Negotiators spent the last two days talking through all the parts of the draft regulatory text except for one small piece provided by the Department of Education. Today the Department and negotiators are expected to present various tweaks and new regulatory text suggestions for consideration. The committee will also start gauging whether it has consensus on any sub issues. Consensus is like a jury deliberation, it has to be unanimous. If the committee is able to reach consensus on all issues, then that text will become what the Department releases for public comment in the form of a Notice of Proposed Rule Making (NPRM). If consensus is not reached on any single issue, then the Department may draft an NPRM as it desires, though any sub issues agreed to will likely appear in the same form as approved by the committee.
Live updates will appear below.
9:10 a.m. Getting Started Again
There’s still some small discussion of the conforming changes from the Department’s text be considered, but the facilitator also indicates that there are a number of new proposals that came in through the night and are being copied for distribution. The facilitator also gives a bit of clarity around what consensus means. As he describes it, the measure of consensus is not perfection, but whether a negotiator can live with it. If a negotiator says he or she cannot, then the facilitator says he or she should be prepared to explain why they cannot live with it and what changes would be needed to do so.
Apparently proposals came in as late/early as 4 a.m. yesterday.
So the plan is to discuss these small conforming changes, then new proposals and some of the ones that came in between sessions. The Department will then take a longer break around lunch time to discuss what its heard before coming back for the afternoon.
9:15 a.m. Conforming Changes
John Kolotos talks about the question of using gainful employment failure as a borrower defense. The Department believes that the borrower defense is relevant for this session, but is removing it. Several consumer-minded negotiators had argued strongly against this provision yesterday. The rest of the conforming changes are very minor.
Margaret Reiter, who represents consumer advocacy organizations, puts forth an idea that an institution that is providing gainful employment should have to add something to its mission statement about that. Kevin Jensen from the College of Western Idaho says the leadership of his independent community college would not go for this. Brian Jones from Strayer University also objects, noting that his institution has a lot of compliance obligations and would not add in something to its mission statement about being a good steward of federal financial aid funds. Neil Harvison, who represents specialized accreditors, asks if the Department could even do this given concerns about respecting the mission of universities. Reiter suggests that instead of being in the mission statement language about gainful employment could be added somewhere else on the website. Marc Jerome from Monroe College in New York also does not like this idea, indicating that he thinks its ineffective.
Della Justice from the Kentucky Attorney General’s office indicates she likes this idea since if the college has to do it under the law, why shouldn’t it say so? Jensen says the issue is more that the institution wants to maintain its ability to make choices about the direction of the institution and not be told what they have to say. Jenny Rickard from the University of Puget Sound also objects. Kolotos suggests that the committee moves on.
9:30 a.m. Definitions
Sandra Kinney from Louisiana Community and Technical College System asks about whether part-time students are included in the cohort for completion. What follows is some confusion about whether the completion rates should be for all students or for part-time ones as well. Kinney says trying to have the Department figure out all the different program lengths and attendance intensities for students would be extremely difficult. Kolotos says the idea is that the Department would know who was enrolled and whether or not they finished so they could calculate a measure. The Department hears the concern about looking only at full-time students, but notes that in a lot of instances the completion rate of part-time students may not be very good and does not want to lose that. He indicates wanting some way to take both into acount. What about calculating a full-time equivalent completion rate?
Kolotos says the Department can look into finding some way to do maybe a half-time or full-time calculation, but notes that at some point it needs to fix enrollment status, so it knows what group to put a student into.
Barmak Nassirian from the American Association of State Colleges and Universities says that the goal is really to find the rate of churn, regardless of when they left the program. This would be a one-year attrition rate, or something close to it. Kolotos notes that if the negotiators don’t think these completion rates are meaningful and want all students included in the figures, then the burden of calculating them would have to go to the institution since the Department cannot do this itself.
Jerome says it is a big step in the right direction to include more than first-time, full-time students. So maybe one measure of full-time and one measure of part-time could be used. What’s frustrating about this conversation is it does not seem to know about the new measures the National Center for Education Statistics is proposing to add in to the Integrated Postsecondary Education Data System, which would have completion figures for part-time students after six or eight years. That would likely provide an option to employ.
The Department says the best it can do at this point is federal student aid only, but will take back an idea on part-time or full-time students.
Jerome says that the loan repayment rate disclosed should not be different from the loan repayment rate that’s used for accountability purposes. He also does not think that median earnings for dropouts does not make sense. He wants the section on disclosure items simplified and shortened. Here’s my suggestion: drop the old repayment rate calculation in the disclosure. Then tell students how long loans are likely to be paid off based upon the amount the balance has been reduced by the time the rates are calculated. That works off the same formula and takes a complicated concept and translates it into clear understanding about years to repay.
