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UNITED STATES DEPARTMENT OF EDUCATION

+ + + + +

GAINFUL EMPLOYMENT

NEGOTIATED RULEMAKING COMMITTEE 2017-2018

+ + + + +

SESSION 3

+ + + + +

Monday,

March 12, 2018

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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: Okay, so for the record, 

4 we are starting the Department of Education 

5 Gainful Employment Session 3 and I want to 

6 welcome everyone. Just a quick note on the 

7 security; that's how it's going to be all week. 

8 It looks like we're probably going to have to try 

9 to get here a little bit earlier to get through 

10 that. And the other thing is to get in and out 

11 of the building, you're going to need a 

12 Department of Education escort, so smokers good 

13 luck. You may be stuck out there for a little 

14 bit getting back in because you're going to have 

15 to wait for that escort. So that's why we 

16 allocated 90 minutes for lunch, a little bit of 

17 extra time for folks to get down and get back up. 

18 So if you can, be sparing on the number of times 

19 you have to leave the building so that we could 

20 try and minimize the number of escorted trips. 

21 That being said, restrooms are on this floor; men 

22 are just straight out the hall; women's, if you 
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1 go where the sign-in desk was, you go behind that 

2 way, the hallway, and then to the left. That's 

3 where the women's restrooms are.

4 Okay, if there's going to be live 

5 streaming today, there's a spot back over here 

6 where you could plug in and stream if you like. 

7 We do ask, again, that during any breaks that the 

8 live streaming be stopped at that time.

9 A quick reminder, we may do some 

10 temperature checks this week, but at some point 

11 we're going to have to take some official 

12 consensus checks, so I remind you that on the 

13 thumbs you have to put your thumb down so that we 

14 know that you are not in agreement. And 

15 depending on where we're at in the process, we 

16 may just record more or less what that consensus 

17 check is, contestant vote is, or I may pick on 

18 you. I may say what's going on, is there an 

19 alternative suggestion that you have. 

20 On discussions, you all have been 

21 doing great as far as keeping it professional. I 

22 know that we've had some hard issues that we've 
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1 had to discuss; I hope that we can continue that 

2 professional dialogue, be hard on the issues, not 

3 on the people. Let's do our best not to single 

4 out any specific organization or institution. 

5 And asking again for your help with the elmos. 

6 If we're beating at the horse enough, let's move 

7 on folks, let me call that.

8 So we'll do an agenda review and then 

9 when we're done with that, we're going to 

10 approve, ask for an approval of the summary from 

11 Session 2. Hopefully you've had a chance to look 

12 at that. Then we'll see if there's any member 

13 comments, followed by public comments. And then 

14 we're going to jump right into the issues after 

15 that. And what I'm going to do, we're going to 

16 go in order 1 through 8, and I'm going to ask 

17 Greg to give us an idea of some of the 

18 modifications from our last meeting to what was 

19 distributed, and then we'll go through each one. 

20 Erin is going to be kind enough to try and 

21 capture up on the screen there as we go any 

22 suggested changes and approvals. So I would ask, 
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1 if you do have any changes, just repeat a few 

2 times so Erin can get it correct up on the board 

3 there. Or if you have a paragraph you want to 

4 throw up there -- Erin, could you raise your 

5 hand?

6 Erin's over here. So you could either 

7 give him the paragraph so he could type up there 

8 or I think he's even kind enough to let you put 

9 your fingers on the keyboard and type away if 

10 need be. Okay, so we'll try our best to give a 

11 visual so that way you can see what it truly 

12 looks like before we can make any additional 

13 modifications or take a consensus check.

14 So with that, let's start off with any 

15 comments from the negotiators. Do any of the 

16 negotiators have any comments?

17 Daniel?

18 MR. ELKINS: Do we have an ETA or has 

19 anyone been in contact with Jennifer?

20 MR. RAMIREZ: No. I was going to 

21 comment that it looks like that's the only group 

22 that's not represented at the moment. It looks 
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1 like all the other groups have a representative 

2 present, but we -- I should probably check my 

3 emails and make sure before I say that we have 

4 not -- but I have not seen anything yet.

5 No, nothing yet. But we'll continue 

6 to move forward; I'm sure that they'll have a 

7 little bit of time before we start voting on 

8 anything.

9 Okay, how about for the public; any 

10 comments from the public?

11 All right, are there any modifications 

12 for the summary that was sent out for the last 

13 round? Or is everyone okay with the summary?

14 Let me see a show of thumbs if 

15 everyone's okay with the summary.

16 Okay, so no thumbs down on the 

17 summary. Then I guess we're going to quickly 

18 jump into the issue statements here, issue 

19 papers. Greg, if I could ask you to lead us off, 

20 give us any rationale or any guidance that you 

21 can, as well as hitting on what the modifications 

22 were.

23
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1 MR. MARTIN: Thank you, Javier. And 

2 good morning, everybody. Nice to have you back. 

3 I had hoped that we would have more spring-like 

4 weather, but I guess it was not to be. So each 

5 paper as we go through it -- we'll start with 

6 Issue Paper 1 -- but each paper does contain a 

7 summary of the changes since Issue 2, and then a 

8 summary provided before Issue 2. I don't think 

9 that there's a radical departure here, but when 

10 we finished the previous session, there was 

11 interest in, I think maybe two areas that were 

12 paramount, and one was the issue of potential 

13 sanctions where programs consistently performed 

14 poorly. And we took that back, we do have a 

15 sanctions paper; we discuss issues related to 

16 that. So that's definitely a change from last 

17 time that reflects what was discussed at the 

18 table. Then the other major issue, I think, 

19 you'll see reflected in these papers is the 

20 addition of a second metric. As you recall the 

21 discussions in the last session, there was the 

22 issue of whether or not DE rates were the only 
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1 metric and then whether it'd be -- remember we 

2 had taken out appeals from DE metrics, appeals to 

3 DE alternate earnings appeals, so there was the 

4 issue of something else besides DE rates that a 

5 program could use to show its outcomes. And I 

6 think we had a lot of discussion around the fact 

7 that perhaps DE rates were the only thing we 

8 should be looking at, that a program could have 

9 DE rates that didn't reflect the two outcomes of 

10 the programs. So we took that back.

11 We have introduced a second metric 

12 here that is repayment rate. I don't want to go 

13 into great detail with that now, but we will be 

14 discussing repayment rate. And I think when we 

15 look at the repayment rate and where the 

16 Department is with that and where we're going to 

17 solicit discussion around the table is around 

18 what threshold should we use. So the protocol 

19 we've introduced here is one where an institution 

20 would have DE rates calculated for it in the same 

21 way we proposed initially, and you would also 

22 have repayment rate. And we're referring to the 
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1 threshold as benchmarks, as having met a 

2 benchmark and not having met a benchmark. And so 

3 we have it so that there would be both, a school 

4 would be measured by a program rather, would be 

5 measured by both benchmarks, repayment rate and 

6 DE. We have the DE thresholds in place; we have 

7 not proposed an actual benchmark as of yet for 

8 repayment rate. We have some ideas, we'll put 

9 those forward, and we'll also entertain any you 

10 might have and see where we can go with that.

11 These proposed rules here also reflect 

12 removal of graduate programs completely from the 

13 entire metric, so either metric. So we would not 

14 be looking at graduate programs, and you see that 

15 reflected in all the papers where it now says 

16 undergraduate educational programs. I'm trying 

17 to think of any other -- I think those would be 

18 the major changes that we've proposed. We're 

19 still committed to doing the calculations 

20 administratively without having institutions have 

21 to report to us, so we're still in the 

22 simplification, still a major part of where we 
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1 wanted to go with this.

2 I guess that's an overview of the 

3 major changes or differences as I see them from 

4 last time. So you want to get going to Issue 

5 Paper 1 here?

6 MR. RAMIREZ: Yes, any questions on 

7 that before we get into Issue Paper 1?

8 Okay. Yes, so go ahead Jennifer. And 

9 just make sure, folks just a quick reminder to 

10 state your name for the record.

11 MS. BLUM: Yes, Jennifer Blum. And I 

12 don't actually really care about what I'm about 

13 to say, but the agenda said that we were skipping 

14 one.

15 MR. RAMIREZ: Yes, I think one was at 

16 the bottom for scope of purpose.

17 MS. BLUM: Well, I didn't mean 

18 skipping. 

19 MR. RAMIREZ: Yes, I think we modified 

20 that a little bit, so just go in order.

21 MS. BLUM: Okay. Like I said, I was 

22 just -- okay.
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1 MR. ELKINS: Yes, I'm sorry. I just 

2 want to go numerically; it's just a personal 

3 preference. 

4 MR. RAMIREZ: Yes, okay. All right --

5 MR. ELKINS: If you feel like I 

6 somehow have something -- we're going to start 

7 with Issue Paper 1.

8 MR. RAMIREZ: Okay. So Greg, you want 

9 to kick us off then? Folks, I know that there is 

10 difficulty sometimes, that some of these papers 

11 are linked with each other, but let's do our best 

12 to see where those areas of agreement that we 

13 could check and hopefully get consensus and save 

14 the real time and discussion on the areas where 

15 there's great concern.

16 So Greg, you want to walk us through 

17 it?

18 MR. ELKINS: Yes. Sure, Javier. And 

19 again, as you just pointed out, there are areas, 

20 obviously especially with scope and purpose, 

21 where we're going to see some, raise some things 

22 that will be discussed in more detail in other 
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1 papers. But just to get you familiar with that. 

2 I don't have any problem with people discussing 

3 those now. Maybe we should try to keep our 

4 comments about those things from a higher level 

5 with this paper and then get more into the 

6 details as we move along.

7 So taking a look at this and I'll just 

8 read the summary of the changes since Session 2; 

9 since the second negotiating session we proposed 

10 to limit the scope of the regulations to 

11 undergraduate programs; we also proposed to add a 

12 loan repayment measure which we are going to 

13 address substantively in Issue Papers 3 and 6.

14 So just to review what these papers 

15 did initially; we proposed to change the focus of 

16 these regulations for programs that prepare 

17 students for gainful employment and recognize 

18 occupation to all educational programs. 

19 Significantly, we proposed to remove the 

20 provision of Section 68-668401 that provides that 

21 Sub-Part Q establishes procedures under which the 

22 secretary determines whether a program is 
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1 eligible for Title 418 program funds. We will 

2 discuss the substantive changes to definitions 

3 and issue papers that correspond to topic of the 

4 defined term.

5 So the overall structure of this 

6 unchanged; we still have removed automatic 

7 program sanctions. We will have a discussion on 

8 Issue Paper 3 of those administrative sanctions 

9 that we have, that we are presenting.

10 So we're going to go through here and 

11 see what is -- not a whole lot has changed here -

12 - I do want to draw your attention to where we 

13 have undergraduate educational programs 

14 reflecting the fact that we have eliminated 

15 graduate programs from both metrics and that we 

16 are referring to the thresholds as benchmarks.

17 And you'll note in 403 gainful 

18 employment debt to earnings rate is undergraduate 

19 educational programs.

20 On Page 2 668-406, note that the debt, 

21 the DE rates alternate earnings appeal, has 

22 changed to calculating and issuing loan repayment 
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1 rates. So what you'll see when we get there, the 

2 loan repayment rate metric has been inserted and 

3 moved into what was formally DE alternative 

4 earnings appeals, so that there are no DE 

5 alternate earnings appeals.

6 And final determinations in 409 you'll 

7 note the inclusion of the benchmark phrase, 

8 undergraduate educational program benchmarks. 

9 And 410 where consequences is stricken, it's 

10 notification for programs that did not meet 

11 benchmarks. So I know we had some discussion 

12 last time around how we would characterize where 

13 a program fell with respect to the metrics. So 

14 that's what we're going to use, the term 

15 benchmark.

16 In scope and purpose the bottom of 

17 Page 2 668-401, just note the sub-part applies to 

18 undergraduate programs offered by an eligible

19 institution. So that does take into account then 

20 all programs, all institutions, except for 

21 graduate programs. 

22 And you'll note at the top of Page 3 
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1 where the secretary calculates the programs debts 

2 to earnings rate and loan repayment rate. And we 

3 note that actions may be taken on the program's 

4 rates, and that there are program level and 

5 disclosure and certification requirements as 

6 well.

7 668-402 is just definitions. I do 

8 want you to take a look at the cohort period. We 

9 will discuss this in a little more detail -- this 

10 does represent a change over what we proposed at 

11 the last session. So let's just read through 

12 that.

13 The two-year cohort period, I think we 

14 had eliminated the four-year period previously, 

15 so that is not a change. The two-year cohort 

16 period during which those students -- this is the 

17 definition of a cohort -- during which those 

18 students complete an undergraduate educational 

19 program are identified in order to assess their 

20 loan debt and earnings for the purpose of DE 

21 rates. And you'll see here that the look-back 

22 period is changed from third and fourth year, on 
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1 the top of Page 4, to rather the fifth and sixth 

2 award years prior to the award year for which the 

3 DE rates are calculated in 668-404. For example, 

4 DE rates are calculated are for '16, '17, the 

5 two-year cohort period is award years 2010 to 

6 2011, and 2011-2012.

7 Trying to think of other things here 

8 we should review -- just continue at the bottom 

9 with credential level note that we have removed 

10 any reference to graduate programs, again.

11 And don't think there's anything else 

12 here that we need to go over before we open the 

13 floor for discussion.

14 MR. RAMIREZ: Okay, so I'm hearing 

15 removal of the graduate and inclusion of all 

16 programs, a two-year cohort period and a look17 back period of fifth and sixth year versus third 

18 and fourth year. Those would be the major 

19 changes in there?

20 MR. ELKINS: Yes, correct.

21 MR. RAMIREZ: Okay. What comments or 

22 questions do you all have on that?
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1 Go ahead.

2 PARTICIPANT: So I do also have a 

3 question about the benchmark; do you want to hold 

4 off until the next issue paper about the 

5 rationale?

6 MR. ELKINS: Sure.

7 PARTICIPANT: Okay. So can I ask 

8 about the rationale about changing the look-back 

9 period to four and five years; that seems worse 

10 for borrowers because it means that it will be 

11 longer until it's revealed that a program isn't 

12 meeting the benchmark?

13 MR. ELKINS: Greg for the record, and 

14 I guess we should try to remember to say that. 

15 The move to the fifth and sixth year of the look16 back period reflects the Department's position 

17 that it gives students more time to be in the 

18 field, earning that it was a more representative 

19 look at where people are rather than using a 

20 third and fourth year.

21 MR. RAMIREZ: Okay, let me get Sandy, 

22 Jennifer and then Laura.
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1 MS. SARGE: So could you go through 

2 the -- you guys use an example in here -- I'm 

3 sorry; this is Sandy for the record -- so the 

4 cohort of '16, '17 and then you go back '10, '11, 

5 '12 -- could you define for me which would be the 

6 cohort of students you would look at? 

7 MR. ELKINS: Oh, I'm sorry. That's 

8 not so good. It's as it says, it's still a two9 year cohort, those are the two years; it's just 

10 back -- you could see before it was the third and 

11 fourth year prior, now it's just the fifth and 

12 sixth year.

13 MS. SARGE: Okay, so you grabbed the 

14 graduates -- if we're reporting in '16-'17, or 

15 you're reporting for us '16, '17 year, you'd go 

16 back two years, '13-'14, '14-'15?

17 MR. ELKINS: No, it has nothing to do 

18 reporting.

19 MS. SARGE: No, I'm just trying to 

20 find the population of graduates; where do they 

21 come from? I'm sorry; it's early.

22 MR. ELKINS: They graduate '10-'11 and 
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1 '11-'12.

2 MS. SARGE: Okay, just making sure.

3 MR. ELKINS: Completed, yes.

4 MS. SARGE: Okay, so you just take 

5 those two years.

6 MR. ELKINS: Yes.

7 MS. SARGE: Got it.

8 MR. ELKINS: It's just what it was 

9 before, only the period is moved back. We didn't 

10 change the two-year cohort, the two-year cohort 

11 is the same.

12 MR. RAMIREZ: Okay, Jennifer?

13 MS. BLUM: I want to recommend 

14 actually that we hold the conversation until we 

15 get to the DE and loan repayment rate, because 

16 we're appreciative of the earnings piece of it 

17 that it's five and six years out is a little bit 

18 more realistic in terms of how the student is 

19 actually faring after graduation. But it also 

20 ties in, in my view, a little bit to the loan 

21 repayment rate and what metric that is, so I 

22 would just say that before we dive in, we perhaps 
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1 wait until we get to the real conversation about 

2 the metrics.

3 MR. RAMIREZ: Okay. Laura and then 

4 Kirsten.

5 MS. METUNE: Laura Metune. I just 

6 wanted to say that I was one of the people that 

7 suggested that we might consider the idea of 

8 treating graduate programs differently, but I am 

9 a little bit confused about the rationale of 

10 extending the time period for students to begin 

11 making money in the field for programs that are 

12 short-term certificate programs. Essentially, 

13 the GE programs that were designed to be 

14 regulated by this practice here, I'm thinking if 

15 we're just narrowing the scope to GE and 

16 baccalaureate level, why would you need to go out 

17 more years?

18 But I think really my point is I think 

19 we need to consider why gainful employment in the 

20 first place, who this is designed to cover, what 

21 we were designed to protect as we go into this 

22 conversation. I think that's all I have to say, 
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1 thank you.

2 MR. RAMIREZ: Okay, Kirsten? 

3 MS. KEEFE: I'm fine with holding off 

4 on that -- this is Kirsten -- with holding off on 

5 that conversation. I do have more questions 

6 about it, but if that's the consensus that we 

7 hold off, I'm willing to do that.

8 MR. RAMIREZ: Okay, thank you. Yes, I 

9 think we're going to get into some greater detail 

10 later. Whitney?

11 MS. BARKLEY-DENNEY: I'm willing to 

12 hold off as well, but I echo Laura's concerns. I 

13 also just wanted to apologize for being late; I 

14 went to the other Department of Education 

15 building and waited in line, and then had to get 

16 here and wait in line. So I apologize.

17 MR. RAMIREZ: Chris and then Daniel.

18 MR. MADAIO: Chris Madaio. So my 

19 concern is about the elimination of graduate 

20 programs. I guess when I look at it, clearly one 

21 of the things the Department articulated was an 

22 interest in including more students and that was 
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1 the basis for including the public's and the non2 profits. So it seems odd on one hand to want to 

3 give more students information about their debt 

4 and their earnings and then not want to give a 

5 certain set of sub-students information about 

6 debt and earnings. So I guess, maybe I'll just 

7 start with that; Greg, can you tell us the 

8 rationale for the elimination of that?

9 MR. ELKINS: Sure. Greg for the 

10 record. Yes, the rationale for the elimination 

11 of graduate programs; first of all, that was 

12 discussed at the previous session. Our rationale 

13 for taking it out here is that in looking at what 

14 we're trying to do in providing information to 

15 students, that for graduate students, the point 

16 at which somebody becomes a graduate student we 

17 are presuming at that point a certain amount of 

18 savvy maturity, familiarity with borrowing in 

19 general. And that we just did not feel for 

20 purposes of proposing these rules that a graduate 

21 student needed to have the same information 

22 provided or that the same level of protection 
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1 afforded, that you needed for undergraduate 

2 students.

3 And again, part of our efforts here 

4 are to streamline and simplify, so I think it 

5 goes towards that. But also our recognition that 

6 graduate students are in a different place. Of 

7 course, if you disagree with that, we're 

8 certainly willing to hear any views to the 

9 contrary.

10 PARTICIPANT: Okay, thank you. Yes, I 

11 mean, I do disagree with that; I think on one 

12 hand a student could go from a certificate to an 

13 associates to a bachelors and that student will 

14 have gone through multiple levels of education, 

15 yet still is deemed by this rule as it's drafted 

16 to have needed that information at the level of 

17 each program. But on the other hand, a student 

18 could just go straight to a bachelors and then to 

19 a masters and only have gotten the debt to 

20 earnings information the one time. So I guess to 

21 me those two students almost are at an equivalent 

22 level of need for what the program they're about 
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1 to enroll in, how it's going to perform compared 

2 to the amount of debt they're going to take on. 

3 And especially graduate programs are often more 

4 expensive certainly I would think than 

5 certificate level and associates programs. So 

6 they're taking on a substantial amount of debt, 

7 more debt, than they would otherwise.

8 So understanding the outcomes in this 

9 metric I think is important, especially if we're 

10 assuming that they're all savvy and mature, then 

11 they should be able to -- then more information 

12 for such a student would be good because often a 

13 complaint is too much is going to confuse them, 

14 they won't understand this, but a graduate 

15 student would understand this metric and might 

16 find it very useful when shopping around for 

17 programs. And then of course, there is the need 

18 for this in the schools with the bad outcomes. 

19 The school in the capital of North Carolina that 

20 was a law school, $337 million in loans in a 

21 course of five years, whereas one in five 

22 students were graduating, passing the bar, 
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1 getting a job and taking on massive debt. So I 

2 would think that students going to a school like 

3 that would have desperately wanted to know how 

4 much debt they were going to take on versus the 

5 earnings that people at that school were 

6 obtaining.

7 Again, I think especially if the 

8 sanction is what it is in these papers -- because 

9 again, I recall the conversations that you 

10 discussed, to me those conversations were 

11 centered around finding an area of potential 

12 compromise where there could be legitimate 

13 sanctions in line where the rule is currently. 

14 And then there could be room for some compromise 

15 on what specific programs are covered. But 

16 because I don't feel like this set of rules has 

17 those levels of sanctions, if it's going to 

18 remain essentially a disclosure only rule, then 

19 it seems very odd to not be disclosing certain 

20 students the information.

21 MR. RAMIREZ: Let me get Daniel, Jeff, 

22 Jordan, Todd and Sandy. Daniel?
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1 MR. ELKINS: This is just for 

2 Jennifer. Don't worry, I asked to make sure that 

3 you were here -- or I'm sorry, Whitney -- that 

4 you were here on time and I was going to hold 

5 everyone back until you got here.

6 MR. RAMIREZ: Yes, I beat it. I'm 

7 sorry. All right, Jordan?

8 PARTICIPANT: Jeff.

9 MR. RAMIREZ: I'm sorry; Jeff, then 

10 Jordan.

11 MR. ARTHUR: Yes, first of all, I do 

12 agree with Chris on this. I do think that our 

13 purpose here is to provide information to 

14 prospects. We know that 38 percent of the debt 

15 is at the graduate level, so it's meaningful 

16 information that can be made available. Now, I 

17 don't necessarily -- and I think the sanctions 

18 that are proposed here are very meaningful 

19 despite what some might think, I think they 

20 really are meaningful. And I would suggest that 

21 possibly for grad programs, that maybe we 

22 wouldn't need to necessarily impose sanctions. 
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1 And then my last fallback on that is, even if we 

2 do continue to exclude them, I would strongly 

3 urge the Department to at least include the data, 

4 as they can all types of data in the college 

5 scorecard. And that the information at least be 

6 available out of this process, even if it's not 

7 part of the actual writing of this regulation.

8 MR. RAMIREZ: Okay, Jordan?

9 MR. MATSUDAIRA: Thanks. I was going 

10 to say almost exactly what Jeff said, so I won't 

11 -- but I totally agree.

12 MR. RAMIREZ: Okay, thank you. And 

13 Todd?

14 MR. JONES: This feels like deja vu 

15 all over again. I mean, we had this discussion 

16 last time, there was a consensus. I want to say 

17 that I believe that there's been a reversal of 

18 some parties here as to where they stood at the 

19 end of last negotiation and where we stand now. 

20 The reason we had a change to exclude graduate 

21 education was not that it couldn't be useful, not 

22 that this couldn't be relevant to someone's 
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1 thought process; the presumption is that if 

2 you've achieved a baccalaureate level of 

3 education, you have a sufficient maturity of 

4 thought and self-interest to weigh complex 

5 decisions such as whether to attend graduate 

6 school. And the federal regulatory system should 

7 not be a catch-all for protecting everyone 

8 against bad decisions that they may make. That 

9 is what we talked about last time.

10 Also, to pretend that this is somehow 

11 -- merely disclosure comes without cost, without 

12 burden, without further difficulty is to ignore 

13 one of the bigger pieces of regulatory burden. 

14 We all talk about there is a cost to students; 

15 there is a cost to students if you regulate to 

16 the nth degree that's incorporated back to the 

17 cost of higher education. I'm not going to pull 

18 into the bigger discussion, but it's a real one 

19 that the expansive federal and state regulatory 

20 regimes have increased the cost of higher 

21 education. Some of these are for very valid and 

22 legitimate reasons, we can go through them. But 
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1 the end of the day, every incremental increase is 

2 cost, and that is borne not by institutions, it's 

3 borne by students. And let's stop pretending 

4 that it's not. The reason we excluded this was 

5 that it was a prophylactic measure. I actually 

6 offered it may be appropriate for baccalaureate 

7 students; there was broad disagreement, that's 

8 fine. But the reason we're including it for them 

9 is as a prophylactic measure. We're possibly 

10 over-including people for programs that are below 

11 graduate level on a prophylactic basis; we're 

12 doing it to protect those that could need 

13 assistance, even though some don't.

14 But we all agreed last time that there 

15 was a cut line here, and now some folks seem to 

16 be troubled by that. I don't know what has led 

17 to the reversal; maybe it's the recognition that 

18 we seem to be headed toward no consensus here so 

19 let's everyone stake out the position that causes 

20 us the least discomfort, I don't know. But 

21 whatever it is, it changed, and I think that we 

22 ought to recognize that and stick with where we 
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1 were at the end of last time for at least some 

2 modest change in the original draft.

3 MR. RAMIREZ: Okay, let me get Laura 

4 and then Jordan.

5 Okay. Go ahead, Jordan. 

6 MR. MATSUDAIRA: You know, Todd, I 

7 think the gist of what Jeff was saying and 

8 without putting words in his mouth, just kind of 

9 the way that I view this issue is that kind of 

10 describing the maturity of graduate students as 

11 being capable of dealing with complexity and so 

12 on, I think is an argument that providing 

13 information alone might be sufficient to allow 

14 graduate students to make wise choices about what 

15 kinds of programs they're attending, but I don't 

16 see the argument that withholding that 

17 information from them is somehow beneficial. 

18 And on the cost of regulatory burden 

19 and all those kind of things, my understanding 

20 still is that we're kind of contemplating a world 

21 where the Department is going to create all these 

22 numbers with their own data without requiring 
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1 additional reporting and so on. So I can see the 

2 kind of, there's a little bit of added cost in 

3 having to monitor these kinds of things and so 

4 on. But I'm skeptical of that. You could craft 

5 an argument that the additional burden that that 

6 would require would really outweigh the value of 

7 providing that information to students.

8 MR. RAMIREZ: Okay, so let me get 

9 Laura.

10 MS. METUNE: This is Laura for the 

11 record. I just wanted to say that there were a 

12 lot of areas where I was willing to express my 

13 openness to compromise, and I feel like all of 

14 those areas that weakened the rule were accepted 

15 into this draft. And so I don't think it's fair 

16 to hold people accountable for the areas they 

17 were willing to compromise with the understanding 

18 that there would be a larger conversation about 

19 meaningful oversight and regulation of the 

20 Department. So I just think we should remember 

21 that as they're referencing things that may have 

22 been an area of agreement at the last meeting, 
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1 understanding that there were things that we all 

2 proposed that weren't incorporated here that 

3 affect what we're willing to compromise on. 

4 Thank you.

5 MR. RAMIREZ: Okay. Todd, did you 

6 have another comment? 

7 MR. JONES: Well, I think it's only 

8 fair to respond on both counts. I understand 

9 that people compromise. I compromise too; I 

10 compromised on things that I didn't agree with 

11 but that I thought would go forward for the 

12 consensus and it'll move things along. In fact, 

13 the very discussion about baccalaureate degrees 

14 is one with which I expressed disagreement at the 

15 time, but I saw as a compromise we'll go forward. 

16 After regulatory regret in this process is not a 

17 rationale for change. And I have to go back to 

18 the comment about whether this is only data 

19 collected by the Department. There are other 

20 competing interests here and larger social 

21 questions as well; access is an important part of 

22 what goes on. I think there are institutions 
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1 that cater to individuals diligently who would 

2 not otherwise have access to careers in, for 

3 example, law or medicine, that we'll see higher 

4 rates of student loan default based on the fact 

5 that they are attempting to serve individuals who 

6 may be from under-represented communities, who 

7 have under-represented areas that need additional 

8 assistance.

9 Appalachia is a good one; part of 

10 where I represent is Appalachia where we have 

11 graduate education levels in the 1 and 2 percent 

12 range. I think it is important to understand 

13 that there are social costs when you stigmatize 

14 institutions on the basis of data, that creates a 

15 perception that there's something wrong with the 

16 institution related to things like a higher than 

17 average default rate, when the relevant 

18 comparison may not be -- when you have a program 

19 that is a -- a type of institution as a 2 or 3 

20 percent default rate and another institution has 

21 6 -- well, that's double or triple, but in 

22 reality that institution may be serving 
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1 individuals and serving them in an area that has 

2 an important social consequence, and there are 

3 other ways to address that.

4 If you stigmatize institutions -- and 

5 that's part of what this is intended to do --

6 let's be honest, that's why we have the numbers -

7 - we want people to stigmatize institutions that

8 are not perceived as performing under these 

9 metrics -- those metrics become the discussion 

10 and not other issues such as equity and service 

11 that are important parts of this calculus. We 

12 reduce everything to a metric and we undermine 

13 the larger role of graduate higher education in 

14 some ways.

15 MR. RAMIREZ: Okay, let me jump in 

16 real quick. Greg, are there areas in this scope 

17 that you think we could reach consensus on, a 

18 scope and purpose issue paper, or would it make 

19 sense to get into the details of now that we have 

20 the overview, get into the second issue paper and 

21 go down the line and see what areas we can 

22 actually get consensus on.
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1 MR. MARTIN: I would think that for 

2 the purposes of seeking consensus, we should 

3 probably wait until we get to the more detailed 

4 papers.

5 MR. RAMIREZ: Yes, okay.

6 MR. MARTIN: That's the decision I 

7 would make. Yes, I think we'll go that route.

8 MR. RAMIREZ: Yes, to me that makes 

9 sense. Instead of going through and continuing 

10 to discuss what I was viewing as more the setup 

11 for the discussion, let's go ahead and get into 

12 the next issue paper and let's start looking at 

13 the details of this and see where we can actually 

14 get consensus. Is everyone okay with that?

15 Okay, thank you. All right, so Issue 

16 Paper 2, Greg, can you give us some rationale as 

17 to what the modifications were on that paper?

18 MR. MARTIN: Sure, glad to do that. 

19 For the record, this is Greg. So looking at the 

20 summary of changes since Session 2, this paper 

21 Issue Paper 2 deals with debt to earnings rates. 

22 So mentioned earlier, we proposed to add a loan 
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1 repayment rate into the framework for 

2 undergraduate educational programs. We also 

3 proposed to refer to a program as one that meets 

4 benchmarks, if it meets the established 

5 standards. And a program as one that does not 

6 meet benchmarks if it does not meet established 

7 standards. Again, the summary of changes that 

8 were provided before Session 2, we proposed to 

9 amend 668-403 so the programs are no longer 

10 considered passing or failing based on debt to 

11 earnings rates. We proposed to refer to those 

12 programs as acceptable. I just want to point 

13 out, this is before Issue 2, so now that's not 

14 going to change the benchmarks.

15 We also proposed to remove the concept 

16 of the zone, which continues -- that's not here 

17 either. Finally, we proposed to remove the 

18 provision that a program is no longer eligible to 

19 participate in the programs based on debt to 

20 earnings rates. We also proposed that if a 

21 secretary does not calculate or issue DE rates 

22 for the year, an educational program would 
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1 disclose the rates for the previous year.

2 We have just a couple of points before 

3 we move into this, points for discussion that are 

4 here and you've probably read that I would like 

5 you to keep it in the back of your mind and to 

6 comment on it as we talk about this paper.

7 So we are interested in the feedback, 

8 and the feedback in using the DE rates as a 

9 comparison tool among institutions of similar 

10 size and scope that serve a demographically 

11 matched student population, which could include 

12 socioeconomic status, percentage of recipients 

13 and percentage of students over the age of 25. 

14 We also seek feedback on an option that would 

15 evaluate outcomes based on only the top 50 

16 percent of those students completing a program. 

