-million-dollar-settlementprofit. 

34 ‘‘Attorneys General Take Aim at For-Profit 

Colleges’ Institutional Loan Programs,’’ The 

Chronicle of Higher Education, March 20, 2012. 

Available at: http://chronicle.com/article/AttorneysGeneral-Take-Aim-at/131254/. 

35 ‘‘Kentucky Showdown,’’ Inside Higher Ed, 

Nov. 3, 2011. Available at: 

www.insidehighered.com/news/2011/11/03/kyattorney-general-jack-conway-battles-profits. 

36 ‘‘Dollar Signs in Uniform,’’ Los Angeles Times, 

Nov. 12, 2012. Available at: http:// 

articles.latimes.com/2012/nov/12/opinion/la-oeshakely-veterans-college-profit-20121112; citing 

‘‘Harkin Report,’’ S. Prt. 112–37, For Profit Higher 

Education: The Failure to Safeguard the Federal 

Investment and Ensure Student Success, July 30, 

2012. 

37 Id. 

38 Id. 

39 Id. 

40 ‘‘We Can’t Wait: President Obama Takes Action 

to Stop Deceptive and Misleading Practices by 

Educational Institutions that Target Veterans, 

Service Members and their Families,’’ White House 

Press Release, April 26, 2012. Available at: 

www.whitehouse.gov/the-press-office/2012/04/26/

we-can-t-wait-president-obama-takes-action-stopdeceptive-and-misleading. 

41 ‘‘$2.5M Settlement over ‘GIBill.com’,’’ Inside 

Higher Ed, June 28, 2012. Available at: 

www.insidehighered.com/news/2012/06/28/ 

attorneys-general-announce-settlement-profitcollege-marketer. 

they incurred to enroll in these GE 

programs. Second, because students are 

limited under the HEA in the amounts 

of Federal grants and loans they may 

receive to support their education, their 

options to move to higher-quality and 

affordable programs are constrained as 

they may no longer have access to 

sufficient student aid. Specifically, 

Federal law sets lifetime limits on the 

amount of grant and subsidized loan 

assistance students may receive: Federal 

Pell Grants may be received only for the 

equivalent of 12 semesters of full-time 

attendance, and Federal subsidized 

loans may be received for no longer than 

150 percent of the published program 

length.28 These limitations make it even 

more critical that students’ initial 

choices in GE programs prepare them 

for employment that provides adequate 

earnings and do not result in excessive 

debt. 

In addition to concerns that some GE 

programs are not meeting the gainful 

employment requirement, the 

Department remains concerned that 

students seeking to enroll in these 

programs do not have access to reliable 

information that will enable them to 

compare programs in order to make 

informed decisions about where to 

invest their time and limited 

educational funding. As we noted in the 

2011 Prior Rule, the Government 

Accountability Office (GAO) and other 

investigators have found evidence of 

high-pressure and deceptive recruiting 

practices at some for-profit institutions. 

See 76 FR 34386. In 2010, the GAO 

released results of undercover testing at 

15 for-profit colleges across several 

States.29 Thirteen of the colleges tested 

gave undercover student applicants 

‘‘deceptive or otherwise questionable 

information’’ about graduation rates, job 

placement, or expected earnings.30

Similarly, a more recent report by the 

Senate HELP Committee on the forprofit education sector found evidence 

that many of the most prominent forprofit institutions engage in aggressive 

sales practices and provide misleading 

information to prospective students.31

Recruiters described ‘‘boiler room’’-like 

sales and marketing tactics and internal 

institutional documents showed that 

recruiters are taught to identify and 

manipulate emotional vulnerabilities 

and target non-traditional students.32

More recently, a growing number of 

State and other Federal law enforcement 

authorities have launched investigations 

into whether the institutions that offer 

GE programs are using aggressive or 

even deceptive marketing and recruiting 

practices. Several State Attorneys 

General have already sued for-profit 

institutions to stop these fraudulent 

marketing practices and manipulations 

of job placement rates. On August 19, 

2013, the New York State Attorney 

General announced a $10.25 million 

settlement with Career Education 

Corporation (CEC), a private for-profit 

education company, after its 

investigation revealed that CEC 

significantly inflated its graduates’ job 

placement rates in disclosures made to 

students, accreditors, and the State.33

The State of Illinois sued Westwood 

College for misrepresentations and false 

promises made to students enrolling in 

the company’s criminal justice 

program.34 The Commonwealth of 

Kentucky has filed lawsuits against 

several private for-profit institutions, 

including National College of Kentucky, 

Inc., for misrepresenting job placement 

rates, and Daymar College, Inc., for 

misleading students about financial aid 

and overcharging for textbooks.35 And 

most recently, early this year, a group of 

13 State Attorneys General issued Civil 

Investigatory Demands to Corinthian 

Colleges, Inc., Education Management 

Co., ITT Educational Services, Inc., and 

CEC, seeking information about student 

placement rate data and marketing and 

student recruitment practices of the 

companies. The States participating 

include Arizona, Arkansas, Connecticut, 

Idaho, Iowa, Kentucky, Missouri, 

Nebraska, North Carolina, Oregon, 

Pennsylvania, Tennessee, and 

Washington. 

A 2012 report released by the Senate 

HELP Committee found extensive 

evidence of aggressive and deceptive 

recruiting practices, excessive tuition, 

and regulatory evasion and 

manipulation by for-profit colleges that 

preyed on service members, veterans, 

and their families as ‘‘dollar signs in 

uniform.’’ 36 The Los Angeles Times 

reported that recruiters from for-profit 

colleges have been known to recruit at 

Wounded Warriors centers and at 

veterans hospitals, where injured 

soldiers are pressured into enrolling 

through promises of free education and 

more.37 Some for-profit colleges lure 

service members and veterans through a 

number of improper practices, including 

by offering post-9/11 GI Bill benefits 

that are intended for living expenses as 

‘‘free money,’’ which is difficult for 

jobless veterans returning home to turn 

down.38 This results in many veterans 

enrolling in online courses to get the 

monthly benefits even if they have no 

intention of completing the 

coursework.39 In addition, some 

institutions have recruited veterans with 

serious brain injuries and emotional 

vulnerabilities without providing 

adequate support and counseling, 

engaged in misleading recruiting 

practices onsite at military installations, 

and failed to accurately disclose 

information regarding the graduation 

rates of veterans.40 In June 2012, an 

investigation in 20 States, led by the 

Commonwealth of Kentucky’s Attorney 

General, resulted in a $2.5 million 

settlement with QuinStreet, Inc. and the 

closure of GIBill.com, a Web site that 

appeared as if it was an official site of 

the U.S. Department of Veterans Affairs, 

but was in reality a for-profit portal that 

steered veterans to 15 colleges, almost 

all for-profit institutions, including 

Kaplan University, the University of 

Phoenix, Strayer University, DeVry 

University, and Westwood College.41

Further, the Consumer Financial 

Protection Bureau issued Civil 

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42 ‘‘For Profit Colleges Face New Wave of State 

Investigations, Bloomberg, Jan. 29, 2014. Available 

at: www.bloomberg.com/news/2014–01–29/forprofit-colleges-face-new-wave-of-coordinated-stateprobes.html. 

43 ‘‘Corinthian Colleges Crumbles 14% on SEC 

probe,’’ Fox Business, June 11, 2013. Available at: 

www.foxbusiness.com/government/2013/06/11/ 

corinthian-colleges-crumbles-14-on-sec-probe/. 

44See, e.g., ‘‘More Selective For-Profits,’’ Inside 

Higher Ed, Nov. 11, 2011 (Kaplan University and 

the University of Phoenix both ‘‘recently began new 

programs that make it easier for unprepared 

students to leave without taking on debt’’), available 

at www.insidehighered.com/news/2011/11/11/

enrollments-tumble-profit-colleges. See also, e.g., 

DeVry University, Form 10–Q, United States 

Securities and Exchange Commission, for the 

quarterly period ended Sept. 30, 2013 (‘‘Over the 

past year DeVry has reduced costs through staffing 

adjustments and by lowering costs. Management 

has made the decision to close or consolidate 

certain DeVry University campuses while balancing 

the potential impact on enrollment and student 

satisfaction. Management is also focused on process 

redesign and restructuring in areas such as student 

finance. . . . Under the Career Catalyst Scholarship 

DeVry University has committed more than $15 

million over the next three years to be awarded to 

qualifying students who enroll in the September 

2013 session), available at www.sec.gov/Archives/ 

edgar/data/730464/000114420413058782/

v357757_10q.htm. 

Investigatory Demands to Corinthian 

Colleges, Inc. and ITT Educational 

Services, Inc. in November, 2013, 

demanding information about their 

marketing, advertising, and lending 

policies.42 The Securities and Exchange 

Commission also subpoenaed records 

from Corinthian Colleges, Inc. on June 6, 

2013, seeking student information in the 

areas of recruitment, attendance, 

completion, placement, and loan 

defaults.43 These inquiries supplement 

the Department’s existing monitoring 

and compliance efforts to protect against 

such abuses. 

Simply put, without reliable 

information, students, prospective 

students, and their families are 

vulnerable to inaccurate or misleading 

information when they make critical 

decisions about their educational 

investments and, based on that 

information, may enroll in poorly 

performing programs. Furthermore, 

without accurate and comparable 

information, the public, taxpayers, and 

the Government are in the dark as to the 

performance of these programs and the 

return on the Federal investment in 

these programs. Although we do not 

seek to impose requirements through 

this rulemaking that specifically address 

all of these allegations of abuse, the 

proposed regulations would help 

ensure, among other things, that 

students, prospective students, and their 

families and the public, taxpayers, and 

the Government are provided with 

reliable and comparable information 

about the student outcomes of GE 

programs. 

We acknowledge that since the prior 

rulemaking effort in 2011, some forprofit institutions have made positive 

changes to their GE programs. For 

example, some institutions now offer 

trial enrollment periods for students 

before they require a full financial 

commitment and scholarships to 

students who reach milestones toward 

completing their programs.44 These 

steps show that positive change is 

possible, but the concerns highlighted 

here demonstrate that more 

improvement in the sector is needed. To 

encourage institutions to start or 

continue to take effective action to 

reduce debt and increase earnings 

prospects for students, by this 

regulatory action, we propose to define 

what it means for a program to provide 

training that prepares students for 

gainful employment in a recognized 

occupation by establishing measures a 

program must meet in order to be 

eligible for title IV, HEA program funds, 

and to better inform students, 

prospective students, and their families, 

as well as the public, taxpayers, and the 

Government, by requiring institutions to 

report and disclose relevant information 

about the outcomes of their GE 

programs. 

Legal Authority 

We seek, through this regulatory 

action, to define a statutory requirement 

that applies only to certain educational 

programs—GE programs—and which is 

a condition of eligibility for title IV, 

HEA program funds. Title IV, HEA 

program funds are Federal student aid 

funds available to students and parents 

to assist them in paying for a 

postsecondary educational program. 

These funds include student loans 

under the Direct Loan Program, the 

Federal Perkins Loan (Perkins Loan) 

Program, and (until 2010) the FFEL 

Program; grants under the Federal Pell 

Grant Program, the Federal 

Supplemental Educational Opportunity 

Grant Program, the Iraq-Afghanistan 

Service Grant Program, and the TEACH 

Grant Program; and earnings under the 

Federal Work-Study Program. 

Under title IV of the HEA, institutions 

must establish eligibility to offer eligible 

programs in order for their students to 

receive Federal student aid funds. In 

some cases, eligible institutions must 

separately establish the eligibility of 

their programs in order for students in 

those programs to receive title IV, HEA 

assistance. See, e.g., 20 U.S.C. 

1001(a)(3), 34 CFR 668.8(c) (educational 

program offered by public or private 

non-profit institution of higher 

education must lead to or be creditable 

toward recognized credential); 34 CFR 

600.20(c) (approval required for 

institution to increase level of programs 

from undergraduate to graduate); 20 

U.S.C. 1088(b)(3), 34 CFR 668.8(m) 

(program offered through 

telecommunications eligible only if 

accredited by agency recognized by the 

Department to evaluate such programs). 

One type of program for which an 

institution must establish program-level 

title IV, HEA eligibility is ‘‘a program of 

training to prepare students for gainful 

employment in a recognized 

occupation,’’ which is the subject of this 

rulemaking. 20 U.S.C. 1001(b)(1), 

1002(b)(1)(A)(i), (c)(1)(A). Section 481 of 

the HEA articulates this same 

requirement: as pertinent here, it 

defines an ‘‘eligible program’’ as a 

‘‘program of training to prepare students 

for gainful employment in a recognized 

profession.’’ 20 U.S.C. 1088(b). This 

statutory requirement—the ‘‘gainful 

employment’’ requirement—is what the 

Department seeks to define here. 

The Department’s authority for this 

regulatory action is derived primarily 

from these provisions, which establish 

the gainful employment requirement, 

and two additional sources. These 

authorities, including relevant 

legislative history which supports 

components of the GE accountability 

framework, are discussed here and also 

in more detail in ‘‘§ 668.403 Gainful 

employment framework.’’ Specifically, 

section 410 of the General Education 

Provisions Act provides the Secretary 

with authority 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. This 

authority includes the power to 

promulgate regulations relating to 

programs administered by the 

Department, such as the title IV, HEA 

programs that provide Federal loans, 

grants, and other aid to students. 

Furthermore, section 414 of the 

Department of Education Organization 

Act (DEOA) authorizes the Secretary to 

prescribe those rules and regulations the 

Secretary determines necessary or 

appropriate to administer and manage 

the functions of the Department. 20 

U.S.C. 3474. These authorities thus 

empower the Secretary to promulgate 

regulations that, in this case, define the 

gainful employment requirement in the 

HEA by: establishing measures to 

determine the eligibility of GE programs 

for title IV, HEA program funds; 

requiring institutions to report 

information about the programs to the 

Secretary; and requiring institutions to 

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disclose information about the programs 

to students, prospective students, and 

their families, the public, taxpayers, and 

the Government, and institutions. 

Section 431 of the DEOA gives the 

Department added authority to establish 

rules to require institutions to make data 

available to the public on the 

performance of their GE programs and 

about students enrolled in those 

programs. That section gives the 

Secretary the authority to inform the 

public about federally supported 

education programs, and to collect data 

and information on applicable programs 

for the purpose of obtaining objective 

measurements of their effectiveness in 

achieving their intended purposes. 20 

U.S.C. 1231a. This provision lends 

additional support for the proposed 

reporting and disclosure requirements, 

which will enable the Secretary to 

collect data and information related to 

GE programs, for the purpose of 

evaluating whether they are achieving 

their intended purpose, and to inform 

the public about relevant information 

related to those federally supported 

programs. 

As discussed in the ‘‘Background of 

The Proposed Regulations, Public 

Participation, and Negotiated 

Rulemaking,’’ some of these authorities 

were subject to scrutiny by the U.S. 

District Court for the District of 

Columbia in Association of Private 

Sector Colleges and Universities v. 

Duncan, 870 F.Supp.2d 133 (D.D.C. 

2012), and 930 F.Supp.2d 210 (D.D.C. 

2013), a suit brought by APSCU to 

challenge the Department’s 2011 prior 

rulemaking efforts to define the gainful 

employment requirement. In deciding 

that challenge, the court reached several 

conclusions about the Department’s 

rulemaking authority in this matter, and 

its conclusions have informed and 

framed the Department’s exercise of that 

authority in proposing these regulations. 

Notably, the court agreed with the 

Department’s position that the Secretary 

enjoys broad authority to make, 

promulgate, issue, rescind, and amend 

the rules and regulations governing the 

applicable programs administered by 

the Department, such as the title IV, 

HEA programs, and that the Secretary is 

‘‘authorized 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.’’ APSCU v. 

Duncan, 870 F.Supp.2d at 141; see 20 

U.S.C. 3474. Furthermore, in answering 

the question whether the Department’s 

regulatory effort to define the gainful 

employment requirement fell within its 

statutory authority, the court found the 

exercise within that power. Specifically, 

it concluded that the phrase ‘‘gainful 

employment in a recognized 

occupation’’ is ambiguous and that in 

enacting the requirement that used that 

phrase, Congress delegated interpretive 

authority to the Department. APSCU v. 

Duncan, 870 F.Supp.2d at 146. 

Likewise, the court upheld the 

Department’s disclosure requirements, 

which are still in effect, rejecting 

APSCU’s challenge to this provision and 

finding that the disclosure requirements 

‘‘fall comfortably within [the 

Secretary’s] regulatory power,’’ and are 

‘‘not arbitrary or capricious.’’ Id. at 156. 

Overview of Accountability and 

Transparency Frameworks 

As stated previously, the 

Department’s goals in the proposed 

regulations are twofold: to establish an 

accountability framework for GE 

programs, and to increase the 

transparency of student outcomes of GE 

programs. In addition, we believe a key 

benefit of this regulatory action would 

be to receive suggestions on how to 

identify programs that are exceptional 

performers, and how to share best 

practices with institutions interested in 

improving their programs. Although 

recognition of exceptional programs is 

not expressly addressed in the proposed 

regulations, we invite comment on ways 

in which the best programs could, 

consistent with our authority under the 

HEA, be identified and rewarded and 

how best practices could be highlighted 

and shared with others. 

In service of these goals, we are 

proposing an accountability framework 

based upon program certification 

requirements and minimum standards 

for program outcomes. We are also 

proposing reporting and disclosure 

requirements designed to both support 

the accountability framework and to 

increase transparency so that relevant 

information regarding GE programs is 

disseminated to students, prospective 

students, and their families, the public, 

taxpayers, and the Government, and 

institutions. 

As part of the accountability 

framework, to determine whether a 

program provides training that prepares 

students for gainful employment as 

required by the HEA, we propose 

procedures to establish a program’s 

eligibility and to measure its outcomes 

on a continuing basis. To establish a 

program’s eligibility, an institution 

would be required to certify that each of 

its GE programs meets all applicable 

accreditation and licensure 

requirements necessary for a student to 

obtain employment in the occupation 

for which the program provides 

training. This certification would be 

incorporated into the institution’s 

program participation agreement. For a 

more detailed discussion of the 

proposed certification requirements, see 

‘‘§ 668.414 Certification requirements 

for GE programs.’’ 

To assess the continuing eligibility of 

a GE program, we propose to use two 

measures—one measure that compares 

the debt incurred by students 

completing the program against their 

earnings (the ‘‘debt-to-earnings rates’’ or 

‘‘D/E rates’’) and a second measure that 

examines the rate at which borrowers 

who previously enrolled in the program 

default on their FFEL or Direct Loans 

(‘‘program cohort default rate’’ or 

‘‘pCDR’’). The proposed regulations 

would establish minimum thresholds 

for the D/E rates measure and the pCDR 

measure. The D/E rates and the pCDR 

measures would operate independently 

of each other, as they are designed to 

achieve complementary objectives, 

capturing two ways a program could fail 

to meet the gainful employment 

requirement. 

In addition to the accountability 

framework, the proposed regulations 

include institutional reporting and 

disclosure requirements designed to 

increase the transparency of student 

outcomes for GE programs. As discussed 

more fully under ‘‘§ 668.411 Reporting 

requirements for GE programs,’’ we 

would require institutions to report 

information that is necessary to 

implement aspects of the proposed 

regulations that support the 

Department’s two goals of 

accountability and transparency. This 

would include information needed to 

calculate the D/E rates and the pCDR, as 

well as some of the specific required 

disclosures. As discussed more fully 

under ‘‘§ 668.412 Disclosure 

requirements for GE programs,’’ the 

proposed disclosure requirements 

would operate independently of the 

proposed eligibility requirements and 

ensure that relevant information 

regarding GE programs is made 

available to students, prospective 

students, and their families, the public, 

taxpayers, and the Government, and 

institutions. These provisions would 

provide for accountability and 

transparency throughout the admissions 

and enrollment process so that students, 

prospective students, and their families 

can make informed decisions. 

Specifically, institutions would be 

required to make information regarding 

such items as cost of attendance, 

completion, debt, earnings, and student 

loan repayment available in a 

meaningful and easily accessible format. 

In the proposed regulations, we use 

the term ‘‘student’’ to refer specifically 

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to individuals who received title IV, 

HEA program funds for enrolling in the 

applicable GE program. The term would 

not include individuals who did not 

receive title IV, HEA program funds to 

enroll in an eligible GE program, even 

if they filed a Free Application for 

Federal Student Aid (FAFSA). 

We believe that this definition is 

appropriate for two reasons. First, this 

approach is aligned with the court’s 

interpretation in APSCU v. Duncan of 

relevant law regarding the Department’s 

authority to maintain records in its 

NSLDS. See ‘‘Background of The 

Proposed Regulations, Public 

Participation, and Negotiated 

Rulemaking’’ for a more complete 

discussion of APSCU v. Duncan. 

Second, because the primary purpose 

for which we would use the GE 

measures is to determine whether a 

program should continue to be eligible 

for title IV, HEA program funds, we 

believe we can make a sufficient 

assessment of whether a program 

prepares students for gainful 

employment based only on the 

outcomes for students who receive title 

IV, HEA program funds. By limiting the 

GE measures to assess outcomes of only 

students who receive title IV, HEA 

program funds, the Department can 

effectively evaluate how the GE program 

is performing with respect to the 

students who received the Federal 

benefit that we are charged with 

administering. We note that this 

definition of ‘‘student’’ would apply 

throughout subpart Q. 

Some of the negotiators believed that 

there were instances where the 

definition of ‘‘student’’ should be 

defined more broadly. Negotiators 

proposed that the term include all 

students who enrolled in a program or, 

in light of APSCU v. Duncan, all 

students who are in NSLDS because 

they applied for title IV, HEA program 

funds by filing a FAFSA or because they 

received title IV, HEA program funds for 

attendance in other eligible programs, in 

both cases irrespective of whether they 

received title IV, HEA program funds for 

the GE program. The negotiators 

proposed that the broader definition 

could be used for some purposes, such 

as calculating the completion and 

withdrawal rates, or the median loan 

debt, for a GE program. 

We believe that our proposed 

definition is better aligned with our 

goals of evaluating a GE program’s 

performance for the purpose of 

continuing eligibility for title IV, HEA 

program funds. In addition, this 

approach is consistent with our goal of 

providing students and prospective 

students who are eligible for title IV, 

HEA program funds with relevant 

information that will help them in 

considering where to invest their 

resources and limited eligibility for title 

IV, HEA program funds. 

Similarly, we also propose to define 

the term ‘‘prospective student’’ in 

subpart Q in order to add clarity to the 

regulations. Our proposed definition is 

broader than the one used in the 2011 

Final Rules. In response to comments 

we received from a number of the 

negotiators, the proposed definition 

accounts for the various ways that 

institutions and prospective students 

commonly interact. Specifically, we 

modified the definition of ‘‘prospective 

student’’ to address concerns raised by 

some of the negotiators that the 

definition of prospective student in 

§ 668.41(a), which was used in the 2011 

Final Rules, is inadequate for the 

purpose of subpart Q. In particular, the 

negotiators noted that this definition 

only applies where an individual has 

initiated contact with an institution for 

information and not when the 

institution contacts the individual. We 

agree with the negotiators that this 

would not capture the common 

circumstances in which institutions first 

contact individuals about enrollment in 

a GE program, and that this type of 

outreach should be captured in the 

definition. 

Section 668.402 Definitions 

Current Regulations: Section 

668.7(a)(2) of the 2011 Prior Rule 

defines, for use in the 2011 Prior Rule, 

the terms ‘‘program,’’ ‘‘debt measures,’’ 

‘‘fiscal year,’’ ‘‘two-year period,’’ ‘‘fouryear period,’’ and ‘‘discretionary 

income.’’ 

Proposed Regulations: Proposed 

§ 668.402 defines a number of terms that 

are used in the proposed regulations. 

The proposed defined terms and the 

sections in which they would be first 

substantively used are: 

• Annual earnings rate, § 668.403 

• Classification of instructional program 

(CIP) code, § 668.411 

• Cohort period, § 668.404 

• Credential level, § 668.411 

• Debt-to-earnings rates (D/E rates), 

§ 668.403 

• Discretionary income rate, § 668.403 

• Four-year cohort period, § 668.404 

• Gainful employment program (GE 

program), § 668.401 

• GE measures, § 668.403 

• Length of the program, § 668.411 

• Metropolitan Statistical Area (MSA), 

§ 668.412 

• Poverty Guideline, § 668.404 

• Program cohort default rate (pCDR), 

§ 668.403 

• Prospective student, § 668.401 

• Student, § 668.401 

• Title IV loan, § 668.404 

• Two-year cohort period, § 668.404 

Generally, where the 2011 Prior Rule 

and the proposed regulations are 

similar, the relevant defined terms are 

similar, with clarifications and changes 

as needed to reflect any differences. 

Reasons: Section 668.402 would 

provide definitions for significant terms 

used in the proposed regulations. 

Although some of these terms were not 

defined in the 2011 Final Rules, 

uniform usage of the terms would make 

it easier for institutions to understand 

the proposed standards and 

requirements for GE programs and for 

students and prospective students to 

understand the information about GE 

programs that the proposed regulations 

would provide. Our reasoning for 

proposing each definition is discussed 

in the section in which the defined term 

is first substantively used. 

Section 668.403 Gainful Employment 

Framework 

Current Regulations: Under 

§ 668.7(a)(1) of the 2011 Prior Rule, a 

program would meet the gainful 

employment requirement if (1) the 

program’s annual loan repayment rate is 

at least 35 percent or (2) the program’s 

annual loan payment is less than or 

equal to 30 percent of discretionary 

income (‘‘discretionary income rate’’) or 

less than or equal to 12 percent of 

annual earnings (‘‘earnings rate’’). 

Under the 2011 Prior Rule, the loan 

repayment rate, discretionary income 

rate, and the earnings rate would be 

collectively referred to as the ‘‘debt 

measures.’’ A program would also meet 

the gainful employment requirement if 

the data needed to determine whether 

the program satisfies the minimum 

standards under § 668.7(a)(1) of the 

2011 Prior Rule are not available. 

Further, a program would satisfy the 

debt measures under any of the 

following circumstances: the program 

did not have the minimum number of 

students who completed the program 

over the applicable cohort period to 

calculate the debt-to-earnings ratios; 

SSA did not provide the earnings 

information necessary to calculate the 

debt-to-earnings ratios; or the median 

loan debt for the program is zero. Under 

§ 668.7(i) of the 2011 Prior Rule, a 

program would become ineligible for 

title IV, HEA program funds if it does 

not satisfy any of the debt measures for 

three out of the four most recent fiscal 

years. 

Proposed Regulations: Section 

668.403 of the proposed regulations sets 

forth the accountability framework 

under which the Department would 

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determine whether programs prepare 

students for gainful employment in a 

recognized occupation and whether 

those programs are eligible for title IV, 

HEA program funds. Under the 

accountability framework, to establish a 

program’s eligibility for title IV, HEA 

program funds, an institution would be 

required to satisfy the certification 

requirements of proposed § 668.414 for 

each of its GE programs. To remain 

eligible for title IV, HEA program funds, 

an institution would have to satisfy the 

D/E rates measure and the pCDR 

measure. The D/E rates and the pCDR 

measures would operate independently. 

Results of one measure would not affect 

results of the other. 

Under the D/E rates measure, we 

would apply as accountability metrics 

the same two debt-to-earnings ratios 

(referred to in the proposed regulations 

as the ‘‘debt-to-earnings rates’’ or the 

‘‘D/E rates’’)—the annual earnings rate 

and the discretionary income rate—as 

the 2011 Prior Rule. Also consistent 

with the 2011 Prior Rule, both D/E rates 

would evaluate the outcomes of only 

those students who completed a 

program. For an explanation of the 

methodology that would be used to 

calculate the D/E rates, see ‘‘§ 668.404 

Calculating D/E rates.’’ 

We do not include in the proposed 

accountability framework the loan 

repayment rate metric of the 2011 Prior 

Rule. Instead, the proposed regulations 

replace the loan repayment rate with a 

program-level cohort default rate 

(pCDR) that measures the percentage of 

students who enrolled in a GE program 

and defaulted on their Direct and FFEL 

loans. Like the loan repayment rate in 

the 2011 Prior Rule, and unlike the D/ 

E rates which only measure the 

outcomes of students who completed a 

program, the pCDR measure would 

evaluate the outcomes of students who 

enrolled in but did not complete a 

program in addition to the outcomes of 

students who completed the program. 

For an explanation of the methodology 

that would be used to calculate the 

pCDR measure, see ‘‘§ 668.407 

Calculating pCDR.’’ 

Certification Requirements 

Proposed §§ 668.403(a) and 668.414 

would require that an institution certify 

that each of its GE programs meets 

applicable accreditation and State and 

Federal licensing requirements to be 

eligible for title IV, HEA program funds. 

The 2011 Prior Rule did not include any 

similar certification requirements. For a 

more detailed discussion of the 

proposed certification requirements, see 

‘‘§ 668.414 Certification requirements 

for GE programs.’’ 

D/E Rates 

D/E rates would be calculated each 

year for an eligible GE program if at 

least 30 students completed the program 

during an applicable cohort period, as 

described in ‘‘§ 668.404 Calculating D/E 

rates.’’ A GE program would pass the D/ 

E rates measure if its discretionary 

income rate is less than or equal to 20 

percent or its annual earnings rate is 

less than or equal to 8 percent. A 

program would fail the D/E rates 

measure if its discretionary income rate 

is greater than 30 percent and its annual 

earnings rate is greater than 12 percent. 

A program would be ‘‘in the zone’’ 

under the D/E rates measure if it is not 

a passing program and its discretionary 

income rate is greater than 20 percent 

but less than or equal to 30 percent or 

its annual earnings rate is greater than 

8 percent but less than or equal to 12 

percent. See ‘‘§ 668.410 Consequences 

of GE measures’’ for an explanation of 

the restrictions that would apply to 

programs with zone or failing D/E rates. 

As under the 2011 Prior Rule, a 

program would pass both D/E rates if its 

median loan debt is zero. A program 

would fail the discretionary income rate 

if the discretionary income is zero or 

negative. A program would fail both D/ 

E rates if its mean or median annual 

earnings are zero. Although the 2011 

Prior Rule did not specifically include 

the latter provision, it follows that a 

program with zero mean or median 

annual earnings could not satisfy the 

debt-to-earnings ratios and would have 

been assessed accordingly. 

A program would become ineligible 

under the D/E rates measure in either of 

two ways. First, a program would 

become ineligible if it is a failing 

program in two out of any three 

consecutive award years for which the 

program’s D/E rates are calculated. 

Second, a program would become 

ineligible if, for four consecutive award 

years in which the D/E rates measure is 

calculated, it is failing or in the zone. It 

is important to note that a program 

could have a mix of zone and failing D/ 

E rates and still remain eligible over the 

course of the four-year period as long as 

the program’s failing results did not 

occur in two out of three consecutive 

award years. But, if a program does not 

pass at least once over any four-year 

period, it would become ineligible. 

With respect to the D/E rates, the 

framework of the proposed regulations 

would differ from the 2011 Prior Rule in 

several ways. First, the D/E rates would 

be calculated for award years rather 

than fiscal years as they were in the 

2011 Prior Rule. See ‘‘§ 668.404 

Calculating D/E rates’’ for an 

explanation of the differences between 

an award year and a fiscal year. Second, 

the proposed regulations would 

establish stricter passing thresholds 

than the thresholds in the 2011 Prior 

Rule. The passing threshold for the 

discretionary income rate would be 20 

percent instead of 30 percent, and the 

threshold for the annual earnings rate 

would be 8 percent instead of 12 

percent. Third, the proposed regulations 

would add a zone category for programs 

with a discretionary income rate greater 

than 20 percent but less than or equal 

to 30 percent or an annual earnings rate 

greater than 8 percent but less than or 

equal to 12 percent. Fourth, the 

proposed regulations would allow 

programs with a mix of D/E rates that 

are failing and in the zone up to four 

years to become passing before losing 

eligibility. Finally, a program failing the 

D/E rates measure would lose eligibility 

sooner than under the 2011 Prior Rule. 

Specifically, a program would become 

ineligible after failing the D/E rates 

measure in two out of any three 

consecutive award years instead of in 

three out of any four consecutive fiscal 

years as provided under the 2011 Prior 

Rule. It is important to note that, as 

explained in ‘‘§ 668.401 Scope and 

purpose’’ and ‘‘§ 668.404 Calculating D/ 

E rates,’’ unlike in the 2011 Prior Rule, 

which considered all students in its 

calculation of the debt measures, the D/ 

E rates would only consider students 

who received title IV, HEA program 

funds for enrolling in the program. 

pCDR 

An eligible GE program’s pCDR would 

be calculated each year. A GE program 

would pass the pCDR measure if its 

pCDR is less than 30 percent and would 

fail the pCDR measure if its pCDR is 30 

percent or greater. See ‘‘§ 668.410 

Consequences of GE measures’’ for an 

explanation of the restrictions that 

would apply to programs that fail the 

pCDR measure. A GE program would 

become ineligible if it fails the pCDR 

measure for three consecutive fiscal 

years. 

The following charts illustrate the key 

components of the proposed GE 

measures. 

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16440 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

OVERVIEW OF METRICS IN THE PROPOSED REGULATIONS

D/E rates Program cohort default rate 

Students 

Students who received title IV, HEA program funds and completed the 

program.

Students who received title IV, HEA program funds, whether or not 

they completed the program. 

Funds 

Title IV, HEA FFEL or Direct Loans, Perkins Loans, title IV grants, private loans, institutional loans or credit (Students would be included in 

calculation even if they received grants only but no loans.).

Title IV FFEL or Direct Loans (Only borrowers would be included in 

calculation.) 

Measurement period 

Annual loan payment of students who completed in the 3rd-4th (2-year 

period) or 3rd-6th award years (4-year period) prior to the award 

year for which D/E rates are calculated. Earnings of these students 

for most recently completed calendar year.

Of borrowers who entered repayment 3 fiscal years prior to the year in 

which pCDR is calculated, percentage who defaulted by end of the 

subsequent 2 fiscal years. 

For example, 2016 pCDR calculation: Of borrowers who entered repayment in fiscal year 2013, percentage who defaulted by end of fiscal 

year 2015. 

For example, 2014–2015 D/E rates calculation: Annual loan payment of 

students who completed in award years 2010–2011 and 2011–2012 

(2-year period); earnings for 2014 calendar year.

Categories & thresholds 

Pass: annual D/E ≤ 8% Or discretionary D/E ≤ 20% ............................... Pass: pCDR < 30% 

Fail: pCDR ≥ 30% 

Zone: 8% < annual D/E ≤ 12% Or 20% < discretionary D/E ≤ 30%.

Fail: annual D/E > 12% AND discretionary D/E > 30%.

Ineligibility 

A program becomes ineligible for 3 years if: ........................................... A program becomes ineligible for 3 years if it fails for 3 consecutive 

years. 

It fails in any 2 out of 3 consecutive years.

OR.

Does not pass in any 1 out of 4 consecutive years (can be mix of zone 

or failing results, but not 2 fails out of 3 consecutive years).

Other consequences 

If a problem could become ineligible based on its next D/E rates, the 

institution must issue warnings to enrolled and prospective students 

and add warning to disclosure template.

If a problem could become ineligible based on its next pCDR, the institution must issue warnings to enrolled and prospective students and 

add warning to disclosure template. 

Independence of the D/E Rates and 

pCDR Measures 

To maintain eligibility, a GE program 

would have to pass either of the D/E 

rates—the discretionary income rate or 

the annual earnings rate—and would 

also have to pass the pCDR measure. 

Unlike the 2011 Prior Rule where a 

program could become ineligible only if 

it failed all of the metrics, under the 

proposed regulations, a program could 

become ineligible if it does not pass the 

D/E rates measure only, does not pass 

the pCDR measure only, or does not 

pass both the D/E rates and pCDR 

measures. 

Under § 668.7(d)(2)(i)(A) of the 2011 

Prior Rule, if the number of students 

reflected in the calculations did not 

meet the minimum number of students 

necessary to calculate either or both of 

the debt measures, the debt-to-earnings 

ratios and the loan repayment rate, then 

the program was considered to have 

satisfied both of the debt measures. This 

would be the case even if the minimum 

number of students necessary to 

calculate one of the measures was met 

and the rate for that measure was a 

failing rate. 

Under the proposed regulations, a 

program would receive a pCDR result 

that would be used to assess the 

program regardless of whether D/E rates 

could be calculated for the program. If 

the D/E rates also could be calculated, 

then the program would receive results 

under both metrics. Further, as stated 

previously, the results of one metric 

would not affect the results of the other. 

For example, a program could 

simultaneously pass the D/E rates 

measure, but fail the pCDR measure. 

Likewise, a program could 

simultaneously be ‘‘in the zone’’ under 

the D/E rates measure, but pass the 

pCDR measure. 

Rates Not Calculated 

As under the 2011 Prior Rule, under 

proposed § 668.404(f), D/E rates would 

not be calculated for an award year if 

fewer than 30 students completed the 

program during an applicable cohort 

period or if SSA did not provide 

earnings information for the program. In 

such instances, the program would not 

receive D/E rates for the award year. In 

the 2011 Prior Rule, however, the 

program would be deemed to have 

satisfied the debt measures. 

For pCDR, on the other hand, due to 

the availability of certain challenge and 

appeal options, there is no minimum 

program size that would prevent the 

Department from calculating the pCDR. 

Even a program with zero borrowers 

entering repayment would receive an 

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official pCDR of 0 percent and pass the 

measure. See ‘‘§ 668.407 Calculating 

pCDR’’ for more information on how 

pCDRs are calculated. 

Reasons: 

Background 

The components of the proposed 

accountability framework that a 

program must satisfy to meet the gainful 

employment requirement are rooted in 

the legislative history of the 

predecessors to the statutory provisions 

of sections 101(b)(1), 102(b), 102(c), and 

481(b) of the HEA that require 

institutions to establish the title IV, HEA 

program eligibility of gainful 

employment programs. 20 U.S.C. 

1001(b)(1), 1002(b)(1)(A)(i), (c)(1)(A), 

1088(b). 

The legislative history of the statute 

preceding the HEA that first permitted 

students to obtain federally financed 

loans to enroll in programs that 

prepared them for gainful employment 

in recognized occupations demonstrates 

the conviction that the training offered 

by these programs should equip 

students to earn enough to repay their 

loans. APSCU v. Duncan, 870 

F.Supp.2d at 139; see also 76 FR 34392. 

Allowing these students to borrow was 

expected to neither unduly burden the 

students nor pose ‘‘a poor financial 

risk’’ to taxpayers. 76 FR 34392. 

Specifically, the Senate Report 

accompanying the initial legislation (the 

National Vocational Student Loan 

Insurance Act (NVSLIA), Pub. L. 89– 

287) quotes extensively from testimony 

provided by University of Iowa 

professor Dr. Kenneth B. Hoyt, who 

testified on behalf of the American 

Personnel and Guidance Association. 

On this point, the Senate Report sets out 

Dr. Hoyt’s questions and conclusions: 

Would these students be in a position to 

repay loans following their training? . . . 

If loans were made to these kinds of 

students, is it likely that they could repay 

them following training? Would loan funds 

pay dividends in terms of benefits accruing 

from the training students received? It would 

seem that any discussion concerning this bill 

must address itself to these questions. . . . 

We are currently completing a second-year 

followup of these students and expect these 

reported earnings to be even higher this year. 

It seems evident that, in terms of this sample 

of students, sufficient numbers were working 

for sufficient wages so as to make the concept 

of student loans to be [repaid] following 

graduation a reasonable approach to take. 

. . . I have found no reason to believe that 

such funds are not needed, that their 

availability would be unjustified in terms of 

benefits accruing to both these students and 

to society in general, nor that they would 

represent a poor financial risk. 

Sen. Rep. No. 758, 89th Cong., First 

Sess. (1965) at 3745, 3748–49 (emphasis 

added). 

Notably, both debt burden to the 

borrower and financial risk to taxpayers 

and the Government were clearly 

considered in authorizing federally 

backed student lending. Under the loan 

insurance program enacted in the 

NVSLIA, the specific potential loss to 

taxpayers of concern was the need to 

pay default claims to banks and other 

lenders if the borrowers defaulted on 

the loans. After its passage, the NVSLIA 

was merged into the HEA, which in title 

IV, part B, has both a direct Federal loan 

insurance component and a Federal 

reinsurance component, under which 

the Federal Government reimburses 

State and private non-profit loan 

guaranty agencies upon their payment 

of default claims. 20 U.S.C. 1071(a)(1). 

Under either HEA component, taxpayers 

and the Government assume the direct 

financial risk of default. 20 U.S.C. 

1078(c) (Federal reinsurance for default 

claim payments), 20 U.S.C. 1080 

(Federal insurance for default claims). 

Not only did Congress consider expert 

assurances that vocational training 

would enable graduates to earn wages 

that would not pose a ‘‘poor financial 

risk’’ of default, but an expert observed 

that this conclusion rested on evidence 

that ‘‘included both those who 

completed and those who failed to 

complete the training.’’ APSCU v. 

Duncan, 870 F.Supp.2d at 139, citing 

H.R. Rep. No. 89–308, at 4 (1965), and 

S. Rep. No. 89–308, at 7, 1965 

U.S.C.C.A.N. 3742, 3748. 

The concerns regarding excessive 

student debt reflected in the legislative 

history of the gainful employment 

eligibility provisions of the HEA are as 

relevant now as they were then. Indeed, 

excessive student debt affects students 

and the country in three significant 

ways: payment burdens on the 

borrower; the cost of the loan subsidies 

to taxpayers; and the negative 

consequences of default (which affect 

borrowers and taxpayers). 

The first consideration is payment 

burdens on the borrower. As we said 

previously in connection with the 2011 

Prior Rule and restate here, loan 

payments that outweigh the benefits of 

the education and training for GE 

programs that purport to lead to jobs 

and good wages are an inefficient use of 

the borrower’s resources. See 75 FR 

43621. 

The second consideration is taxpayer 

subsidies. As we said previously in 

connection with the 2011 Prior Rule and 

restate here, borrowers who have low 

incomes but high debt may reduce their 

payments through income-driven 

repayment plans. These plans can either 

be at little or no cost to taxpayers or, 

through loan cancellation, can cost 

taxpayers as much as the full amount of 

the loan with interest. 75 FR 43622. 

Deferments and repayment options are 

important protections for borrowers 

because, although postsecondary 

education generally brings higher 

earnings, there is no guarantee for the 

individual. Policies that assist those 

with high debt burdens are a critical 

form of insurance. However, these 

repayment options should not mean that 

institutions should increase the level of 

risk to the individual student or 

taxpayers through high-cost, low-value 

programs. See id. 

The third consideration is default. 

The Federal Government covers the cost 

of defaults on Federal student loans. 

These costs can be significant to 

taxpayers. Id. And as we said previously 

in connection with the 2011 Prior Rule 

and restate here, loan defaults harm 

students and their families. Id. Their 

credit rating is damaged, undermining 

their ability to rent a house, get a 

mortgage, or purchase a car. To the 

extent they can get credit, they pay 

much higher interest. And, increasingly, 

employers consider credit records in 

their hiring decisions. 75 FR 43622. In 

addition, former students who default 

on Federal loans cannot receive 

additional title IV, HEA program funds 

for postsecondary education. Id.; see 

also section 484(a)(3) of the HEA, 20 

U.S.C. 1091(a)(3). 

In accordance with the legislative 

intent behind the gainful employment 

eligibility provisions now found in 

sections 101, 102, and 481 of the HEA 

and the significant policy concerns they 

reflect, we propose to use the 

certification requirements to establish a 

program’s eligibility and, to assess 

continuing eligibility, the metrics-based 

standards that measure whether 

students will be able to pay back the 

educational debt they incur to enroll in 

the occupational training programs that 

are the subject of this rulemaking. 20 

U.S.C. 1001(b)(1), 1002(b)(1)(A)(i), 

(c)(1)(A), 1088(b). 

Certification Requirements 

Under proposed §§ 668.403 and 

668.414, institutions must certify 

through their program participation 

agreements that their GE programs meet 

all applicable accreditation and State 

and Federal licensing requirements to 

be eligible for title IV, HEA program 

funds. Through the certification 

requirements, institutions would be 

required to assess their programs to 

determine whether they meet these 

minimum required standards. 

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45Baum, S., and Schwartz, S. (2003). How Much 

Debt is Too Much? Defining Benchmarks for 

Managing Student Debt. 

46 Id. 

47 Gross, J. P., Cekic, O., Hossler, D., and Hillman, 

N. (2009). What Matters in Student Loan Default: 

A Review of the Research Literature. Journal of 

Student Financial Aid, 39(1), 19–29. 

A program that cannot meet the basic 

certification requirements cannot be 

said to be preparing students for gainful 

employment in a recognized 

occupation. We believe that any student 

attending such a program would have a 

difficult time or be unable to secure 

employment in the occupation for 

which he or she received training and, 

consequently, would likely struggle to 

repay the debt incurred for enrolling in 

that program. The certification 

requirements are intended to help 

prevent such outcomes and are an 

appropriate condition that programs 

must meet to qualify for title IV, HEA 

program funds as they squarely address 

the debt repayment concerns underlying 

the gainful employment eligibility 

provisions of the HEA. As we have 

proposed that these certifications must 

be signed by an institution’s most senior 

executive officer, we believe that 

institutions would make this selfassessment in good faith and after 

appropriate due diligence. The 

certification requirements are discussed 

in more detail in ‘‘§ 668.414 

Certification requirements for GE 

programs.’’ 

The GE Measures 

The debt-to-earnings measures under 

both the 2011 Prior Rule and the 

proposed regulations assess the debt 

burden incurred by students who 

completed a GE program in relation to 

their earnings. The pCDR measure, like 

the loan repayment rate in the 2011 

Prior Rule, would assess the extent to 

which a program’s borrowers are paying 

back their loans, whether or not they 

completed the program, by measuring 

the GE program’s loan default rate. 

Both the D/E rates measure and pCDR 

measure assess program outcomes that, 

consistent with legislative intent, 

indicate whether a program is preparing 

students for gainful employment. 

Although the measures supplement and 

complement one another, each focuses 

on separate and distinct expectations on 

which Congress relied in enacting 

legislation that make these programs 

eligible for title IV, HEA program funds 

based on the condition that they provide 

training that prepares students for 

gainful employment. Consequently, we 

believe the measures should operate 

independently. 

Some negotiators questioned the 

proposed use of D/E rates and pCDR as 

independent eligibility measures. They 

suggested the accountability framework 

is inconsistent with the approach taken 

in the 2011 Prior Rule in which the debt 

measures, taken together, were designed 

to identify the worst performing 

programs. Our change in approach is a 

change not in overall objective, but in 

the manner in which we believe that 

objective is best accomplished. 

The D/E rates and pCDR measures are 

designed to reflect and account for the 

three primary reasons that a program 

may fail to prepare students for gainful 

employment where former students are 

unable to earn wages adequate to 

manage their educational debt: (1) a 

program does not train students in the 

skills they need to obtain and maintain 

jobs in the occupation for which the 

program purports to train students, (2) 

a program provides training for an 

occupation for which low wages do not 

justify program costs, and (3) the 

program is experiencing a high number 

of withdrawals or ‘‘churn’’ because 

relatively large numbers of students 

enroll but few, or none, complete the 

program, which can often lead to 

default. See ‘‘§ 668.413 Calculating, 

issuing, and challenging completion 

rates, withdrawal rates, repayment rates, 

median loan debt, and median 

earnings,’’ for a more complete 

discussion of withdrawal rates and 

‘‘churn.’’ 

The D/E rates measure assesses the 

outcomes of only those students who 

complete the program. The calculation 

includes former title IV, HEA program 

fund recipients who took on educational 

debt and recipients who did not. And, 

for those students who have debt, the D/ 

E rates take into account private loans 

and institutional financing in addition 

to title IV, HEA program loans. 

The D/E rates primarily assess 

whether the loan funds obtained by 

students ‘‘pay dividends in terms of 

benefits accruing from the training 

students received,’’ and whether such 

training has indeed equipped students 

to earn enough to repay their loans such 

that they are not unduly burdened. H.R. 

Rep. No. 89–308, at 4 (1956); S. Rep. No. 

89–758, at 7 (1965). A 2002 survey 

found that a majority of borrowers felt 

burdened by their student loan 

payments and reported that they would 

borrow ‘‘much less’’ or a ‘‘little less’’ to 

finance their higher education if they 

were to enroll again in an educational 

program. An analysis of the 2002 survey 

combined borrowers’ responses to 

questions about student loan burden, 

hardship, and regret to create a ‘‘debt 

burden index’’ that was significantly 

positively associated with borrowers’ 

debt-to-income ratios; in other words, 

borrowers with higher debt-to-income 

ratios tended to feel higher levels of 

burden, hardship, and regret.45

‘‘Burden’’ and ‘‘regret’’ were 

significantly positively associated with 

one’s debt-to-income ratio.46

As a result, the D/E rates measure 

identifies programs that fail to 

adequately provide students with the 

occupational skills needed to obtain 

employment or that train students for 

occupations with low demand and low 

wages. The D/E rates also provide 

evidence of the experience of borrowers 

and, specifically, where borrowers may 

be struggling with their debt burden. 

In contrast to the D/E rates measure, 

pCDR measures the extent to which a 

program’s former students are paying 

back their Direct and FFEL loans 

regardless of their earnings, if any. In 

comparison to the D/E rates measure, 

the pCDR measure applies to those 

programs that have relatively high 

enrollments but no or few completions 

such that students are left with debt 

they cannot repay. A substantial body of 

research suggests that ‘‘completing a 

postsecondary program is the strongest 

single predictor of not defaulting 

regardless of institution type.’’ 47

The legislative history supports 

inclusion of students who did not 

complete a program in the proposed 

accountability framework. As discussed 

previously, Congress specifically 

considered expert advice that students 

who took out Federal loans for the 

purpose of training programs, including 

students who do not complete the 

programs, would be able to repay those 

loans, as defaults by those students 

would burden taxpayers in the same 

way as defaults by students who 

completed the program. 

The pCDR, consequently, is foremost 

a measure that assesses whether a 

program presents a ‘‘poor financial risk 

to the taxpayer.’’ 76 FR 34392. In light 

of congressional intent reflected in the 

legislative history, a program that 

presents a poor financial risk for 

taxpayers cannot be considered a 

program that prepares students for 

gainful employment. 

Despite the distinctive purposes of the 

D/E rates and pCDR measures, the 

measures supplement and complement 

one another. The scope of the pCDR 

measure is broader than the D/E rates 

measure as pCDR also takes into 

account the outcomes of borrowers who 

did not complete the program. 

Accordingly, the pCDR measure 

supplements the D/E rates in those cases 

in which D/E rates cannot be calculated 

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48Baum, S., and Schwartz, S. (2006). How Much 

Debt is Too Much? Defining Benchmarks for 

Managing Student Debt. See also S. Baum, ‘‘Gainful 

Employment,’’ posting to The Chronicle of Higher 

Education, http://chronicle.com/blogs/innovations/

gainful-employment/26770, in which Baum 

described the 2006 study: 

This paper traced the history of the long-time rule 

of thumb that students who had to pay more than 

8% of their incomes for student loans might face 

difficulties and looked for better guidelines. It 

concluded that manageable payment-to-income 

ratios increase with incomes, but that no former 

student should have to pay more than 20% of their 

discretionary income for all student loans from all 

sources. 

49 Id. 

50 Id. at 2–3. 

51 Id. 

because no or very few students who 

enrolled in a program actually 

completed the program. By including an 

accountability metric that reflects the 

outcomes of students who do not 

complete the program, institutions 

would have incentive to address any 

high dropout and ‘‘churn’’ issues or face 

the loss of eligibility. 

Likewise, the D/E rates measure 

complements the pCDR measure. 

Specifically, the pCDR measure does not 

take into account the many students 

who may be struggling to repay their 

loans, such as those receiving economic 

hardship deferments or who are in an 

income-driven repayment plan. These 

students may see their loans grow, 

rather than shrink, because their 

incomes are low and their debts are 

high. While the pCDR measure may not 

identify programs whose former 

students are in such circumstances, the 

D/E rates measure would take into 

account those students who are 

struggling with their debt burden 

despite having completed their 

programs. 

Although we have proposed the pCDR 

measure to assess the outcomes of all 

students who attend a program, both 

students who complete the program and 

those who do not, we invite comment as 

to whether the D/E rates measure should 

also consider the outcomes of students 

who do not complete the program, in 

addition to those who do. We ask 

commenters to provide information, 

studies, and data to support their 

comments. 

D/E Rates 

The proposed regulations would 

include the same two debt-to-earnings 

measures as the 2011 Prior Rule. Under 

the proposed regulations, the first D/E 

rate, the discretionary income rate, 

measures the proportion of annual 

discretionary income—the amount of 

income above 150 percent of the Poverty 

Guideline for a single person in the 

continental United States—that students 

who complete the program are devoting 

to annual debt payments. The 

Department also proposes a second rate, 

the annual earnings rate, which 

measures the proportion of annual 

earnings that students who complete the 

program are devoting to annual debt 

payments. A program would pass the D/ 

E rates measure by meeting the 

standards of either of the two metrics, 

the discretionary income rate or the 

annual earnings rate. For an explanation 

of the methodology that would be used 

to calculate the D/E rates, see ‘‘§ 668.404 

Calculating D/E rates.’’ 

The proposed passing thresholds for 

the discretionary income rate and the 

annual earnings rate are based upon 

mortgage industry practices and expert 

recommendations. The passing 

threshold for the discretionary income 

rate is set at 20 percent, based on 

research conducted by economists 

Sandy Baum and Saul Schwartz, which 

the Department previously considered 

in connection with the 2011 Prior 

Rule.48 Specifically, Baum and 

Schwartz proposed benchmarks for 

manageable debt levels at 20 percent of 

discretionary income. Such benchmarks 

would ensure that low income 

borrowers have no repayment 

obligations and that no borrower would 

ever have repayment obligations that 

exceeded 20 percent of their income, a 

level they found to be unreasonable 

under virtually all circumstances.49 The 

passing threshold of 8 percent for the 

annual earnings rate used in the 

proposed regulations has been a fairly 

common mortgage-underwriting 

standard, as many lenders typically 

recommend that all non-mortgage loan 

installments not exceed 8 percent of the 

borrower’s pretax income.50 Studies of 

student debt have accepted the 8 

percent standard and some State 

agencies have established guidelines 

based on this limit. Eight percent 

represents the difference between the 

typical ratios used by lenders for the 

limit of total debt service payments to 

pretax income, 36 percent, and housing 

payments to pretax income, 28 

percent.51

In the 2011 Prior Rule, the passing 

thresholds for the debt-to-earnings ratios 

were based on the same expert 

recommendations and industry practice, 

but were increased by 50 percent to 30 

percent for the discretionary income 

rate and 12 percent for the annual 

earnings rate to identify the lowestperforming GE programs and to build in 

a tolerance. 76 FR 34400. 

Upon further consideration of this 

issue and analysis of the GE Data, we 

believe that the stated objectives of the 

2011 Prior Rule to identify the worst 

performing programs and build a 

‘‘tolerance’’ into the thresholds are 

better achieved by setting 30 percent for 

the discretionary income rate and 12 

percent for the annual earnings rate as 

the upper boundaries for a zone rather 

than as the passing thresholds. For the 

following reasons, adopting this 

approach is consistent with the 

Department’s objectives in this 

rulemaking of identifying poorly 

performing programs, and providing 

institutions time, particularly in the 

initial years of the proposed regulations, 

to improve their programs. 

First, the proposed regulations would 

still identify the lowest performing 

programs, those with a discretionary 

income rate greater than 30 percent and 

an annual earnings rate greater than 12 

percent, by categorizing them as failing. 

Whereas the 2011 Prior Rule provided 

that a program would be ineligible if it 

had failing rates for three out of any four 

consecutive years, under the proposed 

regulations, a GE program that fails the 

D/E rates measure in two out of any 

three consecutive years would become 

ineligible. This reflects the Department’s 

view in the prior rulemaking, as well as 

here, that any program with D/E rates 

above a 30 percent discretionary income 

rate or a 12 percent annual earnings rate 

is producing very poor outcomes for its 

students and should, in order to 

minimize the program’s negative impact 

on students, be given only limited time 

before it loses its eligibility. 

Because of the previous rulemaking 

and the release of the 2011 GE 

informational rates in June 2012, we 

believe many institutions have had 

relevant information for a sufficient 

amount of time to assess their programs 

and make improvements, particularly by 

reducing costs. As discussed in more 

detail below, the proposed four-year 

transition period would take into 

consideration these improvements. Even 

where institutions have not taken 

action, or in cases where programs were 

not included in the 2011 GE 

informational rates, the transition 

period would still account for any 

immediate reductions in costs that 

institutions make in response to the 

proposed regulations. For a more 

detailed explanation of the transition 

period, see ‘‘§ 668.404 Calculating D/E 

rates.’’ Accordingly, less time to 

ineligibility for failing programs is 

merited in comparison to the 2011 Prior 

Rule. 

Second, we propose setting the 

passing thresholds at 20 percent for the 

discretionary income rate and 8 percent 

for the annual earnings rate, which are 

what experts and industry practice 

deem to be the outside limit of 

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52Baum, S., and Schwartz, S. (2003). How Much 

Debt is Too Much? Defining Benchmarks for 

Managing Student Debt. 

53 2012 GE informational rates. 

54 Id. 

55 Id. 

acceptable debt burden. As stated above, 

Baum and Schwarz concluded that the 

ratio of discretionary income to debt 

should never exceed 17 to 20 percent.52

Similarly, the 8 percent threshold for 

the annual earnings rate is based on the 

credit underwriting industry’s judgment 

of the outside limit of all non-mortgage 

debt. Although not among the very 

worst performers, programs with D/E 

rates exceeding the 20 percent and 8 

percent thresholds still exhibit poor 

outcomes and unacceptable debt levels. 

Eventual ineligibility for these programs 

is appropriate if they do not make 

improvements that will be reflected in 

their D/E rates. 

Our analysis of the 2012 GE 

informational rates indicates that the 

stricter thresholds would more 

effectively identify poorly performing 

programs. The average earnings of 

students who completed programs 

evaluated by the Department with a 

discretionary income rate or an annual 

earnings rate in between the passing 

thresholds of the proposed regulations 

and the 2011 Prior Rule, 20–30 percent 

and 8–12 percent, respectively, is under 

$18,000.53 Under the thresholds of the 

2011 Prior Rule, a zone program would 

pass the D/E rates measure, even though 

its graduates could be devoting up to 

almost $2,200, or 12 percent, of their 

$18,000 in annual earnings toward 

student loan payments. We believe it 

would be very difficult for an individual 

earning $18,000 to manage that level of 

debt. That 25 percent of borrowers from 

zone programs evaluated by the 

Department default on their Federal 

student loans within the first three years 

of entering repayment lends support to 

this conclusion.54 In comparison, the 

average default rate of programs 

evaluated by the Department that would 

pass the D/E rates measure under the 

proposed regulations is 19 percent.55

These results indicate that students who 

complete zone programs have very 

different outcomes than students who 

complete passing programs. These 

programs, accordingly, should not be 

treated the same. 

Third, because programs in the zone 

are not among the very worst, they have 

a greater potential to raise their 

performance to passing levels than 

programs with poorer outcomes. We 

believe they should be afforded an 

opportunity to do so. For this reason, 

the proposed regulations include a fouryear zone and allow for a transition 

period to allow zone programs more 

time than failing programs to improve 

before being made ineligible. Because 

institutions have the ability to impact 

the debt that their students accumulate 

by lowering tuition and fees, which the 

transitional D/E rates calculations 

would take into account, we believe it 

is possible for zone programs to 

improve. If institutions do not make 

improvements to these programs, they 

would be made ineligible just as failing 

programs, because, as deemed by 

experts and industry practice and 

supported by our own data analysis, 

both groups of programs are leaving 

their students with unacceptable debt 

burdens in comparison to their incomes. 

As discussed under ‘‘§ 668.404 

Calculating D/E rates,’’ the proposed 

regulations would allow for a transition 

period for the first four years after the 

final regulations become effective. 

During the transition period, an 

alternative D/E rates calculation would 

be made so that institutions could 

benefit from any immediate reductions 

in cost they make. During these four 

years, the transition period and zone 

together would allow institutions to 

make improvements to their programs 

in order to become passing. Institutions 

that lower tuition and fees sufficiently 

at the outset of the transition period 

could move failing programs into the 

zone in order to avoid ineligibility. 

These institutions would then have 

additional transition and zone years to 

continue to improve their programs and 

make them passing. During this period, 

the Department would also provide to 

institutions their results under the 

regular D/E rates calculation so that they 

could measure the amount of cost 

reduction they would need to make in 

order for their programs to pass once the 

transition period concludes. 

After the conclusion of the transition 

period, the overall accountability and 

transparency framework of the proposed 

regulations, including the zone, should 

motivate continuous improvement by 

institutions. If institutions begin 

reducing costs and improving quality at 

the start of the transition period, and 

sustain those efforts after the transition 

period, a program that falls in the zone 

in the future would benefit from the 

four-year time period because consistent 

improvements would be reflected in the 

program’s D/E rates on an ongoing basis. 

Fourth, a four-year zone provides a 

buffer to account for statistical 

imprecision due to random year-to-year 

variations, virtually eliminating the 

possibility that a program would 

mistakenly be found ineligible on the 

basis of D/E rates for students who 

completed the program in any one year. 

As demonstrated below by the 

Department’s analysis of the 2012 GE 

informational rates, given the extreme 

unlikelihood that an unrepresentative 

population of students who completed 

the program could occur in four out of 

four consecutive years, that is, that a 

program’s D/E rates exceed the 8 

percent and 20 percent thresholds four 

years in a row when in fact its D/E rates 

are on average less than 8 percent and 

20 percent for a typical year, there is no 

need to build in a tolerance by adjusting 

the thresholds at the expense of holding 

all poorly performing programs 

accountable as was done in the 2011 

Prior Rule because the zone provides 

that tolerance. In other words, we 

believe the zone accounts for statistical 

imprecision while still holding all 

poorly performing programs 

accountable over time. 

The findings of our statistical analysis 

are discussed in the following 

paragraphs. For demonstrative 

purposes, the probabilities provided 

below are for the annual earnings rate 

because our analysis indicates that, of 

programs that would pass the D/E rates, 

the substantial majority would pass this 

measure. Our analysis assumes that the 

observed annual earnings rates of 

passing programs reasonably 

approximate the true distribution of 

passing annual earnings rates. Note also 

that, although we have proposed an ‘‘nsize’’ of 30 in the proposed regulations, 

we have also invited comment on an nsize of 10. See ‘‘§ 668.404 Calculating 

D/E rates.’’ Accordingly, our analysis 

assessed the statistical precision of the 

measure using both an n-size of 30 and 

an n-size of 10. 

If the minimum number of students 

completing a program (‘‘n-size’’) 

necessary to calculate the program’s 

D/E rates is set at 30, as is the case in 

the proposed regulations, the expected 

or average probability that a passing 

program would be mischaracterized as a 

zone program in a single year is no more 

than 2.7 percent. Because this is an 

average across all programs with passing 

D/E rates, it is important to note that the 

probability is lower the farther a 

program is from the passing threshold 

and higher for programs with D/E rates 

closer to the passing threshold. At an nsize of 10, the probability that a passing 

program would be mischaracterized as a 

zone program in a single year would be 

no more than 6.7 percent. 

Because no program would be found 

ineligible after just a single year, it is 

important to look at the statistical 

precision analysis across multiple years. 

These probabilities drop significantly 

for both an n-size of 30 and 10 when 

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56We are unable to provide more precise 

probabilities for the scenario of a program that fails 

the D/E rates measure in two out of three years. 

Because some students are common to consecutive 

two-year cohort periods for the D/E rates 

calculations, we cannot rely on the assumption that 

each year’s D/E rates are statistically independent 

from the previous and subsequent year’s D/E rates. 

Without the assumption of independence between 

years, there is no widely accepted method for 

calculating the probability of a program failing the 

D/E rates measure in two out of three years. 

57The earliest legislation to use cohort default 

rate was Public Law 101–239, section 2003(a), Dec. 

19, 1989, 103 Stat 2106, 2120, which made an 

institution with a single year CDR of 30 percent or 

more ineligible for Supplemental Loans for 

Students, a FFELP loan authorized under section 

428A as in effect at the time, and added subsection 

(m) to section 435 of the HEA to define the term 

cohort default rate. This followed the Department’s 

June 5, 1989, adoption of regulations that made an 

Continued 

looking across the four years that a 

program could be in the zone before 

becoming ineligible. The average 

probability of a passing program 

becoming ineligible as a result of being 

mischaracterized as a zone program for 

four consecutive years at an n-size of 30 

is close to 0 percent. At an n-size of 10, 

the average probability is no more than 

1.4 percent. 

Setting the failing D/E rates 

thresholds at 30 percent for the 

discretionary income rate and 12 

percent for the annual earnings rate also 

virtually eliminates the probability of a 

passing program losing eligibility 

because of being mischaracterized as 

failing at either n-size. 

The probability of a passing program 

being mischaracterized as a failing 

program in a single year at an n-size of 

30 is close to 0 percent. At an n-size of 

10, the probability is no more than 0.7 

percent. Although we know that these 

are the upper limits of the probabilities 

of a passing program being 

mischaracterized as failing, it is likely 

that the probabilities are lower when 

taken across the two years of failures 

required for a program to become 

ineligible. We are unable to provide 

more precise probabilities for the 

scenario of failing two out three years 

due to limitations in our data.56

Other aspects of the D/E rates measure 

in the proposed regulations also reduce 

the probability of a program becoming a 

failing or ineligible program in error. As 

a general matter, both the debt and 

earnings components of the 

discretionary income rate and annual 

earnings rate calculations are calculated 

as means or medians, which, as 

measures of central tendency, account 

for outliers. And as stated previously, 

both passing thresholds are set at the 

very outside limits of the 

recommendations from which they are 

drawn, resulting in a ‘‘built-in’’ buffer. 

Although we propose to use the same 

D/E rates measure for the purpose of 

determining program eligibility as in the 

2011 Prior Rule but with stricter passing 

thresholds and a zone category, we seek 

comment on whether the passing 

thresholds used in the 2011 Prior Rule— 

12 percent for the annual earnings rate 

and 30 percent for the discretionary 

income rate—should be adopted 

instead. We strongly urge commenters 

to provide supporting data or studies 

that the Department can use in 

evaluating regulatory alternatives. 

pCDR 

To assess the repayment performance 

of former students, we propose to use a 

different method than the loan 

repayment rate measure in the 2011 

Prior Rule: the percentage of those 

students who default within a defined 

period, which we refer to as the program 

cohort default rate or pCDR. 

In the 2011 Prior Rule, to assess 

repayment performance, the Department 

used the loan repayment rate measure in 

§ 668.7(b), which measured the extent to 

which students who borrowed to enroll 

in a GE program were repaying their 

loans. In proposing the loan repayment 

rate measure, the Department explained 

that the measure was designed to 

protect the taxpayer as well as the 

borrower from exposure to default: 

‘‘This concern—protecting the 

taxpayer—motivates the repayment rate 

measure, which indicates the taxpayer’s 

exposure to delayed repayment or 

default.’’ 75 FR 43622 (emphasis 

added). The Department adopted in 

§ 668.7(a)(2) and (b) of the 2011 Prior 

Rule a minimum threshold of 35 percent 

as the percentage of loan amount 

borrowed by former students that those 

borrowers had actually repaid, through 

the recent fiscal year, at a rate that 

reduced the ‘‘outstanding balance’’ 

owed. That threshold was adopted to 

identify ‘‘the approximately one-quarter 

of programs where 65 percent of the 

former students attempting to repay 

their loans were nonetheless seeing 

their loan balances grow.’’ 73 FR 34395. 

In APSCU v. Duncan, the court found 

that the Department had not provided a 

‘‘reasoned explanation’’ for the 35 

percent threshold other than that it 

would identify the worst-performing 

quartile, APSCU v. Duncan, 870 

F.Supp.2d at 154, and vacated that 

portion of the regulations. Nevertheless, 

we continue to consider loan repayment 

performance of a GE program’s former 

students to be relevant evidence of 

whether a program meets the gainful 

employment requirement. Unlike with 

the debt-to-earnings rates, however, the 

Department has found no expert studies 

or industry practice that would provide 

the kind of factual support for 

identifying a particular loan repayment 

rate as an appropriate threshold for 

determining whether a program 

prepares students for gainful 

employment, nor has it found 

alternative support or arguments in 

support of a threshold. 

Instead, we seek to measure the loan 

repayment performance based on the 

proposed pCDR accountability metric, 

which is modeled after the cohort 

default rate metric that is currently used 

to determine institutional eligibility to 

participate in title IV, HEA programs 

(institutional CDR or iCDR). 

Specifically, we propose to use pCDR as 

a measure, independent of the D/E rates 

measure, to determine the continuing 

title IV, HEA eligibility of a GE program. 

To determine whether a program is 

failing, the Department would use the 

same threshold as is used to disqualify 

institutions from the title IV, HEA 

programs. 20 U.S.C. 1085(m). A program 

would be failing the pCDR measure if it 

had a pCDR of 30 percent or greater. 

Because the HEA sets the standard for 

when an institution loses eligibility 

under the iCDR provisions, we consider 

that congressional determination—three 

consecutive fiscal years of an iCDR of 30 

percent or greater—to provide 

compelling support for use of the 

identical standard to assess the 

eligibility of a GE program. Because 

every institution is the sum of its 

programs, the iCDR is simply the 

aggregate outcome of the default 

performance of students from all of its 

programs. 

The legislative history of the HEA 

provisions that impose the iCDR 

eligibility test do not appear to discuss 

the rationale for any of the specific 

threshold rates Congress chose to use 

between 1990 (30 percent) and the 

present (also 30 percent). The legislative 

history does show, however, that 

Congress has closely attended to 

calibrating the iCDR test and its effect 

on institutions, as evidenced by 

numerous and regular amendments. 

These amendments made significant 

changes to the iCDR rule over the years: 

they changed the rates themselves, 

exempted various classes of institutions 

from the test, expanded and refined the 

grounds on which institutions could 

appeal a loss of eligibility, denied 

eligibility for Pell Grants to those 

institutions that lost eligibility on CDR 

grounds, and, most recently, expanded 

the period during which defaults were 

held against the institution from the 

two-year period adopted in 1990 to 

three years.57 This history amply 

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institution with a single-year CDR of 40 percent or 

greater subject to termination of eligibility. 34 CFR 

668.15 (1990), 54 FR 24114 (June 5, 1989). The 

three-year CDR test structure was adopted shortly 

thereafter by Pub. L. 101–508, section 3004, Nov. 

5, 1990, 104 Stat. 1388–26, which amended section 

435(a) of the HEA to adopt the three-year CDR test 

in effect ever since; to set the CDR rate thresholds 

at 35 percent for FY 1991 and 1992, and 30 percent 

for FY 1993 and subsequent fiscal years; and to 

exempt until 1994 historically black colleges and 

universities and tribally controlled colleges and 

universities, as identified by the Tribally Controlled 

Community College Assistance Act and the Navajo 

Community College Act from the cohort default rate 

thresholds. 20 U.S.C. 1085(a)(2)(B), (C). (This 

exemption was extended several times and 

ultimately ended in 1999.) Congress revised the 

CDR thresholds in 1992 amendments, reducing the 

threshold to 25 percent for fiscal years beginning in 

1994. Pub. L. 102–325, section 427, 106 Stat 448, 

July 23, 1992. Congress substantially revised the 

appeal options in 1993 to allow challenges to loss 

of eligibility based on improper servicing, Pub. L. 

103–208, section 2(c)(55), Dec. 20, 1993, 107 Stat 

2457. Appeal options were further expanded in 

1998 to permit appeals based on ‘‘mitigating 

circumstances,’’ including low borrowing and high 

placement rates for GE programs, and disqualifying 

from Pell Grant eligibility those institutions that fail 

the CDR test. Pub. L. 105–244, sections 401, 429, 

Oct. 7, 1998, 112 Stat. 1704 to 1709. Most recently, 

Congress extended the period during which 

defaults would be assessed from the two-year 

period under prior law to a three fiscal year period 

and changed the CDR threshold back to 30 percent 

for fiscal years beginning in 2012, the first year in 

which the three-year period would apply. Pub. L. 

110–315, section 436, 102 Stat 3258. 

demonstrates that the current iCDR rate, 

which is incorporated into the proposed 

regulations at the program level, reflects 

Congress’s experiences and careful 

deliberation over the years. 

Thus, we consider it reasonable to 

rely on the 30 percent standard adopted 

by Congress. We have found no 

analytical criticism of the 30 percent 

standard. Given the unique 

characteristics of the Federal student 

loan program, such as the lack of any 

creditworthiness test, we propose to rely 

on the well-established standard 

deliberated and adopted by Congress. 

Moreover, this standard has been 

applied on a program-level basis for 

many years, as there are a number of 

institutions offering only one eligible 

program that are evaluated on whether 

that one program’s default rate is 

meeting the 30 percent threshold 

established by Congress. In other words, 

in those cases, the iCDR measure is 

effectively already used as a programlevel CDR measure. 

In connection with the negotiated 

rulemaking process for the 2011 Prior 

Rule, several commenters suggested that 

the Department use institutional CDR as 

a measure of whether a program 

prepares students for gainful 

employment. The Department declined 

to do so, stating that ‘‘an institution’s 

average [cohort default rate] does not 

measure the effect of any individual 

program.’’ 76 FR 34386, 34387 (June 11, 

2011) (emphasis added). The 

institutional CDR ‘‘may mask an 

underperforming program . . . [and] 

may therefore be a misleading measure 

of an individual program’s success in 

providing students with sufficient 

income to pay off educational loan 

debt.’’ 76 FR 34411 (emphasis added). 

Notably, these arguments apply only to 

the use of iCDR to measure whether 

individual programs produce excessive 

debt burdens. The Department did not 

consider applying the iCDR 

methodology to assess the default 

performance of individual programs, as 

we now propose. Further, at that time, 

the Department’s proposal already 

included a metric to measure loan 

repayment performance—the loan 

repayment rate. 

We continue to believe that iCDR 

itself is not a useful measure in 

determining whether a program 

prepares students for gainful 

employment in a recognized occupation 

(except for institutions offering only one 

eligible program). Although a passing 

iCDR indicates that an institution is, on 

average, across programs, producing an 

acceptable number of students that are 

able to pay their loans, iCDR does not 

measure individual GE program 

performance and, therefore, does not 

provide the information that would be 

most useful to prospective students and 

their families considering a particular 

program. For students who find 

themselves in a GE program that is 

leaving its students with unmanageable 

debt, the fact that an institution has 

other programs that are producing better 

student outcomes is of limited utility. 

When applied at the program level, 

however, we believe a cohort default 

rate is a valuable measure of GE 

program performance. We also expect 

the implementation of pCDR as a GE 

measure would have a similar effect on 

the cohort default rates at a program 

level as did iCDR on the institutional 

level. 76 FR 34484. That is, when iCDR 

was introduced there was an initial 

elimination of the worst-performing 

programs followed by a new 

equilibrium in which programs 

complied with the minimum standards 

in the regulations. Id. 

Proposed new subpart R would 

establish the procedures and 

methodology that would be applied to 

determine a GE program’s pCDR. 

Subpart R is virtually identical to 

subpart N of part 668, which establishes 

the procedures and methodology used 

to determine iCDR. We have drafted 

proposed subpart R to follow the text 

and procedures in subpart N in order to 

assist institutions already familiar with 

the iCDR process to understand the 

pCDR procedures and methodology. 

Provisions of subpart N that are not 

relevant to pCDR determinations or are 

not adopted for pCDR purposes have 

been reserved in subpart R. 

The major difference between iCDR 

and our proposed use of pCDR is that, 

in the proposed regulations, we would 

adopt only the statutory CDR threshold 

for loss of eligibility (rates of 30 percent 

or greater for three consecutive fiscal 

years), and would not adopt the 

additional regulatory provision under 

which an institution loses eligibility if 

it has an iCDR greater than 40 percent 

in a single fiscal year. This is consistent 

with our overall approach to allow 

institutions time to improve their 

programs so that a program would not 

lose eligibility after only a single year of 

failure to meet a GE measure. 

For the pCDR measure, we propose no 

counterpart to the zone or the transition 

period used for the D/E rates measure. 

There are no equivalent provisions in 

the iCDR framework. However, we note 

that because institutions have been 

subject to the iCDR standards for many 

years, we do not believe that there is a 

similar need for a zone or a transition 

period in connection with the pCDR 

measure. 

Under the proposed regulations, we 

would replicate the iCDR determination 

process for the purpose of determining 

pCDR. Thus, the same procedures and 

methodology used in calculating cohort 

default rates for institutions under 

section 435 of the HEA, 20 U.S.C. 1085, 

and Department regulations would 

largely apply to the calculation of pCDR. 

For example, the proposed regulations 

would mirror regulations contained in 

subpart R that address the calculation of 

cohort default rates for institutions with 

few borrowers entering repayment, 

§ 668.202(a)(2) (calculation of rate when 

fewer than 30 borrowers enter 

repayment in a fiscal year). 

The proposed regulations would also 

provide an institution with the same 

challenges and appeals for the pCDR 

determination as are provided for the 

iCDR determination. We believe that 

institutions are familiar with these 

challenges and appeals and can readily 

use them in connection with pCDR 

determinations. 

We propose to exclude from subpart 

R provisions of 34 CFR part 668, subpart 

N, that address matters that are not 

necessary components of the rate 

determination process itself, such as 

§ 668.204(c)(1)(iii) (affecting 

administrative capability of the 

institution under § 668.16(m)), or do not 

readily apply to program-level rates, 

such as § 668.203 (calculation of CDR 

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for institutions or locations that undergo 

a change in ownership). 

We have considered each provision of 

subpart N to determine its applicability 

to pCDR and believe that a cohort 

default rate, calculated under the 

specific procedures and methodology 

adopted from iCDR, is a valuable and 

reasonable metric at the program level 

for the reasons explained above. 

During the negotiation sessions, 

several non-Federal negotiators 

suggested that pCDR would be an 

inadequate measure of whether a 

program prepares students for gainful 

employment. These negotiators believed 

that the iCDR methodology does not 

capture the extent to which borrowers 

facing an excessive debt burden can, by 

various deferments and forbearances, 

temporarily avoid the adverse 

consequence of that debt burden, only 

to default after the three-year period 

during which the CDR tracks defaults. 

They were concerned that institutions 

would encourage students to enter 

forbearance or deferment in order to 

evade the consequences of the pCDR 

measure and urged the Department to 

modify the existing iCDR methodology 

to disregard these non-payors when 

calculating pCDR. 

We acknowledge that cohort default 

rates do not take into account students 

who are receiving deferments or 

forbearances, or who may be paying 

much less or even nothing as a result of 

repaying under an income-driven 

repayment plan, but we are not inclined 

to make a change that would cause the 

proposed pCDR requirements to differ 

so significantly from the institutional 

CDR requirements. Although we are 

concerned about the manipulation of 

cohort default rates through the 

deferments, forbearances, and incomedriven repayment plans identified by 

some negotiators, we believe that pCDR 

should be consistent with iCDR to avoid 

conflicting results. For example, if we 

accepted the negotiators’ proposal to 

adopt, but modify, the iCDR provisions 

for purposes of pCDR to address the 

concern presented, an institution with 

only one program could be determined 

to be an eligible institution with respect 

to its one program under iCDR, but that 

program could be determined to be 

ineligible under the proposed pCDR 

provision. The Department wishes to 

avoid such contrary consequences. 

During the negotiations, we 

encouraged the negotiators to submit 

proposals for alternative methods of 

assessing loan repayment and the 

corresponding thresholds, together with 

the kind of evidence or analysis that the 

Department would need to pursue a 

different approach to assessing 

repayment. Negotiators responded to 

this request with proposals that 

included using completion rates, 

placement rates, and repayment rates as 

alternative eligibility measures. 

However, we received no proposals 

with a level of support sufficient for 

rulemaking. We believe section 435 of 

the HEA, 20 U.S.C. 1085, provides such 

support for the pCDR measure, and 

explain above why application of the 

cohort default rate at a program level is 

reasonable. 

Negotiators also provided responses 

on a proposal the Department made at 

the second negotiation session to 

evaluate loan repayment performance 

based on whether the program’s loan 

portfolio was negatively amortized. As 

we explained at the third session, we 

were unable to draw conclusions from 

the data available at the time on the 

negative amortization proposal. 

Accordingly, we have not pursued this 

proposal further. 

Other negotiators strongly objected to 

the proposal not to adopt, for the 

purpose of pCDR as an eligibility 

measure, the iCDR regulatory provision 

that results in the termination of an 

institution’s eligibility after one fiscal 

year iCDR of greater than 40 percent. 34 

CFR 668.206(a)(1). The negotiators were 

concerned that a program that may be 

one of the worst performers would 

remain eligible for perhaps two more 

years, harming more students in the 

interim. However, as explained earlier, 

we propose to adopt an accountability 

framework that does not result in 

ineligibility based on just one year of 

poor performance. Adopting a provision 

that would make a program ineligible 

after one year of failure would not be 

consistent with that intention. For a 

program that fails the pCDR measure, an 

institution can make efforts to assist 

subsequent cohorts of borrowers 

entering repayment with managing their 

debt burdens to lower the rates of 

default and, over the long term, can 

reduce debt burden altogether by 

lowering costs. 

Some negotiators questioned whether 

the iCDR methodology would effectively 

address situations in which a program 

has a small number of borrowers, and 

whether such lesser numbers might 

result in volatility of rates. We 

responded, and repeat here, that the 

iCDR process, as established by statute 

and as refined by regulation, explicitly 

addresses the manner in which rates are 

calculated for institutions with a small 

number of borrowers entering 

repayment, in ways that mitigate 

volatility that may arise from small 

numbers. Indeed, section 435(m)(3) of 

the HEA, 20 U.S.C. 1085(m)(3), 

explicitly provides that when fewer 

than 30 borrowers enter repayment in a 

fiscal year, the iCDR of that institution 

for that year is based on those students 

who entered repayment in that fiscal 

year and the preceding two fiscal years. 

§ 668.202(d)(2). Proposed 

§ 668.502(d)(2) would adopt the same 

rule. In addition, § 668.216 provides 

that an institution does not lose 

eligibility regardless of its iCDR if the 

total number of students entering 

repayment for the three-year period is 

fewer than 30. We include the same 

exception for pCDR in proposed 

§ 668.516. Years of experience under 

these regulations have produced no 

evidence of volatility of institutional 

CDRs, and we see no basis for concern 

that the same rules applied to pCDR 

would pose such a risk. 

Negotiators who expressed concern 

about the burden posed for programs 

with low rates of borrowing also 

objected to adopting for pCDR the same 

‘‘participation rate’’ challenge available 

for iCDR. Under this participation rate 

challenge and appeal option in 

§ 668.214, an institution subject to a loss 

of eligibility could avoid that loss by 

demonstrating that the percentage of 

students who borrow is sufficiently low 

that, when that percentage of students is 

multiplied by the iCDR for any of the 

three years for which its iCDR was 30 

percent or greater, the product is less 

than 0.0625. An institution can assert 

this claim at two points in the process: 

First, under § 668.204(c)(1)(ii), when the 

draft iCDR that would constitute the 

third-year rate of 30 percent or greater 

is issued, and, second, under § 668.214, 

when that third-year iCDR is issued as 

the official iCDR. The negotiator 

contended that the Department should 

allow an institution to challenge a pCDR 

based on a participation rate challenge 

or appeal when the first pCDR of 30 

percent or greater is issued, and not 

require the institution to wait until the 

third such rate is issued. For the reasons 

we have already stated, we believe there 

should be consistency between the iCDR 

and pCDR calculations. 

We seek comment on whether there 

are other measures we should consider 

that would further the Department’s 

stated policy goals. We restate our 

interest in ensuring the viability of the 

regulations through measures and 

thresholds that rest on a solid and wellreasoned basis and request that 

commenters submit supporting 

rationale, studies, and data for their 

proposals. We invite comment, 

however, on whether it may be possible 

to accomplish the intended goals of the 

GE measures without establishing a twometric eligibility framework or whether 

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there are other measures that should be 

considered. 

Rates Not Calculated 

If the minimum number of required 

students for the D/E rates to be 

calculated is not met or if SSA does not 

provide earnings information for the 

calculation of a program’s D/E rates, the 

D/E rates would not be calculated and 

the program would not receive rates for 

the award year. We believe it is logical 

to disregard a year for which the D/E 

rates are not calculated for the purpose 

of determining eligibility under the 

D/E rates (as explained previously, 

pCDR would always be calculated). For 

example, if a program failed the D/E 

rates measure in year 1, did not receive 

rates in year 2, passed the D/E rates 

measure in year 3, and failed the D/E 

rates measure in year 4, that program 

would be deemed ineligible after year 4 

because it failed the D/E rates measure 

in two out of three consecutive years for 

which D/E rates were calculated. This 

approach would avoid simply allowing 

a program to pass the D/E rates measure 

when an insufficient number of students 

complete the program. 

In contrast, under the 2011 Prior Rule, 

a program would be deemed to have 

‘‘satisfied’’ the debt measures if one of 

the debt measures could not be 

calculated. Since the 2011 Prior Rule 

provided that a program would satisfy 

the debt measures if it passed either of 

the debt-to-earnings ratios or the loan 

repayment rate, it would not have been 

appropriate to evaluate a program 

without results on all of the measures. 

That is not the case in the proposed 

regulations, as the D/E rates and pCDR 

measures would operate as independent 

measures. 

We seek comment on the appropriate 

number of consecutive ‘‘no rate’’ years 

under the proposed regulations after 

which a program’s zone or failing 

results should reset. As proposed, a 

program would become ineligible after 

failing the D/E rates measure in two out 

of any three consecutive years for which 

D/E rates are calculated. However, we 

seek comment as to whether this should 

apply where a significant period of time 

has passed between results. For 

example, as proposed, a program that 

failed the D/E rates measure for award 

year 2014–2015, and had no D/E rates 

calculated for the next five award years 

(2015–2016 through 2019–2020), would 

lose eligibility if it failed the D/E rates 

measure for 2021–2022. This pattern 

may indicate that the program was and 

remains a failing program, with the 

intervening years showing no evidence 

of successful outcomes. On the other 

hand, if the program had actually failed 

the D/E rates measure in two 

consecutive award years (e.g., 2014– 

2015 and 2015–2016), that program 

could potentially regain eligibility in 

2020 (three years after the date on 

which the program lost eligibility). 

Section 668.404 Calculating D/E rates 

Current Regulations: Under section 

668.7(c) of the 2011 Prior Rule, two 

debt-to-earnings ratios, the annual 

earnings rate and the discretionary 

income rate, would be calculated each 

fiscal year for GE programs using the 

following formulas: 

Both ratios would be calculated based 

on the debt and earnings outcomes of 

students who completed the program 

during an applicable cohort period. 

These students would include both 

those who received title IV, HEA 

program funds and those who did not. 

For both ratios, the annual loan 

payment would be calculated by 

determining the median loan debt of 

students completing the program during 

the applicable cohort period and 

amortizing that median debt amount 

over a 10-, 15-, or 20-year repayment 

period depending on the credential 

level of the program, using the interest 

rate on Federal Direct Unsubsidized 

Loans at the time of the calculation. 

Loan debt would include FFEL and 

Direct Loans (except PLUS Loans made 

to parents or Direct Unsubsidized loans 

that were converted from TEACH 

Grants), private education loans, and 

institutional loans that a student 

received for attendance in the program. 

In cases where students completed 

multiple programs at the same 

institution, all loan debt would be 

attributed to the highest credentialed 

program that the student completed. 

Also excluded from the calculations 

would be students whose title IV, HEA 

loans were in military deferment, whose 

title IV, HEA loans were discharged, or 

being considered for discharge, because 

of disability, who were enrolled at an 

institution of higher education for any 

amount of time in the same calendar 

year that earnings are measured for the 

D/E rates, or who died. Loan debt 

incurred by the student for enrollment 

in a GE program at another institution 

would generally not be included. 

However, the Secretary could choose to 

include this debt if the institution and 

the other institution were under 

common ownership or control, as 

determined under 34 CFR 600.31. The 

loan debt associated with a student 

would be capped at an amount 

equivalent to the program’s tuition and 

fees if tuition and fees information was 

provided by the institution, as such 

reporting would be optional, and if the 

amount of tuition and fees was less than 

the student’s loan debt. 

The discretionary income rate 

denominator would be the higher of the 

SSA-provided mean or median earnings 

minus 150 percent of the Poverty 

Guideline for a single person residing in 

the continental United States as 

published by the U.S. Department of 

Health and Human Services. The 

denominator of the annual earnings rate 

would be the higher of the mean or 

median earnings of the students for the 

most currently available calendar year, 

as obtained from SSA or another Federal 

agency. 

The 2011 Prior Rule would require at 

least 30 students to have completed the 

program during an applicable cohort 

period for the debt-to-earnings ratios to 

be calculated. If, after applying the 

exclusions, 30 or more students 

completed the program during the twoyear period comprised of the third and 

fourth fiscal years prior to the fiscal year 

for which the calculations are made 

(referred to in the 2011 Prior Rule as the 

‘‘2YP’’), then the applicable cohort 

period would be the 2YP. If fewer than 

30 students completed the program 

during the 2YP, then a four-year period 

comprised of the third, fourth, fifth, and 

sixth fiscal years prior to the fiscal year 


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for which the calculations are made 

(referred to in the 2011 Prior Rule as the 

‘‘4YP’’) would be evaluated. If, after 

applying the exclusions, fewer than 30 

students completed the program during 

the 4YP, ratios would not be calculated 

and the program would be considered to 

satisfy the debt measures. Ratios would 

also not be calculated if SSA did not 

provide the mean and median earnings 

for the program or the median loan debt 

of the program is zero. In both cases, the 

program would be considered to satisfy 

the debt measures. 

Section 668.7(k) of the 2011 Prior 

Rule would have set, in the first year 

that programs could become ineligible, 

for each institutional category (public, 

private non-profit, proprietary), a cap on 

the number of ineligible programs, such 

that the number of ineligible programs 

would not account for more than 5 

percent of the total number of students 

who completed GE programs in that 

institutional category. Further, for the 

first three years that the 2011 Prior Rule 

would be effective, for programs failing 

the debt-to-earnings ratios, institutions 

could recalculate and appeal their 

results under the ratios using earnings 

data from the Bureau of Labor Statistics 

(BLS) to replace SSA earnings data. See 

‘‘§ 668.406 D/E rates alternate earnings 

appeals and showings of mitigating 

circumstances’’ for more detail on the 

BLS data-based appeal under the 2011 

Prior Rule. 

Proposed Regulations: Under 

proposed § 668.404(a) the Department 

would calculate the same two debt-toearnings ratios for GE programs as in the 

2011 Prior Rule: a discretionary income 

rate and an annual earnings rate 

(referred to in the 2011 Prior Rule as the 

‘‘earnings rate’’). Unlike the 2011 Prior 

Rule, under which D/E rates are 

calculated on a fiscal year basis, the 

proposed regulations would calculate 

the D/E rates on an award year basis. An 

award year begins on July 1 and ends on 

June 30 of the following year whereas a 

fiscal year begins on October 1 and ends 

on September 30 of the following year. 

Both D/E rates would be calculated at 

the program level based on the debt and 

earnings outcomes of students who 

completed the program during an 

‘‘applicable cohort period’’ as discussed 

in more detail below. Unlike the 2011 

Prior Rule, the D/E rates would be based 

only on the outcomes of students 

receiving title IV, HEA program funds. 

But, as with the 2011 Prior Rule, 

students receiving title IV, HEA program 

funds would include students who 

received title IV, HEA program loans 

and those who received only Pell grants 

or other grants but no loans. See 

‘‘§ 668.401 Scope and purpose’’ for a 

more detailed discussion of the 

definition of ‘‘student’’ in the proposed 

regulations. 

Exclusions 

A student would be excluded from 

the D/E rates calculations for a GE 

program if (1) one or more of the 

student’s title IV loans were in a 

military-related deferment at any time 

during the same calendar year that 

earnings are measured for the D/E rates, 

(2) one or more of the student’s title IV 

loans are under consideration by the 

Department, or have been approved, for 

a discharge on the basis of the student’s 

total and permanent disability, under 34 

CFR 674.61 (Perkins), 682.402 (FFEL), 

or 685.212 (Direct Loans), (3) the 

student was enrolled in another eligible 

program at the same institution or at 

another institution during the same 

calendar year that earnings are 

measured for the D/E rates, (4) if the 

program is an undergraduate program, 

the student subsequently completed a 

higher credentialed undergraduate GE 

program at the same institution, or, if 

the program is a post-baccalaureate, 

graduate certificate, or graduate degree 

GE program, the student subsequently 

completed a higher credentialed 

graduate GE program at the same 

institution, or (5) the student died. 

These exclusions are the same as those 

in the 2011 Prior Rule with the addition 

of an exclusion for students completing 

a higher credentialed GE program at the 

same institution. 

Applicable Cohort Period and Minimum 

Number of Students Completing the 

Program 

As stated previously, the calculations 

for both D/E rates would be based on the 

debt and earnings outcomes of students 

who completed a program during an 

applicable cohort period. As with the 

2011 Prior Rule, for D/E rates to be 

calculated for a program, a minimum of 

30 students would need to have 

completed the program, after applying 

the exclusions, during the applicable 

cohort period. If 30 or more students 

completed the program during the third 

and fourth award years prior to the 

award year for which the D/E rates are 

calculated, then the applicable cohort 

period would be that ‘‘two-year cohort 

period.’’ ‘‘Two-year cohort period’’ is a 

defined term in proposed § 668.402. If at 

least 30 students did not complete the 

program during the two-year cohort 

period, then the applicable cohort 

period would be expanded to include 

the previous two years, the fifth and 

sixth award years prior to the award 

year for which the D/E rates are being 

calculated, and rates would be 

calculated if 30 or more students 

completed the program during that 

‘‘four-year cohort period’’ after applying 

the exclusions. ‘‘Four-year cohort 

period’’ is a defined term in proposed 

§ 668.402. If, after applying the 

exclusions, 30 or more students did not 

complete a program over the two-year 

cohort period, or the expanded four-year 

cohort period, then D/E rates would not 

be calculated for the program. As an 

example, for the D/E rates calculations 

for the 2014–2015 award year, the twoyear cohort period would be award 

years 2010–2011 and 2011–2012 and the 

four-year cohort period would be award 

years 2008–2009, 2009–2010, 2010– 

2011, and 2011–2012. 

The two- and four-year cohort periods 

as described would apply to all 

programs except for medical and dental 

programs whose students are required to 

complete an internship or residency 

after completion of the program. For 

medical and dental programs, the twoyear cohort period would be the sixth 

and seventh award years prior to the 

award year for which the D/E rates are 

calculated. The four-year cohort period 

would be the sixth, seventh, eighth, and 

ninth award years prior to the award 

year for which D/E rates are calculated. 

The 2011 Prior Rule applied the same 

two-year and four-year cohort periods 

for the debt-to-earnings ratios 

calculations, but, as discussed, the 2YP 

and 4YP would be measured in fiscal 

years rather than award years. Unlike 

the 2011 Prior Rule, a program would 

not satisfy the D/E rates measure if rates 

could not be calculated because there 

was not a sufficient number of students 

who completed a program. Rather, the 

eligibility of the program would not be 

affected. 

Formulas for Calculating the D/E Rates 

Each award year, D/E rates would be 

calculated for each GE program that 

meets the minimum size of 30 students 

completing the program for the two-year 

or four-year cohort period. In 

calculating the D/E rates, the Secretary 

would use the same formulas as under 

the 2011 Prior Rule: 

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Annual Loan Payment 

The annual loan payment for each 

formula would be calculated as follows. 

First, the loan debt that each student 

in the applicable cohort period 

accumulated for attendance in the GE 

program would be determined based on 

information in the Department’s NSLDS 

and information reported by the 

institution under proposed § 668.411. 

Under proposed § 668.404(d), loan debt 

would include all title IV loans 

(excluding Federal PLUS Loans made to 

parents of dependent students, Direct 

PLUS Loans made to parents of 

dependent students, and Direct 

Unsubsidized Loans that were 

converted from TEACH Grants), private 

education loans as defined in 34 CFR 

601.2, and institutional student loans. 

Unlike the 2011 Prior Rule, under the 

proposed regulations, loan debt would 

include Perkins Loans. In comparison to 

the 2011 Prior Rule, the proposed 

regulations clarify that institutional loan 

debt would include any outstanding 

debt as a result of credit extended to the 

student by, or on behalf of, the 

institution (e.g., institutional financing 

or payment plans) that the student 

would be obligated to repay after 

completing the program. 

As discussed in more detail under 

‘‘§ 668.411 Reporting requirements for 

GE programs,’’ the credential levels 

under the proposed regulations would 

differ from the credential levels of the 

2011 Prior Rule. The 2011 Prior Rule 

had one credential level for 

undergraduate certificates. The 

proposed regulations would break out 

undergraduate certificates into three 

credential levels based upon the length 

of the program. Further, the proposed 

regulations would add a graduate 

credential and clarify that postgraduate 

certificates would be included in the 

post-baccalaureate certificate credential 

level. 

All of the loan debt incurred by the 

student for attendance in any 

undergraduate GE program at the same 

institution would be attributed to the 

highest credentialed undergraduate GE 

program subsequently completed by the 

student at the institution. Similarly, all 

of the loan debt incurred by the student 

for attendance in any post-baccalaureate 

or graduate GE program at the 

institution would be attributed to the 

highest credentialed graduate degree GE 

program completed by the student at the 

institution. As defined in proposed 

§ 668.402, the undergraduate credential 

levels are less than one year 

undergraduate certificate or diploma, 

one year or longer but less than two 

years undergraduate certificate or 

diploma, two years or longer 

undergraduate certificate or diploma, 

associate degree, and bachelor’s degree. 

The graduate credential levels are postbaccalaureate certificate (including 

postgraduate certificates), graduate 

certificate, master’s degree, doctoral 

degree, and first-professional degree. 

The 2011 Prior Rule included a 

similar debt attribution scheme, but 

would not have differentiated between 

undergraduate and graduate programs. 

Debt would simply have been rolled up 

to the highest credentialed GE program 

that the student completed at the same 

institution regardless of whether the 

highest credentialed program was an 

undergraduate program or graduate 

program. As under the 2011 Prior Rule, 

the Department would have the 

discretion to include in the loan debt 

attribution all loan debt incurred by the 

student for attending GE programs at 

another institution if the institution and 

the other institution are under common 

ownership or control, as determined 

under 34 CFR 600.31. 

Under proposed § 668.404(b)(1)(ii), an 

adjustment to the amount of each 

student’s loan debt would be made if 

the student’s loan debt exceeds the total 

amount of the tuition and fees assessed 

to the student for his or her entire 

enrollment in the program plus the total 

amount of the allowances for books, 

supplies, and equipment included in 

the student’s title IV cost of attendance, 

pursuant to section 472 of the HEA, 20 

U.S.C. 1087ll, or a higher amount if 

assessed to the student by the 

institution. The amount used for each 

student’s loan debt in the D/E rates 

calculations would be the lower of the 

total amount of the student’s loan debt 

or the total amount of the student’s 

tuition and fees and books, supplies, 

and equipment. In comparison to the 

2011 Prior Rule, the proposed 

regulations add books, supplies, and 

equipment to the limitation of loan debt 

to tuition and fees. 

Second, the median loan debt of the 

students in the applicable cohort period 

would be determined using the loan 

debt information previously described. 

Third, as under the 2011 Prior Rule, 

the median loan debt would be 

amortized over a 10-, 15-, or 20-year 

repayment period depending on the 

credential level of the program. A 10- 

year repayment period would be used 

for programs that lead to an 

undergraduate certificate, a postbaccalaureate certificate, an associate 

degree, or a graduate certificate. Fifteen 

years would be used for programs that 

lead to a bachelor’s degree or to a 

master’s degree. Twenty years would be 

used for programs that lead to a doctoral 

or first-professional degree. 

The interest rate used to amortize the 

median loan debt would be the average 

annual interest rate on Federal Direct 

Unsubsidized Loans during the six years 

prior to the end of the applicable cohort 

period. These six years would include 

the applicable cohort period. For 

undergraduate programs, the interest 

rate on Federal Direct Unsubsidized 

Undergraduate Loans would be applied. 

For graduate programs, the interest rate 

on Federal Direct Unsubsidized 

Graduate Loans would be applied. The 

interest rate that would be used under 

the proposed regulations differs from 

the 2011 Prior Rule. Under the 2011 

Prior Rule, median loan debt would be 

amortized using the then-current 

interest rate on Federal Direct 

Unsubsidized Loans, regardless of the 

credential level of the program. 

Discretionary Income 

For the denominator of the 

discretionary income rate, discretionary 

income would be calculated by 

subtracting 150 percent of the Poverty 

Guideline for a single person residing in 

the continental United States as 

published by HHS from the higher of 

the mean or median annual earnings. 

The proposed regulations and the 2011 

Prior Rule use the same calculation for 

discretionary income. 

Annual Earnings 

Under proposed § 668.404(c), as 

under the 2011 Prior Rule, the 

Department would obtain from SSA or 

another Federal agency the most 

currently available mean and median 


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annual earnings for students who 

completed the program during the 

applicable cohort period. As an 

example, the D/E rates calculations for 

the 2014–2015 award year would be 

based on the loan debt of students 

completing a program in the 2010–2011 

and 2011–2012 award years, if the 

applicable cohort period for that 

program was the two-year cohort period, 

and the earnings of those former 

students for the 2014 calendar year. 

Annual earnings include earnings 

reported by employers to SSA and 

earnings reported to SSA by selfemployed individuals. The higher of the 

mean or median annual earnings would 

be used as the denominator of the 

annual earnings rate. 

Transition Period 

Under proposed § 668.404(g), for a 

failing or zone program, in the first four 

years that the regulations are in effect, 

for example, award years 2014–2015, 

2015–2016, 2016–2017, and 2017–2018, 

the Department would calculate 

transitional D/E rates using the median 

loan debt of students who completed 

the program during the most recently 

completed award year instead of the 

median loan debt of students who 

completed during the applicable cohort 

period. The earnings component of the 

calculations would still use the most 

currently available earnings of the 

students who completed the program 

during the applicable cohort period. For 

example, for the 2014–2015 award year, 

the denominator of both standard D/E 

rates calculations would use the higher 

of the mean or median calendar year 

2014 earnings of students who 

completed a program during the 2010– 

2011 and 2011–2012 award years (the 

two-year cohort period) if 30 or more 

students completed the program during 

the two-year cohort period. The 

standard D/E rates would use as the 

numerator an annual loan payment 

calculated based on the debt of those 

same former students. However, the 

transitional D/E rates would use the 

same earnings information as the 

standard D/E rates, but the annual loan 

payment amount would be calculated 

based on the debt of students who 

completed the program during the 

2014–2015 award year. The lower of the 

standard D/E rates or transitional D/E 

rates would be used to assess the 

program. Although the 2011 Prior Rule 

did not include a transition period, it 

would have capped the number of 

ineligible programs in the first year that 

programs could become ineligible, and, 

additionally, in the first three years that 

the 2011 Prior Rule would be effective, 

would have allowed for an alternate 

earnings appeal based on BLS earnings 

data. 

Reasons: The methodology that would 

be used to calculate the D/E rates under 

the proposed regulations is substantially 

similar to that of the 2011 Prior Rule. 

