1

UNITED STATES DEPARTMENT OF EDUCATION

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BORROWER DEFENSES AND FINANCIAL RESPONSIBILITY

NEGOTIATED RULEMAKING COMMITTEE 2017-2018

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SESSION 3

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MONDAY

FEBRUARY 12, 2018

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The Negotiated Rulemaking Committee 

met in Congressional II Room, The Holiday Inn 

Washington Capitol, 550 C Street, S.W., Washington, 

D.C., at 9:00 a.m., Ted Bantle, Moira Caruso and 

Rozmyn Miller, Facilitators, presiding.

PRESENT

TED BANTLE, Federal Mediation and Conciliation 

Service, Facilitator

MOIRA CARUSO, Federal Mediation and Conciliation 

Service, Facilitator

ROZMYN MILLEbR, Federal Mediation and 

Conciliation Service, Facilitator

ROBERT ANDERSON, President, State Higher 

Education Executive Officers Association

BRYAN BLACK, Attorney

MICHAEL BOTTRILL, CFO and CEO, SAE Institute 

North America

KIMBERLY BROWN, Vice President, Enrollment 

Management and Student Affairs, Des Moines 

University

MIKE BUSADA, General Counsel and Vice President, 

Ayers Career College
2

STEVAUGHN BUSH, Student, Howard University 

School of Law

EVAN DANIELS, Assistant Attorney General, 

Government Accountability and Special 

Litigation Unit, Office of the Arizona 

Attorney General

CHRIS DELUCA, Attorney at Law, DeLuca Law LLC

ALYSSA DOBSON, Director of Financial Aid and 

Scholarships, Slippery Rock University

JOHN ELLIS, Principal Deputy General Counsel and 

Division Chief, State of Texas Office of 

the Attorney General

ROBERT FLANIGAN, JR., Vice President for Business 

and Financial Affairs and Treasurer,

Spelman College

JULIANA FREDMAN, Bay Area Legal Aid

JOSELINE GARCIA, President, United States 

Students Association

WANDA HALL, Senior Vice President and Chief 

Compliance Officer, Edfinancial Services

ASHLEY HARRINGTON, Special Assistant to the 

President and Counsel, Center for 

Responsible Lending

WILLIAM HUBBARD, Vice President of Government 

Affairs, Student Veterans of America

KELLI HUDSON PERRY, Assistant Vice President for 

Finance and Controller, Rensselaer 

Polytechnic Institute

GREGORY JONES, President, Compass Rose Foundation

AARON LACEY, Partner, Thompson Coburn LLP

DALE LARSON, Vice President for Business and 

Finance/Chief Financial Officer, Dallas 

Theological Seminary

KAY LEWIS, Assistant Vice-Provost, Enrollment 

Executive Director of Financial Aid and 

Scholarships, University of Washington

DAN MADZELAN, Associate Vice President for 

Government Relations, American Council on 

Education

SUZANNE MARTINDALE, Senior Attorney, Consumers 

Union

MICHALE MCCOMIS, Executive Director, Accrediting 

Commission of Career Schools and Colleges
3

JEFFREY MECHANICK, Assistant Director-Nonpublic 

Entities, Financial Accounting Standards 

Board

SUSAN M. MENDITTO, Director, Accounting Policy, 

National Association of College and 

University Business Officers

LODRIGUEZ MURRAY, Vice President, Public Policy 

and Government Affairs, United Negro 

College Fund

BARMAK NASSIRIAN, Director of Federal Policy 

Analysis, American Association of State 

Colleges and Universities

JAY O'CONNELL, Director of Collections and 

Compliance, Vermont Student Assistance 

Corporation (VSAC)

WALTER OCHINKO, Research Director, Veterans 

Education Success

JOHN PALMUCCI, Interim President, Chief Business 

Officer, Maryland University of Integrative

Health

KAREN PETERSON SOLINSKI, Executive Vice

President, Higher Learning Commission

LINDA RAWLES, Rawles Law

ASHLEY ANN REICH, Senior Director of Financial 

Aid Compliance and State Approvals, 

Liberty University

SHELDON REPP, Special Advisor and Counsel, 

National Council of Higher Education 

Resources

DAWNELLE ROBINSON, Associate Vice President for 

Finance and Administration, Shaw University

RONALD E. SALLUZZO, Partner, Attain

ABBY SHAFROTH, Staff Attorney, National Consumer 

Law Center

VALERIE SHARP, Director, Office of Financial 

Aid, Evangel University

COLLEEN SLATTERY, Federal Contract and Compliance

Officer, MOHELA

KAREN PETERSON SOLINSKI, Executive Vice

President, Higher Learning Commission

JONATHAN TARNOW, Partner, Drinker Biddle & Reath 

LLP
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STAFF PRESENT

CAROLINE HONG, Office of General Counsel

BRIAN SIEGEL, Office of General Counsel

JOHN KOLOTOS, Office of Postsecondary Education

JIM MANNING, Acting Under Secretary of Education

ANNMARIE WEISMAN, Federal Negotiator, Office of 

Postsecondary Education
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CONTENTS

Welcome ....................................... 6

Introductions ................................. 6

Review Agenda ................................ 10

Update on Data Requests ...................... 14

Review Session Two Meeting Summary ........... 16

Discuss and Negotiate Proposed Regulatory

Language Issue Paper 1: Federal Standard for

Borrower Defense Claims ...................... 17

Break ........................................ 98

Continue Discuss and Negotiate Proposed

Regulatory Language Issue Paper 1: Federal

Standard for Borrower Defense Claims ......... 98

Lunch ....................................... 145

Discuss and Negotiate Proposed Regulatory

Language .................................... 146

Issue 1: Federal Standard for

Borrower Defense Claims

Public Comment .............................. 341

Adjourn ..................................... 357
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1 P-R-O-C-E-E-D-I-N-G-S

2 (No time given)

3 MR. BANTLE: Good morning, everybody.

4 Ted Bantle with FMCS, although you 

5 probably all know that by now, just so it's on the 

6 record.

7 I want to get us started today with a 

8 few logistics.

9 Just so you know, restrooms are behind 

10 us. The women's restroom is to my right behind 

11 us. The men's restroom is to the left. You have 

12 to go out the same door regardless. So, head that 

13 direction.

14 The cafeteria on lunch is, again, going 

15 out the same door on that side of the building on 

16 the Maryland Ave. side rather than the C Street 

17 side.

18 I have been notified that the options 

19 are limited on Mondays. So, you may want to venture 

20 out of the building on lunch.

21 When we're looking at the issue papers, 

22 gray is new language, red is previous highlights, 

23 with the exception of issue paper 1, which, while 
7

1 we will be going through all of them with a fine 

2 tooth comb, we'll make particular attention to 

3 issue paper 1 because not all the edits, I have 

4 been told, were correctly noted.

5 Also, issue paper 1 says session 2 on 

6 the top, it is the issue paper for session 3.

7 So, just as we do at the beginning of 

8 every session, we'll go around the room just 

9 introductions on the record. If you could state 

10 your name and the community of interest you 

11 represent, that would be much appreciated.

12 So, we will go around the room.

13 MS. PERRY: Kelli Perry, I'm sorry, 

14 representing business officers.

15 MR. ELLIS: I'm John Ellis 

16 representing state attorneys general.

17 MR. FLANIGAN: Danny Flanigan 

18 representing UNCF.

19 MS. MARTINDALE: Suzanne Martindale 

20 representing consumer advocacy organizations.

21 MS. HALL: Wanda Hall representing 

22 lenders and servicers.

23 MS. O'CONNELL: Jay O'Connell 
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1 representing guarantee agencies.

2 MS. SHAFROTH: Abby Shafroth 

3 representing legal assistants organizations that 

4 work on behalf of low income student borrowers.

5 MR. ANDERSON: Rob Anderson 

6 representing state higher education executive 

7 officers.

8 MR. HUBBARD: Good morning, Will 

9 Hubbard joined by my colleague Walter Ochinko and 

10 representing the military connected community.

11 MS. WEISMAN: Good morning, I'm 

12 Annmarie Weisman. I'm the Federal Negotiator for 

13 the Department of Education.

14 MS. HONG: Hello, I'm Caroline Hong and 

15 I'm Counsel for the Department.

16 MS. GARCIA: Buenos dias, good 

17 morning. My name is Joseline Garcia and I'm 

18 representing students.

19 MR. MCCOMIS: Good morning, Michael 

20 McComis, accreditation community of interest.

21 MR. BOTTRILL: Good morning, Michael 

22 Bottrill representing for profit schools of 500 

23 students or above.
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1 MS. LEWIS: Good morning, Kay Lewis 

2 four-year public institutions.

3 MR. BUSADA: Mike Busada representing 

4 small proprietary schools 500 and under.

5 MR. LACEY: Aaron Lacey representing 

6 general counsels, attorneys and compliance 

7 officers of institutions of higher education.

8 MS. SHARP: Valerie Sharp representing 

9 financial aid administrators.

10 MS. REICH: Ashley Reich representing 

11 not for profit organizations.

12 MS. MILLER: Rozmyn Miller, Federal 

13 Mediation and Conciliation Service.

14 MS. CARUSO: Moira Caruso, Federal 

15 Mediation and Conciliation Service.

16 MR. BANTLE: And, just for the record, 

17 we do not have a representative at this point in 

18 time from two-year public institutions. When they 

19 do arrive, we will make sure to announce them, just 

20 so it's on the record.

21 Okay, to review the agenda, it should 

22 look pretty familiar to you.

23 It'll start with issues 1 through 8. 
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1 You'll see an addition step. This meeting which 

2 is consensus approvals, I'll go into that in a 

3 little bit.

4 And then, we can just kind of have --

5 we'll have the tying up the knots steps at the end, 

6 which we'll probably get to on our final day, 

7 Thursday.

8 Just to confirm, we are here for four 

9 days this time around like we were the last time. 

10 And, we have plenty to do in those four days.

11 Next on the list is to review the agenda 

12 that should have been in your packet or available 

13 at the front table.

14 As you know, the draft agenda was sent 

15 out. This is your time, if you have any comments 

16 or suggested changes you'd like to have made to 

17 that, if you could bring them forward at this time?

18 Okay, William?

19 MR. HUBBARD: At what point in the 

20 agenda would be appropriate to request an update 

21 on the data requests that were put in?

22 MR. BANTLE: We'll do that just prior 

23 to getting into issue 1.
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1 Seeing no suggestions for edits to the 

2 draft agenda, can we just see a show of thumbs on 

3 approving those? And then, it'll be posted to the 

4 docket.

5 Okay, I see no thumbs down on approving 

6 the agenda. Thank you.

7 Okay, just a final kind of point 

8 substantive and procedural as this is our final 

9 session before we get into the issues and any 

10 questions that may arise before the issues, we are 

11 here and our goal throughout this process has been 

12 to reach consensus.

13 That is unanimous consensus and that 

14 is consensus on all three issue papers in their 

15 entirety.

16 Process wise, what we want to -- or all 

17 eight issue papers, sorry. Sorry, I apologize, 

18 maybe we'll get out of here a little earlier if 

19 we only had three -- all eight issue papers in their 

20 entirety.

21 Process wise, it will look familiar to 

22 you. As we did last time, we're going to have 

23 Annmarie break each paper up into sections that 
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1 are bite-sized, maybe not easier to manage, but 

2 at least smaller, easier to read through in a short 

3 amount of time.

4 We will do tentative consensus checks 

5 on the sections themselves. And then, the papers 

6 themselves. And, those are tentative consensus 

7 checks. There is no consensus until we have 

8 consensus on all eight issue papers. Remember 

9 that.

10 Again, remember, back to Moira's 

11 comments on our first session, and I know Roz 

12 reinforced it last session, you can have a side 

13 thumb. All right?

14 Consensus does not necessarily mean 

15 that you are 100 percent in agreement with the 

16 proposal. It means you can live with it if your 

17 thumb is sideways.

18 So, those are things we will, 

19 obviously, reaffirm as we get into the issues. 

20 We will pull out points of consensus. But, just 

21 something I wanted to remind you all of. All right?

22 And, kind of just a note on the process 

23 that we will be following today, we are going to 
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1 start with issue paper 1 and work from there.

2 So, if you have any questions 

3 throughout the process, feel free to, you know, 

4 touch base with us as facilitators.

5 I would open -- turn it over to Annmarie 

6 at this time, if she has any opening comments she'd 

7 like to make from the Department's position.

8 And then, I know William had his 

9 question and we'll open up to any other questions.

10 MS. WEISMAN: Thank you.

11 And, good morning, again. Thank you 

12 all, again, for being here, for your service, for 

13 assisting us in creating these regulations.

14 We know that you've taken substantial 

15 time out of your lives to be here, both personally 

16 and professionally. I know that that time is time 

17 that we, again, appreciate you spending with us 

18 here today.

19 We certainly hope that we can leave at 

20 the end with consensus. We will do everything we 

21 can to get us there.

22 And, again, look forward to working 

23 with you throughout these next four days.
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1 Related to data requests, I do not have 

2 additional data to share at this time. If we have 

3 any additional data requests where we have the 

4 results back and ready to share with you before 

5 the end of the week, we will certainly distribute 

6 those as they're available.

7 But, at this time, I do not know, I 

8 cannot say for sure that we will have any additional 

9 data. But, again, if we do, we will certainly take 

10 a pause in what we're doing and share them. Or, 

11 if there's an appropriate time at a break, you know, 

12 we'll share it after that.

13 But, as of right now, I do not have any 

14 additional data results for you.

15 Hopefully, everybody has received the 

16 issue papers and has had a chance to look at them.

17 As Ted mentioned, for the most part, 

18 the issue papers are shaded with gray text -- gray 

19 shading to highlight things that are new.

20 Issue paper 1 is the exception, not all 

21 of the changes were captured with the gray. And, 

22 given the importance of issue paper 1, I want to 

23 make sure that we do cover everything in its 
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1 entirety.

2 So, we're going to go through that one 

3 in a little more detail than the others.

4 Again, as Ted mentioned, I'm going to 

5 try to break it into pieces so that we can address 

6 those pieces and get through it in a more organized 

7 way.

8 If, for some reason, you feel that the 

9 pieces don't include everything that you need to 

10 include, maybe the next little section has 

11 something that you feel is really relevant, 

12 certainly let us know and we can be flexible on 

13 that.

14 It's really just done to hopefully 

15 focus our conversation. But, it's certainly not 

16 an exact science and certainly the papers have some 

17 interrelation in terms of their sections.

18 So, with that said, is there anything 

19 else that we need to cover before we get started?

20 I guess we need to review the meeting 

21 summary first.

22 MR. BANTLE: I think we had a show of 

23 thumbs that everyone was --
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1 MS. WEISMAN: Okay.

2 MR. BANTLE: -- okay.

3 MS. WEISMAN: We're good?

4 MR. BANTLE: Yes, I just kind of rolled 

5 through that as the facilitators. I did not see 

6 any comments made.

7 MS. WEISMAN: Okay.

8 I thought that was the agenda.

9 MR. BANTLE: Oh, the agenda? My 

10 apologies. I was looking at the summary.

11 Okay, any comments on the meeting 

12 summary? Any questions or edits that the group 

13 would like to make to it?

14 (NO RESPONSE)

15 MR. BANTLE: Okay, hearing none, could 

16 I see a show of thumbs on approving the meeting 

17 summary so it will be posted --

18 Oh, Kelli?

19 MS. PERRY: Sorry, this is just on the 

20 protocols that are in the folder, I had mentioned 

21 this last time, that the CFO and Business Officer 

22 are excluded. That was changed, but we seem to 

23 have reverted back to the other draft of that.
17

1 MR. BANTLE: And, that is the 

2 organizational protocols? Okay, yes, we will note 

3 that. I think maybe that just the incorrect copy 

4 got printed this time around because I do remember 

5 making that change.

6 Any comments on the meeting summary?

7 (NO RESPONSE)

8 MR. BANTLE: Okay, a show of thumbs on 

9 approving the meeting summary so it can be posted 

10 to the docket?

11 Okay, I see no thumbs down. Thank you.

12 And, Annmarie, we'll turn it over to

13 you to take us into issue paper 1.

14 MS. WEISMAN: Issue paper 1, our issue 

15 is whether to establish a federal standard for the 

16 purpose of determining if a borrower can establish 

17 a defense to repayment on a direct loan or recover 

18 for amounts already paid on a direct loan based 

19 on an act or omission of an institution.

20 We've listed our statutory and 

21 regulatory sites. Once again, they remain 

22 unchanged.

23 In looking at the summary of changes, 
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1 you'll find our first change. And, I do also want 

2 to note that, although the changes for issue paper 

3 1 are not all listed in gray, they are in red line, 

4 so you will be able to spot them.

5 And, again, we'll go over this paper 

6 in significant detail and I think we'll cover 

7 everything quite fully.

8 But, in the summary of changes, our 

9 first change is that we've added words, or 

10 administrative tribunal as number three. We've 

11 included that as part of a judgment that can be 

12 used to raise a defense.

13 The other thing you'll note in this 

14 paper is that some of the items that we deleted, 

15 although they're deleted from this paper, they're 

16 not gone. They have been moved to issue paper 2 

17 which is on process.

18 So, things like recovery to -- from an 

19 institution, for example, we've moved all of that 

20 to the process paper. And, we felt that there was 

21 a better fit there.

22 So, again, if you see something that 

23 has been stricken here, please don't feel that it's 
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1 entirely gone, it may just be moved.

2 So, moving down to 685.222, the 

3 borrower defense section, the other thing that we 

4 did is, we changed some language to clarify how 

5 consolidation loans were being handled.

6 And, I think that we've just really 

7 streamlined that language in (a)(1) by saying, or 

8 the making of a loan that was repaid by a direct 

9 consolidation loan.

10 If you look, we used to have (a)(2) 

11 which was on the following page at the top of page 

12 2 where we spelled out all of the loans that could 

13 be used in a consolidation loan.

14 We have stricken that language and, 

15 again, gone for a more streamlined approach.

16 As I mentioned, item number 5, we did 

17 strike the idea of a recovery action here because 

18 that has been moved to issue paper 2.

19 So, we've done some renumbering and we 

20 have a new item 4 where we talk about the provision 

21 of educational services for an act or omission by 

22 the institution concerning the nature of the 

23 institution's educational program, the nature of 
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1 the institution's financial charges, the 

2 employability of graduates of the institution's 

3 educational program, the eligibility of the 

4 educational program for licensure or 

5 certification, the state agency authorization or 

6 approval of the institution educational program 

7 or an accreditor approval of the institution or 

8 educational program.

9 So, for many of you, you're going to 

10 say that looks a lot like the misrepresentation 

11 information, but it's just it's more explicit by 

12 spelling it out here in the regulation.

13 So, I'd just kind of like to stop right 

14 there and discuss that first section. So, going 

15 through the end of (a).

16 Comments? Thoughts? Questions?

17 Aaron?

18 MR. LACEY: I just had a drafting note 

19 on 4 which I'm sure other folks have caught. A 

20 couple -- I have a note and then a suggestion.

21 For the purposes of this section, a 

22 borrower may assert a borrower defense claim 

23 regarding the provision of educational surfaces 
21

1 for an act or omission of, I think we want to strike 

2 the by and just say, for an act or omission of an 

3 institution.

4 And then, I was going to suggest editing 

5 that after institution to say, when such act or 

6 omission concerns the nature of the institution's 

7 educational program, et cetera, et cetera.

8 The idea is just to make it more clear 

9 that what we're talking about is the nature of that 

10 act or omission.

11 MS. WEISMAN: Comments on Aaron's 

12 suggestion?

13 (NO RESPONSE)

14 MS. WEISMAN: Any other comments?

15 Abby?

16 MS. SHAFROTH: If I -- if it's all 

17 right, if I could just recap, I want to make sure 

18 we've got what Aaron suggested.

19 So, obviously, taking out the the and 

20 by that are extraneous words.

21 And then, you're saying, instead of 

22 saying concerning, that we would say when such an 

23 act concerns the nature, is that correct?
22

1 MR. LACEY: Right, I'll just read it 

2 again.

3 For an act or omission of an institution 

4 when such act or omission concerns the nature of 

5 the institution's educational program, et cetera, 

6 et cetera, et cetera.

7 MS. WEISMAN: Abby?

8 MS. SHAFROTH: My comment is about this 

9 same section 4. I'm somewhat concerned that the 

10 way the provision of educational services here is 

11 defined might be too limited.

12 For example, in reading this, it's not 

13 clear to me that this definition would encompass 

14 misrepresentations regarding, for example, job 

15 placement services offered by a school.

16 So, I would propose that, at minimum, 

17 this paragraph be redrafted to make clear that this 

18 is a non-exhaustive list.

19 So, it couldn't -- these could be 

20 examples of the type of misrepresentation that 

21 would be considered, but should not be exclusive 

22 because it would leave out other types of 

23 misrepresentations that could be meaningful in this 
23

1 context.

2 MR. BANTLE: So, to clarify, Abby, your 

3 proposal is modifications identifying that the list 

4 is not exhaustive?

5 MS. SHAFROTH: Correct.

6 MR. BANTLE: William, I see your tag 

7 up. Annmarie, I saw you reaching for the mic. 

8 Okay.

9 MR. HUBBARD: To clarify, in addition 

10 to Abby's proposal, I would recommend potentially 

11 as a redraft provision of the educational services 

12 or related resources to demonstrate that it's more 

13 encompassing than just educational services.

14 MS. WEISMAN: Aaron?

15 MR. LACEY: Well, we had discussed the 

16 last round, I think there's value in putting a box 

17 around what -- provision of educational services 

18 means. That was part of the idea.

19 And, so, I, you know, I believe that 

20 it should be not an illustrative list, but I think 

21 the idea here is to try to articulate what we really 

22 mean by provision of educational services.

23 I think that clarity is good for all 
24

1 parties involved in the process and makes it very 

2 clear for students, institutions, the Department 

3 what's inside the box and what's outside the box.

4 I understand Abby's point, if there are 

5 things to add to the list, I would rather add things 

6 to the list or consider that than to make this an 

7 illustrative list so that it would be open ended.

8 MS. WEISMAN: Will, was your --

9 MR. HUBBARD: It's a clarifying 

10 question for Aaron.

11 If adding or related resources was 

12 included, in your point of view, does that totally 

13 destroy the box?

14 MR. LACEY: No, I don't think it does. 

15 I mean, my -- this isn't a concern really that 

16 I have. I know that phrasing provision of 

17 educational services has some legacy behind it and 

18 has been used.

19 But, you know, what we're really doing 

20 here with this and in other places is defining what 

21 this phrase, whatever it is means.

22 So, if it were to say provision of 

23 educational services and resources, that would not 
25

1 change my view.

2 MS. WEISMAN: Mike Busada?

3 MR. BUSADA: I'll just say, and to 

4 Abby's point as well, I mean, I agree. We want 

5 to make sure that we cover everything. But, if 

6 -- I think that if you look on page 3, letter A, 

7 A through H on page 4, I believe that also does 

8 cover very specifically some of those concerns.

9 MS. WEISMAN: Abby and then Valerie?

10 MS. SHAFROTH: Mike, I agree that 

11 (a)(3) or rather A on page 3 is another enumerated 

12 list that gives some examples of 

13 misrepresentations. I'm concerned that the 

14 language on page 2 in paragraph 4 would limit what 

15 types of misrepresentations a borrower could claim, 

16 that this language itself would further limit what 

17 could be claimed as an actionable misrepresentation 

18 as an actionable actor omission.

19 Because, we're really defining what can 

20 be asserted as a borrower defense claim within

21 paragraph 4.

22 And, paragraph 4 doesn't appear as I 

23 read it to allow for a claim to be made based on, 
26

1 for example, misrepresentations regarding the 

2 school's job placement services, 

3 misrepresentations by the institution regarding 

4 the earnings of its graduates. Those are just a 

5 couple of examples off the top of my head.

6 I think there are probably more out 

7 there which is why I'm really concerned about 

8 drafting this as an exhaustive list because, as 

9 is, you know, there are already easily a few 

10 examples of things that it leaves out and I expect 

11 that there would be more.

12 MR. BANTLE: Just a facilitator 

13 question, Abby, would William's edits address your 

14 concerns? Or, do we, as a group, need to focus 

15 on a different modification to work towards 

16 consensus?

17 MS. SHAFROTH: I think that William's 

18 edits would help. I don't think it would fully 

19 address my concerns, though. Because I'm still 

20 not sure that it would cover -- that his edits would 

21 cover things like misrepresentations regarding 

22 graduates earnings.

23 Also, you know, looking at this again, 
27

1 misrepresentations regarding the nature of the 

2 institution's financial charges, I don't know if 

3 that just covers the cost of the institution or 

4 if that covers misrepresentations regarding 

5 financial aid, meaning of loans versus grants, that 

6 sort of thing.

7 There's a lot that this could be read 

8 to leave out.

9 MR. BANTLE: Okay. Understood, and we 

10 will get to Valerie and Linda. Just, I think it's 

11 an appropriate time to say, you know, we have a 

12 process of building consensus and we call it 

13 building consensus for a reason.

14 I did hear some resistance to Abby's 

15 initial proposal. It seemed that there was 

16 slightly more agreement on William's suggested 

17 edits.

18 Are there additional changes that we 

19 can make to William's suggestion that would enable 

20 the group to reach consensus on this or do we need 

21 to start down a different path?

22 Caroline, Valerie, then Linda?

23 MS. HONG: I just had a question for 
28

1 Will. When you asked to add or related resources, 

2 can you sort of give an explanation of what that 

3 might cover?

4 MR. HUBBARD: Absolutely, I think 

5 Abby's point about, for example, career services 

6 is an important one that's for any university a 

7 major draw for a lot of students and certainly as 

8 I pertains to marketing materials.

9 So, I think that would be an example 

10 of one specifically.

11 MS. SHARP: I would just note that last 

12 time, I believe it was Michael who suggested adding 

13 something about provision of educational services 

14 related to the program of study.

15 And, if we added something like that 

16 in there along with the related resources, I'm 

17 wondering if that might help cover Will's concern 

18 and also cover some concerns about expanding that 

19 piece of it.

20 I understand there's other concerns 

21 lower in the paragraph. But, that was a suggestion 

22 that was made that I noticed didn't make it into 

23 the draft, but it might be helpful.
29

1 MS. WEISMAN: Linda?

2 MS. RAWLES: This is just a question 

3 for the Department, for Caroline.

4 Something in the back of my head says 

5 there's statutory parameters around how broad we 

6 can make this. Can you look -- do you know the 

7 answer to that or can you look into that?

8 Because, it seems that this can't be 

9 broader than statutory authority and I don't have 

10 time right this second to look into it. But, I 

11 would like to make sure we're not going beyond what 

12 we're allowed.

13 MS. WEISMAN: Aaron?

14 MR. LACEY: A couple of things, just 

15 one, an observation. You know, a borrower defense, 

16 if you look under (a)(1) is an act or omission 

17 relates to making a direct loan for enrollment at 

18 the institution or the provision of educational 

19 services.

20 And, we don't have any box around 

21 enrollment at the institution. So, 

22 misrepresentations that were made in connection 

23 with enrollment at the institution that related 
30

1 to job placement, graduate earnings, all those 

2 types of things would be covered.

3 We're only drawing a box around the 

4 second piece of this which is provision of 

5 educational services. Right?

6 So, I do think a lot of those examples 

7 would be covered. I do like, you know, I'm open 

8 if we want to add specific items to the list, again, 

9 for provision of educational services. I think 

10 that would be productive.

11 I think the problem is, if you make this 

12 an illustrative list, you largely take the box away 

13 completely which is problematic I think for 

14 institutions.

15 I want to second Valerie's suggestion, 

16 though, too. I think, you know, if we want to add 

17 some items, you know, we want to add Will's 

18 language, we want to add the idea of -- and make 

19 it specific to the program of study, those are all 

20 productive concepts.

21 MS. WEISMAN: Caroline?

22 MS. HONG: Hi, I just want to respond 

23 to Linda's question. Under the HEA for the 
31

1 borrower defense provision, section 455(h), 

2 there's no specific limitation as to the type of 

3 acts or omissions.

4 Just as which acts or omissions of 

5 institutional higher education borrower may 

6 assert.

7 And then, there's limitation on the 

8 amount of recovery from the Secretary. But, 

9 there's no specific limitation on sort of 

10 qualifiers for the acts or omission.

11 I will note that with regard to 

12 provision of educational services, that's language 

13 that's been at least in the Department's notice 

14 of interpretation of the current regulations since 

15 1995, is also language that exists, I believe, in 

16 the promissory notes right now that deal with 

17 borrower defenses.

18 So, that language does have some 

19 regulatory history. But, that certainly doesn't 

20 prevent us from clarifying that here today if we 

21 wanted to.

22 MS. WEISMAN: Abby?

23 MS. SHAFROTH: Thank you, Caroline.
32

1 I think in light of the fact that there 

2 is presumably then over 20 years of regulatory 

3 history, just using the provision of educational 

4 services language that we -- that should make us 

5 all feel a little bit more comfortable with just 

6 using that language without trying to predict in 

7 advance all of the possible exact types of 

8 misrepresentations or buckets of 

9 misrepresentations that could fit within that area 

10 that using the broader term allows the rule to ready 

11 for, you know, new misrepresentations, new types 

12 of predatory conduct that we can't necessarily all 

13 sit and predict in advance.

14 MR. BANTLE: Abby, just to bring the 

15 discussion back to you, I don't see any tags up, 

16 with respect to your last comment, do you have a 

17 modification to your proposal?

18 MS. SHAFROTH: Sure, I mean, my last 

19 comment was just saying that since we've -- the 

20 Department has just used the language provision 

21 of educational circumstances for over 20 years 

22 without trying to further specifically cabin that, 

23 since it hasn't been a problem thus far, I would 
33

1 propose that we not try to define provision of 

2 educational services any further within this 

3 regulatory text, that we just leave it as is and 

4 continue with the interpretation that the 

5 Department has been using.

6 We could strike paragraph 4 to be very 

7 explicit about that proposal.

8 MR. BANTLE: Thoughts from the working 

9 group?

10 If I'm tracing the roots of proposals 

11 here, the most recent proposal we have is Abby's 

12 of striking number 4 and the other proposal 

13 currently out there which I think grew out of 

14 William's proposal and went through Valerie and 

15 I think Aaron had commented on it was to have the 

16 provision of educational services for the program 

17 of study plus related resources.

18 Mike?

19 MR. BUSADA: Just speaking from a 

20 standpoint of small schools and talking to a lot 

21 of schools across the country that are the size 

22 of ours, 500 and smaller, we don't have teams of 

23 lawyers. Most don't have any lawyers.
34

1 We don't have the resources and the 

2 expertise to be able to go back necessarily and, 

3 just as an example, look at 20 years of, you know, 

4 jurisprudence determining what this provision 

5 means.

6 I think for small schools that don't 

7 have those resources, I think it's imperative, but 

8 I think for the student, too, that doesn't have 

9 those resources, it's imperative to spell stuff 

10 out as clearly and concisely as we can to get rid 

11 of any uncertainty.

12 Because, to expect a small school or 

13 a student to go back and look at 20 years of what 

14 agencies have determined, you know, this word 

15 means, I think is problematic.

16 MR. BANTLE: Okay, Mike, I just want 

17 to ask -- follow up with you and then we'll go to 

18 Kelli.

19 So, can I infer from your comments that 

20 you do not agree with Abby's last proposal? Is 

21 that correct?

22 MR. BUSADA: Yes, I wouldn't want to 

23 strike everything. I think that we need to move 
35

1 -- I do want to come to a consensus on this, but 

2 I think the consensus is more towards moving to 

3 better define what's included as opposed to leaving 

4 it nebulous.

5 MR. BANTLE: So, with that in mind, are 

6 you in support of the I'll call it the 

7 William-Valerie proposal?

8 MR. BUSADA: Yes.

9 MR. BANTLE: Okay.

10 Kelli and then Walter?

11 MS. PERRY: Caroline, you mentioned 

12 that there might be reference to this in the 

13 promissory note. Is there already language that 

14 defines what educational services are in that?

15 MS. HONG: No, it just says provision 

16 -- I believe it just says -- I was just looking 

17 at it this morning. I think it just says provision 

18 of educational services.

19 However, I will note that some of this 

20 language certainly echos language that we have in 

21 other parts of the regulation.

22 So, for example, here employability of 

23 graduates, that's language that's echoed in Subpart 
36

1 F. So, that's 34 CFR 668.74, so that's relating 

2 to the Department's misrepresentation standard 

3 which is different.

4 But, there, we do talk about 

5 employability of graduates to include the 

6 institution's plants maintain a placement service 

7 for graduates or otherwise assist its graduates 

8 to maintain employment, the institution's 

9 knowledge about current or likely future 

10 conditions, compensation or employment 

11 opportunities in industry or occupation for which 

12 students are being prepared.

13 Whether employment is being offered by 

14 institution, that talent hunt or contest.

15 So, if there's some additional language 

16 in other parts of regulation, but certainly, you 

17 know, that's a different regulation.

18 MS. WEISMAN: Michael?

19 MR. MCCOMIS: So, because provision of 

20 educational services is kind of a term of art and 

21 has a long legislative history might not be useful 

22 to use a different term or to add to it.

23 But, to get to William's point and I 
37

1 think maybe somewhat to Abby's, maybe it's adding 

2 the words after educational program.

3 So, it would, for an act or omission 

4 of an institution concerning the nature of the 

5 institution's educational program or related 

6 resources. The nature of the institution's 

7 financial charges, so on and so forth.

8 So, adding or related resources after 

9 educational program might be a way to do that.

10 And, Abby, I think that the concerns 

11 that you were talking about in terms of some 

12 coverage around earnings and some of those are 

13 covered in the next section on the definition around 

14 misrepresentation, not all of them, but a couple 

15 that you had referenced are there.

16 But, specifically, the one that you've 

17 mentioned about placement services doesn't really 

18 appear, so related resources I think would be 

19 encapsulated maybe within that concern.

20 MS. WEISMAN: Okay, Walter then 

21 Joseline?

22 MR. OCHINKO: So, I wanted to speak in 

23 support of Abby's point that we should really just 
38

1 strike this section.

2 And, to address Mike's comment about, 

3 you know, clarity, I don't it really adds clarity 

4 when you have various versions trying to make the 

5 same point. But, they're stated in different 

6 words.

7 You know, when I read this section, the 

8 first thing that popped out to me is it doesn't 

9 say provision of educational services for 

10 misrepresentation by act or omission.

11 I was expecting the word 

12 misrepresentation to be there.

13 Now, it's clear from the rest of this 

14 that it is, but I think anybody reading this is 

15 going to say, so what act or omission? What are 

16 we talking about here?

17 So, and, I think Mike is right, if you 

18 look further on, we see a lot of these same things 

19 that we're concerned about being enumerated.

20 So, I'm not sure that this really --

21 this section 4 adds anything and I would endorse 

22 what Abby said, just strike it.

23 MS. WEISMAN: Joseline?
39

1 MS. GARCIA: I just had a quick 

2 comment. While I was looking through issue paper 

3 number 1, I noticed that the rule doesn't cover 

4 anything about how the Department should handle 

5 breaches of contract.

6 And so, I think it would be wise of us 

7 to include that in here at some point.

8 MS. WEISMAN: Aaron?

9 MR. LACEY: Yes, just a couple things. 

10 I mean, I just want to reiterate, I'll try not 

11 to do that too often, but again, any representation 

12 that is made in the context of enrollment, 

13 regardless of what that representation might be 

14 is extensively covered here.

15 Again, it's there's a disjunctive in 

16 (a)(1), you know, when you're talking about a 

17 borrower defense, it refers to an act or omission, 

18 right, relating to the making of a direct loan for 

19 enrollment at the institution or the provision of 

20 educational services.

21 So, we've already got an open ended 

22 concept for any type of representation that's made 

23 about enrollment. What we're really talking about 
40

1 is trying to put a little bit of a box around 

2 representations or more specifically acts and 

3 omissions that would occur post-enrollment.

4 And, the challenge for institutions is 

5 everything ostensibly falls into the box of the 

6 provision of educational services for an 

7 institution.

8 I mean, I've talked to my 

9 constituencies about this provision. The reason 

10 I raised this, I think probably in the first session 

11 and again in the second session, it was a concern 

12 last year and in the past is because for 

13 institutions, when you look at this, it's wide open.

14 It's hard to understand what, if 

15 anything, could not be characterized as a provision 

16 of educational services. Right?

17 So, the ask here on the part of 

18 institutions and compliance officers and those 

19 trying to manage the risk, right, is not that we 

20 exclude representations from enrollment processes, 

21 again, those are all covered.

22 What we're saying is when we're talking 

23 about things that happened after enrollment, right,
41

1 it is helpful to institutions and we think it 

2 represents a fair allocation of risk, right, to 

3 put some box around this concept of provision of 

4 educational services.

5 Because, again, ostensibly, everything 

6 an institution does, ostensibly, is related to the 

7 provision of educational services.

8 But, we're not trying to exclude 

9 anything that we think would be problematic, any 

10 of these, you know, the concepts around career 

11 services or things like that.

12 We do think it is fair, though, to put

13 some box around it. So, I strongly, again, I want 

14 to make very clear that we're not excluding anything 

15 relating to the enrollment process. Right?

16 And, what we're really just talking 

17 about is putting some clarity around the provision 

18 of educational services, adding resources is not 

19 a problem. I think adding, you know, relating to 

20 the program makes sense. And, if we want to add 

21 a couple of things at the end, I don't think that's 

22 a problem there either.