17 The rationale here being that while a C student 

18 meets the Department's requirements for 

19 satisfactory academic progress, and may complete 

20 the program. Employers may be reluctant to hire 

21 other students and they may be less successful on 

22 the job. The top 50 percent of students would 
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1 demonstrate the capacity or not of the program to 

2 adequately prepare students for success, whereas 

3 outcomes of 100 percent of completers may 

4 inappropriately hold institutions accountable for 

5 low-performing students who can't be expected to 

6 enjoy the same outcomes as A or B students.

7 As we move through the paper itself, 

8 moving onto Page 2, you'll note that the earnings 

9 rate framework has changed in undergraduate 

10 educational program and that we have the 

11 framework is debt to earnings and loan repayment 

12 rates. And for each year undergraduate education 

13 program is offered by the institution, the 

14 secretary calculates the DE rates and 

15 discretionary income rate and annual earnings 

16 rate using the procedures in 668-404, 668-405. 

17 And you'll note loan repayment rate using the 

18 procedures in 668-406, we talked about that 

19 earlier in Issue Paper 1. You note that the 

20 outcomes have become benchmarks and that we have

21 a program either meeting a benchmark, or at the 

22 bottom of Page 2 we have an undergraduate program 
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1 not meeting benchmarks.

2 The debt to earnings rates, the 

3 thresholds have remained unchanged from the 

4 previous paper. And we do have the addition on 

5 Page 3, you'll note at the top there, number 3, 

6 an undergraduate program in considered to meet 

7 benchmarks under the DE rates if the institution 

8 demonstrates to the secretary that the program 

9 meets the standards for economically 

10 disadvantaged appeals in 34CFR668-213 whether 

11 each program meets the standard appeals, in 

12 668.216 for programs with 30 or fewer borrowers. 

13 We did add that in to respond to some of the 

14 issues that came up at the previous session with 

15 respect to programs that serve a different 

16 demographic, perhaps a lower socioeconomic 

17 demographic, and for those programs with few 

18 borrowers participating in it.

19 Those provisions you see there, 213 

20 and 216, are already in regulation and those are 

21 related to the necessity for a short-term program 

22 to demonstrate that it has, I believe placement 
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1 rate is 70, and the completion rate of 70 percent 

2 as well, 70 percent I should say. So we took 

3 those, we took the concept from that portion of 

4 the regulation and just incorporated it here as a 

5 way of addressing those issues that came up 

6 previously.

7 Trying to think of anything other on 

8 Page 4 -- well, at the bottom of Page 3 we do 

9 have secretary -- if an awardee or the secretary 

10 does not calculate DE rates for an educational 

11 program, the institution discloses the rates from 

12 the previous year. I think we discussed that 

13 already, we just wanted to reiterate that.

14 And then you'll note that we have the 

15 benchmark, just to point out again the benchmark 

16 for loan repayment measure, an undergraduate 

17 educational program is considered to meet 

18 benchmarks under the repayment measure if the 

19 loan repayment is greater than or equal to --

20 nothing is there -- that is something that we've 

21 been knocking around and thinking about the past 

22 couple of weeks and wanted to get feedback from 
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1 the table about that. And when we talk about 

2 loan repayment rate, we will discuss the 

3 benchmarking for loan repayment rates; as I said, 

4 we do have some ideas and we'll be interested to 

5 hear what you have to say about that as well.

6 And that's about it for that paper, so 

7 I would open it to discussion.

8 MR. RAMIREZ: All right, so let's 

9 trying limiting the discussion -- when I say 

10 limit, just time-wise on general discussions --

11 and then what I'd like to do is go up to the top 

12 and just take each section by section and see 

13 what modifications we can make and see if we can 

14 get any approval on that. So let me get Whitney 

15 and then Sandy.

16 MS. BARKLEY-DENNEY: Sure. I hope, 

17 Javier, this is what you want us to do. But I 

18 was just going to respond to the feedback 

19 questions. You know, I've noted throughout this 

20 that we've talked about the Department's goal of 

21 streamlining regulation and it seems like with 

22 both of the questions in which you're asking for 
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1 feedback, we're actually making the room more 

2 complicated; particularly with the idea that 

3 we're going to somehow compare demographically 

4 matched student populations. I'm not even sure 

5 how that would work, functionally. Would there 

6 be a different rate for people who fall into a 

7 different demographic area? Would there be a 

8 different scale by which we judge them to be 

9 failing or passing a program?

10 I mean that seems like a complicated 

11 thing for us to figure out in a scheme in which 

12 we're trying to streamline these regulations. 

13 And I would also just note that we already have 

14 an appeal, particularly for disadvantaged 

15 students is getting incorporated into this rule, 

16 and so it seems like we would be sort of getting 

17 two passes for the same folks if we did that.

18 And I would also just note, I think 

19 the same thing applies to 50 percent of students 

20 completing a program; we're already only 

21 contemplating -- and correct me if I'm wrong --

22 looking at graduates, and so we already have 
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1 people who have done at least well enough in the 

2 program that the school says that they can 

3 graduate and be employed in their field. So it 

4 doesn't seem to me like we also need to only take 

5 the top 50 percent of that. Certainly if we 

6 looked at my high school, my math scores would 

7 not put me in that region, so I think most of 

8 this will unnecessarily complicate what we're 

9 trying to do here.

10 MR. RAMIREZ: Sandy?

11 MS. SARGE: This is Sandy. So I have 

12 a general question, back to your point about 

13 trying to stay on the topic; so it seems to me 

14 that the issue about keeping graduate programs in 

15 or eliminating graduate programs is in no other 

16 issue paper except scope, so the fact that that 

17 seemed to have a lot of the discussion, where 

18 else would you guys suggest we have the 

19 opportunity to discuss that?

20 So that's my first question and then I 

21 have a comment after.

22 MR. MARTIN: I'm sorry; could you 
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1 repeat that again? I'm sorry.

2 MS. SARGE: Sure, it seemed to me that 

3 there was quite a bit of discussion about whether 

4 to include or exclude graduate programs. And I 

5 just flipped through and I'm trying to decide or 

6 determine where else would be able to have that 

7 discussion, if not in scope? Is it in another 

8 issue paper? Otherwise, we go back to scope, 

9 because I think it was a strong enough 

10 conversation that we can't ignore it, because I 

11 don't see it where we would have it somewhere 

12 else.

13 MR. MARTIN: That's correct, that is a 

14 scope issue. If anybody else has anything 

15 further to say about that issue, I would 

16 entertain that.

17 MS. SARGE: Okay.

18 MR. MARTIN: I mean, I obviously saw 

19 our proposal, but we can certainly continue that 

20 discussion.

21 MR. RAMIREZ: Let me get Jeff's 

22 comment and then we'll come back and we can see 
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1 if we can clarify that.

2 MS. SARGE: Okay.

3 MR. RAMIREZ: Jeff?

4 MR. ARTHUR: Yes, Jeff Arthur. 

5 Regarding the terminology, I think last time I 

6 suggest that we not use the passing/failing; I 

7 had recommended using the about average/above 

8 average/below average to match the scorecard 

9 language. So I'd just reiterate that again. I 

10 think identifying the benchmark is extremely 

11 difficult without having the data, and I think as 

12 we discussed last time, I still do support 

13 setting benchmarks according to population. And 

14 that's the question you're asking here is whether 

15 we should demographically match students. I do 

16 think as the data is analyzed, the benchmarks or 

17 the standards, whatever that criteria is, should 

18 be set by, maybe the simplest thing would be a 

19 percent, recipients at an institution, is one 

20 approach to deal with that.

21 I guess that's all for now.

22 MR. RAMIREZ: Okay. Erin, could you 
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1 put up Issue Paper 1?

2 Are there any other topics in Issue 

3 Paper 1 where that is the only area where that's 

4 being discussed.

5 PARTICIPANT: Besides programs? I 

6 mean --

7 MR. RAMIREZ: Graduate. Greg, do you 

8 know if there are any other areas -- any other 

9 topics in Issue 1 where it only covered an issue?

10 MR. MARTIN: We think that's the only 

11 one that's not covered in the rest. However, I 

12 don't want to rigid; obviously if someone 

13 identifies another one that they don't see 

14 somewhere else, certainly don't want to preclude 

15 further discussion at all. So just bring that to 

16 our attention. But I think that's the main one, 

17 yes.

18 MR. RAMIREZ: Okay. So, could we get 

19 the entire paragraph up on there for graduate?

20 MR. MARTIN: Yes, there's only -- just 

21 basically eliminate, we're just saying 

22 undergraduates, so that's what eliminates 
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1 graduate students.

2 MR. RAMIREZ: Okay, so where are you 

3 all at on this then? Because we're going to have 

4 to take a vote, right. We're going to have to 

5 check the consensus level to see if, officially, 

6 because we were doing temperature checks before, 

7 right. So let me get Jennifer and then Sandy.

8 MS. BLUM: Yes, and then also just so 

9 you know, my card was up for the Issue 2 when we 

10 go back to it.

11 MR. RAMIREZ: Okay.

12 MS. BLUM: On this I thought we'd just 

13 say we had just agreed that we would vote and do 

14 consensus on Issue 1 at the end. And I think as 

15 we go through the day in the next couple of days 

16 on the metrics, will help inform us as to how it 

17 relates to grad programs. So I would simply say 

18 that we already agree that we were doing the 

19 consensus vote on Issue 1 at the end, so I would 

20 just say let's do it at the end.

21 MR. RAMIREZ: Sandy?

22 MS. SARGE: So I think that -- I'm not 
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1 ready to do consensus by any stretch of the 

2 imagination -- this is Sandy -- however, I do 

3 want to make some points about, or throw on the 

4 table some conversation to Todd's points. I 

5 think you were spot on and I appreciate the fact 

6 that you made the points you did.

7 Schools tend to know their students, 

8 and if you think about the progression of where 

9 and when these metrics are going to be, in front 

10 of students before they enter school. And as 

11 students mature in their tenure within school, 

12 many schools provide financial literacy 

13 throughout the programs. And for those schools 

14 that serve under-served students who may not be 

15 from background where borrowing money was an 

16 option or like that, there is a lot schools do to 

17 help them prepare for debt repayment. So it's 

18 already hard enough to look at debt to earning, I 

19 think, as a student before you've ever 

20 experienced it. It's kind of like, okay thanks 

21 for telling me that my ARM, my adjusted rate on a 

22 mortgage is going to be ten times higher than --
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1 you're like, I don't think I really know that 

2 means until you're in it and realize what's 

3 happening.

4 But at the end of the day what I think 

5 we came back to was in essence if you're dealing 

6 with a first-time borrower or a first-time 

7 student, those are the students in most need at 

8 least getting some perspective on debt to 

9 earnings and repayment, like what's happening at 

10 those schools; once you're a graduate student, 

11 you've been in school and at least if you're 

12 concerned about debt, you would have asked 

13 somebody in your four to six years of education 

14 or what that means. And you would have been 

15 already receiving information like, hey, it's 

16 time to repay your loans, your undergraduate 

17 loans. So instead of labeling it per se for our 

18 discussion, undergraduate versus graduate, think 

19 of it as has a student ever been in school before 

20 or not. And if they have, that's who we're 

21 trying to say maybe they don't need it, and if 

22 they haven't i.e. either certificate or 
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1 undergraduate, then they do need it. Kind of 

2 keep it in mind from that perspective.

3 MR. RAMIREZ: All right, so I thought 

4 you wanted to come back to see if there's a 

5 possibility of getting a consensus vote on 

6 whether graduate programs are being included or 

7 excluded, but I'm hearing that --

8 MS. SARGE: Well, I mean, I think we 

9 should at least get a temperature check, like 

10 where are we.

11 MR. RAMIREZ: Well, if I understand 

12 it, I think that what the folks are saying is 

13 that depending on how some of the other things 

14 pan out that might guide their decision on 

15 inclusion or exclusion of a graduate program.

16 So is everyone comfortable with moving 

17 on and -- we're not going to come back and say 

18 where are we at on the inclusion or exclusion of 

19 graduates, we'll have a little bit more 

20 discussion before we actually vote on it, okay?

21 All right, so I want to try and find 

22 the areas of agreement and that's why I wanted to 
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1 go into the issue paper, so that way Issue 2, so 

2 that way we can start getting into some of the 

3 details of this instead of just arguing broadly 

4 over scope. So I know there's some table tents 

5 up, but are those in regards to graduate or are 

6 those in regards to Issue 2?

7 Issue 2?

8 PARTICIPANT: Scope.

9 PARTICIPANT: Scope.

10 MR. RAMIREZ: All right. So Greg, 

11 you're going to help me out here because --

12 MR. MARTIN: But --

13 MR. RAMIREZ: Let me just try to frame 

14 it a little bit better, Greg, because the way I'm 

15 looking at this is I like the idea of reviewing 

16 scopes, so that way everyone gets an idea of 

17 where the changes were, where we're headed. In 

18 order to get the actual consensus vote on scope, 

19 we have to understand the details, and that's 

20 what we're going to go into next. So continuing 

21 the discussion on scope to this point, is it 

22 going to be fruitful at this time or does it make 
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1 sense to come back when we're actually taking the 

2 consensus vote on scope? Greg?

3 MR. MARTIN: This is Greg. I don't 

4 have any problem with hearing further debate on 

5 the issue of graduate programs. Is that what's 

6 to be addressed, is graduate, inclusion of 

7 graduate?

8 MR. RAMIREZ: It looks like it.

9 MR. MARTIN: Yes, I think we could 

10 have that -- I don't think we're in any way for a 

11 vote on consensus. I mean, we have to -- I mean, 

12 when we come to vote, we have to have that 

13 discussion anyway. That's the only place that we 

14 have that, so I hate to cut it off.

15 MR. RAMIREZ: All right, then let's 

16 get these comments --

17 MR. MARTIN: If people have points 

18 they want to make, they feel haven't been made 

19 about the inclusion, or the exclusion of graduate 

20 students, rather.

21 MR. RAMIREZ: Okay, Kelly, Johnson, 

22 Jennifer, Todd and Tony. So let me get Kelly.
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1 MS. MORRISSEY: So my comment's on --

2 MR. RAMIREZ: Mic. Sorry.

3 MS. MORRISSEY: So my comment's on 

4 Issue Paper 2, so should I hold off?

5 MR. RAMIREZ: Yes, hold off so we 

6 don't keep bouncing back and forth. Thank you. 

7 Johnson?

8 MR. TYLER: Yes, I apologize. It's 

9 on, okay. I find it very hard to get into the 

10 details of what the metric is without knowing 

11 we're discussion the sanction. I feel like the 

12 sanction from the consumer's perspective is so de 

13 minimis that it's really hard to get into the 

14 weeds on the metric that's going to trigger it. 

15 And I'm not sure why we're doing the order this 

16 way; it feels like we're talking about what's 

17 going to -- trigger mechanisms for penalties --

18 from the consumer side, or not what we talked 

19 about before, from the taxpayer side, they're not 

20 what we talked about before.

21 MR. MARTIN: Well, first of all, I 

22 think that the scope -- and again, I'm not asking 
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1 you to -- I'm not saying you have to agree with

2 this, obviously -- but the thrust of debt to 

3 earnings, no longer DE, debt to earnings, is 

4 primarily publishing these rates as disclosure 

5 informational for students to make decisions 

6 about choosing programs. The prior, or the 

7 current I should say, regulations, which call for 

8 an automatic loss of program eligibility if 

9 certain thresholds are not met, is not included 

10 here, nor was it included at all from the get-go. 

11 So I think though you may disagree with that, I 

12 don't think we've been very up front about the 

13 fact that it's not there.

14 With respect to what sanctions there 

15 are and that we're going to discuss in Issue 

16 Paper 3 -- no Issue Paper 4 -- Yes, I'm sorry, 

17 Issue Paper 4 as sanctions -- we discussed at the 

18 table last time -- remember we came with our 

19 original position was there would be no sanctions 

20 at all, there would simply be disclosures. So 

21 that's what was in Issue Paper 2. So we hadn't 

22 put anything on the table with respect to 
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1 sanctions, so I respectfully disagree with the

2 assertion that what's in the sanctions paper here 

3 is not reflective of what we talked about, it's 

4 reflective of the discussion we had in Section 2. 

5 There was interest in having some type of 

6 administrative sanctions and there seemed to be 

7 some compromise on both sides about that, so this 

8 paper reflects that.

9 I mean, if your feeling is simply that 

10 if what's proposed is not what you would want, 

11 that it's not worth discussing any of the other 

12 aspects of this, I can't change that opinion and 

13 you're welcome to it, but there are still 

14 discussions to be had about the rates, how 

15 they'll be calculated with respect to the 

16 disclosures and with respect to those sanctions 

17 as they appear in Issue Paper 4. I'm disinclined 

18 to discuss the idea of sanctions until we get to 

19 the actual issue paper, but I mean, it's 

20 perfectly okay for people to offer their opinions 

21 about that, but I don't want to go into the 

22 details of the sanctions until we get to Issue 
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1 Paper 4.

2 MR. RAMIREZ: Let me get Todd and then 

3 Tony. 

4 MR. JONES: I'm sticking with the 

5 issue of graduate studies because I think it's a 

6 red herring; 38 percent of the debt is held by 

7 graduate students, but graduate students have a 5

8 percent loan default rate. The majority of 

9 students with more than $100,000 in debt are 

10 students who went to graduate school, but they 

11 have letters after their name like JD, MB, MD and 

12 MBA, DDS. I mean, these are people who can pay 

13 their debt. There is no -- it is federal policy 

14 to encourage the taking on of debt for expensive 

15 programs that lead to successful outcomes. Yet 

16 make no mistake, there is a cost associated with 

17 having to explain these kind of disclosures. I 

18 mean, why do people take on $100,000 in debt? 

19 Because they have a 3 percent loan default rate. 

20 So all those people taking on large sums are 

21 people who are not having a problem. Yes, there 

22 are individuals that have problems, yes there's 
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1 schools and we can trot them out, but you do not 

2 impose an entire, full-scale federal regulatory 

3 regime for the purpose of curing a handful of 

4 issues. And I simply will not accept the idea 

5 that there is not a social cost and an 

6 operational cost associated with the imposition 

7 of these new reporting requirements and 

8 disclosure requirements. They create more.

9 And we can have a much longer 

10 discussion about equity issues if that's where we 

11 want to go, but we're going to waste a lot of 

12 time on this issue as we did at the previous 

13 meeting when we came to a general thumbs up, if 

14 we term it that. This is an issue -- I simply 

15 don't understand why this has returned as a 

16 focus.

17 MR. RAMIREZ: Okay. Tony?

18

19 MR. MIRANDO: Thank you, good morning. 

20 This is Tony. Once again I just sit here and 

21 I'm kind of contemplating if we're going to do a 

22 temperature check, where I would go with this. 
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1 And I find myself on the fence, thus I needed to 

2 get some clarity here. So when we were here last 

3 time I asked the Department to explicitly give us 

4 what our mandate is, and so I sit here as an 

5 individual who has several degrees, both 

6 undergraduate and graduate, I can see the benefit 

7 and I hear both sides of the equation, but I find 

8 myself debating as to whether or not this mandate 

9 is to ensure clear notification to students prior 

10 to enrollment as to what their debt to earning 

11 will be after they graduate. I'm struggling to 

12 understand why a graduate student would be 

13 different from an undergraduate student? So 

14 again, I'm looking at you, Greg, and I'm hoping 

15 that you can give me some clarity as to, again, 

16 what is our mandate here? We all have personal 

17 opinions, we come from different sectors, we're 

18 here to hopefully help provide the Department 

19 with some clarity on which direction to go. But 

20 I'm sure I'm not the only one sitting here who's 

21 sitting on the fence truly not understanding what 

22 it is we're supposed to get to, so if you could 
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1 just give me some clarity, that would help sway 

2 which direction I can live with.

3 MR. MARTIN: Well, I mean, obviously 

4 our -- I don't know if I'd call it our mandate, I 

5 hate to use the word mandate -- but I think our 

6 defined task is to try to reach consensus on a 

7 new package of regulations attending to what 

8 previously was GE but now encompasses a much 

9 broader scope. I mean, I think it's obvious in 

10 the fact that we're back here on the table, and 

11 I've pointed this out before, that if the 

12 Department's leadership had determined that the 

13 existing regs were what was wanted, we would not 

14 be here. So we're definitely here to change that 

15 particular protocol. However, and I think as 

16 we've proposed in going back to the initial regs 

17 we proposed, that the, that what we're looking at 

18 is primarily an informational regulation, a 

19 disclosure-based regulation. We have introduced 

20 the concept of sanctions as a result of the 

21 discussions we had previously, but if asked to 

22 characterize the thrust of these negotiations, it 
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1 would be to establish a mechanism for providing 

2 students with information, with requiring 

3 institutions to disclose information about their 

4 programs. And now as an addition based on what 

5 we talked about before, having some programmatic 

6 consequences associated with a continued failure 

7 to meet those established benchmarks.

8 And I don't know that I can -- I can't 

9 twist everybody's opinions and viewpoints and get 

10 them to come to a certain place, but our goal is 

11 still to reach consensus on the package, given 

12 what the thrust of these regulations are.

13 MR. RAMIREZ: Yes, go ahead follow up.

14 MR. MIRANDO: Again, this is tony. 

15 Again, if the primary function is to provide 

16 disclosure to students, is the Department 

17 handcuffed so to speak on whether or not there is 

18 a distinction between undergraduate and graduate 

19 for say a penalty if they don't meet, can it be 

20 broken up?

21 MR. MARTIN: Our reasons for this, if 

22 I can go back to what I stated previously and 
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1 what Mr. Jones stated which I think was a pretty 

2 good overview of why we went in that direction, 

3 so I won't restate those position points. But in 

4 addition to those, there's also the concept of 

5 simplicity when we get to graduate programs, when 

6 we get to medical programs and the number of 

7 years, it does add some complexity to the 

8 calculation of the rates, which we eliminate from 

9 not having to calculate the rates from graduate 

10 students. And looking at whether or not the 

11 added value for providing this information to 

12 people who, as we said previously, are mature 

13 students who have already received undergraduate 

14 education, making a decision to go further and 

15 are fully cognizant of the fact that that will 

16 entail debt. I think these students are in a 

17 much different situation than an 18-year old 

18 person who's embarking on undergraduate 

19 education, whether it's in a GE program or any 

20 other type of eligible program.

21 So I mean, that's where we came at it; 

22 we didn't approach this from the standpoint that 
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1 there would be different, that we were reluctant 

2 to put in place -- I should say we weren't 

3 looking at this in such a way that we would say 

4 that, that whatever sanctions there were, that we 

5 didn't want to apply those to graduate school 

6 programs as well as other programs. Whatever 

7 sanctions there are would be applicable to all 

8 programs covered by the reg. We weren't trying 

9 to shield graduate programs from that; that was 

10 not our intention.

11 MR. RAMIREZ: Okay, let me get Chris, 

12 Whitney, Jordan and Ahmad.

13 MR. MADAIO: Thank you, Chris Madaio. 

14 My issue, I think, is simply because a certain 

15 sector is arguably better on outcomes; I don't 

16 think that means that we shouldn't be disclosing 

17 something to those students. I think if that was 

18 the case, I think then why are we disclosing 

19 anything to public schools or non-profits. I 

20 think generally you're going to have less debt 

21 because a lot of them charge less, or they have 

22 better outcomes than the for-profit sector, which 
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1 brings us back to where we were in the beginning 

2 of the first session. So I think that's kind of 

3 my first point.

4 And then the second; to me it's not 

5 about that a student understands they're taking 

6 on debt. I mean, I get some students may not 

7 even understand that a student loan is in fact 

8 debt compared to a grant, certainly a financial 

9 literacy concern. And I get that a graduate 

10 student may fully cognizantly understand that 

11 this is debt and I'm going to have to pay it 

12 back. But it's not just that they're taking on 

13 debt; it's about being able to shop around at 

14 comparable schools and being able to say this 

15 school has a lot of debt but their average 

16 earnings are really high, so that's a good value 

17 for me. Or this school has very low debt, not so 

18 good outcomes, but that's an okay value for me. 

19 So that to me is the essence of what this metric 

20 is trying to do, I mean especially if there's no 

21 sanction to give someone a shopping tool, we're 

22 just taking away from the students who we think 
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1 are the most savvy and able to shop just boggles 

2 my mind. We say some students may not 

3 understand, so we throw some information at them, 

4 and then other students would, so we take it 

5 away. I mean, that is completely flies in the 

6 face of everything we're talking about here.

7 And the last thing/question, Greg, is 

8 has there been any studies, consumer testing or 

9 anything to form a data-driven opinion that 

10 graduate students don't need or don't want or 

11 wouldn't read this information if it were given?

12 MR. MARTIN: No, we did not base this 

13 on an analysis of data. I don't think we look at 

14 it as they wouldn't look at it or that it would 

15 have no use for them whatsoever; our approach 

16 was, again, one based on where those students are 

17 relative to their education, so at a different 

18 point than someone going into an undergraduate 

19 program and also some of the technical 

20 difficulties involved for calculating the rates 

21 for graduate students.

22 MR. RAMIREZ: Whitney, Jordan and 
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1 Ahmad. 

2 MS. BARKLEY-DENNEY: So I would just 

3 point out that when it comes to the difficulty of 

4 calculating the rates for graduate students, 

5 we're already contemplating extending the look6 back period to six and seven years, so it seems 

7 we're already thinking about looking further out 

8 to see how their salary is evolving. And 

9 certainly, without graduate students in the mix, 

10 that doesn't make a lot of sense, particularly 

11 somebody who is going from a certificate program 

12 into immediately being a certified medical 

13 assistant or something like that. But I would 

14 also just point out the idea that graduate 

15 students are more savvy consumers; a lot of times 

16 -- well, I don't know, I can't definitively say a 

17 lot of times -- but in my experience, many people 

18 who are attending graduate school are actually 

19 borrowing for the first time, they may have had 

20 scholarships or parents helping them out in 

21 undergrad. And so it's really their first time 

22 in thinking about how much they're going to have 
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1 to pay back.

2 And so I think that's an important 

3 consideration that while they're older in age and 

4 certainly older in experience, it doesn't 

5 necessarily mean that they've ever had to take 

6 care of anything financially. Because 

7 particularly my experience at private and a lot 

8 of upper tier public schools, parents are the 

9 ones who are providing that financial support and 

10 paying the bills while they're in undergrad.

11 MR. RAMIREZ: Jordan, Ahmad, then 

12 Mark.

13 MR. MATSUDAIRA: Thanks, this is 

14 Jordan. I just want to make a couple points; so 

15 one is just about the default rates for graduate 

16 students with graduate borrowers being low. The 

17 default rate is low but they're defaulting on 

18 really large balances, the balances are much 

19 higher, so from a taxpayer standpoint if we care 

20 about being good stewards of public investments 

21 and the loan program, the information could 

22 really be more beneficial to the extent that it 
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1 helps to guide students to better programs. So 

2 even though the default rate is only like 5 

3 percent, given that balances are significantly 

4 higher, it could be the case that graduate 

5 student loans make up closer to the 40 percent to 

6 the overall outstanding debt that they comprise. 

7 That's something that the Department could 

8 produce numbers on pretty straightforwardly, just 

9 the share of total loan balances and default that 

10 are represented by graduate students.

11 I agree with everything that's been 

12 said about just the benefits of providing more 

13 information overall, but one thing I wanted to 

14 say about the complexity involved in calculating 

15 DE rates for graduate students, the same argument 

16 doesn't apply for earnings. I would argue 

17 earnings is something that currently graduate 

18 students don't have access to that; there's no 

19 other way that they can get information about the 

20 labor market outcomes with people entering 

21 different programs. So even if the Department 

22 ends up kind of going away from reporting DE 
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1 rates for graduate programs, I urge you to 

2 consider keeping that information available, 

3 again, just for information for students to be 

4 able to use, because that's something that's 

5 straightforward to calculate and students don't 

6 have other ways of getting it.

7 MR. RAMIREZ: Thank you. Ahmad?

8 MR. SHAWWAL: Ahmad here. My 

9 understanding is that there are two main concerns 

10 with disclosures on the graduate side, one was 

11 the increase in burden, the second was 

12 stigmatizing schools potentially. I guess in 

13 regards to the first point, my understanding as 

14 Jordan has mentioned, that this wouldn't actually 

15 require additional reporting systems in place to 

16 calculate the status of the case?

17 MR. MARTIN: No, we currently 

18 calculate rates for graduate programs that would 

19 be in a for-profit environment, so we do do it. 

20 We could, even with -- if you're asking is 

21 whether we're going to calculate these rates 

22 administratively, do we need anything additional 
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1 for graduate students, for graduate programs 

2 rather?

3 MR. SHAWWAL: Or is it within your 

4 capabilities to do so?

5 MR. MARTIN: Yes, it's within our 

6 abilities to do so. Yes.

7 MR. SHAWWAL: So I'm still having 

8 trouble understanding the concerns on the first 

9 point. On the second point, I guess and Todd 

10 correct me if I'm wrong, your viewpoint was that, 

11 for example, in a school in Appalachia, you don't 

12 have half the students graduating, it might be 

13 good for that context. Or were you saying that 

14 would not be appropriate to compare that to 

15 school maybe in urban environment?

16 MR. JONES: No, what I was saying is 

17 as a matter of equity there are areas of our 

18 country that are deeply underserved, some rural, 

19 some urban, but I would never say something like 

20 50 percent default rate which would be a school 

21 that should be shuttered. That's nowhere near 

22 what I'm talking about. I'm talking about 
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1 creating a perception that an institution creates 

2 a debt burden by judgement against its peers, and 

3 to use law as an example, some rural law schools 

4 which have slightly higher default rates but 

5 where they are certainly more than reasonable 

6 ensuring that there is a supply of attorneys in 

7 an area where people's rights are run rush, 

8 something I think consumer groups would 

9 understand. And yet what we see is by having 

10 that be the driving force around disclosure, it 

11 creates a deterrent for people being interested 

12 in rolling.

13 MR. SHAWWAL: Okay, thank you. That's 

14 something I can spend some time thinking about, 

15 but I would I guess refer back to what Chris said 

16 and Jordan has mentioned, that I think graduate 

17 students should be entitled to this information. 

18 I really have difficulty in understanding the 

19 distinctions on why graduate is so exceptionally 

20 special that students don't need this 

21 information.

22 MR. RAMIREZ: Okay. Thank you, Ahmad. 
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1 All right, so we'll get Mark and then we'll take 

2 a break, and then we'll go back into the DE 

3 rates. Mark?

4 MR. MCKENZIE: This is Mark. So I've 

5 been giving a lot of thought to the whole 

6 graduate discussion, and essentially what we're 

7 talking around, and Chris' comments are on point, 

8 and Johnson's comments, and even the comments 

9 from Jordan on default, but I think we're 

10 underestimating that the Department's approach, 

11 whether we go with graduate or not, has actually 

12 alleviated many of the concerns people around the 

13 table have, and because we just don't have the 

14 data, we're not able to see it. So I guess what 

15 I want to make sure we know is that we're looking 

16 to identify, not to burden the whole country with 

17 regulation on graduate, but to identify graduate 

18 programs that are just clearly burdening students 

19 with horrible debt and low earnings.

20 And the difficulty I want to bring out 

21 is the single metric debt to earnings clearly 

22 doesn't do it. I've been doing this seven years 
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1 on debt to earnings and when I go to just the 

2 government offices and ask the employees who have 

3 graduate degrees would they like their debt to 

4 earnings to be measured on which the old GE rule 

5 was they're earning 18 months after graduation, 

6 and the answer was no. And I think if the data 

7 was run, we would find law schools and other 

8 graduate schools that are considered high quality 

9 where the student's going to public service or 

10 government the first few years, take a lot of 

11 debt, and they would fail debt to earnings. 

12 That's why last session I was adamant about 

13 putting in a balance which is a repayment rate or 

14 something else that tries to not capture good 

15 performing programs but still capture poorly 

16 performing. And I guess at some point you've had 

17 a discussion, I have run a lot of the data, I 

18 think I have some data, I'm willing to share 

19 tomorrow morning that should shed some light.

20 But I guess to Todd, I think the 

21 current proposal with an either/or almost may 

22 exempt almost all graduate programs anyway, 
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1 especially if we come up with a certain repayment 

2 rate. So I think this group, we're still talking 

3 theoretical, we need to figure out a way of 

4 bringing a discussion to do what we came here 

5 for, which was to find a metric that actually 

6 identifies the programs that we think aren't 

7 serving students well, and addresses them. And I 

8 think Jordan and I have been together on this, 

9 when we finally get some good data, it's going to 

10 help a lot and I'm hoping I have something to 

11 offer tomorrow.

