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UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION (OPE)

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NEGOTIATED RULEMAKING FOR

HIGHER EDUCATION 2014-2015

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TUESDAY, 

NOVEMBER 4, 2014

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Anaheim Marriott

700 West Convention Way

Anaheim, California

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DEPARTMENT OF EDUCATION PERSONNEL:

LYNN MAHAFFIE, Acting Assistant Secretary for

Postsecondary Education

TED MITCHELL, Undersecretary, Department of

Education

TABLE OF CONTENTS

Opening Remarks

Lynn Mahaffie3

Ted Mitchell3

Public Commenters:

Debbie Cochrane12

Jee Hang Lee18

Cody Hounanian24

Patricia Hurley32

Kay Lewis37

Gustavo Herrera43

Melanie Delgado50

Kurston Cook54

Makenzie Vasquez61

Dawn Lueck63/159

Diana Emuge69

John Zimmerman74

Graciela Aponte82

Christopher Casey88

Megan McLean92

Kristen Leaf98/162

Baldwin Ngai105

Ann Larson111

Laura Hanna115

Elva Munoz118

Karissa McKelvie125

Frank Gutierrez130

Angela Tran135

Christopher Miller141

LaTonya Subbs144

Mike Dear147

Nathan Horns149

Tasha Courtright151/166

Concluding Remarks

Ms. Mahaffie168

Dr. Mitchell168

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

(1:03 p.m.)

MS. MAHAFFIE:  Good afternoon.  I’d like to welcome you to this public hearing.

I’m Lynn Mahaffie.  I’m the Acting Assistant Secretary for Postsecondary Education at the U.S. Department of Education.  I am here with Dr. Ted Mitchell, who is the Undersecretary of Education.  He has been the Undersecretary since he was confirmed by the U.S. Senate in May.  Prior to coming to the Department, he had a very distinguished career in education, much of it in California.  

He is the former CEO of the New Schools Venture Fund.  He is the former president of the California State Board of Education and the former president of Occidental College.  And he is going to get us kicked off this afternoon.

Thank you.

DR. MITCHELL:  Thanks, Lynn, and thanks again to all of you for being here this afternoon.

I’m pleased to welcome you to the second of two public hearings that we are convening together, all of us, around an area of incredible importance; that is, President Obama’s announced extension of the Pay As You Earn repayment plan to those who borrowed direct loans prior to 2008, and also to solicit suggestions for additional issues that should be considered by the Department for regulatory action by the Negotiating Committee.

As you all know, and what draws us together, is the knowledge that a college education remains the single most important investment that Americans can make in their future.  Postsecondary education produces higher earnings and lowers the risk of unemployment.  

Unfortunately, for many low and middle income families, college is slipping out of reach.  Over the past three decades, the average tuition at a public four-year college has more than tripled while a typical family’s income has increased only moderately, if at all.

More students than ever are relying on loans to pay for college.  Today, 71 percent of those earning a bachelor’s degree graduate with debt, and that debt averages $29,400.  While most students are able to repay their loans, many feel burdened by debt, especially as they seek to start a family, buy a home, launch a business, or begin to save for retirement.

Over the past several years, the administration has worked to ensure that college remains affordable and student debt manageable.  This administration has raised the maximum Pell Grant award by nearly $1,000.  It has created the American Opportunity Tax Credit and extended access to student loan repayment plans where monthly obligations are calibrated to a borrower’s income and debt.

These income-driven repayment plans, like the Pay As You Earn plan that caps a federal student loan borrower’s payments at 10 percent of income, can be an effective tool to help individuals manage their debt and pursue their careers while avoiding the consequences of defaulting on a federal student loan.

While this administration has made significant strides in extending repayment options available to borrowers and building awareness of income-driven repayment plans, more needs to be done.  Currently, not all student borrowers of federal direct loans are eligible to cap their monthly loan payments at 10 percent of income.

Therefore, the President has directed the Department of Education to implement four substantive initiatives that will extend support to struggling federal student loan borrowers.  The first of these initiatives will extend the President’s Pay As You Earn plan to allow additional borrowers who borrowed federal loans to cap their federal student loan payments at 10 percent of income, regardless of when they borrowed.

No existing repayment options will be affected, and the new repayment plan will also end, to include new features to target the plan to struggling borrowers.  Today we look forward to hearing your perspectives representing, it looks to me, like a wide range of higher education communities, student and consumer advocates, and a cross-section of stakeholders to assure that our regulatory efforts support the proposals intent to ease the burden that some borrowers are experiencing in managing their student loan debt.

To fulfill the second initiative, the Department will develop, evaluate, and implement new targeted strategies to reach borrowers who may be struggling to repay their federal student loans, to ensure that they have the information they need to select the best repayment option and avoid future default.

In addition to focusing on borrowers who have fallen behind on their loan payments, this effort will focus on borrowers who have left college without completing their education, borrowers who have missed their first loan payment and borrowers, especially those with low balances, who have defaulted on their loans in order to help them rehabilitate their loans with income-based monthly payments.

Our third effort includes partnerships with tax preparation companies -- H&R Block and Intuit, the makers of Turbo Tax -- to better educate borrowers about income-based repayment plans during the 2015 tax filing season.  Building off of prior work, the Departments of Education and Treasury are collaborating to develop effective ways to inform borrowers about their repayment options as they file their 2014 federal taxes and on an ongoing through personalized financial management tools.

Finally, the Departments of Education and Treasury will work together to ensure that students and their families have the information they need to make informed borrowing decisions.  The administration has directed us to work with researchers to test the effectiveness of loan counseling resources, including the Department’s own financial awareness counseling tools.

On September 29th, I convened a call with higher education experts and student debt researchers to identify ways to evaluate and strengthen loan counseling for federal student loan borrowers, and I look forward to continuing this outreach.

As I mentioned at the outset, this is the second of two hearings we will conduct on the new Pay As You Earn plan to solicit suggestions,  and to solicit suggestions for additional issues we should take up in negotiated rulemaking.  

Based on the public comments gathered in the first hearing and today, the Department will list -- draft a list of topics to be considered by one or more rulemaking committees.  We anticipate that any committee established after the public hearings will begin negotiations in February of 2015, and a Federal Notice Register seeking nominations for negotiators will be issued in advance of that date.

Again, thank you for dedicating your time and your expertise to this very important process.  I look forward to a productive dialogue, and I appreciate your willingness to share your perspectives with us this afternoon.

Thanks.

(Applause)

MS. MAHAFFIE:  A couple logistical issues before we get started.  Many of you have preregistered to speak.  If you would like to speak and you have not registered, please go see Amy at the back table, and we’ve got a few more spaces left.  

If you would please limit your remarks to five minutes, we are going to keep track of the time, and I will let you know when you need to wrap up your remarks.  If everybody has had a chance to speak and we have additional time left, we will let you come back up if you want additional time.

Today we have a video crew here.  They are not part of the Department of Education.  They are going to film people who are actively wanting to be filmed and not others.  So if you would like to be filmed, please let them know at the beginning of your remarks.  Otherwise, they will not film you.

We are going to take a break at 2:30.

And I also want to let you know that this session is being transcribed and will be available publicly on regulations.gov.

So our first speak is Debbie Cochrane.

MS. COCHRANE:  And I’m okay being filmed.  Thank you.  

So good afternoon.  I am Debbie Cochrane with the Institute for College Access and Success.  We already submitted detailed comments to the Department on how Pay As You Earn should be modified and had a number of other suggestions for where federal rules could be improved.  So what I wanted to do today was to highlight some of the reasons why we think it’s so important to do that.

I want to start actually by acknowledging the hugely important rule that was out last week requiring career education programs to prepare students for gainful employment.  As welcome as a meaningful gainful employment rule is, the rule itself actually underscores the need for the Department to do more in many ways, and that is because the rule’s accountability metrics excludes students who don’t complete their programs.  At best, this is a huge loophole.  At worst, it creates an incident for poorly performing programs to make sure students don’t complete.

We know that non-completion is incredibly common in some of these programs, and we see it in the Department’s gainful employment data.  Consider the University of Phoenix pharmacy tech associate’s degree program.  There were 920 borrowers who entered repayment in 2009, and 449 of them defaulted.  So that’s a default rate of 49 percent.

The program had fewer than 30 graduates, though, in 2008 and ‘09 combined, so that means a debt-to-earnings ratio will not be calculated, and the program will pass the rule.  So it passes the rule, and the school has no incentive to improve the program, even though the default rate is 49 percent, and defaulters outnumber graduates by 15 to one or more.

So while finalizing the gainful employment rule is an incredibly important step, the Department can and must use its authority to do more, including creating a system to track and monitor complaints against schools, loan servicers, and debt collectors, stopping colleges from misrepresenting the job placement rates, and ensuring states and accreditors fulfill their responsibilities under HEA.

Our detailed comments also have specific suggestions for how to strength rules to prevent CDR manipulation, so that colleges aren’t evading accountability at student and taxpayer expense.

So to illustrate why the gainful employment rule makes stronger CDR rules all the more urgent, I actually want to read from a for-profit college industry analyst’s report.  It’s called "CDRs Only Matter if Ed Establishes New Test in GE."  This is from October 2013.

The question is, "In our opinion, CDRs have been an easily manipulated statistic that was generally irrelevant for investors until last month when Ed threatened to establish a new program level three-year CDR test in its new gainful employment rule.  As this year’s CDR data shows, institutions have become extraordinarily adept at managing these rates, but a program level test would be far more granular than the OPEID unit currently evaluated, and, thus, much more difficult to control.

"However, if Ed drops this idea from the next version of GE, then CDRs will return to their rule as an easily managed cost of doing business."

Without relief provisions for students also, the new gainful employment rule also makes it all the more important to provide relief to defrauded students and deter schools from engaging in fraud.  Default certification discharge provisions in HEA are broad and tended to provide relief for harmed students and discourage illegal practices of schools.  But the Department has interpreted them very narrowly, so those should be expanded.

The Department should also consider easing requirements regarding burden of proof, so that unreasonable hurdles don’t keep students with legitimate claims of fraud and identity theft from getting discharges.  And in places where a school’s violations are pervasive, the Department should be required to grant group discharges.

Finally, I’d like to highlight an issue that is of particular importance here in California.  In the last three years, seven California community colleges collectively enrolling more than 100,000 students have pulled out of the loan program, each with a borrowing rate easily in the single digits.

We hear about other schools on the verge of making the same decision at least once a month.  Many of these colleges cite fears of CDR sanctions as the reason for pulling out, but the law actually gives them a special protection because of their very low borrowing rates.  It’s called the participation rate index appeal.

But the problem is that colleges can’t take comfort in it, because it’s only granted when the axe is about to fall, right when they are on the verge sanction.  So allowing colleges to appeal or petition the applicability of high CDRs towards a sanction before it is mere months away would not be burdensome to the Department and would help keep community college students from dropping out or borrowing private loans unnecessarily.

So thank you for your time, and, again, I would direct you to our detailed comments for much more detail.

Thank you.

MS. MAHAFFIE:  Jee Hang Lee?

MR. LEE:  All right.  Good afternoon, ladies and gentlemen.  My name is Jee Hang Lee.  I am the Vice President for Public Policy and External Relations with the Association of Community College Trustees based in D.C.

It is my pleasure to be here to talk to you about suggestions on important topics that should be included in the U.S. Department of Education’s upcoming negotiated rulemaking on direct loan and expanding Pay As You Earn repayment programs.

The Pay As You Earn expansion is necessary to ensure students that need help repaying their loans are not caught up in an unnecessary web of eligibility requirements.  And in addition to this topic, we believe there are other federal student need issues that need proper attention through the rulemaking process.

First, we ask that the committee revisit existing regulations around cohort default rate challenges and appeals for low borrowing institutions.  

As mentioned by Debbie, we would like some issues related to participation rate index to be dealt with by the committee.  Colleges are being forced to unnecessarily walk the plank on critically important PRI appeals that are deemed and/or denied intensive statutory protection.  Waiting to file a PRI until your third consecutive CDR leading to sanction is far too late in the process.  

Without any assurances in years one or two, many community colleges have faced political and media scrutiny over their unrepresentative CDRs.  Colleges that have stopped offering federal loans point to concerns about CDR sanctions.  We would note that one institution that had 29 defaulters in FY10 that has around 8,000 students recently just left the program.

There is no statutory reason that the Department must withhold PRI appeals or -- challenges or appeals until an institution is facing immediate sanction, and doing so is currently preventing institutions from using a valuable tool.  Colleges should be able to submit a PRI challenge or an appeal in any year in which their published CDR, official CDR, exceeds, the sanction thresholds.

Second, revisit a more sensitive topic -- it’s the treatment of borrowers who have recently died and their next of kin and discharging outstanding federal student loan debt.  Loans are currently being discharged if a family member or representative of the borrower, including an institution, provides a certified copy of the death certificate to the institution or to the loan servicer.

However, these rules are incomplete.  Verifying death is putting unnecessary burden on grieving families and fails the adequate use of federal data sources, misses many eligible loans, and is unfairly considering institutions through default calculations.  

In fact, the Federal Government and other entities already have the documentation necessary to provide relief to families.  The Department should continually verify that all borrowers of outstanding direct loans do not appear on the Social Security Administration’s death master file. 

Furthermore, the Department should remove all borrowers who have died prior to default from CDR calculations regardless of when proof of death was provided.  Data matching can be achieved by regularly comparing the Social Security Numbers of loan borrowers with Social Security records.

The Department currently already does this process when you fill out your master promissory note, because they match it with a master -- the master death file.  So that would be one of the recommendations that we would have for you.

Third, we ask the committee to revisit the loan rehabilitation regulations adopted last year to provide for a smoother and more consumer friendly rehabilitation of defaulted loans.  Requiring nine consecutive payments on time has -- excuse me.  Sorry.  Well, was intended to provide an on ramp to enter/reenter active and responsible loan repayment.

However, given that many community college borrowers have very low loan balances, defaulters who take the step to get back on track with rehabilitation often desire to finally take care of significant action on their debt and pay in full through payments of lump sums.