23 MS. WEISMAN: Abby, then Valerie?
42

1 MS. SHAFROTH: In light of Aaron's 

2 interpretation of paragraph 1 on page 1, I was 

3 hoping we could hear from the Department in terms 

4 of whether the Department interprets and intends 

5 paragraph 1 on page 1 the reference to an act or 

6 omission of an institution at which the borrower 

7 enrolled that relates to the making of a direct 

8 loan or the making of a loan that was repaid by 

9 a direct consolidation of loan for enrollment, 

10 whether that would cover any misrepresentation or 

11 any otherwise actionable act or omission that 

12 occurs prior to enrollment?

13 Is that the way that you read this as 

14 breaking down, the for enrollment relates to any 

15 acts or omissions prior to enrollment and the 

16 provisional educational services prong refers to 

17 anything post-enrollment?

18 Because that wasn't how I read it.

19 MS. WEISMAN: I think we need a couple 

20 of examples of things that you're thinking because 

21 I'm not sure that that's where we intended to go. 

22 It would need to be related to the educational 

23 services of the institution.
43

1 So, when you're talking about the idea 

2 of pre- and post-admission, I'd need a little more 

3 information to respond.

4 MS. SHAFROTH: And, I'm not sure I have 

5 an example because that's not how I read it. I 

6 was and remain concerned with that paragraph 4 on 

7 page 2 limits the scope of what types of acts and 

8 omissions can be the basis for a borrower defense 

9 claim.

10 And that that paragraph doesn't include 

11 things like job placement services, lies about the 

12 earnings of graduates, that sort of thing, lies 

13 about whether a -- whether financial aid is a loan 

14 versus a grant, like there are various things that 

15 don't seem to be encompassed within that.

16 And, I'm not sure that the other 

17 language on paragraph 1 that Aaron pointed out is 

18 sufficient to cover all of that.

19 MS. WEISMAN: Valerie?

20 MS. SHARP: I don't know if this would 

21 help or not, as has been discussed, there are --

22 is a more exhaustive list under misrepresentation. 

23 Would it help if at the end we added some type 
44

1 of statement after the final sentence of item 4 

2 and other items covered under the misrepresentation 

3 regulations, either referring to the list in this 

4 same document or referring back to other regulatory 

5 language that was read to us this morning that 

6 covers some of those other issues without listing 

7 ten more items, but refers to regulation that covers 

8 those.

9 So, this is -- this list isn't 

10 exhaustive, but it also covers things under 

11 misrepresentation that help address some of the 

12 concerns.

13 MS. WEISMAN: Michael then Aaron?

14 MR. MCCOMIS: Yes, I read (a)(1) 

15 similarly to the way that Aaron did. I thought 

16 that the for enrollment at the institution meant 

17 the things like marketing, claims made, statements 

18 made that induced someone to enroll at the 

19 institution or the provision of the educational 

20 services, there was a misrepresentation regarding 

21 the scope of the program or whether it was 

22 accredited or not or things of that sort.

23 So, I did read that as two separate kind 
45

1 -- I don't know if I would break it down as the 

2 post- and the -- the pre- and the post-, but I read 

3 it as kind of being two different kinds of buckets, 

4 I guess.

5 So, as Aaron said, there's no box put 

6 around enrollment at the institution kind of as 

7 a term. But, I do think that it provides the 

8 broader spectrum of opportunity for claims to be 

9 brought.

10 MR. BANTLE: So, I think we might want 

11 to give the Department a minute or two to think 

12 about that. Just, is everyone clear what language 

13 we're talking about that Aaron had pointed to and 

14 Michael and Abby are discussing? It's in paragraph 

15 1 on page 1, about halfway through just after the 

16 writ.

17 And, we appreciate everyone's 

18 patience. It is warm in here, so if somebody wants 

19 to, you know, stand up and walk around a little 

20 bit, that is acceptable.

21 I mean, you selected --

22 Oh yes, yes, just, yes, for the record, 

23 Dan, if you could introduce yourself and your 
46

1 community of interest for the record?

2 MR. MADZELAN: Dan Madzelan, two-year 

3 community colleges.

4 MS. WEISMAN: So, we've talked a little 

5 bit about kind of what our intent was with some 

6 of this language and I think that perhaps where 

7 I've done the split might be doing us more harm 

8 than good because I think we get to some of this 

9 later.

10 And, keeping in mind that it is one 

11 regulation, we wouldn't be splitting it up this 

12 way, that we've done this for conversation. And, 

13 I think that some of the examples that are contained 

14 on page 3 might help just to kind of show that, 

15 yes, that was our intent that that would be covered.

16 Also, I think the idea of what is in 

17 A on page 1, we are talking about what is related 

18 to the making of a direct loan or for enrollment 

19 at the institution.

20 So, I think in our opinion, that does 

21 cover the admission side of things with the 

22 enrollment of.

23 And then, again, the provision of 
47

1 educational services could include things that 

2 affect them after completion such as the idea of 

3 job placement rates.

4 And, I think because we specifically 

5 are now we're calling them employment rates, but 

6 I think because we specifically included them on 

7 page 3, it might benefit us to look at that language 

8 as well and then take it more of a whole before 

9 we determine should we make changes just in the 

10 section that we've covered.

11 So, I think if we can open it up there, 

12 we're continuing on page 2 B where it says borrower 

13 defense.

14 And, I think the biggest change that 

15 you'll see here and, again, this gets back to why 

16 I originally wanted to break it up here because 

17 I thought we have substantial discussion on the 

18 idea of changing clear and convincing to 

19 substantial weight of the evidence.

20 We can certainly still have that 

21 discussion, but again, I just want to have it more 

22 in totality.

23 We have stricken some language, 
48

1 specifically, the in (b)(1)(I). We have stricken 

2 acted with an intent to deceive knowledge of the 

3 falsity of a misrepresentation or reckless 

4 disregard for the truth, and simplified that to 

5 just say made a misrepresentation of material fact, 

6 opinion, intention or law upon which the borrower 

7 reasonably relied, and we've added under the 

8 circumstances.

9 And then, again, talking about that 

10 resulted in financial harm to the borrower. We 

11 also have clarified the language in (ii) at the 

12 bottom of page 2, the borrower has obtained from 

13 a state or federal court of competent jurisdiction 

14 a final definitive judgment rendered in a contested 

15 proceeding and was awarded monetary damages. And, 

16 that continues.

17 And, again, we still circle back to that 

18 same language relating to the loan or provision 

19 of educational services for which the loan was 

20 obtained.

21 Similarly in (iii), we continued with 

22 that same characterization of a final definitive 

23 judgment rendered in a contested proceeding.
49

1 We have added (iv) and went into a 

2 little more detail about the final definitive 

3 judgment, talking about including a proof of claim 

4 filed against the bankruptcy estate of the 

5 institution once a claim is adjudicated in a 

6 contested manner or adversary proceeding such that 

7 the claim is no longer contingent, disputed or 

8 unliquidated in a case arising Chapter 11 of the 

9 bankruptcy code or allowed by a Trustee in a case 

10 arising under Chapter 7 of the bankruptcy code.

11 And then, item 2 says a borrower must 

12 file a defense claim under paragraph (b)(1) of this 

13 section within three years of the date that the 

14 borrower discovered or reasonably should have 

15 discovered the misrepresentation.

16 So, clarifying there, that's the 

17 three-year discovery from when the person learned 

18 of the situation or should have learned.

19 Skipping down to (I) in the middle of 

20 the page, here we, again, go into a 

21 misrepresentation is a statement, act or omission 

22 by an eligible institution to a borrower that is 

23 intentionally false or misleading or made with 
50

1 reckless disregard for the truth and that relates 

2 to the making of a direct loan for enrollment at 

3 the institution or the provision of educational 

4 services for which the loan was made.

5 So, we're essentially moving the 

6 language out of (I) under (b)(1) and moving it in 

7 here.

8 We've made a couple of other minor edits 

9 here, again, changing job placement to say 

10 employment rates, because we understand that is 

11 the more commonly used term.

12 In (C), we've inserted accreditation 

13 as other approvals that the school cannot 

14 misrepresent.

15 Continuing on to page 4, in (H), we have 

16 clarified the language as, again, you cannot 

17 misrepresent relationship or an endorsement by the 

18 U.S. Armed Forces or other individuals or entities 

19 when the institution has no permission to use such 

20 an endorsement.

21 So, again, I think that's just more of 

22 a language clean up.

23 In (I), we have, again, clarified the 
51

1 idea of educational resources provided by the 

2 institution that are necessary for completion of 

3 the educational program that are materially 

4 different than the institutions actual 

5 circumstances at the time the representation is 

6 made.

7 And then, we have added there a short 

8 list. And, again, it's not an inclusive list, but 

9 it says which may include representations regarding 

10 the institution's size, location, facilities, 

11 training equipment or the number, availability or 

12 qualifications of personnel.

13 We did strike (K) here which said any 

14 other circumstances as determined by the Secretary. 

15 Because, again, in the beginning, we said it was 

16 not an inclusive list. We said it is just 

17 essentially it's not needed because we said 

18 included but not limited to up in (I).

19 Continuing on to page 5, we streamlined 

20 the language in (F) to take out the reference to 

21 educational malpractice which is tortuous. And, 

22 instead of using the more legal jargon, if I may 

23 characterize it that was, we now just say claims 
52

1 about which is always what we really included, it's 

2 just we clarified it and rather than describing 

3 the type of claims, we just left it at claims.

4 Going on to down below we then, again, 

5 have as demonstrated by evidence before the 

6 Secretary.

7 So, we then say evidence of financial 

8 harm includes but is not limited to the following 

9 circumstances.

10 We removed one item there and 

11 renumbered. And, again, what we removed, we really 

12 just moved to earlier which is now on the previous 

13 page, cleaned up a little bit of language and we're 

14 replacing one of the items that Alyssa had mentioned 

15 earlier and I believe several others had agreed 

16 with was the idea that is now in (C), the -- we've 

17 listed it as a significant difference in the actual 

18 amount of nature of the tuition and fees charged 

19 by the institution for which the direct loan was 

20 disbursed and the amount that the institution 

21 represented to the borrower.

22 So, my thinking that is by changing that 

23 language, we have kind of removed the situation 
53

1 where a school was concerned that they would issue 

2 a new award letter and the borrower would then say, 

3 well, that's not what you told me.

4 We know that awards can change, you 

5 know, every time an EFC changes, you may be issuing 

6 a new statement or notice to the borrower of their 

7 eligibility.

8 And, the hope is that changing that 

9 language has removed that concern.

10 The other language on page 6 that we've 

11 removed are really not part -- and page 7 are not 

12 really part of standard, they are part of process.

13 So, as I mentioned, when we introduce 

14 this paper, the feeling was that by moving that 

15 into process, it was better fit as opposed to the 

16 standards paper. So, we will discuss that language 

17 in issue paper number 2.

18 Unfortunately, there's not a great 

19 place then to break it up at this time. So, we're 

20 going to really entertain comments on all of issue 

21 paper 1.

22 MR. BANTLE: And so, noting that we are 

23 opening it up to all of issue paper 1 and there 
54

1 were a number of changes in there, I would at least 

2 like to try and begin the discussion where we left 

3 off.

4 With the concerns raised by a number 

5 of individuals in the room. And, we were kind of 

6 going between the interpretation by Aaron and the 

7 interpretation by Abby which the Department did 

8 comment on.

9 So, I see William, Aaron and Michael, 

10 I see your hand there.

11 MR. HUBBARD: This is good timing, 

12 Aaron, because I'm going to ask you a question.

13 Based on, Aaron, your interpretation 

14 of the list in (I), and now, with the information 

15 that the Department just shared specifically as 

16 it outlays that, do you feel that that is enough 

17 of a box that we can then strike for?

18 MR. LACEY: No, I mean, I, for the 

19 reasons I had articulated earlier, I mean, I think 

20 there's value to trying to put a box around 

21 provision of educational services.

22 And, I certainly think, you know, my 

23 constituent community would think that that's an 
55

1 important concept.

2 But, I mean, I think the Department's 

3 views were not exclusive or really different from 

4 mine. I did not mean to stress so much the idea 

5 of a pre- and post-enrollment point. And, I 

6 apologize if I miscommunicated that.

7 My point was really, though, and I think 

8 the Department was consistent with this with the 

9 express was that, and Michael said this, there are 

10 two buckets here.

11 So, you know, enrollment at the 

12 institution, if a student can demonstrate that 

13 there was an act or omission that related to 

14 enrollment at the institution it does not also have 

15 to relate to the provision of educational services, 

16 without regard to whether it's pre-enrollment or 

17 post-enrollment.

18 And, many of the types of 

19 misrepresentations that were articulated and I know 

20 are often concerns for students and raised as 

21 concerns are representations that occurred in 

22 connection with the enrollment process.

23 So, my point was, I don't see any box 
56

1 here around those representations. If you can show 

2 that the act or omission related to enrollment at 

3 the institution, it doesn't also have to be inside 

4 this box of provision of educational services.

5 So, where the box really takes effect 

6 is if you're talking about a representation that 

7 was not related in any way to enrollment at the 

8 institution.

9 And, our concern is -- my concern and 

10 my constituency's concern is that when you start 

11 talking then about taking off all the enrollment 

12 stuff and the omission side stuff out of the 

13 equation and you look at all the other operations 

14 of an institution, everything or virtually 

15 anything, and I'm not trying to be glib, but it's 

16 really hard to put any kind of box around provision 

17 of educational services ostensibly, again, 

18 everything could relate.

19 So, to answer your question, it -- I 

20 still see a need and a benefit to putting some box 

21 around provision of educational services. But, 

22 can I just go into my comment?

23 Well, I don't want to cut you off, 
57

1 though, Will. Okay.

2 So, but, look, I understand the concern 

3 of having, you know, too much of a box and 

4 particularly a potentially excluding things that 

5 may otherwise already be articulated here in 

6 misrepresentation.

7 So, in the interest of trying to move 

8 things forward, I have a couple of suggestions.

9 I mean, in addition to some of the 

10 modifications we've already discussed, the edit 

11 taking the and by and striking it.

12 I would still suggest clarifying an 

13 institution when such act or omission concerns, 

14 I have no issue with provision of educational 

15 services and, tell me, again, Will, the additional 

16 language?

17 MR. HUBBARD: Or related resources.

18 MR. LACEY: Or related resources, and, 

19 Michael, I don't have, I mean, I could put it in 

20 either place where there was provision of 

21 educational services or related resources in the 

22 quotes.

23 And, I see no reason personally why the 
58

1 sort of regulatory legacy should bind us. I mean, 

2 there's really not that much discussion around this 

3 concept. And, that's the whole reason we're here 

4 is because between '95 and now, there wasn't a lot 

5 of conversation.

6 So, if we want to modify that phrase, 

7 I have no issue with it.

8 But, two points, one is one I forgot 

9 to make earlier. And, two, is a suggested way to 

10 address maybe some of Abby's concerns.

11 The first is, and I apologize, I forgot 

12 this earlier, it's also just an edit. We have here 

13 among the items listed the eligibility of the 

14 educational program for licensure certification. 

15 I believe it would be more appropriate to say the 

16 eligibility of the graduates of the educational 

17 program for licensure certification.

18 In my experience, it's typically not 

19 the program that is actually what we're getting 

20 at is not representations about whether the program 

21 is eligible for licensure or certification, what 

22 we're really getting at is whether the graduates 

23 of the program could sit for some type of licensure 
59

1 or certification.

2 Maybe that's not what the Department's 

3 thinking, but I would at least suggest that we 

4 should think about that and what the intent is 

5 there.

6 And then, what I was going to suggest 

7 is then, at the end, we could add, so the last clause 

8 is or an accreditor approval of the institution 

9 or educational program, comma, or an act or omission 

10 that would otherwise constitute a 

11 misrepresentation as that term is defined in, you 

12 know, whatever before (I).

13 So, that, if you've got an act or 

14 omission, that would qualify as a misrepresentation 

15 under this non-exhaustive but illustrative list 

16 that's included under misrepresentation, you 

17 wouldn't somehow be excluded from bringing that 

18 claim on this idea that it didn't constitute 

19 provision of educational services.

20 And, that still allows on the 

21 institution side some, you know, some ability to 

22 say, okay, there are things that fall outside of 

23 the provision of educational services.
60

1 MS. WEISMAN: So, I think first, I want 

2 to explain what we were thinking that Aaron raised 

3 the point about the eligibility of the educational 

4 program for licensure or certification.

5 Our concern is, and I believe you know 

6 where we were going with it, the idea that an 

7 institution would represent that their graduates 

8 would be eligible to sit for licensure in a 

9 particular state.

10 And then, they get out and the state 

11 says, oh no, your program does not have enough hours 

12 to allow you to sit for licensure.

13 I'm concerned that if we would say 

14 something about the idea of the eligibility of the 

15 graduate to sit for the licensure, there are a lot 

16 of other things besides that educational program 

17 that can interfere with a person being able to get 

18 licensure in a state.

19 And, we want to make sure it's focused 

20 on the education and what the institution has 

21 represented about that program.

22 So, I think our focus was putting it 

23 at the program level and saying, does the program 
61

1 meet the criteria that that state has?

2 It's up to the borrower then, of course, 

3 to finish it, pass the courses successfully, pass 

4 the licensure exam. No one can guarantee they're 

5 going to pass the exam, but we want to make sure 

6 that they are eligible to sit for licensure based 

7 on what that program offers.

8 So, if the state says you have to have 

9 1,500 hours to sit for said, you know, licensure, 

10 and they only have 1,300 but they promise you, oh, 

11 you can sit for licensure in this state. That's 

12 a misrepresentation.

13 Also, related to the idea of provision 

14 of educational services, the 1994 regulations do 

15 have some significant discussion about what that 

16 means.

17 And one possibility is that we may want 

18 to consider using the preamble as a place to further 

19 elaborate on what it means as well.

20 So, I offer that as a possible idea of 

21 where we could go. It may be that you feel it's 

22 more appropriate to put it in the regulation because 

23 of, as many people say, if it's important enough 
62

1 to be there, put it in the regulation.

2 But, if you feel it's more of a 

3 discussion item and it's something that, based on 

4 what we have here, you can live with. Keep in mind, 

5 that is a place where we can elaborate further.

6 PARTICIPANT: Just a word of caution 

7 I guess that if we have nothing in the promissory 

8 note that defines this, if we try to put two small 

9 of a box around it, I would be concerned that that, 

10 out of fairness, is not letting the borrower know 

11 up front then what that box is.

12 If we've got some language in '94 that 

13 makes it clear as we go forward what that means 

14 and it's open enough to satisfy the requirements 

15 in the promissory note, then that seems like that 

16 might be a better way of going about it from the 

17 borrower's point of view.

18 I guess I'm just saying I wouldn't get 

19 too restrictive in this if it's going to be 

20 contradictory to what's in the promissory note.

21 MS. WEISMAN: Michael?

22 MR. MCCOMIS: Because on page 2, number 

23 4 starts with for the purposes of this section, 
63

1 I'm kind of going back and forth. But, I think 

2 that it is useful to have this box for the purposes 

3 of this section.

4 And so, but I do think that it would 

5 be important to include in that, in either place, 

6 the or related resources language to make it 

7 broader.

8 And, I think that's also supported by 

9 letter (I) on page 4 that references educational 

10 resources as being a genesis for one of the 

11 representation or misrepresentation claims.

12 So, I think that it would create some 

13 nexus between the definition and the box and one 

14 of the listed items.

15 And then, maybe some additional 

16 language to get to Abby's concern. And, I know 

17 it's not nearly broad enough, but maybe it helps, 

18 on page 3 under (B), actual employment rates or 

19 employment assistance services materially 

20 different from those included in the institution's 

21 marketing materials.

22 So, it's not just the rates, it's the 

23 claim of assistance with regard to that might 
64

1 broaden that a bit as well.

2 MR. BANTLE: Okay, thoughts from the 

3 group? We have a number of proposals floating 

4 around here.

5 So, trying to kind of look at the 

6 constellation of proposals we have out here, we 

7 started with Aaron's sort of technical changes, 

8 some of the language being tweaked, the by being 

9 taken out.

10 The when such an act or omission being 

11 put back in.

12 And then, if I'm seeing, we're 

13 interpreting this all in the context of the whole 

14 issue paper and the comments made by the Department 

15 on some of the representations that might be made 

16 as part of the enrollment process.

17 And then, we have Valerie's suggestion 

18 of provision of educational services related to 

19 the program of study and the addition of Will's 

20 or related resources language that was suggested 

21 by Michael in a couple places, both in 4 on page 

22 2 and then I think coming back, as he just mentioned, 

23 on page 3.
65

1 And then, we had the final concept which 

2 I think was started with Valerie but then kind of 

3 honed by Aaron which was adding something at the 

4 end, an act or omission that would otherwise 

5 constitute a misrepresentation defined in whatever 

6 section it ends up being.

7 In concept, is that something that the 

8 working group can work towards consensus on?

9 (OFF MICROPHONE COMMENTS)

10 MR. BANTLE: I'm looking really for 

11 anyone who would disagree to speak up at this time.

12 (NO RESPONSE)

13 MR. BANTLE: Okay.

14 Abby?

15 MS. SHAFROTH: I'm just not quite sure 

16 I followed all of that.

17 MR. BANTLE: Yes, it's --

18 MS. SHAFROTH: It's multi part.

19 MR. BANTLE: It is very drawn out. I 

20 think -- so, I would let -- how -- this is a question 

21 to the working group. How do we most easily go 

22 through this and clarify all those individual 

23 changes? Because I just kind of went through that 
66

1 on a high level.

2 (OFF MICROPHONE COMMENTS)

3 MR. BANTLE: Okay, shall we go through 

4 each individual change?

5 Abby?

6 MS. SHAFROTH: I just wanted to make 

7 things more complicated by making -- offering a 

8 little bit -- a few more suggestions.

9 One is, I do appreciate Aaron's point 

10 of adding a clause cross referencing the definition 

11 of misrepresentations to make sure it is inclusive 

12 of anything that would be a misrepresentation as 

13 defined.

14 You know, as I think probably folks at 

15 the table know, I have a separate issue that I don't 

16 think borrower defense claims should be limited 

17 to fraudulent misrepresentations, but that's --

18 we can discuss that separately.

19 I do think that, you know, the best 

20 solution is to not try to define these things at 

21 all, but if the Department is intent on defining 

22 provision of educational services, then there's 

23 much that could be done to make that definition 
67

1 better and broader.

2 Just as examples, instead of saying the 

3 employability of graduates, I think what we're 

4 really talking about is the outcome of graduates 

5 which could be the earnings of graduates, it could 

6 be the employability, it could be licensure passage 

7 rates, you know, it could be a number of things.

8 So, I think the language could be 

9 redrafted to be more encompassing of the types of 

10 misconduct that we have all seen and that could 

11 occur in the future.

12 So, making -- adding the resource 

13 language, changing some of these terms to be broader 

14 and adding the cross reference to the 

15 misrepresentation definition as Aaron suggested 

16 I think would all be steps in the right direction.

17 MR. BUSADA: And, I think I know the 

18 answer to this question, or I hope I know the answer 

19 to this question, but just I think it's important 

20 to get it on the record, depending on how specific 

21 that we get.

22 But, for instance, if you just look at 

23 the current environment in higher education 
68

1 especially at state funded schools where different 

2 states are having budget cuts, you're seeing a major 

3 move, major shift of a lot of top professors.

4 I know in Louisiana, that's something 

5 that we've seen a lot of our top professors because 

6 of budget cuts move to other schools.

7 I think at law schools, medical 

8 schools, you see some of the top professors in the 

9 field that are moving to other schools, especially 

10 as medical schools start teaming up with private 

11 entities.

12 My point is, if you enroll in a specific 

13 school because of an all-star faculty that are 

14 mostly your senior year or your third year and 

15 you're enrolling there because of that and because 

16 of budget cuts or something else, that faculty en 

17 masse, which there's ample evidence that this 

18 happens, moves to another institution, is that a 

19 -- does that fall in here because of provision of 

20 educational services? You went to a school 

21 specifically because of these top professors in 

22 their field, they left en masse and you're halfway 

23 through. Is that a borrower defense claim?
69

1 And, that's what concerns me with 

2 provision of education services because I think 

3 that if you leave it too broad, there's a lot that 

4 can fit in there and that concerns me.

5 MS. WEISMAN: William?

6 MR. HUBBARD: I think -- so, I'll 

7 respond to that directly. I think you make a valid 

8 point. Ultimately, though, this language provides 

9 the borrower the opportunity to assert a defense, 

10 it does not guarantee that defense as being accepted 

11 by the Department.

12 It ultimately, as the language stands 

13 and would depend on what it ultimately looks like. 

14 But, that individual would have to go through that 

15 process and demonstrate that that was the case to 

16 the Department. I think that would be pretty 

17 difficult to do.

18 And, ultimately, the Department I think 

19 has some wiggle room there to make that 

20 determination.

21 MS. WEISMAN: John?

22 MR. ELLIS: The risk of dragging up old 

23 wounds, I think this discussion illustrates a 
70

1 concern that I think I've raised before.

2 We see how difficult it is to put 

3 language down that covers all of these situations.

4 So, in the interest to answering the 

5 question, how do we work towards consensus, I think 

6 I continue to have concerns that we have well 

7 developed bodies of state law that answer all of 

8 these questions and we're trying to displace them 

9 with a regulation that's being written using terms 

10 that aren't defined in the law using relatively 

11 novel terms.

12 So, it just seems relevant to point out 

13 that there's still some concern with the premise 

14 of the issue paper itself in establishing a federal 

15 standard.

16 MS. WEISMAN: Aaron?

17 MR. LACEY: Understanding that there 

18 are folks who object in concept or who would prefer, 

19 as Abby noted, not to see a definition here, would 

20 the Department be willing to take a cut assimilating 

21 the various suggestions that have been made at a 

22 redraft of 4 for consideration tomorrow?

23 MS. WEISMAN: I think ideally we'd like 
71

1 to have that discussion around the table because, 

2 if we come back with language and you don't like 

3 it, then we're behind even further.

4 I mean, are we willing to? Sure, but 

5 I think it's -- if we can, I think I'd rather have 

6 that discussion with the large group and have you 

7 all help us to craft it.

8 Because I think we've got a lot to cover 

9 this week and if we keep punting issues to later, 

10 we may not get through it all.

11 MR. BANTLE: Okay, another suggestion, 

12 and this is just a suggestion. Feel free to tell 

13 me you do not approve of it.

14 A couple ways to approach this, those 

15 individuals that did make a proposal, you have 

16 paper, you know, the paper in front of you. Could 

17 you or would you be willing to put your proposal 

18 edits on the paper, hand it in and maybe on a quick 

19 break, we could condense those into one document 

20 to look at?

21 Or, yes, we could take some time, 

22 because we are coming up on our typical break time. 

23 So maybe is that something that the group is okay 
72

1 with?

2 (OFF MICROPHONE COMMENTS)

3 MS. SHAFROTH: I'm not sure that 

4 that'll be more efficient than having the 

5 Department take a stab, as Aaron suggested, based 

6 on all, you know, what we've all said.

7 I mean, having multiple drafters gets 

8 complicated.

9 MR. BANTLE: Or, what we could do is 

10 just go, (a) paragraph 1, what's the suggestion? 

11 We're not evaluating it just if say, Rozmyn or 

12 I have a suggestion on that, we make the suggestion, 

13 we write it down, we move on to (a)(2), make the 

14 suggestion.

15 Okay, I'm seeing -- okay, I'm seeing 

16 positive body language on that. It's more positive 

17 body language than I've seen on my other proposals.

18 So, we will go with that strategy.

19 Okay, so, again, this is not to evaluate 

20 it, it's if you have a proposal on the section that 

21 I call out, you would put your card up, we'll get 

22 the proposal out on the table. We'll answer 

23 clarifying questions on it and then we'll move on 
73

1 to the next section.

2 So, to start off, let's just go with 

3 (a)(1). Any proposed changes to (a)(1)?

4 Okay, seeing -- Ashley?

5 MS. WEISMAN: Ashley Reich?

6 MS. REICH: I just have a question, the 

7 suggestion was made to add related to the program 

8 of study after provision of educational services. 

9 Do we need to do that also here in 1? Saying 

10 provision of educational services related to the 

11 program of study for which the loan was made just 

12 for consistency's sake?

13 MS. WEISMAN: Michael?

14 PARTICIPANT: I don't think so, 

15 Ashley, because in the next section, you're 

16 defining for the purposes of this section what the 

17 provision of educational resources, that's the box.

18 So, I don't think you need to be 

19 duplicative in trying to duplicate that here. 

20 That's why I didn't suggest putting it in both 

21 places.

22 MR. BANTLE: Any other thoughts?

23 (NO RESPONSE)
74

1 MR. BANTLE: Okay, is the group okay 

2 with that? Ashley, are you okay with that?

3 MS. REICH: Yes, that's fine because 

4 I know the suggestion was made in the last round 

5 to put it in 1, so I just wanted to be sure that 

6 we didn't want to put it in 1 and that we were okay 

7 that it was only in 4.

8 MR. BANTLE: Okay, just continuing to 

9 go through (a)(1)(I).

10 (NO RESPONSE)

11 MR. BANTLE: The next section which is 

12 (ii)?

13 (NO RESPONSE)

14 MR. BANTLE: Okay, (2)?

15 (NO RESPONSE)

16 MR. BANTLE: (3)?

17 Michael? No? Okay.

18 (NO RESPONSE)

19 MR. BANTLE: (4)?

20 MS. WEISMAN: Will then Michael?

21 MR. HUBBARD: After the end quotes 

22 provision of educational services, I propose 

23 including or related resources.
75

1 MS. WEISMAN: Michael?

2 PARTICIPANT: So, because that term is 

3 in quotes and because it's not used elsewhere, I 

4 would suggest putting the or related resources at 

5 the point of concerning the nature of the 

6 institution's educational program or related 

7 resources.

8 Because, again, you're trying to define 

9 what provision of educational services is and you 

10 can include it within that definition are the 

11 related resources.

12 And, because it's a term that's used 

13 in other places and as a term of art, I just think 

14 that it's better and cleaner to put it at the end 

15 of educational program.

16 MR. LACEY: Yes, I accept that.

17 MR. BANTLE: Okay, and Michael, just 

18 so everyone is on the same page, could you just 

19 let us know how that would read?

20 PARTICIPANT: Well, I'm on page 2. 

21 For an act or omission of an institution concerning 

22 the nature of the institution's educational program 

23 or related resources, comma.
76

1 MR. BANTLE: Thank you.

2 Okay, and we're going through the, you 

3 know, the comments even if they have been previously 

4 made just so we can get them as we're going through.

5 We'll go Aaron and then Valerie?

6 MR. LACEY: Okay, I would strike in the 

7 second sentence of 4 the words the and by so that 

8 it reads for an act or omission of an institution.

9 I would strike concerning and I would 

10 replace it with when such act or omission concerns, 

11 so an institution when such act or omission 

12 concerns.

13 And then, I would add at the very end 

14 so we've got or an accreditor approval of the 

15 institution or educational program, comma, or any 

16 other act or omission that otherwise constitutes 

17 a misrepresentation as that term is defined in 

18 section blah, blah, blah below.

19 MR. BANTLE: Valerie?

20 MS. SHARP: My proposal is that right 

21 after the quote of provision of educational 

22 services, add related to the program of study.

23 MS. WEISMAN: Abby?
77

1 MS. SHAFROTH: So, I had a couple 

2 options. One would be to strike this paragraph 

3 in its entirety.

4 Another would be to modify this 

5 paragraph so that it represents an illustrative 

6 list rather than an exhaustive list.

7 You know, it would need to be -- the 

8 words would have to be -- wording would have to 

9 be changed a bit more but something -- the language 

10 would need to be inserted making clear that 

11 provision of educational services for purpose of 

12 this section includes, but is not limited to and 

13 then this list of items.

14 The list of items, I would also modify 

15 on the end of line three, beginning of line four, 

16 instead of saying the employability of graduates, 

17 I would say, the outcomes of graduates.

18 And, I would also be supportive of the 

19 suggestion Aaron made to cross reference to the 

20 definition of misrepresentation.

21 MR. BANTLE: Any other comments on (4)?

22 MS. WEISMAN: Aaron, is yours still up?

23 MR. LACEY: Could we just hear it back 
78

1 now with the suggested changes entirety -- in its 

2 entirety?

3 MR. BANTLE: Okay, correct me if I'm 

4 wrong, for the purposes of this section, a borrower 

5 may assert a borrower defense claim regarding the 

6 provision of educational services related to a 

7 program of study -- for an act -- to the program 

8 of study, sorry.

9 For an act or omission of an institution 

10 when such act or omission concerns the nature of 

11 the institution's educational program or related 

12 resources.

13 The nature of the institution's 

14 financial charges, the outcomes of graduates of 

15 the institution's education program, the 

16 eligibility of the educational program for 

17 licensure or certification, I know that was a part 

18 we did have some discussion on earlier, the state 

19 agency authorization or approval of the institution 

20 or educational program and an accreditor approval 

21 of the institution or educational program or any 

22 other acts or omissions that constitute 

23 misrepresentation as defined in whatever section 
79

1 it ends up being.

2 MS. WEISMAN: Mike Bottrill, did you 

3 still -- is your -- okay.

4 I think you just missed one of Abby's 

5 comments on the inclusion.

6 MR. BANTLE: Oh yes, and then Abby had 

7 the two other proposals of striking 4 in its 

8 entirety or the including but not limited to making 

9 it a non-inclusive list or non-exclusive list.

10 Any other proposals on 4 as it is, well, 

11 at this time? Not as it is.

12 (NO RESPONSE)

13 MR. BANTLE: Okay, feel free, I saw you 

14 reaching.

15 PARTICIPANT: I was going to say just 

16 as a suggestion to help us move along, I think that 

17 we're really now down to two issues.

18 We've got the revisions to the existing 

19 paragraph that you just read through and then we 

20 have Abby's alternative proposals as well.

21 To me, it would maybe make sense in 

22 order to move forward that we agree first and 

23 foremost on whether or not we like the amendments 
80

1 as they are.

2 And then, once we have that, then we 

3 determine whether we want to keep that or we want 

4 to go with Abby's proposal.

5 At least, that way, we've not debating 

6 three different things simultaneously.

7 MR. BANTLE: Thoughts from the working 

8 group?

9 Okay, and this was the initial break 

10 point that Annmarie had set out for us. So, 

11 thoughts on the changes that have been made up to 

12 and including (4)?

13 And, this, again, is separate from as 

14 suggested by Mike separate from Abby's proposal 

15 of striking or the inclusive language, which we 

16 will get to.

17 Shall we see a show of thumbs on this 

18 language with those modifications?

19 Aaron?

20 MR. LACEY: Can I suggest taking those 

21 in reverse order, so a show of thumbs on excluding 

22 completely, a show of thumbs on the inclusive 

23 language and then a show of thumbs on the modified 
81

1 language?

2 MR. BANTLE: Again, sensing no push 

3 back to that from the working group, so a show of 

4 thumbs on excluding number 4. And, we had no 

5 changes up to number 4.

6 So, A(1) through (3) with the 

7 Department's changes, we just had no other 

8 additions.

9 And then, exclusion of number 4, show 

10 of thumbs.

11 (OFF MICROPHONE COMMENTS)

12 MR. BANTLE: Could you use the mic?

13 PARTICIPANT: Yes, maybe it would make 

14 sense to separate those so a show of thumbs on 1 

15 through 3 and then a show of thumbs on excluding 

16 4. I'm sorry, I don't --

17 MR. BANTLE: No, we can --

18 PARTICIPANT: Because my thumb is 

19 going different ways on those.

20 MR. BANTLE: Okay, okay. That is 

21 fair.

22 Okay, let's first look at 1 through 3 

23 as the Department had proposed in the issue paper 
82

1 you received today to which we had no edits as we 

2 just ran through. A show of thumbs.

3 Okay, I see no thumbs down --

4 MS. WEISMAN: No, one.

5 MR. BANTLE: Oh sorry, I didn't see the 

6 thumb down. Was that a thumb sideways or a thumb 

7 down? Thumb down.

8 John, you provided us with a thumb down, 

9 so can you provide us with a proposal that you feel 

10 would address your concern and the group's concern?

11 MR. ELLIS: It goes back to the same 

12 concern, this language actually creates the 

13 framework for the new federal standard. We don't 

14 agree with that approach.

15 MR. BANTLE: So, in an effort to reach 

16 consensus today, is -- do you have a proposal or 

17 is it something that you can live with in the 

18 context. This is a tentative thumb check, 

19 obviously.

20 MR. ELLIS: You know, I don't want to 

21 preclude everyone from working on language that 

22 others can agree to. But, it's the premise of 

23 establishing the standard alone that I disagree 
83

1 with.

2 So, you know, the current language goes 

3 up to basically 2 and says, we apply state law where 

4 it's applicable. That's what we think is the 

5 correct approach.

6 MR. BANTLE: Okay. And, so your 

7 proposal would be to cut everything after 2?

8 MR. ELLIS: I think I can live with 

9 that.

10 MR. BANTLE: Okay.

11 MR. ELLIS: I don't think there's much 

12 possibility of that being consensus, being 

13 realistic.

14 MR. BANTLE: Okay. So, with that in 

15 mind and understanding that we would have to reach 

16 consensus on not only issue paper 1 in its entirety, 

17 but issue papers 1 through 8 in their entirety.

