Conference Call with 

Deputy Undersecretary Robert Shireman of the U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

Massie Ritsch: All right. Good afternoon, folks, thanks for your patience. This is Massie 

Ritsch, Deputy Assistant Secretary for External Affairs and Outreach at the 

U.S. Department of Education in Washington. 

Thanks for joining us for what has turned out to be quite a popular call this 

afternoon. 

First, I should say the call is being recorded, if that’s a problem for you, go 

ahead and hang up now. We will do our best to post a recording and transcript 

as it becomes available online. No ETA on that, we’re -- unlike the folks in 

the investment world -- we’re not used to the same kind of turnaround, but 

we’re glad so many of you have been able to join us on the line. 

We will, if - as time permits, take questions clarifying what Bob Shireman 

said, at the end. And we intend to communicate in the future on this topic 

through the Federal Register as we did on Tuesday in press releases. And we 

also want to make sure you’re aware of our website of information for 

financial aid professionals, which is IFAP, I-F, as in Frank, A-P, as in Peter 

dot-ed, dot-G-O-V. I also want to let you know some of our friends who cover 

the industry for the education and financial media are also listening in on the 

line. 

So, with that, I’m going to turn it over to our Deputy Undersecretary, Bob 

Shireman. Take it, Bob. 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

Bob Shireman: Thank you very much, Massie, and let me thank you and others for being on 

the call. 

We decided to this call because I was getting calls from analysts. I generally 

try not to talk to - I generally try to avoid talking to analysts, but it was 

becoming clear that there was an interest in some explanation of the Federal 

Register notice that we published the other day. And so, I wanted to make sure 

that everybody had the same information. 

Our overall goal at the Department of Education in post-secondary education 

is to make sure that students -- potential students -- whether young or old, 

have access to college, they have the information they need to make good 

choices, and that they have good quality post-secondary education that serves 

both them as students and taxpayer as well. 

If that’s not the case, if there is not quality we want to know about it and if we 

can, we want to do something about it. Whether that involves a public 

institutions, a non-profit, a for-profit, a two-year, a four-year, a trade program, 

whatever type or sector of institution, we want to do all we can to make sure 

that we good quality and get the degrees and certificates that we need in this 

country. 

I’m going to take a few minutes to describe the Federal Register notice that 

we published and some of the background behind it, and then we’ll be open to 

any clarifying questions that some of you may have. 

We announced in the Federal Register three public hearings in the latter half 

of June, each of them a day and a half. The first day focused on the beginning 

of a potential rule-making process, the second half-day, some more open 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

sessions. I’ll describe first the purpose of the second half-day. There we are 

having two simultaneous sessions. 

The first one is seeking input on the communications, information, and 

processes that we at the Department of Education provide to students, schools, 

families. And we want input into simplifying the FASFA form, but also well 

beyond that to our website, college.gov, the pamphlets and publications, and 

the various things that - information that we put out, you know, we’d like 

input on. Which ones are useful, how should we - how should they be changed 

or improved, what kind of communications should we be doing that could be 

more effective in getting people prepared for, into, and through college. 

The second of the sessions on the second day is about college persistence and 

completion. The questions there is how could the programs that we run be 

more effective in encouraging students to continue on in their studies once 

they’ve started in higher education and complete, and get that degree. We’re 

interested in input whether that’s the Title IV programs, you know, Pell 

Grants, student loans, etc. 

We also made grants to developing institutions, institutional support in Title 

III and Title V of the Higher Education Act, and there are probably other 

items that - programs where we perhaps could be running them in ways that - 

where they could be more effective. So, we’re looking for ideas, input really 

of any type there. 

On the first day of these three sessions, we are interested in input on 

regulations that we should consider changing. And these can be - really it’s a - 

it’s the public’s (unintelligible) - the public -- any of you -- and others in the 

public to give us any input that you want about how our regulations should be 

changed, added to, subtracted from, for whatever reason or purpose. 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

We laid out some examples of the kinds of things that we’re interested in 

input on. Input on whether we should change our regulations, what that might 

look like, so that we can then decide which items we might consider following 

up on with actual draft regulations or committees that would be created 

around particular topics. So, the outcome from this particular stage of public 

input could be to do something on a topic, to do - or to do nothing on a topic, 

or, you know, to do something at different time. 

So, I’ll - I will go through the items, just give you a little bit of sense of what 

our questions are and where they came from. Several of the items that have 

actually come up in Inspector General reports in recent years, and so we’re on 

the list -- partly -- because of that. A couple of the items emerged recently in 

discussions over the new provision in the law that allows for someone to get a 

second Pell Grant in a - in one year. 

