1

UNITED STATES DEPARTMENT OF EDUCATION

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GAINFUL EMPLOYMENT

NEGOTIATED RULEMAKING COMMITTEE 2017-2018

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SESSION 2

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THURSDAY,

FEBRUARY 8, 2018

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The Negotiated Rulemaking Committee 

met in the Barnard Auditorium, U.S. Department of 

Education, 400 Maryland Avenue, S.W., Washington, 

D.C., at 9:00 a.m., Ramona Buck, Rozmyn Miller, 

and Javier Ramirez, Facilitators, presiding.

PRESENT

RAMONA BUCK, Federal Mediation and Conciliation 

Service, Facilitator

ROZMYN MILLER, Federal Mediation and 

Conciliation Service, Facilitator

JAVIER RAMIREZ, Federal Mediation and 

Conciliation Service, Facilitator

JEFF ARTHUR, Vice President of Regulatory 

Affairs & Chief Information Officer, ECPI 

University

WHITNEY BARKLEY-DENNEY, Senior Policy Counsel, 

Center for Responsible Lending

JESSICA BARRY, President, School of Advertising

Art

JENNIFER L. BLUM, ESQ., Senior Vice President, 

External Relations and Public Policy, 

Laureate Education, Inc.
2

STEPHEN CHEMA, Ritzert & Leyton, PC

JENNIFER DIAMOND, Program Associate, Maryland 

Consumer Rights Coalition

DANIEL ELKINS, Legislative Director, Enlisted 

Association of the National Guard of the 

United States

RYAN FISHER, Intergovernmental Relations 

Division, State of Texas Office of the 

Attorney General

PAMELA FOWLER, Executive Director of Financial 

Aid, University of Michigan - Ann Arbor

CHRISTOPHER GANNON, Vice President, United 

States Student Association

ANDREW HAMMONTREE, Director of Financial Aid and 

Scholarships, Francis Tuttle Technology 

Center

NEAL HELLER, CEO/President, Hollywood Institute 

of Beauty Careers

MARC JEROME, President, Monroe College

C. TODD JONES, President, Association of 

Independent Colleges & Universities in 

Ohio

ROBERTS JONES, President, Education & Workforce 

Policy, LLC

JOHN KAMIN, Assistant Director, The American 

Legion's National Veterans Employment & 

Education Division

KIRSTEN KEEFE, Senior Attorney, Consumer Finance 

and Housing Unit, Empire Justice Center

CHRISTOPHER MADAIO, Assistant Attorney General, 

Office of the Attorney General of Maryland

JORDAN MATSUDAIRA, Nonresident Fellow, Urban 

Institute; Assistant Professor, Cornell 

University

MARK MCKENZIE, Executive Director, Accreditation 

Commission for Acupuncture and Oriental 

Medicine

LAURA METUNE, Vice Chancellor of External 

Affairs, California Community Colleges

ANTHONY MIRANDO, Executive Director, National 

Accrediting Commission of Career Arts and 

Sciences
3

MATTHEW MOORE, Director of Financial Aid and 

Scholarships, Sinclair Community College

KELLY MORRISSEY, Director of Financial Aid, 

Mount Wachusett Community College 

CHAD MUNTZ, Director of Institutional Research, 

Office of Administration and Finance, The 

University System of Maryland

JONATHAN K. PIERRE, Vice Chancellor for 

Institutional Accountability and Evening 

Division, Southern University Law Center

TIM POWERS, Director of Student Aid Policy, 

National Association of Independent 

Colleges and Universities

THELMA L. ROSS, Interim Director of Student 

Financial Aid, Prince George's County 

Community College

SANDY SARGE, SARGE Advisors

AHMAD SHAWWAL, Student, University of Virginia

DAVID SILVERMAN, Chief Financial Officer and 

Director of Business Affairs, The American 

Musical and Dramatic Academy

JOHNSON M. TYLER, Senior Attorney, Consumer and 

Foreclosure Units, Brooklyn Legal Services

CHRISTINA WHITFIELD, Associate Vice President, 

State Higher Education Executive Officers 

Association

STAFF PRESENT

STEVEN FINLEY, Office of General Counsel

GREGORY MARTIN, Office of Postsecondary 

Education

BRIAN SIEGEL, Office of General Counsel

SARAH HAY, Office of Postsecondary Education

CYNTHIA HAMMOND, Office of Postsecondary

Education
4

1 P-R-O-C-E-E-D-I-N-G-S

2 MS. BUCK: So, welcome back, everyone. 

3 Good morning. Again I just want to say I'm 

4 impressed by the passion and interest and 

5 involvement that everyone has, and the 

6 thoughtfulness of your responses. We have a lot

7 to cover today, but let's first start by asking 

8 if there's public comment.

9 (No response.)

10 Okay. I think there isn't then. I 

11 would like to start with an agenda review. What 

12 we need to do today, I think, is first we had said 

13 we would come back to the data. I don't know which 

14 part of the country says data and which data; it's 

15 so interesting. Data questions for just -- but 

16 we think we need to limit that to 30 minutes, and 

17 that could include the document that was sent out 

18 by Jordan.

19 Then we would need to go to Issue 5. 

20 What we'd like to do is cover, I'm proposing to 

21 cover Issues 5 and 6 before lunch. Then to have 

22 lunch. Laura wants -- has a memo with regard to 

23 Issue 8, and she may need to leave a little early, 
5

1 so she has asked if that could be moved up. So 

2 I'm proposing to put that right after lunch and 

3 then Issue 7.

4 Then we could see what time we have. 

5 The document, the technical changes that we didn't 

6 look at at the beginning, the technical and 

7 conforming changes document, and then the other 

8 issues that we hope to address if there's time. 

9 So that's a lot. So that's the agenda I'm 

10 proposing. Are there any comments on the agenda? 

11 Daniel, did you have comments on the agenda?

12 MR. ELKINS: Yes, I did. You 

13 mentioned or referenced an email that Jordan sent 

14 out. I don't know if I was just the only one that 

15 didn't get it.

16 (Off-microphone comments.)

17 MR. ELKINS: It is?

18 MS. BUCK: It's been handed out, sorry.

19 MR. ELKINS: Copies. I will get it.

20 MS. BUCK: Very good. Yes?

21 MR. HELLER: So I know yesterday we 

22 discussed beforehand that we --

23 PARTICIPANT: Neal, can you use the 
6

1 microphone please?

2 MR. HELLER: I guess I just want to make 

3 sure that we're going to address the metrics that 

4 go into the -- what we did yesterday.

5 MS. BUCK: So we have that listed as 

6 one of the things to cover after we cover the issues.

7 MR. HELLER: Okay, all right.

8 PARTICIPANT: Jennifer Diamond, did 

9 you have a question?

10 MS. BUCK: Okay. Yes, Sandy.

11 MS. SARGE: Hi, this is Sandy. I took 

12 a look through these things and I may be opening 

13 a can of worms, but 7 and 8 seem like they -- well 

14 at least 7 could potentially be pretty quick. If 

15 I read it correctly, it's just all crossed out, 

16 but maybe is there --

17 MS. BUCK: So it is the last item.

18 MS. SARGE: Okay.

19 MS. BUCK: So if we get to that and it's 

20 quick, that would be great.

21 MS. SARGE: Okay. I was thinking 

22 maybe first, to get it over with. Got it.

23 MS. BUCK: Any other comments on the 
7

1 agenda?

2 (No response.)

3 MS. BUCK: Now the question I want to 

4 ask is what time people need to end. Is 5:00 too 

5 late for people?

6 PARTICIPANT: Yes.

7 MS. BUCK: Would anyone want to propose 

8 a different -- well how many people will be able 

9 to stay until five? Let's see that.

10 (Show of hands.)

11 MS. BUCK: So quite a few people could 

12 stay until five. Could your alternate be here 

13 until five? Okay. So it sounds like five is okay 

14 then. Okay. Then I wanted to mention that, if 

15 you have suggestions for the facilitation process 

16 for us for next time, please feel free to write 

17 those down and give them to us for our consideration 

18 between now and the next time we meet. 

19 We're always interested in getting 

20 feedback and ideas about how the process could go 

21 better. Okay. So is there -- are there any other 

22 logistical issues we should discuss before we get 

23 started? Yes, Daniel.
8

1 MR. ELKINS: I just would like to 

2 request everyone who's participating in the 

3 negotiation to try and observe the protocols as 

4 much as we can. I understand that we all have very 

5 different perspectives on some of the details. 

6 But I think out of respect for the 

7 process that we're all trying to, in good faith, 

8 participate in, I think it would be very helpful 

9 for people not to be interrupted and people to be 

10 respected. I would like to, you know, just have 

11 a, you know, a thumb up if we all can agree to do 

12 that, and if not, you know, just let me know. Can 

13 we agree to do that?

14 (Show of hands.)

15 MR. ELKINS: Todd?

16 MR. TODD JONES: Yes.

17 MR. ELKINS: Okay.

18 (Laughter.)

19 MS. BUCK: I don't see any thumbs down. 

20 All right. Thanks for that question. Yes.

21 (Off-microphone comment.)

22 MS. BUCK: Okay, thank you. Traffic 

23 can be a big problem in D.C. Okay. So I think 
9

1 the first item on the agenda is Additional Questions 

2 About the Data. 

3 So Sarah, do you want to come up and 

4 we are going to try to keep this to 30 minutes, 

5 and we want to remind you that, if you do have 

6 additional thoughts on this or anything, you can 

7 email Scott about it. Is that right, Greg? They 

8 can email Scott.

9 MR. MARTIN: Yes. Any questions you 

10 have, you can always email Scott.

11 (Laughter.)

12 MR. MARTIN: I'm always quick to point 

13 out that Scott's available 24-7. 

14 (Laughter.)

15 PARTICIPANT: Is he not in the room? 

16 Oh, he is.

17 MS. BUCK: Okay. So what additional 

18 questions or comments do you have about the data 

19 that was given, particularly questions? 

20 MS. MILLER: Sandy.

21 MS. SARGE: Good morning, Sarah. This 

22 is Sandy.

23 MS. HAY: Good morning.
10

1 MS. SARGE: I have a question on the 

2 first paper you handed out, Debt to Earnings 

3 Analysis Using College Scorecard, and it's on 

4 Exhibit 1. I apologize. I feel like I should know 

5 this but I don't, so I wanted to just make sure 

6 I was clear. 

7 It's under the Data and Methods 

8 Difference. Is the Scorecard information 

9 self-reported by the institutions, or is that 

10 information something you guys pull in through 

11 other sources?

12 MS. HAY: It is -- my understanding is 

13 that it is primarily Department of Education data. 

14

15 MS. MILLER: Daniel.

16 MR. ELKINS: Yes. I wanted to thank 

17 you again for putting these together. Did some 

18 fact-checking yesterday just to verify, and as you 

19 said, you are legally unable to get the data that 

20 we want due to the expiration of that MOU. So I 

21 think the record should reflect that that is the 

22 case. The question is, is there an intent to renew 

23 that MOU at any point in time?
11

1 MS. HAY: That decision is above my pay 

2 grade.

3 MS. MILLER: Jeff.

4 MR. ARTHUR: Just a real quick 

5 observation. I think we might have 

6 mischaracterized programs that were excluded 

7 because of low n's. From my experience every 

8 program that was, didn't meet the n was a program 

9 we weren't offering anymore, and I think maybe there 

10 will be a number of small programs that we think 

11 are excluded, but actually they're a small n because 

12 the institution is probably not offering it 

13 anymore. When they're low n's, they're low demand.

14 MS. MILLER: Any other questions for 

15 -- Jennifer Diamond? 

16 MS. DIAMOND: It's Jennifer Diamond. 

17 I just wanted to point out, since there was a 

18 question yesterday on Table 6 in the second packet 

19 on page seven, I know Sandy brought up the issue 

20 of looking linearly across the data about this 

21 point, about 97 percent of programs including that 

22 failing number being at proprietary institutions.

23 But looking linearly, they make up 65.7 
12

1 percent we can see of programs, that 5-6, 5600 

2 number. So I just want to frame this discussion 

3 with that note, that you know, even looking 

4 linearly, that's pretty disproportional, the 

5 number of failing programs in that sector, and then 

6 just going across and looking at the 200,000 

7 students versus 1100 that failed at private 

8 institutions.

9 PARTICIPANT: Can I respond to that?

10 MS. MILLER: Sarah, do you have a 

11 response first?

12 MS. HAY: Sure. So that is a good --

13 it is important when the populations are not all 

14 the same size, to compare the percentages rather 

15 than the counts. So to that point, it is true that 

16 the proprietary programs make up about two-thirds 

17 of the programs covered under GE, and of those, 

18 15 percent of them fell in the failing category.

19 When you look at private, they made up 

20 six percent of the programs and five percent of 

21 those programs failed, and in the public they made 

22 up 29 percent of the programs and when you round 

23 it's zero percent, okay. 
13

1 The findings are similar when you 

2 repeat that math for enrollment counts. So the 

3 public, zero percent of the enrollees were in 

4 failing programs. Two percent of the enrollees 

5 for private programs were in failing programs, and 

6 in proprietary it was 14 percent of enrollees.

7 So if you want to figure out how to do 

8 that math, for example, you would take, looking 

9 at sort of the first row for public, you would look 

10 at one failing program divided by 2,493 programs 

11 to figure out what percent of the public programs 

12 failed, okay. Does that help clarify that for 

13 folks, or are there now more questions?

14 MS. MILLER: I think Jennifer, does 

15 that answer -- Jennifer Diamond, does that answer 

16 your question?

17 MS. DIAMOND: It wasn't really a 

18 question, but yes.

19 MS. MILLER: Okay. Well, Sandy.

20 MS. SARGE: So Jennifer, with all due 

21 respect and I understand what you're trying to say, 

22 but the problem here is that you're not comparing 

23 apples and oranges. So if you only look at what 
14

1 all three categories reported on -- undergraduate 

2 certificate, post-baccalaureate certificate and 

3 graduate -- and then you look at it, the publics 

4 have 2493, the privates have 476 and the 

5 proprietaries have 3,288.

6 So you're looking at the total number, 

7 which includes things that none of the others 

8 include. So what I'm trying to do is keep the math 

9 apples to apples, so that we can get to some real 

10 comparisons, and not add in things that aren't 

11 there.

12 MS. MILLER: Marc Jerome.

13 MR. JEROME: So actually Jennifer, I 

14 think your comment frames our discussion maybe the 

15 best, because we're looking at the data and we're 

16 pulling which institutions failed at the highest 

17 rate, and which institutions had the most students 

18 at the programs that failed.

19 You know, I've been consistent since 

20 the beginning. The reason it's so important for 

21 the Department to go in the direction they're going 

22 is I believe when the -- when they finally run the 

23 data, the actual data is going to show the opposite, 
15

1 that in fact more students attend institutions 

2 outside of the proprietary sector with failing 

3 programs.

4 That is why eventually the data side 

5 of the Department is so important, and it's one 

6 thing to make an argument with an incomplete set; 

7 it's another thing to make the argument with all 

8 the comparable data. 

9 Just one last point. The essential 

10 issue is the data only shows for degree programs 

11 at proprietary, and there's no data for degree 

12 programs in the other sectors.

13 MS. MILLER: Thank you, okay. So 

14 Daniel, then Tony and we have about nine more 

15 minutes left.

16 MR. ELKINS: Jennifer, could you 

17 please just basically restate exactly what you said 

18 again?

19 MS. DIAMOND: Sure. Looking at the 

20 failing programs column, do you see it? So under 

21 the total number of proprietary schools that 

22 failed, we have 878, and the total number is 903. 

23 We decided yesterday that's around 97 percent are 
16

1 failing programs in the proprietary sector. The 

2 total number of programs reported on that -- in 

3 the proprietary sector is about 5600. The total 

4 is 8600. That's 65.7 percent under the Programs 

5 column. Do you see where I'm looking? 

6 MR. ELKINS: You can deal with me 

7 afterwards. I don't math well.

8 MS. DIAMOND: Sure. I can point it out 

9 on the column.

10 MR. ELKINS: Thanks.

11 MS. MILLER: Tony. Tony.

12 MR. MIRANDO: Good morning. This is

13 Tony Mirando, thank you. So when we're looking 

14 at the zone in the failing areas, the first thing 

15 that my brain goes to -- and again it's just my 

16 brain -- the same chart that everybody's been 

17 chatting on. We're still using earnings that may 

18 be distorted by the inability for Social Security 

19 to take into effect the non-wages that an individual 

20 may not claim, correct?

21 MS. HAY: We are using the data 

22 reported by Social Security Administration.

23 MR. MIRANDO: Okay, you answered my 
17

1 question. Okay, great. Thank you. So I just --

2 just because, you know, again I think it's not a 

3 fair analysis if you're missing a huge piece of 

4 the data.

5 MS. HAY: I hear you. Yeah, I hear 

6 your point.

7 MR. MIRANDO: Thank you.

8 MS. MILLER: Jennifer Blum.

9 MS. BLUM: I'm actually switching to 

10 the shorter document, and just had a question on 

11 Table, I'm sorry Exhibit 3, and there was -- just 

12 before it in the narrative piece just above it that 

13 describes, I guess, Exhibit 3, it talks about the 

14 fact that -- and I just want to -- I guess that's 

15 a question.

16 It looks like you've narrowed the 

17 universe to just -- on Exhibit 3, you're using data 

18 just of, quote-unquote, open enrollment 

19 institutions. Is that -- or what do the references 

20 -- I guess I'll do it in the real form of it. Can 

21 you explain to me what you mean in the paragraph 

22 just preceding Exhibit 3, where you talk about open 

23 enrollment?
18

1 And then assuming that you are relying 

2 on, quote-unquote, open enrollment institutions, 

3 I assume that that was something that was taken 

4 from the Scorecard. You've heard me talk a lot 

5 about Scorecard flaws. But a lot of institutions 

6 -- I think some institutions are a mix of open 

7 enrollment, not open enrollment depending on their 

8 program level. The definition of open enrollment 

9 is a little bit squishy. 

10 So just curious as to what, what's going 

11 on there in terms of what schools were included.

12 MS. HAY: Right. So the data that was 

13 presented to you were all of the schools that were 

14 contained in Scorecard. We did make an attempt 

15 to see if there were differences at open enrollment 

16 schools as they're defined in Scorecard, and we 

17 did not include them here because we didn't see 

18 hugely meaningful differences. Does that help 

19 clarify that sentence for you?

20 MS. BLUM: So Exhibit 3 is all 

21 institutions, not just, quote-unquote --

22 MS. HAY: Correct.

23 MS. BLUM: Okay, good. It just wasn't 
19

1 clear from the narrative and the chart. Thank you.

2 MS. HAY: Okay, sure, yes. Thanks for 

3 clarifying. Okay. So I know we're running short 

4 on time. I do want to let folks know I'll be here 

5 today, so if you still have a question about what 

6 the numbers mean, you're welcome to try and catch 

7 me during a break or something like that. 

8 I did want to sort of walkthrough -- I 

9 didn't have my page with me yesterday of all of 

10 the data requests, and I wanted to just sort of 

11 walk through them quickly and let you know where 

12 we're at with them, okay. 

13 So we got a request to parse the 

14 Scorecard at the program level which, as you know, 

15 we can't do. So we gave you the best we could, 

16 which is at the institution level.

17 We got a request to see all wage and 

18 loan data by institution and program for all 

19 institutions and all programs. It's kind of the 

20 same situation. We gave it to you at the program 

21 level when we had the data, which was for the GE 

22 programs, and we gave it to you at the institution 

23 level using Scorecard data for the entire United 
20

1 States, okay.

2 We had a request from negotiators to 

3 be provided all data Ed has pertinent to gainful 

4 employment. That's a really large request, so if 

5 there are more specific requests, we encourage you 

6 to make them in a way that we can try and solidify 

7 a bit more, okay. 

8 So I don't actually have the names of 

9 the people who made the requests on my little cheat 

10 sheet here, but if you have a more specific request, 

11 you can send them to Scott Filter. That's 

12 scott.filter@ed.gov.

13 So for each program in GE and non-GE 

14 school programs, what is debt to earnings? And 

15 again, that's sort of the same response. We got 

16 a lot of questions that are sort of multiple ways 

17 of asking the same thing. 

18 Can the Department of Education provide 

19 the debt to earnings rates using NSLDS so that it 

20 can be compared to the school-reported information? 

21 I wasn't entirely sure what that meant, so for 

22 the person who made that request, if you could 

23 clarify to us more specifically what you were 
21

1 looking for, we can try and look into that one a 

2 little bit more.

3 We got a request for sort of what's the 

4 total enrollment after each GE year, over time, 

5 to sort of get a sense of what the effect of 

6 publishing GE rates was. We did not have time to 

7 get to that. If we have time, we will try and work 

8 on it. I can't make any promises, okay.

9 For those of you who maybe are not 

10 aware, we have been under a hiring freeze for more 

11 than a year, and we have lost a lot of really good 

12 people. So we are doing our due diligence and our 

13 best to get to the most information we can but we're 

14 very short-handed, okay. But that is one that 

15 we're going to try and work on.

16 But don't, no one get mad at me at 

17 Session 3 if we don't find a way to get it done, 

18 okay. All right. We'll do our best. The next 

19 one was sort of -- let me read it. Some of these 

20 are kind of wordy. Questions about what are debt 

21 to earnings, what are repayment rates and what are 

22 average total debt at repayment, so sort of at the 

23 point of completion.
22

1 We've given you what we can for debt 

2 to earnings, and we did repayment rate using 

3 Scorecard data. We could look at trying to get 

4 some debt values if that's of interest to sort of 

5 the larger group, and you can get back to me on 

6 that later. But again, a lot of it is sort of 

7 resource-based on our end of what we can get done 

8 in a short amount of time.

9 We got questions about loan status and 

10 defaults for every single institution and every 

11 single program from a negotiating -- this is talking 

12 about both negotiating rulemaking processes going 

13 on right now. We're not really seeing data at the 

14 institution level and certainly not at the specific 

15 program level at a specific institution. We're 

16 just not going to do that. 

17 Oh geez, now I lost my spot. Sorry. 

18 I still only got four hours of sleep last night.

19 I blame my son. Okay. We got a question about 

20 loan type and balance repayment rate and default 

21 rate, and that information was wanted again at the 

22 institution and program, specifically single data 

23 rows and we're not going to be giving out 
23

1 information at the institution level.

2 We got questions about the thresholds 

3 and whether they were appropriate or not. If the 

4 group wants to know more information about that, 

5 put another request in. This is one that I think 

6 we may have data in the GE data where we could look 

7 at that at the program level or the SIP level. 

8 We have not done it yet, okay.

9 And then we got a request and actually 

10 this is a good one, and I'll turn it back to you 

11 guys. We got a request for, can Ed share any 

12 credible estimates of administrative burden it has 

13 access to, especially information that separately 

14 estimates fixed costs of initially adapting IT 

15 systems to track information necessary for 

16 reporting, and the yearly cost of complying with 

17 reporting requirements once these systems are in 

18 place?

19 So we have to write a regulatory impact 

20 analysis, and we would love to have this 

21 information. So if you have pieces of this 

22 information, we welcome your submission of that 

23 data. We don't currently have anything right now, 
24

1 okay, because we don't keep -- we don't have any 

2 way to go and open your books and know that kind 

3 of stuff.

4 But if you are willing to share, we 

5 would love to have that information. 

6 MS. MILLER: Marc Jerome, did you want 

7 to provide some -- okay. 

8 MS. HAY: All right. And then the last 

9 one is a question about earnings parsed by a bunch 

10 of different variables, and because we only have 

11 earnings, we have mean earnings and median earnings 

12 at the program level, and not at the individual 

13 person level. So we're unable to parse by whether 

14 they completed or didn't complete, or whether they 

15 are under 24 or over 24 or those sorts of variables, 

16 because we just don't have the data at that level. 

17 Okay, all right.

18 MR. JEROME: So it's Marc Jerome. I 

19 have a question for Sarah and for my fellow 

20 negotiators. I have run data that I think would 

21 be very helpful to all of us on what it would look 

22 like at 8 percent and 12 percent, running at 6.8 

23 percent interest rate and 8 percent and 12 percent 
25

1 DE by sector, based on the Scorecard. 

2 My question is I've held it for two 

3 reasons. Number one, it has the identifiers in 

4 it, and number two, I didn't want to get involved 

5 with fighting over is the -- are the methodologies 

6 of a negotiator proper. I'm asking the group would 

7 it be helpful to submit it to the Department without 

8 identifiers, or is it just, you know, or is it better 

9 to ask the Department to run the same report?

10 No, I have it right here. I have the 

11 numbers, but I don't want to bog down the 

12 negotiation and the debate over whether the 

13 methodology was right.

14 MS. HAY: So how about this as a 

15 proposal: why don't you send it over to us, and 

16 we'll take some time and look at it and see if we 

17 can figure out what the differences are between 

18 the methods we used and the methods you used, and 

19 try and get back to you guys on that.

20 MR. JEROME: So just back on the 

21 institutional, on the issue of not naming 

22 institutions.

23 MS. HAY: Oh, you can give us our own 
26

1 identifiers. That would be fine. Sorry, I'm 

2 teasing you.

3 MR. JEROME: Okay. I'll speak to you 

4 offline about that.

5 MS. HAY: Sounds good, okay. Okay. 

6 Other questions? 

7 MS. MILLER: Daniel, and then Jennifer 

8 Blum.

9 MR. ELKINS: I wanted to find out if 

10 you were able to get the numbers on the charts. 

11 I believe I had asked for that yesterday but --

12 MS. HAY: Yes. So --

13 MR. ELKINS: If it's not possible, 

14 that's fine. I was just curious.

15 MS. HAY: Right. So we did it a little 

16 bit differently, and this is mostly just because 

17 we didn't have much time to do it. But we ended 

18 up counting failing institutions, okay. So if you 

19 go on the Scorecard paper to page four, if you look 

20 at the bachelor row, there were two institutions 

21 that failed.

22 At the associate row, there were nine 

23 institutions that failed, and in the certificate 
27

1 row -- all right. I'm making sure I'm reading it 

2 correctly upside down, there were 31 that failed. 

3 Yes. So that the bottom room, the certificate row. 

4 There were 31 that failed.

5 When you look at the public 

6 institutions, so I wrote it down here just by my 

7 little orange box, there was one public institution 

8 that failed. There were three private 

9 institutions that failed, and there were 38 

10 proprietary institutions that failed. I do want 

11 to remind you that the sort of the number of 

12 institutions that fall in each of these categories 

13 is different, okay.

14 And so the public being one and the 

15 private being three and the proprietary being 38 

16 -- I haven't computed those percentages, but I would 

17 assume that the proprietary is larger because 

18 there's a whole bunch more of them. So just keep 

19 that in mind as you're thinking about what these 

20 mean. We did not do sort of the cross-tabulation 

21 across the two, but if you have more questions, 

22 I am going to be available today.

23 MS. MILLER: Jennifer Blum.
28

1 MS. BLUM: It's not a question. I just 

2 wanted to, and sorry you and I spoke last night, 

3 and I did send Scott an additional request on --

4 MS. HAY: Thank you, okay.

5 MS. BLUM: So it's on your list now, 

6 but it is in Scott's email.

7 MS. HAY: Okay, thank you, and I will 

8 do my best to prioritize the requests that we get 

9 in. So feel free to reach out to us. 

10 MS. MILLER: Okay, so I see Laura and 

11 Kirsten, I think, is going to be the last word on 

12 -- Johnson, okay, the last word on this and then 

13 we'll move to Jordan's document.

14 MS. HAY: Right, good.

15 MS. MILLER: So Laura.

16 MS. METUNE: Thank you Sarah for your 

17 work on this, and just your openness to the 

18 challenges that the Department faces in trying to 

19 produce these reports. So I just want to say thank 

20 you, and I also just want to say to Marc, I saw 

21 the Wall Street Journal story. We've talked about 

22 this data that's available. Frankly, I promise 

23 not to debate the metrics of this table. But I 
29

1 would like to see it, so that instead of sort of 

2 just making these broad categorizations, we could 

3 actually know what you're looking at and that would 

4 inform us internally.

5 MR. JEROME: So I'm going to -- I'll 

6 send it to the Department, so the Department can 

7 confirm the percentages were right and the formula 

8 is right. I'll leave it to them to take out the 

9 identifiers. But again, you know, we just 

10 double-checked it last night and we're seeing many, 

11 many more institutions above 12 percent.

12 And for those of you in the room, I just 

13 invite you to go to the Scorecard and look at the 

14 data that's public-facing. It's hard to imagine 

15 institutions, there's plenty with 20,000 of 

16 earnings and $40,000 of debt are not over 12 

17 percent. And I especially ask the consumer groups 

18 about that.

19 MS. METUNE: No, no, Marc. You're 

20 totally doing exactly what I want to stop have 

21 happening. I wanted all of us to see the data.

22 MR. JEROME: Sorry.

23 MS. METUNE: Yeah, and how long will 
30

1 it take the Department maybe to do that for us, 

2 so we can all see what he's talking about?

3 MS. HAY: Sure. So I will do a methods 

4 comparison. I'm not opposed to you guys sending 

5 each other publicly available data. But the 

6 Department's not going to give out information at 

7 the institution level. Does that help clarify?

8 PARTICIPANT: Sure. So Marc, I mean 

9 it's fine and I'm happy to hear what the Department 

10 has to say about the methodology, but I mean you've 

11 talked about it. It's in the Wall Street Journal. 

12 I really think it should be out for everyone to 

13 see. If you need to take out the identifiers, 

14 that's fine. But you know, you've talked about 

15 it a lot so --

16 MS. MILLER: Okay. So Johnson, can 

17 you take us --

18 MR. TYLER: So I wanted to follow up 

19 on Daniel's question to you about the numbers on 

20 Exhibit 3 of the Scorecard data, where you said 

21 there were 38 proprietary schools, three private, 

22 one public. Is there some way to figure out how 

23 many students this is affecting, because when you 
31

1 did the gainful employment we actually see, you 

2 know, that there are 214,000 students who are in 

3 programs that are failing.

4 And I'm just trying to get a sense of 

5 the quantity here, too. I'm just not sure whether 

6 Exhibit 2 or something else might help me with that.

7 MS. HAY: So you ask a good question 

8 and it has to do with the amount of information 

9 we have relative to enrollment data. We have 

10 started collecting that in 2014. 

11 The data were not high quality in 2014 

12 and they're getting better. It's not an answer 

13 I could probably get you today, but if it's an 

14 important one for sort of making your decisions, 

15 follow up with an email so we don't forget about 

16 it, okay. 

17 MS. MILLER: Okay. Thank you, Sarah. 

18 So I want to move now to the document that Jordan 

19 passed out. Does anyone not have a copy of it at 

20 the table or an alternate? So one, two, three, 

21 four. 

22 Okay. I don't have any more. So we 

23 might have to share, and then we'll make sure that 
32

1 we'll get extras.

2 MS. BUCK: So Jordan, do you want to 

3 comment on the document first, because we're just 

4 going to have five more minutes on this before we 

5 move on.

6 MR. MATSUDAIRA: Yeah, and I don't want 

7 to take up people's time too much with this. I 

8 just wanted to try to illustrate one of the concerns 

9 that I had with looking at the Scorecard data as 

10 a way of inferring where or how many low-performing 

11 programs there are.

12 So I just pulled data from the gainful 

13 employment rates just for one institution that has 

14 a lot of programs, and just what I was trying to 

15 illustrate here is, you know, the dots 

16 are -- there's one dot per program that this one 

17 institution has. 

18 Overall the institution, if you average 

19 all the debt to earning rates kind of weighted by 

20 the enrollment in each one of the different 

21 programs, the institution overall has a debt to 

22 earnings rate of about six, six percent. And so 

23 if you're just looking at institution-level 
33

1 averages, this institution would look like, you 

2 know, it passing the annual debt to earnings rate 

3 overall.

4 But that would mask the fact that there 

5 are still about 30 of the 97 programs that are 

6 actually failing. So you know, I just wanted to 

7 make the simple point that in institutions where 

8 there are failing programs, there also tend to be 

9 a lot of programs that aren't failing. 

10 When we just look at institution-level 

11 data, we really mask all that variation below and 

12 miss like a lot of the programs that the rule is 

13 really trying to target. So I just wanted to 

14 illustrate that point if it wasn't clear yesterday.

15 MS. MILLER: Any questions? Todd.

16 MR. TODD JONES: I don't want go down 

17 this rabbit hole as well, but I mean one of the 

18 things that bothers me about going to programmatic 

19 data in this way is variability between years, and 

20 as all the variabilities we've talked about, for 

21 example, choices of career and debt as measured 

22 by cost of living expenses that are self-selected 

23 by individuals within it.
34

1 So as you know, one of the advantages 

2 of having larger data sets or groupings of data, 

3 regardless of the structure is you're able to take 

4 out some of those anomalies. To the extent that 

5 we can say this is either too many or too few if 

6 we're just taking a slice of one year, programs 

7 that should -- that are failing or not failing, 

8 you know, for me getting this specific doesn't 

9 necessarily indicate it's better or worse than the 

10 institutional level data we're talking about, for 

11 the reasons of data variability. I mean is that, 

12 is that a fair analysis?

13 MR. MATSUDAIRA: Yes, it is. I think 

14 it's absolutely true. I would think about the two 

15 things as slightly separate, although they're 

16 related in the way that you've described. So when 

17 you go to the program level, the fact that there 

18 are fewer people in each program, and because of 

19 that we might worry about, you know, it's a very 

20 noisy signal of whatever it is we're trying to 

21 measure. I absolutely agree with that.

22 But what I was trying to say is just 

23 if we're trying to learn about how a program-level 
35

1 rule would impact the sector or how many programs 

2 it would identify and where they would identify 

3 them, then looking at institution-level aggregates 

4 is misleading.

5 So on the second point, I think, you 

6 know, the kind of data that we've asked for in the 

7 past, which is to see year on year changes in these 

8 kinds of measures as a function of the size of 

9 programs which is, you know, again hopefully 

10 something that the Department will be able to 

11 provide, would inform that question.

12 I think it's solvable, you know, as 

13 we've talked about, by kind of rolling up cohorts 

14 to try to prevent the cohort size of any given 

15 program-level metric of being too small.

16 MS. MILLER: Jennifer and Daniel.

17 MS. BUCK: And then we will be moving 

18 on. The facilitators are going to be very 

19 hard-nosed today. So just, you can get mad at us 

20 but we are really going to try to keep on schedule. 

21

22 MS. BLUM: So Jordan, I actually find 

23 this slide interesting and helpful actually as it 
36

1 relates to the framework that we discussed, the 

2 potential framework that we discussed yesterday 

3 as it relates to, you know, having a first tier 

4 of the programmatic level.

5 But then I think actually Steve Finley, 

6 you know, I think brought back up that on the second 

7 tier, institutional could be interesting. I do 

8 want to take issue with one thing that you said. 

9 At a university level, if you had let's call it 

10 five programs that were low -- and I'm going to 

11 call it low-performing, because we haven't even 

12 discussed whether we're going back to fail or not.

13 So I'm going to call it low-performing, 

14 but if you have five programs that were 

15 low-performing at a university -- I want to 

16 recognize and we've talked a lot about whether the 

17 fact that low-performing might not be an indicator 

18 of poor quality. It might be because of the 

19 profession involved.

20 So I want to actually use an example. 

21 If you have a major university that offers, that 

22 has an architecture school, and then it also has 

23 a business school and whatever other money-making, 
37

1 IT, you know, bachelor's degrees, and we'll stick 

2 with undergrad. We'll even say bachelors in 

3 architecture, because actually that's a very good 

4 example.

5 Architects right out of school do not 

6 make a lot of money. So it is quite possible at 

7 the university level that you could have situation, 

8 right, and I want to point out that the masking 

9 that you talk about, actually what it's really 

10 revealing and will reveal, I think, in a lot of 

11 situations, and actually this across higher ed, 

12 is that universities in effect economically 

13 subsidize a college off of another college.

14 That's just the way they do -- and I'm 

15 going to call it business. That's how we do 

16 business. We don't ever want to get rid of an 

17 architecture school, but it's very hard to operate 

18 an architecture school by itself. So it's much 

19 easier to have it with a university structure with 

20 other colleges that might help subsidize it.

21 So I just want to like keep in mind real 

22 life of what a university structure looks like, 

23 and those decisions that universities make when 
38

1 they're deciding what programs to offer and what 

2 -- they might very well know that there might be 

3 an earnings issue on the back end. But it's still 

4 a very important field to teach in.

5 So I just want to -- so the 

6 institutional level piece is helpful on that 

7 overall analysis. I'm not saying it's a 

8 replacement; I'm just saying it's helpful to get 

9 to the understanding of what it means to be 

10 low-performing. So thank you, because I think this 

11 is a helpful piece of paper.

12 MS. MILLER: Thank you, Jennifer, and 

13 finally Daniel.

14 MR. ELKINS: This question would be 

15 addressed to either Jordan or potentially the Texas 

16 AG, or anyone else around the table that could 

17 possibly answer this question. We've been trying 

18 to get an understanding of data at the programmatic 

19 level for public and private institutions: is it 

20 available.

21 I was curious if anyone can confirm or 

22 deny. I've been told that the state of Texas 

23 collects this data, and I haven't been able to find 
39

1 it. But if we're looking for a true apples to 

2 apples comparison, it would be great if we could 

3 look at that data and find out if the private and 

4 public universities were doing well or not.

5 MS. BUCK: Let's just have one answer 

6 to that question and then other people maybe can 

7 talk to you afterwards with answers. Would that 

8 be okay?

9 MS. HAY: So we'll go with Ryan, since 

10 it looks like you're AG.

11 MR. FISHER: Yeah, this is Ryan. I 

12 just want to say we do collect that data. We have 

13 for several years. We do it for transparency, and, 

14 you know, I think everybody agrees that Texas has 

15 great schools, especially when compared to 

16 Oklahoma.

17 (Laughter.) 

18 MR. FISHER: But you know, some of our 

19 schools do not pass the DE metrics, some of the 

20 programs. I don't think that says they're bad 

21 programs. I think it speaks to the efficacy of 

22 using that as a sole indicator.

23 (Off-microphone comments.)
40

1 MR. FISHER: Yeah, there's a -- I can 

2 send you guys. It's a study that the Higher 

3 Education Coordinating Board puts out.

4 MS. BUCK: So if there's other 

5 information for Daniel on this topic, please do 

6 let him know. Okay, thank you. Thank you for that 

7 discussion, those questions. I think what we want 

8 to do now is shift to Issue Number 5. Tony, did 

9 you have a question about that?

10 MR. MIRANDO: Yeah. So we're not 

11 going to finish number four?

12 MS. BUCK: We will come back to number 

13 four at the end, but we do need to keep on going. 

14 Otherwise, we would be discussing Issue 4, I mean, 

15 conceivably all day. But we will come back. We 

16 will come back at the end.

17 MR. MARTIN: Yeah. Re Issue 4, I know 

18 that there's still things people want to discuss 

19 about that. But if -- I don't want to finish the 

20 day just having done Issue 4 and nothing else. 

21 So we'll try to get back to that. That might give 

22 everybody incentive to move through Issues 5, 6, 

23 7 and 8 in an efficacious manner.
41

1 So this is Issue Paper 5, Alternative 

2 Earnings Appeals. I also want to point out that 

3 I'm joined by our counsel for this morning is Brian 

4 Siegel. Steve Finley is not able to be with us 

5 this morning. He'll be back this afternoon. So 

6 I want to thank Mr. Siegel for joining us.

7 Issue Paper 5 is DE Alternate Earnings 

8 Appeals. I'll read this and then I have some 

9 comments about it. We proposed to change the 

10 minimum threshold from 30 to 10 students with 

11 respect to the number of students. SSA data is 

12 needed for the Secretary to calculate DE rates.

13 We propose to eliminate alternate 

14 earnings appeals in favor of appending 

15 notification language found in 668.401(b)(1), to 

16 include a disclaimer informing potential students 

17 that the DE rates measure could be affected if a 

18 significant number of program graduates 

19 under-reported earnings such as tip income, or were 

20 self-employed, and had business expenses that 

21 reduced the earnings being reported.

22 What you see here, and you know, we can 

23 -- the first part of it we don't have very many 
42

1 changes at all, just again striking GE for 

2 educational program, and then on page three talking 

3 the SSA earnings, the changing from 30 to 10. But 

4 the big part of this obviously is, if you look at, 

5 and again after admonishing all of you to number 

6 your pages, what didn't I do, number my pages.

7 On page five, where you see 668.406 has 

8 been reserved, and that reflects what we said in 

9 the -- what I just said in the comments, that we 

10 are -- we had proposed striking appeals language 

11 in favor of the appended notification language.

12 However, I think that, given what we 

13 said yesterday, where I think we got to yesterday 

14 with -- what should I say, not consensus obviously 

15 but some general agreement in moving in the 

16 direction of what's called an administrative 

17 sanction, where we would look at debt to earnings 

18 and then repayment rights. So one thing that does 

19 is when we did these, this paper here, it was based 

20 on the -- predicated on the assumption that there 

21 would be no -- that we would not have any -- there 

22 would be no sanctions. There would be a 

23 disclosure-only environment.
43

1 Obviously, if you're adding back in the 

2 possibility of sanctions and you're looking at debt 

3 to earnings -- again, that's going to be a measure 

4 that could conceivably be used to move toward a 

5 sanction -- then I think it puts, it puts that back 

6 into play, and to a greater extent than it would 

7 have been if it had just been disclosures.