18 Is -- are the -- is there a way that 

19 you could live with the language as proposed?

20 MR. ELLIS: I'd like to hear how it ends 

21 up with others who do agree with the premise before 

22 I make a final decision.

23 MR. BANTLE: Okay.
84

1 And, understanding this is a tentative 

2 thumb check, and then you could, you know, modify 

3 your thumb. So, and not to put you on the spot.

4 MR. ELLIS: I have no objection, I 

5 don't want that thumbs down to grind everything 

6 to a halt here and make it seem like there's no 

7 way it can ever reach agreement.

8 I'm just saying, as it's drafted and 

9 my concerns continue to exist, so I'd like everyone 

10 -- to hear everyone out and see if that changes 

11 my mind.

12 MR. BANTLE: Okay, okay.

13 MS. WEISMAN: Michael?

14 PARTICIPANT: Well, John, you did just 

15 grind it to a halt. I mean, we can't move -- I 

16 mean, if your position is that you don't agree with 

17 the premise from the beginning, but you don't want 

18 that disagreement with the premise to stop us from 

19 working on language, I don't -- those two things 

20 are not compatible for me.

21 So, I guess, I'm just wondering what 

22 -- it would be futile to us to continue to work 

23 on language if you're going to just say no from 
85

1 the very beginning.

2 So, I'm trying to get an understanding 

3 here of whether I should just plan to go home now 

4 or, you know, what, you know, what we're doing here.

5 MR. ELLIS: Yes, I mean, it's difficult 

6 for me to conceptualize given our position that 

7 state law is well developed, that state law is the 

8 appropriate standard to apply here of how those 

9 changes would change my mind.

10 I'm not trying to misrepresent that; 

11 however, I would, honestly, before I make a final 

12 decision, I'd like to know if there's agreement 

13 among everything else in the room, notwithstanding 

14 I, I want to evaluate, you know, do I really want 

15 to derail the entire process on that basis?

16 Does that make any sense?

17 (OFF MICROPHONE COMMENTS)

18 MR. ELLIS: I mean, I'm happy to say, 

19 I'm very skeptical of the idea establishing a 

20 federal standard. I continue to have that 

21 position. It's been my position all along.

22 But, I'm trying to work in good faith 

23 to see if we can produce a rule that's good enough 
86

1 that I can be comfortable with it, despite my 

2 skepticism of the premise to begin with.

3 MS. WEISMAN: John, I'm not sure that 

4 the group understands your exact question. Can 

5 you please address the group with the exact question 

6 as you would like it answered?

7 MR. ELLIS: I'm not sure what exact 

8 question I'm -- you think I'm posing. I'm 

9 skeptical of establishing a federal standard.

10 However, I would like to see what ever 

11 standard -- if the group can agree on one, I would 

12 like to see what that federal standard is going 

13 to look like before deciding if I want to derail 

14 the whole process based on that skepticism.

15 MR. BANTLE: So, if I could jump in just 

16 as the facilitator, what I think I hear you saying 

17 is you have your thumb sideways. No?

18 MR. ELLIS: No, I'm saying whether or 

19 not I'm -- at this moment, you were asking do we 

20 have consensus on this language.

21 MR. BANTLE: So, you --

22 MR. ELLIS: No, I don't approve of this 

23 language.
87

1 MR. BANTLE: So, you -- so, is -- am 

2 I correct, is it that you -- to approve of this 

3 language, you need to see the rest of the issue 

4 paper and the other issue papers?

5 MR. ELLIS: Even, just on this issue 

6 paper, I think I'm, at this moment, I'm a thumbs 

7 down.

8 MR. BANTLE: Okay.

9 MR. ELLIS: However, I'm basically, 

10 I'm telling tentatively, I'm a thumbs down, but 

11 I still want to listen to what everyone has to say 

12 to see if it changes my mind.

13 MR. BANTLE: Okay, okay. Yes, I 

14 guess, so, from the facilitators perspective, 

15 understanding that you are a -- that this is a 

16 tentative vote, I think we would define that as 

17 a thumb sideways for now, just for the purposes 

18 of the discussion.

19 Now, still, you -- we could get to the 

20 end of issue paper 1 and then you could have the 

21 firm thumbs up?

22 MR. ELLIS: Yes, and I mean, if that 

23 makes everyone feel better. My understanding is 
88

1 a thumbs sideways is I'm not objecting. I have 

2 objections.

3 MR. BANTLE: You have objections.

4 MR. ELLIS: But, I'm not trying to stop 

5 everyone from --

6 MR. BANTLE: But, you're not willing 

7 -- yes, you're not wanting to stop the group, that 

8 is fine.

9 Okay, I saw, yes, we have a number of 

10 cards. We'll go with -- is that Michael or I guess 

11 it's Linda.

12 (OFF MICROPHONE COMMENTS)

13 MR. BANTLE: Okay.

14 So, just the order that I saw them in, 

15 I apologize if this is not the actual order. We'll 

16 go Linda, Annmarie, William, Abby.

17 And then, we have already run over our 

18 typical time for break, so after those comments, 

19 we'll take a break.

20 MS. RAWLES: I just want to say, at this 

21 point, I don't agree with John, even though he 

22 represents my great State of Arizona.

23 But, what I want to agree with John on, 
89

1 is he has every right to vote no and for you not 

2 to turn it into a sideways.

3 And, even if we're all shocked because 

4 the tenor of the room is that we're reaching 

5 consensus and everybody's excited and you guys are 

6 doing your job, that's fine.

7 But, I just want to back John up that, 

8 anybody has the right to vote no at any time without 

9 being pressured, unduly pressured.

10 And so, I just back his no vote as part 

11 of the legitimate process. And, I'm a little 

12 disturbed that he can't just vote no without being 

13 a little bit berated there.

14 MR. BANTLE: And, I apologize if that 

15 was the impression. I certainly want to open up 

16 the table for anyone to vote no if they feel that 

17 is appropriate and how they feel. So, I apologize, 

18 John.

19 Okay, just going around, Annmarie, 

20 William?

21 MS. WEISMAN: So, I think to pull us 

22 kind of back together, we've had discussions 

23 throughout about the idea of a federal standard. 
90

1 But, if we look at the beginning words of this 

2 issue paper, we frame it as whether to establish 

3 a federal standard.

4 We've come here, we've discussed it. 

5 But, maybe we need to flesh that out a little bit 

6 more. Let's hear about what some of the objections 

7 are to having a federal standard.

8 Let's see if there is something that 

9 we can incorporate that might make this work. But, 

10 let's have more discussion on that point because, 

11 if that is the point that we have one person saying 

12 they're hung up on, rather than to try to say well, 

13 what can we do to get everybody on board, let's 

14 see what the real issues are behind that.

15 Let's talk about that a little more and 

16 talk about what we see of the benefits, the 

17 drawbacks so that we can feel that we've really 

18 fully fleshed out that issue and maybe that's an 

19 after the break conversation since I don't think 

20 it'll be a two minute conversation.

21 But, I just want to make sure we give 

22 it the respect that it deserves.

23 MR. BANTLE: Understood. And, I would 
91

1 say that that is an after the break conversation. 

2 So, we'll go with William, Abby and then take that 

3 break.

4 MR. HUBBARD: I'm very appreciative of 

5 the Department's position on that. I think it is 

6 a valid discussion and certainly, John, you know, 

7 your position is well understood and appreciated 

8 as well.

9 I think, though, to say that state law 

10 is preclusive of what we're talking about here as 

11 a federal standard is not necessarily the case. 

12 I don't see them as being necessarily mutually 

13 exclusive.

14 The position of military-connected 

15 students would be that the federal standard would 

16 be the minimum standard. And, if state law would 

17 look to be more aggressive on behalf of students 

18 that that would be well accepted.

19 MS. SHAFROTH: I'll waive actually. 

20 I would be largely repeating what Will and Annmarie 

21 said.

22 MR. BANTLE: Okay, it is 10:43 as of 

23 my phone. Let's take 15 minutes. Please be back, 
92

1 we will start promptly at 10:58.

2 (Whereupon, the above-entitled matter 

3 went off the record at 10:43 a.m. and resumed at 

4 10:58 a.m.)

5 MS. WEISMAN: Well, first, I want to 

6 do one literal temperature check. How is the 

7 temperature in here?

8 (OFF MICROPHONE COMMENTS)

9 MS. WEISMAN: Better but still hot? 

10 Okay.

11 MR. BANTLE: We're trying to cool

12 things down.

13 MS. WEISMAN: Okay, well, I think it's 

14 getting cooler.

15 Second is the spotlights were turned 

16 out because that I think was contributing to the 

17 heat. Can people see?

18 (OFF MICROPHONE COMMENTS)

19 MS. WEISMAN: Yes, so we don't need the 

20 spotlights back on again. Okay.

21 MR. BANTLE: Okay, just thank you 

22 everyone for being prompt on your return. Sorry, 

23 for my delay.
93

1 I wanted to -- I think the conversation 

2 that we were having before we took the break was 

3 an important and is an important conversation to 

4 have.

5 So, understanding that we do have a lot 

6 to get through, we have about an hour before lunch, 

7 a little less. So, I would like to take us back 

8 to that conversation.

9 And, John, not to put you on the spot, 

10 but if you could outline your concerns and we can 

11 have some conversation -- dialogue from the group 

12 about their concerns and any questions they may 

13 have.

14 MR. ELLIS: So, and this goes back to 

15 things I've said before, so I hope I'm not boring 

16 everyone. But, you know, I think our top line 

17 concern is that, number one, we are trying to create 

18 an entirely new standard with new language, much 

19 of which, quite frankly, as an attorney, I don't 

20 know what means because it's not, for instance, 

21 language about evidentiary standards, language 

22 about misrepresentations.

23 These are terms that are well defined 
94

1 in state bodies of law. I don't know what they 

2 mean in this federal regulation. That's something 

3 that's going to have to play out over a number of 

4 years.

5 So, from that standpoint, I don't know 

6 that we agree that it's necessary to go to a federal 

7 standard.

8 However, I recognize the Department's 

9 concern that applying 50 standards is unworkable 

10 for it. I understand that.

11 So, what I'm getting at is although I 

12 don't know that I can be happy with a federal 

13 standard, I think that the standard can be improved 

14 substantially such that it relies on that 

15 well-established body of law wherever possible so 

16 that it defers to that body of law where there might 

17 be a technical preemption.

18 Where it agrees to look to that language 

19 in resolving the ambiguities in particular cases, 

20 all of those would be things that would greatly 

21 reduce my concerns.

22 You know, the number two level concern 

23 we have here is, I understand in a technical legal 
95

1 sense, this is not necessarily what a court would 

2 call preemption.

3 I also understand, as a practical 

4 matter, the borrower's concern is with getting the 

5 financial burden off of themselves.

6 If we establish a federal standard that 

7 is substantially lower or higher than federal or 

8 than state consumer protection law, what we're 

9 doing is providing an avenue that a consumer would 

10 be foolish to rely on state law to try to get a 

11 redress of their grievance rather than simply going 

12 to the Department and applying a much simpler 

13 standard to obtain a discharge of the debt.

14 I think that does substantially hinder 

15 the prerogative of the states to establish consumer 

16 protection laws in those states.

17 The old standard deferred to those 

18 state laws and, therefore, didn't interrupt that 

19 standard. It said the Department will give you 

20 a discharge where the state would have given you 

21 damages.

22 So, when I say that I don't necessarily 

23 tacitly or positively agree to the current 
96

1 standard, those concerns which I've articulated 

2 since the first meeting continue to be there.

3 I want to work with the group in good 

4 faith to see if we can reduce that concern through 

5 making this law clearer, number one, that the 

6 standard that we're establishing clear and using 

7 terms that are known to the law.

8 And, building in some protections in 

9 there that say the Department doesn't intend to 

10 displace state law, it doesn't intend to preempt 

11 any state standards and possibly considering some 

12 language that where there are ambiguities in how 

13 the standard applies in a particular case, the 

14 Department will look to the state's law which is 

15 the appropriate regulatory body for these kinds 

16 of transactions in determining how the rule 

17 applies.

18 All of those are things that might 

19 change whether or not I opposed the federal -- the 

20 establishment of a federal standard.

21 So, I think that's what I mean when I 

22 say there's not -- it's not absolutely certain that 

23 I can't be convinced that the rule is acceptable. 
97

1 But, as the rule is drafted right now where it's 

2 saying we're going to set aside this body of state 

3 law for all claims going forward, we're not going 

4 to pay attention to it at all.

5 All that's going to govern is this 

6 federal standard. I think, on behalf of myself 

7 and other attorneys general with whom we often 

8 disagree, also share that concern.

9 So, I do think I have the obligation 

10 to voice that concern and try to take action of 

11 it in this room because I'm not just here to speak 

12 on behalf of my state.

13 MS. WEISMAN: Any responses to John's 

14 concerns? Abby?

15 MS. SHAFROTH: I share John's concern 

16 that the Department's proposal here, and I was going 

17 to get into this in the next section where we discuss 

18 the misrepresentation standard and other basis for 

19 relief.

20 But, that the standard that the 

21 Department has laid out creates a new standard that 

22 departs substantially from the consumer 

23 protections for students that have long existed 
98

1 in state law.

2 And, that is way, way, way harder for 

3 a student to satisfy these burdens and places a 

4 far higher burden on students in order to get relief 

5 than they would under state consumer protection 

6 law.

7 And, also would seem to invite or allow 

8 more abuses of the system than would be allowed 

9 under state consumer protection law.

10 I think I differ from John in that my 

11 proposal would be that the Department create a new 

12 federal standard that is a floor rather than a 

13 ceiling as a basis for borrower relief so that 

14 borrowers can continue to attain relief on the basis 

15 by saying that their school violated their state's 

16 consumer protection laws just as they can now.

17 I think that students should continue 

18 to be able to do that. But, I appreciate the point 

19 that having a federal standard as well could clarify 

20 things for some students and could make sure that 

21 there's a minimum floor such that if a given state 

22 doesn't have consumer protection standards, that 

23 a student in that state would still have a pathway 
99

1 to relief.

2 With respect to that federal standard, 

3 if we are going to have a federal standard at all, 

4 I think it does make a lot of sense to, instead 

5 of making something up, inventing something new 

6 out of whole cloth as John suggested, to really 

7 look to these bodies of consumer protection law 

8 that have been well defined and that have served 

9 consumers well over the years, which is why that 

10 we have proposed standards that would include 

11 protection for students and basis for relief based 

12 on unfair and deceptive or abusive practices.

13 Unfair and deceptive practices are 

14 claims are available in, I believe, every state 

15 and there is significant similarity between those 

16 standards across the states and there is a lot that 

17 the Department could do to draw from those standards 

18 in establishing a new federal standard.

19 The standard that the Department has 

20 proposed is -- there's pretty much no relationship 

21 to the existing state consumer protection 

22 standards. The Department has proposed a 

23 fraudulent misrepresentation standard which is 
100

1 a much higher standard that state unfair and 

2 deceptive practices and would really, I think, 

3 inhibit the relationship between states and federal 

4 governments in trying to enforce and protect --

5 enforce laws and protect students and deter 

6 predatory actions.

7 Because, the federal government is no 

8 longer going to be able to really rely on the 

9 evidence from state investigations such as the 

10 state AG, the California State AG and Massachusetts 

11 State AG investigations of Corinthian and other 

12 schools that they've relied on in the past.

13 Because, those state laws are so 

14 different from the standard established here that 

15 we're no longer going to have that same cooperative 

16 relationship, it's no longer going to be as useful 

17 to the states or to students.

18 MS. WEISMAN: Will and then Aaron?

19 MR. HUBBARD: I just want to thank John 

20 for his comments. I think they are extremely 

21 valuable for this conversation moving forward and 

22 certainly would look to him to provide as much input 

23 on improving this standard so that it would be 
101

1 acceptable to as many states as possible, 

2 specifically attorneys general that he referenced.

3 I think that would be tremendously 

4 valuable for students.

5 One point that I want to highlight is, 

6 in saying that's an entirely new standard I think 

7 is a little bit inaccurate in the sense that, I 

8 mean, there was a previous standard developed in 

9 2016.

10 Additionally, as long ago as 1994, 

11 there was a standard. So, it's not, I wouldn't 

12 say, entirely new. And, many of these provisions, 

13 of course, also draw specifically on state law, 

14 so, and consumer protections there.

15 So, I wouldn't necessarily agree it's 

16 entirely new. I think there is some value also 

17 in identifying the fact that, as federal funds, 

18 having a federal standard makes sense.

19 And, as it pertains to state level 

20 schools and consumer law, having that in 

21 conjunction is likely the most both fair and also 

22 protective for both schools and students combined.

23 I think the two standards are not in 
102

1 competition and setting it up as such, I think, 

2 is a false analogy.

3 Lastly, I think there are definitely 

4 a lot of states that do it better than others in 

5 certain areas. No state has it all right.

6 And, I think that's the value of having 

7 the two different standards, one as a floor and 

8 the other to provide that local flexibility.

9 MS. WEISMAN: Thank you.

10 Aaron?

11 MR. LACEY: John, I also very much 

12 appreciate your comments and that you're here. 

13 And, I think it would be very helpful to all of 

14 us going forward to get more input from you all 

15 and what you think -- where you think there are 

16 opportunities to potentially inform the standards 

17 and the framework here by, you know, the well 

18 established state standards that exist.

19 I do think that there is very good 

20 reasons, strong public policy, however you want 

21 to phrase it, for creating a federal standard here.

22 You know, Congress has directed the 

23 Department to identify these acts or omissions that 
103

1 a borrower could assert as a defense.

2 So, one way or another, the 

3 Department's going to have to ultimately make a 

4 call as to whether or not those acts or omissions 

5 exist.

6 You know, whether they use a state 

7 standard or a federal standard then becomes a 

8 question.

9 You know, I have very -- and you have 

10 acknowledged this -- I mean, I think it would be 

11 just extraordinarily challenging for the 

12 Department to continue to try to pull in and 

13 administer, interpret state standards.

14 The other point that becomes very 

15 difficult that wasn't mentioned but I know the 

16 Department is well aware of is where you have states 

17 that are educating students from different 

18 jurisdictions, different residences, that could 

19 be fine if I'm in Memphis and I've got students 

20 from Arkansas, it could be if I'm a nonprofit, you 

21 know, with students in all 50 states, there become 

22 lots of challenging questions about which state 

23 law would apply, whether it's the residency or where 
104

1 the student works of whether the institution is 

2 located.

3 I just think for both institutions and 

4 for borrowers and students, you know, having a 

5 framework that the department can administer in 

6 a more efficient manner is critical here.

7 I also just want to register, and I know 

8 we're going to talk about this more, but I 

9 respectfully but very strongly disagree with Abby's 

10 characterization of this standard.

11 I believe that this standard is much 

12 lower than what you would see in virtually any 

13 state. There is no barrier to entry. You don't 

14 have to have an attorney, you don't have to pay 

15 any court fees, you don't even have to show up at 

16 court. All you have to do is pull down an 

17 application online and fill it out.

18 The Department has articulated in 

19 evidentiary standard here which, if you look on 

20 the second page, I mean, they talk about the 

21 substantial weight of the evidence but then they 

22 articulate later that the Secretary will find its 

23 essential weight of the evidence supports the 
105

1 approval borrower defense claim when the borrower's 

2 statement is supported by corroborating evidence.

3 So, the standard here, to be clear, is 

4 simply that the borrower bring something to the 

5 table other than a signed statement. Right?

6 I don't know how many state consumer 

7 protection standards in court where you would have 

8 a situation where a borrower could be successful 

9 with nothing more than a signed statement.

10 And, certainly there is barrier to 

11 entry for borrowers to bring claims in the court 

12 system. It's more expensive and cumbersome.

13 And then, as far as the 

14 misrepresentation standard, I mean, you're really 

15 talking about the floor here being reckless 

16 disregard which is, in essence, a step up from a 

17 mistake.

18 So, the other point I think's really 

19 important to note, you made a comment about not 

20 being able to use investigations. I mean, there 

21 is very clearly, it is contemplated here that the 

22 Department can take into account any information 

23 that it may have in its possession.
106

1 So, if you've got attorney general 

2 investigations in the case Corinthian, the 

3 Department had its own findings pursuant to 

4 investigations of Corinthian.

5 All of that could qualify as 

6 corroborating evidence. So, in that instance a 

7 borrower could just make a sworn statement online, 

8 fill out the application. The Department has all 

9 of that agency information available including 

10 information it's got on its own hand.

11 And, all it's doing is making a finding 

12 as to whether or not that corroborating evidence 

13 supports that the institution misrepresented in 

14 a way that was not a mistake.

15 I just -- I think this is a very generous 

16 standard. I think there's low barrier to entry. 

17 I think the line that's been drawn here is 

18 essentially just trying to make sure that 

19 institutions that are good actors aren't penalized 

20 for making mistakes and that borrowers can't 

21 discharge $80,000 of loans based on no more than 

22 a certified statement.

23 The other point I'll make and then I'll 
107

1 be quiet, is that it's really important for us to 

2 continue, and I don't know that we've really talked 

3 about this, but it's really important to appreciate 

4 that this framework is not the -- and the state 

5 consumer protection frameworks are not the only 

6 frameworks available to borrowers who feel like 

7 they've been wronged.

8 I mean, if a borrower feels like an 

9 institution has made a mistake and it's harmed them, 

10 they can go to the institution and they should.

11 I mean, I work with schools all the time 

12 where schools have screwed up or done something 

13 wrong, good actors, but, you know, mistakes are 

14 made and the borrower raises that issue and the 

15 school just fixes it with the borrower.

16 I mean, what we're specifically talking 

17 about here is even narrower than a state consumer 

18 protection act where there might be considerations 

19 outside of the discharge of loan.

20 This, per the statute, all we are 

21 talking about is what are the circumstances 

22 pursuant to which the loan should be discharged, 

23 not what are the circumstances pursuant to which 
108

1 a borrower is entitled to some sort of relief from 

2 an institution outside of a proceeding or within 

3 a proceeding.

4 And, I think that the standard here 

5 that's been articulated, I very strongly support. 

6 I think it's very fair and I would strongly 

7 disagree with the characterization that this is 

8 either a standard that is higher than most state 

9 consumer protection act standards or that this 

10 somehow precludes the inclusion and consideration 

11 of attorney general actions or the Department's 

12 own findings and investigations.

13 Because that is not the case with this 

14 framework.

15 MS. WEISMAN: Abby?

16 MR. SHAFROTH: So, I wanted to respond 

17 to Aaron's comments. Some of his comments were 

18 about the barriers to entry. I think that's a 

19 separate issue that I'd like to discuss later.

20 The issue of whether this standard that 

21 the Department has proposed is easier for borrowers 

22 to satisfy than state law standards or harder, I 

23 don't think there can be reasonable debate about 
109

1 that. This is a harder standard than state unfair 

2 and deceptive practices standards which are the 

3 baseline state consumer protection standards.

4 In 45 of the states, there is no 

5 requirement that the borrower have to prove intent 

6 or recklessness. There is that requirement here, 

7 that is a really big hurdle for students to be able 

8 to demonstrate. These students do not have access 

9 to discovery. They don't have access to the type 

10 of evidence that would allow them to prove what 

11 the school is thinking, whether the school was 

12 reckless.

13 The characterization that this is just 

14 a step up from a mistake is also inaccurate. 

15 There's -- without getting too legal jargony, this 

16 standard that the Department has set out is a 

17 standard of fraudulent misrepresentation.

18 And, it requires a heightened standard 

19 of intent.

20 Most state consumer protection 

21 statutes do not have an intent requirement. 

22 They're more strict liability. If the school says 

23 something to the borrower that's incorrect and the 
110

1 borrower reasonably relies on it, then that's the 

2 basis for a claim. They don't have to show intent 

3 or recklessness.

4 In between a strict liability standard 

5 and the standard that the Department has set out 

6 would be a negligent misrepresentation standard 

7 where the borrower would just have to show that 

8 the school was negligent in providing that 

9 information.

10 That would be a step up from strict 

11 liability, that's not what the Department has 

12 proposed. The Department has proposed two steps 

13 up from that.

14 This standard also requires the 

15 borrower to demonstrate that they reasonably relied 

16 on the intentionally or recklessly incorrect 

17 information in a way that caused them financial 

18 harm of specified types.

19 And, just taking out the loan in 

20 reliance on that incorrect information isn't 

21 enough. That would certainly be enough under state 

22 consumer protection statutes.

23 And, many state consumer protection 
111

1 statutes, you wouldn't have to show this harm at 

2 all. There would be civil damages that would be 

3 available automatically. But, even if not, 

4 through the taking out of the loan, is itself 

5 financial harm under many states laws.

6 So, this is -- I don't see any real 

7 debate that this is a much harder standard for 

8 students to meet than state law standards.

9 There's subject for question about the 

10 burden to -- barrier to entry that I'd like to 

11 discuss more separately, but I'm focusing really 

12 right now on what the standard is. It is a very 

13 high standard for students to meet and a harder 

14 standard than exists under either the 1994 

15 regulation that's currently in effect or the 2016 

16 regulation that was finalized.

17 MS. WEISMAN: Will?

18 MR. HUBBARD: As a more practical 

19 matter to, you know, to just kind of counter or 

20 provide some additional insight in terms of what 

21 the standard practically speaking means 

22 essentially the process for a student that they'd 

23 have to follow which is currently being in some 
112

1 ways characterized as a low barrier to entry.

2 I'd like you to just keep that in mind 

3 as we kind of walk through a practical application 

4 of this process.

5 Initially, you'd have to learn about 

6 the substantial weight of the evidence standard 

7 to gain loan relief that's being applied.

8 Then, you'd have to take notes on all 

9 the phone calls and conversations with school 

10 representatives before suspecting that they're 

11 lying to you.

12 Following that, retain all your 

13 documents given to you by the school, despite 

14 possibly losing access to your school email, even 

15 after unenrolling or if the school is closed.

16 Then somehow gain access to private 

17 emails between school officials to then verify your 

18 suspicions without any legal means to do so.

19 Followed by regular claims processing. 

20 If that fails, you have to spend time and money 

21 to get a day in court, if not first being forced 

22 into arbitration that favors the school.

23 And then, after all of that's said and 
113

1 done, you'd have to figure out how to navigate all 

2 of this on your own within three years as the 

3 standard says currently that your school 

4 misrepresented in front of you or you essentially 

5 lose your right to relief.

6 Mind you, that is no guarantee that 

7 you'll even get your claim accepted. That's just 

8 to get to the table.

9 So, if we're talking about low barrier 

10 to relief, I think characterizing that as low 

11 barrier relief is pretty difficult to support.

12 MR. BANTLE: Does the Department have 

13 any thoughts or comments at this time having heard 

14 the concerns of the room? And, I know our concerns 

15 reasonably spread from our initial discussion.

16 PARTICIPANT: I just have a question 

17 I'd like to ask John. So, you had mentioned in 

18 your comments that you would like to see more 

19 reference or more reliance upon state law by 

20 incorporating known legal concepts.

21 Could you give us an example of what 

22 you're thinking of? Something that we've talked 

23 about in these proceedings is trying to have more 
114

1 of a plain language process that non-attorneys can 

2 understand.

3 So, I just kind of wanted to get a sense 

4 of where you think there might be some areas we 

5 could talk about?

6 MR. ELLIS: Is your question with 

7 regard to the substance of state consumer 

8 protection law or more broad than that?

9 PARTICIPANT: I think my question 

10 would be as more about what concepts you were 

11 talking about that could be incorporated in the 

12 standard, if we were to have a federal standard 

13 that would sort of allay some of your concerns?

14 MR. ELLIS: So, for instance, there are 

15 some of the concerns that I think are relatively 

16 discrete.

17 Like, I understand the desire for plain 

18 language in this substantial weight of the evidence 

19 standard. That's not a legal standard for burden 

20 of proof that I'm familiar with.

21 Perhaps it exists in some body of 

22 consumer protection law or other law that I'm not 

23 familiar with in my particular state.
115

1 But, language like that that seeks to 

2 be plain language at the expense of having a clearly 

3 defined legal meaning, because, at the end of the 

4 day, I understand the Department's going to

5 adjudicate these and the primary purpose of the 

6 rule is to guide the Department's behavior.

7 But, whether or not the Department's 

8 behavior was appropriate in any given situation, 

9 is going to be a question of what is the proper 

10 interpretation of the language?

11 The existing standard in states vary, 

12 for instance, on whether or not they require clear 

13 and convincing evidence or a preponderance of 

14 evidence.

15 But, those are well established terms 

16 that have a huge body of law behind them.

17 So, to the degree that the Department 

18 can rely on those established state law standards, 

19 that also have federal corollaries in most cases 

20 that look the same, I think that that would make 

21 a substantial difference to the fact that the rule 

22 will actually be more useful in the long run.

23 I also think that the rule should 
116

1 recognize that different states do have different 

2 standards. And, I think it would go a long way 

3 to assuage my concerns if the Department were to 

4 say where there are ambiguities in the application 

5 of the federal standard in any given circumstance, 

6 the Department will look to the law that would apply 

7 under the state where the misrepresentation was 

8 made.

9 I understand that doesn't necessarily 

10 get you into a single nationwide standard. You 

11 know, at the risk of sounding flippant, federalism 

12 is often inconvenient and it's inconvenient for 

13 us, the states, sometimes, too.

14 So, I understand that, but where 

15 there's ambiguity in the statute, if the Department 

16 were to fall back on those bodies of applicable 

17 law, that would give every state and the borrowers 

18 within those states and the lenders within those 

19 states a great deal of certainty about what law 

20 is governing their behavior rather than having to 

21 wait and see over the course of years what the law 

22 is going to come out of this new federal standard.

23 So, you know, I also think it would go 
117

1 a substantial way if the Department were to make 

2 clear on the face of the rule that it has no intent 

3 to preempt state law standards where they would 

4 be applicable.

5 Sorry, in a context outside of borrower 

6 defense.

7 MS. WEISMAN: Other thoughts and 

8 comments on what John is proposing?

9 Chris Deluca and then Aaron?

10 MR. DELUCA: And, John, I appreciate 

11 those thoughts. But, one of the things that you 

12 mentioned was, you know, making it clear for 

13 students and schools but also lenders within the 

14 state.

15 And, it would seem to me kind of getting 

16 back to kind of how I've viewed this and thought 

17 about this issue.

18 And, the idea that, and I think others 

19 made it, too, but, the idea that the direct loan 

20 is a contract between the federal government and 

21 the student. And so, it's the federal government 

22 looking at their, you know, under what 

23 circumstances will they make a decision with 
118

1 respect to their loan of whether or not to provide 

2 the borrower with a discharge.

3 And so, from a lender standpoint, the 

4 only lender we're talking about is the federal 

5 government. And, it would seem to me that lenders, 

6 if there are student -- there are folks who are 

7 lending money to students within your state or any 

8 of the other states, is absolutely state law would 

9 apply to those actions within those states.

10 And, just to reiterate Aaron's point 

11 as well, is the idea that, you know, we're just 

12 looking at whether or not the borrower has a claim 

13 for discharge vis-a-vis the direct loan, that 

14 contract between the federal government and the 

15 student.

16 Without getting into the issue of 

17 absolutely the student would still have any other 

18 rights under state law for claims against the 

19 student, in which case, state laws would apply.

20 You know, again, you know, whether 

21 it's, you know, mediation or other, you know, just 

22 filing complaints with the school and resolving 

23 it, you know, without formal arbitration or with 
119

1 lawsuits, but again, that's sort of how, from my 

2 standpoint looking at it, how do we kind of 

3 bifurcate those two things?

4 Because, I really think they are two 

5 separate things and there's a way to reconcile the 

6 state law concerns with the idea that this is a 

7 contract between the federal government and the 

8 individual borrowers.

9 And, within that context, that an 

10 individual borrower in Texas should have the same 

11 expectation when they're dealing with the federal 

12 government as a borrower in Ohio or Missouri or 

13 California or wherever they happen to be.

14 MS. WEISMAN: John, did you want to 

15 respond?

16 MR. ELLIS: I would just add to that, 

17 though, that I recognize that we're talking about 

18 a situation where the actual contract is between 

19 the federal government and the borrower.

20 The only thing I would say there is that 

21 state law has to operate on the same principles 

22 it would any other time.

23 If the harm to the student has actually 
120

1 been resolved by a discharge of the loan, then we 

2 get into a whole different body of law than we would 

3 normally be in for resolving state law claims.

4 Also, as a practical matter, if the 

5 student has received a discharge of the loan, I 

6 very seriously doubt that many students are going 

7 to be interested in further pursuing any state law

8 relief.

9 I understand that attorneys general 

10 might retain their authority but attorneys general 

11 have limited resources and we also normally have 

12 to get a complaint from the citizen in order to 

13 be involved in litigation in the first place.

14 So, that's what I mean when I say, 

15 although this may not be a technical legal 

16 preemption, in many cases, it'll have the same 

17 practical effect of preempting state law.

18 MS. WEISMAN: Chris, did you want to 

19 respond?

20 MR. DELUCA: Yes, I just -- in response 

21 to that and just in thinking about that, if the 

22 student's going to get relief by going through this 

23 federal process and then that's going to make the 
121

1 process go away and then so state -- the state is 

2 involved in that.

3 I mean, how is that any different --

4 whatever -- if it's -- if the action is vis-a-vis 

5 the student and the federal government, then states 

6 aren't ever going to -- whatever standard the 

7 federal government applies, if that's where it 

8 ends, if that's just the only, you know, only 

9 resolution to the issue, that's going to be the 

10 only resolution to the issue whether or not they 

11 apply a federal standard or a state standard. Or, 

12 am I missing something?

13 MR. ELLIS: I think the main point here 

14 is that we think that state law is the appropriate 

15 mechanism for regulating the behavior of the 

16 lenders.

17 It's the design of this system, I mean, 

18 of the institutions. We happen to have set up a 

19 system where the government's making the loan.

20 But, the practical effect of that is 

21 that that, in this case, we're saying a third-party, 

22 the federal government is essentially going to 

23 engage in their -- in the regulation of the 
122

1 educational institution through this process and 

2 saying, in this case, we're going to let people 

3 have a discharge and we may go after them to recover 

4 the money.

5 That's displacing state law as the 

6 primary regulator of that relationship between the 

7 student and the institution.

8 PARTICIPANT: Any other thoughts?

9 Annmarie?

10 MS. WEISMAN: So, I will just share 

11 that when we first started talking about this at 

12 the Department, one of the concerns that we had 

13 related to a state standard which is the standard 

14 that's in use now and we would expect to be in place 

15 until when these regulations take effect.

16 So, again, the cutoff is loans first 

17 disbursed on or after July 1, 2019 would fall under 

18 the new.

19 And, I think from our perspective, the 

20 idea of the new was that we wouldn't have to 

21 interpret 50-plus state laws, so 50-plus the 

22 territories.

23 That's a lot of state law to interpret 
123

1 for the Department staff. And, include in that 

2 the difficulty that sometimes occurs with students 

3 who are residents of one state but attend school 

4 in another.

5 And then, perhaps the school that they 

6 attend, they're not attending the main location, 

7 they're attending an additional location which is 

8 yet in another state.

9 So, where is the contract then? Is it 

10 where the student's attending physically? Or is 

11 it the school's main location where the contract 

12 or the PPA is done? The program participation 

13 agreement is signed?

14 The other thing is, you have online 

15 students. And so, again, what state has the 

16 jurisdiction?

17 So, in looking at those issues, our 

18 discussion was, it's a federal program, there are 

19 differences among the states. Some states are very 

20 consumer friendly, other states are not.

21 The concept of two students sitting 

22 next to each other in a classroom where one was 

23 from one state and one was another or even in an 
124

1 online program and could be treated differently 

2 was troubling for some people.

3 And, the feeling is that that would be 

4 unfair to borrowers that, you know, one might go 

5 with a state that has a lot of resources and if 

6 that's the applicable state for them, that's great. 

7 But, what about the person who does not have a 

8 state with those resources or the state is not 

9 willing to take up their case?

10 So, the feeling was that, the 

11 Department had this in place and had a federal 

12 standard, there would be an avenue for students, 

13 for borrowers to come to us that we would try to 

14 do it in a way that would be done without the need 

15 to hire an attorney, that would be a clear process, 

16 that would be plain English in terms of the 

17 application, that they could understand, plain 

18 language.

19 So, I think we were looking at a way 

20 of making it better for the borrower as well as 

21 to relieve burden on the Department in terms of 

22 processing those claims to get to a faster 

23 resolution.
125

1 We had thoughts about why we thought 

2 it might be helpful. And, I certainly hear the 

3 concerns from the idea of having a state standard, 

4 but I did just want to put that out there in terms 

5 of that was where the origin of our discussion 

6 began.

7 PARTICIPANT: As you look through this 

8 document, John, is there a place to put the language 

9 that you were talking about that would say that 

10 the, I guess the Department does not intend to 

11 preempt the state law or is there any language that 

12 you can propose?

13 MR. ELLIS: I can certainly try to 

14 write something up. I think, and forgive me, I 

15 don't spend all of my time on federal regulations. 

16 So, in state law, we would normally add something 

17 like a rule of construction at the end of a 

18 regulation that says, here's what the legislature 

19 or the agency intends with regard to this language.

20 When construing this language, keep 

21 these principles in mind in effect.

22 I don't see why that wouldn't work in 

23 this case. And, with language like what I had 
126

1 mentioned, language saying the Department has no 

2 intention of preempting state law outside of this 

3 context.