12 Last comment, Jordan, and it's to my 

13 point; I think default and high debt with a 

14 graduate is important, but I think Jennifer 

15 pointed out the data does show that the graduate 

16 programs in students who would default are the 

17 ones that more poorly performing programs because 

18 they default with the lowest amount of debt. 

19 It's not the high borrowers who are defaulting at 

20 graduate, it's the non-completers.

21 And so last comment, and this is back 

22 to administrative capability for the Department, 
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1 and I'm aware of this, but there are graduate 

2 schools that essentially -- I don't want to be 

3 inflammatory -- but have no admission standard 

4 and are close to open admissions. And it's 

5 possible there's another way of going around this 

6 to find how to address quality, and I know it 

7 from my own student's experience where they're 

8 admitted to institutions where it's clear to be 

9 they should not have been admitted and they're 

10 going to be taking debt they should not have 

11 taken. And so maybe there's another way to go 

12 around this, and I'll open it up to my fellow 

13 colleagues who know more about graduate school 

14 than me.

15 MR. RAMIREZ: Okay. So again, when 

16 we're done going through the issue papers, we're 

17 going to have to come back to scope and we're 

18 just not going to ask for thumbs, there'll be 

19 some more dialogue on that. I do want to try and 

20 find those areas of agreement, though, so when we 

21 come back from break, we're going to get into the 

22 DE rates and see where we can find those areas of 
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1 consensus.

2 And just a quick reminder; if you 

3 leave the building, it may be a little while 

4 before you get back in. We'll get you back in 

5 but it may be a little while.

6 So let's take 15 minutes.

7 (Whereupon, the above-entitled matter 

8 briefly went off the record.)

9 MR. RAMIREZ: Okay. So, when we took 

10 a break we were, Greg had done an overview of 

11 issue paper 2. And there was some discussion as 

12 far as the order goes.

13 And in all honesty, I know that we 

14 struggle with this, because of the way that 

15 things are related to each other. But, Greg, 

16 where would you like to go from here?

17 MR. MARTIN: Okay. Yes. Before we 

18 broke, at the table there was some discussion 

19 about the order of things. And we had talked 

20 about which issue papers to look at.

21 And in going back to my original 

22 rigidity as regards to what paper we're going to 
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1 discuss, my colleagues convinced me that perhaps 

2 I was a little extreme in that regard.

3 So, being willing to admit when I'm 

4 wrong, which is frequently, I think that on 

5 balance, since there seemed to be a lot of 

6 interest in the issue of sanctions, that if we're 

7 amenable to it here, and there's not huge amounts 

8 of disagreement, it does not mean we will not 

9 discuss other things.

10 The big issue in, the big matter and 

11 issue too is the economically disadvantaged 

12 appeals. And we will discuss that. But I, we're 

13 not going to skip anything.

14 But since there seems to be this 

15 tension in the room regarding the appeals paper, 

16 I've been convinced that we perhaps should look 

17 at Issue Paper 4. So, unless there's serious 

18 pushback about that I'll introduce Issue Paper 4.

19 MR. RAMIREZ: Okay, yes. And just a 

20 quick correction. You had said appeals, but 4 is 

21 sanctions, right?

22 MR. MARTIN: I'm sorry. It's 
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1 sanctions, yes.

2 MR. RAMIREZ: Okay.

3 MR. MARTIN: Sanctions, yes. Issue 

4 Paper 4 is Sanctions for Programs based on DE 

5 Rates. So --

6 MR. RAMIREZ: Okay. So, just really 

7 quick, what I'd like to do is see if Greg can 

8 give us just, give us an overview. Tell us 

9 what's different. If you'd give some rationale 

10 of why that would be beneficial.

11 But then, when you're done with that 

12 what I would like to do is, do a, just a small 

13 general discussion, right, just to make sure that 

14 we all understand where we're going. And then go 

15 section by section, and see if we can reach 

16 agreement on as many sections as we can. Okay, 

17 Greg?

18 MR. MARTIN: Okay. That sounds a good 

19 way to proceed. So, let's talk about what 

20 happened since issue, since Session 2. And I 

21 just want to reiterate that with, our initial 

22 proposal did not contain sanctions. So, what we 
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1 had originally was not a sanctioned environment. 

2 But based on what we discussed in Session 2 

3 we've come back with what we propose here.

4 So, we're proposing to tie sanctions 

5 for poorly, poor performance under the D/E rates 

6 and loan repayment measure to standards of 

7 administrative capability.

8 The potential sanctions on a program 

9 may be limitations on an institution's ability to 

10 expand programs by more than 10 percent for 

11 programs that do not meet benchmarks, or start 

12 new programs in similar occupations to the 

13 programs that do not meet benchmarks without 

14 prior approval of the Department or a program 

15 review conducted by the Department.

16 We also propose some clarifications on 

17 when notifications must be made in non-English 

18 languages. We expect that programs that are not 

19 taught in English or use non-English promotional 

20 materials to provide notifications in the 

21 language of instruction.

22 And you'll note, just going back as a 
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1 reminder, before Session 2 we proposed to 

2 eliminate the loss of eligibility to participate 

3 in the programs as a possible sanction.

4 And we had proposed notifications 

5 would be provided to students for any year of 

6 programs determined to be low performing, which 

7 we now identify as not meeting benchmarks.

8 Some notes at the bottom of the page, 

9 before we go into the actual proposed rule 

10 itself.

11 While the Department agrees it is 

12 important to hold poorly performing programs 

13 accountable, which we believe will be 

14 accomplished with the proposed language below, 

15 the Department would like additional and focused 

16 feedback from negotiators on the following issues 

17 potentially raised by this accountability 

18 framework.

19 We would also like additional feedback 

20 on an additional threshold, on an appropriate 

21 threshold rather, for taking administrative 

22 action against a program.
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1 There are many factors that the 

2 current regulation does not take into account, 

3 such as demographic and economic variables that 

4 may account for a student's success, or lack 

5 thereof.

6 How can the Department ensure, better 

7 ensure that when the Department does take action 

8 against a program, it is doing so for reasons 

9 that are within a program or institution's 

10 ability to fix and not from mitigating factors 

11 that the program cannot control?

12 Bear in mind, we will be discussing 

13 the economically disadvantaged and participation 

14 rate. And that's in Issue Paper 2.

15 So, if we look at, on Page 2 where 

16 this would tie in. So, remember the current reg 

17 has the automatic loss of program eligibility, as 

18 a result of failure to meet the debt to earnings 

19 thresholds.

20 You see here, we've moved the 

21 sanctions over into a measure of administrative 

22 capability. So, that is the 668.16. And those 
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1 are, that's a longstanding regulation which most 

2 of you are probably familiar.

3 It talks about to begin, and continue 

4 to participate in the programs, in institutions 

5 who demonstrate that it is capable of adequately 

6 administering that program.

7 And so, you can see the section here 

8 that has been added in Q, bottom of Page 2. The 

9 institution offers an undergraduate program that 

10 meets benchmarks as measured under both the D/E 

11 rates benchmark and the loan repayment rate 

12 benchmark.

13 If more or, if one or more of the 

14 institution's undergraduate educational programs 

15 meets neither the D/E rates benchmarks nor the 

16 loan repayment rate benchmark, the Secretary may 

17 determine that the institution's capability is 

18 impaired.

19 And may limit an institution's ability 

20 to expand programs that do not meet benchmarks by 

21 more than 10 percent, or to start new programs 

22 that share the same four-digit CIP code to the 
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1 programs that do not meet benchmarks without 

2 prior approval of the Department or schedule of a 

3 program review.

4 So, we'll stop there. And that's the 

5 meat of what this entails. So, I think if, 

6 Javier, if you want to go section by section, we 

7 should start here with P, and discuss that.

8 MR. RAMIREZ: All right. So, 

9 thoughts, or questions, or comments on that? 

10 Tony?

11 (Simultaneous speaking.)

12 MR. RAMIREZ: I'm sorry. Okay.

13 MS. BARKLEY-DENNEY: Thanks, Tony. 

14 So, I'm just a little concerned about the use of 

15 the term may. It seems to me that if we're going 

16 -- I understand allowing some discussion in 

17 determining whether or not a program doesn't meet 

18 these thresholds, particularly if appeals are 

19 involved.

20 But it then seems like, particularly 

21 in what we were contemplating last time, it's 

22 more of a shall situation. Once you have decided 
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1 that a program no longer meets, is not meeting, 

2 or does not have the administrative capability to 

3 meet the thresholds, then we really should be 

4 moving towards concrete action, and not, you 

5 know, possible action if the person reviewing it 

6 feels like doing so that day.

7 So, I would just like to see, I mean, 

8 at the very least, that strengthened so that the, 

9 you know, there is a particular outcome that's 

10 going to happen, or a choice of outcomes that's 

11 going to happen if a program does not meet the 

12 standards.

13 MR. RAMIREZ: I'm going to ask Counsel 

14 to respond to that.

15 MR. FINLEY: So, this is Steve Finley. 

16 I think we want to hear comments from a number 

17 of people before we start kind of responding 

18 generally to this topic.

19 MR. RAMIREZ: Okay. That's fine. 

20 Tony.

21 MR. MIRANDO: Thank you. This is 

22 Tony. So, in just reading through this, is it my 
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1 understanding that the Department has abandoned 

2 the primary and secondary tiers of meeting the 

3 D/E student repayment rates?

4 Because we had talked about having 

5 that as a primary. And then we talked about a 

6 whole series of secondary. And I remember 

7 bringing it up a second time. And we never 

8 really quite ever got back to that.

9 And then, it just seems like that 

10 whole discussion, which was for quite a long 

11 time, just has been abandoned, it appears.

12 MR. MARTIN: First of all, I don't 

13 think anything's been abandoned. As Steve said 

14 earlier, we're open to any discussion about this. 

15 As far as why we came to this, we did discuss 

16 the --

17 And I know that at the previous 

18 session we had a fairly involved discussion about 

19 what other measures there might be besides D/E. 

20 And obviously repayment rate's not the only one 

21 one could potentially use. There's completion 

22 rate, placement rate, all these other things.
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1 I think the main reason we didn't go 

2 down, as far as establishing some type of a 

3 protocol where we'd have all these various 

4 considerations.

5 First of all, the complexity of that 

6 gets maddening. So, it's, you know, if not this, 

7 then this. Well, what about completion rate? 

8 What about placement rate? So, all these things 

9 came into play.

10 Also, determining how those things 

11 would be calculated was another issue. So, we 

12 settled on having an additional metric. And I 

13 think where we are with that is that we were 

14 convinced by arguments made at this table, that 

15 the D/E measure shouldn't be the only measure of 

16 a program's outcomes.

17 And that it would be possible for 

18 various reasons for a program to have perhaps D/E 

19 rates that don't meet whatever benchmark we 

20 establish, and still be a program with good 

21 outcomes.

22 So, how to allow for another metric 
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1 that might show that, while sticking with our 

2 intention that this rule not become maddeningly 

3 complicated. So, we settled on debt, on 

4 repayment rate.

5 As far as whether it was a primary or 

6 a secondary metric, in thinking about that I 

7 don't, I'm not, we weren't convinced that makes a 

8 difference really.

9 I mean, if you're going to say that 

10 you're introducing the repayment rate -- I mean, 

11 the repayment rate, then it, then you say, well, 

12 how do you use that, you know? I mean, so 

13 whether it's primary or secondary you get to 

14 this, you get to the point where --

15 And I'm going to, what I want to do in 

16 a moment is pass out this graphic that we've put 

17 together, which kind of walks you through the 

18 issue of sanctions, where these sanctions fall 

19 in. It was done by one of our staff members. I 

20 think it's very well done, and will kind of help 

21 you walk through where we are with this.

22 But the, but so, if you say, so, if 
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1 the school doesn't meet, a program rather, 

2 doesn't meet the benchmarks established for D/E 

3 rates, then where do you go?

4 Well, you can, whether you're calling 

5 it primary or secondary, it would be if you don't 

6 meet this one, if you do meet this one, then what 

7 do you meet? So, I don't think it makes any 

8 difference whether it's primary or secondary.

9 And as far as including other 

10 potential metrics, I just think at this point the 

11 complication of adding all of those in would be 

12 further than where we're going to be able to go 

13 here. So, that's why we wound up here.

14 As we continue the discussion, and I'm 

15 going to hand around, and I almost forgot to do 

16 so when Scott reminded me, this metric that will 

17 sort of walk you through where we are with 

18 respect to this.

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

20 we have Sandy, Jennifer, Johnson, Laura, Ahmad, 

21 Daniel, and Jordan. So, let me go with Sandy.

22 MS. SARGE: This is Sandy. Whitney, I 
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1 see exactly what you mean. It's a little bit 

2 ambiguous. So it, we have some concerns.

3 But I was thinking exactly the same 

4 thing that Tony brought up, is we had discussed 

5 the concept of, that if a school failed one or 

6 the, or failed both of the primary metrics, and 

7 just for definitional purposes we'll call that 

8 D/E and loan repayment, the primary metrics, then 

9 a school would have to provide additional 

10 evidence as to why they consider themselves to 

11 have, in this case, administrative capability.

12 And I agree that they would, and 

13 should have to. So, maybe the terminology could 

14 be that the Secretary will require additional 

15 evidence to support an institution's academic 

16 capability.

17 And as long as there's, I think there 

18 should be a next step. And we should say there's 

19 a next step. There's another step that they 

20 would have to prove.

21 And then, that would be where we go 

22 into completion, and maybe graduate rates, and 
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1 licensure, pass rates, and things like that, that 

2 others have brought up, to be an alternative way 

3 to say that their students are being well 

4 educated.

5 MR. RAMIREZ: Okay. Let me, Greg, you 

6 want to walk us through this chart? I think 

7 everyone has one.

8 MR. MARTIN: Sure. Be glad to do 

9 that. So, I mean, I think the, I've seen some 

10 charts in my time that, some produced by the 

11 Department, by the way, that don't look quite as 

12 simple as this does. I shouldn't say it.

13 And they were nothing, you know, if 

14 you try, if you look at some of the charts that 

15 were produced about a report like GE, I mean, I'm 

16 sorry, COD, and NSLDS, and how they all come 

17 together, I've reviewed, I've had to train on 

18 some of those charts sometimes.

19 And you get confused halfway through 

20 it. And you're like, wait a minute, which box 

21 goes where? But this one drops down very nicely 

22 for you.
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1 So, let's take a look at the first, at 

2 the upper left together. Did your program meet 

3 the debt to earnings benchmark? So obviously the 

4 preferred outcome there for everybody involved 

5 would be yes.

6 So, at that, at the point at which you 

7 meet the debt to earnings benchmark, then no 

8 additional actions are necessary. And neither 

9 are there any notifications necessary.

10 You would still have to do 

11 disclosures. Because of course disclosures are 

12 for all programs. It's currently that way under 

13 the GE rule, for GE programs. That would be 

14 extended to all programs. But no additional 

15 notifications. No actions would take place.

16 So, now it's, let's look at what 

17 happens if the program does not meet the D/E 

18 benchmark. So, your program did not meet the D/E 

19 benchmark.

20 And then we go down to the next step 

21 there, the NCIs (phonetic). Does your program 

22 has fewer than ten borrowers? If the answer to 
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1 that question is yes, then you note there off to 

2 the side that there's no additional actions, no 

3 notifications.

4 If the answer to that is no, so it 

5 does meet that NCIs, we ask, does the program 

6 meet the standards for economically disadvantaged 

7 appeals in 34 C.F.R. 668.213, or the standards 

8 appeals in 668.216, for programs with 30 or fewer 

9 borrowers?

10 So again, you'll see that if the 

11 answer to that question is yes, then that would 

12 key up to no additional actions, no 

13 notifications.

14 So, let's now say that you do not meet 

15 the standards for economically disadvantaged, or 

16 fewer than 30 borrowers appeal. Then the 

17 institution must inform students through the 

18 notification process, which is a modification of 

19 the current warning process.

20 And then at that point you see, are 

21 there multiple administrative capability issues 

22 for the institution? Multiple failing programs, 
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1 or one failing program, and other administrative 

2 capability issues?

3 So, if the answer to that question is 

4 yes, that there are multiple administrative 

5 issues for this program, or multiple failing 

6 programs, then we would limit, we have the option 

7 of limiting the expansion of enrollment to no 

8 more than ten percent, require institutions to 

9 get special approval to add programs or 

10 locations, schedule a full program review.

11 If the answer to that question is no, 

12 so, the only administrative issue we have with 

13 this institution is one program that fails to 

14 meet the benchmarks, then the ramification would 

15 be limiting the expansion of enrollment in the 

16 program to no more than ten percent.

17 So, hopefully this walks you through 

18 where the regulatory language is. And I think 

19 it's an easier way of conceptualizing where we're 

20 going with this.

21 MR. RAMIREZ: Okay. Thank you. 

22 Jennifer?
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1 MS. BLUM: Thanks. This is Jennifer. 

2 So, this flow chart helps answer one of my 

3 questions. And it was along the lines of what, 

4 where Whitney was going too, in terms of sort of 

5 the Department's options.

6 But the flow chart, which is really 

7 clear, is not reflected, in my view, in the 

8 paragraph. And so, if this is the intent of the 

9 Department, can we re-write it?

10 And by the way, what I'm saying is, 

11 I'm not, this is on first blush. But regardless 

12 of whether there's consensus or not on this flow 

13 chart, it seems like this paragraph should be 

14 written to reflect the flow chart.

15 And then we can have a discussion 

16 about whether the flow chart is, you know. But 

17 they definitely don't align right now. So, I 

18 would encourage alignment on that.

19 And then, I did have one question as 

20 well, which is a much broader question. And I 

21 completely agree with talking about sanctions 

22 first. Although I think we'll agree that this is 
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1 all like a muddy mess at this point, in terms of 

2 like how you get into.

3 Because I do have a fundamental 

4 question, which is, once you start applying this 

5 to all programs, what's the Department going to 

6 do in the event that every single bachelor of 

7 blah, I'm not even going to try to pick a 

8 bachelor, you know, if more than 50 percent of 

9 bachelor of blah programs for whatever reason 

10 don't meet benchmarks, you know, at all 

11 institutions? What's the Department going to do 

12 with this?

13 And we don't necessarily have to 

14 answer that now. But I do want the question on 

15 the table as we get into the benchmark piece. 

16 Because I do, and this is why I say that 

17 everything sort of does, which is good, it does 

18 all interconnect.

19 But I would say, and I think you sort 

20 of posed the question up above, when you're

21 seeking feedback about sort of the dynamic of a 

22 program, both as it relates to demographic too.
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1 Because you could also say, what 

2 happens if every program that has a majority 

3 population that's, you know, X, and they're all, 

4 right, and all those programs are sub-par, are 

5 you penalizing all of those programs?

6 And so, to me there does need to be a 

7 dynamic down the road. And maybe it could be 

8 written into the regulations now, for the future, 

9 about what higher ed looks like as a whole.

10 I don't want to pre-judge a metric, 

11 you know, a benchmark today, to be honest with 

12 you. I'm just saying that I think that there 

13 does need to be a public policy standpoint, you 

14 know.

15 You are going to have the huge benefit 

16 of a lot of data down the road, to be able to 

17 judge whether, you know, how this reflects on 

18 different types of programs, both professionally, 

19 and also different types of programs from the 

20 demographic standpoint.

21 And so, allowing the Department, or 

22 just all of us, or whatever, some dynamic that 
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1 allows for the ability to judge, you know, on a 

2 comparative basis before, I mean, I don't even 

3 know how you would handle a bench --

4 You know, going through all of this, 

5 if every program that's a bachelor in blah has an 

6 issue, or even half of them have an issue, how 

7 are you going to manage, you know, imposing ten 

8 percent?

9 And that's a huge by the way. And 

10 then you're getting into socio-economic issues 

11 of, you know, directing the marketplace, in terms 

12 of how many teachers, or how many nurse, I mean, 

13 you know, whatever the profession is.

14 So, those are my comments. But the 

15 first one really is, and I, you know, I think 

16 maybe some of us could help draft whatever. But 

17 the paragraph needs to reflect the flow chart.

18 MR. MARTIN: Yes. Just to mention, 

19 just to your last point. I think you're right 

20 that the paragraph needs a little bit of cleaning 

21 up. But we, a lot of this is being done at the 

22 last minute. We will definitely take that back 
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1 and look at that.

2 MR. RAMIREZ: Okay. Thank you. 

3 Johnson.

4 MR. TYLER: Hi. Johnson here. So, I 

5 wanted to go with the ten, ask about the ten 

6 percent. Because I think, I don't think that was 

7 one of the proposals last time.

8 I think it was simply just keep the 

9 enrollment at the current level, if not requiring 

10 a letter of credit, or something related to that 

11 program. So, what was the Department's thinking, 

12 if you want to share it, of why it's ten percent?

13 PARTICIPANT: All right. So, that's 

14 going to invite discussion here. We knew it 

15 would. The idea was, some issues with schools 

16 capping enrollment in programs from time to time.

17 And there's always a question of 

18 whether you cap the current enrollment, or 

19 whether you look at the enrollment over the year. 

20 Because you've got cycles of programs that may 

21 be low at the time, but six months ago they were 

22 higher. Or six months from now you know they'll 
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1 be higher.

2 So, the ten percent is kind of an 

3 acknowledgment that it may not be exactly what 

4 the enrollment is. We're welcome, you know, 

5 we're open to other suggestions for how to track 

6 what you would lock in as an enrollment cap. And 

7 so, it's, the ten percent's a, kind of an invite 

8 for discussion around the table.

9 MR. RAMIREZ: Laura.

10 MS. METUNE: I won't repeat everything 

11 that has been said. But I just, I agree, the 

12 flow chart language don't match. I'm confused 

13 about whether the language is meant to be a 

14 limitation on the Department's authority. 

15 That's, these are the only mays that could be 

16 considered. If that's true, I oppose that 

17 generally.

18 I agree with Jennifer about staff 

19 capacity. Generally this doesn't align to where 

20 I thought things were left off at the last 

21 conversation.

22 In regards to the ten percent. I 
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1 apologize for the side conversation. We were 

2 just laughing about how our community colleges 

3 are facing declining enrollment. And we would be 

4 happy to have ten percent increases in most of 

5 our programs. So, it just seems really dumb.

6 So, I think, frankly, if you're 

7 failing both of these you should not be enrolling 

8 more students into this program. Thank you.

9 MR. RAMIREZ: Daniel.

10 MR. ELKINS: I'd like to yield my time 

11 to Ahmad, and then talk after him, if that's 

12 possible.

13 MR. RAMIREZ: Yes. Go ahead, Ahmad.

14 MR. SHAWWAL: Ahmad here. So, 

15 obviously this is like fundamentally different 

16 from what I believe was the course of the 

17 conversation during the second session.

18 Okay. So, it was like my 

19 understanding that people -- Okay, I get it. 

20 There's opposition to the idea of immediate 

21 enactment of the removal of Title 4 funding. I 

22 get it.
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1 But given the course of the 

2 conversation during the last time around, people 

3 were generally receptive to having a system in 

4 which, okay, if you didn't meet D/E, if you 

5 didn't meet the repayment rate, you know, you 

6 don't meet the standards for economically 

7 disadvantaged appeals, then we'd have a process 

8 by which there would be some sort of consequence, 

9 including, and potentially up to the loss of 

10 Title 4 funding.

11 And I felt like people here were 

12 generally receptive of that, if you remember that 

13 discussion. But now it seems like the only 

14 consequence is the, limiting the expansion of 

15 enrollment in a program to no more than ten 

16 percent.

17 Who even does that in a year. I can't 

18 think of any programs that can expand by ten 

19 percent, especially not any that don't meet D/E 

20 benchmarks, or repayment rates, and any of these 

21 other metrics that we have before that process is 

22 even considered.
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1 I don't know, this seems kind of funny 

2 to me, this entire flow chart. Or is that out of 

3 the question? Are we not, are there no 

4 consequences for institutions that don't meet D/E 

5 or repayment rate, and don't have standards for 

6 economically disadvantaged appeals?

7 MR. MARTIN: Yes. There are no 

8 consequences what, for institutions that don't 

9 meet. Well, the consequences are as you see them 

10 laid out here. These are the only ones with, 

11 these are the consequences we currently have, we 

12 have proposed.

13 MR. SHAWWAL: Who could even expand 

14 more than ten percent in a year? That's what I 

15 want to know.

16 (Simultaneous speaking.)

17 PARTICIPANT: Yes. We're somewhere 

18 between ten or more. I have a school that's 

19 fundamentally vocations schools, HVAC, medical 

20 programs, nursing. I could name a time.

21 But I just, I'm literally going 

22 through the audit right now. So, I've seen the 
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1 increase. And also, if they merge with another 

2 small school with it, then they've grown. So, 

3 there's lots of ways to do it. I think if you go 

4 beyond just thinking of the 20,000 --

5 MR. SHAWWAL: Yes, but let's --

6 PARTICIPANT: -- capacity. If you 

7 look at a school that's 400 students or 200, 

8 that's not many. And a program then is 30, 

9 that's only three, right.

10 So, think about it not just from I'm 

11 in a school with 2,000 students in a program. 

12 Then it's 200 students, maybe. But if you're in 

13 a school where a program has --

14 Like, California medical nursing 

15 programs are limited to 30. You're only allowed 

16 to have 60 in the school. They can, of any time 

17 nursing students. So, that's only three for the 

18 class, and coming in, and six overall.

19 MR. SHAWWAL: Okay. Understood.

20 PARTICIPANT: Yes.

21 MR. SHAWWAL: And --

22 PARTICIPANT: That's accreditation 
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1 rules.

2 MR. SHAWWAL: Okay. And just to 

3 reiterate, I'd like to get an idea of what 

4 everyone thinks of potentially going back to the 

5 previous diagram that we had. Or making an 

6 amendment to this diagram, in which we would 

7 include that.

8 And then through some means, which we 

9 could discuss, the Department would evaluate 

10 whether or not they want to only enact the 

11 limiting of the expansion of their enrollment to 

12 no more than ten percent. And then potentially 

13 include things like, and we can discuss this, 

14 including and up to loss of Title 4 funding.

15 Because I thought, I don't know. I 

16 thought we were making some progress in that 

17 regard last time. I'm not sure why there's a 

18 down trend.

19 (Simultaneous speaking.)

20 PARTICIPANT: I'm wondering if the 

21 Department's thought was, if you find, if you 

22 schedule a full program review, and you find 
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1 other things, then it definitely could. I'm 

2 thinking that may have been. But I'll let them 

3 answer.

4 MR. RAMIREZ: Yes. Could you, Greg?

5 MR. MARTIN: Yes. Correct. And on 

6 the left, those three boxes there, where if there 

7 are multiple administrative capability issues, or 

8 multiple failing programs.

9 And yes, one of those consequences 

10 could be scheduling a full program review, 

11 obviously. If we found other issues that, yes, 

12 that could definitely have an impact on the 

13 school's continued participation.

14 MR. RAMIREZ: Okay. Let me go back to 

15 Daniel, Jordan, Jeff, Whitney, and then Kelly.

16 MR. ELKINS: This is Daniel. I wanted 

17 to thank the Department. I think the intent of 

18 the flow chart, and what's going on here, it's 

19 moving in a good collaborative direction.

20 I do think that there is some work 

21 that needs to be done. Many around the table 

22 have suggested that. And I'm completely 
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1 supportive of that.

2 In addition, I would like to put back 

3 on the table a discussion of limiting expansion 

4 to zero students. I would like to also put on 

5 the discussion for --

6 Well, I want to clarify that that 

7 would simply mean that, you know, if they didn't 

8 meet both there wouldn't be a way to expand 

9 programs and/or enroll new students in those 

10 specific failing programs. Thank you.

11 MR. RAMIREZ: Okay. Thank you. 

12 Jordan.

13 MR. MATSUDAIRA: Thanks. I just 

14 wanted to ask for a little bit of clarification. 

15 I share Ahmad's concern about the lack of teeth 

16 to the sanctions.

17 But just from the language, wanted to 

18 make sure that I understood the proposal 

19 correctly, which was, when we get down to the red 

20 box in the middle where you ask, are there 

21 multiple administrative issues, multiple failing 

22 programs, or one failing, and other capability 
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1 actions.

2 Is the way to read this that if any of 

3 those three statements are true, then we 

4 automatically go to the left? We automatically 

5 get into --

6 And then, are the three boxes on the 

7 left, are those like all together? Or are those 

8 like, some of those things might be invoked, but 

9 not necessarily all three? Or all three are 

10 invoked?

11 PARTICIPANT: Or or and, right, 

12 between the boxes.

13 MR. MATSUDAIRA: Yes. And then, my 

14 last question is whether these are meant as 

15 illustrations of like a couple of sanctions that 

16 might be invoked under the administrative 

17 capability part of the Code, which I'm sorry, I 

18 don't know as well as others around the table 

19 know as well.

20 But I'm just wondering, I think, is 

21 that the part of the Code that also has other 

22 sanctions like cash monitoring, or other things 
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1 like that?

2 PARTICIPANT: Yes.

3 MR. MATSUDAIRA: But the idea here is 

4 just to, we're limiting the kinds of things that 

5 could be remedies under this kind of 

6 administrative capability ruling, to these three 

7 things only? Or these are just examples? 

8 Thanks.

9 (Simultaneous speaking.)

10 MR. FINLEY: So, the three items on 

11 the left, this is Steve. The three items on the 

12 left could all be deployed. They, I'm not sure 

13 if they necessarily would all be deployed every 

14 time, at the same time if you had multiple 

15 instances of administrative capability.

16 It could be, it's going to, it really 

17 is kind of a totality of the circumstances thing 

18 there. You've got one failing program, plus 

19 something else is what that bottom, the box on 

20 the bottom says. And it's the, it's whether the 

21 failing program, or the program not meeting 

22 benchmarks, plus something else, merits taking 
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1 more extreme actions.

2 The question you've asked about 

3 heightened cash monitoring can be done separate 

4 and apart from this at any institution, when 

5 there's concerns.

6 So, it's not referenced here, just 

7 because that kind of is an always available 

8 alternative to deal with heightened monitoring at 

9 an institution. And there's various levels of 

10 cash monitoring that can be deployed, right. So, 

11 but you're right. That is not mentioned there.

12 PARTICIPANT: So, those options are 

13 not exclusive. There could be some other options 

14 as well. Is that right?

15 MR. FINLEY: Yes.

16 MR. RAMIREZ: Okay. Jeff.

17 MR. ARTHUR: Yes. I had similar 

18 thoughts when I looked at this as Jennifer. 

19 Well, what if a program fails across the board? 

20 Well, I had an idea. I mean, first of all, I 

21 thought that the metric, or the benchmark should 

22 be something like two standard deviations to 
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1 begin with.

2 But if we don't get there, and we have 

3 a hard and fast metric, that maybe we could take 

4 that concept to the, after we inform students, to 

5 say, okay, that when the Department's making a 

6 decision, is the program an outlier, by looking 

7 at the, generally it's two standard deviations 

8 that would be something that would identify 

9 outliers. Or whatever it is.

10 But identify, is it truly an outlier 

11 before deciding what action to take at that 

12 point. So, that's one way I thought, you might 

13 be able to insert that easier there.

14 The other thing that we observed is 

15 that, is this intended to be a one year, and all 

16 this happens? I mean, it's not, we don't have 

17 the concept of two out of three years, or two 

18 consecutive years, or three. It seems to be that 

19 it's one year. So, I just want to clarify that 

20 that's the intent.

21 And then I do think, and then, do not 

22 underestimate the power of a program review, and 
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1 what, the actions that can be taken there. And I 

2 also even point out that I wouldn't be surprised 

3 if the compliance -- Every institution has to 

4 have compliance audits on a regular basis for, 

5 our institution's is every year.

6 And if the audit guide has a 

7 compliance auditor identify, or test these 

8 metrics, and they have a finding or some kind of 

9 issue there that they put into an audit report, 

10 those get referred for Department of Education 

11 review. It's called a final program, or final 

12 audit determination.

