Accountability in Higher Education and Access Through Demand-Driven Workforce Pell: Student Tuition and Transparency System (STATS) and Earnings Accountability

DEPARTMENT OF EDUCATION

34 CFR Parts 600, 668, and 685

[Docket ID ED-2026-OPE-0100]

RIN 1840-AE06

Accountability in Higher Education and Access Through Demand-Driven Workforce Pell: Student Tuition and Transparency System (STATS) and Earnings Accountability

AGENCY:

Office of Postsecondary Education, Department of Education.

ACTION:

Notice of proposed rulemaking (NPRM).

SUMMARY:

The Secretary of Education (Secretary) proposes to amend the regulations governing institutional eligibility, general provisions regulations, and the William D. Ford Direct Loan (Direct Loan) Program under title IV of the Higher Education Act (HEA) of 1965, as amended (the title IV, HEA programs). The proposed regulations would implement statutory changes to the title IV, HEA programs included in the One Big Beautiful Bill Act (OBBB), signed by President Trump on July 4, 2025. The OBBB made numerous changes to the HEA, including changes to program eligibility requirements for the Direct Loan program and the introduction of an earnings accountability framework that is intended to limit Direct Loan eligibility to programs whose graduates meet certain earnings benchmarks. This document proposes regulations, based on consensus reached during negotiated rulemaking, to implement the provisions of the OBBB related to low-earning outcome programs and the Direct Loan program, and to harmonize those regulations with requirements for programs that are required to lead to gainful employment (GE programs).

DATES:

We must receive your comments on or before May 20, 2026. For information on anticipated effective dates for the proposed regulatory changes, please see the discussion on the waiver of the HEA master calendar requirements in the “Authority for This Regulatory Action” section below.

ADDRESSES:

You may find a plain language summary of the proposed rule and submit your comments through the Federal eRulemaking Portal at

http://www.regulations.gov.

Follow the instructions for sending comments. The Department will not accept comments submitted by fax or by email or comments submitted after the comment period closes. To ensure that the Department does not receive duplicate copies, please submit your comment only once. Additionally, please include the Docket ID at the top of your comments.

Information on using

Regulations.gov

, including instructions for submitting comments, is available on the site under “FAQ.” If you require an accommodation or cannot otherwise submit your comments via

Regulations.gov

, please contact

regulationshelpdesk@gsa.gov

or by phone at 1-866-498-2945. Include [docket number and/or RIN number] in the subject line of the message. If you are deaf, hard of hearing, or have a speech disability and wish to access telecommunications relay services, please dial 7-1-1.

Privacy Note:

The Department's policy is to make all comments received from members of the public available for public viewing in their entirety on the Federal eRulemaking at

www.regulations.gov.

Therefore, commenters should include in their comments only information that they wish to make publicly available. Additionally, commenters should not include in their comments any personally identifiable information (PII) in comments about other individuals. For example, if your comment describes an experience of someone other than yourself, please do not identify that individual or include any personal information that identifies that individual. The Department reserves the right to redact a portion of a comment or the entire comment at any time any PII about other individuals is included.

FOR FURTHER INFORMATION CONTACT:

Joe Massman, Office of Postsecondary Education, 400 Maryland Ave. SW, Washington, DC 20202. Telephone: (202) 453-7771. Email:

Joe.Massman@ed.gov.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

The Secretary proposes regulations to overhaul the accountability framework for the title IV, HEA programs by replacing the former debt-to-earnings (“D/E”) metric with a revised earnings premium measure, expanding transparency, and strengthening institutional compliance standards. Maintaining robust accountability measures would ensure program integrity and protect students from low-earning outcomes, aligning with Congressional objectives for higher education oversight. The Department proposes to remove outdated definitions tied to D/E metrics, introduce the term “earnings,” and revise several existing definitions. The Student Tuition and Transparency System (“STATS”) would apply to all programs qualifying for title IV, HEA assistance, using the earnings premium measure as the new accountability standard. Institutions would be required to report program-level data, including tuition, fees, and financial aid details such as grants and scholarships to the Department. This reporting would enable the Department to provide enhanced informational disclosures of net program cost to the public. A revised version of the earnings premium measure would apply to both GE and non-GE programs; those failing the earnings premium measure in two of three consecutive years would lose Direct Loan eligibility, though limited extensions may be granted when an orderly program closure described under § 668.603(c)(4) is in students' best interest. Institutions would be required to update Direct Loan-eligible program lists, issue warnings about program risk and Pell Grant lifetime limits, and meet a new administrative capability standard. These proposed changes aim to incentivize institutions in every sector of higher education to offer programs that deliver economic value, enhance data accessibility for students, and protect taxpayers and students through stricter oversight and comprehensive disclosures on program outcomes.

II. Summary of the Major Provisions of This Regulatory Action

General Definitions

The proposed regulations would:

• Amend § 668.2 to remove the definitions of “annual debt-to-earnings rate,” “debt-to-earnings rates,” “discretionary debt-to-earnings rate,” “metropolitan statistical area,” “poverty guideline,” “qualifying graduate program,” and “substantially similar program.”

• Amend § 668.2 to add “earnings” and revise existing key terms, including “cohort period,” “earnings threshold,” “eligible non-GE program,” “Federal agency with earnings data,” and “institutional grants and scholarships.”

Subpart Q—Student Tuition and Transparency System (STATS)

The proposed regulations would:

• Amend several provisions in subpart Q to reflect new numbering.

• Amend §§ 668.401, 668.402, 668.403, 668.404, and 668.405 to remove all references to the former D/E metric and use the earnings premium measure as the new accountability standard.

• Amend § 668.401 to remove exclusions for institutions located in the U.S. Territories or Freely Associated

States, and to remove an exclusion for institutions with no groups of substantially similar programs that produced 30 or more total completers over the four most recently completed award years.

• Amend § 668.402 to establish that if a program does not have an earnings threshold for its State and 50 percent or more of enrolled students are from that State, the Department would not calculate the earnings premium measure but would make earnings data publicly available.

• Amend § 668.403(b) to establish that the Secretary would obtain the median annual earnings of students who completed a GE program or eligible non-GE program during the cohort period for the fourth tax year following program completion. The earnings data would be obtained from a Federal agency and would include students who are working and are not excluded from the earnings premium measure calculation.

• Amend § 668.406 to require an institution offering any GE program or eligible non-GE program to report the total amount of Federal, State, private, or other grants and scholarships each student received for their entire enrollment. This reporting requirement would only apply to students who completed or withdrew from the program during the award year.

Subpart S—Earnings Accountability

The proposed regulations would:

• Amend §§ 668.601, 668.602, 668.603, and 668.605 to remove all references of the former D/E metric.

• Amend § 668.601 to establish that earnings accountability applies to an eligible non-GE program or a GE program offered by an eligible institution and the Secretary determines whether the program is eligible for Direct Loan program funds.

• Amend § 668.603(a) to establish that a low-earning outcome program is a GE program or eligible non-GE program that fails the earnings premium measure in § 668.402 in two out of any three consecutive award years for which the program's earnings premium measure is calculated. A low-earning outcome program's participation in the Direct Loan program would end upon the completion of a termination action of Direct Loan program eligibility under subpart G.

• Add § 668.603(c)(4) to allow a program that has failed to satisfy the requirements of § 668.402 but is not a low-earning outcome program, to continue participating in the Direct Loan program if the institution voluntarily agrees to conduct an orderly program closure, provided the Secretary determines that it is in the best interest of the students. This flexibility would be limited to 3 years or the full-time duration of the program, whichever is less, and would require the institution and the Secretary to agree to make certain amendments to the institution's program participation agreement (PPA).

• Amend § 668.604 to remove the transitional certification requirements and require an institution to establish a program's eligibility for Direct Loan program funds by updating the list of the institution's Direct Loan-eligible programs maintained by the Department. An institution would be prohibited from including programs that share the same 4-digit Classification of Instructional Programs (CIP) code and any overlapping Standard Occupational Classification (SOC) codes as a failing program that was subjected to a two-year loss of eligibility.

• Amend § 668.605(c) to require an institution to provide a student who is eligible for Pell Grant funds with an indication of their remaining lifetime eligibility for Pell Grant funds and an explanation that all Pell Grant funds received for enrollment in the program count against their future lifetime eligibility.

• Amend § 668.605(d) to require an institution to provide an enrolled student with information regarding their remaining Pell Grant eligibility at the time that the institution makes a disbursement of Pell Grant funds to them.

Standards for Participation in Title IV, HEA Programs

The proposed regulations would:

• Add § 668.14(h)(1) to require institutions to be placed on provisional status if they fail to comply with 34 CFR 668.16(t) in two out of any three consecutive award years, which would result in the institution's low earning outcome programs becoming ineligible for title IV, HEA funds.

• Add § 668.14(h)(2) to allow an institution to appeal the Secretary's determination if they are found to have failed the conditions in 34 CFR 668.16(t) in two out of any three consecutive award years.

• Amend § 668.16(t) to require an institution to demonstrate administrative capability by showing that at least half of the institution's recipients of title IV, HEA funds and at least half of the institution's total title IV, HEA funds are not from low-earning outcome programs under subpart S.

• Amend § 668.43(d)(1) to require that the program information website includes the median length of calendar time taken for full-time and less than full-time students to complete the program's academic requirements and obtain the degree or credential awarded by the program.

• Amend § 668.43(d)(2) to no longer require institutions to provide a prominent link to the website maintained by the Secretary on any web page containing academic information about the program or institution. The Secretary may require the institution to modify a web page if the information is not sufficiently prominent, readily accessible, clear, conspicuous, or direct.

Cost and Benefits

As further detailed in the Regulatory Impact Analysis (RIA), the proposed regulations would have significant impacts on students, educational institutions, and taxpayers. Certain degree programs are expected to lose eligibility for title IV, HEA funds under the earnings tests in the proposed regulation, while some undergraduate and graduate certificate programs are expected to gain eligibility relative to current regulations. Students will incur costs when the programs they attend lose eligibility for title IV, HEA funds, or if they enroll in low-earning certificate programs that gain access to title IV, HEA funds. Students will also benefit in cases where the proposed regulation prevents them from attending low-earning and high-cost degree programs. Certain institutions (mainly public and private non-profit institutions) will incur costs when programs they offer lose access to title IV, HEA funds under the proposed regulation. Other institutions (such as proprietary institutions) will benefit as more programs in this sector will remain eligible for title IV, HEA funds. Taxpayers will incur new budget costs via an increase in transfers of title IV, HEA funds to institutions relative to current regulations because the proposed regulation results in a net increase in the number of students attending programs that will be eligible for title IV, HEA funds.

III. Directed Questions

General Definitions: Earnings (§ 668.2(b))

The Department seeks feedback from relevant stakeholders regarding the proposed earnings definition. This definition was developed during negotiated rulemaking to clearly identify the types of earnings income that would be utilized in the earnings premium calculation. During negotiations, several negotiators expressed concerns that the earnings definition may not accurately capture

all of the appropriate earnings income necessary to properly compute an earnings premium calculation. Some earned income elements mentioned by negotiators as areas for concern included tipped income and the value of untaxed housing benefits.

The Department contemplates using the Internal Revenue Service (IRS) as the Federal agency with earnings data as specified under current and proposed regulatory language. This use of data would be consistent with the Department's previous and current processes, including on the College Scorecard, simply with an adjustment for the CIP level under which programs are grouped. Under this approach, the Department would consider earned income sources from work as they are reported on IRS forms attached to IRS Form 1040, some of which include sources that are reported but not subject to Federal income tax. Tip income generally is required to be reported to employers and included in the wages reported in box 1 of IRS Form W-2 and additional tip income not otherwise reported is required to be included with wage income on the filer's tax form. As the Department explained in the preamble to the most recent final rule on gainful employment,

1

individuals are legally required to report their taxable earned income to the IRS, including tipped income. The Department relies on this reported income in the administration of title IV, HEA programs for determinations of earnings for program eligibility and for calculating payments under income-driven repayment plans. The Department's past experiences with the earnings appeal processes under the 2014 GE regulations did not demonstrate that substituted sources of data used in appeals improved the quality of earnings information available to determine program eligibility (see Low-earning outcome programs (§ 668.603) below for more information). No other form of survey or reporting will result in greater accuracy than the income tax reporting process, which has a built-in oversight and enforcement apparatus and involves significant legal penalties for failing to accurately report earned income. Moreover, a 2022 study

2

showed that underreporting tips among barbers in Texas makes up a small share of total income that, even if accounted for, the difference would be insufficient to cause programs to pass the earnings premium test. And while ministerial housing allowances may not be subject to Federal income tax, they are reported on the tax forms for determining self-employment tax and would be available for use in median earnings calculations.

1

88 FR 70004.

2

Cellini, Stephanie Riegg & Blanchard, Kathryn J. (2022). Hair and Taxes: Cosmetology Programs, Accountability Policy, and the Problem of Underreported Income. Geo. Wash. Univ. (

https://www.american.edu/spa/peer/upload/peer_hairtaxes-final.pdf

).

The Department must use reliable data for all calculations and believes that federal agencies use reliable methods for collecting earnings data that will ensure that using such data to calculate institutional cohorts will yield accurate results that reflect the actual post-graduation earnings of graduates. This method will allow for a consistent approach as we harmonize the implementation of the OBBB with the existing Financial Value Transparency and Gainful Employment (FVT/GE) regulatory framework.

As discussed below, the OBBB provides that the Secretary shall establish an appeals process so that if a program is determined to be a low-earning outcome program, the institution may appeal that determination. The OBBB did not instruct the Secretary to allow institutions to appeal at each step of the determination, including the reliability of the data set as to that program. The OBBB leaves the Department discretion to make a reasoned choice of the best available data on which to make the low-earning outcome determination.

See Hosp. for Special Surgery

v.

Becerra,

No. CV 22-2928 (JDB), 2023 WL 5448017, at *9 (D.D.C. Aug. 24, 2023) (agency made a reasoned decision in determining which classification to use in making determination);

Madison-Hughes

v.

Shalala,

80 F.3d 1121, 1127 (6th Cir. 1996) (sufficiency of data collected left to agency discretion);

State of Conn.

v.

E.P.A.,

696 F.2d 147, 159-60 (2d Cir. 1982) (agency's choice of data set was rationally based and “well within the Agency's discretion”).

The Department also considered the difficulty in verifying alternative data in a timely manner and does not believe that, supposing it is accurate, alternative data is likely to have a significant impact on the overall calculation. The Secretary declines to allow such appeals for these reasons.

