United States: How To Project Gainful Employment Rates – Part 3

On October 31, 2014, the U.S. Department of Education promulgated its new "gainful employment" or "GE" regulations. The new regulations prominently feature two metrics intended to assess whether a program offers graduates a reasonable return on investment: (1) the Annual Earnings Rate, and (2) the Discretionary Income Rate. REGucation has dedicated recent posts to assisting institutions interested in projecting "D/E rates," as these metrics collectively are known, by presenting a five-part series that offers step-by-step instructions for calculating estimated rates.  Part 1 and  Part 2 in our series covered steps one through four in the process. With this third post, we'll cover steps five and six.

Step Five: Determining each GE Student's loan debt

Once you have determined the applicable cohort period for each GE Program for which you are projecting rates (step four in our process), you will be able to identify the universe of GE Students who will be included in each program's cohort. With this data in hand, you're ready to determine the loan debt for each individual student.

Significantly, the amount used for each student's "loan debt" in the D/E rate calculations is, in fact, the lesser of the student's (1) actual loan debt, or (2) total costs. 34 C.F.R. 668.404(b)(1). Thus, for each student, you'll have a choice to make regarding which number to include when calculating the median loan debt for the cohort. And keep in mind that the lesser number may vary from student to student, depending on his personal circumstances.

Under the new regulations, when calculating a student's actual loan debt, you will need to include any debt that falls into the following three categories:

  • Any Title IV loans that the student borrowed (total amount disbursed less any cancellations or adjustments) for enrollment in the GE program (Federal PLUS Loans made to parents of dependent students, Direct PLUS Loans made to parents of dependent students, and Direct Unsubsidized Loans that were converted from TEACH Grants are not included); AND
  • Any private education loans, including private education loans made by the institution that the student borrowed for enrollment in the program; AND
  • The amount outstanding, as of the date the student completes the program, on any other credit (including any unpaid charges) extended by or on behalf of the institution for enrollment in any GE program attended at the institution that the student is obligated to repay after completing the GE program. 34 C.F.R. 668.404(d)(1).

When calculating total costs for each student, you will need to include the following amounts:

  • The total amount of tuition and fees assessed the student for the student's entire enrollment in the GE program; AND
  • The total amount of the allowances for books, supplies, and equipment included in the student's Title IV Cost of Attendance for each award year in which the student was enrolled in the program, OR a higher amount if assessed the student by the institution. 4 C.F.R. 668.404(d)(2); 34 C.F.R. 668.411(a)(2)(iv)-(v).

There are a handful of additional wrinkles that may surface at this step, and that should be taken into account when calculating each student's actual loan debt and total costs. The first concerns the management of students who may have completed multiple programs at your institution (e.g., a student who completed an associate's degree, then went on to get her bachelor's degree). In such instances, all of the actual loan debt/total costs incurred by a student for attendance in an institution's undergraduate programs would be attributed to the highest credentialed undergraduate program she completed at the institution as of the end of the most recently completed award year prior to the calculation of the D/E rates. 34 C.F.R. 668.404(d)(2)(i). Similarly, all of the actual loan debt/total costs incurred by a student for attendance in any graduate programs would be attributed to the highest credentialed graduate degree completed at the institution as of the end of the most recently completed award year prior to the calculation of the D/E rates. 34 C.F.R. 668.404(d)(2)(ii).

The second wrinkle involves GE Students with no loan debt. Recall that for purposes of calculating D/E rates, the Department defines a "student" as any "individual who received Title IV, HEA program funds for enrolling in the applicable GE program." 34 C.F.R. 668.402 (Student). Notably, this definition of student would include individuals who received only Pell grants and other grants under Title IV, even if they did not receive any loans. It thus is possible that you may have students properly included in your cohort that have no associated loan debt.

Finally, as a general rule, the Department excludes any loan debt incurred by the student for enrollment in programs at other institutions. But note that the Department, in its discretion, may include loan debt incurred by a student for enrollment in GE programs at other institutions if your institution and the "other" institutions are under common ownership or control. 34 C.F.R. 668.404(d)(3). We expect that in the coming months and years the Department will establish parameters for the exercise of this discretion.

Step Six: Calculation of the median loan debt for each GE Program

At this point in the process, for each GE Program you should have a list of the GE Students included in the program's cohort, accompanied by each such student's total loan debt (or more precisely, the lesser of each student's actual loan debt or total cost). You now are prepared to determine the median loan debt for the cohort. The median of a set of values is the "middle" value. Thus, to determine the median loan debt, one simply need place the loan debt numbers in value order and identify the middle number. The graphic below illustrates the idea:

The median loan debt for the GE Program cohort set out above is the highlighted value: $5,250. In instances where your program cohort includes an even number of students, you would identify the middle pair of numbers and calculate the value that would be halfway between them (i.e., add them together and divide by two). Also note, in instances where more than half of the students in your cohort have no associated loan debt, the median loan debt for the program would indeed be $0.

We appreciate the most folks tasked with projecting rates will not be doing so manually, but instead will be using some form of software to facilitate the process. For those using an Excel spreadsheet, you can calculate the median of a group of numbers by using the MEDIAN function. (For the example above, the function would be [median=(A2:A7)]).

Our next post will begin with Step Seven: Amortization of the median loan debt to determine the annual loan payment.

Looking for more information on the new Gainful Employment rules?

For a complete overview of the new gainful employment rules, including reporting, certification, and disclosure requirements, we invite you to listen in to our free gainful employment webinar series. Our next webinar, "Projecting Debt-to-Earnings Rates," will take place Tuesday, December 9.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions