Responsive Documents (9/30/10 FOIA) - CREW: Department of Education: Regarding For-Profit Educatio: 6/20/2011 - F McFadden Clean

McFadden, Elizabeth
From:
Sent:
To:
Cc:
Subject:
Attachments:
John-
Woodward, Jennifer
Wednesday, September 22, 201 o 3:57 PM
Kolotos, John
Wexler, Rob; Thompson, Lauren; Finkel, Jessica; Sellers, Fred; Guthrie, Marty; McCullough,
Carney; Finley, Steve
FW: Comments on "Additional Programs"
Comments on Additional Programs.Kaplan.9-9-1 O.doc; Comments on Additional
Programs.CapellaU .9-9-1 O.doc
Here are the comments provided by Kaplan and Capella on "additional programs."
If Jessica can provide those to us, we will extract their comments with respect to additional programs, as well.
Thank you,
Jennifer
From: Wexler, Rob
Sent: Wednesday, September 22, 2010 3:23PM
To: Woodward, Jennifer
Cc: Thompson, Lauren
Subject: Comments on "Additional Programs"
Jennifer, I have attached the comments on "additional programs" from the comments submitted by Capella University
and by Kaplan Higher Education Corporation.
33
Department of Education
34 CFR Part 668
Program Integrity: Gainful Employment; Proposed Rule
Comments from Capella University on "Additional Programs"
NOTE: Capella University had no comments that were directly/explicitly about "additional
programs" in 668.7(g). However, comments from Capella University about exempting graduate
programs from the regulations potentially have implications for the "additional programs"
provision. See below.
Exempt graduate programs from the regulations
Capella University Comments related to Proposed 668.7(g), September 9, 2010,
See Section II, Page 3, of Capella's conunents:
Second, these comments propose that me 0 P.pai1rncnl Oiiher ex(c:mpl graduate
programs from its proposed rules or cc.nsider an exemption for institutions with a
his.lory ol low cohort default rates.
Capella University Conunents related to Proposed 668.7(g), September 9, 2010,
See Section VI, Page 10, of Capella's comments:
In t'1e alternative, the !Departrnenl could exemp: from the regulations gradu<!te prograns.
Capella urg.cs the 00partment to CflnSider this option bccaus(?. grad!Jcle level students
are more likel y w acquire hiGher debt levels and to take advantage of consolid<Hed
loans, or repaymont plans that for perie<:!s of ir terest-only payments. It IS
appropriate for such stuc!'ents to tak!3 on more debt - many of these shJd.Ants are
working adults seeking to advance their careers an<.l therefore. their potentia! return on
investment is greater. As stated aarlier in these commcnlr.;, it is pfuoJent for
sttKlents to cl1oose loan c:msolidalion or other r epayrnent plans <md fh?.y c::1d (heir
mslitulions should not be penalized fo such cholces.
1
34 CFR Part 668
Comments from Kaplan Higher Education Corporation on "Additional Programs"
SUMMARY OF KAPLAN HIGHER EDUCATION CORPORATION COMMENTS ON
"ADDITIONAL PROGRAMS":
Redundant because regulated by state agencies and regulatory bodies
Burdensome, leading to increased costs
The number of new programs each year needing review means delay in approval
Employer documentation requirement goes beyond statutory requirement, does not
explain the Department's review process and has no objective metrics of review (and
therefore is vague and arbitrary), includes no information about verification by the
Department of the information submitted, and does not discuss how the requirement
will be applied at on-line or national schools.
Having the Department as the "arbiter of postsecondary offerings" won't best serve
students or national economic interests
Frustrates innovation
Should not be required for on-line or other distance learning programs
In applying the GE rules to each program rather than to an institution, the NPRM
contravenes the HEA
The proposed GE rules should not apply to degree programs
1
34 CFR Part 668
Comments from Kaplan Higher Education Corporation on "Addition.al Programs"
KAPLAN' S COMMENTS:
Kaplan Conunents related to Proposed 668.7(g), September 9, 2010,
See Section ll.C, Page 9 of Kaplan's comments:
C. T he Proposed Rules Ha r m Stifling :m<l
Kcw Programs.
Pmprietnry schPols are at the forcfmntnf i nnmation, pa1i cul<!rly innovation in the
delivery eof They arc pi(mver:. (>I' online cdlh.::t thm nnd blended ncad..:nic prog Mns. of
lhc usc of data a.naly<.is H1 ;;upport student retention. and of new m.::t ho<ls !;;)r men suring swdem
lcami ng. See. for example. Claywn M. Scott D. 1\ntlwny. Erik 1\ . Roth, S<:<'ing
Whm 's N,:;c/. Hat'\ :ti'J Ousiness School Pres!>, at Chapter Fi v:: ( 2004 ).
The Dcpar tme111 proposes thar it mu:>t appro"\: :!II new programs and that .:lll)' such
appro\al would iuduoe .t gainful t!lnpll.ymc:tt See 75 f ed Reg. T
1
1is costly
appmsal step is rl!dunJant and State rcgulatos') bodies :Jrtd accreJicing agencies
already require apprO'. a I of new pmgr:u:ns. [n fact. i ll the Juue IS. 2010 l'\PR\1. tht" 0t"p3r1rr.cnl
pmpos.t:d t\1 require regulatory bodie::. to mke an added role in pro<Jram tl\.:ersighl. 1 he
udoi fion;J] admini:. trJtivc burden that the approvi.l l and affirmation requirements will i'l1r11sc on
the Department and 011 schO(lls wi ll result in im:nws..:d program c(;.sts. Kap!an nl onl.!
implemented scures of new programs Qvcr the last year. How will lJ1e D\:panmcnt be able
cniciently to rtview the numhcr\ \) r rr)r.rams \ ... ith the peed (('quire<l .;,!ucat ion:; l
instirutiol\<. t\''1 functwn If ir can:1ot, ne\\ and p:(Jgwm.'- will be
. !da)cJ .
Additional ly. the n;les :!pp;:tr to rt, ... ire tl wt :;Chut'ls nb1ain I bu$ines.se.;.
dcm\lll>lrnte dcml.nd lo r any :1cw pl'(lgt;.lm. 7 5 Fed. i{e5.
Section 66R. 7{g)(ii) & (iii). l11c requirement rhm an .nsl iturit Ili!1USL that arc
projcc!cd jnb vacaucies or employers precli;:tiug that they wi ll c;.rpcrience c.:rwin
of ,lcmand tor thOS<" OCCtlptUions a! lhcir nut fa[l v\i lhin any rcas<'tllnble
understanding of the statut<'lry requirement th<H progru.ms prepare :;1\tdents f,>r
cmploymenl. Not on that. the pwposed rules do nut atkqumdy e\plai n h U\\ the of
employer afllrm:ation will he ..::,)nduCed or h<,,, 11!..: Dcr:u'lment '"ill \ crify N that
affirmation. J'be ml.:s :tlso du not h\l'.\ thi.; 1lquirc;11;;::t \', uuiJ he :t t cr
other nati0nai Bc1.ause this rcqllireJ ;ent Jny Jdlncu nbjt:ctiw nhtdc thut the
Depanmem U:.C LU dclcmline wbeiher N not a i; lea\' I!:> the
Deparuncn( ith and ullimak power Ill appro\ c 0 1 deny a r mgr:un.
Finally. lhl: rul es d 'J<:.: tively m:1kc I h.: Department - not thc
ct:onomy or c:wdo:.nl <; tlu: arhi tcr 0 r f}t)$1 tl r'kriii ):!.S. '-;w:h '" . \Vi II ( 1111:, b
<.:;.Jst ly and inefticil'ut. it is not designed to result in progrJms !h:.u wi ll hc<;t ' ' " dent'
and our naw.r&al cc<liHlmic i ntcresr<>
fr-.tn the .:.tl'l\1\ 't:. these \\ i lllta\'1: ";:111fiumt ti11 mi;[i,,n ... vf
stu<leuts. Ftlr thcs..: \\c r..:sp::ct:'ully ur:!c Lh.: tn it:> -'PJlh.>.<(.h
tl tl) ing 1\l limit >lm.l:nt ;.kbr anJ or in.-fT::c:i'. e pt ..
2
34 CFR Part 668
Kaplan Comments related to Proposed 668.7(g), September 9, 2010,
See Section IV.A.3, Page 16, ofKaplan's comments:
3. The OC[l!lrrment Should l'\ot Require Employer fvr 'fCl\
Progrnms. Or. For Online
!'he sh(mld not adopt the employer affirmation requirements in connection
with ils approval of new programs. 1l1ese rc-quir<: mems arc onerous and u:1duly burden.;:ome <l nd
wi ll frust rai.C innovation ond costs . .At lht very least, lhe Dcparlment :- ht1uld 1nakc dcnr
that k)cal cmph>ycr affirmat ions are not when arc offeri ng an-lin.: or oth.:r
distallt;C bakd programs. The local requirement simply miJkc:s no sense in this si nce
onl in...: attract swdent from across tJ1e country and around the v.rorid.
3
34 CFR Part 668
NOTE: Below are two comments from Capella University that, although not directly/explicitly
about "additional programs" in 668.7(g), potentially have implications for the "additional
programs" provision.
Sec Section m.c, Page 14, of Kaplan's comments:
C. The App.lica ti.un Of The Propi)SCd Hules To Each l)rogr ll m,
Rat her Tb:w To Each lostitutiou, CmJtraVI!nes The .HEA.
The Ht:A does not a1.1thuri1c the Depa11ment to requi re a/ll}rograms by ;t
proprietary insriwnon of higher education to prcp:trc for gainful employment'" in a
rl!cognized 0\:cupaticm. The cites the dctiniti011 of a p:-oprictar: .nstitution of' higher
education m section 102(b} of the HEA a.o.; authority n:quircm\:'nt. See 75 Fed. Reg.
-D,6!9. 43,640. HC{b) requires ptopric:rary institution.!' ofhig.hcr .;duc.:ation :o
provide -al1 eligibltt pr(Jgram ojtrainil1g to prepan.: student:. lor gai nful employm,nt in a
recognized occ1.tpMi vn." 20 U.S.C. ! 002{b)( I }ta)(l) (emphasis supplied). The pru\ i!)ion docs
nol require all progr::uns of1roi!ling" at a pr1)prk:lary institution to prr;parc: ::;tutknts
for gainful pmvisi0n c-n l) ''em digiblc CJf t.raining'- i.e .. at
kas1 on>: such program.
furthcnn,>rc. ;;cc1i on I 02(h) csi3bli:>hes rc4uircmems for Jn in::.t itution to '!ualify as :l
Title IV eligible proprietary imaitution, not sep.lrate eligibility n.:quin:mcr.ts l'n1 vf
inst itution s educational prugr . uns. Such in"'iltttinus qualify for 1 illc IV ..:ligibili!)' because
c:cction 102(aj( l)(A) deems a popriet3ry in::.ti:ution to be an 'in<;titmion of higher for
Plll poses. or Title I v. In curn, :.CCI ion 487 aurhuri/CS ''ins: itt It ions of higner edl!Catiwl" LO
p:u:ticipatc. in the Title IV programs t"l i Jn o:-dcr to l1c an eligible instilltLion f1.}r the purro>es 1)f
llCl)' program mllhori zed under (Title !Vj, an inl. l i l Il l ion Ill liSt an instituti on or h ighcr CdtJC<1tion
or eligible institution ond ... enter inh"' a participHtion '" }. Noll c..f Lht:,t:
pn)\' is ions eslabl isbes separalt: gainful met It" l'cquircmenl:s fnr each d tll\ t lil)ttid
pmgram. and the.: re4ltiring s-chcx1lc; mt?el tillS SlJ.ndard \\o ilh tho:. SIJtul;::.
4
34 CFR Part 668
See Section IV .A. l , Page 15, of Kaplan's comments:
l. The Cain fu:l Employment Rules Should Not Apply To Degree
Programs.
The proposed rules should not cxl-:nJ to degre-e prog[ams offered by proprietary
The bcnetiL..; conferred by degree programs. such as higher lifc1ime camings, higher
gmwlh r.tLes. greater employabill iy, beaer career advancement and job stability, do not readily
lend ihcrnselves to a formulaic .to measuring value base-d on early career earnings. As.
menlioncd above, a rcc.cnt BLS n::JX1rll;Jund that n degree is almost necess:uy to ensure
- contirmingjob uppurt unitjcs in toug,h economic times. The BLS went on to state tbac,
Husi ness cycles run rheir course and lhc cronomy goes from cxpansi<)n to
reces:;ion -but re-gardless o l' whether the economy is bccnni ng or contracting. an
inverse relationship exists bchvccn education and unemployment: more educarion
is associated with Jess unemployment. Jn 2009, the unemployment mte for
workers whh college degrees wtts pcr..:enr. The rate for '>'.'Orkers whhout a
high scboof diplorm\ was I 0 points higher.
The value of opportunity and sl:1hi lit}, ,espe.:i;dly in periods of economic downturn,
canno! wdl qua.nlifi-=d by these mles. The Department seemingly these faCl$
when i1 excluded degree programs at non-prcli L insl itulions from the gainful empiuyment
requi rement in the June I 8, 20! 0 N PR \ f. The Dcpanrnem should JIOl apply the gainf:tl
employment ru!cs ro degree program!> in the same manner h:::y apply in the nwre traditiona l
vocmionaJ scning.
5
McFadden, Elizabeth
From:
Sent:
To:
Cc:
Subject:
Attachments:
Riddle, Paul
Friday, February 18,20114:19 PM
Templeman, Lori; Gomez, Gabriella; Adams, Kristen; Kvaal, James; Yuan, Georgia; Finley,
Steve; Jenkins, Harold; Marinucci, Fred; Siegel, Brian; Bergeron, David; Baker, Jeff; Smith,
Kathleen ; Hammond, Cynthia; Arsenault, Leigh; Smith, Zakiya; Madzelan, Dan
McFadden, Elizabeth; Smith, Megan; Bowers, Connie
RE: House Adopts Gainful Employment Amendment to CR
House debate 2-17-11 .pdf
In case you're interested, I've attached yesterday's floor debate on this amendment.
From: Templeman, Lori
Sent: Friday, February 18, 2011 3:10PM
To: Gomez, Gabriella; Adams, Kristen; Kvaal, James; Yuan, Georgia; Finley, Steve; Jenkins, Harold; Marinucci, Fred;
Siegel, Brian; Bergeron, David; Baker, Jeff; Smith, Kathleen; Hammond, Cynthia; Arsenault, Leigh; Smith, Zakiya;
Madzelan, Dan
Cc: Riddle, Paul; Mcfadden, Elizabeth; Smith, Megan
Subject: FW: House Adopts Gainful Employment Amendment to CR
fyi
From: Bowers, Connie J. [mailto:Constance J. Bowers@omb.eop.gov]
Sent: Friday, February 18, 2011 4:09 PM
To: Templeman, Lori; Riddle, Paul
Subject: House Adopts Gainful Employment Amendment to CR
House Votes to Block Rules on For-Profit Colleges
by Fnwn Johnson and .Julio Edwards
Friday, February 18, 2011 I 1:53 p.m.
The House on Friday voted 289-136 to block the Education Department from imposing "gainful employment" rules on
for-profit colleges like the University of Phoenix and Kaplan, adding to the department's headaches in attempting to
regulate the industry. The Education Department is already facing a lawsuit for rules it finalized in the fall.
The amendment was added to a House continuing resolution funding the government through the end of the fiscal year.
It would halt all money to the department for implementing the gainful-employment regulat ion.
The most controversial of the Education Department's rules would limit for-profit colleges' access to federal student
loans, which lobbyists say would cripple the industry. The amendment blocks any money that would go toward the
department's proposed regulation stipulating that for schools to be eligible to collect student loans as tuition payment,
they must meet certain benchmarks for graduates' employment. It also cuts off funding for implementation of a rule
finalized last fall requiring schools to submit an application before implementing programs.
Passage of the amendment doesn't mean the rules are dead, but the level of House opposition does indicate that
the department is facing a rocky road. The Education Department also can continue implementation procedures while
Congress debates what to do. The Senate may be less inclined to stop the department from writing the rule. Senate
Democrats, lead by Health, Education, labor, and Pensions Committee Chairman Tom Harkin, D-lowa, have supported
the Education Department's efforts because they hope the rules will keep schools from taking advantage of low-income
students and failing to produce enough employed graduates.
Studies released by Harkin's committee last year revealed deceptive marketing practices by for-profit colleges--
promising higher-paying jobs upon graduation, for example-and brought negative attention to the institutions. Since
the Education Department announced the regulations last year, the stocks of the publicly traded for-profit schools have
declined.
February 17, 2011 CONGRESSIONAL RECORD-HOUSE H1149
<r so. And we'll be happy to work
with to try to address this issue,
particular! report language in the
FY 2012 bill.
Mr. GOODLATTE.
man.
Mrs. EMERSON. I yield back t
ance or my thne, Mi . Chaix.
~ ~
Mr. KLINE. Mr. Chairman, I have an
amendment at the desk.
The Acting CHAIR. The Clerk will
designate the amendment.
The text of the amendment is as fol-
lows:
At the end of the bill (before the short
title), insert the following:
SEC. . None of the funds made avail-
able by this Act may be used to-
(1) implement, administer. or enforce the
final regulations on "Program Integrity:
Gainful Employment-New Programs" pub-
lished by the Department of Education in
the Federal Register on October 29, 2010 (75
Fed. Reg. 66665 et seq.);
(2) issue a final rule or otherwise imple-
ment the proposed rule on "Program Integ-
rity: Gainful Employment" published by the
Depattment of Education on July 26. 2010 (75
Fed. Reg. 43616 et seq.);
(3) implement, atlminister, or enforce sec-
tion 668.6 of title 34, Code of Federal Regula-
tions, (relating to gainfUl employment), as
amended by the final regulations published
by the Department of Education in the Fed-
eral Register on October 29, 2010 (75 Fed. Reg.
66832 et seq.); or
(4) promulgate or enforce any new regula-
tion or rule with respect to the definition or
application of the term " gainful employ-
ment" under the Higher Education Act of
1965 on or after the date of enactment of this
Act.
The Acting CHAIR. The gentleman
from Minnesota is recognized for 5 min-
utes.
Mr. KLINE. Mr. Chairman, in an op-
ed published in The Wall Street Jour-
nal, President Obama laid out his plan
to conduct a comprehensive regulatory
review to "remove outdated regula-
tions that stifle job creation and make
our economy less competitive." I have
pledged to be a partner in that effort.
Job creation and American competi-
tiveness are our top priorities. That's
why I am offering an amendment to
deny funds from being used to imple-
ment and enforce a job-destroying De-
partment of Education regulation.
More than 3 million students attend
proprietary schools. These schools, also
known as for-profit schools or career
colleges, provide students with skills
that can be applied immediately to
specific jobs in the workforce. With
more than 6 million workers unem-
ployed for more than 26 weeks, propri-
etary schools address a critical need in
today's economy. These schools also
help address the needs of local commu-
nities. Proprietary institutions are
nimble and easily adapt to the de-
mands of an ever-changing local econ-
omy. If a community lacks trained
nurses or qualified auto mechanics,
proprietary school can quickly develop
programs to fill those needs.
For years, proprietary schools have
served young adults, single parents,
first-generation college students, and
low-income individuals. They have
opened doors to bright futures and
strengthened our economy. That's why
recent efforts by this administration
have been so troubling.
Last year. the Department of Edu-
cation put forward regulations that
will deny students access to many of
these institutions. The regulation in-
cludes a number of provisions, includ-
ing unprecedented reporting require-
ments placed solely on the back.s of
these proprietary schools. The regular
tion also requires schools to seek
preapproval from the Department of
Education before creating any new pro-
gram, tying down in bureaucratic red-
tape the flexibility that has benefited
communities and workers.
The public outcry to the regulation
has been resounding. More than 90,000
public comments were sent in to the
Department during the rulemaking
process. A strong bipartisan coalition
of Members of Congress has voiced
their concerns to the administration,
but those concerns seem to be ignored.
In 2008, Congress had an opportunity to
define "gainful employment," yet it
chose not to. It recognized such a defi-
nition would limit student choice and
stifle employment. Instead, the admin-
istration is barreling ahead with bad
policy.
We all support transparency and ac-
countability. We should empower stu-
dents with good information about all
institutions so they can make the most
informed choice about their education.
We should do our part to root out bad
actors. We can do that while opposing
an outright attack on the private sec-
tor. That's what this is: an attack on
the private sector of education. Col-
leges that planned to expand their
campuses have put those plans on hold.
This effort will force schools to turn
away students and close their doors.
Some have already laid off workers.
Capella, based in my home State of
Minnesota, announced just yesterday
they will lay off 125 staff members. The
regulation is destroying jobs today and
will continue to do so.
Make no mistake, this isn't just an-
other regulation that will destroy jobs.
This is an assault on students' ability
to find an institution that best meets
their needs.
The President has laid out a goal to
lead the world in college graduates in
less than 10 years. This goal represents
the reality that far too often our work-
ers are unprepared to succeed in a
highly competitive global economy.
But we cannot lead the world if we fol-
low the path this regulation would
force us to t ake.
Let's support our students. Let's sup-
port their right to choose a college
that meets their needs. Let's support a
strong and competitive workforce. I
ask my colleagues to support this
amendment.
Mr. Chairman, I yield back the bal-
ance of my time.
Ms. DELAURO. Mr. Chairman, I move
to strike the last word.
The Acting CHAIR. The gentlewoman
from Connecticut is recognized for 5
minutes.
Ms. DELAURO. I rise in opposition to
the Kline amendment, which would
prevent the Department of Education
from moving forward on a rule that
would deny Federal financial aid to ca-
reer education programs that leave
students in too much debt and without
gainful employment.
The new gainful employment rule
will hold career education employment
programs responsible through a simple
proposition: A career education pro-
gram should onl y receive Federal fi-
nancial assistance if, upon graduation,
students can earn enough money to
pay off the debt that they accrue. In
short, a program is worth the Federal
investment only if the price of the edu-
cation is justified by its outcome. Isn't
this exactly what responsible budg-
eting is all about?
This rule would apply to both for-
profit and nonprofit colleges, but the
for-profit sector has mounted an ag-
gressive lobbying campaign in opposi-
tion. Why? The average tuition in a
for-profit college is several times
greater than at a community college.
For-profit college students account for
only 10 to 12 percent of college stu-
dents, but they receive 23 percent of all
Federal student loans and grants.
Graduation rates at for-profit colleges
are at or below 50 percent while their
profit margins are as high as 30 per-
cent. Twenty-five percent of for-profit
school students default on their loans
after 3 years.
If we are going to build the workforce
of the future, we need to increase the
number of Americans with college de-
grees. But students should not have to
mortgage their futures to pay for col-
lege, and they should be secure in
knowing that when they graduate, they
will have a degree or a credential that
will help them to secure a job and to
repay their student loans. Leaving col-
lege without a credential or with one
that is of little value in the job market
can leave students unable to climb out
of debt. And that is what happens to
far too many students who have been
taken in by the aggressive marketing
tactics of for-profit colleges.
Why would any college contest the
idea that an education should be worth
its price tag? Colleges are in a business
to educate students, not simply to take
their money.
This rule will protect both students
and taxpayers. I urge my colleagues to
oppose this amendment.
I yield back the balance of my time.
Mr. REHBERG. Mr. Chairman, I
move to strike the last word.
The Acting CHAIR. The gentl eman
from Montana is recognized for 5 min-
utes.
Mr. REHBERG. As chairman of the
Committee on Appropriations Sub-
committee on Education, we have no
objections to this amendment.
I have often said- jokingly, of
course-that the reason the Internet is
H1150 CONGRESSIONAL RECORD-HOUSE February 17, 2011
so successful in America is that the
government hasn't figured out how to
screw it up yet. Well, they are doing
everything they can to screw up edu-
cation. We can finally get an institu-
tion or a structure that is able to move
very quickly to meet the needs of stu-
dents, and this government is trying to
create a bureaucracy to keep them
from being successful, and it's inappro-
priate.
The Department of Education is at-
tempting to define, through a new reg-
ulation, what it means for someone
graduating from a proprietary school
to be gainfully employed. Wouldn't
that be nice if we applied that same
standard to our public school system
around the country, that our students
had to be gainfully employed before
they received any money? This is a
prime example of Federal overreach.
Fear of this regulation is having a
real economic impact now even before
it goes into effect. Schools are already
scaling back program offerings because
of the threat of this "gainful employ-
ment" regulation. And if it goes final ,
approximately 5.4 million students
could be shut out of higher education
by 2020.
Portions of the regulation are set to
go into effect July 1, 2011, so it is nec-
essary to include this language in the
continuing resolution. Waiting for the
fiscal year 2012 appropriations process
will be too late for these schools. Busi-
ness groups ranging from the National
Restaurant Association and the U.S.
Chamber of Commerce support this as
well as various State Chamber of Com-
merces. They all support the amend-
ment and oppose the regulation. I hope
you do the same.
Mr. GEORGE MILLER of California.
I move to strike the last word in oppo-
sition to the amendment.
The Acting CHAIR. The gentleman is
recognized for 5 minutes.
Mr. GEORGE MILLER of California.
Mr. Chairman, in my district, after it
invented the Internet, it turned it over
to the private sector to grow it.
Mr. Chairman, Members of the
House, this amendment should not be
adopted. It should not be adopted be-
cause this amendment is designed to
disrupt the regulatory process to deter-
mine whether or not students who are
enrolled in some-and I say "some"; I
say this as a supporter of proprietary
colleges and career colleges-some
classes that only leave them in debt,
don't leave them better prepared for
the workforce, don't leave them better
prepared for the career. There is sub-
stantial evidence that that's the case.
High default rates, students not com-
pleting, students ending up in a lot of
debt. They are doing this with almost
90 percent of taxpayer dollars.
I think we have an obligation to the
students and to the taxpayers. That's
what the administration is trying to do
with this regulation.
It's been mentioned that there were
90,000 comments. 89,000 of them were a
form letter. You would have thought
that they could have varied them a lit-
tle bit for the money they were paying
to get it out, but they didn't. But the
point is this: The administration ought
to be allowed to complete this process
because this really is about the future
of these students.
0 2010
Students from these schools in many
instances graduate with much higher
debt. Some of these schools, they de-
fault. In excess of 40, 45 percent of
them end up in default, and, as you
know, that is not debt that you can
discharge in a bankruptcy. So these
students start out in big trouble if
these schools are not providing the
kind of educational atmosphere and,
hopefully, the success ratio that they
should. That should be a concern to
every Member of this Congress. That
should be a concern to the taxpayers,
and it is a concern to this administra-
tion.
If this regulation doesn't turn out,
the Congress can tell them they can't
do it. That's our power. That's the way
it works. But to come in in the middle
of the game when it's this serious with
this money on the table, with these
kinds of default rates, and some of
these insti t utions and some of these
classes, we're making a big mistake by
put ting our thumb on one side of the
scale at this point in the process.
As I've said from the time I have
been on this committee as these
schools started to grow and become
more a part of our higher education, I
have supported them. I continue to
support them. Somebody just said, if
you're going to meet the goal of col-
lege graduation, it's hard to believe
how you' re going to do it without these
schools. But as we all know, you put 90
cents out of every dollar coming from
the taxpayer on the street, there's al-
ways a few people who show up to pick
i t up without providing the services.
We went through this in the HMOs
back in the nineties. There were people
who said they were becoming health
care HMOs. No, they were really real
estate companies who were trying to
get a lot of people to enroll and hope-
fully they could sell them to somebody
else. In this one, it's a question of
whether or not you're offering a cur-
riculum that truly benefits the stu-
dents, gives them the opportunity.
But, you know, when we see the
kinds of scandals that have erupted in
the past at some of these institutions-
again, not all of them-you have to ask
the questions: What's going on? People
have paid tens of millions of dollars in