We discuss our reasoning regarding 

these proposals, particularly any 

differences from the 2011 Prior Rule, by 

subject area. 

Minimum Number of Students 

Completing the GE Program 

As under the 2011 Prior Rule, the 

proposed regulations would establish a 

minimum threshold number of students 

who completed a program, or ‘‘n-size,’’ 

for D/E rates to be calculated for that 

program. Both the 2011 Prior Rule and 

the proposed regulations require a 

minimum n-size of 30 students 

completing the program. However, some 

GE programs are relatively small in 

terms of the number of students 

enrolled and, perhaps more critically, in 

the number of students who complete 

the program. In many cases, these may 

be the very programs whose 

performance should be measured, as 

low completion rates may be an 

indication of poor quality. As a result, 

we considered, and presented during 

the negotiations, a lower n-size of 10. 

We estimate that in 2010, there were 

roughly 50,000 total GE programs in 

existence and about 4 million students 

receiving title IV, HEA program funds 

enrolled in those programs. At an n-size 

of 30, we estimate, based on our 

analysis of the 2012 GE informational 

rates, that approximately 5,539 of those 

programs would have received D/E 

rates. Those programs cover just above 

60 percent of the total enrollment of 

students who received title IV, HEA 

program funds in GE programs in 2010. 

At an n-size of 10, approximately 11,050 

GE programs would have received D/E 

rates, representing about 75 percent of 

the total enrollment of students who 

received title IV, HEA program funds in 

GE programs. 

The non-Federal negotiators raised 

several issues with the proposal to use 

a lower n-size of 10. First, some of the 

negotiators questioned whether the D/E 

rates calculations using an n-size of 10 

would be statistically valid. See 

‘‘§ 668.403 Gainful employment 

framework’’ for a discussion of the 

Department’s tolerance analysis of the 

D/E rates and thresholds. Further, they 

were concerned that reducing the 

minimum n-size to 10 could make it too 

easy to identify particular individuals, 

putting student privacy at risk. These 

negotiators noted that other entities, 

which they did not identify, requiring 

these types of calculations use a 

minimum n-size of 30 to address these 

two concerns. 

Other non-Federal negotiators 

supported the Department’s proposal to 

reduce the minimum n-size from 30 to 

10 students completing the program. 

They argued that the lower number 

would allow the Department to 

calculate D/E rates for more GE 

programs, which would decrease the 

risk that GE programs that serve 

students poorly are not held 

accountable. They argued that some GE 

programs have very low numbers of 

students who complete the program, not 

because these programs enroll small 

numbers of students, but because they 

do not provide adequate support or are 

of low quality, and, as a result, 

relatively few students who enroll 

actually complete the program. They 

argued that these poorly performing 

programs may never be held 

accountable under the D/E rates 

measure because they would not have a 

sufficient number of students who 

completed the program for the D/E rates 

to be calculated. These negotiators 

further argued that other proposed 

changes from the 2011 Prior Rule, such 

as only including students receiving 

title IV, HEA program funds and 

disaggregating the undergraduate 

certificate credential into three 

categories, as discussed in ‘‘§ 668.411 

Reporting requirements for GE 

programs,’’ would make it less likely 

that many programs would have 30 

students who completed the program 

during the cohort period. For these 

reasons, these negotiators believed that 

the Secretary should calculate D/E rates 

for any GE program where at least 10 

students completed the program during 

the applicable cohort period. 

We acknowledge the limitations of 

using 30 students. However, to be 

consistent with our regulations 

governing cohort default rate at the 

institutional level, § 668.216, and the 

proposed pCDR, § 668.516, we propose 

to retain the minimum n-size of 30 

students who complete the program as 

we did in the 2011 Prior Rule. However, 

we invite comment on whether the 

minimum n-size should be set at 10. We 

encourage commenters to submit 

relevant data and analysis to support 

their views. 

Amortization 

As under the 2011 Prior Rule, the 

proposed regulations would use three 

different amortization periods, based on 

the credential level of the program, for 

determining a program’s annual loan 

payment amount. At the negotiations, 

the Department presented an 

amortization schedule that would apply 

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58 In comparison, the average percentage of 

borrowers who repaid their loans within 20 years 

for the cohort of borrowers that entered repayment 

between 1988 and 1993 was 81 percent. 

59 Department of Education analysis of NSLDS 

data. 

a single 10-year amortization period, 

regardless of credential level. However, 

in the proposed regulations, we have 

retained the 10-, 15-, and 20-year 

schedule. This schedule would mirror 

the loan repayment options available 

under the HEA, which are available to 

borrowers based on the amount of their 

loan debt, and account for the fact that 

borrowers who were enrolled in highercredentialed programs (e.g., bachelor’s 

and graduate degree programs) are likely 

to have more loan debt than borrowers 

who enrolled in lower-credentialed 

programs and, as a result, are more 

likely to be in a repayment plan that 

would allow for a longer repayment 

period. 

Our data show that a substantial 

majority of borrowers entering 

repayment in 2012, regardless of 

credential level, are in the standard 

repayment option of 10 years. Graduate 

students are in this plan at a lower rate, 

63 percent, than students who attended 

two-year and four-year institutions, who 

are in 10-year repayment at rates 

between 80 and 90 percent. 

We analyzed data on the repayment 

behavior of borrowers across all sectors 

who entered repayment earlier, between 

1980 and 2011. Adjusting for inflation, 

in 2011 dollars, average loan sizes have 

increased only moderately over the past 

15 years. From 1999, when the majority 

of borrowers repaid their loans within 

10 years, to 2009, average loan size has 

increased by about 6 percent (in 2011 

dollars). 

We further analyzed the repayment 

patterns of the subset of borrowers 

within this group who entered 

repayment between 1993 and 2002. 

Overall, about 54 percent of these 

borrowers had repaid their loans in full 

within 10 years upon entering 

repayment, about 65 percent had repaid 

their loans within 12 years, about 74 

percent within 15 years, and, for the 

1993 cohort, 83 percent within 20 

years.58

Within this same 1993–2002 subset, 

repayment periods differed somewhat 

among credential levels. The percentage 

of graduate students who repaid their 

loans within 10 years lagged slightly 

behind the rate among undergraduates 

at two-year and four-year institutions. 

Within 10 years of entering repayment, 

about 58 percent of undergraduates at 

two-year institutions, 54 percent of 

undergraduates at four-year institutions, 

and 47 percent of graduate students had 

fully repaid their loans. Within 15 years 

of entering repayment, about 74 percent 

of undergraduates at two-year 

institutions, 76 percent of 

undergraduates at four-year institutions, 

and 72 percent of graduate students had 

fully repaid their loans. 

For more recent cohorts, repayment 

behavior may depart from historical 

trends. For example, of borrowers who 

entered repayment in 2002, 55 percent 

of undergraduates at two-year 

institutions, 44 percent of 

undergraduates at four-year institutions, 

and 31 percent of graduate students had 

repaid their loans within 10 years.59

Although some negotiators supported 

the continuation of the amortization 

schedule from the 2011 Prior Rule, 

others were concerned that the 15- and 

20-year time periods are too long, would 

allow for excessive tuition charges, and 

are not likely to reflect the actual time 

to repayment for most borrowers. We 

invite comments on the proposed 

amortization provision as well as on a 

10-year amortization period for all 

credential levels and a 20-year 

amortization period for all credential 

levels. We encourage commenters to 

submit relevant data and analysis to 

support their views. 

Loan Debt 

As under the 2011 Prior Rule, in 

calculating a student’s loan debt, the 

Department would include title IV, HEA 

program loans and private education 

loans that the student borrowed for 

enrollment in the GE program. The 

amount of a student’s loan debt would 

also include any outstanding debt as a 

result of credit extended to the student 

by, or on behalf of, the institution (e.g., 

institutional financing or payment 

plans) that the student is obligated to 

repay after completing the program. 

Including both private loans and 

institutional loans in addition to Federal 

loan debt would provide the most 

complete picture of the indebtedness a 

student has incurred to enroll in a GE 

program. 

In comparison to the 2011 Prior Rule, 

the proposed regulations would add 

Perkins Loans to the title IV, HEA 

program loans that would be considered 

as a part of a student’s loan debt. We 

have done this because some GE 

programs accept Perkins Loans in 

addition to FFEL and Direct Loans. 

Calculation of D/E Rates 

There are a number of differences in 

the D/E rates calculation procedures 

between the 2011 Prior Rule and the 

proposed regulations: 

• Measuring the D/E rates on an 

award year basis, rather than on a fiscal 

year basis. 

• Using an average interest rate over 

the approximate period of attendance 

instead of the current interest rate to 

calculate the annual loan payment. 

• Including books, equipment, and 

supplies as part of the charges, in 

addition to tuition and fees, in 

determining the amount of a student’s 

loan debt that will be considered in 

calculating the annual loan payment for 

a program. 

• Separating undergraduate and 

graduate programs in attributing loan 

debt to the highest credentialed program 

completed at an institution. 

• Excluding from a program’s D/E 

rates calculations students who 

subsequently completed a higher 

credentialed GE program. 

The reasons for these changes are 

discussed in turn below. Further, 

although the D/E rates calculation under 

the proposed regulations, as under the 

2011 Prior Rule, would apply the higher 

of the mean or median annual earnings, 

we invite comment on whether the 

calculation should use only the mean 

annual earnings or only the median 

annual earnings instead. 

Award Year 

We propose to use award year rather 

than fiscal year for the purpose of 

calculating a GE program’s D/E rates in 

order to better align the calculations 

with institutional reporting and 

recordkeeping, which are by award year. 

Using an award year for calculation of 

the D/E rates would help to simplify the 

reporting process under the proposed 

regulations for institutions. It is 

important to note that award years, like 

fiscal years, span 12 months. 

Interest Rate 

We propose using the average interest 

rate over a six-year period going back 

from the end of the applicable cohort 

period to address two issues. First, as 

opposed to using the current interest 

rate, as was provided in the 2011 Prior 

Rule, using the average of the interest 

rates in effect during the six years prior 

to the end of the applicable cohort 

period better aligns the D/E rates 

calculations with the actual interest rate 

on the loans taken out by individual 

students who completed the program 

during the cohort period. As 

demonstrated by the following table, 

regardless of credential level, over 90 

percent of title IV loans entering 

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60 • Sample includes only two-year cohort period 

programs (programs eligible for D/E rates only 

under the four-year cohort period are not included). 

• Interest rates are the same for graduate and 

undergraduate programs. 

• Program n-size of 30. 

• Calculations are based on annual loan 

payments under the amortization scheme with a 10- 

year period for undergraduate certificate, associate’s 

degree, and post-baccalaureate certificate programs, 

a 15-year period for bachelor’s and master’s degree 

programs, and a 20-year period for doctoral and first 

professional degree programs. 

repayment in 2012 were originated 

within the six years prior to 2012. 

DISTRIBUTION BY LOAN ORIGINATION YEAR FOR TITLE IV LOANS (NON-CONSOLIDATED) ENTERING REPAYMENT IN 2012 

IHE type & sector 

Number of years prior to year loan entered repayment (2012) 

0 1 2 3 4 5 6 or more 

2yr or less public ........................ 11 .67% 38 .64 23 .3 11 .27 6 .49 3 .97 4 .66 

2yr or less private ...................... 7 .8 47 .57 27 .57 9 .04 3 .5 2 .15 2 .37 

2yr or less for-profit .................... 7 .74 57 .67 27 .64 4 .89 1 .17 0 .41 0 .5 

4yr public .................................... 5 .41 21 .81 21 .25 15 .6 17 .01 9 .92 9 

4yr private .................................. 4 .86 19 .9 21 .36 16 .96 19 .25 9 .34 8 .33 

4yr for-profit ................................ 8 .03 36 .07 27 .37 15 .12 7 .41 3 .54 2 .46 

Source: NSLDS. 

Second, the use of an average rate 

helps minimize year-to-year fluctuations 

in the interest rate that would be 

applied to the D/E rates calculations and 

therefore would lead to more 

predictability for institutions. An 

analysis of the data provided to the 

negotiating committee shows that the 

number of programs that have D/E rates 

that are passing, in the zone, or failing 

changes materially as the interest rate 

changes: 

INTEREST RATE VARIATIONS FOR DEBT TO EARNINGS ON 2012 GE INFORMATIONAL SAMPLE 60

3% 4% 5% 6% 7% 8% 9% 

Passing Programs .................................... 4,555 4,441 4,304 4,185 4,033 3,919 3,795 

Zone Programs ........................................ 670 728 807 855 948 986 1,033 

Failing Programs ...................................... 314 370 428 499 558 634 711 

For example, roughly twice as many 

programs in the informational sample 

would fail the D/E rates measure at an 

8 percent interest rate in comparison to 

a 3 percent interest rate. 

We seek comment on the proposed 

method for determining the interest rate 

for the D/E rates calculations, and 

further invite proposals on other 

methods to set the interest rate. 

Specifically, we invite comment on 

whether rates should be averaged over 

a time period other than six years, 

varying based on the length of the 

program, or whether a weighted average 

of the actual interest rates associated 

with the loans included in the median 

loan debt calculation should be used. 

We encourage commenters to submit 

relevant data and analysis to support 

their views. 

Books, Equipment, and Supplies 

As under the 2011 Prior Rule, we 

propose to cap loan debt for the D/E 

rates calculations at the total costs 

assessed to each student for enrollment 

in a GE program because institutions 

can exercise control over this portion of 

the amount that a student may borrow. 

Students may borrow up to the lower of 

the cost of attendance or annual and 

aggregate loan limits imposed under 

parts B and D of the HEA. Cost of 

attendance is comprised of costs 

assessed by institutions for the program, 

tuition, fees, books, supplies, and 

equipment and, additionally, costs that 

students incur that are not related to the 

program, such as living expenses and 

other indirect costs. 

Initially, the Department did not 

propose a cap. Many of the institutional 

negotiators, however, argued in favor of 

this cap because, under the HEA, 

institutions may not generally limit the 

amount an otherwise eligible student 

may borrow up to the cost of attendance 

or annual and aggregate loan limits 

under the HEA. These negotiators noted 

that students often borrow to cover costs 

other than those directly related to the 

program, such as for living expenses, 

over which institutions have little, if 

any, control. They argued that 

institutions have no ability to prevent a 

student from borrowing the maximum 

amount permissible, even if the cost of 

the program is much lower. These 

negotiators suggested that institutions 

should not be held accountable for those 

portions of student debt that are 

unrelated to the cost of the program. 

Some of the committee members 

suggested including in the loan cap 

calculation not only the amount of 

tuition and fees assessed the student, 

but also the total cost of books, supplies, 

and equipment that a student would 

incur in completing the program. The 

negotiators reasoned that, like tuition 

and fees, an institution controlled these 

costs, either directly by providing the 

books, supplies, and equipment to a 

student or indirectly by requiring the 

student to purchase the materials. We 

agree and propose that, in the 

determination of a borrower’s loan debt, 

we would use the lower of: 

• The amount of the student’s loan 

debt attributed to enrollment in the 

program; and 

• The total of the student’s assessed 

tuition and fees, and the student’s 

allowance for books, supplies, and 

equipment included in the cost of 

attendance disclosed under proposed 

§ 668.412, or the actual amount charged 

each student in any sale of books, 

supplies, and equipment, if higher. 

We invite comment on the inclusion 

of books, supplies, and equipment in 

the tuition and fees cap. 

Attributing Loan Debt 

Under the 2011 Prior Rule, all loan 

debt incurred by a student for 

enrollment in GE programs at an 

institution would be attributed to the 

highest credentialed GE program 

completed by the student, based on the 

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presumption that a student’s earnings 

stem from the highest credentialed 

program completed. Although we 

maintain the same presumption in the 

proposed regulations, we propose to 

modify the attribution rule by 

differentiating between undergraduate 

and graduate programs to account for a 

lack of equity that the 2011 Prior Rule 

would create between an institution that 

offers only graduate programs and one 

that offers lower credentialed programs 

in addition to graduate programs. To 

illustrate, we offer the following 

example under the 2011 Prior Rule: A 

student completed a bachelor’s degree 

GE program at Institution A and 

subsequently enrolled in and completed 

a graduate GE program at the same 

institution. In this scenario, if the 

student completed the graduate 

program, all of the student’s loan debt, 

both the amount incurred for the lower 

credentialed program and for the 

graduate degree program, would be 

attributed to the graduate degree 

program and no debt would be 

attributed to the lower credentialed 

program. 

However, for a similarly situated 

student who completed the same 

bachelor’s degree GE program at 

Institution A, but then enrolled in and 

completed a graduate GE program at 

another institution that offers only 

graduate programs, Institution B, the 

results would be different. For 

Institution B, only the loan debt 

incurred by the student for enrolling in 

the graduate GE program at Institution 

B would be attributed to that graduate 

degree program. Institution B would not 

be held accountable for the debt 

incurred by the student at Institution A. 

Unlike at Institution B, Institution A 

could have students who stay at the 

institution after completing their 

undergraduate program to pursue 

graduate study. The D/E rates 

calculations for graduate programs at 

Institution A could include more debt, 

possibly far more debt, than would the 

rates for the same program offered by 

Institution B. The graduate GE programs 

at Institution A are at a disadvantage 

simply because the institution offers 

both undergraduate and graduate 

programs. This scenario could deter 

institutions that offer both 

undergraduate and graduate programs 

from encouraging their undergraduate 

students to pursue further study out of 

concern that they will enroll in graduate 

programs at that same institution and 

cause those programs to have worse 

outcomes under the D/E rates measure 

than if the institution only enrolled 

students who completed their 

undergraduate degrees at other 

institutions. 

To address this issue, we propose that 

(1) any loan debt incurred by a student 

at an institution for enrollment in 

undergraduate GE programs be 

attributed to the highest credentialed 

undergraduate program completed by 

the student, and (2) any loan debt 

incurred for enrollment in graduate GE 

programs at an institution be attributed 

to the highest credentialed graduate GE 

program completed by the student. 

We do not believe that the same 

distinction should apply with respect to 

lower credentialed undergraduate 

programs and higher credentialed 

undergraduate programs. The academic 

credits earned in an associate degree 

program, for example, are necessary for 

and would be applied toward the credits 

required to complete a bachelor’s degree 

program. It is reasonable then to 

attribute the debt associated with all of 

the undergraduate academic credit 

earned by the student to the highest 

undergraduate credential subsequently 

completed by the student. This 

reasoning does not apply to the 

relationship between undergraduate and 

graduate programs. Although a 

bachelor’s degree might be a 

prerequisite to pursue graduate study, 

the undergraduate academic credits 

would not be applied toward the 

academic requirements of the graduate 

program. We invite comment on this 

change from the 2011 Prior Rule. 

In attributing loan debt, we propose to 

exclude any loan debt incurred by the 

student for enrollment in programs at 

another institution. However, the 

Secretary may include loan debt 

incurred by the student for enrollment 

in GE programs at other institutions if 

the institution and the other institutions 

are under common ownership or 

control. The 2011 Prior Rule included 

the same provision. As we noted at that 

time, although we generally would not 

include loan debt from other 

institutions students previously 

attended, entities with ownership or 

control of more than one institution 

offering similar programs might have an 

incentive to shift students between 

those institutions to shield some portion 

of the loan debt from the D/E rates 

calculations. 76 FR 34417. Including the 

provision that the Secretary may choose 

to include that loan debt should serve 

to discourage institutions from making 

these kinds of changes. 

Several of the negotiators expressed 

concerns with this proposal and, in 

particular, the provision that provides 

the Secretary with discretion to include 

the loan debt incurred at an institution 

under common ownership or control. 

These negotiators indicated that the 

Secretary should always include this 

loan debt. The Department could not 

implement such a provision, however, 

because we do not categorize 

institutions by ownership or control. 

Further, because this provision is 

included to ensure that institutions do 

not manipulate their D/E rates, it should 

only be applied in cases where there is 

evidence of such behavior. In those 

cases, the Secretary would have the 

discretion to make adjustments. A 

negotiator also suggested that the 

proposed regulations outline the criteria 

the Secretary would use when 

determining whether to include the loan 

debt incurred at an institution under 

common ownership or control. We 

invite comment on whether such 

criteria should be included in the 

proposed regulations, what those 

criteria should be, and how to 

implement those criteria. 

Exclusions 

Under the proposed regulations, we 

would exclude from the D/E rates 

calculations the same categories of 

students that we would exclude under 

the 2011 Prior Rule. Although the text 

of the 2011 Prior Rule did not 

specifically state the exclusion for 

students who completed a higher 

credentialed GE program at the same 

institution at which they previously 

completed a lower credentialed GE 

program, the exclusion is reflected in 

our discussion of attributions and 

exclusions in the 2011 Prior Rule. See 

76 FR 34417. 

We believe the approach we adopted 

in the 2011 Prior Rule continues to be 

sound policy. With respect to students 

whose loans are in deferment or have 

been discharged, the reasons for which 

these students’ loans are in deferment or 

have been discharged (i.e., military 

service, total and permanent disability, 

death) are not related to whether a 

program prepares students for gainful 

employment. However, we invite 

comment on, for the exclusion based on 

military-related loan deferment, 

whether the proposed regulations 

should require that the loans are in 

deferment for a minimum number of 

days out of the year for the exclusion to 

apply. 

We also continue to believe that we 

should not include the earnings or loan 

debt of students who were enrolled in 

another eligible program at the 

institution or at another institution 

during the year for which the Secretary 

obtains earnings information. These 

students are unlikely to be working fulltime while in school and consequently 

their earnings would not be reflective of 

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the program being assessed under the D/ 

E rates. It would therefore be unfair to 

include these students in the D/E rates 

calculation. 

To clarify our policy from the 2011 

Prior Rule, we are including in the 

proposed regulations an exclusion from 

the D/E rates calculations for students 

who have completed a higher 

credentialed GE program after 

completing a lower credentialed GE 

program. We would do this to avoid a 

student being counted twice since, 

under the attribution rules, the debt 

incurred in the lower credentialed 

program would be attributed to the debt 

incurred in the higher credentialed 

program pursuant to proposed 

§ 668.404(d)(2). 

Transition Period 

Section 668.7(k) of the 2011 Prior 

Rule provides for, in the first year in 

which programs could become 

ineligible, for each institutional category 

(public, private non-profit, proprietary), 

a cap on the number of programs that 

would lose eligibility. Within each 

category, programs with failing debt 

measures would be ranked by 

repayment rate and would lose 

eligibility based on their ranking until 

the number of programs made ineligible 

accounted for 5 percent of the total 

number of students who completed 

programs in that institutional category. 

The cap was set for each institutional 

category so that no one sector would 

bear more than 5 percent of the initial 

impact of the regulations and to lessen 

the impact on small entities. 

Specifically, in connection with the 

2011 Prior Rule, we said, ‘‘the delayed 

effective date and initial cap on the 

regulations’ effect will provide time for 

small entities to adapt to the 

regulations.’’ 76 FR 34386, 34509 (June 

13, 2011). 

The proposed regulations do not 

include a similar cap on the number of 

GE programs that could lose title IV, 

HEA program eligibility. As discussed 

in ‘‘§ 668.403 Gainful employment 

framework,’’ we believe that programs 

that do not pass the D/E rates measure 

but are not among the worst performers 

should be given time, opportunity, and 

incentive to improve. But, if these 

programs do not improve—if their 

performance remains below the 

proposed D/E rates thresholds—they 

should become ineligible for 

participation in the title IV, HEA loan 

programs. 

The proposed regulations also do not 

include the availability of an alternate 

earnings appeal in the first three years 

using BLS data as the 2011 Prior Rule 

did. For our reasoning, see ‘‘§ 668.406 

D/E rates alternate earnings appeals 

and showings of mitigating 

circumstances.’’ 

Some negotiators representing 

institutions expressed concern that 

immediate efforts by institutions to 

improve programs and reduce debt at 

the time the proposed regulations go 

into effect would not be reflected in the 

first few years of D/E rates calculations 

as the calculation takes into account the 

outcomes of students who completed 

the program several years in the past. To 

allow for that improvement, the 

proposed regulations provide for an 

alternative calculation of a GE program’s 

D/E rates during a four-year transition 

period. In summary, during the 

transition period, if a GE program’s draft 

D/E rates are failing or in the zone, the 

Secretary would calculate transitional 

draft D/E rates using the median loan 

debt of the students who completed the 

program during the most recently 

completed award year, rather than the 

median loan debt of the students who 

completed the program during the 

applicable cohort period. Because the 

transitional calculation would apply the 

loan debt of students completing a 

program after the proposed regulations 

go into effect, immediate reductions in 

tuition and fees and other adjustments 

by an institution in order to decrease 

debt of current students would be 

reflected in the results of a program’s 

transitional D/E rates. Whereas the cap 

under the 2011 Prior Rule afforded 

institutions an opportunity to avoid a 

loss of eligibility without doing 

anything to improve their programs, the 

transition period in the proposed 

regulations provides institutions an 

opportunity to avoid ineligibility and, at 

the same time, improve student 

outcomes. 

We invite comment on the proposed 

transition period, including whether the 

transition calculation should apply to 

all programs or, as in the proposed 

regulations, only to programs whose 

draft D/E rates are in the zone or are 

failing. Additionally, we invite 

comments on whether to include in the 

final regulations a cap on program 

ineligibility in the first year programs 

could become ineligible as was included 

in the 2011 Prior Rule. 

Section 668.405 Issuing and 

Challenging D/E Rates 

Current Regulations: Section 668.7(e) 

of the 2011 Prior Rule establishes the 

process by which the Secretary would 

provide an institution notice of the GE 

program’s students whose debts and 

earnings would be considered to 

determine the program’s debt-toearnings ratios. Under this process, the 

Secretary would provide the institution 

with a list of those students, and the 

institution would have an opportunity 

to correct that list during a 30-day 

correction period. Under the 2011 Prior 

Rule, if the Secretary accepted as 

accurate the information provided by 

the institution to support a correction, 

the updated information would be used 

to create a final list of students that the 

Secretary submits to SSA in order to 

obtain the earnings information needed 

to calculate the debt-to-earnings ratios. 

The 2011 Prior Rule provided that the 

Department would provide the final list 

of students to SSA, which, pursuant to 

a data-sharing arrangement with the 

Department, would obtain the 

individual earnings data for all of the 

students on the list, and then calculate 

and provide to the Department the mean 

and median earnings data for the 

students on the list. To preserve the 

privacy of students’ individual earnings 

information, SSA would only provide 

the Department with the aggregate 

earnings information for a list of 

students if SSA is able to ‘‘match’’ at 

least 10 students on the list with its own 

earnings data. 

Because SSA does not disclose any 

individual earnings data that would 

enable the Secretary to assess a 

challenge to an individual student’s 

reported earnings, the Secretary would 

not consider, under § 668.7(e) of the 

2011 Prior Rule, any challenge to the 

accuracy of the mean or median annual 

earnings data that the Secretary obtains 

from SSA to calculate the GE program’s 

debt-to-earnings ratios. Thus, under the 

2011 Prior Rule, an institution’s 

opportunity to challenge the 

information needed to determine the 

aggregate earnings information used in 

calculating the draft debt-to-earnings 

ratios is limited to a review of the list 

that would be sent to SSA. The 

institution would only be permitted to 

review and propose corrections to the 

list of students prior to the Department 

providing the final list to SSA. 

Under the 2011 Prior Rule, the 

Department would: 

• Based on the information submitted 

by institutions under § 668.6 of the 2011 

Prior Rule, create a list of the students 

who completed the program during the 

applicable 2YP or 4YP (§ 668.7(e)(1)); 

• Provide the list of students to the 

institution and consider any changes to 

the list that the institution proposed 

within 30 days of being provided the list 

(§ 668.7(e)(1)); 

• Obtain from SSA or another Federal 

agency the mean and median annual 

earnings of the students on the list 

(§ 668.7(e)(1)(iii)); 

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• If SSA is unable to match certain 

students on the list, exclude from the 

calculation of the median loan debt for 

failing programs the same number of 

students with the highest loan debts as 

the number of students whose earnings 

SSA did not match (§ 668.7(e)(3)(ii)); 

• Calculate draft debt-to-earnings 

ratios for the program using the higher 

of the mean and median earnings 

provided by SSA (§ 668.7(e)(1)(iii)); 

• Provide the draft debt-to-earnings 

ratios to the institution along with the 

individual student loan data on which 

the ratios were based, and consider any 

challenges to the individual student 

loan data used to calculate the ratios 

submitted by the institution within 45 

days after the Secretary notifies the 

institution of the draft debt-to-earnings 

ratios (§ 668.7(e)(2)); and 

• Issue final debt-to-earnings ratios 

(§ 668.7(f)). 

Under the 2011 Prior Rule, an 

institution would have the opportunity 

to appeal the determination of a 

program’s final debt-to-earnings ratios 

in certain circumstances. The appeals 

process under the 2011 Prior Rule and 

the Department’s related proposed 

regulations are discussed under 

‘‘§ 668.406 D/E rates alternate earnings 

appeals and showings of mitigating 

circumstances.’’ 

Proposed Regulations: Proposed 

§ 668.405 would adopt the procedures 

for issuing and challenging debt-toearnings ratios included in the 2011 

Prior Rule, but provide additional detail 

with respect to the procedures involved. 

As in the 2011 Prior Rule, under 

proposed § 668.405, the Secretary would 

provide an institution the data on which 

the D/E rates for a GE program would be 

based and an opportunity to correct the 

data before the Secretary would issue 

draft D/E rates for the program. 

Specifically, under the proposed 

process, the Secretary would: 

• Based on the information submitted 

by institutions under proposed 

§ 668.411, create a list of the students 

who completed the program during the 

applicable cohort period, and indicate 

which students would be removed from 

the list under § 668.404(e) and the 

specific reason for the exclusion 

(§ 668.405(b)(1)); 

• Provide the list of students to the 

institution and consider any changes to 

the list that the institution proposes 

within 45 days of receiving the list 

(§§ 668.405(b)(2); 668.405(c)); 

• Obtain from SSA or another Federal 

agency the mean and median annual 

earnings of the students on the final list 

(§ 668.405(d)); 

• If SSA is unable to match certain 

students on the list, exclude from the 

calculation of the median loan debt the 

same number of students with the 

highest loan debts as the number of 

students whose earnings SSA did not 

match (§ 668.405(e)(2)); 

• Calculate draft D/E rates for the 

program using the higher of the mean or 

median annual earnings provided by 

SSA (§ 668.405(e)(1)); 

• Provide the draft D/E rates to the 

institution along with the individual 

student loan data on which the rates 

were based, and consider any challenges 

to the individual student loan data used 

to calculate the rates submitted by the 

institution within 45 days after the 

Secretary notifies the institution of the 

draft D/E rates (§ 668.405(f)); and 

• Issue final D/E rates (§ 668.405(g)). 

Each of these steps was included in 

§ 668.7(e) and (f) of the 2011 Prior Rule 

with several changes as noted in the 

following discussion. 

In calculating the draft D/E rates 

under proposed § 668.405, the Secretary 

would first create the list of students 

who completed a GE program during the 

applicable cohort period from data 

previously reported by the institution. 

Although not specifically included in 

the 2011 Prior Rule, we have provided 

in the proposed regulations that the 

Secretary would indicate on the list the 

students the Secretary would exclude 

from the list (and the reason for the 

exclusion) under proposed § 668.404(e). 

Although this departs from the 

regulatory language in the 2011 Prior 

Rule, it is consistent with the operating 

procedure the Department used to 

implement the regulations. We believe it 

would be helpful to provide this clarity 

in the proposed regulations. 

Students who may be excluded under 

proposed § 668.404(e) are those students 

whose status during the award year is 

such that including their earnings 

would tend to distort the assessment of 

the program’s D/E rates (e.g., students in 

military deferment status or students 

who are enrolled in another eligible 

educational program at any time during 

the calendar year for which earnings are 

obtained). The Secretary would also 

notify the institution of the applicable 

cohort period that the Department 

would use to compile the final list. 

Similar to the 2011 Prior Rule, the 

institution would have the opportunity 

to propose corrections to the list. 

However, instead of the 30-day period 

provided under the 2011 Prior Rule, the 

institution would have 45 days from 

receiving the student list from the 

Secretary to submit its corrections. The 

institution may seek to correct any data 

included on the list regarding an 

individual student. An institution might 

inform the Department that, although it 

previously reported that a student 

completed a GE program, its report was 

incorrect and the student did not in fact 

complete the program. The institution 

may also request correction of other 

details regarding the listed students, 

such as whether a student had in fact 

enrolled in the program, whether a 

student completed the program during 

the applicable cohort period, whether a 

student should be excluded on the basis 

indicated on the list, and the credential 

level offered by the program that the 

student completed. The proposed 

regulations, in § 668.405(c)(3), like the 

2011 Prior Rule, require the institution 

to identify at this point in the process 

any corrections it wishes to make to the 

student-specific data on the list. This 

precludes an institution from renewing 

later in the process an unsuccessful 

challenge to student-specific data with 

respect to a student included on the 

final list on which the draft D/E rates 

are based. An institution also would not 

be permitted to assert in response to the 

draft D/E rates final list a challenge to 

the student-specific data of an 

individual on that final list. If an 

institution contends that an individual 

student should be removed from the list 

because the student did not complete 

the program, did not complete the 

program during the applicable cohort 

period, or was not enrolled in the 

program, and the Secretary accepts the 

proposed correction and removes the 

student from the list, the institution 

retains the right to challenge other 

student-specific data regarding that 

student if the student is later included 

in a proposed list for a different award 

year. If the institution contends only 

that the student should be removed 

from the list and raises no other 

correction, and the Secretary rejects the 

proposed correction, the institution may 

not later seek to correct other elements 

of student-specific data for that student. 

If the institution proposes a correction 

to the list, the Secretary would notify 

the institution whether a proposed 

correction is accepted. The Secretary 

would use any accepted correction to 

create the final list of students. We 

believe that requiring any corrections to 

student-specific data to be raised at this 

point, in response to the proposed list 

of students, rather than again in 

response to the draft D/E rates, produces 

a more efficient process. To facilitate 

this process, the proposed regulations 

expand the period for asserting such 

corrections from 30 days to 45 days. 

As under the 2011 Prior Rule, after 

finalizing the list of students, the 

Secretary would submit the list to SSA 

or another Federal agency. The 

Secretary would obtain from SSA the 

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mean and median earnings, in aggregate 

form, of those students on the list whom 

SSA has matched to its earnings data. 

The Secretary would calculate draft D/ 

E rates using the higher of the mean or 

median earnings reported by SSA. 

Consistent with the 2011 Prior Rule, 

the list provided by the Department to 

SSA would include the student’s full 

name, date of birth, and Social Security 

Number. SSA only provides earnings 

data if at least 10 of the students on the 

Department’s list for the GE program 

can be matched with its own earnings 

data. If SSA identifies a minimum of 10 

matches, SSA would then identify the 

annual earnings for the students whose 

data it matched, using SSA’s procedures 

for identifying an individual, and would 

provide to the Secretary for that group 

only the aggregate data for the students 

on the list. SSA would also advise the 

Secretary of the number, but not the 

identity, of students whom it could not 

match successfully against its records of 

earnings. 

In turn, the Secretary would use the 

number of SSA non-matches to exclude 

from the calculation of the median loan 

debt (and therefore annual loan 

payment) the same number of students 

as the SSA non-matches, starting with 

the student with the largest loan debt on 

the list. This process, the same as that 

used in the 2011 Prior Rule, would treat 

the non-matches as originating from the 

students with the highest loan debt and 

eliminate those loan amounts from the 

calculation. The debts of the remaining 

students would then be used to 

calculate the annual loan payment used 

in the numerator for the D/E rates. We 

note, however, that under the 2011 Prior 

Rule, this process was only applied to 

programs that failed the debt-to-earnings 

ratios. 

Upon calculation of the draft D/E 

rates, the Secretary would notify the 

institution of the GE program’s draft D/ 

E rates and provide the student loan 

information on each individual student 

loan on which the rates were based. The 

Secretary would also indicate the 

number of loans that were removed 

based upon the number of students in 

the program whose earnings could not 

be obtained from SSA. 

Under proposed § 668.405(f), the 

institution would then have the 

opportunity, within 45 days of notice of 

the draft D/E rates, to challenge the 

accuracy of the rates. Specifically, as 

under the 2011 Prior Rule, the 

institution at this point would be 

permitted to challenge only the loan 

data used to calculate the debt 

component of the draft D/E rates and the 

accuracy of the actual calculation of the 

rates from that data and the reported 

aggregate earnings. The Secretary would 

notify the institution whether a 

proposed challenge is accepted and, if 

so, would use any corrected loan data to 

recalculate the GE program’s draft D/E 

rates. For an award year’s D/E rates 

calculation, an institution would be 

permitted one challenge to the accuracy 

of the loan debt information that the 

Secretary used to calculate that award 

year’s median loan debt for the program; 

we note that no such limitation was 

included in the 2011 Prior Rule. This 

would not preclude an institution from 

challenging the inclusion of a student 

who appears on a different list for a 

different cohort or for a different 

program. 

Although the 2011 Prior Rule did not 

specify a timeframe by which the 

Secretary would issue a final 

determination, under proposed 

§ 668.405(g), the rates would become 

final 45 days after the date the draft D/ 

E rates are provided to the institution or 

after resolution of a timely challenge to 

the draft D/E rates. The Secretary would 

notify the institution of the final rates by 

issuing the notice of determination 

described in proposed § 668.409. That 

notice would also explain the specific 

consequences triggered by those rates, if 

any, for the GE program. D/E rates, once 

final, would become public information. 

There are three additional details 

about the proposed corrections and 

challenge processes worth noting. 

Although not specified in the 2011 Prior 

Rule, the proposed regulations clarify 

that the institution would bear the 

burden of proof to show that the list of 

students, or that the loan debt 

information used to calculate the 

median loan debt for the program, is 

incorrect. The institution would be 

required to ensure that any material it 

submits to make a correction or 

challenge is complete, timely, accurate, 

and in a format acceptable to the 

Secretary and consistent with any 

instructions that the Secretary provides 

to the institution with the notice of draft 

D/E rates. In addition, the proposed 

regulations would provide that an 

institution that does not timely 

challenge the draft D/E rates during the 

45-day period waives any objection to 

those rates. 

As under the 2011 Prior Rule, an 

institution’s opportunity to challenge 

the GE program earnings information 

obtained from SSA would be limited to 

offering corrections to the list of 

students to be provided to SSA. The 

Secretary would not consider, under the 

proposed regulations, any challenge to 

the aggregate earnings information used 

to calculate the draft D/E rates for the 

GE program. Although challenges to the 

SSA earnings data would not be 

permitted as part of the D/E rates 

calculation process, institutions would 

have the opportunity to appeal the 

determination of a program’s final D/E 

rates using earnings data from other 

sources. That appeals process is 

discussed under ‘‘§ 668.406 D/E rates 

alternate earnings appeals and 

showings of mitigating circumstances.’’ 

The proposed regulations, like the 

2011 Prior Rule, provide that a 

program’s D/E rates would be based on 

the debt and earnings of those students 

who completed the program in the twoyear cohort period, so long as that 

number is equal to or greater than 30. 

However, if there are fewer than 30 

students who completed the program in 

the two-year cohort period, the 

Secretary would calculate the program’s 

D/E rates using the debt and earnings of 

the students who completed the 

program in the four-year cohort period. 

Specifically, consistent with our 

treatment of programs with small 

numbers in § 668.7(d)(2)(i)(A) of the 

2011 Prior Rule, we note that, for some 

GE programs that initially have 30 or 

more students who completed the 

program on the list of students for the 

two-year cohort period being evaluated, 

the number could fall to fewer than 30 

upon correction by the institution before 

the list is finalized for submission to 

SSA. In those situations, the group of 

students on which the D/E rates 

calculations are based would be 

expanded from those included in the 

two-year cohort period to those 

included in the four-year cohort period. 

Again, if the total number of students in 

the applicable cohort period is fewer 

than 30, the Department would not 

calculate D/E rates. 

To make the corrections process more 

efficient when there is a possibility that 

a four-year cohort period may be needed 

to calculate D/E rates, we would provide 

both a two-year cohort period list and a 

separate list–-one that would name 

those additional students who 

completed the program during the two 

years prior to that—to the institution 

and explain that both lists would be 

used to determine a program’s D/E rates 

if the two-year cohort period list did 

not, after correction by the school, 

identify at least 30 students who 

completed the program. 

Reasons: In the interest of fairness 

and due process, the proposed 

regulations are intended to provide 

institutions with an adequate 

opportunity to correct the list that 

would be submitted to SSA and to 

challenge the loan data on which the 

draft D/E rates are calculated. In that 

regard, the proposed regulations retain 

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61The Department has had years of experience 

with matching student data received on FAFSAs 

with SSA data, and stated that it expected the 

incidence of non-matches under the 2011 Prior Rule 

would be less than 2 percent of all students for 

whom it sought earnings data from SSA. 76 FR 

34401. Actual experience with matches already 

conducted has been consistent with that 

expectation. 

much of the content of the 2011 Prior 

Rule, but provide more detail to give 

institutions greater clarity as to the 

process for issuing draft D/E rates and 

the corrections and challenges 

permitted in connection with that 

process. 

The proposed regulations continue to 

base the draft D/E rates on the aggregate 

SSA earnings information for students 

who completed the program in the 

applicable cohort period. We believe 

that SSA earnings information is 

reliable. The information is reported by 

individuals and entities, and 

maintained, monitored, and preserved 

by SSA, within a strict, legal framework. 

The individual earnings data are 

required by Federal law to be reported 

to SSA, the data are maintained by SSA 

in compliance with congressionally 

mandated security and privacy 

restrictions, and the data are released to 

the Department only in conformance 

with congressionally mandated 

information quality requirements. 76 FR 

34423. 

Specifically, employers are required 

by section 3102 of the Internal Revenue 

Code to withhold from earnings and to 

remit to the Internal Revenue Service 

(IRS) employment taxes, and to report 

through Form W–2 the earnings on 

which the withholdings were based. 20 

CFR 404.114. SSA maintains earnings 

information in its Master Earnings File 

(MEF). A detailed description of the 

process SSA uses to obtain data from 

employers and maintain that data in the 

MEF can be found at www.ssa.gov/

policy/docs/ssb/v69n3/v69n3p29.html. 

Furthermore, SSA’s data are subject to 

verification, correction, and adjustment. 

SSA compares the earnings information 

it receives from employers through 

Forms W–2 against earnings reports sent 

by the employer to the IRS through 

Forms 941, 943, or 944 or Schedule H 

(Form 1040). SSA routinely performs a 

reconciliation of the data it receives 

with the data received by the IRS. See 

20 CFR 404.114(d); see www.ssa.gov/

employer/recon/recon.htm for an 

explanation of the process. Only after 

SSA performs these reconciliations does 

it release earnings data. Moreover, 

before SSA will provide data matching 

for another agency, the sources of the 

data are required to report any 

corrections and SSA will make any 

adjustments to the individual earnings 

data after the end of the respective 

calendar year. 

Appeals of the earnings data obtained 

from SSA and used in the calculation of 

the draft D/E rates are limited, however, 

not just because of the reliability of the 

data. As the Department noted in the 

2011 Prior Rule, there appears to be ‘‘no 

authority that would require or even 

allow the Department to question the 

quality, objectivity, utility, and integrity 

of SSA’s information under the 

provisions of the Information Quality 

Act [Pub. L. 106–554, section 515, 44 

U.S.C. 3516, note] or otherwise.’’ 76 FR 

34424. Also, as explained in connection 

with the 2011 Prior Rule, we would not 

consider challenges to the accuracy of 

the earnings data received from SSA 

because SSA provides the Department 

with only the mean and median 

earnings and the number of nonmatches for a program. That is, SSA 

does not disclose students’ individual 

earnings data that would enable the 

Secretary to assess a challenge to 

reported earnings. Therefore, an 

institution’s opportunity to challenge a 

program’s earnings information 

obtained from SSA would be limited to 

offering corrections to the list of 

students who completed the program to 

be provided to SSA. The Secretary 

would not consider, under the 2011 

Prior Rule and the proposed regulations, 

any challenge to the program’s earnings 

used to calculate the draft D/E rates. 

We would, however, provide an 

adequate opportunity for an institution 

to correct any inaccuracies in the list of 

students to be submitted to SSA to 

obtain the aggregate earnings data, and 

also to challenge the loan debt of the 

students who completed the program in 

the applicable cohort period that is used 

to calculate the rates, along with the 

Department’s actual computation of the 

D/E rates. In addition, and as explained 

further in ‘‘§ 668.406 D/E rates alternate 

earnings appeals and showings of 

mitigating circumstances,’’ we recognize 

that this process must provide an 

institution an adequate opportunity to 

present and have considered rebuttal 

evidence of the earnings data, and the 

alternate earnings appeal process 

provides that opportunity. 

Non-Federal negotiators asked the 

Department a number of questions about 

the usefulness of SSA earnings data 

given the possibility of non-matches 

between the students who completed a 

GE program during the applicable 

cohort period and available earnings 

information.61 We do not believe this 

possibility would affect in any 

significant way the accuracy of the 

calculations, because we believe that 

non-matches would be infrequent. For 

instance, for the 2011 GE informational 

rates calculated under the 2011 Prior 

Rule and released in June 2012, for 

students who completed GE programs in 

fiscal year 2007 and 2008, the match 

rate was approximately 98 percent. And, 

with the proposed change to include in 

the calculation only students who 

received title IV, HEA program funds, 

that match rate is likely to be higher 

since all students who received title IV, 

HEA program funds have gone through 

an SSA matching protocol before being 

determined eligible to receive title IV, 

HEA program funds. Accordingly, we 

believe that the process proposed in 

§ 668.405 would result in useful and 

reliable data that the Secretary could 

then use to calculate a GE program’s D/ 

E rates. 

Although we fully expect to rely on 

SSA data, the proposed regulations 

would also allow the Department, as an 

alternative, to obtain earnings 

information from other Federal 

agencies. We have included this 

provision to ensure that the Department 

can implement the proposed regulations 

even if unforeseen circumstances arise 

that preclude obtaining earnings 

information from SSA. 

One of the non-Federal negotiators 

proposed that, in the event there are 

non-matches, the Secretary remove a 

corresponding number of loan debts that 

reflect an average loan debt for the 

students on the list, rather than a 

corresponding number of the highest 

loan debts from the D/E rates 

calculation. Because SSA only identifies 

the number of students in a program for 

whom no match was established and 

does not identify those individuals 

specifically, the Department would not 

know the actual loan debts for a student 

whose earnings were not matched by 

SSA. By using that number of nonmatches to remove the students with the 

highest loan debts from the D/E rates, 

consistent with the 2011 Prior Rule, we 

are proposing the most conservative 

approach to avoid overstating the mean 

and median loan debt for a program for 

the calculation of the draft D/E rates. 

Given that there is a 98 percent match 

rate, we do not expect that removing the 

highest loan debts in these 

circumstances will distort the resulting 

D/E rates. 

We note that the 2011 Prior Rule 

provided that the Department would 

remove the highest loan debts in 

situations where SSA was not able to 

match students and earnings for failing 

programs only. We think the better 

approach is to apply this rule for all GE 

programs being evaluated, whether they 

have failing, zone, or passing rates, to 

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62The same requirements have been applied for 

many years to the calculation of CDRs under prior 

standards. See, e.g., 34 CFR 668.185(a)(4), 

668.187(e)(1), 668.189(c), and 668.189(f)(1) (2001). 

ensure fairness and consistency in the 

calculations across all programs. 

Although the 2011 Prior Rule 

specified that an institution would have 

30 days to submit corrections to the list 

of students, to ensure that institutions 

have sufficient time to review the lists 

and submit their corrections, we are 

proposing that an institution have a 

period of 45 days in which to submit its 

corrections to the list of students 

provided by the Secretary. 

Additionally, proposed § 668.405 

would clarify several items that were 

not included in the 2011 Prior Rule, 

providing for clearer and more 

transparent corrections and challenge 

processes. The proposed regulations 

would provide that the Department 

would identify, on the initial list of 

students provided to the institution, 

those students the Department would 

exclude under § 668.404(e) and the 

reasons for the exclusion. This would 

permit the institution to confirm that 

the students the Department proposes to 

exclude should in fact be excluded from 

the list submitted to SSA. 

The proposed regulations would also 

provide that the burden of proof with 

respect to a correction or challenge lies 

with the institution. This burden is 

routinely required by regulations 

governing challenges to institutional 

CDRs, on which this challenge process 

is modeled. 34 CFR 668.204(a)(4), 

668.208(c)(1), (f)(2).62

Section 668.405 would clarify the 

submission requirements that 

institutions must meet for a proposed 

correction to the list of students or 

challenge to draft D/E rates. Outlining 

these conditions in the regulations 

would ensure that institutions have 

notice of the requirements that apply to 

their correction and challenge 

submissions. 

And, finally, in order to provide for 

finality to the challenge process, and to 

ensure the timely issuance of final D/E 

rates, we have proposed that an 

institution that does not timely 

challenge the draft D/E rates within 45 

days of receiving the rates waives any 

objection to those rates and that an 

institution may submit only one 

challenge to the loan debt information 

the Secretary uses to calculate the draft 

D/E rates. As we have stated previously, 

the limitation on one challenge does not 

preclude an institution from challenging 

the inclusion of a student on another list 

or in another cohort. 

Section 668.406 D/E Rates Alternate 

Earnings Appeals and Showings of 

Mitigating Circumstances 

Current Regulations: Under § 668.7(g) 

of the 2011 Prior Rule, an institution 

would have the opportunity to appeal a 

GE program’s failing debt-to-earnings 

ratios by submitting alternate evidence 

of earnings of students in the applicable 

cohort period. Institutions could obtain 

such evidence from State earnings data 

or BLS data (for a limited time period 

only) or could conduct a survey of the 

GE program’s former students in 

accordance with standards developed 

by the National Center for Education 

Statistics (NCES). Through the appeal, 

an institution could demonstrate that, 

using the alternate earnings data 

obtained through one of the permitted 

methods, the GE program meets a 

passing debt-to-earnings standard based 

on the alternate earnings data. Section 

668.7(g) of the 2011 Prior Rule also 

specifies procedures an institution must 

follow, including deadlines an 

institution must meet, when making an 

alternate earnings appeal. 

Under the 2011 Prior Rule, a 

program’s debt-to-earnings ratios are 

calculated based on the outcomes of all 

of the individuals who completed the 

program, rather than only the students 

who received title IV, HEA funds. 

Proposed Regulations: 

Alternate Earnings Appeals 

As under the 2011 Prior Rule, under 

the proposed regulations, an institution 

would be permitted to make an alternate 

earnings appeal of final D/E rates that 

are failing. The proposed regulations 

would also permit an institution to 

submit an appeal any year the final D/ 

E rates are in the zone. If the institution 

fails to submit a timely appeal, the GE 

program’s rates for that year become 

final. 

In submitting an alternate earnings 

appeal under the proposed regulations, 

an institution would seek to 

demonstrate that the earnings of 

students who completed the GE 

program in the applicable cohort period 

are sufficient to pass the D/E rates 

measure. Unlike under the 2011 Prior 

Rule, the institution would base its 

appeal only on alternate earnings 

evidence from a State earnings database 

or an earnings survey conducted in 

accordance with requirements 

established by NCES, and not on 

earnings information from BLS. 

Under proposed § 668.406(a)(3), for 

the purpose of an alternate earnings 

appeals based on a survey, the Secretary 

would publish in the Federal Register 

an Earnings Survey Form developed by 

NCES. The Earnings Survey Form 

would be a model field-tested sample 

survey that could be used by an 

institution in accordance with the 

survey standards that the institution 

would be required to meet to guarantee 

the validity and reliability of the results. 

The survey standards would be 

developed by NCES specifically for the 

alternate earnings survey appeal, would 

include such items as a required 

response rate or subsequent 

nonresponse bias analysis, and could 

differ slightly from the general NCES 

standards utilized under the 2011 Prior 

Rule. Although use of the sample survey 

would not be required, and the Earnings 

Survey Form would be provided by 

NCES as a service to the institutions, the 

institutions would be required to adhere 

to the survey standards outlined in the 

form. 

Under the proposed regulations, the 

institution would certify that the survey 

was conducted in accordance with the 

requirements of the NCES Earnings 

Survey Form, and submit an 

examination-level attestation 

engagement report prepared by an 

independent public accountant or 

independent governmental auditor, as 

appropriate, that the survey was 

conducted in accordance with the 

standards outlined in the NCES 

Earnings Survey Form. As with other 

attestations institutions are required to 

submit to the Department, the proposed 

regulations would require that the 

attestation meet the standards contained 

in the GAO’s Government Auditing 

Standards promulgated by the 

Comptroller General of the United 

States (available at www.gao.gov/

yellowbook/overview), and with 

procedures for attestations contained in 

guides developed by and available from 

the Department’s Office of Inspector 

General. 

The proposed regulations provide that 

the survey must include all of the 

students who received title IV, HEA 

program funds and who completed the 

program during the applicable cohort 

period. 

The second alternate earnings appeal 

method described in the proposed 

regulations would allow an institution 

to make an appeal based on State 

earnings data obtained from one or more 

State-sponsored data systems. Section 

668.7(g)(2) of the 2011 Prior Rule 

allowed institutions to appeal their 

debt-to-earnings ratios by submitting 

alternate earnings evidence derived 

from State-sponsored data systems, such 

as State longitudinal data systems and 

State workforce agency systems. Under 

proposed § 668.406(a)(4), for alternate 

earnings appeals based on earnings 

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information in State data systems, as 

under the 2011 Prior Rule, institutions 

would only be permitted to use this 

alternative if the institution was able to 

demonstrate that it had obtained 

alternate earnings data for a minimum 

number of students. Under the 2011 

Prior Rule, an institution must obtain 

the data for more than 50 percent, and 

more than 30, of the students who 

completed the GE program during the 

applicable cohort periods, without 

regard to whether they had received title 

IV, HEA program funds. Under the 

proposed regulations, in obtaining 

earnings data, the institution would be 

required to submit to the administrator 

of the State-sponsored system a list of 

the students who received title IV, HEA 

program funds and who completed the 

GE program during the applicable 

cohort period. 

Under this method, the institution 

would be required to demonstrate that 

matches were obtained for more than 50 

percent of all of the students on the list 

submitted to the State administrator and 

that the number of matched students is 

30 or more. 

Under proposed § 668.406(a)(5), to 

pursue an alternate earnings appeal, the 

institution would notify the Secretary of 

its intent to submit an appeal no earlier 

than the date the Secretary provides the 

institution with the GE program’s draft 

D/E rates and no later than three 

business days after the Secretary issues 

the program’s final D/E rates, as 

compared to the 2011 Prior Rule, which 

provided an institution 14 days after 

receiving the final rates to submit the 

notice of intent to appeal. The 

institution would then be required to 

submit all supporting documentation for 

the appeal no later than 60 days after 

the Secretary issues the final D/E rates. 

In making any alternate earnings 

appeal, the institution would be subject 

to the conditions for corrections, 

challenges, and appeals under proposed 

§ 668.405(h), relating to requirements 

such as the format and completeness of 

the evidence provided to support the 

appeal. 

If an institution timely files an 

alternate earnings appeal, during the 

appeal process, it would not be subject 

to any of the requirements that would 

otherwise be triggered by the final D/E 

rates as provided in proposed § 668.403, 

regarding eligibility, and proposed 

§ 668.410, regarding the student 

warning. 

Under the proposed regulations, if the 

appealed final D/E rates were made 

public, they would be noted as under 

appeal, and the rates would be revised, 

if needed, based on the Secretary’s 

decision on the appeal. If the Secretary 

determines that the institution’s appeal 

is not sufficient to warrant revising the 

final D/E rates, the Secretary would 

notify the institution and the D/E rates 

under § 668.409(a) would remain the 

final D/E rates for the program for the 

award year. If the Secretary determines 

that the appeal is sufficient to warrant 

revising the final D/E rates, the 

Secretary would recalculate the rates 

and notify the institution that the 

recalculated D/E rates are the final D/E 

rates for the program. 

Showing of Mitigating Circumstances 

The proposed regulations would also 

provide that, if a program is failing or 

in the zone under the D/E rates measure, 

the institution may demonstrate 

mitigating circumstances by showing 

that less than 50 percent of all 

individuals, both those who received 

title IV, HEA program funds and those 

who did not, who completed the 

program during the applicable cohort 

period incurred any loan debt (as 

defined in proposed § 668.404(d)(1)) for 

enrollment in the program. If the 

institution is able to make such a 

demonstration, the program would be 

deemed to pass the D/E rates measure. 

However, the final D/E rates identified 

in the notice of determination that were 

based solely on the students who 

completed the program and received 

title IV, HEA program funds would 

remain the program’s final D/E rates and 

would be annotated to reflect that the 

institution’s showing of mitigating 

circumstances was accepted and that 

the program was deemed to be passing. 

To make a showing of mitigating 

circumstances, an institution would 

calculate the program’s ‘‘borrowing 

rate’’ by: 

Step 1. Determining the number of 

individuals, including students who did 

not receive title IV, HEA program funds, 

who completed the program during the 

applicable cohort period; 

Step 2. Of all of the individuals 

described in Step 1, determining the 

number who incurred loan debt for 

enrollment in the program; and 

Step 3. Dividing the number in Step 

2 by the number in Step 1. 

If the borrowing rate for the program 

is less than 50 percent, the program 

would be deemed to pass the D/E rates 

measure. 

When making a showing of mitigating 

circumstances, the institution would 

have to submit a certification signed by 

its chief executive officer identifying the 

borrowing rate and attesting to its 

accuracy, as well as any other 

supporting documentation requested by 

the Secretary. 

Reasons: Proposed § 668.406 would 

clarify the submission requirements that 

institutions must meet for an alternate 

earnings appeal or a showing of 

mitigating circumstances. Outlining 

these conditions in the regulations 

would ensure that institutions have 

notice of the requirements that apply to 

their appeal submissions and showings 

of mitigating circumstances. 

Alternate Earnings Appeal 

As under the 2011 Prior Rule, 

institutions would not be permitted to 

challenge the accuracy of the earnings 

data provided by SSA and used in the 

calculation of draft D/E rates because 

the Department receives the data from 

SSA in an aggregate form and, therefore, 

lacks the information required to assess 

any such appeal. Therefore, as in the 

2011 Prior Rule, we are proposing to 

permit institutions to appeal their D/E 

rates, which are based on SSA earnings 

data, by demonstrating that the 

difference between the mean or median 

annual earnings the Secretary obtained 

from SSA and the mean or median 

annual earnings from an institutional 

survey or State-sponsored databases 

warrants revision of the final D/E rates. 

Consistent with the 2011 Prior Rule, an 

institution could appeal a GE program’s 

final D/E rates in any year in which the 

program is failing the D/E rates. 

However, to account for the addition of 

the zone, the proposed regulations 

would also permit an institution to 

make an appeal in any year in which the 

program’s final D/E rates are in the zone 

for that year. Because a program’s 

continued performance in the zone can 

ultimately lead to an ineligibility 

determination, we believe due process 

warrants allowing appeals for both 

failing and zone final D/E rates. 

The two primary differences between 

proposed § 668.406 and the 2011 Prior 

Rule, with respect to alternate earnings 

appeals, is that we would consider only 

the alternate earnings of students who 

received title IV, HEA program funds for 

enrollment in the program and we have 

limited the bases for alternate earnings 

appeals to surveys conducted in 

accordance with an NCES Earnings 

Survey Form and data collected from 

one or more State-approved databases. 

First, we consider only the alternate 

earnings of students who received title 

IV, HEA program funds because, to align 

the proposed regulations with the 

court’s interpretation of relevant law in 

APSCU v. Duncan and better monitor 

the Federal investment in GE programs, 

we have defined ‘‘student’’ for the 

purpose of subpart Q to be an individual 

who receives title IV, HEA program 

funds for enrollment in the applicable 

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program. See ‘‘§ 668.401 Scope and 

purpose’’ for a complete discussion of 

the definition of ‘‘student.’’ Second, 

unlike in the 2011 Prior Rule, we would 

not permit an alternate earnings appeal 

that relies on BLS data because the 

average earnings reported by BLS for an 

occupation are not based on the specific 

earnings of the individuals who 

completed the GE program at the 

institution, and therefore would not 

provide useful information about 

whether the institution’s GE program 

prepared students for gainful 

employment in that occupation. 

With respect to the use of an earnings 

survey, the 2011 Prior Rule specified 

that any earnings survey must be 

conducted in accordance with NCES 

standards. NCES is the primary Federal 

entity responsible for collecting and 

analyzing data related to education in 

the United States and other nations. 

NCES fulfills a congressional mandate 

to collect, collate, analyze, and report 

complete statistics on the condition of 

American education; conduct and 

publish reports; and review and report 

on education activities internationally. 

As a part of fulfilling its mandate, NCES 

has developed an extensive Statistical 

Standards Program that consults and 

advises on methodological and 

statistical aspects involved in the 

design, collection, and analysis of data 

collections. Through this program, 

NCES has established statistical 

standards and guidelines to provide 

high-quality, reliable, useful, and 

informative statistical information to 

public policy decision makers and to 

the public and ensure that field work 

and reporting standards are met. The 

NCES standards and guidelines provide 

clear direction regarding how data 

should be collected in NCES surveys 

and the limits of acceptable applications 

and use. We continue to believe that 

complying with the NCES standards 

when conducting the alternate earnings 

survey is necessary in order to ensure 

the results of the survey are valid and 

reliable. 

However, as the NCES standards were 

developed to guide the work of NCES 

itself, we believe it is important to 

develop standards specific to the 

alternate earnings survey. As such, we 

have proposed that NCES would 

develop the Earnings Survey Form and 

publish in the Federal Register. The 

form would have two components. The 

first component would be standards 

developed by NCES specific to the 

alternate earnings survey, which could 

differ from the existing NCES standards. 

The second component would be a 

model alternate earnings survey that 

NCES would develop for use by 

institutions. As stated previously, 

complying with the standards set forth 

in the Earnings Survey Form would be 

required for any institution choosing to 

conduct an alternate earnings survey. 

However, use of the model survey 

would be voluntary and it would only 

be provided by NCES in order to reduce 

the cost, burden, and implementation 

timeline of the institutions when 

conducting the survey. 

In addition to the alternate earnings 

survey, we would permit an alternate 

earnings appeal using State earnings 

data. We propose this option in order to 

provide institutions with an alternative 

form of appeal as we recognize that 

some institutions may already have, or 

could subsequently implement, 

processes and procedures to access State 

earnings data. Additionally, we 

recognize that some institutions may 

have challenges meeting the 

requirements of the Earnings Survey 

Form. However, we are concerned about 

several limitations of State earnings 

data. First, not all States have 

longitudinal data systems that contain 

earnings data, and, in States that do 

have such systems, not all institutions 

have access to them. There are 

circumstances where an institution may 

be able to access earnings data directly 

from a State workforce agency that 

maintains the earnings data as opposed 

to accessing it through the State 

longitudinal data system. However, 

State or Federal law or regulation, or 

both, may generally prohibit or 

significantly complicate the sharing of 

needed data between the institution and 

the State agency. Third, some students 

who complete a GE program can be 

expected to obtain employment in 

different States. In order for an alternate 

earnings appeal based on State data to 

be comprehensive, an institution may 

not only have to access its own State’s 

earnings records, but also the records of 

other States likely to employ the GE 

program’s graduates. Fourth, State 

earnings databases are typically 

maintained to support a State’s own 

unemployment insurance program. For 

example, for any given State, not all 

employers may be liable for 

unemployment insurance contributions 

and not all workers may accrue 

unemployment insurance benefit rights, 

in which case those employers or those 

workers may not be included in the 

database, and those coverage 

determinations will vary by State. 

For these reasons, we invite comment 

on whether we should permit the use of 

data from State databases for alternate 

earnings appeals. It is important to note 

that the Department would only accept 

an alternate earnings appeal using a 

State data system if the submission 

contains matches for more than 50 

percent of all students on the list 

submitted to the State administrator and 

that number of matched students is 30 

or more. As in the 2011 Prior Rule, this 

is to ensure there is a large enough 

sample for the data to be representative 

of the GE program as a whole. 

We believe that there are more 

significant and definitive shortcomings 

associated with the use of BLS data for 

this purpose. As we said in the 2011 

Prior Rule: 

The Department has several concerns 

about using BLS data to calculate the 

debt-to-earnings ratios. First, as a 

national earnings metric that includes 

untrained, poorly-trained and welltrained employees, BLS earnings data 

do not distinguish between excellent 

and low-performing programs offering 

similar credentials. 

Second, BLS earnings data do not 

relate directly to a program—the data 

relate to a Standard Occupational 

Classification (SOC) code or a family of 

SOC codes stemming from the 

education and training provided by the 

program. An institution may identify 

the SOC codes by using the BLS CIP-toSOC crosswalk that lists the various 

SOC codes associated with a program, 

or the institution could identify through 

its placement or employment records 

the SOC codes for which program 

completers find employment. 

In either case, the BLS data may not 

reflect the academic content of the 

program, particularly for degree 

programs. Assuming the SOC codes can 

be properly identified, the institution 

could then attempt to associate the SOC 

codes to BLS earnings data. BLS 

provides earnings data at various 

percentiles (10, 25, 50, 75, and 90), but 

the percentile earnings do not relate in 

any way to the educational level or 

experience of the persons employed in 

the SOC code. 

So, it would be difficult for an 

institution to determine the appropriate 

earnings, particularly for students who 

complete programs with the same CIP 

code but at different credential levels. 

For example, there is no difference in 

earnings in the SOC codes associated 

with a certificate program and an 

associate degree program with the same 

CIP code. Moreover, because BLS 

percentiles simply reflect the 

distribution of earnings of those 

employed in a SOC code, selecting the 

appropriate percentile is somewhat 

arbitrary. 

For example, the 10th percentile does 

not reflect entry-level earnings any more 

than the 50th percentile reflects 

earnings of persons employed for 10 

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years. Even if the institution could 

reasonably associate the earnings for 

each SOC code to a program, the 

earnings vary, sometimes significantly, 

between the associated SOC codes, so 

the earnings would need to be averaged 

or somehow weighted to derive an 

amount that could be used in the 

denominator for the debt-to-earnings 

ratios. 

Finally, and perhaps most 

significantly, BLS earnings do not 

directly reflect the earnings of the 

students who complete a program at an 

institution. Instead, BLS earnings reflect 

the earnings of workers in a particular 

occupation, without any relationship to 

what educational institutions those 

workers attended. While it is reasonable 

to use proxy earnings like those 

available from BLS for research or 

consumer information purposes, we 

believe a direct measure of program 

performance must be used in 

determining whether a program remains 

eligible for title IV, HEA funds. The 

earnings data we obtain from SSA will 

reflect the actual earnings of program 

without the ambiguity and complexity 

inherent with attempting to use BLS 

data for a purpose outside of its 

intended scope. 76 FR 34386, 34421 

Recognizing these shortcomings, in 

the 2011 Prior Rule, the Department 

permitted the use of BLS data as a 

source of earnings information only for 

challenges to debt-to-earnings ratios 

calculated in the first three years of the 

Department’s implementation of 

§ 668.7(g). This was done to address the 

concerns of institutions that they would 

be receiving earnings information for 

the first time on students who had 

already completed the program, at a 

point in time at which they could not 

implement improvements to the 

program that would affect the student 

debt burdens. See 76 FR 34423. In order 

to confirm the accuracy of the data used 

in a BLS-based alternate earnings 

appeal, § 668.7(g) of the 2011 Prior Rule 

also required an institution to submit, at 

the Department’s request, extensive 

documentation, including employment 

and placement records. 

We believe that the reasons for 

previously permitting the use of BLS 

data, despite its shortcomings, no longer 

apply. Most institutions have now had 

experience with SSA data on their 

students’ earnings through the 2011 GE 

informational rates; thus, many 

programs are no longer in the situation 

where they would be receiving earnings 

data for the first time under the 

proposed regulations. In addition, the 

proposed regulations provide for a fouryear transition period (for example, in 

award years 2014–2015, 2015–2016, 

2016–2017, and 2017–2018), during 

which the Department would provide 

the institution an opportunity to have 

its program’s D/E rates calculated using 

more recent loan debt data. By doing so, 

the proposed regulations would allow 

an institution to immediately benefit 

from changes it makes to the GE 

program that reduce student debt. 

Given the shortcomings of the BLS 

data in producing a reliable assessment 

of student outcomes for a particular GE 

program, the fact that many programs 

had access to earnings data under the 

2011 Prior Rule, and our proposal to 

include a four-year transition period, we 

are not including in the proposed 

regulations a provision permitting the 

use of BLS data for alternate earnings 

appeals. 

The procedures an institution would 

be required to follow in making an 

alternate earnings appeal under the 

proposed regulations are largely similar 

to those in the 2011 Prior Rule. Under 

the 2011 Prior Rule, an institution was 

required to notify the Secretary of its 

intent to use alternate earnings no later 

than 14 days after the institution 

received its final debt measures. We 

intend to provide an institution with 

adequate time to pursue an alternate 

earnings appeal, while ensuring that the 

Department can disclose as soon as 

possible to the public the program’s 

final rates, with appropriate notice that 

the institution intends to appeal the 

rates. We are therefore proposing in the 

regulations that an institution must 

notify the Secretary of its intent to 

appeal no later than three business days 

after the date the Secretary issues the 

notice of determination with the final D/ 

E rates. The institution must indicate its 

intent to appeal no earlier than the date 

the Secretary provides the institution 

with its draft D/E rates. However, as 

explained more fully below, the notice 

deadlines do not limit the time available 

to an institution to actually conduct the 

survey. As with the 2011 Prior Rule, the 

institution would have 60 days after it 

receives the notice of determination to 

submit all supporting documentation in 

support of its appeal. In the interest of 

providing finality in the alternate 

appeals process, we would provide that 

an institution waives its right to appeal 

failing or zone final D/E rates if it does 

not submit a timely appeal. 

The non-Federal negotiators raised 

questions about our initial plan during 

the negotiated rulemaking process to 

rely solely on earnings surveys 

conducted in accordance with NCES 

standards. Specifically, some nonFederal negotiators expressed concern 

that, given the proposed deadlines in 

§ 668.406 and the effort required to 

complete a reliable survey under NCES 

standards, the survey option would not 

be a viable appeal mechanism. In 

particular, some of the negotiators 

raised concerns that smaller institutions 

would not have the resources necessary 

to properly conduct the survey. 

We note that an institution would be 

able to begin its survey at any point in 

time and need not wait for issuance of 

draft D/E rates to plan and conduct the 

survey. The proposed regulations 

simply propose deadlines by which the 

institution must notify the Department 

that it will be submitting an appeal and 

by which it must submit the actual 

survey results. 

To put these deadlines in context, 

under the proposed regulations, as an 

example, assume that the first award 

year for which D/E rates could be issued 

is award year 2014–2015. Those rates 

would be based on the outcomes of 

students who completed a GE program 

in award years 2010–2011 and 2011– 

2012 for a two-year cohort period, and 

2008–2009, 2009–2010, 2010–2011, and 

2011–2012 for a four-year cohort period. 

SSA would provide to the Department 

data on the students’ earnings for 

calendar year 2014 approximately 13 

months after the end of calendar year 

2014, in early 2016. Those earnings data 

would be used to calculate the D/E rates 

for award year 2014–2015, and draft 

rates would be issued shortly after the 

final earnings data are obtained from 

SSA. Under our anticipated timeline, an 

institution that receives draft D/E rates 

that are in the zone or failing for award 

year 2014–2015 would receive those 

draft rates early in 2016. The draft D/E 

rates for the following year—award year 

2015–2016—would be issued in early 

calendar year 2017. An institution that 

wished to conduct a survey to support 

a potential alternate earnings appeal of 

its D/E rates for award year 2015– 

2016—the earliest date by which rates 

that could render the program ineligible 

would be issued—would base its appeal 

on student earnings during calendar 

year 2015 for rates calculated on a twoyear cohort period. Students who 

completed the GE program would know 

by early 2016 how much they earned, 

and could be surveyed, as early as the 

beginning of 2016—more than a full 

year before the Department would issue 

final D/E rates for award year 2015– 

2016, the rates for which the institution 

would use the survey results. We 

believe the proposed regulations 

provide more than adequate time to 

permit an institution to conduct and 

present an alternate earnings appeal and 

that to permit more time would 

unnecessarily increase the risk that 

more students would invest their time 

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and money, and their limited eligibility 

for title IV, HEA program funds, in a 

failing GE program. 

In response to concerns voiced by 

some negotiators that the rigor of NCES 

survey standards would make it 

prohibitively difficult and expensive for 

some institutions to conduct an 

alternate earnings appeal based on 

survey data, we made two modifications 

to the alternate earnings appeal process 

that are reflected in the proposed 

regulations. First, we have provided that 

NCES would prepare an Earnings 

Survey Form, which would contain a 

model survey that institutions could 

elect to use. The availability of an 

already developed model survey would 

reduce the expense for institutions as 

they would not need to develop their 

own survey. Moreover, we have 

proposed that the form would outline 

the standards that must be followed 

even if an institution chose to use a 

different form. In addition to making a 

survey-based alternate earnings appeal 

more accessible, we added to the 

proposed regulations the option to use 

earnings data obtained from Statesponsored databases, so that institutions 

would have more avenues of appeal. 

We invite comment on whether the 

proposed regulations should permit 

institutions to expand the applicable 

cohort surveyed under circumstances in 

which the size of the applicable cohort 

may make it difficult for the institution 

to satisfy the survey standards or meet 

the matching requirements proposed in 

connection with appeals based on Statesponsored database earnings 

information. We also invite comment on 

how we might improve the alternate 

earnings appeals process so that it is 

less data intensive, but nonetheless is 

based on accurate earnings information. 

At least one negotiator suggested that, 

if an institution elects to make an 

alternate earnings appeal, it should be 

required to post an appeal bond and 

should remain subject to at least some 

of the requirements in proposed 

§ 668.410 otherwise triggered by the 

final D/E rates, such as the student 

warning, until the resolution of the 

appeal. We do not typically require 

institutions that appeal a limitation or 

termination proposed on other title IV, 

HEA program performance grounds to 

comply with the limitation or post a 

bond pending resolution of an appeal. 

For the purpose of the proposed 

regulations, we do not believe it would 

be necessary to impose these restrictions 

before an institution has had its 

alternate earnings appeal considered 

and received a decision on the merits of 

that appeal. 

In discussing the procedures for 

calculating D/E rates under the 

proposed regulations, some negotiators 

expressed concern over including only 

the earnings of students who receive 

title IV, HEA program funds. As 

explained in ‘‘§ 668.401 Scope and 

purpose,’’ our focus in the proposed 

regulations is on students who receive 

title IV, HEA program funds for 

enrollment in a GE program. However, 

we invite comment as to whether 

institutions should be permitted to 

include the earnings information of 

individuals who did not receive title IV, 

HEA program funds for enrollment in 

the program, and on what basis. That is, 

how would D/E rates based on the 

earnings of individuals who did not 

receive title IV, HEA program funds 

demonstrate that the program satisfies 

the gainful employment requirement for 

students who did receive title IV, HEA 

program funds? We also invite comment 

as to whether, if the earnings 

information of individuals who did not 

receive title IV, HEA program funds 

were included, a successful appeal 

should result in published recalculated 

D/E rates for a program, and whether the 

program should be deemed as passing 

under the D/E rates measure or if the 

program should not receive an official 

result, but also not be subject to any 

sanctions based on that year’s D/E rates. 

Showings of Mitigating Circumstances 

Several negotiators argued that lowcost, and consequently low-risk, 

programs where borrowing is largely 

unnecessary should not be subject to the 

D/E rates measure because the measure 

would not accurately reflect the level of 

borrowing by individuals enrolled in 

the program and the low cost of the 

program. The negotiators claimed that, 

for many low-cost programs, students 

receiving title IV, HEA program funds 

constitute only a small, 

unrepresentative portion of the students 

in terms of borrowing behavior. They 

argued that, for these programs, the 

percentage of students who receive title 

IV, HEA program funds and incur debt 

to enroll in the program is significantly 

greater than the percentage of all 

students who incur debt to enroll in the 

program. According to the negotiators, a 

program in which a majority of students 

have no debt is unlikely to produce 

graduates whose educational debts 

would be excessive because the tuition 

and costs are likely to be modest and 

require little borrowing, and therefore 

would not place the Federal investment 

in the program at significant risk. To 

more adequately account for low-cost, 

low-risk programs, the negotiators 

suggested that a GE program should 

pass the D/E rates measure if (1) the 

median loan debt of all individuals who 

complete the program in the applicable 

cohort period (both individuals who 

received, and who did not receive, title 

IV, HEA program funds) is zero, or (2) 

the program has a borrowing rate of less 

than 50 percent. 

Under the proposed regulations, the 

loan debt component of the D/E rates 

measure would be calculated as a 

median, so that a program would have 

an annual loan payment of $0, and, 

consequently, passing D/E rates of 0, if 

less than half of the students who 

receive title IV, HEA program funds and 

complete the program during the 

applicable cohort period are borrowers. 

However, because the D/E rates 

measure assesses only the outcomes of 

students receiving title IV, HEA program 

funds, it might not in all cases fully 

recognize the benefit of programs that 

present low risk to students and 

taxpayers. Under the proposed 

regulations, the D/E rates measure 

would attribute a student’s loan debt to 

a program, up to the amount of tuition, 

fees, and equipment and supplies, even 

though the student could have obtained 

the loan only to pay for living expenses. 

As a result, the D/E rates measure might 

not fully reflect the impact of low costs 

in reducing the overall debt burden of 

a program’s students. Therefore, in 

order to fully assess the benefit of 

programs that do not place students at 

risk of unaffordable debts, the proposed 

regulations would permit an institution 

to demonstrate that a program with D/ 

E rates that are failing or in the zone 

should be deemed to be passing the D/ 

E rates measure because less than 50 

percent of all individuals who 

completed the program, both those who 

received title IV, HEA program funds, 

and those who did not, did not have to 

assume any debt to enroll in the 

program. The less than 50 percent 

standard is appropriate because a 

borrowing rate of less than 50 percent 

would mean that the median loan debt 

of the program is zero. 

On the other hand, we recognize that 

in all cases a program with a borrowing 

rate of less than 50 percent may not, in 

fact, be low risk. For example, the 

majority of students could have 

alternative resources to pay the program 

costs, such as employers, State grant 

programs, or military benefits, or the 

program could still have a significant 

number of students who received title 

IV, HEA program loans for enrollment 

in the program. 

We request specific comment on 

whether a program that demonstrates a 

borrowing rate of less than 50 percent 

should be deemed to be passing the D/ 

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E rates measure and whether and how 

it may be appropriate to take into 

account students who do not receive 

title IV, HEA program funds to make 

that determination. We also invite 

comment as to whether the program 

should receive an official result, and 

whether the program should be subject 

to any sanctions on the basis of that 

year’s D/E rates. 

In addition, we invite comment on the 

method that should be used to ensure 

that borrowing rate showings are based 

on reliable evidence. Current 

regulations require an institution to 

create and maintain for audit and 

program review purposes records 

needed to verify data that appear in any 

report it uses to participate in a title IV, 

HEA program. 34 CFR 668.24(c)(1)(vi). 

A borrowing rate showing is a report 

that an institution would use to 

participate in title IV, HEA programs, 

and the institution would, thus, be 

required to maintain a complete list 

identifying all individuals included in 

its borrower rate calculations, as well as 

records evidencing those individuals’ 

enrollment in the program and the dates 

on which they completed the program. 

We seek comment on whether the 

institution should also be required to 

submit as part of the showing a 

modified list of these individuals that 

would fully identify the students who 

received title IV, HEA program funds, 

but provide the list of students who did 

not receive title IV, HEA program funds 

in deidentified form, as is now 

commonly done in program review 

reports. Such deidentified list would 

show no more than the individuals’ 

initials and last four digits of the social 

security number or another numeric 

identifier. 

Finally, we invite alternative 

proposals to assess whether a program 

leads to low rates of borrowing. 

Section 668.407 Calculating pCDR 

Section 668.408 Issuing and 

Challenging pCDR 

Subpart R 

Current Regulations: None. 

Proposed Regulations: Under 

proposed §§ 668.407 and 668.408, the 

Department would use pCDR as a 

second accountability metric, 

independent of the D/E rates measure, 

to determine whether a program 

remains eligible for title IV, HEA 

program funds. For a complete 

discussion of our proposed use of, and 

standards associated with, the pCDR 

measure for the purpose of determining 

a GE program’s eligibility for title IV, 

HEA program funds, see ‘‘§ 668.403 

Gainful employment framework.’’ 

Section 435(m) of the HEA provides 

that an institutional cohort default rate 

(iCDR) is the percentage of an 

institution’s FFEL and Direct Loan 

borrowers who entered repayment in a 

given Federal fiscal year and who 

defaulted by the end of the second fiscal 

year following the year in which the 

borrowers entered repayment, referred 

to as the CDR monitoring period. 20 

U.S.C. 1085(m). Subpart N of part 668 

of the regulations currently implements, 

and typically tracks, the iCDR 

provisions of section 435(a) and (m) of 

the HEA, 20 U.S.C. 1085(a) and (m). 

Proposed §§ 668.407 and 668.408 

provide that the Secretary would 

generally determine a GE program’s 

pCDR using the same methodologies 

and procedures used to calculate iCDRs 

pursuant to section 435(m) of the HEA. 

20 U.S.C. 1085(m). These methodologies 

and procedures are set forth in detail in 

proposed subpart R of part 668. The 

proposed pCDR regulations in subpart R 

would generally mirror the structure of 

the iCDR regulations in subpart N. 

Because institutions are familiar with 

subpart N, proposed subpart R would 

adopt the text and section designations 

used in subpart N, with minor changes 

to reflect the application of the iCDR 

process to pCDR determinations. 

Because some provisions in subpart N 

that are applicable to institutions would 

not be relevant at the program level, 

these sections or parts of subpart N have 

been omitted and reserved in subpart R. 

In calculating a GE program’s pCDR, 

the Secretary would consider the 

students who received a FFEL or Direct 

Loan for enrollment in the GE program 

and who entered repayment on those 

loans during a relevant Federal fiscal 

year and determine the number of those 

students who defaulted on those loans 

in that fiscal year or by the end of the 

following two fiscal years—the CDR 

monitoring period. The pCDR measure 

would use the same fiscal year for 

establishing the cohort of students and 

the same CDR monitoring period for 

determining how many students in the 

cohort defaulted as is used for iCDR 

calculations. However, the pCDR 

measure would be based on a different 

measurement period and different 

cohort of students than the proposed D/ 

E rates. Under proposed § 668.404, D/E 

rates are calculated for a cohort of 

students who received title IV, HEA 

program funds, including Federal loans, 

Federal Pell Grants, and other title IV, 

HEA program funds, and who 

completed the program during an 

applicable cohort period. In contrast, 

the pCDR measure, like iCDR, would 

include students who received FFEL 

and Direct Loans and who entered 

repayment on those loans during the 

relevant fiscal year, whether or not they 

completed the program. FFEL and 

Direct Loan borrowers generally enter 

repayment after a six-month grace 

period that begins when the borrower 

ceases enrollment on at least a half-time 

basis. 34 CFR 682.200, 682.209(a)(3) 

(FFEL Loans); § 685.207(b)(2), (c)(2) 

(Direct Loans). 

A GE program’s pCDR would be based 

on students who (1) enrolled in the GE 

program, whether or not they completed 

the program, (2) received one or more 

FFEL or Direct Loans for enrollment in 

the program, and (3) entered repayment 

on one or more of those loans during the 

fiscal year that precedes by 3 years the 

year in which the rate is calculated. If 

2016, for example, is the first year that 

pCDRs for GE programs are released 

under the proposed regulations, the 

pCDRs would be for the fiscal year 2013 

cohort. To calculate the program’s 

pCDR, the Secretary would determine 

the number of borrowers who entered 

repayment on their FFEL or Direct 

Loans between October 1, 2012, and 

September 30, 2013. The Secretary 

would then determine how many of 

those students defaulted by September 

30, 2015. 

A FFEL Loan would be considered to 

be in default if a guaranty agency paid 

a default claim to the FFEL lender on 

the loan. § 668.502(c)(1)(i). A Direct 

Loan would be considered to be in 

default if a borrower failed to make a 

required installment payment for 360 

days. § 668.502(c)(1)(ii). These pCDR 

provisions would be identical to the 

corresponding iCDR provisions in 

§ 668.202(c). 

Under the proposed regulations, each 

year, the Secretary would calculate a 

draft pCDR for each GE program by: (1) 

Identifying, from information reported 

by the institution under proposed 

§ 668.411 and from information in 

NSLDS, a cohort of borrowers who 

received FFEL or Direct Loans for 

enrollment in the GE program and who 

entered repayment during the fiscal year 

and (2) determining the percentage of 

those borrowers who defaulted within 

the pCDR monitoring period. 

§ 668.502(a). If fewer than 30 borrowers 

entered repayment in the fiscal year, the 

cohort of borrowers would include, in 

addition to the borrowers who entered 

repayment in the fiscal year, borrowers 

who entered repayment in the two 

preceding fiscal years. In that case, the 

program’s draft pCDR would be based 

on the total cohort from the three years. 

§ 668.502(d)(2). 

As set forth in proposed § 668.504, the 

Department would notify an institution 

of a program’s draft pCDR and provide 

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a report listing the students included in 

the cohort and the loan details that were 

used in the calculations. The report 

would allow the institution an 

opportunity to challenge the 

information used to calculate the draft 

pCDR. The pCDR challenge process 

mirrors the iCDR process, as follows. 

The institution would have 45 days to 

submit an ‘‘incorrect data challenge’’ to 

the accuracy of the data used to 

calculate the draft pCDR. For most FFEL 

loans, the institution would send its 

incorrect data challenge to the relevant 

guaranty agency. For Direct Loans and 

for FFEL loans held by the Department, 

the institution would send its incorrect 

data challenge to the Department’s loan 

servicer from whose records the data 

were obtained. The guaranty agency or 

Departmental servicer would be 

required to respond to the institution’s 

challenge. The Department would 

review the challenge and response and 

either accept the challenge and 

recalculate the program’s pCDR, or 

reject the challenge and notify the 

institution of the rejection. 

If a GE program’s draft pCDR is 30 

percent or greater for the third fiscal 

year following two consecutive years for 

which the official pCDR was 30 percent 

or greater, the institution would be able 

to submit a ‘‘participation rate index’’ 

challenge to the draft pCDR for that 

third year. This challenge rests on the 

position that the number of students 

who borrow title IV, HEA program loans 

for enrollment in the GE program 

constitutes a small percentage of the 

program’s students. Specifically, if the 

program’s pCDR multiplied by the 

percentage of title IV, HEA program loan 

borrowers among all regular students 

(including students who did not receive 

title IV, HEA program funds) enrolled in 

the program is less than 0.0625, the 

program would not be subject to a loss 

of title IV, HEA program eligibility on 

account of a third consecutive year’s 

pCDR of 30 percent or greater. 

§ 668.504(c). 

After resolution of a participation rate 

index challenge or after the date by 

which such a challenge would have to 

be made, the Department would issue 

an official pCDR. Unlike the procedures 

for issuance of iCDRs, we would not 

provide this notification electronically. 

The institution could request to have 

the official pCDR adjusted on several 

grounds, or could appeal the official 

pCDR, if that pCDR would be the third 

consecutive year’s pCDR of 30 percent 

or greater. § 668.508. Each of these 

appeals and requests for adjustment is 

available to institutions under the iCDR 

provisions. § 668.208. Most appeals and 

adjustment options are available for 

appeals and requests for adjustment of 

any iCDR. However, iCDR regulations 

limit the availability of some appeals to 

those rates that would result in loss of 

institutional eligibility, and the 

proposed regulations would similarly 

allow some appeals only for a pCDR that 

would subject the GE program to a loss 

of eligibility under proposed § 668.403, 

as a result of the third consecutive 

year’s pCDR of 30 percent or greater. 

First, the institution would have two 

possible ways to request an adjustment 

to the data used to calculate any official 

pCDR: 

• Uncorrected data adjustment: A 

correction approved as a result of an 

‘‘incorrect data challenge’’ that was 

previously approved is not reflected in 

the official pCDR, § 668.509; and 

• New data adjustment: New data 

used in the calculation of the official 

pCDR differs from data previously 

provided to the institution with the 

program’s draft pCDR, and it is 

inaccurate, § 668.510. 

Second, the institution would be able 

to request that any pCDR be recalculated 

through two types of appeals: 

• Erroneous data appeal: The pCDR 

should be recalculated because the data 

previously challenged or newly added 

are incorrect, § 668.511; and 

• Loan servicing appeal: The pCDR 

should be recalculated because the 

servicer failed to perform certain due 

diligence activities before the loan 

defaulted, § 668.512. 

Third, the institution would be able to 

avoid a loss of program eligibility under 

proposed § 668.403 through a successful 

appeal of a pCDR that would have 

resulted in loss of eligibility on any of 

the following four grounds: 

• Economically disadvantaged 

appeal: Of all the students enrolled in 

the program on at least a half-time basis 

(including those who did not receive 

title IV, HEA program funds), (a) twothirds were either eligible to receive at 

least half the maximum Pell Grant or 

had a family income below the HHS 

poverty guideline standard for that 

family size, and (b) of these students, at 

least 70 percent timely completed the 

degree program, transferred to a higher 

credentialed program, were still 

enrolled, or entered military service, or, 

for non-degree programs, at least 44 

percent within a year had obtained 

employment in the occupation for 

which the program was offered or 

entered military service, § 668.513; 

• Participation rate index appeal: 

Similar to the participation rate index 

challenge previously described for draft 

pCDR, except it would be submitted 

after official pCDRs have been 

calculated, § 668.514; 

• Average rates appeal: Two or more 

of the pCDRs on which loss of eligibility 

would be based had been calculated as 

an average rate under § 668.502(d)(2)(i) 

because fewer than 30 borrowers 

entered repayment in the fiscal year, 

and the rates for any two of those 

‘‘averaged rate’’ years would pass the 

pCDR measure if calculated based only 

on the borrowers who entered 

repayment in each of those two fiscal 

years, § 668.515; and 

• Thirty-or-fewer borrowers appeal: 

The total number of borrowers who 

comprise the pCDR cohorts for the three 

years at issue was 30 or fewer, 

§ 668.516. 

Reasons: Our reasons for proposing 

§ 668.407, § 668.408, and subpart R of 

part 668, and the use of pCDR as a new 

and independent GE measure, are 

described in ‘‘§ 668.403 Gainful 

employment framework.’’ We also 

discuss there our reasons for proposing 

adoption of the iCDR calculation, 

appeal, and challenge procedures for the 

pCDR measure. The proposed 

consequences associated with a GE 

program’s pCDR, and our related 

reasoning, are described in ‘‘§ 668.403 

Gainful employment framework’’ and 

‘‘§ 668.410 Consequences of GE 

measures.’’ 

We propose to adopt the challenges, 

adjustments, and appeals for pCDR that 

are currently available for iCDR and, in 

several instances, that are based on 

provisions of the HEA itself. Two of 

those options—participation rate index 

challenges and appeals, and 

economically disadvantaged appeals— 

include consideration of individuals 

who did not receive title IV, HEA 

program funds. We invite comment as to 

whether we should modify those 

provisions for pCDR to include only 

those students who receive title IV, HEA 

program funds. 

Section 668.409 Final Determination 

of GE Measures 

Current Regulations: Section 668.7(f) 

of the 2011 Prior Rule provides that the 

Secretary would notify an institution of 

any draft results of the debt measures 

for its GE programs that are not 

challenged, challenged unsuccessfully, 

or recalculated after a successful 

challenge. These results would be the 

final debt measures for the program. 

The Secretary would notify an 

institution if it were to become 

ineligible. If an institution submits an 

alternate earnings appeal of a program’s 

final debt-to-earnings ratios and it is 

denied, the Secretary would also 

separately notify the institution and 

provide reasons for the denial. 

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16466 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

Proposed Regulations: Proposed 

§ 668.409 provides that the Secretary 

would issue a separate notice of 

determination for the D/E rates measure 

and for the pCDR measure for each GE 

program at an institution. In 

comparison, under the 2011 Prior Rule, 

information regarding all of the debt 

measures would be provided in a single 

notice instead of separately for each 

metric. 

The notice of determination for the 

D/E rates measure would be issued for 

each award year that D/E rates are 

calculated for a program, after the 

period for the D/E rates challenge 

process under § 668.405 has passed, or 

any challenges are resolved. The notice 

would include a program’s final D/E 

rates, the effective date of the 

determination, and whether, based on 

the program’s final D/E rates: 

• The program is passing, failing, or 

in the zone as determined under 

proposed § 668.403; 

• The program is ineligible as 

determined under proposed § 668.403 

and, if so, the consequences as provided 

under proposed § 668.410; 

• The program could become 

ineligible based on its final D/E rates for 

the next award year; 

• The institution must provide 

warnings about the program to students 

and prospective students as provided 

under proposed § 668.410; and 

• For a program that is failing or in 

the zone under the D/E rates measure, 

instructions on how it may make an 

alternate earnings appeal or make a 

showing of mitigating circumstances 

under proposed § 668.406. 

The notice of determination for the 

pCDR measure would be issued each 

year, after the period for the pCDR 

appeals and adjustment process under 

proposed § 668.408 and subpart R has 

passed, or any appeals or requests for 

adjustment are resolved. The notice 

would include the program’s official 

pCDR, the effective date of the 

determination, and whether, based on 

the program’s official pCDR: 

• The program is passing or failing as 

determined under proposed § 668.403; 

• The program is ineligible as 

determined under proposed § 668.403 

and, if so, the consequences as provided 

under proposed § 668.410; 

• The institution must provide 

warnings about the program to students 

and prospective students as provided 

under proposed § 668.410; and, 

• For a program that has failed the 

pCDR two consecutive years or three 

consecutive years, instructions on how 

it may appeal or seek an adjustment to 

its official pCDR under proposed 

§ 668.508. 

If an institution were to pursue an 

alternate earnings appeal of a program’s 

final D/E rates, or a showing of 

mitigating circumstances, under 

proposed § 668.406, or an appeal or 

request for adjustment with respect to a 

program’s official pCDR under proposed 

§ 668.508, a subsequent notice would be 

issued with the Department’s 

determination. If the appeal or 

adjustment is successful, the notice 

would provide the recalculated final 

D/E rates or official pCDR along with 

information regarding the program’s 

status. If the showing of mitigating 

circumstances is successful, the 

institution would be notified. If an 

appeal, showing, or adjustment is 

denied, the notice would provide the 

reasons for the denial. The notice of 

determination, or subsequent notice 

after any appeals, showings, or 

adjustments are resolved, would 

constitute the final decision of the 

Secretary and would not be subject to 

further administrative review. 

The notice under the 2011 Prior Rule, 

although similar, would provide less 

information than the notice under the 

proposed regulations. Specifically, the 

Prior Rule’s notice would not include an 

effective date, categorize a program as 

one that satisfies or is failing the debt 

measures, provide information on any 

consequences, or notify an institution 

that a program is ineligible, although an 

institution would be notified separately 

of a program’s ineligibility. Also, in 

contrast to the proposed regulations, the 

notice under the 2011 Prior Rule would 

not provide instructions on appealing or 

seeking adjustments to the results of a 

GE measure. If an appeal was denied, an 

institution would be notified separately 

with the reasons for the denial. 

Reasons: As in § 668.7(f) of the 2011 

Prior Rule, proposed § 668.409 would 

establish an administrative process to 

determine, and notify an institution of, 

a program’s final GE measures. Separate 

notices of determination would be 

issued for the D/E rates and pCDR 

measures because the calculation of the 

D/E rates and pCDR will likely occur at 

different times during the year. 

In comparison to the 2011 Prior Rule, 

the notice of determination under 

proposed § 668.409 would provide more 

detailed information in a single notice 

for each metric so that an institution 

could better and more easily understand 

the results of its GE measures under the 

proposed regulations, when they would 

be effective, whether the results are final 

determinations or could be appealed or 

adjusted or could be the subject of a 

showing of mitigating circumstances, 

the consequences of the results, and any 

actions an institution would be required 

to take and by what date. With respect 

to adjustments, appeals, and showings 

of mitigating circumstances, the 

notification would include instructions 

to help ensure that institutions have a 

clear understanding of the process. 

Section 668.410 Consequences of GE 

Measures 

Current Regulations: Under § 668.7(j) 

and (l) of the 2011 Prior Rule, an 

institution would be subject to one or 

more restrictions with respect to a 

failing program, a program that was 

made ineligible under the 2011 Prior 

Rule, or a program that was voluntarily 

discontinued at the time it was failing. 

Debt Warnings 

For a failing program, an institution 

would be required to provide currently 

enrolled and prospective students with 

debt warnings that would vary in 

urgency based on whether the program 

failed the GE measures for a single fiscal 

year (‘‘first year warning’’) or for two 

consecutive or two out of the three most 

recent fiscal years (‘‘second year 

warning’’). The warnings would be 

required to be prepared in plain 

language and in an easy-to-understand 

format. Further, to the extent 

practicable, institutions would be 

required to provide alternatives to 

English language warnings for those 

students for whom English is not their 

first language. 

In the first-year warning, an 

institution would be required to explain 

the debt measures, show the amount by 

which the program failed to meet the 

standards, and describe how the 

institution plans to improve the 

program’s performance under the debt 

measures. The institution would be 

required to deliver the first-year 

warning orally or in writing directly to 

students in accordance with procedures 

established by the institution. ‘‘Directly 

to students’’ would include 

communicating with the student inperson, telephonically, as a part of a 

group presentation, or by email to the 

student’s email address. In the case of 

an oral warning, the institution would 

be required to document how the 

information was provided, any materials 

used, and that the student was present. 

In the stronger second-year warning, 

an institution would be required to 

include the same information as the 

first-year warning and, additionally, a 

clear and conspicuous statement that a 

student who enrolls or continues in the 

program should expect to have 

difficulty repaying his or her student 

loans, an explanation of the actions the 

institution plans to take in response to 

the second failure, if the institution 

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plans to discontinue the program, the 

timeline and options available to 

students, the risks associated with 

enrolling or continuing in the program, 

including the potential consequences of 

ineligibility and options available to 

students in such an event, and resources 

available to students, including 

www.collegenavigator.gov, to research 

other educational options and compare 

program costs. An institution would be 

required to provide the second-year 

warning in writing and display the 

required information on the program’s 

main Web page and in all promotional 

materials. An institution would have the 

option to include the second-year 

warning in the required disclosures 

under the 2011 Current Rule. The 

second-year warnings would have to be 

provided until the program meets one of 

the debt measures for two out of the 

three most recent fiscal years. 

For students enrolled in a failing 

program, an institution would be 

required to provide the relevant debt 

warning as soon as administratively 

feasible but no later than 30 days from 

the date that the Secretary notifies the 

institution that the program failed the 

debt measures. With respect to 

prospective students, an institution 

would be required to provide the 

relevant warning at the time the student 

first contacts the institution requesting 

information about a failing program. If 

the prospective student intends to use 

title IV, HEA program funds for 

attendance in the program, an 

institution would be prohibited from 

enrolling the prospective student in the 

program until three days after providing 

the debt warning, and, if more than 30 

days pass from when the debt warning 

was first provided and the date the 

student seeks to enroll in the program, 

the institution would be required to 

provide the debt warning again and wait 

three days from that date before 

enrolling the student. 

Ineligibility for Title IV, HEA Program 

Funds 

Except as provided in § 668.26(d) of 

the 2011 Prior Rule, an institution 

would be prohibited from disbursing 

title IV, HEA program funds to students 

enrolled in a program that becomes 

ineligible as a result of failing to meet 

the minimum standards for three out of 

the four most recent fiscal years. 

Period of Ineligibility 

A program that becomes ineligible 

under the 2011 Prior Rule, or a failing 

program that is voluntarily 

discontinued, would remain ineligible 

until the institution reestablishes the 

eligibility of that program. 

For an ineligible program, or a 

program that is substantially similar to 

an ineligible program, an institution 

would not be able to reestablish 

eligibility until the end of three fiscal 

years after the fiscal year in which the 

program is made ineligible. A program 

would be substantially similar to an 

ineligible program if it has the same 

credential level and first four digits of 

the CIP code. 

For a voluntarily discontinued failing 

program, an institution would not be 

able to reestablish eligibility until the 

end of two fiscal years after the fiscal 

year in which the program is 

discontinued if it is discontinued at any 

time after the program is determined to 

be failing but no later than 90 days after 

the date that the Secretary notifies the 

institution that it would be required to 

provide a second-year debt warning 

with respect to the program. If the 

program is voluntarily discontinued 

more than 90 days after the date that the 

Secretary notifies the institution that it 

would be required to provide a secondyear debt warning, an institution would 

not be able to reestablish eligibility until 

three fiscal years after the fiscal year in 

which the program is discontinued. A 

failing program would be deemed as 

voluntarily discontinued on the date the 

institution provides written notice to 

the Secretary that it relinquishes title IV, 

HEA program eligibility. 

Proposed Regulations: Although the 

proposed regulations and the 2011 Prior 

Rule provide for similar consequences, 

the circumstances under which they 

would be imposed and their specific 

requirements differ in many respects. 

Student Warning 

Under proposed § 668.410(a), within 

30 days of receiving a notice of 

determination under § 668.409 stating 

that a GE program could become 

ineligible based on its final D/E rates for 

the next award year or based on its next 

official pCDR, an institution would be 

required to provide a written warning 

directly to each student enrolled in the 

program and include the student 

warning on the program’s disclosure 

template under proposed § 668.412. The 

following statement would be required 

to be included in the student warning: 

‘‘You may not be able to use federal 

student grants or loans to pay for this 

institution’s program next year because 

the program is currently failing 

standards established by the U.S. 

Department of Education. The 

Department set these standards to help 

ensure that you are able to find gainful 

employment in a recognized occupation 

and are not burdened by loan debt you 

may not be able to repay. A program 

that doesn’t meet these standards may 

lose the ability to provide students with 

access to federal financial aid to pay for 

the program.’’ 

The proposed regulations would 

permit the Secretary to modify the 

statement or establish an alternative 

statement in a notice published in the 

Federal Register, after providing the 

general public and Federal agencies 

with an opportunity to comment in 

connection with the approval process 

under the Paperwork Reduction Act of 

1995 (PRA). Before finalizing the 

statement and the manner in which it 

would be presented, the Department 

would conduct consumer testing to 

ensure that the content of the statement 

advances the goals of the warning, the 

language is understandable for the 

intended audience, the manner of 

delivery is effective, and the warning is, 

on the whole, useful for consumers. 

As a part of the student warning, the 

institution would also be required to 

describe the options available to 

enrolled students to continue their 

education at the institution, or at 

another institution, in the event the 

program loses its eligibility for title IV, 

HEA program funds and inform 

students as to whether or not, if the 

program becomes ineligible, it would: 

• Allow the student to transfer to 

another program at the institution; 

• Continue to provide instruction in 

the program to allow the student to 

complete the program; and 

• Refund the tuition, fees, and other 

required charges paid by, or on behalf 

of, the student for enrolling in the 

program. 

The proposed regulations would 

require that the warning be given 

directly to the student, meaning that the 

warning must be hand-delivered to the 

student individually or as part of a 

group presentation, or must be sent to 

the primary email address used by the 

institution for communicating with the 

student. Further, as under the 2011 

Prior Rule, to the extent practicable, 

institutions would be required to 

provide the warnings in alternative 

languages to students whose first 

language is not English. 