It is nonsensical that lump sum payments that absolve all debt can result in a loan that remains in default and it continues to count as a default for the institution. 

The Department should allow students to pay off their entire outstanding loan debt through rehabilitation as a means to remove default from the borrower’s records.

Fourth, we ask the committee to consider the rules around adjustments of CDRs involving borrowers -- service similar to the action by the Department earlier this year.  Borrowers in good standing on one loan, or in default on another, are clearly experiencing an anomaly of the loan program or an unusual hardship of split servicing.  CDR adjustments are, were made for all three consecutive years for CDRs for institutions facing sanctions.

Given that the split servicing issues remain common for borrowers who enter repayment in 2012 and 2013, the Department should continue to adjust annually to all eligible institutions.  We believe the Department has -- needed, the topic should be added to the rulemaking agenda.

Fifth, we ask the committee to consider fair treatment to borrowers who have been split serviced by providing additional assistance and relief to these students for default through institution CDRs due to split servicing.  The record of default should also be eliminated for borrowers’ records, and the defaulted loans should be placed in administrative forbearance.

Okay.  Perfect.  We will have additional comments that we will submit to you later today.

MS. MAHAFFIE:  Cody Hounanian?  I’m sorry.

MR. HOUNANIAN:  No, you did a great job.

MS. MAHAFFIE:  Oh, okay.

MR. HOUNANIAN:  Yeah.  That’s the best job I think I’ve ever seen of my last name.  Yeah, it’s a tough one.

Hello, Undersecretary Mitchell, and everyone here today.  Thank you for the opportunity to speak.  I’m here to present a petition.  If you don’t mind, if I can give this to you.

DR. MITCHELL:  Thank you.

MR. HOUNANIAN:  No problem.  And to save some trees, that’s just a segment of it.  We’ll send a digital copy by the end of this hearing.

My name is Cody Hounanian.  I am representing Student Debt Crisis.  We are a nonprofit organization that seeks to fundamentally change the way that we pay for higher education in this country.

We are a partner and member of the Higher Ed, Not Debt Campaign, where we work in solidarity with many other organizations to make these changes a reality.

I’m here today not only to speak for myself as a recent graduate with over $30,000 in debt, but I’m here to speak for 39,900 signers of this petition and over 40 million student loan borrowers across the country that stand behind the importance of accessible, affordable, quality education.

I personally benefited from many repayment options.  And as I continue my goal to attend law school, they have given me peace of mind knowing that I will be able to afford that $100,000 or more in debt that is ahead of me.

Too often Americans have felt that they were being abandoned by the institutions that are designed to protect their interests.  The Department of Education has the ability, through these policies, to shape how Americans appreciate higher education and how they perceive their government’s efforts to assist them.

Currently, our leaders are doing a poor job of comforting struggling Americans who are looking at these policies to help better themselves and their prospects to follow the American dream.  It is your obligation to protect the integrity of higher education in this country by making it something obtainable to everyone.

Recently, we believe that our politicians and agencies have failed to uphold the universal need for all people to become educated, no matter their financial circumstances.  First, our Congress denied student loan refinancing, which could have helped 25 million Americans lower their payments.

Now the Department has chosen not to defend students and is closing for-profit institutions such as Corinthian Colleges, and they have given them very few options for handling this unprecedented situation.

Instead of highlighting fairness and equality, those in authority have used technicalities and arbitrary differences in loan terms to draw an imaginary line in the sand so that they can avoid helping some borrowers.  What is truly important is assisting any American who wants to better themselves through education.

What the almost 40,000 signers of this petition are asking is simple.  We need to preserve the limited options given to federal student loan borrowers today and expand them so that even private loan borrowers can use them.  Also, we need to do a better job of spreading awareness of these programs, so that anyone who can be assisted is enrolled.

I personally could not afford my student loans without income-based repayment, and neither could my twin brother, who is also a recent graduate.  So in my household alone, we have two people who these options are very important to.

Also, in my work with Student Debt Crisis, I have met hundreds of borrowers who are completely unaware of these options.  So as part of the petition, we have simple asks.  First, we need to keep the 10 percent discretionary income cap for the Pay As You Earn Program.  This program is a crucial option for young Americans like myself who have been unable to find a high-paying job despite doing what they were told would set them on a path to a successful career.

Second, we need to preserve the Public Service Loan Forgiveness Program and avoid setting a cap on forgiveness before the program spends its first dollar.  We need to use this program to incentivize Americans to not only becoming educated but to also enter fields in public service where their expertise is so desperately needed.

Third, we need to tear down arbitrary restrictions that deny private loan borrowers the same options that other people such as myself, are given.  There should not be a difference between how we assist some borrowers over others when we all agree that what is important here is that Americans, whoever they are, are bettering themselves and society through education.

I would like to share some of the comments that our petition signers left, as I think it is important to share their words and to add a human aspect to this topic instead of focusing on loan terms and policy details.

This is Alice from Kansas City.  "Please help us students who have paid and need relief like other students may get.  I have been paying for almost 20 years.  I have worked with special education students, and I have never received a benefit, only higher interest rates."

This is Patricia from California,  "I currently use both the Pay As You Earn Program and public service loan forgiveness, and I find that they make it possible for me to make my payments.  I think that all student loan borrowers should have these options and find the relief that I have."

Tamara from South Dakota, "These options would be ever so helpful.  I am currently in college furthering my education, and I am getting close to graduating.  It scares me to think of what my estimated repayment will be in a month."

And, last, Judith from Illinois, "Students that are trying to get a good education should not have to suffer because of their student loan payments, especially when jobs are so hard to find.  Why go to college if the cost outweighs the benefits of getting the education in the first place?  Help out the -- help out students to be able to pay back their loans without burying them in debt before they can even enter their career."

MS. MAHAFFIE:  If you could wrap up your remarks, please.

MR. HOUNANIAN:  I’d simply ask the Department keep in mind how these rules will affect the lives of borrowers, people like these, people like myself, and others in the room.  We hear from people crippled by student debt every day, and we’d just ask that you guys find the same satisfaction that we find by being able to help borrowers through our outreach, and that you’ll use it to motivate to expand to many others.

Thank you.

(Applause)

MS. MAHAFFIE:  Patricia Hurley?

MS. HURLEY:  I’m Pat Hurley.  I’m the Associate Director -- Associate Dean and Director of Financial Aid at Glendale Community College, and I appreciate the opportunity to provide comments.

It is clear from the previous speaker that many students are unable to repay loans on the standard 10-year repayment plan and offer longer ones.  And I believe that the President’s Pay As You Earn Program is a good option.  However, it is also my experience that as federal student aid programs have grown and matured, they have also become more complex.  And as a participant in four negotiated rulemaking panels, I contributed to that, so I am well aware of the complexity.

Currently, students must decide between six loan repayment options, two 10-year plans, and four that are 25 years or longer.  It is particularly difficult to explain to students the differences between the three plans based on income.  I hope that the Department will use the upcoming negotiated rulemaking session to engage in discussions on what the appropriate number and type of repayment option should be.

The following comments are more on the front end process, and they involve loan counseling.  And generally it is accepted that providing students with clear and timely information is essential to informed and appropriate borrowing.  However, some colleges have received information from the Department that they cannot require loan counseling beyond that mandated in the law.

It is clear that this is one area that one size does not fit all.  Graduate students may not need additional loan counseling that would be appropriate for community colleges or other at-risk students.  And some recent legislative proposals have recommended annual loan counseling.

My institution is an example that that can work.  Our current three-year cohort default rate is 6.6 percent, which is well below the national average of 10 percent and way below the community college average of 20 percent.  We firmly believe that this is because we require students to attend a loan workshop each year that they take out a loan.

The feedback that we get from students, particularly those who have borrowed at other schools, is that they appreciate the information.  And while many colleges may not have the resources to conduct in-person workshops for students, and each rely on online programs, schools who do want this option should be permitted to do so and encouraged to do so, not restricted in the regulations.

Along with this and another front end part of the loan process, before we get to the repayment plans, is the ability to reduce or deny loans.  While current regulations allow colleges to deny or reduce a student’s loan with documentation, as long as it is on a case-by-case basis and not discriminatory, many colleges are still fearful of using this authority.

Community colleges have been asking for this authority to reduce or deny loans for some time, because at low cost institutions funds are more likely to be used for indirect expenses rather than institutional costs.

In response, one of the Department’s current experimental site projects allows colleges to restrict unsubsidized loans.  As a participant in this experimental site, my college does not award unsubsidized loans to first year students.  We have received no complaints, and we have reduced both the number of unsubsidized borrowers and the number -- and the amount of borrowing in the unsubsidized loan program by about 50 percent.

Our conclusion is that in the past students borrowed the maximum because it was available to them, not necessarily because it is what they needed to attend school for that year.

We look forward to the Department’s experimental site report on this project.  If this is indeed the case, and our assumptions are correct, we also look forward to expanding the aid officer’s regulatory authority to reduce or deny loans that may help more students avoid over borrowing.

And then I would also like to comment on the previous speaker’s remarks about the low participation rate index.  This is a particular problem for community colleges who have few borrowers, so that the percentage of students that are borrowing is very low.  My favorite example of this is Canada College in California that had two students in repayment, one in default, which gave them a 50 percent default rate.  Even though they had thousands of students enrolled, their default rate was based on those two individuals.

As we move towards the shopping sheet, pardon?

MS. MAHAFFIE:  If you could wrap up your remarks, please.

MS. HURLEY:  Yes.  And this is going to become more important as we move towards the shopping sheet and other, and the college ratings, which will point out students’ default -- schools’ default rates.  And the question for the schools that have very few borrowers is whether that is really indicative of the institution.

Thank you very much.

(Applause)

MS. MAHAFFIE:  Kay Lewis?

MS. LEWIS:  Hello.  I speak to you today on behalf of the National Direct Student Loan Coalition, a grass-roots organization comprised of schools dedicated to the continuous improvement and strengthening of the Direct Loan Program.

I’d like to thank you for the opportunity to provide comments today.  To ensure that the federal direct student loan program continues to be a strong and viable source of loan funding for students, I wish to address the regulatory issues in the following areas.

Number one; expand participation in the Pay As You Earn repayment plan.  We support President Obama’s proposal to expand the number of borrowers eligible to participate in Pay As You Earn.  The current menu of repayment options, though well-intentioned to address borrower choice, adds a layer of complexity to the program that many borrowers find confusing.

The same is true of the income driven plans.  To the extent possible, we urge the Secretary to consider regulations that would establish one income driven repayment plan open to the largest number of borrowers possible. 

Number two, offer incentives to consolidate existing loans to take advantage of the new Pay As You Earn repayment plan.  Currently, eligibility for participation in Pay As You Earn is limited to new borrowers as of 10/1/2007.  To increase the pool of borrowers who could be eligible for Pay As You Earn, we encourage the Secretary to offer loan consolidation to borrowers who may not be able to take advantage of this plan as a result of borrowing in the FFEL Program or obtaining a federal direct loan prior to the established date.  Expanding loan consolidation options could have the added benefit of reducing the outstanding FEL portfolio and reducing costs.

Number three; simplify the federally held loan servicing environment.  The current direct loan servicing environment is fraught with confusion and frustration for student borrowers.  There is an inherent flaw with the current multiple contractor environment.  Borrowers do not understand who holds their loan.

Until another means of repaying student loans is available, such as IRS payroll deduction, the following changes are needed to restore clarity and simplification for students.

Borrowers must have a single point of contact for all loan repayment activities.  Borrowers should be given one web portal and phone number for loan servicing.  Service levels, loan terms, and borrower benefits must be equal and uniform.  Calculations of interest, fees, interest capitalization, and application of payments to principal and interest should all be standard and consistent among the contractors.

We support healthy competition among a limited number of contractors.  Too many contractors increase the complexity of the system and taxpayer cost.  Healthy competition can be managed in a way that is invisible to the borrower.

Number four; require that all federal loan servicers use white label branding.  Initially, the direct loan program had one contractor identified as the U.S. Department to Education to borrowers.  We believe that environment can be replicated in the current multiple servicer environment.  We also believe that will reduce borrower confusion and defaults.  

To simplify the repayment process for borrowers, we urge the Secretary to require that the identity of contractors be invisible to the borrower, that contractors should be mandated to use only the Department of Education’s logo and name on any communication to the borrowers.  Contractor branding and other marketing of the contractor to the borrower should be prohibited.

Number five; eliminate interest capitalization to reduce debt.  Interest capitalization increases the principal amount of the loan and the total cost of borrowing, since future interest accrues on capitalized interest.  Capitalization is not required by -- in federal law, and is a holdover from the previous federal Family Education Loan Program. 

It is not necessary to charge borrowers additional interest, and we urge the Secretary to consider elimination of this practice in the federal student loan programs.

Number six; support efforts to limit borrowing.  Current statute allows aid professionals to limit the amount of -- to limit the amount a student may borrow on a case-by-case basis.  However, the Department has strongly cautioned against restricting borrowing.  

Some schools no longer participate in the federal loan programs because they fear their students will over borrow.  This forces students at these schools into more expensive private loan programs.  We are advocating for aid officer discretion to develop counseling programs that inform borrowers and the authority to limit borrowing when it is not in the best interest of the student.

In closing, I would like to thank you again for the opportunity to present this testimony on behalf of the National Direct Student Loan Coalition.  The coalition looks forward to participating and negotiating in the rulemaking process in 2015.

Thank you.

DR. MITCHELL:  Thank you.

(Applause)

MS. MAHAFFIE:  Gustavo Herrera?

MR. HERRERA:  Good afternoon.  My name is Gustavo Herrera.  I am the Western Regional Director at Young Invincibles.  At Young Invincibles, we are working to expand economic opportunity for young adults by elevating the voices of 18 to 34 year olds on issues like health care, higher education, and jobs.

Thank you for allowing me to testify on the administration’s effort to expand Pay As You Earn.

