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U.S. Department of Education (ED)

Office of Postsecondary Education (OPE)

Negotiated Rulemaking for Higher Education 

2013

U.S. DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION

PUBLIC HEARING

THURSDAY

MAY 23, 2013

The Public Hearing convened in 

Cowles Auditorium in the Humphrey School of 

Public Affairs Building at the University of 

Minnesota, 301 Nineteenth Avenue South, 

Minneapolis, Minnesota, at 9:00 a.m., John 

Kolotos, Moderator, presiding.
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PRESENT FROM THE DEPARTMENT OF EDUCATION:

JOHN KOLOTOS, Moderator, U.S. Department of 

Education, Office of Postsecondary Education

JULIE MICELI, U.S. Department of Education, 

Deputy General Counsel

PUBLIC COMMENTERS LISTED CHRONOLOGICALLY:

SHANNON GLENN, Minnesota State University 

Student Association (MSUSA)

MORIAH MILES, Minnesota State University 

Student Association (MSUSA)

LAURA HOFFMAN

MICHAEL ROSEN, Milwaukee Area Technical 

College (MATC)

DAN SOLOMON, Office of Senator Franken

C. TODD JONES, Association of Independent 

Colleges & Universities of Ohio (AICUO)

BRIAN DAILEY-ARNDT, Minnesota Public Interest 

Research Group (PIRG)

TRICIA GRIMES, Minnesota Office of Higher

Education

BILL NORWOOD, Heartland Campus Solutions

JEANNE HERRMANN, Globe University/Minnesota 

School of Business

CAROLINE PALMER, Minnesota Coalition Against 

Sexual Assault (MNCASA)

A. KATE BOTHUN, J.D. Candidate, Hamlin 

University
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DAVID SCHEJBAL, University of WisconsinExtension

LAURA POLLASTRINI, Northwestern College of

Illinois

JASON PLEGGENKUHLE, Minnesota Attorney

General's Office

MELISSA RUBIO, IIRON Student Network

WEILI ZHENG, IIRON Student Network

MANSI KATHURIA, IIRON Student Network

KEVIN SHI, IIRON Student Network

BING LI, IIRON Student Network

LILLY OSBORNE, IIRON Student Network

ANEESH NANDAM, IIRON Student Network

DEBORAH BUSHWAY, Capella University

SAMUEL LEVINE, Illinois Assistant Attorney

General

COLLEEN BISHER-FRY, Illinois Assistant

Attorney General

MATT FORSTIE, Minnesota Student Legislative

Coalition
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TABLE OF CONTENTS

Introduction and Welcome Remarks 

Julie Miceli............................ 5

Shannon Glenn........................... 12

Moriah Miles............................ 17

Laura Hoffman........................... 23

Michael Rosen........................... 29

Dan Solomon............................. 40

Todd Jones.............................. 42

Brian Dailey-Arndt...................... 52

Tricia Grimes........................... 63

Bill Norwood............................ 72

Jeanne Herrmann......................... 85

Caroline Palmer......................... 98

A. Kate Bothun.......................... 108

David Schejbal.......................... 112

Laura Pollastrini....................... 122

Jason Pleggenkuhle...................... 133

Melissa Rubio........................... 140

Weili Zheng............................. 153

Mansi Kathuria.......................... 158

Kevin Shi............................... 164

Bing Li................................. 168

Lilly Osborne........................... 175

Aneesh Nandam........................... 181

Deborah Bushway......................... 191

Samuel Levine........................... 202

Colleen Bisher-Fry...................... 212

Matt Forstie............................ 221

Adjournment............................. 230
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1 P-R-O-C-E-E-D-I-N-G-S

2 (9:00 a.m.)

3 MS. MICELI: Good morning, 

4 everyone.

5 (Chorus of good morning.)

6 MS. MICELI: Thank you. Good 

7 morning. I am Julie Miceli. I am the Deputy 

8 General Counsel at the U.S. Department of 

9 Education and I want to welcome everybody to 

10 Minneapolis and thank you for hosting us 

11 here.

12 This is the second of four of our 

13 public hearings and I am going to just 

14 provide a little bit of context of what we 

15 are looking to hear from the field about 

16 today. And then we will go ahead and get 

17 started with public hearing session.

18 In today's global economy, a 

19 college is no longer a privilege for some but 

20 rather a prerequisite for all. In the last 

21 year, 60 percent of jobs went to those with 

22 at least a bachelor's degree and 90 percent 
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1 to those with at least some college. 

2 Over the next decade, as many as 

3 two-thirds of all new jobs will require 

4 education beyond high school. This is why 

5 the President's plan for a strong middle 

6 class and a strong America calls for 

7 expanding the available of postsecondary 

8 education or training for everyone in 

9 America.

10 Providing every American with a 

11 quality education is not just a moral 

12 imperative but an economic necessity. And we 

13 want to make sure that all students, 

14 regardless of income, race, or background 

15 have the opportunity to cross that finish 

16 line. 

17 Today's hearing gives us an 

18 opportunity to begin conversations with the 

19 higher education community on rules that will 

20 ensure that colleges and universities are 

21 giving students a high quality education that 

22 prepares them for the workforce and lifelong 
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1 success. These hearings are meant to be 

2 comprehensive and will include a discussion 

3 of topics like state authorization for online 

4 programs, issues surrounding institutions 

5 management of federal student aid funds, and 

6 how to define gainful employment.

7 This process builds upon previous 

8 steps to develop regulations that protect 

9 taxpayer funds and ensures that all students 

10 are able to access and afford a quality 

11 higher education. We know college is one of 

12 the best investments anyone can make but we 

13 want to make sure that students and taxpayers 

14 are investing in programs that prepare 

15 graduates with the skills and knowledge they 

16 need to compete for high paying jobs.

17 The work of the people in this 

18 room, all of you and the contributions and 

19 feedback that we have received throughout the 

20 last four years has raised our awareness 

21 about the number of issues in this area and 

22 we are interested in learning more through 
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1 these conversations.

2 Last year, the Department held 

3 discussions about rules that would be 

4 designed to prevent fraud and abuse of Title 

5 IV federal student aid, especially within the 

6 context of current technology. In 

7 particular, the Department announced its 

8 intent to propose regulations to address the 

9 use of debit cards for disbursing federal 

10 student aid, as well as to improve and 

11 streamline the campus-based federal student 

12 aid programs.

13 As our interest in fraud and the 

14 use of debit cards continues, we are also now 

15 considering adding several other very 

16 important topics to that regulatory agenda. 

17 These include:

18 Cash management. The Department is 

19 specifically interested in looking at that 

20 regulation -- the regulations governing when 

21 and how institutions disburse federal student 

22 aid, how institutions invest and manage those 
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1 funds, and other issues on this topic.

2 State authorization for distance 

3 education programs. The Department had 

4 previously regulated on this issue but a 

5 court vacated those rule on procedural 

6 grounds in 2011. With that regulation no 

7 longer in place, the Department is interested 

8 in ideas for how to address the requirement 

9 that States authorize the institutions that 

10 provide distance education to its residence 

11 when an institution does not physically 

12 locate in their State.

13 State authorization for foreign 

14 locations in domestic institutions, that is 

15 another. Similarly, the Department is 

16 interested in ideas for how foreign locations 

17 of domestic institutions should be treated 

18 under the State authorization regulations, 

19 since the current rules don't specifically 

20 address foreign schools.

21 Clock to credit hour conversion. 

22 Given concerns raised by institutions of 
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1 higher education, the Department is 

2 interested in whether regulations governing 

3 the conversion of clock hours in a program to 

4 credit hours should be reviewed.

5 Gainful employment. Last June, a 

6 U.S. District Court vacated regulations 

7 defining what it meant for a program to 

8 provide gainful employment in a recognized 

9 occupation but it affirmed the Department's 

10 authority to regulate in this area. The 

11 Department is now interested in public input 

12 on other potential approaches to distinguish 

13 between successful and unsuccessful 

14 approaches -- programs that seek to prepare 

15 students for gainful employment, thoughts on 

16 what the best measures or thresholds should 

17 be, and how to best construct an 

18 accountability system.

19 Campus safety and security 

20 reporting. The reauthorization of the 

21 Violence Against Women Act made some changes 

22 relating to the information institutions are 
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1 required to collect and disclose as part of 

2 the Clery Act. The Department is proposing 

3 to develop regulations to implement these new 

4 requirements. 

5 Definition of adverse credit for 

6 the Direct PLUS Loan program. The PLUS loan 

7 program requires that applicants not have an 

8 adverse credit history to receive a loan. 

9 What constitutes adverse credit was defined 

10 in regulations published in 1994, when credit 

11 conditions and consumer markets were 

12 different and loans were made through two 

13 different programs. Since the conditions 

14 have changed, the Department is interested in 

15 comments on whether it would be appropriate 

16 to modify the definition of adverse credit 

17 and if so, what changes should be made.

18 Based on the comments gathered at 

19 the hearings, the Department will draft a 

20 list of topics to be considered by rulemaking 

21 committees. It is likely that negotiations 

22 will begin this fall and, prior to that, we 
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1 will issue a Federal Register notice seeking 

2 nominations for negotiators to serve on those 

3 committees.

4 I thank you all for dedicating 

5 your time and expertise to this very 

6 important process. I look forward to hearing 

7 your opinions on these very important topics 

8 and appreciate your contributions. 

9 With that, we will go ahead and 

10 start the hearing.

11 MODERATOR KOLOTOS: Moriah Miles 

12 and Shannon Glen.

13 MS. GLEN: Good morning. For the 

14 record, my name is Shannon Glen and I am a 

15 student at Anoka Ramsey Community College and 

16 at Metropolitan State University. I serve as 

17 the Vice President for the Minnesota State 

18 College Student Association or MSCSA.

19 MSCSA represents more than 

20 100,000 public tier community and technical 

21 college students at 47 campuses across the 

22 state. Thank you for the opportunity to 
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1 share MSCSA's priorities on higher education 

2 rulemaking.

3 MSCSA supports the efforts by the 

4 United States Department of Education to 

5 increase accountability in higher education 

6 institutions and help students find 

7 employment upon graduation. Minnesota public 

8 college students pay the third highest 

9 tuition and fees in the country. With the 

10 skyrocketing cost of college, students need 

11 greater access to state and federal financial 

12 aid. Keeping Stafford Loan interest rates 

13 low, increasing Pell grant funding, 

14 maintaining support for other types of 

15 federal aid and making changes to the 

16 Preferred Lender Program will all serve to 

17 help make college more affordable and 

18 accessible.

19 Under the topic of cash 

20 management, I would like to voice MSCSA's 

21 support for making changes to the Preferred 

22 Lender Program to help students gain access 
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1 to information on state loans.

2 The preferred lender program, 

3 part of the Higher Education Opportunity Act 

4 of 2008 requires institutions to recommend 

5 multiple nonfederal loans if they recommend 

6 any such loans to students.

7 As you know, this initiative is 

8 intended to prevent students from being 

9 pressured into choosing one particular 

10 private loan and to provide students with 

11 several loan options. However, states that 

12 offer their own student loan programs were 

13 swept up in this change, including 

14 Minnesota's State-run SELF Loan Program. As 

15 a result, many Minnesota students are unaware 

16 of the SELF Loan. The SELF Loan issued by 

17 the Minnesota Office of Higher Education can 

18 offer students a good alternative to private 

19 loans, with interest rates below that of many 

20 private lenders. Currently, institutions 

21 that do now want to recommend private loan 

22 options on financial aid award letters are 
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1 also unable to recommend the SELF Loan.

2 In the 2011-2012 academic year, 

3 14,124 SELF Loans were issued. During the 

4 2007-2008 academic year, prior to the Higher 

5 Education Opportunity Act of 2008, 28,302 

6 SELF Loans were issued.

7 Prior to my involvement in MSCSA, 

8 I, like many Minnesota students were unaware 

9 of the SELF Loan program. Before starting my 

10 journey at Anoka Ramsey Community College, I 

11 was a student at the Aveda Institute here in 

12 Minneapolis and only knew about private 

13 student loans. Looking back, I wish I knew 

14 about the SELF Loan program because it is a 

15 better alternative to the majority of private 

16 loans. With the lower interest rates on SELF 

17 Loans compared to my private loans, I could 

18 have saved thousands of dollars in interest 

19 payments.

20 MSCSA supports changing the 

21 preferred lender program under the proposed 

22 cash management policies because it would 
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1 help Minnesota students access more 

2 information about their federal financial aid 

3 options and, in turn, make better decisions 

4 on financing their higher education.

5 In addition to preferred lender 

6 requirements, our students share the growing 

7 national concern around fees charged against 

8 student aid when disbursed on debit cards. 

9 In Minnesota, half of our two-year colleges 

10 use Higher One, a for-profit company to 

11 disburse millions in federal financial aid 

12 dollars to students each year. 

13 Unfortunately, students whose aid is linked 

14 to Higher One may face unnecessary fees to 

15 access this aid. Like many banks, Higher One 

16 charges its account holders various fees for 

17 use of the account. A primary way the 

18 account holders accrue fees is when they 

19 withdraw federal financial aid funds from a 

20 foreign ATM. Higher One only has 26 ATMs to 

21 serve tens of thousands of students across 

22 the state. Nationally, the lack of available 
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1 ATMs has led to long lines, out of order 

2 machines, and students forced to use foreign 

3 ATMs.

4 Here in Minnesota, we have had 

5 several Higher One ATMs that were out of 

6 money or inoperable when students needed to 

7 access their funds at the beginning of the 

8 semester. Without adequate Higher One ATM 

9 access, our students lose critical aid to 

10 these fees. 

11 Our students would like to see 

12 increased scrutiny on the ATM and fee 

13 practices of third-party financial aid 

14 disbursement companies.

15 Again, thank you for the 

16 opportunity to address the higher education 

17 rulemaking proposals. We appreciate the 

18 Department of Education's efforts to ensure 

19 colleges and universities are providing 

20 students with the quality of education that 

21 sufficiently prepares them for success in the 

22 workforce.
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1 At this time, I will stand for 

2 any questions.

3 MS. MILES: Hello. My name is 

4 Moriah Miles. I am the State Chair of the 

5 Minnesota State University Student 

6 Association. We represent the 75,000 

7 students that attend the seven state 

8 universities, including Mankato, Moorhead, 

9 Winona, Southwest State, Metropolitan State, 

10 St. Cloud State and Bemidji State. 

11 The first issue facing our 

12 students we would like to address today is 

13 under-regulated financial aid disbursement 

14 financial institutions such as Higher One. 

15 These financial aid institutions are getting 

16 rich off taxpayer dollars that are intended 

17 to help students. And through their unfair 

18 fees, instead, end up in the pockets of 

19 wealthy investors. The biggest firm in the 

20 business is Higher One. It makes 80 percent 

21 of its revenues by siphoning fees from 

22 student aid disbursement cards totaling 
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1 $142.5 million of its $176.3 million total 

2 revenues in 2011, according to SEC filings. 

3 These fees include ATM and other transaction 

4 fees, overdraft fees, and interchange fees 

5 imposed on merchants who accept cards. There 

6 needs to be a serious discussion in this 

7 process to ensure that students are not 

8 continually taken advantage of in an emerging 

9 market with very few consumer protection 

10 regulations.

11 More and more bank regulators are 

12 expressing the concern with this market and 

13 the sector is growing quickly. Students need 

14 protections quickly and this industry needs 

15 rules before they become too entrenched. We 

16 ask that this committee fast track to have 

17 the card rules established in negotiations so 

18 they are fully implemented by the 2014-15 

19 school year. We believe a well-structured 

20 debit card program can provide benefits to 

21 students but many current programs provide 

22 little to no choice while high fees on grants 
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1 and loan money leave students in deeper debt. 

2 These companies are continuing a long track 

3 record of targeting colleges as gatekeepers 

4 to access students to push banking products 

5 that can greatly hurt our students. There 

6 appears to be a gray area in current 

7 regulations. While the intent is to provide 

8 students free access to their aid, that is 

9 not what is happening in most places.

10 There should be clarity now so 

11 that the negotiations can focus on regulatory 

12 review and not the uncertainty of language. 

13 We ask that this committee consider issuing a 

14 "Dear Colleague" letter before the start of 

15 the 2013-14 year clarifying the rules. The 

16 Department of Education could work to clarify 

17 what convenient access to ATMs means and the 

18 crackdown on aggressive and predatory 

19 marketing by only allowing debit card 

20 mailings to students who have affirmatively 

21 opted into the service.

22 While schools obtain revenues in 
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1 reducing costs by outsourcing certain 

2 services, the relationship between schools 

3 and financial aid institutions have raised 

4 questions because students end up bearing the 

5 cost most directly, including per swipe fees 

6 of 50 cents, inactivity fees of $10 or more 

7 after six months, overdraft fees of up to 

8 $38, and plenty more. Other issues include 

9 the effect of aggressive marketing strategies 

10 by partnering companies on student choice and 

11 weaker consumer protections on certain cards 

12 that hold student financial aid funds.

13 Many of our students have faced 

14 issues with these financial aid institutions 

15 on our campus at Metropolitan State 

16 University. We have heard stories of 

17 students that were required to fax a form

18 containing personal information, including 

19 their Social Security number, and go through 

20 a process that delayed the disbursement for 

21 weeks. These students were forced to go 

22 through an unsecured process providing 
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1 personal information in order to opt out of

2 the debit card disbursement process. Many 

3 students received the debit card in the mail 

4 with no prior notification and simply threw 

5 the card away, incurring an additional fee 

6 when trying to gain a new card. These are 

7 just a few of the issues we have heard over 

8 and over again.

9 Lastly, we support the basic 

10 minimum standards for gainful employment. 

11 Currently, for-profit colleges have 13 

12 percent of the students but 47 percent of the 

13 student loan defaults. Abuses by for-profit 

14 colleges impair our efforts to help 

15 Minnesotans receive high quality education. 

16 We have limited resources for our state grant 

17 program and the Pell Grant and we need to 

18 ensure these investments are not squandered.

19 As I am sure you have heard and 

20 will hear through these hearings, there are 

21 numerous issues that need to be addressed. 

22 Thank you for allowing us this opportunity to 
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1 address the committee and we look forward to 

2 partnering with you moving forward in this 

3 process to ensure students and consumers are 

4 protected.

5 Thank you.

6 MODERATOR KOLOTOS: Peter Graham.

7 (No response.)

8 MS. MICELI: Just as we're 

9 waiting to call our next speaker, just for 

10 anybody who has not signed up for a slot and 

11 would like to speak, there are slots 

12 available. We are keeping comments to ten 

13 minutes and we will certainly let you know if 

14 you are getting close to you time. But if 

15 you do want to sign up, please just see Amy 

16 here, who is up at the top with the laptop 

17 and she can schedule you in.

18 MODERATOR KOLOTOS: Laura 

19 Hoffman, if you want to speak now, we can. 

20 Thank you.

21 I just want to remind everyone we 

22 have a ten-minute limit on the testimony and 
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1 I am on the clock. So, I will let you know 

2 if you are running over. Thank you.

3 MS. HOFFMAN: Hi. For the 

4 record, my name is Laura Hoffman. I am a

5 2013 graduate at the University of Minnesota 

6 and a former member of the Minnesota Student 

7 Association, which is our undergraduate 

8 student body government here at the U. I am 

9 speaking on behalf of current and former 

10 students across the University of Minnesota 

11 system and students across the country that 

12 cannot be here today.

13 I am here today because I was 

14 very lucky when it came to paying for 

15 college. Because of scholarships I received 

16 and, more importantly, the contributions of 

17 my parents, I was able to avoid taking out 

18 loans for my college education. 

19 Unfortunately, I am the exception to the 

20 rule. The reality is, total student debt in 

21 the U.S. currently exceeds one trillion 

22 dollars and average student debt is $26,600 
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1 in the United States and almost $30,000 in 

2 Minnesota. And although I have managed to 

3 personally avoid my share of this debt, those 

4 numbers still worry me immensely.

5 When I think of student debt 

6 today, I think of those graduating seniors 

7 whose families were unwilling or unable to 

8 help them through school. I think of my 

9 friend, Shane, who graduated on Sunday with 

10 thousands of dollars in student debt and who 

11 I haven't been out to dinner with in months 

12 because his funds are so tight that he can't 

13 take a night off work. I think of my friend, 

14 Alexa, who graduated on Monday in a similar 

15 situation. She has been working three jobs 

16 since our sophomore year of school and, as 

17 well as balancing the rigorous course load 

18 required of a student of the Carlson School 

19 of Management. And I think about the weight 

20 that this debt places on students across the 

21 country who have so many other things about 

22 which to worry. As a recent grad, I am 
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1 already under a huge amount of stress to find 

2 a job in a struggling economy, especially in 

3 a field that I enjoy and with a salary that 

4 can pay my rent and other living expenses. 

5 That is something that weighs on me daily and 

6 I can't imagine what the pressure would be 

7 like with $30,000 extra dollars in debt 

8 hanging over my head.

9 And here is the problem. You 

10 know people are putting off getting married, 

11 and buying a car, and buying a home because 

12 of the debt and unemployment after they 

13 graduate. Debt has skyrocketed because 

14 tuition has skyrocketed. My father went to 

15 the University of Minnesota back in the '60s 

16 and he paid like $500 a year to go to school 

17 here. I think I paid like $6,500 to go to 

18 school this year. That is insane. Any 

19 solution to fix the debt crisis really needs 

20 to involve reducing tuition.

21 We have seen tuition double in 

22 the last ten years at the University of 
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1 Minnesota, while class sizes and 

2 administrative and athletic expenses have 

3 only increased. And the University here has 

4 over six hundred million dollars in 

5 unrestricted net assets, which is money that 

6 is sitting in reserves and not being 

7 dispensed to students as fellowships, or 

8 grants, or scholarships that could be used to 

9 be paying for quality instruction at a 

10 growing university.

11 Some things that we are 

12 advocating to fix these problems though are 

13 first and foremost we need to ensure that 

14 students are equitably represented throughout 

15 the rulemaking process. We want 75 percent 

16 of the members of the negotiated rulemaking 

17 committee to be students. According to the 

18 National Center for Education Statistics, 

19 students make up 85 percent of the people at 

20 institutions that receive Title IV funding 

21 and the least we can ask is for fair 

22 representation on a committee that is working 
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1 on these regulations that will impact us all 

2 so drastically.

3 As a recent University of 

4 Minnesota grad, I am here to show the 

5 Department that students are aware of these 

6 policy initiatives affecting us and we know 

7 that it is alright to be at the table to 

8 direct those initiatives.

9 It is also vital that federal 

10 funding for higher education is disbursed to 

11 schools based on their track record of making 

12 college affordable for students. Regulations 

13 really must restrict and award federal 

14 funding to higher education institutions, 

15 based on their ability to turn school revenue 

16 into affordable tuition and quality 

17 instruction, keep average student debt and 

18 loan rate defaults low, as well as help 

19 students get jobs on graduation. Reporting 

20 on finances and accounting is something that 

21 benefits all stakeholders in higher 

22 education, including the higher education 
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1 institutions themselves. And if they expect 

2 to get money from the national government, 

3 they really should be able to provide these 

4 resources to students and make sure that they 

5 are using that money in a responsible manner.

6 Also, this year's broad coalition 

7 of students introduced a bill in the 

8 Minnesota Legislature called Opportunity 

9 Minnesota. This will be further explained by 

10 a testifier later in the day but we believe 

11 that a mechanism similar to the one used in 

12 the bill, which is student debt relief 

13 through a refundable tax credit, could be 

14 implemented in the Higher Education Act to 

15 mitigate the student loan debt crisis and 

16 regenerate the middle class in the country 

17 once again.

18 So thank you so much for your 

19 time in allowing us to speak here today about 

20 these educations issues -- finance issues 

21 that are facing us all. I really appreciate 

22 the opportunity. Thank you.
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1 MODERATOR KOLOTOS: We're running 

2 a little ahead of time but if Michael Rosen 

3 is available.