The Department seeks to understand whether this earnings data may be subject to other limitations that the Department is not aware of, such as if certain types of income are not captured in data held by the federal government or are potentially subject to distorting factors. Please ensure that any feedback provided includes the rationale for any modifications to the definition or the Department's proposed process for obtaining earnings data, details the specific earnings data the Department should or should not factor in, and any relevant resources that may help support any changes to the earnings definition. Please also provide details for the broad applicability of any recommended data source to most or all covered program graduates, such as geographic or demographic limitations. The Department is specifically seeking broadly applicable administrative data. The Department has concerns that sources of data that vary across states may not be comparable due to different data definitions, assumptions, and criteria for inclusion. The Department also generally seeks to avoid any data source that would create a significant reporting burden on institutions. To maintain the Department's efforts to keep data as comparable as possible between the earnings used for the program and the comparison group used for the earnings threshold, please accompany suggestions for additional programmatic earnings elements with an explanation for why the importance of their inclusion would outweigh any potential problems from those items being covered differently by Census Bureau data in the American Community Survey (ACS).

Earnings Threshold (§ 668.2(b))

The Department seeks feedback on the process by which “fields of study” are defined in Section 668.2(b) for the purposes of determining earnings thresholds for graduate-level programs.

To calculate the earnings thresholds, the statute under HEA Section 454(c)(2), as revised by the OBBB, requires the Department to use data from the Census Bureau. The Department contemplates using the Census Bureau's ACS for this calculation, as it is the only dataset we are aware of that is maintained by the Census Bureau that is nationally representative, is annually updated, and contains all the data elements needed to calculate the earnings threshold metrics specified under Section 84001 of the OBBB.

However, there are some potential limitations with the ACS when calculating one of the graduate-level earnings thresholds described in Section 668.2(b). Specifically, in some instances, it may not be possible for the Department to calculate the median earnings of working adults aged 25-34 with a bachelor's degree in the same field of study (defined using 2-digit or 4-digit CIP codes) in the state in which the institution is located and who are not enrolled in college.

In some cases, especially in uncommon fields of study and in less-populated states, the ACS may not

sample any individuals (or only a very small number of individuals) who meet all of these criteria. As described in Section 668.2(b), for cases where fewer than 30 individuals are sampled, the Department proposes not calculating this measure. Instead, these graduate programs would be compared to the lower of the other two thresholds described in Section 668.2(b). The Department is concerned that calculating an earnings threshold using a small number of individuals could produce non-representative values in which programs are judged against. This issue is largest for cases where there are zero individuals sampled in the ACS who meet the criteria for this metric.

As such, the Department seeks feedback on this approach and other alternative approaches. For example, the Department seeks feedback on whether this issue could be mitigated by grouping fields of study into broader categories in the ACS. Alternatively, the Department seeks feedback on whether there are other datasets maintained by the Census Bureau, like the National Survey of College Students, as well as datasets that can be supplemented with Census Bureau datasets, that would allow the Department to calculate this metric when fields of study are defined at the 2-digit or 4-digit CIP level, in a more statistically reliable and accurate manner.

IV. Invitation To Comment

We invite you to submit comments regarding these proposed regulations. For your comments to have maximum effect in developing the final regulations, we urge you to clearly identify the specific section or sections of the proposed regulations that each of your comments addresses and to arrange your comments in the same order as the proposed regulations. The Department will not accept comments submitted after the comment period closes.

The following tips are meant to help you prepare your comments:

• Be concise but support your claims.

• Explain your views as clearly as possible and avoid using profanity.

• Refer to specific sections and subsections of the proposed regulations throughout your comments, particularly in any headings that are used to organize your submission.

• Explain why you agree or disagree with the proposed regulatory text and support these reasons with data-driven evidence, including the depth and breadth of your personal or professional experiences. We encourage commenters to include supporting facts, research, and evidence in their comments. When doing so, commenters are encouraged to provide citations to the published materials referenced, including active hyperlinks. Likewise, commenters who reference materials which have not been published are encouraged to upload relevant data collection instruments, data sets, and detailed findings as a part of their comment. Providing such citations and documentation will assist us in analyzing the comments.

• Where you disagree with the proposed regulatory text, suggest alternatives, including regulatory language, and your rationale for the alternative suggestion.

• Submit your public comment only; do not submit comments on the behalf of others.

• Do not include personally identifiable information (PII) such as Social Security numbers or loan account numbers for yourself or for others in your submission.

• Do not include any information that directly identifies or could identify other individuals or that permits readers to identify other individuals.

Mass Writing Campaigns:

In instances where individual submissions appear to be duplicates or near duplicates of comments prepared as part of a writing campaign, the Department will post one representative sample comment along with the total comment count for that campaign to

Regulations.gov.

The Department will consider these comments along with all other comments received.

In instances where individual submissions are bundled together (submitted as a single document or packaged together), the Department will post all of the substantive comments included in the submissions along with the total comment count for that document or package to

Regulations.gov.

A well-supported comment is more informative to the agency than multiple form letters.

Public Comments:

The Department invites you to submit comments on all aspects of the proposed regulatory language specified in this NPRM, and in the Regulatory Impact Analysis and Paperwork Reduction Act sections.

The Department may, at its discretion, decide not to post or to withdraw certain comments and other materials that contain promotion of commercial services or products, and spam.

We may not address comments outside of the scope of these proposed regulations in the final regulations. Comments that are outside of the scope of these proposed regulations are comments that do not discuss the content or impact of the proposed regulations or the Department's evidence or reasons for the proposed regulations.

Comments that are submitted after the comment period closes will not be posted to

Regulations.gov

or addressed in the Final Rule.

We invite you to assist us in complying with the requirements of Executive Orders 12866 and 13563 and their overall requirement of reducing regulatory burden that might result from these proposed regulations. Please let us know of any further ways we could reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the Department's programs and activities.

During and after the comment period, you may inspect public comments about these proposed regulations by accessing

Regulations.gov

.

Assistance to Individuals with Disabilities in Reviewing the Rulemaking Record:

On request, we will provide appropriate accommodation or auxiliary aid to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for these proposed regulations. If you want to schedule an appointment for this type of accommodation or auxiliary aid, please contact the Information Technology Accessibility Program Help Desk at

ITAPSupport@ed.gov

to help facilitate this request.

Clarity of the Regulations

Executive Order 12866 and the Presidential memorandum “Plain Language in Government Writing” require each agency to write regulations that are easy to understand. The Secretary invites comments on how to make the regulation easier to understand, including answers to questions such as the following:

• Are the requirements in the proposed regulations clearly stated?

• Do the proposed regulations contain technical terms or other wording that interferes with their clarity?

• Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphing) aid or reduce its clarity?

• Would the proposed regulations be easier to understand if we divided them into more (but shorter) sections? (A “section” is preceded by the symbol “§” and a numbered heading; for example, § 668.2 General definitions.)

• Could the description of the proposed regulations in the

SUPPLEMENTARY INFORMATION

section of this preamble be more helpful in making the proposed regulations easier to understand? If so, how?

• What else could we do to make the proposed regulation easier to understand?

To send any comments that concern how the Department could make these proposed regulations easier to understand, see the instructions in the

ADDRESSES

section.

V. Background

Gainful Employment (GE) Prior Rules

Under Sections 101 and 102 of the HEA, there are two broad categories of title IV-eligible programs: degree programs offered by public and private nonprofit institutions, and programs required to lead to gainful employment in a recognized occupation (which include nondegree programs at any type of institution, and nearly all programs offered by proprietary institutions). The statute does not further elaborate on the gainful employment requirement.

The Department has issued four previous regulations on GE, most recently in 2023 as part of the current FVT/GE accountability framework. These regulations required the Department to calculate two separate metrics for the vast majority of programs eligible for title IV, HEA funds—a debt-to earnings (D/E) rate and an earnings premium—but did not impose program eligibility consequences for programs other than GE programs. The regulations also established a process by which the Department would disclose key information about academic programs to current and prospective students at a point when the information would be most useful for them.

OBBB Earnings Accountability Framework

The OBBB, signed by into law by President Trump on July 4, 2025, amended the HEA to establish a new accountability framework for most postsecondary programs of study that participate in the Direct Loan program. Congress designed this framework to compare the median earnings of graduates to those of working adults, and it requires the Department to discontinue a program's Direct Loan program eligibility if its graduates earn less than the comparison group.

The OBBB framework does not include D/E rates, and although the earnings comparison metric largely resembles the earnings premium measure under current the FVT/GE regulations, there are differences in the populations of institutions and programs covered by the new framework, in the methodology by which the comparison must be performed, and in consequences for failing programs. To provide students, families, institutions, and the public with meaningful and comparable program information and to promote consistency in the treatment of programs across all credential levels and institutional sectors, the Department seeks to amend and simplify its existing FVT and GE framework to harmonize with the accountability framework required under the OBBB. This would result in the establishment of a single metric that would be calculated for nearly all programs eligible for title IV, HEA funds and that has the same program eligibility consequences for failure of GE and eligible non-GE programs alike.

This NPRM complies with Section 492 of the HEA, which requires the Secretary to obtain public input and conduct negotiated rulemaking before issuing proposed regulations for the title IV, HEA programs. To meet those requirements and implement the new statutory directives provided for in the OBBB, the Department convened the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking committee, which reached consensus agreement on the entirety of the regulatory text included in this NPRM.

VI. Authority for This Regulatory Action

The Department's authority to engage in this rulemaking action and pursue a transparency and accountability framework for GE programs and eligible non-GE programs is derived primarily from seven categories of statutory enactments: (1) the Secretary's generally applicable rulemaking authority, which includes provisions regarding data collection and dissemination, and which applies in part to title IV, HEA; (2) authorizations and directives within title IV, HEA regarding the collection and dissemination of potentially useful information about higher education programs, as well as provisions regarding institutional eligibility to benefit from title IV; (3) the definition of institution of higher education under Section 102 of the HEA and other provisions within title IV of the HEA that address programs that prepare students for gainful employment; (4) the Secretary's authority to establish procedures and requirements relating to the administrative capacities of institutions of higher education; (5) recently enacted changes within title IV, HEA as a result of Section 84001 of the OBBB, which establishes an accountability system limiting Direct Loan eligibility for programs that demonstrate low earning outcomes; (6) the Secretary's authority to develop a quality assurance system under the Direct Loan Agreement; and (7) the Secretary's authority to include other provisions in the Direct Loan Agreement that she determines are necessary to protect the interests of the United States and to promote the purposes of the Direct Loan program. Finally, this section also addresses OBBB's waiver of the HEA's master calendar requirements for some of the proposed regulations discussed in this NPRM.

The Secretary has broad powers to engage in rulemaking to administer programs administered by the Department. Specifically, Section 410 of the General Education Provisions Act (GEPA) grants the Secretary authority “to make, promulgate, issue, rescind, and amend rules and regulations governing the manner of operation of, and governing the applicable programs administered by, the Department,” such as the title IV, HEA programs that provide Federal loans, grants, and other aid to students, to assist in pursuing either eligible non-GE programs or GE programs. 20 U.S.C. 1221e-3. Likewise, Section 414 of the Department of Education Organization Act (DEOA) authorizes the Secretary to “prescribe such rules and regulations as the Secretary determines necessary or appropriate to administer and manage the functions of the Secretary or the Department.” 20 U.S.C. 3474.

Loper Bright Enters.

v.

Raimondo,

603 U.S. 369 (2024) brought about a sea change in administrative law by overturning

Chevron

deference; however,

Loper Bright

did not disrupt Congress's ability to provide “a degree of deference” to agencies in specific statutes. 603 U.S. 369, 394 (2024). Indeed, the Court directly acknowledged that Congress may “delegate . . . discretionary authority to any agency” by giving directions to agencies to promulgate rules that are “reasonable” or “appropriate.”

Id.

In a post-

Loper Bright

case challenging the 2023 FVT/GE rule, a lower court specifically held that the Department has been explicitly granted such deference by Congress under the provisions of GEPA and the DEOA.

American Assoc. of Cosmetology Sch.

v.

Dep't of Educ.,

2025 WL 4219345, at *5 (N.D. Tex. Oct. 2, 2025) (

citing

20 U.S.C. 1221e-3); 20 U.S.C. 3474). The court further stated that, through the HEA, the Congress had clearly granted the Secretary to promulgate rules necessary for the administration of the title IV, HEA programs: “the Supreme Court in

Loper Bright

recognized that Congress may `delegate[ ] particular discretionary

authority to an agency' by leaving it with `flexibility' through terms `such as `appropriate' or `reasonable' ” and that HEA confers such authority [on the Secretary] by including the additional specific direction to `prescribe such regulations as may be necessary to provide for . . . any matter the Secretary deems necessary to the sound administration of the financial aid programs[.]' ”

American Assoc. of Cosmetology Sch.

*6 (

citing

20 U.S.C. 1094(c)(1)(B); 1099c).

Section 431 of the GEPA grants the Secretary additional authority to establish rules to require institutions to make data available to the public about the performance of Federally supported education programs and about students enrolled in those programs and to collect data and information on applicable programs for the purpose of obtaining objective measurements of the effectiveness of such programs in achieving their intended purposes.

See

20 U.S.C. 1231a. This provision authorizes the reporting and disclosure requirements in the proposed rule, which would enable the Department to collect data and information for the purpose of developing objective measures of program performance. The reporting is not only for the Department's use in evaluating programs but also serves to inform the public—including enrolled students, prospective students, their families, institutions, and other stakeholders—about relevant information to those Federally supported programs.

The Secretary's authority to establish rules requiring institutions to provide information to the Department is further bolstered by the fact that certain provisions of the HEA would be rendered inoperable if such data was not provided. For example, without collecting data from institutions regarding students participating in title IV, HEA programs, the Department would have no ability to determine whether a program offered by that institution satisfies the earnings test set forth in HEA Section 454(c)(2), added by OBBB. Therefore, in any such case in which the HEA directs the Department to conduct analysis that requires information that an institution possesses, the Secretary is permitted to establish regulations regarding such data collection under the Secretary's broad authority to promulgate regulations necessary or appropriate for governing the applicable programs administered by the Department.

See

20 U.S.C. 3474.

Furthermore, in the GE setting, the Department has not only a statutory basis for pursuing the effective dissemination of information to students about a range of GE program attributes and performance metrics, but also has authority to use certain metrics to determine that an institution's program is not eligible to benefit from one or more of the title IV, HEA programs. When an institution's program is at risk of losing eligibility based on a given metric, there should be no real doubt that the Department may require the institution that operates the at-risk program to alert prospective and enrolled students that they may not be able to receive assistance from one or more title IV, HEA programs at the program in question. Without direct communication from the institution to prospective and enrolled students, the students themselves risk losing the ability to make informed choices about their educational pursuits. Congress clearly intended to require institutions to provide this manner of direct communication to students, as plainly evidenced by the presence of the student notice requirements for at-risk degree programs under HEA Section 424(c)(7), as revised by the OBBB. In keeping with the Department's effort to harmonize the accountability requirements for non-GE and GE programs, we believe it is appropriate to similarly require institutions to provide warnings to prospective and enrolled students regarding at-risk GE programs consistent with the warnings expressly required in statute for eligible non-GE programs and that the Secretary is authorized to do so under the Secretary's general authority to promulgate regulations that are necessary or appropriate to administer the title IV, HEA Programs.