8 So as you think about this, I'd like 

9 you to think about it, especially those 

10 institutions with programs that you know have 

11 graduates whose earnings are comprised to a great 

12 extent of tips or gratuities, unreported income, 

13 how you feel about -- how you would feel about there 

14 being a debt to earnings, a debt to earnings 

15 measure, but there being no appeals for that.

16 Because remember that that figure would 

17 be published, and even if -- so say you didn't --

18 a program didn't meet debt to earnings. We'll say 

19 failed, even though we don't, going to use for that. 

20 But let's say failed, and you moved on to a 

21 repayment rate and the program passed that, so 

22 therefore there was no problem with the program.

23 Would those institutions still want the 
44

1 opportunity to appeal the way we currently have 

2 the appeals in place, to appeal the SSA earnings 

3 using alternative earnings based on a survey? You 

4 might recall that in the first issue paper we did 

5 going back to December, we had proposed -- at that 

6 point we had proposed retaining the, I think, the 

7 appeals.

8 We'd come up with an idea of -- because 

9 let's be honest, and I think anybody around here 

10 who did any of the appeals would agree with me, 

11 that was not an easy process. It was not clean, 

12 it was expensive, it was convoluted and no matter 

13 what we did with these rules, I think we want to 

14 move away from that.

15 So we had proposed the idea of, rather 

16 than us putting out the much loved Regis survey 

17 tool, that we would -- we would allow -- we would 

18 have institutions conduct the survey and then, 

19 rather than under the current rule, send it to us 

20 and we would evaluate the survey, we would have 

21 institutions conduct the survey, come up with the 

22 results. The survey would have to be -- still have 

23 to be attested to by -- in your annual audit. So 
45

1 there's no way to get away from the attestation. 

2 The way I look at our rules, and Brian can correct 

3 me if I'm wrong or maybe our IG people.

4 But whenever we're having -- whenever 

5 we're having an auditor look at something you've 

6 done to confirm that you complied with a federal 

7 rule, it's got to be at the attestation level. 

8 So it can't just be a review. It's got to be an 

9 attestation. So there would be no way around that. 

10 You'd have to have an attestation of your survey, 

11 but it wouldn't be sent to us for review.

12 We would in a sense be accepting that 

13 it was done correctly, and then once it was --

14 once the non-federal auditor had looked at it as 

15 part of your annual audit, then it would 

16 become -- then it would be final. So that's just 

17 something we proposed before. 

18 I just want everybody to keep that kind 

19 of in mind, that system for doing it. Should you 

20 want to insist that we go back to having appeals 

21 for Social Security earnings, or would you be --

22 since we're talking about this system yesterday, 

23 where if you didn't meet the debt to earnings 
46

1 threshold and then the repayment rate was also not 

2 good enough to make you pass, but we went into that 

3 second look the Department would take, you know, 

4 second tier, thank you, based on other elements. 

5 Would that be adequate for an appeal? 

6 So I just throw -- I'm not saying I have an opinion 

7 or we have a position. I just want to throw all 

8 those things out there and then hear what you have 

9 to say about that. So I'll shut up and let you 

10 do that.

11 MS. MILLER: Okay, Jennifer Blum.

12 MS. BLUM: So I thought a lot about this 

13 last night too, and actually on that second piece, 

14 Greg, that you just said, that's what I was going 

15 to propose, which by the way, without going into 

16 too much detail on Issue 5 now, I would actually 

17 suggest that Issue 5 and Issue 4 are pretty closely 

18 linked.

19 So I'm not sure how -- it's a little 

20 heard to do that. So what I would propose or what 

21 I would have thought of last night is that the 

22 appeals, and we can still -- I think we should still

23 have the conversation about earnings appeals, 
47

1 because we actually had some success with it in 

2 the last rulemaking.

3 So I don't want to take it entirely off 

4 the table, but I do think of the second tier 

5 metrics as, in effect, it's an appeal. So when 

6 you think about what we're doing in terms of the 

7 issue papers and the regulatory framework, I sort 

8 of envision a section of the regs which is really 

9 in Issue Paper 4, of the debt to earnings and the 

10 loan repayment piece, and then Issue Paper 5 becomes 

11 the second tier review, which is really an appeal.

12 And then that's where we would outline 

13 what those possible other metrics for 

14 consideration, you know, by the Department would 

15 be. I would also encourage, and I know Chris 

16 brought this up, that in this same section new Issue 

17 Paper 5 language, we put some time frames and due 

18 process around it.

19 So I would also add that in this, 

20 because we talked about that yesterday and this 

21 is where I would add that piece as well. So I didn't 

22 write anything up, but mentally in my mind, I was 

23 thinking about the next issue paper, and that's 
48

1 how I would approach this. 

2 I would just say that if others agree 

3 with that, then I would propose, which I know might 

4 screw things up for the facilitators, I think it 

5 is really difficult to then get into a detailed 

6 discussion about what those metrics are, without 

7 first establishing a little bit what the debt to 

8 earnings and LRRs are.

9 And so especially if we do an 

10 institutional DTE. So I would -- in thinking about 

11 if we agree on that framework, I would then propose 

12 that the continued conversation of Issue 4 and Issue 

13 5 are a little bit blended. So I would say that 

14 we jump to 6, 7 and 8 and come back to 4 and 5, 

15 because I think that they kind of live together.

16 MS. MILLER: Sandy.

17 MS. SARGE: This is Sandy. I had a 

18 question on -- I had a question and then a comment. 

19 On page four, at the bottom of page four, you have 

20 underlined based on the program information 

21 provided to SSA. I'm not, I don't think I know 

22 what that means. Could you elaborate on that, and 

23 then I have a comment after that.
49

1 MR. MARTIN: Okay. This has to do with 

2 -- this is the challenge. This is just challenging 

3 the accuracy of the loan debt information, right. 

4 The Secretary used to calculate the median loan 

5 debt. The same challenge. The Secretary does not 

6 consider any objection to the mean or median annual 

7 earnings that SSA provides the Secretary.

8 Just clarifying, based on the program 

9 information provided, if it's based on the program 

10 information that we provided to SSA. So it's just 

11 saying that we're not --

12 MS. SARGE: What program information 

13 is provided to SSA, I guess is what I'm asking, 

14 because isn't it -- what's provided are the numbers, 

15 the Social Security numbers in the folks in the 

16 cohort and then here's this cohort is one, give 

17 us that. Do they get any program information at 

18 SSA?

19 MR. MARTIN: No, they get the list that 

20 we provide -- that we provide to them.

21 MS. SARGE: Right, okay.

22 MR. MARTIN: So it's just clarifying, 

23 I think it's a clarifying statement there. I can 
50

1 -- you know, I'll check with my people just to make 

2 certain exactly why we clarified that. 

3 MS. SARGE: Okay.

4 MR. MARTIN: So I want to make that 

5 clear.

6 MS. SARGE: And then with regard to the 

7 -- I appreciate -- I really do appreciate the effort 

8 that the Department made in the qualifying 

9 statement you added regarding tips and 

10 self-employment. 

11 However, I think we miss a point about 

12 Social Security data that I still feel very strongly 

13 about, which is that we have no guarantee that it 

14 represents actual 12 months' worth of work, and 

15 those -- and a student or a borrower choosing, or 

16 for whatever reason may be not a choice, who could 

17 not work or did not work for 12 months, make the 

18 denominator and the numerator two different units 

19 of measure potentially.

20 So I just want to throw that back out 

21 there, that we don't lose sight of it, that the 

22 qualification is not just about under-reporting 

23 tips and stuff. There may be legitimate reasons 
51

1 why people don't work for a whole year in the periods 

2 in which we are measuring. And then is that --

3 so if you're in that situation, does the DE ratio 

4 really tell you whether or not that person has the 

5 ability to repay that debt if they're not working 

6 for the whole year? So that's another big issue 

7 on the denominator. Thank you.

8 Oh, and I agree with Jennifer's points 

9 completely.

10 MS. MILLER: Okay. So we're going to 

11 go through the queue and then we'll go back to the 

12 temperature check on Jennifer's proposal. So 

13 Tony.

14 MR. MIRANDO: Tony Mirando, thank you. 

15 So based on some of what my colleagues mentioned 

16 today and over the week and even some of the 

17 statements I have made, what I'm concerned about 

18 and I'm not an attorney, but I would think that 

19 even without -- even with this disclosure, that 

20 this would potentially bring up a due process issue, 

21 that if a school is being mandated to put something 

22 as a disclosure that's insinuating or referencing 

23 that they're failing something, and the data that's 
52

1 used in order to determine that is flawed data, 

2 couldn't that potentially be an issue for whatever 

3 the reason may be.

4 Even with a disclosure, one could still 

5 say that that could be a detrimental disclosure 

6 that isn't, you know, for lack of a better word, 

7 fair to the institution because their program is 

8 a good program. And whether or not we come up with 

9 a second tier of metrics that could potentially 

10 get them out of having to have that disclosure, 

11 one could say well, you know, what happens if I 

12 don't meet those other metrics compared to another 

13 institution who may not also meet that metric. 

14 But because they have programs that are all W-2 

15 programs, they're being more fairly measured when 

16 you look at oranges to oranges or apples to apples 

17 on this.

18 So that's one of my concerns that I 

19 think we should at least consider here. 

20 MS. MILLER: Thank you. Johnson.

21 MR. TYLER: Thank you, Johnson Tyler. 

22 I have a clarifying question really is, if you 

23 don't -- under the matrix we created yesterday, 
53

1 there was a two-step thing. There was debt to 

2 earnings and then repayment rate. If you failed 

3 the debt to earnings but passed repayment rate, 

4 there would be no consequences. There's no 

5 publication or anything like that, is that right?

6 MR. MARTIN: Yeah. I think that's, 

7 that's on the table. I mean you know, certainly 

8 we would have the -- we would have the debt to 

9 earnings rates. We publish those now. If it would 

10 be -- I think it certainly would -- it would probably 

11 make a difference to schools if we published those 

12 rates irrespective of whether somebody, quote, 

13 fails ultimately or, you know, I'll say that, or 

14 gets to the point where there could be program 

15 sanctions. Let's put it that way.

16 So let's just say that the -- because 

17 the debt to earnings could still be failed. That 

18 portion could still be failed, but then they pass 

19 repayment rates, fine. But the debt to earnings 

20 is still what it is and would be published. 

21 So that's one of the questions I have, 

22 how the, you know, potentially how would a school 

23 feel about a program where we're not saying we have 
54

1 any problem with the program because of the way 

2 we're looking at the rates, but that rate would 

3 still -- would still be out there and I guess 

4 somebody might think it could be perceived as 

5 pejorative therefore, and say well but if I don't 

6 feel that those earnings used to determine that 

7 DE rate represent the true earnings of my students. 

8 Would I still want the right, even though it's 

9 not going to affect, it's not going to have any 

10 programmatic effect, would I still want the right 

11 to appeal that, if for no other reason than to have 

12 that -- to have that debt to earnings figure 

13 changed. That's the question.

14 MR. TYLER: If I can just follow up, 

15 I think maybe one of the follow-up questions to 

16 think about is if someone were to appeal that and 

17 you're using Social Security data, and they're 

18 saying well look at all the licensing, look at all 

19 the whatever, all this other criteria, what gets 

20 published after that appeal?

21 Is it going to be left as N/A because 

22 no one can agree on what it is? Because that's, 

23 that could be equally pejorative and perhaps maybe, 
55

1 you know, this is not something that's worth having 

2 that sort of appeal rate on. Maybe it should go 

3 through the other -- there has to be some 

4 consequence other than disclosure.

5 Disclosure is a different right than 

6 taking away your Title IV money. It's just a 

7 condition perhaps.

8 MR. MARTIN: I think that's what we're 

9 here to discuss. Given the framework we came up 

10 with yesterday, is it necessary -- to what extent 

11 do any of you here feel it's necessary to put that 

12 language back in, allowing for an appeal of an 

13 alternate earnings appeal, to say that you know, 

14 that the Social Security earnings are not 

15 reflective of the students in this program's 

16 earnings. Therefore, I want to do the appeal, put 

17 the appeal back in.

18 Understanding that, you know, if you 

19 go back to the appeal, there's really no way around 

20 doing the survey. All the statistical things we 

21 talked about yesterday would be applicable, and 

22 for those institutions who have done them, there 

23 is some cost involved in the attestation and getting 
56

1 a CPA to attest.

2 So all those things are there. So I 

3 don't think anybody would want to do it frivolously. 

4 But do schools still want the option? That's the 

5 question we're asking.

6 MS. MILLER: Okay. Tony.

7 MR. MIRANDO: Yeah. So I can see, I 

8 can see both sides of this being an issue, and then 

9 just again trying to neutralize real concerns, real 

10 problems. This is obviously not for the bad 

11 apples. I mean obviously they're never going to 

12 be able to provide adequate information to the 

13 Department that's going to make them feel, okay 

14 we get it. I'm talking about real programs that 

15 are good and yet because of the disclosure piece 

16 here, that their graduates may be self-employed 

17 or they're getting tips or whatever, part-time, 

18 whatever the issue is.

19 Can we, you know, at least put on the 

20 table that the disclosure piece would have a 

21 non-detrimental, you know, verbiage, you know. 

22 Maybe instead of saying failing, which again has 

23 a negative connotation to it, we could say, you 
57

1 know, something like this metrics could not be 

2 determined for whatever this reason.

3 So it has a neutral effect, not 

4 necessarily a negative effect, not necessarily 

5 getting a pat on the back that you're meeting it, 

6 but some neutral effect which would limit or 

7 minimize a negative connotation to an institution 

8 that's doing an amazing job.

9 MS. MILLER: Laura?

10 MS. METUNE: I think I need -- I have 

11 a different comment, but I wanted to ask about this. 

12 So what you're saying Tony is if a school fails 

13 debt to earnings potentially because they have this 

14 high, students have high level of tip income but 

15 they've passed the other metric, they should have 

16 a neutral disclosure because we're just going to 

17 believe that the students have the tip earnings 

18 or --

19 MR. MIRANDO: No, I wasn't even saying 

20 that. I'm saying let's make believe it's me. I 

21 have a good school. I'm doing a great job. 

22 Students are coming in and getting them educated 

23 and getting them a license to go prepare them for 
58

1 gainful employment, which was what my job was. 

2 But because of the type of work that they do, their 

3 earnings, you can't control what they do, it's not 

4 necessarily a clear reflection of what they're 

5 actually making.

6 The Department comes up with this 

7 disclosure I've got to put on my website, which 

8 has a negative connotation to it. Regardless of 

9 whether or not, and this is just me personally. 

10 Regardless of whether or not I may meet one of these 

11 other pieces to the puzzle, just again from my point 

12 of view why should that institution have that 

13 negative stripe against them?

14 And so is there a way that we could then 

15 say well based on the fact that you're in one of 

16 those zip codes that a majority of your individuals 

17 are in this group? Everybody would come to a 

18 conclusion that their -- what they're reporting 

19 has a potential not to be accurate. And again, 

20 I'm being very careful how I say that, you know, 

21 because I don't want to make any 

22 mischaracterizations of people.

23 MS. METUNE: Right.
59

1 MR. MIRANDO: But these are real 

2 issues.

3 MS. METUNE: I hear what you're saying, 

4 and I totally understand the institutional 

5 perspective on that. I also though think as a 

6 taxpayer I might want to know if an institution 

7 or a program is leading to a whole group of people 

8 not correctly filing taxes. As a student I might 

9 want to know that this might lead to a job where 

10 I don't file my taxes legally.

11 So I'm just, you know. But my actual 

12 comment was about --

13 MR. MIRANDO: Oh that one, okay.

14 MS. METUNE: -- was about this -- it's 

15 a little bit hard to comment on this piece with 

16 so many other things left unresolved. But one of 

17 the things that continues to come up from the 

18 Department is this issue around capacity and the 

19 Department's ability to conduct all of these 

20 activities. The more levels we make in this 

21 process, it seems like the harder it's going to 

22 be for the Department to actually do this.

23 And so I just, I'm not sure if you've 
60

1 thought through a little bit, like what kind of 

2 a process would be something the Department could 

3 actually accomplish, and maybe it's just a comment 

4 to say I hope that when we come back for the third 

5 week that's reflected in what we look at.

6 MR. MARTIN: A couple of things here. 

7 I want to clarify something about -- it's true 

8 that what we used to call warnings now are called 

9 notifications. It's kind of a disclosure but it's 

10 kind of different, right? You never disclose in 

11 your disclosure template we failed, you know. 

12 That's not what's on the --

13 Remember that currently if you are --

14 what's the warning? The warning, which you have 

15 to include on the disclosure template the way it 

16 is now, the way it's worked, but it's a warning 

17 that the program is in danger of all those things. 

18 So think about this. If you pass, you didn't pass 

19 the DE measure but you did pass the repayment rate, 

20 if that's where we go.

21 So then you wouldn't be posting a 

22 warning because your program would not be in that 

23 level, right? And then turn around to the 
61

1 disclosures, you would be disclosing median 

2 earnings, and that might be something you want, 

3 you know. There would be no context around that 

4 in median earnings, but you might want to say well 

5 I don't, these don't reflect what I feel. So that 

6 would be maybe why you want to appeal.

7 Now going to your question, what has 

8 the Department done about our capacity? Well, we 

9 are reviewing the current -- currently reviewing 

10 appeals. What we kind of had thought of was taking 

11 the Department out of the business of reviewing 

12 all these appeals. That's what I talked about 

13 before.

14 So let's just say, Tony wants to say 

15 well, you know, these earnings are not reflective 

16 of my student earnings. I want to do the survey, 

17 and I want to survey students and show that the 

18 earnings are different. So then conduct that 

19 survey, right. He has to conduct that survey 

20 according to maybe the standards we put out or 

21 generally recognized statistical standards for 

22 conducting surveys.

23 Then that would have to be attested to 
62

1 as part of his non-federal audit. So the auditor 

2 would be required to look at that and attest to 

3 it. He would be required to pay for that, and then 

4 we could look at what the Department would do in 

5 response to that survey. But that's kind of what 

6 we -- where we saw that going if we were going to 

7 retain the appeal.

8 MS. MILLER: Jeff.

9 MR. ARTHUR: Yeah. I think this 

10 highlights the importance of a really sound metric 

11 base for this, that if we use really sound logic 

12 to set the metrics, debt to earnings, repayment 

13 rate, whatever by program across higher ed, that 

14 this will really minimize then. If we're truly 

15 identifying outliers, we will minimize the need 

16 to have this burdensome appeals process.

17 Otherwise, if we don't do that, then 

18 you're going to have certain programs, certain --

19 if we get to the graduate level there are certain 

20 programs where people earn very little at the start. 

21 We're going to have programs where half the 

22 institutions or many institutions are going to need 

23 to initiate appeals if we use a one-size-fits-all.
63

1 MS. MILLER: Daniel.

2 MR. ELKINS: So a couple of things. 

3 I think that transparency of labeling, you know, 

4 high debt, low debt, high earnings, low earnings 

5 is not necessarily pejorative, although people 

6 might think that it is. I think it's just honest, 

7 and I think that students and taxpayers and people 

8 have a right to know. 

9 That being said, within the two-step 

10 process we're talking about or whether we call that 

11 an appeals or not, I do think that there's a lot 

12 of people here who would also say that this one 

13 size metrics to fit all, it doesn't allow for the 

14 idea of an exception to policy, if you will, so 

15 compelling needs.

16 For example, if this were to be applied 

17 to public institutions with, you know, teaching 

18 programs, that it might be honest to say that at 

19 first it's going to be a, you know, high debt low 

20 earnings. But there might be a compelling need 

21 in the state, let's say the state needs teachers. 

22 So for that program to then have sanctions, which 

23 is I think what we would like if these programs 
64

1 don't meet that metrics, they fail the two things. 

2 It goes to an appeal.

3 An institution should have the right 

4 to fight to say that those metrics are incorrect. 

5 But in some cases they will be correct. But that 

6 doesn't mean that there should be sanctions. So 

7 there should still be a way to have some sort of 

8 exception to policy on a case-by-case basis from 

9 the Department.

10 MS. MILLER: Christopher Gannon.

11 MR. GANNON: I have some issues with 

12 talking about yesterday's discussion as reaching 

13 consensus or agreement. I think that we heard some 

14 ideas and took some temperature checks on those 

15 ideas, but we did not reach any kind of agreement 

16 or consensus on those ideas. 

17 MR. MARTIN: This is Greg. I didn't 

18 mean to characterize that as consensus. I just 

19 was trying to find the words, some sense of where 

20 we might go, because that -- is that acceptable 

21 to everybody? To the extent that I intimated 

22 consensus, I heartily apologize for that. I didn't 

23 mean to do so.
65

1 MS. MILLER: Thank you. Jordan.

2 MR. MATSUDAIRA: I think my comments 

3 echo what Laura was saying about just crafting a 

4 rule that the Department can actually administer 

5 and, you know, one of the reasons that I thought 

6 that having this two part metric for establishing 

7 which programs would be, you know, potentially 

8 triggered into sanctions or whatever the next step 

9 would be, of having both debt to earnings and 

10 repayment rate is that in a sense the repayment 

11 rate would be kind of a presumptive appeal if you 

12 want to put it that way.

13 But you know, to the extent that debt 

14 to earnings doesn't measure your sector well, then 

15 repayment rate is the kind of backstop against those 

16 sorts of problems. So I guess, you know, I was 

17 hoping that having a repayment rate as that kind 

18 of backstop might avoid some of the complications 

19 of this kind of appeals process that we're talking 

20 about now and doing all the kind of earnings surveys 

21 and that sort of thing.

22 So I guess I'd favor an appeals process 

23 that was a little bit more limited to kind of 
66

1 technical issues that might make both of those 

2 metrics problematic.

3 MS. MILLER: Thank you. So we have 

4 Mark McKenzie, Christina, David, Steve Chema, Jen 

5 Diamond and then Neal, and then I would like to 

6 get back to the proposal that Jennifer Blum put 

7 up. So let's go with Mark McKenzie.

8 MR. McKENZIE: Great. This is Mark 

9 McKenzie. I'll try and make it short. Concern 

10 I guess. I'd just bring it back to using any metric 

11 that's not an accurate measure. So the debt to 

12 earnings, what I understand I think from Sarah the 

13 other day is that by moving from 30 to 10 is going 

14 to significantly increase the potential negative 

15 impact to schools, and there's not a statistical 

16 reliable way to measure that.

17 So when you increase your -- the number 

18 of schools that may be impacted by this, what's 

19 that actually going to -- what's that number going 

20 to look like? So the risk is that you're actually 

21 putting out false information about good schools, 

22 which damages not only schools but the students 

23 at those schools.
67

1 So it's a real challenge and clearly 

2 you want to reduce burden, but you also want to 

3 make sure you're using accurate information.

4 The other thing that I kind of picked 

5 up on, I think Sandy said this earlier, is that 

6 the disclaimer starts out almost with the negative 

7 by implicating that in certain areas, program 

8 graduates are under-reporting earnings. You also 

9 have probably as much impact by the self, those 

10 that choose to be self-employed. But those that 

11 are making choices, either personal choices by 

12 family, circumstance or to not work full-time.

13 So I think the disclaimer language 

14 would need to be worked on a little bit if there's 

15 going to be disclaimer language that intimates that 

16 there's also personal choice that could be 

17 impacting this. Clearly, we don't want to -- we 

18 don't want to hide the fact that there are 

19 under-performing institutions that this is a 

20 problem. That's not it at all, but we also don't 

21 want to penalize, you know, create a penalty where 

22 we can avoid it.

23 So you know, when it exists, I think 
68

1 what Chris was saying the other day of actually 

2 having an institution come back. It's like okay, 

3 if you don't meet these metrics, you have to 

4 actually explain in the disclosure how you, you 

5 know, how your students are dealing with that. 

6 I don't know whether that's through the appeal 

7 process or not. So I'll stop there.

8 MS. MILLER: Thank you. Greg, did you 

9 want to respond to that? It's okay if you don't.

10 MR. MARTIN: No. The point's taken. 

11 I don't think there's anything I need to say about 

12 that.

13 MS. MILLER: Okay. Christina, then 

14 David.

15 MR. MARTIN: Sorry I had my thing up. 

16 That's why you asked me that question. I'm an 

17 idiot. Thank you.

18 MS. MILLER: Thank you.

19 MS. WHITFIELD: This is Christina. 

20 This question may be premature, but I'm wondering 

21 Greg if you can give us a sense of what proportion 

22 of the failing programs of those that were eligible 

23 to conduct the survey did, and how many of them 
69

1 were successful? 

2 MR. MARTIN: We have that information, 

3 but while I can't tell you how many were successful 

4 because we haven't adjudicated the appeals yet, 

5 under the current -- under the current system, the 

6 appeals come to us and they have to be -- it has 

7 to be an attestation from the CPA. We're in the 

8 process of adjudicating them now.

9 I cannot tell you what the rate of 

10 approvals will be. At the break, I can check with 

11 some of my people from FSA, my colleagues there. 

12 Cynthia can tell me probably how many -- remind 

13 me of how many appeals we've had or what those 

14 percentages are. So I think I can get that 

15 information. What I cannot give you is what the 

16 rate of approvals or denials are. 

17 MS. WHITFIELD: I just think that would 

18 help us. If we have that information, it would 

19 be helpful to sort of put a scope or scale on how 

20 many of these -- to what extent is this really the 

21 case, that they're able to document this tip income.

22 MR. MARTIN: Right. Well again, we 

23 don't know how many formal -- it will be awhile 
70

1 before we have that, you know. It's not going to 

2 happen either during this session I can tell you, 

3 or during the next. 

4 PARTICIPANT: Do you have an 

5 expectation on when it would be completed?

6 MR. MARTIN: I hesitate to give a time 

7 frame for that. Part of the problem with that is 

8 that we in some cases can just say that this is 

9 good and we can prove it. In many cases where we 

10 have some issues, it's we need more information 

11 from the schools. We have to go back and sort of 

12 get more from them. So that process could take 

13 longer than you might think.

14 I don't know any other way of getting 

15 that. I mean you could ask people who have 

16 submitted them anecdotally what they found in their 

17 surveys, but that would just be coming from them, 

18 and we would not have approved those yet.

19 MS. MILLER: David.

20 MR. SILVERMAN: I have a question 

21 regarding the earnings. I think we offended some 

22 people last time by saying people are fudging their 

23 taxes. The earnings is what's reported by the 
71

1 employers to SSA; correct? 

2 MR. MARTIN: No, not always. The 

3 earnings would -- it goes on IRS data from what 

4 people report, what people report to the IRS. So 

5 if -- so if an individual is not reporting, you 

6 know, a significant amount of income that is tips, 

7 then those figures would obviously not reflect the 

8 total amount of earnings somebody had.

9 It's true that they're technically 

10 violating the law by not reporting those earnings, 

11 but then it's also true that their earnings as 

12 reported don't reflect the total amount that they 

13 made. 

14 MR. SILVERMAN: So if you made $500 

15 from some employer as a 1099 and they didn't report 

16 it to Social Security, but you reported on -- but 

17 they did report that $500 on their tax return, would 

18 that be counted?

19 MR. MARTIN: I would have to check. 

20 I believe so. I think it's based upon what 

21 individuals reported. Obviously if you 1099 

22 somebody, you know, the IRS wants that to check 

23 to see that what you -- what you have indicated 
72

1 on the tax returns matches what, you know, what 

2 you were paid.

3 I don't know all the IRS protocols for 

4 all that, but I am fairly sure that what we're 

5 looking at here has to do with what people reported 

6 on their income taxes.

7 MR. SILVERMAN: Under 600, you're not 

8 required to report for 1099s.

9 MR. MARTIN: Yeah.

10 MR. SILVERMAN: The employer's not, 

11 the employer of the employee --

12 MR. MARTIN: I think that's correct, 

13 but I think all this is predicated on -- is 

14 predicated on what people report on their income 

15 taxes.

16 MS. MILLER: Okay, so Jordan did you 

17 want to help out with this?

18 MR. MATSUDAIRA: Yeah, I just want to 

19 clarify. I imagine somebody can confirm, but Greg 

20 I don't think that's right. I think the earnings 

21 that are on both gainful employment and the College 

22 Scorecard are coming from W-2 reports from the 

23 employer. So they also add in Schedule SE 
73

1 self-employment earnings which are self-reported 

2 to the extent --

3 (Simultaneous speaking.)

4 MR. MARTIN: Okay. Well I'll make 

5 sure. I'll make sure I get that correct.

6 MS. MILLER: Tony, one last point on 

7 this?

8 MR. MIRANDO: Yeah. Just again for 

9 somebody who's been in private practice, I can say 

10 when you're starting up a business which again is 

11 reflected here, and again in the schools that we 

12 predominantly accredit, a good majority of the 

13 people are kind of going out on their own, and for 

14 your first year or two, you're buying all kinds 

15 of equipment. You're buying, you know, to get 

16 yourself into business can substantially reduce 

17 your net income reported to the government.

18 And so again, it's not an accurate 

19 reflection of how much income they actually earned, 

20 but it more reflects them being an entrepreneur 

21 and wanting to go into their own business. 

22 And as anybody who's started their own 

23 business, that may not be pretty high for the first 
74

1 couple of years, as you're kind of establishing 

2 your own practice. So again, it's important to 

3 understand those pieces to the puzzle.

4 MS. MILLER: Thank you, Tony. Okay, 

5 so David wasn't quite done, and then we'll go to 

6 Greg.

7 MR. SILVERMAN: So Tony, so the -- if 

8 you had a Schedule C, which is self-employed income, 

9 the income that is getting reported to SSA for this 

10 is after expenses?

11 MR. MIRANDO: Again, if you're --

12 again, I'm not an accountant here, but I would 

13 assume the number that's being reported is your 

14 income, is the end -- the end number.

15 MR. SILVERMAN: Does the Department 

16 know that? It really should be gross income, 

17 because someone on a W-2 is all on gross income. 

18 They don't get any of their expenses. But if 

19 you're Schedule C, you made $1,000 and you have 

20 500 of --

21 (Simultaneous speaking.)

22 MR. SILVERMAN: Then they'd only be 

23 showing 500.
75

1 MR. MIRANDO: I'm assuming you're 

2 paying taxes, and again I'm not --

3 MR. SILVERMAN: You're paying taxes on 

4 the net, correct.

5 MR. MIRANDO: You're paying -- that's 

6 exactly right. 

7 MR. SILVERMAN: But what's being 

8 counted for -- I'm asking, I'm sorry. I'm not 

9 asking you. I'm asking the Department. So if 

10 you've got a 1099 for $100,000 but you wrote off 

11 50, is the 100 being counted or is the 50?

12 MR. MARTIN: I was -- we're using --

13 it uses both W-2s and self-reported income. So --

14 MR. SILVERMAN: But is it gross or is 

15 it net, because people are writing off cars and -- as 

16 they should --

17 MR. MARTIN: I'm not -- I am not a tax 

18 expert. So what I'll do is I'll take this back. 

19 To the extent that I can get those questions 

20 answered for you, I'll come back and make certain 

21 that what we say here is correct.

22 (Simultaneous speaking.)

23 MS. BUCK: Okay. So that question can 
76

1 be answered later.

2 MR. SILVERMAN: So you know, bottom 

3 line is then schools that not only have tip income, 

4 that have -- that have a lot of students that become 

5 private businesses or 1099 or Schedule C, we're 

6 going -- and performing arts has both, of course, 

7 we're going to need earnings appeals, because --

8 and I found, because we did the appeal and we were 

9 successful in moving the needle.

10 For reasons like this, you know, 

11 especially if there's going to be sanctions or even 

12 disclosures which will make us lose students, we 

13 are going to need some kind of earnings appeals, 

14 because I've already found as a fact that there's 

15 more income there that -- not that people aren't 

16 reporting, but they're being able to write off and 

17 there's more money being made than what's being 

18 counted.

19 And that hurt my school, and when we're 

20 at 8.01 and a 7.99 is passing or failing or telling 

21 students we're failing or something like that, it's 

22 extremely important. 

23 So I'd ask a lot of these people to make 
77

1 sure we leave the appeals on the table, as well 

2 as until we know what the metrics are and what's 

3 an 8.0 and what's passing and what's failing and 

4 what's unperforming, especially we have to tell 

5 people please leave their earnings on the table. 

6 Thank you.

7 MS. MILLER: Okay. Steve Chema.

8 MR. CHEMA: Like David, I have some 

9 familiarity with the challenges of putting together 

10 an effective earnings appeal, and as Greg said all 

11 the work, time and expense that goes into it. So 

12 in spite of all that, I find it a little ironic 

13 that I'm not ready to let go of that process. 

14 I mean I think what Jennifer proposed 

15 earlier is reasonable as a concept, but you know, 

16 part of what gives me some hesitation is going back 

17 to the N size, you know. Greg, when we introduced 

18 the concept initially, your comments on the scope 

19 paper were that in a sanctions or in the absence 

20 of sanctions or in a disclosure-only world, N equals 

21 10 is understandable.

22 Is your thinking still that way, given 

23 the potential framework we've talked about?
78

1 MR. MARTIN: I think it's on the table. 

2 I don't think, you know, that was what we proposed, 

3 is on the -- whether or not to stick with that and 

4 30 is something we would -- we'd entertain comments 

5 about.

6 MR. CHEMA: Yeah. I would just say 

7 that, you know, to the extent that we eschew an 

8 earnings appeal structure in favor of, you know, 

9 other factors at a Tier 2 approach, you know, the 

10 potential for swing that we saw year to year with 

11 those small cell sizes worries me. I think we'd 

12 be going through a lot of iterative processes 

13 potentially when, you know, you might not need to 

14 at that sample size.

15 MS. MILLER: Jen Diamond.

16 MS. DIAMOND: Yeah. I just wanted to

17 echo what Jordan said about the repayment rates 

18 maybe solving some of these concerns as a backstop, 

19 but also just to build on Laura's question from 

20 earlier about capacity. In terms of the appeals 

21 you were discussing before Greg, just a clarifying 

22 question.

23 Is there then capacity to review that 
79

1 survey work, etcetera, to ensure that it's not just 

2 taking the institution at their word for what 

3 they're reporting on?

4 MR. MARTIN: Well okay. We're talking 

5 about what's currently, right? The structure is 

6 such that the appeal that gets submitted to us. 

7 It's attested to by a CPA, so they're looking at 

8 did the -- was the appeal conducted according to 

9 NCES standards, right? So the auditor attests to 

10 that. We get it. But still have to -- we still 

11 have to approve the appeal currently.

12 You don't see this language there 

13 because we took the appeals out, but we had this 

14 thinking that to move to a smoother system that 

15 you're talking about the Department's capacity, 

16 and I just jokingly say we were thinking of taking 

17 ourselves out of the game regarding capacity.

18 Which would mean that the auditor 

19 attests to it, right, under the audit, and that 

20 we would -- we're thinking, just thinking that there 

21 could be a tentative acceptance of those revised 

22 figures until such time as the audit becomes final, 

23 and then accepting the CPAs attested to, you know, 
80

1 figures and not having it, not having a system 

2 whereby a school submit these to us and we 

3 adjudicate them, which is really where the capacity 

4 comes in and the time, and the length of time it 

5 takes to adjudicate all these.

6 So that's what we were thinking of. 

7 I agree with you. Under the current way we do it, 

8 if you expanded this to all institutions and all 

9 programs and you had a huge increase in the number 

10 of appeals, it probably could stress our capacity 

11 to look at all of them, yes.

12 MS. MILLER: Neal.

13 MR. HELLER: Good morning. This is 

14 Neal. Well, the Department has in the past put 

15 language in the preamble to the original gainful 

16 employment rule which spoke specifically to the 

17 cosmetology and beauty-related sector and those 

18 zip code programs, in that they accepted the fact 

19 that there was under-reported or unreported income.

20 And yet when the rule came out, there 

21 was nothing that allowed these schools to have some 

22 sort of exception, and it was just you're going 

23 to be treated like everybody else, even though we 
81

1 know you're not like everybody else. So today or 

2 in this session, the Department has graciously 

3 provided us with a disclaimer, which again alludes 

4 to the fact that we pretty much know it's an accepted 

5 practice that in these particular programs, there's 

6 going to be under-reported or unreported income.

7 So I guess what I would ask is why can't 

8 we instead of using that language, just come up 

9 with specific zip codes, where we know it's an 

10 accepted practice, whether or not the state of 

11 California likes that or not. It just is, and then 

12 put some sort of a factor in which increases those 

13 earnings. So let's say it's a factor of 25 percent 

14 or 30 percent, whatever the factor may be.

15 Now you may think that's a high number, 

16 but if you just look at a tip, a $20 haircut, a 

17 20 percent tip is $4. But that $4 is against $10 

18 of reported income, because typically it's a 50 

19 percent split. So that's a 40 percent increase 

20 in that person's reported income. It's very 

21 significant.

22 But again, instead of language, why not 

23 be specific and offer some sort of factor so that 
82

1 we don't have to worry about having an appeals 

2 process? Which is a very difficult process, as 

3 everybody is very much aware. 

4 Secondly, in terms of repayment rate 

5 being the, you know, the alternative if you will, 

6 you know again, our student predominantly is a low 

7 income student. They have the option of choosing 

8 an income-based repayment rate. 

9 And yet you're going to hold that 

10 income-based repayment rate against us. That's 

11 not fair. I mean we know the students we serve. 

12 You know the students we serve, and there has to 

13 be something put in there as some sort of an 

14 exception or something that at least takes into 

15 consideration that there's nothing wrong with an 

16 income-based repayment rate if that is what the 

17 federal government is providing.

18 It shouldn't be held against the 

19 school. Anybody who again is under-reporting 

20 their income and now is eligible for an income-based 

21 repayment rate is going to choose the income-based 

22 repayment rate, and we are the ones who suffer. 

23 Thank you.
83

1 MS. MILLER: Okay, thank you. So I 

2 have Jen Blum and then Ahmad, and then I do want 

3 to get back to the proposal that Jen Blum had put 

4 on the table. So Jen.

5 MS. BLUM: Well, it's a good segue from 

6 what Neal just said, because I actually wanted to 

7 say with regard to Jordan that I support definitely 

8 the pursuit of looking at loan repayment. But I 

9 just want to be really clear that it's not a 

10 backstop. It's an alternative metric to measure 

11 how the program's doing.

12 But as you yourself said when you 

13 discussed the data yesterday, they're actually 

14 complementary. They're not measuring the same 

15 thing at all. So it doesn't resolve -- I mean just 

16 to be clear, I agree with a lot of people here that 

17 it doesn't really resolve the debt to earnings 

18 question.

19 So I also want to clarify, because 

20 Steve, you know, I know what you meant. But I just 

21 want to be clear. I did start my proposal by saying 

22 I still think we should keep the earnings appeals 

23 discussion on the table, and so I'm not taking it 
84

1 off the table by the proposal of having all the 

2 other metrics, you know, in the mix in the appeals 

3 process. 

4 So I support actually this conversation 

5 on appeal, on earnings appeals. So I just wanted 

6 to clarify, just so everybody was clear on that.

7 MS. MILLER: Ahmad.

8 MR. SHAWWAL: Ahmad here. I just want 

9 to re-center this, the conversation on the 

10 framework that we're potentially exploring. So 

11 it seems like we use DE. If that doesn't work, 

12 they get a second chance. We use the repayment 

13 rate. If that doesn't work, we give them a third 

14 chance. They have a second step process in which 

15 maybe it's an appeal, maybe we'll call it something 

16 else.

17 Whether or not that might include a 

18 policy exceptions to that, I'm not entirely sure 

19 how I feel about that, but that's something I'll 

20 think about. 

21 But generally I do want to say that that 

22 in itself is a very -- it seems like we're giving 

23 institutions a lot of chances there to prove that 
85

1 they are indeed capable and that they are indeed 

2 worthy of, you know, or that they indeed have good 

3 outcomes.

4 The student delegation, me and Gannon, 

5 have been very generous and very patient in this 

6 entire process. I'm not entirely sure if I'd be 

7 willing accept anything that pushes that bar 

8 further off the cliff from what we had discussed 

9 yesterday. I assure you the student delegation 

10 is not as generous, as you heard from Jocelyn 

11 yesterday.

12 MS. MILLER: Okay. So Jen, can you 

13 indicate again your proposal?

14 MS. BLUM: Yeah. So my proposal, I 

15 mean it's pretty -- so the proposal for now actually 

16 is to consider Issue Paper 5 on appeals something 

17 that would include, and for continued 

18 conversations, the earnings appeal. But that also 

19 the second tier of metric analysis would in effect 

20 be an appeal process by the institution to the 

21 Department on whatever metrics it is that we come 

22 up with.

23 With time parameters and Ahmad to your 
86

1 point, with time parameters and due process, you 

2 know, notice and comment type due process in the 

3 mix, and that that proposal or concept, because 

4 it is so really closely tied to what we are 

5 discussing in Issue Paper 4, that we move this to 

6 a framework conversation together, you know, that 

7 the two get joined in a conversation.