4 MR. ROSEN: Good morning. I'm 

5 only available after an amazing cab ride we 

6 got. I don't know.

7 In any case, my name is Michael 

8 Rosen and I have been an economics professor 

9 at Milwaukee Area Technical College for 26 

10 years. MATC is one of the largest two-year 

11 colleges in the nation with 50,000 students. 

12 The majority are students of color, 

13 economically and disadvantaged.

14 I am appearing before you today 

15 to urge you to develop a strong gainful 

16 employment rule to ensure that students who 

17 attend college with noble academic and 

18 employment aspirations are not left 

19 unemployed or underemployed with huge debts 

20 they have no possibility of paying back. I 

21 have become an advocate for gainful 

22 employment regulations, based on my own 
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1 experience and that of literally dozens of 

2 former for-profit college students I have 

3 met.

4 Three years ago, I read an 

5 article in Milwaukee's local paper about a 

6 new technical college that was planning to 

7 open a block and a half from MATC. That 

8 piqued my interest because I wondered why 

9 Everest College, which I never heard of, 

10 would want to locate so close to the State's 

11 largest public technical college. So I did 

12 some research and was shocked to learn that 

13 Everest, a subsidiary of Corinthian College 

14 was mired in controversy over poor graduation 

15 and job placement rates, that its credits 

16 didn't transfer to most colleges and 

17 universities, and that its students had 

18 incredibly high student loan default rates. 

19 I also learned that it was subject of several 

20 lawsuits and investigations and it recently 

21 settled with the State of California for 

22 almost seven million dollars.
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1 I contacted the city council

2 person who represented the district Everest 

3 wanted to locate in. She was equally 

4 concerned and asked me to appear at a Board 

5 of Zoning Appeals hearing on Corinthian's 

6 request for a zoning change so they could 

7 begin construction.

8 Upon hearing our concerns about 

9 Everest's record, the Board held the decision 

10 over for a full public hearing. Corinthian 

11 representatives at that hearing threatened 

12 that if they did not receive immediate 

13 approval, the redevelopment deal would die. 

14 That proved to be an idle threat but 

15 representative of their corporate culture.

16 A hearing was finally called for 

17 February 2010. Corinthian spared no expense, 

18 hiring one of Milwaukee's most expense public 

19 relations firms and pressuring the Chamber of 

20 Commerce to hold a public meeting to promote 

21 their venture.

22 The public relations 
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1 representative met with me twice and asked me 

2 what Corinthian could do to get me to stop 

3 opposing their project. Opposition to 

4 Everest had grown, including the residence 

5 council representing the housing project next 

6 to Everest's desired location, the NAACP, 

7 seven additional aldermen, the MATC District 

8 Board, and a local Latino organization.

9 Nonetheless, the Board of Zoning 

10 Appeals approved the project, which was 

11 subsidized with eleven million dollars in 

12 interest-free bonds. But the spotlight was 

13 now on Everest. 

14 Less than two years after it 

15 opened, it quietly announced it was closing. 

16 But because its opening had been so 

17 controversial, the decision became big news. 

18 Immediately, the local media learned that our 

19 worst fears had been realized. As it had in 

20 other cities, Everest enticed low-income 

21 students with a promise that they would find 

22 gainful employment after they completed their 
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1 studies, encouraged and sometimes coerced

2 them to take out huge loans to pay for 

3 programs that cost four times what they would 

4 have paid at MATC, and had more students drop 

5 out than graduate from their programs.

6 An article in the Milwaukee 

7 Journal Sentinel documented the damage. More 

8 than half of the 1,585 students who enrolled 

9 since October 2010 when the school opened 

10 dropped out. Everest placed only 95 students 

11 by the end of July, less than six percent of 

12 enrollees and 25 percent of its grads. By 

13 comparison, according to Wisconsin Technical

14 College Systems Annual Graduate Follow-up 

15 Report, 88 percent of the 2,011 graduates 

16 from the technical colleges were employed 

17 within six months of graduation, 71 percent 

18 directly in their field of study.

19 At the time its closing became 

20 public, Everest had only 300 students 

21 enrolled. At the behest of the Education 

22 Approval Board, a Wisconsin regulatory body, 
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1 it agreed to pay the loans of the 827 

2 dropouts, assuming that they can be located, 

3 and those of any of the 300 students who 

4 didn't make it to the end of March. That 

5 debt at that time was estimated at 3.7 

6 million dollars.

7 The Mayor sent a letter 

8 requesting that Everest pay the loans of 

9 those who had graduated and had not got jobs 

10 but Everest would not agree. The school is 

11 now closed and there are hundreds of former 

12 Everest students who are left with broken 

13 dreams, no jobs, and huge debts. One of them 

14 is Michelle Reese, whose full testimony I 

15 will supply to the committee electronically. 

16 Her experience is like many others who have 

17 been lured into attending for-profit colleges 

18 by the promise of an accelerated academic 

19 program that will lead to immediate and 

20 gainful employment. She wrote, I graduated 

21 with a 4.0 GPA and was an Everest Ambassador. 

22 My credentials speak for themselves. I have 
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1 had only three interviews for offices in my 

2 field, all of which I found on my own with no 

3 help from Everest. They promised me, based 

4 on their advertising, a better life and that 

5 they would place me in my desired field of 

6 study. Everest was not the start of a better

7 life but more of the beginning of a long, 

8 still unfinished nightmare, leaving me with a 

9 ten to fifteen thousand dollar debt and no 

10 new start.

11 Or Karen Kilpatrick, an Everest 

12 grad. Everything they promised was a lie. I 

13 could talk all day about how my decision to 

14 go to this career college ruined my life but, 

15 unfortunately, I don't have enough time in 

16 the day because I am working two jobs as a 

17 housekeeper and personal aide and have two 

18 children to take care of. My intentions were 

19 to give my children a better future by 

20 bettering myself through education. Everest 

21 ripped that dream away from me and is the 

22 reason I am struggling with twelve thousand 
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1 dollars in debt.

2 Or Antonia Fuentes. I enrolled 

3 in the criminal justice program at Sanford4 Brown. My recruiter embellished on the 

5 career outlook, promising a bright future 

6 with a favorable career. From the salary 

7 level of $40,000 annually to the success 

8 stories plastered all over the walls, it was 

9 an advertisement strategy to recruit 

10 vulnerable students to enroll in their bogus 

11 programs. The credits I earned were non12 transferable to any four-year degree program. 

13 I found myself stuck with close to $30,000 in 

14 loan that I may never be able to pay back. 

15 It has been almost four years since I 

16 graduated and I am without a job in my field.

17 And finally, one more, Kyla 

18 Morrison. These are a selection of four from 

19 fifteen that I have collected just when I 

20 heard about this hearing. I was a good 

21 student with good grades. When I finally had 

22 an interview with Aurora Health Care, the 
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1 lady confided in me that this school had a 

2 bad reputation and no one wanted to hire 

3 anyone from this school. I started talking 

4 to other graduates and they, too, were having 

5 the same issues. I went back to school where 

6 they had people who were supposed to help you 

7 find jobs. This, again, was no help. This 

8 school was a total disappointed and I wasted 

9 so much money on a school that got me 

10 nowhere.

11 These are just a sample of the 

12 testimony that I will submit but all of them 

13 indicate that students, many of whom have no 

14 experience with higher education, are lured 

15 into enrolling in for-profit colleges by 

16 aggressive and recruiting marketing 

17 techniques, the promise of accelerated 

18 classes and effective job placement services 

19 and high-paying employment. I would submit 

20 to you that this is a business model, yet 

21 they wind up with their dreams destroyed, 

22 credits that do not transfer, huge debts they 
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1 cannot possibly pay back, and no gainful 

2 employment.

3 The reason there are so many 

4 dissatisfied students, multiple lawsuits, 32 

5 State Attorney General investigations, is 

6 that the business model is focused on 

7 misleading and aggressive advertising and 

8 recruitment paid for by procuring government 

9 loans for students. In my conversation with 

10 these students, to a person they said that 

11 they chose to go to a career college because 

12 they didn't want to waste their time taking 

13 English and math courses. They were told 

14 they could, in nine months, be graduated with 

15 a degree that would get them a job so they 

16 could get on with their lives.

17 Because for-profit colleges go as 

18 profit not placement, their primary concern 

19 is getting students signed up, not educating 

20 them.

21 MS. MICELI: Sir, your time is 

22 getting close.
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1 MR. ROSEN: Okay.

2 MS. MICELI: If you could just 

3 wrap up your comments.

4 MR. ROSEN: Yes. Several of the 

5 students I have spoken with were counseled to 

6 forebear their loans, regardless of their 

7 individual financial situation and despite 

8 the fact that depending on the loan, interest 

9 could continue to accrue in other repayment 

10 plans. This practice, along with other 

11 reports from for-profit schools, suggests a 

12 strategy. I urge the Department also to 

13 consider this possibility and other evasive 

14 tactics in writing new gainful employment 

15 regulations.

16 A gainful employment rule -- I am 

17 ending right now -- that ensures that former 

18 students attain meaningful education to 

19 qualify them for jobs that pay back for them 

20 -- that pay enough for them to pay back their 

21 loans is very important. It is good for the 

22 students and the taxpayers. Gainful 
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1 employment regulations will help ensure that 

2 the nation's Antonias, Karens, Kylas, and 

3 Michelles, and millions like them who are 

4 willing to juggle school, work, and family to 

5 secure a better life for themselves and their 

6 children will not be taken advantage of by 

7 unscrupulous career colleges that provide 

8 them with no career and no meaningful 

9 education at all. Thank you.

10 MS. MICELI: Thank you.

11 MR. ROSEN: Do you want this 

12 submitted in written form also?

13 MODERATOR KOLOTOS: We are 

14 running five minutes early. So if Dan 

15 Solomon wants to come to the microphone.

16 MR. SOLOMON: Hi, my name is Dan 

17 Solomon and I work for United States Senator 

18 Al Franken as his education person in the 

19 State of Minnesota and I will keep my 

20 comments very brief.

21 Basically, I just wanted to thank 

22 you all on behalf of Senator Franken for 
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1 coming to Minnesota. These field hearings 

2 are important and we really appreciate you 

3 and the Department taking the opportunity to 

4 come out and meet with Minnesotans and get 

5 their input and their feedback.

6 Senator Franken's office just 

7 completed eight college affordability 

8 resource nights across the state, where we 

9 offered financial aid advice to parents and 

10 students. And as you all know better than 

11 anyone else, the issue of college 

12 affordability is hugely important to our 

13 state and our nation. And so on behalf of 

14 Senator Franken, thank you so much for coming 

15 and the Senator looks forward to continuing 

16 to work with the Department as we try to meet 

17 this critical need and address the crucial 

18 issue of college affordability.

19 So, thank you.

20 MS. MICELI: Thank you. Thanks 

21 for having us.

22 MODERATOR KOLOTOS: Todd Jones.
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1 MR. JONES: My name is C. Todd 

2 Jones and I am President and General Counsel 

3 of the Association of Independent Colleges 

4 and Universities of Ohio. I am testifying 

5 today on behalf of the organization.

6 AICUO represents 50 independent 

7 non-profit colleges and universities in Ohio, 

8 which educate over 130,000 students and award 

9 degrees at the associate, baccalaureate, 

10 masters, professional and doctoral levels. 

11 Membership includes five institutions with 

12 substantial online educational programs, and 

13 numerous others that utilized online 

14 programs. I am here today to testify on 

15 three topics: the proposed state 

16 authorization regulations, specifically; the 

17 gainful employment regulations, specifically; 

18 and third and most importantly the evaluative 

19 standard used in the development of consensus 

20 through the negotiated rulemaking process.

21 Before discussing these topics, I 

22 will add one final matter for considering the 
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1 context of my comments. I was also 

2 designated by Secretary Duncan as a 

3 negotiator in the 2009-2010 for the 

4 independent college sector for then Proposed 

5 Program Integrity Regulations. During the 

6 Program Integrity Regulations, the Department 

7 proposed regulations on state authorization 

8 of higher ed programs, the final rules 

9 unilaterally moved into content that was not 

10 raised during the negotiations, and when the 

11 Department's rules were challenged in federal 

12 court, they were rejected as conflicting with 

13 the negotiated rulemaking process.

14 The Department of Education is to 

15 be commended for its efforts in this area, 

16 regardless of the outcome of the federal 

17 case. ED raised an important and timely 

18 issue during the Program Integrity 

19 negotiations: How do state regulations on 

20 program authorization interrelate in an era 

21 of cross-border online education? 

22 Unfortunately, the Department's proposal this 
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1 year to regulate yet again in this area is 

2 premature and I recommend the Department 

3 defer regulatory action. As the Department 

4 is aware, currently the President's Forum, 

5 the Council of State Governments Regional 

6 Education Boards, APLU and SHIO, among 

7 others, are developing the State 

8 Authorization Reciprocity Agreement, SARA. 

9 While there is still significant work ahead 

10 for SARA, it represents two things: an 

11 honest effort to forge a true consensus and a 

12 process through which interested parties 

13 participate with highly informed stakeholders 

14 with deep knowledge of state laws and 

15 practices.

16 The fixed timeframe of negotiated 

17 rulemaking and the limitation of 

18 participations that inherently must exclude 

19 some stakeholders for the purposes of making 

20 negotiations on other rules possible, makes 

21 negotiated rulemaking less suited to a 

22 complex issue like harmonization of over 50 
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1 state regulatory regimes. However, the very 

2 fact that the Department could still regulate 

3 on any shortcomings of SARA if it came to 

4 final agreement, means that the Department 

5 would be best advised to withdraw its

6 announcement to regulate on State 

7 authorization for distance education and let 

8 the process run its course.

9 Gainful employment regulations 

10 are another area on which the Department 

11 attempted to regulate during the program 

12 integrity sessions. I will only make two 

13 modest recommendations on this matter. 

14 First, the Department should seriously 

15 consider the difficult questions it was 

16 unable to answer during its initial foray on 

17 gainful employment. What are the possible 

18 unintended consequences of the proposal and 

19 how does the Department respond to them? 

20 Will the proposal encourage students to focus 

21 primarily on short-term earnings increases, 

22 that is the data available, and that is given 
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1 emphasis by the U.S. Department of Education? 

2 How could the Department ever hope to give 

3 such data proper context?

4 Is a college, for example, that 

5 produces significant numbers of teachers for 

6 Appalachian students and Native American 

7 reservations protected from inappropriate 

8 scrutiny from ED for doing exactly the kinds 

9 of public service jobs that are the basis of 

10 the Administration's loan forgiveness 

11 proposal? What will the Department do for 

12 colleges that graduate significant numbers of 

13 students that move out of state or 

14 internationally? As senior staff will 

15 remember from my dreary monologues during the 

16 negotiated rulemaking three years ago, these 

17 questions can go on and on.

18 Second and more importantly, is 

19 there a less burdensome, less invasive, less 

20 burdensome method of achieving the policy 

21 goals sought by the Department? The purpose 

22 of the regulation is to identify fraudulent 
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1 institutions, ones that provide education 

2 with Title IV funds where former students do 

3 not obtain employment in the field advertised 

4 by the institution at appropriate 

5 compensation. 

6 During the former negotiated 

7 rulemaking session, I suggested other 

8 significant indicators of non-employment, 

9 namely, student default rates and complaint 

10 rates. Having created the mechanism for 

11 complaints at the state level, the latter 

12 data are presumably available to the

13 Department. Default rates are also readily 

14 available. The reality is the Department 

15 lacks the fortitude to force closure of 

16 institutions where default rates reach 

17 unconscionable levels, like one-third of loan 

18 recipients.

19 This Administration has been in 

20 power over four years. I would like the 

21 Department to report on how it is 

22 aggressively investigating all institutions 
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1 above some unreasonable default level. 

2 However, as a former senior Department 

3 official myself, the reason is as well known 

4 to me as it is to today's Department 

5 leadership: politics. The Department is 

6 unprepared to use the obvious standard, so it 

7 chooses to burden the entirety of higher 

8 education because that is easier to execute 

9 and more uniform in application. There is a 

10 difference between balance and fairness and 

11 the Department should allow itself to 

12 regulate those institutions that are problems 

13 and free those that are not.

14 Finally, I must mention the very 

15 means by which the Department is seeking 

16 change. I have a great deal of respect for 

17 Secretary Duncan's efforts over the last four 

18 years to help make college more affordable, 

19 to protect the Pell Grant program and his 

20 honest efforts to reduce fraud in federal 

21 higher ed programs. Unfortunately, the means 

22 used to date in negotiated rulemaking and 
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1 elsewhere are greatly increasing the 

2 likelihood that the policy changes he has 

3 sought will be undermined or eliminated in 

4 the future. The lesson of Secretary 

5 Spelling’s work with the creditors was lost 

6 in administrative transition. Her unilateral 

7 attempts to change the purposes of 

8 accreditation led to direct congressional 

9 rebuke.

10 In a similar manner, this 

11 Administration is overriding the general 

12 consensus on state authorization regulations 

13 let it to go for broke, promulgating final 

14 regs it wanted over a general consensus. As 

15 a result, Congress acted and the federal 

16 courts ultimately overturned the regulations. 

17 It is worth noting -- it is worth 

18 briefly cataloguing the unilateral imposition 

19 of higher education policies by the 

20 administration in the last four years, beyond 

21 the examples I have cited. During the 

22 Program Integrity session, the Department 
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1 reversed an explicit unanimous consensus on 

2 the definition of credit hour, with a 

3 rationale that even the Administrator's 

4 supporters are at pains to explain with 

5 clarity to this day.

6 Other rules with essentially no 

7 observable need outside the State of 

8 California, like the State complaint 

9 regulations, were also driven through 

10 overwhelming consensus. During teacher 

11 preparation sessions, the Department 

12 explicitly stacked the panel with supporters 

13 and yet when even these supporters were 

14 unwilling to swallow what the Department 

15 demanded, senior Department staff talked over 

16 and refused to recognize for comment any 

17 dissent. Clearly, if the regulations remain 

18 in the same form once they leave the Office 

19 of Management and Budget, they will remain 

20 controversial. 

21 In addition, the Department 

22 conducted the single biggest rewrite of FERPA 
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1 regulations in the law's history to suit the 

2 Administration's priorities, taking no 

3 significant advice from the public.

4 Finally, the Department 

5 unilaterally changed a major evidentiary 

6 standard for scrutinizing sexual assault 

7 cases under Title IX in 2011. As the former 

8 Assistant Secretary for Enforcement, I can 

9 tell you that the move itself shocked me less 

10 than the comments from General Counsel 

11 outside Ohio with whom I have spoken. They 

12 have told me they believe the new guidance is 

13 actually decreasing the reporting of sexual 

14 assault but they can't tell the Department 

15 for fear of being targeted for investigation 

16 by OCR. This is the information the 

17 Department would have learned if it had 

18 conducted it in an open process.

19 I raise all of these examples 

20 because my great concern is that this 

21 negotiated rulemaking session is going to 

22 mirror the other unilateral policy processes 
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1 conducted over the last four years. My 

2 recommendation to the Department is that it 

3 step back from imposing its current views 

4 onto higher education and listen to a real 

5 public consensus process. If it does not, it 

6 will either be a replay of the late Clinton 

7 administration where congress, democrats, and 

8 republicans conducted an HEA reauthorization 

9 with no input from the administration or it 

10 will see a tidal wave reversal four or five 

11 years hence with no deference to the legal 

12 status quo because the Department and its 

13 leadership refused similar deference to or 

14 input from any stakeholders with which it 

15 disagree.

16 Thank you for the opportunity to 

17 speak with you today.

18 MODERATOR KOLOTOS: Brian Dailey19 Arndt.

20 MR. DAILEY-ARNDT: Good morning. 

21 My name is Brian Dailey-Arndt. I am a 

22 current student at the University of 
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1 Minnesota and I am the Vice Chair on the 

2 Board of Directors for MPIRG, the Minnesota 

3 Public Interest Research Group, working with 

4 the U.S. as well as the Minnesota Student 

5 Association and the Minnesota Student 

6 Legislative Coalition, to pass statewide 

7 initiatives to address the student debt 

8 crisis.

9 In addition, I am a leader with 

10 Take Action Minnesota, a network of 

11 grassroots power organizations spanning the 

12 State of Minnesota. Take Action is an 

13 affiliate of National People's Action, 

14 through which students in Minnesota have been 

15 working with and in alliance with students 

16 from the IIRON Student Network out of 

17 Illinois and Indiana to fix the student debt 

18 crisis as well.

19 So I am speaking today on behalf 

20 of students across the State of Minnesota, 

21 across the University of Minnesota system and 

22 across the country who cannot be here today.
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1 So I am here today because I 

2 recognize that the United States is in the 

3 midst of a crisis. Total student debt in the 

4 United States exceeds one trillion dollars 

5 and average student debt is $26,600 across 

6 the country. In Minnesota it is even worse, 

7 rounding out at almost $30,000. This is 

8 affecting middle class, working class, and 

9 poor families, pummeling them with 

10 incapacitating debt and causing financial and 

11 emotional devastation that, frankly, has not 

12 been seen before in this country in this 

13 form.

14 Students are putting off getting 

15 married, buying a car, buying a home because 

16 of debt and unemployment after they graduate. 

17 The reduction of this economic activity, 

18 which is what drives our economy, generates 

19 capital, jobs, and quality of life for all 

20 Americans is not relenting anytime soon. And 

21 it is going to force our economy to stagnate 

22 and to fall from the prosperity that it has 
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1 achieved as students here today become the 

2 leaders of this country tomorrow.

3 In addition, my generation will 

4 be expected to finance through taxes, the 

5 programs and services that our parents will 

6 need as they enter retirement, as we take 

7 their place as the workforce. Not since 

8 World War II have young people been expected 

9 to take on such responsibility for the future 

10 of the nation, yet had so few resources and 

11 so much opposition to fulfill that call.

12 I am here today because I want a 

13 better life than what my parents had and I 

14 see that that is at risk. What I want is the 

15 American dream and what students today feel 

16 is a birthright as citizens in this country, 

17 we now see as a dream that is evaporating as 

18 we speak. So I am here today to speak on 

19 behalf of the students that are feeling the 

20 real effects of the discussions that take 

21 place in this room.

22 So presenting a few ways that we 
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1 can address these problems. One, first and 

2 foremost, is to ensure that students are 

3 equitably represented throughout the 

4 rulemaking process. Seventy-five percent of 

5 the members of the negotiated rulemaking 

6 community must be students. The National 

7 Center for Education Statistics data shows 

8 that students make up 85 percent of all the 

9 people at institutions that receive Title IV 

10 funding. So that seems equitable to the 

11 students that are working on these issues.

12 Students are also aware of the 

13 policy initiatives that are affecting us and 

14 we know that it is our right to be at the 

15 table to direct those initiatives, not just 

16 tokenized at the table but collaborating and 

17 in a partnership with other stakeholders in 

18 this process.

19 The least we can ask for is fair 

20 representation on a committee that is 

21 establishing these regulations and that is 

22 going to impact us dramatically, more than 
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1 any other stakeholders, frankly, as this work 

2 progresses.

3 The second point has to do with 

4 administrative accountability and 

5 transparency. Debt has skyrocketed because 

6 tuition has skyrocketed. The average tuition 

7 has doubled in the last decade across the 

8 country. It has doubled here in Minnesota. 

9 And so every solution that we present to fix 

10 the debt crisis has to tackle tuition 

11 affordability head-on.

12 So as we have seen tuition double 

13 in Minnesota, we have seen parallel declines 

14 in expenditures on instructional salaries and 

15 increases in class size and administrative 

16 costs and athletic expenses.