10:10 a.m. New Proposals
There are seven new documents the negotiators just received in hard copy. They have not been given to the public yet. We are going to hear explanations from the various authors and only time for clarifying questions at the moment.
1) Margaret Reiter: New Program Application
She has primarily some language on the application section and a few other smaller language suggestions. She says they are trying to address questions about how a program is supposed to know what employers are looking for in terms of programmatic accreditation. For each occupation tied to a program, the institution should say if it has programmatic accreditation that the institution knows or should know it should have for graduates to get jobs. (That’s a paraphrase because I don’t have the actual language). She says there is also some clarifying language around licensure requirements.
Jerome says he thinks that this would be too burdensome and would make the regulation much longer and would not have consensus on this degree of requests.
Justice says that the requirements should go further and be clearer that the program has the various accreditations and approvals needed for graduates to sit for the state licensing exam and/or what employers require. She describes this as not a disclosure issue, but a preparation issue. She also argues again for adding a debt-to-earnings rate onto an application since these are programs that already have some flag attached to them and so they have to make some representation about likelihood of passing.
Harvison says that these suggestions are overly prescriptive, such as having externships within the state, within one hour commute of where the program is located, and if neither is true, why not.
2) Ray Testa: Risk Adjustment
He says the idea for this proposal is to eliminate the category of the zone and consider risk-adjustment based upon income and dependency status. The zone elimination is something he had suggested in his earlier comments submitted at the end of September.
His proposal is that the threshold would change based upon the amount of Pell and independent students in a program. The threshold for the annual debt-to-earnings rate would range between 8 percent and 14 percent for programs, with the higher thresholds allowed for programs with more Pell or independent students.
3) Richard Heath: Low-Risk Programs Richard Heath from Anne Arundel Community College puts out a suggestion around exempting what he calls “low-risk programs.” He says a median loan debt of $0 for all program completers or that the published cost of tuition and fees for a full-time student is less than or equal to the maximum Pell Grant for that year.
Jerome says that if this were accepted, programs with a zero graduation rates or high default rates with less than 50 percent borrowing would pass. He says there are not a lot of those programs, but there are enough.
4) Kevin Jensen: Minimum Repayment Cohort
This proposal pulls some language from the institutional cohort default rate sections so that if that section ever changes they do “not lose control.” That’s a bit vague, but it sounds like maybe they have to hit the minimum cohort size of at least 30 over two years, not three.
He also suggests a minimum cohort size for the loan repayment metric of 30 borrowers.
5) Proposal from the public: for-profit medical schools
We are hearing from Rocky Vista University, which is a for-profit osteopathic medical school and is the only for-profit medical school in the United States. Rocky Vista has asked to be excluded from these rules before and asks so again to point out that medical schools have no history of lack of repayment or issues of deb-to-earnings. To be clear, these are degrees to become doctors, not nursing. The representative from Rocky Vista also argues that graduate professional training does not have a problem here. She says the issue is that a medical degree recipient just cannot pass a debt-to-earnings test in 10 years and calls for having a longer amortization time for graduates of much longer programs.
6) Tom Dalton: Exceptional Performers
Tom Dalton from Excelsior College proposes to exempt institutions with a three-year cohort default rate of 10 percent or less for three consecutive years. He says the point of using cohort default rates is because it has been around for a long time and is now three-years long, which makes it tougher to manipulate. He says 10 percent is chosen because that’s the common high-performance threshold used to allow for things like single disbursement of aid dollars (I believe it’s now actually 15 percent for that, but am not sure).
O’Sullivan asks about whether the Department has data on manipulation of cohort default rates using deferment or forbearance. Jensen says he thinks that the notion of exceptional performance is a valuable carrot, but wants to know some data about the use of deferment or forbearance to help establish a threshold for acceptable usage of those items.
Eileen Connor from the New York Legal Assistance Group raises concerns that it operates at the institutional level so there would be no reporting on programs.
I’ve made this point with respect to the rankings system, but there’s a difference between a rate that tells you something about poor performance and one that tells you something about good performance. A low cohort default rate does not necessarily indicate something is particularly good. It’s the same reason why a very low debt-to-earnings rate does not indicate necessarily that graduates have good incomes, they could just have low debts.
Jerome asks if the Department has any ideas for exceptional performers. Kolotos says the Department does not have any and wanted some ideas. Jerome asks Dalton if he would consider allowing the exceptional performance standard to be done at the programmatic level. He says yes, but it would then require data reporting.