8 In the interest of time, we go to six 

9 and seven and come back to four and five in a 

10 framework that's joint. And can I just make --

11 so on that proposal just Ahmad to your point, but 

12 just to clarify, the loan repayment rate in my mind, 

13 so just so I'm putting the proposals so everybody 

14 understands what I'm proposing, that it's not three 

15 stages.

16 So the way it worked in Gainful 1, for 

17 example, is the two metrics were produced at the 

18 same time. So debt to earnings and loan repayment 

19 were produced at the exact same time. 

20 So just when you're concerned, and I 

21 hear you on the time piece, those were done at the 

22 same time. So it's not like an if then, then that. 

23 It's -- it is that the loan repayment might help 
87

1 in the process, but there's not a time variable 

2 between debt to earnings and loan repayment.

3 So that's -- DTE and loan repayment 

4 would be in Issue Paper 4 as or in 1 through 4 I 

5 guess in fact. Those would be the metrics, and 

6 then the appeals would include potentially an 

7 earnings appeal, but also the other Tier 2 metrics 

8 and the list of potential steps that the Department 

9 could take if they've had findings.

10 MS. BUCK: So Jennifer, I think you're 

11 proposing that proposals be made about Issue 4, 

12 Issue Paper 4 and Issue Paper 5 together because 

13 they're connected. But could we go through 6, 7 

14 and 8 before we do that?

15 MS. BLUM: That's what I'm proposing. 

16 That's exactly what I'm proposing.

17 MS. BUCK: Okay.

18 MS. BLUM: I'm proposing that we now 

19 stop on 5. It's been a really good conversation, 

20 but that we stop on 5, move along to 6, 7 and 8 

21 and come back, you know, to spend the afternoon, 

22 whatever we can on 4 and 5 together.

23 MS. BUCK: And we had originally felt 
88

1 we would go through all the issues before we got 

2 to proposals, and I think what you're saying is 

3 maybe we can go through them even more quickly, 

4 to allow you more time for specific proposals. 

5 Would that be okay with people? 

6 PARTICIPANT: Yes.

7 MS. BUCK: Okay.

8 MS. MILLER: Let's see a show of thumbs 

9 then for Jennifer's proposal.

10 MS. BUCK: To go -- to quickly go 

11 through 6, 7 and 8 and then to come back --

12 (Simultaneous speaking.)

13 MS. BUCK: Well, I pray we're going to 

14 need to go through relatively quickly in order to 

15 leave the time for what you're proposing. 

16 (Show of hands.)

17 MS. BUCK: Okay, all right. So I think 

18 maybe at this point it is time for a break. Why 

19 don't we take a 12 minute break. Ten's a little 

20 too tight, and come back at 10:50.

21 PARTICIPANT: Can I just before we --

22 can I propose a consideration? I know this is a 

23 pain for the public, but could I propose a 
89

1 consideration of a working lunch?

2 MS. BUCK: So why don't you think about 

3 that over the break and we'll come back to that?

4 (Whereupon, the above-entitled matter 

5 went off the record and resumed following a brief 

6 recess.)

7 MS. BUCK: So let me ask a logistics 

8 question. If we're going to quickly go through 

9 6, 7 and 8, what about this? What about 40 minutes 

10 for 6, 40 minutes for 7, lunch, and then 8, and 

11 we could decide at the point at which it's lunchtime 

12 if you wanted to do a working lunch or not? You 

13 don't want to do a working lunch, okay.

14 But in terms of the time frames I'm 

15 proposing, 40 -- doing 6 and 7 before lunch and 

16 8 after, how does that sound to people? Let's see 

17 thumbs.

18 (Show of hands.)

19 MS. BUCK: And one down thumb. Do you 

20 want to comment?

21 PARTICIPANT: Yeah. I don't think 

22 we'll need 40 -- I mean I just like we'll do the 

23 two of them, but you said 40 and 40 and that's not 
90

1 realistic. Issue 6 is definitely going to take 

2 longer than 40 minutes. 

3 MS. BUCK: But what would you propose?

4 PARTICIPANT: Well, you said 6 and 7 

5 together. I'm not sure 7's going to take much time, 

6 because it's reporting and I think there's less 

7 of that. So I'm okay. I just want to clarify, 

8 I don't think it's 40 and 40. Can we not divide 

9 up how we're -- what the rationale of that is?

10 MS. BUCK: You're okay with doing 6 and 

11 7 before lunch; you're not okay with saying only 

12 40 for 6; is that correct?

13 PARTICIPANT: That's correct, and then 

14 I would just --

15 PARTICIPANT: Can we do 7 and 8?

16 MS. BUCK: All right. So well let's 

17 go forward with 6 then, and we'll see where we are 

18 after 45 minutes, and assess how much more time 

19 you think you need. How about that? Okay, very 

20 good. Let's go to Issue 6.

21 MR. MARTIN: Thank you. A couple of 

22 introductory things here. Social Security 

23 reported wages. We are going to be passing around 
91

1 an information page based on that. So I just want 

2 to -- you know, what I was trying to say poorly 

3 was that yeah, the employer does report W-2s to 

4 the IRS. Some are self-employed, some are Schedule 

5 C.

6 But that, you know it is -- I guess my 

7 point is that it is possible for the employer to 

8 report a certain amount of money and for wages not 

9 to be -- for that person who's in a tipped industry, 

10 but for that individual's -- they look at both, 

11 the self-reported and the W-2. So it's still 

12 possible for those wages Social Security has to 

13 not reflect what the student, what the borrower 

14 actually earned in his or her field.

15 But we'll get that information paper 

16 out to everybody to clarify that. Regarding lunch, 

17 I understand the desire to take a working lunch. 

18 I kind of like lunch to decompress a little bit. 

19 I don't know what other people think.

20 MS. BUCK: So we're going to address 

21 that issue when it gets to lunch time --

22 MR. MARTIN: I'll go with the consensus 

23 of the group there, with my preliminary vote against 
92

1 up front. That's no offense to -- no offense to 

2 Jennifer. I love you all.

3 MS. BUCK: Okay, very good. 

4 MR. MARTIN: Okay. Those who know me 

5 and work here know how I'm kind of a fanatic about 

6 lunch, it's like, you know. That and iced tea. 

7 Those are the only two things in my life that I 

8 insist on. Okay. So let's get to -- let's get 

9 to Issue Paper 6, Program Information Disclosures.

10 We propose to remove 668.413 and allow, 

11 instead allow for the method of calculating loan 

12 repayment rates for students' mean and median 

13 earnings to be specified through a notice in the 

14 Federal Register. We propose to eliminate program 

15 cohort default rate as a specified disclosure, as 

16 well as Subpart R, which describes the methodology 

17 for calculating program cohort default rate.

18 We propose to add a disclosure item for 

19 a link to any web page containing the state's 

20 mandatory qualifications for licensure if a program 

21 prepares students for fields requiring licensure, 

22 and a link to the institution's page on the College 

23 Scorecard. Again, we propose to delete language 
93

1 related to direct distribution to prospective 

2 students. 

3 So we can go through this briefly. The 

4 first part, you'll note again striking GE. We 

5 struck any reference to the Secretary, obligating 

6 the Secretary to conduct consumer testing. We have 

7 taken out references to 413 because we've proposed 

8 to remove and reserve 413. I can spend a lot of 

9 time walking through all of this, but again, I 

10 didn't number my pages. 

11 So I'm not going to walk through all 

12 of this, but you'll see on page four where we added 

13 for programs preparing students for fields 

14 requiring licensure, a URL link to any web page 

15 containing the state's mandatory qualifications 

16 for licensure. We also are requiring a link to 

17 the institution's page on the U.S. Department of 

18 Education's College Scorecard, or its successor 

19 site should that occur or other similar federal 

20 resource.

21 You'll see on page five at the bottom 

22 under (e), direct distribution to prospective 

23 students. The direct distribution is struck, and 
94

1 then a simplification of the disclosure protocols. 

2 And at the bottom of page six, seven, you can see 

3 where 413 has been removed and reserved. Let's 

4 stop there. I'd rather leave more time for 

5 discussion than my tedious overview of the paper 

6 so --

7 MS. MILLER: Chris Madaio.

8 MR. MADAIO: Thank you. Chris Madaio. 

9 Greg, if I could just ask first why the Department 

10 would remove the direct distribution to prospective 

11 students?

12 MR. MARTIN: This is Greg for the 

13 record. The removal of direct distribution in 

14 considering the -- again, part of the effort here 

15 with these regulations is to simplify the 

16 regulation, reduce the burden on institutions 

17 related to disclosures, and in that vein we took 

18 out the direct distribution requirements.

19 MR. MADAIO: Okay, thank you. So my 

20 comment, a little bit of, you know, incorporate 

21 everything I said yesterday when we were talking 

22 about the notifications. But basically this is 

23 important information. Obviously, this is why we 
95

1 have this issue paper. 

2 That's why we debate what information 

3 should go out and just putting it on a website 

4 somewhere where a student may or may not see it, 

5 or having it in a promotional material again, which 

6 may be very early on in a process or may be at a 

7 time when a student may or may not ever get that 

8 promotional material.

9 I think it is very important that a 

10 student actually receives this before they enroll, 

11 with the acknowledgments and all the language that 

12 also goes along with it, to ensure that it is 

13 actually received and it is the only thing in an 

14 email, so that it is clear when a student is getting 

15 it. We talked a lot about that yesterday, about 

16 pre-enrollment disclosures, why they're important.

17 So I just think that ensuring that 

18 students get this information is important and 

19 should be included.

20 MS. MILLER: Okay. Ahmad, your tent 

21 is up. Did you have --

22 PARTICIPANT: No.

23 MS. MILLER: Okay. So Johnson, then 
96

1 Whitney.

2 (Simultaneous speaking.)

3 MS. MILLER: Okay, Whitney.

4 MS. BARKLEY-DENNEY: I second 

5 everything that Chris just said about, you know, 

6 the direct distribution. I think that's a really 

7 important way of reaching borrowers. Again, 

8 particularly when we're talking about certificate 

9 and associate degree borrowers at certain schools.

10 You know, you might be going to a school 

11 because it's what's in your neighborhood or it's 

12 where somebody went and were not necessarily again 

13 shopping around in a way that bachelor's degree 

14 students do or students who have the options of 

15 private or public schools. I also wanted to ask 

16 why the PCDR was eliminated? Was it a calculation 

17 issue, or was it also a simplification issue?

18 MR. MARTIN: Yeah. Again, in looking 

19 at streamlining the disclosures and the myriad 

20 things in here which were calculations that we had, 

21 many of which we hadn't, we didn't do this last 

22 time, we can't remember the disclosures, the way 

23 the disclosures are set up. It doesn't obligate 
97

1 the Department to -- we're talking about the current 

2 rule, to request, to require any particular 

3 disclosure.

4 It's a list of what we can disclose and 

5 what we can require to be disclosed rather, and 

6 we can also request something or require something 

7 additional to that list. It was just the 

8 streamlining of those -- of those possible items 

9 and an acknowledgment of where PCDR stands now, 

10 and we didn't see it as something we wanted to carry 

11 forward.

12 MS. MILLER: Excuse me, Greg. I have 

13 a request. What is PCDR?

14 MR. MARTIN: PCDR is Program Cohort 

15 Default Rates. 

16 MS. MILLER: Okay.

17 MR. MARTIN: That would be as opposed 

18 to when we talk about CDR cohort default rate for 

19 institutions, this is a similar calculation but 

20 only for programs, individual programs.

21 MS. MILLER: Okay. Thank you for that 

22 I know in D.C. we love our alphabet soup, but for 

23 some people they don't understand the acronym. 
98

1 MR. MARTIN: That's true. I testified 

2 in a court case once in front of a federal judge, 

3 and I used the -- they used the acronym FSCOG, and 

4 she glared at me and said Mr. Martin, we do not 

5 use alphabet soup in this court and I was -- I was 

6 duly admonished.

7 MS. MILLER: Thank you. Whitney.

8 MS. BARKLEY-DENNEY: So you know, I can 

9 let others weigh in on PCDRs. I do think we're 

10 sort in a different place with CDRs than we were, 

11 given the myriad of repayment options for borrowers 

12 and that repayment at a program level might be more 

13 illuminating.

14 But I just want to stress, and I think 

15 that this table has in some ways done a better job 

16 than others, you know. We're not just talking 

17 about streamlining regulations for institutions, 

18 but also doing that in a way that protects students 

19 and borrowers and taxpayers. I think that having 

20 that first disclosure, and that direct disclosure 

21 is an important piece of that.

22 MS. MILLER: Jennifer Blum.

23 MS. BLUM: I don't know where to begin. 
99

1 So I didn't know whether to go in order of the 

2 regs, and this is a very complicated conversation 

3 to have on this issue paper without people having 

4 the benefit of seeing the template. So I'm going 

5 to try and I'll just start with a couple of examples, 

6 and then we can try to get through.

7 So on the disclosure even of the 

8 occupational codes that are used for the disclosure 

9 of where graduates are employed, I just wanted 

10 everybody to know the template pops up and says 

11 "program graduates are employed in the following 

12 fields."

13 Well actually what the Department is 

14 asking for are the zip codes, I mean are -- yeah, 

15 zip codes that tied to -- I'm sorry, the SOC codes 

16 that tie to the zip codes that are being used for 

17 the metric. So it's not an exhaustive, exclusive 

18 list of every field that gets -- that a student 

19 might get employed in, and if we're extending this 

20 and I know I'm probably speaking now for the 

21 non-profits too, it's problematic enough at our 

22 level. It's really problematic if you extend this 

23 to all programs, where the statements, and again 
100

1 that's why it's hard to have this conversation. 

2 I don't want anybody to have the 

3 impression that I'm not very supportive of the 

4 disclosures. It's just that when you then post 

5 a statement that says "program graduates are," 

6 which is a very affirmative statement, "are 

7 employed in the following fields," and you only 

8 fill in, you know, a few zip codes or SOC codes 

9 and the list could be endless of the potential 

10 fields.

11 And again, this was all developed 

12 around gainful, but now we're taking this into a 

13 whole different level. So I just wanted to flag 

14 those types of issues, where you know, can there 

15 be a more expansive list of SOC codes that can be 

16 provided, that aren't just tied to the zip codes, 

17 or how -- or yeah. It could say "could be 

18 employed," but I don't know how the consumer groups 

19 feel about that.

20 So I'm just, I'm flagging issues for 

21 the Department. I don't have -- I'm sorry that 

22 I don't have solutions, but I do feel like it's 

23 important to flag these in conjunction with what 
101

1 will actually appear on the websites. And so I 

2 don't know. I have -- I mean should I keep going? 

3 I'll stop there for a few minutes if anybody else 

4 has something. 

5 But I then obviously there are going 

6 to be some other issues like these.

7 MS. MILLER: Daniel or Greg, go ahead.

8 MR. MARTIN: Yeah. To respond to 

9 that, you made some excellent points about the way 

10 the template works, and what I can do, I don't have 

11 it in front of me now, but the template's published, 

12 and actually it's very -- since the way the template 

13 works is we give you this template where you enter 

14 the -- We don't collect the 

15 information. You enter it in and it creates an 

16 output that becomes your template. Anybody can 

17 go in and play around with it. So as long as you 

18 use any kind of -- just put it in your school's 

19 OPID, and you can go through the template. Just

20 you could enter dummy information and see how it 

21 works. So for those of you that like to see how 

22 it would potentially work, I can tell you how to 

23 get in there and just -- and do it.
102

1 MS. BLUM: That's actually a really 

2 excellent idea between now and third session. For 

3 programs that haven't had to face this, I think 

4 -- I would encourage you to spend some time between 

5 now and the third session to see, because while 

6 you can play around, you actually can't play around 

7 too much. So in terms of -- and we'll get to that 

8 issue too. It's very limiting. 

9 MS. MILLER: Daniel, then Andrew.

10 MR. ELKINS: This is Daniel for the 

11 record. When it comes to state licensures and 

12 requiring links and whether or not the program and 

13 discussion will allow a person to sit for the 

14 license, we think it's imperative that the 

15 Department disclose that. Many veterans have been 

16 recruited to institutions, telling them that they 

17 will qualify for a specific program, and be able 

18 to sit for that licensure, and then they have been 

19 unable to do so.

20 So I do appreciate and understand that 

21 that is potentially burdensome to some institutions 

22 and/or the Department. However, I think that it's 

23 kind of a non-starter for us. Like if you're going 
103

1 to get a nursing degree and you can't become a nurse, 

2 I don't think that you should be able to use your 

3 eligibility for that program.

4 MR. MARTIN: Yeah, I thank you for that 

5 comment. We did add it to the disclosures here, 

6 and we also have a discussion of that in 

7 certifications as well.

8 MS. MILLER: Andrew.

9 MR. HAMMONTREE: Okay, this is Andrew. 

10 I wanted to respond to Chris and Whitney's concern 

11 about the direct distribution of the disclosure 

12 to prospective students. I think across all 

13 sectors, we would agree that students need to have 

14 all the information. We want to be transparent 

15 and provide students with that information.

16 But I know that this -- the rule that's 

17 being struck out here was in the current rules and 

18 across all sectors we all went into panic mood when 

19 we realized, because included in that is this active 

20 confirmation piece, that we just did not know how 

21 we could comply with. I heard from a lot of the 

22 community colleges, public vocational schools, we 

23 don't know how we're going to be able to do this 
104

1 because the way it's written is that we needed to 

2 get some type of a piece of paper or an email from 

3 every single student.

4 I think Chris or Chad referred to this 

5 as like that's a small city. You're going to get 

6 thousands of pieces of paper from students before 

7 you can actually enroll them. We didn't -- so we 

8 know that they're getting the disclosure. We want 

9 to go over that with them, but to get that active 

10 confirmation piece we just didn't know how we could 

11 possibly comply with that realistically, because 

12 there's so many varieties in how we enroll students 

13 and that was going to create a tremendous burden.

14 I don't have a problem with getting 

15 active confirmation on a program that's determined 

16 as low performing. I think that might be more 

17 important. That might be a good compromise. But 

18 to require -- to require that for every single 

19 program at every institution, I just don't think 

20 that we're -- we're setting schools up to fail on 

21 that piece.

22 PARTICIPANT: Could I ask you a 

23 question on that? Are you opposed to 
105

1 pre-enrollment disclosures then totally, or are 

2 you only opposed to an acknowledgment for the 

3 pre-enrollment disclosures?

4 MR. HAMMONTREE: The acknowledgment. 

5 I think -- I think for the most part the students 

6 are getting them. I don't know that they read them, 

7 but I know that they're provided them. That 

8 acknowledgment piece, that's where I didn't feel 

9 like we could realistically comply with that.

10 MS. MILLER: Kirsten.

11 MS. BARKLEY-DENNEY: Follow-up.

12 MS. MILLER: Well Kirsten was next, if 

13 she's okay with you following up.

14 PARTICIPANT: Go ahead.

15 MS. BARKLEY-DENNEY: Thank you Andrew 

16 for that concern. I mean it's certainly 

17 interesting to hear your perspective. I was 

18 wondering if -- I guess I wonder if it would be 

19 easier for institutions to ensure that people using 

20 Title IV do this? I mean I'm guessing that you 

21 have a lot of cash pay students or --

22 MR. HAMMONTREE: Yes.

23 MS. BARKLEY-DENNEY: Would that make 
106

1 a difference?

2 MR. HAMMONTREE: At my institution 

3 yes. I don't know holistically if that would work 

4 for a lot of people. So I'm looking around the 

5 table to see if people are -- apparently not.

6 MS. BARKLEY-DENNEY: Okay.

7 (Simultaneous speaking.)

8 MS. MILLER: Sandy.

9 MR. HAMMONTREE: Right.

10 MS. SARGE: Sorry. It does say -- well 

11 I guess it says makes a financial commitment. So 

12 I mean there could be a different. I'm just 

13 wondering if there's a different point in time when 

14 we could require it that would make it easier.

15 MR. HAMMONTREE: At my institution, 

16 the problem is is I couldn't control this process. 

17 It became an admissions process, and I have a lot 

18 of concerns about my admissions department being 

19 able to comply with that. The financial aid office 

20 is the compliance office, okay. So this is going 

21 to happen long before they ever came to the 

22 financial aid office. 

23 I don't even know what they're 
107

1 enrolling in at the time that they do the 

2 application, which is when most schools I think 

3 wanted to do this. It was going to take a lot of 

4 staff, and my concern was that if we hire more people 

5 tuition has to go up, and we want to keep our costs 

6 as low as possible.

7 The other concern is if you don't hire 

8 more people to handle something that takes up this 

9 much time, is you're taking away that one on one 

10 counseling that is so important. This is gainful 

11 employment or whatever we call this. This is only 

12 one piece of the Higher Education Act. 

13 That's one piece of the whole financial 

14 aid landscape, and there's just so much complexity. 

15 We're getting a lot of first generation students 

16 coming in that are very, very confused, just getting 

17 the FAFSA filled out. The more time that we spend 

18 making sure that we have this piece of paper before

19 we enroll a student, that's less time that we're 

20 able to spend one on one with those students, 

21 counseling them through a very complicated process.

22 So while I understand getting the 

23 active confirmation maybe for programs that are 
108

1 low performing, where it's -- they're at risk of 

2 losing Title IV eligibility if we went down that 

3 path, I just don't think you can do it for the tens 

4 of thousands of students that don't fall into that 

5 category. 

6 MS. MILLER: Kirsten.

7 MS. KEEFE: So actually my first 

8 comments were related to that and I hear what you're 

9 saying, and I don't know what the solution is. 

10 I will just add though, I think that this disclosure 

11 being provided at the point of somebody actually 

12 signing an enrollment and coming up is a really 

13 critical time, right? 

14 It's one thing to provide information 

15 to folks that are looking at a bunch of different 

16 schools and what they might go to. But it's really 

17 that next step that's a really critical time for 

18 them to get this information. Maybe not all 

19 students need it. I hear what you're saying, but 

20 it is a critical time for the people who need this 

21 information to get that information.

22 I will also just add, and I again hear 

23 what you're saying Andy about the logistical issues 
109

1 with the acknowledgment. I think the 

2 acknowledgment is really important though, again 

3 for the students for whom this information is most 

4 critical.

5 Because, you know, we're all reading 

6 a million disclosures, especially if you're getting 

7 them on your iPhones. You just hit terms of 

8 whatever so you can get onto the next page. But 

9 if you actually have to acknowledge and sign, to 

10 me that's a huge red flag that oh, this is a 

11 disclosure that you really need to read Kirsten, 

12 you know, versus all the other disclosures in life. 

13 So I think it is a critical component, you know. 

14 Again, I appreciate your issues.

15 Let's see. The second thing that I 

16 just wanted -- oh, I wanted to ask the Department 

17 about the elimination of the consumer testing on 

18 the template. I assume that that's because -- so 

19 this is on I think page one of the proposal, in 

20 the first paragraph. I assume that's because it's 

21 already been done; is that correct?

22 MR. MARTIN: Yeah. Yes, we did 

23 conduct -- we did conduct consumer testing 
110

1 previously. In these regulations, we didn't want 

2 to obligate ourselves to do that every year. There 

3 are budget considerations with that, and we don't 

4 -- it doesn't preclude that we would ever do 

5 consumer testing, but these rules don't obligate 

6 us to do that.

7 MS. KEEFE: So then is there a 

8 commitment from the Department that the template 

9 will not change at all, or that if it were to change, 

10 there would be additional consumer testing or is 

11 the template what it is?

12 MR. MARTIN: The template. There's

13 two things here, and I think Jennifer was pointing 

14 that out. There's the disclosure rules and then 

15 how it manifests itself in the template. 

16 Currently, the way it works is we have in here what 

17 the Department may require you to disclose. But 

18 we don't require -- if you looked at the template, 

19 we absolutely don't require anywhere near all of 

20 these things, right.

21 So we -- each year we determine what 

22 will be required to be disclosed. We issue, we 

23 put out an electronic announcement with that 
111

1 information in it, and we issue -- we put that in 

2 the Federal Register. So the template itself is 

3 not -- the way it looks is not dictated by these 

4 regulations now, nor would it be.

5 So I couldn't make any guarantees that 

6 the look of the template would change. We didn't 

7 change the template much this year over last year. 

8 We did change some items. So what could change 

9 would be what we would require you to disclose, 

10 and again since in the old rule and in this rule, 

11 the Department has discretion to use what's here 

12 or additional things, that could change from year 

13 to year.

14 MS. KEEFE: But the pieces that you did 

15 the consumer testing on wouldn't change? That 

16 would be more on the wording and -- I mean if we're 

17 going to be relying heavily on disclosures now in 

18 this new construct, you know, I just really want 

19 to make sure that the disclosures are clear and 

20 readable and, you know, readable to somebody at 

21 a low education level, etcetera.

22 MR. MARTIN: And we make -- and we make 

23 every effort to do that, and I think when I give 
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1 you -- I'll give you later on today the link how 

2 to get in there and look at the template, so you 

3 can all get an idea of what that looks like. So 

4 when you come back, if you have comments about that 

5 you can let us know.

6 MS. KEEFE: Okay, and then my final 

7 question is just -- so if a template, if an 

8 institution puts a template out that's incorrect, 

9 is there oversight of that and are there any 

10 ramifications for that or repercussions?

11 MR. MARTIN: Yeah. I mean a template 

12 that's incorrect -- if like anything else a school 

13 does is incorrect, that would be something that 

14 would be looked at in a program review or 

15 potentially an audit. So yes, there would -- it 

16 would be a compliance issue if somebody put a 

17 template out that was -- we don't have something 

18 in place where we automatically check each template 

19 all the time.

20 But as with anything, as with any of 

21 the other disclosures, consumer disclosure that 

22 schools are required to make, if it's incorrect 

23 that could be a compliance issue, yes.
113

1 MS. KEEFE: Okay, and one last final 

2 compliment. I'm glad to see a link provided to 

3 the state certification. I think that's a good 

4 addition.

5 MS. MILLER: Laura, Jeff and then 

6 Jessica.

7 MS. METUNE: I similarly wanted to 

8 appreciate the addition of the link of the state 

9 licensure requirement. I think that's a good 

10 addition. I wanted to agree with Daniel's comments 

11 about the importance that students can sit for 

12 licensure. I just -- I want to make sure I 

13 understand the current structure of what you're 

14 proposing.

15 So in the certification requirements, 

16 the state where the institution is located, there's 

17 a strict requirement that the institution's program 

18 meet that state's licensure and accreditation 

19 requirements. 

20 But then an institution might have a 

21 service area that includes another state, and in 

22 those instances, the institution is not required 

23 to meet the licensure or accreditation 
114

1 requirements, but must disclose to the student what 

2 those are. Is that the way this works?

3 MR. MARTIN: Before I characterize 

4 that, I'd like -- give me a chance to talk to my, 

5 some of my people before I --

6 MS. METUNE: Okay, and then just a 

7 comment that I think it does seem to -- if I'm 

8 correct, which you can correct me later if I'm not, 

9 but if I'm correct I do like the appreciation that 

10 there's this recognition that students will enroll 

11 in institutions that may not ultimately meet their 

12 accreditation or licensure requirements.

13 I think it's really important that we 

14 make sure that those students do have an assurance 

15 that they will ultimately be able to sit for 

16 licensure in the state where they are located.

17 MR. MARTIN: Thank you.

18 MS. MILLER: Cynthia's here. 

19 (Pause.)

20 MR. MARTIN: You characterized that 

21 correctly. I just wanted to make sure that we were 

22 in on it.

23 MS. MILLER: Jeff, Jessica and then 
115

1 Sandy.

2 MR. ARTHUR: Yeah. When you take a 

3 look at that template, you're going to see currently 

4 there's a requirement to disclose the completion 

5 rate based on 100 percent completion time. I would 

6 assume that this -- that as we do this, the 

7 disclosure would probably evolve to a more 

8 standard, 150 percent or 200 percent graduation 

9 rate, which is fine.

10 But we're also disclosing the length 

11 of the program and then the total cost of the program 

12 based on that. But I would suggest, based on a 

13 couple of stats that we're aware of, I thought it 

14 was 5.8 years that is the median completion time 

15 for a bachelor degree. Roberts had indicated to 

16 me it's 6.1 I believe. But we know it's well over 

17 five.

18 And we also there was a survey, and the 

19 Chronicle and Inside Higher Ed, others I think 

20 referenced it at some point that was fairly recent 

21 that showed that families spent on average 40 

22 percent more than they calculated they were going 

23 to spend when they were starting a program. And 
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1 so there's a real misunderstanding of the cost of 

2 higher ed and this, the way the disclosure's done 

3 here may propagate that. 

4 So I would suggest that we also include 

5 in the disclosure a median completion time for the 

6 program, so that people can understand at that 

7 institution what the normal time that a student 

8 took to complete the program.

9 MS. MILLER: Jessica.

10 MS. BARRY: Thank you, Jessica Barry. 

11 I just want to echo Andrew's comments about 

12 acknowledgment. It would be extremely difficult, 

13 and one of the pieces that makes it even more 

14 difficult that I think was mentioned earlier in 

15 the week is that young people aren't checking their 

16 email and they're not responding to email, and that 

17 makes it even more difficult.

18 One of the suggestions that if 

19 acknowledgment is something that we want to work 

20 in in some form or fashion, in the state of Ohio 

21 we're required to disclose certain rates. So how 

22 we handle this is when a student is accepted to 

23 our college, we send them their acceptance letter 
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1 with their enrollment agreement, explaining what 

2 those next steps are, and we also put the 

3 acknowledgment piece in there.

4 So there's a form that says "I have 

5 received completion rates and placement rates." 

6 And it says if I have not received them, here is 

7 where they're located or here's who I can contact 

8 to get those rates. And we don't accept that 

9 enrollment agreement until we have that signed 

10 acknowledgment. 

11 I think that's the only time that I 

12 could see it really working and us being able to 

13 collect that data. So I just wanted to share that 

14 example and ask the group to consider that.

15 MS. MILLER: Sandy, then Pamela.

16 MS. SARGE: Thank you, this is Sandy. 

17 I had a couple of thoughts. One is, and maybe 

18 Greg can help me. I guess I'm getting a little 

19 bit lost in the weeds between what a disclosure 

20 is versus a notification. I think that yesterday 

21 or the day before we had a lot of very good points 

22 made, and I think we had all sort of come to a place 

23 where we felt that a student should have 
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1 notification before signing a financial obligation 

2 to a school or entering into a contract.

3 We again not consensus, but certainly 

4 felt like the crowd was sort of getting there on 

5 that one. So what's the difference then between 

6 what we were talking about that day and this? I'm 

7 a little confused there, and then I have some 

8 thoughts, other thoughts.

9 MR. MARTIN: Greg for the record. 

10 Yeah, well they are different. The current, let's 

11 talk about now, what we have now as a warning or 

12 we talked about notification. So at the point 

13 at which the program could potentially lose 

14 eligibility, in the next year you're required to 

15 provide a warning.

16 Now that's separate from disclosures. 

17 It's a separate thing. You're warning a 

18 prospective students and students that the program 

19 faces loss of eligibility and there are certain 

20 things attached to that you have to inform them 

21 of.

22 It's kind of linked to disclosure 

23 currently because going back to Jennifer's point 
119

1 about how it helps to distinguish disclosure, 

2 because what happens is with a disclosure template, 

3 currently if your program is in that situation where 

4 you have to use a warning, there's a different --

5 two different templates. One's a warning, one's 

6 a non-warning template.

7 So you have to -- you'd have to use the 

8 template that contains the warning language at the 

9 top of it. It's in red. It's pretty bold. So 

10 it is kind of amalgamated in that way, in that the 

11 template itself sort of forces you to put the 

12 language on there.

13 But that's sort of separate from the 

14 requirement. You still have to have -- there's 

15 still the requirement that you issue the warning. 

16 Schools can use the template as a way of issuing 

17 the warning, but they're kind of separate things. 

18 Does that -- does that describe? 

19 And I invite anybody at the table who 

20 has done the process to say no great, that's 

21 convoluted. Here's a better way of describing it. 

22 But I think I described it accurately.

23 MS. SARGE: Okay, yeah. That makes a 
120

1 little bit more sense, and I think that I definitely 

2 thought about, because Pamela gave an excellent 

3 example, and I'm not sure I certainly got to hear 

4 it, which was great. She gets 100,000 inquiries, 

5 if you will. Right, 125,000 FASAs, 60,000 of which 

6 then --

7 (Off-microphone comment.)

8 MS. FOWLER: 60,000 apps for 

9 admission.

10 MS. SARGE: Apps for admission, 6,000 

11 are admitted and 1,000 ultimately get Title IV or 

12 something like that. So I mean you look at that. 

13 So what I'm hearing is based on prospective 

14 student, then she would be sending out notification 

15 or disclosures on to 125,000 FASAs?

16 (Off-microphone comment.)

17 MS. SARGE: You send it to 60 now, okay. 

18 So is that -- so trying to get acknowledgment, 

19 is that what Andrew you guys are concerned about 

20 is that type of thing? I could see that definitely. 

21 I do agree that it is important that there 

22 is -- there is almost a looking in the whites of 

23 their eyes, making sure that students clearly 
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1 understand information before they get into a legal 

2 contract with the school or along those lines.

3 So my question I think would be to the 

4 groups that represent students. Has there been 

5 any type of research done about what, like focus 

6 groups or surveys about what students, what is 

7 effective to students when it comes to all of this 

8 disclosure that colleges are giving? Because I 

9 think that the concern, and the one example I have 

10 had for many of my financial aid peers has been 

11 I didn't get a loan. I got financial aid.

12 And yet they had to sign a master 

13 promissory note; they had to do entrance counseling 

14 only if they get loans, not if they get Pell. They 

15 then had to acknowledge the receipt of each 

16 disbursement, you know. So but at the end of it, 

17 they're like why did I get something from a servicer 

18 about a loan?

19 So all of this disclosure, I know that 

20 sometimes it's hindsight. Like I go back and go 

21 oh, now I understand what that meant. So have you 

22 guys done any research on that, because I'd be 

23 interested to know what the student masses that 
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1 you represent think about what's already out there. 

2 Thank you.

3 MS. MILLER: Okay. Pamela, then Chris 

4 Gannon.

5 MS. FOWLER: Pamela. There are 

6 certain consumer information requirements right 

7 now that have to go to enrolled and prospective 

8 students. So I consider a prospective student 

9 anyone who completes an application for admission. 

10 So I send an email to over 60,000 students who 

11 I know 90 percent of them will not be admitted,

12 giving them this information. If that comes back, 

13 if that email comes back, they get it in paper.

14 That's the best I can do. Now what 

15 we're talking about here has nothing to do with 

16 anything in my office. We're talking about program 

17 and institutional stuff. But I guarantee you it 

18 will fall to the financial aid office to do this.

19 I have a staff of 53 down from 55, and 

20 two of those people know nothing about financial 

21 aid. They do consumer information day in and day 

22 out. Now if I have to go back and tell Casey she 

23 has to add every program at the University of 
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1 Michigan to what she's already doing, she'll quit.

2 (Laughter.)

3 MS. FOWLER: And if I go to my boss and 

4 say I need -- she needs help, because one of those 

5 people is an editor. She formally wrote for the 

6 Ann Arbor News. The other person is a graphic 

7 designer. She's going to say I need help, and I 

8 can't disagree with that. But I go to my boss who's 

9 more interested in what color the carpet is and 

10 the walls. She's not going to give me more money 

11 to hire someone else.

12 VOICE: That's reality.

13 MS. FOWLER: And so, you know --

14 absolutely reality. 

15 VOICE: That's reality.

16 MS. MILLER: Okay. Chris Gannon, 

17 Whitney, Kelly, then Jennifer Blum.

18 MR. GANNON: Yeah. I have some 

19 concerns on -- as far as knowing how the repayment 

20 rate is calculated. I think it says in here that 

21 you're going to publish that in the Federal Register

22 at a later date. 

23 I think that maybe that's something 
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1 that the negotiators here should decide, so we know 

2 what that is. I just want to know what the 

3 department's justification is for doing it this 

4 way.

5 (Off-microphone comment.)

6 MR. GANNON: I think it's very first 

7 top of page one, first paragraph. 

8 (Pause.)

9 MR. MARTIN: Yeah. Well part of this, 

10 Greg for the record, part of this comes from the 

11 -- when we were looking at this, the recognition 

12 that -- I think I'm not saying anything that we 

13 don't already know. The department has had a few 

14 different recalculation rates, repayment rates out 

15 there, so of which this was one in here.

16 We didn't want to be obligated to the 

17 one that was in these -- and this was just for 

18 disclosure purposes, right? So as far as repayment 

19 rate goes moving forward, you know, yesterday we 

20 discussed here the idea of using a repayment rate 

21 as a -- as part of an evaluation of whether or not 

22 there would be administrative sanctions against 

23 a program, right?
125

1 So I think moving forward, I think 

2 repayment rate, given what we talked about 

3 yesterday, repayment rate takes on more of an 

4 importance than it does simply as a disclosure. 

5 So I agree with you, especially in the context of 

6 that, then what that repayment rate would be becomes 

7 -- becomes a matter for discussion with this group 

8 that takes on a higher degree of importance than 

9 it would as simply a disclosure, because now you're 

10 looking at it as a possible program measure.

11 So we certainly would be willing to hear 

12 anybody's thoughts about what repayment rate would 

13 look like. We have some ideas. I think certainly 

14 we'll come back the next round with some language 

15 on what that might be. But we would welcome any 

16 of you to -- I think, I don't know who made the 

17 point that it's something which is being considered 

18 in legislation that of course we have no control 

19 over.

20 But just keeping that in the back of 

21 our minds, that we, you know, whatever we do we'd 

22 want to stand. So I throw that out to anybody, 

23 you know, that we're not committed, right, 
126

1 especially with regard to how it affects program 

2 eligibility. We're not going to be committed to 

3 a certain rate. We want to hear from you what you 

4 think.

5 But in any case we wouldn't -- I don't 

6 think we want to obligate ourselves to the rate 

7 here which is struck out. Thank you.

8 MS. MILLER: Whitney.

9 MS. BARKLEY-DENNEY: So I think it 

10 would be helpful, and we were talking about this 

11 sort of offline yesterday, you know, for any of 

12 these rates to be included in the issue papers, 

13 at least what you're considering so that we can 

14 think about them and talk about them. I don't think 

15 as negotiators most of us, possibly Jordan 

16 exempted, have access to the data, you know, that 

17 would allow us to sit around this table and come 

18 up with a rate.

19 We might -- if you hand that to us, then 

20 we may be able to say this makes sense or this 

21 doesn't make sense based on these policy decisions. 

22

23 MR. MARTIN: I agree with that, and 
127

1 that's obviously not going to happen today before 

2 the end of the day. But we can -- we will have 

3 something for you next round, and I invite any of 

4 you that have ideas about that to send it to 

5 scott.filter. He also has an advice column he's 

6 thinking about doing.

7 MS. BARKLEY-DENNEY: And I do have one 

8 more follow-up for Marc on what Sandy was saying. 

9 I think actually Sandy your point really 

10 highlights Kirsten's point and the need for 

11 consumer testing with the way these disclosures 

12 work. You know, sometimes what we consider as 

13 people who are professionals to one degree or the 

14 other in this realm, you know, as being obvious 

15 isn't obvious to the average consumer.

16 Even more importantly, even if you're 

17 going into, you know, the great -- if you're going 

18 to Harvard, it doesn't mean that your parents have 

19 a Harvard level education when they're reading it 

20 and trying to understand. So I think that that's 

21 why the consumer testing is really important.

22 Just from my own standpoint, you know, 

23 my first time I encountered a loan because my 
128

1 parents were able to pay, thank God, for undergrad 

2 and the first year of law school. But I had no 

3 idea that I was getting into, you know, the former 

4 loan program that allowed you to take out private 

5 loans for grad debt.

6 And I didn't know that I couldn't 

7 consolidate it with my federal loans, and I didn't 

8 know that, you know, I wasn't going to be able to 

9 get an income-based repayment program on that. 

10 And now ten years later, I still have the same amount 

11 of debt as I had when I took it out. I was smart 

12 enough to get into the University of Michigan law 

13 school, which as Pamela said has a very low 

14 admissions rate. I hope we all notice.

15 (Laughter.)

16 MS. BARKLEY-DENNEY: So you know, I --

17 right. But yeah. So you know, I just want to 

18 qualify that as, you know, even if I as someone 

19 who now works in this didn't understand it as a 

20 22 year-old or 23 year-old, it's probably hard for 

21 somebody as an 18 year-old to understand it.

22 MS. SARGE: So that's kind of the 

23 point, right. I'm sorry. I'm going to directly 
129

1 respond. Whitney, that's exactly it, and I'm 

2 wondering -- I think it's somewhat imperative for 

3 all groups that are at the table. I can certainly 

4 speak that some of my clients have gone out and 

5 done focus groups. They've paid for that, they've 

6 done that and all that, to find out what works for

7 the student on a variety of issues.

8 Now if this is important, we need to 

9 get to what's going to work, because no matter how 

10 hard we try to come up with something and put it 

11 in the front of a 22 year-old, sometimes it just 

12 means you have to go through the process before 

13 you even know you had questions about it at the 

14 beginning, right? I mean it's like driving a car 

15 or anything. 

