Responsive Documents - CREW: Department of Education: Regarding For-Profit Education: 8/17/2011 - 11-00026-F GE Release 8.16

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From: Kvaal James
To.: Bergeron, David
Yuan. Geocgja
Chesley, Susan
CC:
Date: 12/7/2010 2:36:24 PM
Subject: 120810 GE draft presentation Exec.pptx
Attachments: 120810 GE draft presentation Exec pptx
(b)(5)
From: Kolotos John
To: FinkeL Jessica.
Finley. Steve
Harris, Nikki
Woodward Jennifer
CC: Bergeron David
Sellers Fred
Date: 9/21/2010 2:29:16PM
Subject: Comment summary for addition programs, proposed 668.7(g)
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From: Yuan Georgia
To.: Canada. June
CC:
Date: 12/6/2010 6:28:22 PM
Subject: FW: 1205IO_GE_draft_presentation v2 dab.pptx
Attachments: 120510 GE draft presentation v2 dab pptx
l(b)(S) I
From: Bergeron, David
Sent: Monday, December 06, 2010 4:35PM
To: Kvaal, James
Cc: Chesley, Susan; Yuan, Georgia; Arsenault, Leigh
Subject: 120510_GE_draft_presentation v2 dab.pptx
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From: Yuan Georgia
To: Finley. Steve
CC:
Date: 12/7/2010 11:02:16AM
Subject: FW: 1205IO_GE_draft_presentation v2 dab.pptx
Attachments: 120510 GE draft presentation v2 dab pptx
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From: Bergeron, David
Sent: Monday, December 06, 2010 4:35PM
To: Kvaal, James
Cc: Chesley, Susan; Yuan, Georgia; Arsenault, Leigh
Subject: 120510_GE_draft_presentation v2 dab.pptx
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From: Yuan Georgia
To.: Canada. June
CC:
Date: 12/7/2010 3: 15:06 PM
Subject: FW: 120810 GE draft presentation Exec.pptx
Attachments: 12081.0 GE draft presentation Exec.pptx
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From: Kvaal, James
Sent: Tuesday, December 07, 2010 1:43PM
To: Kvaal, James; Bergeron, David; Yuan, Georgia; Chesley, Susan
Subject: RE: 120810 GE draft presentation Exec.pptx
l(b)(S) I
From: Kvaal, James
Sent: Tuesday, December 07, 2010 1:36PM
To: Bergeron, David; Yuan, Georgia; Chesley, Susan
Subject: 120810 GE draft presentation Exec.pptx
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From: Finley Steve
To: Macias, \Vendy
CC:
Date: 5/27/2010 1030:54 AM
Subject: FW: "Socially Destmctive and Morally Bankrupt"
Interesting speech
From: Woodward, Jennifer
Sent: Thursday, May 27, 2010 10:13 AM
To:
Subject: "Socially Destructive and Morally Bankrupt"
Included below the article that Brian sent earlier this morning is the text of the speech by Steven Eisman mentioned in the
article.
http:/ /www.insidehighered.com/news/20 10/05/27 /qt#228602
High-Profile Trader's Harsh Critique of For-Profit Colleges
Steven Eisman, the Wall Street trader who was mythologized in Michael Lewis's The Big Short as that rare person who
saw the subprime mortgage crisis coming and made a killing as a result, thinks he has seen the next big explosive and
exploitative financial industry --for-profit higher education --and he's making sure as many people as possible know it.
In a speech Wednesday at the Ira Sohn Investment Research Conference, an exclusive gathering at which financial
analysts who rarely share their insights publicly are encouraged to dish their "best investment ideas," Eisman started off
with a broadside against Wall Street's college companies.
"Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially
destructive and morally bankrupt as the subprime mortgage industry," said Eisman, ofFrontPoint Financial Services
Fund. "I was wrong. TheFor-ProfitEducation Industry has proven equal to the task." Eisman's speech lays out his
analysis of the sectors enormous profitability and its questionable quality, then argues that the colleges' business model is
about to be radically transformed by the Obama administration's plan to hold the institutions accountable for the student-
debt-to-income ratio of their graduates. "Under gainful employment, most of the companies still have high operating
margins relative to other industries," Eisman said. "They are just less profitable and significantly overvalued. Downside
risk could be as high as 50 percent. And let me add that I hope that gainful employment is just the beginning. Hopefully,
the DOE will be looking into ways of improving accreditation and of ways to tighten rules on defaults." Stocks of the
companies appeared to fall briefly in the last hour of trading Wednesday, after news ofEisman's speech made the rounds
I I I I I I 1++++++++++++++++++++++++ 1 I I I I I I I+++++++++++++++++++
IRA SOHN CONFERENCE
Presentation by Steve Eisman
SUBPRIME GOES TO COLLEGE
May 26,2010
Good Afternoon. I would like to thank the Ira Sohn Foundation for the honor of speaking before this audience. My
name is Steven Eisman and I am the portfolio manager oftheFrontPointFinancial Services Fund. Until recently, I
thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally
bankrupt as the subprime mortgage industry. I was wrong. The For-Profit Education Industry has proven equal to the
task.
The title of my presentation is "Subprime goes to College". The for-profit industry has grown at an extreme and unusual
rate, driven by easy access to government sponsored debt in the form of Title IV student loans, where the credit is
guaranteed by the government. Thus, the government, the students and the taxpayer bear all the risk and the for-profit
industry reaps all the rewards. This is similar to the subprime mortgage sector in that the subprime originators bore far
less risk than the investors in their mortgage paper.
In the past 10 years, the for -profit education industry has grown 5-10 times the historical rate of traditional post
secondary education. As of2009, the industry had almost 10% of the enrolled students but claimed nearly 25% of the
$89 billion ofFederal Title IV student loans and grant disbursements. At the current pace of growth, for- protit schools
will draw 40% of all Title IV aid in 10 years.
How has this been allowed to happen?
The simple answer is that they' ve hired every lobbyist in Washington D.C. There has been a revolving door between the
people who work or lobby for this industry and the halls of government. One example is Sally Stroup. She was the head
lobbyist for the Apollo Group- the largest for-profit company in 2001-2002. But from 2002-2006 she became
Assistant Secretary of Post-Secondary Education for the DOE under President Bush. In other words, she was directly in
charge of regulating the industry she had previously lobbied for.
From 1987 through 2000, the amount of total Title IV dollars received by students of for-profit schools fluctuated
between $2 and $4 billion per annum. But then when the Bush administration took over the reigns of government, the
DOE gutted many of the rules that governed the conduct of this industry. Once the floodgates were opened, the industry
embarked on 10 years of unrestricted massive growth.
[Federal dollars flowing to the industry exploded to over $21 billion, a 450% increase.]
At many major-for profit institutions, federal Title IV loan and grant dollars now comprise close to 90% of total
revenues, up significantly vs. 2001 . And this growth has driven even more spectacular company profitability and wealth
creation for industry executives. For example, ITT Educational Services (ESI), one of the larger companies in the
industry, has a roughly 40% operating margin vs. the 7%-12% margins of other companies that receive major
government contracts. ESI is more profitable on a margin basis than even Apple.
This growth is purely a function of government largesse, as Title IV has accounted for more than 100% of revenue
growth. Here is one of the more upsetting statistics. In fiscal2009, Apollo, the largest company in the industry, grew
total revenues by $833 million. Of that amount, $1.1 billion came from Title IV federally-funded student loans and
grants. More than 100% of the revenue growth came from the federal government. But ofthjs incremental $1.1 billion in
federal loan and grant dollars, the company only spent an incremental $99 million on faculty compensation and
instructional costs- that' s 9 cents on every dollar received from the government going towards actual education. The
rest went to marketing and paying the executives.
But leaving politics aside for a moment, the other major reason why the industry has taken an ever increasing share of
government dollars is that it has turned the typical education model on its head. And here is where the subprime analogy
becomes very clear.
There is a traditional relationship between matching means and cost in education. Typically, families oflesserfinancial
means seek lower cost institutions in order to maximize the available Title IV loans and grants - thereby getting the most
out of every dollar and minimizing debt burdens. F amities with greater financial resources often seek higher cost
institutions because they can afford it more easily.
The for-profit model seeks to recruit those with the greatest financial need and put them in high cost institutions. Ths
formula maximizes the amount ofTitle IV loans and grants that these students receive.
With billboards lining the poorest neighborhoods in America and recruiters trolting casinos and homeless shelters (and I
mean that literally), the for-profits have become increasingly adept at pitching the dream of a better life and higher
earnings to the most vulnerable of society.
But if the industry in fact educated its students and got them good jobs that enabled them to receive higher incomes and
to pay off their student loans, everything rve just said would be irrelevant.
So the key question to ask is- what do these students get for their education? In many cases, NOT much, not much at
all.
Here is one of the many examples of an education promised and never delivered. This article details a Corinthian
Colleges-owned Everest College campus in California whose students paid $16,000 for an 8-month course in medical
assisting. Upon nearing completion, the students learned that not only would their credits not transfer to any community
or four-year college, but also that their degree is not recognized by the American Association for Medical Assistants.
Hospitals refuse to even interview graduates.
But let' s leave aside the anecdotal evidence of this poor quality of education. After all the industry constantly argues that
there will always be a few bad apples. So let's put aside the anecdotes and just look at the statistics. If the industry
provided the right services, drop out rates and default rates should be low.
Let's first look at drop out rates. Companies don' t fully disclose graduation rates, but using both DOE data, company-
provided information and admittedly some of our own assumptions regarding the level of transfer students, we calculate
drop out rates of most schools are 50%+ per year. As seen on this table, the annual drop out rates of Apollo, ESI and
COCO are 50%-100%
How good could the product be if drop out rates are so stratospheric? These statistics are quite alarming, especially
given the enormous amounts of debt most for-profit students must borrow to attend school.
As a result of these high levels of debt, default rates at for profit schools have always been significantly higher than
community colleges or the more expensive private institutions.
We have every expectation that the industry' s default rates are about to explode. Because of the growth in the industry
and the increasing search for more students, we are now back to late 1980s levels of! ending to for profit students on a
per student basis. Back then defaults were off the charts and fraud was commonplace.
Default rates are already starting to skyrocket. It' s just like subprime - which grew at any cost and kept weakening its
underwriting standards to grow.
By the way, the default rates the industry reports are artificially low. There are ways the industry can and does
manipulate the data to make their default rates look better.
But don't take my word for it. The industry is quite clear what it thinks the default rates truly are. ESI and COCO
supplement Title IV loans with their own private loans. And they provision 50%-60% up front for those loans. Believe
me, when a student defaults on his or her private loans, they are defaulting on their Title IV loans too.
[Let me just pause here for a second to discuss manipulation of statistics. There are two key statistics. No school can get
more than 90% of its revenue from the government and 2 year cohort default rates cannot exceed 25% for 3 consecutive
years. Failure to comply with either of these rules and you lose Title IV eligibility. Lose Title IV eligibility and you' re
company' s a zero.
Isn't it amazing that Apollo' s percentage of revenue from Title IV is 8 ~ / o and not over 90%. How lucky can they be?
We believe (and many recent lawsuits support) that schools actively manipulate the receipt, disbursement and especially
the return of Title IV dollars to their students to remain under the 90/10 threshold.]
The bottom line is that as long as the government continues to flood the for profit education industry with loan dollars
AND the risk for these loans is borne solely by the students and the government, THEN the industry has every incentive
to grow at all costs, compensate employees based on enrollment, influence key regulatory bodies and manipulate
reported statistics - ALL TO MAINTAJN ACCESS TO THE GOVERNMENT' S MONEY.
In a sense, these companies are marketing machines masquerading as universities. And when the Bush administration
eliminated almost all tl1e restrictions on how tl1e industry is allowed to market, the machine went into overdrive. [Let me
quote a bit from a former employee ofBPI.
"Ashford is a for profit school and makes a majority of its money on federal loans students take out. They conveniently
price tuition at the exact amount that a student can qualify for in federal loan money. There is no regard to whether a
student really belongs in school, the goal is to enroll as many as possible. They also go after GI bill money and currently
have separate teams set up to specifically target military students. If a person has money available for school Ashford
finds a way to go alter them. Ashford is just the middle man, profiting off this money, like milking a cow and working the
system within the limits of what's technically legal, and paying huge salaries while the student suffers with debt that can't
even be forgi ven by bankruptcy. We mention tuition prices as little as possible .. th.is may cause the student to change
their mind.
While it is illegal to pay commissions for student enrollment, Ashford does salary adjustments, basically the same thing.
We are given a matrix that shows the number of students we are expected to enroll. We also have to meet our quotas
and these are high quotas.
Because we are under so much pressure, we are forced to do anything necessary to get people to fill out an application
- our jobs depend on it.
It's a boiler room- selling education to people who really don' t want it."
This former employee then gives an example of soliciting a sick old lady to sign up for Ashford to meet his quota.
"The level of deception is disgusting- and wrong. When someone who can barely afford to live and feed kids as it is,
and doesn' t even have the time or education to be able to enroll, they drop out. Then what? Add $20,000 of debt to
their problems - what are they gonna do now. They are officially screwed. We know most of these people will drop out,
but again, we have quotas and we have no choice." ]
How do such schools stay in business? The answer is to control the accreditation process. The scandal here is exactly
akin to the rating agency role in subprime securitizations.
There are two kinds of accreditation-- national and regional . Accreditation bodies are non-governmental, non-profit
peer-reviewing groups. Schools must earn and maintain proper accreditation to remain eligible for Title IV programs. In
many instances, the for-profit institutions sit on the boards of the accrediting body. The inmates run the asylum.
Historically, most for profit schools are nationally accredited but national accreditation holds less value than regional
accreditation. The latest trend of for profit institutions is to acquire the dearly coveted Regional Accreditation through the
outright purchase of small, financially distressed non-profit institutions and then put that school on-line. In March 2005,
BPI acquired the regionally accredited Franciscan University of the Prairies and renamed it Ashford University.
[Remember Ashford. The former employee! quoted worked at Ashford.] On the date of purchase, Franciscan (now
Ashford) had 312 students. BPI took that school online and at the end of2009 it had 54,000 students.
SOLUTIONS
While the conduct of the industry is egregious and similar to the sub prime mortgage sector in just so many ways, for the
investment case against the industry to work requires the government to do something-- whereas in sub prime all you had
to do was wait for credit quality to deteriorate.
So what is the government going to do? It has already announced that it is exploring ways to fix the accreditation
process. It will probably eliminate the 12 safe harbor rules on sales practices implemented by the Bush Administration.
And I hope that it is looking at everything and anything to deal with this industry.
Most importantly, the DOE has proposed a rule known as Gainful Employment. In a few weeks the DOE will publish
the rule. There is some controversy as to what the proposed rule will entail but I hope that the DOE will not backtrack
on gainful employment. Once the rule is published in the federal registrar, the industry has until November to try to get
the DOE to back down.
The idea behind the gainful employment rule is to limit student debt to a certain level. Specifically, the suggested rule is
that the debt service-to-income-ratio not exceed 8%. The industry has gotten hysterical over this rule because it knows
that to comply, it wiii probably have to reduce tuition.
[Before I tum to the impact of the rule, let me discuss what happened last week. There was a news report out that Bob