Income-driven repayment plans like Pay As You Earn are critical for student loan borrowers, but not everyone has access to Pay As You Earn.  We want to see the administration solve this.

Default and delinquency rates show that more and more borrowers are having a difficult time repaying their debt.  Over one in seven federal student loan borrowers default on his or her student loans shortly after entering repayment.  Recent data from the New York Fed suggests that more people are falling behind on their payments.

In California, tuition in our state is $1,000 above the national average and has nearly doubled in five years.  We are the second worst in the nation.  With more students and families borrowing to make up for the rising cost of college, and more borrowers struggling to repay their debt, flexible repayment plans like Pay As Your Earn can help borrowers better manage their debt.

To improve Pay As You Earn and protect borrowers, we at Young Invincibles suggest the following seven solutions.  One, expand Pay As You Earn to all borrowers regardless of when they took out their loans.  Two, eliminate the partial financial hardship requirement for enrolling as Pay As You Earn.  Three, eliminate the standard repayment cap in Pay As You Earn.

Four, target expansion of Pay As You Earn to borrowers who would otherwise struggle to repay their loans.  Five, pilot test in-house debt collection of federal student loans.  Six, provide relief to borrowers who have been defrauded by institutions and take steps to prevent institutions from engaging in fraud.  And, seven, prohibit mandatory arbitration requirements in Title IV.

We, at Young Invincibles, urge the Department and the administration to fully explore expanding and improving Pay As You Earn and these related reforms.  Negotiated rulemaking on Pay As You Earn is a welcome opportunity to strengthen and streamline federal student loans for consumers.  We believe that it is also a chance for the Department to take action to right wrongs within the federal student loan market on behalf of students and families.

Now I will talk about the most important solutions we have outlined, and we will submit these in full to regulations.gov.

Our first recommendation is that the administration expand Pay As You Earn to all borrowers regardless of when they borrowed.  This could allow the program to reach many more millions of struggling students and families across the countries cap -- across the country.  Capping payments at 10 percent would also help lower income borrowers in particular, many who are still trying to recover from the recession.

Currently, for all borrowers who took out loans before 2012, the next best available option to them is income-based repayment, which caps student loan payments at 15 percent of monthly discretionary income.  For example, a married recent graduate with two kids who has the average amount of student loan debt would see her monthly payment drop from about $130 per month to $87 per month with Pay As You Earn compared to income-based repayment.

For a mother of two, these savings are critical.  This could mean an extra trip to the grocery store, a child care payment, or savings for the family.  For these reasons, we applaud the administration’s proposed expansion of Pay As You Earn to all borrowers regardless of when they borrowed.

Next, we have several ideas of how to target borrowers who could struggle to pay down their debt without Pay As You Earn.  Our ideas include targeting borrowers who are likely to have high amounts of student debt but low wages.  For a complete list of these populations, I urge to look at our written comments.

Finally, we are very concerned about harmful and deceptive tactics at predatory institutions.  We join more than a dozen other organizations, state attorneys general, and eight U.S. Senators in urging the administration to modify its regulations and take action to prevent predatory institutions from evading the law at the expense of students and taxpayers.

The Department must also provide relief for students who attend failing schools.  This is particularly troubling in California where we have 106 for-profit programs where borrowers have default rates of 30 percent or higher. 

Our preferred solution is for the Department to discharge the debt of students who attended the worst actors, reinstate any lost Pell Grant eligibility, and recollect as much lost funding as possible for the institution.

MS. MAHAFFIE:  Wrap up your remarks, please.

MR. HERRERA:  Okay.  The Department should also grant group discharges where an institution is proven to have committed wide spread abuse.  We, at Young Invincibles, look forward to working with the Department and the administration as it gears up for expanding Pay As You Earn and for its work on behalf of students and families.

Thank you.

(Applause)

MS. MAHAFFIE:  Melanie Delgado?

MS. DELGADO:  Good afternoon.  Thank you so much for allowing me to comment.  My name is Melanie Delgado.  I am an attorney with the Children’s Advocacy Institute.  And over the past several years, the focus of my work has been to improve outcomes for transition age foster youth and for homeless youth.

And in my work, I have encountered several youth who have experienced serious difficulties in dealing with private postsecondary educational institutions.  And so, with that, I would like to comment on regulating these private for-profit postsecondary educational institutions.

Firstly, the complaint process.  The Department recently promulgated regulations requiring postsecondary schools to be authorized by a state in order to be eligible for federal aid.  The Department clarified these regulations saying that a state can fulfill this role through a state agency or a stage AG’s office so long as the entity has a process in place to review, investigate, and resolve complaints for the institution operating in the state.

The Attorney General from California, which is the most populous state in the nation, and the Attorney General has brought authority to take legal action to, to take legal action against postsecondary institutions, recently wrote a letter in response to a request for the AG opinion on whether or not the AG had authority to fulfill this role.  

And in the letter, the Attorney General of California said in part, "The Attorney General does not presently have either explicitly delineated legal authority or any regular process in place to review, investigate, and resolve complaints by students against regionally accredited for-profit postsecondary schools."  These are schools who are, who were not regulated, or who are exempted from the Bureau of Private Postsecondary Education.

The letter further goes on to say, "Ideally, the Attorney General’s Office would facilitate referrals of such complaints to a more appropriate agency, but in the case of students in regionally accredited for-profit postsecondary schools, at present there is not necessarily an obviously appropriate agency."

So it is important for the complaint process to be clearly and easily available and accessible to all students.  There is an applicable -- that it is applicable to all for-profit institutions, no exemptions, and that it is administered by an appropriate agency with the ability to adequately investigate and respond to complaints in a timely manner.

Secondly, the Department should ensure that students who are victims of fraud, which has become a real problem, which is misrepresenting, for example, the training that a student will receive in a program, or inflating graduation rates, or inflating job placement rates.  When students are victims of fraud, they just need to be eligible for loan discharge to the full extent allowable under the Higher Education Act.

Thirdly, abuse of the forbearance by for-profits, and this kind of goes along with what was said before about cohort default rate manipulation.  It is really important that the Department should act to stop schools from pressuring students to enter into forbearance in order to benefit the school.  Forbearance is for the benefit of the students and not for the school.

And then, just to address the Pay As You Earn rule.  The process needs to be readily available, easily understandable, and it needs to be easy for students to enroll.  

Thank you.

(Applause)

MS. MAHAFFIE:  Celia Garcia?  

(No response)

Kurston Cook?

MR. COOK:  Good afternoon.  My name is Kurston Cook.  I’m the Special Programs Manager for Generation Progress, a department of the Youth Engagement Department of the Center for American Progress based out of Washington, D.C.  I’m here to speak to you as a member of the Higher Education, Not Debt campaign, and also as a prospective graduate who will reenter the student loan world. 

Thank you for the opportunity to present at this hearing.

The higher education debt campaign is a national multi-year campaign compromising a dozen of organizations dedicated to tackling the crippling and ever growing issues of student loan debt within this country.  Our coalition works to affirm that quality higher education is a public good and it should be affordable and accessible to all.

Several weeks ago, our coalition launched a national petition, the campaign made up of Student Debt Crisis, the Education -- National Education Association, Working America, and Young Invincibles, which has raised over 30,000 signatures and counting.  Our petition resonated with our members because student loan borrowers in America need more options to manage their ever growing debt and payback -- to pay back their debt sustainably.

President Obama’s expansion of the Pay As You Earn Program is an important step in addressing and helping the 40 million Americans who hold student loans, many of whom are struggling and don’t know about the repayment options available.  We ask the following of the rulemaking process.

One, make it easy to enroll.  Many borrowers don’t understand or are unaware of the student debt management options.  The Department needs to make enrollment accessible and easy and should inform all borrowers who are eligible.  Far too many of the borrowers that we work with do not utilize this option and are suffering and could save tens of thousands of dollars by enrolling within this program.

Preserving the pay gap at 10 percent of income.  Borrowers need the option to cap their payments at 10 percent of their discretionary income.  This cap is crucial for borrowers struggling with their loans.  I find myself in this position currently. 

I’m in the process of applying for graduate -- as a graduate student for public administration.  In order to -- the number one deciding factor of my postsecondary education is cost, not the school which provides the best educational opportunities or employment or advancement.  

Preserving the payment cap at 10 percent would be a huge benefit to me and my family.  Without it, my fiancée and I cannot begin to plan for long term economic milestones like purchasing a home or starting a family.   Having this ruling in place would allow us to not only plan for our financial future, but because the crazy notion of saving for retirement.

Number three; preserve the student loan forgiveness programs.  The Department should maintain its commitment to forgive student loan debt for borrowers after 10 years of public service.  This is absolutely essential for those individuals working within public service.

Once again, I find myself an example of this.  I am deeply passionate about public service.  Before arriving today, I was working in election protection, and which is what I’ll do once the hearing is over.  Working in this common field is not financially lucrative as it is personally rewarding.  Having loan forgiveness programs provide someone like me with the hope and opportunity to not only achieve an advanced degree but also to have, to not have to shoulder that burden for the rest of my life.

Without these programs, it would limit my ability to continue to work in public service and push me outside of the career field of my choice.

And, finally, I would be remiss if I didn’t take the opportunity to speak about for-profit colleges.  Given that almost half the defaults of student loans in this country come from borrowers to attend for-profit colleges or universities, discussions of loan repayment programs like Pay As You Earn and policies to help borrowers cannot be separated from the issue of for-profit colleges and universities.

For example, Corinthian Colleges and the way they’re being shut down demonstrates the many problems with the Department’s approach for these for-profit colleges and universities.  Not only is Corinthian still allowed to continue to enroll students given its poor outcomes and the fact that it has been going through bankruptcy, it is likely that because of Corinthian it is responsible for letting students know about their closed school discharge, and many students that would be eligible to get their money back probably won’t.

Additionally, if Corinthian College is sold, the Department of Education should give students a choice to either -- to continue to their program with new school or to seek full refund for their student loans.  Students must be allowed to opt out.  They are not assets to be sold from one company to another.

We recommend that, one, all current Corinthian students should have the right to discharge their federal and private loans if they do not wish to continue their program.  Two, the Department should discharge all federal loans for Corinthian students who are enrolled in programs with inflated job placement rates or who are subject to either deception or fraud.

Three, students who are victims of fraud should be eligible for loan discharge.  The Department should expand access to fall certification discharges to the full extent of the Higher Education Act’s authorization.  Four, the Department should stop schools from processing students into closely -- excuse me, into costly student loan forbearance and deferments.  Forbearance and deferments should be only used to help borrowers, not to help schools manipulate their default rates and leave students in default.

MS. MAHAFFIE:  Wrap up your comments, please.

MR. COOK:  Yeah.  Default of the larger balances.  And, five, the Department should actively form -- inform eligible students of their right to discharge their federal student loans.  

Thank you for the opportunity to present today, and have a good one.

(Applause)

MS. MAHAFFIE:  Makenzie Vasquez?

(Applause)

MS. VASQUEZ:  Hi.  My name is Makenzie, and I’m here from Santa Cruz, California.  Coming to Corinthian Colleges was a chance to change my life.  It was a chance to be the first in my family to attend college.  It was a chance to make my friends, my family, and, most important, myself proud.

I was supposed to have a chance to better my future, to be able to provide for myself and eventually one day for my family.  Now here I stand in front of you, and what do I have to show for it?  I’ll tell you.  I have 40g and in debt and I’m a few days away from default.

Attending college was a foreign territory for me.  With neither of my parents ever going, I was practically on my own.  And let me tell you, Corinthian College did a great job at making me believe that they cared and were more than willing to help me start a career.  I trusted them, and, I mean, why not?  Why would education fail me?

But instead I was nothing more than a dollar sign to them.  Corinthian College -- they took advantage of me.  They gave me false tuition prices, false placement numbers, and wages that are impossible to make with a degree, this so-called degree.

They gave me and thousands of others false hope.  They sold me a dream, but I got a nightmare.  So I stand here today in front of you asking, how much longer are you, the DOE, and Corinthians Colleges going to continue to profit off of my and many others’ debt?  Why are you, the DOE, holding me and others accountable for my debt knowing that this degree is worthless and comes from an education that’s a scam?

The DOE and the Corinthian Colleges are profiting off of poverty.  So, the DOE, what are you doing?  I would just hope that you do your job.

(Applause)

MS. MAHAFFIE:  Dawn Lueck?

MS. LUECK:  Hi.  I am so nervous, but hello everyone.  Okay.  My name is Dawn, Dawn Lueck, and I’m a former employee of Corinthian College.  I worked specifically for Heald College from 2009 to 2012, and I was their corporate financial aid manager.

I never worked for, or was a student for Everest, but I came here today to share with you guys in how I not only relate to the students but how much of this issue, the complexity around this issue, that I really understand.

I have been in financial aid for over 15 years.  I have also been in recruitment, obviously in the leadership positions -- Director of Finance, the Corporate Finance Manager.  And today I really feel like I’m here because I’m standing in solidarity with the students of Everest and the Strike Debt Movement.

I’m here as an ally, an advocate, and a voice with the intention of using my own personal story to raise awareness.  So as a student, I enrolled in what I was told would give me more opportunity and credentials.  What I heard the voices around me saying when I was looking at schools is it was all about that piece of paper.  As long as you get that piece of paper, you’ll have -- you’ll be able to show that you have done something.  So for myself and $53,000 in student loans later, I got my piece of paper.

Now, prior to 2012, paying back my student loans was not an issue.  That piece of paper, and along with the experience that I gained, was actually my ticket to working for Heald College as their Corporate Finance Manager.  I was hired in a high level position.  I was making $85,000 a year, and in which -- which case I paid for more than just student loans.

And the way that I paid as an employee, as part of the story that I came here to tell you guys about today, in the system, and specifically with Corinthian College, it didn’t matter what the stars, the moon, the weather said.  They have their goals, they have their forecasts, and they expected a steady increase year over year.

