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UNITED STATES DEPARTMENT OF EDUCATION

+ + + + +

GAINFUL EMPLOYMENT

NEGOTIATED RULEMAKING COMMITTEE 2017-2018

+ + + + +

SESSION 3

+ + + + +

TUESDAY,

MARCH 13, 2018

+ + + + +

The Negotiated Rulemaking Committee 

met in the Potomac Center Plaza Auditorium, U.S. 

Department of Education, 550 12th Street, S.W., 

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

Rozmyn Miller, and Javier Ramirez, Facilitators, 

presiding.

PRESENT

RAMONA BUCK, Federal Mediation and Conciliation 

Service, Facilitator

ROZMYN MILLER, Federal Mediation and 

Conciliation Service, Facilitator

JAVIER RAMIREZ, Federal Mediation and 

Conciliation Service, Facilitator

JEFF ARTHUR, Vice President of Regulatory 

Affairs & Chief Information Officer, ECPI 

University

WHITNEY BARKLEY-DENNEY, Senior Policy Counsel, 

Center for Responsible Lending

JESSICA BARRY, President, School of Advertising

Art

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

External Relations and Public Policy, 

Laureate Education, Inc.
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STEPHEN CHEMA, Ritzert & Leyton, PC

JENNIFER DIAMOND, Program Associate, Maryland 

Consumer Rights Coalition

DANIEL ELKINS, Legislative Director, Enlisted 

Association of the National Guard of the 

United States

RYAN FISHER, Intergovernmental Relations 

Division, State of Texas Office of the 

Attorney General

PAMELA FOWLER, Executive Director of Financial 

Aid, University of Michigan - Ann Arbor

CHRISTOPHER GANNON, Vice President, United 

States Student Association

ANDREW HAMMONTREE, Director of Financial Aid and 

Scholarships, Francis Tuttle Technology 

Center

NEAL HELLER, CEO/President, Hollywood Institute 

of Beauty Careers

MARC JEROME, President, Monroe College

C. TODD JONES, President, Association of 

Independent Colleges & Universities in 

Ohio

ROBERTS JONES, President, Education & Workforce 

Policy, LLC

JOHN KAMIN, Assistant Director, The American 

Legion's National Veterans Employment & 

Education Division

KIRSTEN KEEFE, Senior Attorney, Consumer Finance 

and Housing Unit, Empire Justice Center

CHRISTOPHER MADAIO, Assistant Attorney General, 

Office of the Attorney General of Maryland

JORDAN MATSUDAIRA, Nonresident Fellow, Urban 

Institute; Assistant Professor, Cornell 

University

MARK MCKENZIE, Executive Director, Accreditation 

Commission for Acupuncture and Oriental 

Medicine

LAURA METUNE, Vice Chancellor of External 

Affairs, California Community Colleges

ANTHONY MIRANDO, Executive Director, National 

Accrediting Commission of Career Arts and 

Sciences
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MATTHEW MOORE, Director of Financial Aid and 

Scholarships, Sinclair Community College

KELLY MORRISSEY, Director of Financial Aid, 

Mount Wachusett Community College 

CHAD MUNTZ, Director of Institutional Research, 

Office of Administration and Finance, The 

University System of Maryland

JONATHAN K. PIERRE, Vice Chancellor for 

Institutional Accountability and Evening 

Division, Southern University Law Center

TIM POWERS, Director of Student Aid Policy, 

National Association of Independent 

Colleges and Universities

THELMA L. ROSS, Interim Director of Student 

Financial Aid, Prince George's County 

Community College

SANDY SARGE, SARGE Advisors

AHMAD SHAWWAL, Student, University of Virginia

DAVID SILVERMAN, Chief Financial Officer and 

Director of Business Affairs, The American 

Musical and Dramatic Academy

JOHNSON M. TYLER, Senior Attorney, Consumer and 

Foreclosure Units, Brooklyn Legal Services

CHRISTINA WHITFIELD, Associate Vice President, 

State Higher Education Executive Officers 

Association

STAFF PRESENT

STEVEN FINLEY, Office of General Counsel

GREGORY MARTIN, Office of Postsecondary 

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

2 9:00 a.m.

3 MR. RAMIREZ: So, welcome everybody 

4 for Session Three, day two of the Department of

5 Energy -- I'm sorry, the Department of Education 

6 --

7 (Laughter)

8 MR. RAMIREZ: Yeah, Department of 

9 Education Gainful Employment Negotiated 

10 Rulemaking.

11 Reminder on the live streaming, if you 

12 can, just pause it. Or please do pause it during 

13 any breaks.

14 And I'm going to start off and see if 

15 there are any opening remarks from any of the 

16 negotiators?

17 (No response)

18 MR. RAMIREZ: Okay. It does not look 

19 like it. How about from the public? Any opening 

20 remarks from the public?

21 (No response)

22 MR. RAMIREZ: Okay. All right, so 
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1 seeing no remarks, then we're going to go ahead 

2 and continue on with Issue Paper Two, D/E Rates.

3 And with that, there were a couple of 

4 -- we left off with one discussion as far as 

5 terminology goes. And Greg, I believe that the 

6 Department has discussed that and has come up 

7 with a way to consistently capture that 

8 throughout the Rule, correct?

9 MR. MARTIN: Greg for the record. 

10 Yes, Javier, we have. I'll discuss that.

11 But our first alternate energy sources 

12 -- no, I'm just kidding.

13 MR. RAMIREZ: Yeah.

14 (Laughter)

15 MR. MARTIN: I'm an ex -- I'm a noted 

16 expert in that field. But you know, I do this 

17 too once in a while.

18 MR. RAMIREZ: Yeah.

19 MR. MARTIN: Okay, so yes, picking up 

20 from yesterday's conversation. I know that we 

21 had some discussion over terms to use.

22 So, last night we met with our senior 
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1 staff. And we have settled on the use of the 

2 word measures.

3 So the -- it will be either meets 

4 measures or does not meet measures. So, that's 

5 the decision from above.

6 So, we did settle on that. And as 

7 Scott wants me to point out that we have made 

8 changes in one paper, Scott?

9 (Off mic comment)

10 MR. MARTIN: Yeah. The paper we 

11 discussed yesterday, Scott's making changes to. 

12 But, they haven't been changed going forward.

13 But, you can just kind of mentally 

14 make those adjustments as you see them, as you 

15 see the word. Such as going through this paper 

16 here.

17 We also made some decisions on the 

18 sanctions paper. Which I'll go over later. Not 

19 now. But, I'll talk about those as well.

20 And we'll be handing out a revised 

21 flow chart that we had yesterday that -- the 

22 person who works on this is Ashley Higgins on our 
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1 staff. And she's amazing in that.

2 She's probably made, I don't know how 

3 many changes to this over the past couple of 

4 weeks. But, she's always able to do it really 

5 quickly and it looks really good.

6 So, I'm going to hand that out later 

7 on. And we'll discuss those changes.

8 I also -- I think yesterday we left 

9 off with Issue Paper Two. And we had only gotten 

10 to the -- we talked about those notes at the 

11 bottom.

12 And the Department is seeking feedback 

13 on those options. And the subject was raised 

14 about -- the topic was raised about -- or the 

15 idea, I should say, was put forward about using a 

16 75 percent, the top 75 percent of earners.

17 We took that back to senior management 

18 at the meeting last night, and there was interest 

19 in it. They were intrigued by it.

20 So, I think our main stumbling block 

21 at this point would be finding justification for 

22 it. Or making it not -- we don't want there to 
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1 be an arbitrariness to it.

2 So, we are giving it some thought. 

3 So, I just wanted to let you know about that.

4 Before I move on else, I wanted to say 

5 that before -- prior to our break this morning, 

6 Mark Jerome is going to do a short data 

7 presentation.

8 And we can have a discussion about 

9 that. I don't want it to go on indefinitely. So 

10 -- and I mean, Mark's part, that's not going to 

11 go on indefinitely.

12 He's going to wind up the discussion 

13 about it. So, we'll do that before the break.

14 All right, so we can continue then 

15 with Issue Paper Two. And I think we again, we 

16 talked a little bit about the notes at the 

17 bottom.

18 So we can go through the actual paper 

19 itself then, starting with 668.403. And you can 

20 see that gainful employment framework becomes 

21 educational program framework.

22 It's awful difficult sometimes working 
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1 through these to figure out what they say now. 

2 Because you have all the strikeouts. Right, so.

3 And you can see there that the 

4 framework does consist of debt to earnings rates 

5 and loan repayment rates. Again, the 

6 undergraduate educational program is reflected 

7 there.

8 And in two loan repayment rate using 

9 the procedures in 668.406. And we will talk 

10 about those. And you can see we're using 

11 benchmarks still here. But that would become 

12 measures.

13 And as you are aware, we retained the 

14 same -- we retained the same debt to earnings 

15 measures as we had previously. So nothing is new 

16 there over what we talked about in Session Two.

17 Let's see here, We again referenced 

18 the -- on page three, the top of page three, 

19 number three is the inclusion of the 

20 undergraduate program.

21 Which was considered to have met what 

22 would now be measures under the D/E rate measure 
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1 if the institution demonstrates that the program 

2 meets the standards for economically 

3 disadvantaged. Appeals in 668.213 or the appeal 

4 for programs with fewer borrowers in 668.216.

5 And --

6 MR. RAMIREZ: And Greg, let me pause 

7 you for just a second. And the pieces that are 

8 above three there, let me ask the group, are 

9 there any questions on that?

10 And see if we could get an approval on 

11 -- from the beginning of this Issue Paper up to 

12 Number Three, which is at the top of page three. 

13 Right.

14 So, on those sections there on page --

15 really page one and -- I'm sorry, page two and 

16 the top of page three.

17 You have a question Sandy?

18 MS. SARGE: This is Sandy. I think 

19 that there's certainly some concern that I've 

20 heard, and I want to throw it out there, is if 

21 we're still going to stick with the 8 percent, 

22 would the amortization add ten years?
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1 That would be a concern. So, because 

2 it doesn't state here the amortization, I think 

3 it goes in conjunction with.

4 So, I would be concerned about 

5 finalizing that until we have a discussion about 

6 the amortization rate period. The amortization 

7 period.

8 MR. RAMIREZ: Okay. Chris?

9 MR. GANNON: Well, I have a concern 

10 with the meets measures term. So, I suppose that 

11 is articulated in these pages.

12 So, I would express that. I mean, 

13 it's getting more confusing, not less confusing, 

14 going from benchmarks, which I already thought 

15 wasn't very good explanation for a student, to 

16 measures.

17 I mean, I just Googled the definition 

18 of measures is like a standard unit of 

19 measurement. So, to me if you're saying it meets 

20 measures, measures of what?

21 I mean, it's like a part of the 

22 sentence is almost chopped off. So, I think that 
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1 it's -- if a student reads just that it doesn't 

2 meet measures that is going to make it a lot more 

3 confusing.

4 And I think there's a lot better ways 

5 to express if someone is not sufficiently 

6 providing earnings. Or providing gainful 

7 employment.

8 That I think that should be expressed 

9 a lot better and a lot shorter if it does not 

10 meet -- and I'm not going to throw out anything. 

11 I just think that is not going in the right 

12 direction.

13 MR. RAMIREZ: Sandy, you had a comment 

14 on that?

15 MS. SARGE: Yes. Is the Department 

16 intending to put together or have some sort of 

17 language about where we would be required to put 

18 out there what we're looking at?

19 So, for example, it would say debt to 

20 earnings and loan repayment, the Department of 

21 Education has measured, buh, buh, buh. And that 

22 would be like standard language we would put as 
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1 a, sort of a precursor to these measures?

2 Because I think that would be a good 

3 way to explain it. Is if the Department just 

4 states these are our -- this is what we're doing 

5 and why we're doing it.

6 Here are our measures. And then you 

7 say, here's the measures. You either meet them 

8 or you don't.

9 MR. MARTIN: Well, the only --

10 remember that the only -- that you don't -- in 

11 disclosures you don't disclose the rate.

12 The only time the language comes into 

13 play is with the notification. So, it would only

14 be if you were required to do notification for 

15 the program that the language would come in.

16 And we talked about that language 

17 yesterday. Moving from the -- to measures, we 

18 would have to tweak that language somewhat to 

19 make that fit.

20 But, I think it would be similar to 

21 what is there now. But again, we'd have to go 

22 back and take a look at that.
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1 But that would be the only time. So, 

2 I just want to remind everybody that you wouldn't 

3 be using, you know, every day you wouldn't put in 

4 your disclosure template this language.

5 It's only -- well, it would be there 

6 obviously if you had to put the notification in. 

7 And that's the only time it would. It's sort of 

8 like not with the warning. 

9 MR. RAMIREZ: Okay. Thank you. So, 

10 then I'm sorry Greg, could you continue on with 

11 three then?

12 MR. MARTIN: Sure. Okay. We were 

13 talking about the economically disadvantaged 

14 appeals.

15 And then we can move onto page four, 

16 where we talk about the addition of the -- well, 

17 we call it benchmark here, but it would be 

18 measure -- obviously it can't be measure for the 

19 loan repayment measure. So, that will have to be 

20 tweaked.

21 But, where it says benchmark for the 

22 loan repayment measure. And you can see there 
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1 that the issue currently is that we don't have 

2 anything as far a -- what the repayment rate is 

3 greater then or equal to.

4 So, obviously if we were to proceed 

5 with the methodology that Sarah discussed 

6 yesterday, we would have to change that -- change 

7 that language.

8 And this language is written as if 

9 there were going to be settled upon benchmark. 

10 But obviously it might not be that. So, that's 

11 just kind of a holding place for that.

12 Beginning at three, for any year the 

13 Secretary has not calculated or issued loan 

14 repayment rate for a program, for a measurement 

15 period, the institution discloses the loan 

16 repayment for the previous measure if available.

17 And if the Secretary has not 

18 calculated repayment rates for additional 

19 measurement periods, the program would list N/A 

20 for the repayment rate.

21 MR. RAMIREZ: Okay. Any questions or 

22 -- Sandy?
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1 MS. SARGE: Clearly I've had more 

2 coffee this morning then I did yesterday. This 

3 is Sandy.

4 So, is this the time to ask some 

5 questions about the loan repayment rate? I had 

6 some confusion.

7 And you caught me off guard. I hadn't 

8 gotten my brain all together when you asked if 

9 anybody had any questions from yesterday.

10 MR. RAMIREZ: Um-hum. Yeah, you can 

11 go ahead.

12 MR. MARTIN: Yeah, go ahead.

13 MS. SARGE: Okay.

14 MR. MARTIN: If they're technical in 

15 nature, we might have to ask -- is Sarah here 

16 this morning?

17 MS. SARGE: No, they're not 

18 mathematically --

19 MR. MARTIN: She's a -- okay.

20 MS. SARGE: No. They're technical. 

21 But Steve, maybe it's a legal thing. I guess I 

22 didn't realize it was so intuitive yesterday.
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1 That the populations would be 

2 different between -- or the groups of students we 

3 would be measuring would be different between 

4 gainful employment, which are graduates who have 

5 received some sort of Title IV and loan 

6 repayment. Which is any student that has 

7 borrowed. Right?

8 I was confused about that. Why --

9 where and is that a set in stone thing? And is 

10 there a reason why we shouldn't be looking at the 

11 same population of students?

12 In other words, graduates with loan

13 balances versus all borrowers? For what we're 

14 doing here in gainful employment.

15 MR. MARTIN: Greg for the record. 

16 We've incorporated for this the repayment rate 

17 methodology used for the scorecard.

18 Of course that's institutional. This 

19 will be programmatic. And it doesn't just 

20 include completers as you're aware.

21 I think, you know, we look at this, 

22 first of all there are two separate metrics. 
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1 They're not linked. There are two separate 

2 measures.

3 I think that's a good thing. Because 

4 it's meant to be, you know, if you don't meet the 

5 one, then you have the other one.

6 The repayment rate was designed that 

7 way from the get go to include all borrowers, not 

8 just completers. I don't think it's necessary, 

9 and I don't think -- and I think our data people 

10 would agree that they line up.

11 As far as -- there are enough 

12 repayment rates out there right now that we're --

13 I'm disinclined to put together another one. And 

14 I -- yeah, repayment rate number six, right? Or 

15 whatever.

16 So, I think we used -- we incor -- you 

17 know, we incorporated one we already have. It's 

18 a -- we feel it's a defensible one from the 

19 scorecard. And that's why we have it here.

20 And you're correct, it doesn't just 

21 include completers. To go back and revisit that 

22 would require us putting together another 
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1 repayment rate calculation here.

2 And I don't know that we have time to 

3 do that. I don't -- yes, you could make -- you 

4 could definitely make the argument that the two -

5 - that the one is just completers and this one 

6 isn't.

7 I don't -- we don't see that as a 

8 problem necessarily. Since again, they are two 

9 separate measures. And the repayment rate's 

10 meant to be a, and if you don't meet the other 

11 one, we offer the repayment rate as a -- it's 

12 like a secondary way of meeting the standard.

13 But you know, certainly I'm open to 

14 discussion about it. I'm not going to commit the 

15 Department to going back to the table to revisit 

16 the repayment rate.

17 MS. SARGE: So, I guess -- this is 

18 Sandy again. The only reason why, you know, 

19 obviously my mantra has been consistency.

20 And if you're going to present these 

21 two things together, and remembering that at the 

22 beginning we were trying to -- we determined that 
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1 it was good information for all students to know 

2 whether when they graduate that they could get a 

3 job that repaid their loans.

4 So that's what debt to earning is 

5 supposed to measure. And in the framework, I 

6 think at least certainly when I was thinking 

7 about it last time, there were reasons that we 

8 would want this second measure.

9 That if a student chooses to go into a 

10 career where the salaries were not necessarily 

11 good, like I think Sarah used the example of 

12 teaching. She had her colleagues in teaching had 

13 lower salaries, but not one of them wasn't 

14 repaying their loans.

15 So, I'm just putting it out there 

16 because I was confused at why we would bring in 

17 non-completers into this discussion about 

18 graduating and getting gainfully employed enough 

19 to repay your loans.

20 I think there are other places we 

21 measure, correct me if I'm wrong anybody. Don't 

22 we measure the non-completers through cohort 
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1 default? And some of these other things?

2 I mean, -- so anyway, I'm throwing it 

3 out there. I just want to make sure that -- I'll 

4 go with the crowd to some degree.

5 But, I want to put it out there.

6 MR. RAMIREZ: Thank you. Jennifer?

7 MS. BLUM: I just wanted to recommend 

8 that we -- because I mean, I think a lot of us 

9 have questions around the loan repayment rate.

10 But I was prepared to talk about those 

11 in the calculation section under Issue Three. 

12 And so I just want to recommend that we -- the 

13 only -- to me, the only question on the table 

14 here is the fact that the benchmark piece is 

15 blank.

16 But I actually don't even feel like we 

17 can talk about that before we talk about the 

18 calculation. So, I would just recommend that 

19 before we go down the -- and we can, but then, 

20 you know, Issue Paper Three, and I do think the 

21 calculation's on both.

22 So, I'm not saying that Sandy's 
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1 questions aren't relevant. But, I just feel like 

2 they're better placed when we're talking about 

3 the calculations themselves in Issue Three.

4 MR. RAMIREZ: Okay. All right, any 

5 other questions then on D/E Rates?

6 (No response)

7 MR. RAMIREZ: So, it sounds like 

8 there's a couple of pieces that we still need to 

9 figure out before we can come back in and plug 

10 those in and get that final verbiage nailed down.

11 So Greg, do you want to walk us 

12 through Issue Paper Three?

13 MR. MARTIN: Sure. Just hold on a 

14 moment. I find that as the week goes on that 

15 papers build up. And you're less and less able 

16 to find anything.

17 Okay. If we can get Issue Three up. 

18 So, we'll be able to continue, as Jennifer 

19 pointed out, with the discussion of the rates in 

20 this.

21 Okay. So, looking at the summary here 

22 Well, changes in section two. We propose to 
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1 amortize debt.

2 And we did have a discussion already 

3 about that. So, it's fair that we should discuss 

4 it here.

5 We propose to amortize debt over a ten 

6 year period for undergraduate certificates and 

7 post-baccalaureate certificates and associate 

8 degrees.

9 We also propose to amortize debt over 

10 a 15-year period for bachelor's degrees. And 

11 conforming with our previous proposal to limit 

12 these regulations to undergraduate programs, we 

13 remove the amortization of debt for master's 

14 level programs or higher.

15 We propose moving the calculation of 

16 loan repayment to 668.406. And I'm not going to 

17 go back over the changes before section two, 

18 because I think these changes made some 

19 alterations to that.

20 So, that's pretty much where we are 

21 with the paper. So, I think we'll just get right 

22 into the paper itself.
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1 So, we can start with 404, calculating 

2 debt to earnings rates. And nothing has changed

3 really here. We're using the same D/E rates 

4 calculation as we proposed before.

5 Using existing D/E rates calculations. 

6 And you'll note though however that we have 

7 changed GE program to undergraduate educational 

8 program.

9 And the next major change would be on 

10 page two. Looking at (b)(2) amortizing the 

11 median loan debt.

12 MR. RAMIREZ: Okay Greg, before we get 

13 into there then, for that first part, is that 

14 something that the group can approve?

15 Or is there any discussion that needs 

16 -- talk about just that first portion of the 

17 paper. Yeah, go ahead, David. 

18 MR. SILVERMAN: Hi, I was -- I'm 

19 either going to ask why we moved -- why you moved 

20 back the amortization for certificates and 

21 associates from back to 15 to 10.

22 Or I'll just plead my case.
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1 MR. RAMIREZ: Well, let me pause you 

2 though. Because that's going to be in the next 

3 section.

4 MR. SILVERMAN: Okay.

5 MR. RAMIREZ: And so I just want to 

6 see on this first section here if there was any 

7 issues? Or if we could check for consensus on 

8 that first part of the paper?

9 Because your question is going 

10 straight to the next number two, the 

11 amortization.

12 MR. SILVERMAN: It is? Okay.

13 MR. RAMIREZ: Jennifer?

14 MS. BLUM: I do have a question, 

15 sorry. And it maybe just be that I don't

16 remember the answer from last time.

17 But, on (b)(1), where it says the 

18 lesser of tuition, it allows for, or actually it 

19 says, that it will be the lesser of the loan 

20 amount or tuition and fees.

21 And by the way, I think that it 

22 references paragraph (d)(3). But I think it's 
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1 supposed to be (d)(2).

2 So, I just wanted to point that out. 

3 But also, when you got to (d)(2), it then says 

4 that the Secretary may elect through a federal 

5 register notice to seek the tuition and fees and 

6 books and supplies and private loan debt and 

7 institutional loan debt.

8 And so those two don't jive to me. 

9 Those two paragraphs. Because one says that 

10 basically it will be based on the lesser of 

11 tuition and fees or the loan amount.

12 And then the next section -- and maybe 

13 I'm reading it wrong. Like I said, I just want 

14 clarity.

15 And then on (d)(2) it says the 

16 Secretary may elect to receive. And so to me 

17 it's one or the other. You're either allowing 

18 for the different, you know, allowing for the 

19 lesser of the two.

20 In which case the Department shall 

21 like be seeking that data from federal, not a 

22 may. Or you're taking one, you know, you're 
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1 taking the loan amount.

2 So, I feel like the two paragraphs are 

3 in conflict with one another. But again, maybe 

4 I'm reading it wrong and would like clarity.

5 MR. MARTIN: Greg for the record. I 

6 do con -- I will concede that that could lead to 

7 confusion.

8 Yes, what we have done is given 

9 ourselves the option of using that if we were 

10 able to capture what the tuition, total tuition 

11 and fees, books, equipment and supplies for each 

12 student is.

13 Remember that under the -- when we're 

14 doing this administratively, we're not going to 

15 have that information. And we have no way of 

16 collecting it currently other then to have to

17 require every school to do the reporting that's 

18 currently required of a GE, of schools with GE 

19 programs.

20 So, we're not going to do that. So, 

21 we just don't have the data. So, right now we 

22 can't do that.
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1 We wanted to give ourselves the 

2 latitude to use that should we be able to capture 

3 that information in some sort of a manner that 

4 doesn't impose too much of a burden on 

5 institutions.

6 But, I do agree that the way it's 

7 written here, it does say we shall use --

8 basically it says we shall use that.

9 So, we'll take that back and try to 

10 work on that language to make the language here 

11 match up with what we have.

12 MS. BLUM: Yeah, I mean it would need 

13 to match up. And then, I mean, I think I'm on 

14 the record already, so I won't belabor it.

15 But, we would strongly urge the 

16 Secretary and the Department to consider the 

17 lesser of the two. But, we're not going to --

18 I'm not going to belabor that again.

19 But just yeah, as written it doesn't 

20 work.

21 MR. MARTIN: I mean, our main concern 

22 again, and to be honest it's not that we don't --
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1 we don't see any use in this. It's simply that 

2 without the data we can't do it.

3 And that's, you know, we simply would 

4 have to have that reported to us. And part of 

5 this effort is to eliminate burden and not impose 

6 those reporting requirements on all institutions 

7 for all programs.

8 So, we can only go with the data that 

9 we have. And we don't have that data.

10 MR. RAMIREZ: Okay. Chris then Mark.

11 MR. GANNON: So, this is the section 

12 where, I've raised this before, that I worry that 

13 we're not actually accomplishing the goal of the 

14 rule by using Title IV completers instead of 

15 borrowers.

16 And I'm not suggesting that we go to 

17 that. But I think this group has to recon with 

18 it.

19 Because essentially I want to make 

20 sure the negotiators know any program where 

21 there's high numbers of borrowers who the 

22 objective evidence is they have no earnings, they 
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1 have high default. But, they don't constitute 

2 the majority of the program.

3 The program gets the best D/E result, 

4 a perfect result. I want to make sure the 

5 consumer people understand this. It's a very 

6 important thing.

7 Because if any institution -- it 

8 actually ends up not protecting borrowers. And I 

9 understand the reason behind it.

10 I'm just looking, has the Department 

11 done any thinking about this? Because I've 

12 raised it a number of times.

13 And, you know, the data is fairly 

14 clear on this. That there's plenty of 

15 institutions where objectively student borrowers 

16 are struggling but D/E gives them the best 

17 result.

18 MR. MARTIN: We haven't had extensive 

19 discussions about changing that yet. We'll take 

20 it back.

21 But we have not, to be honest, we 

22 haven't discussed a change in that part of the 
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1 calculation.

2 MR. RAMIREZ: Okay Chris?

3 MR. MADAIO: So, if I -- and I know 

4 this wasn't changed in this issue paper, but I 

5 just wanted to make sure I'm understanding that 

6 it's the calculation of median loan debt wouldn't 

7 include the housing and living expenses, I guess, 

8 if it was less then the living expenses debt 

9 incurred.

10 If it was less then the total amount 

11 of tuition, fees, and supplies. That's right, 

12 right Greg?

13 MR. MARTIN: I'm sorry. I was not --

14 can you --

15 MR. MADAIO: Sure, yeah.

16 MR. MARTIN: I'm sorry, could you 

17 restate that?

18 MR. MADAIO: If the total amount of 

19 debt incurred by a student that included housing 

20 and living expenses was lesser, I guess, then the 

21 tuition and fees, it would -- you'd use the 

22 tuition and fees.
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1 That's what this would do. Is that 

2 right?

3 MR. MARTIN: It's the lesser of the 

4 debt or the -- it's capped. It's the debt capped 

5 at tuition and fees, books, supplies.

6 MR. MADAIO: And use, okay.

7 MR. MARTIN: And that's what it was.

8 MR. MADAIO: All right.

9 MR. MARTIN: But we wouldn't be doing 

10 that now. But that's what it was.

11 MR. MADAIO: Right. That's what --

12 sure. Okay. Well, I guess I've just expressed a 

13 general principal that, you know, living expenses 

14 to me is debt that, you know, students have to 

15 take out.

16 We've talked about this before. That 

17 to go to the school, obviously understanding that 

18 they should take out the appropriate amount of 

19 debt, and they should be advised as to that.

20 But, you know, I think that the amount 

21 of debt that students incur because to live while 

22 they're at the school is something that should be 
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1 incorporated.

2 And that students should be -- should 

3 under -- other students should understand those 

4 numbers when they're looking at whether to enroll 

5 in that school.

6 MR. RAMIREZ: Jeff?

7 MR. ARTHUR: Yeah, I'll just reiterate 

8 something I said before. It's my opinion. I 

9 don't think everybody may agree.

10 But, I don't think that counting that 

11 debt or not changes the median debt of a student 

12 at all. Because I think they're all above the 

13 median anyway when they -- unless you've got over 

14 half of your students taking out living expenses 

15 for the most part.

16 And that's pretty rare. So, I don't 

17 think it makes a difference.

18 MR. RAMIREZ: Johnson and then 

19 Jennifer.

20 MR. TYLER: Thanks. So I wanted to 

21 follow up with Mark on Mark's question. Does the 

22 Department of Education collect income related to 
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1 borrowers?

2 Is that something they could do?

3 MR. MARTIN: Yeah, sure we collect it. 

4 We get that from Social Security.

5 You're talking about what we don't 

6 collect, well we do collect it now for GE 

7 programs, but won't be collecting it going 

8 forward is tuition fees, the amount for tuition 

9 fees, books, supplies and equipment. Which is 

10 what we would need to do this.

11 That's what we will not be getting 

12 going forward.

13 MR. TYLER: Yeah, so well I -- I mean, 

14 I think Mark's idea is a good idea. In that I've 

15 had many clients who when I've looked at the GE 

16 stuff and the GE report on a specific program 

17 they have is pretty good because anyone who can 

18 complete it can get a good job.

19 But the instruction is really poor. 

20 And the completion rate is really low. Like less 

21 then 18 percent for HVAC.

22 And it's very expensive. And a lot of 
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1 people do, you know, the HVAC program, at certain 

2 schools it's not run very well.

3 And it's a relationship thing that 

4 gets people jobs, not the education. So, it's a 

5 big loss of money for a lot of students.

6 MR. RAMIREZ: Okay. Jennifer?

7 MS. BLUM: So like I said before, I 

8 don't want to belabor the point. Actually I just 

9 wanted to make sure that the Department knew that 

10 it was inconsistent.

11 So I just want to be clear that I'm 

12 not like belaboring the point. I will point out, 

13 and Stephen, I think you and I just discussed 

14 this, the Department is actually doing some 

15 interesting work right now in a pilot with regard 

16 to breaking out the loans with regards to living 

17 expenses.

18 And it is kind of a shame that the 

19 Department itself doesn't know what amounts are 

20 for living expenses and what amounts are for loan 

21 and fees. I mean, you would think the Department 

22 instead of disbursing the loans would know the 
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1 difference.

2 So, ultimately down the road, and so I 

3 do appreciate the section in (d)(2), which I 

4 assume would be a sort of looking down the road. 

5 Ultimately there may not be a reporting 

6 requirement on the part of the institutions with 

7 regard to the breakout.

8 Because I think the Department is 

9 beginning work to understand the parsing of their 

10 loan amounts anyway. So, I do appreciate the 

11 section on (d)(2), because it plays out for the 

12 future.

13 MR. RAMIREZ: Okay. Thank you. So, 

14 Greg, you want to go ahead and continue on with 

15 two?

16 MR. MARTIN: Yes, thanks. Greg for 

17 the record. And we'll continue with amortizing 

18 median loan debt at the bottom of page two.

19 So, I think we had a comment before, 

20 but I'll just reiterate that again. And then we 

21 can entertain that comment.

22 So, amortizing median loan debt over a 
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1 ten year repayment period for a program at least 

2 to an undergraduate certificate or post3 baccalaureate certificate, or an associate degree 

4 or graduate certificate.

5 Or over a 15-year repayment period for 

6 a program that leads to a bachelor's degree. 

7 Using the annual statutory interest rates on 

8 federal direct, unsubsidized loans that were in 

9 effect during the last award year of the cohort 

10 period.

11 And also I should -- but the cohort --

12 yeah, in determining that rate the Secretary will 

13 use the federal direct student loan interest rate 

14 applicable to undergraduate students for 

15 undergraduate certificate programs, post16 baccalaureate certificates, bachelor programs and 

17 associate degree programs.

18 MR. RAMIREZ: Okay. David you have --

19 yeah.

20 MR. SILVERMAN: Thank you. David 

21 Silverman. I am going to ask the Department to 

22 move back the amortization for -- from ten years 
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1 for the certificate programs, associate programs.

2 It was 15 at session two. Now at 

3 session three it's back to ten.

4 My students for example can be done 

5 with -- our two-year program in performing arts, 

6 they can be done with the program when they're 19 

7 and a half year's old.

8 So these are, you know, they're still 

9 babies when they come out of there. I realize to 

10 all of us they're babies.

11 You know, so they're a little -- even 

12 in the five years that they -- before we start 

13 measuring them, you know, they're still two, 

14 three years younger then people getting four year 

15 degrees.

16 And seven, eight years younger then 

17 people with graduate degrees. So they're a 

18 little, you know, they're a little -- they're 

19 younger, they're more immature.

20 They may still be living at home. And 

21 you know, have less income compared to people 

22 with degrees.
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1 And also certificate programs and 

2 associates, but that's not strong as a -- it's 

3 not as strong of a resume builder as a degree.

4 So, and I would say that performing 

5 arts, you know, the income after graduation is 

6 going to be lower then say business schools or 

7 doctors. And I believe other certificate 

8 programs like MIL, manicurists, nothing against, 

9 you know, barbers and other kind of arts 

10 programs.

11 I think the income is going to be a 

12 bit lower. So, it's moving the amortization back 

13 to ten years or it really hurts.

14 It hurts a school like me -- mine. 

15 And I think it would probably hurt other 

16 certificate programs.

17 And you know, the people -- these 

18 people, students getting certificates in manicure 

19 and these people are just trying too really, you 

20 know, work hard and make an honest living doing 

21 gainful employment.

22 And there's, you know, those salaries 
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1 just aren't going to be as high as business 

2 school and other kind of salaries.

3 So, if we could, you know, if you 

4 could -- and then you also got rid of the zones. 

5 So, you know, we were 8.01, that was the zone.

6 So now 8.01 is failing or not meeting 

7 measures as opposed to being in the zone. So, 

8 there was really no help to a school like me from 

9 moving the 15 back to ten.

10 And there's other people shaking their 

11 heads here that are in the same boat. Thank you.

12 MR. RAMIREZ: All right. So I have 

13 Jennifer Diamond, Chad, Jessica, Kelly and Chris. 

14 So, Jennifer Diamond?

15 MS. DIAMOND: This is Jennifer 

16 Diamond. I just want to push back on that since 

17 when we're looking at certificate programs for 

18 folks who are choosing those, the folks that we 

19 work with, they're choosing them often for the 

20 speed of the program and the cost effectiveness.

21 And to go for a two-year program 

22 regardless of what age you graduate at, I mean, 
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1 you're still lending those little -- those kids, 

2 you know, a ton of money.

3 So, thinking about paying off a two4 year program for 15 years, I think ten years is 

5 far more appropriate for students choosing 

6 certificate and associate degrees.

7 MR. RAMIREZ: Okay. Thank you. Chad?

8 MR. MUNTZ: Slide over here. A quick 

9 question on (a). Right there, (2)(a), graduate 

10 certificates.

11 Are we removing graduates completely 

12 out of everything?

13 MR. MARTIN: Those graduates are 

14 removed completely.

15 MR. MUNTZ: So, should we remove 

16 graduate certificates out of that line?

17 MR. MARTIN: It -- yeah they lost it.

18 MR. MUNTZ: Okay.

19 MR. MARTIN: If I amend, let me take a 

20 purpose break here. Sorry, my error.