13 And that any issues there, after 

14 that's done, can get referred for further action, 

15 fines, penalties, limitations, suspension, 

16 termination, all that. So, there would be some 

17 regular review of that, that would be at the

18 Department's disposal.

19 And then the last thing, does the 

20 program have fewer than ten borrowers? I think 

21 that's your first box. Because I don't think 

22 you're doing a DTE on programs with less than 
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1 ten.

2 So, I think you move that to the 

3 beginning. Because if that's no, then you're 

4 stopping right there, and you're not doing a DTE 

5 rating.

6 (Simultaneous speaking.)

7 MR. RAMIREZ: I believe you're 

8 correct.

9 MR. ARTHUR: Yes. All right.

10 MR. RAMIREZ: Okay. So, we have 

11 Whitney, Kelly, Neal, Daniel, and then Mark. So, 

12 let me get Whitney.

13 MS. BARKLEY-DENNEY: Thank you. I 

14 just have a question for the Department. Or 

15 there may be institutions around the table that 

16 can answer this.

17 On the economically disadvantaged 

18 appeals in 34 C.F.R., how often are those used? 

19 And how often are they successful? I'm just 

20 trying to get an idea of the scope of these 

21 appeals.

22 MR. MARTIN: Yes. On those appeals, I 
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1 misspoke earlier. Those are, my brain's a little 

2 fried. I've not been feeling too well the last 

3 couple of days.

4 But those appeals are -- So, you have 

5 213 and 216. And there are appeals for if you've 

6 been notified of a loss of eligibility to cohort 

7 default, right. So, there are two cohort default 

8 rate appeals.

9 And I don't know, I mean, I could 

10 probably find out from program compliance how 

11 some of our cohort default people how often 

12 they're invoked. I'll ask Steve. Do you know?

13 MR. FINLEY: I don't know how often. 

14 I know they're used. And I know that 

15 institutions that use them are able to prevail on 

16 the appeals. But I can't tell you whether it's, 

17 you know, 50 percent, or 70 percent, or 20 

18 percent.

19 MR. RAMIREZ: Okay. Kelly.

20 MS. MORRISSEY: This is Kelly. I 

21 think in looking at this flow chart, the bottom 

22 box in the center needs to be further parsed out. 
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1 I believe that it would be impossible to, well, 

2 it may not be possible to determine if there are 

3 other administrative capability issues for the 

4 institution unless a program review is invoked.

5 So, I think there should be a separate 

6 box stating that if there are multiple failing 

7 programs, that would immediately trigger the 

8 actions on the left. Because that would be 

9 something that would be known without further 

10 review of the institution.

11 And then, have a separate box saying, 

12 if there are multiple administrative capability 

13 issues, that could also trigger actions on the 

14 left.

15 MR. MARTIN: Let me just clarify. So, 

16 what you're asking on this box is that -- So, are 

17 there multiple administrative capability issues 

18 for the institutions, multiple failing programs, 

19 or one failing program and other administrative 

20 capability issues?

21 So, I mean, if there -- So, you're 

22 asking if it's just -- I'm not sure what your 
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1 point was.

2 MS. MORRISSEY: So, what I'm asking 

3 is, if it's immediately known that there are 

4 multiple programs that don't meet the benchmark, 

5 that that separately could trigger the action on 

6 the left.

7 MR. MARTIN: Correct. Correct. If 

8 there are multiple programs that don't meet the 

9 benchmark, yes, it would trigger the action on 

10 the left.

11 MR. FINLEY: So, just to clarify. 

12 They don't have to hit all of those. Any of 

13 those would trigger those.

14 MS. MORRISSEY: Okay. I just think 

15 that that should be a clearer, less --

16 MR. FINLEY: So, maybe putting ors in 

17 there instead of commas?

18 MS. MORRISSEY: Right. Just to make 

19 it clear that that would be an immediate concern 

20 if there are multiple failing programs. Because 

21 some of these other things may not be immediately 

22 obvious.
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1 And then, beyond that I do believe 

2 there was somewhat of an agreement that a lack of 

3 administrative capability generally does trigger 

4 LS&T, which is what we were seeking to gain by 

5 putting this under administrative capability.

6 So, I think we have kind of taken the 

7 teeth out of a lot of this, especially by 

8 allowing a ten percent expansion of programs. 

9 So, I would echo the comments of others saying 

10 that institutions that fall under these 

11 sanctions, if they are, should not be allowed to 

12 expand at all.

13 PARTICIPANT: Kelly, could you define 

14 LS&T?

15 MS. MORRISSEY: I'm sorry. 

16 Limitation, suspension, termination.

17 PARTICIPANT: Got it. Thank you.

18 MR. MARTIN: I just want to clarify 

19 one thing about that. First of all, I, there are 

20 ways the Department has of knowing if a school 

21 has administrative capability issues besides 

22 program reviews.
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1 We regularly review audits, looking at 

2 program, looking at cohort default rates. So, 

3 there are other mechanisms we have of knowing 

4 that.

5 Wish respect to limitation, 

6 suspension, and termination, even currently under 

7 admin capability, we're not obligated to take 

8 LS&T action. That's a separate thing. So, I 

9 don't, I, we're not going to tie ourselves to an 

10 automatic, to some type of an environment where 

11 we have to take LS&T, with respect to the failing 

12 to meet the benchmarks.

13 MR. RAMIREZ: Neal.

14 MR. HELLER: Good morning. Neal here. 

15 I think first of all, I think what Steve was 

16 kind of talking about, as far as the ten percent. 

17 In our case, and in the case of many of our 

18 shorter term programs we have multiple starts.

19 We can have weekly starts, monthly 

20 starts. So, it's not based on semesters or 

21 terms. So, to try and figure out a zero percent 

22 growth would be sort of impossible as we're doing 
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1 these rolling starts.

2 So, anyway, that being said, we've 

3 mentioned many times the economically 

4 disadvantaged appeals process. So, I don't know 

5 if this is the appropriate time to get into that 

6 a little bit more, Greg. I know you're looking 

7 for comments as far as --

8 MR. MARTIN: We're fine with taking 

9 comments related to that.

10 MR. HELLER: Okay.

11 MR. MARTIN: It is part of the 

12 sanction.

13 MR. HELLER: Well, that being said, I 

14 don't know if everybody has actually looked at 

15 that rule closely. But I have. And what it 

16 basically speaks to is that if you're 70, if 70 

17 percent of the students in that program are Pell 

18 eligible for half of the cost, I believe, you 

19 would have to show a 70 percent graduation rate, 

20 and then what amounts to basically a 44 percent 

21 placement rate.

22 But placement of every single student 
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1 that started that program, not just completers. 

2 That's a pretty, pretty difficult threshold to 

3 meet for any of the schools that serve that 

4 particular type of population, whether it be 

5 schools like mine, or community colleges, et 

6 cetera. Even some of the schools that Todd was 

7 alluding to in his earlier comments this morning.

8 So, I was going to throw out a 

9 proposal that maybe can be discussed over time, 

10 that if you meet the threshold of 70 percent Pell 

11 eligible, why not simplify it and go back to 

12 either a 15 year amortization for that program, 

13 or bump the threshold up to 12 percent, as far as 

14 the debt to earnings ratio is concerned?

15 PARTICIPANT: There you go.

16 MR. HELLER: So, I'm just throwing 

17 that out there.

18 PARTICIPANT: That's interesting.

19 MR. RAMIREZ: Okay. It looks like 

20 Daniel, Mark McKenzie, and then Marc Jerome. 

21 Daniel.

22 MR. ELKINS: Yes. To clarify on what 
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1 I was thinking earlier, to give an actual 

2 tangible suggestion. I know it's what you are 

3 looking for.

4 I think that it's the last box if you 

5 move to the right. I would just limit the 

6 expansion of enrollment, period. And then, on to 

7 the left I would say, not have it be one of the 

8 three, or ors.

9 But I would say, limit expansion, 

10 period. Require institutions to get special 

11 acceptance to add new programs. So, make sure 

12 it's both, pending a scheduled full programmatic 

13 review. So, that would be my suggestion there. 

14 And, you know, obviously across all sectors. 

15 It's not a bifurcated system here.

16 And then the other question though 

17 that I had for the Department was, you know, I 

18 believe GE 2 was taken to court, and was knocked 

19 down due to a repayment rate issue.

20 Has there been consideration as to 

21 the, I don't want to say efficacy, but the 

22 calculation, and how it's being calculated, just 
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1 to avoid us doing this a fourth time?

2 MR. MARTIN: Yes. We have considered 

3 that. We, and these rules we're not proposing as 

4 straightforward benchmark. When we get to that 

5 section we'll discuss with you what our ideas are 

6 about that.

7 We didn't want to be hard and fast, 

8 because we did want to elicit other ideas from --

9 You are correct that we did not prevail in court 

10 on that. It was considered to be arbitrary. So, 

11 we are seeking to avoid going down that path 

12 again.

13 MR. ELKINS: Thanks. Thanks for that 

14 response.

15 MR. RAMIREZ: Okay. Mark McKenzie, 

16 then Marc Jerome.

17 MR. MCKENZIE: Thank you. Mark 

18 McKenzie. Greg, just a quick question. And then 

19 I've got a follow-up. Between the box that is 

20 the institution must inform students through the 

21 notification process, and then the last one in 

22 the center.
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1 Could you talk a little bit more about 

2 what the process that you would see, or what you 

3 would envision as to how the Department would 

4 determine some of these things? I know you 

5 referenced you have other tools, compliance 

6 audits.

7 But it seems like this is a pretty 

8 essential time. So, things have been flagged, a 

9 program has failed both metrics, and has gone 

10 through a process. So, is that something that 

11 needs to be fleshed out more?

12 MR. MARTIN: Well, we're certainly, 

13 this is Greg, for the record. We're certainly 

14 willing to entertain suggestions about it. I'm 

15 not going to obligate the Department to a 

16 specific mandated schedule of escalating events 

17 here.

18 If you have suggestions about what you 

19 would like that to be, if you feel that these 

20 should be laid out in a more strict way, we're 

21 certainly willing to hear that.

22 Right now, the way we have it is that, 
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1 you know, there are -- there are certainly in 

2 668.16 a number of measures of a school's 

3 administrative capability.

4 There is, to some extent, or there 

5 always has been a bit of a judgment call about 

6 when the Department would say a school lacks 

7 administrative capability. So, there's a number 

8 of things that we look at here.

9 I don't know at this point exactly 

10 what the -- Because we wouldn't have done it 

11 before. So, exactly how that would work when the 

12 school participation team became aware of 

13 multiple failing programs, how that whole, you 

14 know, structure would function.

15 It would be disingenuous of me at this 

16 point to say that. Because I don't know. This 

17 is rather a new way of approaching it. But, you 

18 know, we would look at, it gives us the option of 

19 looking at a, not just these rates, but looking 

20 at the school holistically as well.

21 Because the only reason why we're 

22 looking at this one failing program? Or they 
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1 have, are there multiple programs that don't meet 

2 the benchmarks, and other problems at the school? 

3 So, it gives us flexibility. And I think that's 

4 intentional.

5 MR. RAMIREZ: Marc Jerome.

6 (Simultaneous speaking.)

7 MR. RAMIREZ: Oh, I'm sorry. Steve, 

8 you had --

9 MR. FINLEY: No. I was just going to 

10 add to Greg's comments. The other thing to 

11 remember here is that we're going to be looking 

12 at a significant lag in the outcomes for the 

13 program.

14 And it may well be that we're going to 

15 have an institution that comes into the 

16 Department with what looks like a very bad 

17 benchmark performance, that can demonstrate that 

18 in the subsequent years since then they've done 

19 an enormous amount of work to improve that 

20 outcome, by changing the costs, or working with 

21 the businesses.

22 You know, it's actually, 
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1 administrative capability is as much, what have 

2 they don't to continually try to improve these 

3 outcomes, as it is about simply trying to lock in 

4 a bad outcome that's based on something that 

5 happened several years prior.

6 So, it's hard to pigeon hole this, 

7 except to say, there's going to be a discussion 

8 there to see if the institution is taking this 

9 seriously, and acting to improve the outcomes in 

10 that program.

11 MR. MARTIN: Okay. Thank you. 

12 Actually, it leads me into the next comment. 

13 Because that's my recollection of our discussion 

14 at the last session, was that these are 

15 indicators that there may be an issue.

16 It's not a term commonly used as 

17 bright line. If you fail the bright line you 

18 automatically get penalized. I think the 

19 discussion was that these indicate there may be 

20 an issue. And we need to take a deeper look at 

21 the particular program and/or the particular 

22 institution.
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1 Works the same way in the 

2 accreditation process. We'll do thresholds. And 

3 we'll do three year rolling averages. Because 

4 you see, that tries to take into account both 

5 small ends, and also time lags, and things along 

6 those lines.

7 So, it appears to me that the thing 

8 that will need to get fleshed out is how that 

9 process unwinds, either at the Department level 

10 at that last box, as to whether it goes right or 

11 left. And I think a number of people have 

12 identified that.

13 And the one other issue is that I'm 

14 assuming that once they get through the three 

15 boxes on the top, that there could also 

16 potentially be a notification to the accreditor 

17 that, okay, we've gone through this, and they 

18 failed both metrics.

19 As a result of that, that's going to 

20 trigger a whole separate set of reviews. And I 

21 don't want people to lose sight of that, even 

22 though it's kind of outside the Department's 
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1 role.

2 The accrediting commissions will be 

3 looking at this and going, exactly what are the 

4 problems? And then, I think most of the 

5 accreditation commissions have elevated their 

6 level of conversation with the Department when 

7 there are issues of compliance at play.

8 And also with, you know, state 

9 authorizing agencies. They may also trigger a 

10 whole separate process. So, this is not just in 

11 the weeds to just these two issues that go 

12 immediately to a sanction. Thank you.

13 MR. RAMIREZ: Okay. Thank you. 

14 Jerome, Marc Jerome.

15 MR. JEROME: This is Marc Jerome. 

16 Greg, sorry, I'm asking if, I'm calling a little 

17 time out. I'm looking at this, and I'm looking 

18 at the big picture.

19 I believe, and someone can correct me 

20 if I'm wrong, there's about 6,000 institutions, 

21 depending on how you do OPIDs. Does anyone know 

22 the number of total programs in the United 
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1 States? I'd say it's a couple of hundred 

2 thousand to a million.

3 MR. MARTIN: It's going to be a lot of 

4 programs, yes.

5 MR. JEROME: A lot of programs.

6 PARTICIPANT: A lot.

7 MR. JEROME: It looks to me that the 

8 way we're going, depending of course on the 

9 metric, could be administratively untenable. And 

10 to all the people sitting behind me, it's kind of 

11 like condemning them to administrative hell with 

12 the -- I'm serious though, with the number of 

13 programs.

14 So, I'm asking my colleague, Chad 

15 Muntz, who we've been discussing, as we go 

16 forward, and we start seeing how this plays out, 

17 to reconsider looking at the metrics at an 

18 institutional level, to find a way of being 

19 effective.

20 Because I've lived through gainful 

21 employment, with all its ups and downs. And 

22 taking this to a programmatic level for all 
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1 institutions across the entire country, given the 

2 breadth, and depth, and complexity, seems to me 

3 to be administratively untenable.

4 And so, I'm going to ask we reflect on 

5 that as we move through until Thursday. And I'll 

6 end with that.

7 MR. RAMIREZ: I want one clarification 

8 here before we move on. This is what, and I, 

9 everything that was said, good points. With a 

10 look at administrative capability though we are 

11 calculating these rates by program. That is 

12 true.

13 An administrative capability 

14 assessment is of the institution. So, you'd be 

15 looking at the institution, looking at the 

16 programs the institution has. So, to the extent 

17 that there is an assessment of admin capability, 

18 that is at the institution level.

19 MR. JEROME: So I guess, and just to 

20 talk it out. We've had some discussion. I'm 

21 just trying to imagine how it's playing out 

22 though.
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1 So, you know, if you have an 

2 institutions with 100 programs, and two fail both 

3 compared to an institution with a few programs. 

4 Are you looking at the enrollment size of the 

5 programs?

6 Again, looking at the Department's 

7 capabilities, and looking at just the complexity 

8 of this, it feels like it's going to be very 

9 difficult to implement it without some more 

10 structure.

11 And I take, you know, comments from 

12 people who know the landscape of higher ed a 

13 little better than me. But I'm just having that 

14 sense that this is still untenable.

15 MR. RAMIREZ: Okay. Let me get 

16 Jennifer, Kelly, and then Ahmad.

17 MS. BLUM: So, I just have a couple of 

18 questions. So, Greg, to your point on the 

19 administrative capability, I was going to ask 

20 that. I assumed it was not on some new 

21 programmatic level administration. Because I was 

22 at the school level. And I, if I, I'm not that 
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1 familiar with the economically disadvantaged 

2 appeals process. But I believe that's at the 

3 institutional level as well, isn't it, round 

4 CDRs?

5 MR. MARTIN: Well --

6 MS. BLUM: Or, I mean, the way it's 

7 used today, anyway.

8 MR. MARTIN: Yes.

9 MS. BLUM: Is that the --

10 MR. MARTIN: I'm sorry. The way it's 

11 used today.

12 MS. BLUM: So, you would get out --

13 That's not the right word. But you would 

14 potentially be using an institutional level 

15 appeal, which I agree is hard to, really hard to 

16 meet anyway. But you would be, I'm just 

17 wondering about the application of value. Okay?

18 (Simultaneous speaking.)

19 MS. BLUM: Steve can answer this 

20 anyway. So, I just want to understand the 

21 economically disadvantaged appeal, even though I 

22 do think it's really hard to meet, regardless of 
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1 whether it's at the institution level or the 

2 program level.

3 But are you, is the suggestion in this 

4 section, and I think in the other section where 

5 it's mentioned, that a program that has an issue, 

6 the institution could then use the economically 

7 disadvantaged appeal at the institution level to 

8 not have the applicability of the metrics? I 

9 just, that was a question I had.

10 MR. FINLEY: So, the proposal would be 

11 to use those appeals done at the programmatic 

12 level.

13 MS. BLUM: Okay.

14 MR. FINLEY: But if there's 

15 conversation around the table saying, if there 

16 was already a successful appeal that's been used 

17 recently on that, and you want us to consider 

18 that as an alternative way for the program to 

19 meet it, the answer, it's up for discussion.

20 MS. BLUM: Okay. So, that was one 

21 question. And then the other point that I just 

22 wanted to make, because I know Daniel mentioned, 
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1 a lot, a number of people sort of mentioned, sort 

2 of the mandatory program, not mandatory, but the 

3 sort of like jump, you know, ensuring that there 

4 was a program review.

5 And I did just want to emphasize what 

6 I said earlier, and also what Jeff said earlier. 

7 That with the, what Marc just said, with the 

8 volume of programs that we're talking about I 

9 feel like there needs to be something written in 

10 about what the norm is, so to speak.

11 So, whether it's that, you know, it's 

12 an outlier, like whether there's a standard 

13 deviation, or whether there's some ability for 

14 the Department to not jump into this if every 

15 single bachelor in X is a problem in this 

16 country. Or even some sort of, you know, 

17 significant number of programs across the board.

18 Because I can't even imagine a world 

19 where the Department is doing, you know, a 

20 literally, you know, potentially dozens of 

21 program reviews at the same time on a particular 

22 --
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1 So, I just, I do feel like there 

2 needs to be language written in somehow that 

3 allows for that standard deviation. That was a 

4 interesting idea that Jeff had.

5 Or something that allows that if 

6 there's, if it's, because you are, like I said, 

7 you're going to learn a lot about the 

8 marketplace, in terms of professional, you know, 

9 different types of professions. And it may be 

10 that some are, you know, have lower results than

11 others.

12 I mean, I expect that business degrees 

13 are going to do okay. It's like what we already, 

14 kind of already know. So, I just think you need 

15 some sort of caveat there.

16 MR. RAMIREZ: So, I have Kelly, Ahmad, 

17 and then Johnson.

18 MS. MORRISSEY: This is Kelly. I just 

19 wanted to circle back to Neal's discussion about 

20 the economically disadvantaged appeals. And just 

21 looking at the grad rate requirement of those 

22 appeals.
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1 In looking at the average graduation 

2 rate of community college students, which is my 

3 own sector. According to Clearinghouse data that 

4 grad rate is 57 percent.

5 So, holding an appeal to a standard of 

6 70 percent at an institution with a high 

7 percentage of economically disadvantaged 

8 students, you won't have any schools that are 

9 able to demonstrate that benchmark.

10 So, I think that there should be some 

11 further consideration if we're using those same 

12 standards for an appeal under these program 

13 specific metrics. I think perhaps we should look 

14 more carefully at the grad rate requirement in 

15 that appeal.

16 MR. RAMIREZ: Okay, thank you. Ahmad.

17 MR. SHAWWAL: Ahmad here. 

18 Philosophically I can understand the idea that we 

19 ought to let the accreditors do their job. And I 

20 feel like a lot of people agree with that.

21 And to that effect I would support a 

22 requirement that the accreditors ought to be 
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1 notified if these benchmarks are not met. And 

2 I'm curious if anyone disagrees with that.

3 MR. RAMIREZ: Daniel.

4 MR. ELKINS: I second that. I think 

5 that that's absolutely a necessity. I think that 

6 should a program essentially not meet both of 

7 these benchmarks, then I think that there should 

8 be an automatic notification to the accreditor.

9 MR. RAMIREZ: Johnson.

10 MR. TYLER: I just want to revisit an 

11 idea, people, for the last time, last session, 

12 which was a letter of credit. And if it was 

13 specific to the program it might address what 

14 Marc was talking about, if there are 100 

15 programs, and only two programs that are having 

16 problems.

17 The Department of Education wouldn't 

18 have to get involved in looking at those 

19 programs. It would just be an assessment of what 

20 the potential tax payer hit would be on those 

21 failing programs.

22 We have, the idea here is we are now 
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1 having two metrics that will look at gainful 

2 employment and repayment rates. If you fail both 

3 of those you're in a bad place from both a 

4 borrower's perspective, and from a tax payer's 

5 perspective.

6 And that might be a way to let the 

7 marketplace better police some of the bad apples 

8 here.

9 MR. RAMIREZ: Sandy.

10 MS. SARGE: This is Sandy. To Kelly 

11 and Neal's point, I agree. I just read through 

12 the standards on which you would win a economic 

13 disadvantage appeal.

14 And I agree that it would be very, 

15 very difficult, especially if you were to count, 

16 look at years of the Great Recession where people 

17 weren't getting employed. That would be another 

18 piece of it.

19 So, perhaps for the sake of this we 

20 would define economically disadvantaged, or 

21 underserved maybe would be a better word. And 

22 that we say that, we leave it at the 70 percent, 
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1 or whatever the standard is. It might say two2 thirds.

3 So 67, if 67 percent of your students 

4 are receiving more than half the level of Pell 

5 eligibility you would be considered serving an 

6 underserved or economically disadvantaged group. 

7 And therefore, this. And leave off, for sake of 

8 what's the next steps. Leave off the completion 

9 and placement.

10 At that point, not that those aren't 

11 out there, and accreditors look at those, et 

12 cetera. But just to move through this 

13 discussion. That would be one of them.

14 And then to Mark's point earlier, with 

15 regard to the volume that we're thinking about 

16 here, I agree with that as well. This will be 

17 difficult.

18 So, when you're looking at whole 

19 numbers, and not in context of a comparison, so 

20 therefore, percentages, you could end up in just 

21 this untenable situation for yourself.

22 So maybe, to Mark's point, we add 
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1 something that says, and is equal to some 

2 percentage of the student population of that 

3 school, or number of, or percentage of programs 

4 offered.

5 So, if you're at a school like 

6 Pamela's at, two programs out of 10,000 programs, 

7 or 1,000 programs may not be very many. And it 

8 may not represent a large percentage of her 

9 students. So, overall they're okay. 

10 It may mean that they have to go on 

11 because of their accreditor, and look at other 

12 things. Or they may want to sit as an 

13 administration team and say, do we really want to 

14 be offering this? Are we the best group? But 

15 it's a very, very tiny population that we impact.

16 Two out of another school, like 

17 Jessica's, that could be 100 percent of her 

18 students, right, if two of them are failing. So, 

19 that would be a much different response.

20 So, numbers are always better if it's 

21 compared to something. So, utilizing percentages 

22 at that point might be valuable. Thank you.
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1 MR. RAMIREZ: Laura, then Tony.

2 MS. METUNE: Laura Metune for the 

3 record. I've been thinking about where to insert 

4 this comment. And I was going to wait until 

5 Issue Paper 2. But I'm so confused about which 

6 direction we're going, I'll just say it now.

7 I'm really disheartened by this idea 

8 that colleges that serve low income students 

9 should not have to meet an outcome standard. I 

10 think the purpose of financial aid is to be an 

11 equalizer, and to give underserved student 

12 populations the opportunity for upward mobility.

13 And I don't think that we should be 

14 looking at eliminating programs that primarily 

15 serve low income students from that same 

16 expectation. So, I just say that broadly.

17 And then, I do want to say that I 

18 support continuing program level data. I realize 

19 there will be some administrative burden there. 

20 And I realize that the sanctions have been 

21 largely eliminated. But I do think this data can 

22 be valuable to states, to system offices, and 
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1 ideally to institutions too.

2 I hope that we all come to this 

3 wanting to know whether or not our programs are 

4 really serving students. And if they're not, 

5 wanting to make changes to make sure that they 

6 do. Thanks.

7 MR. RAMIREZ: Thank you. Tony.

8 MR. MIRANDO: Thank you. This is 

9 Tony. Try to keep this short. So, I appreciate 

10 that the accreditors should be brought into this 

11 conversation. Institutions that have bad D/E or 

12 bad replacement rates.

13 If you remember, back in Session 1 one 

14 of the concerns that I had was that if we're 

15 going to use these rates, then the metrics should 

16 be metrics that effectively show whether or not 

17 we have a good program.

18 And I think if we continue to use the 

19 rates that I'm hearing that we're using, and 

20 originally agreed that we could go down this 

21 route, because I thought we were going to have 

22 the second tier, that you could still have good 
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1 performing programs, providing students great 

2 gainful employment.

3 But because of the metrics that are 

4 being used for both D/E and repayment rates, that 

5 good schools are going to get penalized. And so, 

6 I just think that, again, we need to really look 

7 and be focused on, what are we trying to 

8 accomplish?

9 And I can say from my 1,300 plus 

10 schools, which it appears that you all are going 

11 to be sending me information about these schools, 

12 I'm going to be very uneasy about requiring them 

13 to provide more information, when I'm looking at 

14 them already and saying, well, I think these are 

15 good schools, providing great programs.

16 But because of the metrics that are 

17 being used on them, they're getting this negative 

18 outcome.

19 MR. RAMIREZ: Okay. Thank you. 

20 Whitney.

21 MS. BARKLEY-DENNEY: Yes. I just 

22 wanted to follow-up on what Sandy said. Because 
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1 I think it's actually a pretty powerful point, 

2 which is, you know, I first of all, just 

3 stipulating that I'm concerned about the idea of 

4 letting any one program, even if it only enrolls 

5 ten borrowers, to fail, and continue to fail 

6 without sanction.

7 But I do think if we're going to be 

8 looking at, you know, one program versus two 

9 program, we do need to be considering the 

10 percentage of students who are enrolled.

11 Because certainly that might be more 

12 reflective of the institution as a whole, and of 

13 the performance of those programs if, you know, 

14 they account for 50 percent of borrowers who are 

15 actually enrolled in the school.

16 MR. RAMIREZ: All right. I know that, 

17 from the conversation that we were having here 

18 there was quite a few ideas that surfaced. And 

19 then, also even on the chart that was shared with 

20 us. There were a couple of modifications or 

21 clarifications to the chart.

22 And let me ask you all. How do you 
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1 feel, as far as the conversation on sanctions, 

2 knowing that we're probably going to have to make 

3 some revisions to the language that was already 

4 proposed, based on what we just heard here?

5 Do we want to give the Department some 

6 time? Maybe we could put this back on the agenda 

7 for tomorrow, and then go on to the next paper 

8 after lunch? Sound okay to everyone?

9 All right. So, we'll take 90 minutes 

10 -- Jennifer, do you have something on that?

11 MS. BLUM: Well, I mean, we only did 

12 one paragraph of the paper.

13 MR. RAMIREZ: Okay.

14 MS. BLUM: And, I mean, it was a good 

15 conversation. But there are other pages, and 

16 other -- I mean, I know, I see Steve nodding his 

17 head in agreement. But the notification language 

18 and, I mean, there is, there are other issues in 

19 the Issue Paper.

20 MR. MARTIN: Yes. I don't mind, 

21 Javier, if they want to continue, you know, 

22 discussing it.
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1 MR. RAMIREZ: Okay.

2 MR. MARTIN: We're not going to be 

3 able to get new language together tonight, I 

4 don't think. So, I would rather actually hear a 

5 more holistic discussion of it before we go back.

6 One thing we do have to do that was 

7 very remiss about this morning was, we have our 

8 data person, Sarah Hake (phonetic), who's been 

9 waiting patiently in the back for me to probably 

10 bring this up, when I haven't.

11 We should have her come up and discuss 

12 the data papers with you. So, I think I'd like 

13 to start with that after lunch. Take a hiatus 

14 from this, and then have a discussion of that. 

15 Then come back to the Issue Paper 4.

16 MR. MARTIN: All right, 90 minutes.

17 (Whereupon, the above-entitled matter 

18 went off the record.)

19 MR. RAMIREZ: All right, so just a 

20 quick announcement. The -- at the end of the 

21 day, as far as security goes, we are asking that 

22 as soon as we conclude that folks gather stuff so 
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1 that way the escorts could get you out of the 

2 building as quick as possible. So no hanging 

3 around. But then the other thing is, I 

4 understand that some of you discovered the 

5 cafeteria on the seventh floor. We are being 

6 asked that that remain for the employees. I 

7 think part of the issue is that this is a 

8 building that's also shared with ICE and there's 

9 security concerns. So, escorts would have to 

10 take you to the seventh floor as well. But they 

11 are asking that we just keep that as -- for the 

12 employees. So if anyone has to get anything, we 

13 have to go outside and -- and grab that.

14 So I guess a note for tomorrow as 

15 well, right? Make sure you come with your 

16 Camelbacks and be fully hydrated. All right, so 

17 as far as logistics, that's all I have for now. 

18 And then we are going to start off with some of 

19 the data.

20 (Pause.)

21 MR. RAMIREZ: Okay, Greg (phonetic), 

22 we are ready.
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1 PARTICIPANT: Okay, welcome back. 

2 Hope you found some place to eat and I hope it 

3 was not quite as circuitous as the route I had to 

4 take to find something. We made our way to this 

5 cafeteria which -- just felt like something from 

6 the Lord of the Rings. You need to have a number 

7 of different interpretations before you get 

8 there. But anyway, but before we continue with 

9 Issued Paper 4, I -- I had intended to have

10 Sarah come up a little earlier this morning and I 

11 had neglected to do that. So I am going to have 

12 Sarah Hake come up and discuss a couple things 

13 with you, including this paper we just handed out 

14 on repayment recalculations. So if she'd be kind 

15 enough to join us, I will move over.

16 MS. HAKE (phonetic): Good afternoon, 

17 everyone. It is good to see all of you again. 

18 So I wanted to start out with a couple of items. 

19 After the previous Neg Reg, we did go back and 

20 investigated the MOU and looked at it. And I got 

21 a copy and read it for myself. As a result of 

22 that, we have started investigating whether 
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1 there's anything we could do before the existing 

2 MOU expires. We are also in discussions about 

3 future MOUs and our ability to match with the new 

4 MOUs. So relative to data requests, we did 

5 receive a few data requests. But we have very 

6 few data scientists here at the Department. And 

7 incredibly limited resources. And there's also 

8 an intensive data validation process, and so 

9 unfortunately we are not able to bring any data 

10 to the table today.

11 So in lieu of that, I thought that 

12 because we were contemplating adding repayment 

13 rate, that it would be good to have a discussion 

14 about how one might set thresholds on repayment 

15 rate information and, generally, how in the realm 

16 of mathematics and statistics the different 

17 methods work for identifying outliers. And, sort 

18 of, an honest discussion about what are some of 

19 the pros and cons of each of them. So one of the 

20 most common ways is using box plots. Before we 

21 get into that intensively -- because that sort 

22 of is the meat of what I am talking about there 
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1 -- if you would turn over to the back and look at 

2 the bottom of page two, there are other ways to 

3 do this. And I have heard a lot of people at the 

4 table talk about setting it at, you know, the 

5 mean minus two standard deviations -- or at a 

6 particular percentile within the data.