fines because of how they have at-
tracted students. When you have a
business plan that' s based upon at-
tracting homeless people, you better
make sure that there is some oppor-
tunity for that homeless person to
thrive in that educational class other
than just end up in debt and still home-
less. That was a business plan.
So I'm just asking for caution. I
know you want to run to justice. I
know the power of these institutions
and I know the pressure that you're
saying you have to stop this, you have
to stop this. We're talking about a few
classes within all of these institutions
where there is a history, there may
very well be a history that all the stu-
dent got out of it was debt. This isn't
about what you end up doing in your
career over time, but it's about wheth-
er or not you got what you paid for and
they delivered services that they prom-
ised.
I hope that Congress will reject this
amendment. Let the Department con-
tinue to work on the regulation, and
again, if it doesn't work, if it doesn't
make sense and is threatening schools,
I suspect that we will all join in mak-
ing sure that the regulation doesn't go
into effect.
Mr. ROE of Tennessee. Mr. Chairman,
I move to strike the last word.
Mr. ROE of Tennessee. Mr. Chairman,
I rise in support of thi s amendment.
Over the past year, a number of us
have met with Education Secretary
Duncan to express our serious concerns
with any proposal that evaluates edu-
cation programs based on the level of
debt students are accumulating. De-
spite improvements that have been
made to the rule, I remain concerned
about the direction this rule is taking
our education system.
I understand and agree with those
who are concerned about the high cost
of education, but shouldn't we let stu-
dents and their family evaluate for
themselves whether the risk of car-
rying a high debt load is one they want
to take on? It seems to me to be a far
better use of our resources to be en-
couraging informed decisions by put-
ting out accurate information to stu-
dents about graduation rates, place-
ment rates, and even average student
debt burdens.
The fact is career colleges are meet-
ing a community need by educating
and training people in specific profes-
sions like nursing. In six short years,
we are a million nurses short in this
country. If there are problems with a
specific program, and there are many-
in fact, there may be bad programs in
this country. Let's come up with a cri-
teria that actually evaluates the pro-
grams' effectiveness.
Either way, I think it makes sense to
put a halt to this rule and use the addi-
tional time to urge the Department to
go back and put out a rule that will en-
sure students continue to have access
to educational choice.
I urge adoption of the rule.
Mr. POLIS. I move to strike the last
word in opposition to the amendment.
from Colorado is recognized for 5 min-
utes.
Mr. POLIS. Mr. Chairman, I rise to
oppose the amendment, which is a
broad, sweeping measure, not only
February 17, 2011 CONGRESSIONAL RECORD -HOUSE H1151
against; important protections for stu-
dents, which I'll elaborate on, but it
also leads to potential exposure for
taxpayers and taxpayer money.
This amendment would not only
eliminate the ability to have the crit-
ical gainful employment regulation,
some element of quality control to
make sure that after receiving some-
times very expensive education some-
body's actually more employable, but
it would also undo existing trans-
parency that's already approved and
published, to disallow basic informa-
tion on student outcomes, including
graduation rates as well as loan default
and payment rates.
Now, the reason this is such an im-
portant matter to Congress is that this
is a critical matter for taxpayers. Tax-
payers have been paying the cost for
excessive loan default rates of poorly
performing for-profit colleges. Specifi-
cally, for-profit higher education insti-
tutions received $24 billion in title IV
loans and Pell Grants in 2009, account-
ing for about a qu.arter of the Federal
college loan dollars, despite them com-
prising only about 10 percent of the
higher education institutions.
Meanwhile, students from the for-
profit colleges have loan default rates
after 3 years about twice the rate of all
college defaults and rising to 25 per-
cent. Now, these are averages. That
doesn' t matter. What matters is: Does
it work? Does it work for kids? Are
they getting their money's worth? Are
taxpayers getting their money's worth
by helping people attend these institu-
tions, or are wo graduating students
with a mountain full of debt, no more
employable than the day they walked
into that door.
To make the matter even worse, in
2009, the average tuition of the for-
profit institution is $14,000 per year,
compared to $7,000 per year for average
4-year universities and $2.500 for com-
munity colleges.
Now, again, what I would look at
would be the return on investment. Are
they providing twice the value of a 4-
year or community college? The data
says no. Are they providing six times
the value of community colleges and
making somebody employable in the
future? The answer, by and large, again
is no. That's why the Higher Education
Act authorized the Education Depart-
ment regulations that this amendment
would block.
I strongly support the process that
the administration has gone through,
including the process on the rule on
gainful employment.
The administration has not turned a
deaf ear to the industry, to the legiti-
mate concerns of quality operators.
The first rule that they put out there
was-I think they've acknowledged had
some room for improvement. They've
been working daily in conjunction with
the responsible players in the for-profit
education industry to establish a real
playing field to ensure that we are not
doing these students and taxpayers a
disservice through this program. GAO
has detailed the issues in its report last
summer, and the Leadership Con-
ference on Civil and Human Rights
wrote to the U.S. Education Depart-
ment a couple of weeks ago that the
rule will benefit minority students, as
they disproportionately enroll at for-
profit schools, overpaying for poorer
quality education, as compared to the
public counterparts.
The proposed rule is a reasonable
way to ensure gainful employment for
students, and I applaud the administra-
tion for taking on this difficult battle
for minority students, to ensure basic
transparency and to protect taxpayer
funds.
I urge a "no" vote on the amend-
ment.
Mrs. BIGGERT. 1 move to strike the
last word.
from lllinois is recognized for 5 min-
utes.
Mrs. BIGGERT. Mr. Chairman, I rise
in support of the Kline amendment. It
is imperative that Congress put the
brakes on what has become this admin-
istration's culture of runaway regula-
tion.
Specifically, the amendment under
consideration will prohibit the use of
funds in the underlying bill for the im-
plementation of a misguided regulation
commonly referred to as the gainful
employment rule, which has already
led to job loss and uncertainty in the
proprietary college sector. Moving for-
ward. I'm concerned that that rule will
jeopardize access to many educational
and training programs that provide
students with skills to meet the de-
mands of an ever-changing labor mar-
ket.
In function, this rule would prohibit
college programs from receiving Fed-
eral student loans unless new com-
plicated loan repayment criteria are
met. As such, the rule incentivizes in-
stitutions to pursue only those repay-
ment plans which satisfY arbitrary
government goals rather than the
plans that best fit students' needs. This
may be loan repayment; also ignoring
measures of seemingly equal impor-
tance such as on-time graduation rates
and clear placement.
Equally troubling, under the rule,
proprietary institutions would, sadly,
be forced to navigate an additional re-
strictive layer of Federal bureaucracy,
requiring Federal approval in order to
offer any new programs. Unfortu-
nately, this provision fails to realize
what is the agile nature of these pro-
prietary institutions that uniquely po-
sition them to help unite a properly
equipped workforce with employers in
today's uncertain job market. By un-
lawfully restricting the flexibility, we
risk failure to capitalize on emergency
economic opportunities.
0 2020
Moreover the gainful employment
rule applies almost exclusively to one
sector of higher education, the propri-
etary schools which tend to teach job-
specific skills, often to at-risk popu-
lations such as low-income, minorities,
single parents, high school dropouts
with GEDs, and first-generation college
students who do not have financial
help from parents. Somehow there is
the notion that the bad actors of the
Federal higher education loans world is
exclusively within the proprietary col-
lege sector. This is preposterous, but
the fact is that the administration has
chosen to discriminate against these
schools. The fact remains, a student
can graduate from any institution of
higher education with inadequate in-
come to repay their debts, and students
should not suffer simply because the
school that best suits their needs oper-
ates under a for-profit model.
I have repeatedly asked the Depart-
ment of Education to refrain from im-
plementing this rule until we have
clear data on the state of our Nation's
overall higher education system. If the
administration were serious about ad-
dressing unscrupulous recruiting prac-
tices at the college level, this data
would be compiled and made available,
and particularly to Members of Con-
gress. As it stands, we have little more
than this singular, last-minute vote to
slow down the administration's race to
squeeze the for-profit college sector
out of existence.
Mr. ELLISON. Mr. Chairman, I move
from Minnesota is recognized for 5 min-
utes.
Mr. ELLISON. Mr. Chair, I would
like to point out a few important facts
about the for-profit educational sector,
and that is that the low-income stu-
dents make up about half of the enroll-
ment for for-profit colleges and minori-
ties comprise about 37 percent. So this
really is a matter of low-income and
minority students facing what are
high-cost loans for students, and often
90 percent of the money comes from
the Federal Government.
Now, as I listen to my friends in the
Republican caucus, I would think that
they would want the best value for the
public dollar. This rule means that
some money spent will result in the
outcome that is sought in the begin-
ning, which is gainful employment.
Too many of the students who go to
these schools are coming out with
nothing other than big debt, and no
education, no gainful employment at
all. And this is a problem. And I'm sur-
prised that we would not say that,
look, we are going to make sure that
when the Federal dollar is put forward,
there will be value coming back for it.
Now, I am no opponent of for-profit
colleges. I think ones that are per-
forming well are certainly welcomed in
the market and serve a valuable role.
But there are bad actors. And I think
it's important to point out we have
seen this movie before, Mr. Chairman.
We have seen it when people said,
Look, poor people, low-income people
of color need to get mortgages. And,
well, you know what? Well,. they can
get subprime mortgages. Now, not all
subprime mortgages were predatory
mortgages, but some were. And enough
were to be able to take advantage of
people on a very severe scale.
This rule, if it goes into effect, if al-
lowed to proceed forward, would make
sure that these students and the gov-
ernment get good value for their
money, and no for-profit college that is
not relying on a business model that
bilks the consumer, the student, should
object. No college, no for-profit college
that relies on a business model that ac-
tually is designed to help the students
they propose to help should object to
saying, Look, we're going to deliver
what we say we're going to deliver,
which is gainful employment.
This is no friendly thing for the poor
and low-income students of color. This
is an abuse. Not all for-profit colleges,
but some. And the Federal Government
has a responsibility to make sure that
these students are not taken advantage
of.
By the logic of some of the pro-
ponents of this amendment, we should
say that, look, any loan shark, pawn
shop, payday lender, we ought to just
thank them because, you know what,
they serve the poor. Well, they had bet-
ter serve the poor in a fair, scrupulous
way and not take advantage of people
in a circumstance where they are at a
disadvantage.
So I urge members to vote this
amendment down and to allow the
proper rulemaking procedure to go fot-
ward.
Mr. ROKITA. Mr. Chairman, I move
from Indiana is recognized for 5 min-
utes.
Mr. ROKITA. Mr. Chairman, I rise to
support this amendment. This so-called
"gainful employment" regulation is
another example of this big Federal
Government run amok.
Today, Hoosiers in Indiana, and all
Americans, are free to choose from ac-
credited colleges and pick the one that
they believe fits their needs. These are
accredited colleges. No one has accused
them of unfairly serving the poor-no
one rightfully has-or anyone else.
They are accredited. They are licensed.
The Federal Government gets in-
volved in student loans and grants al-
ready, more so, I would say, than I and
others would like it to. But at least,
Mr. Chairman, we still let individuals
make their own decisions on where to
go to school.
The new rule makes a mockery of our
American tradition of free choice, re-
placing it with a bizarre program
where the Federal Government decides
what job you should seek and what
school you can attend. Let me walk
you through it.
Under this rule, the Obama adminis-
tration has proposed a plan that, num-
ber one, creates a matrix that exam-
ines the student loan debt to future in-
come of a prospective student; then, it
compares that ratio to the student
loan repayment rates of graduates of
the same program; and, number three,
and finally, it decides if the student
can have access to the loans they
would need to attend the school or pro-
gram of their choice.
So for those of us listening, watching
at home, what this means is, if you are
contemplating going to school so that
you can economically better yourself,
or because you otherwise want to en-
rich your life, you just can't go to the
college or school of your choosing if
you need a government loan.
Instead, a nameless, faceless bureauc-
racy using some bizarre arbitrary for-
mula gets to decide whether or not you
have chosen a field of study that will
pay enough to justify the investment,
in the mind of that particular bureau-
crat. Unbelievable.
The government and the Obama ad-
ministration are now micromanaging
this part of our lives, too. Talk about
central planning, Mr. Chairman.
To make matters worse, this new
program will disproportionately hurt
Hoosiers and other Americans who are
least able to do anything about it:
Working Americans who need new
training and new skills to move for-
ward in the workforce. This was what
this Congress should be about.
If thiS regulation becomes reality, it
will immediately prevent 400,000 people
from developing new skills to benefit
the workforce. By 2020, nearly 5.4 mil-
lion students will be denied the higher
education program of their choice.
In a global economy, we cannot com-
pete without an educated and flexible
workforce. This amendment will allow
Americans the choice they deserve and
the educational flexibility our Nation
needs. I urge a "yes" vote.
0 2030
Ms. WATERS. Mr. Chairman, I move
from California is recognized for 5 min-
utes.
Ms. WATERS. Mr. Chairman, I rise
today in strong opposition to the
Kline-Foxx-Hastings-McCarthy amend-
ment that would stop the Department
of Education's proposed gainful em-
ployment regulation. Proprietary col-
leges account for only 7 percent of the
higher education student population;
yet last year 44 percent of student loan
borrowers who defaulted within 2 years
of beginning their repayment were stu-
dents who had attended for-profit
schools.
Mr. Chairman, I know something
about these private postsecondary
schools. One could make the argument,
and you will hear, oh, not all of the
schools. Of course, not 100 percent of
the schools are ripoff schools, but a
huge majority of them are. I have expe-
rienced some of this firsthand.
While I was working with poor stu-
dents in South Los Angeles, we were
trying to get them into GED classes.
The recruiters would come along and
tell them that they could get them
into their schools, they could help
them to get Pen Grants, and they
could help them get a career, and, lo
and behold, they would sign up. You
would see them a few days later, some
were going to be dental assistants and
they had a little green jacket on and
they had a little box that they carried
to make it look as if they were car-
rying dental tools. But it was just a
matter of months later when you
would find sometimes the school was
out of business. They had been going to
school, there were no teachers, there
was no equipment.
They were ripoff schools. And I want
to tell you, they make a lot of money.
Take a look at this one school, Capella.
They earned $335 million in profits; 78
percent of that was government
money.
Now, my friends on the opposite side
of the aisle will have you believe they
want to save the government money.
They want to make sure that they do
everything to protect the government
from spending the taxpayers' money
unwisely. Something is wrong with
this picture when they take the floor
and argue for the continued ripoff of
our students and our taxpayer money
to these schools.
Let me tell you who some of them
are. Corinthian, bad reputation; Ever-
est, ITT, Westwood. And, guess what?
Kaplan University. Guess who owns
Kaplan? The Washington Post. Do you
think The Washington Post makes
most of its money from the newspaper?
You got another thought coming. Their
profits and their revenue for the most
part is coming from Kaplan University,
which has been found to have done all
kinds of things to get these students
in, charging them higher prices for
these classes. They are not getting
jobs, they don't get a career, and they
end up not only owing the government
money, but they are prevented from
having a decent quality of life because
now they can' t get a section 8, they
can't get another Pell Grant, and, you
know what? In many States they are
going after Social Security money and
retirement money.
This is the next big scandal in Amer-
ica. You think that the meltdown that
we just had and the foreclosures that
we are experiencing across this country
are bad. You wait until the investiga-
tions are done and the truth is tol d and
the amount of money is counted from
the ripoffs.
Now, I know that this is a powerful
lobby that I am working against. I un-
derstand that. They roam these Halls,
and they have plenty of resources, and
they put out plenty of materials. They
buy full-page ads. They are up on tele-
vision, the Joe Blow School of Com-
puter Learning that has no school. I
want to tell you, I understand how
tough this is.
But what I don't understand is how
they could be joined by people who
February 17, 2011 CONGRESSIONAL RECORD-HOUSE H1153
claim to care about the taxpayers'
money and claim that they are fighting
to reduce' government, when in fact
they are supporting the ripoff schools
that are increasing the amount of Pell
Grants that we give to schools, who
will not get any jobs or create any ca-
reers.
This is not right. We should not have
to suffer this kind of misrepresenta-
tion. Members of this House should be
in support of students who want to
learn. The worst thing that can happen
to students who drop out of school, to
students who haven' t made it, to all of
a sudden think that somehow they are
going to get a job and get into one of
these ripoff schools and get dis-
appointed time and time again.
I know what populations they are
targeting. I see them. They are tar-
geting the welfare mothers. They are
targeting gang-bangers. They are tar-
geting all kinds of people that they
know are going to have a difficult time
succeeding.
So you keep doing this, it is going to
catch up with you. I ask that this
amendment not be supported.
Mr. THOMPSON of Pennsylvania.
Mr. Chairman, I move to strike the last
word.
Mr. THOMPSON of Pennsylvania.
Mr. Chairman, the President has pro-
moted a policy to have 5 million new
college graduates by 2020, and I com-
mend the President for that goal. How-
ever, I have to st op and wonder, how
are we going to achieve that mission ii
the Department of Education is going
to put up roadblocks such as the pro-
posed rules for gainful employment?
In reality, career college also serves
many purposes for many different peo-
ple from all walks of life. This is not an
issue of black or white, rural or urban,
young or old, or Republican or Demo-
crat. This is an issue of access to op-
portunity.
I represent a very rural district in
Pennsylvania. Many of my constitu-
ents don't have access to a community
college, and they live a significant dis-
tance from any university. Many pro-
prietary schools have sprung up out of
necessity. Many st udents in Pennsyl-
vania choose these schools because of
their convenience. They realize that
career colleges offer course work of all
types and work to accommodate the
busy schedules that we all have. They
realize that life does not just stop for 4
years so that you can go to a school.
And they realize these institutions will
give them the skills they need to enter
the workforce and earn a decent living.
Mr. Chairman, I have concerns that
the Department of Education has
stepped way beyond its authority and
begun determination of an arbitrary
ruling on gainful empl oyment. I ask
my colleagues to support this bipar-
tisan amendment.
Mr. HASTINGS of Florida. Mr. Chair-
man, I move to strike the requisite
number of words.
Mr. HASTINGS of Florida. Mr. Chair-
man, I rise in support of this amend-
ment that will prohibit the use of funds
by the Department of Education for its
misguided gainful employment rule.
Perhaps it would be helpful for the
body and the public to know what this
gainful employment is that we are
talking about. Under the Higher Edu-
cation Act, proprietary colleges and
universities and career training pro-
grams are required to offer programs
that lead to gainful employment in a
legally recognized occupation in order
to participate in the Federal student
aid programs.
The term "gainful employment" has
been in the statute for over 40 years;
and during the most recent reauthor-
izat ion of the Higher Education Act,
there was absolutely no debate or dis-
cussion on a need to further define the
term.
Now, when this originated, several of
our colleagues on both sides of the
aisle, and I am deeply appreciative of
the chairman and my colleagues, in a
bipartisan fashion we went about our
business trying to understand just
what kind of proposed rule it is that
the Department is talking about and
ju.st how it is that it will impact the
overall public.
What this amendment would do is
prohibit the use of funds for implemen-
tation of the draft regulation that the
Department issued on October 29, 2010,
and will prohibit the Department from
promulgating or enforcing new regula-
tions regarding gainful employment.
Let me put a face on these schools, as
my colleagues that are opposed have
done.
Perhaps some of them have never
eaten at a restaurant where the person
that prepared the food went to a pro-
prietary institution. I have.
Perhaps none of them have had phys-
ical therapy where the person admin-
istering it graduated from a propri-
etary school. I have.
And, most importantly, I want this
body to understand that of the eight
people that had the last hands-on expe-
riences with my mother for 2 years, all
were nurses in two different hospitals
and at home, and all graduated from
proprietary schools.
0 2040
We all agree that both taxpayer
funds and students' best interests
should be protected in higher edu-
cation. But I can tell you this: rushing
into a blanket approach that will limit
student access to higher education and
fail to adequately address problem in-
stitutions is not the way to go.
You know what we did here in this
institution? What we did here for the
people that work with us, young people
that graduate from Ivy League schools,
historically black schools, all over this
place, we created a program that will
allow them to help pay off their stu-
dent loans. Some of us hire people at
what I would not call gainful employ-
ment that may have graduated from
institutions that I attended or that the
President attended.
I don' t understand why the Depart--
ment refuses to recognize job place-
ment, professional certification, pass-
ing rates, employer verification, or
anything else related in determining
an institution's effectiveness. If it's un-
reasonable amounts of student debt
that they' re trying to address, I agree
that that is a concern. Let's have a
frank discussion on student debt. But
it is not only the institutions that are
responsible. Students, lenders, policy-
makers, as well as institutions must be
part of this process and must be held
accountable.
This proposed rule is very broad and
its implementation so burdensome that
many schools will undoubtedly close.
And I don't buy into that fallacious ar-
gument that 50 percent of these people
don't graduate or don't go on to do
this, that, or the other. In this econ-
omy in the United States of America, a
whole lot of students are graduating
from a whole lot of schools and are not
getting jobs today. And many of these
schools that we're attacking, unreason-
ably, are places where I know, at least
in the congressional district that I'm
privileged to serve, that many of these
people have received jobs-and many of
them leave the institutions, like the
last two nurses that worked with my
mom that had a job when they left the
institution.
This may please some of my friends
in this body, and the Department of
Education, but what will happen to the
single mother looking to change ca-
reers who needs the flexibility of a pri-
vate sector college? What about the
first--generation college student who
needs the added support.
Mr. Chairman, I urge that we support
this amendment.
Mr. FLAKE. Mr. Chairman, I move to
strike the last word.
from Arizona is recognized for 5 min-
utes.
Mr. FLAKE. Mr. Chairman, I rise in
support of the amendment. If the De-
partment wants to issue a rule, do a
rule that actually targets the abuses
rather than takes on a segment of the
industry that may or may not be
complicit in the kind of allegations
that are there. This is overly broad.
Let's have them go back to the draw-
ing board and actually target abuses
that occur, not a segment of the indus-
try that's actually providing services.
Mr. DAVIS of illinois. Mr. Chairman,
I move to strike the last word.
Mr. DAVIS of illinois. Mr. Chairman,
I rise in strong opposition to the Kline
amendment. Although I know that ca-
reer colleges play an important role in
higher education, I cannot support this
amendment because the scope of the
prohibition is too broad and the timing
of this amendment prior to the release
of any final regulation preempts the
traditional regulatory process.
Together. the amendment's com-
prehensive ban on the Department's
ability to "implement, administer. or
enforce" any current, pending, or fu-
ture regulation of gainful employment
inappropriately and prematurely re-
stricts the responsibility of the admin-
istration to regulate institutions of
higher education.
In the many meetings I've bad with
career college stakeholders. each one
of them bas admitted that there are
bad actors. Despite this uniform rec-
ognition, this amendment would tie
the hands of the Department of Edu-
cation from any effort to encourage
these schools to improve their prac-
tices and protect their students.
I support career colleges, yet I am
resolute in my belief that the Federal
Government has the responsibility to
protect students and hold institutions
of higher education accountable-espe-
cially those that access public dollars.
I stand with over 50 civil rights groups,
Historically Black Colleges and Uni-
versities, and student groups who sup-
port strong gainful employment pro-
tections for students, including key
civil rights groups such as the NAACP,
the Leadership Conference on Civil and