21 You know, I'm thinking back to my 

22 training officer days when you're talking about 
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1 loan limits. You know, and that was a graduate 

2 certificate is the same as a master's degree. 

3 That's stuck in my head.

4 So, I can't get rid of those times 

5 from my -- unfortunately it's like Thelma 

6 remembers those days well. Probably thinking 

7 I've got to watch this guy again after having 

8 done it for 20 years.

9 But, yeah. So, I spoke in error 

10 there. We have not done that for graduate 

11 certificates.

12 It was only -- the way we did it was 

13 masters' degrees and higher. So, I'm sorry about 

14 that. My error.

15 MR. RAMIREZ: Okay. Jessica?

16 MS. BARRY: Jessica Barry. In 

17 response to what David's talking about, yes the 

18 15-year amortization would definitely help 

19 students in our sector.

20 But I really just wanted to ask the 

21 Department why they choose to go back to 10 after 

22 the last session?
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1 MR. MARTIN: Yeah, I -- these years 

2 that we used here just reflect our determination 

3 that we thought this was an appropriate time 

4 period for amortization. Hold on a moment.

5 Okay. Before I reverse myself again, 

6 see, I was right. No. Well okay, so the issue 

7 of why we use these rates. Right.

8 You know, we were just discussing it 

9 and for a certificate program or an associate 

10 degree, we determined that that was a reasonable 

11 amount of time to, you know, for which to 

12 amortize the loan.

13 We are open to hearing, you know, 

14 discussion about another time frame if you don't 

15 think this is correct. So, I mean, where you 

16 know, I'm certainly not cutting off debate for 

17 that. But that was our intention.

18 Moving back to graduate certificates. 

19 Graduate certificates should be eliminated. 

20 We're not going to do it for graduate 

21 certificates.

22 So, I apologize for that.
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1 MR. RAMIREZ: Yeah, yeah. 

2 MS. BARRY: Just in response to that, 

3 Neal and I were just talking about, so our 

4 students who enter income-based repayment plans, 

5 they are then amortized over a 15-year schedule.

6 So, we're wondering why the government 

7 says it's okay for 15 years in that instance, but 

8 we would sort of be penalized at a 10-year rate 

9 in this instance.

10 MR. MARTIN: You know, I don't think

11 we view it as being penal -- we certainly 

12 understand that students go in using repayment 

13 instruments that are more, you know, more then 

14 ten years.

15 So it wasn't -- it's not a reflection 

16 of the fact that we believe everybody in those 

17 types of programs is using a standard ten year 

18 repayment.

19 It was just more a reflection of when 

20 determining, you know, the rates for those 

21 students, what's a reasonable amount of time to 

22 look out for how long it should take to repay the 
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1 loan. So that's why we settled on the ten years.

2 But again, you know, I'll take back 

3 your concerns. We're not cutting off debate on 

4 this. We're saying that I'm willing to consider 

5 a different time frame.

6 MR. RAMIREZ: Quick?

7 MR. SILVERMAN: Quick.

8 MR. RAMIREZ: Go ahead.

9 MR. SILVERMAN: I just want to 

10 reiterate, you know, you took away the -- the 8 

11 to 12 used to be sort of, you know, it was a safe 

12 zone.

13 It -- I don't think it every 

14 established -- somehow this zone went -- the 8 to 

15 12 was the zone. Now all of a sudden 8.01 is 

16 failing or not meeting measures.

17 We never -- I think we need to discuss 

18 that. Because someone having an 8.01 is a lot 

19 different then a school having an 18.01.

20 And so if you can explain getting rid 

21 of the zone, which was 8 to 12, which was a 

22 little safe place for a while, to give us under 
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1 the original. So now without the zone, 8.01 went 

2 from zone too not meeting measures.

3 MR. MARTIN: Okay. Well, the first 

4 thing, you know, just in reviewing and I just 

5 want to point out, you know, again with the ten 

6 year rate that we're looking at averages here. 

7 So we're not, you know, for purposes of doing a 

8 metric.

9 So, I don't think you can say look at 

10 how much time it takes each individual student to 

11 repay. So, that's one thing I wanted to say 

12 about that or add to that.

13 With respect to the zone, the zone was 

14 originally put into place be -- you have to 

15 consider what the ramifications were for failing 

16 at that point. Which was loss of program 

17 eligibility.

18 So, the zone was a way for schools 

19 that were not meeting the standard or not 

20 passing, but slightly under that to come into a 

21 position of passing. And I think that was 

22 absolutely necessary given the fact that the 
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1 ramifications lost automatic loss of program 

2 eligibility.

3 I think when you look at these rates 

4 you have to consider, we've removed that. So, 

5 you know, there's no failing. So, you know, 

6 you're not in a sense there's not going to be a 

7 failure, there's not going to be a removal of 

8 program eligibility.

9 So, I don't think that the zone is a -

10 - I don't see, or we don't see that putting the 

11 zone back in would be appropriate for these 

12 regulations.

13 MR. SILVERMAN: Can I just say one 

14 more with ---

15 MR. RAMIREZ: No. Let me jump back 

16 into the queue here. Because I've got some other 

17 people up here.

18 MR. SILVERMAN: Just real quick just 

19 to answer. I promise it will only take ten 

20 seconds.

21 MR. RAMIREZ: Go. Hurry up. Right.

22 MR. SILVERMAN: But you know, me 
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1 telling a perspective student we're not meeting 

2 measures is very hurtful to the school. It's 

3 almost like failing.

4 MR. RAMIREZ: Okay. Kelly.

5 MS. MORRISSEY: This is Kelly. I have 

6 a question for Greg and a comment.

7 The question being, now that we have 

8 bachelor degree students in these calculations,

9 I'm just wondering how loans would be treated if 

10 a student started in a certificate or an 

11 associate degree and then they continue to a 

12 bachelor degree program?

13 And they have loans for all of those 

14 programs, which amortization period would they be 

15 assigned? And how would those loans be rolled up 

16 in the calculation?

17 MR. MARTIN: I'm going to ask Cynthia 

18 Hammond to respond to that.

19 MS. HAMMOND: So, each program is 

20 evaluated separately. So when the student 

21 completes the two year degree program, assuming 

22 he's not -- or two year certificate program, the 
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1 loans associated with that program are the ones 

2 that we would be using in the evaluation.

3 And that is separate from the 

4 evaluation of the four year program in which case 

5 we will be looking at the loans that were 

6 associated with completing the four year program.

7 So, they're separated out by loan 

8 periods and times when they're in those programs.

9 MS. MORRISSEY: That seems 

10 straightforward. Now what about consolidation 

11 loans? If at the end they consolidate their 

12 loans in a federal consolidation loan?

13 MS. HAMMOND: So, we know which loans 

14 went into the consolidation loan. And just like 

15 we've been doing for debt to earnings, you know, 

16 going back it's -- we pick them apart.

17 But, yes?

18 MS. SARGE: Well, I mean this is --

19 you're making the case for keeping 15 for all of 

20 them. I just want you to point that out.

21 Because you can't really -- and we'll 

22 have a conversation on the loan repayment rate 
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1 too about the difficulties of breaking out 

2 consolidated loans.

3 But I also was going to ask a question 

4 about does the Department have any idea how many 

5 associate degree students go on to get their 

6 bachelor's? Because I think it's probably a lot.

7 And so for simplification, and you 

8 have been talking a lot about simplification 

9 purposes, those loans do roll up. And so they 

10 often roll up into a consolidated situation.

11 And so treating them all the same at 

12 15 years, you know, plus the argument that was 

13 already made on IBR, makes abundant sense that 

14 your standard really is 15 years when it comes 

15 to, you know, I just would be really interested 

16 to know the date on how many associates' degrees 

17 don't go on to get their bachelor's.

18 But, if there's a significant 

19 percentage of students that go on to get their 

20 bachelor's, there's a really strong argument for 

21 keeping it all at 15.

22 MR. RAMIREZ: Let me get Chris then 
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1 Daniel.

2 MS. MORRISSEY: Oh, I'm sorry, could I 

3 continue? That was my question. I also have a 

4 comment.

5 MR. RAMIREZ: Go ahead.

6 MS. MORRISSEY: All right. Thanks. 

7 In terms of the amortization period, I'm looking 

8 at the data on the federal loan portfolio.

9 And the majority of borrowers are in a 

10 ten year or less repayment plan. There are 

11 higher dollars in greater then ten years.

12 But in terms of the number of 

13 borrowers, there's still an overwhelming majority 

14 in a ten year or less repayment plan. So, I 

15 think it makes sense especially for the shorter 

16 term programs to keep the ten year amortization 

17 period, because it accurately reflects the 

18 payment plans that students are in.

19 MR. RAMIREZ: Okay. Thank you. 

20 Chris?

21 MR. GANNON: So, I agree with Kelly on 

22 that. I mean, in fact, if you want to make it 
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1 easier, make it ten for everyone.

2 I know that was discussed, I think, in 

3 the prior rules discussions. So, I mean, I think 

4 if most students are in a ten year standard 

5 repayment plan, and especially over between I 

6 think, between '93 and '02, most majority of 

7 students had paid back their loans over ten 

8 years.

9 Perhaps just ten years for everyone. 

10 But, in any event, looking at this point, I mean, 

11 certainly a student that's going into a 

12 certificate program or an associate's degree has 

13 less debt then a student going into bachelors'.

14 I mean, more then half less debt I 

15 think on average. So, it seems unrealistic to 

16 expect those students to give them information 

17 that contemplates their paying that back in more 

18 then ten years.

19 I mean, that is simply unfair to the 

20 idea of trying to give accurate information to 

21 those students.

22 MR. RAMIREZ: Daniel?
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1 MR. ELKINS: A few questions for the 

2 Department as well as the -- as well as the 

3 group. Just trying to clarify some things so I 

4 can make a firm decision.

5 The first thing was, is I know we 

6 removed the zone, which I think a lot of people 

7 were supportive of. It really didn't do 

8 anything.

9 I just wanted to hear kind of the 

10 rationale for keeping it at 8 as opposed to 

11 bumping it up to 12?

12 And then the second question was 

13 possibly for Todd or maybe Jennifer. Like when 

14 it comes to certificate programs, for example, 

15 like Juilliard's, you know, African 

16 Interpretative Dance, things that --

17 (Laughter)

18 PARTICIPANT: Sorry. That's very 

19 important. Go ahead. Sorry.

20 MR. ELKINS: Okay. I, you know, 

21 they're very costly. But I just don't know what 

22 the earnings are of those sort of certificates or 
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1 their bachelor's programs.

2 And my wife was a dance major. And I 

3 really think that it's great that people can go 

4 to schools like that.

5 I just don't know how that equates to 

6 earnings. And is there an issue there? I don't 

7 know if you guys know? If you could comment on 

8 that?

9 MR. RAMIREZ: Okay. Could you restate 

10 the first question while they think about that? 

11 What was it?

12 MR. ELKINS: Yeah. I'm glad we did 

13 away with the zone. I didn't know what the 

14 rationale behind keeping it 8.

15 Especially when there seemed to be 

16 some descent schools that are right at that cusp 

17 as opposed to raising it to 12 or, you know, 

18 raising it at all. I just wanted some background 

19 on that, if there is any.

20 MR. MARTIN: So, in the big picture 

21 we're looking at expanding something that applied 

22 to a subset of programs offered by proprietary 
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1 schools to everybody. Right.

2 An explosion of programs, explosion of 

3 the institutions. We're looking at simplicity, 

4 right.

5 The zone, the top of the zone was the 

6 area where you de-marked the people that were 

7 entitled to get some additional time to try to 

8 work things out.

9 It wasn't because they were almost 

10 passing. It was because that was the zone where 

11 people could get more time.

12 When you're talking about a metric 

13 that does not lead to an automatic loss of 

14 eligibility, and the data actually drove the 

15 Department decision to originally set the 

16 percentage at 8, it makes more sense that that's 

17 still the line for triggering notices to students 

18 where there might be an expectation that there's 

19 more difficulty repaying their educational debt.

20 MR. ELKINS: Thank you for that 

21 clarification. I think a concern, but, you know, 

22 there's not sanctions being applied.
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1 The concern might be as we expand this 

2 to more programs, there will be a significant 

3 amount of programs that are on the cusp. You 

4 know, so I just want the Department to consider 

5 that.

6 Todd, did you have the -- thanks.

7 MR. JONES: The very short answer is 

8 we do not have much data on programs that have 

9 fewer then 30 completers. When the data was 

10 first out, you know, there were thousands of 

11 certificate programs at independent colleges for 

12 which there was data.

13 There were only 20 that were deemed 

14 failing. And ten of those shut down immediately.

15 So, I mean, it was a very tiny 

16 fraction of those that were large enough to have 

17 data. And you know, they were predominantly high 

18 perform.

19 MR. ELKINS: Interesting. Yeah, I 

20 appreciate that. So, I think that there are --

21 it does show that in spite of some programs 

22 being, you know, costly that as Todd said, that 
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1 they're able to repay their debts.

2 I'm assuming that's what you're 

3 insinuating?

4 MR. JONES: Because we don't have data 

5 on the number of programs that are smaller then 

6 the threshold, I can't say in good conscious that 

7 that's true or not.

8 Of course, being an advocate for the 

9 sector here, I'm going to tell you I expect that. 

10 And if you extrapolate from the larger programs 

11 to the smaller, that would be true.

12 But, I'm not sure that's, you know, 

13 sound data analysis.

14 MR. ELKINS: Thank you Todd.

15 MR. RAMIREZ: Okay. So we have Chris, 

16 Laura, Jeff, Mark, Sandy, Neal, Johnson, Todd and 

17 Whitney.

18 So, let me get to Chris Gannon.

19 MR. GANNON: Yeah, I just wanted to 

20 echo some sentiments from around the table. I 

21 agree that a ten year period for a two year 

22 program is totally appropriate payment time.
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1 MR. RAMIREZ: Okay. Thank you. 

2 Laura?

3 MS. METUNE: Similarly wanted to 

4 express my support for maintaining the ten year 

5 amortization for two year or shorter programs. I 

6 wanted to say that I do understand this concern 

7 about those outlier good programs.

8 I also think that we can't draft a 

9 rule that speaks only -- or allows for the 

10 outliers because it let's in too many programs 

11 that really aren't serving students, and are 

12 creating too much debt for earnings.

13 And I also wanted to just remind folks 

14 that that's the reason for adding the repayment 

15 rate in this plan. Is so that for those outlier 

16 good programs where this metric won't work, 

17 you'll have another chance to pass.

18 I still think the sanctions are 

19 insufficient. But, I'll save that.

20 MR. RAMIREZ: Thank you. Jeff? Okay.

21 MR. ARTHUR: Just two points. First, 

22 I think the table should realize, all three 
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1 elements are probably equally important, interest 

2 rates, amortization time, and the year of 

3 earnings.

4 When I pre -- I was kind of shocked at 

5 how each of the elements when changed has a 

6 massive impact on the outcomes in colleges. And 

7 the impact is so great that I think it's going to 

8 take a lot of research to understand it.

9 My second point is, I guess to Kelly 

10 to make sure we're clear, for especially public 

11 colleges and some proprietary where they offer 

12 multiple levels of degrees, if the Department 

13 measures the highest degree earned, if they were 

14 earned consecutively.

15 So if a student goes from an associate 

16 to bachelor next to each other, the Department is 

17 going to apply the standard for bachelor not for 

18 the associate. Or a certificate to associate.

19 So, I just want to make sure the 

20 community colleges know that. Because it's 

21 important for certificate to associate.

22 And there's more now state colleges 
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1 that offer associate and bachelors and we're 

2 seeing more of that.

3 MS. HAMMOND: Yeah, if -- we still 

4 have the roll up from the lower credential 

5 undergrad to the higher credential.

6 So, if they're going back to back and 

7 we don't have a chance to measure the certificate 

8 program before they already have -- are in and 

9 completed the associates -- the higher credential 

10 program, at the same school, yes, then you're 

11 right.

12 We will be measuring the higher 

13 bachelor's degree program. And then the 15 year 

14 would apply for that.

15 MR. RAMIREZ: Okay.

16 MS. MORRISSEY: Can I ask for 

17 clarification on that? Is that -- that's only if 

18 they're at the same school?

19 But if they have continuous enrollment 

20 but they're switching schools, that's different?

21 MS. HAMMOND: So, if they're -- if 

22 they have continuous enrollment but switching 
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1 schools, if they're in school at, you know, a 

2 Jennifer school at the time that we go to measure 

3 the program at your school, then they'll be 

4 counted as in school, and therefore be removed 

5 from the calculation.

6 If they are not in school during that 

7 year, like they went to your school and then 

8 decided to do something else for a couple of 

9 years, then we would only be calculating the debt 

10 and stuff from your school and not from hers.

11 Or let's say they like went through, 

12 but because of the timing of how this worked, you 

13 know, it was several years later before we 

14 calculate them, we only do the debt for your own 

15 school and your own programs.

16 Yes, so you won't be adding in the 

17 bachelor's degree debt to the lower credential 

18 program.

19 MR. RAMIREZ: Okay. Thank you. Jeff?

20 MR. ARTHUR: Yeah, I just want to 

21 point out that as Mark mentioned with these 

22 interest rate changes, the interest rate went 
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1 from 3.76 percent to 4.45 this year. When you 

2 use a ten year amortization and you look at the 

3 data, there's a large number of programs that are 

4 right around that threshold.

5 We're going to be having programs 

6 flipping to above 8 percent, below 8 percent from 

7 one year to the next as these dynamics change.

8 We had four programs that were in the 

9 8 percent range, easily appeal those down. That 

10 option wouldn't be available.

11 But, this is a really volatile area. 

12 And I think we need to look -- consider two 

13 things. Either I think -- I do agree that a 12 

14 percent was fine.

15 But a 10 percent if you look at the 

16 data would also help stabilize this quite a bit. 

17 So, consider a 10 percent debt to earnings as a 

18 threshold.

19 And another thought is, I think it was 

20 Christopher mentioned something about red, green, 

21 yellow. Well, maybe if we do end up sticking 

22 with an 8 percent as a threshold, and we're going 
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1 to be bouncing in and out that in -- and we're 

2 talking about a notification process.

3 Which the notification is pretty 

4 serious. It will have an impact. It will be 

5 material.

6 So, maybe if there's something in 

7 that. I mean, and the other thing I'd like to 

8 point out, if you try to go from 11 to 7.9, you 

9 can't do it.

10 It's just you're talking about --

11 you're talking about a raise that moving it 1 

12 percent is a pretty significant accomplishment.

13 So, maybe if you're in that 8 percent 

14 to 10 percent range, if we stay at this, that the 

15 notification ought to be something a little 

16 softer. Just like a caution.

17 A caution not a, you know, this thing 

18 does not meet, what was it? Measures. That 

19 something a little softer.

20 MR. RAMIREZ: Neal?

21 MR. HELLER: Good morning, Heal. I 

22 guess I just want to make a few comments about 
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1 the amortization period.

2 And I'm not quite sure why it's that 

3 big a deal for even the consumer advocates. You 

4 know, we serve a community of people that, quite 

5 frankly, nobody else wants to serve anymore.

6 In the State of Florida, 10 or 12 

7 years ago, the community colleges were given an 

8 option. They were given a choice. Do you want 

9 to go from beyond an associate's degree to 

10 bachelors' degrees?

11 Or do you want to stay as basically a 

12 community college? Every single one, no 

13 exception, chose to go up to bachelors' level 

14 programs.

15 Clear indication. They have no 

16 interest in serving many respects not even the 

17 two year associate degree programs. But 

18 certainly they have no interest whatsoever in 

19 certificate programs.

20 So, we serve that community. And I'm 

21 proud to serve that community. And that 

22 community at times receives certain accommodation 
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1 if you will, from the government, including the 

2 ability to do income-based repayment.

3 So, I know that once we get to 

4 repayment rates I'm going to hear from Laura 

5 saying that income-based repayment shouldn't 

6 matter. And that's just not fair.

7 It's like a box that you put them in. 

8 And it would put us in and it just gets tighter 

9 and tighter and tighter.

10 So yes, the expectation is that there 

11 is lower debt for certificate programs. And our 

12 debt is pretty low, under ten thousand dollars 

13 average student.

14 There is also the expectation that 

15 they're going to earn less money. So, giving 

16 them the accommodation to go ahead and go onto an 

17 income-based repayment plan, which could extend 

18 up to 15 years, maybe even beyond in some cases.

19 I think we should be judged the same 

20 way. So, I'm asking the Department to reconsider 

21 and go back to that 15-year amortization schedule 

22 for certificate and associate degree programs.
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1 Because quite frankly, you can't do 

2 for one and then essentially penalize the school 

3 another -- based upon another measure.

4 So, I do believe that 15 years would 

5 be effective and fair. And would be basically 

6 exemplify what many of our students do have to do 

7 in repaying their loans.

8 Thank you.

9 MR. RAMIREZ: Johnson then Whitney.

10 MR. TYLER: All right, Johnson Tyler 

11 here. So, first of all, I looked it up in the 

12 CFR, the income-based repayment plan is a ten 

13 year standard repayment.

14 You can't get in if you could pay off 

15 your loan in ten years. So, the government has 

16 not endorsed this idea that 15 years is a 

17 reasonable way to repay your plan.

18 Ten years for graduate students or 

19 people with PhDs, it's ten years for college 

20 students, it's ten years for people with 

21 certificates. So, I just think we should be 

22 clear on the numbers.
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1 The second thing is these floating 

2 factors that are going to put people in a bad 

3 position. There's another factor here, and 

4 that's part of the reason we're here, which has 

5 to do with tuition debt.

6 Debt is a factor. And we are trying 

7 to deal with this problem by having all these 

8 institutions complete against each other for 

9 students.

10 And if you take that out of this 

11 equation, as Jeff was saying, these schools maybe 

12 at risk. What will they do?

13 They may -- one of the things they may 

14 do is they may reduce their tuition. And that's 

15 part of what, I think, the goal here too, is to 

16 have people get what they're paying for.

17 The final thing is, the idea that a 

18 college education, which you would look at a 

19 payment plan for 15 years. You know, if you go 

20 to a -- if you pay full fair to go to an Ivy 

21 League type school, or even a state school, 

22 you're talking 40 grand a year. A 160 thousand 
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1 dollars that's what the 15-year amortization is.

2 We're talking about a certificate 

3 program that could vary from two thousand dollars 

4 to 15 thousand dollars. Where you have a choice 

5 of where you want to go.

6 So the idea of putting them, treating 

7 them as if you're going to college just doesn't 

8 make sense to me. If you're trying to help 

9 people identify where the value is in the 

10 education that they're going to.

11 MR. RAMIREZ: Whitney, Daniel, then 

12 Bob.

13 MS. BARKLEY-DENNEY: Yeah, so I just 

14 wanted to make a couple of comments. One, I 

15 think we need to make sure that we all remember 

16 that even in the rule that we are talking about, 

17 changing now a failing annualized debt to 

18 earnings ratio, no matter how little you failed 

19 it by, was never enough to fail a program.

20 We also had the discretionary piece in 

21 there. So, there has always been a backstop to 

22 the annualized 8 percent debt to earnings ratio.
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1 Now, as Laura pointed out, we are 

2 adding another backstop to that with the 

3 repayment plan. So, we might have eliminated the 

4 zone, but there is still literally three ways 

5 that you can pass this.

6 You can pass annualized, you can pass 

7 discretionary, and you can pass the repayment 

8 rate. So the idea that we need to be more 

9 generous for the outlying programs is kind of 

10 beyond me.

11 I don't really understand how we can 

12 be more generous in this rule unless we go back 

13 to what we all decided we didn't want, which was 

14 a disclosures only regime.

15 And I also just wanted to point out on 

16 the 8 percent, we did a little of playing around 

17 with these numbers. And as I pointed out 

18 yesterday, what Baum in her work actually did, 

19 was create sort of an income-based repayment 

20 chart to look at how much a borrower makes versus 

21 how much they should pay.

22 So, she capped out at about 10 percent 
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1 for the vast majority of gainful borrowers who 

2 make 30 thousand dollars or less a year. And in 

3 fact a full third of gainful borrowers, if you 

4 look back at the gainful employment numbers from 

5 last year, don't make enough to pay anything

6 under Baum's thesis.

7 So, if we're really talking about what 

8 the documentation shows, and what the studies of 

9 the department used to show, and what courts have 

10 held up are legitimate things to use to underpin 

11 a rule, 8 percent is more then generous.

12 And in fact for a third of students 

13 who are borrowing under gainful employment, it's 

14 too generous.

15 MR. RAMIREZ: Okay. Daniel?

16 MR. ELKINS: Thank you for that. That 

17 -- I think that was really, really good.

18 I want to cap, or I guess build on 

19 that. You know, I think that there is this 

20 initial debt to earnings that we're all talking 

21 about.

22 But there are ways to, you know, if 
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1 you don't pass it to earnings, there's ways to 

2 obfuscate that. There's ways to say okay, you're 

3 program is still good.

4 You know, I'm just trying to determine 

5 if I'm putting my head on for protecting veterans 

6 at all programs across all institutions, you 

7 know, at what point does it become so lax that 

8 we're not doing anything?

9 We have parity amongst the proprietary 

10 institutions, the public, private, state run 

11 schools now. And I think that that's a big step 

12 that people from the proprietary sector have 

13 really wanted for a long time.

14 I think that if -- to be honest, to be 

15 fair, I think that if you guys push too hard, you 

16 know, maybe you don't get anything.

17 And conversely, I think that there is 

18 a very good argument on the side of some of the 

19 state schools and so forth that, you know, that 

20 will have lots of programs that quote/unquote, 

21 might show not to be compliant with this.

22 But, I think we're in the ballpark of 
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1 some middle grounds. And you know, I think after 

2 hearing the back and forth I think the 8 percent 

3 is a -- it makes sense.

4 I think that I would like to kind of 

5 move the discussion onto actually getting into 

6 the repayment rates. Because I think that that's 

7 a -- that there's going to be some lively 

8 discussion about that.

9 MR. RAMIREZ: All right, so there's a 

10 couple of things. We have a few people in the 

11 queue. We also wanted to give Marc a little bit 

12 of time to go over the -- some numbers before we 

13 go on break.

14 But I also want to figure out how do 

15 we close this conversation out? Right? Because 

16 there was a lot of conversation on different, I 

17 guess, components or ways to piece this together.

18 Does anyone have a suggestion of how 

19 we could close this piece out? So --

20 (Off mic comments)

21 MR. RAMIREZ: Okay. Let me get Tony 

22 then we'll go to the data. Tony?
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1 MR. MIRANDO: I mean, I'm hearing 

2 again, I'm just trying to stay neutral here. I'm 

3 hearing, you know, the 10 percent why don't we go 

4 back -- I mean, the 8 percent why don't we go 

5 back to the 15, I'm sorry 10 and then 15.

6 Is there a middle ground? I mean, I'm 

7 always kind of like, you know, let's move this 

8 on. Is there a middle ground?

9 I mean, can we get to 12 years? And 

10 say okay, well, it's not the 15, it's not the 10. 

11 Let's just settle with the 12 and let's just 

12 move on.

13 (Off mic comments)

14 (Laughter)

15 MR. MIRANDO: The 12, do we have a 12 

16 and a half? 

17 MR. RAMIREZ: Is --

18 MR. MIRANDO: I mean, seriously, I 

19 mean, 10 years I understand it, I hear, I get the 

20 10 years. I get it.

21 I'm not sure, Johnson, whether or not 

22 you were reading the code. I'd like to 
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1 understand from the Department if what you were

2 saying was accurate in the code, the federal 

3 regulation that it only could be 10 years.

4 My understanding is it can be 15. So, 

5 I just want to get that around my head. Because 

6 again, this is not my area of expertise.

7 But, what I've heard is it is 15. 

8 But, can we do 12? Would everybody be okay with 

9 a negotiation?

10 That's what this is about. It's 

11 supposed to be about negotiating. I mean, can we 

12 get to 12? So.

13 MR. RAMIREZ: So, let me ask -- Chad, 

14 you have a quick thought on that? Yeah, go 

15 ahead.

16 MR. MUNTZ: Yeah. So, I think the 

17 bigger question is, what is reasonable debt? I 

18 mean, so the reason why everybody is arguing over 

19 these metrics is because, you know, a 2 or 3 

20 percent increase in interest rate can put you 

21 over.

22 One thousand, two thousand dollars 
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1 more in income can put you under. I mean, all 

2 these things are very variable.

3 And so one question I've asked is, and 

4 I ask all of you guys to come up with a number 

5 for a bachelor's degree. What would be the most 

6 debt that you would think is permissible?

7 Maybe divide that by four for a 

8 certificate program. I don't know. But, just 

9 think about it in that way.

10 If 50 thousand dollars too much? 

11 Thirty thousand dollars too much? Ten thousand 

12 dollars too much?

13 And then once you have that number, 

14 the thing how these -- this metric works. 

15 Because that's the concern that we're hearing, is 

16 even if it's eight thousand dollars, but people 

17 are making 17 thousand, it may fail.

18 And that might be a reasonable number. 

19 And I think that's why everybody's arguing over 

20 that.

21 So, I'm hoping we'll get to see some 

22 data on that soon.
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1 MR. RAMIREZ: I -- go Daniel.

2 MR. ELKINS: Yeah, normally I don't 

3 talk much about debt because it's an area that 

4 veterans don't face very much with the post-911 

5 GI Bill.

6 But I will say to your point, there 

7 was a very, very large amount of research that 

8 the VA put into when crafting the post-911 GI 

9 bill to the amount of what was appropriate debt 

10 levels. Because that's what we wanted to set the 

11 benefit at.

12 So, I would encourage the Department 

13 to look at the in state and out of state tuition 

14 rates for the post-911 GI Bill for both undergrad 

15 and grad programs. Because I think that that is 

16 -- there's been a considerable amount of research 

17 to say that that is an appropriate amount that 

18 someone should be given to pay for postsecondary 

19 education.

20 MR. RAMIREZ: All right, let me do 

21 this. Let me ask Marc if he could go and explain 

22 the numbers, at least the numbers that he has.
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1 I know there's still a few tents that 

2 are up. But, if this could help maybe get to a 

3 compromise position.

4 I think maybe some benefit to that. 

5 So Marc, can you quickly take us through your 

6 charts here?

7 MR. JEROME: Thank you. And so that 

8 the presentation has taken in the nature it's 

9 intended, I'm giving out some candy. Because 

10 whenever you give data out with a lot of very 

11 bright people in the room, it could be difficult.

12 So, just a couple of background. I'm 

13 going to ask my colleague Dan Sharon -- say it 

14 again?

15 MR. SHARON: Do you want this passed 

16 out?

17 MR. JEROME: Yes, pass it out. To 

18 assist me. Because he is the equivalent of our 

19 data analyst.

20 So, the first thing is the reason I'm 

21 presenting, and we've had this discussion is, 

22 there's just not been enough information for the 
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1 negotiators. And the Department confirmed to us 

2 that they do not have debt to earnings 

3 information by programs for public and not for 

4 profit sectors.

5 The data you're getting is taken 

6 directly from the college scorecard. And in 

7 every instance possible, the data is untouched 

8 from the scorecard.

9 So, and I did that intentionally. And 

10 the reason is, is the scorecard actually has an 

11 interest rate and it calculates an annual loan, a 

12 monthly loan payment for each student.

13 The data that this is to be taken for 

14 a broad picture and its broad impact. But, I 

15 guess what the negotiators should know, and the 

16 public should know, is actually it is a big deal 

17 each thing that is presented.

18 So, you can stop me. I'm going to 

19 turn, please turn to page two. The first page is 

20 just a description.

21 And a couple of things which Sarah had 

22 already gone over. The scorecard, number one, 
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1 does not include any private debt.

2 Number two, the interest rates are 

3 lower then what's sometimes used in the current 

4 gainful employment. Number three, using six year 

5 or ten year earnings, is sometimes more generous 

6 then the current proposal.

7 On the other hand, the scorecard only 

8 uses borrowers. And for the purposes of this 

9 presentation, I only used ten year amortization, 

10 because number one, the consumer groups had been 

11 asking. And number two, that is the amortization 

12 available on the scorecard. It is easy to run 

13 the data at 15 years amortization. And I want 

14 you to know, it has a massive impact. 

15 Especially, I believe, on four year private 

16 colleges.

17 So, for all 17 data set you can look 

18 at it, the debt is the median debt of borrowers. 

19 The earnings are six years and ten years using 

20 scorecard earnings for completers.

21 The debt to earnings are at 8 and 12 

22 percent. The interest rate used in the scorecard 
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1 is 4.45, though it was very difficult to find.

2 This analysis uses ten year 

3 amortization for both. But it's not hard to 

4 manipulate it.

5 And I'm going to be circulating the 

6 underlying spreadsheet so that all members of the 

7 negotiating panel and the public can play with it 

8 how they want.

9 We used eight digit OPEID, which means 

10 for a number of systems, there's lots and lots of 

11 institutions. Some have the same data. For 

12 repayment rates, it's five year repayment rate 

13 data directly from the scorecard.

14 So, go to chart one. Let's -- can we 

15 switch the slide, please? And what chart one is, 

16 is it's exactly what a number of people are 

17 asking for.

18 An analysis of the scorecard using 8 

19 percent debt to earnings rates, six year 

20 earnings, and a ten year amortization. Okay?

21 And the results basically show that 

22 they show what they show. It has a large impact 
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1 on all sectors. There are many more proprietary 

2 institutions that fail.

3 But the number of students served are 

4 smaller. In my -- and I'm going to try not to 

5 draw any conclusions from it, you can draw your 

6 own conclusions.

7 But, my belief is is that this data 

8 probably over exaggerates the impact on public 

9 institutions because it's not including non10 borrowers. But it underestimates the impact on 

11 the overall higher education landscape, because 

12 since it's only institutions, any institution, 

13 it's not including institutions that are overall 

14 very strong, but have a num -- a few programs 

15 that are very weak.

16 So, for example, in the -- let's just 

17 say the propriety sector, if my institution 

18 passed it because 20 of my 25 programs were very 

19 good, but five of them on a programmatic level 

20 didn't pass it, I'm just -- what I want the group 

21 to see is, look how many institutions are 

22 covered.
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1 And I believe when you go 

2 programmatically, it's going to expand. I'm not 

3 sure. But, that is my belief.

4 The way you read this cart is, on the 

5 left is the sector and the number of institutions 

6 in the universe. So, in the public sector, 

7 there's 2,064 institutions, 2,008 private, 3,500 

8 proprietary.

9 This is the number the inst -- the 

10 schools that were above 8 percent. I've calcul -

11 - you can calculate it yourself. It's about 11 

12 percent of public institutions, I think 35 

13 percent of private, and 29 percent of 

14 proprietary.

15 The next column is the number of 

16 institutions that fail. I did this the way Sarah 

17 did it. And then it's by schools and by 

18 students. Okay?

19 Just to do it quickly, the next chart 

20 is the same thing at 12 percent. And you see 

21 that the numbers decrease, you know, 

22 dramatically.
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1 The next chart is now moving earnings 

2 from six years to ten years. Sorry?

3 (Off mic comments)

4 MR. JEROME: So, let me see --

5 (Off mic comments)

6 MR. JEROME: So, it's 263, I think, 

7 divided by the 417 schools. Okay? And again, I 

8 work -- you know, you have my apologies.

9 I worked very hard to present this 

10 simply. We were up late last night. So, if 

11 there are any errors, they're open for 

12 correction.

13 And so then when -- so you have the 

14 four slides on debt to earnings. And what you 

15 see is, is as you change the earnings, the 

16 earnings years and the percentages, it just has a 

17 big impact.