Proposed § 668.410(a)(2) would 

require the institution to provide this 

same warning to a prospective student 

at the time the prospective student first 

contacts, or is contacted by, the 

institution about a GE program. Further, 

the institution would not be able to 

enroll, register, or enter into a financial 

commitment with the prospective 

student for the program until: 

• Three business days after the 

warning was first provided; or 

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• If more than 30 days pass from the 

date the warning is first provided, three 

business days after the institution 

provides another warning. 

Ineligibility for Title IV, HEA Program 

Funds 

If a program loses title IV, HEA 

eligibility, under proposed 

§ 668.410(b)(1), except for the limited 

disbursements permitted under 34 CFR 

668.26(d), an institution would be 

prohibited from disbursing title IV, HEA 

program funds to students enrolled in 

the program. 

Period of Ineligibility 

For an ineligible program, voluntarily 

discontinued failing or zone program, or 

program that is substantially similar to 

an ineligible program or voluntarily 

discontinued failing or zone program, 

an institution would not be able to 

reestablish title IV, HEA program 

eligibility under § 668.414 for three 

calendar years. In the case of an 

ineligible program, this three-year 

period would begin on the date 

specified in the notice of determination, 

under § 668.409, that the program is 

ineligible. For a voluntarily 

discontinued program, the three-year 

period would begin on the date the 

institution provides written notice to 

the Secretary that it relinquishes title IV, 

HEA program eligibility. 

Reasons: We have two overarching 

goals for the proposed regulations: (1) 

To establish an accountability 

framework for GE programs and (2) to 

increase the transparency of GE program 

student outcomes. To achieve these 

goals, we have proposed accountability 

metrics—D/E rates and pCDR—that we 

believe are reasonable and valuable 

measures of a program’s student 

outcomes. In proposed § 668.410, we 

propose consequences that would be 

imposed on institutions based on the 

results of their GE programs under the 

accountability metrics that serve both 

our accountability goal and our 

transparency goal. 

The proposed regulations would 

largely adopt the consequences set forth 

in the 2011 Prior Rule. They differ from 

the 2011 Prior Rule in the timing and 

content of the language for the student 

warning and in the period of time before 

which ineligible programs can 

reestablish title IV, HEA program 

eligibility. From a policy perspective, 

the significant differences are largely 

attributable to our desire, consistent 

with our transparency goals, to 

streamline the student warning process 

so that the message is more accessible 

to students and prospective students, to 

facilitate institutional compliance by 

reducing administrative burden, and to 

motivate continuous improvement by 

institutions with respect to their GE 

programs or face termination of program 

eligibility for title IV, HEA program 

funds. 

Student Warning 

The accountability framework of the 

proposed regulations reflects our belief 

that, particularly in the initial years of 

the proposed regulations, institutions 

should be given time and incentive to 

improve those programs that are not 

among the very worst, but still have 

outcomes that do not meet minimum 

acceptable levels of performance. We 

recognize, however, that some of these 

programs may not improve, or improve 

sufficiently, and may consequently lose 

eligibility for title IV, HEA program 

funds. A program’s loss of eligibility 

could make it impossible for some 

students to complete that GE program. 

Given the adverse effects on students 

that may arise from a program’s loss of 

title IV, HEA program eligibility, we 

believe that students should be warned 

if a program could lose eligibility based 

on its next result under one or both of 

the GE measures. Such warnings would 

inform decisions of currently enrolled 

students with respect to their 

continuing financial investment in the 

program, and would enable prospective 

students to make informed decisions 

when choosing among similar programs 

offered at one institution, or at several 

institutions. 

The proposed student warning differs 

from the 2011 Prior Rules in that there 

would only be one type of warning 

instead of two, and the warning would 

only be required when a GE program 

could become ineligible based on its 

final D/E rates or official pCDR for the 

next year instead of after a first failure. 

Additionally, the proposed student 

warning focuses more narrowly than the 

warnings under the 2011 Prior Rule on 

the information that prospective and 

enrolled students urgently need to have 

in considering whether to begin or 

continue enrollment in a program facing 

the possible loss of eligibility. 

The proposed regulations include the 

text that institutions would use for the 

student warning in order to standardize 

the warning and ensure that the 

necessary information is conveyed to 

students. This particular language was 

chosen because we believe it would be 

simple and easy to comprehend for 

students. However, we intend to 

conduct consumer testing to better 

understand how different groups of 

students would receive and process this 

information, and may modify our 

proposed language based on the results 

of that testing. As proposed, the warning 

would alert both prospective and 

enrolled students that a GE program 

may lose eligibility for title IV, HEA 

program funds and explain the 

implications of ineligibility. In addition, 

for enrolled students, the warning 

would indicate the options that would 

be available to continue their education 

at the institution or at another 

institution, if the program lost its title 

IV, HEA program eligibility. 

We believe this simplified warning 

and statement of options provides more 

useful information than what was 

required by the 2011 Prior Rule. The 

statement that a program may lose the 

ability to provide students with access 

to title IV, HEA program funds is critical 

for students so that they can use that 

information to decide whether and 

when to enroll in a similar, passing 

program at another institution or in a 

passing program at the same institution. 

Requiring that the warning be provided 

directly to a student is intended to make 

it more likely that the student will 

benefit from the information. Further, 

requiring that at least three days must 

pass before the institution could enroll 

a prospective student would provide a 

‘‘cooling-off period’’ for the student to 

consider the information contained in 

the warning without direct pressure 

from the institution, and also provide 

the student with time to consider 

alternatives to the program either at the 

same institution or at another 

institution. 

The negotiators representing students, 

legal aid organizations, and State 

Attorneys General generally urged the 

Department to revise the draft 

regulations to make the student warning 

more understandable and more widely 

available. They believed that 

institutions should begin providing the 

student warning earlier than in the year 

before the GE program could become 

ineligible, recommending that students 

should also receive this information in 

any year in which a GE program is 

identified as a zone program. They 

argued that as soon as it is available, 

students should have any information 

that indicates that a program for which 

they are spending significant time and 

money, including title IV, HEA program 

funds, may not ultimately be a good 

investment. Similarly, some negotiators 

proposed that a less stringent warning 

be required for a zone program that is 

not at risk of losing eligibility in the 

following year, and suggested that the 

Department issue an alert instead of a 

warning when a program first enters the 

zone, with the alert or warning 

becoming stronger as the program 

moves closer to becoming ineligible. 

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Additionally, the negotiators were 

concerned that bad actors would 

undermine the value of the student 

warning by hiding the information or 

downplaying the message of the 

warning. They suggested that the 

Department require institutions to post 

the warning in classrooms where the GE 

program is offered, in the financial aid 

office, and in other places where 

students would likely see it. 

With respect to the language of the 

student warning, the negotiators 

representing consumer advocates raised 

concerns that specifying language to be 

included in the student warning would 

limit the Department’s ability to alter 

the required text to make it more 

meaningful based on experience. They 

urged the Department to commit to use 

focus groups to test and refine the 

language and format of the warning to 

ensure that students, including those 

with limited English proficiency or 

lower literacy levels, would understand 

the content and implications. 

Lastly, negotiators representing 

consumer advocates urged the 

Department to require an institution to 

provide the warning to a prospective 

student at the time that the student first 

contacts, or is contacted by, the 

institution about the GE program and 

before a student signs an enrollment 

agreement or otherwise makes a 

financial commitment for the program. 

They noted that in many cases, an 

institution will contact a prospective 

student before the student requests 

information from the school. For 

example, some institutions contact a 

prospective student visiting the Web 

site for a particular GE program via a 

live chat. The negotiators stated that it 

was important to capture this type of 

contact in the regulations in order to 

prevent schools from convincing a 

student to commit to the program before 

giving them the required warning. 

Along these same lines, these 

negotiators argued that it is critical for 

prospective students to receive the 

warning before they sign an enrollment 

agreement, as opposed to at the time 

they sign, because once a student has 

committed to signing, the warning 

would have little to no effect. 

Although the other negotiators 

generally agreed that it is important to 

warn students when a program is close 

to losing eligibility for title IV, HEA 

program funds, some raised concerns 

about the Department’s approach. With 

regard to the proposal that institutions 

would have to describe any options 

available to students to continue their 

education at another institution in the 

event that the program loses eligibility 

for title IV, HEA program funds, one of 

the negotiators noted that it is not 

always possible for a student to transfer 

to another institution. The negotiator 

pointed out that, particularly in rural 

areas, there may not be another 

institution within close proximity to the 

student that is offering a similar GE 

program. Additionally, the negotiator 

noted that, even if there were another 

institution nearby that was offering a 

similar program, there is no guarantee 

that the institution would allow the 

student to transfer into the program. 

Another negotiator noted that the 

warning could be problematic for 

institutions in which the typical 

program length is one and a half 

academic years. The negotiator raised 

concerns that in those cases, a warning 

telling students that they may not be 

able to use Federal student grants or 

loans to pay for the program could be 

misleading because students enrolled in 

the program could complete the 

program before it lost eligibility. The 

negotiator argued that providing the 

warning to enrolled students in these 

cases could cause students to leave the 

program unnecessarily when they could 

have completed and achieved their 

academic goals. Similarly, some of the 

negotiators were concerned about 

having to provide the warning to 

prospective students who would not be 

affected by a program’s loss of title IV, 

HEA program eligibility, such as foreign 

students. They recommended adding 

language specifying that the warning 

must only be provided to a student who 

could be affected by a program’s loss of 

eligibility before they are likely to 

complete the program. 

We have considered the concerns 

raised during the negotiations about the 

student warning, and we have taken 

into account many of the suggestions 

and concerns in the proposed 

regulations. Although we understand 

the position that students should 

receive a warning or, at a minimum, a 

lower-level alert when a GE program is 

in the zone, we believe that it is 

important, particularly in the initial 

years of the rule, to give institutions a 

period of time to improve, without 

restrictions, those programs that are 

either in the zone or not at risk of losing 

eligibility under the GE measures in the 

following year. Similarly, in future 

years, sufficient time should be allowed 

without restrictions to determine 

whether a program’s poor results are 

atypical or whether they reflect a true 

decrease in its value. Accordingly, we 

would limit instances where a warning 

would be required to potential losses of 

eligibility under the D/E rates or the 

pCDR measure in the following year. We 

believe that using one warning instead 

of the two different warnings provided 

in the 2011 Prior Rule would reduce the 

complexity of this requirement, 

facilitating institutional compliance so 

that it is more likely that students 

receive this valuable information when 

they need it most. 

The proposed regulatory language is 

also intended to alleviate concerns that 

institutions may try to downplay the 

warnings. First, we have added language 

clarifying that providing a written 

warning ‘‘directly’’ to enrolled students 

means hand-delivering the warning to a 

student individually or as part of a 

group presentation, or sending the 

warning to the primary email address 

used by the institution for 

communicating with the student about 

the program. We believe that this 

addition would make it clearer to 

institutions what they are required to do 

and better ensure that students receive 

the important message intended to be 

conveyed by the warning. We invite 

comment on methods to make it even 

more likely that students would receive 

the warning but at the same time would 

not create overly burdensome 

requirements for institutions. 

Second, we have added proposed 

language clarifying that the warnings 

must be given to a prospective student 

when the student first contacts the 

institution or is contacted by the 

institution with respect to a GE program 

and requiring institutions to provide the 

warning before a student enrolls, and 

not at the time of enrollment, to prevent 

an institution from manipulating 

students into committing to enroll 

before it provided the required warning. 

An institution should maintain records 

that showed the warning was provided 

prior to a student enrolling at an 

institution. § 668.24(a)(3). 

We note, also, that under proposed 

§ 668.412(b)(2), within 30 days of 

receiving notice from the Secretary that 

the student warning is required for a GE 

program, an institution would be 

required to update the program’s 

disclosure template to include the 

warning. We believe that incorporating 

the student warning into the disclosure 

template, which has a set format and 

standard text and which must be 

provided via a prominent, readily 

accessible, clear, conspicuous, and 

direct link from the program’s Web site 

would limit manipulation of the 

warning text or presentation to 

prospective students. For a prospective 

student, we would also require the 

institution to obtain the student’s 

signature on a written disclosure, as this 

would ensure that the student reviews 

the information in the warning before 

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63 In response to these objections, we noted that 

the Department had already expressly interpreted 

section 437(c) of the HEA in controlling regulations 

making a financial commitment to the 

institution. 

In the proposed regulations, we have 

added that we would conduct consumer 

testing to ensure that the content of the 

statement advances the goals of the 

warning, the language is understandable 

for the intended audience, the manner 

of delivery is effective, and the warning 

is, on the whole, useful for consumers— 

that is, it clearly communicates to 

students the risks associated with 

enrolling or continuing enrollment in a 

program that could soon become 

ineligible. The proposed regulations 

would allow the Secretary to improve 

the warning language by publishing a 

notice in the Federal Register with any 

changes to the text, after providing the 

general public and Federal agencies 

with an opportunity to comment in 

connection with the approval process 

under the PRA. 

With regard to the concern expressed 

by some negotiators that students may 

not realistically have the option to 

transfer to a similar GE program at 

another institution, the proposed 

regulations would not mandate that 

institutions take affirmative steps to 

secure transfers for its students but, 

rather, would require that institutions 

tell students whether or not transfer 

options are available at the same 

institution or another institution. In 

response to the concerns of the 

negotiator who noted that in some cases 

the warning would discourage students 

in short-term programs from completing 

their programs, we believe that the 

potential timing for the loss of eligibility 

would still be important information for 

those students to be aware of. Further, 

we note that some programs may be 

short enough, or an enrolled student 

may have already completed enough of 

the program, that the potential loss of 

the program’s title IV, HEA program 

eligibility in the following year would 

not be a concern. 

In addition, we understand 

institutional concerns about providing 

the warning to prospective students 

who are categorically ineligible for title 

IV, HEA program funds. Institutions 

would be responsible for ensuring that 

any prospective student who could get 

title IV, HEA program funds receives the 

warning, but institutions would not be 

required to provide the warning to 

specific groups of prospective students 

whom they know would not be eligible 

for title IV, HEA program funds for 

enrolling in that program, such as 

foreign students. 

Program Eligibility Restrictions 

As stated, our proposed 

accountability framework is designed to 

provide an opportunity and strong 

incentive, particularly in the initial 

years of the proposed regulations, for 

institutions to improve poorly 

performing programs before loss of title 

IV, HEA program eligibility occurs. At 

the same time students, prospective 

students, and their families and the 

public, taxpayers, and the Government 

must be protected. There is no greater 

incentive to improve than the potential 

loss of eligibility. But, for programs that 

do not improve, the eventual loss of 

eligibility protects students by 

preventing them from enrolling in 

programs that have consistently 

produced poor student outcomes. 

As in the 2011 Prior Rule, the 

proposed regulations would establish a 

period of time before an ineligible or 

voluntarily discontinued program could 

regain eligibility. However, unlike in the 

2011 Prior Rule where the length of the 

waiting period varied depending on 

whether the program was made 

ineligible or if it was voluntarily 

discontinued, and when it was 

discontinued, the proposed regulations 

would use a single, three-year waiting 

period without regard to whether a 

program became ineligible or was 

voluntarily discontinued. 

Although the negotiators generally 

did not raise concerns about the threeyear waiting period, one of the 

negotiators believed that an institution 

that voluntarily discontinues a program 

should always have to abide by the 

three-year waiting period before seeking 

to reestablish the eligibility of the 

program, regardless of whether the 

program was failing, passing, or in the 

zone. We believe that it is more 

appropriate to impose this period of 

ineligibility only on programs 

determined to be failing or in the zone 

because there could be legitimate 

reasons for discontinuing a passing 

program, and, further, we do not wish 

to impose restrictions on an institution 

where a program is meeting the 

standards of the accountability metrics. 

During the negotiated rulemaking 

sessions members of the negotiated 

rulemaking committee raised proposals 

to create borrower relief provisions for 

students in programs that fail the GE 

measures and to place additional 

restrictions on those program. The 

Department had proposed, for a program 

that does not pass the GE measures and 

is in jeopardy of losing its eligibility for 

title IV, HEA program funds, in addition 

to the student warning requirement, 

limits on the number of students eligible 

for title IV, HEA program funds who 

could be enrolled in the program. In 

response to the negotiators’ concerns, 

the Department also proposed, in those 

circumstances, to require institutions to 

make arrangements to reduce student 

debt. We have not included these 

additional consequences in the 

proposed regulations. 

We have not included enrollment 

limits in the proposed regulations as we 

believe that providing warnings to 

students and prospective students about 

potentially ineligible programs, along 

with the information that would be 

available through the required 

disclosures, provide meaningful 

protections and will sufficiently enable 

students and their families to make 

informed decisions about their 

educational investment. However, we 

invite comment on whether enrollment 

limits should be imposed on programs 

that could become ineligible and how 

those limits could be practically 

implemented. 

We developed our debt reduction 

proposal in response to suggestions 

from negotiators representing consumer 

advocates and students. These 

negotiators argued that, while a failing 

or zone program would be allowed 

several years to pass the GE measures 

before becoming ineligible, students 

would continue to borrow to attend a 

program that the Department, based on 

the proposed regulations, may not 

reasonably expect would lead to gainful 

employment. Moreover, in the event a 

program lost eligibility under the GE 

measures, enrolled students would still 

be responsible for the debt they 

accumulated despite the fact they could 

not complete a program identified by 

the Department as failing the 

performance metrics. 

To address this, the negotiators 

argued that the Department should 

provide loan discharges under section 

437(c) of the HEA to students who 

borrowed for attending a program that 

loses eligibility under the GE measures. 

They contended that these borrowers 

would also have claims against the 

institution for enrolling them in a 

program that was offered as an eligible 

program, but that in fact did not meet 

the eligibility requirements proposed in 

the regulations. They observed that 

Federal regulations implementing 

section 455(h) of the HEA, 20 U.S.C. 

1087e(h), allow a Direct Loan borrower 

to assert, as a defense to loan 

repayment, any claim that the borrower 

has against the institution, and that this 

existing regulation would apply to the 

case of a program that did not meet the 

standards of the proposed regulations. 

34 CFR 685.206(c).63 These negotiators 

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to provide no relief for a claim that the loan was 

arranged for enrollment in an institution that was 

ineligible, or that the institution arranged the loan 

for enrollment in an ‘‘ineligible program.’’ 34 CFR 

682.402(e); 59 FR 22470 (April 29, 1994), 59 FR 

2490 (Jan. 14, 1994). 

further urged the Department to 

formally adopt, as a defense to loan 

repayment, a program’s failure to pass 

the GE measures, whether or not the 

program eventually lost eligibility. 

Additionally, the negotiators suggested 

a variety of other remedies, including 

requiring institutions to refund tuition 

paid for a program that loses eligibility, 

requiring institutions to post a surety 

bond or letter of credit when a program 

receives a zone or failing result in order 

to provide for relief in the event that the 

program later becomes ineligible, and 

requiring all institutions intending to 

offer a GE program to contribute to a 

‘‘common pool’’ fund to be 

administered by the Department that 

would be used to provide debt relief to 

students affected by a program’s loss of 

eligibility. 

One of the non-Federal negotiators 

submitted a proposal that would allow 

a program that did not pass the GE 

measures to remain eligible if the 

institution implemented a debt 

reduction plan that would reduce 

borrowing to levels that would meet the 

GE measures. 

In response, at the second and third 

negotiating sessions, we drew on the 

negotiator proposals and presented 

regulatory provisions that would have 

required an institution with a program 

that could lose eligibility the following 

year to make sufficient funds available 

to enable the Department, if the program 

became ineligible, to reduce the debt 

burden of students who attended the 

program during that year. The amount 

of funds would have been 

approximately the amount needed to 

reduce the debt burden of students to 

the level necessary for the program to 

pass the GE measures. If the program 

were to lose eligibility, the Department 

would use the funds provided by the 

institution to pay down the loans of 

students who were enrolled at that time 

or who attended the program during the 

following year. We also included 

provisions that would allow an 

institution, during the transition period, 

to avoid these requirements by offering 

to every enrolled student for the 

duration of their program, and every 

student who subsequently enrolled 

while the program’s eligibility remained 

in jeopardy, institutional grants in the 

amounts necessary to reduce loan debt 

to a level that would result in the 

program passing the GE measures. If an 

institution took advantage of this 

option, a program that would otherwise 

lose eligibility would avoid that 

consequence during the transition 

period. 

Negotiators voiced numerous 

concerns about the proposed borrower 

relief provisions. These included 

whether the proposals would be 

sufficient to compensate students for 

enrolling in an ineligible program, what 

cohort of students would receive relief, 

the extent of the relief to be provided, 

how any monetary amounts would be 

calculated, and costs that would be 

incurred by institutions in providing 

relief. The nature of these discussions 

made clear that these are very complex 

issues that warrant further exploration. 

Accordingly, we are not including 

proposed language regarding borrower 

relief in the regulations and request 

comment on these issues, including 

other options that the Department could 

consider to address borrower relief 

concerns. 

In addition to the specific concerns 

discussed about the proposed 

consequences, some of the negotiators 

raised general concerns about how these 

consequences would be implemented. 

In particular, some institutional 

representatives on the negotiating 

committee were concerned that having 

separate notices of determination for the 

D/E rates measure and for the pCDR 

measure, indicating different start dates 

for the various consequences, would be 

difficult for institutions to track and 

implement. In this regard, the 

Department has in place an annual 

process to determine CDRs for 

institutions, and the additional steps 

needed to determine a pCDR for a GE 

program would be built into that 

existing framework and timelines. We 

believe that this approach, as opposed 

to establishing an alternative process, 

would minimize the additional burden 

for institutions. There is no functional 

need to synchronize the calculation of 

the D/E rates and the pCDR as the 

information used for each measure is 

distinct and tied to different cohorts of 

students and different time periods. 

Section 668.411 Reporting 

Requirements for GE Programs 

Current Regulations: Under § 668.6(a) 

of the 2011 Prior Rule, an institution 

would be required to annually submit to 

the Department information about each 

student, regardless of whether the 

student received title IV, HEA program 

funds, who enrolled in a program that 

prepares students for gainful 

employment in a recognized occupation 

during an award year. Institutions 

would report, in addition to student 

identifiers (name, Social Security 

Number, and date of birth), the name, 

CIP code, and credential level of the 

program in which the student is 

enrolled, the date the student began 

enrollment in the program, the student’s 

enrollment dates during the award year, 

and the student’s attendance status at 

the end of the award year (i.e., 

completed, withdrew, or still enrolled). 

If the student completed the program 

during the award year, the institution 

would also report the date the student 

completed the program, amounts the 

student received from private 

educational loans and institutional 

financing, and whether the student 

matriculated to a higher credentialed 

program at the institution or any 

available evidence that the student 

transferred to a higher credentialed 

program at another institution. 

Additionally, under the 2011 Prior 

Rule, for each gainful employment 

program, institutions would be required 

to report, by name and CIP code, the 

total number of students enrolled in the 

program at the end of each award year 

and identifying information for those 

students. In regard to the definition of 

CIP code, § 600.10(c)(2)(ii) of the 2011 

Prior Rule refers, with respect to an 

additional education program, to 

programs with a CIP code under the 

taxonomy of instructional program 

classifications and descriptions 

developed by NCES. Section 668.7(a)(2) 

of the 2011 Prior Rule also specifies the 

credential levels for a program. 

Finally, under the 2011 Prior Rule, an 

institution would be required to provide 

an explanation, acceptable to the 

Secretary, of why the institution failed 

to comply with any of the reporting 

requirements. 

Proposed Regulations: Under 

proposed § 668.411, institutions would 

report, for each award year, information 

about each student who was enrolled in 

a GE program and received title IV, HEA 

program funds for enrolling in that 

program. 

Specifically, under the proposed 

regulations, the required reporting 

would include: 

• Information needed to confirm the 

identity of the student, such as the 

student’s name, Social Security 

Number, and date of birth and the 

institution; 

• The name, CIP code, credential 

level, and length of the GE program; 

• Whether the GE program is a 

medical or dental program whose 

students are required to complete an 

internship or residency; 

• The date the student first enrolled 

in the GE program; 

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• The student’s attendance dates and 

attendance status in the GE program 

during the award year; and 

• The student’s enrollment status 

(i.e., full-time, three-quarter time, halftime, less than half-time) as of the first 

day of the student’s enrollment in the 

program. 

Further, if the student completed or 

withdrew from the GE program during 

the award year, the institution would 

report: 

• The date the student completed or 

withdrew from the program; 

• The total amount the student 

received from private education loans 

for enrollment in the program that the 

institution is, or should reasonably be, 

aware of; 

• The total amount of institutional 

debt incurred for enrollment in the 

program that the student owes any party 

after completing or withdrawing from 

the program; 

• The total amount of tuition and fees 

assessed the student for the student’s 

entire enrollment in the GE program; 

and 

• The total amount of the allowances 

for books, supplies, and equipment 

included in the student’s title IV Cost of 

Attendance, pursuant to section 472 of 

the HEA, for each award year in which 

the student was enrolled in the program, 

or a higher amount if assessed the 

student by the institution. 

Finally, as in the 2011 Prior Rule, the 

proposed regulations would require an 

institution to provide to the Secretary an 

explanation, acceptable to the Secretary, 

of why the institution failed to comply 

with any of the reporting requirements. 

No later than July 31 of the year the 

regulations take effect, institutions 

would be required to report this 

information for the second through 

seventh award years prior to that date. 

For medical and dental programs that 

require an internship or residency, 

institutions would need to include the 

eighth award year prior to July 31. For 

all subsequent award years, institutions 

would report not later than October 1 

following the end of the award year, 

unless the Secretary establishes a later 

date in a notice published in the 

Federal Register. The proposed 

regulations would give the Secretary the 

authority to, through a notice published 

in the Federal Register, specify a 

reporting deadline later than October 1, 

as well as the authority to identify 

additional reporting items, after 

providing the general public and 

Federal agencies with an opportunity to 

comment in connection with the 

approval process under the PRA. 

For example, if these regulations 

become effective on July 1, 2015, 

institutions must report information for 

the 2008–2009 through the 2013–2014 

award years no later than July 31, 2015. 

For medical and dental programs, the 

institution must also include 

information from the 2007–2008 award 

year. 

Under this example, unless the 

Secretary establishes a later date by 

notice in the Federal Register, 

institutions must report information for 

the 2014–2015 award year by October 1, 

2015, and continue to report each 

subsequent award year by October 1 

following the end of the award year on 

June 30. 

We note that the terms ‘‘CIP code’’ 

and ‘‘credential level,’’ which are 

defined in proposed § 668.402, are first 

substantively used in proposed 

§ 668.411 and are therefore explained 

here. The proposed regulations contain 

similar definitions as the 2011 Prior 

Rule; however, we have included 

separate definitions of both of these 

terms in § 668.402. In our proposed 

definition of CIP code, we refer, as we 

did in the 2011 Prior Rule, to a 

taxonomy of instructional program 

classifications and descriptions as 

developed by NCES. In the definition of 

‘‘credential level,’’ we are identifying 

more specific credential levels than we 

did in the 2011 Prior Rule and have 

broken some of those levels into subcategories. Thus, the undergraduate 

credential levels would be: less than one 

year undergraduate certificate or 

diploma, one year or longer but less 

than two years undergraduate certificate 

or diploma, two years or longer 

undergraduate certificate or diploma, 

associate degree, and bachelor’s degree; 

and the graduate credential levels 

would be post-baccalaureate certificate 

(including postgraduate certificates), 

graduate certificate, master’s degree, 

doctoral degree, and first-professional 

degree (e.g., MD, DDS, JD). 

Reasons: Certain student-specific 

information is necessary for the 

Department to implement the provisions 

of proposed subpart Q, specifically to 

calculate the D/E rates and the pCDR for 

GE programs under the accountability 

framework. This information is also 

needed to calculate the completion 

rates, withdrawal rates, repayment rates, 

median loan debt, and median earnings 

disclosures under proposed § 668.412. 

As discussed in ‘‘§ 668.401 Scope and 

purpose,’’ the proposed reporting 

requirements are designed, in part, to 

facilitate the accountability of 

institutions for, and the transparency of, 

GE program student outcomes by: 

ensuring that students, prospective 

students, and their families, the public, 

taxpayers, and the Government, and 

institutions have timely and relevant 

information about GE programs to 

inform student and prospective student 

decision-making; help the public, 

taxpayers, and the Government to 

monitor the results of the Federal 

investment in these programs; and allow 

institutions to see which programs 

produce exceptional results for students 

so that those programs may be 

emulated. 

Unlike in the 2011 Prior Rule, under 

the proposed regulations, institutions 

would not report information on 

students who did not receive title IV, 

HEA program funds for enrollment in 

the GE program. To align the proposed 

regulations with the court’s 

interpretation of relevant law in APSCU 

v. Duncan and better monitor the 

Federal investment in GE programs, we 

have defined ‘‘student’’ for the purpose 

of subpart Q to be an individual who 

receives title IV, HEA program funds for 

enrollment in the applicable program. 

See ‘‘§ 668.401 Scope and purpose’’ for 

a complete discussion of the definition 

of ‘‘student.’’ The proposed regulations 

also differ from the 2011 Prior Rule in 

that the proposed regulations add the 

reporting of information necessary to 

implement provisions of proposed 

subpart Q that were not in the 2011 

Prior Rule and, conversely, do not 

include requirements that were relevant 

to provisions in the 2011 Prior Rule that 

are not in the proposed regulations. 

To enable the Secretary to calculate a 

program’s GE measures and the relevant 

disclosures, an institution would be 

required to provide information to 

identify itself, the student, and the GE 

program in which the student was 

enrolled during the award year. 

The proposed regulations would 

require institutions to report the length 

of the program. Under § 668.6 in the 

2011 Current Rule, an institution is 

required to make several disclosures 

that are tied closely to the definition of 

‘‘normal time,’’ namely, the tuition and 

fees it charges a student for completing 

the program within normal time, as well 

as the percentage of students who 

completed the program within normal 

time (the on-time graduation rate). 

‘‘Normal time’’ is defined in § 668.41(a) 

as ‘‘the amount of time necessary for a 

student to complete all requirements for 

a degree or certificate, according to the 

institution’s catalog.’’ 

In the proposed regulations, 

particularly in the reporting and 

disclosure requirements in §§ 668.411 

and 668.412, we refer to the ‘‘length of 

the program’’ instead of to the ‘‘normal 

time’’ of the program. The ‘‘length of the 

program’’ would be defined as the 

amount of time in weeks, months, or 

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years that is specified in the 

institution’s catalog, marketing 

materials, or other official publications 

for a student to complete the 

requirements needed to obtain the 

degree or credential offered by the 

program. The institution would report 

this information under § 668.411 and 

disclose the information under 

§ 668.412(a)(3). 

Although the substance of the 

definitions of ‘‘normal time’’ and 

‘‘length of the program’’ is similar, we 

believe that the change in terminology 

is necessary to promote uniformity in 

the reporting requirements between the 

proposed regulations and the Moving 

Ahead for Progress in the 21st Century 

Act (MAP–21) that amended the HEA. 

MAP–21 limits a borrower’s receipt of 

Direct Subsidized Loans to ‘‘a period 

equal to 150 percent of the published 

length of the educational program in 

which the student is enrolled.’’ 

Accordingly, the Department must 

collect the published length of the 

program to determine the borrower’s 

maximum eligibility for such loans. 

Consistent with guidance issued by the 

Department for § 668.6(b) and in the 

preamble to the Interim Final 

Regulations establishing 34 CFR 

685.200(f), published May 16, 2013, in 

the Federal Register (78 FR 28953), the 

length of the program that an institution 

must report is the amount of time that 

it takes full-time students to complete 

the program. This must be reported and 

disclosed in terms of calendar time— 

weeks, months, or years. We also 

believe that requiring this disclosure 

along with credential level disclosures 

would provide greater transparency 

about whether the length of the program 

is appropriate in light of the credential 

to be attained. Although the Department 

makes this type of assessment under 

§ 668.14(a)(26), we request comment on 

other ways the Department could ensure 

that program lengths identified by 

institutions in their program 

participation agreements are appropriate 

given the credential level for the 

program. 

In § 668.402 of the proposed 

regulations, we would establish separate 

definitions for ‘‘CIP code’’ and 

‘‘credential level.’’ The proposed 

definition of ‘‘CIP code’’ largely mirrors 

the definition in the 2011 Prior Rule but 

would add specificity about the 

elements that make up a CIP code. We 

think this specificity would be helpful 

to institutions in identifying programs 

for the purpose of the reporting 

requirements. 

In the proposed definition of 

‘‘credential level,’’ we would also 

identify more specific credential levels 

than we did in the 2011 Prior Rule. The 

proposed definition includes a listing of 

the credential levels for use in the 

definition of a GE program. Specifically, 

we propose three different credential 

levels for undergraduate certificate 

programs, whereas the 2011 Prior Rule 

had only one. This breakdown of 

undergraduate certificate programs is 

necessary to properly identify the 

program for the purpose of both 

calculations of a program’s D/E rates 

and pCDR and disclosures. For example, 

a one-year or shorter GE program offered 

by an institution under a specific CIP 

code is significantly different, in terms 

of student debt, costs, completion, etc., 

than a two-year program offered by the 

institution under the same CIP code. In 

addition, the proposed regulations 

would add a credential level for 

graduate certificate programs because of 

the interest rate provision in proposed 

§ 668.403(b)(2), which uses a different 

interest rate for graduate programs. 

Reporting whether the program is a 

medical or dental program that includes 

an internship or residency is necessary 

because the proposed regulations in 

§ 668.404 would use a different two-year 

cohort period—the sixth and seventh 

award years prior to the award year—in 

calculating the D/E rates for those 

programs. See ‘‘§ 668.404 Calculating 

D/E rates’’ for a discussion of why these 

programs would be evaluated 

differently. 

The dates of a student’s attendance in 

the GE program and the student’s 

attendance status (i.e., completed, 

withdrawn, or still enrolled) and 

enrollment status (i.e., full-time, threequarter-time, half-time, and less than 

half-time) would be needed by the 

Department to attribute the correct 

amount of a student’s title IV, HEA 

program loans that would be used in the 

calculation of a program’s D/E rates. 

These items would also be needed to 

identify: 

• The program’s former students for 

inclusion on the list submitted to SSA 

to determine the program’s mean and 

median annual earnings for the purpose 

of the D/E rates calculation; and 

• The borrowers who would be 

considered in the calculation of the 

program’s pCDR, completion rate, 

withdrawal rate, loan repayment rate, 

median loan debt, and median earnings. 

We would require the amount of each 

student’s private education loans and 

institutional debt, along with the 

student’s title IV, HEA program loan 

debt, to determine the debt portion of 

the D/E rates. During the negotiations, 

several of the non-Federal negotiators 

recommended that, in addition to FFEL 

and Direct Loans, the D/E rates take into 

account Federal Perkins Loans that were 

received by students for enrollment in a 

GE program. At that time, the 

Department noted that institutions 

would have to report Federal Perkins 

Loan amounts, as NSLDS did not have 

the necessary detail to correctly 

attribute Perkins Loans to a GE program. 

However, we have now determined that 

the necessary information is available 

without requiring any additional 

Perkins Loan reporting by institutions. 

We would also require institutions to 

report the cost of tuition and fees and 

the cost of books, supplies, and 

equipment to calculate the D/E rates 

because, as provided under proposed 

§ 668.404, in determining a GE 

program’s median loan amount, each 

student’s loan debt would be capped at 

the total of those two amounts. See 

‘‘§ 668.404 Calculating D/E rates’’ for a 

discussion of why this cap is included 

in the calculation. 

One non-Federal negotiator asked 

why institutions would not be required 

to report the SOC codes for the 

occupations that a program prepares 

students to enter. We responded that the 

institutional reporting under this 

section of the proposed regulations is at 

the student level and not on a program 

level. We also note that under the 

proposed disclosure requirements in 

§ 668.412, institutions would disclose 

the occupations that the program 

prepares students to enter and this 

disclosure would include SOC codes. 

Several of the negotiators, particularly 

those representing postsecondary 

institutions, asserted that the proposed 

reporting would be overly burdensome. 

We understand this concern and will 

continue to consider ways to reduce 

reporting burden. To that end we invite 

comment on how that may be 

accomplished. Nonetheless, we believe 

that the benefits to students and to 

taxpayers stemming from the reporting 

requirements under proposed subpart Q, 

which allow implementation of the 

proposed accountability and 

transparency frameworks, far outweigh 

any additional institutional burden. 

Further, we note that the information 

reported enables the Department to 

calculate each program’s GE measures 

and disclosure items, which we believe 

is more efficient, much less 

burdensome, and results in greater 

accuracy than requiring institutions to 

perform these calculations, though we 

welcome comment on the advantages of 

having institutions perform these 

calculations. 

We propose to retain the provision 

from the 2011 Prior Rule requiring an 

institution to provide the Secretary with 

an explanation of why it has failed to 

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comply with any of the reporting 

requirements. Because the Department 

would use the reported information to 

calculate the GE measures and the 

institutional disclosures, it is essential 

for the Secretary to have information 

about why an institution may not be 

able to report the information. 

One negotiator argued that the 

combination of the reporting 

requirements of the proposed GE 

regulations and the reporting 

requirements resulting from the 

regulations promulgated on May 16, 

2013, to implement the 150% Direct 

Subsidized Loan limit under section 

455(q) of the HEA would result in the 

creation of a student unit records system 

in a form that is prohibited by section 

134 of the HEA. That is not the case. 

Section 134(b) of the HEA allows the 

continued operation of a database 

necessary to implement title IV, HEA 

programs if that database was in 

operation prior to the enactment of 

section 134(b) of the HEA on August 14, 

2008. 20 U.S.C. 1015c(b). Although 

NSLDS is a student unit database, it is 

one that is explicitly permitted under 

section 134(b) because it has been in 

operation prior to August 14, 2008, and 

it is necessary for the Secretary to 

properly administer the title IV, HEA 

programs. 

Section 668.412 Disclosure 

Requirements for GE Programs 

Disclosures 

Current Regulations: Section 668.6(b) 

of the 2011 Current Rule requires an 

institution, for each program that 

prepares students for gainful 

employment in a recognized 

occupation, to disclose information 

about: 

(1) the occupations that the program 

prepares students to enter, along with 

links to occupational profiles on 

O*NET; 

(2) the on-time graduation rate for 

students completing the program; 

(3) the cost of tuition and fees, books 

and supplies, and room and board, and 

a link to other cost information; 

(4) the placement rate for students 

completing the program, as determined 

under a methodology to be developed 

by NCES when it becomes available, 

and, in the meantime, if required by the 

institution’s accreditor or State, a 

program-level placement rate using the 

methodology required by the accreditor 

or State; and 

(5) the median loan debt incurred by 

students who completed the program, 

identified separately as title IV, HEA 

loan debt and debt from private 

educational loans and institutional 

financing plans. 

Proposed Regulations: Although the 

proposed regulations would replace 

§ 668.6(b) of the 2011 Current Rule, they 

would retain many of the same 

concepts. The proposed changes would 

expand the amount of information that 

the Department may require to be 

disclosed and increase the Department’s 

flexibility to tailor the disclosures in a 

way that would be most useful to 

students and minimize burden to 

institutions. 

Under the proposed regulations, the 

disclosure items would include, but 

would not be limited to: 

(1) the primary occupations (by name 

and SOC code) that the GE program 

prepares students to enter, along with 

links to the corresponding occupational 

profiles on O*Net; 

(2) the GE program’s completion and 

withdrawal rates for full-time and lessthan-full-time students; 

(3) the length of the program in 

calendar time (i.e., weeks, months, 

years); 

(4) the number of clock or credit 

hours, as applicable, in the program; 

(5) the total number of individuals 

enrolled in the program during the most 

recently completed award year; 

(6) the loan repayment rate for any 

one or all of the following groups of 

students who entered repayment on title 

IV loans during the two-year cohort 

period: all students who enrolled in the 

program, students who completed the 

program, or students who withdrew 

from the program; 

(7) the total cost of tuition and fees, 

and the total cost of books, supplies, 

and equipment that students would 

incur for completing the program within 

the length of the program; 

(8) the placement rate for the program, 

if the institution is required to calculate 

a placement rate by its accrediting 

agency or State; 

(9) of the individuals enrolled in the 

program during the most recently 

completed award year, the percentage 

who incurred debt for enrollment in the 

program; 

(10) as provided by the Secretary, the 

median loan debt incurred by any or all 

of the following groups: students who 

completed the program during the most 

recently completed award year, students 

who withdrew from the program during 

the most recently completed award year, 

or both those groups of students; 

(11) as provided by the Secretary, the 

median earnings of any one or all of the 

following groups: students who 

completed the program during the 

applicable cohort period used to 

calculate the most recent D/E rates for 

the program, students who were in 

withdrawn status at the end of the 

applicable cohort period used to 

calculate the most recent D/E rates for 

the program, or both students who 

completed the program during the 

applicable cohort period used to 

calculate the most recent D/E rates and 

students who were in withdrawn status 

at the end of that applicable cohort 

period; 

(12) the most recent pCDR as 

calculated by the Secretary under 

proposed § 668.407; 

(13) the most recent annual earnings 

rate as calculated by the Secretary under 

proposed § 668.404; 

(14) if applicable, whether completion 

of the program satisfies the educational 

prerequisites for professional licensure 

in the State in which the institution is 

located and in any other State included 

in the institution’s Metropolitan 

Statistical Area (according to OMB 

guidelines); 

(15) if applicable, the programmatic 

accreditation required for an individual 

to obtain employment in the occupation 

for which the program prepares a 

student; and 

(16) a link to the College Navigator 

Web site. 

From year to year, in a notice 

published in the Federal Register, the 

Department would identify which of the 

disclosure items institutions must 

include on their disclosure templates; 

where applicable, whether the 

disclosures should be disaggregated to 

reflect students who completed the 

program, students who did not complete 

the program, or both students who 

completed and those who did not 

complete the program; and any other 

information that must be disclosed. If 

the Secretary were to require disclosure 

of completion rates, withdrawal rates, 

loan repayment rates, median loan debt, 

or median earnings, the Secretary would 

calculate the required information for 

each GE program based on information 

reported by the institution to the 

Secretary under proposed § 668.411 and 

provide the required disclosure to the 

institution to disclose. 

The principal differences from the 

2011 Prior Rule are that: the proposed 

disclosures for all items, except for the 

number and percentages of the number 

of individuals who incurred debt for 

enrollment in the GE program and 

completed or withdrew from the 

program, would be made only for 

students who received title IV, HEA 

program funds; the proposed 

disclosures could be required for all 

students enrolled in a program or 

disaggregated by whether or not they 

completed the program so as to provide 

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students with the information necessary 

to make more informed choices; and the 

Department would have more flexibility 

to change the required disclosures from 

year to year to reflect new evidence 

about what information is most helpful 

to students. 

Reasons: As discussed in ‘‘§ 668.401 

Scope and purpose,’’ the proposed 

disclosures are designed to improve the 

transparency of GE program student 

outcomes by: ensuring that students, 

prospective students, and their families, 

the public, taxpayers, and the 

Government, and institutions have 

timely and relevant information about 

GE programs to inform student and 

prospective student decision-making; 

help the public, taxpayers, and the 

Government to monitor the results of 

the Federal investment in these 

programs; and allow institutions to see 

which programs produce exceptional 

results for students so that those 

programs may be emulated. 

In particular, the proposed 

disclosures would provide prospective 

and enrolled students the information 

they need to make informed decisions 

about their educational investment, 

including where to spend their limited 

title IV, HEA program funds and use 

their limited title IV, HEA program 

eligibility. Prospective students trying to 

make decisions about whether to enroll 

in a GE program would find it useful to 

have easy access to information about 

the jobs that the program is designed to 

prepare them to enter, the likelihood 

that they will complete the program, the 

financial and time commitment they 

will have to make, their likely debt 

burden and ability to repay their loans, 

their likely earnings, and whether 

completing the program will provide 

them the requisite coursework, 

experience, and accreditation to obtain 

employment in the jobs associated with 

the program. 

The proposed disclosures would also 

provide valuable information to 

enrolled students considering their 

ongoing educational investment and 

post-completion prospects. For 

example, we believe that disclosure of 

completion rates for full-time and lessthan-full-time students would inform 

prospective and enrolled students as to 

how long it may take them to earn the 

credential offered by the GE program. 

Similarly, we believe that requiring 

institutions to disclose pCDRs, annual 

earnings rates, and loan repayment rates 

would help prospective and enrolled 

students to better understand how well 

students who have attended the 

program before them have been able to 

manage their loan debt, which could 

influence their decisions about how 

much money they should borrow to 

enroll in the program. For a discussion 

about the pCDR and annual earnings 

rates and why we believe they are 

valuable measures of student outcomes, 

please see the discussion under 

‘‘§ 668.403 Gainful employment 

framework.’’ We address the loan 

repayment rate briefly in this section 

and more extensively under ‘‘§ 668.413 

Calculating, issuing, and challenging 

completion rates, withdrawal rates, 

repayment rates, median loan debt, and 

median earnings.’’ 

Additionally, to the extent that an 

institution does not systematically 

gather or calculate some of this 

information, particularly with respect to 

the completion, withdrawal, and 

repayment rates, median loan debt, and 

median earnings, the Secretary’s 

calculation of this information for 

institutions could aid them in targeting 

their efforts and resources toward 

ongoing improvement in those areas 

where their programs are not performing 

well. 

Disclosure Items, Generally 

Disclosures Regarding Students 

Receiving Title IV, HEA Program Funds 

Unlike in the 2011 Prior Rule, to align 

the proposed regulations with the 

court’s interpretation of relevant law in 

APSCU v. Duncan and better monitor 

the Federal investment, the proposed 

disclosures would be made only with 

regard to students who received title IV, 

HEA program funds for enrollment in 

the GE program, with the exception of 

the disclosure of the number and 

percentage of individuals who incurred 

debt for enrollment in the GE program. 

See ‘‘§ 668.401 Scope and purpose’’ for 

a complete discussion of our proposed 

definition of ‘‘student.’’ 

Many of the non-Federal negotiators 

strongly disagreed with this approach, 

raising numerous concerns. First, 

several negotiators argued that 

excluding students who do not receive 

title IV, HEA program funds greatly 

reduces the usefulness of the 

information. In particular, they noted 

that the disclosures would not reflect 

the outcomes of all of the students 

enrolled in the program. They believed 

that providing data on all students 

enrolled in the program would provide 

a more complete picture of the program 

that would be meaningful to a broader 

spectrum of students, regardless of 

whether those students rely on Federal 

student assistance to enroll in the 

program. 

Second, the negotiators raised 

concerns that some programs would 

have too few students who received title 

IV, HEA program funds to disclose the 

required information without 

jeopardizing student privacy. For 

instance, in cases where only a small 

number of students who received title 

IV, HEA program funds completed the 

program in a prior award year, the 

Department might not require the 

program’s completion rate to be 

disclosed to protect the privacy of those 

students. The negotiators believed that 

limiting the disclosures to only those 

students receiving title IV, HEA program 

funds would increase the likelihood that 

information would be withheld in the 

disclosures, particularly given the 

proposed definition of credential level, 

which breaks out credential level to a 

greater degree than does the 2011 

Current Rule. 

To address this issue, several 

negotiators proposed different 

approaches. Some of the negotiators 

urged the Department to broaden the 

definition of ‘‘student’’ for purposes of 

the reporting and disclosure 

requirements to include all students 

enrolled in a GE program during an 

award year. These negotiators believed 

that the Department could collect data 

on all students enrolled in a GE program 

to prepare the aggregate information 

institutions would disclose in the 

template without storing any 

information in the student database 

about the individual students in the 

program who did not receive title IV, 

HEA program funds. 

Several negotiators proposed that, as 

an alternative, institutions, rather than 

the Secretary, calculate and disclose the 

completion and withdrawal rates for all 

students enrolled in the program so that 

the Secretary would not have to collect 

information about students who do not 

receive title IV, HEA program funds. 

Other negotiators, however, argued 

strongly that the Department should 

calculate these rates in order to ensure 

the integrity of the data and to reduce 

burden on institutions. 

One negotiator proposed broadening 

the scope of the disclosures and 

reporting to require that all students 

who have filed a FAFSA be included, 

regardless of whether those students 

subsequently received title IV, HEA 

program funds. The negotiator argued 

that this approach would permit the 

Department to retain that information in 

its student database so that the 

program’s disclosures would more 

accurately portray the students in a GE 

program while arguably acting in 

alignment with APSCU v. Duncan. We 

discuss this proposal in ‘‘§ 668.401 

Scope and purpose.’’ 

Although we understand the 

negotiators’ concerns, we believe that, 

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for several reasons, the best approach is 

to include in the GE measures and all 

of the disclosures, except one, only 

students who received title IV, HEA 

program funds to enroll in the GE 

program. 

First, this approach aligns with the 

court’s interpretation of relevant law in 

APSCU v. Duncan because the Secretary 

would not add to the student database 

any information about the students 

enrolled in the GE program who did not 

receive title IV, HEA program funds. 

Second, as the primary purpose of the 

proposed regulations is to evaluate 

whether a program should continue to 

be eligible for title IV, HEA program 

funds, we believe that, by limiting the 

GE measures and all but one of the 

disclosures to include only students 

who receive title IV, HEA program 

funds, the public, taxpayers, and the 

Government can effectively evaluate 

how the GE program is performing with 

respect to the students who received the 

Federal benefit. We also believe that 

disclosure of information that reflects 

solely the outcomes of students who 

received Federal dollars would be more 

relevant to similarly situated 

prospective students. Prospective 

students who intend to borrow for 

enrollment in a GE program would 

know specifically how students in 

similar economic circumstances fared in 

the program. 

Third, the Secretary seeks to reduce 

the regulatory burden on institutions by 

performing the calculations of the 

completion, withdrawal, and repayment 

rates. In the interest of reducing 

institutions’ regulatory burden, the 

Department also would calculate 

median loan debt using the data 

reported by the institutions. In addition 

to reducing institutional burden, this 

approach would ensure that students 

benefit from reliable data. Although we 

propose that the Department, rather 

than institutions, would calculate the 

rates required for disclosure, we invite 

specific comment on this question. 

There is one set of disclosures that we 

believe institutions should calculate. 

Although the Department’s calculations 

of median loan debt would be based 

only on the loan debt of students who 

completed the program, we are 

proposing that institutions be required 

to disclose the percentage of students 

who incurred loan debt to enroll in the 

program and who either completed the 

program during the most recently 

completed award year or withdrew from 

the program during the most recently 

completed award year. We believe this 

information would be particularly 

useful to students, prospective students, 

and their families, the public, taxpayers, 

and the Government, and institutions. 

Specifically, it would provide 

information about the number of 

students who are incurring loans, 

whether under the title IV, HEA 

programs or not, to enroll in a GE 

program and the extent to which those 

students complete or withdraw from the 

program. 

We also note that, for small programs 

for which complete data are not 

available because of applicable privacy 

laws, institutions must still disclose 

several items, including the primary 

occupations the program prepares 

students to enter, the length of the 

program, the number of students 

enrolled in the most recently completed 

award year, the program costs, the link 

to the Department’s College Navigator 

Web site, and licensure and 

programmatic accreditation information. 

Program Comparability and Utility 

Although several negotiators, in 

particular the representatives for 

consumers, students, and State 

Attorneys General, argued strongly for 

robust disclosures for GE programs, 

other negotiators argued that the 

proposed disclosures would not be 

meaningful to students because of a lack 

of comparability across institutions and 

because of the amount of information to 

be provided. Another negotiator 

contended that a proprietary institution 

offering a high-performing degree 

program would be required to make the 

disclosures, whereas a public institution 

offering a low-performing degree 

program in the same field would not fall 

under the proposed regulations and 

consequently would not be subject to 

the disclosure requirements. These 

negotiators, who primarily represented 

proprietary institutions, argued that 

these types of scenarios demonstrate 

that requiring disclosures only for GE 

programs instead of for all programs 

undermines the value of the information 

for consumers and unfairly burdens 

institutions offering GE programs. 

Several negotiators also warned that 

requiring so many disclosures carries 

the risk of overwhelming consumers 

with information to the point that the 

disclosures cease to influence behavior. 

Some of these negotiators recommended 

limiting the information to be disclosed 

to program completion rates and the 

earnings and debt levels of students 

completing the program. They argued 

that providing fewer, but still valuable, 

data points would serve consumers 

effectively while reducing burden on 

institutions. Additionally, one 

negotiator noted that the current 

conversation in the higher education 

community surrounding accountability 

is in flux, arguing that the items that we 

believe will be useful to students today 

might not be the most useful tomorrow. 

We share the concerns raised by the 

negotiators that the disclosure 

information must be as comparable and 

meaningful as possible. However, we 

are using this rulemaking process to 

propose regulations specifically for 

programs that are required under the 

HEA to prepare students for gainful 

employment in recognized occupations. 

Given this specific focus, the 

Department is not establishing new 

disclosure requirements for non-GE 

programs through the proposed 

regulations. However, we believe that 

the proposed disclosures would still be 

valuable because they would provide 

comparable information across GE 

programs. 

To address the concern about 

overwhelming consumers with too 

much information, the proposed 

regulations would allow the Secretary to 

identify from a number of possible 

disclosures which items must be 

disclosed for a particular award year 

through a notice published in the 

Federal Register. This would allow the 

Department to conduct consumer testing 

to ensure that the disclosures advance 

the goals of the transparency framework, 

the language is understandable for the 

intended audience, the manner of 

delivery is effective, and the disclosures 

are, on the whole, useful for consumers 

and to modify the required disclosures 

based on the results of the consumer 

testing and experience. In addition, we 

invite comment as to which disclosures 

might be most useful to students, 

prospective students, and their families. 

Individual Disclosure Items 

In general, requiring institutions to 

disclose information regarding their GE 

programs is consistent with the 

provisions of section 487(a)(8) of the 

HEA, which requires institutions to 

provide prospective students with 

recent graduation, employment, and 

State licensing information related to 

the jobs for which the institution 

provides training. The negotiators raised 

a variety of concerns, however, about 

the adequacy of individual disclosure 

elements, while others had suggestions 

for additional required disclosures. 

Placement Rate 

Some negotiators, particularly those 

representing consumer advocates, State 

Attorneys General, and students, 

strongly urged the Department to 

develop a national placement rate 

methodology for the purpose of the 

placement rate disclosure. They 

believed that placement information is 

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64U.S. Department of Education, 2012 National 

Post-Secondary Student Aid Study (NPSAS: 12). 

critical to prospective students making 

a decision about where to enroll, and 

they argued that it is important to have 

a uniform methodology to allow for 

useful comparisons across programs. 

Further, these negotiators recommended 

standardizing the placement rate 

methodology to prevent an institution 

from manipulating or misrepresenting 

the program’s placement rate, and they 

proposed parameters for how soon after 

graduation an individual must be 

employed, how long an individual must 

be employed in a job, and what types of 

jobs (i.e., in-field or out-of-field) an 

individual must hold, in each case for 

the job to be counted. 

Some of the negotiators proposed an 

alternative approach, suggesting that the 

Department could develop a national 

placement rate methodology to function 

as the default methodology unless 

another entity, such as an accrediting 

agency or State, requires a more 

stringent methodology. They argued that 

this would be less burdensome for 

institutions that would have to calculate 

multiple rates, while still providing 

meaningful information. In particular, 

they noted that, because States and 

accrediting agencies vary widely in their 

methodologies, having a default 

methodology would protect consumers 

in situations where a non-Federal entity 

uses a weak placement rate 

methodology or does not require a 

placement rate. 

Although we agree that comparable 

placement rate information would be 

valuable for prospective students, 

limitations in available data preclude 

the development of a national 

placement rate methodology that is 

consistent across all GE programs. The 

Department’s NCES convened a 

technical review panel (TRP) in 2011 to 

develop a national placement rate 

methodology. The TRP determined that 

a single job placement rate methodology 

could not be developed without further 

study because of limitations in data 

systems and available data. The TRP 

suggested requiring greater transparency 

about how rates are currently calculated 

as an interim step for institutions 

disclosing these rates. See ‘‘Report and 

Suggestions from IPEDS Technical 

Review Panel #34: Calculating Job 

Placement Rates’’ at http://

www2.ed.gov/policy/highered/reg/

hearulemaking/2012/ipedssummary91013.pdf for a full discussion 

of the TRP’s findings. 

Accordingly, we propose to require an 

institution to disclose placement rates 

for its GE programs, if it is required to 

do so by its State or accrediting agency, 

using the methodology required by the 

State or accrediting agency. This 

approach would provide consumers 

with valuable information because such 

requirements are in place for many 

programs using the methodologies that 

the respective agencies have determined 

are appropriate for those programs. 

In accordance with the TRP’s 

recommendations to foster as much 

transparency as possible regarding how 

placement rates have been calculated, 

the gainful employment disclosure 

template that institutions must currently 

use to make disclosures under § 668.6(b) 

of the 2011 Current Rule requires an 

institution to provide information about 

the methodology (or methodologies, if 

an institution must calculate a rate for 

more than one entity) that it used. 

Specifically, the template requires 

institutions to explain which students 

were included in the calculation, 

whether or not the jobs in which the 

students were placed were related to the 

student’s field of study, the positions 

that students were hired for, how long 

after graduation students were hired and 

for how long they were employed before 

they would be included in the 

calculation, and how students were 

tracked. 

We would continue to include in the 

proposed disclosure template a field in 

which institutions would disclose their 

placement rate methodology. We 

request comment, however, on the best 

way to handle cases where an 

institution must calculate more than one 

placement rate to satisfy the 

requirements of multiple entities, e.g., 

multiple States or multiple accreditors. 

The current template allows institutions 

to disclose placement rate information 

for up to one State and up to one 

accrediting agency, though the template 

also provides institutions with a way to 

disclose additional calculated rates. We 

invite comment on whether the 

Department should modify the template 

to allow institutions to include 

placement rate information required by 

additional entities. 

Median Loan Debt 

Several of the negotiators raised 

concerns about our proposal to require 

the disclosure of median loan debt. 

First, some of the negotiators believed 

that the Department should require 

institutions to disclose the mean, 

instead of the median, loan debt, 

arguing that consumers are more 

familiar with means than medians and 

that the mean would be more valuable. 

Another negotiator suggested that if the 

Department uses the higher of the mean 

or median loan debt in the D/E rates 

calculation, then institutions should 

have to disclose both the median and 

the mean. 

Second, a number of the negotiators 

were concerned that the median loan 

debt information would be artificially 

high because it would only take into 

account students who received title IV, 

HEA program funds. In addition to these 

concerns, some of the negotiators 

requested clarification as to which 

students would be included in the 

various possible median loan debt 

calculations and what types of loan debt 

would be included. 

We agree that it is important that 

consumers have clear, meaningful 

information about loan debt. However, 

we disagree that it would necessarily be 

more helpful to use the mean, as both 

mean and median are measures of 

central tendency. We also do not believe 

that it would be helpful to consumers to 

provide both the mean and the median. 

In designing the disclosure template, the 

Department would explain what a 

median is in plain language to help 

consumers understand the information, 

and we would use consumer testing to 

determine the most effective wording in 

this regard. 

With respect to concerns that 

considering only the loan debt of 

students receiving title IV, HEA program 

funds would provide insufficient 

information to consumers about the 

amount of loan debt students in a GE 

program incur, particularly at low-cost 

institutions with few borrowers, we 

believe that these concerns may be 

overstated and are outweighed by the 

benefits of reducing institutional burden 

and ensuring that accurate loan 

information is disclosed. First, our 

analysis indicates that, of students who 

borrow for enrollment in GE programs, 

most receive title IV, HEA loans.64 Many 

of these students may also be receiving 

private and institutional loans in 

addition to their title IV, HEA loans, but 

we believe that the percentage of 

students who borrow exclusively from 

private or institutional lenders is 

relatively small. Second, calculating the 

loan debt as a median would likely 

mitigate any distortion in the disclosure 

that could result from not including 

private or institutional borrowers who 

do not receive title IV, HEA program 

funds. 

Unlike the median loan debt 

calculation for the D/E rates, the median 

loan debt determination for the 

disclosures would not include students 

who had no debt or who received only 

title IV, HEA program grants but no 

loans. We believe that this approach 

would result in a more useful disclosure 

for consumers. For students who must 

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65www.census.gov/population/metro/about/. 

borrow to attend a program, it would be 

more informative to know how much 

debt other students who borrowed had 

to take on. Including students who do 

not have debt would distort the 

disclosure. In comparison, because the 

D/E rates are a measure of the overall 

performance of a program and not of 

particular individuals, it is appropriate 

to take into account the debt of all 

students, even those with zero debt. 

The median loan debt calculation for 

disclosure purposes could include the 

median loan debt of students who 

completed the program in the most 

recently completed award year, 

withdrew from the program during the 

most recently completed award year, or 

both. We note that these are different 

cohorts of students than the cohorts of 

students used in the calculation of the 

D/E rates. The D/E rates consider the 

median loan debt only of students who 

completed the program during the twoor four-year cohort period. For the 

proposed disclosure item, the median 

loan debt would be for only those 

students who completed or withdrew 

from the program during the most 

recently completed award year. Using 

the most recently completed award year 

would ensure that students are receiving 

the most current information possible, 

as opposed to information that is several 

years old. 

The 2011 Current Rule considers only 

the loan debt incurred by students who 

completed the program. We continue to 

believe that this is valuable information. 

However, we also believe that it is 

significant for prospective students to 

know how much loan debt was incurred 

by students who did not complete the 

program because those former students 

are still responsible for repaying their 

loans even if they do not earn a 

credential, so we have proposed that as 

a possible disclosure item. 

Again, the Secretary would publish a 

notice in the Federal Register specifying 

for which of these groups of students 

the median loan debt must be disclosed. 

The proposed regulations would 

provide the Secretary flexibility to 

determine, based on consumer testing 

and experience, the information that 

would be most valuable to prospective 

students. 

State Licensure 

Several negotiators, particularly those 

representing consumer advocates, State 

Attorneys General, and student 

representatives, argued that it is critical 

for prospective students to know the 

extent to which a program qualifies 

students who completed the GE 

program for State licensure in a given 

field. The negotiators and commenters 

during the public hearings in spring 

2013 provided examples of cases where 

students were misled to believe that if 

they completed a particular GE program, 

they would be eligible to sit for State 

licensing exams or otherwise would 

have met the educational prerequisites 

to obtain a license in a particular State, 

when, in fact, they were not able to sit 

for the exam or otherwise obtain a 

license. Along these lines, negotiators 

and others have noted cases where 

students were misled to believe that 

they would be able to obtain a position 

in their field of study upon completion 

but later learned that the program didn’t 

have the proper programmatic 

accreditation to allow them to sit for a 

licensing exam needed to practice in the 

field or to obtain a certification 

generally preferred by employers. For 

example, in the physical therapy field, 

students typically must graduate from a 

program accredited by the Commission 

on Accreditation in Physical Therapy 

Education in order to sit for a licensing 

exam (see www.capteonline.org for more 

information). As another example, 

although licensure requirements for 

dental assistants vary by State, most 

States require attendance at a program 

accredited by the Commission on Dental 

Accreditation in order to be eligible for 

licensure (see www.danb.org for more 

information). 

Although other negotiators generally 

supported the proposal to require 

disclosure of this information, several, 

particularly those from institutions with 

locations in multiple States and those in 

areas where students often cross State 

lines to attend school and for 

employment, were concerned about the 

burden associated with providing these 

disclosures for every State. Further, 

some of the negotiators questioned the 

feasibility and enforceability of 

requiring institutions to determine 

which programmatic accreditation is 

generally necessary to obtain 

employment in a particular field and to 

then disclose that information to 

prospective students. Other negotiators 

pointed out that students can also 

substitute work experience for the 

program accreditation requirement, and 

this makes it harder to determine when 

program accreditation would be 

considered a requirement for a GE 

program. 

We agree that information about 

licensure and programmatic 

accreditation is critical information for 

prospective students. Students dedicate 

months and years, as well as a 

significant amount of money—often 

using up their eligibility for Federal Pell 

and Federal Direct subsidized loans—to 

enroll in GE programs. Enrolling in a 

program that does not have the 

necessary accreditation or meet 

licensure requirements can have grave 

consequences for students’ ability to 

find jobs and repay their loans after 

graduation. Accordingly, we have 

proposed that institutions must disclose 

whether completion of the program 

satisfies the educational prerequisites 

for professional licensure in the State in 

which the institution is located. 

Institutions with locations in multiple 

States must make this disclosure for 

every State in which they are located. 

To address concerns about situations 

where students regularly cross State 

lines for employment outside of the 

State in which the institution is located, 

we have proposed that institutions must 

disclose whether the program meets the 

licensure requirements for each of the 

States in the institution’s Metropolitan 

Statistical Area (MSA), as published by 

OMB. We believe that this is a 

reasonable approach, as ‘‘the general 

concept behind an MSA is that of a core 

area containing a substantial population 

nucleus, together with adjacent 

communities having a high degree of 

economic and social integration with 

that core.’’ 65 This concept seems 

appropriate for this context because it 

focuses on economic and employment 

mobility. More information about MSAs 

is available at www.census.gov/

population/metro/. We specifically 

invite comment on whether a better 

measure can be used to identify when 

GE programs offered at institutions near 

State borders would be required to meet 

requirements established by adjacent 

States. 

Additionally, we propose to require 

institutions to disclose the 

programmatic accreditation needed for 

an individual to obtain employment in 

the occupation identified by the 

institution. Similar to the licensure 

examples provided above, if a program 

does not have the proper accreditation, 

graduates of a program would be unable 

to seek employment in their 

occupations. It is therefore important 

that institutions perform due diligence 

to determine when programmatic 

accreditation would be needed and to 

inform prospective students of whether 

the program meets this requirement. 

Completion, Withdrawal, and 

Repayment Rates, Median Loan Debt, 

and Median Earnings Calculations 

Several negotiators raised questions 

and concerns about how the 

completion, withdrawal, and repayment 

rates, median loan debt, and median 

earnings would be calculated. Please see 

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‘‘§ 668.413 Calculating, issuing, and 

challenging completion rates, 

withdrawal rates, repayment rates, 

median loan debt, and median 

earnings’’ for additional discussion of 

these items. 

Other Possible Disclosures 

A few negotiators suggested 

additional items that institutions should 

have to disclose to prospective students, 

such as the amount of money that the 

institution spent on marketing and 

recruitment for the program, the 

employment rate, and the percentage of 

students enrolled in an income-based 

repayment plan. We have not proposed 

to add these disclosures because, first, 

we believe the proposed disclosures 

better address whether a GE program, in 

fact, meets the gainful employment 

requirement. Second, we are mindful 

both that we do not want to overwhelm 

students with disclosures and that, 

under the proposed regulations, the 

Secretary has the flexibility to modify 

the disclosures if it is determined, for 

example, through consumer testing, that 

such disclosures would be valuable to 

prospective or current students within 

the context of the proposed regulations. 

Timing, Format, and Method of 

Disclosure 

Current Regulations: Section 

668.6(b)(2) of the 2011 Current Rule 

requires institutions to include the 

disclosures for each GE program in 

promotional materials made available to 

prospective students and to post the 

disclosure information on their Web 

sites. Specifically, institutions must 

prominently provide the information in 

a simple and meaningful manner on the 

home page of each GE program Web 

site, and they must include a prominent 

and direct link to the disclosures from 

any Web site containing general, 

academic, or admissions information 

about the program. 

Proposed Regulations: Under 

proposed § 668.412(a), institutions 

would use a template provided by the 

Secretary to disclose the items 

identified in a notice published in the 

Federal Register. 

Under proposed § 668.412(b), 

institutions would be required to update 

at least annually the information 

contained in the disclosure template, 

and the deadline and procedures for 

doing so would be specified by the 

Secretary. Additionally, institutions 

would have 30 days from the date that 

they receive notice from the Secretary 

that they must provide the student 

warning for a GE program (see 

‘‘§ 668.410 Consequences of GE 

measures’’) to update their disclosure 

templates to include the warning for 

both enrolled and prospective students. 

Under proposed § 668.412(c), 

institutions would be required to 

provide a prominent, readily accessible, 

clear, conspicuous, and direct link to 

the disclosure template for each GE 

program on any Web page containing 

academic, cost, financial aid, or 

admissions information about that 

program. In this regard, the proposed 

regulations would provide the Secretary 

authority, beyond the remedies already 

available for noncompliance with title 

IV, HEA regulations, to require an 

institution to modify its Web page to 

ensure that the link to a GE program’s 

disclosure template satisfies the 

requirement that the link be easy to 

find. Additionally, institutions would 

have the option to publish separate 

disclosure templates for each location or 

format of a GE program if doing so 

would result in clearer information for 

students. Institutions choosing to 

publish separate disclosure templates 

would have to ensure that each 

disclosure template clearly identifies 

the applicable location or format of the 

GE program to which the template 

refers. 

Under proposed § 668.412(d), in 

addition to publishing their disclosures 

on their institutional Web sites, 

institutions would generally have to 

include the disclosure information in all 

promotional materials made available to 

prospective students identifying or 

promoting a GE program. The 

promotional materials must display the 

disclosure template in a prominent 

manner. Promotional materials would 

include materials such as, but not 

limited to, institutional catalogs, 

invitations, flyers, billboards, 

advertisements, and social media. The 

regulations would, however, allow 

institutions to include the Web address 

or direct link to the disclosure template 

where space or airtime constraints, such 

as with a 30-second radio 

advertisement, would preclude the full 

disclosure of the required information. 

Institutions that provide a Web address 

or URL in these cases would have to 

identify that URL or link as ‘‘Important 

Information about the educational debt, 

earnings, and completion rates of 

students who attended this program’’ or 

as specified by the Secretary in a notice 

published in the Federal Register. 

Institutions would be responsible for 

ensuring that all promotional materials, 

including printed materials, about a GE 

program are accurate and current at the 

time they are published, approved by a 

State agency, or broadcast. 

Finally, proposed § 668.411(e) would 

require institutions to provide, as a 

separate document, a copy of the 

disclosure template to any prospective 

student. Specifically, before the 

prospective student signs an enrollment 

agreement, completes registration, or 

makes a financial commitment to the 

institution, the institution would be 

required to obtain written confirmation 

from the prospective student that the 

prospective student received a copy of 

the disclosure template. These 

disclosures need not be made to foreign 

students, however, as they are not 

eligible to receive title IV, HEA program 

funds. 

Reasons: As with the 2011 Current 

Rule, the proposed regulations include 

requirements relating to the timing, 

format, and method of disclosure that 

are designed to increase the likelihood 

that prospective and enrolled students 

receive and review the disclosures. 

These requirements are intended to 

provide students with readily 

accessible, understandable, and timely 

information about GE programs to 

inform their educational and financial 

choices while at the same time 

minimizing burden on institutions. 

Updating and Distributing Disclosures 

Several of the negotiators raised 

concerns about the timing of the 

disclosures and about ensuring that the 

disclosures could be easily found on an 

institution’s Web site and in its 

promotional materials. With respect to 

the timing of the disclosures, the 

negotiators representing consumer 

advocates, State Attorneys General, and 

students urged the Department to 

require institutions to update their 

disclosures annually with the most 

current information and to add the 

student warning, if required under 

proposed § 668.410, as soon as possible, 

so that students can take that 

information into account when deciding 

where to enroll or whether to continue 

enrollment in the program. These 

negotiators also warned of the highpressure tactics that predatory 

institutions might use to coerce 

prospective students to enroll, arguing 

that students need to have this 

information before they actually enroll 

in a program. 

Some of the negotiators also raised 

concerns that some schools would try to 

hide their disclosures by burying them 

in large amounts of material or 

otherwise trying to draw a student’s 

attention away from them. To address 

this issue, the negotiators proposed 

requiring institutions to provide the 

disclosures both in writing and orally 

and prohibiting institutions from using 

language to undermine, denigrate, or 

otherwise diminish the content of the 

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disclosures. Other negotiators, 

particularly those representing 

institutions, challenged the feasibility of 

making oral disclosures to each student 

for every program of every program 

length. They argued that this would add 

significant burden for schools. In 

particular, they noted that this would be 

difficult for institutions that might not 

communicate in person with all of their 

students, such as those that offer 

distance education programs. In 

response, some of the negotiators 

asserted that the burden would be 

justified when students are taking on 

significant amounts of debt, and others 

suggested using video or other means 

such as entrance counseling to reach all 

students. 

In the same vein, several of the 

negotiators urged the Department to 

ensure that Web links to the disclosures 

be prominent, clear, and conspicuous to 

ensure that prospective students would 

find and understand the information. 

They recommended that the link to the 

disclosure template be placed next to 

‘‘trigger terms’’ like the program name 

and in a way that students would not 

have to scroll down a Web site to find 

it. Other negotiators, particularly those 

from institutions with multiple 

locations, raised concerns about being 

overly prescriptive about how and 

where an institution must include the 

links to the disclosures. These 

negotiators noted that institutions need 

flexibility to provide the information in 

the way that is best suited for their 

programs. 

We share the negotiators’ general 

concerns about ensuring that the 

required disclosures are provided to 

students in a timely and meaningful 

way, and we are proposing several 

provisions to address these concerns. 

First, we have proposed that institutions 

would have to update their disclosures 

annually in accordance with procedures 

and timelines established by the 

Secretary. Under the 2011 Current Rule, 

institutions updated their disclosures by 

January 31 in 2013 and 2014, and the 

Secretary provided institutions 

approximately two months to make 

those changes. We anticipate that under 

the proposed regulations, we would 

again require institutions to update their 

disclosures with information from the 

most recently completed award year 

annually in January. We note that 

because each award year ends on June 

30, institutions would have several 

months to gather the necessary 

information to update their disclosures. 

We have also proposed that institutions 

would have to update their disclosure 

templates to include the student 

warning within 30 days of the date 

institutions receive final GE measures 

that trigger the requirement to provide 

the warning. We believe that this 

provides institutions sufficient time to 

update their disclosures while still 

ensuring that students have this critical 

information promptly. 

Second, to address concerns about 

high-pressure enrollment tactics, we are 

proposing that an institution must make 

these disclosures to a prospective 

student before the student makes a 

financial commitment to the institution, 

for example, by signing an enrollment 

agreement or otherwise completing 

registration. Further, we are proposing 

that an institution would have to 

provide the disclosure template as a 

stand-alone document and would have 

to obtain written confirmation from the 

prospective student that the student 

received the disclosure template. In 

response to concerns raised by some 

negotiators, we note that institutions 

can accept electronic means of written 

confirmation, and we would provide 

additional guidance to institutions in 

this regard. We believe that these 

provisions would increase the 

likelihood that prospective students will 

have the time to read and digest the 

disclosures without facing undue 

pressure to enroll immediately. 

Third, we have used terms like 

‘‘direct,’’ ‘‘prominent,’’ and ‘‘clear and 

conspicuous’’ to highlight the fact that 

students should be able to reach the 

disclosures with a minimum number of 

clicks from the program home page and 

that the link should be placed on the 

Web site in a way that is obvious, eyecatching, and otherwise not difficult to 

find. The Federal Trade Commission 

(FTC) published guidance in 2013 on 

making disclosure information easy to 

find. In particular, the FTC recommends 

placing a hyperlink to a disclosure as 

close as possible to the relevant 

information it qualifies and to make it 

noticeable, to label the hyperlink 

appropriately to convey the importance, 

relevance, and nature of the information 

it leads to, and to repeat the hyperlink 

as needed on lengthy Web sites or when 

consumers have multiple routes through 

a Web site. (See the FTC’s 2013 

guidance at: www.business.ftc.gov/sites/ 

default/files/pdf/bus41-dot-comdisclosures-information-about-onlineadvertising.pdf.) We would expect to 

provide similar guidance to facilitate 

compliance with these proposed 

requirements. 

Finally, the proposed regulations 

provide institutions the flexibility to 

develop their disclosure templates, 

hyperlink pathways, and promotional 

materials in ways best suited for their 

programs. For example, we have 

proposed that institutions offering a GE 

program in more than one location or 

format would have the option to create 

separate disclosure templates for each 

location or format in order to provide 

clearer disclosures. We note, however, 

that institutions developing multiple 

templates for a GE program would have 

to ensure that these separate disclosure 

templates are clearly identified and 

labeled so that viewers would not be 

confused or misled by the information. 

Similarly, we have not specified a 

maximum number of ‘‘clicks’’ from the 

program home page or other Web pages 

related specifically to the program to the 

disclosure template in order to allow 

institutions to design reasonable 

hyperlink pathways. 

For example, it would be acceptable 

for institutions with multiple locations 

of a program to include a pass-through 

page from the program’s home page to 

the actual disclosure templates where a 

student would identify the specific 

campus for which the student would 

like the disclosure information. In order 

to promote compliance, however, we 

propose that the Department may 

require an institution to modify its Web 

page if the link for the disclosure 

template is not prominent, readily 

accessible, clear, conspicuous, and 

direct. This would allow the 

Department to work with schools to 

improve their disclosures without 

engaging in a lengthy and potentially 

adversarial program review. 

Additionally, we have given 

institutions flexibility as far as how to 

incorporate the disclosures into their 

promotional materials. The proposed 

regulations require that institutions 

include the disclosure template or, 

where including the disclosure template 

is not feasible, a link to the template, in 

all promotional materials about the GE 

program made available to prospective 

students, including in materials like 

course catalogs, information session 

invitations, flyers, billboards, and 

advertisements. In including their 

disclosures, or a link to the disclosures, 

institutions would be required to 

identify the link as ‘‘Important 

information about the educational debt, 

earnings, and completion rates of 

students who attended this program.’’ 

We invite comment on the optimal 

format and placement of the disclosure 

template by the institution, recognizing 

the variations among institutions in 

Web site organization, the information 

conveyed, and how the enrollment 

process is conducted. 

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Section 668.413 Calculating, Issuing, 

and Challenging Completion Rates, 

Withdrawal Rates, Repayment Rates, 

Median Loan Debt, and Median 

Earnings 

Current Regulations: Section 668.6(c) 

of the 2011 Current Rule provides that 

institutions must calculate the on-time 

graduation rate for students completing 

the program. Because the 2011 Current 

Rule specifies that the institution will 

calculate the on-time graduation rate, 

the rule did not provide a process by 

which an institution would issue or 

challenge the rate. 

The 2011 Current Rule does not 

require institutions to disclose 

withdrawal rates, repayment rates, or 

median earnings; however, it does 

require institutions to calculate and 

disclose the GE program’s median loan 

debt. Under the 2011 Prior Rule, a loan 

repayment rate was used not as a 

disclosure item but, together with debtto-earnings ratios, to determine the 

eligibility of a GE program for title IV, 

HEA program funds. See ‘‘§ 668.403 

Gainful employment framework’’ for a 

discussion of the loan repayment rate 

under the 2011 Prior Rule. 

Calculating Completion, Withdrawal, 

and Repayment Rates, Median Loan 

Debt, and Median Earnings 

Proposed Regulations: As discussed 

in connection with proposed §§ 668.411 

and 668.412, under the proposed 

regulations, an institution could be 

required to disclose completion, 

withdrawal, and repayment rates, 

median loan debt, and median earnings 

for a GE program. Using the procedures 

proposed in § 668.413, and based on the 

information that institutions would 

report under proposed § 668.411, the 

Department would calculate the rates, 

median loan debt, and median earnings, 

and provide them to institutions for 

disclosure. The proposed regulations 

would provide an opportunity for 

institutions to challenge the Secretary’s 

completion, withdrawal, and repayment 

rates and median loan debt and median 

earnings determinations, as discussed 

under ‘‘Issuing and Challenging 

Completion, Withdrawal, and 

Repayment Rates, Median Loan Debt, 

and Median Earnings.’’ 

Completion Rates 

Under proposed § 668.413(b)(1), the 

Secretary would calculate four 

completion rates for a GE program—two 

based on students whose enrollment 

status is full-time on the first day of the 

student’s enrollment in the program, 

and two more based on students whose 

enrollment status is less-than-full-time 

on the first day of the student’s 

enrollment in the program. 

For the two completion rates based on 

full-time students in the enrollment 

cohort, we would determine the 

percentage of students who completed 

the program within 100 percent of the 

length of the program and the 

percentage of students who completed 

the program within 150 percent of the 

length of the program. For the two 

completion rates based on less-than-fulltime students in the enrollment cohort, 

we would determine the percentage of 

students who completed the program 

within 200 percent of the length of the 

program and within 300 percent of the 

length of the program. 

Withdrawal Rates 

Under proposed § 668.413(b)(2), the 

Secretary would calculate two 

withdrawal rates for the program. One 

rate would be the percentage of students 

in the enrollment cohort who withdrew 

from the program within 100 percent of 

the length of the program. The second 

rate would be the percentage of students 

in the enrollment cohort who withdrew 

from the program within 150 percent of 

the length of the program. The 

enrollment cohort would be comprised 

of the students receiving title IV, HEA 

program funds who enrolled in the 

program at any time during the relevant 

award year. 

Repayment Rates 

Under proposed § 668.413(b)(3), the 

Secretary would calculate a borrowerbased loan repayment rate for borrowers 

with FFEL or Direct Loans for 

enrollment in a GE program by adding 

together the ‘‘number of borrowers paid 

in full’’ to the ‘‘number of borrowers in 

active repayment’’ and dividing the sum 

by the ‘‘number of borrowers entering 

repayment.’’ 

Number of borrowers entering 

repayment are those who entered 

repayment during the two-year cohort 

period on FFEL or Direct Loans received 

for enrollment in the GE program. 

Number of borrowers paid in full 

would be, of the borrowers entering 

repayment, those who have fully repaid 

all of their FFEL or Direct Loans 

received for enrollment in the GE 

program. For instances where a loan 

was consolidated with one or more 

other loans, the consolidation would not 

result in the consolidated loans being 

viewed as paid in full. The repayment 

status of the consolidation loan would 

instead be used for the repayment rate 

calculation, as discussed more fully 

below. 

Number of borrowers in active 

repayment would be those borrowers 

entering repayment who, based on a 

comparison of the outstanding balance 

of each loan at the beginning and end 

of the most recently completed award 

year, made loan payments sufficient to 

reduce by at least one dollar the 

outstanding balance of each of the 

borrower’s FFEL loans or Direct Loans 

received for enrollment in the GE 

program (or consolidation loans that 

include FFEL or Direct Loans taken out 

for enrollment in the GE program). 

In the calculation, a borrower who 

defaulted on a loan taken out for 

enrollment in the GE program would 

not be included in the number of 

borrowers in active repayment even if 

the loan has subsequently been paid in 

full or met the definition of active 

repayment. That borrower would, 

however, be included in the number of 

borrowers entering repayment. 

The Secretary would exclude from the 

repayment rate calculation those 

borrowers who: 

• Have one or more FFEL or Direct 

Loans in a military-related deferment 

status at any time during the most 

recently completed award year; 

• Have one or more FFEL or Direct 

Loans under consideration, or approved, 

for a discharge on the basis of the 

borrower’s total and permanent 

disability; 

• Were enrolled in any other eligible 

program at the institution or at another 

institution during the most recently 

completed award year; or 

• Have died. 

The proposed regulations would also 

provide that the Secretary may modify 

the loan repayment rate formula to 

calculate a repayment rate for only those 

borrowers who completed the program 

or for only those borrowers who 

withdrew from the program. 

Median Loan Debt 

Under proposed § 668.413(b)(4), 

(b)(5,) and (b)(6), the Secretary would 

determine and provide to institutions 

the median loan debt of a GE program 

for students who completed the 

program, students who withdrew from 

the program, and for both students who 

completed and students who withdrew 

from the program during the most 

recently completed award year. In 

calculating the median loan debt, the 

Secretary would include only the GE 

program’s former students who received 

title IV, HEA program funds for 

enrollment in the program. And, unlike 

the median loan debt used in the 

calculation of D/E rates, where students 

who do not have title IV loans would be 

included, the median loan debt used for 

disclosure would be based only on 

students who received title IV, HEA 

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program loans, but would include all 

debt, including private loans, incurred 

by those students related to enrollment 

in the program. 

The median loan debt would be 

calculated using each student’s incurred 

debt, as described in proposed 

§ 668.404(d)(1), that is title IV loans, 

private educational loan debt, and debt 

from institutional financing. 

Median Earnings 

Under proposed § 668.413(b)(7)- 

(b)(12), the Secretary would determine 

and provide to institutions the median 

earnings of a GE program for students 

who completed the program, students 

who withdrew from the program, and 

for both students who completed and 

students who withdrew from the 

program during the applicable cohort 

period. 

For students who completed a 

program, the Secretary would determine 

median earnings using generally the 

same process as the one used to 

calculate the D/E rates for a GE program 

in proposed § 668.405. Specifically, the 

Secretary would: 

• Create a list from Department 

records of the students who completed 

the program during the applicable 

cohort period (§ 668.413(b)(8)(ii)(A)(1)); 

• Indicate which students would be 

removed from the list and the specific 

reason for their exclusion 

(§§ 668.413(b)(8)(ii)(A)(2); 

668.413(b)(11)); 

• Provide the list of students to the 

institution and consider any changes to 

the list proposed by the institution 

(§§ 668.413(b)(8)(ii)(B); 

668.413(b)(8)(iii)); 

• Obtain from SSA or another Federal 

agency the median annual earnings of 

the students on the list 

(§ 668.413(b)(8)(iv)); and 

• Notify the institution of the median 

annual earnings of the students who 

completed the program (§ 668.413(c)(3)). 

As with the process used to calculate 

D/E rates, in providing the list of 

students who completed the program, 

the Secretary would state which cohort 

period was used to select the students. 

Depending on the number of students 

who completed the program in the twoyear cohort period the proposed 

regulations would use one of two 

different cohorts to determine a 

program’s median earnings. 

Specifically, if 30 or more students 

completed the program in the two-year 

cohort period, the median earnings for 

the program would be calculated based 

on the earnings of those students. But if 

fewer than 30 students completed the 

program during the two-year cohort 

period, the median earnings for the 

program would be calculated based on 

the earnings of the students who 

completed the program in the four-year 

cohort period. 

Under proposed § 668.413(b)(9), for 

students who withdrew from a GE 

program, the Secretary would follow a 

similar process. Under proposed 

§ 668.413(b)(9), the Secretary would: 

• Create a list from Department 

records of the students who were 

enrolled in the program but withdrew 

from the program during the applicable 

cohort period (§ 668.413(b)(9)(ii)(A)(1)); 

• Indicate which students would be 

removed from the list and the specific 

reason for their exclusion 

(§§ 668.413(b)(9)(ii)(A)(2); 

668.413(b)(11)); 

• Provide the list of students to the 

institution and consider changes to the 

list proposed by the institution 

(§§ 668.413(b)(9)(ii)(B); 

668.413(b)(9)(iii)); 

• Obtain from SSA or another Federal 

agency the median annual earnings of 

the students on the list 

(§ 668.413(b)(9)(iv)); and 

• Notify the institution of the median 

annual earnings for the students who 

did not complete the program 

(§ 668.413(c)(3)). 

The Secretary would use a similar 

process, as outlined previously for 

calculating the median earnings of 

students who completed the program, to 

determine the applicable cohort period 

for the purpose of creating the list of 

students who withdrew from the 

program and determining their median 

earnings. 

To determine the median earnings of 

the combined group of students who 

completed the program and who 

withdrew from the program, the 

Secretary would follow the same 

process, but would create a combined 

list of students who completed the 

program and students who withdrew 

from the program and use that list as the 

basis for the calculation 

(§ 668.413(b)(10)). 

Reasons: The proposed regulations 

describe how the Secretary would 

calculate a program’s completion, 

withdrawal, and repayment rates, 

median loan debt, and median earnings 

and provide the results to the 

institutions. In the interest of fairness 

and due process, institutions would 

have an opportunity to correct the 

information the Secretary uses to 

calculate the completion, withdrawal, 

and repayment rates, median loan debt, 

and median earnings. The corrections 

procedures in proposed § 668.413 

mirror the related procedures in 

§ 668.405 for calculation of the D/E 

rates. Please see ‘‘§ 668.405 Issuing and 

challenging D/E rates’’ for a more 

detailed description of those procedures 

and our reasons for proposing them. 

Completion Rate 

The 2011 Current Rule provides for an 

institution to calculate the on-time 

graduation rate for its GE programs. In 

contrast, we are proposing that the 

Secretary would calculate completion 

rates for an institution’s GE programs 

that reflect the extent to which students 

completed the program within 100 

percent and 150 percent of the length of 

the program. 

The proposed regulations address 

concerns raised by commenters during 

the public hearings and by some of the 

non-Federal negotiators during the 

negotiated rulemaking about whether 

institutions or the Secretary would be in 

the better position to calculate 

completion rates. 

A number of non-Federal negotiators 

recommended that we follow the 

approach in the 2011 Current Rule and 

provide that institutions, rather than the 

Secretary, should calculate the 

completion rate. They noted that, if the 

Secretary were to calculate the 

completion rate, (1) institutions would 

be required to report additional 

information under proposed § 668.411 

and (2) the calculation would be limited 

to students receiving title IV, HEA 

program funds, in alignment with 

APSCU v. Duncan. See ‘‘§ 668.401 

Scope and purpose’’ for a general 

discussion of our focus on students who 

receive title IV, HEA program funds and 

‘‘§ 668.412 Disclosure requirements for 

GE programs’’ for a discussion of the 

various considerations regarding the 

group of students (i.e., students 

receiving title IV, HEA program funds or 

all students) on which disclosures are 

proposed to be based. Many of the nonFederal negotiators believed that there 

would be more value for prospective 

students if the completion rates 

included all students who enrolled in 

the program and not just those who 

received title IV, HEA program funds. In 

addition, the negotiators were 

concerned that if the Secretary were to 

calculate completion rates, in order to 

provide an appropriate due process, the 

Secretary would have to provide 

institutions with an opportunity to 

challenge the calculation, potentially 

delaying the inclusion of the rates on 

the disclosure template. 

Other negotiators strongly favored 

having the Secretary calculate the 

completion rates to better ensure the 

integrity of the information and to 

lessen the burden on institutions. After 

consideration of the various negotiator 

suggestions, we believe that the benefits 

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of (1) ensuring that all completion rates 

are calculated consistently and 

accurately across institutions and across 

programs; (2) reducing the burden on 

institutions to calculate multiple rates; 

and (3) providing the Department the 

opportunity to gather and analyze 

completion information for all GE 

programs outweigh any drawbacks 

associated with limiting the coverage of 

these disclosures to students who 

received title IV, HEA program funds. 

Nonetheless, we invite comment on the 

question of whether the Secretary or 

institutions should calculate completion 

rates for the respective groups of 

students. 

Committee members urged the 

Department to modify the completion 

rate calculation to show the percentage 

of all students who completed the 

program, rather than just the percentage 

of students who completed the program 

on time, as is set forth in the 2011 

Current Rule. Negotiators argued that 

this change would provide for more 

meaningful information for prospective 

students. In addition, some of the 

negotiators raised concerns that a single 

completion rate indicating the extent to 

which full-time students completed a 

program on time would not adequately 

reflect the experience of part-time 

students, many of whom withdraw and 

re-enroll multiple times before 

completing a program. In this regard, 

some of the negotiators noted that 

students often change their enrollment 

status during the term, and they 

discussed how to include in the 

completion rate students who began a 

program as full-time students but then 

switched to less-than-full-time status. 

To address this concern, the negotiators 

suggested fixing a student’s enrollment 

status at a certain point, such as on the 

first day of class or on a census date. 

The negotiators also noted that, given 

the proposal to narrow the definition of 

‘‘student’’ to include only students who 

received title IV, HEA program funds, a 

completion rate for only full-time 

students could dramatically reduce the 

completion rate for a particular GE 

program. Lastly, while several 

negotiators urged the Department to 

include additional completion rates for 

part-time students, others argued that 

having four rates would overwhelm 

students and prospective students and 

ultimately would not provide 

meaningful information. 

To address these concerns, we are 

proposing that the Secretary would, 

using data reported by an institution, 

calculate and provide to the institution 

for disclosure up to four different 

completion rates for each of its GE 

programs when the Secretary identifies 

those completion rates as required 

disclosures for a particular award year. 

In calculating these rates, the Secretary 

would use a ‘‘snapshot’’ of a student’s 

enrollment status (i.e., full-time, lessthan-full-time) on the first day of the 

student’s enrollment in the program. 

Although this would not reflect changes 

in a student’s enrollment status during 

the student’s entire enrollment, we 

believe, and some committee members 

agreed, that this is a reasonable way to 

establish cohorts for this purpose, as it 

generally reflects the intent of the 

student at the beginning of his or her 

enrollment in the program. 

To ensure that enrolled and 

prospective students have information 

about the percentage of students who 

reach completion, rather than just the 

percentage of students completing the 

program on time as is the case with the 

2011 Current Rule, and, additionally, 

how long students are taking to 

complete the program, the calculations 

for full-time students would be based on 

the number of full-time students who 

completed the program within 100 

percent of the length of the program, 

and the number of full-time students 

who completed the program within 150 

percent of the length of the program. 

Similarly, with respect to less-than-fulltime students, the calculations would be 

based on the number of less-than-fulltime students who completed the 

program within 200 percent of the 

length of the program, and the number 

of less-than-full-time students who 

completed the program within 300 

percent of the length of the program. 

We believe that calculating 

completion rates using these four 

variations would adequately capture the 

experience of full-time and part-time 

students, and that this information 

would be beneficial to both enrolled and 

prospective students, as well as to 

institutions as they work to improve 

outcomes for students. However, we are 

mindful of the concerns raised by some 

of the committee members that multiple 

completion rates might be confusing. 

We invite comment on how the 

completion rate calculations could be 

simplified but still provide meaningful 

information to prospective students. 

Withdrawal Rate 

The 2011 Current Rule does not 

require disclosure of a GE program’s 

withdrawal rates. However, we believe 

this information can be very valuable to 

students, as discussed in ‘‘§ 668.412 

Disclosure requirements for GE 

programs.’’ 

As with completion rates, committee 

members disagreed as to whether the 

withdrawal rate should be calculated by 

the institution or the Department and, 

related to that, whether the calculation 

should include only students who 

received title IV, HEA program funds or 

all individuals who enrolled in and 

withdrew from the program, whether or 

not they received title IV, HEA program 

funds. As with completion rates, we 

concluded that the benefits of ensuring 

consistent and accurate calculations, 

reducing burden on institutions, and 

providing an opportunity for the 

Department to obtain data outweigh 

concerns about limiting the disclosure 

to those students who received title IV, 

HEA program funds. As with 

completion rates, however, we seek 

specific comment on the question. 

The negotiators had two other 

suggestions concerning the withdrawal 

rate. First, some recommended 

extending the period of time over which 

the rate is calculated to mirror the 

proposed extended completion rate 

periods. Second, some of the negotiators 

suggested replacing the withdrawal rate 

with an attrition rate to reflect the 

turnover of students who enroll in a 

program. 

We propose that there be two 

withdrawal rate calculations. One 

would consider the percentage of 

students in the enrollment cohort who 

withdrew from the program at any time 

during the length of the program, 

beginning upon the student’s original 

enrollment in the program, within 100 

percent of the length of the program. 

The second rate would be the 

percentage of students in the enrollment 

cohort who withdrew from the program 

within 150 percent of the length of the 

program. We think this second variation 

of the rate would provide valuable 

information to students about when 

students withdraw from their programs. 

As with other items on the disclosure 

template, we would conduct consumer 

testing to assess how best to present 

these variations of withdrawal rate. 

We agree that an attrition rate would 

provide useful information; however, 

we believe that prospective students 

would better understand a withdrawal 

rate. That is, it would be more intuitive 

for consumers looking at a GE program’s 

disclosures to understand that the 

withdrawal rate reflects how many 

students began the program but dropped 

out before completing the program. 

Additionally, we think these rates 

would be useful to prospective students 

to assess whether an institution may 

have a ‘‘churn’’ problem, where many 

students are enrolling, but are dropping 

out. Making a ‘‘churn’’ problem more 

visible to prospective students may also 

encourage institutions to target efforts 

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and resources to improve student 

outcomes. 

Finally, some negotiators requested 

clarification about how official and 

unofficial student withdrawals would 

factor into the withdrawal rate 

calculation. Operationally, the Secretary 

would include in the withdrawal rate 

calculation any student that the 

institution reported as withdrawn under 

proposed § 668.411. Institutions must 

report as withdrawn any student who 

officially withdrew or otherwise met the 

return of title IV, HEA program funds 

withdrawal provisions under § 668.22, 

which include unofficial withdrawals. 

Repayment Rate 

We propose to use as a disclosure 

item a ‘‘borrower-based’’ repayment rate 

for title IV, HEA program loans that 

reflects whether students entering 

repayment during the applicable cohort 

period were able to pay down, by at 

least one dollar, the outstanding balance 

on the Federal loans they took for 

enrolling in the GE program. Reducing 

the outstanding balance would 

demonstrate that the GE program’s 

former students had sufficient resources 

to pay down at least the amount of 

accruing interest on their title IV, HEA 

program loans taken for enrollment in 

that program. 

For reasons we have already 

discussed, we do not propose to use the 

loan repayment rate as an accountability 

metric in the proposed regulations as we 

did in the 2011 Prior Rule. Nor do we 

propose the same calculation of the 

repayment rate that was in the 2011 

Prior Rule, which was calculated as a 

‘‘dollar-based’’ rate. A dollar-based rate 

measures the percentage of loan 

amounts that are being repaid; a 

borrower-based rate measures the 

percentage of students who are making 

payments on their loans. Of the two, we 

believe a borrower-based repayment rate 

is easier to understand and 

consequently would be more useful to 

prospective students trying to gain 

insight into whether they would be able 

to repay loans they take out for enrolling 

in the program and where to invest their 

limited eligibility for title IV, HEA 

program funds. We believe the 

repayment rate disclosure would also 

help enrolled students as they make 

continuing financial decisions. In 

particular, it might encourage an 

enrolled student to reconsider the 

amount they plan to take out in loans 

in subsequent years. Additionally, we 

think this rate would be useful to 

institutions to assess whether students 

who are taking out Federal loans are 

having a difficult time repaying them 

and, if so, to target efforts and resources 

to provide more effective loan 

counseling to students. 

Some of the negotiators recommended 

indicating on the disclosure template 

that the proposed loan repayment rate 

does not include any private education 

loans or institutional debt that a 

borrower may have incurred in addition 

to their Federal loans. Under the 

proposed regulations, the loan 

repayment rate would include FFEL and 

Direct Loans (including Graduate PLUS 

loans, and consolidation loans that 

include a FFEL or Direct Loan received 

for enrollment in the GE program). The 

loan repayment rate would not include 

Parent PLUS Loans, Perkins Loans, 

private education loans, or institutional 

debt. Although we believe that the 

calculation would be an accurate 

reflection of the repayment performance 

of a GE program’s former students, we 

will use focus groups and consumer 

testing to determine the best way to 

explain to users of the disclosure 

template which types of loans are 

included in the repayment rate and 

which are not. 

Other negotiators representing 

institutions argued that some borrowers 

in an income-driven repayment plan 

(i.e., Income Based Repayment, Income 

Contingent Repayment, Pay As You 

Earn) who make their scheduled 

payments are actively repaying their 

loans, even if those payments do not 

reduce the principal year-end balance, 

and should be counted in the numerator 

of the repayment rate as being in active 

repayment. Although the Department 

has made income-driven repayment 

plans available to borrowers to assist 

them in managing their debt, and 

borrowers may well be meeting their 

obligations under their repayment 

plans, these plans by their nature are 

available only to borrowers whose loan 

debt in relation to their income places 

them in a ‘‘partial financial hardship’’— 

information that we believe the rate 

should reflect. Specifically, the incomedriven repayment plans result in 

considerably extended repayment, add 

interest cost to the borrower, and allow 

cancellation of amounts not paid at 

potential cost to taxpayers, the 

Government, and the borrower. Treating 

such borrowers as in active repayment 

for the purpose of the repayment rate 

disclosed to consumers would not 

provide meaningful information about a 

GE program’s student outcomes and, 

worse, may give prospective students 

unrealistic expectations about the likely 

outcomes of their investment in such a 

program. For that reason, we believe 

that students who are unable to make 

sufficient loan payments scheduled 

during a year to reduce the outstanding 

principal loan balance owed on their 

loans (principal and accrued interest) at 

the end of the year by at least one dollar, 

including students making payments 

under an income-driven repayment 

plan, should not be included in the 

number of borrowers in active 

repayment. 

Several commenters recommended 

that the borrowers excluded under the 

proposed D/E rates calculations—such 

as students in military deferment status 

or students who are enrolled in another 

eligible educational program—be 

excluded from the loan repayment rate 

calculation, noting that the same logic 

would apply. We agree and propose that 

the same exclusions would apply except 

for the exclusion in proposed 

§ 668.404(e) for students who completed 

a higher credentialed program because 

that exclusion is not relevant to 

repayment rates. See ‘‘§ 668.404 

Calculating D/E rates’’ for a discussion 

of these exclusions. 

Median Loan Debt 

Under the 2011 Current Rule, 

institutions calculate and disclose the 

median loan debt incurred by students 

who completed the program, identified 

separately as title IV, HEA loan debt and 

debt from private educational loans and 

institutional financing plans. We believe 

the better approach, instead of each 

institution calculating three median 

loan debt amounts for each of its GE 

programs, is for the Secretary to 

calculate the median loan debt amounts 

and provide them to the institution for 

disclosure. 

In addition to reducing burden on 

institutions and ensuring accuracy of 

the results, this approach is consistent 

with our broader approach of basing 

disclosure information on students who 

received title IV, HEA program funds, 

rather than all individuals enrolled in 

the GE program. 

Although we understand the 

negotiators’ concerns, we believe that 

disclosure information that reflects 

solely the outcomes of students who 

received Federal dollars would be more 

relevant to similarly situated 

prospective students who likely will 

also receive title IV, HEA program 

funds. Prospective students who will 

need to borrow from the title IV, HEA 

programs for enrollment in a GE 

program would know specifically how 

students in similar economic 

circumstances have fared in that 

program. See ‘‘§ 668.401 Scope and 

purpose’’ and ‘‘§ 668.412 Disclosure 

requirements for GE programs’’ for a 

complete discussion of our reasons for 

proposing that the GE measures 

calculations and disclosures be based on 

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information on only title IV, HEA 

program funds recipients. We also note, 

as described in ‘‘§ 668.412 Disclosure 

requirements for GE programs,’’ that we 

may require institutions to disclose 

information about the individuals 

enrolled in the program during the most 

recently completed award year, 

specifically, the percentage of those 

students who incurred debt for 

enrollment in the program. 

Median Earnings 

The 2011 Current Rule does not 

provide for the calculation of median 

earnings as a disclosure item. However, 

we believe that a median earnings 

disclosure would allow students to 

better understand their likely financial 

outcomes if they enroll in a GE program 

and either complete the program or 

withdraw from the program. For the 

purpose of this disclosure, median 

earnings for students who completed 

the program would already be obtained 

from SSA for the purpose of calculating 

the D/E rates. Please see ‘‘§ 668.405 

Issuing and challenging D/E rates’’ for a 

discussion of the process that the 

Secretary would use to determine the 

median earnings of students who 

complete a GE program. A similar 

process would be used for students who 

withdrew from the program, and for 

both students who completed and 

students who withdrew from the 

program. We have repeated the process 

in proposed § 668.413 to make it easier 

for readers to understand the section 

without having to refer back to previous 

sections in proposed subpart Q. 

Issuing and Challenging Completion, 

Withdrawal, and Repayment Rates, 

Median Loan Debt, and Median 

Earnings 

Proposed Regulations: Under the 

proposed regulations, the Department 

would determine and issue the 

completion, withdrawal, and repayment 

rates, median loan debt, and median 

earnings for each GE program, for 

disclosure by the institution. We also 

propose to give institutions an 

opportunity to challenge the 

information used by the Department in 

its calculation of these rates and 

determination of median loan debt. 