The key players, what some might refer to as leaders, set down the results that they wanted, and, in my own words, come Hell or high water, we were expected to achieve those results.  Many of us as employees, we worked long hours.  We frantically did whatever we could to get within a range of what they demanded of us.  Otherwise, there was this big looming fear that we were going to lose our jobs.

When I reflect on my experience with Heald College, which is a brand of Corinthian College, what I mostly recall is an environment really lacking transparency, with a lot of pressure and high demand.  I think about our job descriptions and the performance measures and the compensation, which was all tied into getting the enrollments and getting the students through financial aid so that schools could make their starts, which ultimately means the schools can make their profit.

Once the student was enrolled, and as they went through the process to get packaged and ready to start classes, many of these key individuals quickly forgot that we were dealing with humans here, that these are actually people.

I believe, like myself, that there are a lot of employees throughout this organization that they really wanted to do right by these students, but they were stuck in this conflict around intentions.  

I recall a significant amount of reports where on a daily and weekly and quarterly basis, it was just -- it was numbers and goals and percentages, and the structure to me really created this disassociation with the fact that these are lives, and the students’ lives mattered less and less, and the company’s forecasts and goals matter more and more.

Now, there is a few things about me I’d like to share, and I feel very vulnerable in doing this but I’m going to go for it.  Myself and many others were laid off in 2012 when Heald College outsourced their centralized financial aid process to Corinthian College.  That is, outsourced to Corinthian College.  As I understood it, the intention behind this was so that they could cut costs, speed up the funding, and ultimately increase profits to the bottom line.  And the stories you are going to hear more about today I feel are going to bring forward a clear example of how Corinthian cut corners that caused harmful consequences to the students, the families, the parents, the co-signers, leaving them confused and lost, trying to navigate through a complex process, misinformed and robbed of their opportunities to achieve their goals and aspirations.

Now, for myself, I’m not a high school graduate.  I really relied on these kind of institutions to get my own education.  And what I want to say, since we’re running out of time -- I’m coming back up here, by the way.  What I want to say, in closing, since I need to close right now, is all along, during this process, I -- now that I’m outside of it, I think back and I wonder to myself, why didn’t I listen to those red flags and to those bells.  And beyond all of the stress and all of the anxiety that I dealt with almost on a daily basis, it only makes sense why I didn’t hear that voice that said something is really wrong here.  Okay?

When I look around this room and I reflect on my personal experience, I see that there really are no incentives to do just the right thing, and to ensure that all students have access to higher education.  So believe together that we can make this change.  I’m here to ask that you guys join us in making this change by discharging these students debts and demanding that Corinthian College is held accountable.

In addition to that, we also need to take necessary steps to change the education system so that all students can go to school without the debt.  Other countries are doing some amazing things, so I think that we should go ahead and look at our peers and see what we can model after them.

Thank you.

DR. MITCHELL:  Thank you.

(Applause)

MS. MAHAFFIE:  Diana Emuge?

MS. EMUGE:  Hello.  My name is Diana Emuge.  I am also a little nervous, but I’ll do the best I can.  I am speaking to you as a student.  Again, my name is Diana Emuge.  I’m not a loan number.  I’m not a debt.  I’m a person who had dreams, and I feel like I was taken advantage of for that.

By no means did I go to school to abuse the advantage.  I graduated magna cum laude from St. Louis University School, and it has just been so stressful on the other end of that.  I feel like my college did a poor job informing me of what my options were as a student, how I could finance my education.

It is just -- I feel like there should be more opportunity -- more information given to students that was not given to me.  

I’m speaking as a person who is first generation.  My Mom and Dad came to this country and told me I should dream.  And I’m going to try very hard not to cry, but I am because I feel like my dreams have been taken from me and robbed, robbed dry and nobody cares.

I’m dealing with mostly personal student loans -- personal -- sorry, private student loans.  And there are basically no options.  Let me take a moment.

(Applause)

I feel like there are no options.  I’m at a dead end road because I wanted to dream, and that should not be the American dream.  That is not the American dream that my parents saw for myself.  I should not be penalized for going to school for four years, working hard, not partying, not drinking, but working hard to become an educated, intelligent black woman, and this is my reward -- working with a private student loan company, MOHELA, based in St. Louis, Missouri, who does not see me as a person.  They see me as a balance and as a student loan number, and that is not the dream I signed up for.

I heard a speaker say something about loan workshops each year.  I tell you, when I graduated and I got my first -- my first payment that was due, I called up MOHELA and I said, "What’s my balance in private student loans?"  And I was shocked.  I didn’t even know I had two years at a community college free.  St. Louis University gave me a scholarship for 25 grand, and then there was the surprise of, "You don’t know that you can’t afford the rest of the balance?  Go to the private loan company."

And I just did that to finance the rest of my education, but I didn’t know that my limits -- my repayment options would be so limited, and that I would be stuck in a box.  I didn’t go to school to come out the other end just not being able to dream or live a decent life.  My friends -- thank God for Facebook.  I see they are having kids, they are buying houses, they are buying cars.  Some of them didn’t even go to school.  I went to school, and this is what my dream led me to -- a dead end road where I’m seen as a balance, and that is not right.  

That’s all I really have to say.  That’s all I can really voice right now, because it has just been such a burden.  

My Mom, bless her heart, was a co-signer for my loans.  She didn’t even read the contract.  She went off of what I explained to her.  And because she wanted me to dream, she gave her Social, I went online, and I signed up for the loans on my own.  Dear God, I regret that because having someone explain to me that if you can’t repay your student loans, they can take your Mom’s house.  

She is a widow.  My Dad passed away in 2009 after I graduated, and her house is her memories of us as kids, as a part of her American dream.  And the fact that she wanted me to dream, part of that can be taken away from her because all they see is I am a balance, a student loan number, and not a person who had a dream or who had parents that wanted me to dream, too.

That’s all I have to say, and I hope you really take this back to Washington, D.C., because this is not the dream that I signed up for, and it’s not what may parents wanted for me.

Thank you.

(Applause)

MS. MAHAFFIE:  John Zimmerman?  John Zimmerman?  Oh.

MR. ZIMMERMAN:  To the woman from St. Louis, we all should be crying with you.  I’m sorry for what has been taken from you, and I hope that there is a silver lining in all of this.

My name is John Zimmerman.  I’m from MTI College in Sacramento.  One of the first advocates for government student loans was President Johnson.  Almost 50 years ago, this was part of his great society legislation.  He said, "Poverty must not be a bar to learning and must -- learning must not offer an escape -- and learning must offer an escape from poverty."

Unfortunately, much of the good created with the student loan programs over the years has been set back with the fact that countless numbers of once hopeful citizens are being placed in poverty -- poverty-like lifestyle because of their enormous student loan burdens.  

I speak in favor of the Pay As You Earn Program and hope to influence the regulations with my testimony today.  I don’t mean to be trenchant, but the major culprit in this is the Department of Education for allowing the debt levels to go higher and higher without any real world reality caps being placed on borrowing.

I know there were good intentions behind the Department of Education’s current student loan borrowing limits, but it’s time to make some big changes.  Credit is due to the Department’s determination to publish the gainful employment regulations.  These regulations establish a serious intent to hold colleges more accountable for their students’ outcomes.

Unfortunately, these regulations are intended to apply to for-profit colleges and community colleges, so we are missing about 85 percent of the college student population, and that the GE regulations will not apply to the more traditional institutions.  

Perhaps the horse has already left the barn in regard to there ever being a chance of bringing the traditional colleges under the umbrella of the gainful employment regulations, but there is a chance with the Pay As You Earn repayment program to help keep students, regardless of the type of institution they attended, from being forced into poverty because of the loan debt and the prison it has made for them.

I had some other comments written, but I am going to divert from them just as a matter of time.  But I have been at MTI College for 37 years.  I’m at the eve of my career.  When I first started working there, the Pell Grant would cover, for a fully eligible student, the entire cost of education, and some would even get a refund.

Now, at MTI College, while we have a loan -- an average loan debt of our graduates that is 52 percent below the national average, it is still about two-thirds of their cost on average for our students.  So the grants are there, but it doesn’t cover everything.

The 90/10 rule -- now, this applies to for-profit institutions -- the 90/10 rule says that you have to get at least 10 percent of your income from non-Title IV programs.  The consequence of the 90/10 is that many institutions are having to push their tuition up in order to force students to get private loans, to pay out of their pocket, to come up with that 10 percent.  I don’t think it’s accomplishing what it was hoped to accomplish.

We would be forced, if we had a problem -- I’m from a for-profit institution, don’t throw things, please.  We would be forced to raise our tuition if we had a problem with it.  Fortunately, we don’t. 

The type of institution should be identified somewhere in the college’s literature.  If it’s a for-profit institution, it should say that somewhere in the literature.  I hear a radio ad often that talks about a publicly traded institution that advertises on the radio that they have a Christian-based education program.

Now, I’m sorry, but I have a problem with saying that you have a Christian-based education program and I’m a Christian, and making a profit on it and making people believe that this is some kind of religious endeavor when, really, it’s a profit enterprise.  There should be some kind of disclosure for students to see what kind of institution they are attending -- a for-profit institution, a nonprofit institution, a public institution.

This idea that everybody should go to college --

MS. MAHAFFIE:  Wrap up your comments, please.

MR. ZIMMERMAN:  All right.  This idea that everybody should go to college is like going over to Disneyland.  I’m sorry, but everybody doesn’t deserve or need a college degree.  When I say "deserve," I mean, it’s just not their area that they’re best at.  They might be a wonderful artist or a sculptor or a craftsman, but they don’t need a degree for that.

This college that we keep hearing about has a two-year degree program in pharmacy tech and medical assisting.  You don’t need a degree to be a pharmacy tech that makes $12 to $15 an hour or medical assisting.  You don’t need that.  Why is not the Department saying with programs, "This program, medical assisting, this job is worth X, so you’re going to be able to borrow X."  

It’s just like buying a house.  The house is worth X.  That’s where the loan --

(Applause)

You can’t get unlimited monies -- you can’t get unlimited monies for some basket-weaving program that doesn’t deserve it.

I’m going to close -- I could talk on and on.  I’m so upset.  The for-profit colleges, there is a lot of good for-profit colleges in this country that do a great job.  We have thousands and thousands of hands that I have shook of people walking across the stage that are working.

We have a -- I don’t know what happened to the loan repayment statistic that came out.  You released a preliminary rate on that that showed what the actual loan repayment rate was for an institution.  I’m talking about, how many loans are having the principal paid down?  

We saw a preliminary release.  We were second highest in the city of Sacramento, the second to the state university, CSUS, and we don’t have those kind of students, by the way.  Our default rate, 8.2 percent.  So we’re not manipulating our default rate to have a repayment rate that is the highest in the state.

Our graduates are getting jobs.  They are getting great jobs.  And, by the way, the person that spoke about regionally accredited institutions, there are only two for-profit institutions in the State of California.  Senate Bill 1247 that just was signed by the Governor a month ago said you have to be under the Bureau, but two were left off -- two -- and the legislature said they don’t need to be under the Bureau, and the Sacramento -- I’ll quote said, "It’s because of their stellar reputations and exceedingly excessive student outcomes worthy of exemption from the Bureau."  You can guess which one of those institutions was mine.

Thank you very much.

(Applause)

MS. MAHAFFIE:  Graciela Aponte Diaz?

MS. APONTE:  Good afternoon.  My name is Graciela Aponte.  I work on various policy issues for the Center for Responsible Lending, including student loans and for-profit colleges.  For more 13 years, I have been working on policies that provide wealth-building opportunities to low income and vulnerable communities. 

Thank you for this opportunity to testify on the Department of Education’s proposed rulemaking agenda.

CRL is a nonprofit research and policy organization dedicated to protecting home ownership and family wealth by working to eliminate abusive financial practices.  We recently released a study with three key findings related to for-profit colleges. 

Number one, students who attend these schools rely heavily on loans, because of the high cost of attendance.  Number two, these students are more likely to experience worse educational outcomes and a higher incidence of loan default.  For example, students attending public and private for-profit colleges are about twice as likely to graduate as those attending for-profit colleges.

And for those who do manage to graduate, they are more likely to be unemployed than those who attend public and private nonprofit schools.

Number three, students of color are at greater risk of harm from for-profit colleges.  Latino and African American students make up 28 percent of students enrolled in postsecondary education, but they represent 41 percent at for-profit colleges.  We believe these high enrollments are due to targeted marketing in our communities as well as fraudulent marketing practices.

And I’m just going to go off topic for a second.  Just listening to what the St. Louis person was talking about, I think this is really similar to the foreclosure crisis that targeted a lot of immigrant communities who were first generation here, didn’t know the ins and outs of buying a house, and it feels sort of -- the same abuse is happening with students and immigrants.

The Department’s gainful employment rule is a step in the right direction on these issues, but we are disappointed that it was weakened from the original proposed rule.  In my testimony, I will discuss two issues prevalent at for-profit colleges that should be added to the negotiated rulemaking agenda -- arbitration and non-disclosure agreements.

Many for-profit colleges require students and employees to sign binding arbitration agreements as condition of their enrollment or employment.  Under these agreements, students and employees are barred from going to court for any civil claim against the school.  Instead, claims must be filed before a private arbitrator out of the public eye.

In practice, arbitration greatly deters consumers from filing claims at all, and even if they do file they lack many procedural protections they would have in court.  The arbitration agreements extend to almost all claims a student or employee might raise, including misrepresentation and fraud and whistleblower claims.

That means less protections for students that were preyed upon to attend these schools, and, as I mentioned before, more likely to have high student loan debt and less likely to graduate and be gainfully employed. 

The Department should be concerned that the schools are deliberately evading accountability to students and employees for conduct that constitutes violations of federal rules.  Meanwhile, these schools continue to participate in Title IV -- in the Title IV program.  Corinthian College students might have been able to find redress for their claims in civil court but are likely finding this avenue blocked by arbitration agreements.

Second, arbitration agreements greatly hinder the flow of information to the Department itself.  Suppressing student and whistleblower claims not only prevents the public’s understanding of violations, but it also prevents institutions from learning about internal violations related to financial aid programs.