Human Rights, and the Children's De-
fense Fund; the three HBCU advocacy
groups-NAFEO, the United Negro Col-
lege Fund, and the Thurgood Marshall;
and key education groups such as the
American Federation of Teachers, the
NEA, and the Council for Opportunity
in Education.
Let's be clear and make no mistake.
The Kline-Fox.x amendment is not
about protecting low-income minority
students. If that was the case. then
those concerns would have been ex-
pressed by not cutting Pell Grants for
over a million students by approxi-
mately $845 per student. If the goal was
truly to support low-income minority
students, the OR would not have cut
$200 million in institutional aid from
nonprofit HBCUs, predominantly black
colleges and universities, and Hispanic-
Serving In.stitutions. If the goal was
truly to help low-income minority stu-
dents, the OR would not ll.ave cut $44
million from GEAR UP and TRIO-pro-
grams that are designed to help first;-
generation students prepare and suc-
ceed in college.
The reality is that this amendment
completely stops the Department of
Education from any form of oversight
of career colleges that educate 10 per-
cent of higher education students, re-
ceive approximately 24 percent of Fed-
eral grants and loans, and account for
48 percent of loan defaults.
I say let's slow down the process.
Let's stop now. Let's give the Depart-
ment of Education an opportunity to
review its work and come back to us
with some regulations that take care
of the needs of students and not pro-
tect just tho institutions.
Mr. TOWNS. Mr. Chairman, I move
from New York is recognized for 5 min-
utes.
Mr. TOWNS. Mr. Chairman, I strong-
ly support the Kline-Foxx-McCartby-
Hastings amendment, which would pro-
hibit the use of funds by the Depart-
ment or Education for the implementa-
tion of the Gainful Employment Act. I
am concerned that if this rule is imple-
mented, it will apply an unnecessary
broad-brush approach to a complicated
situation. This rule, if implemented in
its proposed form, will effectively close
high-quality programs while leaving
programs of questionable value open.
So this is not the way to deal with this
issue.
We all know that a college education,
whenever possible, is one or the best
paths a student can take to secure em-
ployment in a time when our Nation's
unemployment rate is just under 10
percent. In some communities, it's dou-
ble that. Let's not close off a.ny mean-
ingful job training programs. The De-
partment should not forget that these
programs serve 2.8 million, and many
of them are economically disadvan-
taged minority students who will lose
access to the educational opportunities
that they cannot get elsewhere. These
students are nontraditional and need
the extra assistance offered by t hese
flexible programs.
Supporting this amendment is sup-
porting access and choice. Supporting
this amendment is supporting edu-
cational opportunities for minorities.
A "yes" vote is a vote for economically
disadvantaged students. Many of them
are the first in their families to attend
college. These students wish to have
the opportunity to attend a flexible
program that trains them to be the
best they can be.
0 2050
I urge my colleagues to understand
how important this is to be able to pro-
vide an opportunity for these young
people in many instances. one inci-
dent; you cannot draw national conclu-
sions because you know one student
that did not finish. You can pick the
finest university and the most pres-
tigious university in this country and
you can find examples. Let us be seri-
ous. We need to provide opportunities
for people to be able to have a better
quality of life.
On that note, I encourage my col-
leagues to vote "yes" on this amend-
ment.
Mr. ANDREWS. Mr. Chairman, I
move to strike the last word.
from New Jersey is recognized for 5
minutes.
(Mr. ANDREWS asked and was given
permission to revise and extend his re-
marks.)
Mr. ANDREWS. Mr. Chairman, I join
a strong coalition of Democrats and
Republicans in urging a "yes" vote on
the Kline-Hastings amendment. I do so
because I believe that every student
should be guaranteed the right of
knowing that he or she is going to get
a high quality education for every tui-
tion dollar they spend and because
every taxpayer should be guaranteed
that not one dime of Pell Grant or stu-
dent money goes to any school under
any ownership or management that
does not properly spend the public's
money. This is a goal that I believe is
shared universally by each speaker on
each side who has spoken here tonight.
Our difference is not over whether we
should guarantee students and tax-
payers high quality and gainfUl em-
ployment. Our difference is over how to
accomplish that.
Here is my concern about the rule
that bas been proposed thus far. It is
both under-inclusive and over-inclu-
sive. To understand that, consider two
schools. The first school successfully
places 50 percent of its graduates in the
job for which it's training people. So
let's say it's a job in medical records
technology and 50 percent of the stu-
dents from that school are placed suc-
cessfully. That school has a tuition
that generates a rate so that 7 percent
of the graduate's income goes to pay
back their student loan. The second
school successfully places 90 percent of
its graduates in the medical records
technology field, but its tuition gen-
erates a repayment rate of 10 percent.
So again the first school only places
half of its graduates in the job for
which it's training people and the sec-
ond school places 90 percent of its jobs
for which it's training people. Under
this rule, the first school survives and
the second school is thrown out of the
program. Let me say this again. The
school with the 50 percent placement
rate continues to get taxpayer dollars.
but the school with the 90 percent
placement rate doesn't. This doesn't
make any sense and it is the basis for
our bipartisan objection.
What should we do? If we're going to
measure gainful employment, let's
come up with a proposal that measures
gainful employment. Let's ask the
question that when students graduate
from a school. whether it's for-profit,
nonprofit or public, whether those stu-
dents in fact gain employment and
whether that employment raises their
income and, therefore, is gainful. Let's
measure what the law actually says.
Finally. I think there is the issue of
whom should make this decision. As
Chairman KLINE pointed out, as Mr.
HASTINGS pointed out, as others have,
the statutory phrase "gainful employ-
ment" has been with us for a very long
time. But this Congress bas never cho-
sen to define it. So the issue here is a
separation of powers issue. Who should
determine what gainful employment
means? Should it be an administrative
agency or should it be the duly elected
representatives of the people? I think
it should clearly be the duly elected
representatives of the people.
So I would urge my friends, both
Democrat and Republican, to vote yes
February 17, 2011 CONGRESSIONAL RECORD- HOUSE H1155
for a procedure that will correct this
rule, let us join together, Republicans
and Democrats, and do a bill, work on
legi slation that will give us the kind of
outcome that we should really have
here.
Now why are we doing this? We're
doing it so the person with three jobs
gets fair treatment here. You all know
her. She's the person who works 35 or
~ 0 hours a week on her feet, and that's
a. full-time job; she's raising children,
and that's a full-time job; and she' s
going to school , and that's a full-time
job. Let's not put the additional burden
of taking away or j eopar dizing the
quality school that she has chosen for
b.erself. Everyone in this Chamber, I
believe, supports high quality career
education. Instead of a rule that sub-
verts that principle, l et ' s write a bill
that advances that principle. Let's vote
"yes" for the Kline-Hastings amend-
ment.
Mr. HONDA. Mr. Chair, I rise against this
2mendment and to express my strong support
for the Department of Education's proposed
federal student aid funding rules for postsec-
:mdary education programs that prepare stu-
jents for gainful employment in a recognized
:>ccupation.
The program includes a foan repayment rate
measure to assess how effectively program
attendees repay the student loans they bor-
row; debt to earnings measures that assess
the relationship between the student loan debt
)f program completers and their earnings; and
a stringent performance threshold for each of
the three measures.
I strongly support these "Gainful Employ-
ment Rules" because they protect students
'rom fraud, which has adversely impacted the
minority student population.
These rules were a response to the Depart-
ment of Education's recent investigation find-
ings that some for-profit institutions were
promising students' job placement upon com-
pletion of their programs and not following
:hrough on their commitment. Consequently,
:>tudents who enrolled in these schools were
Jnable to pay off student loans because they
were never placed in the jobs they were prom-
ised and could not find employment. Accord-
ing to the Institute for College Access and
Success, the student default rate at for-profit
colleges is the highest at 25 percent in com-
parison to private non-profit schools at 7.6
percent, and public schools at 10.8 percent re-
:>pectively.
Not surprisingly, nearly one in five students
who attend for-profits default on their loans
within 3 years. Students seeking an education
are completely unaware of the dire long term
implications of loan default including the inabil-
ity to receive credit to rent an apartment; buy
a car or home; or receive future loans for
postsecondary education. Moreover, evidence
has shown that some programs tend to over-
charge students for an education that can be
acquired at a much lower cost at a private
non-profit or public institution.
Despite this increased federal assistance,
tuition at for-profit institutions continues to far
)utpace other schools. Attendance at a two-
:tear for-profit institution costs more than five
limes as much as a community college, forc-
ing students to take out more loans, including
1isky private loans. The percent of bachelor's
degree recipients from for-profit institutions
who carry debt in excess of $30,000 is more
than four times that of their peers at public in-
stitutions.
I am especially troubled by the fact that low-
income and minority students are increasingly
concentrated in for-profit institutions. Approxi-
mately one out of every four African-American,
Latino, and low-income students start their
post-secondary education at a for-profit institu-
tion. According to a study by the Education
Trust, for-profit institutions represent about 9
percent of all student enrollments, but 16 per-
cent of black students and 24 percent of Pel!
Grant recipients attend these schools. Four-
year, for-profit institutions have an average
graduation rate of 22 percent, while public in-
stitutions have a rate of 55 percent and private
institutions 65 percent. For black and Hispanic
students, the graduation rates are similarly low
at for-profits-16 percent and 28 percent, re-
spectively-far below the rates for such stu-
dents at public and non-profit colleges.
In the 2008-2009 school year, the federal
government invested $4.31 billion in grant aid
at for-profit institutions, quadruple what it had
invested just a decade eartier. With this level
of public investment, the Department of Edu-
cation has a fiduciary responsibility to make
sure that its investment is being administered
correctly and that the for-profits are delivering
on the commitment they make to their stu-
dents. The Department's "Gainful Employment
Rules" will accomplish these goals, and I sup-
port their adoption.
The Acting CHAIR. The question is
on the amendment offered by the gen-
t l eman from Minnesot a (Mr. KLINE).
The question was taken; and the Act-
ing Chair announced that the ayes ap-
peared to have i t .
Mr. KLINE. Mr. Chairman, I demand
At the d of the bill (before the short
title), inser the following:
SEC. ne of t he funds made available
by this Act m y be made available for any
pur pose to Pia ed Parenthood Federation
of America, Inc. r any of the following af-
filiat es of Planne arenthood Federation of
America, Inc.:
(1) Planned Paren ood Southeast in At-
lanta, Georgia.
( 2) Planned Parent ho of the Great North-
west in Seattle, Washing n.
( 3) Planned Parenthood izona in Phoe-
nix, Arizona.
(4) Pl anned Parenthood o Arkansas and
Eastern Oklahoma in Tulsa, 0 lahoma.
(5) Planned Parent hood of eater Mem-
phis Region in Memphis, Tenness e.
(6) Planned Parenthood Afiiliat s of Cali-
fornia in Sacrament o, California.
(7) Pl anned Parenthood Los Angele in Los
Angeles, California.
(8) Pl anned Parent hood Mar Monte San
Jose, California.
(9) Planned Parenthood of Orange & n
Bernardino Counties, Inc. in Orange, Cal
fornia..
(10) Planned Parenthood Pasadena and San
abriel Valley, Inc. in Pasadena, California.
(11) Planned Parenthood of the Pacific
S uthwest in San Diego, California.
) Planned Parenthood of Santa. Barbara,
Ve tura & San Luis Obispo Counties in
S ta Barbara, California.
(1 ) Planned Parenthood: Shasta-Diablo in
Con ord, California.
(14 Six Rivers Planned Parenthood in Eu-
reka, California.
(15) Planned Parenthood of the Rocky
Moun s in Denver, Colorado.
(16) lanned Parenthood of Southern New
Engla.n . Inc. in New Haven, Connecticut.
(17) anned Parenthood of Delaware in
Wilmin on, Delaware.
(18) PI nned Parenthood of Metropolitan
Washing n, D.C., Inc. in Washington. Dis-
trict of c umbia.
(19) Flor da Association of Planned Parent-
hood Affili tes in Sarasota, Florida.
(20) Pl ed Parenthood of Collier County
in Naples, orida.
(21) PI d Parenthood of Greater Or-
lando, Inc. i Orlando, Florida.
(22) Planne Parenthood of North Florida
in Jackson vii , Florida.
(23) Planned Parenthood of South Florida
and the Treas re Coast, Inc. in West Palm
Beach, Florida.
(24) Planned arenthood of Southwest and
Central Florida, c. in Sarasota, Florida.
(25) Planned P renthood of Hawaii in Hon-
olulu, Hawaii.
(26) Planned Pa enthood of Greater Wash-
ington and North Idaho in Yakima, Wash-
ington.
(27) Planned Par thood of Illinois in Chi-
cago, illinois.
(28) Planned Pare thood of the St. Louis
Region in St. Louis, issourl.
(29) Planned Paren ood of Indiana, Inc. in
Indianapolis, Indiana.
(30) Iowa Planned Parenthood Affiliate
League in Des Moines, owa.
(31) Planned Paren od of East Central
Iowa in Cedar Rapids, I a.
(32) Planned Parentho d of the Heartland
in Des Moines, Iowa..
(33) Planned Parenthoo of Southeast Iowa
in Burlington, Iowa.
(34) Planned Parentho
Mid-Missouri in Overland
(35) Planned Parenthood
in Louisville, Kentucky.
(36) Planned Parenthood
Region in Cincinnati, Ohio.
(37) Planned Parenthood G
Houston, Texas.
(38) Planned Parenthood of orthern New
England in Williston, Vermont.
(39) Planned Parenthood of aryland, Inc.
in Baltimore, Maryland.
(40) Planned Parenthood Leag e of Massa-
chusetts in Boston, Massachuset .
(41) Planned Parenthood A iliates of
Michigan in Lansing, Michigan.
(42) Planned Parenthood of
Northern Michigan in Grand Ra.pi
gan.
(43) Planned Parenthood Mid
Michigan in Ann Arbor, Michigan.
(44) Planned Parenthood of South
Michigan in Kalamazoo, Michigan.
(45) Planned Parenthood of esota.,
Nort h Dakota, South Dakota in St. Paul ,
Minnesota.
(46) Planned Parenthood of Southwes Mis-
sowi in St. Louis, Missouri.
(47) Tri-Rivers Planned Parenthoo
Rolla, Missouri.
(48) Planned Parenthood of Montana,
in Billings, Montana.
(49) Planned Parenthood of the Heart!
in Omaha., Nebraska.
(50) Planned Parenthood Affiliates of Ne
Jersey in Trenton, New Jersey.
McFadden, Elizabeth
From:
Sent:
To:
Cc:
Subject:
Attachments:
FYI
Yuan, Georgia
Wednesday, April 21 , 201 o9:50AM
Jenkins, Harold; Finley, Steve; Shireman, Bob; Rose, Charlie; Bergeron, David; Madzelan,
Dan
McFadden, Elizabeth; Rogers, Margot; Kanter, Martha
Report on Gainful in Inside Higher Ed today
2010-04-21 Inside Higher Ed.doc
4
ht tp://www .insiddi 1ghered.com/new s/201 0/04/21/gainfui#Comments
Going Ahead With Gainful Employment
April 21, 2010
WASHINGTON-- A long recession and a wavering job market have brought for-profit higher education institutions
into the public eye as never before. Big advertising budgets have given them name recognition. Dramatic enrollment
growth (fueled by increasing amounts of federal fi nancial aid) and assurances to students that a degree or certificate
is the path to a comfortable job in a specific field have brought them scrutiny.
Many newspapers. websites and TV networks have told the tale of programs at for-profit institutions that don't
prepare students for the jobs they've been all but promised - and plunge them into debt in the process. While the
anecdotes are often true, they're only part of the story; plenty of for-profit colleges (the institutions themselves prefer
the term "private sector" or "market funded") do prepare students for good jobs and don't sink them in a pool of post-
graduation debt.
Title IV of the Higher Education Act of 1965 requires all for-profit offerings other than those clearly designated as
"liberal arts," and non-degree vocational programs at nonprofit institutions, to show that they prepare students for
"gainful employment in a recognized occupation." If they don't, they' re not supposed to be eligible for federal financial
aid dollars.
No one, the U.S. Department of Education has contended, seems to have a satisfactory way of determining which
programs meet that standard. "It's illuminating for us that when we ask institutions how they're complying with this
current law, we have not received adequate answers," says Bob Shireman, deputy undersecretary of education. "And
this is the law."
Through ..rr:l!1ess :;f neqotiattd..I!l!!LDldking that began last year after passage of the Higher Education Opportunity
Act in 2008, the department has sought to develop a formulaic solution to the dilemma, in the form of regulations that
define "gainful employment" using data on incomes and debt loads, as well as completion, job placement and loan
repayment rates.
In essence, this is a crude mechanism to assess the quaiity and value of vocational programs. The "good'' programs
that help students get jobs without saddling them with debt could continue to exist and deliver Pell Grants and
subsidized loans to their students. The "bad' programs-- the ones found to lead graduates to jobs they could've
gotten without the educational experience or that don't pay well enough for borrowers to repay their loans-- would be
identified and put under closer scrutiny.
Representatives of the for-profit sector have aggressively fought such an approach, but most analyses so far suggest
that the proposed regulations are unlikely to be a sector killer. The department has acknowledged the need for
nonprofit and for-profit vocational programs, and has estimated that just 6 to 8 percent of programs that qualify for
Title IV under gainful employment would potentially need to change under the proposed rules.
In research that's been circulated but not yet publicly released. the Career College Association, the trade group that
represents for-profit colleges and universities, has less-conservatively estimated that close to 20 percent of career
college programs and a third of the colleges' students would be affected. In what the department would consider a
positive outcome, some of the "bad" programs would shut down, while others would lower prices or work to improve
their completion and job placement rates.
Though some observers have suggested that rewriting f ederal financial aid policy would be a better way to address
these problems, the Obama administration's Education Department is seizing on the opportunity it has now, with
Democratic majorities in both houses of Congress, to effect change. The revision of the gainful employment rules
could be a once-in-an-administration (if not once-in-a-career) chance for Shireman - who has advocated for reform
and ncreased protections for borrowers since serving in the Cl inton White House - and his staff to tackle what they
consider to be a mi.ljor source of student debt.
Shireman himself does not put it that way. 'We have to do everything we can in the regulatory process, as well as in
the legislative process. to protect taxpayers and students." he says. "We have these regulatory opportunities so we
have to take them."
He does acknowledge that he is unwilling to wait for the next renewal of the Higher Education Act, in 2013, when
lawmakers would be most likely to make major changes in the law. "We' re not going to wait for a reauthorization to
ensure that federal funds are being used appropriately."
The department sent a version of the regulations to the White House Office of Management and Budget this month.
and, though it's still being revised, a final draft will be published by mid-June. Over the summer, there will be one last
chance for public input and, by Nov. 1, the regulations wi ll be printed in the Federal Register, to go into effect on July
1' 201 1.
Defining Gainful Employment
The Education Department was slow to formulate a proposed definition of gainful employment. In November and
December, during the first two week-long rule making sessions, the discussion among negotiators focused on
whether the department had the statutory authority to establish a formulaic definition of gainful employment.
Many negotiators saw the department's suggestions - particularly one that sought to determine the value a credential
would add to a recent graduate's earning power, and to use that to determine an acceptable maximum tuition -- as
price controls. The most vocal opponent was the lone negotiator representing for-profit institutions, Elaine Neely,
senior vice president of regulatory affairs at Kaplan Higher Education. In December. Neely saic.!..Ehe w<-1s
"flabbergasted that [the department] would impose price controls when clearly Congress itself has not been able to
come to the decision to do that on higher education.'' By warning of a "slippery slope" toward price controls
throughout higher education, Neely was able to get many representatives of nonprofit institutions on board in
opposition to the proposal.
An idea that took up muct1 less of the panel's time was the department's proposal to determine whether the starting
salary in the field for which a program prepared students was sufficient to pay the average annual debt obligation of
the program's graduates. If the average debt load for a program's graduates was $9,000 on a 10-year loan with a 6.5
interest rate, students would have loan obligations of $1,250. With a debt-service-to-income ratio of 5
percent, the starting income in that field would have to be at least $25,000 to be considered "gainful employment."
By mid-January, as the department and negotiators prepared for the third and fi nal round of rule making, this debt-
service ratio had become the department's preferred regulatory path. Based on a partial reading of a 2006 paper by
Sandy Baum, of the College Board, and Saul Schwartz, of Ontario's Carleton University, the department's ratio
became 8 percent. (While Baum and Schwartz's paper discusses 8 percent as a generally accepted standard, most
likely derived from mortgage underwriting standards, the authors suggest that a ratio as high as 18 percent could be
appropriate for sin9le people earning $150,000 annually.)
U r J,:r d.illJ: COIJQietH cfgfi nit!on .. by :he d(QJrtii l8i1l,
vocational programs would be eligible for Title IV funds if their graduates' median annual payments on a 10-year loan
were no more than 8 percent of the Bureau of Labor Statistics 25th percentile of annual earnings for people in
occupations for which a given program prepared students.
Programs that exceed 8 percent could still be eligible for Title IV funds by producing what the department considers
yood outcomes: by showing that its graduates' annual earnings are higher than the BLS's 25th percentile and keep
the debt-income ratio below 8 percent; by documenting that students have at least a 75 percent repayment rate on
federal loans; or by demonstrating a program completion rate of at least 70 percent and an in-field employment rate
of at least 70 percent.
In the third round of negotiations, c.ullt(;I.Liuus a :,i Terry W. Hartle, senior vice
p:esi<ient for government and public at the American Council on Education, said he worried about cost, privacy
and the potential for "unintended consequences." A former Bush administration Education Department official, Todd
Jones, president and general counsel of the Association of Independent Colleges and Universities of Ohio, said he
saw the proposal as ripe for lawsuits.
Department u.ffiYI!iin the enti(fci.X, though they were open to constructive
feedback. "We put things on the table partly because we think they're a good idea and partly to get input," Shireman
says.
The department started with its most extreme- but politically viable idea -and was ready to negotiate, but many
negotiators seemed too intent on persuading officials to obliterate the proposals to make good, constructive
suggestions.
And, since the third round of negotiations ended in late January, t'}e d--,>artment has ,,,Jn!lnued 10 rlisc ,he
!dfCposals .;;th znd 10 qat feedback. "We recognize that some people felt- even we felt - that there was
not enough discussion at negotiated rule making for whatever reasons." Shireman says. "So we continue to hear from
associations and i'nstilutions, getting input from them that continues to be helpful, to continue to hear what
suggestions they have about what the term gainful employment should mean."
Who Would Be Hit
In broad terms, the Department of Education's goal is to determine which programs really are preparing students for
gainful employment and not sinking graduates into chasms of debt.
"There's a tremendous number of students graduating with incredibly high levels of debt," says Rich Williams, higher
education associate at the U.S. Public Interest Research Group, who represented students on the negotiated rule
making panel. "And in some cases they're unable to enter the fields they studied at the levels they thought they'd be
qualifi ed for."
Pauline Abernathy, vice president of the Institute for College Access and Success, anticipates the regulations v.nll
lead to programs that are currently leaving students in terrible debt either having to change the quality of their
programs or their cost stn1cture." Before Shireman joined the Obama administration, he was TICAS's president.
But it's unclear whether the department's proposed rules would really weed out those programs and would do so in a
way that kept all good programs up and running. "I don't think you can draw a line that separates the wheat from the
chaff perfectly," says Mark Kantrowitz, publisher of Finaid.org. "The choices are tough-- you either throw out the baby
with the bath water or, because you want to keep the baby no matter what, you're going to get some bathwater too. I
think that's a reality that everyone needs to come to terms with.''
When applied to the existi ng landscape of vocational programs, the department's approach would seem to favor
programs at public institutions over private ones {either for-profit or nonprofit). those that required fewer credits
earned over more credits, and those in higher-paid fields like nursing and information technology over lower-paid
careers in the arts.
Because the rules would apply only to certificate programs at community colleges. state universities and private,
nonprofit institutions, they're less' likely to force any real change at nonprofits. Tuition on these programs at public
institutions is so low that it's rare for students to take out loans. If they do, they're likely to be small. Even at
private non profits. where tuition is likely to be of a similar magnitude as at for-profit colleges, the fact that the rules
apply only to non-degree programs wi ll keep many programs out of regulatory reach.
Sh1reman and other department officials have insisted in many rnstances that the department IS not out to get" for-
profit colleges and that it is not the department's intention to regulate the sector out of existence. "We have made it
quite clear that we are interested in improvement and outcomes all across the spectrum. all across the sectors: he

