Gainful Employment Conference Call Liveblog: New Programs

The Department of Education is hosting a special conference call to talk about what approval process should be in place for new gainful employment programs. It is scheduled to run from 1 pm to 3pm EST. 

ED Changes Its Position

John Kolotos from ED says that the Department is willing to change its initial position and no longer require all new gainful employment programs to seek approval from the government before starting up. He indicates ED is willing to limit this to only poor performers and want to talk about what metrics should be used.

Brian Jones from Strayer University asks what the universe of options could look like given the court’s ruling that ED may be overstepping its bounds in looking at program content. Steve Finley from ED said they are looking at things besides the content of the course–seriousness and sufficiency of the program, the estimated outputs, for example.

Marc Jerome from New York-based Monroe College says he likes ED moving its position but says the proposal needs to be simpler for ED to consider. He suggests they will put in a proposal that looks at 1) completion rates, 2) cohort default rates, and 3) the regulatory scheme the program faces from the state or accredtior.

Editorial observation: both of the for-profit negotiators seem very well briefed for this call and are already trying to extend the conversation to the broader questions of the purpose of the rule.

Margaret Reiter, a consumer advocate asks if the Department has enough info on completion for all students to use for a metric. She also asks if the Department had looked at a proposal that some negotiators had sent on what to do in this space. This proposal is not public, so it’s unclear what is in it. Kolotos says if a completion rate was done the way it was articulated in the draft language then it would not have information at the program level for several years because it would have to get program level enrollment and then wait for 100 or 150 percent of normal time, which could be many years and after the rule takes effect in July of 2015. Kolotos says ED is open to the idea of using Bureau of Labor Statistics (BLS) upfront (a question Reiter raised), but says it is more or less a paper exercise” and something the Department could do on its own. He says ED would prefer data that are more specific to the school. Finley says ED is still reviewing the submissions it has received.

Tom Dalton from Excelsior asks if Jerome was talking about a program-level CDR or something else and about the availability of program-level CDR data. Dalton asks if program level CDR data could be generated right away. Kolotos says he would have to talk to the operations folks to see how quickly it could be generated and what years it would have to start with to have three years of data in time for the start of the rules. Jerome says generating a program-level CDR should be easy because his college was able to do it by taking the existing school-level CDR. For completion, Jerome says it would be good to start an institution or credential-level completion rate that takes into account things like transfer and then move from there.

Kevin Jensen from the College of Western Idaho says there should be some way to look at whether an institution is consistently bringing successful programs and give them more latitude if those new programs are within the scope of where they have been successful in the past. He suggests if things should be layered a bit more to think about the program level versus institutional level. He says the occupational code structure could be used to judge if programs are similar.

1:30 p.m. What would prior approval look like?

Della Justice from the Kentucky Attorney General’s Office says she likes the idea of an investigation into the local community to see what wages would be like. She asks if prior approval means a program has to submit the underlying data to the Department or whether they would have to do the legwork and then provide an attestation to the Department but not all the information. Basically, she wants to know if everyone would have to do a certain degree of initial due diligence and then have the Department get under the hood for only some providers. So everyone could provide some affirmation of a new program and some would have a more detailed review.

Finley says that idea is something ED could look at, but doesn’t have any feedback on.

1:35 p.m. Scope Matters

Ray Testa from the Empire Education Group, which includes beauty schools, says that getting local labor market conditions and estimates can be obtained by state and in some cases municipality from the BLS. He notes that new programs could be completely new versus a similar version of something existing. He thinks that if the new program is directly tied to a professional license that is required or makes it almost impossible to work without out it, then that should be considered. He argues that programs meeting that criteria should not have to deal with as much scrutiny because they have a more clearly established scope because they already go through a lot of work with the state licensing process to start a program. He argues that if ED has to be the last line of approval after the state and the accreditor, then the Department could delay something being stood up. He says that the accountability triad should be kept in mind.

Lighter aside: Not all state licenses make sense. Indiana used to offer a license in hypnotism before it was eliminated in 2010.

1:40 p.m. Zones and surveys

Whitney Barkley from the Mississippi Center for Justice agrees with Justice that having work be tied to local analysis is important. She also suggests that maybe looking at programs based upon whether similar ones are in the “zone” (the middling but not horrible performance level) could be a criteria for further scrutiny. She also suggests that whether an institution has only one or two programs in the zone could be taken into account as to whether being in the zone triggers the need for greater review.