4 And, a rule of construction saying 

5 where there are ambiguities, the Department will 

6 look to the applicable state law would go a long 

7 way to alleviate my concerns.

8 I would also say, I don't think that 

9 there would be the same kind of conflict if the 

10 federal government were to want to establish its 

11 own set of conflict of law rules here to try to 

12 standardize what law would apply to a given 

13 circumstance.

14 You know, each state develops their own 

15 conflict of law rules and that would make sense 

16 to me. But --

17 MS. WEISMAN: So, thoughts on that, on 

18 John's proposal, a rule of construction and then, 

19 is it additional language to address the ambiguity?

20 MR. ELLIS: Come again? I'm sorry?

21 MS. WEISMAN: Just could you clarify 

22 your proposals again? I have rule of construction 

23 and then, I'm sorry, I'm not a lawyer.
127

1 MR. ELLIS: Yes, it would be rules of 

2 construction to say, number one, it's not the intent 

3 of the Department to preempt state law in any other 

4 context other than the discharge of the debt to 

5 the government.

6 And, a second rule of construction to 

7 say, where there's an ambiguity in construing the 

8 rule, the Department agrees to consider whatever 

9 the applicable state law would be in determining 

10 what the federal standard means.

11 MS. WEISMAN: Okay, thank you.

12 Okay, Lodriguez and then Kelli?

13 MR. MURRAY: Not against what John is 

14 offering at all, I just want to know from the 

15 Department, are rules of construction something 

16 that are regular in this process to add such a thing?

17 Could someone add clarity?

18 His experience is with state law and 

19 I understand that and I'm glad to have his 

20 participation here today. But I want to know from 

21 the federal perspective, what would be something 

22 -- is there something similar to go along with what 

23 John is offering? And, how can we help get to a 
128

1 point of consensus?

2 PARTICIPANT: So, I think that some, 

3 if I'm understanding what John is asking for 

4 correctly, I think some of those items would be 

5 items that we would typically include in the 

6 preamble.

7 Other times, if there is a specific item 

8 that we definitely wanted to include, we could just 

9 add that to regulation.

10 I don't think we have a similar 

11 structure necessarily, that it's always included. 

12 But, that's not to say that we couldn't include 

13 some of this language.

14 Did you have a follow up, Lodriguez?

15 MR. MURRAY: Yes, thank you, from the 

16 Department because if we were dealing with 

17 legislation, John, then the thing we would probably 

18 do is try to get committee report language which 

19 would be the clarifier from the federal 

20 perspective.

21 But, dealing with regulation, I'm happy 

22 to work with you to make sure items that are 

23 agreeable for everyone, get in the preamble or 
129

1 anywhere else.

2 MS. WEISMAN: Okay, thank you.

3 Kelli and then Sheldon?

4 MS. PERRY: With regard to those two 

5 proposals, I understand the first one because, 

6 obviously, you wouldn't want to go against state 

7 law with something outside of this.

8 But, the second one where you're 

9 talking about ambiguity where it would revert back 

10 to state law, I'm confused on that. And so, can 

11 you explain a little bit more about what that means?

12 Because, in essence, by establishing 

13 this federal standard, we're trying to get rid of 

14 the ambiguity. Because, you want students in all 

15 50 states to be treated the same.

16 So, where -- what does that mean?

17 MR. ELLIS: I think, from my 

18 perspective, I would consider ambiguity and lack 

19 of uniformity are two different issues.

20 You know, language in the rule is going 

21 to have to be interpreted in a particular case. 

22 And, how the language in the rule, in the federal 

23 standard applies in that particular case, normally, 
130

1 an attorney would look to what legal standard there 

2 is construing that particular language or deciding 

3 how that language plays out in a given circumstance.

4 And, I understand the federal standard 

5 wanting to say we're always going to look at these 

6 stock set of considerations.

7 But, any person subject to these 

8 regulations at the end of the day is going to have 

9 to try to figure out, does the term when the 

10 Department used it in this regulation mean the same 

11 as it does when it's used in all these other 

12 different bodies of law?

13 And so, looking to those other bodies 

14 of law that people are already familiar with, state 

15 consumer protection law, et cetera, to determine 

16 what those standards mean.

17 And, the Department making it clear we 

18 would look to those standards in determining how 

19 to handle each individual case.

20 I do think it would reduce some of the 

21 Department's burden of trying to just nebulously 

22 figure out what is the law of this state that the 

23 borrower's coming from?
131

1 And say, how would the state -- that 

2 state's law interpret the language that we've put 

3 down here as the standard?

4 I mean, that's not, I think, my 

5 preferred approach, I think our preferred approach 

6 is that the current standard that we look to state 

7 law is adequate. But, I think we would be happy 

8 to entertain that idea that the Department is 

9 agreeing that we're going to try to make the federal 

10 standard look like the state law where ever it's 

11 possible or practicable.

12 MS. WEISMAN: Sheldon?

13 MR. REPP: Thank you.

14 A couple of just starting points here. 

15 First of all, I heard from the Department about 

16 their need to come up with a standard that they 

17 can administer, that's easy -- that there is an 

18 ease of administering.

19 And, I think that's -- I think the fact 

20 that we have this huge backlog of existing claims 

21 under the existing of claims under the exiting 

22 standard just points out the complexity of trying 

23 to bring in state law all the time.
132

1 I'll also point out what Aaron had to 

2 say, we all should realize that this isn't -- that 

3 there -- this standard here facilitates the filing 

4 of claims.

5 The idea here is to come up with an 

6 expedited process so you don't have to go to court, 

7 you don't have to get backlogged.

8 It seems to me, I think we have to 

9 recognize that the goal here is borrower friendly 

10 and that as we have a standard that facilitates 

11 the adjudication, the prompt adjudication, of 

12 claims.

13 To get to John's comment, it seems to 

14 me, we are creating a new standard here. There 

15 is a new standard being created.

16 And, it seems to me to make sense to 

17 say, the standard of proof being one of them, I've 

18 never heard of the standard of proof that's in the 

19 regs here.

20 But, to the extent that there is 

21 ambiguity with respect to the new standards that 

22 are being created, it makes sense to me that there 

23 be some recognition in the regulation that the 
133

1 Department can look to state law interpretations 

2 as a way to interpret the federal standard, that 

3 would make sense to me.

4 Finally, I am troubled by the comment 

5 that John suggested that we say, in this regulation 

6 on borrower defense, that the Department will agree 

7 not to, in other contexts outside of borrower 

8 defense, not to preempt state law.

9 I just think that's inappropriate for 

10 this -- in this regulation.

11 MS. WEISMAN: Thank you.

12 Any other comments on that?

13 Valerie?

14 MS. SHARP: So, would it be helpful in 

15 an effort to begin to move forward again for us 

16 to go back through and start in the sections and 

17 for the attorneys general to share in any sections 

18 they have concern or they feel the language is 

19 currently ambiguous and proposals for us to 

20 consider so that we can begin to walk through the 

21 sections again, see where the concerns lay, where 

22 they might want to add language as proposed or new 

23 suggestions that they have so that we can begin 
134

1 to see if we can work through the regulations in 

2 a way that becomes more one that they can support

3 MR. ELLIS: I'm happy to try to work 

4 with everyone in the room to work through the 

5 language.

6 I would just point out, though, that, 

7 in a lot of these situations, the ambiguities are 

8 only going to arise once you have a fact pattern 

9 to apply to the law.

10 In some cases, I definitely think 

11 there's language that's creating ambiguities on 

12 its face and I'm more than happy to try to help 

13 with that.

14 MS. WEISMAN: So, it's 11:45, and I 

15 think that we, if I remember correctly, we started 

16 to walk through and we kind of stopped on page 1 

17 or right before page 2, IV.

18 So, I guess what I'm suggesting to the 

19 group is we can start back and go through the 

20 sections again, given now that we've heard from 

21 John and other state's attorneys are going to add 

22 in language or propose things where they find --

23 where they feel language is necessary.
135

1 Or, it's -- now it's 11:47, is this a 

2 good time to take a break for lunch and then, sort 

3 of -- it would be a working lunch because you'd 

4 have to go through and find out those ambiguity 

5 pages and then start back again after lunch.

6 So, we could start now and work for 

7 about I guess 11 minutes or we could stop now and 

8 then come back.

9 I'm sensing break for lunch.

10 (OFF MICROPHONE COMMENTS)

11 MS. WEISMAN: Okay, Mike Busada?

12 MR. BUSADA: I was going to say, if 

13 we're looking at ambiguities, I mean, I think that's 

14 going to be an issue that we're going to deal with 

15 in many contexts throughout.

16 So, I mean, I don't think that we 

17 necessarily need to have an entire path just looking 

18 at ambiguities dealing with state and federal law. 

19 I think we ought to look at ambiguities in general 

20 which means we continue with the process that we're 

21 on from the beginning.

22 MS. WEISMAN: Okay.

23 MR. BANTLE: Yes, just judging the body 
136

1 language in the room, let's break for lunch. So, 

2 it's 11:50 right now. If everyone could try and 

3 be back by 12:50 so we can start promptly at 1:00, 

4 that'd be much appreciated.

5 (Whereupon, the above-entitled matter 

6 went off the record at 11:50 a.m.)

7 MR. BANTLE: Okay. Thank you, 

8 everyone, for coming back promptly. Just a, one 

9 item before we get started. We've had a request 

10 just because we are recording this and we do have 

11 the real time transcription, if everyone at the 

12 table and in the audience could mute their cell 

13 phones that would be much appreciated.

14 With that I would like to open the floor 

15 back up to the Working Group, to the negotiators. 

16 We, I think we had a productive conversation this 

17 morning and then particularly after our break this 

18 morning about some of the concerns that were raised.

19 And what we want to do is begin to go 

20 through this Issue Paper 1 again and see if there 

21 are proposals that might address some of those 

22 concerns. So I would open it up to the Working 

23 Group.
137

1 I know we had kind of informally tasked 

2 John with some homework. So, but I don't know if 

3 he's had time to look through that. But open it 

4 up to the Working Group for proposals on Issue Paper 

5 1 to address some of the concerns that have been 

6 raised.

7 Chris, you're coming forward so we'll 

8 start off with you.

9 MR. DELUCA: Thanks. So had some, 

10 talked a little bit about this but had a thought 

11 over lunch about kind of the approach that the group 

12 is taking and in the context of negotiations.

13 And it seems like, you know, we've 

14 started to go through okay, one, two, three, but 

15 we don't have agreement on three so now we're stuck. 

16 And from what, and, John, please I don't want to 

17 speak for you.

18 I'm just telling you what I thought I 

19 heard you say or how I interpreted what you said. 

20 But and what I heard you say is consistent with 

21 how I would approach mediation or negotiations and 

22 I think how many of us, most of us approach 

23 negotiation is that there is give and take and 
138

1 there's some certain areas where I don't like it.

2 But let's see what happens later and 

3 maybe I can get over my hurdle up front. So, you 

4 know, so in that context it seems like, you know, 

5 why would we stop at three or get hung up here to 

6 say you know what we've expressed our concerns. 

7 We've expressed the issues.

8 Thrown some alternatives out there. 

9 And take, okay, this is where we're at. So maybe, 

10 you know, if this is where we stop today, no, I'm 

11 not going to agree.

12 But let me see what I can get further 

13 on down because maybe if I'm happy in Issue Paper 

14 2, Section 4 then I can, then I'm willing to see, 

15 you know, at least give a sideways thumb to whatever 

16 is hanging me up, up front.

17 MR. BANTLE: And just a note as a 

18 facilitator I can completely agree with that. I 

19 think, I apologize for my confusion potentially 

20 on the thumbs and not reaffirming that after our 

21 first, you know, discussion the first set of 

22 sessions.

23 I think we do want to draw a line or 
139

1 make a distinction between this is my thumb down 

2 and it's something that I in no way will be able 

3 to agree with regardless of the changes and at this 

4 time I'm not comfortable with it.

5 I don't, you know, if I had to vote 

6 formally at the end I probably wouldn't vote for 

7 it but I'd like to hear the, you know, entirety 

8 of the conversation and as you said, Chris, see 

9 where things pan out.

10 And so I think it's worth having that 

11 discussion. And I place the burden on you as 

12 negotiators to make that distinction clear to the 

13 group because if it is something that in no way, 

14 shape or form will be acceptable I think, you know, 

15 it kind of is a halt moment and we have to evaluate 

16 and get through it.

17 If it's a I'm not comfortable with it 

18 but we can, you know, I will evaluate the proposal 

19 in its totality at the end and may be able to give 

20 it a thumbs sideways may still vote down and that's 

21 fine, I think that's a different distinction that 

22 needs to be made.

23 PARTICIPANT: And I think that's 
140

1 important to know that a sideways thumb is not I'm 

2 just going to abstain so I'm not on the record for 

3 approving this, but that this issue is done and 

4 we're moving on because there are other issues that 

5 we're going to get to and I'm sure everybody at 

6 this table probably has some issue that they don't 

7 like.

8 But depending on how the rest of it is, 

9 it's like, you know what I'll hold off on that and 

10 I'm not going to, you know, muck up the works on 

11 that one issue until I see what happens with 

12 everything else.

13 MR. BANTLE: And as we discussed 

14 earlier, you know, while we may be doing these 

15 periodic checks we will also do an issue paper based 

16 check and then a full consensus check at the end. 

17 So there will be multiple times for individuals 

18 to, you know, raise their concerns.

19 That being said, don't wait until the 

20 end to do it. Let's have the discussions, have 

21 the productive discussion. But I do agree, Chris, 

22 that we don't want to stop discussion if it is a -- I 

23 want to hear the rest of, you know, the way this 
141

1 pans out.

2 So with that in mind, does the Working 

3 Group still see it as advantageous to go through 

4 kind of starting with A(1) and continue through 

5 the document?

6 Okay. So that's Question 1. Question 

7 2, we had already sort of gotten through A(1) 

8 through (4). So let's, while we will go 

9 individually after that let's look at A(1) through 

10 (3).

11 Okay, and then we had Paragraph 4 after 

12 that. So let's look at A(1) through (3) in their 

13 entirety. Are there any other comments or proposed 

14 changes from the Working Group that would address 

15 some of the concerns?

16 Hearing none, let's move on to Number 

17 4. We have the edits that were previously 

18 suggested up on the screens for those of you that 

19 can see them.

20 We know that locations are not 

21 necessarily ideal for everyone in the room. But 

22 at least we do have the screens. Okay, are there 

23 any other proposed modifications to Paragraph 4?
142

1 And this would be your time to speak 

2 up if we didn't capture something that we had 

3 discussed that any of you see. So not hearing any 

4 other additions, can we do a show of thumbs on A(1) 

5 through (4) as they are proposed here. Okay.

6 MS. MILLER: So one thumb down. Two 

7 thumbs down.

8 MR. BANTLE: Okay. And those with 

9 their thumbs down. Aaron, you want to start us 

10 off with your concern.

11 MR. LACEY: Yes, this version includes 

12 the language but is not limited to which was the 

13 suggestion that this be turned into an illustrative 

14 list and not an exhaustive list. You know, I've 

15 articulated earlier I think it's important to put 

16 some box around this concept.

17 I think with the addition of the 

18 language at the end you're tying it to acts or 

19 omissions that are misrepresentations. And that 

20 list is illustrative.

21 So it should, it widens the box, I 

22 think, considerably to make sure that anything that 

23 would constitute a misrepresentation as conceived 
143

1 in the definition would be included. But by 

2 including that language, is not limited to, it 

3 essentially turns this entire thing into at best 

4 illustrative.

5 But it doesn't really put any box around 

6 the term. So I would be in favor of this language 

7 provided that but is not limited to were struck 

8 from it.

9 MR. BANTLE: And, Mike, I think you 

10 were the other thumbs down. Same rationale or 

11 different rationale?

12 PARTICIPANT: Yes, same rationale. 

13 And I go back to my original question. If 40 years 

14 from now when we're not here and you have a situation 

15 where somebody wants their loans discharged because 

16 major faculty members left the university and went 

17 to another university after they had been there 

18 two years, can we answer the question would that 

19 lead to borrower defense.

20 Under this interpretation you can 

21 easily argue that it would. And 40 years from now 

22 we won't be around to explain that. And so I think 

23 we absolutely need to have a box for the protection 
144

1 of all parties.

2 MR. BANTLE: Abby.

3 MS. SHAFROTH: I disagree that this 

4 would necessarily allow a borrower defense claim 

5 based on faculty, certain faculty members going 

6 to a different school. I don't follow that.

7 Certainly in light of the rest of the 

8 proposed rules that wouldn't satisfy the other 

9 standards the Department has proposed, I don't 

10 think, that are part of this. This is just one 

11 component.

12 I just wanted to speak again in support 

13 of the but is not limited to language. I would 

14 only support this provision if that language is 

15 included and I don't think that with that, this 

16 including, making this list illustrative means that 

17 there is no box.

18 It just makes clear that the Department 

19 has some discretion to continue to interpret what 

20 provision of educational services means and they're 

21 going to interpret it in light of the illustrative 

22 list. So it's not like there are no boundaries 

23 here.
145

1 MR. BANTLE: I see tags up.

2 PARTICIPANT: Just one comment. With 

3 all due respect, I don't think we can definitively 

4 say that would not qualify unless there is a 

5 judicial determination of that we can't 

6 definitively say that. None of us can. That's 

7 not fair.

8 MR. BANTLE: So just as the facilitator 

9 here I am hearing that it is unlikely we will reach 

10 consensus with the language included or not 

11 included. So what is our option forward?

12 PARTICIPANT: You know, I don't know 

13 that this would satisfy Abby. But I just want to 

14 point out, I mean first of all adding the 

15 misrepresentation clause at the end, you know, we 

16 tried to make sure, I mean I'm just a little 

17 flustered because I feel like we're trying to 

18 compromise here.

19 I mean we've tried to make sure that 

20 anything that could be a misrepresentation would 

21 clearly be included. You know, we've offered to 

22 add specific examples at the end. We've noted that 

23 anything that would be in connection with the 
146

1 enrollment process would not be confined by this 

2 box.

3 And I disagree with the notion that the 

4 Department would not still have a great deal of 

5 flexibility. The misrepresentation definition is 

6 illustrative which means if the Department found 

7 that some sort of representation, act or omission 

8 constituted a misrepresentation it would be inside 

9 of this box.

10 So I just feel like this is pretty broad 

11 and flexible. It still gives the Department a lot 

12 of flexibility. But what it says is that the 

13 provision of educational services as a concept does 

14 have boundaries.

15 It is not anything that an institution 

16 would do. So, you know, at least for the benefit 

17 of other negotiators this is a pretty good 

18 compromise position and creates a lot of 

19 flexibility for the Department.

20 It ensures that any misrepresentation 

21 or anything the Department would deem a 

22 misrepresentation would be covered, that a borrower 

23 could bring it. I mean I'm not exactly sure, 
147

1 frankly, what we're excluding because if it's not 

2 a misrepresentation then it's not a basis for a 

3 borrower defense claim in the first place.

4 So, you know, I would hope that we could 

5 move forward. I just don't think you're losing 

6 a lot if you say is, if you strike the is not limited 

7 language.

8 But it does suggest at least for 

9 institutions that there's a recognition on the part 

10 of the Department that there is some limit to what 

11 constitutes the provision of educational services 

12 and it is not anything that might be carried out 

13 by an institution.

14 PARTICIPANT: Abby.

15 MS. SHAFROTH: Without going back and 

16 forth too much on whether there is enough boundaries 

17 or not, the reason that the last line or any other 

18 act or omission defined in B(4)(I) isn't sufficient 

19 to satisfy my concern is because borrower defenses 

20 are allowed under this rule primarily on the basis 

21 of misrepresentations.

22 But the rule also allows borrowers to 

23 have borrower defenses based on final judgments 
148

1 and these other provisions, you know, arbitral 

2 judgments, judgments in court. And that, my 

3 understanding was the intent there was that was 

4 supposed to allow borrowers to assert a defense 

5 based on, sometimes on something other than a 

6 misrepresentation.

7 So if the borrower has a final judgment 

8 that the school violated their rights in some other 

9 way, even if not through a misrepresentation then 

10 it's not, it's not much of an opening because 

11 borrowers don't obtain final judgments very often.

12 But that is supposed to allow for 

13 borrowers to get relief in situations other than 

14 misrepresentations. And so just having the catch 

15 all for misrepresentations doesn't fully address 

16 my concern.

17 MR. BANTLE: So, Abby, is there a way 

18 that example that you've given could be 

19 incorporated into the list and would that address 

20 your concern?

21 MS. SHAFROTH: I'm not sure a way to 

22 incorporate it into the list other than, I mean, 

23 I thought that we had maybe a good compromise by 
149

1 making the list illustrative and keeping these 

2 examples.

3 It sounds like Aaron doesn't think that 

4 would be a compromise from his institution's 

5 perspective. But, no, I'm sorry I don't have 

6 another suggestion.

7 MR. BANTLE: And just a facilitator 

8 note, I will ask these folks questions throughout 

9 the day. I know I'm putting her on the spot, so. 

10 PARTICIPANT: Can I ask a question for 

11 the folks that are not, don't think this is good 

12 enough? Would this be preferable to having nothing 

13 there at all?

14 MR. BANTLE: And just to clarify, by 

15 having nothing there at all are you, it's the 

16 striking of 4, correct?

17 PARTICIPANT: Right, I just want to 

18 figure out the degrees here of support or oppose. 

19 So would this be preferable as written to just 

20 striking all of our 4?

21 PARTICIPANT: Speaking only for 

22 myself, but, no, I think that striking the whole 

23 thing is not helpful. So I would put that at the 
150

1 bottom of the list.

2 And then I would put something like this 

3 and, you know, next in order but I've obviously 

4 expressed my dissatisfaction with the idea of it 

5 being illustrative.

6 MR. BUSADA: I think that they both 

7 result in the same outcome. I think there's other 

8 options there and I think we should look at the 

9 other options.

10 PARTICIPANT: Do you have an option, 

11 Mike Busada?

12 MR. BUSADA: Absolutely. All the 

13 language that we've all agreed to without that one 

14 line. First, let's just all agree to that then 

15 we can debate on that one line. We all agree on 

16 everything else, right?

17 MS. MILLER: Michale, Mike McComis.

18 MR. MCCOMIS: Well I don't know if this 

19 constricts the illustrativeness of but is not 

20 limited to. But would instances such as keep a 

21 box because in that way they have to be somewhat 

22 related to the list.

23 Instances such as, as opposed to not 
151

1 limited to which is far more wide open. And so 

2 I offer that as a compromise to the compromise.

3 MS. MILLER: Okay, Abby, then Will.

4 MS. SHAFROTH: I think I would be 

5 comfortable with that. I assure you I'm not trying 

6 to be difficult here.

7 My main fear is that it's hard to 

8 imagine everything and that if we define things 

9 too rigidly then a, you know, bad actor in the system 

10 can often find a way to get slightly outside of 

11 the, you know, prohibited conduct and still harm 

12 borrowers.

13 So just allowing a little play in the 

14 joints for the Department to, you know, reasonably 

15 make sure that conduct that we're not anticipating 

16 at this table right now is still incorporated.

17 And I think Michale's suggestion is 

18 sufficient to address my concerns and would still 

19 make clear that there is a limited scope to this.

20 PARTICIPANT: Will.

21 MR. HUBBARD: I also would be 

22 supportive of the such as language that Michale 

23 is proposing. A question for Aaron and Mike just 
152

1 so I can understand a little better.

2 Can you, I mean you've made the 

3 distinction that the reference to B(4)(I) is the 

4 illustrative list that kind of covers all the 

5 categories. Help me understand the distinction 

6 between including that and having the limiting 

7 factor?

8 I'm just not, like you're kind of 

9 pointing to the fact that, hey, this illustrative 

10 list is included already but making the point that 

11 you don't want to be the, I'm just trying to make 

12 that distinction.

13 MR. LACEY: It's a great question. So 

14 the, by adding the one at the end other things, 

15 you know, you have a non-exhaustive, you have this 

16 idea that you could have a range of different things 

17 that would be included but they would all have to 

18 be a misrepresentation, right.

19 So here you could have some sort of 

20 conduct, an act or omission that would qualify as 

21 a provision of educational services, but would not 

22 constitute a misrepresentation, not be involved 

23 in the enrollment process or not otherwise be 
153

1 included in any of these categories.

2 So that's, you know, and so what we're 

3 trying to do, and I appreciate folks may disagree 

4 with this, but, you know, what I'm trying to say 

5 is look if it doesn't associate with enrollment, 

6 if it's not a misrepresentation, if it doesn't fall 

7 in any of these articulated categories then it's 

8 outside of the box.

9 And I think it's important, you know, 

10 and I know I sound like a broken record, but when 

11 you're talking about allocating risk and sort of 

12 developing a framework it's important to try to 

13 acknowledge that there are certain things that are 

14 outside of this concept because I, I mean I 

15 struggled with this the first time I saw this 

16 language well before 2016, you know.

17 This phrase provision of educational 

18 services from, and Abby, I understand your point 

19 of, you know, what if there is a bad actor or 

20 misrepresentation that's not captured here. I get 

21 that.

22 And there is some risk there. You 

23 know, on the flip side there's also risk that there 
154

1 could be activities that are deemed provision of 

2 educational services that really, at least in my 

3 mind, would not be that are totally unrelated 

4 operational aspects of an institution.

5 And so what, which by the way if a school 

6 screwed up on one of those I'm not suggesting that 

7 they shouldn't be able to go to the school and talk 

8 to them, the student shouldn't be able to talk to 

9 them about getting some sort of recompense or 

10 whatever.

11 But for purposes of borrower defense, 

12 you know, there's this idea that it has to relate 

13 to the provision of educational services and I think 

14 it's important to give that phrase some meaning 

15 because if we don't put any, if you just have it 

16 open-ended and the instances such as is better.

17 But it still leaves it pretty open. 

18 You know, my fear is this just opens it up for folks 

19 to bring claims that, potentially frivolous claims 

20 that really don't even relate to the provision of 

21 educational services and get far afield from the 

22 kinds of things that I think we're really concerned 

23 with here.
155

1 Look, I readily accept that there is 

2 risk for both sides that a concept like this could 

3 be misapplied. And what I'm trying to come up with 

4 is some way of allocating a little of that risk 

5 to either side.

6 And I feel like right now with what 

7 we've got, I mean, it's a pretty broad net and my 

8 feeling is, obviously we disagree, but my feeling 

9 is this captures most of the conduct and gives the 

10 Department flexibility that if a student has been 

11 wronged, they have the ability to act while also 

12 giving institutions some ability to say there are 

13 limits to this notion.

14 And, you know, we just I think we just 

15 disagree on where that box should be drawn and how 

16 much of that risk should be put on one side of the 

17 other. That was a long-winded answer. I 

18 apologize.

19 MR. BANTLE: So in the context, 

20 understanding, you know, we are only looking at 

21 one paragraph here and we have things yet to reach 

22 consensus on, is the Negotiating Committee more 

23 comfortable with instances such as than not limited 
156

1 to? Is that something that we can work towards 

2 consensus on?

3 PARTICIPANT: Speaking only for myself 

4 I'm not agreeing to it but I'm certainly more 

5 comfortable with it and I would like to think about 

6 it.

7 MR. BUSADA: The easiest way for me to 

8 answer is, and I agree with what Aaron said but 

9 let me just give you a real world example that just 

10 kind of, there's things that we have to deal with 

11 as small schools.

12 A school in Arkansas has a pharmacy 

13 technician program. They have, I think they, I 

14 forgot what they told me but I think they have four 

15 or five different pharmacy partners that came to 

16 their campus on a regular basis to recruit students 

17 to meet with students.

18 One of the pharmacies was one of the 

19 big ones that everybody has heard of and it's kind 

20 of the one everybody wants to go work for. Well 

21 they decided to pull out of this agreement with 

22 this small school.

23 And there were a lot of students, I 
157

1 think they told me between ten or 12 that 

2 immediately filed complaints and said well, you 

3 know, if I can't go to work at this pharmacy, they're 

4 not part of your program then that defeats the whole 

5 purpose of me going.

6 I don't want to be a pharmacist in a 

7 small pharmacy and I did it because you told me 

8 these were your employers. Now I know that doesn't 

9 sound like a big deal if you were a large 

10 institution.

11 I know that's not going to, I mean you 

12 can come, you can get the lawyers to say this or 

13 that. But for small schools we don't have lawyers. 

14 We don't have legal teams.

15 We don't have all these researchers and 

16 technicians. We need to know what is acceptable 

17 and what's not acceptable.

18 And if you have 14 students at a school 

19 of 150 that file complaints all at one time the 

20 cost to defend yourself in that could easily put 

21 you out of business and put all those other students 

22 that are in the school trying to do the right thing 

23 at stake.
158

1 And it happens all the time. And I'll 

2 be happy to provide more examples to anybody on 

3 the side that would like to see them. But these 

4 are the real world things that happen in small 

5 schools.

6 PARTICIPANT: Walter and then Abby.

7 MR. OCHINKO: I just wanted to comment 

8 that I think that Mike's example actually falls 

9 under outcomes of graduates. So I'm not sure that 

10 it would be included anyway.

11 MR. BUSADA: Well, no, because they 

12 would still be able to go work for a pharmacy. 

13 This is they wanted to choose a particular pharmacy.

14 MR. OCHINKO: I'm not sure that it 

15 would fall outside.

16 MR. BUSADA: I know. But you and I 

17 disagree. What would a judge say? We don't know. 

18 Let's make it clear.

19 MR. OCHINKO: These all have 

20 arbitration clauses that they can't go to judges.

21 PARTICIPANT: Abby.

22 MS. SHAFROTH: I don't want to belabor 

23 it. But I would agree with Walter that under this 
159

1 language it's possible that the student could still 

2 bring that claim.

3 It's possible that they couldn't. And 

4 I don't think that whether we have such as in there 

5 makes a difference one way or the other if the 

6 borrower could bring the claim. In terms of like 

7 this happens all the time, your commentary there, 

8 we haven't, those claims have not been approved.

9 There haven't been any claims approved 

10 from schools outside of Corinthian, ACI and ITT. 

11 So I, again, just want to caution that we not make 

12 rules here based on fears that students could be 

13 abusing the process when we have history showing 

14 that students haven't been abusing the process and 

15 that students haven't been getting relief in these 

16 sorts of circumstances under the current rules 

17 which include the broader provision of educational 

18 services language.

19 So that hasn't been an issue and I don't 

20 see reason that we should anticipate that would 

21 be an issue.

22 MS. MILLER: Joseline and then Aaron.

23 MS. GARCIA: Yes. I just wanted to 
160

1 echo what Abby was saying. Mike, I respect the 

2 position that you're coming from. However, this 

3 is the Department of Education and its entire 

4 mission is to look out for students.

5 And I would rather ensure that students 

6 are protected and that small risk that one person 

7 may have to go through, you know, I would rather 

8 ensure that they are protected and have the ability 

9 to pursue their dreams and education because that's 

10 what students are doing.

11 They're not coming in here to scam the 

12 system. They're coming here just to pursue their 

13 dreams. And also if, you know, the situation that 

14 you're talking about does happen it doesn't mean 

15 that their claim is going to get accepted.

16 The Department still has to go through 

17 all this paperwork and all this process to see 

18 whether the claim is valid or not.

19 MS. MILLER: Aaron.

20 MR. LACEY: I don't want to belabor 

21 this point. So I'm not going to make it again I 

22 assure you for the rest of the negotiations.

23 But I don't think it's fair to suggest 
161

1 that we can anticipate how claims activity will 

2 proceed under the rules we're negotiating now based 

3 on anything that's happened before. I mean for 

4 20 years there were five claims under the provision 

5 that was in the basis then suddenly there were 

6 90,000 claims and now we're talking about a 

7 completely different standard.

8 I mean I strongly encourage everyone 

9 at the table to just acknowledge that in all 

10 populations, whether it be among institutions or 

11 among students, there are good actors and there 

12 are bad actors. It is my great hope that the bad 

13 actors represent a very small percentage.

14 But I'm quite confident that if you were 

15 to contact United Educators or some other 

16 organization that insures institutions of higher 

17 education they could provide you data that shows 

18 that institutions are sued and pursued and have 

19 claims filed against them on a very regular basis 

20 by students.

21 I'm not talking strictly about 

22 for-profits. I'm talking about the 3,300 

23 institutions that participate in Title 4 in the 
162

1 United States.

2 And it is not fair to suggest one, that 

3 there are not students among that population that 

4 hold loans or graduates right now, the millions 

5 of people out there who hold loans, that there 

6 aren't people who would bring frivolous claims.

7 And it is not fair to suggest that as 

8 a general matter that there aren't going to be 

9 people among any population, including 

10 institutions, there aren't going to be a percentage 

11 that are going to be bad actors. No one here has 

12 argued or asserted that there aren't institutions 

13 out there that at time misbehave or don't have 

14 employees who do stupid things.

15 I will readily accept that. But I 

16 reject the notion that in the future one, we can 

17 predict what the activity is going to be under the 

18 standards we're negotiations or two, that there 

19 would not be some percentage of the population, 

20 student and graduate population that for whatever 

21 reason, valid or invalid, would seek to discharge 

22 their loans.

23 And some percentage of that, that for 
163

1 invalid reasons or frivolous reasons would be 

2 looking to discharge their loans. And I think we 

3 have an obligation as we're negotiating this rule 

4 to assume that both will be true.

5 There will be borrowers with valid 

6 claims. There will be borrowers who do not have 

7 valid claims. There will be good actors who are 

8 trying to defend themselves on the institutional 

9 side and there will be bad actors who are trying 

10 to game the system.

11 And so what we need to do with all of 

12 those eventualities in mind is to try to come up 

13 with a rule that fairly allocates risk so that in 

14 every one of those scenarios we can do the best 

15 we can to make sure that borrowers can bring their 

16 claims when they're valid, institutions can defend 

17 themselves against frivolous claims and vice versa.

18 But I think it's disingenuous and I 

19 don't think it's fair, let me just put it that way 

20 to keep suggesting that institutions don't have 

21 any potential risk here because that's just not 

22 true.

23 PARTICIPANT: It just feels like your 
164

1 rationale cuts against your reasoning for not 

2 wanting to include things like instances not 

3 limited to.

4 If you're saying we can't predict the 

5 future, we don't know what kind of actions will 

6 occur then why would a limited list enable us to 

7 protect students in the future if we have no idea 

8 some of the actions that might occur in the future 

9 that may not even be contemplated under an 

10 exhaustive list. So how do we prepare for that 

11 scenario which is what we're trying to do?

12 MR. LACEY: That's a great question. 

13 So that's the risk allocation concept, right. 

14 You accept that there are unknowns on both sides 

15 of the equation.

16 You accept, and I mentioned this 

17 earlier, there is some risk that there will be 

18 students who will have some sort of act or omission 

19 against them that might not be included. There is 

20 also some risk that there are students who would 

21 try to bring claims under this framework that really 

22 don't fall within the provision of educational 

23 services.
165

1 And so what your, you understand that 

2 there's risk on both sides. And what you're trying 

3 to do is come up with a standard that places a little 

4 bit of that risk on both sides so that hopefully 

5 most scenarios will be appropriately handled, 

6 right.

7 And my view is particularly with the 

8 such as language, it's very hard for me to 

9 contemplate this standard, as written, precluding 

10 any student from bringing any claim. I mean if 

11 it's any, if it's a misrepresentation, if it's such 

12 as meaning similar to any of these items listed.

13 I mean this language makes this a 

14 non-exhaustive list. The only box this really puts 

15 around it is you can't bring a claim or you can't 

16 claim something is a provision of educational 

17 services if it is totally unrelated or could not 

18 be deemed such as or related to anything else on 

19 this list or a misrepresentation.

20 You know, and the point was made 

21 earlier, you know, that still and that gives a very 

22 broad range of opportunity to folks who may have 

23 brought claims under state consumer protection 
166

1 laws. So, you know, I'm not sure how I feel about 

2 this yet.

3 But, boy, I mean as written this 

4 essentially puts what risk there is almost entirely 

5 on the institutional side. I just, it's very hard 

6 for me to conceive of a situation where a borrower 

7 would not have a shot at bringing a claim for almost 

8 any circumstance under this.

9 Now I appreciate there are other 

10 elements. Don't get me wrong. But I mean this 

11 component of this framework would preclude any 

12 claim in and of itself.

13 MR. BANTLE: Joseline and then Abby.

14 MS. GARCIA: Just a quick comment. 

15 Aaron, would you be able to provide me with stories 

16 or the students who are the bad actors and have 

17 tried to, you know, navigate the system in a way 

18 to get relief in a way where the institution didn't 

19 deserve to be put into that position because 

20 throughout this entire process I've been hearing 

21 students be really malcharacterized.

22 And I keep hearing assumptions being 

23 made of that. But I want to see facts or stories 
167

1 because I can give you facts of institutions who 

2 have been those bad actors.

3 But I have yet to see students being 

4 those. And it's perhaps maybe I need to do more 

5 research. But if you have that on you I would be 

6 very much interested in seeing it.

7 MR. LACEY: So as an initial matter I'm 

8 not and would not do that because I don't want to 

9 start highlighting individual people in the context 

10 of this proceeding and pointing to individuals as 

11 bad actors. I think that would be, at least from 

12 my view inappropriate.

13 But the other thing is, let me give you 

14 an example. I mean when you negotiate a contract 

15 if you're an attorney between two parties. Let's 

16 say two people want to go into business.