17 In addition, the University has 

18 over six hundred million dollars in 

19 unrestricted net assets. That is not an 

20 uncommon thing, from what I am hearing, 

21 especially in public universities across the 

22 country. The University is sitting on 
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1 reserves that are essentially not being 

2 distributed to students as fellowships, 

3 grants, or scholarships that are used to pay 

4 for quality instruction at growing 

5 universities. These kinds of problems need 

6 to be addressed directly by regulations. So 

7 it is vital that federal funding to higher 

8 education be disbursed to schools, based on 

9 their track record of making college 

10 affordable for students.

11 So at least three things that we 

12 can do to make sure that regulations are used 

13 to restrict and award federal funding for 

14 higher education institutions based on their 

15 ability to turn school revenue into 

16 affordable tuition and quality instruction, 

17 to keep average student debt and loan default 

18 rates low, and to help students get jobs upon 

19 graduation. Those three basic things are the 

20 ways that we are going to be able to mitigate 

21 the suffering that our economy is going to 

22 endure in the future.
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1 We have to set this kind of 

2 precedent for administrative accountability 

3 and transparency, simply as part of a 21st 

4 Century education system in this country. 

5 Adding another level of oversight at the 

6 federal level making information available 

7 for how schools are or are not going to every 

8 effort to make college affordable must be 

9 transparent and accessible for all students 

10 and their families as they make decisions 

11 about higher education.

12 Additionally, reporting on 

13 finances and accounting is something that 

14 benefits all stakeholders in this process and 

15 can benefit the institutions themselves as 

16 they can kind of prove their clout.

17 And as with any of these 

18 regulations that are being discussed here 

19 today, students need to be at the table to 

20 discuss how those will play out and make sure 

21 that they are implemented to benefit students 

22 in the long run.
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1 Finally, I want to mention a 

2 State policy initiative that MPIRG has been 

3 working on a coalition with other 

4 organizations. We introduced a bill in the 

5 Minnesota legislature this year that relieves 

6 student loan debt payments through a 

7 refundable tax credit mechanism. It is 

8 called Opportunity Minnesota. It is based on 

9 a bill called Opportunity Maine that passed 

10 in Maine in 2007. This is a really 

11 innovative way to tackle the student debt 

12 crisis and we believe that this is a sound 

13 regulation that we can try to introduce at 

14 some level at the federal level to tackle the 

15 crisis head-on.

16 So the way it works is that 

17 students who complete their entire 

18 postsecondary degree at higher education in 

19 Minnesota -- this is on the State level I am 

20 talking about now -- they work here after 

21 they graduate and they make their monthly 

22 loan payments, reimbursed for the principle 
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1 and interest that they paid on their loans up 

2 to $4,000 a year at the end of each year that 

3 they qualify, based on those three things I 

4 mentioned. And the amount that they can 

5 receive is based on a series of income cut6 offs that we have established.

7 So we have gone through rigorous 

8 economic analysis with the professor here at 

9 the University, Elton Mykerezi. He is an 

10 applied economist here at the University. He 

11 indicates that because the refundable tax 

12 credit mechanism incentivizes students to go 

13 to college who would have otherwise been 

14 priced out of going to school, the net fiscal 

15 and social benefits of the program ensure 

16 that it can become revenue neutral within ten 

17 years. So, it is pretty incredible.

18 These benefits are accrued 

19 through wage spillover effects, reduced 

20 incarcerations, and reliance on social 

21 programs, and a drastic increase in the tax 

22 base.
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1 On a federal level, this 

2 mechanism could relieve the burden of student 

3 debt, while incentivizing more students who 

4 go to college and for our work for sustaining 

5 the United States. We could explain it from 

6 a state level to a national level. Finally, 

7 I mean this is just one example of how 

8 students are pushing initiatives at every 

9 level of our democracy to fix the student 

10 debt crisis. 

11 This negotiated rulemaking 

12 process is yet another form in which we are 

13 presenting innovative policy solutions. As a 

14 constituency most directly affected by this 

15 crisis and the provisions of the Higher 

16 Education Act, the solutions that we are 

17 presenting deserve equitable gravity in the 

18 decision making process moving forward. We 

19 are living in this crisis. We are the 

20 workforce of tomorrow and we at least, at the 

21 very least are looking for adequate 

22 representation on the negotiated rulemaking 
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1 committee to ensure that our interests are 

2 justly served.

3 Thank you so much.

4 (Applause.)

5 MR. DAILEY-ARNDT: I have some 

6 documents about the policy. I could leave 

7 those with you. 

8 MS. MICELI: Yes. Can you leave 

9 them with me?

10 MR. DAILEY-ARNDT: Sure.

11 MS. MICELI: Thank you.

12 MR. DAILEY-ARNDT: Thank you.

13 MODERATOR KOLOTOS: Tricia 

14 Grimes.

15 MS. GRIMES: Good morning and 

16 welcome to Minnesota. I am Tricia Grimes. I 

17 work for the Minnesota Office of Higher 

18 Education, which is the state agency that 

19 does one of the country's leading state grant 

20 programs that complements the federal Pell 

21 Grant program. We also regulate private 

22 postsecondary education and provide policy 
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1 analysis and information for the whole state. 

2 We do not operate colleges and universities, 

3 not even the public ones.

4 On the issue of state 

5 authorization for distance education 

6 programs, we do want to reinforce the idea 

7 that it is important to ensure that 

8 institutions are operating legally in all 

9 states. Minnesota requires every school 

10 enrolling Minnesota residents in online 

11 courses or programs to register as a private 

12 degree-granting institution pursuant to the 

13 Minnesota Private and Out-of-State Public 

14 Postsecondary Act, unless the school offers 

15 the course for free or for a nominal charge. 

16 This registration requirement provides 

17 consumer protection to students who pay 

18 tuition and consume student aid eligibility 

19 with each term of enrollment.

20 Minnesota's requirements for 

21 online schools are more stringent than many 

22 other states. The explosion of online 
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1 distance education, especially over the past 

2 eight to ten years, has made the issue of 

3 state authorization and approval more 

4 critical than ever. Minnesota is one of the 

5 leaders in the state approval process called 

6 SARA that the testifier from Ohio recently 

7 mentioned.

8 In an effort to balance the need

9 for consumer protection with the goal of 

10 allowing postsecondary innovation Minnesota 

11 adopted legislation regarding massive open 

12 online courses or MOOCs in the legislative 

13 session that ended earlier this week. The 

14 legislation exempts institutions in online 

15 course platforms offering free instruction 

16 from regulation by the state higher education 

17 agency, as long as fees associated with the 

18 courses do not exceed two percent of the 

19 undergraduate tuition charged for full-time 

20 students at degree-granting institutions, as 

21 published annually by the U.S. Department of 

22 Education. That law is included in the 
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1 attachments that we provided up there.

2 As you work to develop the state 

3 authorization rule, it is imperative that you 

4 include clear procedures for state regulatory 

5 agencies like ours to notify the U.S. 

6 Department of Education of possible illegal 

7 operations by schools in their state and 

8 provide a process for such claims to be 

9 addressed.

10 Turning to the topic of gainful 

11 employment, the increase in borrowing and the 

12 difficulty in finding jobs in the current 

13 economy have combined to change the meaning 

14 of gainful employment from getting a job to 

15 getting a job that pays well enough for 

16 borrowers to repay their student loans. This 

17 should apply to students attending all types 

18 of postsecondary institutions, public, 

19 private, for-profit, and not-for-profit. 

20 Minnesota provides information on hourly 

21 earnings by occupation in its iseek.org 

22 website. We are, again, providing you with 
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1 an example in the attachment of the 

2 information on the earnings of police patrol 

3 officers and their outlook for employment. 

4 It gives an example of the kind of consumer 

5 information that can help students.

6 The Minnesota Office of Higher 

7 Education is also one of the partner agencies 

8 in Minnesota's Statewide Longitudinal 

9 Educational Data System, affectionately known 

10 as SLEDS. The system tracks students from 

11 preschool to K-12 and postsecondary education 

12 into the workforce. The data system was 

13 developed with federal stimulus funds and our 

14 legislature recently enacted an appropriation 

15 to continue it with state funds. The data 

16 include information on public, not-for17 profit, and for-profit institutions for all 

18 levels of postsecondary education from one19 year certificates to graduate degrees.

20 The SLEDS data system provides 

21 information on employment and earnings that 

22 can be tracked back to the students' type of 
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1 postsecondary institution, major field of 

2 study, and the industry in which they work 

3 after leaving postsecondary education. While 

4 information on earnings is helpful to 

5 students, it is important to balance the 

6 demand for data on employment outcomes by 

7 institution with the burden of providing the 

8 data.

9 The gainful employment the U.S. 

10 Department of Education collected and 

11 published in summer 2012 was time consuming 

12 and expensive for institutions to provide. 

13 Policymakers want postsecondary institutions 

14 to minimize administrative expenses but, at 

15 the same time, they demand more and more 

16 outcome data, which increases those expenses.

17 If an institution is to be 

18 evaluated according to the workforce outcomes 

19 of its former students, which is an important 

20 thing to evaluate them on, policymakers need 

21 to remember that institutions do not control 

22 a number of factors that affect employment. 
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1 For example, institutions do not control the 

2 unemployment rate and the number of companies 

3 hiring in their region for any given 

4 graduating class. They also do not control 

5 student circumstances, such as injury, job 

6 loss, sickness, divorce, and whether a 

7 student has dependent children. Many of 

8 these factors contribute to a lower 

9 likelihood of completing a postsecondary 

10 degree or certificate. In addition, demands 

11 such as supporting a family and paying 

12 medical bills can make it hard for borrowers 

13 to repay student loans and, thus, affect an 

14 institution's repayment ratio.

15 Another factor that is not in 

16 control of the postsecondary institutions is 

17 the federal borrowing limit. The federal 

18 government increased borrowing limits for 

19 undergraduates in 2008, resulting in 

20 substantial increases in federal borrowing. 

21 If institutions are to encourage responsible 

22 borrowing, they should be given flexibility 
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1 in limiting how much a student can borrow 

2 based on their knowledge of what their 

3 students are likely to earn.

4 And now turning to the PLUS Loan 

5 program. The definition of adverse credit 

6 needs to be evaluated in the context of the 

7 PLUS Loan default rates. It is important to 

8 analyze the effects on defaults of any 

9 changes in the adverse credit definition.

10 The current credit standards used 

11 for the PLUS Loan are similar to those used 

12 by our Minnesota Student Education Loan Fund, 

13 known as the SELF program. The SELF program 

14 was described earlier a little bit by Moriah 

15 Miles and Shannon Glen from the Community 

16 College and State University Student 

17 Associations here in Minnesota.

18 Aspects of the credit criteria 

19 for our SELF program are less stringent than 

20 PLUS Loans and yet the SELF program has 

21 relatively low default rates. Gross SELF 

22 default rates over the lifetime of the loans 
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1 average five percent over a 20 year period. 

2 One of the key differences is that the SELF 

3 program permits people to borrow if they have 

4 paid off liens, judgments, and collection 

5 items. The filing of bankruptcy itself does 

6 not prohibit someone from being a cosigner on 

7 the SELF loan. If debts included in 

8 bankruptcy are subsequently paid off, rather 

9 than discharged, the person would be eligible 

10 as a cosigner. The SELF program cosigner 

11 credit requirements are also in the 

12 attachment.

13 The PLUS Loan borrowing limits 

14 may be a larger factor contributing to 

15 defaults. The PLUS Loan allows borrowing up 

16 to the cost of attendance without regard to 

17 the parents' income and capacity to repay the 

18 loan. 

19 The Minnesota SELF Loan borrowing 

20 is limited to $10,000 annually for bachelor 

21 and degree-granting institutions and $7,500 

22 annually for other institutions.
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1 The same disclosure requirements 

2 should be applicable for PLUS Loans and non3 federal student loans so parents and students 

4 can compare costs since, in many cases, state 

5 loans are less expensive than the PLUS Loan. 

6 For example, the SELF Loan variable interest 

7 rate is currently 3.3 percent and the fixed 

8 rate loan is 6.9 percent. And there are no 

9 fees. In comparison, the PLUS Loan has a 

10 fixed rate of 7.9 percent and up-front fees 

11 of four percent. The overall cost of 

12 repaying the PLUS Loan may not be apparent, 

13 since the three disclosures required to 

14 borrowers for state and private student loan 

15 lenders are not required for the PLUS Loan.

16 The preferred lender requirement 

17 adopted in 2008 severely restricts the 

18 ability of families to compare loan options. 

19 The result of the preferred lender 

20 requirement is that many schools cannot talk 

21 with families about lower cost alternatives, 

22 such as state loans. Even though the cost of 
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1 the PLUS loan may be greater than other state 

2 and private loan programs, postsecondary 

3 institutions are allowed to include plus 

4 loans in student's financial aid award 

5 packages with no restrictions. The 

6 shortcomings of the preferred lender law 

7 should be fixed. Minnesota, along with 15 

8 other states is seeking changes to the law in 

9 order to permit postsecondary institutions to 

10 provide critical financing information about 

11 state loan programs to students and families.

12 Thank you for the opportunity to 

13 present testimony as you move ahead in the 

14 federal process.

15 MODERATOR KOLOTOS: Bill Norwood.

16 MR. NORWOOD: Thanks. Good 

17 morning. My name is Bill Norwood and I work 

18 for a company called Heartland Payment 

19 Systems. I am in their Campus Solutions 

20 group and I function as chief architect. My 

21 focus has been on, for many years, the higher 

22 education products such as the Campus 
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1 OneCard, Give Something Back Program for 

2 charities, and specifically our financial aid 

3 disbursement product called Acceluraid. 

4 I am here today as a member of 

5 the Heartland team and we appreciate the 

6 opportunity you have given us to make this 

7 presentation. And we will also be submitting 

8 a written comment letter with the Department 

9 as well.

10 Before getting started, I would 

11 like to take a moment to introduce you to 

12 Heartland Payment Systems. It is probably a 

13 newcomer to many of you in the higher 

14 education market. It is a publicly traded 

15 corporation that opened its doors in 1997. 

16 We provide financial transactions for over 

17 250,000 merchants. We deal with about 90 

18 billion in transactions a year. Heartland is 

19 the fifth largest payment processor in the 

20 U.S. and ninth in the world.

21 This translates to stability, a 

22 company that will be around for the years to 
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1 come. And it is also a significant economic 

2 scale designed to save money on every 

3 transaction and that is why we can do what we 

4 do today with our Campus OneCard and other 

5 products and solutions.

6 Heartland is committed to 

7 transparency, fair dealings, and ethical 

8 business practices. We believe that fees and 

9 rates should be clearly disclosed so that 

10 students can make an informed decision when 

11 selecting their refund disbursement method. 

12 We feel that it is essential to know the fees 

13 you may pay with every transaction and with 

14 every account.

15 I have been with Heartland for 

16 the past seven years and prior I spent 35 

17 years of my career working at Florida State 

18 University in Tallahassee. I developed a 

19 forerunner of the electronic transfer of 

20 financial aid during that period, something 

21 called the FSU card. It was a private label 

22 ATM campus card built in '93-'94 era around 
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1 the bank system which I had the pleasure of 

2 presenting to the Department of Education and 

3 asking for approval to use that product at 

4 that period in time for dispensing financial 

5 aid.

6 It seems only fair to be speaking 

7 to the Department again almost 20 years later 

8 referencing those justifications that I used 

9 back then for developing the FSU Card program 

10 20 years ago and the justifications today are 

11 almost identical to what they were 20 years 

12 ago.

13 These justifications usually have 

14 five basic tenets. Make it simple and easier 

15 for students to receive their aid, loans, 

16 grants, scholarships or any other types of 

17 refunds by giving them choice or selectivity 

18 either ACH check, prepaid card, and today we 

19 don't know what is coming next but we will 

20 wait and see what that is.

21 Give students access to their 

22 funds faster while complying with all of the 
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1 associated regulations. And that has become 

2 a bigger and bigger deal.

3 Eliminate the cost students 

4 typically pay when using check-cashing 

5 companies; and you do that by eliminating 

6 checks. Reduce checks, eliminating all the 

7 associated work which, on average according 

8 to various studies, costs a campus, on 

9 average today, $5 each. So if you want to 

10 know why campuses need to get rid of checks 

11 or want to get rid of checks, understand the 

12 work that goes on with those.

13 And also, the other beauty of 

14 getting rid of checks is you eliminate the 

15 lost and stolen check issues. And if none of 

16 you have ever had the pleasure of working in 

17 a bursar or cashier's office dealing with 

18 those items, you will quickly understand why 

19 that is a bad deal.

20 Twenty years ago, in order to use 

21 a card for financial aid, that card had to be 

22 tied to a brick and mortar bank to have 
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1 access to account information. Today, 

2 technology has moved past the brick and 

3 mortar requirements, giving students access 

4 to transactional and balance information 

5 while walking down the street.

6 Look at the world students live 

7 in today: Always in touch, communicating 

8 constantly, using smartphones, the web, 

9 tablets, mobile banking, text messaging and 

10 other forms of social media. It is their 

11 life every day.

12 While this change is taking 

13 place, the Department of Education is setting 

14 up guidelines to make sure that federal funds 

15 are used as appropriate. Campuses are 

16 following their guidelines. Students are 

17 enrolled and attending class and graduate. 

18 The U.S. PIRG Education Fund 

19 Report titled "The Campus Debit Card Trap: 

20 Are Bank Partnerships Fair to Students?" in 

21 May 2012 raised a lot of questions and does a 

22 good job of covering the basic operational 
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1 aspects for reviewing a campus debit card 

2 program and understanding what it is.

3 Regarding bank partnerships being 

4 fair to students, campuses endorse many 

5 things by simply allowing them to be on 

6 campus. This includes food service, 

7 operations, computer, bookstore, and much 

8 more which a campus has typically contracted 

9 out and they are endorsing them in the same 

10 way as they are endorsing a branch bank on 

11 campus, a campus card program, or financial 

12 aid disbursement solution should also be 

13 endorsed by the campus as well.

14 Look at what other government 

15 agencies committed to removing paper checks, 

16 such as the IRS, Social Security, and other 

17 benefit programs have accomplished. They are 

18 now using prepaid debit cards as an option to 

19 replace all those checks, save the government 

20 a lot of time and money, and deliver funds 

21 faster to the individuals. And guess what? 

22 The prepaid debit cards used in these 
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1 programs have fees, reasonable fees paid by 

2 the individuals that are acceptable to the 

3 administration. The key words in here were 

4 prepaid and acceptable.

5 Quick summary. Campuses today 

6 basically follow one of four models and I 

7 will run through those quickly for you when 

8 handling financial aid disbursement and other 

9 campus refunds.

10 Number one, campuses continue to 

11 do what they have been doing for years, 

12 issuing and mailing checks, handling return 

13 mail and non-negotiated items, dealing with 

14 lost/stolen checks, supporting ACH to 

15 personal bank accounts, collecting and 

16 maintaining personal bank information on 

17 students.

18 Number two, company contracts 

19 with the campus to handle their refund 

20 disbursements where students can request a 

21 check or transfer funds via ACH to their 

22 personal bank account with all costs for the 
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1 service being paid by the campus. The ACH 

2 process requires students to submit their 

3 personal financial account information, which 

4 creates problems for the non-bank. The ACH 

5 process typically has a one to two day delay 

6 before funds are available.

7 Number three, campus partners 

8 with a brick and mortar or internet bank, 

9 giving students a branded debit card based on 

10 a demand deposit account or something that is 

11 referred to as a DDA. The bank typically has 

12 fees associated with the DDA, offers checking 

13 accounts and other services as well. Funds 

14 are ACH to the bank, typically, again, 

15 creating a one to two day delay before 

16 students have access to those funds. 

17 Students also have to provide PII 

18 information, which creates issues for the 

19 non-bank as well.

20 Number four, campus contracts for 

21 a branded prepaid card that is simply 

22 designed to be a disbursement refund card 
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1 only and nothing more. It is not based on a 

2 demand deposit account, not linked to or will 

3 be linked to a checking or savings account, 

4 has few and low fees, including no monthly 

5 fee, no ACH fee, no POS fee, no cash back 

6 fee, no transactional fee, no, no, no, no. 

7 So basically, the fees that it does have 

8 associated with it are associated are related 

9 to use of an ATM out of networks. 

10 Funds are typically available 

11 within minutes to students from receipt of 

12 funding from the campus.

13 The U.S. PIRG Report stated that 

14 prepaid cards offered little or no consumer 

15 protection, which is also not true in this 

16 case. Heartland's Discover-branded prepaid 

17 card has FDIC insurance, zero liability from 

18 fraud, no PII requirements, no reporting to 

19 credit agencies, and no overdrafts.

20 The program further helps 

21 students manage their finances by giving them 

22 access to view transaction history, receipt 
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1 notification, real-time with deposits and 

2 transactions, plus used a geographical spend 

3 analyzer tool to see where they spent their 

4 money. And our knowledge as far as fees are 

5 concerned with this particular program, it 

6 has the lowest fee structure of anyone 

7 compared.

8 This program also includes live 

9 customer support 24/7, seven days a week, 365 

10 days a year.

11 Considering the benefits shown 

12 above when using a branded prepaid card, it 

13 is easy to understand why many college 

14 students find a branded prepaid card to be an 

15 attractive alternative to the traditional 

16 checking account. A recent survey of 

17 campuses using this program showed that 92 

18 percent are likely to recommend using this 

19 Discover-branded prepaid card to a friend, as 

20 opposed to receiving a check from the 

21 college. Ninety percent, when calling our 

22 customer service at Heartland rated their 
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1 wait time for a representative as very short 

2 or short. Ninety-four percent said the 

3 customer service center representative fully 

4 or mostly resolved their issue. Eighty-one 

5 percent said the customer service 

6 representative was very knowledgeable.

7 And another example of the 

8 service provided to students at a large 

9 school through our call center handled 11,300 

10 calls in January alone, handled another 9,600 

11 in February, and the number goes up and down, 

12 depending on disbursement of funds. All of 

13 those calls are calls that would have gone to 

14 a campus but, instead, came into the call 

15 center to be handled and managed.

16 Under negotiated rulemaking, it 

17 should be apparent, going through the 

18 information above, that many of the issues 

19 raised in negotiated rulemaking don't apply 

20 to all of these programs. It is apparent 

21 that branded prepaid cards are as defined in 

22 the program above are not opening financial 
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1 accounts, not collecting PII information on 

2 students, not used to sell any other bank 

3 services at any time, not passed to third 

4 parties, and are as protected and secure as a 

5 personal bank account.

6 MS. MICELI: Sir, your time is 

7 almost up, if you could just wrap up.

8 MR. NORWOOD: How long?

9 MS. MICELI: I think we are out 

10 of time.

11 MR. NORWOOD: I'm done? Out of 

12 time? Okay.

13 MS. MICELI: But you can go ahead 

14 and wrap up.

15 MR. NORWOOD: Okay, all right.

16 The regulations propagated by the 

17 Department of Education for the express 

18 purpose for Title IV funds do not address the 

19 changes that have occurred in this technology 

20 in the past five years, as it relates to 

21 branded cards. Rules should allow these 

22 cards to act the same as a check. If never 
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1 accepted by the student, then they should be 

2 considered the same as a non-negotiated 

3 check. And the worst rule in the world is if 

4 you can't get in touch with a student, you 

5 don't know their address, they don't 

6 communicate with you, just drop a check in 

7 the mail. And that is the process we deal 

8 with today and schools have to live with 

9 that. Thank you.

10 MS. MICELI: Thank you.

11 MODERATOR KOLOTOS: Thank you and 

12 I have to say that I do remember those 

13 conversations 20 years ago with Florida State 

14 University.

15 MS. MICELI: I do not.

16 (Laughter.)

17 MODERATOR KOLOTOS: Jeanne 

18 Herrmann.

19 MS. HERRMANN: Good morning. My 

20 name is Jeanne Herrmann and I am the Chief 

21 Operating Officer for Globe University of 

22 Minnesota School of Business. Thank you for 
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1 the opportunity to offer comments relative to 

2 the Department's planned negotiated 

3 rulemaking. 