7) Libby DeBlasio and Della Justice: Disclosures
This is some wording around how information is presented to consumers and when it would be given, such as doing some information as a frequently asked question, subject to consumer testing.
They also propose to limit enrollment to the number of students minus any that withdrew, so you cannot replace dropouts. She also proposes expanding the borrower relief to students who completed the year before the failure.
LIbby DeBlasio from the Colorado Department of Law also discusses adding language about required consumer testing. She says that until a permanent comes out, issue a temporary template under the current regulations that includes primary occupations and a few other elements. She talks through some other changes about disclosures, but they are text changes and not easy to follow.
Marc Jerome’s Proposal
Jerome lays out three things he had asked for: (1) informational rates; (2) reinstate the 12 percent threshold from before; and (3) go back to the amortization rates of 10, 15, or 20 years. This would essentially be the 2011 rule. He also raises the idea suggested in September comments on immediate loan reduction to students.
The Department will now break to discuss these issues until 1:15 p.m.
1:20 p.m. Verbal Presentation of Changes
The Department is going to walk through the document and take some suggested changes and why they are taking some things and not taking others. Simultaneously, the Department is working on a red-lined document that will be presented later on.
Elizabeth McFadden from the Department’s General Counsel’s office is now presenting. The Department will start from the beginning on the version of the document that Libby DeBlasio had submitted because it is a full copy. I don’t believe that is available electronically, so this may be hard to follow.
The Department will add a definition of a prospective student at some point in this section. It is agreed to.
668.403 Gainful Employment Program Framework
Page 8–The Department will add Perkins Loans into the debt-to-earnings rates, but cannot add it to other measures. This was a suggestion by Margaret Reiter.
Reiter had proposed to make a program fail the debt-to-earnings rate if it had an annual rate above 12 percent or above 30 percent. The Department is not taking that change. This means that a program still has to fail both debt-to-earnings measures to fail, which is more lenient.
Page 9–Reiter had wanted to make a program lose eligibility if it was in the zone for three years instead of four. The Department is not accepting this change to give programs a chance to improve.
The Department also chose not to accept a proposal from Testa to adjust the debt-to-earnings thresholds based upon the percentage of students at a program that received Pell Grants or were independents. The Department says that it looked at this issue the last time and will look at the issue this time. When it did the analysis the last time, it did not see a degree of effect of Pell Grant status that made it think there was enough of a connection to have to make adjustments for it and so does not see a reason to make such adjustments at this time. It did, however, note that it would be doing this analysis again and if it sees evidence that such adjustment is necessary it would do so. Testa asks about the independent status, since that is related to loan limits. Kolotos says the Department will look at it but did not see a reason at the moment to make that change.
668.404 Calculating Debt-to-Earnings Rates
Reiter had suggested to amortize loans based upon an average rate. Representatives of for-profit schools had asked for differentiated amortization schedules based upon the type of credential. The Department is not accepting either suggested change. It is, however, adding Perkins Loan debt into the calculations.
Jerome asks the Department to see what the actual amortization schedule was by program type. Kolotos says the Department has looked at it, but most people elect 10 year plans. Kolotos says but if you look at how long it takes someone to pay off their loans, you are looking at very old cohorts. But when you look at the data, he sees most loans are paid back in less than 10 years. Jones from Strayer University asks if the loans are broken down by type of credential when it looks at average repayment periods. Kolotos says he will take it back.
Reiter had suggested deleting language that clarified what it meant to start paying a loan upon completion so that a loan with a grace period could not be exempted on the grounds that it did not immediately come due. Kolotos suggests saying “after” instead of “upon” completion.
668.407 and 668.408 Calculating, Issuing, and Challenging Program Cohort Default Rates
Kevin Jensen from the College of Western Idaho had proposed including a new section that mirrored what was already required under the regulations for cohort default rates. The Department says it does not need to include this here since it already exists elsewhere in regulations. He says if the underlying section ever changed, then it could see if it had to change the language.
668.409 Determining Loan Portfolio Repayment Performance
Jensen had also suggested a minimum of 30 borrowers for the repayment rate. The Department is adding in a minimum size, but it is looking at 10 borrowers, not 30. That would be 10 in a cohort of two years.
668.411 Final Determination and Consequences of GE Measures
DeBlasio and Justice, the attorney general representatives suggested providing warnings to students at programs enrolled in the zone. The Department will not adopt that. It continues to believe that the first few years in the zone not entail barriers to allow these programs to improve.