Nonetheless, it seems clear that the gainful employment regulations will force the most change on for-profit
institutions, which will have to choose between lowering tuition, improving student outcomes or shutting down
programs that don't align with the rules. In the short run, at least, all of these options would hurt the institutions'
bottom lines.
Even if some programs end, says Abernathy, of T!CAS, "there will be plenty of other for-profit programs that will be
very eager and capable of being able to meet that need, but that do so in a way where students and taxpayers are
better off."
For a field in which a for-profit institution offers multiple certificate and degree options. the ones that cost the least--
and often require the fewest credits - are the ones least likely to be regulated out of existence. If an institution offered
certificates, associate degrees and bachelor's degrees in, for example, culinary arts, that allied to the sameLabor
Department-classified jobs and the same Bureau of Labor Statistics-reported 25th percentile of income, it's logical
that the 8 percent rule would make the preferred outcome a certificate and not a bachelors degree.
Kantrowitz, of Finaid.org, says that though the department's existing proposals "really didn't consider the impact on
bachelor's and graduate degrees," he thinks the next draft of regulations will because the department hasn't shown
any indication of wanting to discourage students from pursuing longer programs. "Take an associate's degree versus
a bachelor's degree. Students are in school twice as long, paying twice the tuition, but they don't have twice the
income."
Though programs would have the option of collecting their own salary data rather than relying on the BLS numbers,
institutions often find it difficult to collect this information. As of now, observers say, few institutions have a
comprehensive view of their graduates' incomes.
Kantrowitz and others have suggested that the department use different labor data - in his own calculations,
Kantrowitz used federal Census data, which details age group and educational attainment but not field of employment
- but the ideal data set does not exist.
Apollo Group, which owns the University of Phoenix and other institutions, said in a March 30 earnings call that it has
begun the process of analyzing its programs. But. "given the number and range of disciplines offered by our
universities as well as the uncertainty regarding the implementation process of the draft proposal, our analysis is both
extensive and complex:
In mid-March, analysts at Morgan Stanley said they thought that Education Management Corp. (which runs the Art
Institutes and Argosy University, among others) and ITI Educational Services would need to undergo the most
w.despread change to meet the regulations because of high tuition rates and, at Education Management, an
enrollment that leans heavily toward low-paying arts fields.
Two companies that would have very few endangered programs, according to Morgan Stanley: American Public
Education, Inc .. which focuses on serving members of the military and public servants. who are less likely to take out
student loans; and Capella Education Company, whose programs have very low loan default rates and would be able
to qualify for Tille IV funds under one of the alternative definitions of gainful employment.
W. Thorn. Capella's vice president of government affairs and general counsel , agrees that his company
would probably have to rnake few changes to abide by the gai nful employment regulation. "Capella is viewed by folks
within the department as a high quality institution: he says. 'We have a degree of comfort that however this plays
out. Capella would be fine and Capella would be in good shape."
And yet. until the final regulations go into place and the institution can collect and calculate all the appropriate data,
Capella can't be sure that it's out of the woods. "There are so many moving parts," Thorn says. 'It's premature to
engage in speculation on how this is going to play out . at Capella on a program-by-program basis.
A leader at another for-profit institution with low cohort default rates said he also thought his programs would meet at
least one of the gainful employment rules, but still worried that they might not. Insufficient data and a still-unclear
sense of the precise regulations the department will decide upon has left him feeling a bit uneasy about the
outcomes.
The Feedback
At every hint that the Department of Education is backing down from proposed regulations that would force some
programs offered at for-profit colleges to lower their prices, improve their outcomes or shut down. Wall Street analysts
and the for-profit institutions breathe a sigh of relief.
When Secretary of Education Arne Duncan testified before the House of Representatives' Education and Labor
Committee on March 3, and was questioned on the gainful employment regulations, his comments that the
department was "by no means wedded to any one direction" and "[didn't] want to be overly heavy-handed" were
perceived by for-profit boosters as signs that the department was open to scaling back the regulations.
Before and since, the Career College Association and lobbyists for for-profit institutions have pounded the halls of
Congress trying to get members to put pressure on the department. Some members of the Congressional Black
Caucus sent a letter to Duncan charging that the rules are discriminatory because for-profit institutions
disproportionately serve minority students. A bipartisan group of 18 House members wrote to Duncan asking that he
pull the plug on the department's approach altogether.
Last week, w h ~ n a re:)ort trom ... :redlt_Sclisse cited scmcone "c!ose" to the Office of Management and Budget as
saying that the department had decided to seemingly soften one of the alternative methods of qualifying for Title IV,
higher education stocks soared as the rumor spread. The source told the bank that the option to demonstrate a
program completion rate of at least 70 percent and an in-field employment rate of at least 70 percent had become a
50 percent completion rate and a 70 percent employment rate.
Though it is one of the possibilities the department is considering, the switch to a 50 percent completion rate is not
final. Officials submitted a draft to the OMB to begin the process leading to the publication of rules and the pubiic
comment process, but are said to be continuing to analyze data and listen to feedback.
The for-profit institutions tout these small bits o ~ news and others as indications that the department may be backing
away from its tough-line approach, but it is unclear whether any perceived motion on the department's part will
actually materialize as dramatic changes to the next draft of regulations.
Teddy Downey, of Washington Research Group, says he doubts the department would take any steps that would
dramatically lessen the reach of the regulations. In a e-mail message last week after the. Credit Suisse rumor
circulated, he said he anticipates "a very low chance that this change will amount to a truly significant loophole."
In an interview, he went further. "I don't think the department would do anything it doesn't think will have the desired
effect. I thi nk they have the data to support wllatever they choose to do.
Kantrowitz, of Finaid.org, is skeptical of whether the department has the data, but he a9rees that the department isn't
backing clown on gainful employment. "They're not going to do anything that doesn't have teeth in it," he says. "It may
just be some kind of educated guess. but it's going to have teeth."
Comments on GD t1 !\head With Gainful Employment
Schools do not give students their diplomas
Posted by LL . Concemed taxypayer on April 21, 2010 at 9:00am EDT
These schools are a waste of taxpayer dollars! Schools like these are not giving students their
diplomas. It is ridiculous and I applaud the Dept of Ed for finally taking a stand to regulate these insti tuti ons.
This is another example of private profits, public loss.
Unintended consequences
Posted by .Concerned Educator Qn April 21. 2010 at 9:30am EDT
The proposed regulations will decrease the likelihood that low-income. minority and difficult-to-serve
students wi ll encounter general education coursework. (Accredited degree programs must have at least 33%
gen ed coursework. Certificate programs have no such requirement.) Is that a desirable outcome?
Does the Department intend to engage in social engineering. whereby the less well-to-do cannot pursue
careers in the arts? Selective institutions offer a limited number of seats. At least some passionate young
artists who lack the support and specialized knowledge required to attain one of those seats will be left out. I
can think of few outcomes more depressing than eliminating support for young artists. Is starti ng salary the
most important measurement of success in artistic fields?
At my for-profit college, we struggle mightily to help students who have been previously unsuccessful in
educational endeavors. It's difficult work, and not everyone makes it, but for the ones who do it's very
satisfying on graduation day- to us, but apparently not to the Department. The proposed regulations
devalue the work of those of us who take on the tough cases.
I have a dream of opening a high-quality institution of higher education in the inner city. The proposed
regulations make unacceptably risky. Is that what we want? People say that community colleges already do
that. In my state the graduation rate at community colleges is 11%, up from 9% last year. Isn't it cynical to
suggest that students should simply accept that?
Some of our programs result in careers that don't yield high salaries until a few years after graduation. Do
we really want to get rid of those programs?
Few baccalaureate degree programs at non-profi t institutions would meet the 8% standard. Why is that okay
for those graduates to have more debt but not for ours?
What is this really about?
Posted by NG on Apri l 21, 2010 at 9:30am EDT
o For profits have adapted and quickly changed majors/programs that are deemed to provide gainful
employement.
These schools( using the term loosely}do a better job of providing trai ni ng to their communities then most
community colleges.
They don't have the heavy burden of unions and byrocracy hence they're flexible and can change their
programs they offer quickly to meet demand.
Because of the aging US population and its move away from manufacturing most ofthe new programs are
now in Healthcare. There is a shortage of heal thcare professionals and these guys are filling a need by
providing a product thats needed in the marketplace today.
This intiative will c!o nothing to change the landscape of Higher Eel.
McFadden, Elizabeth
From:
Sent:
To:
Kaczmarek, Tina [tkaczmarek@edmc.edu]
Monday, May 17, 2010 9:00AM
McFadden, Elizabeth
Cc: Guida, Anthony
Subject:
Attachments:
FW: EDMC's Meeting with OMB/OIRA Regarding Gainful Employment
AJG letter to Mar 5 16 10 r.pdf
Please see the attached letter, sent to you on behalf of Tony Guida.