18 And again, I put this out not to draw 

19 conclusions, but to hope that some very bright 

20 people take the spreadsheet and start looking at 

21 it to help the Department come up with a good 

22 policy.
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1 But, in the first chart is the closest 

2 to the current gainful employment chart. The 

3 current gainful employment rule, which is eight 

4 years.

5 The earnings are -- just so you know, 

6 the current gainful employment rule, the earnings 

7 measurement, we don't mention this sometimes, is 

8 actually 18 months following graduation to three 

9 years.

10 It's not three years. So, it's a 

11 much -- it's a little bit earlier.

12 When you go to the -- I included 

13 repayment rates. And the benchmarks I included 

14 was because 50 percent was in the current 

15 borrower defense rule, only applying to 

16 proprietary colleges.

17 And 35 percent was in the original 

18 gainful one rule, with slightly different 

19 metrics. But, -- and so I thought that was a 

20 good choice.

21 The research around repayment rates is 

22 much less then -- I find it much more difficult 
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1 then with debt to earnings.

2 I'd like to just show what the 

3 spreadsheet looks like so you can see it. And 

4 the spreadsheet I'm sharing has all institutions 

5 with the names redacted but the OPEID's in there.

6 And just go to the first click there, 

7 the D/E rate. So what you'll see is, is that 

8 number two, that's the institution.

9 It has a 26.77 debt to earnings rate 

10 at -- using a ten year amortization and six year 

11 earnings. Is that correct?

12 This is Dan Sharon, my colleague. If 

13 you go to the next slide, the next click, this is 

14 the institutions over 12 percent at six year 

15 earnings.

16 If you go to the next one, it's the 

17 institutions over 8 using ten year earnings. And 

18 if you go to the next one it's the institutions 

19 over 12 using 10 year earnings.

20 And then the next slide is repayment 

21 under 50. And the next chart is repayment under 

22 25.
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1 And I started to actually draw the 

2 conclusions of the Department's current proposal. 

3 Which is, you know, adding the two together. 

4 But I stopped, because I thought it was too much 

5 information.

6 And the one last thing that I ran at 

7 Chad Muntz' request, because we thought it right, 

8 and I'm not giving it out yet, but we ran, if you 

9 just wanted to make the rule simpler, and just 

10 look at annual earnings versus annual debt as a 

11 ratio so we can avoid all this, I'll us the word 

12 michigas, with all the different elements, I 

13 think there's some room to look at that.

14 And that would be simpler for the 

15 public and simpler for the institutions. So, I 

16 think I will stop there.

17 My only thing -- yes, I think I will 

18 stop there. Okay? And I'll answer any 

19 questions.

20 MR. RAMIREZ: All right, Todd, you had 

21 a question?

22 MR. JONES: My first cut at looking at 
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1 the data actually has what I see as a somewhat 

2 simple explanation. But also what I would 

3 consider to potentially be a methodological flaw.

4 And I wondered if you would comment on 

5 it?

6 MR. JEROME: Sure.

7 MR. JONES: Part of the reason that 

8 you have higher levels of debt for independent 

9 colleges here then publics then propos, is the 

10 relation of this is data for completers.

11 And the fact is that there are more 

12 people accumulating more debt at independent 

13 colleges, because more people at independent 

14 colleges are completing their programs.

15 So, let's take the four, five, and six 

16 year graduation rates. In the independent 

17 sector, those are 51, 61, and 65, meaning almost 

18 two-thirds of students complete after six years.

19 Of the publics, it's 30, 49, and 55. 

20 And of the proprietaries it's 14, 17 and 22.

21 So, if you're using completers as the 

22 basis of your analysis, what you're doing is 
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1 you're excluding a large group of people if you 

2 take the difference between sectors. Not even 

3 calculating the difference versus 100 percent.

4 But those who are completing are 

5 tending to fini -- more people are finishing the 

6 program and therefore are accumulating more debt. 

7 And therefore, they will have repayment rates 

8 compared to earnings.

9 Whereas those who don't complete 

10 programs and gain nothing for, or little for 

11 their education, especially when it's in 

12 certificate and associate programs that you don't 

13 complete, have a greater difficulty -- would have 

14 a greater difficulty.

15 And in fact those it strikes me, are 

16 the very people that the focus of the gainful 

17 employment regulations were originally intended 

18 to address.

19 So, the answer is that a problem, in 

20 your view, that you have such substantial 

21 disparities in completion rates between sectors 

22 to be making comparisons between sectors in this 
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1 manner with this debt.

2 MR. JEROME: So, generally, I agree 

3 with the thrust of your comments completely. And 

4 again, I've been consistent over eight years that 

5 a GE rule without a completion rate metric is 

6 fairly meaningless, because you quoted one set of 

7 data.

8 For me, which I've been consistent 

9 within the borough that my institution serves, 

10 the two public institutions have on time 

11 completion rates below 3 percent. And they 

12 passed gainful employment perfectly.

13 So, this is, I'm just putting the data 

14 out the way the current proposal is. But 

15 philosophically, I am totally with you.

16 And this, you know, I am totally with 

17 you that completion rates are very important and 

18 provide a context that debt to earnings does not 

19 provide.

20 MR. JONES: And if I might address 

21 that response, I appreciate that. But not 

22 contextualizing it in the statement of the 
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1 presentation data.

2 I think the fact that I had to bring 

3 it up, I think is a problem for folks that you 

4 didn't allow them to, you know, allow them or 

5 were willing to allow them to draw inferences 

6 that are inappropriate on the basis of that data 

7 without noting that particular piece.

8 And you were right, and I agree part 

9 of the problem is the absence of completion data. 

10 I look to the three institutions among my 51 

11 members who have the lowest graduation rates.

12 But there are a number of indigenous 

13 students within those four year programs is 

14 exceedingly low. If you only have, you know, one 

15 out of 15 of your students has not attended your 

16 college for the first time, the remainder are 

17 transfers in from community colleges, people who 

18 have dropped out of other programs, people who 

19 transferred in from other four year programs, 

20 then the meaning of your four year, five, and six 

21 year graduate rates is something for an 

22 institution like that.
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1 But, I am concerned, you know, when I 

2 look at this data, the suggestion, and it was 

3 made in your comments, that there's some 

4 similarities between the independent sector and 

5 the proprietary sector on this, I think is flat 

6 wrong.

7 Except in saying, well, it's like 

8 judging people by height, but some people are 

9 standing on boxes. I mean, the reality is they 

10 may look the same height, but you really have to 

11 adjust for the fact that there's a box for some 

12 of them propping them up.

13 And I think that's where this 

14 comparison falters here as well.

15 MR. RAMIREZ: Okay. So let me jump in 

16 real quick. Because I believe what Marc was 

17 trying to do was just go along with what is 

18 currently written.

19 And so I don't think there was any 

20 intention to try and manipulate the data. As a 

21 matter of fact I think Marc was pretty clear on 

22 that. Those are the standards that he was using.
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1 MR. JONES: Please be fair, I did not 

2 say manipulate the data. I said that the 

3 description of the data lacked critical 

4 components to properly contextualize.

5 MR. RAMIREZ: Okay.

6 MR. JONES: I never would say 

7 misrepresent because I believe that his data is 

8 likely quite accurate.

9 MR. RAMIREZ: Okay. Thank you.

10 MR. JONES: Or perfectly accurate.

11 MR. RAMIREZ: And so what I want to do 

12 is I want to make sure that we're focusing these 

13 questions here before we go on break, to help 

14 understand what Marc has presented here.

15 So, we have Chad, Whitney and Daniel.

16 MR. MUNTZ: Mark, thank you again. 

17 Looking at this spreadsheet, I was hoping the 

18 loan information would be in there.

19 So, I'll just ask the question in 

20 general. What is the range of the loan?

21 So when we see failing of the metric, 

22 everybody's going to assume that 100 thousand 
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1 dollars in debt, what kind of loan balances are 

2 we seeing that's failing?

3 MR. SHARON: Dan Sharon, Sorry. I'm 

4 the one who helped put together this spreadsheet. 

5 Hidden behind here is, you know, all the 

6 detailed data.

7 I would have to say, you know, the 

8 average loan debt is probably on a four 

9 institution are ranging between 28 to 35. Your 

10 associate levels are probably between, you know, 

11 probably about 12 to 18, 12 to 20, somewhere 

12 around there.

13 The data, you know, and when we do 

14 give out the spreadsheets, that data will be 

15 behind it. So you can actually see how all these 

16 calculations were done.

17 And all the debt would be shown there.

18 MR. MUNTZ: Right. So then the follow 

19 up to me is when I see, what is it, 235 public 

20 institutions with 28 thousand dollars in debt 

21 that's failing this metric, which goes to the 

22 point that what Todd, you know, was kind of 
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1 alluding to is that at 8 percent, it only takes 

2 25 thousand dollars to fail this metric.

3 And I think the cost of education 

4 would suggest that that's the reasonable amount 

5 of loan debt that you might have for a student 

6 after four years of education.

7 And this is why as we've been going 

8 through all this metric and we're going back and 

9 forth between 8 and 12, a 4 percent rate versus 6 

10 percent, all these different kinds of things are 

11 affecting, which I think objectively we should 

12 just look at, what is a reasonable amount of debt 

13 given the level of attainment.

14 And which sectors have higher 

15 employment rates, and lower employment rates. 

16 Which institutions might be negatively affected 

17 as well.

18 So, I appreciate this.

19 MR. JEROME: And I would say, you 

20 know, chart 4.3 probably more closely represents 

21 the Department's current proposal. Because they 

22 are looking at earnings five and six years after 
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1 completion.

2 Which aligns closer to ten year 

3 scorecard data. It's not perfect. So then the 

4 number drops as you see to 70.

5 And then just to Todd's point, this 

6 was run at ten year amortization. I believe when

7 you run it at 15 year for four year school, the 

8 number of independent colleges drops very, very 

9 dramatically.

10 So, I want that deceptor to know that.

11 MR. RAMIREZ: Okay. Whitney?

12 MS. BARKLEY-DENNEY: Yeah, I just have 

13 a couple of methodological questions. So, maybe 

14 they're best for you.

15 So, the number in parenthesis, what 

16 does that represent again?

17 MR. JEROME: It's the number of 

18 institutions that were measured.

19 MS. BARKLEY-DENNEY: So why were the 

20 numbers of schools divided by all institutions 

21 instead of the number of institutions existing?

22 Because if I understand it correctly, 
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1 it's divided by the number of schools who are 

2 "failing" the metric and not the total number of 

3 schools in that sector.

4 MR. JEROME: I just -- you know, we 

5 had a great debate about this. I lost the 

6 debate.

7 We tried to mimic what the Department 

8 did when they put out their data. So, the 

9 Department's data in their scorecard analysis, 

10 and maybe I was wrong to do it, just broke down 

11 the percentage of schools within a certain range 

12 and the percentage of students.

13 So, you can take this and cross out 

14 it. And you can look at it however you want to 

15 look at it.

16 But basically this is within the 

17 institutions above 8 percent percentage. The 

18 data is what the data is.

19 MS. BARKLEY-DENNEY: Yeah, because I 

20 think it would be worthwhile for everybody just 

21 to go through and divide the number of schools 

22 that are failing by the number of schools in the 
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1 sector.

2 And some of the numbers it really 

3 makes a difference. For example, on page chart 

4 one, instead of seeing 51.94 percent of schools, 

5 which some people could, you know, not know what 

6 they're looking at and interpret it as saying 

7 that 51.94 percent of proprietary schools would 

8 fail under this rule, it's actually 29 percent.

9 MR. JEROME: Yes.

10 MS. BARKLEY-DENNEY: So that does make 

11 a big difference if you go through and do that. 

12 And then there's just one number I couldn't 

13 reconcile.

14 MR. JEROME: Go ahead.

15 MS. BARKLEY-DENNEY: Which was on page 

16 three in the propriety sector, 557 percent have 

17 debt to earnings above 8 percent on a ten year 

18 amortization rate.

19 So, 28 percent -- 557 is not 28 

20 percent of 932. So, where did we -- is that just 

21 a mistake? Which is fine. I make mistakes all 

22 the time.
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1 MR. JEROME: It maybe a mistake. It 

2 looks like a mistake.

3 MS. BARKLEY-DENNEY: Okay. Yeah, so 

4 that's 59 percent not 28 percent.

5 MR. JEROME: Yeah. So again, I 

6 apologize, I was working my hardest to make this 

7 as accurate. And that's why at the last second I 

8 added in the number of institutions.

9 So the public can see a percentage of 

10 schools are failing, but also within each sector, 

11 how many fail. And then students were relevant 

12 because of the way there are many, many small 

13 institutions in the propriety sector, some larger 

14 in the public.

15 And I mean, this data has negative and 

16 positive about all sectors. I worked very hard 

17 to present it as neutrally as I can so that you 

18 guys who really have the ability can take it and 

19 manipulate it however you feel appropriate.

20 But, I worked very hard to present it 

21 as, you know, neutrally as I could.

22 MR. RAMIREZ: Daniel?
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1 MR. ELKINS: Marc, I just wanted to 

2 thank you for, you know, putting this together. 

3 I think your intent to, you know, to put forth to 

4 the group a data set that you know has flaws.

5 And we're not trying to draw any 

6 conclusions other then just to, you know, put the 

7 data in front of us. You're opening it up to 

8 people who are better data people then yourself.

9 I think it really goes to show that 

10 you're trying to, in good faith, shape the 

11 conversation. And to Todd's point, I actually 

12 heard the exact opposite.

13 And perhaps while you were conferring 

14 with your colleagues, maybe you missed some of 

15 the things that he had said. But, I'm not sure.

16 But, I just want to say I think anyone 

17 that produces data like this is really helpful to 

18 the conversation. So, thank you.

19 MR. JEROME: There is one other thing. 

20 When you see the data from six years to ten 

21 years, you see for example the impact on the 

22 liberal arts institutions, how their earnings 
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1 raise much more later on.

2 And so the reason -- and proprietary 

3 colleges, they don't raise so much. Because 

4 they're probably more vocational in nature.

5 So I felt this was the kind of data 

6 that would help inform a discussion in the 

7 Department. I apologize for any errors.

8 Please point out the errors and we 

9 will get them corrected. And part of the reason 

10 there might have been an error was, we wanted to 

11 present it that it was visually easy to look at.

12 So Dan had the spreadsheets and last 

13 night we spent formatting it so it was easy for 

14 you to see it.

15 MR. RAMIREZ: Thank you. Jordan? 

16 MR. MATSUDAIRA: Thank you. So, when 

17 the Department presented information based on the 

18 scorecard, I was rude to Sarah and apologize to 

19 Sarah for kind of losing my cool a little bit and 

20 reacting to that.

21 But I should apologize again in 

22 public. But, I'd also feel remiss about not 
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1 expressing some of my frustration about the same 

2 data coming back.

3 And I don't mean this in a personal 

4 way Marc. But, you know, these are the data that 

5 are available for us to look at this question.

6 But I just want to reiterate how 

7 misleading I feel these data are for making cross 

8 sectoral comparisons because of the difference in 

9 the way things are measured in the gainful 

10 employment sector versus the way that they're 

11 measured in the scorecard.

12 Okay? The biggest and most important 

13 difference is -- the most important difference is 

14 that in gainful employment we only measure the 

15 earnings of completers.

16 And in the scorecard we measure 

17 earnings for every student whoever begins their 

18 study at a particular institution. And that 

19 matters because there are pretty -- as Todd was 

20 alluding to, there are differential completion 

21 rates across sectors.

22 And so using the data from the 
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1 scorecard, it kind of bakes in some of those 

2 results. And the data are really different.

3 So, it's just, you know, that can in 

4 principal go in either way. But I tend to feel 

5 that on balance the comparison favors kind of 

6 proprietary institutions.

7 And it does that for a variety of 

8 different reasons. Including the way the debt is 

9 measured.

10 Which Marc has alluded to in the past. 

11 So, I think there are some patterns here that 

12 are kind of real and that would be borne out in 

13 the gainful data as well.

14 Well, the thing that Marc is pointing 

15 out right now, that if you look at earnings later 

16 on, earnings tend to be higher. They're higher 

17 in different ways across different sectors, but 

18 in general, earnings are higher later on.

19 So, if you, you know, move back the 

20 cohort period like we've done now, the 

21 measurement period for earnings, you define the 

22 cohort period as being earlier so earnings are 
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1 measured later.

2 That makes the rule less strict. And 

3 I think, you know, when we're considering all the 

4 different changes that are being made to 

5 measurement, that's one of the important things 

6 that's happening.

7 We're giving two more years for 

8 earnings to rise over time. And that in effect 

9 is making the kind of 8 percent threshold, you 

10 know, less binding over time.

11 We'll kind of automatically going to 

12 give a debt to earnings rate. If we measured it 

13 the old way, it would be, you know, maybe 20 

14 percent more favorable then it was before just to 

15 earnings growth over -- as individuals age over 

16 time.

17 So, I think that aspect that Marc has 

18 shown here with the scorecard data would bear 

19 out. But all of the cross-sectional stuff I 

20 really don't think we can make inferences from 

21 the data that are here.

22 I just don't think they're reliable 
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1 for that purpose.

2 The one thing I wanted to ask, I'm 

3 just guessing this is a typo, Marc, but when you 

4 look at the repayment rates, it says using five 

5 year earnings.

6 MR. JEROME: It just should say five 

7 years. My apologies. We again in our rush to 

8 print, we printed one, the wrong version.

9 The data is correct. It's just five 

10 year repayment rates. Which is available. Okay?

11 MR. MATSUDAIRA: Great. And the last 

12 request I'd just make is, if when you guys 

13 circulate the materials, if you could include the 

14 variables that were referenced here, that would 

15 be great.

16 MR. JEROME: So, I just -- just for 

17 protocol, I was planning to send the Excel 

18 spreadsheet with everything in it, without the 

19 names to the Department. And having the 

20 Department send it to the negotiators.

21 Is that the right protocol?

22 MR. RAMIREZ: Yeah. That's fine.
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1 MR. JEROME: Okay. And then what I'll 

2 do is on a -- I'll give you a URL on my own site 

3 with the names if someone wants to just -- for 

4 ease of use, you know, offsite and not part of 

5 the gainful employment.

6 But Jordan, you know I appreciate your 

7 comments. And I think both of us would not, 

8 would rather not be looking at scorecard data.

9 And we'd rather that for the past 

10 three weeks we negotiated with the Department, 

11 they gave us informational rates on their 

12 proposals using actual data, which would have 

13 informed our discussion much more.

14 So, I honestly was very reluctant to 

15 do this for all your reasons. But I feel we have 

16 an obligation to the people at the table to show 

17 just the broad swaths of the impact of what the 

18 Department is proposing.

19 MR. MATSUDAIRA: Yeah. And I just 

20 want to follow that up. So, the comment was made 

21 yesterday about a shortage of data scientists in 

22 the Department.
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1 I'd be happy to bring down an army of 

2 graduate students who are really well trained and 

3 will work for nothing to be able to do that in 

4 exchange for having that better data to inform 

5 this policy going forward.

6 MR. RAMIREZ: Thank you Jordan. All 

7 right, Marc, you have a final comment before we 

8 break?

9 MR. MCKENZIE: Yeah, thank you. You 

10 know, I think the whole conversation is 

11 indicative of an essential challenge that we 

12 have.

13 Is that we're trying to make decisions 

14 on -- very specific decisions on numbers that we 

15 don't have data to back up that decision.

16 Not having this information, and 

17 having someone like Marc have to step up at the 

18 lat minute and put something together, basically 

19 demonstrates the challenge that we're going to 

20 face.

21 So, I'm going to come back to Steve 

22 and Greg and just as question from a regulatory 
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1 standpoint. Is there a way to incorporate 

2 language to allow an adjustment of whatever 

3 numbers we determine, or the Department 

4 determines initially?

5 And then after we actually have that 

6 data, and that's been analyzed, that then there's 

7 an actual review of those numbers and an 

8 adjustment of the rates or the years to 

9 accommodate the unintended consequences that came 

10 out with gainful employment?

11 MR. RAMIREZ: Can I suggest that we 

12 take a break and that we continue with the answer 

13 to that question?

14 MR. MARTIN: Yeah. I'll address that 

15 after we get back.

16 MR. RAMIREZ: Okay. So let's take a 

17 15 minute break. And thank you everyone. And 

18 thank you to Marc and Dan for pulling that 

19 together.

20 MR. JEROME: Chad Muntz helped me a 

21 lot.

22 (Whereupon, the above-entitled matter 
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1 went off the record 10:45 a.m. and 

2 resumed at 11:00 a.m.)

3 MR. RAMIREZ: Okay, let's go ahead and 

4 get started. So, Greg, we had left off with a 

5 question for you. 

6 Do you want to go ahead and answer 

7 that now?

8 MR. MARTIN: You know what? That 

9 would be great if I recalled what the question 

10 was. 

11 MR. RAMIREZ: Yes, Mark, please? 

12 MR. MCKENZIE: The question was is 

13 there any way in the regulations to write in an 

14 opportunity for the Department to reconsider any 

15 thresholds that are determined during this 

16 process? 

17 Because it's pretty clear to me in 

18 listening that it would be very challenging to 

19 get consensus on numbers because we're basing 

20 everything on speculation. 

21 And so whether you choose 8 percent or 

22 12 percent or 10 years or 15 years, everything is 
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1 really speculative at this point. 

2 And so it's very challenging, I think, 

3 for the negotiators to make any reasonable 

4 determination. 

5 So, I guess from a regulatory 

6 standpoint, is there a way to incorporate 

7 language that would commit the Department 

8 re-looking at these numbers on a specific 

9 timeframe in order to allow the negotiator some 

10 room to move forward with picking a number in 

11 between 8 and 12 or whatever?

12 MR. RAMIREZ: I'm going to have 

13 Counsel answer that.

14 MR. FINELY: This is Steve. So is 

15 that a good thing or a bad thing when he hands it 

16 off to me?

17 MR. RAMIREZ: Absolutely a good thing, 

18 right.

19 MR. FINELY: So, I understand a lot of 

20 this conversation is taking place where every 

21 variable shifts and every time we discuss moving 

22 one variable, it affects the stress that's placed 
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1 on the others. 

2 So, I think we've got a few variables 

3 to keep talking about this week and we'll try to 

4 get back to you on that. Some things are 

5 probably more flexible than others. 

6 I don't see an alternative to the 8 

7 percent right now, just because of the way that's 

8 been established historically at this point, 

9 since we've done this a few times. But I think 

10 by the time we conclude in the week, we'll talk 

11 about that. 

12 MR. RAMIREZ: Thank you. All right, 

13 so then, we had left off on Number 2 on Page 2 of 

14 the Debt Calculations on Issue Paper 3. 

15 And the question was is there some 

16 other combination of numbers that we could look 

17 at? 

18 But it sounds like the folks may want 

19 a little bit of time to digest the numbers that 

20 Mark had just shared with us. So, with that, 

21 Greg, would you want to take us to the next 

22 section?
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1 MR. MARTIN: Sure, and I do want to 

2 say with respect to repayment, the amortizing 

3 million loan debt in the years, we'll take that 

4 back for discussion, looking at that. 

5 I'm not going to guarantee anything 

6 but we will. 

7 And again, the issue here is I think, 

8 I could be incorrect about this, but I think any 

9 way we move, if we move in one direction for one 

10 side of the table we're liable to cause an equal 

11 amount of stress at the other side. 

12 So, I'm not sure that there's any 

13 movement on this that would reach consensus, but 

14 we will work towards that and see if we can come 

15 up with something regarding those numbers. 

16 But as Steve said, we're probably not 

17 going to look at the DE metrics, but we can look 

18 at the repayment rate, repayment period rather.

19 MR. FINLEY: So, just before the 

20 break, I offered a solution of I understand that 

21 many individuals would love to see the 

22 certificate in two-year programs have an 
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1 annualized amortization schedule of 15 years. 

2 And again, I understand that many of 

3 the student advocates are saying 10 years and 

4 that risk of the Department having to make a 

5 choice of going to the 15 or the 10. 

6 I think in an effort to get to yes, 

7 again I propose that you consider a 12-year.

8 PARTICIPANT: Greg, for the record, we 

9 will consider it. I don't think we can choose 

10 the rate just because it splits the difference. 

11 If we can come up with a logical, 

12 supportable basis for it, then we can consider 

13 moving in that direction. So, we will take it 

14 under advisement. 

15 MR. RAMIREZ: Thelma?

16 MS. ROSS: I just need clarification. 

17 Steve, why is the Department not willing to 

18 entertain moving off of the eight percent?

19 MR. FINLEY: The eight percent was 

20 based on some research and it's withstood legal 

21 challenge and it's really clear right now that 

22 thresholds that are placed have to be able to 
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1 withstand legal challenge. 

2 And so that's a safe point for us. 

3 MR. RAMIREZ: Daniel then Jennifer.

4 MR. ELKINS: I want to say that it's 

5 relieving to hear the rationale behind the eight 

6 percent. Our suggestion to Mark was we can't 

7 just arbitrarily come to the 12. 

8 And I just wanted to comment on a 

9 wider scale, again, not insinuating this is what 

10 Mr. Jerome's chart suggests or not, but I think 

11 it does kind of clearly show, unless I'm 

12 completely reading it wrong, the problems across 

13 the sector kind of fall into the considering that 

14 we all thought that they would. 

15 There are some issues in the 

16 proprietary sector and to a smaller degree, there 

17 could be some issues in the private sector and 

18 the public sector is not have as big of a 

19 problem. 

20 And I think that as we continue to 

21 negotiate, we need to kind of keep that in mind.

22 MS. ROSS: I have a follow up, though. 
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1 MR. RAMIREZ: Go ahead, Thelma.

2 MS. ROSS: So, I get that there's an 

3 interest in the Department and being able to have 

4 something that withstands a legal challenge, but 

5 you indicated based on research and was the 

6 research based on what you were trying to 

7 establish for gainful employment when gainful 

8 employment was gainful employment?

9 MR. FINLEY: It was based on academic 

10 studies about debt levels for students, period. 

11 MS. ROSS: So was it still based on 

12 regulations that you were trying to establish for 

13 gainful employment? Yes?

14 MR. FINLEY: It was used in the 

15 gainful employment regulations, it was a number 

16 that was not tied to proprietary schools.

17 MS. ROSS: Okay, I get that. 

18 I wasn't talking about proprietary 

19 necessarily, just trying to figure out the 

20 unwillingness to move off the eight percent. And 

21 I'm still not there. I hear what you're saying. 

22 MR. RAMIREZ: Let me get Jennifer, 
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1 Johnson, then Whitney.

2 MS. BLUM: So, I feel compelled, 

3 sitting in the lawyer's seat, to be a lawyer for 

4 a minute. 

5 So I get, and it is safe zone 

6 (unintelligible) disagree with you so it's 12 

7 percent, by the way, safe zone for something too. 

8 Because you got rid of the zone. 

9 But the minute you started, you 

10 changed from three to four years' earnings to 

11 five to six years' earnings. 

12 So, it's actually not as safe anymore 

13 necessarily because you changed the rest of the 

14 metric. 

15 So, I think it's safe so I agree with 

16 you in terms of legality, but I would say there 

17 is an argument that because you changed other 

18 aspects, you change the interest rate too. 

19 So, you change other aspects, then 

20 it's not as safe anymore. 

21 And so what I would advocate for, 

22 which is what I've said yesterday too, and what 
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1 Mark just alluded too earlier, Mark McKenzie, is 

2 that you're definitely on safe zone if you take 

3 the -- safe zone, no pun intended. 

4 You're definitely in safe territory 

5 if you take the data for a year or two on both 

6 debt to earnings loan repayment rate both, and 

7 figured out what the mean and medians were. 

8 So, in my mind, there's no question 

9 that you're in safe zone to take the data, 

10 publish it. By the way, guys, I'm not saying, 

11 you know, take the data and keep it secret. 

12 Take the data, you can make it public 

13 the same way Gainful 1 was made public. 

14 But then establish what the measure 

15 benchmark -- you're also much more able to 

16 establish a different term than measures once you 

17 actually have the -- and I would go so far as to 

18 say, you know, I would totally be willing to 

19 entertain the conversation of giving the 

20 discretion to the Department to figure out 

21 whether it's the mean, the median, or the average 

22 that becomes that sort of place. 
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1 Or maybe it's slightly above one of 

2 those to make it more robust. And so you don't 

3 have to come back to the NEG-REG table, it can be 

4 structured in a way where the data is taken, it's 

5 looked at. 

6 We didn't really talk this morning 

7 about one of the notes that you had, or 

8 yesterday, about the feedback on the comparative 

9 tools. 

10 I would say long term that having the 

11 ability for consumers to do a comparison across 

12 demographics, especially if you set the metric at 

13 eight percent, it is helpful for students to be 

14 able to say, oh, a like institution, regardless 

15 of tax status, looks like this one too.

16 So, I think that is helpful 

17 information so you put that into the dynamic of 

18 the framework as well.

19 I'm not saying that changes the 

20 benchmark, I'm saying just from disclosure 

21 standpoint, that comparative tool is helpful.

22 But anyway, the point is you're 
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1 definitely on safe zone if you take the data, 

2 analyze it, especially since you changed other 

3 aspects of the metric. 

4 MR. RAMIREZ: Thank you. Whitney?

5 MS. BARKELY-DENNEY: Yes, so I just 

6 wanted to go back and answer your question, 

7 Thelma, a little bit more in-depth I hope, which 

8 is the paper primarily that was relied on was 

9 from 2006, so it was prior to any negotiations 

10 starting. 

11 And it really just looks across all 

12 sectors at what an affordable loan debt looks 

13 like based on income. 

14 So, again, I think it's more helpful 

15 to think of it as an income-based repayment-type 

16 analysis, and one that lays out a strict 

17 percentage rate.

18 But based on the amount of money that 

19 -- and this is true, all we have is gainful 

20 programs. 

21 But based on the amount of money that 

22 borrowers coming from gainful programs make when 
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1 they graduate, that number makes sense.

2 Now, if we had better data as far as 

3 being able to see what salaries looked like for 

4 people across programs, I think that we might be 

5 able to move that. 

6 My major concern is that when you move 

7 from just looking at people between 8 percent and 

8 12 percent, those people who would now be newly 

9 included in the passing or meeting standards or 

10 whatever you want to call it, their discretionary 

11 income rates, 47 percent of those programs have 

12 discretionary income rates or DTE rates of 100 

13 percent or more.

14 And so how those two things are tied 

15 together is really troublesome to me, but 

16 definitely, I take your point that that was only 

17 gainful, that's the only thing we can have to 

18 look at those earnings rates. 

19 So, I take your point that if we had 

20 other data on that, it would probably be a good 

21 thing. 

22 MR. RAMIREZ: Thank you. All right, 
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1 Greg?

2 MR. MARTIN: Okay, we'll move on to a 

3 discussion of annual -- Page 3 is mostly 

4 strike-outs. Let's move on the next substantive 

5 changes on Page 4, annual earnings. 

6 We're still obtaining earnings from 

7 Social Security administration and those are 

8 students who have completed the undergraduate 

9 educational program. 

10 And under D, Loan Debt and Assess 

11 Charges, we have the Secretary determining the 

12 loan debt for a student and you see the method in 

13 which that's done. 

14 This is not a change from the last one 

15 we gave you, but reflects our position when we 

16 came here for Session 2, was the elimination of 

17 the private education loans and institutional 

18 debt. 

19 And I think we've gone over why we did 

20 that and I know that we could have a lot of 

21 discussion around whether that should be included 

22 or not. 
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1 But this is basically a logistical 

2 thing. Again, we don't have this data, we don't 

3 have any way of getting it any time soon. So, 

4 this just reflects the reality of an 

5 administrative calculation. 

6 And again, at the top of Page 5, what 

7 Jennifer referenced earlier in the day, the 

8 Secretary made an effort to include in the 

9 calculation institutional loan debt, private loan 

10 debt, tuition of fees, by publishing a notice of 

11 such election in the Federal Register, should it 

12 in the future become possible to obtain this data

13 in a way that would be reasonable and not overly 

14 burdensome.

15 So, I'll stop there and see if there's 

16 any comments?

17 MR. RAMIREZ: Okay, it looks like I 

18 have Jennifer then Johnson, and then Whitney.

19 MS. BLUM: I've referenced this before 

20 and it occurred to me that I would like to ask 

21 for a tweak on 2 to reflect -- because this 

22 assumes that in the future you might ask the 
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1 institutions to report it. 

2 But as I said before, the Department 

3 is actually at the beginning to explore its own 

4 ability to parse its loan dispersements between 

5 -- and again, I don't want to go down the rabbit 

6 hole in the conversation. 

7 I'm just saying you're assuming by 

8 saying in the manner in which the institutions 

9 must report. 

10 But there is a scenario, at least as 

11 it relates to the loan amounts for tuition of 

12 fees versus living expenses, that the Department 

13 itself might know that in the future. 

14 So, I just want to leave the 

15 opportunity to the Department itself and you 

16 still might need to issue a Federal Register 

17 notice because we would want public comment on 

18 that. 

19 But it implies that the institution 

20 would have to report it, and in the future, I 

21 think the Department will be able to do this 

22 themselves.
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1 So, is there a way just to tweak it? I 

2 can think about what the language would look like 

3 if it's helpful. 

4 But is there a way just to say that in 

5 the event that the Department has its own access 

6 to its own data?

7 PARTICIPANT: Just a clarification if 

8 I could, Jennifer? And I know the Department's 

9 working in those areas and I'm not familiar with 

10 that. 

11 But I guess I'm trying to understand 

12 how we could possibly know what debt was at the 

13 institutional level or private debt that students 

14 obtained to go to the school without the school 

15 reporting it to us by some mechanism? 

16 I don't know if there's any way we 

17 could get into that, or I just don't know how we 

18 could get it. 

19 MS. BLUM: Well, I'm looking at Steve 

20 because I'm not that familiar with the pilot 

21 either, but it relates -- yes, but that's why I'm 

22 just saying on an open-ended basis, you're just 
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1 assuming an institutional reporting requirement. 

2 And I actually think the Department, 

3 through this credit card pilot, is actually doing 

4 its own determination of what is living expenses

5 and what is tuition and fees? 

6 I could be wrong.

7 MR. MARTIN: Greg again, for the 

8 record. 

9 I think we could do that, I mean, as 

10 far as when we're talking about what 

11 institutional charges versus non-institutional 

12 charges or I want to say direct charges versus 

13 those costs that are part of the cost of 

14 attendance for other things. 

15 Yes, I think we could get that but 

16 that wouldn't necessarily -- this is actual debt. 

17 So, I can't think of any other way for 

18 us to determine what a student's debt is at any 

19 institution you represent, other than for you to 

20 tell us. So, I mean, through some mechanism. 

21 And I think what we have here would 

22 presuppose a way of doing that maybe in the 
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1 future through the regular enrollment reporting 

2 for NSLDS, without some extra 

3 debt-to-earnings-type reporting. 

4 But if we could collect that 

5 information, that might be possible in the future 

6 but it isn't now and we don't want to obligate 

7 ourselves to something that we may or may not be 

8 able to do.

9 MS. BLUM: Yes, so I wasn't looking at 

10 it, and I won't belabor it, but I wasn't looking 

11 at it as a tuition and fee, like a breakout of 

12 reporting of tuition fees. 

13 I was literally looking at it when you 

14 talk about debt, there are two pieces to the 

15 debt. 

16 And again, I don't want to go down the 

17 rabbit hole because I'm good where we are, but 

18 I'm just playing this out for the future, where 

19 there will be a future understanding by the 

20 Department of what is debt for tuition and fees 

21 and what is debt for living expenses. 

22 And so that would not be a reporting 
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1 requirement necessarily by the institutions, that 

2 was my only point. 