Reiter asks whether the National Center for Education Statistics (NCES) could lay out the requirements for a survey of local wages. She asks whether schools/programs with low borrowing rates should have to go through as detailed a set of procedures and if ED knows the borrowing rate at programs. Kolotos says the survey question will go back to NCES. ED thinks it could identify borrowers versus non-borrowers by program.

Rory O’Sullivan from Young Invincibles reminds the negotiators that there are bad actors out here and that it is important to have upfront protections.

Dalton from Western Idaho says that institutions already do research–such as having to run some programs by the state board of education. He also points out the program participation agreement as a mechanism to deal with new programs.

1:50 pm. What is Gainful Employment About?

Richard Heath from Anne Arundel Community College says this issue had started out as an issue about too much borrowing and students going into default because they had a worthless certificate or couldn’t find a job. He said if we are talking about overall investment or return on a certificate than that is a different conversation. He says if you start looking at the total investment of Pell plus what they borrow it would be very difficult to justify the return on investment.

Jerome disagrees. He says gainful employment is about more than just student debt. If that was the issue, then CDR would be the only thing to consider. He thinks that completion has to be a part of this and it should not all just be debt-to-income ratios.

Reiter asks if there are other ways to determine what kind of programmatic approval is needed for a particular occupation besides surveys of employers.

1:55 p.m. What is a “local” market for a national online program?

Jones from Strayer wants to return to the idea of localized analysis brought up by Justice and Barkley. He asks how a national, online institution would do that.

Testa from Empire Education argues that we are trying to create a formula to measure performance, not speculate on what performance might be. So there’s no way to know what students might borrow to create a theoretical debt-to-earnings ratio. He agrees there’s a difference between brick and mortar versus online institutions, but that the population itself also moves. He says there are nearly 40 reciprocity agreements that allow people to move licenses across states. He suggests that the more you break this down questions keep adding up but not answers.

Testa says the statute is about gainful employment in a recognized occupation and that last piece should be the upfront requirement. The courts agreed that debt-to-earnings could be used, but it should not be the upfront tool used and would be overreaching to do so.

2:00 p.m. Trying to get back on track with three options

Kolotos tries to bring the discussion back to more helpful specifics so something can get drafted. He says ED could look at:

1. The occupation codes for a program and expected earnings;
2. State or accreditor licensing requirements to gauge if something should get a pass; or
3. Institutional performance metrics.

But he still needs specificity on how it would actually work. He also notes that maybe ED could consider a free pass for institutions with all passing programs but they would still have to decide what to do if an institution passes everything only because it shut down zone programs in the pass.

He does suggest that ED could consider the share or number of students in passing programs, since that would speak to overall institutional performance. But there would need to be a threshold or cutoff to be applied.

Justice says that state licensing may not always be the issue. She cites medical assisting, where the issue may not be licensing, but whether the program has the right approval to get the certifications that are most remunerative. She says one way that the issue with online schools that Jones brought up could be dealt with is by setting some requirements for how many students are in a given area before the school has to do some analysis. She says it could be once the school has a “significant percentage.”

Barmak Nassirian from AASCU says that the negotiators appear to have resigned themselves to lagging measures. But he says it makes no sense to allow new programs to be stood up if they will definitely violate these measures. He thinks that institutions should pursue a diligent process of figuring out where they think a new program would sit. But the issue then becomes where should the risk be held if the results are in doubt. Should we err on the side of allowing new providers to come in and put the risk on the several cohorts of students to go through before results. Or should the providers bear some of the initial risk? He says if the track record indicates that the risk should not be that high then they should be given less scrutiny.

2:15 p.m. A simple rule of thumb test

Eileen Connor from the New York Legal Assistance Group asks if the upfront process could be more modest and say no access to student aid if the program can’t pass a simple rule of thumb test of whether the total debt will exceed the first year salary. A tweak could be made to have this look instead at the total program cost versus the first year salary. There’s no direct response.

2:20 p.m. Tackling online programs

Kolotos asks Jones from Strayer how it handles earnings estimates for online programs. Jones says they look at national results and will get a more concrete proposal by later in the week. He reiterates his concern that the localized evaluation is problematic.

