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65–011 PDF 2011

EDUCATION REGULATIONS: ROADBLOCKS TO 

STUDENT CHOICE IN HIGHER EDUCATION 

HEARING 

BEFORE THE

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, MARCH 17, 2011 

Serial No. 112–13 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: 

http://www.gpoaccess.gov/congress/house/education/index.html 

or 

Committee address: http://edworkforce.house.gov 
(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Thomas E. Petri, Wisconsin 

Howard P. ‘‘Buck’’ McKeon, California 

Judy Biggert, Illinois 

Todd Russell Platts, Pennsylvania 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Scott DesJarlais, Tennessee 

Richard L. Hanna, New York 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Kristi L. Noem, South Dakota 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Dennis A. Ross, Florida 

Mike Kelly, Pennsylvania 

[Vacant] 

George Miller, California, 

Senior Democratic Member 

Dale E. Kildee, Michigan 

Donald M. Payne, New Jersey 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Lynn C. Woolsey, California 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Dennis J. Kucinich, Ohio 

David Wu, Oregon 

Rush D. Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

David Loebsack, Iowa 

Mazie K. Hirono, Hawaii 

Barrett Karr, Staff Director 

Jody Calemine, Minority Staff Director 
(III) 

C O N T E N T S 

Page 

Hearing held on March 17, 2011 ............................................................................ 1 

Statement of Members: 

Heck, Hon. Joseph J., a Representative in Congress from the State of 

Nevada, submissions for the record: 

Heffner, Van, president and chief executive officer, Nevada Hotel 

and Lodging Association, prepared Statement of ............................... 36 

Hinchliffe, John, past chairman, Nevada Restaurant Association, prepared Statement of ................................................................................ 37 

Kline, Hon. John, Chairman, Committee on Education and the Workforce 1 

Prepared statement of ............................................................................... 3 

Miller, Hon. George, senior Democratic member, Committee on Education 

and the Workforce ......................................................................................... 4 

Prepared statement of ............................................................................... 6 

Statement of Witnesses: 

Barreto, Catherine, MBA, graduate, Monroe College .................................... 8 

Prepared statement of ............................................................................... 10 

Herrmann, Jeanne, chief operating officer, Globe University/Minnesota 

School of Business ......................................................................................... 20 

Prepared statement of ............................................................................... 22 

Jennings, Travis, electrical test department supervisor, Orbital Sciences 

Corp., Launch Systems Group ..................................................................... 11 

Prepared statement of ............................................................................... 13 

Mitchem, Arnold, president, Council for Opportunity in Education ............ 14 

Prepared statement of ............................................................................... 16 

(1) 

EDUCATION REGULATIONS: ROADBLOCKS TO 

STUDENT CHOICE IN HIGHER EDUCATION 

Thursday, March 17, 2011 

U.S. House of Representatives 

Committee on Education and the Workforce 

Washington, DC 

The committee met, pursuant to call, at 10:00 a.m., in room 

2175, Rayburn House Office Building, Hon. John Kline [chairman 

of the committee] presiding. 

Present: Representatives Kline, Petri, McKeon, Biggert, Platts, 

Foxx, Hunter, Roe, Walberg, DesJarlais, Hanna, Barletta, Heck, 

Kelly, Miller, Payne, Andrews, Scott, McCarthy, Tierney, Wu, 

Davis, Grijalva, Bishop, and Hirono. 

Staff present: Katherine Bathgate, Press Assistant; James 

Bergeron, Director of Education and Human Services Policy; 

Colette Beyer, Press Secretary-Education; Kirk Boyle, General 

Counsel; Casey Buboltz, Coalitions and Member Services Coordinator; Heather Couri, Deputy Director of Education and Human 

Services Policy; Daniela Garcia, Professional Staff Member; Jimmy 

Hopper, Legislative Assistant; Amy Raaf Jones, Education Policy 

Counsel and Senior Advisor; Barrett Karr, Staff Director; Brian 

Melnyk, Legislative Assistant; Alex Sollberger, Communications 

Director; Linda Stevens, Chief Clerk/Assistant to the General 

Counsel; Alissa Strawcutter, Deputy Clerk; Tylease Alli, Minority 

Hearing Clerk; Jody Calemine, Minority Staff Director; John 

English, Minority Presidential Management Fellow; Sophia Kim, 

Minority Legislative Fellow, Education; Brian Levin, Minority New 

Media Press Assistant; Megan O’Reilly, Minority General Counsel; 

Helen Pajcic, Minority Education Policy Advisor; Julie Peller, Minority Deputy Staff Director; Alexandria Ruiz, Minority Administrative Assistant to Director of Education Policy; Melissa 

Salmanowitz, Minority Press Secretary; and Daniel Weiss, Minority 

Special Assistant to the Chairman. 

Chairman KLINE [presiding]. A quorum being present, the committee will come to order. 

I want to make an administrative announcement. I have talked 

to some of the witnesses. I want to make sure all my colleagues understand that we are expecting votes—how this place works—somewhere around 10:15. 

It is my intention that we will have opening remarks, Mr. Miller 

and I. And we will move as far down witness testimony as we can 
2 

and, and then we will break for votes—I think there are two—and 

come back and resume. 

Well, good morning, and welcome to the fourth hearing in our series to examine federal rules and regulations that undermine the 

strength of our nation’s educational system. 

I would like to thank our witnesses for joining us today. Your 

time is valuable, and we appreciate the opportunity to hear from 

you about the impact of the Department of Education’s proposed 

gainful employment regulation. 

The Higher Education Act states that in order to receive Title IV 

funding, programs at proprietary colleges must prepare students 

for ‘‘gainful employment in a recognized occupation.’’ 

Congress has purposely never defined the term ‘‘gainful employment,’’ despite its presence in the statute for the past 50 years. It 

was decided that any attempt to define such an evolving concept 

could have unintended consequences. 

However, some in the administration seem to believe they know 

better than Congress. Last year, the Department of Education 

issued a new regulation that attempts for the first time to define 

‘‘gainful employment.’’ 

Under the regulation, proprietary colleges would be required to 

seek pre-approval from the federal government before creating new 

programs and adhere to a confusing formula that utilizes the debtto-income ratio and loan repayment rates of program graduates to 

determine eligibility for federal student aid. Additionally, these institutions would face a host of new and unprecedented reporting requirements. 

This gainful employment regulation is yet another example of 

federal overreach into the nation’s colleges and universities that 

will reduce access to higher education for millions of students, undercut our efforts to re-energize our economy and, frankly, destroy 

jobs. 

More than 3 million students attend proprietary colleges each 

year. These colleges, also known as for-profit colleges or career colleges, provide students with skills that can be applied immediately 

to specific jobs in the workplace. As our unemployment rate continues to hover around 9 percent, and more than 13 million Americans remain out of work, proprietary colleges address a critical 

need in today’s economy. 

These colleges are uniquely geared toward underserved, non-traditional students, such as single parents, first-generation college 

students and working adults, who require training, but are not able 

to attend traditional colleges or universities. 

These institutions are flexible and able to adapt to the needs of 

the American workforce, and they prepare a new generation of jobseekers to meet the demands of a changing local economy. For example, if a community lacks trained nurses or qualified auto mechanics, proprietary colleges can quickly develop programs to fill 

those needs. 

More and more Americans are realizing the value of obtaining an 

education from a proprietary college. Unfortunately, the proposed 

gainful employment regulation could force many of these valuable 

institutions to close their doors, denying millions of potential students access to key job training programs. 
3 

This poorly conceived regulation would allow the federal government to control program expansion by restricting financial aid eligibility, limiting initial enrollment and requiring schools to document the demand for workers with specific skills. According to one 

report, as many as 5.4 million students could be shut out from 

higher education by 2020 as a result of this regulation. 

I should note, these are concerns shared by members on both 

sides of the committee. Last month, an overwhelming bipartisan 

majority of members of the House of Representatives voted to put 

an end to the regulation before it hurt students and our economy. 

I have repeatedly asked Secretary Duncan to withdraw this regulation. 

At its heart, the issue is about student choice. We all support 

transparency and accountability, and we should have more of it. 

We realize there are some bad actors that should be rooted out. 

But we should not deny students the opportunity to attend the college of their choice and gain the valuable skills they need to compete in the workforce. That is why we are here today—to have a 

thoughtful discussion about the gainful employment regulation. 

This morning, we will hear from one young woman who graduated from a proprietary college and is now a successful professional. Without access to the proprietary college, she would not be 

where she is today. 

Rather than restrict access to an entire sector of colleges, we 

need to empower individuals to make informed decisions about 

their education and career goals. 

The President has laid out a bold vision to lead the world in college graduates by the end of the decade. We cannot meet this goal 

by launching an assault against an entire sector of higher education. Instead, we should encourage a strong and competitive 

workforce by providing opportunities for individuals to gain the 

skills and training they need to succeed in the workplace. 

Again, I would like to thank our witnesses for joining us. 

And I will now recognize my distinguished colleague, George Miller, the senior Democratic member of the committee, for his opening remarks. 

[The statement of Chairman Kline follows:] 

Prepared Statement of Hon. John Kline, Chairman, 

Committee on Education and the Workforce 

A quorum being present, the committee will come to order. 

Good morning and welcome to the fourth hearing in our series to examine federal 

rules and regulations that undermine the strength of our nation’s education system. 

I’d like to thank our witnesses for joining us today. Your time is valuable and we 

appreciate the opportunity to hear from you about the impact of the Department 

of Education’s proposed gainful employment regulation. 

The Higher Education Act states that in order to receive Title Four funding, programs at proprietary colleges must prepare students for ‘‘gainful employment in a 

recognized occupation.’’ Congress has purposely never defined the term ‘‘gainful employment,’’ despite its presence in the statute for the past 50 years. It was decided 

that any attempt to define such an evolving concept could have unintended consequences. However, some in the administration seem to believe they know better 

than Congress. Last year, the Department of Education issued a new regulation 

that attempts for the first time to define ‘‘gainful employment.’’ 

Under the regulation, proprietary colleges would be required to seek preapproval 

from the federal government before creating new programs and adhere to a confusing formula that utilizes the debt-to-income ratio and loan repayment rates of 

program graduates to determine eligibility for federal student aid. Additionally, 
4 

these institutions would face a host of new and unprecedented reporting requirements. 

This gainful employment regulation is yet another example of federal overreach 

into the nation’s colleges and universities that will reduce access to higher education 

for millions of students, undercut our efforts to reenergize our economy, and destroy 

jobs. 

More than three million students attend proprietary colleges each year. These colleges, also known as for-profit colleges or career colleges, provide students with 

skills that can be applied immediately to specific jobs in the workforce. As our unemployment rate continues to hover around nine percent and more than thirteen 

million Americans remain out of work, proprietary colleges address a critical need 

in today’s economy. 

Proprietary colleges are uniquely geared toward underserved, non-traditional students, such as single parents, first-generation college students, and working adults, 

who require training but are not able to attend traditional colleges or universities. 

These institutions are flexible and able to adapt to the needs of the American workforce, and they prepare a new generation of job-seekers to meet the demands of a 

changing local economy. For example, if a community lacks trained nurses or qualified auto mechanics, proprietary colleges can quickly develop programs to fill those 

needs. 

More and more Americans are realizing the value of obtaining an education from 

a proprietary college. Unfortunately, the proposed gainful employment regulation 

could force many of these valuable institutions to close their doors, denying millions 

of potential students access to key job-training programs. This poorly conceived regulation would allow the federal government to control program expansion by restricting financial aid eligibility, limiting initial enrollment, and requiring schools 

to document the demand for workers with specific skills. According to one report, 

as many as 5.4 million students could be shut out from higher education by 2020 

as a result of the gainful employment regulation. 

I should note these are concerns shared by members on both sides of the committee. Last month, an overwhelming bipartisan majority of members in the House 

of Representatives voted to put an end to the regulation before it hurts students 

and our economy. I have repeatedly asked Secretary Duncan to withdraw his regulation. 

At its heart, this issue is about student choice. We all support transparency and 

accountability. We realize there are some bad actors that should be rooted out. But 

we should not deny students the opportunity to attend the college of their choice 

and gain the valuable skills they need to compete in the workforce. That’s why we’re 

here today—to have a thoughtful discussion about the gainful employment regulation. This morning, we will hear from one young woman who graduated from a proprietary college and is now a successful professional. Without access to a proprietary 

college, she would not be where she is today. 

Rather than restrict access to an entire sector of colleges, we need to empower 

individuals to make informed decisions about their education and career goals. The 

president has laid out a bold vision to lead the world in college graduates by the 

end of the decade. We cannot meet this goal by launching an assault against an entire sector of higher education. Instead, we should encourage a strong and competitive workforce by providing opportunities for individuals to gain the skills and training they need to succeed in the workplace. 

Again, I’d like to thank our witnesses for joining us, and I will now recognize my 

distinguished colleague George Miller, the senior Democratic member of the committee, for his opening remarks. 

Mr. MILLER. Thank you, Mr. Chairman. And thank you for holding this hearing. 

You mentioned that this is one in a series of hearings about the 

role of regulations in undermining—or impacting education. 

This might also be a hearing this morning about what happens 

to you in the absence of regulation, and what happens to taxpayers, 

and what happens to students, and what about the product that is 

being offered to some of those students in terms of quality. 

The topic we are discussing this morning is one that is not new 

to us on this committee, and it is not new to the higher education 
5 

industry. But it is one of significant impact in many communities 

across the country. 

For-profit or career colleges play a very important role in our 

economy. Many career colleges provide job training opportunities 

that Americans need to get ahead. Taxpayers subsidize these opportunities through federal student loans, Pell Grants and through 

other state programs, which students use in some of these schools 

to get the education they need. 

It has become apparent, however, that a handful of bad programs 

and schools are not only failing their students, but they are also 

wasting taxpayer dollars. Instead of students earning a certificate 

from these programs better prepared for the workforce or for a career, they are only leaving with crippling amounts of debt. 

In fact, a recent report by the Department of Education showed 

that nearly one in four borrowers at for-profit colleges default on 

repaying their loans within 3 years. This number is staggering. 

These are taxpayer subsidies that are being given away without 

any real accountability. In some cases, these institutions take 90 

percent of their revenues from federal student loan programs, the 

Pell Grant program and, as I mentioned before, other state taxpayer programs. 

With this taxpayer money in play, we have an obligation to the 

students and to the taxpayers to conduct the oversight, as does the 

department. And I think that is what they are trying to do with 

this regulation. 

Whether this regulation will be successful or not, whether this 

regulation addresses the exact problem, remains to be seen when 

they are finished and ready to publish it. 

It is completely fair to expect that institutions profiting from federal taxpayer money to have a standard to meet in terms of what 

their schools need to provide for their students. It is a tragedy to 

see that so many students from some of these schools graduate 

with much higher debt and then very high default rates—as I mentioned before, almost 25 percent of the time. 

And some of these programs simply do not provide the kind of 

educational opportunity or atmosphere and the success rate that 

they should. In fact, only 22 percent of the students graduating 

from for-profit colleges compared to 65 percent of the private colleges, or 55 percent of students in public universities. 

A recent report from Ed Trust reported that 24 percent of all Pell 

Grant recipients are at for-profit colleges, even though they represent 12 percent of the total college enrollment. This number has 

nearly doubled in 10 years. That may be a good thing; it may not 

be. 

The report also shows that for-profit colleges account for 43 percent of all federal student loan defaults. 

Given the growing reliance on taxpayer dollars, the performance 

of for-profit schools should be a concern to every member of this 

Congress. It should be a concern to the taxpayers and a concern to 

the administration. And I think that is what the administration is 

reflecting. 

When we see the kinds of scandals that have erupted in the past 

in some of these institutions—again, not all of them—you have to 

ask, ‘‘What is going on? And what do we need to do to fix it?’’ 
6 

This is not about what you end up doing in your career over 

time, but about whether or not you got what you paid for, and 

whether the institution you attended delivered the services that 

they promised. In this economy, graduating from a career education program should mean a job, not stifling debt. It is irresponsible not to insist on some level of accountability when billions of 

federal dollars and student financial security are at risk. 

The case is very clear. We have to demand more quality and affordability from schools on behalf of students and the taxpayers, 

not less. And I look forward to hearing from our witnesses. 

[The statement of Mr. Miller follows:] 

Prepared Statement of Hon. George Miller, Senior Democratic Member, 

Committee on Education and the Workforce 

Thank you Mr. Chairman and thank you for holding this hearing. 

The topic we’re discussing this morning is one that isn’t new to us on this committee and isn’t new to the higher education industry. 

But it is one that has a significant impact on many communities across this country. 

For-profit or career colleges play an important role in this economy. 

Many career colleges provide job training opportunities that Americans need to 

help get ahead. Taxpayer subsidize these opportunities through federal student 

loans, which students use at some of these schools to get the education they need. 

It has become apparent, however, that a handful of bad programs are not only 

failing their students, but they’re also wasting taxpayer dollars. 

Instead of students earning a certificate from these programs better prepared for 

the workforce or for a career, they’re only leaving with crippling amounts of debt. 

In fact, a recent report from the Department of Education showed that nearly one 

in four borrowers at for-profit colleges default on repaying their loans within three 

years. 

This number is staggering. 

These are taxpayer subsidies that are being given away without any real accountability. 

In some cases, these institutions take in 90 percent of their revenue from federal 

student loans. 

With federal money in play, we have an obligation to both the students and the 

taxpayers. 

Ensuring accountability with this money is what the administration is trying to 

do with their new gainful employment regulation. 

It is completely fair to expect institutions profiting from federal taxpayer money 

to have a standard to meet in terms of what their schools need to provide for their 

students. 