3 MR. MARTIN: I'll look at it. 

4 Maybe some of my FSA colleagues are 

5 more familiar with what we're doing there, and if 

6 it appears that would have an impact, we'll 

7 adjust that. 

8 MR. RAMIREZ: Whitney?

9 MS. BARKLEY-DENNEY: Yes, I just want 

10 to reiterate the opposition of consumer groups to 

11 removing private and institutional loans from the 

12 calculation. 

13 We've seen in the past what happens 

14 when some bad actors decide to really load up 

15 borrowers with institutional loan debt that is 

16 non-sustainable. 

17 And I think that it's a really 

18 important part of this and I would not want to 

19 inadvertently push those institutions who would 

20 be likely to do things like that into that 

21 position in order to mask the actual cost of 

22 attendance at their school. 
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1 MR. RAMIREZ: Okay. Johnson then 

2 Chris Gannon.

3 MR. TYLER: Whitney said what I was 

4 going to say much better than I could so I have 

5 nothing else to add to that. 

6 MR. RAMIREZ: Gannon?

7 MR. GANNON: I think just from 

8 listening to the conversation here, I think that 

9 one thing we do have at least some consensus on 

10 is that we don't have the data that we need to 

11 make accurate decisions about what's being 

12 presented. 

13 And I think until we have that data, 

14 we can't really make decisions or decide, or make 

15 accurate decisions. 

16 So I think that maybe we should have a 

17 fourth session to come back and discuss this 

18 later after the Department delivers some more 

19 data. 

20 Because I know last time we had data 

21 but it was about halfway through the session and 

22 we didn't have time to digest it. And here we 
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1 are in the third session still asking for data. 

2 So, I'd like to get a thumb-check on a 

3 possible fourth session after the data. We have 

4 at least some data to make a decision. 

5 PARTICIPANT: Let me ask the 

6 Department to comment on that before we check 

7 that.

8 PARTICIPANT: Yes, the extension of 

9 this to a fourth session would require consensus 

10 around the table. Preliminarily, the Department 

11 would be disinclined to vote consensus on it. 

12 MR. RAMIREZ: Okay, Whitney?

13 MS. BARKLEY-DENNEY: As much as I joke 

14 about not wanting a fourth session, I do think 

15 that Chris makes an important point and I am 

16 concerned about being able to reach any real 

17 decisions without the ability to actually look at 

18 data. 

19 I mean, you know, if it were a perfect 

20 world, we would have all of this data scrolling 

21 up there and be able to see the changes and what 

22 would happen to institutions and what would 
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1 happen to programs based on the metrics that 

2 we've set. 

3 So I do think that Chris, you know, as 

4 much as we've all grown and I don't want to give 

5 birth at the table, I think that Chris makes an 

6 important point when it comes to what we're doing 

7 here and how we could do it more efficiently and 

8 effectively, and make sure that we're actually 

9 doing what we intend to. 

10 MR. RAMIREZ: I see some tents up. Is 

11 that in regards to comment on the idea of a 

12 fourth session? Johnson then Sandy. 

13 MR. TYLER: I think there are very 

14 difficult questions that have to be answered 

15 based on data, not on theoretical things. 

16 I think what Mark brought to the table 

17 was really interesting. I've tried running this 

18 data myself, it's complicated stuff. 

19 I think when you get into repayment 

20 and the whiskers and all that stuff, it gets 

21 really complicated, and there's a good 

22 possibility from a statistical standpoint that no 
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1 one will fail repayment. 

2 Because when I've done the math 

3 consulting with Sarah, it looks like everyone is 

4 -- the numbers are such that the repayment rate 

5 is in the negative area. 

6 So, if we want something to be useful 

7 here, I think we have to deal with data because 

8 you have to know how it's going to affect all of 

9 these schools. 

10 So, I would agree that a fourth 

11 session might -- my wife and children will kill 

12 me, but I would come back for a fourth session.

13 MR. RAMIREZ: Sandy?

14 MS. SARGE: So, a couple things. 

15 I agree with the fact that data is 

16 beneficial, especially if you're trying to do 

17 calculations. 

18 Because when you have several 

19 different mathematical elements, it will move the 

20 needle and something on the numerator affects it 

21 differently than if it's in the denominator. So 

22 that's just pure math. 
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1 And for the record, I would always try 

2 to come back and help it.

3 Because I thought about this last 

4 night, out of all of the GE negotiations and in 

5 the past, the recent other negotiated 

6 rule-makings on borrower defense, I felt like we 

7 might be the only group that actually had a 

8 chance to get to consensus. 

9 And that's pretty amazing when you 

10 think about it. We could get there and I think 

11 we could do it in a point that's reasonable. 

12 So if, to Chris's point, it takes 

13 getting better data and coming back and we can 

14 get there, then I of course would be all for 

15 that. 

16 But the one thing that we haven't done 

17 this time and Chad, thank you for bringing it up 

18 again. Because I think we were all pretty 

19 excited the last time you made your pitch or 

20 suggestion at the end of last session. 

21 And we shouldn't lose sight of it. 

22 Chad's suggestion was to take average total debt 
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1 and average earnings by program. 

2 Don't try to do math, don't try to 

3 find a metric or a measure or a threshold. Just 

4 show the information and that allows students to 

5 decide what multiple is reasonable for them.

6 If you borrow $100,000 to become a 

7 doctor and your average income after X number of 

8 years is $100,000, that's a one-to-one. Is that 

9 worth your rate of return or is that a multiple 

10 you're willing to live with?

11 If you borrow $100,000 to become a 

12 nurse and it's $50,000, it's two years, et 

13 cetera, et cetera. 

14 Maybe that's a better way to look at 

15 it as the average debt taken out for that program 

16 at that school versus the average income of that 

17 cohort, or median whatever, and you do the 

18 comparison that way. 

19 We don't have to worry about interest 

20 rates, amortization rates, a mathematical 

21 equation; it's a comparison. 

22 So I want to throw that back out and 
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1 thank Chad from the last time for bringing it to 

2 our attention. 

3 MR. RAMIREZ: Chris?

4 MR. GANNON: So, just very quickly, 

5 I'd be in favor of that, I think with the 

6 repayment rate, we discussed it last session. 

7 And the Department took that and 

8 brought it to us, what it would look like, the 

9 language, but didn't bring to us any repayment 

10 rate number that they would propose. 

11 So now we're kind of tossing numbers 

12 around and discussing data in box and whiskers at 

13 this session. 

14 So it seems like we should have 

15 another session to see what the Department would 

16 propose as a repayment rate, discuss that, and 

17 see if there's some consensus for it. 

18 So, it would definitely be in favor of 

19 coming back. 

20 MR. RAMIREZ: Daniel?

21 MR. ELKINS: I second that. 

22 MR. RAMIREZ: All right, so if we took 
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1 a temporary check on this, you all have to 

2 understand one is that the Department would have 

3 to go back to and see if that's even something 

4 that's doable, if there was consensus among the 

5 group. 

6 But then the second question that I 

7 would have, though, is that the reason that I'm 

8 hearing that you all may be interested in a 

9 fourth session is because you want to be able to 

10 digest data, use data. 

11 Do you have the data that you need, 

12 one? and then two, if not, is that data that we 

13 can get? So, it's I guess a two-part question 

14 there, right? 

15 So, let me go to Jennifer, then Chris. 

16 MS. BLUM: Well, yes, I have that 

17 question for the Department. I mean, is this 

18 month any different than any other months? 

19 I mean, would you have data next 

20 session to share? 

21 So, if we came up with a benchmark 

22 like let's look at 35 percent, would you even be 
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1 able to have that data a month from now? 

2 I'm not saying, though, that I'm 

3 against a fourth session because as I've said, I 

4 think there is a framework for the future to set 

5 up where the data is actually collected in the 

6 future. 

7 But I think there is a framework where 

8 you could set up metrics now with the caveats, 

9 obviously, that there wouldn't necessarily, and I 

10 know this is upsetting in terms of the sanction 

11 piece, it would be sort of put on hold until 

12 there was sort of a more known what does the 

13 universe look like.

14 But I do think that there is a 

15 regulatory framework that could be established 

16 that sort of sets up for the future that way. 

17 And so in that regard, if there were a 

18 conversation around that, I would never walk away 

19 from a fourth session.

20 MR. GANNON: So the concern that I 

21 have is that even if did get a fourth session, 

22 are we going to have what we need? Right, 
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1 Johnson?

2 MR. TYLER: I really think that this 

3 is a question of leadership here. We have all 

4 this data, it's all there, it's all public. 

5 I've been trying to work the Excel 

6 spreadsheets. Mark's done a great job, he's 

7 enlisted all these people to do it. 

8 We should have a sheet up here that 

9 says if you have a 35 percent repayment rate, 

10 what's going to happen, so that we'll know that 

11 60 percent of all schools are going to fail this. 

12 If you're going to have it at four 

13 percent, then we'll know that everyone's going to 

14 pass it except for maybe 100 schools. I think 

15 that's the sort of data we're talking about. 

16 It's not that the data doesn't exist, 

17 it's that if we have to rely on us to do all the 

18 analysis, when you guys are making the proposals, 

19 I just think it's useless that way. 

20 I think we need some presentations 

21 about what the options would be and what the 

22 implications would be to all of the sectors that 
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1 are interested at this table. 

2 MR. RAMIREZ: Greg, do you have any 

3 direction on that? 

4 MR. MARTIN: Well, regarding those 

5 questions, I think some of the, and I'm not the 

6 person to talk to about data, I will say this 

7 generally though, some of this has to do with the 

8 fact that we're talking about expanding this from 

9 GE programs to all programs and getting data 

10 that's relevant at the programmatic level to all 

11 the programs we would be including at this point. 

12 And also, earnings data relevant to 

13 all these programs as well. So, in order to have 

14 the complete data on which to make decisions,

15 that would probably be necessary. 

16 So, I think that regarding what data 

17 could be compiled between now and any 

18 hypothetical fourth session, I guess I'm pretty 

19 safe to say we would probably have more data. 

20 Whether we would have everything you want I 

21 couldn't guarantee that. So, we would come back 

22 and it's quite possible we will not have all the 
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1 data that you want at that point in time. 

2 So, I'm not going to obligate the 

3 Department to saying that having a fourth session 

4 would mean that we would have all the data that 

5 you would want to use to make those decisions. 

6 So, I think your point, Javier, is valid. 

7 All right, so let me get Sandy and 

8 then we'll take a temporary check on that. 

9 Sandy?

10 MS. SARGE: So, just because I'm not 

11 an expert on the scorecard, what I think you're 

12 referring to is that the loan repayment rate data 

13 that's currently available would only be at the 

14 institution level, and that we don't have it at 

15 the program level right now? 

16 Okay.

17 MR. MARTIN: That's one thing we don't 

18 have at the program level, yes. 

19 MR. RAMIREZ: All right, so let's see 

20 a show of thumbs for your level of agreement on 

21 the idea of a fourth session? 

22 So, I'd call that a very soft 
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1 consensus but it's consensus, right? And I say 

2 consensus with the understanding -- oh, was your 

3 thumb down? 

4 Okay, Todd was just being comforted. 

5 And I understand that I say a soft consensus but 

6 I also want to acknowledge that the Department 

7 did not thumb, and I understand why not. 

8 So, they're going to take that 

9 information, take it back and see if that's 

10 something that's even possible. 

11 MR. MARTIN: I'll take it back and I 

12 might have a better indication this afternoon 

13 when I speak with senior leadership about that. 

14 But I will have an indication, yes.

15 MR. RAMIREZ: Okay, thank you. Okay, 

16 see what you did, Dennis, you got us all 

17 derailed.

18 MR. HELLER: I have a question.

19 MR. RAMIREZ: Yes, Neal?

20 MR. HELLER: If the Department were in 

21 fact able to provide all the data we needed, do 

22 you really think we'd come to consensus on a 
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1 number for repayment percentage at this table?

2 MR. RAMIREZ: Whitney?

3 MS. BARKLEY-DENNEY: So, respectfully, 

4 Neal, I think it's about more than consensus. 

5 Obviously, that's what we're all working 

6 towards but it's also about being able to create 

7 a role that actually is well-reasoned and can 

8 stand up to challenges and can be a lasting role. 

9 So, even if you and I still can't 

10 agree on a number, I would feel a lot better 

11 walking away from the table knowing that we did 

12 the work that we needed to do to be able to 

13 justify the decisions that we were making, 

14 whether those decisions are to support or not 

15 support a role. 

16 And I don't feel, particularly because 

17 of the problems with expanding to all programs, 

18 that we necessarily can do that with the data we 

19 have now. 

20 And even just thinking towards the 

21 future, this is my second one of these, I don't 

22 necessarily want to do a third. I know there are 
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1 some people who have done three all the way 

2 around. 

3 So, having that underpinning of it I 

4 think would be better than moving in this new 

5 direction without really knowing where we're 

6 going.

7 MR. RAMIREZ: Daniel?

8 MR. ELKINS: This is Daniel. Yes, I 

9 think it's possible. 

10 (Laughter) 

11 MR. RAMIREZ: Thank you, Daniel. 

12 Johnson?

13 MR. TYLER: I feel like there was 

14 consensus about there being bad apples that we're 

15 trying to get out of here. 

16 And I think if you were to look at the 

17 data and see whether it's going to capture those 

18 people, because a lot of it reflects those 

19 institutions, or it doesn't and it captures the 

20 wrong people, there would be consensus. 

21 MR. RAMIREZ: Okay, thank you. 

22 All right, so I'm trying to jump back 
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1 in here to the debt calculations. Where do we 

2 need to go next, Greg, on that paper? 

3 MR. MARTIN: I believe we were at the 

4 top of Page 5 and then we're moving onto three, 

5 the attribution or roll-up. 

6 The Secretary attributes all loan debt 

7 incurred by the student for enrollment and any 

8 undergraduate program at the institution to the 

9 highest-credential undergraduate program 

10 subsequently completed. 

11 I think Cynthia did an excellent job 

12 of summarizing that when she was up here. 

13 And then we have the exclusions; I 

14 don't think there's anything there that we 

15 haven't talked about. The removal of the 

16 graduate education program references that. 

17 Moving on to Page 6, again, working 

18 through the exclusions, and then at the bottom of 

19 Page 6 under F, DE rates not issued, we have 

20 after applying the exclusions in Paragraph E of 

21 the section, fewer than ten students completed 

22 the program during the cohort period.
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1 So, that was the end size of ten, 

2 which I think we discussed earlier. So, I'll 

3 stop there and see if anybody has any comments 

4 through the top of Page 7?

5 MR. RAMIREZ: Any questions on that 

6 and/or is there anything controversial in that, 

7 that the group would be hesitant in approving? 

8 Pamela? 

9 MS. FOWLER: I just want to be clear. 

10 Going back to Page 5, Number 3, for 

11 enrollment in any undergraduate educational 

12 program at the institution to the 

13 highest-credentialed undergraduate program 

14 subsequently completed by the student at the 

15 institution. 

16 Are we talking about the same 

17 institution?

18 MR. MARTIN: Yes, it's the same 

19 institution.

20 MR. RAMIREZ: Is that something that 

21 the group would feel comfortable approving? 

22 Let me see a show of thumbs if 
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1 everyone's okay with the approval of that 

2 section, which would be from Page 5 to the top of 

3 Page 7. Chad?

4 MR. MUNTZ: The cohort period is at 

5 two years or one year? I'm trying to remember. 

6 The reason why I'm asking is ten completers, if 

7 it's two years it would be --

8 MR. MARTIN: The cohort period is a 

9 two-year cohort period. 

10 MR. MUNTZ: So, basically, it's five 

11 completers per year, right? 

12 MR. MARTIN: Holistically, yes.

13 MR. MUNTZ: Okay, thank you.

14 MR. RAMIREZ: Okay, so let's see a 

15 show of thumbs on that? Okay I'm not seeing any 

16 thumbs down so we're okay with that portion. 

17 Okay, Greg, what's next? 

18 MR. MARTIN: Okay, we're moving onto 

19 Page 8, calculating and issuing loan repayment 

20 rates. This is new for 668406. 

21 I'll spare you the torture of reading 

22 every line in this, I'm not going to do that. 
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1 But essentially, this repayment rate calculation 

2 comes from the scorecard and it's been moved into 

3 here. 

4 Of course, we would be applying this 

5 at the programmatic level. 

6 And we just go through, basically, the 

7 calculation. 

8 And just to reiterate our reasons for 

9 doing this, this came out of the last session 

10 where it was voiced that there needed to be a 

11 different or additional measure, aside from debt 

12 to earnings, that would show outcomes of a 

13 program, such that if a program failed to meet 

14 the measure for debt to earnings, there would be 

15 an alternative way of showing that that program 

16 still had good outcomes. 

17 So, this is why we incorporated this 

18 and we're tying it to an existing repayment rate 

19 calculation. 

20 MR. RAMIREZ: Would this be a spot to 

21 bring back Chad's idea as far as having just a 

22 ratio of debt to earnings?
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1 MR. MARTIN: I'm sorry, could you 

2 review that? 

3 MR. RAMIREZ: Sandy, can you explain 

4 what the idea was there, or Chad?

5 MS. SARGE: Chad would be better.

6 MR. MUNTZ: This went back to the last 

7 session where total debt, total earnings were 

8 side by side. 

9 The student, if it's a disclosure 

10 could make that determination if they will earn 

11 enough for the total debt that their average 

12 cohort receives. 

13 Now, we can set a threshold of one to 

14 one, or we could say, you know, half to one, half 

15 the debt for annual earnings. 

16 Whatever it might be, the debt would 

17 be much simpler than the repayment rate, the 

18 period, the interest, all those other things put 

19 in there that's creating this threshold of what 

20 we're declaring as affordable payment. 

21 But just doing a one-to-one kind of 

22 ratio. 
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1 MR. MARTIN: So, again, for the 

2 record, Greg here. So, you would have us 

3 publish, what, just debt and earnings, right? 

4 And do a ratio of debt to earnings, 

5 just simple ratio that would replace, that would 

6 obviate repayment rate, right? 

7 MR. MUNTZ: Perhaps. 

8 I mean, given all the discussion, 

9 because we're going to discuss which interest 

10 rate is correct, which repayment period is 

11 correct. 

12 MR. MARTIN: Would that obviate debt 

13 to earnings as well?

14 MR. MUNTZ: It would just be the debt 

15 to earnings I believe. I mean, I'm open to 

16 discussion on that but the idea is it's simpler. 

17 Just this is how much debt you have, 

18 this is what you're earning; is that the kind of 

19 decision you want to make for yourself?

20 You define the cohort the same way. 

21 potentially. You could define the number of 

22 students or the selection of students in there, 
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1 and then go find the total debt that they've 

2 taken out for that program. 

3 And then go to the Social Security and 

4 say here's their annual income so if you borrow 

5 $100,000 to go to medical school or whatever, to 

6 go to HVAC and you only make $20,000, that's five 

7 times -- you've paid five years' worth of 

8 earnings to have that debt. 

9 Is that reasonable to you? And some 

10 students may say yes or no. $100,000 for a 

11 doctor making $100,000 is only one year. So, it 

12 would be a very clean comparison. 

13 And we can opine to the students or 

14 outside groups could opine as to what they think 

15 would be a reasonable multiple, but we would just 

16 be giving the data. 

17 MR. MARTIN: Okay, this is Greg. I 

18 get it, I just want to clarify that with this 

19 idea, the Department would not be contextualizing 

20 it. 

21 It would simply be issuing it and 

22 requiring you to disclose it to all students, 
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1 such that they would see debt earnings and they 

2 would be free to draw their own conclusions for 

3 that, or third-party entities could say we don't 

4 think this is good. 

5 And so just again to be clear, then we 

6 wouldn't need -- the concept of notification 

7 wouldn't exist, right? 

8 So, it would just be the debt and the 

9 disclosure of the earnings, correct?

10 PARTICIPANT: I'm not saying this, I'm 

11 just trying to make sure that I'm properly 

12 summarizing your ideas. 

13 MR. MUNTZ: Right. This is Chad 

14 Muntz.

15 PARTICIPANT: And Chad's as well.

16 MR. MUNTZ: So, I leave that open to 

17 the group if you guys want to set a threshold 

18 somewhere. I don't know. 

19 Again, the data would be important to 

20 see but given that interest rates fluctuate and 

21 every year, it seems that's one of the things 

22 that we're discussing is that, well, this year 
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1 the interest rate was this, this year it wasn't, 

2 for this program it's ten years, that's 15 years, 

3 that level of confusion I think has a negative 

4 impact on consumers if they can't understand what 

5 that means. 

6 So I think any consumer can understand 

7 what it means to saying after four years, for 

8 example, in a bachelor's degree program, it's 

9 $25,000 and you're going to make $50,000. 

10 I think they can make that choice for 

11 themselves and understand that. I mean, that's 

12 just one opinion. 

13 MR. RAMIREZ: So, what I would ask is 

14 are there any questions on clarification on that? 

15 Because we're 9 minutes to 12:00 p.m. 

16 and I'd like to make sure that people understand 

17 that, and then we can break for lunch and then we 

18 can come back and see if there's anything there. 

19 PARTICIPANT: Just one comment. 

20 Chad and I, we actually, again, ran 

21 this data from the scorecard so you can look at 

22 it, it's easy for the group to look at, and I 
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1 believe, though it hasn't been subject to enough 

2 scrutiny, that it perfectly reflects the 

3 debt-to-earnings metric, just without all the 

4 noise. 

5 So, when Chad presented this, we had 

6 it in essentially the scorecard that we just 

7 presented and we put it together. 

8 And so if the group wants, at some 

9 point you can look at that also. I guess I could 

10 forward it without names.

11 MR MARTIN: Greg, again. May I ask 

12 this? 

13 If it were to be -- and this is all 

14 hypothetical, I'm not saying that the 

15 Department's going in this direction or not, I'm 

16 just building on what we're saying here. 

17 If it were to be something the schools 

18 had to disclose, the Department would not be 

19 calculating a DE metric, then would it be 

20 reasonable to say that if a school was disclosing 

21 debt, they would have to also disclose, since 

22 they would have these figures, institutional debt 
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1 and private debt as well? 

2 Would that be fair?

3 PARTICIPANT: He's suggesting a 

4 metric, right? You're suggesting a metric. 

5 MR. MARTIN: Yes, that, we, the 

6 institution, would do, the Department would do, 

7 the Department would propose.

8 PARTICIPANT: Is there a metric, 

9 though, or is it just publishing earnings and 

10 debt?

11 MR. MARTIN: It's a ratio.

12 PARTICIPANT: Okay, I'm sorry. 

13 MR. MARTIN: And what it means is --

14 PARTICIPANT: We'd publish a ratio, 

15 okay.

16 MR. MARTIN: The Department has 

17 invested a lot, I understand, in 8 percent and 12 

18 percent but there are other commentators in the 

19 field who say we generally look, rule of thumb, 

20 one to one that for an associate's degree, your 

21 debt should not be more than your earnings. 

22 And generally, that is easier to 
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1 understand for the public and for students than 

2 what we have invested in with debt to earnings. 

3 And so I understand we're far into 

4 this but when Chad presented it, there's no doubt 

5 it's a much more intuitive number and 

6 essentially, I believe, it perfectly represents 

7 the debt-to-earnings metric just without all the 

8 noise. 

9 J: I'm not asking for agreement or 

10 debate at this moment, but is everyone clear on 

11 the idea? Okay, Johnson, go ahead.

12 MR. TYLER: So is Chad's idea a second 

13 metric that would trigger some event?

14 MR. MARTIN: Just instead of a 

15 debt-to-earnings metric and what it is is that 

16 it's just a much easier way to explain to a 

17 student, one of your clients, when you go for an 

18 associate's degree, your debt should never be 

19 more than the earnings. 

20 When you go for a bachelor's degree 

21 and my institution, we have a certain protocol 

22 like that but it's possible this is a much more 
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1 helpful way to do financial education for 

2 students and the public. 

3 MR. TYLER: I understand that but 

4 we're talking about -- we had a second test in 

5 case you failed the debt-to-earnings metric. 

6 We're not talking about a second test, we're 

7 just talking about it as a disclosure? Is that 

8 what we're talking about?

9 MS. BLUM: I think --

10 Mr. TYLER: And just to make a final 

11 point, the repay was designed to be another 

12 metric, a backstop metric. So, I guess that's my 

13 question. Is this --

14 MS. BLUM: And all I'm doing is 

15 telling you what I'm hearing from Chad right now. 

16 What I think I'm hearing, and it's 

17 good for us all to level-set on this because 

18 maybe I'm hearing it wrong, is that this would be 

19 instead of the debt to earnings that we've been 

20 discussing. 

21 This would be, in effect, a debt to 

22 earnings, it's just a different ratio. 
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1 And so it would be setting a different 

2 ratio, I'm hearing Chad say but he can confirm it 

3 because he's standing up, that there would not be 

4 a loan repayment rate. 

5 We would just go to -- whatever. 

6 Okay, so a subject for conversation. But this 

7 would be -- the new debt to earnings would be 

8 this straight-on ratio. 

9 And I think the subject for 

10 conversation, which at least I heard it was the 

11 subject for conversation, was whether there would 

12 be I'm going to call it a benchmark tied to 

13 whatever this ratio was. 

14 PARTICIPANT: So, just to follow on 

15 that, let's take the example that we had before 

16 at eight percent. I'll try and do this math in 

17 my head. 

18 Hopefully, someone can correct me. 

19 Let's say you make $40,000. 8 percent means your 

20 student loan annual payment needs to be $3200. 

21 So you find out how much debt that can 

22 be over a 15-year period and then you would meet 
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1 that. You either have that amount of debt or 

2 less. 

3 That's at the DE, the current. The 

4 same thing is applied here, that if you're at 

5 $40,000 then hopefully you have only $30,000 in 

6 debt or only $40,000 in debt. 

7 So, without having to do a payment to 

8 figure out if it's affordable, we're essentially 

9 just saying that this ratio is a one to one. 

10 Does your school, your institution, meet 

11 that or not? Does your program meet that or not? 

12 You don't need to do a calculation to 

13 figure out if you can afford a car -- sorry, it 

14 sounds like the car payment, like when you're 

15 with the salesman. 

16 All right, well, here's the payment 

17 that you can afford but just the raw number, what 

18 is the debt that you have after finishing your 

19 program and is that equal to your earnings or is 

20 it less than your earnings?

21 PARTICIPANT: One year, one year. 

22 Yes, I would say a one-to-one kind of ratio. I 
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1 mean, that's the proposal that I would put out 

2 here right now. One year earnings, one year 

3 debt. 

4 PARTICIPANT: Versus your total debt?

5 PARTICIPANT: Total debt. 

6 MR. RAMIREZ: Jordan, you had a 

7 clarification question on that too? 

8 MR. MATSUDAIRA: I just wanted to try 

9 my hand at maybe an explanation of the idea in a 

10 kind of simple way. 

11 If you have a ten-year amortization 

12 period and pretend there's no such thing as 

13 interest, then you would pay one-tenth of your 

14 loan. 

15 Your annual payments would be 

16 one-tenth of the balance every year if you 

17 borrowed $50,000. Your annual debt service 

18 payments would be $5000 every year. 

19 So, if you think about it that way, I 

20 think what Chad is proposing is just having the 

21 full amount of your debt, the full amount of your 

22 loan in the numerator of the debt-to-earnings 
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1 ratio instead of the annual payment. 

2 And so there's really a one-to-one 

3 link between these two ideas, it's just a 

4 different way of existing the ratio. 

5 Now, if we wanted to maintain the same 

6 standard, again, in this world with no interest 

7 and a ten-year amortization period, I would just 

8 say instead of requiring a 0.08 standard, I'd 

9 require that loans like the total debt relative 

10 to your earnings be pointy and instead it would

11 scale by about ten, the factor of ten. 

12 So I think there are three conceptual 

13 differences, differences that are actually 

14 important, like going to that model versus having 

15 the estimated loan payments per year.

16 So one is that we would get rid of 

17 this amortization and there's kind of the 

18 benefits of simplicity of that but the downside 

19 is that if we feel like a short-term degree 

20 should be paid off over a quicker amount of time 

21 and we'd want to have a different standard 

22 implicitly, we'd be sacrificing that. 
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1 That's one. 

2 Another is that there wouldn't be the 

3 discretionary rate that we have right now, which 

4 is effectively a way of having a lower standard 

5 for programs where earnings are higher. 

6 So, you can have a higher ratio of 

7 debt to earnings as long as your earnings are 

8 higher. That's the discretionary rate instead of 

9 the annual rate in the current framework. And 

10 we'd be going away from that. 

11 And then the last thing is that we 

12 wouldn't have to assume an interest rate to be 

13 able to do the estimated loan payments and all 

14 that, so that's simpler. 

15 But if we think of this debt service 

16 payment as approximating affordability, we might 

17 actually want to kind of have our debt to 

18 earnings ratio reflect the interest rate. 

19 Because when the interest rates are 

20 higher, it's actually harder for students to 

21 repay their loans because the interest costs are 

22 higher as well. 
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1 So, I think those three things are 

2 added sources of complexity but they all kind of 

3 have a reason. 

4 So the question is just whether the 

5 tradeoff is worth it.

6 MR. RAMIREZ: Okay, so what I didn't 

7 want to do was to get too far into the debate, at 

8 least not right now. So, is everyone clear on at 

9 least what the concept is? 

10 All right, if so, let's go ahead and 

11 break for lunch and then when we come back we can 

12 pick up there. 

13 And we have a queue so we'll start off 

14 with Whitney, then Daniel, Kelly, Sandy, Bob. 

15 Okay, thanks, everyone. 90 minutes, 90-minute 

16 lunch.

17 (Whereupon, the above-entitled matter 

18 went off the record at unstated time.) 

19 MR. RAMIREZ: All right, Greg, when we 

20 broke, there were a couple things that were 

21 thrown out there. I didn't know if you had a 

22 chance to get anything on the possibility of a 
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1 fourth session and then also if it's worth 

2 exploring a little bit more the idea that Chad 

3 had thrown out there.

4 So, were those things that you were 

5 able to look into?

6 MR. MARTIN: Yes, I apologize for the 

7 lodgings but I have some issues here. So I know 

8 it's rude but that's the way it'll be for now.

9 My mom's not watching unless she's 

10 watching the livestream, which I very much doubt. 

11 She's sitting there will all her friends --

12 that's my son. And they're all saying how 

13 unfortunate.

14 And so anyway, yes, we did take that 

15 back to leadership this afternoon. So on the 

16 issue of a fourth session, the Department 

17 declines to do a fourth session. Our main reason 

18 being that what we gather is that the interest in 

19 a fourth session is primarily driven by the hope 

20 that such a session would produce a plethora of 

21 new data for us to consider in making decisions 

22 moving forward. And while, as I said earlier, I 
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1 say with a fair degree of certainty, we would 

2 have more data, I don't believe that we would 

3 have all the data that you want or data in such 

4 abundance that it would inform our decisions 

5 anymore than will this session.

6 So we'll continue with this session 

7 and we're going to have to make our decisions on 

8 Thursday as to where we are based on that.

9 So I never want to eliminate 

10 discussion on anything and, certainly, people are 

11 welcome to voice their opinions but that decision 

12 is final.

13 Regarding the -- I think it was Chad's 

14 suggestion, correct?

15 MR. RAMIREZ: Right.

16 MR. MARTIN: Right. I'm not that good 

17 with names. His suggestion that we move to and 

18 in lieu -- and I believe this was the way it was, 

19 in lieu of the current metrics that would be both 

20 D/E and payment rate, that we move to the 

21 direction of the Department publishing earnings 

22 and debt. And then those numbers would be 
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1 published and schools would be required to 

2 disclose those numbers and that students, third 

3 parties would be free to put whatever parameters 

4 around those they want to.

5 Our leadership is intrigued by that 

6 idea and we're inclined to give that serious 

7 consideration. It does do a lot of things. I 

8 mean it eliminates a lot of the debate about 

9 amortization, and metrics, and such. So, it does 

10 have that advantage.

11 We would be interested to see if 

12 anybody can come up with any literature or data 

13 that would indicate if there's some type of a --

14 if we're looking at this income and debt, if 

15 there's some type of a threshold that would be 

16 applicable or, I should at least say, maybe not a 

17 threshold but some level at which it would 

18 suggest that having -- that this ratio is okay 

19 but having this much debt would not be okay, 

20 something along those lines that would support 

21 putting some type of -- contextualizing that in 

22 some way. So I throw that out.
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1 We will go back and discuss this 

2 further. We'll take a look at it tonight and 

3 tomorrow but we are very intrigued by it and I 

4 would welcome any further discussion anybody has 

5 as to whether they are in favor of it, or opposed 

6 to it, or possible pitfalls they see with it.

7 MR. RAMIREZ: Okay, great. Thank you.

8 So that's what I wanted to make sure 

9 we weren't barking up the wrong tree.

10 So with that, we did have a queue 

11 started where we had Whitney, Daniel, Kelly, and 

12 Sandy.

13 So, Whitney, do you have some 

14 additional questions or comments on that idea?

15 MS. BARKLEY-DENNEY: Yes. So I think 

16 that it's something that I'm willing to consider, 

17 as long as it's still tied to some sort of 

18 action, so as long as we do set that threshold 

19 and don't move back into a disclosure-only 

20 regime. Obviously, I think I would not be alone 

21 around the table in saying that that's a 

22 nonstarter.
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1 However, I will say my one pitfall and 

2 thing I'm concerned about and, again, this is not 

3 necessarily fatal, is generally when we do 

4 disclosures to people or we talk to them about 

5 how much debt we have -- they're going to have, 

6 we do amortize. You know if you're getting a 

7 house you do get an amortization table with that 

8 mortgage that helps you understand exactly how 

9 much you're going to pay over the amortized 

10 period.

11 And I think as we said, as Jordan said 

12 before we left, interest really can make a 

13 difference in the cost of something. And so I 

14 would just want to be careful of that. I don't 

15 know if there's a way of like figuring out what 

16 interest would trigger needing to do the 

17 amortization but I do think that's an important 

18 of consumers. I just can't think of another 

19 consumer notification where we don't include the 

20 amortization and what that debt is actually going 

21 to look like to repay.

22 MR. RAMIREZ: Okay, thank you.
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1 Daniel.

2 MR. ELKINS: I'm from the veterans'

3 community. We're very supportive of moving in 

4 this direction for numerous reasons. One, in the 

5 event that we're not able to reach consensus on 

6 what sanctions should look like, I would much 

7 rather move to this methodology because I do 

8 believe that although simple disclosures are a 

9 weaker form of accountability, disclosures pushed 

10 to consumers in this manner have a higher 

11 potential to influence decisions than the way 

12 that they currently are structured.

13 I do have faith that we will be able 

14 to find some agreement on sanctions but in the 

15 event that the Department maintains its current 

16 position, which is Title IV is not going to be 

17 connected to this in any way, I do want the best 

18 possible information submitted to the students as 

19 they look. And currently there are very similar 

20 metrics that are disclosed to students through 

21 the VA and the GI Bill Comparison Tool. So I'm 

22 very, very excited about the possibility of 
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1 having a discussion moving in this direction, 

2 away from the current metrics in place.

3 MR. RAMIREZ: Thank you.

4 Kelly.

5 MS. MORRISSEY: This is Kelly. I am 

6 very supportive of this metric. I think that 

7 it's simple for students to understand. However, 

8 I believe the one variable that would be 

9 meaningful in our moving towards this measure 

10 would be what year of earnings are we looking at. 

11 Because depending on the year of earnings, as 

12 you all know, the outcomes will be very, very 

13 different.

14 So I think although right now it 

15 appears simple, the devil is in the details and 

16 we still have to weigh in on what year we should 

17 land on in measuring those earnings.

18 MR. RAMIREZ: Would you have a 

19 suggestion on how to do that, which year or 

20 years?