The Department also does not accept proposals from DeBlasio and Justice that would require field testing and provide actual disclosure language. The Department says it will field test it, but can’t require it as a practical matter and does not want to lock down the language.
DeBlasio and Justice had suggested that programs subject to the enrollment cap be calculated after subtracting dropouts. The Department does not accept it, citing the borrower relief provisions as a way for a program to consider what it should do in terms of students to add.
DeBlasio and Justice had suggested that borrower relief provisions apply to not just students currently enrolled in the program, but also those who were previously enrolled and whose results were measured and produced the failure. The idea is the borrowers that actually “caused” the failure get some help. The Department notes that it is trying to balance who gets relief here and that those borrowers that are measured have some relief through income-based repayment and that including this could triple the size of the population eligible for relief, which would be overwhelming.
Nassirian asks if the Department is documenting that some harm occurred. The Department says not necessarily because the program that may fail could also pass in one last year in which case no harm had occurred. Nassirian asks what about programs that do end up getting that final failure? He asks for a distinction between programs that did fail and those that came close to failing. The Department reiterates it is a difficult position to balance.
668.412 Reporting Requirements
Reiter, DeBlasio, and Justice had asked for programs to report for an occupational code known as SOC for each student as well. The Department says it is not appropriate to add this in for the student-level data, which is what this section addresses.
Reiter had requested adding language around private education loans that says the institution should report private education loans “which the institution is, or reasonably should be aware of.” The Department accepts this change.
668.413 Disclosure Requirements for Gainful Employment Programs
DeBlasio and Justice had put forth comments to require consumer testing on the template or to put forth a temporary template. The Department says a temporary template would still have to be approved by the Office of Management and Budget, so there’s no reason to do a temporary one. The Department says it will have a template out for the current disclosure requirements sometime this month. This would apply to things that are in the parts of the current language not struck down by the court. The Department then has time to consumer test something before the final version of this rule is published.
DeBlasio and Justice had proposed disclosing the mean earnings and not the median. The Department wants to keep the median language and explain what a median is in plain English. Testa from Empire Education Group asks about disclosing both. The Department says it will take it back.
DeBlasio and Justice had suggested changing some of the language around disclosures about licensure. The Department suggests having programs list the state or states where “completion of the program satisfies the educational prerequisites for licensure.” Nassirian asks what happens if a program would not qualify for anywhere in the United States. He says that not being eligible anywhere should not be eligible. The Department says that there is some interplay between this section and the certification requirements that will be discussed later.
3:30 p.m. Still on Disclosures
We’re now back in session after a delay that was supposed to be about 35 minutes and still went on for more like an hour.
The Department says it will add the prominent to its description of the disclsoures, but says they need to keep readily accessible. In terms of the remedy if the website needs to be fixed, the Department would add language saying in addition to other actions by the Secretary.
In terms of language for direct distribution to students, the Department would require the disclosures to be given to prospective students before they enroll or sign an enrollment agreement or similar type activity. It would not,however, require disclosures to be provided orally.
668.14 Calculating, Issuing, and Challenging Completion, Withdrawal, and Repayment Rates and Median Earnings
The Department will accept concerns from negotiators and do separate completion measure for part-time and full-time. And it will assign students to a status based upon their attendance intensity the first time a student’s data is reported to the Department. Part-time students will be se judged on whether they complete within 200 percent of the program length or 300 percent of the program length. This means two rates each for full-time and part-time students. Full-time students would be measured at 100 percent and 150 percent of time and part-time students will be checked at 200 percent and 300 percent of program length.
The Department does not accept a suggestion from Nassirian to report an attrition rate instead of a withdrawal rate. The Department says it will have the data to calculate some form of an attrition rate, so if that information is needed then it could add it.
The Department notes it is still working on the new programs text.
4 p.m. Debt Reduction Proposal
Jerome asks if the Department is going to set aside time to discuss the accountability metrics, given concerns that they could close some programs/institutions or if the Department was going to keep going through the regulatory text. Kolotos says in a way the metrics have already been discussed through the comments on this proposal and its language. He says the Department’s proposal are those three metrics: debt-to-earnings; loan portfolio repayment rate; program-level cohort default rate and that the thresholds it suggested on those rates are the ones it wants to keep.
Kolotos says he wants to discuss Jerome’s proposal that would allow an institution to reduce the debt for each cohort to get it to the point where the debt amounts would pass. Kolotos says it is a viable idea and thinks the debt reduction amount would be equal to what it would otherwise have to provide through the letter of credit or the set aside of loan dollars. So it could reduce the debt instead. The one exception would be for the program-level cohort default rate, in which it could not calculate an amount to set aside. The one catch is it would only be available for the transition period.