It is a tragedy to see that many students from some of these schools graduate 

with much higher debt and default in excess of 45 percent of the time. Some of these 

programs simply do not provide the kind of educational atmosphere and the success 

ratio that they should. 

In fact, only 22 percent of students graduated from for-profit colleges, compared 

with 65 percent at private colleges or 55 percent of students at public universities. 

A recent report from Ed Trust showed that 24 percent of all Pell Grant recipients 

are at for-profit colleges even though they only represent 12 percent of total college 

enrollment. This number has nearly doubled from 10 years ago. 

The report also shows that for-profit colleges account for 43 percent of all federal 

student loan defaults. 

Given their growing reliance on the taxpayer dollar, the performance of for-profit 

schools should be a concern to every member of this congress. 

It should be a concern to the taxpayers, and it is a concern to this Administration. 

When we see the kinds of scandals that have erupted in the past at some of these 

institutions, again not all of them, you have to ask what’s going on and what can 

we do to fix it? 

This isn’t about what you end up doing in your career over time but about whether or not you got what you paid for and whether the institution you attended delivered the services that they promised. 

In this economy, graduating from a career education program should mean a job, 

not stifling debt. 
7 

It is irresponsible to not insist on some level of accountability when billions of federal dollars and students’ financial security are at risk. 

The case is very clear. We have to demand more quality and affordability from 

schools on behalf of students and taxpayers, not less. 

I look forward to hearing from our witnesses and continuing this conversation. 

Chairman KLINE. I thank the gentleman. 

Pursuant to Committee Rule 7c, all committee members will be 

permitted to submit written statements to be included in the permanent hearing record. 

And without objection, the hearing record will remain open for 

14 days to allow statements, questions for the record and other extraneous material referenced during the hearing to be submitted in 

the official hearing record. 

I always pause a little bit at that ‘‘other extraneous material.’’ 

Sometime somebody will explain that to me. 

Or maybe you know. It is one of our mysteries here. I do not 

know. 

Okay. It is now my pleasure to introduce our distinguished panel 

of witnesses. 

First, Ms. Catherine Barreto is a senior sales manager at the 

Doubletree Hotel in Jersey City. Ms. Barreto received her associate’s degree in hospitality management at Monroe College in 1996, 

and her bachelor’s degree from Monroe in 2002. She has also 

earned an MBA from Long Island University. 

She has served as an area sales manager representing six Hilton 

Hotels, as well as a business travel sales manager at the Hilton 

Rye Town. 

Mr. Travis Jennings has been with Orbital Sciences Corporation 

for the past 13 years. Prior to his current job as electrical supervisor of the manufacturing launch systems group, he worked at 

Intel Corporation and spent 6 years in the United States Navy. 

He has an associate and science degree from Mesa Community 

College, a bachelor’s of science in operations management technology from Arizona State University, and has credits towards his 

MBA at Grand Canyon University. 

Dr. Arnold Mitchem has served as the president of the Council 

for Opportunity in Education, the organization that represents the 

interests of the federal TRIO programs in Washington since 1986. 

Prior to serving at the council, Dr. Mitchem served on the history 

faculty and as a director of the Educational Opportunity Program 

at Marquette University. He received his Ph.D. in foundations of 

education from Marquette University in 1981. 

Ms. Jeanne Herrmann became chief operating officer of Globe 

University/Minnesota School of Business in 2004. In 2009, she was 

appointed to the board of directors of the Accrediting Council of 

Independent Colleges and Schools. She is past chair of the Minnesota Career College Association and is a member of the Minnesota Higher Education Advisory Council and P-16 Partnership. 

Always a pleasure to welcome all of you, particularly someone 

from Minnesota. And congratulations on getting out of there this 

week. If your house is like mine, there are still several feet of snow. 

The light system, when you start your testimony, there will be 

a green light that comes on. When you have been speaking for 4 
8 

minutes, there will be a little yellow light that comes on. And when 

you reach 5 minutes, a red light will come on. 

Please try to wrap up your testimony shortly after that red light 

comes on. Your entire testimony will be entered into the record. 

We are ready to go. 

Ms. Barreto, you are recognized for 5 minutes. 

STATEMENT OF CATHERINE BARRETO, GRADUATE, 

MONROE COLLEGE 

Ms. BARRETO. Chairman Kline, Ranking Member Miller and distinguished members of the committee, good morning, and thank 

you for this opportunity to share my story with you. I consider this 

an extreme honor to make this presentation to you all today. 

My name is Catherine Barreto. I am a first generation of my 

family born in this great nation. My mother was from the Dominican Republic, and my father was from Peru. 

I was raised in the Harlem section of New York City, along with 

my sister, by my single mother. My mother taught me strong 

standards and the importance of a good education, respect towards 

others and faith. I remember my mother telling me that our neighborhood did not define us, and that an education can never be 

taken away. 

With this guidance, I have overcome many challenges. I am 

proud to say that I am now employed as a senior sales manager 

at the Doubletree Hotel Jersey City, and now I am supporting my 

family. 

After high school, I enrolled in the Borough of Manhattan Community College. I was the first female in my family to attend college. Unfortunately, I found BMCC a bit overwhelming. Class size 

was too large, and I felt like a number. 

It also seemed like every consumer goods company you can imagine came to promote their products and have a huge party. 

While at BMCC I considered transferring, and a friend told me 

she was enrolled at Monroe College and liked it. I did my research, 

and I enrolled at Monroe College as a transfer student. 

I was impressed by the enrollment process. They answered all 

my questions and treated me well. 

This was an extreme difference from BMCC where I had to stand 

in multiple lines for enrollment. My friend from Monroe College 

told me she enjoyed the hospitality management courses she was 

taking, so I decided to pursue my degree in hospitality management. 

Classes were a good size, and I received close attention from my 

professors. They did not only teach me, they seemed to be interested in my success. 

I recall receiving a letter asking me to meet with my accounting 

professor, Professor Jacob Lamar. I was having difficulties in this 

class, and he recommended I go to tutoring. I took advantage of the 

free tutoring, and I did well in the class. 

Later, I was offered an internship by my housekeeping teacher 

at the U.N. Park Hyatt Hotel, because I was one of the top students in my class. This was a tremendous opportunity. 
9 

With one semester to go, I needed further financial assistance, 

because I used up all my TAP funds. I met with a loan officer at 

Monroe College, and he told me I had three options. 

The first he told me, I had an option to take a semester off, save 

the money for the semester that I needed. Second, he told me I can 

take a loan from a family member. Third, he mentioned I could 

take out a student loan. 

I had to come up with approximately $800. This was a lot of 

money for me since I only made $5 an hour. My internship was 

non-paying at the time. I was assisting my family. 

My mother had already made significant sacrifices for my sister 

and me, so I decided to take out a loan. I am very proud, as I graduated with my associates in 1996. 

After graduation, I started to pay off my loan. However, I ended 

up defaulting. I was now a single mother living at home, supporting my elderly mother and assisting my sister. I always intended to repay my loan, but it was either to live or to pay back 

the loan. 

My internship began as non-paying, and later turned into a paying position. As soon as I could afford it, I repaid my loan in full. 

Looking back, I realize how difficult it was to pay the loan back 

at that time. I wish I would have had more time to make my payments. 

Working for The Boston Consulting Group, I found a position I 

wanted to pursue, which required a bachelor’s degree. I did not 

hesitate to call my long-time adviser at Monroe College, Dean Goldstein. With my employer’s assistance, they had a tuition reimbursement program. I enrolled in Monroe College and sought my bachelor’s degree. 

I worked full-time, went to college part-time, and supported my 

21⁄2-year-old daughter. I was very proud that I did not take out any 

loans, and I graduated at Monroe with a bachelor’s degree in June 

2002. 

I realized that I needed a master’s degree to advance in my career, so again, I met with Dean Goldstein at Monroe College for 

more advice. We discussed options, and after our discussion I enrolled in Long Island University-Brooklyn Campus. 

Working full-time, I enrolled at LIU part-time. With one semester left, a class I needed to finish my MBA was not offered at the 

campus. 

I learned that Monroe College now had a master’s program that 

offered the class I needed. I took this class at Monroe and juggled 

my other classes at LIU. Despite working full-time and being a 

parent, I graduated with my MBA in 4 years. 

On June 10, 2007, my 70-year-old mother, who was legally blind 

and on my dialysis, was at my graduation along with my younger 

sister and my 8-year-old daughter. We celebrated my huge accomplishment. This was the best day of my life. 

Several months after receiving my master’s degree, I received an 

e-mail from Monroe College regarding a job fair. Since I was with 

my current employer 8 years, I decided to see what other opportunities were out there. I attended the job fair in the fall of 2007, and 

I was later hired for the position of business travel sales manager 

at the Hilton Rye Town. 
10 

Since taking this job, I have received two promotions, and I am 

currently the senior sales manager at the Doubletree Hotel Jersey 

City. 

I am here because I want you to know my story. I have not fully 

explained the difficulties I have had to endure in my life. But I 

would not have been able to do this without the opportunities provided by Monroe College. 

Testifying before you today is proof that I have come a very long 

way. And I am very thankful for the opportunity to speak to you 

today. I welcome your questions. 

[The statement of Ms. Barreto follows:] 

Prepared Statement of Catherine Barreto, MBA, Graduate, Monroe College 

Chairman Kline, Ranking Member Miller, and distinguished Members of the 

Committee, good morning and thank you for this opportunity to share my story with 

you. I consider this an extreme honor to make this presentation to you all today. 

My name is Catherine Barreto. I am the first generation of my family born in this 

great nation. My mother was from the Dominican Republic and my father was from 

Peru. 

I was raised in the Harlem section of New York City along with my sister by my 

single mother. My mother taught me strong standards and the importance of a good 

education, respect towards others and faith. I remember my mother telling me that 

our neighborhood did not define us and that an education could never be taken 

away. With this guidance I have overcome many challenges and I am proud to say 

that I am now employed as a Senior Sales Manager at the Doubletree Hotel Jersey 

City and I am supporting for my family. 

After High School I enrolled in the Borough of Manhattan Community College 

(BMCC). I was the first female in my family to attend college. Unfortunately, I 

found BMCC a bit overwhelming. Class size was too large and I felt like a number. 

It also seemed like every consumer goods company you can imagine came to promote their products and have a huge party. 

While at BMCC, I considered transferring and a friend told me she was enrolled 

at Monroe College and liked it. I did my research and enrolled in Monroe College 

as a transfer student. I was impressed with the enrollment process. They answered 

all my questions and treated me well. This was a better experience than I had had 

at BMCC as I had to wait in multiple long lines to enroll. 

My friend from Monroe College told me she enjoyed the Hospitality Management 

courses she was taking so I decided to pursue my Associates Degree in Hospitality 

Management. Classes were a good size and I received close attention by my professors. They did not only teach me, they seemed interested in my success. I recall receiving a letter asking me to meet with my accounting professor, Professor Jacob 

Lamar. I was having difficulties in this class and he recommend I go to tutoring 

sessions. I took advantage of the free tutoring and did well in the class. 

I was offered an internship by my Housekeeping Professor at the UN Park Hyatt 

Hotel, because I was one of the top two students in my class. This was a tremendous 

opportunity. With one semester to go, I needed further financial assistance because 

I had used all my TAP (state aid) funds. I met with a loan officer at Monroe College 

and he told me I had three options. First, he told me I could take a semester off 

and save the money to pay for my remaining semester. Second, he told me I could 

take a loan from a family member; third, I could take out a loan. 

I had to come up with approximately $800. This was a lot of money for me since 

I only made $5 per hour. My internship was non-paying at that time and my family 

was not in a position to contribute anything to me. My mother had already made 

significant sacrifices for my sister and me so I decided to take out a loan. I was 

very proud as I graduated with my Associates in 1996. 

After graduation, I started paying off my loan; however, I ended up defaulting on 

the loan. I was now a single mother, living at home, supporting my elderly mother 

and assisting my younger sister. I always intended on repaying my loan but it was 

either live or pay back my loan. 

My internship began as non-paying and later turned into a paying position. As 

soon as I could afford to, I repaid my loan in full. Looking back I realize how difficult it was to pay the loan back at that time. I wished I had more time to make 

my payments. 
11 

Working for The Boston Consulting Group, I found a position I wanted to pursue 

which required a Bachelors degree. I did not hesitate; I called my long-time advisor 

at Monroe College Dean Goldstein. With help of my employer’s tuition reimbursement program, I enrolled in Monroe College and sought my Bachelors Degree. I 

worked full-time, went college part-time and supported my 21⁄2 year old daughter. 

I am also very proud that I did not take out any loans and I graduated with my 

Bachelors Degree from Monroe College in June 2002. 

I realized that I needed a Masters Degree to advance my career so I again met 

with Dean Goldstein at Monroe College for more advice. We discussed options and 

after our discussions, I enrolled in Long Island University-Brooklyn Campus. Working full-time I enrolled part-time at LIU. With one semester left, a class I needed 

to finish my MBA was not offered at that campus. I learned that Monroe College 

now had a masters program and that offered my class. I took this class at Monroe 

College and juggled my other classes at LIU. Despite working full-time, and being 

a parent, I graduated with my MBA in four years. 

On June 10, 2007 my 70 year old mother, who was legally blind and on dialysis, 

was at my graduation along with my younger sister and my 8 year old daughter. 

We all celebrated my huge accomplishment. This was best day of my life. 

Several months after receiving my Master’s Degree, I received an email inviting 

me to a Monroe College Job Fair. Since I had been with my employer for eight years 

I decided to see what other opportunities were out there. I attended the job fair in 

the fall of 2007 and I was later hired in the position as Business Travel Sales Manager at the Hilton Rye Town. Since taking this job I received two promotions and 

am currently the Senior Sales Manager at the Doubletree Hotel Jersey City. 

I am here because I wanted you to know some of my story. I have not fully explained the difficulties I have had in my life and troubles I have endured but I want 

you to know that I could not have done it without the opportunities provided to me 

from Monroe College. 

Testifying before you today is proof that I have come a long way and I am thankful for this opportunity to speak with you. I welcome your questions. 

Chairman KLINE. Thank you very much, Ms. Barreto. You have 

indeed come a long way. 

Mr. Jennings, you are recognized. 

STATEMENT OF TRAVIS JENNINGS, ELECTRICAL SUPERVISOR, 

MANUFACTURING LAUNCH SYSTEMS GROUP, ORBITAL 

SCIENCES CORP. 

Mr. JENNINGS. Good morning. My name is Travis Jennings. 

I am the electrical test department supervisor at Orbital Sciences 

Corporation, Launch Systems Group, Chandler, Arizona. My responsibilities include managing electrical test technicians engaged 

in the process of validating the acceptability of flight and ground 

support hardware for complex multi-stage missile systems. 

I am representative of a typical line manager within a manufacturing organization, frequently tasked with the responsibility of locating qualified employees. 

Employing graduates from both public and private postsecondary 

technical programs, I find their technical capabilities to be indiscernible. However, I have found it difficult to recruit from the three 

community colleges in the Phoenix metropolitan area offering the 

technical degree programs. I would like to explain some of the reasons. 

Several barriers seem to impede our recruitment of public school 

students. Typically, public schools operate within a traditional 16- 

week semester, two semesters per year, with limited summer attendance and staff. Recruitment is only possible during regular semesters. 
12 

Additionally, career placement duties are assigned as a collateral 

responsibility to existing staff with other responsibilities, rather 

than to a dedicated department as seen in the career colleges. 

My last attempt to recruit from a local community college required an extraordinary amount of time away from work presenting the employment opportunity. These tasks are normally performed by placement specialists in career colleges, who take the job 

information from the hiring manager and, in turn, provide a pool 

of qualified candidates. 

This attempt was at the community college that I graduated 

from, and I was unsuccessful at recruiting from it. 

The career placement services in career colleges are absolutely a 

valued commodity offered to employers in search of qualified technical candidates. It has been my experience that, within these 

schools, there is a genuine customer-supplier relationship that exists between the students, faculty and staff. 

The students understand from the beginning of their enrollment 

that the tuition he or she pays is compensation for contributions 

far beyond classroom instruction. There is an understanding by 

both students and staff that the services provided do not end with 

just a diploma. 

It is clearly evident that career placement for graduating students is a high priority for these career colleges. Employers, like 

Orbital Sciences Corporation, managers, such as myself, need only 

reap these ancillary benefits. 

In addition, the career colleges seem to understand the needs of 

their customers; that is, the potential employers. As I have witnessed, private postsecondary institutions actively practice continuous improvement through the use of industry advisory committees. 

I am currently a standing member of ITT Technical Institute’s 

Tempe, Arizona campus, School of Electronics, Technology Industry 

Advisory Committee, and have just recently received an invitation 

to participate in DeVry University’s electronics program industry 

advisory committee for the Phoenix, Arizona campus. 

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. 

In Orbital’s manufacturing electrical test department, the ideal 

candidate for an entry level position is a recent graduate of a 2- 

year technical program. Orbital strongly encourages advancement 

and growth through continued formal education coupled with onthe-job training. 

The rate of return for continuing education is immeasurable, as 

each team member will return to the workplace with an increased 

knowledge, skills, and expertise, fostering innovation and driving 

the organization to the next level. Career colleges accommodate 

working adults with flexible schedules, frequently offering evening, 

weekend, and compressed classes. 

This is mutually beneficial to employees and employers, allowing 

employers to retain a skilled workforce while the employee is in-
13 

creasing their potential for growth in their respective technical disciplines. 