17 They want to start a restaurant 

18 together, right. And they're great and they're 

19 friends and they're excited. And you say, okay, 

20 now we need an exit strategy.

21 We have to understand what's going to 

22 happen if you guys have a falling out, if things 

23 don't go well, right. And it's not uncommon for 
168

1 an attorney to have two people say well that will 

2 never happen, right.

3 But any attorney worth their salt is 

4 going to say I appreciate that you guys are getting 

5 along great right now and you don't think that's 

6 ever going to happen. But the fact is it's an 

7 eventuality and we want to plan for that so that 

8 if it does happen that we have figured out how we're 

9 going to manage it.

10 I mean, you know, I am quite confident 

11 institutions I've hired would not have insurance, 

12 I mean I'm quite confident that there are instances 

13 of students across the United States on an almost 

14 daily basis deciding to file claims against or file 

15 suits against institutions of higher education.

16 I will note that they may not be the 

17 students that you all represent. Let me make that 

18 very clear. I mean I've made this point before.

19 This rule is not only available to 

20 minorities or underserved populations. This rule 

21 is available to everyone who holds part of the 

22 trillion dollar plus student loan debt that's out 

23 there right now.
169

1 This rule is available to me. I owe 

2 the Department of Education $40,000 plus which I 

3 would be happy for them to absolve in exchange for 

4 my participating in this process.

5 FYI, thumbs up. But the fact of the 

6 matter is, you know, my concern is that there will 

7 be, I just think it's undisputable that in a 

8 population of millions of people that there are 

9 people who potentially would decide to file a claim 

10 to discharge their loans and who did not have a 

11 meritorious claim.

12 And again, those may not be minorities 

13 or under represented individuals. I'm concerned 

14 with 3,300 institutions of higher education and 

15 every borrower out there who could take advantage 

16 of this standard.

17 And I think just like it would be 

18 irresponsible of me as an attorney with two joint 

19 individuals opening a restaurant in a joint venture 

20 to say you don't need an exit strategy it would 

21 be totally irresponsible for me not to acknowledge 

22 that eventuality and to try to make sure that we're 

23 coming up with a rule that to some extent tries 
170

1 to allocate risk.

2 I just think that is a fair approach. 

3 We may come up with different ideas of where those 

4 lines should be. But in my mind there's no question 

5 that there's risk for institutions just as there 

6 is risk for students and that we need to try to 

7 come up with a fair way to allocate that risk.

8 MS. GARCIA: Can I respond really 

9 quick? Aaron, I understand the perspective you're 

10 coming from.

11 But because we're trying to also make 

12 this process difficult for those students who are 

13 bad actors to gain relief, students who are the 

14 good actors are still getting impacted by this.

15 And those come in the thousands. I 

16 mean I can read you a bunch of stories where students 

17 lives have been destroyed because of this. And 

18 as some of my colleagues mentioned earlier, the 

19 current rule as it stands is extremely difficult.

20 So please understand the perspective 

21 that I'm coming from for the students, the good 

22 and the bad, that I'm representing.

23 MR. BANTLE: Just to jump in here as 
171

1 the facilitator and Rozmyn does have the cards noted 

2 so we will get there. I understand the passionate 

3 arguments that are being made from both sides as 

4 to the perspectives.

5 But as a group we keep drifting back 

6 to reinforcing our perspectives. Whereas, I 

7 think, you know, Michale had offered the solution 

8 of instances such as.

9 If we could redirect our attention, you 

10 know, if you have an inkling of an idea that what 

11 might get us there as a group, what might be 

12 acceptable to the group throw it out. We can work 

13 it.

14 It doesn't have to be perfect. If it 

15 doesn't work that's fine. We'll move on to another 

16 idea.

17 PARTICIPANT: Were there any thumbs 

18 down to instances such as? I know that --

19 MR. BANTLE: We haven't voted on 

20 instances such as at the moment and we can certainly 

21 do that. Okay, let's see a show of thumbs on the 

22 language, we've lost Kelli and she does not have 

23 an alternate.
172

1 So we will wait until Kelli comes back. 

2 So while we're waiting it looks like Linda has 

3 a comment and then Caroline and then we have all 

4 the tags.

5 MS. RAWLES: I just want a 

6 clarification. Just so I understand, if they do 

7 thumbs sideways that means you're not decided 

8 right?

9 It doesn't mean you're opposed but it 

10 doesn't mean you might not be opposed. You're not 

11 in support or opposed, it's neutral.

12 You're undecided. Is that what a 

13 sideways thumb means because I don't think everyone 

14 in the break --

15 PARTICIPANT: No, no.

16 MS. RAWLES: -- has the same idea of 

17 what it means.

18 PARTICIPANT: That's not what it 

19 means, Linda, thank you for the question. A 

20 sideways thumb means that you will agree to support 

21 it if that is the conclusion that the group comes 

22 to.

23 So it's not your first choice, might 
173

1 not even be your second or third. But you can live 

2 with it and agree to support it if that is what

3 the group decides is the best for them at this time 

4 meaning the best you're going to get that you can 

5 support going forward.

6 MS. MILLER: You yield to the knowledge 

7 of the group is another way that we term that.

8 MR. BANTLE: And you could have a 

9 situation, which I think we discussed earlier, 

10 where on a particular issue you if it came to a 

11 final vote it would be a thumbs down.

12 I think it's important that you make 

13 that clear to the group even if your thumb is 

14 sideways just so we know that's there. But you're 

15 waiting to evaluate say four in the context of the 

16 entire issue paper.

17 MS. MILLER: Okay, so a lot more tags 

18 popped up. I want to get to Caroline and then I'll 

19 get to questions, I think about this.

20 MS. HONG: I really only have one very 

21 small thing. Since these are mostly categories 

22 of claims maybe instead of instances such as it 

23 would be like areas such as.
174

1 MS. MILLER: So I don't see any outward 

2 objection to areas such as. Chris DeLuca, did you 

3 have a question for the facilitators about --

4 MR. DELUCA: Yeah, I had a question 

5 about the process because that's one of the things 

6 that I mentioned right after the break.

7 And I think from a process standpoint 

8 I've got concerns about saying, okay, I'm going 

9 to put my thumb sideways and move forward or Mike 

10 is going to put his thumb sideways and move forward 

11 because again, in the context of a negotiation I 

12 may be willing to accept something if I get 

13 something in return later on or there's a position 

14 that, you know, that I'm pushing for later on that 

15 I agree with, but that if I don't get anything later 

16 on then, you know, I'm going to go back and say, 

17 no, I don't agree with what we decided on 1(A).

18 So and I think we're doing ourselves 

19 a disservice as a group if we get hung up on 1(A) 

20 and we can't get past 1(A) and here we are at what, 

21 quarter to two on Monday and we're on Page 2. And 

22 we've got, I'm thinking four days is a long time 

23 when this thing started at 9 o'clock this morning.
175

1 Now I'm thinking four weeks isn't going 

2 to be enough time with what we've going on here. 

3 So I think again, I would just ask to reconsider 

4 what, this process because we've got a lot of people 

5 who have spent a lot of time and a lot money and, 

6 you know, to come here and to try to work through

7 something.

8 But I think if it's a negotiation then 

9 it should be, we should behave like it is a 

10 negotiation.

11 PARTICIPANT: Chris, just a clarifying 

12 question. You're saying that it's a concern with 

13 the process. Is it the process itself that you 

14 have an issue with or how we are using the process?

15 MR. DELUCA: Well I don't know what you 

16 mean by that. My concern is that with the process 

17 being that, you know, if I don't agree with a 

18 particular provision right now that in order to 

19 move on I've got to give a sideways thumb again 

20 I'm willing to say I'm ready to move on.

21 I still hold reservation back on this 

22 and I reserve the right to use this as a basis to 

23 say no go. But I want to see what else develops 
176

1 and depending on what else develops I may just let 

2 that go.

3 MS. MILLER: Okay, Abby.

4 MS. SHAFROTH: I agree with that point. 

5 And it seems maybe we're too constrained in having 

6 just like those definitions of thumbs up, sideways 

7 or down.

8 I realize this would make things more 

9 complicated. But maybe could we do something like 

10 sideways and down indicating like I don't like this 

11 but I'm willing to like keep moving on through 

12 discussion of the remainder?

13 PARTICIPANT: So here's the thing. 

14 And the group can decide to proceed how they would 

15 like. The reason that the definition of the 

16 sideways thumb is what it is, is to prevent 

17 surprises at the end that, you know, we went on 

18 under the pretense that something was okay when 

19 it really wasn't.

20 And then you find at the very end of

21 the process a thumbs down and you didn't understand 

22 that there was a red flag or even a yellow flag. 

23 So if you want to have a sideways thumb with, you 
177

1 know, a card up saying, listen, I'll be okay with 

2 this, you know, I have some reservations, I want 

3 to see how it goes and whatnot you can create some 

4 sort of norm like that.

5 But what we can't have is surprises in 

6 the end that we had no idea and no ability to prevent 

7 as we move forward.

8 MS. MILLER: Dan, then Chris DeLuca.

9 MR. MADZELAN: So I'm wondering where 

10 then are the, sort of in the thumbs world where 

11 are the provisions for trading off later on. If 

12 I say thumbs up now or and then we get to a point 

13 where something is really egregious and I don't 

14 like then, you know, then maybe I'll go back and 

15 say, you know, I don't like what I agreed to before 

16 but I'm willing to talk about this subsequent issue.

17 My thinking here is I think the 

18 protocols say all agreements are tentative until 

19 they are final. So I don't see how a thumbs up 

20 in the run of play can be a final vote. Okay, so 

21 a thumb sideways is not a final vote and a thumbs 

22 down is not a final vote.

23 PARTICIPANT: In the scenario that I 
178

1 think you're describing, you know, when you're 

2 talking about trading off and being down the road 

3 and not being able to live without something, then 

4 that's probably the time where a thumbs down is 

5 going to be very important.

6 And a reminder to the group that we had 

7 a sideways thumb earlier because we wanted to see 

8 what was going to happen at this point. So a thumbs 

9 down at that later time is a bit more important 

10 from our perspective.

11 But, no, no testing of thumbs is final 

12 until it's all final.

13 MS. MILLER: Chris.

14 MR. DELUCA: Well and that's where I 

15 think to, in order to move through the process I 

16 think the concept of a sideways thumb with a noted 

17 objection like with John and the issue of whether 

18 we're going to have a federal standard or not.

19 You know, we've been participating 

20 since then at least I've had the understanding of, 

21 okay, we don't have consensus on that issue and 

22 it's something we may go back on. But we've sort 

23 of preserved that issue.
179

1 It's a parking lot issue, if you will, 

2 depending on how everything else goes. I mean that 

3 makes sense and I understand the concern about not 

4 raising surprises and saying, you know, and I am 

5 certainly not here to sandbag on other issues to 

6 bring up at 4:30 on Thursday.

7 I mean that's not, you know, I don't 

8 think anybody has got that intent. But I think, 

9 but again the idea of whether it's an objection, 

10 whether it's a parking lot issue or whatever to 

11 say let's hold on to that and see how everything 

12 else plays out.

13 MS. MILLER: Okay. So I still have 

14 Will, Valerie and now Linda's tent is up. Linda, 

15 did you have a question about the process or did 

16 you have another suggestion?

17 MS. RAWLES: I have a question about 

18 what people are voting on before the vote whenever 

19 you want to put that in because I'm not sure.

20 MR. BANTLE: I think the vote was 

21 delayed until Kelli had come back. So I don't know 

22 if there was a vote.

23 MS. RAWLES: Right. But I don't care 
180

1 when you call on me but I need to say something 

2 before we vote just so I understand what we're all 

3 voting on whenever you want me to do that.

4 MR. BANTLE: Okay.

5 MS. MILLER: So how about now?

6 MR. BANTLE: Do you want to share it 

7 now?

8 MS. RAWLES: Okay.

9 MR. BANTLE: You're at the mic.

10 MS. RAWLES: All right. Maybe I'm on 

11 another page with everybody but I think I'm a fairly 

12 decent lawyer and I'm really confused. So I 

13 thought well let's not all vote on something and 

14 then not know what we voted on.

15 On Page 2, Number 4 the point of our 

16 contention here where does, I mean does that apply 

17 to all three categories? For instance, when you 

18 look at the summary of changes on Page 1 there's 

19 three ways a student can bring a borrower defense 

20 claim, right, a misrepresentation, a court judgment 

21 or a final arbitration.

22 Have we created a fourth category? Why 

23 not? How does this relate to those three 
181

1 categories? What am I missing?

2 MR. BANTLE: So, Abby, you had said, 

3 yes.

4 MS. RAWLES: Maybe that's an Annmarie 

5 question.

6 MS. MILLER: Let's go ahead and let 

7 Caroline answer.

8 MS. SHAFROTH: Well I hope Annmarie or 

9 Caroline will jump in and correct me if I'm getting 

10 anything wrong. But I think that this is defining 

11 the scope of the sorts of issues that the 

12 misrepresentation can be about or that the final 

13 judgment can be about or the arbitral judgment can 

14 be about.

15 So this is a limitation upon all three 

16 categories.

17 MS. RAWLES: So it only applies when 

18 the provision of educational services term is used 

19 elsewhere?

20 MS. SHAFROTH: Yes, I think so, yes. 

21 So each of those three categories that could be 

22 a basis, a misrepresentation or a court judgment 

23 or a final arbitral judgment it's only to the, you 
182

1 know, each of those bases has to be related to the 

2 making of a direct loan for enrollment or the 

3 provision of educational services for which the 

4 loan was made.

5 So this is just defining what that 

6 means. But you still have to have, you still have 

7 to meet one of those three.

8 MS. RAWLES: I agree with that, Abby. 

9 I just didn't want us to vote on it and go down 

10 the road and not everyone agree with that because 

11 we've been on it so long it's starting to sound 

12 like a fourth category.

13 And I didn't think that was the case. 

14 But, okay, thank you for the clarification.

15 MR. BANTLE: So there are tags up. Are 

16 they related to process or comments on the paragraph 

17 before we take a vote? Both.

18 Will, can I get your process comment 

19 first and then we'll save comments until the vote 

20 until after we solve the process question?

21 MR. HUBBARD: Yes, absolutely. I 

22 think we're kind of getting hung up on a lot of 

23 like on off straw man type arguments that don't 
183

1 really cut to the core of what the application of 

2 this is.

3 So my process comment is, you know, 

4 maybe it would just make more sense to move forward 

5 with more voting and just kind of knock some stuff 

6 out in that sense instead of like debating the one 

7 off scenarios. That's my process comment.

8 MR. BANTLE: So just to put it out to 

9 the group, it seemed as though there was some 

10 interest in having a fourth thumb category of a 

11 noted objection, right. Willing to move on, but 

12 a noted objection.

13 Is that something the group would like? 

14 Okay, what's the hand signal?

15 PARTICIPANT: Closed fist.

16 MR. BANTLE: Something that's easy 

17 here.

18 PARTICIPANT: Just a suggestion. I 

19 mean could we just, I mean, I don't know how we're 

20 going to do this without making it somehow more 

21 complicated.

22 But is there a way to do thumb checks 

23 on the substance of something and then if you see 
184

1 no's then we can do a second thumb check on process 

2 as to whether or not it's a, that way you register 

3 the, no, but you can do a sideways thumb to move 

4 on for process purposes only? I don't know. 

5 That's my best shot at a suggestion.

6 PARTICIPANT: On the thumbs down I 

7 think the concern is that, you know, when John gave 

8 a thumbs down to say I have a concern here the 

9 immediate perception was we're done. So you're 

10 saying that not necessarily.

11 So if a thumbs down is the warning flag 

12 then people, do we need another signal? Shouldn't 

13 someone be able to do the thumbs down, say why, 

14 but say, just like John did I have concerns here 

15 but I want to hear what happens.

16 And I think everybody is afraid to vote 

17 thumbs down because they're afraid to stop the 

18 process because we all do want to come to a 

19 consensus. Yet that is your red flag.

20 And so if it's okay to do that and be 

21 the red flag and say here's my concern but I'm 

22 willing to move on then can't we just use the thumbs 

23 down for that process instead of adding a new signal 
185

1 because we already have that one.

2 MR. BANTLE: I think that was the 

3 original intent. But if the Working Group feels 

4 that is not clear enough we can, and we will as 

5 facilitators, you know, scan the room and ask each 

6 thumbs down, you know, is this a permanent thumbs 

7 down or is this a wait and see thumbs down.

8 Is the group okay with that? Okay. 

9 So we will go with that. And if for some reason 

10 you have your thumbs down and we don't, you know, 

11 don't catch it please, you know, speak up 

12 particularly if it is a permanent thumbs down 

13 because that is something we need to stop and 

14 address.

15 Okay, with that we have tags up as well 

16 I think which was on the substance of Number 4. 

17 So who is first? I think Valerie was first and 

18 then Will.

19 MS. SHARP: I just had an idea. You 

20 said to just throw anything out there. I don't 

21 know if it would be helpful or acceptable and I 

22 don't know, Abby, if your concerns go beyond what 

23 we're talking about in the full regulatory context 
186

1 of what we're doing here.

2 But I know that we had proposed, I had 

3 suggested the idea and Aaron made it sound much 

4 better that we add the misrepresentation piece. 

5 But to encompass all the judgments and anything 

6 that is contained in the context of this regulation 

7 that would broaden this but yet keep a box, so to 

8 speak.

9 If we just didn't reference just the 

10 misrepresentation but we added some language at 

11 the end that would state other acts, omissions or 

12 judgments as outlined in this regulation which 

13 would be the entirety of the regulation.

14 It would capture all the pieces that 

15 we're going to get to later and discuss but would 

16 not open a door by leaving instances such as or 

17 something more broad that others are concerned 

18 about. Don't know if that would help be a 

19 compromise position between the two sides.

20 MS. MILLER: So, Valerie, is that 

21 taking out what's up there and adding?

22 MS. SHARP: Yes, where it says any 

23 other act or omission that is defined in Section 
187

1 B(4)(I) I believe it is and just saying any other 

2 act or omission that, act, omission or judgment 

3 that is, and we could add another word there if 

4 there was something beyond the judgments, as 

5 outlined in this regulation which would encompass 

6 the various issues we're getting ready to continue 

7 to discuss.

8 MR. BANTLE: And that would take out 

9 the such as correct?

10 MS. SHARP: Yes. It would be a 

11 position referring to all the other pieces here 

12 that might be left out that Abby was concerned about 

13 and addressing the concerns of broadening the 

14 whole.

15 And I don't know that either side would 

16 like it. But it was just a suggestion.

17 MR. BANTLE: We appreciate all 

18 suggestions. Abby, I would direct it towards you.

19 MS. SHAFROTH: Thanks, Valerie. So I 

20 think I would probably be fine with that. But I 

21 anticipate that Aaron and Mike would not be okay 

22 with that.

23 I think that. And I won't try to make 
188

1 their argument for them. But the way I'm 

2 understanding your proposal would be that we would 

3 be saying for the purposes of the section the 

4 borrower may assert a borrower defense claim 

5 regarding provision of educational services, sort 

6 of comma, comma, comma, including any 

7 misrepresentation or any judge, final judgment or 

8 arbitral judgment.

9 So I think that would almost sort of 

10 effectively remove Paragraph 4 which is what I 

11 originally proposed. So I would be okay with it. 

12 But and I think your question raises the point 

13 that it's really complicated figuring out how all 

14 the pieces of this regulation fit together.

15 And I think I did a poor job of trying 

16 to describe before that this paragraph here is just 

17 cabining what is a relevant final judgment or a 

18 relevant misrepresentation that are defined 

19 elsewhere.

20 So I don't know whether someone from 

21 the Department wants to explain a little bit more 

22 about what you're trying to do with this paragraph 

23 and how it relates to those three bases because 
189

1 this by itself does not create an independent basis.

2 All this does is cabin what types of 

3 misrepresentations or what types of final judgments 

4 would be a permissible basis to get relief on.

5 MS. MILLER: Okay, Will, you've had 

6 your tent up for a while. Did you have other 

7 suggestions for this?

8 MR. HUBBARD: It's really more a 

9 comment on kind of an overall concept that's related 

10 to this which is the whole debate has been set up 

11 such that we're trying to talk about different 

12 filters and allocation of risk which, and I 

13 certainly appreciate to Aaron and others.

14 I have to, you know, make the point 

15 though just asserting a claim or asserting a defense 

16 does not mean that claim is a guarantee. In fact, 

17 we've seen that's quite the opposite as of late.

18 So I think ultimately the concerns 

19 there are not equally allocated in terms of that. 

20 I made the point earlier.

21 But just to, you know, capture it they 

22 have to find out, the students would have to find 

23 out what the standard is, collect evidence while 
190

1 they are still applying to go to a school that they 

2 don't know is yet potentially deceiving them, 

3 retain those documents, access private emails.

4 And then if they don't do all of that 

5 and their claim is, their claim fails then they 

6 still have to potentially get the time and money 

7 to go to court. And by the way, that's all on their 

8 own and within three years.

9 I mean that is quite a process of 

10 filters that ultimately is there going to be 

11 potentially frivolous claims, obviously. That's 

12 all sides. There's going to be some frivolous 

13 claims somewhere at some point, forever.

14 But the one off case is not the reason 

15 we establish an entirely different direction for 

16 regulation. I mean, yes, there will be cases, 100 

17 percent appreciate that.

18 But if we're looking at the weight of 

19 cases, I mean there's in some instances thousands 

20 of claims against schools and maybe some claims 

21 against students. I don't know.

22 I don't think we're asking for 

23 personally identifiable information for these 
191

1 examples. But it's just if we're talking about 

2 the weighting of that I think that has to be 

3 understood.

4 And to the point of risk, I mean, yes, 

5 there is a risk for businesses. That's the cost 

6 of doing business. That's any business. That's 

7 not just schools.

8 That's literally any business that 

9 opens in America there is going to be risk that 

10 somebody will take a claim against you. So 

11 something worth thinking about.

12 MR. BANTLE: Mike, and then I want to 

13 pull it back to the temperature check.

14 MR. BUSADA: No, Will, and I think for 

15 the most part I agree with you that there's going 

16 to be claims on all sides. Just speaking from small 

17 institutions, just getting a frivolous claim filed 

18 against you can be financially disastrous for a 

19 small institution because that means that even if 

20 you have just two that means you still have to go 

21 out.

22 You've got to hire a private lawyer. 

23 You've got to take your very limited staff away 
192

1 from what they're doing on a daily basis to get 

2 all the paperwork together. I mean, and then all 

3 the preparation for that on the front end.

4 I mean for a small institution just that 

5 complaint, whether it's frivolous or accurate, it 

6 costs a lot of money. And so I just to want make 

7 sure that we're not creating a system that's going 

8 to just avalanche because I mean we've talked about 

9 it.

10 You've said, you know, there are a lot 

11 of, you know our schools we're doing good work. 

12 We're doing good things.

13 But there gets to be a point that all 

14 the preparation trying to prevent these one offs 

15 plus having to defend against frivolous suits, at 

16 a certain point you just can't afford to do it when 

17 you're small.

18 And so that's my biggest concern just, 

19 you know, help us, you know, find a way to do right 

20 and not have to, you know, all of a sudden just 

21 be in fear of, you know, a frivolous claim that 

22 could put you out.

23 MR. BANTLE: Annmarie, you were moving 
193

1 towards your mic.

2 MS. WEISMAN: So it's hard because I 

3 don't have a mic. I don't have the ability to do 

4 the mic and see up there behind me. I wish I had 

5 eyes in the back of my head.

6 I don't think that last clause that was 

7 just added and changed at the end referring 

8 basically back to the regulation kind of anywhere 

9 within this regulation is going to get us to where 

10 we want to get.

11 My concern is that it doesn't really 

12 say anything for us. So if we want to make a 

13 reference then I think we should make a reference.

14 But I think just kind of saying as 

15 outlined in the regulation doesn't really convey 

16 what we were trying to convey here in Item 4. I 

17 do think that our intent here was to put some 

18 parameters and say these are the kinds of things 

19 we would expect to see in terms of what a borrower 

20 defense claim would look like, why would one file 

21 a claim.

22 Well because of things like this. I 

23 think that we made a number of, I heard a number 
194

1 of suggested changes. That is language that in 

2 order, you know, to have the Department sign off 

3 on that there are some others that would want to

4 see that language who are not here right now.

5 So it would be helpful to get a sense 

6 of where the group is if we could do a temperature 

7 check on that so we have language that we can take 

8 back and share. So it's not something that we can 

9 make an absolute decision on right now this minute.

10 But if we can get an idea of where you 

11 all are we can take that back and hopefully have 

12 some answers for later today or tomorrow morning.

13 MR. BANTLE: So in that vein it 

14 appeared, at least from the facilitator's table 

15 here, that the group was closest on the, I'll label 

16 it the such as language before our previous change.

17 Is the group okay, just body language 

18 taking a temperature check on the such as language? 

19 Okay. So let's see a show of thumbs on this 

20 language as proposed understanding outstanding 

21 concerns in our new rules or a clarification of 

22 the thumbs down rule and we will do A(1) through 

23 (4).
195

1 Okay, show of thumbs. Okay, and so, 

2 Linda, I see your thumb down. Is that a, could 

3 you explain the rationale of the thumbs down?

4 MS. RAWLES: Sorry. It makes it 

5 illustrative and I think it should be definitive.

6 MR. BANTLE: And just to follow up on 

7 our clarification of the down thumb, is this 

8 something that you do not see your constituency 

9 being able to agree to in any way, shape or form 

10 or is it something that in the context of how the 

11 rest of the issue paper turns out and the other 

12 issue papers, it could be something that might be 

13 agreed to?

14 MS. RAWLES: If this was the only thing 

15 standing between us and rule we liked we might trade 

16 it for something.

17 MR. BANTLE: Okay, so at this time I 

18 think just process-wise we've noted that. We 

19 firmly noted that. Let's take a look at B(1).

20 I know Annmarie had taken us through 

21 the rest of the issue paper. Could you do that 

22 again just because it's been a while?

23 MS. WEISMAN: So moving to Page 2, B, 
196

1 I would say about two-thirds of the way down the 

2 page, borrower defense. We have in Item 1, B(1) 

3 we have changed the clear and convincing evidence 

4 standard to what we called substantial weight of 

5 the evidence.

6 That is probably the biggest change in 

7 this section and that I think will generate the 

8 largest discussion. Substantial weight of the 

9 evidence is really talking more about the idea of 

10 weight then amount of evidence.

11 I know there was some question earlier 

12 about what that specifically meant. Again, I think 

13 this was our attempt --- we heard the last time 

14 that, throughout the last session in Session 2 we 

15 heard that there isn't really even a clear 

16 definition of preponderance of the evidence or what 

17 clear and convincing means, that it means different 

18 things to different people.

19 So this was our attempt at finding some 

20 middle ground and finding some compromise language. 

21 So just to reiterate that is substantial weight 

22 of the evidence that demonstrates that and then 

23 we go into (I).
197

1 Here cleaned up the language a little 

2 bit and again tried to streamline the institution 

3 at which the borrower enrolled. Made a 

4 misrepresentation of material, fact, opinion, 

5 intention, or law upon which the borrower 

6 reasonably relied under the circumstances in 

7 deciding to obtain the direct loan to enroll or 

8 continue enrollment in a program at that 

9 institution that resulted in financial harm to the 

10 borrower.

11 And then in (ii) the borrower has 

12 obtained from a state or federal court of competent 

13 jurisdiction a final definitive judgment rendered 

14 in a contested proceeding and was awarded monetary 

15 damages and so on.

16 Then in (iii) we also made a similar 

17 change to qualify the type of judgment we were 

18 looking at. So we were looking at a final, 

19 definitive judgment rendered in a contested 

20 proceeding.

21 We also added (iv) again further 

22 explaining the final definitive judgment including 

23 a proof of claim filed against and we listed out 
198

1 two different bankruptcy codes there, Chapter 11 

2 and Chapter 7.

3 And then in Item 2 we pick up with the 

4 idea again of the borrower having three years from 

5 the date that they discovered or should have 

6 discovered the misrepresentation.

7 MS. MILLER: Linda and then Michael.

8 MS. RAWLES: When I first read this I 

9 liked it and then I thought about it and I didn't 

10 like it. And then I realized I didn't know what 

11 it meant so I didn't know if it liked it or didn't 

12 like it.

13 So was this intended, two questions for 

14 the Department, was this intended to find a middle 

15 ground between preponderance and clear and 

16 convincing because some research I've done, some 

17 people think that's the case. Even lawyers in this 

18 room some think that it is a middle ground between 

19 clear and convincing and preponderance.

20 And other attorneys have researched and 

21 think it's a lower standard than preponderance. 

22 So I just wondered what the Department was trying 

23 to hit on the scale of evidentiary weight.
199

1 That's my first question. And two, do 

2 you have a working definition that you could offer?

3 MS. WEISMAN: We do not have a working 

4 definition. And this was, in my opinion, our 

5 attempt to come up with a middle ground between 

6 preponderance of the evidence and the clear and 

7 convincing standard that we discussed previously. 

8 This was seen as a compromise.

9 MS. MILLER: Michael.

10 PARTICIPANT: Are we taking comments 

11 from B(1)?

12 MR. BANTLE: Anything Annmarie just 

13 went through.

14 PARTICIPANT: Okay, all right. So I 

15 have some suggestions to maybe align the language 

16 a little bit more because on the preceding page 

17 under the introduction again we've already 

18 discussed kind of the, for enrollment at the 

19 institution or the provision of educational 

20 services.

21 And we use under the claims sections 

22 or what would rise to bring a claim, we only 

23 reference in (ii) and (iii) the provision of 
200

1 educational services.

2 So I'm suggesting to try to really align 

3 the three romanettes under B(1), and it would read 

4 something along the lines of under (I) the 

5 institution at which the borrower enrolled, a 

6 misrepresentation related to enrollment at the 

7 institution or the provision of educational 

8 services upon which the borrower reasonably relied.

9 And striking material fact, opinion, 

10 intention or law. And if those concepts are 

11 important then they should probably be under the 

12 definition of a misrepresentation not under what 

13 gives rise to a claim.

14 Does that makes sense so far? Okay, 

15 you don't have to answer that. I'm sorry.

16 MS. WEISMAN: I think if you could just 

17 go over it again. We have someone who is trying 

18 to update the language and didn't --

19 PARTICIPANT: I will, right, okay.

20 MS. WEISMAN: -- catch all of it.

21 PARTICIPANT: Sure, sure. So what I'm 

22 suggesting is under (I), it would read the 

23 institution at which the borrower enrolled made 
201

1 a misrepresentation related to enrollment at the 

2 institution or the provision of educational 

3 services upon which the reason, the borrower 

4 reasonably relied, and that would strike material 

5 fact, opinion, intention of law.

6 MS. MILLER: Okay, Michael, can you 

7 stop right there and then just make sure that what's 

8 typed up there is what is being said.

9 PARTICIPANT: Yes, I think so.

10 MR. BANTLE: Okay.

11 PARTICIPANT: And then under (ii) and 

12 (iii) again to align the concepts, the same edit 

13 would be made where it references relating to the 

14 loan or the provision of educational services. 

15 That's a different concept then enrollment at the 

16 institution.

17 So I would suggest again, under (ii) 

18 and (iii) it would just say relating to enrollment 

19 at the institution or the provision of educational 

20 services for which the loan was obtained. And make 

21 that same edit under (ii) and (iii).

22 Towards the end of each sentence 

23 under -- no, go down. Yes, see at the end of each 
202

1 sentence where it says or the provision of, where 

2 it says relating to the loan replace to the loan 

3 and replace that with relating to enrollment at 

4 the institution or the provision of -- and make 

5 that same edit in (iii).

6 And all I'm suggesting there is that 

7 we're trying to align from the introduction to 

8 Number 4 to the reasons that give rise to the claims 

9 that all of that language is aligned. And so that's 

10 all I'm trying to suggest here in doing that.

11 (Off microphone comment)

12 MR. BANTLE: It was just typing, okay. 

13 Any additional comments, Michael?

14 PARTICIPANT: No, I think that's 

15 sufficient for now.

16 MS. MILLER: Aaron.

17 MR. LACEY: Yes.

18 MS. MILLER: We want to take a look at 

19 this, you remembered, okay, Aaron remembered.

20 MR. LACEY: Okay, sorry. I was 

21 distracted by the other Aaron. Honestly, I heard 

22 my name and I thought am I supposed to be typing 

23 something, and it threw me.
203

1 I have two questions actually. One if 

2 for John and one is for the Department. So, John, 

3 you expressed earlier some concern over, you know, 

4 we had a lot of conversation and I know there are 

5 folks who feel strongly about trying to make this 

6 language very accessible and for that reason maybe 

7 not using a legal standard.

8 You had expressed reasons as to why you 

9 thought using a legal standard would be valuable. 

10 I will say I don't have a real strong opinion either 

11 way.

12 I understand both arguments, and I 

13 would be appreciative if the folks who have strong 

14 opinions could revisit those in light of the new 

15 language. The other question I have for the 

16 Department is, I mean when I read B(1) I can't read 

17 it apart from what is it, B(3).

18 And, you know, it was interesting the 

19 Department said we don't have a definition. But 

20 it is fair to say that your definition of 

21 substantial weight of the evidence is the 

22 borrower's statement plus corroborating evidence?

23 MS. WEISMAN: Yes, I think that's fair. 
204

1 I mean I think we don't have a definition beyond 

2 what's already written here.

3 MS. MILLER: John, did you want to 

4 respond?

5 PARTICIPANT: You know, from the 

6 standpoint of state law, and I don't know that this 

7 is a top line concern, but I do think here we have 

8 an untested evidentiary standard. I know we have 

9 a definition from here.

10 But in a given circumstance that 

11 definition is not going to provide a lot of 

12 certainty. State law varies as to what evidentiary 

13 standard applies in these consumer protection 

14 contexts.

15 So I think, from my standpoint, I don't 

16 have a strong opinion on what it should be. I just 

17 think it creates real problems and real ambiguities 

18 on the face of the law in a brand new federal 

19 standard to begin with to not rely on one of the 

20 established standards of proof that the law has 

21 for years.

22 I understand it's difficult to write 

23 out in a definition exactly what preponderance or 
205

1 clear and convincing evidence mean. But at the 

2 very least, there is a well understood hierarchy 

3 of where those things fall, that exist in law.

4 So I think the extent of our concern 

5 there is they are well established standards of 

6 evidence. I understand that there's disagreement 

7 about them. But trying to create another one out 

8 of whole cloth probably isn't going to provide any 

9 more certainty than the current standard.

10 MR. BANTLE: So understanding that 

11 concern and I think kind of building off of Aaron's 

12 question, this is to John but also to the whole 

13 group. Is that a concern, you mentioned that while 

14 the definitions of preponderance or the other 

15 standards may not be easily written out the 

16 hierarchy is understood.

17 Could that hierarchy be incorporated 

18 with I think Annmarie's comment that this was 

19 intended to be in the middle in the definition, 

20 and would that meet the concerns of the group? 

21 Linda.

22 MS. RAWLES: I don't know how to draft 

23 this yet. But that's what I was going to propose 
206

1 that if you have this definition, at least we need 

2 to somewhere explain that it is between 

3 preponderance and clear and convincing because to 

4 me if you had a borrower's statement and 

5 corroborating evidence you might have less than 

6 51 percent certainty which is less than 

7 preponderance.

8 So I could see this being less than 

9 preponderance. So we might have gone backwards 

10 instead of forwards. And I also don't understand 

11 the word "will" as opposed to "may" or I forget 

12 which one the Department uses on Page 3, Number 

13 3 because it seems that it's kind of constrictive.

14 But at the minimal, I'm not saying I 

15 would support it with that. But at the minimal 

16 I would think it would need to be clear that this 

17 was an attempt to hit the middle ground between 

18 preponderance and clear, so it isn't interpreted 

19 later as something less than preponderance.

20 MS. MILLER: Michael, Abby.

21 MS. SHAFROTH: I have concerns about 

22 this standard. I share John's concern that 

23 substantial weight of the evidence is not clearly 
207

1 defined in the law.

2 I went back and researched this after 

3 seeing the issue paper, and this is generally a 

4 standard that is used by courts reviewing a lower 

5 court's decision or a lower administrative judge's 

6 decision. So it's not clear how it would apply 

7 in this context.

8 So if there is a decision, neither the 

9 school or the borrower wants to appeal it, it's 

10 also not clear how a court reviewing this decision 

11 would judge it. It creates a lot of uncertainty 

12 I'm concerned about.

13 I also sort of as written and as defined 

14 by the Department have some concerns that by that 

15 substantial weight of the evidence suggests that 

16 if the weight of the evidence demonstrates that 

17 the school defrauded the borrower, that that's not 

18 enough.

19 I don't like it that we have this 

20 modifier that it has to be substantial, that simply 

21 the weight of the evidence if it's more likely than 

22 not, that's not enough. So I disagree with that 

23 and I don't think that's fair to borrowers.
208

1 The, then on Page 3, Number 3 here about 

2 when the Secretary will find substantial weight 

3 of the evidence, I'm concerned that there has to 

4 be some sort of corroborating evidence outside of 

5 the borrower's statement necessarily.

6 I can see in some circumstances why the 

7 Department might not find the statement itself 

8 sufficiently credible to award relief. But in 

9 other circumstances that borrower's testimony 

10 might be really credible.

11 It might be really compelling and the 

12 school might not present any evidence to the 

13 contrary. So I don't know why in that situation 

14 we wouldn't allow the Department to provide that 

15 borrower with relief.