Shireman, the Under Secretary ofEducation in charge of this process was leaving. This caused a massive rally in the
stocks under the thesis that this signaled that the DOE was backing down from gainful employment. This conclusion is
absurd. First, of all, inside D.C. it has been well known for a while that Shireman always intended to go home to
California after a period of time. Second, to draw a conclusion about the DOE changing its policy because Shireman is
leaving presupposes that one government official, one man, drives the entire agenda of the U.S. government.]
I cannot emphasize enough that gainful employment changes the business model. To date that model has been constant
growth in the number of students coupled with occasional increases in tuition. Gainful employment will cause enrollment
levels to grow less quickly. And the days of raising tuition would be over; in many cases, tuition will go down.
To illustrate the impact of gainful employment, I've chosen 5 companies, Apollo, ESI, COCO, EDMC and the
Washington Post. Yes, the Washington Post, whose earnings are all driven by this industry.
Assuming gainful employment goes through, the first year it would impact would obviously be 2011. However, because
the analysis is so sensitive to tuition levels per school, it' s best to have as much information as possible. So for analytical
purposes, we are going to show the impact on actual results in fiscal 2009 and this year' s estimates under the assumption
that gainful employment was already in effect.
We employ 2 scenarios. Scenario 1 is static. It takes actual results and then reduces tuition costs to get down to the 8%
level. Scenario 2 is dynamic. It assumes the same thing as scenario 1 but then assumes the companies can reduce costs
by 5%-15%.
Results for each company depend largely on the mix of students, the duration of each degree and the price of tuition at
each institution
For each company, I show the results under the two scenarios and the cotTesponding PIEs. Needless to say, the PIE
multiples look quite a bit different under either scenario.
Apollo- In fiscal 2009, the company earned $4.22. The consensus estimate for fiscal 2010 is $5.07. Under scenario 1,
fiscal 2009 and the fiscal 2010 estimate get cut by 69% and 57%, respectively. Under scenario 2, it gets cut 50% and
41%, respectively.
ESI- In fiscal 2009, the company earned $7.91. The consensus estimate for fiscal2010 is $11.05. Under scenario 1,
fiscal 2009 turns slightly negative and the fiscal 2010 estimate gets cut by 74%. Under scenario 2, fiscal 2009 declines
by 75% and the 2010 estimate gets cut by 53%.
COCO- In fiscal2009, the company earned $0.81. The consensus estimate for fiscal2010 is $1.67. Under scenario 1,
fiscal 2009 turns negative and the fiscal 2010 estimate gets cut by 94%. Under scenario 2, fiscal 2009 declines by 79%
and the 2010 estimate gets cut by 38%.
EDMC- In fiscal2009, the company earned $0.87. The consensus estimate for fiscal2010 is $1.51. Under scenario
1, fiscal 2009 and the fiscal 2010 estimate turns massively negative. Under scenario 2, fi scal 2009 and the fiscal 2010
estimate are also massively negative, just less massively than scenario 1. The principal reason why the numbers are so
bad for EDMC is that they have a lot of debt and that debt has to be serviced and cannot be cut.
Washington Post - The Post's disclosure of Kaplan metrics is slight. Thus, analyzing the impact from gainful employment
is much more difficult and we have confined our analysis solely to fiscal2009. In fiscal2009, WPO earned $9.78.
Under scenario 1, a loss of$33.25 per share occurs. Under scenario 2, there is still a loss of$6.19. The principal reason
why the numbers are so bad for the Post is that more than 100% of its EBIDTA comes from this industry through its
Kaplan di vision.
[Let me just add one caveat to our analysis. Implementation of gainful employment could result in a cut in marketing
budgets. Given the high drop out rates of this industry any such cuts could tum a growth industry into a shrinking
industry. The numbers that I just showed do not assume that the industry shrinks but grows at a slower pace.]
Under gainful employment, most of the companies still have high operating margins relative to other industries. They are
just less profitable and significantly overvalued. Downside risk could be as high as 50%. And let me add that I hope that
gainful employment is just the beginning. HopefuUy, the DOE will be looking into ways of improving accreditation and of
ways to tighten rules on defaults.
Let me end by driving the subprime analogy to its ultimate conclusion. By late 2004, it was clear to me and my partners
that the mmtgage industry had lost its mind and a society-wide calamity was going to occur. It was like watching a train
wreck with no ability to stop it. Who could you complain to?- The rating agencies?- they were part of the machine.
Alan Greenspan? - he was busy making speeches that every American should take out an ARM mortgage loan. The
OCC? -- its chaim1an, John Dugan, was busy suing state attorney generals, preventing them from even investigating the
subprime mortgage industry.
Are we going to do this all over again? We just loaded up one generation of Americans with mortgage debt they can't
afford to pay back. Are we going to load up a new generation with student loan debt they can never afford to pay back.
The industry is now 25% of Title IV money on its way to 40%. If its growth is stopped now and it is policed, the
problem can be stopped. It is my hope that this Administration sees the nature of the problem and begins to act now. If
the gainful employment rule goes through as is, then this is only the beginning of the policing of this industry.
But if nothing is done, then we are on the cusp of a new social disaster. If present trends continue, over the next ten
years almost $500 billion of Title IV loans will have been funneled to this industry. We estimate total defaults of$275
billion, and because of fees associated with defaults, for profit students will owe $330 billion on defaulted loans over the
next 10 years.
[Bracketed Sections might be deleted during speech.]
I I I I I I 1++++++++ 1 I I I I I I 1++++++++ 1 I I I I I I 1++++++++++4
http :1 I dealbook.blogs.nytimes.com/20 1 0/05/26/li ve-from-the-ira-sohn-20 1 0-conference/?src=busln
Hedge Funds
Live From the Ira Sohn 201 0 Conference
May 26, 20 l 0, 3:28 pm
8:29p.m. I Updated Unlike previous years, this year's Ira Sohn Investment Research Conference didn' t have any
blockbuster revelations- certainly nothing on the orderofDavid Einhorn's bet against Lehman Brothers or William A
Ackman' s assault on MBIA, the bond insurer.
But several themes emerged from the conference, one of the most heralded in the investing world, where top-name
executives deliver 15-minute presentations of their top trading ideas. (Or in Mr. Ackman's case this year, a little closer
to 30 minutes.)
Chief among them was the idea that the credit ratings agencies have yet to face an overhaul that addresses their
weaknesses. (For the full rundown, check out my Twitter coverage of the conference.)
Mr. Einhorn, the head of GreenJight Capital reiterated his short bet against the Moody' s Corporation. He argued- as
did others like Mr. Ackman of Pershing Square Capital Management and Seth Klarman of Baupost the Group- that
the credit ratings agencies remain beholden to the banks whose products they are supposed to analyze independently.
Nearly every fund manager who spoke at the conference expressed a bearish position on Western economies, arguing
that they are simply too over-leveraged and unable to address their liabilities to stay on top. A few executives, including
Daniel Arbess of Perella Weinberg Partners, expressed instead a deep interest in China.
"We like shaking hands with China," Mr. Arbess said.
Gold also proved popular with the likes of Mr. Arbess and Mr. Einhorn, who said he had acquired shares in Afiican
Barrick Gold, a spinoff of gold miner Barrick Gold.
A memorable bearish bet came from Steve Eisman, the FrontPoint Financial Services Fund founder who gained fame
with Michael Lewis' s book "The Big Short." Mr. Eisman devoted much of his presentation to a highly critical analysis of
for -profit education companies, showing his hand with the very title of his PowerPoint deck: "For Profit Education:
Subprime Goes to College."
Original post: DealBook is on hand for the Ira W. Sohn Investment Research Conference, the famous annual meeting of
high-profile investors where some of the biggest trades of the year are discussed. (It's where David Einhorn of
Greenlight Capital delivered his polemic against Lehman Brothers, for example.)
Below is DealBook' s live twittering of the goings on at the conference, being held in Midtown Manhattan.
From: Woodward Jennifer
To: Thompson. Lauren
CC:
Date: 9/22/2010 3:15:24 PM
Subject: FW: Comment summary for addition programs, proposed 668.7(g)
l(b)(5) I
-----Original Message-----
From: Kolotos, John
Sent: Tuesday, September 21, 2010 2:29PM
To: Finkel, Finley, Steve; Harris, Nikki; Woodward, Jennifer
Cc: Bergeron, Sellers, Fred
Subject: Comment summary for addition programs, proposed 668.7(g)
(b)(5)
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To: Kolotos. John
CC: Wexler. Rob
Thompson. Lauren
Finkel, Jessica
Sellers Fred
Guthrie, Marty
McCullough Carney
Date:
Finley, Steve
9/22/2010 3:57:00 PM
Subject: FW: Comments on "Additional Programs"
John-
Here are the comments provided by Kaplan and Capella on "additional programs." ](bJ(S)
(b)(S)
Jennifer
From: Wexler, Rob
Sent: Wednesday, September 22, 2010 3 :23 PM
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.
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), September9, 2010,
See Section II, Page 3, of Capella' s comments:
Second. these comments propose that ttle Department elther exempt graduate
progrnrrl$ from rts proposed rl)les or an exempt1oo 1ot Institutions with a
history of low cohort default rates.
Capella University Comments related to Proposed 668.7(g), September 9, 2010,
See Section VI, Page 10, of Capella's comments:
.. In alternative, tne Department could exemptfrom tile regulations graduate programs.
CapeUa urges the Department to COrt$ldet this option because graduate tevel students
are more likely to acquire higher debt revels and to take advantage of consolidated
loans, or roJT41ymr.-nt plans that anew for periods of lrterest..o11Jy payments. It is
app.-opriale for such students too take on debt- many of these studentS ate
wort<lng adults seeking to advance lheit careers and therefore, their potenftaJ return on
investment Is greater. As stated eartier in these commen\5, it is prudent for graduate
students to choose loan consolidatfQO.Or omet tepayme:nt plans and they and their
instilutrons not be penalized for such choices.
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
Programs"
KAPLAN'S COMMENTS:
Kaplan Comments related to Proposed 668.7(g), September 9, 2010,
See Section II.C, Page 9 ofKaplan' s comments:
C. The Proposed Rules Har:na Stud&nts ny Stilling J nnova tion and Discouragutg
New Pr ograms.
Proprietary schools are at. fordronl nfinnoyation, particularly innovation jn the
deli\cy of cducatiot\. Tile)' are ol online education and blended academic of
the use of data analysis ro support studenl retention, und of new method-; for measuring student
learning. See, fot exnntple, Clayton M. Christen.<K:n, Scott(). Anth{'lny, Erik A. Roth, Seeing
What's .Vexl. 'Harvard Business School PresSy at Chapter Five (2004).
The Department proposes that it must appl"UVC all new prt>grams and lhat arty such
approval would include a gainful t'mploymcnt analysis. See 15 Fed. Reg. 43,624. Tltis costly
approval step is redundant a11d unnecessary: State regulatory bodies and accrediting agencies.
already require approval of new programs. ln fact. in the June 18, 2010 NPit\.1. tlte DepartJ'tlent
proposed to require State rogltlatory bodies to take an added role in program oversight rhc
addilional administrative burden chat the approval and affirmation will impose on
Department and on schools will result in increased program costs. Kaplan alone
implemented scores of new pmgrams over the last year. How will the Department be able
efficiently to review the- anticipated numbers of programs with the speed required for educational
institutions ro functioo efft:eli vely? lf it cannot, new und needed programs will be iudefinitely
delayed.
Addilionally, the proposed rull."'S (Q 1 bat schools obtuil la<;a! bucs.inesscs
support to demonstrate demand for any new program. 75 Fed. Reg.
Section 668.7(n)(ii) & (iii). 1 he rl'quiremcnt that au institution must prove that there 11re
project-ed job vacancies or thnt employers nre predicting that they will c:xperienee cerutin te""Cis
of demand for those occupatioos at their businesses does not fall within any
understanding of the statUtory requ1rement that prepare students for gainful
cmploymeflt. Not only rhat. the proposed rules do nat adequately explain how the process of
croployer affirmation will be conducted or huw the Department will verify or review that
affinnati0t1. The rules also do not discuss how this requirement would be applied al Otllinc or
<?ther national schools. Because this requirement lacks any defined objective metric tl'uit the
Department must t() determine \\-'hether or not: a program is acceptable, it leaves the
Department with vague and arbitrary ultimate power to approve or deny a program.
Finally. Lhe proposed rules cOectivel)' make the Department - not the demands of the
economy or stt1denrs- the arbilcr of postsecondary offerings. Such a sy$lcm will not only be
tQstly and ineff&eient. it afso is not designed to resuh in programs lhat v.ilf best serve srudents
our natiMal economic interests.
CJearl)', frorn the above, !h<.-sc rules will have signiticanl consequences for miUions of
students. for reasons we agnin respectfully urge the Department to reconsider irs approach
to trying to limit exeessive student debt .and misleading or Ineffective programs.
1
34 CFR Part 668
Comments from Kaplan Higher Education Corporation on " Additional
Programs"
See Section IV.A. 3, Page 16, of Kaplan' s comments:
3-. The Department Should Nut Require }:tnployer For
Program&. Or, Espaciall)\ For Online Pr ograms.
'fhe D<;Jlurtment should not adopt rhe employer affirmation rcqu in
with ifs ttpproval of ncv. programs. TI1ese requirements are t>ntmw; and unduly burdensome and
wiLL frustrate innO\ation and increase -costs. At the very least. the Department should make clear
th:n local emP"Joycr affirmations are not required whoo sthools are offering Qr1 line or othe.r
distance based pt"Ograros. '11'tc local requirement simply no sense in1his conLcxt since
onl progmms attra<:r student from across tbt country and around the world.
1
34 CFR Part 668
Programs"
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.
See Section III.C, Page 14, of Kaplan' s comments:
C. The Department's Apptictttion Of The Proposed Rules 1'o Eacb Pogrtlm,
Tbao To Institution, Contravenes The HEA.
l'he HCA. d"'es not authorize the Department oo require all programs offered by a
pr<)prietary institution of higher to prep:trc students for "gainful ernploymcnf' io a
rec-ognized occupation. TI)e Department cites lhc dcflnilion of a proprktary ofhigher
edttctnion in sec lion t 02(b) of the HEA as authority for ttlis requirement. See 75 Fed. Reg.
4j,6J9, However, 102(b) proptietar) institutions ofhi.gher education to
provide: ""on eligible ptogrttm l)j"irllillillg to prepare students for gaii,ful entpl<>ytnent jo a
recognized O:uparion: 20 U.S.C. 1002(b)(t}(a)(i) (emphasis suppHed). Tire provision
not require ed.ucattonal training" at a proprietary iJlStitution to prepare students
foe- gainft1l employmenL 1'he prt>visron ooly requires "an t.ligibte progrum oft:rai'ning"- at
least one such program.
!!urthermon; section r 02(b) estabtishts requirements forM institUlion to quaHfy as a
Title IV eligible proprietary jn$tltution. but not separate eligibility requirements for each of the
inst illltion 's educationa Such institutions qualify for Tide tV eligibility because
section I02(n){1)(A) deems a proprietary imtittttion Lobe an "institution for
purposes ofT1de IV. In tum, section 481authorir..ts'tinstitutionsofhigher education" to
participate in the TitJe IV programs ("[ljn order to be an eligible institut1M for the puqroses of
any progmm authorized under (Tick IVJ. ID'l inslitution m\lst be an irt$titution ofh;ghcr
or eligible institutton and shall ... enter into a program participation agreement,.). None <lfthese
provisions establishes separatt. "gainful employmem requirements ror each educational
and rhc ntlcs requiring schools to meet this standard are inconsistent with the
1
34 CFR Part 668
Programs"
See Section IV.A.l , Page 15, of Kaplan' s comments:
1. 'f l:lc f.mphlyment Rules Should Not Ap))ly To Degree
Programs.
The proposed rules should not extend to degree programs offered by proprietary schools.
The benefits conferred by degree programs. s.uch as high<..T lifetime earnings, higltel' income
growth rJlCS. greater ernployabillty, better earecr sdvanc.cmcnt and job do not readily
lend thcm.selve:> to a formulaic approach to measuring v.aluc based on early ccrre<:r eamings.. As.
meutioned above. a recent B LS report iound that a degree is almost necessary to ensure
continurngjob opportunities in tough CCOJl()m{c thocs. The BLS \\-ent on to state xhar.
Business run chelr course and the economy goes from t.-xpansion to
recession - bul regardless <>f whether the economy is booming or contracting, an
inverse te[ationship exists behvccn education and unemplo)-1TleJJL: more education
is. associated with less untmploymcnt. Jn 2009, the unemployment rate for
workers with eollege degrees lW\S 4.6 percent. The rate fonvorkers without a
high school diploma was l 0 points highel".
Back lO College?, Ofcollegel bomc.hfm.
1
34 CFR Part 668
Comments from Kaplan Higher Education Corporation on " Additional
Programs"
The value of opportunity and stability, in pcrxls of dowtttum,
cmmol be W1r quanrificd by lhcsc rules, The Depmmcnt seemingly recognized facLS
when it excluded prognnns at non-profit inslitu!Jon<; (com the gainful e:rnploymenl
requirement in tlte June 18, 2010 NPRM. 'tbc Department sh.ould not apply the gainful