Executive Assistant to
Anthony J. Guida Jr.
Senior Vice President,
Strategic Development & Regulatory Affairs
Education Management Corporation
210 Sixth Avenue, Suite 3300
Pittsburgh, PA 15222
Tel: 412-995-7818 Fax: 412-995-7666
From: Guida, Anthony
Sent: Sunday, May 16, 2010 10:14 AM
To: 'smar@omb.eop.gov'
Cc: 'Georgia Yuan (georgia.yuan@ed.gov)'; 'ahunt@omb.eop.gov'; McKernan, John
Subject: EDMC's Meeting with OMB/OIRA Regarding Gainful Employment
Sharon,
As a follow up to our meeting this past Friday, attached is a letter to you summarizing our position. Attached to the
letter, per your request, are electronic copies of the documents we referenced at our meeting. I was unable to locate
Elizabeth McFadden' s email address over the weekend and will forward her copy on Monday.
Thank you for your time and attention to this matter.
Tony Guida
SVP, Strategic Development & Regulatory Affairs
o: 412.995.7657
c: 412.901.4037
f: 412.995.7314
aguida@edmc.edu
CONFIDENTIALITY N OTICE: This email and any files transmitted with it are confidential and intended
solely for the use of the individual or entity to which they are addressed. If you are not the intended recipient,
you may not review, copy or distribute this message. If you have recei ved this email in error, pl ease notify the
sender immediately and delete the original message. Neither the sender nor the company for which he or she
2
E D l\l( _ _:r
Educarion t\Ln1agt: mcn1 Corpnrariou
Senior &csidcn!, _
Strategic Developmem aud Regu Ia tory A !'fairs
VIA Emai!
May 16, 2010
Sharon M. Mar, Policy Analyst
Executive Office of the President
Office of Management and Budget
Office of Information and Regulatory Affairs
New Executive Office Building
1735 17th Street, NW
Washington, D.C. 20503
Re: Proposed Gainful Employment Rule
Dear Ms. Mar:
Thank you again for spending time with Governor McKernan and me to discuss the
Department of Education's ("'ED") proposed rule on gainful employment this past Friday.
Hopefully our participation in this vetting process will be helpful to the Office of
Information and Regulatory Affairs (OIRA) as it exercises its gate keeper function
between ED and the issuance of t he proposed "gainful employment" rule.
As I outlined on Friday, we urge OIRA to refer the "gainful employment'' rule back to ED
for failure to meet, inter alia, all of the following regulatory principles and policies set forth
in Executive Order 12866 (referred to herein as "EO"):
The rule is not "consistent with applicable law," as outlined in detail in the legal
memorandum authored by the law firm Wilmer Hale that 11as been provided
previously to OIRA. EO. 2(b).
The rule is not consistent with the President's degree attainment goal and it
actually is biased against degree and advanced degree programs. EO, 2(b).
ED failed to "identify the problem that it intends to address . . . as well as assess
the significance of the problem," the umessy spreadsheet" that anafyzed only non
degree proprietary school programs notwithstanding. EO, 1(b)(1) .
ED did not "tailor its regulations to impose the least burden on society." as
evidenced, among other ways, by the significant impact the ru!e will have on
minorities and women and the significant unfunded economic burden that the rule
will impose on states as hundreds of thousands of students and potential
students per year will be forced to shift their enrollment from privately funded
institutions to public institutions. EO, 1 (b)(11 ).
ED failed to provide the detailed information and analysis required for this
''significant regulatory action." As we discussed. this requirement is triggered
because the economic impact of the proposed regulation is in the billions of
1h111 Umlds C.tr<'ers
210 Sixth 1\ 3:.'1'<1 Floor l'iushurgh. 1'.1\ 15:!21-2hfl:l
'112-995-71)57 Fax: 411-995-73 II .::d!l!di!o!.!...:Jl_[l.,_.:_J 1
Sharon M. Mar
May 16, 2010
Page2
dollars and far exceeds the $100 million threshold. In addition to the significant
economic impact identified by Professor John Guryan in his letter dated May 6,
2010 to Deputy Director Neyland, the net increase in federal , state and local
direct tax appropriations per student ($4,689) to fund the migration of more than
360,000 students per year from privately funded institutions to publicly funded
institutions will have an economic impact of more than $1.5 billion (excluding
required capital investments necessary to increase capacity). EO, 3(f) ,
6(a)(1 }(C).
Attached are electronic copies of the following documents that were presented at our
meeting:
Letler dated March 18, 2010 from tile National Black Chamber (representing
95,000 black owned businesses) urging elimination of the debt-service-to-income
test in the proposed rule
Letter dated May 10, 2010 from the League of United Latin American Citizens
(representing more than 115,000 members) urging reconsideration of the
proposed rule
Resolution adopted on April 10, 2010 by the National Hispanic Caucus of State
Legislators (representing over 300 elected Hispanic State legislators) urging
careful study of the impact of the proposed rule on Hispanic, poor and other
minority students
Letter dated March 13, 2010 from me to Robert Shireman, Deputy
Undersecretary of Education, expressing the concerns and proposed solutions
we discussed on Friday
,. Letters dated April12 and April19, 2010, f rom Kaplan, Inc., OeVry, Inc. and
EDMC discussing concerns with the proposed rule and proposed solutions.
Slide entitled 'Tuition at the Art Institutes is lower than many not-for-profit
institutions"
Slide entitled "Real World Example: 8% Debt- Payment-To-Income Ratio is
Unrealistic" .
Slide entitled "Direct Tax Appropriations Received per Fall Enrollment from Local,
State and Federal Sources" (referred to at our meeting)
If you should requi re any further information or documentation, do not hesitate to contact
me.
Encl.
cc: Alex Hunt, OMB/OIRA
Georgia Yuan, ED - OGC
Elizabeth McFadden, ED - OGC
Jock McKernan, EOMC
March 18,2010
The Honorable Arne Duncan
U.S. Department of Education
400 Maryland Avenue, SW
Washington, DC 20202-0008
Dear Secretary Duncan.
Currently, the Department of Education is proposing a rule that would severely limit higher education
opportunities lor thousands of Americans. This proposed Ernployrnenf' provision would make
certain programs ineligible for Title IV financial aid. effectively eliminating the oppor1unity for lower-income
students to attend these degree programs. Perhaps a better term for the proposed rule is the 'Mandated
Income Loan Test,'' since eligibility for Title IV aid would be determined by a program's failure to meet a
single debt service-to-income ratio test. rather than the programs success or student satisfaction.
As currently written, the Mandated Income Loan Test (aka Gainful Employment) would disproportionally
harm low-income and minority populations by discriminating against students who must borrow the needed
tuition to attend college. Without financial aid. access to higher education will be limited for thousands of
students. Ar present, Black students make up 18% of enrollees in for-profit colleges and universities-
many of them would find it impossible to pursue higher education without this financial aid.
The National Black Chamber of Commerce works to empower Black communities and is made up oi
95,000 Black owned businesses. With 190 afti liated chapters intemationally. we v10rk to sustain Black
communities through opportunity.
By moving forward with the proposed Mandated Income Loan Test, the Department of Education is taking
higher education opportunities away from Black siudents and other minorities, by withholding financial aid
for the programs they choose. We urge you to eliminate the debt serviceio-incorne test from the proposed
rule in order to maintain choice and opportunity for Black students across the country.
Respectfully,
Harry C. Alford
President & CEO
National Black Chamber of Commerce
Fo1 more intormaliOn, please call NBCG at 12021 4666888 or t;Sit Tt:e National i3/ack Chamber of Commerce
is dedicated to econom;cal!y ampowerin9 and svs1a111ing African Ama1icen commiinit/es rtuough entrepreneursfJip and cap1tal/stic
activity wirhin ille UniterJ States and vm mieractio:J witli the Bla<:l< Diasp:;ra.
Nat ional Blac!< Chamber of Commerce
1350 Connecticut Avenue NW Suite 405, Washington DC 20036
202-466-6888 202-466-4918fax
Plll:SSOENT
ltf\(d 1\nsrdi$
I:NfX:l'IJI'f: Olllf.l1'011
Brl"nl A. Wilh'-s
.\111'10:'1.\1. Ol'l'll'f. RS
fnllfl\"'(ilitll' ;:t, ,...,fktll
RO)(<r RI.ll'ba
Trt.t. ...U.rt:J'
1. l 1urti.attt
Y.,u\IJ
Litll" .\1t>dt-l !\la.rtinFJ:
\'i"'rtu
Gotlall<-
\' t' fhr \\ IHN
ICcortn t!tf.eJt,,:a
I 1' fur Yrou! h
llith(llt
ltUIIg At\Uit.'1
c;. t nl'\:u . .-
VP r.w f::l' ...