Under proposed § 668.413(c), the 

Secretary would notify institutions of 

the draft completion, withdrawal, and 

repayment rates calculated under 

§ 668.413(b) and the information that 

the Secretary used to calculate those 

rates. The Secretary would also notify 

institutions of the median loan debt and 

median earnings for the applicable 

cohort period of the students who 

completed each program, the students 

who withdrew from each program, or 

both the students who completed and 

the students who withdrew from each 

program. 

Under proposed § 668.413(d)(1), an 

institution would be permitted to 

challenge the draft completion, 

withdrawal, and repayment rates and 

draft median loan debt amounts 

provided by the Secretary. The 

proposed procedures would mirror the 

procedures used for challenges to a GE 

program’s draft D/E rates. Specifically, 

the institution would have 45 days after 

the Secretary notifies the institution of 

its draft completion, withdrawal, and 

repayment rates and the median loan 

debt to challenge the accuracy of the 

information that the Secretary used to 

calculate those rates and the median 

loan debt by providing evidence 

demonstrating that the information was 

incorrect. If an institution does not 

challenge the draft completion, 

withdrawal, or repayment rates, or 

median loan debt, those draft rates and 

median loan debt would become the 

final rates and median loan debt under 

proposed § 668.413(e). Following any 

challenge to the rates and median loan 

debt, the Secretary would issue a notice 

of determination under proposed 

§ 668.413(e) indicating whether the 

challenge was accepted and the final 

rate or rates and the median loan debt, 

which the institution would be required 

to disclose if specified by the Secretary. 

Under proposed § 668.413(e), the 

Secretary could also publish the final 

rates and median loan debt. As with the 

determinations of the D/E rates, an 

institution could challenge the 

Secretary’s calculations only once for an 

award year and an institution that does 

not timely challenge the rates or median 

loan debt would waive any objections to 

those rates or median loan debt as stated 

in the notice from the Secretary. 

Proposed § 668.413(d)(2) specifies 

that the Secretary would not consider 

any challenges to the median earnings, 

and proposed § 668.413(e)(2) specifies 

that the median earnings of a program 

calculated by the Secretary constitute 

the final median earnings for the 

program. After notifying an institution 

of its final median earnings for a GE 

program, the Secretary would be able to 

publish those earnings. 

Finally, proposed § 668.413(f) would 

require that any material that an 

institution submits to the Secretary to 

make corrections or challenges under 

this section must be complete, timely, 

accurate, and in a format acceptable to 

the Secretary. Further, any challenges 

under this section would have to 

conform to the instructions provided to 

the institution with the notice of draft 

rates and median loan debt under 

§ 668.413(c). 

Reasons: The proposed regulations 

are intended to provide institutions, in 

the interest of fairness and due process, 

with an adequate opportunity to 

challenge the completion, withdrawal, 

and repayment rates and median loan 

debt determined by the Department. The 

proposed regulations would also 

establish a clear administrative process 

to determine when a program’s 

completion, withdrawal, and repayment 

rates, median loan debt, and median 

earnings information are final and, 

therefore, required to be disclosed. The 

correction and challenge procedures in 

proposed § 668.413 mirror the related 

procedures in § 668.405 for calculation 

of the D/E rates. Please see ‘‘§ 668.405 

Issuing and challenging D/E rates’’ for a 

more detailed description of those 

procedures and our reasons for 

proposing them. 

Section 668.414 Certification 

Requirements for GE Programs 

Current Regulations: 

Certification Requirements 

Under § 668.14, to participate in the 

title IV, HEA programs, an institution 

must enter into a program participation 

agreement (PPA) with the Secretary in 

which it agrees to comply with 

provisions governing the title IV, HEA 

programs. With respect to a GE program 

offered by the institution, the institution 

agrees in the PPA that there is a 

reasonable relationship between the 

length of the program and the entrylevel requirements for the recognized 

occupation for which the program 

prepares students. Under 

§ 668.14(b)(26), the Secretary considers 

the relationship between the program 

length and entry-level requirements to 

be reasonable if the number of clock 

hours provided in the program does not 

exceed by more than 50 percent the 

minimum number of clock hours that a 

State or Federal agency establishes for 

the program training. If the number of 

clock hours in the program exceeds 50 

percent of that minimum, then the 

institution must provide an explanation 

that is acceptable to the Department of 

why the extra hours are justified. The 

institution must also be able to establish 

the need for the training for students to 

obtain employment in the recognized 

occupation for which the program 

prepares students. 

Program Application Requirements 

Under 34 CFR 600.20(d) of the 2011 

Prior Rule, an institution would 

establish the title IV, HEA program 

eligibility of a new GE program through 

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a notice and application process. Under 

that process, the institution would 

notify the Department at least 90 days 

before it intended to provide title IV, 

HEA program funds to students in the 

program, and would provide 

information regarding the market need 

for the program, an explanation of how 

the program was reviewed by or 

developed in conjunction with State or 

recognized oversight entities, and other 

information about the program. 

In reviewing an application, the 

Secretary would consider— 

• The institution’s demonstrated 

financial responsibility and 

administrative capability in operating 

its existing programs. 

• Whether the additional educational 

program is one of several new programs 

that will replace similar programs 

currently provided by the institution, as 

opposed to supplementing or expanding 

the current programs provided by the 

institution. 

• Whether the number of additional 

educational programs being added is 

inconsistent with the institution’s 

historic program offerings, growth, and 

operations. 

• Whether the process and 

determination by the institution to offer 

an additional educational program that 

leads to gainful employment in a 

recognized occupation is sufficient. 

If the Department did not notify the 

institution at least 30 days prior to the 

start of the program, the program would 

be approved by default and the 

institution could disburse title IV, HEA 

program funds to eligible students 

enrolled in the program. However, if the 

Department notified the institution at 

least 30 days before the date the 

program was supposed to begin that 

additional information was needed, the 

institution would be required to provide 

the information and address any 

concerns identified by the Department 

before the program would be approved. 

If the Secretary denied an application 

from an institution to offer a new 

program, the denial would be based on 

the considerations listed above, and the 

Secretary would explain the basis for 

the denial and permit the institution to 

respond and request reconsideration. 

Proposed Regulations: Under proposed 

§ 668.414, we would require an 

institution to assess its GE programs to 

determine whether they meet the 

following minimum standards (referred 

to as the ‘‘certification requirements’’): 

(1) Each eligible GE program it offers 

is included in the institution’s 

accreditation by its recognized 

accrediting agency, or, if the institution 

is a public postsecondary vocational 

institution, the program is approved by 

a recognized State agency for the 

approval of public postsecondary 

vocational education in lieu of 

accreditation; 

(2) Each eligible GE program it offers 

is programmatically accredited, if such 

accreditation is required by a Federal 

governmental entity or by a 

governmental entity in the State in 

which the institution is located or by 

any State within the institution’s MSA; 

and 

(3) For the State in which the 

institution is located and in all other 

States within the institution’s MSA, 

each eligible program it offers satisfies 

the licensure or certification 

requirements of those States so that a 

student who completes the program and 

seeks employment in those States 

qualifies to take any licensure or 

certification exam that is needed for the 

student to practice or find employment 

in an occupation that the program 

prepares students to enter. 

Transitional Certification 

Under proposed § 668.414(a), an 

institution would provide to the 

Department no later than December 31 

of the year in which these regulations 

take effect, a ‘‘transitional certification’’ 

signed by its most senior executive 

officer affirming that each of its eligible 

GE programs then offered by the 

institution satisfies the certification 

requirements. The Secretary would 

accept the certification as an addendum 

to the institution’s program 

participation agreement (PPA). An 

institution would not provide the 

transitional certification if, between July 

1 and December 31 of the year in which 

these regulations take effect, it makes 

the certification in its PPA. 

PPA Certification Requirements 

Under § 668.414(b) of the proposed 

regulations, as a condition of its 

continued participation in the title IV, 

HEA programs, an institution would 

certify in its PPA with the Secretary 

under 34 CFR 668.14 that each of its 

then-eligible GE programs satisfies the 

certification requirements. 

Establishing Eligibility and Disbursing 

Funds 

Under proposed § 668.414(c), an 

institution would establish the 

eligibility of a GE program by updating 

the list of eligible programs maintained 

by the Department to include that 

program, as provided under proposed 

34 CFR 600.21(a)(11)(i). In accordance 

with the procedures for institutional 

notifications under 34 CFR 600.20 and 

600.21, an institution that participates 

in the title IV, HEA programs would 

update the information maintained by 

the Department to reflect changes at the 

institutional level and the program level 

since the institution last signed a PPA. 

Proposed § 600.21(a)(11)(i) would 

expand the existing obligation to update 

by requiring an institution to report any 

changes it makes, or that otherwise 

occur, for a GE program. An institution 

would report, for example, a change in 

the name or credential level of an 

eligible GE program it currently offers, 

or the addition of a GE program. When 

an institution updates its list of eligible 

programs maintained by the Department 

to add a GE program under proposed 

§ 668.414(c), the institution would 

affirm that the program satisfies the 

certification requirements. Except for a 

program that is still subject to a threeyear loss of eligibility under proposed 

§ 668.410(b)(2), after the institution 

updates its list of eligible programs to 

include the GE program, the institution 

may begin to disburse title IV, HEA 

program funds to students enrolled in 

the program. 

Reasons: As part of the accountability 

framework of the proposed regulations, 

we propose that an institution must 

certify through its PPA that its GE 

programs meet applicable accreditation 

and State and Federal licensing 

requirements—the certification 

requirements. Through the certification 

requirements, institutions would be 

required to assess whether their 

programs meet widely accepted 

minimum standards to be eligible for 

participation in the title IV, HEA 

programs. Although the 2011 Prior Rule 

did not include certification 

requirements, we believe that students 

who complete a program that does not 

meet these standards would have a 

difficult time obtaining, or be unable to 

obtain, employment in the occupation 

for which they received training and, 

consequently, would likely struggle to 

repay the debt they incurred for 

enrolling in that program. The 

certification requirements are intended 

to help prevent such outcomes and are 

appropriate conditions that programs 

must satisfy to qualify for title IV, HEA 

program funds as they squarely address 

the debt repayment concerns underlying 

the gainful employment eligibility 

provisions of the HEA. 

The certification requirements, 

designed as an independent pillar of the 

accountability framework, would work 

together with the metrics-based 

standards. The certification 

requirements would provide a basic 

initial assessment of a program’s title IV, 

HEA eligibility. For programs existing as 

of the effective date of the proposed 

regulations, the transitional 

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certification, if applicable, and the 

certification through the existing PPA 

process would establish a program’s 

baseline eligibility as a gainful 

employment program under the HEA. 

Thereafter, if an institution seeks to 

establish or reestablish a program’s 

eligibility, it would do so, first, through 

the institutional notification procedures 

under 34 CFR 600.20 and 600.21 and, 

subsequently, as part of its established 

PPA process. Once sufficient data are 

available to assess program performance 

using the GE measures, the 

accountability metrics would be the 

principal method for assessing a 

program’s continuing eligibility for title 

IV, HEA program funds. 

The negotiators disagreed on what 

kind of standards and what kind of 

process, if any, the Department should 

use to establish eligibility for programs 

existing as of the effective date of the 

proposed regulations and for programs 

that an institution subsequently seeks to 

newly establish or reestablish. 

Certification Standards 

Some negotiators and members of the 

public who attended the negotiated 

rulemaking meetings raised significant 

concerns about students who have been 

harmed by enrolling in programs that 

purported to train the students to work 

in certain occupations but that did not 

meet all governmental requirements or 

accrediting standards necessary for the 

students to get the jobs associated with 

their training. The negotiators explained 

that there are cases where programs lack 

programmatic accreditation, leaving 

students who complete the program 

unable to work in a particular 

occupation without meeting alternative 

standards such as having years of 

experience working in lesser-skilled and 

lower-paying jobs in that field. 

In view of the negotiators’ concerns, 

we believe it is reasonable to require an 

institution to certify that each GE 

program it offers meets any applicable 

State or Federal licensing and 

accrediting requirements for the 

occupations for which the program 

purports to prepare students to enter. 

Some of the negotiators argued that 

the basis for making any initial title IV, 

HEA program eligibility assessment— 

whether for existing programs or new 

programs—should be more 

comprehensive. For example, with 

respect to new programs, some of the 

negotiators proposed that the 

assessment should also include, among 

other things, consideration of the market 

need for the program, projected tuition 

and fees, projected instructional 

expenses, projected income for students 

who complete the program, the 

projected attrition rate, and the 

projected debt-to-earnings ratios for 

students. Under the negotiator 

proposals, projections of market need, 

starting income, and performance under 

debt measures would be obtained 

through employer surveys and State 

databases. Those negotiators suggested 

that an eligibility determination for 

existing programs would consider 

similar matters, but rely on actual data 

rather than projections. 

Although we agree that many of the 

considerations the negotiators proposed 

are relevant to whether a program 

would prepare students for gainful 

employment, and note that market need 

was a factor included in the 2011 Prior 

Rule, we believe that the most critical 

measure of title IV, HEA program 

eligibility—and the measure supported 

by the legislative history—is whether 

students will be able to pay back the 

educational debt they incur to enroll in 

the occupational training. We believe 

that this measure is best made using 

actual student outcomes as calculated 

by the Department using the proposed 

accountability metrics. Accordingly, we 

believe that a more limited inquiry upon 

implementation of the proposed 

regulations and when an institution 

seeks to newly establish the eligibility of 

a program in order to ensure that basic 

requirements are met is sufficient to 

support the more detailed assessment of 

continuing eligibility that would be 

made using the accountability metrics. 

Further, we believe that there is less 

burden on institutions, and a better 

investment of Department resources, if 

the program’s eligibility is thoroughly 

assessed through one, rather than 

multiple processes, and by using actual 

student outcomes instead of projections 

that may not be reliable. This approach 

also takes into consideration that 

institutions will be providing 

disclosures about these programs and 

their outcomes separately from the 

eligibility determinations, with students 

benefitting from both. 

Certification Process 

In this regard, we have proposed that, 

both for programs existing at the 

effective date of the proposed 

regulations and for programs that an 

institution seeks to newly establish or 

reestablish, the certifications would be 

incorporated into the PPA 

recertification process, as it is a 

streamlined, administrative process 

with which institutions are already 

familiar. This approach is consistent 

with section 487(a)(21) of the HEA, 

which establishes requirements for an 

institution’s PPA, provides that an 

institution must meet the requirements 

established by the Secretary and 

accrediting agencies or associations, and 

requires an institution to provide 

evidence to the Secretary that the 

institution has the authority to operate 

within a State. 

We expect that using an existing 

process for these certifications would 

lessen institutional burden and facilitate 

compliance. Because institutional 

schedules vary with respect to the PPA 

process, we have proposed that 

institutions that are not scheduled for 

recertification of their PPA within six 

months of the effective date of the 

proposed regulations make a 

transitional certification for thenexisting programs. The six-month 

period, coupled with the period of time 

from when the final regulations are 

published before they go into effect on 

July 1 would provide time for the 

Department to establish and publicize 

the procedures that institutions would 

follow to submit the certifications, as 

well as provide time for institutions to 

ensure their GE programs are in 

compliance with the certification 

requirements and submit the required 

certifications. Given that the 

certification would affirm compliance 

with a statutory condition for eligibility 

for receipt of title IV, HEA program 

funds, we expect that institutions would 

undertake the self-assessment in good 

faith and based on appropriate due 

diligence. 

Although we have proposed that 

institutions make the same basic 

certifications and generally follow the 

same process with respect to both 

programs existing as of the effective date 

of the proposed regulations and 

programs that an institution 

subsequently seeks to newly establish or 

reestablish, some negotiators suggested 

that new programs may warrant a closer 

review by the Department. That is, 

although negotiators recognized that it 

might be overly burdensome on the 

Department to conduct a full review of 

all existing programs, some believed the 

Department is obligated, once the 

proposed regulations are in effect, to 

make an up-front, substantive eligibility 

determination for new programs, and 

that such review would be necessary to 

prevent institutions from establishing 

inadequate programs for limited time 

periods and avoiding altogether any 

substantive review under the GE 

measures. 

The negotiators expressed differing 

views on the extent to which the 

Department should require institutions 

to apply to add new GE programs and 

the information the Department would 

require institutions to provide in those 

applications. Students, consumer 

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advocates, and State Attorneys General 

urged the Department to develop a 

robust new program approval process, 

arguing that institutions should have to 

demonstrate for each new GE program 

that the projected ratio between their 

planned tuition and fees and the 

estimated earnings of students who 

complete the program would meet the 

GE measures. They argued that 

institutions should have to provide 

documentation of how they determined 

the expected earnings of graduates of 

the program and the market viability of 

the program. Such documentation 

would include information from likely 

employers stating that the program 

would prepare students for positions in 

demand in the field and indicating 

likely entry-level or expected salaries. 

Further, they argued that institutions 

should have to demonstrate in their 

applications that the new GE program 

would meet any applicable required, or 

generally preferred, programmatic 

accreditation and State licensure 

requirements and would adequately 

provide for any necessary experiential 

placements, because otherwise the 

students who complete the program 

would be unable to obtain gainful 

employment. 

Negotiators from institutions and 

accrediting agencies generally argued 

for a meaningful application process 

that would limit the burden on 

institutions as much as possible. They 

suggested targeting the application 

requirements to programs with 

demonstrated difficulty passing the GE 

measures, or otherwise narrowing the 

scope of institutions and programs that 

would have to apply in order to 

establish title IV, HEA program 

eligibility for a new GE program. Several 

parties recommended that the 

Department should avoid duplicating 

processes already in place with States 

and accrediting agencies, particularly in 

States or in fields that already have 

rigorous approval processes. These 

negotiators suggested approaches such 

as exempting institutions from the 

approval process if they could 

demonstrate that they go through a more 

stringent process for another entity, and 

allowing institutions to submit 

information that they assemble for other 

non-Departmental approval processes 

with annotations indicating which 

sections would address the GE 

requirements. The negotiators also 

raised concerns that an approval process 

would limit institutions’ flexibility to 

quickly add new GE programs in 

response to changing demands in the 

field or industry. Overall, these 

negotiators believed that any 

application process should have clear 

and objective standards that an 

institution must meet for a GE program 

to be approved. 

After considering widely varying 

options regarding which new programs 

would require Department approval and 

the content of the institution’s 

application for approval, we are not 

proposing separate approval 

requirements for new programs. At this 

time, we believe that the accountability 

metrics are the best measures of whether 

a program prepares students for gainful 

employment, as we are concerned that 

a more rigorous approval process would 

require an undue amount of time and 

resources from both the Department and 

institutions that would be better spent 

on program improvements. For these 

reasons, instead of establishing the 

eligibility of a GE program under an 

application process, an institution 

would update its list of eligible 

programs maintained by the Department 

to include that program. We view this 

list of eligible programs as an extension 

of the institution’s PPA because the list 

defines the nature and scope of the 

institution’s eligibility and certification 

to participate in the title IV, HEA 

programs under 34 CFR 600.20(e). In 

updating its list of eligible programs to 

include that program, the institution 

would be certifying that the program 

satisfies the certification requirements, 

and, accordingly, the Department would 

recognize that program as an eligible 

program within the scope of the 

institution’s participation. Under the 

proposed regulations, an institution 

could not update its list of eligible 

programs to include a GE program that 

is subject to the three-year loss of 

eligibility provision under proposed 

§ 668.410(b)(2) until the three-year 

period expired. 

Section 668.415 Severability 

Current Regulations: None. 

Proposed Regulations: Proposed 

§ 668.415 would make clear that, if any 

part of the proposed regulations is held 

invalid by a court, the remainder would 

still be in effect. 

Reasons: For the reasons described in 

‘‘§ 668.401 Scope and purpose,’’ through 

the proposed regulations we intend to: 

• Define what it means for a program 

to provide training that prepares 

students for gainful employment in a 

recognized occupation; 

• Establish measures that would 

distinguish programs that provide 

quality, affordable education and 

training to their students from those 

programs that leave students with 

unaffordable levels of loan debt in 

relation to their earnings; and 

• Establish reporting and disclosure 

requirements that would increase the 

transparency of student outcomes of GE 

programs so that accurate and 

comparable information is disseminated 

to students, prospective students, and 

their families, to help them make better 

informed decisions about where to 

invest their time and money in pursuit 

of a postsecondary degree or credential; 

the public, taxpayers, and the 

Government, to help them better 

safeguard the Federal investment in 

these programs; and institutions, to 

provide them meaningful information 

that they could use to improve student 

outcomes in these programs. 

We believe that each of the proposed 

provisions serves one or more 

important, related, but distinct, 

purposes. Each of the requirements 

provides value to students, prospective 

students, and their families, to the 

public, taxpayers, and the Government, 

and to institutions separate from, and in 

addition to, the value provided by the 

other requirements. To best serve these 

purposes, we would include this 

administrative provision in the 

regulations to make clear that the 

regulations are designed to operate 

independently of each other and to 

convey the Department’s intent that the 

potential invalidity of one provision 

should not affect the remainder of the 

provisions. 

Section 600.2 Definitions; Section 

600.10 Date, Extent, Duration, and 

Consequence of Eligibility; Section 

600.20 Notice and Application 

Procedures for Establishing, 

Reestablishing, Maintaining, or 

Expanding Institutional Eligibility and 

Certification; Section 600.21 Updating 

Application Information; Section 668.6

Reporting and Disclosure Requirements 

for Programs That Prepare Students for 

Gainful Employment in a Recognized 

Occupation; Section 668.7 Gainful 

Employment in a Recognized 

Occupation; Section 668.8 Eligible 

Program; Section 668.14 Program 

Participation Agreement 

Current Regulations: The current 

regulations establish requirements for 

institutions to apply to participate in the 

title IV, HEA programs; to continue 

participating beyond the expiration date 

of an institution’s program participation 

agreement; or to continue participating 

when new approval is required due to 

a change of ownership that results in a 

change of control. The current 

regulations also include requirements 

for an institution to provide timely 

notice to the Secretary when expanding 

its participation in title IV, HEA 

programs by adding new educational 

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programs or locations. Similarly, the 

current regulations include 

requirements to identify when an 

institution must first obtain approval for 

a new educational program or location 

before disbursing title IV, HEA program 

funds to students enrolled in the 

program or attending the new location. 

Section 600.10(c) of the 2011 Prior Rule 

established new notice and application 

requirements for institutions proposing 

to add new GE programs. We discuss 

those specific regulations and our 

proposed changes to them in ‘‘§ 668.414 

Certification requirements for GE 

programs.’’ Sections 668.6 and 668.7 are 

parts of the 2011 Final Rules. 

Proposed Regulations: We propose to 

make a number of technical and 

conforming changes to the current 

regulations, including sections of the 

2011 Current Rule, and to the 

regulations from the 2011 Prior Rule. 

• The definition in § 600.2 of 

‘‘recognized occupation’’ would be 

removed and replaced with a slightly 

modified definition. 

• Section 600.10(c) would be revised 

to refer to proposed subpart Q to 

identify the conditions when time 

restrictions would exist that prohibit an 

institution from establishing or 

reestablishing the eligibility of a GE 

program. 

• Proposed § 600.10(c)(1)–(3) would 

incorporate the provisions of the 

proposed regulations into existing new 

program approval requirements. We 

would also revise some of the language 

concerning the need for institutions that 

are provisionally certified, and 

institutions offering direct assessment 

programs, to obtain approval for new 

programs without changing the 

applicable requirements. 

• We propose to revise § 600.20(c)(1) 

to clarify that the circumstances when 

an institution must apply to expand its 

eligibility include the addition of new 

programs and new locations. 

• Section 600.21(a)(11) would be 

revised to require an institution to 

update the list of programs identified in 

its most recent program participation 

application when a GE program is 

established, is voluntarily discontinued, 

loses eligibility, or has other changes to 

the program’s name, CIP code, or 

credential level. 

• Sections 668.6 and 668.7 would be 

removed and reserved. 

• Section 668.8 would be amended to 

replace the reference to § 668.6 in 

paragraph (d)(2)(iii) and (d)(3)(ii) with a 

reference to proposed subpart Q. 

• Section 668.14(a)(26) would clarify 

that a GE program offered by an 

institution is required to prepare 

students for gainful employment in a 

recognized occupation. 

• Section 668.14(a)(26) would be 

revised to include a reference to the GE 

program certification requirements of 

proposed § 668.414. 

• The authority citations in §§ 600.2, 

600.10, 600.20, and 600.21 would be 

revised. 

Reasons: The proposed changes to the 

authority citations are technical in 

nature. The other changes would be 

made to ensure consistency and 

conformity between the proposed 

regulations and existing eligibility and 

related requirements for title IV, HEA 

programs, and to reflect the court’s 

decision in APSCU v. Duncan. 

The definition of ‘‘recognized 

occupation’’ in § 600.2 would be 

restated to clarify that this provision 

would be in effect under the proposed 

regulations. 

The proposed changes to § 600.10(c) 

would make the existing regulation text 

consistent and in conformity with the 

proposed regulations. Proposed 

§ 600.10(c)(2) would provide that except 

as provided in § 600.20(c), an eligible 

institution does not have to obtain the 

approval of the Secretary to establish 

the eligibility of any program not 

previously described in proposed 

§ 600.10(c)(1). 

The proposed change to § 600.20(c)(1) 

to add a reference to new programs is 

a technical change, as the current 

regulations refer only to additions of 

locations in § 600.20(c)(1), whereas 

§ 600.20(c)(1)(v) provides that the 

Secretary can advise an institution by 

letter that it must apply for approval of 

new programs, as well as additional 

locations, under § 600.10(c). Adding the 

reference to new programs in 

§ 600.20(c)(1) would make that language 

consistent with the range of actions that 

are described in § 600.20(c)(1)(i)–(v). 

The revisions to § 600.21(a)(11) would 

require an institution to update the list 

of programs it offers that was provided 

in its last recertification application to 

the Department to include any new GE 

programs it offers, to account for any 

changes in the status of its GE programs, 

and to track any significant change in 

the items the Department uses to track 

GE programs, such as a program’s name, 

CIP code, or credential level. 

Sections 668.6 and 668.7, which were 

a part of the 2011 Final Rules, would be 

removed and reserved because they 

were either vacated or vacated in part by 

the court decision in APSCU v. Duncan, 

and would be replaced by the proposed 

regulations. 

Section 668.8(d)(2)(iii) and (d)(3)(ii) 

would be amended to replace § 668.6 as 

the reference to the requirements for GE 

programs with a reference to proposed 

subpart Q, which would contain the 

requirements for GE programs under the 

proposed regulations. 

Section 668.14(a)(26) would be 

amended to change the description of 

GE programs as having a stated objective 

to prepare students for gainful 

employment in a recognized occupation 

to instead say that a GE program offered 

by an institution is required to prepare 

students for gainful employment in a 

recognized occupation. With this 

revision, this section would more 

closely track the relevant statutory 

language in the HEA and would be 

consistent with the proposed 

requirements for GE programs in 

subpart Q. 

Section 668.14(a)(26) would be 

revised to include a reference to the GE 

program certifications in proposed 

§ 668.414. 

Executive Orders 12866 and 13563 

Regulatory Impact Analysis 

Under Executive Order 12866, the 

Secretary must determine 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 

economically significant as it is 

estimated to have an annual effect on 

the economy of more than $100 million. 

Therefore, this proposed action is 

subject to review by OMB under section 

3(f) of Executive Order 12866. 

We have also reviewed these 

regulations under Executive Order 

13563, which supplements and 

explicitly reaffirms the principles, 

structures, and definitions governing 

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16490 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

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 

upon 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 these regulations only 

on a reasoned determination that their 

benefits justify their costs. In choosing 

among alternative regulatory 

approaches, we selected those 

approaches that maximize net benefits. 

Based on the analysis that follows, the 

Department believes that these 

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. 

In accordance with both Executive 

orders, the Department has assessed the 

potential costs and benefits of this 

regulatory action. The potential costs 

associated with this regulatory action 

are those resulting from implementing 

statutory requirements and those we 

have determined as necessary for 

administering the Department’s 

programs and activities. 

Under the heading Paperwork 

Reduction Act of 1995, we identify and 

explain burdens specifically associated 

with information collection 

requirements. 

A detailed analysis, including our 

Initial Regulatory Flexibility Analysis, is 

found in Appendix A to this document. 

Clarity of the Regulations 

Executive Order 12866 and the 

Presidential memorandum ‘‘Plain 

Language in Government Writing’’ 

require each agency to write regulations 

that are easy to understand. 

The Secretary invites comments on 

how to make these proposed regulations 

easier to understand, including answers 

to questions such as the following: 

• Are the requirements in the 

proposed regulations clearly stated? 

• Do the proposed regulations contain 

technical terms or other wording that 

interferes with their clarity? 

• Does the format of the proposed 

regulations (grouping and order of 

sections, use of headings, paragraphing, 

etc.) aid or reduce their clarity? 

• Would the proposed regulations be 

easier to understand if we divided them 

into more (but shorter) sections? (A 

‘‘section’’ is preceded by the symbol 

‘‘§ ’’ and a numbered heading; for 

example, § 668.410 Consequences of GE 

measures.) 

• Could the description of the 

proposed regulations in the 

SUPPLEMENTARY INFORMATION section of 

this preamble be more helpful in 

making the proposed regulations easier 

to understand? If so, how? 

• What else could we do to make the 

proposed regulations easier to 

understand? 

To send any comments that concern 

how the Department could make these 

proposed regulations easier to 

understand, see the instructions in the 

ADDRESSES section. 

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 and continuing 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. 

The table at the end of this section 

summarizes the estimated burden on 

small entities, primarily institutions and 

applicants, arising from the paperwork 

associated with the proposed 

regulations. 

Sections 668.405, 668.406, 668.408, 

668.410, 668.411, 668.412, 668.413, 

668.414, 668.504, 668.509, 668.510, 

668.511, 668.512, 668.513, and 668.514 

contain information collection 

requirements. Under the PRA, the 

Department has submitted a copy of 

these sections, related forms, and 

Information Collections Requests (ICRs) 

to OMB for its review. 

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. 

In the final regulations, we will 

display the control numbers assigned by 

OMB to any information collection 

requirements proposed in this NPRM 

and adopted in the final regulations. 

Discussion 

Section 668.405 Issuing and 

Challenging D/E Rates 

Requirements: Under the proposed 

regulations, the Secretary would create 

a list of students who completed a GE 

program during the applicable cohort 

period from data reported by the 

institution. The list would indicate 

whether the list is of students who 

completed the program in the two-year 

cohort period or in the four-year cohort 

period, and it would also indicate 

which of the students on the list would 

be excluded from the D/E rates 

calculations under proposed 

§ 668.404(e), for one of the following 

reasons: A military deferment, a loan 

discharge for total and permanent 

disability, enrollment on at least a halftime basis, completing a higher 

undergraduate or graduate credentialed 

program, or death. 

The institution would then have the 

opportunity, within 45 days of receiving 

the student list from the Secretary, to 

propose corrections to the list. After 

receiving the institution’s proposed 

corrections, the Secretary would notify 

the institution whether a proposed 

correction is accepted and would use 

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any corrected information to create the 

final list. 

Burden Calculation: We have 

estimated that the 2010–2011 and the 

2011–2012 total number of students 

enrolled in GE programs is projected to 

be 6,436,806 (the 2010–2011 total of 

3,341,856 GE students plus the 2011– 

2012 total of 3,094,950 GE students). 

We estimate that 89 percent of the 

total enrollment in GE programs would 

be at for-profit institutions, 2 percent 

would be at private non-profit 

institutions, and 9 percent would be at 

public institutions. As indicated in 

connection with the 2011 Final Rules 

(75 FR 66933), we estimate that 16 

percent of students enrolled in GE 

programs would complete their course 

of study. Therefore, we estimate that 

there would be 916,601 students who 

complete their programs at for-profit 

institutions (6,436,806 students times 89 

percent of total enrollment at for-profit 

institutions times 16 percent, the 

percentage of students who complete 

programs) during the two-year cohort 

period. 

On average, we estimate that it would 

take for-profit institutional staff 0.17 

hours (10 minutes) per student to 

review the list to determine whether a 

student should be included or excluded 

under proposed § 668.404(e) and, if 

included, whether the student’s identity 

information requires correction, and 

then to obtain the evidence to 

substantiate any inclusion, exclusion, or 

correction, increasing burden by 

155,822 hours (916,601 students times 

.17 hours) under OMB 1845—NEW1. 

We estimate that there would be 

20,598 students who complete their 

programs at private non-profit 

institutions (6,436,806 students times 2 

percent of total enrollment at private 

non-profit institutions times 16 percent, 

the percentage of students who 

complete programs) during the two-year 

cohort period. 

On average, we estimate that it would 

take private non-profit institutional staff 

0.17 hours (10 minutes) per student to 

review the list to determine whether a 

student should be included or excluded 

under proposed § 668.404(e) and, if 

included, whether the student’s identity 

information requires correction, and 

then to obtain the evidence to 

substantiate any inclusion, exclusion, or 

correction, increasing burden by 3,502 

hours (20,598 students times .17 hours) 

under OMB 1845—NEW1. 

We estimate that there would be 

92,690 students who complete their 

programs at public institutions 

(6,436,806 students times 9 percent of 

the total enrollment at public 

institutions times 16 percent, the 

percentage of students who complete 

programs) during the two-year cohort 

period. 

On average, we estimate that it would 

take public institutional staff 0.17 hours 

(10 minutes) per student to review the 

list to determine whether a student 

should be included or excluded under 

proposed § 668.404(e) and, if included, 

whether the student’s identity 

information requires correction, and 

then to obtain the evidence to 

substantiate any inclusion, exclusion, or 

correction, increasing burden by 15,757 

hours (92,690 students times .17 hours) 

under OMB 1845—NEW1. 

Collectively, the total number of 

students who complete their programs 

and who would be included on the lists 

that would be provided to institutions is 

a projected 1,029,889 students, thus 

increasing burden by 175,081 hours 

under OMB Control Number 1845— 

NEW1. 

Requirements: Under the proposed 

regulations at § 668.405(f), after 

finalizing the list of students, the 

Secretary would obtain from SSA the 

mean and median earnings, in aggregate 

form, of those students on the list whom 

SSA has matched to its earnings data for 

the most recently completed calendar 

year for which SSA has validated 

earnings information. SSA would 

provide the Secretary no individual data 

on these students; rather, SSA would 

advise the Secretary of the number of 

students it could not, for any reason, 

match against its records of earnings. In 

the D/E rates calculation, the Secretary 

would exclude from the loan debts of 

the students on the list the same number 

of loan debts as SSA non-matches, 

starting with the highest loan debt. The 

remaining debts would then be used to 

calculate the mean and median earnings 

for the listed students. The Secretary 

would calculate draft D/E rates using 

the higher of the mean or median 

annual earnings reported by SSA under 

proposed § 668.405(e), notify the 

institution of the GE program’s draft 

D/E rates, and provide the institution 

with the individual loan data on which 

the rates were calculated. 

Under the proposed regulations at 

§ 668.405(f), the institution would have 

the opportunity, within 45 days of the 

Secretary’s notice of the draft D/E rates, 

to challenge, under procedures 

established by the Secretary, the 

accuracy of the rates. The institution 

would be permitted only to challenge 

the loan data used to calculate the draft 

D/E rates. Because SSA does not 

disclose data that would enable the 

Secretary to assess a challenge to 

reported earnings, the Secretary would 

not consider any challenge to the 

earnings used to calculate the draft 

D/E rates. The Secretary would notify 

the institution whether a proposed 

challenge is accepted and use any 

corrected information from the 

challenge to recalculate the GE 

program’s draft D/E rates. 

Burden Calculation: There are 9,986 

programs that would be evaluated under 

the proposed regulations. Our analysis 

estimates that of those 9,986 programs, 

with respect to the D/E rates measure, 

7,604 programs would be passing, 929 

programs would be in the zone, and 

1,453 programs would fail. 

We estimate that the number of 

students at for-profit institutions who 

complete programs that are in the zone 

would be 52,395 (327,468 students 

enrolled in zone programs times 16 

percent, the percentage of students who 

complete programs) and the number 

who complete failing programs at forprofit institutions would be 135,118 

(844,488 students enrolled in failing 

programs times 16 percent, the 

percentage of students who complete 

programs), for a total of 187,513 

students (52,395 students plus 135,118 

students). 

We estimate that it would take 

institutional staff an average of 0.25 

hours (15 minutes) per student to 

examine the loan data and determine 

whether to select a record for challenge, 

resulting in a burden increase of 46,878 

hours (187,513 students times .25 hours) 

in OMB Control Number 1845—NEW1. 

We estimate that the number of 

students at private non-profit 

institutions who complete programs that 

are in the zone would be 369 (2,308 

students enrolled in zone programs 

times 16 percent, the percentage of 

students who complete programs) and 

the number who complete failing 

programs at private non-profit 

institutions would be 868 (5,423 

students enrolled in failing programs 

times 16 percent, the percentage of 

students who complete programs), for a 

total of 1,237 students (369 students 

plus 868 students). 

We estimate that it would take 

institutional staff an average of 0.25 

hours (15 minutes) per student to 

examine the loan data and determine 

whether to select a record for challenge, 

resulting in a burden increase of 309 

hours (1,237 students times .25 hours) 

in OMB Control Number 1845—NEW1. 

We estimate that the number of 

students at public institutions who 

complete programs that are in the zone 

would be 100 (628 students enrolled in 

zone programs times 16 percent, the 

percentage of students who complete 

programs) and the number who 

complete failing programs at public 

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institutions would be 2,109 (13,178 

students enrolled in failing programs 

times 16 percent, the percentage of 

students who complete programs), for a 

total of 2,209 students (100 students 

plus 2,109 students). 

We estimate that it would take 

institutional staff an average of 0.25 

hours (15 minutes) per student to 

examine the loan data and determine 

whether to select a record for challenge, 

resulting in a burden increase of 552 

hours (2,209 students times .25 hours) 

in OMB Control Number 1845—NEW1. 

Collectively, the burden for 

institutions to examine loan records and 

to determine whether to make a draft 

D/E rates challenge would increase 

burden by 47,739 hours under OMB 

Control Number 1845—NEW1. 

The total increase in burden for 

§ 668.405 would be 222,820 hours under 

OMB Control Number 1845—NEW1. 

Section 668.406 D/E Rates Alternate 

Earnings Appeals and Showings of 

Mitigating Circumstances 

Alternate Earnings Appeals 

Requirements: The proposed 

regulations would provide an 

opportunity for an institution to submit 

to the Secretary an alternate earnings 

appeal if, using data obtained from SSA, 

the Secretary determined that the 

program was a failing or in the zone 

under the D/E rates measure. In 

submitting an alternate earnings appeal, 

the institution would seek to 

demonstrate that the earnings of 

students who completed the GE 

program in the applicable cohort period 

are sufficient to pass the D/E rates 

measure. The institution would base its 

appeal on alternate earnings evidence 

from either a survey conducted in 

accordance with requirements 

established by NCES or from Statesponsored data systems. In either 

instance, the alternate earnings data 

would be from the same calendar year 

for which the Secretary obtained 

earnings data from SSA for use in the 

D/E rates calculations. An appeal could 

only be filed once for a GE program’s 

award year’s D/E rates. 

An institution with a GE program that 

is failing or in the zone that wishes to 

submit alternate earnings appeal 

information must notify the Secretary of 

its intent to do so no earlier than the 

date that the Secretary provides the 

institution with its draft D/E rates and 

no later than three business days after 

the date the Secretary issues the notice 

of determination of the program’s D/E 

rates. No later than 60 days after the 

date the Secretary issues the notice of 

determination, the institution must 

submit its appeal information under 

procedures established by the Secretary. 

The appeal must include all supporting 

documentation related to recalculating 

the D/E rates using alternate earnings 

data. 

Survey: If an institution wishes to 

submit an appeal by providing survey 

results data, it would include in the 

universe of students that would be 

subject to survey sampling all of the 

program’s former students who 

completed the program during the 

applicable cohort period and who 

received title IV, HEA program funds. 

The Secretary would publish in the 

Federal Register an Earnings Survey 

Form developed by NCES. The Earnings 

Survey Form would be a model fieldtested sample survey that may be used 

by an institution in accordance with the 

survey standards, such as a required 

response rate or subsequent nonresponse bias analysis that the 

institution must meet to guarantee the 

validity and reliability of the results. 

Although use of the sample survey 

would not be required and the Earnings 

Survey Form would be provided by 

NCES only as a service to institutions, 

an institution that chooses not to use the 

Earnings Survey Form would be 

required to conduct its survey in 

accordance with the published NCES 

standards. 

Under the proposed regulations, the 

institution would certify that the survey 

was conducted in accordance with the 

requirements of the NCES Earnings 

Survey Form and submit an 

examination-level attestation 

engagement report prepared by an 

independent public accountant or 

independent governmental auditor, as 

appropriate, that the survey was 

conducted in accordance with the 

standards in the NCES Earnings Survey 

Form. The attestation would be 

conducted in accordance with the 

attestation standards contained in the 

GAO’s Government Auditing Standards 

promulgated by the Comptroller General 

of the United States and with 

procedures for attestations contained in 

guides developed by and available from 

the Department’s Office of Inspector 

General. 

Burden Calculation: We estimate that 

for-profit institutions would have 1,364 

gainful employment programs in the 

zone and that 910 programs would be 

failing for a total of 2,274 programs. We 

expect that most institutions would 

determine that SSA data reflect 

accurately the earnings of students and 

would therefore not elect to conduct the 

survey. Accordingly, we estimate that 

for-profit institutions would submit 

alternate earnings appeals under the 

survey appeal option for 10 percent of 

those programs, which would equal 227 

appeals annually. We estimate that 

conducting the survey, providing the 

institutional certification, and obtaining 

the examination-level attestation 

engagement report would total, on 

average, 100 hours of increased burden, 

therefore burden would increase 22,700 

hours (227 survey appeals times 100 

hours) under OMB Control Number 

1845—NEW2. 

We estimate that private-non-profit 

institutions would have 12 gainful 

employment programs in the zone and 

that 34 programs would be failing for a 

total of 46 programs. We expect that 

most institutions would determine that 

SSA data reflect accurately the earnings 

of students and would therefore not 

elect to conduct the survey. 

Accordingly, we estimate that private 

non-profit institutions would submit 

alternate earnings appeals under the 

survey appeal option for 10 percent of 

those programs, which would equal 5 

appeals annually. We estimate that 

conducting the survey, providing the 

institutional certification, and obtaining 

the examination-level attestation 

engagement report would total, on 

average, 100 hours of increased burden, 

therefore burden would increase 500 

hours (5 survey appeals times 100 

hours) under OMB Control Number 

1845—NEW2. 

We estimate that public institutions 

would have 7 gainful employment 

programs in the zone and that 55 

programs would be failing for a total of 

62 programs. We expect that most 

institutions would determine that SSA 

data reflect accurately the earnings of 

students and would therefore not elect 

to conduct the survey. Accordingly, we 

estimate that public institutions would 

submit alternate earnings appeals under 

the survey appeal option for 10 percent 

of those programs, which would equal 

6 appeals annually. We estimate that 

conducting the survey, providing the 

institutional certification, and obtaining 

the examination-level attestation 

engagement report would total, on 

average, 100 hours of increased burden, 

therefore burden would increase 600 

hours (6 survey appeals times 100 

hours) under OMB Control Number 

1845—NEW2. 

Collectively, the projected burden 

associated with conducting an 

alternative earnings survey would 

increase burden by 23,800 hours under 

OMB Control Number 1845—NEW2. 

State data systems: An institution that 

wishes to submit an appeal by providing 

State data would include in the list it 

submits to the State or States all of the 

students who were included on the list 

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sent by the Secretary to the SSA under 

proposed § 668.405(d). That is, the 

institution must include the program’s 

former students who received title IV, 

HEA program funds, who completed the 

program during the applicable cohort 

period, and who were not excluded 

under proposed § 668.404(e). The 

earnings information obtained from the 

State or States would have to match 50 

percent of the total number of students 

included on the institution’s list, and 

the number matched would have to be 

30 or more. 

Burden Calculation: We estimate that 

there would be 1,364 failing GE 

programs at for-profit institutions and 

910 programs in the zone, for a total of 

2,274 programs. We expect that most 

institutions would determine that SSA 

data reflect accurately the earnings of 

students who completed a program and 

would therefore not elect to submit 

earnings data from a State-sponsored 

system. Accordingly, we estimate that in 

10 percent of those cases, institutions 

would obtain earnings data from a Statesponsored system, resulting in 

approximately 227 appeals. 

We estimate that, on average each 

appeal would take 20 hours, including 

execution of an agreement for data 

sharing and privacy protection under 

the Family Educational Rights and 

Privacy Act (20 U.S.C. 1232g) (FERPA) 

between the institution and the State 

agency, preparing the list(s), submitting 

the list(s) to the appropriate State 

agency, reviewing the results, 

calculating the proposed revised D/E 

rates, and submitting those results to the 

Secretary. Therefore, burden would 

increase by 4,540 hours (227 state 

system appeals times 20 hours under 

OMB Control Number 1845—NEW2. 

We estimate that there would be 34 

failing GE programs at private non-profit 

institutions and 12 programs in the 

zone, for a total of 46 programs. We 

expect that most institutions would 

determine that SSA data reflect 

accurately the earnings of students who 

completed a program and would 

therefore not elect to submit earnings 

data from a State-sponsored system. 

Accordingly, we estimate that in 10 

percent of those cases, institutions 

would obtain earnings data from a Statesponsored system, resulting in 5 

appeals. 

We estimate that, on average each 

appeal would take 20 hours, including 

execution of an agreement for data 

sharing and privacy protection under 

FERPA between the institution and the 

State agency, preparing the list(s), 

submitting the list(s) to the appropriate 

State agency, reviewing the results, 

calculating the proposed revised D/E 

rates, and submitting those results to the 

Secretary. Therefore burden would 

increase by 100 hours (5 state system 

appeals times 20 hours) under OMB 

Control Number 1845—NEW2. 

We estimate that there would be 55 

failing GE programs at public 

institutions and 7 programs in the zone, 

for a total of 62 programs. We expect 

that most institutions would determine 

that SSA data reflect accurately the 

earnings of students who completed a 

program and would therefore not elect 

to submit earnings data from a Statesponsored system. Accordingly, we 

estimate that in 10 percent of those 

cases institutions would obtain earnings 

data from a State-sponsored system, 

resulting in approximately 6 appeals. 

We estimate that, on average each 

appeal would take 20 hours, including 

execution of an agreement for data 

sharing and privacy protection under 

FERPA between the institution and the 

State agency, preparing the list(s), 

submitting the list(s) to the appropriate 

State agency, reviewing the results, 

calculating the proposed revised D/E 

rates, and submitting those results to the 

Secretary. Therefore, burden would 

increase by 120 hours (6 state system 

appeals times 20 hours) under OMB 

Control Number 1845—NEW2. 

Showings of Mitigating Circumstances 

Requirements: If a GE program is 

failing or in the zone under the D/E 

rates measure, an institution may avoid 

or mitigate the consequences that the 

Secretary may otherwise impose under 

§ 668.410 by making a successful 

showing of mitigating circumstances 

with respect to the program’s most 

recent final D/E rates issued by the 

Secretary. The institution may make a 

showing of mitigating circumstances if 

less than 50 percent of all the 

individuals who completed the program 

during the applicable cohort period, 

including those who received and those 

who did not receive title IV, HEA 

program funds, incurred loan debt (as 

defined in § 668.404(d)) for enrollment 

in the program. If such mitigating 

circumstances are shown, the program 

would be deemed to pass the D/E rates 

measure for that year. In submitting the 

showing of mitigating circumstances, 

the chief executive officer of the 

institution would have to affirm the 

accuracy of the data used to calculate 

the borrowing rate. Additionally, the 

institution would be required to 

maintain those data for program review 

or audit purposes. 

To make a showing of mitigating 

circumstances for a program with D/E 

rates that are failing or in the zone, an 

institution would calculate the 

program’s ‘‘borrowing rate’’ by: 

Step 1. Determining the number of 

individuals, including individuals who 

did not receive title IV, HEA program 

funds, who completed the program 

during the applicable cohort period; 

Step 2. Of all of the individuals in 

Step 1, determining the number who 

incurred loan debt for enrollment in the 

program; and 

Step 3. Dividing the number in Step 

2 by the number in Step 1. 

If the borrowing rate for the program 

is less than 50 percent, the program 

would be deemed to pass the D/E rates 

measure for that year. In submitting the 

showing of mitigating circumstances, 

the chief executive officer of the 

institution would have to affirm the 

accuracy of the data used to calculate 

the borrowing rate. In addition, the 

institution would be required to 

maintain those data for program review 

or audit purposes. 

Burden Calculation: We estimate that 

2 percent of the total 2,274 programs at 

for-profit institutions (910 zone 

programs plus 1,364 failing programs), 

or 45 programs at for-profit institutions, 

would make a showing of mitigating 

circumstances based on a borrowing rate 

of less than 50 percent and that 

generally this would be an automated 

process. However, there would be some 

situations, probably at small 

institutions, where the process could be 

a manual process, and, therefore, we 

estimate the average amount of time to 

collect the data and make the showing 

would on average be 5 hours per 

showing. The estimated burden would 

be 225 hours (45 showings times 5 

hours per showing) under OMB Control 

Number 1845—NEW2. 

We estimate that 5 percent of the total 

46 programs at private non-profit 

institutions (12 zone programs plus 34 

failing programs), or 2 programs at 

private non-profit institutions, would 

make a showing of mitigating 

circumstances based on borrowing rate 

of less than 50 percent and that 

generally this would be an automated 

process. However, there would be some 

situations, probably at small 

institutions, where the process could be 

a manual process, and, therefore, we 

estimate the average amount of time to 

collect the data and make the showing 

would on average be 5 hours per 

showing. The estimated burden would 

be 10 hours (2 showings times 5 hours 

per showing) under OMB Control 

Number 1845—NEW2. 

We estimate that 50 percent of the 

total 62 programs at public institutions 

(7 zone programs plus 55 failing 

programs), or 31 programs at public 

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institutions, would make a showing of 

mitigating circumstances based on a 

borrowing rate of less than 50 percent 

and that generally this would be an 

automated process. However, there 

would be some situations, probably at 

small institutions, where the process 

could be a manual process, and, 

therefore, we estimate the average 

amount of time to collect the data and 

make the showing would on average be 

5 hours per showing. The estimated 

burden would be 155 hours (45 

showings times 5 hours per showing) 

under OMB Control Number 1845— 

NEW2. 

Collectively, burden would increase 

by 5,150 hours under OMB Control 

Number 1845—NEW2. 

Requirements: Under the proposed 

regulations, to pursue an alternate 

earnings appeal or to make a showing of 

mitigating circumstances, the institution 

must notify the Secretary of its intent to 

submit an appeal or make a showing no 

later than three business days after the 

Secretary issues the final D/E rates. This 

notification must be made no earlier 

than the date the Secretary provides the 

institution with draft D/E rates and no 

later than three business days after the 

Secretary issues the final D/E rates. 

Burden Calculation: We estimated 

above that for-profit institutions would 

have annually 227 alternate earnings 

survey appeals, 227 State-sponsored 

data system appeals, and 45 showings of 

mitigating circumstances for a total of 

499 appeals and showings. We estimate 

that completing and submitting a notice 

of intent to submit an appeal or make 

a showing increases burden, on average, 

by 0.25 hours per submission or 125 

hours (499 submissions times 0.25 

hours) under OMB Control 1845— 

NEW2. 

We estimated above that private nonprofit institutions would have annually 

5 alternate earnings survey appeals, 5 

State-sponsored data system appeals, 

and 2 showings of mitigating 

circumstances for a total of 12 appeals 

and showings. We estimate that 

completing and submitting a notice of 

intent to submit an appeal or make a 

showing increases burden, on average, 

by 0.25 hours per submission or 3 hours 

(12 submissions times 0.25 hours) under 

OMB Control 1845—NEW2. 

We estimated above that public 

institutions would have annually 6 

alternate earnings survey appeals, 6 

State-sponsored data system appeals, 

and 31 showings of mitigating 

circumstances for a total of 43 appeals 

and showings. We estimate that 

completing and submitting a notice of 

intent to submit an appeal or make a 

showing increases burden, on average, 

by 0.25 hours per submission or 11 

hours (43 submissions times 0.25 hours) 

under OMB Control 1845—NEW2. 

Collectively, the projected burden 

associated with completing and 

submitting a notice of intent would 

increase burden by 139 hours under 

OMB Control Number 1845—NEW2. 

The total increase in burden for 

§ 668.406 would be 29,089 hours under 

OMB Control Number 1845—NEW2. 

Section 668.408 Issuing and 

Challenging pCDR 

The burden associated with issuing 

and challenging pCDR is located in 

Subpart R as indicated below. 

Section 668.410 Consequences of GE 

Measures 

Requirements: Under proposed 

§ 668.410(a), if we notify an institution 

that a GE program could become 

ineligible based on a final GE measure 

for the next award or fiscal year, within 

30 days the institution would have to 

provide a written warning directly to 

each student enrolled in the program. 

To the extent practicable, an institution 

would have to provide this warning in 

other languages for enrolled students for 

whom English is not their first language. 

In the warning, an institution would 

be required to describe the options 

available to the student to continue his 

or her education in the event that the 

program loses its eligibility for title IV, 

HEA program funds. Specifically, the 

warning would inform the student of 

whether the institution will allow the 

student to transfer to another program at 

the institution; continue to provide 

instruction in the program to allow the 

student to complete the program; or 

refund the tuition, fees, and other 

required charges paid by, or on behalf 

of, the student for attending the 

program. 

Under proposed § 668.410(a)(1), an 

affected institution must provide a 

written warning (a) by hand-delivering 

it individually, (b) through a group 

presentation, or (c) via email. 

Burden Calculation: We estimate that 

the written warnings would be handdelivered to 10 percent of the affected 

students, delivered through a group 

presentation to another 10 percent of the 

affected students, and delivered through 

the student’s primary email address 

used by the institution to the remaining 

80 percent. 

Based upon 2009–2010 reported data, 

2,703,851 students were enrolled at forprofit institutions. Of that number, we 

estimate that 327,468 students were 

enrolled in zone programs and 844,488 

students were enrolled in failing 

programs at for-profit institutions. Thus, 

the total number of warnings would 

have to be provided to 1,171,956 

students enrolled in GE programs at forprofit institutions. 

Of the 1,171,956 projected number of 

warnings to be provided to enrolled 

students at for-profit institutions, we 

estimate that 117,196 students 

(1,171,956 students times 10 percent) 

would receive the warning individually 

and that it would take on average 0.17 

hours (10 minutes) per warning to print 

the warning, locate the student, and 

deliver the warning to each affected 

student. This would increase burden by 

19,923 hours (117,196 students times 

0.17 hours) under OMB Control Number 

1845—NEW1. 

Of the 1,171,956 projected warnings 

to be provided to enrolled students at 

for-profit institutions, we estimate that 

117,196 students (1,171,956 students 

times 10 percent) would receive the 

warning at a group presentation and that 

it would take on average 0.33 hours (20 

minutes) per warning to print the 

warning, conduct the presentation, and 

answer questions about the warning to 

each affected student. This would 

increase burden by 38,675 hours 

(117,196 times 0.33 hours) under OMB 

Control Number 1845—NEW1. 

Of the 1,171,956 projected warnings 

to be provided to enrolled students at 

for-profit institutions, we estimate that 

937,564 students (1,171,956 students 

times 80 percent) would receive the 

warning via email and that it would take 

on average 0.017 hours (1 minute) per 

warning to send the warning to each 

affected student. This would increase 

burden by 15,939 hours (937,564 

students times 0.017 hours) under OMB 

Control Number 1845—NEW1. 

Based upon 2009–2010 reported data, 

57,700 students were enrolled at private 

non-profit institutions. Of that number 

of students, we estimate that 2,308 

students would be enrolled in zone 

programs and 5,423 students would be 

enrolled in failing programs at private 

non-profit institutions. Thus, the total 

number of warnings would have to be 

provided to 7,731 students (2,308 

students plus 5,423 students) enrolled 

in GE programs at private non-profit 

institutions. 

Of the 7,731 projected number of 

warnings to be provided to enrolled 

students at non-profit institutions, we 

estimate that 773 students (7,731 

students times 10 percent) would 

receive the warning individually and 

that it would take on average 0.17 hours 

(10 minutes) per warning to print the 

warning, locate the student, and deliver 

the warning to each affected student. 

This would increase burden by 131 

hours (773 students times 0.17 hours) 

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under OMB Control Number 1845— 

NEW1. 

Of the 7,731 projected warnings to be 

provided to enrolled students at nonprofit institutions, we estimate that 773 

students (7,731 students times 10 

percent) would receive the warning at a 

group presentation and that it would 

take on average 0.33 hours (20 minutes) 

per warning to print the warning, 

conduct the presentation, and answer 

questions about the warning to each 

affected student. This would increase 

burden by 255 hours (773 times 0.33 

hours) under OMB Control Number 

1845—NEW1. 

Of the 7,731 projected warnings to be 

provided to enrolled students at nonprofit institutions, we estimate that 

6,185 students (7,731 students times 80 

percent) would receive the warning via 

email and that it would take on average 

0.017 hours (1 minute) per warning to 

send the warning to each affected 

student. This would increase burden by 

105 hours (6,185 students times 0.017 

hours) under OMB Control Number 

1845y—NEW1. 

Based upon 2009–2010 reported data, 

276,234 students were enrolled at 

public institutions. Of that number of 

students, we estimate that 628 students 

would be enrolled in zone programs and 

13,178 students would be enrolled in 

failing programs at public institutions. 

Thus, the total number of warnings 

would have to be provided to 13,806 

students (628 students plus 13,178 

students) enrolled in GE programs at 

public institutions. 

Of the 13,806 projected number of 

warnings to be provided to enrolled 

students at public institutions, we 

estimate that 1,381 students (13,806 

students times 10 percent) would 

receive the warning individually and 

that it would take on average 0.17 hours 

(10 minutes) per warning to print the 

warning, locate the student, and deliver 

the warning to each affected student. 

This would increase burden by 235 

hours (13,806 students times 0.17 hours) 

under OMB Control Number 1845— 

NEW1. 

Of the 13,806 projected warnings to 

be provided to enrolled students at 

public institutions, we estimate that 

1,381 students (13,806 students times 10 

percent) would receive the warning at a 

group presentation and that it would 

take on average 0.33 hours (20 minutes) 

per warning to print the warning, 

conduct the presentation, and answer 

questions about the warning to each 

affected student. This would increase 

burden by 456 hours (1,381 times 0.33 

hours) under OMB Control Number 

1845—NEW1. 

Of the 13,806 projected warnings to 

be provided to enrolled students at 

public institutions, we estimate that 

11,044 students (13,806 students times 

80 percent) would receive the warning 

via email and that it would take on 

average 0.017 hours (1 minute) per 

warning to send the warning to each 

affected student. This would increase 

burden by 188 hours (11,044 students 

times 0.017 hours) under OMB Control 

Number 1845—NEW1. 

Collectively, providing the warnings 

would increase burden by 75,907 hours 

under OMB Control Number 1845— 

NEW1. 

Students would also be affected by 

the warnings. On average, given the 

alternatives available to institutions, we 

estimate that it would take each student 

0.17 hours (10 minutes) to read the 

warning and ask any questions. 

Burden would increase by 199,233 

hours (1,171,956 students times 0.17 

hours) for the students who would 

receive warnings from for-profit 

institutions under one of the three 

delivery options, under OMB Control 

Number 1845—NEW1. 

Burden would increase by 1,314 

hours (7,731 students times 0.17 hours) 

for the students who would receive 

warnings from private non-profit 

institutions under one of the three 

delivery options, under OMB Control 

Number 1845—NEW1. 

Burden would increase by 2,347 

hours (13,806 students times 0.17 hours) 

for the students who would receive 

warnings from public institutions under 

one of the three delivery options, under 

OMB Control Number 1845—NEW1. 

Collectively, students reading the 

warning would increase burden by 

202,894 hours under OMB Control 

Number 1845—NEW1. 

Requirements: Under proposed 

§ 668.410(a)(2), institutions must 

provide a written warning about a 

possible loss of eligibility for title IV, 

HEA program funds directly to 

prospective students prior to their 

signing an enrollment agreement, 

registering, or making any financial 

commitment to the institution. To the 

extent practicable, an institution would 

have to provide this warning in other 

languages for enrolled students for 

whom English is not their first language. 

Burden Calculation: Most institutions 

would have to contact, or be contacted 

by, a larger number of prospective 

students to yield institutions’ desired 

net enrollments. The magnitude of this 

activity would be different depending 

on the type and control of the 

institution, as detailed below. 

We estimate that the number of 

prospective students that must contact 

or be contacted by for-profit institutions 

as a result of a failed program would be 

6 times the number of expected 

enrollments. As noted above, we 

estimate that 1,171,956 students 

(327,468 students enrolled in zone 

programs plus 844,488 students 

enrolled in failing programs) would be 

enrolled in failing or zone programs at 

for-profit institutions. Therefore, forprofit institutions would be required to 

provide 7,031,736 warnings (1,171,956 

times 6), with an estimated per student 

time of 0.10 hours (6 minutes) to 

deliver, increasing burden by 703,174 

hours (7,031,736 prospective students 

times 0.10 hours) under OMB Control 

Number 1845—NEW1. 

We estimate that the number of 

prospective students that must contact 

or be contacted by private non-profit 

institutions as a result of a failed 

program or zone program would be 1.8 

times the number of expected 

enrollments. As noted above, we 

estimate that 7,731 students (2,308 

students enrolled in zone programs plus 

5,423 students enrolled in failing 

programs) would be enrolled in failing 

programs or zone programs at private 

non-profit institutions. Therefore, 

private non-profit institutions would be 

required to provide 13,916 warnings 

(7,731 students times 1.8), with an 

estimated per student time of 0.10 hours 

(6 minutes) to deliver, increasing 

burden by 1,392 hours (13,916 

prospective students times 0.10 hours) 

under OMB Control Number 1845— 

NEW1. 

We estimate that the number of 

prospective students that must contact 

or be contacted by public institutions as 

a result of a failed program or zone 

program would be 1.5 times the number 

of expected enrollments. As noted above 

we estimate that 13,806 students (628 

students enrolled in zone programs plus 

13,178 students enrolled in failing 

programs) would be enrolled in failing 

programs and zone programs at public 

institutions. Therefore, public 

institutions would be required to 

provide 20,709 warnings (13,806 

students times 1.5), with an estimated 

per student time of 0.10 hours (6 

minutes) to deliver, increasing burden 

by 2,071 hours (20,709 prospective 

students times 0.10 hours) under OMB 

Control Number 1845—NEW1. 

Collectively, burden would increase 

by 706,637 hours under OMB Control 

Number 1845—NEW1. 

The prospective students would also 

be affected by the warnings. On average, 

given the alternatives available to 

institutions, we estimate that it would 

take each student 0.08 hours (5 minutes) 

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to read the warning and ask any 

questions. 

Burden would increase by 562,539 

hours (7,031,736 times 0.08 hours) for 

the prospective students who would 

receive warnings from for-profit 

institutions, under OMB Control 

Number 1845—NEW1. 

Burden would increase by 1,113 

hours (13,916 times 0.08 hours) for the 

prospective students who would receive 

warnings from private non-profit 

institutions, under OMB Control 

Number 1845—NEW1. 

Burden would increase by 1,657 

hours (20,709 times 0.08 hours) for the 

prospective students who would receive 

warnings from public institutions, 

under OMB Control Number 1845— 

NEW1. 

Collectively, prospective students 

reading the warning would increase 

burden by 565,309 hours under OMB 

Control Number 1845—NEW1. 

Requirements: Under proposed 

§ 668.410(a)(2)(ii)(B), if more than 30 

days have passed from the date the 

initial warning is provided, the 

prospective student must be provided 

an additional warning and may not 

enroll until three days later. We 

estimate that half of the number of 

prospective students would not enroll 

within 30 days of the initial warning 

and therefore would require a second 

warning. 

Burden Calculation: We estimate that 

50 percent of students enrolling in a 

failing program do so more than 30 days 

after receiving the initial prospective 

student warning. Burden would 

increase by 281,269 hours for the 

3,515,868 (7,031,736 prospective 

students times 50 percent times .08 

hours) students for whom for-profit 

institutions would provide subsequent 

warnings. 

Burden would increase by 557 hours 

for the 6,958 (13,916 prospective 

students times 50 percent times .08 

hours) students for whom private nonprofit institutions would provide 

subsequent warnings. 

Burden would increase by 828 hours 

for the 10,355 (20,709 prospective 

students times 50 percent times .08 

hours) students for whom public 

institutions would provide subsequent 

warnings. 

Collectively, subsequent warning 

notices would increase burden by 

282,654 hours under OMB Control 

Number 1845—NEW1. 

Similarly, it would take the recipients 

of subsequent warnings time to read the 

second warning. Burden would increase 

by 281,269 hours for the 3,515,868 

(7,031,736 prospective students times 

50 percent times .08 hours) students to 

read the subsequent warnings from forprofit institutions, OMB Control 

Number 1845—NEW1. 

Burden would increase by 557 hours 

for the 6,958 (13,916 prospective 

students times 50 percent times .08 

hours) students to read the subsequent 

warnings from private non-profit 

institutions. 

Burden would increase by 828 hours 

for the 10,355 (20,709 prospective 

students times 50 percent times .08 

hours) students to read the subsequent 

warnings from public institutions. 

Collectively, burden to students to 

read the subsequent warnings would 

increase by 282,654 hours under OMB 

Control Number 1845—NEW1. 

The total increase in burden for 

§ 668.410 would be 2,116,055 hours 

under OMB Control Number 1845— 

NEW1 

Section 668.411 Reporting 

Requirements for GE Programs 

Requirements: Under the proposed 

regulations in § 668.411, institutions 

would report, for each student enrolled 

in a GE program during an award year 

who received title IV, HEA program 

funds for enrolling in that program: (1) 

Information needed to identify the 

student and the institution the student 

attended; (2) the name, CIP code, 

credential level, and length of the GE 

program; (3) whether the GE program is 

a medical or dental program whose 

students are required to complete an 

internship or residency; (4) the date the 

student began initial attendance in the 

GE program; (5) the student’s attendance 

dates and attendance status in the GE 

program during the award year; and (6) 

the student’s enrollment status as of the 

first day of the student’s enrollment in 

the GE program. 

Further, if the student completed or 

withdrew from the GE program during 

the award year, the institution would 

report: (1) The date the student 

completed or withdrew; (2) the total 

amount the student received from 

private education loans for attendance 

in the GE program that the institution is, 

or should reasonably be, aware of; (3) 

the total amount of institutional debt the 

student owes any party after completing 

or withdrawing from the GE program; 

and (4) the amount for tuition and fees 

and books, supplies, and equipment 

included in the student’s cost of 

attendance for each award year in which 

the student was enrolled in the GE 

program, or a higher amount if assessed 

by the institution to the student. 

No later than July 31 of the year the 

regulations take effect, institutions 

would be required to report this 

information for the second through 

seventh award years prior to that date. 

For medical and dental programs that 

require an internship or residency, 

institutions would need to include the 

eighth award year prior to July 31. For 

all subsequent award years, institutions 

would report not later than October 1 

following the end of the award year, 

unless the Secretary establishes a later 

date in a notice published in the 

Federal Register. The proposed 

regulations would give the Secretary the 

flexibility to identify additional 

reporting items, or to specify a reporting 

deadline later than October 1, in a 

notice published in the Federal 

Register. 

Finally, the proposed regulations 

would require institutions to provide 

the Secretary with an explanation of 

why any missing information is not 

available. 

Burden Calculation: There are 2,526 

for-profit institutions that offer one or 

more GE programs. We estimate that, on 

average, it would take 6 hours for each 

of those institutions to modify or 

develop manual or automated systems 

for reporting under § 668.411. Therefore 

burden would increase for these 

institutions by 15,156 hours (2,526 

institutions times 6 hours). 

There are 318 private non-profit 

institutions that offer one or more GE 

programs. We estimate that, on average, 

it would take 6 hours for each of those 

institutions to modify or develop 

manual or automated systems for 

reporting under § 668.411. Therefore 

burden would increase for these 

institutions by 1,908 hours (318 

institutions times 6 hours). 

There are 1,117 public institutions 

that offer one or more GE programs. We 

estimate that, on average, it would take 

6 hours for each of those institutions to 

modify or develop manual or automated 

systems for reporting under § 668.411. 

Therefore burden would increase for 

these institutions by 6,702 hours (1,117 

institutions times 6 hours). 

Collectively, burden to develop 

systems for reporting would increase by 

23,766 hours (under OMB Control 

Number 1845—NEW1. 

Requirements: Proposed § 668.411(b) 

requires that, by no later than July 31 of 

the year the regulations take effect, 

institutions report this information for 

the second through seventh award years 

prior to that date. For medical and 

dental programs that require an 

internship or residency, institutions 

would need to include the eighth award 

year prior to July 31. 

Burden Calculation: According to our 

analysis of previously reported GE 

program enrollment data, there were 

2,703,851 students enrolled in GE 

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programs offered by for-profit 

institutions during the 2009–2010 

award year. Based on budget baseline 

estimates as provided in the general 

background information, we estimate 

that enrollment in GE programs at forprofit institutions for 2008–2009 was 

2,219,280. Going forward, we estimate 

that enrollment in GE programs at forprofit institutions for 2010–2011 was 

2,951,154, for 2011–2012 enrollment 

was 2,669,084, for 2012–2013 

enrollment was 2,426,249, and for 

2013–2014 enrollment would be 

2,227,230. This results in a total of 

15,196,848. 

We estimate that on average, the 

reporting of GE program information by 

for-profit institutions would take 0.03 

hours (2 minutes) per student as we 

anticipate that, for most for-profit 

institutions, reporting would be an 

automated process. Therefore, GE 

reporting by for-profit institutions 

would increase burden by 455,905 

hours (15,196,848 students times .03 

hours) in OMB Control Number 1845— 

NEW1. 

According to our analysis of 

previously reported GE program 

enrollment data, there were 57,700 

students enrolled in GE programs 

offered by private non-profit institutions 

during the 2009–2010 award year. Based 

on budget baseline estimates as 

provided in the general background 

information, we estimate that 

enrollment in GE programs at private 

non-profit institutions for 2008–2009 

was 49,316. Going forward, we estimate 

that enrollment in GE programs at 

private non-profit institutions for 2010– 

2011 was 67,509, for 2011–2012 was 

73,585, for 2012–2013 was 70,641, and 

for 2013–2014 would be 65,697. This 

results in a total of 384,448. 

We estimate that on average, the 

reporting of GE program information by 

private non-profit institutions would 

take 0.03 hours (2 minutes) per student 

as we anticipate that, for most private 

non-profit institutions, reporting would 

be an automated process. Therefore, GE 

reporting by private non-profit 

institutions would increase burden by 

11,533 hours (384,448 students times 

.03 hours) in OMB Control Number 

1845—NEW1. 

According to our analysis of 

previously reported GE program 

enrollment data, there were 276,234 

students enrolled in GE programs 

offered by public institutions during the 

2009–2010 award year. Based on budget 

baseline estimates as provided in the 

general background information, we 

estimate that enrollment in GE programs 

at public institutions for 2008–2009 was 

236,097. Going forward, we estimate 

that enrollment in GE programs at 

public institutions for 2010–2011 was 

323,194, for 2011–2012 was 352,281, for 

2012–2013 was 338,190, and for 2013– 

2014 would be 314,517. This results in 

a total of 1,840,513. 

We estimate that on average, the 

reporting of GE program information by 

public institutions would take 0.03 

hours (2 minutes) per student as we 

anticipate that, for most public 

institutions, reporting would be an 

automated process. Therefore, GE 

reporting by public institutions would 

increase burden by 55,215 hours 

(1,840,513 students times .03 hours) in 

OMB Control Number 1845—NEW1. 

Collectively, we estimate that burden 

upon institutions to meet the initial 

reporting requirements under proposed 

§ 668.411 would increase burden by 

522,653 hours in OMB Control Number 

1845—NEW1. 

The total increase in burden for 

§ 668.411 would be 546,419 hours under 

OMB Control Number 1845—NEW1. 

Section 668.412 Disclosure 

Requirements for GE Programs 

Requirements: The proposed 

§ 668.412 would expand the number of 

items that we may require an institution 

to disclose and increase the 

Department’s flexibility to tailor the 

disclosure in a way that would be most 

useful to students and minimize burden 

to institutions. 

These disclosure items could include: 

(1) The primary occupations (by name 

and SOC code) that the GE program 

prepares students to enter, along with 

links to the corresponding occupational 

profiles on O*Net; 

(2) the GE program’s completion and 

withdrawal rates; 

(3) the length of the program; 

(4) the number of clock or credit 

hours, as applicable, in the program; 

(5) the total number of students 

enrolled in the program during the most 

recently completed award year; 

(6) the loan repayment rate for any 

one or all of the following groups: All 

students who attended the program, 

students who completed the program, or 

students who withdrew from the 

program; 

(7) the total cost of tuition and fees, 

books, supplies, and equipment that 

students would incur for completing the 

program within the length of the 

program; 

(8) the placement rate for the program, 

if the institution is required to calculate 

a placement rate by its accrediting 

agency or State; 

(9) of the individuals enrolled in the 

program during the most recently 

completed award year, the percentage 

who incurred debt for enrollment in the 

program; 

(10) as provided by the Secretary, the 

median loan debt incurred by any or all 

of the following groups: Students who 

completed the program during the most 

recently completed award year, students 

who withdrew from the program during 

the most recently completed award year, 

or both those groups of students; 

(11) the median earnings of any one 

or all of the following groups: Students 

who completed the program during the 

two-year period used to calculate the 

most recent D/E rates for the program, 

students who were in withdrawn status 

at the end of the two-year period used 

to calculate the most recent D/E rates for 

the program, or all of the students who 

completed during the two-year period 

used to calculate the most recent D/E 

rates and students who were in 

withdrawn status at the end of that twoyear period; 

(12) the pCDR for the most recently 

completed fiscal year; 

(13) the most recent annual earnings 

rate as calculated by the Secretary under 

proposed § 668.404; 

(14) if applicable, whether completion 

of the program satisfies the educational 

prerequisites for professional licensure 

in the State in which the program is 

offered and in any other State included 

in the institution’s Metropolitan 

Statistical Area (MSA) (according to the 

OMB guidelines); 

(15) if applicable, the programmatic 

accreditation required by the applicable 

State, or States, for an individual to 

obtain employment in the occupation 

for which the program prepares a 

student; and 

(16) a link to the College Navigator 

Web site. 

The Secretary would conduct 

consumer testing to determine how to 

make the disclosures as meaningful as 

possible. After we have the results of the 

consumer testing, each year the 

Secretary would identify which of these 

items institutions must include in their 

disclosures, along with any other 

information that must be included, and 

publish those requirements in a notice 

in the Federal Register. 

Institutions must update their GE 

program disclosure information 

annually. They must make it available 

in their promotional materials and make 

it available on any Web page containing 

academic, cost, financial aid, or 

admissions information about a GE 

program. 

Burden Calculation: We estimate that 

of the 37,589 GE programs that reported 

enrollments in the past, 12,250 

programs would be offered by for-profit 

institutions. We estimate that, annually, 

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the amount of time it would take to 

collect the data from institutional 

records, from information provided by 

the Secretary, and from the institution’s 

accreditor or State, and the amount of 

time it would take to ensure that 

promotional materials either include the 

disclosure information or provide a Web 

address or direct link to the information 

would be, on average, 4 hours per 

program. Additionally, we estimate that 

revising the institution’s Web pages 

used to disseminate academic, cost, 

financial aid, or admissions information 

to also contain the disclosure 

information about the program would, 

on average, increase burden by an 

additional 1 hour per program. 

Therefore, burden would increase by 5 

hours per program for a total of 61,250 

hours of increased burden in OMB 

Control Number 1845—NEW1 (12,250 

programs times 5 hours per program). 

We estimate that of the 37,589 GE 

programs that reported enrollments in 

the past, 2,343 programs would be 

offered by private non-profit 

institutions. We estimate that, annually, 

the amount of time it would take to 

collect the data from institutional 

records, from information provided by 

the Secretary, and from the institution’s 

accreditor or State, and the amount of 

time it would take to ensure that 

promotional materials either include the 

disclosure information or provide a Web 

address or direct link to the information 

would be, on average, 4 hours per 

program. Additionally, we estimate that 

revising the institution’s Web pages 

used to disseminate academic, cost, 

financial aid, or admissions information 

about the program to also contain the 

disclosure information would, on 

average, increase burden by an 

additional 1 hour per program. 

Therefore, burden would increase by 5 

hours per program for a total of 11,715 

hours of increased burden in OMB 

Control Number 1845—NEW1 (2,343 

programs times 5 hours per program). 

We estimate that of the 37,589 GE 

programs that reported enrollments in 

the past, 22,996 programs would be 

offered by public institutions. We 

estimate that the amount of time it 

would take to collect the data from 

institutional records, from information 

provided by the Secretary, and from the 

institution’s accreditor or State, and the 

amount of time it would take to ensure 

that promotional materials either 

include the disclosure information or 

provide a Web address or direct link to 

the information would be, on average, 4 

hours per program. Additionally, we 

estimate that revising the institution’s 

Web pages used to disseminate 

academic, cost, financial aid, or 

admissions information about the 

program to also contain the disclosure 

information would, on average, increase 

burden by an additional 1 hour per 

program. Therefore, on average, burden 

would increase by 5 hours per program 

for a total of 114,980 hours of increased 

burden in OMB Control Number 1845— 

NEW1 (22,996 programs times 5 hours 

per program). 

Collectively, we estimate that burden 

would increase by 187,945 hours in 

OMB Control Number 1845—NEW1. 

Under proposed § 668.412(e), an 

institution must provide, as a separate 

document, a copy of the disclosure 

information to a prospective student. 

Before a prospective student signs an 

enrollment agreement, completes 

registration at, or makes a financial 

commitment to the institution, the 

institution must obtain written 

confirmation from the prospective 

student that he or she received the copy 

of the disclosure information. 

We estimate that the enrollment in the 

12,250 GE programs offered by for-profit 

institutions for 2013–2014 is 2,227,230. 

As noted earlier, most institutions 

would have to contact, or be contacted 

by, a larger number of prospective 

students to yield institutions’ desired 

net enrollments. 

We estimate that the number of 

prospective students that must contact 

or be contacted by for-profit institutions 

as a result of a failed program would be 

6 times the number of expected 

enrollment. As noted above, we estimate 

that 13,363,380 (2,227,230 students for 

2013–2014 times 6) students would be 

enrolled in GE programs at for-profit 

institutions. Therefore, for-profit 

institutions would be required to 

provide 13,363,380 disclosures to 

prospective students. On average, we 

estimate that it would take institutional 

staff 0.03 hours (2 minutes) per 

prospective student to provide a copy of 

the disclosure information. We also 

estimate that, on average, it would take 

institutional staff 0.10 hours (6 minutes) 

to obtain written confirmation and 

answer any questions from each 

prospective student. Therefore we 

estimate that the total burden associated 

with providing the disclosure 

information and obtaining written 

confirmation by for-profit institutions 

would be 0.13 hours (8 minutes) per 

prospective student. Burden would 

increase by 1,737,239 hours for forprofit institutions (13,363,380 

prospective students times 0.13 hours) 

under OMB Control Number 1845— 

NEW1. 

We estimate that the burden on each 

prospective student would be 0.08 

hours (5 minutes) to read the disclosure 

information and provide written 

confirmation of receipt. Burden would 

increase by 1,069,070 hours for 

prospective students at for-profit 

institutions (13,363,380 prospective 

students times 0.08 hours) under OMB 

Control Number 184—NEW1. 

We estimate that the enrollment in the 

2,343 GE programs offered by private 

non-profit institutions for 2013–2014 is 

65,697. As noted earlier, most 

institutions would have to contact, or be 

contacted by, a larger number of 

prospective students to yield their 

enrollments. 

We estimate that the number of 

prospective students that must contact 

or be contacted by private non-profit 

institutions as a result of a failed 

program would be 1.8 times the number 

of expected enrollment. As noted above 

we estimate that 65,697 students would 

be enrolled in GE programs at private 

non-profit institutions. Therefore, 

private non-profit institutions would be 

required to provide 118,255 disclosures 

(65,697 times 1.8) to prospective 

students. On average, we estimate that 

it would take institutional staff 0.03 

hours (2 minutes) per prospective 

student to provide a copy of the 

disclosure information. We also 

estimate that, on average, it would take 

institutional staff 0.10 hours (6 minutes) 

to obtain written confirmation and 

answer any questions from each 

prospective student. Therefore we 

estimate that the total burden associated 

with providing the disclosure 

information and obtaining written 

confirmation by private-non-profit 

institutions would be 0.13 hours (8 

minutes) per prospective student. 

Burden would increase by 15,373 hours 

for private non-profit institutions 

(118,255 prospective students times 

0.13 hours) under OMB Control Number 

1845—NEW1. 

We estimate that the burden on each 

prospective student would be 0.08 

hours (5 minutes) to read the disclosure 

information and provide written 

confirmation of receipt. Burden would 

increase by 9,460 hours for prospective 

students at private non-profit 

institutions (118,255 prospective 

students times 0.08 hours) under OMB 

Control Number 184—NEW1. 

We estimate that the enrollment in the 

22,996 GE programs offered by public 

institutions for 2013–2014 is 314,517. 

As noted earlier, most institutions 

would have to contact, or be contacted 

by, a larger number of prospective 

students to yield their enrollments. 

We estimate that the number of 

prospective students that must contact 

or be contacted by public institutions as 

a result of a failed program would be 1.5 

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times the number of expected 

enrollment. As noted above we estimate 

that 314,517 students would be enrolled 

in GE programs at public institutions. 

Therefore, public institutions would be 

required to provide 471,776 disclosures 

(314,517 times 1.5) to prospective 

students. On average, we estimate that 

it would take institutional staff 0.03 

hours (2 minutes) per prospective 

student to provide a copy of the 

disclosure information. We also 

estimate that, on average, it would take 

institutional staff 0.10 hours (6 minutes) 

to obtain written confirmation and 

answer any questions from each 

prospective student. Therefore we 

estimate that the total burden associated 

with providing the disclosure 

information and obtaining written 

confirmation by public institutions 

would be 0.13 hours (8 minutes) per 

prospective student. Burden would 

increase by 61,331 hours for public 

institutions (471,776 prospective 

students times 0.13 hours) under OMB 

Control Number 1845—NEW1. 

We estimate that the burden on each 

prospective student would be 0.08 

hours (5 minutes) to read the disclosure 

information and provide written 

confirmation of receipt. Burden would 

increase by 37,742 hours for prospective 

students at public institutions (471,776 

prospective students times 0.08 hours) 

under OMB Control Number 1845— 

NEW1. 

Collectively, burden would increase 

by 2,930,215 hours under OMB Control 

Number 1845—NEW1. 

The total increase in burden for 

§ 668.412 would be 3,118,160 hours 

under OMB Control Number 1845— 

NEW1. 

Section 668.413 Calculating, Issuing, 

and Challenging Completion Rates, 

Withdrawal Rates, Repayment Rates, 

Median Loan Debt, and Median 

Earnings 

Requirements: As discussed in 

connection with proposed § 668.412, an 

institution would be required to 

disclose, among other information, 

completion and withdrawal rates, 

repayment rates, and median loan debt 

and median earnings for a GE program. 

Using the procedures proposed in 

§ 668.413 and based partially on the 

information that an institution would 

report under proposed § 668.411, the 

Secretary would calculate and make 

available to the institution for 

disclosure: Completion rates, 

withdrawal rates, repayment rates, 

median loan debt, and median earnings 

for a GE program. 

An institution would have an 

opportunity to correct the list of 

students who completed a GE program 

and the list of students who withdrew 

from a GE program prior to the Secretary 

sending the lists to SSA for earnings 

information. 

For the median earnings calculation 

under proposed § 668.413(b)(8), (b)(9), 

and (b)(10), after the Secretary provides 

a list of the relevant students (those who 

completed and those who withdrew) to 

the institution, the institution may 

provide evidence showing that a student 

should be included on the list or 

removed from the list as a result of 

meeting the definitions of an exclusion 

under proposed § 668.413(b)(11). The 

institution may also correct or update a 

student’s identity information or 

attendance information on the listing. 

Burden Calculation: For the 12,250 

for-profit institutions, we estimate, on 

average, that it would take institutional 

staff 2 hours to review each of the two 

lists to determine whether a student 

should be included or excluded under 

proposed § 668.404(e) and, if included, 

whether the student’s identity 

information or attendance information 

requires correction, and then to obtain 

the evidence to substantiate any 

inclusion, exclusion, or correction. 

Burden would increase by 49,000 hours 

(12,250 programs times 2 lists times 2 

hours) under OMB Control Number 

184—NEW1. 

For the 2,343 private non-profit 

institutions, we estimate, on average, 

that it would take institutional staff 2 

hours to review each of the two lists to 

determine whether a student should be 

included or excluded under proposed 

§ 668.404(e) and, if included, whether 

the student’s identity information or 

attendance information requires 

correction, and then to obtain the 

evidence to substantiate any inclusion, 

exclusion, or correction. Burden would 

increase by 9,372 hours (2,343 programs 

times 2 lists times 2 hours) under OMB 

Control Number 184—NEW1. 

For the 22,996 private public 

institutions, we estimate, on average, 

that it would take institutional staff 2 

hours to review each of the two lists to 

determine whether a student should be 

included or excluded under proposed 

§ 668.404(e) and, if included, whether 

the student’s identity information or 

attendance information requires 

correction, and then to obtain the 

evidence to substantiate any inclusion, 

exclusion, or correction. Burden would 

increase by 91,984 hours (22,996 

programs times 2 lists times 2 hours) 

under OMB Control Number 184— 

NEW1. 

Collectively, burden would increase 

by 150,356 hours under OMB Control 

Number 1845—NEW1. 

Under proposed § 668.413(d)(1), an 

institution may challenge the 

Secretary’s calculation of the draft 

completion rates, withdrawal rates, 

repayment rates, and median loan debt. 

The Secretary would develop the 

completion rates, withdrawal rates, 

repayment rates, and median loan debt 

lists for each of the estimated 12,250 GE 

programs at for-profit institutions. For 

the purpose of challenging the 

completion, withdrawal, and repayment 

rates and median loan debt we estimate 

that, on average, it would take 

institutional staff 20 hours per program 

to review all five of the lists (full-time 

students for completion rates, part-time 

students for completion rates, students 

who withdrew, students who entered 

repayment for the repayment rate, and 

students included in the median loan 

debt calculation), compare the data to 

institutional records, and determine 

whether there are student records that 

must be included or excluded under 

§ 668.413(b)(8). Therefore, burden 

would increase by 245,000 hours 

(12,250 programs times 20 hours for five 

lists) under OMB Control Number 

1845—NEW1. 

The Secretary would develop the 

completion rates, withdrawal rates, 

repayment rates, and median loan debt 

lists for each of the estimated 2,343 GE 

programs at private non-profit 

institutions. For the purpose of 

challenging the completion, withdrawal, 

and repayment rates and median loan 

debt we estimate that, on average, it 

would take institutional staff 20 hours 

per program to review all five of the lists 

(full-time students for completion rates, 

part-time students for completion rates, 

students who withdrew, students who 

entered repayment for the repayment 

rate, and students included in the 

median loan debt calculation), compare 

the data to institutional records, and 

determine whether there are student 

records that must be included or 

excluded under § 668.413(b)(8). 

Therefore, burden would increase by 

46,860 hours (2,343 programs times 20 

hours for five lists) under OMB Control 

Number 1845—NEW1. 

The Secretary would develop the 

completion rates, withdrawal rates, 

repayment rates, and median loan debt 

lists for each of the estimated 22,996 GE 

programs at public institutions. For the 

purpose of challenging the completion, 

withdrawal, and repayment rates and 

median loan debt we estimate that, on 

average, it would take institutional staff 

20 hours per program to review all five 

of the lists (full-time students for 

completion rates, part-time students for 

completion rates, students who 

withdrew, students who entered 

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repayment for the repayment rate, and 

students included in the median loan 

debt calculation), compare the data to 

institutional records, and determine 

whether there are student records that 

must be included or excluded under 

§ 668.413(b)(8). Therefore, burden 

would increase by 459,920 hours 

(22,996 times 20 hours) under OMB 

Control Number 1845—NEW1. 

Collectively, burden would increase 

by 751,780 under OMB Control Number 

1845—NEW1. 

The total increase in burden for 

§ 668.413 would be 902,136 under OMB 

Control Number 1845—NEW1 

Section 668.414 Certification 

Requirements for GE Programs 

Requirements: Under proposed 

§ 668.414(a) each institution 

participating in the title IV, HEA 

programs would be required to provide 

a ‘‘transitional certification’’ to 

supplement its current program 

participation agreement (PPA). The 

transitional certification would be 

submitted no later than December 31 of 

the year in which the proposed 

regulations take effect. The transitional 

certification would be signed by the 

institution’s most senior executive 

officer and apply to all of the 

institution’s GE programs eligible for 

title IV, HEA program funds. Under 

proposed § 668.414(d), the certification 

would provide that each GE program 

meets certain requirements (PPA 

certification requirements), specifically 

that each GE program is: 

• Approved by a recognized 

accrediting agency, is included in the 

institution’s accreditation, or is 

approved by a recognized State agency 

for the approval of public postsecondary 

vocational education in lieu of 

accreditation; 

• Programmatically accredited, if 

required by a Federal governmental 

entity in the State in which the 

institution is located or by any State 

within the institution’s MSA; and 

• Satisfies licensure or certification 

requirements in the State where the 

institution is located and in all other 

States within the institution’s MSA so 

that a student who completes the 

program and seeks employment in those 

States qualifies to take any licensure or 

certification exam that is needed for the 

student to practice or find employment 

in the occupation that the program 

prepares students to enter. 

Under proposed § 668.414(b) an 

institution would be required to certify 

each time it executes a new PPA that 

any GE programs it offers meet the PPA 

certification requirements. 

Burden Calculation: We estimate that 

it would take the 2,526 for-profit 

institutions that offer GE programs 0.5 

hours to draft a certification statement 

and obtain the signature of the 

institution’s senior executive for 

submission to the Department. This 

would increase burden by 1,263 hours 

under OMB Control Number 1845— 

NEW1 (2,526 institutions times 0.5 

hours). 

We estimate that it would take the 318 

private non-profit institutions that offer 

GE programs 0.5 hours to draft a 

certification statement and obtain the 

signature of the institution’s senior 

executive for submission to the 

Department. This would increase 

burden by 159 hours under OMB 

Control Number 1845—NEW1 (318 

institutions times 0.5 hours). 

We estimate that it would take the 

1,117 public institutions that offer GE 

programs 0.5 hours to draft a 

certification statement and obtain the 

signature of the institution’s senior 

executive for submission to the 

Department. This would increase 

burden by 559 hours under OMB 

Control Number 1845—NEW1 (1,117 

institutions times 0.5 hours). 

The total increase in burden for 

§ 668.414 would be 1,981 hours under 

OMB Control Number 1845—NEW1. 

Subpart R—Program Cohort Default 

Rates 

Requirements: Under proposed 

subpart R, the Secretary would calculate 

a GE program’s cohort default rate using 

a structure that would generally mirror 

the structure of the institutional cohort 

default rate (iCDR) regulations in 

subpart N of part 668 of the regulations. 

Thus, depending on the pCDR of a 

program, an institution would have the 

opportunity to submit a challenge, 

request an adjustment, or appeal the 

pCDR. Detailed information about each 

of these opportunities and our burden 

assessments follow. Common to all 

requests for challenges, adjustments, or 

appeals is that institutions would 

receive a loan record detail report 

(LRDR) provided by the Department. 

Burden Calculation: As noted in the 

preamble discussion in ‘‘§ 668.408 

Issuing and Challenging pCDR,’’ the 

proposed pCDR regulations in subpart R 

would generally mirror the structure of 

the institutional cohort default rate 

(iCDR) regulations in subpart N of part 

668 of the regulations. However, 

because subpart R is specific to GE 

programs the consequences of a GE 

program’s pCDR are different than are 

for iCDRs under the iCDR regulations in 

subpart N. For this reason (pCDR not the 

same as iCDR) the burden assessments 

that follow recognize that institutions 

will have the option of submitting 

challenges, requests for adjustments, 

and certain appeals for all of their GE 

programs in every year for which we 

calculate a pCDR, but will in all 

likelihood exercise those rights only in 

those instances in which we calculate a 

failing (or close to failing) pCDR rate for 

the second or third consecutive year. 

For purposes of our burden assessments, 

we consider a close to failing pCDR to 

be one that is between 20 percent and 

29.9 percent. 

Of the 6,815 GE programs that we 

estimate would be evaluated for pCDR, 

we estimate that 943 programs would be 

failing programs (pCDR of 30 percent or 

more) and therefore have the highest 

likelihood of having pCDR challenges, 

adjustments, or appeals. In addition, we 

considered that half of the 1,840 GE 

programs with a pCDR rate of 20 percent 

to 29.9 percent would also make 

challenges, request adjustments, or 

submit appeals, adding another 920 

programs to the 943 that failed for a 

total of 1,863 programs. We estimate 

that 92 percent of the 1,863 would be 

GE programs at for-profit institutions, 3 

percent would be GE programs at 

private non-profit institutions, and 5 

percent would be GE programs at public 

institutions. 

We used an analysis of the FY 2011 

institutional CDR data to estimate the 

percentage of the possible 1,863 

programs where a challenge, adjustment 

request, or appeal may be submitted. 

Those percentages varied by the type of 

challenge, adjustment, or appeal, as 

indicated in each of the regulatory 

sections that follow and are used to 

project the distribution of pCDR 

challenges, adjustments, and appeals. 

Section 668.504 Draft Cohort Program 

Default Rates and Your Ability To 

Challenge Before Official Program 

Cohort Default Rates Are Issued 

Requirements: 

Incorrect Data Challenges: Under 

proposed 668.504(b), the institution 

may challenge the accuracy of the data 

included on the LRDR by sending an 

incorrect data challenge to the relevant 

data manager(s) within 45 days of 

receipt of the LRDR from the 

Department. The challenge would 

include a description of the information 

in the LRDR that the institution believes 

is incorrect along with supporting 

documentation. 

Burden Calculation: Based upon FY 

2011 submissions, there were 353 

institutional CDR challenges for 

incorrect data of a total of 510 

challenges, requests for adjustments, 

and appeals, a 69 percent submission 

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rate. Therefore 69 percent of the 

projected 1,863 challenges, adjustments, 

and appeals, or 1,285, are projected to 

be challenges for incorrect data. 

Based on data provided earlier, we 

estimate that out of the likely 1,285 

submissions, 1,182 (92 percent) would 

be from for-profit institutions. We 

estimate that the average institutional 

staff time needed to review a GE 

program’s LRDR for each of these 1,182 

programs and to gather and prepare 

incorrect data challenges would be 4 

hours (1.5 hours for list review and 2.5 

hours for documentation submission). 

This would increase burden by 4,728 

hours. 

Based on data provided earlier, we 

estimate that out of the likely 1,285 

submissions, 39 (3 percent) would be 

from private non-profit institutions. We 

estimate that the average institutional 

staff time needed to review a GE 

program’s LRDR for each of these 39 

programs and to gather and prepare the 

challenges would be 4 hours (1.5 hours 

for list review and 2.5 hours for 

documentation submission). This would 

increase burden by 156 hours. 

Based on data provided earlier, we 

estimate that, out of the likely 1,285 

submissions, 64 (5 percent) would be 

from public institutions. We estimate 

that the average institutional staff time 

needed to review a GE program’s LRDR 

for each of these 64 programs and to 

gather and prepare the challenges would 

be 4 hours (1.5 hours for list review and 

2.5 hours for documentation 

submission). This would increase 

burden by 256 hours. 

Collectively, this would increase 

burden by 5,140 hours under OMB 

Control Number NEW3. 

Participation Rate Index Challenges: 

Under proposed 668.504(c), institutions 

may challenge a program’s anticipated 

loss of title IV, HEA program eligibility, 

if the institution’s participation rate 

would be equal to or less than 0.0625 for 

any of the three pCDR fiscal years that 

where the pCDR is 30 percent or greater. 

A participation rate index challenge 

(and a participation rate index appeal 

for final rates, discussed below) could 

be submitted if the number of students 

who received title IV, HEA program 

loans during a one-year period was only 

a small percentage of those who were 

eligible to borrow. 

Burden Calculation: Based upon FY 

2011 submissions, there were 2 

participation rate index challenges of 

the total 510 challenges, requests for 

adjustments, and appeals 0.4 percent. 

Therefore we project that there will be 

4 participation rate challenges (0.4 

percent of the projected 943 challenges, 

adjustments, and appeals). Note that we 

use 943 and not 1,863 because that 

number includes 920 programs with 

rates between 20.0 percent and 29.9 

percent and only programs subject to 

loss of eligibility can submit a 

participation rate index challenge. 

Further, based upon GE program 

distribution percentages, we project that 

all 4 participation rate index challenges 

would be from for-profit institutions. 

Therefore, all of the estimated burden 

below would be to for-profit institutions 

and none to private non-profit or public 

institutions. 

On average, we estimate that 

gathering and submitting the 

information for each participation rate 

challenge would take 2.0 hours per 

submission. Therefore, burden would 

increase by 8 hours (4 participation rate 

index challenges times 2 hours per 

submission) under OMB Control 

Number 1845—NEW3. 

The total increase in burden for 

§ 668.504 would be 5,148 hours under 

OMB Control Number 1845—NEW3. 

Section 668.509 Uncorrected Data 

Adjustments 

Requirements: An institution may 

request an uncorrected data adjustment 

for the most recent cohort of borrowers 

used to calculate a GE program’s most 

recent official pCDR, if in response to 

the institution’s incorrect data 

challenge, a data manager agreed to 

change data but the changes were not 

reflected in the official pCDR. 

Burden Calculation: Based upon FY 

2011 submissions, there were 116 

uncorrected data adjustments of the 

total 510 challenges, requests for 

adjustments, and appeals. Therefore, 23 

percent of the projected 943 challenges, 

adjustments, and appeals (based on 

possible loss of eligibility) or 217 are 

projected to be uncorrected data 

adjustments. We estimate that the 

average institutional staff time needed is 

1 hour for list review and 0.5 hours for 

documentation submission, for a total of 

1.5 hours. 

We estimate that 200 (92 percent) of 

the 217 projected uncorrected data 

adjustments will be from for-profit 

institutions. Therefore, burden would 

increase at for-profit institutions by 300 

hours (200 adjustments times 1.5 hours) 

under OMB Control Number 1845— 

NEW3. 

We estimate that 6 (3 percent) of the 

217 projected uncorrected data 

adjustments would be from private nonprofit institutions. Therefore, burden 

would increase at private non-profit 

institutions by 9 hours (6 adjustments 

times 1.5 hours) under OMB Control 

Number 1845—NEW3. 

We estimate that 11 (5 percent) of the 

217 projected uncorrected data 

adjustments would be from public 

institutions. Therefore, burden would 

increase at public institutions by 17 

hours (11 adjustments times 1.5 hours) 

under OMB Control Number 1845— 

NEW3. 

The total increase in burden for 

§ 668.509 would be 326 hours under 

OMB Control Number 1845—NEW3. 

Section 668.510 New Data 

Adjustments 

Requirements: An institution could 

request a new data adjustment for the 

most recent cohort of borrowers used to 

calculate the most recent official pCDR 

for a GE program, if a comparison of the 

LRDR for the draft rates and the LRDR 

for the official rates show that data have 

been newly included, excluded, or 

otherwise changed and the errors are 

confirmed by the data manager. 

Burden Calculation: Based upon FY 

2011 submissions, there were 12 new 

data adjustments of the total 510 

challenges, requests for adjustments, 

and appeals. Therefore, 2 percent of the 

projected 943 challenges, adjustments, 

and appeals (based on possible 

sanction) or 19 are projected to be new 

data adjustments. We estimate that the 

average institutional staff time needed is 

3 hours for list review and 1 hour for 

documentation submission, for a total of 

4 hours. 

We estimate that 17 (92 percent) of 

the 19 projected new data adjustments 

would be from for-profit institutions. 

Therefore, burden would increase at forprofit institutions by 68 hours (17 

adjustments times 4 hours) under OMB 

Control Number 1845—NEW3. 

We estimate that 1 (3 percent) of the 

19 projected new data adjustments 

would be from private non-profit 

institutions. Therefore, burden would 

increase at private non-profit 

institutions by 4 hours (1 adjustment 

times 4 hours) under OMB Control 

Number 1845—NEW3. 

We estimate that 1 (5 percent) of the 

19 projected new data adjustments 

would be from public institutions. 

Therefore, burden would increase at 

public institutions by 4 hours under (1 

adjustment times 4 hours) OMB Control 

Number 1845—NEW3. 

The total increase in burden for 

§ 668.510 would be 76 hours under 

OMB Control Number 1845—NEW3. 

Section 668.511 Erroneous Data 

Appeals 

Requirements: An institution could 

appeal the calculation of a pCDR upon 

which a sanction under § 668.410 would 

be based. The institution could do so if 

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it disputes the accuracy of data that was 

previously challenged under 

§ 668.504(b) (challenge for incorrect 

data); if a comparison of the LRDR that 

we provided for the draft rate and the 

official rate shows that data have been 

newly included, excluded, or otherwise 

changed; or if the institution disputes 

the accuracy of that data. The institution 

must send a request for verification of 

data to the applicable data manager(s) 

within 15 days of receipt of the notice 

of sanction or provisional certification, 

and it must include a description of the 

incorrect information and all supporting 

documentation. 

Burden Calculation: Based upon the 

fact that in FY 2011 there were no 

institutional CDR erroneous data 

appeals, we have no basis to establish 

erroneous data appeals burden for 

pCDRs. 

Section 668.512 Loan Servicing 

Appeals 

Requirements: An institution could 

appeal the calculation of a pCDR on the 

basis of improper loan servicing or 

collection only if the borrower did not 

make a payment on the loan and the 

institution can prove that the servicer 

failed to perform required loan servicing 

or collections activities. 

Burden Calculation: Based upon FY 

2011 submissions, there were 19 loan 

servicing appeals of the total 510 

challenges, requests for adjustments, 

and appeals. Therefore, 4 percent or 38 

of the projected 943 challenges, 

adjustments, and appeals are projected 

to be loan servicing appeals. We 

estimate that, on average, to gather, 

analyze, and submit the necessary 

documentation, each appeal would take 

3 hours. 

We estimate that 35 (92 percent) of 

the 38 projected loan servicing appeals 

would be from for-profit institutions. 

Therefore, burden would increase at forprofit institutions by 105 hours (35 

servicing appeals times 3 hours) under 

OMB Control Number 1845—NEW3. 

We estimate that 1 (3 percent) of the 

38 projected loan servicing appeals 

would be from private non-profit 

institutions. Therefore, burden would 

increase at private non-profit 

institutions by 3 hours (1 servicing 

appeal times 3 hours) under OMB 

Control Number 1845—NEW3. 

We estimate that 2 (5 percent) of the 

38 projected loan servicing appeals 

would be from public institutions. 

Therefore, burden would increase at 

public institutions by 6 hours (2 

servicing appeals times 3 hours) under 

OMB Control Number 1845—NEW3. 