See

20 U.S.C. 1221e-3; 20 U.S.C. 3474.

The data to be collected and analyzed by the Department will not violate the student unit record prohibition found in HEA Section 134. The Department does not propose creating any new databases of student records. It will collect from institutions individual title IV, HEA recipient data, including PII, and will securely transmit that data to a Federal agency with earnings data for matching. The metric calculation will only utilize median earnings data that does not include PII data from student recipients of title IV, HEA assistance. The proposed regulation is also supported by the Department's statutory responsibilities to observe eligibility limits in the HEA. Section 498 of the HEA requires institutions to establish eligibility to provide title IV, HEA funds to their students. 20 U.S.C. 1099c. Eligible institutions must also meet program eligibility requirements for students in those programs to receive title IV, HEA assistance.

One type of program for which certain types of institutions must establish program-level eligibility is “a program of training to prepare students for gainful employment in a recognized occupation.” 20 U.S.C. 1001(b)(1)(A)(i), (c)(1)(A). Section 481 of the HEA articulates this requirement by defining, an “eligible program,” in part, as a “program of training to prepare students for gainful employment in a recognized profession.” The HEA does not more specifically define the terms “training to prepare,” “gainful employment,” “recognized occupation,” or “recognized profession” for purposes of determining the eligibility of GE programs for participation in title IV, HEA programs. At the same time, the Secretary and the Department have a legal duty to interpret, implement, and apply those concepts in order to observe the statutory eligibility requirements in the HEA.

The Department has long interpreted the word “gainful” in this context to mean “profitable.” Program Integrity: Gainful Employment, 79 FR 64890, 64894 (Oct. 31, 2014);

American Assoc. of Cosmetology,

2025 WL 4219345, at *5.

3

And the Department has consistently interpreted the broader phrase “gainful employment” to mean that the program “actually train[s] and prepare postsecondary students for jobs that they would be less likely to obtain without that training and preparation.”

4

This would

not

include, for example, “baccalaureate degree[s] in liberal arts” as those programs are statutorily prohibited from being in most instances.

5

3

“Gainful.”

Merriam-Webster.com Dictionary, https://www.merriam-webster.com/dictionary/gainful.

Accessed March 20, 2026.

4

Financial Value Transparency and Gainful Employment (GE), 88 FR 32,300, 32,342 (May 19, 2023).

5

Section 102(b)(1)(A)(ii) provides that baccalaureate degrees in liberal arts are no longer considered to be gainful employment programs, but Congress provided a grandfather clause to allow certain institutions that have offered such programs since January 1, 2009 to continue to offer such programs. Those baccalaureate degree programs are now covered by the accountability provisions in OBBB.

It is relevant to acknowledge that there is some degree of ambiguity in the term “gainful employment.”

See Ass'n of Priv. Colleges & Universities

v.

Duncan,

870 F. Supp. 2d 133, 145 (D.D.C. 2012) (stating that “There is no unambiguous meaning of what makes employment “gainful' ”);

Ass'n of Proprietary Colleges

v.

Duncan,

107 F. Supp. 3d 332, 359 (S.D.N.Y. 2015)

(quoting

Ass'n of Priv. Colleges & Universities

v.

Duncan,

870 F. Supp. 2d 133 at 145, and adopting its conclusion that “There is no unambiguous meaning of what makes employment “gainful' ”). Indeed, some dictionaries that define the whole phrase “gainful employment” define it as meaning “work that you get paid for.”

6

Under this definition, the only programs that do not prepare students for “gainful employment” would be programs that train students for unpaid volunteer positions or hobbies. But courts have warned about reading phrases in isolation like this, as the text of a statute must be construed as a whole.

See Kmart Corp.

v.

Cartier,

inc. 486 U.S. 281, 291 (1988) (per Kennedy, J.) (“In ascertaining the plain meaning of the statute, the court must look to the particular statutory language at issue, as well as the language and design of the statute as a whole.” The interpretative canon, which is generally referred to as the Whole-Text Canon or the Whole Act Rule, provides that the context of the broader statutory scheme is the “primary determinant of meaning.” Scalia & Garner, Reading Law, 167 (2012).

6

See

“Gainful Employment”,

Cambridge Dictionary Online, https://dictionary.cambridge.org/us/dictionary/english/gainful-employment.

Accessed March 22, 2026.

As we look to other parts of the statute, we find provisions that help provide clarity regarding the definition of gainful employment. In the first instance, Congress has created two definitions of “institution of higher education.” The first definition, which is in Section 101 of the HEA, authorizes non-profits and public institutions to participate in title IV student aid programs. 20 U.S.C. 1001. The definition in Section 101 does not include references to gainful employment, which is a notable omission and strongly suggests that Congress did intend to limit the universe of eligible programs when using that phrase elsewhere.

In Section 102, Congress provides its second definition of institution of higher education, this time defining it to mean proprietary institutions, vocational institutions, and foreign institutions. Here, Congress tells us that if a subset of these types of institutions (proprietary and vocational) want to participate, they must provide “an eligible program of training to prepare students for gainful employment in a recognized occupation.” The broader phrase makes it clear that these programs “train” students for “a recognized occupation.” Further, we know that Congress does not think baccalaureate degree programs in liberal arts are gainful employment programs, because Congress says that proprietary institutions can offer (1) gainful employment programs, OR (2) programs leading to a baccalaureate degree in liberal arts if the program has been provided since January 1, 2009 and the institution is accredited by a certain type of accreditor. The disjunctive “or” in this context shows us that “gainful employment” does not mean liberal arts.

For the reasons above, it is clear that the operative purpose of Section 102(b)-(c) is to use taxpayer funds to help support students in their quest to obtain more training such that they may enter a recognized occupation. The Department thinks that this context is key in demonstrating that Congress only wants to fund programs that help make the student better off in their “gainful employment.” Gainful means “profitable,” so Congress wants students to get training that enables them to be more profitable than before they went to school. As such, the Department interprets the term “gainful employment” to mean that a program must, on average, make students better off financially than they would have been had they not attended the program. In other words, institutions must ensure that the median student in a gainful employment program earns a premium, compared to what they would have earned if they had never gone to school. This is the same earnings premium measure called for in OBBB, but the Department believes that the gainful employment statute calls for this type of accountability independent from the amendments made by OBBB.

The Department's interpretation of the phrase “gainful employment” aligns with the statute and is supported by case law concerning Department's previous gainful employment regulations. In

Ass'n of Priv. Colleges & Universities

v.

Duncan,

870 F. Supp. 2d 133, 146 (D.D.C. 2012), the court stated that term “gainful employment” must be understood in the context of the statutory command that “a given program `prepare students for gainful employment in a recognized occupation.' ” That court reasoned that the “real question, then, is not how much gain is enough but rather how much preparation is enough” and found that the Department's attempt to “answer that question by reference to the economic success of a program's former students” was not precluded by the HEA, as the HEA does not specifically state “how to determine which programs actually prepare their students and which programs do not.”

Id

at 146.

7

Additionally, in a post-

Loper Bright

case,

American Assoc. of Cosmetology,

the court stated that the ordinary meaning analysis supported the Department's conclusion that students are not prepared for gainful employment if a program is designed to leave its graduates financially worse off than when they started, and unable to repay their loans. 2025 WL 4219345, at *5.

7

This conclusion was directly restated several years later in

Ass'n of Proprietary Colleges

v.

Duncan,

107 F. Supp. 3d 332, 359 (S.D.N.Y. 2015), which excerpted a considerable portion of the D.D.C.'s opinion in

Ass'n of Priv. Colleges & Universities

v.

Duncan,

870 F. Supp. 2d 133, 146 (D.D.C. 2012).

Furthermore, the Secretary is authorized to establish and enforce administrative capability standards for institutions participating in title IV, HEA programs and to terminate the participation of any institution who the Secretary determines does not meet those standards. Section 498(a) of the HEA provides that, for purposes of qualifying institutions of higher education for participation in title IV, HEA programs, the Secretary shall determine administrative capability of an institution of higher education.

Section 498(d)(1) authorizes the Secretary “to establish procedures and requirements relating to the administrative capacities of institutions of higher education” which can include “consideration of past performance of institutions.” Section 498(d)(2) further authorizes the Secretary to any other reasonable procedures necessary to ensure compliance with the administrative capability standard. Therefore, because of the broad authority conferred on the Secretary to establish such standards and procedures, as well as to consider the past practice of an institution in determining whether or not it satisfies the administrative capability standard, the Department believes that it is well within the Secretary's authority to establish a standard would penalize an institution where at least half of the institution's recipients of title IV, HEA funds and at least half of the institution's total title IV, HEA funds are from low-earning outcome programs under subpart S (and have remained so for two out of three consecutive years) by terminating the overall title IV, HEA program eligibility of all such programs and requiring the institution to participate in title IV, HEA program on a provisional basis.

Section 84001 of the OBBB amends HEA Section 454 to create a new accountability framework, including an earnings test under HEA Section

454(c)(2) for title IV, HEA programs that lead to an undergraduate degree, graduate or professional degree, or graduate certificate. It further specifies under HEA Section 454(c)(7) that such programs which fail the earnings test are ineligible for Direct Loan program participation for a period of not less than two years. HEA Section 454(c)(6) further requires institutions to provide warnings to students regarding at-risk programs.

Direct Loan Agreement Authority

Institutions that participate in the Direct Loan program must agree to comply with the requirements set for in Section 454 of HEA. The requirements in this section, which has been called the Direct Loan Agreement, have been incorporated into the PPA which covers other title IV programs, not just the Direct Loan program. As part of the Direct Loan Agreement, institutions must “provide for the implementation of a quality assurance system, as established by the Secretary and developed in consultation with institutions of higher education, to ensure that the institution is complying with program requirements and meeting program objectives.” 20 U.S.C. 1087d(a)(4). The Department has never developed a formal quality assurance system before this rulemaking,

8

but believes that the GE framework proposed herein is authorized by this provision and is itself a quality assurance system.

9

8

See Dan Zibel & Aaron Ament, Protection and the unseen: How the US Department of Education's underdeveloped authorities can protect students and promote equity in higher education, Brookings Economic Studies, 13 (Oct. 2020) (noting that the quality assurance authority in Section 454(a)(4) has never been relied upon, but that “[n]evertheless, section 454(a)(4) of the HEA (the “QA authority”) unambiguously provides that the DLA” shall implement a quality assurance system”), available at

https://www.brookings.edu/wp-content/uploads/2020/10/ES-10.13.20-Zibel-Ament.pdf.

9

The Department has relied on its authority in Section 454(a)(7) to justify certain aspects of the 2016 Borrower Defense regulations, such as provisions prohibiting arbitration agreements in certain settings.

See

Student Assistance General Provisions, 81 FR 75926, 75932 (Nov. 1, 2026). These provisions were ultimately removed when the Department published 2019 borrower defense regulations, which are now in effect under Section 85001 of the OBBB; however, the Department did not disclaim the authority to impose these provisions and made the change for policy reasons.

See

Student Assistance General Provisions, 84 FR 49788, (Sept. 23, 2019).

The quality assurance system authority requires the Secretary to ensure that the institution is complying with program requirements and meeting program objectives. As such, it is important to discuss the “program requirements and program objectives” referenced in HEA Section 454. 20 U.S.C. 1087d(a)(4). The legal scholars Dan Zibel and Aaron Ament have noted that “the HEA is silent as to what is meant by `quality assurance,' `program requirements,' and what it means for an institution to `meet[ ] program objectives.' In such situations, the law affords the Department ample discretion to fill these statutory voids, resolve statutory ambiguities, and ensure that institutions of higher education are serving students and taxpayers.”

10

Zibel and Ament have argued that “a core `program objective' of the Direct Loan program is to ensure not only that students have access to higher education, but also to ensure that federally issued loans are repaid.”

11

The Department largely agrees with these assertions that we have broad authority to provide details as to what the purpose of these programs are and that the Direct Loan program is designed to provide borrowers with capital to attend college and to repay their loans in most circumstances. However, certain subsets of programs within the HEA have additional purposes that are narrower in scope.

10

Ziebel & Ament,

supra

note 8 at 14 (cleaned up).

11

Id.

Here, the Department believes that the gainful employment text in Section 102(b)-(c) of the HEA provides significant context as to what the program objectives are for proprietary and vocational institution programs as they participate in the Direct Loan program. Both of these types of institutions are required to provide “an eligible program of training to prepare students for gainful employment in a recognized occupation.” 20 U.S.C. 1002(b)-(c). As such, the purpose of these programs is to provide “gainful employment.” With that in mind, it is clear that the gainful employment authority operates in tandem with the quality assurance system authority, in that guardrails to protect the purpose of a GE program can be incorporated into a quality assurance system. As such, the Secretary is permitted to develop a quality assurance system on a curated basis for these specific GE programs that ensures quality in how these institutions are preparing students for gainful employment. As discussed above, the Department has determined that the gainful employment statute requires institutions to ensure that most graduates of a gainful employment program earn a premium compared to what they would have earned if they had never gone to the program.

In sum, the Department has concurrent authority under Section 454(a)(4) along with Section 102(b)-(c) of the HEA to require institutions to comply with the earnings premium. Institutions that fail to comply with Section 102 fail to meet the definition of “institution of higher education” for the purposes of title IV, and are no longer eligible institutions and the Secretary must terminate eligibility. And institutions that fail to comply with the terms of the Direct Loan Agreement under Section 454 are not eligible to participate in the Direct Loan program. As such, as part of this rulemaking the Department is proposing the earnings premium measure to be a quality assurance system that establishes eligibility for all GE programs to participate only in the Direct Loan program, consistent with the scope of Section 454, which only applies to Direct Loans.

The quality assurance system authority also requires the Department to develop the quality assurance system in consultation with institutions of higher education, which we have done as part of the negotiated rulemaking process. In addition, institutions will have the ability to comment on this proposed rule. The Department is required to consider making changes in response to all substantive comments under informal notice-and-comment rulemaking, and as such, we are effectively consulting with institutions of higher education under the existing rulemaking procedures because we are seeking and obtaining advice from institutions. 5 U.S.C. 553; 20 U.S.C. 1098a.

Institutions must also comply with “other provisions as the Secretary determines are necessary to protect the interests of the United States and to promote the purposes of this part.” 20 U.S.C. 1087d(a)(7). Failure to abide by the terms of the Direct Loan Agreement results in disqualification from participating in the Direct Loan program, but not necessarily other title IV, HEA programs.