employment nJtes to degree programs in Lhc same mannel"they .apply in the more troditiorull
vocational school setting.
1
To: Thompson. Lauren
Wexler. Rob
CC:
Date: 9/22/2010 4:08:50 PM
Oh, good.
From: Finkel, Jessica
Sent: Wednesday, September 22, 2010 4:08PM
Subject: RE: Comments on "Additional Programs"
From: Woodward, Jennifer
Sent: Wednesday, September 22, 2010 3:57 PM
To: Kolotos, John
Cc: Wexler, Rob; Thompson, Lauren; Finkel, Jessica; Sellers, Fred; Guthrie, Marty; McCullough, Carney; Finley, Steve
John-
Here are the comments provided by Kaplan and Capella on "additional programs."
1
(b)(S)
(b)(S)
"ffilK"YOlT,
Jennifer
From: Wexler, Rob
Sent \!Vednesday, September 22, 2010 3:23 PM
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.
(b)(5)
};;> Docket ID: ED-2010-0PE-0012 Gainful Employment in a Recognized Occupation
Reference: 34 CFR 668.7, 668.13,668.90
The University embraces the objective of full transparency to encourage students to borrow responsibly.
In addition to the clear and intrinsic value of higher education which provides a more broadly and
deeply educated citizenry, students obtain a postsecondary education for many reasons: to begin a
career, change careers or gain additional knowledge and skills to advance in their current career. In
1976, most proprietary schools offered vocational and occupational training programs leading to
recognized occupations at that time. Today, regionally accredited proprietary schools provide higher
education in academic programs and confer baccalaureate and post-baccalaureate degrees. If the
ultimate objective is to encourage students to borrow responsibly, additional student protections should
be debated by Congress and new legislation adopted before any new regulations are proposed. For the
reasons outlined below, these proposed regulations are discriminatory, overly complex, non-verifiable
with no ability to cure, administratively burdensome, too vague to properly assess the impact or
effectiveness, and have many unintended consequences. We are concerned that the rule as currently
proposed does not achieve public policy objectives, and we respectfully request the Department to
withdraw the regulatory proposal until congressional intent has been revisited and established.
The proposed regulation for determining eligibility of programs that lead to gainful employment is:
Discriminatory
If the Department is truly concerned about high debt and ability to repay, any proposed rules should
apply to all students. The recently released loan repayment rate data indicates the problem is not
limited to proprietary schools. If the proposed rule applied across all sectors and programs, one third of
community colleges, nearly one half of schools with the largest concentration of Hispanic enrollment,
and the vast majority of Historically Black Colleges and Universities would fail the loan repayment rate.
Sound public policy must achieve consistent treatment of students and schools.
Overly complex
The Department openly admits the proposed metrics are based on incomplete data because the
"current system does not yet track the detailed information". For example, with regards to the
proposed calculation of loan repayment, a consolidation loan will capitalize accrued, unpaid interest
under certain conditions, causing an increase in the principal balance even if the borrower is making the
required regular amortized payment on the loan. Another example is that interest and fees must be
paid before principal reduction on the rehabilitation of delinquent loans. These examples demonstrate
how, even if a student may be in good standing repaying their debt, they would still be counted against
the program's loan repayment ratio. Finally, due to the aforementioned data availability restrictions
and because of t he economic recession and combination of recent legislation (ECASLA, FFELP
elimination and exclusivity of Direct loans), the vast majority of current students will require loan
consolidation, deferment and forbearance entitlements, and/or income based repayment options; all of
which are unable to be tracked within the proposed loan repayment calculation. Sensible public policy
should be transparent and simple enough that all stakeholders can clearly gauge how they are impacted
by the regulation.
Non-verifiable with no ability to cure
We are concerned about the dependency on Social Security Administration or other federal agency for
income verification. The proposal lacks due process because the income data provided by the Social
Security Administration is non-verifiable. Additionally, legal uncertainty exists whether or not the
Department could obtain confidential income information without a release from the taxpayer.
Furthermore, under the proposed regulations, institutions have no ability to view draft rates and
challenge the data integrity prior to official public release, as afforded under the cohort default rate
regulations. Moreover, the proposed regulation timeframe has a retroactive application with no
opportunity for institutions to cure any problem. If the intent of the proposed rule is to reign in debt
incurred by students, a longer phase-in period of restrictions and ineligibility may be warranted to
enable schools to get programs "into shape". If the intent is simply to get rid of programs, then the
proposed implementation schedule is probably effective. Reasonable and prudent public policy
implementation should be forward looking to allow corrective action plans to be effectuated.
Administratively burdensome
Considering the significant economic impact of these proposed regulations, the overall cost benefit
analysis is debatable. We believe the Department is significantly underestimating the data collection
burden and cost on institutions a
1
nd the government. For instance, in order to capture the necessary
student level loan detail information, the IPEDS file record layout will require extensive modification and
technical review. In turn, institutions need to develop new software, customize queries and perform
validation procedures to ensure data integrity. The complexity of multiple government agencies
capturing and exchanging student specific earnings data with personal identifier information is
unfathomable.
Unintended consequences
The proposed regulation is punitive to certain student populations. Existing research on Pelt grant
recipients indicates lower socioeconomic students would be adversely affected by this proposal. By
nature, Pell grant recipients are generally at-risk students that challenge all schools {public, private
nonprofit and proprietary) with the same issues. These proposed rules are discriminating to students,
not the schools they choose to attend. Additionally, ethnic diversity is underrepresented in the sample
model, therefore, the Missouri debt-to-income data is not a good proxy for national averages, especially
Hispanic and African American groups.
The debt to earnings test uses discretionary income on the poverty guideline for a single person yet
many non-traditional students are single parent families. Furthermore, the current proposal does not
consider personal, family matters by excluding household income in the debt to earnings calculation
even though the loan may have a reduced principal balance.
Post-baccalaureate, graduate and professional programs seem to fa II outside of the concept of training
programs. Many non-degree programs enable an individual to refine their expertise or obtain a
specialization associated with a recognized occupation; however, the intent of the program is not
necessarily training to move the individual into the job market or basic career field (e.g. teacher's
certificate). Therefore, post-baccalaureate degrees and certificate programs should be excluded from
these regulations.
Congress created many viable alternatives for students facing economic hardship. In fact, the
Department encourages loan consolidation and promotes the income based repayment plan. The
proposed regulations would have an undesirable effect on students if schools steer students away from
beneficial repayment plans, deferments or forbearances because it does not reduce principal balance.
The proposed regulation is an impediment to market adjustments by requiring prior approval from the
Department for additional programs. The criteria and timeframe for program approval by the
Department are vague at best. The proposal provides no guidance for how programs may be evaluated,
allows no ability to challenge the rulings of the Department, provides no timing assurances on review
periods, and ultimately may disadvantage the American higher education system compared to other
countries due to the lack of innovative higher education programs. For example, technology changes at
a rapid pace and the business industry mandates adjustments to educational programs to meet these
dynamic changes. Also unclear in the proposal are t h ~ expectations of employer affirmations for
national and/or global distance-learning academic programs. The proposed regulation will stifle
innovation and has a crippling effect on the marketplace agility that could potentially eliminate high
quality programs, yet not impact programs of questionable value.
Economists have demonstrated it takes well beyond three years after graduation for those with higher
degrees to begin to experience the real financial advantage of additional education. Current or future
economic recessions are unpredictable and adversely affect the debt to income ratio. Can the value of a
program be isolated from temporary economic vagaries? With the national unemployment rate
hovering near ten percent, should we risk losing programs because of temporary economic problems
when the need for these programs will reassert itself?
The proposed regulation has the potential to eliminate access to higher education for many working
adults who have no alternative at a time when state budget cutbacks are forcing state financed
institutions to turn away students.
Although unconscionable, discriminatory, and potentially impermissible under existing federal law and
regulation, the most frightening unintended consequence is that institutions may contemplate prior
college loan balances as admissions criteria.
Too vague to assess the impact or effectiveness
The proposed regulation is vague and ambiguous on a number of fronts. For example, areas that need
clarity include, but are not limited to:
The treatment of loans for students who obtain multiple degrees from the same school. CIP
codes will be used to link specific students with specific programs at an institution. If an
institution has multiple programs with the same CIP code, how wi ll the Department perform
program-level calculations?
What will be the impact of these rules on traditionally low-paying jobs with existing shortages of
qualified individuals that have cost intensive preparation?
Consolidation loans are excluded from loans paid in full, but the proposed rule does not explain
how to treat them in reduced principal balance.
The proposal uses the terms "earnings" and "income" interchangeably and each has different
meani ngs.
An unaffiliated employer is not clearly defined and, on the surface, certainly not qualified to
determine if a program's curriculum aligns with occupations at those employers' business.
The proposed regulation is opaque in so many ways. Without further clarification and definition, we
cannot determine if the rule is fair and equitable. Public policy should not be created arbitrarily.
Recommendation
The mission of the Education Department is to promote student achievement and preparation for global
competitiveness by fostering educational excellence and ensuring equal access. The core mission of the
Federal Student Aid department is to ensure that all eligible Americans benefit from federal financial
assistance for education beyond high school. If there are statutory constraints to achieving this mission,
the debate belongs in Congress. We recommend the Department withdraw the proposed regulation
defining gainful employment until such time that Congress carefully considers an education quality index
for higher education that includes learning outcomes.
Public comment related to credit hours
From: ne.greg09
To.: Finley, Steve
CC:
Date: 6/1/200910:20:20 AM
Subject: FW: Definition ofUSC 20 1088
From: White Leeland [ mailtoJ(b)(G) i@yahoo.com]
Sent: Wednesday, May 27, 2009 10:36 PM
To: negreg09
Subject: Definition ofUSC 20 1088
This is a united states statute. It is not the 12 hour rule. 24 semester credit hours, 30 weeks of instruction. The committe
must define a semester credit hour as 15 hours of instruction. This is because no one knows that a semester is half of an
academic year.
Therefore, 20 USC 1088 must be recoded. See my court case that I am reopening, due to fraud on the court; and
why there is a necessity to redefine this rule. For profit schools provide 4 hours of instruction per week for 5 weeks for 3
semester credit hours. However the law states 45 hours of instruction for 3 semester credit hours.
What the for profits have done, is they provide 20 hours of instruction for 40 weeks being 800, when the law states 15 x
120 for the average bachelor of science degree program. There is a huge difference between 800 instructional hours at
Phoenix vs other Title IV schools that must provide 1 ,800 hours of instruction. The fraud is so bad at Phoenix, that ed
pays 1800 hours of instruction for only 800 hours while all non profits must provide 1,800 for the average bachelor of
science degree.
But revisiting the 800 hours provided by Phoenix. Is not this 1 00 hours less of an associates degree of 60 semester
credit hours, being 800 hours of instruction.
See my case that went all the way to the Supreme Court and now I am reopening it due to fraud upon the court for
better explaination. See attached.
This document may be found in the Western District of Texas, El Paso as 02cv0237DB, document (140] as filed on
May 20, 2009 and (141] May 26,2009. What is important here is that ED can collect overpayments without any false
claims violations of this act.
What is absolutely necessary is 15 instructional hours for 1 semester credit hour as mandated by this l a w ~ and the strict
enforcement of this law. Ed can collect overpayments immediately without any kind of Court argument. The reason that
the government looks the other way, is that the IRS receives lOO's ofmlll ions of dollars in the form of kick backs from
for profits and not a dime from public institutions.
Lee White (915) 694-0144 El Paso, Texas
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I
I 02CV0237-TABLEOF AUTHORITIES& EXHIBITS I
FED. R. CIV. P.
Rule 4 Fetl R Civ. P. SERVICE. Kemp Smith and counsel could not
All amendments made by Plaintiff made before service.
plead September 5, 2002, there is no return of
service to plead on until September 6, 2002.
Judge Martinez's unauth01ized falsified service
[17] Pleadings: [14] , [15] & [16] and Order
(30] lack jurisdiction due to timeliness.
Rule 12(a)(4)(B) Fed. R. Civ. P. DEFINITE STATEMENT. - Defendant de-
faulted to Dismiss[42l.
Rule 60(b)(3) Fed. R. Civ. P. FRAUD UPON THE COURT- Kemp Smith
in collusion wi th Jude.e Martinez.
STATUTES
18 usc 1505 OBSTRUCTION OF JUSTICE
18 usc 2071 CONCEALMENT/FALSIFICATION by
Marlinez137] and [171
20 usc 1088 ACADEMIC YEAR mandating 15 hours of
instruction ver credit hour
20 usc 1088 Phoenix providing only 6 hours and 34 min-
utes per credit hour rather than 15 hours as
mandated by law. 20 hrs per 3 credit hours
providing 20 hours of instruction and charg-
ing Title IV program for 45 hours of instruc-
lion.
CASES
Herring v. United States, 424 F. 3d 384 Bar in de(lning fraud upon the court
Kenner v. C.I.R., 387 F.3d 689 (1968); 7 Moore's Federal . A decision produced by fraud upon
Practice, 2d ed. P 512, 60.23. the court is not in essence a decision at
all a.nd never becomes final . ..
USA v. Poindexter, 725 F.Supp. 13: 1989 Concealment, falsi(lcation statute applies to
everv_one.
USA v. Sciuto, 521 F.2d, 842,845(7th, 1996) A judge who does not recuse is in violation of
the due process Clause of the U.S. Con-
stitution. Jude.e B1iones. 18 USC S 1 <;ot;,
USA v. Simpson, 460 F.2d 5:15, 1972 (9cir) WILLFULNESS defi ned
TABLE OF ExHIBITS
Affidavit in confirming original service [13 7] while to/king to Cer- EXHIBIT F - September 6, 2002. Confirming
old Ciordano,]r. default date August 26. 2002.
Annotated Civil Docket with distorted entry {137}. EXHIBIT B - October 15, 2004. concealed
(1371 and falsified (171 used in lieu of.
Biography, Philip R. Martinez EXHIBIT I - Establishing Kemp Smith Link -
9/30/2002
Default, Application to Clerk/or Entry of EXHIBIT C - Filed September 5, 2002, Page
Number 1
Default, Affidavit in support of Entry. This affidavit establishes ExHIBIT E - September 5, 2002, Page Num-
the existence of the original service felony concealed till October 15, ber 3. Establishes original service date August
2004
5, 2002, Certified Mail7000-1530-0003-3784-
0692. Default date Aue.ust 27. 2002.
Default, Entry by the EXHIBIT D - Filed ( received) September 5,
2002. paee number 2
Definitions, Statutes EXHIBITG - 18 USC2071 and
20 USC_J088
Fraud Upon the Court, Original service missing and EXHIBIT J -Docket proving concealment of
Falsified service [17] never [137] and falsification 17], original docket
Fraud Upon the Court, Appearance of Original service EXHIBIT K - Posting [137] 10/ 15/2004-
1137] Orie.inal Service.
Recusal, Motion of Philip R. Martinez after Philip R. Martinez EXHIBIT A-1- Docket [35] Complaining
received a letter to recuse. about concealment of original servi ce [137] ,
Oct. 7, 2002
Philip R. Martinez EXHIBIT H- Docket (38]
'
page
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IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS, EL PASO
4 1 Leeland 0. White
5
Plaintiff
MOTION TO SET ASIDE
JUDGMENT
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vs
Apollo Group, Inc., doing business as,
University of PhoenixsMJ
Arthur Andersen, et al
Defendant
Rule 60(d)(3) Fed. R. Civ. P.
Fraud upon the court
Based on Falsification [ 17]
and Concealment of the
Otiginal Setvice Docket ent1y [137],