Jerome says that since an institution cannot change the debt of past students, so there is nothing it can do to change the course of action for those individuals. So instead, the program would lower the debt levels of new students and stop lending to existing students that are above the acceptable level. Or he says they could get to a zero median debt for the program so it does not fail. What it gets in exchange is relief from the penalties. He says not many institutions will take advantage of this because it is costly. Nassirian asks if past cohorts of students get any relief. Jerome says no. (That’s not dissimilar from what the Department is saying either, since its borrower relief does not apply to past students. Jerome says he would do this through scholarship and institutional aid.
So to clarify, the institution would lower the debt for current and new students through institutional aid or scholarships. It would be good for the transition period only. Justice asks what would happen if it’s the last year of the four-year transition period and the program is multiple years long. The answer is not clear and Jerome says he wanted this to be a permanent change.
Nassirian says he is concerned that making this a permanent allows institutions another “bite at the apple” to keep flying near the limits. He asks how many schools could really afford this. Jerome says he thinks it could be as little as paying for students’ books instead of using loan dollars. Kolotos says he thinks Jerome is doing the right thing and that this is a replacement for requiring a letter of credit. He clarifies that the idea is to use institutional support with the students’ consent, which is how he can legally limit the borrowing.
Justice says it has to be every single new student and every single current student. Jerome says that is how he sees it.
Nassirian says the problem is peaks and valleys. He says this is a way of setting the ratio at the maximum allowable level to ensure compliance. So an institution can set the price at one level and then go back and change the loan amounts once the data show it was priced too high.
Kolotos clarifies this would allow the program to avoid penalties and be subject to eligibility loss for everything. It would exempt them from the loan portfolio repayment rate but could not exempt it from the program-level cohort default rate. Kolotos calls this proposal the “most proactive” idea that negotiators have put before the commitee. Justice asks if the Department would limit the number of times the institution could rely upon this provision.
The Department asks for a short break for individuals to read the language and then take a consensus vote.
For what it’s worth, if you wanted to do a debt reduction program it would probably be better to structure it one of two ways. Either have them cut off debt entirely, which is a cleaner test and makes it simpler to worry about the ability to raise tuition on non-borrowers and use it to pay off debts for others. Or, you could have the debt reduction be set to the discretionary level needed to pass. What this would mean is that a program with very low earnings would have to cut debt to zero, since they would not have any discretionary earnings and thus any debt level would produce an automatic ratio of infinity. If done to the annual rate, there is a bit of a risk that high-cost programs could cost shift dollars around.
4:40 p.m. Another Meeting
The Department is proposing to hold a one-day meeting between December 9 and 20. The Department could do it over the phone or in person. It would try to have the data available before then. It would take a consensus vote at that time and not take a vote today.
The Department says it will review the exceptional performers language.
Jones from Strayer says he appreciates the attempt to get data. He asks about the process going forward. He notes that some of the ideas the Department has put forward lies in the impact of the data. He asks if the terms of the rule appear to be set, what is the point of the data if there isn’t openness to using that data to find some critical underlying points. He says if the Department is going to have the data would it be used to revisit core components of the rule. Kolotos says it will give the data and we can discuss the metrics, but it must be done in one day and not have session after session. Jones says he in particular is concerned about the impact of complying with one of three metrics versus having to comply with all three metrics.
Jensen from the College of Western Idaho says he wants to remind people that this work impacts millions of families and large numbers of people. He says we are not doing proper due diligence if we try to wrap this up in one day. He asks for a two-day session given how much is at stake. Reiter says she thinks it can be done in one day and can’t keep going around on things the Department does not want to do.
Kolotos responds to Jones. He says he believes the Department put forward the right policy. The data should inform the policy, but it should not drive it. That seems to suggest that the policy should not be driven by the outcomes estimates but by what makes sense from a policy standpoint.
Kinney from the Louisiana Community and Technical College System says she is still concerned about the unintended consequences for places with small numbers and percentages of borrowers and that it could penalize low-cost, low-risk programs and benefit high-cost high-risk institutions that can buy themselves out of this issue. Jensen says he has some political problems at the local level with how this rule could come out. He says this could create incentives for low-cost programs to leave the loan programs. He does not want fundamental errors to be made in the way this rule is put together. Justice agrees that she’s concerned that community colleges get no reward for being low cost under a proposal like the one that Jerome put out.