The Department believes that it has authority under these provisions in Section 454 of the HEA, as well as the GE provisions in Section 102, to require GE programs to comply with the earnings premium standard. However, the Department believes that the appropriate remedy for programmatic noncompliance is loss of eligibility for Direct Loans for such programs that fail the earnings premium, except when a large number of an institution's programs fail, which is discussed in greater length below. The Secretary has been given significant deference by Congress in Section 454 in designing the quality assurance system, and that

includes the option to tailor the remedy for noncompliance to a program-by-program basis to protect the interests of the United States. Indeed, it would not be in the interest of the United States to disqualify all programs at an institution if only one or a few programs are not performing because students in high performing programs would also lose access to programs that are adding value.

The Department also has authority under Section 454(a)(7) for this rulemaking, which authorizes the Secretary to include in the Direct Loan agreement (which is incorporated into the PPA) “such other provisions as the Secretary determines are necessary to protect the interests of the United States and to promote the purposes of this part.” 20 U.S.C. 1087d(a)(7).

Indeed, this broad grant of deference to the Secretary gives the Department significant latitude in designing to protect the interests of the United States and promote the purposes of this part. As explained above, the holding in

Loper Bright

does no work to disrupt deference provided to the Department in broad statutory grants of authority like we have here.

Loper Bright,

603 U.S. at 394-95.

As stated above, the purpose of authorizing proprietary institutions and vocational institutions to participate in title IV, HEA programs is to provide students opportunities for training designed to ensure that they may become gainfully employed in a recognized occupation. As such, the Department believes that Section 454(a)(7) provides additional authority for the Department to require the earnings premium measure, because doing so advances the purposes of the Direct Loan program through institutional eligibility under Section 102(b)-(c).

In sum, the Department has overlapping and concurrent authority to require an earnings premium for GE programs under the gainful employment authority in Section 102(b)-(c), the quality assurance system authority in Section 454(a)(4), the “protect” and “promote” authority in Section 454(a)(7), and our broad authority to regulate Section 410 of GEPA. The Department believes that all of these authorities work in tandem and authorize us, independent from the amendments made by OBBB related to accountability, require an earnings premium for such GE programs.

In practice, the proposed earnings premium under OBBB is the same as the earnings premium under GE. The only type of program not covered by the earnings premium under OBBB are certificate programs, which are covered by GE. As such, if a court disagrees with our assessment of the robust legal authority we have, the accountability provisions relating to GE are severable and would only have a practical impact on certificate programs.

Summary of Authorities

The above authorities collectively empower the Secretary to promulgate regulations to (1) Require institutions to report information about GE programs and eligible non-GE programs to the Secretary; (2) Require institutions to provide disclosures or warnings to students regarding programs that do not meet earnings measures established by the Department; (3) Implement Direct Loan program eligibility requirements pertaining to graduate earnings outcomes, including an earnings premium metric and associated reporting, certification, and warning processes; and (4) Define the GE requirement in the HEA by establishing similar measures to determine the eligibility of GE programs for participation in the Direct Loan program, which also is supported by the overlapping authority the Department has to create a Quality Assurance System for institutions participating in the Direct Loan program. Where helpful and appropriate, the Department will elaborate on the relevant statutory authority in our overviews and section-by-section discussions below.

Waiver of HEA Master Calendar Requirements

Congress may waive, modify, or rescind requirements in the HEA and Administrative Procedure Act (APA) that require the Department to follow certain processes and procedures when engaging in informal notice-and-comment rulemaking.

See, e.g., Asiana Airlines

v.

F.A.A.,

134 F.3d 393, 398 (D.C. Cir. 1998);

Methodist Hospital of Sacramento

v.

Shalala,

38 F.3d 1225, 1237 (D.C. Cir. 1998) (finding that certain parts of the APA procedural framework had been waived when Congress gave an agency direction that conflicts with and is irreconcilable with the APA).

At the same time, the court in

Asiana Airlines

made clear that the APA requires “clear intent” from Congress to justify a departure from the procedural requirements in the APA, noting that 5 U.S.C. 559 requires an explicit waiver of APA procedural requirements. Here, the Department is complying with all of the requirements for informal notice-and-comment rulemaking in 5 U.S.C. 553, so an express waiver is not needed. The explicit waiver standard in 5 U.S.C. 559 only applies to the procedural requirement of the APA, and does not apply to the Master Calendar provision in Section 482(c) the HEA. Had Congress wished for the HEA Master Calendar provision to have the same rule of construction as it does for procedural requirements of the APA, we would have expected that Congress would either cross reference and incorporate 5 U.S.C. 559 into the HEA or use similar language to 5 U.S.C. 559 within Section 482(c) of the HEA. Congress knows how to create these types of special rules of construction when they want to, and they declined to do so in Section 482(c) of the HEA.

Absent an explicit rule of construction in the HEA, we rely on the ordinary tools of statutory interpretation to glean the meaning of the statute. The Harmonious-Reading Canon provides that statutes should, when possible, be interpreted in a way that renders them compatible, not contradictory, but such an approach is not always possible if context and other considerations (including the application of other canons) make it impossible to do so, another approach to statutory interpretation, such as the General/Specific Canon must be applied.

See

Scalia & Garner,

Reading Law,

155 (2012). The General/Specific Canon dictates that, in cases where a general prohibition is contradicted by a specific permission or a general permission that is contradicted by a specific prohibition, the more specific of the two provisions controls.

Id.

at 158. Because, as discussed below, the OBBB contains provisions with effective dates that cannot possibly be implemented in regulation in accordance with the HEA's master calendar requirements, and as such, implicitly provides a limited waiver of the HEA's master calendar requirement, so far as it is necessary to promulgate regulations that give effect to those provisions.

See Dorsey

v.

United States,

567 U.S. 260, 274 (2012) (stating that an agency's compliance with an existing statute “cannot justify a disregard of the will of Congress as manifested either expressly or by necessary implication in a subsequent enactment” (

quoting Great Northern R. Co.

v.

United States,

208 U.S. 452, 465 (1908).

Here, the OBBB was enacted on July 4, 2025. The OBBB directs the Department to implement roughly a dozen provisions by July 1, 2026. Many of these provisions are not self-executing and could not be implemented absent the Department promulgating regulations to provide details for institutions on how to comply with the OBBB. Congress gave

the Secretary discretion within the OBBB to implement the provisions impacting the title IV, HEA programs and knew that its commands were not self-executing when directing the Secretary to take action. Congress expected the Secretary to act via rulemaking before July 1, 2026, to enable these provisions to actually go into effect.

The master calendar in the HEA provides that regulatory changes initiated by the Secretary affecting the title IV, HEA programs must be published in final form by November 1st in order for them to go into effect by July 1st of the following year. 20 U.S.C. 1089(c)(1). Section 492 of the HEA requires the Department to undertake negotiated rulemaking as part of any regulation under title IV of the HEA. In order to conduct negotiated rulemaking and meet APA requirements, the Department must have a public hearing (providing notice to the public), solicit nominations from the public to serve on a negotiated rulemaking committee, select non-Federal negotiators, hold negotiations, develop an NPRM, publish an NPRM (with at least a 30-day comment period), and then publish a final rule that responds to any substantive comments received. The fastest possible timeframe in which the negotiated rulemaking process for the rulemaking packages assigned to the AHEAD Committee could have occurred is 149 days, which is irreconcilable with the timeline allowed by the enactment of the OBBB, due to the fact that there were 120 days from July 4, 2025, (the day the OBBB was enacted), through and including November 1, 2025, (the publication date of the final rule required by the master calendar).

It would not have been possible for the Department to undertake every step of the negotiated rulemaking process by November 1, 2025, in order to implement the provisions that become effective in the OBBB by July 1, 2026, which is the statutory effective date. Congress was aware of this temporal impossibility when they passed the OBBB, yet Congress decided that these provisions would still go into effect on July 1, 2026. Because these provisions are not self-implementing and cannot go into effect unless the Department promulgates a final rule, the OBBB implicitly waives the master calendar.

With important details unanswered by the plain text of the OBBB, it is clear that the policy scheme set forth in the HEA made by the OBBB cannot be implemented absent regulatory action by the Department. At the same time, even though the requirements of negotiated rulemaking are onerous, it is possible to undergo negotiated rulemaking and publish a final rule at least 30 days prior to the effective date of these OBBB provisions on July 1, 2026. Therefore, the OBBB does not waive negotiated rulemaking nor any provision in the APA. For provisions in the OBBB that become effective July 1, 2027, and beyond, Congress did not implicitly repeal the master calendar because it is possible for the Department to publish a final rule that complies with the master calendar to implement those provisions.

Severability

“It is axiomatic” that a regulation may be invalid in part but not in whole or as applied to one set of facts but not another.

Ayotte

v.

Planned Parenthood of N. New England,

546 U.S. 320, 329 (2006). If a court finds one part of a regulation is unlawful, the “normal rule” is to enjoin only that part.

Id.

(quoting

Brockett

v.

Spokane Arcades, Inc.,

472 U.S. 491, 504 (1985).

It is the Department's intent that if any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.

Statutes and regulations are severable if the separate provisions are “wholly independent of each other” and can operate independently.

Brockett

v.

Spokane Arcades, Inc.,

472 U.S. 491, 502 (1985). That is the case here. No part herein will be affected if another part is found to be unlawful. Nor does the Department believe courts or regulated parties would be unable to apply the rule if one part is held invalid.

C.f. Dep't of Educ.

v.

Louisiana,

603 U.S. 866, 868 (2024) (per curiam) (denying the government's request to stay a preliminary injunction against an entire rule where only parts were found to be invalid because “schools would face in determining how to apply the rule for a temporary period with some provisions in effect and some enjoined”).

VII. Public Participation

Section 492 of the HEA, 20 U.S.C. 1098a, requires the Secretary to obtain public involvement in the development of proposed regulations affecting programs authorized by the title IV, HEA programs. Prior to developing this NPRM, the Department obtained advice and recommendations from individuals and representatives of groups involved in the title IV, HEA programs. This outreach included a 30-day public comment period, one day of public hearings, and five days of in-person negotiated rulemaking on these proposed regulations at the Department's headquarters in Washington, DC. Further details regarding these efforts are provided below.

On July 25, 2025, the Department published in the

Federal Register

(90 FR 35261) a notice of our intent to hold public hearings and to establish two negotiated rulemaking committees to consider regulatory changes to the title IV, HEA programs, with one committee addressing topics including institutional and programmatic accountability and the Pell Grant Program. The engagement included a 30-day written public comment period, a public hearing on August 7, 2025, and five days of negotiated rulemaking specific to this NPRM.

Public Comments and Hearings

We received 1,864 written comments in response to the

Federal Register

notice. Additionally, we held a virtual public hearing on August 7, 2025. A total of 57 individuals testified virtually at the hearing.

You may view the written comments submitted in response to the July 29, 2025 “Intent to Establish Negotiated Rulemaking Committees; Correction” correction notice (90 FR 35652), by visiting the Federal eRulemaking Portal at

Regulations.gov

, within docket ID ED-2025-OPE-0151. Instructions for finding comments are also available on the site under “FAQ.”

Transcripts of the public hearings can be accessed at

https://www.ed.gov/laws-and-policy/higher-education-laws-and-policy/higher-education-policy/negotiated-rulemaking-for-higher-education-2025-2026.

VIII. Negotiated Rulemaking

On July 25, 2025, we published the notice in the

Federal Register

referenced earlier in the Public Participation section. That notice also set forth a schedule for committee meetings and requested nominations for individual negotiators to serve on the AHEAD Committee.

We chose members of the negotiated rulemaking committee from individuals nominated by groups involved in the title IV, HEA programs. We selected individuals with demonstrated expertise or experience with the proposed topics. The negotiated rulemaking committee included the following members, representing their respective constituencies:

• Students who are currently enrolled and receiving assistance from the title IV, HEA programs: Eric Atchison, Arkansas State University System, and

Magnus Noble (alternate), University of Illinois Springfield.

• Students who are veterans, U.S. military service members or groups representing them: Matthew Feehan, Veterans Education Project, and Julie Howell (alternate), Paralyzed Veterans of America.

• Employers and groups representing the business community, including small, medium, and large businesses: David Kafafian, CLASP, and Dennis Cariello (alternate), Hogan Marren Babbo & Rose.

• Legal assistance organizations that represent students and borrowers, consumer advocates, and civil rights groups that represent students: Tamar Hoffman, Community Legal Services of Philadelphia, and Zoe Kemmerling (alternate), Legal Aid of the District of Columbia.

• Public institutions of higher education, including institutions eligible to receive Federal assistance under Title III and Title V of the HEA, Tribal Colleges and Universities, and Historically Black Colleges and Universities: Kristin Hultquist, HCM Strategists, and Tonjua Williams (alternate), St. Petersburg College.

• Private nonprofit institutions of higher education including institutions eligible to receive Federal assistance under title III and title V of the HEA, Tribal Colleges and Universities, and Historically Black Colleges and Universities: Aaron Lacey, Thompson Coburn LLP, and Joanna Roush (alternate), Liberty University.

• Proprietary institutions of higher education, as defined in 34 CFR 600.5: Jeff Arthur, ECPI University, and Ryan Claybaugh (alternate), Paul Mitchell Advanced Education.

• State workforce agencies and workforce development boards: Rachael Stephens Parker, Maryland Governor's Workforce Development Board, and Andrea DeSantis (alternate), North Carolina Department of Commerce.

• State grant agencies, and other State and non-profit higher education financing organizations: J. Ritchie Morrow, Nebraska Coordinating Commission for Higher Education, and Elizabeth McCloud (alternate), Pennsylvania Higher Education Assistance Agency.

• State higher education executive officers, State authorizing agencies, and other State regulators: Randy Stamper, Virginia Community College System, and Heather DeLange (alternate), Colorado Department of Higher Education.

• Accrediting agencies recognized by the Secretary of Education: Michale McComis, Accrediting Commission of Career Schools and Colleges, and Gedalia (Gary) Litke (alternate), Association of Advanced Rabbinical and Talmudic Schools.

• Organizations representing taxpayers and the public interest: Preston Cooper, American Enterprise Institute, and Ethan Pollack (alternate), Jobs for the Future.

After obtaining extensive advice and recommendations from the public, the Secretary, as required by Section 492 of the HEA, 20 U.S.C. 1098a, prepared draft regulations and submitted them to a negotiated rulemaking process. The Committee for these proposed regulations convened on January 5, 2026, and concluded on January 9, 2026. The Committee reviewed and discussed draft regulations prepared by the Department, as well as alternative regulatory language and suggestions proposed by Committee members. Additionally, during each negotiated rulemaking meeting, some non-Federal negotiators shared feedback that they had received from stakeholders in their respective constituencies. This approach facilitated the inclusion of a wide array of ideas and perspectives, which contributed to the development of the consensus language.