October 15, 2004
Case No. 02CV0237DB
The Motion to Set Aside Judgment should be granted and must be granted. 02cv0237 is
an action which indubitably has been plagued by fraud upon the Court committed by culpable
party, Kemp Smith, law firm of the Defendant, in collusion with the recused Honorable Judge
Martinez, a former partner of Kemp Smith. The Counsel for the Defendant in this matter ac-
cepted the original service [137] (Certified Service 7000-1530-0003-3784-0692 delivered to the
General counsel of the Apollo Group, Inc., Lynn Campbell, August 5, 2002 being concealed until
October 15, 2004) by its pleading on September 5. 2002, acquiescing to default, without ques-
tion; too late to Motion the Court for a Definite Statement [16]. The day of default was not
September 5. 2002 but rather August 27, 2002. The lie of remark is, if the Defendant were not
lying it would have ignored the application to the clerk for default entry in its entirety, waiting
to the last day to respond being September 26, 2002. Instead Kemp Smith presented itself as
being very foolish when the only acknowledging service was the falsified service which was ac-
cepted on September 6, 2002 [17] - a day later. Kemp Smith pleading in a panic move on
September 5. 2002 to save John Sperling's billion dollar tower of babble, Phoenix
5
M is based
on the obvious, insider information from Judge Martinez and the opportunity to embellish his
coffers. The panic move of Kemp Smith was not necessary nor were it a 91 I protocol. The fal-
sified service by Judge Martinez [17] was initiated when the Defendant were 3 days into default
by [137] and if the concealed original service would have not reappeared on October 15, 2004;
would have allowed Counsel for Defendant to plead up to September 26, 2002 but not submit
a Motion for Definite Statement till at least September 7. 2002. Even Judge Martinez panicked
coming down with [30] admitting to the original service. There was one more day of the 20
day service left for the Defendants as well as the Plaintiff to amend. However, the insurmount-
able flaw, that putting aside all the criminal activity, was the granting of the Motion for Definite
1
University of Phoenix
5
M is the Service Mark of Apollo Group, Inc. No claim is made to the exclusive
32 lright to use, "University" apart from its trade mark logo.
MOTION TO SET AsiDE JUDGMENT EP: 02CV0237, Rule 60(d)(3) Fed. R. Civ. P
PAGE 1.
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Statement which effectively annulled every Pleading by the Plaintiff in the court, including the J
three amended complaints by order of Judge Martinez on September 25, 2002. It also pre-
cluded any Final Judgment in the future, especially the one that Judge Briones ruled on. As a
fact the Defendants never responded to the Definite Statement [42] on October 7, 2002 the day
Judge Martinez recused. Awaiting the mandatory 10 day period for the Defendants to respond
to the Definite Statement would be October 21, 2002 proving that Defendant's motion to dis-
miss on October 22, 2002 was untimely and void causing Judge Briones Final Judgment to fail
in its entirety on January 30, 2003.
There is little citing to go with when identifying Fraud Upon the Court or how to tem-
plate it. This citing is derived on the standard applied in a reopened 50 year old case in United
States u. Reynolds, 345 U.S. I , in which the government claimed military secrets of family mem-
bers killed in a B-29 crash. Years later documentation was discovered showing that no military
secrets had been compromised. One family commenced a new suit entitled Herring u. United
States, 424 F. 3d 384, claiming fraud upon the court. Of little importance is this case, but of sub-
stantial importance is the standard used in defining fraud upon the court.
Speaking for the 3rd Circuit Justice Aldisert found, that the bar in defining fraud upon the
Court must be set very high, stating that:
"In order to meet the necessari{y demanding standard for proof of fiaud upon the cow't
we conclude that there must be: (1) an intentional fi-aud; (2) by an o{f!cer of the cow't; (3)
which is directed at the cowt itself; and (4) in fact deceives the cowt," Aldisert wrote in an
opinion joined by Circuit Judges Samuel A. AI ito Jr. and Franklin S. Van Antwe1pen.
In affirming Herring u. United States, 424 F.3d 384, and Rule 60(d)(3) Fed. R. Civ. P., if1i
!applying this standard to 02cv0237 are the following facts:
(1.) an intentional fiaud to conceal [137] by Judge Martinez caught in collusion with for-
mer law Film, Kemp Smith representing Defendant when Defendant had been in de-
fault, for three days [137], August 27, 2002, August 28, 2002, and August 29, 2002
and Judge Martinez a falsified service [17] after Defendant had been in de-
fault knowing the ceJtified 7000-1530-003-3784-0692 had been sitting in his
court for 25 days.
(2.) by an officer of the courti Judge Martinez, Judge Briones and Pro Se Law
Amanda. Knowing the existence of the original seJVice the Cowt did not sua sponte
the concealment or the falsification spelled out in the A/fldavit, page number 3
of 5. 2002 and docket [35] Motion to Recuse Judge Ma1tinez.
(3.) which is directed at the court itself; felony concealment, falsification 18 USC 2071
and obstnJCtion ofjustice, 18 USC 1505. Original complaint put back in the Cowt,
October 15,2004.
( 4.) in [act deceives the cow"t. The Court was unaware of docket [137] and deceived
the Court by docket [17-1] for 20 months after Final Judgment of Judge Briones
of January 30, 2003 denying the Plaintiff of a default entry.
Federal District Court Judge Philip Martinez did, willingly and knowingly, falsify and con-
ceal documents in a United States Court House in violation of United State Statues 18 USC
2071 and obstructed Justice pursuant to 18 USC 1505 to prejudice the outcome of this
MOTION TO SET AsiDE JUDGMENT EP: 0 2 CV0237, Rule 60(d)(3) Fed. R. Civ. P
P AGE 2 .
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action. The motive of Judge Martinez was to entertain business for his former law firm Kemp J
Smith that represented the Defendant, Apollo Group, Inc., doing business as the University of
that went into default on August 26, 2002 [137-1] and by falsifying that service on the
3rd day of default by docket [17] to deny the Plaintiff a default entry. This concealment has cost
the United States government billions of dollars every year since the year 2002, which means
over 7 billion dollars to date. Defendant violates 20 USC I 088, which mandates a semester
credit hour as 15 hours of instruction in the Title IV Federal Student Loan Program. Because of
the mechanical nature of this regulation this case is only an overpayment issue; in which the
United States of America could immediately collect without trial.
Federal District Court Judge Briones knowingly and willingly continued to conceal the
original service in collusion with Federal District Court J udge Martinez, and Law Clerk Amanda
proving default. Even though Judge Martinez pathologically lied about his recusal as to recus-
ing perhaps violating 18 USC 1001 to Judge Briones; his ProSe Clerk Amanda affirms the lie
by continuing on now becoming a conspirator in the [willful] obstruction, concealment and fal-
sification of documents manipulated in the United States Court House and is equally involved.
See United States of America vs John Wrlliam Simpson, aka Brother John Simpson, 460 F.2d 515:
1972 (9th Cir), which the Ninth Circuit States, that the statutory requirement of willfulness is satis-
fied if the accused acts intentionally, with knowledge that he is breaching the statute. Both of the
accused Federal Judges and the Pro Se Clerk Amanda acted with knowledge that they had
concealed [137] on September 5, 2002 as written on affidavit in support of Default Entry, page
13. By October 1, 2002 document [35] informed the Court for the second time. Judge Briones
willfully concealed this document till October 15. 2004. When Judge Martinez recused he
should have docketed [137] which should have been docket [8] instead he and his ProSe Clerk
Amanda anted the count of concealment to obstruct justice.
Plaintiff demands a void judgment for the sake of J ustice. Plaintiff demands time to
amend the complaint to comply to 31 USC 3730, as ordered by Judge Martinez granting the
Plaintiff the right to proceed under 31 USC 3729.
The Court deliberately precluded this action to give an unfair advantage to Defendant's
counsel and Judge Martinez's former law firm Kemp Smith (count I, 18 USC 2071 - [17 Falsifi-
cation]), when Defendant had been in default since August 27, 2009, docket no. [137] (count II,
18 USC 2071 -[Concealment]) and Judge Martinez reserved the Defendant August 29, 2002,
to obstruct justice in order to deny a default entry on September 5, 2002, knowing the Defen-
dant was in default since August 27, 2002, willfully knowing the existence of [137-1] or the origi-
nal service not posted to the docket (Count Ill, 18 USC 1505, [Obstruction of Justice].
Regardless, it is a given, that Judge Martinez and J udge Briones colluded in conspiracy
involving Kemp Smith with its Jeanne C. Collins; and Snell & Wilmer, LLP with its Gerald Gior-
dano, Jr. and James Mackie to entertain business for his former law firm who now represents the
Defendant and Judge Briones being fully aware that the Defendant was in default and the origi-
nal service had been removed.
MOTION TO SET AsiDE JUDGMENT EP: 0 2 CV0 237, Rule 60(d)(3) Fed. R. Civ. P
P AGE 3 .
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An affidavit made on September 30, 2002, summarizes a conversation with Plaintiff and J
Gerald Giordano, Jr. on September 6, 2002, that establishes that the Apollo Group, Inc.,
through Gerald Giordano, Jr. received the original service on August 6, 2002. This is the same
Gerald Giordano who reversed the truth and deliberately violated 18 USC 1001, lying to a ju-
dicial officer, Judge Briones, in open court, in order to get docket entry [123] into the record
during the Void Judgment Hearing enumerated by hyphen [- -] on May 20, 2004. The tran-
script works against the interests of Gerald Giordano as well. Gerald Giordano in admitting that
service was made on August 6, 2002 means that the Apollo Group, Inc., was in default by
August 26, 2002 .
The activity of Judge Martinez is very similar, in part, to the case in United States us John
Poindexter, 725 F. Supp. 13; 1989 U.S. Dist. LEXIS 12572; where Poindexter believed he could
falsify and conceal with impunity, 18 USC 2071; and in the same light obstruct justice, 18 USC
1505 no different than Judge Martinez colluding with Judge Briones mentioned through out
the proceeding of 02cv0237 in which prima facie evidence works against the best interests of
both judges. Judge Martinez was caught in the act of entertaining business for a former law
partner that represented the Defendant; even a federal district court judge shall be held ac-
countable for "obstruction of Justice" at least by the Plaintiff who believes that truth, justice
and the American way is not dead. In Poindexter: The Court determined in its count 1 argu-
endo activity that which parallels the activity of Judge Martinez, to wit:
Count 1 Argument, 18 USC 2071. Defendant's argument regarding "custody" suf-
fers fiom similar artificiality. There is no wanant for supposing, and no legislative
histo1y suggesting, that Congress meant to subject to punishment under section
2071 only those who are the custodians of records in the technical sense, such as
clerks or librmians, but to permit others working in a govemment agency who have
access to sensitive documents to destroy or alter them with impunity [Judge Marti-
nez]. The obvious pwpose of the statute is to prohibit the impairment of sensitive
govemment documents by those officials who have access to and control over them,
and no court has euer held to the contrmy. See generally, Coplon, supra, where the
defendant was found to have custody of classified documents to which she gained
access in the course of her employment as an attorney in the Intemal Security Sec-
tion of the Department of Justice. Not only was she not the official "custodian" of the
records, but she had specifical1y been told that she no longer had routine access to
them.
In addition the striking of factual document [58] by District Court Judge Briones, willingly
and knowingly, that it is full of criminal allegations is no different than criminally destroying evi-
dence when the material is true and correct, which it [were]. A Judge does not have the author-
ity to strike a legitimate document especially one reporting remarkable crime committed by
Judge Briones; his COHORTS and staff in addition to Judge Martinez. It is evidentiary and factual
and a rock solid allegation that Judge Briones obstructed justice, not on one count; but on many
counts pursuant to 18 USC 1505; and not recusing is an acquiescence to committing the crime
of obstruction; and is prima facie evidence that could lead to indictment.
PAGE 4.
1 I Those issues addressing 20 USC I 088 by the Plaintiff, can be investigated by the United J
2 I States. In case 04cv0452. the United States never specifically investigated 20 USC 1088 or the
3 I averment of fraud stated with particularity pursuant to Rule 9(b) Fed. R Civ. P. The Court had
4 I imposed a safe harbor sanction pursuant to Rule 1I Fed. R. Civ. P., based on the concealed serv-
5 I ice of this case; and never ever addressed the violation of the Academic Year by Defendant
6 I Phoenix. Judge Briones being compromised by his remarkable temperament allowed the Defen-
7 I dant to steal billions from the Title IV Student Loan Program by hiding his ignorance in doing sim-
8 I ple multiplication. Unfortunately, Judge Briones knows that the University of Phoenix only pro-
9 I vides 800 instructional hours on a 120 semester credit hour BS degree while his University of
10 I Texas at El Paso has to provide 1800 instructional hours or 120 hours x 15 hours of instmction
11 I mandated by law. For example why should Phoenix at $300 a semester credit hour in a 120 se-
12 1 mester credit hour bachelor of science program receive $54,000 (I8000 x $300) when it has only
13 I done $ 24,000 worth of work (800 x $300). The law is 15 hours of instruction for each semester
14 I credit hour course pursuant to 20 USC I 088. Almost 3 billion dollars in the Title N Student
15 I Loan Program, 2008, last year went to the University of Phoenix!
16 I The Plaintiff intends on amending this complaint, serving the United States Attorney Gen-
J 7 I era! the complaint in camera, seeking an order to seal the case, and changing the captioning to
18 I United States ex rei Leeland 0. White vs the Apollo Group, Inc., doing business as University of
19 I Phoef1ixSM.
20 In light of all the animus of the Court, all sanctions, bonds and penalties against the Plaintiff
21 I should and must be removed. 02cv0237 was a bad day for the United States. The Court chose
22 I the wealth of the Defendant, who acquired such wealth by stealing from the government billions
23 I of dollars per year. It is pathetic that no one except the Plaintiff knows the difference between
24 I 800 vs 1800 hours of instruction as applied to 20 USC 1088.
25 I In conclusion and hedging on the truth based on the criminal minds judging criminal
26 I minds and the overabundance of fraud upon the Court in the Federal District Court; the Judg-
27 I ment in this case is a civil one and void and has always been void and must be set aside. The
28 I original service was never timely posted to the docket as a result of a criminal act of falsification of
29 I a second service in violation of the public trust when the Defendant had been in default for 3
30 I days as proven by prima facie evidence; to wit, prima facie docket entry [35] telling the Court that
3 1 I the original service had been concealed. Indeed it was; reappearing two years later as docket
32 I [137). The cmelty applied towards this Plaintiff is a pain long gone. As to Judge Briones, Judge
MOTION TO SET AsiDE JUDGMENT EP: 0 2CV0237, Ru l e 60(d)(3) Fed. R. Civ. P
P AGE 5 .
1 I Martinez, Amanda the ProSe Law Clerk, Gerald Giordano, Jr. -counsel for the Apollo Group, J
2 I Inc., James Mackie- counsel for the Apollo Group, Inc., represented by Snell & Wilmer, LLP and
3 I Jeanne C. Collins, Counsel for the Apollo Group, Inc., doing business at the University of Phoe-
4 1 n.ii'M who manipulated Judge Martinez with Kemp Smith, they have forever earned their identity
5 I by their clandestine behavior which neither opens the door by scripture nor closes the door by
6 I the law. Need more be said, they have their rewards.
7 I The disservice by Judge Martinez, the Counsel for Defendant and others requires this
8 I Court to Set Aside the Final Judgment of January 30, 2003. Fraud upon the Court by Judge
9 I Martinez in collusion with Kemp Smith and the Defendant has been proven and perfected as
10 I well as the double-bubble, double trouble criminally concealed document [137], the original
11 I service and the falsified service [17] pursuant to the double-bubble, double trouble law known as
12 I 18 USC 2071. Can't have one without the other!
13 I Respectfully submitted,
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Leeland 0. White, Plaintiff
815 La ClUz
El Paso, Texas 79902
18 (915) 694-0144
lA true and correct copy of this Motion to Set Aside Judgment pursuant to Rule 60(d) (3) Fed. R. Civ. P., was served to
19 ~ e court, May 20, 2009 and mailed to all other parties on May 21, 2009.
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United States Attorney General,
Eric H. Holder, Jr.
950 Pennsylvania Aven, NW
Washington, DC
The United States District Court
511 East San Antonio Ave, Room 219
El Paso, Texas 7990 I
Qui Tam Input Section
Attn: Wm Stanley Luke
60 I NW Loop 410, Suite 600
San Antonio, TX 78216
Jeanne C. Collins
Jeanne C. Collins,
Kemp Smith
221 N. Kansas
El Paso, Texas 7990 I
Gerald F. Giordano, Jr.
Snell & Wtlmer, LLP
One South Church Avenue
Suite 1500
Tucson, Arizona 85701-1630
PAGE 6.
LEELAND 0. WHITE, Pro Se, }
Plaintiff }
vs }
} .WESTER}-!' DIST .OFTEXAS
THE APOLLO GROI..iP dba }
UNITED . if(:0'8RT
"t' .
UNIVERSITY OF PHOENIX, and '}