7 So the difficulty with that is that 

8 you are, by definition, saying that your 

9 population has outliers. Because if you use the 

10 mean minus two standard deviations, you then have 

11 four percent of your population with a lower 

12 repayment rate than that threshold. And so you 

13 are defining the bottom four percent of repayment 

14 rate as outliers. And so that's -- to me, is a 

15 concern because it could be that in other -- in 

16 other mathematical or statistical methods, they 

17 might not be identified as outliers. And what I 

18 heard really clearly during the last meeting from 

19 you guys was that you really wanted a way to 

20 identify, in your own words, the bad actors. And 

21 so I am not sure that that necessarily gets you 

22 to where you want to go, but I think it's one of 
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1 the valid ways that statisticians do use to 

2 identify outliers in process control settings and 

3 in other environments, okay?

4 Another method is using statistical 

5 tests. And when I had information, I did include 

6 some references there to the literature -- or to 

7 the people who developed those methods. The ones 

8 that are sort of recommended are cited below. 

9 But with statistical tests relative to outliers, 

10 what you usually end up with in the test is, does 

11 my data contain outliers or not? Yes or no? 

12 Which doesn't really help us in this context, 

13 right? Does our data have outliers, yes or no? 

14 Okay, now what? Yes, we have outliers. Right? 

15 Or, no, we don't have outliers.

16 Or you could test, does my data have 

17 -- my data contains five outliers -- yes or no? 

18 You can set an upper threshold and test for how 

19 many outliers you think there are, but you're 

20 still assuming that there's outliers. And so, if 

21 what you're trying to do is actually pinpoint 

22 where are the outliers given the distribution of 
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1 the data, my recommendation is box plots. So 

2 let's go back and talk about them. And before we 

3 go too far in, there are some open questions 

4 where -- when -- we welcome your input, but 

5 where we would have to make some decisions around 

6 how we do it, or how we group it. So let's just 

7 talk through some of those. And I want you to 

8 think about it as we talk about box plots.

9 So, should outliers be identified at, 

10 say, the individual CIP and level? So for 

11 example, I can't even think of it. Someone give 

12 me an example of that. A CIP and a level.

13 (Simultaneous speaking.)

14 PARTICIPANT: Zero-one-zero-one, 

15 computer science.

16 MS. HAKE: Okay, so 11.0101, and what 

17 would be the level? Like what would make -- a 

18 bachelor degree relative to, say, a CISCO 

19 certificate or something with the same CIP code?

20 PARTICIPANT: Sure.

21 MS. HAKE: Okay -- all right, does 

22 that help, sort of? So, if we were to group at 
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1 CIP code and level, you would have differences 

2 between CIPs and also between levels. So 

3 theoretically, right, then we're just talking 

4 about the different options that could be done -

5 - knowing we have to make choices. So in that 

6 situation, theoretically there could be a 

7 different threshold for bachelor's, computer 

8 science, than there might be for a certificate IT 

9 program than a master's degree computer science 

10 program, okay? So that's one option. Another 

11 options is throw the entire population of all 

12 programs into the pot, and run one threshold, 

13 right, that applies to everybody? Regardless of 

14 your program type or what area it's in or what 

15 level it is, okay? And I am not advocating for 

16 one or the other. I want you to think about 

17 which one you think is most appropriate. Okay?

18 Other ways that we could do it would 

19 be trying to find demographically matched student 

20 populations, or other ways of grouping the data 

21 where we see statistical significance, or 

22 statistically significant differences where when 
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1 you do that kind of research, we usually ask 

2 people, well, where do you think the differences 

3 are? And then we test and see, you know, is 

4 there a statistically significant difference if 

5 we separate the population there? Or in that 

6 way? Okay? So those are some of the decisions 

7 we would have to make if we were to use box plots 

8 and a repayment rate metric trying to set a 

9 threshold in this way. So that's question --

10 open question number 1, okay?

11 Open question number 2, we've sort of 

12 already covered, how should thresholds be 

13 selected? Well, there's lots of different 

14 methods. And I am going to talk about box plots. 

15 But if other people feel strongly about a 

16 different method for identifying outliers, we 

17 welcome that discussion. And I would be 

18 interested in what your thoughts are. The third 

19 is how frequently should thresholds be 

20 reassessed? So if we are using a mathematical or 

21 a statistical method, and we compute them, would 

22 you want us to compute them on that year's data 
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1 so that you wouldn't necessarily know what the 

2 thresholds are before you are held to them? Or 

3 would you rather we set them on last year's data 

4 and then you would know what the thresholds are 

5 for the next year's data? Or would you rather 

6 you we set them, say, once and say that if we 

7 need to set them -- based off of drastic changes 

8 in the economy or things like that, that we would 

9 reassess in those sorts of situations?

10 So there's different ways to do that 

11 and different ways that those are handled in 

12 different circumstances. And I think we'd be 

13 open to that, knowing that if you want us to do 

14 it every single year, it will probably cost us 

15 money. So -- because there's more work to doing 

16 it every year. But that doesn't mean that if you 

17 -- you know, like, if it really needs to happen, 

18 we'll probably find a way to do it. I can't --

19 I shouldn't commit anything, sorry.

20 But I think that -- that sort of is 

21 where that question is. How often do you think, 

22 knowing your own industry, we reasonably would 
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1 want to reassess them? My experience with these 

2 sorts of things is that when you set a threshold, 

3 and you start paying attention to who is above 

4 the threshold and who is below the threshold, 

5 that behavior changes. And then you see -- you 

6 know, and it takes time, right? Particularly 

7 when you're only computing once a year. But that 

8 behavior does change. And that -- you know, 

9 theoretically, that could be one of the goals of 

10 this group is to change that behavior and to try 

11 and identify the bad actors and either make them 

12 better or make them go away -- however you want 

13 to think about that. And when you set a 

14 threshold, agencies and institutions are likely 

15 to start acting against that threshold. So 

16 that's another thing to think about also when you 

17 think about how often should we consider 

18 reassessing thresholds?

19 The last one is how should we make the 

20 methods and thresholds available to the public? 

21 There's lots and lots and lots of ways to do 

22 that. But think about what kinds of information 
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1 would you want to know about the thresholds? 

2 Right? How would you like us to tell you? How 

3 would you like us, not just to tell you, but to 

4 make that information available to other 

5 constituents in the public or general people who 

6 are, you know, surfing the web?

7 Okay, so let's talk about box plots. 

8 Box plots were developed by Tukey, and it's a 

9 method for looking at the distribution of data. 

10 And we talked some about these last time. Erin 

11 (phonetic), can I get you to go to the previous 

12 page? The image on the previous screen? 

13 Perfect. So I may actually take the walking 

14 microphone and go and point up at the screen.

15 Are we working? Okay, so you guys are 

16 all going to get a little glimpse into my 

17 previous career as a high school math teacher. 

18 Okay, so when you construct a box plot, imagine 

19 the first thing a student would do would be to 

20 draw -- like, this is the number line, and it's 

21 going vertically, which isn't necessarily the way 

22 we think about it normally. That's the way this 
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1 one has been drawn. So there's a number line 

2 going vertically and zero somewhere. Infinity is 

3 up there. The negative infinity is down there, 

4 okay? And then you just draw a whole bunch of 

5 dots on their number line.

6 Then they compute where is the mean? 

7 And the mean is here. They compute where's the 

8 median, which is the middle number, which is 

9 here. They compute, where is the line where I 

10 have 25 percent of my dots below it? That's 

11 here. Where's the line where 25 percent of my 

12 dots are above it? Or, 75 percent of my dots are 

13 below it? That's here. So the median is 

14 splitting at 50 percent of the dots. And the 

15 75th percentile is splitting where there's 25 

16 percent of the dots above, and 75 percent below. 

17 Okay?

18 So the box, then, has the middle 50 

19 percent of the data. Okay? And we call that the 

20 interquartile range, or IQR for short. And then 

21 how do we draw -- these are called whiskers 

22 because they look like little kitty cats.
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1 Okay, so this actually represents a 

2 dot. So the threshold, theoretically -- and the 

3 way it normally would be done when trying to 

4 identify outliers -- is you would put the 

5 threshold at -- if you're looking for a lower 

6 threshold, right, it would be the 25th 

7 percentile, or the 1st quartile, minus one-and-a8 half times the interquartile range, which falls 

9 here, right? And it's a dotted line because you 

10 don't usually see it in the box-and-whisker 

11 graphs. The upper one is here. So what is that? 

12 That means, like, you take this distance and you 

13 multiply it by one-and-a-half. So there's one. 

14 There's a half. That's your threshold, okay?

15 Well, why is this drawn here? That's 

16 the dot that's as close to the lower fence as 

17 exists in the data, but that doesn't go below the 

18 lower fence. Okay? So this represents a real 

19 piece of data in your data set, okay? So this 

20 one only has upper dots. But Erin, if you would 

21 move to the next page. We've already covered how 

22 I don't have real data for you, okay? No 
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1 throwing spit wads. So I created synthetic data, 

2 and I made a bunch of assumptions. One, I 

3 assumed the data are normally distributed, just 

4 so we could talk about it. And I assumed that 

5 the median -- no, sorry -- I assumed that the 

6 mean repayment rate was 46-percent, which is 

7 roughly where it falls for all institutions. And 

8 then -- so that we didn't have a whole lot above 

9 100 and a whole lot below 100 -- I think what 

10 the paper says, as I assumed, either 12 -- or 15-

11 percent standard deviation.

12 And then I had SAS draw me a picture. 

13 Those of you who have not used SAS before, it is 

14 an analytic software. You're required to cite 

15 it, so that's there. Okay. So, using these 

16 data, we do have -- and you can see them -- two 

17 outliers, okay? And notice that dotted line 

18 where the threshold got set is not graphed. 

19 Okay? It's not here, it's somewhere in between 

20 this dot and this line, okay? Let me pause. Are 

21 there questions?

22 (No audible response.)
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1 MS. HAKE: You mean I made sense to 

2 everybody? That's marvelous.

3 PARTICIPANT: I have a question, 

4 actually.

5 MS. HAKE: Okay, yes.

6 PARTICIPANT: Sorry, I had to ask 

7 other people just to make sure I wasn't the only 

8 one not understanding this. Why are we talking 

9 about this? Are we -- is this, like, for the 

10 purposes of what the student disclosure would 

11 look like?

12 MS. HAKE: Right. So, relative to 

13 repayment rate, how might we set a threshold for 

14 repayment rate that would be valid and useful and 

15 stand up in court? Okay? So would not be 

16 determined to be arbitrarily -- arbitrary and 

17 capricious, right? But that would be data driven 

18 and based upon the actual situation -- and 

19 meaningful to this situation.

20 All right. All right, good. Are we 

21 all on the same page again? Anyone need me to go 

22 back and reexplain something? Yes?
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1 MS. SARGE: So, this is Sandy. So 

2 when you said that -- just that least piece 

3 where you said here's the line -- so that's 

4 where the minimum observation is? And then the 

5 dots are falling below. And you're saying, 

6 basically, the lower fence is not on this? Is 

7 that right?

8 MS. HAKE: Exactly. So you -- when 

9 you usually draw box plots, you don't draw that 

10 lower fence.

11 MS. SARGE: Don't do the -- got it.

12 MS. HAKE: But that's why I included 

13 that first picture, because I think for the 

14 purposes of discussion, that's important to 

15 realize -- where that might fall. And it could 

16 be on this one that it's really close to that 

17 line. Or it could be really close to that dot, 

18 but we don't really know, right? Obviously, we'd 

19 need to tell you where it would -- where it is, 

20 okay? Yes?

21 PARTICIPANT: So the idea of this is 

22 that we'd basically be setting the threshold 
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1 around the place where the outliers are? Is that 

2 the rationale?

3 MS. HAKE: So you are -- you would be 

4 setting a threshold based off of the distribution 

5 of the data. And so, if the data are very 

6 centrally clumped, right, with just a couple of 

7 outliers -- like, maybe just that one and just 

8 these two, your whiskers might be much shorter, 

9 but that doesn't move where those are located. 

10 So what it's looking for are those that are 

11 statistically different from the rest of the 

12 population -- and so much so that they are one13 and-a-half times farther from the middle 50 

14 percent of the data than everyone else.

15 PARTICIPANT: Sorry, I am still 

16 confused.

17 MS. HAKE: That's okay.

18 PARTICIPANT: So you set -- what I 

19 guess I am asking, is, the reason why you 

20 pictured the number of 1.5-times farther from the 

21 central -- from the mean and median and the 

22 interquartile range is because that shows us what 
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1 outliers are? Is that right?

2 MS. HAKE: Yes, and -- so, 1.5 is 

3 sort of the industry-standard in statistics for 

4 one layer of fence. There is another one for 

5 really, really, really extreme outliers, which is 

6 three times the interquartile range. But that 

7 sort of is standard. If we had been doing this 

8 for a really long time and we had lots and lots 

9 of data, we could assess where maybe a different 

10 value might fall. And in industries where their 

11 data behaved really differently than all the 

12 other industries, sometimes they do that. But 

13 this is the standard. And so I showed this one 

14 because that is sort of what you find in all the 

15 text books as the recommendation. Yes?

16 PARTICIPANT: So, again, the lines you 

17 have at the top and the bottom -- the little 

18 ones -- those represent the maximum observation 

19 below the upper fence?

20 MS. HAKE: Exactly.

21 PARTICIPANT: And the one on the 

22 bottom is the lower --
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1 (Pause.)

2 MS. HAKE: The minimum observation 

3 above the lower fence.

4 PARTICIPANT: Above the lower fence.

5 MS. HAKE: Yes. Yes, Jordan had his 

6 hand up first. Sorry.

7 PARTICIPANT: Jordan, give it a --

8 I'm sorry. Go ahead, Mike.

9 PARTICIPANT: I might have just missed 

10 your answer to Whitney, but can you explain again 

11 where the 1.5 comes from? It's --

12 MS. HAKE: So, if this is the middle 

13 50 percent of your data, well, it comes from 

14 Tukey, who is the man who developed box plots. 

15 But at that (telephonic interference) all of the 

16 literature, Jordan, but from sort of the why 

17 behind that. The idea is that this tells you 

18 about how spread the middle 50 percent of the 

19 data is. Okay? And then, if you multiply that 

20 by 1.5, you are essentially saying that you're 

21 going -- you're taking the spread of that and 

22 you're going 1.5 times farther out from that 
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1 middle 50 percent of the data than your central 

2 spread.

3 PARTICIPANT: I think -- is it 

4 working now? No. It's shorting again. So I 

5 guess what I am wondering about is just whether 

6 there's a justification for 1.5 that Tukey gives?

7 Or if -- if that's kind of a good number in --

8 under some, like, circumstances? Like, given 

9 some distribution of the underlying data. Or --

10 or whether that's, you know, in essence just kind 

11 of a rule of thumb that exists in the -- the 

12 literature that was applied to a particular 

13 instance, which may or may not be well justified 

14 in this case? Just if you could give any more 

15 background.

16 MS. HAKE: Thank you. Yes, sure. So 

17 it is the rule of thumb. I read Tukey ten years 

18 ago, so I don't remember. But we certainly could 

19 go back and see what Tukey used as his 

20 justification. I do know it gets used across 

21 industries. So I used it at the Census Bureau 

22 when I was doing the economic census. I used it 
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1 in Food Safety when I was doing some clustering 

2 stuff with the CDC. So I am not saying it 

3 necessarily is the perfect number, but given the 

4 fact that we don't have the data in front of us, 

5 I figured for the purposes of discussion we would 

6 use the rule of thumb. Okay? But if you -- if 

7 you have data that would support a different 

8 number get used, we certainly would welcome that 

9 and would be interested in seeing it. Okay?

10 PARTICIPANT: So my question is 

11 actually a little bit for Steve. Remind me - --

12 about eight or ten years ago the Department 

13 invested in a 35-percent repayment rate that 

14 didn't pass some standard. And was it because it 

15 -- there was a median and then it chose an 

16 amount away from the median and that's what this 

17 group has to stay away from? Just so you can 

18 direct us a little bit? Because the Department 

19 did the research on this and has already 

20 addressed it.

21 MR. FINLEY: So what the court said is 

22 -- is that the repayment rate was struck in the 
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1 first GE (phonetic) regulations because we failed 

2 in the final rule to provide an adequate 

3 justification for setting it where we did. And 

4 if you look at the regulation, I think the only 

5 justification you might even find working 

6 backwards would be what we had included in the 

7 REA (phonetic) which kind of came up with a 

8 suggestion that about 25 percent of the programs 

9 might have failed that threshold.

10 PARTICIPANT: So it was kind of the 

11 bottom-up approach -- the lowest performing 

12 program is just by saying the 25 percent are the 

13 lowest performing? That -- that was defined as 

14 arbitrary? Just so we understand what we can't 

15 do.

16 MR. FINLEY: Right. And it was the 

17 failure to provide the explanation for how we 

18 came up with that rate.

19 PARTICIPANT: Sorry, I think I am not 

20 more confused than I was at the beginning of that 

21 conversation. So basically what you're saying 

22 is, we could come up with that, we would just 
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1 have to justify it to a greater extent than it 

2 was justified in the last -- in the rule that 

3 was struck down. Is that right?

4 PARTICIPANT: So there's two things, 

5 right, of -- the first prong is, you want to be 

6 able to explain -- we want, very much, to be 

7 able to explain the justification for whatever 

8 rate we select now. And the other thing is the 

9 context is also probably significant since this 

10 is not the kind of sanction that was at issue 

11 before. And it was an integral component of 

12 preserving eligibility that was removed.

13 PARTICIPANT: So, I am sorry, just one 

14 more for myself. So it is not that you set it 

15 up, like, the bottom 25 percent of performers. 

16 It's that that wasn't explained well enough, or 

17 justified well enough. So we could theoretically 

18 set it there, we would just have to justify and 

19 explain it better than it was done previously. 

20 I'm not -- I don't know if that's possible or 

21 not, but I am just asking if that's the 

22 distinction that you are making.
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1 PARTICIPANT: Yes, that is the 

2 challenge.

3 PARTICIPANT: Mark, did you have 

4 something?

5 (No audible response.)

6 PARTICIPANT: Jennifer?

7 PARTICIPANT: This one is also for 

8 Steven, I think. Can you remind me on debt-to9 earnings back in the -- and I know they never 

10 really got to it, if I remember correctly, in the 

11 court decision, but I can't remember that for 

12 sure. But the thought occurred to me as I was 

13 listening to this -- and obviously I have 

14 already said this morning that before we get to 

15 sanctions we -- there ought to be some 

16 consideration of whether it's the norm to be, you 

17 know, below a benchmark. Or, you know, if it's a 

18 norm for a particular program. So I appreciate 

19 the good work here and it's certainly helpful. 

20 But of course the thought did occur to of, how 

21 come we wouldn't do this for the debt to earnings 

22 one too to understand what debt to earnings looks 
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1 like on -- on a norm basis? Like, why is this 

2 conversation just around loan -- I mean, I get 

3 the lawsuit reason. But from a policy 

4 standpoint, why wouldn't this be relevant for 

5 looking at debt to earnings as well?

6 MR. FINLEY: So there are different 

7 ways you can substantiate using a threshold. And 

8 we used -- we relied on recommendations in the 

9 literature for setting the debt to earnings 

10 levels. And that -- the courts have 

11 consistently upheld that as being an appropriate 

12 thing to rely upon.

13 MS. HAKE: I would add that I did read 

14 that research recently. And it relied upon loan15 based standards -- so, standards in the loan 

16 industry. And -- that were created by actuaries 

17 and I, you know, the court probably rightly said 

18 why should we redo the work of all of the 

19 actuaries in the United States? But yes, that -

20 - that's the reason behind it. We have looked 

21 for similar things in repayment rate and we 

22 haven't found them. But if someone else has and 
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1 you'd like to provide us a citation, we would be 

2 interested in seeing that as well. Okay? So we 

3 are not opposed to setting one based off of peer4 reviewed literature either.

5 PARTICIPANT: Johnson?

6 MR. TYLER: Hello, Johnson here. So 

7 -- just so I understand the chart here. So is 

8 the -- the group that we might want to identify 

9 as bad apples is below the bottom whisker? So 

10 it's somewhere around the 14th percentile?

11 MS. HAKE: Well, that was all fake, 

12 made-up data. But yes, in my fake, made-up, 

13 magical world, yes. Okay? And another piece to 

14 sort of think about as you're thinking about some 

15 of the other open questions is that when you have 

16 a really large population and you run one box 

17 plot against all of them, you are likely to 

18 identify fewer outliers, or a lower proportion of 

19 the population as outliers, than if you group it 

20 into, say, 20 different groups and run 20 

21 different box plots, each with their own 

22 thresholds. You're likely to identify a higher 
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1 proportion of the population in that situation. 

2 Generally, the way box plots work is that the 

3 smaller the population against which you are 

4 drawing a box plot, the higher the likelihood is 

5 that you will identify outliers and more 

6 outliers. So that's just one thing to think 

7 about.

8 PARTICIPANT: Okay. Tim and then 

9 Sandy.

10 MR. POWERS: I am sorry, I am just 

11 having a little bit of a hard time grasping the 

12 numbers. So could we just walk through what I -

13 - I think I have it, but could we just walk 

14 through what would be --

15 MS. HAKE: Sure, absolutely.

16 MR. POWERS: Again, using fake data, 

17 fake numbers. So let's say your 25th percentile 

18 is 80, your median is 90.

19 MS. HAKE: Is 80?

20 MR. POWERS: Just -- just -- yes, 

21 yes. Is just the number 80.

22 MS. HAKE: Yes, yes. Okay.
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1 MR. POWERS: Your median is 90 and 

2 your 75th-percentile is 100. So 80, 90, 100. So 

3 that would be -- it would be your Q1, so your 

4 25th percentile, 80, minus 1.5 times your 

5 interquartile range. Your interquartile range 

6 being 20.

7 MS. HAKE: Yes.

8 MR. POWERS: 100 minus 80. So --

9 sorry.

10 MS. HAKE: No.

11 MR. POWERS: 1.5 times 20, which is 

12 30, would be subtracted from 80.

13 MS. HAKE: Exactly.

14 MR. POWERS: Meaning that anything 

15 south of 50 would be your outlier.

16 MS. HAKE: You've got it.

17 MR. POWERS: Okay.

18 MS. HAKE: Good job.

19 MR. POWERS: Thank you.

20 (Laughter.)

21 (Applause.)

22 PARTICIPANT: Tim gets a star.
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1 MR. POWERS: I think I got it. Okay, 

2 I appreciate that. Thank you.

3 MS. HAKE: Absolutely. Thank you for 

4 walking us through an example.

5 PARTICIPANT: Oh, I am sorry. Sandy 

6 and then Chad.

7 MS. SARGE: I am going reserve because 

8 I have to -- I got so engrossed, that I --

9 PARTICIPANT: Chad.

10 MR. MUNTZ: Chad Muntz. So I get that 

11 you're using a statistical method, which I 

12 applaud. And you're asking ideas from other 

13 industries. So just out of curiosity, what is a 

14 repayment rate that would cause a business to not 

15 exist anymore? Like, if 10 percent of their 

16 customers didn't pay, would they go out? Is 

17 there another industry like that? When does the 

18 Federal Government -- when would they break? If 

19 they had 10 percent -- 20 percent not repaid? 

20 What?

21 MS. HAKE: You would need to ask 

22 somebody in the Treasury Department that 
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1 question. But I -- I hear your point. Yes, I 

2 don't know the answer to it, though.

3 PARTICIPANT: Sandy?

4 MS. SARGE: Okay, I remember now. 

5 This is Sandy. All right, Sarah , so -- so when 

6 you were going through -- if we have a broader 

7 definition of the group, you -- your point is we 

8 would have fewer outliers because you're covering 

9 a bigger proportion of them in essence, right? 

10 And if we go tighter, we could theoretically end 

11 up with everybody almost appearing like an 

12 outlier at first. It would seem very scattered. 

13 But the way, then, you would put your box around 

14 it would catch a bunch of them. Right? Because 

15 you do have to put a box around the scatter of 

16 dots. So if you were -- so if you had CIP code 

17 -- six-digit CIP code and level, they may be 

18 kind of all over the place. But then you would 

19 put the 50 percent around it, right? Of where 

20 they would end up -- and then still get 

21 outliers? So it's really balancing that. It's 

22 balancing how precise do we want to be in the 
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1 definition of the group, versus what we lose by 

2 becoming a little less specific and therefore 

3 maybe missing some of those that are truly 

4 outliers and deemed -- and would be deemed bad 

5 players, potentially.

6 MS. HAKE: Yes, yes.

7 MS. SARGE: Okay.

8 MS. HAKE: It's a choice to be made.

9 MS. SARGE: Right, okay. Got it.

10 MS. HAKE: I did -- I forgot to 

11 mention something. Because you're setting -- in 

12 -- in this example, you would be setting 

13 thresholds statistically or mathematically, 

14 right? So there may be a situation where you 

15 would get a negative percentage, right? Which 

16 doesn't really jive with common sense. So, our 

17 proposal might be that we would decide in any 

18 cases where it was a negative number, that we set 

19 it at zero. But that's something to be aware of 

20 and think about as well.

21 PARTICIPANT: Mark, are you back in 

22 the queue here? Okay, Mark and then Tony.
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1 MR. McKENZIE: So, I am following up 

2 on the other metric. And this may be for Steve 

3 more than you. If -- I am a believe that the 8-

4 percent debt to earnings is going to be -- is 

5 going to prove to be too broad and affect too 

6 many institutions. Do we know, was the bound 

7 research only identifying 8 and 12 as appropriate 

8 metrics? Or was it a range in between? I just 

9 don't remember.

10 MR. FINLEY: Yes, I don't recall 

11 either, I am sorry.

12 MR. McKENZIE: But theoretically, if 

13 that happens and we conclude 8 percent is 

14 inappropriate, we could use this similar approach 

15 to debt to earnings, as Jennifer said, so that we 

16 have a -- a, I guess, equal approach to the two 

17 metrics?

18 (Pause.)

19 PARTICIPANT: Could you use your mic?

20 MS. HAKE: Yes, so I was saying I've 

21 reread the bound (phonetic) research before the 

22 first session. So this was obviously in 
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1 December. But if I recall that paper concludes 

2 with sort of a, what we would see now as kind of 

3 an income-based repayment chart. And so the 8 

4 percent is based off of a certain -- a certain 

5 salary that you make. So it actually moves up 

6 and down a scale, depending on the salary that 

7 somebody makes, with eight percent kind of being 

8 where -- right where the mean is.

9 PARTICIPANT: So you're interpreting, 

10 though, that the Department would have -- the 

11 research would give the Department some 

12 flexibility to move it? And be considered 

13 rational by the court?

14 MS. HAKE: So I haven't read it in15 depth enough to make -- or, recently enough to 

16 make a decision on that. But I will say that 

17 majority of folks, if you look at the earnings 

18 post-graduation from a GE program fall in the 8-

19 percent or lower threshold of what she 

20 recommends.

21 PARTICIPANT: Okay, Tony, Jordan and 

22 then Johnson.
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1 MR. MIRANDO: Okay, I have gotten a 

2 little -- I have gotten more confused, now. 

3 When you -- the last thing you mentioned -- I 

4 think you saw my face, I was kind of like I had 

5 question to ask. And I want to get -- I've 

6 tried not to pay attention too much of what 

7 everybody said between that time because I didn't 

8 want to forget what I was going to ask you.

9 (Laughter.)

10 MR. MIRANDO: So, can you go through 

11 that last little piece again where you say if you 

12 go with the one group it's less specific? And -

13 - can you go through that again one more time? 

14 Because I think I understood, but I am not 

15 positive.

16 MS. HAKE: Right. So if you throw 

17 everyone together in one set of data, there's -

18 MR. MIRANDO: And I apologize -- and 

19 this is -- for question number one. So this is 

20 when you were first explaining to us that we can 

21 do this in two different ways, or maybe three 

22 different ways.
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1 MS. HAKE: Right, yes.

2 MR. MIRANDO: So that's what you were 

3 explaining? Okay, go ahead.

4

5 MS. HAKE: Right. So if you throw it 

6 all together, you likely will identify some 

7 outliers, just like we do on the board behind us. 

8 But you've got a lot of data. And when you have 

9 that much data, you're going to have a fair 

10 amount of variation, which is going to make your 

11 box larger, which is likely going to make your 

12 whiskers larger, but will certainly make your 

13 fences larger. Okay? If you start breaking it

14 down into smaller groups of data, you might pull 

15 out a set of, say, 100 where there is just a lot 

16 of variation. And -- or, where you have, like 

17 -- what did I say, 100? Where it's really 

18 central, but, like, maybe 10 of them are behaving 

19 really differently than the others. And those 10 

20 might all be identified as outliers. Whereas, if 

21 they were smushed in with the rest of the, I 

22 don't know, 100,000 -- I am making up numbers, 
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1 right? They likely would all get mishmashed in 

2 with potentially the middle 50 percent. But 

3 that's -- that's one argument for identifying 

4 populations that behave differently from each 

5 other, and doing it in meaningful ways. So it 

6 could go either way.

7 MR. MIRANDO: So -- if I may?

8 PARTICIPANT: Yes, go ahead.

9 MR. MIRANDO: So -- just so that I 

10 can get some clarity in my own brain, which --

11 not saying too much, but -- so there's a benefit 

12 to having the larger group only because the 

13 spread is a lot bigger?

14 MS. HAKE: So, I think it depends on 

15 what your goal is, right?

16 MR. MIRANDO: Okay.

17 MS. HAKE: Yes.

18 MR. MIRANDO: But if you -- what 

19 you're saying is that if you go with a smaller 

20 group, which is -- let's say a group that I 

21 accredit, could be a group that's either here or 

22 here on the bigger chart. And so then you're 
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1 getting more specific to your group of people, 

2 which could be beneficial or not beneficial. But 

3 again, it's more specific to your people.

4 MS. HAKE: Right.

5 MR. MIRANDO: Okay. That's what I 

6 just needed to understand.

7 MS. HAKE: Exactly.

8 (Pause.)

9 MS. HAKE: Right, could go either way.

10 MR. MIRANDO: And that's fine, I just 

11 wanted to understand.

12 MS. HAKE: Absolutely.

13 MR. MIRANDO: The smaller the group 

14 that's specific to a specific program could 

15 range, is what you're trying to say?

16 MS. HAKE: Right.

17 MR. MIRANDO: So an IT group versus a 

18 cosmetology group could go -- if we put them all 

19 together, it would be a larger scale. But that 

20 scale, for let's say, the cosmetologist may be up 

21 here, which now gets spread out in the full group 

22 versus mixing it into the puzzle -- mixing it 
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1 into the whole pie.

2 MS. HAKE: Yes, exactly.

3 MR. MIRANDO: I think I understand it, 

4 thank you.

5 MS. HAKE: Okay, good.

6 PARTICIPANT: Okay, Jordan, Johnson 

7 and then Chad.

8 MR. MATSUDAIRA: So I -- I guess, 

9 just one question that I have is whether we want 

10 to get into some of the substance of how the 

11 metrics should be defined in -- in -- you know 

12 whether this kind of -- thank you. In whether 

13 this kind of more relative metric as opposed to, 

14 like, setting an absolute standard -- whether 

15 that's preferable in the overall scheme of 

16 things? Or whether we should just focus on the 

17 -- understanding the details of the analysis that 

18 had been presented? So just a question -- I 

19 have a question about the latter, and then a lot 

20 of things to say about the former part of that 

21 question.

22
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1 The -- the thing that I have to say 

2 about the latter is just, you know, I suspect 

3 this parameter of, like, 1.5 interquartile ranges 

4 away from the 25th or 75th percentile is a method 

5 is -- is a pretty arbitrary kind of multiple to 

6 use. And it might be, you know, kind of accepted 

7 as a standard in some cases, but I -- I just 

8 wonder about the applicability here. Just to get 

9 -- and I worry that here, it sets up a very 

10 conservative standard for identifying outliers. 

