Breaking News: U.S. DOE Rescinds Gainful Employment (GE) Rule – Official Version to be posted on July 1

Late on June 28, 2019, the U.S. Department of Education rescinded the “Gainful Employment” (GE) Rule.  (The Department posted the “unpublished” notice in the rescinded GE Rule on Friday and will post the official version on July 1).  The GE Rule applied to all programs at all Title IV eligible proprietary schools, as well as certificate programs at non-profit schools.  The GE Rule imposed numerous reporting and disclosure obligations on affected programs; as well we imposed a Debt-to-Earnings metric on the affected programs if they were to maintain Title IV eligibility.

Typically, the effective date for this rule would be July 1, 2020.  However, the Department designated this rule for early implementation.  This means that schools can be bound by the rescinded rule – rather than the old one – at their discretion.  In an Electronic Announcement issued on Friday, the Department provided:

An institution that early implements the rescission must document its early implementation internally.  It does not have to publish its decision to do so; however, it must make such documentation available upon request by the Department.  Institutions that do not early implement the rule are expected to comply with the 2014 rule until the rescission becomes effective on July 1, 2020.

We suggest that schools create an internal document that says the school will be voluntarily be bound by the new rule as soon as possible.  As the guidance suggests, this document must be provided to the Department upon its request.  Schools should also expect their auditors to request this document during their annual compliance audits.

While the Department does not prescribe what this document should look like, it should state that your school is adopting this rule effective July 1, 2019 (which is also the publication date of the register notice) and should be done in a manner consistent with your processes for other such documents.  For example, if you document regulatory changes in a memo to staff or a memo to file signed, do so here.  Also, if a particular person would typically author or sign such a document, do so here as well.  You should create this document as soon as possible.

Here is some proposed language for such a document (feel free to supplement as you see fit to address your school’s situation):

Effective July 1, 2019, [School Name] has adopted and will be bound by the gainful employment rule as amended in [Federal Register Cite], as published on July 1, 2019. 

We will update this post to provide the proper cite once the document is published on Monday.  We provide this language as merely a suggestion – feel free to use what you think is best for your school.   As the Department noted:

Institutions that early implement the rescission of the GE rule will not be required to report GE data for the 2018-2019 award year to NSLDS, which will be due October 1, 2019.  Additionally, those institutions that early implement will not be required to comply with the current requirements in 34 CFR 668.412 (d) and (e) that require institutions to include the disclosure template, or a link thereto, in their GE program promotional materials and directly distribute the disclosure template to prospective students, which will be required starting on July 1, 2019.  Institutions that early implement will no longer be required to post the GE Disclosure Template and may remove the template and any other GE disclosures that are required under 34 CFR 668.412 from their web pages.  Finally, an institution that early implements will not be required to comply with the certification requirements for GE programs under 34 CFR 668.414.

If you have any questions or would like assistance, please feel free to contact the author at dennis.cariello@hmbr.com.