ARTHUR ANDERSEN, et al, }
1
Defendant1"
. '"EP02CA0237
Docket Number
.. , - ,.1
, IJ . >
MOTION FOR RECUSM.$<,. . I . 4
OF PHJUP R. MARTINEz".
4t
. ' .... ,, .
Enters the Plaintiff who moves for a re P\lrsuant to Title 28
\ ,..-
' ..
USCA 455. A letter for recusal has gone unanswered. This motion is based on several
incidences harming Plaintiff in which Judge Martinez's impartiality is reasonably questioned;
and by the fact that at one time, the accused, bad ownership as a shareholder into the legal finn
. 1,
representing as well as speciali7Jng in the matter of conuncrcial litigation, to wit:
Kemp Smith Duncan & Hammond law fmn. The Defendant is represented by Kemp Smith
Duncan & Hammond Jaw firm.
Politically, the judge is an appointee of President Bush, a Republican .. The Law firm of
J,
Kemp & Hammond has made political contributions to the campaign electing
President Bush, ReMcan Parry, to wit: Jack T. Chapman $1000.00. Margaret A. Christian

..
$500, Jim Chris A. Paul $250.00. The Defendant, and its President John

to the Bush Campaign as well . The second highest position in
.,.
the I:>Tpaltment of Education is occupied prior lobbyist for defendant appointed by President
Bush, Sally L. Stroup. Such an shall lead to obvious corruption within the
department of education and collusion with defendant. This person has power over student

.,
' >-(1:
.... . .;.
"'}

,,.
.,::-. .. ,
..
.....
MOTION TO SET AsiDE JUDGMEI-lT EP: 02CV0237, Rule 60(d)(3) Fed. R. Civ. P
PAGE 7.

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EXHIBITS A- K
financial aid issues affecting Plaintiff. It is important for Defendant to quash this complaint, at
any cost, as any judicial decision may adversely affect defendant.
Judge Martinez is a President Bush appointee. Because Plaintiff entered en forma
pauperis, the scope of the judge would be limited to the narrow scopes of the Republican Party.
The policy of the republican party stands opposed to anyone who is in a position appearing to be
or requiring public assistance. There is no question to partiality in this instance, it is a given.
Pursuant to Plaintiff's case is the !mown history based on the record of Judge Martinez's
partiality.
On September 5, 2002, instructing the clerk to violate Rule 55( a), obstructing due
process and justice, by ordering the clerk to impede Plaintiff's entry of default to
preventing the entry from ever getting on the docket The clerk stated that Judge
Martinez had given them orders not to sign the default entry.
Most of the communication from Defendant in the form of ex parte. The
defendant is not the Plaintiff and should not be courted as such.
Not answering the Motion to Compel the Government to investigate.
Defendant on the record objecting to the letter of recusal
By allowing the untimely denial for the Motion to Compel Discovery, knowing
that service by mail were August 12,2002 and that it were untimely, still ruling in
favor of Defendant.
Forcing Plaintiff to reconstruct a new complaint by order for a More Definite
Statement demeaning Plaintiff to the position of Defendant.
PAGE 8.
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EXHIBITS A K
Deliberately with holding evidence from the record. As of September 26. 2002
the default entry by the clerk had not been entered by the clerk or inserted into the
record.
By allowing entry of Defendant knowing that Defendant had already defaulted
Knowing that all of Defendants material should have been rejected after default
By permitting Defendant to perjure itself in the Objection to the Default
Judgment. knowing that the citing were not based on 1.-w but distortion.
By arbitrarily annulling the original summons and proof of service usurping the
Plaintiff of its rights. By instructing the clerk, without Plaintiffs permission to
send out a new summons and proof of service after the old rcmm receipt had
come in on August 8, 2002
By witholding and not inserting the return receipt August 29. 2002
Plaintiff prays that given the above that the judge should recuse himself and must recuse
himself in the interest of justice and impartiality.
Respectfully Submitted,
~ ~
Leeland 0. White
815 La Cruz
El PMo, Texas 79902
(915) 474-9846
MOTION TO SET Asi DE JUDGMENT EP: 0 2 CV0237 , Rule 60(d)(3) Fed. R. Civ. P
P AGE 9.
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EXHIBITS A- K
I02Cv0237DB ANNOTATED DOCKET
7/18/02
7/24/02
7/26/02
8/08/02
8/08/02
8/12/02
9/5/02
9/5/02
9/5/02
9/5/02
9/5/02
9/5/02
9/5/02
9/6/02
I
5
Complaint filed. I.F.P. Motion granted (Pages 9) (aq)
[Entry date 7/18/02]
6 Amended complaint by Leeland 0. White. Amending complaint
[5-1) (dll) [Entry date 7/25.02)
2
Amended complaint by Leeland 0. White, amending complaint See the initials (aq)
[5-1] {Q(lges 7) (aq) [Entry date 7/29/02]
8 Motion by Leeland 0. White to compel discovery Gm)
[Entrydate 8/08/02]
137
Return of Service executed as to the Apollo Group on (aq) did the service
8/5/02 Re: document #7 (rna) [Entry date 10/15/04] on this. See return
receipt 7000-1530-
THIS IS THE ORIGINAL SERVICE CONCEALED BY JUDGE 003 -3784-0692 and
MARTINEZ UNTIL OCTOBER 15, 2004 ESTABLISHING THE
the name (aq) anno-
APOLLO GROUP, INC., BEING IN DEFAULT SINCE AUGUST
tated on the return
21, 2002 ESTABLISHING THE FACT THAT ON SEPTEMBER S,
service addressed to
2002 THE APOLLO GROUP, INC. HAD BEEN IN DEFAULT
Lynn Campbell, Gen-
SINCE AUGUST 2 7, 2002 .
era! Counsel for the
PROOF OF VIOLATION OF 18 USC 2071 BY JUDGE MARTINEZ
Apollo Group Inc.
9
Motion by Lee land 0. White to compel an Officer of the
United States to do his duties (aq) [Entry date 8/12/02]
10 Motion by Lee land 0. White for default Judgment against
The Apollo Group, Arthur Andersen (aq) [Entry date 09/05/02]
11
Affidavit by Leeiand 0 . White in support of motion for
Defaul t judgment against the Apollo Group. Arthur Andersen
[ 10-1] (aq) [Entry date 9/05/02]
12 Notice of filing by Leeland 0. White. Affidavit of Amount
Due upon Application for Default Judgment to Clerk (aq)
Entry date 09/05/02]
13 Notice of filing by Leeland 0. White. Application to Clerk See Exhibit C - this is an
For Entry of Default (aq) [Entry date 9/05/02]
Application to Clerk for
-THIS IS NOT A NOTICE , THIS IS AN APPLICATION TO THE
Enuy of Default and Ex-
CLERK (aq) WHO DID THE ORIGINAL SERVICE [137]; AND AT-
hibit D - with the At-
tached received
TACHED TO IT IS AN ENTRY OF DEFAULT THAT (aq) REFUSED
Stamped Enuy the clerk
TO SIGN I N VIOLATION OF RULE 55(a) Fed. R. Civ. P.
was supposed to make ,
THE DEFENDANT THE APOLLO GROUP, INC, HAD ALREADY Exhibit D. (aq) is the
BEEN IN DEFAULT 10 DAYS WHEN THIS APPLICATION WAS one who should have
MADE - . It is customary for one in default to take leave before til-
entered the default by
ing any documentation upon entry in the Court. The Apollo
the Clerk, and (aq) sent
Group did not follow the proper procedure and the clerk had the
the complaint knowing
duty to reject all filings except to file a Motion to set aside defaul t
that Phoenix was in de-
fault.
entry.
14 Motion by the Apollo Group for James K. Mackie and Gerald
F. Giordanto, Jr. To appear pro hac vice (aq)
15 Response by the Apollo Group motion to compel discovery
[8-1] [aq] [Entry date 9/06/02]
16 Motion by The Apollo Group for more definite statement (aq)
17 Return of service executed as to The Apollo Group on This is a falsified
8/29/02 (aq) [Entry date 9/09/02 Service
- Where did this service come from and why is it not referenced to
any Doument number like [ 137]? The reason is simple i t is a falsi-
tied service by Judge Martinez, 18 USC 2071, so he could enter-
tain business for his former law firm Kemp Smith, when the Defen-
dant had already been in defaul t for 3 days,and the service in the
court for 25 days.
PAGE 10.
I E X ~ B r r I
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LEELAND 0. WIDTE, Pro Se,
:Plaintiff
vs
THE APOLLO GROUP dba
UNIVERSITY OF PHOENIX, and
ARTHUR ANDERSEN, et al,
}
}
}
}
}
}
}
Defendants }
UNITED STATES
WESTERN
ELPAS&>,=WXAS 49
W's' ,. C.. .. ..
TERiv

Docket
Application to Clerk for Entry of Default
The clerk oft he above entitled court will enter default against the Apollo Group, Inc., of
America , a corporation, in the above cause, for failure of the said defendant to plead, answer or
otherwise plead in said cause, as required by law, and oblige.
Page Number 1.

Leeland 0 . White, Plaintiff ProSe
815 La Cruz
EI Paso, Texas 79902
(91 5) 276-0704
PAGE 11.
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EXHIBITS A- K
RECEIVED
LEELAND 0. WffiTE, ProSe,
SEP 0 5 ZOOZ Plaintiff
U.S. DISTiliCl\f&lUAT
WESTERN DISTRICT OF TIOXAS
sv dba
ARTHUR ANDERSEN, et al,
}
}
}
}
}
}
}
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
ELPASO, TEXAS
EP02CA0237
Defendants } Docket Number
Entry of Default
It appearing that the defendant herein the Apollo Group, Inc. , a Corporation of America,
is in default for failure to plead or otherwise defend as required by law.
Default is hereby entered as against the said defendant this the day of
Clerk
Page Number 2.
PAGE 12.
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LEELAND 0 . wmTE, Pro Se,
Plaintiff
vs
THE APOLLO GROUP dba
EXHIBITS A -K
}
}
}
}
}
}
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
EL PASO, TEXAS
ARTHUR ANDERSEN, et a!, }
Defendants }
EP02CA0237
Docket Number
Affidayit of Failure to Plead or Otherwise Defend in
Support of Application for Entu of Default
State of Texas }
County of El Paso }
I, Lee/and 0. White, being duly swom deposes and says:
l. That be is the plaintifi: pro se, and has personal knowledge of facts set forth in this
affidaviL
2. That the plaintiff herein, on the 22 day of July 2002, filed in this cause his complaint
against the defendants herein.
3. That examination of the court files and record in this cause shows that the defendants
herein were served by certified mail, 7000-1530-003-3784-0692 with a copy of summons,
together with a copy of plainti.frs co.mplaint, on the 5th Day of August, 2002.
4. That more than 20 days have elapsed since the date on which the said defendants
herein were served with summons and a copy of the complaint, excluding the date thereof.
5. That the defendants herein have failed to answer or otherwise defend as to plaintiff's
complaint, or serve a copy of any answer or other defense which it might have had, upon
Leeland 0, White, Pro Se, Plaintiff of record.
6. That this affidavit is executed by affiant herein in accordance with Rule No. SS(a) of
the Federal Rules of Civil Procedure, for the purpose of enabling the plaintiff herein to
obtain an entry of default against the defendants herein, for their failure to answer or
defend as to the plainti.frs complaint.
t
:e 8tAHCA Y. CONCHA
liON\' PUILIC
* STATE OF TEW
lty c-.luloft """'" F'fiiiUAIII' 2,,
'3h.ttf_(l;l{ Wt'\Ckt
. 5, dedd

Number 3.
MOTION TO SET AsiDE JUDGMENT EP: 02cv0237, Rule 60(d)(3) Fed. R. Civ. P
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City ofEI Paso
Country ofEl Paso
State ofTexas
EXHIBITS A- K
AFFAPAVIT OF LEET.AND 0. WHITE
I, Leeland 0 . White, state under penalty of pe!jwy that on Septembcc 6, 2002 I called
Tuscon. AriZDna to the Law rum of Snell and Wilmer, LLP. I requested to speak with James K.
Mackie, and the person answering the phone stated that James K. Maclcie were out of town.
I then asked to speak to Gerald F. Giorano, Jr., disclosed who I was, and I was connected
to Gerald F. Giorano, the out of town attorney representing The Apollo Group. 1 talked at length
on the telephone over several issues.
I then iltfuireJI tiS to whidt dille thilt the Apoflo Group lttul received the SUJrulfOIIS and
complilint. Mr. Giorano stilted. tlud he was answering the compuunt disted August 6, 2002.
We tallced a little more and then the both of us bung up the phone. It was Friday evening.
Signed this _;2Q dayof Jtpt-e;4 q.o 2002
. /
Leeland 0. Whlte

G c61t(hQ)
k 30 aoo.;)..
Pip '
f:')(J.I/45 '' A-AkP..
MOTION TO SET Asi DE JUDGMENT EP: 02CV0237, Rule 60(d)(3) Fed. R. Civ. P
PAGE 14.
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EXHIBITS A- K
1
2
118 USC 2071. Concealment, removal, or mutilation generally (Criminal)
3 (a) Whoever willfully and unlawfully conceals, removes, mutilates, obliterates, or destroys,
4
~ o r attempts to do so, or, with intent to do so takes and carries away any record, proceeding,
ap, book, paper, document, or other thing, filed or deposited with any clerk or officer of
5 lany court of the Unjted States, or in any public office, or with any judicial or public officer of
6
f he United States, shall be fined under this title or imprisoned not more than three years, or
oth.
7 l(b) Whoever, having the custody of any such record, proceeding, map, book, document, pa-
er, or other thing, willfully and unlawfully conceals, removes, mutilates, obliterates, falsi-
ies, or destroys the same, shall be fined under this title or imprisoned not more than three
ears, or both; and shall forfeit his office and be disqualified from holding any office under
8
9
10
F,he United States. As used in this subsection, the term "office" does not include the office
eld by any person as a retired officer of the Armed Forces of the United States. [137]
11
12
0 USC 1088 Academic Year
13 (a) Academic and award year
14
(1) For the purpose of any program under this subchapter and part C of subchapter I of chap-
15 ~ e r 34 of title 42, the term "award year" shall be defined as the period beginning July 1 and
16
1
ending June 30 of the following year.
11 r(2J
18
1
{A) For the purpose of any program under this subchapter and part C of subchapter I of
19 (chapter 34 of title 42, the term "academic year" shall
20
21
(i) require a minimum of 30 weeks of instruction time for a course of study that
22 I h. l' h
measures 1ts program engt m ere(, 1t ours; or
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(ii) require a minimum of 26 weeks of instructional time for a course of study
that measures its program length in clock hours; and
(iii) require an undergraduate course of study to contain an amount of instruc-
tional time whereby a full-time student is expected to complete at least-
ill 24 semester or trimester hours or 36 quarter credit hours
in a course of study that measures its program length in
credit hours; or
PAGE 15.
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EXHIBITS A- K
Case 3:02-cv-00237-DB Document 38 Filed 10/07/2002 Page 1 of 1
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN QISTRICT OF TEXAS.
ELPASODMSION
~ : J
. ,., ' )
\) .J
LEELAND 0. WHITE,
Plaintiff,
8 '( !! "I"I'>IIT V
v.

