United States: How To Project Gainful Employment Rates – Part 5

With this fifth and final post, we're wrapping up our REGucation series on projecting gainful employment rates. We're also pleased to announce that in the coming days, we'll be publishing the entire series in a white paper format that will take you seamlessly through the projection process, and include some helpful charts and diagrams. Finally, for folks looking for a bit more gainful guidance, we encourage you to check out our free webinars. Both " Getting a Grip on Gainful" and "Projecting Debt-to-Earnings Rates" will be available on-demand by December 22, 2014, on our TCLE webinar site.

Step Eight: Estimate annual earnings

In our previous post, we discussed how to finalize the Annual Loan Payment for each GE Program, which constitutes the numerator for both the Annual Earning Rate and Discretionary Income Rate calculations, as illustrated below:

  • Annual Earnings Rate = Annual Loan Payment / Annual Earnings
  • Discretionary Income Rate = Annual Loan Payment / Discretionary Income

With the Annual Loan Payment in hand, all that remains is to calculate the denominator for each equation.

When determining Annual Earnings for a GE program, the Department will obtain from the Social Security Administration the most currently available mean and median annual earnings for the GE Students who completed the GE Program during the applicable cohort period, and use the higher of the mean or median annual earnings for purposes of the calculation. 34 C.F.R. 668.404(c).

Thus, when computing the 2014-15 D/E rates, for example, the Department will use SSA earnings data from calendar year 2014. We've set out below a chart that illustrates the earnings data that will used in the coming award years.

Because this SSA data is not (and presumably will not be) made available to the public, for each GE Program, you will have to develop a proxy for the SSA earnings information. There are a variety of ways an institution can go about estimating earnings data, and the methodology used might differ from program to program, depending on the information available. Ultimately, your institution should seek to identify and use data that is most likely to resemble that of the SSA information that will be utilized by the Department.

For example, if your institution conducts graduate surveys that include salary information, it may be that you are able to estimate the average earnings of your graduates based on actual salary data. Alternatively, you might be able to determine a reasonable average by interviewing regional employers regarding their salary practices. Faculty, staff, program advisory committees, and experienced career services personnel also may be able to provide insight into the likely average salary of new graduates in particular fields.

You also could estimate earnings using the data included with the 2012 GE Informational Rates released by the Department in connection with the 2014 negotiated rulemaking. For every GE Program (at every institution), the 2012 GE Informational Rates spreadsheet includes 2011 calendar year annual earnings data for GE Students who completed the program between October 1, 2007, and September 30, 2009, as reported by SSA. If you adjust the 2011 earnings data for each of your GE programs, taking into account occupational demand, inflation, and other relevant variables, you may be able to formulate a very reliable earnings estimate for use with your current projections.

Because the Department's data also can be sorted and filtered by state, zip code, industry sector, and CIP code, an institution also can calculate average earnings for programs in a select area, for example, or national earnings information for programs offered by a certain sector. This may prove useful if there is no 2011 data for your specific GE program (e.g., because your program was only recently introduced), or if your graduate population has shifted (e.g., because you recently began offering your program online).

Institutions unable to obtain wage and salary information using the methods described above may attempt to estimate average earnings using data made available by the U.S Department of Labor, Bureau of Labor Statistics (BLS), or by one or more State Employment Security Agencies (regional earnings data likely will be a better proxy for actual earnings where most graduates find employment within a specific geographic area).

If your institution decides to move in this direction, your best starting point may be the O*NET Online website. This website, sponsored by the U.S. Department of Labor, Employment and Training Administration, compiles both federal and state wage data in a single location. Institutions can locate salient earnings information through the website's crosswalk page, which permits a user to search for job-specific data using a variety of inputs, including the CIP code associated with the program, or the Standard Occupational Classification ("SOC") code associated with the occupation into which most graduates' are placed.

Keep in mind, however, that earnings information generated by a government agency may not be a particularly worthy proxy for the SSA data the Department will compile for your institution. Indeed, in the preamble to the proposed rules, the Department dedicates several paragraphs to explaining why BLS salary data is unlikely to accurately represent the actual earnings of a GE program's graduates. 79 Fed. Reg. 64941-42. Accordingly, if you do not presently gather actual earnings data from graduates through surveys or other means, you may want to introduce a process for doing so. Although this effort may not assist you with your near-term projections, it will provide you better data for projections made in years to come. Also, if you ever intend to challenge the SSA data the Department uses in calculating your D/E rates, you likely will need salary information gathered through institutional surveys to use as the basis of your claim.

Step Nine: Calculate discretionary income

The final step in our process involves calculating the Discretionary Income for each GE program, which constitutes the denominator of the program's Discretionary Income Rate. For each GE program, the Discretionary Income is calculated by subtracting from the program's Annual Earnings 150 percent of the Poverty Guideline for a single person residing in the continental United States, as published by the U.S. Department of Health and Human Services. The Department applies the Poverty Guideline for the calendar year immediately following the calendar year for which annual earnings are obtained. 34 C.F.R. 668.404(a)(1).

By way of example, the 2014 Poverty Guideline for a single person residing in the United States is $11,670. Thus, to calculate the Discretionary Income for a program with an Annual Earnings of $28,000, an institution would execute the following calculation:

$28,000 – ($11,670 x 1.5) = $10,495

The Poverty Guideline for a single person in the continental United States is published by the U.S. Department of Health and Human Services and available here. 34 C.F.R. 668.402. Each year institutions will want to check this website to ensure that the most current number in being used in the school's GE projections.

Conclusion

Thank you again for following our series on projecting gainful employment rates. We know this topic has been top of mind for many postsecondary administrators, and hope our posts have been helpful. Keep an eye out for our white paper, and please feel free to contact me if you have any questions.

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.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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.

Disclaimer

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.

General

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