As our workforce expands, I find myself instinctively contacting 

one of the private sector technical schools in the area first. I typically get an immediate response from career service professionals 

that provide me with an applicant pool meeting my job specifications. This allows me to fill positions quickly and maintain production schedules and, ultimately, customer commitments. 

Additionally, my employees are encouraged to pursue greater opportunities within the company, and know that this is only achievable with increased formal education. Many of these employees 

know this can be accomplished with the flexible schedules offered 

by career colleges. 

Thank you for this opportunity. I certainly welcome any questions. 

[The statement of Mr. Jennings follows:] 

Prepared Statement of Travis Jennings, Electrical Test Department 

Supervisor, Orbital Sciences Corp., Launch Systems Group 

Good morning. My name is Travis Jennings. I am the Electrical Test Department 

Supervisor at Orbital Sciences Corporation, Launch Systems Group, in Chandler, 

Arizona. My responsibilities involve managing electrical test technicians engaged in 

the process of validating the acceptability of flight and ground support hardware for 

complex multi-stage missile systems. 

I am representative of the typical line manager, within a manufacturing organization, frequently tasked with the responsibility of locating and hiring qualified employees. 

Employing graduates from both public and private sector postsecondary technical 

programs, I find their technical capabilities to be indiscernible. I have however; 

found it difficult to recruit from the three community colleges in the Phoenix metropolitan area offering technical degrees programs. 

Several barriers seem to impede our recruitment of public school students. Typically, public schools operate within a traditional sixteen week semester, two semesters per year, with limited summer attendance and staff. Recruitment is only possible during regular semesters. Additionally, career placement duties are assigned 

as a collateral responsibility to existing staff rather than a dedicated department 

as seen in the private sector. My last attempt to recruit from a local community college required an extraordinary amount of time away from work presenting the employment opportunities. These tasks are normally performed by placement specialists in the private sector, who take the job information from the hiring manager 

and, in turn, provide a pool of qualified candidates. 

The career placement services, in private sector schools, are certainly a valued 

commodity offered to employers in search of qualified technical candidates. It has 

been my experience that within these private postsecondary educational institutions 

there is a genuine customer-supplier relationship between the students, faculty and 

staff. The students understand from the beginning of their enrollment that the tuition he or she pays is compensation for contributions far beyond classroom instruction. There is an understanding by both students and staff that the service provided 

doesn’t end with a diploma. It is clearly evident that career placement for graduating students is a high priority for the private postsecondary education sector. 

Employers, like Orbital Sciences Corporation, need only reap these ancillary benefits. 

In addition, the private sector strives to understand the needs of their end customers; potential employers. As I’ve witnessed, private postsecondary educational 

institutions actively practice continuous improvement through the use of industry 

advisory committees. I am currently a standing member of ITT Technical Institute, 

Tempe, Arizona, School of Electronics Technology, Industry Advisory Committee, 

and have recently received an invitation to participate on the advisory committee 

for DeVry University, Phoenix, Arizona. 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. 
14 

In Orbital’s Manufacturing Electrical Test Department, the ideal candidate for an 

entry level position is a recent graduate of a two year technical program. Orbital 

strongly encourages advancement and growth through continued formal education 

coupled with on-the-job-training. The rate of return for continuing education is immeasurable, as each team member will return to the workplace with increased 

knowledge, skills and expertise, fostering innovation and driving the organization 

to the next level. Private postsecondary schools accommodate working adults with 

flexible schedules, frequently offering evening, weekend and compressed classes. 

This is mutually beneficial to employees and employers, allowing employers to retain a skilled workforce while the employee is increasing their potential for growth 

in their respective technical disciplines. 

As our work force expands, I find myself instinctively contacting one of the private 

sector technical schools in the area, first. I typically get an immediate response from 

a career services professional that provides me with an applicant pool meeting the 

job specifications. This allows me to fill positions quickly and maintain production 

schedules and ultimately customer commitments. Additionally, my employees are 

encouraged to pursue greater opportunities within the company and know that this 

is only achievable with increased formal education. Many of these employees know 

this can be accomplished with the flexible schedules offers by the private sector 

postsecondary institutions. 

Thank you for this opportunity to provide these comments. 

Chairman KLINE. Thank you, Mr. Jennings. 

As you can tell by the lights and the buzzers and things, there 

is a vote underway. I would like to get Dr. Mitchem’s testimony before we break. 

And so, that will be our expectation for my colleagues here. Then 

we will break, come back, and get Ms. Herrmann’s, and go into 

questions. 

So, Dr. Mitchem, you are recognized. 

STATEMENT OF ARNOLD MITCHEM, PRESIDENT, 

COUNCIL FOR OPPORTUNITY IN EDUCATION 

Mr. MITCHEM. Thank you very much, Mr. Chairman, Ranking 

Member Miller and members of the Education and Workforce Committee. I deeply appreciate the opportunity to testify this morning. 

My name is Arnold Mitchem, and I am the president of the 

Council for Opportunity in Education, an organization representing 

over 1,000 colleges and over 5,000 administrators, counselors, and 

teachers, who work every day to provide low-income and first-generation students a realistic chance to enter and succeed in college. 

In developing my testimony, I spoke with many of these educators, and I also drew upon my own experience of nearly 40 years 

of working directly with low-income young people and adults. 

Throughout these 40 years, I have tried to govern my interactions with students by a simple maxim: Work so that other people’s children have the same range of options that my own children 

had, and now my grandchildren have. 

I believe this view is consistent with President Johnson’s closing 

remarks as he signed the Higher Education Act 45 years ago: Tell 

your children, and tell your grandchildren, that the doors of opportunity are now open. 

At the time, he was advancing an equal educational opportunity 

policy, a policy that envisioned access to and inclusion of all segments of the American family in all categories of colleges and universities. 
15 

Mr. Chairman, I and many others are troubled today by the overconcentration of low-income Americans in for-profit schools. This 

class, ethnic and racial stratification is troubling for two reasons. 

First, there is little evidence that this stratification is the result 

of the informed choice of these students or their families. 

Second, in far too many instances, the enrollment in a program 

does not adequately prepare these students for the workforce, but 

simply allows them to accumulate large amounts of private and 

federal college loans—in many instances, leading students to default on these loans. 

According to the Career College Association’s own research, students attending for-profit institutions are twice as likely as students at other institutions to default on their loans. 

Let me elaborate. 

What do we know about the circumstances surrounding students’ 

decisions to attend for-profit institutions? 

First, we know that, in most instances, the low-income student 

and his or her family come to the table with limited information 

about college. We all know that discussions about the relative 

ranking of colleges, the sticker price of college as opposed to the actual price, transferability of credits, or how financial aid works, are 

confusing even to families with resources. 

Middle- and upper-income families invest a great amount of time 

and financial resources in ensuring the path to college admission 

and completion for their children. 

Families at the lower end of the economic ladder and without college experience most often do not even know the right questions to 

ask. 

In short, when low-income and first-generation students enter 

the for-profit college marketplace, they think they are dealing with 

counselors. But far too often, they are dealing with salespeople. 

So, on one side of the table we have a poorly informed consumer, 

and on the other side of the table we have a business that is marketing its product using sophisticated, state-of-the-art techniques. 

Over and over again we were told stories of students being subjected to high-pressure marketing to enroll in for-profit institutions. 

In some cases, I heard from students who, once cornered by forprofit recruiters, were pushed to register for courses and apply for 

financial aid within a single sitting. 

Some would argue that these situations are rare, that there are 

only a few bad apples in the for-profit sector who engage in these 

marketing tactics. 

Mr. Chairman, I believe this is a fair point. 

For example, Ms. Herrmann’s testimony, to my left, points up 

the various ways in which her own institution works to provide 

students with the guidance needed to emerge from their course of 

study and into the job market. Also, the most egregious behaviors 

uncovered by the GAO are limited. 

Yet the basic inequity in the relationship between the low-income 

consumer and the industry is inherent. A sophisticated business 

with a high-cost product it wants to sell, for example, and a poorly 

informed consumer is a cocktail for abuse. 

As I said earlier, our second major concern about the current regulations governing low-income students and for-profit institutions 
16 

is that in too many instances, a student’s enrollment is not a real 

opportunity, but instead results in a situation where the individual 

is worse off than they were before they enrolled. In short, we stand 

opportunity on its head. 

Mr. Chairman, thank you again for the opportunity to testify and 

for your addressing these serious and complex concerns. 

[The statement of Mr. Mitchem follows:] 
17 
18 
19 

Chairman KLINE. Thank you, Dr. Mitchem. 

Thanks to the witnesses. 

When we come back, we will pick up with Ms. Herrmann. 

You can see by the screen there that the time remaining for us 

to vote is 7 minutes and 44 seconds. It turns out that is just another one of the big lies here on Capitol Hill. But we will be back 

as quickly as we can. 

We are in recess. 

[Recess.] 
20 

Chairman KLINE. Welcome back. We will resume with witness 

testimony. 

And Ms. Herrmann, you are recognized for 5 minutes. Please. 

STATEMENT OF JEANNE HERRMANN, CHIEF OPERATING 

OFFICER, GLOBE UNIVERSITY/MINNESOTA BUSINESS SCHOOL 

Ms. HERRMANN. Chairman Kline, Ranking Member Miller, and 

other distinguished members of the committee, my name is Jeanne 

Herrmann, and I am the chief operating officer at Globe University/Minnesota School of Business, Globe MSB. 

Both schools are owned by the Kaye and Terry Myhre family, 

and I would like to acknowledge their attendance with me today. 

Thank you for the opportunity to testify regarding the gainful 

employment regulations proposed by the Department of Education. 

We believe they pose serious roadblocks to students’ choice in higher ed. 

As a member of the Globe executive team since 1997, I am accountable to ensuring successful outcomes for our students, which 

is a goal central to our strategic plan. 

I work with Chancellor McCormick’s office as a founding member 

of the state’s P-20 Partnership that looks to improve the connections between early childhood education and graduate school. I 

have worked with other state leaders to create a data accountability system. 

I am very committed to the education field and proud to work for 

a school that truly cares about its students and their success. 

The schools were established in 1885 and 1877. Both institutions 

are private, tax-paying institutions with 20 campuses in Minnesota, Wisconsin and South Dakota, and we serve over 11,000 students. We offer a range of programs from certificate through master degree level, and the schools are accredited by the Accrediting 

Council for Independent Colleges and Schools, ACICS. 

I will address three main points today. 

First, Globe’s commitment to providing a quality education is 

demonstrated by our strong outcomes. 

Second, we understand that the department wants to ensure the 

highest quality and accountability of programs that benefit from 

Title IV funds. But we believe the proposed rule would adversely 

impact students’ choice of postsecondary education. 

Third, there are other alternatives that could better address consumer protection, quality, and student loan debt concerns that may 

be driving the G.E. rule. 

To my first point, our retention and placement rates are strong. 

In 2010, our average placement retention rates were over 70 percent. 

At Globe, we make certain students acquire essential knowledge, 

skills, and abilities to succeed in their chosen career fields by setting specific learner outcomes in every program, by having closer 

relationships with employers to help design curriculum, and 

through a strong commitment to community engagement. 

In 2010, Globe students and staff participated in 3,600 community events, totaling more than 24,400 volunteer hours. 

Our commitment to student achievement and financial literacy of 

our students have had a positive effect on our default rates. In fis-
21 

cal year 2008, Globe MSB campuses had an average default rate 

of 5.7 percent. 

We take compliance with the federal, state, and accrediting body 

triad of regulation very seriously, and compliance best practices are 

part of our culture. 

To my second point, we support the department’s desire to ensure the highest quality and accountability of Title IV programs. 

But the proposed metric is an unnecessary, complex regulation not 

based on sound analysis. 

Under the proposed rule, programs with marginally successful 

outcomes in terms of graduation and job placement could continue, 

while programs with outstanding results in preparing students for 

high-demand occupations could fail. 

Among other flaws, the Charles River Associates study found 

that the metric may reduce access to programs that would have 

conferred significant benefits to students in terms of higher lifetime earnings, would foreclose between 1.2 and 2.3 million students 

from any postsecondary option through 2020. 

In contrast, the department’s claim that 90 percent of students 

in programs closed as a result of the proposed rule would find replacement programs, actually, only 25 to 50 percent of those displaced students would be able to find other programs. 

For Globe, it is difficult to anticipate which programs would be 

impacted by the metric, because schools do not have access to Social Security earnings, and this is information that is needed to calculate the metric. 

The programs most likely to be impacted include those that have 

strong placement rates, because starting salaries are not at pay 

levels that will meet the department’s metric. 

In addition, certain medical and business programs, including 

registered nursing, are among the 15 most high-demand occupations over the next decade. And yet, they are likely to be negatively 

impacted by the proposed rule. 

To my third point, it is unclear what problem the department is 

trying to solve. If the objective is consumer protection, provide all 

students with information relevant to choosing career-focused programs, such as the total cost of education and understanding of 

how they will pay for these costs and reasonable expectations for 

employment. 

Many of these disclosures are already required under the 2008 

amendments to Higher Education Opportunity Act, and just became effective. 

If better metrics of quality are the concern, then requiring outcome measures, such as placement and graduation rates and licensure passage rates, are better measures of value and quality than 

loan debt or repayment rates. It is not for the department to direct 

students to specific types of jobs. 

Let me be clear. We are not opposed to regulation per se, but we 

support reasonable, fact-based regulation focused on improving outcomes. 

Students are customers who vote with their feet. If schools do not 

perform, we risk losing student enrollment, Title IV eligibility and 

accreditation. 
22 

Mr. Chairman, the proposed G.E. rule is so bad for our students 

and for our country, that we have no alternative but to ask Congress to stop. 

We thank you for your leadership in the bipartisan amendment 

that passed the House with a strong vote recently. That would put 

a necessary pause in the department’s implementation of this rule 

and allow a more thoughtful approach to these issues. 

I am grateful for the opportunity today. Thank you so much. 

[The statement of Ms. Herrmann follows:] 

Prepared Statement of Jeanne Herrmann, Chief Operating Officer, 

Globe University/Minnesota School of Business 

Mr. Chairman and other distinguished Members of the Committee, my name is 

Jeanne Herrmann and I am the Chief Operating Officer at Globe University/Minnesota School of Business. On behalf of the students, faculty and administration of 

Globe University and the Minnesota School of Business (referred to jointly as 

‘‘Globe’’ below), which are both owned by the Terry and Kaye Myhre family, I thank 

you for the opportunity to submit testimony to the House Committee on Education 

and the Workforce on the topic of regulations proposed by the Department of Education (‘‘the Department’’) that pose roadblocks to students’ choice in higher education. My testimony is directed specifically to the Department’s proposed regulation 

to define ‘‘gainful employment’’ (‘‘GE’’) for purposes of determining Title IV student 

financial aid eligibility of programs offered by proprietary institutions of higher education and postsecondary vocational institutions, as published in its July 26, 2010 

Notice of Proposed Rulemaking (NPRM). 

I joined Globe in 1994 and I have responsibility for providing oversight and leadership to our campus operations. I have a team of six regional directors who work 

with each campus on a daily basis to ensure that compliant, consistent and caring 

practices are in place to serve every student. I provide oversight to our academic, 

student, career services and military support teams. I am a member of the executive 

team that sets our strategic, organizational goals each year and I have responsibility for ensuring successful outcomes for our students, which is a goal central to 

our strategic plan. 

Outside of my immediate responsibilities at Globe, I serve on the Minnesota Higher Education Advisory Board, which includes four higher education sector leaders 

and the commissioner of K-12. I also serve in an advisory role to the governor-appointed executive director of the Minnesota Office of Higher Education, participate 

actively with the Minnesota Career College Association and serve on several state 

committees that focus on education and workforce development. I am proud to be 

one of the founding members of the Minnesota P-20 Partnership that looks to improve the connections between early childhood education and graduate school. I 

have worked with other leaders in Minnesota to create the State Longitudinal Educational Data Systems (SLEDS) so that we can more accurately account for students 

and their college attainment rates, as well as their success in entering the workforce. 

On a national level, I serve as a Commissioner of the Accrediting Council for Independent Colleges and Schools (ACICS), a national institutional accrediting body, 

where I work to ensure the standards of accreditation are upheld, best practices are 

shared and quality improvement is a continuous focus of member institutions. In 

my capacity as Chair of the Institutional Effectiveness Committee (IEC), I am currently working with staff at ACICS and the United States Department of Education 

to develop a student success initiative project that focuses on everything from graduation rates to default prevention. 

As detailed above, I am deeply committed to the education field. I am very proud 

to work for a school that truly cares about the success of its students. I do a great 

deal of training of internal staff regarding our accreditation and compliance responsibilities and I always end my training by saying to our employees that we have 

an obligation to do our very best for our students. That is why I appreciate the opportunity to appear before this Committee, knowing there are people who are not 

always supportive of or do not have a complete understanding of private sector higher education, to explain the valuable educational and other services we provide our 

students and our concerns about the harm that the GE proposal would have on students. 

My testimony focuses on three main points. First, private sector colleges and universities (PSCUs) are committed to providing a quality education, just as their coun-
23 

terparts in traditional higher education, and to observing both the letter and the 

spirit of the myriad laws that govern them. Independent research of PSCUs demonstrates very positive outcomes. Globe is one among many PSCUs that bring great 

value to students, employers and communities. 

Second, the Department’s proposed GE regulation will detrimentally impact students’ access to, and choice of, postsecondary programs nationally and at Globe. We 

fully support the President’s objective of regaining the nation’s premier rank in proportion of citizens with at least one year of postsecondary education by 2020, but 

the GE proposed rule will actually work against that objective by restricting choice 

and access. Moreover, if the metric is designed to solve the problems of student debt 

load, quality of programs, or directing students to programs that will prepare them 

for the highest-demand occupations, it fails in being the best route to all three objectives. Under the proposal, programs with marginally successful outcomes in terms 

of graduation and job placement could continue, while programs with outstanding 

results in preparing students for high-demand occupations could fail. For these reasons, it should be abandoned. 