El'-02-CA-237-PRM
THE Al'OLW GROUP, dba,
THE UNIVERSITY OF PHOENIX, and
ARTHUR ANDERSON, et al.,
Defendants.
ORDER OF RECUSAL
On this day, the Court considered Plaintiff's "Motion for Recusal," filed October 1, 2002,
in the above-captioned cause. PlaintiffLeeland White filed a Complaint with the District Clerk
on July 18, 2002, alleging various fraud claims against Defendants. The case was subsequently
assigned to this Court.
On October 1, 2002, Plaintiff filed a Motion for Recusal requesting that the current
district judge, the Honorable Philip R. Martinez, recuse himself from the case due to his past
employment with Defendant's attorneys, Kemp Smith, P.C.
Although this Court disagrees with the assertions made in the Plaintiff's Motion, the
Court, out of an abundance of caution, recuses itself from this matter.
Accordingly, IT IS HEREBY ORDERED that the above-referenced cause be
TRANSFERRED to the docket of the Honorable David Briones for final disposition. Pursuant
to the most current Order Assigning the Business of the Court, the Clerk shall credit this case to
the percentage of business of the receiving Judge.
SIGNED this . ~
PAGE 16.
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EXHIBITS A K
USDOJ: OLP: MartinezBio Page 1 of2
c
~ ~ -
','!: ---
U.S. Department of Justice
~
...
Office of Legal Policy
About Us
History
Functions
Staff Bios
Resources
Judicial
Nominations
Employment/
Internships
. om
Homepage
[ti-ome I Judici al Nominations I Contact Us I DOl I
PhHip R. Martinez
Biography
Philip Ray Martinez is currently serving his third term as Judge of the 327th
Judicial District Court in E'l Paso, Texas. He was first elected to judicial
office in November of 1990 as Judge of County Court at Law No. 1 at the
age of33. Ten months a.fier assuming office, he was appointed to his
current position, a position to which he has been re-elected without
opposition on three separate occasions.
La<t Upd<ned: l '8102
Judge Martinez is a former shareholder of the Kemp Smith Duncan &
Ha..OTtmond law finn where be was a member of the Litigation Dep::.!t:nen!
specializing in commercial litigation. As an attorney, he was involved in
numerous professional organizations, having served as a Director and
Treasurer of the El Paso Bar Association, and as a Director of the El Paso
Mexican-American Bar Association. He also served on the El Paso Legal
Assistance Society Board cofDirectors, having been elected as Chainnan of
the Board in 1986-87.
Judge Martinez currently serves as CIU!innan of the El Paso County
Juvenile Board and Chair-Elect of the Juvenile Law Section of the State Bar
of Texas. He is a past Director of the Texas Center for the Judiciary, having
served as Chairman of the lndigent Defense Representation Committee of
the Judicial Section of the State Bar of Texas, a past member of the Funding
Parity Task Force of the Texas Commission on Judicial Efficiency, and a
past Chairman of the Office of Court Administration Strategic Planning
Committee. He is a member of numerous professional organizations,
including the American Law Institute, the American Bar Association, the
Hispanic National Bar Association, the National Council ofFamily &
Juvenile Court Judges, the Judiciary Relations Committee of the State Bar
of Texas, and the Texas Bar Foundation.
Judge Martinez also served as the Local Administrative Judge of the El
Paso Council of Judges. He has been instrumental in the creation of the El
Paso County Statutory Probate Court, the Juvenile Court Referee position,
numerous n e \ ~ state di.stric1 courts, and the Associate Judge position for
Child Abuse and Neglect cases.
hHn//o .n..nu tt.:,.:ln; t'fl'\,,/,.,.1n/ ...,...QT"t-1no8-?h;,... ht-rn 0/"Jf\P'liV'\"')
MOTION TO SET AsiDE JUDGMEMT EP: 0 2 CV0237 , Rule 60(d)(3) Fed. R. Civ. P
PAGE 17.
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EXHIBITS A- K
USDOJ: OLP: Martinez Bio Page 2 of2
In addition to his professional accomplishments, Judge Martinez has been
active in community organizations throughout his life. He currently serves
as a member of the El Paso Holocaust Museum and Study Center Board of
Directors. Other cornmunjty organjzations in which he has been involved
include the Hispanic Leadership Institute, the UTEP Alumni Association,
the National Conference of Christians & Jews, the El Paso Cancer
Treatment Center, and the Ascarate Junior GolfTouman1ent.
Judge Martinez is a frequent author and lecturer at continuing education
conferences and has been honored with munerous awards, including the
Outstanding Ex at Burges l.Jigh School (2000), the UTEP College of Liberal
Arts Gold Nugget Award (1995), the Law Enforcement Achievement
Award (1995), and was named El.Paso's Outstanrung Young Lawyer
(1992). .
Born and raised in El Paso, Judge Martinez received his high school
diploma from Burges High S c h o o ~ graduating in the top two percent of his
class. He received a B.A. Degree from the University of Texas at El Paso,
graduating with Highest Honors. He earned his Doctorate of Jurisprudence
Degree in 1982 from Harvard Law School.
He is married and bas two daughters.
[FOI-A]Privacy and Security Notice I
-
ht+n/Aa.T\lVU/ n<:l'lni Ol"nlin1n/n"''su-t1nP7h1n httn ()non no?
MOTION TO SET AsiDE JUDGMEtrr EP: 02CV0237, Rule 60(d)(3) Fed. R. Civ. P
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EXHIBITS A- K
DOCKET YEAR 2002
Note concealment of Original Service which later becomes [137] after [8]
Note [11], Exhibit E, page 13, making Court Aware of Original Service
September 5, 2002
Proceedings include all events.
3:02cv237 White v. The Apollo Group, et al INTAPP
6/7/02
6/7/02 1
7/8/02 2
7/12/02 3
7/18/02 4
7/18/02 5
7/24/02 6
7/26/02 7
8/8/02 8
8/12/02 9
9/5/02 10
9/5/02 11
9/5/02 12
9/5/02 13
9/5/02 14
9/5/02 15
9/5/02 16
Case assigned to Judge Philip R. Martinez (aq)
[Entry date 06/10/02)
Motion by Leeland 0. White to proceed in forma pauperis (jm)
Order denying motion to proceed in forma pauperis [1-1) (aq)
Motion by Leeland 0. White for reconsideration of motion
to proceed in forma papueris (aq) [Entry date 07/12/02)
Order granting motion for reconsideration of motion to
proceed in forma papueris [3-1) (aq) [Entry date 07/18/02)
Complaint filed. I.F.P. Motion Granted (Pages: 9) (aq)
Amended complaint by Leeland o. White , amending complaint
[5-1) ) (dl1) [Entry date 07/25/02]
Amended complaint by Leeland 0. White , amending complaint
[5-1] (Pages: 7) (aq) [Entry date 07 /29/02]
Motion by Leeland o. White to compel discovery (jm)
Motion by Leeland 0. White to compel an Officer of the
United States to do his duties (aql [Entry date 08/12/02]
Motion by Leeland 0. White for default judgment against
The Apol lo Group, Arthur Andersen (aq) [Entry date 09/05/02]
Affidavit by Leeland 0. White in support of motion for
default judgment against The Apollo Group, Arthur Andersen
[10-1] (aq) [Entry date 09/05/02]
filing by Leeland 0. White, Affidavit of Am;unt
Application for Default Judgment to Clerk (aq)
of filing by Leeland 0. White, Application to Clerk
of Default (aq) [Entry date 09/05/02]
Motion by The Apollo Group for James K. Mackie and Gerald
F. Giordanto, Jr. to appear pro hac vice (aq)
Response by The Apollo Group motion to compel discovery
[8-1] (aq) [Entry date 09/06/02)
Motion by The Apollo Group for more definite statement (aq)
(Entry date 09/06/02]
Docket as of October 21, 2002 1:02 pm Page 2
PAGE 19.
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EXHIBITS A- K
Falsified Docket [17] by Judge Martinez, Concealed [137]
To make business for Kemp Smith, when Defendant was already 3 days in default.
Proceedings include all events.
3:02cv237 White v. The Apollo Group, et al INTAPP
9/6/02 17
9/6/02 18
9/9/02 19
9/9/02 20
9/12/02 21
9/16/02 22
9/16/02 23
9/16/02 24
9/16/02 25
9/16/02 26
9/ 16/02 27
9/17/02 28
9/23/02 29
9/25/02 30
Return of service executed as to The Apollo Group on
8/29/02 (aq) [Entry date 09/09/02)
Order granting mot i on for James K. Mackie and Gerald F.
Gi ordanto, Jr. to appear pro hac vice [14- 1) (aq)
Ex Parte Motion by Leeland 0. White to Correct Clerical
Error (aq) [Entry date 09/09/02]
Motion by Leeland 0. White to strike Motion for more
Definite Statement (aq) [Entry date 09/09/02]
[Edit date 09/09/02)
Amended Motion by Leeland 0. Whi te to strike Defendant's
motion for more definiet statement (aq)
Response by Leeland 0. White motion for more definite
statement [16-1) (aq) [Entry date 09/16/02}
Response by Leeland 0. White
(aq) [Entry date 09/16/02}
to motion response [15-1}
Response by Leeland 0. White motion for James K. Mackie and
Gerald F. Giordanto, Jr. to appear pro hac vice [14-1] (aq)
Response by The Apollo Group motion to Correct Clerical
Error [19-1} (aq) [Entry date 09/17/02]
Objection by The Apollo Groupo Plaintiff's Application to
Cler k f or Entry of Default and Plaintiff's Motion for
Judgment by Default by the Court [10-1] (aq)
Memorandum by The Apollo Group in support of motion for
mor e defi nite statement [16-1], and Response to Plaintiff's
Related Pleadings (aq) [Entry date 09/17/02}
Cert ificate o f service by The Apollo Group, regarding The
Apollo Group's Combined Objection to Plaintiff 's
Applicat i on to Cl erk for Entry of Defaul t and Plainti ff 's
Motion for Judgment by Default by The Court (aq)
Notice of filing by Leeland 0. White, Protest of District
Court Not Rejecting Defendant's Pleading (aq)
Order grant ing motion f or more definite statement [16-1)
(aq) [Entry date 09/26/02)
PAGE 20.
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EXHIBITS A- K
Proof of Concealed original service [137], October 15, 2004. However court was aware
of document on September 5, 2002 by affidavit [1 1] establishing willful concealment.
...... .
; c
'
... .. , ..
l..
Proceedi-ngs include all ._
3:02cv237 White v. The Apollo Group, et al \
6/7/ 02
6/7/02 1
7/8/02 2
7/12/02 3
7/18/02 4
7/18/02 5
7/24/02 6
7/26/02 7
8/8/02
8/8/02 137
8/12/02 9
9/5/02 10
9/5/02 11
9/S/02 12
9/5/02 13

9/5/02 14
9/5/02 15
case assigned to J udge Philip R. Martinez (aq) .,
[Bntro; date 06/10/02]
1

,,
Motion by Leeland o. White to proceed in forma pauperis (jm)
(Entry date 06/10/02) it
Order denying motion to proceed in pauperi's ' 1.1-1.] (aq)
(Entro; date 07/09/02] , ...
' Y' "
Motion by Leeland o. White for reconsideratH>n Of motion
to proceed in forma papueris (aq) (Entry dat( 07/U/'02)
Order granting motion for reconsideration ot motion to
proceed in forma papueris [3-1] (aq) (Entr}' date 07/18/02)
complaint filed. I.F.P. Moti on Granted
[Entry date 07 /18/02] .
Amended complaint by Leeland 0. White
[5-1) ) (dll) (Entry date 07/25/02]
I Pages : 9) (aq)
amehding complaint