4 Globe MSB is a veteran of the 

5 career college community. Minnesota School 

6 of Business was founded in 1877 and Globe 

7 College started in 1885 in downtown St. Paul. 

8 Today, these two institutions are part of a 

9 family-owned educational business led by the 

10 Myhre family with 12 campuses in Minnesota, 

11 seven in Wisconsin, and one in South Dakota, 

12 and currently serve over 8,000 students.

13 As we have grown, we have 

14 maintained our fundamental mission of 

15 providing student-centered and career focused 

16 education. Our national accreditation 

17 accountability reports review the outcomes of 

18 our interaction of students and challenge us 

19 to continue improvement while requiring our 

20 institutions to meet benchmarks.

21 To ensure our students are 

22 acquiring essential knowledge, skills, and 
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1 abilities to be successful in their chosen 

2 career fields, every program has learning 

3 outcomes specific to the career path. The 

4 learning outcomes are assessed in courses 

5 throughout the program, using a variety of 

6 assessment tools.

7 As part of our campus focus, we 

8 have steadily increased our involvement in 

9 our local communities. Most of our graduates 

10 find employment in the communities 

11 surrounding the campus. It is an essential 

12 part of our commitment to our students to 

13 help them build those relationships in the 

14 community that will ultimately support their 

15 search for employment. We have close, 

16 established relationships with employers to 

17 help design our curriculum and to make sure 

18 that it is current.

19 Our Program Advisory Committees, 

20 PACs ensure that our curriculum meet employer 

21 industry standards and needs. Each campus 

22 maintains a PAC with appropriate membership 
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1 for every program offered at that campus. 

2 Currently, 1,428 employers or practitioners 

3 serve as active members of our PACs.

4 Through applied learning, our 

5 students become engaged, ethical, and 

6 responsible citizens of their communities. 

7 Students apply their learning to real world 

8 situations which benefit them and our 

9 community partners, including employers, the 

10 government and non-profit organizations. In 

11 2012, our students partnered with industry, 

12 to complete nearly 2,200 projects to meet 

13 applied learning course requirements. 

14 Globe University/Minnesota School 

15 of Business support the Department's effort 

16 to ensure the integrity of the federal 

17 student aid programs by strengthening the 

18 accountability of participating institutions.

19 The Department of Education also 

20 has, as a primary responsibility, to ensure 

21 access and choice for students. Increasing 

22 access to postsecondary education is one of 
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1 the Administration's key goals. Our comments 

2 urge the Department to consider how its 

3 regulatory proposals may work against these 

4 goals by imposing complex, burdensome, or 

5 confusing new requirements on the 

6 institutions.

7 We echo the Association of 

8 Private Sector Colleges and Universities in 

9 encouraging the Department to postpone 

10 convening new negotiated rulemaking sessions, 

11 particularly for controversial topics in 

12 areas likely to be impacted by 

13 reauthorization. It is our hope that the 

14 Department and the Congress will work out 

15 complimentary schedules for both 

16 reauthorization and the regulations to 

17 implement the Higher Education Act.

18 Having said that, I would like to 

19 offer comments for the Department's 

20 consideration on gainful employment, state 

21 authorization and the Department's negotiated 

22 rulemaking process.
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1 With respect to gainful 

2 employment, I will focus on three main 

3 points. First, private sector colleges and 

4 universities are committed to providing a 

5 quality education, just as their counterparts 

6 in traditional education, and to observing 

7 both the letter and the spirit of the myriad 

8 of laws that govern them. Globe is one, 

9 among many private sector colleges and 

10 universities that bring great value to 

11 students, employers and communities. 

12 Accordingly, any reconstituted gainful 

13 employment regulation should be applied 

14 uniformly across all sectors of higher ed.

15 Secondly, we support the 

16 President's objective of regaining the 

17 nation's premiere rank in proportion of 

18 citizens with at least one year of 

19 postsecondary education by 20/20. Adding a 

20 gainful employment metric as a condition of 

21 Title IV eligibility will actually work 

22 against this objective by restricting choice 
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1 and access.

2 Moreover, if such a metric is 

3 intended to solve the problems of student 

4 debt load, quality of programs or directing 

5 students to programs that will prepare them 

6 for highest demand occupations, it fails in 

7 being the best route to all three of these 

8 objectives.

9 If the goal is controlling 

10 student loan indebtedness, a better approach 

11 would be to permit institutions to limit the 

12 amount of loan funds a student may borrow to 

13 that which is needed to pay for the student's 

14 educational charges, such as tuition fees.

15 We urge the Department to seek 

16 and support legislative solutions that would 

17 permit these new approaches, instead of 

18 reconstituting gainful employment metrics 

19 that were part of the 2011 final rule.

20 We also urge the Department to be 

21 mindful of unintended consequences of 

22 precluding students like Globe students who 
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1 are working parents, young adults, military 

2 personnel, veterans, career changes, and 

3 other non-traditional students, those who 

4 need training the most from receiving the 

5 education they want and need. Why would the 

6 Department pursue metrics with such a 

7 significant impact on student choice at a 

8 time when the gap in the economic well-being

9 between rich and poor is increasing and 

10 education is that one path to bridge that 

11 gap?

12 Third, the Department should 

13 engage the higher education community in more 

14 common sense solutions for holding 

15 institutions accountable for positive 

16 outcomes. If, for example, the objective is 

17 consumer protection, transparency through 

18 enhanced disclosure of key relevant 

19 information to consumers as required already 

20 in current regulation is far more effective 

21 in assisting students in choosing career 

22 focus programs than the application of a 
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1 complex metric.

2 If student debt loads are the 

3 concern, the financial aid officer should be 

4 given the discretion to limit federally 

5 guaranteed loans borrowed when the amount 

6 borrowed exceeds educational costs, as it 

7 does all too often. If better tests for 

8 quality are concerned, achievement outcomes 

9 such as placement and graduation rates are 

10 better measures of value and quality of 

11 education for students than debt load or 

12 repayment rates.

13 Globe University and Minnesota 

14 School of Business are accredited by the 

15 Accrediting Council for Independent Colleges 

16 and Schools, ACICS, a national accrediting 

17 body recognized by both the Department and 

18 the Council for Higher Education 

19 Accreditation. Schools accredited by ACICS 

20 are required to meet and maintain high 

21 standards for faculty qualifications, student 

22 retention, and student placement. The 
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1 required ACICS reports also include audited 

2 annual financial statements to verify that 

3 adequate fiscal resources back our programs 

4 and student support services. In addition, 

5 many of our programs are programmatically 

6 accredited by specialized accrediting bodies, 

7 such as the Commission on Collegiate Nursing 

8 Education or CCNE.

9 In addition to accrediting body 

10 oversight, our schools are subject to a 

11 variety of other Title IV regulations, 

12 including required minimum cohort default 

13 rates as well as state oversight. We take 

14 compliance with a federal state accrediting 

15 body triad of regulation very seriously and 

16 compliance best practices are a part of our 

17 culture at Globe.

18 We support reasonable fact-based 

19 regulation focused on improving outcomes for 

20 students. We believe that there are steps 

21 that can be taken to protect and inform 

22 consumers and taxpayers. For instance, 
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1 educational outcomes, retention, and 

2 placement that are direct measures of quality 

3 are already in regulation and benefit all of 

4 higher education where they are implemented 

5 widely.

6 In respect to state 

7 authorization, Globe University/Minnesota 

8 School of Business appreciates the 

9 Department's interest in ensuring the 

10 postsecondary institutions that are 

11 participating in federal student aid programs 

12 operate with integrity and meet their 

13 obligations to the programs and to students. 

14 We have supported the spirit of the 

15 Department's goal in proposing regulations to 

16 require state authorization to ensure the 

17 monitoring enforcement mechanism of state 

18 statutes, rules, and regulations, and 

19 protection of students and consumers. That 

20 said, we remain concerned that the 

21 regulations on state authorization, as they 

22 are currently written intrude on state law, 
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1 alter traditional relationships among the 

2 triad partners, and actually work against the 

3 Department's data goal of increasing access 

4 to higher education, especially for adult 

5 learners and traditionally underserved 

6 student populations.

7 Accordingly, we believe the 

8 Department should rescind the regulation or 

9 limit its scope to institutions with physical 

10 presence within the state, as defined in 

11 state statute or regulation. The states are 

12 in the best position to understand what is 

13 needed to protect students, without 

14 additional layers of burdensome regulations. 

15 The regulations disrupt what have been 

16 strong, collegial and successful working 

17 partnerships.

18 It is our concern that students 

19 currently enrolled in legitimate, legally 

20 authorized institutions may be left in a no21 man's land, if the state does not pass new 

22 required legislation. The consequences for 
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1 institution and students within states that 

2 do not comply with the state authorization 

3 regulations are extremely grave. We 

4 appreciate the Department's decision to delay 

5 the implementation of the regulation but 

6 believe that it is imperative that the 

7 Department issue guidance as to which states 

8 have been determined to be in compliance with 

9 the regulation up to this point.

10 Many states and organizations are 

11 considering the best ways to approach the 

12 state authorization issue. We have heard 

13 about them earlier today, including the 

14 voluntary system of state reciprocity being 

15 recommended by the Commission on the 

16 Regulation of Postsecondary Distance 

17 Education. More time is needed for this work 

18 to be completed.

19 We propose that the Department of 

20 Education and various other stakeholders 

21 engage in a dialogue with all states to 

22 develop appropriate legislation and 
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1 administrative rules that protect students 

2 and consumers while respecting the right of 

3 each state to protect its citizens as it sees 

4 fit.

5 And finally, if negotiated 

6 rulemaking progresses beyond the field 

7 hearings, we would strongly urge the 

8 Department to implement the recommendations 

9 from the Office of Inspector General Final 

10 Audit Report dated June 2012 and to improve 

11 the rulemaking process by creating more teams 

12 with a smaller, more manageable number of 

13 agenda items.

14 Globe University/Minnesota School 

15 of Business appreciates the opportunity to 

16 provide comments on the Department's proposed 

17 regulations.

18 MS. MICELI: Thank you.

19 MODERATOR KOLOTOS: We are going 

20 to take a short break at this time. We will 

21 reconvene at 10:40. Thank you.

22 (Whereupon, the foregoing hearing 
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1 went off the record at 10:27 a.m. and went 

2 back on the record at 10:40 a.m.)

3 MODERATOR KOLOTOS: Caroline 

4 Palmer.

5 MS. MICELI: If everyone could 

6 just please take your seat, we are going to 

7 get started. Thank you.

8 MR. SILVER: Good morning. My 

9 name is Caroline Palmer and I am the staff 

10 attorney at the Minnesota Coalition Against 

11 Sexual Assault. Thank you for the 

12 opportunity to submit comments today. And I 

13 am just going to use my time to talk about 

14 the implementation of the new Violence 

15 Against Women Act requirements for campuses 

16 and this is otherwise known as VAWA.

17 MNCASA is a non-profit 

18 organization located in St. Paul and we 

19 represent over 70 sexual assault victim 

20 service programs statewide. Some of these 

21 organizations are located on college or 

22 university campuses or collaborate with local 
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1 campuses to prevent sexual violence and 

2 address sexual assault victim needs.

3 MNCASA also focuses activities it 

4 the areas of technical assistance, training, 

5 resource development, prevention, and public 

6 policy advocacy, as well as the promotion of 

7 the multidisciplinary Sexual Assault Response 

8 Team approach. This is sometimes known as a 

9 SART and this is administered through our 

10 Sexual Violence Justice Institute or SVJI.

11 In fact, MNCASA actually receives 

12 federal funding from the Office on Violence 

13 Against Women to provide technical assistance 

14 to SARTs across the country. Many of these 

15 SARTs are located on college campuses or 

16 include campuses in their protocol 

17 development and community response to sexual 

18 violence.

19 MNCASA currently advises directly 

20 12 SARTs in Minnesota and all but two have at 

21 least one college campus in their service 

22 areas. One example of a recent success story 
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1 is in Ramsey County, where a SART has been 

2 actively engaged in ongoing training, in 

3 communications with the many public and 

4 private colleges and universities in the 

5 area.

6 The primary comments I am 

7 planning to provide today are based on some 

8 of our experiences supporting collaborations 

9 between SARTs and campuses, with a specific 

10 focus on the nexus between the campus process 

11 and the criminal justice response to sexual 

12 assault.

13 There is a tremendous need for 

14 communication between these two responsive 

15 functions but there are also many different 

16 tensions at play. These include different 

17 timeframes for investigations, different 

18 burdens of proof, different potential short 

19 and long-term outcomes for both the victim 

20 and the offender, and concerns about how the 

21 different investigative and adjudicatory 

22 processes could influence one another. With 
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1 members of the criminal justice system 

2 expressing particular concern because of a 

3 finding of no responsibility by a campus 

4 investigation could be used as a defense in a 

5 criminal prosecution.

6 Further, these two investigatory 

7 and adjudicative functions have different 

8 goals. The campus is determining whether 

9 there has been a violation of campus policy, 

10 while the criminal justice system is 

11 determining whether there has been a 

12 violation of the law.

13 And the punishments are also 

14 different. A finding of responsibility for a 

15 campus related sexual assault could lead to 

16 an expulsion at worst, while a criminal 

17 conviction can lead to jail or prison time, 

18 probation, potentially sex offender 

19 registration, and the collateral consequences 

20 on education, employment, housing, and other 

21 issues that accompany such an outcome.

22 SARTs report varying degrees of 
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1 success working with campuses. In some 

2 cases, there is a close collaboration in the 

3 development of protocol and sometimes there 

4 is an arms-length interaction or no 

5 interaction at all. It is unfortunate when 

6 the latter scenario occurs because the 

7 members of a SART are often the best resource 

8 of training and support for a college campus. 

9 A SART has representatives from law 

10 enforcement, advocacy, prosecution, medical, 

11 social services, and other professional 

12 bodies. All of these professionals have the 

13 knowledge base to train campus personnel 

14 responsible for carrying out the new VAWA 

15 regulations that are also known as the Campus 

16 SAFE Act.

17 And these are all the local 

18 professionals campus officials need to be 

19 familiar with, in the event a sexual assault 

20 on campus becomes the subject of a criminal 

21 prosecution or requires medical attention 

22 including forensic exams, or even additional 
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1 confidential support from an independent 

2 advocacy program.

3 So what can be done to help each 

4 entity, the SART, and the campus see one 

5 another as an ally and not an enemy, or at 

6 least some sort of barrier. There is really 

7 no need for an adversarial relationship. 

8 Both entities are trying to get at offender 

9 accountability and justice for victims. Here 

10 is one idea.

11 Because annual training for 

12 anyone involved in the response procedure 

13 will be required under VAWA, the new VAWA 

14 campus regulations could promote 

15 collaboration with local SARTs if they exist 

16 in the campus jurisdiction, not only as a 

17 means of identifying possible trainers, but 

18 also as a way to further the skills of the 

19 campus officials tasked with investigating 

20 and adjudicating sexual assault allegations.

21 Annual training is certainly an 

22 important new requirement through VAWA but 
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1 ongoing conversation about the issue with the 

2 professionals in the community who are 

3 interested in promoting safety on campus and 

4 in the areas surrounding the campus where 

5 students live and work will only serve to 

6 enhance the abilities of the campus 

7 professionals to respond when the need 

8 arises.

9 Hopefully, the regulations can 

10 emphasize the significance of the SART 

11 approach to creating a coherent response 

12 protocol across disciplines as well as the 

13 ways they can benefit the campus. When 

14 appropriate, there could be a requirement of 

15 participation in a local SART, if one exists, 

16 or at least some level of communication as 

17 needed.

18 I would also like to mention 

19 briefly three other areas of consideration. 

20 First, it is my understanding that campuses 

21 will be required under the new VAWA 

22 regulations to create policy statements about 
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1 victim rights and institutional 

2 responsibilities around protective orders 

3 issues by criminal, civil, or tribal courts. 

4 It has been the experience of some of our 

5 local advocates that sometimes judges are 

6 reluctant to issue order that would keep a

7 student identified as a perpetrator out of 

8 campus housing or out of a class. But at the 

9 same time, the campus investigative process 

10 has up to 60 days and some level of 

11 protection may be needed in the meantime. 

12 Sometimes judges see these matters as 

13 something the schools just need to resolve. 

14 The regulations should urge 

15 campuses to coordinate with the courts and 

16 legal services providers in their 

17 jurisdictions to ensure that there is an 

18 understanding of how and when protective 

19 orders are issued. A campus has no legal 

20 authority and can levy no consequences for 

21 violations beyond expulsion. So, the 

22 adherence to protective orders is really 
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1 important and these are necessary safety 

2 mechanisms that must be provided to students 

3 who need them.

4 Again, SARTs can be helpful in 

5 facilitating these local conversations and 

6 can address these issues and protocols so the 

7 regulations could further promote this type 

8 of collaboration.

9 Next, I would like to address the 

10 issue of confidentiality. A student cannot 

11 always be assured of confidentiality when he 

12 or she reports a sexual assault to someone 

13 who represents the university. Therefore, it 

14 is important that students are aware of local 

15 off-campus resources where confidential 

16 resources are available. A campus that does 

17 not have the appropriate level of specialized 

18 counseling for student victims of sexual 

19 assault should create a partnership with a 

20 local advocacy services provider, so that 

21 service is available. In short, a college or 

22 university has an obligation to ensure that 
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1 some level of professional help is available 

2 either on the campus or within a short 

3 distance or by at least a 24-hour crisis line 

4 and those services should be confidential.

5 And finally, please consider the 

6 role of the state sexual assault coalition in 

7 helping campuses to meet their goals. MNCASA 

8 would like to suggest a program that supports 

9 opportunities for state coalitions to bring 

10 together campus representatives, to learn 

11 about best practices and network with one 

12 another perhaps on an annual or a biannual 

13 basis.

14 So thank you very much for your 

15 attention and I am happy to answer any 

16 questions. MNCASA is certainly happy to 

17 serve as a resource. Thank you.

18 MODERATOR KOLOTOS: A. Kate 

19 Bothun.

20 MS. BOTHUN: Good afternoon. My 

21 name is A. Kate Bothun and I briefly wanted 

22 to take a moment to mention why I decided to 
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1 present comments today.

2 I recently graduated from law 

3 school and during my time as a law student, I 

4 spent my time focusing on social justice 

5 issues, particularly that of the impact of

6 sexual violence on women. Therefore, my 

7 comments today will focus solely on issues 

8 that the Department of Education should 

9 consider when approaching regulations for 

10 Section 485(f) of the Higher Education Act 

11 that was just recently amended by VAWA.

12 In doing so, the regulations 

13 should directly address two issues, the 

14 training or college and university officials 

15 when conducting institutional proceedings and 

16 also the written explanation of a victim's 

17 rights and options.

18 Beginning with training for 

19 college and university officials under 

20 subparagraph B of Section 304(a)(8) of VAWA, 

21 officials who conduct these institutional 

22 proceedings must receive annual training on 
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1 domestic violence, stalking, sexual assault, 

2 and also dating violence on how to not only 

3 conduct the process but to do so in a manner 

4 that protects the victim.

5 So in consideration of the 

6 regulations, the consideration should be what 

7 should qualify as adequate training on these 

8 issues. For instance, the regulations could 

9 articulate minimum criteria to be including 

10 the training. The rationale behind doing so 

11 is that the content of the training received 

12 will significantly impact not only how 

13 officials respond to a report of domestic 

14 violence, dating violence, sexual assault or 

15 stalking, but also helps to ensure the 

16 victim's safety in the investigation and 

17 hearing process.

18 Next, a written explanation of a 

19 victim's rights and options is required under 

20 Section 304(a)(8)(C). Essentially, the 

21 written explanation summarizes information 

22 that must be included in an institutions 
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1 policies and procedures on sexual violence. 

2 So this includes items such as procedures the 

3 victims would have to following in making a 

4 report as well as sanctions or protection 

5 measures that an institutions may impose.

6 The regulations should approach 

7 the written explanation of a victim's rights 

8 and options by requiring the written 

9 explanation to occur within a certain time 

10 frame. For instance, once an incident of 

11 sexual assault is reported, the regulations 

12 could require that the college or university 

13 provide the victim with that written 

14 explanation of her rights and options within 

15 a five to seven day time period. The time 

16 frame will benefit both the victim and the 

17 institution because the written explanation 

18 provides the victim with a comprehensive 

19 overview of the rights and the processes that 

20 they must follow, which are articulated in 

21 the institution's policies and procedures.

22 Also, a time frame on the written 
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1 explanation ensures the victim receives a 

2 timely response. Reporting an incidence of 

3 sexual violence can be extremely difficult 

4 and unpleasant for a college-aged individual. 

5 Also, it ensures that a victim is aware of 

6 how to proceed, the possible sanction and 

7 protective measures available, the makeup of 

8 the institutional proceeding, available 

9 advocacy, counseling, and legal services and 

10 change in academics and living situations 

11 that would be available to them.

12 In summary, the regulations 

13 should in addressing 485(f), seek to address 

14 minimum criteria to be included in the

15 training of officials that conduct 

16 institutional proceedings on campuses and 

17 require college and university once a report 

18 is made to provide the victim with a written 

19 explanation of her rights and options within 

20 five to seven days.

21 Thank you for your time and 

22 consideration.
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1 MODERATOR KOLOTOS: David 

2 Schejbal and I apologize for the 

3 pronunciation now.

4 MR. SCHEJBAL: Thank you. My 

5 name is David Schejbal and I am Dean of 

6 Continuing Education Outreach and E-Learning 

7 in the University of Wisconsin Extension. I 

8 am here to speak about competency-based or 

9 direct assessment to higher education 

10 programs. And several of the criteria for 

11 awarding Title IV aid that have recently 

12 emerged in the March 19 Department of 

13 Education Dear Colleague letter.

14 As brief context, the University 

15 of Wisconsin has a system of institutions 

16 that includes 26 campuses and statewide 

17 extension service. My office works with all 

18 University of Wisconsin campuses to help 

19 increase the percentage of degree holders 

20 among adult and non-traditional students. To 

21 facilitate that process, we have concentrated 

22 on developing new online degrees in areas 
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1 that dovetail directly with significant job 

2 growth sectors such as healthcare, 

3 sustainability, and information technology.

4 As open courseware and massively 

5 open online courses or MOOCs became popular 

6 over the past two years, we began to think 

7 strategically about how to utilize these 

8 resources to provide more opportunities for 

9 students to access higher education while we 

10 work to lower the cost of higher education 

11 delivery.

12 In that deliberation process, we 

13 noted several key issues. One, quality 

14 assurance happens at the level of assessment. 

15 It is only by assessing student learning 

16 abilities and knowledge that we have evidence 

17 of learning.

18 Two, content and evaluation 

19 expertise is critical in determining 

20 knowledge and faculty have historically 

21 provided both services.

22 Three, we are increasingly able 
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1 to replicate or replace traditional classroom 

2 teaching with technological solutions. 

3 Four, discipline competency and 

4 mastery in highly applied ways is critical 

5 for students to be able to secure good jobs. 

6 And five, engaging employers in 

7 the identification and development of 

8 disciplinary competency standards is 

9 extremely important for ensuring that what a 

10 student knows and is able to do translates to 

11 meaningful and valuable job skills.

12 Given these considerations, we 

13 decided to develop a competency-based or 

14 direct assessment approach to higher 

15 education. To date, the University of 

16 Wisconsin system is the only system of higher 

17 ed in the country to develop direct 

18 assessment programs. Our direct assessment 

19 initiative is not intended to replace 

20 traditional modes of higher education. 