Testa from Empire Education says there is a difference between a new program being offered at a school for the first time versus an entirely new program that’s never been offered before. He says the latter is much harder to estimate properly. (Editorial question–how often do we actually see brand new heretofore unoffered programs?) He says they wouldn’t want to set something up to fail because a new program that gets knocked out three or four years after they start would not give the school enough time to make its investment back. He also brings up the idea of giving a pass to institutions that are not struggling.

2:25 p.m. Reapproval process

Kolotos brings up the idea in the draft regulatory language that would restrict how soon a school could try to reinstate a failing program. He asks if ED should stick with that framework of saying you have to wait three years before you can reapply and if the same metrics should be used for that attempt at reapplying.

Libby DeBlasio from the Colorado Department of Law asks what kind of upfront work Empire Education does do before it starts programs. Testa says his schools and most schools will not offer programs that do not directly lead to a state license. This immediately means programs are tied to an actual job. He says they look at a community’s economic conditions, gender breakdown, etc. to get a sense of the needs. He says it may not be the absolute science basis for a given school, but they have a sense. Testa cites how they used to offer a lot of skincare services because they seemed popular. But they noticed that there was a lot of saturation there and many salons couldn’t offer those services. So they pared back where it was offered so it would better reflect demand.

With no one responding to Kolotos’ question, negotiators keep talking about the issues raised by Testa and DeBlasio. Heath from Anne Arundel CC says that the state of Maryland already makes his school present the same information that the Department had initially said it would want in terms of expected job numbers, wage estimates, etc. He says it makes no sense to do the approval a second time if the state already does it.

Heath says that previous programs should not get any sort of pass and should be treated like a new program. Kolotos indicates they are looking for something more, not less, since it already existed once. He wants to know what makes the program different from the failing one last time.

2:40 p.m. Accreditors don’t think this is necessary

Belle Wheelan, from the accreditor SACS, measuring the success of a program on how people can pay back their loans is “ludicrous.” She thinks data on whether jobs are still available that would compensate them at a level where they could still pay back their loans would be useful. She says looking at how many students paid off their loans from when the program became ineligible. Or looking at the national economy, what might be different about the students. She says school could talk about what’s changed–the national economy, a new employer moved in, etc.

Jones says the amount of approval work varies by states. Some ask about expected labor market growth, some ask for comparisons to existing programs. The result is some states are very robust in their approval role. He suggests that institutions should state if they went through a rigorous approval process and then the Department would insert itself if the program was not subject to that rigorous approval process. This way the Department could step in when states and accreditors aren’t doing their jobs.

Justice asks if all this work is being done on the front end, then where is the breakdown occurring that we still have all these problems. She notes that the Department couldn’t look at the front end and pull out programs that would not be able to pass metrics on the back end. So good information is needed for not burdensome things that could be looked at to identify those likely to fail. She notes that it sounds like lots of schools are already doing something like that, so there might not be much more new information, but it would more be about providing that information to ED as well. Finally, she notes that the standards being set are not that unreasonable–the Department is not asking, for example, for 100 percent repayment.

Nassirian goes back to the idea of upfront requirements. He calls for self certified compliance from all programs at all times, so there’s an assurance of real-time effort to stay within the parameters of the regulations. His concern is about sending students into experiments and waiting a few years to see if they succeed or not. He notes part of the problem is that the committee has good actors on it who don’t understand why they would need to do this. But that there are bad actors who aren’t at the table. He cites an example of ATI, which just reached a settlement following a lawsuit even though it had full accreditation and approval from the Texas workforce board. His solution would create an honor system for schools but still have a verification element.

Rhonda Mohr from the California Community College System says all this work will just create another step for the folks who are just going to game the system to still game the system. She thinks some kind of accountability or personal responsibility is necessary. But she says if a new program process similar to the old set of regulations is decided upon, then the timing needs to be addressed so students aren’t affected by programs in limbo.

Helga Greenfield from Spelman College notes that the negotiators aren’t really any farther along than they were at the start and echoes calls for simplicity.

Barbara Hobiltzell from the University of California says there is a need to look at outcomes. And while paying a loan should not be the best metric, the goal of career education is to improve their circumstances and the ability to pay debt is an indication of that.

That’s it for now. The next negotiation session will be in person on October 21.“