The total increase in burden for 

§ 668.512 would be 114 hours under 

OMB Control Number 1845—NEW3. 

Section 668.513 Economically 

Disadvantaged Appeals 

Requirements: An institution could 

appeal a notice of a sanction under 

§ 668.410 or a notice of a second 

successive official pCDR that is equal to 

or greater than 30 percent if an 

independent auditor certifies that the 

low income rate for the GE program is 

two-thirds or more and the program is 

a degree program with a completion rate 

of 70 percent or more or, if the program 

is not a degree program, its placement 

rate is 44 percent or more. 

Burden Calculation: Based upon FY 

2011 submissions, there were 6 

economically disadvantaged appeals of 

the total 510 challenges, requests for 

adjustments, and appeals. Therefore 9 (1 

percent) of the projected 943 challenges, 

adjustments, and appeals are projected 

to be economically disadvantaged 

appeals. We estimate that preparing and 

submitting an economically 

disadvantaged appeal would take an 

institution 5 hours for each program. 

We estimate that 8 (92 percent) of the 

9 projected economically disadvantaged 

appeals would be from for-profit 

institutions. Therefore, burden would 

increase at for-profit institutions by 40 

hours (8 programs times 5 hours) under 

OMB Control Number 1845—NEW3. 

We do not project any economically 

disadvantaged appeals from the private 

non-profit institutions. 

We estimate that 1 (5 percent) of the 

9 projected economically disadvantaged 

appeals would be from public 

institutions. Therefore, burden would 

increase at public institutions by 5 

hours (1 program times 5 hours) under 

OMB Control Number 1845—NEW3. 

The total increase in burden for 

§ 668.513 would be 45 hours under 

OMB Control Number 1845—NEW3. 

Section 668.514 Participation Rate 

Index Appeals 

Requirements: An institution could 

appeal a notice of a program’s loss of 

title IV, HEA program eligibility under 

§ 668.410 based upon two pCDRs of 30 

percent or greater if the participation 

rate index for that GE program is equal 

to or less than 0.0625 for any of those 

three program cohort’s fiscal years. A 

participation rate index appeal (and a 

participation rate index challenge for 

draft rates, discussed above) could be 

submitted if the number of students 

who received title IV, HEA program 

loans during a one-year period was only 

a small percentage of those who were 

eligible to borrow. 

Burden Calculation: Based upon FY 

2011 submissions, there were 2 

participation rate index appeals of the 

total 510 challenges, requests for 

adjustments, and appeals. Therefore 0.4 

percent of the projected 943 challenges, 

adjustments, and appeals or 4 are 

projected to be participation rate index 

appeals. On average, we estimate that 

gathering and submitting the 

information for each appeal would take 

2 hours per submission. 

We estimate that all 4 projected 

participation rate index appeals would 

be from for-profit institutions. 

Therefore, the total increase in burden 

for § 668.514 would be 8 hours (4 

participation rate index appeals times 2 

hours) under OMB Control Number 

1845—NEW3. 

Section 668.515 Average Rates 

Appeals 

Requirements: Before notifying the 

institution of the official pCDR for a GE 

program, we would make an initial 

determination about whether the GE 

program qualifies for an average rates 

appeal. An average rates appeal would 

be allowed if the number of borrowers 

who entered repayment in the cohort 

period is less than 30. In such cases, the 

program’s pCDR is calculated based on 

the total of the program’s former 

students who entered repayment in the 

cohort year and in the two previous 

cohort years. 

If we determine that the GE program 

qualifies, we would notify the 

institution of that determination at the 

same time that we notify the institution 

of the official pCDR. A GE program 

would not be subject to a sanction under 

§ 668.410 if we determine that the GE 

program meets the requirements for an 

average rates appeal. 

If the institution disagrees with our 

initial determination, that is, the 

institution wants the program to be 

made ineligible or subject to sanction 

and not be granted the appeal, the 

institution would send the Department 

notification. No institutions have ever 

rejected our provision of this appeal. 

Therefore, there is no burden associated 

with average rates appeals. 

Section 668.516 Thirty-or-fewer 

Borrowers Appeals 

Requirements: An institution could 

appeal a notice of sanction of a GE 

program under § 668.410 if the total 

number of borrowers who comprise the 

pCDR cohorts for the three years at issue 

was 30 or fewer borrowers. 

Before notifying the institution of the 

official pCDR, we would make an initial 

determination about whether the GE 

program qualifies for a thirty-or-fewer 

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borrowers appeal. A GE program would 

not become subject to a sanction under 

§ 668.410 if we determine that the GE 

program meets the requirements for a 

thirty-or-fewer borrowers appeal. If we 

determine that the program qualifies, we 

would notify the institution of that 

determination at the same time that we 

notify the institution of the official 

pCDR. If the institution disagrees with 

our initial determination, that is, the 

institution wants the program to be 

subject to sanction and not granted the 

appeal, the institution would send the 

Department notification. No institution 

has ever rejected our provision of this 

appeal; therefore there is no burden 

associated with this appeal. 

Consistent with the discussion above, 

the following chart describes the 

sections of the proposed regulations 

involving information collections, the 

information being collected, and the 

collections that the Department will 

submit to OMB for approval and public 

comment under the PRA, and the 

estimated costs associated with the 

information collections. The monetized 

net costs of the increased burden on 

institutions and borrowers, using wage 

data developed using BLS data, 

available at www.bls.gov/ncs/ect/sp/

ecsuphst.pdf, is $209,859,517, as shown 

in the chart below. This cost was based 

on an hourly rate of $36.55 for 

institutions and $16.30 for students. 

Collection of Information 

Regulatory section Information collection 

OMB control No. 

and estimated burden 

[change in burden] 

Estimated 

costs 

668.405—Issuing and challenging 

D/E rates.

The proposed regulations would provide institutions 

an opportunity to correct information about students who have completed their programs and who 

are on the list provided by the Department to the 

institution.

OMB 1845—NEW1 This would be 

a new collection. We estimate 

that the burden would increase 

by 222,820 hours.

$8,144,071 

668.406—D/E rates alternate earnings appeals and showings of 

mitigating circumstances.

The proposed regulations would allow institutions to 

make an alternate earnings appeal to the D/E 

rates, or a showing of mitigating circumstances, 

when the final D/E rates are failing or in the zone 

under the D/E rates measure.

OMB 1845—NEW2 This would be 

a new collection. We estimate 

that the burden would increase 

by 29,089 hours.

1,063,203 

668.410—Consequences of GE 

measures.

The proposed regulations would provide that for any 

year the Secretary notifies the institution that a GE 

program could become ineligible based on a final 

GE measure for the next award or fiscal year the 

institution must provide written warnings.

OMB 1845—NEW1 This would be 

a new collection. We estimate 

that the burden for institutions 

would increase by 1,065,198 

hours. We estimate that the burden would increase for individuals by 1,050,857 hours.

56,061,956 

668.411—Reporting requirement for 

GE programs.

The proposed regulations would require information 

the institution must report to the Department about 

students in GE programs.

OMB 1845—NEW1 This would be 

a new collection. We estimate 

that the burden would increase 

by 546,419 hours.

19,971,614 

668.412—Disclosure requirement 

for GE programs.

The proposed regulations would require certain information about GE programs to be disclosed by institutions to enrolled and prospective students.OMB 1845—NEW1 This would be 

a new collection. We estimate 

that the burden for institutions 

would increase by 2,001,898 

hours. We estimate that the burden for individuals would increase by 1,116,272 hours.

91,364,240 

668.413—Calculating, issuing, and 

challenging completion rates, 

withdrawal rates, repayment 

rates, median loan debt, and median earnings.

The proposed regulations allow institutions to challenge the rates and median earnings calculated by 

the Department.

OMB 1845—NEW1 This would be 

a new collection. We estimate 

that the burden would increase 

by 902,136 hours.

32,973,071 

668.414—Certification and application requirement for GE programs.The proposed regulations would add a requirement 

that institutions certify that GE programs it offers 

are approved or accredited by an accrediting agency or the State.

OMB 1845—NEW1 This would be 

a new collection. We estimate 

that the burden would increase 

by 1,981 hours.

72,406 

668.504—Draft program cohort default rates and challenges.The proposed regulations would allow an institution 

to challenge the draft program cohort default rates.

OMB 1845—NEW3 This would be 

a new collection. We estimate 

that the burden would increase 

by 5,148 hours.

188,159 

668.509—Uncorrected data adjustments.The proposed regulations would allow institutions to 

request a data adjustment when agreed-upon data 

changes were not reflected in the official program 

cohort default rate.

OMB 1845—NEW3 This would be 

a new collection. We estimate 

that the burden would increase 

by 326 hours.

11,915 

668.510—New data adjustments ..... The proposed regulations would allow an institution 

to request a new data adjustment if a comparison 

of the draft and final LRDR show that data have 

been included, excluded, or otherwise changed 

and the errors are confirmed by the data manager.

OMB 1845—NEW3 This would be 

a new collection. We estimate 

that the burden would increase 

by 76 hours.

2,778 

668.511—Erroneous data appeals .. The proposed regulations allow an institution to appeal the program cohort default rate calculation 

when the accuracy was previously challenged on 

the basis of incorrect data.

OMB 1845—NEW3 This would be 

a new collection. We estimate 

that the burden would increase 

by 0 hours.

0 

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16504 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

Regulatory section Information collection 

OMB control No. 

and estimated burden 

[change in burden] 

Estimated 

costs 

668.512—Loan Servicing Appeals .. The proposed regulations allow an institution to appeal on the basis of improper loan servicing or collection where the institution can prove that the 

servicer failed to perform required servicing or collections activities.

OMB 1845—NEW3 This would be 

a new collection. We estimate 

that the burden would increase 

by 114 hours.

4,167 

668.513—Economically disadvantaged appeals.The proposed regulations would allow institutions to 

appeal a notice of ineligibility based upon an auditors certification that the GE program has a low income rate, a high completion rate, and a placement rate of 44 percent or more.

OMB 1845—NEW3 This would be 

a new collection. We estimate 

that the burden would increase 

by 45 hours.

1,645 

668.514—Participation rate index 

appeals.

The proposed regulations would allow institutions to 

appeal loss of eligibility if the participation rate was 

less than 0.0625 percent for any of the three most 

recent program cohort default rates.

OMB 1845—NEW3 We estimate 

that the burden would increase 

by 8 hours.

292 

The total burden hours and change in 

burden hours associated with each OMB 

Control number affected by the 

proposed regulations follows: 

Control No. Total proposed 

burden hours 

Proposed change 

in burden hours 

1845—NEW1 ............................................................................................................................................... 6,907,571 + 6,907,571 

1845—NEW2 ............................................................................................................................................... 29,089 29,0890 

1845—NEW3 ............................................................................................................................................... 5,717 5,717 

Total ...................................................................................................................................................... 6,942,377 = 6,942,377 

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 the 

General Education Provisions Act, 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. Free Internet access to the 

official edition of the Federal Register 

and the Code of Federal Regulations is 

available 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 Adobe 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: 84.007 FSEOG; 84.032 Federal 

Family Education Loan Program; 84.033 

Federal Work-Study Program; 84.038 Federal 

Perkins Loan Program; 84.063 Federal Pell 

Grant Program; 84.069A LEAP; 84.268 

William D. Ford Federal Direct Loan 

Program; 84.376 ACG/Smart; 84.379 TEACH 

Grant Program; 84.069B Grants for Access 

and Persistence Program) 

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: March 14, 2014. 

Arne Duncan, 

Secretary of Education. 

For the reasons discussed in the 

preamble, 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 

■ 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. 

■ 2. Section 600.2 is amended by: 

■ A. Revising the definition of 

‘‘Recognized occupation.’’ 

■ B. Revising the authority citation at 

the end of the section. 

The revisions read as follows: 

§ 600.2 Definitions. 

* * * * * 

Recognized occupation: An 

occupation that is— 

(1) Identified by a Standard 

Occupational Classification (SOC) code 

established by the Office of Management 

and Budget (OMB) or an Occupational 

Information Network O*Net-SOC code 

established by the Department of Labor, 

which is available at 

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www.onetonline.org or its successor site; 

or 

(2) Determined by the Secretary in 

consultation with the Secretary of Labor 

to be a recognized occupation. 

* * * * * 

(Authority: 20 U.S.C. 1001, 1002, 1071, et 

seq., 1078–2, 1088, 1091, 1094, 1099b, 1099c, 

1141; 26 U.S.C. 501(c)) 

■ 3. Section 600.10 is amended by: 

■ A. Revising paragraphs (c)(1), (c)(2), 

and (c)(3)(i). 

■ B. Revising the authority citation at 

the end of the section. 

The revisions read as follows: 

§ 600.10 Date, extent, duration, and 

consequence of eligibility. 

* * * * * 

(c) Educational programs. (1) An 

eligible institution that seeks to 

establish the eligibility of an 

educational program must— 

(i) For a gainful employment program 

under 34 CFR part 668, subpart Q of this 

chapter, update its application under 

§ 600.21, and meet any time restrictions 

that prohibit the institution from 

establishing or reestablishing the 

eligibility of the program as may be 

required under 34 CFR 668.414; 

(ii) 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; 

and 

(iii) 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. 

(2) Except as provided under 

§ 600.20(c), an eligible institution does 

not have to obtain the Secretary’s 

approval to establish the eligibility of 

any program that is not described in 

paragraph (c)(1)(i), (ii), or (iii) of this 

section. 

(3) * * * 

(i) Fails to obtain the Secretary’s 

approval for an educational program 

identified in paragraph (c)(1) of this 

section; or 

* * * * * 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, 

and 1141) 

■ 4. Section 600.20 is amended by: 

■ A. Revising the introductory text of 

paragraph (c)(1). 

■ B. Revising the authority citation at 

the end of the section. 

The revisions read as follows: 

§ 600.20 Notice and application 

procedures for establishing, reestablishing, 

maintaining, or expanding institutional 

eligibility and certification. 

* * * * * 

(c) * * * 

(1) Add an educational program or a 

location at which the institution offers 

or will offer 50 percent or more of an 

educational program if one of the 

following conditions applies, otherwise 

it must report to the Secretary under 

§ 600.21: 

* * * * * 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, 

and 1099c) 

■ 5. Section 600.21 is amended by: 

■ A. Adding paragraph (a)(11). 

■ B. Revising the authority citation at 

the end of the section. 

The revisions read as follows: 

§ 600.21 Updating application information. 

(a) * * * 

(11) For any gainful employment 

program under 34 CFR part 668, subpart 

Q, for which the institution— 

(i) Establishes the eligibility or 

reestablishes the eligibility of a new 

program; 

(ii) Discontinues the program’s 

eligibility under 34 CFR 668.410; 

(iii) Ceases to provide the program for 

at least 12 consecutive months; 

(iv) Loses program eligibility under 

§ 600.40; or 

(v) Changes the program’s name, CIP 

code, as defined in 34 CFR 668.402, or 

credential level. 

* * * * * 

(Authority: 20 U.S.C. 1094, 1099b) 

PART 668—STUDENT ASSISTANCE 

GENERAL PROVISIONS 

■ 6. The authority citation for part 668 

continues to read as follows: 

Authority: 20 U.S.C. 1001, 1002, 1003, 

1088, 1091, 1094, 1099b, and 1099c, unless 

otherwise noted. 

§ 668.6 [Removed and Reserved] 

■ 7. Remove and reserve section 668.6. 

§ 668.7 [Removed and Reserved] 

■ 8. Remove and reserve section 668.7. 

§ 668.8 [Amended] 

■ 9. Section 668.8 is amended by: 

■ A. In paragraph (d)(2)(iii), removing 

the reference to ‘‘§ 668.6’’ and adding, in 

its place, a reference to ‘‘subpart Q of 

this part’’. 

■ B. In paragraph (d)(3)(iii), removing 

the reference to ‘‘§ 668.6’’ and adding, in 

its place, a reference to ‘‘subpart Q of 

this part’’. 

■ 10. Section 668.14 is amended by 

revising paragraph (a)(26) to read as 

follows: 

§ 668.14 Program participation agreement. 

(a) * * * 

(26) If an educational program offered 

by the institution is required to prepare 

a student for gainful employment in a 

recognized occupation, the institution 

must— 

(i) Demonstrate a reasonable 

relationship between the length of the 

program and entry level requirements 

for the recognized occupation for which 

the program prepares the student. The 

Secretary considers the relationship to 

be reasonable if the number of clock 

hours provided in the program does not 

exceed by more than 50 percent the 

minimum number of clock hours 

required for training in the recognized 

occupation for which the program 

prepares the student, as established by 

the State in which the institution is 

located, if the State has established such 

a requirement, or as established by any 

Federal agency; 

(ii) Establish the need for the training 

for the student to obtain employment in 

the recognized occupation for which the 

program prepares the student; and 

(iii) Provide for that program the 

certification required in § 668.414. 

* * * * * 

■ 11. Add subpart Q to read as follows: 

Subpart Q—Gainful Employment (GE) 

Programs 

Sec. 

668.401 Scope and purpose. 

668.402 Definitions. 

668.403 Gainful employment framework. 

668.404 Calculating D/E rates. 

668.405 Issuing and challenging D/E rates. 

668.406 D/E rates alternate earnings appeals 

and showings of mitigating 

circumstances. 

668.407 Calculating pCDR. 

668.408 Issuing and challenging pCDR. 

668.409 Final determination of GE 

measures. 

668.410 Consequences of GE measures. 

668.411 Reporting requirements for GE 

programs. 

668.412 Disclosure requirements for GE 

programs. 

668.413 Calculating, issuing, and 

challenging completion rates, 

withdrawal rates, repayment rates, 

median loan debt, and median earnings. 

668.414 Certification requirements for GE 

programs. 

668.415 Severability. 

Subpart Q—Gainful Employment (GE) 

Programs 

§ 668.401 Scope and purpose. 

This subpart applies to an educational 

program offered by an eligible 

institution that prepares students for 

gainful employment in a recognized 

occupation, and establishes the rules 

and procedures under which— 

(a) The Secretary determines that the 

program is eligible for title IV, HEA 

program funds; 

(b) An institution reports information 

about the program to the Secretary; and 

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(c) An institution discloses 

information about the program to 

students and prospective students. 

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

1231a) 

§ 668.402 Definitions. 

The following definitions apply to 

this subpart. 

Annual earnings rate. The percentage 

of a GE program’s annual loan payment 

compared to the annual earnings of the 

students who completed the program, as 

calculated under § 668.404. 

Classification of instructional 

program (CIP) code. A taxonomy of 

instructional program classifications 

and descriptions developed by the U.S. 

Department of Education’s National 

Center for Education Statistics (NCES). 

The CIP code for a program is six digits. 

For the purpose of this subpart, 

programs that are ‘‘substantially 

similar’’ to one another share the first 

four digits of a CIP code. 

Cohort period. The two-year cohort 

period or the four-year cohort period 

during which those students who 

complete a program are identified in 

order to assess their loan debt and 

earnings for the purpose of calculating 

the D/E rates for the program for an 

award year. 

Credential level. The level of the 

academic credential awarded by an 

institution to students who would 

complete the program. For purposes of 

this subpart, the undergraduate 

credential levels are: Less than one year 

undergraduate certificate or diploma, 

one year or longer but less than two 

years undergraduate certificate or 

diploma, two years or longer 

undergraduate certificate or diploma, 

associate degree, and bachelor’s degree; 

and the graduate credential levels are 

post-baccalaureate certificate (including 

postgraduate certificates), graduate 

certificate, master’s degree, doctoral 

degree, and first-professional degree 

(e.g., MD, DDS, JD). 

Debt-to-earnings rates (D/E rates). The 

discretionary income rate and annual 

earnings rate as calculated under 

§ 668.404. 

Discretionary income rate. The 

percentage of a GE program’s annual 

loan payment compared to the 

discretionary income of the students 

who completed the program, as 

calculated under § 668.404. 

Four-year cohort period. The cohort 

period covering four consecutive award 

years that are— 

(1) The third, fourth, fifth, and sixth 

award years prior to the award year for 

which the D/E rates are calculated 

pursuant to § 668.404. For example, if 

D/E rates are calculated for award year 

2014–2015, the four-year cohort period 

is award years 2008–2009, 2009–2010, 

2010–2011, and 2011–2012; or 

(2) For a program whose students are 

required to complete a medical or dental 

internship or residency, the sixth, 

seventh, eighth, and ninth award years 

prior to the award year for which the 

D/E rates are calculated. For example, if 

D/E rates are calculated for award year 

2014–2015, the four-year cohort period 

is award years 2005–2006, 2006–2007, 

2007–2008, and 2008–2009. For this 

purpose, a required medical or dental 

internship or residency is a supervised 

training program that— 

(i) Requires the student to hold a 

degree as a doctor of medicine or 

osteopathy, or a doctor of dental 

science; 

(ii) Leads to a degree or certificate 

awarded by an institution of higher 

education, a hospital, or a health care 

facility that offers post-graduate 

training; and 

(iii) Must be completed before the 

student may be licensed by a State and 

board certified for professional practice 

or service. 

Gainful employment program (GE 

program). An educational program 

offered by an institution under 

§ 668.8(c)(3) or (d) and identified by a 

combination of the institution’s six-digit 

Office of Postsecondary Education ID 

(OPEID) number, the program’s six-digit 

CIP code as assigned by the institution 

or determined by the Secretary, and the 

program’s credential level. 

GE measures. The debt-to-earnings 

rates and the program cohort default 

rate as described in this subpart. 

Length of the program. The amount of 

time in weeks, months, or years that is 

specified in the institution’s catalog, 

marketing materials, or other official 

publications for a student to complete 

the requirements needed to obtain the 

degree or credential offered by the 

program. 

Metropolitan Statistical Area (MSA). 

The Metropolitan Statistical Area as 

published by the U.S. Office of 

Management and Budget and available 

at www.census.gov/population/metro/ 

or its successor site. 

Poverty Guideline. The Poverty 

Guideline for a single person in the 

continental United States as published 

by the U.S. Department of Health and 

Human Services and available at http:// 

aspe.hhs.gov/poverty or its successor 

site. 

Program cohort default rate (pCDR). 

The percentage of a GE program’s 

students who defaulted on their loans, 

as calculated under § 668.407. 

Prospective student. An individual 

who has contacted an eligible 

institution for the purpose of requesting 

information about enrolling in a GE 

program or who has been contacted 

directly by the institution or indirectly 

through advertising about enrolling in a 

GE program. 

Student. An individual who received 

title IV, HEA program funds for 

enrolling in the applicable GE program. 

Title IV loan. A loan authorized under 

the Federal Perkins Loan Program 

(Perkins Loan), the Federal Family 

Education Loan Program (FFEL Loan), 

or the William D. Ford Direct Loan 

Program (Direct Loan). 

Two-year cohort period. The cohort 

period covering two consecutive award 

years that are— 

(1) The third and fourth award years 

prior to the award year for which the 

D/E rates are calculated pursuant to 

§ 668.404. For example, if D/E rates are 

calculated for award year 2014–2015, 

the two-year cohort period is award 

years 2010–2011 and 2011–2012; or 

(2) For a program whose students are 

required to complete a medical or dental 

internship or residency, the sixth and 

seventh award years prior to the award 

year for which the D/E rates are 

calculated. For example, if D/E rates are 

calculated for award year 2014–2015, 

the two-year cohort period is award 

years 2007–2008 and 2008–2009. For 

this purpose, a required medical or 

dental internship or residency is a 

supervised training program that— 

(i) Requires the student to hold a 

degree as a doctor of medicine or 

osteopathy, or as a doctor of dental 

science; 

(ii) Leads to a degree or certificate 

awarded by an institution of higher 

education, a hospital, or a health care 

facility that offers post-graduate 

training; and 

(iii) Must be completed before the 

student may be licensed by a State and 

board certified for professional practice 

or service. 

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

§ 668.403 Gainful employment program 

framework. 

(a) General. A program provides 

training that prepares students for 

gainful employment in a recognized 

occupation if the program— 

(1) Satisfies the applicable 

certification requirements in § 668.414; 

and 

(2) Is not an ineligible program under 

the provisions for the D/E rates measure 

described in paragraph (b)(1) or the 

provisions for the pCDR measure 

described in paragraph (b)(2) of this 

section. 

(b) GE measures. (1) Debt-to-earnings 

rates (D/E rates). For each award year 

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and for each eligible GE program offered 

by an institution, the Secretary 

calculates two D/E rates, the 

discretionary income rate and the 

annual earnings rate, using the 

procedures in §§ 668.404 through 

668.406. 

(2) Program cohort default rate 

(pCDR). For each fiscal year and for 

each eligible GE program offered by an 

institution, the Secretary calculates the 

pCDR using the procedures in § 668.407. 

(c) Outcomes of GE measures. (1) 

D/E rates. (i) A GE program is ‘‘passing’’ 

the D/E rates measure if— 

(A) Its discretionary income rate is 

less than or equal to 20 percent; or 

(B) Its annual earnings rate is less 

than or equal to eight percent. 

(ii) A GE program is ‘‘failing’’ the D/ 

E rates measure if— 

(A) Its discretionary income rate is 

greater than 30 percent or the income 

for the denominator (discretionary 

earnings) of the rate is negative or zero; 

and 

(B) Its annual earnings rate is greater 

than 12 percent or the denominator 

(annual earnings) of the rate is zero. 

(iii) A GE program is ‘‘in the zone’’ for 

the purpose of the D/E rates measure if 

it is not a passing GE program and its— 

(A) Discretionary income rate is 

greater than 20 percent but less than or 

equal to 30 percent; or 

(B) Annual earnings rate is greater 

than eight percent but less than or equal 

to 12 percent. 

(iv) For the purpose of the D/E rates 

measure, a GE program becomes 

ineligible if the program— 

(A) Is failing the D/E rates measure in 

two out of any three consecutive award 

years for which the program’s D/E rates 

are calculated; or 

(B) Is failing the D/E rates measure or 

is in the zone for four consecutive 

award years for which the program’s 

D/E rates are calculated. 

(2) pCDR. (i) A GE program is 

‘‘passing’’ the pCDR measure if its pCDR 

for the most recent fiscal year is less 

than 30 percent. 

(ii) A GE program is ‘‘failing’’ the 

pCDR measure if its pCDR for the most 

recent fiscal year is 30 percent or 

greater. 

(iii) For the purpose of the pCDR 

measure, a GE program is ineligible if it 

fails the pCDR measure for three 

consecutive fiscal years. 

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

§ 668.404 Calculating D/E rates. 

(a) General. Except as provided in 

paragraph (f) of this section, for each 

award year, the Secretary calculates 

D/E rates for a GE program as follows: 

(1) Discretionary income rate = annual 

loan payment/(the higher of the mean or 

median annual earnings—(1.5 × Poverty 

Guideline)). 

(2) Annual earnings rate = annual 

loan payment/the higher of the mean or 

median annual earnings. 

(b) Annual loan payment. The 

Secretary calculates the annual loan 

payment for a GE program by— 

(1) Determining the median loan debt 

of the students who completed the 

program during the applicable cohort 

period, based on the lesser of— 

(i) The loan debt incurred by each 

student as determined under paragraph 

(d) of this section; and 

(ii) The total amount of tuition and 

fees the institution assessed each 

student for enrollment in the program 

and the total amount for books, 

equipment, and supplies, as reported in 

§ 668.411(a)(1)(iv) and (v). 

(2) Amortizing the median loan 

debt— 

(i)(A) Over a 10-year repayment 

period for a program that leads to an 

undergraduate certificate, a postbaccalaureate certificate, an associate 

degree, or a graduate certificate; 

(B) Over a 15-year repayment period 

for a program that leads to a bachelor’s 

degree or a master’s degree; or 

(C) Over a 20-year repayment period 

for a program that leads to a doctoral or 

first-professional degree; 

(ii) Using an annual interest rate that 

is the average of the statutorily 

determined annual interest rate on 

Federal Direct Unsubsidized Loans 

made during the six-year period prior to 

the end of the applicable cohort period, 

which includes the applicable cohort 

period, where— 

(A) For a program that leads to an 

undergraduate certificate, an associate 

degree, a bachelor’s degree, or a postbaccalaureate certificate, the average 

interest rate is based on the rate of a 

Federal Direct Unsubsidized Loan made 

to an undergraduate student; and 

(B) For a program that leads to a 

master’s degree, a graduate certificate, or 

a doctoral or first-professional degree, 

the average interest rate is based on the 

rate of a Federal Direct Unsubsidized 

Loan made to a graduate student. 

Note to paragraph (b)(2)(ii): For example, 

if the two-year cohort period is award years 

2010–2011 and 2011–2012, the interest rate 

would be the average of the interest rates for 

the years from 2006–2007 through 2011– 

2012. 

(c) Annual earnings. (1) The Secretary 

obtains from the Social Security 

Administration (SSA) or another 

Federal agency, under § 668.405, the 

most currently available mean and 

median annual earnings of the students 

who completed the GE program during 

the applicable cohort period and who 

are not excluded under paragraph (e) of 

this section; and 

(2) The Secretary uses the higher of 

the mean or median annual earnings to 

calculate the D/E rates. 

(d) Loan debt. In determining the loan 

debt for a student, the Secretary— 

(1) Includes— 

(i) The amount of title IV loans that 

the student borrowed for enrollment in 

the GE program (Federal PLUS Loans 

made to parents of dependent students, 

Direct PLUS Loans made to parents of 

dependent students, and Direct 

Unsubsidized Loans that were 

converted from TEACH Grants are not 

included); 

(ii) Any private education loans as 

defined in 34 CFR 601.2, including 

private education loans made by the 

institution, that the student borrowed 

for enrollment in the program and that 

were required to be reported by the 

institution under § 668.411; and 

(iii) Any credit extended by or on 

behalf of the institution for enrollment 

in the GE program that the student is 

obligated to repay after the student’s 

completion of the program, regardless of 

who holds the debt, even if that 

obligation is excluded from the 

definition of ‘‘private education loan,’’ 

in 34 CFR 601.2; 

(2) Attributes all of the loan debt 

incurred by the student for enrollment 

in any— 

(i) Undergraduate GE program at the 

institution to the highest credentialed 

undergraduate GE program 

subsequently completed by the student 

at the institution as of the end of the 

most recently completed award year 

prior to the calculation of the draft 

D/E rates under this section; 

(ii) Graduate GE program at the 

institution to the highest credentialed 

graduate GE program completed by the 

student at the institution as of the end 

of the most recently completed award 

year prior to the calculation of the draft 

D/E rates under this section; and 

(iii) Post-baccalaureate GE program, 

graduate certificate GE program, or 

graduate degree GE program at the 

institution to the highest credentialed 

graduate degree GE program completed 

by the student at the institution as of the 

end of the most recently completed 

award year prior to the calculation of 

the draft D/E rates under this section; 

and 

(3) Excludes any loan debt incurred 

by the student for enrollment in 

programs at other institutions. However, 

the Secretary may include loan debt 

incurred by the student for enrolling in 

GE programs at other institutions if the 

institution and the other institutions are 

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under common ownership or control, as 

determined by the Secretary in 

accordance with 34 CFR 600.31. 

(e) Exclusions. The Secretary excludes 

a student from both the numerator and 

the denominator of the D/E rates 

calculation if the Secretary determines 

that— 

(1) One or more of the student’s title 

IV loans were in a military-related 

deferment status at any time during the 

calendar year for which the Secretary 

obtains earnings information under 

paragraph (c) of this section; 

(2) One or more of the student’s title 

IV loans are under consideration by the 

Secretary, or have been approved, for a 

discharge on the basis of the student’s 

total and permanent disability, under 34 

CFR 674.61, 682.402, or 685.212; 

(3) The student was enrolled in any 

other eligible program at the institution 

or at another institution during the 

calendar year for which the Secretary 

obtains earnings information under 

paragraph (c) of this section; 

(4) For undergraduate GE programs, 

the student completed a higher 

credentialed undergraduate program at 

the institution subsequent to completing 

the program as of the end of the most 

recently completed award year prior to 

the calculation of the draft D/E rates 

under this section; 

(5) For post-baccalaureate, graduate 

certificate, or graduate degree GE 

programs, the student completed a 

higher credentialed graduate GE 

program at the institution subsequent to 

completing the program as of the end of 

the most recently completed award year 

prior to the calculation of the draft D/ 

E rates under this section; or 

(6) The student died. 

(f) D/E rates not calculated. The 

Secretary does not calculate D/E rates 

for a GE program if— 

(1) After applying the exclusions in 

paragraph (e) of this section, fewer than 

30 students completed the program 

during the two-year cohort period and 

fewer than 30 students completed the 

program during the four-year cohort 

period; or 

(2) SSA does not provide the mean 

and median earnings for the program as 

provided under paragraph (c) of this 

section. 

(g) Transition period. (1) If a GE 

program would be failing or in the zone 

based on its draft D/E rates calculated in 

accordance with paragraphs (a) through 

(f) of this section for any of the first four 

award years for which the Secretary 

calculates D/E rates, the Secretary 

calculates transitional draft D/E rates for 

the program by using— 

(i) The median loan debt of the 

students who completed the program 

during the most recently completed 

award year prior to the calculation of 

the D/E rates; and 

(ii) The earnings used to calculate the 

draft D/E rates under paragraph (c) of 

this section. 

(2) For the award years listed in 

paragraph (g)(1), the Secretary 

determines the final D/E rates for the 

program by using the lower of the draft 

D/E rates calculated under paragraphs 

(a) through (f) of this section or the 

transitional draft D/E rates calculated 

under this paragraph (g). 

(3) The institution may challenge the 

transitional draft D/E rates under the 

procedures in § 668.405 and may appeal 

the transitional final D/E rates under 

§ 668.406. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.405 Issuing and challenging D/E 

rates. 

(a) Overview. For each award year, the 

Secretary determines the D/E rates for a 

GE program at an institution by— 

(1) Creating a list of the students who 

completed the program during the 

applicable cohort period and providing 

the list to the institution, as provided in 

paragraph (b) of this section; 

(2) Allowing the institution to correct 

the information about the students on 

the list, as provided in paragraph (c) of 

this section; 

(3) Obtaining from SSA or another 

Federal agency the mean and median 

annual earnings of the students on the 

list, as provided in paragraph (d) of this 

section; 

(4) Calculating draft D/E rates and 

providing them to the institution, as 

provided in paragraph (e) of this 

section; 

(5) Allowing the institution to 

challenge the median loan debt used to 

calculate the draft D/E rates, as provided 

in paragraph (f) of this section; 

(6) Calculating final D/E rates and 

providing them to the institution, as 

provided in paragraph (g) of this 

section; and 

(7) Allowing the institution to appeal 

the final D/E rates as provided in 

§ 668.406. 

(b) Creating the list of students. (1) 

The Secretary selects the students to be 

included on the list by— 

(i) Identifying the students who 

completed the program during the 

applicable cohort period from the data 

provided by the institution under 

§ 668.411; and 

(ii) Indicating which students would 

be removed from the list under 

§ 668.404(e) and the specific reason for 

the exclusion. 

(2) The Secretary provides the list to 

the institution and states which cohort 

period was used to select the students. 

(c) Institutional corrections to the list. 

(1) The Secretary presumes that the list 

of students and the identity information 

for those students are correct unless, as 

set forth in procedures established by 

the Secretary, the institution provides 

evidence to the contrary satisfactory to 

the Secretary. The institution bears the 

burden of proof that the list is incorrect. 

(2) No later than 45 days after the date 

the Secretary provides the list to the 

institution, the institution may— 

(i) Provide evidence showing that a 

student should be included on or 

removed from the list pursuant to 

§ 668.404(e); or 

(ii) Correct or update a student’s 

identity information and the student’s 

program attendance information. 

(3) After the 45-day period expires, 

the institution may no longer seek to 

correct the list of students or revise the 

identity or program information of those 

students included on this list that the 

Secretary uses to determine the D/E 

rates for the program. 

(4) The Secretary considers the 

evidence provided by the institution 

and either accepts the correction or 

notifies the institution of the reasons for 

not accepting the correction. If the 

Secretary accepts the correction, the 

Secretary uses the corrected information 

to create the final list. The Secretary 

notifies the institution which students 

are included on the final list and the 

applicable cohort period used to create 

the final list. 

(d) Obtaining earnings data. The 

Secretary submits the final list to SSA 

or another Federal agency. For purposes 

of this section, SSA returns to the 

Secretary— 

(1) The mean and median annual 

earnings of the students on the list 

whom SSA has matched to SSA 

earnings data, in aggregate and not in 

individual form; and 

(2) The number, but not the identities, 

of students on the list that SSA could 

not match. 

(e) Calculating draft D/E rates. (1) The 

Secretary uses the higher of the mean or 

median annual earnings provided by 

SSA to calculate draft D/E rates for a GE 

program, as provided in § 668.404. 

(2) If SSA reports that it was unable 

to match one or more of the students on 

the final list, the Secretary does not 

include in the calculation of the median 

loan debt the same number of students 

with the highest loan debts as the 

number of students whose earnings SSA 

did not match. For example, if SSA is 

unable to match three students out of 

100 students, the Secretary orders by 

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amount the debts of the 100 listed 

students and excludes from the D/E 

rates calculation the three largest loan 

debts. 

(3)(i) The Secretary notifies the 

institution of the draft D/E rates for the 

program and provides the mean and 

median annual earnings obtained from 

SSA and the individual student loan 

information used to calculate the rates, 

including the loan debt that was used in 

the calculation for each student. 

(ii) The draft D/E rates and the data 

described in paragraphs (b) through (e) 

of this section are not considered public 

information. 

(f) Institutional challenges to draft D/ 

E rates. (1) The Secretary presumes that 

the loan debt information used to 

calculate the median loan debt for the 

program under § 668.404 is correct 

unless the institution provides 

evidence, as provided in paragraph (f)(2) 

of this section, that the information is 

incorrect. The institution bears the 

burden of proof to show that the loan 

debt information is incorrect, and to 

show how it should be corrected. 

(2) No later than 45 days after the 

Secretary notifies an institution of the 

draft D/E rates for a program, the 

institution may challenge the accuracy 

of the loan debt information that the 

Secretary used to calculate the median 

loan debt for the program under 

§ 668.404 by submitting evidence, in a 

format and through a process 

determined by the Secretary, that 

demonstrates that the median loan debt 

calculated by the Secretary is incorrect. 

(3) In a challenge under this section, 

the Secretary does not consider— 

(i) Any objection to the mean or 

median annual earnings that SSA 

provided to the Secretary; 

(ii) More than one challenge to the 

student-specific data on which draft D/ 

E rates are based for a program for an 

award year; or 

(iii) Any challenge that is not timely 

submitted. 

(4) The Secretary considers the 

evidence provided by an institution 

challenging the median loan debt and 

notifies the institution of whether the 

challenge is accepted or the reasons 

why the challenge is not accepted. 

(5) If the information from an 

accepted challenge changes the median 

loan debt of the program, the Secretary 

recalculates the program’s draft D/E 

rates. 

(6) Except as provided under 

§ 668.406, an institution that does not 

timely challenge the draft D/E rates for 

a program waives any objection to those 

rates. 

(g) Final D/E rates. (1) After 

expiration of the 45-day period and 

subject to resolution of any challenge 

under paragraph (f) of this section, a 

program’s draft D/E rates constitute its 

final D/E rates. 

(2) The Secretary informs the 

institution of the final D/E rates for each 

of its GE programs by issuing the notice 

of determination described in 

§ 668.409(a). 

(3) After the Secretary provides the 

notice of determination to the 

institution, the Secretary may publish 

the final D/E rates for the program. 

(h) Conditions for corrections and 

challenges. An institution must ensure 

that any material that it submits to make 

any correction or challenge under this 

section is complete, timely, accurate, 

and in a format acceptable to the 

Secretary and consistent with any 

instructions provided to the institution 

with the notice of its draft D/E rates and 

the notice of determination. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.406 D/E rates alternate earnings 

appeals and showings of mitigating 

circumstances. 

(a) Alternate earnings appeals. (1) 

General. If a GE program is failing or in 

the zone under the D/E rates measure, 

an institution may file an alternate 

earnings appeal to request recalculation 

of the program’s most recent final D/E 

rates issued by the Secretary. 

(2) Basis for appeals. (i) The 

institution may use alternate earnings 

from an institutional survey conducted 

under paragraph (a)(3), or from a Statesponsored data system under paragraph 

(a)(4) of this section, to recalculate the 

program’s final D/E rates and file an 

appeal if— 

(A) For a program that was failing the 

D/E rates measure, the program’s 

recalculated rates are passing or in the 

zone; or 

(B) For a program that was in the zone 

for the purpose of the D/E rates 

measure, the program’s recalculated 

rates are passing. 

(ii) In recalculating the final D/E rates, 

the institution must— 

(A) For the numerator, use the annual 

loan payment used in the calculation of 

the final D/E rates; and 

(B) For the denominator, use the 

higher of the mean or median alternate 

earnings. The alternate earnings must be 

from the same calendar year for which 

the Secretary obtained earnings data 

from SSA to calculate the final D/E rates 

under § 668.404. 

(3) Survey requirements for appeals. 

An institution must— 

(i) In accordance with the standards 

included on an Earning Survey Form 

developed by NCES, conduct a survey, 

to obtain annual earnings information, 

of all the students (as defined in 

§ 668.402) who completed the program 

during the same cohort period that the 

Secretary used to calculate the final 

D/E rates under § 668.404. The Secretary 

will publish in the Federal Register the 

Earnings Survey Form that will include 

a field-tested sample survey as well as 

the survey standards. An institution is 

not required to use the Earnings Survey 

Form but must adhere to the survey 

standards included in the form in 

conducting a survey under this section. 

(ii) Submit to the Secretary as part of 

its appeal— 

(A) A certification signed by the 

institution’s chief executive officer 

attesting that the survey was conducted 

in accordance with the survey standards 

in the Earnings Survey Form, and that 

the mean or median earnings used to 

recalculate the D/E rates was accurately 

determined from the survey results; 

(B) An examination-level attestation 

engagement report prepared by an 

independent public accountant or 

independent governmental auditor, as 

appropriate, that the survey was 

conducted in accordance with the 

requirements set forth in the NCES 

Earnings Survey Form. The attestation 

must be conducted in accordance with 

the attestation standards contained in 

the Government Accountability Office’s 

Government Auditing Standards 

promulgated by the Comptroller General 

of the United States (available at 

www.gao.gov/yellowbook/overview or its 

successor site), and with procedures for 

attestations contained in guides 

developed by and available from the 

Department of Education’s Office of 

Inspector General; and 

(C) Supporting documentation 

requested by the Secretary. 

(4) State-sponsored data system 

requirements for appeals. An institution 

must— 

(i) Obtain annual earnings data from 

one or more State-sponsored data 

systems by submitting a list of the 

students (as defined in § 668.402) who 

completed the GE program in the 

applicable cohort period to the 

administrator of each State-sponsored 

data system used for the appeal; 

(ii) Demonstrate that annual earnings 

data were obtained for more than 50 

percent of the students on the list, and 

that the number of students for whom 

earnings data were obtained is 30 or 

more; and 

(iii) Submit as part of its appeal— 

(A) A certification signed by the 

institution’s chief executive officer 

attesting that it accurately used the 

State-provided earnings data to 

recalculate the D/E rates; and 

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(B) Supporting documentation 

requested by the Secretary. 

(5) Appeals procedure. (i) For any 

appeal under this section, in accordance 

with procedures established by the 

Secretary and provided in the notice of 

draft D/E rates under § 668.405 and the 

notice of determination under § 668.409, 

the institution must— 

(A) Notify the Secretary of its intent 

to submit an appeal no earlier than the 

date that the Secretary provides the 

institution the draft D/E rates under 

§ 668.405(f), but no later than three 

business days after the date the 

Secretary issues the notice of 

determination under § 668.409(a) 

informing the institution of the final 

D/E rates under § 668.405(g); and 

(B) Submit the recalculated D/E rates, 

all certifications, and specified 

supporting documentation related to the 

appeal no later than 60 days after the 

date the Secretary issues the notice of 

determination. 

(ii) An institution that timely submits 

an appeal that meets the requirements of 

this section is not subject to any 

consequences under § 668.410 based on 

the D/E rates under appeal while the 

Secretary considers the appeal. If the 

Secretary has published final D/E rates 

under § 668.405(g), the program’s final 

D/E rates will be annotated to indicate 

that they are under appeal. 

(iii) An institution that does not 

submit a timely appeal waives its right 

to appeal the GE program’s failing or 

zone D/E rates for the relevant award 

year. 

(6) Appeals determinations. (i) 

Appeals denied. If the Secretary denies 

an appeal, the Secretary notifies the 

institution of the reasons for denying 

the appeal, and the program’s final D/ 

E rates previously issued in the notice 

of determination under § 668.409(a) 

remain the final D/E rates for the 

program for the award year. 

(ii) Appeals granted. If the Secretary 

grants the appeal, the Secretary notifies 

the institution that the appeal is 

granted, that the recalculated D/E rates 

are the new final 

D/E rates for the program for the award 

year, and of any consequences of the 

recalculated rates under § 668.410. If the 

Secretary has published final D/E rates 

under § 668.405(g), the program’s 

published rates will be updated to 

reflect the new final D/E rates. 

(b) Showings of mitigating 

circumstances. (1) General. If a GE 

program is failing or in the zone under 

the D/E rates measure, an institution 

may avoid or mitigate the consequences 

that the Secretary may otherwise impose 

under § 668.410 by making a successful 

showing of mitigating circumstances 

with respect to the program’s most 

recent final D/E rates issued by the 

Secretary. 

(2) Basis for showing. The institution 

may make a showing of mitigating 

circumstances if less than 50 percent of 

all the individuals who completed the 

program during the applicable cohort 

period, including those who received 

and those who did not receive title IV, 

HEA program funds, incurred loan debt 

(as defined in § 668.404(d)) for 

enrollment in the program, referred to in 

this section as the ‘‘borrowing rate.’’ 

(3) Showing requirements. An 

institution must— 

(i) Calculate the borrowing rate by— 

(A) Identifying the individuals 

(including those who received title IV, 

HEA program funds and those who did 

not) who were enrolled in the program 

on at least a half-time basis at any time 

during the applicable cohort period, and 

who completed the program during the 

applicable cohort period; 

(B) Determining which of the 

individuals identified under paragraph 

(b)(3)(i)(A) of this section incurred loan 

debt (as defined in § 668.404(d)) for 

enrollment in the program; and 

(C) Dividing the number of 

individuals who incurred loan debt 

under paragraph (b)(3)(i)(B) by the total 

number of individuals identified under 

paragraph (b)(3)(i)(A) of this section; 

and 

(ii) Submit as part of its showing— 

(A) A certification signed by its chief 

executive officer identifying the 

borrowing rate and attesting to its 

accuracy; and 

(B) Supporting documentation 

requested by the Secretary. 

(4) Showing procedure. (i) For any 

showing under this section, in 

accordance with procedures established 

by the Secretary and provided in the 

notice of draft D/E rates under § 668.405 

and the notice of determination under 

§ 668.409, the institution must— 

(A) Notify the Secretary of its intent 

to make a showing of mitigating 

circumstances no earlier than the date 

that the Secretary provides the 

institution the draft D/E rates under 

§ 668.405(f), but no later than three 

business days after the date the 

Secretary issues the notice of 

determination under § 668.409(a) 

informing the institution of the final 

D/E rates under § 668.405(g); and 

(B) Submit its borrowing rate 

calculations, all certifications, and 

specified supporting documentation 

related to the showing no later than 60 

days after the date the Secretary issues 

the notice of determination. 

(ii) An institution that timely submits 

a showing of mitigating circumstances 

that meets the requirements of this 

section is not subject to any 

consequences under § 668.410 based on 

the D/E rates for the year in which the 

showing is made while the Secretary 

considers the showing. If the Secretary 

has published final D/E rates under 

§ 668.405(g), the program’s final D/E 

rates will be annotated to indicate that 

the institution has filed to make a 

showing of mitigating circumstances. 

(iii) An institution that does not make 

a timely showing of mitigating 

circumstances for a GE program waives 

its right to make such a showing for the 

relevant award year in any subsequent 

determination with respect to the GE 

program. 

(5) Showing determinations. (i) 

Showings denied. If the Secretary denies 

a showing of mitigating circumstances, 

the Secretary notifies the institution of 

the reasons for denying the showing, 

and the program’s final D/E rates 

previously issued in the notice of 

determination under § 668.409(a) 

remain the final D/E rates for the 

program for the award year. 

(ii) Showings accepted. If the 

Secretary accepts the showing of 

mitigating circumstances, the Secretary 

notifies the institution that the showing 

is accepted and that the program is 

deemed to have passed the D/E rates 

measure for the relevant year. If the 

Secretary has published final D/E rates 

under § 668.405(g), the program’s 

published rates will remain the same, 

but will be annotated to indicate that 

the program’s showing of mitigating 

circumstances was accepted. 

(c) Conditions for alternate earnings 

appeals and showings of mitigating 

circumstances. An institution must 

ensure that any material that it submits 

to make any appeal or showing of 

mitigating circumstances under this 

section is complete, timely, accurate, 

and in a format acceptable to the 

Secretary and consistent with any 

instructions provided to the institution 

with the notice of determination. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.407 Calculating pCDR. 

For each fiscal year, the Secretary 

calculates the pCDR of a GE program 

using the same methodology the 

Secretary uses to calculate the 

institutional cohort default rate 

(institutional CDR) pursuant to section 

435(a) of the HEA. The methodology 

and the procedures used for calculating 

pCDR are set forth in subpart R of this 

part. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

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§ 668.408 Issuing and challenging pCDR. 

For each fiscal year, the Secretary 

notifies the institution of the pCDR for 

the program determined under subpart 

R of this part. The institution may 

challenge or appeal the pCDR under the 

procedures for challenges and appeals 

set forth in subpart R of this part. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.409 Final determination of GE 

measures. 

(a) Notice of determination. For each 

award year for the D/E rates measure 

and fiscal year for the pCDR measure for 

which the Secretary calculates a GE 

measure for a GE program, the Secretary 

issues a notice of determination 

informing the institution of the 

following: 

(1) For the D/E rates— 

(i) The final rates for the program as 

determined under § 668.404, § 668.405, 

and, if applicable, § 668.406; 

(ii) The final determination by the 

Secretary of whether the program is 

passing, failing, in the zone, or 

ineligible, as described in § 668.403, and 

the consequences of that determination; 

(iii) Whether the program could 

become ineligible based on its final 

D/E rates for the next award year for 

which D/E rates are calculated for the 

program; 

(iv) Whether the institution is 

required to provide the student warning 

under § 668.410(a); and 

(v) If the program’s final D/E rates are 

failing or in the zone, instructions on 

how it may make an alternate earnings 

appeal or make a showing of mitigating 

circumstances pursuant to § 668.406. 

(2) For the pCDR— 

(i) The official pCDR for the program 

as determined under § 668.505 or, if 

changed by adjustment or appeal, as 

determined under § 668.508(e)(3); 

(ii) The instructions for requesting 

adjustment to or appealing an official 

pCDR as provided in § 668.508; 

(iii) The final determination of the 

Secretary of whether the program is 

passing, failing, or ineligible, as 

described in § 668.403, and the 

consequences of that determination; and 

(iv) Whether the institution is 

required to provide the student warning 

under § 668.410(a). 

(b) Effective date of Secretary’s final 

determination. The Secretary’s 

determination as to a GE measure is 

effective on the date that is specified in 

the notice of determination. The 

determination, including, as applicable, 

the determination with respect to an 

appeal or showing of mitigating 

circumstances under § 668.406, 

constitutes the final decision of the 

Secretary with respect to that GE 

measure and the Secretary provides for 

no further appeal of that determination. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.410 Consequences of GE measures. 

(a) Student warning. For any year for 

which the Secretary notifies an 

institution that a GE program could 

become ineligible based on a final GE 

measure for the next award or fiscal 

year, the institution— 

(1) Must provide a written warning 

directly to each student enrolled in the 

program no later than 30 days after the 

date of the Secretary’s notice of 

determination under § 668.409. 

‘‘Directly’’ means by hand-delivering 

the warning to the student individually 

or as part of a group presentation, or 

sending the warning to the primary 

email address used by the institution for 

communicating with the student about 

the program. The Secretary will conduct 

consumer testing to determine how to 

make the student warning as meaningful 

as possible. Unless otherwise specified 

by the Secretary in a notice published 

in the Federal Register, the warning 

must— 

(i) State that: ‘‘You may not be able to 

use federal student grants or loans to 

pay for this institution’s program next 

year because the program is currently 

failing standards established by the U.S. 

Department of Education. The 

Department set these standards to help 

ensure that you are able to find gainful 

employment in a recognized 

occupation, and are not burdened by 

loan debt you may not be able to repay. 

A program that doesn’t meet these 

standards may lose the ability to 

provide students with access to federal 

financial aid to pay for the program. 

(ii) Describe the options available to 

the student to continue his or her 

education at the institution, or at 

another institution, in the event that the 

program loses its eligibility for title IV, 

HEA program funds; and 

(iii) Indicate whether or not the 

institution will— 

(A) Allow the student to transfer to 

another program at the institution; 

(B) Continue to provide instruction in 

the program to allow the student to 

complete the program; and 

(C) Refund the tuition, fees, and other 

required charges paid to the institution 

by, or on behalf of, the student for 

enrollment in the program. 

(2) For each prospective student— 

(i) At the time the prospective student 

first contacts, or is contacted by, the 

institution about the GE program, must 

provide a written warning directly to 

the student. The Secretary will conduct 

consumer testing to determine how to 

make the student warning as meaningful 

as possible. Unless otherwise specified 

by the Secretary in a notice published 

in the Federal Register, the warning 

must state: ‘‘You may not be able to use 

federal student grants or loans to pay for 

this institution’s program in the future 

because the program is currently failing 

standards established by the U.S. 

Department of Education. The 

Department set these standards to help 

ensure that students are able to find 

gainful employment in a recognized 

occupation and are not burdened by 

debt they struggle to repay. A program 

in violation of these standards may lose 

the ability to provide students with 

access to federal financial aid to pay for 

the program.’’; and 

(ii) May not enroll, register, or enter 

into a financial commitment with the 

prospective student in the program 

earlier than— 

(A) Three business days after the 

warning was first provided to the 

prospective student; or 

(B) If more than 30 days have passed 

from the date the warning is first 

provided to the prospective student, 

three business days after the institution 

provides another warning as required by 

paragraph (a)(2)(i) of this section. 

(3) To the extent practicable, must 

provide alternatives to English-language 

warnings for those students and 

prospective students for whom English 

is not their first language. 

(b) Restrictions. (1) Ineligible program. 

Except as provided in § 668.26(d), an 

institution may not disburse title IV, 

HEA program funds to students enrolled 

in an ineligible program. 

(2) Period of ineligibility. An 

institution may not seek to reestablish 

the eligibility of a failing or zone 

program that it discontinued 

voluntarily, reestablish the eligibility of 

an ineligible program, or establish the 

eligibility of a program that is 

substantially similar to the discontinued 

or ineligible program, until three years 

following the date on which the 

program became ineligible or the 

institution discontinued the failing or 

zone program. 

(3) Restoring eligibility. An ineligible 

program, or a failing or zone program 

that an institution voluntarily 

discontinues, remains ineligible until 

the institution establishes the eligibility 

of that program under § 668.414(b). For 

this purpose, an institution voluntarily 

discontinues a failing or zone program 

on the date the institution provides 

written notice to the Secretary that it 

relinquishes title IV, HEA program 

eligibility of that program. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, 

1099c) 

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§ 668.411 Reporting requirements for GE 

programs. 

(a) In accordance with procedures 

established by the Secretary, an 

institution must report— 

(1) For each student enrolled in a GE 

program during an award year who 

received title IV, HEA program funds for 

enrolling in that program— 

(i) Information needed to identify the 

student and the institution; 

(ii) The name, CIP code, credential 

level, and length of the program; 

(iii) Whether the program is a medical 

or dental program whose students are 

required to complete an internship or 

residency, as described in § 668.402; 

(iv) The date the student initially 

enrolled in the program; 

(v) The student’s attendance dates and 

attendance status (e.g., enrolled, 

withdrawn, or completed) in the 

program during the award year; and 

(vi) The student’s enrollment status 

(e.g., full-time, three-quarter time, halftime, less than half-time) as of the first 

day of the student’s enrollment in the 

program; 

(2) If the student completed or 

withdrew from the GE program during 

the award year— 

(i) The date the student completed or 

withdrew from the program; 

(ii) The total amount the student 

received from private education loans, 

as described in § 668.404(d)(1)(ii), for 

enrollment in the program that the 

institution is, or should reasonably be, 

aware of; 

(iii) The total amount of institutional 

debt, as described in § 668.404(d)(1)(iii), 

the student owes any party after 

completing or withdrawing from the 

program; 

(iv) The total amount of tuition and 

fees assessed the student for the 

student’s entire enrollment in the 

program; and 

(v) The total amount of the allowances 

for books, supplies, and equipment 

included in the student’s title IV Cost of 

Attendance (COA) for each award year 

in which the student was enrolled in the 

program, or a higher amount if assessed 

the student by the institution; and 

(3) As described in a notice published 

by the Secretary in the Federal Register, 

any other information the Secretary 

requires the institution to report. 

(b)(1) An institution must report the 

information required under paragraph 

(a) of this section no later than— 

(i) July 31, following the date these 

regulations take effect, for the second 

through seventh award years prior to 

that date; 

(ii) For medical and dental programs 

that require an internship or residency, 

July 31, following the date these 

regulations take effect for the second 

through eighth award years prior to that 

date; and 

(iii) For subsequent award years, 

October 1, following the end of the 

award year, unless the Secretary 

establishes a later date in a notice 

published in the Federal Register. 

(2) For any award year, if an 

institution fails to provide all or some 

of the information in paragraph (a) of 

this section to the extent required, the 

institution must provide to the Secretary 

an explanation, acceptable to the 

Secretary, of why the institution failed 

to comply with any of the reporting 

requirements. 

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

1231a) 

§ 668.412 Disclosure requirements for GE 

programs. 

(a) Disclosure template. An institution 

must use the disclosure template 

provided by the Secretary to disclose 

information about each of its GE 

programs to enrolled and prospective 

students. The Secretary will conduct 

consumer testing to determine how to 

make the disclosure template as 

meaningful as possible. The Secretary 

identifies the information that must be 

included in the template in a notice 

published in the Federal Register. That 

information may include, but is not 

limited to: 

(1) The primary occupations (by name 

and SOC code) that the program 

prepares students to enter, along with 

links to occupational profiles on O*NET 

(www.onetonline.org) or its successor 

site. 

(2) As calculated by the Secretary 

under § 668.413, the program’s 

completion rates for full-time and lessthan-full-time students and the 

program’s withdrawal rates. 

(3) The length of the program in 

calendar time (i.e., weeks, months, 

years). 

(4) The number of clock or credit 

hours, as applicable, in the program. 

(5) The total number of individuals 

enrolled in the program during the most 

recently completed award year. 

(6) As calculated by the Secretary 

under § 668.413, the loan repayment 

rate for any one or all of the following 

groups of students who entered 

repayment on title IV loans during the 

two-year cohort period: 

(i) All students who enrolled in the 

program. 

(ii) Students who completed the 

program. 

(iii) Students who withdrew from the 

program. 

(7) The total cost of tuition and fees, 

and the total cost of books, supplies, 

and equipment that a student would 

incur for completing the program within 

the length of the program. 

(8) The placement rate for the 

program, if the institution is required by 

its accrediting agency or State to 

calculate a placement rate. 

(9) Of the individuals enrolled in the 

program during the most recently 

completed award year, the percentage 

who incurred debt for enrollment in the 

program. 

(10) As calculated by the Secretary, 

the median loan debt as determined 

under § 668.404(d) of any one or all of 

the following groups of title IV, HEA 

loan program borrowers: 

(i) Those students who completed the 

program during the most recently 

completed award year. 

(ii) Those students who withdrew 

from the program during the most 

recently completed award year. 

(iii) All of the students described in 

paragraphs (a)(10)(i) and (ii) of this 

section. 

(11) As provided by the Secretary, the 

median earnings of any one or all of the 

following groups of students: 

(i) Students who completed the 

program during the applicable cohort 

period used by the Secretary to calculate 

the most recent D/E rates for the 

program under this subpart. 

(ii) Students who were in withdrawn 

status at the end of the applicable cohort 

period used by the Secretary to calculate 

the most recent D/E rates for the 

program under this subpart. 

(iii) All of the students described in 

paragraph (a)(11)(i) and (ii) of this 

section. 

(12) As calculated by the Secretary 

under § 668.407, the most recent pCDR. 

(13) As calculated by the Secretary 

under § 668.404, the most recent annual 

earnings rate. 

(14) With respect to the occupations 

for which the program prepares students 

as disclosed by the institution under 

paragraph (a)(1) of this section, whether 

completion of the program satisfies any 

applicable educational prerequisites for 

professional licensure in the State in 

which the institution is located and in 

any other State included in the 

institution’s Metropolitan Statistical 

Area. 

(15) If applicable, whether the 

program holds the programmatic 

accreditation necessary for an 

individual to obtain employment in the 

occupation for which the program 

prepares the student. 

(16) A link to the U.S. Department of 

Education’s College Navigator Web site, 

or its successor site. 

(b) Disclosure updates. (1) In 

accordance with procedures and 

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timelines established by the Secretary, 

the institution must update at least 

annually the information contained in 

the disclosure template with the most 

recent data available for each of its GE 

programs. 

(2) Within 30 days of receiving notice 

from the Secretary that the institution 

must provide a student warning for the 

program under § 668.410(a), the 

institution must update the disclosure 

template to include the warning for both 

enrolled and prospective students. 

(c) Web link to disclosure information. 

(1) On any Web page containing 

academic, cost, financial aid, or 

admissions information about a GE 

program, the institution must provide a 

prominent, readily accessible, clear, 

conspicuous, and direct link to the 

disclosure template for that program. 

(2) An institution that offers a GE 

program in more than one location or 

format (e.g., full-time, part-time, 

accelerated, differing lengths) may 

publish a separate disclosure template 

for each location or format if doing so 

would result in clearer disclosures 

under paragraph (a). An institution that 

chooses to publish separate disclosure 

templates for each location or format 

must ensure that each disclosure 

template clearly identifies the 

applicable location or format. 

(3) In addition to other actions the 

Secretary may take, the Secretary may 

require the institution to modify its Web 

page if the link for the disclosure 

template is not prominent, readily 

accessible, clear, conspicuous, and 

direct. 

(d) Promotional materials. (1) All 

promotional materials that an 

institution makes available to 

prospective students that identify a GE 

program by name or otherwise promote 

the program must include— 

(i) The disclosure template in a 

prominent manner; or 

(ii) Where space or airtime constraints 

would preclude the inclusion of the 

disclosure template, the Web address 

(URL) of, or the direct link to, the 

disclosure template, provided that the 

institution identifies the URL or link as 

‘‘Important Information about the 

educational debt, earnings, and 

completion rates of students who 

attended this program’’ or as otherwise 

specified by the Secretary in a notice 

published in the Federal Register. 

(2) Promotional materials include, but 

are not limited to, an institution’s 

catalogs, invitations, flyers, billboards, 

and advertising on or through radio, 

television, print media, the Internet, and 

social media. 

(3) The institution must ensure that 

all promotional materials, including 

printed materials, about a GE program 

are accurate and current at the time they 

are published, approved by a State 

agency, or broadcast. 

(e) Direct distribution to prospective 

students. (1) An institution must 

provide, as a separate document, a copy 

of the disclosure template to a 

prospective student. 

(2) Before the prospective student 

signs an enrollment agreement, 

completes registration, or makes a 

financial commitment to the institution, 

the institution must obtain written 

confirmation from the prospective 

student that the prospective student 

received a copy of the disclosure 

template. 

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

§ 668.413 Calculating, issuing, and 

challenging completion rates, withdrawal 

rates, repayment rates, median loan debt, 

and median earnings. 

(a) General. Under the procedures in 

this section, the Secretary determines 

the completion rates, withdrawal rates, 

repayment rates, median loan debt, and 

median earnings an institution must 

disclose under § 668.412 for each of its 

GE programs, notifies the institution of 

that information, and provides the 

institution an opportunity to challenge 

the calculations. 

(b) Calculating completion rates, 

withdrawal rates, repayment rates, 

median loan debt, and median earnings. 

(1) Completion rates. The Secretary 

calculates the completion rates of a GE 

program. For the purpose of this 

calculation, the ‘‘enrollment cohort’’ is 

comprised of the students who enrolled 

in the program at any time during the 

relevant award year. The Secretary 

calculates completion rates as follows: 

(i) For students whose enrollment 

status is full-time on the first day of the 

student’s enrollment in the program: 

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(ii) For students whose enrollment 

status is less than full-time on the first 

day of the student’s enrollment in the 

program: 


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(2) Withdrawal rate. The Secretary 

calculates two withdrawal rates of a GE 

program. For the purpose of this 

calculation, the ‘‘enrollment cohort’’ is 

comprised of the students receiving title 

IV, HEA program funds who enrolled in 

the program at any time during the 

relevant award year. The Secretary 

calculates withdrawal rates as follows: 

(i) The percentage of students in the 

enrollment cohort who withdrew from 

the program within 100 percent of the 

length of the program; 

(ii) The percentage of students in the 

enrollment cohort who withdrew from 

the program within 150 percent of the 

length of the program. 

(3) Loan repayment rate. For an award 

year, the Secretary calculates a loan 

repayment rate for borrowers not 

excluded under paragraph (b)(3)(vi) of 

this section who enrolled in a GE 

program as follows: 

(i) Number of borrowers entering 

repayment. The total number of 

borrowers who entered repayment 

during the two-year cohort period on 

FFEL or Direct Loans received for 

enrollment in the program. 

(ii) Number of borrowers paid in full. 

Of the number of borrowers entering 

repayment, the number who have fully 

repaid all FFEL or Direct Loans received 

for enrollment in the program. 

(iii) Number of borrowers in active 

repayment. Of the number of borrowers 

entering repayment, the number who, 

during the most recently completed 

award year, made loan payments 

sufficient to reduce by at least one 

dollar the outstanding balance of each of 

the borrower’s FFEL or Direct Loans 

received for enrollment in the program, 

including consolidation loans that 

include a FFEL or Direct Loan received 

for enrollment in the program, by 

comparing the outstanding balance of 

each loan at the beginning and end of 

the award year. 

(iv) Loan defaults. A borrower who 

defaulted on a FFEL or Direct Loan is 

not included in the numerator of the 

loan repayment rate formula even if that 

loan has been paid in full or meets the 

definition of being in active repayment. 

(v) Repayment rates for borrowers 

who completed or withdrew. The 

Secretary may modify the formula in 

this paragraph to calculate repayment 

rates for only those borrowers who 

completed the program or for only those 

borrowers who withdrew from the 

program. 

(vi) Exclusions. For the award year the 

Secretary calculates the loan repayment 

rate for a program, the Secretary 

excludes a borrower from the repayment 

rate calculation if the Secretary 

determines that— 

(A) One or more of the borrower’s 

FFEL or Direct loans were in a militaryrelated deferment status at any time 

during the most recently completed 

award year; 

(B) One or more of the borrower’s 

FFEL or Direct loans are either under 

consideration by the Secretary, or have 

been approved, for a discharge on the 

basis of the borrower’s total and 

permanent disability, under 34 CFR 

682.402 or 685.212; 

(C) The borrower was enrolled in any 

other eligible program at the institution 

or at another institution during the most 

recently completed award year; or 

(D) The borrower died. 

(4) Median loan debt for students who 

completed the GE program. For the most 

recently completed award year, the 

Secretary calculates a median loan debt 

for the students described in 

§ 668.412(a)(10)(i), who completed the 

program during the award year. The 

median is calculated on debt described 

in § 668.404(d)(1). 

(5) Median loan debt for students who 

withdrew from the GE program. For the 

most recently completed award year, the 

Secretary calculates a median loan debt 

for the students described in 

§ 668.412(a)(10)(ii), who enrolled in a 

GE program and who withdrew from the 

program during the award year. The 

median is calculated on debt described 

in § 668.404(d)(1). 

(6) Median loan debt for students who 

completed and withdrew from the GE 

program. For the most recently 

completed award year, the Secretary 

calculates a median loan debt for the 

students described in 

§ 668.412(a)(10)(iii) who enrolled in a 

GE program and who completed the GE 

program during the award year and 

those students who withdrew from the 

GE program during the award year. The 

median is calculated on debt described 

in § 668.404(d)(1). 

(7) Median earnings. The Secretary 

calculates the median earnings of a GE 

program as described in paragraphs 

(b)(8) through (b)(12) of this section. 

(8) Median earnings for students who 

completed the GE program. (i) The 

Secretary determines the median 

earnings for the students who 

completed the GE program during the 

applicable cohort period by— 

(A) Creating a list of the students who 

completed the program during the 

applicable cohort period and providing 

it to the institution, as provided in 

paragraph (b)(8)(ii) of this section; 

(B) Allowing the institution to correct 

the information about the students on 

the list, as provided in paragraph 

(b)(8)(iii) of this section; 

(C) Obtaining from SSA or another 

Federal agency the median annual 

earnings of the students on the list, as 

provided in paragraph (b)(8)(iv) of this 

section; and 

(D) Notifying the institution of the 

median annual earnings for the students 

on the list. 

(ii) Creating the list of students. (A) 

The Secretary selects the students to be 

included on the list by— 

(1) Identifying the students who were 

enrolled in the program and completed 

the program during the applicable 

cohort period from the data provided by 

the institution under § 668.411; and 

(2) Indicating which students would 

be removed from the list under 

paragraph (b)(11) of this section and the 

specific reason for the exclusion. 

(B) The Secretary provides the list to 

the institution and states which cohort 

period was used to select the students. 

(iii) Institutional corrections to the 

list. (A) The Secretary presumes that the 

list of students and the identity 

information for those students are 

correct unless the institution provides 

evidence to the contrary that is 

satisfactory to the Secretary. The 

institution bears the burden of proof 

that the list is incorrect. 

(B) No later than 45 days after the date 

the Secretary provides the list to the 

institution, the institution may— 

(1) Provide evidence showing that a 

student should be included on or 

removed from the list pursuant to 


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paragraph (b)(11) of this section or 

otherwise; or 

(2) Correct or update a student’s 

identity information and the student’s 

program attendance information 

provided for a student on the list. 

(C) After the 45-day period expires, 

the institution may no longer seek to 

correct the list of students or revise the 

identity or program information of those 

students included on this list that the 

Secretary uses to determine the median 

earnings for students who completed 

the program. 

(D) The Secretary considers the 

evidence provided by the institution 

and either accepts the correction or 

notifies the institution of the reasons for 

not accepting the correction. If the 

Secretary accepts the correction, the 

Secretary uses the corrected information 

to create the final list. The Secretary 

notifies the institution which students 

are included on the final list and the 

applicable cohort period used to create 

the list. 

(iv) Obtaining earnings data. The 

Secretary submits the final list to SSA. 

For purposes of this section, SSA 

returns to the Secretary— 

(A) The median earnings of the 

students on the list whom SSA has 

matched to SSA earnings data, in 

aggregate and not in individual form; 

and 

(B) The number, but not the identities, 

of students on the list that SSA could 

not match. 

(9) Median earnings for students who 

withdrew from the program. (i) The 

Secretary determines the median 

earnings for the students who withdrew 

from the program during the applicable 

cohort period by— 

(A) Creating a list of the students who 

were enrolled in the program but 

withdrew from the program during the 

applicable cohort period and providing 

it to the institution, as provided in 

paragraph (b)(9)(ii) of this section; 

(B) Allowing the institution to correct 

the information about the students on 

the list, as provided in paragraph 

(b)(9)(iii) of this section; 

(C) Obtaining from SSA or another 

Federal agency the median annual 

earnings of the students on the list, as 

provided in paragraph (b)(9)(iv) of this 

section; and 

(D) Notifying the institution of the 

median annual earnings for the students 

on the list. 

(ii) Creating the list of students. (A) 

The Secretary selects the students to be 

included on the list by— 

(1) Identifying the students who were 

enrolled in the program but withdrew 

from the program during the applicable 

cohort period from the data provided by 

the institution under § 668.411; and 

(2) Indicating which students would 

be removed from the list under 

paragraph (b)(11) of this section and the 

specific reason for the exclusion. 

(B) The Secretary provides the list to 

the institution and states which cohort 

period was used to select the students. 

(iii) Institutional corrections to the 

list. (A) The Secretary presumes that the 

list of students and the identity 

information for those students are 

correct unless the institution provides 

evidence to the contrary that is 

satisfactory to the Secretary, in a format 

and process determined by the 

Secretary. The institution bears the 

burden of proof that the list is incorrect. 

(B) No later than 45 days after the date 

the Secretary provides the list to the 

institution, the institution may— 

(1) Provide evidence showing that a 

student should be included on or 

removed from the list pursuant to 

paragraph (b)(11) of this section or 

otherwise; or 

(2) Correct or update a student’s 

identity information and the student’s 

program attendance information 

provided for a student on the list. 

(C) After the 45-day period expires, 

the institution may no longer seek to 

correct the list of students or revise the 

identity or program information of those 

students included on this list that the 

Secretary uses to determine the median 

earnings for students who withdrew 

from the program. 

(D) The Secretary considers the 

evidence provided by the institution 

and either accepts the correction or 

notifies the institution of the reasons for 

not accepting the correction. If the 

Secretary accepts the correction, the 

Secretary uses the corrected information 

to create the final list. The Secretary 

notifies the institution which students 

are included on the final list and the 

applicable cohort period used to create 

the list. 

(iv) Obtaining earnings data. The 

Secretary submits the final list to SSA. 

For purposes of this section SSA returns 

to the Secretary— 

(A) The median earnings of the 

students on the list whom SSA has 

matched to SSA earnings data, in 

aggregate and not in individual form; 

and 

(B) The number, but not the identities, 

of students on the list that SSA could 

not match. 

(10) Median earnings for students who 

completed and withdrew from the 

program. The Secretary calculates the 

median earnings for both the students 

who completed the program during the 

applicable cohort period and students 

who withdrew from the program during 

the applicable cohort period in 

accordance with paragraphs (b)(8) and 

(b)(9) of this section. 

(11) Exclusions from median earnings 

calculations. The Secretary excludes a 

student from the calculation of the 

median earnings of a GE program if the 

Secretary determines that— 

(i) One or more of the student’s title 

IV loans were in a military-related 

deferment status at any time during the 

calendar year for which the Secretary 

obtains earnings information under this 

section; 

(ii) One or more of the student’s title 

IV loans are under consideration by the 

Secretary, or have been approved, for a 

discharge on the basis of the student’s 

total and permanent disability, under 34 

CFR 674.61, 682.402 or 685.212; 

(iii) The student was enrolled in any 

other eligible program at the institution 

or at another institution during the 

calendar year for which the Secretary 

obtains earnings information under this 

section; or 

(iv) The student died. 

(12) Median earnings not calculated. 

The Secretary does not calculate the 

median earnings for a GE program if 

SSA does not provide the median 

earnings for the program. 

(c) Notification to institutions. The 

Secretary notifies the institution of 

the— 

(1) Draft completion, withdrawal, and 

repayment rates calculated under 

paragraph (b)(1) through (b)(3) of this 

section and the information the 

Secretary used to calculate those rates. 

(2) Median loan debt of the students 

who completed the program, as 

described in paragraph (b)(4), the 

students who withdrew from the 

program, as described in paragraph 

(b)(5), and both the students who 

completed and withdrew from the 

program, as described in paragraph 

(b)(6) of this section, in each case during 

the applicable cohort period. 

(3) Median earnings of the students 

who completed the program, as 

described in paragraph (b)(8), the 

students who withdrew from the 

program, as described in paragraph 

(b)(9), or both the students who 

completed the program and the students 

who withdrew from the program, as 

described in paragraph (b)(10) of this 

section, in each case during the 

applicable cohort period. 

(d) Challenges to completion rates, 

withdrawal rates, repayment rates, 

median loan debt, and median earnings. 

(1) Completion rates, withdrawal rates, 

repayment rates, and median loan debt. 

(i) No later than 45 days after the 

Secretary notifies an institution of a GE 

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program’s draft completion rate, 

withdrawal rate, repayment rate, and 

median loan debt, the institution may 

challenge the accuracy of the 

information that the Secretary used to 

calculate the draft rates and the draft 

median loan debt by submitting, in a 

form prescribed by the Secretary, 

evidence satisfactory to the Secretary 

demonstrating that the information was 

incorrect. 

(ii) The Secretary considers any 

evidence provided by the institution 

challenging the accuracy of the 

information the Secretary used to 

calculate the rates and the median loan 

debt and notifies the institution whether 

the challenge is accepted or the reasons 

the challenge is not accepted. If the 

Secretary accepts the challenge, the 

Secretary uses the corrected data to 

calculate the rates or median loan debt. 

(iii) An institution may challenge the 

Secretary’s calculation of the 

completion rates, withdrawal rates, 

repayment rates, and median loan debt 

only once for an award year. An 

institution that does not timely 

challenge the rates or median loan debt 

waives any objection to the rates or 

median loan debt as stated in the notice. 

(2) Median earnings. The Secretary 

does not consider any challenges to the 

median earnings calculated under this 

section. 

(e) Final rates, median loan debt, and 

median earnings. (1) Completion rates, 

withdrawal rates, repayment rates, and 

median loan debt. (i) After expiration of 

the 45-day period, and subject to 

resolution of any challenge under 

paragraph (d)(1) of this section, a 

program’s draft completion rate, 

withdrawal rate, repayment rate, and 

median loan debt constitute the final 

rates and median loan debt for that 

program. 

(ii) The Secretary informs the 

institution of the final completion rate, 

withdrawal rate, repayment rate, and 

median loan debt for each of its GE 

programs by issuing a notice of 

determination. 

(iii) After the Secretary provides the 

notice of determination, the Secretary 

may publish the final completion rate, 

withdrawal rate, repayment rate, and 

median loan debt. 

(2) Median earnings. The median 

earnings of a program calculated by the 

Secretary under this section constitute 

the final median earnings for that 

program. After the Secretary provides 

the institution with the notice in 

paragraph (c) of this section, the 

Secretary may publish the final median 

earnings for the program. 

(f) Conditions for challenges. An 

institution must ensure that any 

material that it submits to make any 

corrections or challenge under this 

section is complete, timely, accurate, 

and in a format acceptable to the 

Secretary as described in this subpart 

and, with respect to challenges under 

paragraph (d)(1) of this section, 

consistent with any instructions 

provided to the institution with the 

notice of its draft completion, 

withdrawal, and repayment rates and 

median loan debt. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.414 Certification requirements for 

GE programs. 

(a) Transitional certification for 

existing programs. (1) Except as 

provided in paragraph (a)(2) of this 

section, an institution must provide to 

the Secretary no later than December 31 

of the year in which this regulation 

takes effect, in accordance with 

procedures established by the Secretary, 

a certification signed by its most senior 

executive officer that each of its 

currently eligible GE programs meets 

the requirements of paragraph (d) of this 

section. The Secretary accepts the 

certification as an addendum to the 

institution’s program participation 

agreement (PPA). 

(2) If an institution makes the 

certification in its PPA pursuant to 

paragraph (b) of this section between 

July 1 and December 31 of the year in 

which this regulation takes effect, it is 

not required to provide the transitional 

certification under this paragraph. 

(b) PPA certification. As a condition 

of its continued participation in the title 

IV, HEA programs, an institution must 

certify in its PPA with the Secretary 

under § 668.14 that each of its currently 

eligible GE programs meets the 

requirements of paragraph (d) of this 

section. 

(c) Establishing eligibility and 

disbursing funds. (1) An institution 

establishes the eligibility for title IV, 

HEA program funds of a GE program by 

updating the list of the institution’s 

eligible programs maintained by the 

Department to include that program, as 

provided under 34 CFR 600.21(a)(11)(i). 

By updating the list of the institution’s 

eligible programs, the institution affirms 

that the program satisfies the 

certification requirements in paragraph 

(d) of this section. Except as provided in 

paragraph (c)(2) of this section, after the 

institution updates its list of eligible 

programs, the institution may disburse 

title IV, HEA program funds to students 

enrolled in that program. 

(2) An institution may not update its 

list of eligible programs to include a GE 

program, or a substantially similar 

program, that was subject to the threeyear loss of eligibility under 

§ 668.410(b)(2), until that three-year 

period expires. 

(d) GE program eligibility 

certifications. An institution certifies, at 

the time and in the form specified in 

this section, that: 

(1) Each eligible GE program it offers 

is approved by a recognized accrediting 

agency or is otherwise included in the 

institution’s accreditation by its 

recognized accrediting agency, or, if the 

institution is a public postsecondary 

vocational institution, the program is 

approved by a recognized State agency 

for the approval of public postsecondary 

vocational education in lieu of 

accreditation; 

(2) Each eligible GE program it offers 

is programmatically accredited, if such 

accreditation is required by a Federal 

governmental entity or by a 

governmental entity in the State in 

which the institution is located or by 

any State within the institution’s MSA; 

and 

(3) For the State in which the 

institution is located and in all other 

States within the institution’s MSA, 

each eligible program it offers satisfies 

the licensure or certification 

requirements of those States so that a 

student who completes the program and 

seeks employment in those States 

qualifies to take any licensure or 

certification exam that is needed for the 

student to practice or find employment 

in an occupation that the program 

prepares students to enter. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, 

1099c) 

§ 668.415 Severability. 

If any provision of this subpart or its 

application to any person, act, or 

practice is held invalid, the remainder 

of the subpart or the application of its 

provisions to any person, act, or practice 

shall not be affected thereby. 

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

■ 12. Add subpart R to read as follows: 

Subpart R—Program Cohort Default Rate 

Sec. 

668.500 Purpose of this subpart. 

668.501 Definitions of terms used in this 

subpart. 

668.502 Calculating and applying program 

cohort default rates. 

668.503 Determining program cohort 

default rates for GE programs at 

institutions that have undergone a 

change in status. 

668.504 Draft program cohort default rates 

and your ability to challenge before 

official program cohort default rates are 

issued. 

668.505 Notice of the official program 

cohort default rate of a GE program. 

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668.506 Consequences of program cohort 

default rates on the GE program’s 

eligibility to participate in the title IV, 

HEA programs. 

668.507 Preventing evasion of the 

consequences of program cohort default 

rates. 

668.508 General requirements for adjusting 

official program cohort default rates and 

for appealing their consequences. 

668.509 Uncorrected data adjustments. 

668.510 New data adjustments. 

668.511 Erroneous data appeals. 

668.512 Loan servicing appeals. 

668.513 Economically disadvantaged 

appeals. 

668.514 Participation rate index appeals. 

668.515 Average rates appeals. 

668.516 Thirty-or-fewer borrowers appeals. 

668.517 [Reserved] 

Subpart R—Program Cohort Default 

Rate 

§ 668.500 Purpose of this subpart. 

General. The program cohort default 

rate is a measure we use to determine 

the eligibility of a GE program under 

subpart Q of this part. This subpart 

describes how program cohort default 

rates are calculated, some of the 

consequences of program cohort default 

rates, and how you may request changes 

to your program cohort default rates or 

appeal their consequences. Under this 

subpart, you submit a ‘‘challenge’’ after 

you receive your draft program cohort 

default rate, and you request an 

‘‘adjustment’’ or ‘‘appeal’’ after your 

official program cohort default rate is 

published. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.501 Definitions of terms used in this 

subpart. 

We use the following definitions in 

this subpart: 

(a) Cohort. Your cohort is a group of 

borrowers used to determine your 

program cohort default rate. The method 

for identifying the borrowers in a cohort 

is provided in § 668.502(b). 

(b) Data manager. (1) For FFELP loans 

held by a guaranty agency or lender, the 

guaranty agency is the data manager. 

(2) For FFELP loans that we hold, we 

are the data manager. 

(3) For Direct Loan Program loans, the 

Direct Loan Servicer, as defined in 34 

CFR 685.102, is the data manager. 

(c) Days. In this subpart, ‘‘days’’ 

means calendar days. 

(d) Default. A borrower is considered 

to be in default for program cohort 

default rate purposes under the rules in 

§ 668.502(c). 

(e) Draft program cohort default rate. 

Your draft program cohort default rate is 

a rate we issue, for your review, before 

we issue your official program cohort 

default rate. A draft program cohort 

default rate is used only for the 

purposes described in § 668.504. 

(f) Entering repayment. (1) Except as 

provided in paragraphs (f)(2) and (f)(3) 

of this section, loans are considered to 

enter repayment on the dates described 

in 34 CFR 682.200 (under the definition 

of ‘‘repayment period’’) and in 34 CFR 

685.207, as applicable. 

(2) A Federal SLS loan is considered 

to enter repayment— 

(i) At the same time the borrower’s 

Federal Stafford loan enters repayment, 

if the borrower received the Federal SLS 

loan and the Federal Stafford loan 

during the same period of continuous 

enrollment; or 

(ii) In all other cases, on the day after 

the student ceases to be enrolled at an 

institution on at least a half-time basis 

in an educational program leading to a 

degree, certificate, or other recognized 

educational credential. 

(3) For the purposes of this subpart, 

a loan is considered to enter repayment 

on the date that a borrower repays it in 

full, if the loan is paid in full before the 

loan enters repayment under paragraphs 

(f)(1) or (f)(2) of this section. 

(g) Fiscal year. A fiscal year begins on 

October 1 and ends on the following 

September 30. A fiscal year is identified 

by the calendar year in which it ends. 

(h) GE program. An educational 

program offered by an institution under 

§ 668.8(c)(3) or (d) and identified by a 

combination of the institution’s six-digit 

Office of Postsecondary Education ID 

(OPEID) number, the program’s six-digit 

CIP code as assigned by the institution 

or determined by the Secretary, and the 

program’s credential level, as defined in 

§ 668.402. 

(i) Loan record detail report. The loan 

record detail report is a report that we 

produce. It contains the data used to 

calculate your draft or official program 

cohort default rate. 

(j) Official program cohort default 

rate. Your official program cohort 

default rate is the program cohort 

default rate that we publish for you 

under § 668.505. 

(k) We. We are the Department, the 

Secretary, or the Secretary’s designee. 

(l) You. You are an institution. We 

consider each reference to ‘‘you’’ to 

apply separately to the institution with 

respect to each of its GE programs. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.502 Calculating and applying 

program cohort default rates. 

(a) General. This section describes the 

four steps that we follow to calculate 

and apply your program cohort default 

rate for a fiscal year: 

(1) First, under paragraph (b) of this 

section, we identify the borrowers in 

your GE program’s cohort for the fiscal 

year. If the total number of borrowers in 

that cohort is fewer than 30, we also 

identify the borrowers in your cohorts 

for the 2 most recent prior fiscal years. 

(2) Second, under paragraph (c) of this 

section, we identify the borrowers in the 

cohort (or cohorts) who are considered 

to be in default by the end of the second 

fiscal year following the fiscal year 

those borrowers entered repayment. If 

more than one cohort will be used to 

calculate your program cohort default 

rate, we identify defaulted borrowers 

separately for each cohort. 

(3) Third, under paragraph (d) of this 

section, we calculate your program 

cohort default rate. 

(4) Fourth, we apply your program 

cohort default rate to your program at all 

of your locations— 

(i) As you exist on the date you 

receive the notice of your official 

program cohort default rate; and 

(ii) From the date on which you 

receive the notice of your official 

program cohort default rate until you 

receive our notice that the program 

cohort default rate no longer applies. 

(b) Identify the borrowers in a cohort. 

(1) Except as provided in paragraph 

(b)(3) of this section, your cohort for a 

fiscal year consists of all of your current 

and former students who, during that 

fiscal year, entered repayment on any 

Federal Stafford Loan, Federal SLS 

Loan, Direct Subsidized Loan, or Direct 

Unsubsidized Loan that they received to 

enroll in the GE program, or on the 

portion of a loan made under the 

Federal Consolidation Loan Program or 

the Federal Direct Consolidation Loan 

Program that is used to repay those 

loans. 

(2) A borrower may be included in 

more than one of your cohorts and may 

be included in the cohorts of more than 

one institution in the same fiscal year. 

(3) A TEACH Grant that has been 

converted to a Federal Direct 

Unsubsidized Loan is not considered for 

the purpose of calculating and applying 

program cohort default rates. 

(c) Identify the borrowers in a cohort 

who are in default. (1) Except as 

provided in paragraph (c)(2) of this 

section, a borrower in a cohort for a 

fiscal year is considered to be in default 

if, before the end of the second fiscal 

year following the fiscal year the 

borrower entered repayment— 

(i) The borrower defaults on any 

FFELP loan that was used to include the 

borrower in the cohort or on any Federal 

Consolidation Loan Program loan that 

repaid a loan that was used to include 

the borrower in the cohort (however, a 

borrower is not considered to be in 

default on a FFELP loan unless a claim 

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for insurance has been paid on the loan 

by a guaranty agency or by us); 

(ii) The borrower fails to make an 

installment payment, when due, on any 

Direct Loan Program loan that was used 

to include the borrower in the cohort or 

on any Federal Direct Consolidation 

Loan Program loan that repaid a loan 

that was used to include the borrower 

in the cohort, and the borrower’s failure 

persists for 360 days; 

(iii) You or your owner, agent, 

contractor, employee, or any other 

affiliated entity or individual make a 

payment to prevent a borrower’s default 

on a loan that is used to include the 

borrower in that cohort; or 

(iv) The borrower fails to make an 

installment payment, when due, on a 

Federal Stafford Loan that is held by the 

Secretary or a Federal Consolidation 

Loan that is held by the Secretary and 

that was used to repay a Federal 

Stafford Loan, if such Federal Stafford 

Loan or Federal Consolidation Loan was 

used to include the borrower in the 

cohort, and the borrower’s failure 

persists for 360 days. 

(2) A borrower is not considered to be 

in default based on a loan that is, before 

the end of the second fiscal year 

following the fiscal year in which it 

entered repayment— 

(i) Rehabilitated under 34 CFR 

682.405 or 34 CFR 685.211(e); or 

(ii) Repurchased by a lender because 

the claim for insurance was submitted 

or paid in error. 

(d) Calculate the program cohort 

default rate. Except as provided in 

§ 668.503, if there are— 

(1)(i) Thirty or more borrowers in 

your cohort for a fiscal year, your 

program cohort default rate is the 

percentage that is calculated by— 

(ii) Dividing the number of borrowers 

in the cohort who are in default, as 

determined under paragraph (c), by the 

number of borrowers in the cohort, as 

determined under paragraph (b) of this 

section. 

(2)(i) Fewer than 30 borrowers in your 

cohort for a fiscal year, your program 

cohort default rate is the percentage that 

is calculated by— 

(ii) Dividing the total number of 

borrowers in that program cohort and in 

the two most recent prior program 

cohorts who are in default, as 

determined for each program cohort 

under paragraph (c) of this section, by 

the total number of borrowers in that 

program cohort and the two most recent 

prior program cohorts, as determined for 

each program cohort under paragraph 

(b). 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.503 Determining program cohort 

default rates for GE programs at institutions 

that have undergone a change in status. 

(a) General. (1) If you undergo a 

change in status identified in this 

section, the program cohort default rate 

of a GE program you offer is determined 

under this section. 

(2) In determining program cohort 

default rates under this section, the date 

of a merger, acquisition, or other change 

in status is the date the change occurs. 

(3) A change in status may affect your 

GE program’s eligibility to participate in 

title IV, HEA programs under § 668.506 

or § 668.507. 

(4) If the program cohort default rate 

of a program offered by another 

institution is applicable to you under 

this section with respect to a program 

you offer, you may challenge, request an 

adjustment, or submit an appeal for the 

program cohort default rate under the 

same requirements that would be 

applicable to the other institution under 

§§ 668.504 and 668.508. 

(b) Acquisition or merger of 

institutions. If you offer a GE program 

and your institution acquires, or was 

created by the merger of, one or more 

institutions that participated 

independently in the title IV, HEA 

programs immediately before the 

acquisition or merger and that offered 

the same GE program, as identified by 

its 6-digit CIP code and credential 

level— 

(1) Those program cohort default rates 

published for a GE program offered by 

any of these institutions before the date 

of the acquisition or merger are 

attributed to the GE program after the 

merger or acquisition; and 

(2) Beginning with the first program 

cohort default rate published after the 

date of the acquisition or merger, the 

program cohort default rates for that GE 

program are determined by including in 

the calculation under § 668.502 the 

borrowers who were enrolled in that GE 

program from each institution that 

offered that program and that was 

involved in the acquisition or merger. 

(c) [Reserved] 

(d) Branches or locations becoming 

institutions. If you are a branch or 

location of an institution that is 

participating in the title IV, HEA 

programs, and you become a separate, 

new institution for the purposes of 

participating in those programs— 

(1) The program cohort default rates 

published for a GE program before the 

date of the change for your former 

parent institution are also applicable to 

that GE program when you offer that 

program; 

(2) Beginning with the first program 

cohort default rate published after the 

date of the change, the program cohort 

default rates for a GE program for the 

next three fiscal years are determined by 

including the applicable borrowers who 

were enrolled in the GE program from 

your institution and from your former 

parent institution (including all of its 

locations) in the calculation under 

§ 668.502; and 

(3) [Reserved]. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.504 Draft program cohort default 

rates and your ability to challenge before 

official program cohort default rates are 

issued. 

(a) General. (1) We notify you of the 

draft program cohort default rate of a GE 

program before the official program 

cohort default rate of the GE program is 

calculated. Our notice includes the loan 

record detail report for the draft 

program cohort default rate. 

(2) Regardless of the number of 

borrowers included in the program 

cohort, the draft program cohort default 

rate of a GE program is always 

calculated using data for that fiscal year 

alone, using the method described in 

§ 668.502(d)(1). 

(3) The draft program cohort default 

rate of a GE program and the loan record 

detail report are not considered public 

information and may not be otherwise 

voluntarily released to the public by a 

data manager. 

(4) Any challenge you submit under 

this section and any response provided 

by a data manager must be in a format 

acceptable to us. This acceptable format 

is described in materials that we 

provide to you. If your challenge does 

not comply with these requirements, we 

may deny your challenge. 

(b) Incorrect data challenges. (1) You 

may challenge the accuracy of the data 

included on the loan record detail 

report by sending a challenge to the 

relevant data manager, or data 

managers, within 45 days after you 

receive the data. Your challenge must 

include— 

(i) A description of the information in 

the loan record detail report that you 

believe is incorrect; and 

(ii) Documentation that supports your 

contention that the data are incorrect. 

(2) Within 30 days after receiving 

your challenge, the data manager must 

send you and us a response that— 

(i) Addresses each of your allegations 

of error; and 

(ii) Includes the documentation that 

supports the data manager’s position. 

(3) If your data manager concludes 

that draft data in the loan record detail 

report are incorrect, and we agree, we 

use the corrected data to calculate your 

program cohort default rate. 

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(4) If you fail to challenge the 

accuracy of data under this section, you 

cannot contest the accuracy of those 

data in an uncorrected data adjustment, 

under § 668.509, or in an erroneous data 

appeal, under § 668.511. 

(c) Participation rate index 

challenges. (1)(i) [Reserved] 

(ii) You may challenge an anticipated 

loss of eligibility based on three 

consecutive program cohort default 

rates of 30 percent or greater, if your 

participation rate index is equal to or 

less than 0.0625 for any of those three 

program cohorts’ fiscal years. 

(iii) [Reserved] 

(2) For a participation rate index 

challenge, your participation rate index 

is calculated as described in 

§ 668.514(b), except that— 

(i) The draft program cohort default 

rate is considered to be your most recent 

program cohort default rate; and 

(ii) If the program cohort used to 

calculate the draft program cohort 

default rate included fewer than 30 

borrowers, you may calculate your 

participation rate index for that fiscal 

year using either your most recent draft 

program cohort default rate or the 

average rate that would be calculated for 

that fiscal year, using the method 

described in § 668.502(d)(2). 

(3) You must send your participation 

rate index challenge, including all 

supporting documentation, to us within 

45 days after you receive your draft 

program cohort default rate. 

(4) We notify you of our 

determination on your participation rate 

index challenge before your official 

program cohort default rate is 

published. 

(5) A GE program does not lose 

eligibility under § 668.506 if we 

determine that your participation rate 

index challenge is meritorious, and the 

GE program will not lose eligibility 

under § 668.506 when the next official 

program cohort default rate for the GE 

program is published. A successful 

challenge that is based on the draft 

program cohort default rate does not 

excuse the program from loss of 

eligibility on any other ground. 

However, if a successful challenge 

under paragraph (c)(1)(ii) of this section 

is based on a prior, official program 

cohort default rate for the GE program, 

and not on the draft program cohort 

default rate for the program, we also 

excuse the GE program from any 

subsequent loss of eligibility under 

§ 668.506 that would be based on that 

official program cohort default rate. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.505 Notice of the official program 

cohort default rate of a GE program. 

(a) We notify you of the official cohort 

default rate of a GE program after we 

calculate it. After we send our notice to 

you, we publish a list of program cohort 

default rates for all institutions. 

(b) If one or more borrowers who were 

enrolled in a GE program entered 

repayment in the fiscal year for which 

the rate is calculated, or the GE program 

is subject to loss of eligibility under 

§ 668.506, or if we believe you will have 

an official program cohort default rate 

for a GE program calculated as an 

average rate, you will receive a loan 

record detail report as part of your 

notification package for that program. 

(c) You have five business days, from 

the date of our notification, as posted on 

the Department’s Web site, to report any 

problem with receipt of the notification 

package. 

(d) Except as provided in paragraph 

(e) of this section, timelines for 

submitting challenges, adjustments, and 

appeals begin on the sixth business day 

following the date of the notification 

package that is posted on the 

Department’s Web site. 

(e) If you timely report a problem with 

receipt of your notification package 

under paragraph (c) of this section and 

the Department agrees that the problem 

was not caused by you, the Department 

will extend the challenge, appeal, and 

adjustment deadlines and timeframes to 

account for a re-notification package. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.506 Consequences of program 

cohort default rates on the GE program’s 

eligibility to participate in the title IV, HEA 

programs. 

(a) End of participation. (1) A GE 

program loses eligibility as provided in 

§ 668.403(c)(2). 

(2) [Reserved] 

(b) Length of period of ineligibility. A 

GE program that loses eligibility under 

this section continues to be ineligible as 

provided in § 668.410(b). 

(c) [Reserved] 

(d) [Reserved] 

(e) Requests for adjustments and 

appeals. (1) A loss of eligibility under 

this section does not take effect while a 

request for adjustment or appeal, as 

listed in § 668.508(a), is pending, 

provided your request for adjustment or 

appeal is complete, timely, accurate, 

and in the required format. 

(2) Eligibility of a GE program that is 

continued under this section ends if we 

determine that none of the requests for 

adjustments and appeals you have 

submitted qualify the GE program for 

continued eligibility under § 668.508. 

Loss of eligibility takes effect on the 

date that you receive notice of our 

determination on your last pending 

request for adjustment or appeal. 

(3) The GE program does not lose 

eligibility if we determine that your 

request for adjustment or appeal for the 

GE program meets all requirements of 

this subpart. 

(4) To avoid liabilities you might 

otherwise incur under paragraph (f) of 

this section, you may choose to suspend 

your participation in the FFEL and 

Direct Loan programs during the 

adjustment or appeal process. 

(f) Liabilities during the adjustment or 

appeal process. If you continued to have 

the GE program participate in the Direct 

Loan Program under paragraph (e)(1) of 

this section, and we determine that 

none of the requests for adjustment or 

appeals qualify the program for 

continued eligibility— 

(1) For any Direct Loan Program loan 

that you originated and disbursed for 

borrowers in the GE program more than 

30 days after you received the notice of 

program cohort default rate for that GE 

program, we estimate the costs of those 

loans; 

(2) We exclude from this estimate any 

amount attributable to funds that you 

disbursed more than 45 days after you 

submitted your completed appeal to us; 

(3) We notify you of the estimated 

amount; and 

(4) Within 45 days after you receive 

our notice of the estimated amount, you 

must pay us that amount, unless— 

(i) You file an appeal under the 

procedures established in subpart H of 

this part (for the purposes of subpart H 

of this part, our notice of the estimate 

is considered to be a final program 

review determination); or 

(ii) We permit a longer repayment 

period. 

(g) [Reserved] 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.507 Preventing evasion of the 

consequences of program cohort default 

rates. 

In calculating the program cohort 

default rate of a GE program, the 

Secretary may include loan debt 

incurred by the borrower for enrolling 

in GE programs at other institutions if 

the institution and the other institutions 

are under common ownership or 

control, as determined by the Secretary 

in accordance with 34 CFR 600.31. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

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§ 668.508 General requirements for 

adjusting official program cohort default 

rates and for appealing their consequences. 

(a) Remaining eligible. A GE program 

does not lose eligibility under § 668.506 

if— 

(1) We recalculate the program cohort 

default rate for a program, and it is 

below the percentage threshold for loss 

of eligibility under § 668.506 as the 

result of— 

(i) An uncorrected data adjustment 

submitted under this section and 

§ 668.509; 

(ii) A new data adjustment submitted 

under this section and § 668.510; 

(iii) An erroneous data appeal 

submitted under this section and 

§ 668.511; or 

(iv) A loan servicing appeal submitted 

under this section and § 668.512; or 

(2) The GE program meets the 

requirements for— 

(i) An economically disadvantaged 

appeal submitted under this section and 

§ 668.513; 

(ii) A participation rate index appeal 

submitted under this section and 

§ 668.514; 

(iii) An average rates appeal 

submitted under this section and 

§ 668.515; or 

(iv) A thirty-or-fewer borrowers 

appeal submitted under this section and 

§ 668.516. 

(b) Limitations on your ability to 

dispute a program cohort default rate. 

(1) You may not dispute the calculation 

of a program cohort default rate except 

as described in this subpart. 

(2) You may not request an 

adjustment, or appeal a program cohort 

default rate, under § 668.509, § 668.510, 

§ 668.511, or § 668.512, more than once. 

(3) You may not request an 

adjustment, or appeal a program cohort 

default rate, under § 668.509, § 668.510, 

§ 668.511, or § 668.512, if the GE 

program previously lost eligibility under 

§ 668.506 based entirely or partially on 

that program cohort default rate. 

(c) Content and format of requests for 

adjustments and appeals. We may deny 

your request for adjustment or appeal if 

it does not meet the following 

requirements: 

(1) All appeals, notices, requests, 

independent auditor’s opinions, 

management’s written assertions, and 

other correspondence that you are 

required to send under this subpart 

must be complete, timely, accurate, and 

in a format acceptable to us. This 

acceptable format is described in 

materials that we provide to you. 

(2) Your completed request for 

adjustment or appeal must include— 

(i) All of the information necessary to 

substantiate your request for adjustment 

or appeal; and 

(ii) A certification by your chief 

executive officer, under penalty of 

perjury, that all the information you 

provide is true and correct. 

(d) Our copies of your 

correspondence. Whenever you are 

required by this subpart to correspond 

with a party other than us, you must 

send us a copy of your correspondence 

within the same time deadlines. 

However, you are not required to send 

us copies of documents that you 

received from us originally. 

(e) Requirements for data managers’ 

responses. (1) Except as otherwise 

provided in this subpart, if this subpart 

requires a data manager to correspond 

with any party other than us, the data 

manager must send us a copy of the 

correspondence within the same time 

deadlines. 

(2) If a data manager sends us 

correspondence under this subpart that 

is not in a format acceptable to us, we 

may require the data manager to revise 

that correspondence’s format, and we 

may prescribe a format for that data 

manager’s subsequent correspondence 

with us. 