21 Instead, it is intended to grow the pie, to 

22 increase the number of access points to the 
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1 University of Wisconsin so that more students 

2 from more diverse backgrounds can take full 

3 advantage of the education resources that the 

4 University offers.

5 A competency-based or direct 

6 assessment approach is a significant 

7 departure from traditional higher education 

8 programs. It places focus on assessment and 

9 student mastery of disciplinary areas and it 

10 allows students to learn whenever and 

11 wherever they are best able to do so.

12 By allowing students to learn in 

13 places other than traditional online or face14 to-face classrooms, students can 

15 significantly reduce the cost of their 

16 education. Students can use open courseware 

17 to learn. They can learn on the job, in the 

18 military, and in an array of other settings. 

19 They can then demonstrate their mastery 

20 through structured assessments. And if they 

21 are well prepared, they can proceed through 

22 the assessment process more quickly than 
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1 through traditional programs. This then 

2 translates to students saving money in direct 

3 and indirect costs of education as well as in 

4 significant time savings.

5 Direct assessment or competency 

6 programs also differ from traditional 

7 programs in that completion or progress isn't 

8 measured in seat time or credit hours. It is 

9 measured in the demonstration of subject 

10 mastery. In recognition of this, the 

11 Carnegie Foundation, which established the 

12 Carnegie unit or credit hour as a measure of 

13 student progress is currently reviewing 

14 whether the credit hour is still an 

15 appropriate measure of student progress in 

16 knowledge acquisition.

17 In light of all of these 

18 developments and changes, the federal 

19 Department of Education recognized the 

20 importance and value of competency approaches 

21 to higher education. And in March, the 

22 Department released a "Dear Colleague" letter 
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1 to help universities and accreditors 

2 understand how federal financial aid may be 

3 awarded for programs that are based on direct 

4 assessments and not on classroom seat time or 

5 credit hours.

6 The "Dear Colleague" letter is a 

7 very useful first step in helping to 

8 establish some national standards for 

9 competency-based programs. There are, 

10 however, several issues in the "Dear 

11 Colleague" letter that are problematic and I 

12 want to highlight those today and request 

13 that they be addressed and changed.

14 First, the Department stipulates 

15 that in order for a program to qualify for 

16 federal aid, the entire program must be 

17 either direct assessment based or credit hour 

18 based. Quoting from the letter, “Programs 

19 that are offered partially with credit or 

20 clock hours and partially via direct 

21 assessment are not eligible programs." 

22 It is unclear why this 
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1 requirement is in place and it conflicts what 

2 is likely to be best practices for how 

3 students learn. Many students in direct 

4 assessment programs will need to take some 

5 traditional courses to build their knowledge. 

6 Those traditional courses, at least for the 

7 foreseeable future, will be credit-based. 

8 There seems to be no clear reason why 

9 students can't move between credit-based 

10 courses and direct assessments, just as 

11 students often take classes for more than one 

12 campus or enrolling classes, some of which 

13 are offered online and some of which are 

14 offered face-to-face.

15 In Wisconsin, for example, most 

16 of our campuses offer classes in various 

17 formats and our students take them online, 

18 face-to-face, or via mobile technologies. In 

19 addition, we have students who take advantage 

20 of large university system and enroll in 

21 classes offered by two or more campuses. In 

22 those cases, federal regulations allow aid to 
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1 be awarded and provide clear guidelines for 

2 how to do that. The same should be the case 

3 for students enrolled in direct assessment 

4 programs who want to take some credit classes 

5 and vice versa. The objective in all of 

6 these situations must be student learning and 

7 student success and federal regulations 

8 should help facilitate that.

9 Second, the "Dear Colleague" 

10 letter requires that direct assessment 

11 programs be directly tied to seat time and 

12 credit hours. Quoting again from the letter, 

13 "An institution must explain the method for 

14 reasonably equating the direct assessment 

15 program to credit or clock hours and related 

16 parameters of the program, including minimum 

17 weeks of instruction time." This requirement 

18 directly conflicts with how direct assessment 

19 programs are supposed to work. By design, 

20 direct assessment programs do not focus on 

21 instruction or the amount of time students 

22 spend learning. The value of direct 
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1 assessment programs is that they allow 

2 students to take full advantage of learning 

3 opportunities whenever and wherever they find 

4 them. Once students have learned a subject, 

5 process, skill, or a topic, direct assessment 

6 tests their mastery. When students do not 

7 successfully demonstrate mastery in an area, 

8 then they are directed to other learning 

9 opportunities to help them achieve mastery 

10 and then they are assessed again.

11 Hence, seat time or classroom 

12 time is not the program focus and requiring 

13 that direct assessment programs be equated to 

14 seat time and instruction-based programs 

15 misses the point and the value of direct 

16 assessments.

17 I encourage the negotiated 

18 rulemaking committee and the Department of 

19 Education to recognize the inherent 

20 separateness of learning, on the one hand, 

21 and demonstration of mastery on the other, 

22 and to explore ways in which aid can be 
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1 awarded for both kinds of programs, 

2 independently of one another. Finally, and 

3 for reasons of practicality, I suggest that 

4 instead of having the Department of Education 

5 review and approve direct assessment 

6 programs, the crediting agencies should be 

7 charged with that responsibility, just as 

8 they currently review all credit-based 

9 programs.

10 The relationship between colleges 

11 and universities and their accrediting 

12 agencies are generally positive and formal 

13 approval processes work reasonably well. 

14 Direct assessment programs, although new, are 

15 not inherently disrupted to that 

16 relationship, so the standard accreditation 

17 process should be used to approve competency18 based programs.

19 Thank you very much for the 

20 opportunity to speak here.

21 MODERATOR KOLOTOS: Laura 

22 Pollastrini.
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1 MS. POLLASTRINI: Thank you for 

2 the opportunity today. My name is Laura 

3 Pollastrini and I represent Northwestern 

4 College of Illinois in Chicago, a family5 owned institution of higher learning that has 

6 been in the Schumacher family since 1958. 

7 During this academic year, Northwestern 

8 College is celebrating its 110th anniversary 

9 as a family-owned institution. With just 

10 three campuses, Northwestern College 

11 continues to serve a population of students 

12 that are not served by public universities, 

13 community colleges, and non-profit 

14 institutions of higher education. For 110 

15 years now, we have been providing our 

16 students with an opportunity to obtain a 

17 college degree and, ultimately, to have a 

18 better life.

19 As the U.S. Department of 

20 Education ventures to begin yet another round 

21 of negotiated rulemaking sessions, we 

22 strongly request to consider suspending the 
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1 rulemaking sessions and, instead, worked 

2 jointly with the U.S. Congress to address 

3 program integrity and other issues as part of 

4 the reauthorization of the Higher Education 

5 Act.

6 The Department's last attempt at 

7 negotiated rulemaking included gainful 

8 employment and the state authorization 

9 regulations, which resulted in over 90,000 

10 comments filed by interested parties, heated 

11 debate on multiple occasions by the U.S. 

12 Congress and protracted litigation via 

13 several legal challenges. At a time when the 

14 charges to reduce college costs and student 

15 debt, instituting even more regulations might 

16 very likely result in the opposite effect; 

17 increases in college costs to meet additional 

18 federal compliance tax, and ultimately 

19 increasing the very tuition costs that it is 

20 aiming to reduce.

21 The Department is moving to 

22 continue a regulatory agenda that has been 
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1 overturned by the federal courts, specially 

2 the gainful employment and state 

3 authorization regs. In a bipartisan effort, 

4 members of the U.S. House disagreed with the 

5 gainful employment regulation and via its 

6 two-thirds majority vote, overwhelmingly 

7 evidenced their desire to prohibit the 

8 Department from implementing, administering, 

9 or enforcing the provision. The same was had 

10 for the state authorization regulation with a 

11 similar vote resulting.

12 Now, if the Department does 

13 pursue rulemaking, Northwestern College would 

14 urge concentration of its efforts on one to 

15 two topics, rather than the six to eight 

16 topics explicitly named; quality over 

17 quantity.

18 Here, I would like to touch upon 

19 some of the rules that the Department has 

20 proposed at this time. First, cash 

21 management. We believe the process currently 

22 in place and the time limits allotted to 
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1 comply are sufficient to meet the needs of 

2 the students and the institution while 

3 safeguarding the funds themselves. Smaller 

4 and larger institutions operate in very 

5 different fashions. Northwestern College 

6 finds that the current allotment of days to 

7 disburse funds in Title IV student aid funds 

8 to students should not be reduced. Checks 

9 and balances must be met with in an 

10 institution in order to ensure the integrity 

11 of the process and protect against fraud. 

12 Reducing the time period to comply, we feel 

13 would compromise this.

14 In addition, and maybe our school 

15 is archaic, but we oppose the debit card 

16 distribution of excess loan funds on our 

17 campuses as a mandatory regulation. First 

18 and foremost, we believe that the printing of 

19 an actual check double and triple checked by 

20 our controller's office and the requirement 

21 of in-person pickup of the funds which we do 

22 following the presentation of a school ID 
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1 affords Northwestern College the opportunity 

2 to prevent fraud and to ensure proper 

3 distribution. It further allows our business 

4 office the opportunity to better counsel our 

5 students on minimizing future debt through 

6 encouragement of application of those funds 

7 towards future tuition and educational needs 

8 instead.

9 With all the talk today of debit 

10 card fees that were testified to earlier, it 

11 reinforces the fact that I think Northwestern 

12 College's method, the checks that we actually 

13 cut for our students have the best effect and 

14 we also have zero fees, which would be in the 

15 best interests of our students, from what we 

16 have heard testified to today.

17 Second, state authorization. 

18 This issue has been raised in previous rules, 

19 although it has never been thoroughly honed 

20 to allow for compliance. To say that the 

21 current state authorization rules are 

22 ambiguous and utterly confusing is a gross 
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1 understatement. Multiple requests have been 

2 made to the Department for clarity and 

3 concise direction so that institutions like 

4 Northwestern College can comply but with no 

5 response. Instead, deadlines for compliance 

6 continue to be kicked down the road only to 

7 come up again a year later with no better 

8 idea of what we need to do to comply.

9 While awaiting clarification, 

10 though, the courts and Congress have weighed 

11 in and overturned state authorization for 

12 distance education. Some states do not yet 

13 have systems in place for state authorization 

14 of brick and mortar schools within its 

15 boundaries. Thus, their efforts to further 

16 comply with state authorization of distance 

17 education without any clarification from the 

18 Department is an even bigger struggle. 

19 Reciprocity agreements between states should 

20 also come into play.

21 If an institution is recognized 

22 in the state where they maintain a brick and 
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1 mortar campus and they are meeting that 

2 state's regulatory requirements, there should 

3 be reciprocity in states where the same 

4 institution operates via distance education 

5 programs. However, in order to work, that 

6 home state would be responsible for 

7 maintaining regulations to ensure 

8 institutional integrity, institutional 

9 quality, consumer protection, and 

10 institutional financial responsibility. But 

11 before we can pursue this innovative 

12 approach, we need to know which of the 50 

13 states are currently in compliance for 

14 smaller institutions like Northwestern 

15 College have a staff of one to determine this 

16 on our own for all 50 states.

17 Title IV eligibility is at stake. 

18 We need the Department to provide guidance on 

19 its previous rules on state authorization 

20 before it moves on to even further 

21 promulgation.

22 Third, clock to credit hour 
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1 conversion. The Department issued its final 

2 rules on the definition of a credit hour that 

3 was effective July 1, 2011. And in these two 

4 years, there has been nothing but confusion. 

5 The Department is on the right 

6 track. Times are changing and the clock to 

7 credit hour system is antiquated. Allow 

8 higher education institutions working with 

9 state regulatory agencies and accrediting 

10 commissions to be innovative to the needs of 

11 today's traditional student. Outcome or 

12 competency-based conversions need to be 

13 considered, for today's student is a far cry 

14 from the traditional student of even just the 

15 last decade.

16 If we want additional access to a 

17 college education, we need to adapt to the 

18 student of today and stop putting up 

19 roadblocks via regulations. 

20 Finally, gainful employment. 

21 While the courts have struck down the 

22 Department's rules on gainful employment, the 
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1 litigation is still ongoing, although 

2 yesterday it was announced that the 

3 Department is not appealing. We maintain the 

4 belief that the Department has exceeded its 

5 statutory authority by attempting to define 

6 this term when the U.S. Congress has, on 

7 multiple occasions, chosen not to define it. 

8 Further, we believe the Department exceeds 

9 its authority by attempting to create 

10 eligibility rules that again only the 

11 Congress has the power to create.

12 In brief, we believe debt to 

13 earning ratios as a means to evaluate the 

14 success of a program, while a seemingly 

15 balanced procedure is far from it and that it 

16 is unjust to find that if a single program is 

17 out of compliance with the complicated 

18 metric, that an entire institution should be 

19 placed on a provisional certification.

20 Further, the debt are required to 

21 ensure that an institution is in compliance 

22 with the metric is primarily held by Social 
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1 Security, and educational institutions are 

2 not privy to that data for it is 

3 confidential. Thus, we have no way to 

4 challenge the Department's determinations 

5 that a program or an institution is out of 

6 compliance which does violate our right to 

7 due process.

8 Now I would like to speak to 

9 additional regulations just generally. 

10 Regulatory change should not be taken lightly 

11 but only implemented when truly necessary. 

12 For college like northwestern, it comes at a 

13 cost to us in time and in money. In order to 

14 comply, we must change systems, invest in 

15 equipment, retrain staff, and develop 

16 policies and procedures to ensure the 

17 institution's compliance. That means higher 

18 costs to colleges and costs that will 

19 eventually have to be passed on to students 

20 via higher tuition. If the Department's goal 

21 is to increase access and affordability and 

22 reduce student debt, additional regulations 
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1 are not always the answer.

2 Finally, I respectfully ask the 

3 Department to reassess its opinion of the 

4 traditional college student; whereas, for the 

5 last century, the traditional college student 

6 was 18 to 22 years old, coming right out of 

7 high school, that is no longer the case. The 

8 nontraditional student is now America's 

9 really traditional student: Older adults 

10 balancing jobs and families and attending 

11 college part-time in order to meet financial 

12 and family obligations. Consequently, it 

13 takes longer for them to complete their 

14 degrees, most likely because they are doing 

15 it part-time. Many times, it is taking 

16 doubly expected timeframes because of the 

17 need to start and stop as many times as they 

18 do. Thus, the first time full-time 

19 parameters are incompatible in outcome 

20 evaluations and need to be reevaluated.

21 Thank you for the opportunity to 

22 present these comments here today, 
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1 Northwestern College has been providing 

2 students in the Chicago, Illinois area with a 

3 higher education and consequently greater 

4 opportunities for over 110 years. We would 

5 like to do so for another 110 years if the 

6 federal government would work with us and 

7 allow us. We respectfully ask the Department 

8 to reconsider its decision to promulgate the 

9 rules and, instead, work collaboratively with 

10 the Congress to properly and efficiently 

11 address the reauthorization of the Higher 

12 Education Act. 

13 Thank you.

14 MODERATOR KOLOTOS: Jason 

15 Pleggenkuhle.

16 MR. PLEGGENKUHLE: Good morning. 

17 My name is Jason Pleggenkuhle and I am an 

18 Assistant Attorney General with the Minnesota 

19 Attorney General's Office. Thank you for the 

20 opportunity to testify about the upcoming 

21 negotiated rulemaking for Title IV Federal 

22 Student Aid programs.
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1 Effective regulations are 

2 important to ensure that taxpayers invest in 

3 quality, affordable postsecondary education 

4 programs and also to make sure that these 

5 programs fulfill their ultimate purpose to 

6 adequately prepare students for employment in 

7 a career in today's competitive economy.

8 The Minnesota Attorney General's 

9 Office recommends that the negotiated 

10 rulemaking committee include two additional 

11 items in its rulemaking agenda. First, 

12 strengthen the job placement rate disclosure 

13 requirement for gainful employment programs, 

14 and second, add an additional gainful 

15 employment disclosure that adequately 

16 discloses to students the impact that 

17 national accreditation has upon the 

18 transferability of credits.

19 First, the committee should 

20 strengthen the job placement rate disclosure 

21 requirement. Students evaluate a 

22 postsecondary program by reviewing the 
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1 program's job placement rate. Accordingly, 

2 an institution's reported job placement rates 

3 must be accurate and comparable to other 

4 institutions. As you know, the technical 

5 review panel or TRP convened by National 

6 Center for Education Statistics or NCES to 

7 establish the calculation methodology for the 

8 job placement rate disclosure agreed that a 

9 common metric for calculating job placement 

10 rates was the most preferable methodology. 

11 However, the TRP was unable to provide 

12 definitive guidance and suggested that the 

13 Department further study 1) how to define key 

14 elements in a common metric to produce 

15 meaningful data; and 2) the availability and 

16 expansion of data sources to support a common 

17 metric.

18 It appears that no significant 

19 headway has been made since the TRP's June 

20 20, 2011 report. Because the NCES has not 

21 established a common metric, the regulation’s 

22 temporary calculation methodology has 
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1 controlled since July 1, 2011. Under this 

2 interim provision, an institution required by 

3 its accrediting agency or state to calculate 

4 job placement rates must use the accrediting 

5 agency's or state's methodology to calculate 

6 job placement rates for its gainful 

7 employment program disclosures.

8 An institution that is not 

9 required by its accreditor or state to 

10 calculate job placement rates is presently 

11 exempt from the job placement rate disclosure 

12 requirement.

13 Government investigations have 

14 found some for-profit schools manipulate, 

15 misrepresent, or falsify their job placement 

16 rates to mislead students and to meet 

17 standards required for Title IV funding. In 

18 some instances, for-profit schools inflate 

19 advertised job placement rates and the rates 

20 they report to accreditors or state 

21 regulatory bodies.

22 For example, according to one 
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1 pending government lawsuit, a Massachusetts 

2 based for-profit training center advertised 

3 and reported job placement rates between 70 

4 and 100 percent. The school's actual job 

5 placement rates were 13 to 17 percent and a 

6 higher percentage were unemployed than were 

7 placed in an occupation in their field of 

8 study. The investigation exposed that the 

9 school had been counting job placement rates 

10 in any field, such as fast food and 

11 housekeeping, to inflate its rates.

12 In 2012, a for-profit college 

13 paid $4.5 million to settle a government 

14 lawsuit alleging similarly inflated job 

15 placement rates. In 2011, a parent 

16 corporation that reported 2010 job placement 

17 rates for 49 -- oh, I'm sorry.

18 In 2011, a parent corporation 

19 that owns about a dozen national for-profit 

20 school chains was forced to revise its 

21 reported 2010 job placement rates for 49 of 

22 its campuses, due to a government 
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1 investigation. These revisions caused over 

2 30 of its campuses to fall out of compliance 

3 with its accreditor. 

4 In 2010, a Texas for-profit 

5 training center was ordered to hire an 

6 accountant to verify its reported job 

7 placement rates, after allegations of 

8 misrepresentations. The audit found that 90 

9 percent of the programs over-reported their 

10 job placement rates and that 63 percent of 

11 its programs had verified job placement rates 

12 that fell below its accreditor's minimum 

13 requirement of 60 percent.

14 It has been reported that some 

15 for-profit schools employ job placement rate 

16 manipulate tactics, which may include 

17 counting as placed graduates who are employed 

18 in fields that are unrelated to the 

19 occupations for which the program trained 

20 them or require no specialized training. 

21 Counting as placed graduates who work as 

22 little as a few days in the field, are self-
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1 employed, are working in unpaid internships 

2 or do freelance work, and counting as placed 

3 graduates who had a job prior to entering the 

4 program and remain unemployed in that same 

5 position following their completion of the 

6 program.

7 For these reasons, the negotiated 

8 rulemaking committee should include 

9 strengthening the job placement rate 

10 disclosure requirement in its rulemaking 

11 agenda.

12 We suggest two potential actions 

13 the committee should take to strengthen the 

14 job placement disclosure requirement. First, 

15 require routine independent audits of 

16 disclosed job placement rates and second, 

17 adopt a common metric for the calculation of 

18 disclosed job placement rates.

19 The committee should require 

20 institutions to substantiate the reported job

21 placement rates through the use of routine 

22 independent audits. For example, the 
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1 committee could require a job placement rate 

2 audit, similar to what is required for 300 to 

3 600 clock hour programs. Under that rule, 

4 the Department requires institutions to 

5 substantiate their job placement rates by 

6 having a certified public accountant audit 

7 the job placement rate calculations.

8 The committee should require any 

9 such audit to require the certified public 

10 accountant to independently verify the 

11 accuracy of the institution's job placement 

12 rates, rather than rely on information the 

13 institution unilaterally provides. Auditors 

14 should also be on the lookout for the 

15 manipulation tactics used by some for-profit 

16 schools.

17 The committee should also adopt a 

18 common metric for calculating placement rates 

19 of gainful employment programs, so that 

20 students can accurately compare job placement 

21 rates. Currently, even if the job placement 

22 rates disclosed by institutions are correct, 
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1 it is difficult for students to accurately 

2 compare the race because each institution's 

3 disclosed rate is calculated differently.

4 As recognized by the TRP, 

5 placement rates reported to accreditation and 

6 state agencies are often not comparable. 

7 Because of this, the TRP concluded that 

8 calculating job placement rates using a 

9 common metric was the preferable approach but 

10 were recommended that the Department further 

11 research how to define key elements of a 

12 common metric.

13 Only with the implementation of a 

14 common metric will students be able to make 

15 an apples to apples comparison of the job 

16 placement rates of different programs. The 

17 negotiated rulemaking committee should 

18 include in its agenda consideration of how to 

19 define key elements such as placement, to 

20 adopt a common metric to calculate job 

21 placement rates for gainful employment 

22 programs.
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1 Finally, the committee should 

2 include in its rulemaking agenda, the need to 

3 add an additional gainful employment 

4 disclosure that adequately discloses to 

5 students the impact that national 

6 accreditation has upon the transferability of 

7 credits.

8 As you know, there are two types 

9 of institutional accreditation; national 

10 accreditation, which typically accredits 

11 vocational and online for-profit schools, and 

12 regional accreditation, which generally 

13 accredits degree-granting, non-profit and 

14 public colleges and universities. Currently, 

15 90 percent of the schools that are nationally 

16 accredited are for-profit schools and 96 

17 percent of the schools that are regionally 

18 accredited are non-profit or public colleges 

19 and universities.

20 Regionally accredited schools 

21 rarely accept credits transferred from 

22 nationally accredited schools. A 2005 
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1 Government Accountability Office report found 

2 that 84 percent of institutions consider 

3 whether the sending institution is nationally 

4 or regionally accredited when determining 

5 whether to accept transfer credits and that 

6 many institutions' transfer policies specify 

7 that they only accept credits from a 

8 regionally accredited institution.

9 This leaves students of 

10 nationally accredited for-profit schools 

11 unable to transfer the credits they earn to 

12 places like a local community college. In 

13 some instances, the degree a student earns 

14 from a nationally accredited for-profit 

15 school will not even be recognized by a 

16 regionally accredited public university or 

17 community college.

18 At the time they enroll, most 

19 students are unaware of the differences 

20 between national and regional accreditation 

21 or the impact that national accreditation 

22 will have on the transferability of credits. 
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1 Indeed, when asked which type of 

2 accreditation is more widely accepted, 

3 students often intuitively choose national 

4 accreditation. As a result, students often 

5 do not learn that the credits they earn at a 

6 nationally accredited for-profit school will 

7 not transfer until long after they have 

8 enrolled or are attempting to leave. The 

9 student is then confronted with the choice of 

10 either transferring to a regionally 

11 accredited institution where the student will 

12 be forced to pay for and repeat coursework he 

13 or she has already completed, or receive some 

14 benefit for the money and time invested by 

15 finishing or building on the degree the 

16 student started at the nationally accredited 

17 for-profit school the student wishes to 

18 leave.

