Assignment, Week 2:
Administrative Agencies and Regulations
By:
Zohaib Samana

Professor Scroggins
Legal, Political, and Ethical Dimensions: July 2011
Keller Graduate School of Management

1. State the administrative agency which controls the regulation. Explain why this agency and your proposed regulation which interests you (briefly). Will this proposed regulation affect you or the business in which you are working?
The U.S. Department of Education (ED) announced on July 23, 2010 a set of proposed regulations that would define the term “gainful employment” as used under the Higher Education Act. The Notice of Proposed Rulemaking (NPRM) is the product of a year-long negotiated rulemaking process between the agency and stakeholders across the higher education community to address a set of fourteen “program integrity” issues under Title IV of the Higher Education Act. The agency issued an earlier NPRM in June that covered thirteen of the fourteen issues, including eliminating provisions that allowed schools to provide incentives for recruiters based on enrollment increases, and strengthening the agency’s authority to crack down on misleading marketing practices at for-profit institutions. However, the agency declined to issue its gainful employment definition as part of that proposal, after facing strong resistance from the for-profit sector and some key lawmakers in both the House and Senate. I work at DeVry University as a Career Advisor and this would affect me directly in my workings with graduates to get them gainfully employed within six months after graduation

2. Describe the proposal/change. (10 points)

Under current law, certain occupational training programs are eligible to participate in student aid programs under Title IV of the Higher Education Act only if they prepare students for “gainful employment in a recognized occupation,” Additionally; this term has never been defined in law or through regulations. The proposed regulations would establish a two-part test to determine whether programs were meeting a newly defined gainful employment standard: a debt-to-income ratio test, which would measure the relationship between the median annual loan payment for program completers compared to average discretionary income and annual earnings; and a loan repayment test that would measure the percentage of former students paying down the principal on their loans. Programs that achieve at least a 45 percent loan repayment rate, and whose median debt-to-income ratio for program completers did not exceed 12 percent of discretionary income or 8 percent of average annual earnings would continue to be fully eligible for Title IV student assistance. Programs that met some but not all of the requirements would be required to provide warnings to current and prospective students about the potential for high student loan burdens associated with the program, and in some cases could be placed on “restricted” status, which would require the institution to limit new enrollments in the program and provide evidence from employers testifying to the need for the training program. Programs that failed to satisfy any of the tests would be ineligible for further participation in federal student aid programs. The agency would cap the number of ineligible programs in the first year to five percent of all covered programs; programs that would have been declared ineligible but fall outside the initial five percent will be placed on restricted status.

The proposed regulations will impact federal student aid eligibility for virtually all degree and non-degree programs offered by for-profit institutions –and for many non-degree programs at public and private non-profit institutions—unless the schools are able to demonstrate the programs are preparing students for gainful employment. The new rules, which would take effect starting in the 2012-13 school year, are expected to render up to five percent of covered occupational training programs ineligible for Title IV student aid programs, and will require more than half of such programs to provide consumer warnings to students on student debt levels associated with the program.

3. Write the public comment which you would submit to this proposal. If the proposed regulation deadline has already passed, write the comment you would have submitted. Explain briefly what you wish to accomplish with your comment. (10 points)

DeVry is currently analyzing the data released on for its institutions and intends to work collaboratively with ED to gain clarity on its methodology and reach a resolution on inconsistencies in the data. In addition, DeVry understands that ED intends to rectify an oversight with regard to the methodology to determine repayment rates for students at medical schools.

About DeVry Inc.

DeVry's purpose is to empower its students to achieve their educational and career goals. DeVry (NYSE: DV, member S&P 500 Index) is a global provider of educational services and the parent organization of Advanced Academics, Becker Professional Education, Carrington College, Carrington College California, Chamberlain College of Nursing, DeVry Brasil, DeVry University, and Ross University Schools of Medicine and Veterinary Medicine. These institutions offer a wide array of programs in business, healthcare and technology and serve students in secondary through postsecondary education as well as accounting and finance professionals

4. Provide the "deadline" by which the public comment must be made. (If the date has already passed, please provide when the deadline was). (5 points)

This expires on October 1, 2011.

5. a. Once you have submitted your comment, what will you be legally entitled to do later in the promulgation process (if you should choose to do so)? (See the textbook's discussion of the Administrative Procedure Act.)

Once the law has been in effect it would make for example Graduates from DeVry University graduating with a Bachelor’s Degree to be employed 90 days before they can be termed gainfully employed. Now even after we assist a student to gain a position in his/her field and they come back before the 90 day period that he/she has lost the position, we would need to adjust the number of gainfully employed individuals from the University to reflect this regulation.

b. If the proposal passes, identify and explain the five legal theories you could use in an attempt to have the regulation declared invalid and overturned in court.
(will provide after homework due)

c. Which of these challenges would be the best way to challenge the regulation you selected for this assignment if you wanted to have the regulation overturned and why?
(will provide after homework due)

Answer all of these questions for #5 even if you are in favor of your proposed regulation. The response to question 5 should be a minimum of 2-3 paragraphs long. (15 points)

References/Works Cited 1) USA Funds. Gainful Employment Final Rules Summary. July 12, 2011 2) DeVry University. DeVry Inc. Comments on Release of U.S. Department of Education Gainful Employment Data. Downers Grove, Ill. August 16, 2010
GM