Gainful employment and financial value transparency

(a) Defining gainful employment programs (1) Additional institutions Section 101(b) (20 U.S.C. 1001(b)) is amended in paragraph (1), by inserting, including that meets the standards for debt-to-earnings and earnings premium in section 498C, after gainful employment in a recognized occupation. (2) Proprietary institution of higher education Section 102(b)(1)(A)(i) (20 U.S.C. 1002(b)(1)(A)(i)) is amended, by inserting, including that meets the standards for debt-to-earnings and earnings premium in section 498C after gainful employment in a recognized occupation. (3) Postsecondary vocational institution Section 102(c)(1)(A) (20 U.S.C. 1002(c)(1)(A)) is amended, by inserting, including that meets the standards for debt-to-earnings and earnings premium in section 498C after gainful employment in a recognized occupation. (4) Eligible program Section 481(b)(1)(A)(i) (20 U.S.C. 1088(b)(1)(A)(i)) is amended, by inserting, including that meets the standards for debt-to-earnings and earnings premium in section 498C after gainful employment in a recognized profession. (b) Debt-to-Earnings and earnings premium Subpart 3 of part H of title IV (20 U.S.C. 1099c et seq.) is amended by adding at the end the following: 498C. Debt-to-earnings and earnings premium (a) Definitions In this section: (1) Annual debt-to-earnings rate The term annual debt-to-earnings rate means the rate that is calculated for a cohort of students by taking the annual loan payment for such cohort, as calculated by the Secretary, divided by the median annual earnings for such cohort. (2) Annual loan payment The term annual loan payment means, for a cohort of students, as defined by the Secretary, who completed an eligible program, their total annual payment on loans borrowed to enroll in the institution that offered the eligible program, measured not less than 2 and not more than 4 years after their completion. (3) Discretionary debt-to-earnings rate The term discretionary debt-to-earnings rate means the rate that is calculated for a cohort of students by taking the annual loan payment for such cohort, as calculated by the Secretary, divided by the discretionary earnings for such cohort. (4) Discretionary earnings The term discretionary earnings means, for a cohort of students, as defined by the Secretary, who completed an eligible program, the median annual earnings minus the amount that is 150 percent of the poverty level for an individual, as determined by the Department of Health and Human Services. (5) Earnings premium The term earnings premium means the amount by which the median annual earnings exceed the median earnings for working adults with not more than a high school diploma, as determined using data from the Bureau of the Census— (A) in the State where the institution that provides the eligible program is located; or (B) if fewer than half of the students in the eligible program are from the State where the institution that provides the eligible program is located, or if the institution is a foreign institution, nationally. (6) Median annual earnings The term median annual earnings means, for a cohort of students, as defined by the Secretary, who completed an eligible program, the midpoint of their annual earnings measured not less than 2 and not more than 4 years after their completion. (b) Standards (1) In general An eligible program does not meet the standards for debt-to-earnings or earnings premium if it fails the debt-to-earnings rates or fails the earnings premium, as described in paragraph (2), in 2 out of any 3 consecutive years. (2) Failing An eligible program— (A) fails the debt-to-earnings rates if it has— (i) a discretionary debt-to-earnings rate equal to or greater than 20 percent; and (ii) an annual debt-to-earnings rate equal to or greater than 8 percent; and (B) fails the earnings premium if it has an earnings premium of zero or a negative amount. (c) Process (1) Data match In order to ensure compliance with paragraph (2), the Commissioner of the Internal Revenue Service, the Commissioner of the Social Security Administration, and the head of any other Federal agency that administers the database of individual-level earnings data shall, in coordination with the Secretary, timely ensure secure, annual data matches of earnings data with Department of Education data to produce the median annual earnings of each eligible program. (2) Requirements of the secretary The Secretary shall— (A) on an annual calendar year basis— (i) for each eligible program— (I) calculate for each award year the discretionary debt-to-earnings rate, the annual debt-to-earnings rate, and the earnings premium for the program; and (II) publish the discretionary debt-to-earnings rate, the annual debt-to-earnings rate, and the earnings premium for the eligible program for each award year on a website established and maintained by the Secretary; (ii) for each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation or a graduate or professional degree program offered by an institution of higher education described in section 101(a), issue a notice of determination not later than 45 days after completing the data match described in paragraph (1), informing the institution that provides the program— (I) of the final discretionary debt-to-earnings rate, the annual debt-to-earnings rate, and the earnings premium for the program, which may not be appealed by the institution unless the institution believes that the Secretary erred in the calculation of any such measure; (II) of the final determination regarding whether the program fails the debt-to-earnings rates or fails the earnings premium, as described in subsection (b)(2); (III) whether the program does not meet the standards for debt-to-earnings or earnings premium as described in subsection (b)(1) or could not meet such standards in the next year if it fails the debt-to-earnings rates or fails the earnings premium, as described in subsection (b)(2), in such next year; and (IV) whether the institution is required to provide warnings to enrolled students and prospective students of the program’s failure, or risk of failure, to meet the standards, as determined under subclause (III); and (iii) for each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to-earnings and earnings premium as described in subsection (b)(1), enforce the consequences under subsection (d); and (B) develop processes to verify, on an annual calendar year basis— (i) that each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation or a graduate or professional degree program offered by an institution of higher education described in section 101(a), provides the warning described in subparagraph (A)(ii)(IV), if applicable; and (ii) that each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to-earnings or earnings premium as described in subsection (b)(1), does not receive funds as described in subsection (d). (d) Consequences of not meeting standards (1) No disbursement of funds for enrollment in ineligible programs An institution may not disburse program funds under this title to students enrolled in a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to-earnings and earnings premium as described in this section. (2) Time period to reestablish eligibility An institution may not seek to reestablish the eligibility of a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to-earnings and earnings premium as described in this section or establish the eligibility of a program of training to prepare students for gainful employment in a recognized occupation that is substantially similar to the program that did not meet such standards until the date that is 3 years after the date of the notice of determination issued under subsection (c)(2)(A)(ii) that the program of training to prepare students for gainful employment in a recognized occupation does not meet the standards. (e) Regulations The Secretary shall issue regulations to carry out this section not later than 1 year after the date of enactment of the Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2025, except that such regulations shall not be subject to the requirements of sections 482 or 492..