Steps Institutions Should Take With DoE’s New Gainful Employment Rule

FORVIS

January 10. 2024

We offer tips for higher education institutions to help meet DoE reporting requirements.

By this point, every administrator in higher education should know that the U.S. Department of Education (DoE) has imposed new regulations on institutions that are designed to protect students from unsustainable financial burdens associated with high-cost programs. Some variants of these regulations were in place in 2009 and successfully challenged thereafter. Only time will tell if the latest version of the rule has the same fate. However, many administrators are taking the regulations seriously.

Specifically, the new guidance requires proprietary schools and non-degree certificate programs across all sectors to demonstrate that graduates can become gainfully employed, which is captured by two metrics: (1) graduates earn enough money to pay off their loans, i.e., their monthly debt burden does not exceed some percentage of their earnings, and (2) graduates earn more than they would have otherwise earned with a high school diploma. If a program or institution fails to meet these criteria for two consecutive years, students enrolling in those programs will not qualify for federal financial aid.

In addition, the DoE has implemented a reporting requirement for financial value transparency (FVT), which will require institutions across all sectors to provide comprehensive cost estimates for each program they offer, which will be made available in a public database alongside income estimates for graduates. Those income estimates will be provided and reported by the DoE, independently of institutions. Institutions reporting costs that outweigh earnings won’t immediately lose funding but may be at risk for discretionary funding loss if they are facing other challenges, as determined by the DoE.

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