11 And I just wanted to make sure that I'm, like, 

12 thinking about it the right way. So if the 

13 underlying distribution is normal, then you can 

14 kind of figure out what fraction of observations 

15 should fall more than 1.5 interquartile ranges 

16 below the 25th percentile. And I think it's 

17 about 0.4 percent. So 4 out of 1,000 programs -

18 - the bottom 4 out of 1,000 programs would be the 

19 ones that would be targeted. And I imagine that 

20 if we look at the distribution of repayment 

21 rates, you know, we would think that there's 

22 still quite a bit of really low and absolute 
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1 level repayment rates above that, kind of, 0.4th 

2 percentile in the distribution that don't strike 

3 us as good outcomes for students. So -- so I 

4 worry that it's overly conservative. But just as 

5 a check on my math, did -- did you say there are 

6 1,000 programs here? And is it -- am I 

7 eyeballing it right to say that there are about 

8 -- are there two that are below the bottom 

9 whisker?

10 MS. HAKE: There are two. They were 

11 randomly generated. And if I remember correctly, 

12 I generated 1,000 random numbers. But I am not 

13 -- I don't remember exactly, sorry.

14 MR. MATSUDAIRA: And maybe -- are 

15 there six dots above? I just can't quite make 

16 out the graph from --

17 MS. HAKE: Maybe.

18 MR. MATSUDAIRA: So my concern is just 

19 that it -- it's, like, overly conservative. So 

20 like in this example, only 2 out of 1,000 -- the 

21 bottom 2 out of 1,000 judged as failing. So 

22 just, my general comment about the former part of 
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1 this, about whether this is a desirable way to go 

2 -- determining outliers just purely in a 

3 relative sense -- has to do with just, you know, 

4 when we divorce this from kind of some norm 

5 about, like, an absolute level of repayment being 

6 a really bad outcome, then I worry that we can 

7 have just a lot of programs being deemed 

8 acceptable because they're not outliers in the 

9 distribution even though they're really low 

10 overall.

11 PARTICIPANT: Okay -

12 MS. HAKE: Yes, so just playing 

13 devil's advocate -- because I hear your 

14 argument, right? But this is what mathematicians 

15 and scientists do, is one person presents one 

16 side of the argument and then someone plays 

17 devil's advocate, so we're -- it may not be my 

18 actual perspective on the issue. But the other 

19 side of that is, theoretically, if you throw 

20 everyone together into one distribution, and you 

21 create one threshold -- theoretically it is 

22 possible that a particular CIP and level, all of 
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1 those programs would fall below the threshold. 

2 And is that something that you want to do?

3 PARTICIPANT: (Inaudible.)

4 MS. HAKE: So -- or, right. Or, for 

5 a certain demographic, or however you decide to 

6 group them. So that's the other side of that 

7 argument. Okay?

8 PARTICIPANT: I totally agree. And -

9 - and, you know, I think one thing that a lot of 

10 people would endorse is, if we have the data, 

11 we'd get a sense for whether that's a real issue 

12 or not. You know, earlier, Todd in response to a 

13 question was saying, you know, if there's a -- a 

14 -- some program out there with a 50-percent 

15 default rate, that program ought to be shuttered. 

16 I mean, that reflects some kind of absolute 

17 sense that there is some level in absolute terms 

18 that's just, you know, not acceptable.

19 If we have a program where nobody is 

20 repaying their loans, you know, that feels like 

21 that should be unacceptable. So I worry about 

22 just giving up -- like, entirely punting on any 
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1 sense of kind of absolute acceptability in the 

2 rule.

3 PARTICIPANT: Let me get Chad and them 

4 Mark.

5 MR. MUNTZ: This is Chad. So just a 

6 question, I guess. How many groups would we look 

7 at for this measure? And would it be a different 

8 group for each program? Would we do it by 

9 demographics? Would we do it by sectors? I 

10 mean, kind of -- what would you think about with 

11 this? I mean, we've all along been moving 

12 towards one standard. Now this sounds like we 

13 might be introducing multiple standards.

14 MS. HAKE: So I think, actually, 

15 that's one of my questions to you guys. If it 

16 were me sitting on my sofa with my cup of cocoa 

17 and my kitty can on my lap with my slippers on, 

18 my answer would be, well, let's let the data 

19 decide. Because I am a mathematician and I would 

20 look for statistically significant differences, 

21 and that would be my groups. But you guys have 

22 the opportunity to make some of these decisions. 
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1 And -- and so, we welcome your thoughts on how 

2 you think we should approach that problem. If 

3 you think we should approach it with my kitty cat 

4 and cocoa method, then -- then that certainly is 

5 something we'd want you to express. If you think 

6 we should do it differently, or look at the 

7 problem entirely differently -- I mean, I've 

8 heard Jordan's thoughts on it. And -- and I 

9 will take them back. But we really -- we are 

10 open to your thoughts. This is meant to be sort 

11 of a discussion. We want you to understand the 

12 different possibilities. And the one that to me 

13 seemed like it would be the most fruitful is the 

14 one I've talked you through. But that doesn't 

15 mean that that has to be decision that this group 

16 makes if you come to consensus.

17 PARTICIPANT: Let me get Mark and then 

18 Jennifer.

19 MR. McKENZIE: Actually, it's for both 

20 Department and for Jordan. I recall -- because 

21 we have looked at this now twice. Once, GE-1, 

22 when there was a 35-percent rate. Then the 
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1 second time in (unintelligible) Defense when 

2 there was a 50-percent rate. What I recall from 

3 looking at the data both times was that there was 

4 a clear and direct correlation between percentage 

5 of Pell students served and repayment rates, with 

6 the proportion being inverse. So, all I would 

7 say is, is in my mind, to approve an appropriate 

8 repayment rate -- and I think there's much less 

9 research around this -- there's no way to avoid 

10 the issue of student demographics. And so, I am 

11 going to hold. But at some point, I think I am 

12 going to throw out, again -- even though I 

13 propose putting the repayment rates in, I brought 

14 the recent data on student default -- where it's 

15 about a little over half a million, and I 

16 actually believe this group, if we consider this, 

17 the research is much more robust. It may be much 

18 easier to come up with an absolute number.

19 And, if we move to this, it meets one 

20 other requirement I think of good policy, which 

21 is the rule, institutions could have -- could 

22 undertake actions that positively impact 
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1 students. Whereas, with repayment rates -- and 

2 I do want to address this -- I am -- I am of 

3 the belief, especially with low-income students, 

4 there is almost nothing an institution can do to 

5 affect the outcome. So you had a little 

6 conversation about when a data comes out, there's 

7 something you can do. But in my mind, for low8 income students, I am choosing a non-amortizing 

9 repayment plan is often the right thing for them. 

10 And therefore, you'd have a regulation that's 

11 almost at odds with what's sometimes right for 

12 students. And I am happy to have discussion on 

13 it, but at some point I am going to ask the group 

14 to formally look at this. Because I actually 

15 think, if this group looked at -- this is the 

16 Department of Education recent release on three 

17 or (unintelligible) default rates. And I 

18 actually think we could come up with a policy 

19 that lowered the number of people that default in 

20 the United States by a significant amount.

21 PARTICIPANT: Jennifer?

22 PARTICIPANT: So I am harking back 
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1 again to -- a lot of us have been at this for a 

2 long time. So I am thinking about Gainful 1 and 

3 I am thinking about the fact that the Department 

4 had a year where they disclosed data before they, 

5 you know, sort of -- and of course, then the 

6 court came in. But -- but the idea of -- and 

7 again, I am sort of looking at Steve for a 

8 confirmation on this. But if I remember 

9 correctly, there was a year of published data 

10 that was not -- you -- nobody was really 

11 subject. It wasn't -- it was not year one, if 

12 you will, of the -- and -- and I again, this 

13 goes back to something I said this morning, too, 

14 and I keep sort of saying, which is I feel hard15 pressed to sit here and create a threshold, even 

16 on a -- even with this good work on data that we 

17 don't have. So if it's the kitty cat scenario, 

18 perhaps, I just think that there's a strong 

19 argument for getting the data -- releasing -- I 

20 am not suggesting it be hidden or anything. But 

21 in terms of the sanctioned piece, and in terms of 

22 the -- understanding what a benchmark is, it 
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1 feels like we ought to know what the data looks 

2 like and then be able to make -- and when I say 

3 we, it might not be -- be the Department, 

4 probably -- but there could be language written 

5 in about figuring out, you know, what those 

6 benchmarks should be.

7 But it -- it feels really difficult 

8 -- and if my mother were alive, she'd say I can't 

9 believe my daughter is sitting at the table doing 

10 anything mathematical because that doesn't work. 

11 She was a math major, and I wasn't. So I just 

12 feel like this is something where it's a -- we 

13 are little hard pressed to make those types of 

14 decisions about, you know, is it by CIP code that 

15 we want to create benchmarks? Is it by 

16 demographics that we want to create -- I think 

17 it's hard without understanding the data and 

18 having it in front of us. And so, I just do, I 

19 hearken back a little bit to that year one of GE 

20 where we all had the data and it was helpful to 

21 have that. Of course, and then it stalled out, 

22 but -- but it was helpful.
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1 MS. HAKE: And I -- I hear your 

2 concern. This is the situation we're in. And we 

3 don't have the data at the table. And so to the 

4 extent that you could provide guidance or 

5 thoughts, we would appreciate it. But I -- I 

6 hear your concern.

7 PARTICIPANT: Let me get Laura and 

8 then Todd.

9 MS. METUNE: Laura Metune. I want to 

10 agree with Jennifer, that it's really hard to do 

11 this without having data in front of us. And so 

12 I guess all I can do is provide feedback 

13 conceptually on the policy that you're seeking. 

14 And so, in my mind, when I look at this document 

15 about the process by which any sort of action 

16 might someday ever be taken, I think -- if the 

17 argument for why the current GE metrics are 

18 insufficient is because they don't calculate 

19 things like income that's not claimed for tax 

20 purposes, then it seems like -- and you have to 

21 fail that in order to even have this checked, 

22 wouldn't -- shouldn't we not be looking at the 
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1 people who also fail at the very lowest levels of 

2 repayment? Shouldn't that somehow be made up for 

3 by the fact that there's some level of income 

4 that they're getting that's not being claimed on 

5 their taxes? So I just sort of make that point 

6 because I'm also not somebody who should ever be 

7 allowed to look at math. But it just --

8 principally, it seems that it's a little bit 

9 backwards and that we shouldn't be saying if 

10 you're at the bottom of one, you also have to be 

11 at the bottom of the other in order to ever, 

12 someday, have a sanction.

13 MS. HAKE: So I think the idea behind 

14 adding repayment rate is that debt to earnings 

15 and repayment rate in the data that we have 

16 available to us are not correlated. And so when 

17 you have one measure and you fail one measure, if 

18 you apply or make it possible to pass under a 

19 different measure that is not correlated, you're 

20 measuring a different behavior, for lack of a 

21 better word. Okay? And so there may be 

22 situations -- and I have been in one. I just 
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1 told you guys earlier that I was a high school 

2 math teacher. And there are a lot of teachers 

3 out there that have high debt to earnings. But I 

4 didn't meet a teacher I worked with who wasn't 

5 able to repay his or her loans. So I think 

6 that's sort of the thought process behind this. 

7 And now, whether you agree or not -- or whether 

8 you have a different reason for considering 

9 repayment, rate -- and folks may have really 

10 different reasons for why you want to include 

11 different things, but that's one. As I was sort 

12 of thinking about it, I could see that from my 

13 own previous career as one way that my school 

14 might have been able to protect themselves. And 

15 I certainly got a good education. Just -- you 

16 know.

17 PARTICIPANT: Thank you. All right, 

18 let me get Todd then Johnson.

19 MR. JONES: This is one of those 

20 instances where we are in a less than ideal 

21 position for rulemaking because the lack of data 

22 makes the decision about whether to have an 
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1 absolute standard one that is, in some ways, 

2 foreclosed. I would love to have some sort of 

3 useful, absolute standard -- even if there were 

4 multiple absolute standards -- because that 

5 would be based on data we know and it would be 

6 based on some reasonably identifiable criteria 

7 for what constitutes harm or a problem that we 

8 can make a judgment. But, we are big boys and 

9 girls and there really isn't that option here. 

10 And we have to make a choice. And I am going to 

11 say, guardedly, I think this is unfortunately one 

12 of those situations where this is the -- I don't 

13 want to say least bad because it makes it sound 

14 like this is a problematic option.

15 But the last comment you made touches 

16 on one of the appeals in my mind of this. And 

17 that is, we have a problem with certain -- for 

18 -- we have a problem for purposes of this 

19 conversation with certain forms of employment in 

20 this country that are traditionally low wage or 

21 low entry wage. Teaching, because of how 

22 contracts are negotiated, is not helpful for 
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1 those who are in their first years of teaching, 

2 but aside from the personal reward it is richly 

3 rewarding at the back end with pensions and with 

4 long tenure in teaching. Theology and being --

5 spreading the Word of God as you know it -- is 

6 not a highly compensated position. But there is 

7 other ways that debt is relieved or supported in 

8 many cases. Social work is another one which is 

9 a desperately needed occupation but is not high 

10 compensation, but it has some of the similar 

11 characteristics, once you have some experience, 

12 of teaching in that -- in telling you have a 

13 job.

14 The value of this structure makes the 

15 calculation relative for types of education that 

16 gets us beyond the limitations of an absolute 

17 standard calculation that would inherently have 

18 -- when we don't know how that will affect 

19 particular kinds of work that we know to exist 

20 and that are socially valuable. So, for my mind, 

21 this is -- I -- I mean, I don't embrace it 

22 because I know with certainty this is going to be 
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1 a great working standard. I share some of 

2 Jordan's concerns that there will be those who 

3 are not within it. On the flip side, it's far 

4 more likely to withstand judicial scrutiny from 

5 an arbitrariness standard because we are adopting 

6 something that is relative to data that is 

7 currently unknown going forward. And we could 

8 revisit this in a few years, or the Department 

9 can, when data is known.

10 MS. HAKE: Are there any more 

11 questions about math before I hand it back over 

12 to Greg?

13 PARTICIPANT: Yes, I think Johnson has 

14 one, right?

15 MR. TYLER: Yes, I have a math 

16 question. So if -- if that box is really big -

17 - because that's where 50 percent of all the 

18 scores are -- then that whisker's going to be 

19 outside -- it could be below zero, right? And 

20 so this could not work out.

21 MS. HAKE: So my -- my suggestion 

22 would be that if the lower fence is negative, 
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1 that we would set it at zero.

2 MR. TYLER: So -- so --

3 MS. HAKE: Because it is a 

4 mathematical calculation.

5 MR. TYLER: But no one will have a 

6 zero -- I don't think anyone has a zero repayment 

7 rate. I mean, I am pretty sure no one has a zero 

8 because I have looked at the data. It is not 

9 that bad. It is like, you know, people have 0.05 

10 percent. But no one has zero.

11 PARTICIPANT: But, Johnson, if that 

12 happens the whole box would be low, 

13 theoretically. The whole box would be saying 

14 that everybody is not above a certain percentage 

15 of repayment. So, you know, remember that too. 

16 It moves in conjunction with where the mean and 

17 median is and where the box is. So if we are 

18 getting that low, everybody is pretty low. And 

19 so we have to rethink what is really -- what is 

20 really the standards? Maybe only two percent at 

21 that particular time in the history of the world 

22 would be appropriate. So, it moves in 
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1 conjunction. We have to keep minding that.

2 MS. HAKE: Did I answer your math 

3 question? Okay.

4 PARTICIPANT: Okay, I think that's it, 

5 then. Thank you, Sarah, I appreciate your time.

6 MS. HAKE: My pleasure.

7 PARTICIPANT: Okay, so a question I 

8 have for the group then is that was interesting 

9 information as well as dialogue. Did you want to 

10 continue on this one? Or did you want to go to 

11 the -- continue where we were at as far as 

12 sanctions go?

13 PARTICIPANT: I just want to point out 

14 before we make that decision that we will be 

15 talking about the -- Issued Paper 3 does have a 

16 discussion of the repayment rate. So with what 

17 Sarah talked about, maybe we should talk about 

18 that in context of Issued Paper 3.

19 PARTICIPANT: Okay.

20 PARTICIPANT: That may make more 

21 sense.

22 PARTICIPANT: All right, then -- then 
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1 let's do this. Let's take quick, ten-minute

2 break. And then let's come back in and then we 

3 will pick back up with sanctions.

4 (Whereupon, the above-entitled matter 

5 briefly went off the record.)

6 MR. RAMIREZ: All right. So we're 

7 going to go ahead and pick back up with 

8 sanctions. And where we left off before lunch 

9 was with 668.16, where the Department will look 

10 at that and make a few little tweaks based on 

11 some of the discussion we had and reviewing that 

12 flow chart.

13 So the next area is 668.409. And 

14 let's see if we could focus on (a)(1) and (2) and 

15 see if we can make some tweaks or see what we 

16 need to do in order to make that one acceptable 

17 and move on to the next section. Sanctions, 

18 Issue Paper 2. And it's really top of page 3.

19 PARTICIPANT: Four.

20 MR. RAMIREZ: I'm sorry. Four. Four. 

21 Top of page 3. So Sanctions, Issue Paper 4, top 

22 of page 3.
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1 MR. MARTIN: Okay. Well, before we 

2 get started I just want to thank Sara for coming 

3 up here and doing -- that was very nice. And as 

4 somebody mentioned, I think it was Jennifer, I 

5 wish she had been my math teacher. I had an 

6 algebra teacher who's way of teaching algebra was 

7 to kick your chair every time you couldn't answer 

8 a question.

9 (Laughter.)

10 MR. MARTIN: And that was arguably 

11 somewhat less effective. It was the 1970s. He 

12 was a huge man, and he wore clogs. It was the 

13 strangest thing.

14 (Laughter.)

15 MR. MARTIN: And he was a very angry 

16 person. I just remember every time he asked me a 

17 question, I just froze and, bam, my whole --

18 because the chair was hooked to the desk and it 

19 was --

20 MR. RAMIREZ: Greg, it sounded like 

21 you had your chair kicked a lot.

22 MR. MARTIN: Yes, it was a very 
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1 triggering event and that's why to this day I --

2 the math is -- I would have been like Sara, but 

3 for that man. 

4 (Laughter.)

5 MR. MARTIN: So I went down the 

6 literary path. The English teacher didn't kick 

7 anything, so that's why.

8 (Laughter.)

9 MR. MARTIN: Yes, so, okay. I 

10 digress.

11 So we're looking at 668.409. Starts 

12 at the bottom of page 2 in Issue Paper 4. Going 

13 over to the top, this is the -- just pointing out 

14 the notice of determination. The only thing 

15 that's different here is the addition of the 

16 Secretary, "For each award year for which the 

17 Secretary calculates D/E rates and a loan 

18 repayment rate for an undergraduate program, the 

19 Secretary issues a notice of determination 

20 informing the institution of the D/E rates." And 

21 it gives you the appropriate area for how that's 

22 calculated and also the final loan repayment 
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1 rate, which we'll go over after this paper, which 

2 is in 406. And the final determination by the 

3 Secretary as to whether the program meets 

4 benchmarks or does not meet benchmarks.

5 And then we move down to No. 3, 

6 whether the institution is required to -- to 

7 require notifications under 668.410. And we talk 

8 about the effective date of the Secretary's final 

9 determination. 

10 So I guess we'll entertain any 

11 comments on those two areas before we move on.

12 MR. RAMIREZ: Is there anything 

13 controversial in those, or is that something that 

14 the groups feels that they could approve and move 

15 on?

16 (No audible response.)

17 MR. RAMIREZ: So let's see a show of 

18 thumbs of if the group is okay with (a) and (b) 

19 under 668.409. The top of page 3. Actually it's 

20 pretty much all of page 3 and then the top of 

21 page 4.

22 So let's see a show of thumbs if 
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1 everyone's okay with that language.

2 (Show of thumbs.)

3 PARTICIPANT: I've got four up, and I 

4 don't see any down.

5 MR. RAMIREZ: Okay. Not seeing any 

6 thumbs down. Okay. So we'll go ahead and move 

7 forward.

8 Greg, what's the next section?

9 MR. MARTIN: The next section would be 

10 410, 668.410. This talks about the notifications 

11 for programs that did not meet the benchmarks. 

12 You'll note that we did change "low-performing"

13 to "benchmark" there. And for any area in which 

14 an undergraduate educational program is 

15 determined to not meet the benchmark under the 

16 D/E rates and loan repayment measure, the 

17 institution must provide a notification to 

18 students and prospective students. You'll see 

19 there the content of the notification. So unless 

20 otherwise specified we can -- you can look at 

21 that under (b). 

22 What the notification must state and 
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1 the way that language is worded is, "The 

2 performance of this program is below standards 

3 established by the U.S. Department of Education 

4 regarding the debt-to-income ratios and loan 

5 repayment performance of prior graduates. The 

6 Department based these standards on the amount 

7 students borrow for enrollment in this program, 

8 and -- excuse me -- earnings that were reported 

9 to the Internal Revenue Service. These graduates 

10 are not making sufficient payments to actively 

11 pay down the balance of the loans. Students 

12 should take into account when selecting a program 

13 for enrollment or determining how much they 

14 should borrow to complete the program based on 

15 likely earnings upon completion. 

16 And then I do want us to consider as 

17 part of this as well in (2) right below that, an 

18 institution if appropriate may include the 

19 following notification: "Please note, however, 

20 that the institution believes the earnings may be 

21 affected by a significant number of students who 

22 completed our program and did not report all 
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1 their income, such as tip income, or who were 

2 self-employed and had business expenses that 

3 reduced the earnings being reported, or who 

4 selected to work in part-time or -- to work part5 time or take time out of the workforce, including 

6 care for dependents or other family members;" and 

7 an institution may also include: "The institution 

8 believes that the data here may not reflect the 

9 earnings potential in your geographic location 

10 because the institution enrolls students 

11 nationally and wages can vary significantly from 

12 one part of the country to the other."

13 MR. RAMIREZ: Okay. So, again, just 

14 focusing on 668.410, starting at the top of page 

15 4 to the middle, I guess, of page 5, looks like 

16 we have a few comments there. So we'll start off 

17 with Jennifer, Laura, then Whitney.

18 PARTICIPANT: So one, just I guess I 

19 would qualify it as sort of technical, the 

20 Department in its language flips a little bit 

21 back into the word "standards" and not 

22 "benchmarks," and so I feel like one thing that 
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1 the Department ought to consider is is that when 

2 -- instead of -- if you're going with the word 

3 "benchmark," then be consistent with the word 

4 "benchmark," because you used the word 

5 "standards" in a couple of places. And so I 

6 think just for ease of understanding I would be 

7 consistent. It's either standards or it's bench 

8 -- but you should pick one. And I think it 

9 sounds like it's benchmark. So that was one just 

10 sort of grammatical, if you will.

11 And the other one is actually sort of 

12 along the same lines. But on top of page 5 I'm a 

13 little bit concerned about "these graduates are 

14 not making sufficient" -- some of them will be. 

15 It's a percentile. So I was thinking along the 

16 lines of could you say; and I'm just really 

17 grasping here, but, "an insufficient number of 

18 graduates are making payments to actively pay 

19 down," or something that -- it's not all 

20 graduates. Some of the graduates will -- I mean, 

21 on the loan repayment rate in particular. It's 

22 like somebody -- I mean, unless it's really, 
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1 really bad. But, so it's just not completely 

2 accurate to say "these graduates." So I feel 

3 like there needs to be a little bit more clarity 

4 around that sentence. 

5 And "actively pay down" is actually a 

6 little bit controversial because you can be sort 

7 of in active repayment and not satisfy. We'll 

8 get that -- we'll get to that in the calculation 

9 section, but you can be in active repayment and 

10 not necessarily -- I mean, in my view, you can be 

11 in good standing with your repayment and not be 

12 in positive -- in the numerator under -- so I'm a 

13 little bit concerned about the word "actively" 

14 paying.

15 And then finally, I would suggest at 

16 the end of that same sentence, the one that's 

17 highlighted the "these graduates," I would put a 

18 comma and say something along the lines of 

19 "according to the Department's established 

20 benchmarks," especially if you're going to leave 

21 it as "these graduates."

22 MR. RAMIREZ: Okay. So can I -- let's 
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1 go ahead and make sure that we're capturing your 

2 suggestions up there so we could take a look at 

3 that.

4 PARTICIPANT: So the most important 

5 one is actually at the end of the sentence in my 

6 view. It's the adding a comma and saying 

7 "according to the Department's established 

8 benchmarks," because it's based -- it's judged 

9 based on the Department. And there will be some 

10 graduates who are making payments, so that's why 

11 I think the last -- that clause at the end -- if 

12 you don't do anything else, the clause at the end 

13 of saying "according to the Department's 

14 established benchmarks" makes sense.

15 MR. RAMIREZ: Okay. So --

16 PARTICIPANT: We don't know what the 

17 threshold is. 

18 MR. RAMIREZ: So, Jennifer, does that 

19 capture it accurately, the changes up there on 

20 the board?

21 PARTICIPANT: You have to -- it's now 

22 a double-negative, so you have to say -- I think 
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1 it would be "an insufficient number of graduates 

2 are making payments." And you could say 

3 "sufficient." I guess you could keep the 

4 "sufficient." "Are making sufficient payments." 

5 And then I guess I'm throwing it out there for 

6 conversation, this "actively pay." I think 

7 "actively" is kind of a trip word.

8 MR. RAMIREZ: And what would be the 

9 recommendation there?

10 PARTICIPANT: I mean, you could just 

11 leave it as "an insufficient number of graduates 

12 are making sufficient payments to actively pay 

13 down the balance of their student loans according 

14 to the Department's established benchmarks."

15 PARTICIPANT: So these -- in the first 

16 few years they're repaying their loan?

17 PARTICIPANT: I mean, you could do 

18 that, too. Again, I sort of -- I mean, I 

19 purposely didn't like come up with the exact 

20 language because I thought that this was a good 

21 sentence for conversation, but those are the --

22 the last clause, like I said, is the most 
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1 important to me.

2 MR. RAMIREZ: Yes, I know there are 

3 some people in the queue, but let's see if we 

4 could -- no, Mark, go ahead stay there if you 

5 have a suggestion on this sentence.

6 PARTICIPANT: I think this reflects 

7 what is out there, especially from the scorecard: 

8 "More than 50 percent of the students in 

9 repayment are not reducing the principal on their 

10 loans over a five-year period." I believe that 

11 is factually accurate.

12 MR. RAMIREZ: More than --

13 PARTICIPANT: But we haven't 

14 established 50 percent as the threshold here, so 

15 that's why -- I mean, this is meant to be --

16 right, this is meant to be according to whatever 

17 benchmarks yet to be established, which is part 

18 of the reason why I'm hesitating on what the 

19 language should be, because we don't quite know, 

20 you know, but --

21 MR. RAMIREZ: Yes, let me get Sandy 

22 then, then Whitney.
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1 MS. SARGE: So where she has "an 

2 insufficient number of" maybe we say "this 

3 indicates that a number of graduates are not 

4 making sufficient payment to actively pay down." 

5 Take out the first part. Start the sentence 

6 with, "This indicates that a number of graduates 

7 are not making sufficient payments to actively 

8 blah, blah, blah."

9 MR. RAMIREZ: Whitney, you had a 

10 question on that?

11 MS. BARKLEY-DENNEY: Yes, I have a 

12 technical question. When we're discussing a 

13 repayment rate, are we discussing graduates or 

14 all borrowers in the program?

15 PARTICIPANT: All borrowers. It's not 

16 limited to graduates.

17 MS. BARKLEY-DENNEY: So therefore it 

18 should not be "this indicates that a number of 

19 graduates." It should be "this indicates that a 

20 number of borrowers borrowing for this program."

21 PARTICIPANT: That's good. Can I 

22 respond to that?
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1 MR. RAMIREZ: Yes.

2 PARTICIPANT: So actually -- so, 

3 Whitney, I have the same thought, because the 

4 problem with this -- there's a little bit of a 

5 problem with this paragraph in that the paragraph 

6 is tying debt to earnings to and loan repayment 

7 together. 

8 And so it's a little bit of a problem. 

9 So I hear you and I agree with you, but it's 

10 also a little bit of a problem because the debt 

11 to earnings is complete or -- so right. So 

12 that's the -- there's a little bit of -- it's a 

13 little messy.

14 PARTICIPANT: Had we determined that 

15 the loan repayment is on all borrowers as opposed 

16 to just the graduates?

17 (Simultaneous speaking.)

18 PARTICIPANT: You make a good point. 

19 And it's true, I think that's an omission here 

20 that -- because we -- this language was 

21 originally key to debt to earnings. And so with 

22 the addition of the repayment metric the 
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1 notification language is -- has I don't think 

2 been sufficiently tweaked to deal with the fact 

3 that it could be repayment as well. It's key to 

4 debt to earnings. So we're going to have to take 

5 a look at that.

6 PARTICIPANT: I mean, it could be 

7 something like "this indicates that a number of 

8 those" -- I don't want to say like examined, but 

9 I mean some way to say that we're talking about 

10 the class that we looked at, whether they were 

11 graduates or not graduates.

12 (Simultaneous speaking.)

13 MR. MARTIN: I mean, in thinking about 

14 the way that the chart works, so if you have a 

15 program that fails; and, Steve, correct me if I'm 

16 reasoning incorrectly here -- but if you have a 

17 program that fails, that does not meet the 

18 benchmark for debt to earnings and then met the 

19 benchmark for repayment rate, you wouldn't get 

20 here, right? So you're only going to get here if 

21 you have a program that -- and you wouldn't get 

22 here either if you had a program that didn't meet 
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1 the benchmark for repayment rate, but did meet 

2 the benchmark for D/E. So you're only going to 

3 get here if you have a below-the-benchmark on 

4 both. 

5 So I don't think it's technically 

6 incorrect because you're still -- you're just 

7 referencing one -- you're referencing the one 

8 metric. And I don't think it's incorrect because 

9 if you got to this point, this would be the case. 

10 It's just that it doesn't reference the -- it 

11 doesn't reference the other metric which the 

12 program also failed to meet the benchmarks on.

13 Would that be accurate, Steve?

14 MR. FINLEY: Yes, I mean, Greg's 

15 right. I mean, the other -- the anomaly here is 

16 if that's the only required disclosure, there are 

17 other programs that won't be required to make 

18 that disclosure for which that statement would 

19 also be true, right? It would be the programs 

20 that didn't meet the standard, meet this 

21 benchmark but they did in turn not meet the 

22 repayment rate requirement either.
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1 MR. MARTIN: Well, I guess our 

2 question would be to the group would it be 

3 necessary then to say something beyond this, that 

4 not only did they not meet this, but there are 

5 repayment rate --

6 MS. SARGE: I have a suggestion.

7 MR. MARTIN: That is there though, 

8 yes. I don't know. 

9 MR. RAMIREZ: Yes, Sandy, you have an 

10 idea on that?

11 MS. SARGE: I think that the point is 

12 a good one. It's almost like we need two 

13 sentences. So the first part of it says, "The 

14 Department based these standards on the amounts 

15 students borrowed for enrollment in this program. 

16 The earnings that were reported" --

17 MR. RAMIREZ: I'm sorry, Sandy. Where 

18 are you reading off of?

19 MS. SARGE: I'm sorry, the end -- the 

20 bottom of page 4. The earnings. So first we're

21 talking about basically the components of D/E 

22 reported to the IRS. We could finish this little 
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1 piece right here before the "Students should take 

2 into account."

3 MR. RAMIREZ: On the top of page 5?

4 MS. SARGE: On the top of page 5. 

5 "This indicates that students may not" -- I'm 

6 trying to say find employment that would 

7 sufficiently allow them to pay down their debt 

8 that they borrowed. So it's really sticking with 

9 employment, you know, the income that they're 

10 going to make in that and then say, "In addition, 

11 the amount of debt borrowed by students," you 

12 know, the loan repayment. Have it two different 

13 sentences, in essence. Finish the thought about 

14 debt to earning and then speak separately about 

15 the loan.

16 PARTICIPANT: I think that line where 

17 we kind of just --

18 MS. SARGE: Yes.

19 PARTICIPANT: -- kind of both concepts 

20 are there, but they kind of get amalgamated 

21 together and not clarified. So I think we can 

22 take a look at that and clean that up.
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1 MR. RAMIREZ: Okay. So then the 

2 Department will take a shot at cleaning up that 

3 piece.