16 But the more experienced you are in a 

17 scenario, then oftentimes the more questions you 

18 end up coming up with that we can't think of or 

19 know of. So I'm -- I think one school has 

20 done -- one anecdotal way they've done a great job 

21 is they have required their students to go to 

22 financial literacy every quarter. It's mandatory 

23 for every student in the school, and they go through 
130

1 all these disclosures again.

2 They talk about their debt as they 

3 become more experienced. Through their journey 

4 of accumulating debt, they make it mandatory for 

5 the student to go. So in essence their associate 

6 students, two year, they've gone eight times and 

7 that's after they had all the disclosures. 

8 So I think my point is we've got to know 

9 from you guys. I want to hear what's out there, 

10 not just anecdotally the exceptions, but what would 

11 work so that we could do it and figure it out. 

12 So we need that information from you guys, not the 

13 department. I don't think they're the right 

14 people.

15 MS. MILLER: Sandy, thank you. Okay, 

16 Kelly, then Jen Blum, then Daniel.

17 MS. MORRISSEY: This is Kelly. I have 

18 concerns about the template in general if we are 

19 now expanding our universe to all educational 

20 programs, because this was designed for a view of 

21 gainful employment programs. So now what is 

22 relevant to a student entering a short-term 

23 certificate program designed for them to obtain 
131

1 gainful employment is not relevant, does not have 

2 the same relevancy as that of a bachelor's degree 

3 student or an associate degree student in a liberal 

4 arts program.

5 For example, a typical liberal arts 

6 student in a two-year program is perhaps not looking 

7 at the types of occupations that they're being 

8 trained for. They're looking for what types of 

9 programs they can then transfer into at the bachelor 

10 degree level.

11 I also wonder if we could examine the 

12 fact that the students graduating on time really 

13 is not reality in terms of in a one-year program 

14 why are we reporting how many students graduate 

15 within a 12 month period, where the typical student 

16 never graduates within one year for many different 

17 reasons.

18 So I think that many of these different 

19 elements really require further examination if 

20 we're now applying these disclosures to all types 

21 of programs. Furthermore, I really want to 

22 emphasize the fact that I agree with my colleague 

23 Andrew in terms of the overwhelming job it would 
132

1 be for all of us to obtain active confirmation of 

2 the fact that students have read these disclosures.

3 However, I am very, very concerned 

4 about how can we amplify what is in these 

5 disclosures, so that students are using this 

6 information to make enrollment decisions. I 

7 listened very carefully to the public comments that 

8 were made particularly yesterday, and the 

9 information that students are making enrollment 

10 decisions about are advertisements that they see 

11 on TV or a few other types of media that are making 

12 claims about earnings potential of their graduates, 

13 and they're not based on any reality.

14 How can we ensure that instead, 

15 students are using the earnings data that is in 

16 these disclosures? Why can't we get at the fact 

17 that these schools are making these false 

18 advertising claims that are not related to any type 

19 of fact in terms of the graduates' earning 

20 potential?

21 MS. MILLER: Thank you. Jen Blum.

22 MS. BLUM: So I think I said I have a 

23 list. I'm going to try to be really thoughtful 
133

1 about this. So first of all on consumer testing, 

2 I would really urge the Department that on the items 

3 that they're adding, so anything that's being 

4 changed, that they do consumer testing around and 

5 that segues me to licensure.

6 But actually first Kelly, I just want 

7 you to -- I just want to clarify something. Gainful 

8 employment programs today include university level 

9 programs, and so we've been shoe-horning for years. 

10 So I just want to -- so it is -- I hate to say, 

11 but it is doable. It's just magnified obviously 

12 exponentially now, but I do want to say that it 

13 is. 

14 Okay now I'll go to licensure. I 

15 actually want to put on the table right away two 

16 things. One is that I totally understand the need 

17 for disclosure in this area, but we need to get 

18 a little bit of a reality check about how we do 

19 it, and how best to do it.

20 And so I am going to list out some of 

21 my concerns, but right off the bat I want to suggest, 

22 and this is going to be very hard for me 

23 logistically, but I want to suggest a subcommittee 
134

1 during the time between session 2 and 3, of Laura, 

2 me, non-profit representation and I think that 

3 actually could be it, although I welcome others. 

4 But I'm just -- those are the ones that I absolutely 

5 need to have, to get to a better place on what's 

6 being proposed. 

7 Let me just quickly, and I'm going to 

8 do it quickly and I purposefully came up with the 

9 subcommittee idea, because we could spend hours 

10 on licensure and I want to respect the time. So 

11 I would urge us to consider, and it needs to be 

12 frankly a smaller group to really get at how to 

13 solve this.

14 So let me just say really quickly, I 

15 just want to give you another example from the 

16 template and this is current. So obviously the 

17 department's making changes, but the current 

18 template requires you to select when there's not 

19 -- so when there's a state where your program does 

20 not lead to licensure, the pop-up, right. So you 

21 have to sort of flag those states where there's 

22 an issue.

23 The pop-up is the following state does 
135

1 not have licensure requirements for this 

2 profession. What? That's not -- so I'm just. 

3 I'm pleading that we get this right on the template, 

4 and that we have a reality check. So the other 

5 thing I want to say is this ties to program 

6 disclosures. But for any one program, there could 

7 be multiple potential licenses that are possible 

8 in each state by profession. 

9 I love the fact that the department 

10 keeps using the word "any state" or "the state," 

11 as if there's one license in each state. There 

12 are hundreds of licenses and licensure boards in 

13 each state. So your drop-down can't be by state. 

14 It's got to be every single licensure board, every 

15 single license, and I'm not saying it's not doable.

16 So I just want to be on -- we understand 

17 the need for students to understand something about 

18 licensure. We also need for them to be 

19 responsible, to then get educated themselves on 

20 what those licensure requirements are to some 

21 degree, because they fluctuate and change while 

22 the students are enrolled, and we work -- we have 

23 talked about resources. 
136

1 We have a whole cadre for each of our 

2 licensure programs to work through this. But it 

3 is time burdensome, and so, you know, that example 

4 is a pretty stark one that I just gave. But there 

5 needs to be -- there has to be a serious drop-down 

6 list that's not just by program, because it's by 

7 license and that's very complex to get to. So I 

8 urge us to sort of spend more time on this one.

9 MS. BUCK: I want to interrupt just a 

10 minute, to tell you that it has been 45 minutes. 

11 I told you I would let you know when that had 

12 passed. I think from seeing the cards up that you 

13 probably would like to continue this until 

14 probably 12:00 and stop for lunch at that point. 

15 Does that sound okay with people? 

16 Okay. Now there was also a proposal 

17 of a subcommittee that was just made. Are the 

18 people that proposed -- sorry, and the department 

19 probably should be included, sorry. 

20 MR. MARTIN: Can I make a comment about 

21 that? I just want to say, and I'm not saying we 

22 can't have a subcommittee, anything like that. 

23 If we're talking about the structure of the 
137

1 template, remember what the regulations say, is 

2 that we require you to use the template. Nothing 

3 in regulation currently or proposed -- we're not 

4 putting the structure of the template in 

5 regulations.

6 So every year we issue the template. 

7 We will soon have our Federal Register out, which 

8 will give everybody the opportunity to comment on 

9 the template and what might be improved in the 

10 future. I wholeheartedly agree that there are 

11 things that could be improved with the way that 

12 the template captures information.

13 But I just want to be certain that we 

14 don't have a structure here that, you know, we're 

15 not going to regulate how the department structures 

16 the template. Is that -- I just want to -- I just 

17 want to make that clear. We certainly -- we 

18 certainly put out the Register and we get comments 

19 from the community on how the template is structure, 

20 take those back. 

21 But I just want to be certain that we're 

22 not talking about, you know, a whole new regulatory 

23 section here which would lay out how not what will 
138

1 be required of the template, but how we'll structure 

2 the template. I'm not sure that's appropriate --

3 MS. BLUM: Understood, except that the 

4 following. I totally understand that, don't want 

5 to create a whole new regulatory framework around 

6 the template. But because the regulatory language 

7 leads to what the template includes and how it's 

8 structured, the regulations have to be much more 

9 clearly written than they are with regard to 

10 licensure. It makes assumptions. In the regs, 

11 it makes it look like each state has one license, 

12 you know, there are hundreds in each state.

13 And so the regulations need to reflect 

14 what ultimately is going to be on the template. 

15 Then I will say how the department then this is 

16 a huge problem for institutions, and if it spreads 

17 to all institutions, it's going to be a huge problem 

18 for all institutions, where students are being 

19 misinformed.

20 So let me give you one other example 

21 that's not licensure, completion. You have on 

22 completion, because we have graduate programs, you 

23 have an N/A with an asterisk that says N size less 
139

1 than ten. That's not why our completion rate's 

2 not there. Our completion rate's not there because 

3 we don't -- it's a completion time at the doctoral 

4 level of more than 54 months.

5 So you don't allow for that ability. 

6 So completion, so here's another one. Completion 

7 and withdrawal, which you have here and this is 

8 what leads to the template, you don't allow for 

9 true completion and withdrawal rate, which causes 

10 huge confusion at the graduate level, huge 

11 confusion at the doctoral level in particular. 

12 So that's another area where I don't have time right 

13 now to give you a proposal.

14 But we would have proposals around what 

15 the completion and withdrawal rates should look 

16 like, because the result of having these vague 

17 regulations is that you don't have good templates, 

18 and then there's a problem on the student end.

19 MS. MILLER: Thank you Jennifer, okay. 

20 So before we take a vote or a temperature check 

21 on the subcommittee, we still -- I do want to say 

22 that it is 11:46 and we have six tents still up 

23 who still need to make a point, okay. So let's 
140

1 take a temperature check on the subcommittee for 

2 licensure as Jennifer Blum has proposed, and that 

3 includes the people who would be on it.

4 (Show of hands.)

5 MS. BLUM: And there could be others 

6 on it.

7 MS. MILLER: It's a subcommittee for 

8 the licensures.

9 PARTICIPANT: Is it limited?

10 MS. MILLER: The people, one is Laura, 

11 some other.

12 PARTICIPANT: Could we add? I mean I 

13 would like to include a consumer representative 

14 and a student maybe. 

15 MS. MILLER: Right. We can figure out 

16 who would be on it.

17 MS. BLUM: Yeah. I was just saying the 

18 people who I felt like are involved in the issue, 

19 who needed to be on it and then I don't -- it can 

20 be others.

21 MS. MILLER: And if you want to be on 

22 it, you can see Jennifer or Laura to ask if you 

23 want to be on it.
141

1 MS. BUCK: So it sounds like that it 

2 is positive, so talk to her about it.

3 MS. MILLER: So no thumbs down on that. 

4 Daniel.

5 MR. ELKINS: Just had some, a 

6 clarifying question from the department. I'm 

7 going to piece together some of the code, so I will 

8 start on page one. Then we'll go to page 2 and 

9 then 3, starting in "Disclosure Template," line 

10 1, 2, 3. I'll just read it out and you can just 

11 follow and let me know if I'm hearing this 

12 correctly.

13 "An institution must disclose template 

14 provided by the Secretary to programs, to enroll 

15 perspective students. That information may 

16 include, but is not limited to." Then breaking 

17 to page 3, item 13(i). "Whether the program does 

18 or not satisfy." A, B and C all talk about 

19 licensure. 

20 Then 16 "For programs preparing 

21 students in the field requiring licensure, a URL 

22 link to the state's mandatory qualification for 

23 licensure." So can you just provide clarity? When 
142

1 you piece all those together, basically what I read 

2 it is we're not requiring an institution to disclose 

3 specifically that it will not prepare a student. 

4 Is that -- is that how we should interpret that 

5 currently?

6 MS. BUCK: Don't forget to turn your 

7 speaker on.

8 MR. MARTIN: I'm sorry, yeah. So 

9 you're talking about -- well I'll start with your 

10 first one there, where you talk about the template 

11 itself, where it says "The information may include, 

12 but is not limited to." That is the way the current 

13 rule is written, that allows the department 

14 flexibility is what we require.

15 I think that was written originally 

16 with the intent in mind that the department would 

17 not be limited to what is here. If there's 

18 something else we thought we should -- we wanted 

19 to require to be disclosed, we could do that and 

20 not be limited by the regulation. So that remains 

21 as is. The next one you went to was on page 3, 

22 is that correct?

23 PARTICIPANT: Yes.
143

1 MR. MARTIN: At the bottom where it 

2 says what the --

3 MR. ELKINS: 13.

4 MR. MARTIN: 13, whether the program 

5 does or does not satisfy. So it's either one, 

6 whether it does or does not as written here. So 

7 the template does collect that. As Jennifer 

8 pointed out, there are some operational things with 

9 it. It's really hard to -- you have to think 

10 about -- it helps to have seen the template, to 

11 see how that works. But currently, that is what 

12 we do, we have required, about licensure. 

13 MR. ELKINS: What I would then propose 

14 then is a change in the statute to -- that "the 

15 information may include but is not limited to," 

16 to "the information must include" and then you would 

17 carve that out to the licensure pieces.

18 MR. MARTIN: Can't change the statute, 

19 but yeah. As far as like including --

20 MR. ELKINS: Right, yeah. I got it.

21 MR. MARTIN: Are you suggesting that 

22 -- were you suggesting that we say must, that we 

23 obligate ourselves to that?
144

1 MR. ELKINS: Yes.

2 MS. MILLER: Okay. So Todd, then 

3 Steve Chema, then Johnston.

4 MR. JONES: Well, the licensure 

5 discussion greatly limited what I'm going to need 

6 to say about this. But I think there is a serious 

7 misunderstanding on the department's part about 

8 the unified nature of licensing, and also an issue 

9 I'll get to is the variability of kinds of licenses 

10 that are available under an educational program 

11 that may or may not be linked to what is perceived 

12 to be the student's goal.

13 You look at different types of 

14 educational and assistance aid programs that some 

15 do, some don't. You look at the division between 

16 teaching programs, where is your elementary 

17 education program something that permits you 

18 licensure for fifth graders or fourth graders? 

19 Well there are states where you have -- like mine 

20 at one point, a four to seven licensure, which is 

21 elementary school but it's for the middle grade 

22 bands.

23 The differences in licensure there are 
145

1 putting, we keep using this description, it's 

2 putting the department down a rabbit hole and it's 

3 taking the schools with them, that is simply not 

4 going to be possible for anyone to verify if 

5 thousands of schools in tens of thousands of 

6 programs, in thousands and thousands of different 

7 licenses are going to be applicable here. 

8 I guess that's my greatest concern is, 

9 and hopefully we can come up with some language 

10 that limits that. But I hope everyone who's 

11 discussing this in the interest of students is 

12 thinking about how do we modestly understand to 

13 make this workable. Because if it's unworkable, 

14 it's going to be like the piles of notices that 

15 we've been throwing at people for the last 40 years 

16 in the interest of consumer protection.

17 At a certain point, it just becomes 

18 things to use as doorstops, and nobody pays 

19 attention. I think if we're going to make this 

20 one around licensure a useful one, and it should 

21 be, that we need to do it in a way that's not going 

22 to be one that is requiring a degree of universal 

23 precision to every conceivable license. It's just 
146

1 not going to be viable.

2 MS. MILLER: Steve Chema.

3 MR. CHEMA: Steve Chema. Sort of 

4 glomming onto Todd's concept of piles of notices, 

5 I wanted to turn the discussion to the treatment 

6 of promotional materials on page 5 . You know, 

7 I want to at least suggest based on, you know, what 

8 we've been hearing that we consider, you know, the 

9 balance between burden on the institution and the 

10 efficacy of this.

11 I know Kirsten, when she was discussing 

12 the direct distribution of the template, you know, 

13 mentioned that one time, and I think Johnson has 

14 said this similarly throughout the session, that 

15 you know, at the time a student is making a financial 

16 commitment or making a decision to apply or become 

17 admitted is, you know, a useful time for this 

18 information to be in front of them.

19 But when we're talking about 

20 promotional materials, we're not there yet. We 

21 may be very far from ever getting to that point, 

22 and yet there's a whole lot that you have to do 

23 in order to comply with the current rule and, you 
147

1 know, that would all continue in this proposal. 

2 So you know, I want to consider whether we really 

3 feel like it's necessary to try to reproduce this 

4 disclosure on every piece of promotional material 

5 that, you know, mentions a program by name or 

6 otherwise promotes the program.

7 I mean that's a lot of things, you know. 

8 We're discussing catalogues, invitations, flyers, 

9 billboards, advertising on broadcast, print, 

10 digital media and so forth. Some of those things, 

11 it's fairly easy to pop these disclosures in the 

12 back of a catalogue. That's probably appropriate 

13 frankly. But you know, how do you do it on, you 

14 know, broadcast media or through social media?

15 The department with the current rule 

16 has said through guidance for a long time that, 

17 you know, where it's impractical, you know, to 

18 reproduce this information that's on your template, 

19 you can go ahead and indicate through a phrase and 

20 a link back to your website, you know, a way for 

21 the interested party to get to those disclosures, 

22 and that phrase says something like important 

23 information about educational debt, earnings and 
148

1 completion rates of students who attended this 

2 program, you know, four more important and then 

3 the link.

4 Even that creates in practice some real 

5 problems and challenges with ways that schools 

6 attempt to promote their programs in their 

7 institutions. Specifically, if you're engaging 

8 with any number of vendors that do social media 

9 campaigns or digital media campaigns, oftentimes 

10 the way that these things work is that you craft 

11 your message, and there's only one --

12 You can embed a link, but just one. 

13 And so you're defeating the purpose of your 

14 promotional campaign if you're going to say 

15 something about your school or something about your 

16 program, and then all they can go back to is the 

17 page for your disclosures. They don't get to see 

18 the landing page for your school, the information 

19 that you also wanted to show them, really what the 

20 whole point of the exercise was.

21 So there's some -- there's some 

22 disconnect between, you know, how we can actually 

23 do this in a way that still allows for channels 
149

1 to reach students, prospective students, and 

2 whether it's the appropriate time to do it. 

3 So I'd ask that we consider whether 

4 promotional materials, as they're defined here, 

5 need to be defined so broadly, and whether we can 

6 have a more informed approach about how we can 

7 provide that information when it's not practical.

8 Getting back to the idea of giving a 

9 "for more information" phrase with a link. Why

10 can't we have at least a two click solution, you 

11 know. Have a link to a landing page that also 

12 contains on it information about, you know, with 

13 one click that can get to a disclosure. 

14 I mean, you know, these are ideas that 

15 at least allow institutions to continue to do the 

16 kind of marketing that they want to be able to do 

17 without, you know, running afoul of the rules here, 

18 assuming we feel like we still need that, you know, 

19 to have this treatment.

20 MS. BUCK: I think there are two more 

21 people, and then after they speak, I'm proposing 

22 that we stop for lunch.

23 MS. MILLER: Yeah, so Johnson and then 
150

1 Whitney.

2 MR. TYLER: Oh, I do have -- I really 

3 think disclosures are not a useful way to achieve 

4 what we're trying to do here. I'll just say that. 

5 If we really want to get the bad apples out, we 

6 have to create sanctions that will get them out 

7 of the field or improve their game, not try to inform 

8 people that this is a bad place to go. So I really 

9 feel strongly about that.

10 Having said that, almost everyone has 

11 the experience of someone saying you need to read 

12 this before you're committed to this contract, to 

13 see this doctor, to come to legal services, all 

14 this stuff. We all have to do that. 

15 So at the very least, I think when 

16 you're signing up for school, you've got to have 

17 some statement that you're looking at that gets 

18 unloaded in the system, that shows that you are 

19 aware of what you're getting into, or what the 

20 program is about. So those are my two thoughts.

21 MS. MILLER: Whitney.

22 MS. BARKLEY-DENNEY: Just to echo what 

23 Johnson said, I think that this is incredibly 
151

1 important, and I hear the concerns that we get it 

2 right around the table, though I will say that, 

3 you know, I just think we need to remember that 

4 we are here not only to reduce the burden on 

5 institutions, but find a way to balance that with 

6 protecting students and taxpayers.

7 I want to make sure that that is at the 

8 forefront of our mind. Frankly, you know, I think 

9 that -- never mind. I'm not going to say that. 

10 So you know, I just want that to be the last thing 

11 on our mind as we go to lunch, is that that's what 

12 we're here to do.

13 As Daniel pointed out so eloquently, 

14 this is one of the biggest complaints that we hear, 

15 is that people didn't know that either the licensure 

16 that was being pushed by the school was not actually 

17 a relevant licensure for employment. So we all 

18 know that there are thousands of licensures or 

19 tests, certification tests that are floating around 

20 that employers don't care about.

21 And we need to make sure that what we 

22 are telling students when we are, as the person 

23 spoke to about yesterday, advertising to them, 
152

1 promoting things to them, that the licensures are 

2 contained in that and that they are the relevant 

3 licensures for what they're going to need in order 

4 to actually work in their field, because that's 

5 what we are getting at, right, gainful employment 

6 in a recognized occupation.

7 If you don't have the right licensure, 

8 you cannot be gainfully employed in the occupation 

9 that you studied for. So that's all I have to say.

10 MS. BUCK: Thank you. Now there was 

11 a proposal that we have a working lunch, but I saw 

12 some objections to that. So I'm thinking that we 

13 should go ahead and have a break for lunch, and 

14 come back and try to do 7 and 8 pretty quickly. 

15 So is an hour the right amount of time? I think 

16 I heard yesterday 45 minutes is not long enough. 

17 Is that correct?

18 (Off-microphone comments.)

19 MS. BUCK: So we'll come back promptly 

20 at one o'clock. See you then.

21 (Whereupon, the above-entitled matter 

22 went off the record and resumed following a brief 

23 recess.)
153

1 MS. BUCK: I hope you had a good lunch, 

2 a good rest, and we're now in the last half day 

3 for this session. I again appreciate all your 

4 work. I think what we want to do now is to quickly 

5 go through 7 and 8. 

6 Not that we've thoroughly covered any 

7 of them, but quickly go through 7 and 8, and then 

8 allow time for the proposals that many of you have 

9 really been wanting to focus on. So let's start 

10 with 7.

11 MR. MARTIN: We're going to start with 

12 7? While we're doing that, I'm going to be passing 

13 around something we have that explains the Social 

14 Security Administration's master earnings file. 

15 So Steve will be passing it to one side and I'll 

16 pass it to the other. Thanks a lot. I appreciate 

17 it. 

18 Okay, thanks. We'll get started with 

19 Issue Paper 7. This is reporting requirements, 

20 and this one's pretty simple actually, because you 

21 can see the consistency of nothing but strikeouts.

22 So it goes back to what we talked about in the 

23 beginning with scope and purpose, where we had 
154

1 proposed to eliminate reporting requirements in 

2 favor of an administrative calculation of debt to 

3 earnings, based on information that is currently 

4 in NSLDS.

5 Our reasons for doing or currently 

6 being reported to NSLDS by institutions under 

7 enrollment reporting. So I think we've gone over 

8 the basics of this already, obviously the huge plus 

9 for this is that it eliminates a lot of burden on 

10 the part of institutions. 

11 I think any institutions here who had 

12 -- who have programs that had to do the reporting, 

13 especially if they had a lot of programs and a lot 

14 of students, can tell you that they had at least 

15 some modicum of burden associated with that 

16 process, and so the option would be that we had 

17 in front of us was to try to seeing as we were 

18 expanding this to all institutions, all programs, 

19 would be to expand that DE reporting under NSLDS, 

20 which is separate than enrollment reporting, a 

21 separate process. Expand that to include all 

22 schools, all programs, or to find a way to do it 

23 administratively without having to make schools 
155

1 report.

2 This obviously reduces a great deal of 

3 burden, takes off the table a great deal of burden, 

4 and we already know that the potential other side 

5 of this, which consider it a give or a take, 

6 whatever, would be that in looking at what 

7 information we have being reported to NSLDS, what 

8 that doesn't include.

9 So it doesn't include tuition and fees, 

10 books and supplies, which would allow us to do the 

11 capping of debt at that level. It also on the other 

12 side of that equation does not take -- does not 

13 capture either institutional or private debt. 

14 Which means that DE calculation could 

15 not include any of those items. So I just before 

16 -- everything's on the table, throwing it out there 

17 for discussion. Just want to say a couple of things 

18 that are absolutely in stone, which is that the 

19 only options for us to go, direction for us to go 

20 in if we're going to continue to calculate DE rates 

21 going forward without a huge amount of lag time 

22 is to either use the information we have or require 

23 all schools to do what is under the current DE 
156

1 reporting. So go forward from there.

2 MS. MILLER: Okay. Does every --

3 first of all, does every negotiator have the paper 

4 that Greg is talking about, that he just handed 

5 around?

6 MR. MARTIN: Oh, that's the Social 

7 Security master file. Hopefully you'll have --

8 MS. MILLER: Does everyone have it? 

9 So Jennifer, Whitney and then Laura.

10 MS. BLUM: So on that last point, so 

11 just I mean this again, this issue paper is relevant 

12 to what we end up working on in terms of the debt 

13 to earnings metrics, because it goes back to this 

14 all debt issue. And so if -- you know obviously 

15 I'm fine with this issue paper as with all the 

16 strikeouts if the metric accommodates the notion 

17 that we're talking about all debt, which it 

18 currently doesn't really contemplate.

19 So that's a metrics conversation. But 

20 what I would say is is that, and you've said this 

21 a couple of times now Greg. In my mind there is 

22 a third option, which is the ability of institutions 

23 to report, which they can, the amount of loan that 
157

1 they keep versus the amount of loan that goes to 

2 the student.

3 So I'm just flagging that. I don't 

4 want to get into a huge conversation because I think 

5 we need to move on, because I also think that's 

6 a metrics conversations. But sort of reserving 

7 the right that that -- this is going to come back 

8 up and that would be one place where there would 

9 be a reporting.

10 MR. MARTIN: Could I just ask what 

11 mechanism you would foresee that being reported 

12 through?

13 MS. BLUM: Well I mean that's a good 

14 question, but there wasn't really -- I mean was 

15 there a peer mechanism before we started Gainful 

16 1 on tuition and fees? We created that.

17 MR. MARTIN: We created the whole 

18 gainful employment, DE reporting process for that, 

19 that whole file you have to submit. So I mean 

20 there's not -- what I'm saying is there's not --

21 we don't have a way to build in either getting 

22 tuition and fees or what you propose, getting the 

23 amount that was credited to the student's account, 
158

1 as opposed to the amount that --

2 All those require modifications to 

3 current DE reporting, I mean current NSLDS 

4 enrollment reporting, if we weren't going to use 

5 the DE reporting.

6 MS. BLUM: So I'm just going to say 

7 something along the lines of what Whitney has said 

8 before, in terms of like oversimplifying to the 

9 point of bad policy. So I hear you on the 

10 constructing, but I mean we're creating a 

11 regulation, and so creating -- It's hard to just 

12 think about the fact that we're confining ourselves 

13 to the limited abilities of the department, and 

14 so we're going to deal with --

15 I mean so I'm just bringing it home 

16 that's just going to definitely affect how the 

17 metric looks if you're including all debt, which 

18 I don't think is good for students because I think 

19 you're burying the lead for students, by the way, 

20 by doing all debt, because the lead for the students 

21 should be like what is a tuition that I'm paying 

22 at the school.

23 I'm not saying that the living expenses 
159

1 isn't also relevant, but you're burying -- you're 

2 putting all the story into one piece of information 

3 conglomerated, you know, instead of broken apart. 

4 And so I hear you, but it's a little disappointing 

5 for you to say we're moving away for gainful, but 

6 if we're going to do a reporting it has to be using 

7 the gainful framework technology.

8 I mean so that piece seems a little 

9 twisted to me but -- or we're not doing reporting 

10 at all, which is also an extreme in terms of the 

11 all debt issue. So I'm just flagging it. It's 

12 going to come up again when we talk about the metric 

13 so --

14 MS. MILLER: Whitney.

15 MS. BARKLEY-DENNEY: So I want to 

16 reiterate something that we talked about, another 

17 issue paper which I don't remember which one it 

18 was. But the elimination of institutional and 

19 private loan debt is a real issue here. I think 

20 most people around this table would agree that for 

21 the vast majority of borrowers, federal loans are 

22 a better option given their repayment rates, the 

23 repayment options that private and institutional 
160

1 loans don't have.

2 What we don't want to do is set up an 

3 incentive for bad actors to push borrowers into 

4 private and federal loans in order to mask the 

5 overall loan debt that people are taking out in 

6 order to go to their institutions. So however we 

7 need to figure it out, I think that institutional 

8 and private loan debt is incredibly important to 

9 really understand the financial health of a 

10 borrower, particularly if they've borrowed that 

11 obviously for the tuition.

12 MS. MILLER: Laura.

13 MS. METUNE: Second to Whitney's 

14 comments, and maybe just a question to the 

15 department about, I mean we know with Corinthian 

16 what happened in regards to those loans, and I'm 

17 wondering if you've thought through what the other 

18 mechanisms to identify that kind of a problem early 

19 on might be and how the department could address 

20 it outside of this metric. I'm certainly open to 

21 those ideas as well.

22 MR. MARTIN: I'm not sure I can 100 

23 percent speak to what -- what happened at Corinthian 
161

1 and to what extent other mechanisms were used or 

2 could have been used to catch what was going on 

3 at an institution like that. You know, as far as 

4 -- with respect to reporting, I don't know -- you 

5 know, and I acknowledge that if we go this route 

6 with getting rid of this, that there are certain 

7 things we just -- we just can't use.

8 And that that's -- that it's correct 

9 to say that we're looking at that from a 

10 practicality level first and foremost. Again, 

11 other mechanisms we can use other than this? We 

12 certainly are aware of institutions' financial 

13 difficulties. We look at that. We have letters 

14 of credit we can require of schools and we have 

15 done that. 

16 We've done some very large ones. So 

17 there are a lot of other things we have in our, 

18 I hate to say arsenal; that sounds a little bit 

19 military. But at our disposal, let's put it that 

20 way, that we can use to go after those players that 

21 are chiefly responsible for abusing the programs. 

22

23 And you know, but probably at varying 
162

1 levels of success with that. But with this 

2 particular thing, again there is a certain level 

3 of practicality involved with it. I mean you have 

4 to understand if you're going to say that we're 

5 going to include all these other things in this 

6 calculation and we're including other programs, 

7 other schools, not just GE programs that going 

8 forward --

9 PARTICIPANT: It's good to be useful.

10 MR. MARTIN: I should point out, I mean 

11 people think I have this group of people probably 

12 who are required to bring me things. By and large, 

13 the people bringing me things are above me in pay 

14 grade so it's -- they just do it because I'm such 

15 a nice guy, not because they have to. So yeah, 

16 we're looking at then having to get that 

17 information, to understand it from schools that 

18 are currently have GE programs. We have that 

19 information. You're reporting it to us. You're 

20 required to do it.

21 But then if we look at a school, a 

22 program that wasn't required to report, we have 

23 to get a certain number of years of that data before 
163

1 we can start to put those rates out inclusive of 

2 that tuition and fees, private and institutional 

3 debt. So there are ramifications to it however 

4 you go. 

5 MS. MILLER: Sandy, Kelly, then 

6 Johnson.

7 MS. SARGE: So this is Sandy for the 

8 record. So I just want to make sure that I recall 

9 properly what -- the proposal is that it would not 

10 be all debt. I think this is -- it would be only 

11 the Title IV debt as we've been saying.

12 One of the things that is potentially 

13 difficult with private loans is that the -- doesn't 

14 always come to the school. It can come to the 

15 individual and then they pay the school cash. So 

16 we don't know that it's necessarily a private loan 

17 sometimes.

18 Now other organizations like Nelnet, 

19 Sallie Mae, and all those guys, they do send 

20 directly to the school. So it's a combination. 

21 Private banks not always. But I just want to make 

22 sure. At this point, I think we need to keep in 

23 mind tradeoffs. 
164

1 So length, where we may have the Title 

2 IV debt, which is not necessarily representative 

3 of the lower cap on two, you know, it's more on 

4 the numerator, the extending of the amortization 

5 could in effect bring it back into line of what 

6 it would have been more specifically.

7 I think we're -- I agree with Greg's 

8 point. We have to start thinking about some 

9 practical ways to get to a place where numbers are 

10 meaningful, and that's what I would continue to 

11 encourage us all to think about. Like are there 

12 tradeoffs here that we can talk about, so that we 

13 get to a number that makes sense for students?

14 MS. MILLER: Kelly.

15 MS. MORRISSEY: My comments are 

16 similar to Sandy's, in that I believe this is 

17 definitely a tradeoff. We are definitely 

18 welcoming the easing of administrative burden that 

19 was involved with the former GE reporting 

20 requirements. 

21 I think as we discussed in December, 

22 there may be opportunities to include data elements 

23 in our current reporting structures that are not 
165

1 present at the moment, that would allow us to report 

2 tuition and fees that are being covered by Title 

3 IV borrowing.

4 I understand that's in the future and 

5 maybe that's a goal that we could work towards. 

6 But I think especially in an environment where we're 

7 looking to expand this to all educational programs, 

8 I don't see how it's practical to then pass that 

9 level of administrative burden on to institutions 

10 which will directly then pass along the 

11 administrative cost of that process directly to 

12 students.

13 That will result in less time for us 

14 to spend directly with students in counseling them 

15 about matters that are of grave importance to them 

16 in making enrollment decisions. So I really do 

17 think it is a tradeoff, but that's exactly what 

18 we're trading off.

19 MS. MILLER: Johnson, Whitney, then 

20 Chris Gannon.

21 MR. TYLER: I have two comments, first 

22 with respect to the private loans. I was looking 

23 at the website of a non-profit school the other 
166

1 day, trying to figure out the tuition there. When 

2 I went to tuition, it immediately popped up we 

3 already have an arrangement with a bank to do 

4 private loans. So and we're preapproved for 

5 $1,000, and it was a $3,400 program.

6 So it's -- it is a problem. It's a real 

7 problem, and those debts are very different than 

8 federal debts. But I do also appreciate what Greg 

9 was talking about, in terms of getting the data 

10 to protect the students sooner rather than later. 

11

12 I just want to respond a little bit to 

13 what Jennifer said about the people taking out money 

14 and using some for tuition and some for living, 

15 and we talk about this whole debt to earnings ratio 

16 as a return on your investment. And part of what 

17 is getting paid that doesn't get counted is your 

18 Pell grant, and if you're in California your Cal 

19 Grant, and in New York your TAP grant.

20 Those things don't get counted as a 

21 return on investment. So and when we look at the 

22 documents that Sarah gave us, we can see 90 percent 

23 of the people who are in the gainful group, the 
167

1 original gainful oversight group are getting Pell 

2 grants. 

3 So I really think we should put aside 

4 this issue of, you know, what was tuition, what 

5 was -- what went to living expenses, because there 

6 is a loss of opportunity. If you go to a school 

7 and you don't get a return on your investment that 

8 you could have gotten if you had taken your Pell, 

9 your TAP, your Cal aid to a higher performing 

10 school. 

11 MS. MILLER: Whitney.

12 MS. BARKLEY-DENNEY: So with regards 

13 to private loans, I do want to point out, and I'm 

14 sorry, I did not follow instructions and number 

15 all of my pages, but on the second page, I think 

16 we call it numerette ii, or 2, I don't know. 

17 Underneath 2, Roman numeral ii, so it was -- the 

18 rule was always conceived as what the institution 

19 should reasonably be aware of, and I think that 

20 there's some room if we decide to do this to figure 

21 out how to be more specific about that language.

22 But I am just going to reiterate that 

23 I think private loans are different than 
168

1 institutional loans, because the institution knows 

2 the institutional loans that they're giving out. 

3

4 So even if we say okay, the private loan 

5 thing was too hard, I think we really need to think 

6 about the institutional loan piece, especially 

7 again considering the abuse that we saw with the 

8 two institutions that rhyme with Smerinthian and 

9 PEE.

10 So we all know that they had 

11 institutional loans that they were expecting as 

12 investors a 50 percent default rate on those, and 

13 that's not really, I think, the same type of burden 

14 as figuring out a private loan.

15 MS. MILLER: Greg, Greg.

16 MR. MARTIN: You know the problem is 

17 with my glasses off, and with them on, I can't see 

18 this. So and I'm too vain to get what do they call 

19 them, progressives. Yeah, don't say that word. 

20 That's for old people, not me. 

21 All right, now. I just want to point 

22 out one thing, and this is just something to throw 

23 out there, that you know, to the extent that there's 
169

1 a concern about that we all know that schools can 

2 currently put students in other instruments other 

3 than the Title IV, private debts or whatever, we 

4 do have the capability of looking to see if students 

5 are -- if schools are pushing students into other 

6 forms of debt.

7 We can look at disbursement records, 

8 whatever, to see where a school is now. So you 

9 know, these rules go into effect and we noticed 

10 a huge decline in loan volume. We could certainly 

11 have our compliance people look at a school to see 

12 are they pushing students into other instruments. 

13 So we would have that capability. I just want 

14 to point that out.

15 MS. MILLER: Chris Gannon, then 

16 Daniel.

17 MR. GANNON: Yeah. So I have serious 

18 concerns leaving out private and institutional loan 

19 debt, because it incentivizes bad actors to issue 

20 bad institutional loans. I think that this would 

21 disproportionately hurt low income students.

22 MS. MILLER: Thank you. Daniel.

23 MR. ELKINS: It's already been said 
170

1 better than I could, so I second what Jennifer and 

2 Chris said.

3 MS. MILLER: Okay. Jeff, then Sandy.

4 MR. ARTHUR: Yeah. Having 

5 experienced the reporting process and 

6 understanding the burden, I mean I absolutely 

7 understand. It is not going to be practical for 

8 all institutions of higher education to go through 

9 that exercise. You just wouldn't get through it 

10 in three or four years for one year, to resolve 

11 everything and for it to be accurate.

12 But I've got an idea that might help 

13 move this along. Maybe not, we'll see. So if we 

14 look back at the disclosures, and the department 

15 has discretion. 

16 At some point when it's determined that 

17 there may be some way to gather, capture 

18 institutional, private debt, whatever, that why 

19 not just say okay, when the department's able to 

20 or at some point they've got the discretion to add 

21 that element to the disclosure, although it might 

22 not be in the DTE calculation for the official DTE 

23 disclosure.
171

1 But it still may be supplemental 

2 information that could be provided through the 

3 disclosure process. Better than nothing, right?

4 MS. MILLER: Any other comments or 

5 questions on this? Whitney.

6 MS. BARKLEY-DENNEY: Does anybody, and 

7 I'm not going to, I promise, attack you. I just 

8 have a question. Does anybody here issue 

9 institutional loans as part of their institution, 

10 other than -- Okay. So I guess my question would 

11 be as far as the burden in reporting those, I mean 

12 I imagine that they're somewhere, right, and it's 

13 a matter of just transmitting over the amount that 

14 has gone out per student. 

15 Like it seems like -- and unlike the 

16 private loans we have to go ask about that, that 

17 information should already be somewhere in a 

18 presentable format, because certainly you have to 

19 go back to your investors or to whomever's helping 

20 to fund that institutional loan program and show 

21 then what disbursements look like. 

22 MS. MILLER: Sandy, and then David, did 

23 you also want to answer?
172

1 MR. SILVERMAN: She asked about loans. 

2 I thought I raised my hands about loans.

3 MS. BARKLEY-DENNEY: Oh yeah. I was 

4 just asking is that -- I mean is it something, is 

5 it really that burdensome to transfer that. I 

6 understand the private loan issue, but I don't 

7 understand why it would be burdensome for the 

8 institution to show who's borrowing.

9 PARTICIPANT: We track it. I mean 

10 every school has a different amount of students. 

11 I mean at any one time we have 1,500 students, 

12 but some schools might have 25,000. We track it. 

13 We don't have investors by the way, but we track 

14 loans. We don't have too many. We just do it 

15 really --

16 You know, you're looking at 

17 institutional loans as a bad things. We do it as 

18 a good thing. We know they're hard to collect, 

19 but if the student really wants to come and there's 

20 a bridge of five-six thousand dollars, we'll give 

21 them a loan knowing it's risky. But they want to 

22 come to school, so we want to get them into school. 

23
173

1 So we kind of do -- or someone that's 

2 already in school and is having trouble. So we 

3 do it for a good cause, to keep them in school 

4 because they've already paid and they want to stay 

5 and they want to graduate. But yeah, we do track 

6 it and but I don't know how a bigger school would 

7 do the same thing.

8 MS. MILLER: Jeff and Kelly, do you 

9 want to respond on both?

10 MR. ARTHUR: Yes.

11 MS. MILLER: Well, I want to see if she 

12 didn't want to respond on the institutional behalf. 

13 So Jeff and Kelly.

14 MR. ARTHUR: Yeah. One of the points 

15 here, this is institutional debt, not institutional 

16 loans the way it's been used before, and that was 

17 not very well or actually not defined in a way that 

18 actually was institutional debt prior, and I think 

19 we discussed that at the last session.

20 I mean if you have payment plans, that 

21 they exceeded the TIL requirements, where you had 

22 to have a certain instrument, that that was being 

23 counted as debt even though -- so anything we do 
174

1 on institutional debt should be long-term planned 

2 debt, whether it's a payment that goes well beyond 

3 graduation. 

4 But the way it was done before is 

5 payments that were made, even if somebody had a 

6 balance that they had to clean up after they left 

7 school that -- or you know what? You owed a 

8 balance. You left school and you owed a thousand 

9 bucks. You should have paid that. Well now, you 

10 know, they take a few months to pay that.