16 And I think this is especially 

17 important because often times, you know, the 

18 borrowers that I've spoken to who feel that they 

19 have been taken advantage of by their schools, what 

20 they experienced was being told lies orally by 

21 recruiters.

22 So there isn't necessarily going to be 

23 any sort of written corroborating evidence that 
209

1 exists. And so a rule that would only allow the 

2 Department to give borrowers relief if there is 

3 this other outstanding evidence beyond the 

4 borrower's own testimony signed under penalty of 

5 perjury is going to be really problematic and would 

6 mean that all those borrowers would be unable to 

7 get relief.

8 MS. MILLER: Michael.

9 PARTICIPANT: So I think we're, I feel 

10 like we're kind of ping ponging here with what we 

11 tell the Department that our preferences are 

12 because at the last meeting we said hey, can we 

13 not use these kind of legal kind of, legalese kind 

14 of words.

15 And we all at least threw up some 

16 sideways thumbs. Maybe Linda didn't. But as she 

17 is sitting here next to me shaking her head. But, 

18 you know, that was the direction I thought that 

19 we were kind of moving forward.

20 And what Kelli had suggested was to just 

21 say evidence, which goes to some degree with what 

22 I think Abby is suggesting in that, you know, maybe 

23 to, you know, for Aaron's risk allocation model, 
210

1 that might not be acceptable.

2 But we seem to keep getting caught up 

3 in this. What does evidence or weight or clear 

4 and convincing or preponderance -- what is the guide 

5 and the tools that the Department will use?

6 And I would agree with what Kelli had 

7 suggested the last time, which is just if the 

8 evidence demonstrates it, then that might be 

9 sufficient. I don't know why there needs to be 

10 substantial weight given to it if there's enough 

11 evidence to demonstrate it.

12 It just seems like that would make it 

13 actually more clear in my mind because then you 

14 get away from these ideas about there's no legal 

15 standard.

16 And as, Annmarie, you said, plain 

17 language regulations was one of the goals here. 

18 And I thought that you made a very valiant effort 

19 to try to meet that goal. And I would support 

20 trying to continue doing that.

21 MS. MILLER: Linda and then Will.

22 MS. RAWLES: Yes, I was shaking my 

23 head. And it wasn't just me last time that thought 
211

1 that, you know, plain language is great. But there 

2 are reasons there are established legal standards.

3 And no matter how much we don't want 

4 lawyers involved at some point it will be lawyers 

5 interpreting this. And if you have something that 

6 we don't even understand together at this table, 

7 the lawyers at this table don't even know what this 

8 means.

9 So it will just lead to more trouble 

10 later on. And while I know we all want to reach 

11 consensus now we also have an obligation to present 

12 a rule that is understandable for everyone going 

13 forward.

14 And that's why some of us don't mind 

15 having a legal standard that people know what that 

16 means. And I think this is going to be very 

17 problematic.

18 MS. MILLER: Will and then Aaron.

19 MR. HUBBARD: Thank you. And I would 

20 like to also share my appreciation for the 

21 Department's valiant -- I think was the good and 

22 right word for it speaking of specific words.

23 Ultimately this standard does not live 
212

1 in a vacuum. There's the three romanettes below 

2 that provide some sort of clarity in terms of what 

3 that standard is.

4 I think if we went with just evidence, 

5 I mean if you just read it out just plain language, 

6 if the evidence demonstrates that and then it lists 

7 the three standards, I mean that I think is quite 

8 sufficient.

9 If it doesn't meet those then it's also 

10 pretty clear. I think it's pretty clear for 

11 everybody involved. I think it's pretty fair. 

12 Looking from the perspective of schools, you're 

13 not giving an overly burdensome standard.

14 Looking from the perspective of 

15 students, it gives them the opportunity to prove 

16 their case. I mean I think that's ultimately what 

17 we're all trying to get to.

18 MS. MILLER: Aaron and then Michael.

19 MR. LACEY: I think substantial weight 

20 of the evidence or substantial evidence is a pretty 

21 common evidentiary standard in administrative law. 

22 And I would ask the Department if it could provide 

23 feedback today or tomorrow as to whether or not 
213

1 substantial evidence is an evidentiary standard 

2 that the Office of Hearings and Appeals and the 

3 Department uses in other administrative 

4 proceedings.

5 I think that would be useful to know, 

6 particularly given that if there's a recovery 

7 action against institutions substantial evidence, 

8 I mean it's going to be an administrative law judge 

9 in the Office of Hearings and Appeals that's going 

10 to be determining that.

11 So using a standard that is common in 

12 administrative proceedings might make some sense. 

13 I do think we need some standard because you need 

14 to know what the quality of the evidence has to 

15 be.

16 Without a standard, a person could 

17 state that this happened and that would be evidence 

18 and that would satisfy the standard. And it 

19 wouldn't have to meet any sort of evidentiary 

20 standard.

21 You would just say I'm saying and that 

22 would be evidence, and so the law would be 

23 satisfied. You know, I think from my perspective, 
214

1 you know, representing my constituency, I mean, 

2 our view is we're not trying to make it difficult 

3 for borrowers.

4 But we think it's got to be something 

5 more than the borrower's statement, right. I mean 

6 if a borrower can just state because let me be real 

7 clear, without regard to the definition of 

8 misrepresentation or any of those things, I mean 

9 no matter how onerous you might view the definition 

10 of all these other pieces, if a borrower can just 

11 state that those things occurred and that's 

12 sufficient then the claim can be granted.

13 And I think from the institutional 

14 perspective, at least from my perspective and my 

15 constituency, it's an extremely important point 

16 that it needs to be more than just a statement. 

17 Again, I know I'm a broken record.

18 But there's no barrier to entry here. 

19 I mean all someone would have to do is fill out 

20 an application and properly assert that the 

21 institution did whatever we decide a 

22 misrepresentation is, and that would be it.

23 And a borrower defense claim could be 
215

1 granted on that. And I think that's problematic. 

2 We have to have something more than the student's 

3 statement.

4 You know, I would also suggest though 

5 that the corroborating evidence, it doesn't have 

6 to be something the student or the borrower rather 

7 I should say, you know, researched or grabbed while 

8 they were in school or what have you.

9 In addition to being, I've mentioned 

10 before attorney general investigation findings, 

11 things the U.S. Department of Education has done 

12 which I think would cover a lot of Corinthian and, 

13 you know, I mean the bad actors you guys have named 

14 have been typically investigated by a host of 

15 agencies.

16 But corroborating evidence could also 

17 be affidavits from other borrowers who were 

18 similarly wronged, right. I mean that's 

19 corroborating evidence.

20 So if you've got 25 borrowers who come 

21 to you and say we were all wronged and you file 

22 all of their statements or you file 24 affidavits, 

23 that's corroborating evidence and you don't have 
216

1 to have a bunch of stuff you researched way back 

2 when.

3 So I think, I really think this is not 

4 has hard to satisfy. I think what the Department 

5 is saying is look, it's got to be more than just 

6 the statement.

7 And I believe that is a very fair point 

8 of view, and that allowing a claim to be certified 

9 based strictly on a borrower's affidavit or sworn 

10 statement is not an acceptable risk carrying model.

11 MS. MILLER: Annmarie and then 

12 Michael.

13 MS. WEISMAN: I just wanted to quickly 

14 respond to Aaron's question about whether or not 

15 we had used the standard, meaning substantial 

16 weight of the evidence, in other Ed proceedings, 

17 and we do not.

18 MS. MILLER: Michael.

19 PARTICIPANT: Yes, I think it would be 

20 useful to have a standard or a guide. But to look 

21 for one, and as Aaron said and I agree, that 

22 something that's in an administrative, has an 

23 administrative process tied to it, not terms that 
217

1 are used for a different process that is based in 

2 a judicial review.

3 And those are the terms that kind of, 

4 you know, the clear and convincing and the 

5 preponderance they continue to arise because in 

6 a different circumstance, in a different setting 

7 those terms would be used, and a certain segment 

8 would understand what those terms mean.

9 Here we have a different setting. And 

10 so if outside of Ed maybe there's another 

11 administrative process where a similar phrase has 

12 been used that might be useful in understanding 

13 that.

14 But I don't disagree with the notion 

15 of having some standard around what evidence means 

16 or substantial evidence. But going backwards to 

17 the idea of preponderance or clear and convincing 

18 I think is problematic.

19 MS. MILLER: Kelli.

20 MS. HUDSON PERRY: Just a question for 

21 Ed. Are the individuals that are making the 

22 determinations to actually discharge these loans 

23 attorneys?
218

1 MS. WEISMAN: The people who are doing 

2 that currently are. I will say that is not common 

3 for other discharges that it's always attorneys.

4 And I think that the idea of moving away 

5 from looking at a state law standard and moving 

6 to a federal standard, one of the considerations 

7 was that perhaps we would not need to have attorneys 

8 for that work at all times in the future.

9 And keep in mind the other thing is just 

10 because someone is an attorney doesn't mean they're 

11 an expert in the 50 plus state laws -- again 50 

12 states plus the territories. So being an attorney 

13 is helpful.

14 But there is still a lot of research 

15 then that goes into it when you're looking at that 

16 individual state on an individual application.

17 MS. MILLER: Dan and then Aaron.

18 MR. MADZELAN: So if the Department 

19 does not have a substantial weight of the evidence 

20 standard in other contexts, might that mean that 

21 in the borrower defense context substantial weight 

22 of the evidence is whatever the Secretary says it 

23 is?
219

1 And whereas, we think about 

2 preponderance and clear and convincing and 

3 reasonable doubt as being, you know, some things 

4 above 50 percent might -- I'm not trying to bind 

5 this Secretary or any future Secretary. But could 

6 this standard be, you know, sort of a plurality?

7 You know, not 50 percent, but almost 

8 50 percent. I mean if you think about, I'll just 

9 use an example since we're talking about weight 

10 here. Let's talk about 100 pounds.

11 Say there are 17 pieces of evidence that 

12 average three pounds each, and one piece of evidence 

13 that's 49 pounds. Now the substantial weight of 

14 all the evidence is with that one piece.

15 Does this make sense? What I'm getting 

16 at is the way this is written could the -- could 

17 it in fact be a lower standard than what you had 

18 previously proposed when you look at all of the 

19 evidence, and you're not talking about 

20 preponderance.

21 You're not talking about clear and 

22 convincing. You're talking about substantial. 

23 And if you have lots of evidence and there is only 
220

1 one or two pieces that are substantial could that 

2 be the basis of the Secretary's decision? I'm just 

3 trying to get at, you know, what 'substantial 

4 weight' means.

5 MS. MILLER: Aaron, okay, Linda.

6 MS. RAWLES: I appreciate that the 

7 Department was trying to split the baby. And this 

8 isn't the best draftsmanship. I wanted to propose 

9 some language.

10 Is that appropriate at this time? 

11 Okay, on Page 3 it would read, "The Secretary may 

12 find that the substantial weight of the evidence" --

13 MR. BANTLE: Linda, this is Paragraph 

14 3 as well?

15 MS. RAWLES: Yes, Page 3, I've lost 

16 track of all the different sections. But the one, 

17 where we attempt a definition for --

18 MR. BANTLE: Okay.

19 MS. RAWLES: Yes, where it starts the 

20 "Secretary will find", okay. "The Secretary may 

21 find that the substantial weight of the evidence 

22 supports the approval of a borrower defense 

23 claim" --
221

1 This is all the same. When the 

2 borrower's statement is supported by corroborated 

3 evidence provided by the borrower or otherwise in 

4 the possession of the Secretary and the evidence 

5 proves that the assertion is at least more probable 

6 than not because that tells us that we are at least 

7 somewhere in between more probable than not and 

8 clear and convincing.

9 We get the lawyer, the legal standard 

10 in there but we have the plain language for the 

11 plain language folks. I'm not even sure I will 

12 support it, but it's something to talk about.

13 I mean the Department said they were 

14 trying to go in between the two definitions. I 

15 appreciate that. But I do think there is things 

16 out there that can argue that this is lower than 

17 preponderance.

18 So at least we would know this was above 

19 preponderance and that it had to be more than a 

20 mere statement, there had to be corroborating 

21 evidence. So I think that's a fair compromise at 

22 least to discuss.

23 MR. BANTLE: Yes. Thank you, and as 
222

1 I said, we appreciate all potential options. We 

2 had Evan and then Michael.

3 MR. DANIELS: So again, I think 

4 reiterating that I don't know that the state 

5 attorneys general have a position on what the 

6 standard should be, but just to illustrate how 

7 whatever the standard ultimately becomes could 

8 affect state law, I think speaks in favor of what 

9 we discussed earlier about perhaps adding a 

10 provision that discusses or clarifies that the 

11 Department doesn't intend to preempt state law in 

12 any way with this regulation.

13 I handled a case in which there was an 

14 unlicensed person -- persons purporting to be a 

15 trade school, that was out there in Arizona taking 

16 money from consumers when they weren't licensed 

17 and weren't regulated. And we pursued an action 

18 against them through a consent judgment, were able 

19 to obtain restitution for consumers. And this had, 

20 fortunately none of the consumers had received 

21 loans from the Department of Education.

22 But if I was a clever lawyer in Arizona 

23 and I represented one of these consumers what I 
223

1 would do is in bringing a consumer fraud action 

2 against the school I would present this standard, 

3 whatever it is, to the judge, and suggest that my 

4 client was in the exact same position as this 

5 consumer was.

6 And if a state court judge in Arizona 

7 accepted that argument, all of a sudden now this 

8 standard very much becomes part of our state 

9 consumer protection law. And I just point that 

10 out to illustrate there very well could be some 

11 unintended consequences irrespective of what the 

12 standard ultimately becomes.

13 MS. MILLER: So, Evan, you started by 

14 saying this is where you think you would put the 

15 language in that you were talking about earlier.

16 MR. DANIELS: Right. I guess really 

17 the point was I was going back to the introduction 

18 when we had proposed the idea that there needs to 

19 be some statement that the Department isn't trying 

20 to affect state consumer protection law as a 

21 standard like this -- whatever it is -- might in 

22 the circumstance that I just described.

23 MS. MILLER: So would that go after 3, 
224

1 or where would that assertion go? I'm sorry.

2 MR. DANIELS: I think it would go in 

3 A, introduction.

4 MS. MILLER: In A, in the introduction, 

5 okay, thank you.

6 MR. BANTLE: Okay, so just to bring the 

7 negotiators back we had -- we have a number of 

8 proposals here. We have Michael's additional 

9 suggestions to I would, if I could characterize 

10 it as to bring everything in line with the intent 

11 of the first three sections.

12 Those were his changes. Made a 

13 misrepresentation related to enrollment or 

14 provision. You'll see that in blue.

15 And then we had Abby's suggestion which 

16 was to eliminate in, I think, B(1) and in (3) the 

17 term substantial. So it would just be the weight 

18 of the evidence.

19 I think, Abby, you had the additional 

20 suggestion also of eliminating the supported by 

21 corroborating evidence. And then we have Linda's 

22 suggestion which was in 3 to make the will a may 

23 and the language that was added there which was 
225

1 the evidence proves that the assertion was more 

2 probable than not.

3 I don't have it in front of me. But 

4 I believe that's what it had said. And then we 

5 have Evan's suggestion of the caveat not intended 

6 to preempt state consumer protection laws in some 

7 fashion wherever it would fit in, maybe A.

8 So that's kind of the scope of the 

9 discussion that I've seen on this section. Did 

10 I miss anything?

11 PARTICIPANT: If you're going to 

12 modify substantial weight you would probably also 

13 do it there in 3, so minor note.

14 MR. BANTLE: Correct, okay. Did I 

15 miss any suggestions?

16 MS. MILLER: Abby.

17 MS. SHAFROTH: I just wanted to clarify 

18 that if we moved to a weight of the evidence standard 

19 then I think we would probably just scrap 3, because 

20 I think without the corroborating evidence addition 

21 in there it doesn't really add anything.

22 MS. MILLER: Valerie.

23 MS. SHARP: I have a question for the 
226

1 state attorney generals. And, Evan, with the 

2 request you made to add the language to the 

3 introduction, would that you feel cover the risk 

4 of unintended consequences by using some other 

5 evidentiary standard in this language that hasn't 

6 been used before or do you also think that the 

7 Committee really needs to think about coming up 

8 with a new evidentiary standard that's not common?

9 MR. DANIELS: It would make me feel a 

10 lot better that whatever the standard is, there 

11 would be much less risk that it could affect state 

12 law in an unintended way. As to what the standard 

13 ought to be, I don't know that I have an opinion 

14 on that.

15 I think what I was speaking to earlier 

16 was to suggest that if weight of the evidence, for 

17 example, is in the manner that Dan described that 

18 would mean you could accidentally impose -- you 

19 could accidentally lower a state law standard 

20 unintentionally or I imagine a clever lawyer 

21 wouldn't argue for a standard that ended up being 

22 higher than what state law was.

23 But just to illustrate why it would be 
227

1 a perhaps unintended consequence.

2 MS. MILLER: Abby.

3 MS. SHAFROTH: Yes, I just wanted to 

4 talk a little bit more about this corroborating 

5 evidence and the whole idea of creating a new 

6 standard out of whole cloth.

7 As an example of what kind of confusion 

8 this creates, if the standard is that the Secretary 

9 will find a substantial weight of evidence supports 

10 approval when the borrower's statement is supported 

11 by corroborating evidence, does there have to be 

12 corroborating evidence on sort of each element of 

13 the claim?

14 Does there need to be corroborating 

15 evidence that the school acted with intent or 

16 reckless disregard and does there have to be 

17 corroborating evidence that the borrower suffered 

18 financial harm? Does there have to be 

19 corroborating evidence that the borrower 

20 reasonably relied?

21 Do we have to have, does the borrower 

22 have to find some additional evidence to hit on 

23 each of these points? That's one reasonable 
228

1 interpretation of the standard because we have no 

2 interpretations through the case law because this 

3 is a new standard there isn't clarity there.

4 You know, that would be pretty 

5 challenging. That's a lot for a borrower to have 

6 to do, and I can't imagine any of my clients being 

7 able to do that, certainly not without my help.

8 But even with my help, I think that's 

9 very unlikely. And another reason that I have such 

10 concerns about this new standard and the 

11 requirement of corroborating evidence is again, 

12 you know, that I don't understand why we would 

13 automatically disregard a borrower's sworn 

14 testimony provided under penalty of perjury.

15 You know, there might be instances 

16 where that testimony isn't plausible and the 

17 Department finds it not credible for some reason. 

18 But sworn testimony is evidence by itself.

19 And if that evidence is really 

20 compelling and if it's -- if that evidence carries 

21 more weight than any evidence to the contrary, then 

22 I don't know why we would deny that borrower relief.

23 MS. MILLER: Valerie.
229

1 MS. SHARP: Two items on the 

2 corroborating evidence. As Aaron stated, you 

3 know, that is something that institutions would 

4 be looking for because we will be repaying all of 

5 those loans.

6 So for there to be more than just a sworn 

7 statement for us to even be processing those claims 

8 would be important. And a question to Michale 

9 McComis on his suggestions of changing the language 

10 in Item -- I think I've got it written down here -- in 

11 Item I.

12 And you said we could move the material 

13 fact, opinion, intention or law. And I think you 

14 suggested moving it under misrepresentation. But 

15 I didn't hear how you would incorporate that 

16 language into that statement.

17 So if we're going to move it I would 

18 like to see where you want to move that so I would 

19 understand when I'm, if I'm supporting your change 

20 here where you'll be moving it to elsewhere so that 

21 the -- I think the material fact on the materiality 

22 is important to continue to include.

23 MR. MCCOMIS: Would you like me to 
230

1 respond now?

2 PARTICIPANT: Yes.

3 MR. MCCOMIS: I don't know. I mean I 

4 looked, and what I'm trying to figure out is whether 

5 it's duplicative or whether it's different from 

6 what we're trying to say as what a misrepresentation 

7 is under 4(I).

8 And the words are different. So it's 

9 just interesting to me that under B(1)(I) we have 

10 these words material fact, opinion, intention or 

11 law, but none of those words are under what an actual 

12 definition of misrepresentation is.

13 So I mean I -- to get it in there we 

14 have to shoe horn it in there a little bit. But 

15 if those are important concepts -- material fact, 

16 opinion, intention or law -- then, yes, I would 

17 support finding a place to get them into 4(I).

18 So the first question is: do those words 

19 actually align with what's, you know, the other 

20 things that we say are a misrepresentation? Is 

21 that -- I don't know that it answers your question.

22 But I just didn't see how it fits under 

23 that section if, again, we think those words are 
231

1 important, I would find a place for them under 4(I). 

2 I can work on that if that's important.

3 MS. MILLER: Chris and then Ashley 

4 Harrington.

5 MR. DELUCA: Yes. I want to go back 

6 or just kind of --- the point about the need for 

7 corroborating evidence and the idea and absolutely 

8 a student's statement is evidence.

9 A student's signed statement would be 

10 evidence. But the idea that there needs to be 

11 something more. I mean there's a lot, there's a 

12 number of considerations that we have to be looking 

13 at.

14 And, you know, and understand we, this

15 isn't a rule, this isn't a concern for the vast, 

16 vast, vast, vast majority or, you know, 99 percent 

17 of the students. You know, we love students.

18 That's why we're in this education 

19 industry. I mean that's why we, you know, that's 

20 what we do. And so, but having said that I mean 

21 there's a reason why the Department of Education 

22 Federal Student Aid has, what, a 116 page 

23 verification handbook.
232

1 You know, there's a reason for that. 

2 There's a reason that they have verification codes 

3 and, you know, different and the date of retrieval 

4 tool, the IRS verification. There are reasons for 

5 that.

6 The reasons are that there are some 

7 people, some students, again, we're not talking 

8 about the vast -- significant majority of students. 

9 But there are bad apples out there.

10 And understanding too when we talk 

11 about, you know, the resources and who is at risk 

12 here, you know, understand that particularly when 

13 we're talking about the cases where there have been 

14 resolutions, I mean who has paid them?

15 The taxpayers have paid them, the 

16 claims that have been paid. I mean the taxpayers 

17 are paying it. And so, you know, if we're looking 

18 at a school that closes for whatever reason, you 

19 know, it could be a bad actor school.

20 It could be a small trade and career 

21 school where the owner had been there for 40 years 

22 and retired and moved to Hawaii, or it may have 

23 died and the school closed because the owner and 
233

1 founder passed away.

2 You know, again so looking at it from 

3 a standpoint of if there are circumstances where 

4 the individuals at the school are no longer able 

5 to, you know, the parties involved aren't there 

6 then it just seems imminently reasonable to 

7 require, okay, there needs to be something.

8 It can't just be a signed statement. 

9 There needs to be some corroborating evidence. 

10 And recognize again what others have said at the 

11 table is that, you know, there's a whole host of 

12 ways that corroborating evidence could be seen.

13 One of the things that's included in 

14 here is that the Department can consider 

15 information in its possession. So if they've got 

16 a dozen claims from the same school, from the same 

17 class that said the same, you know, Chris DeLuca 

18 told me all these flat out lies when I signed up 

19 there and we can't find Chris DeLuca but we've got 

20 12 students who say the exact same things 

21 independently that's corroborating evidence, 

22 right.

23 So I think it's important that there 
234

1 must be some amount of evidence above and beyond 

2 just a statement and above and beyond just a bare 

3 minimum preponderance. And so that's why again, 

4 I recognize what we've been talking about here.

5 Again, I certainly appreciate the 

6 effort to kind of come up with that middle ground. 

7 Personally I feel that, you know, we've got 

8 evidentiary standards.

9 We've got a standard that's beyond 

10 preponderance, but it's not, you know, requiring, 

11 you know, beyond a reasonable doubt. We've got 

12 clear and convincing.

13 That was the first proposal and that's 

14 where, you know, quite frankly given the 

15 uncertainty of other things and even given the 

16 uncertainty with various definitions for 

17 preponderance and clear and convincing, at least 

18 with clear and convincing there is a history and 

19 a body of law that people understand generally what 

20 that means.

21 MS. MILLER: Ashley Harrington.

22 MS. HARRINGTON: So currently in 

23 practice we know that the Department is not just 
235

1 using sworn statements, because if they were we 

2 wouldn't have as big of a backlog as we do right 

3 now. So that just already doesn't happen.

4 But also you create a process where the 

5 school gets to respond. So if the student does 

6 submit a sworn statement saying this, this and this 

7 happened, the institution can then respond with 

8 their own sworn statement and say this didn't 

9 happen.

10 Then the Department has to use its other 

11 things in its possession to look into things to 

12 investigate all these other things. So including 

13 this in that process, you already have other 

14 protections there for institutions and the 

15 taxpayers and the students without including 

16 corroborating evidence that the student, then that 

17 puts too much burden on the student and the 

18 consumer.

19 MS. MILLER: Will.

20 MR. HUBBARD: Thank you. As it 

21 stands, it seems like the debate is trending towards 

22 finding as many ways as possible to place as much 

23 burden as possible on students -- victims who have 
236

1 already been harmed as a result of negative actions 

2 whether intentional or not.

3 You know, I'm not in the heads of 

4 schools. So I can't judge intent nor can students 

5 in such a case. I think ultimately really what 

6 we're talking about it's not a signed statement.

7 It's not someone filling out a note card 

8 or a napkin saying I was harmed. It's a sworn 

9 statement under the perjury of law. We're talking 

10 about fines and prison time if found guilty.

11 So if a school finds that there's hordes 

12 of students out to get them, they've got the law 

13 on their side in that case.

14 MS. MILLER: Thank you, Will. Before 

15 I move on to the other tents up I just want to note 

16 that it's 2:51, and we ideally want to take a break 

17 at 3:00. So can we go to Abby, Kay, Linda, Chris 

18 DeLuca and then Joseline. So, Abby, Kay.

19 MS. LEWIS: So I have a suggestion in 

20 which all the lawyers can tell me from each side 

21 how this doesn't work. But in Number 3 instead 

22 of just saying "corroborating" what if we said 

23 "sufficient evidence."
237

1 That doesn't lock the Secretary into 

2 having to have something that's corroborating 

3 necessarily. If the Secretary decides that the 

4 sworn statement of the student makes sense, is 

5 credible, whatever other evidence they might look 

6 at when they investigate that claim would be 

7 something that they would use to make that, and 

8 we don't again get hung up on what might be 

9 interpreted legally in different ways.

10 MS. MILLER: Thank you, Kay. Linda.

11 MS. RAWLES: This is quick. As we 

12 progress I just want to make sure, because it's 

13 misleading up there that my proposed language only 

14 stands if corroborating evidence remains otherwise 

15 it's not an either/or. Mine is a package.

16 MS. MILLER: Chris DeLuca.

17 MR. DELUCA: Yes, I just get back to 

18 the idea that there needs to be something more than 

19 the signed statement. And, Ashley, you said that, 

20 you know, currently that's not enough under the 

21 current rule and that there's examples where that's 

22 not being done for students currently.

23 But we're talking about a new rule and 
238

1 there's a proposal on the table, there's a proposal 

2 made to the Committee that, that become okay, that, 

3 that become enough, that a standalone statement 

4 there's nothing else to refute it.

5 And again, we've got situations out 

6 there where, you know, if we're dealing with closed 

7 schools, the taxpayers are on the hook for this.

8 And so, and again, given that, you know, 

9 it's not looking at, you know, creating an 

10 artificial barrier for students and looking at, 

11 you know, and in our last session, you know, I 

12 brought an example up of some of the signed 

13 statements that were being used by the Heald group 

14 the Heald cases where that was, and I was informed 

15 that those were one-off cases.

16 That's the reason why that form was 

17 being used, but that there was this whole backlog 

18 of, or this whole background of corroborating 

19 evidence and investigation reports and things that 

20 facilitated that. Well that's corroborating 

21 evidence.

22 Then, you know, if that's the case and 

23 then you've got a form where it is a signed 
239

1 statement, I understand that. You know, that's 

2 the body of the case then that makes sense.

3 But again, as a standalone statement, 

4 again, as a standalone statement you can't get 

5 federal aid to begin with. You have to go through 

6 a verification process.

7 You have to fill out a FAFSA, you have 

8 to get so you have to get a data, you have to verify 

9 your IRS statements. I mean you can't get aid 

10 without there being some sort of corroborating 

11 evidence to begin with.

12 So it seems like on this type of, when 

13 we're talking about, you know, when you're looking 

14 for a borrower defense claim, there needs -- again, 

15 there just needs to be something more than a signed 

16 statement.

17 MS. MILLER: Joseline.

18 MS. GARCIA: I think it's important to 

19 note that most students may not have access to other 

20 evidence besides their own personal testimony. 

21 And I know that some of my colleagues mentioned 

22 that.

23 But it's, I really want to emphasize 
240

1 that point because students really don't have the 

2 resources. And again, this regulation as it stands 

3 right now is placing numerous hurdles for them.

4 Also, oftentimes students, the 

5 evidence that would be considered evidence, it was 

6 done orally in terms of like speaking to the student 

7 and a recruiter talking to them. I have a student 

8 whose recruiter actually went to their home trying 

9 to aggressively recruit them to come to the 

10 institution.

11 How would a student be able to provide 

12 that as evidence, I don't know. Another thing to 

13 mention is that what we're talking about right now 

14 is about eligibility. It doesn't mean that the 

15 claim is going to get approved.

16 It just means that they are going to 

17 be considered and won't be rejected right from the 

18 start. So like I hear the concerns. But again, 

19 this is just so the student has a chance at proving 

20 their claim.

21 MS. MILLER: Abby, and then we'll take 

22 a break.

23 MS. SHAFROTH: I liked Kay's 
241

1 suggestion of changing corroborating evidence to 

2 sufficient evidence. I think that captures the 

3 fact that there can be all sorts of evidence, that 

4 the evidence from the borrower's testimony signed 

5 under perjury might by itself be really compelling 

6 in some circumstances.

7 Sometimes it might not be very 

8 compelling and you might need some other 

9 corroborating evidence to state a claim or to 

10 prevail on a claim. And sometimes it might not 

11 be compelling, or there's counter-evidence from 

12 the school that the Department otherwise has in 

13 its possession that's more compelling and the 

14 borrower doesn't win.

15 But you should just be assessing the 

16 weight of the evidence on the whole and not what 

17 particular form that evidence takes. There was 

18 a suggestion that this wouldn't be hard for 

19 borrowers to satisfy because maybe one, maybe, you 

20 know, 20 borrowers from a school file claims, and 

21 those applications sort of corroborate each other.

22 But, you know, that sort of assumes that 

23 there's a group process which unfortunately there 
242

1 isn't in this proposal. And, you know, it 

2 highlights the fact that if one borrower files an 

3 application and they're the first one to file an 

4 application against a school, their application 

5 would presumably be denied because no one else has 

6 applied yet.

7 You know, if a year later someone else 

8 files an application, if they are also denied at 

9 what point are there enough applications filed that 

10 we say, okay, there's evidence? And then does the 

11 Department go back and reverse its initial denials?

12 You know, I appreciate the point that 

13 there can be multiple applications that corroborate 

14 each other. But I don't think that in practice 

15 that necessarily would get us past this problem 

16 that most of the time students are -- student 

17 borrowers are just going to really have their own 

18 testimony.

19 MS. MILLER: Okay. So it's 2:57. Why 

20 don't we come back, I'm feeling generous, at 3:15. 

21 Annmarie is like no, that's too -- so let's come 

22 back at 3:15. Thank you.

23 (Whereupon, the above-entitled matter 
243

1 briefly went off the record.)

2 MR. BANTLE: Okay. We will bring it 

3 back together. I apologize for the delay on the 

4 facilitator side of things. Okay, so we have had 

5 a substantial amount of discussion on Issue Paper 

6 1 thus far.

7 So what I've been told is that the 

8 Department has graciously offered to take the 

9 thoughts of this conversation and put together a 

10 rewrite that will hopefully be ready tomorrow if 

11 it can go through the powers that be by then.

12 I think that would help to get us all 

13 just kind of on the same page of the comments we've 

14 had, what the Department, you know, feels it can 

15 incorporate. In that effort, I think it would be 

16 useful to go through the rest of Issue Paper 1 

17 starting with 4, and I think it is all just 4 with 

18 letters going down.

19 And if there's any edits or suggestions 

20 that the Working Group has on the rest there or 

21 final comments, you know, obviously on what we've 

22 discussed because I understand there are tags still 

23 up, we will do that, and then we will move on to 
244

1 Issue Paper 2. Okay, Suzanne. Is it Suzanne, 

2 okay?

3 MS. MARTINDALE: This is somewhat of 

4 a process question. So we, are we moving 

5 completely off of, on to the next section because 

6 we haven't talked about, I think several of us with 

7 have something to say about (ii), the statute of 

8 limitations?

9 MR. BANTLE: Any comments you have on 

10 Issue Paper 1 that you would like to make before 

11 the Department goes back and does some edits or 

12 makes some revisions would be -- now is the time.

13 MS. MARTINDALE: Okay. Well, so the 

14 three year statute of limitations that would 

15 require that a borrower must bring a claim within 

16 three years of the date the borrower discovered 

17 or reasonably should have discovered the 

18 misrepresentation, that is effectively going to 

19 bar otherwise valid claims.

20 If you think about, you know, take not, 

21 you know, the archetypal example of Corinthian, 

22 you know, of a borrower enrolling say, you know, 

23 in 2011, you know, maybe they make it almost all 
245

1 the way through their program and then, you know, 

2 they can't complete it.

3 The find out that it's not what they 

4 were promised, you know, maybe as the school, as 

5 we understand as the school was failing they were 

6 being told, you know, don't worry, everything is 

7 fine. Don't bother, you know, with what you're 

8 reading in the news.

9 And then the school collapsed. You can 

10 imagine that over the course of several years, a 

11 borrower may not discover that there is internal 

12 mismanagement, that there have been 

13 misrepresentations made.

14 They have no way of finding that out. 

15 And so we can envision all too many instances where 

16 a borrower simply will not be able to discover the 

17 stuff within three years.

18 So and again, federal loans have no 

19 statute of limitations on them. They can be 

20 collected against you until you're dead. So we 

21 have serious concerns about the statute of 

22 limitations because it applies not just to amounts 

23 already paid, but to outstanding debts.
246

1 MR. BANTLE: Michael.

2 MR. MCCOMIS: So I'll go back to the 

3 question that Valerie had asked about where I would 

4 suggest moving the material, fact, opinion, 

5 intention or law. So maybe under 4(I) that defines 

6 a misrepresentation.

7 For the purposes of this section, a 

8 misrepresentation is a statement, act or omission 

9 regarding material fact, opinion, intention or law 

10 made by an eligible institution. So I would insert 

11 the material fact, opinion, intention or law, 

12 regarding material fact, opinion, intention or law 

13 after omission.

14 MS. MILLER: Bill.

15 MR. HUBBARD: We continue to hold the 

16 position that as long as a borrower can be collected 

17 upon maintaining any statute of limitations against 

18 them is wholly insufficient, because that 

19 essentially sets up a scenario where a student 

20 potentially would not have the right to defend 

21 themselves.

22 If they pass the period of time in which 

23 they can assert a claim but they can still be 
247

1 collected upon following that, it's an unfair and 

2 undue burden on the borrower.

3 MS. MILLER: Joseline.

4 MS. GARCIA: Thank you. So I have a 

5 couple of things. The first thing I'll point to 

6 is in (i) under the circumstances, you know, I just 

7 wanted to express my appreciation to the Department 

8 for including that.

9 And then the second thing for (ii), I 

10 noticed that there was a change from non-default

11 to final, definitive. And I was hoping that 

12 Department could give me an explanation as to why 

13 that change was made.

14 And then I have something else. But 

15 I'll just pause for right now.

16 MS. WEISMAN: So for (ii), on the 

17 bottom of Page 2 in multiple places, we talk about 

18 the idea of a final, definitive judgment. The idea 

19 there is that would be a judgment that one could 

20 no longer appeal.

21 So it's truly final. The 

22 determination has been made and cannot be reversed.

23 MS. GARCIA: Thank you. And to get to 
248

1 my third point, as my colleagues have mentioned, 

2 I also do not agree with the three year time period.

3 I know a student who is named Aria who 

4 attended the Illinois Institute of Art from 2007 

5 to 2010. And she and her mother are $120,000 in 

6 debt.

7 And her life has just been ruined 

8 because of the process she went through. And she 

9 has been fighting this fight since 2011. However, 

10 she didn't know of borrower defense until 2015.

11 I don't think it's fair because, you 

12 know, under this current law, she could potentially 

13 risk not being able to file a claim if she became 

14 aware, you know, another year later or a few years 

15 later. And as my colleagues have said, you know, 

16 this is something that is not okay.

17 It would create another hurdle for 

18 students, and this is possibly something that I 

19 would not be able to give consensus to if this is 

20 still in the language.

21 MS. MILLER: Aaron, then Abby.

22 MR. LACEY: I have a handful of 

23 comments. The first thing is I wanted to go back 
249

1 to the evidentiary standard just briefly and say 

2 I think that substantial weight of the evidence 

3 or substantial evidence, more specifically -- first 

4 of all, I believe it is an appropriate standard.

5 But I was doing a little research in 

6 the interim. I believe that it is a common 

7 standard, as I mentioned earlier, that's used in 

8 administrative law proceedings.

9 I was looking at some literature that 

10 stated explicitly that it is considered to be 

11 squarely between preponderance of the evidence and 

12 clear and convincing. You don't have to take my 

13 word for it.