21 MS. MORRISSEY: Well I think looking 

22 at the data that Marc Jerome provided we can see 
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1 that the outcomes are very, very different, 

2 depending on five years or ten years. Actually, 

3 he has six years as well.

4 So I, personally, think that it should 

5 not be any earlier than five years just because 

6 it does take students some time to establish 

7 themselves in their career pursuits.

8 MR. RAMIREZ: Okay, thank you.

9 Sandy.

10 MS. SARGE: I'll yield my time. Thank 

11 you.

12 MR. RAMIREZ: Matthew.

13 MR. MOORE: I agree with -- oh, that's 

14 loud -- with Whitney in that I think the 

15 amortization is an important piece to the 

16 discussion. 

17 So I was thinking what if we included 

18 in the format that schools are displaying the 

19 total debt to the one-year income, some sort of 

20 like monthly payment of what a ten-year payment 

21 amount would be. So then the way that that's 

22 disclosed to students, they could see debt, 
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1 earnings, and then what a monthly payment would 

2 be for that average. Just something to consider.

3 MR. RAMIREZ: Right. Just an example 

4 based on an average amortization.

5 MR. MOORE: Sure, if your total was 

6 $10,000, it might say your monthly payment is $68 

7 or whatever. So students could maybe make an 

8 additional frame of reference about what that 

9 might be for their financial situation.

10 PARTICIPANT: And the Scorecard does 

11 that right now, too.

12 MR. RAMIREZ: Right, thank you.

13 Johnson, then Sandy.

14 MR. TYLER: You know I was just 

15 looking at the Scorecard. I mean it has a lot of 

16 -- it's institution-wide. But if we're talking 

17 about people attaining four-year degrees, there's 

18 a lot of variation in what program they begin in 

19 and end in. So I'm not sure this is adding much 

20 to the disclosure that's already out there, at 

21 least for the four-year degree people.

22 I think for the people who want to 
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1 know what a welder is going to make if they throw 

2 down this amount of money or a dental assistant, 

3 it might have more value. But I think for -- I 

4 think this information is already out there and 

5 people are aware of it, to the extent that they 

6 are looking at it.

7 MR. RAMIREZ: So, Johnson, would it 

8 make a difference then if it was clear that that 

9 information would be for all programs?

10 MR. TYLER: I guess I prefer the idea 

11 of there being a metric with a consequence, 

12 rather than simply a disclosure. And I feel like 

13 this metric already exists for people who are 

14 looking for information. I don't think it adds 

15 anything to what the people are going to school, 

16 with the exception of the degree-granting 

17 programs. I think it might be more interesting 

18 for them to consider doing specific careers. 

19 They've already decided what they are.

20 Am I being clear?

21 MS. BARKLEY-DENNEY: Can I ask a 

22 clarifying question?
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1 MR. RAMIREZ: Yes, please.

2 MS. BARKLEY-DENNEY: I think there's 

3 just some confusion around the table as to 

4 whether this is being discussed as a 

5 disclosures-only regime or as a regime that would 

6 possibly, we could create a metric within it that 

7 would have to be met. And I was assuming that we 

8 were still discussing creating a metric within it 

9 that would have to be met.

10 And I just wanted to make sure that 

11 was the feeling around the table or are we 

12 discussing disclosures only? Because I think 

13 that would go to your question, Johnson, as to 

14 how comfortable you felt with this new way of 

15 looking at it, right?

16 MR. TYLER: Yes, if it's part of a 

17 metric that will actually do something, you have 

18 to pass this, you have to pass that, if you fail 

19 both something happens, then it's interesting. 

20 If it's simply information without a consequence, 

21 I don't think it's adding anything to what's 

22 already out there for the people who are looking 
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1 at this.

2 MS. BARKLEY-DENNEY: Yes and we're in 

3 the same place. I think I just assumed that we 

4 were considering it as a metric versus a 

5 disclosure; whereas, you're thinking the 

6 opposite. So yes, clarification would be good 

7 around that.

8 MR. RAMIREZ: So Whitney, when you 

9 were saying that, quite a few heads were bobbing 

10 yes to your question.

11 And Chad, I think you had an idea on 

12 that.

13 MR. MUNTZ: Yes, I was just trying to 

14 replace the current debt-to-earnings metric with 

15 this simple ratio. We can discuss, if we want, 

16 if you also keep the repayment plan in place as 

17 well, those that are repaying or not, and we can 

18 discuss what kind of ratio would be acceptable 

19 and not. I leave that open.

20 It wasn't intended to just be a 

21 disclosure-only when I proposed it. It was just 

22 intended to decrease the complexity of having all 
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1 the different interest rates and stuff like that.

2 So, yes.

3 MS. BARKLEY-DENNEY: So mark out this 

4 gray box and put this here.

5 MR. MUNTZ: Yes, that's a good idea. 

6 So that first starting gray box would be was the 

7 ratio met. Whatever that ratio is that we want 

8 to look at one-to-one, 1.3-to-one. I don't know. 

9 I don't know what the literature would suggest 

10 on that. 

11 But yes, it was just in place of a 

12 simple ratio.

13 MR. RAMIREZ: Okay. So did everyone 

14 hear Whitney's example of the chart here? Okay.

15 All right so with that understanding, 

16 then, Johnson, does that make a difference for 

17 you?

18 MR. TYLER: Yes, I guess I'm open to 

19 hearing more about Chad's idea. Yes.

20 MR. RAMIREZ: Okay, thank you.

21 Sandy.

22 MS. SARGE: I just happened to Google 
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1 debt-to-earnings ratios and there's a study done

2 by the Brookings Institute and I don't know where 

3 they fall out on anything. It's just called The 

4 Relationship Between Student Debt and Earnings 

5 and it was dated 9/23/16. So it's fairly recent 

6 and they have some good insights in there.

7 That might be a place to start, Greg.

8 PARTICIPANT: Is that the Looney 

9 piece?

10 MS. SARGE: I don't know what that 

11 means.

12 PARTICIPANT: So, I think Adam Looney 

13 wrote it.

14 MS. SARGE: Oh.

15 PARTICIPANT: Sorry. Is it written by 

16 Adam Looney? Is he the author?

17 PARTICIPANT: No, it's Bob Kelchen.

18 PARTICIPANT: Oh, it was a Bob Kelchen 

19 piece.

20 Because a lot of the treasures -- so a 

21 lot of the Brookings stuff, they aren't able to 

22 aggregate/disaggregate the debt between loans. 
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1 It's the consolidation problem.

2 So a lot of the Brookings work, 

3 they've actually -- and this is an issue --

4 aggregated the debt to the most -- the last 

5 terminal institution that was attended.

6 So it's pretty -- I want to be careful 

7 because I have a lot of respect for Brookings but 

8 that data -- and we've crunched that a lot and 

9 we've met with the authors. And so I just want 

10 to be really careful that we don't overly on 

11 data.

12 And I have a lot of respect. They're 

13 dealing with an issue that we'll get to when we 

14 get to loan repayment, which is how the heck do 

15 you handle a student who has attended multiple 

16 institutions and has multiple degree levels. 

17 It's just really hard to disaggregate the debt.

18 MR. RAMIREZ: Okay, let me get Tony 

19 and then Daniel.

20 MR. MIRANDO: Thank you, this is Tony.

21 As a few people have already said, the 

22 devil is in the details. However, I think if 
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1 we're thinking about students, I do absolutely 

2 think it's a lot cleaner and clearer for them to 

3 understand, instead of all this other metrics 

4 that they may or may not understand. So, I am 

5 very interested to see how we pull this together.

6 And I do think having an amortization 

7 example, as you mentioned, Javier, I think is a 

8 very important piece here as well.

9 And so you know we chatted real quick 

10 and I think we're good to move forward at least.

11 MR. RAMIREZ: Okay, great. Thank you.

12 Daniel.

13 MR. ELKINS: I'm not sure that the two 

14 things are mutually exclusive. Like what I mean 

15 by that is I want us all to kind of take into 

16 consideration the feedback that the Department is 

17 taking from the various sessions, i.e., we could 

18 come to a conclusion or consensus about rates or 

19 measurements, whether that's debt-to-earning or 

20 repayment, but then if we don't come to any 

21 conclusions about sanctions or consensus, then 

22 they have the ability to put forth what they 
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1 think and hope to do.

2 So whether -- obviously, I personally 

3 think that it would be in the best interest of 

4 all students at all institutions to have some 

5 sort of sanctions attached to this. But we 

6 should also bear in mind that should there not be 

7 an agreement on sanctions, how would we want 

8 quote, unquote, disclosures to look? What is the 

9 best avenue for students?

10 I think all of us agree that some sort 

11 of sanctions would be helpful to students but, 

12 should we not be able to reach that consensus, do 

13 we want to leave it to chance that we get 

14 nothing?

15 MR. RAMIREZ: And Daniel, am I to 

16 understand that keeping them separate that in the 

17 event -- well, carving out the sanctions piece 

18 for now, are you saying that you feel comfortable 

19 with this type of information out there 

20 regardless of what happens with the sanctions?

21 MR. ELKINS: Yes.

22 MR. RAMIREZ: Yes, okay. And that's a 
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1 yes from back there.

2 So Greg had put out a question 

3 earlier, right, as far as does anyone have any 

4 information on supporting documentation to show 

5 what would this ratio -- what's a reasonable 

6 ratio here?

7 Jordan.

8 MR. MATSUDAIRA: What I was trying to 

9 convey earlier is that doing things with just 

10 debt relative to your earnings is really exactly 

11 comparable to doing things with the annual 

12 payment. So I think the relative literature is 

13 still the Baum piece. I mean I think that's the 

14 same thing. It just comes back to the issue of 

15 whether debt is affordable and that's the main 

16 thing that we have available.

17 So you know whether we have the 

18 original debt principal or like annual payments, 

19 to think about affordability, to map that to the 

20 literature, I think you would still be going back 

21 to thinking about what payments would be relative 

22 to your income because that's what speaks to 
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1 affordability.

2 So I think the justification of 

3 standards would still come from the same place. 

4 Like there weren't other ideas kind of back then 

5 or in other literature that people were appealing 

6 to. So I think we'd be back to the same place.

7 MR. RAMIREZ: Can you -- does everyone 

8 know the report that Jordan is referencing? Can 

9 you give a little bit more context to that, of 

10 what that is? I saw a few heads shaking no.

11 MR. MATSUDAIRA: So this is the same 

12 Sandy Baum report that we've talked about kind of 

13 throughout that Steve referenced earlier. So the 

14 gist of it was, I think, just looking at what 

15 different studies had to say about the 

16 sustainability or the affordability of different 

17 debt levels, in a general sense.

18 MR. RAMIREZ: Ty.

19 MR. TYLER: One of the concerns I've 

20 always had about this particular metric -- system 

21 of metric creation is that we're looking at a 

22 metric that is uniform across regions, when we 
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1 have very, very different levels of income across 

2 regions for similar jobs in a way that would 

3 effectively say that if you're from a low-income 

4 area or a lower income area of the United States 

5 -- lower cost of living. I'm sorry not lower 

6 income -- lower cost of living area of the United 

7 States, you are, in a sense, discourage -- or no, 

8 institutions in higher cost of living areas of 

9 the United States would have some trepidation 

10 about potentially bringing you on as a student.

11 Part of the reason that incomes are 

12 lower in certain parts of this country is that it 

13 costs less to live there. I'm reminded of that 

14 when I think about what it costs to get around 

15 the City of New York or even Washington, D.C. 

16 when you compare that to what it costs to live in 

17 you know major city suburbs in Texas or in 

18 Appalachia. And it is not that there is also not 

19 poverty, there is that correlation, but there is 

20 a lower cost of living.

21 If what we are doing here, then, is 

22 having institutions that have certain fixed costs 
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1 in their operation that occur by the nature of 

2 being a higher ed institution, such as hiring 

3 quality faculty, and then can only marginally 

4 transfer that cost into tuition, what you're 

5 going to have is higher ratios in rural areas in 

6 certain lower cost portions of the country. And 

7 I'm curious, again, as we have talked about the 

8 need for data, is to what extent is there a risk 

9 created of harming institutions that are in these 

10 lower cost portions of the country from a uniform 

11 metric. 

12 You know the reverse isn't going to be 

13 a problem, for the most part, because you have 

14 higher income in higher income areas and you're 

15 going to have a percentage of students who are 

16 going from lower cost areas and lower cost 

17 institutions to higher cost of living areas, 

18 where their income may be higher, even though it 

19 may not be a substantial improvement of their 

20 lifestyle. But for this metric, they're making 

21 the grade.

22 I think that merits exploring and 
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1 that's part of my continued hesitancy about this 

2 idea of a uniform metric.

3 MR. RAMIREZ: All right, so thank you.

4 Greg, did you have a response on that?

5 MR. MARTIN: Yes, well I mean we're 

6 just taking comments on it now. I do have one 

7 question about it.

8 So we started with the proposal that 

9 we have a median debt -- I mean I'm sorry that we 

10 just have the debt and the earnings. But if we 

11 move to taking that and then amortizing it and 

12 coming up with an annual loan repayment, I mean 

13 aren't we, in a circular way, getting right back 

14 to a D/E metric again? 

15 I mean I just point out that because 

16 for instance, the annual earnings rate, the 

17 annual loan repayment divided by the higher of 

18 the mean or median annual earnings of the 

19 students in the applicable cohort. So you're 

20 pretty much getting to the same place.

21 I kind of realized that as Jordan was 

22 talking that you know it's pretty much going back 
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1 to -- when you said that the same -- when I asked 

2 what would be the applicable threshold and he 

3 said well, the thresholds that exist now, 

4 basically, because you're doing the same thing.

5 So I mean I just throw that out there. 

6 I could be wrong. If I'm mistaken, then I'm 

7 open for hearing why. But it just seems that if 

8 we go down that path, I just -- the rhetorical 

9 question would be why move away from D/E, not 

10 that I'm saying we shouldn't or should. I'm just 

11 pointing that out there.

12 MR. RAMIREZ: Sandy.

13 MS. SARGE: So just to make sure I 

14 understand. So basically, Jordan, if you were 

15 saying that if the threshold was eight percent 

16 that it would basically be 0.8, in essence. So 

17 it would be 0.8 of the debt to one year of 

18 earnings. Is that essentially what you're saying 

19 as it kind of comes back to that?

20 MR. MATSUDAIRA: Yes, the ratio 

21 depends on the details of what you would assume 

22 about the amortization period and the interest 
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1 rate.

2 MS. SARGE: Okay, essentially.

3 MR. MATSUDAIRA: But that's about 

4 right.

5 MS. SARGE: So assuming that what 

6 underlies that is eight percent and ten-year 

7 amortization, roughly, if we went to one-to-one, 

8 which would be very easy for students to 

9 understand, that would probably be eight percent 

10 to about 12 years, roughly, I mean just off the 

11 top of your head. Or maybe it's a little higher 

12 interest rate on a ten-year am.

13 So it's somewhere -- all of these 

14 numbers that we've been trying to sort of flesh 

15 out between 8 percent and 12 percent, and 10 

16 years and 15 years, if we ended up somewhere at a 

17 one-to-one, which would be easy for a student to 

18 understand, potentially that would get us 

19 somewhere where we've already been without the 

20 specifics and potentially gives them clarity.

21 So I haven't done the math and I'm 

22 putting Jordan on the spot by asking him to do 
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1 that kind of complicated math in his head, which 

2 I'm sure he can do. But do you know what I'm 

3 saying? 

4 If we get somewhere around there, 

5 would we be able to support it for you guys, in 

6 the sense that mathematically it comes back to 

7 the eight percent, essentially? And I may hear 

8 how that's not perfect, and I agree, but it's a 

9 starting point.

10 MR. RAMIREZ: Let me see if I could 

11 understand some of that because -- so I'm seeing 

12 a few different pieces there. So if you were 

13 able to agree on the ratio, that would clear some 

14 of the deck there.

15 But then as far as a loan payment 

16 amount that students would have an idea of what 

17 that would be, that component would be 

18 informational, right?

19 MS. SARGE: Or not even -- I mean --

20 MR. RAMIREZ: That wouldn't be part of 

21 the triggering mechanism for sanctions. It would 

22 just be more informational.
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1 MS. SARGE: Yes, and we have a loan 

2 calculator out there, right, on everything. So I 

3 would also direct students to the loan calculator 

4 that we already have existing in our disclosures.

5 So potentially, we could -- if we say 

6 you know the Department believes that the 

7 measurement of one-to-one is a good estimate of 

8 whatever, however the language is going to be, 

9 and you either fall below that or you're above 

10 that, you're better or worse. In other words, 

11 your debt is lower than one year of earnings. 

12 That's a good thing. And if your debt is higher 

13 than one year of earnings, then that's not a good 

14 thing -- however we want to say it.

15 Then, I think that would be relatively 

16 easy for a student to understand and still put 

17 the ability to go calculate an annual payment or 

18 even a monthly payment in the calculator.

19 To Kelly's point, where I think she's 

20 absolutely right where we measure the timing of 

21 the earnings. If we were to stick with what the 

22 Department's come up with now, which is I think 
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1 five and six years off of their graduation rate, 

2 that would also be a potentially good place to 

3 start. It would give new graduates some time to 

4 get their feet wet in their career and hopefully 

5 get us to a place where we -- I agree, we still 

6 should have some sort of next step. Like if 

7 you're not passing this, you need to show why you 

8 aren't. What's going on?

9 So, that's sort of where I fall. I 

10 hope that makes sense.

11 MR. RAMIREZ: Yes, so I think the way 

12 I'm understanding it then, that to your question, 

13 Greg, it does clean up a little bit because then 

14 you don't have to worry about so much of the 

15 components of the repayment piece. The 

16 information would be out there but it wouldn't 

17 necessarily be one of the triggers.

18 MR. MARTIN: Okay, right. So in other 

19 words, we wouldn't be -- you wouldn't be basing 

20 anything off the -- for purposes of evaluating, 

21 you just look at the one-to-one ratio, right? 

22 That's what I get and not -- the idea of 
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1 amortizing the loan, looking at annual loan 

2 repayment would be informational only for 

3 students, correct, for the loan?

4 MR. MATSUDAIRA: So in other words, 

5 you'd have the one -- you'd be looking at the 

6 one-to-one ration and what that shows. So if you 

7 were making any -- if we were contextualizing 

8 anything, it would be at that level and what's 

9 below is simply informational, right? Okay.

10 MR. RAMIREZ: Pamela.

11 MS. FOWLER: I think publishing the 

12 two is a good idea but I'm thinking back to the 

13 young woman who read the letter from the young 

14 lady who said she enrolled in a program because 

15 it was going to pay her way more than anyone in 

16 this room would ever think that it would pay her 

17 and it didn't. And the State of New York 

18 eventually shut the school down.

19 So I think by the Government saying 

20 this is what you're going to earn and giving you 

21 that figure, some of that might go away. But I'm 

22 concerned about how the information would be 
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1 presented at the institutional level. Some of us 

2 will do a much better job of presenting this 

3 information than others.

4 And I think -- let me go back to the 

5 devil is in the details -- that's one of the 

6 things we really need to keep an eye on, how this 

7 information is presented. Just don't put a 

8 number here and a number there and then spin both 

9 of those numbers to your advantage is my concern.

10 MR. RAMIREZ: Jennifer.

11 MS. BLUM: Well, Pamela's comments 

12 just made me just make sure again, level, set 

13 myself. I thought we were talking about 

14 something that actually the Department would be 

15 publishing. It's the data but I thought it was 

16 -- so I don't think it would be us because I 

17 agree with you, Pamela. But I don't think it 

18 would be us. I think it would be the Department 

19 who would be doing the legwork.

20 But I will say, just as my point of 

21 view on all of this, is that we're sort of back 

22 -- I keep thinking about what Johnson said about 
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1 what our purpose is here, which I agree with. 

2 And I just think that it doesn't matter -- and 

3 I'm not trying to be negative but it doesn't 

4 matter what the metric -- like okay, I do think 

5 that that's a streamlined approach or whatever 

6 but I don't know what it means until I see all of 

7 the data, in terms of relative to what.

8 And so I just feel like, you know I 

9 keep coming back to it, but I just feel like it's 

10 so important for the Department to get the data, 

11 to create, perhaps, a regulation that allows them 

12 to get the data, whether it's that we're doing a 

13 debt-to-earnings and a loan repayment rate or 

14 whether that we're using Chad's idea, which I do 

15 like, either way to get to like the punchline, if 

16 you will, of what the value is of the data, we 

17 have to see the data.

18 So I think it's a really important 

19 conversation. I support the simplicity of what 

20 Chad's proposing but I do want to add that I 

21 still think that in terms of what the value is of 

22 the exercise, we don't know yet and won't know 
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1 until the Department has a year or two of data so 

2 they can analyze it, digest it, understand where 

3 the bad actors fit in relative to the good actors 

4 in order to create because I do think I actually 

5 support the concept of an above this or below 

6 that concept, ultimately. I just don't think, at 

7 this table, we have the expertise or the 

8 information to be able to do that.

9 MR. RAMIREZ: So if I understand what 

10 you're saying is that even if we did have another 

11 session, it would be irrelevant as far as 

12 exploring this.

13 MS. BLUM: Well actually I spoke to 

14 this before lunch where I said that actually I 

15 would have supported it but it's moot. So I 

16 really don't want to talk about the fourth 

17 session if it's not happening.

18 But I would have supported a fourth 

19 session in order to create that frame -- because 

20 we can't do it in the next two days, I don't 

21 think, the framework that would have given the 

22 Department the ability to get the data, to set up 
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1 the discretion that would have allowed them to 

2 then, whether it's a mean median average, to then 

3 set themselves a couple of years from now. You 

4 know that they were going to do a notification of 

5 this meets the measure, this doesn't meet the 

6 measure.

7 So I do feel like there would have 

8 been -- my own view and the Department made a 

9 decision so it's moot, is that there would have 

10 been value for a fourth session but for a 

11 different reason than collecting the data.

12 MR. RAMIREZ: Well I guess the 

13 question that I'm really trying to get at here is 

14 if I understand you correctly, we don't have the 

15 time in order to fully explore, even though it 

16 may be a simplified method, for us to reach 

17 agreement by Thursday.

18 MS. BLUM: I mean I don't want to 

19 prejudge because I've actually always had a 

20 positive attitude about the whole -- and I am a 

21 big believer in actually the value of sitting 

22 around as we have for the last couple of months 
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1 because I do think, and I hope the Department 

2 agrees, that we've provided a lot of important 

3 information for them to do their work, regardless 

4 of whether consensus is reached.

5 So I don't want to sound -- I don't 

6 want anybody to have the impression that this has 

7 been a negative exercise or that we're not going 

8 to reach consensus and then oh, well. 

9 But that was my point on the fourth 

10 session is that it wasn't necessarily that I 

11 thought we would have data and then go ah-ha. It 

12 was that we could set a framework that would 

13 allow the Department to collect data. And we 

14 could have reached a decision, perhaps, over the 

15 course of a month, over whether it's a 

16 streamlined method like Chad proposes or whether 

17 it's a direct debt-to-earnings and repayment rate 

18 one. But either way I think we are, frankly, 

19 running out of time. We haven't even discussed 

20 the loan repayment rate yet.

21 So I mean we are beginning to run out 

22 of time to have the conversations of what the 
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1 framework would look like.

2 MR. RAMIREZ: Okay. 

3 Chris Gannon.

4 MR. GANNON: I appreciate everybody 

5 entertaining the idea of having a fourth session. 

6 I really do appreciate that.

7 I think the burden of not just like 

8 data collection but the presentation of the data 

9 has been put on negotiators during this entire 

10 session. 

11 And I just have a question for the 

12 Department. Why are we even renegotiating a rule 

13 if we don't have the data to make an informed 

14 decision?

15 MR. MARTIN: Well, going back to why 

16 we're renegotiating the rule, I'm the first one 

17 to say that any decision should be informed by as 

18 much data as you can possibly collect for it.

19 Part of the reason why we're back here 

20 is a fundamental difference in policy, in outlook 

21 as to what this should be between a previous 

22 administration and the one you have now. And I 
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1 think that's not going beyond what I should be 

2 saying. That's simply fact. 

3 You know I mean this represents, this 

4 effort to come back to the table and renegotiate 

5 this rule, represents where the leadership of the 

6 Department is. And that's just a reality.

7 I agree that with all the details 

8 we're looking at it would be better to have more 

9 data. I would be the first to concede that but I 

10 can't make data appear that we don't have access 

11 to or that we can't generate, given our current 

12 resources. We're not hiding anything from you. 

13 It's not like we have all these data runs that we 

14 go back and look at every day without sharing 

15 with you. We don't have it available.

16 So, we're tasked with making decisions 

17 that we have to make with what we've got. It may 

18 not be 100 percent ideal but it is where we are. 

19 So if --

20 To answer your question, because your 

21 question seemed to be well, why, starting with 

22 the premise with why we are back here. I think I 
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1 have explained that previously, in the previous 

2 two sessions, and I am reiterating it again. I 

3 think it's a pretty straightforward answer. You 

4 may or may not agree with it but --

5 MR. RAMIREZ: Okay, thank you.

6 Daniel.

7 MR. ELKINS: No.

8 MR. RAMIREZ: All right. So then, I'm 

9 going to need some help then as far as direction 

10 goes because if it looks like the simplified 

11 ratio route isn't something that this group can 

12 work towards in the next couple days, do we 

13 continue down looking at the calculating 

14 initiating loan payment rates on 668.406, where 

15 Greg started?

16 Okay. So, what modifications do we 

17 need to make here in order to make this work, 

18 then, looking at page 8 of Issue Paper 3?

19 MS. SARGE: May I ask a question?

20 MR. MARTIN: Yes, you're welcome to 

21 make comments. I'm not going to read over the 

22 whole repayment rate. I will not subject you to 
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1 that.

2 MR. RAMIREZ: Yes, go ahead, Sandy.

3 MS. SARGE: This is Sandy. I just 

4 have a question for the group.

5 For those of you more experienced in 

6 the past history of loan repayment rate, maybe 

7 you could -- somebody could summarize for us what 

8 the issues in the past have been, just so that we 

9 already know sort of -- Marc, come on up and tell 

10 us where there's been issues.

11 MR. JEROME: It's Marc. I'll keep it 

12 short. First thing I believe the Department and 

13 many policy people moved away from default to 

14 loan repayment because there was a concern that 

15 institutions were able to do certain things that 

16 artificially lowered the default rate.

17 So that was the first thing. I'm not 

18 sure I agree with that reasoning but that was 

19 definitely a reality.

20 The second thing was, in the past few 

21 years, there was great concern about students not 

22 paying down their principal and being overwhelmed 
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1 by their student debt. And in the GE-1, the 

2 Department published a rule only applying to GE 

3 institutions that essentially had a 35 percent 

4 repayment rate. In borrower defense, with a 

5 slightly different formula, the Department 

6 published a rule and this one only applying to 

7 for-profit institutions that had a 50 percent 

8 rate.

9 In all of those rules, from my 

10 perspective, the repayment rates had two issues 

11 or problems, which made it very difficult to come 

12 up with an absolute number. The first problem is 

13 that they seem, in my opinion, to be directly 

14 related to student demographics. So you are 

15 essentially punishing schools that enroll lower 

16 income students and I've looked at that a number 

17 of times.

18 The second issue is that, which is 

19 important for me, that it's a metric the 

20 institution cannot affect at all, where I 

21 actually believe with default rates, even though 

22 it's difficult, if the Department gave resources 
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1 to institutions, the Department and the Federal 

2 Government could lower the national default rate 

3 by half.

4 So, that's enough from me.

5 MR. RAMIREZ: Jennifer.

6 MS. BLUM: So I have a number of 

7 questions and, Sandy, this will also get to 

8 yours.

9 Because there are so many different 

10 loan repayment rates now, and I know the 

11 Department is relying on the Scorecard one it 

12 sounds like, but there have been now 

13 historically, well, I mean three at the 

14 Department, one in the House bill, and the Senate 

15 has -- you know it's like a myriad of different 

16 formulas.

17 And we've looked at a lot of them and 

18 so I have a number of questions and I just want 

19 to get clarification because -- actually even 

20 under the Scorecard. So bear with me, if that's 

21 okay. And you can cut me off, Javier, whenever 

22 you want but I'm sure everybody has the same 
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1 questions I do.

2 So as Marc said -- let me just preface 

3 by saying as Marc said, one thing that is 

4 problematic about loan repayment rates, if 

5 they're not structured correctly, is that almost 

6 all of them, except for maybe the House bill, 

7 speak to create a new behavior in order to create 

8 a rate that doesn't reflect borrower behavior, 

9 servicer behavior, or Department behavior and yet 

10 the institution is stuck with the rate.

11 And so while I might disagree a little 

12 bit that the institutions have like counseling. 

13 You know there is a role for the institution, 

14 certainly, on how the student then repays because 

15 there is certainly exit counseling, which we 

16 believe needs to be really robust. And so I'm 

17 not saying the institutions don't have a role but 

18 there are a lot of other actors in the repayment 

19 piece that aren't reflected in the Scorecard's 

20 rate adequately, in my view.

21 And so let me ask the first question. 

22 IBR. So the Department -- I mean the 
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1 institutions didn't create income-based 

2 repayment. Congress and the Department created 

3 income-based repayment. And the students and the 

4 servicers are definitely using income-based 

5 repayment. We can have a long policy 

6 conversation, which I discourage us from having, 

7 about whether income-based repayment is a good 

8 technique or a bad technique but it's just sheer 

9 fact that a lot of students are now opting into 

10 income-based repayment. 

11 And if they are considered, and I love 

12 the term here in the numerator of the 

13 Department's formula, it says active repayment. 

14 Most servicers will determine that a borrower is 

15 considered in active repayment in an income-based 

16 repayment plan if they are compliant with 

17 whatever their requirements under the 

18 income-based repayment plan is. But the 

19 Department, I don't think, is favorably treating 

20 -- but I want to get confirmation the Department 

21 is not favorably treating an IBR student here --

22 borrower here, unless they are paying principal.
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1 Okay, so that's point number one, just 

2 in terms of inconsistency among -- so active 

3 repayment, by the way, you've got to change that 

4 road because that's misleading. I mean I don't 

5 know what the word is but it's not active 

6 repayment because there are lots of people in 

7 active repayment, which gets me to the next 

8 question.

9 I have two questions relating to 

10 interest. The first one is capitalization. So 

11 when you talk about -- you don't use, which is 

12 interesting because back in GE-1 you had a term 

13 original outstanding principal balance. Here, 

14 you've deleted the word principal balance and I 

15 think your refer to something -- I think you 

16 refer to outstanding originating balance or 

17 something along those lines, original outstanding 

18 balance.

19 Original outstanding balance, are you 

20 including just principal or are you capitalizing? 

21 Are you creating a point in time where the 

22 interest, the original interest has been 
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1 capitalized into the principal?

2 It's a really relevant question 

3 because if you, even at the bachelor level, and I 

4 know that graduates are at the table, and even at 

5 the bachelor level and we'll go back to the 

6 associate's and bachelor story where is a student 

7 has an associate and then they become a bachelor, 

8 they will have had, and especially with unsub 

9 loans, which students do have, in addition. 

10 But there is a question about whether 

11 the interest capitalizes, when it capitalizes to 

12 become part of the principal payment. And so how 

13 you treat that at the time that -- your starting 

14 point is relevant to whether a student will be 

15 considered in active repayment or not. So that's 

16 a second question.

17 A third question is, and this isn't 

18 going to be as true at the undergrad level but 

19 even at the undergrad level --

20 MR. RAMIREZ: Jennifer, let me pause 

21 you just so that we can try to get some of the 

22 responses.
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1 MS. BLUM: Okay.

2 MR. MARTIN: Well, continue with the 

3 third question for now.

4 MS. BLUM: Yes, because it's tied to 

5 the first -- tied to this one.

6 MR. RAMIREZ: Okay, go ahead.

7 MS. BLUM: The next question is for a 

8 bachelor student who graduates, if they have, 

9 over time, and I think we're in fifth or sixth 

10 year repayment here, anyway, if they are paying, 

11 and again, this goes back to the active 

12 repayment, servicers will often say that if 

13 you're paying interest down -- and again, I'm not 

14 saying what the rate should be. I'm just asking 

15 questions to understand what the rate should be.

16 If they're paying down interest every 

17 year but they are not hitting principal, that's 

18 not -- that's a negative treatment. That's not 

19 -- even though it is active repayment.

20 MR. MARTIN: That is. You have to pay 

21 down $1 of principal.

22 MS. BLUM: So that's it for now.
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1 MR. RAMIREZ: Okay, Tim.

2 PARTICIPANT: I had a follow-up 

3 question.

4 MR. RAMIREZ: Oh, I'm sorry. Go 

5 ahead, Rozmyn.

6 MS. MILLER: Do we have any idea --

7 because I hear you Jennifer and I'm wondering if 

8 there's an idea of how many borrowers are in an 

9 income-based repayment versus a forbearance 

10 situation. Because certainly we wouldn't want to 

11 get into a place where we're counting people in 

12 forbearance as being in repayment.

13 I mean I take your point on IBR and I 

14 was just wondering if we had any contrast between 

15 those.

16 MS. BLUM: It's a really good 

17 question. And related to that, by the way, if 

18 you're paying zero on income-based repayment, I 

19 think that's a different conversation than if 

20 you're paying something on income-based 

21 repayment, by the way.

22 MR. RAMIREZ: Okay, Tim.
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1 MR. POWERS: This is Tim, for the 

2 record. So yes, most of my questions were the 

3 same ones that Jennifer has.

4 I do want some clarification, though, 

5 because I'm just trying to figure it out. So 

6 I'll try to put this in just normal terms, as my 

7 brain tries to understand them.

8 So on the Scorecard, right now you 

9 essentially get a credit if a student -- a credit 

10 as an institution if one of your students is 

11 paying at least $1 off of their principal within 

12 three years. 

13 My understanding of principal in this 

14 case, meaning the capitalized amount that starts 

15 at the beginning of the repayment cycle, so six 

16 months after leaving school. 

17 That's my understanding of principal 

18 in that case, not the principal that the student 

19 took out. Let's say you took out $20,000 but 

20 it's an unsubsidized amount so it's $23,000 by 

21 the time you graduate or whatever. It would be 

22 the principal, in that case, is the $23,000, 
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1 right?

2 MR. MARTIN: It's the -- I was just 

3 checking with my expert over there, Brian. It's 

4 the amount -- so you're correct. It's the 

5 balance at the time you enter repayment. So 

6 that's a correct assertion. So it would include 

7 that interest that would capitalize at that time 

8 when you went into repayment.

9 MR. POWERS: Okay. So then my sort of 

10 clarification, I'm just hoping I can get some 

11 guidance on this is that I don't see any 

12 three-year, or five-year, or any sort of time 

13 stamp on when an institution would or would not 

14 get credit, if you will, on when a student starts 

15 to pay back.

16 So it's just a little bit confusing to 

17 me on when a student would be sort of counted to 

18 be in active repayment on their loan if, again, 

19 they're in an IBR program and they're in negative 

20 amortization to start with, or whatever it might 

21 be.

22 So I didn't see anything in there. 
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1 Maybe I missed it. But I'm wondering if -- and 

2 this is, I guess, really the question. Is this 

3 intended to be the same metric as the one on 

4 Scorecard or are there minor differences? I 

5 guess that's really the question.

6 MR. MARTIN: You know hold on a 

7 minute. Can we take a purpose break for about 

8 two minutes?

9 MR. RAMIREZ: Yes, why don't we take a 

10 ten-minute break?

11 (Whereupon, a short recess was taken.)

12 MR. RAMIREZ: All right, Greg, you 

13 have a response for us?

