The rules, which will go into effect July 1, 2024, include a fortified Gainful Employment rule and Financial Value Transparency framework.
10/09/2023 3:40 P.M.
2 minute read
Last month, the Biden administration announced critical regulations aimed at safeguarding students from excessive debt and uncertain career prospects, according to a press release from the U.S. Department of Education.
The two main components of these new rules are a fortified Gainful Employment (GE) rule and an innovative Financial Value Transparency (FVT) framework. These measures are anticipated to shield approximately 700,000 students each year from the detrimental effects of enrolling in career training programs that fail to deliver on their promises.
“T[hese] final rules answer President Biden’s call to hold colleges accountable for rising costs and protect students from unaffordable college debt,” U.S. Secretary of Education Miguel Cardona said. “We are fixing a broken system and making sure that students know, before they take out loans, when college programs have a history of leaving graduates with high debts, low earnings, and poor career prospects. The Biden-Harris administration believes that when students invest in higher education, they should get a solid return on their investment and a greater shot at the American dream.”
The GE rule evaluates whether programs in private for-profit institutions and certificate programs across all types of colleges adequately prepare students for gainful employment. This assessment is based on two crucial measures: the debt-to-earnings ratio and the earnings premium. The debt-to-earnings ratio gauges if a program’s debt is manageable for its graduates, while the earnings premium compares graduates’ earnings with those of high school graduates in their state. Programs failing to meet the established standards may lose eligibility for federal student aid programs.
In addition to the GE rule, the FVT framework extends comprehensive insights to students and families, offering transparency on program costs, expected debt and post-graduation earnings. This initiative will help ensure prospective students are aware of the risks associated with pursuing particular certificate or graduate programs.
“Students will receive this enhanced transparency for programs through new reporting requirements for institutions related to costs (including tuition and fees, books, and supplies), non-federal grant aid, and typical borrowing amounts (for both private and federal loans). The [d]epartment will also calculate typical earnings for program graduates. This information will be made publicly available to students on a website run by the Department,” according to the press release.
The regulations, issued after consideration of more than 7,500 public comments received over the summer, are set to take effect on July 1, 2024.
The final regulations will be on public inspection in the Federal Register and published on Oct. 10, 2023. A copy of the regulations can be found here and a fact sheet on the final rule can be found here.
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