Gainful Employment Talking/Writing Points

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Comments

• The Department went beyond their authority to define gainful employment with a complex formula. Congress has never chosen to do this.
• Programs such as Income Based Repayments (IBRs), which began less than a year ago, and loan forgiveness for public service and other special careers, were set up to assist students who enter fields that do not pay as well, or which start out with lower salaries. Those Congressionally-authorized programs achieve the stated goals of gainful employment without limiting access to postsecondary education.
• The gainful employment proposal would usher in government price-fixing. Yet, Congress has repeatedly rejected the idea of government price fixing in higher education, which is one reason all of higher education objected strongly to this proposal during negotiated rulemaking.
• The proposal curtails educational choice and diminishes job prospects in such high demand fields as nursing, technology, and education. For instance, fifty-four percent of allied health workers who graduated last year were educated at schools that will be impacted by the Department's proposal.
• Programs where many graduates want to work part-time will be adversely affected because grads will not make sufficient wages to meet the debt to income ratio.
• Gainful employment assumes everyone is going to work full-time upon graduation and that is not the case. Again, students have a right to choose where they work and how many hours. If they are not working full time, the school cannot meet the burden imposed by gainful employment.
• Students have the right to choose where they want to go to school and gainful employment diminishes that ability based on tuition versus what a person can make. Nor should it be based on what the government believes are the most needed jobs.
• You simply cannot compare career school students to large public four-year schools. Public four-year schools choose from only the top academic students. By demographics, these students come from families with a better ability to meet their obligations. Career schools serve a much different population; essentially we serve the same population as the local community college, which is exempt from the Gainful Employment regulations.
• On April 12, 2010, Robert Reich, former Secretary of Labor under President Clinton, wrote, "The only way many of today's jobless are likely to retain their jobs or get new ones is by settling for much lower wages and benefits." And, "The likelihood…[is that] the median wage will continue to fall – as it did between 2001 and 2007, during the last so called recovery period." Therefore, this rigid, formulaic approach with the proposed limited variable will not work.
• These repayment metrics, applied only to for-profit institutions, are being instituted during a time where everyone, from all education and income levels, are struggling to survive during a time of economic crises.
• As if compliance with this regulation wasn't already an uphill struggle, the department is proposing that any of our borrowers who responsibly meet their repayment obligation on time following their grace period, will not – I repeat – will not be counted in the Original Outstanding Payment Balance for the Federal Fiscal Year if their repayments begins in the last six months of the most recent Federal Fiscal Year. This can effectively remove up to 50% of students considered to be in repayment for the current Federal Fiscal Year.
• No Pell Grant has ever been awarded to my school. Students have made an informed decision to attend my school and utilize the financial aid for which they are eligible. This very regulation will dramatically limit the choices available to students.
• The proposed definition will force schools to reduce spending on equipment and faculty and cause other program cutbacks, but does nothing to address student over-borrowing, another cause of high student debt.
• The only way to cut tuition is to cut expenses. Our largest expense is faculty. All our faculty are full time with family sustaining wages and full benefits. We are penalized for providing good jobs. Gainful employment encourages us to eliminate these full time faculty jobs and hire part-time adjunct faculty with no benefits. The success of any institution is solely dependent on the quality of the faculty. Higher paying jobs with full benefits attract better faculty than low paying, no benefits, part-time positions.
• The department points out that three-quarters of bachelor degree recipients entering school in the 1980's repaid their loan debt in less than 10 years. The landscape has changed so much in the last 25 years that this statistic is totally irrelevant – there is an entire segment of the population now asking to be educated that were not even considering a post-secondary education in the 1980's.
• As we all know, the overall economy goes through major recessionary-growth swings and salaries rise and fall it. Currently, our entry-level graduates are willing to accept lower salaries (temporarily) to become employed and gain a foothold in their career.
• Gainful employment simply targets schools that serve low-income populations, regardless how successful they are in serving those students. If applied evenly, the local community college would be in danger of being closed by the Department of Education simply because of the student population that they serve.
• Gainful employment metrics measure loan repayment rates, median loan debt of graduates, and the percentage of loan debt compared to a graduate's wages. These metrics create an uneven playing field for career schools that serve low income, high-risk students, the same students as many community colleges.
• One of the goals of Gainful Employment is to force schools to lower tuition so students do not incur loan debt. Cutting tuition does not lower the amount a student can borrow. If tuition costs were really the concern, then you should only measure the amount of loans the student needs to cover tuition, not the amount they are taking out to cover "living" expenses. We cannot limit what a student borrows even if we know it is unnecessary.
• Many of our students enter our school after accumulating loan debt from traditional colleges, where the median loan debt is much higher than our school. These previous loans severely impact their ability to repay their loans, but only our school, as a for-profit institution, is penalized, even though we successfully graduated them and they are employed in a field related to their major.
• Salary is only part of compensation. Some positions have greater benefits and certain perks that can add significantly to overall compensation. For instance, hospitality salaries are generally low; but many people accept lower pay because of the valuable travel, food, and hotel opportunities offered. Others just want to help animals, so they become vet techs because they love the work.
• The proposed Department of Education regulation will force colleges to close needed programs and only allow training for high salaried fields. This proposed regulation goes against the Presidential policies of healthcare reform and access to education.
• Some professions, such as healthcare, often do not pay as much as others, such as business occupations. Yet, healthcare is more expensive to deliver than business while business generally pays more. The result will be that colleges and schools cannot train entry-level students in the healthcare field at a time when the demand is high and predicted to get higher as a result of the aging of our population and new healthcare legislation. This discriminates against lower income students, the very students it is purported to help, by limiting their educational opportunities to gain employment in a desirable growth industry.
• Programs caught in this regulatory net may be long-standing, effective programs students have chosen to attend, graduated from, and depended upon to begin careers in their field – and that ultimately lead to lifetime success. These programs may be in compliance with 100 percent of the quality assurance and compliance regulations set by Congress. But they still may be cut.
• Student loan subsidies should be eliminated. The department points out numerous times throughout this regulation the additional cost that loan subsidies add to the program. A student has never made a decision to pursue a post-secondary education just because part of his/her student loan interest was being subsidized by the federal government. Eliminate the subsidy and use the savings to reduce the overall rates of interest which will in turn result in lower monthly loan payments for all borrowers.

