2. Costs Rising Faster than Healthcare

3. Growth of Total Student Loan Debt and
Income Over the Past 12 Years

4. Students are borrowing more, at the same
time % of students borrowing funds is rising

5. Student Loans in Default

6. Uncle Sam’s Portfolio Is Risky

7. Examining Proposed
Legislation for Federal
Student Loan Program
Changes to Eligibility Requirements Gainful Employment (GE)
programs that receive funds underTitle IV, of the Higher Education Act
of 1965

8. Current Proposed Legislation
▪ The proposed changes are referred to collectively as, Gainful
Employment (GE) program.
▪ This program has been drafted over the past several months; the
drafting of this program is now complete. The final draft was entered
into the Federal Register as a formal proposal on March 25, 2014.
▪ Sponsors of this program have acted to attempt to increase
information available to prospective students of what the total costs
of each educational program they are considering is, and what they
can reasonably expect to earn upon completion of these programs.

9. Scope and Purpose of
Gainful Employment (GE) Program
1) The Secretary of Education determines that the program
is eligible forTitle IV, Higher Education Act funds.
2) An institution reports information about the program to
the Secretary.
3) An institution discloses information about the program to
students and prospective students.

10. Gainful Employment Program Framework
Gainful Employment Measures
▪ For each award year, and for each eligible GE program offered by an
institution, the Secretary calculates two Debt/Earnings rates.
▪ These rates are the discretionary income rate and the annual
earnings rate.
Program Cohort Default Rate (pCDR)
 For each fiscal year and for each eligible GE program offered by an
institution, the Secretary calculates the pCDR.

11. Calculating GE Measures
1) Discretionary Income Rate = Annual Loan Payment / (the higher of
the mean or median annual earnings – (1.5 x Poverty Guideline)).
2) Annual Earnings Rate = Annual Loan Payment / the higher of mean
or median annual earnings.
 Annual Loan Payment – is found by determining the median loan
debt of the students who completed the program during the two-
year period. (This is only debt that is required to be reported by the
institution, that a student is obligated to repay after completion of
the program).

12. Calculating Program Cohort Default Rate (pCDR)
▪ For each fiscal year, the Secretary determines the pCDR of a GE
program using the same methodology used currently to calculate the
institutional cohort default rate (CDR) as described by section 435 of
the Higher Education Act.
▪ The pCDR will require individualized cohort default rates to be
calculated for each program offered by a specific institution, rather
that a generalized number for the entire institution.

13. Failing/Zone/Passing Programs Defined by
the GE Program
Failing
▪ Discretionary income rate is greater than 30% or denominator is negative or zero
AND
▪ Annual earnings rate is greater than 12% or denominator is zero.
Zone
▪ Discretionary income rate is 20% or greater and less than 30%
▪ Annual earnings rate is 8% or greater and less than 12%
Passing
▪ Discretionary income rate is less than 20% or its annual earnings rate is less than
8%

15. Selected GE Data Examples
DATA PROCESSING AND DATA PROCESSING
TECHNOLOGY/TECHNICIAN.
327 2.55 $481 $19,204 111.04 $481 $3,999 879 4.28 $683 $20,306 48.03 $683 $5,295
ELECTROCARDIOGRAPH
TECHNOLOGY/TECHNICIAN.
64 2.26 $410 $27,189 334.43 $410 $10,434 340 3.12 $538 $22,964 49.58 $538 $6,430
BUSINESS, MANAGEMENT, MARKETING, AND
RELATED SUPPORT SERVICES, OTHER.
161 8.38 $1,800 $21,428 58.67 $1,800 $5,992 800 11.00 $2,475 $23,418 62.85 $2,475 $7,009
COMPUTER/INFORMATION TECHNOLOGY
SERVICES ADMINISTRATION
ANDMANAGEMENT, OTHER.
47 6.62 $1,197 $46,592 55.63 $1,197 $30,422 188 4.70 $922 $44,365 45.32 $922 $27,885
CLINICAL/MEDICAL LABORATORY SCIENCE
AND ALLIED PROFESSIONS, OTHER.
55 2.53 $386 $18,532 53.07 $386 $3,812 75 3.44 $481 $21,054 27.26 $481 $6,173
ADVERTISING. 146 13.62 $4,130 $34,851 43.60 $4,130 $18,096 475 16.16 $5,053 $33,899 50.95 $5,053 $16,812
WEB PAGE, DIGITAL/MULTIMEDIA AND
INFORMATION RESOURCES DESIGN.
479 10.75 $3,112 $32,229 41.77 $3,112 $16,090 4023 10.70 $3,075 $31,616 47.55 $3,075 $14,913
LAW (LL.B., J.D.) 774 16.46 $8,208 $64,895 24.85 $8,208 $48,140 1364 19.43 $9,277 $58,807 30.92 $9,277 $41,572

16. Major Differences Can Occur – It is Essential to be
highly specific. Prospective students often do not
comprehend or plan for these differences
ADVERTISING. 146 13.62 $4,130 $34,850 43.60 $4,130 $18,095 475 16.16 $5,053 $33,899 50.95 $5,053 $16,812
01-UNDERGRADUATE CERTIFICATE 26 0.69 $345 $49,359 1.05 $345 $32,604 37 0.64 $345 $53,668 0.94 $345 $36,433
02-ASSOCIATES DEGREE 0 10 6.57 $958 $14,575 100.00 $958 $0.00
03-BACHELORS DEGREE 101 16.23 $4,540 $29,903 55.22 $4,540 $13,148 409 18.30 $5,583 $31,863 53.57 $5,583 $14,628
05-MASTERS DEGREE 19 10.90 $5,457 $50,028 16.40 $5,457 $33,273 19 9.21 $5,898 $63,995 12.61 $5,898 $46,760

17. Concluding Views on the Gainful
Employment Program
▪ Timeline of Implementation is Rushed – this stands to be a significant
risk to the success of the Gainful Employment Program
▪ What are the unintended consequences of this program? – How will
eliminating funding for some programs affect other programs, etc.