And that has raised the question of somebody getting a Pell - you get a second 

Pell Grant after you have gotten a first Pell Grant. There’s a question of 

satisfactory academic progress, which is the - you can’t continue to get federal 

financial aid if you’re not making satisfactory academic progress. The rules 

about what exactly the standards are for satisfactory academic progress are 

fairly open and loose. And so, you have the potential for a lot of people 

getting a second Pell Grant to - and we want input on whether there - whether 

we should take a closer look at the issue of satisfactory academic progress. 

Second issue related to that double Pell is the definition of a credit hour. We 

have not - there is no -- in regulations -- no definition of what one credit hour 

is. So, you can imagine that there’s some potential for abuse in terms of 

saying that someone has completed a full-year of credit hours. So, that a 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

second Pell Grant can come in, which may mean that we should perhaps have 

a standard for what a credit hour is. 

Another item on the list, incentive compensation. 

Some Safe Harbors were created a number of years ago, and we now have 

some experience with those Safe Harbors in actual operation. And the 

question is whether the way that things are actually operating now is the way 

it should continue, given the statutory prohibition, on paying incentives 

directly or indirectly based on enrollments, and so we want input on whether 

we should consider changes there. 

The third bullet on that list is gainful employment in a recognized occupation. 

Congress rewrote the definition of a proprietary school to include some 

situations of institutions that are offering Liberal Arts Degrees and of Liberal 

Arts programs. And we have already addressed that second new part of the 

definition, but it raised questions about the lack of specificity about what the 

first part of the definition means; gainful employment in a recognized 

occupation. So, again, we’re interested in public input on whether we should 

get more specific about what that really means. 

State authorization as a component of institutional eligibility. Generally, 

institutions of higher education and - under the Higher Education Act must be 

recognized by a - or - but be accredited by an agency recognized by the 

Secretary of Education. Must be okayed by the Department of Education, 

mostly around their financial capability and related areas. And third, have to 

be authorized by a state to provide a secondary - or education beyond 

secondary school. 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

And in that third piece -- state authorization -- there are some circumstances 

where a state’s lack of an authorizing body has been interpreted as allowing 

certain institutions to be considered authorized by a state. And we want input 

on whether to allow that situation to continue or if not, what should our 

standard be or what state authorization is. 

Verification of information included on student aid applications. There are - 

when students apply for financial aid, colleges are - a lot of applications are 

flagged for them to verify certain items that students or their parents had 

indicated in those applications, and it has been a long time since we have 

reviewed the - our verification rules. And so, it may well - it may be an area 

where there’s some regulatory relief possible, some administrative relief for 

colleges, maybe other things that, particularly college financial aid officers, 

may have suggestions around that, and we want to hear those suggestions for 

our consideration. 

And then, a high school diploma, the Inspector General has brought up some 

situations when - where it seems that the ability to benefit rules are perhaps 

being dodged by high school diplomas that are perhaps too easy to get, don’t - 

maybe don’t represent a real high school diploma. So, the question is what 

kinds of standards -- if any -- we should have for what qualifies in that regard. 

Those are the items on the - our list. Again, we’re looking for input on 

whether these are items that we should move forward with further 

consideration of possible regulatory changes. Any suggestions people may 

have about what those regulatory changes would be if we were to move 

forward, and we are open to any other items that people might suggest. 

Thank you for listening, and we have a few minutes when we can take your 

clarifying questions on this. 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

Massie Ritsch: Okay, folks, so we’ll open it up for questions. To ask a question, hit star 1 on 

your phone. We’ll take a minute to get folks in the queue, and then we’ll come 

back with you. 

Okay, again, star 1 is how you ask questions. You can enter that queue at any 

time during the Q&A. Operator; can we have the first question, please? 

Coordinator: The first question comes from Trace Urdan from Signal Hill. 

Trace Urdan: Hey, good afternoon, and thank you, Mr. Shireman for doing this call today. I 

know we all appreciate it. I heard your comments regarding your feelings that 

your primary interest was in protecting taxpayers and students, irrespective of 

the sector, but I was hoping that you might address the question more directly. 

Do you believe the proprietary school sector provides a useful service that’s 

not otherwise address by not-for-profit or state funded schools? Hello? 

Bob Shireman: Yeah, I’m trying to - I think it’s - I - so maybe I could ask you to repeat the 

question again. Do I believe that the... 

