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Free Desk Guide: How to Project D/E Rates Under the 2023 Proposed Financial Value Transparency & Gainful Employment Rule

Aaron Lacey Hope Watson August 22, 2023

On May 19, 2023, the U.S. Department of Education published its proposed “Financial Value Transparency and Gainful Employment” rule (the “GE Rule”).  While this proposed rule covers a number of important topic areas for Title IV-participating institutions, including financial responsibility, administrative capability, and certification procedures, the most substantial element of the Department’s proposal is the reintroduction of the “gainful employment” or “GE” framework.  Of particular significance, this latest version of the GE rule, now titled “Financial Value Transparency and Gainful Employment,” has been expanded to cover all Title IV programs at all Title IV-participating institutions of higher education.    

On June 6, Thompson Coburn’s Higher Education Practice hosted a 90-minute webinar reviewing the proposed GE rule.  With this post, we are releasing a free Desk Guide developed to assist institutions as they contemplate compliance with this latest version of the GE rule. The Guide is divided into three parts.  In Part I, we provide a succinct overview of the proposed Financial Value Transparency and Gainful Employment framework (for simplicity, hereinafter the proposed “GE rule”).  In Part II, which is the primary focus of this Guide, we detail a step-by-step process institutions can follow to project Debt-to-Earnings (D/E) rates under the proposed rule.  Finally, in Part III, we offer guidance regarding how institutions can project earnings premiums.

We believe efforts to project and understand D/E rate performance are worthwhile, even as calculated under the proposed rule.  A final rule would not take effect until July 1, 2024, at the earliest, and lobbying, elections, and court challenges likely stand between the effective date and the first round of possible sanctions.  This said, the sooner an institution is aware that it has (or may have) an issue, the sooner it can begin revising a problem program or creating and seeking approval of a new program to take its place. In addition, gathering data for the purpose of projecting rates may facilitate an institution’s accompanying efforts to satisfy any reporting obligations under the final regulation.

We expect to update this Desk Guide in November, following the arrival of the final rule (currently anticipated in late October).

We hope you and your institution find this Desk Guide helpful as you navigate this latest version of the GE rule.  If you have questions regarding the proposed rule or the projection methodology contained in this Guide, please do not hesitate to reach out to Aaron Lacey at alacey@thompsoncoburn.com or Hope Watson at hwatson@thompsoncoburn.com. Aaron Lacey is the Chair of Thompson Coburn LLP’s Higher Education practice, host of the firm’s popular Higher Education Webinar Series, and editorial director of REGucation, the firm’s higher education law and policy blog.  Hope is an attorney in the Higher Education practice who works on regulatory and corporate matters for postsecondary institutions and has a particular focus on the proposed Financial Value Transparency and Gainful Employment rule.