NAICU Washington Update

Gainful Employment Complexity Grows with New Department Announcement

May 14, 2012

We're now up to 34.

In late April, the Department of Education published yet another announcement to clarify a provision of its gainful employment (GE) regulations.  The most recent notice deals with Title IV student aid eligibility of preparatory courses of study and their gainful employment status. It supersedes information provided in Announcement # 19, issued August 31, 2011.

Currently, under an exemption in Sec. 483(3) of the Higher Education Act, a student enrolled in a course of study "necessary for  enrollment in a program leading to a degree or certificate"  may receive Direct Loan funds for up to 12 consecutive months.  In its Announcement #19, the Department stated that these preparatory programs were not gainful employment programs, even if a credential was awarded. 

The Department is now making a distinction - although parsing it from the new announcement isn't easy.  Basically, if no credential is awarded for completion of a preparatory program, the program continues to be exempt from the gainful employment program.  However, if a credential is awarded for the preparatory program, the program then is considered a gainful employment program, and is not covered by the preparatory-program exemption.

This distinction is important for two reasons:  first, it affects the amount of federal loans the student qualifies for, and second, it determines whether the institution must comply with the gainful employment regulations or not.  

Note:  An institution with a preparatory program not included in last year's GE reporting, and which provides a credential, must file information on that program no later than October 15, 2012.  The institution also must post the required GE disclosure for the program as soon as possible.

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