March 11, 2010

Negotiated Rulemaking Reaches an Impasse

After three negotiated rulemaking sessions over several months, there was no consensus for Team 1 – Program Integrity Issues. According to the rules, the negotiators, gathered from all spectrums of the industry, need to reach consensus on the entire package of issues for the proposals to be adopted without revision by the Department of Education (ED).

The negotiators, however, were unable to reach agreement on five issues, two of which - the definition of gainful employment and incentive compensation for recruiters - were major discussion topics during the negotiations.

The issue regarding the definition of gainful employment is due to some programs’ and institutions’ eligibility for Title IV aid because they “prepare students for gainful employment in a recognized occupation.” Currently, within the regulations, there is no standard definition for what is considered “gainful employment.” Options discussed included establishing a reasonable relationship between:

1. The cost of the program and expected earnings (the precept that the program provides “value-added” above a high-school education for the program to meet the “gainful employment standard); and
2. The debt of the student and the starting annual income that student expects to make (the student would need to meet a set ratio for the program to meet the “gainful employment” standard).

The other three issues on which agreement could not be reached were:

1. How to calculate Return of Title IV Funds for term-based programs with modules;
2. The definition of an institution that is required to take attendance for the purpose of Return of Title IV Funds calculations; and
3. State authorization as a component of institutional eligibility.

Team 1 – Program Integrity Issues did reach agreement on the following issues:

• Definition of a high school diploma (for the purpose of establishing institutional eligibility to participate in Title IV programs and the student to receive Title IV aid).
• Ability to benefit.
• Misrepresentation of information to students and prospective students.
• Definition of a credit hour.
• Agreements between institutions of higher education.
• Verification of information included on student aid applications.
• Satisfactory academic progress.
• Retaking coursework.
• Disbursements of Title IV funds.

Since negotiators did not reach agreement on all of the issues, ED is not obligated to include any items discussed by the negotiators when it publishes the final rules. For more information about the discussions, please visit ED’s Web page for negotiated public rulemaking.

If you have a question about the negotiated rulemaking process, call OGSLP’s Policy, Compliance and Training department at 405.234.4432 or 800.247.0420 (toll-free).