11 But they're going by the LDA, what's 

12 a debt, and even payments that they had made by 

13 the LDA were counted as debt, which was pretty 

14 absurd.

15 MS. MILLER: Kelly.

16 MS. MORRISSEY: What Jeff said. 

17 MS. MILLER: Thank you, Sandy.

18 MS. SARGE: Yeah but to some degree 

19 yes, that's true, and oftentimes debt --

20 longer-term debt comes with an interest rate 

21 oftentimes, and much of the institutional gap 

22 payment plans that schools put in place, it's while 

23 they're in school there's no interest. Oftentimes 
175

1 there's never any interest on it. It is a way to 

2 support the cash flow deficiency between what they 

3 can get from other sources and what the tuition 

4 and/or living expenses may be, like if they're in 

5 dorms and stuff.

6 So there are institutions. I think it 

7 would be easy where -- you know, in order to get 

8 repaid, you have to know who has the debt, right? 

9 Who owes you money, right, yeah? And a lot of 

10 the schools that I work with, they have collections 

11 within the school. Some of them outsource that. 

12

13 But most of them that I've seen put 

14 together retail installment contracts, which is 

15 different than a loan for everything Jeff said in 

16 their payment plans. So yes, it is available.

17 MS. MILLER: Tim.

18 MR. POWERS: Yeah, and I just, you 

19 know, I'm not advocating one way or the other. 

20 But just to sort of jump in from the non-profit 

21 perspective, some of our schools do offer 

22 institutional loans and I'm not a financial aid 

23 administrator. Let me make that abundantly clear. 
176

1

2 But what they -- what we often hear is 

3 that it's in many times I don't want to call it

4 a bridge, but when there's an unforeseen financial 

5 disruption that can't necessarily be caught by the 

6 one time a year you fill out your FAFSA, it's a 

7 way for schools to sort of offer you a little bit 

8 of a lifeline. Again, not advocating one way or 

9 the other, but that's typically how our schools 

10 do it.

11 MS. MILLER: Sandy.

12 MS. SARGE: Could I just ask a 

13 clarifying question? So Chris, maybe you can be 

14 more specific in what you mean when you say the 

15 bad actors incentivizing bad loans, because I want 

16 to make sure that I am putting it in my head. What 

17 does that mean to you? What's a bad loan? What's 

18 -- explain that as a compared to how we've explained 

19 some of the financial mechanisms that the schools 

20 are using?

21 MR. GANNON: Yeah. I'm concerned that 

22 certain schools will issue loans to students, you 

23 know, to incentivize them to go to school that they 
177

1 can't repay, that they're not in a position to 

2 repay. So they're bad loans, because they can't, 

3 they can't essentially afford to take them on and 

4 they deceive them into taking them on.

5 MS. SARGE: And then when they don't 

6 pay, the school doesn't get the cash back. So 

7 they've loaned them the money. I just want to make 

8 sure that the relationship, it is a bad loan. If 

9 they don't pay it back, you know, that the next 

10 step is that that cash doesn't come back to the 

11 school.

12 They can't do that forever, because if 

13 they keep doing that -- they don't have the cash 

14 flow to run the school. So I want to make sure 

15 that if it was coming in from some other source. 

16 And you're thinking it's coming from investment 

17 money?

18 MS. BARKLEY-DENNEY: No. I'm 

19 thinking that you can get it back by selling it 

20 to a debt buyer. I mean you might not get 

21 everything that you have, but you know some schools, 

22 depending on the institution, and I'm not saying 

23 anybody here would do that. But you know, you could 
178

1 have a bunch of loans that you know you're going 

2 to write off as a loss, and then sell whatever you 

3 can to a debt buyer and get your profit from that.

4 MS. SARGE: Okay.

5 MS. BARKLEY-DENNEY: I mean, you know 

6 --

7 (Simultaneous speaking.)

8 MS. SARGE: That's a good example. 

9 That's a good example. I was just trying to get 

10 understanding.

11 PARTICIPANT: Or they're loss leaders, 

12 so that you can continue to be in compliance with 

13 9010 and can continue to get federal student loans 

14 and other private loans.

15 MS. BARKLEY-DENNEY: Yeah, that's 

16 right.

17 MS. MILLER: Jeff.

18 MR. ARTHUR: Yeah. I just also wanted 

19 to point out that I don't want anybody to get the 

20 impression that there aren't reporting 

21 requirements. This means there's no reporting 

22 requirements to the Department of Education. The 

23 disclosure process is still a tremendous reporting 
179

1 burden already.

2 So this is something that's layered on. 

3 Don't state that schools aren't going to have to 

4 do anything.

5 MS. BUCK: So are there other comments 

6 about Issue Paper 7? 

7 (No response.)

8 MS. BUCK: I think we're ready to move 

9 on to Issue Paper 8.

10 MR. MARTIN: Okay. I'm going to ask 

11 Cynthia Hammond from FSA to come up and join me 

12 for that discussion. 

13 MS. MILLER: While Cynthia's making 

14 her way up, I know Laura did a good job of handing 

15 out her memo on this. But does every negotiator 

16 have a copy of Laura's memo for Issue Paper 8?

17 MS. BUCK: And we'll let her comment 

18 on it shortly.

19 (Pause.)

20 MR. MARTIN: Do we all -- you know what? 

21 After we introduce this, I'll introduce the topic 

22 and maybe Laura can take just a few minutes to just 

23 briefly go over, just so we all know what that's 
180

1 about. Just a brief, I don't want to impose upon 

2 her to launch into some detailed thing, but just 

3 to give us a brief overview of what it is, so that 

4 people will recall.

5 I'll start with an introduction of the 

6 paper and then we can do that. Okay. We're

7 looking at Issue Paper No. 8, and this is 

8 certification requirements, and we propose to 

9 require that for any Title IV educational program 

10 that prepares students for employment in an 

11 occupation for which the state or federal 

12 government has requirements for certification or 

13 licensure, the institution certify and it's a 

14 program participation agreement that the program 

15 is approved by a recognized accreditation agency 

16 and meets the state or federal requirements. 

17 As noted previously, with the removal 

18 of loss of Title IV eligibility as a sanction, we 

19 propose to clarify the ramifications of that 

20 proposal by removing the requirement for schools 

21 to explain how a new program is not substantially 

22 similar to another low-performing program. 

23 Let's look through this briefly before 
181

1 we start. You'll note that we struck the language 

2 related to transitional certifications for 

3 existing programs. We don't feel that that is any 

4 longer germane. I'm trying to see what we did here. 

5 What else did we have to go through? Yeah. 

6 Basically eligibility and transition rates.

7 So that's the main thrust of what we 

8 did. So I'm not going to go through -- I'm not 

9 going to bother going through, in the interest of 

10 time, going through the whole paper. So why don't 

11 we take -- is Laura willing to give us a few minutes 

12 explanation of the paper?

13 MS. METUNE: So you might recall that 

14 I mentioned this when we gathered in December, when 

15 we talked about this issue of certification, and 

16 I think I've also mentioned that before coming to 

17 the community colleges, I was the regulator for 

18 California's for-profit institutions.

19 One of the first school closures I faced 

20 was in 2012, when an institution was found to be 

21 offering programs. They were related to MRI 

22 technicians for which they didn't have the proper 

23 programmatic accreditation and students ultimately 
182

1 weren't going to be able to sit for licensure.

2 Thankfully, students were being 

3 charged $14,000 and at the end of the day they would

4 be left with the loss of time, loss of money and 

5 no ability to get a job in this field. Thankfully 

6 California's laws were really clear. We said 

7 essentially that if you wanted to offer a program 

8 in a field that requires licensure by the state 

9 of California, you must meet the licensure 

10 standards for that program, so that the students 

11 could ultimately be qualified to sit for exam or 

12 to be licensed.

13 That provision of our law allowed the 

14 bureau that I worked at to take action to ultimately 

15 stop the school from enrolling new students and 

16 close the school, and we were able to get students 

17 back the tuition that they had paid. But we, you 

18 know, we prevented any more students from being 

19 taken advantage of, but we did have 400 students 

20 who even though they got their tuition back, they 

21 still lost their time and really their goals.

22 They realized that they had spent a lot 

23 of time towards a goal that they were no longer 
183

1 going to be able to fulfill. So putting aside the 

2 need to protect students, which is really a priority 

3 for me and it's probably obvious from the things 

4 I say while I'm here. I do want to recognize the 

5 burden that is placed on an institution when you 

6 have to go through a certification process to assure 

7 your program's qualified for state level licensure.

8 So when I thought about preparing this 

9 memo, I approached some of our career education 

10 programs to talk about this, and they were really 

11 shocked by the concept that an institution would 

12 offer a program that ultimately doesn't allow a 

13 student to be eligible for licensure. They felt 

14 that this was a no brainer, and that of course you 

15 would not enroll a student in a program that doesn't 

16 meet the requirements of the state.

17 We also talked about the growth in 

18 online education, and for some smaller states this 

19 issue of cross-border enrollments. They really 

20 felt like it's not an unfair burden for an 

21 institution to be responsible for ensuring that 

22 the student can ultimately sit for licensure in 

23 the state where the student is located.
184

1 So I appreciate that Issue Paper 8 

2 continues to maintain this requirement for the home 

3 state, essentially the state where the institution 

4 is located, and my proposal is that we extend that 

5 to the state where the student is located.

6 Essentially, that if I'm offering an 

7 online program say for nursing or teacher 

8 credentialing, I'm not going to enroll a student 

9 from another state unless my program meets the 

10 requirements of that state. I did recognize that 

11 there will be instances where a student might want 

12 to still enroll. Like if they have a plan to move 

13 to the state that meets the requirements, obviously 

14 that student should still be allowed to enroll, 

15 and I think that the language in this proposal 

16 addresses that and would continue to allow that.

17 I also just -- I do want to recognize 

18 that fundamentally there's a difference here 

19 between what's required for a student to practice 

20 in that field versus what additional certifications 

21 just might be recognized by the state. So this 

22 is really intended to be targeted only on that base 

23 level requirement to practice in the field, not 
185

1 the myriad of other optional certifications that 

2 a state might offer.

3 So what I was hoping to do is just spend 

4 a few minutes talking about it. I'm happy to 

5 participate in a subcommittee. I thought we could 

6 get your feedback, maybe take a temperature check 

7 to guide the work of the subcommittee, and then 

8 maybe discuss it in more length in March.

9 MS. BUCK: So maybe some initial 

10 feedback to the ideas expressed here?

11 MS. MILLER: Okay. Daniel, then 

12 Jennifer Blum.

13 MR. ELKINS: Thank you for putting this 

14 well thought-out document together. I couldn't 

15 agree with you more, yeah. Thank you.

16 MS. MILLER: Jennifer Blum, then 

17 Whitney.

18 MS. BLUM: So this is so complex, but 

19 here we go. So there's no difference between an 

20 -- in my mind, there's no difference between an 

21 online institution that enrolls a student, students 

22 in 50 states and a major state university that has 

23 students from all 50 states or 30 states or even 
186

1 ten states. 

2 So I would say that this is -- broaches 

3 on an issue. You don't say online explicitly, but 

4 there's a significant issue as to who this would 

5 apply to beyond the online, and we would argue that 

6 it would have to apply to any institution that had 

7 students from multiple states, because why would 

8 there be any -- from a consumer protection 

9 standpoint, why would there be any difference? 

10 And so that's just one point right off the bat. 

11 And then I just really want to point 

12 out, and this is what we suffer through. So if 

13 you take -- well, I'll give you two examples. If 

14 you take -- I don't even want to use one of our 

15 programs. It's just a program that's subject to 

16 licensure in 50 states, and say your home state 

17 has particular curriculum, and by the way the 

18 Department's going to need to be very, very careful 

19 on this regulation because we are now in the 

20 curricular weeds, and we are.

21 Because that's how they build their 

22 licensure requirements around course work and what 

23 type of courses are required for licensure. So 
187

1 if in your home state, and you need to meet your 

2 home state sort of first if you will. So if in 

3 your home state they say you need to take the 

4 following 25 courses and credit hours in the 

5 following X places, and then -- and that's State 

6 X. 

7 And then State Y, the licensure board 

8 says you know what? We're going to have you do 

9 30 courses. What we do, and I think a lot of schools 

10 do this, is we build it to meet our home state, 

11 and then we will have the other courses available 

12 to the students. We try to always make sure that 

13 that student in that state, right, understands that 

14 they have to take five more courses.

15 But when you get into certification 

16 around it, you're going to get really, really 

17 tricky, and again I want to emphasize again 

18 licensure boards are not like legislatures or 

19 regulations. They change their interpretations 

20 all the time. I mean literally all the time, and 

21 it's student by student.

22 It's not like they have a set, you know, 

23 somehow standardization. I wish they did, but they 
188

1 don't. I'll give you another example. You have 

2 in here "if accreditation is required." 

3 Accreditation, while a lot of states are 

4 increasingly, and I don't necessarily think this 

5 is -- I think it blows up the triad what I'm about 

6 to say, I think is a practice that I think is not 

7 productive.

8 But states because of the burdens are 

9 increasingly saying "and if you have accreditation 

10 of X, you get a free pass." Now so that's why I 

11 know you have "if accreditation is required." Most 

12 states, thankfully for students, because there are 

13 -- sadly there are specialized accreditors who for 

14 whatever reason have dispositions against online, 

15 and so they just say oh, we don't approve online. 

16 Psychology, which you have in your paper, is a 

17 good example. 

18 They don't accredit online programs, 

19 which is sort of goofy but whatever. Most states, 

20 understanding that that's the case, create 

21 alternative pathways for students. So that 

22 students have a different way of becoming licensed 

23 that's not reliant on if accreditation is required. 
189

1

2 So that's an example where I think we 

3 can work together to clarify, that we're not talking 

4 about just if accreditation is required. We're 

5 talking about if there's an alternative pathway 

6 to licensure as well. So that would be a good 

7 example of I think a place that could be, you know, 

8 improved and tweaked.

9 Then my only other comment is not on 

10 your paper but it's on, actually the Department's 

11 paper. So I can reserve that or I can mention it 

12 now. 

13 MS. BUCK: Why don't you wait?

14 MS. BLUM: Okay.

15 MS. MILLER: Okay. So Whitney, Chris 

16 Madaio, Daniel and then Tim.

17 MS. BARKLEY-DENNEY: Yeah. So I'm 

18 going to have to disagree that it is the same thing 

19 for an online program to be offered in a school 

20 as it is to have students come from another state 

21 to a brick and mortar school. 

22 I think a brick and mortar school that 

23 is serving students in a particular state, you know, 
190

1 their assumption can truly be that they need to 

2 meet all of the standards of the state that they're 

3 operating in and, you know, that student knows that 

4 by going to that state, then the requirements that 

5 that school meets are going to be the requirements 

6 set up by the brick and mortar state.

7 You don't expect if you're going from 

8 Ohio to University of Michigan that, you know, 

9 University of Michigan is going to meet the 

10 standards for an employment in Ohio. That's 

11 different than if you are living in Ohio and you 

12 are reached by an online program to train you to 

13 do something in your home.

14 You expect to be able to stay in your 

15 home, to stay in your home state. That's part of 

16 why you are doing the online program. So I think 

17 that it is important that we recognize that 

18 difference, and that we really understand that as 

19 hard of a burden that this seems to be for 

20 institutions, it's way harder for borrowers and 

21 students who don't know where to start looking, 

22 or even what the requirements might be. Truly, 

23 the people who have the expertise to do that in 
191

1 this field are the institutions themselves.

2 MS. MILLER: Chris Madaio.

3 MR. MADAIO: Thank you, Chris Madaio. 

4 So certainly I agree with the proposal that Laura's 

5 putting forward, in that schools that have the 

6 resources to offer these programs, schools know 

7 where students are living, especially in online 

8 programs. 

9 You know, obviously I think Whitney, 

10 and I know you hear some grumbling, is drawing the 

11 distinction between online, you know, obviously 

12 where the school expects that students are living 

13 in various states, and a brick and mortar campus 

14 where a school, you know, may expect. 

15 Of course in smaller states, you know, 

16 it's easy for students to cross state lines and, 

17 you know, larger states. Maybe it's easier to 

18 assume that the student is likely going to try to 

19 get a job in the state in which they're going. 

20 But I think Whitney's not saying that those brick 

21 and mortar schools shouldn't have to follow this. 

22 Right, exactly. So I think that that's just kind 

23 of drawing a line. 
192

1 I mean right, and I agree with that and 

2 I think what Laura says, that a school sure, that 

3 has students from states should be able to explain, 

4 assuming where the student lives because the school 

5 knows where the student lives, should be able to 

6 explain to that student where that he or she would 

7 be able to get a license in their state.

8 My only other point is just that, you 

9 know, Maryland for instance, passed a law that says 

10 that for private career schools and for-profit 

11 institutions, they can't offer programs that will 

12 not allow a student to become licensed in a field 

13 in the state of Maryland. 

14 So I think there's a basis for this, 

15 that states recognize that it's important that for 

16 students in states who are taking programs, they're 

17 going to be able to get licensed and therefore get 

18 a job if a license is required to get a job in that 

19 state.

20 MS. MILLER: Daniel.

21 MR. ELKINS: I understand that the 

22 administrative burden for all schools will be 

23 difficult when it comes to this issue, so I would 
193

1 suggest that the Department look into O*NET, 

2 Department of Labor. They currently are tracking 

3 career certifications and licensure, ones that have 

4 certain levels of earning potential, ones that 

5 require or are required to practice based on state 

6 and so forth. That could be a halfway step.

7 MS. MILLER: Tim, Tony, then Johnson.

8 MR. POWERS: So this is actually a 

9 question for the Department, but one that I think 

10 actually sort of pulls together a lot of these loose 

11 threads, which and forgive me because a lot has 

12 been happening with the change in administration, 

13 and if there has been an announcement, I just 

14 haven't seen it.

15 But and I apologize for bringing in an 

16 outside regulation to the table, but the distance 

17 education state authorization regulation, that is 

18 still scheduled to go into effect on July 1, right? 

19

20 So you're not going to hear us, and I 

21 don't do this very often, but we would -- we actually 

22 really have a lot of praise for the Department, 

23 for the way that I think they constructed -- I know 
194

1 Greg's laughing -- the way that they constructed 

2 that regulation, because I think it actually does 

3 sort of balance the two, which is they say, and 

4 correct me if I'm wrong, but essentially what 

5 Laura's suggesting, but if the state requires 

6 programs to be authorized.

7 So in other words, sort of what Chris 

8 was saying has happened in Maryland, would sort 

9 of apply nationwide. Is that generally the gist 

10 of it?

11 MR. GANNON: That's correct, and it's 

12 also just there's a disclosure to students built 

13 into the regulation as well about whether the 

14 program would meet requirements in certain states.

15 MR. POWERS: Okay, because I think 

16 that's actually a pretty good sort of middle line, 

17 because it doesn't tread on any sort of federalism 

18 issues, and it kind of allows states to operate, 

19 to regulate as they see appropriate. But it 

20 doesn't necessarily create a burden on institutions 

21 to sort of have to track a student as they might 

22 move from state to state or whatever might be so.

23 Just sort of just to put that out there, 
195

1 and again, I apologize for those who might not be 

2 that familiar with the regulation, because it is 

3 outside the scope of this committee. But I just 

4 wanted, I wanted to mention that and actually to 

5 commend the Department for the way that they 

6 constructed the regulation.

7 MS. BUCK: So before we leave Laura's 

8 proposal or her memo, is there -- are there any 

9 other questions or comments about it, and then we 

10 can get into questions of the Department.

11 MS. MILLER: Tony.

12 MR. MIRANDO: Thank you. Tony 

13 Mirando. Laura, I like it, and I know that you 

14 asked me to look at this. One of the things that 

15 I would recommend that you might want to consider 

16 adding into here is the fact that you have down 

17 programmatic accreditation requirements.

18 Not all -- I do want to get back to 

19 gainful employment programs, have a requirement 

20 for programmatic accreditation. And so 

21 institutional accreditors, or at least a 

22 specialized institutional accreditor such as my 

23 agency, we do require that in order for us to approve 
196

1 a program in a state that it does lead to licensure.

2 So just a little piece. There are some 

3 states that do require a school to have 

4 accreditation, which I really love those states, 

5 because not all states require accredited 

6 institutions to sit for licensure, which again as 

7 an accreditor I find that a little bit shameful 

8 to students. But there are states that say you 

9 must be accredited. 

10 So even institutional accreditation is 

11 a requirement for them to sit for licensure, which 

12 is nice. But at least in the states that don't 

13 have that as a requirement, institutional 

14 accreditation for at least in the specialized area 

15 ones, we do look at do they meet the requirements 

16 to sit for licensure and students must be notified 

17 of and given a copy of the law, so they can look 

18 at things like do you have a history of being 

19 arrested, you know, was it a felony, was it a 

20 misdemeanor and what the ramifications of all those 

21 things are, prior to enrollment, so that students 

22 have a better understanding.

23 MS. MILLER: Okay. So I have Johnson, 
197

1 Bob. John, did you have a -- on both, okay? So 

2 Johnson, Bob and then John.

3 MR. TYLER: Hi, Johnson Tyler. I just 

4 want to agree with Laura's proposal here. I think 

5 there's a human element here, the burden imposed 

6 on the student who doesn't spend time studying, 

7 arranging their life so they can go to school, and 

8 then learn that they can't sit for the test. I've 

9 had two clients that this has happened to, and it 

10 really, it really kills their souls. They really 

11 have put themselves out there.

12 And to the extent that distance 

13 learning is involved here, there's a huge economies 

14 of scale that's involved with distance learning. 

15 You know, that's part of why it's attractive. 

16 I think that the institutions need to address this 

17 issue, especially when it's pertaining to the skill 

18 levels, the certificate type of programs that are 

19 designed to get you quickly into a better-paying 

20 job. It's -- I think they really have that 

21 obligation.

22 MS. MILLER: Bob.

23 MR. ROBERT JONES: I too want to thank 
198

1 Laura and we've discussed this, but going back to 

2 my point yesterday and the point that was just made 

3 a few moments ago, I think it's not only should 

4 we do this, but we need to ultimately move this 

5 on. The Department needs to move this on to 

6 industry recognized formal certifications. We 

7 find more abuse where there's generic technical 

8 training going on, but not resulting in 

9 accreditation and a certification that is in fact 

10 recognized by business.

11 So that issue is going to become more 

12 and more important, and this structure is useful 

13 for that purpose, and we need to get this 

14 fundamental piece in place before we start making 

15 judgments on our protocol.

16 MS. MILLER: Thank you, John.

17 MR. KAMIN: Thank you, this is John. 

18 Laura, I actually have a question, a clarification 

19 question on this. In terms of the requirements 

20 to meet professional licensure and certification, 

21 would that include unaccredited certification as 

22 well? So for instance if I was in digital media, 

23 I would need to prove how it leads to an Adobe 
199

1 certificate or a Microsoft certificate or something 

2 like that?

3 MS. METUNE: I tried to write this in 

4 a way where I thought it could be complied with. 

5 I do think institutions should have a 

6 responsibility to know what the expected industry 

7 standards are. But this wouldn't go that far, 

8 because I think it's a harder thing to clearly 

9 certify that you're complying with. It would only 

10 apply in the cases where the state requires that 

11 licensure standard, educational component or 

12 programmatic accreditation.

13 MR. ROBERT JONES: Great. Appreciate 

14 the foresight.

15 MS. BUCK: So now let's shift to 

16 include questions to the Department, as well as 

17 any continued comments on the proposal, both.

18 MS. MILLER: Okay. So I have Tony. 

19 Then I have Jen B., then I have Jeff.

20 MR. MIRANDO: Thank you again. Tony 

21 Mirando. This is again to Laura. I just want to 

22 follow up, just probably 30 seconds or less. One 

23 of the things that you might want to include in 
200

1 your paper is a requirement, because I actually 

2 like it, again I want to show my support for this, 

3 is institutions that do have institutional 

4 accreditation, where they absolutely do recognize 

5 the fact that a programmatic accreditation is also 

6 necessary.

7 That would be important, because I know 

8 that, you know, for the longest time we've heard 

9 of schools in New York who only need to have 

10 institutional accreditation, but yet students who 

11 because they're right on the line may want to go 

12 to New Jersey, and New Jersey requires not only 

13 institutional accreditation but there may be a 

14 programmatic accreditation.

15 But because the state in which the 

16 school is in doesn't have that requirement, the 

17 student maybe doesn't have that disclosure. So 

18 it may be important to, however you frame this, 

19 that that issue is being addressed, because I hear 

20 about it and I hear about it and I just said well, 

21 you know, this is more of a disclosure issue. So 

22 we should just make sure that's pretty clear. 

23 We're looking at that method, that 
201

1 cosmetology and barbering and massage have that 

2 yet. We're looking at requiring our institutions, 

3 that if indeed that day happens, where there is

4 programmatic accreditation and we don't get into 

5 that, that we're going to require our institutions 

6 to notify their students that that is a requirement. 

7 MS. MILLER: Jennifer Blum.

8 MS. BLUM: So actually Tony, just to 

9 piggyback off that, I mean I just want everybody 

10 to understand. This is a certification for Title 

11 IV for the institution. So this is actually a much 

12 bigger deal than the disclosure piece. So that's 

13 why I'm emphasizing like let's get it right, because 

14 this actually -- this is -- this is a big Title 

15 IV issue as it relates to the PPA.

16 So this is actually not small potatoes 

17 here. So that's why I'm emphasizing let's get it 

18 right. I just want to be on record. We're 

19 supportive conceptually of understanding the 

20 licensure issue and just, I mean we go above and 

21 beyond what's required. Right now what we do is 

22 we disclose -- we don't just disclose to students, 

23 but we actually do and we talk about the burdens 
202

1 of acknowledgments. 

2 But we do make sure in writing by state, 

3 by student to the extent that we, you know, that 

4 they understand in the state that they reside at 

5 time of enrollment. So I do want to point something 

6 out. One of the reasons why students do attend 

7 online is that they are mobile, and they do move 

8 state to state.

9 So we also beg them to let us know when 

10 they're moving, so that we can then revisit this. 

11 Throughout the course of a program, we will notify 

12 the student individually with their academic 

13 advisor. We will notify them, remind them, have 

14 you talked to your licensure board lately. When 

15 you're midway through, like are you sure you 

16 understand your field requirements? Do you get 

17 what your, you know, do you get where you are, on 

18 track for licensure?

19 Oh, you moved? Okay. Well now we need 

20 to have a different conversation. So we do that. 

21 Literally, we try to do it to the extent that online 

22 students are actually hard to capture. We do our 

23 best to try to capture them. But it is -- this 
203

1 is a lot of work, and so I'm very focused on the 

2 certification piece, because that puts it into a 

3 whole different realm of responsibility.

4 So I just, I did have one other question 

5 before I ask the Department my other question. 

6 Whitney, just to be clear, I totally understand 

7 the difference between online and on ground of 

8 course. But you're not saying that on ground 

9 institutions shouldn't have to certify in the same 

10 manner? You're just saying -- you're just 

11 acknowledging that there's a difference? Okay, 

12 got it. Okay.

13 I just wanted to make sure that we 

14 understood that this was applying -- yeah. So I 

15 just wanted to clarify, this would apply to on 

16 ground as well. 

17 (Off-microphone comments.)

18 MS. BLUM: Okay, good.

19 MS. BARKLEY-DENNEY: Let me just say, 

20 since I didn't say it clearly. What I'm saying 

21 is, you know, of course if a school in North Carolina 

22 that only has a campus in North Carolina, they would 

23 have to certify in North Carolina. I just think 
204

1 it's a different consideration if they have --

2 MS. BLUM: No, no, this isn't a 

3 certification about North Carolina. That's why 

4 I'm emphasizing. That's why I'm spending so much 

5 time on it. We would have not just certify the 

6 way, I think the way Laura's proposing, we would 

7 not just have to certify in North Carolina if we 

8 were in North Carolina.

9 We'd have to be certifying about every 

10 single program that leads to some form of licensure 

11 in every single state from which we have students. 

12

13 MS. METUNE: Yes, you would be 

14 responsible for ensuring that the student where 

15 they reside, right? They might move and change 

16 their residency to another state, in which case 

17 you'd be fine. But if they're maintaining their 

18 --

19 MS. BLUM: Well only if I knew.

20 MS. METUNE: --- if they're residing 

21 in a state that your program doesn't meet the 

22 certification for licensure requirements, then 

23 yes, my proposal is that the student should have 
205

1 to sign that they know that and that they're 

2 enrolling anyway.

3 MS. BARKLEY-DENNEY: So let me just 

4 make a clarification.

5 MS. BUCK: Wait.

6 MS. BARKLEY-DENNEY: Let me make it 

7 clear from what I understand, and I think Laura 

8 this is correct. A student who leaves Ohio to go 

9 to Michigan is a resident of Michigan.

10 (Off-microphone comments.)

11 MS. MILLER: Sandy, can you use the 

12 microphone?

13 MS. SARGE: I'm sorry. Like I move to 

14 Texas --

15 MS. MILLER: It's not on.

16 MS. SARGE: I moved to Texas to go to 

17 school. I was -- you had to be out of school and 

18 working full time for X number of years to be 

19 considered a resident. Otherwise, they wouldn't 

20 get the out of state tuition at the state school 

21 I went to. So people are not considered residents 

22 of that state while they're in school. They're 

23 residents of their home state and they vote in their 
206

1 home state. Well, a lot of -- well maybe it's state 

2 by state.

3 PARTICIPANT: Okay. So there's a 

4 difference in opinion about fact here. I'm not 

5 sure we're going to be able to settle that. I'm 

6 wondering if we could go back and have you ask the 

7 questions of the Department that you have.

8 MS. BLUM: Well yeah. Now I have two 

9 questions of the Department. So just to clarify, 

10 and this is sort of blending Laura and the 

11 Department, Laura, the certification that 

12 you're -- the certification in Issue 8 is a 

13 certification around the PPA. It's not a student 

14 certification. It's a certification that the 

15 institution is making to the Department in order 

16 to re-up its PPA; is that correct Steve?

17 So the certification Laura that you're 

18 talking about is part of the certification to the 

19 Department? We're obligated -- we're saying what?

20 MS. METUNE: No. I'm -- yes. The 

21 requirement here is the certification to the 

22 Department, but the language that I was referring 

23 to in terms of the student choices written into 
207

1 the memo, that is just intended to recognize that 

2 there might be students who choose to enroll in 

3 a program, regardless of the fact that it may not 

4 meet the licensure requirement.

5 So the certification is essentially 

6 that the school has made -- I mean in my mind, the 

7 idea here is that the school's made a declaration 

8 that they've informed the student, and the student 

9 is making an informed choice to enroll anyway.

10 MS. BLUM: Very helpful, thank you.

11 MS. BARKLEY-DENNEY: So let me just ask 

12 a clarifying question, because I'm still confused. 

13 In the way that you understand this to work, and 

14 everybody please just let me get this out before 

15 you jump in, if a borrower moves from Ohio to 

16 Michigan and is in residence at the University of 

17 Michigan, does the state have to say we may not 

18 be licensed in Ohio, but we are licensed in 

19 Michigan?

20 MS. METUNE: That is not the problem 

21 I'm trying to solve.

22 MS. MILLER: Okay. So let's -- did you 

23 have a question?
208

1 MS. BLUM: Yeah, for the Department. 

2 So this is switching gears. I hope people are 

3 okay with that, switching gears. It was pointed 

4 out to me that in the certification, and I can 

5 provide language. We don't have to belabor this. 

6 But on the language that you have in the 

7 regulations, it says "satisfies any applicable 

8 prerequisites." 

9 This goes back to the example that I 

10 gave, where even in your home state. So let's say, 

11 and this happens a lot. So let's say your home 

12 state has a requirement of 20 courses, but like 

13 48 of the other states require 18 courses, okay. 

14

15 So you're going to build your 

16 curriculum around the country, around what the 

17 majority of the country is, and then what you're 

18 going to do or what most schools do is they add 

19 on the two course requirements, and they say to 

20 the students that live in your home state you need 

21 to take these two extra courses to be, you know, 

22 to be --

23 The way your language is written, I just 
209

1 have a tweak, which I can provide separately to 

2 clarify that it's really -- it's not because a 

3 curriculum can be constructed that doesn't actually 

4 technically satisfy the requirements in that home 

5 state. But you've built an extra curriculum for 

6 that home state. 

7 So I just want to make sure that we tweak 

8 the language to be clear about it, because it is 

9 a certification and there is a lot of liability 

10 around the certification. So I just have a tweak 

11 on that.

12 MS. BUCK: Does the Department want to 

13 respond to that or not?

14 (Pause.)

15 MR. MARTIN: A question for you. So 

16 you're talking about this idea that you have the 

17 program length, right, whatever the program length 

18 is, right, set program length?

19 MS. BLUM: Not necessarily a length 

20 issue.

21 MR. MARTIN: Well, I'm just curious as 

22 how you account for the fact that if you're saying 

23 the program length is X and that's what's recognized 
210

1 on your ECAR, that the program is a certain amount 

2 of length. So I'm a student in your state and your 

3 state has the additional -- the additional so many 

4 credits above what the rest of the country's is. 

5 So you deal with that by just requiring 

6 the student to take additional, an elective that 

7 would give them that particular credit? Or how 

8 do you deal with that with respect to not having 

9 two, I guess what I'm trying to say is how do you 

10 avoid having two different program lengths for a 

11 program that has one published length?

12 MS. BLUM: This usually doesn't affect 

13 program length, because it might be that, and again 

14 it might be -- and sometimes it's constructed in 

15 a way where you can drop two other course 

16 requirements from another state. This is really, 

17 and I do urge the Department to be careful here.

18 You're in the curricular weeds here. 

19 I mean you really are because -- and I'll give 

20 you an example. This goes down into 

21 specializations. So if you take some form of a 

22 counseling field, they'll be three different types 

23 of licensure. Like if you get just your basic 
211

1 masters in counseling you -- in some states you 

2 might just be eligible for that counseling license.

3 But you also might be eligible -- if 

4 you took three more courses, you might be eligible 

5 for marriage-family teaching, I mean marriage and 

6 family counseling, sorry. And so, you know, if 

7 you want to do that, then you take X number more 

8 courses. This is why it gets hard to, and we do 

9 our best. I mean honestly, this is just in terms 

10 of student notification.

11 It is extremely important to notify the 

12 student, and so you know, I completely support this. 

13 But you do get in the weeds in terms of curriculum. 

14 It doesn't necessarily impact program length, 

15 because you're flipping out things that aren't 

16 needed in one state and are needed in another state, 

17 and that's literally how it works.

18 Some states have different types of 

19 field experience, so that's another one than other 

20 states do. So the field experience is different 

21 state to state as well, so that's another good 

22 example. Where yes, I mean Greg, I mean that could 

23 change, you know. The type of field experience 
212

1 could change the dynamic of the program for that 

2 student in that state.

3 MS. BUCK: So let's get some other 

4 people's comments and questions.

5 MS. MILLER: Okay. So I have Jeff, 

6 Daniel and then Laura.

7 MR. ARTHUR: Yeah Laura. Is the 

8 intent of your proposal to include all programs, 

9 or was it just GE or online?

10 MS. METUNE: I wrote this at a time when 

11 we were still talking about gainful employment. 

12 So you know, that's really the -- I mean you heard 

13 the story I highlighted. You heard the problem 

14 I identified. My goal was to address very 

15 specifically career education programs, where 

16 licensure is required by a state, and to address 

17 it in an online format.

18 MS. MILLER: Okay. Greg or Cynthia, 

19 did you want to chime in? Cynthia.

20 MS. HAMMOND: Yeah, I don't have a name 

21 tag, so I'm just using his. So this is Cynthia. 

22 I want to point out the way we wrote the 

23 certification requirements for this, it's for all 
213

1 programs where there is a certification or 

2 licensure requirement in the state.

3 So that would include a bachelor's in 

4 Nursing presumably at any school, but it wouldn't 

5 necessarily be Art History at any school. So it 

6 would only focus on the ones that -- where there 

7 is a state licensure requirement. Those are the 

8 ones that we would need to have certified. So it 

9 kind of crosses the line, whether it's not really 

10 GE but it's not really non-GE either. It's kind 

11 of whichever ones would fit.

12 MS. METUNE: And I don't mean that to 

13 say that I don't want to make sure that a non-profit 

14 nursing program meets the requirement of the state 

15 in which the student's located as well.

16 PARTICIPANT: And one other thought 

17 occurred to me, and I think only gainful employment 

18 degree programs are reported on the ECAR. I mean 

19 are we talking about all institutions, including 

20 all programs on the ECAR going forward, or would 

21 we then be able to stop dealing with the reporting 

22 of degrees period, for all institutions? Would 

23 it be the same for all?
214

1 MS. HAMMOND: As it's currently 

2 conceived, only gainful employment programs are 

3 reported on the ECAR. This certification you would 

4 have to do at the time of certification or 

5 recertification for all programs. 

6 So it's not that University of Michigan 

7 would list every single one of their degree 

8 programs; but they would provide a certification 

9 on all their programs that fit this requirement, 

10 where there is state or federal licensure 

11 requirements at the time of certification, whether 

12 or not those are already listed on their ECAR.

13 PARTICIPANT: And I know I kind of went 

14 to a different area, but I think it's, you know, 

15 it's been quite a burden. So I guess I'm just 

16 curious. Does this whole process mean that we 

17 would no longer need to include gainful employment 

18 programs or include employment programs on ECAR 

19 and be this consistent?

20 MS. HAMMOND: Not necessarily. 

21 That's a different part of the reg.

22 MS. MILLER: Daniel.

23 MR. ELKINS: Can we take a temperature 
215

1 check or vote on both Issue Paper 8 as it's currently 

2 written, and the proposal we've been discussing 

3 for the last hour?

4 MS. BUCK: Are you saying Issue Paper 

5 8 plus Laura's memo, or what are you saying 

6 specifically?

7 MR. ELKINS: Laura's memo.

8 MS. BUCK: Laura's memo. You'd like 

9 to take a temperature check on Laura's memo. So 

10 that's what he's requesting.

11 MS. MILLER: What about Laura's memo, 

12 that -- what about her memo?

13 MR. ELKINS: That we accept the 

14 proposal.

15 MS. BUCK: As written.

16 MS. MILLER: As written by Laura.

17 MS. BUCK: Okay. So let's have a 

18 temperature check of Laura's memo as written. 

19 (Show of hands.)

20 MS. MILLER: So at least four thumbs 

21 down on that.

22 MS. BUCK: More than that actually.

23 MS. MILLER: Five.
216

1 MS. BUCK: So let's ask some of the 

2 people with their thumbs down maybe, as to why you 

3 had thumbs down.

4 MS. MILLER: Well Sandy had her thumb 

5 down. She also has her tent up so --

6 MS. SARGE: Please.

7 MS. BARRY: Yeah, Jessica Barry. 

8 Because it just for GE programs. 

9 MS. BUCK: Is there any way the 

10 proposal could be modified, that you could approve 

11 it? So for anyone who had your thumb down, is there 

12 any way you would modify the proposal such that 

13 you could approve it? Jeff?

14 MR. ARTHUR: Yeah. I think we've 

15 already discussed and kind of agreed that it was 

16 -- should or could apply to all programs. So I 

17 think that's the modification, and then we could 

18 flip our thumbs up.

19 MS. BUCK: So let's try that.

20 (Simultaneous speaking.)

21 PARTICIPANT: I apologize. That's 

22 what I was insinuating. I don't think I -- yes, 

23 I do apologize.
217

1 MS. BUCK: So do you want to go with 

2 Jeff's modification and see how you respond to that? 

3 I see your thumbs.

4 (Show of hands.)

5 MS. BUCK: So I still see some thumbs 

6 down. So you want to tell us, Kelly, why you had 

7 your thumb down?

8 MS. MORRISSEY: Well, I think the 

9 applicability of this changes significantly if 

10 we're talking about all programs and not just 

11 programs preparing students for gainful 

12 employment. For example, I'm thinking my state 

13 teacher preparation programs, I can't even begin 

14 to fathom how that would work, when we're enrolling 

15 students from all 50 states with wildly different 

16 certification requirements for teachers in each 

17 of those. I just can't even begin to fathom that.

18 MS. MILLER: Tim.

19 MR. POWERS: You know, obviously 

20 authorization is different than licensure, and 

21 that's something that we try to make, you know, 

22 very clear when we talk about how it affects our 

23 sector in particular. But again, I'll just go back 
218

1 to the notion that the distance ed state 

2 authorization requirements, I think, get at a lot 

3 of these problems, and you know, I just kind of 

4 echo what Kelly said in terms of the applicability 

5 as you change the definitions.

6 MS. BUCK: So having heard the 

7 objections, is there anyone who could propose, make 

8 a proposal that you think people would be more able 

9 to accept?

10 MS. METUNE: I do want to say that I 

11 actually was really interested in what Jennifer 

12 described that they do for their students. I'm 

13 happy to continue to have this conversation to 

14 identify -- I mean I think you heard what I was 

15 trying to get at and I -- it sounds to me like what 

16 you do for your students prevents that.