Under the organizational protocols for negotiated rulemaking agreed to by all members of the Committee, if the Committee reaches consensus on the proposed regulations, the Department agrees to publish, without substantive alteration, a defined group of regulations on which the Committee reached consensus—unless the Secretary reopens the process or provides a written explanation to the participants stating why she has decided to depart from the agreement reached during negotiations. In this instance, consensus is considered to be the absence of dissent by any member of the negotiated rulemaking Committee (abstaining members are not considered to be dissenting from the proposal). The Committee reached consensus on the entirety of the draft regulations on January 9, 2026. As a result, this NPRM reflects the consensus language with minor technical and non-substantive corrections which are noted in subsequent sections of this NPRM.

As part of this process, the Department engaged in extensive consultation with institutions of higher education in accordance with Section 454(a)(4) of the HEA. Institutions were represented on the negotiated rulemaking committee, were able to comment at the August 7, 2025 hearing, and are able to submit comments in response to this proposed rule.

IX. Significant Proposed Regulations

The Department discusses substantive issues under the sections of the proposed regulations to which they pertain. Generally, we do not address proposed regulatory provisions that are technical or otherwise minor in effect.

General Definitions

Annual Debt-to-Earnings Rate (Annual D/E Rate) (§ 668.2(b))

Statute:

See the “Authority for This Regulatory Action” section of this NPRM.

Current Regulations:

The current regulations provide that the annual debt-to-earnings rate is the ratio of a program's annual loan payment amount to the annual earnings of the students who completed the program, expressed as a percentage.

Proposed Regulations:

None.

Reasons:

The Department is proposing to eliminate references to the D/E rates that are not needed for calculation of the earnings premium metric and is eliminating this definition accordingly. For a more detailed explanation for and analysis of the removal of the D/E rates, please see the discussion later under the section “§ 668.402—Student tuition and transparency system framework.”

Cohort Period (§ 668.2(b))

Statute:

Section 454(c)(2) of the HEA, added by the OBBB Section 84001, specifies that the initial period used to evaluate program completers is the academic year four years before the year of determination. Section 454 (c)(4) provides a procedure to obtain further data to reach the minimum threshold requirement.

Current Regulations:

Initially, the Department uses completers from the third and fourth award year prior to the calendar year for which the most recent earnings data is available, constructing a two-year cohort period. If the program does not have at least 30 completers who can be matched with earnings data, completers from the fifth and sixth award years prior to the calendar year for which the most recent earnings data is available are added to the two-year cohort period, constructing a four-year cohort period. If at least 30 completers in the four-year cohort period cannot be matched, metrics will not be calculated for the program for that award year.

If a program is a qualifying graduate program, the award years used for graduation shift three years further into the past (sixth and seventh award year prior for the two-year cohort, adding the eighth and ninth award year prior for a four-year cohort if needed to reach an n-

size of 30) to account for delayed earnings growth for mandatory post-graduation training such as a residency program.

Proposed Regulations:

Under the proposed regulations, the cohort of students used to determine a program's median student earnings and calculate the earnings premium metric under proposed 34 CFR 668 subpart Q would begin with the program's graduates from a single award year ending four years prior to the calendar year used to source earnings data. For example, in 2027, earnings data from IRS records would be available for calendar year 2025, and students who completed the program in award year 2020-2021 would be included in this cohort.

If the single year cohort does not yield 30 completers or if a sufficient number cannot be paired with earnings, the Department would add completers from the fifth, sixth, seventh, and eighth award years prior to the earnings year, one award year at a time, until a minimum number of completers is reached. For example, if a program did not yield enough completers from award year 2020-2021, students who completed in award years 2019-2020, 2018-2019, 2017-2018, and 2016-2017 would be added as needed.

If the expanded cohort group still does not reach the minimum number of completers, the cohort would continue to include the completers from all five years (fourth through eighth award years prior to the earnings year) at that six-digit CIP code and credential level. Then, completers from programs at the same credential level sharing the first four CIP code digits would be added one at a time, starting with the fourth award year prior to the earnings year. Continuing with the same example, the Department would keep completers at the six-digit level for award years 2016-2017 through 2020-2021 and add 2020-2021 completers at the four-digit CIP level, then 2019-2020, and so on as needed, stopping after adding completers from award year 2016-2017.

If adding completers from all five award years at the same credential level sharing the same first four CIP code digits still does not reach the minimum number of completers, the Department would keep the completers at the six-digit and four-digit CIP levels and add completers sharing the same credential level and first two digits of a CIP code one award year at a time as needed, going from the fourth award year through the eighth award year prior to the earnings year, following the same pattern used to add completers at the four-digit CIP level.

If cohort expansion proceeds through the addition of students who completed a program in the fourth through eighth award years prior to the earnings year at the six, four, and two-digit CIP levels and a minimum number of completers still cannot be reached, the Department would not publish median earnings or an earnings premium for the program.

Reasons:

The proposed regulatory language aligns with statutory requirements in Sections 454(c)(2) and (4) of the HEA, added by Section 84001 of the OBBB, which requires the creation of a one-year cohort, then aggregates additional years of programmatic data if needed, then expands to add data from other similar educational programs. The Department interprets the statutory phrase “educational programs of equivalent length” used in Sections 454(c)(2) and (4) to refer to programs offered at the same credential level.

Because the proposed framework only matches completers who are working and who are not enrolled in an eligible institution during the earnings year or subject to another exclusion, it is possible that a cohort that meets the n-size of 30 will have too few matches to earnings data for the federal agency with earnings data to meet their own threshold to release what they consider to be statistically reliable median earnings to the Department. In this case, it is possible that further cohort expansion to additional steps in the sequence would be required to obtain statistically reliable data.

Debt-to-Earnings Rates (D/E Rates) (§ 668.2(b))

Statute:

See the “Authority for This Regulatory Action” section of this NPRM.

Current Regulations:

The current regulations define “debt-to-earnings rates” as including discretionary debt-to-earnings rate and annual debt-to-earnings rate as calculated under current § 668.403.

Proposed Regulations:

None.

Reasons:

The Department is proposing to eliminate references and requirements related to the current D/E rates that are not needed for calculation of the earnings premium metric, and is eliminating this definition accordingly. For a more detailed explanation for and analysis of the removal of the D/E rates, please see the discussion later under the section “§ 668.402—Student tuition and transparency system framework.”

Discretionary Debt-to-Earnings Rate (Discretionary D/E Rate) (§ 668.2(b))

Statute:

See the “Authority for This Regulatory Action” section of this NPRM.

Current Regulations:

The current regulations define “discretionary debt-to-earnings rate” as the percentage of a program's annual loan payment compared to the discretionary earnings of the students who completed the program, with discretionary earnings defined as the median earnings for the program minus 150 percent of the poverty guideline for a single person in the continental United States.

Proposed Regulations:

None.

Reasons:

Discretionary debt-to-earnings rates are one of the components of debt-to-earnings rates, which would be eliminated under the proposed consensus language.

Earnings (§ 668.2(b))

Statute:

Section 454(c)(2) of the HEA, as amended by Section 84001 of the OBBB, specifies that the Secretary is to determine the earnings of program completers.

Current Regulations:

None.

Proposed Regulations:

The Department proposes to define earnings for the purposes of subparts Q and S of this part, as wages, and other earned income as reported to the IRS, including net income reported from self-employment. This does not include other forms of income (whether taxed or untaxed).

Reasons:

After discussions with negotiators, the Department developed an earnings definition to provide clarity and transparency regarding the types of earnings that would be included in the median earnings used in the accountability metrics. Several negotiators raised concerns regarding the types of income that would be included in or excluded from the earnings metric, including unreported tips and the value of certain housing allowances. The Department believes that the proposed definition includes all relevant earnings sources for the accountability metric; however, during negotiations, the Department committed to asking a directed question on this topic to ensure that we have considered all of the appropriate earnings from work and source limitations in our definition. Please refer to the Directed Questions section listed under the

Supplementary Information

section III for more information.

Earnings Premium (§ 668.2(b))

Statute:

Section 454(c)(2) of the HEA, added by Section 84001 of the OBBB,

prescribes an accountability metric that compares the median earnings for recipients of title IV, HEA program funds who completed a program during a specific cohort period to the median earnings of a working adult described in Section 454(c)(3). The statute stipulates that if the program's median earnings are less than those of the comparison group in two out of three award years, the program is a low-earning outcome program. See also the “Authority for This Regulatory Action” section of this NPRM.

Current Regulations:

The Department currently defines the term “earnings premium” as the amount by which the median annual earnings of students who recently completed a program exceed the earnings threshold, as calculated under current § 668.404.

Proposed Regulations:

The proposed regulatory language matches the language in existing regulations but revises the citation from § 668.404 to § 668.403.

Reasons:

The proposed change would update the regulatory citation to align with the structure of the new proposed regulatory language.

Earnings Threshold (§ 668.2(b))

Statute:

Section 454(c)(3) of the HEA, as amended by Section 84001 of the OBBB, specifies the populations used to develop the comparison groups for the accountability metric under the OBBB.

Current Regulations:

Median earnings are currently based on data from the Census Bureau for working adults aged 25-34 with only a high school diploma (or recognized equivalent), who were not currently enrolled in an institution of higher education, and who either worked during the year or indicated they were unemployed in the State in which the institution is located. The median earnings would use national data if fewer than 50 percent of the students in the program are from the State where the institution is located or if the institution is a foreign institution.

Proposed Regulations:

The Department proposes to align the earnings threshold definition with statutory requirements for both undergraduate and graduate programs using the following methodology.

For undergraduate programs offered by an eligible institution located in a State, the comparison group is based on data from the Census Bureau, using the median earnings for working adults aged 25-34 with only a high school diploma (or recognized equivalent), who worked and were not enrolled in an eligible institution. The Department uses data for the State in which the institution is located, or national data if fewer than 50 percent of the students enrolled in the institution are from the State where the institution is located.

For graduate programs offered by an eligible institution located in a State, the earnings threshold is based on data from the Census Bureau for the median earnings of working adults aged 25-34 with only a baccalaureate degree, who worked and were not enrolled in an eligible institution at the time earnings were measured by the Census Bureau. The median earnings used for the earnings threshold will be the lowest of: (1) the median earnings of working adults in the State in which the institution is located; (2) the median earnings of working adults in the same field of study under the two-digit CIP or four-digit CIP code in the State in which the institution is located; or (3) the median earnings of working adults nationally in the same field of study under the two-digit CIP or four-digit CIP code. If fewer than 50 percent of the students enrolled in the institution are from the State where the institution is located, the earnings threshold would use national data, taking the lowest of the median earnings of working adults with a baccalaureate degree, or the median earnings of working adults with a baccalaureate degree in the same field of study under the two-digit CIP or four-digit CIP code. For States and certain U.S. Territories, where the Census Bureau data necessary to perform the calculations set forth in subsections (1) and (2) is not available, there will be no earnings threshold.

For eligible foreign institutions, the Department proposes using different methodologies for undergraduate and graduate programs. For undergraduate programs offered by eligible foreign institutions, the comparison group would be based on data from the Census Bureau, which provides the median earnings of working adults aged 25-34 in the United States with only a high school diploma or recognized equivalent and who were not enrolled in an eligible institution during the year of the associated measured earnings. For graduate programs offered by eligible foreign institutions the comparison group is based on data from the Census Bureau, the median earnings of working adults aged 25-34 with only a baccalaureate degree, who were not enrolled in an eligible institution during the year of the associated measured earnings. The median earnings will be the lowest of the median earnings of working adults nationally in the United States; or nationally in the United States in the same field of study under the two-digit CIP code or four-digit CIP code.

Reasons:

The Department's methodology for establishing the earnings threshold is derived largely from Section 454(c)(3) of the HEA, as amended by Section 84001 of the OBBB, with several exceptions described below that are based on limitations on the Census Bureau data that the law requires the Department to use.

Some negotiators raised questions about various elements of the Census Bureau's ACS being used to determine the earnings threshold for evaluation. The ACS is the only dataset maintained by the Census Bureau that contains the data elements needed to compute the metric specified in statute. During negotiated rulemaking, several negotiators indicated concern about whether data for high school graduates might sometimes include individuals with undergraduate certificates. The Department has sought further clarification from the Census Bureau on how individuals with undergraduate certificates are instructed to complete the “highest educational attainment” question on the ACS and will incorporate these findings in the final regulations. We also encourage commenters with insights into this data element to submit information for the Department's consideration.

The law is prescriptive with regard to the exact manner in which program earnings would be evaluated, specifying factors for comparison such as age ranges, working status, education level, and geography. Congress did not include a regional price parity adjustment in Section 84001, even though they included it elsewhere in the OBBB for value-added earnings for eligible workforce programs.

See

Section 83002 of the OBBB (adjusting median earnings based upon regional price parities of the Bureau of Economic Analysis based on the location of the program). In doing so, Congress demonstrated it knows how to require a regional price adjustment when it wants to.

Id.; see also Kimbrough

v.

United States,

552 U.S. 85, 87 (2007) (reading implicit directives into statues is disfavored where Congress has demonstrated it knows how and has previously directed such practices in express terms). Here, it omitted such an adjustment, and we assume it did so intentionally because it did not want such an adjustment. Therefore, the Department believes that it would be inconsistent with the statute for the program earnings to be computed using a regional price adjustment.

Another negotiator submitted a suggestion to adjust the earnings threshold for certificate programs having at least 75 percent of female

completers downward to 85 percent of the median earnings for the comparison group to account for sex-based wage gaps. The Department does not believe that it possesses the statutory authority to establish different standards for completers of different sexes when analyzing the outcomes of Title IV, HEA programs as the statute does not provide any indication that Congress intended the Department to such distinctions, either implicitly or explicitly.

Distinctions based upon sex are subject to intermediate scrutiny under the Fifth Amendment to the Constitution. To survive such review, the government must show “at least that the challenged [sex-based] classification serves important governmental objectives and that the discriminatory means employed are substantially related to the achievement of those objectives.”

See United States

v.

Virginia,

518 U.S. 515, 533 (1996) (quoting

Mississippi Univ. for Women

v.

Hogan,

458 U.S. 718, 724 (1982),

and Wengler

v.

Druggists Mut. Ins. Co.,

446 U.S. 142, 150 (1980)) (cleaned up). To survive such review, the government must demonstrate an “exceedingly persuasive justification” for that action.

Virginia,

518 U.S. at 531.

As stated previously, there is no clear statutory command in the OBBB or the HEA more broadly directing the Department to create an earnings variance based upon sex. Construing the statute to give us the authority to create such a sex-based variance would create a constitutional difficulty. Even if we assumed the statute was ambiguous, the constitutional doubt canon would caution against reading the statute to permit such a sex-based variance. Indeed, when an ambiguous statute could be construed in either a constitutional manner or a manner that creates constitutional difficulties, the constitutional doubt canon directs the Department to construe the statute “to avoid the need even to address serious questions about their constitutionality”

See United States

v.