4 And let me just back up before we 

5 continue on with the queue, because we do have 

6 Laura, Whitney, Sandy, and Jeff. But Jennifer 

7 had raised the clarification of replacing 

8 "standards" for "benchmark." Is everyone okay 

9 with that? Let me see a show of thumbs if 

10 everyone's okay with replacing "standards" with 

11 "benchmark."

12 (Show of thumbs.)

13 MR. RAMIREZ: Okay. Laura, what's 

14 your thinking on that?

15 MS. METUNE: My general comment was 

16 going to be about the usefulness of the term 

17 "benchmark" when I think about my teenager 

18 reading a disclosure, but --

19 PARTICIPANT: Yes, so let me just be 

20 clear that I'm not a big fan of actually the term 

21 "benchmark" either. My point was though stick --

22 like if that's the direction the Department's 
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1 going, then use that term --

2 MR. RAMIREZ: Use it for consistency.

3 PARTICIPANT: -- or use standards, but 

4 be consistent. But I actually --

5 PARTICIPANT: So are we voting on 

6 consistency? I'm all for consistency.

7 MR. RAMIREZ: Yes, that --

8 PARTICIPANT: Right. That's what I 

9 thought we were --

10 MR. RAMIREZ: Yes, that's --

11 PARTICIPANT: -- that's what I wanted 

12 --

13 MR. RAMIREZ: -- that's what I 

14 understood that Jennifer was saying, that there 

15 were some inconsistencies in the terminology. 

16 There was flip-flopping back and forth on the 

17 two. Pick one. Stick with it.

18 PARTICIPANT: That's what I was 

19 saying. So I was all about consistency. I'm 

20 actually kind of with you on the term 

21 "benchmark."

22 MR. RAMIREZ: Bob, you have a thought 
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1 on that?

2 MR. JONES: Yes, I think earlier today 

3 Jeff raised the issue of changing this to -- away 

4 from either of those words to averages: above 

5 average, average, and below average. And I think 

6 those terms communicate much better to both 

7 students and other people about what's going on 

8 here.

9 When you're saying students in this 

10 program are having difficulty paying their loans 

11 back below the averages of other people, or 

12 earnings, or below the average of what would be 

13 expected in this field. And especially since 

14 we're aligning this now as more of a disclosure 

15 model, then I think saying -- using that kind of 

16 language is much more descriptive.

17 MR. RAMIREZ: Any thoughts on that? 

18 Johnson?

19 MR. TYLER: Yes, with all due respect 

20 I think average and below average -- they're too 

21 kind to the schools, frankly, that aren't serving 

22 the students. A lot of my clients, if you said 
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1 "benchmark" to them would not know what you're 

2 talking about. And then to just say "below 

3 average," a lot of their lives are already very 

4 below average. I'm not sure that's a warning 

5 sign. 

6 And I think that's what the original 

7 idea was here: fail, red. I remember Dan 

8 mentioned that. Department of Veterans Affairs 

9 has a red sign for things. I mean, I think it 

10 has to be a warning, not soft-pedaling. You've 

11 already failed two metrics here, if we ever 

12 figure out what the metrics are. But we already 

13 have a safeguard in the second metric. So --

14 MR. RAMIREZ: Any other thoughts on 

15 that? Sandy?

16 MS. SARGE: I think you're right, 

17 Johnson, when you say "below average, above 

18 average," it does -- can get muddied. That's 

19 everybody's interpretation. But if we say "the 

20 average established by the Department," or 

21 something along that -- we're more specific, I 

22 think we could clear some of the muddiness in it 
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1 with the intent of getting somewhere we could be 

2 close to. I think the student could -- a student 

3 could presume that the Department is trying to 

4 find some -- a measure that you can say, okay, 

5 did the school fall below it or above it and come 

6 up with some thought process. So maybe just the 

7 word "the average" would help that.

8 MR. RAMIREZ: Johnson?

9 MR. TYLER: We've moved away from what 

10 a lot of us consumer advocates came here to do, 

11 which was to find a way to get rid of the bad 

12 apples, to get rid of the people who are making a 

13 lot of money off of taxpayers, at the expense of 

14 people who are not very sophisticated in their 

15 educational choices. And now to dumb -- if we're 

16 now just going to have a disclosure that's 

17 meaningless, I mean, that just is preposterous.

18 MR. RAMIREZ: All right. So I want to 

19 try to -- what I'm trying to do is seeing if we 

20 could give some additional guidance to the 

21 Department to -- when they're going to clean this 

22 up a bit. What's the terminology that would be 
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1 -- stand a greater chance of being accepted? 

2 And so there was both "benchmark" and 

3 "standards," and we heard the "above average" and 

4 "below average," but the feeling that it may be 

5 too soft. Is "standards" the word, or is there 

6 another term that folks could agree to?

7 Whitney?

8 MS. BARKLEY-DENNEY: Yes, I like the 

9 "standards" term. I think that everybody 

10 understands what meeting a standard or not 

11 meeting a standard is. And my concern with 

12 averages is just that that's not really what 

13 we're doing. I mean, yes, if we put "the 

14 average" in front it, it would make a little bit 

15 more sense, but just from a perspective of what 

16 we're actually doing around the table here we're 

17 really talking about standards and not averages.

18 MR. RAMIREZ: Let me see a show of 

19 thumbs for "standards," the terminology 

20 "standards."

21 (Show of thumbs.)

22 PARTICIPANT: There's one down.
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1 MR. RAMIREZ: All right. One down. 

2 Tony, is that down?

3 PARTICIPANT: Two down.

4 MR. RAMIREZ: Okay. And understand, 

5 really quick again, consensus is the -- and the 

6 middle could be live with. But, Bob, what's your 

7 thinking on not using "standards?"

8 MR. JONES: I think "standards" is at 

9 absolute contradiction with everything we're 

10 doing here. Number one, there is no standard. 

11 Number two, if we were setting standards, that 

12 would be a whole different agenda than what's 

13 happening here. It's completely misguided. The 

14 issue we're trying to do is explain to people 

15 that some programs pay off; some programs don't. 

16 If we want to get rid of bad actors, 

17 that comes under the program review role of the 

18 Department to take action on people who are in 

19 trouble, not this process. So I think we have to 

20 be very clear about what we're setting out to do 

21 and use language that communicates the fact. And 

22 we are not communicating a standard, let me tell 
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1 you.

2 MR. RAMIREZ: Okay. Thank you. Tony?

3 MR. MIRANDO: Yes, so I feel because I 

4 said no I want to just kind of say I agree with 

5 what Roberts is saying. Just the whole issue 

6 with standards -- first of all, from a creditor's 

7 point of view, I work with standards every day, 

8 and this is very far from black and white 

9 standards. There's so much gray here. 

10 And, again, you've heard me say this 

11 more than once, and so I feel like I'm getting 

12 crazy here, is that these metrics just are not --

13 they don't fit everybody. And so to say a school 

14 is not meeting a standard when indeed they may be 

15 meeting a standard is, again, I think, very 

16 confusing to a student. 

17 And, again, I'm all about making sure 

18 students understand this. To me this -- if a 

19 student is saying, well, they don't meet a 

20 standard from the Department of Education. Wow. 

21 That really sounds serious. When indeed a 

22 school could be a great school with a great 
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1 program, but because of where the school is 

2 located the student may not be repaying back 

3 their debt and the debt to earning because of 

4 their own personal situation may not fit. How is 

5 that a standard? In my opinion it's just not a 

6 standard.

7 MR. RAMIREZ: All right. Someone 

8 needs to crack out a thesaurus, but -- all right. 

9 Jessica?

10 MS. BARRY: Yes, I just wanted to say 

11 I think where I feel confused right now is I 

12 think we're not all clear of why we're here. Are 

13 we developing some sort of metric that will 

14 eliminate bad actors, or are we developing a 

15 metric that will identify the bad actors and then 

16 let the Department do their job? And I think 

17 that -- I don't know if we need to talk about 

18 that, because it seems like we just keep coming 

19 back to that problem.

20 MR. RAMIREZ: Okay. Daniel?

21 MR. ELKINS: To the people around the 

22 table that had their thumbs down, would you care 
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1 to offer a word or phraseology that you feel 

2 comfortable with?

3 MR. RAMIREZ: I think Sandy -- do you 

4 have one you want to throw out?

5 MS. SARGE: Yes, there are several. 

6 This is Sandy. Measure, criterion, gauge, norm, 

7 example, pattern, reference. Those are just on 

8 the first page. Device. 

9 MR. RAMIREZ: Bob --

10 MS. SARGE: I'm looking at a 

11 thesaurus, literally looking --

12 MR. RAMIREZ: Bob or Tony, you got 

13 one?

14 PARTICIPANT: Yes, I mean, I said --

15 without having a mic on, I mean, I've been saying 

16 all along metric. Below the Department of 

17 Education's metric. I mean, it explains it's 

18 their metric which could mean nothing or it could 

19 mean everything, I mean, depending on the school.

20 MR. RAMIREZ: Daniel? 

21 MR. ELKINS: Can we vote on that right 

22 now?
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1 PARTICIPANT: Below the metric? Norm?

2 MR. RAMIREZ: Let's see a show of 

3 thumbs for "metric."

4 (Show of thumbs.)

5 MR. RAMIREZ: What are you thinking, 

6 Laura?

7 MS. METUNE: I thought voting no was 

8 the way to get called on. No.

9 (Laughter.)

10 MS. METUNE: Finally. So I just think 

11 that I came to be a part of these negotiations 

12 because I believe that there are requirements 

13 that institutions should have to meet to 

14 participate in the Federal Financial Aid Program. 

15 And I think that weakening those metrics, 

16 standards, whatever we want to call them, to the 

17 point where very few people ever get sanctioned 

18 really undermines what I thought I was coming 

19 here to do in the first place.

20 Putting that aside, if what we're 

21 saying is that a disclosure is going to give any 

22 sort of reasonable bit of information to a 
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1 student to make a decision, these fall far short 

2 of that. So we might disagree about whether or 

3 not these actually evaluate something that a 

4 student should know, but if we believe that they 

5 do, then we -- it doesn't matter whether you call 

6 it a standard or a metric. The school either 

7 passed or failed. And it needs to be that simple 

8 for a student to have it be meaningful at all to 

9 them.

10 And then the other thing I was going 

11 to add, since I have the mic, is it seems to me 

12 that if you fail one or the other, there should 

13 be some level of disclosure that goes to a 

14 student. And then if you fail both, it should be 

15 very clear to that student that now the 

16 Department could actually take action, as limited 

17 as it might be. But some action could happen 

18 that could affect the viability of that program, 

19 and the student should know that. 

20 And then finally with regards to these 

21 sort of -- and maybe our student -- the two and 

22 three about students who maybe the data doesn't 
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1 incorporate their income, it just seems like I --

2 when we were here last time we talked about an 

3 institutional -- an institution's responsibility 

4 to verify that these circumstances are actually 

5 true before they put this kind of disclosure. 

6 And I was wondering whether or not the Department 

7 thinks this language accomplished that goal that 

8 was expressed last time or if they just didn't 

9 incorporate it at all.

10 PARTICIPANT: I think to respond to 

11 that when the institution makes this -- this is 

12 an assertion they're making about their program. 

13 And they -- if it's -- we're not going to set up 

14 a -- I don't even know how we would do that, set 

15 up something in advance where we would vet every 

16 time an institution does this automatically 

17 whether or not they had made this assertion in 

18 earnest.

19 However, as with any other assertion 

20 an institution makes, it is subject to review by 

21 the Department. If in the context of a program 

22 review or some other evaluation -- well, it would 
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1 certainly be, I should say, acceptable for a 

2 reviewer to ask an institution to justify having 

3 made that statement. So I think we have that --

4 we certainly have that authority. We would 

5 expect that an institution would make this 

6 assertion in good faith and not just be slapping 

7 it onto every program. 

8 But I don't know if the -- if the idea 

9 is to have some sort of a vetting process for 

10 that specific statement, for that specific 

11 program every time a school uses it, I don't know 

12 what that would be other than going back to the 

13 -- something similar to the old appeals process, 

14 which we very much wanted to move away from.

15 MS. BARKLEY-DENNEY: Can I respond to 

16 that?

17 MR. RAMIREZ: Yes, go ahead, Whitney.

18 MS. BARKLEY-DENNEY: Thank you. So 

19 this is Whitney. I guess I'm with Laura on this. 

20 I mean, as somebody who drafts legislation I got 

21 hives when I read the words "if appropriate," 

22 because it also doesn't give the institution very 
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1 much guidance as to when it's appropriate for 

2 them to use this or not. And if we're not going 

3 to be doing program reviews, then I would imagine 

4 -- or not -- we might do program reviews, but if 

5 we're not going to be doing appeals around this 

6 issue, then I would imagine that "if appropriate" 

7 needs to be fleshed out more so that institutions 

8 know whether or not it is appropriate for them to 

9 use this. 

10 And maybe that's a certain -- I mean, 

11 I hate threshold, standard, average, whatever of 

12 borrowers who are in jobs that -- where they 

13 would have tipped income who are graduating from 

14 that program might be one way of working at it. 

15 Or if they look through their numbers and a 

16 certain threshold of them are self-employed, that 

17 seems more appropriate than one borrower being 

18 self-employed in that program and the other 

19 relying on tips, which you could say, sure, 

20 that's appropriate because we have people in this 

21 cohort who rely on tips or rely on self-income. 

22 So I just -- I really think this needs 
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1 to be fleshed out more if we're even going to 

2 consider it.

3 MR. RAMIREZ: Let me get -- let me go 

4 back here. I have Jeff, Jennifer, Tony and 

5 Sandy.

6 MR. ARTHUR: Yes, I just had a quick 

7 comment on the clean up of the language. I think 

8 we -- when you read it, I think when you just 

9 state they aren't repaying loans or not paying 

10 down loans, it sounds like that's pretty final. 

11 So I think you do need to identify the time frame 

12 in the first X years, some way to identify that 

13 this doesn't mean that they never do.

14 MR. RAMIREZ: What's the X that you 

15 think would be appropriate?

16 MR. ARTHUR: Whatever the rule is.

17 MR. RAMIREZ: I see. Okay. 

18 MR. ARTHUR: When we decide what that 

19 is.

20 MR. RAMIREZ: Yes. Jennifer?

21 PARTICIPANT: Well, I'll keep with the 

22 theme. I think one of the reasons that where I 
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1 put my thumb sideways on standards, I actually 

2 did like Tony's of below the Department's metric, 

3 but let me just qualify that I think part of the 

4 struggle here is is that if we walk away from 

5 here either us deciding what a threshold -- what 

6 the metrics are, what the metric amount is, or 

7 the Department later on decides what the metric 

8 amount is on their own for each of them, then I 

9 think "below the Department's metric" makes 

10 sense, because we don't know where it fits in 

11 relative to anything else.

12 If, as I have been saying, there were 

13 a framework where the Department took for a year, 

14 or maybe more, but a year and took the data and 

15 then did understand where different programs fit 

16 in relative to other programs, then I think you 

17 can get into a conversation about standards and 

18 benchmarks because then it is a comparative model 

19 where there is sort of a quote/unquote 

20 "standard." 

21 But without understanding what it is 

22 relative to anything else, if the Department's 
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1 just going to set -- or I shouldn't say the --

2 but if there's just going to be a metric set, 

3 then I actually think Tony's makes some sense, 

4 because it's just a fact-based statement. It's 

5 below the metric established by the Department 

6 without judging where it is relative to anything 

7 else. That's I think the quandary right now. 

8 I hear Laura and I'm with Laura 

9 actually on the I thought we were creating some 

10 sort of a -- you know, I don't even want to use 

11 the word "standard" or "threshold," but without 

12 understanding where it is relative to anything 

13 else, I think it's hard to use those words.

14 MR. RAMIREZ: Okay. Tony?

15 MR. MIRANDO: Thank you. So, yes, I 

16 absolutely agree with you, Laura. I listened to 

17 what you said and I agree that's what we're here 

18 for, but when I hear the word "standard," I 

19 associate that with something that's going to 

20 work for everyone. It's a standard. It's a 

21 standard for which everybody can live by, and in 

22 this case this metric is not a standard for which 
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1 everyone can live by. So it's "the Department's" 

2 -- and maybe another word you might want to look 

3 at is maybe "established criteria." So it's "the 

4 Department's established criteria." 

5 And so it's another alternative word, 

6 but the word "standard" just has a strong 

7 connotation to it that just turns my stomach 

8 upside down, especially since I know that this 

9 established criteria doesn't work for this sector 

10 of schools that I accredit, and I know they're 

11 good accredited schools and they do provide a 

12 great education to a lot of inner city schools. 

13 And these students don't necessarily fit this. 

14 And so I just -- I have a hard time 

15 with that one, but I do -- we are here for -- to 

16 get the bad apples out, and I agree with Johnson 

17 we've got to do that, but this doesn't get to it 

18 as written.

19 MR. RAMIREZ: So I have Ahmad, 

20 Johnson, Bob, and Daniel.

21 MR. SHAWWAL: Ahmad. I would push 

22 back a little bit on saying it's above or below 
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1 metric or a threshold, because depending on how 

2 you do the calculation who knows if it's good to 

3 be below the threshold or if it's good -- or if 

4 it's bad to be below the threshold. I'm not sure 

5 what the disclosure language is currently. It 

6 might be helpful to say, hey, this passes or 

7 fails this metric as defined by the Department of 

8 Education. And you could include language that 

9 says these are metrics which the Department 

10 believes to be a -- I don't want to say 

11 "effective," but effective measure of program 

12 outcomes.

13 So maybe go a little bit more in depth 

14 as to -- so that students have an idea of where 

15 these metrics are coming from rather than just 

16 saying it passes or fails. So you could add in 

17 something like "this passes or fails a certain 

18 metric which we have established on our own which 

19 we believe to be indicative of X, Y, and Z." So 

20 that way students don't perceive it as an 

21 objective, pass or fail objective indicator of 

22 the quality of a program's outcomes.
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1 MR. RAMIREZ: Okay. Thank you. 

2 Johnson, Bob, and Daniel. 

3 MR. TYLER: Yes, I'm kind of beating a 

4 dead horse here, but I think if "pass" and "fail" 

5 are words that people understand and whatever you 

6 want to call it, a standard, a metric, whatever 

7 it's modifying, that -- those should be the 

8 verbs, because if we're going to have a 

9 disclosure statement, if that is what the 

10 administration wants, equal playing fields for 

11 for-profits and non-profits and all these 

12 institutions where the better entity comes out at 

13 the end, people need to understand what's being 

14 said. So pass or fail, that gets people's 

15 attention.

16 MR. RAMIREZ: Bob?

17 MR. JONES: Yes, I think probably 

18 we're all basically in agreement around whether 

19 it's "metric" or some language like this, but I 

20 want to go back and repeat that I think the 

21 system we're here today talking about is not the 

22 regulatory solve. It is the disclosure to 
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1 everyone of performance and where people are, 

2 where the schools are, so that students can make 

3 decisions.

4 Now whether or not the lowest 

5 performing institution is actually failing or in 

6 fact they're -- it's a very good program but the 

7 students are not succeeding well because of the 

8 culinary market or this market or where they live 

9 or something else, that's a determination the 

10 department has to make in the management process, 

11 not made by this process here.

12 So that's why we argue I believe for 

13 language that's more descriptive. I want to make 

14 a clear statement to the student that says 

15 students in this program are having difficulty 

16 paying back their loans. Students in this 

17 program are not earning as much over time to pay 

18 their loans as other people are. And we have to 

19 be that clear. And I think "metric" is a fine 

20 way to get there.

21 MR. RAMIREZ: Daniel?

22 MR. ELKINS: I was curious if the 
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1 people who put their thumbs down for "metric" 

2 could offer maybe a potential alternative?

3 PARTICIPANT: For the record we like 

4 "benchmark."

5 PARTICIPANT: What about voting on 

6 "benchmark as established by the Department of 

7 Education?"

8 PARTICIPANT: It's not about that --

9 that's not the word that matters. It's the did 

10 you pass or fail it is the piece that we're 

11 arguing over. Or did you go above or below? So 

12 I think that's where the disagreement is. It's 

13 not actually about "metric" or "benchmark" or 

14 "standard" as much.

15 MR. RAMIREZ: Yes, Sandy?

16 MS. SARGE: This is Sandy. The last 

17 time we were here we had a lot of discussion 

18 about this concept of what does the words "pass 

19 and fail" mean? And they're very definitive in 

20 that. This is -- to me this is an indication 

21 that there may be issues within other issues that 

22 the Department would then have a mechanism to 
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1 which they could explore and continue down their 

2 ability to -- it gives the Department an 

3 opportunity to dig deeper, which that's really 

4 what we should be using this for because of all 

5 the other reasons we've talked about.

6 I think if we said, "This program at 

7 this university falls below the benchmark, we 

8 deem" -- I liked your language -- "that the 

9 Department deemed to be appropriate, whatever, 

10 and further Department processes may be 

11 required," something like that. Or it would --

12 what I want to do is I -- this in and of itself 

13 can be explained away, right? 

14 If we come in there, we can argue 

15 about earnings and the right and wrong about how 

16 debt and earnings are calculated and repayment, 

17 all that stuff, but if they get the ability to go 

18 in and dig deeper into a school, you're going to 

19 find other things. You're going to find things 

20 like whether or not there's a going concern 

21 paragraph in their audited financial statements. 

22 You're going to find out whether or not their 
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1 composite score -- they're looking at the audits. 

2 You're going to go in and find out whether or 

3 not they're maintaining records appropriately. 

4 You're going to go in and investigate in a 

5 program review tell me how you gather your 

6 employment information. You're going to find out 

7 a lot more.

8 What this does is gives them a tool to 

9 open that box and dig deeper. But I think 

10 standing alone debt to earnings isn't going to be 

11 the one metric that's going to determine whether 

12 this program is hurting students or not. But I 

13 want to give them every opportunity to get 

14 digging.

15 MR. RAMIREZ: So there was --

16 elsewhere in the paper it talks about meets and 

17 not meets. Is that something that would be 

18 strong enough versus pass or fail? Ahmad?

19 MR. SHAWWAL: I mean, I was going to 

20 say -- so I'm a big fan of brevity, and I'm not 

21 sure what the disclosures look like, but I think 

22 it's totally reasonable to say something like, 
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1 hey, it passes or fails by this test that we've 

2 developed, but -- and take it with a grain of 

3 salt because not all -- like no calculation is 

4 perfect. This is what we just believe to be an 

5 indicator of such and such problems. Like, I --

6 is there any pushback to something like that? 

7 Like what is the current disclosure language?

8 PARTICIPANT: First of all, we should 

9 make a clarification here. These are not 

10 disclosures. These are notifications. What 

11 currently -- what replaced warnings. I can -- if 

12 you want the current -- you want the current 

13 language for the warning? 

14 It states "the program has not passed 

15 the standards established by the U.S. Department 

16 of Education. The Department based these 

17 standards on the amounts students borrow for 

18 enrollment in this program. If in the future the 

19 program does not pass the standards, students who 

20 are then enrolled may not be able to use federal 

21 student grants or loans to pay for this program 

22 and may have to find other ways such as private 
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1 loans to pay for the program." And that was key 

2 to the loss of -- to the current loss of program 

3 eligibility. But that's the way the warning is 

4 currently worded. So the notifications replaced 

5 warnings. Disclosures are a separate thing.

6 PARTICIPANT: So maybe we did a full 

7 360 here, right?

8 (Laughter.)

9 PARTICIPANT: Pass, not pass the 

10 standards, right? 

11 PARTICIPANT: Correct. It never said 

12 "fail." It said either -- it did not pass and 

13 then if it does not pass in the future.

14 MR. RAMIREZ: So let me see a show of 

15 thumbs if everyone's okay with pass or did not 

16 pass the standards.

17 (Show of thumbs.)

18 MR. RAMIREZ: Okay. So actually 

19 there's quite a few thumbs down. So did you want 

20 to add something to that?

21 Okay. At this point I'm going to --

22 PARTICIPANT: I will add what I think 
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1 David's concerns have expressed to me in the 

2 past; and feel free to jump in, but part of the 

3 issue is that if you're at -- if you end up 

4 falling in at 8.1 versus 7.9, that failing or not 

5 passing is very -- is still somewhat -- as you 

6 get in more finite with math, it -- one little 

7 thing can move you above or below that. And I 

8 think that's been part of the issues is that 

9 preciseness can be triggered by so little of a 

10 flip. One student could flip you technically. 

11 And I think that's been some of the issues of 

12 that.

13 MR. RAMIREZ: Okay. So what I was 

14 going to say was that at this point I think we'll 

15 let the Department take this conversation under 

16 advisement. And there's a couple of other areas 

17 that need to be cleaned up in this as well, so 

18 we'll let them clean up and then we'll take 

19 another look at this.

20 So before we move on to the next 

21 portion. is there anything that, Ahmad or Tony --

22 you're the last two left. Is there anything else 
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1 that you really wanted to add before we move on?

2 PARTICIPANT: I'm just trying to think 

3 of ideas that could lead to consensus. I don't 

4 know, maybe green, yellow, red zone. I'm not 

5 sure how effective that would be.

6 MR. RAMIREZ: What was that? I didn't 

7 hear that last one.

8 PARTICIPANT: Like having a green, 

9 yellow, and red zone.

10 MR. RAMIREZ: Oh. 

11 PARTICIPANT: I'm not sure how that 

12 would play out though. I'll have to think about 

13 that. 

14 MR. RAMIREZ: I thought we were 

15 getting rid of zones, but --

16 PARTICIPANT: Spaces.

17 MR. RAMIREZ: Okay.

18 (Laughter.)

19 MR. RAMIREZ: Tony?

20 MR. MIRANDO: So I have another 

21 question, but it's prior to that section, so I 

22 just want to make sure before we move on.
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1 MR. RAMIREZ: Okay. Thank you.

2 MR. MIRANDO: So, yes? 

3 PARTICIPANT: Yes.

4 MR. MIRANDO: Okay. So on page 4; and 

5 this is to you, Greg, I just want to make sure 

6 that I'm understanding it, and I think I do. I 

7 just want to make sure before we move on. So on 

8 page 4 under I guess it would be No. (b)(1). So 

9 the last paragraph. It says, "The notification 

10 must state that the performance of the program is 

11 below standards established by the U.S. 

12 Department of Education regarding the debt-to13 income ratio and loan repayment performance of 

14 prior graduates." And that's because you have to 

15 fail both in order for the sanctions to occur, 

16 right?

17 MR. MARTIN: That's correct.

18 MR. MIRANDO: Okay. Even though it's 

19 one or the other, if you're good in them, you 

20 don't need even get to this section?

21 MR. MARTIN: Right.

22 MR. MIRANDO: Okay. I just want to 
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1 make sure I understand.

2 PARTICIPANT: And I think there you 

3 could just strike "of prior graduates," right? 

4 Just leave it there, "regarding debt-to-income 

5 ratios and loan repayment performance," period.

6 PARTICIPANT: That's true. That would 

7 answer Whitney's issue.

8 PARTICIPANT: Yes.

9 PARTICIPANT: Could you repeat that so 

10 Erin can get --

11 PARTICIPANT: Yes, right at -- what I 

12 was just stating, so right at the end of that 

13 sentence just take out the words "of prior 

14 graduates" and just put a period after 

15 "performance."

16 PARTICIPANT: It could refer to the 

17 institution, their debt-to-income ratio. I think 

18 you have to put in "graduates" or "borrowers."

19 PARTICIPANT: Well, it says "program."

20 PARTICIPANT: It does say "program" 

21 though.

22 PARTICIPANT: But what is a program? 
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1 I mean, we're talking about students here who are 

2 reading that.

3 PARTICIPANT: Well, the reason -- the 

4 only reason they were deleting "of prior 

5 graduates" is to resolve the Whitney -- Whitney's 

6 good point that some of -- that on loan repayment 

7 it's not graduates, it's all borrowers. So they 

8 were -- there was just a proposal to try to cover 

9 the -- both bases on the discrepancy that -- or 

10 not discrepancy, but the sort of issue that 

11 Whitney highlighted before that loan repayment 

12 rate is all borrowers, not just graduates. So 

13 that's the only reason they were -- I think. Not 

14 to speak for Tony and -- but I think that's the 

15 reason they were deleting it.

16 PARTICIPANT: But "prior borrowers" 

17 would work as well.

18 PARTICIPANT: I mean, it could say 

19 "borrowers." But period? Why? I'm not sure 

20 what's not clear about just ending the sentence.

21 PARTICIPANT: I think it needs to say 

22 that students are not doing well.
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1 PARTICIPANT: Oh, something about this 

2 -- well, I mean, we continue --

3 PARTICIPANT: Yes, rather than the 

4 program.

5 PARTICIPANT: The performance of this 

6 program --

7 PARTICIPANT: Well, it continues on. 

8 I mean, the paragraph then continues on to talk 

9 about the students, so it's just an introductory 

10 sentence.

11 PARTICIPANT: -- students borrow based 

12 on --

13 (Simultaneous speaking.)

14 PARTICIPANT: Well, just put -- yes, 

15 just put -- how about putting "students" in the 

16 front of -- "below standards established by U.S. 

17 Department of Education regarding student debt18 to-income ratios and loan repayment performance?

19 PARTICIPANT: That works.

20 PARTICIPANT: There you go. Boom. 

21 Done.

22 PARTICIPANT: So you just put 
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1 "students" in front of the debt to earning.

2 PARTICIPANT: I like "students" 

3 better.

4 PARTICIPANT: Does that work?

5 PARTICIPANT: Is that -- you see what 

6 I'm saying, Johnson?

7 MR. TYLER: Yes.

8 PARTICIPANT: That gets to the 

9 students.

10 PARTICIPANT: I think I'd prefer 

11 people knowing that even if they complete the 

12 program, they may have trouble because of they've 

13 failed in this category repaying their debt.

14 PARTICIPANT: Then the sentence needs 

15 to be split apart completely because the loan 

16 repayment rate is not just graduates.

17 PARTICIPANT: I think if we say 

18 "students," everybody knows it's them. I mean, I 

19 think that would refer to anybody. They're 

20 getting this -- hopefully they're seeing this 

21 when they begin the program, so hopefully they're 

22 being positive they're going to make it through. 
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1 Its' better than having no -- nothing in there 

2 with students, because I understood what you were 

3 saying.

4 MR. RAMIREZ: Johnson, does that work?

5 MR. TYLER: I think people need to be 

6 -- I think when you put in "prior graduates;" and 

7 the debt-to-income ratio is for completers, it's 

8 not inaccurate to say that graduates, you 

9 complete this program and you're -- those people 

10 are still failing to meet these metrics. I think 

11 it's important that it be there. 

12 PARTICIPANT: How about "regarding the 

13 debt-to-income ratios of prior graduates and loan 

14 repayment performance of the school's -- or the 

15 program's borrowers," or something like that? 

16 Then it's accurate.

17 PARTICIPANT: Can you say that again?

18 PARTICIPANT: Yes, I mean, and I'm 

19 making -- well, I'm not making it up, but I'm 

20 doing this on the fly, so it might not be the 

21 same twice. "Regarding the debt-to-income ratios 

22 of prior graduates and loan repayment performance 
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1 of the program's borrowers," or something like 

2 that. So then it's clear who the cohorts are for 

3 each of the metrics. 

4 PARTICIPANT: That's fine.

5 PARTICIPANT: Okay. 

6 MR. RAMIREZ: So what was the last 

7 word, performance of?

8 PARTICIPANT: Just qualify each 

9 section.

10 PARTICIPANT: Yes, "and loan repayment 

11 performance of prior borrowers."

12 MR. RAMIREZ: Okay. Yes, I like that.

13 PARTICIPANT: Does that -- I think I 

14 just made it slightly different, too, so that's 

15 why I said you're not going to get the same 

16 answer out of me twice. It's not intentional.

17 PARTICIPANT: Yes, I think it's up on 

18 the board. I think Erin did a good job of 

19 grabbing that.

20 MR. RAMIREZ: All right. Let me just 

21 see a quick show of thumbs on that revision. Is 

22 everyone okay with that? It's up on the board.
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1 (Show of thumbs.)

2 MR. RAMIREZ: So, okay. I don't see 

3 any thumbs down, so it looks like we're good.

4 All right. And then, again, as far as 

5 those other items are concerned, the Department 

6 will take that under advisement. Then we'll move 

7 on to the next section here.

8 MR. MARTIN: So the -- thank you, 

9 Javier. This is Greg for the record. So we'd be 

10 looking on page 6 at (c), Alternative Languages. 

