the joint hearing will come to order and i want to thank our witnesses and guests today unfortunately i have to leave and get to a meeting in the whip's office but we are going to be in the able hands of the gentlelady from north thank you chairman jordan there are a lot of things going on around here today and people are going to be moving in and out as i am sure most of you know the committee will come to order i want to welcome everyone here today i appreciate the opportunity to hold a joint hearing with the oversight and government reform subcommittee on regulatory affairs stimulus oversight and government spending and i would like to thank all of our witnesses and guests for joining us today supporting freedom of choice in higher education should be a priority for all members of congress post secondary education opens doors for greater job opportunities and the chance for a more stable career path both of which are critical for americans struggling to make ends meet and support their families in this tough economy unfortunately the administration's efforts to impose the widely criticized gainful employment regulation on proprietary colleges could severely limit education and job training opportunities for millions of students and inhibit local economic development in communities across the country proprietary colleges are unique institutions with the flexibility to offer courses in formats that meet the demands of the student population and in subjects based on the needs of the local community the majority of students attending a proprietary institution are what we commonly refer to as  nontraditional students meaning they are not attending college right after graduating from high school in fact forty eight percent of students enrolled in a two year proprietary program and seventy two percent of four year program students are twenty five years of age or older many of these students have families full time jobs or seek job training for career opportunities in a new field the option to take courses in the evenings on the weekends at an accelerated pace or even online can be a valuable alternative for students who may otherwise be unable to pursue post secondary education proprietary colleges serve several fast growing industry sectors including the computer data processing and health care fields from two thousand and eight to two thousand and nine for example seventy nine percent of the allied health and medical assisting workforce and eleven percent of nurses were educated at proprietary colleges students who choose to attend proprietary institutions often benefit from the institution's close working relationship with local business owners and hiring managers which helps the schools better develop programs that meet the needs of the local workforce in a hearing held by the education workforce committee earlier this year a hiring supervisor with orbital sciences corporation in arizona praised a local proprietary institution's efforts to gain input from business leaders that would better prepare students to compete in the job market and this is a quote private post secondary educational institutions actively practice continuous improvement through the use of industry advisory committees the witness said these advisory committees allow industry leaders the opportunity to provide constructive feedback and recommendations for curriculum enhancement based on graduate performance in the industry this approach has an immediate benefit for employers as new graduates enter the industry armed with the skills and knowledge to solve real issues in the workplace the reams of red tape in reporting re quirements established by the department of education's gainful employment regulation could make it more difficult for proprietary schools to create the career training programs valued by local businesses in turn this could force businesses to outsource job opportunities to find skilled candidates or even relocate to another part of the country the new unemployment numbers released by the department of labor this morning show private sector job growth remains sluggish more than fourteen million americans are out of work and the unemployment rate continues to hover above nine percent our economy added only eighteen thousand jobs in june that is simply unacceptable it is absolutely critical that congress do everything in its power to rein in harmful regulations that hamper economic growth and job creation and we must start by putting an end to the misguided gainful employment regulation i hope today's hearing will shed additional light on the serious ramifications that this regulation could have on students employers job creation in the economy as a whole i look forward to our witness adults deserve the best education they can get and scarce taxpayer dollars should be used to maximize the opportunities to ensure that they receive quality instruction and to prepare them to become successful members of our nation workforce this hearing should not be about protecting jobs at for profit schools it should be about creating millions of jobs for american students who are striving to better ourselves and our society unfortunately the record of for profit schools raises significant concerns generally students at for profit schools are less likely to graduate less likely to find a job more likely to have higher debts and more likely to default on those debts than students at public and private nonprofit schools in addition low income and minority students who make up a substantial part of the student body at for profit schools are three times more likely to borrow federal student loans four times more likely to borrow private loans and less than half as likely to graduate than the same groups of students at nonprofit schools for this e graduation ceremonies in baltimore recently i have met personally with their ceos and presidents and i have seen the gleaming faces of graduates holding diplomas in their hands my concerns relate to whether u s taxpayers are fueling incentive structure that encourages for profit schools to use federal student loans to pay their ceos exorbitant salaries to pay their shareholders lucrative dividends and to plow millions of dollars into recruitment and marketing campaigns all while spending less on education and job placement programs that would actually help students fulfill their dreams for example the ceo of strayer education made more than forty dollars million last year many times more than seventy seven percent of its revenue from hard paid federal dollars taxpayer dollars despite these numbers strayer's six year graduation rate is just fourteen percent compared to fifty five percent for public schools and sixty five percent for nonprofit schools strayer's loan repayment rate is twenty five percent less than