Similar to forced arbitration, non-disclosure agreements hinder needed compliance information from reaching the Department.  Employees may be required to sign an upfront confidentiality agreement as a condition of their employment.  The agreements may appear to prevent them from disclosing any matters the school deems covered by the agreement, which could include violations of the Department’s rules and HEA statutory requirements.

Second, employees or students may be required to sign a confidentiality agreement as a condition of a settlement, including whistleblower claims or a claim about recruiting and financial aid misrepresentations.  After signing such an agreement, the student or employee will be deterred from speaking to a third party about the allegations.

Therefore, I strongly urge the Department of Education to prohibit the use of mandatory arbitration and non-disclosure agreements and include this in the rulemaking -- in the negotiated rulemaking process.  In addition, CRL supports the Pay As You Earn Program to all direct loan borrowers.  We also support a strong public loan forgiveness program.

And, finally, we stand with all Corinthian students here today and support their call for relief.

Thank you.

(Applause)

MS. MAHAFFIE:  Thank you.  Christopher Casey?

MR. CASEY:  Okay.  So thank you so much, the Department of Education and Undersecretary Mitchell, for giving me the opportunity to testify at today’s hearing.  

My name is Christopher Casey, and I’m one of the staffers with Consumer’s Union, the advocacy arm of consumer reports.  And I also just want to just quickly thank Diane, the lady from St. Louis, and the young lady from Santa Cruz for your testimony.  It is always good to hear students at these events.  It’s my hope that we continue to have more of them and hear more of their voices.

So for over 75 years, Consumer Union has fought for the rights of ordinary consumers.  In recent years, we have become increasingly concerned about the growing financial burdens that students and families are carrying just because they want to get an education.

With college tuition increasingly becoming sort of beyond the means of most families, most students have now no choice but to borrow loans in order to pay for school and their dreams.  When they leave school, they find that it’s tough to earn a living in today’s terrible economy, and just as tough to navigate the world of student loan repayment.  I mean, it’s like a world, and it’s very difficult for them.

That’s why the Department’s plans to expand access to affordable repayment plans are so important and so very critical.  We support the Department’s efforts to expand access to Pay As You Earn -- that plan, and we think that you should take this opportunity, as others have said here, to make additional improvements to the system overall that will improve the lives of millions of students and young people in this country.

We will be filing more detailed comments in writing fairly soon, but here are some key -- sort of seven key reforms that we believe will help struggling borrowers with this problem. 

Number one, ensure that all students with federal loans have a clear and easy access to Pay As You Earn.  Number two, keep the repayment period at 20 years, and credit borrowers who consolidate their loans for any qualifying payments that they made before consolidation.

Three, let borrowers choose their loan servicer.  Okay?  We’re Consumer Union.  Obviously, we’d like to maybe one day rate them, but let them choose them.  Okay?

Number four, set strong minimum standards for student loan servicing and collections, and we mean really, really strong.  Okay?  And make them transparent.

Number five, create a clear single point, a portal for borrowers to file complaints and fix problems.  Number six, step up efforts to crack down on schools that take advantage of the federal loan system, such as the for-profit schools that you have been hearing about today that are nothing but scams.

Presumably, you know, we are going to need to do something about that system, and I recognize that this rule may not necessarily do that, but this is an area where I’m sure you can hear it is particularly problematic.

And then, seven, and our final thing, and then I will stop here. Finally, continue your important work on cash management regulations to make sure that students’ financial aid isn’t vulnerable to campus-sponsored financial products that don’t meet student needs.  

We at Consumer Union look forward to working with the Department and you, Secretary Mitchell, and others, on these important issues that affect our young people.

Thank you.

(Applause)

MS. MAHAFFIE:  Megan McLean?

MS. McLEAN:  Good afternoon.  My name is Megan McLean.  I’m the Director of Policy and Federal Relations for the National Association of Student Financial Aid Administrators, and we thank you for this opportunity to contribute considerations for the upcoming negotiations to expand eligibility for the Pay As You Earn repayment plan as well as additional issues that should be considered for regulatory action by the Negotiating Committee.

On behalf of our nearly 3,000 member postsecondary institutions, NASFAA extends strong support for the negotiated rulemaking process.  We believe all stakeholders are strongly motivated to achieve consensus and that this process results in far better proposed rules.

We applaud the expansion of Pay As You Earn eligibility to more borrowers as it has great potential to be a successful tool in keeping struggling borrowers out of delinquency and default.  However, expansion of eligibility, in and of itself, is insufficient.  Borrowers actually have to enroll in income-driven plans to receive any benefit, and this enrollment step is where the Department should focus its efforts.

The application process must be smoothed out to become more borrower friendly.  When calculating the monthly repayment amount, the alternative documentation of income process must be standardized across servicers, so that borrowers in similar situations are treated the same regardless of their servicer.

The Department should also require loan servicers to leverage technology and available data to better inform borrowers who should not have to jump through unnecessary hoops in order to enroll in Pay As You Earn.

On the front end, the Department should do more to reach out to eligible borrowers, especially those who are at risk for delinquency and default.  For borrowers already in default who are now eligible for Pay As You Earn, we recommend an expedited enrollment process so that they can get back into good standing quickly without having to go through a full-on rehabilitation process.

Also worthy of consideration is offering borrowers the option to preauthorize sharing of income between the IRS and the Department for purposes of automatic enrollment in income-based repayment if the borrower were to ever become delinquent in the future.

Our national default rate of 13 percent is indefensible given the availability of income-driven repayment plans.  To the extent that another federal agency already has income information on a borrower, the ideal situation for a delinquent borrower is automatic enrollment in an income-driven plan prior to default.  The best time to obtain such consent from a borrower is at the time that they are taking out the loan.

There are several additional loan related topics we would recommend for inclusion on the negotiator’s agenda.  First, the Department should take this opportunity to negotiate the regulations related to the 150 percent subsidized loan limitation, since those rules were promulgated without the benefit of negotiated rulemaking.

The rules and related reporting requirements are extremely complex, burdensome, and in some cases unnecessary.  Now that the rules have been effective for about a year, it is time to evaluate what is working well and what changes might be warranted.

In particular, the reporting requirements should be negotiated and added to the regulations rather than being issued through an often changing sub-regulatory guidance.

Other rules we encourage the Department to include on the negotiating agenda are related to default prevention plans and cohort default rate appeals.  Currently, default prevention plans approved by the Department are required for schools with one year cohort default rates of 30 percent or more.

We’d like an option for schools to use a Department-approved default prevention plan in cases where a default rate is not as high as 30 percent but still is cause for concern.  This would allow these schools to aggressively tackle the issue before their rate reaches the 30 percent mark.

For example, the Department could extend the option of a default prevention plan when a school’s default rate is above a certain percentage for two consecutive years or if a school’s rate increases by a certain percentage from one year to the next.  To mitigate workload issues at the Department, there could be a set of approved default prevention practices that a school could undertake if it meets the established criteria.

The school would be required to notify the Department of its practices but would not be subject to an approval process.  Establishing a new framework for default prevention plans would assist schools that are struggling with their default rates but lack sufficient tools to significantly improve them.

Similarly, greater institutional flexibility is also needed in the CDR appeals process.  Rather than only permitting an institution -- appeal when the institution is on the cusp of losing Title IV eligibility, for the sake of predictability, institutional planning, and student success, the regulations should allow a school to appeal its default rate in any year in which it is high enough to threaten the school’s Title IV eligibility.

Thank you for your time, and we look forward to working with you in the future.

(Applause)

MS. MAHAFFIE:  Krista Eliot?

MS. LEAF:  Good afternoon.  My name is actually Kristen Leaf.  I’m here to read Krista Eliot’s statement.  I have a couple of thoughts myself, and I’m hoping to get another five minutes at the end.

So this is the testimony of Krista Eliot, Adjunct Anthropology Instructor.  She says, "I am a contingent faculty member, one of the new faculty majority who teach half of all courses offered on college campuses in the United States today.  Although I love my job as an adjunct community college professor in the San Diego area, it is very difficult to make ends meet.

"Community colleges in San Diego County typically pay their adjunct faculty $3- to $4,000 per course, which means that I can expect to make approximately $35,000 a year teaching the equivalent of a full-time course load at three different colleges.

"My husband is also an adjunct anthropologist, and neither of us has employment that provides us with health insurance.  We pay out of pocket for insurance for ourselves and our three year old son.  In addition, we have a combined student loan debt of $140,000, twice our anticipated annual income for the foreseeable future.

"We are in the process of applying for public service loan forgiveness, but we don’t know if our applications will be approved given the difficulty in demonstrating that we are in fact on -- employed on a full-time basis in public service.  Although each of our workloads typically equals or exceeds the workload of a full-time faculty member, albeit at three separate campuses, we are not hourly workers, so it’s difficult to prove that we actually work far more than the minimum average of 30 hours per week that the public service loan forgiveness program requires.

"The matter is further complicated by the fact that most of the colleges we teach at pay us per instructional hour.  This means that on paper it appears that we only work on an average of about 15 hours per week, the number of hours we spend in the classroom, but this is only a fraction of the actual work we do.  It does not include the many hours we spend preparing lessons, evaluating student work, reading and answering emails, and meeting with our students.

"In light of the issues raised by our story, which illustrates the problems faced by thousands of other contingent faculty across this nation, I ask the Department of Education to do the following three things.

"Number one, preserve all existing loan forgiveness programs and provide a reasonable method for determining full-time employment for adjunct faculty for public service loan forgiveness.  The standard in the proposed Adjunct Faculty Loan Fairness Act, which would extend public service loan forgiveness to all adjunct faculty for whom teaching is their main source of income, provides the fairest measure for determining eligibility.  And this is the standard I recommend that the Department of Education adopt.  

"Most adjunct faculty who make their living by teaching put in far more than the minimum average of 30 hours per week, whether or not these hours are documented on paper.  Another possibility would be to adopt guidelines similar to those issued by the IRS for employers to determine health insurance eligibility under the Affordable Care Act.  These guidelines credit adjunct faculty with 1.25 hours of work outside the classroom for every hour in the classroom.  However, it needs to be recognized that the IRS number is a very low estimate.  Two or more hours of work outside the classroom for every hour in the classroom is a much more realistic estimate of the real work that we do.

"Number two, extend Pay As You Earn to all borrowers not previously eligible.  All people with financial need and eligible loans should be included in the expansion of loan repayment programs like Pay As You Earn.  Responsible borrowers who make payments for their loans for 20 years should have the remainder of their debt forgiven.

"Number three, make sure that all borrowers are informed of their student loan repayment options, including any loan forgiveness program for which they may be eligible.  It has been my experience that most of my co-workers don’t know about their loan repayment option or about the possibility that they may be eligible for loan forgiveness.  The Department of Education needs to make information about loan forgiveness programs more universally available and enrolling in such programs easier to do."

And now we begin with my testimony, Kristen Leaf.  So I second Krista’s request, because in part I am the perfect example of someone who could have and might still benefit from having been better informed with regards to my student loan repayment options.  I am an unemployed adjunct historian.  

Happily, I spoke to my student loan debt servicer at Great Lakes about three and a half hours ago and this is what I learned.  They don’t know how much I borrowed for graduate school at UCLA in the early (90s.  Number two, they -- when my -- I think it was about, I don’t know, $17,000 a year for two to three years.  I’m not quite sure how much.  Maybe 40 to 60,000.

When my loans, however, got consolidated and turned over to Great Lakes, it seemed I borrowed from them approximately $119,000, including interest as of today and, granted, I have had some default issues and some other problems repaying my loan because I am an unemployed historian.  As of today, I owe $216,516.35.  

Prior to this morning, when I learned about some of my potential repayment options, which I hope to tell you about later, this is what I have been thinking that I could do about my loans.  First, marry into the one percent.

(Applause)

Two, inherit my mother’s wealth.  Unfortunately, my mother is very healthy, her mother lived to be 97, she -- my mother is only 20 years older than me, so I can hope to do so when I’m in my mid-eighties.  

And my last and final option I was thinking:  die.

(Applause)

MS. MAHAFFIE:  Thank you.  We are now going to take a break until 3:00.  We’ll come back then.

Thank you.

(Whereupon, the above-entitled matter went off the record at 2:40 p.m. and resumed at 3:00 p.m.)

MS. MAHAFFIE:  Baldwin Ngai?  Before we get started, I just want to remind everybody that we are going to limit remarks to five minutes.  We now have a full slate of speakers, so we are going to enforce the five-minute rule as we have been.

Thank you.

MR. NGAI:  Hello, everybody.  My name is Baldwin Ngai.  I’m Treasurer of the Board of the statewide student advocacy group, the California Public Interest Research Group, or CalPIRT.  I am also a senior at UC-Riverside where 55 percent of the students get the Pell Grant, and also 65 percent of us graduate with student loan debt.

At CalPIRT, we have been engaged in keeping students in college affordability since the mid-90s.  However, things have taken a turn for the worse.  Since the recession, the proportion of 27- to 30-year-old adults who have a mortgage has fallen most sharply amongst those who have a student loan.  This trend is troubling, as attainment of a college degree should lead graduates toward long term financial security, yet the high cost loans that students must carry have begun to undermine that pathway.

Students are the recipients of billions of dollars of student aid yearly.  But at the same time, we are new to the financial marketplace.  We are -- we can fall prey to the tricks and traps layered into the financial products that can drive up our costs over time.  For instance, financial institutions apply borrowers’ payments in a way that takes advantage of the borrower.

The vast majority of the borrowers have more than one student loan and is paying on several loans at the same time to that same servicer.  Borrowers benefit most if the payments go directly to the highest interest rate loans first.  Yet servicers in most cases spread out the payments across all loans on the accounts which causes borrowers to pay more -- pay down more of their debt slowly, and to pay more money in interest over the life of their loans.

On top of tricky practices, borrowers can use their -- can see their principal and interest on a loan climb higher and higher due to interest capitalization, often when borrowers change from one repayment program to another.  Given the social mission of federal student loan program, there is no justification for this practice other than to squeeze money from students.