Questions

• If USDE's concern is the high debt burden incurred by some students, how does this proposal address that concern with respect to students attending non-profit institutions with much higher tuitions? (The public institutions have much lower tuitions because they are heavily subsidized by taxpayers)
• Periodic shortages and then excess demand in particular fields can cause wages to rise or fall rapidly. For instance, in the early 2000's, our colleges were graduating and placing IT graduates at salaries of $50,000. After Silicon Valley collapsed, salaries plunged overnight to $25,000 to $35,000. How will this new regulation account for salary fluctuations in a bubble situation?
• How will this regulation account for tips that may not be reported by graduates?
• The timeframe for the proposed gainful employment regulation is wrong. The period between starting and graduating from a program can range from two years to four years or even more. At the start, wages could be at one level and at the end quite another, perhaps much lower. For instance, right now jobs for Information Technology are not plentiful and do not have high starting salaries. But, there are many signs indicating a coming shortage and so based on this, we are enrolling students to be ready for the demand predicted two to four years in the future. The proposed regulations will prevent schools from offering courses of study for jobs of the future until those jobs actually materialize. Employers, who need skilled, trained labor, will not accept this delay. They are likely to send those jobs overseas where qualified employees are available. Is this a desirable outcome?
• Is the proposed approach justifiable based on widely accepted data and research?
• How will the proposal negatively affect student and workforce training over both the short and long-term? Does the USDE have impact data on this?
• How does the proposal conflict or interact with the President's proposed Income Based Repayment plan?
• What other means might there be to address the concern about over-borrowing that would not create additional barriers to services for at-risk students?
• The proposal also discriminates against the poor. If students who attend programs are well-off, they will borrow less and the program can continue. If the students are poor, their loans will be more and the program may be forced to close. How can this Administration – which says it is committed to increasing access to education to all – is apparently proposing what amounts to an initiative that will limit access to low-income students? Based on this formula, my school will lose _____ programs thus hurting student access in my region.
• The Education Department claims this proposal will help limit student loan debt. But where is the evidence that students who complete their education have a systemic problem with student debt? The Department has not presented any. The evidence is clear that students who complete college or certificate programs usually do fine. Most defaults are by students who do not complete.
• There is an identical program to my school's _______ program that is offered at a non-profit college in our region. It has the same job outcome but costs more. Why are they not under this rule?
• One of our four campuses has a 12% repayment rate. (Our other campuses are well over 50% repayment.) The 12% rate is based on the fact that there are only three students and only one is in repayment right now. The others have transferred to our main campus as was expected of them as part of their program. Will the 12% repayment rate hurt that campus? Will DOE observe their own cautionary statement "…caution should be exercised in instances where small numbers of borrowers entering repayment are observed."
• Where did the 8% come from?
• The College Board study concludes, "In sum, we believe that using the difference between the front-end and back-end ratios historically used for mortgage qualification as a benchmark for manageable student loan borrowing has no particular merit or justification. This is not to say that 8 percent is an unreasonable number. Some of the problems listed above suggest that higher limits might be appropriate, while others suggest the opposite. It is simply to say that any benchmark needs stronger justification than has thus far been forthcoming." Question: So how can you use a mortgage calculation for students who have just graduated from college?
• In the gainful employment regulation, the DOE wants to approve all new programs because of "labor oversupply." Yet, more than 80% of our students find jobs in the exact field they were trained for. If labor oversupplies are a concern, why are only programs from for-profit institutions being "approved" when other colleges have the exact same program, degree level and occupational outcome? Why are their programs exempt from the regulations if there is a so-called "oversupply"?
