The U.S. Education Department (ED) published a December 31 Federal Register notice that specifies the “earnings threshold” by state that gainful employment (GE) program completers must meet or exceed on average in order for the program to remain eligible for Title IV.
This standard is a major component of the Financial Value Transparency (FVT) and GE regulations that took effect July 1, but which have had various delays in implementation, with the massive data reporting deadline coming on January 15. (A program that fails to meet the standard two out of three consecutive years becomes ineligible; basically, all Title IV-eligible certificate programs offered by community colleges are GE programs.)
The new earnings threshold is based on Census Bureau data and is calculated as the median earnings by state for working adults ages 25 to 34 who have not attained an educational credential beyond a high school diploma (or recognized equivalent) and who either worked during the year or indicated they were unemployed when interviewed. For institutions at which fewer than 50% of the students in the program are from the state where the institution is located, a national average is used, on the logic that these students might return to their home state where earnings would be different from those of the state that their college is in.
Rule’s background
In the negotiated-rulemaking process held in early 2022 that preceded the publication of proposed regulations, community colleges (the sector’s primary negotiator was Anne Kress, president of Northern Virginia Community College) argued against the new earnings threshold. The American Association of Community Colleges (AACC) opposed it in its formal regulatory submission as well.
But ED moved forward with the new metric in its final rule, and in recent months the concept that postsecondary education completers should earn more than those who have only received a high school diploma has gotten significant policy traction in Congress from both parties.
Trump’s call
It is highly unlikely that the incoming Trump administration will retain the GE regulations close to their current form, since the first Trump administration rescinded an earlier version implemented by President Barack Obama, and Congressional Republicans continue to inveigh against GE. (Obama promulgated two sets of GE rules.)
However, the new administration might retain the elaborate data collection and reporting FVT mechanism that has been established, which will, in fact, provide improved data on program outcomes, though at great administrative cost to colleges.
Besides the earnings threshold, the other major aspect of the GE eligibility framework is two debt-to-earnings metrics. AACC has supported these metrics, which would only minimally impact community college programs since most of their students do not take out federal student loans. However, it seems likely that some community college GE programs would not meet the earnings threshold standard, if implemented. Therefore, the just-published earnings thresholds are potentially of much more than academic interest.
AACC will keep its members informed of these and other relevant regulatory developments.