14 MR. MARTIN: Yes, so I've brought 

15 Brian Fu (phonetic), one of my colleagues who 

16 works with our data and also an expert on the 

17 Scorecard and repayment rate.

18 So he's up here to answer any 

19 questions about the Scorecard or rather the 

20 repayment rate that we've used here. I would ask 

21 you to only direct technical questions to Brian 

22 and he will entertain those questions.
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1 And hopefully, we will get the answers 

2 that you need.

3 MR. RAMIREZ: Okay and if we could, 

4 Tim, would you mind restating the question that 

5 you had regarding is it supposed to be the 

6 Scorecard or is it a slight variation; if so, 

7 what is that?

8 MR. POWERS: Yes, I mean that's really 

9 the gist of it, which is the way I'm reading the 

10 proposed language is just slightly different from 

11 how I read the language in the Scorecard about 

12 how you define what would be a sort of successful 

13 active repayment.

14 And I'm just really wondering if that 

15 is just sort of a language oversight and whether 

16 it's intended to be the same metric or there are 

17 some differences in those.

18 So that's really sort of the thrust of 

19 it, thanks.

20 MR. FU: For the record, this is 

21 Brian. Thanks for the question. 

22 The intention is for this to sort of 
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1 mirror the College Scorecard methodology only at 

2 the program level. I think there's one --

3 there's a couple words that were just -- I think 

4 it says fifth or sixth years after. If you kind 

5 of take out or sixth you'll get very close to 

6 what the College Scorecard has.

7 MR. RAMIREZ: Go ahead. State it for 

8 the record.

9 MS. BLUM: Sorry. This is Jennifer. 

10 So but for the purposes of this 

11 Scorecard -- I mean not Scorecard, this metric, 

12 sorry, are we looking at fifth and sixth? 

13 Because that is a fundamental question. What 

14 years of repayment are we looking at?

15 MR. FU: So this is Brian for the 

16 record. For this, we are looking to do the same 

17 thing as Scorecard. So it's always the fifth but 

18 it's a weighted average of two consecutive 

19 cohorts.

20 So two fifth-year cohorts combined 

21 together gives you the repayment rate for a 

22 double cohort.
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1 MS. BLUM: Can I just suggest, could 

2 we say that? Just because that's way more clear, 

3 actually.

4 MR. FU: Yes.

5 (Laughter.)

6 MR. RAMIREZ: So I guess the question 

7 would be well, we can say that. Who is going to 

8 capture that and change the language?

9 But then does that work for everybody? 

10 Is that something that the group is agreeable 

11 to?

12 MS. BLUM: Can I ask another -- sorry, 

13 this one just occurred to me. Isn't the 

14 Scorecard the one that's published three-year? I 

15 mean I know you do three, five, seven but isn't 

16 the one that's published on the Scorecard a 

17 three-year rate?

18 MR. FU: This is Brian. We have a 

19 consumer tool in which we feature the three-year 

20 repayment rate to consumers.

21 MS. BLUM: Most people, I mean just --

22 again, this is Jennifer.
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1 I would say that most consumers think 

2 of that as the Scorecard. I mean I'm just saying 

3 what you publish out there is what most consumers 

4 -- it's just -- I mean, frankly experts around 

5 this room who know that there is backroom data 

6 that includes the fifth and seventh years, as 

7 well as the third year.

8 So I do want to say because that is a 

9 noticeable difference. And I support it, by the 

10 way. I'm happy that fifth year is -- you know I 

11 think that that's a more real repayment rate. 

12 But just for the record, I do think that's a 

13 distinction between the institutional Scorecard, 

14 at least what's published and what's being 

15 discussed here.

16 MR. RAMIREZ: Okay, Marc.

17 MR. JEROME: So Brian, first thanks 

18 for being here because we had a lot of Scorecard 

19 questions. And we all just learned -- I was 

20 unaware that certificate institutions are not on 

21 the Scorecard.

22 MR. FU: This is Brian. So, again, 
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1 this is to Jennifer's point, sort of what's in 

2 the Scorecard data and what's in the Scorecard 

3 consumer tool are two different things.

4 So in the College Scorecard data sort 

5 that we have an API and we have a backend sort of 

6 database, which is available to the public. We 

7 have one, three, five, and seven repayment rates. 

8 The consumers can only see three-year repayment 

9 rates.

10 Similarly, we only show 

11 degree-granting institutions on the consumer 

12 side. However, repayment rates and other data 

13 are available for essentially all of the Title IV 

14 institutions.

15 MR. JEROME: So one follow-up 

16 question, which I'm not sure if it was before 

17 your time of the Scorecard.

18 When the Department proposed and 

19 implemented the 50 percent repayment rate and 

20 borrow defense, I did an analysis which surprised 

21 me that showed two things.

22 An unevenness in the data that we all 
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1 would expect at three years, five years, and 

2 seven years. Institutions' repayment rates go 

3 up. But I noticed that many institutions had 

4 significant declines in the fifth year compared 

5 to the third year and it made me question, number 

6 one the integrity of the data, number two was 

7 there something macro going on either with IBR 

8 coming in at that time or Tim and I just had a 

9 discussion about traditional students leaving 

10 their parents' help. But it was very odd for me 

11 to see the repayment rates coming down in the 

12 fifth year compared to the third year.

13 MR. FU: For the record, this is 

14 Brian. And sorry, this is before the 2016 

15 republish or after the 2016 republish?

16 MR. JEROME: It was definitely before. 

17 My comments were before. I don't know if I 

18 reran it after. But my understanding with the 

19 republish, which were the rates were then 

20 inflated by 20 percent and came down, my 

21 understanding they all came down about that same 

22 20 percent. So, it should be -- the data, I 
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1 haven't checked it, but it should be the same and 

2 the Department should be able to confirm what I'm 

3 asking.

4 MR. FU: Sure. I don't have those 

5 data on the top of my head. But what I do recall 

6 from just looking at aggregate data, sort of the 

7 weighted average repayment rate across all 

8 institutions is that it has been slowly declining 

9 since 2009 and a lot of that may have to do with 

10 -- we could hypothesize -- IBR, the recession.

11 So in looking at just, for example, 

12 the three-year repayment rate, it has gone down 

13 slightly. So to the extent that you could 

14 compare a five-year to a three-year of the same 

15 cohort, I don't know what those would look like. 

16 I can confirm what you're talking about if 

17 that's helpful but --

18 MR. JEROME: Thank you so much.

19 MR. FU: -- for further context, 

20 that's the general trend.

21 MR. RAMIREZ: Okay, any other 

22 questions for Brian?
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1 Because the next thing I'm going to 

2 ask you all, then, is that with that information 

3 what tweaks do we need to make to 668.406 in 

4 order to make it acceptable.

5 Jennifer.

6 MS. BLUM: Sorry. Sorry but this is 

7 -- we've spent so much time on this that I feel 

8 like it's -- so I have a question about the 

9 treatment of deferment. Actually I have two 

10 questions but I have one about the treatment of 

11 deferment.

12 I wasn't sure --

13 MR. RAMIREZ: Okay, let me pause you 

14 just for a second. So are we done with Brian

15 then? Could we get him out of the hot seat.

16 MS. BLUM: No. I think Brian's going 

17 to have to answer it, is my guess.

18 MR. RAMIREZ: Okay, okay, okay.

19 MS. BLUM: No offense, Greg.

20 MR. MARTIN: None taken.

21 MS. BLUM: On page ten you have, and I 

22 think it's in the section -- yes, it's on the 
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1 section on exclusions. And it just might be good 

2 if people know where I'm referencing. It's 

3 little -- its Romanette iii.

4 It says the borrower was enrolled in 

5 any other eligible institution for at least 60 

6 days at the institution or at another institution 

7 during the time of measurement.

8 So I want to ask what during the time 

9 of measurement means. I think I know what you're 

10 going to say.

11 So let me add a second -- well, do you 

12 want to answer that and then I'll ask the second 

13 question that was related to it still on 

14 deferment?

15 Go ahead and answer the question.

16 MR. FU: This is Brian, for the 

17 record.

18 During the time of measurement is the 

19 end of the fiscal year of the fifth fiscal year 

20 after repayment. So if you were in a deferment 

21 status at that time, that's also where we measure 

22 your loans and default status.
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1 MS. BLUM: Okay, so that's literally a 

2 moment in time.

3 MR. FU: This is Brian. Yes, it's 

4 literally a moment in time.

5 MS. BLUM: Which takes me to my next 

6 question, which is so -- and we've really -- this 

7 is an issue that I think everybody because this 

8 include bachelor degrees and so if you go on to 

9 graduates, let me play out a scenario and you can 

10 answer the question.

11 If a borrower graduates from their 

12 bachelor's program and starts repaying when 

13 they're supposed to start repaying. And let's 

14 say they start and they're in active repayment. 

15 When I say active repayment I actually do mean 

16 they are actually hitting principal in the first 

17 couple of years after they graduate from their 

18 bachelor's program. And then they decide to go 

19 back and get their master's. How is that student 

20 -- so that student's being excluded, even though 

21 they did hit active repayment from the 

22 institution from which they attended the bachelor 
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1 program. They did hit repayment in an active way 

2 but because they decided to go back to master's, 

3 they're being excluded.

4 It's not necessarily a Scorecard 

5 question. That's true, although I'd be 

6 interested to know how they are treating this for 

7 the purpose of the Scorecard but it is a 

8 go-forward question on how are you going to 

9 treatment deferment.

10 Because I understand the argument for 

11 exclusion and certainly that's better than a 

12 negative treatment but some of those students who 

13 are in deferment will have been in active 

14 repayment, which is a positive thing. So I just 

15 want to understand.

16 And the snapshot in time, and we see 

17 it even with cohort default rates, it is -- it's 

18 an issue. And so I just want to understand how 

19 it's being treated -- how it would be treated.

20 MR. FU: This is Brian. From a 

21 technical Scorecard methodology perspective, it's 

22 just a moment in time. And if you're in school 
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1 or in the military at the time, you're out. 

2 That's how it works now.

3 MR. RAMIREZ: All right, Jeff. I have 

4 Jeff, then Johnson.

5 MR. ARTHUR: Yes, this is Jeff for the 

6 record. Just a quick question for Brian, while 

7 he's here.

8 We're going to be talking about an 

9 appropriate repayment rate threshold before long 

10 and I wondered if it would be possible, something 

11 I think it would be pretty straightforward, to do 

12 a regression analysis between the repayment rate, 

13 the five-year repayment rate in the database 

14 against the socioeconomic diversity score, which 

15 is the Pell percentage. I think that's what that 

16 is, is the Pell percentage. I think when we get 

17 to that point, it's going to be helpful to 

18 understand the impact of the socioeconomic 

19 diversity on the repayment rate. And that may 

20 help us at appropriate repayment rates that may 

21 need to be adjusted by that score.

22 MR. FU: I think we can do it. It 
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1 needs to be submitted as a data request. I don't 

2 know how much time that would take. I can find 

3 out. I'm not going to obligate our people but 

4 yes, send that to Scott as a data request and 

5 we'll see if we can.

6 MR. RAMIREZ: Okay, Johnson.

7 MR. TYLER: Yes, this is just more of 

8 a comment. If a person was not repaying -- if 

9 they were in repayment but weren't paying down 

10 the principal and then they went to school the 

11 day before the snapshot occurred, they'd be in 

12 deferment. They wouldn't get counted as well, 

13 correct?

14 MR. FU: Yes, this is Brian. It's 

15 just -- exclusion is based on the day.

16 MR. TYLER: Okay, right. Okay, thank 

17 you.

18 MR. RAMIREZ: Did everyone understand 

19 that response? Could you go and say the 

20 response? It sounded like Johnson was really 

21 clear but I think there may be some folks in the 

22 room that weren't quite clear on that.
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1 MR. FU: This is Brian. So what's 

2 written here is different from Scorecard and the 

3 difference is the 60 days. Can I read that, 

4 actually?

5 The borrowers -- so this is iii, 

6 triple i, the borrowers enrolled in any eligible 

7 program for at least 60 days at the institution 

8 or at another institution during the time of 

9 measurement. So there's some ambiguity there 

10 that we'd have to resolve.

11 But from a -- I guess if we're asking 

12 for how Scorecard is currently working, it's just 

13 a snapshot of one moment of time is whether you 

14 go into exclusion or not. This is a little bit 

15 different.

16 MR. RAMIREZ: Jordan.

17 MR. MATSUDAIRA: Sorry, there's a lot 

18 of feedback.

19 One of the things I wanted to say in 

20 response to Jeff's question in a follow-up with a 

21 question to Brian is you know just looking at the 

22 difference in outcomes across institutions with 
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1 different shares of Pell students can be a little 

2 bit misleading because you know if it turns out 

3 to be the case that low-income students just 

4 happen to have kind of lower quality institutions 

5 that are located nearby them, then that can 

6 create the appearance that their poor outcomes at 

7 those institutions are actually due to their 

8 socioeconomic status, rather than difference in 

9 quality in the institutions that students are 

10 attending.

11 So I just wanted to ask Brian if you 

12 could refresh my memory about whether a repayment 

13 rate is something that is reported differentially 

14 in the Scorecard by Pell recipient status. And 

15 if so, I'll follow-up with a data request that, 

16 in addition to looking at the aggregate repayment 

17 rate difference across those institutions that 

18 we also be sure that we compare differences in 

19 the repayment rates of non-Pell students across 

20 those institutions, which would not kind of be --

21 which would kind of provide evidence about 

22 whether it's really due to demographics or 
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1 quality of institutions.

2 MR. FU: It would be both sides.

3 MR. MATSUDAIRA: Exactly.

4 MR. FU: This is Brian, for the 

5 record. Yes, there are disaggregates that 

6 include Pell and non-Pell completers, 

7 non-completers. It includes by gender and some 

8 other demographic fields. So we could look at 

9 those as well. So we welcome again, email Scott.

10 MR. MATSUDAIRA: So I'm very 

11 interested to hear that and I basically echo 

12 Jordan's request. My only comment is, since I 

13 was a little involved with the error in the 

14 original repayment rate, I recall when I tried to 

15 download by Pell for completion repayment I did 

16 not have confidence in the data and I don't 

17 remember why. And I don't know -- has anyone 

18 else looked at it?

19 So I just would ask the Department to 

20 really look at that.

21 MR. FU: This is Brian. My suspicion 

22 is that we do apply some privacy standards. So 
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1 to the extent that either your Pell or your 

2 non-Pell n size is not -- you might be getting a 

3 very small subset. So we'll go back and look, 

4 see if we can do something more in-depth.

5 MR. MATSUDAIRA: I'm now remembering. 

6 Just to be more specific, I remember trying to 

7 look at completion rates at more competitive 

8 institutions, where my assumption was that Pell 

9 students would graduate at a little bit lower 

10 rate. I was looking where my daughters were 

11 applying. They were applying to a couple of very 

12 competitive institutions. And I remember seeing 

13 the data being identical for Pell and not Pell 

14 and saying it can't be right.

15 So I'm just being constructive. I 

16 guess you'll look at it again.

17 MR. FU: Yes, this is Brian for the 

18 record.

19 Again, please send them to Scott just 

20 for the process point.

21 MR. RAMIREZ: Okay, Jennifer.

22 MS. BLUM: Sorry, I just remembered 
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1 another question. It goes back to -- it's sort 

2 of the reverse of the certificate.

3 When you said that -- so I just want 

4 to make sure I understand it. So the Scorecard, 

5 the published Scorecard is just at the degree 

6 level. Does it include certificate-level debt on 

7 a loan repayment rate? I mean is it --

8 MR. FU: This is Brian. So the 

9 College Scorecard repayment rate reflects anybody 

10 at the institution that went into repayment in a 

11 certain fiscal year, regardless of what type of 

12 program they were enrolled in, including 

13 different academic levels.

14 MS. BLUM: So let me just take it to a 

15 different place. So a bachelor's -- so for the 

16 bachelor-level loan repayment rate, does that

17 include, because it's far enough out, especially 

18 at five and seven, does it include debt that 

19 might have been acquired in a master's program in 

20 futuristic -- obviously, they have to have -- I 

21 mean it has to be known debt at that point. But 

22 does it include -- so if you're publishing for a 
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1 four-year degree institution a loan repayment 

2 rate, will you have factored in master's level 

3 debt -- because your disaggregating somehow.

4 MR. FU: Yes, this is Brian for the 

5 record. There are no master's level loans or 

6 above a baccalaureate loan --

7 MS. BLUM: Okay.

8 MR. FU: -- loans that are counted in 

9 the repayment rate. That's correct.

10 MS. BLUM: And then one final 

11 question, which I can't believe I didn't ask 

12 first.

13 How in the Scorecard, and I know you 

14 have talked -- I know the Department I think has 

15 talked about this before. But how in the 

16 Scorecard do you handle consolidation, in terms 

17 of breaking out between institutions?

18 MR. FU: This is Brian, for the 

19 record.

20 For institutions -- if a student went 

21 into repayment in two different institutions and 

22 then consolidated those loans, we will measure 
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1 the percentage of that consolidated loan that can 

2 be attributed to each institution and allocate 

3 those loans accordingly.

4 And then to the extent that their 

5 balance on the consolidated loan would reflect 

6 the percentage of the loan that we attribute to 

7 the individual institution, that's how we make 

8 our calculation.

9 MS. BLUM: I'm just trying to think 

10 about how that works with capitalized interest. 

11 I'm so not an expert in this, so I'm grappling 

12 here myself.

13 MR. FU: This is Brian, for the 

14 record.

15 So any capitalized interest that was 

16 going into the consolidation would be attributed 

17 to the capitalized interest of that associated 

18 loan.

19 MS. BLUM: Thank you.

20 MR. RAMIREZ: Any other questions for 

21 Brian?

22 (No audible response.)
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1 MR. RAMIREZ: All right, thank you, 

2 Brian.

3 That was a lot of information. What 

4 do you all want to do with that information?

5 (Laughter.)

6 MR. RAMIREZ: I mean is it information 

7 that is helpful for us to tweak something here 

8 and make this work or is that information that 

9 you need to digest?

10 I think it's being digested. So all 

11 right, then we will hold off on this then. But I 

12 think that that was the last piece under debt 

13 calculations. Is that accurate?

14 MR. MARTIN: Yes, that was the last 

15 for Issue Paper 3.

16 MR. RAMIREZ: All right. So let's do 

17 this, then. Let's take another ten-minute break 

18 and then we'll come back and I believe we're 

19 going to be picking up with appeals.

20 MR. MARTIN: Yes, Issue Paper 5, 

21 correct. Yes, correct.

22 MR. RAMIREZ: All right, so let's take 
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1 a ten-minute break.

2 MR. MARTIN: It should not take a long 

3 period of time to go over it.

4 (Whereupon, a short recess was taken.)

5 MR. RAMIREZ: Okay. So, yesterday Jeff 

6 had thrown out an idea as far as the earnings 

7 metric, that the earnings metric would be -- a 

8 way to look at that would be to take the top 75 

9 percent and then use that medium or mean number 

10 based on Social Security data. And Jeff wanted 

11 to share with us that that wasn't just a "SWAG" 

12 number, right, a "scientific wild ass guess" 

13 number, but there was actually some rationale 

14 behind that.

15 So, Jeff would you want to share with 

16 us where that idea came from?

17 MR. ARTHUR: Sure. One of the big 

18 factors is if you look at the Department of Labor 

19 data on college graduates that work part time --

20 and they've got figures for a variety of reasons 

21 -- but by choice, the data on college graduates, 

22 21.7 choose to work part time. That's a huge 
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1 percentage.

2 MR. RAMIREZ: I'm sorry. What was that 

3 percentage?

4 MR. ARTHUR: 21.7 percent part time. 

5 And that certainly skews wages.

6 Then if you look at with regard to 

7 gender pay discrimination, the Institute for 

8 Women's Policy Research they show that there's a 

9 20 percent wage difference for women with the 

10 same education and job description.

11 The Economic Policy Institute has data 

12 that measures pay discrepancy in minority college 

13 graduates, differences as much as 20 percent.

14 When you look at unreported wages, 

15 there's a research paper titled "America's 

16 Undergraduate Economy" that estimates 18 to 19 

17 percent of all wages are not reported to the IRS 

18 in the United States.

19 Consider maternity leave. The Census 

20 Bureau indicates the median age for the first 

21 birth is now 25 years old. I suspect that would 

22 be pretty close to the mode for our data set with 
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1 students in the cohorts. And by age 30 about 50 

2 percent of all women have had a child. So, given 

3 a 2-year cohort, there's a meaningful percentage 

4 that will certainly have an interruption in 

5 full-time employment during at least one of the 

6 two years their income is measured.

7 So, programs that tend to be dominated 

8 by female graduates will have a debt to earnings 

9 that will certainly be skewed for this reason 

10 alone.

11 There's other reasons. I don't have 

12 any data right now on self-employment, persons 

13 who leave the country, Peace Corps missions, all 

14 that, it all adds up to some small amounts.

15 Also, recall a recent survey that 

16 showed that 84 percent of students' reason for 

17 going to college was to secure gainful employment 

18 or to secure employment. So certainly there's 

19 good numbers. We heard that a number of people 

20 go to college just for the sake of learning, so 

21 there is a percentage tied to that.

22 And then, also, I think when you 
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1 consider a very low 10 as the end score, that if 

2 you do look at this, that does effectively raise 

3 the end to 13, even though it still would be 10 

4 for the pool tested. But going to, but if you 

5 renew the 25 percent lowest for all the reasons 

6 I've mentioned, you effectively move the end to 

7 about 12 or 13.

8 And certainly all these things layer. 

9 So I'm sure that 25 percent would be a very 

10 conservative estimate as a percentage to, a 

11 minimal amount that would help moderate the 

12 income that we look at when measuring the debt to 

13 earnings.

14 MR. RAMIREZ: Okay, thank you.

15 Johnson, you had a question on that?

16 MR. TYLER: Well, I just have a 

17 question. Do we want to be saying this is what 

18 you're going to earn if you're a white male in 

19 the United States versus all these other groups? 

20 I think that's also misleading to what we're 

21 here for.

22 MR. ARTHUR: I think what we're trying 
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1 to do is trying to normalize the data where, I 

2 mean, you have programs, you have institutions, 

3 you have, you know, that serve a diversity, a 

4 variable diversity in the population served. And 

5 this is a way to level that a little bit.

6 MR. TYLER: But just to respond. The 

7 debt applies regardless of your situation, 

8 regardless of whether you're a woman, or a man, 

9 or percent color.

10 MR. ARTHUR: Right. But I think what 

11 we're pointing out is that people do make 

12 choices, they do -- are subject to different, you 

13 know, discrimination and different variables, 

14 choices that, you know, why should a program that 

15 has 80 percent of graduates that are female you 

16 have a 2-year window, or a window there where 

17 their earnings are lower because of not working 

18 full-time during that period that, even though 

19 they resume, they go back to earning their 

20 full-time wage and progress as normal, but it 

21 just happens to be that window, the time we're 

22 measuring wages.
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1 It kind of helps account for all that. 

2 And there are probably some other people could 

3 help me explain that a little better than I am. 

4 But these are all significant factors that impact 

5 wages and in a, you know, in a way we measure 

6 this in somewhat of a unfair manner.

7 MR. RAMIREZ: And we have Thelma, 

8 Daniel, and Sandy.

9 But just, again, to refocus. The idea 

10 was that, so, we don't have to figure out how 

11 much do we adjust earnings based on people that 

12 may not report income or that are working part 

13 time or are choosing not to work if they went to 

14 school for other reasons other than for gainful 

15 employment.

16 And I think what Jeff was showing us 

17 was that you have all of these slices. And when 

18 you combine them all together, the 25 percent is 

19 not a number that's an unreasonable number to 

20 look at as a way to clean all that up and just 

21 say we'll use these 75 percent to calculate the 

22 number. Is that accurate? Okay.
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1 So, Thelma, Daniel, than Sandy. 

2 Thelma.

3 MS. ROSS: So Thelma.

4 That farther helps me with the 

5 question that I had about the 75 percent on 

6 yesterday for my population of students' MSIs. 

7 And so I thank you for that.

8 I can, I can wrap my brain around that 

9 for my institutions. And I would just say that 

10 although debt is debt, earnings aren't. There 

11 are some variables that have to be considered. 

12 And I think Jeff raises a good point in 

13 delineating where those may be.

14 And I think we have to be realistic 

15 when we try to address this issue and be sure 

16 that we are not unintentionally, unintentionally 

17 harming students that are trying to attend 

18 institutions that have opened their doors for 

19 them for years, for years, and have done well by 

20 the majority of them, but we still do have to 

21 recognize that there are some limitations when it 

22 comes to the income earnings of those students.
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1 MR. RAMIREZ: Thank you. Daniel, 

2 Sandy, then Laura. Daniel.

3 MR. ELKINS: Yield my time.

4 MR. RAMIREZ: Sandy.

5 MS. SARGE: I have a follow-up question 

6 to Thelma first.

7 So, Thelma, are you saying, which way 

8 are you following, are you saying Johnson's 

9 bringing up a good point like we don't want 

10 someone for all these data, or are you saying 

11 that Jeff helps us neutralize some of the things 

12 that are still very, very real.

13 MS. ROSS: This is Thelma again. For 

14 me, I'd say that he brought clarity to a question 

15 that I had.

16 MS. SARGE: Okay.

17 MS. ROSS: Yeah.

18 MR. RAMIREZ: Laura. I'm sorry, Sandy. 

19 Yes.

20 MS. SARGE: Sorry. I thought, I just 

21 want to go on the record with Sandy that I 

22 thought Jeff's idea was great from a mathematical 
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1 perspective. I think it really helps us. It's 

2 not perfect, but nothing in this is going to be.

3 So, what we want to try to do is see 

4 if we can find places where we make one 

5 adjustment and we try to solve for a multitude of 

6 issues. And I think this was a great idea, Jeff, 

7 so I would be all for doing this. So thank you.

8 And I would, just so that we're clear, 

9 I think that this would be the side of the ratio. 

10 You take the total debt that a student does and 

11 the median of the 75 percent would be the 

12 earnings of that cohort. So, just so that we're 

13 not still looking at it as a division but as a 

14 side-by-side comparison I would use that number 

15 in that as well, just to be clear.

16 MR. RAMIREZ: Laura then Chris.

17 MS. METUNE: I want to say that I 

18 appreciate what I think is a true effort to try 

19 and find an area of compromises that addresses 

20 what I do think is a problem. In the sense that 

21 some students do make career choices that affect 

22 their income, and there's certainly 
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1 discrimination in wages in marketplaces, I also 

2 think students want to know that, and 

3 institutions should know that.

4 I also don't understand the scope of 

5 how much that kind of a problem should be 

6 factored into a rule.

7 And that really leads to my point, 

8 which is in the absence of any real data around 

9 any of these things it makes it impossible for me 

10 to make an informed decision or recommendation. 

11 And so, in the absence of that I don't think I 

12 could support this because it feels a little bit 

13 like you're just claiming the top income earners 

14 in your metric. And I don't think we should do 

15 that.

16 But with more data on a lot of these 

17 areas I do feel like I could make a decision to 

18 go in a different direction than where the 

19 previous gainful employment negotiations ended.

20 MR. RAMIREZ: I have Chris, Jessica, 

21 then Neal.

22 PARTICIPANT: So, I second that about 
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1 the lack of data. My points, one of the 

2 statistics Jeff mentioned was that if it was 18 

3 percent of people are in tipped jobs. I think 

4 that was what he said.

5 MR. ARTHUR: Oh, not at all. It was a

6 study that reported that 18 to 19 percent of 

7 wages go unreported. I don't know what -- it's a 

8 multitude of reasons.

9 PARTICIPANT: Okay, sure. My point on 

10 that would just be that a lot of those folks I 

11 would think are in jobs that they didn't go to 

12 any four year, or even get a certificate, they 

13 didn't go to any higher education to achieve. 

14 Right? I mean those folks. A lot of them 

15 probably are going to be in food.

16 MR. ARTHUR: That could be. But I 

17 think the point is there's a large amount of 

18 wages being earned out there that isn't reported 

19 in the SSA wages.

20 PARTICIPANT: Okay, sure. And that 

21 being the case, but I just think a large amount 

22 of that percentage are not people who went to two 
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1 and four year, or did not attend a program with 

2 the intention of getting that job. I mean, they 

3 might have gotten that job because they couldn't 

4 get a job in the program for which they went to 

5 school for, but we don't know.

6 MR. ARTHUR: We don't know. We don't 

7 know. Maybe it's all criminal activity.

8 PARTICIPANT: All right, I doubt that.

9 And then, and I just think, again, 

10 with the lack of data, I mean I think what if 

11 there are -- there's noise on the top end, too. 

12 So why don't we eliminate the top 10 percent as 

13 well, or the top 25 percent, because there are 

14 people who may have a really rich family so 

15 they're going to work for their parents' company. 

16 I mean that's not -- why is that something that 

17 is going to be incorporated into an earnings 

18 segment?

19 So, to me just chopping off the bottom 

20 people and inflating the number is doing nothing 

21 but inflating the number. Well, then I think we 

22 should take out the top percent of earners so 
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1 we're not inflating it too high.

2 MR. ARTHUR: Well, I don't think the 

3 top earners statistically would be moving the 

4 median much. I mean, once you get to -- you're 

5 talking about aggregated data towards the middle. 

6 Anything you would do at the top, let's just say 

7 let's bring them all down to, let's drop them all 

8 by 30 percent. I mean, basically I don't think 

9 they should be eliminated because they're doing 

10 extremely well. But if you moderated it, it has 

11 no effect.

12 If you moderate those, where I'm 

13 talking about moderating the low end to a more 

14 normalized amount, if you remove the top ones 

15 that isn't the right way to go about it either, 

16 but if you moderated them, it wouldn't change the 

17 median wage at all.

18 PARTICIPANT: My point, just that 

19 they're doing extremely well but not because of 

20 the school, so I don't -- because of their own 

21 personal situation, similar to the people on the 

22 bottom end who you're saying we shouldn't punish 
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1 the school for something that the school had no 

2 impact in, I also think we shouldn't reward the 

3 school for something it had no impact in.

4 MR. ARTHUR: Right. But I do think 

5 when you look at the very high percentage who are 

6 working part time by choice, that that's probably 

7 because their family income is probably already 

8 in a good position. You might have people whose 

9 spouses are making a lot of money, they've got a 

10 good degree, they're paying back their loans 

11 fine, but they just -- their wages aren't good 

12 because they chose not to participate.

13 PARTICIPANT: All right. Again, I 

14 think without that I just can't support this.

15 MR. RAMIREZ: Go to Jessica, Neal, 

16 Ahmad, and Sandy. Jessica.

17 MS. BARRY: Hi. Jessica Barry. I 

18 just, I had a point to make and then I wanted to 

19 ask Jeff a question.

20 Jeff, when you developed the 25 

21 percent, that is based on studies. Is that 

22 information you could share with us?
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1 MR. ARTHUR: It was an idea to begin 

2 with. And then when we -- the idea, the concept 

3 was that there is a lot of noise, a significant 

4 amount. And I don't know what it is. But when I 

5 thought about the department's proposal of 50 

6 percent I thought, okay, well that's way too 

7 high.

8 And so then you start doing some 

9 research and figure out to what extent all these 

10 variables occur, and then you go, wow, this 25 

11 percent is probably not even adequate to address 

12 that, but it's certainly adequate to -- it's 

13 certainly at least that.

14 MS. BARRY: Okay. And the point I 

15 wanted to make is I think that Jeff's proposal is 

16 probably even more important now that we are 

17 opening this up to all programs because we're 

18 serving many, many different populations. And as 

19 Todd has pointed out many times, people who are 

20 going to school because they want to learn.

21 So I think this is probably more 

22 important to consider now than ever.
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1 MR. RAMIREZ: Neal.

2 MR. HELLER: Neal again. So, we are 

3 here obviously to try and solve some of these 

4 issues. And, you know, to say that there is no 

5 data and so we can't make a decision, I guess we 

6 probably shouldn't have shown up day one. 

7 Because we're in the same position we were on day 

8 one in terms of that this is the data that's 

9 available, and conceptually we've got to wrap our 

10 arms around some things.

11 You know, we can't be so rigid as to 

12 leave here on Thursday and having accomplished 

13 nothing, and then letting the department 

14 basically write the rule again. So, we have a 

15 chance to do something.

16 And I think what Jeff has proposed --

17 and I had not heard this before he proposed it 

18 yesterday -- I think it's brilliant, honestly. I 

19 think it solves so many of the issues that we 

20 have talked about around this table. And there 

21 is no perfect solution. But I do believe that we 

22 all can agree that there are -- there is an issue 
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1 with part-time employment, as evidenced by the 

2 study that he just read from.

3 There is an issue as far as 

4 underreported income, and unreported income, 

5 especially in the world of cosmetology and 

6 beauty, where we all know we tip in cash and it 

7 is no reported. I mean, let's just face facts. 

8 It's the culture of the beauty industry. It's 

9 not going to change, whether you agree with it, 

10 or you think they're breaking the law, or they're 

11 working illegally, it's just the way it is. And 

12 we can't change it. That's a culture that's been 

13 around for, who knows, 100-plus years.

14 And I also think to say that the 18 to 

15 19 percent of unreported income is simply people 

16 that didn't go to school for that job, well, I 

17 think we've already proven, and the department 

18 has already more or less agreed in the disclaimer 

19 language that they were looking at, and the 

20 preamble of the original gainful employment where 

21 they speak to the fact that they know there are 

22 certain professions such as cosmetology where 
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1 there is a significant portion of unreported and 

2 underreported income.

3 So putting all that in and along with 

4 everything else that Jeff and others have spoken 

5 to, I think this is a brilliant way to get rid of 

6 all those underlying concerns without having to 

7 have 10 different metrics for everything under 

8 the sun, and let's accomplish something. We have 

9 to accomplish something. And I think right here

10 with this particular proposal we have a chance to 

11 accomplish something. And it's not perfect. 

12 There is no such thing as perfect.

13 MR. RAMIREZ: Thank you. Ahmad.

14 MR. SHAWWAL: Ahmad. I'd just like to 

15 ask the department, so my understanding is that 

16 the current administration will remain the 

17 current administration till 2020. And so what 

18 was the rush behind changing these regulations? 

19 Why not wait a year and get some more data before 

20 starting this entire process?

21 MR. MARTIN: Well, I don't, I don't 

22 feel that I can or that I should answer for 
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1 decisions made as far at senior levels as to 

2 when, what will be negotiated, when it will be 

3 negotiated, what the schedules would be. I think 

4 that, like any, as with anything, I mean I think 

5 any administration comes in with a certain 

6 philosophy that is not necessarily completely --

7 I mean, let's be honest here, data is an 

8 important thing, and data does drive decisions, 

9 and data does drive positions, but so does 

10 philosophy. And so that's just a, that's just a 

11 given.

12 And I think that goes across any 

13 group, any group of people that come into a 

14 position of power in government. They, this 

15 administration saw this as a priority. They, the 

16 current leadership, sees the regulation currently 

17 in place as one that they don't view as 

18 completely fair to certain types of institutions. 

19 And there was an impetus to make changes to it. 

20 And this is the schedule it was one.

21 I mean, I don't think that that 

22 position would have changed, you know, if we 
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1 waited a year or waited two years. You know, so 

2 the same can be said for the previous 

3 administration: why did they make the decision to 

4 do what they did at the time that they did it? I 

5 don't know. Except that it reflects the 

6 philosophical leanings of the leadership. And 

7 that's what this is, too.

