Understanding Gainful Employment Reporting Requirements: An Overview
Gainful Employment (GE) reporting requirements have been a focal point of compliance challenges for postsecondary institutions since their introduction by the Department of Education (ED) in 2010. This is especially the case for those offering vocational and career-oriented programs. This article will delve into recently updated guidance and essential strategies for institutions to navigate these requirements successfully. Throughout, we will highlight some of the key aspects from our recent presentation with the Mid-Atlantic Association of Career Schools (MAACS) and insights from industry experts, including our co-presenters Aaron Shenck and Jeff Arthur.
Background and Legal Context: Gainful Employment Rule and Legal Challenges
Simply put, the GE regulations are designed to ensure that programs intended to prepare students for gainful employment in recognized occupations are worth the investment. As with the prior GE rule, the current version has faced legal challenges, in particular from the cosmetology school community, who argue that the regulations do not properly account for under-reported earnings data or for pandemic-related economic disruptions and pose an existential threat to cosmetology programs.
Gainful Employment Reporting Mechanism and Process
Gainful Employment reporting under the new guidelines is due by October 1, 2024. The Department of Education (ED) has outlined a structured approach for institutions to comply with the new reporting requirements, along with guidance and training for institutions on the format and process. This proactive preparation aims to give institutions ample time to compile and submit their data accurately.
Key Benchmarks and Reporting Details
Institutions must meticulously gather and report a wide array of data, including:
- Program Information: Name, CIP code, credential level, length, and accreditation details.
- Student Information: Enrollment dates, status, cost of attendance, tuition, fees, and any financial aid received.
- Completion and Withdrawal Data: Dates of completion or withdrawal, total loan debt, tuition, fees, and allowances for books and supplies.
Gainful Employment Metrics
A GE program must pass the following metrics in order to maintain its eligibility for Title IV funding. Note that the program can pass the annual DTE rate OR the discretionary DTE rate and still be okay. But it must pass one of the two DTE metrics and the Earnings Premium test to remain in good standing.
Debt-to-Earnings Ratios
- Annual DTE Rate: This ratio requires that a graduate’s annual loan payments do not exceed 8% of their total earnings. For instance, if a student’s total debt is $8,500 and their annual loan payment is $1,000, to stay within the acceptable range, their annual earnings must be at least $12,500.
- Discretionary DTE Rate: This ratio mandates that a graduate’s annual loan payments do not exceed 20% of their discretionary income, defined as earnings above 150% of the federal poverty guideline. For example, if a student’s total debt is $45,000 with an annual loan payment of $5,000, their earnings must be at least $45,385 annually (accounting for $20,385 as the threshold for discretionary income).
Earnings Premium Test
The Earnings Premium test compares GE program graduates’ earnings to those of high school graduates. In other words, it attempts to determine whether a given program results in higher earnings than someone would earn if they did not attend college.
For a program to pass, graduates must earn more than a specified threshold. For example, in Virginia, graduates must earn more than $25,569 annually to meet this benchmark (based on 2019 American Community Survey). Failure to meet this criterion will jeopardize the program’s Title IV eligibility.
Gainful Employment Reporting Considerations for Institutions
Managing GE reporting requires accurate data management and careful student record keeping. Our colleague Jeff Arthur of ECPI University compiled the following recommended practices that enable effective reporting:
- Analyze Program Offerings: Evaluate program and credential levels, ensuring alignment with GE requirements.
- Assess Pricing and Scholarships: Understand how pricing strategies and scholarship offerings impact median debt levels.
- Leverage Data Tools: Utilize resources like the College Scorecard to analyze program outcomes and enhance reporting accuracy.
- Monitor Loan Interest Rates: Be aware of how variations in Direct Loan interest rates influence debt-to-earnings calculations.
- Account for Geographical Variances: Recognize wage differences across campuses and incorporate these into reporting and program evaluation.
Conclusion
Navigating the GE reporting requirements demands a comprehensive understanding of the regulations and meticulous data management. By following the structured reporting mechanisms and leveraging available resources, institutions can ensure compliance and demonstrate the value of their educational programs.
Staying informed about legal developments and regulatory updates will further aid institutions in maintaining eligibility and supporting their students’ financial success.
By proactively addressing these requirements, postsecondary institutions can continue to offer valuable education that empowers students to achieve gainful employment and financial stability.
Our thanks again to Jeff Arthur of ECPI University and Aaron Schenk at MAACS for their contributions to the MAACS presentation that led to this article.
Looking for Support?
If you have questions or need assistance navigating Gainful Employment reporting or any other Title IV compliance issue, please reach out to us. Our experts specialize in every aspect of higher education financial compliance.