Amended complaint by Leeland 0. White , amending compl aint
[5-l] (Pages : 7) (aql [Entry date 07/2-9/02]
Motion by Leeland o. White to compel discovery (jm)
[Entry date 08/0B/02]
Return of service executed as to The Apollo Group on
B/5/02 Re: document #7 (rna) (Entry date 10/15/04]
Motion by Leeland 0 . White to compel an Officer of the
United States to do his duties (aq) [Ent ry date 08/12/02)
Motion by Leeland 0. White ttfr default judgment against
The Apollo Group, Arthur Andersen (aq) !Entry date 09/05/02]
by Leeland o. Whi t e in support of motion for
detault judgment against The Apollo Group, Arthur Andersen
(10-1) (aq) (Entry date 09/05/02)
of filing by Leeland 0. White, Affidavit of Amount
Oue upon Application f or Default Judgment to Clerk (aq)
Qf filing by Leeland o. White, Application to Clerk
for Entry of Default (aq) (Entry dat e 09/05/02]
Motion by The Apollo Group for James K. Mackie and Gerald
F. Giord4nto, J r . to appear pro hac vice (aq)
[Entry date 09/06/02}
Response by The Apollo Group motion to compel discovery
18-1) (aq) [Entry date 09/06/02]
' ,..
,.
MOTION TO SET AsiDE JUDGMEtrr EP: 02CV0237, Rule 60(d)(3) Fed. R. Civ. P
PAGE 21.
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From: Finley Steve
To: Macias, Wendy
CC:
Date: 5/3/2010 4:08:44 PM
Subject: FW: Did you see this WSJ article from today?
Nonresponsive
Tenor OfF or-Profit School Discussion Gets Toned Down
By Melissa Kom
OfDOW JONES NEWSWIRES
NEW YORK (Dow Jones)--This week's sell-off in for-profit school stocks, prompted by a report of a U.S.
Department ofEducation official's speech, may have been overblown, some analysts say now that they have read a full
transcript of the comments.
The sector's shares fell sharply Thursday after trade Web site Inside Higher Ed reported that Robert Shireman, deputy
undersecretary for education, spoke harshly of market-funded colleges at a meeting of state school administrators and
accreditors Wednesday. The article, citing sources at the meeting, said Shireman compared the schools to Wall Street
firms whose actions helped cause the recent financ1al crisis. Inside Higher Ed, which didn't have a reporter at the
meeting, attempted to confirm the comments with Education Department officials, who declined comment for the article.
Shireman did make that comparison, according to a transcript of his speech, which analysts believe was relatively even-
handed and wide-ranging. He also said regulators could do a better job. Shireman devoted much of his speech,
delivered at the National Association of State Administrators and Supervisors ofPrivate Schools meeting, to proposed
changes in rules governing all of higher education.
The Inside Higher Ed article sparked a nearly universal sell-offin higher-education shares, but some recovered ground
Friday. Career Education Corp. (CECO), which fell more than 12% Thursday, was recently trading up 1.1% to $29.59.
ITT Educational Services Inc. (ESI), which lost 6.6% the previous day, was off a fraction in recent trading at $102.78.
Apollo Group Inc. (APOL), which fell6.1% Thursday, was up 0.4% at $57.98.
Analysts who have read both Inside .Higher Ed's report and a transcript of Shireman's speech say the comments were
mostly in line with his earlier stance, which has generally accepted the role of for-profit schools in the Obama
administration's plan to increase access to higher education.
Doug Lederman, editor of Inside Higher Ed and author of the article, said the story "made pretty clear that it was based
on accounts from people in the room. There was no question that they interpreted his comments in a certain way."
Lederman has heard a recording of the full speech since publishing the article.
"Shireman was laying out a case for greater government regulation given increased investments in Pell Grants," Wedbush
Securities analyst Ariel Sokol said in an email message after reviewing the meeting transcript. "He seemed amenable to
forming bridges with the sector."
Shireman commended the schools for "making sure that there was capacity to be able to serve additional students"
during the recession, according to a transcript provided by Career Education Review. Shireman cited year-over-year
percentage increases in Pell grant funds for 11 publicly traded school companies, including Corinthian Colleges Inc.
(COCO), DeVry Inc. (DV), and American Public Education Inc. (APEI).
Most for-profit schools derive the majority of their revenue from federal student aid.
A Department of Education spokesman reiterated Shireman's comments, saying in an em ailed statement: "For-profit
colleges play a critically important role in helping to ensure so many Americans have access to education and training that
can improve their job prospects and lives."
To be sure, Shireman did liken the relationship between schools and accrediting groups to that between banks and
ratings agencies, which have an "inherent conflict ofinterest," as the agencies are paid by the companies they are
supposed to regulate.
"Are there regulators in the room who feel like you do have the analytical firepower you need to assess what is going on
with the entities you regulate in higher education," Shireman asked. "1 don't th.ink we feel we have the firepower we
need."
Lederman said the speech was "a much stronger indictment of the system of higher education accreditation than of the
sector."
Trace Urdan of Signal Hill Capital Group wrote in a note to clients, regarding the full transcript, that Shireman's "tone in
general is much less severe" toward schools specifically. "He presents as a reasonable person struggling with
accountability gaps that he perceives exist in the system."
According to the transcript, Shireman devoted a portion of his speech to detailing the process by which the Department
ofEducation formulates new rules governing higher education, known as negotiated rulemaking. He stressed that there
were productive discussions on many fronts, though he said college representatives weren't particularly constructive
when it came to a measure to quantifY how well the schools prepare students for "gainful employment" in a recognized
occupation.
Concerns over that proposal have upended the for-profit school industry over the past few months, with a trade group
estimating the government's early version would di splace hundreds of thousands of students as their programs lose
access to federal funds. During a question-and-answer session, Shireman said there is no final proposal yet, and he is
open to suggestions to ensure the rule is fair.
-By MelissaKom, Dow Jones Newswires; 212-416-2271; melissa.korn@dowjones.com
From: Finley Steve
To: Macias, \Vendy
CC:
Date: 5/19/2010 9:28:00 AM
Subject: FW: FYI- From the Chronicle of Higher Ed on fight over Gainful Employment
Very interesting
From: Siegel, Brian
Sent: Wednesday, May 19, 2010 9:01AM
To: Jenkins, Harold; Marinucci, Fred; Finley, Steve; Sann, Ronald; Wolff, Russell; Woodward, Jennifer
Subject: FYI-- From the Chronicle of Higher Ed on tight over Gainful Employment
May 19, 2010
In a Fight to Preserve Their Market, For -Profit Colleges Lobby Hard Against a Proposed Rule
By Goldie Blumenstyk and Kelly Field
For-profit colleges, faced with the threat of program closures, have gone on a lobbying and public-relations blitz,
spending hundreds of thousands of dollars in an attempt to beat back an Education Department proposal to cut off
federal student aid to for-profit programs whose graduates carry high debt-to-income loads.
In the five months since the department offered its controversial "gainful employment proposal ," for-profit colleges and
their chief association have spent at least $620,000 lobbying members of Congress, the Education Department, and the
Office of Management and Budget, which is reviewing the department's proposed rule (see related article, with tables).
The University ofPhoenix, the nation's largest for-profit institution, has taken out ads in major publications, including The
Chronicle, defending the sector and arguing against the rule, while for-profit colleges are urging their students to sign on
to a petition opposing the plan.
For-profit lobbyists and executives are swarming Capitol Hill and federal agencies, pushing an alternative plan that would
require programs only to provide prospective students with more information about their graduates' debt levels and
salaries. During the Career College Association's annual "Hill Day" in March, members of the organization met with aides
from nearly every Congressional office. Their message: The proposal would cost jobs and limit access to college at a
time when the president is pushing education as a solution to high unemployment.
In an attempt to discredit the proposal, some opponents have tried to paint Robert M Shireman, who as deputy under
secretary is the department's top political appointee on higher-education issues, as a rogue actor. But even critics of the
plan acknowledge that Mr. Shireman, who is stepping down this summer, was not the sole author of the proposal.
Lobbyists for the for-profit sector say the last time there was a lobbying push of this magnitude was in 1992, when the
Education Department was crafting rules governing commissions for college recruiters. The fight extends all the way to
the top, with the chief executives of major for-profit companies like ITT Educational Services, Career Education
Corporation and Corinthian Colleges holding meetings with agency heads.
For-profit lobbyists and Congressional aides say Education Department officials have been surprised by the amount of
pushback they've gotten on their proposal.
"I doubt that when Arne Duncan was planning his 2010 calendar, he thought he'd be spending a lot of time on gainful
employment," said Harris N. Miller, president of the Career College Association, which represents more than 1,400
colleges.
Backing From Business
The for-profits have gotten a boost from the U.S. Chamber of Commerce, which represents both for-profit colleges and
the employers who hire their graduates. In recent weeks, Arthur J. Rothkopf, executive vice president of the Chamber's
Institute for a Competitive Workforce and a former president ofLafayette College, has met with Secretary ofEducation
Arne Duncan and other department officials to voice concerns about the "gainful employment" rule, said Rolf Lundberg
Jr., the Chamber's chieflobbyist.
"Employers are keenly interested in the continuing ability of the for-profit industry to thrive," he said.
Consumer and student groups, meanwhile, have launched a counteroffensive, urging the department to stand firm and
issuing briefs challenging the sectors claims about the impact of the proposal. In April, the Career College Association
released a report on a study of more than 10,000 for-profit college programs. It estimates that nearly a fifth of those
programs would become ineligible for federal student aid and forced to close under the proposed rule, which would bar
a program's students from taking on loan payments that exceed 8 percent of the expected earnings for graduates in that
program, based on a 1 0-year repayment plan. The association has extrapolated from those findings to predict that more
than five million students could be displaced over the next 10 years if the rule is adopted.
Supporters of the rule say the study demonstrates that the rule would hardly devastate the for-profit college industry
because 82 percent of programs would be unaffected.
"What is truly troubling," said Pauline M. Abernathy, vice president of the Institute for College Access & Success, is the
Career College Association's response to the study. Rather than fighting the rule, she said, its members should shut down
programs that require students to take on more debt than their likely earnings would allow them to repay.
The study was conducted by a Jonathan Guryan, an associate professor of economics at the University of Chicago
Booth School of Business, along with a colleague from Charles River Associates, a consulting firm with offices around
the world. Neither Mr. Harris nor Mr. Guryan would reveal how much the association paid for the research or for the
professors trips toW ashington to explain the findings to staff members on Capitol Hill and the Obama Administration.
But both insisted that the association had no say over how the study was conducted or in interpreting the results.
An Appeal to M:inority Groups
Though for-profit colleges are, in the words of one college lobbyist, "leaving no stone untumed" in their effort to build
Congressional opposition to the plan, they are particularly targeting minority lawmakers and members with for-profit
colleges in their districts. In April, the Career College Association held a briefing for aides to members from the "Tri-
Caucus"-the Congressional Black Caucus, the Congressional Hispanic Caucus, and the Congressional Asian Pacific
American Caucus-in which association leaders warned that the proposal would harm minority students attending for-
profit institutions. At the hearing, the association circulated charts showing that for-profit colleges educate, and graduate,
more African-American and Hispanic students than public two- and four-year colleges.
The sector's effort to appeal to minority groups has met with mixed success. While the League of United Latin American
Citizens and the National Black Chamber of Commerce have come out against the plan, members of the Tri-Caucus
groups are split over the proposal. In the U.S. House of Representatives, African-American lawmakers Rep. Alcee L.
Hastings, Democrat ofFiorida, and Rep. Donald M. Payne, Democrat ofNew Jersey, sent a letter signed by 18
lawmakers to Mr. Duncan warning that the department's proposal would "disproportionately harm nontraditional and
lower-income students" and "lead to educational capacity cutbacks in critically important fields." The letter urged the
secretary to consider expanding disclosures instead.
But other members of the Tri-Caucus groups are suspicious of the sector. At the Career College Association's briefing,
some aides to minority lawmakers raised doubts about the value that for-profit institutions are providing students, with
one aide calling proprietary colleges "the Toyota" of education, according to an individual who attended the meetings. An
aide to one oftheHispanic lawmakers said that roughly seven of the 10 or so questions raised by the two dozen
attendees ranged from "somewhat skeptical to very skeptical."
"We agree that the colleges provide the access," said another aide to a Hispanic lawmaker. "Our concern is that the
quality of the education is not what it needs to be."
The aide suggested that the rules should be even stronger, calling the department's proposal "actually pretty wimpy."
He called the association's appeal to minority members "cynical."
"Minority status is always used to get away with something," the aide said.
Lobbying and PR Blitz
For-profit colleges have also been hiring lobbyists with ties to the Congressional Black Caucus, the Education
Department, and Congressional leaders. Both the Career College Association and the Career Education Corporation
have retained the Podesta Group, a powerful lobbying shop led by Tony Podesta, who is a top Democratic fund raiser
with longstanding ties to members of Congress.
Among the lobbyists working for the colleges are Paul Brathwaite, a former executive director for the Congressional
Black Caucus; Lauren Maddox, a former assistant secretary of communications for the Education Department, and
former aides to Sen. Richard J. Durbin, Democrat oflltinois and the assistant majority leader, and Rep. A1 Green,
Democrat of Texas and a member of the Congressional Black Caucus.
During the first three months of 2010, the association and Career Education Corporation paid the Podesta Group about
$140,000 in lobbying fees, making the Podesta Group No. 1 among 14lobbying firms hired by the largest for-profit
college groups, according to a Chronicle analysis oflobbying disclosure forms. (Podesta Group has represented both for
several years.) Another lobbying firm led by Mr. Podesta's wife, Heather, received approximately $20,000 each from
Concorde Career Colleges, De VI)' Inc, and Education Management LLC during that time period.
Meanwhile, Kaplan Inc. has hired Dezenhall Resources, a Washington-based public-relations firm known in political
circles (and a 2006 Business Week story) as the "pit bull of public relations" for its secretive work for interests seeking
to undermine environmental groups and advocates for open access to research findings.
Kaplan officials declined to comment on Dezenhall's entire role, but did acknowledge that the firm has been helping it to
place op-ed articles that question the proposed rule. (One ofthose, by Robert H. Atwell, a former president of the
American Council on Education and also a former board member Education Management Corporation, which owns for-
profit colleges, recently appeared as a letter to the editor in The Chronicle.)
For-profit colleges are being "undeservedly lambasted" by news media and others and "in situations like this, companies
hire outside experts like Dezenhall," said Ronald H. Iori, a spokesman for Kaplan Higher Education, which runs Kaplan
University and other for-profit colleges.
Calls and e-mails to Dezenhall from The Chronicle were not returned. On its Web site, Dezenhall describes its chief
product as "crisis management" and notes that it is "typically brought in during times of intense scrutiny, risk, or
competition."
In addition to the personal visits to lawmakers and regulators, the colleges and companies have been trying to make their
case in the news media, both with op-ed commentaries criticizing the rule, and paid advertisements.
This week, for example, the University ofPhoenix, ran advertisements aimed at discrediting the proposed gainful-
employment ru.le as a policy that could "limit access to the education so many Americans desire." One of the ads uses a
quote from Mr. Shireman praising the for-profit sector. M The ads will or have run in newspapers widely read on
Capitol Hill-Politico, CQ Today, Roll Call, The Washington Post, and The Chronicle.
Teni C. Bi shop, executive vice-president for external affai rs for the university's parent company, the Apollo Group,
would not say how much the company is spending on the ads.
On the other side of the fight over the gainful employment rule are groups representing students, consumers and civil-
rights organizations. They have also held meetings with Congressional aides and agency heads, and, later this week, a
coalition of more than 20 groups will announce their support for "strong and effective regulation."
"CCA is much louder than we are because they have way more to lose," said Christine Lindstrom, higher-education
program director for U.S. Public Interest Research Group, a consumer organization.
"They have just been a force on the Hill and in the media," she said. "Now we're feeling the need to amp it up ourselves."
Ms. Lindstrom said the association's message, and in particular its argument that it serves min01ity students, is
disingenuous. "They keep saying, 'We serve this population. We serve this population."' But the reality is, if you're
serving a financially needy population, "then you need to care about debt and defaults and job placement."
An association of Florida community-college presidents has already publicly endorsed the proposed rule, calling it "a fair
measure' in a letter to Mr. Duncan, and a Texas community-college association is considering doing so.
Student Petition
One unusual piece of the lobbying effort is the online petition drive from an organization calling itself Students for
Academic Choice.
For more than two weeks, the self-described organization of "proud students and graduates of private, postsecondary
career oriented institutions" has been seeking signatures from at least 100,000 fellow students and graduates for their
petition opposing the proposed rule. (As of Tuesday, the counter on the site showed under 32,000 signers.)
"This new regulation would treat career-college students as separate and inherently unequal," the petition reads, invoking
language of the segregation era.
The site was established with the technical and financial help of the Career College Association, and a number of
colleges have put up links to it on their own Web sites. At least one of those pages with the link invites readers with
questions to contact a Career College Association lobbyist, Bruce Leftwich.
Advocates for the proposed rule call the petition a classic example of "astroturfing,"-an attempt by the association to
create the appearance of grass-roots opposition.
The career college's president, Mr. Miller, said the idea for the petition came from some of the same 150 students who
participated in the association's March 11 "Hill Day," an annual event that brings hundreds of college officials to lobby
their representatives and senators. The association, he said, helped out at the students' request.
"These are not wealthy, middle-class students who have lots of free time," he said. "We make no apologies for assisting
the group getting set up."
He said the language of the petition was not an attempt by his association to make allusions to the civil-rights battles
overturning racial segregation. "I'm not clever enough to use code words," said Mr. Hanis.
