EDITORS' CORNER
Finalized rule includes new exemptions
The U.S. Department of Education issued its final rule tying federal aid to graduates’ earnings Monday.
“Under the new Student Tuition and Transparency System (STATS) and Earnings Accountability rule, undergraduate programs will be required to demonstrate that their graduates earn more than the typical high school diploma holder, and graduate programs will be required to demonstrate that their graduates earn more than the typical bachelor’s degree holder,” a news release from the department states.
Programs that fail in two out of three years lose access to federal Direct Loans.
“The Trump Administration is hitting the hard reset button on higher education and implementing commonsense reforms that will drive down the cost of higher education and hold all institutions, regardless of sector, accountable for low earnings outcomes,” Under Secretary of Education Nicholas Kent said.
“If a program cannot show that it leaves its graduates financially better off than if they had never enrolled, it should not be underwritten by federal taxpayers,” he said.
The Education Department initially proposed the rule in April, building on the existing Gainful Employment rule by introducing a broader “earnings test,” The College Fix previously reported.
After reviewing nearly 10,000 public comments on the proposed rule, the department added several exemptions and delays.
In the final version, the department will delay penalties for programs that train students for occupations where most workers earn tips so the department can use cleaner earnings data after the “No Tax on Tips” policy takes effect.
Further, schools that do not participate in federal Direct Loans are exempt from automatic penalties.
Institutions can also voluntarily agree to stop offering federal loans for a specific program for at least five years to avoid penalties for that program.
Finally, schools that exclusively serve students with documented disabilities are fully exempt from the new accountability consequences.
The rule will go into effect on July 1.
About 6 percent of all programs and 5 percent of students receiving federal financial aid would fail the earnings test, according to The College Investor.
For-profit colleges would be hit the hardest, as roughly 35 percent of their programs would fail.
The new rule would also hit certain fields particularly hard, “several of which would see 90% to 100% of their certificate or associate students fall short of the earnings bar,” according to The College Investor.
These fields include culinary services, cosmetology, drama and fine arts, religious studies, and alternative and complementary medicine.
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