(f) Our decision on your request for 

adjustment or appeal. (1) We determine 

whether your request for an adjustment 

or appeal is in compliance with this 

subpart. 

(2) In making our decision for an 

adjustment, under § 668.509 or 

§ 668.510, or an appeal, under § 668.511 

or § 668.512— 

(i) We presume that the information 

provided to you by a data manager is 

correct unless you provide substantial 

evidence that shows the information is 

not correct; and 

(ii) If we determine that a data 

manager did not provide the necessary 

clarifying information or legible records 

in meeting the requirements of this 

subpart, we presume that the evidence 

that you provide to us is correct unless 

it is contradicted or otherwise proven to 

be incorrect by information we 

maintain. 

(3) Our decision is based on the 

materials you submit under this subpart. 

We do not provide an oral hearing. 

(4) We notify you of our decision— 

(i) If you request an adjustment or 

appeal because you are subject to a 

sanction under § 668.410 or file an 

economically disadvantaged appeal 

under § 668.513(a)(2), within 45 days 

after we receive your completed request 

for an adjustment or appeal; or 

(ii) In all other cases, before we notify 

you of your next official program cohort 

default rate. 

(5) You may not seek judicial review 

of our determination of a program 

cohort default rate until we issue our 

decision on all pending requests for 

adjustments or appeals for that program 

cohort default rate. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.509 Uncorrected data adjustments. 

(a) Eligibility. You may request an 

uncorrected data adjustment for a GE 

program’s most recent cohort of 

borrowers, used to calculate the most 

recent official program cohort default 

rate, if in response to your challenge 

under § 668.504(b), a data manager 

agreed correctly to change the data, but 

the changes are not reflected in your 

official program cohort default rate. 

(b) Deadlines for requesting an 

uncorrected data adjustment. You must 

send us a request for an uncorrected 

data adjustment, including all 

supporting documentation, within 30 

days after you receive your loan record 

detail report from us. 

(c) Determination. We recalculate 

your program cohort default rate, based 

on the corrected data, and correct the 

rate that is publicly released if we 

determine that— 

(1) In response to your challenge 

under § 668.504(b), a data manager 

agreed to change the data; 

(2) The changes described in 

paragraph (c)(1) of this section are not 

reflected in your official program cohort 

default rate; and 

(3) We agree that the data are 

incorrect. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.510 New data adjustments. 

(a) Eligibility. You may request a new 

data adjustment for the most recent 

program cohort of borrowers, used to 

calculate the most recent official 

program cohort default rate for a GE 

program, if— 

(1) A comparison of the loan record 

detail reports that we provide to you for 

the draft and official program cohort 

default rates shows that the data have 

been newly included, excluded, or 

otherwise changed; and 

(2) You identify errors in the data 

described in paragraph (a)(1) of this 

section that are confirmed by the data 

manager. 

(b) Deadlines for requesting a new 

data adjustment. (1) You must send to 

the relevant data manager, or data 

managers, and us a request for a new 

data adjustment, including all 

supporting documentation, within 15 

days after you receive your loan record 

detail report from us. 

(2) Within 20 days after receiving 

your request for a new data adjustment, 

the data manager must send you and us 

a response that— 

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(i) Addresses each of your allegations 

of error; and 

(ii) Includes the documentation used 

to support the data manager’s position. 

(3) Within 15 days after receiving a 

guaranty agency’s notice that we hold 

an FFELP loan about which you are 

inquiring, you must send us your 

request for a new data adjustment for 

that loan. We respond to your request as 

set forth under paragraph (b)(2) of this 

section. 

(4) Within 15 days after receiving 

incomplete or illegible records or data 

from a data manager, you must send a 

request for replacement records or 

clarification of data to the data manager 

and us. 

(5) Within 20 days after receiving 

your request for replacement records or 

clarification of data, the data manager 

must— 

(i) Replace the missing or illegible 

records; 

(ii) Provide clarifying information; or 

(iii) Notify you and us that no 

clarifying information or additional or 

improved records are available. 

(6) You must send us your completed 

request for a new data adjustment, 

including all supporting 

documentation— 

(i) Within 30 days after you receive 

the final data manager’s response to 

your request or requests; or 

(ii) If you are also filing an erroneous 

data appeal or a loan servicing appeal, 

by the latest of the filing dates required 

in paragraph (b)(6)(i) of this section or 

in § 668.511(b)(6)(i) or 

§ 668.512(c)(10)(i). 

(c) Determination. If we determine 

that incorrect data were used to 

calculate your program cohort default 

rate, we recalculate your program cohort 

default rate based on the correct data 

and make corrections to the rate that is 

publicly released. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.511 Erroneous data appeals. 

(a) Eligibility. Except as provided in 

§ 668.508(b), you may appeal the 

calculation of a program cohort default 

rate upon which loss of eligibility under 

§ 668.506 is based if— 

(1) You dispute the accuracy of data 

that you previously challenged on the 

basis of incorrect data, under 

§ 668.504(b); or 

(2) A comparison of the loan record 

detail reports that we provide to you for 

the draft and official program cohort 

default rates shows that the data have 

been newly included, excluded, or 

otherwise changed, and you dispute the 

accuracy of that data. 

(b) Deadlines for submitting an 

appeal. (1) You must send a request for 

verification of data errors to the relevant 

data manager, or data managers, and to 

us within 15 days after you receive the 

notice of your loss of eligibility. Your 

request must include a description of 

the information in the program cohort 

default rate data that you believe is 

incorrect and all supporting 

documentation that demonstrates the 

error. 

(2) Within 20 days after receiving 

your request for verification of data 

errors, the data manager must send you 

and us a response that— 

(i) Addresses each of your allegations 

of error; and 

(ii) Includes the documentation used 

to support the data manager’s position. 

(3) Within 15 days after receiving a 

guaranty agency’s notice that we hold 

an FFELP loan about which you are 

inquiring, you must send us your 

request for verification of that loan’s 

data errors. Your request must include 

a description of the information in the 

program cohort default rate data that 

you believe is incorrect and all 

supporting documentation that 

demonstrates the error. We respond to 

your request as set forth under 

paragraph (b)(2) of this section. 

(4) Within 15 days after receiving 

incomplete or illegible records or data, 

you must send a request for replacement 

records or clarification of data to the 

data manager and us. 

(5) Within 20 days after receiving 

your request for replacement records or 

clarification of data, the data manager 

must— 

(i) Replace the missing or illegible 

records; 

(ii) Provide clarifying information; or 

(iii) Notify you and us that no 

clarifying information or additional or 

improved records are available. 

(6) You must send your completed 

appeal to us, including all supporting 

documentation— 

(i) Within 30 days after you receive 

the final data manager’s response to 

your request; or 

(ii) If you are also requesting a new 

data adjustment or filing a loan 

servicing appeal, by the latest of the 

filing dates required in paragraph 

(b)(6)(i) of this section or in 

§ 668.510(b)(6)(i) or § 668.512(c)(10)(i). 

(c) Determination. If we determine 

that incorrect data were used to 

calculate your program cohort default 

rate, we recalculate your program cohort 

default rate based on the correct data 

and correct the rate that is publicly 

released. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.512 Loan servicing appeals. 

(a) Eligibility. Except as provided in 

§ 668.508(b), you may appeal, on the 

basis of improper loan servicing or 

collection, the calculation of— 

(1) The most recent program cohort 

default rate for a GE program; or 

(2) Any program cohort default rate 

upon which a loss of eligibility under 

§ 668.506 is based. 

(b) Improper loan servicing. For the 

purposes of this section, a default is 

considered to have been due to 

improper loan servicing or collection 

only if the borrower did not make a 

payment on the loan and you prove that 

the responsible party failed to perform 

one or more of the following activities, 

if that activity applies to the loan: 

(1) Send at least one letter (other than 

the final demand letter) urging the 

borrower to make payments on the loan. 

(2) Attempt at least one phone call to 

the borrower. 

(3) Send a final demand letter to the 

borrower. 

(4) For a FFELP loan held by us or for 

a Direct Loan Program loan, document 

that skip tracing was performed if the 

applicable servicer determined that it 

did not have the borrower’s current 

address. 

(5) For an FFELP loan only— 

(i) Submit a request for preclaims or 

default aversion assistance to the 

guaranty agency; and 

(ii) Submit a certification or other 

documentation that skip tracing was 

performed to the guaranty agency. 

(c) Deadlines for submitting an 

appeal. (1) If the loan record detail 

report was not included with your 

official program cohort default rate 

notice, you must request it within 15 

days after you receive the notice of your 

official program cohort default rate. 

(2) You must send a request for loan 

servicing records to the relevant data 

manager, or data managers, and to us 

within 15 days after you receive your 

loan record detail report from us. If the 

data manager is a guaranty agency, your 

request must include a copy of the loan 

record detail report. 

(3) Within 20 days after receiving 

your request for loan servicing records, 

the data manager must— 

(i) Send you and us a list of the 

borrowers in your representative 

sample, as described in paragraph (d) of 

this section (the list must be in social 

security number order, and it must 

include the number of defaulted loans 

included in the program cohort for each 

listed borrower); 

(ii) Send you and us a description of 

how your representative sample was 

chosen; and 

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(iii) Either send you copies of the loan 

servicing records for the borrowers in 

your representative sample and send us 

a copy of its cover letter indicating that 

the records were sent, or send you and 

us a notice of the amount of its fee for 

providing copies of the loan servicing 

records. 

(4) The data manager may charge you 

a reasonable fee for providing copies of 

loan servicing records, but it may not 

charge more than $10 per borrower file. 

If a data manager charges a fee, it is not 

required to send the documents to you 

until it receives your payment of the fee. 

(5) If the data manager charges a fee 

for providing copies of loan servicing 

records, you must send payment in full 

to the data manager within 15 days after 

you receive the notice of the fee. 

(6) If the data manager charges a fee 

for providing copies of loan servicing 

records, and— 

(i) You pay the fee in full and on time, 

the data manager must send you, within 

20 days after it receives your payment, 

a copy of all loan servicing records for 

each loan in your representative sample 

(the copies are provided to you in hard 

copy format unless the data manager 

and you agree that another format may 

be used), and it must send us a copy of 

its cover letter indicating that the 

records were sent; or 

(ii) You do not pay the fee in full and 

on time, the data manager must notify 

you and us of your failure to pay the fee 

and that you have waived your right to 

challenge the calculation of your 

program cohort default rate based on the 

data manager’s records. We accept that 

determination unless you prove that it 

is incorrect. 

(7) Within 15 days after receiving a 

guaranty agency’s notice that we hold 

an FFELP loan about which you are 

inquiring, you must send us your 

request for the loan servicing records for 

that loan. We respond to your request 

under paragraph (c)(3) of this section. 

(8) Within 15 days after receiving 

incomplete or illegible records, you 

must send a request for replacement 

records to the data manager and us. 

(9) Within 20 days after receiving 

your request for replacement records, 

the data manager must either— 

(i) Replace the missing or illegible 

records; or 

(ii) Notify you and us that no 

additional or improved copies are 

available. 

(10) You must send your appeal to us, 

including all supporting 

documentation— 

(i) Within 30 days after you receive 

the final data manager’s response to 

your request for loan servicing records; 

or 

(ii) If you are also requesting a new 

data adjustment or filing an erroneous 

data appeal, by the latest of the filing 

dates required in paragraph (c)(10)(i) of 

this section or in § 668.510(b)(6)(i) or 

§ 668.511(b)(6)(i). 

(d) Representative sample of records. 

(1) To select a representative sample of 

records, the data manager first identifies 

all of the borrowers for whom it is 

responsible and who had loans that 

were considered to be in default in the 

calculation of the program cohort 

default rate you are appealing. 

(2) From the group of borrowers 

identified under paragraph (d)(1) of this 

section, the data manager identifies a 

sample that is large enough to derive an 

estimate, acceptable at a 95 percent 

confidence level with a plus or minus 

5 percent confidence interval, for use in 

determining the number of borrowers 

who should be excluded from the 

calculation of the program cohort 

default rate due to improper loan 

servicing or collection. 

(e) Loan servicing records. Loan 

servicing records are the collection and 

payment history records— 

(1) Provided to the guaranty agency by 

the lender and used by the guaranty 

agency in determining whether to pay a 

claim on a defaulted loan; or 

(2) Maintained by our Direct Loan 

Servicer that are used in determining 

your program cohort default rate. 

(f) Determination. (1) We determine 

the number of loans, included in your 

representative sample of loan servicing 

records, that defaulted due to improper 

loan servicing or collection, as 

described in paragraph (b) of this 

section. 

(2) Based on our determination, we 

use a statistically valid methodology to 

exclude the corresponding percentage of 

borrowers from both the numerator and 

denominator of the calculation of the 

program cohort default rate for the GE 

program, and correct the rate that is 

publicly released. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.513 Economically disadvantaged 

appeals. 

(a) General. As provided in this 

section you may appeal, for a GE 

program, a loss of eligibility under 

§ 668.506. 

(b) Eligibility. You may appeal under 

this section if an independent auditor’s 

opinion certifies that the low income 

rate, as defined in paragraph (c) of this 

section, for the GE program is two-thirds 

or more and— 

(1) The program is an associate, 

baccalaureate, graduate, or professional 

degree, and its completion rate, as 

defined in paragraph (d) of this section, 

is 70 percent or more; or 

(2) The program is not an associate, 

baccalaureate, graduate, or professional 

degree, and the placement rate, as 

defined in paragraph (e) of this section, 

for the program is 44 percent or more. 

(c) Low income rate. (1) The low 

income rate for a GE program is the 

percentage of students enrolled in the 

program, as described in paragraph 

(c)(2) of this section, who— 

(i) For an award year that overlaps the 

12-month period selected under 

paragraph (c)(2) of this section, have an 

expected family contribution, as defined 

in 34 CFR 690.2, that is equal to or less 

than the largest expected family 

contribution that would allow a student 

to receive one-half of the maximum 

Federal Pell Grant award, regardless of 

the student’s enrollment status or cost of 

attendance; or 

(ii) For a calendar year that overlaps 

the 12-month period selected under 

paragraph (c)(2) of this section, have an 

adjusted gross income that, when added 

to the adjusted gross income of the 

student’s parents (if the student is a 

dependent student) or spouse (if the 

student is a married independent 

student), is less than the amount listed 

in the Department of Health and Human 

Services poverty guideline for the size 

of the student’s family unit. 

(2) The students who are used to 

determine the low income rate for a GE 

program include only students who 

were enrolled on at least a half-time 

basis in the GE program at your 

institution during any part of a 12- 

month period that ended during the 6 

months immediately preceding the 

program cohort’s fiscal year. 

(d) Completion rate. (1) For purposes 

of this subpart, the completion rate for 

a GE program is the percentage of 

students enrolled in the program, as 

described in paragraph (d)(2) of this 

section, who— 

(i) Completed the GE program in 

which they were enrolled; 

(ii) Transferred from your institution 

to a higher level educational program; 

(iii) Remained enrolled and are 

making satisfactory progress toward 

completion of their educational 

programs at the end of the same 12- 

month period used to calculate the low 

income rate; or 

(iv) Entered active duty in the Armed 

Forces of the United States within 1 

year after their last date of attendance at 

your institution. 

(2) The students who are used to 

determine the completion rate for a GE 

program include only regular students 

who were— 

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16524 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

(i) Initially enrolled on a full-time 

basis in the GE program; and 

(ii) Originally scheduled to complete 

the GE program during the same 12- 

month period used to calculate the low 

income rate for the GE program. 

(e) Placement rate. (1) Except as 

provided in paragraph (e)(2), for 

purposes of this subpart the placement 

rate for a GE program is the percentage 

of students enrolled in the program, as 

described in paragraphs (e)(3) and (e)(4) 

of this section, who— 

(i) Are employed, in an occupation for 

employment in which the GE program 

was offered, on the date following 1 year 

after their last date of attendance at your 

institution; 

(ii) Were employed for at least 13 

weeks, in the occupation for which the 

GE program was offered, between the 

date they enrolled at your institution 

and the first date that is more than a 

year after their last date of attendance at 

your institution; or 

(iii) Entered active duty in the Armed 

Forces of the United States within 1 

year after their last date of attendance in 

the GE program. 

(2) For the purposes of this section, a 

former student is not considered to have 

been employed based on any 

employment by your institution. 

(3) The students who are used to 

determine the placement rate of a GE 

program include only former students 

who— 

(i) Were initially enrolled in the GE 

program on at least a half-time basis; 

(ii) Were originally scheduled, at the 

time of enrollment, to complete the GE 

program during the same 12-month 

period used to calculate the low income 

rate; and 

(iii) Remained in the GE program 

beyond the point at which a student 

would have received a 100 percent 

tuition refund from you. 

(4) A student is not included in the 

calculation of the placement rate of a GE 

program if that student, on the date that 

is 1 year after the student’s originally 

scheduled completion date, remains 

enrolled in the same program and is 

making satisfactory progress. 

(f) Scheduled to complete. In 

calculating a completion or placement 

rate under this section, the date on 

which a student is originally scheduled 

to complete a GE program is based on— 

(1) For a student who is initially 

enrolled full-time, the amount of time 

specified in your enrollment contract, 

catalog, or other materials for 

completion of the GE program by a fulltime student; or 

(2) For a student who is initially 

enrolled less than full-time, the amount 

of time that it would take the student to 

complete the GE program if the student 

remained at that level of enrollment 

throughout the program. 

(g) Deadline for submitting an appeal. 

(1) Within 30 days after you receive the 

notice of loss of eligibility under 

§ 668.506 you must send us your 

management’s written assertion, as 

described in the Program Cohort Default 

Rate Guide. 

(2) Within 60 days after you receive 

the notice of your loss of eligibility, you 

must send us the independent auditor’s 

opinion described in paragraph (h) of 

this section. 

(h) Independent auditor’s opinion. (1) 

The independent auditor’s opinion must 

state whether your management’s 

written assertion, as you provided it to 

the auditor and to us, meets the 

requirements for an economically 

disadvantaged appeal and is fairly 

stated in all material respects. 

(2) The engagement that forms the 

basis of the independent auditor’s 

opinion must be an examination-level 

compliance attestation engagement 

performed in accordance with— 

(i) The American Institute of Certified 

Public Accountants’ (AICPA) Statement 

on Standards for Attestation 

Engagements, Compliance Attestation 

(AICPA, Professional Standards, vol. 1, 

AT sec. 500), as amended (these 

standards may be obtained by calling 

the AICPA’s order department, at 1– 

888–777–7077); and 

(ii) Government Auditing Standards 

issued by the Comptroller General of the 

United States. 

(i) Determination. The GE program 

does not lose eligibility under § 668.506 

if— 

(1) Your independent auditor’s 

opinion agrees that you meet the 

requirements for an economically 

disadvantaged appeal; and 

(2) We determine that the 

independent auditor’s opinion and your 

management’s written assertion— 

(i) Meet the requirements for an 

economically disadvantaged appeal for 

the GE program; and 

(ii) Are not contradicted or otherwise 

proven to be incorrect by information 

we maintain, to an extent that would 

render the independent auditor’s 

opinion unacceptable. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.514 Participation rate index appeals. 

(a) Eligibility. 

(1) [Reserved] 

(2) You may appeal a loss of eligibility 

under § 668.506 based on three 

consecutive program cohort default 

rates of 30 percent or greater, if the 

participation rate index for that GE 

program is equal to or less than 0.0625 

for any of those three program cohorts’ 

fiscal years. 

(b) Calculating the participation rate 

index for a GE program. (1) Except as 

provided in paragraph (b)(2) of this 

section, the participation rate index for 

a GE program for a fiscal year is 

determined by multiplying the program 

cohort default rate for the GE program 

for that fiscal year by the percentage that 

is derived by dividing— 

(i) The number of students who 

received an FFELP or a Direct Loan 

Program loan to enroll in that GE 

program during a period of enrollment, 

as defined in 34 CFR 682.200 or 

685.102, that overlaps any part of a 12- 

month period that ended during the 6 

months immediately preceding the 

program cohort’s fiscal year, by 

(ii) The number of regular students 

who were enrolled in that GE program 

on at least a half-time basis during any 

part of the same 12-month period. 

(2) If your program cohort default rate 

for a fiscal year is calculated as an 

average rate under § 668.502(d)(2), you 

may calculate the participation rate 

index for the GE program for that fiscal 

year using either that average rate or the 

program cohort default rate that would 

be calculated for the fiscal year alone 

using the method described in 

§ 668.502(d)(1). 

(c) Deadline for submitting an appeal. 

You must send us your appeal under 

this section, including all supporting 

documentation, within 30 days after you 

receive notice of loss of eligibility of the 

GE program. 

(d) Determination. (1) The GE 

program does not lose eligibility under 

§ 668.506 if we determine that you meet 

the requirements for a participation rate 

index appeal for that GE program. 

(2) If we determine that the 

participation rate index for a GE 

program for a fiscal year is equal to or 

less than 0.0625 under paragraph (d)(1) 

of this section, we also excuse you from 

any subsequent loss of eligibility under 

§ 668.506 that would be based on the 

official program cohort default rate for 

that fiscal year. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.515 Average rates appeals. 

(a) Eligibility. 

(1) [Reserved] 

(2) You may appeal a loss of eligibility 

under § 668.506 based on three program 

cohort default rates of 30 percent or 

greater, if at least two of those program 

cohort default rates— 

(i) Are calculated as average rates 

under § 668.502(d)(2); and 

(ii) Would be less than 30 percent if 

calculated for the fiscal year alone using 

the method described in § 668.502(d)(1). 

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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16525 

(b) Deadline for submitting an appeal. 

(1) Before notifying you of the official 

program cohort default rate for a GE 

program, we make an initial 

determination about whether the GE 

program qualifies for an average rates 

appeal. If we determine that the GE 

program qualifies, we notify you of that 

determination at the same time that we 

notify you of the official program cohort 

default rate for that program. 

(2) If you disagree with our initial 

determination, you must send us your 

average rates appeal for that GE 

program, including all supporting 

documentation, within 30 days after you 

receive the notice of your loss of 

eligibility. 

(c) Determination. The GE program 

does not lose eligibility under § 668.506 

if we determine that the GE program 

meets the requirements for an average 

rates appeal. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.516 Thirty-or-fewer borrowers 

appeals. 

(a) Eligibility. You may appeal a 

notice of a loss of eligibility under 

§ 668.506 if 30 or fewer borrowers, in 

total, are included in the three most 

recent cohorts of borrowers used to 

calculate the program cohort default 

rates for that GE program. 

(b) Deadline for submitting an appeal. 

(1) Before notifying you of the official 

program cohort default rate for a GE 

program, we make an initial 

determination about whether the GE 

program qualifies for a thirty-or-fewer 

borrowers appeal. If we determine that 

the program qualifies, we notify you of 

that determination at the same time that 

we notify you of the official program 

cohort default rate for that GE program. 

(2) If you disagree with our initial 

determination, you must send us the 

thirty-or-fewer borrowers appeal for that 

GE program, including all supporting 

documentation, within 30 days after you 

receive the notice of loss of eligibility of 

that GE program. 

(c) Determination. The GE program 

does not lose eligibility under § 668.506 

if we determine that the GE program 

meets the requirements for a thirty-orfewer borrowers appeal. 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

§ 668.517 [Reserved] 

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094) 

Note: The following Appendix will not 

appear in the Code of Federal Regulations. 

Appendix A—Regulatory Impact 

Analysis 

This regulatory impact analysis is divided 

into eight sections. 

In ‘‘Need for Regulatory Action,’’ we 

discuss the problems of high debt and 

relatively poor earnings impacting students 

who enroll in gainful employment programs 

(‘‘GE programs’’). We also provide an 

overview of the Department’s efforts to 

address these problems by establishing an 

institutional accountability framework for GE 

programs and increasing transparency about 

student outcomes in GE programs for the 

benefit of students, prospective students, and 

their families, the public, taxpayers, the 

Government, and institutions of higher 

education. 

In ‘‘Analysis of the Proposed Regulations,’’ 

we present the impact of the proposed 

regulations on GE programs and students for 

a single year. 

The ‘‘Discussion of Costs, Benefits, and 

Transfers’’ section considers the costs and 

benefits of the proposed regulations and the 

implications of the Department’s impact 

estimates for students, institutions, the 

Federal Government, and State and local 

governments. There would be two primary 

benefits of the proposed regulations. Because 

the proposed regulations would establish an 

accountability framework that assesses 

program performance, we would expect 

students, prospective students, taxpayers, 

and the Federal Government to receive a 

better return on money spent on education. 

The proposed regulations would also 

establish a transparency framework designed 

to improve market information that would 

assist students, prospective students, and 

their families in making critical decisions 

about their educational investment and in 

understanding potential outcomes of that 

investment. The public, taxpayers, the 

Government, and institutions would also 

gain relevant and useful information about 

GE programs, allowing them to better 

evaluate their investment in these programs. 

Institutions would largely bear the costs of 

the proposed regulations, which would fall 

into three categories: paperwork costs 

associated with institutions complying with 

the regulations, costs that could be incurred 

by institutions if they attempt to improve 

their GE programs, and costs due to changing 

student enrollment. In addition, if programs 

that provided education of some value to 

students shut down as a result of the 

proposed regulations, then the foregone value 

of that service would be another potential 

cost to society. 

We also consider the distribution of effects 

on institutions associated with the proposed 

regulations. For institutions, the 

distributional impact of the proposed 

regulations would be mixed. Institutions 

with programs that are in the zone or failing 

under the GE measures and programs that 

eventually lose eligibility could see lower 

revenues, primarily revenues derived from 

title IV, HEA program funds, and, depending 

upon the expenses associated with improving 

a failing or zone program, potentially 

reduced margins from that program. On the 

other hand, institutions with programs that 

pass the proposed regulations would likely 

experience growing enrollments and 

revenues and would benefit from the 

additional market information that would 

permit these institutions to demonstrate, and 

consumers to understand, the value of their 

GE programs. The net gain from the student 

aid and other revenue that results from 

student transfers to better performing 

programs would depend on the instructional 

expense that transfers with them. 

Under ‘‘Net Budget Impacts,’’ we present 

our estimate that the proposed regulations 

would save the Federal Government between 

$75 million and $110 million annually 

depending on certain assumptions. The 

largest factor in these savings would result 

from reduced expenditures on Pell Grants, as 

some Pell Grant-eligible students may elect 

not to pursue postsecondary educational 

opportunities if the program they would have 

attended fails the GE measures or is in the 

zone. 

We also provide a ‘‘Sensitivity Analysis’’ to 

demonstrate how alternative student and 

program response assumptions would impact 

our budget estimates. 

In ‘‘Return on Investment,’’ we present an 

illustrative example of how the proposed 

regulations could impact student earnings. 

In ‘‘Regulatory Alternatives Considered,’’ 

we describe the other approaches the 

Department considered for key features of the 

proposed regulations, including components 

of the GE measures and possible alternative 

GE measures. Many of these alternative 

approaches were discussed by the negotiated 

rulemaking committee. 

Finally, in ‘‘Initial Regulatory Flexibility 

Analysis,’’ we consider issues relevant to 

small businesses and non-profit institutions. 

Need for Regulatory Action 

Background 

The proposed regulations are intended to 

address growing concerns about educational 

programs that, as a condition of eligibility for 

title IV, HEA program funds, are required by 

statute to provide training that prepares 

students for gainful employment in a 

recognized occupation, but instead are 

leaving students with unaffordable levels of 

loan debt in relation to their earnings or 

resulting in students defaulting on their title 

IV, HEA program loans. 

Through this regulatory action, the 

Department seeks to establish: (1) an 

accountability framework for GE programs 

that will define what it means to prepare 

students for gainful employment in a 

recognized occupation by establishing 

measures by which the Department would 

evaluate whether a GE program remains 

eligible for title IV, HEA program funds, and 

(2) a transparency framework that would 

increase the quality and availability of 

information about the outcomes of students 

enrolled in GE programs. 

The accountability framework is designed 

to define what it means to prepare students 

for gainful employment by establishing 

measures that would assess whether 

programs provide quality education and 

training that lead to earnings that will allow 

students to pay back their student loan debts. 

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16526 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

66Based on reporting in NSLDS, IPEDS, and other 

information provided by institutions. 

67 Id. 68NSLDS. 

The transparency framework is designed to 

establish reporting and disclosure 

requirements that would increase the 

transparency of student outcomes of GE 

programs so that information is disseminated 

to students, prospective students, and their 

families that is accurate and comparable to 

help them make better informed decisions 

about where to invest their time and money 

in pursuit of a postsecondary degree or 

credential. Further, this information would 

provide the public, taxpayers, and the 

Government with relevant information to 

better understand the outcomes of the 

Federal investment in these programs. 

Finally, the transparency framework would 

provide institutions with meaningful 

information that they could use to improve 

student outcomes in these programs. 

Outcomes, Practices, and Literature Review 

GE programs include non-degree programs, 

including diploma and certificate programs, 

at public and private non-profit institutions 

such as community colleges and nearly all 

educational programs at for-profit 

institutions of higher education regardless of 

program length or credential level. Common 

GE programs provide training for occupations 

in fields such as cosmetology, business 

administration, medical assisting, dental 

assisting, nursing, and massage therapy. 

We estimate that there are approximately 

50,000 66 GE programs offered at 

postsecondary institutions around the 

country, with an enrollment of 

approximately 4 million 67 students receiving 

title IV, HEA program funds. About 60 

percent of these programs are at public 

institutions, 10 percent at private non-profit 

institutions, and 30 percent at for-profit 

institutions. 

For fiscal year 2010, 37,589 GE programs 

with an enrollment of 3,985,329 students 

receiving title IV, HEA program funds 

reported program information to the 

Department.68 The Federal investment in 

students attending these programs is 

significant. In FY 2010, students attending 

GE programs received approximately $9.7 

billion in Federal student aid grants and 

approximately $26 billion in Federal student 

aid loans. 

Table 1 provides, by 2-digit CIP code, the 

number of GE programs for which 

institutions reported program information to 

the Department in FY 2010. Table 2 provides 

the enrollment of students receiving title IV, 

HEA program funds in GE programs, by 2- 

digit CIP code, for which institutions 

reported program information to the 

Department. 

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EP25MR14.000</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Table 1: FY 2010 GE Program Count 

Public Private Proprieta

'" '" '" Q) Q) Q) 

0 0 0 

'" tll 

.. 0 .. 0 .. Q) -;.. 0 

QJ 0 Q) 0 Q) 0 

0 II! 0 II! 0 II! 0 II! 

2-Digit .Q .Q ..... rl .Q 

'tl '1::1 'tl 0 Q) 

CIP Code 2-Digit eIP Name II! II! n! 0 .<:: 

.. .. .. '" '" '" 0 .. 

tn 0 g tn !! 

P Po P 

Health and Related 

51 Sciences 4,735 291 404 274 2,493 1,078 155 16 

Business Management and 

5::: Administrative Services 3,401 117 17.7 166 474 (;49 376 30 

Persocal and 

12 Services 1,059 1 47 3 2,354 127 28 0 

47 and Repairs 2,254 2 54 0 266 84 a 0 

11 Computer and Information Sciences 1,613 51 52 38 292 312 2:9 7 

15 Engineering Related Technologies 1,689 11 42 6 143 145 23 1 

50 Visual and Performing Arts 583 28 53 72 187 238 275 0 

13 Education 389 298 29 389 52 19 57 22 

43 Protective Services 869 11 15 21 55 189 112 6 48 Precision Production Trades 1,047 0 22 0 41 13 0 0 46 Construction Trades 956 0 24 0 98 26 2 0 

22 Law ar"d Legal Services 312 5 40 19 118 197 40 5 

19 I:!:conomics 66<J b 12 8 11 13 2 

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Business and 

1 Producticn 502 2 5 0 7 1 1 0 

10 Telecommunications Technologies 378 0 4 1 31 42 55 0 

44 Publ:ec Administration and Services 146 41 7 21 0 8 :1 2 

9 Commucl cat" 1 ons 131 15 10 ;;/, 19 15 37 0 

•• and Macerial Moving 

49 Workers 170 0 5 2 28 7 6 1 

Parks, Recreation, LeiscYe, and 

31 Fitness Studies 106 5 7 2 36 21 15 2 

Liberal Arls dnd S::iellces, General 

24 Studies and Humanities 130 1 4 4 2 22 l7 1 

,0 Stadies 60 5? 17. '30 5 7- 15 2 

45 Social Sciences and History 79 48 4 22 1 4 18 0 

12 Psychology 9 29 1 55 0 3 16 6 

14 Engineering 39 44 1 14 4 6 15 1 

16 Foreign Languages and Literature 105 11 2 8 1 0 5 0 

English Language and 

23 Literature/Letters 53 24 10 7 7 2 10 0 

Theological Studies and Religious 

39 vocations 1 0 45 43 0 2 9 0 

26 Biological and Biomedical 35 30 1 13 1 2 10 0 

and Renewable Natural 

3 Resources 62 4 2 4 1 0 8 1 

.. 

-"--

41 Scien2e Technologies 70 1 0 2 5 0 0 

4 Architeccure and Rela_ed Programs 39 6 1 b 1 0 3 0 

Area, Cultu:cal, Ethnic, and 8ender 

5 Studies 20 24 3 7 0 0 1 0 

EP25MR14.002</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

25 Library Studies 22 11 0 7 0 0 1 0 

40 Physical Sciences 12 11 0 5 1 0 2 0 

54 History 2 6 0 2 0 2 6 3 

27 Mathematics and Statistics 4 14 3 1 0 1 1 0 

38 Philosophy and Religious Studies 0 3 7 ,1 0 0 4 0 

32 Basic Skills 10 1 1 0 3 0 0 0 

Healtc-related Knowledge and 

34 Skills 6 0 2 1 4 0 0 0 

Leisure and Recreational 

36 Activities 5 1 3 0 0 0 2 0 

28 Reserve Officer Training Ccrps 1 0 0 0 2 1 1 1 

60 Programs 0 5 0 1 0 0 0 0 

---------

Tp('hnn-_ogy/Education Industrial 

------ ---------------- ------i------- ------ --

21 Arts 0 1 0 1 0 1 1 0 29 f'liliLacy 0 0 0 0 1 2 1 0 

33 Citizenship Activities 2 1 0 0 0 0 0 0 

Awareness and Self 

37 Improvement 1 0 0 0 0 0 0 0 

"ligh schcol/secondary Diplomas and 

53 Certificates 1 0 0 0 0 0 0 0 

Total 21,775 1,221 1,C64 1,279 6,665 3,267 109 

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Table 2: FY 2010 Title IV Enrollment in GE Programs 

2-

Digit 

CIP 

Code 2-Digit CIP Name 

Health Professions and 

51 1 Related Sciences 

Business l\1anagement and 

52 1 Administrative Services 

Personal and 

12 1 I>liscellaneous Services 

43 1 Protective Services 

computer and Information 

11 1 Sciences 

47 1 Mechanics and Repairs 

Educiltion 

Visual and Performing 

50 I -'I.rts 

Engineering Related 

15 1 Technologies 

22 1 Law and Legal Services 

Multi-interdisciplinary 

30 1 Studies 

19 1 Home Economics 

Public Administration and 

44 1 Services 

...., 

.. 

Q) 

tJ 

'g 

.. 

g 

Public 

277,010 129,593 

44,669 

57,765 

36,207 

fl7,155 

13,697 14,935 25,641 10,629 

1,118 

50,594 

5,624 

...., 

.. 

Q) 

tJ tJ 

.Q 

...., 

'" o '" 

2,475 

1,69C 

152 

385 

6,376 

153 

36 

5C7 

133 

458 

Private 

...., 

.. 

Q) 

tJ 

'g 

.. 

g 

30,356 

3,904 

3 1 169 

841 

1,252 '3 I 278 1,104 1,479 

768 

57 

946 

147 

...., 

.. 

Q) 

tJ tJ 

.Q 

...., 

'" o '" 

3,130 

2,180 

6 

171 436 

o 

6,932 

548 

17 

875 

209 

78 

233 

...., 

.. 

Q) 

o 

g 

445,923 

16,174 

198,590 

3,209 

14,659 

79,074 

'" Q) ...., 

I1S 

-r< 

o 

o 

'" '" ..: 

306,061 

231,033 

34,860 

115,239 100,225 

15,04C 

1,838 I 21,473 

6,573 36,354 

21,879 48,954 

5,047 31,550 

71 32,287 

785 999 

° 18,642 

'" 

.. 

o 

rl 

Q) 

..c: 

Cl 

94,512 

308,843 

5,857 

85,657 

88,824 

° 

66,897 

::'1,964 

7,948 

23,772 

2,846 

:8,865 

Proprietary 

...., 

.. 

Q) 

tJ tJ 

.Q 

...., 

'" o '" 

735 

'" 

.. 

Q) 

...., 

'" 

41,885 

2,184 109,180 

15 

90 8,098 

222 6,089 

o 

58,768 

3,166 

14 695 

213 I 724 

1171 2,076 

85 1 1,442 35110,339 

1

2

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46 Construction Trades 21,776 C 1,988 0 13,271 2,529 51 0 0 

Precision Production 

48 Trades 29,078 0 1,356 0 6,566 972 0 0 0 

Telecommunications 

10 Technologies 9,587 C 105 2 3,730 4,841 :2,737 0 490 

Liberal Arts and 

Sciences r General Studies 

24 and Humanities 14,539 1 10 435 14 9,178 1,318 97 138 

Social Sciences and 

45 History 741 381 76 391 89 61 l4,869 0 740 

English Language and 

73 8,436 156 1,147 21 7.,059 3,668 1,476 0 119 

--9 rco:nmunications 1---- 2,046-t------ r--S; 4i4- -_. 3,684 8'0 63 112 0 2T1 

Transportation and 

49 ,laterial Workers 4,109 G cl'2f;) n 7,518 436 430 3 146 

Parks, Recreation, 

Leisure r and Fitness 

31 Studies 2,445 824 165 3 2,073 3,271 3,263 19 645 

14 Engineering 980 385 7 289 46 149 5,241 1 174 

--------

Business i:md 

I lon 6,562 12 ll6 0 236 2 42 0 0 

54 History 9 28 0 2 0 140 2,473 44 1,629 

nrchitecture and Related 

4 Programs 2,718 114 1 89 2 0 114 0 97 

Conservation and 

Renewable Natural 

3 Resources 1,253 5 5 52 7 0 2,075 6 258 

Foreign Languages and 

16 Literature 2,574 48 4 47 27 0 30 0 0 

Philosophy and Religious 

38 Studies 0 6 64 5 ° 0 2,146 0 411 

41 ScIence TechnologIes 1,602 3 0 0 169 422 0 0 0 

Biological and Biomedical 

26 Sciences 482 282 1 45 71 107 719 0 ° 

, , ... . . . . . . ,.

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Theological Studies and 

39 Religious vocations 1 780 361 0 54 341 0 73 

Health-related Knowledge 

34 and Skills 103 C 27 1 1,320 0 0 0 0 

Technology/Education 

2l Industrial Arts 0 4 0 2 0 761 305 ° 0 

25 Library Studies 575 130 0 177 0 C 1 0 0 

32 Basic Skills 176 1 10 0 366 0 0 0 0 

Area, Cultural, Ethnic, 

5 and Sender Studies 133 140 14 17 0 C 1 ° 0 

Leisure and Recreational 

36 A::-tivities 171 1 15 0 0 0 114 ° 4 

Reserve 8fficer Training 

28 Corps 5 C 0 0 11 17 :39 10 0 

40 Physical Sciences 70 34 0 36 0 0 :7 0 0 

and 

27 Statistics 32 77 5 2 0 28 ::'2 0 0 29 Military Technologies 0 0 0 0 12 62 4 0 0 

_. 

60 Residency Programs 0 14 ° 9 0 C 0 ° 0 

33 2itizenship Activities 6 1 0 0 0 0 0 0 0 

Personal Awareness and 

37 Self Improvement 7 C 0 0 0 C 0 0 0 

High School/Secondary 

53 Diplomas and Certificates 1 C 0 0 0 C 0 0 0 

ToLal 847,843 16,049 6C;,714 18,006 833,458 1,020,751 838,483 5,709 266,344 6

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Table 3: Characteristics of Students Enrolled in GE Programs (FY 2010) 69 

Percent Percent zero Percent Per

Institution Credential level Pell estimated Percent above Sector o

type family married 24 in Recipient vet

contribution age 

All 70.5% 41.5% 30.1% 66.2% 

< 2 year Certificate 67.5% 37.3% 39.3% 72.0% 

Public 2-3 year Certificate 71.1% 43.2% 28.9% 65.2% 

Certificate 63.6% 33.2% 30.3% 63.6% 

4+ year Post-Bacc 

Certificate n/a 15.4% 47.0% 94.3% 

All 67.8% 40.8% 31.2% 63.6% 

Certificate 81.4% 52.1% 31.9% 63.3% 

< 2 year Post-Bacc 

Certificate n/a 33.3% 66.7% 100.0% 

Private Certificate 56.8% 38.6% 31. 5% 64.2% 

2-3 year 

Post-Bacc 

Certificate n/a 26.7% 6.7% 93.3% 

4+ year Certificate 69.1% 47.6% 28.6% 53.6% 

Post-Bacc 

Certificate n/a 17.4% 37.3% 89.1% 

----_._ .... _--- -- 

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A1l 63.7% 34.1% 36.6% 68.8% 

Certificate 75.6% 47.0% 27.1% 55.5% 

< 2 year Associate's 96.0% 80.6% 34.3% 50.3% 

1st Professional 

Degree n/a 51.3% 31.7% 56.2% 

Certificate 74.9% 43.4% 27.8% 53.9% 

2-3 year Associate's 74.2% 44.4% 24.2% 54.0% 

Post-Bacc 

Certificate n/a 16.8% 44.4% 86.0% 

For-Profit 

Certificate 72 .1% 45.3% 33.6% 61.3% 

Associate's 60.0% 35.6% 38.9% 66.7% 

Bachelor's 55.3% 27.0% 39.4% 75.2% 

Post-Bacc 

4+ year Certificate n/a 15.5% 43.7% 97.9% 

Master's n/a 19.0% 48.3% 94.5% 

Doctoral n/a 16.5% 48.9% 97.9% 

1st Professional 

Degree n/a 27.1% 32.7% 80.9% 

A1l A1l 64.9% 34.7% 36.1% 68.5% 

--- ----

69 Pell grant recipient percentages based on students at undergraduate GE programs who entere

IV, REA program loans between October 1, 2007 and 30, 2009 and received a Pell gra

the institution between July 1, 2004 to June 30, 2009. Graduate programs not included in c

recipient percentages. Other percentages based on students at GE programs who entered repay

program loans between October 1, 2007 and September 30, 2009 and had a demographic record in 

Sector and credential averages generated by weighting program results by FY 2010 enrollment. 
Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16535 

70Avery, C., and Turner, S. (2013). Student 

Loans: Do College Students Borrow Too Much—Or 

Not Enough? Journal of Economic Perspectives, 

26(1), 165–192. 

71Moretti, E. (2004). Estimating the Social Return 

to Higher Education: Evidence from Longitudinal 

and Repeated Cross-Sectional Data. Journal of 

Econometrics, 121(1), 175–212. 

72Avery, C., and Turner, S. (2013). Student 

Loans: Do College Students Borrow Too Much—Or 

Not Enough? Journal of Economic Perspectives, 

26(1), 165–192. 

73Lang, K., and Weinstein, R. (2013). ‘‘The Wage 

Effects of Not-for-Profit and For-Profit 

Certifications: Better Data, Somewhat Different 

Results.’’ NBER Working Paper #19135, Cambridge, 

MA. 

74At the Federal minimum wage of $7.25 per 

hour (www.dol.gov/whd/minimumwage.htm), an 

individual working 40 hours per week for 52 weeks 

per year would have annual earnings of $15,080. 

75 2012 GE informational rates. Our analysis by 

sector shows the following: Of the 5,539 programs 

evaluated with earnings data, 30 percent of forprofit programs and 13 percent of public non-profit 

programs produced graduates with average annual 

earnings below a Federal minimum wage worker. 

76Based on a weekly wage of $471 (http://

www.bls.gov/emp/ep_chart_001.htm) for 52 weeks. 

77 2012 GE informational rates. Our analysis by 

sector shows the following: Of the 5,539 programs 

evaluated with earnings data, 72 percent of forprofit programs and 32 percent of public non-profit 

programs produced graduates with average annual 

earnings less than the earnings of individuals who 

have not obtained a high school degree. 

78 2012 GE informational rates. Percent of 

defaulters calculated based on pCDR data for 

programs with mean or median earnings below high 

school dropout. 79 Dunlop, E. ‘‘What Do Student Loans Actually 

Buy You? The Effect of Stafford Loan Access on 

Community College Students,’’ Working Paper 

(2013). 80Martin, A., and Andrew L., ‘‘A Generation 

Hobbled by the Soaring Cost of College,’’ New York 

Times, May 12, 2012. 

81 Deming, D., Goldin, C., and Katz, L. (2013). For 

Profit Colleges. Future of Children, 23(1), 137–164. 

82 Deming, D., Goldin, C., and Katz, L. (2013). For 

Profit Colleges. Future of Children, 23(1), 137–164. 

83Federal Reserve Bank of New York (2012, 

November). Quarterly Report on Household Debt 

and Credit. Retrieved from www.newyorkfed.org/

research/nationaleconomy/householdcredit/

DistrictReport_Q32012.pdf. 

84Brown, M., and Sydnee C. (2013). Young 

Student Loan Borrowers Retreat from Housing and 

Auto Markets. Liberty Street Economics, retrieved 

from: http://libertystreeteconomics.newyorkfed.org/

2013/04/young-student-loan-borrowers-retreatfrom-housing-and-auto-markets.html. 

85 Id. 

86 Deming, D., Goldin, C., and Katz, L. (2013). For 

Profit Colleges. Future of Children, 23(1), 137–164. 

87 Id. 

88Avery, C., and Turner S. Student Loans: Do 

College Students Borrow Too Much Or Not Enough? 

The Journal of Economic Perspectives 26, no. 1 

(2012): 189. 

89 Id. at 165–192. 

90 Id. 

91 Id. 

92 Gicheva, D. ‘‘In Debt and Alone? Examining the 

Causal Link between Student Loans and Marriage.’’ 

Working Paper (2013). 

93 Gicheva, D., and U. N. C. Greensboro. ‘‘The 

Effects of Student Loans on Long-Term Household 

Financial Stability.’’ Working Paper (2014). 

94 Id. 

95Shand, J. M. (2007). ‘‘The Impact of Early-Life 

Debt on the Homeownership Rates of Young 

Households: An Empirical Investigation.’’ Federal 

Deposit Insurance Corporation Center for Financial 

Research. 

96Brown, M., and Sydnee C. (2013). Young 

Student Loan Borrowers Retreat from Housing and 

Continued 

Research has consistently 

demonstrated the significant benefits of 

postsecondary education. Among them 

are private pecuniary benefits 70 and 

social benefits, such as higher wages.71

Even though the costs of postsecondary 

education have risen, there is 

substantial evidence that financial 

returns to students have increased 

commensurately.72 Although evidence 

of the returns on GE programs in 

particular is sparse, the limited 

information that exists shows 

substantial variation in returns 

depending on the occupation that the 

program provides training for, including 

negative returns for some types of 

programs.73

Our analysis, described in more detail 

in ‘‘Analysis of the Proposed 

Regulations,’’ reveals that low earnings 

and high rates of student loan default 

are common in many GE programs. For 

example, 27 percent of the 5,539 GE 

programs evaluated with earnings data 

produced graduates with average annual 

earnings below those of a full-time 

worker earning no more than the 

Federal minimum wage ($15,080).74 75

Sixty-four percent of the 5,539 GE 

programs evaluated with earnings data 

produced graduates with average annual 

earnings less than the earnings of 

individuals who have not obtained a 

high school diploma ($24,492).76 77

Approximately 24 percent of former 

student borrowers who attended 

programs with below high school 

dropout earnings defaulted on their 

Federal student loans within the first 

three years of entering repayment. 78

In light of the low earnings and high 

rates of default of some GE programs, 

the Department is concerned that all 

students at these programs may not be 

making optimal borrowing decisions. 

While many students appear to borrow 

less than might be optimal, either 

because they are risk averse or lack 

access to credit,79 the outcomes 

described above indicate that 

overborrowing may be a significant 

problem for at least some students. 

Over the past three decades, student 

loan debt has grown rapidly as increases 

in college costs have outstripped 

increases in family income,80 State and 

local postsecondary education funding 

has flattened,81 and relatively expensive 

for-profit institutions have 

proliferated.82 Student loan debt now 

stands at over $904 billion nationally 

and rose by 41 percent, or $264 billion, 

between 2008 and 2012, a period when 

other forms of consumer debt were flat 

or declining.83 Since 2003, the 

percentage of 25-year-olds with student 

debt has nearly doubled, increasing 

from 25 percent to 43 percent.84 Young 

people with student debt also owe more; 

the average student loan balance among 

25-year-olds with debt has increased 

from $10,649 in 2003 to $20,326 in 

2012.85 The increases in the percentage 

of young people with student debt and 

in average student debt loan balances 

have coincided with sluggish growth in 

State tax appropriations for higher 

education.86 While State funding for 

public institutions has stagnated, 

Federal student aid has increased 

dramatically. From 2000–2001 to 2010– 

2011, Federal Pell Grant expenditures 

more than tripled, while Stafford Loan 

volumes more than doubled.87

Evidence suggests that student 

borrowing is not too high across the 

board.88 Rather, overborrowing results 

from specific and limited conditions. 

Although students may have access to 

information on average rates of return, 

they may not understand how their own 

abilities, choice of major, or choice of 

institution may affect the expected 

value of the investment they make in 

their education.89 Further, 

overborrowing may result because 

students do not understand the true cost 

of loans, because they overestimate their 

chance of graduating, or because they 

overestimate the earnings associated 

with the completion of their program of 

study.90 For example, among a 

nationally representative sample of firsttime bachelor degree-seeking students, 

only 52 percent of those who expected 

to complete a BA degree did so within 

six years of beginning their studies, and 

of these students, those who borrowed 

incurred an average debt of $14,457.91

Inefficiently high borrowing can cause 

substantial harm to borrowers. There is 

some suggestive evidence that high 

levels of student debt decrease the longterm probability of marriage.92 For those 

who do not complete a degree, greater 

amounts of student debt may raise the 

probability of bankruptcy.93 There is 

also evidence that it increases the 

probability of being credit constrained, 

particularly if students underestimate 

the probability of dropping out.94

Student debt has been found to be 

associated with reduced home 

ownership rates.95 And, excessively 

high student debt may make it more 

difficult for borrowers to meet new 

mortgage underwriting standards, 

tightened in response to the recent 

recession and financial crisis.96

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16536 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

Auto Markets. Liberty Street Economics, retrieved 

from: http://libertystreeteconomics.newyorkfed.org/

2013/04/young-student-loan-borrowers-retreatfrom-housing-and-auto-markets.html. 

97U.S. Department of Education (2014). 2-year 

official national student loan default rates. Federal 

Student Aid. Retrieved from http://www2.ed.gov/

offices/OSFAP/defaultmanagement/

defaultrates.html. 

98Martin, A., ‘‘Debt Collectors Cashing In on 

Student Loans,’’ New York Times, September 8, 

2012. 

99 Gross, J. P., Cekic, O., Hossler, D., & Hillman, 

N. (2009). What Matters in Student Loan Default: 

A Review of the Research Literature. Journal of 

Student Financial Aid, 39(1), 19–29. 

100Lochner, L., and Monge-Naranjo, A. (2014). 

‘‘Default and Repayment Among Baccalaureate 

Degree Earners.’’ NBER Working Paper No. w19882. 

101Belfield, C. R. (2013). ‘‘Student Loans and 

Repayment Rates: The Role of For-Profit Colleges.’’ 

Research in Higher Education, 54(1): 1–29. 

102 Id. 

103 Deming, D., Goldin, C., and Katz, L. (2012). 

The For-Profit Postsecondary School Sector: Nimble 

Critters or Agile Predators. Journal of Economic 

Perspectives, 26(1), 139–164. 

104Hillman, N. W. ‘‘College on Credit: A 

Multilevel Analysis of Student Loan Default.’’ The 

Review of Higher Education 37.2 (2014): 169–195. 

Project MUSE. Web. 12 Mar. 2014. 

105 Id. 

106 Id. 

107 Id. 

108 Id. 

109 Id. 

110 Deming, D., Goldin, C., and Katz, L. (2012). 

The For-Profit Postsecondary School Sector: Nimble 

Critters or Agile Predators. Journal of Economic 

Perspectives, 26(1), 139–164. 

111 Deming, D., Goldin, C., and Katz, L. (2012). 

The For-Profit Postsecondary School Sector: Nimble 

Critters or Agile Predators. Journal of Economic 

Perspectives, 26(1), 139–164. 

112 Keller, J. (2011, January 13). Facing new cuts, 

California’s colleges are shrinking their 

enrollments. Chronicle of Higher Education. 

Retrieved from http://chronicle.com/article/FacingNew-Cuts-Californias/125945/. 

113Cellini, Stephanie Riegg. (2009). Crowded 

Colleges and College Crowd-Out: The Impact of 

Public Subsidies on the Two-Year College Market. 

American Economic Journal: Economic Policy, 1(2): 

1–30. 

114 Deming, D.J., Goldin, C., and Katz, L.F. (2012). 

The For-Profit Postsecondary School Sector: Nimble 

Critters or Agile Predators? Journal of Economic 

Perspectives, 26(1), 139–164. 

115 IPEDS First-Look (July 2013), table 2. Average 

costs (in constant 2012–13 dollars) associated with 

attendance for full-time, first-time degree/ 

certificate-seeking undergraduates at Title IV 

institutions operating on an academic year calendar 

system, and percentage change, by level of 

institution, type of cost, and other selected 

characteristics: United States, academic years 2010– 

11 and 2012–13. 

116 Id. 

117Cellini, S. R., and Darolia, R. (2013). College 

Costs and Financial Constraints: Student Borrowing 

at For-Profit Institutions. Unpublished manuscript. 

118 Id. 

There is ample evidence that students 

are having difficulty repaying their 

loans. The national two-year cohort 

default rate on Stafford loans has 

increased from 5.2 percent in 2006 to 10 

percent in 2011.97 As of 2012, 

approximately 6 million borrowers were 

in default on Federal loans, owing $76 

billion.98

There is a wide array of literature on 

the determinants of default, which 

include both student and institutional 

characteristics. A substantial body of 

research suggests that ‘‘completing a 

postsecondary program is the strongest 

single predictor of not defaulting 

regardless of institution type.’’ 99 In a 

study of outcomes 10 years after 

graduation for students receiving BS/BA 

degrees in 1993, Lochner and MongeNaranjo found that both student debt 

and post-school income levels are 

significant predictors of repayment and 

nonpayment, although the estimated 

effects were modest.100 In another 

study, Belfield examined the 

determinants of Federal loan repayment 

status of a more recent cohort of 

borrowers and found that loan balances 

had only a trivial influence on default 

rates.101 However, Belfield found 

substantial differences between students 

who attended for-profit and those who 

attended public institutions. Even when 

controlling for student characteristics, 

measures of college quality, and college 

practices, students at for-profit 

institutions, especially two-year 

colleges, borrow more and have lower 

repayment rates than students at public 

institutions.102 In two recent studies, 

Hillman and Deming, Goldin, and Katz 

also found that students who attend forprofit colleges have higher rates of 

default than comparable students who 

attend public colleges.103 104

The causes of excessive debt, high 

default rates, and low earnings of 

students at GE programs include 

aggressive or deceptive marketing 

practices, a lack of transparency 

regarding program outcomes, excessive 

costs, low completion rates, deficient 

quality, and a failure to satisfy 

requirements needed for students to 

obtain higher paying jobs in a field such 

as licensing, work experience, and 

programmatic accreditation. 

As we noted in connection with the 

2011 Prior Rule, the outcomes of 

students who attend for-profit 

educational institutions are of particular 

concern. 76 FR 34386. The for-profit 

sector has experienced tremendous 

growth over the past 15 years, fueled in 

large part by Federal student aid 

funding.105 The share of total 

enrollment of for-profit institutions 

eligible for title IV, HEA program funds 

has increased from about 4 percent in 

2000 to nearly 11 percent in 2009,106

while the share of Federal student 

financial aid going to students at forprofit institutions has doubled to nearly 

25 percent over the same time period.107

The for-profit sector serves older 

students, women, Black students, 

Hispanic students, and students with 

low incomes at disproportionately high 

rates.108 Single parents, students with a 

certificate of high school equivalency, 

and students with lower family incomes 

are more commonly found at for-profit 

institutions than community colleges.109

For-profit institutions develop 

curriculum and teaching practices that 

can be replicated at multiple locations 

and at convenient times, and offer 

highly structured programs to help 

ensure timely completion.110 For-profit 

institutions ‘‘are attuned to the 

marketplace and are quick to open new 

schools, hire faculty, and add programs 

in growing fields and localities.’’ 111

At least some research suggests that 

for-profit institutions respond to 

demand that public institutions are 

unable to handle because of budget 

shortfalls. Recent evidence from 

California suggests that for-profit 

institutions are increasingly absorbing 

students from budget constrained public 

institutions.112 Conversely, increased 

taxpayer support for local community 

colleges results in higher enrollments in 

those institutions and a decrease in 

enrollments in for-profit schools in the 

first few years after a bond passage.113

For-profit institutions may also be 

able to respond more quickly to 

increases in demand for postsecondary 

education. Research by Deming, Goldin 

and Katz found that ‘‘[c]hange[s] in forprofit college enrollments are more 

positively correlated with changes in 

State college-age populations than are 

changes in public-sector college 

enrollments.’’ 114

Although research indicates that the 

for-profit sector has some positive 

features, there is growing evidence of 

troubling outcomes and practices at 

many institutions. For-profit institutions 

typically charge higher tuitions than do 

public postsecondary institutions. 76 FR 

34386. Average tuition and fees at lessthan-two-year for-profit institutions are 

more than double the average cost at 

less-than-two-year public 

institutions.115 Attending a two-year forprofit institution costs a student four 

times as much as attending a 

community college.116

‘‘Unlike other sectors, grant aid has 

not risen with tuition in the for-profit 

sector, leading to steep increases in the 

net price that students pay.’’ 117 Not 

surprisingly, ‘‘student borrowing in the 

for-profit sector has risen dramatically 

to meet the rising net prices.’’ 118

Students at for-profit institutions are 

more likely to receive Federal student 

financial aid and have higher average 

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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16537 

119 Deming, D.J., Goldin, C., and Katz, L.F. (2012). 

The For-Profit Postsecondary School Sector: Nimble 

Critters or Agile Predators? Journal of Economic 

Perspectives, 26(1), 139–164. 

120National Postsecondary Student Aid Study 

2012. 

121 Id. 

122 Id. 

123 Id. 

124 Darolia, R. (2013). Student Loan Repayment 

and College Accountability. Federal Reserve Bank 

of Philadelphia. 

125 Deming, D.J., Goldin, C., and Katz, L.F. (2012). 

The For-Profit Postsecondary School Sector: Nimble 

Critters or Agile Predators? Journal of Economic 

Perspectives, 26(1), 139–164. 

126Based on the Department’s analysis of the 

three-year cohort default rates for fiscal year 2010, 

U.S. Department of Education, available at 

www.ed.gov/news/press-releases/default-ratescontinue-rise-federal-student-loans. 

127Cellini S.R., and Darolia, R. (2013). College 

Costs and Financial Constraints: Student Borrowing 

at For-Profit Institutions. Unpublished manuscript. 

http://www.upjohn.org/stuloanconf/ 

Cellini_Darolia.pdf. 128 Id. 129Postsecondary Education: Student Outcomes 

Vary at For-Profit, Nonprofit, and Public Schools 

(GAO–12–143), GAO, December 7, 2011. 

130For Profit Higher Education: The Failure to 

Safeguard the Federal Investment and Ensure 

Student Success, Senate HELP Committee, July 30, 

2012. 

131 Id. 

132 Id. 

133U.S. Department of Education, National Center 

for Education Statistics (NCES), 2003–04 Beginning 

Postsecondary Students Longitudinal Study, 

Second Follow-up (BPS:04/09) (cumulative 

certificate, associate’s degree, and bachelor’s degree 

attainment at any institution). 

134 Darolia, R. (2013). Student Loan Repayment 

and College Accountability. Federal Reserve Bank 

of Philadelphia. 135Cellini S. R., and Darolia, R. (2013). College 

Costs and Financial Constraints: Student Borrowing 

at For-Profit Institutions. Unpublished manuscript. 

http://www.upjohn.org/stuloanconf/Cellini_

Darolia.pdf. 136 Deming, D., Goldin, C., and Katz, L. The ForProfit Postsecondary School Sector: Nimble Critters 

or Agile Predators?, Journal of Economic 

Perspectives, vol. 26, no. 1, Winter 2012. 137 Id. 

138Lang, K., and Weinstein R. (2013). ‘‘The Wage 

Effects of Not-for-Profit and For-Profit 

Certifications: Better Data, Somewhat Different 

Results.’’ NBER Working Paper. 

student debt than students in public and 

not-for-profit institutions.119 76 FR 

34386. 

In 2011–2012, 86 percent of students 

who earned certificates from for-profit 

institutions took out student loans 

compared to 35 percent of certificate 

recipients from public two-year 

institutions.120 Of those who borrowed, 

the median loan amount borrowed of 

for-profit certificate recipients was 

$11,000 as opposed to $8,000 for 

certificate recipients from public twoyear institutions.121 Eighty-eight percent 

of associate degree graduates from forprofit institutions took out student 

loans, while only 40 percent of associate 

degree recipients from public two-year 

institutions took out student loans.122

Of those who borrowed, for-profit 

associate degree recipients had a 

median loan amount borrowed of 

$23,590 in comparison to $10,000 for 

students who received their degrees 

from public two-year institutions.123

‘‘While increasing in every sector in 

recent years, student loan default rates 

have consistently been highest among 

students in the for-profit college 

sector.’’ 124 125 Approximately 22 percent 

of borrowers who attended for-profit 

institutions default on their Federal 

student loans within the first three years 

of entering repayment as compared to 

about 13 percent of borrowers who 

attended public institutions.126 Two 

other estimates produced by the 

Department for purposes other than 

determining eligibility for title IV, HEA 

program funds yield even higher default 

rates for for-profit students. First, 

estimates of ‘‘cumulative lifetime 

default rates,’’ based on the number of 

loans, rather than borrowers, yield a 

default rate of about 31 percent for 

cohorts graduating between 2005 and 

2009.127 Second, based on estimates 

used in the President’s budget, which 

use dollars, rather than loans or 

borrowers, to estimate defaults, lifetime 

defaults are around 48 percent for twoyear for-profit students.128

Although more expensive, there is 

growing evidence that many for-profit 

programs may not prepare students as 

well as comparable programs at public 

institutions. 75 FR 43618. A 2011 GAO 

report reviewed results of licensing 

exams for 10 occupations that are, by 

enrollment, among the largest fields of 

study and found that that for 9 out of 

10 licensing exams, graduates of forprofit institutions had lower rates of 

passing than graduates of public 

institutions.129 Many for-profit 

institutions devote greater resources to 

recruiting and marketing than they do to 

instruction or to student support 

services.130 An investigation by the U.S. 

Senate Committee on Health, Education, 

Labor & Pensions (Senate HELP 

Committee) of thirty prominent forprofit institutions found that almost 23 

percent of revenues were spent on 

marketing and recruiting but only 17 

percent on instruction.131 A review of 

useable data provided by some of the 

institutions that were investigated 

showed that they employed 35,202 

recruiters compared with 3,512 career 

services staff and 12,452 support 

services staff.132

Lower rates of completion in many 

four-year for-profit institutions are also 

a cause for concern. 76 FR 34409. The 

six-year graduation rate of first-time 

undergraduate students who began at a 

four-year degree-granting institution in 

2003–2004 was 34 percent at for-profit 

institutions in comparison to 65 percent 

at public institutions. However, for firsttime undergraduate students who began 

at a two-year degree-granting institution 

in 2003–2004, the six-year graduation 

rate was 40 percent at for-profit 

institutions in comparison to 35 percent 

at public institutions.133

The higher costs of for-profit 

institutions and consequently greater 

amounts of debt incurred by their 

former students, together with generally 

lower rates of completion, continue to 

raise concerns about whether for-profit 

programs lead to earnings that justify 

the investment made by students. See 

75 FR 43617. As we stated in 

connection with the 2011 Prior Rule, 

this ‘‘value proposition’’ is what 

‘‘distinguishes programs ‘that lead to 

gainful employment in a recognized 

occupation.’ ’’ 76 FR 34386. 

‘‘While research is still emerging on 

returns to for-profit colleges, recent 

studies indicate that for-profit students 

generate earnings gains that are lower 

than those of students in other 

sectors.’’ 134 ‘‘Among associate’s degree 

students, estimates of returns to forprofit attendance are generally in the 

range of 2 to 8 percent per year of 

education, compared to upwards of 9 

percent in the public sector.’’ 135

Analysis of data collected on the 

outcomes of 2003–2004 first-time 

beginning postsecondary students as a 

part of the Beginning Postsecondary 

Students Longitudinal Study shows that 

students who attend for-profit 

institutions are more likely to be idle, 

not working or in school, six years after 

starting their programs of study in 

comparison to students who attend 

other types of institutions.136 Further, 

for-profit students no longer enrolled in 

school six years after beginning 

postsecondary education have lower 

earnings at the six-year mark than 

students who attend other types of 

institutions.137 Some studies, however, 

fail to find significant differences 

between the returns to students on 

educational programs at for-profit 

institutions and other sectors.138

Overall, these outcomes are troubling 

for two reasons. First, some students 

will have earnings that will not support 

the debt they incurred to enroll in these 

GE programs. Second, because students 

are limited under the HEA in the 

amounts of Federal grants and loans 

they may receive to support their 

education, their options to move to 

higher-quality and affordable programs 

are constrained as they may no longer 

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139See section 401(c)(5) of the HEA, 20 U.S.C. 

1070a(c)(5), for Pell Grant limitation; see section 

455(q) of the HEA, 20 U.S.C. 1087e(q), for the 150 

percent limitation. 

140For-Profit Colleges: Undercover Testing Finds 

Colleges Encouraged Fraud and Engaged in 

Deceptive and Questionable Marketing Practices 

(GAO–10–948T), GAO, August 4, 2010 (reissued 

November 30, 2010). 

141 Id. 

142For Profit Higher Education: The Failure to 

Safeguard the Federal Investment and Ensure 

Student Success, Senate HELP Committee, July 30, 

2012. 

143 Id. 

144 ‘‘A.G. Schneiderman Announces 

Groundbreaking $10.25 Million Dollar Settlement 

with For-Profit Education Company That Inflated 

Job Placement Rates to Attract Students,’’ press 

release, Aug. 19, 2013. Available at: www.ag.ny.gov/ 

press-release/ag-schneiderman-announcesgroundbreaking-1025-million-dollar-settlementprofit. 

145 ‘‘Attorneys General Take Aim at For-Profit 

Colleges’ Institutional Loan Programs,’’ The 

Chronicle of Higher Education, March 20, 2012. 

Available at: http://chronicle.com/article/AttorneysGeneral-Take-Aim-at/131254/. 

146 ‘‘Kentucky Showdown,’’ Inside Higher Ed, 

Nov. 3, 2011. Available at: 

www.insidehighered.com/news/2011/11/03/kyattorney-general-jack-conway-battles-profits. 

147 ‘‘For Profit Colleges Face New Wave of State 

Investigations, Bloomberg, Jan. 29, 2014. Available 

at: www.bloomberg.com/news/2014–01–29/forprofit-colleges-face-new-wave-of-coordinated-stateprobes.html. 

148 ‘‘Corinthian Colleges Crumbles 14% on SEC 

probe,’’ Fox Business, June 11, 2013. Available at: 

www.foxbusiness.com/government/2013/06/11/

corinthian-colleges-crumbles-14-on-sec-probe/. 

149 ‘‘Dollar Signs In Uniform,’’ Los Angeles 

Times, Nov. 12, 2012. Available at: http://

articles.latimes.com/2012/nov/12/opinion/la-oeshakely-veterans-college-profit-20121112; citing 

‘‘Harkin Report,’’ S. Prt. 112–37, For Profit Higher 

Education: The Failure to Safeguard the Federal 

Investment and Ensure Student Success, July 30, 

2012. 

150 Id. 

151 Id. 

152 Id. 

153 ‘‘We Can’t Wait: President Obama Takes 

Action to Stop Deceptive and Misleading Practices 

by Educational Institutions that Target Veterans, 

Service Members and their Families,’’ White House 

Press Release, April 26, 2012. Available at: 

www.whitehouse.gov/the-press-office/2012/04/26/

we-can-t-wait-president-obama-takes-action-stopdeceptive-and-misleading. 

have access to sufficient student aid. 

Specifically, Federal law sets lifetime 

limits on the amount of grant and 

subsidized loan assistance students may 

receive: Federal Pell Grants may be 

received only for the equivalent of 12 

semesters of full-time attendance, and 

Federal subsidized loans may be 

received for no longer than 150 percent 

of the published program length.139

These limitations make it even more 

critical that students’ initial choices in 

GE programs prepare them for 

employment that provides adequate 

earnings and do not result in excessive 

debt. 

We also remain concerned that 

students seeking to enroll in these 

programs do not have access to reliable 

information that will enable them to 

compare programs in order to make 

informed decisions about where to 

invest their time and limited 

educational funding. As we noted in the 

2011 Prior Rule, the GAO and other 

investigators have found evidence of 

high-pressure and deceptive recruiting 

practices at some for-profit institutions. 

See 76 FR 34386. In 2010, the GAO 

released the results of undercover 

testing at 15 for-profit colleges across 

several States.140 Thirteen of the 

colleges tested gave undercover student 

applicants ‘‘deceptive or otherwise 

questionable information’’ about 

graduation rates, job placement, or 

expected earnings.141 The Senate HELP 

Committee investigation of the for-profit 

education sector also found evidence 

that many of the most prominent forprofit institutions engage in aggressive 

sales practices and provide misleading 

information to prospective students.142

Recruiters described ‘‘boiler room’’-like 

sales and marketing tactics and internal 

institutional documents showed that 

recruiters are taught to identify and 

manipulate emotional vulnerabilities 

and target non-traditional students.143

There has been growth in the number 

of qui tam lawsuits brought by private 

parties alleging wrongdoing at for-profit 

institutions, such as overstating job 

placement rates. Moreover, a growing 

number of State and other Federal law 

enforcement authorities have launched 

investigations into whether for-profit 

institutions are using aggressive or even 

deceptive marketing and recruiting 

practices. Several State Attorneys 

General have sued for-profit institutions 

to stop these fraudulent marketing 

practices which include manipulations 

of job placement rates. On August 19, 

2013, the New York State Attorney 

General announced a $10.25 million 

settlement with Career Education 

Corporation (CEC), a private for-profit 

education company, after its 

investigation revealed that CEC 

significantly inflated its graduates’ job 

placement rates in disclosures made to 

students, accreditors, and the State.144

The State of Illinois sued Westwood 

College for misrepresentations and false 

promises made to students enrolling in 

the company’s criminal justice 

program.145 The Commonwealth of 

Kentucky has filed lawsuits against 

several private for-profit institutions, 

including National College of Kentucky, 

Inc., for misrepresenting job placement 

rates, and Daymar College, Inc., for 

misleading students about financial aid 

and overcharging for textbooks.146 And 

most recently, early this year, a group of 

13 State Attorneys General issued Civil 

Investigatory Demands to Corinthian 

Colleges, Inc., Education Management 

Co., ITT Educational Services, Inc., and 

CEC, seeking information about job 

placement rate data and marketing and 

recruitment practices. The States 

participating include Arizona, Arkansas, 

Connecticut, Idaho, Iowa, Kentucky, 

Missouri, Nebraska, North Carolina, 

Oregon, Pennsylvania, Tennessee, and 

Washington. 

Further, the Consumer Financial 

Protection Bureau issued Civil 

Investigatory Demands to Corinthian 

Colleges, Inc. and ITT Educational 

Services, Inc. in November, 2013, 

demanding information about their 

marketing, advertising, and lending 

policies.147 The Securities and 

Exchange Commission also subpoenaed 

records from Corinthian Colleges, Inc. 

on June 6, 2013, seeking student 

information in the areas of recruitment, 

attendance, completion, placement, and 

loan defaults.148 These inquiries 

supplement the Department’s existing 

monitoring and compliance efforts to 

protect against such abuses. 

The 2012 Senate HELP Committee 

report also found extensive evidence of 

aggressive and deceptive recruiting 

practices, excessive tuition, and 

regulatory evasion and manipulation by 

for-profit colleges in their efforts to 

enroll service members, veterans, and 

their families. The report described 

veterans being viewed as ‘‘dollar signs 

in uniform.’’ 149 The Los Angeles Times 

reported that recruiters from for-profit 

colleges have been known to recruit at 

Wounded Warriors centers and at 

veterans hospitals, where injured 

soldiers are pressured into enrolling 

through promises of free education and 

more.150 Some for-profit colleges take 

advantage of service members and 

veterans returning home without jobs 

through a number of improper practices, 

including by offering post-9/11 GI Bill 

benefits that are intended for living 

expenses as ‘‘free money.’’ 151 Many 

veterans enroll in online courses simply 

to gain access to the monthly GI Bill 

benefits even if they have no intention 

of completing the coursework.152 In 

addition, some institutions have 

recruited veterans with serious brain 

injuries and emotional vulnerabilities 

without providing adequate support and 

counseling, engaged in misleading 

recruiting practices onsite at military 

installations, and failed to accurately 

disclose information regarding the 

graduation rates of veterans.153 In June 

2012, an investigation in 20 States, led 

by the Commonwealth of Kentucky’s 

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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16539 

154 ‘‘$2.5M Settlement over ‘GIBill.com’,’’ Inside 

Higher Ed, June 28, 2012. Available at: 

www.insidehighered.com/news/2012/06/28/

attorneys-general-announce-settlement-profitcollege-marketer. 

Attorney General, resulted in a $2.5 

million settlement with QuinStreet, Inc. 

and the closure of GIBill.com, a Web 

site that appeared as if it was an official 

site of the U.S. Department of Veterans 

Affairs, but was in reality a for-profit 

portal that steered veterans to 15 

colleges, almost all for-profit 

institutions, including Kaplan 

University, the University of Phoenix, 

Strayer University, DeVry University, 

and Westwood College.154

Basis of Regulatory Approach 

The components of the proposed 

accountability framework that a 

program must satisfy to meet the gainful 

employment requirement are rooted in 

the legislative history of the 

predecessors to the statutory provisions 

of sections 101(b)(1), 102(b), 102(c), and 

481(b) of the HEA that require 

institutions to establish the title IV, HEA 

program eligibility of GE programs. 20 

U.S.C. 1001(b)(1), 1002(b)(1)(A)(i), 

(c)(1)(A), 1088(b). 

The legislative history of the statute 

preceding the HEA that first permitted 

students to obtain federally financed 

loans to enroll in programs that 

prepared them for gainful employment 

in recognized occupations demonstrates 

the conviction that the training offered 

by these programs should equip 

students to earn enough to repay their 

loans. APSCU v. Duncan, 870 

F.Supp.2d at 139; see also 76 FR 34392. 

Allowing these students to borrow was 

expected to neither unduly burden the 

students nor pose ‘‘a poor financial 

risk’’ to taxpayers. 76 FR 34392. 

Specifically, the Senate Report 

accompanying the initial legislation (the 

National Vocational Student Loan 

Insurance Act (NVSLIA), Pub. L. 89– 

287) quotes extensively from testimony 

provided by University of Iowa 

professor Dr. Kenneth B. Hoyt, who 

testified on behalf of the American 

Personnel and Guidance Association. 

On this point, the Senate Report sets out 

Dr. Hoyt’s questions and conclusions: 

Would these students be in a position 

to repay loans following their training? 

* * * 

If loans were made to these kinds of 

students, is it likely that they could 

repay them following training? Would 

loan funds pay dividends in terms of 

benefits accruing from the training 

students received? It would seem that 

any discussion concerning this bill must 

address itself to these questions. * * * 

We are currently completing a 

second-year followup of these students 

and expect these reported earnings to be 

even higher this year. It seems evident 

that, in terms of this sample of students, 

sufficient numbers were working for 

sufficient wages so as to make the 

concept of student loans to be [repaid] 

following graduation a reasonable 

approach to take. * * * I have found no 

reason to believe that such funds are not 

needed, that their availability would be 

unjustified in terms of benefits accruing 

to both these students and to society in 

general, nor that they would represent a 

poor financial risk. 

Sen. Rep. No. 758, 89th Cong., First 

Sess. (1965) at 3745, 3748–49 (emphasis 

added). 

Notably, both debt burden to the 

borrower and financial risk to taxpayers 

and the Government were clearly 

considered in authorizing federally 

backed student lending. Under the loan 

insurance program enacted in the 

NVSLIA, the specific potential loss to 

taxpayers of concern was the need to 

pay default claims to banks and other 

lenders if the borrowers defaulted on 

the loans. After its passage, the NVSLIA 

was merged into the HEA, which in title 

IV, part B, has both a direct Federal loan 

insurance component and a Federal 

reinsurance component, under which 

the Federal Government reimburses 

State and private non-profit loan 

guaranty agencies upon their payment 

of default claims. 20 U.S.C. 1071(a)(1). 

Under either HEA component, taxpayers 

and the Government assume the direct 

financial risk of default. 20 U.S.C. 

1078(c) (Federal reinsurance for default 

claim payments), 20 U.S.C. 1080 

(Federal insurance for default claims). 

Not only did Congress consider expert 

assurances that vocational training 

would enable graduates to earn wages 

that would not pose a ‘‘poor financial 

risk’’ of default, but an expert observed 

that this conclusion rested on evidence 

that ‘‘included both those who 

completed and those who failed to 

complete the training.’’ APSCU v. 

Duncan, 870 F.Supp.2d at 139, citing 

H.R. Rep. No. 89–308, at 4 (1965), and 

S. Rep. No. 89–308, at 7, 1965 

U.S.C.C.A.N. 3742, 3748. 

The concerns regarding excessive 

student debt reflected in the legislative 

history of the gainful employment 

eligibility provisions of the HEA are as 

relevant now as they were then. 

Excessive student debt affects students 

and the country in three significant 

ways: Payment burdens on the 

borrower; the cost of the loan subsidies 

to taxpayers; and the negative 

consequences of default (which affect 

borrowers and taxpayers). 

The first consideration is payment 

burdens on the borrower. As we said 

previously in connection with the 2011 

Prior Rule and restate here, loan 

payments that outweigh the benefits of 

the education and training for GE 

programs that purport to lead to jobs 

and good wages are an inefficient use of 

the borrower’s resources. See 75 FR 

43621. 

The second consideration is taxpayer 

subsidies. Borrowers who have low 

incomes but high debt may reduce their 

payments through income-driven 

repayment plans. These plans can either 

be at little or no cost to taxpayers or, 

through loan cancellation, can cost 

taxpayers as much as the full amount of 

the loan with interest. 75 FR 43622. 

Deferments and repayment options are 

important protections for borrowers 

because, although postsecondary 

education generally brings higher 

earnings, there is no guarantee for the 

individual. Policies that assist those 

with high debt burdens are a critical 

form of insurance. However, as we 

explained in connection with the 2011 

Prior Rule, these repayment options 

should not mean that institutions 

should increase the level of risk to the 

individual student or taxpayers through 

high-cost, low-value programs. See id. 

The third consideration is default. 

The Federal Government covers the cost 

of defaults on Federal student loans. 

These costs can be significant to 

taxpayers. Id. We continue to assert as 

we did in connection with the 2011 

Prior Rule and restate here, loan 

defaults harm students and their 

families. Id. Their credit rating is 

damaged, undermining their ability to 

rent a house, get a mortgage, or purchase 

a car. To the extent they can get credit, 

they pay much higher interest. And, 

increasingly, employers consider credit 

records in their hiring decisions. 75 FR 

43622. In addition, former students who 

default on Federal loans cannot receive 

additional title IV, HEA program funds 

for postsecondary education. Id.; see 

also section 484(a)(3) of the HEA, 20 

U.S.C. 1091(a)(3). 

In accordance with the legislative 

intent behind the gainful employment 

eligibility provisions now found in 

sections 101, 102, and 481 of the HEA 

and the significant policy concerns they 

reflect, we propose to use the 

certification requirements to establish a 

program’s eligibility and, to assess 

continuing eligibility, the metrics-based 

standards that measure whether 

students will be able to pay back the 

educational debt they incur to enroll in 

the occupational training programs that 

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16540 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

are the subject of this rulemaking. 20 

U.S.C. 1001(b)(1), 1002(b)(1)(A)(i), 

(c)(1)(A), 1088(b). 

Proposed Regulatory Framework 

As stated previously, the 

Department’s goals in the proposed 

regulations are twofold: to establish an 

accountability framework for GE 

programs, and to increase the 

transparency of student outcomes of GE 

programs. 

As part of the accountability 

framework, to determine whether a 

program provides training that prepares 

students for gainful employment as 

required by the HEA, we propose 

procedures to establish a program’s 

eligibility and to measure its outcomes 

on a continuing basis. To establish a 

program’s eligibility, an institution 

would be required to certify that each of 

its GE programs meets all applicable 

accreditation and licensure 

requirements necessary for a student to 

obtain employment in the occupation 

for which the program provides 

training. This certification would be 

incorporated into the institution’s 

program participation agreement. 

To assess the continuing eligibility of 

a GE program, we propose to use two 

measures—the D/E rates measure, 

which compares the debt incurred by 

students completing the program against 

their earnings, and the pCDR measure, 

which examines the rate at which 

borrowers who previously enrolled in 

the program default on their FFEL or 

Direct Loans. The proposed regulations 

would establish minimum thresholds 

for the D/E rates measure and the pCDR 

measure. The D/E rates and the pCDR 

measures would operate independently 

of each other, as they are designed to 

achieve complementary objectives, 

capturing two ways a program could fail 

to meet the gainful employment 

requirement. 

In addition to the accountability 

framework, the proposed regulations 

include institutional reporting and 

disclosure requirements designed to 

increase the transparency of student 

outcomes for GE programs. Institutions 

would be required to report information 

that is necessary to implement aspects 

of the proposed regulations that support 

the Department’s two goals of 

accountability and transparency. This 

would include information needed to 

calculate the D/E rates and the pCDR, as 

well as some of the specific required 

disclosures. The proposed disclosure 

requirements would operate 

independently of the proposed 

eligibility requirements and ensure that 

relevant information regarding GE 

programs is made available to students, 

prospective students, and their families, 

the public, taxpayers, and the 

Government, and institutions. The 

disclosure requirements would provide 

for accountability and transparency 

throughout the admissions and 

enrollment process so that students, 

prospective students, and their families 

can make informed decisions. 

Specifically, institutions would be 

required to make information regarding 

such items as cost of attendance, 

completion, debt, earnings, and student 

loan repayment available in a 

meaningful and easily accessible format. 

Together, the certification 

requirements, accountability metrics, 

and disclosure requirements are 

designed to make improved and 

standardized market information about 

GE programs available for better 

decision making by students, 

prospective students, and their families, 

the public, taxpayers, and the 

Government, and institutions and lead 

to a more competitive marketplace that 

encourages improvement; improve the 

quality of programs and lead to reduced 

costs and student debt; eliminate poor 

performing programs; result in a better 

return on educational investment for 

students, prospective students, and their 

families, as well as for taxpayers and the 

Federal Government; and, for 

institutions with high-performing 

programs, lead to growth in enrollments 

and revenues resulting from transparent 

market information that would permit 

those institutions to demonstrate to 

consumers the value of their GE 

programs. 

The D/E Rates and pCDR 

As previously stated, as part of the 

accountability framework, we propose 

two complementary yet independent 

measures—the D/E rates measure and 

the pCDR measure—that would be used 

to determine whether a GE program 

remains eligible for title IV, HEA 

program funds. The debt-to-earnings 

measures under both the 2011 Prior 

Rule and the proposed regulations 

assess the debt burden incurred by 

students who completed a GE program 

in relation to their earnings. The pCDR 

measure, like the loan repayment rate in 

the 2011 Prior Rule, would assess the 

extent to which a program’s borrowers 

are paying back their loans, whether or 

not they completed the program, by 

measuring the GE program’s title IV, 

HEA loan default rate. 

The D/E rates measure would evaluate 

the amount of debt students who 

completed a GE program incurred to 

enroll in that program in comparison to 

those same students’ discretionary and 

annual earnings after completing the 

program. The proposed regulations 

would establish the standards by which 

the program would be assessed to 

determine, for each year rates are 

calculated, whether it passes or fails the 

D/E rates measure or is ‘‘in the zone.’’ 

Under the proposed regulations, to pass 

the D/E rates measure, the GE program 

must have a discretionary income rate 

less than or equal to 20 percent or an 

annual earnings rate less than or equal 

to 8 percent. The proposed regulations 

would also establish a zone for GE 

programs that have a discretionary 

income rate between 20 percent and 30 

percent or an annual earnings rate 

between 8 percent and 12 percent. GE 

programs with a discretionary income 

rate over 30 percent and an annual 

earnings rate over 12 percent would fail 

the D/E rates measure. Under the 

proposed regulations, a GE program 

would become ineligible for title IV, 

HEA program funds if it fails the D/E 

rates measure for two out of three 

consecutive years, or has a combination 

of D/E rates measures that are in the 

zone or failing for four consecutive 

years. We propose the D/E rates measure 

and the thresholds to assess whether a 

GE program has prepared students to 

earn enough to repay their loans, to 

better safeguard the Federal investment 

in the program. 

To allow institutions an opportunity 

to improve, the proposed regulations 

include a transition period for the first 

four years after the final regulations 

become effective. During the transition 

period, an alternative D/E rates 

calculation would be made so that 

institutions could benefit from any 

immediate reductions in cost they make. 

During these four years, the transition 

period and zone together would allow 

institutions to make improvements to 

their programs in order to become 

passing. 

In addition to the D/E rates measure, 

the proposed regulations would 

establish a pCDR measure. The pCDR 

measure would evaluate the default rate 

of former students enrolled in a GE 

program, regardless of whether they 

completed the program. Under the 

proposed regulations, a program would 

lose eligibility if its GE program has a 

pCDR of 30 percent or greater for three 

consecutive fiscal years. We propose the 

pCDR measure and the thresholds to 

identify those programs that may pass, 

or may not be evaluated by, the D/E 

rates measure, but whose students incur 

debt they cannot repay and ultimately 

default on their loans. Unlike the D/E 

rates measure, the pCDR measure would 

include students who did not complete 

their programs and therefore would 

assess programs with low completion 

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155Baum, S., and Schwartz, S. (2003). How Much 

Debt is Too Much? Defining Benchmarks for 

Managing Student Debt. 

156 Gross, J. P., Cekic, O., Hossler, D., and 

Hillman, N. (2009). What Matters in Student Loan 

Default: A Review of the Research Literature. 

Journal of Student Financial Aid, 39(1), 19–29. 

rates that, regardless of the earnings of 

students who complete the program, 

leave a significant number of students 

without credentials and with 

unmanageable debt. 

Both the D/E rates measure and pCDR 

measure assess program outcomes that, 

consistent with legislative intent, 

indicate whether a program is preparing 

students for gainful employment. 

Although the measures supplement and 

complement one another, each focuses 

on separate and distinct expectations 

upon which Congress relied in enacting 

legislation that make these programs 

eligible for title IV, HEA program funds 

based on the condition that they provide 

training that prepares students for 

gainful employment. Consequently, we 

believe the measures should operate 

independently. 

The D/E rates and pCDR measures are 

designed to reflect and account for the 

three primary reasons that a program 

may fail to prepare students for gainful 

employment where former students are 

unable to earn wages adequate to 

manage their educational debt: (1) A 

program does not train students in the 

skills they need to obtain and maintain 

jobs in the occupation for which the 

program purports to train students, (2) 

a program provides training for an 

occupation for which low wages do not 

justify program costs, and (3) the 

program is experiencing a high number 

of withdrawals or ‘‘churn’’ because 

relatively large numbers of students 

enroll but few, or none, complete the 

program, which can often lead to 

default. 

The D/E rates measure assesses the 

outcomes of only those students who 

complete the program. The calculation 

includes former students who received 

title IV, HEA program funds and took on 

educational debt and those who did not. 

And, for those students who have debt, 

the D/E rates take into account private 

loans and institutional financing in 

addition to title IV, HEA program loans. 

The D/E rates measure primarily 

assesses whether the loan funds 

obtained by students ‘‘pay dividends in 

terms of benefits accruing from the 

training students received,’’ and 

whether such training has indeed 

equipped students to earn enough to 

repay their loans such that they are not 

unduly burdened. H.R. Rep. No. 89–308, 

at 4 (1956); S. Rep. No. 89–758, at 7 

(1965). A 2002 survey found that a 

majority of borrowers felt burdened by 

their student loan payments and 

reported that they would borrow ‘‘much 

less’’ or a ‘‘little less’’ to finance their 

higher education if they were to enroll 

again in an educational program. An 

analysis of the 2002 survey combined 

borrowers’ responses to questions about 

student loan burden, hardship, and 

regret to create a ‘‘debt burden index’’ 

that was significantly positively 

associated with borrowers’ debt-toincome ratios; in other words, borrowers 

with higher debt-to-income ratios 

tended to feel higher levels of burden, 

hardship, and regret.155

As a result, the D/E rates measure 

identifies programs that fail to 

adequately provide students with the 

occupational skills needed to obtain 

employment or that train students for 

occupations with low wages. The D/E 

rates also provide evidence of the 

experience of borrowers and, 

specifically, where borrowers may be 

struggling with their debt burden. 

In contrast to the D/E rates measure, 

pCDR measures the extent to which a 

program’s former students are paying 

back their Direct and FFEL loans 

regardless of their earnings, if any. In 

comparison to the D/E rates measure, 

the pCDR measure applies to those 

programs that have relatively high 

enrollments but no or few completions 

such that students are left with debt 

they cannot repay. As stated previously, 

research indicates that ‘‘completing a 

postsecondary program is the strongest 

single predictor of not defaulting 

regardless of institution type.’’ 156

The legislative history supports 

inclusion of students who did not 

complete a program in the proposed 

accountability framework. As discussed, 

Congress specifically considered expert 

advice that students who took out 

Federal loans for the purpose of training 

programs, including students who do 

not complete the programs, would be 

able to repay those loans, as defaults by 

those students would burden taxpayers 

in the same way as defaults by students 

who completed the program. 

The pCDR, consequently, is foremost 

a measure that assesses whether a 

program presents a ‘‘poor financial risk 

to the taxpayer.’’ 76 FR 34392. In light 

of congressional intent reflected in the 

legislative history, a program that 

presents a poor financial risk for 

taxpayers cannot be considered a 

program that prepares students for 

gainful employment. 

Despite the distinctive purposes of the 

D/E rates and pCDR measures, the 

measures supplement and complement 

one another. The scope of the pCDR 

measure is broader than the D/E rates 

measure as the pCDR measure also takes 

into account the outcomes of borrowers 

who did not complete the program. 

Accordingly, the pCDR measure 

supplements the D/E rates measure in 

those cases in which D/E rates cannot be 

calculated because no or very few 

students who enrolled in a program 

actually completed the program. By 

including an accountability metric that 

reflects the outcomes of students who 

do not complete the program, 

institutions would have incentive to 

address any high dropout and ‘‘churn’’ 

issues or face the loss of eligibility. 

Likewise, the D/E rates measure 

complements the pCDR measure. 

Specifically, the pCDR measure does not 

take into account the many students 

who may be struggling to repay their 

loans, such as those receiving economic 

hardship deferments or who are in an 

income-driven repayment plan. These 

students may see their loans grow, 

rather than shrink, because their 

incomes are low and their debts are 

high. While the pCDR measure may not 

identify programs whose former 

students are in such circumstances, the 

D/E rates measure would take into 

account those students who are 

struggling with their debt burden 

despite having completed their 

programs. 

Analysis of the Proposed Regulations 

Data and Methodology for Analysis of 

the Proposed Regulations 

Data 

After the effective date of the 2011 

Final Rules on July 1, 2011, the 

Department received, pursuant to the 

reporting requirements of the 2011 Final 

Rules, information from institutions on 

their GE programs for award years 

2006–2007 through 2010–2011 (GE 

Data). The GE Data is stored in the 

National Student Loan Database System 

(NSLDS), maintained by the 

Department’s Office of Federal Student 

Aid (FSA). The GE Data originally 

included information on students who 

received title IV, HEA program funds, as 

well as students who did not. After the 

decisions in APSCU v. Duncan, the 

Department removed from NSLDS and 

destroyed the data on students who did 

not receive title IV, HEA program funds. 

Using the GE Data, student loan 

information also stored in NSLDS, and 

earnings information obtained from 

SSA, the Department calculated (1) 2012 

GE informational D/E rates and (2) 2012 

GE informational pCDR for GE 

programs. As discussed in the 

‘‘Background’’ section of the preamble 

to this NPRM, the 2012 GE 

informational D/E rates and 2012 GE 

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157http://www2.ed.gov/policy/highered/reg/

hearulemaking/2012/gainfulemployment.html. 

informational pCDR are referred to as 

the ‘‘2012 GE informational rates.’’ The 

2012 GE informational rates are stored 

in a data file maintained by the 

Department that is accessible on its Web 

site.157

The 2012 GE informational D/E rates 

were calculated by program and are 

based on the debt and earnings of 

students receiving title IV, HEA program 

funds who completed GE programs 

between October 1, 2007, and 

September 30, 2009 (the ‘‘08/09 2012 D/ 

E rates cohort’’). The annual loan 

payment component of the debt-toearnings formulas for the 2012 GE 

informational D/E rates was calculated 

for each program using student loan 

information from the GE Data and from 

NSLDS. For the annual earnings figures 

that were used in the debt-to-earnings 

calculations, the Department obtained 

from SSA the 2011 annual earnings, by 

program, of the 08/09 2012 D/E rates 

cohort. The 2012 GE informational D/E 

rates were calculated using the 

following criteria: 

• N-size: 30 

• Amortization schedule: 10 years for 

certificate and associate degree 

programs, 15 years for bachelor’s and 

master’s degree programs, and 20 years 

for doctoral and first professional 

programs 

• Interest rate: 5.42 percent 

The 2012 GE informational rates files 

also include debt-to-earnings rates 

calculated using variations of the n-size 

and amortization schedule criteria for 

comparative purposes. 

The 2012 GE informational pCDR 

were calculated by program for students 

receiving title IV, HEA program funds 

who entered repayment between 

October 1, 2008, and September 30, 

2009 (the ‘‘09 2012 pCDR cohort’’) on 

FFEL or Direct Loans for enrollment in 

a GE program. The 2012 GE 

informational pCDR calculations were 

made using student loan information for 

the 09 2012 pCDR cohort from the GE 

Data and NSLDS. 

Unless otherwise specified, in 

accordance with the proposed 

regulations, the Department analyzed 

the 2012 GE informational D/E rates, 

and program level debt and earnings, 

only for those programs with 30 or more 

students who completed the program 

during an applicable cohort period— 

that is, those programs that met the 

minimum ‘‘n-size—in this case between 

October 1, 2007, and September 30, 

2009, as previously described. Of the 

37,589 GE programs for which 

institutions reported program 

information to the Department in FY 

2010, 5,539 met the minimum n-size of 

30 for the 2012 GE informational D/E 

rates calculations. 

The proposed regulations regarding 

pCDR do not include similar n-size 

requirements because various 

challenges and appeals are available for 

programs that have less than 30 

borrowers included in the calculation. 

For the purpose of this regulatory 

impact analysis, however, we analyzed 

the 2012 GE informational pCDR only 

for those programs with an n-size of 30 

or more borrowers who entered 

repayment on FFEL or Direct Loans for 

attendance in the program during an 

applicable cohort period. The applicable 

cohort period for the 2012 GE 

informational pCDR is October 1, 2008, 

to September 30, 2009, unless fewer 

than 30 students entered repayment 

during that year, in which case the 

calculation includes students who 

entered repayment in the previous two 

years. Of the 37,589 GE programs for 

which institutions reported program 

information to the Department in FY 

2010, 6,815 met the minimum n-size of 

30 borrowers for the 2012 GE 

informational pCDR calculations. In 

total, we estimate that 7,934 programs 

out of the 37,589 programs, representing 

73 percent of students receiving title IV, 

HEA program funds in FY 2010, would 

be evaluated under the GE measures 

because they would receive D/E rates 

and pCDR, D/E rates only, or pCDR 

only. 

For the purposes of this regulatory 

impact analysis, we analyzed the impact 

of the proposed regulations on GE 

programs by the following criteria: 

• Enrollment: Number of students 

receiving title IV, HEA program funds 

for attendance in a program. In order to 

estimate enrollment, we used the FY 

2010 enrollment of students receiving 

title IV, HEA programs funds. 

• 6-digit classification of instructional 

program (‘‘CIP’’) code: 6-digit CIP codes 

are categories of program type defined 

by the Department’s National Center for 

Education Statistics. The first two digits 

of each 6-digit CIP code represent the 

corresponding 2-digit CIP code, which 

provides a higher-level categorization of 

program categories. 

• Sector: Public non-profit, private 

non-profit, for-profit designation for 

each OPEID (institution) using NSLDS 

sector data as of November 2013. 

• Institution type: Less than 2 years, 

2 years, and 4 years or more designation 

for each OPEID using NSLDS sector data 

as of November 2013. 

• Credential level: Certificate, 

associate degree, bachelor’s degree, 

post-baccalaureate certificate, master’s 

degree, doctoral degree, and first 

professional degree. 

We examined the number of programs 

that would, under the proposed 

regulations, ‘‘pass,’’ ‘‘fail,’’ or fall in the 

‘‘zone’’ based on the 2012 GE 

informational D/E rates. Similarly, we 

examined the number of programs that 

would, under the proposed regulations, 

‘‘pass’’ or ‘‘fail’’ based on the 2012 GE 

informational pCDR. 

Methodology 

The estimated effects of the proposed 

regulations described in ‘‘Analysis of 

the Proposed Regulations’’ are based on 

the 2012 GE informational rates sample. 

The methodologies used for the 

informational data calculations depart 

slightly in some areas from the 

provisions in the proposed regulations 

as described in the following 

methodological notes related to the rates 

calculated for this regulatory impact 

analysis. 


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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16543 

• Both the annual earnings and 

discretionary income rates were 

calculated by program for students 

receiving title IV, HEA program funds 

who completed the program between 

October 1, 2007, and September 30, 

2009, defined above as the 08/09 2012 

D/E rates cohort. 

• D/E rates were not calculated for 

programs with fewer than 10 students in 

the 08/09 2012 D/E rates cohort. Unless 

otherwise indicated, analysis of 

programs under the D/E rates measure 

in this regulatory impact analysis 

includes only programs with 30 or more 

students in the 08/09 2012 D/E rates 

cohort to reflect the D/E rates measure 

minimum n-size requirements in the 

proposed regulations. 

• The SSA provided, at the program 

level, the 2011 calendar year mean and 

median annual earnings of the 08/09 

2012 D/E rates cohort. Annual earnings 

include wages, salaries, tips, and selfemployment income. The higher of the 

mean or median annual earnings was 

used as the annual earnings component 

of the annual earnings rate and 

discretionary income rate calculations. 

• The annual loan payment was 

calculated by determining the median 

loan debt for the 08/09 2012 D/E rates 

cohort and amortizing that median debt 

amount over a 10-year period for 

undergraduate certificate, associate 

degree, and post-baccalaureate 

certificate programs, a 15-year period for 

bachelor’s and master’s degree 

programs, and a 20-year period for 

doctoral and first professional degree 

programs using an annual interest rate 

of 5.42 percent, which represents the 

average undergraduate and graduate 

unsubsidized interest rate on Federal 

Direct Unsubsidized Loans for the six 

years prior to the end of the applicable 

cohort period. 

• Loan debt includes both FFEL and 

Direct Loans (except PLUS Loans made 

to parents or Direct Unsubsidized loans 

that were converted from TEACH 

Grants), private loans, and institutional 

loans that a student received for 

attendance in the GE program. 

• In cases where students completed 

multiple GE programs at the same 

institution, all loan debt was attributed 

to the highest credentialed program that 

the students completed and the student 

was not included in the calculation of 

rates for the lower credentialed 

programs. 

• In calculating median loan debt, the 

loan debt associated with a student was 

capped at an amount equivalent to the 

program’s tuition and fees if: (1) tuition 

and fees information was provided by 

the institution, and (2) the amount of 

tuition and fees was less than the 

student’s loan debt. This tuition and 

fees cap applied to approximately 15 

percent of student records for the 08/09 

2012 D/E rates cohort. 

• For the discretionary earnings rate 

calculations, the Poverty Guideline is 

the Federal poverty guideline for an 

individual person in the continental 

United States as issued by the U.S. 

Department of Health and Human 

Services. We used the 2013 Guideline of 

$11,490 to conduct our analysis. 

• Excluded from the calculations are 

students whose loans were in military 

deferment or who were enrolled at an 

institution of higher education for any 

amount of time in the calendar year for 

which earnings were retrieved or whose 

loans were discharged because of 

disability or death. 

• The annual loan payment was 

truncated rather than rounded, with no 

digits after the decimal place. 

• The annual earnings rate and 

discretionary income rate are truncated 

two digits after the decimal place. 

• The pCDR was calculated by 

program for students who entered 

repayment between October 1, 2008, 

and September 30, 2009, defined 

previously as the 09 2012 pCDR cohort, 

on FFEL or Direct Loans received for 

attendance in the GE program. 

• Borrowers whose loans entered 

repayment represents the number of 

students, by program, in the 09 2012 

pCDR cohort. 

• Borrowers whose loans are in 

default represents the number of 

students, by program, in the 09 2012 

pCDR cohort who defaulted on their 

FFEL or Direct Loans at any time within 

the first three fiscal years of repayment. 

For the 09 2012 pCDR cohort, this was 

the period between October 1, 2008, and 

September 30, 2011. 

• For programs with fewer than 30 

students in the 09 2012 pCDR cohort: 

Æ Borrowers whose loans entered 

repayment also includes students who 

entered repayment between October 1, 

2006, to September 30, 2007 (2007 

pCDR Cohort) and October 1, 2007, to 

September 30, 2008 (2008 pCDR Cohort) 

on FFEL or Direct Loans received for 

enrollment in the GE program; and 

Æ Borrowers whose loans are in 

default also includes the number of 

students, by program, in the 2007 and 

2008 pCDR Cohorts who defaulted on 

their FFEL or Direct Loans at any time 

within the first three fiscal years of 

repayment. For the 2007 pCDR Cohort, 

this was the period between October 1, 

2006, and September 30, 2009. For the 

2008 pCDR Cohort, this was the period 

between October 1, 2007, and 

September 30, 2010. 

• pCDR were not calculated for 

programs with less than 30 total 

combined students in the 2007 and 2008 

pCDR Cohorts and 09 2012 pCDR 

cohort. 

• The pCDRs are truncated to two 

digits after the decimal point. 