17 So I'm happy to try and make sure that 

18 language is crafted in a way that really addresses 

19 the concern that we're trying to address, and then 

20 I also just think, you know, just to encourage the 

21 Department to continue to look at this question 

22 of what it is to be industry recognized or what 

23 the states require.
219

1 I think as an institutional 

2 representation, it would be wonderful if I could 

3 look to the federal government to tell me what each 

4 of the states require. 

5 MS. BLUM: I would love that. I would 

6 love that, and I was going to propose, it's not 

7 a propose to language, but this is directly related 

8 to the subcommittee. So things like, and I said 

9 this earlier, things like changing the language 

10 of if accreditation is required to -- because there 

11 are almost always pathways other than if 

12 accreditation is required.

13 So I think there's just language 

14 changes that need to be made. I also think that 

15 certifying that every single state and every single 

16 program for licensure is a little stiff. But if 

17 you went to certifying that the institution is 

18 informing their students individually, that would 

19 be something that we would -- because we do it. 

20 I know it's a burden for others, but we do it. 

21 So that's -- and we encourage -- the 

22 Department knows, as I've said in many meetings, 

23 that we've encouraged that that be something that 
220

1 all schools do. So I think there's a lot to work 

2 with.

3 MS. BUCK: So it sounds like that you 

4 are saying the subcommittee could work on this 

5 further, rather than reaching general agreement 

6 right now. 

7 MS. BLUM: Yes.

8 MS. BUCK: Are there other comments 

9 that should be made before we leave this topic?

10 MS. MILLER: Neal and then Daniel.

11 MR. HELLER: I guess clarification. 

12 In the Department's language, you speak of the state 

13 or federal requirement. Are you referring to the 

14 state that we operate in? So for instance for us, 

15 the state of Florida?

16 MR. MARTIN: Yes. The way we proposed 

17 it, yes.

18 MR. HELLER: Okay so --

19 MR. MARTIN: In our rule, our proposed 

20 rule doesn't differ that much from the previous, 

21 from the existing rule, except that we're now taking 

22 into -- it's not just limited to gainful employment 

23 programs.
221

1 MR. HELLER: So I think that that is 

2 pretty clear, and I guess for those that serve 

3 students from 50 states, you would at least have 

4 to disclose to them that that program may or may 

5 not meet their particular state requirement. But 

6 I think if you combined those two in the language, 

7 I think that would be fair to everybody.

8 PARTICIPANT: I will note that it does 

9 connect back those regs that -- I think it's Tim 

10 keeps referring to. So when those regs go into 

11 effect, there is a link in here that connects back 

12 to those regs as well.

13 MS. MILLER: Okay. So outside of 

14 Laura's memo, which sounds like it's going to get 

15 some more work done in the subcommittee, and you 

16 can talk to Laura and Jen if you'd like to be a 

17 part of that, are there other questions for the 

18 Department on Issue Paper 8? Sandy.

19 MS. SARGE: I wish that subcommittee 

20 great luck, and I look forward to hearing what you 

21 guys come up with, because I think it's really 

22 important too. I just can't come up with a way 

23 to resolve it. But in this proposal, I just have 
222

1 some questions about understanding timing on 

2 things.

3 So I absolutely think it's important 

4 that if a program is intended to lead to licensure, 

5 that the school should have to say our program meets 

6 the requirements, so that you have the opportunity 

7 to sit for licensure. I couldn't agree with that 

8 more. My concern is just a timing issue or how 

9 do you resolve or how were you guys thinking about 

10 or how do we do it today, what happens when those 

11 requirements change for a state and a student's 

12 midway through a program, and potentially there's 

13 more than just a minimal amount of change that has 

14 to be done to the curriculum.

15 So it's a substantive change in 

16 curriculum in order to now meet the new regulations. 

17 What happens now, and/or what's the thought 

18 process, because unfortunately it's the two do not 

19 always happen on the same day, right? Today, our 

20 program meets the state regulatory requirements 

21 for licensure. Tomorrow, maybe not. 

22 MS. HAMMOND: So how this would work 

23 or does work is that school -- if there is a change 
223

1 that would change the ability to certify this, like 

2 the program does or doesn't, no longer meets it. 

3 So like let's say the state changes something 

4 fundamental and the program no longer meets it, 

5 then you have to do a new certification that says 

6 Okay, these 20 programs meet this requirement, but 

7 this one no longer does.

8 So you'd do a new certification any time 

9 there was a major change like that. It is unusual, 

10 but it absolutely has happened, where a state has 

11 put in a requirement and made it effective 

12 immediately, and in that case we did work with the 

13 schools to see how quickly they could get their 

14 programs into compliance. 

15 And yes, that does propose issues for 

16 students. But they would have to change their 

17 certification requirements if that were the case.

18 MS. SARGE: Just to make sure I 

19 understand. So Okay. So what would happen is that 

20 particular certification period or within ten days 

21 or something like that happens. 

22 MS. HAMMOND: Within ten days.

23 MS. SARGE: Yes. So they go out and 
224

1 they say this no longer meets the state 

2 requirements. They're certifying that between the 

3 institution and to the Department, and is there 

4 also a now -- does that trigger notification to 

5 students, which I would think most schools would 

6 want to do anyway, to let them know hey, there's 

7 a big change?

8 And then what -- I can see where this 

9 would be a real concern. But I'm -- but I don't 

10 know how to control it, or how to even minimize 

11 the impact. So I'm loving some discussion if 

12 anybody has seen this.

13 PARTICIPANT: So for purposes of this 

14 conversation, right, there's what happens to the 

15 program that no longer meets the certification 

16 requirement. What I would imagine would happen 

17 is the institution is obviously going to know that's 

18 happened, because they've been tracking the state 

19 requirements and the change.

20 They're going to notify the Department 

21 the program you were offering doesn't -- no longer 

22 meets the certification requirement, and 

23 presumably that you've stopped enrolling students 
225

1 in that program because it doesn't meet the 

2 requirements anymore, and that you're going to I 

3 guess update it when -- presumably you're going 

4 to change the program to meet the requirements, 

5 whatever they are.

6 There's going to be a separate 

7 conversation about the students in that program, 

8 and that's all going to be on how the state provided 

9 -- usually there's a grandfather provision that 

10 lets you teach out the students when they do that. 

11 But that will be a separate conversation unrelated 

12 to this, to make sure that the students are still 

13 able to qualify for Title IV, as long as the states 

14 envision that they could keep taking that program.

15 MS. BUCK: Does that satisfy the needs 

16 of the consumers and students do you think?

17 MS. MILLER: Well Jennifer Diamond is 

18 next in the queue, so did you want to answer or 

19 did you want to take a minute to answer to that 

20 and then go to your question or comment?

21 MS. DIAMOND: I'm not sure I have 

22 answer right now to that. 

23 MS. MILLER: Okay.
226

1 MS. DIAMOND: But do you want to -- does 

2 anyone else have something they want to chime in 

3 on or should I move on?

4 MS. MILLER: Go ahead, Jennifer 

5 Diamond. 

6 MS. DIAMOND: Okay. I just wanted to 

7 bring up something that we haven't talked about 

8 yet, which is now that we've been discussing the 

9 idea of bringing sanctions that could lead to loss 

10 of Title IV, I think there's some concern around 

11 this substantially similar program issue, in that 

12 we have stricken the idea that, you know, a school 

13 could lose their Title IV eligibility and then 

14 immediately come back with a very similar program, 

15 and I would like to look at bringing that back into 

16 the regulation. 

17 MS. MILLER: Jennifer Blum. Does the 

18 Department want to respond first?

19 MR. MARTIN: Yeah, I'll respond to 

20 that. That's a very good point Jennifer, that 

21 yeah, we put that in there obviously with the 

22 presumption that there would be no -- there would 

23 be no program sanction that would be lost, could 
227

1 have a result in loss of eligibility.

2 Therefore, the whole idea of adding 

3 similar programs would have been redundant. But 

4 if we're moving back, if we're moving to thinking 

5 about, again and I'm not going to use the C word, 

6 but if the general sense that we might want to 

7 reintroduce possible administrative sanctions 

8 based on certain measures, then I think that's an 

9 issue again, right.

10 If it were the case that as a result 

11 of these sanctions, the program were to lose 

12 eligibility, we would take some action to limit. 

13 Would we put into place something that would 

14 prohibit from standing up a program that was the 

15 same program or one that was very similar? 

16 So I think that's something which is 

17 definitely out there for consideration. That 

18 does, I will agree that that does change the playing 

19 field somewhat.

20 MS. MILLER: Okay. Jennifer Blum, 

21 then John and then Jessica Barry.

22 MS. BLUM: So actually Jen, I had 

23 thought about this too, and actually I sort of 
228

1 alluded to it yesterday in the caucus on the --

2 and I think we'll get to it in the conversation 

3 about sanctions. But I would put that into the 

4 category of growth restrictions, and so no new, 

5 you know, you could limit enrollments in other

6 similar zip code programs and also not have a new 

7 zip code.

8 Although one caution, and I say this 

9 from an institution that has direct assessment 

10 programs, which might share a zip code but they 

11 are very different in cost, because they're 

12 much -- they're a lower cost. And so just in the 

13 interest of being able to offer for lots of programs 

14 in CBE or direct assessment, there needs to be some 

15 thought around that piece of it.

16 But thought of it too and agree that 

17 -- and I was thinking that it could be in the 

18 context of the sanctions section when we get there 

19 again.

20 MS. MILLER: John.

21 MR. KAMIN: Yeah. It has just been 

22 brought to our attention, in the case of for 

23 instance, a Marine gets honorably discharged out 
229

1 of Camp Pendleton and is intent on moving back to 

2 Texas. But he's been at Pendleton for eight years, 

3 so he's got the license. He goes to a California 

4 community college, but has every intent of going 

5 to Texas and he wants to do something in the medical 

6 field.

7 Is there any -- would there be any 

8 capacity to inform him of this, because it seems 

9 like there may be students who are intending to 

10 move elsewhere, that would be -- that would 

11 definitely benefit from learning this information, 

12 but it doesn't seem like they would be able to be 

13 initially identified.

14 MS. MILLER: Does the Department want 

15 to answer or --

16 (Pause.)

17 MR. MARTIN: Could we hear some 

18 comments from those schools, to see how they deal 

19 with this issue? Any -- I mean I see it as a 

20 possible disclosure.

21 MS. BLUM: Is it in the disclosures 

22 about the state licensing, and would it specify 

23 it there? Or at least say something -- somebody 
230

1 made a comment about, oh Neal did, that it meets 

2 the requirements of this state if you, you know, 

3 and language around but may not require.

4 MR. MARTIN: Yes, that's currently in 

5 disclosure, in the disclosure templates, yes, in 

6 the template.

7 MS. BUCK: I'm going to propose that 

8 in five minutes we take a break, and that we then 

9 come back and focus on proposals. So let's just 

10 focus on this for five more minutes.

11 MS. MILLER: Jessica.

12 MS. BLUM: I just want to comment on 

13 the substantially similar programs. I think I 

14 brought this up in the first week. You know, say 

15 I have an associate degree program that, for a 

16 better word fails, and I go back to the industry 

17 and I say hey, we're teaching some really great 

18 technical skills here, but the length and the cost 

19 of this program is great for the students compared 

20 to their earnings, you know.

21 Would it make sense to take this 

22 technical curriculum and put this into a 

23 certificate program without the gen ed requirement? 
231

1 So it would be -- would take less time to complete. 

2 It would be of lower cost. Would you consider 

3 that certificate program a substantially similar 

4 program?

5 MR. MARTIN: Well I mean first of all, 

6 under these proposed rules we took out program 

7 sanctions. So that all that language, and Cynthia 

8 made a good point to me earlier, that what's in 

9 certifications here is sort of ancillary. So what 

10 you're doing is schools to explain how a new program 

11 is not substantially similar.

12 But that stems from the fact that having 

13 lost -- the program having lost eligibility, the 

14 school could not stand up a similar program. If 

15 we're going to re-think introducing those again, 

16 we have to think about whether we would want, 

17 whether we as a group would want the current, the 

18 existing limitations on standing up a similar 

19 program, which is one --

20 (Off-microphone comments.)

21 MR. MARTIN: Yeah, one within the same 

22 four-digit CIP. Whether we want to go back to 

23 looking at that, how many years we want to put that 
232

1 up for? So I think that's on the table. But not 

2 so -- so it's not really a certification issue. 

3 It goes back to wherever we added -- if we were 

4 to add language about, you know, these 

5 administrative actions that could proceed from 

6 having unsatisfactory or failing rates, what would 

7 be the --

8 If there were a loss of program 

9 eligibility, what would -- what would the 

10 limitations be on when a school could stand that 

11 back up? I think that would be essentially in that 

12 portion of the regulations. So I think we should 

13 deal with it mostly from there, because this is 

14 just -- this is just certifying that they haven't 

15 done so.

16 MS. BUCK: So I think there have been 

17 some very helpful comments, and thanks to Laura 

18 for bringing forward her memo which helped to focus 

19 things, and we do have a subcommittee now that's 

20 going to go forward with that it sounds like. Why 

21 don't we take a ten minute break and then come back 

22 to focus on proposals?

23 You've now gotten through the issue 
233

1 papers. Congratulations.

2 (Whereupon, the above-entitled matter 

3 went off the record and resumed following a brief 

4 recess.)

5 MS. BUCK: Okay, welcome back. As I 

6 heard several people say, we're on the home stretch, 

7 so that's great. So we've gone through the issues 

8 and what we have up on the screen is number four 

9 sanctions, because we had kind of been working there 

10 for a while, particularly in the caucus meeting.

11 We went a little bit through 

12 application, a little bit through metrics. We had 

13 gotten to corrective options, which Crystal can 

14 pull up. You don't necessarily have to start 

15 there. You may have proposals about other areas. 

16 I'm just putting -- we're just putting this up 

17 in case that's helpful to you, since that's kind 

18 of where we had stopped. But I see Greg has his 

19 card up, so let's hear from him.

20 MR. MARTIN: Yeah. I think I promised 

21 you guys I would tell you how to get to the template. 

22 So I just want to maybe write this down. I know 

23 for those of you in aid, you're well familiar with 
234

1 the use of IFAP. But if you want to go on to the 

2 website, I-F-A-P.ed.gov, we refer to as IFAP. When 

3 you go on to IFAP, in the right upper-hand corner 

4 you'll see some links to certain things.

5 One of them says "Gainful Employment." 

6 Click on the Gainful Employment link. Once you 

7 go there, it will give you the option to pull up 

8 Dear Colleague letters and electronic 

9 announcements, all right. 

10 And when you see -- you click on 

11 electronic announcements and Dear Colleague 

12 letters, you want Electronic Announcement 110. 

13 Yes, there have been 110 electronic announcements 

14 related to gainful employment. Yeah, is that it 

15 really?

16 Cynthia and I once argued over who got 

17 to have 100. We were putting conflicting things 

18 out at the same time. I said I want 100. She said 

19 no, we get 100. So it's 110 and when you go on 

20 there, you'll see how you can link to the template.

21 MS. MILLER: Greg, I'm sorry. Can you 

22 repeat the website again?

23 MR. MARTIN: Sure. You start with 
235

1 I-F-A-P.ed.gov, I-F-A-P. Then once you get to 

2 IFAP, you get on there, on the right-hand corner 

3 you'll see a link. You'll see various links we 

4 have to like hurricane relief and then you'll see 

5 gainful employment. Click on gainful employment, 

6 and then once you get to gainful employment you'll 

7 see an option to choose Dear Colleague letters and 

8 electronic announcements.

9 You go on to -- you click on that, onto 

10 electronic announcements and you want Electronic 

11 Announcement No. 110, release of the 2018 DE 

12 disclosure template. It will give you a link in 

13 that particular electronic announcement, right to 

14 the template. Once you have the template, you can 

15 -- I probably shouldn't use the word -- you can 

16 play around with it, because you're not sending 

17 it, doing anything with it.

18 So all you have to do is put in a valid 

19 OP, I was going to say zip, do you believe that? 

20 OP ID number, and then you can -- you could just 

21 put dummy information to get to where you want to 

22 get to, just to see how it flows.

23 PARTICIPANT: If you Google Electronic 
236

1 Announcement No. 110 it's the only agency with 110 

2 announcements on anything. It's the first hit. 

3 (Laughter.)

4 MR. MARTIN: Okay, you could do it that 

5 way, but that's no fun. You should do it the way 

6 I told you.

7 (Pause.)

8 MS. BUCK: Excellent. So we're in the 

9 time when people can make proposals, and as I always 

10 tell people when I'm mediating with them, 

11 understanding the other parties' perspectives as 

12 you do, what can you propose that you think they 

13 might accept that you could also accept? That's 

14 just kind of one way of thinking about it. So John, 

15 do you have a proposal?

16 MR. KAMIN: Actually I have -- perhaps 

17 is a good time to ask, just in recapping where we 

18 are now, I'm curious based off of the proposals. 

19 If we could get a little bit of a walk-through 

20 from the Department on a phased time line of what 

21 happens when --

22 I think I'm especially interested with 

23 no reporting requirements how that influences the 
237

1 time line between the Department collecting the 

2 information to synthesizing it and disclosing it 

3 or how the time line for disclosures as well. So 

4 if we can just talk through how the rule would work 

5 under the new proposal?

6 MR. MARTIN: Yeah. I'm going to have 

7 Cynthia come up and sit here, because she's the 

8 one that -- she does this work. So if we're talking 

9 about -- so what you want to know is as opposed 

10 to the way it works now, how would the time -- how 

11 would the time line work if we're using 

12 administrative calculation of the rates, correct?

13 MR. KAMIN: Yes.

14 MR. MARTIN: Okay. 

15 MS. HAMMOND: So assuming we don't add 

16 any -- there is no additional reporting. We don't 

17 add in anything we don't already have. The rule 

18 goes into effect July 1st, 2019, and sometime during 

19 2019 we would be able to -- we're obviously going 

20 to start. 

21 I mean as soon as in November of 2018 

22 when we publish this final rule, we are going to 

23 start working on the contracts and the other things 
238

1 that we would need to do in order to do the 

2 calculations. So sometime, maybe as early as in 

3 2019, we would be able to have a draft completer's 

4 list out. I don't know about the repayment rate, 

5 because I don't know if you guys are doing that.

6 MR. KAMIN: I'm sorry, it's the draft 

7 completer. What is that?

8 MS. HAMMOND: So how the debt to 

9 earnings rates work right now is we create a draft 

10 completer's list, which is the students who we think 

11 have completed the program minus the exclusions. 

12 We provide that to the schools. The schools then 

13 tell us yes, you're right. No, you're wrong, 

14 provide any additional information to get those 

15 corrected, to make sure we have the right students 

16 in the right programs that graduated in the right 

17 years.

18 We then take the results of that and 

19 give it to the Social Security Administration, who 

20 comes back with the mean and median earnings. Once 

21 we have those mean and median earnings, we're able 

22 to do a draft debt to earning calculations. At 

23 that point, the schools can no longer challenge 
239

1 the earnings information. But they do look at the 

2 debt, to see whether or not we have the debt 

3 information correct. 

4 There's a 45 day challenge process for 

5 that, and then we run it based on those corrections, 

6 if any. We call them challenges, based on those 

7 challenges, if any, and then we put out -- we make 

8 sure -- we validate it, make sure everything's good 

9 and put out final debt to earnings rates.

10 This year that you're in, the last time 

11 we did this, the final debt to earnings rates came 

12 out in January of '17. But depending on how we 

13 do the new challenge system, that time line may 

14 not -- may not be the same. On the last time we 

15 did this, we put some things into NSLDS to make 

16 corrections and challenges easier for schools.

17 I would suspect that a lot of that could 

18 be reused, although it's going off different tables 

19 instead of doing it just for the gainful employment 

20 tables. We'd be looking at enrollment reporting. 

21 But even with that, I would suspect that a lot 

22 of that coding could be reused, and therefore the 

23 time lines might be shortened a bit.
240

1 But any way you look at it, it would 

2 sometime in 2019 at best, maybe early 2020 when 

3 we would have another round of rates out based on 

4 these new rules.

5 MS. MILLER: Tim.

6 MR. POWERS: It's been a long few days, 

7 so I apologize if this has already been determined 

8 and I just zoned out for a few minutes or something. 

9 But I just want to make sure it's completely clear 

10 to me. So any debt to earnings reporting is only 

11 going to be for borrowers who have completed; 

12 correct, as in how we sort of currently do it under 

13 DE now.

14 MR. MARTIN: Currently yes, and that 

15 doesn't change with these proposed rules.

16 MR. POWERS: Just wanted to make sure 

17 that that's what it was, okay.

18 (Off-microphone comment.)

19 MS. MILLER: Marc Jerome.

20 MR. JEROME: My apologies. He said 

21 for only borrowers, right? Now debt to earnings 

22 --

23 (Simultaneous speaking.)
241

1 MR. MARTIN: No, I'm sorry. I didn't 

2 catch that. That's a good catch. No, it's not 

3 for only borrowers. It's Title IV recipients. 

4 I'm sorry. 

5 MR. POWERS: Yes.

6 MR. MARTIN: Sorry, thanks. Thank 

7 you, Marc.

8 MS. HAMMOND: And the way we clarified 

9 it in these rules, is that it's only Pell and 

10 borrowers, because we don't actually have in our 

11 systems the campus-based. We don't have work study 

12 only students, and so in order to make it easier 

13 for you all as well as for us, we just took them 

14 out. There are very few work study only students 

15 anyway.

16 MR. JEROME: And no Perkins then 

17 either?

18 MS. HAMMOND: And I think -- I think 

19 we did include Perkins.

20 MR. JEROME: It's a relatively small 

21 group.

22 MS. HAMMOND: Yeah actually we do have 

23 Perkins, because Perkins is reported to NSLDS. 
242

1 MR. JEROME: Okay.

2 MS. HAMMOND: So that one we do have. 

3 I will mention that if there are any additions, 

4 for instance, I know we've had a lot of discussion 

5 about tuition and fees, about private debt, I would 

6 like to note that if we have schools -- what we're 

7 talking about doing right now is something in 2020 

8 based on the fact that we have 2014 data, because 

9 that's when schools started reporting enrollment 

10 reporting by program. So we have some data for 

11 that.

12 If we started reporting, we couldn't 

13 start any earlier than 2019 and depending on how 

14 we do it, it might even be later, depending on if 

15 we included it in enrollment reporting, or if we 

16 just had schools report based on the current DE 

17 reporting scheme. So if you had schools start 

18 reporting those things in 2019, then it is 2027 

19 before we have rates again.

20 And my 12 year-old will be in college 

21 by then, but I just want to get you guys to 

22 understand. There's a significant gap in time if 

23 we add in new reporting requirements, and that is 
243

1 due to the fact that you have completers in a 

2 particular year, but then you need to advance 

3 several years. 

4 Then you have the Social Security 

5 earnings year, and that data doesn't become 

6 available until a year and a month later than that, 

7 and then we need time to get it and to calculate 

8 it.

9 So that expands the process 

10 significantly. So I was just doing a back of the 

11 envelope calculation. I might be off by a year, 

12 but I think it is 2027 if we decided to add in 

13 additional reporting.

14 MS. MILLER: Chris Madaio.

15 MR. MADAIO: Yeah, just a quick 

16 question, Cynthia, on what you were saying there. 

17 Thank you. On the draft completer's list, aren't 

18 they relatively kind of an easy thing to do, and 

19 that couldn't they also be done, I guess, after 

20 November and the publication of the final rule, 

21 at the same time you're seeking agreements to --

22 would be necessary to complete the debt to earnings?

23 I guess my question is kind of isn't 
244

1 the -- what is involved in doing draft completer's 

2 lists beyond just sending the list to the school?

3 MS. HAMMOND: So currently the draft 

4 completers list is a program that we run off of 

5 what Sarah Hay described as an antiquated system. 

6 I'm not a fan of those words, but she -- she does 

7 have a point. So this isn't done by query. It's 

8 done by an actual program that we run off of that. 

9 In order to do it for all schools, we no longer 

10 are going off of that part of NSLDS.

11 We now are doing it on completely 

12 different tables, the ones that have to do with 

13 enrollment reporting. So there's going to be some 

14 significant coding changes that are going to need 

15 to be made to that. It's hard to make those until 

16 the rule is final. But as soon as the rule is final, 

17 we can start working towards that. You know, we 

18 don't have to actually wait until it goes into 

19 effect in July, July 1st of the following year.

20 So we can start ahead of time, but it's 

21 hard to make any coding changes and commit the 

22 agency to funding contracts and stuff when the rule 

23 itself isn't finalized yet.
245

1 MR. MADAIO: Sure.

2 MS. HAMMOND: There will be some 

3 significant changes, not just because it's a 

4 different table, but there's different information 

5 there, and then we also have the issue that we will 

6 need to deal with if not here than in a subsequent 

7 Federal Register notice of how we do attribution 

8 of loans.

9 Because we will have the issue where 

10 in 2014 they told me that you graduated with your 

11 bachelor's degree in Art History, but you had four 

12 different majors before you decided on that, and 

13 how we attribute the debt related to that.

14 MR. MADAIO: So then as far as the 

15 current rule that's on the books, when does the 

16 Department plan to do the draft completer's list 

17 now if the coding is able to be done at this point, 

18 if they're still going to do it?

19 MS. HAMMOND: I do not have a time line. 

20 We are currently working on it.

21 MS. MILLER: Jennifer Blum.

22 MS. BLUM: So Cynthia, I just wanted 

23 to double-double clarify something. So we did to,
246

1 and I'm just asking the question. I'm actually 

2 now thinking about like all debt and how that 

3 changes the metric and all that good stuff. So 

4 don't everybody -- like I'm definitely on the all 

5 debt.

6 But I do want to just understand. If 

7 it were tuition and fees, if we were going back 

8 to tuition and fees, it would still be 2027 because 

9 you haven't done that for non-profits or right, 

10 okay.

11 MS. HAMMOND: That's correct.

12 MS. BLUM: Got it, got it.

13 MS. MILLER: John.

14 MR. KAMIN: Yeah. Just a final 

15 clarification before I ask -- we can move on to 

16 actual proposals. To be clear, what you're -- this 

17 is being worked out towards an eventual solution 

18 for what would inevitably be DMYR, Debt Measurement 

19 Year 2017. But before that, we're looking to --

20 right now we only have 2015 and we're waiting on 

21 2016 and we'll be patient with that.

22 But there's still the intent to do that 

23 before this new math gets worked out for the new 
247

1 rules?

2 MS. HAMMOND: That is our current plan, 

3 yes.

4 MR. KAMIN: Okay. 

5 MS. HAMMOND: I will also say that --

6 so let's say we go as we proposed and we're looking 

7 at a 2020 release of the things, based on what I've 

8 heard from you all earlier on in the sanctions, 

9 so in 2020, early 2020 or late 2019, at some point 

10 we would have rates put out, and then we would go 

11 to the two requirements and figure out the sanctions 

12 and that sort of stuff would be after that point.

13 MS. BUCK: Any other questions about 

14 the phased time line?

15 (No response.)

16 MS. BUCK: Okay. So I think we're 

17 ready now for a continuation of proposals. I was 

18 going to say --

19 PARTICIPANT: Can we go to metrics?

20 MS. BUCK: You want to see metrics up 

21 on the screen?

22 PARTICIPANT: Yeah, that is --

23 MS. BUCK: Okay. We can go back to 
248

1 metrics.

2 PARTICIPANT: This is technically part 

3 of 4 and 5, right?

4 MS. MILLER: Yes.

5 PARTICIPANT: Okay.

6 MS. BUCK: Yes, 4 and 5. 

7 MS. BLUM: Can I propose that we just 

8 focus on debt to earnings and loan repayment first 

9 though, because I mean those are the two that are 

10 the primaries --

11 PARTICIPANT: Tier 1, right.

12 MS. BLUM: Right.

13 MS. MILLER: Marc Jerome.

14 MR. JEROME: So given that it's the 

15 last day, I thought it would help, because that 

16 we got, I guess, a more general consensus that the 

17 negotiating committee is asking the Department and 

18 feels comfortable that we're going with these two 

19 metrics, a repayment rate and a debt to earnings 

20 rate, because I proposed that when we were in 

21 caucus, and I'm not sure it came out in the public 

22 segment.

23 So because that would then give the 
249

1 Department, to get some data and come to our next 

2 session with a more formal proposal that would be 

3 more constructive for us to work off.

4 MS. BUCK: So are you asking the group 

5 Marc?

6 MR. JEROME: Yes.

7 MS. BUCK: Okay, Jennifer Blum.

8 MS. BLUM: Marc, you're asking that we 

9 not discuss -- like just give it to the Department 

10 to figure out?

11 MR. JEROME: No, no. I'm asking is it 

12 this negotiating committee's general consensus 

13 that the Department should go forward for next time, 

14 preparing the metrics to have the alternate 

15 repayment rate and debt to earnings? It seemed 

16 like we were there, but it's been some time lapse.

17 MS. BUCK: So do you want to ask for 

18 people to indicate thumbs on that?

19 MS. MILLER: Whitney, do you have a 

20 response?

21 MS. BARKLEY-DENNEY: Yeah. So I think 

22 I would maybe categorize it a little differently, 

23 and I don't know to what extent this matters. But 
250

1 I think it's our general -- I'm not going to even 

2 say consensus. I think we all gave a positive 

3 temperature check to the idea that there needs to 

4 be something more than what is contained in this 

5 rule, particularly some way to get to sanctions 

6 with teeth.

7 The way that we have discussed doing 

8 that is via debt to earnings rates and repayment, 

9 along with another appeals process, and that that 

10 had a positive temperature check, rather than 

11 saying it's general consensus. Does that make 

12 sense to everyone?

13 MR. JEROME: I'm totally comfortable 

14 with that. I'm really only saying it, so that the 

15 Department and others can start getting how the 

16 heck the thing would work, what's the impact on 

17 the colleges and all the sectors, because that is 

18 very, very important to figure out if the metrics 

19 are appropriate. 

20 So it just focuses them. It doesn't 

21 mean it's definite. It just lets us have a general 

22 direction that we're moving forward, and if the 

23 data shows it's not right, then we'll revisit it.
251

1 MS. MILLER: Thelma.

2 MS. ROSS: So Thelma Ross. I am -- I 

3 don't have a proposal to this, but I do have a 

4 concern that I think that I want to state publicly 

5 for the institutions that I serve. So for 

6 minority-serving institutions, and they're not 

7 just HBCUs, but for minority-serving institutions, 

8 we've talked about the first session and this week, 

9 about the student population that these regulations 

10 are trying to protect.

11 We keep coming back to low income, under 

12 -- I'm going to use -- I'm going to stick with low 

13 income, and I would suggest that we get a 

14 significant number of those students at our 

15 institutions for whatever reason and for however 

16 long that has occurred.

17 But they come to us with a whole lot 

18 of other limitations other than low income. We 

19 could talk about philosophically the societal 

20 issues that come with those students, and by no 

21 means for anyone that's listening to this publicly 

22 do I mean that all of our students are in that 

23 category, because we have a diverse population of 
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1 students at minority-serving institutions.

2 We have some that are at this part of 

3 the spectrum, that any college sitting around this 

4 table would want to have on their campus, and we 

5 have those that come that at whatever level, 

6 secondary, just did not do well by them. But when 

7 they come, we offer them an array of services, and 

8 I am -- I'm at a loss to try to understand how, 

9 when we get to the other side of this, where we 

10 are going to try to roll up programs into this 

11 regulation, all programs in this regulation, and 

12 then apply debt to earning ratios to those programs 

13 or repayment, that those students are going to fare 

14 well in that.

15 Because if I look at any statistics with 

16 the group of students that we serve, and I start 

17 talking about income levels and debt, they're going 

18 to come out on the short end every time, every time, 

19 and it does not mean that the program was not a 

20 good program. 

21 It's just that when they go out the door 

22 from a very well-designed and constructed program 

23 that they did exceptionally well in, when they go 
253

1 out their earning potential is already different 

2 than another group of students' earning potentials. 

3 Then we're going to apply the same measuring stick 

4 to those students or those institutions, and I have 

5 a problem reconciling that in my mind.

6 MS. BUCK: Do you have any alternative 

7 that you think would be workable?

8 MS. ROSS: I'm going to -- say that 

9 again Whitney?

10 (Off-microphone comments.)

11 MS. ROSS: So and Whitney said --

12 Whitney said tongue in cheek and yeah, so that would 

13 be my recommendation to be honest with you. But 

14 I don't think the Department is going to do that. 

15 I said we could do what the regulations was 

16 intended, what they were intended to do when they 

17 were formed, and some of our schools are 

18 still -- they're in that boat. 

19 They offer certificate programs that 

20 lead to gainful employment, and they've had to rise 

21 or fall based on the regulations that were presented 

22 to us, right? So and the metrics that were 

23 presented to us at the time. So that my -- but 
254

1 I've been -- but we were almost told emphatically 

2 from Day 1 that that's not an option. It's not 

3 an option just for it to do what the regulations 

4 were intended to do.

5 So that would be my proposal, but I'm 

6 not sure the Department's going to go for it.

7 MS. MILLER: So Ahmad I see your card 

8 up, so I'm wondering if Tim or Jessica Barry or 

9 Mark McKenzie have a response for Thelma. Okay, 

10 so Tim and then Jessica.

11 MR. POWERS: Well just to thank Thelma, 

12 because I think it's a really important perspective 

13 and one that I think is essential for all of us 

14 to consider. So you know, we all have certain 

15 differences of opinion on statutory limitations 

16 here, but at a very, very, very minimum, maybe 

17 suggesting to the Department that when you sort 

18 of dig deeper beyond these metrics, at least taking 

19 some very serious considerations for Title III and 

20 Title V schools, and the challenges that they face. 

21 At a very minimum, just throwing that 

22 out there is something that I think we should all 

23 consider, given the I mean absolutely essential 
255

1 role that MSRs play in our higher ed landscape in 

2 this country.

3 MS. MILLER: Jessica and then Mark 

4 McKenzie.

5 MS. BLUM: Yeah Thelma, I'm glad you 

6 brought that up. The way you describe your 

7 student population though is very similar to our 

8 student populations on the proprietary side, and 

9 that's why the gainful employment regulations have 

10 been so hard for us to comply with. It's very 

11 similar populations.

12 MS. MILLER: Mark.

13 MR. McKENZIE: Yeah, Mark McKenzie. 

14 Thelma, well said and you know, the thought that 

15 I had about this is that the first two indicators, 

16 the debt to earnings and the repayment, are global 

17 thresholds that apply to all institutions, and 

18 they're kind of the first, the first pass-through.

19 If you don't, you know, if you fail both 

20 -- if an institution fails both of those, then no 

21 longer is it a global issue. It becomes an 

22 institutional discussion with the Department, you 

23 know. We had talked, I believe, about you called 
256

1 it administrative capabilities through the -- so 

2 now, the institutions have the opportunity to 

3 present the additional information in whatever 

4 metrics that are applicable.

5 I mean we went through a whole bunch 

6 of metrics. I actually think the burden then 

7 shifts from the Department to actually the 

8 institution that has been red-flagged on the first 

9 two, and but they can use whatever metrics they 

10 -- that makes sense in their institution. In your 

11 case, you know, bringing that piece forward would 

12 actually be a very legitimate defense, I think, 

13 or at least explanation. Let's say an explanation. 

14 I don't actually think we should use 

15 the term "appeal" in that second tier. I think 

16 it's really a review. It's an institutional review 

17 process, and then if the Department finds that there 

18 are significant issues here beyond, you know, an 

19 easy explanation, then it gets elevated and 

20 whatever your process is, whether it's program 

21 review and then you go much deeper.

22 But it's no longer part of the global 

23 regulation, and maybe the regulation that we're 
257

1 dealing with can be simplified to accommodate that.

2 MS. MILLER: John.

3 MR. KAMIN: Yeah. I think that there 

4 is a dissonance that will eventually be reconciled 

5 in one way or another over these fundamental 

6 differences in structure between state schools, 

7 non-profits and for-profits related to gainful 

8 employment. I think Daniel said it best, but when 

9 it came to compelling need and interest, and where 

10 that factors into things.

11 To put a finer point on that, I don't 

12 think that if New Hampshire, a New Hampshire 

13 community college has a drug counselor program, 

14 behavioral sciences at the associate's degree, I 

15 don't think the state would appreciate the 

16 Department of Education coming in saying oh, that's 

17 a poor program that you're running because they're 

18 not making enough money.

19 I say that they would probably tell you 

20 there's an opioid crisis and it's in the state's 

21 best interest to incentivize the program. And you 

22 know what? It's their business on how to do that. 

23 There is an accountability and structure in place 
258

1 that facilitates that, and empowers them to make 

2 those decisions.

3 Now non-profits have their own 

4 accountability structures as well. The issue when 

5 this originally came up back 50 years ago was about 

6 trying to build or cultivate an accountability 

7 structure for for-profits, for specific metrics 

8 that could be defined because of the absence of 

9 these accountability measures in the other sectors.

10 So it seems like applying those across 

11 all sectors to my point is going to inevitably lead 

12 to some clash, where the schools say this is -- we 

13 do not see the utility in this type of disclosure 

14 for us. I think that one of the regrets I have 

15 about this session is we haven't really honed in 

16 or drilled down on what precisely that utility 

17 is, for why we're doing that outside of equity 

18 across all sectors.

19 Which you know, that's a great point 

20 to debate on a fairness level. But in terms of 

21 practical effect and practical impact, I think that 

22 it hasn't really been mentioned, and that's --

23 I don't know what the answer is, but I certainly 
259

1 have sympathy for the schools who have those issues.

2 MS. MILLER: Johnson.

3 MR. TYLER: Yeah. I think Thelma's 

4 point is a great point. People do leave jobs and 

5 they're perceived the same way they were perceived 

6 before they went into the school, I mean leave 

7 school. It does impact on their ability to earn 

8 money. That applies to both sectors. But there 

9 is a difference here, and the big difference I see 

10 has to do with mission, and when you look at the 

11 mission of the proprietary schools, they have -- a 

12 lot of them have investors.

13 Mark's not included. Mark's business 

14 is a family business. His has its own mission, 

15 which I think is a good mission. But when you get 

16 investors involved, it changes everything. If you 

17 look at some of the schools, they've been 

18 well-documented. You can see the enrollment 

19 increasing. You can see the debt increasing. You 

20 can see salaries increasing massively.

21 The person whose story was told about 

22 going to automotive school. The structure there 

23 was I mean really bloated. The five chief 
260

1 executives made between them $8 million annually, 

2 and the investors, the whole school changed when 

3 investment got in it. 

4 So I guess I go to what is the 

5 consequence, and that would seem to be the only 

6 way to get the schools with a mission who are part 

7 of the public non-profit sector out of the 

8 consequences.

9 Maybe they can identify it, because 

10 there seems to want to be this, you know, 

11 transparency about return on investment, that sort 

12 of stuff. 

13 But it doesn't seem appropriate to have 

14 a school that has a different mission, that isn't 

15 related to satisfying investors, to have to go 

16 through this second look process that's very 

17 time-consuming and that's going to take away more 

18 from their students to the quality of the education 

19 they're doing, their bottom line, the number of 

20 people they can serve.

21 So I guess I would suggest maybe there's 

22 a way to revisit this, because otherwise it really 

23 does seem like a universal system here is really 
261

1 going to have some unintended consequences. 

2 MS. MILLER: Okay. Johnson, when you 

3 say revisit, does that mean in Session 3?

4 MR. TYLER: I'm not sure which session. 

5 I think my revisiting has to do with the question 

6 of if you were to fail the debt to income and the 

7 repayment rate, do you go through -- do you suffer 

8 the same consequences at the end that I think people 

9 have envisioned for the schools with a different 

10 mission, for proprietary schools?

11 MS. BUCK: And I think that would be 

12 under Corrective Options that we were brainstorming 

13 earlier. So maybe we should bring that up, just 

14 so people can see that as well.

15 MS. MILLER: Okay. So Ahmad.

16 MR. SHAWWAL: Ahmad. What 

17 guarantees, if any, do we have that the proposed 

18 regulations during the third session won't be 

19 shamelessly different than from the course of 

20 discussion during this session, as was the case 

21 with the proposed regulations that we were given 

22 on Monday, compared to the discussion in the first 

23 session?
262

1 MS. MILLER: Greg.

2 MR. MARTIN: Is that directed to me? 

3 So first of all, this -- we did. I would remind 

4 everybody that we did in the initial -- with the 

5 initial papers that we did, issue papers for Round 

6 1, we did bring up -- those papers were for 

7 everybody's consideration. We did not propose 

8 rules at those times, at that time.

9 We did introduce the idea of, to throw 

10 out there, to contemplate what if the rules were 

11 -- the sanctions were no longer there. So I think

12 we did introduce that option. We didn't have any 

13 -- there were no -- at that time it was the first 

14 meeting. We didn't have any -- we hadn't had any 

15 discussion about, you know, we hadn't had any 

16 discussions yet.

17 We had discussions at the table about 

18 what might occur. These proposed rules represent 

19 the Department's starting point as far as where 

20 the proposals go. I can ensure you that the, you 

21 know, when we go back and take this back, that the 

22 next round will reflect, you know, what was 

23 discussed here today.
263

1 And again, we have a whole 'nother week 

2 to discuss whatever is proposed. We're not coming 

3 back. We're not going to come back 

4 with -- obviously, we'll have positions, as all 

5 of you do, but we're not going to come back with 

6 something that we lay in front of you and say it's 

7 hard and fast, you know. This is it. We'll have 

8 another week of discussion around that.