Trace Urdan: So, I understand that you’re focused... 

Bob Shireman: Yeah, let me (unintelligible) - I think that there are good schools, very 

effective schools, and schools that are less effective in every sector, and that 

sometimes the lines between the sectors are somewhat gray, and you - you 

know, we’re seeing that a lot in the public versus non-profit sector. For 

example, where states pull their support from their public institutions, so, you 

know what - at what point does an institution become a non-profit? 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

So, there’s very effective schools and less effective in every sector, you know, 

in every sector, also four-year, two-year, etc. And so, our focus needs to be on 

quality, regardless of sector. 

Trace Urdan: And then, just as a follow-up, if I may. Do you look at or care about the 

financial performance of the for-profit schools beyond the financial 

responsibility provisions that are attached to accreditation? Does it concern 

you... 

Bob Shireman: Yeah... 

Trace Urdan: ...how much money they make? 

Bob Shireman: ...I mean our main focus is implementing the Federal Student Financial Aid 

programs and the items that are relevant to that. So, generally we would look 

for things that are relevant to our financial goal responsibility guidelines, 

things like that. 

You know, it - we accept any information that is provided to us and assess it, 

and analyze it. And if you - and I, you know, would say that even though 

there’s a lot of financial analysts on this call, there’s nothing wrong with you 

all -- in this process coming up -- providing your own input about the kinds of 

things that you think are relevant to our responsibilities. 

Trace Urdan: All right, thank you very much. 

Coordinator: The next question is from Suzanne Stein, Morgan Stanley. 

Suzanne Stein: Hi, thank you very much again for doing this call. I’m curious, what kinds of 

things - you started the call by talking about measuring quality, and I’m just 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

wondering what kinds of things you’re going to do to measure quality. And, 

you know, take into account, particularly for the for-profits, that the students 

attending these schools, you know, may not have been at the top of their class, 

and maybe somewhat disadvantaged. You know, how are you going to take 

that into account? 

Bob Shireman: Our tools are basically enforcing the rules surrounding the programs that we 

operate. So, most of that has to do with the information that students have, 

which some of which comes from data reporting by colleges and universities. 

The kinds of things that are in the - that are required to be available to 

students, in terms of information, or to be made available to them. 

And then, you have accreditation, the state authorization, and then more our 

financial responsibility guidelines. So, it would tend to rely in either part of 

that regulatory triad or the information and basic eligibility requirements. 

Suzanne Stein: Okay, and just a follow-up, can you may go into a little bit of detail in what 

the process will be following the hearings and when we can expect to have 

some clarification on what you may or may not do? 

Bob Shireman: Sure. The - what we indicated in the notice is that any teams we decide to 

develop would probably start meeting in September, which would - which 

means that some time in maybe late August to mid -- sorry -- late July to midAugust, we would announce topics that we plan to pull together teams on. 

And those teams then would start meeting around those - about those topics in 

September, and then would meet - possibly reach consensus around changes 

in regulations around those topics. And then, there’s a - then we would 

publish draft regulations, another public comment period on those draft 

regulations, and then final regulations beyond that. 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

Suzanne Stein: Okay, thanks again, this has been very helpful. 

Bob Shireman: Great. 

Coordinator: Your next question is from Andrew Fones, UBS. Your line is open. Sir, your 

line is open. 

Andrew Fones: Thanks. Yes, thanks for doing the call. I had a question regarding the - your 

comments about the relative effectiveness for schools in different categories. 

And is there any particular metrics that you tend to focus in on when you 

think about, you know, what represents a good, average, or poor institution 

within a particular area? Thanks. 

Bob Shireman: Not that - there’s nothing in particular that comes to mind, and those certainly 

are the kinds of things that if there are metrics that those of you in the analyst 

industry use, feel free to suggest them to us. There’s also a big element here of 

consumer information and the market doing its work, and we have a pretty big 

role to play there in terms of making sure that students have good information. 

Andrew Fones: Thanks, and if I could, just a second question. I wondered about Obama’s 

goals to - obviously, to increase a proportion of adults with higher education 

qualifications during this administration, and how you will, you know, look to 

push that goal forward, given the lack of funding at state schools and some of 

the difficulties they’re having understanding the stimulus. There’s been a lot 

of money given to the state, but it still appears as though the state system is 

under a lot of pressure and public - the public schools are having to cut 

enrollments. Like, how in your mind are you balancing that - the goal of 

increasing higher education given these funding shortfalls? 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

Bob Shireman: Yes. Well, certainly the Recovery Act and the State Fiscal Stabilization Fund 

is intended -- in part -- to not only make sure that K-12 schools can keep 

operating and do a better job, but also applies to higher education. So, we’re 

hoping to - and know that we’ve had some impact in terms of reducing the 

levels of cuts that might exist there. 