Third, if the Department had better defined the problem it was trying to solve 

through the proposed GE rule, more common sense solutions could be implemented. 

For example, if the objective is consumer protection, transparency through enhanced 

disclosure of key, relevant information to consumers is far more effective in assisting students in choosing career-focused programs than the application of a convoluted, complex metric. If student debt loads are the concern, then financial aid 

officers could be given the discretion to limit federally guaranteed student borrowing 

when the amount borrowed exceeds the educational costs, as it does all too often. 

If better metrics of quality are the concern, then requiring minimum outcomes 

measures such as placement and graduation rates are better measures of value and 

quality of education for students than debt load or repayment rates. We stand ready 

to work with the Committee to develop such common sense legislative proposals. 

I. Globe’s Commitment to Career Education and the Community 

Globe is not new to career education. Globe University (then, Globe College) was 

established in 1885 in downtown St. Paul with the goal of providing ‘‘practical’’ education to students. The Minnesota School of Business was established in 1877 to 

teach bookkeeping, shorthand, English and penmanship in downtown Minneapolis. 

Both institutions are private, tax-paying, accredited postsecondary institutions 

based in Woodbury, Minnesota, with twenty (20) campuses throughout Minnesota, 

Wisconsin and South Dakota. A list of campus locations is included as Attachment 

A to this testimony. As of March 2011, 11,175 students were enrolled at our schools. 

Our schools offer masters’, bachelors’, associates’, diploma and certificate programs 

that help prepare students for careers in multiple fields, including accounting, 

health fitness, medical assisting, business administration, paralegal services, criminal justice, information technology, network support, registered nursing, veterinary 

technology, and health care management. 

Globe University and Minnesota School of Business are accredited by the Accrediting Council for Independent Colleges and Schools (ACICS), a national accrediting 

agency recognized by both the Department and the Council for Higher Education 

Accreditation. Schools accredited by ACICS are required to meet and maintain high 

standards of faculty qualification, student retention and student placement. Specifically, to maintain national accreditation, our schools are required to meet minimum 

placement rates and to submit annual reports tracking enrollment, retention, and 

default rates. These requirements are a focus of our efforts and, as a result, a majority of our students stay in school, complete their programs and get jobs. 

Finding suitable employment, our students are able to repay their loans. Although 

not all the students who enroll in our programs end up graduating, we are proud 

that our federally guaranteed student loan default rates are in the single digits for 

many of our programs. In Fiscal Year 2008, Globe University had an average Cohort 

Default Rate (CDR) of 6.6% and Minnesota School of Business had an average CDR 

of 5.5%. In addition, our retention and placement rates are strong. In 2009, the average retention rate at the ten Minnesota Business School campuses was 73.1% and 

the average placement rate was 77.1%. For the ten Globe University campuses, in 

2009 the average retention rate was 70.3% and the placement rate was 78.1%. We 

achieve these positive outcomes through student supports to keep students in 

school, default management and financial literacy training to educate students 

about loan repayment obligations, and well-staffed placement offices that have longstanding relationships with local and national employers. To put it simply, we must 

have positive outcomes for our students. Otherwise, we cannot continue to operate, 

both because our reputation will suffer, making it difficult to recruit new students, 
24 

and because our accrediting body will remove our ability to continue to accept students with Title IV funds. 

The required ACICS reports also include audited annual financial statements to 

verify that adequate fiscal resources back our programs and student support services. Compliance with ACICS requirements are linked to Globe’s eligibility to accept 

Title IV student financial aid, including Stafford Loans, federal PLUS loans, Pell 

Grants, Academic Competitiveness Grants, National SMART Grants, federal SEOG 

grants and other Title IV grant and loan assistance. In addition, many of our programs are programmatically accredited by specialized accrediting bodies, such as 

the Commission on Collegiate Nursing Education (CCNE) for our Bachelor of 

Science in Nursing, the Accrediting Bureau of Health Education Schools (ABHES) 

and the American Veterinary Medical Association (AVMA). In addition to accrediting body oversight, our schools are also subject to a variety of other Title IV regulations, including required minimum Cohort Default Rates, as well as state oversight. We take compliance with the federal-state-accrediting body ‘‘triad’’ of regulation very seriously and compliance best practices are part of our culture at Globe. 

Globe’s philosophy as a career-focused educational institution is to invest in our 

students by providing knowledge, skills and credentials to support their immediate 

employment goals and to build a foundation for continued career opportunities. Our 

21st Century economy is a knowledge economy, and skilled workers are a central 

driver of business and prosperous communities. We search for faculty and staff who 

are passionate about learning. We provide, and keep up to date, pedagogical resources to help students acquire the skills and knowledge needed to succeed in their 

chosen field. To ensure students are acquiring essential knowledge, skills and abilities to succeed in their chosen career fields, every program has learner outcomes 

specific to that career path that are assessed in courses throughout their educational program using a variety of assessment tools. 

We are both a career-centered and a community-focused institution by mission. 

Globe believes that citizens’ quality of life and ability to contribute to communities 

is tied to educational attainment. Our institutional mission statement is centrally 

tied to the community. It states: ‘‘We will demonstrate We Care by preparing careerfocused, community-minded graduates for the global workforce.’’ Globe evidences 

this shared career and community focus in the following ways: 

Strong Employer Collaboration. We have close, established relationships with employers to help design our curriculum and to make sure that it is kept current. Our 

Program Advisory Committees (PACs) ensure that our curricula meet employers’ industry standards and needs. Each campus maintains a PAC with appropriate membership for every program offered at the campus. PAC members cannot be employed 

by the school. Membership is diverse and includes a minimum of 15 members, at 

least three of whom are employers, who can provide multiple points of view. In 

2010, 521 employers or practitioners were active members of our PACs. In addition, 

we monitor annually and, when appropriate, end enrollments in specific programs 

in order to ensure that the number of graduates of a program in a geographic area 

is compatible with employer demand for those graduates. 

Globe Community Engagement: Globe is committed to building communities 

through education. We accomplish this through service-learning and community 

partnerships, memberships, sponsorships, and charitable support and outreach initiatives. In 2010, our campus students, faculty and staff participated in 3,612 community events totaling 24,412 volunteer hours. 

Service Learning: Through service-learning, our students learn how to be engaged, ethical and responsible citizens of their communities. Students apply their 

learning to real-world situations, which benefits them and our community partners 

including employers, the government and nonprofit organizations. In the process, 

students hone their critical thinking skills and learn the value of community engagement. Community partners benefit by having access to energetic individuals 

with sharp minds and volumes of great ideas. As of November 15, 2010, Globe 

courses that had a service-learning component applied this concept to 1,113 projects 

that provided a real world learning experience for our students and a service to 

community partners. 

Memberships: Globe is a member of twenty-three Chambers of Commerce, twelve 

industry-specific professional organizations related to our program fields, the Association of Private Sector Colleges and Universities, the Better Business Bureau, the 

Dakota Association for College Admission Counseling, Distributive Education Clubs 

of America (DECA), Minnesota Association of Financial Aid Administrators, Minnesota Career College Association, Minnesota Library Association, National Association of Colleges & Employers, National Association of Student Financial Aid Administrators, numerous Rotary and Kiwanis Clubs, the South Dakota Association of 

Student Financial Aid Administrators, the South Dakota Career Planning & Place-
25 

ment Association and the Wisconsin Council for Independent Education. And when 

we join these organizations, we play an active role, learning from them and giving 

back. 

Charitable Support & Outreach Initiatives: Globe supports the American Cancer 

Society and other cancer research and awareness organizations, the Children Heritage Foundation, the Correctional Facility Education Initiative, India Higher Education Outreach, Luther Seminary, Make-a-Wish Foundation, Peace House Africa, 

Salvation Army, Vision Slovakia, and Youth Frontiers, among other charitable and 

community service organizations. 

Sponsorship: Globe has been a sponsor of the Minnesota Chamber of Commerce 

Luncheon, ‘‘Best in Class: Building a World Class Education System’’ featuring the 

U.S. Secretary of Education, the Madison Area Music Association Awards, numerous Chamber of Commerce Business Development Luncheons, the TechFuse Technology Conference, the Veteran of the Month radio program, charitable golf tournaments, and numerous community parades, festivals and sporting events. 

Globe has received a Certificate of Recognition from the Minnesota Governor and 

a Certificate of Appreciation from the Minnesota Department of Veterans Affairs for 

support of veterans. We have been designated a Yellow Ribbon Campus from the 

State of Minnesota and were voted a Top 100 ‘‘Best for Vets’’ College from Military 

Times EDGE. Career education and community service are inextricably bound together at Globe and we are committed to being both a fine institution of higher education and a responsible and valuable member of the community. 

II. The Proposed GE Rule Would Severely Limit Student Choice and Should Be 

Abandoned 

We support the desire of the Department and this Committee to ensure the highest quality and accountability of programs that benefit from Title IV funds and to 

prevent abuse, for both students and taxpayers. However, the proposed GE rule that 

would tie a program’s Title IV student financial aid eligibility to debt/income and 

repayment rate metrics is an overly burdensome, unnecessarily complex regulation 

not based on sound data and analysis. At the heart of the problem is the fact that 

it is not clear what problem the rule is trying to solve, yet it will have the unintended consequence of precluding students, many of whom are ones who need training the most—like Globe students who are working parents, young adults, military 

personnel, veterans, career-changers and other non-traditional students—from receiving the education they want and need. 

Is the goal of the rule to limit loan indebtedness, eliminate poor quality programs, 

or direct students to certain occupations and away from others? If the goal is controlling student loan indebtedness, a much better approach is to permit institutions 

to limit the amount of loan funds a student may borrow to that which is needed 

to pay for the student’s educational charges, such as tuition and fees. This would 

require Congressional authorization, and we would be happy to work with the Committee to advocate for such legislation. In addition, Congress could require that private loan funds be disbursed directly to the institution, rather than the student, to 

allow one final opportunity to counsel students about financial literacy, the benefits 

of federal loans over private loans, and the dangers of over-borrowing and default. 

We would be happy to work with the Committee on such a proposal if it is of interest. Congress is best equipped to be making these types of loan indebtedness decisions, not the Department through a convoluted metric with damaging unintended 

consequences. 

If the goal is to measure the quality of the program through the costs and benefits 

to the students, the rule does not do that either, as explained in more detail below. 

Moreover, the General Education Provisions Act (GEPA), 20 U.S.C. §1232a provides 

that the Department is prohibited from such qualitative assessments by 

‘‘exercise[ing] any direction, supervision, or control over the curriculum, program of 

instruction, administration, or personnel of any educational institution, school, or 

school system limitations.’’ The proposed rule would run afoul of this provision by 

unnecessarily encumbering the process of designing and offering to students innovative academic programs that are responsive to rapidly shifting economic and social 

conditions. 

In the absence of key research by the Department itself, Charles River Associates 

(CRA), a well-respected research organization, conducted the most exhaustive analysis done thus far about the potential impact of the proposed GE rule on programs 

and students, using data from over 10,000 programs and more than 600,000 stu-
26 

1Public Comment of Charles River Associates, filed September 9, 2010 with the Department 

of Education. 

dents.1 It did the initial analysis in large part because the data used in support of 

the Department’s published proposed GE rule was very limited and the analysis 

lacking. The CRA study concluded the following, among other things: • the GE metric underestimates the economic benefits that students receive from 

postsecondary education and, as a result, ‘‘has the potential to reduce access to programs that would have conferred significant benefits to students in terms of higher 

lifetime earnings’’ without being a measure of the quality of those programs; • between 1.2 and 2.3 million students could be foreclosed from any postsecondary option through 2020, including mostly female and minority students who 

stand to gain most socio-economically from additional schooling; • between 18.4% and 22.6 % of all programs would fall within the ineligible or 

restricted Title IV categories under the metric and between 27.1% and 46.6% of students are currently in programs that would either fail or be deemed ineligible under 

the metric; • despite the Department’s claim that 90% of students in programs closed as a 

result of the proposed rule would find replacement programs, only 25% to 50% of 

displaced students would find replacement programs, leaving others with no further 

access to postsecondary programs; and • despite the Department’s assumption that programs with a higher debt-to-income ratio also have a higher default rate, in fact if a student graduates from a program with a higher debt-to-income ratio, he or she is less likely—not more likely— 

to default on their student loans, undermining a fundamental assumption of the 

metric. 

Finally, if the goal of the metric is to set forth a methodology for directing students to specific types of jobs, social engineering of that type would never work. Nor 

is it the appropriate role for the federal government to determine how many graduates are needed in a particular field and manage the labor force to that end. The 

market, along with various accreditation standards such as placement rates, is 

much better at anticipating and measuring workforce demands. In a market economy, students are customers who vote with their feet—if we cannot perform and the 

programs cannot prepare students for careers, we risk our institutional accreditation, our Title IV eligibility, and future student enrollment because our reputations 

will suffer. Nor is it the role of the federal government to get involved in price fixing, by telling schools they must lower their tuition to maintain the designated ratios, as some in the Department have suggested. And, because schools cannot limit 

the amount a student borrows, even if a school would lower its tuition to try to meet 

the metric, as long as students are allowed to borrow the maximum, the school will 

still fail the GE metric. Many schools would also have a significant problem in meeting the 90/10 test if they were forced to lower tuition primarily to meet the GE proposed rule. That rule requires proprietary schools to receive no more than 90% of 

their revenue from Title IV funds and the rule has the unintended effect of making 

tuition reductions difficult without impacting that ratio negatively. 

Why, we must ask, would the Department pursue a rule with such significant impacts on student choice at a time when the gap in economic well-being between the 

rich and the poor is increasing, and education is the one path to bridge that gap? 

At Globe, it has been extremely difficult to anticipate exactly which programs would 

be deemed restricted or ineligible for Title IV funding because schools do not have 

access to the average annual earnings information by which the debt/income metric 

is calculated. Specifically, the proposed rule is structured in a way that schools do 

not have access to Social Security earnings used to calculate the metric, which are 

understandably classified as private. We view that lack of transparency and notice 

as a violation of our due process rights. In addition, the Department, in its proposed 

rule, makes Title IV eligibility contingent on past years’ data—data from as long 

as three years ago—and thus does not provide us with an opportunity to adjust programs to comply with the rule or access that data. 

That said, we believe that among many other programs, our allied health, medical 

assisting, veterinary technician, massage therapy, and paralegal programs are most 

vulnerable to negative impact by the proposed rule. Yet, we have high placement 

rates for these programs, indicating students are getting jobs despite what is, at the 

start of their careers, often pay levels that will not meet the Department’s metric. 

In addition, medical and clinical assistants, registered nursing, medical office management/administration and business administration, business management and operations, programs which we also offer, are among the 15 most high-demand occupations over the next decade, and yet they are likely to be negatively impacted by the 

proposed rule. We simply do not understand why the federal government would, es-
27 

pecially at this time in our country’s history, seek to implement a rule that would 

impact job placement in fast-growing occupations. In short, the Department could 

not have contrived a more anti-student and thereby anti-employer and anti-taxpayer 

proposed rule. 

One other point, Mr. Chairman and Members of the Committee, which is more 

about process than outcomes, but I think is critical to thinking about the GE proposal. This Congress took ten years to reauthorize the Higher Education Act, including countless hearings and reports. During that time, both parties held the gavel 

in this Committee. The final product was the 2008 reauthorization, which, though 

it had a few controversial elements, was fundamentally bipartisan. In several areas, 

it included additional student and taxpayer protections in response to concerns this 

Committee heard. Implementing those changes has added costs to our operation, but 

we have complied because the Congress came to those changes after fair deliberations based on the record that was established. 

During those ten years, as far as we have been able to determine, no hearings 

were held, no suggestion was made by this Committee or anyone else in the Congress that the term ‘‘gainful employment,’’ which has been in the statute for more 

than four decades, needed to be redefined. No indication existed that there was a 

substantial problem in the relationship between graduates’ earnings and the 

amounts borrowed or that establishing a metric as in the Department’s GE proposed 

rule would solve the problem. Not being from Washington, I do not claim to understand everything that goes on here, but it seems that if the problem really existed 

and if a solution was apparent, it would have surfaced sometime during that ten 

year period. But it did not. To me, that indicates the GE rule is a solution in search 

of a problem. The fact that the proposed rule generated an unprecedented 90,000 

comments, the majority negative, many from Members of Congress, indicates that 

the proposed solution is far from accepted. So, again as an educator, not a policy 

expert, I would offer that a change in policy as dramatic as the GE proposed regulation should be dealt with through the legislative process, so that this Congress can 

determine whether it has merit. 

III. If the Goal of the Proposed GE Rule were Clear, a More Common Sense Solution 

Could be Implemented 

We are not opposed to regulation per se, but we support reasonable, fact-based 

regulation focused on improving outcomes for students. We believe that instead of 

a misguided regulation, like the GE proposed rule, there are steps that can be taken 

to protect and inform consumers and taxpayers. For instance, educational outcomes—retention, placement, passage of post-graduation licensure examinations— 

are direct measures of quality, as opposed to the convoluted and ultimately harmful 

measures such as the proposed GE metric. Institutions that perform well should 

continue to participate fully in Title IV programs. Institutions that are poor performers should be required to improve and adhere to regulatory requirements. Abusers should have their eligibility suspended or terminated. 