9 So we do -- we have every intention of 

10 crafting the rules, not rules proposals for the 

11 next, the next session based on what we've heard 

12 here. You know, we've heard that everybody wants 

13 to look at an environment where we reintroduce some 

14 type of measure of sanction, and we will go back 

15 and look at a proposal to do that.

16 I understand everybody's on different 

17 pages with all of this. I don't -- I don't know 

18 that I would characterize our references as 

19 shameless. 

20 MR. SHAWWAL: Thank you, Greg. The 

21 reason I asked that is because I know there's a 

22 lot of differences of opinion at this table. But 

23 I feel like we've made some progress, and I'd like 
264

1 to see that continued.

2 I feel like if during the third session 

3 there's proposed regulations that are drastically 

4 different from the progress that we've made here, 

5 then it just derails the entire conversation and 

6 it really negates our entire purpose, and it's a 

7 big waste of time for all of us. Thank you.

8 MS. MILLER: Steve Chema, then 

9 Whitney.

10 MR. CHEMA: Thank you, Steve Chema. 

11 Just wanted to reflect on the point that Thelma 

12 and Jessica made about the socioeconomic and 

13 demographic backgrounds of the students that 

14 predominate their institutions, and what impact 

15 that has on their labor market outcomes.

16 This is -- it's not unprecedented for 

17 the Department to take that into consideration. 

18 If you look in the cohort default rate regulations, 

19 there's something known as the economically 

20 disadvantaged appeal, which allows institutions 

21 to tell the Department about their characteristics, 

22 and if they have a proportional amount of low income 

23 students coupled with another metric, sometimes 
265

1 it's placement rate, sometimes it's completion and 

2 graduation, but it varies depending on the degree 

3 program.

4 This is something that, you know, the 

5 Department weighs and allows them to consider 

6 whether or not that institution ought to be 

7 sanctioned. I think that would be appropriate to 

8 be considered at the Tier 2 phase.

9 MS. MILLER: Whitney.

10 MS. BARKLEY-DENNEY: Yeah. I just 

11 wanted to reiterate a request that I made last time 

12 that I don't think was addressed, which was to have 

13 someone to talk about the statutory and legislative 

14 intent of this language, because I think Thelma 

15 is getting to something really important, and I 

16 have to be honest. 

17 There have been times this week when 

18 I've been like are we actually legislating instead 

19 of writing a regulation? And it does feel like 

20 that to some extent, when we seem to be going so 

21 outside the parameters of what this original 

22 legislation contemplated. 

23 So I would just like to reiterate that 
266

1 request for either something buried in the annals 

2 of history or someone who actually knows the history 

3 of this, to come and talk to us about whether it's 

4 even appropriate to consider applying this rule 

5 all institutions.

6 MS. BUCK: Greg, can you respond to 

7 that at all?

8 MR. MARTIN: I'm going to let counsel 

9 respond to it.

10 MS. MILLER: Steve.

11 MR. FINLEY: So we hear a question, and 

12 we've identified for people that we think there's 

13 adequate authority to support these disclosure 

14 requirements. We're not here to talk about whether 

15 this is a reimaging of GE; this is developing these 

16 regulations to serve a purpose that we think is 

17 valid, which is to promote disclosure of the debt 

18 to earnings calculations, and to do so where we 

19 think there's authority to do this for all programs.

20 These actually respond to complaints 

21 the Department heard about some aspects of the DE 

22 regulations saying to the extent it's good to have 

23 this information; it would be better if it were 
267

1 available for everyone, and this does address that. 

2 It does it in a way that we think is meaningful. 

3 And that's the reason we're here, and 

4 that's the foundation for why we're here. It may 

5 not exactly respond to the questions you're asking, 

6 but I don't think they're on point for why we're 

7 here. We can differ on that in our opinions. 

8 MS. BARKLEY-DENNEY: Sure, and 

9 obviously I think we're going to have to. I mean 

10 we're talking about even removing, you know, 

11 references to the term "GE" when we're creating 

12 a gainful employment regulation. So you know, in 

13 my opinion we're pretty far afield from the 

14 Congressional intent, even by removing the name 

15 that Congress gave the statute when they named it. 

16

17 MS. MILLER: Kelly.

18 MS. MORRISSEY: So a couple of days ago 

19 I made the comment that it was very difficult for 

20 me to be asked to make decisions about this, without 

21 seeing any of the data that would inform those 

22 decisions. So now we do have some data in front 

23 of us, and after reviewing it quite thoroughly, 
268

1 I feel further convinced that we are not 

2 accomplishing what we are trying to do by casting 

3 a wider net here.

4 I'm really wondering why instead we're 

5 not trying to narrow our focus to identify those 

6 programs and those institutions that are really 

7 harming students. You know, hearing Thelma and 

8 others in terms of serving economically 

9 disadvantaged students, many of our institutions 

10 do that. So we're all dealing with the same inputs, 

11 if you will. 

12 It's what happens after those students 

13 arrive, and we really -- I feel, you know, it's 

14 difficult for me to say this, but we cannot have 

15 this conversation without examining the effects 

16 of the profit motive here, and that's what differs. 

17 So I really don't think that by throwing every 

18 institution in the country into this mix we're 

19 solving the problem at hand.

20 MS. MILLER: So we have Daniel, Jeff, 

21 Neal and Jennifer B. Daniel.

22 MR. ELKINS: Thank you for that 

23 comment. I appreciate that. That's a good segue 
269

1 into my point, which is that under the current 

2 regulation, both profit and non-profit schools are 

3 affected. So I want to keep in mind that even if 

4 we kept things as they were, it still does apply 

5 to both for-profit and non-profit programs, and 

6 those issues would still be there with low income 

7 students.

8 MS. MILLER: Jeff.

9 MR. ARTHUR: Yeah. I'd just point out 

10 that these sector lines of demarcation have blurred 

11 significantly. Many of the institutions you're 

12 talking about, the Wall Street schools, have --

13 some have been converted to non-profits. Some 

14 don't exist anymore. 

15 I mean it has changed significantly, 

16 and you know, if we want to address the issues that 

17 a sector-targeted rule, the institutions will just 

18 change the sector that they're in. I mean we've 

19 seen that happen significantly. 

20 But I think I've got an idea on how we 

21 can deal with this. I've been pretty, you know, 

22 convicted that I think we've got to score any data 

23 we look at, norm it for all programs. But being 
270

1 sensitive to Thelma's concern, which is also the 

2 concern of my institution. We serve the same 

3 demographic, the same socioeconomic diversity. 

4 But the Scorecard itself has a 

5 socioeconomic diversity score. If you look at 

6 IPEDs, they do peer. It's called peer evaluation 

7 review reports. There are systems and processes 

8 there and ways to analyze data to account for the 

9 socioeconomic diversity of the student body served.

10 So I would suggest that maybe that 

11 should be taken another step, to where we do this 

12 norming and we look for the -- I think it's somewhere 

13 in the two standard deviations, but don't need to 

14 get into that now, but to identify outliers. But 

15 that that should also be done at these -- at the 

16 level of some kind of a way to analyze the student 

17 body served.

18 I think that may help us get to where 

19 we need to go. Every measurement in the scorecard, 

20 you would see -- in every ranking in U.S. News and 

21 everything, a lot of that is the population served 

22 more than the institution's quality per se. And 

23 so we've got to find a way to identify the truly 
271

1 outlying programs that we want to target, and try 

2 to improve.

3 MS. MILLER: Neal.

4 MR. HELLER: So you know, I think 

5 Thelma stated it very eloquently, and I thank you, 

6 and Johnson I couldn't agree more that some of the 

7 people that came into our industry, starting in 

8 the late 1990's when they saw an opportunity with 

9 government money quite frankly, we became an 

10 industry that opened up to publicly traded 

11 companies, private equity groups and their only 

12 motivation, their only incentive was profit.

13 I 100 percent agree with it. They 

14 destroyed this industry, and they made it bad for 

15 everybody. Fortunately, and maybe it took too long 

16 than it should have, most of them are gone. It's 

17 not to say that there aren't outliers amongst 

18 family-owned businesses as well, but the majority 

19 of the wrongdoing was done by these private equity 

20 held and for-profit institutions. 

21 Not for-profit, sorry, publicly traded 

22 institutions that only looked at how much profit 

23 every quarter was being earned, and what were their 
272

1 stocks worth at that time and their stock options. 

2 Anyway, fortunately most of them are gone and yet 

3 this rule that came into play has only affected 

4 the ones like the schools that are represented here 

5 today that were left behind, and quite frankly most 

6 of us do it right.

7 We're not perfect, but we do serve 

8 difficult student bodies, and I think we get it 

9 right most of the time. So with that being said, 

10 you know, I think it's very hard to distinguish 

11 between a for-profit institution and a 

12 not-for-profit institution and I'm sorry, but you 

13 know, we are all in this one way or another, to 

14 make a profit.

15 Just because your tax status says not 

16 for profit doesn't mean you're not profitable. 

17 I've gone around this country and I've seen some 

18 wonderful private and public institutions in the 

19 traditional sector that have some of the most 

20 amazing facilities I've ever seen in my life.

21 I can point to one of Whitney's favorite 

22 schools, which I actually love, the University of 

23 North Carolina, and you've never seen a place like 
273

1 Chapel Hill, and you know, forget about the Dean 

2 Dome, which is a 19,000 seat gorgeous basketball 

3 arena. Right next door is the swimming facility, 

4 which I've never seen anything like that in my life.

5 So and you know, public money. So I 

6 also point to of all places, a New York Times article 

7 a few years ago, New York Times, that has castigated 

8 the for-profit industry, and I feel has done it 

9 in a very unfair way many times, actually wrote 

10 an article about Princeton University. They 

11 picked on Princeton. There are many others in the 

12 same boat.

13 Princeton has $20 billion sitting in 

14 a bank under investment. They actually went on 

15 to say that Princeton paid more money in fees to 

16 their financial advisors than they gave out in 

17 scholarships that year, which was 2015. Now I 

18 don't know about you, but I think that's as immoral 

19 and unethical as it gets, as they continue to raise 

20 their tuition to levels --

21 PARTICIPANT: This is -- sorry, this 

22 is about one of the schools in our sector, and I'd 

23 just point out that Princeton, they're not a 
274

1 scholarship-granting institution because they give 

2 need-based aid. They say we're going to charge 

3 you based on what you can contribute. 

4 MR. HELLER: Okay. Well I appreciate 

5 that.

6 PARTICIPANT: I just wanted to correct 

7 the record.

8 MS. MILLER: So Neal, do you have a 

9 proposal for what you're saying about that?

10 MR. HELLER: I don't have a proposal, 

11 but I do think, and I'll stop. You know, the words 

12 "gainfully employed" were put into the Higher 

13 Education Act in 1965. I was five years old. I'm 

14 pretty sure that it was not Congressional intent 

15 to somehow define it 50 years later as a debt to 

16 earnings ratio. So I hear everybody around this 

17 table and everyone has a problem with it. 

18 So I think the Department has headed 

19 in the right direction, and I do think there are 

20 other metrics that obviously do a much better job 

21 of identifying bad schools, no matter what their 

22 for-profit, not-for-profit, public or private.

23 MS. MILLER: Jennifer Blum.
275

1 MS. BLUM: So yeah. I just want to try 

2 to get back on track. I will say that I agreed 

3 with the last things that Neal said. Of course, 

4 you know, I wouldn't throw all types of for-profits 

5 and whatever size or type under the bus because 

6 of bad actors. 

7 I certainly think that this country has 

8 things like distance ed, where of course there have 

9 been some non-profits, but the private investment 

10 that was made, for example, into distance ed very 

11 early, I'm not sure we would have distance ed the 

12 way we have it today if it weren't for the private 

13 investment of for-profits. 

14 So I just want to -- let's not lose sight 

15 of the value of private money, and certainly as 

16 Neal very eloquently said, the non-profits 

17 certainly invest in often actually for-profit 

18 education in myriads of ways.

19 As Senator Alexander eloquently 

20 inquired of Tony Carnaval last week at a hearing, 

21 he said I'm sure you wouldn't let Georgetown operate 

22 at a deficit. So let's like all keep on track here. 

23 So with that, I'd like to propose that we get to 
276

1 debt to earnings, and discuss actual metrics.

2 MS. BUCK: Is that -- would the metrics 

3 chart be focused on that, the one that we were 

4 looking at before?

5 MS. BLUM: I don't think we need -- I 

6 mean with all due respect to the slides, I don't 

7 think we need the slides, because I think we have 

8 the proposed metric of the Department that we're 

9 going to go back to and discuss whether, what that 

10 one should look like in the context of the 

11 conversations we've had the last few days.

12 So it's debt to earnings, which is the 

13 one that was proposed in issues -- it's sort of 

14 Issues 2, 3, whatever. But it's really about the 

15 metric of, you know, and I think it's a combined 

16 conversation of, you know, are we sticking with 

17 the N size of ten? 

18 What is, you know, is eight percent 

19 appropriate -- 8 and 20 percents appropriate when 

20 you are now including all debt, and what is the 

21 amortization period going to be for the bachelor 

22 and below programs?

23 I mean those to me are the questions 
277

1 on the table, and I would just encourage. We've 

2 got less, you know, like a little bit more than 

3 an hour. So I just don't want to leave the 

4 Department -- with all due respect to the 

5 Department, I just would like to give the Department 

6 some insights, given the information which has been 

7 very helpful and education to us the last few days.

8 I'd just like to give the Department 

9 a bit more information on what it, and then if we 

10 can get to loan repayment, those two, and then we 

11 still haven't even talked about the alternative 

12 Tier 2 metric. So I just want to get to that.

13 MS. MILLER: So Jennifer, Sandy might 

14 have a suggestion for that. Sandy.

15 MS. SARGE: Just the -- the only thing 

16 that I would suggest is maybe we go to a blank sheet 

17 as we keep notes, so that we're seeing where the 

18 differences are going to be from that perspective.

19 MS. MILLER: Okay. So with Jennifer's 

20 suggestion that we move to talking about the debt 

21 to earnings repayment there's -- some cards went 

22 down but then some are still up. Tim?

23 MR. POWERS: Yeah. I mean just before 
278

1 we move on, I just want to put it on the record 

2 that I just fundamentally disagree with this sort 

3 of notion that non-profit and mission-based 

4 organizations and for-profit corporations have the 

5 same goals in mind when it comes to governance 

6 structure, right?

7 This is Milton Friedman stuff, right? 

8 I mean the point of a for-profit corporation or 

9 an entity is to maximize profit. That's not the 

10 mission of a non-profit so -- and I respect that 

11 there are some wonderful institutions around this 

12 table, and I am a firm supporter of the notion that 

13 proprietary schools do play a really important role 

14 in this country.

15 But I just needed to put it on record 

16 that this notion that there's sort of this blurred 

17 line, I don't think that that's something that I 

18 can just accept and move on from, and I just felt 

19 a need to point that out. So thank you for that.

20

21 MS. MILLER: Okay, Whitney.

22 MS. BARKLEY-DENNEY: Yes. I wanted to 

23 make a similar though different point to Tim, just 
279

1 sort of a philosophical reorientation, which is 

2 I think -- I've spent most of my career working 

3 with people who are under-served, and working with 

4 people in really dire economic conditions, 

5 particularly in the Mississippi delta.

6 What those people deserve and what they 

7 need when they go into higher education is more 

8 protection, not less. So that would include more 

9 understanding of how much money they're going to 

10 have to take out and what that means, more 

11 understanding. 

12 Like Sandy pointed out, a lot of these 

13 kids think financial aid means free, because 

14 Medicaid means free. Other things that they accept 

15 means free.

16 They need more career services, because 

17 they don't have mom or dad to put them into an 

18 internship like a privileged kid does. And so I 

19 just wanted to say I understand where everybody 

20 is coming from, and from my perspective, that means 

21 that we have to do actually more for those kids, 

22 not less.

23 MS. MILLER: So in doing more for them, 
280

1 can we move on to discuss the metrics that are up 

2 here? Does anybody else need to make an 

3 impassioned response or speech about their 

4 particular community of interest? Kelly you do?

5 MS. MORRISSEY: Everyone.

6 MS. MILLER: Everyone does?

7 MS. MORRISSEY: Well no. I'm just 

8 wondering before I feel comfortable moving on, is 

9 it even appropriate to take a temperature check 

10 on the basic tenet of whether or not we are 

11 comfortable with the expansion of this to all 

12 colleges and all programs. I just don't know if 

13 we're there. I feel like the rest of this hinges 

14 upon that.

15 MS. BUCK: Let's ask that question. 

16 Are you comfortable with including all college 

17 programs?

18 (Show of hands.)

19 MS. MILLER: Daniel has a question.

20 MS. BUCK: Except for graduate, which 

21 you already knocked out yesterday. 

22 MS. MILLER: Daniel has a question.

23 MR. ELKINS: Is the Department willing 
281

1 to not expand it? If the Department's not willing 

2 to do that, then it's not -- why are we even going 

3 to take the vote? I thought it was established 

4 already.

5 (Off-microphone comments.)

6 PARTICIPANT: I thought that's what we 

7 were told yesterday, that's our new mandate. So 

8 I felt we worked through this yesterday.

9 MR. ELKINS: Yeah, that's what I'm 

10 tracking.

11 PARTICIPANT: There's no harm in 

12 telling the Department what we think. I mean if 

13 they're not going to do it, they're not going to 

14 do it but --

15 MR. MARTIN: This is Greg. I agree 

16 with that. No, there's nothing wrong with giving 

17 us your opinion. You see our position, which it 

18 is a basic tenet of where we started from in these 

19 negotiations, and where we remain right now, that 

20 the -- that the rule be expanded to include all 

21 programs at all institutions, right?

22 I mean if -- I would hope that the 

23 proposals coming forth -- if the proposal is just, 
282

1 you know, we want to go back to the old rule, that's 

2 it, we're not moving off of that. That's going 

3 to be a very different -- I'm going to say this. 

4

5 We're open to anything, hearing 

6 anything. That's going to be a very difficult 

7 position for us, me, to negotiate from the 

8 perspective of the Department, if that's going to 

9 be your implied or tacit position.

10 Just like I would say to people on the 

11 other side, if someone's position were to be that 

12 I absolutely will tolerate no measurement of what 

13 we do or any implications of what we do, that's 

14 another position I think would be rather untenable. 

15 So I think we all have to be willing to get to 

16 some place based on the reason I'll reiterate, 

17 saying everything's on the table. But why did 

18 we come here to begin with?

19 If the intent of the Department was to 

20 keep the rule that we had in place with no changes, 

21 none of us would be here, right? That's just --

22 that's not Greg Martin's opinion or anything; 

23 that's just reality. So let's keep that in mind 
283

1 as we move forward.

2 MS. BUCK: And yesterday you did take 

3 a temperature check on graduate programs. Whether 

4 or not they're going to listen to that, you don't 

5 know. But you did take a temperature check on it. 

6

7 So why would it not be Okay to ask 

8 similar kinds of questions, even though you don't 

9 know for sure what their response would be? So 

10 with that in mind, do you want to ask that question 

11 again about colleges? No.

12 MS. MILLER: I'm hearing no.

13 (Off-microphone comments.)

14 MS. MILLER: Thelma.

15 MS. ROSS: So Thelma. Kelly, then 

16 your question or your ask was for a temperature 

17 check, because you said that it was not clear, in 

18 your mind at least, and as a negotiator at the table 

19 you have a request on the table. Can we ask --

20 she's asked for a temperature check. We've had 

21 50 temperature checks. Can we not do this one?

22 MS. BUCK: Please ask it again.

23 MS. MORRISSEY: I'm just asking for a 
284

1 temperature check on the basic tenet here, as to 

2 whether this will no longer be specifically DE 

3 programs, but an expansion of these disclosures 

4 to all educational programs at all institutions, 

5 and if that's something, a direction that we're 

6 comfortable heading into?

7 MS. BUCK: Okay. Is that clear? Can 

8 people indicate their response?

9 MS. MILLER: Or thumbs.

10 (Show of hands.)

11 MS. BUCK: Okay. There are quite a few 

12 thumbs down.

13 MS. MILLER: Quite a few thumbs down.

14 MS. BUCK: 1-2-3-4-5-6-7-8.

15 MS. MILLER: Eight thumbs down.

16 MS. BUCK: I see eight thumbs down. 

17 And by the way, we usually don't count the alternate 

18 unless the person is not --

19 MS. MILLER: The primary is not here, 

20 yeah. Jennifer.

21 MS. BLUM: So I just want to go back 

22 to something that Whitney said, I think it was the 

23 last time she spoke, about giving the students more. 
285

1 One thing that, you know, we can talk a long time 

2 about the Congressional intent from 1965 and then 

3 again in '92, where they actually did a lot on 

4 gainful employment.

5 We can talk about what the intent was 

6 then, but the realities, as I've said before, are 

7 different today than they were then. So one of 

8 the big struggles here is for universities and 

9 colleges too, that are at the degree level, that

10 have exposure from the disclosures, that where the 

11 students who are making decisions don't have the 

12 counterpoint of comparable programs at non-profit 

13 institutions.

14 I mean that's just -- and so if part 

15 of this is about consumer protection and consumer 

16 information, you're only giving students, you know, 

17 a third of the loaf. You're not giving them the 

18 full picture and let's see how it looks. I mean 

19 if I think it's important for students to see 

20 everything. 

21 I don't know how it's going to look, 

22 by the way. I mean I'm just saying -- but it's 

23 important for the students to see it, and that we 
286

1 just -- I mean the fact of the matter is is that 

2 higher ed moved beyond the term "gainful 

3 employment." 

4 The Department has created a statutory 

5 -- not created, but has used -- is using a statutory 

6 framework within their broad disclosure authority 

7 for a rational, sound solution here, and I think 

8 from a consumer -- you know, it just strikes me 

9 that we would want these students to see all of 

10 the data, not part of the data.

11 MS. MILLER: Sandy.

12 MS. SARGE: So I'm -- I very much agree 

13 with the table, I think Johnson and Tim and Chris 

14 Gannon, with regard to the intent of for-profit, 

15 particularly and to Neal's point exactly, to PE, 

16 to private equity and to publicly held 

17 universities. They have a mandate to their 

18 shareholders first and foremost, even though their 

19 mission statement as far as what they're doing, 

20 just like Ford says I want to make a good car. 

21 But at the end of the day, they really want to make 

22 a profit, insurance companies, name them. You're 

23 exactly right.
287

1 So I would be more than willing, and 

2 in fact would emphatically wish we could bring 

3 together a group of people who could talk about 

4 how do we bifurcate this group that's been deemed 

5 in the regs maybe, and maybe I'm overstepping 

6 because it's sanctions and I'm not an expert --

7 or not sanctions but statutory -- what a for-profit 

8 is.

9 Because I think, exactly to Neal's 

10 point, people that start off small family-owned 

11 schools that group and just pay their taxes had 

12 no idea 20 years ago what the ramifications were 

13 to be labeled in this group, and they don't have 

14 the same mission statement. I would love to move 

15 the Department into a way to separate out the 

16 sophisticated --

17 Todd said it yesterday, the 

18 sophisticated investor or the sophisticated person 

19 who's investing in those schools, and then when 

20 the school goes bad, those investors walk away. 

21 They lose their initial investment, but they don't 

22 repay our taxpayers, and they leave the student 

23 burdened and the Department burdened and us as 
288

1 taxpayers.

2 I'm in full agreement. Is there a 

3 way -- where would it be appropriate for us to 

4 start those discussions with the Department? How 

5 do we do that, and please don't tell me go to my 

6 Congressman, because we only get one or two and 

7 the state senators and a handful. I tried to do 

8 that, by the way.

9 (Pause.)

10 MR. MARTIN: First of all, we're 

11 prohibited by law from telling you to go to your 

12 -- to contact your Congressman, yes. So we never 

13 do that. Yeah, I don't. 

14 Whenever anybody brings this up with 

15 me, I always say -- I just always say to people 

16 about anything statutory, just remember your civics 

17 lesson. Some people make the law, some people 

18 interpret the law, some people enforce it, right.

19 That's by the way all I remember from 

20 my 8th grade civics class. But no, to the point 

21 of not for profit, I think that -- that question 

22 is somewhat rhetorical. I mean we're not in a 

23 position here to -- I mean, you know, for-profit, 
289

1 not for profit is a tax status, and I don't know 

2 that it's probably way beyond what we can do here 

3 to look at, you know, bifurcating within 

4 for-profit, different types of for-profit and 

5 different rules we would apply to that.

6 I don't -- I think that's well beyond 

7 the scope of -- what we'd like you to get to what's 

8 within our scope, let alone to go there. So I mean 

9 I think it's an interesting thing to think about 

10 and it certainly is, but -- and I fully understand 

11 the distinctions you're making there.

12 But for purposes of where we are now, 

13 I think we, you know, we have to look at those 

14 distinctions which currently exist.

15 MS. MILLER: So Jennifer has requested 

16 to answer Sandy's question.

17 MS. BLUM: So and Steve can certainly 

18 help me out here. But the fact of the matter is 

19 is that, and we can have a long conversation about 

20 its effectiveness or not. But the fact of the 

21 matter is is that in the financial responsibility 

22 standards, there is a bifurcation between 

23 non-profit and for-profit as it relates to the 
290

1 financial composite score first of all, and then 

2 secondly just by sheer structure of a for-profit 

3 organization, that all gets meted out in the 

4 financial responsibility standards.

5 I mean, you know, it's not explicit per 

6 se, but the holdings and the assets and all that 

7 get meted out when they're looking at financial 

8 responsibility. So there is a place in the statute 

9 and in the regs where this does get meted out, and 

10 it does get enforced. Is that fair Steve?

11 MS. MILLER: Chad.

12 MR. FINLEY: I actually understood 

13 Sandy was making a slightly different point of 

14 there's for-profits and there's for-profits, that 

15 you'd like some help putting initial caps on there 

16 or something but --

17 (Simultaneous speaking.)

18 MS. BLUM: Yes, but my point -- yes, 

19 but my point is that even that gets meted out in 

20 a financial composite score. 

21 MR. FINLEY: You know I think the goal 

22 here is to have a discussion about trying to 

23 identify programs that have high debt and low 
291

1 earnings, because the suspicion is they're in many 

2 places, right.

3 The conversation this week has 

4 broadened substantially to talk about other kinds 

5 of ways to look at them, to see if they're bad 

6 program or if there's -- if that's only one aspect 

7 of a good program, and that's felt like a very 

8 constructive part of our time this week.

9 MS. MILLER: Chad.

10 MR. MUNTZ: Chad Muntz. All right. 

11 I agree that perhaps maybe it doesn't apply to the 

12 public sector. I'm going to set that world aside 

13 for a second, and move this conversation forward 

14 I hope with some debt to earning metrics ideas, 

15 okay.

16 VOICES: Yea!!

17 MR. MUNTZ: All right. So if this has 

18 to be a one-size-fits-all in this new universe, 

19 I will reiterate my position that I don't think 

20 we need to do -- I want to make it simple. Let's 

21 just do total earnings, total debt, the consumer, 

22 the advocates, whoever out there can then make any 

23 ratios they want. 
292

1 A student can then determine if they 

2 can pay $10,000 over 10 years, over 15 years, over 

3 20 years, over the rest of their life and their 

4 grandchildren's life. I don't know.

5 But that could be a value statement. 

6 My value statement could be that we could make 

7 this ratio that one year's worth of earnings is 

8 equal to one year's worth of debt. Let's just say 

9 that that's the benchmark. You have 30 years' 

10 worth of working. Is it worth spending one out 

11 of 30 years to get this credential?

12 That's the point. That's the 

13 benchmark to maybe start with. Now if this has 

14 to apply to all of us, that would be one simple 

15 way, because once we go into an amortization 

16 schedule, once we get into a payment interest rate, 

17 it's going to be confusing because by the time 

18 you're finished with all of your undergraduate 

19 degree, now you're in a new interest rate with a 

20 new company. 

21 Your loans got consolidated somewhere 

22 else. Who knows what that is? But I just think 

23 earnings to debt, does that make sense to you? 
293

1 Maybe I'll look at the consumers. What do you guys 

2 think? The students, would you like that kind of 

3 information? The Department can produce that kind 

4 of information. That's one point.

5 Now from -- it's on the College 

6 Scorecard, that's right, and we start at the 

7 institutional level. If the institution has a 

8 problem, then we can get to the program level. 

9 That's kind of the way I look at it. The Department 

10 can produce that.

11 The second piece of it is the 

12 disclosure. So the Department's disclosing this. 

13 We've got hundreds of thousands, millions of 

14 students in the beginning. I would have to say 

15 for this to apply, we can't then keep pieces of 

16 paper that everybody read this that were 

17 prospective students to make it work, at least in 

18 the public and maybe the non-profit sector.

19 So from that point of view, I reflect 

20 back onto the data that we got yesterday. The 

21 current rule identified three million low income 

22 people who tended to be single mothers, Pell grant 

23 recipients and after the end of their program they 
294

1 were making at best 20 to 28 thousand dollars no 

2 matter what.

3 So the current rule did get at a very 

4 high risk population. I would say that disclosure 

5 might have to have a two-tiered approach. Maybe 

6 for the public and non-profit, bachelor degree. 

7 I'd be welcome to open that up, and a master's that 

8 maybe it's just an email notification like what 

9 we currently do.

10 But for certificate programs to be 

11 gainful, there has to be a second step because there 

12 are the lowest income students, and they need to 

13 -- we need to verify that they understand that 

14 they're going to take on $20,000 of debt or whatever 

15 it is to only make $20,000.

16 I think that that's the key that we're 

17 trying to protect is to consumers at that point. 

18 So that's just my putting this out there. Two 

19 tier approach on the disclosures, depending on your 

20 sector. But an overall one metric approach for 

21 the department to produce or maybe two if we had 

22 the repayment rate, for all of our programs.

23 MS. BUCK: Okay, thank you for that. 
295

1 MS. MILLER: Thank you. So thoughts?

2 PARTICIPANT: Chad, can I ask one 

3 question of you please? So you're talking about 

4 the -- this would be under a disclosure environment. 

5 Did you give any thought to how, given those 

6 disclosures, the Department would make a measure?

7 MR. MUNTZ: Well so I think the measure 

8 would be the ratio of debt to earnings.

9 PARTICIPANT: Okay. You're still on 

10 that measure, okay.

11 MR. MUNTZ: And we can discuss the 

12 earnings. Is it ten years later, five years after 

13 you graduate? I don't know. Is the debt the 

14 beginning debt or is it the debt five years later? 

15 I don't know. But that's the point, is that this 

16 could apply to everybody. 

17 MS. MILLER: So thoughts, comments, to 

18 what Chad has proposed? Jeff.

19 MR. MUNTZ: Yeah, I agree. 

20 (Off-microphone comments.)

21 MR. MUNTZ: So the two tiered 

22 disclosure approach would be for the current 

23 gainful kinds of programs, because of what their 
296

1 customer base might be, would have to be an email 

2 sign-off. But for disclosures for everybody, 

3 maybe we could do just a notification like what 

4 we already do and our typical work that Pam had 

5 referred to.

6 I'd be willing to open this up, that 

7 it would be degree programs could fit within the 

8 first tier notification and the signing off by the 

9 student could fit in the second tier, for the volume 

10 of students involved in higher ed. Just an idea. 

11 I'd be willing to have pushback on this but --

12 (Off-microphone comment.)

13 MR. MUNTZ: Yeah. No sector 

14 differentiation for the degree level. Sector 

15 differentiation for maybe the certificate level.

16 MS. BUCK: Responses to this idea. 

17 Jeff.

18 MR. ARTHUR: Yeah. So I mostly agree 

19 with Chad. I mean the first step, absolutely. 

20 We have an opportunity here to finally disclose 

21 debt data by program to students for everybody. 

22 That's never happened. We've got 1.3 trillion of 

23 debt or whatever it is. We have no idea how to 
297

1 manage it without getting it down to a program 

2 level.

3 And so the data, this really is a first 

4 step. To try to talk about sanctions and tiers 

5 for anybody is a little premature until that data's 

6 there. We've got to analyze it. We've got to 

7 figure out, okay, what kind of sanctions are 

8 appropriate? You can't determine an appropriate 

9 sanction, I think, without starting with the data 

10 and identifying the outliers.

11 MS. MILLER: Other thoughts on this 

12 idea? Marc Jerome and then Whitney.

13 MR. JEROME: So, Chad, I do really 

14 appreciate the proposal, and I'm trying to 

15 understand it. Did I hear you propose something 

16 that I had proposed yesterday, with starting out 

17 first at an institutional debt and earnings? So, 

18 I actually believe that remains one of the best 

19 ways for the Department to focus its energies on 

20 programs that may need their energies focused on. 

21 So I would second that. 

22 I'm open to the discussion about, you 

23 know, different approaches to different sectors. 
298

1 I guess what I would say is I still view the rule 

2 from a student perspective, and so if there is a 

3 program or an institution in any sector that the 

4 data shows as clearly having very, very low 

5 outcomes, I'd like the Department to protect them. 

6 I always view the Department as having an 

7 obligation to protect students wherever they come 

8 from. 

9 And then when you were proposing, how 

10 does your debt to earnings proposal differ from 

11 what we've been discussing? 

12 MR. MUNTZ: I think it's just total 

13 debt, total earnings at the end of your credential, 

14 making a ratio of that. I don't know yet what the 

15 benchmark is. 

16 MR. ARTHUR: But that's what the -- how 

17 does that differ from the current rule?

18 MR. MUNTZ: It's not the amortization, 

19 yeah.

20 (Off-microphone comments.)

21 MR. MUNTZ: We're not going to try and 

22 do payment and discretionary income and all that 

23 --
299

1 MR. ARTHUR: Okay. So basically 

2 they're the Mark Kantrowitz, which is if they were 

3 about equal, okay.

4 MR. MUNTZ: Maybe. I don't know. I 

5 mean, I'm just trying to throw something out there, 

6 because otherwise my next argument will be, well, 

7 if you use a six percent we pass; if you use a seven 

8 percent, we don't. And I --

9 MR. ARTHUR: So you're just really 

10 proposing a gross -- like, I would call it a gross 

11 or more simplistic formula that avoids all the 

12 variables.

13 MR. ARTHUR: Yeah, that's right.

14 MS. MILLER: Whitney.

15 MR. MUNTZ: Easy for people to 

16 understand.

17 MS. MILLER: Hang on. Whitney has 

18 more ideas about this. Whitney.

19 MS. BARKLEY-DENNEY: Okay. So I'm not 

20 going to comment on what it would look like to do 

21 the gross and the gross, just because I would 

22 appreciate it actually if the Department could take 

23 that back and possibly run some of those numbers 
300

1 so we could see what the difference would look like. 

2 Because I'm not a good enough mathematician to 

3 think that through in my head.

4 The other thing, though, I was going 

5 to say is I am concerned about the institutional 

6 level view, because of all of the reasons why that 

7 Jordan outlined this morning with his data, the 

8 potential of it really masking problems. And I 

9 think if we want to get to the program issue, we 

10 have to understand what's happening at the program 

11 level.

12 It may be that at some point if a certain 

13 institution had several failing programs, or a 

14 certain percentage of failing programs, then we 

15 look at their institutional rates to see, to 

16 diagnose the problem. But, as a first look, I think 

17 we have to look at program rates.

18 MR. MUNTZ: The reason why I was 

19 thinking that way -- I agree, that if your 

20 institution is bad, all of the programs are going 

21 to be bad, it's going to come to the top. But from 

22 the disclosure standpoint, as it stands, most of 

23 our institutions, you get admitted to the 
301

1 university even in a general education program.

2 But if you have 100 programs and we've 

3 got to disclose every single rate -- I mean every 

4 single earning and debt for every single program 

5 to every prospective student, it's going to be all 

6 this paper combined that we're sending on an ongoing 

7 basis. And I don't know if that's the intent of 

8 protecting the consumer that you would hope to have, 

9 versus right now your institution's bachelor degree 

10 programs tend to have this debt, this outcome, like 

11 the Scorecard. And if you want more data, then 

12 maybe you could dig down deeper. 

13 If the institution has a problem in the 

14 disclosure piece or in the sanction piece or 

15 whatever we're calling that, the Department can 

16 dig down deeper to that level. 

17 Like I said, it's just a proposal.

18 MS. MILLER: Okay. So, Jordan, Chris 

19 Gannon ,and Daniel. I see your tent's up. Is it 

20 related to this idea that Chad has presented? 

21 Okay. Johnson, is your idea?

22 MR. TYLER: Yeah, only that -- and 

23 there are other social -- I'm not a social 
302

1 scientist, but I did read something that Jordan 

2 sent to me. I mean, I think there's a very high 

3 correlation with outcomes and institutions. I 

4 think there's a lot of science behind that, a lot 

5 of studies.

6 So this whole issue that Chad's trying 

7 to avoid, the disclosure per program, which really 

8 becomes a huge drain on resources, but if we're 

9 talking about institutions that are consistently 

10 failing students, you know, I think there's some 

11 studies out there that would back that up.

12 MS. MILLER: Daniel and Chris Gannon, 

13 were yours directed towards Chad's? Daniel's? 

14 Okay. Well, let's have Chris Gannon go first, then 

15 Daniel.

16 MR. GANNON: Yeah, I just also had some 

17 concerns with the institutional level view, because 

18 I think that's just going to mask bad-acting 

19 programs and not necessarily help students by 

20 masking those programs. So I just have -- I still 

21 have issues with that.

22 MS. MILLER: Do you have a proposal or 

23 any thoughts on how to correct that at this time?
303

1 MR. GANNON: I just don't agree with 

2 the institutional level view. 

3 MS. MILLER: So back to the program?

4 MR. GANNON: Yeah, back to the program. 

5 I think it needs to be viewed at the program level, 

6 or else you're just going to mask bad programs that 

7 are scamming students.

8 MS. MILLER: Okay, thank you. Chad.

9 MR. MUNTZ: Sure. I'll respond to 

10 that. I think our data that we've been given might 

11 be able to highlight some programs that we could 

12 amend to that, the institutions who offer programs 

13 where a lot of the enrollment is from, you know, 

14 it looks like communication technologies. It 

15 looks like basic skills and developmental and 

16 remedial education. 

17 I mean, just looking at the table, Page 

18 6, Table 5, wherever the bulk of the enrollment 

19 is. Maybe we could limit some of our programs to 

20 that level for the disclosure, to help in that 

21 regard. 

22 MR. JEROME: So, just one question on 

23 that. My apologies, Marc Jerome. The data from 
304

1 University of Texas, which is not included in the 

2 GE data set, I think that data, which is publicly 

3 available and easy to look at, shows that in the 

4 liberal arts and those areas, that's where the 

5 problems with debt to earnings are. So just be 

6 aware of the implication.

7 MR. MUNTZ: Yeah, I agree. But I'm 

8 trying to start us somewhere, right? 

9 MS. BARKLEY-DENNEY: So, just a 

10 follow-up, one other thing I wanted to clarify. 

11 So are we considering, because we were talking about 

12 using Scorecard data versus GE data. So were you 

13 considering including non-completers and 

14 completers, or just completers?

15 MR. MUNTZ: Well, it depends, right? 

16 I mean, you're right. The devil's in the detail. 

17 We can do completers, but, I mean, I could go either 

18 way on this. But if we did the entire student body 

19 that's ever had contact with that institution, then 

20 I would also want to include all the students who 

21 never had to take out a loan, and add them in as 

22 a zero for your averages.

23 But if we're only doing, you know, the 
305

1 other, then we would have to look at that. But, 

2 yeah, I mean, it's a good question.

3 MS. BARKLEY-DENNEY: Yeah, and I don't 

4 have an opinion on it necessarily at the moment. 

5 I just wanted to point out, if we're moving over 

6 to Scorecard data, that's something we have to 

7 consider.

8 MS. MILLER: Daniel.

9 MR. ELKINS: To what Marc said a few 

10 minutes ago, this is very reminiscent of Mark 

11 Kantrowitz's paper. Like this is almost identical 

12 to what he proposes if you've spent any length of 

13 time talking to him.

14 MS. MILLER: Okay. Any other thoughts 

15 on Chad's proposal before we go to Jordan? Tim.

16 MR. POWERS: I just wanted to thank 

17 Chad for moving the ball forward. So, thank you.

18 MS. BUCK: So, go ahead, Sandy. What 

19 were you going to propose?

20 MS. SARGE: Would you guys be 

21 interested in doing a thumb check on whether this 

22 feels like it could be something we move forward 

23 with and we continue moving on this? 
306

1 MS. BUCK: Or you could do a thumb check 

2 on whether you would like the Department of Ed to 

3 explore this approach.

4 MS. SARGE: There you go. That sounds 

5 better, okay.

6 MS. BUCK: Okay. Could we have a check 

7 then on whether you would like the Department of 

8 Ed to explore this approach as it has been 

9 described. And give the data. 

10 (Show of hands.)

