AACS Visits the White House

 AACS GRC Returns to the White House on Oct. 20

By Greg Jones, AACS GRC Chairman

At 9:30 a.m. on Monday, October 20, 2014, your AACS Government Relations Committee completed its second meeting with high-ranking officials within the Administration and U.S. Department of Education in the past three months on the pending Gainful Employment regulations.

On behalf of your students and schools, AACS Past-Presidents Christine Gordon and Tony Fragomeni, along with Public Policy Advisor Tom Netting, presented our most recent set of revised talking points and a new analysis of the 2012 GE Informational Rates to representatives from the Office of Management and Budget's Office of Information and Regulatory Affairs.

As we have done throughout the negotiated rulemaking process, our response to the Notice of Proposed Rulemaking, and in our prior White House meeting; AACS once again took this opportunity to inform White House officials of our concerns with the lack of comprehensive data being used to establish the regulations, the flaws within the calculation process and procedures, and the inequities which exist based simply on whether or not the institution enrolls predominately independent vs. dependent students.

The meeting was more of a monolog than a dialogue, but it nevertheless gave us one final opportunity to present our concerns to key decision makers before the pending publication of the final rule which we anticipate will take place next week, just days or a day before the November 1st deadline established under the Master Calendar Rule. 

According to the OMB/OIRA representatives, they will conclude their meetings this week, presenting their comments and recommendations to the Department for consideration on or before the end of the week, thereby providing the Department with basically only one full business week to make final revisions to the regulation and have it published in time to meet the Master Calendar deadline.

Your GRC continues to monitor the activities of both OMB/OIRA and the Department, and are preparing for the pending release of the final rule so that we can immediately begin the analysis of the Administration and the Department's final rule under GE 2.0. 

Upon receipt of the final rule, we will immediately conduct a comprehensive review.  Our goal is to provide initial analysis prior to the AACS Annual Convention & Expo, with extensive discussions and presentations to follow during both the GRC's General Session presentation and subsequent breakout sessions.  We look forward to seeing you in a couple of weeks in Phoenix at this vitally important convention.


AACS GRC Visits the White House on Aug. 19

By Tom Netting, AACS Public Policy Advisor

Here are the documents that Greg talked about in his video:

At noon on Tuesday, August 19, 2014, AACS Government Relations Committee Chairman Gregory J. Jones, AACS Immediate-Past-President Christine Gordon, and AACS Past-President Anthony Fragomeni were called to the White House to present additional commentary and information related to the American Association of Cosmetology Schools', May 27, 2014 response to the March 26, 2014 Notice of Proposed Rulemaking on Program Integrity: Gainful Employment.

AACS was granted the meeting with senior Administration officials from both the White House and the U.S. Department of Education, in order to:

  • provide greater detail regarding our memberships concerns with the lack of comprehensive and complete data upon which the proposed regulations have been comprised;

  • seek additional clarity on the policies and procedures used by the Internal Revenue Service and the Department of Education in determining key portions of the metrics, including:

- mean and median Debt-to-Earnings under both calculations;

- Debt-to-Discretionary Earnings (dD/E) percentages, and

- interpretations of how some of the data for these metrics and Programmatic Cohort Default Rates (pCDR) were presented as part of the Departments December 2013 release of 2012 Gainful Employment Informational Rates and subsequent release of additional data with the NPRM; and

  • respond to questions from the Administration officials on our views related to other portions of the NPRM and AACS' response, including:

- our opposition to the pass, zone, and fail D/E eligibility thresholds and the required passage of both the D/E AND pCDR metrics individually;

- the viability of surveys or other third-party earnings data to help further illustrate the variances which form the basis for our earnings calculation and determination concerns;  and

- other key, nuanced questions pertaining to nitty-gritty details within the regulations.

As recounted by AACS' GRC Chairman in the attached video, the hour-long meeting was highly productive, providing AACS with the unique opportunity to expound upon a number of our concerns and present them to officials who acknowledged that we were providing them with perspectives and issues which they were not fully aware of prior to our presentation. 