8 I don't now. I mean, I can't answer 

9 for you, you know, why this rule now as opposed 

10 to something else next year. I mean, you know, 

11 it's, yeah, you could always go back and look, 

12 you could look at any set of regulations proposed 

13 by any, you know, whether it was the current 

14 administration, the one previous, the one 

15 previous to that. You know, why did they put 

16 that agenda forth? I don't know that I can 

17 answer the question as to why we didn't wait.

18 They start as a priority, I guess I 

19 would say they start as a priority which needs to 

20 be addressed forthwith. And that's, that's why 

21 we're doing it.

22 MR. SHAWWAL: I understand your 
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1 constraints. So I guess maybe that's feedback 

2 for future sessions. I feel like it would have 

3 helped prevent a lot of problems that we're 

4 experiencing now.

5 And I guess to Neal's point, I do 

6 agree, Neal, I would like to leave here on 

7 Thursday having accomplished something rather 

8 than nothing. And I really feel like Chris and I 

9 are ready to make some concessions if it means 

10 that at the end of the day students will have 

11 some protections versus no protections at all, 

12 which is a likelihood if, you know, this goes 

13 back to the department and they have the 

14 authority to rewrite it as they please.

15 So what I would ask of everybody is 

16 please be willing to make some concessions, 

17 because I feel like we could potentially leave 

18 here on Thursday having accomplished something.

19 MR. RAMIREZ: Thank you, Ahmad.

20 And I will be asking you to come back 

21 to the mike to share some of those ideas. All 

22 right?
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1 MR. SHAWWAL: Yes.

2 MR. RAMIREZ: But Sandy, Kirsten, and 

3 Jen Diamond, Jennifer Diamond. Kirsten. I'm 

4 sorry, Sandy first.

5 MS. SARGE: Chris, I'm going to address 

6 this to you. I mean, why wouldn't we take off 

7 the top 25 percent?

8 Well, one of the things that the 

9 department asked us before earlier is when we 

10 came up with suggestions, can we provide some 

11 sort of research that would support it so that 

12 they can go back and make some decisions? So, do 

13 you have research, like Jeff just presented 

14 probably four or five different sources, directly 

15 addressing some of the issues we have brought up 

16 before?

17 Like the fact that if someone doesn't 

18 work for a whole year, then your, from my 

19 perspective, your denominator is not an annual 

20 number, but your numerator is. So these are 

21 inconsistencies with math that affect the 

22 results.
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1 So I'd be, you know, love to hear if 

2 you have that research. But if you're just 

3 throwing it out as a way to counter for the 

4 record a great idea that he's been able to 

5 support with research, I would ask you to just 

6 not do that. You can say you don't agree with 

7 it, but it wastes time, and I think the 

8 department is clearly asking us to try to help 

9 them find things that are defensible and to give 

10 some thought about whether our ideas are trying 

11 to meaningfully address the issues that are of 

12 legitimate concern to many people around the, 

13 around the table, all of us, pros and cons.

14 MR. RAMIREZ: I'll get Chris to update. 

15 That's fine.

16 PARTICIPANT: All right, thank you. 

17 Obviously I don't have data for that because I 

18 just thought of the idea. It was more of an 

19 example as to why I don't think the idea works 

20 that is presented.

21 So, Sandy, that's my answer to that is 

22 that I don't think the data that Jeff presented 
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1 accurately stands up for using this, so I really 

2 don't think there's any data to support this at 

3 the outset.

4 And then, second, I'm using this as a 

5 rhetorical example to make a point that I think 

6 it's just artificially inflating what the number 

7 of going to be. And that's why I don't think 

8 it's something I would support.

9 MS. SARGE: And I think to Jeff's point 

10 earlier, he said that regardless of what we do 

11 the mean's not going -- or the median's not going 

12 to change a lot. However, it would take away the 

13 arguments that many of us have where it then 

14 doesn't get into the doesn't get into the noise.

15 Like Neal said, we'd be willing to 

16 take out the language about tips and all these 

17 "yeah, but" statements that are in the 

18 notifications because at least we do feel that it 

19 is looking at things that are clearly issues. 

20 There is inequality in pay. And I'm not saying 

21 that those are good things and that I want to 

22 mask or hide them, but they do negatively impact 
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1 and potentially misrepresent what a school is 

2 trying to do.

3 And he's given points that are all 

4 falling between 18 and 25 percent.

5 So, so I'm just -- while I get that 

6 it's rhetorical, and I understand all that, I 

7 just don't think we have enough time for that. 

8 That's all.

9 PARTICIPANT: Okay. Okay, I mean I'll 

10 -- that's fine. I mean I just, I don't agree. I 

11 mean, I think that the data that is put out 

12 doesn't support this. I think that if the 

13 department had data on how this 25 percent would 

14 actually relate, that's the data that I'd like to 

15 see.

16 I think just having statistical 

17 examples of how, what's happening in the 

18 workforce doesn't equal a 25 percent reduction in 

19 the debt to earnings.

20 MR. RAMIREZ: So I'm going to go to 

21 Kirsten then Daniel.

22 MS. KEEFE: So I appreciate Neal's, the 
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1 point that Neal has been making about the tipping 

2 economy. And I think other folks have made it as 

3 well, and how that's not accounted for.

4 I don't think that that is on par with 

5 also trying to account for the fact that there is 

6 discrimination in wages or people, you know, 

7 going to some school but choose after graduation 

8 or getting a certificate to go part time, or they 

9 take off time, or whatever, some of the other 

10 examples that Jeff was giving.

11 I could see using that sort of lopping 

12 off the bottom 25 percent or some percentage 

13 perhaps in categories where folks are getting a 

14 lot of tips and that is a legitimate part of 

15 their wage, but they might not actually be 

16 reporting that. And we know that and we can 

17 accept that.

18 You know, the alternative idea I 

19 thought about is, you know, do you just gross up 

20 wages in those professions and folks coming out 

21 with those kinds of programs? It would be 

22 complicated, I think, to define that universe. 
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1 But I, you know, it's an interesting idea I think 

2 limited to that. I don't agree with it to sort 

3 of compensate for the fact that there's 

4 discrimination in wages because, you know, I 

5 certainly agree with what Johnson said, people 

6 have the debt. It's a real thing of life, and 

7 they've got to be paying back that debt.

8 MR. RAMIREZ: All right. So, we have 

9 two more tents up. We'll hit them and then we'll 

10 go back to Issue Paper Number 5. We wanted to 

11 allow Jeff the opportunity to present some of the 

12 rationale behind those numbers.

13 So, Jen.

14 MS. DIAMOND: Jen Diamond. I'm going 

15 to steal one of Whitney's favorite words and just 

16 talk about reframing the conversation a little 

17 bit.

18 Just to ground this again, I think 

19 that now that we're talking about a rule with 

20 this whole flow chart that wouldn't, you know, 

21 allow a school to block the road directly to loss 

22 of Title IV, I think there are a lot of 
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1 opportunities along the new flow chart to kind of 

2 figure out whether there are other issues at play 

3 without just removing that bottom 25 percent and 

4 risking inflation.

5 And then to Chris' point, which I 

6 would agree that there, you know, if we're trying 

7 to mitigate some of that risk of inflation, you 

8 know there are studies that show that there's a 

9 birth lottery and, you know, that your parents 

10 will have a lot to do with how much your children 

11 make. So there is -- I don't know how we can get 

12 numbers on luck but, you know, I do think if 

13 we're not having enough data, as I think we've 

14 all agreed, and we're working somewhat on 

15 philosophy, I'd like that to be taken into 

16 consideration, too, if we're trying to kind of 

17 find an accurate representation of how much folks 

18 are making.

19 MR. RAMIREZ: Okay, thank you. Chad.

20 MR. MUNTZ: All right. Chad.

21 So, I appreciate the idea of trying to 

22 get at 75, top 75, or account for some of this. 
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1 We know a lot of people are dropping out of the 

2 workforce, either by choice or not.

3 I think instead of saying bottom 25 

4 dropped out, it's effectively moving from the 

5 median to 62.5 percent. So we're just, we can 

6 say all 100 percent are in but we're going to 

7 just measure on 62.5 percentile of income.

8 And I don't know if that changes the 

9 opinion or not, but it's basically trying to 

10 account for the number of part-time people who 

11 are stay-at-home moms, or who never went to the 

12 workforce, doing part-time, Peace Corps, 

13 teaching, those kinds of things that may not be 

14 counted. Military service might be another one. 

15 So, thank you.

16 MR. RAMIREZ: Emily, you have 

17 something?

18 PARTICIPANT: I had a question. If we 

19 went with Jeff's proposal or some iteration of 

20 that proposal, would that eliminate the need for 

21 Issue Paper 5 and appeals on earnings?

22 MR. MARTIN: Greg, for the record.
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1 Issue Paper 5, though, it says 

2 alternate earnings appeals mostly consist now of 

3 issuing a challenge of D/E rates. So those are 

4 challenges.

5 You will note the appeals, the appeals 

6 which was the appeal based on alternate earnings 

7 has already been eliminated. So that's no 

8 longer, nor has it been included in any of our 

9 proposals.

10 The initial proposal was to eliminate 

11 the appeals. The discussion was when we did that 

12 that we, we started down the road them of how to 

13 compensate for that. Partially there were the 

14 disclaimers that we included. And then, and the 

15 inclusion of the repayment rate calculation was 

16 in part -- I hesitate to categorize it as an 

17 appeal because it certainly isn't -- but it was 

18 a, sort of another measure put in there in lieu 

19 of the fact that we took the appeals out.

20 So you'll see in this issue paper when 

21 we get there that the appeals that you're 

22 thinking of, I believe, which are the alternate 
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1 earnings appeals, have been removed. And that 

2 reflects what we had in the previous paper as 

3 well.

4 MR. RAMIREZ: And Jennifer.

5 PARTICIPANT: So I've been kind of 

6 thinking about this quietly listening because, 

7 again, this is a little bit math and statistics 

8 and I don't, I'm not good at them. So, so I've 

9 been trying to think about what my view is on 

10 this.

11 And I thought about -- actually it's 

12 funny, I was landing a little bit where Pamela 

13 was, not as much on the appeals per se but on the 

14 economically disadvantaged case which is you do 

15 have them. And I was thinking a little bit about 

16 that. And I was also thinking about what -- I 

17 think it was John, it was either Chris or John 

18 said about, you know, the white male data, or 

19 whatever. And I was thinking about that, too.

20 And I was thinking about sort of 

21 institutions that have predominantly blanks, or 

22 predominantly minority, predominantly female. 
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1 And, you know, to me that kind of does feel like 

2 there's an argument for what Jeff is saying 

3 because of what you're saying. And I could be 

4 wrong about this. And I don't want to go down, 

5 too far down the rabbit hole. I've purposely 

6 stayed quiet because I'm trying to, like, wrap my 

7 head around this.

8 But it is sort of interesting that if 

9 an institution has a majority female population 

10 that's part time and there are going to be 

11 struggles at the bottom, right, but the majority, 

12 the 60 -- so jobs math or adjust -- the 62 

13 percent or whatever, and they're on, end up being 

14 on par with the nonprofit, private institution 

15 that has -- or it could be for profit for that 

16 matter because I assume there'd be a tax status 

17 -- but if it's on par with the institution that 

18 has a majority white male population, or, you 

19 know, a socioeconomic of, you know, they have no 

20 Pell, you know, then that to me is a relevant 

21 piece of data because it does demonstrate that 

22 the school that has sort of the part-time female 
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1 30 percent Pell student, or whatever, is matching 

2 up to that level.

3 So I'm struggling with this. I'm not 

4 reaching a conclusion or whatever. But I did 

5 just want to share that thought that there is 

6 something there around what Jeff's suggesting to 

7 me in that it does sort of help sort of 

8 demonstrate whether a school with -- that is 

9 enrolling at a more, you know, at a sort of 

10 struggling, if you will, enrollment base, you 

11 know, how they perform.

12 I mean, that's what I'm sort of 

13 grappling and listening to. And thinking, well, 

14 maybe there is a there there. I wasn't sure 

15 there was. But the more I think about it, maybe 

16 there is something to what, you know, Jeff's 

17 suggesting. Just food for thought.

18 MR. RAMIREZ: So, yeah, I think that's 

19 a good place to move on to the next one. So I 

20 would like for people to think about that, right. 

21 And if that isn't the number, if there is some 

22 other way that we could reach some type of 
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1 agreement on how we measure it, the income or 

2 earnings.

3 All right. Greg, you want to take us 

4 to appeals?

5 MR. MARTIN: Sure. Thank you. Greg, 

6 for the record.

7 We're looking at Issue Paper Number 5, 

8 "D/E Rates Alternate Earnings Appeals." We'll 

9 read the "Summary of Changes Since Session 2."

10 "In response to discussions during the 

11 second negotiating session, we propose to 

12 introduce repayment rate as a secondary metric 

13 for measuring program outcomes and include the 

14 protocols for calculating and issuing loan 

15 repayment rates in 668.406," as discussed in 

16 Issue Paper 3. "Our only additional proposed 

17 changes to these sections are conforming changes 

18 for our proposal that limit these regulations to 

19 undergraduate educational programs."

20 So, what we have here shouldn't be 

21 anything new. If we look at issuing and 

22 challenging D/E rates, this is just the protocol 
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1 for issuing the rates and giving institutions the 

2 ability to challenge those rates. So nothing you 

3 see here has changed except for the fact that we 

4 have noted that everything is applicable to an 

5 undergraduate educational program.

6 MR. RAMIREZ: Okay.

7 MR. MARTIN: We've eliminated the 

8 references to the alternate earnings appeals. So 

9 you'll see on page 2, "Creating the list of 

10 students." This is all certainly something which 

11 goes into the proprietary sector or other schools 

12 that had GE programs should be familiar with.

13 The obtaining earnings data, same way 

14 we're doing that, submitting the final list to 

15 Social Security Administration.

16 You'll note at the bottom of page 3, 

17 the end size going from 30 to 10. We've 

18 discussed that previously.

19 Moving on to page 4, again nothing, 

20 there's nothing new really there. At the bottom 

21 of that we have institutional challenges to debt 

22 to earnings rates.
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1 And the only thing, again the only 

2 thing you'll see here is the noting that it 

3 applies only to undergraduate educational 

4 programs.

5 If we move on to page 6, that the rest 

6 of the paper is -- was the D/E rates alternate 

7 earnings appeals. And you'll see that 406 has 

8 been stricken from here. All this is stricken in 

9 406. And 406 is now the repayment rate 

10 calculation that we discussed, we discussed 

11 earlier. We used that section to include the 

12 repayment rate.

13 And that's pretty much it for Issue 

14 Paper 5.

15 MR. RAMIREZ: Okay. Are there any 

16 concerns with the modifications here?

17 (No response.)

18 MR. RAMIREZ: Let me see a show of 

19 thumbs if everyone's okay with Issue Paper Number 

20 5.

21 (Show of thumbs.)

22 MR. RAMIREZ: Tony.
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1 MR. MIRANDO: So whatever mechanism ---

2 I'm sorry. Tony.

3 Whatever mechanism that we either come 

4 to consensus with or not, is it the intent that 

5 other than what's listed here, a school would 

6 have no other means of appealing? It just is 

7 what it is?

8 MR. MARTIN: Well, remember that the 

9 appeal was not -- when these rates were issued 

10 the only appeal that was available was appealing 

11 the -- was an alternate income appeal, to appeal 

12 the income used in the rate. In other words, to 

13 say that, well, not that the Social Security 

14 rates were incorrect, you didn't get -- that 

15 wasn't something you needed. They were assumed 

16 to be correct. So the fact that if you did not 

17 feel the Social Security earnings were 

18 representative of the earnings of your students 

19 in a program you could appeal that.

20 So it wasn't so much, I guess it 

21 wasn't appeal of -- it was an appeal of one 

22 element that went into the calculation.
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1 So, yes, if we eliminate the appeals 

2 here, we are eliminating that particular, that 

3 particular appeal. And we had some reasons for 

4 it. First, I think anybody who participated in 

5 that around the table here would concede that 

6 that is not at all, was not at all an easy 

7 process, and that it was time consuming, 

8 expensive, not without a lot of issues.

9 I will more than happily relinquish my 

10 title as regis contact, regis appeal contact. 

11 That reason alone is enough to move on. That 

12 should be off the record, I suppose.

13 (Laughter.)

14 MR. MARTIN: But I just had to say that 

15 because it's a, I feel it's like an expiation of 

16 sorts. So I had to get that out; catharsis if 

17 you will. Right.

18 So, yeah, we -- and, you know, we had 

19 originally proposed a, remember we had originally 

20 come to the table with the idea that we would 

21 have the appeals but that the department would be 

22 out of the business of adjudicating those appeals 
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1 and we would have, there would be through the 

2 annual audit.

3 But we moved away from that with, you 

4 know, I think there was interest around this 

5 additional metric and maybe being able to move 

6 away from having these appeals, and also with the 

7 disclaimer language. So that was our reason for 

8 moving away from the appeals.

9 I think it's a good simplification, a 

10 good reduction in burden. And, you know, as with 

11 anything that we do, there is a give and a take, 

12 yes. And certainly no matter what we offer on 

13 one side without the appeals, an institution with 

14 students who, or graduates who earn significant 

15 portion of money, of earnings from gratuities 

16 are, you know, are not going to have that 

17 opportunity to appeal based on that.

18 But I think on balance, what we've 

19 offered outweighs that. I just want everybody to 

20 remember that that, that was not without it's 

21 difficulties.

22 And as far as, like, who can do this, 
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1 I think that as we expand this to be all 

2 institutions, all programs, that the more 

3 programs we have certainly I couldn't imagine --

4 maybe I shouldn't say this -- but I couldn't 

5 imagine a large institution with numerous 

6 programs saying we're going to mount, you know, 

7 20 or 30 of these alternate earnings appeals, you 

8 know, having to have each one attested to by a 

9 CPA. That probably just would not be feasible on 

10 a larger, on a larger scale.

11 So I think there were a lot of good 

12 reasons for us moving to eliminate that. But 

13 that was a recap of why we did that.

14 MR. RAMIREZ: Yes.

15 MR. MIRANDO: So, I anticipated that 

16 was going to be your answer. So what I guess I'm 

17 just anxious over, I would offer just a sense of 

18 caution, would be that if indeed this group 

19 doesn't come to consensus, or even if it does and 

20 you all -- or let's say we do and you all 

21 implement, if again an institution is unfairly 

22 required to put some form of disclosure on their 
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1 website but as a result of nothing that they've 

2 done wrong other than the metrics you all are 

3 using, again unfairly requires them to have this 

4 disclosure, doesn't this put -- isn't there a 

5 legal jeopardy here that, again, there's no 

6 reason for, you know, for appeal, some way of 

7 making a wrong right?

8 And, again, back to what I started on 

9 Session 1, then I sent to Session 2, and I'll 

10 repeat it here that, you know, right is right, 

11 wrong is wrong. And if the school is a good 

12 school providing a great program, but because of 

13 some artificial metrics that's placed against 

14 them they're required to put some -- what some 

15 want to do is put some horrifying disclosure. 

16 And maybe others want to put a very watered down 

17 disclosure, but still it's a disclosure, if it's 

18 unfairly required, I don't see that being right.

19 I mean, again I'm back to its again 

20 being wrong. And so I leave, I end this with 

21 saying again, you know, if we don't approach this 

22 where right is right and wrong is wrong, and all 
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1 institutions are going to be treated equal and 

2 fairly, then something is wrong with the process. 

3 And I just have always been taught, and I 

4 believe that -- that's how I run my agency -- is 

5 that if it can't be done properly we shouldn't be 

6 doing it until we can figure out a way to do it 

7 properly so that nobody, not one student is 

8 harmed by this.

9 And I shall stop there.

10 MR. RAMIREZ: Jennifer.

11 MS. DIAMOND: So, switching directions 

12 slightly. But it has occurred to me, where are 

13 the challenge opportunities for the loan 

14 repayment rate? And couldn't it mirror -- I 

15 think in some other prior reg, I can't remember 

16 which one now, maybe it was gainful, maybe it was 

17 borrow defense, I can't remember -- but isn't 

18 there a, is there something in here and I'm just 

19 missing it, and if not couldn't it mirror what 

20 the cohort default rate process basically is?

21 Because on loan repayment rate there 

22 is actually the institutions do have all this 
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1 level of knowledge. And that moment in time 

2 piece that I was talking about earlier, 

3 institutions have, you know, some level of 

4 knowledge about what their borrowers are doing 

5 after they graduate. And so that piece it would 

6 seem important for the institutions to have the 

7 ability, once you send us the list of whatever.

8 MR. MARTIN: In 406(d), for the record.

9 MS. DIAMOND: Oh, so it is there? 

10 Okay.

11 MR. MARTIN: 406(d) you'll see. Well, 

12 406(c) is notification, and (d) is challenges to 

13 repayment rates.

14 MS. DIAMOND: What page? Sorry.

15 MR. MARTIN: On page 10 of Issue Paper 

16 Number 3.

17 MS. DIAMOND: Oh, Issue Paper Number 3. 

18 Sorry, that's why, that's why I wasn't seeing 

19 it. Okay. So it's not in the --

20 MR. MARTIN: So, yes, we did, we did 

21 retain those challenges that were previously 

22 there.
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1 In the current regulations where it 

2 talks about various disclosures, it gives 

3 challenges. And we incorporated those challenges 

4 into this.

5 MS. DIAMOND: Thank you.

6 MR. RAMIREZ: Okay. So seeing no other 

7 questions let me see where you all are at on --

8 Oh, I'm sorry, Mark, you had a question?

9 MR. McKENZIE: Mark McKenzie, for the 

10 record.

11 Similar to Tony's concern, and this 

12 may be addressed -- Greg, you had said earlier 

13 that you had revised the flow chart, there were 

14 revisions. Is that going to be passed out today?

15 MR. MARTIN: I'm still looking to that 

16 to make -- we'll make a decision on that 

17 presently.

18 MR. McKENZIE: Okay. The reason that I 

19 was bringing that up, and I think addressing 

20 Tony's concern as well, is in these five boxes in 

21 the center it appears to me that box 4 and box 5 

22 should be reversed.
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1 And the reason for that is if we get a 

2 complaint, say we get a complaint against a 

3 school, we have to run it down and say, okay, is 

4 this a legitimate complaint. We have to notify 

5 the school that there has been a complaint and 

6 give them an opportunity to respond. And I think 

7 most agencies have some kind of a mechanism, 

8 whenever there is a potential penalty of some 

9 kind of public disclosure that the institution 

10 has an opportunity to respond to that in some 

11 fashion.

12 And so it would appear to me that 

13 those, just putting those two boxes or reversing 

14 those it may address it.

15 Now, it does put the burden, one, on 

16 the institution to have a conversation with the 

17 institution at that point to say, okay, both of 

18 these benchmarks have not been passed and, 

19 therefore, we need to go into a deeper level of 

20 conversation to find out what is going on, rather 

21 than immediately having the school turn around 

22 and post any kind of a notification.
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1 Because there is -- you know, these 

2 metrics are never going to capture all of the, 

3 all of the exceptions. And there are going to be 

4 a lot of exceptions, especially, again going 

5 back, this is new data, and we're not going to 

6 have good data until there is an analysis to 

7 that, you know, a year or two years down the road 

8 to be able to get this.

9 So I think to try and make it 

10 consistent and good information, that's what I 

11 would suggest.

12 MR. RAMIREZ: Mark, I'm trying to see 

13 where you all are on appeals. And if I 

14 understand correctly, would that question be best 

15 answered under reporting requirements?

16 MR. McKENZIE: It may be. I'm not 

17 actually looking at the appeal. I was actually 

18 looking at this in the process because this piece 

19 between four and five is kind of where that 

20 conversation needs to have before a school to 

21 even, you know, before you even get to an appeal. 

22 It's like we talked about escalating the level 
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1 of review if you've got things that are flags 

2 that are indicating that there may be some issue. 

3 And, therefore, the school needs to have a 

4 chance, the institutions need to have a chance to 

5 respond. And, you know, it's going to, it is 

6 going to create some burden on the department to 

7 have that conversation as well.

8 PARTICIPANT: And when you say four and 

9 five you mean the fourth one down in the middle 

10 column and the fifth one down in the middle 

11 column?

12 MR. McKENZIE: Correct. You know, it 

13 looks to me like those should be reversed. And 

14 that would necessitate some wording changes into 

15 the fourth box as well because you're putting 

16 them out, changing the order.

17 MR. RAMIREZ: Okay. So I think I'll 

18 probably ask Greg for his opinion as far as where

19 that question might be best answered. Right?

20 If the appeals letter is dealing with 

21 the process itself, then maybe your question 

22 would be best under seven. But, Greg, do you 
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1 have an idea on that?

2 MR. MARTIN: Okay, let me just get 

3 straight again what we would be doing here. So 

4 if I look at the boxes, the fourth and fifth box; 

5 correct?

6 MR. McKENZIE: Correct.

7 MR. MARTIN: So we would be reversing 

8 those two.

9 PARTICIPANT: Yes.

10 MR. MARTIN: So that, so okay, if a 

11 program meets the -- so, all right, if the 

12 program meets the repayment rate. So you've --

13 So if you, if you didn't meet the -- if you don't 

14 meet the D/E benchmark, if you don't meet the 

15 repayment rate bench or measure, and your program 

16 -- so we're talking about the standards for 

17 economically disadvantaged, that one?

18 The next one. So the institution must 

19 inform students.

20 All right, I'm sorry, I was looking at 

21 this. So, okay, so we're looking at the 

22 institution must inform students through the 
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1 notification process. Oh, you're talking -- I 

2 see what you're saying now. Okay. You want to 

3 reverse the multiple, the bottom box, are there 

4 multiple administrative capability issues, with 

5 notification.

6 Well, I think the problem here in that 

7 is that the bottom, the bottom box there goes to 

8 -- although we're not really referring to them as 

9 sanctions but actions the department can take --

10 so if, that would be whether or not -- so what we 

11 have here is, so what you would be saying is you 

12 wouldn't want there to be the requirement for 

13 notification until and unless the department 

14 instigated --

15 MR. McKENZIE: -- clearly identified in 

16 these two metrics.

17 I should probably use a mike. Sorry.

18 You know, it's clearly identified in 

19 the two metrics that they haven't met the 

20 metrics. We've already discussed that there are 

21 challenges with the metrics now. We're not going 

22 to know for sure about the accuracy of the 
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1 metrics for a year to two years minimum.

2 So, in order to avoid collateral 

3 damage to institutions you have to get, it would 

4 appear to me that you would have to give them 

5 some opportunity to respond in the event that 

6 they have these, they have these two flags, okay, 

7 they haven't met those two metrics.

8 And so it just it creates a 

9 requirement for a conversation. Some kind of 

10 interaction with the department in order for you 

11 to then determine, okay, what do we need to do? 

12 Are there other programs? And, given that point, 

13 should we move to immediate notification, or are 

14 there extenuating circumstance that the 

15 institution can cite that would give you pause to 

16 say, okay, we need to see more data in order to 

17 make that decision?

18 MR. MARTIN: So, essentially be moving 

19 the notification process from what is currently 

20 an automatic process based on a not meeting the 

21 measures to a discretionary decision on the part 

22 of the department; right?
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1 MR. McKENZIE: Back to the department; 

2 correct.

3 Because then I think it gets to the 

4 level of fairness and making sure that you don't 

5 penalize a school inappropriately. And just 

6 there are so many questions about whether the 

7 metrics are going to work long-term. And we just 

8 don't know that information at this point.

9 MR. MARTIN: All right, I'll note that 

10 and we'll take it back for discussion.

11 MR. RAMIREZ: And, Greg, does that 

12 impact, does that issue impact Issue Number 5?

13 MR. MARTIN: No. No, it does not 

14 impact Issue Paper 5. Issue Paper 5 was only 

15 ever dealing with the institutional challenges to 

16 D/E rates, and then showing that the appeals, the 

17 alternate earnings appeals had been removed. 

18 That wouldn't be affect -- that wouldn't affect 

19 it. This chart doesn't have anything about --

20 this chart was drawn up without any reference to 

21 those appeals.

22 MR. RAMIREZ: Okay. So, Neal, did you 
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1 have a question on Issue Paper 5 or? Okay, 

2 what's your question on that?

3 MR. HELLER: It's not a question.

4 MR. RAMIREZ: Okay. What's your 

5 comment on that?

6 MR. HELLER: It's a comment.

7 MR. RAMIREZ: Okay.

8 MR. HELLER: Well, we're being asked to 

9 eliminate the appeals process. And for, again, 

10 schools in our community of schools that appeals 

11 process kept some schools in business. And I 

12 realize that that was under a immediate or close 

13 to immediate loss of Title IV funding, and that's 

14 why there was an appeals process which, of 

15 course, the courts ruled was sort of a -- well, 

16 not sort of, was overly burdensome and unfair 

17 appeals process.

18 And I'm not going to get into the 

19 whole reasons why. But nevertheless, that was 

20 the finding of the court.

21 So, now we're looking at eliminating 

22 appeals altogether, not refining them and making 
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1 them perhaps an easier hurdle, but to eliminate 

2 them based simply because the Title IV sanction 

3 is off the table. But it's not really off the 

4 table. Because if we don't meet both the 

5 repayment and the D/E ratios we do have to make 

6 some very serious notifications to prospective 

7 students, which will affect businesses.

8 And combined with perhaps a lack of 

9 administrative capability based upon the 

10 department's judgment, that would lead to a 

11 program review, which would in turn lead to loss 

12 of Title IV, which would in turn lead to putting 

13 those schools out of business and, again, with no 

14 appeals process.

15 You know, we brought up a number, 

16 introduced a number of proposals here around the 

17 table by various people: 15 percent amortization, 

18 shot down. The 25 percent, eliminating 25 

19 percent of the bottom earners, if you will, or 

20 not earners, shot down. The 1:1 ratio, shot 

21 down.

22 We're not going to have any more 
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1 disclaimers, which aren't worth much anyway.

2 We don't know what the repayment rate 

3 is going to be.

4 And, yet, we're going to vote on 

5 eliminating the appeals process altogether?

6 Some have argued that we need more 

7 data. Well, I think we need more answers before 

8 we deal with Issue Paper Number 5. I think that 

9 should be the last thing we deal with, because if 

10 we can't come to some conclusion on repayment 

11 rate and whether or not any of these other 

12 proposals are deemed acceptable by the people 

13 around this table, I'm not willing to give up my 

14 right to appeal.

15 MR. MARTIN: I just want to point out 

16 for the record that with appeals, were that to be 

17 back on the table, we have some serious, serious 

18 statistical issues with appeals, with the number 

19 that are required.

20 And I can have Sarah come back up and 

21 explain that. But essentially it would have the 

22 affect of meaning that most small institutions 
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1 would not be able to, would not be able to mount 

2 an appeal because we simply wouldn't be able to 

3 get to the sample side necessary, or would 

4 necessitate a 100 percent response rate because 

5 we would start to go back to the survey.

6 So, I mean, if there is interest in 

7 bringing that back, we would have to go back to 

8 the methodology we used previously. And we have 

9 a lot of issues around how we would do that and 

10 make it statistically valid. So that's a real 

11 sticking point if we bring this back.

12 And I'm not certain. We definitely 

13 knocked those issues around for a long time and 

14 we were unable to come up with any good solution 

15 to it. So, you know, I can take it back but if 

16 we were to put it in place there would be a lot 

17 of programs that simply would not be able to take 

18 advantage of that appeal, especially the smaller 

19 programs.

20 MR. HELLER: Well, if I may.

21 MR. MARTIN: Yeah.

22 MR. HELLER: I would prefer to 
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1 eliminate the appeals and come up with another 

2 metric that much more fairly represents what our 

3 schools, you know, the students and the graduates 

4 at our schools. But, you know, none of these 

5 other metrics have been deemed acceptable. And 

6 if that's not going to be part of the picture, 

7 then to just give away the right to appeal would 

8 not be acceptable.

9 And the courts deemed that the 50 

10 percent, asking 50, to get 50 percent of 

11 graduates to respond was a threshold that was way 

12 too high. So why would we go to 100 percent? 

13 I'm not following that. I'm sorry.

14 MR. MARTIN: It's not going to 100 

15 percent. It has to do with the number of 

16 students necessary.

17 First of all you have -- and I, Sarah 

18 can jump up here and throttle me if I get this 

19 wrong -- but you have to have a response number 

20 of at least 30 to make it valid. That means for 

21 smaller programs that could be, you know, 100 

22 percent of -- a 100 percent sample size, which is 
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1 probably unreasonable to expect. So that's, so 

2 if you look at that and looking at smaller 

3 programs, we didn't want to introduce an appeals 

4 protocol where we're essentially by virtue --

5 statistically, rather, eliminating a number of 

6 schools from having the right to appeal simply 

7 because of statistical problems.

8 So we tried to move to a different 

9 understanding of that. And I take your point 

10 that there still are notifications, but that this 

11 doesn't lead to an automatic loss of program 

12 eligibility. We tried to compensate for that by 

13 the introduction of a secondary metric and the 

14 inclusion of disclaimers.

15 So, I mean as I said before, it's a 

16 give and a take. I would not argue with you that 

17 we lose, we'll lose something with the 

18 elimination of the appeals, but there are a lot 

19 of issues attendant to having those back, and 

20 certainly not -- and in addition to all of that 

21 it would still require the what we had before, 

22 which would be an attestation by your accountants 
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1 of your calculation, which is certainly an 

2 expense.

3 So, for all these reasons we moved in 

4 this direction. But I'm not averse to taking it 

5 back and discussing it. But I just want to point 

6 out those issues.

7 MR. RAMIREZ: Your mike.

8 MR. HELLER: It's not that I want the 

9 appeals process, because it is very, very 

10 difficult, very expensive, burdensome, et cetera. 

11 But as you said, it's a give and a take. And

12 something's got to give.

13 Because, again, the disclaimers are 

14 nice. It's wonderful language. But it doesn't 

15 do anything about the metric. So as I asked for, 

16 in the previous session, instead of disclaimer 

17 language why can't we put some sort of a number 

18 on things that addresses the underreported or 

19 unreported income, or all the other things that 

20 we discussed, so that we don't have to have an 

21 appeals process and we don't have to worry about 

22 the disclaimers? That's my point.
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1 Thank you.

2 MR. RAMIREZ: All right. Johnson then 

3 Sandy.

4 MR. TYLER: I just want to speak for 

5 the consumers and the taxpayers because when you 

6 have debt to earnings failure there are two 

7 metrics people have to fail under debt to 

8 earnings. Then you have the repayment rate. And 

9 then you have a notice to prospective students.

10 I get Neal's point. I understand this 

11 group of people. I understand, I have many 

12 clients who've been hairdressers, barbers. I'm 

13 constantly telling them it's important to pay 

14 Social Security. You need that for your 

15 retirement, otherwise you're not going to get 

16 anything when you get older.

17 But I think I wouldn't want that 

18 sector to be driving this discussion. If you 

19 have someone going to HVAC school, someone going 

20 to automotive school, someone going to be a home 

21 attendant, someone going to be a medical 

22 assistant, they're W-2 employees by and large. 
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1 And I really, you know, want to remind people 

2 that this is a notification that occurs after a 

3 bunch of safeguards that we have thrown on the 

4 table here. And that's the sanction is a 

5 notification.

6 And, you know, with all due respect to 

7 the hairdressing industry, to the extent that 

8 that's part of the culture I'm not sure how, why 

9 this notification would put your schools out of

10 business, so.

11 MR. RAMIREZ: Sandy. Yeah, go ahead.

12 MR. HELLER: Well, the notification 

13 wouldn't necessarily put us out of business. It 

14 would, it would make it a little more difficult. 

15 But I think that we're dismissing the fact that 

16 there is a sanction back in here. And I know 

17 that some of us would like it to be more 

18 meaningful, so to speak, but it is meaningful. 