Further, transparency is critical. All students should have information available 

to them regarding their total cost of education, an understanding of how they will 

pay for those costs and reasonable expectations for employment or graduate school 

following completion of their undergraduate studies, as has been provided for in the 

2008 amendments to the Higher Education Opportunity Act (HEOA) addressing enhanced consumer disclosure that just became effective in 2010. These outcome and 

transparency improvements stand to benefit all of higher education, not just the 

proprietary sector, if adopted widely. We would support a more comprehensive approach to solving these problems and offer to work with the Committee as requested. The time has come to put aside different treatment of postsecondary institutions based on tax status and to work together to protect students while also preserving choice so that we can meet the demands of preparing our nation’s workforce 

to be globally competitive now and into the future. 

In conclusion, Mr. Chairman, Globe supports the idea of reasonable and fair regulation. Our job is to provide a quality education while adhering to the rules. We understand the Department’s role is to oversee the rules, make sure any and all needed improvements, and to propose new or modified rules when the current system 

lapses. The proposed GE rule is so bad, however, in our estimation, for our students 

and our country that we have no alternative but to ask the legislative branch to 

stop it being implemented. We appreciate the overwhelming, bipartisan vote in the 

House to push the pause button on this regulation through the Kline/Foxx/Hastings/ 

McCarthy/Payne amendment to the Continuing Resolution, and hope that the 

amendment will appear in the final Continuing Resolution that is signed by the 

President. 
28 

Thank you, Mr. Chairman and other distinguished Members of the Committee for 

this opportunity. We stand ready to assist you further in any way requested. 

ATTACHMENT A: GLOBE UNIVERSITY/MINNESOTA SCHOOL OF BUSINESS

CAMPUS LOCATIONS

Each of our campuses is handicapped accessible and has facilities and equipment 

that comply with federal, state and local ordinances and regulations, including those 

required for safety, building safety and health. Based on the programs offered, a variety of equipment and technologies provide students with training that is current 

with existing professional practices. 

GLOBE UNIVERSITY

Appleton Campus 

Globe University-Appleton campus is located at 5045 West Grande Market Drive, 

Grand Chute, Wisconsin. 

Eau Claire Campus 

Globe University-Eau Claire campus is located at 4955 Bullis Farm Road in Eau 

Claire, Wisconsin. 

Green Bay Campus 

Globe University-Green Bay campus is located at 2620 Development Drive in 

Bellevue, Wisconsin, a suburb of Green Bay. 

La Crosse Campus 

Globe University-La Crosse campus is located at 2651 Midwest Drive in 

Onalaska, Wisconsin, a suburb of La Crosse. 

Madison East Campus 

Globe University-Madison East campus is located at 4901Eastpark Blvd in Madison, Wisconsin. 

Madison West Campus 

Globe University-Middleton campus is located at 1345 Deming Way in Middleton, 

Wisconsin, a suburb of Madison. 

Minneapolis Downtown Campus 

Globe University-Minneapolis Downtown campus is located at 80 South 8th 

Street, Suite 51, in downtown Minneapolis, Minnesota. The site occupies 20,000 

square feet in the concourse level of the IDS Center. 

Online Division 

Globe University-Online Division is located on the third floor of Minnesota School 

of Business-Richfield at 1401 West 76th Street, Richfield, Minnesota, a suburb of 

Minneapolis. 

Sioux Falls Campus 

Globe University-Sioux Falls campus is located at 5101 South Broadband Lane in 

Sioux Falls, South Dakota. 

Wausau Campus 

Globe University-Wausau campus is located at 1480 County Highway Xx in Rothschild, Wisconsin. 

Woodbury Campus 

Globe University-Woodbury campus is located at 8089 Globe Drive in Woodbury, 

Minnesota, a suburb of St. Paul. 

MINNESOTA SCHOOL OF BUSINESS

Blaine Campus 

Minnesota School of Business-Blaine campus is located at 3680 Pheasant Ridge 

Drive Northeast in Blaine, Minnesota, a northern suburb of Minneapolis. 

Brooklyn Center Campus 

Minnesota School of Business-Brooklyn Center campus is located at 5910 Shingle 

Creek Parkway in Brooklyn Center, Minnesota, a northern suburb of Minneapolis. 
29 

Elk River Campus 

Minnesota School of Business-Elk River campus is located 11500 193rd Avenue 

in Elk River, Minnesota, a northern suburb of Minneapolis. 

Lakeville Campus 

Minnesota School of Business-Lakeville campus is located at 17685 Juniper Path 

in Lakeville, Minnesota, a southern suburb of Minneapolis. 

Moorhead Campus 

Minnesota School of Business-Moorhead campus is located at 2777 34th Street 

South in Moorhead, Minnesota. 

Online Division 

Minnesota School of Business-Online Division is located on the third floor of Minnesota School of Business-Richfield at 1401 West 76th Street, Richfield, Minnesota, 

a suburb of Minneapolis. 

Plymouth Campus 

Minnesota School of Business-Plymouth campus is located in the center of the 

Plymouth Plaza at 1455 County Road 101 North in Plymouth, Minnesota, a western 

suburb of Minneapolis. 

Richfield Campus 

Minnesota School of Business-Richfield campus is located at 1401 West 76th 

Street in Richfield, Minnesota, a suburb of Minneapolis. The campus has additional 

classrooms and labs at a nearby location, 4445-4555 West 77th Street in Edina, 

Minnesota. 

Rochester Campus 

Minnesota School of Business-Rochester campus is located at 2521 Pennington 

Drive Northwest in Rochester, Minnesota. 

Shakopee Campus 

Minnesota School of Business-Shakopee campus is located in Shakopee Town 

Square at 1200 Shakopee Town Square in Shakopee, Minnesota, a southwestern 

suburb of Minneapolis. 

St. Cloud Campus 

Minnesota School of Business-St. Cloud campus is located at 1201 2nd Street 

South in Waite Park, Minnesota, three miles west of St. Cloud. 

Chairman KLINE. Thank you, Ms. Herrmann, and all the witnesses. 

We will move into our give-and-take discussion now, with members of the committee asking questions and occasionally making 

speeches. And we look forward to your responses, your discussion 

and your thoughts. 

We will try—I am going to put myself—I am making a speech, 

but will put myself on the 5-minute clock here. 

Ms. Herrmann, since this rule first started rolling out, it has concerned me, and I have been very outspoken in my criticism of the 

part of the rule that says, if you are a for-profit college, like Globe, 

and you want to start a new program, you have to get approval 

from the U.S. Department of Education. 

One of the strengths of this sector, in my opinion, is its ability 

to be nimble and to quickly address the needs of the workplace. So, 

for example, if there is a shortage of nurses in an area, the for-profit sector has been very quick to establish a new nursing program, 

so that you have new nurses entering the field and taking those 

positions. 

This rule would not allow you to do that until you got approval 

from the U.S. Department of Education. 
30 

So, can you talk about what problems that might cause for you 

and other institutions? And I am a little bit concerned, because I 

have been looking at the possibility that this might be potentially 

in violation of the General Education Provisions Act. 

So, please take some time and talk about that aspect of this rule. 

Ms. HERRMANN. Thank you, Chairman Kline. 

Indeed, it will add another layer. And there are already extensive 

processes in place when we look to add a new program at our 

schools. 

The one that you spoke to specifically was nursing. It already 

has an additional layer, because there is a state regulatory board 

associated with reviewing nursing curriculum specifically. 

Secondly, it would then go to the regular state board of higher 

education and have another thorough review. And then, finally, it 

goes to our accreditors. 

And all through that process, we have to be able to provide information that shows we have used outside experts, that we are working with industry in developing that curriculum, that there are positions available. 

More specifically, as you mentioned nursing, we would have to be 

able to prove that we have practicum and clinical sites in contracts 

set up with local hospitals, so that we are able to ensure our curriculum will be able to be followed as nurses progress through their 

training with us. So, there are already very stringent processes in 

place for curriculum and new program approval. 

But I feel it would be very burdensome. And as you said, it does 

not allow us to be responsive to the workforce like we need to be, 

by putting yet another approval, stamp of approval. 

I feel like it is already a very good process. 

Chairman KLINE. What about your concerns about the General 

Education Provisions Act, and possible violation of that? Have you 

given that any thought at all? 

Ms. HERRMANN. Well, I do not know that I am, you know, able 

to speak to the legal side of that. But again, putting the additional 

barrier there would be difficult for us. 

Chairman KLINE. With the federal government making decisions 

about what—— 

Ms. HERRMANN. Exactly. 

Chairman KLINE [continuing]. Goes in the—— 

Ms. HERRMANN. Which, typically, they are not involved in academic decisions. 

Chairman KLINE. And have typically been purposely barred from 

entering into that curriculum. 

Ms. HERRMANN. Exactly. 

Chairman KLINE. Ms. Barreto, your story, as we knew it would 

be, was particularly poignant and touching. And we thank you for 

being here and for your testimony, and for sharing your story of 

your travels through higher education. 

When you think about when you started and the decisions that 

you had to make, what kind of information do you think would be 

most helpful for students—traditional students or non-traditional 

students—as they start on this journey of a higher education? 
31 

Ms. BARRETO. Well, they need to know their options. For example, whether just getting materials—back then, when I started at 

Monroe, online was not big. 

So, just being able to be knowledgeable, get the information 

about the school or the courses you are going to take, knowing— 

like, I was an evening student. And just knowing—by reading the 

material that was given to me, I knew that the school, Monroe, was 

a school that was centered around students. 

I knew that, you know, just because I went to evening classes— 

you know, offices were open. I knew if I had a question about financial aid, bursar, registrar, they were all open. All the counselors 

were there, even though I was an evening student. 

So, just more resources available. That is really helpful towards—you know, for students. 

Chairman KLINE. Okay. Thank you very much. 

In an always futile effort to set the example here in timing, I see 

my time is about to expire. 

I yield back, and I recognize Mr. Miller. 

Mr. MILLER. Thank you, Mr. Chairman. 

And thank you again to the witnesses. 

If the stories that Ms. Barreto and Mr. Jennings in their testimony related to the committee are accurate, that is the way the 

system is supposed to work. But unfortunately, for an awful lot of 

students, that is not the way the system is working. 

And when that experience is financed almost with more than 90 

percent federal dollars, I think the Congress has to ask a question. 

And Mr. Mitchem, you raise a number of these questions that 

are of concern to me and others. And that really is—it goes to both 

the default rate on loans and the completion rate in colleges. 

In the Ed Trust report, they point out that, at a 4-year for-profit, 

low-income students must find a way to finance almost $25,000 

each year with a 22 percent chance of graduation, completion of 

their programs. Or on the other hand, at a 4-year private non-profit institution, it is $16,000 a year. 

That is a big chunk of difference per year. And the graduation 

rates of 4-year—for 4-year graduation rates of 22 percent versus 55 

percent, let us say, for publics, is a very different outcome for a 

huge sector of those individuals who are—or most all of them—who 

are taking out loans or using other federal resources. 

Mr. MITCHEM. Well, these differentials are a concern. And that 

is what prompts me to be here this morning. 

The mission of my organization is to advance and defend the interest of low-income and first-generation Americans. And we got 

into this issue because, as we talked with our practitioners around 

the country, we kept running into these issues that, from our perspective, were abuses. 

And really, the federal government got into the business of assisting low-income, first-generation Americans to give them and 

provide them upward mobility. 

And what we saw was something in the reverse happening. Oftentimes, these students—particularly because of the loan issues— 

were in sort of a permanent bondage. And this is our concern. 

Mr. MILLER. Well, you know, I think—— 

Mr. MITCHEM. For those who—— 
32 

Mr. MILLER. And I guess I am chiming in with you on that concern. 

I have been a very strong proponent of for-profit schools. I think 

that they have developed an alternative education model that fits 

the needs of many, many adults—— 

Mr. MITCHEM. I agree. 

Mr. MILLER [continuing]. Especially working adults. 

But I am also deeply concerned about the overall results. 

And, you know, it is interesting. The legislation that passed on 

the floor also said that the department could not regulate in this 

area in the future. 

So, I appreciate—everybody says, well, there are always these 

few bad apples. There are a few things. We ought to do something 

about them. 

At first, when the department first announced what they were 

doing, there was a complete—you know, just stop it in its tracks— 

reaction at the outset. 

I finally encouraged some of the schools to work with the department, to meet with them, and that process has taken place. 

But, you know, the idea that somehow, because of the successes, 

we cannot examine the overall system, to me is just counterintuitive to the role of this committee. 

I wonder if we would start involving—when we have schools who 

enroll a couple hundred thousand students, and they have a completion rate at 6 years of 9 percent—would that trigger our interest? Or 16 percent, or 18 percent, or 8 percent, or 13 percent? 

Now, there are schools there that have very good completion 

rates. But each one of those is carrying a federal dollar with them. 

And in many instances, that completion rate also reflects the inability to pay back that loan. 

Mr. MITCHEM. Exactly. 

Mr. MILLER. And that is a very, very worrisome thing, because 

the banks and the lenders a number of years ago got a change, so 

you could not discharge this debt in bankruptcy. 

Mr. MITCHEM. Exactly. 

Mr. MILLER. So you now do not have the occupation, you do not 

have the job opportunity you thought you were seeking. And it may 

be your fault, you know. 

But the fact is, for very, very—I mean, if 9 percent of the people 

are completing, we have to ask the question about the other. But 

you do not have an ability to discharge that debt. 

Now, you are a poor student with a poor education and a poor 

credit record, and you are trying to survive in American society. 

Mr. MITCHEM. Absolutely. They made the wrong choice, because 

they did not have good information to begin with. That is how they 

got themselves into that situation. 

Mr. MILLER. They got themselves into that situation. And you 

can say, well, that is their fault. 

We also know there is a very active recruiting process going on. 

There has to be a development of that next year’s class. 

And again, in many instances, that information is very valuable. 

Our two witnesses found it valuable. But in many instances, it is 

also the subject of settlements of lawsuits by the Justice Department and others. 
33 

Mr. MITCHEM. Right. That is one of our principal concerns. 

Mr. MILLER. Thank you. 

Chairman KLINE. I thank the gentleman. His time has expired. 

Just a sort of a clarification. Mr. Miller talked about the department could not regulate in the future. That language in the C.R. 

only applied to September 30th. We would all hope that we would 

look at the opportunity to provide more information to students. 

And Dr. Foxx, you are recognized for 5 minutes. 

Mrs. FOXX. Thank you very much, Mr. Chairman. 

And I want to thank all the members of the panel. Dr. Mitchem 

and I have known each other for a long time. 

Mr. MITCHEM. Long time. 

Mrs. FOXX. I was director of an Upward Bound/Special Services 

Program many years ago. 

And I want to thank all of you for coming. 

I do not want to make a long speech, but I do need to respond 

just a little bit to a couple of comments that Mr. Miller has made. 

I think nobody, again, wants there to be bad actors out there. 

But we have mechanisms for going after the bad actors. And earlier, I think someone said that some of these institutions—it may 

have been Dr. Mitchem who said it does not prepare them for jobs. 

But I will tell you that we have lots of people graduating from 

well-known institutions in this country, 4-year institutions, graduate schools, who have not been prepared for jobs either. So, it is 

not just a phenomenon that occurs in one segment. 

And I would say, it is not perfect anywhere. No institution is perfect anywhere. 

I was in a university for 15 years. I was at a community college 

for seven. And I know other schools very well. And we have a lot 

of public schools who have a much worse track record than for-profit schools. 

And I think that, if we are going to look at the results, we need 

to do it for everybody. But let me stop there. 

Ms. Barreto, I want to say to you that you are truly an inspiration. And I hope lots of people get to hear your story. 

Mr. Jennings, I would like to ask you a question. In your testimony, you mentioned that you sit on the advisory council of one of 

the proprietary colleges. 

Can you discuss what your service on that council entails? And 

what is the school hoping to gain from your service? And what benefits do you or others in your profession gain? 

Mr. JENNINGS. Well, I sit on the ITT Technical Institute’s Tempe, 

Arizona campus industry advisory committee. We break into disciplines. I sit on their electronics board. 

We discuss some of the things we are seeing that work well and 

some of the shortcomings, maybe, that we see. We bounce it off of 

their other industry managers that come and meet. It is twice a 

year. 

We talk about maybe some of the technical skills that we could 

see improved. We are sitting there with the instructors, and we discuss ways that maybe they could put that into their curriculum, or 

maybe how they can enhance existing classes to beef up certain 

areas, whether it be soft skills, data manipulation, you know, programming—things that we are seeing. 
34 

And usually, typically what it is, is the technology is changing. 

We are constantly evolving, constantly changing out there in the 

world. So, we need to be able to tune those curriculums up just a 

little bit. So, that happens twice a year. 

We are also asked to give a—to do a critique, if you will. I know 

that ITT has gone with a national database type critique system. 

They go through and ask very specific questions. Would you like to 

see more training in this area versus that area? 

And what they do is, they will adjust their national curriculum 

based on that. When they see an overwhelming response in a certain area, they will actually adjust their curriculum throughout 

the—at the national level. And that is maybe even adjust classes, 

drop a class and add a class. 

Regionally, locally what they will do is just say, you know what? 

Maybe we should do another project in this area, so they get more 

experience in a specific technical area. 

Mrs. FOXX. So, the goal is to make sure that when the students 

come out, they have the skills that they need to get a job in the 

industry. 

Mr. JENNINGS. Oh, yes, ma’am. Yes, ma’am. 

I give them very honest and accurate feedback. Look, this is 

what I see, you know, this is what I am having to train these folks 

to do once they reach my department. Once they reach my production floor, this is what I would like to see them train to do before 

they reach me. 