While acknowledging the validity of many of the concerns we presented, the officials did suggest that not all of our concerns and/or requests were likely to be capable of being addressed prior to the NPRM heading into its next phase (see below).  That, nevertheless, they would take all of this important information back and suggested that we would very likely see at least some responses to our inquiries and concerns incorporated into the Final Rule (which they made clear is still on course to be completed by November 1, 2014 – for implementation on July 1, 2015),  And finally, that even in those instances where our conversation and proposals were not fully addressed in the Final Rule, that it would be their intent to see if still other issues and concerns we raised may well need to be worked on between the publication of the Final Rule and the effective date of implementation.

As you can see from the Talking Points, AACS' goal going into the meeting was to share our on-going concerns with the lack of complete and comprehensive data, to highlight areas in the procedures and calculation methodology which are confusing and most-likely inaccurate, and discuss how working together revisions and considerations for these concerns may be addressed in the Final Rule.  AACS is proud to report that we believe that we made considerable headway on each and every point.

By the end of the meeting, the Administration officials acknowledged that:

  • depending upon the manner in which an individual was required to file with the IRS, what information was used based upon those filings, and the degree to which these earnings were manipulated or changed in order to comply with other IRS regulations, that the earnings for our specific graduates have the potential to become significantly skewed to the detriment of the institution and its corresponding eligibility calculations;
  • that the snowball effect, as a result of these unique characteristics, has the very real potential to impact the general calculation methodology and the corresponding determinations – particularly as it relates to the determinations under dD/E in which AACS' analysis shows clearly that 99.9% of for-profit cosmetology programs wind up with results in mean/median earnings that the data suggests mean that our licensed graduates are reporting earnings below 150% of poverty - leading to inconceivable determinations under dD/E that our sector;
  • the net result of these problematic dD/E determinations are that our programs and institutions are faced with an eligibility test comprised not of three metrics, but only of two Annual0Debt-To-Earnings (aD/E) and pCDRs – and that for that reason alone, among many others, AACS opposes the regulatory structure that requires a program to individually meet both the D/E metric(s) AND pCDR metric, and would urge for the Final Rule to return to program passage of D/E OR pCDR; and
  • discussion of alternative methodologies that could/should be considered given our line of inquiry and presentation.

While there are absolutely no guarantees, the two key officials said that they would go back internally and have additional discussions based upon our meeting and circle with us in the future as noted above.  We expressed our willingness to re-engage and have additional discussions with either the White House and/or Department whenever called upon to do so.

Prior to the conclusion of the meeting AACS officials also shared with the top-level staff that we, as an industry, were not sitting idly by – waiting on the final regulations to be published – and were already, as an industry, looking at ways in which to address some of the concerns the Administration has expressed.  Both Administration officials commended AACS for clearly showing through our research and response to the NPRM, our views expressed throughout the meeting, and our forward thinking discussions that we were taking the Administration's initiative very seriously and acknowledged our commitment to compliance.



Once the White House and the Department have completed the meeting with individuals/organizations, the next phase in the process will be for the Department to submit their proposed final rule to the Administration's Office of Management and Budget (OMB) and its Office of Information and Regulatory Affairs (OIRA).  OIRA carries out several important functions, including reviewing Federal regulations, reducing paperwork burdens, and overseeing policies relating to privacy, information quality, and statistical programs.

The Department and OIRA must publicly announce when the draft of the Final Rule has been sent to and received by OMB/OIRA.  At that time, effected and interested parties once again have the opportunity to petition the Administration to meet with them to discuss the implications of the regulations from a paper work and administrative burden, student privacy, and economic impact perspective.  AACS and the GRC are in the process of reviewing our options with regard to seeking a separate meeting on these topics. 

We anticipate that the OMB/OIRA will seek to host meetings quickly given the rapidly elapsing period of time remaining before the November 1, 2014 Master Calendar deadline.  Once OMB/OIRA hosts their meetings and make their conclusions, they will return them to  the Department for consideration (note the Department does not have to accept, only at a minimum review the comments and recommendations of OMB/OIRA), before moving on to the final stages of establishing their Final Rule and seeking its publication in the Federal Register on or before November 1, 2014.  (Note:  As the Department has done in the past, the release of the Final Rule may first appear on the U.S. Department of Education's website(s).)