The Temporary Fate of Gainful Employment

This posting is more for the FA administrators than anyone else. There has been a lot of talk lately as to what is and isn't still required, and there seems to be confusing answers that seem to contradict what's out there. So, what's really going on?

There are four main points to discuss: disclosures, reporting, new programs, and the metrics.

1. The Metrics. These were a series of figures that came out from the Dept this year for the first time. They were based partly on the massive report (explained below) from last October/November and partly on information from the Social Security Administration. This information translated to if a school was meeting expectations on three areas for programs: repayment rate and two debt-to-earnings ratios. If a school failed all three for three out of four years, then they would lose Title IV eligibility for that program (failures once and twice had varying degrees of severity and sanctions). The court ruling in June stated that the Dept had failed to accurately define where their rates came from. For example, the court didn't understand where the students' payments couldn't be above 30% of their discretionary income. In other words, the rates seemed to have been picked simply for the sake of knowing that roughly 25% of schools couldn't pass these rates chosen, as opposed to any actual evidence of why these rates were beneficial. So the Metrics were thrown out as being legal.

2. The Report. Beginning last year, schools had to submit a massive report each October with information on the previous year's student's enrollments (last year's actually dated back five years). This massive report wanted to know things like name, SSN, enrollment dates, enrollment status at the end of the year, and information of what happened to the student after they left school. If schools didn't have any kind of a computerized database, this turned into a disaster to complete. The purpose of this report was to partially create the metrics, but since the metrics were thrown out, so was the report.

3. New Programs. Another component of the rules was the new programs rule. The fear from the Dept was that schools would create a new program that was identical to a failing program, so to stop this, schools had to jump through all sorts of new hoops for programs to be approved. Part of this included having to submit the program information to the Dept at least 90 days before the first day of the new program (and this had to be after the program had obtained approval from the accrediting agency). Since there won't be failing programs, then there is no need for this part of the rule, so this was thrown out.

4. The Disclosures. The judge ruled that the wording of 'gainful employment' in the original HEA of 1965 was vague enough that the Dept could make rules on the gainful employment of schools, so a requirement to disclose information about those programs was within the rights of the Dept. So the disclosures part of the rule was upheld, and schools still have to disclose information about the programs, such as on-time graduation rate, placement rate, median loan debt, SOC codes for potential jobs, etc.

The future of the Gainful Employment rules are up in the air for the time being. The Dept has 60 days from the date of the ruling to appeal, which would be the end of August. However, it is expected that the Dept won't appeal and instead focus more on re-creating the rules for next year or the year after. It is generally agreed that a lot of the future of the rules depend a lot on who is elected President. We will see what the future holds!

Reminiscing of the FA Office

The greatest thing about having a blog is the interaction that comes with it, and the greatest joy one can hear in life in general is to know that you've made a difference in someone's life.

When I was in the FA office everyday, I saw that first hand. I would meet students who had been on their own since they were sixteen, who had several children, who made a life for themselves without any help from mom and dad, other family members, or anyone else. I'd met some remarkable people that made me take a look at myself and think "You know, life's not that bad." There were some amazing people that I had the great fortune of helping navigate through the murky waters of FA, and in return they helped me to appreciate everything that I'd taken for granted.

Unfortunately, I don't get to see these students on a regular basis anymore, nor do I have the fortune of being able to directly help these remarkable people as I once did. They were stressful days, I won't lie. I remember being at graduations watching these same students (who I ended up looking up to as inspirations) completely ignore me and instead talk to their teachers and their admissions reps. And I was fine with it. After all, I was the FA person; I was the person who always needed something signed; I was the person who needed to send something in and had to inconvenience them to get the paperwork done; I was the one who more often than not had bad news. Well, at least that's the reputation that FA people have. But I was fine with it, like I said, because I knew that I was helping these students in ways they wouldn't realize yet, if they ever did.

And as I'd stand off to the side at graduations and reminisce on the students that I'd never see again, I may only have one of them talk to me and thank me for helping them. It may have been the student that I'd stayed late for on a night that I didn't have to, putting aside my own personal life for the student who'd no-showed me a couple times before, or it may have been the student that always had their paperwork completed on-time and flawlessly. Either way, that one student would always make up for everything else. People would often ask why someone stays in the FA business since there always seems to be bad news, changing rules, and stress without end. My response is always "for that one student who realizes".

No one seems to go into the FA industry on purpose: it always seems like an accident. After all, who ever hears of a child who says "I want to grow up to work in Financial Aid!" Everyone has their reason for getting into the industry, but I will say this: everyone that seems to get into it seems to last a long time in it. And that one student who says "thank you" is all it takes to continue for another year.

12 Ways to Make Sure Your Teen Doesn’t Boomerang Back

12 Ways to Make Sure Your Teen Doesn’t Boomerang Back | Bachelor's Degree Online

Here is a link that was sent to me from the people at Bachelors Degree Online. The article definitely has some good ideas about how to help children going off to college don't end up coming back so quickly. Although there is definitely a slant toward university life portrayed in the article, there are some good and common sense ideas that everyone can take and use in their lives.

Sometimes we forget about the little things in life. I have two favorite points from this list: setting expectations early and providing the child with a strong financial education.

No matter when you are thinking of college, it's never too early to start planning. The earlier you start thinking about it and getting things in order, the easier the change will be when you make the transition. I've heard Admissions reps talking to students at our school and they would try to make the prospective student think about daycare and transportation well in advance of starting. There will always been last minute things that go wrong, so there's no reason to figure out as much as you can in advance, so when something does go wrong, you can more easily take care of it.