We also know that we need to make sure that higher education becomes more 

- post-secondary education more broadly, becomes more effective in getting 

people through to those degrees and certificates, and so that’s a reason for - so 

that’s focus that we have. So, that even given the current number of people 

who are going on to education beyond high school, getting them to that degree 

or certificate and help us to aim for that goal. 

We also do propose substantial increases in the Pell Grant program, some 

expansion in the availability of student loans with an expansion of the Perkins 

Program. A bigger tax credit that is partially refundable and available for 

more costs, and so are taking a number of steps in terms of making that a real 

priority in the federal budget. 

Massie Ritsch: Folks, we’ve -- thanks, Andrew for that question-- we’re just about to run out 

of time here, so I’ll take one last question. I just want to say that Bob has laid 

out the calendar; the Federal Register has a calendar. This is how input can be 

provided and how you can track this process. 

Our intent is not to make this a regular conversation or a continuing 

conversation; we wanted to do this once in response to interest we were 

getting based on the notice posted Tuesday. Some of you folks have asked to 

join our list; there really is no list. We were able to assemble a large group of 

folks for this purpose today, and hope that in the future you’ll continue to rely 

on the Federal Register press releases from the department and the website I 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

mentioned with information for financial aid professionals. That’s 

IFAP.ed.gov, I-F-A-P.ed.gov. 

So, let’s take one last question, operator. Operator? 

Coordinator: Yes, sir, one moment. 

Massie Ritsch: Bear with us folks, we’ll find that one lucky last person. Folks, in the press - 

in the media, you can -- of course, as usual -- contact our press office for 

questions that you have stemming from this call. 

Coordinator: Okay. And the last question is from Brandon Dobell from William Blair. Your 

line is open. 

Brandon Dobell: Thanks for taking my call - I mean, squeezing me in here. 

One more of a - maybe a procedural question, should we expect more of these 

types of rule-making sessions going forward, or is this one of the, you know, 

the forum under which you expect to address all the issues that you think need 

to be addressed? Should we assume that in a year there’s going to be other 

issues to go, you know, kind of, sort of this process as well? 

Bob Shireman: At this point, this is the only one that we’re planning and I’d say we do hope 

that issues that folks have that they think should be addressed are expressed at 

these hearings. I suppose it’s possible we could get some number of issues 

that we decide - that we could decide from these hearings that there are -you 

know, that there’s one set of committees to create for September, and then 

another set, you know, in January or something like that, but at this point, 

that’s not in our plan. 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

And, you know, something like this can happen at any time, but it is fairly 

resource intensive, so I know that our - the very hard working staff who work 

on all of our regulatory operations here, I’d say they hope for a break at some 

point. 

Brandon Dobell: Fair point. And then, final question, you know, with the recent increases in 

assistance from the government, in terms of both Pell and Stafford, you know 

if - it kind of conflicts with the idea of making, you know tuition affordable 

from a 90/10 perspective. 

You know, schools can go right past 90/10 if the (unintelligible) 90/10 if their 

programs are “affordable”. You know, how does that - how do you think 

about managing that balance where affordability might put schools in conflict 

with, you know, one of those regulations that’s designed to maintained quality 

of that organization? 

Bob Shireman: I don’t know, but if you’ve got suggestions, bring them up at the public 

hearing. 

Brandon Dobell: All right, fair enough. Thank you very much. 

Massie Ritsch: Great. Thanks. With that, folks, we will wrap it up. Again, thank you all for 

participating in this one element of our efforts for greater transparency here at 

the Department of Education. 

Again, continue to watch the Federal Register, press releases, websites, we 

have dedicated to financial aid. We’ll do our best to get a replay of this and a 

transcript; it may not come till next week frankly, but we’ll put it up. You all 

have heard it and I trust you’ll share the information with you colleagues. 
Conference Call with 

Deputy Undersecretary Robert Shireman, U.S. Department of Education 

May 29, 2009 

12:30 PM ET 

And with that, I wish you a good weekend. Thanks for joining us today. 

Bob Shireman: Thank you, everyone. 

Coordinator: This concludes today’s conference. You may now disconnect. 

END