19 Further, nationally accredited 

20 for-profit schools often do not meaningfully 

21 inform students of the difficulty they will 

22 face when transferring credits to a 
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1 regionally accredited institution. Some for2 profit schools even falsely inform students 

3 that their national accreditation is highly 

4 prestigious or that students will have no 

5 problems transferring the credits they earn 

6 to another institution. Students should be 

7 fully informed before they enroll in a 

8 nationally accredited for-profit school that 

9 the credits or degrees they earn there, will 

10 most likely not be transferable to a 

11 regionally accredited community college or 

12 public university.

13 We recommend that the negotiated 

14 rulemaking committee add an additional 

15 gainful employment disclosure to the 

16 disclosures found at 34 CFR Section 668.6(b) 

17 that adequately discloses to students the 

18 impact national accreditation has upon the 

19 transferability of credits to a regionally 

20 accredited institution.

21 Thank you again for the 

22 opportunity to be here.
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1 MS. MICELI: Thank you.

2 MODERATOR KOLOTOS: Okay, at this 

3 time, we are going to adjourn until 1:30. 

4 Thank you very much.

5 (Whereupon, at 11:24 a.m., a lunch recess was 

6 taken.)

7

8

9
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1 A-F-T-E-R-N-O-O-N S-E-S-S-I-O-N

2 (1:30 p.m.)

3 MS. MICELI: Okay, good 

4 afternoon, everyone. We are going to restart 

5 the hearing. I just wanted to reintroduce 

6 myself. I am Julie Miceli from the 

7 Department of Education's Counsel's Office. 

8 This is my colleague John Kolotos from the 

9 Office of Postsecondary Education. And we 

10 will start with --

11 MODERATOR KOLOTOS: Melissa 

12 Rubio.

13 MS. MICELI: And folks, just to 

14 remind everyone, you have ten minutes 

15 allotted and if you get close to your time, 

16 we may politely interrupt, just to remind you 

17 that you are getting close and to wrap it up.

18 MS. RUBIO: Good afternoon. My 

19 name is Melissa Rubio and I am a leader with 

20 DePaul Students for Justice at DePaul 

21 University and the IIRON Student Network. 

22 The IIRON Student Network is a network of 
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1 grassroots university social justice-based 

2 organizations from across Chicago. The IIRON 

3 Student Network is an affiliate of the 

4 Community Organizing Network IIRON and 

5 National People's Action. 

6 The current student debt crisis 

7 that is costing our country one trillion 

8 dollars has created a fickle economy and job 

9 market for the graduating students of today. 

10 Many of us are being forced to put off major 

11 milestones in our lives, such as purchasing 

12 homes and starting families so that we can 

13 begin to chip away at the mountains of 

14 student loan debt through working low-paying 

15 jobs that have nothing to do with the degrees 

16 that we have studied and worked so hard to 

17 attain. I am one of these students.

18 This year, I am graduating. I 

19 have struggled through five years of work and 

20 study to keep myself fed and housed and to 

21 pay as much as possible out of pocket for my 

22 education. Even so, I am graduating with
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1 $47,000 in student loan debt. It will take 

2 me at least 20 years to pay off this debt, 

3 even with the new loan forgiveness plans in 

4 place. Not only am I graduating with this 

5 debt, but I also have no safety net to fall 

6 back on. Due to the housing crisis, my 

7 father lost his carpentry job in 2006, right 

8 after he lost his wife and my mother from 

9 hospital complications during her cancer 

10 treatments. 

11 I worked, as my mother had, in 

12 restaurants, trying to keep our lights on and 

13 the banks from seizing our home. At 16, 

14 suffering from the loss of my mother, I had 

15 to feed myself and keep my family from 

16 falling apart. I was not successful. I 

17 often went hungry. My father now lives 

18 thousands of miles away with his mother, 

19 drinking away the pain and the loss.

20 As you can understand, I wanted 

21 to go college not just to better my own lot 

22 in life, but to help others who have suffered 
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1 from poverty and hunger and the loss of their 

2 families and homes. So I came to DePaul 

3 University to get a degree that is not often 

4 offered at other universities in peace, 

5 justice, and conflict resolution. I am doing 

6 the work that I love to do, the work that 

7 needs to be done. But the job opportunities 

8 in my field are few and the pay is low.

9 I went to college believing I 

10 would be able to do something good in the 

11 world and someday support a family. But the 

12 reality of student debt is that this is not 

13 possible, at least not for me. In order to 

14 pay off my loans by the time I am 40, I will 

15 have to forego having a family and buying a 

16 home. 

17 I had access to college because I 

18 worked and I took out loans. But at what 

19 cost to my future? Since I began my 

20 education in 2008, my tuition has increased 

21 by more than $1,000 each year and has cost me 

22 nearly $6,000 extra.
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1 I agreed to a tuition price when 

2 I entered. I had no idea that I would be 

3 roped in to paying so much more each year. 

4 I was forced to contemplate the 

5 idea of dropping out the first semester of my 

6 freshman year in college because I could not 

7 afford the huge expenses. I asked the 

8 counselor, through tears, if there were any 

9 more funds that DePaul might provide for a 

10 struggling student like me. The counselor 

11 assured me that it would all be okay, that I 

12 could just take out more loans to cover the 

13 costs. This is not financial aid. This is 

14 creditors praying on the vulnerable. And 

15 this story is not uncommon. This happens to 

16 millions of students each year.

17 And just one month before my 

18 expected graduation ceremony, while my city 

19 and University are spending $125 million on a 

20 basketball stadium for our team, I am 

21 scrambling to find a job, any job that will 

22 allow me to pay my bills, feed myself, and 
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1 keep a home to live in. But it is not 

2 looking very good. I have been searching for 

3 months for jobs that I am both qualified and 

4 over qualified for and I am finding nothing. 

5 I am shopping in a community kitchen for my 

6 food and I will soon have to apply for 

7 federal food assistance.

8 These are the struggles my family 

9 and I dealt with my entire year -- my entire 

10 life and the struggles that made me yearn for 

11 a college education. When I entered college, 

12 my future looked bright but now I fear what 

13 is coming next and I dread my graduation 

14 date. I did not put myself through college 

15 for a future of struggle and poverty. This 

16 is not the future I invested in.

17 And these are the choices that 

18 students like me are faced with today. It is 

19 clear to me that my university, while 

20 benefitting from the federal student loans 

21 that I incurred through Title IV funding did 

22 not hold up its responsibility to keep 
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1 tuition affordable.

2 The Department of Education needs 

3 to create regulations that hold colleges and 

4 universities accountable for keeping tuition 

5 affordable and maintaining educational 

6 quality. Those colleges and universities 

7 that accept Title IV funding while letting 

8 tuition fees skyrocket should not be allowed 

9 to benefit from these programs while 

10 compromising students' futures by saddling 

11 them with debt. There are nearly 21 million 

12 of us students enrolled in institutions that 

13 participate in Title IV funding that would be 

14 impacted by these new rules that are about to 

15 be negotiated. We believe that students, the 

16 people most gravely impacted by this crisis 

17 must have adequate representation on the 

18 negotiated rulemaking committee, if we are to 

19 arrive at a solution that works for students' 

20 needs.

21 Because students make up 85 

22 percent of the individuals at institutions 
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1 receiving Title IV funding, we believe it is 

2 only fair that representatives of student 

3 organizations should account for 75 percent 

4 of the negotiators selected to be on the 

5 negotiated rulemaking committee.

6 Policymakers often do good work 

7 but students like myself are the ones that 

8 understand what is struggling to pay for an 

9 education feels like. Because we are the 

10 ones suffering, we have the right to be a 

11 majority on the committee. Thank you.

12 MODERATOR KOLOTOS: Weili Zheng.

13 MR. ZHENG: Good afternoon. My 

14 name is Weili Zheng. I am a leader in the 

15 IIRON Student Network and Roots of Justice at 

16 the University of Illinois at Chicago. We 

17 are a grassroots power organization composed 

18 of students from universities all across 

19 Chicago and we are an affiliate of IIRON and 

20 National People's Action.

21 I also recently graduated from 

22 the University of Illinois at Chicago and 
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1 will begin at the University of Illinois,

2 College of Medicine this fall. As a UIC 

3 student, I am proud to say that my university 

4 has a history of providing an affordable and 

5 quality education for those who could not 

6 otherwise attend a four-year institution. 

7 However, unfortunately, the university in 

8 recent years has completely abandoned this 

9 mission. In my three years as an 

10 undergraduate, I have seen the university 

11 display a callous disregard for students' 

12 academic and financial well-being.

13 In my personal experience at the 

14 largest university in Chicago, one that is a 

15 leading research institution in the nation, I 

16 have seen classes, class sizes for science 

17 classes routinely border on 300 students. 

18 And I have seen undergraduate classes left 

19 with decades’ old and non-functioning 

20 equipment to use. As a result, students are 

21 not learning what they should be and it is 

22 reducing their college degrees to a long, 
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1 wasteful, and expensive accreditation 

2 process.

3 In my own organic chemistry 

4 class, one of the most difficult classes in 

5 my undergraduate program, I found myself as 

6 one of 182 students in my lecture. And while 

7 this may be hard to imagine, this was 

8 actually the smallest lecture for organic 

9 chemistry of that semester. In my three 

10 years as an undergraduate, I have never sat 

11 in a major class with less, with fewer than 

12 20 students. In my genetics laboratory 

13 class, there weren't even enough seats, 

14 enough lab benches to seat all the students. 

15 I found myself often doing labs on a side 

16 counter away from everyone else standing. In 

17 my upper level cellular biology lab class, we 

18 found that we had to resort to having five 

19 people complete a lab meant for only two.

20 To put it in perspective -- we 

21 were so ill-equipped that to put it in 

22 perspective, my public high school had better 
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1 laboratory equipment than my classes at UIC 

2 had. I paid thousands in tuition to go to a 

3 college to attend classes that were less 

4 beneficial than the ones I took in high 

5 school.

6 According to IPEDS data, 

7 enrollment at UIC has increased by at least 

8 13 percent since 2004. In addition, tuition 

9 and fees have approximately doubled in that 

10 time. Yet, there has been barely any 

11 increase in instructor hiring or improvements 

12 upon existing classroom facilities. Instead, 

13 we have had funds diverted to building 

14 unnecessary residence halls that cannot even 

15 adequately fill their own rooms, as well as a 

16 proliferation in top administration 

17 positions.

18 And how is this viable? Well, 

19 state appropriations have been declining but 

20 the University has compensated for this, with 

21 a generous pool of Title IV loan money from 

22 increasing both enrollment and tuition.
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1 In a university where almost half 

2 of incoming freshmen are Pell Grant 

3 recipients, this imposes an additional and 

4 costly burden among students in terms of 

5 debt. Students at UIC cannot afford this. 

6 Moreover, the University of Illinois system 

7 currently holds over one billion dollars in 

8 unrestricted net assets.

9 When we attempted -- when Roots 

10 of Justice attempted to reach our chancellor 

11 about these concerns, she repeatedly refused 

12 to meet with us. We were told that the 

13 chancellor had no time to meet over the next 

14 few months. Later, we even found out that 

15 she had also asked our campus police for a 

16 report on our organization. To her, we were 

17 hostiles to the university when we were only 

18 trying to bring forth academic issues.

19 In our only meeting with another 

20 top administrator, our concerns were 

21 repeatedly dismissed and we were repeatedly 

22 condescended towards. In that moment, after 
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1 all the classes that I had been through, I 

2 felt that to the university I was basically 

3 just a number, rather than an actual person.

4 Educators that demonstrate this 

5 level of hostility towards student concerns 

6 should not be present on this negotiating 

7 rulemaking committee. However, moreover, it 

8 is clear that universities need to be held 

9 accountable in how they use Title IV funding. 

10 Schools that continue to exploit students for 

11 federal loans and grants without providing an 

12 adequate education, they undercut the 

13 integrity of a college education and cannot 

14 continue to receive Title IV funding. For 

15 student interests to be adequately 

16 represented, students need to be fairly 

17 represented as negotiators on the rulemaking 

18 committee. We demand that students comprise 

19 75 percent of the negotiators in the 

20 rulemaking committee and we assert that the 

21 rulemaking committee needs to focus on non22 profit university spending and tuition 
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1 increases as well.

2 Thank you.

3 MODERATOR KOLOTOS: Mansi 

4 Kathuria.

5 MS. KATHURIA: Good afternoon. 

6 My name is Mansi Kathuria and I am a recent 

7 graduate of the University of Illinois at 

8 Chicago. I am a leader in Roots of Justice 

9 at the University and the IIRON Student 

10 Network.

11 The IIRON Student Network is a 

12 network of grassroots, university-based 

13 social justice organizations all over Chicago 

14 and the IIRON Student Network is an affiliate 

15 of the community organizing network, IIRON 

16 and National People's Action.

17 Although I recently graduated 

18 from the University of Illinois at Chicago, I 

19 always aspired to go to Northwestern as a 

20 high school student and yet, the day I got my 

21 acceptance in the mail, I decided that I 

22 wouldn't do it. Even a couple of years ago, 
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1 my four-year Northwestern education would 

2 have cost my family about $200,000, a burden 

3 that I could not put on them.

4 I chose, instead, to go to a 

5 public school. And just two weeks ago, I 

6 graduated with my bachelor's of science in 

7 neuroscience from UIC. 

8 I have spent the past six weeks 

9 searching for and applying to multiple jobs 

10 many of which do not even require a college 

11 degree. And yet, I have not even gotten a 

12 single interview. This is after completing 

13 my degree in three years, graduating from the 

14 honors college, and spending hours 

15 volunteering, doing research, working, and 

16 being a member of multiple student 

17 organizations.

18 I currently work at a small 

19 coffee shop 15 hours a week for minimum wage. 

20 I work every Saturday and Sunday because 

21 these are the only hours that the shop is 

22 currently able to give me. I make under $400 
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1 a month at a job for which I am highly 

2 overqualified and yet, I am not alone in 

3 this. Fifty-three percent of college 

4 graduates currently hold positions for which 

5 they are overqualified.

6 I want to go to graduate school 

7 to expand my employment opportunities but I 

8 am worried that a master's degree will not 

9 only not land me a job but will also leave me 

10 with tens of thousands of dollars in debt. 

11 Currently in our country, student debt is 

12 more than one trillion dollars and is higher 

13 than the sum of all credit card debt. I am 

14 terrified that even after years of working 

15 hard to earn multiple degrees in higher 

16 education, I could be left off worse than I 

17 started.

18 As tuition continues to skyrocket 

19 around the country far faster than the rate 

20 of inflation, it only exacerbates the student 

21 debt. Meanwhile, the increased revenue from 

22 this high cost of tuition is going straight 
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1 into the pockets of universities and is not 

2 used to benefit the students and families 

3 bearing the burden of this cost.

4 At the University of Illinois at 

5 Chicago, tuition and fees have approximately 

6 doubled in the last nine years. And yet, 

7 class sizes have grown, the number of full8 time instructors employed by the university 

9 has shrunk, and numerous programs have been 

10 cut. The cuts have forced some of my friends 

11 to transfer schools. Individuals who started 

12 the degree program and in the middle of their 

13 college education had this program cut from 

14 the university. I, myself, have been in 

15 overcrowded classrooms and labs where there 

16 aren't even enough chairs for all the 

17 registered students to sit. Even my upper 

18 level science classes are held in huge 

19 lecture halls with over 100 students and 

20 classes themselves aren't the only issue. 

21 Seeking, advising, and registering for 

22 classes is often a struggle in itself. I 
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1 have frequently been shuttled from Department 

2 to Department, forced to wait more than a 

3 week just to get a meeting with an advisor in 

4 my Department and this is not what I expected 

5 from an institution of higher education. I 

6 have continuously felt neglected by my 

7 university.

8 And despite this, administrator's 

9 salaries have increased dramatically over the 

10 years, with top administrators at UIC getting 

11 an average raise of more $6,000 in the last 

12 year alone.

13 Universities benefit directly 

14 from the availability of Title IV funding 

15 that allows a student to pay for school and 

16 often take on student debt. Regulations need 

17 to be developed so that universities cannot 

18 draw large sums of money from the federal 

19 government through Title IV funding without 

20 maintaining a commitment to keep tuition 

21 affordable and maintaining educational 

22 quality.
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1 University administrators and 

2 other parties in the education industry have 

3 a clear, self-interest in not protecting the 

4 financial and educational well-being of 

5 students. Given this, it is crucial that 

6 students make up at least 75 percent of the 

7 negotiators selected to be on the negotiated 

8 rulemaking committee. We make up 85 percent 

9 of the population at institutions receiving 

10 Title IV funding and we deserve accurate 

11 representation on a committee whose decisions 

12 directly impact our lives and our future.

13 Thank you.

14 MODERATOR KOLOTOS: Kevin Shi.

15 MR. SHI: Hello. My name is 

16 Kevin Shi. I am a leader with Roots of 

17 Justice at the University of Illinois at 

18 Chicago and the IIRON Student Network, a web 

19 of grassroots, university-based social 

20 justice organizations from across Chicago. 

21 The IIRON Student Network is an affiliate of 

22 the community organizing network, IIRON, and 
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1 National People's Action.

2 This upcoming semester, I will be 

3 a third-year student undergraduate student 

4 with a lot of new found responsibilities. It 

5 has come time for me to make some real 

6 choices about where I want to go in life, 

7 what I want to do, and who I want to be.

8 Now since I was a child, I have 

9 always dreamt of becoming a physician. 

10 However, new thoughts of medical school and 

11 the massive amount of debt that awaits is a 

12 real frightening prospect. Yet, the 

13 financial obstacle posed by the exorbitant 

14 average graduate debt of $167,000 can at 

15 least be paid off with a physician's income.

16 Now what really, really makes me 

17 more worried is the growing cost of tuition 

18 at the undergraduate level. Tuition and fees 

19 at my state university have doubled -- almost 

20 doubled in the last nine years. Despite this 

21 dramatic rise in cost, I have only seen the 

22 quality of education decline. The laboratory 
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1 science classes that I have been required to 

2 take are stuffed with more students than 

3 there are seats. The faulty equipment puts 

4 the safety of myself and fellow students at 

5 risk. And despite this increase in tuition, 

6 the number of full-time instructors hasn't 

7 increased to accommodate the growing student 

8 enrollment.

9 We now have gigantic class sizes. 

10 Instructors are teaching too many students 

11 and too many classes to provide adequate one12 on-one help. I would like to believe that I 

13 am still learning a great deal and getting 

14 well-prepared for medical school but such is 

15 just not the case. The University claims 

16 that there isn't money to pay for more 

17 instructors and better equipment, despite the 

18 fact that the University of Illinois system 

19 has accumulated more than one billion dollars 

20 in unrestricted net assets. There has been a 

21 greater percent increase in the number of 

22 full-time upper-level administrators than 
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1 there has instructors. And on top of that, 

2 average raises of more than $6,000 have been 

3 given to these top level administrators in 

4 just the last year alone.

5 Now when we, Roots of Justice, 

6 met with the vice Chancellor of Student 

7 Affairs, we were simply appalled by her 

8 blatantly unremorseful statement that it was 

9 a fact that some students would simply be 

10 unable to afford a higher education. When 

11 the vice Chancellor was suddenly pressed 

12 about her salary, she grew quiet and 

13 unwilling to comment.

14 It is not fair for my educational 

15 quality to suffer while tuition skyrockets 

16 and the university demonstrates the financial 

17 capability to do better for me and my fellow 

18 students. My university's mismanaged 

19 priorities describe a major reason why 

20 college tuition has become so expensive. 

21 Nationwide, student debt exceeds one trillion 

22 dollars. This increase has been driven by 
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1 unnecessary rises in the cost of tuition and 

2 fees.

3 It is unfair that my dreams of 

4 living a fulfilling life and providing for 

5 those that I love are being made more 

6 difficult when I have worked so hard and done 

7 my best to succeed. With this abuse of 

8 tuition, state, and federal dollars by my 

9 university and others, I believe that 

10 regulations that tie university eligibility 

11 for Title IV funding to institutional 

12 responsibility for maintaining a quality, 

13 affordable education should be enacted.

14 All colleges and universities 

15 should be held accountable by the Department 

16 of Education for keeping tuition affordable, 

17 while maintaining educational quality. And 

18 those that do not should no longer be 

19 eligible for Title IV funding.

20 Additionally, because students 

21 make up 85 percent of the constituents at 

22 institutions that currently accept Title IV 
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1 funding, it is only logical that students 

2 should be a majority of the voices 

3 represented on the negotiated rulemaking 

4 committee. Representatives of student 

5 organizations must make up at least three6 fourths of the negotiated rulemaking 

7 committee if there are to be fulfilling 

8 futures for those seeking higher education. 

9 Thank you.

10 MODERATOR KOLOTOS: Bing Li.

11 MS. LI: Good afternoon. My name 

12 is Bing Li. I am a former sergeant in the 

13 Army National Guard and an Iraq veteran. I 

14 am also a recent graduate of the University 

15 of Illinois at Chicago, a leader in Roots of 

16 Justice at the University and a leader in the 

17 IIRON Student Network.

18 The cost of my education is a 

19 burden that has changed my life in many ways. 

20 I graduated high school nearly seven years 

21 ago and only now am I finally graduating with 

22 a bachelor's degree. In high school, my 
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1 father's job situation was on and off. And 

2 my senior year I knew that if I wanted to 

3 pursue my dream of attending medical school, 

4 I would have to fight for it.

5 So in 2006, I chose to join the 

6 Army National Guard. Soon after I shipped 

7 off for basic training, I found that by far I 

8 was not alone in this decision. No matter 

9 where I was stationed during my six years of 

10 service, I found myself surrounded by many 

11 young people who could not afford to go to 

12 college without substantial assistance and we 

13 all thought that joining the military was the 

14 best option that we had. However, 

15 subsistence being provided for non-deployed 

16 soldiers was not enough to actually pay for 

17 the growing cost of tuition.

18 After completing my months of 

19 basic training and advanced individual 

20 training to become a medic, I volunteered to 

21 deploy to Iraq. I knew that a deployment 

22 would mean a steady salary and greater 
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1 benefits through the new GI Bill. However, 

2 this decision nearly devastated my family. 

3 My father was so ridden with guilt that he 

4 had to seek professional mental help, and all 

5 this while I was away from home and unable to 

6 contact him regularly. By the time I 

7 returned home, all of his hairs were white.

8 Even after returning home from 

9 Iraq, I had to take time off of school for 

10 several months in order to readjust and find 

11 work in order to pay for tuition. But 

12 compared to many others that served alongside 

13 me, I ended up on the luckier end of the 

14 spectrum. Two soldiers from our training 

15 class are not with us today and many others 

16 are left physically, emotionally, and 

17 mentally scarred. A friend from my 

18 deployment, someone who liked to laugh and 

19 joke a lot, was found dead in his home only a 

20 few months ago.

21 Those young people who simply 

22 wanted to serve their country and make more 
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1 out of their lives are now the faces of the 

2 rising rates of depression and suicide 

3 amongst veterans. It may seem ironic that 

4 suicide rates are going up, while the 

5 violence appears to be winding down but I 

6 believe that this all links back to lack of 

7 opportunities for veterans, students, and 

8 graduates.

9 In the 1950s, veterans were 

10 returning to affordable housing and job 

11 opportunities. Today, they are returning to 

12 rising debt and joblessness. Two soldiers in 

13 my company have even had to deal with 

14 homelessness and one of them was trying to 

15 pursue an associate's degree at the same time 

16 to better his life.

17 I went to the University of 

18 Illinois at Chicago because it was an 

19 affordable option for me. The University 

20 actually ties itself back to the 1940s 

21 providing education for the rising numbers of 

22 veterans who are starting to use their GI 
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1 bill benefits, after returning from World War 

2 II.

3 My university prided itself in 

4 providing education to many students who, 

5 like the veterans, would be the first in 

6 their families to achieve a college 

7 education. The public university is meant to 

8 be an affordable choice for students from 

9 working class families who cannot afford 

10 education elsewhere. But in contrast to this 

11 mission and to this history, the University 

12 of Illinois at Chicago has become drastically 

13 less affordable over the years. The tuition 

14 and fees have roughly doubled in the last 

15 nine years alone. Meanwhile, the percent 

16 increase and full-time upper level 

17 administrative positions has been substantial 

18 and a number of full-time instructors has 

19 remained unchanged.