Worse, the Federal Government is increasing student loan interest rates higher and higher each and every year for the next 10 years.  And that is why I’m here.  While CalPIRT and the rest of the campus chapters of student PIRTs across the country are thankful for many of the beneficial policies that have flowed from the U.S. Department of Education.  To alleviate student loan debt, we ask you to do more.

Please consider the policy suggestions that drive down student loan borrower costs even further, and that will help strengthen a borrower’s understanding and ability to maintain a healthy credit history.  Our higher education program, through the U.S. PIRT, has already submitted suggestions for policy changes through this public hearing process, so I won’t repeat our requests.

What I want to do is leave you with some comments that I collected through our student list serves last week in advance of this hearing.  I hope you will hear their pleas, their panic, and their attempts to achieve financial stability while shouldering huge loans.  

First off, is Jennifer Laura, a junior from CSU, Northridge.  Works while in college to pay down her unsubsidized loan at $115 month.  She was shocked to see that she hadn’t touched the principal at all on her loans as she goes along.

Jason Elliott, who currently lives in Urbana, Illinois, compares his $200,000 loan debt to his home prices there and tries not to stress out. 

David Morey at UC, Santa Cruz is carrying a mix of private and federal student loans but hasn’t landed a permanent job to start paying them off.  

Also, at Santa Cruz, laments over -- Tanisha Wilson, also from Santa Cruz, laments over the rising college costs as she faces which continues to increase her debt.

Nicole Dela Cruz at UC, Riverside  missed the FAFSA deadline and now has $20,000 in private student loans at 11 percent interest.

Me, at UC, Riverside, by the time I graduate, I will have inherited $30,000, even though I transferred from junior college in attempt to save us from that, save myself from that.  

So while we wait for policy deliberation in Washington that could take months, even years, we at CalPIRT are launching a "deflate your rate" education effort towards student loan borrowers.  

We will hold workshops on campuses throughout the year to educate borrowers about practical steps they can take to rein in their debt now, such as making payments while in grace period and conducting a thorough scholarship search.  We will be sure to forward you our material as we develop it.

Thank you for your consideration.

(Applause)

MS. MAHAFFIE:  Ann Larson?

(Applause)

MS. LARSON:  Hi, everybody.  My name is Ann Larson, and I came here from New York City to talk to everybody.  I came here with students from Corinthian College.  I have been volunteering with an activist collective called Strike Debt, and talking to a lot of students online and on the phone from Corinthian.  And I’m here today to advocate for current and former students from Everest.  I don’t think a lot of people are looking out for their interests, and I want to do that today.

What has happened, in my view, is that Everest students, many working class and low income people and people of color, were sucked into a predatory debt machine that was underwritten for years by this agency.  Students found themselves in a debt trap.  The result is that they are left with unpayable debt and no degree or a degree that didn’t lead to a promised job.

Their credits don’t transfer, and their debt is non-dischargeable in bankruptcy.  They have few options. 

But I want to emphasize today the bigger picture here.  Many former Everest students are worse off than they were before.  Worse off.  That’s where the American dream stands today.  Higher education financed by this Department and by taxpayers can actually make people worse off than before.

Now this Department proposes to sell the majority of campuses to, no doubt, another for-profit operator.  I propose to you that you are acting as a de facto debt collector, standing by and even actively collaborating in this predatory lending scheme that preyed on vulnerable people who wanted nothing more than to get an education, find jobs, care for their families.

The answer isn’t selling Corinthian to another buyer.  I propose to you today that your sale of Corinthian, along with your refusal to cancel these students’ debts, is simply an exercise of arbitrary power of the basest sort.

Your proposed debt-income guidelines are completely off base.  No college can or should guarantee high wage jobs to graduates.

The answer, instead, is standing up for these students and standing up for the idea that education is about something else besides preparing people to compete in a cut-throat labor market.  It’s really quite simple.  Germany just announced that it would have free education.  Why not us?  Why not us?

You are the Department of Education.  Who do you represent?  Who do you serve?  And who do you betray?

(Applause)

In closing, I would like to say I’m -- I have an academic background, so I want to get in a little academic analysis.  Recently, there was a study conducted by researchers at Princeton University, Martins Gillens and Benjamin Page.  Their in-depth analysis found that the vast majority of people, the 99 percent we might say, have no influence at all over public policy.

And here is what they said.  These are their words.  "Economic elites in organized groups representing business interests have substantial independent impacts on U.S. Government policy while average citizens and mass-based interest groups have little or no independent influence."

So that’s the academic analysis, but here is how it feels.  The capitalist machine grinds on and on.  Sometimes it chews us up and spits us out.  Sometimes it doesn’t.  But either way it feels like it’s not up to us.  So we are left with the question, can this Department of Education, and more generally can this political system, work in the interest of ordinary people, or does it only work for the rich and powerful?

Thank you.

(Applause)

MS. MAHAFFIE:  Laura Hanna?  Laura Hanna?  Thank you.

MS. HANNA:  My name is Laura Hanna.  I also collaborate within a group called Strike Debt.  And for the last couple of years, I have been working on an initiative called the Rolling Jubilee.  It’s an educational project that exposes secondary debt markets, double standards around bankruptcy law and write-offs, when students don’t have those options.

But the project really asks a fundamental question.  Who owes what to whom,  right?  And I think that that’s a question that the Department of Education maybe wants to think through.  But not only that, what do we want to provide to one another within a quote/unquote "civilized society"?

So our initiative recently purchased and abolished nearly $4 million of illegitimate debts from Everest -- or not from Everest but for Everest’s students’ student debt.  And our -- excuse me, I’m a little bit nervous.  My question is to the Department of Education:  why have you not done anything to help these students when you have the ability basically, and you have the power, you have the discretionary power, and plenty of cash?

I think I read somewhere -- maybe it’s accurate, maybe it’s not -- that you are apparently set to make over $127 billion over the next 11 years.  So why is it that a group of scruffy individuals that are all volunteers have managed to help these students more than the Department of Education?  But what is even more shocking to me -- and, sorry, for -- you know, it’s sort of dark humor, is the fact that you haven’t even bothered to communicate with these students, that these students actually say that we help them more.  So I don’t know what everybody is doing for their jobs --

(Applause)

-- but -- so the CFPB is off to a nice start.  They filed a lawsuit against Genesis, but we think that it would be a good first step for the Department of Education of course to discharge all of the Corinthian debt.  Like, let’s start there.

The Department of Education could also reference white papers like ours at strikedebt.org that talk about how we can actually create tuition-free education, apparently for less than one percent of the federal budget.  

So back to Ann’s point.  It seems just like we should reorganize a little bit of our priorities around what education is, and it is certainly not a commodity.  It shouldn’t be a commodity.  I don’t agree with the person who runs this for-profit school and says that not everyone deserves education.  

I think that that’s basically trapping people into vocational jobs, and that’s, you know -- I’m not saying that it’s -- I think that, you know, people need to have access to education, and maybe we need to think about the way that we create certification for jobs, but that’s not the same thing as education.  So that’s it for me, basically.

(Applause)

MS. MAHAFFIE:  Elva Munoz?

(Applause)

MS. MUNOZ:  So I’m Elva Munoz.  I’m from Santa Cruz, California, originally from Oregon.  I didn’t know anything about Everest, really, or anything about Corinthian Colleges, let alone any college.  I only knew what I saw portrayed on the media, which was people working full-time, able to go to school, get degrees really quickly, and of course looking happy.

So I know that I have way more debt than I can afford.  My time at Everest was very confusing, unorganized, and deceitful.  Because of the fact that I lived in Santa Cruz, San Jose was the closest campus to me, and the commute was about 30 minutes each way.  And since I did financially support myself, I had to ask, otherwise I couldn’t afford it, "Am I going to get financial aid for gas?"  "Yes," smiled Liz, the Everest rep.

So confidently I continued to sign the paperwork, and I specified that I had no help from my parents.  Again, they live in Oregon.  And I said the only way I would be able to do school was if I got that financial aid.

After a month of attending Everest, I still had not received any financial aid.  About the same time, I got called into the office by Liz, the financial aid counselor.  She sat me down and handed me some paperwork.  As I looked down at the paperwork, I realized it was something that I had already filled out, and so I let her know.

And she proceeded to explain that they had switched loaners on me.  So being that it was my first time at a school experience after high school, and having no parental guidance to steer me along, I did as they told me.  Why would they lie to me?

And I also took the opportunity to ask when I would start receiving financial aid.  And so Liz quickly replied, "You have already been receiving it."  Really confused, I looked at her and I said, "I haven’t received anything."  And she proceeded to let me know that, "Oh, you never see it.  It is all electronic.  It pays for your -- you know, your books and your scrubs."  

So really, really confused and embarrassed I asked again, "But you said it would help -- you know, the financial aid would help with gas."  And she again repeated, "Well, it does because it pays for your books and your tools and your scrubs."  Embarrassed, and not knowing really what else to do, I just said okay and continued to fill out my paperwork.

In addition to that, I had not really seen any financial aid complete cost until I had already been sitting in class for about two weeks.  And at first it wasn’t that bad money-wise because I had a lot saved up, but that quickly changed.  I got dropped three times by letter.  I thought it was strange at first because I was still continuing school unaware that they had dropped me.

I was in the school building in class and they could have called me into the office, but instead I had to go to them when I had received a strange letter.  The first time I was dropped was due to failure to makeup hours, which I had not been informed of that policy, and so I let them know that.

And so they said, "Oh, okay.  Like, it’s fine.  Just, you know, write a quick letter saying why you missed those days," and they let me stay.  And, again, that was due to illness and I had a doctor’s note.

So the second and third time I was dropped was due to the fact that I literally had no money.  No more money left for gas.  I couldn’t even get to San Jose.  The third time they called me into the office for an appeal to stay, I walked into the office and sat down before the whole Everest head honcho.  

Before I could even speak, they sat me down and just put me on a hotplate.  Quote, "Elva, we see that you have a 4.0.  We see that you’re a good student academically, but your attendance is unacceptable.  Do you even want to be here?  You need to get your priorities straight.  You need to make up your mind."

So Esther, who was the head of Everest over in San Jose, looks at me and says, "Okay, now, your time to speak."  So I looked at her and I just said, "Of course I want to be here.  Like this is my seventh month.  I’m almost done.  I just -- I don’t know what to do.  The only reason that I didn’t come to class those days was because I had no way of getting here.  I had no money.  I didn’t get financial aid like you guys said I would."

And so at this point I was tearing up, I was so angry and frustrated and embarrassed, not knowing what to do because of course I had no parental guidance.  And so I asked, "Is there any way I can get an actual loan that will give me actual cash?  Or is there a way I can take a month off of class without having to pay extra and then come back," being that I would have supposedly saved up a little bit more money?

And Esther looks at me and says, "You know, those are some options, but that’s just something we want you to figure out."  And at that moment, in my head I knew that this was not right.  This is your job.  You’re supposed to help me.  I was sitting there asking, like, what can I do?  I’m asking for your help.  And they just wanted me to figure it out.

So I just stopped going.  And towards the end of that first month that I took off, somebody sent me a link talking about how Everest is being sued by the State of California for targeting low income individuals who had no close family and wanted to get school done quickly.  Me.

So of course I didn’t really know what to do.  I, you know, didn’t have money for a lawyer.  I could barely survive.  I could barely feed myself.  And so --

MS. MAHAFFIE:  Wrap up your comments, please.

MS. MUNOZ:  Okay.  So, you know, I’ve been hassled by them ever since, and that was in -- I stopped going in July 2013, so I still don’t really know what to do.  I know I’m not alone.  How is this fair?  I know there’s others in the same situation that have been scammed by the Corinthian Colleges, and so I just think you guys should discharge our debts.

(Applause)

DR. MITCHELL:  Thank you.

MS. MAHAFFIE:  Karissa McKelvie?

(Applause)

MS. McKELVIE:  Hello.  How’s it going?  My name is Karissa McKelvie.  I’m a student debtor.  I wasn’t planning on speaking until recently I decided to.  I’m not a Corinthian student, but I was a student of a public university, Indiana University, Bloomington.  

And I originally was interested in going for music, but then I realized that I couldn’t -- there was like no possible way I could actually like pay off the loans I was going to get with a music degree.  And so I decided to go into something a little more profitable, so now I build websites.

But now I have over $90,000 in debt from a public university, which is interesting, because our public universities are supposed to be places where people are educated for the public good, you think?  At least I think that’s how they were probably originally created.

And to think about this in the context of the global situation in our peers, it seems really backwards.  I know we’ve been talking a lot about for-profit colleges, but I think this is a more systemic problem that we need to start addressing.  I know the Department of Education can only do so much, but, you know, I’d like to speak to everybody on that point.

There are over $1.3 trillion dollars of student debt.  We have a crisis on our hands.  And you’ve seen it, you’ve seen it here today, people are being sucked dry by schools.  Some schools are funded by Wall Street.  Some of these banks that give out private loans are funded by Wall Street.  They securitize these loans.  The Federal Government guarantees some of these loans.  They are used by -- as assets by the college, so all of your debt is actually money for someone else.

And people at the top get their cut.  Everyone gets their cut along the way.  The person that was just talking to the student before, I’m sure they all got their cuts, too.  And what is this -- this sounds a lot like the mortgage crisis, doesn’t it?  Nobody is paying these things.  

The question that we need to start asking is:  who gets to walk away, and who is held accountable for this?  They are literally robbing us.  They are robbing the treasury.  They are robbing students.  This is white collar crime, and nobody is calling it out.

(Applause)

So bringing it back to public education, it’s hard to draw the line there, because for for-profits it’s really clear who the culprits are, you know.  But with public education it’s more complicated.  I have been doing a lot of organizing related to public education in the past, did a lot of audits of the Indiana University system in particular.  And I don’t know how those relate to the global -- to the national trends, but in Indiana the President of the university is paid almost half a million dollars a year, and the Board of Directors are all former bankers, former sitting on Wall Street, and they run the university.  They set the prices of the university.

