By Rosalyn Steward, Assistant Chief Counsel
At the roundtable held on June 7, 2017, in Baton Rouge, LA, Advocacy heard from Michael J. Busada, the General Counsel and Vice President of Ayers Career College in Shreveport, LA, on his concerns with the Department of Education’s Gainful Employment regulation (34 CFR § 66.403, et seq.). The stated objective of the regulation is to require schools to ensure their career training programs actually prepare students for good-paying jobs that allow them to pay for their student loans. Mr. Busada stated that he supports the overall objective of the regulation with respect to ensuring quality educational programs, however the requirements and associated metrics bare little rational connection to measures of quality.
First, Mr. Busada stated that the regulatory requirements are not applied uniformly, because whether a program falls under these requirements is based on a school’s federal tax status. For public institutions and private institutions that are classified as non-profit, only programs that do not lead to a degree fall under these new requirements. All other programs provided by these institutions are exempt. For private institutions without a non-profit tax classification, all programs offered must meet these new requirements, regardless of whether the program leads to a certification or a degree.
Second, Mr. Busada stated that regional wage variations make the regulation’s measurements unworkable. He proffered as an example, that certified Medical Assistants earn $10,000 more per year if they live and work in Massachusetts than if they live and work in Louisiana. Hence, the same program, with the same costs, and the same student debt would likely meet the regulation’s requirements in Massachusetts yet fail in Louisiana.
Last, Mr. Busada shared his concern that schools have limited control over the data used to calculate compliance. The earnings data used to calculate a program’s gainful employment rate is provided in aggregate form to the Department of Education by the Social Security Administration (SSA). Mr. Busada said that the actual earnings specific to each student are not provided to the Department of Education or the school. All the school receives is the list of student names that are included in the cohort. The school is not allowed to review or challenge the actual earnings data provided by the SSA to the Department of Education. The only thing a school can review and challenge is the list of student names.
Mr. Busada went on to explain that although a school is permitted to collect student specific alternative earnings data (non-SSA data) to contest the aggregate data supplied by SSA; the school is given a short timeframe to appeal and cannot see disaggregated SSA data. Additionally, the other acceptable forms of alternative earnings data are practically impossible for a school to obtain, especially smaller institutions. The system of using aggregate data from the SSA, does not allow for the consideration of special or unique circumstances. For instance, if a graduate is not able to continue working or chooses not to work, the school has no recourse.
It is clear from Mr. Busada’s sentiments that the Gainful Employment regulation poses a myriad of issues for smaller institutions like Ayers Career College. Education Secretary Betsy DeVos is establishing rulemaking committees to rework the Gainful Employment regulation through a negotiated rulemaking, and is allowing colleges and universities an extra year, until July 1, 2018 to comply with the regulation.
Advocacy was in Louisiana for Regional Regulatory Reform Roundtables June 7-8.
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Rosalyn Steward is an Assistant Chief Counsel for Advocacy whose portfolio includes international trade and education. She can be reached at Rosalyn.Steward@sba.gov.