Mrs. FOXX. Right. 

Mr. JENNINGS. This is what I would like to see happen in the college classroom. 

Mrs. FOXX. Right. And if community colleges are doing their jobs, 

they would have advisory councils like this and bring them in. And 

the better community colleges do do that. 

Mr. JENNINGS. Yes. I have not heard from my alma mater yet. 

Mrs. FOXX. Okay. So, you do not get asked to do the same 

thing—— 

Mr. JENNINGS. I am a—yes. I don’t. I do not, no. 

Mrs. FOXX. Okay. 

Mr. JENNINGS. No, ma’am. 

Mrs. FOXX. Well, again, having been at a community college, I 

know the better ones do that. Not all of them do that. 

Ms. Herrmann, I have a question for you, but my time is over. 

So, I will check with you later, and I will get it in the record. 

Thank you very much. 

Chairman KLINE. Thank the gentlelady. 

Mr. Payne, you are recognized. 

Mr. PAYNE. Thank you very much. Let me certainly commend the 

four witnesses here. 

And I would like to certainly also add my accolades to Ms. 

Barreto. Not only have you shown by example what perseverance 

and opportunity will give you, but, secondly, you work in my congressional district, so that is very important. [Laughter.] 

We are tax-and-spenders, you know, so you are helping America. 

[Laughter.] 

Let me say that, of course, my good friend, Dr. Mitchem, of the 

work that you have done for so many, many years, I think your 
35 

greatest achievement is probably catching Ms. Gwen Moore and 

telling her she should go to college, and she went on to Marquette 

where you were. And she is one of our rising stars. So, I would like 

to give you credit for that, also. 

Let me just, Dr. Mitchem, in your testimony—and this is certainly an issue that we are really grappling with. 

First of all, if our students—we know they are usually not able 

to get into traditional 4-year colleges. They are either too expensive 

or the students do not meet the requirements. Many of our community colleges do not prepare them for a job immediately. 

And many of the people—being older and non-traditional, veterans, older persons—are looking, really, basically for training for 

a job, not particularly for a general education as an 18-year-old 

coming out of high school would be. 

And so, this is probably one of the most difficult issues that I 

have confronted in my many years, even as a former elementary 

and secondary school teacher—my first career for the first 10 years 

of my life, which I really enjoyed and miss. And if I ever get 

pushed out, I guess I might see if I could reapply and teach again. 

But let me just say that, in your testimony, you said that you 

consulted with teachers, counselors and administrators who work 

with TRIO programs, and that these individuals reported that it 

was rare that they found for-profit programs to be the best for their 

students. They counseled, because they could identify less expensive, publicly supported alternatives in the same area that would 

not require the student to assume as high a loan burden, and that 

admissions counselors were not fully forthcoming. 

You said a concern repeatedly raised by TRIO counselors was the 

difficulties many low-income individuals had distinguishing between the value of a particular program and the value of college. 

I understand that to be the benefit of the TRIO programs, and you 

are certainly providing the needed service to your students. 

Now, your testimony highlights the information and guidance 

needed for low-income and first-generation college students that 

called the Department of Education to action to issue the proposed 

gainful employment rule. 

While I am supportive of the effort to provide greater protection 

for such students, my concern remains that the department’s rule 

as proposed will limit access to a wide range of proprietary programs, not only the bad actors. And so, the issue as I see it is not 

to attack one particular sector, but to equip students with the guidance and support needed to make informed decisions. 

Can you speak to the guidance and support that TRIO programs 

provide for students? And in your discussing roadblocks to students’ choices in higher education, can you share the roadblocks 

that would be cemented if the proposed cuts to the TRIO program 

were implemented? 

Mr. MITCHEM. Surely. Thank you for the question. 

The way our Talent Search and EOC programs operate—they are 

situated, typically, right within the communities where you have 

high concentrations of low-income and first-generation students. 

And they are open access, open door. People reach out. 

In addition to that, they also populate the high schools and middle schools in providing advice and counseling and information to 
36 

the students. And in the evenings they work with the parents, and 

then on Sundays, providing them information about financial aid, 

and also, trying always to match students to the appropriate college or experience. 

In other words, making judgments about the students’ capabilities or potentials, and trying to align those with the appropriate institution. 

So, it is a very intensive, holistic approach that they use to intervene with the students. And they do various ingenious things, for 

example, to get the parents involved, which is always a complaint. 

People say, ‘‘we cannot get the low-income parents involved.’’ 

Well, they have potluck dinners and other things to try to attract 

parents to get them involved. They go to churches and try to meet 

low-income adults where they are, where they are comfortable, and 

so forth. 

And they always try to employ individuals who are, in quotes, 

‘‘culturally competent;’’ that is, able to deal and understand and negotiate the cultures of the groups that they are working with. So, 

there is, yes, a very systematic outreach effort to deal with that. 

Now, you asked me a question with respect to proposed cuts in 

H.R. 1. I assume that is where you are going. 

At this point, it would be a big blow. But we cannot talk in terms 

of specifics. I mean, how the department would allocate the cuts is 

unclear. For example—— 

Chairman KLINE. I hate to interrupt, but the gentleman’s time 

has expired, and we have many members who want to engage in 

this dialogue. 

I understand that Dr. Heck wants to be recognized for just a moment. You want to enter something in the record. Is that correct? 

Mr. HECK. Yes. Thank you, Mr. Chair. 

I appreciate the panel being here. I apologize for having missed 

the testimony due to a competing meeting, but I have read your 

statements. 

I thank you, Mr. Chair. 

And I ask for unanimous consent to enter testimony from both 

Mr. Van Heffner of the Nevada Hotel and Lodging Association, and 

Mr. John Hinchliffe, the past chairman of the Nevada Restaurant 

Association, into the record. 

[The information follows:] 

Prepared Statement of Van Heffner, President and Chief Executive Officer, 

Nevada Hotel and Lodging Association 

For the record, my name is Van Heffner. I am President and CEO of the Nevada 

Hotel and Lodging Association (NHLA). The NHLA is the unifying voice of Nevada’s 

multi-billion dollar hospitality industry. Serving Nevada since 1979, this trade association represents more nearly 300 hotel casinos statewide with approximately 

150,000 rooms and over 200,000 employees. 

Nevada’s hospitality industry is heavily dependent on a knowledgeable and welltrained workforce. Southern Nevada’s tourism and hospitality industry have been 

well served by graduates of the institutions that will be harmed by the Department 

of Education’s proposed ‘‘Gainful Employment’’ regulation. These institutions have 

provided students the education that has given them the essential skills and talents 

that have supported Nevada’s economy. 

Private sector post-secondary schools like the Art Institute of Las Vegas provide 

career training for the jobs they need to succeed in today’s economy. This institution 

provides a broad range of education options that provide a skilled workforce to the 

hospitality industry in Nevada. In Las Vegas, the entertainment capital of the 
37 

world, the Art Institute of Las Vegas and the Culinary Institute of Las Vegas have 

graduated over 1,000 students in past 8-years. And many employers are eager to 

express the important role the Art Institute plays for their business. 

Nevada has the dubious distinction of having the highest unemployment rate in 

the nation at over 14.2% according to the Bureau of Labor Statistics rankings and 

the U.S. Department of Education’s proposed rule would prevent hundreds of Nevadans as well as future students from acquiring the job skills they need to work 

in and support our critical tourism industry to help reduce this troubling statistic. 

Unfortunately, the proposed ‘‘Gainful Employment’’ rule is discriminatory. Our industry is particularly concerned about the bias this proposed rule holds against students who must borrow money to attend college. 

The Gainful Employment rule proposed by the Department of Education would 

render many of these career-oriented degree programs ineligible for Title IV financial aid if students fail to meet a debt service-to-income ratio test. 

This rule is arbitrary and unfair to those who want to pursue careers with lower 

starting salaries in the culinary arts for example. Essentially, these students would 

be ineligible to qualify for the same federal funding as classmates who opt for careers that may initially pay better starting salaries. Because this rule discriminates 

against those who must borrow to attend college, access to post-secondary education 

may move out of reach for many low-income and minority students. 

Not all students are meant to attend traditional four-year colleges and universities. Fortunately, for-profit institutions provide these students with an alternative 

to traditional schools in the form of a high quality education. The Gainful Employment rule is unacceptable and I believe the Department of Education has overstepped its statutory authority with this ruling and should rescind it. Matters of 

education policy should be administered by Congress, on the advice or counsel of the 

Education Department. 

The Nevada Hotel and Lodging Association was encouraged to see the passage of 

an amendment co-sponsored by Representatives Kline, Foxx, Hastings and McCarthy to defund this detrimental rule. Even more encouraging than the bipartisan 

support this amendment gained, all three House members of the Nevada Congressional delegation voted in support of the measure—illustrating just how important 

career colleges are to Nevada. 

Without proprietary schools, Nevada’s hospitality industry cannot fill its jobs with 

qualified graduates. The Art Institute of Las Vegas and the Culinary Institute of 

Las Vegas work hard to educate students so that they are career-ready upon graduation. However, if the ‘‘Gainful Employment’’ rule is implemented, it will make creating new jobs for these qualified individuals and decreasing Nevada’s unemployment rate next to impossible. 

Thank you for the opportunity to address you on this important issue to the industry that I represent. 

Prepared Statement of John Hinchliffe, Past Chairman, 

Nevada Restaurant Association 

As past Chairman of the Nevada Restaurant Association, I know firsthand the importance of quality chefs and the importance of the culinary arts programs that prepare them for their careers. Southern Nevada is the now the home of many famous 

world known chefs and restaurants and our industry in ‘‘Las Vegas’’ is the envy of 

many cities and regions. 

The Nevada Restaurant Association represents, educates and promotes a rapidly 

growing industry that is comprised of some 5,000 restaurant and foodservice outlets 

employing over a hundred thousand people in this state. We have nearly 300 member companies represent more than 1,000 restaurant establishments. Our Association provides it members with many services. Among those have been the advancement of the culinary arts profession. 

Our industry depends on a well-trained and skilled workforce—heavily relying on 

students who graduate from culinary arts programs, such as the Las Vegas Art Institute. Through this program, Las Vegas has been able to maintain and further 

support and develop its renowned culinary reputation. More importantly, however, 

the Institute has answered the call of many aspiring students who desire to develop 

their skills and profession in the art of culinary services and restaurant management. 

Unfortunately we fear that proposed regulations from the Department of Education will create barriers for students with a passion for the culinary arts. We have 

been very vocal on our opposition to the department’s ‘‘Gainful Employment’’ rule 

as we believe it unfairly targets career colleges, especially those with culinary arts 
38 

programs. As proposed, the rule would punish the learning institutions, the industry’s they support and the very students it purports to serve. 

Students in our state should be able to choose which programs and degrees they 

want to pursue. The government should not be limiting critical funding for students 

who wish to attend career colleges. We fear the Gainful Employment rule will hurt 

the exact population of students we need to be helping the most: those from lowincome and minority communities. A significant source of our skilled workforce has 

come from career-oriented colleges; we’ve found that these schools provide education 

and training in a specific career path for students who are not a fit for, or who do 

not want to attend a traditional four-year college. If a student in Nevada wants to 

go to the Art Institute of Las Vegas, they should have that opportunity. 

In collaboration with the Institute that serves our industry, we recently filed comments during the Notice of Proposed Rulemaking Process with the Department and 

corresponded with Nevada’s Congressional members making the following points: • The rule should use the higher of the Bureau of Labor Statistics or actual earnings for debt to income tests—it is the most accurate income data; • The rule should use a 15 year repayment schedule—it best approximates an average real life educational repayment period; 

• The rule should be phased in to commence no sooner than 2015 so as to not 

adversely affect students and schools; 

• The rule should exclude graduate programs. 

We understand the Departments objective through this rule is to protect students, 

among other things. However, the rule as promulgated will have in our opinion, 

many negative consequences to the very institutions that support career development, job growth, industry economic enhancements and most important personal individual fulfillment. 

Mr. HECK. I have serious concerns with this new gainful employment regulation. The state of Nevada has the highest unemployment rate in the nation. And because of the State’s heavy reliance 

on the tourism industry, which has taken a significant hit during 

this recession, there is a definite need, now more than ever, for Nevada to diversify its industry. 

I have many private colleges, such as the ones under discussion 

today, in my district, which are critical to this process of diversifying our economy. One is the Art Institute of Las Vegas, which 

works closely with both those entities I previously mentioned, in 

making a ready and willing workforce for our community. 

It is schools like the Art Institute of Las Vegas, which provides 

extensive training programs and hospitality in the culinary arts, do 

not have the flexibility in modifying existing programs and creating 

new ones to rapidly meet industry’s needs. Nevada’s ability to experience economic recovery and get people back to work will be hindered considerably. 

Additionally, I am a strong believer in student choice and student access to educational and training programs that fit their individual needs. These schools provide the flexibility necessary for 

non-traditional students to fulfill their educational goals. 

This new gainful employment regulation severely limits this, especially in a time when emphasis on an educated and skilled workforce is critical to advancing our country as a whole. I fully expect 

to be engaged in examining this gainful employment regulation further. 

I would like to thank Chairman Kline for holding this hearing 

today, and for his consideration in allowing me to provide my testimony. And I yield back. 

Chairman KLINE. I thank the gentleman. 

Without objection, the two statements will be entered in the 

record. 
39 

Mr. Grijalva? According to my list here, Mr. Grijalva, you are 

recognized for 5 minutes. 

Mr. GRIJALVA. Thank you, Mr. Chairman. And I am going to follow your encouragement and give a short speech. [Laughter.] 

I wanted to—you know, having all this discussion, all this talk 

here about government needing to tighten its belt, we have to ensure that all our programs are effective, and the taxpayer money 

is being used very efficiently and prudently. 

So, it is amazing to me in this hearing that many of the same 

people that are saying that also do not seem to care about the efficiency of the taxpayer’s money in this particular instance. 

And I have not in this hearing heard anything about the gainful 

employment regulation, so let me maybe ask some questions about 

that. 

Ms. Herrmann, does Globe University have a program where 

more than two-thirds of its students are not paying down their 

loans? 

Ms. HERRMANN. Congressman, no, we do not. 

Mr. GRIJALVA. And that is my point. Then, the restriction under 

the rule would not apply to you, because your programs are meeting the criteria and are doing the job they are supposed to do. 

Ms. HERRMANN. As I understand the rule, it is two-part. And the 

other part is the debt-to-earning ratio that would be problematic. 

Mr. GRIJALVA. It is either/or, is my understanding. And so, in 

support of the—and you mentioned your support for the Kline 

amendment. And that amendment would have blocked disclosure of 

placement, graduation, debt levels for all career education programs. 

How does this square with your testimony where you mention 

that transparency is critical, that all students should have information available to them regarding the total cost of education? And 

how does that square with that comment in support of that amendment? 

Ms. HERRMANN. Congressman, we believe that we do need to be 

transparent. Students need to have the right information to make 

an informed choice about where to go to school. 

But giving them information about the results and about efficiencies and effectiveness, I can tell you that is something that is 

core to our educational business. 

I see that there are problems with the rule, as I mentioned, even 

with the either/or. As you speak to, are they not paying their loans 

down, there are problems there, as well. 

And there are government-sponsored programs out there, including forbearance and deferral, that are put in place for students, or 

interest-bearing-only payments, that students will take advantage 

of when they graduate college. I did. 

Mr. GRIJALVA. And the rule speaks to programs, not schools. So, 

if there was a dysfunctional program that is not passing that twothirds, either/or, that program could continue in that school. It just 

would not get any federal support in terms of student loans and 

Pell Grants. 

Ms. HERRMANN. Which, Congressman, would mean that students 

would not be able to choose to go to that specific program. And 
40 

there are many fields where entry level pay is not indicative of 

what their future earnings is going to be. 

So, if a student starts as a medical assistant, the salaries can be 

rather low. But placement is high, and there are good job opportunities for them. And they will continue to grow and be promoted. 

Mr. GRIJALVA. But your university passes all the criteria that are 

in the rule at this point. I am just making that point. 

Mr. JENNINGS [continuing]. And thank you—you said that forprofits, in your experience, have so many placement staff that they 

are able to respond, able to provide the industry and where you 

work with the appropriate referrals in terms of students prepared 

for those employment opportunities. And I think that is the way it 

should be, and I applaud that. 

But that is not the uniform rule. We have one publicly traded 

for-profit, Ashford University, that has 78,000 students and one career placement person. 

Any comment on that in terms of the efficiency of that program 

being able to track their students and put them in the right place? 

Mr. JENNINGS. I am certainly not aware of—I certainly have not 

encountered any of the career colleges that have a department of 

career—a career counselor, or a career placement services that is 

that disproportionate. 

I know in our industry, we have several career colleges in the 

area that I turn to when I need to increase my staff. They do have 

a dedicated—the important part is that they have a dedicated career placement services department. Whereas the public schools, it 

is usually a collateral responsibility of a staff member who has 

other responsibilities. 

Mr. GRIJALVA. You know, all the solutions up to this point, Mr. 

Chairman, have been about reporting requirements. And that idea 

reminds me of products liabilities issues, where we should not 

allow a toaster on the market that has a 66 percent chance of exploding in someone’s face. 

And so, I think the gainful employment rule is about regulating, 

making sure the taxpayer’s money is being used efficiently. And 

those colleges—for-profit, proprietary colleges that are doing the 

exemplary work that Globe University is doing—should have the 

access to continue to serve their students. 

Those 5 percent bad apples and programs need to be dealt with. 

We cannot just ignore that and ignore the mounting debt that is 

on those students, and the mounting cost to the taxpayers. 

