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Feds Float Idea of Program-Level Loan Default Rate

Feds Float Idea of Program-Level Loan Default Rate
September 11, 2013

An official with the U.S. Department of Education on Tuesday suggested that a panel of negotiators consider including a program-level cohort default rate as part of proposed gainful employment regulations, which would would measure the employment outcomes of vocational programs at for-profit institutions and community colleges. That metric would be a new addition to an annual debt-to-income ratio and a discretionary income ratio.

John Kolotos, the official, who is a negotiator for the rule-making session that began this week, said the department had not vetted the details on how a loan default rate would work. But the department already has an institution-level rate in place, and he said the feds consider a three-year program-level rate of 30 percent (and one year at 40 percent) to be a "viable addition" to gainful employment. It would be a stand-alone measure, he said, meaning academic programs would lose eligibility for federal aid programs if they crossed the threshold, regardless of how they perform on other measures. 

 

 

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