Davis,

588 U.S. 445, 463 n. 7, (2019) (citing

Rust

v.

Sullivan

, 500 U.S. 173, 190-191(1991)). Here, even if the statute could be read implicitly as giving us the authority to create a sex-based variance, the constitutional doubt canon requires us to avoid that constitutional difficulty by reading the statute in a sex-neutral manner.

A sex-based variance could also raise problems with consistent treatment of programs and could potentially lead to confusion. Furthermore, a sex-based variance would conflict with Executive Branch policy as required under Executive Order 14173's prohibition on identity-based preferential treatment based on race, color, sex, sexual preference, religion, or national origin.

12

12

Exec. Order No. 14,173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, 90 FR 8633 (January 21, 2025).

For the purposes of constructing the earnings threshold, a working adult is an individual who earns a positive, non-zero income from wages, salary, farm income, or self-employment and was not enrolled in an eligible institution at the time earnings are measured by the Census Bureau.

One negotiator submitted a proposal for incorporating SOC codes, licensure-linked professional categories, predominant feeder bachelor's degree fields, and two-digit, four-digit, and six-digit CIP codes into the construction of the earnings threshold, with the Department using whichever of the named categories has the lowest reliable median earnings as a program's “same field of study” benchmark. When the Department said that it did not currently have the data to support the adoption of that proposal, the negotiator indicated a preference for use of the four-digit CIP level instead of the two-digit level to narrow interpretation of field of study around occupational field.

At this time, the Department believes the best data available for matching field of study is the two-digit CIP data as recommended by the statute. At this time, the ACS currently contains field of study information that is only disaggregated at the 2-digit CIP level. Further, the Department believes the two-digit CIP data is most appropriate because it reasonably approximates earnings for similar programs and is reliable. Should earnings data through ACS become widely available and statistically reliable at the four-digit CIP level at some point in the future, the Department would consider using such data.

For graduate-level programs at institutions where at least 50 percent of enrollment is from the State in which the institution is located, if statistically significant data (n-size of at least 30) for working adults aged 25-34 in the same field of study in the same State is unavailable, the Department proposes that the program will be evaluated against the lower of median income for working adults with a baccalaureate degree aged 25-34 in the same State and median income for working adults aged 25-34 with a baccalaureate degree in the same field of study nationally. The Department is concerned that calculating an earnings threshold using less than 30 individuals could produce arbitrary and non-representative values in which programs are judged against. As described in the Directed Questions section above, the Department is seeking feedback on this approach and possible alternative approaches. Specifically, the Department is interested in feedback related to the way that fields of study are defined. For example, the Department is interested in feedback about grouping 2-digit CIP codes into broader fields of study, which could reduce the extent to which the Department is unable to calculate this median earnings value. Further, the Department is interested in feedback about other possible datasets maintained by the Census Bureau, and other Federal agencies or external sources, that could be used for this calculation. Please refer to the Directed Questions section listed under the

Supplementary Information

section III for more information.

Eligible Non-GE Program (§ 668.2(b))

Statute:

Section 431 of the GEPA grants the Secretary authority to establish rules to require institutions to make data available to the public about the performance of their programs and about students enrolled in those programs. That section directs the Secretary to collect data and information on applicable programs for the purpose of obtaining objective measurements of the effectiveness of such programs in achieving their intended purposes, and also to inform the public about Federally supported education programs.

Section 454(c)(2) of the HEA, as amended by Section 84001 of the OBBB, establishes the accountability framework that makes programs with low-earning outcomes ineligible for the Direct Loan program. This section mentions the inclusion of undergraduate degrees, and graduate and professional degrees, covering the scope of programs participating in the title IV aid programs beyond merely gainful employment programs.

Current Regulations:

The Department defines an eligible non-GE program as an educational program other than a GE program offered by an institution and included in the institution's participation in the title IV, HEA programs, identified by a combination of the institution's six-digit Office of Postsecondary Education ID (OPEID) number, the program's six-digit CIP code as assigned by the institution or determined by the Secretary, and the program's credential level.

Proposed Regulations:

In the proposed regulation, the Department provides a cross reference to HEA Section 454(c).

Reasons:

The proposed additional phrase referencing 454(c) of the HEA would provide clarity as to the source of authority being used, making it clear that change is being made in direct response to accountability provisions established in such section by the OBBB.

Federal Agency With Earnings Data (§ 668.2(b))

Statute:

Section 454(c)(2) of the HEA, as amended by Section 84001 of the OBBB, specifies that earnings used in the accountability metric are derived by a process to be determined by the Secretary.

Current Regulations:

The regulations define a Federal agency with which the Department enters into an agreement to access earnings data for the D/E rates and earnings threshold. This may include agencies such as the Treasury Department (including the IRS), the Social Security Administration, the Department of Health and Human Services, and the Census Bureau.

Proposed Regulations:

The proposed regulations continue to define the term to mean a Federal agency with which the Department enters into an agreement to access earnings data for the earnings threshold or value-added earnings measure and provide several examples of agencies the Department may work with. The only changes to the definition include the removal of a reference to D/E rates and the inclusion of a reference to value-added earnings pertaining to eligible workforce programs.

Reasons:

The meaning of “Federal agency with earnings data” remains essentially the same under the proposed regulatory language as compared to the current regulations. The reference to D/E rates was eliminated because the Department is proposing to eliminate that metric from the regulations. The reference to value-added earnings was added as a conforming change to align with other parts of the regulatory scheme.

Institutional Grants and Scholarships (§ 668.2(b))

Statute:

Section 431 of the GEPA grants the Secretary authority to establish rules to require institutions to make data available to the public about the performance of their programs and about students enrolled in those programs. That section directs the Secretary to collect data and information on applicable programs for the purpose of obtaining objective measurements of the effectiveness of such programs in achieving their intended purposes, and also to inform the public about Federally supported education programs.

Current Regulations:

The Department defines institutional grants and scholarships as assistance that the institution or its affiliate(s) controls or directs to reduce or offset the original amount of a student's institutional costs and that do not have to be repaid. Typically, an institutional grant or scholarship includes a grant, scholarship, fellowship, discount, or fee waiver.

Proposed Regulations:

The Department proposes to expand the definition to include grants or scholarships that could convert to loans if students do not meet certain requirements, and also would outline what is not considered institutional grants or scholarships, including Federal education benefits; State, Tribal, local, or private grants and scholarships that the institution does not control or direct; the institutional share of Federal Campus-based programs; or assistance that must be repaid.

Reasons:

The proposed additions would provide further clarification and resolve confusion among stakeholders for which data elements should be included in this reporting category. In reporting under the FVT/GE regulations, this was a data field that generated numerous questions from institutions regarding which aid types were and were not included as institutional grants or scholarships. The Department believes that further clarification would improve data quality.

Metropolitan Statistical Area (§ 668.2(b))

Statute:

See the “Authority for This Regulatory Action” section of this NPRM.

Current Regulations:

The Department defines a metropolitan statistical area as a core area containing a substantial population nucleus, together with adjacent communities having a high degree of economic and social integration with that core.

Proposed Regulations:

None.

Reasons:

The current regulations require institutions to report whether a program meets licensure requirements or prepares students to sit for a licensure exam for all states in their metropolitan statistical area. The Department originally proposed to eliminate the related reporting requirement because it was burdensome to institutions and was not specifically relevant to the development of a net price. However, several non-federal negotiators argued that the information would be valuable for consumer information purposes, and the administrative burden associated with the reporting would be diminished if the required reporting aligned with the existing licensure disclosure requirements under 34 CFR 668.43(a)(5)(v). The Department agreed, and amended the proposed regulations to require institutions to report whether a program meets licensure requirements or prepares students to sit for a licensure examination in any State, and a list of all States where the institution has determined the program meets such requirements. Thus, the metropolitan statistical area is no longer part of the reporting requirements and the regulatory definition would no longer be necessary. As such, the Department proposes to eliminate the definition from the regulations.

Poverty Guideline (§ 668.2(b))

Statute:

See the “Authority for This Regulatory Action” section of this NPRM.

Current Regulations:

In section 668.2(b), the Department defines poverty guideline as the U.S. Department of Health and Human Services' published poverty guideline for a single person in the continental United States.

Proposed Regulations:

None.

Reasons:

The poverty guideline's role in 34 CFR 668 subpart Q was to establish discretionary earnings for the calculation of discretionary debt-to-earnings rates, with discretionary earnings equal to earnings minus 150 percent of the poverty guideline. With the proposed removal of discretionary debt-to-earnings rates, the Department no longer needs a definition for poverty guideline in part 668 and proposes to eliminate it.

Qualifying Graduate Program (§ 668.2(b))

Statute:

See the “Authority for This Regulatory Action” section of this NPRM.

Current Regulations:

The Department defines a qualifying graduate program as one where at least half of the program's graduates obtain licensure in a field where post-graduation training requirements apply, in a degree field specified by the Department and published in the

Federal Register

. For the first three years of rates, these programs would be in the fields of medicine, osteopathy, dentistry, clinical psychology, marriage and family counseling, clinical social work, and clinical counseling.

Proposed Regulations:

None.

Reasons:

Under the current regulations, the distinction for qualifying graduate programs was created to account for the fact that

graduates in required post-graduation training programs, such as residency programs, have reduced earnings for a longer period of time following graduation. The time frame prescribed by the OBBB uses the same span between graduation and earnings measurement for all program types, including undergraduate and graduate programs. Since the framework in proposed 34 CFR 668 subpart Q uses the time span prescribed by statute for graduates of all program types, creating a separate distinction for qualifying graduate programs is no longer necessary, and the Department therefore proposes to eliminate the definition.

Substantially Similar Program (§ 668.2(b))

Statute:

See the “Authority for This Regulatory Action” section of this NPRM.

Current Regulations:

The Department indicates that two programs are deemed substantially similar if they share a 4-digit CIP code, regardless of credential level.

Proposed Regulations:

None.

Reasons:

The concept of substantially similar programs as currently described in the regulations does not comport with the Department's proposed earnings accountability framework. The current definition uses a different restriction on establishing new programs with subject matter overlapping programs that were voluntarily discontinued or lost eligibility following failing metrics under proposed 34 CFR 668.604(b)(2), but that restriction employs different criteria and different terminology. The exemption from reporting for substantially similar program groupings under FVT/GE did not have an equivalent provision in the OBBB statute, nor was a similar provision added in negotiated rulemaking. Therefore, due to changes in statute and proposed regulatory changes related to the new accountability metric, the Department determined that the substantially similar program definition is no longer necessary and proposes to eliminate it.

Student Tuition and Transparency System (STATS)

Student Tuition and Transparency System Scope and Purpose (§ 668.401)

Statute:

Section 431 of the GEPA requires the Secretary to prepare and disseminate information about applicable programs to states, LEAs, and institutions. The Secretary must also inform the public about federally supported education programs. The Secretary is required to collect data and information on applicable programs for the purpose of obtaining objective measures of effectiveness of such programs to achieve their intended purpose. In addition, Section 454(c)(2) of the HEA, as amended by Section 84001 of the OBBB, establishes an accountability framework that identifies low-earning program outcomes.

Current Regulations:

The current regulations require institutions to report information about a GE program or eligible non-GE program to the Secretary. The Secretary evaluates the program's debt and earnings outcomes for the programs. The regulations in part 668, subpart Q generally exempt institutions located in U.S. Territories or Freely Associated States, except for the reporting requirements under current § 668.408. In addition, the regulations also exempt institutions that did not offer any groups of substantially similar programs, meaning groups of programs with the same four-digit CIP code, that produced fewer than 30 total completers within the last four award years.

Proposed Regulations:

The Department proposes to rename part 668, subpart Q from Financial Value Transparency to Student Tuition and Transparency System (STATS) to better reflect the subpart's focus on students and transparency. The current version of this regulation does not apply to institutions in the U.S. Territories and the Freely Associated States, except that such institutions are required to report data under current § 668.408. The proposed regulations would update the regulations to create a framework that applies to those institutions. We further clarify that the STATS framework applies to nearly all programs eligible for title IV, HEA funds, including both GE programs and eligible non-GE programs offered by an eligible institution.

Reasons:

We believe it is necessary to update the language to clearly affirm the removal of the exemptions for institutions located in U.S. Territories or Freely Associated States and institutions with no groups of substantially similar programs with a total of at least 30 completers over the four most recently completed award years. The OBBB does not specifically exempt such programs and, in order to avoid confusion, complexity, and additional burden to institutions, the Department is proposing to harmonize the OBBB's earnings accountability framework with requirements for GE programs. Additionally, given the sequential expansion of cohorts provided under the OBBB explained in the proposed changes to the definition of “cohort period” at § 668.2, we anticipate few instances where the earnings premium measure would not be calculated for a program.

The U.S. Territories and Freely Associated States are already required to report data under the FVT framework. The Department believes that modification of this regulation to include all eligible institutions and a wider range of programs would benefit students and the general public by providing useful and comparable information across institutions and programs, regardless of where the institution is located.

Student Tuition and Transparency System Framework (§ 668.402)

Statute:

Section 454(c) of the HEA), as amended by Section 84001 of the OBBB, describes a process whereby the Secretary determines the Direct Loan eligibility for certain programs based on the calculation of the median earnings of program completers. In addition, Section 431 of the GEPA requires the Secretary to collect and publish data on applicable programs to obtain objective measurements of effectiveness of such programs in achieving their intended purposes. See also the “Authority for This Regulatory Action” section of this NPRM.

Current Regulations:

The current regulations at § 668.402(b) establish a framework through which the Secretary determines the debt and earnings outcomes for a GE program or an eligible non-GE program using debt-to-earnings rates and an earnings premium measure. Currently, the debt-to-earnings rates are determined when the Secretary calculates for each award year two D/E rates for an eligible program: the discretionary debt-to-earnings rate, and the annual debt-to-earnings rate. The discretionary D/E rate compares annual loan payments for student debt to the borrower's total discretionary income above 150 percent of the Federal poverty line. The annual debt-to earning rate compares annual loan payments for student debt to the borrower's total annual income.

A program passes the D/E rates if its discretionary debt-to earnings rate is less than or equal to 20 percent, if its annual debt-to-earnings rate is less than or equal to 8 percent, or if the median annual or discretionary earnings of either rate is zero and the median debt payment amount is zero.

A program fails the D/E rates if it fails both parts of a two-prong test. First a program fails the D/E rates test if its discretionary debt-to-earnings rate is greater than 20 percent, or the income for the median discretionary earnings is

negative or zero and the median debt payment amount is positive. Second, a program fails the D/E rates if its annual debt-to-earnings rate is greater than 8 percent or the median annual earnings is zero and the median debt payment amount is positive.