half that of public and nonprofit schools and i would venture to guess that there is no member of these subcommittees or committee if you were running a firm would stand for that that kind of effectiveness a bipartisan coalition of ten state attorneys general have now launched an investigation into deceptive marketing practices and misrepresentations by for profit schools the attorney general of kentucky jack conway who was leading the probe said i want to make sure these institutions are as interested in educating their students as they are in collecting federal loan money i want to make sure that students aren't being misled and left owing tens of thousands of dollars in student loans for credits that don't transfer or a degree that will not benefit them consider the story of yasmine issa a twenty four year old mother of twin three year olds who recently divorced in a written statement submitted for today's hearing she describes her experience at sanford brown institute in white plains new york she said this the school's recruiter did not know much or give much detail about the program it seemed like they were just trained to be very aggressive and sell the seat for the program which would cost me a little over thirty two thousand dollars they said i would not have a hard time finding a job and that career services at the school would be dedicated to helping me find a job the recruiters kept calling me and told me that the seats for the program were filling fast and i needed to hurry up and sign up for the program after successfully completing the program ms issa tried for months to find a job only then did she discover that the program was not accredited and she was unable to become certified for her ultrasound degree as she explained in her statement i continued to search for a job this time i visited a hospital in new jersey the supervising  increase graduation rates and employment placement after graduation rather than enriching ceos and corporate shareholders our job is to examine the best ways to do just that i commend the department of education for developing the gainful employment rule in an open manner that this great nation offers to its people for generations citizens of this country have strived to obtain the american dream however the persistence of this great recession and chronically high levels of unemployment have led many americans to lose confidence in this dream just this morning we learned that the unemployment rate actually rose to nine point two percent one of the contributors to the economic morass are the layers of bureaucratic red tape and the onerous regulations that stifle entrepreneurial activity and suppress the private sector to create jobs as part of the committee's commitment to promote job creation today's hearing continues our ongoing examination of federal regulations regulations that are preventing millions of american businesses from creating jobs and putting americans back to work contrary to the american dream sometimes the testimony received by this committee is unsettling sometimes it is disturbing for example in february a small business owner from ohio was asked would you do it all over again knowing what the regulatory environment is today in this country his response was disturbing and it was heartbreaking no sir i would not but he is not alone every hearing brings in more americans who are frustrated discouraged and believe that the american government is actually working against them flailing their success rather than supporting their efforts to help expand the u s economy and create jobs today's hearing will explore an issue that we first learned about in february two thousand and eleven the department of education's gainful employment regulation the regulation is targeted at for profit institutions of higher learning such as the university of phoenix and strayer university to name just two well known schools these schools provide opportunities for americans who may be the first in their family and to high risk students in other words those whose previous collegiate experiences were interrupted by family responsibilities military obligations financial crisis or perhaps some who were simply not ready to persevere as younger students additionally many of their programs are designed to fit lifestyles of nontraditional students like working moms or economically displaced individuals who seek to gain new skills so that they can pursue a second career in addition to the opportunities that these institutions provide to many of our fellow americans there is some evidence that some bad actors have left some students with unaffordable debts and poor employment prospects in response to these concerns the department of education announced final gainful employment regulations on june  two thousand and eleven as the committee has reviewed this regulation it has heard from many students employers and universities that it will hurt both reputable as well as problematic programs equally eliminating post secondary options for many students as a general matter institutions of higher learning offer important opportunities to americans seeking to expand their skills and earn post secondary degrees and certificates the unemployment rate for americans with a bachelor's degree or higher is four point five percent less that is less than half of the national rate of nine point two percent of the eighteen million undergraduate students in fall of two thousand and nine nine percent or one point six two million attended for profit institutions for them as will the other students obtaining a bachelor's degree a proven way to combat unemployment and to obtain the american dream that so many americans strive for however according to one study the gainful employment rule will cause one point two to two million students to decline to enter post secondary schooling over the next decade this includes seven hundred thousand to one three million female students two hundred thousand to three hundred and sixty zero black students and two hundred thousand to three hundred and thirty  o hispanic students in addition to eliminating educational choice americans employed by for profit institutions may be impacted if their employer is forced to eliminate programs or if it experiences shift in enrollment the uncertainty of how this regulation will affect for profit schools may also affect new program development investment and infrastructure and worse yet hiring concern for these regulations has been bipartisan house minority leader nancy pelosi voted along with distinguished former chairman of this committee ed towns and a majority of members of the house to block the obama administration from implementing the regulations the administration however ignored the concerns and moved forward with finalizing the