Analysis of Impact of Student 

Demographics 

In connection with the 2011 Final 

Rules and the public hearings and 

meetings of the negotiating committee 

for the current gainful employment 

negotiated rulemaking, we received 

comments that the results of programs 

under the proposed GE measures is 

driven in large part by the demographic 

characteristics of the students attending 

the programs rather than characteristics 

of the programs themselves. For the 

current rulemaking, we conducted an 

analysis to examine the contribution of 

demographic factors, including the 

program’s estimated concentration of 

Pell Grant recipients and estimated 

concentration of minority students 

(black, American Indian, or Hispanic), 

to program performance under the 

proposed GE measures. Students qualify 

for Pell Grants based on a number of 

factors, with household income being a 

primary factor, making the share of 

students enrolled in a program who 

receive Pell Grants an indicator of the 

socioeconomic status of students in a 

program. 

To examine the extent to which 

student demographic factors explain 

program performance under the 

proposed regulations, we developed two 

regression models using the 2012 GE 


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16544 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

informational rates. In the first 

regression the dependent variable was 

the program’s annual earnings rate. In 

the second regression, the dependent 

variable was the program’s cohort 

default rate. 

Two explanatory variables measured 

at the program-level were used for the 

annual earnings rate regression analysis. 

The first variable was the percentage of 

students enrolled in the program who 

were Pell eligible. The second variable 

was the percentage of students who 

were enrolled in the program and had 

minority status (black, American Indian, 

or Hispanic). The annual earnings rate 

regression analysis showed that the 

percentage of Pell Grant recipients and 

the percentage of students with minority 

status account for less than 2 percent of 

the variation in annual earnings rates. 

The pCDR regression analysis used 

the same program-level percentage of 

Pell eligible students variable used in 

the annual earnings rate regression 

analysis. Since program-level race/

ethnicity data that include both students 

who completed the program and those 

who did not are not available, 

institution-level minority race/ethnicity 

data were used as a proxy. The pCDR 

regression analysis showed that the 

percentage of Pell Grant recipients and 

the percentage of students with minority 

status accounted for less than 20 percent 

of the variation in pCDR. 

These results suggest that 

performance on the GE measures under 

the proposed regulations is not 

substantially the result of Pell status or 

race and ethnicity. 

The Department further looked at 

explanatory factors for both the annual 

earnings rate and pCDR by adding the 

following variables to the regressions: 

sector (public, private non-profit, or forprofit) and institution type (< 2-year, 2– 

3 year, ≥ 4-year), as well as additional 

demographic characteristics including 

percentage of title IV recipients that 

were female, above the age of 24, and 

had a zero estimated family 

contribution. The Department found 

that by including these additional 

variables, 36 percent of the variance in 

the annual earnings rate could be 

explained and 33 percent of the 

variance in pCDR could be explained. 

Analysis of the 2012 GE Informational 

Rates 

The 2012 GE informational rates 

include only programs from the FY 2010 

reporting that meet the minimum n-size 

criteria. Of the 37,589 GE programs in 

the FY 2010 reporting with total 

enrollment of 3,985,329 students 

receiving title IV, HEA program funds, 

7,934 programs, representing 2,914,376 

students receiving title IV, HEA program 

funds, were evaluated in the 2012 GE 

informational rates. 

Table 4 provides, by 2-digit CIP code, 

the number of programs in the 2012 GE 

informational rates sample. Table 5 

provides, by 2-digit CIP code, the 

number of 2012 GE informational rate 

programs as a percentage of all GE 

programs for which institutions 

reported program information to the 

Department in FY 2010. Table 6 

provides, by 2-digit CIP code, the title 

IV enrollment of programs in the 2012 

GE informational rates sample. Table 7 

provides, by 2-digit CIP code, title IV 

enrollment of programs in the 2012 GE 

informational rates sample as a 

percentage of all title IV enrollment in 

GE programs for which institutions 

reported program information to the 

Department in FY 2010. 

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EP25MR14.010</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Table 4: 2012 GE lnfor.mational Rates Program Count by 2-Digit ClP Code 

Public Private Proprietary 

+J +J +J 

'" .. .. (IJ (IJ (IJ tl tl tl 

+J .u .u III tll 

.. tl .. tl .. (IJ - tl 

2-Digit (IJ tl (IJ tl (IJ .u .. tl III 

tJ oj tl oj tl oj 0 oj 

elP .a .a ..... .... .a .. 

'0 '0 '0 tl OJ OJ 

Code 2-Digit ClP Name oj .u oj +J oj 0 ..t: .u .u 

.. III .. tll .. III tl tll III 

g 0 g 0 g oj 0 

'" '" Ul '" 

Health Professions and 

51 Related Sciences 850 4 25 1,506 582 51 7 41 

Business Management and 

52 Administrative Services 86 3 18 7 148 346 186 11 59 

Personal and 

12 Miscellaneolls Services 103 0 13 0 954 79 18 0 0 

47 Mechanics and Repairs 93 0 16 0 169 56 0 0 0 

Computer and 

11 Information Sciences 8 0 8 1 81 185 125 1 17 

.. :ing Related 

15 Technologies 14 a 10 0 74 73 10 0 1 

Visual and Performing 

50 Arts 4 0 6 3 40 165 174 0 14 

13 Educat,ion 11 7.0 9 7.7 7 7 9 5 44 

43 Protective Services 99 0 2 0 114 :03 1 13 

Precision Production 

48 Trades 40 0 5 0 22 8 0 0 0 46 Construction Trades 63 0 10 0 53 13 0 0 0 

22 Law and Legal Services 14 1 6 46 116 17 1 1 

19 Home Economics 26 0 6 0 7 2 2 0 2 

EP25MR14.011</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Agricultural Business 

1 and Produc':ion 3 0 1 0 4 0 1 0 0 

Telecommunications 

10 Technologies 1 0 1 0 16 29 34 0 1 

Public Administration 

44 and Services 4 1 1 0 3 3 0 7 

9 Communications 0 a 0 0 8 " 21 a 1 

Transportation and 

49 Material Workers 30 0 3 0 :9 2 0 0 0 

Parks, Recreation 

---- ---------- 

Leisure, and Fitness 

31 Studies 1 1 0 0 7 12 3 0 2 

Liberal Arts and 

Sciences, General 

24 Studies and Humanities 13 0 0 1 0 6 1 0 1 

30 Studies 2 2 0 0 0 2 4 1 1 

Social Sciences and 

45 History 1 a 1 1 1 2 5 0 1 42 Psychology 0 1 0 3 0 2 9 2 17 

14 Engineering C 1 0 1 0 3 3 0 1 

Foreign Languages and 

16 Literature 1 0 0 0 0 0 0 0 0 

English Language and 

23 Literature/Letters 0 0 5 0 4 1 1 0 0 

Theological Studies and 

39 Religious Vocations C 0 2 0 0 0 0 0 0 

Biological and 

26 Biomedical Sciences 1 a 0 0 1 0 2 0 a 

Conservation and 

Renewable Natural 

3 Resources 0 a 0 0 0 0 2 0 0 

41 Science Technologies 2 0 0 0 1 1 0 0 0 

EP25MR14.012</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Architecture and 

4 Related Programs 0 0 0 1 0 <) 0 0 1 

Area, Cultural, Ethnic, 

5 and Gender Studies 1 0 0 0 0 0 0 0 0 

25 Library Studies G 0 0 1 0 0 0 0 0 

40 Physical Sciences 1 0 0 0 0 0 0 0 0 

54 History C 0 0 0 0 0 1 0 2 

Mathematics and 

27 Statistics 0 a 0 0 0 0 0 0 0 

and 

38 Religious Studies 0 0 0 0 0 0 2 0 0 32 Basic Skills 0 0 0 0 2 0 0 0 0 

Health-related 

34 Knowledge and Skills 0 a 0 0 4 0 0 0 0 

and 

36 Recreational Activities 0 0 0 0 <) 0 0 0 0 

'----------------------------- 1-------- ------ --- ----------- ._------- ----- ------------1------------------ --

Reserve Officer 

28 Training Corps C a 0 0 0 0 0 0 0 

60 Residency Programs 0 a 0 0 0 0 a 0 0 

Technology/Education 

21 Industrial Arts 0 a 0 a 0 1 1 0 0 29 Military Technologies C a 0 0 0 0 0 0 0 

33 Citizenship 0 a 0 0 0 0 0 0 0 

Personal Awareness and 

37 Self Improvement C 0 0 0 0 0 0 0 0 

lIigh School/Secondary 

Diplomas and 

53 Certificates 0 0 0 0 0 0 0 0 0 

Total 1,472 35 267 78 3,192 1,815 738 29 227 

EP25MR14.013</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Table 5: 2012 GE Informational Rates Programs as a Percentage of All Pro

Reporting 

..., ..., ..., 

.. .. .. 

0.1 0.1 0.1 

U U U 

..., ..., ..., III III 

.. u .. u .. 0.1 U 

2-Digit 0.1 u 0.1 U 0.1 ..., U III 

u t1l u t1l u t1l 0 t1l 

ClP .Q .Q .... .... .Q 

'0 '0 '0 u 0.1 0.1 

Code 2-Digit ClP Name t1l ..., t1l ..., t1l 0 .J:1 ..., ..., 

k "' .. m k m u III m 

g 0 g 0 g t1l 0 

Il. Il. !Xl Il. 

Health Professions and 

54.0% I 

i 

51 I Related Sciences 18.0% 1. 4% 36.1% 9.1% 60.4% 32.9% ! 43.8% 47.1'0 

I 

Business Nanagement and I I 

52 Services 2.5% 2.6% 14.2% 4.2% 31. 2% 53.3% I 49.5% I 36.7% 49.6% 

i I I 

Personal and 

62.2% I 

I 

12 Services 9.7% 0.0% 27.7% 0.0% 40.5% 64.3% I 

- 0.0% 

47 Nechanics and Repairs 4.1% 0.0% 29.6% - 63.5% 66.7% - - 

Computer and 

11 Information Sciences 0.5% 0.0% 15.4% 2.6% 27.7% 54.1% 57.1% 14.3% 43.6% 

Engineering Related i 

15 Technologies 0.8% 0.0% 23.8% 0.0'6 51. 7% 50.3% I 43.5% I 0.0% 100.0% 

Visual Performing 

50 Acets 0.7% 0.0% 11. 3% 4.2% 37.4% 69.3% 63.3% 36.8% 

13 Education 2.8% 6. "l% 31. 0% 6.9% 13.5% ··6 8"" I 

-' • 0 ! 1:'.8% 22. '1% 56.4% 

43 Pceotective Services 11.4% 0.0% 13 .3% 0.0% 32."1% 60.3% I 4·/.3% 16. 'l% ;'6.5% 

i 

Precision 

48 T:cades 3.8% 22.7% 53.7% 61.5% 

461 Construction Trddes 6.6% 41. 7% 54.1% 50.0% 0.0% 22 I Law and Legal Services 4.5% 20.0% 10.0% 31.6% 39.0% 58.9% 42.5% 20.0% 50.0% 

19 Home Economics 3.9% 0.0% 50.0% 0.0% 46.7% 18.2% I 15.4% 0.0% 100.0% 

I 

Agri.cultural Business 

1 and Production 0.6% 0.0% 20.0% 57.1% 0.0% 100.0% 

EP25MR14.014</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Telecommunications 

10 I Technologies 

44 

Public Administration 

and Services 

9 I Comn1unicaLions 

Transportation and 

49 I Material Hoving Workers 

Parks, Recreation, 

Leisure, and Fitness 

31 I Studies 

Liheral Arts and 

Sciences, General 

24 I Studies and Humanities 

30 I Studies 

45 I History 42 I Psychology 

14 I Engineering 

Foreign Languages and 

16 I Literature 

English Language and 

23 I Literature/Letters 

Studies and 

39 I Religious Vocations 

Biological and 

26 I Biomedical Sciences 

Conservation and 

Renewable Natura: 

3 I Rp.sources 

41 I Science Technologies 

Architecture and 

4 I Related Programs 

0.3% 25.0% 0.0% 

2.7% 4.9% 14.3% 4.8% 

0.0% 0.0% 0.0% 0.0% 

17.6% 60.0% 0.0% 

0.9% 20.0% 0.0% 0.0% 

10.0% 0.0% 0.0% 25.0% 

3.3% 3.8% 0.0% 0.0% 

1. 3% 0.0% 25.0% 4.5% 

0.0% 3.4% 0.0% 5.5% 0.0% 2.3% 0.0% 7.1% 

1. 0% 0.0% 0.0% 0.0% 

0.0% 0.0% 50.0% 0.0% 0.0% 4.4% 0.8% 

2.9% 0.0% 0.0% 0.0% 

0.0% 0.0% 0.0% 0.0% 

2.9% 0.0% 

0.0% 0.0% 0.0% 16.7% 

51. 6% 69.0% 61. 8% 33.3% 

37.5% 27.3% 0.0% 43.8% 

42.1% 33.3% 56.8% 20.0% 

67.9% 28.6% 0.0% 0.0% 0.0% 

19.4% 57.1% 20.0% 0.0% 100.0% 

0.0% 27.3% 5.9% 0.0% 25.0% 0.0% I 100.0% 26.7% 50.0% 33.3% 

100.0% 50.0% 27.8% 33.3% 

66.7% 56.3% ! 33.3% 63.0% 

0.0% 50.0% 20.0% 0.0% 12.5% 0.0% 0.0% 

57.1% 50.0% 10.0% c.O% 

1------·-----+--···-·----·····- 1--- 

0.0% 0.0% 0.0% 

100.0% 0.0% 20.0% 

0.0% 25.0% 0.0% C_O% 

50.0% 20.0% 

0.0% 0.0% 50.0% 

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Area, Cultural, Ethnic, 

5 and Gender Studies 

25 Library Studies 

40 Physical Sciences - I 0.0% 

I I 

54 History 0.0% I 16.7% i 0.0% 50.0% 

Mathematlcs and I 0.0% I 0.0% I 0.0% I 0.0% I I i 27 I SLatlsLics 0.0% i 0.0% - I - I 

and r--- t---

38 Religious Studies - 0.0% 0.0% 0.0% - - 50.0% - I o . 0'6 I 32 Basic Skills 0.0% 0.0% 0.0% - 66.7% - I - - I - I 

Health-related I 34 I Knowledge and Skills 0.0% 0.0% 0.0% 100.0% I I I 

I 

Leisure and 

36 I Rec,eational Actcvi.ties 0.0% 0.0% 0.0% - - - I 0.0% - I 0.0% I 

ReFerve Officer 

I 0.0% I - I - I - I 0.0% I I 28 Training Corps 0.0% I 0.0% 0.0% I - I 

60 iidency Programs I - I 0.0% I - I O. 0'. I - I - I - I - I 

Technology/Education 

21 Industrial Arts 100.0% 100.0% 29 Military Technologies 0.0% 0.0% 

! 

33 Citizenship Activities 0.0% 0.0% - - - - I -T - I - I 

I I 

Personal Awareness and 

I 

I 

37 I Sel f Improvement 0.0% - - I 

i 

High School/Secondary 

Dip:i.omas and 

53 I Certificates 

Total 55.6% I 47.0% i 26.6% 46.9% 

EP25MR14.016</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Table 6: 2012 GE Infor.mational Rates Title IV Enrollment by 2-Digit CIP Code 

Public Private Proprietary 

+> +> '" til 

H t> H t> W i.. t> 

W t> (j) t> .u t> 00 

2-Digit t> <1l t> <1l <1l 0 <1l i.. 

,Q ,Q -M ri ,Q 

CIP '" '" '" t> (j) (I) 

III +> +> III +>+> III +> 0 ,Q +>.u +> 

Code 2-Digit CIP Name H m H H rn H H H '" t> I1l H 00 

tJJ o (I) tJJ o ., tJl ., '" <1l o ., <1l 

P Po t> P Po t> P t> ..: III Po t> :a 

Health Professions and 

51 Related Sciences 113,626 140 28,436 1,161 384,202 270,444 79,668 557 35,857 

Business Management and 

52 Ad:ninisLratlve Services 12,074 191 2,669 822 11,584 219,135 293,649 1,923 103,:18 

Personal and 

12 Miscellaneous Services 11,200 0 1,925 G 31/955 5,464 0 ° 

43 Procective Services 13,870 0 336 0 1,137 102,779 72,397 30 6,965 

Computer and Information 

11 Sciences 1,391 ° 641 190 7;771 91,363 77,521 66 5,090 

17 Mechanics and Repairs 6,129 0 2,734 0 72(616 13,332 0 0 a 

13 Educatior: 2,7S1 1.,681 916 2,98 I 809 18,400 27,096 1, 276 S3,746 

Visual and Performing 

50 Arts 185 ° 577 86 5,228 33,401 58,754 ° 2,426 

Engineering Related 

15 Technologies 886 0 991 C 18,529 15,810 11,739 0 695 

42 Psychology 0 275 0 157 0 415 34,267 152 10,573 

22 Law and Legal Services 1,818 156 227 657 3,463 23,383 7,241 113 642 

30 Studies 516 198 0 " 0 32,287 21,532 38 1,791 

19 Home Economics 8,086 0 829 0 488 503 483 0 1,442 

Public Administration and 

44 Services 509 153 64 16 0 15,839 15,629 0 8,299 46 Construction Trades 3,484 ° 1, FI8 ::: 10,5n 1,56'/ 0 0 0 

EP25MR14.017</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Precision Production 

48 '":'rades 2,858 0 1,165 5,042 907 0 0 0 

'":'elecommunications 

10 Technologies 435 0 52 0 3,004 3,322 9,613 0 472 

Liberal Arts and 

Sciences, General Studies 

24 and Humanities 9,201 0 0 384 0 7,817 34 0 18 

Social Sciences and 

45 History 0 0 66 101 89 55 12,959 0 487 

English Language and 

23 Literature/Letters 0 0 1,101 C 1,992 3,667 400 0 0 

9 Communications 0 0 0 0 1,896 585 5,814 0 l80 

'":'ransportation and 

49 Material Workers 1,529 0 586 0 7,459 294 0 0 0 

Parks! Recreation, 

Leisllre, and Fitness 

31 Studies 34 815 0 C 534 2,827 2,776 0 645 

14 Engineering 0 45 0 164 0 101 5,002 0 31 

AgrlcullL1L"al Business and 

1 Production 158 0 94 0 205 0 12 0 0 

54 History 0 0 0 0 0 0 648 0 1,293 

Architecture and Related 

4 Programs 0 0 0 37 0 0 0 0 93 

Conservation and 

Renewable Natural 

3 Resources 0 0 0 C 0 <] 1,068 0 0 

Foreign Languages and 

16 Literature 71 0 0 u 0 0 0 0 0 

Philosophy and Religious 

38 Studies 0 0 0 C; 0 0 1,846 0 0 

41 Science Technologies 192 0 0 C 128 125 0 0 0 

Biological and Biomedical 

26 Sciences 74 0 0 C; 71 0 398 0 0 

EP25MR14.018</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

":'heologicaJ Studies and 

39 Religious vocations 0 0 167 G 0 a 0 0 0 

Health-related Knowledge 

34 and Skills 0 0 0 0 1,320 0 0 0 0 

f--- Tcchnol, '/Ed-"cati, - ---------

21 lndust"rial Art s 0 0 0 0 0 761 305 0 0 25 Library Studies 0 0 0 89 0 a 0 0 0 

32 Basic Skills 0 0 0 0 131 0 0 0 0 

Arsa, Cultural, Ethnic, 

5 and Gender Studies 28 0 0 v 0 0 0 0 0 

Leisure and Recreational 

36 Activities 0 0 0 C 0 a 0 0 0 

Reserve Officer 

28 Corps 0 0 0 0 0 0 0 0 0 

40 Physical Scier:.ces 28 0 0 v U 0 0 0 0 

Mathematics and 

27 0 0 0 C 0 a 0 0 0 29 Military Technologies 0 0 0 C 0 0 0 0 0 

60 Residency Pru::J.r:ams 0 0 0 C 0 0 0 0 0 

Citizenship 

------- ------ ----------- ---._----1---- ---- ------------.-

33 0 0 0 0 0 0 0 0 0 

Personal A\vareness and 

37 Self Improvement 0 0 0 C 0 0 0 0 0 

High School/Secondary 

53 Diplomas aud CeI-tif icates 0 0 0 C 0 0 0 0 0 

Total 191,433 3,654 45,454 6,851 697,095 921,074 746,345 4,155 238,863 

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Table 7: 2012 GE Infor.mational Rates Title IV Enrollment as a Percentage of Al

Enrollment in FY 2010 Reporting 

Public Private Proprietary 

.... 

000 

.. 

.u +l +l m 00 

'"' U 1-1 U ... Q) .. u 

2 -Digi t I I !!' 

CIP .Q '0 .Q '0 ';1 0: .Q 

Code 2-DigitCIPName l <Il <Il 0 .d 

til 1-1 til J..I til 0 [Q til 

o tll 0 tll '! <Il 0 ."! 

_ '" p '" p '" JIl '" '" 

Health and 

51 RclCltcd SClcnccs 1,1.0% 5.7% 80.4% 37.1% 86.2% 88.4% 84.3% 75.8% 85.6% 

Business Managenent and 

52 AdministJ:ative Services 9.3% 11.3% 68.4% 37.7% 71.6% 94.9% 95.1% 88.0% 94.4% 

Perscnal and Miscellaneous 

12 Services 25.1% 60.7'6 0.0% 80.0% 91.7'6 93.3'6 - 0.0% 

43 ProLecLive 24.0% 0.0% 40.0% 0.0% 35.4% 89.2% 84.5% 33.3% 86.0% 

Computer and Information 

11 Sciences 3.8% 0.0% 51.2% 43.6% 53.0% 91.2% 87.3% 29.7% 83.6% 

47 Mechanics and Repairs 9.6% 0.0% I 70.5% I - I 91.9% I 88.6% I - I - 

13 Education 20.1% I 26.4% I 81.5% I 43.1% I 44.0% I 85.7% I 92.5% I 79.0% I 91.5% 

50 Vislhal and Puforming Arts 1.2% 

Engineering Related 

15 TecblOlogies 3.5% 0.0% 67.0% 0.0% 84.7% 93.6% 98.1% 0.0% 100.0% 

42 Psychology 0.0% 38.7% 0.0% 14.7% 89.6% 93.0% 69.7% 83.4% 

22 Law and Legal Services 17.1% 66.4% 29.6% 75.1% 68.6% 74.1% 91.1% 53.1% 88.7% 

Mul 

30 Studies 

19 Home Economics 

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Public Administration and 

44 Services 9.1% 33.4% 43.5% 6.9% 85.0% 82.8% C.O% 80.3% 46 Construction Trades 16.0% 89.4% 79.7% 62.0% 0.0% 48 Precision Production Trades 9.8% 85.9% 76.8% 93.3% 

Telecommunicat-ions 

10 Technologies 4.;'% 49.;'% 0.0% 68.6% !:>% 96.3% 

Liberal Arts and Sciences, 

General Studies and 

24 Humanities 

45 Social Sciences and History 

English Language and 

23 I Literature/Letters 0.0% 0.0% 96.4% 0,0% 96.7% 100.0% 27.1% - I 0.0% 

Communications 0.0% O. 0'6 0.0% 0,0% 92,7% 67.0% 69.0% 65.0% 

Transportation and Mater'al 

49 I Workers 37.2% 80.8% 0,0% 99.2% 67.4% 0.0% 0.0% 0.0% 

Parks, Recrea::ion, Leisure F 

31 and Studies 1.4% 98.9% 0.0% 0.0% ?-5.8% 86.4% 85.1% 0.0% 100.0% 

14 Engineering 0.0% 11.7% 0.0% 56,7% 0,0% 67.8% 95.4% 0.0% 17.8% 

Business and 

1 Production 2.49.0 0.0% 81.0% 86,9% 0.0% :00.0% 

54 History 0.0% 0.0% 0,0% 0.0% 26.2% C.O% 79.4% 

Architecture and Kelated 

4 I Programs 0.0% I 0.0% I 0.0% I 41.6% I 0.0% I - I 0.0% I - I 9S.9% 

Conservation and Renewable 

3 Natural Resources 0.0% 0.0% 0.0% 0,0% 0.0% 51.5% C.O% 0.0% 

Poreign Languages and 

16 L:"terature 2.8% 0.0% 0.0% 0,0% 0.0% 0.0% 

Philosophy and Religious 

38 Studies 0.0'6 O. 0'6 0,0% 86.0% 0.0% 

4J Science Technclogi.es 17.0% 0.0% - I - I 75.7% 29.ti% - I - I - 

Biological and Biomedical 

26 Sciences 15.4% I 0.0% I O. 0% I 0,0% I 100.0% I 0.0% I 55.4% I - I - 

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Theological Studies and 

39 I Religious vocations O.O%- I - I 21.4%- I o. a%- I - I O.O%- I O.O%- I - I o. a%

Health-related Knowledge and 

34 Skills 0.0% 0.0% 0.0% 100.0% 

Technology/Education 

21 Industrial 0.0% 0.0% 100.0% 

2S Library Studies 0.0 96 0.0% 50.3% 0.0% - I - 

32 Basic Skills 0.0% 0.0% 0.0% - I 35.8% - I - I - 

Area, Cultural, Ethnic, and 

Gender Studies 21.11; 0.0% 0.0% 0.0% 0.0% 

Leisure and Recreational 

36 Activities O.O%- 0.0% 0.0% 0.0% 0.0% 

Reserve Officer Training 

28 Corps 0.0% 0.0% 0.0% 0.0% e.O% 

40 40.0% 0.0% - I 0.0% - I - I 0.0% - I 

27 I Mathematics and Statistics 0.0% 0.0% 0.0% O.O%- O.O%- O.O%- 29 I l1ili tary Technologies O.Ot 0.0% 0.0% 

60 Residency Programs 0.0% 0.0% 

33 0.0% 0.0% - I - I - I - 

Personal Awareness and Self 

37 I Inprcvement 0.0% I - I - I - I - I - I - I - I - 

53 I Diplomas and Certificates 

Total 89.7% 

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Table 8: Count and Title IV Enrollment of Programs in 2012 GE Informational Rates 

Sector IHE Type Number of Enrollment Number of Enrollment Number of Enrollment Number of 

Programs Programs for Programs programs for programs programs p

Evaluated Evaluated for evaluated evaluated for evaluated 

for DIE DIE for pCDR pCDR for pCDR or p

DIE 

Toto.l 22,996 863,892 1,093 142,400 902 121,650 1,507 

I 

< 2 year 1,38C 25,083 157 11,439 119 9,489 179 

Public 

year 18,791 779,997 "24 119,615 701 104,399 ],178 

4-year 2,825 58,812 112 11,346 82 7,762 150 

Total 2,343 78,720 ! 253 45,696 262 40,039 345 

I 

< 2 year 134 11, :060 i 49 9,609 33 5,655 54 

Private ! 

2-3 year 257 14,671 74 10,324 67 3,894 87 

4 year 1,952 52,489 130 25,763 162 25,490 204 

Tota.l 12,25C 3,042,717 4,193 2,333,187 5,651 2,583,388 6,082 

For-

< 2 year 2,885 280,463 i l,le9 216,870 1,034 196,833 1,284 

profit i 2-3 year 4,557 621,810 I 1,677 471,406 2,220 485,513 2,346 

I 

4-year 4,808 2,140,444 i 1,407 1,644,911 2,397 1,901,042 2,452 

i 

Overall Total 37,589 3,985, 329 1 5,539 2,521,283 6,815 2,745,077 7,934 

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Table 9: 2012 GE Infor.mational Rates Program Results 

Passing Zone Failing Enrollment Enrollmen

Sector IHE Type Credential Level Programs Enrollment in Passing in Zone 

Programs Programs Programs Programs Programs 

Total 1,5C7 1,453 1 53 195,087 182,165 22

<- 2 year I Certificate 179 175 0 4 12,203 12, 007 

Public 2 3 year i Certificate 1,178 1,132 0 46 169,275 136,966 

i i CeLLi[ icate llS 1L. 1 3 9,955 9,538 22

4 -year I 

! Post-Bacc 35 35 0 0 3,654 3,654 

i 

! 

Total 345 312 4 29 52,305 45,658 :',81

< 2 year ! Certificate 54 45 1 8 9,796 8,172 39

I 

I Cert:ificate 86 81 2 10,952 9,374 

Private 2-3 year 

Post-Dacc 1 1 0 0 17 17 

I Certificate 127 109 1 17 24,706 21,381 llO 

4-year I I 

I Post-Bacc Certificate 77 76 0 1 6,834 6,714 

! 

For- Total 6,082 4,204 660 1,218 2,666,984 1,541,550 298,20

Profit 

i Certificate 1,275 974 123 178 224,500 147,951 33,00

! 

" 2 year i Associate I s 5 3 1 1 195 142 

I 

I 

I Pro:essional 

I I Degree 4 3 0 1 312 312 

I 

Certificate 1,505 1,061 157 287 379,198 241,903 50,77

2-3 year I Associate's 839 533 128 178 139,033 67,925 26,83

I I Post Bncc 2 2 0 0 156 156 I 
Tables 9a and 9b show by program 

count and title IV enrollment GE informational rate programs that fail, 

respectively, for programs in the 2012 

causes failure. 

results disaggregated by the metric that 


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Certificate 412 282 76 93,097 , 361 

Ass()ciate's 971 532 132 307 781,846 133,818 

Bachelor's T38 S04 '/ 1'/7 '746, 578,666 

4-year I Post-Dace Certificate 27 27 0 0 3,999 3,999 

, 

! Master IS 227 214 3 10 238,863 235,201 I 

I Doctoral 67 65 2 0 51,931 

i 

i ls-c Protessional 

I Degree 10 4 3 3 7,209 3,107 

Overall To::al 7,934 5,969 665 1,300 2,914,376 1,769,373 

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Sector 

Public 

Table 9a: 2012 GE Informational Rates Program Results - Failing Program

(Program Count) 

Programs 

Passing Zone Failing 

IRE Type Credential Level Programs Programs Programs Programs Failing 

DIE 

Total 1,507 1,453 1 53 1 

< 2 year Certificate 179 175 0 4 0 

2-3 year Certificate :,178 1,:32 0 46 0 

CerlificaLe 115 :11 1 3 1 

4 year 

Post-Bacc Certificate 35 35 0 0 0 

Total ,,45 312 -0 3 

Private 

< 2 year Certificate 54 45 1 8 0 

Certific3.te 86 81 2 3 0 

2-3 yearPost-Bacc Certificate 1 1 0 0 0 

Certificate 127 109 1 17 2 

4-year 

Posl-Bacc Certificale 77 76 0 1 1 

For- Total 6,082 4,204 660 1,218 447 

Profit 

Certificate l,275 974 123 178 28 

< 2 year hssociate1s 5 3 1 1 0 

1st Professional 

Degree 4 3 0 1 0 

Cf'rtificCitf' 1,S05 1,061 IS7 287 37 

2-3 year Associate's 839 533 128 178 63 

Post-Bacc Certificate 2 :2 0 0 0 

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Certificate 412 282 54 76 19 

Associate's 971 532 132 307 144 

Bachelor's 738 504 57 177 143 

4-year Post-Bacc Certificate 27 27 0 0 0 

!o':aster's 227 2l!l 3 10 10 

eloctoral 67 65 2 0 0 

1st 

Degree 10 4 3 3 3 

Overall Total 7,934 5,969 665 1,300 45] 

Sector 

Public 

Private 

Table 9b: 2012 GE Informational Rates Program Results - Failing Program

(Title IV Enrollment) 

Enrollment Enrollment Enrollment Enrollment E

IHE Type Credential Level Enrollment in Passing in Zone in Failing in Programs i

Programs Programs Programs Failing DIE F

To::: a 1 195,087 182,165 221 12,7Cl 46 

< 2 year Certificate 12,203 12,007 0 196 0 

2-3 YCiJ.r CertificiJ.te :69,275 156,966 0 12,309 0 

Certificate 9,955 9,538 221 196 46 

4-year 

Post-EiJ.CC Certificate 3,654 3,654 0 0 0 

TO:::iJ.l 52,305 45,658 1,810 4,837 1,115 
Table 10 provides the weighted 

averages of the median annual loan annual earnings and pCDR of programs 

payment, higher of the mean or median 

sample. 

in the 2012 GE informational rates 


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< 2 year Cer::ific:ate 9,796 8,l72 396 1,228 0 

10,952 9,374 1,304 274 Q 

2-3 year 

Certificate 17 17 0 0 0 

Cer::ificate 24,706 21,381 110 3,215 99S 

4-year 

Post-Bacc Certificate 6,834 6,714 0 120 120 

To':al 2,666,984 1,541,550 298,209 827,225 357,982 

Cer::ificate 224,500 147,951 33,001 43,548 6,147 

< 2 year Associate1s 195 142 0 53 0 

1st Professional 

Degree 312 312 0 0 Q 

379,498 244,903 50,777 83,818 8,145 

2-3 year Associate's 139,033 67,925 26,832 44,276 26,320 

For- Pos::-Eacc Certificate 156 156 0 0 0 

Profit 

Certificate 93,097 54,361 27,100 11,636 4,752 

Associate's 781,846 153,818 88,872 539,156 236,593 

Bachelor'S 746,345 578,666 66,74.9 100,930 72,217 

4-year Pos::-3ac:c Certificate 3,999 3,999 0 0 0 

Mas:.erts 238,863 235,201 1,240 2,422 2,422 

51,931 51,009 922 0 0 

1st Protessional 

Degree 7,209 3,107 2,716 1,386 1,386 

""""-"""""""-----

--

. 

__ 

."- ----------

Overall Total 2,914,376 1,769,373 300,240 844,763 359,143 
Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16563 


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Table 10: Average Annual Loan Payment, Earnings, and pCDR of 

2012 GE Informational Rates Sample 

Credential Level Status Metric All Public Private For-Profit 

Annual Loan Payment $789 $320 $662 $900 

Pass Earnings $20,613 $31,672 $20,027 $18,267 

Default Rate 17 12 14 18 

Annual Loan Payment $1,360 $2,571 $1,420 $1,358 

Zone Earnings $14,615 $23,577 $16,392 $14,571 

01-UNDERGRADUATE Default Rate 21 8 13 21 

CERTIFICATE 

Annual Loan Payment $1,222 $376 $619 $1,248 

Fail Earnings $15,792 $17,875 $13,885 $15,831 

Default Rate 34 35 36 34 

Annual Loan Payment $923 $323 $688 $1,028 

All Earnings $19,153 $31,501 $19,333 $17,309 

Default Rate 21 13 16 22 

Annual Loan Payment $1,629 $1,629 

Pass Earnings $31,778 $31,778 

Default Rate 17 17 

Annual Loan Payment $2,095 $2,095 

Zone Earnings $21,628 $21,628 

02-ASSOCIATES Default Rate 20 20 

DEGREE 

Annual Loan Payment $3,042 $3,042 

Fail Earnings $25,741 $25,741 

Default Rate 35 35 

Annual Loan Payment $2,400 $2,400 

All Earnings $26,847 $26,847 

Default Rate 28 28 

03-BACHELORS Annual Loan Payment $2,431 $2,431 

DEGREE 

Pass Earnings $50,734 $50,734 

Default Rate 19 19 

Zone Annual Loan Payment $3,080 $3,080 

Earnings $29,443 $29,443 
16564 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 


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Default Rate 20 20 

Annual Loan Payment $4,241 $4,241 

Fail Earnings $24,661 $24,661 

Default Rate 24 24 

Annual Loan Payment $2,790 $2,790 

All Earnings $44,6l3 $44,6l3 

Default Rate 19 19 

Annual Loan Payment $787 $594 $947 $560 

Pass Earnings $67,799 $67,489 $69,378 $63,091 

Default Rate 3 2 3 5 

Annual Loan Payment $2,659 $2,659 

04-POST 

BACCALAUREATE Fail Earnings $19,845 $19,845 

CERTIFICATE 

Default Rate 3 3 

Annual Loan Payment $795 $594 $961 $560 

All Earnings $67,574 $67,489 $68,966 $63,091 

Default Rate 3 2 3 5 

Annual Loan Payment $1,890 $1,890 

Pass Earnings $58,842 $58,842 

Default Rate 6 6 

Annual Loan Payment $3,761 $3,761 

Zone Earnings $32,113 $32,113 

Default Rate 5 5 

05-MASTERS DEGREE 

Annual Loan Payment $S,250 $5,250 

Fail Earnings $25,112 $25,112 

Default Rate 4 4 

Annual Loan Payment $1,923 $1,923 

All Earnings $58,492 $58,492 

Default Rate 6 6 

06-DOCTORAL DEGREE Annual Loan Payment $3,347 $3,347 

Pass Earnings $80,749 $80,749 

Default Rate 6 6 

Zone Annual Loan Payment $6,280 $6,280 

Earnings $40,785 $40,785 
Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16565 

Table 11 shows the results of 

programs under the D/E rates measure 

in the 2012 GE informational rates 

sample. 


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Table 11: 2012 GE Informational Rates Program Results - DIE rates measu

Passing Zone Failing Enrollment 

Sector IHE Type Credential Level Programs Enrollment in Passing 

Programs Programs Programs Programs 

Total 1,093 1,090 2 1 142,400 142,077 

< 2 year Certificate 157 157 ° 0 11,439 L,439 

Public 2-3 year Certificate 824 823 1 0 119,615 119,559 

Certificate 86 84 1 1 8,102 7,835 

4-year ------------------- -------- ------ -- ------ ---

Post-Bacc 

Certificate 26 26 0 0 3,244 3,244 

Total 253 245 5 3 45,696 42,643 

< 2 year Certificate 49 48 1 0 9,609 9,213 

Certificate 73 70 3 ° 10,307 8,875 

Private 2-3 year Post-Bacc 

Certificate 1 1 0 0 17 17 Certificate 91 88 1 2 20,666 19,561 

4-year Post-Bacc 

Certificate 39 38 0 1 5,097 4,977 

For- Total 4,193 2,921 825 447 2,333,187 1,530,701 

Profit 

Certificate 1,100 919 153 28 216,363 166,144 

< 2 yenr Associate's 5 4 1 0 195 195 

1st Professional 

Degree 4 4 0 0 312 312 
Table 12 disaggregate results under 

the D/E rates measure for the two debt- rate and the dicretionary income rate. 

to-earnings rates, the annual earnings 


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Certificate 1,223 969 217 37 365,500 287,01'1 

2-3 year Associate's 452 236 153 63 105,750 46,626 

Post-Bacc 

Certificate 2 2 0 0 156 155 Certificate 267 180 68 19 84,610 49,881 

Associate's 514 206 164 144 669,030 246,138 

Bachelor's 407 203 61 143 618,330 469,780 

Post-Bacc 

4-year Certificate 8 8 0 0 1,950 1,950 

Master's 171 158 3 10 226,106 222,444 

Doctoral 30 28 2 a 37,676 36,754 

1st Professional 

Degree 10 4 3 3 7,209 3,107 

Overall Total 5,539 4,256 832 451 2,521,283 1,715,421 

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Table 12: 2012 GE Informational Rates Program Results - DIE rates measure, 

by annual earnings rate and discretionary income rate 

Pass Pass Pass Pass Pass Zone 

Sector IHE Credential Level Total Pass ADTE ADTE & DDTE & ADTE & DDTE & Zone ADTE & 

Type DIE & Zone Zone Fail Fail DIE DDTE 

DDTE DDTE ADTE DDTE ADTE 

Total 1,09, 1,090 1,050 I ° 38 I 0 0 

I 

< 2 Certificate 

I year 157 157 148 I 1 0 8 I 0 0 0 

I 

Public 2-3 Certificate I I year 824 823 794 1 I 0 28 I 0 1. 0 

I I 

Certificate 86 84 82 0 

I 

0 2 ! 0 1 0 

4-year I 

Post-Hacc Certificate 26 26 26 0 

i 

0 c 

I 

0 0 0 

Total 253 245 178 7 1 59 

I 

0 5 1 

< 2 Certificate 

I I year 49 48 29 0 0 19 0 1 1 

Private Certificate 73 70 5C 1 i 0 19 I 0 3 0 

I i year Post-Bacc Certificate 1 1 0 1 I 

0 G I 0 0 0 

I 

Certificate 91 88 61 S I 1 21 I 0 1 0 

II-year I i 

Post-Bacc Certificate 39 38 38 0 I 0 0 i 0 0 0 

I I 

For- Total 4193 2,921 :,191 180 I 71 1,479 i 0 825 92 

Profit ! I 

Certificate; lIDO 919 252 40 I 0 627 I 0 153 1 

< ? Associate's 5 4 0 0 0 4 

I 

0 1 0 

ye;ar 

1st Professional 

Degree I 4 4 1 0 0 3 

I 

0 0 0 

Certificate 1223 969 271 63 i 16 619 

I 

0 217 8 

2-3 I 

I I 

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year Associate's 152 236 135 ' r I 9 76 

I 

0 153 15 

I 

Post-Bacc Certificate 2 2 2 0 I 0 c I 0 0 0 

I I 

267 180 52 :8 i 0 110 i 0 68 2 

I 

Associate's 514 206 116 38 I 13 39 

I 

0 164 31 

I 

Bachelor's 407 203 174 4 

i 

24 1 

! 

0 61 33 

I 

4-year Post-Baec Certificate 8 8 8 0 I 0 0 I 0 0 0 

Master's 171 158 152 1 5 C 0 3 2 

-------------------r-------::-:--- 2----0--

DoeLoLdl 30 28 26 0 2 C 0 

1st Professional 

I 

I 

I Degree 10 4 2 0 2 C i 0 3 0 

Overall Total 5,539 4,256 2,419 189 

I 

72 1,576 I 0 832 93 

I 

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Table 13: 2012 GE informational Rates Program Results - pCDR measure 

Credential Passing Failing Enrollment 

Sector IHE Type Programs Enrollment in Passing 

Level Programs Programs Programs 

Total 902 850 52 121,650 108,995 

< 2 year Certificate 119 115 4 9,489 9,293 

Public 2-3 year Certificate 701 655 46 104,399 92,090 

Certificate 60 58 2 5,055 4,905 

4-year Post-Bacc 

Certificate 22 22 0 2,707 2,707 

Total 262 236 26 40,039 36,317 

< 2 year Certificate 33 25 8 5,655 4,427 

Certificate 66 63 3 8,877 8,603 

Private 2-3 year Post-Bacc 

Certificate 1 1 0 17 17 Certificate 94 79 15 19,263 17,043 

4-year Post-Bacc 

Certificate 68 68 0 6,227 6,227 

For-Profit Total 5,651 4,786 865 2,583,388 1,921,468 

Certificate 1,027 869 158 196,484 157,098 

Associate's 4 3 1 87 34 

< 2 year 

1st 

Professional 

Degree 3 2 1 262 262 
Table 14 provides program and FY 

combinations in the 2012 GE 

20 most frequent CIP-credential level 

2010 title IV enrollment counts for the 

level combination represents of all 

and enrollment that each CIP-credential 

14 provides the percentage of programs 

informational rates. In addition, Table 

rates sample. 

programs in the 2012 GE informational 


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Certificate 1,386 1,128 258 349,369 

2-3 year Associate's 832 700 132 135,988 

Post-Bacc 

Certificate 2 2 0 156 Certificate 398 337 61 90,875 

Associate's 958 746 212 774,875 

Bachelor's 721 679 42 737,414 

Post-Bacc 

4-year Certificate 26 26 0 3,960 

Master's 218 218 0 235,113 

Doctoral 67 67 0 51,931 

1st 

Professional 

Degree 9 9 0 6,874 

Overall Total 6,815 5,872 943 2,745,077 

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Table 14: 20 Most Common Types of Programs in 2012 GE Informational Rates SampCount) 

* combines CIP codes 513901 and 511613 158 

All sectors Public Private 

Q Q 

.r< ..... .r< . .

crp Name Cred S\ 00 Ul 00 U

0 w w 

" Ul '" Q Q 

P, W W " " I

Q I:l1 I:l1 

'§

rl rlOO 0'0 ;:>'0 0'0 rl rlW HI!) WI!) H I!) .w 

III ;:> III Q p,H 00 H p,H 0

.w I!) <J <J <J 

'" Ul "''0 "" "" ""' , "

0 0 o ;:I OP< WP< OP< .w

" '" W dPt' H H d

P< dP W dPUl dP() dP 

COSMETOLOGY/COSMETOLOGIST, GENERAL. Certificate 667 8.4% 120,803 4.1% 12.1% 7.1% 0.9% 

LICENSED PRACTICAL/VOCATIONAl" NURSE 

TRAINING* Certificate 571 7.2% 86,950 3.0% 80.9% 62.3% 4.4% 

MEDICAL/CLINICAL ASSISTAN'r. Certificate 407 5.1% 185,471 6.4% 15.2% 5.4% 3.4% MASSAGE THERAPY /THERAPEU'I'IC MASSAGE. Certificate 271 3.4% 35,045 1. 2% 4.1% 1. 2% 2.6% 

PHARMACY TECHNICIAN/ASSISTANT. Certificate 153 1. 9% 27,311 0.9% 7.2% 4.9% 7.2% 

MEDICAL/CLINICAL ASSISTANT. Associate's 151 1. 9% 74,506 2.6% 0.0% 0.0% 0.0% 

DENTAL ASSISTING/ASSISTANT. Certificate 145 1. 8% 21,757 0.7% 25.5% 10.7% 1.4% 

AESTHETICIAN/ESTHETICIAN AND SKIN 

CARE SPECIALIST. Certificate 136 1.7% 7,372 0.3% 1. 5% 1. 0% 0.0% 

MEDICAL INSURANCE CODING 

SPECIALIST/CODER. Certificate 112 1. 4% 21,224 0.7% 12.5% 5.4% 6.3% 

BUSINESS ADMINISTRATION AND 

MANAGEMENT, GENERAL. Associate's 92 1. 2% 74,095 2.5% 0.0% 0.0% 0.0% MEDICAL ADMINISTRATIVE/EXECUTIVE 

ASSI STANT AND MED:::CAL SECRETARY. Certificate 88 1.1% 16,027 0.5% 14.8% 8.5'!; 3.4% 

MEDICAL INSURANCE SPEClALIST/MEDICAL 

BILLER. Certificate 87 1.1% LO,381 0.7% 1.1% 0.9% 6.9% 

LEGAL ASSISTANT/PARALEGAL. Associate's 79 1. 0% 19,962 0.7% 0.0% 0.0% 0.0% 
Table 15 provides the weighted 

averages of the median annual loan annual earnings and pCDR for the 20 

payment, higher of the mean or median most frequent CIP-credential-level 


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SURGICAL 'I'ECHNOLOGY j1'ECHNOLOGIS'l'. Certificate 77 1.0% 8,335 0.3% 27.3% 16.2% 5.2% 

MEDICAL OFFICE ASSISTANT/SPECIALIST. Certificate 73 0.9% 10,538 0.4% 8.2% 5.0% 1. 4% 

AUTOMOBILE/AUTOMOTIVE MECHANICS 

TECHNOLOGY/TECHNICIAN. Certificate 71 0.9% 35,071 1.2% 39.4% 7.1% 8.5% 

CRIMINAL JUSTICE/POLICE SCIENCE. Certificate 68 0.9% 10,755 0.4% 98.5% 99.6% 0.0% 

BUSINESS ADNINISTRATION AND 

MANAGEMENT, GENERAL. Bachelor's 66 0.8% 174,487 6.0% 0.0% 0.0% 0.0% HEATING, AIR CONDI'!'lONING, 

VENTILATION AND REFRIGERATION 

MAINTENANCE TECHNOLOGY/TECHNICIAN 

(HAC, HACR, HVAC, HVACR). Certificate 66 0.8% 13,484 0.5% 30.3% 9.2% 6.1% 

BARBERING/BARBER. Certificate 65 0.8% 10,378 0.4% 6.2% 5.0% 1. 5% 

---

.. - .. ---- - . --_. - ----- ---- --,_."------ --" , 

158ClP codes 513901 and :'11613 were combinE:d to conform with changes to elP code 51163 i

rp: / /!,i.ces. eel. /ipeds/cipcC:.ge/ cipdetail. aspx?y=55&cip'''Sl. 3901. 

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Table 15: Average Annual Loan Payment, Earnings, and pCDR for 20 Most Common Types 

Programs in 2012 GE Infor.mational Rates Sample (Program Count) 159 

* combines elP codes 513901 and 511613 

All sectors Public Private 

1'1 1'1 1'1 1'1 

CIP Name Cred ., ., ., ., 0 0 0 0 

.... .. .... .. .... til .... 

,u t1l ,u .u t1l .u .u t1l ,u .u 

.... 1'1 1'1 .... .... 1'1 1'1 .... .... >l >l .... .... >l 

., Q) ..... :; .,Q) . .... :; <11 Q) ..... :; <11 Q) 

H, >l ., Q) 1'1 <11 Q) >l ., Q) 

k .... ,u k ... ,u k 4-I.u 

COSMETOLOGY 

GENERl'.L. Certificate $804 $12,276 17.4%- $137 $12,796 20.0%- $358 $l2,281 17.8%- $845 

LICENSED 

PRACTICAL/VOc.znIONAL NURSE 

TRAINING* Certificate $922 $33,835 12.9% $490 $34,939 11.3%- $990 $28,110 15.5% $1,753 

CL INICAL ASSISTANT. Certificate $1,009 $15,344 24.6% $271 $20,370 13.4% $928 $:4,400 15.1% $1,029 

MASSAGE THERAPY/THERAPEUTIC 

Certificate $939 $16,122 21. 3% $307 $18,750 11. 7% $959 $:8,879 15.4% $944 

TECHNICIAN/ASSISTANT. Certificate $922 $17,073 21. 3%- $357 $23,C52 14.1% $832 $15,058 17.6%- $945 

MEDICAL/CLINICAL ASSISTANT. Associate'S $1,827 $19,234 22.5%- $1,827 DENTAL ASSISTING/ASSISTANT. Certificate $911 $17,211 19.8% $418 $23,173 9.2% $1,C81 $:6,332 10.7% $952 

AESTHETICIANjESTHETICIAN 

SKIN CAR3 SPECIALIST. Certificate $606 $16,539 lO.9%- $208 $19,233 4.7% $610 

MEDICAL CODING 

SPECIALIST/CODER. Certificate $1,050 $17,080 20.l% $249 $25,452 11. 2% $1,119 9.9% $1,073 

BUSINESS ADMINISTRATION AND 

, GENER1\L. l\ssociate IS $1,700 $27,025 27.5% $1,700 

159Averages include earnings and loan payment data from programs with DIE rates measure n-size less t

(if available) in instances where no programs met ninimum n-size 30. 
Table 16 provides the 20 CIPcredential level combinations with the the 2012 GE informational rates sample. highest FY 2010 title IV enrollment in 

percentage of programs and enrollment 

In addition, Table 16 provides the 


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MEDICAL 

ADMINISTRATIVE/EXECUTIVE ASSISTANT AND MEDICAL 

SECRETARY. Certificate $878 $12,693 24.7% $323 $18,941 14.4% $140 $8,600 32.4% 

MEDICAL INSURANCE 

SPECIALIST/MEDICAL BILLER. Certificate $1,020 $17,784 19.4% $0 $16,300 $386 $8,876 24.3% 

LEGAL ASSISTANT/PARALEGAL. Associate's $2,283 $22,796 23.2% 

SURGICAL 

TECHNOLOGY/TECHNOLOGIST. Certificate $1,235 $24,218 17.4% $417 $29,797 11. 3% $760 $23,533 13.1% 

MEDICAL OFFICE 

ASSISTANT/SPECIALIST. Certificate $926 $13,736 24.1% $112 $14,973 18.6% $628 $14,010 27.1% AUTOMOBILE/AUTOMOTIVE 

MECHANICS 

TECHNOLOGY/TECHNICIAN. Certificate $1,235 $23,660 21. 6% $503 $25,824 19.9% $698 $20,208 23.6% 

CRIMINAL JUSTICE/POLICE 

SCIENCE. Certificate $95 $42,174 12.7% $95 $42,557 12.7% 

BUSINESS ADMINISTRATION AND 

MANAGEMENT, GENERAL. Bachelor's $1,057 $21,608 27.7% $410 $24,889 14.4% $713 $23,702 20.7% 

HEATING, AIR CONDITIONING, 

VENTILATION AND 

REFRIGERATION MAINTENANCE 

TECHNOLOGY/TECHNICIAN (HAC, 

HACR, HVAC, HVACR). Certificate $2,489 $49,821 19.6% BARBERING/BARBER. Certificate $335 $7,722 31. 5% $355 $7,413 42.7% $0 $7,128 

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Table 16: 20 Most Common Types of Programs in the 2012 GE Informational Rates Samp

(Title IV Enrollment) 

* combines CIP codes 513901 and 511613 

All sectors Public Private 

ClP Name 

ASSISTANT. 

BUSINESS ADMINISTRATION AND 

MANAGEMENT, GENERAL. 

COSMETOLOGY/COSMETOLOGIST, GENERAL. 

LICENSED PRACTICAL/VOCATIONAL NCRSE 

TRAININ::;* 

BUSINESS ADMINISTRATION AND 

GENERAL. 

MEDIC1,L/CLINICAL ]'.SSISTANT. 

BUSINESS ADMINISTRATION AND 

MANAGEMENT, GENERAL. 

O?FICE MANAGEMENT AND SUPERVISION. 

CRIMINAL JUSTICE/LAW ENFORCEMENT 

ADMINISTRATION. 

O",FICE ASSISTANT/SPECIALIST. 

AUTOMOBILE/AJTOMOTIVE MECHANICS 

TBCHNOLOGY/TBClIKICIA.\l. 

THERl'lPY /THERl'IPECTIC MASSAGE. 

COMPJTER SYSTEMS NETWORKING AND 

TELECOMr-mNICATIONS. 

Cred 

Certificate 

3achelor's 

Certificate 

Certificate 

Master's 

Associate's Associate's Associate's 

3achelor's 

Associate'S 

Ce:::tificate 

Certificate 

Associate!s 

OJ 

I-< 

01 

o 

I-< 

Po 

407 

66 

667 

571 

29 

151 

92 

7 

18 19 

71 

271 

36 

OJ 

I-< 

01 

e 

Po 

,., ,., 

III 

..... 

o 

0'1' 

5.1% 

0.8% 

8.4% 

7.2% 

0.4% 

1. 9% 1. 2% 

0.1% 0.2% 0.2% 0.9% 

3.4% 

0.5% 

OJ 

-» 

.:: 

IV 

'0 ;1 

-» 

OJ 

... 

-» 

185,471 

174,487 120,803 

86,950 

77,744 

74.,506 '14, 

59,274 

38,622 35,484 35,071 

35,045 

33,465 

"" -» 

,.,tIl 

,.,-» 

III .:: 

IV 

..... '0 

0;1 

-» 

<l<'tIl 

6.4% 

6.0% 3.0% 

2.7% 2.6% 

2.0'6 

1. 3% 1. 2% 1. 2% 1. 2% 

1.1% 

.:: 

'M 

til 

I-< 

OJ 

0'0 

I-< IV 

Pol-< 

U 

....., 

OPo 

H 

dPU 

15.2% 

0.01> 

12.1% 

80.9% 

0.0% 0.0% 0.0% 0.0% 0.01; 0.01; 

39.4% 

4.11; 

0.0% 

.:: 

'M 

til 

-» 

.:: 

IV 

'0 

;1'0 -»CIJ 

Ul I-< 

U 

... ' -»Po 

H 

<l<'U 

5.4% 

0.01> 

7.1% 

62.3% 

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 

7.1% 

1. 2% 

0.0% 

.:: 

'M 

Ul 

I-< 

OJ 

0'0 

I-< CIJ 

0.1-< 

U 

.... , 

OPo 

H 

<l<'U 

3.4% 

0.01> 

0.9% 

4.4% 

0.0% 

0.0% 0.0% 

0.0% 0.0% 

0.0% 

8.5% 

2.6% 

0.0% 

.:: 

'M 

Ul 

-I-l 

.:: 

CIJ 

'0 

::1'0 

-I-lCIJ 

rn I-< 

U 

"'" -I-lPo H 

<l<'U 

3.7% 

0.0% 0.6% 

4.1% 

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 

4.2% 

2.1% 

0.0% 
Table 17 provides the weighted 

averages of the median annual loan annual earnings, and pCDR for the CIPpayment, higher of the mean or median 2012 GE informational rates sample 

credential level combinations in the 


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HEALTH IN"ORMATlON/MEDICAL RECORDS 

TECHNOLOGY /TECHNl Clk'! . Associate's 18 0.2% 32,535 1.1% O.O!k 0.0% 0.0% 

CORRECTTONS AND CRTMTNAl, JUSTICE, 

OTEER. Associate's 4 0.1% 28,498 1. O%- O.O%- 0.0% 0.0% 

PHARMACY TECHNICIAN/ASSISTANT. Certificate 153 1. 9% 27,311 0.9% 7.2% 4.9% 7.2% 

SCIENCES. Associate's 1 0.0% 27,090 0.9% 0.0% 0.0% 0.0% 

CRIMINAL JUSTICE/SAFETY STUDIES. Bachelor's 19 0.2% 26,968 0.9 96 0.0% 0.0% 0.0% CRIMINAL JUSTICE/LAW ENFORCEMENT 

ADMINISTRATION. Associate's 25 0.3% 26,768 0.9% 0.0% 0.0% 0.0% 

PSYCHOLOGY, GENERAL. Bachelor's 8 0.1% 26,580 0.9% 0.0% 0.0% 0.0% 

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Table 17: Average Annual Loan Payment, Earnings, and pCDR for 20 Most Common Types o

Programs in the 2012 GE Informational Rates Sample (Title IV Enrollment) 160 

* combines elP codes 513901 and 511613 

All sectors Public Private 

>: >: 

ClP Name Cred III III III 0 0 0 0 

.-; III .-; III .-; III .-; 

...., tn ...., ...., tn ...., ...., tn ...., ...., 

.-; I'l I'l .-; '-;I'l I'l .-; .-; I'l I'l ..-i ..-i I'l 

III (I) . .., ::I III (I) . .., ::I III (I) .... ::I III (I) 

I'l III (I) I'l III (I) I'l III (I) 

" "'...., " .... .u " .... ...., III III III 

1"1 1"1 1"1 

MEDICAL/CLINICAL ASSISTANT. Certificate $1,009 $15,344 24.6% $271 $20,370 13.4% $928 $14,4CO 15.1% $1,029 

3USINESS }lliD 

IJ'ANl'.GEI<:ENT, GENERAL. Bachelor's $2,489 $49,821 19.6% $2,489 

COSMETOLOGY/COSMETOLOGIST, 

GENERAL. Certificate $8Q4 $12,276 17.4% $137 $12,796 20.0% $358 $12,281 17.8% $845 

LICENSeD 

QRACTICAL/VOCATIONAL NURSE 

TRAINING* Certificate $922 $33,835 12.9% $490 $34,939 11. 3% $990 $28,110 15.5% $1,753 

3USINESS .AND 

MANAGEMENT, GENERAL. fJIasterls $1,997 $63,823 7.0% $1,997 MEDICAL/CLINICAL ASSISTANT. Associate's $1,827 $19,234 22.5% $1,827 

'JUSTNESS .O.DNINTSTRATTON AND 

VlANAGEMENT, GENERAL. Associate's $1,700 $27,025 27.5% $1,700 

OFFICE Nh,'\AGEME!-:T .AND 

SUPZRVISION. Associatefs $1,910 $38,413 33.7% $1,91C 

CRIMINAL JUSTICE!LA1'l 

ENFORCEMENT ADMINISTRATION. Bachelor's $3,095 $38,362 25.1% $3,095 

MEDICAL OFFICE 

ASSISTANT/SPECIALIST. Associate's $1,9S4 $22,065 34.2% $1,954 AUTONOBILE!Ac.:TOMOTIVE $1,235 $23,660 21. 6% $503 $2:0,824 19.9% $698 $2C,208 23.6% $1, 275 

MECHANICS 

160 Averilges inch:de eilrnings ilnd lOiln pilyment diltil from progrilms with DIE riltes meilsure n-size less th

(if available) in instances where no programs met minimum n-size 30. 
Table 18 shows the 20 most frequent 

CIP-credential level combinations in the informational rates sample. 

for-profit sector in the 2012 GE 


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TECIlNOLOGY/TECIl;\ICIAN. 

THERAPY/THERAPEUTIC 

Certificate $939 $16,122 21. 3% $307 $18,750 11.7% $959 $18,879 15.4% 

COMPUTER NETWORKING 

AND Associate's $3,772 $28,759 30.8% 

HEALTH INFORMATION/MEDICAL 

2ECORDS 

TECHNOLOGY/TECH;\ICIAN. Associate'S $2,412 $24,471 33.6% 

COR2ECTIONS CRIMINAL 

JUSTICE, OTHER. Associate's $2,077 $30,857 43.9% 

PHII2MIICY 

TECHNICIk'\1/ASSISTANT. Certificate $922 $17,073 21. 3% $357 $23,052 14.1% $832 $15,058 17.6% 

BEHAVIORAL SCIENCES. Associate'S $2,335 $18,781 38.0% 

JUSTICE/SAFETY 

STULJIES. Bachelor'S $2,879 $33,470 25.4% 

CRIMINAL JUSTICE/LAW 

ENFORCEME;\T ADMINISTRATION. Associate's $2,640 $20,653 32.2% 

PSYCHOLOGY, GENERAL. Bachelor'S $1,497 $29,013 21.3% 

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Table 18: 20 Most Common Types of For-Profit Programs in the 2012 GE Informa

Sample (Program Count) 161 

* combines CIP codes 513901 and 511613 

0. 

III H III 

a u a 

III .-< 

III .... 1-<'0 .... 

CIP Name Cred 

..., E-I tl1()) E-I ..... .-< 

a I-< III 

!Il .-< III ()) .-< !Il I-< U .-< !Il ::i 

a '0 .-<..., a. I .-< ..., 

III ::i ..: a. '" 

I-< I-< ..., ()) '-<H ()) ..: 

tll ... tll !Il "''0 .-<U "''0'0 

a o a o ::i ..: a ::i ()) 

I-< I-< .... ..., ..., I-< 

0. .;po. ..., .;pm .;p ..... ""'mu 

/COSMETOLOGIST, GENEHAL. Certific3te 588 7.3% lll,456 87.0% 92.3% 

jVIELJICP,L/CLIN.CAL ASS1S1AN'1. Certificate 331 4.2% 168,460 5.8% 81. 3% 90.8% 

MASSAGE THC':RAPY/THERAPEUTIC MASSAGE. Certificate 253 3.2% 33,871 1. 2% 93.4% 96.H MEDICZ\L/CLIN=Cl,L l,SSISIl\NT. 11.8 socia tc I 8 151 1. 74,506 100.0% 100.0% 

AESTHETICIJ\N/C':STHETICI1'-N PJ'U SKIN 

Certific3t.e 134 1.n 7,295 0.3% 98.5% 99.0% 

T::CCHNICIAN/l,SSISTANT. Certitic3te 131 1. I'!; L..:J, oJ)!1 0.0% 8:0.6* 81.:0, 

DENTAL ASSIS=ING/ASSISJANT. CE-:L tifled 10ri 1.:'3% 19,245 0.79,; n.1% 8'1.5* 

DUSINESS ADtLNISTRATION AND 

, Associate 1 s 92 , L 74,095 2.5% 100.0% 10D.0% 

INSUWINCE CCDING 

SPECIALIST/CODER. Certitic3te 91 1. 12,102 0. 81. 3% 8o.1t 

T,TC:F.NSF.j PC:AC:TTC:AT,/VOC:WrTONAT, NnRSF. 

TRP,INING* CertificClte 84 1. 1% 29,231 1. 0% 14.7% 33.6% 

l'lICUICAL lNSUlZi\NCIc: 

BILLER. Certificate 80 1.0% lE,985 92.0% 93.2% 

ASS I STANT Associ3te's 79 1. 0% 19,362 0.7% 100.0% 100.0% 

161 Averages include earnings and loan payment data from programs with D!E rates measure n-si

(if available) in instances where no programs met minimum n-size 
Table 19 shows the 20 CIP-credential 

level combinations with the highest title the 2012 GE informational rates sample. 

IV enrollment in the for-profit sector in 


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NEDICZ\L ZWNINISTR1,TIVE/EXECUTIVE 

ASSISTANT },ND NEDICAL SEC8ETARY. Certific3te 72 0.9% 14,196 0.5% 81.8% 88.6% 

BUSINESS ADlVl::::NISTRATIOl\: AND 

NANAGlcNb;1\T, B3:::he1oc's 66 C.8% 174,487 6.0% 100.0% 100.0% 

ASSIS'I'AN'I'/SPEC:i:AL"S'I'. CerLilicdLe 66 0.8% 9,318 0.3% 90.4% 93.2% 

BARBERING/3AR3ER. Certificate 60 C.8% 9,469 0.3% 92.3% 91.2% 

GR1U'HIC DES.lGN. Associate's 54 C.7% 13,280 0.5% 100.0% 100.0% 

SU8GICAL 'I'co;CHNOLOGY/'I'ECHNOLOGIS'I'. CeLLlfic:3Le 52 0.7% 0.2% 67.5% 78.7% 

CRUHNAL JTJSC'ICE/SAFE'I'Y SIUJIES. Associate's 47 0.6% 24,507 0.8% 100.0% 100.0% 

'I'ICCHNDLDSY/IICCHNICIAN AND 

BOOKKEEPING. F ... 5 socia te 1 5 44 0.0% 26,550 0.9'c 100.0% 100.0" 

EP25MR14.052</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Table 19: 20 Most Common Types of For-Profit Programs in the 2012 GE Infor

Sample (Title IV Enrollment) 162 

* combines CIP codes 513901 and 511613 

n. 

H 

0 

til 

..... ... I'l ... I'l 

ClP Name Cred I'l '"' • .-1 '"' • .-1 

r-i Q) 

til r-i til 'tI r-i til r-itll'tl r-i til 

a ...: a ;:l r-i ..... r-i a Q) r-i ..... 

1\1 1\1 ..... ...: I'l 1\1 1\1 I-< 1\1 I'l 

I-< ... I-< til Q) I-< 0 Q) 

tn o tn "''0 ... tn I ... 'tI'tI 

0 0 ... o ;:l o 0 n. o ;:l Q) 

I-< I-< ..... ., I-< H ..... I-< 

"" '*''''' ,*,00 ,*,""0 '*'000 BUSINESS ADMINISTRATION A"D MANAGEMENT, GEKEEAL. Bachelcr's 66 0.13% 174,487 6. 0% 100.0% 100.0% 

MEDICAL/CLINICAL ASSISTANT. Certificate 331 4.2% 168,460 5.8% 81. 3% 90.8% 

GENERAL. Certificate 530 7.3% 111,456 3.8% 87.0% 92.3% 

BUSINESS ADMINISTRATION A'lD MANAGEMENT, GEKEEAL. Master's 29 0.4% 77,744 2.7% 100.0% 100.0% 

MEDICAL/CLINICAL ASSISTANT. Associate's 151 1. 9% 74,506 2.6% 100.0% 100.0% 

BUSINESS ADMINISTRATION A"D MANAGEMENT, GEKEEAL. Associate's 92 1. 2% 71,095 2.5% 100.0% 100.0% 

OFFICE AND SUPERVISION. Associate's 7 0.1% S9,274 2.0% 100.0% 100.0% CFIJVllNAL JUSTICr:/LAW r:Nl<'O'{CEMI:CNT Bachelor's 18 0.2% 38,622 1. 3% 100.0% 100.0% 

MEDICAL ASSISTANT/SPECIALIST. Associate's 19 0.2% 35,484 l. 2% 100.0% 100.0% MASSAGE THERAPY!THERA"EUTIC MASSAGE. Certificate 253 3.2% 33,871 l. 2% 93.4% 96.7% 

COMPUTER SYSTEMS NETWORfCI'lG AND 

TELECOMMUNICATIONS. Associate's 36 0.5% 33,465 l. 1 % 100.0% 100.0% 

HEALTH RECORDS 

Associate's 18 0.2% 32,535 l.1% 100.0% 100.0% 

162Averages include earnings and loan payment data from programs with DIE rates measure n

(if available) in instances where no programs met n-size 30. 
Table 20 shows the 20 most frequent 

CIP-credential level combinations in the informational rates sample. 

public sector in the 2012 GE 


EP25MR14.053</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

AUTOMOBILE/AUT0110TIVE M:':CHANICS 

TECHNOLOCY/:ECHNICIAN. Cortifiooto 37 0.:0% 31,111 1.1% 52.1% 88.7% 

LICENSED PRACTICAL/VOCATIONAL NURSE TRAINIKG* CeLLiLLcdLe 34 1.1% 29,231 1. 0% 14.7% 33.6% 

AND CRIMINAL O1'HE;k. Associate's 4 0.1% 28,498 1. 0% 100.0% 100.0% 

SCIENCES. Associate's 1 0.0% 27,090 0,9% 100.0% 100.0% 

CEIJVlINAL JUSTICE/SAFETY STUDIES. Bachelor's 19 0.2% 26,968 0.9% 100.0% 100.0% CEIJVlINAL JUSTICE/LAW ENFORCEMENT ADMINISTR1HION. Associate'::: 25 0.3% 26,768 0.9% 100.0% 100.0% 

PSYCHOLOGY, GENERAL. Bachelor's 8 0.1% 26,580 0.9% 100.0% 100.0% 

ACCOUNTING :ECHNOLOGY!T:':CHNICIAN AND BOOKKEEPING. Associate's 44 0.6% 26,550 0.9% 100.0% 100.0% 

EP25MR14.054</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

Table 20: 20 Most Common Types of Public Sector Programs in the 2012 GE Info

Rates Sample (Program Count) 163 

* combines CIP codes 513901 and 511613 

11< I

fIl H <

U 0 

'"

'" !IJ <I' I'l <I' I'l 

CIP Name Cred tn '" E-I .r! E-I ·rI '"

0 Q <

fIl '" Q) ..... fIl ..... fIl '0 ..... fIl ;

11< '0 

..... '" ';;J ..... '" I

;I A: I'l <II I'l Q 

'" ..... '" Q) '" U Q) A

tn ..... !IJ .... '0 .... tn I .... '0'0 0 A: o ::I o 0 11< o ::I Q) 

'" <I' '" '" H '" '" 

11< aP '" aPtil o\"11<U aPtilU LICENSED PRACTICAL/VCCATION]\.L NURSE TRAINING* Certificate '::62 5.8% 54,1 74 1.9% 8C.9% 62.3% 

COSMETOLOGY/COSNETOLOGIST, GENER.z\L. Certificate 81 1. 0% 8,6:5 0.3% 12.:% 7.1% 

CRIJVlINAL JUSTICE/POLICE SCIENCE. Certiflcate 67 0.8% 10,708 0.4% 98.5% 99.6% 

M, IJ CAl ,feLJ N I CP.L A:-;S I "TAI"l'. Cf'rtifi ltf' 67 10,059 0.]% 1 '1.4% 

DENTAL ASSISTIKG/ASSISTANT. Certificate 37 0.5% 2,322 0.1% 25.5% 

El"ERGENCY MEDICAL TECENOj)GY /TECHN1C1AN (EM':' 

P]\.RAt1EDIC) . Certificate 34 0.4% 2, 0.1% 69.4 40.7% 

WELDING Certificate 33 0.4% 2,553 0.1% 63.5% 32.2% 

ACTOt10BILE / IVE NCCIAK I CS 

Certificate 28 0.4% 2, '::96 0.1% 39. 7. 

TPUCK AND DUS DRIVZR/COMt1TRCIl,L VELICLE CPEEA'I'ION. Certificate 26 0.3% 1,301 0.0% 63.4% 7% 

SCRGICI\I TECHNOLOGY/TECHNOLOGIST. Certificate 21 0.3% 1,354 0.0% 27.3% - 6.2% 

ELECTRICIAN. Certificate 20 0.3% 1,337 0.0% 31.3% 

Hl'.A'l'ING, AlR CONDITIONING, IiEN'l'ILA'I'lON AND REFRIGERlHION JVAINTENlmCE TECHNOLOGY /TECHNICLz\N 

(HAC, HACP, HV]\.C, 'lVACR) . Certificate 20 0.3% 1,245 0.0% 3C.3% 9.2% 

163Averages include earnings and loan payment data from programs with DIE measure n-s

(if availahle) in instances where no programs met minimum 'i-size 30. 
Table 21 shows the 20 CIP-credential 

level combinations with the highest title 2012 GE informational rates sample. 

IV enrollment in the public sector in the 


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ASSISTANT JI.ND SECRETAEIAL SCENCE, 

GENERAL. Certificate 0.2% 3,762 0.1% 33.3% 61.0% 

/ CA?PENTER. Certificate 0.2% <)28 0.0% 88.2% 73.9% 

Al:TOBODY /CO::OLIC'ION AND R,;PAIR TE:HNOLOGY /TECHNICIAN. CRrtifiC:iltf' 0.2% 0.0% 

BOS=Ni:CSS OPERATIONS SCPPORT AND SECRETARIAL 

SFRVTCF,S, OTHF',R. Cprt i fi C;,:::jt_p 4 o.n 1,170 o.(n 7r:.O% 84.9% 

INSC?AKCE COCING SPECIALIST/COJER. CerLlflcdLe 0.2% 1,148 0.0% 5.4% 

MENT1\L AND SOC11\L 3EALTH SEEVICES AND ALLIED 

PEOFESSIONS, OTHER. CerUficdte 0.2% 1,769 0.1% 10C.O% 100.0% 

NORSING ASSISTI'.NT/AICE AND PATIENT CARE 

ASS:STANT!AIDE. Certificate :4 0.2% 3,109 0.1% 66. 58.4% 

CHILD CARE Certificate 0.2% 6,5 7 4 0.2% 90.8% 

LINEHORKER. Certificc:ltG :'3 0.2% 562 0.0% lOe.O% 100.0% 

MED:CAL ADMI'JISTRATIVE/EXECCTIVE ASSISTANT AND MED:CAL SECRETARY. Certificute REG:STERED NJRSING/REGISTERED NUESE. Certificate 

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Table 21: 20 Most Common Types of Public Sector Programs in the 2012 GE Info

Rates Sample (Title IV Enrollment) 

* combines CIP codes 513901 and 511613 

'" 

til H u 

'" til .... I:: .... I:: 

ClP Name Cred OJ ..... 1-1 .r! 1-I.r! 

0 I:: 

til '" (l) rl til rltll'O rl til 

a '" '0 rl ...., rl a Q) M .w 

'" ::! ..; s:I '" '" ... '" s:I '" M ..... Q) "'u (l) 

OJ M til '1-1'0 '1-1 OJ , 'I-I'tI'tI 0 ..; o ::! o 0'" o ::! Q) 

'" .... ...., "'H .w '" 

'" "" ..... "'. '" """'u """'u LICENSED PRACTICAL/VOCATIONA::.o NURSE TRAINlNG* Certificate 462 J.8% 54,174 1.9% 80.% 62.3

REGISTEHED NURSING/REGISTERED NURSE. CertLficate 13 0.2% 12,666 C.4% 34.2% 75.6% 

C1UN1NAL SCIJCNCE:. Certificate E7 0.8% 10,708 C.4% 98.5% 99.6

MEDICP,L/CLINICAL ASSISTANT. Certificate 62 0.8% 10,059 C.3% 15.2% 5.4

LIBEHAL AHTS AND SCIENCES/LIBERAL STUDIES. Certificate 10 0.1% 8,6'; 0 C.3% 

COSNETOLOGY /COSi"lETOLOGIST, GENERAL. Certificate 81 1.0% 8,615 C.3% 12.1% 7.1

CHILD CT,RE PROVIDER/l\SSISTJ\NT. Ccrtiticatc 13 1).2% 6,:0/4 c.n 

ADt1INISTRATIVE ASSISTANT AND SECRETARIAL SCIENCE, GENE?-AL. Certificate 19 0.2% 3,7G2 C.1% 33.3, G4.)% 

NURSING ASSISTANT/AIDE [,NO PATIENT CARE ASSISTANT!AI:JE. Certificate 14 0.2% 3,109 C.1% 66. n 53.4

HEALTH PRm·ESSIONS AND RELATED CLINICAL SCIENCES, OTHE?-. Certiticate 0.1% 3,009 0.1% 66.7% 76.3% 

WELDING TECllNO:"OGY Certificate 23 0.4% 2,553 C.l% 63.575 

}O,tJTm10Rr.E/AUTOlVIOTTVF. MECHANICS TECHNOLOGY /TECHNTCTAN. [j caLf: )8 ".H 19.H 7.1

l1EDICA':" TECHNO.'oOGY /TECHNICIAN PARANEDIC). Certificate 34 0.4% 2,474 C.1% 69.4% 4 J. 7

BUSINESS ADlVlINISTRATION AND l1l'.NAGEMENT, GENERAL. Certificate 9 0.1% 2,436 C .1% 47.4% 84.4

DENTAL ASSISTING/ASSISTANT. Certificate 37 O.:J% 2,322 C .1% 25.S% lJ.7% 

ALLIED HEA::OTH DIAGNOSTIC, INTERVENTION, ANJ TREATMENT 

PROFF.SSTONS, OTHF:R. Cer-Lifici:lLe 7 n.l 1,991 ".H 8 7 . 94.1 

Hb:AL"l"H/LVlt;UJ.CAL PKb:PAKATOKl PKOGKA1'lS, O'l"H J..: 1<' Certifi.cate 2 0.0% 1,961 C.l% 100.0% l.OJ.JC
Table 22 provides the 2012 GE 

informational rate program and level combinations with the most 

enrollment counts for the CIP-credential 

under the proposed GE measures. 

programs that are failing or in the zone 


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MENTAl, AND HEALTH SERVICES AND ALLIED PROFESSIONS, 

OTHER. Ccrtificiltc 14 0.2% 1,769 C.1% 100.0% 10J.J% 

LEGAL Certificate 11 0.1% 1,630 C .1% 28.9% 

ACCOONTING TECHNOLOGY/TECHNICIAN AND BOOKKEE?ING. Certificate 8 I) .1% 1,429 C. C% 22.2% 43.1% 

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Table 22: 20 Most Common Types of Zone or Failing Programs in the 2012 GE Info

Rates Sample (Program Count) 

* combines elP codes 513901 and 511613 

All sectors Public 

, , , , , 

Po Po Po Po Po 

H .... H H tJ H 

ClP Name u ..... u u u 

Cred ... 

c;: ..... .... 

........ 

.... '" .... '" '" 

.... to .... to "" to i" to " to 

"' ..... ,.., 

"" (I) 

'''' '" '(I) (I) '" lJ

(I) m m" (I)" 0"" £ 8' 0 o (I) ;l N ;l (I) :> 0 

o '" i.e t 0 ..... ..... '" '" !t t ..... '" !

""Po "" to aP to u to u 

! COSMETOLOG =:3T , GENERAL. CeLllflcnLe 194 45,937 38.0% 1. 5% 0.9% 0.

HEOICAL/CLINICAL Certificate 121 29.7 9, 02,219 44.3, 0.0% 0.0% 0.

NEDICAL/CLINICAL ASSIS'::ANT. Plssociate I s 73 48.3% 54,931 73.7% O. 0.0% 0.

MASSAGE /THERAPEUTI::: MIl.SSAGE. :::ertiticate 64 23.6% 8,229 23.5% 0.0% 0.0% 0.

BUS INESS ADHIN _STRAT ION m,c MANJ\GEMENI, GENERAL,. Z\ssociatc 1 s 39 42.4% 40,068 ,,4 .. % 0.0% 0.0% 0.

PHP.RMACY TECHN_:::IAN!ASSISTANT. Certificate 36 23.5 9, 8,218 30.3% 0.7% 1 ... % 1. 

CULINARY ARTS/CHEF TRP._NIN3. Associate's 32 88.9% 24,514 96.6% 0.0% 0.0% 0.GRIl.P'HC DESIGN. Associate's 32 59.3% L,358 8:0.5% 0.0% 0.0% 0.

CRIHINAL STUDIES. p,,;:) :::lucia Le 1 .::; 31 66.0% 86.2% 0.0% 0.0% 0.

LEGAL P,ssociate I 31 =9 :2°;- 12,524 62.7% 0.0% 0.0% 0.

INTEC{IUR DESIGN. 26 74.3% 8 1 632 0.0% 0.0% 0.

NEDICAL ADf'lINISTRAII'JE/':':XE:::UTI'JE ANC 26 29.5% E,276 39.2% 1.1% 0.9% 1.

SECRETARY. Certificate 

BAIiB':':IiI"lG/BARBER. Certificate 25 38.5% 4,306 41. 5% 3.1% 1. 3% 0.

Certificate n ::02.4% 6,dUI 10.4% /. U% 1 •.. 'Ii 2.

AUTONOl3ILE/AUTOMOTIVE H:;;CIIANICS 
Table 23 provides the weighted 

averages of the median annual loan annual earnings, and pCDR for the CIPpayment, higher of the mean or median most frequent zone or failing programs 

credential-level combinations with the 


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TECHNOLCGY /TECH'HCIlIN. 

I I 

HEDICAL OFFICE .!'SSISTP.NT /SPECIALIST. I Certificote T 22 30.1% 3,300 31.3% 0.0% 0.0% 0.

DEKT}\L Certificate 20 13.8% 4,160 0.0% 0.0% 0.

GRP.P:JIC DESIGN. Bachelo:,'s LO 62.:0% 12,1:31 88.0% 0.0% 0.0" 0.

HE1'.TING, AIR VENTILATION ]'.t\D 20 30.3% E,-J04 48.2% 1. 5% 0.3% 1. 

REFRTGERATTON M.ATNTENIl.NrE TErHNOT,OGY /TF,rHNTrTAN (HAr, 

HACR, HVAC, HVACR) . Certificate I I I I I I 

INSURANCE CODING SPECIALIST /C:JDER. Certificate I 20 117·9%IE,522 I 30.7 % I 1).0% 10,0%TO,

Certificate I 19 I ; I I 18. U% I 0.0% I U.O% I 0.

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Table 23: Average Annual Loan Payment, Earnings, and pCDR for 20 Most Common Ty

Zone or Failing Programs in the 2012 GE Informational Rates Sample (Program Cou

* combines elP codes 513901 and 511613 

CIP Name Cred Sector Annual loan payment Earnings D

Pass Zone Fail Pass Zone Fail Pass 

Public 114 363 12,826 12,500 16 

COSMETOLOGY/COSMETOLOGIST, 

GENERAL. Cert=-ficate Private 239 1,287 12,200 12,912 18 

For-Profit 63) 1,191 1,279 12,43,) 12,057 11,5(7 15 Public 271 20,370 13 

MEDICAL/CLINICAL ASSIS:ANT. Private 867 1,099 1,486 14,647 13,68E 12,266 15 

For-Profit 932 1,247 1,088 15,259 13,57C 14,389 21 Public 

MEDICAL/CLINICAL ASSIS:ANT. Jl.ssociate's Private 

For-Profi_t 1,332 1,842 2,341 20,311 19,571 17,6C3 18 Public 307 18,750 12 

HASSAGE THERAPY/THERAPEUTIC 

MASSAGE. Cert_ficate Private 916 1.,1.4:0 20,003 14,098 15 

For-Profit 857 1, ?Og 1,14) 17,DRl 13, )0-' 13,463 1 9 

BUSINESS ADtlINISTRJl.TION AND F.GGociate f [3 Public 

HANAGEHENT, GENERAL. 

Private 

64Averages include earnings and loan payment data from programs with DIE rates measure n-size 

(if available) in instances where no programs met minimum n-size 30. 

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For-Profit 1,497 2,196 1,723 27,027 24,289 27,78 Public 374 ° 23,035 23,411 

PHARMACY 

TECHNICIAN/ASSISTANT. Cert_ficate Private 832 800 1 ,020 17,43" 

For-Profit 948 1,329 849 17,808 13,861 15,437 Public 

CULINARY ARTS/ClIEF TIUUNING. s Private 

For-Profit 2,288 2,197 4,368 2:0,784 22,98C 22,259 Public 

GRAPHIC DESIGN. P,ssociate's Private 

For-Profit 1,650 2,089 3,152 21,697 20,535 19,633 Public 

JUSTICE/SAFETY 

STUDIES. p,ssociate's Private 

For-Profit 1,450 1,998 1,972 24,091 20,887 22,794 Public 

LEGAL ASSISTANT/PARALEGAL. f s Private 

For-Profit 1,844 2,505 2,528 24,588 23,214 20,264 

[Jublic 

INTERIOR DESIGN. Bachelor's Private 

For-Profit 2,678 2,774 4,077 2:0,277 26, l11 25,075 Public 323 18,941 

MEDICAL 

ADMINISTRATIVE/EXECUTIVE Cert_ficate Private 0 736 7,550 13,051 

ASSISTANT AND MEDICAL 

SECRETARY. 

For-Profit 601 1,388 1,276 11,790 13,85E 13,8e8 Public 114 1,375 8,227 3,979 

EARBERING/BARBER. Cert'-ficate Private 0 7,128 

For-Profit 87 842 944 7,342 8,209 8,726 

. , . . 
Table 24 provides the 20 CIPhighest FY 2010 title IV enrollment in 

credential level combinations with the GE informational rates sample. 

zone and failing programs in the 2012 


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Public 509 422 25,656 28,084 

AU'J OJVlOBl LlC I AU'1'OJVlO'1' 1 V lC 

Private 719 522 20,997 13,8C7 

TECHNOLOGY/TECHNICIAN. 

For-Profit 1,241 1,457 24,567 18,817 Public 112 14,973 

MEDICAL OFFICE Cert fi cate Private 628 14,010 

For-Profit 894 1,092 1,143 14,289 1l,40E 12,429 Public 418 23,173 

DENTAL Cert:eficate Private 1,081 16,332 

For-Profit 927 1,268 972 17,051 14,382 15,528 Public 

GRAPHIC Bachelor's Privato 

For-ProllL 2,959 2,783 3,932 32,888 27,277 26,636 

AIR CONDITIONING, Public 381 771 24,820 25,735 

VENTILATION ANJ REFRIGERATION 

MAINTENANCE Private 733 454 23,631 24,627 

TE2HNOLOGY/TECHNICIAN (HAC, 

HACR, HVAC, HVP.CR) . For-Profit 961 2,151 1, 188 21,070 21, 808 21,IC6 

Public 249 25,452 

NEDICAL INSURANCE CODING 

SPECIALIST/CODER. Cert_ficate Private 1,119 16,645 

j:'or-Profi t 997 1,333 1,012 17,710 15,07E 14,290 

Public 713 31,729 

ELECTRICIAN. Private 352 14,056 

For-Profit 849 2,009 1,332 19,005 21,614 21,131 

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Table 24: 20 Most Common Types of Zone and Failing Programs in the 2012 GE 

Rates Sample (Title IV Enrollment) 

* combines elP codes 513901 and 511613 

All sectors Public Privat

.... .... .... 

'-' '-' '-' 

CIP Name Cred .... 

... 0 '-' ... 0 ... 0 ... 0 ... 0 ... 

-r-! -rl -rl -,.., ,.., -,.., -r-! ·rl -rl "ri ·rl 

... III ... III III III III III 

.,.., '" rx. '" '0 .... '" rx. '" '0 rx. '" '0 rx."''O rx."''O rx. 

III a ,a <I) III '-' '+><I) 'W '+><I) ,a <I) ,,

rx. III <I) III 10< rx. 0 <I) 0 10< Q) 0 10< Q) III 10< <I) 

,I-< 01-<0 ,<I) 1'1 <I) 0 1'1 10< 0 1'1 <I) 0 1'1 I-< 0 0

Q) tn o tn • (1)'0 0'0' o tn • 0'0 • o tn • 0

o 0 NO'" o ::l N ::l '" NO'" N :l '" NO'" N 

o I-< li,H o +> +>H li,H +>H ,,0 li, ti 

N '" <II' U N '" <ll'IIlU <II' U <ll'IIlU <II' 

ASS ISC']\NT • Ccrtificotc 121 29.7% 62,219 44.3% ).0% 0.7% 

O:?F=CE J\ND SJPERvrS=ON. AS30cia::.e's 2 28.6% 58,526 98.7% 0.0% ).0% 0.0% 

m:,D = CAL/ I CAL Associa::.e's 13 !Jt1,931 13.1% a.Ot ).0% 0.0% 

COSMC:TOLOGY /COSYJETOLOGI 3T. GEKE:\AL. Certificate 194 29.1% 45,937 38.0% 1. 5% J.9% 0.1% 

BUS::-lESS ADMINISTRP.TION AND 

GENECffiL. P,.ssocia--:::e! s 39 42.496 40,OG8 ::4. 0.0'0 J.O% 0.0% 

1V1ED_CAL OFF=CE _",SSISTANT/SFECIALIST. Associa::.e's 7 36.8% 32,202 90.8% J.O% 0.0% 

HEALTH RECORDS 

TECH'\fOLCGY/TECHNICIAN. I A330cia-::e!.3 27.8 128,6151 88.0 95 1 0.0% 1 ).0% 1 0.0% 1 

C()EE,;CTl()NS ANLJ CKHHl':AL JU,,'l'IClC, 

1 

31 OTEEo(. Associa-::e!s 75.0% 128,301 1 99.3% 1 I}. I J.O% I 0.0% I 

:j 1 11100.0% 1 27 ,090 11CO.0% 1 0.0% 1 J.O% 1 0.0% 1 

COMPJTER SYSTEMS AKD 

CAT l.ONS. Associa-.::.e!s 10 1 27.8% I 26,7S91 80.0% I o. I J.O% 1 0.0% 1 

CRIMINAL JOSTlCSI ENFORCEMENT 

]IDM='HSTRlIT=ON. s 15 60.0% 24, 858 92.9% 0.0% J.O% 0.0% 

CUL='\fARY APTS/CHEF TRAI'\fING. AS30cia-:.e' 3 32 88.9% 24,514 96.6% 0.0% ).0% 0.0% 

f.T.f.CTRJC:A=" f.T,FC:TRONTC ,",N[) Associa::.e's " 31. 3% :'/10 O.Ot J.O'l; 0.0% COMMJNI,:ATIONS ENGINEERING 
Table 25 provides weighted averages 

of the median annual loan payment, earnings, and pCDR for the CIPhigher of the mean or median annual 2012 GE informational rates sample 

credential level combinations in the 


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CRIMINAL JCSTICE/SfI.FETY STUDIES. 3 

SCIENCES. Bachelcr's 

]ICCO:JNTING /':'ECHNICIAN AND 

12 27. 18, 91 69.6% 0.0% J.O% 0.0% 

TEACHER ASS:STANT/IUDE. Associa_8!S 1 100.0% IG,025 1CO.09, 0.0% J.O% 0.0% liUMAN :itcK'IIClCS, Gl::t\1:.:RP.L. Associ.a::.e's 2 66.7% 15,790 99.7% J.O% 0.0% 

HUMAN SERVICES, GEKERfI.L. Bachelor's 1 50.0% 14,385 98.8% 0.0% ).0% 0.0% 

CAD/CAD[ DRAFT lNG fI.ND/O? DESIGN 

TECIINOLOGY/TSCIINICIAN. I Associa::.e! s 6 I 85.7% 114,355 I 1CO.0% I 0.0% I J.O% I 0.0% I 

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Table 25: Average Annual Loan Payment, Earnings, and pCDR of 20 Most Common Types 

and Failing Programs in the 2012 GE Informational Rates Sample (Title IV Enrollme

* combines CIP codes 513901 and 511613 

ClP Name Cred Sector Annual loan payment Earnings De

Pass Zone 

I 

Fail Pass Zone Fail Pass 

Public 271 

I 

20,370 :,3 

11EOICA::O/CLINICAL Cer::ificate Private 867 1,099 I 1,48 G 14, 647 13,686 12,266 -_5 

F_SSISTAN':' . 

I 

Foc--profi l 932 1,247 I 1,088 16,259 13,570 14,389 21 

, 

Public 

I OFFICE Y1ANAGSMENT },NO i\ssoC'iate's Private SCPERVISION. I 

I 

Fo-::-profit 1,985 

I 

1,901 3 7 ,966 38,16" 

Public I 

I 

M2DICA::O/CLINICAL Associate's F.SSISTlm':' . Private I 

Foc--pro[ i L 1,332 1,842 I 2,341 20,311 19,571 17,603 .8 Public I 363 12,326 12,500 I 

I 

COSM2TOLOGY/COSMFTOLOG I Cer::ificate Private 1, 'L'd) I 12,2()C 12,912 

1ST, GEN2Rl'.L. 

I 

Fo-::-profit 639 1,191 i 1,279 12,43= 12,0,,7 11,507 

I 

I 

Public I 

ROSTNESS I 

AD1ViIKISTCZATION AND Associate's Private 

JVllINAGH1ENT, GENER]"L. I 

1,497 2,196 I 1,723 27,J27 24,289 27,781 23 

I 

include earnings and loan payment data from programs with DIE rates measure n-size less 

(if avai'-able) in instiiIlces where IlO programs met minimum n-size 30. 

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Public 

MEDICAL OFFICE 

ASSISCANT/SPSCIALIST. Z\ssociatc's Privute 

Fo'C-proflt 1,459 2,15G 15, 31 I 23,357 I Public 

!MED=C.1\L 

RECOROS Associate's I Private 

TECHNOLOGY !TECHNICHIN. Fo'C-protit 1, I 2, to 40 I 2, I 2U, %1 I 21,632 I 11,430 I 

Public 

CORRECTIONS AND 

CEIMI'1l\L JUSTICE, Z\ssociatc I s I Pri vate 

Fo'C-profit 2, 

I 

2,076 27,G5? 31,022 

, 

Pub1lc 

BEHAVIORAL SCIE'1CES. I Associate's I 'c' 

Fo'C-protit 18 ,!81 I Public 

COMPUTE" SYSTEMS 

NETWORKING 7\ND J\.ssocia tc' s PriVate 

TP,LFCOVIMlINTCAT TONS. 

2,314 I 2,90 I 4,101 1 32,29C I 31,0651 27,949 I 

Public 

, 

CRHlIKAL JOSTlCS/LAW 

SNFCRCEMENT I P ,-SSOCld-c8 , S Private 

ADMINISTRATION. 

Fo'C-protit 1,181 1, E!! I 2, %91 L4, Jl4 1 ')" P61 2U,08:) 1 

_1, _. 

I 

Public 

COLIKARY ARTS/CHEF 

Associate's Private TRAINING. I I I I I I 

Fo::--profit I 2,283 I 2,197 4,3G8 I 25,784 I 22,980 I 22,259 I 

ELECTRONIC Associate's Public 

111'0 COMt1J'1IClITICNS 

F,]'V;TNF,F,R TKe; I Fri vate 
Table 26 provides the percentage of 

institutions (entities with unique OPEID rates sample with all passing programs 

numbers) in the 2012 GE informational and the percentage of all institutions 


EP25MR14.067</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

TECHNOLOGY/TECHNICIAN. For-profit 1,664 1,962 4,154 32,337 20,906 30,896 

Public 

CRHlINAL 

JUSTICE/SAFETY Associate's Private 

STUDIES. 

For-profit 1,450 1,998 1,972 24,091 20,887 22,794 Public 

BEHAVIORAL SCIENCES. Bachelor's Private 

For-profit 2,128 2,657 43,331 29,449 Public 

ACCOUNTING 

TECHNOLOGY !TECHNICIAN Associate's Private 

AND BOOKKEEPING. 

For-profit 1,853 2,302 2,074 25,462 25,281 28,369 Public 

TEACHER Associate's Private 

ASSISTANT/AIDE. 

For-profit 2,170 14,637 Public 

HUMAN SERVICES, 

GENERAL. Associate's Private 

For-prcfit 2,248 22,588 Public 

HUMAN SERVICES, 

GENERAL. 

Bachelor's Private 

For-profit 2,005 2,974 32,935 31,245 Public 

CAD/CADD DRAFTING 

AND/OR DESIGN Associate's Private 

TECHNOLOGY/TECHNICIAN. 

ror-profit 2,365 3,160 4,241 33,819 26,678 28,249 

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Table 26: Program Results by Institution in the 2012 GE Informational Rates Samp

All sectors Public Private For-pr

% wi all % wi at % wi all % wi at least 1 % wi all % wi % w/ all 

pass least 1 pass ",ail or zone pass least 1 pass 

Total programs fail or programs program programs fail or programs 

OPEIDs zone zone 

program Total Total program Total 

2,420 70'6 30 96 726 94% 6% 173 88', 12% 1/521 I S

I I 

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Table 27: Concentration of Zone and Failing Programs by Institution in the 2012 

Informational Rates Sample 

All sectors Public Private Por

Total Total % OPE IDs Total Total %public OPEIDs Total Total % private Total Total 

OPE IDs fail & responsible fail & responsible fa:'l & OPEIDs fail & 

zone for 90% fail zone for 90% zone responsib::'e zone 

programs & zone programs public fail & programs for 90% programs 

programs zone progra:ns private fail & 

zone programs 

2,420 1,365 22% 726 54 5% 173 33 10% 1,521 1,878 

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Table 28: Concentration of Title IV Enrollment in Zone and Failing Programs by 

Institution in the 2012 GE Informational Rates Sample 

All sectors Public Private For-p

Total T4 Total t4 % OPE IDs Total T4 Total t4 % public Total T4 Total t4 % private Total T4 Total 

Students students responsible Students students OPE IDs Students students OPEIDs Students stude

in fail & for 90% of in fail responsible in fail responsibl in fa

zone t4 students & zone for - 90% of & zone e for 90% zone 

programs in fail & programs t4 students programs of t4 progr

zone in public students 

programs fell 1 & zone in pri_vate 

programs tail & 

zone 

programs 

2,9l4,376 1,145,003 8% 195,087 12,922 3%- 52,305 6,647 6% 2,666,984 1,12
Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16601 

Table 29 provides earnings 

information for programs in the 2012 GE 

informational rates sample. 

TABLE 29—PROGRAMS IN THE 2012 GE INFORMATIONAL RATES SAMPLE BY EARNINGS LEVEL

Earnings level 

All sectors Public Private For-profit 

Programs 

% of all 

D/E n30 

programs 

with earnings data 

t4 

students 

% of all 

t4 students in 

D/E n30 

programs 

with earnings data 

Programs t4 

students Programs t4 students Programs t4 students 

Less than Poverty Guidelines for 1 person ($11,490) ........................................ 631 11.4 115,581 4.6 60 6,108 63 11,086 508 98,387 

Less than Federal min wage ($15,080) .... 1,492 26.9 351,581 13.9 137 16,223 95 20,037 1,260 315,321 

Less than 150% of Poverty Guidelines for 

1 person ($17,235) ................................ 2,090 37.7 540,381 21.4 189 29,069 118 25,105 1,783 486,207 

Discussion of Costs, Benefits, and 

Transfers 

Assumptions and Methodology for 

Costs, Benefits, and Transfers and Net 

Budget Impacts 

Assumptions 

We made assumptions in three areas 

in order to estimate the impact of the 

proposed regulations on the title IV, 

HEA programs: 

1. Program performance under the 

proposed regulations; 

2. Student behavior in response to 

program performance; and 

3. Growth rates of enrollment in GE 

programs. 

Program Performance Assumptions 

Given a program’s results under the 

D/E rates and pCDR measures in any 

year—passing, in the zone, or failing, or 

not evaluated because the program did 

not meet the minimum n-size 

requirements—we developed 

assumptions for the likelihood that, in 

the subsequent year, the program’s 

results would place it in any of the 

following six categories: 

1. Passing (program would have to 

pass both the D/E rates and pCDR 

measures); 

2. In the zone (program would be in 

the zone under the D/E rates and pass 

pCDR); 

3. Failing for the first time (program 

would be failing under either or both 

the D/E rates and pCDR measures); 

4. Failing for the second time 

(program would be failing for the 

second time under the pCDR measure; 

a second failure under the D/E rates 

measure would make the program 

ineligible); 

5. Ineligible under either or both 

measures (a program could become 

ineligible in one of three ways: (a) by 

failing the D/E rates measure for two 

consecutive years or two out of three 

consecutive years, (b) by being in the 

zone for four consecutive years, or (c) by 

failing pCDR for three consecutive 

years); and 

6. Not evaluated because the program 

failed to meet the minimum n-size 

requirements for both the D/E rates and 

pCDR measures. 

The likelihood of each of the year 1- 

year 2 combinations (e.g., a program 

could fail in year 1 but pass in year 2) 

are guided by our observations of the GE 

programs in our data set for which we 

were able to calculate D/E rates or pCDR 

for two consecutive years. For the D/E 

rates, the first year’s results are based on 

the outcomes of students who 

completed GE programs in FYs 2007 

and 2008, and the second year’s results 

are based on the outcomes of students 

who completed GE programs in FYs 

2008 and 2009. In order to maximize the 

number of programs in the two-year 

comparative analysis, we applied a 

minimum n-size of 10 for the D/E rates. 

For pCDR, the first year’s results are 

based on the outcomes of students who 

entered repayment in FY 2008, and the 

second year’s results are based on the 

outcomes of students who entered 

repayment in 2009. Table 30 shows the 

changes in results from year one to year 

two for the programs for which we 

could calculate two years of D/E rates or 

pCDR. 

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The observed changes in the two-year 

program results from our data set 

informed, but did not define, our 

assumptions for year-to-year program 

results because they are based on years 

in which there were no regulations 

regarding GE programs. Our 

assumptions for year-to-year program 

results are provided in Table 31. 

For year 1 to year 2, the assumed 

changes are identical to the observed 

two-year program results. We made one 

exception to this for programs that 

failed in two consecutive years because 

the assumptions must account for the 

difference in results for a program that 

failed the D/E rates measure twice, 

ineligibility, and one that failed the 

pCDR measure, a second fail. For this 

combination, fail in year 1 and fail in 

year 2, we used two data points to 

determine the percentage of programs 

that are assumed to be ineligible and the 

percentage of programs that are assumed 

to have a second fail. First, we observed 

in the two-year results that of the 

programs that fail in year 1, 57 percent 

fail in year 2. Second, we found that, of 

all failing programs in the year 2 data 

set regardless of whether they had a year 

1 result, 50 percent (49 percent 

rounded) failed the D/E rates. We used 

this to assume that of the 57 percent of 

year 1 failures that failed in year 2 in 

our two-year results, half, or 29 percent 

(28.5 percent rounded) would fail the 

D/E rates measure for a second 

consecutive year and therefore become 

ineligible. The other half, 29 percent 

(28.5 percent rounded), were assumed 

to receive a second consecutive pCDR 

failure, which would place these 

programs in the second fail category in 

our assumptions in Table 31. We 

maintained this even split for each year 

of our assumptions. After year 1 to year 

2, assume some first fail programs may 

fall into the not evaluated category in 

subsequent years because program 

enrollments and completions may 

fluctuate from year-to-year causing some 

programs to fall below the minimum 

n-size requirements for the GE 

measures. 

For the other categories of year 1-year 

2 program results, after year 1 to year 2, 

the assumed changes between program 

results are guided by the observed twoyear results but are adjusted slightly to 

reflect assumed improved program 

performance in response to the 

proposed regulations. So, each year, we 

assume a modest increase in the 

percentage of programs that improve 

from failing to zone or passing and from 

zone to passing. But, for year 4 to year 

5, as provided under the proposed 

regulations, we assume that some 

percentage of zone programs would 

become ineligible. 

Because we were only able to 

determine two years of program results 

from our data set, we did not have 

observed results for the second fail 

category. For the first year that second 

fail programs would exist, year 2, we 

assumed that a relatively large 

percentage of programs would become 

ineligible in the subsequent year. After 

that, as with the other categories, we 

assumed improved program 


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performance from year to year and 

gradually decreased the percentage of 

second fail programs that would become 

ineligible. 