11 MS. BUCK: I don't see any down thumbs. 

12 I see a few sideways and I see some up thumbs. 

13 Am I right about that? Okay. 

14 MS. MILLER: Thank you for that. 

15 Okay, Jordan.

16 MR. MATSUDAIRA: Yeah, thanks. So, 

17 I'm going to be the jerk who I guess goes backwards 

18 or moves us backwards. I hope it's not that, but 

19 I had kind of an alternative way of just thinking 

20 about kind of a path to consensus about a broad 

21 way of constructing a rule that I feel like, you 

22 know, maybe splits the difference between a lot 

23 of kind of concerns or kind of criticisms of the 
307

1 old rule and the new rule, and maybe splits some 

2 of these differences. 

3 So I just wanted to throw out the kind 

4 of general idea. So, you know, for me I think 

5 maintaining some of the current structure of the 

6 original GE rule is really critical for protecting 

7 students, and in particular having a path that's 

8 kind of close to automatic with appeals around data 

9 and so on for Title IV eligibility loss is 

10 important.

11 But, you know, I think a lot of what 

12 we talked about is, you know, a desire to really 

13 improve the metrics that are actually used to do 

14 that and kind of revisit whether we're really 

15 isolating programs that are poor performing. So 

16 we've talked about adding in a repayment rate, 

17 thinking about, you know, like changing time 

18 horizons for different metrics and so on.

19 So I think, you know, that's something 

20 that makes good sense. The other criticism that 

21 I've heard is just a feeling like only having to 

22 focus on the GE structure puts a lot of for-profit 

23 programs at a competitive disadvantage to poor 
308

1 performing non-GE programs, and so, you know, 

2 folding in this idea of expanding the disclosure, 

3 so, compute the debt to earnings rate, compute 

4 repayment rates at a program level for every 

5 institution, and have a disclosure and notification 

6 regime that does, you know, pop up with a warning 

7 on whatever space we decide is appropriate. 

8 But it says, you know, simply people 

9 who go to this program struggle to repay their debt 

10 or, you know, have high debt relative to earnings 

11 or have low repayment rates. So you kind of add 

12 that in, and then outside of the DE accountability 

13 structure, which again I still advocate for having 

14 an automatic path for Title IV eligibility loss, 

15 outside of that perhaps building in the kind of 

16 thing that we've been talking about where, for the 

17 non-GE programs, there is a trigger that triggers 

18 some kind of compliance review or administrative 

19 action with the sanctions that Ed has available 

20 to it in the way that we've kind of been describing 

21 as a Tier 2 process.

22 So I imagine that makes everybody a 

23 little bit unhappy, but it feels like it addresses 
309

1 a lot of the different kinds of concerns that have 

2 been raised. So I wonder whether there might be 

3 some room for pursuing consensus along that path.

4 (Off-microphone comments.)

5 PARTICIPANT: Can we get a new page and 

6 you can write them up so we can see?

7 MR. MATSUDAIRA: Okay. So --

8 MS. BUCK: As you say them, Crystal 

9 will write them up. So, say them, see them go up, 

10 make sure it's what you're saying and then go to 

11 the next point. How about that?

12 MR. MATSUDAIRA: Okay. So, GE 

13 accountability structure with improved metrics, 

14 including the repayment rate.

15 (Off-microphone comments.)

16 PARTICIPANT: Are you saying DE? Debt 

17 to earnings?

18 MR. MATSUDAIRA: Yeah, I'm sorry, 

19 including a repayment rate in addition to DE. 

20 PARTICIPANT: Just a minute. DE 

21 accountability structure with what?

22 MR. MATSUDAIRA: So, automatic Title 

23 IV loss and sanctions for GE programs. Part 2 would 
310

1 be --

2 (Off-microphone comments.)

3 MR. MATSUDAIRA: What I mean is similar 

4 to the structure of the 2011 GE rule, there's still 

5 some structure where based on DE and repayment 

6 rates, there's still some -- for programs that 

7 persistently do not pass those kinds of rates, there 

8 still is a path to automatic Title IV loss.

9 In the non-GE sector, debt to earnings 

10 and repayment rates are still measured, and 

11 according to the same process there's a 

12 notification and warning structure. So, in other 

13 words, the students get the same information based 

14 on the performance of GE versus non-GE programs. 

15 It's just the sanctions side of the regime that 

16 would be different.

17 On the non-GE side, the non-performance 

18 on the metrics would lead to some sort of compliance 

19 review, programmatic reviews or administrative 

20 sanctions. 

21 PARTICIPANT: Would you be open to --

22 because the Department had open stated they would 

23 not have a structure where there were sanctions 
311

1 with one identical degree program without the 

2 other, especially total loss of Title IV. Are you 

3 open to some other path that would encourage 

4 improved programs?

5 MR. MATSUDAIRA: Yeah. What I'm 

6 worried about is just on the -- if the path to 

7 improving these programs is through some sort of 

8 programmatic oversight, I just don't feel like 

9 we've gotten information that makes me confident 

10 that the Department would really have the capacity 

11 to do that at the kind of scale that's being 

12 contemplated now.

13 So that's why I feel like, you know, 

14 to protect students, we really need some kind of 

15 automatic process that's metric-based. It has an 

16 appeals process but can do this in some sort of 

17 efficient way in order to keep students protected.

18 MS. MILLER: Greg, did you want to 

19 weigh in?

20 MR. MARTIN: I was just looking for a 

21 clarification from Jordan. So, automatic loss. 

22 So automatic loss of some pathway to automatic loss 

23 of eligibility for programs that are currently 
312

1 defined as -- it would still be in the law; the 

2 law still defines what a GE program is. 

3 So, for those programs, then, there 

4 would be -- I don't want to pin you down, but would 

5 you see that being what is currently in a 

6 regulation, along those lines, or something 

7 modified from that?

8 MR. MATSUDAIRA: I guess what I'm 

9 suggesting is something like the current 

10 regulation, in the sense that there's still some 

11 kind of automatic Title IV eligibility loss that's 

12 triggered by continued failure, according to some 

13 set of metrics, but improving the set of metrics 

14 in a way that addresses some of the concerns that 

15 have been brought up with debt to earnings, the 

16 measurement of those things, and having the appeal 

17 process and so on.

18 But then also adding to that structure 

19 kind of a measurement and disclosure regime that 

20 covers the non-GE space in a way that kind of 

21 addresses some of the concerns that Marc has brought 

22 up, like, you know, I don't want to be here running 

23 a good program and having a kind of non-GE program 
313

1 that's doing really poorly and not have a way to 

2 kind of communicate that to students.

3 MS. MILLER: Mark McKenzie.

4 MR. McKENZIE: Actually, I'm going to 

5 have a different suggestion, so maybe you should 

6 finish and if you want to do temperature checks, 

7 whatever you were going to do. I'll come back.

8 MS. MILLER: Okay. Thank you, Mark 

9 McKenzie. Jordan, does this look right, what we've 

10 --

11 MS. BUCK: Can you see it? It's too 

12 small. Can you read it off, Crystal?

13 PARTICIPANT: So it looks kind of like 

14 a bifurcated system where it's I guess similar, 

15 but DE and loan repayments and automatic title loss. 

16 Is that for the traditional GE programs on one 

17 side? And then you have a different structure, 

18 slightly different structure for the non-GE 

19 program, which is still DE plus repayment. And 

20 there are a notification and warning structure, 

21 as well as sanctions, meaning non-performance 

22 rates, compliance, programmatic reviews, and 

23 administrative sanctions? Is that about right?
314

1 MR. MATSUDAIRA: I think so. I think 

2 the only difference, or the only thing that might 

3 not be reflected well, is just that I mean for the 

4 notification and warning structure to be symmetric 

5 across --

6 PARTICIPANT: Oh, for both sides, for 

7 both.

8 MS. BARKLEY-DENNEY: This leads to my 

9 question. And it's very pedantic, but I don't 

10 understand what automatic means in this context. 

11 Because if there's appeals, if you're 

12 contemplating an appeal, then it's not really an 

13 automatic loss, right? So can you just clarify 

14 that?

15 MR. MATSUDAIRA: I mean it in the same 

16 way that it exists in the current regulation.

17 MS. MILLER: Is it okay to use pathway 

18 to Title IV loss, rather than automatic, or you 

19 want the automatic?

20 MR. MATSUDAIRA: As long as we 

21 understand each other. I'm not sure. What I mean 

22 is in the same way that in the current rule, if 

23 you fail the metric two out of three years, there 
315

1 exists an appeals process. But, in principle, if 

2 you fail the metric two out of three years, that 

3 triggers Title IV eligibility loss.

4 MS. BUCK: So is his proposal clear?

5 MS. MILLER: Daniel, did you want to 

6 say something or ask something?

7 MR. ELKINS: I wanted to ask a 

8 question.

9 MS. MILLER: Okay, Daniel.

10 MR. ELKINS: Jordan, help me 

11 understand the intent for the bifurcation, 

12 specifically with the loss of Title IV not being 

13 applied across the board. Is your intent more to 

14 do with you feel like that's a statutory overstep? 

15 Or is it because you feel like that's too harsh?

16 MR. MATSUDAIRA: I think the main --

17 I think one constraint, and Steve can correct me 

18 if I'm wrong, but I think one constraint is that, 

19 you know, because I think the loss of Title IV 

20 eligibility is basically implicit in defining GE, 

21 that I think it might not be statutorily possible 

22 to kind of have that automatic metric-based trigger 

23 to Title IV eligibility loss through there. But 
316

1 Steve can correct me if I'm wrong about that.

2 But I'm also sympathetic to the idea 

3 that a more holistic review of non-GE programs might 

4 be appropriate to kind of build in some of the 

5 considerations about, you know, what the mission 

6 or kind of goal of a particular program, what 

7 constitutes good programs, not to say that's not 

8 an issue at all in GE sector programs, but that, 

9 you know, those programs in general are more 

10 vocationally oriented.

11 So the focus more on the financial side 

12 of things might be appropriate, but that's to me 

13 like a lesser of the argument than the statutory 

14 authority piece. 

15 And I'll just say that I think the 

16 asymmetric treatment of the two sectors, again, 

17 is warranted by the fact that, based on the data 

18 that we have available, the problems that students 

19 are having with debt are much more concentrated 

20 in the for-profit sector.

21 MS. BUCK: Does that answer your 

22 question?

23 MS. MILLER: Okay, Jeff, do you have 
317

1 a question, clarification point?

2 MR. ARTHUR: Yeah. Were we about to 

3 take a temperature check on this?

4 MS. MILLER: We were, but if you have 

5 more questions about it --

6 MR. ARTHUR: Okay. Then I just want 

7 to point out, if I've got a program that's at 10 

8 percent debt to earnings, and I get it down to 9.5 

9 the next year, and I get it to 9 percent the next 

10 year, maybe 8.5 the next year, I mean that's a very 

11 significant improvement in that program, but it 

12 fails.

13 Exact same program, and there will be 

14 the exact same programs at institutions that aren't 

15 subject to this, where their debt to earnings is 

16 15 percent, 16 percent, 14 percent, each of those 

17 three years. And for any scenario where mine fails 

18 and is deemed a failure, and theirs has no 

19 sanctions, that's an automatic thumbs down for me.

20 MS. MILLER: Jennifer, another point 

21 or question?

22 MS. BLUM: Yes, for Steve Finley. So 

23 I am sitting in, and Steve might help me out here, 
318

1 too, a little bit. But I am sitting in the legal 

2 seat, so I am going to put on my legal hat here. 

3

4 In terms of statutory authority, you 

5 now have a metric that's the same metric across 

6 all higher ed using the disclosure authorities of 

7 the Department, of the statute. And that's the 

8 basis because you can't use the gainful one and 

9 have the metric. You can't argue that you're 

10 somehow subjecting the non-profit bachelor's to 

11 this disclosure under gainful.

12 So now you're using the disclosure, 

13 which is what you've been doing all week, using 

14 the disclosure authorities that you have and the 

15 various different provisions of the statute, which 

16 we can list if we need to, and you're disclosing 

17 all of these metrics.

18 And then you're deciding that, from an 

19 enforcement standpoint, you're going to enforce 

20 only on one sector of higher ed. The problem is 

21 that there is absolutely no rational basis for 

22 -- and particularly I'm going to take the bachelor's 

23 level, where there are probably -- and I don't know 
319

1 what the data is, but I'm going to guess that 

2 two-thirds of bachelor programs in this country 

3 are non-profit and one-third are for-profit. I'm 

4 just going to guess. That's a round, and I could 

5 be wrong, but, you know, but it's the majority of 

6 the bachelor's degree in this country are probably 

7 in the non-profit, or it's at least even. 

8 Then you're going to get into a 

9 discussion. So there's already that point, right? 

10 So, somehow you're going to punish a bad 

11 performance of a for-profit bachelor degree program 

12 but not the non-profit.

13 Then I'll take it one step further. 

14 That program has a demographic, a socioeconomic 

15 demographic of, let's call it, low. And yet 

16 there's going to be a whole bunch of non-profit 

17 institutions that have the exact same demographic. 

18 But somehow, even though it will be disclosed that 

19 they have a low-performing program, too, somehow 

20 they're not seeing the same punishment. So my 

21 question is, can you really do that at the 

22 Department?

23 MR. FINLEY: I think that's a great 
320

1 rhetorical question, and I'm going to leave it on 

2 the table in just that way. It does seem like a 

3 proposal that calls for like keeping what's there 

4 and then adding on the new thing that's proposed 

5 and ignoring that you may have programs that look 

6 very similar having very different outcomes based 

7 on the sector in which they're being offered. But 

8 I think it's an interesting rhetorical question, 

9 certainly problematic in a lot of ways.

10 MS. BUCK: Are we ready to take a 

11 temperature check on Jordan's proposal? Okay. 

12 It's not showing. Oh there is it.

13 MS. MILLER: There it is, okay. 

14 MS. BUCK: So, temperature check. 

15 (Show of hands.)

16 MS. BUCK: Okay I see 1-2-3-4-5 at 

17 least thumbs down on this proposal. Does one 

18 person want to say why, just so Jordan understands? 

19 Not everybody, but one person? Go ahead. Yeah, 

20 you just did, okay.

21 MS. MILLER: Yeah, we did. 

22 MR. MIRANDO: One reason, one reason 

23 alone, as I've been stating the whole day: my 
321

1 understanding is that's not what our mandate here 

2 is, and I feel like we're just spinning the wheels 

3 again. So that's my rationale, like there's no 

4 point in continuing this conversation. It's just 

5 not what they want from us.

6 MS. MILLER: Okay. Thank you, Tony. 

7 Mark McKenzie, did you have another proposal for 

8 us to consider? Please say yes.

9 MR. McKENZIE: Yes, I think so. Yeah, 

10 I've spent a number of days listening to this, and 

11 great ideas, and there are lots of challenges. 

12 There are challenges with metrics, there are 

13 challenges with public versus private, for-profit, 

14 non-profit. There are capability and capacity 

15 issues at the Department. And there's a rule in 

16 place.

17 It seems to me that a reasonable way 

18 forward is to potentially partition this into the 

19 next four years, apply this new tiered process to 

20 the for-profits or the current GE-covered 

21 institutions, and give it a time to pilot all of 

22 these metrics that we're using. And then at a set 

23 date that there's a rollover into the rest of the 
322

1 programs. 

2 So the one thing we don't want to do 

3 is continue to propagate bad information and apply 

4 that to a bigger group of people. That's just --

5 that's crazy-making. 

6 So, maybe stay focused on the 

7 institutions where you already have data, and apply 

8 that data over a period of time. And then expand 

9 it out into the public arena when you've actually 

10 demonstrated that the data is actually effective 

11 or accurate. And it gives the folks looking at 

12 that a good amount of time to demonstrate it.-

13 MS. BUCK: Questions about that 

14 proposal? And thank you for proposing it.

15 MS. MILLER: Greg and then Daniel.

16 MR. MARTIN: Mark, during this piloted 

17 period of time that you have in mind, would there 

18 be any type of -- so you would pilot this and it 

19 would apply to GE institutions. And would there 

20 be -- what would happen to the sanction structure? 

21 That would be set aside for that period of time?

22 MR. McKENZIE: No, actually, the 

23 two-tiered process that you were talking about, 
323

1 that there seemed to be agreement on, is these two 

2 measures. Whether you go to Chad's measure for 

3 DE or the one that's already retained, it's like 

4 figure out those two metrics. What are reliable 

5 metrics in those two? And they're red flags. If 

6 a school, an institution fails both of those, then 

7 they need to go into a review process. We need 

8 to continue to protect students that are currently 

9 enrolled. And so, you know, it keeps the process 

10 going with changing a little bit of the focus. 

11 So I'd use that structure instead of 

12 an automatic. It's not an appeal, but it's a review 

13 process. And it's not only a review process for 

14 the Department, but if you've got institutions that 

15 are failing those two metrics, accreditors are 

16 going to absolutely jump on that bandwagon, because 

17 that's going to be a reportable non-compliance 

18 event for us and we're going to be looking at that.

19 So it seems to accomplish a lot of what 

20 we're trying to do, keep the focus on the students 

21 and protecting students in this case without that 

22 drop. 

23 And the other thing that I was concerned 
324

1 about is the capacity issue. When you go from 

2 expanding, if I remember correctly, from the 

3 for-profit sector to including all of those, the 

4 potential for inaccurate readings was five to six 

5 percent. And it's a greater number of institutions 

6 that's going to blow up the number of potential 

7 appeals, because you haven't resolved that the 

8 metrics actually work.

9 MS. BUCK: Additional questions about 

10 the proposal? 

11 MS. MILLER: Daniel.

12 MR. ELKINS: I had one question. The 

13 four-year rollout as currently exists with what's 

14 on statute right now or what we're talking about 

15 today?

16 MR. McKENZIE: Yeah, I'm not sure. 

17 I'd probably ask Cynthia or Greg how that can work 

18 in. That one, I haven't thought through the 

19 ramifications of that.

20 MS. MILLER: Sandy.

21 MS. SARGE: So, in your proposal, Mark, 

22 would o the discussion we had the other day where, 

23 the graduate programs, we all had at least a neutral 
325

1 to a thumbs up on excluding the graduate programs. 

2 Would we all be amenable to taking those out at 

3 least? Or are you saying keep the population of 

4 programs as it stands today, but pilot the new 

5 methodology of review?

6 MR. McKENZIE: Actually I think

7 because most of the data that is based on the 

8 Scorecard, and a lot of that doesn't apply to 

9 graduate programs, I actually think that exempting 

10 the graduate programs actually makes sense.

11 MS. SARGE: Okay.

12 MR. McKENZIE: You know, just from that 

13 perspective. So that population would change at 

14 least.

15 MS. SARGE: At least those would be.

16 MR. McKENZIE: Yeah.

17 MS. SARGE: Oh, and I had one other 

18 question, and maybe this is -- if Sarah's still 

19 here.

20 MS. MILLER: Is this on Mark's 

21 proposal?

22 MS. SARGE: It rolls up to something 

23 that was asked earlier and it applies to every 
326

1 suggestion, in essence, because it's the Scorecard.

2 MS. MILLER: Okay.

3 MS. SARGE: So there are some places 

4 on your chart, Exhibit 1 on that first paper, Sarah, 

5 where you show things like excludes non-completers, 

6 includes non-completers, things like that. These 

7 are questions that have come up. Would you be able 

8 to get them consistent? 

9 (Off-microphone comments.)

10 MS. SARGE: I'm trying to find out, are 

11 there identifiers in those databases that would 

12 help to be able to exclude it so the data is 

13 consistent?

14 (Pause.)

15 MS. HAY: Hi. So, this is Sarah. The 

16 data are really different. So, I could probably 

17 spend a entire day explaining it, but I think the 

18 answer is no. They cannot be made consistent with 

19 each other.

20 MS. MILLER: The data is what it is. 

21 Okay. So, John K., Marc Jerome, and then Johnson. 

22 And then let's see if we can do a temperature check.

23 MR. KAMIN: Okay. I just want to 
327

1 backtrack for a moment on the idea of sanctions 

2 for non-profits and public schools. Would I be 

3 out of order to ask what potential authority or 

4 statutory authority that could be derived from, 

5 because that wasn't, I think, my reading of 1001 

6 and 1002.

7 MR. MARTIN: Well, I mean, okay. So 

8 we started from the perspective of, you know, 

9 currently sanctions, automatic loss of eligibility 

10 for, you know, gainful employment programs. And 

11 as Steve indicated yesterday, any statutory 

12 authority to extend such a loss of program 

13 eligibility based on DE metrics would be dubious 

14 at best. So, probably not.

15 What we talked about yesterday was, in 

16 looking at programs that are not GE programs, and 

17 expanding this to all programs, would be something 

18 where we would look at a rates measure and then 

19 tie rates that were -- I don't want to characterize 

20 it -- less than satisfactory, whatever we determine 

21 that to be, tie that to an administrative evaluation 

22 of that program, right?

23 So it wouldn't be an automatic loss of 
328

1 eligibility. So we would be looking at that 

2 program through the other tools the Department has 

3 at its disposal. Or if you keyed it back to a 

4 measure of administrative capability, the 

5 Department certainly has the statutory authority 

6 to look at an institution's administrative 

7 capability. And I don't know, Steve, do you want 

8 to add something there?

9 MR. FINLEY: I mean, the concept there, 

10 that is one indicator of a bad program, right? 

11 That would be one indicator. It could be offset 

12 by showing that a program has high repayment rates. 

13 Maybe it doesn't. A program with high DE and bad 

14 repayment rates and lots of drops. There are a 

15 lot of indicators that, when considered together, 

16 any institution is accountable for its 

17 administrative capabilities to the Department, and 

18 this could be one factor. Does that help?

19 MR. KAMIN: Yeah. I think from my head 

20 I was just looking at it like there were components 

21 of the 2011 GE that we seem to be amenable over 

22 providing some flexibility. And, again, going 

23 back to 2011, that statutory authority was defined 
329

1 under those provisions for a program providing 

2 gainful employment.

3 Which leads me to think that it would 

4 be tough to have any type of remedial actions or 

5 corrective steps that schools would take if they 

6 were outside of that definition. So I just think 

7 that it's important to be thoughtful and 

8 considerate about how we could correct this 

9 difference between institution types.

10 So, I'm not saying that there shouldn't 

11 be any correction on the part of public schools 

12 or non-profits eventually after -- because I agree 

13 with the way this is kind of looking in terms of 

14 piloting and understanding the data. But it may 

15 conceivably be different than, and unique but still 

16 comparable to, what the for-profits are going

17 through. 

18 And I will just close in saying if this 

19 is the no-go zone in terms of us exploring the idea 

20 of these remedial actions, sanctions, corrective, 

21 whatever we want to call it, and we return to --

22 then it would appear that we're going back to the 

23 transparency model.
330

1 If that's the case, I would just highly 

2 advise that graduate schools, of course, be 

3 introduced back to the program, because there's 

4 nothing, no problems -- I think we could gather 

5 from just learning more about the program. I think 

6 it hinged on the idea that we were taking a more 

7 serious approach. But if it's just transparency, 

8 by all means we should capture as many schools as 

9 possible.

10 MS. BUCK: So let's continue to focus 

11 on this pilot program up here, see if there are 

12 any additional questions about it, and then take 

13 a temperature check before we go on to other issues.

14 MS. MILLER: Marc Jerome, did you have 

15 a question about Mark McKenzie?

16 MR. JEROME: Yes, Mark McKenzie. So, 

17 in my mind, I'm fairly surprised you're putting 

18 this out there, because the schools that you 

19 accredit I thought presented the exact reason why 

20 this proposal is problematic. You have two schools 

21 or three schools, I understand, that are GE that 

22 fail. You have a number of schools that are non-GE 

23 that we don't know but you suspect, all the evidence 
331

1 indicates their debt and earnings is about the same. 

2 And so for another four years, the 

3 schools that fail are labeled failing. Their 

4 enrollments are declining. Students are attending 

5 the other schools without knowing the debt to 

6 earnings. So this is, you know, for me, I'm going 

7 to be consistent. This is exactly what I believe 

8 we should be avoiding, because you have to protect 

9 consumers, and to me that's -- and you have to give 

10 students the information to make an intelligent 

11 decision.

12 MR. McKENZIE: Right.

13 MR. JEROME: So I just wanted to 

14 reflect on that.

15 MR. McKENZIE: Sure. Actually, I 

16 think Greg might have asked. The concept would 

17 not be that the same negative things apply, that 

18 we'd switch to that two-tier review. So you'd have 

19 to have the two metrics. The two metrics, if they 

20 are both red, then it just leads to a higher level 

21 of review. 

22 But, again, instead of being a global 

23 issue, now you're looking at an individual 
332

1 institutional review, and the institution has the 

2 opportunity to bring other metrics to the table 

3 to have that discussion with the Department as to 

4 whether these sanctions apply or not.

5 So one of the things that you can do 

6 -- I mean, one of the concerns I think there would 

7 be from students -- and this would be from a 

8 regulator as well, as an accreditor -- any time 

9 you have institutions that don't meet particular 

10 thresholds, it's a red flag. It doesn't mean it's 

11 a bad program. It could just lead to, okay, the 

12 sanction is this program's under review, you know?

13 So that's a way to do it, rather than 

14 hanging the penalty. Because you're right. I 

15 don't think the penalty phase that's in the current 

16 regulation should continue to be applied, because 

17 I just don't think that's fair at all. And that 

18 kind of leads back to the other issues with the 

19 validity of the measures that we've all been talking 

20 about for four days.

21 This is trying to kind of accomplish 

22 a little bit of everything for everybody. But, 

23 most importantly, trying to put students first, 
333

1 because that's the thing that we need to continue 

2 to make sure that they're protected in this current 

3 environment. 

4 It allows the Department to ramp up. 

5 As we heard earlier, you know, their capacity to 

6 do things is lower just because of the hiring freeze 

7 and everything else. So to add a huge burden onto 

8 the staff would be very difficult. So I think this 

9 is a way to get there, but it's just going to take 

10 some time. 

11 MS. BUCK: So I need to tell you that 

12 it is 4:30, and I wonder, are there questions that 

13 must be asked before we take a temperature check 

14 on this proposal? 

15 MS. MILLER: Chad.

16 MR. MUNTZ: I think it's a question for 

17 maybe the Department. Can we do a roll-out like 

18 this over four years, or does the Department need 

19 to go back with something that covered everybody 

20 from Day 1 on, what was it, 2019? 

21 MR. MARTIN: This is Greg, for the 

22 record. I don't think that we're in a position 

23 to answer that right now. We certainly can take 
334

1 -- you know, the proposal were to achieve a level 

2 of supportability -- I keep looking for a way to 

3 get around that word; I think it's interesting. 

4 I like the term now, level of supportability. I 

5 want that enshrined from now on. 

6 But if that were the case, we would 

7 certainly take it back and look at it, if there's 

8 support there for it. I can't guarantee or make 

9 any assertions that we could do it or how fast that 

10 could be done. But it doesn't mean we'd be 

11 unwilling to consider it. But at this point, I 

12 can't give you that, I can't give you an estimate.

13 MS. BUCK: Are there other questions 

14 that have to be asked before we take a temperature 

15 check?

16 (No response.)

17 MS. BUCK: Then let's take a 

18 temperature check of this pilot program proposal.

19 MS. MILLER: Show of thumbs.

20 (Show of hands.)

21 MS. BUCK: Looks to me like there are 

22 three thumbs down.

23 MS. MILLER: Four thumbs down.
335

1 MS. BUCK: Four thumbs down, okay. 

2 MS. MILLER: Thank you.

3 MS. BUCK: There was some support and 

4 some sideways thumbs as well. 

5 So it is now 4:35, and I want to ask, 

6 does anything need to be said about the technical 

7 and conforming changes issue paper, or can people 

8 simply look at that without discussion? 

9 That was something that wasn't covered 

10 before, and I don't know if it needs to be, but 

11 I just want to mention it. So, Greg, I was asking 

12 you that. The issue paper on technical and 

13 conforming changes.

14 MR. MARTIN: I personally don't feel 

15 I need to say anything more about it than was said 

16 at the outset. Certainly if someone has comments 

17 about it, questions, wants to bring something to 

18 our attention, we're glad to entertain that.

19 It basically is technical and 

20 conforming changes based on what we proposed. Now, 

21 obviously, if something changes based on what we 

22 talked about here, it could change what's in those 

23 technical and conforming changes, right, if we 
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1 proceed in a different direction. That was based 

2 on what was proposed to you here.

3 MS. BUCK: Okay. I just wanted to be 

4 sure, that's all. So it was mentioned and we can 

5 pass on that for now.

6 MS. MILLER: So, Ahmad, your tent is 

7 still up.

8 MR. SHAWWAL: I have more of a general 

9 question. So, say by the third session, we all 

10 reach some sort of consensus on our items. What 

11 is the legal obligation that the Department of 

12 Education has to incorporate our recommended 

13 changes, assuming that we all reach some sort of 

14 consensus on each of the issue items that we have?

15 MR. FINLEY: So, this is Steve, and I 

16 realize I've been forgetting to say that the whole 

17 time this week, so that I would say it now.

18 (Laughter.)

19 MR. FINLEY: So in the third session, 

20 we'll have proposed reg language, and some 

21 background information on it to present. We will 

22 try to work through those as we go and try to be 

23 in a position where if there's changes suggested, 
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1 we provide feedback on it and they get modified 

2 during the week.

3 And if at the end of that week we get 

4 consensus on the package, the Department would 

5 publish that regulatory language as the proposed 

6 regulation, except that the Secretary does have 

7 the right to deviate from that with an explanation 

8 in the NPRM. But the goal of the consensus is to 

9 create the proposed regulation. 

10 MR. SHAWWAL: Thank you. And to that 

11 effect, before the third session, if everyone here 

12 is okay with it, is it okay if the Department 

13 prepares a summary of their take-aways from this 

14 session from what we have recommended to the 

15 Department, so that we can have something to 

16 reference during the third session?

17 It's just a way of -- it's a way of 

18 helping us keep track of what it is that we had 

19 discussed, and also finding a way to hold each other 

20 accountable in that sense, if that makes sense. 

21 MR. MARTIN: This is Greg. I don't --

22 I can't commit to that on behalf of the Department. 

23 If you want to put that request in writing, we 
338

1 will consider it. I can't say now, yes, we'll 

2 definitely do that. It will be committing the 

3 resources of a lot of people to that.

4 I don't know whether that's going to 

5 fit into our current protocol. But I don't think 

6 I need to tell you who to send that to, scott.filter. 

7 But no I'm serious, do. If you want that you can 

8 certainly request it. We can take it into 

9 consideration. But I can't promise we can do that.

10 MS. MILLER: Daniel.

11 MR. ELKINS: Yes. If I could put Mark 

12 on the spot just for a moment. Yesterday, in 

13 caucus, you brought up a point that was very 

14 innovative and we kind of were blown away by it,

15 but it never got fully fleshed out. I was wondering 

16 if we could put that on the board. I don't know 

17 if that fits into Chad's option, but I think it 

18 had to do with institution versus programmatic 

19 level. So if you could explain that a little bit 

20 more as another metric? I think that that would 

21 be very valuable.

22 MS. BUCK: We can spend ten more 

23 minutes, and then we'd have to have time for public 
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1 comment.

2 MR. MCKENZIE: It's only one minute on 

3 this, because the group already discussed it. I 

4 just generally believe in order for the Department 

5 to be the most effective in being able to identify 

6 poorly performing institutions or programs, they 

7 may be better served by first running an 

8 institutional metric, whatever it may be, and then 

9 only after that go to a programmatic. 

10 I think that the group should consider 

11 that this is proposed in the spirit. If the 

12 Department is going to straight programmatic 

13 metrics, they're going to be unable to be effective 

14 because of the huge, vast number of programs in 

15 different types of institutions. So that's the 

16 spirit it was given in, to be actually the most 

17 effective in protecting consumers.

18 MS. BUCK: Would you add anything to 

19 that chart in covering your proposal?

20 MS. MILLER: Okay. Sandy, then 

21 Whitney.

22 MS. SARGE: I just had one procedural 

23 question. Last time we had talked about getting 
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1 a transcript of the meeting and maybe I'm just 

2 forgetting. Has that been published of the last 

3 meeting? It was supposed to be three and a half

4 weeks or something after the last meeting. I can't 

5 remember. I just can't remember.

6 (Simultaneous speaking.)

7 MS. MILLER: There's a question about 

8 the transcript for last session.

9 MS. BUCK: I think they're going to 

10 answer it in just a minute.

11 PARTICIPANT: It's online.

12 MS. SARGE: I'm just asking, okay. 

13 Thank you.

14 MR. MARTIN: I believe it's out there, 

15 but Scott's going to check and confirm for certain.

16 MS. BUCK: Check the GE site. That's 

17 where it should be.

18 MR. MARTIN: I have to confess that 

19 having lived it I wasn't keen to go right back and 

20 re-read everything right away but --

21 MS. MILLER: Okay.

22 MS. BUCK: Mark, in terms of this 

23 proposal, is it enough that people want to have 
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1 a temperature check or not? Help me understand 

2 where you'd like to have this go.

3 MR. MCKENZIE: No, I think enough has 

4 been said about it. I don't believe it needs a 

5 temperature check.

6 MS. BUCK: Okay. All right.

7 MS. MILLER: So we have one tent left. 

8 We have 20 minutes. 

9 MS. BUCK: Whitney, did you want to 

10 close us out?

11 MS. BARKLEY-DENNEY: So take the whole 

12 20 minutes?

13 MS. MILLER: No, no. We still have to 

14 do public comment and then talk about our next 

15 meeting and wrap this up. 

16 MS. BARKLEY-DENNEY: So if we're not 

17 taking a temperature check on it, it's not that 

18 relevant. But I just wanted to say again that we 

19 think that this is actually should be the opposite. 

20 So we start with programmatic metric and then you 

21 can see if an institution has, you know.

22 I think if you look at the data, you're 

23 going to notice that a lot of institutions fail 
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1 programmatically. If you notice that, then 

2 perhaps you can do an institutional review, as well 

3 as -- you know, instead of having to 

4 programmatically review every single one of those 

5 programs. 

6 But you start with a programmatic 

7 review and then see what the institution looks like 

8 as far as the number of programs that they've had 

9 that have passed or failed or met expectations or 

10 not met expectations, or been an angel or a devil 

11 or whatever we decide to call it.

12 MS. MILLER: Okay. I think with that, 

13 I'm going to see if there are any public comments. 

14 Any public comments? One, two. Any more than 

15 two? Okay. Could you come up to the microphone, 

16 state your name, and give your public comment?

17 MS. MERCHANT: Hi, everyone. My name 

18 is Senya. I'm with the group Higher Ed, Not Debt. 

19 We've been running this livestream throughout the 

20 hearing, and as a consequence of opening up this 

21 process to the wider public, we've been receiving 

22 hundreds of stories from borrowers themselves, 

23 often stories of less than gainful employment after 
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1 being lied to by many for-profit college programs.

2 So these are one of those comments that 

3 came in on our livestream video. This comment is 

4 from Andy Conrad Watson. "I went to ITT Tech for 

5 a B.S. in Criminal Justice and graduated in 2010, 

6 'valedictorian and top of my class.' I was 

7 guaranteed employment, they said, because of my 

8 academic effort and my degree.

9 "It's 2018, and not one company or 

10 government body has accepted my degree. It's not 

11 from a lack of applying, either. I turned in 

12 multiple pages of denied job applications that I 

13 qualified for after receiving my degree, they said, 

14 with my defense to repayment. I have been ignored, 

15 overlooked, and laughed at by potential employers.

16 "Many of have told me that my degree 

17 is worthless and they do not consider ITT a 

18 legitimate school. There is no such thing as 

19 gainful employment when you're a victim of one of 

20 these dishonest for-profit schools such as ITT 

21 Technical Institute."

22 If I have time, I'm going to read one 

23 more comment. This comment is from Deborah Jean. 
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1 "The Art Institutes from 2013 to 2014 left me to 

2 $20,000 in debt and no job offers. I now work a 

3 job that pays $9 an hour. While I was in school, 

4 the culinary director was fired from embezzlement 

5 around the time that I finished. Another culinary 

6 instructor was fired during my culinary process 

7 for showing up to class drunk or high. I have a 

8 worthless degree, and ended up deciding on a 

9 different career path because I had no other choice. 

10 But unfortunately this debt is one that I cannot 

11 get rid of." Thank you so much.

12 MS. MILLER: Thank you. Next?

13 MR. SCHRADE: My name is Jeff Schrade. 

14 I represent the Paul Mitchell Franchisee 

15 Association. I've spoken before. I do want to 

16 extend my thanks to Greg and all of you that are 

17 here. I know this is really hard work and it's 

18 hard to come to an agreement. 

19 Contrary to the testimony, the comment 

20 that was made yesterday, I do support going into 

21 executive session. I've been in negotiations. 

22 I know what it's like. It's sometimes helpful to 

23 close the door.
345

1 For what it's worth, I used to work as 

2 a communications director in the U.S. Senate. As 

3 a communications person, I loved having reporters 

4 there. I loved having cameras. I wanted to get 

5 my boss on the news back home. But in my 

6 discussions with other congressional staff, I heard 

7 over and over again that in the old days they could 

8 close the doors and people could cut deals and not 

9 face the kind of public outcry. And the addition 

10 has unfortunately led to the situation we now see 

11 on Capitol Hill where nobody wants to bend. 

12 All that said, I've got to say I'm 

13 extremely disappointed, particularly in some of 

14 the consumer advocates that are here, those of you 

15 who voted to take down or remove from consideration 

16 applying GE to all schools.

17 I'm a father. I have a daughter, two 

18 daughters. One's in school in Florida and the 

19 other one graduated with a master's degree in museum 

20 studies. The oldest daughter, I thought, being 

21 in Washington, D.C., lots of museums, Smithsonian, 

22 my kid's going to get a job right out of the block. 

23 She's working as an aide now to an attorney, 
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1 because, guess what? There are few jobs in 

2 museums. When I talked to some of the head people 

3 in the Smithsonian, they said if she was willing 

4 to work there for a year, 40 hours a week with no 

5 pay, she might be considered for a job.

6 So if the university that she went to 

7 was under a gainful employment metric, that would 

8 look very poor on that public institution that she 

9 went to. So, those of you, I understand the 

10 schools, you know, University of Michigan and 

11 others, you don't want to have any more rules and 

12 regulations than the rest of us.

13 You talk about how hard and difficult 

14 it is to comply with. Well, guess what? It's hard 

15 and difficult on our schools. We spent 

16 $500,000-plus complying with the regulations. The 

17 computer system was so poorly put together that 

18 our folks ended up providing advice to the 

19 Department on how to make it work.

20 So if you hear some frustration, I'm 

21 frustrated as a taxpayer, as a father, as someone 

22 who represents people who only schools -- they're 

23 usually husband and wife teams that have invested 
347

1 a million dollars or so into the programs.

2 It's not easy for them. They're 

3 fortunate to have a corporate sponsor that's helped 

4 them through this process. A lot of mom and pop 

5 schools have gone out of business. Maybe they 

6 should have. But I don't think it's fair to stick 

7 it to some and not to all. So, anyway, those are 

8 my thoughts. Thanks.

9 MS. MILLER: Thank you. So, we're at 

10 4:48. We didn't think we were going to make it, 

11 but we have like 11 minutes to spare. But before 

12 I release you, I do want to thank you for your hard 

13 work this week. We've had a lot of tough 

14 discussions. We've done a lot of things to make 

15 sure that we get to some general area of at least 

16 a tentative agreement and make sure we were heard.

17 Before I turn it over to Greg, I just 

18 want to remind you of our next session, March 12th 

19 through 15th, and it will be at the Potomac Center 

20 Plaza Auditorium at 550 12th Street, Southwest. 

21 MS. BUCK: And just want to thank 

22 particularly the people who did come up with 

23 proposals. I know it's really hard to do that with 
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1 all the restrictions and things you're dealing 

2 with, and that made it possible for us to really 

3 consider some options. So, thank you for that. 

4 Is there anything anybody wanted to say before Greg 

5 says some final words? 

6 (No response.)

7 MS. BUCK: Okay.

8 MS. MILLER: Greg?

9 MR. MARTIN: Yeah. Before we leave, 

10 on behalf of the Department, I want to thank 

11 everyone for being here and for their time and their 

12 patience. I know it was a difficult week, that 

13 we all have positions, and there's been some 

14 disagreement around here at this table and, you 

15 know, after a while nerves get to people and 

16 everybody, myself included.

17 But I think overwhelmingly everybody 

18 comported themselves in a professional way, and 

19 I applaud you all for that. And I have an immense 

20 amount of respect for each and every one of you. 

21 I especially want to thank our sound person, Bill, 

22 who I think did an excellent job this week.

23 (Applause.)
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1 MR. MARTIN: And with that -- oh, I 

2 should add one more thing. People say, as a huge 

3 weather geek -- which my wife hates, by the way 

4 -- I will say that, for those of you who do not 

5 like winter, at least on the east coast, if you 

6 look at the weather records, February 8th is about 

7 the general day where the temperatures start to 

8 go back up.

9 So for those of you, like in New 

10 England, you're still in a pretty big hole and 

11 that's a slow rise. But it is going that way, so 

12 hopefully when we come back in March at least the 

13 weather might be a little warmer and you might see 

14 some crocuses coming up, and that will lighten 

15 everybody's spirits. So, y'all have a safe trip 

16 home.

17 MS. MILLER: Thank you.

18 (Whereupon, the meeting was adjourned 

19 at approximately 4:50 p.m.)

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