rules today we will hear from the most directly impacted by the gainful employment regulations students schools and the business community who all rely on for profit institutions for educational opportunities the testimony we will hear today will help us exa mine how these regulations will impact job creation as we attempt to foster an economic recovery that puts americans back to work thank you very much i now recognize the distinguished member of the subcommittee on higher education and workforce training the gentleman from texas mister hinojosa for his opening statement am going to request unanimous consent that representatives alcee hastings maxine waters ed towns and danny davis be permitted to participate in this hearing and ask questions of the and chairwoman foxx as ranking member of the subcommittee on higher education and workforce training i strongly support the department of education's final rule on gainful employment for a number of reasons first of all as members of these two committees we have a tremendous responsibility to exercise oversight and ensure that these taxpayer dollars are spent wisely and in the best interest of students and taxpayers during my fifteen year tenure in congress i fought vigorously to expand accessibility and affordability in higher education by working with my colleagues to increase the federal financial aid support president obama's college completion goals increase america's global competitiveness and are indeed necessary to educate and graduate greater numbers of students in our nation's colleges and universities at the same time the federal government must be assured that students and taxpayers are receiving an adequate return on their investment particularly twenty five percent of the total pell grants awarded and twenty seven dollars twenty cents billion in student loans representing twenty six percent of all student loans awarded to students  lled in for profit institutions importantly approximately fifteen percent of for profit institutions derive between eighty five and ninety percent of their total revenue from title  more likely to default than students who attended nonprofit schools whereas ten point eight percent of the two thousand and eight cohort who attended public colleges defaulted on loans within three years the default rate for students attending for profit institutions was twenty five percent in today's hearing some of my colleagues may argue that the gainful employment regulation limits educational opportunity for low income and minority students programs three years to improve before removing eligibility for student aid the rule targets the worst actors who i believe are like two percent who fail to improve student fifty five thousand programs which include thirty seven thousand programs at public institutions five thousand at private nonprofit institutions and thirteen thousand at for profit institutions i also want to underscore that the rule does not harm minority and low income students instead the rule helps low income and minority students access higher quality programs that increase their employment prospects what is more the u s department of ed estimates that only two percent of all the programs would ultimately lose eligibility under the rule in fact programs lose eligibility only after failing each metric three times within a four year period and no program could be ruled ineligible for title iv funds until the year two thousand and fifteen in closing i want to say that we must put students and taxpayers before company profits there is no doubt that pell grant scholarships and affordable student loans expand educational opportunity and help our students prepare for family sustaining jobs careers and life the final ga employment rule protects the integrity of these vital federal financial aid programs particularly in the for profit sector with that i yield back ms foxx thank you very much m members may have fourteen days to submit opening statements and extraneous material for the record we will now welcome testimony from our witnesses and i would take just a couple of minutes to introduce our distinguish witnesses today doctor dario a cortes is the president of berkeley college ms karla carpenter is a graduate of herzing university doctor anthony carnevale is the director of the center of education and workforce at georgetown university and mister harry c alford is the president and ceo of the national black chamber of commerce pursuant to oversight committee rules all witnesses will be sworn in before they testify and i would like to ask the witnesses if they now would rise and raise your right hand  please be seated we know that we are going to be called for votes very very shortly in fact we thought it would be by now but i am going to make a you have one minute left when it turns to red your time is up and we would appreciate your staying as close as possible to the five minutes thank you very much and other distinguished members of the respective committees a special greeting also to berkeley college members of congress rob andrews caroline mccarthy and ed towns to whom i sincerely thank for their leadership and support for private sector education my name is doctor dario cortes i am privileged to serve as the president of berkeley college i applaud you for holding this joint hearing and appreciate the invitation to share our perspective on the impact of the new federal gainful employment regulation on our colleges communities family owned businesses and jobs in the new york and new jersey region fully accredited and family owned and operated berkeley college has four new york and four new jersey campuses and berkeley college online we have serious concerns about the final federal rule on the surface the question of how it will affect our students faculty and campuses and programs seems quite clear but the answer is quite the opposite the honest response however is we just don't know the honest and in spite of the changes included in the final version of the rule institutions will essentially be navigating a minefield blindfolded and using an updated map before i elaborate on the rule i would like to provide you with a snap shop of berkeley college this year we celebrate eighty years since our founding in one thousand nine hundred and thirty one during the great depression berkeley college has been a leader in business education we now have enrollment of nearly nine thousand students including more than eight hundred international students  enrollment is sixty eight percent and forty six percent of our students are over the age of twenty three berkeley college's offerings are more than twenty career fields including health sciences information systems business administration accounting criminal justice and fashion marketing among others