The Secretary also calculates the earnings premium measure for an eligible program for each award year. A program passes the earnings premium measure if the median annual earnings of the students who completed the program exceed the earnings threshold, which represents the median annual earnings of those who did not attend postsecondary education. A program fails the earnings premium measure if the median annual earnings of the students who completed the program are equal to or less than the earnings threshold.

Proposed Regulations:

The current FVT/GE framework includes two tests: the earnings premium measure test and the debt-to-earnings rate test. Under the existing regulations under part 668, subpart S, GE programs that fail the same test in two out of three consecutive years for which rates were calculated lose all title IV, HEA program eligibility. The Department proposes to remove the D/E rate metric and use only an earnings premium measure.

For programs in States where an earnings threshold cannot be determined, an earnings premium would only be calculated if at least 50 percent of the students enrolled in the institution are from locations other than that State. If, during the award year in which the calculations are performed, 50 percent or more of the students enrolled in the institution are from the State, no earnings premium measure would be calculated; the Department would, however, make the earnings data for these programs available to the public.

Reasons:

We believe the proposed revision to remove D/E rates is consistent with the statute, which provides for an earnings premium and does not establish a D/E rate. The Department recognizes and acknowledges that it is changing its position on this issue. The Department has previously issued regulations on these issues four times. This includes the 2011 Prior Rule (76 FR 34385), the 2014 Prior Rule (79 FR 64889), and the 2019 Prior Rule (84 FR 31392), which rescinded the 2014 Prior Rule, and the 2023 Prior Rule, which restored and revised major aspects of the 2014 Major Rule.

The 2011 Prior Rule (which was vacated in federal court), the 2014 Prior Rule, and the 2023 Prior Rule all asserted that the gainful employment statute authorized a D/E eligibility test. The 2019 Prior Rule repealed the D/E eligibility test, arguing that had “the Department believes that the GE regulations do not align with the authority granted by section 431 of the Department of Education Organization Act since the D/E rates measure that underpins the GE regulations does not provide an objective measure of the effectiveness of such programs.” 84 FR 31395.

The Department did not take the position in the 2019 Prior Rule that Section 102 of the HEA did not permit it to establish an earnings outcome measure under the gainful employment authority. Rather, the Department abandoned the D/E rate because it viewed it as a “flawed metric that inflates a borrower's monthly or annual repayment obligation above that which is required by the law and does not accurately distinguish between high-quality and low-quality programs.” 84 FR 31434. The Department is changing its position here because the Department agrees with the 2019 rule that D/E metric does not accurately distinguish between high-quality and low-quality programs and for other reasons discussed below.

The Department also proposes to harmonize the requirements for GE programs, including undergraduate certificate programs, with the requirements of the OBBB for all other programs, reducing complexity, taxpayer cost, and burden on institutions. During negotiated rulemaking, some negotiators agreed from the outset with the Department's proposed changes to eliminate the D/E rate calculation. They noted that the Department's effort to implement the accountability framework enacted in the OBBB would be coherent, administrable, and applied consistently across proprietary, nonprofit, and public institutions. They acknowledged that the proposed elimination of the debt-to-earnings metric reduces unnecessary complexity while preserving meaningful accountability. These negotiators believed the shift reflects statutory intent and promotes regulatory durability. On the other hand, other negotiators initially believed that the D/E test should continue to apply to all GE programs because it is an important accountability measure to ensure the Department does not waste valuable resources funding programs that may leave students in a position where they are unable to pay their debt. They argued that the D/E metric protects students from spending their time, money, and resources on programs that could leave them in a position where they are unable to afford their student loan payment relative to their earnings. These negotiators also stressed their belief that the D/E metric would remain important in the years to come as policy shifts. They opined that the new loan limits established by the OBBB will cause an uptick in private lending which may leave students vulnerable to predatory lending, high interest, and unable to repay their loans. Although these negotiators were initially reluctant to eliminate the D/E metric, they ultimately voted to do so.

The Department agrees with the negotiators who supported removing the D/E rates. Calculation of D/E rates requires the use of a significant amount of data reported by institutions to the Department beyond what is normally necessary to administer the title IV, HEA programs. During the implementation of the current FVT regulations, many institutions expressed confusion with the reporting requirements, which may have resulted in reporting of inaccurate data. The Department's proposed approach would dramatically reduce complexity for institutions because the earnings premium test relies on administrative enrollment data that institutions have become accustomed to reporting for more than 10 years.

Furthermore, the Department's analysis of data obtained for the College Scorecard revealed that it is likely that including a D/E test for GE programs would not result in a substantial number of additional programs failing the metric. The Department estimates that, after accounting for the programs that fail the earnings premium measure, maintaining the D/E metric would result in a 0.2 percentage point increase in the share of all programs that would, and that share would likely be even smaller once pending changes to loan limits

13

under the OBBB are implemented (see Table 6.1 in the “Alternatives Considered” section, below). In the Department's view, this amounts to a de minimis number of impacted programs. The Department notes that the estimated net budget impact for the proposed regulation reflects a larger effect from removing the D/E metric than the Department's separate analysis that identifies additional failing programs used for research purposes.

14

13

The OBBB establishes new loan limits for students enrolled in graduate programs that will become effective July 1, 2026. For more information, see

91 FR 4254.

14

The 0.2 percentage point increase in failing programs that would occur if a D/E metric were added to the accountability framework is estimated using data from a more recent cohort of students

than those used to estimate fail rates in the budget baseline. The more recent cohort has higher earnings than the older cohort, partly because the older cohort earnings were measured during the COVID-19 pandemic. Additionally, the D/E metric in the budget baseline uses a different earnings metric that produces lower earnings and therefore higher fail rates under the D/E metric than in the count of failing programs.

The Department seeks to reduce unnecessary regulatory burden on institutions as part of our broader effort to implement Executive Order 14192, entitled “Unleashing Prosperity Through Deregulation.” 90 FR 9065. After considering the de minimis impact that continuing to use the D/E rates would have on eligibility, the Department believes that the value-added earnings premium test would have virtually the same substantive effect in providing quality assurance that programs lead to gainful employment while substantially reducing the burden on institutions. Given the significant reduction in regulatory burden and the de minimis effect on program eligibility, the Department has determined that deregulating by eliminating the D/E rates is appropriate and advances the Executive Branch's policy to deregulate under Executive Order 14192. In sum, the Department believes eliminating the D/E metric would be fairer to institutions, more consistent across sectors and program types, and would provide useful and comparable information to students and the general public when comparing all types of programs.

The Department has considered reliance interests relating to the current D/E rate calculation. The Department thinks the reliance interests are minimal here because the Department is not aware of D/E rates from any of the GE regulations being widely used by consumers as a gauge of institutional quality. The Department thinks that reliance on the part of institutions is minimal as the D/E rate creates institutional burden associated with reporting and compliance.

Calculating Earnings Premium Measure (§ 668.403)

Statute:

Section 454 (c)(3) of the HEA, as amended by the OBBB, explains the requirements for calculating the median earnings of program completers. The Secretary is also required to collect data and information on programs to ascertain the effectiveness of such programs in achieving their intended purposes under Section 431 of the GEPA.

Current Regulations:

The current regulation entitled “Calculating Earnings Premium Measure” is numbered as § 668.404. The Secretary calculates the earnings premium measure for a program by determining whether students' annual earnings exceed the earnings threshold.

Under current regulations, a Federal agency with earnings data provides the Secretary with the most currently available median annual earnings of the students who completed the program during the cohort period. The Secretary uses the median annual earnings of students with a high school diploma or GED to calculate the earnings threshold. The Secretary annually publishes the earnings thresholds in the

Federal Register

.

In current § 668.404(c), students are excluded from the earnings premium measure calculation if the Secretary determines that (1) one or more of the student's Direct Loans have been approved for a total and permanent disability discharge; (2) the student was enrolled full-time in any other program qualifying for title IV, HEA funds during the calendar year of the earnings data; (3) for an undergraduate program, the student completed a higher credentialed undergraduate program at the same institution prior to the earnings premium measure calculation; (4) for a graduate program, the student completed a higher credentialed graduate program at the institution prior to the earnings premium measure calculation; (5) the student is enrolled in an approved prison education program; (6) the student is enrolled in a comprehensive transition and postsecondary (CTP) program; or (7) the student died.

The Secretary does not issue the earnings premium measure for a program if fewer than 30 students completed the program during the two-year or four-year cohort period or when the Federal agency with earnings data does not provide the programs median earnings data for the program.

Proposed Regulations:

First, the Department proposes to strike the existing 668.403 regulation entitled Calculating D/E rates, consistent with our proposal to eliminate that metric. As a conforming change, we propose to renumber the “Calculating Earnings Premium Measure” provisions currently in § 668.404 to 668.403.

The proposed regulations would slightly broaden the programs considered to be passing the earnings premium measure calculation to include those in which the median annual earnings of the students who completed the program equal or exceed the earnings threshold, as opposed to only those whose earnings exceed the threshold as under the current regulations. In proposed § 668.403(b)(1), the proposed regulations clarify that the calculation would use the most currently available median annual earnings of the students who completed the program during the cohort period and would specifically consider earnings from the fourth tax year following program completion of students who are working. Proposed changes to § 668.403(b)(2) would more generally describe the earnings thresholds as using the median annual earnings of working adults, removing the reference to students with a high school diploma or GED, consistent with the proposed changes to the definition of the earnings threshold discussed in § 668.2. Under proposed § 668.403(b)(3), the Secretary would no longer publish the earnings thresholds using a notice in the

Federal Register

, instead allowing the Department to publish the earnings threshold through other, less formal means, such as, on a website.

Reasons:

The Department proposes to update which programs would pass the earnings premium measure to incorporate the changes included in the OBBB accountability framework. Section 84001 of the OBBB states that a program only fails if the median earnings of its graduates are less than the median earnings of a working adult, which would allow a program to pass if the median graduate earnings were equal to working adults. The OBBB accountability framework only includes working students in that median calculation, a change from the current regulations which include both working and non-working students in the calculation of median earnings for a program.

Initially, the Department proposes to remove an exclusion for completers of graduate programs, whereby the Secretary would exclude a student from the earnings premium measure calculation for a graduate program if the Secretary determined that the student completed a higher credentialed graduate program at the institution subsequent to completing the program as of the end of the most recently completed award year prior to the calculation of the earnings premium measure. The Department believed that this exclusion for higher credentialed graduate programs would apply less frequently than in undergraduate programs, and that removing it could potentially reduce confusion and burden for institutions. Institutions raised numerous questions during the 2024 and 2025 FVT/GE reporting cycles. For example, institutions repeatedly asked why an associate degree

completer would be excluded if they later completed a bachelor's degree, but a bachelor's completer would not be similarly excluded if they later completed a graduate or professional degree. Institutions also voiced confusion about higher credential roll-up when graduate-level sequences of study did not follow a numerical progression of credential levels. For example, as a first professional degree, a Juris Doctor (JD) would have the credential level “07”. In many cases a student pursuing further study after the JD would seek a Master of Laws (LLM), which as a master's degree would correspond with the credential level “05”. Because a master's degree corresponds to a lower-numbered credential level in the FVT/GE framework, debt from a JD program would not roll up to a subsequently completed LLM degree at the same institution, despite the fact that a LLM is considered to be further along the sequence of study. With this in mind, the Department initially proposed removing higher credential roll-up for graduate-level programs. However, during negotiated rulemaking, negotiators noted the importance of maintaining higher credential roll-up. In response to negotiators who advocated for the retention of this exclusion, we agreed to retain the language to exclude students who completed graduate programs and then went on to complete a higher-credentialed graduate program at the same institution. The Department agreed with the negotiators that there are several potential downsides associated with the removal of the higher credential exclusion and roll-up, including the possibility that the earnings of a student completing a master's degree on the way to completing a doctoral degree could be counted in the master's program rather than the doctoral program. Typically, in such circumstances, the doctoral degree is the terminal degree and would be the program that is more appropriately evaluated under the earnings accountability framework.

For undergraduate certificate programs only, some negotiators also proposed to use the 60th percentile of completer earnings, rather than the median, for undergraduate certificate programs only. Those negotiators believed that using the 60th percentile would provide a more accurate and stable measure of program performance while preserving rigorous accountability. They believed that this approach would not alter the comparison benchmark, the timing of earnings measurement, or the statutory structure of the earnings premium test. The negotiators also believed that the refinement would improve measurement accuracy, reduce false negative determinations driven by known statistical distortions, and remain consistent with the accountability objectives of the OBBB. The Department disagreed, indicating that using the 60th percentile of completer earnings for undergraduate certificate programs only would unfairly advantage these programs compared with other programs and would contradict the Department's goal of a fair framework that treats all types of academic programs consistently. Furthermore, using the 60th percentile of completer earnings is inconsistent with the accountability framework established in the OBBB, which calls for the use of medians.

The Department believes that it is important to publish earnings thresholds annually, however the publication of the earnings threshold in the

Federal Register

annually would be burdensome for the Department. The Department believes it is more appropriate to include it with other guidance that we publish, such as a Dear Colleague Letter or publication on a Department website, in part because there would be significantly more variants of the earnings thresholds under the OBBB framework than for the existing FVT framework.

Process for Obtaining Data and Calculating Earnings Premium Measure (§ 668.404)

Statute:

Section 454(c) of the HEA, as amended by the OBBB, describes the data that the Secretary uses to calculate the median earnings of certain student cohorts to determine low earning outcome programs. In addition, Section 431 of the GEPA requires the Secretary to prepare and disseminate information about applicable programs to determine whether programs achieved their intended purpose.

Current Regulations:

The current regulations at § 668.405 explain the process the Department uses to calculate D/E rates and earnings premiums for programs using enrollment, disbursement, and program data, along with other title IV, HEA participation data institutions are required to report to the Secretary. An institution must correct or update any reported data within 60 days after an award year.

The current process allows the Secretary to use the data to create a list of students who completed programs during the cohort period, obtain from a Federal agency with earnings data the median annual earnings of the students on each list, calculate the D/E rates and earnings premium measure, and provide them to the institution.

Proposed Regulations:

The Department proposes renumbering § 668.405 to 668.404 as a conforming change, following the elimination of § 668.403 “Calculating D/E rates” as mentioned above. We would also modify the process described in the regulations to allow the Secretary to calculate the earnings premium measure using Federal agency earnings data reports from records of earnings on at least 16 students who are working. We propose to strike the current provision that removes the highest loan debts for the number of completers not matched to earnings data, because it is unnecessary after removal of D/E rates.

