What Experts Are Saying About Recent Regulatory Updates
The Department of Education has been busy.
First, they released new regulations around borrower defense to repayment. Although the new regulations are pending litigation, schools have already seen an increase in BDR claims, and media outlets position it as an avenue for student loan forgiveness.
Then, they released new regulations around Gainful Employment, with strict debt-to-earnings ratios compared to the average high school graduate in your state. These regulations are particularly detrimental to skilled trades programs. According to Rachna Madan, a higher education compliance consultant with 20+ years of experience managing comprehensive compliance and financial aid programs:
“The 15-year saga of the GE rule being implemented, repealed, replaced then reimplemented, modified, and then paused continues its painstaking storyline and will get more excruciating till the time every IHE is held to the same common-sense standard and metric.
A vast majority of the GE programs help at-risk, socially, and economically stranded parts of the population become skilled contributors to the workforce, build productive middle-class lives, and support a broader economic ecosystem.
The fact that the rule unintentionally wipes out the possibility of training in entire career paths is reflective of the flawed policy. The rule fails to award a fair chance to some unique, in-demand careers and irresponsibly puts them in a box of metrics that does not cater to their distinctive nature and market demand.”
On top of these highly publicized regulations, the Department also released updated regulations on financial responsibility, ability to benefit, administrative capability, and certification procedures.
Making sense of the nearly 700 pages of regulatory text every time the Department updates regulations is daunting, so we called on industry experts to share their thoughts on the new regulations, with tips on addressing these recent changes. Here’s what they said:
Make a plan NOW
Rachna’s number one piece of advice for schools is to start putting compliance measures, particularly GE measures, in place yesterday. Regulations will always ebb and flow with the political environment. However, it’s always best to plan as if they will come to fruition, regardless of litigation or election changes.
“Don’t wait!” says Rachna. “Plan and strategize ahead of the 2024 implementation and the 2026 enforcement dates, and put active GE measures in place for your current cohorts.”
For gainful employment, she recommends:
- Analyzing internal data to review average student debt numbers
- Creating a threshold debt number by taking the average earnings published by www.bls.gov.
- Monitoring, retrofitting, and capping current tuition rates using the analysis
- Creating a GE Rate management plan to mirror the outreach strategy of your Default Management Plans
- Including tax filing information and resources as part of exit counseling
- Hosting tax filing workshops multiple times per year
- Outsourcing and providing free tax preparation services to current and alumni students
- Actively communicating tax recommendations with alumni during the first quarter of the year leading up to tax filing season
Beware of regulatory whack-a-mole
For Edward Cramp, Managing Partner at Duane Morris, one of the most significant concerns about the new regulations is that they’re deeply interconnected, and one can create a triggering event that impacts the other. For example, a failing gainful employment program triggers a mandatory letter of credit under new financial responsibility regulations.
“The twin pillars of compliance are administrative capability and financial responsibility,” said Edward. “If you fail one, the whole institution is in jeopardy. With the new regulations, there are a lot of landmines out there that create triggering events. Trying to keep an eye on all those things will be challenging.”
According to Edward, if a school doesn’t have a compliance program already, now is the time to develop one.
“No school is too small to have an active compliance program,” he said. For schools that don’t currently have a comprehensive compliance program, he recommends getting involved and active in trade associations like CECU and a state association. These associations typically provide regular webinars and other resources to help schools stay up-to-date on the latest regulatory changes and understand the rules.
Double-down on experience
“I would be prepared for what we know is coming, like BDR claims, letters of credit, and federal scrutiny, and bring it back to the basics with students. Many compliance issues can be addressed by doing the basic blocking and tackling to deliver the best education possible,” said Edward. “Theoretically, high satisfaction, outcomes, and success rates can go far on the compliance side.”
He uses the analogy of a high-end retail experience. You wouldn’t visit a luxury store and expect to walk out without feeling satisfied by your experience, and he believes the same goes for schools.
“Recognizing the student as a customer is important,” he says.
As part of your compliance goals for 2024, consider auditing your student experience. Review the entire student lifecycle, from enrollment to placement, and identify pain points along the way.
You can ask your students directly via satisfaction/experience surveys or review your historical data to identify areas in the student journey with higher-than-average drops.
When you create a world-class student experience, your students are more likely to leave your program happy and with the skills they need to become employed in their chosen field.
Shoring up your regulatory compliance
Regardless of where you are in your compliance journey, all the experts agree that now is the time to level up.
Here’s a list of resources to help you get started:
- Duane Morris publishes regulatory updates and breakdowns regularly on their website. They also represent schools and trade associations. You can connect with Edward to learn more.
- Career Education Colleges and Universities is one of the largest trade associations in our sector. They represent more than 1000 campuses and members nationwide and offer support for schools with regulatory compliance needs.
- State and industry-specific associations. Some states have associations that collaborate with national associations like CECU to advocate on the state level, including CAPPS in California, CCST in Texas, NWCCF in Washington, and more. Industry associations, like the American Association of Cosmetology Schools, also advocate for schools within their industry.
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