This seems to me like it’s a very clear corruption case.  The way that we structure our universities is based off of a system from, like, 200 years ago, like why are we still letting people in suits, like six or seven people appointed by the governor, run these universities and set the price of these universities and let them come from anywhere and have friends or be -- formally be paid off by the people who are sending loans to the students.  It doesn’t make any sense, unless the Department of Education is also in the racket.

So there are a few things you could do immediately that could help.  One is financial aid is not aid.  It is a loan.  And saying financial aid is aid is actually misleading.  You should discharge -- you should discharge the debts of those in any for-profit colleges under investigation, not just Corinthian but any for-profit that’s under investigation.

And the forced arbitration clauses in a lot of these contracts should be illegal or investigated.

(Applause)

This means that people can’t file a lawsuit or have a class action if the college goes bankrupt or stops giving services.  That should be looked at.

Thanks.

(Applause)

MS. MAHAFFIE:  Frank Gutierrez?

MR. FRANK GUTIERREZ:  My name is Frank Gutierrez, and I have -- I had surgery, so I’m going to have my son, Xavier, read what I wrote.

MR. XAVIER GUTIERREZ:  "Esteemed members of the U.S. Department of Education, my name is Frank Gutierrez.  I am 55 years of age and I decided to testify at this hearing both to express my support for the expansion of Pay As You Earn and to address the following issues surrounding my personal case.

"Currently, I am almost $60,000 in debt for different types of loans which I took out in an attempt to pursue and complete a Bachelor of Arts and Liberal Arts with the University of LaVerne located in LaVerne, California, where I began pursuing this degree in 1998.

At this time, I was working as a police officer, and on May 15, 2002, I left for what was -- I left for what was supposed to be a simple operation involving bone spurring around my right shoulder.  This was the second operation on this shoulder, and as life circumstances go, it turned out to be less than a simple operation.  Spurring continued, requiring a third surgery, which eventually led to a severe reduction to the right shoulder to the point where I was no longer able to perform my duties and eventual retirement from the profession, which required an eventual lawsuit against my employer at the time in an attempt to attain an honorable retirement as a police officer due to my medical conditions.

This lawsuit went on for several years and eventually led to my finances being depleted.  In 2007, I was awarded a medical retirement and honorably retired as a police officer.  But, once again, life circumstances struck me with a separation and eventual divorce of my wife. 

It was during this same period that I was involved in a motorcycle accident which, believe it or not, led to the discovery of my thyroid cancer.  The cancer was removed, and today I am cancer-free from this area.  But life circumstances --

(Applause)

Thank you.  But life circumstances struck again earlier this year when I was diagnosed with cancer of the vocal chords, which led to the removal of my vocal chords, giving me this beautiful singing voice.  In addition, I was diagnosed with cancer of the prostate, which will require radiation at a later date.

Now, I tell you this not in an attempt to gain sympathy, but to advise that sometimes, as in my case, life circumstances are factors when it comes to becoming in debt with student loans.

I was recently given the option of not having to pay off this debt because I am -- because of -- because I am permanently disabled.  But that’s not something I want to do, because I still plan on returning to complete my education in hopes that my degree will allow me the opportunity to teach future police officers in the area of writing, which is area deficient with many new police recruits and police officers as a whole.

The receiving of the degree will allow credibility for future employment and, as of this date, I discovered that I am still alive and very much in hopes of returning to work in the field of teaching.  Old codgers, such as myself, can be of great resource.  

So what I am asking here is a helping hand, not a freebie or a handout, some sort of relief and a fair opportunity for financial aid, so that I can complete my schooling and the opportunity to pay off my debt.  I use the word

‘fair’ only because during my time as a student with the University of LaVerne I spoke with a representative for the State of California Student Aid Commission to ask why a student with a 3.75 GPA was not receiving a Cal grant.

The representative would not actually say it, but admitted to me that because I was a student over the age of 40 years old that I was not considered for these types of grants because I was older. 

To conclude, I ask you, Undersecretary Mitchell, for two things.  One, if you have the power, please intercede on behalf here at the state level with the Commission, so I may receive financial aid to continue my studies.  Two, as you reform income-based repayment, plans -- sorry -- as you reform income-based repayment plans, please study the unique needs of older and disabled student borrowers, so as to ensure future policy does not disadvantage these populations.

Thank you for your time."

(Applause)

MS. MAHAFFIE:  Angela Tran?

MS. TRAN:  Hello.  My name is Ange.  I went to art school because I really didn’t have a vision beyond getting a good job at a grocer.  But all of the teachers at the high school that I attended -- and I did not attend it frequently, mind you -- felt that I was too talented and too dedicated, strangely enough, to stay in my home state of Maine.  They felt and they believed that I needed to go to college and that I needed to go at a reputable institution in order to represent my talents as an artist and as a young person.

I wound up going to Pratt Institute.  This was largely arbitrary.  I was 16.  I had never left the state of Maine beyond a couple of field trips, and I really felt that the city was for me.  Manhattan was too intimidating.  Brooklyn had trees.  So I went.

I was an independent student.  So this means that I had no co-signers.  Pratt is a private school, so I had to do whatever I could to stay in college.  I owed my teachers, my professors, thousands of dollars by the time I graduated that they loaned me personally for supplies.

I had to get married.  I had to get married so that I could get the basic health care necessary to stay in school.  Their health plan was reasonable.  I couldn’t take out another penny.  I’m now going through a divorce.

I’m also first generation.  A lot of my family is known as Vietnamese diaspora.  I wish I could say that I was more in touch with my family, but these struggles that we go through are not restricted to student debt.  We have a debt crisis that is large.  

My family came here scattered over the U.S., and it took a lot of energy to get everybody back together.  They got good jobs.  They worked at a semiconductor company, and they were laid off.  And after all of the work that my family did to come together again, now we are separated, scattered over California, living in Orange County, Boston, New York.  And I used to be able to send money home.  I can’t do that any longer.

I used to be able to take my cousin and my cousin’s kids out on occasion.  I can no longer do that.  

I’m speaking to you today, and I am giving you this very personal background because I want you to understand that this is so much bigger than any particular cause or policy.  And I think it has been very difficult for us to step back and to look at the landscape.

I flew into California to be here today, and these crises continue where even as I saw lawns being watered and kept green, the landscape from the eye’s view of a plane showed nothing but empty rivers and lakes.  This crisis is deep.

So I’d like to read to you today actual statements from my friends, statements from people I know online, statements from people who have helped me keep it together who could not be here because they have jobs, because they had to vote, because they had children, because they couldn’t get around because they can’t afford the internet, because they don’t necessarily even have cell phones, and because they all have student debt and I think that they should have been here speaking today.

"All I wanted to do is go to college and become a success.  By the time I graduated from high school, I didn’t know what I wanted to major in, so I didn’t go straight to college.  By the time I was 21, I decided to go back to school and major in web design.  By the time I graduated from Everest, I felt like I was cheated out of an education.  I ended up with a limited knowledge of web design, my portfolio is crap, and from the skills that I have gained I couldn’t even apply for web design internships.

Their career services were non-existent.  I graduated with over $26,000 in debt and owe the school over $300,000 for pretty much nothing.  Desmond.  Georgia."

"I have over 50,000 in debt.  And even though I now have an Associate’s Degree, I have not been able to find a job that relates to my area of study.  I am frustrated and worried that I am required to pay this much money for a degree that is useless.

I was also targeted for a Genesis loan.  I never signed up for this type of loan or agreed to it, but the school signed me up anyway.  Now I’m entitled to pay this back and I shouldn’t have to because I didn’t agree to the loan in the first place.  I’m really proud of my fellow classmates for standing up to this crooked school.  Shawna.  North Carolina."

"I graduated from Everest a few months ago with a degree in criminal justice.  I now have a newborn baby.  Since graduation, I have not heard from the school or career services.  And when I contact -- and when I contact them, they tell me that jobs that pay between $8 and $9 per hour.  I now have a job as a housekeeper.  

I took out $40,000 in loans for a criminal justice associate degree that most employers didn’t even recognize.  All I wanted for myself was to work in the courts as a bailiff or a correctional officer.  I wanted to be able to live that dream, but now that I have all of these loans and no job in my field I am completely lost and in debt.  LaTonya.  Ohio."

MS. MAHAFFIE:  Would you please wrap up your comments?  You have five minutes.

MS. TRAN:  Okay.  Well, needless to say, I have about 45 more of these statements that I could read to you, but I’ll close off with this last one because I’m out of time.

"When I first called Everest, I just wanted information.  I wasn’t trying to start school right away because I was pregnant, because they kept calling and calling all the time.  I felt pressured.  I told her that I was pregnant and that I just wanted information.

The recruiter made me feel bad.  She’d say, ‘Don’t you want to start now, so you can provide a good future for your son?  And the more you wait, you’ll never start.’  I felt pressured into it."

MS. MAHAFFIE:  End?  Close?

MS. TRAN:  All right.  Well, thank you for listening to me.  And I hope you all put on a Red Square.

(Applause)

MS. MAHAFFIE:  Christopher Miller?

(Applause)

MR. MILLER:  Madam Assistant Secretary, Mr. Undersecretary, good afternoon, ladies and gentlemen.  My name is Christopher Miller.  I’m a United States Army veteran as well as a former student of Corinthian Colleges.

I am here on behalf of not only myself but my brother, my sister, and my brother-in-law, who all attended the school but couldn’t be here.  I am also here on behalf of veterans who feel as I do about this matter.  

I’m a person who prides himself on integrity and honor.  Integrity is also a core value of Corinthian Colleges for which they have not fulfilled that value.  Another thing that is in the core values of Corinthian Colleges is accountability.  

Corinthian Colleges have shown none as far as accountability is concerned.  For example, when I attended Everest College, I had to go into the main class, my second module, and have no books for two weeks as well as being promised with the help of job placement, as long as I was certified, and training in my field for which I was studying.

The only thing that I have received since graduating in 2010 is consistent harassment of phone calls, not limited to myself, also to include my 90-year-old grandfather who is a World War II veteran.

When I -- when they call for repayment of student loans, I reply with this:  where is the help as far as job placement?  I have yet to receive an answer, and I don’t think I’m going to get one in my lifetime.

The point I’m trying to make is that Corinthian Colleges acted dishonorably and lacked integrity and showed no moral conscience for their actions.  Now, they should not be allowed to prosper by being sold off.  That they should be forced to close their doors for all future endeavors.

In closing, we all know that Corinthian Colleges has no accountability and integrity.  With all due respect, ma’am, sir, where is your integrity and accountability?  I thought not.  To show that you have some, discharge these student loans and debts.

Thank you.

(Applause)

MS. MAHAFFIE:  LaTonya Subbs?

MS. SUBBS:  Good afternoon, everyone.  My name is LaTonya Subbs, and I’m from Cincinnati, Ohio.  I am a mother with a newborn child who I left behind in Cincinnati to be here to share my story with you today.

When I first started Everest online, I was really excited because I felt that finally all of my dreams were going to come true.  Everest promised me things such as career hunting skills, a quality education, and a place that I can walk in my area.  I was worried because I never even met anyone from the school.

I really believed that they would hold up their end of the bargain.  But when I was close to graduating, I noticed that it was a change in the way the school operates.  I noticed that we had lost all communication, and I am sad because the system had failed me.  Not only did that system -- the school fail me, but the Department of Education failed me as well.

I feel that the Department of Education failed me because it is your responsibility to make sure that these schools provide a quality education at an affordable cost and a scam-free school.

(Applause)

Hmm.  It is funny how that is because Everest doesn’t even have my high school diploma.  If you can see here, it says "missing document -- high school diploma."  They was ready to suck me dry without even knowing that I even had a high school diploma, although I have one, but they didn’t care.

Okay.  I am proud that I invested in myself.  But now that I have graduated with a newborn baby, this school still has not held up their end of the bargain.  It has been a whole month since I have graduated, and I have not heard much on career services.  When I try to contact them, it has been long wait times, always a rescheduled date, and the request for a job that pays $8 to $9 an hour as a security officer.

At this point, as she stated, I do have a job as a housekeeper.  I took out $40,000 in loans for a criminal justice degree that most employers in my city does not even recognize.

(Applause)

All I wanted for myself is to work in the courts as a probation officer.  I wanted to be able to live that dream and make differences in people’s lives.  I knew that by doing this I would have to get the right education from the right school.  Now that I have all of these loans with no job in my field, I am completely lost and in debt.

The only way to solve this is for you to discharge my loan so I can start over with a college that will live up to its name.  I deserve a free tuition for them wasting my time.  So here.  You can have that cap back.  I don’t even want it.

(Applause)

MS. MAHAFFIE:  Mike Dear?

MR. DEAR:  Good afternoon.  My name is Michael Dear.  I’m the Director of Financial Aid and Scholarships at Mira Costa College, one of the 112 colleges in the California community college system.  I’m here today to represent the California Community Colleges Student Financial Aid Administrators Association.  We call ourselves CCCSFAAA.

Our comments echo some of those already made.  We support -- we support the expansion of Pay As You Earn and encourage the Department to consider focusing income-based repayment -- on one income-based repayment program that can be the most useful for the most students.  Number one.

Number two, we encourage changing the appeal process for colleges that have a cohort default rate above 30 percent and meet the low participation rate index.  Currently, this appeal is only available after an institution’s CDR reaches 30 percent for three consecutive years.  We believe our institutions should be able to appeal based on a single year at 30 percent or above.  The Department has very little risk involved with institutions with low participation rates, and the risk involved does not correspond with the amount of additional workload and resources necessary in the current process.

Those are my only two written comments.  But after today I do want to add one thing.  You know, we are hearing from many students today that are feeling as though they were forced into over borrowing and are carrying sort of exorbitant amounts of loan debt.  

And at the California community colleges, we are trying to actively reduce or deny loans for some of our students, and we are being told by the Department that we do not have the authority to do that.  So we would like to see a conversation around this.  We would like the Department to increase our authority to decrease or deny student loans.

