On Monday, July 1, 2019, the U.S. Department of Education (“ED”) formally published a final rule rescinding the Obama-era regulations known as the Gainful Employment rule.  Institutions have the option to implement these changes immediately—including cessation of all GE disclosure obligations and direct-delivery requirements—provided they follow ED’s instructions for doing so, which are described below. 

For institutions wishing to early-implement, completing an appropriate and well-documented implementation process will be critical.  The rescission otherwise does not take effect until July 1, 2020, and institutions that do not early-implement will need to continue abiding by all current GE requirements until that date.  

ED’s instructions for early implementation are relatively simple.  An electronic announcement ED published on Friday stated:   “An institution that early implements the rescission must document its early implementation internally.  It does not have to publish its decision to do so; however, it must make such documentation available upon request by the Department.”

While this may seem straightforward, the flexibility ED is affording institutions could cause them to be too casual about early implementation.  However, institutions must comply with the current requirements until they properly early-implement (or until the rule takes effect on schedule next year), and could be subject to federal, state agency and state attorney general actions and student lawsuits for failing to do so.  The critical question will therefore be: exactly “when” did an institution early implement the rule?  

In our view, the clear internal documentation called for by ED’s announcement is vital, but may not be enough if the institution’s internal and external actions are inconsistent.  Personnel should have a clear understanding of when—by day and time—the institution is early implementing, and should behave as though the rule remains in effect until then. And once implementation occurs, an institution should take prompt steps to end its compliance with the GE rule, such as by removing GE disclosures from its website, ending any student delivery processes, and updating promotional materials to omit disclosure references.  

An institution that implements early, but then behaves as though any of the GE requirements remain in effect, could be at risk.  This does not necessarily mean an institution must cease any current practices it finds valuable, even if they were implemented in response to the GE rule.  To the contrary, if an institution believes its prospective or current students have benefited from any aspect of the information provided in response to the GE rule, the institution can choose not to early implement or, if the institution chooses to early implement, it can re-package that information under a title that does not reference gainful employment.

Friday’s electronic announcement also confirms that for institutions that do early-implement, the following requirements will no longer be in effect:

  • “Institutions that early implement . . . will not be required to report GE data for the 2018-2019 award year to NSLDS, which will be due October 1, 2019.”  
  • “Additionally, those institutions that early implement will not be required to comply with the current requirements in 34 CFR 668.412 (d) and (e) that require institutions to include the disclosure template, or a link thereto, in their GE program promotional materials and directly distribute the disclosure template to prospective students, which will be required starting on July 1, 2019.”  
  • “Institutions that early implement will no longer be required to post the GE Disclosure Template and may remove the template and any other GE disclosures that are required under 34 CFR 668.412 from their web pages.”  (While not mentioned in the announcement, institutions would also be able to stop distributing any GE warnings to prospective and enrolled students.)  
  • “Finally, an institution that early implements will not be required to comply with the certification requirements for GE programs under 34 CFR 668.414.”

Powers has followed the Gainful Employment rule since it was introduced nearly a decade ago, and will continue to closely monitor these latest developments.  As many are aware, the administration plans to replace the repealed GE requirements with more robust College Scorecard disclosures covering institutions and programs across all sectors of higher education.  Stay tuned for another post in the coming days about what is in store for these expanded Scorecard disclosures, as described in Monday’s notice.

Please do not hesitate to contact Dan Brozovic or another Powers attorney with whom you regularly work if you have questions or need assistance in completing an early implementation of the GE rule rescission.