Posted Date: August 31, 2011

Author:  David Bergeron, Deputy Assistant Secretary for Policy, Planning and Innovation, Office of Postsecondary Education

Subject: Gainful Employment Electronic Announcement #19 - Preparatory Courses of Study Not Considered Gainful Employment Programs

Note: This Electronic Announcement has been superseded by an updated Electronic Announcement posted on April 27, 2012. Please refer to the updated Electronic Announcement #34.

We have been asked to provide further information on whether courses of study that are designed to provide students with coursework necessary for enrollment in a degree or certificate program are gainful employment programs for purposes of the regulations published on October 29, 2010 and June 13, 2011. The following provides that requested information as well as more general information on the types and amounts of Title IV aid students enrolled in such courses of study may receive.

Background

Generally, to receive Federal student assistance from programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA), a student must be enrolled in an educational program that leads to a degree, certificate, or other credential awarded by the institution. However, one exception to this statutory requirement is provided in section 484(b)(2)(A) of the HEA where an otherwise eligible student at a public, private nonprofit, or proprietary institution of higher education may receive Direct Loan Program funding for one period of 12 consecutive months during which the student is enrolled in a course of study that the student's institution determines is necessary for the student to enroll in a program leading to a degree or certificate offered by either the same institution or by another institution. Note that such courses of study may or may not lead to a certificate. Further, the course of study must be made up of courses that are prerequisites required for admission to a degree or certificate program and not coursework that is part of the degree or certificate program in which the student seeks to enroll. Throughout the remainder of this Electronic Announcement, we will refer to such a course of study as a "preparatory course of study".

Gainful Employment Programs

Dear Colleague Letter GEN-11-10 (DCL GEN-11-10), posted to our IFAP website on April 20, 2011, stated that a preparatory course of study was not a Gainful Employment Program. However, DCL GEN-11-10 also stated that all educational programs that lead to the awarding of a certificate by the institution were Gainful Employment Programs. Similarly, Gainful Employment Electronic Announcement #11, posted to IFAP on June 24, 2011, effectively reiterated the guidance in DCL GEN-11-10. Thus, neither DCL GEN-11-10 nor the June 24, Electronic Announcement was clear on the status of a certificate program that meets the requirements of a preparatory course of study. The following provides the needed clarity.

Regardless of whether the preparatory course of study leads to a certificate awarded by the institution or is simply a set of courses, the preparatory course of study is not a gainful employment program, since it does not prepare a student for employment in a recognized occupation.

Title IV Program Eligibility and Time Limitations

Pursuant to the statutory exception noted above, a student enrolled in a preparatory course of study is only eligible for funding from the Direct Loan Program and for no more than 12 consecutive months. If the student is enrolled in a preparatory course of study that exceeds 12 consecutive months, the student ceases to be eligible for Direct Loans after the 12-month period.

Direct Loan Annual Loan Limits

A preparatory course of study is considered to be at the undergraduate level, and the annual loan limits for a student enrolled in a preparatory course of study are the same as the limits for an undergraduate student even if the coursework is at the graduate level. A student enrolled in a preparatory course of study is never eligible for a Graduate/Professional PLUS Loan; however, if the student is a dependent student, the student's parent may borrow a Parent PLUS Loan.

For a preparatory course of study necessary for enrollment in an undergraduate degree or certificate program the annual loan limit is the same as for a student who has not completed the first year of an undergraduate program, regardless of how many years of undergraduate study the student has completed. That is, the 'base" annual loan limit for Direct Subsidized and Direct Unsubsidized Loans combined is $2,625. Dependent students are eligible for an additional $2,000 in Direct Unsubsidized Loan funds. Independent students and dependent undergraduates whose parents cannot get a Direct PLUS Loan are eligible to borrow up to an additional $6,000 in Direct Unsubsidized Loan funds.

For a preparatory course of study necessary for enrollment in a graduate or professional program the annual loan limit is the same as for an undergraduate student who has completed the first two years of undergraduate study. That is, the "base" annual loan limit for Direct Subsidized and Direct Unsubsidized Loans combined is $5,500. Dependent students are eligible for an additional $2,000 in Direct Unsubsidized Loan funds. Independent students and dependent undergraduates whose parents cannot get Direct PLUS Loans may borrow up to an additional $7,000 in Direct Unsubsidized Loan funds.

Since a student may complete an academic year in less than twelve calendar months, a student may receive more than one annual loan limit during the consecutive 12-month period.

Example

A university offers a certificate in postbaccalaureate prehealth specialized studies to serve the academic needs of students who have bachelor's degrees and plan to enroll in a health professions program. In addition to coursework necessary for meeting the prerequisites required for enrollment in the health professions program, the certificate program also includes coursework for strengthening a student's academic preparation for a health professional school curriculum. The course of study requires a student to complete a minimum amount of undergraduate prehealth and elective coursework over a two-year period. For purposes of the Title IV, HEA student assistance programs, this course of study is not a gainful employment program, and a student enrolled in the course of study is only eligible for aid through the Direct Loan Program, up to the annual loan limits described above, during the first consecutive twelve months of enrollment in the program. Further, the only coursework that is eligible is the coursework that the university determines is necessary for a student to enroll in a program leading to a degree or certificate. Coursework not determined necessary that is taken by a student for the purpose of strengthening his or her academic preparation for a health professional school curriculum is not eligible.

If you have any questions, please submit them to the GE Questions mailbox at GE-Questions@ed.gov.

   

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