So thank you very much for the opportunity to comment.

(Applause)

MS. MAHAFFIE:  Nathan Horns?

(Applause)

MR. HORNS:  Hello.  Good afternoon, guys.  Good afternoon.  Thank you for having us here.

I just want to start by saying my name is Nathan Horns, II.  I co-founded a group called the Everest Avengers, along with Strike Debt and Rolling Jubilee.  I’m a former student of Everest College.  I went from 2010 to 2014.  I graduated with a Bachelor’s Degree, and I work two minimum wage jobs.  I work at Smashburger. I work at the Carl’s, Jr. inside of the John Wayne Airport.  Both jobs I got on my own.

I am working 18-hour days, because I cannot afford to pay these bills back.  The loans that I have are ridiculous, $78,000 for a Bachelor’s Degree in business?  Why?  Why are you guys allowing them to do this to people like me?  To people like us?

(Applause)

We deserve better, and you guys have the power to give us better.  All I’m asking for today is that you look inside of yourself and say, if this was your child would you want this to happen to your child?  My mother and my father worked their asses off -- excuse me -- to make sure that I had a great life.  And all I want to do is to make sure that my mother and my deceased father are proud of me.

I know so many students that have way worse stories than I do.  People that have children, people that have parents that they have to take care of, people whose families are counting on them because they are from out of the country, and they come here to America thinking that, "Oh, we’re going to live the dream."  But what is the dream?  To be in debt?

This is ridiculous, people.  We have to stand together.  

(Applause)

We have to work together.  We have to help each other.  If we’re not helping each other, then who are we helping?  This is crazy.  All I want is for all of us to stand together, because we’re all in the red at this point.  And the only way out is for you guys to do your jobs.  Help us.

Thank you.

(Applause)

MS. MAHAFFIE:  Tasha Courtright?

MS. COURTRIGHT:  Hi, everybody.  I am trying not to be emotional after hearing everybody’s stories.  Mine starts with my parents; neither one graduated high school.  And I was the first in three generations to graduate.  I was the first to even attend a college, and now my parents look at me going, "How is she going to make it?"  

First of all, I want to say I appreciate everybody coming here to try to help and raise awareness of what is going on.  But we need to face that the real problem on my end is the for-profit schools.  In an internal document obtained by the Department of Justice, CCI describes its target demographic as isolated, impatient individuals with low self-esteem who have few people in their lives who care about them and who are stuck and unable to see and plan well for their future.

That does not sound like somebody who is there to help us with our career path, somebody who is there to help us obtain jobs that can actually support our families, because we all know minimum wage doesn’t, not even two.

There are so many things I have seen and been through with Corinthian Colleges that I could be here all day.  Initially, signing up, I didn’t go there to sign up.  I went with a friend.  She was signing up.  They hounded me the whole time I was there, "Don’t you want to better your future?"  I said, "Yes.  Obviously, I do, but I work a minimum wage job and I live in low income government housing.  I can’t afford it."

"Well, there are grants, and there are this and there are that."  "Okay.  Tell me that I qualify for both of those grants, Cal Grant and Pell grant, and I will attend, if I do not have to make payments or owe, because I can’t afford it."  I stressed that over and over again, and I was told I qualified.

Three months into me being in my associate’s degree, I get a rejection letter.  I don’t qualify for the Cal Grant.  Why?  Because I was out of high school too long.  I had to be in college for 36 units before I even qualified, but they decided not to tell me this.

So I reapplied only -- I told them, "I have to leave school or, if I do qualify next time and I get the grant, can I use it for the loans that you are taking out for me now?"  "Of course.  It’s your money.  It’s your grant.  You can use it for the past classes."  That made me comfortable in proceeding, because the grant was enough to cover all of it, having both.

So when I finally get the letter, I was approved, and it was -- they had received my first payment.  I went to the financial aid supervisor, the head person, and said, "I got it.  Can you please apply it?"  "Well, we can’t do that.  You can only use it for future classes."

I was lied to.  They stole my money that I didn’t even have.  They stole four years of my life.  I waited -- I’m 33 years old.  I started when I was 26 in 2008.  I waited until after college to have children, and now my education is nothing and I have to -- now I am a mother of a disabled child with Down ’s syndrome.

I cannot afford to pay this.  I’m still, five years later, living in low income housing with no job.  I called Sallie Mae, and you know what?  Nobody has addressed Sallie Mae.  Sallie Mae -- I called them and I told them, "I just had a child with a disability.  I can’t go to work.  I can’t go to work."  I have -- she had to have heart surgery at 15 -- at five months old.  I couldn’t go to work.

"Is there any kind of programs you have?  Is there anything I might qualify for to help me?  I have no money."  "Well, no, ma’am.  All we can do for you is a forbearance, but that has capital gains," which, mind you, $10,000 in capital gains interest in one year.

My debt now is over $41,000 for an Associate’s Degree in criminal justice, which you don’t even need to be a correctional officer.  You don’t need it to be a police officer.  Those are public jobs, which I was not told.

Again, I -- while I’m here, I was asked to make a statement for a friend that could not make it.  She also went to school with me, and has not gotten her bachelor’s degree.  She was, I believe, one class or something out.  She couldn’t afford to go back because her having four children, also living in low income housing, qualified for both grants, and on paper received them, has $96,000 in loans that she has to -- when the bachelor’s degree costs $96,000 in loans, so where did that grant money go?  Where did that grant money go?

That grant money covered almost my entire bachelor’s degree.  It should have covered hers.  

Everest College is -- the one thing I want to say before you guys push me off is if this was anywhere else, any con artist that goes and cons somebody for money, over $500 is grand theft, right?  A con artist will con you for over $5,000, they’re going to prison. 

But Everest conned each one of us out of over tens of thousands, hundreds of thousands of dollars, and they’ve gotten a slap on the wrist and done it three times.  You keep -- you tell them you have to sell, and they sell back to themselves.  They open another company, whatever, but they have done this three times.

MS. MAHAFFIE:  Okay.

MS. COURTRIGHT:  You guys have let them continue to be in education.  They need to be forced to close their doors and not do this to anybody again.  I did this wanting to better my life and show my parents that it doesn’t have to be how it was for them.  I took all the right steps.  I graduated high school.  I got the highest GPA in my entire class, my associate’s, and my bachelor’s, but not even Everest would hire me.

I applied with Everest.  They refused to even give me an interview, right after they told me that they backed their students’ education.  It’s a joke.  They should be in prison just like every other person that has committed grand theft.  They should --

(Applause)

-- how are they -- our loans should be discharged.  I can’t even tell you the -- we complained to the department chair, the dean, about a class I had, specifically Mr. Haney.  Okay?  He gave us the answers to our homework, to our final, to our midterms, and that was regular in a lot of our classes.  We learned nothing.

I went in and complained.  I said, "I don’t want to pay for my degree.  I want to learn something so somebody will hire me."  Six different students went in there with me.  Nothing was done.  They made me stay in that class.

They didn’t reimburse me.  They didn’t put me in another class.  We’re paying them to give us an education.  Please do what’s right, because they are right; you guys are responsible.  You guys have been investigating them for five years.  How long does it take to see that they are con artists?

(Applause)

MS. MAHAFFIE:  We have now heard from everybody who signed up.  We have three people who have asked for additional time.  We have two minutes for each of you to come back.  Dawn Lueck?  okay.  She’s not there.  Kristen Leaf?  Oh, I’m sorry.

MS. LUECK:  Two minutes.  Okay.  And I’m going off the cuff, and I’m also putting out there my ignorance.  I don’t know a lot about the Earn As You Pay loan program.  I have been out of financial aid for two years now.  But when I think about the loan alternatives that you guys are creating, the first thing that comes to mind is, okay, if I apply for a Pay As I Earn loan program, are you guys going to tell me up front over the long term, the big picture, what I’m actually paying back?  And is that going to be disclosed to me?

Because I can’t keep making short-term decisions.  These companies cannot keep making short-term decisions.  The Department of Ed cannot continue to put on band aids.  We need cures, not band aids.  Far too long the government has operated the intelligence that run all these different organizations.  I mean, we have a lot of really intelligent individuals running these companies, in the Department of Ed, throughout the systems.  I mean, I have worked with them.

Why aren’t we coming up with better solutions?  They continue to look at short-term results, maybe a year, maybe five years.  Give me my lifetime.  You tell me with my $80,000 in student loan debts, because I am in grad school now, if I take these loan programs to repay, what is my lifetime picture?  I need to know that so I can make choices.

I’m not going to kill myself.  I’ll tell you what.  I value my life way too much.  But it really feels like sometimes the -- death is the only way out.  And the other thing that I want to say is, as I have been 15 years in higher education, in talking about the band aids, you know, a lot of -- I have worked for ITT Tech, I was with them for 10 years, worked for Corinthian College, I also attended University of Phoenix.  They continue to come up with these alternative loan programs.

We have Genesis, which is a big frickin’ issue.  ITT Tech had the Temp credit.  Big frickin’ issue.  When I -- and not knowing much about this loan repayment program, but it just makes me think, is it that same mentality of "Let’s just fix it now, let’s just fix it now, while these people are in office, or we have this person in position"?  That leads to these decisions.

And that’s all I have to say.  Thank you again, guys.  I appreciate it.

(Applause)

MS. MAHAFFIE:  Kristen Leaf? 

MS. LEAF:  Hi.  I’m back.  As I -- I just want to start off by telling you something hilarious I discovered over the weekend.  It was Halloween, and apparently Amazon was selling sexy Ph.D. costumes, and there were all kinds of comments, one of which ran as follows, "I spent my six years working -- or I spent six years working hard to get my Ph.D., which was extra hard because I am a lady and it hurt my ovaries to think so much.  

"After obtaining this advanced degree, the only position I could secure, like the majority in my field, was an adjunct position teaching for less than $2,000 a course.  Then, I got this lady Ph.D. regalia and my life immediately changed."  It’s very skimpy and small, as you can imagine.

"My department full of esteemed and very prestigious senior male tenured faculty saw me walking in the hall, invited me into the department meeting, and right there on the spot immediately voted to make me a tenured full professor.  Sadly, the next morning I found out that it was not a faculty meeting I had been to but just a bunch of professors having an office cocktail party.  And I was not tenured after all.  I want my money back.  I have student loans to pay off," she says.

So I -- when I was an undergrad, my very first quarter at UCLA, my bill was $435.  That was the last time I ever saw that.  I graduated undergrad with no student debt.  I started off at community college.  I worked all throughout undergrad.  When I started graduate school, back again at UCLA, I -- at the end of my first year, my father died, and I didn't want to burden my mother with the more like $2,000 a semester that I had to pay, so I started getting student loans, and that allowed me to go full-time for a couple of years, tend just to my courses, at $17,000-or-whatever a year.

However, at UCLA, when I was going, average time to dissertation completion was 10 years.  I, unfortunately, have yet to finish, but I'm working on it.  And I guess my two -- my two minutes are over, other than to, again, emphasize that I have lots of options apparently that include -- but starting on December 9th, my rehab status will come to an end, and I will be -- I have been paying like $20 a month for six months or something.  On December 9th, my new level plan payment rate will be $2,714 a month.  That's for the 10-year plan.

I could also choose the extended level plan that is 25 years.  That's $1,438 a month.  The graduate plan is a 10-year repayment plan that starts at $1,249 and then goes up every couple of years.  I might qualify for the income-based repayment plan depending on who knows what, and I am also available for 36 months of forbearance. 

One last thing.  If all that fails and I still can't pay my student loans, I can go back into delinquency, followed by collections, then rehab again, rehabilitation, and it will all start over again.  When I asked the woman on the phone if that means I could be maybe sent to jail at that point, she laughed and said she did not know.

I have been feeling shame for 18 years related to my student loan debt, and my unfinished Ph.D. probably tied in a bit together.  And I would love not just for me but for my students -- I really, really, really want my students -- I'd like a full-time tenured track position.  I'd like to be able to pay off my student loans, but I really want my students to not end up in the position that I am in.  Right?

(Applause)

MS. MAHAFFIE:  Tasha Cartwright?

MS. CARTWRIGHT:  The whole -- like I think she just touched on it a little, actually.  The whole -- I feel like in repayment a lot of it is used as a scare tactic, like I was told that you guys can garnish my wages, my tax refunds will be taken, and they have -- everybody has touched on that about family life.  I mean, all of us are barely getting by, like barely getting by.

I don't know how else you can collect, but if somebody can't -- if it goes to the point where you have to garnish wages and collect tax returns, then maybe another solution should be figured out.  I don't know it.  But if somebody can pay -- an honorable person will pay.

The one other thing I did want to say is in the middle of being at Everest, I decided -- I was thinking about teaching.  And when I had my daughter, I really thought about teaching special education.  And I can't, because not only does nobody recognize our degrees, you guys back them and you don't recognize our degrees for teaching, because they are not regionally accredited.  And that bothers me.  I don't see how the Department of Education can back a school that they don't even acknowledge their degree.

And, I mean, that should be it -- that's an issue to me, because now I can't even take that where I want to go.  I would have to reroute myself and do a lot more education just to get there when I have already gotten my bachelor's degree.

If I graduated at the top of my class, I should be able to teach.  I can't even go and be an aide.

DR. MITCHELL:  Thanks.

MS. CARTWRIGHT:  Thank you.

(Applause)

MS. MAHAFFIE:  This concludes our hearing.  Thank you very much for coming and sharing your ideas with us and, in many cases, sharing very personal stories.  You have given us a lot to think about, and we really appreciate this and we will be taking what we heard back to the Department.

Thank you.

DR. MITCHELL:  I want to echo Lynn's thanks, and the profound -- your profound ability to translate what are often abstract policy debates into very personal terms is very meaningful to me personally, and to us.  And be sure that we will be working on these issues on your behalf.

Thank you.

(Applause)

(Whereupon, the above-entitled matter went off the record at 4:08 p.m.)

**NEAL R. GROSS**

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