And I yield back, sir. 

Chairman KLINE. The gentleman’s time has expired. 

Dr. Roe, you are recognized. 

Mr. ROE. Thank you. 

Ms. Barreto, for you. 

Ms. BARRETO. Thank you. 

Mr. ROE. And I introduce myself to say that I overdosed on education—24 years in school without kindergarten. 

And so, and I served on the foundation board of two state universities, one as chairman of the foundation board for a state. So, I 

have never been to a private college or a for-profit college. 

But let me point out a couple of things during March Madness. 

If you will go back and look at the graduation rates of many, many, 
41 

many major universities, their football teams graduate 10, 12, 15 

percent of their students. Their basketball teams I have seen have 

graduated—I have seen major universities, one that won a national 

championship that, during that coach’s tenure, graduated zero African-American students. It was abysmal. 

And you see this, but nobody complained until it was made public. And finally, NCAA, because of money—I am on my high horse 

here about them—began to notice these atrocities in our public 

schools, and did something about it. Nobody said a word, as long 

as their team was winning. 

So, I simply point that out, a little bit of frustration I have had 

with university presidents at public universities, and so forth, 

about how they manage those things as long as the alumni were 

happy with the winning record. 

So, the for-profit colleges where I have seen in our local area, 

have done exactly what Mr. Jennings said, have noticed a niche in 

the market. 

Business has said, look, we need this type of employee. They rapidly do that, and then are able to put those employees in. One I 

remember is a ball bearing plant that they were able to do this in 

our local area. 

So, Mr. Jennings, would you comment on that advantage that 

those colleges have? 

Mr. JENNINGS. Well, sir, I have seen—I am trying to address 

your question here. As far as adjusting the programs as necessary, 

is that more of what you are asking? 

Mr. ROE. Yes, a business comes to town and says, we need this 

type of program for our particular job needs. A for-profit was able 

to adjust that very quickly—— 

Mr. JENNINGS. Sure. 

Mr. ROE [continuing]. And not have to go through all these hoops 

to get it done. 

Mr. JENNINGS. Yes, you know, they are able to expand. 

ITT, for instance, in our area has three separate campuses in the 

Phoenix metropolitan area. DeVry has two. One thing that they are 

able to do is expand their laboratory and classroom area, so if they 

needed to increase classroom sizes. 

They can truly finish a 2-year degree in 2 years. I could not. I 

went the community college route, finished an associate’s degree in 

electronics. And it took me probably 4 years part-time. 

And that was because it was a traditional 16-week semester, 

then limited classes during the summer, and the typical class 

scramble that you are left with at a public school. 

So, the private schools definitely are much more flexible. The 

public schools—and this is going through two different community 

colleges and Arizona State University—say, ‘‘Here are the classes. 

Here is the number of seats that we have. Hope you make it.’’ 

The private schools expand. If they see a need, if they see students that are being away, they create more classrooms. They create more laboratory space. 

So, sir, I hope that is answering your question. And if we open 

a new Intel plant, a new aerospace plant in our area, they recognize that need and they increase their space. 

Mr. ROE. Let me also get on this gainful employment. 
42 

When you have private schools now, private universities that are 

$40,000 or $50,000 a year, and let us say you spend $250,000, in 

Tennessee, and you start teaching school, is that gainful employment? Because there is no way you could ever pay back a quarter 

of a million dollar loan teaching school in the State of Tennessee. 

And I am not saying that is a good thing. I am just saying that 

is the reality. 

I do not know what that even means. It means if you get a job, 

compared with what you did, as Ms. Herrmann was talking 

about—I have seen it in medical practice for years, that somebody 

would come in as a clinical assistant and end up as a registered 

nurse. I have seen that over and over again. 

So, I think the other point I want to make is about debt. And 

I think that is for all students—I mean, not just for-profit universities, but for all colleges. Now, it is just overwhelming. 

I had dinner this week at a restaurant here, and I will not say 

where it was, but I paid more for dinner than I did a quarter of 

college years ago. That is how unaffordable it was then, and how 

unaffordable now. 

We had a student in my office in Kingsport, Tennessee, not long 

ago from a public university with a $72,000 debt. And she did not 

know how she was going to pay that back. 

So, it is not just the for-profits. It all costs so much. And then, 

can you get a job commensurate with what you had educated yourself for to pay those loans off? 

So, I do not think it is just in the for-profit market. It is all students that have this problem. 

Ms. Herrmann, I have one final thing I wanted to ask you right 

quickly. I Googled all of you all up right here while I was sitting 

here, and read about your universities while I was sitting here. 

But can you shed any light on the programs you have had that 

have adjusted quickly at your university? 

My time is up. I am sorry. I yield back. 

Chairman KLINE. Thank you. The gentleman’s time has expired, 

and we can get that response for the record, if the gentleman likes. 

Mr. Bishop, you are recognized. 

Mr. BISHOP. Thank you, Mr. Chairman. Thank you very much for 

holding this hearing. 

Let me start by commending Ms. Barreto on your success, and 

to tell you that I had the good fortune to spend several hours at 

Monroe College at the invitation of President Jerome. And I left 

there very impressed. 

And you are the epitome, or the walking example, of what happens there. And so, commendations to you—— 

Ms. BARRETO. Thank you. 

Mr. BISHOP [continuing]. And to Monroe. 

I have to say, I am troubled by what we are doing here. This is 

the fourth hearing that this committee has held, or subcommittees 

have held, on the issue of regulation of higher education. 

And yet, we have not spent a second dealing with what I consider to be the single greatest problem confronting higher education today, particularly its students, and that is the impending 

devastation of the student financial aid programs as proposed by 

the Republicans in H.R. 1. 
43 

Republicans have passed a bill that would cut the Pell Grant 

maximum to $4,705 for next year, and to cut it to $4,015 by 2014. 

It would eliminate the SEOG program, and it would—if we do not 

act by 2014, we will also no longer have a Perkins Loan program. 

Now, the subtitle of this hearing is, ‘‘Roadblocks to Student 

Choice.’’ I am a former financial aid administrator. I think that, if 

we were to eliminate or devastate the student financial aid program to the extent that is currently being proposed, that, too, 

would constitute a significant roadblock to student choice. 

Now, Ms. Herrmann, I just heard you indicate in response to Mr. 

Grijalva’s question that students would not be able to select certain 

programs at your school if they did not have access to student financial aid. I infer from that, that student financial aid programs 

are absolutely essential to the ability of your students to both enroll and to continue their enrollment. 

Am I correct in that? 

Ms. HERRMANN. You are correct. 

Mr. BISHOP. Okay. So, what would be the impact? 

Fast forward to 2014. What would be the impact of a Pell Grant 

maximum of $4,015, no SEOG and no Perkins? What would be the 

impact for your students? And more broadly, what would be the 

impact for your enrollment? 

Ms. HERRMANN. Well, it is hard to predict the future. I will go 

to a past experience where we were in a situation in Minnesota 

where there was a tremendous debt that needed to be rectified. 

And so, there was a look at the state grant and its availability to 

students, and the size of it. 

And does that change? And does it change for a specific sector? 

Or does it change for a specific group of students? 

And we understand that cuts have to happen when the economy 

is not giving us what we need. So, in order to go back and grow 

that economy, we have to figure out how to make cuts in the meantime. And we have always felt, as long as those cuts are fair and 

across all sectors, that it is something that, basically, we all have 

to do. 

We have to tighten our belts. We are sitting in a bad economy. 

We have to figure out how to change that. 

So, will it be difficult for students to take less grant dollars and 

have to make that up in loan dollars? Absolutely. 

But investing in education, how students will do that for themselves, is the one way that helps them improve their situation, gets 

them to work and helps us improve the economy. 

Mr. BISHOP. Would your institution freeze tuition if the gap between total student cost and available aid continues to grow? 

Ms. HERRMANN. I am certain that that would be something that 

would be considered. 

Mr. BISHOP. Would the institution be willing to put back into institutionally funded student aid some portion of the profit that the 

institution makes? 

Ms. HERRMANN. It is actually not a decision that I would be part 

of. 

Mr. BISHOP. I understand that. 

The issue here is, if we are truly interested in supporting student 

aspiration, it seems to me we have taken our eye off the ball. 
44 

The single greatest determinant of a student’s ability to go to 

school is whether or not they can pay. 

And would anyone else care to comment on this issue? 

Ms. Barreto, did you receive financial aid when you went to Monroe? 

Ms. BARRETO. I did. And I also want to note that I started at the 

MCC, so I used TAP and Pell when I was there. And that is what 

helped me, you know—— 

Mr. BISHOP. Would you have been able to afford Borough of Manhattan—— 

Ms. BARRETO. No, I would not have been, you know, at a college, 

because I did not have any money saved, and that was the resource 

that I had available to me. So if I wouldn’t have had that, I would 

not have been able to attend college. 

Mr. BISHOP. Okay. Mr. Mitchem, you work with needy students 

all the time. 

Mr. MITCHEM. Yes. The financial aid cuts are going to be devastating. Already, unmet need is quite high. 

And this would drive it up, indeed, if the Pell Grant maximum 

is reduced. And so, thus, it would force more low-income and firstgeneration students out of college. It is just quite simple. 

You have to provide financial aid. You have to provide supportive 

services, indeed, if you want to graduate first-generation and lowincome students. That is my experience. 

Mr. BISHOP. Okay. Thank you. Thank you, Mr. Chairman. 

Chairman KLINE. I thank the gentleman. I apologize for the 

interruption. 

Mr. Barletta, you are recognized. 

Mr. BARLETTA. Thank you, Mr. Chairman. 

Ms. Herrmann, I think a great feature of the proprietary school 

sector is its unique ability to adapt to the changing needs of the 

local economy. As a former mayor, I could attest to the importance 

of that versatility. 

Can you please provide some examples of how you have worked 

with local community and business leaders to add, change, or reconstruct some of the programs, your programs, to ensure they are 

meeting the needs of your community in Woodbury? 

Ms. HERRMANN. Absolutely. I can speak specifically in Woodbury, 

or I am happy to speak beyond those boundaries. 

We have found that students go to school where it is convenient 

and accessible to them. When we look at a campus growing beyond 

a certain size, or we see a need from a community that is outside 

of a radius where students would drive to, we work towards looking 

to that community, seeing if there is a true need to build a new 

campus. 

We would work them directly in determining what type of industry was there, what type of job opportunities were there. And we 

would develop programs and put programs in those schools specific 

to that new community. 

I can tell you, as Mr. Jennings talked about, we use PAC committees that come into our campuses twice a year. They review our 

curriculum. They review our equipment, the things that we are 

doing to ensure that we are meeting their needs. 
45 

We also will close programs. If we know that there is no longer 

a need in a specific community for that program, or we will look 

to see if we have campuses that are close in proximity, and there 

is not enough of an employment market surrounding those two 

campuses, we may not choose to offer all of our programs there. 

For instance, we have campuses in Green Bay and Appleton, 

Wisconsin, close proximity, a smaller employment market. So, we 

look very closely at what programs we would offer. 

We limited enrollment in our veterinary technology program to 

ensure that we are—you know, we are very careful on the front end 

to make sure we can meet our commitments on the back end. And 

that is getting our students jobs. 

Mr. BARLETTA. Thank you. 

Mr. Jennings, could you discuss what you see as the top three 

most harmful aspects of the gainful employment regulation? 

Mr. JENNINGS. Well, my concern is, I ran down a couple of numbers—if I could just speak frankly—I ran down a couple of numbers of my team. Thirteen of my 19 direct reports are from career 

colleges. I am looking to expand in the future about 5 percent. 

We have a big contract coming in about 2 years. Well, we have 

landed the contract. Now we are in the design phase. And when 

we get to the production phase, we are going to expand about 30 

percent. 

As I understand the gainful employment, and as we have discussed here, we are certainly going to lose—financial aid is going 

to be a loss. Students are no longer going to have the opportunity 

to attend these colleges. 

I turn to these schools to find employees. These employees just 

are not going to be available to me when I need them. When we 

expand, when we go to execute these programs for our customers, 

for our government, there simply just—we might not find the qualified people that we need. 

That is my concern. That is my biggest concern. 

Beyond that, I really—that truly is my primary concern. 

Mr. BARLETTA. Yes, and I agree with you. These schools play a 

major role for many people in our communities finding employment 

and staying in that community. 

One of the challenges of many communities is keeping people 

there and helping them find employment, because most people 

want to stay home where they live and find work there. 

Mr. JENNINGS. Yes, sir. 

Mr. BARLETTA. And it is also a fact that, if we are trying to attract businesses to a community, they are looking for a workforce 

to be able to feed off of. So, these schools play a major role in economic development, as well. 

Mr. JENNINGS. They do. They do. The local public schools in our 

area, I have attempted to recruit from them before. And it was a 

difficult process, and I was unsuccessful. It was the community college I actually graduated from some years back, some 10 years 

back. 

They will certainly have to change the way they do business, if 

the technical schools start graduating fewer people. They will definitely have to do things differently. 

Mr. BARLETTA. Thank you. I yield back the balance of my time. 
46 

Chairman KLINE. I thank the gentleman. 

Mrs. McCarthy, you are recognized. 

Mrs. MCCARTHY. Thank you, Mr. Chairman, and thank you for 

holding this hearing. 

And may I wish everybody a happy St. Patrick’s Day. 

The reason you see everybody running is that there is actually 

a Speaker’s lunch at 12 o’clock with Speaker Boehner, the President, and the Vice President. So, we are rushing, to say the least. 

You know, listening to the debate and, you know, hearing both 

sides—and I think that we all agree that we are trying to do whatever we can to make sure the bad apples—that we get rid of them. 

If they are not doing the right thing by students, we do not want 

them in the system, nor do we want them part of educating those 

children that have a chance, probably, of failing and defaulting. 

But reading the testimony and then hearing Ms. Herrmann’s testimony, as far as I am concerned, she hits on the central points of 

what this hearing is supposed to be about. You know, as she states, 

the goal of the gainful employment regulation is unclear and the 

logic supporting it is quite fuzzy, to be very honest with you. 

If we are concerned about education quality, then we should be 

looking at those issues directly. We should be evaluating the 

schools based on the quality of their education. We should be looking at the faculty, their qualifications. 

And we should look at other outside metrics, measures. We 

should be looking at accreditation standards and performance 

measures. 

You know, in my State of New York, we treat institutions, 

whether a career college or a university or community college, 

equally. If you do not do well, you are kicked out. That is the bottom line. 

So, it seems strange to use such indirect measures as debt loan 

and repayment rates to get at school quality. And I think that is 

what we should be looking at. 

If we really are concerned about debt loans, then we should be 

looking at some of the well-respected universities in this country 

that have annual tuition rates in excess of $500,000. And I also 

would like to know what is their graduation rate or likelihood of 

their students getting a job. 

A lot of students right now, especially during this economy, are 

graduating students, and they are not getting jobs either. And we 

should be looking at that equally. 

It is equally strange to look at repayment rates or default rates 

when attempting to judge the effectiveness of the educational program. That is what this committee is about—quality education. 

So, does it make any sense to punish a school, or schools, who 

has changed nothing about their program, but because of outside 

factors beyond their control, now have lower loan repayment rates? 

So, Ms. Herrmann, I am going to ask you again. I know you have 

been asked, but I want you to go a little bit more. 

Can you explain a little bit more about some alternative ways 

that possibly this committee and the Department of Education 

could look at to improve the quality without burdening schools, or 

denying student choice? 

Ms. HERRMANN. Thank you, Congresswoman. 
47 

There are very good processes in place right now. We have the 

regulatory triad. We have the state, we have the accrediting bodies, 

and we have the federal government. And there are regulations in 

place now. 

Some of the examples that have been brought about in the past 

6 to 12 months really are cases where current regulations have not 

been enforced. And if those regulations that are already there are 

enforced, I do not think we run into these stories about these bad 

actors. 

But as far as quality indices, you know, there are things that I 

know our national accreditor looks for. And those are things such 

as the retention rate of students. If they are coming, are the staying? 

They also look to the placement rate. And it is very prescriptive. 

It is not just that a student gets a job. They need to be placed in 

a field, a related field, in order for them to be counted as placed. 

They will look to our loan default rates. They also, when they 

come in to do visits, they are looking at the faculty credentialing. 

And as you mentioned, it is not different whether you are a career college or you are a traditional school. Depending on the subject matter that that faculty member is teaching, the credentialing 

requirements are the same. 

And so, I believe that the regulations in place can help us get 

through this period where we feel like there are some bad actors 

that need to go away. 

But if there are additional things that we look to for measuring 

quality, then let us look at student outcome. Are they getting jobs? 

To me, gainful employment is a pretty simple term. Do they get a 

job when they finish? 

The salary is not about the quality of the education. It is about, 

really, the field that the student goes into. And for the most part, 

I hope that students are going to college to fulfill their dreams and 

follow their dreams, versus for the paycheck that they are going to 

get. 

Mrs. MCCARTHY. Thank you. 

And I think that brings me to Ms. Barreto. You went back to 

Monroe College several times? 

Ms. BARRETO. Correct. 

Mrs. MCCARTHY. Do you think the college had anything to do 

with your default rate? 

Ms. BARRETO. No, it was life, you know, my circumstances. I was 

a single mom. I had a little baby girl. 

And when I started, had to pay back, I could not, because it was 

surviving, you know. My job was not paying that much, and I had 

to make choices. Survival or, you know, down the line I was going 

to pay it. 

My intention was always to pay it. But life, you know, played a 

huge role in that. 

Mrs. MCCARTHY. Thank you very much. 

I yield back my time. 

Chairman KLINE. I thank the gentlelady. 