Another group, the Business Industry Political Action Committee, has created Web sites for tl1e Education Management
Corporation that urge the company's 20,000 employees and 136,000 students to weigh in with Congress on the gainful-
employment rule.
With the department's decision on the rule expected to affect the stocks of publicly traded for-profits, Wall Street
analysts have also been closely watching the debate over the proposal. One of them, Trace A Urdan, an analyst with
Signal Hill Capital Group, has even offered for-profits some advice on fighting the proposal: "Embrace the media, control
the message," he urged in an April 27 note to clients and others. "Go on cable television (right and left) and make the
case for more-rigorous disclosure and student choice over government price controls."
He also suggested that the companies appeal to their supporters within the Congressional Black Caucus and to the
alternative media outlets that serve minority communities and other interests. "Industry has a great story to tell in terms of
expanding educational access within minority communities and in terms of a government policy that seeks to rob these
students of choice and condescends to their ability to make informed choices," he said.
Congressional Pushback
The colleges' arguments appear to be getting some traction in Congress. In addition to the letter sponsored by
Representatives Hastings and Payne, at least two Democratic S\senators-Bill Nelson of Florida and Bob Casey of
Pennsylvania-have sent letters to the Education Department opposing the proposal. Sen. Lamar Alexander, Republican
of Tennessee, has suggested that the department consider applying caps on default rates to for-profit college programs
rather than adding another layer of regulation. The existing rules penalize colleges whose default rates over all exceed
certain levels.
Mr. Alexander, a former secretary of education, and a member of the Senate education and appropriations committees,
has warned that he will offer an amendment to withhold funds to put the rule into effect if the department follows through
with its original proposal .
One senior Republican aide says that the Education Department has failed to make a case for its proposal . Education
Department officials have so far refused to provide opponents of the rule with the data they say they used in drafting the
rules.
"The department hasn't presented a factual case," the aide said. "Before you can legislate, you have to have a factual
case."
Meanwhile, on the House side, Rep. Robert E. Andrews, Democrat ofNew Jersey, is preparing to offer legislation that
would substitute the debt-to-income ratio for a "matrix" of variables used to measure the value that for-profit colleges
add. The matrix, he said in an interview, would apply to all colleges, nonprofit and for-profit, and assess four things: job
placement in the advertised field, graduation rates, default rates, and success in serving low-income, high-need
populations. His goal, he said, is to measure students' "actual outcomes," rather than their "projected incomes."
"I think the department has chosen the wrong method to measure value-added," Mr. Andrews said in an interview. "If
we want to measure whether people get a job and how much money they make, let's measure whether people get a job
and how much money they make."
From: Finley Steve
To: Macias, \Vendy
CC:
Date: 6/11/2010 8:37:20 AM
Subject: FW: FYI- Articles on CCA meeting from Inside Higher Ed and Chronicle of .Higher Ed
FYI -emphasis mine below
From: Siegel, Brian
Sent: Friday, June 11, 2010 8:26AM
To: Burton, Vanessa; Finley, Steve; Jenkins, Harold; Marinucci, Fred; Morelli, Denise; Sann, Ronald; Scaniffe, Dawn;
Varnovitsky, Natasha; Wanner, Sarah; Wolff, Russell; Woodward, Jennifer
Subject: FYI- Articles on CCA meeting from Inside Higher Ed and Chronicle of Higher Ed
Inside Higher Ed
Sector Under Siege?
June 11, 2010
LAS VEGAS-- The annual convention of the Career College Association was just gearing up for the day Thursday
when word started circulating that the U.S. Senate's education committee planned to start a series of hearings this month
into the increasing flow of federal student aid money into for-profit higher education.
It was a stark reminder --in case anyone here really needed it -- that the rapidly growing college sector faces a level of
federal scrutiny probably unmatched since the early 1990s, when Congress approved a set of changes to the Higher
Education Act aimed at reining in perceived abuses of the fmancial aid programs by what were commonly referred to as
"fly-by-night trade schools."
Just how much today's environment felt like deja vu from 20 years ago depended on whom you talked to here.
To many financial analysts, investor types and others who focus on stock prices or otherwise take a short-term view, the
mood was one of steady-state alarm, focused on the cloud of intensified federal regulation that has loomed over the
colleges for the last year. Those in this group believe that the for-profit sector has a target on its back, with a coalition of
consumer advocates, short-semng investors (who profit if stock prices fall), and ideological government bureaucrats
pushing an aggressive, activist agenda.
To some observers who've worked in and around the industry longer, though, the current round of federal scrutiny (in
the form of potentially tough new rules)-- while unfair in their eyes-- is a far cry from the 1990s, for a few reasons.
First, they argue, for-profit colleges are too embedded in the fabric of higher education, and too essential to meeting
President Obama's goals for increasing the country's college completion rates, to be dealt with in a way that would
seriously damage their ability to contribute to that effort.
Second, during the purge of the early 1990s, for-profit colleges were singled out for scrutiny, with policies put in place
that focused specifically on reining them in. This time around, while some federal policy makers clearly have special
concerns about for-profit colleges, higher education leaders in all sectors are feeling (and in many cases bristling at)
heightened scrutiny from federal , state and other policy makers who see higher education as underperforrning and costing
students and taxpayers alike too much.
"I don't know anybody in our sector who doesn't think that the the '92 amendments, and all the trauma they brought
about, ultimately had a positive outcome and changed the nature of quality assurance in this sector for the better--
though it was clearly something we resisted at the time," said Elise Scanlon, a Washington lawyer who spent nearly 20
years as an accreditor of for-profit colleges. "Right now it's hard to see what could come out of this round that would
make things better for us, but it is clearly part of a push for better information about quality in all of higher education, at a
time of increasingly scarce resources."
Mood of the Meeting
By many measures, the advocates for for-profit (or "private sector," as they prefer to call it) higher education who
gathered here for the annual meeting of the sector's main advocacy group could be feeling good about where they are.
Enrollments in the institutions have grown to nearly 10 percent of all postsecondary students, and the economic downturn
of the last year has enrollments booming at the colleges. The exhibit hall at the meeting here was bristling with companies
of all sorts seeking to sell their services to the institutions, a reflection of their steady and sturdy growth. Bottom line (as it
were), business is booming.
And yet, that very same enrollment growth-- and the fact that it is driven in significant part with Pell Grants and federal
student loans-- has given new and added urgency to consumer advocates, federal regulators, and others who believe
that the for-profit institutions are charging students too much for an education of inferior quality. (A series of critical news
media stories have focused on dubious practices.) Those concerns have been at the forefront of the Education
Department's push since last winter to consider a new mechanism for ensuring that vocational programs are helping their
graduates find "gainful employment," among other rules aimed at bolstering the "integrity" of the federal financial aid
programs.
The department's favored approach, which would judge programs based on a ratio comparing the incomes of graduates
to their monthly payments on their student loan debt, has been vehemently opposed by many career college officials,
who say that instituting such a policy could force the closure of many programs and potentially cut off access to college
for tens if not hundreds of thousands of students in them.
Lobbyists for and leaders of the colleges have been feverishJy opposing the gainful employment regulation (as well as
some of the department's other expected rules), arguing that department officials do not have sufficient evidence and/or
justification to support the approach and urging the Obama administration to reconsider.
They appear to have made at least minor advances in slowing down the department's progress in recent days.
On Friday, the Office of Management and Budget placed a cryptic note in the Federal Register concluding that the
department's proposed program integrity rules could have a major economic impact, a designation that requires the
Education Department to strengthen the evidence it must provide to justifY the need for the regulation. That designation is
believed to be a major reason why the Education Department has (according to reports from several sources Thursday,
though unconfirmed by department officials directly) decided to hold the gainful employment proposal back from the set
of proposed regulations it is expected to release a week from today.
Chronicle of .Higher Education
June 10, 2010
Pending Federal Rules Are Hot Topic at For-Profit CoiJege Gathering
By Jennifer Gonzalez
Las Vegas
New federal rules that the U.S. Department ofEducation is now expected to propose next week are dominating many
conversations here at the annual meeting of the Career College Association, which represents more than 1,400 for-profit
colleges.
Thousands offer-profit-college operators, financial analysts, faculty members, investors, and companies converged to
take part in the three-day national conference being held by the association, which announced Wednesday that it will be
changing its name to the Association of Private Sector Colleges and Universities.
The rules, which will mostly affect the for-profit-college sector, cover an array of issues, including misrepresentation of
consumer information and how to define a high-school diploma. The most-contentious issue has become a proposed
rule, known as the "gainful employment" rule, that would withhold federal aid from for-profit programs whose graduates
are likely to carry high debt-to-income loads.
The department has said its goal is to crack down on colleges that overcharge and underdeliver in training students for
jobs right after graduation.
Similar issues are also gaining the attention of Congress. On Thursday, Sen. Tom Harkin, the chairman of the U.S.
Senate Health, Education, Labor, and Pensions Committee, announced that his panel would hold hearings, beginning this
month, to examine "issues related to the growing role of the for-profit higher-education sector, induding the scope and
rapid growth of the federal investment in for-profit higher education and the corresponding opportunities and risks for
students and taxpayers."
Harris N. Miller, the president of the career-college association, said Thursday that the group welcomed the hearings.
"The education landscape in America is shifting," he said. "Federal student aid in private-sector education is an incredibly
important way to provide postsecondary access for all ."
Standing-Room Only
Because of the forthcoming federal rules' possible effects on the for-profit sector, it is not surptising that many of the
sessions at the conference revolved around legislative and regulatory issues. One session went in-depth into the issue of
how to compensate student recruiters without running afoul of the federal ban on paying employees based on how many
people they enroll , while another gave attendees an overview of state issues facing for-profit colleges, such as complying
with licensure fees and state grant eligibility.
It was standing-room only at a session called "Neg Reg 2010: There Is a New Sheriff in Town I" with a number of
attendees forced to stand outside the door and listen from the hallway. The panel gave an overview of the 14 rules the
federal Education Department plans to unveil.
Sharon H. Bob, a higher-education consultant at the Washington-based law firm ofPowers Pyles Sutter & Verville,
urged the attendees to take full advantage of the 30-to-40-day comment period that will begin after the department
releases its rules to make sure the department understands all the concerns of the for-profit sector.
"You want the full weight of the sector on the issues," she said.
The panel left the most-contentious issue, "gainful employment," last for discussion. A hush came over the room when the
panelists finally started talking about it.
The Higher Education Act of 1965 requires that proprietary and vocational colleges, other than those clearly designated
as "liberal arts" and vocational programs not designed to lead to a degree, provide "an eligible program of training to
prepare students for gainful employment in a recognized occupation." Compliance with the rule is a conrution for those
colleges' students to be eligible to receive federal financial aid.
The higher-education act does not define "gainful employment" as described by the proposed rule. So the Education
Department set out to do that late last year, convening a panel that included consumer advocates, for-profit-college
officials, and student advocates to re-examine the rule.
At Thursday's session, Elaine Neely, senior vice president of regulatory affairs at Kaplan Higher Education Corporation,
said the department has never produced data supporting the need to define "gainful employment."
The department's most-recent draft of the "gainful employment" rule would bar federal aid for programs where a majority
of the students' loan payments would exceed 8 percent of graduates' expected earnings based on a 10-year repayment
plan.
In April the career-college association released a report on a study of more than 10,000 for-profit college programs. It
estimated that nearly one-fifth of those programs would become ineligible for federal student aid and forced to dose
under the proposed rule.
Ms. Neely urged for-profit college operators to talk with nonprofit colleges to find out how the rule would affect them.
"This is a slippery slope that traditional schools need to be aware of," she said.
Another panelist, Lawrence Brown, president of Beam Reach Education, which focuses on acquiring and developing
specialized trade schools, said everyone agrees that graduates of a career college should leave gainfutly employed, but he
has a problem with the department "picking arbitrary numbers" to define what that means. A lot of heads in the room
nodded in agreement. He said if the issue is that much of a problem, then Congress, not the department, should deal with
it.
Jitters and Advocacy
The talk of gainful employment was inescapable at the convention, which, the association said, is set to break records,
with an estimated 2,500 attendees.
Outside the exhibit hall, financial analysts talked among themselves about the forthcoming rules. Some said they were
jittery about the proposals and how they might hurt profits. Talk of the rules spilled into elevators and even the casino,
with a conference attendee making a joke about the rules before playing a hand during a poker game.
A newly foimed group called Students for Academic Choice says it will represent the interests of career-college students
and graduates. At the conference, the group's leaders said their first order of business was to send Education Secretary
Arne Duncan a letter expressing their concern about the proposed gainful employment rule. The group said the proposal
would adversely affect hundreds of thousands of students. The group has gathered over 32,000 signatures for the letter.
Dawn Connor, a student at Globe University in Wisconsin and the group's president, said the proposed rule would take
away a student's choice of where to attend college.
Ms. Connor said the group plans to put together a full public-policy agenda in the future. She said the voice of students
who attend for-profit colleges has been overlooked and unheard on issues and that the new student association wants to
change that.
Jane A Nickles, an instructor at Le Cordon Bleu College of Culinary Arts in Austin, Tex., says discussion of the
proposed federal regulations has just started to trickle down to faculty members. She says some instructors are
concerned about how the rules may affect them.
However, Ms. Nickles said she planned to attend sessions on faculty development and teaching rather than those dealing
with legislative or regulatory issues. She will lead a session on Friday called "Teacher Vs. Twitter" that focuses on how to
better engage students in the classroom. She said she is dealing with tech-savvy students with short attention spans and
will tell instructors that "We have to be as engaging as video games."
From: James Bob
To: Finley, Steve
CC:
Date: 9/24/2010 9:47:36 AM
Subject: FW: Higher Ed Watch: Week of September 20- September 24
l"'"'"'po"''" I
Robert H. James
Liaison for Career Institutions of Higher Education
U.S Department ofEducation
FAX: 317-257-2098 Call first
Cell Phone #202-557-5835 D.C.# 202-377-4301 Indianapolis Office 317-257-2098
8527 Quail Hollow Road
Indianapolis. IN 46260-2208
From: Higher Ed Watch [mailto:higheredwatch@newamerica.net]
Sent: Friday, September 24, 2010 9:46AM
To: James, Bob
Subject: Higher Ed Watch: Week of September 20- September 24
NAF Header
Below is a summary of items published this week on Higher Ed Watch (www.higheredwatch.org ). If this alert does not
interest you, let us know and we'll remove you from our weekly e-mai l list.
HEW Logo
Higher Ed Watch
September 20- September 24
A Name Change That George Orwell Could Have Dreamed Up
Stephen Burdi September 23, 2010
Take note Higher Ed Watch readers, it is no longer pol itically correct to call proprietary schools "career colleges." From
now on, they are to be referred to as "private-sector" colleges.
At least that's the word that has come down from the lobbying organization formerly known as the Career College
Association. On Wednesday, CCA officially changed its name to the Association of Private Sector Coll eges and
Uni versities. So does this name change portend a major shift in the association's priorities --like, for instance,
encouraging their members to reduce their dependence on federal subsidies? Not a chance. In fact, judging from internal
CCA strategy documents that Higher Ed Watch obtained this summer, the association appears only to be getting more
aggressive in seeking out new sources of federal funding for their institutions.
More ...
Other Education Posts
The Status of the Education Jobs Fund
GAO Releases Report on Uses ofEducation Stimulus Funds
Proposed Rules Will Shake Up Head Start
Questions on the State ofPre-K in the States
Dept ofEd Announces 'Promise Neighborhoods' Planning Grantees
Guest Post: Gauging Gainful Employment
Ben Miller! September 21, 2010
Newspaper readers across the country have been greeted this week with full-page color ads featuring large pictures of
smiling nurses, medical assistants, and mechanics under the headline "I don't count? Some in Washington think I don't."
The ads warn that new Gainful Employment regulations that the U.S. Department ofEducation has proposed would put
100,000 people out of work and eliminate educational opportunities for up to one million low-income and minority
students.
This ad campaign is funded by Corinthian Colleges, a for-profit higher education company that could have a lot to lose if
these regulations-- which would penalize proprietary schools for saddling students with more debt than they can pay
back-- go into effect. So it should come as no surprise to readers ofHigher Ed Watch that the ads' claims are a bit
hysterical.I recently conducted my own analysis of the Education Department's proposed gainful employment rule by
looking at the pricing, repayment rates, and estimated salary information for over 12,600 proprietary school programs. I
found that, under these standards, only a small share of programs would be in danger of being removed from the federal
student aid programs.
More ...
The Washington Post's "Class Struggle" blog recently named Higher Ed Watch and its sister blogs Early Ed Watch and
Ed Money Watch to be among the best education blogs in the country . We are grateful for the recognition.
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From: Macias, Wendy
Sent: Thursday, July 16, 2009 9:55AM
To: Bergeron, David
Subject: Neg reg comment excerpts
(b)(5)
From: Macias Wendy
To.: Finley, Steve
CC:
Date: 7/16/2009 11:49:30 AM
Subject: FW: Neg reg comment excerpts

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