Today the Department of Education’s (ED) negotiated rulemaking committee wraps up the third round of negotiations on newly proposed regulations and stricter standards regarding “gainful employment” for vocational education programs at community colleges and for-profit institutions. As we shared last year, an earlier effort by ED to establish rules concerning debt repayment and “gainful employment in a recognized occupation” were struck down by a D.C. district court. The ruling, a victory for many for-profits, preserved ED’s authority to make such rules, but made clear that any new regulations must have clearer justification. These regulations impact postsecondary students’ ability to use federal financial aid at an institution considered to be failing under the proposed guidelines.
Negotiations between representatives of for-profits institutions, community colleges, and other relevant stakeholders are discussing ED’s most recent set of regulations which are somewhat different than its much stricter proposal sent out last month. This latest set of rules no longer evaluates programs on loan portfolio repayment rates and also drops the 40 percent cohort default rate detailed in our update last month. Instead graduates of programs whose loan payments comprise 30 percent or more of discretionary income or 12 percent of total income would fail. A program default rate of 30 percent or more for three consecutive years would also fail under these new proposed regulations. In addition to these changes, programs which fall within ranges close to failure would be required to send students, prior to enrollment, a written warning informing students that their ability to use federal financial aid at their institution is in jeopardy and that their program may not fully prepare them to pay off the amount of debt they are likely to incur.
These more stringent regulations would affect 11,735 programs and 13 percent of that figure would fail under these new rules. ED has released a summary of how many programs would be impacted under this proposal which can be found here. It is important to note that the committee’s final guidance is non-binding and ED can still move forward on new gainful employment rules with or without consensus from the committee. An overview of the rules can be found here and the draft can be found here. Please check our blog for more updates as this process continues.
Budget Deal Update
Yesterday, the House passed the Bipartisan Budget Act of 2013 (BBA) the details of which we shared on Wednesday. The bill sets total discretionary spending levels to $1.012 trillion for FY14 and substitutes $63 billion of sequester cuts over the next two years. The House overwhelming supported the two-year budget agreement on a 332-94 vote and it has now moved on to the Senate where it is pending consideration. The Senate is expected to vote on the bill Tuesday next week and President Obama has indicated that he will sign it into law.
NASDCTEc applauds this initial first step by Congress to inject much needed certainty into the budget process and to partially reverse a portion of the highly damaging sequester cuts. However, further Congressional action is still needed to more fully address the federal disinvestment in education programs over the past several years. At a time when the American economy is experiencing a shortage of skilled workers, restoring funding to Career Technical Education (CTE) programs is critically important to safeguarding the economic vitality of the United States for years to come.
JPMorgan Chase Announces New Job Skills Program
Yesterday, JPMorgan Chase unveiled a five-year $250 million initiative that seeks to address the United States’ skills gap— a problem the IMF says accounts for approximately one-third of the current unemployment rate. The New Skills at Work initiative was announced in D.C. in conjunction with the Mayor of Chicago Rahm Emanuel and hosted by the Aspen Institute. “Addressing the skills gap can be one of our most powerful tools for reducing unemployment and creating more broadly shared prosperity” JPMorgan Chase CEO Jamie Dimon told those in attendance. The initiative will invest $50 million annually over the next five years in metropolitan areas across the United States and Europe and will fund research and training programs to improve upon existing workforce development and educational efforts in these areas.
One such proposal, “Workforce Readiness Gap Reports”, would help facilitate data-driven investments by producing detailed reports on regional labor markets and identify areas where there are skill shortages. It is hoped that eventually these reports will help guide workforce investment decisions and allow employers to better communicate the specific skills they are currently seeking. New Skills at Work will also support successful training programs already in existence such as Chicago’s College to Careers program (among other such programs) and seek to improve upon those accomplishments. A list of specific grants and partnerships to be funded under New Skills at Work is expected in early 2014. More information on this new initiative can be found here.
Steve Voytek, Government Relations Associate