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Regulatory Update: ED Proposes Regulations with Significant Impacts on Programs Leading to Licensure

Updated: Jun 4, 2023

The US Department of Education (ED) has released new proposed regulations that may impact educator preparation programs (and all programs intended to lead to a professional license).

Gainful Employment – ED proposes updating its gainful employment requirements for programs. These regulations seek to ensure that students' debt burden upon completing a Federal Financial Aid eligible program does not outpace the expected earnings that a graduate can make in their chosen field within their state. Here, the Department primarily targets certificate programs and high debt load programs at for-profit institutions. Specifically, programs that accept student aid would need to show the following:

  • Graduates can afford their yearly debt payments. In particular, the share of their annual earnings needed to devote to paying their debt (i.e., their "debt-to-earnings ratio") must be equal to or less than 8 percent, or equal to or less than 20 percent of their discretionary earnings (i.e., their annual earnings above 150 percent of the Federal poverty guideline).

  • At least half of graduates have higher earnings than a typical high school graduate in their state's labor force who never pursued a post secondary education.

Institutions should consider what, if any, implications that new gainful employment standards would have on their educator preparation program's pricing model should they go into effect.

Licensure Disclosures (See page 957) – ED is proposing updated language to clarify its intent that IHEs must determine whether their Federal Financial Aid eligible programs lead to licensure/certification. Notably, the National Association of State Directors of Teacher Education and Certification (NASDTEC) is interpreting this proposal to mean that IHEs will need to make this determination for a program "to be eligible for Title IV HEA program funds (Federal Student Financial Aid)" in each state.

Institutions should assess their capacity (internal or via external consulting) to determine where any programs intended to lead to licensure meet the educational prerequisites of each state where the IHE enrolls students.

Consumer Protection (See page 958) – ED proposes a regulatory change requiring IHEs to comply with all state consumer protection laws related to closure, recruitment, and misrepresentations, including generally applicable State laws and those specific to educational institutions. States vary in how stringent they are with consumer protection requirements. Currently, when an institution participates in the NC-SARA Interstate Agreement, it must meet NC-SARA's consumer protection standards and not the individual requirements of each state in which it serves distance education students. If these regulations go into effect as written, institutions will need to comply with varying requirements in each state. Among other consequences, this could mean:

  • IHEs would need to secure additional approvals from consumer protection bureaus in some states.

  • Additional compliance requirements on advertising the program (which may vary based on the program's approval status in a state and the method of advertising – in-person, electronically, etc.).

  • IHEs may need to secure surety bonds (a type of insurance that provides financial remuneration to students should the program close or if the institution is otherwise unable to deliver the program) proportional to projected enrollment in a state. Note: all states do not currently require surety bonds.

ED is accepting public comments on these issues through June 20, 2023. Institutions are strongly advised to consider submitting a public comment via this link.

For strategic advising with crafting a public comment or planning for expanding your institution's assessments of whether your programs meet the educational requirements for licensure, contact us.

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