• Gainful employment is based on tuition and the amount of aid a student takes out to pay for educational costs. The Department will do nothing to allow schools to limit borrowing. Students are "entitled" to full aid whether they need it or not to cover tuition. So if a student is using the aid to "buy Christmas presents" or bail friends out of jail" or "buy liquor for a party," the school is still held responsible if that student does not have a job paying enough to meet the burden of this regulation. Why is over-borrowing not being reviewed?
• Gainful employment is predicted to shut down so many programs and at times a complete school. What impact will it have on the workforce and industry needs? Was a study done to assess the impact?
• According to Department of Education statistics, the local community college in Cambria County, Pennsylvania, has a loan default rate of 12.1%, a median loan debt of $6,200 for graduates, and a graduation rate of 25%. While the for-profit private career school in the same area has a loan default rate of 9.4%, their median loan debt is $7,834 for graduates, and the graduation rate is 66%. Why are community colleges exempt from gainful employment?
• The department states that "to the extent that the education and its accompanying student loan debt do not provide the necessary skills to provide increased wages and employment, public policy should attempt to minimize or eliminate that cost to students and society." If so, shouldn't that same public policy move to eliminate my local community college since they are graduating students at a 14.4% rate of graduation?
• The department states that this regulation will be a form of consumer protection. By implementing this regulation the department believes defaults will be reduced - this is important because credit ratings are destroyed, the ability to purchase items severely limited, and for disadvantaged students, "the stigma of default can send an unfortunate message to others – that seeking an education can have disastrous results." If this is the case, please tell me why, then, would the Department allow – even encourage – a student in default to consolidate his/her defaulted loan, without as much as making a commitment to make a single loan payment, and allow that student to return to a post-secondary school and acquire additional loans?
• Why would all loan debt be calculated at the unsubsidized loan rate when approximately 40% of the loan volume would be at the significantly lower subsidized rate?
• The Department of Education contends that for-profit colleges overburden students with loans that they are subsequently unable to repay and want to use their own repayment metric to eliminate programs from for-profit institutions. These metrics show the students from for-profit institutions have a higher default rate than other institutions. Yet, traditionally black colleges have a higher default rate and community colleges with similar student demographics have a similar rate. This means loan repayment is based not on the type of institution but on the student demographic. Why should schools be penalized?
• There are many issues that impact a graduate's ability to repay their loans that have nothing to do with the education they received at our school, yet we are the ones held accountable. For example, if a graduate was given a subprime loan for a house they cannot afford from an unscrupulous bank that left them financially ruined, and grads cannot repay their student loan, why should schools be penalized?

How To Submit Your Comments

Submit Your Comments by September 9

1. Click on or type the following link: www.bipac.net/cca
2. After logging on, click on the "Take Action" link on the left-hand side of the page and choose the action alert that best applies to you (i.e. student, graduate, institutional employee, and employer)
3. You will be directed to a page with a link to talking points on the "gainful employment" issue and a link to a more detailed summary of the regulation, as well as a form where you enter your address and contact information
4. After clicking "continue," you will be routed to a page where you can view a sample comment letter, which you can customize and personalize before sending
5. When you are done writing, simply click the "Print/Send" button, and your comments will be sent directly to the Department of Education

Comments may also be submitted via the Federal eRulemaking portal by following these steps:

1. Click on the following link: www.regulations.gov
2. In the text box labeled "Enter Keyword or ID," enter the following docket number: ED-2010-OPE-0012
3. You will then be routed to a page where you will be required to fill out a submission form with your name and other information, and then you may either enter your comments into a text box or upload them as a Word or PDF document
4. After completing the process and clicking the "submit" button, you will be given an electronic receipt verifying your comments have been successfully submitted