14 What I really wanted to let you know 

15 is I'm working on putting together a summary of 

16 that and I'm going to provide it the group and to 

17 the Department for consideration.

18 But I believe an evidentiary standard 

19 that is used in administrative law contexts which 

20 has a history in legal proceedings in which if it 

21 is -- if I can confirm this -- falls between 

22 preponderance of the evidence and clear and 

23 convincing would certainly be something well worth 
250

1 consideration.

2 I also will reiterate my point that I 

3 believe, and I know Chris has said this, from the 

4 institutional standpoint it is critical that there 

5 be a requirement that something be required in 

6 addition to a signed statement from a student.

7 There was the suggestion made that in 

8 this 3 corroborating be changed to sufficient. 

9 And then, Abby, you may have suggested and I just 

10 wasn't clear on this, so I wanted to get the 

11 Department's opinion now or later, I would read 

12 even if that change were made, that sufficient 

13 evidence would still have to be in addition to the 

14 borrower's statement.

15 It says when the borrower's statement 

16 is supported by corroborating, sufficient 

17 evidence. And it is very important to me to know 

18 if the Department's view is that if that change 

19 were made to sufficient, that the borrower's 

20 statement would somehow in and of itself constitute 

21 sufficient evidence. That certainly would impact 

22 my reading.

23 MS. WEISMAN: That was not our intent. 
251

1 Our intent was that there would be something in 

2 addition to the borrower's signed statement.

3 MR. LACEY: Okay. So I understand 

4 that to mean then if we changed that to sufficient 

5 evidence, it would still mean there had to be 

6 sufficient evidence in addition to the borrower's 

7 statement, just for consideration of the Committee 

8 as we think about that.

9 And then finally, on the statute of 

10 limitations. Just as a point of clarity, if a 

11 student or a borrower rather had not -- I just want 

12 to be really clear -- had not discovered the basis 

13 for the claim the three years does not start 

14 running, right?

15 So if someone -- I mean and if I'm wrong 

16 on that, please tell me. But my read is, you know, 

17 it says a borrower must file the claim within three 

18 years of the date the borrower discovered or 

19 reasonably should have discovered the 

20 misrepresentation.

21 So it's not from when the 

22 misrepresentation occurred. It's when -- from the 

23 point at which they discovered or reasonably should 
252

1 have discovered.

2 So if someone wanted to argue that, you 

3 know, I could see someone arguing that they should 

4 have discovered earlier. But it's still from the 

5 date of discovery, just to be very clear.

6 So where you have a situation who 

7 someone didn't know or evidence from Corinthian 

8 didn't become available until multiple years later 

9 and they found out about it, my read is the three 

10 years statute of limitations doesn't start to run 

11 until the point at which they discover that there 

12 was a wrong.

13 I would also still argue, I'll just say 

14 I think the Department has it right. Let me not 

15 argue. Let me just statute of limitations are not 

16 just commonplace but standard in jurisprudence.

17 They are a standard concept when you're 

18 dealing with claims across state laws, across 

19 federal laws, all over the place. And we've talked 

20 about, Mike has articulated, I've articulated 

21 previously the bases, the public policy behind 

22 standards of limitations.

23 I mean, yes, it is true that the idea 
253

1 here is that there would come a point where 

2 potentially a borrower would be barred from 

3 bringing a claim. But that is the point of a 

4 statute of limitation.

5 But the public policy basis for a 

6 statute of limitation is to ensure that people are 

7 encouraged to bring claims, that they bring claims 

8 while the facts are still available and fresh enough 

9 that justice can be done, that the accused party 

10 still has time and will have access to facts that 

11 would allow it to defend itself.

12 I mean there are lots and lots of 

13 reasons -- don't take my word for it -- out there 

14 why you have statute of limitations. And I just 

15 want to say to the Department I think three is right 

16 in the wheelhouse.

17 I think it is utterly reasonable. And 

18 you also, you know, we've given the caveat that 

19 it's from the date of discovery. I think this is 

20 an extremely reasonable standard.

21 MS. MILLER: Abby.

22 MS. SHAFROTH: I strongly oppose the 

23 three year limitations period that the Department 
254

1 has proposed, and I just wanted to remind folks 

2 that I submitted a memo on January 16th 

3 explaining -- Juliana and I submitted -- explaining 

4 why legal assistance organizations strongly oppose 

5 this limitations period and believe that it would, 

6 that the practical effect of this limitations 

7 period would be to deny relief to the vast majority 

8 of borrowers who have been harmed by their schools.

9 I want to be clear that the three year 

10 limitations period is not, as written is not from 

11 when the borrower discovered the 

12 misrepresentation. It's from when the Department 

13 feels that they reasonably should have discovered 

14 the misrepresentation.

15 That is a very complex analysis. And 

16 just to make this a bit more concrete, I want to 

17 give an example. A Corinthian student who was 

18 recruited to Corinthian in August 2011 on the basis 

19 of false job placement rates.

20 So let's say they were recruited and 

21 saw these false job placement rates in August 2011. 

22 They actually enrolled and took out loans shortly 

23 thereafter.
255

1 Let's say it was a two year program that 

2 they graduated from in May of 2013. In May of 2013, 

3 let's say they didn't get a job, and they heard 

4 from lots of their friends that those friends didn't 

5 have jobs either.

6 At that point should the -- would we 

7 say that borrower should have, reasonably should 

8 have known that the job placement rates quoted to 

9 them were false? That's a possible 

10 interpretation.

11 That student might be stuck with that 

12 limitations period. We might say that they then 

13 had to apply within three years of May 2013 when 

14 they graduated, which to be clear they would be 

15 out of luck now. It would be too late now.

16 Or would we say that they reasonably 

17 should have known that the school lied to them about 

18 the job placement rates when the California AG filed 

19 the lawsuit against Corinthian on this basis in 

20 October of 2013?

21 Was the filing of this lawsuit enough 

22 to put them on notice that they reasonably should 

23 have known that the job placement rates were false? 
256

1 Or would we say that they reasonably should have 

2 known this when the Department of Education issued 

3 Corinthian a fine letter in March of 2015 on the 

4 basis of false job placement rates?

5 Or would we say they reasonably should 

6 have known when the Department finally engaged in 

7 an email and postal mail attempts to contact the 

8 borrowers in the summer of 2016 to let them know 

9 that they were potentially eligible for relief?

10 You know, each of those dates are dates 

11 that someone could argue the borrower reasonably 

12 should have known that they were subject to a 

13 misrepresentation, that they reasonably should 

14 have discovered that.

15 And each of those dates would set a 

16 separate deadline for when the borrower must file 

17 an application or they lose their right to relief 

18 forever. So that's a huge -- that date matters 

19 a lot.

20 And borrowers without lawyers aren't 

21 going to know how to argue which date applies to 

22 them. You know, they're not going to necessarily 

23 have all these facts.
257

1 They're just going to know when it was 

2 that they found out that they could apply for 

3 relief. When they found out they could apply for 

4 relief is the date that really matters to them.

5 Before that, it's all academic. So my 

6 point is that this really matters, that the standard 

7 that the time limit the Department has set out 

8 leaves a lot of legal ambiguity and makes it really

9 hard in each, and a fact intensive question for 

10 each application whether that application is timely 

11 or not.

12 That's going to take a lot of resources 

13 for the Department to figure out for each applicant. 

14 And it's going to be really hard for all of these 

15 borrowers, who believe they were defrauded by their 

16 school, to figure out how to make clear that their 

17 claim is timely and what -- you know, what do they 

18 need to do to prove when they found out or when 

19 they should have found out that they had a claim.

20 This is really hard, really 

21 complicated, and really unnecessary. This is a 

22 departure from how defenses against collection 

23 happen in every other contexts.
258

1 And in other contexts so long as the 

2 creditor can collect against you, you can assert 

3 a defense. It's under false certification. So 

4 long as the Department can collect against you, 

5 you can assert false certification as a right to 

6 discharge.

7 So I don't know why we would be 

8 establishing this really restrictive, really 

9 complicated limit on borrowers that would have the 

10 effect of denying many borrowers relief arbitrarily 

11 based on when they filed their application.

12 MS. MILLER: Michael.

13 PARTICIPANT: So and I think Abby's 

14 last comments are instructive. You know, there 

15 have been a lot of passionate positions shared 

16 around the table and passionate pleas.

17 But after all of that I don't know what 

18 you want. So do you have language, so for all of 

19 those positions that are, we seem to be saying the 

20 same thing that we said the last time we were 

21 together.

22 So I understand what the positions are. 

23 I think most of the people do. But it would be 
259

1 really useful if I had something to say, okay, so 

2 what does Abby and her community of interest and 

3 Will and his community or Aaron, what language do 

4 you want to present so myself as another negotiator 

5 can figure out where we go from here.

6 That would be just useful for me as a 

7 negotiator and maybe it would be useful to others 

8 as well.

9 MS. MILLER: Abby, did you have a quick 

10 response or did you want to think about it?

11 MS. SHAFROTH: No, I'm happy to respond 

12 now. I, luckily I have these in writing. They're 

13 in the memo I shared with the group on January 16th.

14 I think the best and simplest solution 

15 would be to follow the route that the Department 

16 has applied with other discharges like false 

17 certification, closed school that there isn't a 

18 limitations period at all.

19 That would be my first choice option 

20 recognizing that there are many at the table who 

21 might be opposed to that and who would prefer to 

22 have a shorter time period or have some sort of 

23 time periods, you know, if the Department is 
260

1 unwilling to do that, if the group is unwilling 

2 to do that I would say that it should at minimum 

3 mitigate the harm of these limitations periods by 

4 one, not applying the limitations period to 

5 requests for discharge of outstanding balances.

6 So students wouldn't be able to get 

7 their refunds after three years of amounts they've 

8 already paid. But they would at least still be 

9 able to defend against the collectability of the 

10 outstanding balance.

11 So that's one alternative. Another 

12 thing that could be done to mitigate again some 

13 of this harm would be to allow claims within three 

14 years after borrowers either discover the 

15 misrepresentation or discover the right to seek 

16 relief based on that misrepresentation whichever 

17 is later.

18 So if the borrower didn't know that 

19 there was such a thing as borrower defense until 

20 they got a letter from the Department saying, hey, 

21 you can file a borrower defense based on 

22 Corinthian's misconduct then that would be the 

23 triggering date.
261

1 MS. MILLER: Michael, you want to --

2 PARTICIPANT: So again, those are 

3 really complex suggestions and I think there were 

4 three of them. What language should I consider? 

5 Like do you have language of well it could this 

6 or it could be this or, here are my three options 

7 that I've drafted.

8 So I'm just, I'm having a hard time 

9 getting to a position where I can help make a 

10 decision if all I have in front of me is what the 

11 Department has given. So I'm not trying to put 

12 you on the spot.

13 I'm just asking like in order for me 

14 to able to make a decision on something to negotiate 

15 it would be very useful to me to have something 

16 to work with. I don't think that you would have 

17 it at this exact second.

18 But maybe that's something that you 

19 could bring back to us and we could revisit the 

20 statute of limitations because otherwise we're 

21 going to go back and forth.

22 People are going to be for it and 

23 people, we know that there are two sides of 
262

1 position. We need to get to language that we can 

2 work with.

3 MS. MILLER: Will and then Aaron.

4 MR. HUBBARD: I appreciate that point, 

5 Michael. And just for simplicity sake, I'm not 

6 trying to capture all of Abby's proposals.

7 But I would say a minimum of ten years 

8 from, so a borrower must file a borrower defense 

9 claim under Paragraph B(1) under the section within 

10 ten years of the date of the borrower discovered 

11 or reasonably should have discovered certainly 

12 appreciating in principle, and I would say in 

13 principle I agree, with Aaron and other's point 

14 about a statute of limitations and the necessity.

15 But again, there is no statute of 

16 limitations on collections. So ten years, while 

17 that may sound like a long time compared to three, 

18 I would also note that three is half then what many 

19 states consider the minimum for fraud, taking fraud 

20 cases up.

21 So I would say a little bit beyond that. 

22 Ten is reasonable in our opinion and that's 

23 probably the minimum number of years we would be 
263

1 willing to accept.

2 MS. MILLER: Aaron.

3 MR. LACEY: So I agree strongly with 

4 all the points Abby just made about the complexity 

5 of the decision making involved here and would just 

6 note that I made those arguments in the last 

7 session. And as, and that was the whole basis for 

8 my suggestion that we do a fixed date rather than 

9 a date based on discovery from graduation or 

10 withdrawal of the student.

11 And I also noted that in some cases that 

12 could be to the student's advantage because to your 

13 point an institution or a bad actor, if I'm a bad 

14 actor the first thing I'm going to argue is if there 

15 was a misrepresentation at the time of enrollment 

16 that's when the statute of limitations started to 

17 run.

18 So that was precisely why, all those 

19 arguments were precisely why I said what we should 

20 do to simplify the administrative process, to make 

21 it clearer for students is that we should just do 

22 a fixed date. Now that cuts both ways, right, I 

23 mean because what it means is you have the time 
264

1 period starts tolling from the moment of graduation 

2 or withdrawal and if someone hasn't discovered it's 

3 still running.

4 But we can't have it both ways. I mean, 

5 you know, you either go with the complicated concept 

6 so that you get the advantage of discovery or you 

7 omit that concept and understand that there's a 

8 possibility that somebody might discover and the 

9 statute of limitations is still running.

10 I need to know what the, I mean we've 

11 got to pick one way or the other. But, you know, 

12 I just wanted to highlight, look, I agree with all 

13 of those arguments. That's why I suggested doing 

14 a hard deadline from the time the student graduates 

15 or withdraws.

16 It's simple, you know, it's simple to 

17 administer for the Department. It's simple for 

18 students and institutions to understand. And so 

19 the question would be what is that time line?

20 I disagree. I don't think there is a 

21 reasonable basis to extend it to something like 

22 ten years. But I would entertain numbers other 

23 than three, right, particularly if we're talking 
265

1 about a fixed term.

2 But, you know, my question for Abby and 

3 the others is, I mean what do you want? I mean 

4 do you want it from the date of discovery or do 

5 you want to eliminate that complexity?

6 And the only way I know to eliminate 

7 that complexity is you pick a time frame that 

8 doesn't rely on the date of discovery. But I agree 

9 with you 100 percent.

10 I think discovery is nebulous. I think 

11 bad actors, institutional bad actors will try to 

12 take advantage of it. I think it's problematic.

13 MS. MILLER: Annmarie.

14 MS. WEISMAN: So then could we 

15 temperature check that, get a sense of where people 

16 are around the table. Do people want a fixed amount 

17 of time, fixed number of years from a specific date, 

18 whatever that date is graduation, something else 

19 versus a discovery period?

20 MS. MILLER: Abby, did you want to 

21 weigh in before we --

22 MS. SHAFROTH: Yes, I just want to 

23 posit that, I mean my first best proposal remains 
266

1 no limitations period. But if there is a 

2 limitations period I don't think it has to be either 

3 or.

4 I think it could be if we're trying to 

5 protect the interests of the borrower we could say, 

6 you know, "x" years from the date of withdrawal 

7 from the institution, graduation or withdrawal or 

8 "x" years after discovered or, you know, discovery 

9 of the misrepresentation whichever is longer.

10 And that way, you know, we assure the 

11 borrower at least a certain amount of time and then 

12 we have a basis for extending that amount of time 

13 if there is, you know, if the misrepresentation 

14 isn't discovered until later.

15 MS. MILLER: Yes, Aaron.

16 MR. LACEY: But as long as you have a 

17 discovery component in there you're right back 

18 where you started with all those things you just 

19 said about how awful a discovery component is. 

20 I mean you're still going to put the Department 

21 and students are going to have uncertainty.

22 Institutions will have uncertainty. 

23 The Department has still got to make a call. I 
267

1 just don't see how you can have it both ways.

2 MS. MILLER: Valerie.

3 MS. SHARP: I think one of the reasons 

4 this is in here, and I could be wrong and one of 

5 the reasons this is important to schools is because 

6 this is the time frame that the Department has set 

7 up for records keeping and retention.

8 And as a part of these new rules in order 

9 to protect taxpayer dollars the Department has made 

10 it clear it intends to seek restitution on every 

11 one from the school. And if you're going to now 

12 extend that deadline or get rid of limitations and 

13 you're going to expect the schools to be able to 

14 have a defense and be responsible for repaying any 

15 forgiven loans a longer time period becomes 

16 problematic because schools will not have any 

17 records.

18 It also gives incentive to wait longer 

19 to file your claims until the schools records are 

20 destroyed. So if we're going to extend a deadline 

21 then the Department would also have to consider 

22 extending the retention guidelines for schools so 

23 that the records would still be available if schools 
268

1 are going to be, and even if you don't extend it 

2 schools are going to be holding on to records 

3 longer.

4 And now the Department is recommending 

5 that we don't hold them past that retention deadline 

6 for safety, security reasons of the private 

7 information. So I think that is why this is in 

8 here.

9 And it's very important to use from that 

10 perspective because it ties into all of our 

11 requirements already of schools by the Department 

12 on retention.

13 MS. MILLER: Mike Busada.

14 MR. BUSADA: And I think Valerie made 

15 some great points. What I want to say on this and 

16 even more broadly is and look, I understand. I 

17 mean one of the things I know that has been talked 

18 about as we talk about well this is what happened 

19 with Corinthian.

20 This is what happened. And I 

21 understand that and believe me, you know, schools 

22 like mine are, you know, having to deal with that. 

23 And it's not been fun.
269

1 But it, you know, and so believe me I 

2 don't want those things to be able to happen because 

3 it makes it very, very tough on small schools like 

4 ours. At the same time, comparing schools like 

5 mine to a Corinthian is like comparing a dog and 

6 a cat.

7 I mean there's just completely 

8 different. And the problem is if we're going to 

9 build an entire regulatory framework focused on 

10 a Corinthian it just in so many ways makes it almost 

11 impossible to operate a smaller school.

12 It makes it almost impossible to 

13 operate unless you are very large and have the 

14 resources. A specific example here is if you get 

15 rid of any statute of limitations small schools

16 we get our financing through small community banks 

17 that know us.

18 There's no small community bank that 

19 is going to lend and work with the school when there 

20 is this contingent liability that extends forever. 

21 It's just not going to happen.

22 And so those are the things that, the 

23 practical things that you have to keep in mind. 
270

1 Is it possible?

2 And I know that, you know, and I'll end 

3 on this last time I was here and this is something 

4 I have thought about a lot, several people came 

5 up to me afterwards and said, look, we know you 

6 have a good school and we know there are a lot just 

7 like yours.

8 And there are. I mean hundreds, family 

9 owned schools all over the country. And they said, 

10 you know, we know you're a good school but, you 

11 know, but we've got to take care of these problems.

12 And I had one person, and I think this 

13 person's heart was very much in the right place, 

14 said to me afterwards when we're having dinner well 

15 look, I understand that your school is one of the 

16 good ones. But look, there is going to be 

17 collateral damage in trying to get rid of the bad 

18 ones and you're school, you know, unfortunately 

19 you just may be collateral damage.

20 I just can't accept that. I mean that 

21 just is scary to me that we can have that opinion. 

22 And the reason is don't worry about, it's not about 

23 whether or not my school goes away or any other 
271

1 community school goes away.

2 It's not about the people, the owners. 

3 It's about the fact in this country it is well 

4 documented, there's a great article in the Georgia 

5 Journal, Georgetown Journal of Poverty Law and 

6 Policy that says that the only way that we will 

7 be able to compete economically globally and help 

8 lift out of poverty is we've got to educate a 

9 tremendous number of students because no longer 

10 is a high school diploma enough for a lot of jobs.

11 And it also goes on to say that because 

12 of budget constraints of a lot of states there 

13 hasn't been an expansion of opportunity and seats 

14 in colleges. And so there is a place for schools 

15 like ours that teach, you know, welding and truck 

16 driving and, you know, airline mechanics.

17 I mean those things are not, there's 

18 not going to be anyone left to teach those things 

19 because it's become financially unfeasible for a 

20 lot of states to do it. And so you're not just 

21 getting rid of and, you know, saying there's 

22 collateral damage to one school here or one school 

23 there.
272

1 You're saying a lot of people that come 

2 to these schools that learn vocational and 

3 technical training that never were able to get into 

4 other schools or didn't have that opportunity, now 

5 you're saying that they can't even get the education 

6 that we provide because nobody else is providing 

7 it.

8 And that's critical that we continue 

9 to be able to provide it. And so we have to figure 

10 out a way to do it. Being collateral damage is 

11 just not, that's not a moral and reasonable thing 

12 to do.

13 MR. BANTLE: Okay. So Rozmyn has the 

14 name tags that are up listed. I just want to, as 

15 we had the request for the temperature check focus 

16 us on proposals.

17 Right now we are editing or looking at 

18 Number 2 up there. So for the cards that are up 

19 or left up if you could focus on proposals that 

20 would be much appreciated and then we'll get to 

21 those temperature checks.

22 And as the Department is going to relook 

23 at and revise Number 1 I just want to run through 
273

1 quick temperature checks on all the concepts that 

2 we've discussed.

3 MS. MILLER: Ashley Reich and then Dan.

4 MS. REICH: Just for the Department, 

5 so this goes back to the very first session that 

6 we had. This is to Valerie's point. I believe 

7 we came to some sort of agreement that three years 

8 was the record retention for this.

9 Is that correct, that the Department 

10 was not interested in or at that time was not 

11 interested in expanding those record retentions? 

12 So I'm just trying to understand from an 

13 institution's perspective if that three years has 

14 passed what would there be to provide at that point?

15 MS. WEISMAN: So our thinking is that 

16 many of the records that would be requested as part 

17 of this process would not necessarily be specific 

18 student financial aid records which our records 

19 retention period applies to, that there are other 

20 things that schools are doing that are part of their 

21 marketing materials that might be things on their 

22 website that we're not regulating the records 

23 retention period for those items.
274

1 But we believe that it is many, it would 

2 be many of those items that would be what we would 

3 need in terms of corroborating a borrower's story 

4 or not.

5 MS. MILLER: Did the Department want 

6 to answer, no, okay?

7 MS. WEISMAN: I thought that I did. 

8 Is there still an outstanding question?

9 PARTICIPANT: Well I have had every 

10 complaint. I have had a few complaints filed and 

11 every single one of them they might ask for some 

12 marketing if there's any other materials.

13 But everything, the majority of the 

14 information the Department has wanted on any claim 

15 tied to loans has been financial aid documents 

16 because we're talking about discharge of loans. 

17 And so any time the Department is looking at a 

18 discharge of loans they want to know every 

19 communication you've had with the student about 

20 their loans.

21 They want to see all the letters you 

22 sent them, your financial aid awards, your 

23 documentation for origination, the time you did 
275

1 that. I mean even documents that the Department 

2 has access to they also want you to provide to show 

3 that you have that and you had record of it.

4 So I don't think that these claims are 

5 going to be able to move forward without any of 

6 the financial aid data that might not be kept 

7 anymore. I think it's going to be a part of that 

8 discussion because it's all about loans.

9 MS. WEISMAN: So the record retention 

10 policy, although we do have it in regulation, its 

11 basis is in statute. So we do not have the 

12 authority to change from the three years.

13 An institution, although, yes, I 

14 understand from a privacy perspective we have made 

15 recommendations that people not keep records longer 

16 than they need to, an institution would need to 

17 decide for themselves and determine based on this 

18 what they felt comfortable keeping, retaining 

19 versus not retaining.

20 If we're going to word it the way we 

21 have it right now we do have the discovery period 

22 in place. And so that discovery period would mean 

23 that it's not an even three years. So you could 
276

1 even under this construct have a situation where 

2 you destroyed records because you thought you 

3 didn't need them and somebody could make a claim 

4 later and say I only just learned of this.

5 So that is possible now. I think that 

6 we've written it in a way that we hope would minimize 

7 that. But, yes, this including the three years 

8 that date was a nod to the record retention 

9 requirements that we had previously discussed.

10 So that was the Department's thinking 

11 in terms of how we arrived there. Again, it's not 

12 a perfect system because of discovery it's hard 

13 to know what that period looks like. But we felt 

14 three years was a reasonable place to go.

15 MS. MILLER: Ashley Reich.

16 MS. REICH: That's what I thought. 

17 And I think going back to this argument of we 

18 shouldn't have any, you know, limitations here I 

19 mean that just removes the institution out of it.

20 I mean we may have a small period of 

21 time that we could assist. But we would not be, 

22 I mean my constituency could not support not having 

23 some sort of limitation there because that just 
277

1 would remove the institution out of it for a period 

2 of time or a majority period of time.

3 MS. MILLER: Dan.

4 MR. MADZELAN: I was going back to the 

5 notion of date of discovery and it looks like there 

6 are two dates there. And when I was listening to 

7 Abby speak she seemed to be more concerned about 

8 the second one, reasonably should have discovered, 

9 that starting date.

10 And I share that concern. I'm not 

11 quite sure whose reason will be applied here. I'm 

12 guessing it will be the Secretary's. So, and I'm 

13 also assuming that the date that a borrower 

14 reasonably should have known will always be before 

15 when the borrower actually learned.

16 So it seems to me that, you know, a date 

17 of discovery that is a date certain when the 

18 borrower learned that they had this opportunity. 

19 Well how do we know when the borrower learned?

20 Well we know when the borrower said she 

21 learned. And I think my guess is that's part of 

22 the application process which is to be made under 

23 penalty of perjury or something like that.
278

1 So we have to accept she's telling the 

2 truth. The, it seems that the Department gets its 

3 shot in the next step when we've already talked 

4 about substantial weight of the evidence and 

5 corroborating or sufficient evidence.

6 Who makes that call? That's the 

7 Secretary making that call. So if the Secretary 

8 gets to make that call on substantial weight of 

9 the evidence allowing the Secretary to make a call 

10 on the submission of an application is basically 

11 just trying to create a smaller funnel right.

12 You're just limiting access to the 

13 possibility of discharge on the front end. And 

14 I just, you know, the Secretary, that's the first 

15 bite at the apple for the Secretary, the second 

16 bite being the adjudication of the, or the 

17 evaluation of the evidence provided by the 

18 borrower.

19 So again, I think, I don't know if three 

20 years, ten years, 50 years, I don't know what the 

21 right time frame is. But whatever it is I think 

22 from a date certain makes the most sense.

23 MR. BANTLE: And so just to clarify, 
279

1 Dan, you're thought, okay, so it is on the screen. 

2 Were you proposing to just have a fixed date as 

3 Aaron had proposed or to eliminate the or reasonably 

4 should have discovered?

5 MR. MADZELAN: Just eliminate or 

6 reasonably should have discovered.

7 MR. BANTLE: Okay, so the date of 

8 discovery is still in there.

9 MR. MADZELAN: Right, the date the 

10 borrower discovered.

11 MS. MILLER: Suzanne.

12 MS. MARTINDALE: Yes. I mean it's 

13 not, you know, not intending to be difficult here 

14 it's really tough to figure out how to make 2 better.

15 I mean I certainly think I appreciate 

16 Dan's suggestion to remove reasonably should have 

17 discovered because that is where a lot of the 

18 complexity that Aaron was talking about, I mean 

19 there's really where it is. Where is the 

20 reasonable discovery point for this hypothetically 

21 reasonable borrower?

22 You know, I would be curious to know 

23 if others in the Committee have an opinion about 
280

1 making a, you know, distinguishing between amounts 

2 already paid versus amounts that are still 

3 outstanding, that are still subject to collections.

4 I would be curious to know what others 

5 think about that. But again, where we're coming 

6 from here is there's already so much uncertainty. 

7 Borrowers are already really confused about what, 

8 their rights.

9 You know, late last Friday the 

10 Department issued its final notice of the delay 

11 of the 2016 rule. So I think that there's going 

12 to be confusion for a long time and borrowers are 

13 going to be, not necessarily going to know, you 

14 know, they're not, even if they figure out that 

15 they've been had they're not necessarily going to 

16 know when they actually have a right to file 

17 something which is why we're struggling so hard 

18 with this which is why we think that, you know, 

19 no statute of limitations make more sense as it 

20 is used in other contexts so we don't have any more 

21 students who are collateral damage of this whole 

22 process.

23 MS. MILLER: Will.
281

1 MR. HUBBARD: Thank you. One point to 

2 think about is the fact that claims over time, you 

3 know, a lot of the schools the position is, you 

4 know, your ability to defend against a claim 

5 diminishes, fully appreciate that.

6 Conversely, the claims of students, the 

7 ability for them to level a claim or bring a claim 

8 I would say equally if not more diminishes. The 

9 fact is students don't have massive data warehouses 

10 and really in most cases the ability to maintain 

11 the kind of records or details or evidence that 

12 would be required to submit a claim, certainly not 

13 compared to schools.

14 Additionally, schools ultimately as it 

15 stands today or tomorrow or after this rule passes 

16 ultimately it's up to them to weigh the risk. And 

17 so if you have a good program, a good school your 

18 risk is obviously much lower because you're doing 

19 a good job.

20 The chances of claims being leveled 

21 against you are significantly decreased. And, you 

22 know, to the Department's point they're not saying 

23 that you have to keep records longer than the three 
282

1 years.

2 But it's a possibility. So risky 

3 schools ultimately are going to invest in a large 

4 data infrastructure and those that have much less 

5 risk would reduce that.

6 Also, you know, the point was made by 

7 the Department and I think it's worth underscoring, 

8 a lot of what we're talking about in terms of the 

9 impacts to schools it's a non-unique risk. It's 

10 already a thing as of today, as of tomorrow, as 

11 of yesterday.

12 And so, you know, the chance of this 

13 already happening is still a possibility yet we 

14 haven't seen that come out in herds. Understand 

15 it's ten years for the possibility for a bankruptcy 

16 to appear on a credit report, 15 years for a tax 

17 lien.

18 I think anything less than those would 

19 be insufficient because what we're talking about 

20 are people's lives. As long as someone's life can 

21 be affected in that same way potentially by a 

22 bankruptcy in some cases it just doesn't make sense 

23 to have it less than that.
283

1 So therefore, I propose the following 

2 language. I will underscore or emphasize the 

3 changes.

4 A borrower must file a borrower defense 

5 claim under Paragraph B(1) of this section within 

6 10 years of the date the borrower left the program 

7 or the date the borrower discovered the 

8 misrepresentation, whichever is longer. This time 

9 frame may be extended at the discretion of the 

10 Secretary.

11 One more time, in pertinent ten years 

12 of the date of the borrower left a program or the 

13 date the borrower discovered the 

14 misrepresentation, whichever is longer. This time 

15 frame may be extended at the discretion of the 

16 Secretary.

17 MS. MILLER: Joseline.

18 MS. GARCIA: I like Will's statement. 

19 The only thing I would add is that the borrower 

20 discovered their right to seek relief based on the 

21 misrepresentation, as I mentioned earlier.

22 The misrepresentation might have taken 

23 place but the student may not have realized they 
284

1 have the right to seek relief and I think it's really 

2 important to note that because there's a lot of 

3 cases where students find themselves in that 

4 situation.

5 And just really quick to address a 

6 comment that was made earlier. Again, the current 

7 language as it stands is not protecting students. 

8 And it is important that we have a strong BD role 

9 that protects students.

10 And I don't believe that having a strong 

11 BD role is going to hurt the good actors for 

12 institutions and schools. But having a weak BD 

13 role is going to be a lot of collateral damage for 

14 good students.

15 MS. MILLER: Aaron.

16 MR. LACEY: Well I'll just say I think 

17 this is a good BD rule or it's shaping up to be. 

18 I think that it's superior to what we have on the 

19 books right now in 95.

20 And I think, I mean the whole point of 

21 this rule, the rule itself is a good thing for 

22 students. I mean the whole thing is creating 

23 opportunity for students that does not presently 
285

1 exist.

2 You know, a couple of comments on the 

3 language. I would not be comfortable with just 

4 striking the or reasonably should have been 

5 discovered with respects to Dan.

6 If the only standard is yours, if the 

7 only standard is borrower discovered then it 

8 essentially is up to the borrower to just assert 

9 when they think they discovered. I'm not 

10 suggesting that the vast majority of borrowers 

11 would do that.

12 But it creates a standard that would 

13 allow bad actors easy access to make an assertion 

14 at any point, even years after they have extensively 

15 paid off their loans for example. I mean for all 

16 the reasons that have been suggested previously, 

17 I just suggest that a discovery concept be excluded 

18 entirely.

19 I would like to propose that we make 

20 it a hard date from the date of graduation or 

21 withdrawal. I think that is simple for borrowers 

22 to understand. It's simple for institutions to 

23 understand.
286

1 It's easy for the Department to 

2 implement. And I would not leave it open ended. 

3 I think for all the reasons previously stated for 

4 public policy reasons.

5 And the other point I think it's really 

6 important to make actually following up on Valerie. 

7 She said this, but I want to reiterate it. The 

8 Department is affirmatively instructing 

9 institutions not to keep data, right. It's not 

10 just a matter of you get into it and you accept 

11 the risk.

12 I mean institutions are being directed 

13 by the federal government not to keep this data. 

14 And that's consistent with guidelines and best 

15 practices regarding data management and data 

16 privacy and all those kinds of things and is good 

17 for students, by the way.

18 I mean you don't want these huge 

19 repositories of data sitting around that are 

20 potentially subject to breach. And it seems so 

21 problematic to me that on the one hand we would 

22 have the Government directing students to get rid 

23 of records, potentially and then on the other hand 
287

1 also creating a statute of limitations that would 

2 subject them to claims that those records 

3 potentially would have been used to defend.

4 I think that's highly problematic. So 

5 I advocate for a hard rule and I think that hard 

6 rule needs to be within a fairly close proximity 

7 of the time frame that the U.S. Government is 

8 advising institutions to keep the records that they 

9 would use to defend themselves.

10 PARTICIPANT: So how many years? How 

11 many years from the date of, you're suggesting 

12 graduation or termination, right?

13 MR. LACEY: I would be willing to go 

14 to five if it were a fixed date concept.

15 PARTICIPANT: Fixed date from 

16 graduation --

17 MR. LACEY: Yes, I think five is very 

18 consistent.

19 PARTICIPANT: -- termination or 

20 withdrawal?

21 MR. LACEY: Correct. I think that's 

22 very consistent, three to five with statute of 

23 limitations. I hear what the other side is saying 
288

1 in terms of wanting a more favorable rule giving 

2 borrowers a little more time. I get that.

3 MR. BANTLE: Okay. Are there any 

4 additional proposals on 2 from the Working Group?

5 PARTICIPANT: I just have one question 

6 for the Department the way this is written. Does 

7 the Department know when a borrower has withdrawn 

8 from school?

9 MS. WEISMAN: Yes, we have that 

10 information from NSLDS. But again, it is 

11 contingent on what the school has reported to us.

12 MR. BANTLE: Okay. So understanding 

13 that the Department hopes to go back and take a 

14 look at Issue Paper 1 tonight I think it's important 

15 if we try and give them as much signaling 

16 information as possible.

17 So in, to that effect let's do 

18 temperature checks. And again, these are our 

19 typical temperature check rules. We're not going 

20 to worry about agreeing to consensus on these items.

21 This is to provide information to the 

22 Department. So can we see a show of thumbs on 

23 Number 2 just as a base line as it was proposed 
289

1 by the Department with none of the edits we've 

2 discussed today? So as it was proposed going in 

3 this morning.

4 Okay, one, two, three, four, five, six, 

5 seven, okay, I see seven thumbs down, eight thumbs 

6 down. Sorry, I didn't catch, Dan. Okay, so that 

7 was our base line.

8 And there are a number of these so I 

9 will need all of your assistance, you know, going 

10 through and identifying all the changes we had. 

11 So the next one that I had was the modification 

12 of the language.

13 I think, Will, this was your first 

14 proposal. The language of Number 2 as proposed 

15 just replacing the three with a ten. So a show 

16 of thumbs on that.

17 Ten thumbs down, 12 thumbs down. Roz 

18 is much better at counting than I am. Okay. The 

19 next proposal that I have and again, just kind of 

20 working through my paper here, was to have no 

21 statute of limitations language.

22 Can we see a show of thumbs on that? 

23 Okay, that's 11 thumbs down. The next was this 
290

1 was Abby's proposal again in concept. I know 

2 Michael had asked for specific language. We did 

3 not have it.

4 But just to have this language and, 

5 Abby, correct me if I'm mangling this, not applying 

6 for outstanding balances just for balances that 

7 had been paid. Is that correct, okay?

8 And obviously we do not have language. 

9 We're temperature checking this in concept. So 

10 a show of thumbs. Okay, seven thumbs down, okay.

11 The next one was the combination of 

12 discovered the misrepresentation or discovered the 

13 individual's right to seek relief. So I would 

14 assume this would not include the reasonably should 

15 have discovered language, okay.

16 Again, just concept. We don't have 

17 language. Just a show of thumbs to provide the 

18 Department information.

19 Yes, so the qualifiers would have been 

20 within "x" number of years, whatever "x" was 

21 determined to be discovered the, from discovering 

22 the misrepresentation or the right to receive 

23 relief. Okay, Abby, I think this was your 
291

1 proposal.

2 Could you clarify or was it Joseline's 

3 proposal? Okay, could you clarify just the 

4 proposal, thank you.

5 MS. GARCIA: Yes. So there have been 

6 cases, for example, if we were to stick through 

7 the three year time limit where a student discovered 

8 that they received the misrepresentation years ago, 

9 however, they didn't realize that they had the right 

10 to do a borrower defense claim.