' !'
T>oln Polilit.
\ i' fltt lheil<t
hrtltU(" Q11iiinu,..s 1-:tut.t\
Vli lr $oudi.-;L'"1
Syl,ia L.
' 1' (;lf
snn:
t\na \'aJrzaurh; f..,,i r:uht

.\Jcj..m-tlru
\..'t:xl\ .. :.t..
. \rt.;1ul in::tl)l:l\'ill!l..Ut\' ..UW
l',llifr.rnM
Tmu Uuran

,\II" P;na
Hl ..Hkt
Jn:o.t' /\.
r:4ifl;t
.\r1 lti'darcl

t '::rolltl a
iiiJli'!Ji.'

i tl ii,tJI!l

li r'\\,f
.. G"-"'it,
..

\h.:r)ol.HtLf

r' ..
''"'' \t:,h .

\r'J.tl a
\' :ltl <' l :'t)lfllt
.l:\.W1: Hh1uJ
t;,.,m:w 1'rJH
i' nu,,h.un .
flh,'oh .... Jch ...r.;
!'.; 1rh1 t(j,.,
.h,,:. HI
' ! .. t ..
Hhv..;.t ,it.- 0.-srk"t
:.ttt
!-t.amud M1
\ 1;-ciu;.
HMryl 1), \lijrin
L..CftQ ... J1f
League of United Latin American Oitizens
May I 0. 20 l 0
Secretary Arne Duncan
Cniit:d States Department of Education
400 Marylnnd Ave, SW.
Wasbingion, D.C. 20202
Dear Secretary Dunco.u.1:
As national executive director of the League of United L-atin Arn.:rican Ci tizens, l am wri1ing on behalf of
our org:mi7..ation. whose mission is to advance the economic condition. educational allainm..:nt, polftical
influence, hous.i ng. health and civil rights of the Hispanic population of the United States. We recognize
1hc need for higher education ia todays society and want to ensure !hal our youth are nol denied
opportunities.
The NmionaJ Hispanic Caucus of State Legislators recently passed a resolution calling on the Dcpan.rnent
ot' Edul.'atiiJil to reconsider the proposed .. Gainful Employment" ru le that "vould deny access to student
loan financi ng I(H students who altend some private-sector colleges and institutions. We supporr the
rcsolutivn. which points out that:
Private-sector colleges have a higher of minority student::; th;m do ulher scC!l>rs.
Privale-sec:tor instit1ni ons ofter a broad range of academic progrmns ..:cmccnirated in the creat ive and
applied arts. beha,ioral sciences, educ:ttion, he:.tlili sciences anu business fidds.
A "Gainful Employmem" rul.: may disproporlionatcly l1arm low-income and minority populations by
against students who must burrow the needed tuit ion to allcml college.
Students choost' colleges and instit11tions based on a number of factors, im;luding field of study, lo..:ation,
nexibility in class hours and reput ation among companies thai hire gradua1es. To exclttde students ,, ho
chose a college and inMitution from eligibility t(1r Tit le IV fi nanci nl aid. simply because of the in::>tjtut iJn 'li
ownership structun:, lhmies these student s t heir freedcJm of choice .
We join with (he National Hispank Caucus of State l cgisl:!tors in urging you to mnrc rar;."full y study the
impad of this pmposed rule. particularly on llisp(lnic and other minori1y and low-income and
..:hvo.>c: instead wall ow students to bavc: fair and .:qual access 10 hight:r educ:tlion in order to meet their
aspiral itms. I am writ ing to urge you to reconsider the propo,;ed "Gainful Emplvyrn.:nt" .rult: that
"m:ld JisprnponlOna!dy rninori ly and low-income studt:uls lu funher their cdut:<!liPn.
Thunk for your cllnsilh:ralion,
Brent Wil kes
:\ii tional Executive D1rc.ctor
L Sl.rcet. 610 Washiugton, DC 20036 (202) ?\3:H!:1o l"i\X (202) ii:33li l 3-5 www.LUL.\C.org
(.eatttrship
. .....
.,.,.'!
,,,,,I"
..
l:.'xuuri-;Je Dirutor
2010-01
Rep. Pedro Marin (GA)
Introduced April, 2010 Executive Meeting (Adopted)
A RESOLUTION
To Ensure Hispanic Students Retain Access to Financial Support for Career
Training and Privately Funded Institutions
Short Title: Ensure access to student loan financing.
WHEREAS Private sector colleges comprise 2,750 of the 6,750 postsecondary
institulions across the United States; and
WHEREAS Two and four year private sector colleges have a higher percentage
of minority students than do other sectors. Over 50 percent of students attending
career colleges are minority students, compared to approximately 34 percent at
public and 32 percent at private, not-for-profit four-year institutions, while 14.3%
of all current private-sector college students are Hispanic; and
WHEREAS Private-sector institutions offer a broad range of academic programs
concentrated in the creative and applied arts, behavioral sciences, education,
health sciences, and business fields, culminating in the award of associate's
through doctoral degrees as well as non-degree programs; and
'WHEREAS The U.S. Department of Education is considering a "Gainful
Employmem" rule that may limit education ai1.d economic opporrunities for
hundreds of thousands of Americans by making entire programs ineligible for
Title IV financial aid if they fail to meet a single debt service-to-income ratjo test;
and
WHEREAS A "Gainful Employment" rule may dlsproportionally harm low-
income and minority populations by discriminating against students who must
borrow the needed tuition to attend college; without such financial aid, higher
education opportunities wilJ be limited for thousands of students; and
WHEREAS The U.S. Department of Education's "Gainful Employment'' rule
threatens a top source of highly-qualified graduates v.rho are prepared to enter the
workforce with the skills they need to begin their careers and add value for their
new employers on day one; and
WHEREAS The need to improve the education level, career readiness and job
s}::ills of American workers is critical if our nation is to meet t'1e President's goal
of this nation once again having the highest proportion of college graduates in the
world by 2020;
t ' I.,, .. ~ \ ,
.. v, 1 '/ ,
i . ,I '!
2010-01
Rep. Pedro Mari n (GA)
Introduced April, 2010 Executive Meeting (Adopted)
BE IT RESOLVED, that the Department of Education musl support the goal of
increasing the number of college graduates among American srudents; that regulations
promulgated by the Department of Education should promote fair and equal
access to higher education and that career aspirations should be a matter of choice
for those pursuing a higher education;
BE IT FURTHER RESOLVED, that the U.S. Departmem of Education carefully
study the impact of the debt service-to-income ratio included in proposed
''Gainful Employment'' language to Hispanic, poor and other minority swdents
before any such rule may be implemented.
Sponsored by: Rep. Pedro "Pete" Marin (GA)
THIS RESOLUTION WAS ADOPTED BY THE NHCSL EXECUTIVE
COMMITTEE ON APRIL 10,2010 AT THE 2010 NHCSL EXECUTIV"E
C01V1MITTEE 'MEETING IN WASHINGTON, D.C.
------- ------- ..-
, .. t
,_,.
;. ,I
Education l\ lanagemem Corporatiol"'
Antl1ony J. Guida Jr.
Senior Vice
Stralcgic Development and Regulatory A flairs
VIA Email and Regular Mail
March 13, 2010
Robert M. Shireman
Deputy Under Secretary of Education
400 Maryland Avenue, SW
Re: Ensuring Effective and Fiscally Responsible Higher Education
Dear Mr. Shireman:
As a follow on to Tom Babel's email to you earlier today, I also want to thank you and
Michael Dannenberg for meeting with Governor Jock McKernan, myself, and
representatives of DeVry University and Concorde Career Colleges to begin what I hope
will be an ongoing dialogue to address how the Department can better ensure
meaningful results for students who participate in the Federal student aid programs. As
you know from my position on the Advisory Committee. I also share a common interest
with you in actively seeking solutions that will ensure access and affordability for those
students from low and moderate income families and other at risk students.
At our meeting you invited us to provide our thoughts and ideas with respect to
addressing the Department's concerns with the level of debt that students incur in
relation to the education and training being provided. As we discussed, we believe that
rather than pursuing the proposed "gainful employment" calculation. this issue is most
effectively addressed by a bifurcated approach in which preventing excessive student
debt and ensuring student success are approached separately. We also believe that this
approach is in line with Congressional intent and the current statutory framework.
Once the extent of the student indebtedness issue is properly defined through data
collection and analysis, we believe that the better approach to addressing excessive
student debt would be to focus on modifying student behavior by enabling students to
make informed decisions at the time their borrowing decisions are made, and not on the
colleges and universities who are without any real means to prevent student over-
borrowing. Under the current law, our institutions have no direct control over borrowing
by their students, and they cannot legally establish lower loan limits than Congress has
provided. Further, our experience is that a student's proclivity to borrow maximum
federal loan amounts is not significantly impacted by variations in the cost of tuition and
fees. In fact. it is driven more by L1e personal financial background of our students
inasmuch as a significant part of their borro'lvings are to pay living expenses while
attending college.
J:.duccut'J'l tluu Uuilclv 1 tln:cs
210 Sil\lhAvcniiC 33:.1 l' loor Pillsburglt.l'/\
Ph11m:: 412-9'15-7657 Fax: 417.-()95-731,1
Robert M. Shireman
March 13,2010
Page2
The best and most immediate impact on curbing excessive student debt would be
through a clear and concise disclosure made to each student at the time he or she is
packaged for financial aid that would provide sufficient information for the student to
know and appreciate the long term impact of the financial obligations they are taking on.
As Tom describes in his email, such a disclosure would include information such as the
cost of tuition and fees for the program of study, the average starting salary for the
program, the amount of debt that the student will be taking on, and the student's monthly
debt payments after graduation. In this fashion, each student can make an informed
decision concerning the debt burden being assumed and their ability to pay back this
debt after graduation each and every time a borrowing decision is made. Further,
because the issues surrounding excessive debt is common to all of higher education, not
just for profit higher education, the approach should be applied to both for-profit and
public institutions.
As Tom indicated, EDMC and DeVry are part of a small working group that is currently
working on language for an appropriate disclosure, trying to take into consideration the
data challenges and wide variety of institutions, degree levels and programs that need to
be addressed.
As we related to you at our meeting, there are numerous challenges with an approach in
which "gainful employment" is measured formulaically that were left unanswered at the
negotiated rulemaking session. Mark Kantrowitz in his white paper on this issue does an
excellent job of delineating most of them and I won't rehash them here. Further, the
necessary data to both define the problem and support a sufficient and informed policy
have not yet been complied and analyzed. Uncertainties inherent in the current approach
to gainful employment thus make it very difficult for us to know with reasonable certainty
whether any proposed rule would actually address the Department's stated concern of
excessive debt in relation to the education and training provided.
We further believe that the proposed approach to a gainful employment regulation would
stifle the opportunity for hundreds of thousands of Americans, who have .selected for-
profit institutions, to acquire new job skills that are necessary for employment in the 21st
Century workforce by causing the elimination of many programs that provide meaningful
results for students. This is particularly true for tens of thousands of our art, design, and
culinary students.
For example, EDMC's colleges and universities prepare students for high demand
careers and professions and its programs fulfill a niche role and are an important
element in the broad spectrum of education opportunities for America's workforce. (A
fact sheet further describing our institutions and programs is attached). Approximately
92% of the students who attend our colleges and universities are in degree programs,
with approximately 65% of those students pursuing a baccalaureate degree and above.
Almost 50% of our students are minorities and nearly two thirds are women. Further, we
serve a very significant Pell eligible population, with some of our institutions having more
than 80% of their population being Pelt eligible.
Given ihe makeup of our program offerings and student body, we are very concerned
witl1 the impact that that the proposed rule will have on current and future students in our
programs. If the conclusions of Mark Kantrowitz in his white paper are correct, the
proposed rule:
Robert M. Shireman
March 13, 2010
Page3
Makes it nearly impossible for any institution to continue to offer any Bachelors
degree and above programs and many Associate degree programs (the same
would be true for non profit institutions were the rule to apply to them)
Disproportionately harms minority and fema!e students attending our institutions
Does not take into consideration our students' non financial reasons for pursuing
higher education, including better employability, greater job security and benefits,
and fulfillment and personal enrichment (the "passion" programs such as culinary
and photography offered by the Art Institutes that we discussed).
As you testified last October before the Higher Education Lifelong Learning, and
Competitiveness Subcommittee of the House Education and Labor Committee, students
with degrees and other formal credentials from oUr Country's postsecondary education
institutions are more likely to be employed, even during these difficult economic times.
This is born out in our results. In our Art Institutes, for example, which currently enroll
more than 75,000 students, over the last 12 months more than 85% of our giaduates are
employed within 6 months of graduate in their field of study using a calculation similar to
that required by our national accreditors. For graduates from the Art Institute's
programs, their 2-year (FY 2007) cohort default rates were 1.2%. These are the types of
programs and student outcomes that should be encouraged by the Department in the
current economic environment. not regulated out of existence.
Finally, we believe that measures to ensure student success are best approached
separately from the indebtedness issue and should focus on assuring positive student
outcomes through accountability measures such as retention and graduation rates,
placement rates. starting salaries, and success on licensure and certification
examinations. This is also an area where additional data and analysis is required before
proper benchmarks can be established. In particular, there is a dearth of data on what
appropriate measures of success in these areas should be when addressing low-income,
minority, first generation and other at-risk student populations.
EDMC looks forNard to working with you and the Department on sensible ways to
address the issue of student debt and to develop meaningful measures of student
success. As a Board member of the Career Colleges Association, I also could work with
you and our sector in an attempt to reach regulations that make sense for addressing the
issues you have identified.
End
cc: Michael Dannenberg
Jock McKernan, EDMC
Tom Babel, DeVry University
Tim Foster. Concorde Career Colleges
E
l) l\l'ir (
- 1 Jl ....
Educarion Corporation
. "'
WHO WEARE
With 97 locations in 30 U.S.
States and Canada. Education
Management Corpora1ion
(EDMC) is among the largest
providers oi private post-
secondary educat;on in North
America. based on student
enrollment and revenue. All
EDMC schools are accredited by
accrediting agencies recognized
by the U.S. Department of
Education. Ukewise. each EDMC
school is licensed by the state in
which it is located and is
authorized to confer its respective
doctoral. master's, bachelor's.
associate's and diploma/
certificate level programs.
EDMC was founded in 1962 and
is headquartered in Pittsburgh,
Pennsylvania. In 1970. the
company made its first
acquisition, The Art Institute oi
Piltsburgil . John R. McKernan,
Jr. serves as the Chairman of
EDMC's Board of Directors:
Todd S. Nelson is Chief Executive
Officer; and Edward H. West
serves as President and Chief
Financial Officer.
WHERE WE EDUCATE
EDMC has schools in these
States/Provinces.
Al abal'l'ta
Arizooa
British Columbi a.
Canaca
California
Colorado
!'lorida
Georgia
Hawaii
luaho
l!itOOIS
1'1diana
K;;nsas
Kentucky
Mas.sac.'luser.s
Mchlgan
Mi nnesota
Missouro
Nevada
New Mexico
New York
Nortn Carolina
Oh:o
Oklahoma
Oregon
Pennsylvania
Soulh Carolina
Tennessee
Texas
Utah
V1rgint<J
Washing!on
To reach more students seeking
access to Quality higher
education. 54 of EOMC's schools
are located 10 center city
locations Online higher
educadon degree programs are
offered at The Art Institutes,
Argosy University, and South
Universi! y
QUALITY
What We Do
EDMC has four primary education institutions that offer a broad range of academic programs
concentrated in the creaiive and applied arts, behavioral sciences, education, health
sciences, and business fields, culminating in the award of associate through doctoral
degrees, as wetr as non-degree programs. In addition. Western State University College of
Law offers the juris doctorate degree:
" Argosy University (>A'W\v.argosy.edu), with 19 campus locations in 13 states, provides
undergraduate and graduate degrees to students in an environment where academic
knowledge is paired with interpersonal skills vital to success in an increasingly
competitive market. Argosy University has five colleges: Psychology and Behavioral
Sciences, Business. Education, Health Sciences. Undergraduate Studies.
o The Art Institutes (WW\v.artinstitutes.edu) is a system of more than 45 education
institutions located throughout North America, providing an important source of design,
media arts, fashion, and culinary arts professionals.
" Brown Mackie College (v.J' .'IW.brownmackie.edu), with 24 schools foC<l ted throughout
the United States, offers educational programs that prepare students for entry-revel
positions in a rapidly-changing workplace. Brown Mackie College schools offer
bachelor's degree. associate degree. certificate, and diploma programs in heallh
sciences, business, information technology, legal studies. and design technologies.
South Univer sity (IWIW.southuniversity.edu}, established in 1899, is a private
academic instiiution dedicated to providing educational opportunities for lhe i ntellectual,
social. and professional development of a diverse student population. South University
offers educational programs at seven campuses in five states.
o Western State University College of Law (v.'W\v.wsulaw.edu) was founded in 1966 and
is the oldest law school in Orange Colmty with more than 10,000 alumni . Located in !he
heart of Southern California, Western Stale University has produced more Califomia
judicial officers than any other law school and is fully accredited by the American Bar
Association.
COMMUNITY
How Our Students are Making a Difference
EDMC's vision is to help students achieve their educational goals across the full spectrum
of in-demand careers. Graduates from EDMC owned schools are employed by companies
and organizations of all types and sizes, including companies sucl1 as the Sony
Corporation, Adidas, Verizon. Ford Motor Company, and Walt Disney Company. To help
prepare students for a career in a rapidly-changing global economy, each school's Career
Services department offers a range of services and resources that support student career-
planning efforts.
GROWTH
Who We Educate
\IIlith a collective enrollment of 136.000 students as of Fall2009. EDMC and its sr.hool
systems employ approximately 20.212 ful!-time. part-time, and adjunct faculty and staff
Nearly tv-1o-lhirds or EDMC students are female, and the average age of an EDMC studen!
is 27.7 years. To expand its reach to more students than ever before, EDMC is actively
working with the U.S. Department of Veterans Affairs in the "Yellow Ribbon reduced
tuilion program, part of the post-9/11 G.l. Bill.
The Honorable Anthony Wilder Miller
Deputy Secretary
400 Maryland A venue, SW
Washington, DC 20202
Dear Secretary tvtiller:
Aprill2. 2010
Thank you for soliciting input on the Department of Education's (ED) proposed Gainful
Employment (GE) regulation at our recent meetings. We are writing on behalf of our
institutions (Kaplan, DeVry, and Education Management Corporation), which together offer
opportunities for over three hundred thousand students to attend college annually. We are
deeply committed to educating and preparing our students tor the new jobs of the 21st century,
a..nd to ensuring that our students receive high-quality. results-oriented education, witbout being
bw-dened by excessive debL
We understand and support what you are trying to accomplish. We believe tbat together we
can find a solution that addresses student debt and simultaneously enables the Administration
to achieve its goals of expanding access to quality higher education, particularly among non-
traditional students. We believe both sets of goals are achievable.
We thought it would be most helpful to (a) describe the contnoution of the private sector in
achieving the Administration's goals, (b) explain the impact ofthe latest GE proposal made
public, and (c) offer a constructive alternative to this GE proposal that would address the ED's
concerns without restricting students' access to collcg<! opportunities.
Qualitv Private Sector Colleges Plav A Critical Role in Achie'\oing Administration Goals
President Obama has said he wants America to have the highest percentage of college
graduates in the world by 2020. This goal will require educating millions of additional college
students at a cost of many billions of dollars and cannot be met without the participation of
quality private sector colleges like ours. The private sector currently educates some 2. 7 mjJlion
students a year and has the resources to help alleviate the financial burden of achieving the
Administration's goal. Moreover, the private sector attracts more non-traditional students- a
critical requirement to increasing the number of college graduates_
April 12, 2010
Page2
Not -only do private sector colleges attract more non-traditional students, but we also help them
graduate and achieve gainful employment at significantly higher rates. A recent report by The
Parthenon GToup. using ED data for public and private two-year and less institutions, shows
that students at private sector colleges graduate at rates roughly 50 percent higher than public
schools. The study further shows that private sector college stlldeots acrueve hlgber percentage
wage increases (54% vs. 36%) after completing their educarion.
1
The Current GE Proposal Would Dramatically Limit Students' College Opportunities
Kaplan. OeVry. and EDMC share the ED's goal of ensuring that students receive a quality
education and enter programs with a full understanding of tbe costs, v.rithout incurring
excessive debt We would support regulation that appropriately addresses over-borrowing
while enabling high-quality institutions to continue their good work ofbujlding capacity and
innovation in higher education.
The GE criteria proposed by the ED at the end of the most recent Negotiated RulemaJGng
session attempt to define "gainful employment" by establishing an 8 percent debt-service-to-
income threshold based on median student debt for college graduates. Income would be based
either on the Bureau of Labor Statistics (BLS) 25th percentile wage data, or actual canungs of
college graduates. Loan payments would be based on a 1 0-year repayment plan.
This proposal as written would have a number of unintended consequences. A recent study by
Mark Kantrowitz, a respected independent authority on financial aid, concludes:
'The 8% debt-service-to-income Threshold is so strict that it would preclude for-profit
colleges from offering Bachelor's degree programs. It would also elimi11ate many
Associate's degree programs at for-profit colleges. Even non-profit colleges would find
it difficult to satisfY this standard if they were to it.,._
Kantrowitz further found that:
"The proposed use of Bureau of Labor Statistics wage data . .. wili disproportionately
harm minority and female students. "
3
Kantrov.ritz also points out that the proposed GE rule tasks institutions with a job without
providing the tools necessary to complete the job:
1
Panhenon Perspectives on Private Sector Post-Secondary Schools. F.:bruary 24, 20 I 0. by Robt:rr I .ytlc. Roger
Brirmer and Cluis Ross; p. 8: Source: NCES BPS 2004-2006.
! What is GainfuJ Employment? What Is Afford2ble Debt?, Mark Kantrowitz. March I, 20 l 0, p. !
t fbid.
------ ----
Apri112. 2010
Page 3
''The debt-ser1'ice-to-income threshold effectively establishes borrowing limits based on
field of study and degree programs. but does not gile colleges the controls needed 10
enforce these limits. Current sub-regulatory guidance precludes colleges from
establishing lower loan limits. , o ~
Another study conducted by Charles River Associates reaches similar conclusions, estimating
that 1& percent of private sector programs will be disqualified from participation in Title IV
programs and that lhis would impact one-third of private sector students. 11lis means that
hundreds of thousands of entering students would be displaced annually from private sector
colleges.
5
By 2020, approximately 5.4 million students who otherwise would be on track to
attend college would be denied access by the proposed GE regulation.
6
Finally. the GE proposal would result in significant job loss among the hundreds of thousands
of faculty members, administrators, and staff who work in the private post-secondary sector,
and in non--degree programs in public sector and independent schools as well.
Students Will Be Protected bv Transparent Cost and Debt Information.
We remain concerned that defining "gainful employment" by student debt levels is beyond
Congressional intent. We believe that the necessary data to both define the problem and
support a sufficient and informed policy have not yet been compiled and analyzed. We are
certain there are numerous consequences of the GE proposal that are not currently
contemplated by the ED.
For these reasons, we propose that srudent debt concerns be addressed by mandating that all
institutions disclose to students the i nfom1ation'students need to make informed decisions prior
to taking on student debt, as well ac; warn students about programs that faillo meet a minimum
debt service-to-income ratio under a new student consumer "lemon law." Prospective students
who receive sufficient information at the time of enrollmem are in the best position to make an
informed decision regarding whether or not to attend an institution. We believe lhe information
students need to make decisions concerning the appropriate amount of debt to incur for a given
program should be provided in a disclosure form to students.
Tile form would include: (a) the cost oflhe program of study, (b) a reasonabte projection of
potential earnings in the students' chosen 1ield upon graduation and th.rougbout the life of their
employment in that field, (c) a reasonable estimate of the debt students typically incur to
complete their program, and (d) students' repayment plan options. A proposed disclosure form
4
Ibid. p. 2.
' Report on Gainful .Employment, Charles Rivers Associ ales, April 2. 20 I 0. prepared by Jonathan Guryan, PhD,
2lld Matthew Thompson, PhD, p. 38.
6
Executive Summary to Report oo Gainful Employment, Charles Rivers Associates, April2. 2010. prepared by
Jonathan Gur)'an. PhD, and Matthew Thompson, PhD, p. l .
April 12,2010
Page4
is attached as Appendix 1. The accuracy of the information contained in the disclosure 1orrn
would be ensured by the misrepresentation prohibition that received tentative agreement at the
last Negotiated Ru.lemaki.ng session. The proposed misrepresentation prohibition provides,
among other things, that:
If the Secretary determines an institution bas engaged in substantial misrepresentation.
the Secretary may revoke or limit that institution's participation in the TitJe IV
programs.
Misrepresentation is defined as any false, erroneous or misleading statement an
institution makes directly or indirectly to a student, prospective student, or any member
of the public, an accrediting agency, State agency, or the Secretary.
,. A misleading statement includes.any statement that bas the capacity, likelihood, or
tendency to deceive or confuse. The omission of information may also be interpreted as
a misrepresentation.
In addition to this disclosure, schools would be required to warn students prior io enrollment of
any program that fails to meet a debt-service-to-income ratio test. The debt-service-to-income
ratio would be based on the approach recently proposed by the ED, with appropriate
modifications discussed below. Institutions offering programs that fail the test would be
required to warn studenls in appropriate marketing materials, and in a \Witten signed
by the student prior to enrollment, that (a) the program has failed a debt-service-to-income-
ratio test, and (b) swdent borrowers enrolling in the program should expeci 10 Jun'e difficulty
meeting their repayment obligations upon graduaiion.
To ensure that the debt-service-to-income ratio is appropriately directed at identifyin.g "outlier"
programs we propose that the ratio currently contained in the GE proposal be adjusted as
tollows:
Formula applied to non-degree programs ouJy.
Degree programs confer lifetime benefits that don't correlate easily to
specific job codes, such as higher lifetime eamjngs, higher income growth
rates, greater employability, better career advancement and job stability.
7
In
addition, degree holders tend to change jobs and pursue careers seemingly
unrelated to the degrees, but using the skills they developed in college.
Including degrees in the ratio detin\tion would dramatically undervalue these
programs.
y By applying the formula opJy to non-degree programs, both private and
public institutions are impacted in the same manner.
A debt-service-to-income threshold of 15 percent, based on median student debt for
college graduates, and assuming a current unsubsidizcd Stafford loan interest rate of
6.8% to calculate the ru,mual repayment amount
pp. 20-21.
April 12, 2010
Page5
)> The 15 percent debt-service-to-income threshold is referenced in the
Kantrowitz study as a well as a recent study published by the College
Board,
8
and is within the range generally used by personal financial
counseling professionals.
Income based either on the BLS 50l
11
percentile wage data, or actual earnings of
graduates if the latter are higher than the BLS 50th percentile.
The 50lh percentile of the BLS wage data more accurately reflects the long-
tenn potential earnings of a graduate. Moreover, there is no reason to
assume that non-degree program graduates, regardless of their backgrounds,
would be unable to achieve average earnings.
Loan payments based on a 20-year repayment plan .
.>- The 20-year loan repayment plan is also referenced in tlle Kantrowitz study
and supported by the fact that borrowers are permitted to, and do, choose
repayment plans covering a period of up to 25 years.
Exclude prior school debt from the calculation and provide institutions the
regulatory ability to control student borrov1ng, thereby enabling compliance with
ratio and 90/l 0 requirements.
}:- Absent the regulatory ability to control student borro ... "ing, the GF:
calculation should be based only on direct cost of education.
Eliminate the ED pre-approval requirement for ne"v programs.
)> State regulatory bodies and accrediting agencies already require approval of
all new programs.
We also recommend that the ED consider alternative routes to compliance with the debt-
ratio test, specifically by establishing: ( l) target graduate cohort default rates
(GCDRs) (e.g., 12.5% GCDR on a two-year calculation; 15% on a three-year calculation), (2)
targets for actual post-graduation salaries that include a multiplier of J .5x to recognize the fact
that lifetime earnings are sibrnificantly higher than BLS mtes, and (3) thresholds for post-
graduate employment rates.
We believe that tlle proposal contained in this letter provides an innovative and etiectivc way to
protect students from institutions that over promise and under deliver to students, thus leaving
students with too much debt and not enough return on investment.
8
How Much Debt is Too Much, Sandy Baum and Saul Schwanz. The College Board, 2006. p. 1:!.
APPENDIX 1
INSTfTUTIONAL DISCLOSURES RELATED TO EXPECTED EARNINGS AND DEBT
You have requested information about our_....:A;..:.c::.::c:.=o:..::uc:..:nc;.;ti:..:.;n:ag ____ program
Program Level: 0 Associates fZlsachelors 0Masters Ocertificate/Diploma
Here are some important disclosures for the award year ending June 30, 2010
.
During the year ended June 30, 2009 , 75.8 % of in thi s program graduated or
continue to be actively enrolled at the institution whil e 24.:l' :% ceased enrollment.