19 And if you do fail both of the measures, the 

20 department can deem that to be a lack of 

21 administrative capability, and it will lead to 

22 loss of Title IV.
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1 It may not be as quick as some in the 

2 room would like it to be, but it will lead to 

3 that if they deem it to be necessary. And, 

4 again, I don't -- I realize we can't drive the 

5 whole conversation just based on one small 

6 profession. But then what would be the harm in 

7 giving some sort of exclusion to that one small 

8 profession or doing something to impute, again, 

9 additional income to that one profession?

10 And that's really all we're asking 

11 for. And everybody more or less agrees that it's 

12 a fact. So that's all we're asking for.

13 MR. RAMIREZ: Sandy then Jordan.

14 MS. SARGE: This is Sandy.

15 It's the middle of the afternoon, or 

16 now in Colorado. Here it's almost nighttime. 

17 Just like to say sort of maybe we spend a few 

18 minutes at the end of today and we can leave with 

19 this tonight is, are there any places where there 

20 are suggestions from the other side? I mean, as 

21 I said last time we were here it's like after a 

22 while you just want to not even come up with an 
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1 idea because it's negative, negative, negative to 

2 Neal's point.

3 So, so maybe we just need a roundtable 

4 about where are we kind of.

5 And the other thing, and to be on 

6 Tony's bandwagon, it's like wanting to regroup 

7 again about what we're trying to solve for. What

8 is X? We're trying to make sure that we can give 

9 students information about whether or not the 

10 debt that they're incurring, is one thing, the 

11 debt that they are incurring is reasonable 

12 compared to the income that they will earn in 

13 their chosen profession. That's one thing we are 

14 trying to do with this information.

15 And then the other thing is if we find 

16 that there are schools that are egregiously 

17 overcharging, or allowing students to over 

18 borrow, or not working with their community to 

19 get them hired, i.e. they don't have good 

20 licensure passing rates or placement passing 

21 rates, so those are all things that the 

22 department would use these metrics as the initial 
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1 indicators and then dig in deeper. And I think 

2 that's part of it is we really want to make sure 

3 we're hitting those bad guys.

4 But we are also trying to come up with 

5 a way to inform students of good information.

6 So, the first question I have is where 

7 are we on suggestions from the other side about 

8 this? And I'll say the other side even though I 

9 don't want to be deemed that way. Where are we 

10 on any suggestions there?

11 And other than we're going to -- we 

12 want just exactly what the rule is right now; 

13 that's off the table. So help us get to a step 

14 off that back wall towards the middle and tell me 

15 where you guys are on some of that.

16 And then also I'd like some reminders 

17 as to are we still clear on what we're trying to 

18 solve for here?

19 MR. RAMIREZ: All right. So as far as 

20 Issue Paper Number 5, it seems like the appeals 

21 process lined out -- outline on here in and of 

22 itself isn't so much the issue, it's how it's 
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1 going to be applied, what are the other 

2 components that are around there.

3 So I'm not going to ask for the 

4 temperature check on that right at this moment. 

5 But, hopefully, there won't be many modifications 

6 if we are able to get some of those other pieces 

7 resolved.

8 Jordan, you had a comment before I 

9 comment on what Sandy was talking about or are 

10 you good?

11 MR. MATSUDAIRA: So this is Jordan.

12 Just a quick comment. Am I still on? 

13 So I kind of feel like the framing that, you 

14 know, like one side has given and the other side 

15 has not just feels, you know, really kind of off 

16 base to me. I think and just to Neal's point, I 

17 mean, I think we came up with this whole metric 

18 of a repayment rate in large part in response to 

19 some of the concerns. Or at least that was the 

20 spirit in which I'd proposed it back a few 

21 sessions ago to kind of address this issue that 

22 maybe debt to earnings wasn't really, you know, 
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1 working for some institutions where income was 

2 underreported and so on.

3 So you have, you know, this whole 

4 other metric that's added to the rule that was 

5 meant to kind of address those kinds of concerns. 

6 And I, you know, I don't understand the critique 

7 that that wouldn't be, you know, relevant for 

8 some schools, you know, in the sense that, you 

9 know, I think all schools that you're loaning to 

10 students should care about whether they're 

11 repaying it or not. I just don't see how that's 

12 different across sectors in any kind of way.

13 But there are other changes that we're 

14 making as well. You know, I also don't agree 

15 with the idea of, like, choosing a different 

16 percentile than the median to report earnings 

17 for. I mean, I think that does violence to, you 

18 know, we're redefining a typical student to now 

19 be the student at the 63rd percentage of 

20 distribution rather than in the middle of the 

21 distribution. Just things like that feel off 

22 base to me.
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1 And there are other things that we're 

2 doing, like moving the period of measurement 

3 further into the future so students have time for 

4 their earnings to grow. There are a lot of 

5 things that are already have been, you know, in 

6 principle written into the rule.

7 So, you know, I just think the 

8 conversation ought to concede some of that. So, 

9 you know, I think keeping the debt to earnings 

10 the way it is makes a lot of sense.

11 MR. MIRANDO: This is Tony. Thank you, 

12 Jordan.

13 One of the things that we have taken 

14 into consideration, yes, we did put in a 

15 repayment piece in there. But until institutions 

16 have some mechanism to somewhat limit the amount 

17 of money students can borrow, I think that also 

18 throws another piece into this.

19 So the institution in some cases it's 

20 out of their hands on both sides of that 

21 equation. So, again, there are some institutions 

22 that would get hurt. And neither one of those 
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1 two pieces can be effectively dealt with by the 

2 student. They can't -- the student can come in 

3 an borrow up to their limit, which then throws 

4 that whole thing off because now they've borrowed 

5 so much money the can't afford to pay it back.

6 And on the other side, because they 

7 can't, they can't, the data that the department 

8 is getting from Social Security is limited to 

9 what they're being told by the student. Again, 

10 the institution is at a place where its hands are 

11 crossed or tied, and what do they do? And it's 

12 still a good institution.

13 So those are the -- so that's, that's 

14 the hesitation on people like myself and others 

15 here is that, yes, in theory what you said is 

16 correct. And for some that makes perfect sense, 

17 but not for all. So until we come up with 

18 something that effectively works for all, 

19 somebody is going to get the you know what side. 

20 And that's the issue that I'm having a challenge 

21 with, because I'm all about I want to be fair. 

22 We should all want to be fair.
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1 And I think everybody wants to. But 

2 then so we have to be open to the idea that there 

3 are exceptions here. And until we can deal with

4 the exceptions we shouldn't be implementing 

5 anything yet.

6 I mean, I can't imagine as an 

7 accreditor putting out a whole set of standards 

8 and criteria that I know right from the beginning 

9 is going to absolutely prevent a group of 

10 individuals being able to become accredited. It 

11 just wouldn't work, especially if they're fair, 

12 so.

13 MR. RAMIREZ: All right. Whitney, 

14 didn't mean to skip over you there. So, Whitney.

15 MS. BARKLEY-DENNEY: Yeah. I don't 

16 want to repeat too much of what Jordan said. 

17 Just to push back a little bit on the 

18 characterization from my side.

19 I think if you look at where we have 

20 been with the D/E rule prior to this, and where 

21 we were with the disclosures only rule, there's 

22 actually been a lot of compromise happening 
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1 across the table. And the fact that, you know, 

2 we're getting hung up now on the details doesn't 

3 necessarily mean that people aren't willing to 

4 compromise or haven't compromised greatly, both 

5 from where the rule was previously and then where 

6 it was in the session before that.

7 So I actually think that there are 

8 some things happening here. And if were able to 

9 find a way to, you know, with the 1:1, for 

10 example, idea, you know, I don't feel like that 

11 was rejected out of hand. I think the issue was 

12 we couldn't figure out without the data a way to 

13 really set that metric. And that's what we're 

14 going to be coming back to again and again.

15 I know I am uncomfortable, both from a 

16 personal standpoint, a philosophical standpoint, 

17 and a legal standpoint of setting policy based on 

18 philosophy rather than based on something that we 

19 can actually point to, which seems to sort of be 

20 the thing that we are circling constantly at this 

21 negotiation because that's the direction we're 

22 headed in.
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1 So, just to say all of that. But I 

2 think that, you know, we need to be giving credit 

3 where credit is due that this document does 

4 represent compromise from both sides of the 

5 equation.

6 MR. RAMIREZ: Yes. So, Tony, you're 

7 done? Jordan, do you have something else?

8 MR. MATSUDAIRA: No.

9 MR. RAMIREZ: Okay. So, with any 

10 negotiations, as a mediator the regulatory 

11 negotiations are one form of negotiations; right?

12 The bulk of negotiations that we 

13 usually end up getting involved with they can be 

14 multi-party but they're not -- we have other 

15 tools as mediators to try to help parties reach 

16 agreement; right? And one of them we call 

17 shuttle diplomacy as we shuttle between the 

18 parties and caucusing and sidebarring. And 

19 there's just a lot of other tools that we could 

20 use as mediators that aren't quite as available 

21 in this regulatory process.

22 So I would, I would ask two things. 
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1 One is that -- and I'm not, I'm not saying any 

2 side, I'm saying anybody, right, if anybody has 

3 ideas that they would like to present before the 

4 group you are always welcome to do that. But 

5 what I would also suggest is that tomorrow that 

6 we have like a -- you'll see at 10:00 o'clock 

7 start time, official start time, but what I would 

8 like to do is that, you know, be here at -- and 

9 this is open for discussion, right, but that we 

10 be here at 9:00 o'clock, and that if folks want 

11 to share with me what are some of the areas where 

12 they might be willing to move but they might not 

13 be willing, you know, stay it out without -- or 

14 stay it out openly without having an idea of how 

15 that might work, I could see if there is some 

16 common ground; right? And then offer those 

17 suggestions as far as common ground.

18 If it's just positional, well, then we 

19 just continue the path that we're going; right? 

20 But if there is some overlap where there might be 

21 some room for agreement, then I could bring those 

22 pieces forward; right? But at least it will give 
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1 folks an opportunity to come and share those with 

2 me in that first hour. And then we'll open up

3 the doors to everyone at 10:00 clock. Okay? An 

4 hour for folks to share any ideas with me.

5 You, yeah, you all, the negotiators 

6 and alternates come here at 9:00 o'clock. But 

7 public at 10:00. Yeah, public at 10:00.

8 But this way folks could, you know, if 

9 there are ideas then you could share those. And 

10 then if there are overlap or areas where we could 

11 possibly explore before the full group, then 

12 we'll do that. Okay?

13 So any thoughts or comments on that? 

14 Greg?

15 (Microphone placed.)

16 MR. MARTIN: You have failed me for the 

17 last time.

18 All right. I've always wanted to say 

19 that. I don't have James Earl Jones' voice, 

20 unfortunately.

21 (Laughter.)

22 MR. MARTIN: Just a 5' 9" skinny guy 
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1 saying it, but nevertheless.

2 So, you know, I mean, no, not 

3 particularly on that. Are you going to put that 

4 to a vote or?

5 MR. RAMIREZ: Not necessarily a vote.

6 MR. MARTIN: I'm amenable to it.

7 MR. RAMIREZ: Yeah. It's just more 

8 like if there's any strong objections I'll listen 

9 to it and see if it makes sense.

10 But I do think that we need to have an 

11 opportunity for folks to share some ideas. And 

12 if there's no overlap, then there's no overlap. 

13 But if there is, then we can explore that.

14 MR. MARTIN: Before we leave today I 

15 just want one thing basically. We had a question 

16 about the revised chart that Ms. Higgins prepared 

17 for us. So I'm going to pass that out. And 

18 you'll see on it sort of we took back what was 

19 said yesterday around the table with respect to 

20 the department's actions in the event that an 

21 institution were to fall short of both the D/E 

22 metrics and the repayment rate, and not meet the 
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1 appeals for low income or program less than 30.

2 So, we've made a few changes there to 

3 reflect our position from there. So I think that 

4 will really help, you know, sort of a segue from 

5 where you were going, and help people, help 

6 inform maybe people's questions tomorrow morning 

7 if we take a look at this tonight.

8 So I'm just going to take an 

9 opportunity to pass that out now.

10 MR. RAMIREZ: Okay, thank you. Gannon.

11 PARTICIPANT: Yeah. I really 

12 appreciate that suggestion. But I remember last 

13 time we had I think what was called the full 

14 caucus. And I kind of thumbed in the middle for 

15 that one because I didn't exactly know what it 

16 was. And it turned out to be, like, a totally 

17 closed meeting. And, you know, looking back I'm 

18 comfortable with that process and want to make 

19 sure that this is an open meeting, as open as it 

20 can possibly be.

21 So I'd prefer if we just, you know, 

22 continue with the discussion. If folks have 
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1 ideas that they want to share that we just do 

2 that like we're doing it now.

3 MR. RAMIREZ: Yeah. This is more of an 

4 opportunity for folks to share ideas with me. 

5 And then, again, if there is that overlap, that's 

6 what the full group will be discussing.

7 PARTICIPANT: Okay.

8 MR. RAMIREZ: Yeah, so it's not, it's 

9 not like the last time.

10 Okay. So while this is being passed 

11 out, are there any comments from negotiators or 

12 alternates?

13 PARTICIPANT: I just want to make sure 

14 we don't close too early. There are some people 

15 who are coming for public comment on their way 

16 here, because that's usually 4:45.

17 MR. RAMIREZ: Okay. That's where I was 

18 going next, so okay. Well, then we do have a few 

19 minutes then.

20 So, do you want -- are there any other 

21 issues, concerns, questions on the chart, 

22 anything else that folks would like to? Because 
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1 as far as the conversation that was around 

2 appeals, I don't think there was much more there. 

3 And we definitely don't want to go into a new 

4 paper with just a few minutes left here.

5 Unless everyone is saying that 

6 disclosures is a no brainer, we could easily, we 

7 could easily agree to that.

8 Thelma, you have something?

9 MS. ROSS: I don't think so.

10 MR. RAMIREZ: Okay. Is 7 a pretty 

11 light lift?

12 MR. MARTIN: I was thinking of I would 

13 be -- this is Greg for the record -- I'd be more 

14 than happy to entertain looking at 7 if we're 

15 amenable to that. It might resolve witness 

16 concerns about people coming for public comment.

17 PARTICIPANT: Yes.

18 MR. MARTIN: And I don't think this is 

19 a real heavy lift.

20 MR. RAMIREZ: Okay.

21 MR. MARTIN: I think I'm the only one 

22 capable of presenting this. Yes, I'm getting 
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1 rather punch drunk. But I'll leave that to 

2 Javier. Do you want to do that, Javier?

3 MR. RAMIREZ: Yes.

4 MR. MARTIN: Okay, let's look at Issue 

5 Paper 7, "Reporting Requirements."

6 And you'll see here that since the --

7 "Summary of Changes Since Session 2: Since the 

8 second negotiating session, we have no additional 

9 proposals."

10 So this remains as it was. Reporting 

11 requirements for GE stricken from 668.411, is 

12 reserved. And this reflects, you know, one of 

13 the, one of the places we wanted to go here was 

14 to provide a lessening of burden on institutions. 

15 And that's largely what we've done with 

16 eliminating reporting requirements.

17 I would imagine there's not going to 

18 be a hue and cry to bring them back, especially 

19 on the part of those who have not had to do them 

20 previously. I think you could talk to your 

21 colleagues who've had to do it, and they would 

22 probably encourage you to not say anything along 
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1 those lines.

2 So, yeah, you can see then that under 

3 411 those are reserved.

4 And I would entertain any comments 

5 about that because that is the entirety of Issue 

6 Paper 7.

7 MR. RAMIREZ: Are there any -- Thelma, 

8 do you have a question there?

9 MS. ROSS: This is Thelma. I just have 

10 a clarification.

11 MR. RAMIREZ: Okay.

12 MS. ROSS: The first note I think that 

13 you had at Issue Paper 2, yes, was the reference 

14 to what the department did not have data on; is 

15 that correct. If we went that way, which we 

16 didn't, in Issue Paper 2 had the 50 percent in he 

17 AMEs and there was no way for you to have that 

18 data for reporting purposes if you needed to 

19 gather it?

20 MR. MARTIN: Yeah.

21 MS. ROSS: Okay.

22 MR. MARTIN: Going back to Issue Paper 
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1 2, those were suggestions that --

2 MS. ROSS: Right. Got it.

3 MR. MARTIN: -- leadership just wanted 

4 you to kind of mull around in your head. They 

5 weren't necessarily out there with --

6 MS. ROSS: Exactly.

7 MR. MARTIN: -- an idea of how we would 

8 obtain the data.

9 MS. ROSS: I got it. And that was the 

10 only thing that was different about what you 

11 needed to gather now that you're pulling 

12 everybody in.

13 MR. MARTIN: Correct. As it stands 

14 with what's actually proposed there's no 

15 reporting requirement on you at all.

16 MS. ROSS: Okay.

17 MR. RAMIREZ: Any other questions or 

18 comments?

19 (No response.)

20 MR. RAMIREZ: Let me see a show of 

21 thumbs if everyone is okay with Issue Paper 7.

22 (Show of thumbs.)
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1 MR. RAMIREZ: Okay. I am not seeing 

2 any thumbs down.

3 PARTICIPANT: I think we need to talk 

4 about this because I am fundamentally concerned 

5 with some of the changes made in the other papers 

6 that eliminate private loan debt from the 

7 equation but are all reliant on the -- the reason 

8 the department chose to do that is because they 

9 wanted to relieve the reporting burden on 

10 institutions.

11 So I really, I understand the dynamics 

12 that's happening in the papers, and I understand 

13 -- and I guess if what I'm voting on is I 

14 understand why this is being eliminated as it's 

15 taken together with the rest of the papers, I do 

16 understand that.

17 Am I concerned about the fact that 

18 we're eliminating loan debt and that we're 

19 removing sanctions and that? Yes, I am 

20 concerned.

21 So how would you like me to handle 

22 that in my vote?
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1 MR. RAMIREZ: Yeah, because what you're 

2 actually approving here is the removal of these 

3 reporting requirements. On those other issues 

4 you could vote no. You could show you thumbs 

5 down on the consensus on those other areas. But 

6 this one would be saying that you're eliminating 

7 the voting -- the reporting requirements. Okay.

8 This is a consensus. Yeah, because 

9 look at where we're at. It's Tuesday. We have 

10 Wednesday and Thursday left.

11 PARTICIPANT: If we approve this via 

12 consensus then you can't put private loan debt --

13 I mean, theoretically, if Whitney was writing 

14 this -- you can't put private loan debt back in 

15 because we have consensus on reporting 

16 requirements now.

17 MR. MARTIN: Yeah, it would require a 

18 consensus on the whole package. This is just on 

19 this particular, this particular paper.

20 PARTICIPANT: This is Chris. It would 

21 articulate some sort of favor. If we're 

22 eliminating reporting requirements it would 
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1 certainly be indicating something to the 

2 department as far as how we feel about what 

3 information should be collected and how it should 

4 be used.

5 MR. RAMIREZ: Unless you're stating 

6 right now that --

7 PARTICIPANT: Right.

8 MR. RAMIREZ: -- and letting them know 

9 that, hey, we're not in agreement with these 

10 pieces here.

11 But I understand what you're saying. 

12 It kind of sounds kind of along the similar 

13 dynamic that Neal was talking about as far as 

14 disclosures being used to see how some of these 

15 other pieces play out before I formally approve 

16 something. And I think that's kind of what 

17 you're saying is you want to see how these other 

18 pieces play out first.

19 I'm okay with holding off on it. The 

20 only thing is, is that that's what tomorrow 

21 morning is going to be for then. We're going to 

22 need ideas from everyone of how we could either 
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1 reach agreement on these other pieces or make it 

2 clear where the lack of agreement is; right? And 

3 there is no room for compromise on those pieces.

4 But I'm going to have to have folks be 

5 candid be with me.

6 Okay, so, so much for being easy but, 

7 Greg?

8 MR. MARTIN: I mean I want to be candid 

9 about this, this being the central tenet of what 

10 we did. I can certainly if there was a lot of 

11 interest on the table about bringing these back, 

12 I could take it back to leadership. I don't see 

13 us moving off of the removal of this reporting 

14 requirement. It's a huge step in the reduction 

15 of burden.

16 I also want to remind everybody that 

17 we're not, this is not GE anymore. So we're 

18 talking about all programs, all institutions. So 

19 at a large institution, there are some here that 

20 have, you know, 150 programs, we'd be talking 

21 about doing that reporting for each of those 

22 programs. I would imagine the burden that we 
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1 would be imposing in that case -- and our goal 

2 here is not to impose that kind of burden. I 

3 can't see us imposing that type of burden on 

4 institutions to report.

5 I mean, I understand that there are 

6 disagreements around this table as to whether we 

7 should be expanding this to include all programs, 

8 all institutions, but we are doing that. So, 

9 keeping that in mind I want everybody to remember 

10 what type of burden we would be imposing on 

11 schools to institute this across the board.

12 MR. RAMIREZ: Thank you for that.

13 Whitney.

14 MS. BARKLEY-DENNEY: Yeah. And this 

15 can be my last comment. But I just want to make 

16 clear if we do take a vote I will be voting no, 

17 and why that is so we're not accused of not 

18 trying to compromise.

19 But, you know, I really am 

20 uncomfortable setting up a situation in which a 

21 very -- a bad actor, the ones we know in the 

22 past, can come and create an institutional loan 
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1 program that is unsustainable, that is 

2 investigated by every government agency and shut 

3 down, but meanwhile borrowers take out money from 

4 that program in order to mask how much it 

5 actually costs. And in some cases are still left 

6 on the hook paying that back.

7 So, you know, that, that's where I am. 

8 And then I don't think that, regardless of what 

9 the department is going to do, I as a consumer 

10 negotiator can endorse that regime.

11 MR. RAMIREZ: Sandy then Laura.

12 MS. SARGE: So what might be helpful 

13 would be tomorrow as we go through this is 

14 understanding, just like these guys are pointing 

15 out, which I think is great because it's helpful, 

16 is I'm not comfortable with Issue Paper -- or 

17 excluding the reporting requirements because we 

18 think that private debt should be back included. 

19 You know, like just making sure that we 

20 understand where the side is because that's 

21 really then what we need to talk about, right, is 

22 how we get those -- how do we get from those on 
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1 this issue. And we need to understand that.

2 So, maybe as we go through things 

3 tomorrow we can make sure that we know: I'm not 

4 voting on sanctions because of this; or, you 

5 know, what we're coming up with, so that we're 

6 all clear. And we can then decide how to 

7 negotiate or how to come to compromise.

8 MR. RAMIREZ: Thank you. Laura.

9 MS. METUNE: I just wanted to be really 

10 clear from the community college perspective that 

11 there is a burden of this reporting. And I'm not 

12 in any way saying I would support expanding this 

13 to every institution and every program. What I'm 

14 saying is that gainful employment was designed to 

15 protect students from what we knew was a series 

16 of bad actors.

17 And I'm concerned with the idea that 

18 we completely moved away from what gainful 

19 employment was designed to do to set up a system 

20 that really creates a burdensome and meaningless 

21 mechanism for oversight with really very little 

22 by way of protecting students. And that I'm 
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1 being asked to vote on this it just -- I just 

2 wanted to be clear that community colleges don't 

3 love this reporting. We don't want to have to do 

4 this either. Which is why we understood the 

5 requirement when this rule was focused on areas 

6 where we knew there was a problem.

7 Because we thought the burden of 

8 reporting was outweighed in many cases by the 

9 benefit of consumer protection. And I don't 

10 think that's true anymore.

11 MR. RAMIREZ: Yeah. And so, Laura, I 

12 understand that. So I have no problem trying to 

13 discuss some of these other things and see how 

14 much more agreement or lack of agreement we get 

15 to. And then come on back to this one. Okay.

16 Ahmad.

17 MR. SHAWWAL: Ahmad. Could we have 

18 some sort of graphic on the screen for tomorrow 

19 so that we can physically, like, plot out the 

20 issues where there are areas of contention?

21 MR. RAMIREZ: Sure.

22 MR. SHAWWAL: And then possibly check 
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1 them off or cross it out. I thought that was 

2 helpful last session.

3 MR. RAMIREZ: Sure. Okay.

4 Okay, any other questions or comments?

5 PARTICIPANT: I've stalled long enough 

6 if we want to move to public comment. Folks are 

7 here.

8 MR. RAMIREZ: Okay. So, yeah, the tap 

9 dancing shoes are off. Public comment.

10 So, if anyone has public comment, come 

11 to the mike, introduce yourself and make your 

12 comments.

13 MR. COHEN: Good afternoon. Thank you 

14 for the opportunity to briefly comment. My name 

15 is David Cohen, and I am President of Five Towns 

16 College.

17 Five Towns College is a proprietary 

18 college located on Long Island, New York. 

19 Founded in 1972, we are a comprehensive college 

20 of the arts that serves approximately 700 

21 resident and commuter students. Our college is 

22 regionally accredited by Middle States. And our 
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1 programs for the preparation of public school 

2 teachers are accredited by the National Council 

3 for Accreditation of Teacher Education, NCATE.

4 We offer degrees from the associate 

5 through to the doctoral level.

6 While many know us because of famous 

7 former students like Adam Levine, Joe Satriani, 

8 and Wyclef Jean, we are most proud of the 

9 countless classroom teachers and music educators 

10 we have prepared for New York's public schools.

11 We want to thank the department for 

12 pausing to rethink gainful employment. Our 

13 students, faculty, and staff believe that the 

14 rule as made was unfair. For example, several of 

15 our arts programs were in the zone. Our music 

16 program, for example, had a D/E ratio of 8 

17 percent. We considered shutting down that 

18 program despite the high quality we knew it 

19 represented.

20 The unfairness is that our students 

21 would have then been forced to enroll at other 

22 schools not subject to the rule, with tuition 
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1 rates that are approximately twice as high as 

2 ours, and with D/E rates that are significantly 

3 higher as well.

4 For example, while the Five Towns 

5 ratio was 8 percent, the rate at the University 

6 of the Arts was 15 percent; at the Boston 

7 Conservatory of Music, 15 percent; at Julliard, 

8 13 percent; at the Berklee College of Music, 12 

9 percent.

10 These rates demonstrate that the rule 

11 was flawed and didn't necessarily serve the 

12 purpose for which they were made, as our students 

13 would have been forced to attend lower performing 

14 institutions as defined by that ratio. Those 

15 rates also demonstrate that some career paths, 

16 particularly those that serve the arts, should 

17 have higher D/E ratios than 8 percent.

18 I have heard others on this panel echo 

19 that concern. And we ask you to consider that 

20 fact when you make the final rule. We join with 

21 them.

22 Thank you.
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1 REV HAMLIN: Good afternoon. My name 

2 is Reverend Sekinah Hamlin. I'm Director of the 

3 Faith and Credit Roundtable of the Center for 

4 Responsible Lending. I have the privilege of 

5 working with faith leaders as we work to end 

6 predatory lending and to ensure that all have an 

7 opportunity to succeed and living to their 

8 God-given abilities.

9 As a minister, the faith community is 

10 very well acquainted with a text from Jeremiah 

11 that says that God has plans for all of us, plans 

12 to prosper us, to give us our hope and our 

13 future. Therefore, when the Center for 

14 Responsible Lending endeavored to talk with 

15 students of Allied Medical Group in Orlando, 

16 Florida, to talk to them about truly what they 

17 believed their hopes were when they went into 

18 various programs with this for-profit college, I 

19 was thrilled, but I was also disheartened to hear 

20 that truly the hopes that God would have for 

21 their lives were not realized.

22 And in our tradition we testify. So I 
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1 want to read you the testimony of Elena and what 

2 she said about her hopes and dreams.

3 Elena is a 35 year old Hispanic female 

4 who is currently unemployed, occasionally doing 

5 freelance work as a self-contracting pharmacy 

6 tech in various locations, as well as filling in 

7 at her family's grocery store. After seeing 

8 television commercials for the local branch of a 

9 large for-profit college chain, targeted at those 

10 without a GED like herself, Elena enrolled in 

11 their pharmacy tech associates degree program and 

12 completed it in two years.

13 When asked why she did or why she 

14 decided to go to college in the first place, she 

15 said, "Money. That's why I went. That's what I 

16 went to school for. I didn't want to settle for 

17 just any old regular job. It meant my future and 

18 that I was going to have money and be stable."

19 However, despite her own financial 

20 investment in her education, she reportedly owes 

21 about $80,000 with interest accrual. She has 

22 seen very little return.
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1 As per assurances from her program at 

2 the for-profit college, she expected to make 

3 between $13 and $15 an hour working as a pharmacy 

4 tech, which according to her would have enabled 

5 her to begin to pay off her student loans. 

6 However, these expectations were not met when she 

7 put herself on the job market.

8 The pharmacies at which she was 

9 offered a job only paid $10.50 per hour. She 

10 explains that the financial aid officers at the 

11 for-profit college encouraged her to apply for 

12 all these monies, grants and loans that I could 

13 get. And they took it all, all of it, she said. 

14 And, yes, I am left with this bill.

15 She is not currently paying on the 

16 loan. She hasn't paid a dime, explaining that 

17 because she is not currently working in a steady 

18 job her income-based repayment plan allows her to 

19 pay zero dollars towards her loan each month.

20 Because of her current financial 

21 situation she has hopes of going back to school 

22 to earn a bachelor's degree, hoping after 
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1 graduation to "be making more than what they told 

2 me I would be making as a pharmacy technician." 

3 She feels the need to act due to the prospect of 

4 having her wages garnished, which she says she 

5 could not handle in light of having a child and 

6 being pregnant with a second, saying that this 

7 scenario if scary.

8 She finds it incredible that her 

9 cousin, who works in fast food, makes a 

10 comparable wage to what she makes freelancing as 

11 a pharmacy tech. But she says that even with a 

12 better paying job after earning her bachelor's is 

13 going to make it -- it's going to take the rest 

14 of her life to pay her money back.

15 Elena's responses to two short surveys 

16 administered following a focus group confirmed 

17 her dire financial condition. On the first 

18 survey, the CFPB Financial Well-being Survey, 

19 Elena scored a 29, one of the lowest of all focus 

20 group participants, and substantially below the 

21 nationwide average of 54.

22 The CFPB reports that a score below 50 
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1 is associated with a high probability of 

2 struggling to make ends meet and of experiencing 

3 material hardship. A second survey designed by 

4 CRL about credit, product usage, and practices 

5 show that Elena resorted to payday loans and bank 

6 overdrafts, had also been contacted by debt 

7 collectors, and had only been able to save money 

8 prior to taking out student loans.

9 I appeal to you to give people truly 

10 what for us God's word says, a hope and a future, 

11 and not have them straddled with that burden.

12 Thank you.

13 MR. RAMIREZ: Thank you.

14 Anyone else? Yes.

15 PARTICIPANT: Hi, everyone. My name is 

16 Senya(phonetic). I'm from the student debt 

17 reform advocacy group Higher Ed, Not Debt. I'm 

18 here to read a statement from a veteran and 

19 borrower. His name is Harrison Luisma(phonetic), 

20 and he attended Technical Career Institute in New 

21 York City.

22 "I'm a 29-year-old veteran of the U.S. 
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1 Army. I served two years in Afghanistan and Iraq 

2 in 2008 and 2009. When I returned I was called 

3 up from the Army Reserve to protect commuters --

4 to protect commuters at railroad and bus stations 

5 in New York City. I would stand in my uniform 

6 with fellow soldiers watching for anything 

7 unusual.

8 "During this time I was homeless and 

9 lives in a V.A. shelter. In 2012, a school 

10 recruiter started talking to me while I was 

11 guarding Penn Station in New York City. The 

12 recruiter asked me if I would like to go to 

13 school to work as a heating, ventilation, and air 

14 condition mechanic. He said his school, the 

15 Technical Career Institute, had a 97 percent job 

16 placement rate and was right next to Penn 

17 Station.

18 "This sounded like a good idea, as my 

19 life had stagnated since I had come back from 

20 Iraq and Afghanistan. I signed a bunch of papers 

21 to pay $15,000 in tuition. I was told that the 

22 V.A. would pay for everything, and that the 
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1 federal loans I took out would be reversed once 

2 the V.A. payments kicked in.

3 "What a mistake. The classes reminded 

4 me of after school daycare. Students were 

5 milling about. The classrooms were overcrowded. 

6 Instructors were poorly prepared and lacked any 

7 focus. The material taught was out of date. I 

8 learned little and never worked as an HVAC 

9 technician as I didn't learn enough.

10 "TCI never credited any of my V.A. 

11 payments against the federal loans which it said 

12 it would do. Now I owe $9,000 on my federal 

13 loan. That is a third of my annual income. I 

14 work as a forklift operator in a warehouse 

15 earning minimum wage.

16 "I learned a lot about TCI through my 

17 lawyer, who is trying to get rid of this debt. 

18 In 2004, the parent company of TCI sold $10 

19 million in stock to investors. One month later, 

20 the CEO and chair of the parent company sold 80 

21 percent of their personal stockholdings and 

22 pocketed $6 million.
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1 "In 2006, the stock of TCI's parent 

2 company collapsed. This was triggered when New 

3 York State stopped the company's expansion due to 

4 student complaints about crowded classrooms, poor 

5 instruction, and few jobs.

6 "In 2008, TCI was investigated after 

7 students complained that they somehow now owed 

8 TCI money. The U.S. Department of Education 

9 found that TCI manipulated its default rate to 

10 ensure the flow of federal loans. TCI did so by 

11 paying off $500,000 worth of federally insured 

12 debt involving 300 TCI students. TCI hired debt 

13 collectors who hounded the 300 students.

14 "TCI also refused to release the 

15 transcripts of the 300 students until they repaid 

16 this new debt. DOE stepped in and the debts were 

17 stricken. TCI continued thereafter becoming a 

18 prominent advertiser on New York City subways.

19 "By 2015, 100,000 students had passed 

20 through its doors, generating $150 million in 

21 loans. But the value of a TCI education was 

22 minimal. In 2017, 7 out of 13 programs failed 
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1 the gainful employment test. TCI's repayment 

2 rate on loans was 24 percent, which placed it in 

3 the bottom 15 percent of schools whose students 

4 were trying to repay their debt.

5 "In 2017, TCI went out of business. 

6 But I still own $9,000 for a year that my life 

7 was wasted. Few days go by without my wishing I 

8 had been posted at Grand Central or Port 

9 Authority or the Freedom Center rather than Penn 

10 Station where the TCI recruiter found me."

11 I'd also like to state for the record 

12 that Higher Ed, Not Debt is opposed to one hour 

13 of closed door negotiations. I think if there 

14 are things negotiators don't feel comfortable 

15 saying for the record or in front of the camera, 

16 perhaps they should not be negotiators in a 

17 public federal rulemaking session.

18 Thank you.

19 MR. RAMIREZ: Okay, thank you.

20 Any other comments?

21 (No response.)

22 MR. RAMIREZ: Okay, hearing none, then 
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1 that concludes for today. And, again, tomorrow 

2 I'll be here at 9:00 o'clock. It will be open 

3 for the public at 10:00 o'clock.

4 And as I stated just -- I heard you --

5 and it's not a negotiations, it's an opportunity 

6 for them to come and share ideas with me and so I 

7 can find that overlap. It's a common mediation 

8 tactic or tool.

9 Okay. So, I ask folks again, same as 

10 yesterday, they do need to escort folks out. So, 

11 if you could pack up your stuff so that way the 

12 Department of Ed folks can help you out, that 

13 would be great. And please take your trash with 

14 you or, I'm sorry, not with you but throw it out 

15 in the trashcans.

16 Thank you.

17 (Whereupon, the session recessed at 

18 5:00 p.m., to reconvene at 10:00 a.m., Wednesday, 

19 March 14, 2018.)

20