11 And they were fighting this fight 

12 through other means because they didn't know that 

13 they had this other avenue. And again, I just 

14 really emphasize it's really hard for students to 

15 know what their rights are which is why I'm 

16 emphasizing this point.

17 PARTICIPANT: Is that then the date the 

18 borrower actually discovered?

19 MS. GARCIA: No, because, well they 

20 would have discovered the misrepresentation 

21 earlier but they didn't realize that they could 

22 gain borrower defense or that borrower defense 

23 existed.
292

1 MR. BANTLE: So to attempt to clarify, 

2 and correct me if I'm wrong, whatever the time frame 

3 determined would be, the three to ten years would 

4 start the date they discovered, the latter of the 

5 date they discovered the misrepresentation or the 

6 date they discovered borrower defense was available 

7 to them.

8 Okay, show of thumbs on that proposal. 

9 And there was no defined number of years in there. 

10 It's just in concept. Okay, I see four, you're 

11 not clear. What can we do to clarify or --

12 Okay, I see four thumbs down on that. 

13 Okay, now I think this was one of the first 

14 proposals that Aaron provided was, do we have a, 

15 no, it wasn't your phone.

16 This was a fixed date. I think the 

17 proposal ended up being five years from graduation 

18 or withdrawal. Show of thumbs. Four thumbs down, 

19 okay. The next one I have is --

20 PARTICIPANT: Five years?

21 MR. BANTLE: No, we did five years. 

22 Okay, the next one I have is, this was William's 

23 I believe so correct me if I'm wrong. Ten years 
293

1 since, after the student left the program or, I 

2 guess discovered the misrepresentation. Is that 

3 correct?

4 MR. HUBBARD: And with the addition of 

5 the time frame may be extended at the discretion 

6 of the Secretary.

7 MR. BANTLE: Thank you. Show of 

8 thumbs. Okay. So six thumbs down, okay. And 

9 the, I think what the final, thanks, Moira, is just 

10 this was Dan's proposal of just eliminating the 

11 reasonably should have discovered.

12 So it would be as the language stands 

13 now a three year time period starting from the date 

14 the borrower discovered the misrepresentation. 

15 Show of thumbs.

16 Okay, I see five thumbs down. Okay, 

17 are there any discussion items, suggestions that 

18 we had come up with that I forgot to temperature 

19 check or just missed when I was going through my 

20 notes? Mike.

21 MR. BUSADA: I just want to say, and 

22 I don't have a specific suggestion but I could look 

23 into it, but I mean it would take some time to look 
294

1 into it. But kind of going into what Joseline was 

2 saying.

3 And I think there would be an avenue 

4 to possibly allot a statute of limitation 

5 provisions have interruption periods. So I mean 

6 that may be something that would address her concern 

7 and prescription would be interrupted if you are, 

8 you know, trying to address this issue in another 

9 manner.

10 I mean that's something, it would be 

11 complex. We would have to look at it and come up 

12 with something. But I mean that's something that's 

13 technically used in prescription provisions to 

14 protect people.

15 MR. BANTLE: Thoughts from the Working 

16 Group on that concept of some sort of interruption 

17 period to the statute of limitations, I guess, in 

18 concept conditioned on active pursual of some form 

19 of recovery. Abby.

20 MS. SHAFROTH: I don't think it, 

21 Joseline should correct me if I'm wrong. But it 

22 wouldn't at least satisfy my concerns about 

23 students not being aware that they have a right 
295

1 to pursue discharge through the borrower defense, 

2 through a borrower defense.

3 And a quick anecdote, I help administer 

4 a Listserv of student loan lawyers around the 

5 country. And even today although all of us spend 

6 perhaps too much of our time thinking about borrower 

7 defense there are many, many student loan lawyers 

8 across the country who do not know that borrower 

9 defense exists.

10 If student loan lawyers don't know 

11 borrower defense exists then I can assure you that 

12 the vast majority of students don't know that 

13 borrower defense exists. So this is a real problem 

14 that it's not just that borrowers don't know that 

15 the school lied to them.

16 But they don't know that they have a 

17 right to have their loans discharged based on it.

18 PARTICIPANT: Could I just, just to add 

19 to that I've had many students right up until the 

20 present day tell me that they contacted their 

21 services, told them about these claims. These 

22 include Corinthian students.

23 And the servicers who answer the phone 
296

1 don't have any idea what they're talking about and 

2 generally send them a closed school discharge form 

3 which is not what they need.

4 MS. MILLER: Annmarie.

5 MS. WEISMAN: So it's 4:20. We have 

6 public comment coming at 4:45. We have just gone 

7 through one, two, three, four, five, six, seven, 

8 eight different proposals.

9 And what I heard was that we went 

10 anywhere from almost everyone saying I don't like 

11 what the Department came out with. We can move 

12 on from that.

13 We understand you're not going to like 

14 everything. So, okay. But I didn't see anything 

15 that people were in love with either. So it looked 

16 like beyond the almost everybody saying no to that 

17 we went anywhere from 12 thumbs down.

18 The thing that I guess people liked the 

19 most had about four or five thumbs down. So we're 

20 not super close here. So I guess I would just 

21 reiterate that our goal is consensus.

22 I want us to keep working. I 

23 appreciate your continued efforts to keep working. 
297

1 But we've got to move it along a little.

2 So, yes, the Department will take Issue 

3 Paper 1 back tonight and try to come up with some 

4 other items. But I don't necessarily feel like 

5 in all of the conversation we're getting concrete 

6 ideas that people feel really good about.

7 So tomorrow when we bring back language 

8 while we can have more discussion we have seven 

9 other issue papers that will also require 

10 discussion. So if there is any other proposal that 

11 anybody can think of even just on this one issue 

12 this is our time.

13 MS. MILLER: Michael.

14 PARTICIPANT: A shot in the dark. So 

15 and I don't know. I mean, you know, I'm trying 

16 to think about this and weigh it out with all of 

17 the constituents and trying to achieve some balance 

18 in my own mind about what's fair to every party 

19 involved.

20 And so I'm struggling really with these 

21 temperature checks because a lot of these concepts 

22 are still percolating. But what if it was trying 

23 to bring it together ten years from the date of 
298

1 graduation, termination or withdrawal.

2 That gets to the issue that Will said 

3 and it gets to the issue of keeping it somewhat 

4 finite even though that's seven years beyond other 

5 record retention. And there may not be any 

6 consensus around that. But it's a movement towards 

7 a little bit on both sides.

8 MS. MILLER: So what's the language 

9 again, Michael, I'm sorry?

10 PARTICIPANT: Well it would be within 

11 ten years of the date of the borrower's graduation, 

12 termination or withdrawal.

13 MS. WEISMAN: Can we get clarification 

14 of how that was different from the second proposal 

15 which was also a ten year period if you have the 

16 language that we went with?

17 MR. BANTLE: Yes, just my 

18 understanding was the second proposal was the 

19 language of 2 as proposed by the Department just 

20 swapping ten in whereas Michael's is taking off 

21 the, any discovery element.

22 It's just ten years from graduation, 

23 termination or withdrawal.
299

1 PARTICIPANT: Yes, and, Will, I also 

2 just didn't quite understand why the option for 

3 the Secretary to extend. I didn't, you didn't 

4 speak to that rationale behind that and so that's 

5 why I had a hard time getting behind it.

6 So I know why there could be 

7 circumstances. I just don't know in what 

8 circumstance. And that's problematic for 

9 institutions because if the Secretary can extend 

10 it for whatever reason then they just have to keep 

11 records forever.

12 And that's really what we're saying 

13 here is that if there's no limitation then they 

14 have to maintain these records. Good school or 

15 not they have to roll the dice on whether to keep 

16 those records.

17 MS. MILLER: Will.

18 MR. HUBBARD: I'll just speak to that 

19 very briefly if I may. So I think the thought 

20 behind having the Secretary have some discretion 

21 was ultimately in the case of precipitous closures 

22 where students may not anticipate their school

23 closing for example or there's a massive event with 
300

1 a school that I think ultimately is worth 

2 consideration.

3 PARTICIPANT: Yes, but the next 

4 section that we're going to talk about, I don't 

5 know Thursday in Paper 2 is about closed school 

6 discharges and all the, you know, the 

7 notifications.

8 So I think there are other 

9 opportunities for that instance. Maybe it doesn't 

10 get into BD. But there are notification issues 

11 here and opportunities.

12 Anyway, I'm just, Annmarie asked for 

13 another proposal. There it is.

14 MS. MILLER: Ashley Harrington.

15 MS. HARRINGTON: Just want to remind 

16 everyone that this does not preclude a separate 

17 statute of limitations for the Department to 

18 recover funds from institutions. This is just for 

19 students to be able to access relief which is 

20 different.

21 Also with regard to record retention 

22 policies, it's not clear that a lot of the claims 

23 that people are talking about would even be in the 
301

1 records that you have to keep anyway. It's not 

2 clear that should be the deal breaker is how long 

3 a school has to keep stuff because there are things 

4 that you don't have to keep anyway that would 

5 hopefully corroborate these claims.

6 So it wouldn't depend on that. It 

7 wouldn't turn on that for a lot of cases anyway. 

8 So I just wanted to reiterate that point that we 

9 don't have to think, we don't have to think about 

10 these at the same time.

11 MS. MILLER: Abby and then Valerie.

12 MS. SHAFROTH: I wanted to follow up 

13 on Michael and Will's suggestions. I think Michael 

14 had suggested a ten year firm limitations period 

15 from the date of withdrawal or graduation. Is that 

16 right?

17 You know, I think that could be a 

18 potential compromise position between no 

19 limitations period on the one hand and three years 

20 on the other hand if there were some safety valves 

21 such as the one that Will suggested of, you know, 

22 the possibility of extension for extenuating 

23 circumstances.
302

1 And maybe there would be a little 

2 language to define that. But just off the top of 

3 my head, you know, if there is a school, it turns 

4 out that a school has engaged in very sinister web 

5 of lies that they've managed to conceal 

6 successfully for 11 years and then that all becomes 

7 public or 11 years from the student's date of 

8 graduation and it all becomes public and no one 

9 knew about it before but it sort of blows up that 

10 they were, you know, lying about job rates in a 

11 certain systematic way and there is a finding but 

12 maybe there's no, a finding by the Department that 

13 this happened that might be, you know, a basis for 

14 extenuating circumstances to give those students 

15 a little bit more time in that instance because 

16 there's a robust amount of evidence that is, that 

17 the Department has in its possession even though 

18 a lot of time, a lot more time has passed.

19 So, you know, it would provide just a 

20 little safety valve to catch those situations where 

21 like the interests of justice really would say that 

22 we as a country want these students to get relief 

23 and we as a country don't want our government to 
303

1 continue hounding them to pay these loans. But 

2 I think that makes sense.

3 MS. MILLER: Valerie.

4 MS. SHARP: Based on what Ashley had 

5 just stated about the difference between what we're 

6 asking for the borrower defense to be filed and 

7 what the Department would do, based on questions 

8 that were asked of the Department last time and 

9 the answers it seemed clear to me that the 

10 Department does not intend to make this a bifurcated 

11 process whereby borrower defense is one process 

12 and then a decision to go after the school is 

13 another, that the intent is that the Department 

14 plans to have the school repay any of the debt that 

15 is forgiven in an effort to protect the taxpayer.

16 And so it looks to me then that the three 

17 years was put in here on point two in Issue Paper 

18 1. That same language was also, is highlighted 

19 as added to the section on collection from the 

20 school.

21 And so am I not understanding that 

22 correctly because it seems to me that the Department 

23 has linked them and the intention is that those 
304

1 two would be linked, that any loan that is forgiven 

2 then would be repayment unless the amount was so 

3 minimal it wasn't worth it I think was the comment 

4 before.

5 That then that repayment would be 

6 requested from the school. So we really can't 

7 leave larger time frame here and a smaller time 

8 frame for the school. It will probably match at 

9 the end of the day.

10 MS. WEISMAN: We do not necessarily 

11 intend the process to be joined. So we could have 

12 different dates for these two items.

13 MS. SHARP: Thank you.

14 MR. BANTLE: So just to be through, 

15 let's do a show of thumbs on Michael's initial 

16 proposal which was just the ten years from, fixed 

17 ten years from graduation, withdrawal or 

18 termination and then we'll add in the Secretary's 

19 discretion.

20 But we're going to bifurcate those two 

21 votes. So Michael's initial proposal, ten years 

22 fixed. Seven thumbs down.

23 And then the ten year proposal as 
305

1 Michael proposed it with the addition of the 

2 Secretary's discretion for extenuating 

3 circumstances. Okay, six thumbs down, okay. 

4 Another suggestion?

5 MS. MILLER: Aaron and then Ashley.

6 MR. LACEY: I just wanted to offer a 

7 comment from a, why I had my thumbs down. I just 

8 want to point out that, you know, for example I'll 

9 just use my proposal.

10 But my proposal was the fixed term for 

11 five years. I just want to point out that is a 

12 compromise position. I mean the Department has 

13 started here with three years from the date of 

14 discovery or reasonable discovery.

15 And there was considerable and I think 

16 valid concern expressed over how challenging it 

17 would be to administer those standards. So the 

18 offer was to do a fixed position.

19 And then there was concern that three 

20 years is not sufficient. So five years was put 

21 on the table. I just want to note that those are 

22 compromise positions.

23 There is an effort here. And I believe 
306

1 those are reasonable positions.

2 MS. MILLER: Ashley Reich.

3 MS. REICH: Just as another 

4 suggestion, I mean we're going back and forth on 

5 three years, five years, ten years, whatever. But 

6 in terms of the extenuating circumstances we were 

7 kind of talking about if we kept the three years 

8 and then said, you know, include extension for 

9 extenuating circumstance.

10 I mean that would possibly be an option 

11 because it would allow the Secretary to look at 

12 some of those other circumstances that might be 

13 beyond someone's control. So I don't know if 

14 that's another option or if that just makes it 

15 worse.

16 But I'm just trying to think about all 

17 sides of what's being proposed here.

18 MR. BANTLE: So Ashley to clarify, is 

19 that adding in kind of the Secretary's discretion 

20 to the Department's original proposal or to Aaron's 

21 five year, okay, to the original proposal. So 

22 thoughts from the Working Group on adding in some 

23 clause about the Secretary's discretion to the 
307

1 Department's original proposal. So 

2 three years from the date of the borrower discovered 

3 or reasonably should have discovered with the 

4 additional discretion of the Secretary to continue. 

5 So show of thumbs.

6 I see five down. Just to be thorough 

7 and I know we do have cards, let's add that addition 

8 to Aaron's proposal which was a fixed five years 

9 from withdrawal, termination, graduation plus 

10 discretion of the Secretary to extend it.

11 Show of thumbs. Five thumbs down, 

12 okay. We do have some tags up. The order.

13 MS. MILLER: We have Sheldon, Will and 

14 then that's it right now. Sheldon.

15 MR. REPP: Shelly, thank you. You 

16 know, first of all two comments here. First, the 

17 Department hasn't really showed its hand here as 

18 to whether or not you're willing to accept any of 

19 these.

20 I mean you put marker down here in the 

21 reg, draft reg. So I mean the question is are we 

22 not knocking our head against the wall or not with 

23 respect to any of these ideas? Just mention that.
308

1 Personally I agree with Aaron's 

2 suggestion. It is, I mean it makes sense to me. 

3 It's five years beyond when you leave school. 

4 You know, most cases you'll know whether or not 

5 there is a, whether you have a claim or not after 

6 five years after you leave school.

7 I don't even know if you could agree 

8 with that. And then I guess one variation on that 

9 would be to say a set period of time, say five years 

10 after you leave school, excuse me, be the later 

11 of a set period of time after you leave the school 

12 five years or three years after the borrower 

13 discovers or should have discovered the defense.

14 MS. MILLER: Will.

15 MR. HUBBARD: Thank you. I totally 

16 appreciate Aaron's point about trying to 

17 compromise. I think we're trying to do the same, 

18 at least from the military connected perspective.

19 I mean ultimately, you know, as our 

20 starting position saying that there should be no 

21 statute of limitations which presumably could be 

22 80, 90, 100 years to then go to an offer of 

23 potentially ten I think is a significant compromise 
309

1 to the tune of like possibly 90 years, right.

2 So, you know, just putting that out 

3 there. One thing for consideration is also, I mean 

4 the standard federal student loan repayment plan 

5 is 19 years.

6 So we're talking half of that. I think 

7 potentially that is a decent compromise in that 

8 sense.

9 MS. MILLER: Michael.

10 PARTICIPANT: I mean the thing about 

11 statute of limitations to Abby's point about well 

12 what about at 11, you know, wouldn't it be a 

13 miscarriage of justice if it happened. But that's 

14 always going to be the case.

15 That's just what statute of limitations 

16 does. It limits the extent to which something can 

17 apply or something can be eligible. So I get why 

18 it's problematic to then say well it's this unless 

19 we can add on to that.

20 So that's why I'm kind of going back 

21 and forth and not being real clear. Can I get a 

22 vote for seven?

23 MR. BANTLE: Seven what?
310

1 PARTICIPANT: Seven years fixed, four 

2 and a half percent. Get you in this car today.

3 MR. BANTLE: So from graduation, 

4 termination, withdrawal?

5 PARTICIPANT: Yes, seven years from 

6 fixed date graduation, termination or withdrawal.

7 MR. BANTLE: And, Kay, I did see your 

8 card spring up. So before we do a show --

9 MS. LEWIS: Well because that's one of 

10 my questions for the group is I get why you want 

11 a fixed term. I want to know then is it the number 

12 of, for the other folks is it the number the years, 

13 does that have more play than the, than having a 

14 measure that's a little more open-ended or a little 

15 bit later?

16 So is it the fixed part that bothers 

17 you or is it the number of years that bothers you?

18 MS. MILLER: Abby.

19 MS. SHAFROTH: So what, I'm having a 

20 hard time answering that question because what 

21 really bothers me is that I regularly get calls 

22 from borrowers or get referrals of students from 

23 a local shelter.
311

1 And when I talk to them about their 

2 educational experience and what happened and what's 

3 going on with their loans, why they're in default 

4 they are often telling me about some, you know, 

5 a situation that happened with their school.

6 You know, definitely more than three 

7 to five years ago. They are often, this is often 

8 something that happened a decade ago and they're 

9 just now at a point in their life where they were, 

10 you know, put in touch with social services or they 

11 happened to talk to a lawyer about something else 

12 and a lawyer flagged this for them.

13 So the problem for me is that, is I think 

14 the biggest issue is that borrowers don't know that 

15 they have a right to this relief and they don't 

16 know until some fortuitous circumstances tip them 

17 off to the fact that they do have this right to 

18 relief.

19 And it's only then that we can 

20 reasonably expect them to try to access the relief. 

21 And if we have a longer period of time then we're 

22 going to, you know, we have a greater chance of 

23 capturing, you know, getting to students allowing, 
312

1 you know, students discovering they have that right 

2 to relief during that time.

3 So there's more chance that a student 

4 within ten years will discover they have a right 

5 to relief than there is within three years. But, 

6 you know, I don't know to what extent that answers 

7 it.

8 But it's just to say that this is a very 

9 real thing that I rarely talk to folks about their 

10 student loans who graduated a year or two ago. 

11 Most people are just trying to like figure out their 

12 lives and other things for the first few years.

13 And many people don't know about the 

14 complexities of sort of federal student loan 

15 discharges.

16 MS. MILLER: Annmarie.

17 MS. WEISMAN: So I just wanted to 

18 respond to a couple of the comments and/or questions 

19 that I heard in the last couple of discussions. 

20 So first to Sheldon's question.

21 I'm open to discussion. I 

22 specifically asked for some proposals. And I would 

23 not have done that had I not been open to hearing 
313

1 them and not seriously considered each one of them.

2 That said, you know, saying the 

3 Department hasn't put its cards on the table we've 

4 given you an issue paper and we have dates in there 

5 and we have a statute of limitations. But what 

6 I'm hearing is nobody likes it.

7 So this is my effort to try to find 

8 something that we can have some better agreement 

9 on. So far I'm not hearing it. But I don't think 

10 it was unreasonable to ask.

11 Maybe we just didn't find the sweet spot 

12 yet. Maybe there's a date out there that will 

13 resonate with more people. You know, maybe it's 

14 7.25. I don't know.

15 And I don't want to be flip. But it 

16 matters to me. And I think if I'm asking for 

17 something please know that I wouldn't ask if I 

18 didn't feel it was open to negotiation.

19 We are here as a negotiator. We are 

20 each negotiators and we are to serve that role. 

21 So I just want to be very clear that I'm coming 

22 in good faith. I want to hear ideas.

23 It's Session 3 so, you know, time is 
314

1 ticking and, yes, I'm getting nervous because the 

2 clock is ticking away and we're still on Issue Paper 

3 1. But that said, I think that it's been good 

4 conversation and I appreciate the enthusiasm and 

5 the energy that people have brought to that.

6 So not trying to close down 

7 conversation, but again, being mindful of that time 

8 and trying to balance. That all said, I believe 

9 it was Abby who mentioned about, you know, borrowers 

10 not knowing and I believe I heard Joseline say that 

11 earlier as well that, you know, borrowers don't 

12 know what avenues are available to them.

13 Keep in mind that as we are regulating 

14 this, this would be for new borrowers for loans 

15 disbursed on or after July 1, 2019. So we would 

16 have the opportunity to do some outreach, 

17 potentially change the promissory note.

18 Put other information out on our 

19 website. There are ways that we could hopefully 

20 communicate that information to borrowers so that 

21 they know what resources they have available and 

22 what avenues of recourse they have.

23 So I'm not saying that necessarily 
315

1 changes any minds. But I do think that we have 

2 some other things that we can do in addition to 

3 just saying well, we've all talked here and we have 

4 this regulation.

5 I think we would owe it to borrowers 

6 to publicize what we've done here and get the word 

7 out.

8 MS. MILLER: Chris.

9 MR. DELUCA: So now, you know, at the 

10 end of the day I'm going to sound like the kid who 

11 is sucking up to the teacher because I like the 

12 rule that you wrote. And after hearing, and I like 

13 it more after hearing everybody talk and here's 

14 why.

15 There is all the reasons for having a 

16 statute of limitations and those have all been very 

17 well articulated and I agree with them. And then 

18 hearing the stories and hearing the incidents and 

19 the concern about, you know, borrowers didn't even 

20 know, you know.

21 And it's a long ways away and they're 

22 struggling with loans that they didn't know 

23 whether, that they had a right or that the school 
316

1 did this, the school did that. I mean the way you 

2 drafted the rule it says, you know, it's three years 

3 from when they knew or should have known.

4 And so, and at least in that context 

5 it gets the students an opportunity to get in the 

6 game. So if it is seven years later they can say 

7 I didn't know. It wasn't reasonable under the 

8 circumstances for me to know based on this that 

9 and the other thing and it gets you an opportunity 

10 to get in the game.

11 So the more, you know, after listening 

12 to this conversation this afternoon and the more 

13 I think about it, I'm just, and again, I like the 

14 rule as it was proposed heading into today.

15 MS. MILLER: Okay. So it's now 4:43, 

16 okay, Linda.

17 MS. RAWLES: Yes, I like the rule as 

18 written. And I think the reason you don't hear 

19 that sometimes, Annmarie, is because if we say we 

20 like the rule as written we sort of get chastised 

21 to do something else.

22 So I think that's one of the flaws in 

23 the system here. We have to be able to say we like 
317

1 the language that's on the paper and that's what 

2 I'm saying.

3 MS. MILLER: Will.

4 MR. HUBBARD: I'll keep this very 

5 quick. I think ultimately we're coming from a 

6 position of the fact that we have seen instances 

7 where students were not provided the right 

8 information in the right time frame.

9 I think ten years as a starting point 

10 is a reasonable proposition. And so I would just 

11 like to share that for consideration.

12 And I know that one of our folks in our 

13 public comment this afternoon, an ardent champion 

14 of students across the country will share some 

15 thoughts on some of this stuff.

16 And we're looking forward to hearing 

17 that. But I think ultimately that the ten year 

18 proposition is one that's a compromise position 

19 but also a fair position.

20 MS. MILLER: Thank you, Will. I think 

21 that's a great segue into our public comment. Can 

22 I see how many people we have for public comment 

23 this afternoon?
318

1 One, two, okay. Do we have three, two 

2 or three? Okay. So, Joseline, why don't you start 

3 with our first public comment and we'll have the 

4 second gentleman I think if you could come up to 

5 the mic. Yes.

6 MS. GARCIA: Cool, thank you. So I am 

7 reading a story that was sent to me by a student. 

8 And the student's name is Jennifer.

9 I think my key problem is being able 

10 to prove the school lied to me. In roughly the 

11 spring of 2005, my high school senior year a 

12 recruiter from Westwood College then based in 

13 Colorado presented the school in my history class.

14 To this starry eyed 18 year old with 

15 dreams of a career in computer animation the thought 

16 that the school might be a fraud never even crossed 

17 my mind. The same recruiter also visited my home 

18 and presented to my parents, am I speaking it in 

19 the wrong way?

20 Okay, hold on. I want to give justice 

21 to this story. I'm not getting time taken away, 

22 am I, okay. The same recruiter also, hold on let 

23 me start all over.
319

1 To the starry eyed 18 year old with 

2 dreams of a career in computer animation the thought 

3 that the school might be a fraud never even crossed 

4 my mind. The same recruiter also visited my home 

5 and presented to my parents who suggested I attend 

6 local community college classes to help reduce the 

7 cost.

8 We were told CSU requirements would 

9 transfer and until fall that was the end of it. 

10 In the fall I began classes at Lake Tahoe Community 

11 College as an art major with emphasis in animation 

12 because they didn't have an actual degree program 

13 of any sort in animation.

14 For the entire two years I attended the 

15 Westwood recruiter emailed an average of once a 

16 month saying I was wasting my time and needed to 

17 sign up with Westwood despite the classes I was 

18 taking being CSU requirements.

19 In the fall of 2008 after moving from 

20 South Lake Tahoe to Carson City, Nevada it was 

21 decided local schools were simply out of reach and 

22 had bad timing for public transportation so 

23 Westwood was the logical choice.
320

1 Once stating the desire to transfer we 

2 were rushed through the enrollment process and told 

3 everything would be automatic. Classes started 

4 and within the first week I realized I was taking 

5 repeats and was told by one instructor I was the 

6 unofficial TA and had an automatic "A" because I 

7 had previous classes that were supposed to have 

8 transferred.

9 Keeping in mind I was following a dream 

10 I kept up with the classes and maintained my "B" 

11 average GPA mostly. The class term was nine weeks 

12 and for my computer animation that's not nearly 

13 enough time to learn a program as complicated as 

14 Maya.

15 Particularly the book has absolutely 

16 nothing to do with the program itself. It was 

17 nothing but common animation theory. For the class 

18 lectures the videos were garbled and with no way 

19 to download them, impossible to follow because the 

20 class site kept logging me out.

21 Not to mention they barely had anything 

22 at all to do with the assignments. I tried 

23 repeatedly to ask questions. But by the time the 
321

1 instructor answered I had already failed the 

2 assignment.

3 2001 was a year of pure misery with few 

4 exceptions. I'm normally horrible with Algebra 

5 I'm not ashamed to say as I know it's not uncommon. 

6 But finally having a decent instructor did help 

7 me keep a steady "B" until the final exam.

8 For the questions they used a very low 

9 resolution jpg images that were impossible to read. 

10 How do you answer a question you can't read, I 

11 ask?

12 Needless to say I failed miserably 

13 after hours of attempting to make the questions 

14 even semi-legible. I complained loudly but 

15 nothing came of it.

16 By November I might as well have had 

17 one foot in the nearest mental hospital. I was 

18 so stressed. A classmate in my second class in 

19 Maya which I was far from ready for told me about 

20 an attempted class action against the school.

21 I didn't get through half the list of 

22 allegations before realizing just how badly I let 

23 myself be fooled and burst into tears. Sometimes 
322

1 after leaving I contacted a former local Senator 

2 for help and told his assistant the story.

3 She agreed what they had done was beyond 

4 wrong and he tried to help as best as he could. 

5 It turns out they had illegal in house loans at 

6 18 percent that I believe he had a hand in helping 

7 get them in trouble with the state for.

8 But before he could be further help he 

9 left office. Since then I have been keeping an 

10 eye on things and found out the school closed in 

11 the spring of 2016 but haven't heard of any relief 

12 for the school's victims like me.

13 I know that the time I was attending 

14 they were under the Government's microscope. But 

15 if you ask me all they got was a slap on the wrist 

16 at the time.

17 I know I can't get a school closure 

18 discharge because they closed years after I left. 

19 All I want is to be free of that horrible disaster 

20 so I can move on with my life.

21 I know taxpayers shouldn't have to foot 

22 the bill and would prefer it if the school did, 

23 but that's probably not going to happen. To me 
323

1 it was like buying a car only to find it completely 

2 dead the next day with no refund possible and I 

3 still have to pay for the loans anyway.

4 You tell me, why should I have to pay 

5 for their defective product regardless? True, I 

6 chose to sign a contract for the loans. But at 

7 the time I believed they had high job placement 

8 and I would be able to pay back said loans after 

9 getting a job in my chosen field.

10 I've talked to potential employers in 

11 the computer animation field and got Westwood who 

12 for an answer. I was getting loans for a valid 

13 degree not a worthless piece of paper.

14 I never got a degree because they lied 

15 and I found out yet I'm still stuck with the loans. 

16 All I want is the loans eliminated and to move 

17 on with my life.

18 I've been picking up the pieces of that 

19 shattered dream since. But the loans are a 

20 constant harassment I would like to live without. 

21 I can't even think about that awful year without 

22 crying. Thank you.

23 MS. MILLER: Thank you. Okay, are we 
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1 ready for our second public comment? The time is 

2 4:51 if we can make our way here, into this 

3 microphone that's right here and we can take about 

4 five minutes.

5 So we still have logistics to close out. 

6 Thank you.

7 MR. TAKANO: Thank you. Well let me 

8 just button up here. Okay, thank you. Well good 

9 afternoon, everybody. My name is Mark Takano and 

10 I am the proud representative of California's 41st 

11 Congressional District.

12 As a member of the House Education and 

13 Workforce Committee and the House Committee on 

14 Veteran's Affairs the impact of for-profit colleges 

15 on our education system is at the intersection of 

16 my oversight responsibilities.

17 And I want to begin by noting that it 

18 is telling and troubling that the best opportunity 

19 for me to provide feedback on Borrower's Defense 

20 Rule, on the Borrower's Defense Rule is at an open 

21 public comment period.

22 I strongly encouraged Secretary DeVos 

23 to appear before Congress to discuss the 
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1 administration's education agenda including the

2 funding cuts proposed in the President's budget 

3 this morning.

4 Today however, I am here because the 

5 Department of Education is on the verge of betraying 

6 the students and taxpayers that it is supposed to 

7 serve. In my 24 years as a public school teacher 

8 and my two decades as a community college trustee 

9 I witnessed the rapid and disturbing rise of 

10 for-profit colleges in our higher education system.

11 And despite their flashy commercials 

12 and lofty promises for-profit schools have too 

13 often preyed upon vulnerable students. These 

14 companies have targeted single mothers, 

15 aggressively recruited veterans and focused their 

16 marketing on first generation college students.

17 Instead of rewarding their ambition 

18 for-profit schools have exploited it for financial 

19 gain. That is not just my experience. It is the 

20 reality captured in countless studies that reveal 

21 a pattern of predatory behavior.

22 In 2010, when the Government 

23 Accountability Office did an undercover 
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1 investigation of 15 for-profit colleges it found 

2 that all 15, every single one of them were making 

3 deceptive or misleading statements to applicants.

4 In 2014, a Senate Health Committee 

5 study found eight of the top ten schools receiving 

6 veteran's post 9/11 GI Bill money were for-profit 

7 institutions. Seven of those eight were under some 

8 form of investigation for unethical practices.

9 Two of them are now defunct. In 2016, 

10 a National Bureau of Economic Research paper found 

11 that on average students who attended for-profit 

12 colleges would have been better off not enrolling 

13 at all.

14 The borrower's defense to repayment 

15 rule was a reasonable and overdue response to this 

16 long record of fraud and deception in the for-profit 

17 education sector and the immediate response from 

18 students demonstrated the scope and source of the 

19 problem.

20 When the Century Foundation reviewed 

21 nearly 100,000 borrower's defense claims it found 

22 that 98.6 percent were from students saying they 

23 were misled by for-profit schools. Like many in 
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1 the education community I have been profoundly 

2 disappointed in Secretary DeVos' approach to the 

3 for-profit college industry.

4 The Department's refusal to process 

5 existing borrower's defense applications is 

6 forcing thousands of students to put their lives 

7 on hold. And her description of borrower's defense 

8 applicants as seeking "free money" was an insult 

9 to the students, veterans and families who have 

10 had their futures derailed by a for-profit 

11 institution.

12 Secretary DeVos' words and actions 

13 reflect the interests of a for-profit college 

14 investor. But that is no longer the interest that 

15 she or this Department is responsible for 

16 advancing.

17 She is now accountable to the hundreds 

18 of thousands of students who were sold on the idea 

19 of a rewarding career and a promising future only 

20 to wind up with a degree that they cannot use, 

21 credits they cannot transfer and crippling debt 

22 they cannot pay off.

23 The Borrower's Defense Rule is one of 
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1 the only protections they have against these 

2 schools. It should not be delayed or rewritten. 

3 It should be implemented immediately.

4 I want to close with this reminder. 

5 A public comment period is only useful if the 

6 comments received by the Department of Education 

7 are given the consideration they are due.

8 Throughout this rulemaking process you 

9 have heard students, educators, consumer advocates 

10 and many others plead with Secretary DeVos not to 

11 dismantle the Borrower's Defense Rule. These are 

12 the people the Department of Education has a duty 

13 to serve.

14 And I hope the final rule reflects that 

15 responsibility. Thank for your time this 

16 afternoon. Thank you.

17 MS. MILLER: Okay, thank you. Okay, 

18 any final comments from the negotiators? Okay, 

19 we have one more public comment. So if we could 

20 keep it between three and five minutes, thank you.

21 MR. CRAIG: My name is Travis Craig. 

22 I'm an Army combat veteran who served in the Army 

23 National Guard from 2014 to 2013 and deployed to 
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1 Iraq and Afghanistan.

2 After I left the Army I used my GI 

3 benefits to attend ITT Tech. I thought ITT Tech 

4 would help me get a great career in the IT field. 

5 My experience at ITT Tech sometimes saddens me 

6 when I think about it.

7 When I signed up I was rushed through 

8 the paperwork and many questions weren't answered. 

9 But what was, was my credits being transferred

10 to other colleges.

11 While attending ITT Tech I maintained 

12 a 3.7 grade point average, but noticed that my 

13 fellow students and I weren't getting the best 

14 education at all. I enrolled in ITT Tech to obtain 

15 an Associates Degree in Networking.

16 ITT Tech led me to believe it would 

17 provide me with a meaningful, quality education 

18 in that field. In my first networking class I never 

19 even met the course professor.

20 We were always taught by a substitute 

21 teacher who did not know the course material and 

22 had to read from the book when he taught us. He 

23 couldn't even answer the questions from students 
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1 and admitted regularly that he did not even know 

2 the course work himself.

3 Even in networking where my professor 

4 showed up for class it was often clear that they 

5 didn't know the subject material. In one 

6 networking course students were given a CD with 

7 the course material.

8 I showed a friend of mine the material 

9 because he was already working in the networking 

10 field. He quickly answered why would ITT Tech be 

11 teaching you out of date course material.

12 When I raised the concern with the 

13 school I got nowhere. Eventually the dean told 

14 me I could continue or withdraw. She showed no 

15 concern about my, about me or other fellow students.

16 The poor quality of the networking 

17 program and ITT's lack of concern led me to 

18 withdraw. Fast forward a few months later. ITT 

19 Tech closes down for good and I have student loans.

20 To be able to pay my student loans I 

21 had to move all the way from Las Vegas, Nevada to 

22 Maryland to live with my parents at the age of 31. 

23 In late 2016, I began contacting community 
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1 colleges in Maryland.

2 I asked each school if they would accept 

3 my credits from ITT Tech. Each school told they 

4 didn't recognize ITT Tech's credits. This was 

5 despite ITT Tech officials telling me multiple 

6 times that their credits were recognized at other 

7 colleges.

8 Ultimately even though I had nearly 

9 finished my Associate's Degree at ITT Tech when 

10 I enrolled at a new school I was forced to start 

11 from scratch. The loans I took out to go to ITT 

12 Tech as well followed me.

13 If ITT Tech was supposed to be in the 

14 secondary higher learning education category then 

15 why were we getting outdated course material? Why 

16 were the instructors not even competent in what 

17 they taught?

18 How can I know more about the subject 

19 than my own instructors? This failure has affected 

20 me as well as other veterans and it's not right.

21 You try so hard to get your education 

22 in order and this happens. How hard is it to find 

23 an honest college? What more can we do about this 
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1 at the end of the day?

2 Veterans are the ones that are taking 

3 the biggest hits. As veterans the education has 

4 to do more for us. Thank you.

5 MS. MILLER: Thank you. Are there any 

6 other public comments? Okay, the time is now 5:00. 

7 Unless anyone has any other questions or comments, 

8 the negotiators or the Department. Annmarie.

9 Okay. I'll see you all tomorrow at 

10 9:00. Thank you.

11 (Whereupon, the above-entitled matter 

12 went off the record at 5:00 p.m.)

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