Of the students who graduated, 88.6 % were in their ffeld of study, or a related field,
..
within six months of graduation with an average annual salary of approximately$ 46,300 per year .
. .

This academic program corresponds to the following Standard Occupational Classification (SOC)
codes as reported by the Bureau of Labor Statistics (BLS): 13-2011 . The annual
salaries for these SOC codes at the 75th percentil$ir?$ 45,900 and $ 78.210 ,
respectively. For information related anq other occupations, please visit
http://www.bls.gov/oes/curr ent/oes_nat.hW,l. ..
$.
The cost of this programpf study fot a student enrolled fulf-time and. with no transfer credits is
$ 62,040 . The average annual tuition increast!. for the mostrecently concluded three years was
4.6 %
The average loan debt, of stUdents in.curred at this institution and who graduated from this
program 9,w.in_g'the prior. award $ 33,100 . This amount includes$ 30,900 of federa l
student debt and$ l zoo ofi'nstjtutional t'oan debt. This does not include any debt incurred
while attendin-...another institution. Addlfionally, 4.6 %of graduates obtained private student loans
' . --
from third part1es.
.
If this average education loan debt 100% federal loans with an average interest rate of 6.8% and
you chose to repay using a 10 standard repayment term, the annual total of 12 monthly
payments would be $ 4,571.0"4 . If you chose to pay using a graduated repayment plan (over 10
years), the total of your first 1i monthly payments would be$ 3,138.60 . For more information
concerning repayment options on federal loans, please visit
https:/ /studentloans.gov/myDirectloan/index.action.
The latest official Cohort Default Rate (FY07) from the US Department of Education indicates that
1.7 % of graduates in this program defaulted on their federal loans.
PLEASE NOTE THAT YOUR ACTUAL EXPERIENCE MAY BE DIFFERENT THAN THE AVERAGES AND
STATISTICS PRESENTED ABOVE.
Deputy Secretary
400 Maryland A venue, SW
Washington, DC 20202
Dear Secretary Miller:
Aprill9, 2010
Thank you for meeting with us this past Thursday to discuss the Department of Education's (ED)
proposed Gainful Employment (GE) regulation. We appreciate the candid discussion, and want to
follow up on several items that arose in our meeting.
We appreciated your reinforcement of the ED's public statements that it views private sector
presence in the higher education marketplace as positive. We also believe that it is not the ED's
intention to eliminate private sector institutions or eliminate private capital from higher education.
We view these as important points because the GE proposal made dwing Negotiated Rulemaking -
which would substantially eliminate proprietary institutions ' ability to offer degrees- is not
consistent with the ED's goals.
Our comments come from a sincere concern for the students we serve, an understanding of the
limited educational opportunities afforded to these students, and the success stories of their fellow
students who graduated before them. We educate hundreds of L."lousands of students each year,
enabling them to obtain jobs and begin careers that are transiormational not only for those students,
but for generations to follow. We each offer non-degree, associate, baccalaureate and graduate
degree programs. Across our three organizations, we enroll more than 300,000 students and employ
more than 50,000 faculty and staff each year.
As we discussed, while the ED's GE proposal will exclude fully one-third of our students from the
programs they currentJy attend, its effect on degree programs is the most s ~ : : v e r e . The ED's GE
proposal is unworkable for the vast majority of degree programs in our sector and will result in as
many as half of the two million plus degree students at our colleges being denied Title IV ftu1ds.
This includes, among countless examples, Bachelor's of Science in Nursing students, at a time when
our country faces a growing nursing shortage. Private sector colleges are a vital source of new
capacity in nursing education as well as in allied health ftdds, where they educate 54% of all such
professionals. We do not believe this could possibly be the intent of the ED. which is why we are
asking you to revise your proposal to avoid these unintended consequences.
April 19,2010
Page2
Likewise, we reiterate that the 50% graduation rate exception described recently does littlt: to
ameJiorate the impact of the ED's last GE proposal. With the nation's median aggregate college
graduation rate at less than 50% for all types of colleges (private, public and non-profit alike-
including elite colleges with 90%+ graduation rates), even this exception would exclude the students
at more than half of all colleges from participation in the Title IV program. Many of those excluded
students would be the very ones Congress was attempting to help through the Stafford and Pelt
programs, and those for whom there are fe\IV other educational opportunities today.
We understand the objectives of the proposed GE regulations are focused on two concerns:
l . The ED's concern that a material segment of students take on disproportionate debt for value
received. More specifically, a c-oncern that the risk tolerance of these students essentialJy
means that no amount of warning would deter them from making a poor enrollment decision
and "over-borrowing"-i.e., b o r r o ~ i n g more than their ultimate job prospects would enable
them to repay.
2. The ED's concern about the risk that certain investors could purchase schools with the
intention of grov.ring revenue by dramatically increasing enrollment without regard to
educational quality, and then turning a quick profit by re-selling the institution to another
buyer or to the investing public through a securities offering. The concern here is that such
investors would take advantage of the difference between their short timetable and the
inherently longer term during which regulatory problems mature - - all while drawing federal
financial aid and increasing the overall student debt burden.
As we discussed in our meeting, we share your concern about student over-borrowing and believe
our proposal can solve that problem witl1out harming quality schools. Section 1 of this letter
expounds further on our student debt proposal and offers additional alternatives.
We also understand your concerns abom the incentives certain investors might have and believe that
the ED has the tools to constrain them ""itbout hamUng students across the sector. The ED's ability
to constrain sucb investors is discussed in Section 2 of this letter.
1. Our ProposaJ and Simple Modificatjons To the Debt-Service-To-Income Ratio Can Sohre
tbe Problem of Student Over-Borrowing wit.bout Harming Students of Quality Scbools
We continue to believe that student debt concerns can be addressed quickly and meaningfully by: (a)
mandating that institutions clisclose to students the information students need to make infonned
decisions prior to taking on debt, and (b) implementing a student cl}nsumer temon Law" that warns
srudents prior to enrollment about programs that fail to meet a minimum debt-service-to-income
ratio (Appendix A). This approach bas at least four advantages over the ED's GE proposal: (l) it
addresses the concern that defining "gainful employment'' by srudent debt levels is beyond
April19, 2010
Page3
Congressiona:l intent; (2) it is a less draconian approach from an en.fi)rcement perspective; (3) it
avoids the risk ofinadvertently eliminating quality programs if the ratio parameters are not set
appropriately; and (4) it '\viii immediately address the ED's concerns while still allowing the ED and
schools to complete the data collection and analysis necessary to develop a more studied approach, if
necessary. This approach would indeed give the ED new tools to address the risk for programs that
do not provide value commensurate with their cost.
Under our proposal, in addition to disclosure, a school would be required to warn students if that
school had failed certain debt-service-to-income metrics. The proposed metrics would roughly
follow those in the ED's latest GE proposal, but with the foJJowing modifications:
a. Any Debt-Service-To-Income Ratio Should Apply
Ooly T() Non-Degree Programs
As you are aware, the GE requirement contained in the Higher Education Act (HEA) applies to all
program offerings at proprietary institutions including Associate' s, Bachelor's and Master's and
doctoral-level tUld professional degrees (other than a de minimis number of"liberal arts" programs)
and only non-degree programs at public and private nonprofit institutions. Wbile we believe that a
debt-service-to-income formula is inappropriate, we are especially concerned \'Vith a fommla that is
inherently biased against degree programs (and with corresponding alternative measures that are
biased as well).
There are a number of reasons why debt-service-to-income ratios such as those contained in the
ED's GE proposal should not apply to degree programs. First, it is very unlikel y that Congress
intended the GE requirement to apply to degree programs. vVhen the GE requirement was first
introduced by Congress in the 1965 HEA, very few proprietary schools were degree gTanting.
Second, the at-risk students the ED is seeking to protect are much more likely to enroll in non-degree
programs than in degree programs. Third, the lifetime benefits conferred by degree programs, such
as higher lifetime earnings; higher income growth rates, greater employability, better career
advancement and job stability, don' t readily lend themselves to a formulaic approach to measuring
value using job codes and BLS statistics. For.tbese reasons, debt-service-to-income ratios should not
apply to degree programs.
To accomplish the above and to overcome our concerns with the ED' s debt-service-to-income
proposal, we recommend the ED use the follo'Wing language, which tracks the last language
proposed at the Negotiated Rulemaki ng session (bolded to show changes/additions):
(a) General. (1) An institution . . . offering an eligible flon-degree program ... shall
be required to warn students that tlzey are likely t.o have difficulty meeting their repayment
ob!igatwns in such program where ... at the end of each three-year period . . . the debt to
earnings ratio associated with the program is twelve percent or less .. ..
April19, 2010
Page4
(b) Debt to earnings ratio. {Ajn institution calculates the ratio for the three-year
period by-
(l) Determining the median loan debt of students \Vho completed or graduated from
the non-degree program (loan debt includes title IV, HEA programs (except Parent PLUS),
institutional loans and private educational loans) dtning the three-year period and using tile
mean loan debt to calculate an annual loan payment based on a 15-year repayment schedule
and the current annual interest rate on Unsubsidized Federal Stafford Loans or Direct
Unsubsidized Loans;
(2) Using the most current Bureau of Labor Statistics (BLS) data ... to determine the
annual earnings, at the 25th percentile. made by persons employed in occupations related to r ~
the training provided by the noll-degree program; ...
b. AJtern.atively, There Should Be a Tje'ted Approach
To the Dcbt-Service-To-locomc Formnla
Should the ED be inclined to include degree programs, we recommend different formulae for non-
degree programs, Associates degre.e programs, and Bachelor's degree programs. Post-baccalaureate
programs would not be included as those students, having successfully completed at least a
Bachelor's level of education, are more sophisticarcd consumers and better equipped to make
in:fonned borrowing decisions.
We recommend the foHowing graduated degree metrics:
Program Level Debt-service-to- BLS Percentile Years in
income threshold Repayment
Non-Degree 12%
?Ul
_)
15
Associate's Degree 15%
som
15
Bachelor's Degree 15%
50m
20
These numbers are consistent with the Studies by Kantrowitz and Baum referenced in our April 12,
2010 letter.
c. Any Formula Should Contain An Exclusion for Prior School Debt
As we also discussed, prior school debt should be excluded from any debt-service-to-income ratio
test. By excluding prior debt, the ED can ensure that students who may have failed in the past wjJI
continue to have an opportunity to succeed in Lhe future, wi thout penalizing schools tor giving the
students that opportunity.
Aprill9, 2010
Page 5
d. There Are Other Alternatives Wortb Exploring
In the event the ED chooses to pursue a debt-service-to-income ratio test, we reierate our
recommendation that the ED consider alternative routes to compliance as part of that test. These
alternatives include maintaining target graduate cohort default rates (GCDRs) at 12.5% over two
years and 15% over three years. They also include a threshold for post-graduate employment rates.
We recommend setting a mininnun employment rate of70% within si.x months following
graduation. As we discussed) the employment rate would be measured using methodologies similar
to those of the larger national accrediting agencies, but with additional flexibility, particularly for
degree programs, as degree-seeking students are likely to use their degree for general employment
advancement.
2. The ED Has an Array of Powerful Tools to Constrain Certain New Investors
As we discussed, most private sector higher education companies are invested in students for the
long hauL Certainly, Kaplan, DeVry, and EDMC - as well as other higher education organizations -
are focused on building enduring institutions that create value for our students, our employees, and
our communities. Our institutions will only succeed to the extent our students succeed. We are
passionate about our students' achieving their learning outcomes, securing good jobs. and becoming
contributing members of society. Our reputation is essential to attracting students, faculty. and
employees. Indeed, most of our alumni quietly but successfully enter into essential roles in the
American economy- working paying taxes. and raising their families. Their enthusiasm is
what encourages other students to join our institutions- and any or frustration with
their learning experiences would quickly hamper our institutions' ability to attract new students.
We understand your concern that some t1rms may invest in higher education with different motives
and according to a vastly different timetable. They may see an opportunity to purchase a struggling
institution, grow it rapidly, and exit the business before difficulties like poor completion,
employment rates, cohort default rates or other problems marure --all at the students' and the
taxpayers' expense.
We respectfully submit that 1he HEA ClllTCntly provides the ED \vith ample measures to prevent
sucb a scenario from occurring. A number of such measures are enumerated below. A chart
providing additional detail regarding these measures is att.ached as Appendix B to this letter.
t. The ED has the authority to conditjon or withhold Title IV approval from new ow11ers
who do nol have a demonstrated track record.
2. The ED may condition or disallow the resumption of Title IV participation following a
change jn ov.'llership.
April19, 2010
Page6
3. Following a change in the ED may terminate an institution's eli.gibility to
participate in the Title IV programs without the institutio.n having the usual due process
rights to contest the termination.
4. The ED has the ability to eru,"'Ure that no students receive Title IV funds untiJ the ED is
satisfie<l that the students are eligible for the funds and the school is worthy.
We appreciate your meeting with us and we sincerely hope that you have found these observations
and ideas useful. We look forward to discussing these matters further. Should you so desire) we
would be happy to provide you with further clarifications and are available to meet at your
convenience.
Yours Truly,
Andrew S. Rosen
Chairman and CEO, Kaplan, lnc.
l)anjel Hamburger
President and CEO, DeVry Inc.
[(b)(6)
J
Todd S. Nelson
CEO, Education Management Corporation
Enclosures
cc: The Honorable Martha J. Kanter
The Honorable Carmel Martin
Mr. Robert Shireman
Mr. Matthew A. Yale
Ms. Georgia Yuan
Appendix A
XYZ UNIVERSITY
INSTITUTIONAL DISCLOSURES RELATED TO EXPECTED EARNINGS AND DEBT
You have requested information about our Veterinary Assistant program
WARNING: The annual loan repayment burden for graduates ofthis progr am at XYZ University
exceeds the maximum debt-t o-earnings ratio as recommended by the U.S. Department of
Education.
Program Level: 0Associates Osachelors IZ]certificate/Diploma
Here are some important disclosures for the award year ending June 30, 2009
During the year ended June 30, 2009, 81.2% of students enrolled in this program graduated or
continued their enrollment into the next year while 18.8% withdrew from school.
1
Of the students who graduated and were available for employment
2
, 73.4% were employed in their
f ield of study, or a related field, within six months of graduation with an average annual salary of
$23,600 per year.
$40,000 -
$35,000
$30,000
$25,000
$20,000
$15,000 '
$10,000
XYZ University
: Veterinary
1 Assistant
Graduates' 1st
1 year Salaries
$5,000
$-
Cost of Program Average Loan debt for
Graduates
Average earnings for
all Accounting
graduates at 25th
percentile
Average for
all Accounting
graduates at 75th
percentile
The weighted annual salaries for this occupation at the 25
1
h and 75
1
h percentiles are $20.809 and
$30.706, respectively.
3
The cost for this program of study at XYZ University a student enrolled full-time and with no
t ransfer credits is $28,440. The average annual tuit ion increase for the three most recent years was
4.6%.
The average education loan debt incurred at t his institution for graduates of this program during the
2009 award year was $27,400. This amount includes $20,300 of federal student loans and $17,100 of
institutional loans. Additionally, 2.0% of graduates obtained private student loans from t hird parties.
1
Appendix A
f .
;
I
I
I
l
-- Loan as of- -----l
Salaries for Vet erinary Assist ant Occupations
$4,000 00 '
$3,000.00
$2,000.00
$1,000.00
$
i
[ _-
Annual loan repayment
10 year standard plan
I
Annual loan repayment Recommended maximum
15 year extended repayment annual loan repayment
plan
If this average education loan debt was 100% federal loans with an average interest rate of 6.8% and
you chose to repay using a 10 year standard repayment t erm, the annual total of 12 monthly
payments would.be $3,83.34. If you chose to pay using a 15 year extended repayment term, the total
of your first 12 monthly payments would be $2,918.76.
3
The latest official Cohort Default Rate (FY07) from the US Department of Education indicates t hat
3.6% of graduates in this program defaulted on their federal loans.
NOTE: YOUR ACTUAl EXPERIENCE MAY BE DIFFERENT THAN THE AVERAGES AND STATISTICS
PRESENTED ABOVE AND THAT THE DATA PRESENTED Will CHANGE IN THE FUTURE.
(Student Signature)
(Date)
{1) Withdrawal rates are calculated for the selected program using the met-hodology required for the Institutional
Post-secondary Enrollment Data Survey to the U. 5. Deportment of Education. The graduation and continuing
enrollment rate represents the complement of the withdrawal rote.
(2) Gmduates in the following categories ore considered unavailable for employment and are 'wt counted in the
placement rate calculation: graduates who are pursuing further education, are deceased, are in active military
service, hove medical conditions that prevent them from working, ore continuing in a career unrelated to their
program of study because they currently earn salaries which exceed those paid to entry-level employees in their
field of study, or are international students 110 longer residing in the country in which their school is located.
{3} Salaries are from the Bureau of Labor Statistics as reported for the Standard Occupational Classification (SOC)
codes that correspond to the Classification of Instructional Program (CIP) code for this academic program. For
information related to salaries from these and other occupot10ns, please visit
J:Jlt.e;li_y!w _ _w. bls.gQy/oes/curr:..if.!lY.Qes ngl_.htn?.
(4) Costs are based on tuition rates and fees currently charged to students in the indicated program of study.
(5) The recommended loan repayment is calculated using a debt-to-earnings ratio of 12% of tile 25'
1
' percentile of
so/aries as reported from tlle Bureau of Labor Statistics for the Standard Occupational Closs!fication (SOC} codes
that correspond to the Classification of Instructional Program {CIP} code for this academic program.
(6) For more i nformation concerning repayment options on federal loans, please ;isft
https:/@denrloans.gov/mvOirectLoaQ/index.action.
2
Title IV Eligibility
Tenninates Upon
lnstitutional Change in
Ownership
An instirution that changes
ownership must enter imo a
new program participation
agreement at the ED's
discreti011. The ED may
review afl.aspects of the
institution and may deny
ongoing Title IV
participation.
Additional Program
Participation Agreement
Conditions
ED has discreti011 to include
additional provisions in new
participation agreement
DisaUowance of Title N
Participation
May revoke Title IV
participation following a
change
APPENDLXB
Title IV eligibility terminates when an institution changes
ownership. The new ownership must re-apply for
participation in Title IV programs. Under ED's current
practice, the ED may extend the curre.nt program.
participation agreement under a "provisional certification."
The ED will not approve tile new owners without a
demonstrated track record (as indicated by at least two years
of audited fi.Qancial statements) in higher education unless
they ( l) post a letter of credit (typically 25 percent of the
Title IV aid disbursed to tbe institution's students during the
previous fiscal year), and (2) agree to growth restrictions
(typically the inability to offer new programs or open new
locations until the ED has reviewed and approved fmancial
aid and compliance audits for a full fiscal year of operations
under the new ownership).
The ED has the ability to add any additional conditions in
any new program participation agreement that the Secretary
requires the institution to meet in order for the new
i11stitution to participate in Title lV.
Before the expiration of a provisionally certified institution's
period of participation, ifthe Secretary determines that the
.institution is WJable to meet i.ts responsibilities under its
program participation agreement, the Secretary may revoke
the institution's provisional certification for participation ir1
that program.
Reimbursement or Even in the absence of a change in ownership, the ED has
Heightened Cash the ability to place a school on the reimbursement or
Monitoring beiglJtened cash monitoring method of Title IV payments,
Ability to place institution on so that no students receive Title IV funds until the ED is
cash managem1mt satisfied that the students are eligible for the funds and the
restrictions, even in absence school is worthy of adminjstrating the funds.
34 C.F.R. 600.20(g) and (n)
34 C.F.R. 600.31(a)
34 C.F.R. 668.13
34 C.F.R. 668.14
34 C.F.R 668.23
34 C.F.R. 668.13(c)(4)(ii)
34 C.r.R. 668.13(d)(1)
34 C.F.R. 668. 162
34 C.F.R . . 668.175(d)(2)(i)
of chan:<:e in ownership