our professors bring a rich array of real world experience to the classroom and additionally fifty percent of our faculty members hold doctoral degrees in  field i was appointed president of berkeley college in july of two thousand and eight prior to accepting this position at the college i served in senior roles at the fashion institute of technology fairleigh dickinson university in new jersey university of maryland at college park johns hopkins university north carolina state university and university of wisconsin at madison the opportunity to serve both at traditional and private sector institutions has really truly opened my eyes to the positive impacts that our sector and our college has on our students many of whom may not have been able to pursue the college dream otherwise as berkeley college has evolved over the past eighty years we have cultivated relationships with our business communities we strongly believe that it is essential for students to gain work experience while acquiring their degrees and this is why the internship experience is a graduation requirement at berkeley we have student success philosophy this is evident through our many programs and initiatives which are aimed at encouraging financial literacy reducing student debt and increasing retention and graduation rates and providing scholarships and grants turning to the new federal gainful employment rule i have three major concerns first we believe that the gainful employment rule will create uncertainty and unnecessary confusion about the status of our programs under the rule not only for  for the school leaving the federal government the only entity completely in the know about the full impact of the rule specifically the initial data the department of education will provide to schools will measure the loan repayment histories of students who graduated or entered the loan repayment so long ago we question whether that information is even accurate further the department's proposed alternative data collection means are impractical as most states do not have the appropriate data collection infrastructure in place and most institutions like ours family owned schools do not have the staff or the capability to conduct the required service second there remains a lack of clarity regarding the debt to income calculation and institutions ability to exclude costs outside of tuition fees such as living expenses finally and third the rule will impose significant undue regulatory burdens this would only result in diverting precious college resources away from the core mission of teaching and learning and educating our students in favor of gathering and maintaining volumes of data to report to washington none which measure the quality of our institution o programs or the satisfaction of our students i appreciate the opportunity to address the joint subcommittee today and i would be happy to answer any questions following my testimony thank you very much ms foxx thank you doctor cortes i forgot to mention that the entire written statement will be made a part of the record ms carpenter you are recognized for five minutes chairwoman foxx and ranking member hinojosa and chairman jordan and ranking member kucinich and other distinguished subcommittee members thank you for holding this joint hearing and for the opportunity to share my educational story with you a special greeting to congressman petri a member of the education and workforce committee thank you for your continuing support for students and graduate of career colleges we greatly appreciate it my name is karla hammer carpenter i am a mother  boys ages fifteen and eighteen i am a two thousand and seven graduate of herzing university in madison wisconsin and now thanks to my education i am employed in my chosen field of work i work as a program manager for quest software a california based multinational company that develops sells and supports enterprise level software for public and private sector businesses all across the globe i have been employed at quest software since finishing my one and a half year of studies to attain my associate's degree in computer networking from herzing university four years ago my degree has proven to be of high value to me and to my employer prior to starting my family and being out of the paid workforce for fourteen years i spent the ten years after high school working without a college degree after high school and through my early twenties i briefly attended luther college in decorah iowa the university of wisconsin madison uw extension school baraboo and madison area technical college after several shifts in my academic focus i entered the workforce full time without a post secondary degree during a portion of that time i worked at an emerging manufacturing company not far from madison you may have heard of it trek bicycle corporation i gave that job up to stay home with my children when i started my family but after fourteen years at home and removed from the rigors of formal academic study and technological changes in the workplace i found myself forced to return to work to support my two boys after the end of my marriage the last five and a half year journey from housewife duties to my current software management responsibilities has not been without great effort given the nature of the technological shift timed against my absence from the workforce it clearly necessitated that i return to college in order to be marketable when i decided to return to school i knew that i needed to select the correct college environment that i could afford that would mesh well with my existing life the local community colleges had considerable wait lists could not guarantee me availability of my preferred programs or most importantly class times without question herzing university offered me the best daily schedule via block programming the best program options for viable employment with highly desirable skills in the local marketplace the best graduation time line incredible faculty accessibility and career services and the best total value of any program or school i  investigated in the area i met the admissions requirements for every school in the area but i did not think these other schools met my requirements except for herzing university by participating in this hearing i would like to give  to many who are seeking educational options to better their lives and contribute more fully to our economy and society i attended classes and partnered on projects with many students who had little to no family support financially or emotionally as first generation college attendees many armed services veterans and enlisted soldiers on leave and many various minority members of society who all felt that herzing university was a special and caring environment where faculty and staff