On September 26, the Department of Education released its final Gainful Employment (GE) rule. The rule is set to take effect July 1, 2024, with the first data reported in early 2025.
The final GE rule, which is largely unchanged from the draft rule that the administration released in May, would apply to all certificate programs at public institutions, including community and technical colleges, and all programs at for-profit institutions. These programs would be subject to two new measures of performance.
First, there is a new debt-to-earnings rate that compares the median annual payments on loan debt borrowed for the program to the median earnings of its Federally aided graduated. For a program to pass, the debt payments must be no more than 8 percent of annual earnings or 20 percent of discretionary earnings.
The final rule also includes a new earnings premium test, which would require at least half of program graduates to have higher earnings than a typical high school graduate between the ages of 25 and 34 in their state’s labor force who never enrolled in a postsecondary institution.
If a program fails either metric in a single year, they will be required to provide warnings to current and prospective students that their program could be at risk of losing federal funding. If a program fails the same metric in two of any three consecutive years, it will no longer be eligible to participate in federal student aid programs. The department estimates that about 1,700 programs serving nearly 700,000 students would fail the debt-earnings ratio test or not pass the earnings threshold.
The final GE rule also contains a new Financial Vale Transparency (FCT) framework that will “provide information to all students in all programs on the typical earnings outcomes, borrowing amounts, cost of attendance, and sources of financial aid to help students make more informed choices.”
As the department moves forward with the implementation process, ACTE will continue to keep you informed on what this rule means for your programs and the postsecondary community.
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