Reasons:

Since the IRS would most likely be the Federal agency to provide earnings data, and it sets its threshold for returning aggregated earnings data to more than 15 individuals, we propose to change to 16 individuals to establish that threshold. The Department indicated that it expects that the IRS would be the Federal agency that provides the earnings data, but as discussed above in § 668.2, the proposed regulations would offer the Department flexibility to use data from another Federal agency or a combination of data from multiple agencies if appropriate. Additionally, we propose removing language from the current regulation which required the highest loan debts to be removed for the number of completers that did not match earnings data. That calculation would no longer be needed, because it is unnecessary after removal of D/E rates calculations.

Determination of the Earnings Premium Measure (§ 668.405)

Statute:

HEA Section 454 (c)(6) requires institutions to provide warnings to students regarding at-risk programs. Section 454 (c)(7) also states that programs that fail the earnings test are ineligible for Direct Loan program participation for a period of not less than two years.

Current Regulations:

The Secretary calculates D/E rates and the earnings premium measure for a program, for each award year. The Secretary issues a notice of determination to inform institutions of the D/E rates for each program, the earnings premium measure for each program, and the consequences of passing or failing GE programs. The Secretary also determines whether student acknowledgments are required. For GE programs, the notice of determination informs the institution whether the GE program could become

ineligible based on its final D/E rates or earnings premium measure for the next award year, and whether the institution must provide student warnings for a GE program at the risk of losing title IV, HEA eligibility.

Proposed Regulations:

We propose to renumber § 668.406 to § 668.405 and to rename the section consistent with the elimination of the D/E rate calculation from the transparency framework. The proposed regulations would also eliminate all references to the D/E rate calculation and the acknowledgement process and would refer to all programs, instead of GE programs, when describing program eligibility consequences for failing the measure.

Reasons:

The Department would determine if programs pass or fail the earnings premium measure and reference warnings across all types of programs. Institutions would no longer need to require student acknowledgments under § 668.407, since the accountability framework in part 668, subpart S, including the student warning process in § 668.605, would now apply to both GE and non-GE programs. The separate student acknowledgement process is not required under the OBBB framework, and it is duplicative with the warning process described in 34 CFR 668.605. Overall, the changes to this section would be made to reflect the elimination of the D/E rates calculation from the regulation and to reflect the change of scope to apply provisions consistently to both GE programs and eligible non-GE programs.

Reporting Requirements (§ 668.406)

Statute:

Section 431 of the GEPA grants the Secretary authority to establish rules to require institutions to make data available to the public about the performance of their programs and about students enrolled in those programs. That section directs the Secretary to collect data and information on applicable programs for the purpose of obtaining objective measures of the effectiveness of such programs in achieving their intended purposes and also to inform the public about Federally supported education programs.

Current Regulations:

Current 34 CFR 668.408(a) specifies the data elements that institutions must report to the Department under the FVT framework. An institution offering any group of substantially similar programs, defined as all programs in the same four-digit CIP code at an institution, with 30 or more completers in total over the four most recent award years, must report to the Department certain data at the program level and at the student level.

At the program level, for each GE program and eligible non-GE program, an institution must report for its most recently completed award year—

• The name, CIP code, credential level, and length of the program;

• Whether the program is programmatically accredited and, if so, the name of the accrediting agency;

• Whether the program meets licensure requirements or prepares students to sit for a licensure examination in a particular occupation for each State in the institution's metropolitan statistical area;

• The total number of students enrolled in the program during the most recently completed award year, including both recipients and non-recipients of title IV, HEA funds; and

• Whether the program is a qualifying graduate program whose students are required to complete postgraduate training programs, as described in the current definition under 34 CFR 668.2.

Current 34 CFR 668.408(a)(2) specifies the student-related data elements that must be reported annually to the Department. For each student, institutions must report the following—

• Information needed to identify the student and the institution;

• The date the student initially enrolled in the program;

• The student's attendance dates and attendance status (

e.g.,

enrolled, withdrawn, or completed) in the program during the award year;

• The student's enrollment status (

e.g.,

full-time, three-quarter time, half time, less than half time) as of the first day of the student's enrollment in the program;

• The student's total annual cost of attendance (COA);

• The total tuition and fees assessed to the student for the award year;

• The student's residency tuition status by State or district;

• The student's total annual allowance for books, supplies, and equipment from their COA under HEA section 472;

• The student's total annual allowance for housing and food from their COA under HEA section 472;

• The amount of institutional grants and scholarships disbursed to the student;

• The amount of other State, Tribal, or private grants disbursed to the student; and

• The amount of any private education loans disbursed to the student for enrollment in the program that the institution is, or should reasonably be, aware of, including private education loans made by the institution.

The current regulation under 34 CFR 668.408(a)(3) further requires an institution to report the following information on students who completed or withdrew from the program during the award year—

• The date the student completed or withdrew from the program;

• The total amount the student received from private education loans, as described in current 34 CFR 668.403(d)(1)(ii), for enrollment in the program that the institution is, or should reasonably be, aware of;

• The total amount of institutional debt, as described in 34 CFR 668.403(d)(1)(iii), the student owes any party after completing or withdrawing from the program;

• The total amount of tuition and fees assessed to the student for the student's entire enrollment in the program;

• The total amount of the allowances for books, supplies, and equipment included in the student's title IV, HEA COA for each award year in which the student was enrolled in the program, or a higher amount if assessed by the institution for such expenses; and

• The total amount of institutional grants and scholarships provided for the student's entire enrollment in the program.

The current regulation under 34 CFR 668.408(a)(4) states that institutions must report any other information the Secretary requires, as published by the Department in the

Federal Register

.

The current regulations under 34 CFR 668.408(b)(1) provides the timing for initial and annual reporting. Except as provided under the transitional reporting option under paragraph (c) of this section, for initial reporting an institution was required to report the program-level and student-level information described above no later than July 31, 2024.

For all subsequent award years, institutions must annually report the required information by October 1 following the end of the relevant award year, unless the Secretary establishes different dates in a notice published in the

Federal Register

.

The current regulations under 34 CFR 668.408(b)(2) address the possible failure of an institution to provide all or some of the required information. For any award year in which an institution fails to provide all or some of the required information, the institution must provide to the Secretary an explanation, acceptable to her, of why the institution failed to comply with any of the reporting requirements.

The current regulations under 34 CFR 668.408(c)(1) provide for an optional

transitional reporting period and metrics.

For the first six years for which D/E rates and the earnings premium are calculated under the current regulations, institutions could opt to instead initially report the required program-level and student-level information for its eligible programs for only the two most recently completed award years.

The current regulations under 34 § CFR 668.408(c)(2) provide that if an institution chose the transitional reporting option, the Department would for the first six years calculate transitional D/E rates using the earnings for students who graduated during the cohort period but the median debt for the more recent period reported. In other words, as the Department explained in Dear Colleague Letter GEN 24-04, for institutions using transitional rates, to calculate D/E rates for the institution's programs, the Department would use earnings for the students from the appropriate cohort period but would use debt information for different students from the most recently completed award years covered by transitional reporting.

Proposed Regulations:

The proposed regulations would modify the data elements reported to the Department by adding new items, adding specificity to others, and removing items that would no longer be needed under the proposed STATS framework. The Department proposes to retain many of the existing reporting requirements in current 34 CFR 668.408. We intend to renumber 34 CFR 668.408 to § 668.406 to conform with deleted prior sections of this part.

In 34 CFR 668.406(a), we are proposing to make several changes. We propose to expand the types of institutions required to report by removing the current exemption for institutions with no groups of substantially similar programs with 30 or more total completers over the four most recently completed award years. With regard to licensure reporting, we also seek to collect a list of all States where the institution has determined a program meets licensure requirements, rather than collecting only information about the States in the institution's metropolitan statistical area.

The proposed regulations would clarify the reporting requirement for the cost of attendance by requiring institutions to report values for the award year. We also wish to clarify that when reporting the tuition and fees assessed to the student, institutions should report the actual amount for that student (not a general amount for a category of students). Institutions would report a student's residency tuition status only as applicable (rather than in all cases). This would capture whether a student was charged in-State (or in-county or in-district) tuition rates or out-of-State rates, or if residency status is irrelevant (

i.e.,

tuition is calculated without regard to residency). The proposed regulations would also more clearly describe the amount and types of aid disbursed for the award year (

e.g.,

grants and private loans).

For students who completed or withdrew from a program during the award year, the proposed regulations would remove reported items related to certain graduate programs that require postgraduate training, student attendance dates, withdrawal dates (if applicable), enrollment statuses, and total institutional debt upon completing or withdrawing from a program.

In 34 CFR 668.406(b), the proposed regulations would change the date institutions must initially report the information specified in 34 CFR 668.406(a) to October 1 following the date the regulations take effect, while for subsequent annual reporting the date would remain October 1 of each year as under the current reporting requirements.

We propose to remove references to 34 CFR 668.406(c) and to remove references to qualifying graduate programs.

The proposed regulations would also remove the transitional reporting process and metrics provided under current 34 CFR 668.406(c).

Reasons:

Renumbering 34 CFR 668.408 to § 668.406 is a conforming change required by the deletion of 34 CFR 668.403 and 668.407. This is necessary to ensure consistency and alignment throughout the CFR.

The modifications to the data elements defined in 34 CFR 668.406(a)(1), and ultimately reported to the Department, are required in part because the Department seeks to reexamine and remove reporting items when possible. We believe removing certain items would be helpful to institutions because it should reduce reporting burden and complexity. Some items would be removed because they support metrics or processes that would not be used; other items would be removed because they would not support the Department's more focused priorities for transparency data.

When reporting under the current FVT/GE requirements, institutions often questioned the Department about how to best report the licensure status for each State in the institution's metropolitan statistical area. During negotiated rulemaking, several negotiators indicated that they believed that the licensure information provided substantial value to consumers, and that reporting burden on institutions could be minimized if the list of States matched the similar listing in existing public disclosure requirements. Therefore, in 34 CFR 668.406(a)(1)(iii), the Department agreed to instead require institutions to provide a list of all States where the institution determines the program meets such requirements. Although this change would expand the number of States that an institution would be required to report, because that list would be consistent with existing disclosure requirements under 34 CFR 668.43(a)(5)(v), the requirement would still be simpler for institutions to perform than narrowing the reporting to only certain metropolitan statistical areas. This change would clarify and simplify the reporting requirement for institutions while still yielding useful information for informational disclosures to students.

In 34 CFR 668.406(a)(1)(v), we propose removing the reporting element addressing whether a program is a qualifying graduate program whose students are required to complete postgraduate training programs. We propose this because under HEA Section 454(c)(2), the Department must measure earnings four years after graduation for all types of programs, with no extended earnings measurement period for graduate programs with postgraduate training requirements.

In 34 CFR 668.406(a)(2), the proposed regulations would clarify the items to be reported to the Department. These clarifications are intended to help institutions regarding which amounts should be reported (

e.g.,

actual tuition and fees) and the time period applicable to those amounts (

e.g.,

award year).

We propose the addition of the phrase “as applicable” in the context of reporting the student's residency tuition status by State or district because some institutions do not distinguish between States or districts or make residency status distinctions related to tuition charges. We believe this change would help reduce confusion for institutions reporting this information.

In 34 CFR 668.406(a)(3), the Department now believes it can obtain the date the student withdraws or completes the program from routine NSLDS enrollment reporting data and does not need a separate reporting item under the STATS requirements.

We propose to remove the total amount of institutional debt the student may owe any party after completing or withdrawing from the program because

it would no longer be needed for purposes of the debt-to-earnings rate (which we propose to eliminate) and because of the complicated way that institutions were required to report this information, particularly for withdrawn students. We believe this change would substantially reduce burden for institutions.

We propose to include the total amount of Federal, State, private, or other grants and scholarships provided for the student's entire enrollment in the program to obtain a more complete picture of the amount of aid an individual receives from an institution in order to calculate a more accurate net price. The Department has collected this through FVT annual amount reporting for the 2024 and 2025 reporting cycles, so this is not a new concept, but we believe it is also necessary for institutions to report this as total amount data for students who complete or withdraw. However, we believe it is appropriate to add a regulatory requirement for something that we would need to collect.

One negotiator argued that private loan debt should not be reported to the Department. The negotiator stressed that reporting this item would introduce data quality, interpretive, and equity concerns and could lead to misleading conclusions, particularly when used in conjunction with earnings-based accountability measures. The Department disagrees and believes private loan debt that the institution is, or normally should be, aware of should be reported in order to convey the greatest extent of consumer information regarding current and future costs (

e.g.,

tuition due at once and future loan repayment obligations) to prospective and current students. In accordance with 34 CFR 668.16(f)(3), the Department does not expect that private loans that the institution does not know about, or should not be normally aware of, be reported.

In 34 CFR 668.406(b) we made conforming changes to remove references to the eliminated section 34 CFR 668.406(c) and to improve readability and clarity. We made further changes by proposing to limit the scope of information that must be reported under this section from five years' worth to two. The Department has already, in most cases, collected data from the prior period through the reporting process under the existing FVT regulations.

We propose removal of 34 CFR 668.406(c) because we see no need for a transitional reporting process under the revised accountability framework. The OBBB requirements are specific and do not provide for a transitional reporting period and metrics. The proposed new framework does not demand institutional reporting of debt, scholarship, or grant values for cohorts of students who graduated or withdrew numerous years in the past.

Earnings Accountability

Earnings Accountability Scope and Purpose (§ 668.601)

Statute:

Section 481 of the HEA defines, in part, certain categories of an “eligible program,” including most undergraduate nondegree programs, as a “program of training to prepare students for gainful employment in a recognized profession.” Section 454 of the HEA, as amended by Section 84001 of the OBBB, further establishes an accountability framework for programs qualifying for title IV, HEA assistance that lead to an undergraduate degree, graduate or professional degree, or graduate certificate that evaluates such programs by measuring the earnings outcomes of graduates.

Current Regulations:

Current regulations under 34 CFR 668.601 establish the scope and purpose of the Department's existing accountability framework under part 668, Subpart S. As noted in § 668.601(a), the current accountability framework applies to programs that prepare students for gainful employment in a recognized occupation and establishes rules and procedures for the Department to make title IV, HEA eligibility determinations regarding such programs.

Current § 668.601(b) provides two exemptions from the GE accountability framework under subpart S. First, the current regulations categorically exempt institutions located in U.S. Territories or Freely Associated States. Second, the regulations exempt a particular institution if it offered no groups of substantially similar programs, at any credential level within the same four-digit CIP code, that produced a combined total of 30 or more completers over the four most recently completed award years.

Proposed Regulations:

Proposed changes to § 668.601 would rename the accountability framework under subpart S from Gainful Employment to Earnings Accountability and would broaden its scope to cover both GE programs and eligible non-GE programs, applying the accountability framework to include the same institutions and programs covered under the transparency framework and thereby extending accountability to nearly all programs qualifying for title IV, HEA assistance. Notwithstanding the significantly expanded universe of institutions and programs that the revised accountability framework would cover, the proposed changes would also narr

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