20 Top level administrators, the 

21 lowest paid of which is paid $167,000 a year 

22 received an average raise of more than $6,000 
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1 in the last year alone. The university 

2 claims that the tuition rises are due to a 

3 lack of state funding. Yet, the University 

4 of Illinois system has more than one billion 

5 in unrestricted net assets. We don't know 

6 exactly where all this money is going but it 

7 is certainly not going to the students.

8 As our class sizes are growing 

9 larger, some classrooms even lack enough 

10 seats and students are not getting the 

11 individual attention that they need. 

12 Furthermore, many of our science labs even 

13 lack the necessary safety equipment.

14 It is not fair that people like 

15 myself who do not have the means to afford 

16 college without substantial assistance were 

17 driven to enlist in the military and risk 

18 their well-being because of the exorbitant 

19 prices of college tuition. As can be seen in 

20 the example of my school, colleges and 

21 universities do not have the best interest of 

22 their students in mind, financially and 
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1 educationally.

2 We want the Department of 

3 Education to implement regulations that hold 

4 all colleges and universities accountable for 

5 the affordability of tuition and the quality 

6 of education. Title IV funding should not be 

7 allowed to be exploited by colleges and 

8 universities to enable their worst excesses 

9 and schools that do not work to keep tuition 

10 affordable should not continue to be eligible 

11 for Title IV funding.

12 In addition, because we students 

13 understand what it means to suffer while 

14 trying to afford an education, we demand that 

15 75 percent of the negotiators selected to be 

16 on the negotiated rulemaking committee to be 

17 representatives from student organizations. 

18 I am proud to go to a public university that 

19 has historically been accessible for 

20 veterans, working class, and lower income 

21 families, and I want the Department of 

22 Education to step in and ensure that this can 
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1 continue. Thank you.

2 MODERATOR KOLOTOS: Lilly 

3 Osborne.

4 MS. OSBORNE: My name is Lilly 

5 Osborne and I am a student at Loyola 

6 University Chicago, a leader with Loyola 

7 Organized in Action and the IIRON Student 

8 Network.

9 The IIRON Student Network is a 

10 network of grassroots social justice 

11 organization based at universities across 

12 Chicago. IIRON Student Network is also an 

13 affiliate of the Regional Organizing Network 

14 IIRON and National People's Action.

15 The Loyola University 

16 Administration has exploited students who are 

17 already financially stretched thin. While 

18 many students receive federal loans and 

19 grants to make college more affordable,

20 universities like Loyola use this aid as an 

21 opportunity to profit by needlessly 

22 increasingly tuition and fees.
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1 At Loyola, students have been 

2 outraged by a new meal plan that will 

3 drastically increase the price tag of their 

4 education. The least expensive option which 

5 we are required to buy for two years will 

6 cost me over $2,000 extra a year. The 

7 cheapest option is an increase of 150 percent 

8 over that of last year's. In just two years, 

9 a Loyola student will spend more than $9,000 

10 on meal plan expenses alone.

11 When we asked Dr. Rob Kelly, Vice 

12 President of Student Affairs where the extra 

13 money would be going, at first he claimed he 

14 had no idea. Eventually, he made it clear 

15 that the money wasn't actually being used to 

16 pay for food. He said it would help build 

17 the new business school on a separate campus 

18 from the one undergraduates actually use and 

19 pay for guest speakers. Although the price 

20 of higher education has increased by over one 

21 thousand percent in the last 30 years alone, 

22 and Loyola administrators have already 
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1 increased tuition twice in the last two 

2 years, apparently, they need more money to 

3 fund their relentless building expansion and 

4 six-figure salaries.

5 In spite of the huge financial 

6 burden this exorbitant plan would exact upon 

7 students, in less than 40 days the university 

8 quickly signed contracts to implement it 

9 without the consent or acknowledgment of the 

10 student body or student government.

11 After hundreds of students showed 

12 strong, continued disapproval of the 

13 increases, our President Michael Garanzini 

14 refused to meet with students and told us in 

15 an email that this is just a meal plan we are 

16 talking about. However, this isn't just a 

17 meal plan we are talking about.

18 Gratuitous increases like the new 

19 Loyola meal plan and yearly tuition surges 

20 directly contribute to growing student debt, 

21 which now exceeds one trillion dollars and 

22 comes second only to national mortgage debt. 
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1 For me, this has been a source of incredible 

2 anxiety.

3 Shortly before I entered Loyola, 

4 my financial situation drastically changed. 

5 Although my parents are divorced, they had 

6 agreed upon a 50/50 split of the cost of my 

7 education. However, when my father refused 

8 to pay his portion, my mom was forced to 

9 shoulder it all. But because my dad makes 

10 significantly more than my mom, I am unable 

11 to receive any need-based scholarships. This 

12 problem was further exacerbated by constant 

13 fee and tuition increases, worsening my 

14 mother's financial burden, as she spent much 

15 of her savings to support my education.

16 While I wrestled with my 

17 impending debt, my emotional stability and 

18 relationship with my father deteriorated 

19 until I was suffering from regular anxiety 

20 attacks. I am not alone in this struggle. 

21 Students at Loyola and other universities 

22 across this country not only face similar 
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1 family financial issues, preventing them from 

2 receiving aid for a more affordable education 

3 but they also enter with an expectation of 

4 how much their education will cost, only to 

5 be subjected to numerous increases as time 

6 goes on.

7 Like me, the financial and 

8 emotional stability of students across the 

9 country are being compromised by senseless 

10 and ever-increasing student debt. But 

11 President Garanzini and other administrators, 

12 the people who are supposed to look out for 

13 students' interests think it is beneath them 

14 to talk with us about thousands of dollars in 

15 extra costs. They are not only out of touch 

16 with the financial concerns of students but 

17 Loyola administrators and President Garanzini 

18 are profiting off them. Unfortunately, this 

19 is not an experience unique to Loyola 

20 students. This is the devastating reality 

21 for universities across America. It is time 

22 that universities -- it is clear to us that 
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1 universities are taking advantage of Title IV 

2 funding by using it to support massive 

3 tuition and fee increases. Given this, it is 

4 absolutely necessary that the negotiating 

5 rulemaking committee create regulations for 

6 the Department of Education to implement that 

7 hold all colleges and universities 

8 accountable for keeping tuition and fees 

9 affordable while maintaining educational 

10 quality.

11 Those institutions that misuse 

12 students' tuition dollars paid for through 

13 Title IV funding should not continue to be 

14 eligible for Title IV programs. 

15 Additionally, we cannot trust universities 

16 and their administrators who are rewarded by 

17 our debt to have a voice in developing 

18 regulations for Title IV funding without 

19 ensuring adequate representation for 

20 students. Because students make up 85 

21 percent of the individuals at institutions 

22 receiving Title IV funding, it is fair that 
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1 representatives of student organizations make 

2 up 75 percent of the negotiators selected to 

3 be on the rulemaking committee, in order to 

4 properly represent those most affected by the 

5 struggles of paying for higher education, the 

6 students.

7 Thank you.

8 MODERATOR KOLOTOS: We're running 

9 ahead of schedule. So if Aneesh Nandam would 

10 like to address the group? Thank you.

11 MR. NANDAM: Good afternoon. My 

12 name is Aneesh Nandam. I am a graduate of 

13 the University of Illinois at Chicago, a 

14 leader in Roots of Justice at the University 

15 of Illinois at Chicago, and a leader in the 

16 IIRON Student Network. The IIRON Student 

17 Network is network of grassroots university18 based social justice organizations from 

19 across Chicago and we are affiliated with the 

20 community organizing network IIRON and the 

21 National People's Action.

22 So, I have extensive educational 
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1 experience at the University of Illinois at 

2 Chicago. In my four years there, I completed 

3 two bachelor's degrees and nearly all of the 

4 academic requirements of a master's degree in 

5 public health. And in all of my time there, 

6 I have experienced numerous abuses 

7 perpetrated by the university and 

8 administration both as an undergraduate 

9 student and a graduate student.

10 As an undergraduate, I sat 

11 through classes that had far too many 

12 students for the instructors running the 

13 classes to provide any meaningful 

14 individualized attention. I was in lab 

15 classes that did not have enough seats for 

16 students to actually do work. And had faulty 

17 equipment such that I was going into lab for

18 four hours a day, collected no meaningful 

19 data, had to go home and write lab reports 

20 every week that were totally meaningless 

21 because I had no results to report. Every 

22 day I went to class, I felt like I was just 
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1 wasting my time. And for somebody that is

2 paying thousands of dollars per semester to 

3 attend college that seems ridiculous that I 

4 should feel like I am wasting my time every 

5 day going to class, as that is not the 

6 purpose of education.

7 And throughout the entire process 

8 of my undergraduate education, I felt like 

9 most of the time no one actually cared 

10 whether I learned anything at all. And to 

11 this day, I ask myself what exactly I did 

12 learn in undergrad, except that I need more 

13 education.

14 So as a graduate student in 

15 public health, things did not start out well, 

16 even before I even enrolled. Even though I 

17 paid my tuition deposit on time and I was 

18 communicating with academic support at the 

19 university to just check in to see if there 

20 was anything I needed to do to ensure that my 

21 enrollment was going smoothly, I didn't find 

22 out that the Department didn't even know that 
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1 I was attending the University School of 

2 Public Health until two weeks before the 

3 semester actually began. I was not assigned 

4 an advisor. I had to go find my own from a 

5 relationship I already had at the University 

6 from being undergrad. And because of my 

7 delay in actually being recognized as an 

8 enrolled student, I didn't even get to 

9 register for classes until very late. And 

10 because I was only attending the graduate 

11 school for one year, my ability to attend 

12 classes that I actually felt were meaningful 

13 was significantly hampered.

14 And while this may seem like a 

15 one-off occurrence, just a random student 

16 that got unlucky, something got lost in the 

17 mail, this is really just the result of 

18 commitment by the University of actually 

19 funding academic support, as my department in 

20 the School of Public Health only had one 

21 person who was in charge of managing 

22 relationships with students, making sure that 
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1 they were actually able to register for 

2 courses properly and addressing any concerns 

3 with that. And to me, it seems ridiculous 

4 that one person had to shoulder that entire 

5 burden. She did a great job, all things 

6 considered but that didn't seem fair to me or 

7 the other students that were there.

8 In addition to feeling exploited 

9 as a graduate student and undergraduate, I 

10 also felt exploited as a graduate student 

11 worker. I worked as a research assistant as 

12 a graduate student to cover my tuition and 

13 fees and my living expenses and this is 

14 something that was won by the graduate 

15 student union through negotiations with the 

16 University. But despite the tuition and fee 

17 waivers, I still owed an additional $2,000 

18 per semester to cover a tuition differential, 

19 which is not something that has been clearly 

20 defined by the University in terms of what 

21 that money is actually used for. That is 

22 something that the union has struggled to get 
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1 more information out of the University for 

2 and has not actually had their questions 

3 answered in any meaningful way.

4 So I had to borrow that 

5 additional money, despite working three jobs 

6 or two jobs and one unpaid internship for 

7 roughly 35 hours a week while being a full8 time student. And for me, it seems 

9 ridiculous that I should have to borrow in 

10 excess while I am already nearly working

11 full-time. And this is just an example of 

12 the university continuing to try to exploit 

13 graduate labor as a cheap form of labor so 

14 they don't have to pay significant amounts of 

15 money.

16 Even a better example of this is 

17 during the contract negotiations with the 

18 graduate union in the last year, they tried 

19 to eliminate the tuition waivers that were 

20 offered to teaching assistants, many of whom 

21 were shouldering very significant teaching 

22 duties and it seems ridiculous that they 
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1 would take away the greatest incentive for 

2 actually doing that job in the first place.

3 So all of these things I 

4 experienced as an undergraduate student and a 

5 graduate student at the University of 

6 Illinois at Chicago were justified by this 

7 very elaborate narrative that had been pushed 

8 to me and my fellow students since I was a 

9 freshman in the University, where the 

10 University simply blamed the state's 

11 declining appropriations for the need for 

12 tuition increases and for the need for 

13 students and faculty to tighten their belts 

14 and cut back and expect less.

15 What I learned as a graduate 

16 student and a graduate of the University is 

17 that this narrative was an outright lie and 

18 that while students and faculty were made to 

19 accept program cuts, growing class sizes, no 

20 increases in the number of full-time faculty 

21 instructors, administrators saw no losses, we 

22 had from 2004 to 2011 while there was a 13 
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1 percent increase in total enrollment at the 

2 University and roughly no change in the 

3 number of full-time instructors, we had a 15 

4 percent increase in the number of higher-end 

5 administrators and top-level administrators 

6 who were making the lowest salary was about 

7 $167,000, had a raise of an average of $6,000 

8 in the last alone -- more than $6,000 in the 

9 last year alone.

10 In addition to that, the 

11 University of Illinois system has accumulated 

12 more than a billion dollars in unrestricted 

13 net assets. Most of this was accumulated 

14 after the financial crisis of 2008. So all 

15 of these to me, point to signs of a 

16 University that is not actually in fiscal 

17 trouble and actually has gravely mismanaged 

18 priorities that is causing all of its 

19 students to suffer.

20 So the stories that I have shared 

21 with you throughout my experiences in 

22 undergraduate and graduate colleges at the 
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1 University of Illinois at Chicago and the 

2 other members of the IIRON Student Network 

3 today demonstrate that colleges and 

4 universities across this country are not 

5 being held accountable to holding the 

6 financial interests of students and their 

7 families when they are making decisions about 

8 how much students are actually paying for 

9 school.

10 And so Title IV funding has been 

11 used by these colleges to enable their worst 

12 excesses, such that increases in tuition, 

13 fees, supported by the easy availability of 

14 loans have made colleges feel like they don't 

15 have a problem with raising tuition because 

16 they know that students can just borrow for 

17 it. And as such, they are exploiting 

18 students into taking on more debt, which has 

19 contributed to the skyrocketing figure of 

20 student debt, which now exceeds a trillion 

21 dollars and is seconded only by mortgage 

22 debt.
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1 So we want the negotiated 

2 rulemaking committee and the Department of 

3 Education to develop and implement 

4 regulations that hold colleges and 

5 universities accountable for keeping tuition 

6 affordable and for maintaining educational 

7 quality. Because universities that exploit 

8 federal funding through Title IV programs 

9 should not be allowed to continue to accept -

10 - continue to be eligible for Title IV 

11 programs and simply exploit their students 

12 into taking on more debt because right now 

13 they are not facing any consequences for 

14 that.

15 Second, we feel that students, 

16 because we are the people who face the real 

17 consequences and suffering of trying to pay 

18 for college education deserve adequate 

19 representation at the negotiated rulemaking 

20 table -- the negotiated rulemaking committee. 

21 Because students make up 85 percent of the 

22 constituents at colleges and universities 
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1 accepting Title IV funding, we think it is 

2 only fair that we make up at least three3 quarters of those selected negotiators on the 

4 negotiated rulemaking committee because we 

5 are the only people who are truly able to 

6 defend student interest in the process.

7 Thank you.

8 MS. MICELI: Thank you.

9 MODERATOR KOLOTOS: Okay, I think 

10 we will take a break and reconvene at 2:40. 

11 And if Deborah Bushway is available at that 

12 time, we would appreciate it if you could 

13 speak at 2:40 when we reconvene. Thank you.

14 (Whereupon, the foregoing hearing went off 

15 the record at 2:23 p.m. and went 

16 back on the record at 2:41 p.m.)

17 MODERATOR KOLOTOS: If everybody 

18 could please take their seats, we are ready 

19 to reconvene. Deborah Bushway.

20 MS. BUSHWAY: Just start? 

21 MS. MICELI: Yes.

22 MS. BUSHWAY: Good afternoon. I 
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1 am Deb Bushway and I am the Chief Academic 

2 Officer at Capella University. On behalf of 

3 Capella, I want to thank you for the 

4 opportunity to speak today. 

5 So just for introduction, Capella 

6 University is an online institution that 

7 delivers primarily graduate-focused education 

8 to working adults. Approximately 75 percent 

9 of Capella's learners are enrolled in masters

10 or doctoral degree-level programs. All in 

11 all, we offer about 43 degree programs with 

12 145 specializations. We currently enroll 

13 about 37,000 students from all 50 states and 

14 61 different countries and we are based here 

15 in Minneapolis, Minnesota.

16 So we use an outcomes based 

17 curricular model. Our program outcomes are 

18 defined by expertise that is required to 

19 succeed in a given profession and our courses 

20 and assignments are tied to those program 

21 outcomes. As a result, Capella assesses each 

22 student's achievement throughout his or her 
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1 enrollment with us. Our courses are designed 

2 to encourage our students to incorporate 

3 workplace issues or projects into their 

4 studies, providing relevancy and context to 

5 the curricula.

6 For these reasons, we share the 

7 Department's interest in outcomes and 

8 accountability. We strongly believe that 

9 there needs to be a robust and effective 

10 system of regulations that govern student 

11 financial assistance programs. Institutions 

12 should be held to the highest standards of 

13 integrity when it comes to administering 

14 Title IV program funds. Capella is committed 

15 to such regulatory compliance and appreciates 

16 the opportunity to comment on the proposed 

17 changes.

18 Capella would like to introduce, 

19 however, an additional topic for the 

20 Department's consideration during this 

21 rulemaking. We greatly appreciate the 

22 Department's interest in and support of the 
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1 potential direct assessment programs, as 

2 evidenced by the recent "Dear Colleague" 

3 letter. Under the umbrella of the 

4 Department's intent to address program 

5 integrity issues related to Title IV federal 

6 financial aid, Capella would propose that the 

7 Department consider adding direct assessment 

8 or competency-based programs to the list of 

9 topics considered. We believe direct 

10 assessment programs have the potential to 

11 significantly lower costs, increase speed to 

12 degree and more effectively align learning to 

13 the needs of society and to employers. This 

14 is true, especially we believe, for working 

15 adult learners.

16 We believe that the core to 

17 success for an effective direct assessment 

18 program is built around well-articulated and 

19 defined competencies, as well as the 

20 maintenance of a central role for faculty in 

21 this model. Maximizing the potential of 

22 direct assessment model will require hand-in-
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1 glove cooperation of institutions, 

2 accreditors, and the Department. 

3 With this in mind, we are honored 

4 to have been recently approved by the Higher 

5 Learning Commission to offer competency-based 

6 direct assessment programs. We will continue 

7 to work with the Department as this process 

8 moves forward.

9 On a parallel path, we believe 

10 there is opportunity to review and modify 

11 current regulatory constraints, in order to 

12 foster successful utilization of this 

13 innovation in educational delivery. 

14 Specifically, this will offer an important 

15 vehicle for addressing critical questions 

16 around key issues like instructional time 

17 requirements and credit hour definitions. We 

18 believe that revising the existing regulatory 

19 restraints with a focus on protecting 

20 academic quality and the integrity of Title 

21 IV can continue to further two goals of the 

22 Department and the Administration. One, 
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1 significantly lowering the cost of college 

2 and two, reducing the amount of time it takes 

3 a student to complete the degree program.

4 I shift gears a bit to gainful 

5 employment. Capella welcomes being held 

6 accountable for the academic quality of our 

7 programs and the success of our learner and 

8 our graduates. We share many of the 

9 Department's interest in ensuring 

10 institutional integrity and quality and in 

11 protecting the student.

12 We would like to work with the 

13 Department to achieve these goals. We 

14 believe these collective goals are best 

15 achieved through a true focus on outcome 

16 measures related to actual student 

17 performance and would be best and 

18 appropriately achieved through comprehensive 

19 and thoughtful reform legislation.

20 Congressional hearings, as you 

21 know in preparation for the Higher Ed 

22 Reauthorization Act are already underway. 
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1 Recently introduced legislation focusing on 

2 outcomes and student performance, such as the 

3 student's right to “Know Before You Go” is a 

4 great example of how the Department could 

5 achieve these goals legislatively. We 

6 believe the student's right to Know Before 

7 You Go would provide data critical to 

8 informing a greater understanding of the 

9 higher education landscape and would also 

10 serve to level the playing field by ensuring 

11 that key data instrumental to choosing an 

12 institution and a degree is in the hand of 

13 every student attending any institution.

14 Lastly on this topic, not lastly 

15 overall, Capella respectfully disagrees with 

16 the Department's proposal to discuss new 

17 program approval requirements within the 

18 context of gainful employment. Capella, like 

19 many institutions, must already comply with 

20 the requirements of its state regulatory body 

21 and accrediting body in the development and 

22 offering of new academic programs. Because 
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1 Title IV eligibility for a new program cannot 

2 be sought from the Department until after all 

3 the necessary state and accrediting approvals 

4 are obtained, the imposition of yet another 

5 substantive approval process at the federal 

6 level applied across the board for all 

7 institutions creates great uncertainty and 

8 institutional planning.

9 As the Department seeks to add 

10 further protections to the integrity to the 

11 Title IV federal financial aid funds, we 

12 propose relying on yet another tool already 

13 in place to appropriately monitor these 

14 program expansions, the total provisional 

15 certification. Those institutions that are 

16 provisionally certified for whatever reason 

17 must already seek Departmental approval to 

18 offer total funds in new programs.

19 Shifting to state authorization, 

20 Capella has robust experience in the area of 

21 compliance with state authorization and state 

22 requirements for distance education programs. 
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1 While Capella has been very successful in 

2 navigating the complexities of state 

3 authorization, one of the largest obstacles 

4 with compliance centers on various states, 

5 using individualized and sometimes 

6 conflicting terminology for describing their 

7 state authorization requirements. This could 

8 make compliance efforts for an institution 

9 challenging, obviously.

10 Based on this experience, we urge 

11 the Department to work constructively with 

12 state partners to facilitate the development 

13 of more common standards for distance state 

14 education authorization and to encourage 

15 reciprocity agreements, rather than again 

16 imposing a rule that simply tasks state to 

17 create further confusion.

18 The issue of preventing fraud. 

19 As an institution that serves many working 

20 adults for whom online program delivery is 

21 critical to their ability to pursue higher 

22 education and to advance their careers, 
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1 Capella appreciates the Department's focus on 

2 this issue.

3 As part of the upcoming 

4 rulemaking, Capella suggested the Department 

5 maintain institutional flexibility to develop 

6 and apply specific protocols that work best 

7 for a particular institution, rather than 

8 prescribing a one size fits all solution. 

9 While all institutions should have the shared 

10 goal of preventing improper access to Title 

11 IV and perhaps can agree to a common set of 

12 red flags in this area, it may be difficult 

13 to craft regulatory language that covers all 

14 the contingencies and all the various 

15 circumstances that arise.

16 Capella also welcomes 

17 conversations around the definition of 

18 adverse credit with regard to Parent PLUS and 

19 Grad PLUS approvals. We recognize that these 

20 two programs are important sources of funding 

21 to provide student access to education and we 

22 support a definition which both ensures 
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1 student accesses and compromise but also 

2 simultaneously safeguards federal financial 

3 aid funds.

4 In terms of the makeup of the 

5 committee, the rulemaking committee, as the 

6 Department considers this makeup, we would 

7 like to offer two thoughts. The issues 

8 presented for the negotiated rulemaking range 

9 from technical really down in the weeds 

10 technical financial aid issues to broad, 

11 substantive policy issues. 

12 In order to enable really robust 

13 negotiations with subject matter experts, we 

14 would recommend dividing the committee into 

15 two committees; one specifically focused on 

16 this technical financial aid issue, the other 

17 on the more substantive broad-reaching policy 

18 issues. If the Department were to consider 

19 this additional topic that we proposed 

20 earlier about direct assessment or

21 competency-based education, we would suggest 

22 that might be a third committee to negotiate 
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1 on that issue.