I can't speak enough about having a strong financial understanding, which ties is specifically with living within your means. I have friends who are in college or recently graduated college. They always tell me how difficult it is to afford things, but then I see them with the new iPhone, toting around a tablet, showing off a new tattoo, or smoking the expensive cigarettes. Sometimes in life, we have to make sacrifices. Other times we just need to cut back. Society tells us we need the newest toys and the higher-priced consumables. Sometimes, all it takes is just cutting back. In the first three months of this year, Starbucks' net income from the US alone was over $309 million. There's a reason why they make so much and why we feel so poor. Maybe one should get used to making their own coffee, which would save a few dollars every day. Maybe one should make their own lunch instead of buying fast food or even snack food. Maybe one should carpool sometimes. Wherever one can cut down on the spending (even if it's just a few cents here and there), one will be able to afford the things that they need to easier.

It is a challenge to plan ahead and to live frugally, as well as do the other things listed, but the rewards are more than just an education at a school.

Graduation and Placement Rate Bias

The world of higher education is an interesting one. It's a world filled with misinformation, half-truths, and outright lies. Sometimes there are truths, but one usually has to do some digging to actually find them. As with most industries, there are good players and bad players. It's just a way of life. However, with most attempts to weed out the bad players, the good players are the ones that suffer.

The funny thing is how things aren't always how they seem. Take for example the rules of the Dept of Ed that for-profit schools disclose their on-time graduation rates, placement rates, costs, and other information. Any school that offers a Gainful Employment program, whether it's public, private, or for-profit, should release that information for that program. So why is it that all programs at a for-profit institution has to disclose that information? There are several reasons for that which we won't cover today.

Some people are under the impression if a school has to disclose something, then the numbers have to be really good. But what's considered really good? I've met a few who compare graduation rates and placement rates to grades on tests: if it's over 90% then it's good, if it's in the 80's% then it's ok, if it's in the 70's% then it's not so good, and if it's under that, then it's failing. It's not quite that simple.

Accrediting agencies have their own rules on these numbers. Graduation rates are figured on a time and a half basis, meaning if a program lasts two years, then the graduation rate is figured on people who completed in three years. Placement rates are figured on people who completed a program and obtained jobs in a related field; however, this figure doesn't take into account people who willingly chose not to get a job in a related field (yes, these people do exist - take for example an accountant who takes Medical Assisting to learn how to take care of her Great Aunt but has no intention of becoming a Medical Assistant). The rates themselves (like most statistics) don't tell the whole story, and usually ruling against the school. Most accrediting agencies look at around 60% as a good number for judging these rates.

However, have you ever wondered what a public university's rates were? These schools don't have to disclose this information for non-Gainful Employment programs. So, just because they aren't required to disclose it, does that mean that their rates are exemplary?

Here is an article about the 11 public universities with horrible graduation rates. These rates are based on time and a half for bachelor's degrees. The list of schools is found on a link in the page. I urge you to take a look. Some of the names will shock you.

Recent Updates

Here we are after July 1, so that means new rules are now in effect. So what have been the newest changes?

1. A new change which is nothing new but has had no publicity is that fees on federal Stafford loans. On the Subsidized, Unsubsidized, and PLUS loans, there were fees but some part of the fees had been part of a rebate. Well, the rebate is gone so the fee goes up now. Last year, the fee was .5% on Subsidized and Unsubsidized, but now it will be 1%. PLUS loans last year were 2.5%, but now they will be 4%.
2. At seemingly the last minute Congress finally passed the extension of the Subsidized interest rate on June 29. It was signed into law the first week of July. This extension ensures that the Subsidized loan's interest rate will remain at 3.4% until June 30, 2013.
3. The biggest news comes last. On June 30, a ruling was given from a federal district judge on the lawsuit between APSCU and the Dept of Education regarding the Gainful Employment rules. Although the Dept of Ed has 60 days from the ruling to appeal (and from the sound of it, it seems like they will), the career-focused sector of higher education treats this as a victory. Our of the four main parts, three were struck down and one was upheld. The one that was upheld was the Disclosures (cost, completion rate, placement rate, median loan debt, etc.). The one part of the rule that was struck down was the Metrics, which schools had to reach to remain eligible to continue receiving FA. The judge stated that the Dept of Ed hadn't fully explained how it had come up with its figures, so the judge struck down the rule. The other two (new program approval process and Reporting) were struck down since they were dependent on the Metrics.

There have been some major changes. These are the largest ones. Those of us in the for-profit sector hail Rudolph Contreras's ruling in favor on 3/4 of the GE rules. Much of the industry isn't upset about the Disclosure rule not being struck down; in fact, we wish all schools would be held to that standard. It would surprise a lot of people to know the numbers on most of the large public schools.

Topic Requests?

Financial Aid is difficult and challenging, and unfortunately it's a little different at each school. Because of this, there are always nuances that can only be explained by someone from that particular institution. On the other hand, there are always certain things that don't change and certain things that remain constant no matter how the institution interprets the rules.

That being said, if you have topics that you would like covered, feel free to email suggestions. We try to keep updated on policies and rules that go into effect each year, as well as explaining issues with currently existing rules and regulations. If something hasn't been covered yet, let us know and we'll try to find some information.

A Moment to Breathe

This week the campuses are on vacation, and to allow time to research new rules and regulations, the Financial Aid Corner is taking a moment to breathe. It's been a good year with some interest starting to show on this blog. I hope that the interest continues! For all the new rules and interpretations of the new rules, we always seem to stay quite busy.

Thanks for checking out the blog! Let's take a moment to breathe as the new rules go into effect and as we make our way to the end of the year.