Annual Compliance Audits Once the ED has confirmed the institution's eligibility for 34 C.F.R. 668.23(b)
May annually review Title IV, the institution must file annual compliance audit
institution's compliance with statements with the ED. Thus, the ED can monitor the
1--D-ep _art. __ m_e_n_r ___ +-=inc:.:s :.:: ' ti:.:.tu::..'U::... o:.:n:.. ' .::..s and take action as
Program Review In addition to tbe fact that an institution that changes 34 C.F.R. 668.24(f)
Requirements O\-Ynership will be required undergo new Title IV eligibility
ED may conduct a full review, the ED can review any program at any time to
program reiew of a11y detennine compliance or issues.
institution in addition to the
review associated with
applvinf( for elif{ibility
Tuition at The Art Institutes is lower than many not-for-profit
institutions
Not-for-profit Inst itutions:
Rhode Island School of Design
Cal ifornia Institute of the Arts
Art Center College of Design
The New School
Pratt Institute- Main
Otis College of Art and Design
The Art Inst itut es
Tuition - Net of
Instit utional
Grants (2008)
1
$31,862
$27,747
$27,270
$25,489
$25,376
$24,002
$22,058
:s,,urce IES. N:H<cutal CN<t.!r ror Statistics IPE05 Data Center /.008 Survr'{ Dalil Student f inancial Aid tlepon (calculllted b3sed on Publlshed Tuitioll Rate. 1\Ver.lec?
1 l . bt tp:/ /nces.r!d.gcov/ipcd
Real World Example: 8% Debt-Payment-To-Income Ratio is
Unrealistic
Bachelor's Degree at Average Cost
Average
Min. Starting
BLS 25th
4 year Institutions of Attendance
Cumulative Debt
Salary to Satisfy
Percentile

at Graduation
Gainful
Bachelor's degree

Employment
(2008)
3
Rule
2
Private Not-for-Profit $102A84 $27,542 $47,543 $36,920
Private For-Profit $81,216 $32,906 $56,802 $36,920
- - ------ ---- --
1
Growth in Cumulative Education Debt at College Graduation, by Mark Kantrowitz (Aug. 28, 2009).
2
The minimum starting salary required given Average Cumulative Debt at Graduation. an 8% debt-payment-to-income ratio, over a 10 year
repayment period.
3
Bureau of Labor Statistics, Labor Force Statistics (CPS), (unaclj)-Usual weekly earnings (first quartile), Employed full-time, Wages and Salary
workers, Bachelor's degrees only, 25 years and over {annualized).
By Institution Type, the Appropriation$ received per Fall Enrollment from Federal, State and Local sources
Federal Stare Local Total
Total
Appropriations Appropriations Appropriations Appropriations
Fall Enrollment
Appropriations
{2007)
2
(2007)
2
(2007)
2
(2007)
2
(2007)
1
per Student
(2007)
4 Year Institutions
Public Institutions $1,764,493,000 $48,395,487,000 $446,923,000 $50,606,903,000 7,166,697 $7,061
Private Not-For-Profit Institutions $461,833,000 $528,522,000 $12,515,000 $1,002,870,000 3,538,015 $283
Private For-Profit lnstitutions
3
$446,632,000 $35,145,000 $481,777,000 925,873 $520
2 Year Institutions
Public Institutions $131,709,000 $14,302,710,000 $8,653,541,000 $23,087,960,000 6,374,554 $3,622
Private Not-For-Profit Institutions $11,382,000 $6,265,000 $462,000 $18,109,000 44,843 $404
Private For-Profi t Institutions' $313,926,000 $37,923,000 $351,849,000 321,221 $1,095
Less Than 2 Year
Public Institutions $7,364,000 $364,423,000 $302,517,000 $674,304,000 54,598 $12,350
Private Not-For-Profit Institutions $0 $850,000 $0 $850,000 12,349 $69
Private For-Profit Institutions, $302,868,000 $19,174,000 $322,042,000 232,934 $1,383
All Institutions
Public Institutions $1,903,566,000 $63,062,620,000 $9,402,981,000 $74,369,167,000 13,595,849 $5,470
Private Not-For-Profit Institutions $473,215,000 $535,637,000 $12,977,000 $1,021,829,000 3,595,207 $284
Private For-Profit lnstitutions
3
$1,063,426,000 592,242,000 $1,155,668,000 1,480,028 $781
-- -------- ---
1
Table 1,
2
Table 3 from IES National Center for Education Statistics, Enrollment in Postsecondary Institutions, Fa ll 2007: Graduation Rates, 2001 & 2004
Cohorts; and Financial Statistics, Fiscal Year 2007
3
The category for For'-Profit Institutions includes appropriations, grants, and other contracts
http:! /nces ed.r,ov/oubs2009/2009155.pdf
5/16/2010 9:31 AM
works accepts any liability for any damage caused by any virus transmitted by this email.
3
McFadden, Elizabeth
From: Yuan, Georgia
Sent:
To:
Thursday, October 21, 201 o 6:05 PM
McFadden, Elizabeth
Subject:
Attachments:
Fw: Additional Program Approval Requirement of Gainful Employment Rule
AJG Ltr OMB 10 20 1 O.pdf
Did you get a copy? G
From: Guida, Anthony <tony.guida@edmc.edu>
To: Yuan, Georgia
Sent: Thu Oct 2115:19:33 2010
Subject: Additional Program Approval Requirement of Gainful Employment Rule
Georgia,
Hi. I had a meeting today with OMB regarding the above matter and thought you may have been in at the meeting. In
any event, attached is a copy of a letter that I delivered at the meeting that summarizes our position. I had copied you
on the letter.
Tony Guida
SVP, Strategic Development & Regulatory Affairs
o: 412.995.7657
c: 412.901.4037
f : 412.995.7314
aguida@edmc.edu
CONFIDENTIALITY NOTICE: This email and any files transmitted with .it are confidential and intended
solely for the use of the individual or entity to which they are addressed. If you are not the intended recipient,
you may not review, copy or distribute this message. If you have received this email in error, please notify the
sender immediately and delete the original message. Neither the sender nor the company for which he or she
works accepts any liability for any damage caused by any virus transmitted by this email.
78
Educarion \lanagcmcnr ( :orpora rion
Senior Vice President,
Strategic Development and Regulatory Affairs
October 21, 2010
Robert Gordon
Associate Director for Education,
Income Maintenance and Labor
Executive Office of the President
Office of Management and Budget
New Executive Office Building
1735 17th Street, NW
Re: Proposed Gainful Employment Rule Provision Requiring Approval of
.. Additional Programs
Dear Mr. Gordon:
For the reasons set out below, we strongly urge the Office of Management and
Budget to send the rule proposed by the Department of Education (ED) that would
require approval of additional programs (34 C.F.R. 668.7(g)) back to ED to
complete its review and full consideration of the numerous and substantive public
comments that were submitted in response to this proposed rule. To issue the rule
without full consideration of these comments would violate the Administrative
Procedures Act, 5 U.S.C. 553(c), which provides that an agency should "give
interested persons an opportunity to participate in the rule making through
submission of written data, views, or arguments" and shall issue a final rule only
"[a]fter consideration of the relevant matter presented." Further, the regulatory
impact of this proposed rule has not been properly considered under Executive
Order 12866 inasmuch as ED has substantially underestimated the number of new
program applications that the rule will require it to review.
ED published two Notices of Proposed Rulemaking (NPRM) describing its proposed
regulations of the for-profit higher education sector, the first of which was
published on june 18, 2010 and described 13 new regulations, as well as graduation
and job placement disclosures related to the "gainful employment" (GE) rule. The
second NPRM, related exclusively to the GE rule, was issued on July 26, 2010 with a
public comment period that closed on September 9, 2010. The approval of
additional programs requirement first appeared
1
in the second GE NPRM and was
1
It was never raised during the negotiated rulemaking sessions that occurred between November
2009 and Ja nuary 2010.
EducolionJiwl Builds Careers
2 10 Sixth Avenue 33'd Floor Pittsburgh, PA 15222-2603
Phone: 412-995-7657 f'ax: 41 2-995-7314 aill!i,!adill.: .. .::du Wl\11 .\.'dm.:.lom
Robert Gordon
October 21, 2010
Page 2
never mentioned in the first NPRM that ED is currently moving forward with. This
second GE NPRM received an unprecedented 91,000 comments, many of which
expressly addressed the new program approval procedures.
Expressly recognizing the need to allow further time to fully consider the public
comments submitted in response to ED's proposed regulations of the for-profit
higher education sector, on September 24, 2010 ED issued a press release
announcing that it would publish its rules in two phases. While release of the GE
regulations dealing with a program's eligibility to receive federal student aid were
postponed until early 2011, ED announced that the 13 regulations plus the
graduation rate and job placement provision from the second NPRM, would be
released on or around November 1, 2010.
The issue raised concerning additional program approvals by ED are significant and,
like the other comments raised in response to the GE NPRM, could not have
adequately been addressed by ED prior to November 1. The proposed review
process of new programs is a major departure from current practice, which only
requires that non degree programs receive approval by ED with a review essentially
requir ing only confirmation that pertinent state licensing and institutional
accrediting agencies have reviewed and approved the program.
The comments concerning the addition program approval requirement raised by
Education Management Corporation (EDMC), as well as by entities such as the
American Council on Education, the Career Colleges Association, Career Education
Corporation, ITT Technical Institute, Kaplan Higher Education, National Association
of Student Financial Aid Administrators, National Consumer Law Center, School of
Visual Arts, U.S. PIRG, United States Student Association, to name a few, include the
following:
ED lacks the authority under the gainful employment statute to regulate
general economic conditions, as contemplated by both the employer
verifications and growth restrictions contemplated by the rule. Both of these
requirements would regulate job markets, not whether a program prepares
its students for gainful employment;
Employer verification measures that include many complex and interrelated
factors and would require ED to perform functions beyond its expertise,
including
o the assessment of job markets up to nine years in the future (i.e.,
employment opportunities for graduations of 4-year programs
projected over a five year period); and
o analysis of whether a job market is growing, contracting, or otherwise
changing over an extended period of time;
Robert Gordon
October 21, 2010
Page 3
Employers will be put into the position of affirming the curriculum of a
program when curriculum design is well outside the knowledge set of many
employers;
The job market, and not ED, should control how many students are trained
for a particular profession;
Requiring prior approval of new programs by ED will stifle innovation and
the overall impact will limit access to higher education at a time when budget
cutbacks force state institutions to turn away students;
The requirements are burdensome and make no sense in the context of
s ~ h o o l s offering online education or other distance learning based programs
locations;
The prior approval requirement is overly proscriptive and duplicative of
existing regulations that already require accrediting agencies to have
"substantive change" policies that evaluati on substantive changes in
accredited programs;
The regulation as written lacks a standard of application and interpretation
and thus raises substantial due process and fairness concerns. Among the
other matters, the proposed employer verification regulations do not:
o specify what must be included in the documentation the institution
must submit, such as the number of verifications needed or what they
must say;
o provide notice regarding what it means that a program "aligns with
recognized occupations at those employers' businesses" or what data
are required to show that "job vacancies or expected demands for
those occupations at businesses" exist;
o specify how ED will determine that the number and locations of the
businesses for which affirmation is required is "commensurate with
the anticipated size of the program"'
o indicate who will review the verifications or what standards will be
applied in evaluating verifications and ensuring consistent evaluation;
and
o Explain the circumstances under which ED will treat an employer as
"affiliated" with the institution, including serving as a clinical s ite or
making internships available to students.
As detailed in its press release, ED appropriately postponed issuance of the
proposed GE rule due to the additional time required to consider the volumi nous
public comments that it received in response to the second GE NPRM and to host
meetings and public hearings with those who submitted substantive comments.
Robert Gordon
October 21, 2010
Page4
The potential impact of the additional program approval rule that was part of the
second GE NPRM is significant and far reaching, and not surprisingly, generated its
own share of significant comments. In fact, under 668.7(g)(3), certain additional
programs will be subject to loan repayment rate and debt-to-income calculations
under t he proposed GE rule that was postponed until 2011. For the same reasons
that ED delayed issuance of the balance of the second GE NPRM, it should delay
issuance of the additional program approval rules. It simply has not had sufficient
time to thoroughly review and properly consider the public comments submitted in
response to the additional program approval rules in the limited time available
since the comment period on the second GE NPRM closed on September 9.
Finally, we believe that ED has substantially underestimated the number of new
program approvals that it would be required to address on an annual basis. In its
Regulatory Impact Analysis pursuant to Executive Order 12866 (GE NPRM at p.
43636), ED estimated t hat during the initial three year period there will be 312 new
programs submitted by for-profit institutions for revi ew. ln publicly available
information from four publicly traded companies2 operating 107 institutions, these
companies reported that for the most recent one year period they collectively added
a total of nearly 800 new programs. Accordingly, even if the remaining 1,979
proprietary institutions only added an average of one program per institution per
year instead of more than seven, the total number of new programs added over a
three year period would exceed 8,300, which is more than 25 times ED's original
estimate.
For these reasons, while EDMC maintains for the reasons submitted in its public
comments that t he program approval regulations should be completely eliminated
from the fi nal rules, at a minimum the issuance of any such regulation should be
postponed until full review and consideration of the public comments on the rule
has been possible.
Sincerely,
Anthony j. Guida jr.
cc: Georgia Yuan, ED - OGC
2
Education Management Corporation (EDMC), Career Education Corporation (CEC), Corinthian
Colleges (COCO), and ITT Technical Institute (ESI).
McFadden, Elizabeth
From:
Sent:
To:
Subject:
Attachments:
Hi fol ks
Yuan, Georgia
Friday, September 17, 2010 1:49PM
Kvaal, James; Bergeron, David; McFadden, Elizabeth
Schedule for meetings
Program Integrity Schedule Fall 201 O.xlsx; Meetings and Public Hearing Oct 201 O.docx
Yesterday I circulated a draft schedule
Attached is a list of issues we need to resolve re meetings and the public hearing.
James and David
I am leaving for the airport.
I will ask June to find a meeting time for the four of us and whoever else you want to include on Monday so we can
touch base on details .... Hope that's reasonable.
If the meeting does not make sense, just decline and I'll get the message!
Thanks,
Georgia
Georgia Yuan
Deputy General Counsel
Postsecondary and Regulatory Service
LBJ 6E341
202-401-6399
93

Responsive Documents (9/30/10 FOIA) - CREW: Department of Education: Regarding For-Profit Educatio: 6/20/2011 - F McFadden Clean

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Responsive Documents (9/30/10 FOIA) - CREW: Department of Education: Regarding For-Profit Educatio: 6/20/2011 - F McFadden Clean

Uploaded by

Copyright:

Available Formats

McFadden, Elizabeth

You might also like