Mrs. Biggert, you are recognized. 

Mrs. BIGGERT. Thank you, Mr. Chairman. 
48 

Mr. Jennings, you have mentioned continuing education in training of many of your company’s employees, which I assume leads to 

higher salaries over time. 

Can you comment on the entry level salaries of individuals you 

hire, and how a debt-to-income determination of programs’ effectiveness might affect the availability of high-quality graduates? 

Mr. JENNINGS. I can certainly speak to entry level salaries. Debtto-income I probably will not be able to speak to. I am not sure 

what debt these graduates are coming to me with. 

Typically, I hire, as you saw in my statement, that a graduate 

of a 2-year program, zero to 2 years’ experience. And that is an 

entry level technician for my department. 

They come to us at just a little over $40,000 a year, is their annual salary. 

So, you know, that ratio, of course, obviously, would depend on 

the amount of debt they have accrued to get to that point. 

And your question about continuing education, if I could speak 

to that a little bit. Once we hire them at the associate’s level, at 

an entry level technician position, we do encourage them to continue on through a bachelor’s program, whether it be a technical 

bachelor’s or whether it be a management or non-technical bachelor’s. 

The local career colleges having their evening classes, having 

weekend classes, are very accommodating for these students to continue on. 

If I could tell you a little of my story. I went the community college route and then transferred over to Arizona State University. 

It took me 8.5 years to finish a bachelor’s degree, going the public 

school route while working full-time. 

These students are actually able to go from an associate’s to a 

bachelor’s within 2 years. That was impossible to do—that is impossible to do through the public schools. 

Mrs. BIGGERT. Okay. Thank you. 

If I could move on and, Ms. Barreto, let me just commend you 

for your accomplishments. And you have a great story, and thank 

you for being here. 

Ms. BARRETO. Thank you. 

Mrs. BIGGERT. Then, Ms. Herrmann, in your written testimony 

you indicate that the debt-to-income is a poor way of determining 

whether or not an institution is offering value to its students. 

Can you describe some of the fields graduates enter in which 

their income may be initially low, yet likely to result in a successful, long-term career? 

Ms. HERRMANN. I would be happy to. Thank you. 

I would say, virtually any profession where students are starting 

entry level, the pay is going to be fairly low. It is indicative of 

someone coming in with no experience. And your salary, you know, 

is commensurate with your experience and, of course, your training 

and your academic background. 

Some specific ones that I know as we looked at those ratios that 

come to mind, registered nursing. A 4-year degree in registered 

nursing is an expensive program. And the salaries that nurses 

start with are typically around $40,000 in the State of Minnesota. 
49 

But I know people that, in the field just 2 and 3 years later, look 

at close to doubling that salary. 

So, there are great opportunities. Students just do not realize 

those—or anybody going into an entry level position—are not seeing those types of earnings when they start a job. 

Mrs. BIGGERT. Then you also note that the private sector is better suited to the constant adaptation needed to ensure that our 

workforce is best aligned with the labor demands to capitalize on 

emerging economic opportunities. 

If this regulation restricts or eliminates roughly 20 percent of 

proprietary school programs, how do you see the future alignment 

of our nation’s workforce with the employer demand developing, 

which we hope it develops soon? 

Ms. HERRMANN. It is deeply troubling to me. We know that right 

now what we need to do is produce more and better skilled workers, not less. And so, if we look at 20 percent, or even greater numbers, depending on which study you might be looking at, that is a 

great hit to our economy and to our workforce. 

It is critical that proprietary schools and the programs that we 

offer can still function and be adaptable and nimble to industry, so 

that we are able to continue to help build the workforce. 

Mrs. BIGGERT. Thank you. 

Then also, Ms. Herrmann, the department has predicated gainful 

employment rules on the assumption that schools are responsible 

for students taking on too much debt. Yet you note that your institutions cannot reduce the amount of loans that a student receives, 

which may be more than they need. 

If the idea of student loans is to pay for education, what are the 

other expenses for students using these excess funds? 

Ms. HERRMANN. I appreciate you bringing that to light, because 

no matter what our tuition is set at, students always have the 

availability of the loans that they are eligible for. And we do not 

have any way of preventing them from taking out those loans. 

Expenses that students find important to them while they are in 

school, that will always be up to them. Sometimes it is absolutely 

necessary. It is transportation to get them to school. 

Other times it is, you know, if I can get this big check, I might 

get a nicer car than I would have had before. 

So again, while we can counsel and advise, we have no ability 

to prevent students from taking out those loans. 

Mrs. BIGGERT. Thank you. 

I yield back. 

Chairman KLINE. Thank you. 

Mr. Andrews? 

Mr. ANDREWS. Thank you, Mr. Chairman. 

I thank the witnesses. 

I think the issue here is not whether we protect students and 

taxpayers against inferior programs; it is how. And I wanted to ask 

the panelists a question. 

Let us assume we have two schools. School A has a graduation 

rate of 90 percent in a duly accredited program—in a program, not 

just the school, but a program—and a placement rate of 80 percent. 

So, in other words, of the students who attend a program at school 
50 

A, 90 percent of them graduate, 80 percent of them are placed in 

the job for which they were trained. 

School B graduates, from the same program, 70 percent of its 

graduates and places 60 percent of those graduates in the field for 

which they were trained. 

Ms. Barreto, which school do you think is better, school A or 

school B? 

Ms. BARRETO. Well, honestly, I would have to know more about 

it, not just straight numbers. There are a lot of things that go into 

it. I would have to learn about what type of students they have and 

what circumstances. Just like—— 

Mr. ANDREWS. Good point. 

Ms. BARRETO [continuing]. What I expressed, you know. 

Mr. ANDREWS. But let us assume all other things like that were 

being equal, do you think A or B is better? 

Ms. BARRETO. By straight numbers, I would say A, because you 

are looking—— 

Mr. ANDREWS. Well, I understand. 

Ms. BARRETO [continuing]. You are looking just at numbers. You 

are not looking at any other—— 

Mr. ANDREWS. That is right—— 

Ms. BARRETO [continuing]. But that. 

Mr. ANDREWS. Controlling for everything else, Mr. Jennings, 

what do you think, school A or school B? 

Mr. JENNINGS. All things being equal, A certainly would be better. 

Mr. ANDREWS. Dr. Mitchem? 

Mr. MITCHEM. I would agree with Ms. Barreto. School A, if you 

are just going to stick to the metrics. 

Mr. ANDREWS. Right. 

And Ms. Herrmann? 

Ms. HERRMANN. Of course, school A. 

Mr. ANDREWS. Okay, here is my concern about the gainful employment rule. If school A charges a tuition that generates a debt 

service-to-income ratio of 9 percent, and school B charges a tuition 

that generates a debt service-to-income ratio of 7 percent, school A 

is kicked out of the program, and school B stays. 

Does anybody here think that is a good idea? 

I don’t either. 

The question I think that we confront, then—and I commend, 

frankly, the Secretary of Education, the administration for, in good 

faith, grappling with this question—is, what would be a better 

measure? 

And I would like people’s opinion about a measurement that 

would look at job placement and graduation rates as the guiding 

factors in this. 

Dr. Mitchem, do you think that is a good idea, if we could develop a metric that would look at job placement and graduation, 

that that would be a good way to measure inferiority versus superiority in these programs? 

Mr. MITCHEM. Job placement and graduation rate. 

Mr. ANDREWS. Right. 

Mr. MITCHEM. That was your question. 

In theory, I think it would be, yes. 
51 

Mr. ANDREWS. What practical impediments do you think might 

get in the way of that theory? That is not a rhetorical question, because we are grappling with that very question right now. 

How would we measure placement and graduation in a way you 

think would be fair and accurate? 

Mr. MITCHEM. It would be complex and difficult. It would be 

above my pay grade, frankly. 

Mr. ANDREWS. The gainful employment rule is kind of complex 

and difficult, too. The chairman and Mr. Miller and I, and others, 

have been following this issue for an awful lot of years. It takes 

about 15 minutes to explain gainful employment to somebody who 

is involved in this for a long time. 

I agree with you. It is a difficult measure. But do you think it 

is a better measure than debt to income? 

Mr. MITCHEM. It is a difficult judgment that I am not prepared 

to make. 

Mr. ANDREWS. What do you think, Ms. Barreto? Do you think it 

is a better way of measuring the quality of the school? 

Ms. BARRETO. Honestly, it is difficult. It is difficult to reply to, 

because you are just switching the scenarios you are, you know, 

checking on now. 

Mr. ANDREWS. When you chose the school that you went to, why 

did you choose Monroe? 

Ms. BARRETO. Well, I am not your traditional student. You know, 

I was a little bit older than everyone else. 

Mr. ANDREWS. You do not look very old to us, by the way. 

[Laughter.] 

Ms. BARRETO. Yes, I am. But I chose that school, because what 

I needed at the time was available to me at the school. 

For example, they mentioned that they had three semesters in 

1 year. And that fit in my—I was, like, great, you know, I can graduate—— 

Mr. ANDREWS. Was your ultimate goal to get the best job that 

you could? 

Ms. BARRETO. At the time, I knew I needed a degree to get a 

great job. 

Mr. ANDREWS. Right. 

Ms. BARRETO. You know, that was always instilled in me. 

Mr. ANDREWS. And would you say a good school is one that helps 

you get that great job, as opposed to one that does not? 

Ms. BARRETO. Correct, yes. 

Mr. ANDREWS. That is what I think we are driving at here. And 

it is a difficult issue to grapple with. 

But I think the grappling with gainful employment, frankly, is 

taking us in the wrong direction. And I think my example demonstrates that, and we should continue to work together as we 

have to find a better answer. 

I yield back. 

Chairman KLINE. I thank the gentleman. 

Mr. Walberg? 

Mr. WALBERG. Thank you, Mr. Chairman. 

It is always a tough act to follow Mr. Andrews. I am tempted to 

just suspend my questioning. But I am not going to do that, be-
52 

cause we are grappling with that problem, and I think it is worthwhile to continue to grapple. 

And Ms. Barreto, I identify to some degree with you, coming 

from a South Side Chicago home, being a first-generation college 

student myself, with the added burden that my twin brother wanted to go at the same time, from a family that was limited significantly in income. And the two of us had to find our own way, to 

provide our own education through the process. And I applaud you 

for doing what was necessary to complete. 

I assume from what you have said already that you feel the institution that you attended—all the institutions you attended, but 

specifically thinking on this issue—that it supplied a very adequate 

education for you to continue your achievement. 

However, if enacted, the gainful employment regulation that we 

are considering, thinking of your situation and others that would 

be considering education for their own selves in the future with 

similar concerns, how would this regulation impinge upon them, or 

help them, either way, in getting the education that you received? 

Ms. BARRETO. I am sorry. Can you just rephrase the question? 

Mr. WALBERG. How would you feel the new gainful employment 

regulation would affect the student who is currently looking to 

achieve the same kind of career successes that you have enjoyed? 

Ms. BARRETO. Well, you know, for other students coming, you 

know, going to school, I just see that they would benefit from being 

in a school that gives them that opportunity, that gives them, you 

know, the training, the knowledge, so that when they get out and 

graduate, be at the top of the pile of the resumes, because you are 

competitive. And you have learned through that school everything 

you need to be competitive, you know, in the field. 

So, I think it is just the knowledge that is given. That is how I 

believe they would benefit, you know. 

Mr. WALBERG. But the gainful regulation, the gainful employment regulation that is being proposed, would it keep them from 

having that opportunity, in your viewpoint? 

Ms. BARRETO. True. But I think, even with the restrictions that 

we are facing now, I think students like me, you know, you reach 

tough circumstances, whether it is funding getting cut, your not 

being able to attend a school, or anything like that. 

I am an example. It has taken me a long time to finish school. 

And, you know, thinking back, if I wouldn’t have those opportunities and grants, something—I would have been resourceful and 

used something else. 

Maybe it would have taken me longer to go to school. And I 

would have been here, you know, 10 years down the road. But it 

is just, you know, using—being resourceful, you know. 

Mr. WALBERG. And making your own choices and—— 

Ms. BARRETO. Exactly, just—— 

Mr. WALBERG [continuing]. Moving forward. 

Ms. BARRETO [continuing]. Being more resourceful. 

And being first generation, I knew, you know, just using every 

avenue possible to reach your opportunity. 

Mr. WALBERG. Thank you. Thank you. 

Ms. Herrmann, in a recent hearing in this committee, we have 

heard many examples of the burdens placed upon institutions, re-
53 

quiring them to spend vast amounts of time reporting information 

to the federal government. 

What kinds of reporting requirements would this gainful employment regulation create? And would it detract from the productivity 

of your school? 

Ms. HERRMANN. Congressman, I think any time that we are required to report and we are looking at a paper process versus a 

people process, it takes us away from our day job. 

That being said, there already are significant reporting requirements that are put on our schools, and particularly those schools 

that are nationally accredited. 

So, while it takes additional time to gather that data, it is important data—not just for us to show the outside world, but for us to 

focus on our internal operations to see how we might improve and 

make sure that we are continually working to improve student outcomes. 

The burden in the gainful employment specifically is such that, 

first of all, we do not know what it is. It is looking back versus 

moving forward, so we would have to have information on students 

from 3 years prior. It requires us to have salary information that 

is not always readily available. 

We always ask our graduates to self-report their earnings. But 

to get that earning report from the Social Security Administration 

would be very difficult. I think that those records are not very likely to be released. So, it is the matching of those. 

The cross-matching of the specific programs to the CIP codes 

from the SOC, the crosswalk that occurs there, the programs do 

not always make sense. 

For instance, we have a very strong paralegal program. And one 

of the careers that is associated with that, that we would have to 

be transparent and show a student that it is available to them, is 

a religious worker. Students graduating from my paralegal program do not have that opportunity. 

So, there are so many convoluted pieces that go into it, that it 

will take a lot of time away from our day job, and that is working 

with students and helping them achieve, and making sure that we 

have quality in the classroom and quality outcomes. 

Mr. WALBERG. Thank you. 

Thank you, Mr. Chairman. 

Chairman KLINE. I thank the gentleman. 

Mr. Scott? 

Mr. SCOTT. Thank you, Mr. Chairman. 

Dr. Mitchem, what are some of the problems that young people 

have in accessing college, particularly those whose parents have 

not gone to college? 

Mr. MITCHEM. The first problem they have is one of motivation 

and in understanding the importance and power of going to college. 

The second issue is oftentimes their inability to overcome what 

I would call the consciousness of poverty; that is, that they are not 

always aware of the financial aid opportunities that are available 

from the federal, state, and even from institutions. 

The other is confidence in themselves, that they lack that confidence oftentimes—which rests in terms of their—oftentimes in 

terms of low self-esteem. 
54 

So, it is a cocktail of variables that really work against their 

moving forward and making appropriate choices in the process. 

Mr. SCOTT. And what can Council on Opportunity in Education 

programs do to overcome those problems? 

Mr. MITCHEM. The programs that we represent? These programs 

do not deal with the financial aid issues. You are talking about the 

TRIO programs in this instance, I assume. 

These programs do not deal with the financial, but rather, they 

deal with the cultural, social and academic barriers, which are absolutely essential that we have to grapple with, along with the financial aid, if, indeed, these students are going to achieve and 

graduate. 

Mr. SCOTT. Once they get into college, are there things that can 

be done to increase the chance that they will actually complete college? 

Mr. MITCHEM. What can be done to increase the chance of students completing college? 

Mr. SCOTT. Right. 

Mr. MITCHEM. I think to make sure that there is adequate financial aid, as well as adequate supportive services. I think, in the federal equation as we go all the way back to 1965, the federal policy 

has missed the importance of supportive services. 

If you look at the record where you just provide financial aid, the 

attrition rates and completion rates are not what they want. And 

that is why I applaud the president’s initiative now in trying to 

raise the completion rates for all Americans. 

But I think we are going to have to do more than we have done 

historically with respect to supportive services. 

Mr. SCOTT. And what kind of supportive services increase the 

chance that a student may complete—— 

Mr. MITCHEM. A, in making sure that there is greater preparation for individuals who aspire or can be motivated to go to college. 

Information so that, again, so they make the appropriate choices 

and make the right—so there is a right match between individual 

and institution. 

And then, once individuals are in institutions, a panoply of academic, cultural and social services that address whatever educational deficiencies the students may bring with them. But also, 

deal with some of the psychosocial issues because these students 

are making a class transition. 

And oftentimes, we do not understand or recognize that people 

are moving from a first-generation underclass into a middle-class, 

bourgeois experience. And we do not always make the necessary 

adjustments. 

Individuals have to feel whole and welcome in an environment. 

They cannot feel alienated and succeed. They are motivated if, indeed, they feel included. 

And so, thus, these supportive services become quite important 

indeed, and coupled with the financial aid, which provide the floor, 

the underpinning, so they can move forward. 

Mr. SCOTT. Thank you, Mr. Chairman. I yield back. 

Chairman KLINE. I thank the gentleman. 

It looks like all members have had an opportunity to engage in 

the discussion. 
55 

I want to thank the witnesses for great testimony, great dialogue 

answering the questions, and recognize Mr. Miller for any closing 

remarks? 

No closing remarks. 

In that case, I will just say again, thank you. And we are going 

to continue to grapple with this. 

As Mr. Andrews said, we have got a lot of confusing numbers. 

We have got graduation rates that—the numbers do not even work, 

because you have got to be a first-time, full-time student for the 

numbers to count. 

And a lot for us to do here. Your participation today is going to 

be very helpful. Thank you very much. 

And with that, we are adjourned. 

[Whereupon, at 12:18 p.m., the committee was adjourned.] 

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