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Table 31: Assumed Year-to-Year Program Results 

Result Result in Subsequent Year 

Year 1 Pass Zone First Second Fail Ineligible Not Evaluated Fail 

Pass 77 96 8 9

6 8% 0% 0 9

6 7% 

Zone 29% 37% 30% 0% 0% 4% 

First Fail 27% 16% 0% 29% 29% 0% 

Not Evaluated 9% 1% 1% 0% 0% 89% 

Year 2 Pass Zone First Second Fail Ineligible Not Evaluated Fail 

Pass 79% 7% 7% 0% 0% 7% 

Zone 31% 36% 28% 0% 0% 5% 

First Fail 28% 18% 0% 26% 26% 2% 

Second Fail 20% 20% 0% 0% 55% 5% 

Not Evaluated 9% 1% 1% 0% 0% 89% 

Year 3 Pass Zone First Second Fail Ineligible Not Evaluated Fail 

Pass 8l%- 6% 6% 0% 0% 7% 

Zone 35% 35% 25% 0% 0% 5% 

First Fail 3l% 2l% 0% 23% 23% 2% 

Second Fail 23% 22% 0% 0% 50% 5% 

Not Evaluated 9% 1% 1% 0% 0% 89% 

Year 4 Pass Zone First Second Fail Ineligible Not Evaluated Fail 

Pass 83% 5% 5% 0% 0% 7% 

Zone 38% 23% 21% 0% 13% 5% 

First Fail 35% 25% 0% 19% 19 9

6 2% 

Second Fail 27% 25% 0% 0% 43% 5% 

Not Evaluated 9% 1% 1% 0% 0% 89% 

Year 5 and after Pass Zone First Second Fail Ineligible Not Evaluated Fail 

Pass 85% 4% 4% 0% 0% 7% 

Zone 43% 24% 16% 0% 12% 5% 

First Fail 40% 30% 0% 14% 14% 2% 

Second Fail 30% 30% 0% 0% 35% 5% 

Not Evaluated 9% 1% 1% 0% 0% 89% 
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Student Response Assumptions 

Depending on the results that a 

program receives—passing, in the zone, 

failing in the first year, failing in the 

second year, ineligible—we developed 

assumptions for the likelihood that a 

student would transfer to a passing 

program, transfer to a zone program, 

remain in the program, or drop out. 

These assumptions were developed for 

two scenarios. The first scenario 

assumes that students would have a 

‘‘low reaction’’ to program results. The 

second assumes that students would 

have a ‘‘high reaction’’ to program 

results. Our assumptions regarding 

student responses to program results are 

provided in Table 32. These student 

response rates are based on our best 

judgment and are presented to facilitate 

comment on the estimated impacts of 

the proposed regulations. 

Enrollment Growth Rate Assumptions 

We estimated, for each fiscal year, the 

rate of growth or decline in enrollment 

of students in GE programs receiving 

title IV, HEA program funds. This 

estimate is based on the Department’s 

President’s Budget (PB) 2015 loan 

projections by institution type and, for 

for-profit institutions, level. The budget 

estimates for growth do not specify 

credential level, so we based our 

enrollment estimates for programs at 

public and private non-profit 

institutions on the estimates for 2-year 

or less institutions because the budget 

estimates for 4-year institutions would 

be driven to a greater extent by degree 

programs not subject to the proposed 


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Table 32: Assumed Student Response to Program Results 

Rate of student response 

Response of title IV students 

Low Reaction High Reaction 

Scenario Scenario 

Program receives zone result 

Transfers to passing program 30% 45% 

Remains in program 67% 47% 

Drops out 3% 8% 

Program fails for first time 

Transfers to passing program 20% 30% 

Transfers to zone program 15% 33% 

Remains in program 60% 25% 

Drops out 5% 12% 

Program fails for second time 

Transfers to passing program 30% 35% 

Transfers to zone program 22% 30% 

Remains in program 40% 20% 

Drops out 8% 15% 

Programs becomes ineligible 

Transfers to passing program 35% 40% 

Transfers to zone program 30% 30% 

Remains in program 25% 10% 

Drops out 10% 15% 
Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16605 

regulations. The 2-year or less category 

is the closest approximation of GE 

programs available in the budget 

projections, and so we applied these 

projections to public and private nonprofit institutions. For private for-profit 

institutions, the estimates are split into 

rates for 2-year or less and 4-year private 

for-profit institutions. For the PB 2015 

estimates, the Department had data 

through September 2013, so the 

estimates for 2010–2011 through 2012– 

2013 are based on actual data showing 

a decline in Stafford subsidized loans 

for 2-year public and private non-profit 

institutions, 2-year or less private forprofit institutions, and 4-year for-profit 

institutions. Our data also included the 

first quarter of the 2013–2014 award 

year. The first quarter generally 

represents about 50 percent of the loans 

in a given year, which was the basis for 

our estimate that enrollment will 

decline in the 2013–2014 and 2014– 

2015 award years. For subsequent years, 

we assumed a reversion to long-run 

historical averages for the relevant 

institutional categories. 

Methodology for Net Budget Impacts 

To calculate the net budget impacts 

estimate, we developed a simple model 

based on the assumptions previously 

described for the estimated yearly rate 

of enrollment change of students 

receiving title IV, HEA program funds in 

GE programs, program results, and 

student response to program results. 

We estimated the enrollment of 

students receiving title IV, HEA 

programs funds for FYs 2016–2024 by 

applying the enrollment growth 

assumptions to the enrollment of 

students receiving title IV, HEA program 

funds for FY 2010 that we determined 

based on data received from institutions 

through reporting under the 2011 Prior 

Rule. We then assumed that the program 

results—passing, zone, failing, and not 

evaluated—for 2016 would be identical 

to those under the 2012 GE 

informational rates but applied a 

minimum n-size of 15 for the D/E rates 

calculations. In order to ensure as 

accurate an estimate as possible, the 

distribution for the budget estimate is 

based on a D/E rates n-size of 15 

because we assume these programs 

would have 30 students who completed 

the program over a 4-year period and 

may be subject to the proposed 

regulations. It is important to note that 

the results provided in the ‘‘Analysis of 

the Proposed Regulations’’ section are 

based on a minimum n-size of 30 for the 

D/E rates measure. The estimated 2016 

enrollment and program results were 

used to establish an initial 2016 

distribution of students by program 

result. Table 34 provides the estimated 

initial 2016 distribution of programs 

and title IV enrollment by program 

result. 


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The estimated change in enrollment 

from 2016 to 2017 was then applied to 

this distribution of students. We then 

estimated student behavior in response 

to these results based on our student 

reaction assumptions to create the 

distribution of students at the beginning 

of the subsequent year, 2017, before the 

programs receive a second 

determination of their GE measures. 

Next, we applied our assumed change in 

year-to-year program results to the 

initial 2016 program results to create a 

new distribution of programs, and 

corresponding enrollment, to which 

ineligibility was added as a result since 

the second year of results is the first 

time that programs could become 

ineligible. We repeated this cycle for 

each subsequent year to 2024. The 

student response to program 

performance is assumed to be constant 

for each cycle while the year-to-year 

program transitions assume some 

institutional learning and improved 

ability to meet the GE measures over 

time as reflected in the reduced 

percentage of failing programs that 

become ineligible and increased 

percentage of programs that pass the GE 

measures in later years. 

This process produced a yearly 

estimate for the number of students 

receiving title IV, HEA program funds 

who will choose to enroll in a betterperforming program, remain in a zone, 

failing, or ineligible program, or will 

choose to drop out of postsecondary 

education altogether after their program 

receives a zone or failing result or 

becomes ineligible. The estimated net 

savings for the title IV, HEA programs 

results from students who drop out of 

postsecondary education in the year 

after the program that they are enrolled 

in receives rates that are zone or failing 

or who remain at a program that 

becomes ineligible for title IV, HEA 

program funds. We assume no budget 

impact on title IV, HEA programs from 

students who transfer from programs 

that are failing or in the zone to betterperforming programs as the students’ 

eligibility for title IV, HEA program 

funds carries with them across 

programs. To estimate the yearly Pell 

Grant and loan volume that would be 

removed from the system based on the 

low reaction and high reaction 

scenarios, we multiplied the number 

who leave postsecondary education or 

who remain in ineligible programs by 

the average Pell grant amount and 

average loan amount for each type of 

title IV, HEA program loan, from NPSAS 

2012, for students who received some 

type of title IV aid by sector and 

credential level. To determine the 

estimated subsidy cost of the reduced 

loan volume in the ‘‘Net Budget 

Impacts’’ section, the yearly loan 

volumes were multiplied by the PB 

2015 subsidy rates for the relevant loan 

type. 

Methodology for Costs, Benefits, and 

Transfers 

The estimated number of students for 

each response category was used to 

quantify the costs and transfers in the 

‘‘Discussion of Costs, Benefits, and 

Transfers’’ section of this analysis. We 

quantify a transfer of title IV, HEA 

program funds from programs that lose 

students to programs that gain students. 

We also quantify the transfer of 

instructional expenses as students shift 

programs as well as the cost associated 

with additional instructional expense to 

educate the students who transfer to 

better-performing programs. We 

calculated estimated costs and transfers 

for each year from 2017 to 2024. 

In this analysis, student transfers 

could be of students who enrolled in a 

program and switch programs or 

prospective students who choose an 

alternative program to one they would 

have chosen in the absence of the 

proposed regulations. Based on our 

assumptions, the average number of 

yearly transfers between 2017 and 2024, 

rounded to the nearest thousand, would 

be 172,000 for the low reaction scenario 

and 233,000 for the high reaction 

scenario, respectively. 

For both the low student reaction and 

high student reaction scenarios, we 

multiplied the estimated number of 

students receiving title IV, HEA program 

funds transferring from ineligible, 

failing, or zone programs each year by 

the average Pell Grant, Stafford 

subsidized loan, unsubsidized loan, 

PLUS loan, and GRAD PLUS loan, as 

determined by NPSAS 2012, to calculate 

the amounts of student aid that could 

shift with students each year. In order 

to annualize the amount of student aid 

transfers over the 2014–2024 budget 

window, we made two separate total net 

present value (NPV) calculations of each 

year’s estimated amount of transfer in 

student aid, one calculation using a 

discount rate of 3 percent, and the other 

using a discount rate of 7 percent. These 

two discount rates are standards set by 

OMB for use in the Accounting 

Statement provided in Table 41. As 

provided in Table 41, the estimated 

range for the amount of student aid 

transfers annualized over the 2014–2024 

budget window would be $1.4 billion 

(low reaction) to $2.0 billion (high 

reaction) at a 7 percent discount rate 

and $1.35 billion (low reaction) to $1.8 

billion (high reaction) at a 3 percent 

discount rate. 

As stated, we also quantify the 

transfer of instructional expenses as 

students shift programs as well as the 

cost associated with additional 

instructional expense to educate the 

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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16607 

performing programs. For the transfer of 

instructional expenses, we applied the 

$4,529 average for-profit instructional 

expense per enrollee for 2010–2011 

from IPEDS to the estimated number of 

annual student transfers from 2017– 

2024. We estimate that the range of 

annualized transfers in instructional 

expenses would be $705 million (low 

reaction) to $962 million (high reaction) 

at a 7 percent discount rate and $660 

million (low reaction) to $896 million 

(high reaction) at a 3 percent discount 

rate. 

For the analysis of the additional cost 

of educating students at betterperforming programs, we collected 

IPEDS data on instructional expenses 

for 2010–2011 and applied the expense 

per enrollee to each institution’s 

programs and determined the average 

instructional expense per enrollee of 

passing, zone, and failing programs in 

the 2012 GE informational rates. We 

applied a difference of $1,212 for those 

who transfer from failing to passing 

programs and $924 for those who 

transfer from zone to passing programs 

to the estimated number of students 

who will transfer between 2017 and 

2024. As provided in Table 41, we 

estimate that the range of the additional 

annualized cost of educating students at 

better-performing programs over the 

2014–2024 budget window would be 

$173 million (low reaction) to $236 

million (high reaction) at a 7 percent 

discount rate and $162 million (low 

reaction) to $230 million (high reaction) 

at a 3 percent discount rate. 

Discussion of Costs, Benefits, and 

Transfers 

The potential primary benefits of the 

proposed regulations are: (1) Improved 

and standardized market information 

about GE programs that would increase 

the transparency of student outcomes 

for better decision making by students, 

prospective students, and their families, 

the public, taxpayers, and the 

Government, and institutions and lead 

to a more competitive marketplace that 

encourages improvement; (2) 

improvement in the quality of programs 

and reduction in costs and student debt; 

(3) elimination of poor performing 

programs; (4) better return on 

educational investment for students, 

prospective students, and their families, 

as well as for taxpayers and the Federal 

Government; and (5) for institutions 

with high-performing programs, 

potential growth in enrollments and 

revenues resulting from the additional 

market information that would permit 

those institutions to demonstrate to 

consumers the value of their GE 

programs. 

We have considered and determined 

the primary costs and benefits of the 

transparency framework and 

accountability framework for the 

following groups or entities that we 

expect to be affected by the proposed 

regulations: 

• Students 

• Institutions 

• Federal, State, and local government 

We discuss first the broad benefits 

that we would expect to result from 

improved market information. We then 

describe the impact of the proposed 

regulations—both the costs and the 

benefits—for each of students, 

institutions, and the Federal 

Government and State and local 

governments. 

Improved Market Information 

The proposed regulations would 

provide a standardized process and 

format for students, prospective 

students, and their families to obtain 

information about borrowing, earnings, 

completion, and the incidence of 

defaults among GE programs. This 

information would allow them to make 

educated decisions based on reliable 

information about a program’s costs and 

the outcomes of former students. The 

proposed disclosures would provide 

prospective students with extensive, 

comparable, and reliable information 

that would assist them in avoiding 

overpaying and overborrowing for 

postsecondary credentials. 

As explained in connection with the 

2011 Prior Rule, the improved 

information that would be available as 

a result of the proposed regulations 

would also benefit institutions in 

addition to students, prospective 

students, and their families. 76 FR 

34491. We continue to believe that debt, 

earnings, and default information would 

provide a clear indication to institutions 

about whether their students are 

successful in securing positions that 

allow them to repay their loans and 

avoid default. Id. This information 

would help institutions determine when 

it would be prudent to expand programs 

or whether certain programs should be 

improved or eliminated or offered at a 

reduced cost. Id. Additionally, 

institutions may be encouraged to better 

prepare students for jobs in well-paying 

and in-demand fields in order to meet 

the requirements of the GE measures. Id. 

This effect could create an incentive for 

institutions to provide higher-quality 

and more comprehensive training, so 

that they prepare students for jobs with 

better salaries and employment 

prospects. 76 FR 34492. 

The information provided in the 

disclosures would also allow the public, 

taxpayers, and the Government to 

monitor the results of the Federal 

investment in these programs, and 

would allow institutions to see which 

programs produce exceptional results 

for students so that those programs may 

be emulated. 

Students 

Students would benefit from lower 

tuition prices or improved program 

quality as institutions with failing or 

zone programs seek to comply with the 

proposed regulations. Lower tuition 

may also result in reduced educational 

debt for students. Efforts to improve 

programs by offering student services to 

increase persistence and completion, 

work with employers to ensure 

graduates have needed skills, improve 

academic quality, and help students 

with career planning could lead to 

better outcomes and higher earnings 

over time. Students who graduate with 

manageable debts and adequate earnings 

would be able to save for retirement or 

other goals, form families, or take out 

other debt for home ownership or 

business opportunities. 

Students enrolled in programs that do 

not pass the proposed D/E rates measure 

or pCDR measure would be particularly 

affected by the proposed regulations. 

Based on the assumptions and 

methodology described previously in 

this section, we estimate that the FY 

2010 enrollment of students who 

received title IV, HEA program funds in 

programs that would fail either GE 

measure or fall in the zone under the D/ 

E rates measure is approximately 1.2 

million. We estimate that, in 2016, 

approximately 2.9 million students 

receiving title IV, HEA funds would be 

enrolled in programs evaluated under 

the proposed regulations, of which 

approximately 585,000 would be in 

failing programs and 223,000 in zone 

programs, totaling 808,000. As programs 

become ineligible for title IV, HEA 

program funds, students enrolled in 

those programs (or prospective students 

who would have enrolled in them) 

would have to choose among other title 

IV, HEA programs (at the same or other 

institutions), or pay for the program 

without the use of title IV, HEA program 

funds if the institution continues to 

offer the program. Similarly, students 

enrolled in programs that receive a zone 

or failing result would face a similar 

choice as to whether to transfer to a 

higher-performing program or remain in 

the program. Students who transfer to 

programs at other postsecondary 

institutions to continue their education 

could face increased commuting costs, 

additional tuition and fees if their 

credits do not transfer, or other costs 

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166 Goldin, C., and Cellini S. R. Does Federal 

Student Aid Raise Tuition? New Evidence on ForProfit Colleges. American Economic Journal: 

Economic Policy. Forthcoming. 

due to disruptions in their educational 

plans. 

Some students may choose to drop 

out of postsecondary education if their 

program loses title IV, HEA program 

eligibility or if the program receives a 

zone or failing result. We estimate that, 

under the low and high reaction 

scenarios, 22,000 current or prospective 

students in the low reaction scenario, 

and 45,000 current or prospective 

students in the high reaction scenario, 

would not continue postsecondary 

education in the year after the first 

program results are released under the 

proposed regulations. Some of these 

students may eventually continue their 

postsecondary education, but others 

may not return. 

The number of programs that could 

lose eligibility and the number of 

students who could transfer to another 

program or drop out of postsecondary 

education as a result of poor program 

performance raises a concern about the 

supply of GE programs available to 

students. In the short term, the supply 

of GE program enrollment capacity 

could be reduced, particularly in 

locations served by few providers, as 

programs become ineligible or 

institutions close programs that receive 

zone or failing results despite the 

opportunity to improve during the 

transition period. Over time, we expect 

existing or new postsecondary 

institutions to expand capacity among 

programs that meet the GE measures 

and to establish new programs, and that 

new and expanded programs would 

perform better than closed programs. 

Some students could also choose to 

enroll in programs at for-profit 

institutions outside of the Federal 

student aid system. Researchers 

estimate that 4,600 postsecondary 

institutions operate outside of the title 

IV, HEA programs, enrolling 

approximately 700,000 students, and 

that these institutions are ‘‘long-lived, 

surviving and apparently thriving 

without access to title IV funds,’’ and 

that they provide programs of 

comparable net price and quality to 

those operating inside the title IV, HEA 

system.166

Students would not only be affected 

by the results of the programs in which 

they are enrolled or plan to enroll in, 

but also by the proposed requirements 

that students read the disclosures and 

students warnings from institutions. We 

estimate that this would increase the 

paperwork burden on students by an 

estimated 2,167,129 hours in the initial 

year of reporting. The monetized cost of 

this additional burden on students, 

using wage data developed using 

Bureau of Labor Statistics data, available 

at www.bls.gov/ncs/ect/sp/ecsuphst.pdf, 

is $35,324,203 and is detailed more 

fully in Paperwork Reduction Act of 

1995. 

Institutions 

For institutions, the impact of the 

proposed regulations would likely be 

mixed. As noted in connection with the 

2011 Prior Rule, institutions with 

programs that do not pass, including 

programs that lose eligibility, are likely 

to see lower revenues and possibly 

reduced profit margins. 76 FR 34493. 

On the other hand, institutions with 

high-performing programs are likely to 

see growing enrollment and revenue 

and to benefit from additional market 

information that permits institutions to 

demonstrate the value of their programs. 

Id. 

As the proposed regulations are 

implemented, institutions would 

inevitably incur costs as they make 

changes needed to comply with the new 

regulations. These costs could include 

but would not be limited to one or more 

of the following, as they relate to 

satisfying the requirements of the 

proposed regulations: (1) Training of 

staff for additional duties, (2) potential 

hiring of new employees, (3) purchase 

of new software or equipment, and (4) 

procurement of external services. 

Compliance costs may be administrative 

in nature or aimed at improving 

program outcomes under the GE 

measures. As discussed in connection 

with the 2011 Prior Rule, an institution 

could choose to spend more on 

curriculum development to better link a 

program’s content to the needs of indemand and well-paying jobs in the 

workforce. 76 FR 34492. Institutions 

could also allocate more funds toward 

other functions, such as hiring better 

faculty; providing training to existing 

faculty to improve program outcomes; 

tutoring or providing other support 

services to assist struggling students; 

providing career counseling to help 

students find jobs; or other areas where 

increased investment could yield 

improved performance on the GE 

measures. Id. 

These costs are difficult to quantify as 

they would vary significantly by 

institution and ultimately depend on 

institutional behavior. Institutions 

where the majority of their programs are 

passing the proposed GE measures 

could be inclined to commit only 

minimal resources toward compliance 

activities associated with satisfying the 

requirements of the proposed 

regulations. Institutions with multiple 

failing or zone programs could decide to 

devote significant resources toward 

compliance activities, depending on 

their existing capacity levels. Small or 

single-program institutions with failing 

or zone programs could decide to 

commit a significant amount of 

resources to compliance activities as the 

suspension of the title IV, HEA program 

eligibility of one or more of their 

programs could have severe financial 

consequences or even lead to closure. 

However, regardless of performance, we 

expect that all institutions with GE 

programs would incur at least minor 

costs due to compliance-related 

activities. 

Whatever the costs institutions devote 

to program changes to improve results 

to comply with the proposed 

regulations, institutions would incur 

costs associated with the reporting and 

disclosure requirements of the proposed 

regulations. This additional workload is 

discussed in more detail under 

Paperwork Reduction Act of 1995. As 

discussed in connection with the 2011 

Prior Rule, additional workload would 

normally be expected to result in 

estimated costs associated with either 

the hiring of additional employees or 

opportunity costs related to the 

reassignment of existing staff from other 

activities. 76 FR 34493. In total, the 

proposed regulations are estimated to 

increase burden on institutions 

participating in the title IV, HEA 

programs by 4,775,248 hours in the first 

year of reporting as multiple years are 

reported at once. The monetized cost of 

this additional burden on institutions in 

the first year of reporting, using wage 

data developed using BLS data available 

at: www.bls.gov/ncs/ect/sp/

ecsuphst.pdf, is $174,535,314. This cost 

was based on an hourly rate of $36.55. 

We would expect this amount to 

decrease in subsequent years to 

approximately $29 million. 

As discussed in connection with the 

2011 Prior Rule, institutions would 

possibly incur administrative costs from 

enrolling additional students who 

transfer to their GE programs in 

response to the disclosures and 

warnings for other GE programs. 76 FR 

34492. Schools for which their required 

disclosure metrics reveal less than 

satisfactory outcomes for current or 

former students may experience revenue 

losses via enrollment decreases. We 

expect a strong response from 

prospective students who are notified 

that they may not be able to use title IV, 

HEA program funds in the future to 

attend a program they are considering. 

We also continue to project that some 

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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16609 

167U.S. Department of Education, National Center 

for Education Statistics, Condition of Education 

2010 table 416, available at https://nces.ed.gov/

programs/digest/d12/tables/dt12_416.asp. 

students may withdraw or transfer 

completely from an institution while 

others may transfer into another 

program at the institution if possible. Id. 

Institutions with programs of different 

costs may also incur revenue losses if 

current or prospective students choose 

to transfer or enroll in a less expensive 

program at the same institution. Id. 

Although lower costs are a driving 

factor for many passing programs and 

the transfer of students to passing 

programs might result in lower revenue 

across the postsecondary system, 

students might also examine the 

disclosure data and elect to attend a 

program in a different sector, CIP code, 

or credential level that could result in 

the student paying more than he or she 

would have paid for the original 

program, potentially increasing 

institutional revenues. Id. 

Expenses associated with educating 

students would also shift. Educating 

additional students requires a 

postsecondary education institution to 

incur additional costs—both fixed costs 

(for example, additional classroom 

space) and variable costs (such as hiring 

additional instructors). Id. As a result, 

there would be a shift of certain costs 

from institutions with zone and failing 

programs to institutions with passing 

programs. Id. We estimate that, on 

average over 2017–2024, approximately 

172,000 current or prospective students 

in the low reaction scenario and 233,000 

current or prospective students in the 

high reaction scenario would transfer 

programs annually. Applying the 

average instructional expense of $4,529 

for for-profit institutions from IPEDS 

data for 2010–2011,167 we estimate the 

annualized transfer of instructional 

expenses to be $705 million in the low 

reaction scenario to $962 million in the 

high reaction scenario at a 7 percent 

discount rate and $660 million in the 

low reaction scenario to $896 million in 

the high reaction scenario at a 3 percent 

discount rate. 

Assuming institutions act rationally 

in determining program offerings and do 

not offer programs at a loss for an 

extended period, a reduction or increase 

in enrollment would result in some 

profit loss or gain to sending or 

receiving institutions. Further, some 

institutions could decide to lower their 

tuition prices in response to the 

proposed regulations in order to ensure 

the long-term viability of their programs 

but, in the process, would reduce their 

revenue levels. 

The proposed regulations may lead to 

increased enrollments and revenue for 

those institutions with passing 

programs. As the public gains more 

information about GE programs, 

individuals would be able to make 

informed market decisions and identify 

high-performing programs that match 

their interests. As noted in connection 

with the 2011 Prior Rule, the better and 

clearer information that would be 

available about GE programs would also 

benefit institutions with highperforming programs, which could use 

their performance on the GE measures 

to differentiate themselves from 

competitors. 76 FR 34492. The proposed 

regulations would allow an institution 

to demonstrate to prospective students 

that its programs lead to better wages, 

lower debt burdens, and a higher 

likelihood of ability to repay student 

loan debt than competitor offerings— 

easily understandable data that tell a 

clear story about student success. Id. 

In the scenarios evaluated in ‘‘Net 

Budget Impacts,’’ we estimate that 

approximately 172,000 current or 

prospective students in the low reaction 

scenario and 233,000 current or 

prospective students in the high 

reaction scenario might transfer or elect 

to attend passing or zone programs 

annually instead of programs that fail 

the GE measures or become ineligible 

for title IV, HEA program funds. We 

estimate that approximately $1.4 billion 

in title IV, HEA Pell Grant aid and loan 

volume in the low reaction scenario and 

approximately $2.0 billion in the high 

reaction scenario at a 7 percent discount 

rate and $1.35 billion in title IV, HEA 

Pell Grant aid and loan volume in the 

low reaction scenario and 

approximately $1.8 billion in the high 

reaction scenario at a 3 percent discount 

rate would transfer between failing and 

ineligible programs to passing or zone 

programs on an annualized basis. These 

amounts reflect the anticipated high 

level of initial transfers as institutions 

adapt to the proposed regulations and 

failing and zone programs eventually 

lose eligibility for title IV, HEA program 

funds. We would expect the title IV, 

HEA program funds associated with 

student transfers related to the proposed 

regulations to decline in future years. 

These figures assume students would 

receive the same amount of title IV, 

HEA program funds at the new program 

as the program in which the student is 

currently enrolled. 

As noted in the 2011 Prior Rule, when 

students transfer programs, the expense 

of providing instruction shifts with 

them along with revenues and aid 

amounts. 76 FR 34492. The added 

expense of educating students at betterperforming programs is a cost, but, as 

we noted in the regulatory impact 

analysis of the 2011 Prior Rule, a cost 

associated with improved program 

quality. 76 FR 34492. To determine the 

added instructional costs resulting from 

student transfers, as described in 

‘‘Methodology for Costs, Benefits, and 

Transfers,’’ we applied the difference in 

instructional expenses per enrollee of 

$1,212 for those who transfer from 

failing to passing programs and $924 for 

those who transfer from zone to passing 

programs to the estimated number of 

students who will transfer from our net 

budget estimate. The additional cost of 

educating students who shift from lowperforming programs to programs with 

better results would be approximately 

$173 million under the low reaction 

scenario and $236 million under the 

high reaction scenario at a 7 percent 

discount rate and $162 million under 

the low reaction scenario and $220 

million under the high reaction scenario 

at a 3 percent discount rate on an 

annualized basis. 

Federal Government 

A primary benefit of the proposed 

regulations would be improved 

oversight and administration of the title 

IV, HEA programs. Additionally, as 

detailed in ‘‘Net Budget Impacts,’’ we 

anticipate some small savings in the 

title IV, HEA programs as some students 

who would have attended programs that 

fail the GE measures would elect not to 

pursue postsecondary education. Also, 

students enrolled in programs that 

become ineligible may choose to remain 

in those programs and forego Federal 

loans or Pell Grants or transfer to a forprofit institution that does not 

participate in the title IV, HEA 

programs. As provided in Tables 35 and 

36, based on the assumed responses of 

these students, we estimate a total 

savings of $666 million to $973 million 

over the 2014–2024 loan cohorts in the 

low reaction and high reaction scenarios 

respectively. This represents our best 

estimate of the effect on title IV, HEA 

programs. We assume that most 

students who transfer out of failing or 

zone programs to programs with better 

results would still receive title IV, HEA 

program funds, and accordingly 

estimate that the response of these 

students would have little to no impact 

on the title IV, HEA programs budget. 

State and Local Government 

As noted in connection with the 2011 

Prior Rule, if States choose to expand 

enrollment of passing programs, it is not 

necessarily the case that they will face 

marginal costs that are similar to their 

average cost or that they will only 

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16610 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

choose to expand through traditional 

brick-and-mortar institutions. 76 FR 

34493. The Department continues to 

find that many States across the country 

are experimenting with innovative 

models that use different methods of 

instruction and content delivery that 

allow students to complete courses 

faster and at a lower cost. Id. Rather 

than adding additional buildings or 

campuses, States may instead opt to 

expand online education offerings or try 

innovative practices like awarding 

credit when students demonstrate they 

have mastered a competency. Id. 

Forecasting the extent to which future 

growth would occur in traditional 

settings versus online education or some 

other model is outside the scope of this 

analysis. Id. 

We welcome comments on the effects 

of the proposed regulations on students, 

institutions, the Federal Government 

and State and local government, and 

other stakeholders. Any comments 

received will be considered in the 

development of the final regulations. 

Net Budget Impacts 

We do not expect these regulations to 

significantly affect Federal costs, as the 

vast majority of students are typically 

assumed to resume their education at 

another program in the event the 

program they are attending loses 

eligibility to participate in the title IV, 

HEA programs. As discussed in 

connection with the 2011 Prior Rule, 

scenarios presented in this regulatory 

impact analysis anticipate that some 

students would not pursue education if 

warned about debt burdens or if their 

program loses eligibility, so we have 

estimated potential Federal costs under 

the low reaction scenario and high 

reaction scenario. 76 FR 34495. We 

continue to project that estimated 

savings come from Federal loans and 

Pell Grants not taken by students who 

do not pursue an education in each 

scenario. Id. As provided in Tables 35 

and 36, the estimated net impact on the 

Federal budget between the FY 2014 

and FY 2024 loan cohorts is savings of 

$666 million in the low reaction 

scenario and $973 million in the high 

reaction scenario. A cohort reflects all 

loans originated in a given fiscal year. 

Consistent with the requirements of the 

Credit Reform Act of 1990, budget cost 

estimates for the student loan programs 

reflect the estimated net present value of 

all future non-administrative Federal 

costs associated with a cohort of loans. 

As discussed in connection with the 

2011 Prior Rule, estimated reductions in 

Pell Grants are offset by increased 

subsidy costs from reduced 

unsubsidized and PLUS loan volumes. 

76 FR 34495. As provided in Tables 35 

and 36, the estimated reductions in Pell 

Grants of approximately $702 million in 

the low reaction scenario and $1.0 

billion in the high reaction scenario 

would be offset by increased subsidy 

costs from reduced unsubsidized and 

PLUS loan volumes. We continue to 

believe that the potential savings 

represent our best estimate of the effect 

of the regulations on the Federal student 

aid programs, but student 

responsiveness to program performance, 

programs’ efforts to improve 

performance, and potential increases in 

retention rates could offset the 

estimated savings. Id. Tables 35 and 36 

present the net budget impact of the 

proposed regulations under the low 

reaction and high reaction scenarios. 

While Table 37 presents the 

approximate effect on the estimated 

initial 37,589 programs that would first 

be evaluated under the proposed 

regulations, it does not take into account 

the addition of new programs. 

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Table 35: Estimated Net Budget Impacts Summary Low Reaction Scena

2017 2018 2019 2020 2021 2022 

Students in GE Programs 

Overa_l IV 

2,933,625 3,OO6,30? 3,080,803 3,157, 3,235,606 3,316,013 3,398,510 

110del No_ 

Evaluated 8JO, 

;023 82'J,339 906,884 1,031,430 1,121,084 1,194,066 1,284,468 

EnroLed in 

Programs Passing 

bot:-_ netrics 1,516,121 1,663,661 1,71(,237 1,769,535 1,833,119 1, 89 /j, 853 

Zone Progra::ns 

non-failinq 

CDR 243,280 2'l (f :.398 232, USt; 11)'/ , 161,464 129,13') 

F.nrol ed in 

Programs Failing 

tor :.he Flyst 

3:10,718 12:1,019 10:),2:)2 86, 6R,310 

EnroL_ed in 

Programs Failing 

:::he Second 

Time (CDR Only) N/A I 12,023 I 13,125 I 11,788 I 3,197 I 1,979 

EnroL_ed in 

Ineligi:c)le 

Programs N/A 1 - 1 26,264 1 H, 1 9,08 7 1 12,99: 1 3,847 

Not Attending 

Non-Pdssln9 

Programs N/A 1 36,8 / 3 1 37,9991 26,721 1 21,638 1 19,121 1 ,915 

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Estimated Reduced Federal Student Aid Volumes from Students Leaving Post-Secondary Education 

Pell Gre.nts 102, 869, _·79,43[1,119 114,568,009 85,787,652 46,801, 

Sub.sidlLed LCdilS 96,609, "'02 107,596,048 80,567,100 24,996,454 43,953,1 7 5 

Unscbsidizej 

809, %4 13;,889,4B2 lUB, 921,021 :06,328,0,)/ 

LUc.Il,s 17,456,266 3e,448, 19,441,37 3 ::'s, , 52 13,357,88= 7,941,835 

Estimated Net Budget Impact using PB 2015 Subsidy Rates 

Pell Grc.nts 1('2,869, -' - , ,430,719 114,568,009 85,787,6!J2 90,504,01 46,801,23 L 

Subsidiz()j leans 9,322,836 19,699,004 13,589,381 11,903,003 6,522,651 

]oa:-:s (16,788,630) (75,0 7 7,4':,1 ) (14,961, (1 0, (10,456,99 L ) (4,917,443) 

PLUS Loc:ns (4,776,030 (7,605,938) (4,560, 6) (3,368,617) (3, 66,275) (1,727,349) 

Total 90,627,947 166,451,334 108,635,435 82,649,987 88,488,751 46,679,093 

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Table 36: Estimated Net Budget Impacts Summary - High Reaction Scenario 

2017 2018 2019 2020 2021 2022 

Students in GS Programs 

Overall title IV 

enrollme:-.- ,933,685 3,006,309 3,080,8:3 3, ,212 3,235,606 3,316,018 ,398,510 

110del Not 

Evall1atecl 820,339 970,928 1,096,383 1,190,704 1,267,::)18 

Enrolled In 

Programs Passing 

DoLb meLLlc:i 1,640,410 :,733,613 1,767,377 1,801,943 1,844,311 1,890,862 

Enrolled in DTE 

?:one ProGrams 

non-failing 

CDR 30,), ,04 1:,6,cb 101, 129 

Enrolled in 

Programs Fo.iling 

T.st 

T 

__ _____ _____ ____ ___ ___ 

34, __ 

Enrolled in 

?ro,;-rarns Failing 

for Lhe Second 

(CD" Only) N/A I - I 8,7:=:S I 3,154 I 2,386 I 1,6:J6 I 992 

in 

Ineligible 

Proc;rams N/A I - I 4,377 I 2,071 I If I 3,010 I SS4 

Dropping Out/ 

Not, 

Non-?assing 

Pro';!r<lms N/T, I 90,2:0:0 I 66,396 I 9, j! j I 40,084 I 36,060 I 2:0, j34 

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Estimated Reduced Federal Student Aid Volumes from Students Leaving Post-Secondary Education 

Pe11 Gra:-_::s 252,000,:::195 197,606,926 144, - ,04 L 7,096,932 109,036,314 72,840,622 

Subsidized Loans 2::\6,664, 6j!) ,423,910 10l), 911, 102,44//1.)":;) 

Un.sub.si di 

:::"'oans 303,297,253 237,231,8:6 173,552,215 140,933,193 131,291,932 87,668,064 

PT.nS 47, 7(]), (;1 /'4,4(ig,S4 - 9, R70, l 1 A, S11, 1 ()R 17,J('0,0:1J 

Estimated Net Budget Impact using PB 2015 Subsidy Rates 

GrCi:::_::l 252, 000, J95 97,606,926 144, - ,04 L7,096,B2 109,036,314 72,840,622 

Subsidized loans 22, 838, W4, LC;9 14,3,,2,9,,6 lO,l:,l,HO 

Unsub.'::iidized 

loarcs (dl,127,1 ) (27,612, ) (12,830,-116) (1'1,332,9C6) (12,601,025) (7,653,122) 

PLUS Loa:'s (11,699,852) (8,376,414) ( ,740,556) (4,598,037) (4,177,971) (2,688,416) 

Total 222,011,288 183,312,738 136,732,117 112,814,137 106,657,274 72,650,524 
The amounts presented represent our 

best estimate of the range of the net assumptions about student and 

budget impact given certain 

regulations and the data and results that 

institutional responses to the proposed 


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Table 37: Estimated Effect of the Proposed Regulations on Programs 

2016 2017 2018 2019 2020 2021 2022 

Pass 7,487 8,944 10,201 11,411 12,599 13,725 14,435 

Zone 988 1,482 1,708 1,779 1,586 1,504 1,434 

First Fail 1,511 1,171 1,292 1,270 1,158 958 978 

Second Fail N/A 431 305 297 241 162 134 

Ineligible N/A 431 541 450 369 247 191 

Not Evaluated 27,603 25,130 23,111 21,409 19,982 18,781 17,778 

Total 37,589 37,589 37,158 36,617 35,936 35,377 34,950 
16616 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

will be generated when the proposed 

regulations take effect. Many factors 

could affect whether the net budget 

impact falls within the range established 

by the scenarios presented or outside of 

that range. For example, if students, 

including prospective students, react 

more strongly to the consumer 

disclosures or potential ineligibility of 

programs than anticipated in the 

scenarios, the impact on Pell Grants and 

loans affected could increase 

substantially. Similarly, if institutions 

react to the implementation of the 

proposed regulations by modifying their 

program offerings, enrollment strategies, 

or pricing, the estimated enrollments 

and aid amounts used in the scenarios 

above could be overstated. 

As described in ‘‘Analysis of the 

Proposed Regulations,’’ the data 

available for analyzing the proposed 

regulations are subject to several 

limitations, among them the lack of 

performance information for certificate 

programs once disaggregated, the use of 

the old attribution rules that combined 

undergraduate and graduate debt at the 

same institutions, and the inability to 

predict the extent to which institutions 

would take advantage of the transition 

period to reduce the costs to students of 

failing and zone programs. Although 

these factors are not explicitly 

accounted for in the estimates, we 

expect that they would all operate to 

reduce the number of failing and zone 

programs and affected students. 

Additionally, as previously stated, we 

do not estimate any significant budget 

impact from student transfers when a 

program they attended or planned to 

attend loses eligibility for title IV, HEA 

program funds or when a program’s 

performance is disclosed. Although it is 

true that programs have varied costs 

across sector, CIP code, credential level, 

location, and other factors, the students’ 

eligibility for title IV, HEA program 

funds carries with them across 

programs. It is possible that passing and 

zone programs that students choose to 

transfer to could have lower prices than 

the failing or ineligible programs, and 

the amount of title IV, HEA program 

funds to GE programs may be reduced 

as a result of those transfers. However, 

students or counselors may also use the 

disclosures and earnings information to 

choose a different field of study or 

credential level which could result in 

increased aid volume. In general, we 

anticipate that overall aid to students 

who transfer among GE programs or to 

non-GE programs will not change 

significantly, so no net budget impact 

was estimated for these students. 

However, an estimated economic impact 

from transfers as an amount of revenues 

and instructional expenses that could 

transfer from zone, failing, and 

ineligible programs to zone and passing 

programs that receive students was 

presented in ‘‘Discussion of Costs, 

Benefits, and Transfers’’ and in the 

Accounting Statement. 

The effects previously described 

represent the estimated effects of the 

proposed regulations during the initial 

period of time after the proposed 

regulations take effect. We expect, as 

noted in connection with the 2011 Prior 

Rule, that the budget effects of the 

proposed regulations would decline 

over time as programs that could not 

comply are eliminated and institutions 

have more data about program 

performance under, and are more 

familiar with, the GE measures. 76 FR 

34484. This is similar to the pattern 

observed when cohort default rates 

(CDR) were introduced in 1989 with an 

initial elimination of the worstperforming programs followed by a new 

equilibrium in which programs 

complied with the minimum standards 

in the regulations. Id. We do not expect 

the impact of the proposed regulations 

on program results to drop off as sharply 

as occurred with the introduction of 

institutional CDR. This is because the 

inclusion of multiple measures, the 

need to fail the D/E rates measure at 

least twice in three consecutive years or 

not pass in four years and the need to 

fail the pCDR measure for three 

consecutive years to be ineligible, the 

transition period, and the continued 

introduction of new programs will 

extend the effect of the proposed 

regulations on program results. 

Alternate Enrollment Projections 

In developing the estimated net 

budget impact, we also analyzed the 

effects of the proposed regulations based 

on NCES enrollment projections instead 

of the PB 2015 budget loan estimates. 

Although the primary estimate of the 

net budget impact and the estimates in 

the ‘‘Discussion of Costs, Benefits, and 

Transfers’’ section are based on the 

Department’s budget projections, we are 

providing the results of the alternative 

NCES-based enrollment projections as 

additional information for commenters. 

TABLE 38—ALTERNATE NCES ENROLLMENT GROWTH RATES

Sector 2010–16 

(Percent) 

2017 

(Percent) 

2018 

(Percent) 

2019 

(Percent) 

2020 

(Percent) 

2021 

(Percent) 

2022 

(Percent) 

2023 

(Percent) 

Public ............................................... 7.00 1.50 1.60 1.50 1.30 0.90 1.20 1.20 

Private .............................................. 7.40 1.50 1.70 1.50 1.20 0.90 1.30 1.30 

In conducting this analysis, all other 

assumptions about student and program 

response were held constant. The 

estimated NCES-based enrollment of 

students receiving title IV, HEA program 

funds in 2016 would be 4.3 million 

compared to 2.9 million in the primary 

estimate and the estimated savings for 

the net budget impact across loan 

cohorts 2014–2024 would be $988 

million in the low reaction scenario to 

$1.4 billion in the high reaction 

scenario, compared to the primary 

estimate of $666 million and $973 

million, respectively. Tables 39 and 40 

present the estimated net budget 

impacts under the alternate NCES-based 

enrollment projections. We welcome 

comments on the estimates, data, and 

assumptions discussed in this 

regulatory impact analysis. 

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Table 39: Estimated Net Budget Impacts (NCES Enrollment Assumption) - Low 

Scenario 

2017 2018 2019 2020 2021 2022 

Students in GE 

OveLdll Ll_le 

=V enrollment 4, ,189 4,:340,693 L:,4 ,644 4,:d3,E:48 4,Yh,946 4,634, 44 

Model )lot 

Evaluated 1,:15,313 I,C30,484 1,17 1,674, 632 1 

,998 1,366,255 1,454,798 1,560,674 

EnI.Qlled III 

ProgrFl.mR 

Passin9 bo,:h 

:s 2, 97,156 2, "1 ,931 2,502,767 ,54:;,917 2,604,084 2,653,247 

Enrolled in DTE 

Zone Programs 

with 

(;DR lGO,?O- I cRG,90S 1 4;;',717 1 14:1,80R 1 ?F ,9491 279,897 I 180, Gil4 

8nrollpd in 

Progr:lms 

Failin9 for the First Time ,859 1 3,870 184,231 152,108 123,220 95,336 

J:;nro11ed in 

Programs 

Fi'liling the 

Second Time 

(CDR Only) N/A 1 - 1 65,7031 19,9361 17,2031 11,733 1 7, 

Enrolled in 

=neligible 

Proqrams N/A 1 41,064 1 2:,629 1 13,281 1 18,642 1 5,419 

Dropping OuLi 

Not Non-P:lssir:g 

Prog..cam.s N/A 1 58,289 1 53,3401 39,670 1 31,3921 ,696 1 18,J72 

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Estimated Reduced Federal Student Aid Volumes from Students Leaving Post-Secondary Education 

Pell 3ra::ts 162,'149,002 2',1'/, '/, l'I1, 1'04, '(06 l24, /31, '/01 129,380,182 6:0,:090," 

Buboidi£ed Loans 152,845,018 260,657,993 160,739,197 ,141,234 121,506,835 61,599,4:2 

Un::>uo::;lzll:C::E:.!d 

Loans 331,;, 20!J, 994, '-:0O, 1::0),116, un 18, 9LL, :031 

PLUS Loa,,"s 27,617,313 17,097,912 29,0'13,731 21,166,078 21,95'1,892 

Estimated Net Budget Impact using PB 2015 Subsidy Rates 

Pell ::Jr2:'.ts 162,749,002 277,547,995 171,154,706 ,731,701 129,380,182 65,590,2 

Subsidi.;;:cc_ 

_OaIlti 14,749 1 30,472,919 15,603,212 17,023,108 9,141, 

Unsubsidized 

_oans (26, 08!') (38, ,704 ) (:CS, 267,411) (14,948,81'0) (6,891,62"1) 

PLUS (7,556,105) (11,765, C58) (6,813,659) (4,897,831) (4,955,219) (2,420,842) 

Total 143,381,358 257,471,152 162,291,953 120,169,666 126,499,256 65,419,716 

, .. , , . 

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Table 40: Estimated Net Budget Impacts (NCES Enrollment Assumption) - High R

Scenario 

I I 

2016 2017 2018 2019 2020 2021 2022 

Students in GE Programs 

Overall 

IV 2nrollmcnt 4,276,789 ,340,693 ,412,644 4,478,297 4,533,6':8 4, ,946 4,634,444 

1 Not_ 

3v3.1uated _,015,313 1,030,484 1,276,358 _,465 / 227 1,538,53L, l,6E8,1 1,772,:133 

::::1r'Jlle::::t lD 

Pr:lgrC"!'ns 

both 

metrics 1 7771 2,446, 637 1 2,565, 023 1 2,580, 450 1 2,594,2':91 2,(17, 894 1 2,64:: , 

in 

LJ'l't; Progra'1ls 

CDR 234 I 226,195 I 183, GG4 I 141, U:J 

Progra::TtS 

for 

236,608 89,132 7'1,HO 6J,589 ,18,996 ,232 

::'::-lrolled in 

Prc>gra'1ls 

Foiling for 

Second 

Time (::::DR 

01 i y) N/A I - I 13,(,[113 I 4,104 I 3, LIL I ?,3 -I , J:1/ 

EP25MR14.084</GPH>mstockstill on DSK4VPTVN1PROD with PROPOSALS2

:o:1r:)llcd in 

N/A 6,844 3,116 1,976 779 

Out/ 

Not .I,ttRndjng 

Non - P,lSsing 

Pr:::>':;:rra:ns N/A 142,818 101,086 73,155 ,632 51,226 3'::,623 

Estimated Reduced Federal Student Aid Volumes from Students Leaving Post-Secondary Education 

Pell Grants 398,763,565 301,350,559 2:"2,957,577 169,222,758 155,C47, 101,6cl, 

LOdIlo 374,497 ,068 283,012,067 e99,998,183 ,924,817 145, Ell, 720 95,4 ,955 

TJ::1subsidizcd 

L03.ns 179,935,906 256,307,238 2C3, 669,755 186,6C8,321 122,311,128 

PLJS Loans 6;,66'7,328 51,137,03'7 36,137,379 ,893 26,31C,369 17,24 , 6 J4 

-"--

.. _ 

.. _- .. _------- 

Estimated Net Budget Impact using PB 2015 Subsidy Rates 

Pell 3rdIlLs 398,763,565 301,350,559 2e2, 957,577 169,222,758 155,C47, 101,6cl,916 

loans 36,138,967 33,084,Le 25,259,770 21,168,786 20,4CC,202 14,167,14 

U::-13UDsidized 

loans (65,079,309) «(2,108,716) (2 7 ,809,335) (2C,713, (17,91,1,rJ (10, G8C, 61 ) 

PLJS Loans (18,513,781) (12, ,032) (8, ,829) (6,644,858) (5,938, (3,75 , 9) 

Total 351,309,443 279,551,923 201,930,183 163,033,472 151,594,551 101,386,628 
Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16621 

Accounting Statement 

As required by OMB Circular A–4 

(available at http://

www.whitehouse.gov/sites/default/files/

omb/assets/omb/circulars/a004/a4.pdf), in Table 35, we have prepared an 

accounting statement showing the 

classification of the expenditures 

associated with the provisions of the 

proposed regulations. This table 

provides our best estimate of the 

changes in Federal student aid 

payments as a result of the proposed 

regulations. Expenditures are classified 

as transfers from the Federal 

Government to students receiving title 

IV, HEA program funds and from lowperforming programs to higherperforming programs. Transfers are 

neither costs nor benefits, but rather the 

reallocation of resources from one party 

to another. 

In order to generate the estimates 

presented, the Department made several 

assumptions about projected 

enrollments, aid amounts, programs 

covered by the proposed regulations, 

student reaction to program 

performance, and the likelihood of 

program results under the GE measures 

changing from year to year. 

TABLE 41—ACCOUNTING STATEMENT

Low reaction scenario High reaction scenario 

Category Benefits 

Improved market information and development of measures linking programs to labor market outcomes ................................................................. Not Quantified Not Quantified 

Better return on money spent on education .................................................... Not Quantified Not Quantified 

Category Costs 

Discount Rate .................................................................................................. 3% 7% 3% 7% 

Additional expense of educating transfer students at passing programs ....... $162 $173 $220 $236 

Cost of Compliance with Paperwork Burden ................................................... $54.8 (3%); $58.5 (7%) 

Category Transfers 

Discount Rate .................................................................................................. 3% 7% 3% 7% 

Transfer of Federal student aid money from failing programs to the Federal 

government when students drop out of programs ....................................... $70 $75 $103 $110 

Estimated Transfer of revenues from non-passing programs to passing or 

zone programs as students transfer ............................................................ $1,353 $1,447 $1,837 $1,974 

Estimated Transfer of instructional expenses from non-passing programs to 

passing or zone programs as students transfer .......................................... $660 $705 $896 $962 

Sensitivity Analysis 

We have also prepared alternative 

accounting statements using varied 

student response and program 

performance assumptions to 

demonstrate the sensitivity of the 

estimated effects of the proposed 

regulations to these factors. The 

assumptions about institution and 

student reactions are critical to this 

analysis. We offer several scenarios to 

illuminate how varying these 

assumptions would affect the title IV, 

HEA programs and institutions offering 

GE programs. We attempt to offer 

extreme scenarios in order to bound the 

estimates of effects although we believe 

these extreme scenarios are unlikely to 

occur. 

Alternative Program Performance 

Assumptions 

In addition to the primary program 

response assumptions provided in Table 

31, we created two additional program 

response scenarios, a negative program 

response assumption and a positive 

program response assumption. 

Negative Program Response: In this 

extreme worst case scenario, we 

assumed institutions would have no 

success in improving programs over 

time so the program performance 

transition rates are held constant. Table 

42 presents the program response for 

this assumption. 

TABLE 42—NEGATIVE PROGRAM RESPONSE ASSUMPTION

Result Result in subsequent year 

Evaluated Year Pass Zone First fail Second fail Ineligible Not evaluated 

Pass ......................................................... 25% 50% 20% 0% 0% 5% 

Zone ......................................................... 0% 20% 75% 0% 0% 5% 

First Fail ................................................... 0% 0% 0% 0% 100% 0% 

Second Fail .............................................. 0% 0% 0% 0% 100% 0% 

Not Evaluated .......................................... 0% 0% 15% 0% 0% 85% 

Positive Program Response: In this 

best case scenario, we assume 

institutions would be highly successful 

in improving program performance and 

the rate of improvement would 

accelerate as institutions have more 

time to adjust to the proposed 

regulations. Table 43 presents the 

program response for this assumption. 

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16622 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

Alternative Student Response 

Assumptions 

Zero Student Response: In this 

extreme scenario, we assume that 

students would have no reaction to 

program results, regardless of the 

outcome. As a result, there would be no 

student transfers or drop outs and 

associated costs or economic transfers in 

response to the proposed regulations. 

There would still be a net budget impact 

due to students remaining in ineligible 

programs for which they could no 

longer receive title IV, HEA program 

funds. We applied the zero student 

response scenario to the primary 

program response assumption described 

in ‘‘Discussion of Costs, Benefits, and 

Transfers,’’ the positive program 

response alternative assumption, and 

the negative program response 

alternative assumption. Under the 

primary program response assumption, 

the annualized net budget impact for the 

no student response scenario would be 

$157 million at a 3 percent discount rate 

and $167 million at a 7 percent discount 

rate. As no programs become ineligible 

under the positive program response 

assumption, the net budget impact 

would be $0 in that scenario. For the 

negative program response assumption, 

the annualized net budget impact would 

be $1 billion. 

Student Response Only to Ineligibility: 

We assumed two scenarios where 

students would not react to warnings 

and disclosures, but might have some 

reaction when a program becomes 

ineligible for title IV, HEA program 

funds. The first scenario assumes 50 

percent of students would drop out and 

50 percent of students would transfer 

when faced with ineligibility. The 

second scenario evenly divides the 

responses between students who would 

drop out, transfer, and remain in the 

program. Table 44 presents the student 

response assumptions for these two 

scenarios. For transfers in both 

scenarios, 85 percent of students who 

transfer are assumed to transfer to 

passing programs and 15 percent to 

zone programs. This matches the split of 

enrollment in passing and zone 

programs as a percent of enrollment in 

evaluated programs that did not fail in 

the 2012 GE informational rates sample. 


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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16623 

The costs and transfers associated 

with the student response only to 

ineligibility scenarios are provided in 

Tables 45 and 46. Only the primary 

program and negative program response 

scenarios are provided as no programs 

reach ineligibility under the positive 

program assumption. 


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Table 44: Assumptions for Student Response Only to 

Ineligibility Scenarios 

Rate of Student Response 

No Reaction Until Ineligibility 

Response of students receiving title IV, HEA 

program funds 

34% Drop, 33% 50% Drop,50% Transfer and 33% 

Remain Transfer 

Program receives zone result 

Transfers to passing program 33% 

Remains in program 33% 

Drops out 34% 

Program fails for first time 

Transfers to passing program 28% 

Transfers to zone program 5% 

Remains in program 33% 

Drops out 34% 

Program fails for second time 

Transfers to passing program 28% 

Transfers to zone program 5% 

Remains in program 33% 

Drops out 34% 

Programs becomes ineligible 

0% 

100% 

0% 

0% 

0% 

100% 

0% 

0% 

0% 

100% 

0% 

Transfers to passing program 28% 42.5% 

Transfers to zone program 5% 7.5% 

Remains in program 33% 0% 

Drops out 34% 50% 
16624 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 


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Table 45: Costs and Transfers Associated with Student 

Response Only to Ineligibility: 50 Percent Drop Out/50 

Percent Transfer 

No Student Reaction Until Ineligibility; Then 50% Drop 

and 50% Transfer 

Estimates Primary Program Negative Program 

Average Annual Student Transfers over 36,000 288,000 2017-2024 

Average Annual Student Dropouts over 36,000 288,000 2017-2024 

3% 7% 3% 7% 

Better return on money spent on education 

Not Quantified Not Quantified 

Additional expense of educating transfer 

students at passing programs 

$37 $39 $283 $286 

Transfer of Federal student aid money 

from failing programs to the Federal 

government when students drop out of 

programs 

$81 $85 $633 $640 

Estimated Transfer of revenues from nonpassing programs to passing or zone 

programs as students transfer 

$281 $297 $2,167 $2,194 

Estimated Transfer of instructional 

expenses from non-passing programs to 

passing or zone programs as students 

transfer 

$137 $145 $1,057 $1,070 
Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16625 

Strong Student Response to Program 

Results: We also assumed three 

scenarios in which students are highly 

responsive to program performance. The 

first scenario assumes 100 percent of 

students would drop out in response to 

any non-passing program result. The 

effect of this scenario is reflected in the 

transfer of title IV, HEA program funds 

from students at non-passing programs 

to the Federal Government as they drop 

out of postsecondary education. The 

second scenario assumes that 100 

percent of students would transfer in 

response to any non-passing program 

result, with 85 percent of those who 

transfer assumed to transfer to passing 

programs and 15 percent to zone 

programs. The third scenario evenly 

divides the responses between students 

who will drop out, transfer, and remain 

in the program. Table 47 presents the 

student response assumptions for these 

three scenarios. 


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16626 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

The costs and transfers associated 

with the strong student response 

scenarios are provided in Tables 48, 49, 

and 50. 


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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16627 


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Table 48: Costs and Transfers Associated with Strong 

Student Response: 100 Percent Drop Out Scenario 

100% Drop for Any Non-passing Status 

Positive Primary Estimates Program Program Negative Program 

Average Annual Student Transfers over 2017-2024 

Average Annual Student Dropouts over 2017-2024 312,000 250,000 587,000 

3% 7% 3% 7% 3% 7% 

Better return on money spent on education Not Not 

Quantified Quantified Not Quantified 

Additional expense of educating transfer 

students at passing programs 

$0 $0 $0 $0 $0 $0 

Transfer of Federal student aid money from 

failing programs to the Federal government when 

students drop out of programs 

$693 $739 $556 $603 $1,302 $1,374 

Estimated Transfer of revenues from nonpassing programs to passing or zone programs as 

students transfer 

$0 $0 $0 $0 $0 $0 

Estimated Transfer of instructional expenses 

from non-passing programs to passing or zone 

programs as students transfer 

$0 $0 $0 $0 $0 $0 
16628 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 


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Table 49: Costs and Transfers Associated with Strong 

Student Response: 100 Percent Transfer Scenario 

100% Transfer for Any Non-Passing Status 

Estimates Positive Program Primary Program Negative Program 

Average Annual Student Transfers over 303,000 349,000 1,739,000 2017-2024 

Average Annual Student Dropouts over 

2017-2024 

3% 7% 3% 7% 3% 7% 

Better return on money spent on 

education Not Quantified Not Quantified Not Quantified 

Additional expense of educating 

transfer students at passing programs 

$301 $324 $322 $347 $1,465 $1,493 

Transfer of Federal student aid money 

from failing programs to the Federal 

government when students drop out of 

programs 

$0 $0 $0 $0 $0 $0 

Estimated Transfer of revenues from 

non-passing programs to passing or 

zone programs as students transfer 

$2,833 $3,021 $2,750 $2,956 $13,150 $13,385 

Estimated Transfer of instructional 

expenses from non-passing programs to 

passing or zone programs as students 

transfer 

$1,381 $1,473 $1,341 $1,441 $6,411 $6,526 
Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16629 

Return on Investment Analysis 

Students who transfer to betterperforming programs would be expected 

to experience higher earnings. However, 

some students that leave postsecondary 

education in response to their program’s 

performance under the proposed 

regulations would lose the associated 

earnings gains. As an illustrative 

example, we estimated the change in the 

lifetime earnings associated with 

postsecondary education for the 

estimated number of students who 

would transfer and who would dropout 

because of the proposed regulations. We 

offer this example to underscore that 

increased earnings from postsecondary 

education is a necessary condition for 

students to pay back their student debt 

obligations. 

Assumptions and Methodology 

Our budget estimate generates a 

number of students who drop out in 

response to a non-passing program 

result and makes no assumption about 

their future education. For this analysis, 

we assume that they do not return to 

postsecondary education. Table 51 

shows the estimated transfers and 

dropouts used for the analysis of the 

impact of the proposed regulations on 

earnings. 


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16630 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

Based on these transfer and dropout 

assumptions, we calculated the net 

present value of total lifetime earnings 

based on the age-profile of earnings for 

a high school graduate assuming work 

between ages 24 and 64, as provided in 

Table 52, and valued each transfer 

category (fail to zone, fail to pass, zone 

to pass, fail to drop, and zone to drop) 

based on the difference in the net 

present value of lifetime earnings. The 

net present value was discounted for 

two rates, 3 percent and 7 percent, and 

we assumed a return on investment (in 

terms of the percentage improvement in 

earnings at every age), using the 

earnings of a worker with a high school 

degree as a baseline, of 2 percent for 

students who attend a failing program, 

4 percent for a zone program, and 6 

percent for a passing program. We 

calculated earnings differentials for both 

the low reaction and high reaction 

student response scenarios. 


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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16631 


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Table 52: Wage Profile of High School Workers 

Age Average Salary for HS Fail (2% Zone (4% Pass (6% 

Workers (CPS) return) return) return) 

24 $16,808 $336 $672 $1,008 

25 $19,823 $396 $793 $1,189 

26 $20,617 $412 $825 $1,237 

27 $19,829 $397 $793 $1,190 

28 $24,660 $493 $986 $1,480 

29 $22,006 $440 $880 $1,320 

30 $23,854 $477 $954 $1,431 

31 $26,070 $521 $1,043 $1,564 

32 $27,042 $541 $1,082 $1,623 

33 $26,466 $529 $1,059 $1,588 

34 $27,171 $543 $1,087 $1,630 

35 $28,851 $577 $1,154 $1,731 

36 $30,830 $617 $1,233 $1,850 

37 $29,441 $589 $1,178 $1,766 

38 $32,280 $646 $1,291 $1,937 

39 $28,145 $563 $1,126 $1,689 

40 $29,914 $598 $1,197 $1,795 

41 $29,845 $597 $1,194 $1,791 

42 $32,901 $658 $1,316 $1,974 

43 $31,600 $632 $1,264 $1,896 

44 $29,614 $592 $1,185 $1,777 

45 $30,331 $607 $1,213 $1,820 

46 $32,983 $660 $1,319 $1,979 

47 $30,504 $610 $1,220 $1,830 

48 $32,425 $649 $1,297 $1,946 

49 $32,997 $660 $1,320 $1,980 

50 $33,579 $672 $1,343 $2,015 
16632 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

Earnings Differential Estimates 

Our return on investment estimates 

are presented in Table 53. For students 

who dropout, we estimate a loss of 

earnings ranging from $2.8 billion and 

$6.9 billion in the high reaction scenario 

at 7 percent and 3 percent discounting, 

respectively, compared to $1.3 billion 

and $3.3 billion in the low reaction 

scenario at 7 percent and 3 percent 

discounting, respectively. For students 

who remain in postsecondary education 

and transfer to higher-performing 

programs, the lifetime gain in earnings 

ranges between $14.6 billion (7 percent) 

and $35.5 billion (3 percent) in the high 

reaction scenario and $11.1 billion (7 

percent) and $27.1 billion (3 percent) in 

the low reaction scenario. 


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Regulatory Alternatives Considered 

As part of the development of the 

negotiators representing institutions, 

and proposals from non-Federal 

process in which we received comments 

engaged in a negotiated rulemaking 

proposed regulations, the Department 

exemptions for programs with low 

student protections for failing programs, 

of proposals relating to placement rates, 

Federal negotiators submitted a variety 

State Attorneys General. The nonaid administrators, accreditors, and 

consumer advocates, students, financial 

site at 

proposals is available on the GE Web 

proposals. Information about these 

new programs, as well as other 

approval requirements for existing and 

borrowing or default rates, rigorous 

http://www2.ed.gov/policy/


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Table 53: Earnings Differential Analysis 

3% DISCOUNT RATE: 7% DISCOU

High Reaction NPV of switch 2016-2026 NPV NPV of switch 

Scenario 

Fail to Zone $14,794 $8,893,568,138 $7,305 Fail to Pass $29,587 $16,792,727,610 $14,610 

Zone to Pass $14,794 $9,778,392,031 $7,305 

Fail to Drop -$14,794 -$3,437,997,414 -$7,305 

Zone to Drop -$29,587 -$3,476,761,611 -$14,610 

Total Cost/Benefit $28,549,928,754 

Low Reaction NPV of switch 2016-2026 NPV NPV of switch 

Scenario 

Fail to Zone $14,794 $5,521,786,224 $7,305 Fail to Pass $29,587 $14,369,008,445 $14,610 

Zone to Pass $14,794 $7,199,997,645 $7,305 

Fail to Drop -$14,794 -$1,861,102,532 -$7,305 

Zone to Drop -$29,587 -$1,439,999,529 -$14,610 

Total Cost/Benefit $23,789,690,252 
16634 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

highered/reg/hearulemaking/2012/

gainfulemployment.html. 

In addition to the proposals from the 

non-Federal negotiators and the public, 

the Department considered alternatives 

to the proposed regulations based on its 

own analysis. We considered both 

alternative provisions within the GE 

measures we have proposed, as well as 

alternatives to the GE measures 

themselves. Important alternatives that 

were considered are discussed below 

and Table 60 summarizes the estimated 

impacts of key alternatives considered 

for the calculation of the D/E rates. We 

welcome comments on the alternatives 

discussed and will consider any such 

feedback in the development of the final 

regulations. 

Alternative Components of D/E Rates 

Measure 

N-Size 

For the purpose of calculating the 

D/E rates measure, we considered 

reducing the n-size for program 

evaluation to 10 students who 

completed a program in a two-year 

cohort period. As a result, 11,050 

programs, or programs accounting for 

approximately 75 percent of the FY 

2010 enrollment of students receiving 

title IV, HEA program funds, would be 

subject to evaluation on at least one GE 

measure, as opposed to 60 percent if we 

use a program n-size of 30. Although we 

believe an n-size of 10 students who 

complete the program would be 

reasonable for the D/E rates, we elected 

to retain the n-size of 30 for both GE 

measures, but to include those who 

completed over a four-year period if 

needed to achieve a 30-student cohort 

for a given program. Our data shows 

that, using the two-year cohort period, 

5,539 programs have enough students 

who completed the program to satisfy 

an n-size of 30, with those students 

representing approximately 60 percent 

of students who received title IV, HEA 

program funds for enrolling in a 

program. Further, we estimate that, by 

using both a two-year cohort period and 

a four-year cohort period, we would 

include in the D/E rates measure 

calculation approximately 70 percent of 

students who received title IV, HEA 

program funds for enrolling in GE 

programs. 

TABLE 54—EFFECT OF N-SIZE ON PROGRAMS EVALUATED UNDER THE D/E RATES MEASURE

Result 

N=10 N=30 

Programs Enrollment Programs Enrollment 

Pass ................................................................................................................. 9,023 2,058,028 4,256 1,715,421 

Zone ................................................................................................................. 1,271 495,936 832 446,719 

Fail ................................................................................................................... 756 395,717 451 359,143 

Total .......................................................................................................... 11,050 2,949,681 5,539 2,521,283 

Interest Rates 

The interest rate used in the D/E rates 

calculations has a substantial effect on 

the performance of programs with 

respect to the D/E rates measure. 

TABLE 55—INTEREST RATE IMPACT ON D/E RATES RESULTS (TOTAL 5,539 PROGRAMS) 

Interest Rate 3% 4% 5% 6% 7% 8% 9% 

Passing Programs ........ 4,555 4,441 4,304 4,185 4,033 3,919 3,795 

Zone Programs ............ 670 728 807 855 948 986 1,033 

Failing Programs .......... 314 370 428 499 558 634 711 

Note: 10–15–20 amortization, minimum program n-size of 30, 2008–2009 two-year cohort period. 

The Department considered several 

options. Some non-Federal negotiators 

suggested using the actual rates on an 

individual borrower level, but we 

believe that would be unnecessarily 

complicated. Although the calculation 

of the D/E rates is based on a group of 

students who completed a program over 

a particular two- or four-year period, the 

date on which each of these students 

may have taken out a loan and, with it, 

the interest rate on that loan, varies. 

Averaging the interest rates over the six 

years prior to the end of the applicable 

cohort period is designed to 

approximate the interest rate that a large 

percentage of the students in the 

calculation received, even those 

students who attended four-year 

programs, and to mitigate any year-toyear fluctuations in the interest rates 

that would cloud the performance of 

programs under the D/E rates measure. 

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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16635 

168Projected interest rates from Budget Service 

used in calculations requiring interest rates for 

future award years. 

TABLE 56—OPTIONS FOR DETERMINING INTEREST RATE168 FOR D/E RATES CALCULATION

Four-year average Three-year average Two-year average 

2YP 2YPMED UG 

(%) 

GRAD 

(%) 

MED 

(%) 

UG 

(%) 

GRAD 

(%) 

MED 

(%) 

UG 

(%) 

GRAD 

(%) 

MED 

(%) 

08–09 05–06 6.43 6.43 4.04 6.80 6.80 4.03 6.80 6.80 4.34 

11–12 08–09 6.80 6.80 6.43 6.80 6.80 6.80 6.80 6.80 6.80 

12–13 09–10 6.80 6.80 6.80 6.80 6.80 6.80 6.80 6.80 6.80 

13–14 10–11 6.07 6.45 6.80 5.82 6.34 6.80 5.33 6.11 6.80 

14–15 11–12 5.61 6.38 6.80 5.21 6.24 6.80 4.42 5.97 6.80 

15–16 12–13 5.26 6.42 6.80 4.75 6.29 6.80 5.19 6.73 6.80 

16–17 13–14 4.99 6.53 6.45 5.37 6.90 6.34 5.57 7.09 6.11 

Amortization Period 

The proposed regulations apply the 

same 10-, 15-, 20-year amortization 

periods by credential level as under the 

2011 Prior Rule. Accordingly, under the 

proposed regulations, in calculating the 

annual loan payment for the purpose of 

the D/E rates measure, we would use a 

10-year amortization period for 

certificate and associate degree 

programs, a 15-year amortization period 

for baccalaureate and master’s degree 

programs, and a 20-year amortization 

period for doctorate and first 

professional degree programs. We did 

consider several options and presented, 

as an alternative, a 10-year amortization 

period for all programs, which we 

believe is reasonable especially in light 

of the decision to evaluate graduate 

programs on graduate-level debt only. 

As discussed in ‘‘§ 668.404 Calculating 

D/E rates’’ in Significant Proposed 

Regulations, we looked at available data 

on the repayment plan selection of 

existing borrowers, the repayment 

patterns of older loan cohorts, and 

available amortization periods for 

different loan balances under 

consolidation loan repayment rules. 

Although the prevalence of the standard 

10-year repayment plan and data related 

to older cohorts could support 10-year 

amortization for all credential levels, the 

Department retained the split 

amortization approach for the proposed 

regulations. Growth in loan balances, 

the introduction of plans with longer 

repayment periods than were available 

when those older cohorts were in 

repayment, and some differentiation in 

repayment periods by credential level in 

more recent cohorts contributed to this 

decision. 

As expected, extending the 

amortization period would reduce the 

number of programs that fail the D/E 

rates measure. The greatest effect would 

be on graduate-level programs. As can 

be seen in Tables 57 and 58, when the 

10-year and 20-year amortization 

periods are applied, the D/E rates 

measure failure rate across all sectors 

and credential levels changes from 9.0 

percent (for 10-year amortization) to 2.8 

percent (for 20-year amortization), but 

for first professional degrees, from 70 

percent to 30 percent, and from 45.5 

percent to 25.8 percent for bachelor’s 

degrees. 

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16636 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

TABLE 57—D/E RATES

RESULTS BY

SECTOR AND

CREDENTIAL (5.42% INTEREST

RATE, N-SIZE OF 30, 10-YEAR

AMORTIZATION) 

Sector & IHE type Credential level Programs Pass Zone Fail Pass% Zone% Fail % 

Public 

<2 year ............................... Certificate ....................................................................... 157 157 0 0 100.00 0.00 0.00 2-year ................................. Certificate ....................................................................... 824 823 1 0 99.88 0.12 0.00 4-year ................................. Certificate ....................................................................... 86 84 1 1 97.67 1.16 1.16 

Post-Bacc Certificate ...................................................... 26 26 0 0 100.00 0.00 0.00 

Private 

<2 year ............................... Certificate ....................................................................... 49 48 1 0 97.96 2.04 0.00 2-year ................................. Certificate ....................................................................... 73 70 3 0 95.89 4.11 0.00 

Post-Bacc Certificate ...................................................... 1 1 0 0 100.00 0.00 0.00 

4-year ................................. Certificate ....................................................................... 91 88 1 2 96.70 1.10 2.20 

Post-Bacc Certificate ...................................................... 39 38 0 1 97.44 0.00 2.56 

For-Profit 

<2 year ............................... Certificate ....................................................................... 1,100 919 153 28 83.55 13.91 2.55 

Associate’s ..................................................................... 5 4 1 0 80.00 20.00 0.00 1st Professional Degree ................................................. 4 4 0 0 100.00 0.00 0.00 

2-year ................................. Certificate ....................................................................... 1,223 969 217 37 79.23 17.74 3.03 

Associate’s ..................................................................... 452 236 153 63 52.21 33.85 13.94 Post-Bacc Certificate ...................................................... 2 2 0 0 100.00 0.00 0.00 

4-year ................................. Certificate ....................................................................... 267 180 68 19 67.42 25.47 7.12 

Associate’s ..................................................................... 514 206 164 144 40.08 31.91 28.02 Bachelor’s ....................................................................... 407 175 47 185 43.00 11.55 45.45 Post-Bacc Certificate ...................................................... 8 8 0 0 100.00 0.00 0.00 Master’s .......................................................................... 171 153 6 12 89.47 3.51 7.02 Doctoral .......................................................................... 30 26 2 2 86.67 6.67 6.67 1st Professional Degree ................................................. 10 2 1 7 20.00 10.00 70.00 

Total 5,539 4,219 819 501 76.17 14.79 9.04 

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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16637 

D/E Rate Thresholds and the Zone 

We also considered the related issues 

of the appropriate thresholds for the D/ 

E rates measure and whether there 

should be a zone. The proposed 

regulations would establish stricter 

passing thresholds than the thresholds 

in the 2011 Prior Rule. The passing 

threshold for the discretionary income 

rate would be 20 percent instead of 30 

percent, and the threshold for the 

annual earnings rate would be 8 percent 

instead of 12 percent. Additionally, the 

proposed regulations add a zone 

category for programs with a 

discretionary income rate greater than 

20 percent but less than or equal to 30 

percent or an annual earnings rate 


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Table 58: DIE Rates Results by Sector and Credential 

(5.42% Interest Rate, N-Size of 30, 20-Year Amortization 

Sector & IHE Credential Level Programs Pass Zone Fail Pass% Zone % Fail % 

Type 

Public 

<2 year Certificate 157 157 0 0 100.00% 0.00% 0.00% 

2-year Certificate 824 824 0 0 100.00% 0.00% 0.00% 

4-year Certificate 86 86 0 0 100.00% 0.00% 0.00% 

Post-Bacc Certificate 26 26 0 0 100.00% 0.00% 0.00% 

Private 

<2 year Certificate 49 49 0 0 100.00% 0.00% 0.00% 

2-year Certificate 73 73 0 0 100.00% 0.00% 0.00% 

Post-Bacc Certificate 1 1 0 0 100.00% 0.00% 0.00% 

4-year Certificate 91 89 1 1 97.80% 1.10% 1.10% 

Post-Bacc Certificate 39 38 1 0 97.44% 2.56% 0.00% 

For-Profit 

<2 year Certificate 1,100 1,079 19 2 98.09% 1.73% 0.18% 

Associate's 5 5 0 0 100.00% 0.00% 0.00% 

1st Professional 4 4 0 0 

Degree 100.00% 0.00% 0.00% 

2-year Certificate 1,223 1,192 31 0 97.47% 2.53% 0.00% 

Associate's 452 398 44 10 88.05% 9.73% 2.21% 

Post-Bacc Certificate 2 2 0 0 100.00% 0.00% 0.00% 

4-year Certificate 267 250 16 1 93.63% 5.99% 0.37% 

Associate's 514 390 102 22 75.88% 19.84% 4.28% 

Bachelor's 407 230 72 105 56.51% 17.69% 25.80% 

Post-Bacc Certificate 8 8 0 0 100.00% 0.00% 0.00% 

Master's 171 159 4 8 92.98% 2.34% 4.68% 

Doctoral 30 28 2 0 93.33% 6.67% 0.00% 

1st Professional 10 4 3 3 

Degree 40.00% 30.00% 30.00% 

Total 5,539 5,092 295 152 91.93% 5.33% 2.74% 
16638 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

169Baum, S., and Schwartz, S. (2003). How Much 

Debt is Too Much? Defining Benchmarks for 

Managing Student Debt. 

170 Id. 

171 Id. 

greater than 8 percent but less than or 

equal to 12 percent. 

The proposed passing thresholds for 

the discretionary income rate and the 

annual earnings rate are based upon 

mortgage industry practices and expert 

recommendations. The passing 

threshold for the discretionary income 

rate is set at 20 percent, based on 

research conducted by economists 

Sandy Baum and Saul Schwartz, which 

the Department previously considered 

in connection with the 2011 Prior 

Rule.169 Specifically, Baum and 

Schwartz concluded that the debt 

payment-to-discretionary income ratio 

should never exceed 17 to 20 percent, 

and that ‘‘there are virtually no 

circumstances under which higher debt 

service ratios would be reasonable.’’ 170

The passing threshold of 8 percent for 

the annual earnings rate used in the 

proposed regulations has been a fairly 

common credit-underwriting standard. 

It is based on the recommendation made 

by many lenders that student and all 

other loan installments not exceed 8 

percent of the borrower’s pretax income 

so that the borrower has sufficient funds 

available to cover taxes, car payments, 

rent or mortgage payments, and 

household expenses. Indeed, other 

studies have also accepted the 8 percent 

standard, and some State agencies have 

established similar guidelines. These 

percentages are derived from home 

mortgage underwriting criteria where 

total household debt should not exceed 

38 to 45 percent of pretax income, with 

30 percent being available for housingrelated debt.171

In the 2011 Prior Rule, the passing 

thresholds for the debt-to-earnings ratios 

were based on the same expert 

recommendations and industry practice, 

but were increased by 50 percent to 30 

percent for the discretionary income 

rate and 12 percent for the annual 

earnings rate to identify the lowestperforming GE programs and to build in 

a tolerance. 76 FR 34400. 

TABLE 59—D/E RATES MEASURE RESULTS FOR ALTERNATIVE THRESHOLDS

Result 

12/30 no zone 8/20 w/zone 

Programs Enrollment Programs Enrollment 

Pass ................................................................................................................. 5,088 2,162,140 4,256 1,715,421 

Zone ................................................................................................................. N/A N/A 832 446,719 

Fail ................................................................................................................... 451 359,143 451 359,143 

Total .......................................................................................................... 5,539 2,521,283 5,539 2,521,283 

Upon further consideration of this 

issue and analysis of the GE Data, we 

believe that the stated objectives of the 

2011 Prior Rule to identify the worst 

performing programs and build a 

‘‘tolerance’’ into the thresholds are 

better achieved by setting 30 percent for 

the discretionary income rate and 12 

percent for the annual earnings rate as 

the upper boundaries for a zone rather 

than as the passing thresholds. 

Estimated Effects of the D/E Rates 

Alternatives 

In order to consider the alternatives 

for calculation of the D/E rates and to 

provide information to potential 

commenters, we estimated the impacts 

of the alternatives. The results are 

summarized in Table 42 and are the 

equivalent of the annualized costs and 

transfers in the Accounting Statement 

for the proposed regulations. To 

evaluate the alternatives, the same data, 

methods, and assumptions were used as 

for the estimates for the proposed 

regulations as described in 

‘‘Methodology for Costs, Benefits, and 

Transfers’’ and the ‘‘Net Budget 

Impacts’’ sections of this regulatory 

impact analysis. The alternatives 

considered would result in different 

estimated distributions of enrollment in 

passing, zone, and failing programs 

under the proposed regulations, leading 

to the results in Table 42. 

TABLE 60—ESTIMATED EFFECTS OF D/E RATES ALTERNATIVES

N=10, 10–15–20 Amortization 

Estimates Low Reaction High Reaction 

Average Annual Student Transfers over 2017–2024 ...................................... 175,000 236,000 

Average Annual Student Dropouts over 2017–2024 ...................................... 23,000 45,000 

3% 7% 3% 7% 

Better return on money spent on education .................................................... Not Quantified Not Quantified 

Additional expense of educating transfer students at passing programs ....... $164 $176 $223 $240 

Transfer of Federal student aid money from failing programs to the Federal 

government when students drop out of programs ....................................... 71 76 104 112 

Estimated Transfer of revenues from non-passing programs to passing or 

zone programs as students transfer ............................................................ 1,373 1,468 1,864 2,002 

Estimated Transfer of instructional expenses from non-passing programs to 

passing or zone programs as students transfer .......................................... 670 716 909 976 

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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16639 

N=30, 10 Year Amortization for All Credentials 

Estimates Low Reaction High Reaction 

Average Annual Student Transfers over 2017–2024 ...................................... 175,000 236,000 

Average Annual Student Dropouts over 2017–2024 ...................................... 23,000 45,000 

3% 7% 3% 7% 

Better return on money spent on education .................................................... Not Quantified Not Quantified 

Additional expense of educating transfer students at passing programs ....... $164 $176 $223 $240 

Transfer of Federal student aid money from failing programs to the Federal 

government when students drop out of programs ....................................... 71 76 104 112 

Estimated Transfer of revenues from non-passing programs to passing or 

zone programs as students transfer ............................................................ 1,375 1,472 1,865 2,006 

Estimated Transfer of instructional expenses from non-passing programs to 

passing or zone programs as students transfer .......................................... 670 718 910 978 

N=30, 20 Year Amortization for All Credentials 

Estimates Low Reaction High Reaction 

Average Annual Student Transfers over 2017–2024 ...................................... 157,000 214,000 

Average Annual Student Dropouts over 2017–2024 ...................................... 21,000 41,000 

3% 7% 3% 7% 

Better return on money spent on education .................................................... Not Quantified Not Quantified 

Additional expense of educating transfer students at passing programs ....... $147 $156 $201 $215 

Transfer of Federal student aid money from failing programs to the Federal 

government when students drop out of programs ....................................... 64 68 94 100 

Estimated Transfer of revenues from non-passing programs to passing or 

zone programs as students transfer ............................................................ 1,227 1,302 1,675 1,785 

Estimated Transfer of instructional expenses from non-passing programs to 

passing or zone programs as students transfer .......................................... 598 635 817 870 

Discretionary Income Rate 

Instead of two debt-to-earnings ratios, 

the annual earnings rate and the 

discretionary income rate, we 

considered a simpler approach where 

only the discretionary income rate 

would be used as a metric. However, 

this would have led to any program 

with earnings below the discretionary 

income level failing the measure. 

Having a single discretionary incomebased metric would essentially set a 

minimum earnings threshold for the 

proposed regulations, even if the debt 

for students completing the program 

was very low. Because of this, the 

Department retained the annual 

earnings rate metric of the 2011 Prior 

Rule. For programs with very low 

earnings but also very low debt, we 

believe that the transparency 

requirements are a more effective 

regulatory approach. With information 

about program outcomes available 

through the proposed disclosures, 

students would be able to make their 

own assessment of whether the 

potential earnings would meet their 

goals and expectations. 

Pre-Post Earnings Comparison 

The Department also considered an 

approach that would compare preprogram and post-program earnings to 

capture the near-term effect of the 

program. This approach had been 

suggested by commenters responding to 

the 2011 Prior Rule, especially for shortterm programs, and has some merit 

conceptually. However, earnings 

immediately before enrollment may not 

be an accurate measure of an 

individual’s baseline earning potential 

without the program. Pre-enrollment 

earnings are particularly unlikely to 

reflect earnings potential for dependent 

students, workers returning to school 

after becoming unemployed, or those 

using their training to switch fields. 

Moreover, such a measurement would 

not identify programs where large 

numbers of students are taking out debts 

they cannot afford to repay. 

pCDR Thresholds 

As described in ‘‘§ 668.403 Gainful 

employment framework’’ in Significant 

Proposed Regulations, we modeled 

pCDR on the cohort default rate metric 

that is currently used to determine 

institutional eligibility to participate in 

title IV, HEA programs. Thus, in 

addition to adopting the iCDR threshold 

under which an institution loses 

eligibility if it has three consecutive 

fiscal years of a pCDR of 30 percent or 

greater, we considered adopting the 

second threshold, which is that an 

institution loses eligibility if it has one 

year of an iCDR of 40 percent or greater. 

Of the 6,815 programs in the 2012 GE 

informational rates sample with pCDR 

data, 233 have a default rate of 40 

percent or more. However, we do not 

believe that a measure that results in the 

loss of program eligibility after only a 

single year of failure is consistent with 

our overall approach to allow 

institutions time to improve their 

programs, particularly during the initial 

years of implementation of the 

regulations. 

Negative Amortization 

Another proposal the Department 

considered was a variation on a 

repayment metric that would compare 

the total amounts owed at the beginning 

and end of the calculation year for 

borrowers from a program who entered 

repayment in the two-year period, 

without regard to whether the borrower 

completed the program, to determine if 

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16640 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

172 In response to these objections, we noted that 

the Department had already expressly interpreted 

section 437(c) of the HEA in controlling regulations 

to provide no relief for a claim that the loan was 

arranged for enrollment in an institution that was 

ineligible, or that the institution arranged the loan 

for enrollment in an ‘‘ineligible program.’’ 34 CFR 

682.402(e); 59 FR 22470 (April 29, 1994), 59 FR 

2490 (Jan. 14, 1994). 

borrower payments reduced that 

balance over the course of the 

calculation year. Different variations of 

this measure were considered, including 

a comparison of total balances and a 

comparison of principal balances only. 

The measure would have been an 

additional metric that would have 

accounted for the performance of 

students who did not complete the 

program. 

Ultimately, the Department decided 

not to propose negative amortization as 

an eligibility metric in the proposed 

regulations because we were unable to 

draw clear conclusions from the data 

available. 

Programs With Low Rates of Borrowing 

Several negotiators argued that lowcost, and consequently low-risk, 

programs where borrowing is largely 

unnecessary should not be subject to the 

D/E rates measure because the measure 

would not accurately reflect the level of 

borrowing by individuals enrolled in 

the program and the low cost of the 

program. The negotiators claimed that, 

for many low-cost programs, students 

receiving title IV, HEA program funds 

constitute only a small, 

unrepresentative portion of the students 

in terms of borrowing behavior. They 

argued that, for these programs, the 

percentage of students who receive title 

IV, HEA program funds and incur debt 

to enroll in the program is significantly 

greater than the percentage of all 

students who incur debt to enroll in the 

program. According to the negotiators, a 

program in which a majority of students 

have no debt is unlikely to produce 

graduates whose educational debts 

would be excessive because the tuition 

and costs are likely to be modest and 

require little borrowing, and therefore 

would not place the Federal investment 

in the program at significant risk. To 

more adequately account for low-cost, 

low-risk programs, the negotiators 

suggested that a GE program should 

pass the D/E rates measure if (1) the 

median loan debt of all individuals who 

complete the program in the applicable 

cohort period (both individuals who 

received, and who did not receive, title 

IV, HEA program funds) is zero, or (2) 

the program has a borrowing rate of less 

than 50 percent. 

A program with a borrowing rate of 

less than 50 percent may not, in fact, be 

low risk. For example, the majority of 

students could have alternative 

resources to pay the program costs, such 

as employers, State grant programs, or 

military benefits, or the program could 

still have a significant number of 

students who received title IV, HEA 

program loans for enrollment in the 

program. Accordingly, rather than 

adopting a broad approach that would 

apply to all programs and could 

commonly lead to inaccurate 

determinations as to whether a program 

is low risk to students and taxpayers, 

the proposed regulations reserve such 

an inquiry to situations where a 

program is failing or in the zone under 

the D/E rates measure. The proposed 

regulations would permit an institution 

to demonstrate that a program with D/ 

E rates that are failing or in the zone 

should instead be deemed to be passing 

the D/E rates measure because less than 

50 percent of all individuals who 

completed the program, both those who 

received title IV, HEA program funds, 

and those who did not, had to assume 

any debt to enroll in the program. 

Enrollment Limits and Borrower 

Protections 

During the negotiated rulemaking 

sessions members of the negotiated 

rulemaking committee raised proposals 

to create borrower relief provisions for 

students in programs that fail the GE 

measures and to place additional 

restrictions on those program. The 

Department had proposed, for a program 

that does not pass the GE measures and 

is in jeopardy of losing its eligibility for 

title IV, HEA program funds, in addition 

to the student warning requirement, 

limits on the number of students eligible 

for title IV, HEA program funds who 

could be enrolled in the program. In 

response to the negotiators’ concerns, 

the Department also proposed, in those 

circumstances, to require institutions to 

make arrangements to reduce student 

debt. We have not included these 

additional consequences in the 

proposed regulations. 

We have not included enrollment 

limits in the proposed regulations as we 

believe that providing warnings to 

students and prospective students about 

potentially ineligible programs, along 

with the information that would be 

available through the required 

disclosures, provide meaningful 

protections and will sufficiently enable 

students and their families to make 

informed decisions about their 

educational investment. However, we 

invite comment on whether enrollment 

limits should be imposed on programs 

that could become ineligible and how 

those limits could be practically 

implemented. 

We developed our debt reduction 

proposal in response to suggestions 

from negotiators representing consumer 

advocates and students. These 

negotiators argued that, while a failing 

or zone program would be allowed 

several years to pass the GE measures 

before becoming ineligible, students 

would continue to borrow to attend a 

program that the Department, based on 

the proposed regulations, may not 

reasonably expect would lead to gainful 

employment. Moreover, in the event a 

program lost eligibility under the GE 

measures, enrolled students would still 

be responsible for the debt they 

accumulated despite the fact they could 

not complete a program identified by 

the Department as failing the 

performance metrics. 

To address this, the negotiators 

argued that the Department should 

provide loan discharges under section 

437(c) of the HEA to students who 

borrowed for attending a program that 

loses eligibility under the GE measures. 

They contended that these borrowers 

would also have claims against the 

institution for enrolling them in a 

program that was offered as an eligible 

program, but that in fact did not meet 

the eligibility requirements proposed in 

the regulations. They observed that 

Federal regulations implementing 

section 455(h) of the HEA, 20 U.S.C. 

1087e(h), allow a Direct Loan borrower 

to assert, as a defense to loan 

repayment, any claim that the borrower 

has against the institution, and that this 

existing regulation would apply to the 

case of a program that did not meet the 

standards of the proposed regulations. 

34 CFR 685.206(c).172 These negotiators 

further urged the Department to 

formally adopt, as a defense to loan 

repayment, a program’s failure to pass 

the GE measures, whether or not the 

program eventually lost eligibility. 

Additionally, the negotiators suggested 

a variety of other remedies, including 

requiring institutions to refund tuition 

paid for a program that loses eligibility, 

requiring institutions to post a surety 

bond or letter of credit when a program 

receives a zone or failing result in order 

to provide for relief in the event that the 

program later becomes ineligible, and 

requiring all institutions intending to 

offer a GE program to contribute to a 

‘‘common pool’’ fund to be 

administered by the Department that 

would be used to provide debt relief to 

students affected by a program’s loss of 

eligibility. 

One of the non-Federal negotiators 

submitted a proposal that would allow 

a program that did not pass the GE 

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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16641 

measures to remain eligible if the 

institution implemented a debt 

reduction plan that would reduce 

borrowing to levels that would meet the 

GE measures. 

In response, at the second and third 

negotiating sessions, we drew on the 

negotiator proposals and presented 

regulatory provisions that would have 

required an institution with a program 

that could lose eligibility the following 

year to make sufficient funds available 

to enable the Department, if the program 

became ineligible, to reduce the debt 

burden of students who attended the 

program during that year. The amount 

of funds would have been 

approximately the amount needed to 

reduce the debt burden of students to 

the level necessary for the program to 

pass the GE measures. If the program 

were to lose eligibility, the Department 

would use the funds provided by the 

institution to pay down the loans of 

students who were enrolled at that time 

or who attended the program during the 

following year. We also included 

provisions that would allow an 

institution, during the transition period, 

to avoid these requirements by offering 

to every enrolled student for the 

duration of their program, and every 

student who subsequently enrolled 

while the program’s eligibility remained 

in jeopardy, institutional grants in the 

amounts necessary to reduce loan debt 

to a level that would result in the 

program passing the GE measures. If an 

institution took advantage of this 

option, a program that would otherwise 

lose eligibility would avoid that 

consequence during the transition 

period. 

Negotiators voiced numerous 

concerns about the proposed borrower 

relief provisions. These included 

whether the proposals would be 

sufficient to compensate students for 

enrolling in an ineligible program, what 

cohort of students would receive relief, 

the extent of the relief to be provided, 

how any monetary amounts would be 

calculated, and costs that would be 

incurred by institutions in providing 

relief. The nature of these discussions 

made clear that these are very complex 

issues that warrant further exploration. 

Accordingly, we are not including 

proposed language regarding borrower 

relief in the regulations and request 

comment on these issues, including 

other options that the Department could 

consider to address borrower relief 

concerns. 

Initial Regulatory Flexibility Analysis 

This Initial Regulatory Flexibility 

Analysis presents an estimate of the 

effect on small entities of the proposed 

regulations. The U.S. Small Business 

Administration Size Standards define 

‘‘for-profit institutions’’ as ‘‘small 

businesses’’ if they are independently 

owned and operated and not dominant 

in their field of operation with total 

annual revenue below $7,000,000, and 

defines ‘‘non-profit institutions’’ as 

small organizations if they are 

independently owned and operated and 

not dominant in their field of operation, 

or as small entities if they are 

institutions controlled by governmental 

entities with populations below 50,000. 

The Secretary invites comments from 

small entities as to whether they believe 

the proposed changes would have a 

significant economic impact on them 

and, if so, requests evidence to support 

that belief. 

Description of the Reasons That Action 

by the Agency Is Being Considered 

The Secretary is creating through the 

proposed regulations a definition of 

gainful employment in a recognized 

occupation by establishing what we 

consider, for purposes of meeting the 

requirements of section 102 of the HEA, 

to be a reasonable relationship between 

the loan debt incurred by students in a 

training program and income earned 

from employment after the student 

completes the training. The proposed 

regulations also assess the default 

experience of students who borrowed 

title IV, HEA program funds to attend a 

program. 

As described in this regulatory impact 

analysis, the trends in graduates’ 

earnings, student loan debt, defaults, 

and repayment underscore the need for 

the Department to act. The gainful 

employment accountability framework 

takes into consideration the relationship 

between total student loan debt and 

earnings after completion of a 

postsecondary program and the default 

experience of students who borrow title 

IV, HEA program loans regardless of 

whether they complete a program. 

Succinct Statement of the Objectives of, 

and Legal Basis for, the Proposed 

Regulations 

As discussed in connection with the 

2011 Prior Rule, the proposed 

regulations are intended to address 

growing concerns about high levels of 

loan debt for students enrolled in 

postsecondary programs that 

presumptively provide training that 

leads to gainful employment in a 

recognized occupation. 76 FR 76 FR 

34498. The HEA applies different 

criteria for determining the eligibility of 

programs and institutions for title IV, 

HEA program funds. Id. In the case of 

shorter programs and programs of any 

length at for-profit institutions, 

eligibility is restricted to programs that 

‘‘prepare students for gainful 

employment in a recognized 

occupation.’’ Generally, the HEA does 

not require degree programs greater than 

one year in length at public and nonprofit institutions to meet this gainful 

employment requirement in order to be 

eligible for title IV, HEA program funds. 

Id. This difference in eligibility is 

longstanding and has been retained 

through many amendments to the HEA. 

Id. As recently as the HEOA, Congress 

again adopted the distinct treatment of 

for-profit institutions while adding an 

exception for certain liberal arts 

baccalaureate programs at some forprofit institutions. Id. 

Description of and, Where Feasible, an 

Estimate of the Number of Small 

Entities to Which the Proposed 

Regulations Would Apply 

The proposed regulations would 

apply to programs eligible for title IV, 

HEA program funds because they 

prepare students for gainful 

employment in a recognized 

occupation. The Department estimates 

that approximately 6,842 programs 

offered by small entities could be 

subject to the proposed regulations, of 

which 2,555 would be evaluated under 

at least one GE measure. As stated in 

connection with the 2011 Prior Rule, 

given that the category of small entities 

includes some private non-profit 

institutions regardless of revenues, a 

wide range of small entities would be 

covered by the proposed regulations. 76 

FR 34498. This continues to be true 

today, and the entities may include 

institutions with multiple programs, a 

few of which are covered by the 

proposed regulations, to single-program 

institutions with well-established ties to 

a local employer base. Id. Many of the 

programs that would be subject to the 

proposed regulations are offered by forprofit institutions and public and 

private non-profit institutions with 

programs less than two years in length. 

Id. 

The structure of the proposed 

regulations and the proposed n-size 

provisions reduce the effect of the 

proposed regulations on small entities 

but complicate the analysis. As 

discussed in connection with the 2011 

Prior Rule, the proposed regulations 

provide for the evaluation of individual 

GE programs offered by postsecondary 

institutions, but these programs are 

administered by the institution, either at 

the branch level or on a system-wide 

basis. 76 FR 34498. Many institutions 

continue to have programs that would 

be considered small, but the 

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16642 Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 

classification for this analysis is at the 

institutional level, as a program that is 

determined ineligible under the 

proposed regulations could affect the 

institution’s ability to operate. Id. Table 

61 demonstrates that many small 

entities offer a limited number of GE 

programs and the number of small 

entities that would have at least 50 

percent of their programs become failing 

or in the zone. With a high percentage 

of programs that are failing or in the 

zone, the loss of title IV, HEA program 

eligibility for any program would be 

more likely to cause the institution to 

shut down than would be the case for 

larger entities with multiple programs. 

TABLE 61—DISTRIBUTION AND GE MEASURE PERFORMANCE OF SMALL ENTITIES BY NUMBER OF PROGRAMS

Number per small entity Number of small entities 

Number of small entities 

with more than 50% 

failing 

Number of small entities 

with more than 50% 

zone or failing 

1 ................................................................................................... 737 95 95 

2 ................................................................................................... 232 31 31 

3 ................................................................................................... 74 5 5 

4 ................................................................................................... 47 4 4 

5 ................................................................................................... 22 3 3 

6 ................................................................................................... 20 7 7 

7 ................................................................................................... 8 2 2 

8 ................................................................................................... 4 0 0 

9 ................................................................................................... 4 0 0 

10 ................................................................................................. 2 0 0 

11 ................................................................................................. 1 0 0 

12 ................................................................................................. 1 0 0 

15 ................................................................................................. 1 0 0 

22 ................................................................................................. 1 0 0 

While private non-profit institutions 

are classified as small entities, our 

estimates indicate that no more than 2 

percent of programs at those institutions 

are likely to fail either of the GE 

measures, with an even smaller 

percentage likely to be found ineligible. 

As noted in connection with the 2011 

Prior Rule, the governmental entities 

controlling public sector institutions are 

not expected to fall below the 50,000 

threshold for small status under the 

Small Business Administration’s Size 

Standards, but, even if they do, 

programs at public sector institutions 

are highly unlikely to fail the GE 

measures. 76 FR 34500. This continues 

to hold true; therefore, our analysis of 

the effects on small entities focuses on 

the for-profit sector. The percentage of 

programs subject to evaluation in the 

for-profit sector likely to fail the GE 

measures is 23.4 percent for four-year 

institutions, 19.8 percent for two-year 

institutions, and 14.0 percent for lessthan-two-year institutions. When 

modeled using the small entities only, 

those percentages are 34.6 percent, 12.4 

percent, and 10.7 percent, respectively. 


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Federal Register / Vol. 79, No. 57 / Tuesday, March 25, 2014 / Proposed Rules 16643 

Description of the Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements of the Proposed 

Regulations, Including an Estimate of 

the Classes of Small Entities That 

Would Be Subject to the Requirement 

and the Type of Professional Skills 

Necessary for Preparation of the Report 

or Record 

Table 63 relates the estimated burden 

of each information collection 

requirement to the hours and costs 

estimated in Paperwork Reduction Act 

of 1995. This additional workload is 

discussed in more detail under 

Paperwork Reduction Act of 1995. 

Additional workload would normally be 

expected to result in estimated costs 

associated with either the hiring of 

additional employees or opportunity 

costs related to the reassignment of 

existing staff from other activities. In 

total, these changes are estimated to 

increase burden on small entities 

participating in the title IV, HEA 

programs by 1,651,551 hours in the 

initial year of reporting. The monetized 

cost of this additional burden on 

institutions, using wage data developed 

using BLS data available at 

www.bls.gov/ncs/ect/sp/ecsuphst.pdf, is 

$60,364,201. In subsequent years, this 

burden would be reduced as institutions 

would only be reporting for a single year 

and we would expect the annual cost to 

be approximately $10 million. This cost 

was based on an hourly rate of $36.55. 

TABLE 63—PAPERWORK REDUCTION ACT

Provision Reg section OMB Control No. Hours Costs 

Issuing and Challenging D/E Rates ......................................... 668.405 OMB—NEW1 ............ 85,094 3,110,175 

D/E Rates Appeals .................................................................. 668.406 OMB—NEW2 ............ 11,677 426,779 

Consequences of GE Measures .............................................. 668.41 OMB—NEW1 ............ 427,091 15,610,175 

Reporting Requirements of GE Programs ............................... 668.411 OMB—NEW1 ............ 202,336 7,395,398 

Disclosure Requirements for GE Programs ............................ 668.412 OMB—NEW1 ............ 748,282 27,349,710 

Calculating, Issuing, and Challenging Completion, Withdrawal, and Repayment Rates.668.413 OMB—NEW1 ............ 174,126 6,364,305 

Certification and Application Requirement for GE Programs .. 668.414 OMB—NEW1 ............ 665 24,323 

Draft Program Cohort Default Rates and Challenges ............. 668.504 OMB—NEW3 ............ 2,055 75,115 

Program CDR—Uncorrected Data Adjustments ..................... 668.509 OMB—NEW3 ............ 129 4,726 

Program CDR—New Data Adjustments .................................. 668.51 OMB—NEW3 ............ 31 1,143 

Program CDR-Erroneous Data Appeals .................................. 668.511 OMB—NEW3 ............ 0 0 

Program CDR—Loan Servicing Appeals ................................. 668.512 OMB—NEW3 ............ 45 1,649 

Program CDR—Economically Disadvantaged Appeals .......... 668.513 OMB—NEW3 ............ 16 586 

Program CDR—Participation Rate Index Appeals .................. 668.514 OMB—NEW3 ............ 3 117 

Total .................................................................................. ............................ .................................... 1,651,551 60,364,201 

Identification, to the Extent Practicable, 

of All Relevant Federal Regulations 

That May Duplicate, Overlap, or 

Conflict With the Proposed Regulations 

The proposed regulations are unlikely 

to conflict with or duplicate existing 

Federal regulations. Under existing law 

and regulations, institutions are 

required to disclose data in a number of 

areas related to the proposed 

regulations. 

Alternatives Considered 

As previously described, we 

evaluated the proposed regulations for 

their effect on different types of 

institutions, including the small entities 

that comprise approximately 60 percent 

of institutions that would be subject to 

the proposed regulations. As discussed 

in ‘‘Regulatory Alternatives 

Considered,’’ several different 

approaches were analyzed, including 

the use of different interest rates and 

amortization periods, placement rates, 

pre- and post-program earnings 

comparison, and different n-size for 

programs to be evaluated. These 

alternatives are not specifically targeted 

at small entities, but the n-size 

provision may have a larger effect on 

programs at small entities. 

[FR Doc. 2014–06000 Filed 3–24–14; 8:45 am] 

BILLING CODE 4000–01–P 

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