2 Regarding the makeup of the 

3 committee, we would respectfully request two 

4 additional seats to be considered. Given the 

5 unique impact of state authorization and 

6 financial aid fraud on distance education 

7 institutions, we would request that a seat 

8 for distance education institutions be 

9 included.

10 With respect to gainful 

11 employment, the diversity of the institutions 

12 affected warrants diversity on the 

13 committees. We would strongly urge that the 

14 Department create room on the committee for a 

15 graduate education representative as well.

16 So now I am closing. We 

17 appreciate the opportunity to provide these 

18 comments to you. We value all the efforts 

19 you are making and we ask that you accept our 

20 comments as part of the hearing. Thanks.

21 MS. MICELI: Thank you.

22 MODERATOR KOLOTOS: If Samuel 
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1 Levine would like to speak now, that would be 

2 great. Thank you.

3 MR. LEVINE: Good afternoon. My 

4 name is Samuel Levine and I, along with my 

5 colleague, Colleen Bisher-Fry, am here on 

6 behalf of the Illinois Attorney General.

7 As the chief consumer advocacy 

8 agency in Illinois, our office handles 

9 hundreds of complaints concerning higher 

10 education and we enforce laws to protect 

11 consumers from unfair and deceptive 

12 practices. To date, we have received more 

13 than 1500 complaints about Illinois colleges 

14 and universities and have interviewed scores 

15 of students to learn more about their 

16 experiences. Additionally, our investigation 

17 of the for-profit school industry has yielded 

18 broader policy lessons that may be useful as 

19 the Department shapes its rulemaking agenda.

20 We have carefully reviewed the 

21 proposed topics for consideration and wish to 

22 comment on one topic, gainful employment,
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1 that we believe is of particular importance 

2 to Illinois consumers. Additionally, we 

3 encourage the Department to address six other 

4 topics that were not referenced in the 

5 notice: cohort default rates -- I had better 

6 go slowly -- cohort default rates, 

7 institutional loan transparency, placement 

8 rates, programmatic accreditation, and delays 

9 in loan disbursement. I will be addressing 

10 gainful employment, cohort default 

11 manipulation, and institutional loans. My 

12 colleague, during the time, will address the 

13 remaining issues.

14 We believe that strong rules in 

15 these areas would protect taxpayer 

16 investment, aid consumers in making informed 

17 choices, and level the playing field for 

18 career schools that are delivering for the 

19 students and the public.

20 I will first address the gainful 

21 employment rule. A robust gainful employment 

22 rule is vital to protect taxpayer investment 
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1 and ensure that students have adequate and 

2 reliable information when they enroll in a 

3 career school. We recommend adoption of a 

4 rule that again sets thresholds for repayment 

5 rates, and debt to income ratios and requires 

6 disclosures of these figures to perspective 

7 students. If career schools consistently 

8 fail to meet these thresholds, they should 

9 lose eligibility for federal funds.

10 Debt to income ratios provide 

11 perspective students with a vital snapshot in 

12 graduates' ability to repay their loans. We 

13 have spoken to numerous career college 

14 graduates who find that their earnings are 

15 lower and debt burden far higher than what 

16 they expected when they enrolled. Had they 

17 been given debt to income disclosures when 

18 they were shopping for schools, they could 

19 have made more informed decisions before 

20 incurring significant debt.

21 We encourage the Department, 

22 therefore, to again promulgate rules that set 
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1 maximum thresholds for debt to income ratios; 

2 programs in which a majority of graduates 

3 don't have loans, such as community colleges, 

4 can be deemed to have met these thresholds.

5 Perspective students should also 

6 be entitled to information about loan 

7 repayment rates, which indicate whether a 

8 school's graduates are in careers that allow 

9 them to cover the cost of their education. 

10 Repayment rates are a vital compliment to 

11 debt to income ratios because they can and 

12 should account not only for graduates but 

13 also for students who drop. After all, if a 

14 school has a 90 percent repayment rate for 

15 its graduates but only a 20 percent 

16 completion rate, that school is not 

17 delivering for a majority of its students and 

18 taxpayers.

19 The repayment rate, therefore, is 

20 a strong indicator of a college's success in 

21 preparing its students for gainful 

22 employment. If the rate falls below a 
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1 certain threshold, that college should lose 

2 its eligibility for Title IV funds. Because 

3 of the importance of both of these figures 

4 from schools and taxpayers, schools should be 

5 accountable for both of them. Failure to 

6 meet either should lead to loss of Title IV 

7 eligibility.

8 The next topic that we would like 

9 the Department to address is manipulation of 

10 cohort default rates. Like repayment rates 

11 and debt to income ratios, cohort default 

12 rates are a vital measure of a school's 

13 success both as educators and as stewards of 

14 our taxpayer dollars. Troublingly, however, 

15 many for-profit schools have evaded the 

16 intentions of congress and the Department by 

17 aggressively soliciting students to seek 

18 forbearances and deferments so that they are 

19 not accounted for in the Department's 

20 measurement. Indeed, the recent For Profit 

21 Higher Education: The Failure to Safeguard 

22 the Federal Investment and Ensure Student 
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1 Success Report released by the Senate 

2 Committee on Health, Education, labor, and 

3 Pensions details the troubling ways in which 

4 for-profit schools manipulate their default 

5 rates, including repeated phone calls to 

6 separated students, McDonald's gift cards, 

7 aggressive mailings, home visits, and bonuses 

8 for default management employees who can 

9 secure the most cures.

10 Manipulation of cohort default 

11 rates evades accountability for poor 

12 outcomes. It hurts students who may not 

13 benefit from one size fits all cures, and it 

14 misleads prospective students about their 

15 chances of securing gainful employment.

16 Prospective students are entitled 

17 to disclosures that indicate their actual 

18 likelihood of paying back their loans without 

19 the distorting effect of default management 

20 tactics. Separated students, meanwhile, 

21 don't always benefit from forbearances or 

22 deferments. Some would be better off in 
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1 enrolling in income-based repayment of other 

2 alternatives. Students need financial 

3 counseling that places their interests first, 

4 not the financial interests of for-profit 

5 schools.

6 Accordingly, we believe that it 

7 is vital that the Department address the 

8 issue of cohort default rate manipulation at 

9 its upcoming rulemaking.

10 The next and final issue that I 

11 will be addressing is institutional loans. 

12 We believe that many players in the for13 profit school industry attempt to comply with 

14 the 90/10 rule by setting their tuition such 

15 that no more than 90 percent of their cost 

16 will be covered by federal aid, thus creating 

17 a gap and leaving students with no choice but 

18 to take out private loans.

19 Until 2008, this gap could be 

20 filled by third-party lenders. But after the 

21 economic crash, these lenders have largely 

22 exited the subprime market. For-profit 
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1 schools then began issuing their own loans, 

2 what we and others have called institutional 

3 loans to fill the gap. Although these loans 

4 may lose money for the school, they serve the 

5 vital purpose of contributing to the ten 

6 percent of non-federal revenue that the 

7 Department requires.

8 Institutional loans pose a number 

9 of problems for students. They frequently 

10 carry high interest rates, binding 

11 arbitration provisions, and mandatory in12 school payments. They lack the protections 

13 of federal -- they generally lack the 

14 protections of federal loans. 

15 Many students don't realize that 

16 these loans are ultimately purchased by the 

17 school. And we have spoken to a number who 

18 were surprised when they were pulled out of 

19 class, denied externships, even denied 

20 diplomas if they didn't make in-school 

21 payments on time. Unfortunately for students 

22 and taxpayers, schools set up complex 
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1 financial arrangements with third-party 

2 lenders in order to attempt to comply with 

3 90/10 and conceal the fact that they own or 

4 will ultimately purchase the loans being 

5 issued to their students.

6 It is essential, therefore, that 

7 the Department create a clear definition of 

8 institutional loans. If schools have any 

9 direct financial interest in a loan to 

10 repayment, that loan should be considered 

11 institutional. And if students are to be 

12 offered institutional loans, they should be 

13 informed of this fact and also of the 

14 consequences if they fail to make timely 

15 payments, especially while in school.

16 We are also concerned by schools' 

17 lack of transparency concerning default rates 

18 on institutional loans. Indeed, the only 

19 information available publicly is accounting 

20 figures disclosed to investors by publicly 

21 owned for-profit schools. These figures 

22 suggest a default rate of over 50 percent and 
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1 prospective students of for-profit schools 

2 should be entitled to at least the same 

3 information as investors in for-profit 

4 schools. After all, it is the students who 

5 are taking out the loans and the students 

6 ultimately who will be the most harmed if 

7 they default.

8 Accordingly, schools should 

9 disclose to students the default rates on 

10 institutional loans in a clear, transparent 

11 way, ideally according to the same measure 

12 with which they calculate cohort default 

13 rates on federal loans.

14 On behalf of my office, I want to 

15 thank the Department for this opportunity to 

16 comment on an area of great importance for 

17 the consumers we are charged with protecting. 

18 I will now turn things over to 

19 Colleen Bisher-Fry to discuss the remaining 

20 issues that we believe the Department should 

21 address.

22 Thank you.
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1 MS. BISHER-FRY: Good afternoon. 

2 My name is Colleen Bisher-Fry and I also am 

3 an Assistant Attorney General representing 

4 the Illinois Attorney General's Office today.

5 As my colleague, Mr. Levine, 

6 previously discussed, we have a variety of 

7 issues that we encourage the Department to 

8 consider during its upcoming rulemaking 

9 session, including job placement rates, 

10 accreditor shopping, programmatic 

11 accreditation and loan disbursement delays. 

12 We encourage the Department to promulgate 

13 rules that support students in their decision 

14 of whether to attend higher education 

15 institutions by providing them with clear, 

16 accessible and accurate information.

17 The first issue I will address 

18 today is job placement rates. Many students 

19 choose to attend college or career schools to 

20 broaden their job opportunities and potential 

21 for income. As prospective students research 

22 these institutions, they should be provided 
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1 accurate and timely disclosures of graduate 

2 job placement rates. Unfortunately, many 

3 prospective students cannot rely entirely 

4 upon job placement disclosures when 

5 determining the actual rate of job placements 

6 of graduates from any given institution. We 

7 have discovered for-profit schools that have 

8 counted students as placed in field when it 

9 is very questionable whether or not these 

10 graduates are actually placed in field.

11 For example, some schools have 

12 identified students that attended one-day 

13 field trips or job fairs in their area of 

14 study as placed in field. We have also seen 

15 instances when students have been induced by 

16 institutions to identify themselves as self17 employed in field, so the school may count 

18 the students as placed. Moreover, some 

19 institutions categorize students as placed in 

20 field when graduates have obtained retail 

21 positions related to their program of study, 

22 such as a game design graduate who is 
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1 employed at Game Stop or a fashion design 

2 major employed at Kohl's, or a criminal 

3 justice major employed at Walgreen's. 

4 Unsurprisingly, many of these practices are 

5 not unique to Illinois.

6 Oral statements about job 

7 placement rates from institutional 

8 representatives are also questionable. 

9 Students have been told that graduates 

10 receive high salaries that their particular 

11 institution has a 99 percent job placement 

12 rate or that schools have high passage rates 

13 on licensure exams that are required to enter 

14 a particular professional field.

15 Many students attending or who 

16 have attended for-profit schools, relied upon 

17 the promises made to them either in 

18 disclosures or orally by school 

19 representatives when they chose to enroll in 

20 that university. These students have sadly 

21 discovered that their job prospects are far 

22 more bleak than they expected upon 
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1 graduation. In order to mitigate oral and 

2 written misrepresentations about job 

3 placement rates, the Illinois Attorney 

4 General's Office recommends that the 

5 Department require clear placement disclosure 

6 for all career schools. We ask that the 

7 Department again seek to develop a uniform 

8 definition of in field placement for 

9 graduates.

10 The Department should also 

11 exclude self-employed graduates who earn 

12 little or no income, hold temporary or 

13 contract positions, or hold the exact same 

14 job as they held prior to their enrollment as 

15 placed in field.

16 The Department should also 

17 require disclosure of average and median 

18 salaries, along with percentile breakdowns, 

19 so students have realistic expectations about 

20 their future salaries if they graduate from 

21 their program of choice.

22 Additionally, the Department 
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1 should require independent audits to ensure 

2 that institutions are properly categorizing 

3 students' jobs as in field or not in field 

4 after graduation. 

5 Further, the Department should 

6 set minimum thresholds for placement rates. 

7 Schools that don't meet the threshold should 

8 not be eligible to receive federal dollars 

9 because schools that can't prepare their 

10 graduates for employment in their fields of 

11 study should not receive taxpayer money.

12 The second issue I will discuss 

13 today is the practice of accreditor shopping. 

14 For-profit institutions should not be able to 

15 avoid accountability for poor practices by

16 simply switching accreditors. The broad 

17 jurisdiction of national accreditors prevents 

18 them from ensuring compliance of the schools 

19 that they accredit. For example, if a 

20 national accreditor believes that a school is 

21 not complying with their guidelines, it may 

22 request that the school provide concrete 
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1 evidence of institutional compliance with 

2 their guidelines in order to retain 

3 accreditation.

4 In response to this type of 

5 request, schools may do one of three things. 

6 First, they may improve their practices or 

7 provide evidence that they are abiding with 

8 accreditor guidelines, which is clearly the 

9 most preferred solution and the intention of 

10 the request. Second, the school may shut 

11 down the low-performing campus or campuses 

12 and potentially open up shop under a new name 

13 and in a new location. Finally, the school 

14 may simply switch national accreditors, which 

15 is the most troubling solution. This 

16 practice allows institutions to entirely 

17 avoid accountability with one national 

18 accreditor and move forward with a clean 

19 slate from another. As such, we request that 

20 the Department promulgate rules that protect 

21 the integrity of the accreditation process by 

22 preventing accreditor shopping.
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1 The third issue I will discuss 

2 today is programmatic accreditation. Many 

3 employers see employees who have earned a 

4 career-based certification or have graduated 

5 from a program with a programmatic 

6 accreditation related to a specific field. 

7 For example, to be eligible to take the 

8 certification exam to become a certified 

9 medical assistant or a CMA, a graduate must 

10 have attended a medical assisting program 

11 that was accredited either by the Commission 

12 on Accreditation of Allied Health Education 

13 Programs, which is a mouthful and it is known 

14 short as CAAHEP or the Accrediting Bureau of 

15 health Education Schools, known as ABHES.

16 We have seen examples of for17 profit schools setting up its Office of 

18 Postsecondary Education Identification Code, 

19 also known as the school's OPEID Code in a 

20 way that would inhibit a reasonable consumer 

21 from discovering whether a particular program 

22 is programmatically accredited. A school may 
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1 have numerous campuses under one OPEID Code, 

2 some of which may have programmatic 

3 accreditation and some of which may not. 

4 This prevents potential students and even 

5 savvy higher education shoppers from 

6 determining which campuses are accredited and 

7 which ones are not.

8 We ask the Department create 

9 rules requiring schools with one OPEID Code 

10 and different programmatic accreditations for 

11 different campuses to provide students with 

12 clear and accessible exposures about the 

13 programmatic accreditation at each campus. 

14 We also ask that the Department require that 

15 affirmative representations are made to 

16 students regarding the status of a particular 

17 campus' programmatic accreditation.

18 The final issue I will address 

19 today is loan disbursement delays. As Mr. 

20 Levine discussed, we believe that some 

21 educational institutions circumvent the 90/10 

22 rule with their institutional loans. We have 
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1 found evidence that schools are delaying the 

2 disbursement of their Title IV funds received 

3 on behalf of students to the following fiscal 

4 year. The practice of holding on to money 

5 intended to be disbursed directly to students 

6 allow schools to avoid applying the federal 

7 loan money to the year that it is received. 

8 Rather, it is applied to the year that it is 

9 disbursed to the student. This loophole 

10 allows schools who are approaching the 90 

11 percent threshold to attempt to comply with 

12 90/10. Many students anticipate their 

13 student loan disbursements to meet rent, pay 

14 bills, buy food, or purchase other 

15 necessities. Delaying disbursement likely 

16 does not benefit students but benefits only 

17 the institution withholding the money. As 

18 such, we encourage the Department to 

19 promulgate rules that protect students in the 

20 integrity of 90/10 by prohibiting untimely 

21 loan disbursements to students.

22 The Office of the Illinois 
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1 Attorney General appreciates the opportunity 

2 to comment on an area of great importance for 

3 Illinois students and taxpayers. We look 

4 forward to discussing these issues in more 

5 depth in written comments we will submit to 

6 the Department later this month.

7 Thank you very much for your time 

8 and consideration.

9 MS. MICELI: Thank you.

10 MODERATOR KOLOTOS: I take it you 

11 are Matt? Okay.

12 MR. FORSTIE: Well, thank you. 

13 My name is Matt Forstie. I am a student here 

14 at the University of Minnesota, an 

15 undergraduate student. I just finished my 

16 junior year studying finance and mathematics. 

17 And I want to thank the Department for 

18 providing this opportunity to provide input. 

19 I really appreciate the way that is being 

20 sought in this process.

21 I formerly served as the 

22 statewide share of an organization called the 
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1 Minnesota Student Legislative Coalition. And 

2 that is official representation for students 

3 at the University of Minnesota across our 

4 five campuses across the state. So I 

5 represent over 70,000 students.

6 And I will first talk a little 

7 bit about, I will frame, some of the issues 

8 students are facing both here in the state 

9 and nationally. And then I will talk about a 

10 few broad principles that I think are areas 

11 for the Department to take action as it 

12 relates to the reauthorization of the Higher 

13 Education Act.

14 So as you know, we have a crisis 

15 in higher ed, specifically a crisis for 

16 students in this country. And it is 

17 primarily manifesting itself in high tuition 

18 and high debt, which is a place that we have 

19 gone in this country and we are just starting 

20 to see the negative results of that. We have 

21 a generation that is in trouble and this 

22 damages our national interests.
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1 Total student debt in the U.S. 

2 exceeds one trillion dollars. The average 

3 student debt nationally is about $26,000 and 

4 in this state, it has reached nearly $30,000. 

5 People are putting off getting married, 

6 buying a car, buying a home and other big 

7 life decisions because of this debt and 

8 unemployment after they graduate. So like I 

9 said, we have a generation in trouble. It is 

10 not just people that are in school now. It 

11 is people that have graduated or that will 

12 enter school and will graduate in the future. 

13 And I think that that will damage the future 

14 of this country.

15 There are three big players that 

16 I think aren't stepping up in the higher 

17 education policy conversation in this 

18 country: the federal government, states, and 

19 institutions. I think all of those three 

20 players haven't done enough to address the 

21 student debt crisis. I think all three could 

22 do more and I appreciate this opportunity to 
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1 address you to tell you how I think 

2 specifically the federal government could do 

3 more.

4 So I will move into, I think I 

5 want to address four broad principles. I am 

6 not an expert as some of the folks here have 

7 been. But I think some of these broad 

8 principles should help you guide your actions 

9 as it relates to students in the Higher 

10 Education Act.

11 So the first principle I want to 

12 talk about is strong student representation 

13 on the rulemaking committee. First and 

14 foremost to ensure that students are 

15 equitably represented throughout the 

16 rulemaking process, a significant portion of 

17 the members of the negotiated rulemaking 

18 committee should be students or 

19 representatives of students. According to 

20 the National Center for Education Statistics, 

21 students make up 85 plus percent of all the 

22 people at institutions that receive Title IV 
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1 funding so I think that is a strong statistic 

2 that should be kept in consideration. And I 

3 think the least that students can ask for is 

4 fair representation on a committee 

5 establishing regulations that will impact us 

6 so drastically as all of these decisions will 

7 impact students.

8 So as a representative of the 

9 Minnesota Student Legislative Coalition 

10 representing 70,000 students, I plead for 

11 strong student representation on the 

12 rulemaking committee. And I think strong 

13 representation on that committee will produce 

14 positive outcomes in the other principles 

15 that I want to talk about.

16 So the second thing I want to 

17 talk about is that the Higher Education Act, 

18 the reauthorization I think should emphasize 

19 administrative accountability and 

20 transparency in higher education to help 

21 students and families shop with their feet, 

22 realize what they are buying, and get what 
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1 they are buying. So I think it is vital that 

2 federal funding for higher education should 

3 be disbursed to schools based on their track 

4 record of making college affordable for 

5 students. Regulations must restrict and 

6 award federal funding to higher education 

7 institutions, based on their demonstrated 

8 ability to do, I think, at least three 

9 things. The first of which is turn revenue, 

10 institutional revenue into affordable tuition 

11 and quality instruction. The second should 

12 be to keep average student debt and loan 

13 default rates low, and the third should be to 

14 help students get jobs upon graduation, which 

15 is why the entered a higher education 

16 institution in the first place.

17 So we must set some kind of 

18 precedent for administrative accountability 

19 and transparency by adding another layer of 

20 oversight at the federal level. And I 

21 believe that reporting on finances and 

22 accounting is something that benefits all 
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1 stakeholders in higher education, including

2 the institutions themselves and efforts by 

3 the federal government to enforce this are a 

4 necessary component of our modern higher 

5 education system.

6 The third principle I would like 

7 to talk about relates to states. Lack of 

8 state funding and disinvestment by states in 

9 the past decade and more is the primary cause 

10 of high tuition and high debt. The 

11 administration and the Department recently 

12 proposed as part of President Obama's Fiscal 

13 Year '14 budget proposal dollars for a Higher 

14 Education Race to the Top: College 

15 Affordability and Completion program. And I 

16 want to thank the Department for that effort 

17 because I think that goes towards something 

18 that desperately needs to be done, which is 

19 encouraging states to prioritize higher 

20 education with their dollars. So those 

21 dollars would go to states on a competitive 

22 basis, block grant style to focus on higher 
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1 education. And I appreciate that effort and 

2 I hope that there is some kind of opportunity 

3 in the higher education act to encourage 

4 states to place a financial emphasis on 

5 higher education.

6 The last principle I want to 

7 address is addressing the student debt crisis 

8 through tax credits. As I said earlier, it 

9 is not just folks that are in higher 

10 education institutions right now or have just 

11 graduated or are just entering that are 

12 facing this debt issue, it is folks that have 

13 graduated and who may have been in the 

14 workforce for five or ten years. 

15 To address this problem, a broad 

16 coalition of students, specifically in 

17 Minnesota, introduced legislation in this

18 state, we call it Opportunity Minnesota, 

19 which would provide student loan debt relief 

20 through a refundable tax credit. And we 

21 think that there is opportunity for some of 

22 that conversation on the federal level 
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1 because it would refund dollars for large 

2 student loans for folks that are in the 

3 workforce and contributing to the economy. 

4 So I hope that becomes a part of the 

5 conversation that is going forward.

6 So once again, I would just like 

7 to thank the Department and everyone here for 

8 this opportunity to provide input. I 

9 appreciate it and I will be involved in the 

10 ongoing process. So thank you.

11 MS. MICELI: Thank you.

12 MODERATOR KOLOTOS: At this 

13 point, we have no one else scheduled but if 

14 someone in the audience would like to speak, 

15 now is the time.

16 (Pause.)

17 MODERATOR KOLOTOS: That's okay. 

18 If nobody wants to come up, we are going to 

19 remain here until the scheduled 4:00 end of 

20 the meeting. So you are welcome to stay and 

21 see if anyone else comes or you can go. It 

22 is up to you but we will be here.
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1 (Whereupon, the foregoing hearing went off 

2 the record at 3:17 p.m. and went 

3 back on the record at 3:59 p.m.)

4 MS. MICELI: Okay. You know it 

5 is 4:00 somewhere. So, I am closing the 

6 record. The hearing has concluded.

7 (Whereupon, at 3:59 p.m., the foregoing 

8 hearing was concluded.)

9

10

11

12