were invested in helping each and every student attain their educational goals while enrolled my fellow students and i often joked as we learned more about each other shared our reasons  school and disclosing our dreams for our futures that we seemed to be in the hallowed halls of second starts just as business practices have changed over the years to accommodate global more technologically advanced business operations so too our schools must adapt in equal measure on the educational front but education policy changes should not impact student choice and i worry about the negative impact that the gainful employment rule will have on future students who are currently my sons ages and younger and other returning adult students in the workforce currently my fear is that fewer not more students will fulfill our national educational vision of more americans obtaining a higher level of post secondary training as a final note as a returning adult student i represent an important and growing demographic of students that our educational institutions will need to serve in order to best fulfill our national goals for post secondary education and workforce development six years ago it was i who stood at a crossroads in my professional life as i contemplated going back to college many more prospective students will soon face this same crossroad i only hope that others have the opportunity to attend a college as fine as my alma mater herzing university i hope they can attend a school of their true choice that meets their needs perfectly just as herzing university did for me thank you and i stand ready to answer your questions that you may have ms foxx thank you very much ms carpenter ladies and gentlemen of the committee we have twelve minutes there are some i suppose are engaged in this issue who don't believe that for profit institutions make a huge contribution to the individuals who attend them or that in my view at least they make a huge contribution to american higher education they have offered models that are quicker more tightly tied to labor market  value models that in light of their scheduling as ms carpenter points out and their structure are much more friendly to non traditional students having said that i think it important to note that there are some serious problems here and in that regard i think the administration's response with the rulemaking has been appropriate and i think actually fairly putting lots of people out of work we then turned technology loose and essentially restructured the american economy somewhat dramatically over the next twenty years ms carpenter's experience i think reflects that the economy we all worked in in the s is not the same one that existed by one thousand nine hundred and ninety five and what happened as a result of that was that automation the simplest force let loose able to automate the repetitive tasks in every job and what remained were the jobs that included non repetitive tasks those tasks bundled together made up new kinds of jobs sometimes altogether new jobs but changed the jobs that already existed a mechanic who used to repair a car needed mechanical skill now they need electro mechanical  skill and an understanding of computer operations to repair a car any of you who have faced that awful moment or at least of my vintage i remember as a boy if i could open up the hood of a car i could fix it a year or two ago i faced a broke down car opened the hood and finally turned away in disgust i had no idea what was going on in there so that fundamental shift has raised the value of post secondary education and we have been under producing post secondary education ever since one thousand nine hundred and eighty three one thousand nine hundred and eighty four the evidence of that is plain the earnings returns to post secondary education and training relative to high school have risen from thirty percent to eighty four percent although this is cloaked over more and more in this recession where the return has dropped down to seventy four percent higher than a high school degree but the bottom line here is that in the united states and in most advanced economies if you are going to go anywhere after high school you have to get some post secondary education or training first and the second change that i think is of great note here and makes this ruling sensible is that the relationship between the texture of education is changed as it relates to the economy and what i mean by that is it doesn't matter so much anymore which degree y whether you get a certificate an industry based certificate a ba a graduate degree what matters more and more is what you take not the degree still true that on average if you get a ba you will make more than a person with a certificate but if you get a certificate in engineering you will make more than almost forty percent of bas there is a vast shift in the relationship between education and the economy it is no longer just the preferred way to join the middle class it is becoming the only way so there are still some high school jobs left but there are only about one of those for every fifteen people who get no education and training after high school and those jobs pay about thirty five thousand dollars a year with experience and promotion you can go to forty five or fifty in some of those jobs but most of them not so and those are the jobs that are being eliminated or the education requirements are increasing  so it becomes important that we focus on the programs not the degrees and programs have wildly different earnings returns even at the ba level if you go get a degree in petroleum engineering make one hundred and dollars a year if you become a high school counselor you will make on average over forty years about thirty thousand dollars a year there is a difference there of almost two dollars million so it matters we need to have much better information on the relationship between programs and earnings and that in the end is what this set of regulations begins to do i think in the end these regulations are exactly  right sort they are regulations that will make markets work better information is what makes markets work better the collapse in the financial community was in large measure due to the fact that we had no information bankers didn't know any better who they were loaning money to than they knew the people who printed the money so the post secondary system people i think students parents and legislators have a right to know what the earnings returns are to higher education programs especially now when public resources are so precious we are at least thirty   urge you to come back immediately after the last vote and we will continue the hearing thank you all very much and i am sorry to have this recess but we need to go vote thank you