11 So we did make some revisions there. You can 

12 see that the language states, "Programs that are 

13 not taught in English or that use non-English 

14 promotional materials must provide notifications 

15 in the language of the program instruction or the 

16 promotional materials."

17 MR. RAMIREZ: Okay. Any questions on 

18 that one? Yes, Tony, you --

19 MR. MIRANDO: You forgot to say Mark 

20 before you moved to this section.

21 MR. RAMIREZ: Oh, Mark, go ahead.

22 MR. McKENZIE: Thank you. Mark 
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1 McKenzie. I was listening to the last 

2 conversation. I just want to note we spent 

3 probably 45 minutes debating the term "benchmark" 

4 versus "metric" versus "standard." We're in a 

5 third session and have a couple of days and some 

6 major, major issues. So with all due respect, I 

7 think not getting into the weeds about debating 

8 particular terminology when it's kind of 

9 irrelevant in some ways, the difference between 

10 "benchmark" and "metric" -- so I just caution us 

11 to not get into the fight with -- at that level. 

12 The other thing in this particular 

13 thing is the concern; and I think the transition 

14 from -- in the sequencing that was given to us is 

15 that I left the last session understanding that 

16 there were these two items: the debt to earnings 

17 and the loan repayment, and if there were -- if 

18 an institution or a program failed both, then 

19 there would be a discussion to see what was going 

20 on. 

21 In this sequence there's automatically 

22 a notification. So a notification is now going 
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1 before there's been a review or a consideration 

2 of, okay, do these two flags actually indicate 

3 something that needs to be -- there needs to be 

4 some intervention? And one of the challenges 

5 here is that -- and I think Jessica said it 

6 earlier, is that there's a difference of opinion 

7 in how we're -- how the groups are kind of coming 

8 at this. 

9 And I think it's extremely important 

10 that there not be a lot of collateral damage in 

11 the application of any regulation or any --

12 whatever set of metrics we end up agreeing to or 

13 that the Department goes forward with. And I 

14 think right now based on the earlier conversation 

15 it's not even clear that the new metric is going 

16 to be a good metric yet. It's not until the 

17 metric's in place and has been there for a year 

18 or two or three that you then look back and see 

19 what the impact of that metric is going to be.

20 So to automatically go to something 

21 that's going to start penalizing institutions 

22 and/or students attending those institutions --
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1 because it's not just the students that are 

2 attending bad institutions. If you close down a 

3 good performing institution, those students get 

4 penalized as well. Those faculty members get 

5 penalized. So there are a lot of issues at stake 

6 here and I think making sure that we're thinking 

7 about that on the front end rather than on the 

8 back end. Thanks.

9 MR. RAMIREZ: Okay. Thank you. 

10 All right. So going back to (c), 

11 Alternative Languages, are there any questions on 

12 that one? 

13 MR. MARTIN: I just want to make a 

14 point of clarification; this is Greg, regarding 

15 notifications. The notifications are not new per 

16 this session. Remember that the chart we handed 

17 out that went through the various steps that we 

18 always -- even going back to round one, our first 

19 proposal was when we proposed this as a 

20 disclosure-only regulation, that we still had 

21 disclosures and we still had notifications 

22 involved. 
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1 Now what this one does is introduce 

2 the concept of or the possibility of sanctions. 

3 That's what new. But notifications was there. 

4 The notifications don't key to any -- in and of 

5 themselves don't key to any type of action. It's 

6 just if the benchmarks are not met, then the 

7 notification is necessary. But the notification 

8 doesn't go to anything other than making the 

9 notification.

10 MR. RAMIREZ: Okay. Thank you.

11 All right. So let me see a show of 

12 thumbs for alternative languages.

13 (Show of thumbs.)

14 PARTICIPANT: I don't see any down.

15 MR. RAMIREZ: Okay. Yes, I don't see 

16 any thumbs down. 

17 All right. And one of the reasons --

18 I want to get that one done, but one of the 

19 reasons I wasn't necessarily going back on the 

20 issue of the notifications, the flow chart, 

21 because I understand that we still have to make 

22 some tweaks to that language and there's probably 
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1 going to be some additional discussion at that 

2 point, right?

3 So, Greg, what's the next section?

4 MR. MARTIN: The next section is (d) 

5 at the bottom of page 6. That's delivery to 

6 students. And remember, this is not delivery --

7 I'll be honest with you, when I first got 

8 involved with GE, always with -- just keeping the 

9 disclosures and notifications separate was always 

10 a difficult thing to do because you start saying 

11 "disclosures" when you mean "notifications." So 

12 -- well, at that time it was "warnings," but we 

13 had to keep notifications and disclosures 

14 separate.

15 So this is delivery to students of 

16 notifications. "An institution must provide the 

17 notification required under this section to each 

18 -- in writing to each student enrolled in the 

19 program, but no later than 30 days after the date 

20 of the Secretary's notice of determination." 

21 And "Hand delivering the notification" -- by hand 

22 delivering "as a separate document or sending the 
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1 warning -- the notification rather to the primary 

2 email address used by the institution."

3 Again, we have, "If the institution 

4 sends the notification by email, it must ensure 

5 that the notification is the only content of the 

6 email."

7 And we have, "Send the notification 

8 using a different address or method of delivery 

9 if the institution receives a response that the 

10 email could not be delivered," and, "maintain 

11 records of its efforts to provide the 

12 notification required in this section." 

13 And then we have, "Delivery to 

14 prospective students," as well. "Provide 

15 notification required in this section to each 

16 prospective student or third party acting on 

17 behalf of that student by hand-delivering as a 

18 separate document." Again, we're again "sending 

19 notification to the primary email address." 

20 "Providing a student a copy of the disclosure 

21 that includes the notification, because remember 

22 that the notification will be, as is currently 
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1 the case with the warning, included on the 

2 disclosure template itself. 

3 And then we have email 

4 acknowledgement. "If the institution provides 

5 the notification to the prospective student, 

6 including by providing the prospective student or 

7 third party an electronic copy of the disclosure 

8 template, the institution must ensure that the 

9 notification is the only substantive content of 

10 the email."

11 And then, "Send the notification using 

12 a different address or method of delivery if the 

13 initial response could not be -- initial --

14 rather, if the institution receives a response 

15 that the email could not be delivered."

16 And then finally we can look at the 

17 disclosure template. "Within 30 days of 

18 receiving notification from the Secretary that it 

19 must provide the warning, the institution must 

20 update the educational program's -- undergraduate 

21 educational program's disclosure template to 

22 provide -- to include rather the notification."
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1 MR. RAMIREZ: Okay. So, Steve, you 

2 have a comment or a question on that?

3 MR. CHEMA: I do. It's Steve Chema 

4 for the record. And I get that this is going to 

5 sound like a minute detail in the grand scheme of 

6 everything we've talked about today, but for Greg 

7 or Steve, looking at the deletion of (B) and then 

8 (i) on page 7 -- so if a school does choose to 

9 communicate the notification by email and --

10 whether it's a student complaint or there's some 

11 reason for the Department to question whether the 

12 notification was in fact given, would the 

13 Department accept the sent email, assuming it 

14 didn't bounce back?

15 PARTICIPANT: Yes, that would be 

16 accurate. We'd accept the sent email without a 

17 bounce back. Part of the -- part of what we were 

18 doing here is to try to streamline and simplify 

19 the numerous --

20 MR. CHEMA: No, I appreciate --

21 PARTICIPANT: -- some of the 

22 requirements we had here.
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1 MR. CHEMA: I very much appreciate 

2 that simply because the read receipt capability 

3 on email is so spotty. Thanks.

4 MR. RAMIREZ: Any other questions on 

5 delivery of notification to students, prospective 

6 students and the template? Yes, Mark?

7 PARTICIPANT: Yes, just one quick easy 

8 one. Under (i) should there be an "and" or an 

9 "or" at the end of that sentence? 

10 PARTICIPANT: Could you read the 

11 sentence, please?

12 PARTICIPANT: Yes, so "hand 

13 delivering" --

14 PARTICIPANT: (Inaudible).

15 PARTICIPANT: No, here. Under (i). 

16 "Hand delivering the notification as a separate 

17 document to the prospective student or third 

18 party individually; or as part of a group 

19 presentation." And should there be and "and" or 

20 an "or" that (ii) and then you also have send the 

21 notification? I'm just not sure whether that's 

22 -- does that make sense?
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1 PARTICIPANT: So if I could jump in 

2 here, because under the delivery to students 

3 there's an "or" after it in the delivery. After 

4 prospective student there is no "or." So as you 

5 -- are you talking about after the prospective 

6 students?

7 PARTICIPANT: Yes, mine has an "or;" 

8 his doesn't. So --

9 PARTICIPANT: Yes, because I think it 

10 depends if you're looking under "students" or 

11 "prospective students."

12 PARTICIPANT: "Prospective student or 

13 third party individually" --

14 PARTICIPANT: Yes.

15 PARTICIPANT: -- "or as part a group 

16 presentation."

17 PARTICIPANT: Yes.

18 PARTICIPANT: Because there should be 

19 something after that, correct?

20 PARTICIPANT: Yes, so there is an "or" 

21 under the first one under students, but there's 

22 no "or" under "prospective students."
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1 PARTICIPANT: Ah, prospective 

2 students.

3 PARTICIPANT: There is -- under 

4 prospective students there is the -- the way 

5 that's worded, yes, "by hand delivering the 

6 separate document," and then there's a semicolon, 

7 "sending the notification to the primary email 

8 address for communication, or providing the 

9 prospective student with a copy of the disclosure 

10 template."

11 PARTICIPANT: Right, and so under 

12 prospective student under (i) I think what Mark 

13 is saying there should be an "or" at the end of 

14 the first (i) under "prospective students."

15 PARTICIPANT: Do they both or do they 

16 do --

17 PARTICIPANT: One or the other.

18 PARTICIPANT: You can do one or you 

19 can do this?

20 PARTICIPANT: Right.

21 PARTICIPANT: It's any of the three 

22 there, right, so --
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1 PARTICIPANT: So then it should be 

2 "or."

3 PARTICIPANT: Right.

4 PARTICIPANT: Just the "or" is 

5 missing.

6 PARTICIPANT: Oh, I see. Okay. On 

7 page 7 where it says "Hand delivering?"

8 PARTICIPANT: Page 7.

9 PARTICIPANT: "Hand delivering the 

10 notification as a separate document to the 

11 prospective student or third party individually; 

12 or as part of a group presentation" --

13 PARTICIPANT: Or.

14 PARTICIPANT: -- or sending the 

15 warning to the primary address."

16 PARTICIPANT: Yes, that's -- well, 

17 it's just the way you read it. It's basically --

18 so it says, yes, "Sending the notification." And 

19 then you can do it -- so you can hand deliver. 

20 So you're giving them a list. I can hand deliver 

21 it, I can send the notification to the primary 

22 email address, or I can provide it via the 
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1 disclosure template, right?

2 PARTICIPANT: They're saying that in 

3 the previous page where you had the same wording 

4 you did have an "or," so they'd like you to put 

5 the or in this one as well.

6 PARTICIPANT: At the bottom of page 6.

7 PARTICIPANT: It goes in the clause 

8 before the last one. If it's an "and," all three 

9 apply; if it's an "or," any of the three apply.

10 MR. RAMIREZ: Mark, does that help?

11 PARTICIPANT: You don't need 

12 (inaudible) from a legal standpoint?

13 PARTICIPANT: No. No.

14 MR. RAMIREZ: Okay. Then any other 

15 discussion on delivery of notification for 

16 students, prospective students or the template?

17 Sandy?

18 MS. SARGE: This is Sandy. I just 

19 have a question and to Kelly and Andrew from --

20 since this falls on financial aid, would this --

21 is 30 days adequate? 

22 MS. MORRISSEY: I'm not sure that it 
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1 would fall in financial aid if we're talking 

2 about prospective students because we in some 

3 cases would not be in contact with them at that 

4 point in the enrollment cycle, but I think to me 

5 30 days is adequate.

6 MS. SARGE: Okay. 

7 MR. HAMMONTREE: I would agree. And 

8 this is only for those students in a program 

9 that's not meeting a benchmark. It's not for all 

10 programs. That's what we had some concerns about 

11 before is it wasn't realistic --

12 MS. SARGE: Okay.

13 MR. HAMMONTREE: -- to do -- to 

14 include all programs. But if this is only 

15 notifying students in a program that's in danger, 

16 I think it's okay.

17 MS. SARGE: Okay. 

18 MR. RAMIREZ: Thank you, Andrew. All 

19 right. 

20 PARTICIPANT: One more thing. I just 

21 want to point out that I was informed that I 

22 erroneously suggested that -- at the top of page 
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1 7, that we were keeping substantive content. And 

2 that should -- and as is -- what's there is 

3 correct. We removed "substantive" just to make 

4 it easier. It's the only content of the email.

5 PARTICIPANT: That makes it much 

6 clearer.

7 MR. RAMIREZ: All right. Let me see a 

8 show of thumbs if everyone's okay with delivery 

9 of notification to students, prospective students 

10 and the template.

11 (Show of thumbs.)

12 MR. RAMIREZ: Okay. I am not seeing 

13 any thumbs down, so that means we're moving 

14 forward.

15 Okay. Thelma?

16 MS. ROSS: Did we define a 

17 "prospective student?" 

18 MR. RAMIREZ: Greg?

19 MR. MARTIN: Okay. "Prospective 

20 student" is on Issue Paper 1, page 7. I thank 

21 Jennifer for that quick reference.

22 On page 7 you'll see, if you go back 
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1 to Issue Paper 1, the definition of a 

2 "prospective student" is there. "An individual 

3 who has contacted an eligible institution for the 

4 purpose of requesting information about enrolling 

5 in an undergraduate educational program or has 

6 been contacted directly by the institution or a 

7 third party on behalf of the institution about 

8 enrolling in a program."

9 MS. SARGE: So is the intent to be 

10 going forward on that? I'm sorry. I just jumped 

11 right in there, Javier. I apologize. This is 

12 Sandy.

13 So it would be prospective. So if 

14 something comes out, says they're not passing 

15 these rates, we have to do notification within 30 

16 days, and it would be notification to any student 

17 that in the future either asks for information or 

18 not and any student that's currently in the 

19 system, right, student already enrolled, we'd 

20 have to give that notification. So then I think 

21 the only question would be about the students 

22 that have not yet enrolled but began the process 
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1 before this notification. 

2 So I think the bottom line is just 

3 make sure you're letting people know. Is that 

4 your concern, Pamela?

5 MS. FOWLER: We had talked before 

6 about a student -- it was much broader than that. 

7 It could be the kid that was at cheerleading 

8 camp or at basketball camp or football camp when 

9 they were in the seventh grade and never had any 

10 intentions of attending the institution. That 

11 was my concern.

12 MR. RAMIREZ: All right. So, but with 

13 that clarification of --

14 MS. FOWLER: Not enrolled? MR. 

15 RAMIREZ: Yes, okay. All right. Jeff?

16 MR. ARTHUR: Yes, so in that regard, I 

17 mean, "first contact" is pretty broad. And I 

18 would suggest that we make this at the time of 

19 either application or expressed interest in a 

20 particular program or a first visit to a campus. 

21 There has to be some qualifier besides just, 

22 hey, here, here's a name and address of somebody 
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1 that might be interested.

2 (Simultaneous speaking.)

3 MR. RAMIREZ: All right. So --

4 MR. ARTHUR: You may not even know 

5 what program they're in. And then they're in 

6 your system. And now at some point they identify 

7 a program. Good luck trying to figure out what 

8 -- when that happened. When did they actually 

9 decide on a program that you need to disclose? 

10 Very complicated.

11 MR. RAMIREZ: So we have to look at 

12 that under Issue Paper 1 under the definition of 

13 "prospective student." Is that where we would 

14 make that modification? 

15 PARTICIPANT: Yes.

16 MR. RAMIREZ: Okay. So we'll hold off 

17 on that for now. I think we're still okay with 

18 the language that you all just approved. We 

19 would have to make sure that we are clear on what 

20 is prospective student under Issue Paper 1 then. 

21 Correct?

22 (No audible response.)
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1 MR. RAMIREZ: Okay. All right. So we 

2 have about 50 minutes left. Do we want to go 

3 back into the D/E rates?

4 PARTICIPANT: 5.0 or 1.5?

5 MR. RAMIREZ: 5.0. And we -- and 

6 actually we need a little bit of time -- make 

7 sure there's any comments in closing, but --

8 PARTICIPANT: Yes.

9 MR. RAMIREZ: We jumped into sanctions 

10 after talking about D/E rates for a little bit. 

11 So all right. Let's go ahead and continue on 

12 with D/E rates then.

13 MR. MARTIN: So we're going back to 

14 D/E rates. It's Issue Paper No. 2. Just give 

15 everybody a minute to go there.

16 (Pause.)

17 MR. MARTIN: I think we already read 

18 the summary of that, and just to draw your 

19 attention again to the notes at the bottom of 

20 page 1 regarding the feedback we're interested in 

21 with respect to these ideas you see listed at the 

22 bottom.
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1 This basically talks about adding the 

2 loan repayment rate framework. And you can see 

3 starting at the top of page 2, the undergraduate 

4 educational program framework. We have debt-to5 earnings rates, or D/E rates, and loan repayment 

6 rates that's been added. And noting here that 

7 for each award year and for each eligible program 

8 the Secretary is going to calculate two D/E 

9 rates: the discretionary income rate and the 

10 annual earnings rate, using the procedures in 

11 668.404 and 405, and the loan repayment rate, 

12 which is using the procedures in 668.406.

13 And you see the benchmarks for D/E 

14 rates measure. And those haven't changed; so we 

15 had those last time around, so I'm not going to 

16 review those again because we know what those 

17 are.

18 And again, the reference at the top of 

19 page 3 that: "An undergraduate educational 

20 program is considered to meet the benchmarks 

21 under the D/E rates measure if the institution 

22 demonstrates to the Secretary it meets the 
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1 standards for economically disadvantaged appeals 

2 in 668.213, or meets the standards appeals in 

3 668.216 for programs with thirty-or-fewer 

4 borrowers."

5 All right. Okay. So can entertain 

6 comments on that.

7 MR. RAMIREZ: Yes, Pamela?

8 MS. FOWLER: Actually I would like to 

9 go back to page 1 where you talk about as a 

10 comparison tool among institutions of similar 

11 size and scope and that serve a demographically 

12 matched student population. Are you looking at 

13 -- are you talking about all three of those or 

14 are you talking about any order?

15 MR. MARTIN: Yes, here we're 

16 soliciting -- we're just soliciting your feedback 

17 on ideas about what you think about any or all of 

18 these. So we're not necessarily committed to one 

19 or the other. We put it out there as whether --

20 or as to whether or not the D/E rate should be 

21 used as a comparison tool among -- to 

22 institutions with similar size/scope or those 
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1 that serve at a certain demographic and what you 

2 think about whether or not we should pursue that, 

3 or which of these you think would be most 

4 effective toward that end. 

5 MR. RAMIREZ: Okay. Kelly?

6 MS. MORRISSEY: This is Kelly. I 

7 would also like to provide feedback, but on the 

8 second point about evaluating incomes only on the 

9 top 50 percent of students in a program. I 

10 oppose this both philosophically and 

11 logistically. 

12 First of all, I'm just wondering why 

13 we would exclude students who are maintaining 

14 standards of satisfactory academic progress, 

15 therefore they're allowed to receive financial 

16 aid, receive federal loans, why we would not be 

17 tracking their outcomes if they in fact completed 

18 the program. 

19 And then logistically I'm not sure how 

20 these rates would be calculated without 

21 additional data points being reported to the 

22 Department in an effort to exclude those students 
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1 from the calculation.

2 MR. RAMIREZ: Okay. Whitney and then 

3 Jeff?

4 MR. MARTIN: You are -- I'll respond 

5 to that. You are correct that we would -- it 

6 would require us to get further data from 

7 institutions. I mean, there are different ways 

8 we could do it. We could possibly do it with --

9 through completer lists. Schools -- only 

10 including those students who were above a C, or 

11 an A or a B. That's a possibility.

12 I think just the theory here is that 

13 -- behind this is that -- especially for open 

14 enrollment institutions or schools that act in 

15 that way that they take -- they basically take 

16 all applicants and that there are a certain 

17 number inherent with that. There's a greater 

18 risk to those schools than perhaps you have with 

19 a more selective institution that self-selects 

20 out those kinds of students who would have more 

21 difficulty being employed or meeting higher 

22 academic standards.
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1 MR. RAMIREZ: Okay. Whitney, Jeff, 

2 Steve, Johnson, Christina.

3 MS. BARKLEY-DENNEY: Yes, so my first 

4 comment, Greg, to your last point is that we're 

5 already getting to that by using, at least in the 

6 D/E rates, graduates only. I mean, those people 

7 have made it through the program. The school has 

8 deemed them competent enough to receive the 

9 certification or degree or diploma, whatever 

10 they're getting from the school. So therefore, 

11 we should believe that those people can be hired 

12 in their field.

13 I agree with everything else Kelly 

14 said. I thank her for raising that because I 

15 don't even know what we're considering here. Are 

16 employers asking for your grade in your mechanics 

17 class? Like I just don't understand that -- if 

18 that's even something that happens when people go 

19 out into the world, or they're just looking at 

20 the diploma.

21 PARTICIPANT: They ask for grades.

22 MS. BARKLEY-DENNEY: They do ask for 
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1 your grades? Okay. Well, I've never encountered 

2 that, so that's not something I'm familiar with. 

3 But I still think that if a school has said that 

4 someone is doing well enough to graduate from 

5 their program, then that should really be the end 

6 of the discussion.

7 MR. RAMIREZ: Jeff?

8 MR. ARTHUR: I think I've got an 

9 approach to this that may be way simpler and 

10 actually address several concerns.

11 We've heard a lot of concerns about 

12 pay discrimination. We've heard concerns about 

13 people that have a percentage, good percentage of 

14 people that are self-employed that doesn't get 

15 counted to Social Security wages, about people 

16 that are good -- or a good number of students 

17 receive income through tip-based income. 

18 And I think also if you consider the 

19 academic performance, the lowest-performing --

20 academically performing students is -- I think if 

21 we take the salaries and just simply base the 

22 median on the 75 percent of students with the 
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1 highest salaries, we would basically eliminate 

2 and adjust for pay discrimination, self3 employment, all those factors and just chop those 

4 out, all those that maybe out and put a median on 

5 the 75 percent of the highest wages. And I think 

6 it would address all of that.

7 MR. RAMIREZ: Johnson?

8 PARTICIPANT: I'm going to have to 

9 think about what Mark said. It's an intriguing 

10 idea.

11 PARTICIPANT: Jeff.

12 PARTICIPANT: I'm sorry. Jeff. 

13 Sorry.

14 So I'm concerned about the end factor 

15 here. You're already -- you have completers 

16 being smaller than the group of people that enter 

17 the program. Some of these schools, there are 

18 very few completers. And if you take that end 

19 group and you divide it in half to get the top 

20 part of the class, I think you're just 

21 eliminating more data that's out there.

22 PARTICIPANT: That -- but, Todd, that 
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1 does then actually adjust for some of the 

2 concerns with a really low 10 n, so it would have 

3 to -- then you'd be at about a 13 n, because if 

4 the number of 75 percent represented less than 

5 10, then I would also propose that that doesn't 

6 meet the n threshold. So you'd be adjusting the 

7 n threshold up about three.

8 PARTICIPANT: We'll talk off mic.

9 But I also I had one more point, but I 

10 can't remember what it was, so --

11 MR. RAMIREZ: We'll come back to you.

12 Steve?

13 MR. CHEMA: Steve Chema for the 

14 record. 

15 Just one small reaction point to 

16 Kelly. I think while I definitely appreciate the 

17 logic behind the comparison to SAP because they 

18 both establish a metric or a baseline around a C 

19 average, I think there is a little bit of an 

20 apples and oranges application to how -- why we 

21 use SAP the way we do and looking at outcomes for 

22 graduates. Because if you think about how SAP 
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1 works, it measures touch points during a 

2 student's enrollment. 

3 And there's a certain profile of 

4 student that a lot of you would be aware of that 

5 struggles early on in a program maybe first 

6 couple of terms, has difficulty because the GPA 

7 cumulatively is low or credits that they complete 

8 might be low, but they kept their stride and they 

9 get out of jeopardy and they graduate well above 

10 a C average. And I think SAP exists to -- it 

11 monitors how students are doing, but also to 

12 alter their behavior, give opportunity for 

13 institutions to intervene.

14 But if you're looking at graduates, 

15 it's done. There's no opportunity for 

16 improvement there. And I just wanted to raise 

17 that.

18 MR. RAMIREZ: Okay. Christina and 

19 then Sandy.

20 MS. WHITFIELD: I'll be really brief 

21 because a lot of my points have already been 

22 made, but I wanted to be on the record about -- I 
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1 also -- I agree that it's inappropriate to 

2 exclude half of graduates and say that somehow 

3 even though the institution has credentialed 

4 them, they're not sort of putting their full 

5 faith and credit behind the credential that the 

6 institution itself has awarded.

7 I also think that on the first note I 

8 understand what age -- what an age band would 

9 look like and what Pell recipients -- who Pell 

10 recipients are, but I think socioeconomic status 

11 is pretty vague and how we would define that. We 

12 would need a -- that's another can or worms 

13 entirely to bring up.

14 MR. RAMIREZ: Okay. Sandy?

15 MS. SARGE: This is Sandy. I like 

16 Jeff's idea as we talk about so many of the 

17 issues of the, yes, but what about this, what 

18 about this. And I personally dealt with probably 

19 half of those issues as a graduating --

20 undergraduate student. I was part time, I had 

21 kids early, I did this, I did that. So -- and I 

22 worked for tips. And we'll leave it at that.
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1 (Laughter.)

2 MS. SARGE: I would say that by 

3 dropping -- I know. No. No. I was born in 

4 Mexico. I got ICE right next door. I mean, what 

5 else are we going to talk about, right?

6 But if we drop the -- if we drop the 

7 bottom 25 percent of those earners in the 

8 population from the Social Security and you then 

9 get a mean on the remaining 75, you eliminate 

10 mathematically some of the noise that's been down 

11 there. So that -- I -- actually I love that 

12 idea. So I'm going to go on the record for that, 

13 for the denominator.

14 MR. RAMIREZ: All right. Johnson, did 

15 you want to -- do you remember --

16 MS. TYLER: (Inaudible).

17 MR. RAMIREZ: Okay. 

18 (Laughter.)

19 MR. RAMIREZ: Tony?

20 MR. MIRANDO: Yes, can you repeat what 

21 you said? Just because --

22 MR. ARTHUR: Yes, I said that when 
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1 you've got -- we know and we've stated concerns 

2 about pay discrimination, we've got a number of 

3 people that have interruptions to their work 

4 early in their career because of having children, 

5 you've got people who are self-employed, you've 

6 got people that work for tips and you've got a 

7 certain percentage -- and so there's a lot of 

8 issues with a percentage of students as they 

9 start their career. And we're measuring wages 

10 somewhere in the three to five years after they 

11 complete when all this is going on.

12 So my proposal was that if we 

13 eliminate the 25 percent of graduates with the 

14 lowest salary, that we would remove some of that 

15 noise, or a good amount of that noise, and then 

16 median the remaining wage data. And the 

17 Department could do that extremely simply by 

18 telling the SSA instead of here's the list of 

19 Social Security numbers; tell us a median, they 

20 say here's the list of Social Security numbers; 

21 tell us the median of the 75 percent of the 

22 highest wage earners in that cohort. Boom. 
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1 Done. It's done. You got it.

2 PARTICIPANT: (Inaudible) median or 

3 mean?

4 PARTICIPANT: Yes, median or mean, 

5 whatever (inaudible).

6 MR. ARTHUR: Median or mean. Yes, 

7 whatever it is.

8 MR. MIRANDO: So basically that would 

9 get -- it would take into consideration the 

10 demographics where the school is located as also 

11 -- the whole --

12 PARTICIPANT: (Inaudible).

13 MR. MIRANDO: Yes, I like that idea, 

14 too.

15 PARTICIPANT: Yes, geographic. I 

16 mean, there's so many things that we've expressed 

17 concerns about that that would help adjudicate a 

18 little bit.

19 MR. MIRANDO: Can I follow up on that?

20 MR. RAMIREZ: Tony, yes.

21 MR. MIRANDO: Yes, so how would that 

22 work for -- I mean, I could see that working for 
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1 schools that have multiple campuses, but how 

2 would that work for a single campus in a city 

3 school? How would that work for them?

4 MR. ARTHUR: I don't think statically 

5 it would really matter whether it was a school of 

6 300 students in one location or 10-20,000 

7 students with 15.

8 PARTICIPANT: But it would be an 

9 indicator if it didn't move it, if -- then you 

10 would go in and there would be other reasons 

11 going on. Because if your incomes in that area 

12 of all those -- in the cohort were similar, so it 

13 didn't move the needle much, that's an issue 

14 within that geographic area potentially about --

15 like one school came to me and said we're a 

16 welding school in the Upper Peninsula of 

17 Michigan. Our welders don't want to leave town, 

18 they don't want to leave where they grew up, but 

19 there's only two welding jobs in the whole area. 

20 So that -- and it would be a different 

21 indicator, but what it does is it takes away some 

22 of the noise on if they're reporting fully to the 
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1 IRS or if the amount of money that's in the 

2 denominator is a full year of earning when the 

3 numerator is a full year of debt repayment, 

4 right? So it kind of averages out.

5 It's not going to solve for 

6 everything, but what it does is it takes away 

7 some of the noise. You may still have problems 

8 in socioeconomically depressed areas where 

9 student are trying to get jobs, and that might be 

10 something that the school then says, listen, we 

11 have to start working on figuring out how kids 

12 could move out of the area, get to somewhere 

13 where they could get a good job.

14 PARTICIPANT: I think it's --

15 PARTICIPANT: Yes, and when I looked 

16 at the top 50 percent of academic performers 

17 proposal, I mean, that just seemed really 

18 complicated, unworkable and data that I think a 

19 lot of people would object to going to the 

20 Department of Education. But yet it did bring --

21 it kind of prompted that thought that, well, 

22 there is some element here that -- okay, let's 
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1 take this to a -- let's look at this a little 

2 differently.

3 MR. RAMIREZ: Steve then Jordan?

4 MR. CHEMA: Yes, I just want to ask if 

5 part of that suggestion is then that completely 

6 streamlines the notification to remove all these 

7 other hypothetical reasons that a program might 

8 not be meeting the benchmarks or the standards or 

9 the metrics, or whatever the word --

10 PARTICIPANT: I'd be up for that.

11 MR. CHEMA: -- is, right? But --

12 because it sounds like that's a potentially 

13 significant adjustment.

14 PARTICIPANT: Yes, yes. Let's -- I 

15 would be fine with removing the -- all the 

16 excuses an institution might want to put on why 

17 the median wages -- or why the debt-to-earnings 

18 calculation may not be as effective for your 

19 institution. I mean, yes, I think it would 

20 streamline a lot of things.

21 MR. RAMIREZ: Jordan?

22 MR. MATSUDAIRA: This is Jordan. So I 
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1 want to I guess just suggest that I think this 

2 idea of trying to figure out a way of kind of 

3 risk-adjusting, for lack of a better word, or of 

4 adjusting the metrics for variation in the 

5 demographic characteristics of students across 

6 programs is probably a bad idea in this context, 

7 and I think it's -- but it comes back a little 

8 bit to what the purpose is if we view the metric 

9 as really being a good proxy of the quality of 

10 the program.

11 So for example, like an earnings 

12 value-added divided -- like this is how much the 

13 program causally improves your earnings as a 

14 fraction of that. Then I could see a rationale 

15 for risk adjustment. But if we're still thinking 

16 about this as protecting students from incurring 

17 unsustainable amounts of debt, which is the 

18 original rationale behind the rule, then -- and 

19 this is just a question about what the goal of 

20 the regulation is now in this kind of new world, 

21 but if we're trying to protect students from 

22 incurring like an unsustainable amount of debt, 
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1 low-income students don't get to pay back less of 

2 the debt that they borrow. 

3 So if we do this kind of risk4 adjustment as a function of the fraction of Pell, 

5 for example, of students in a program, that has 

6 the impact of making the standard softer for 

7 programs that serve more economically8 disadvantaged students. And that has the 

9 implication that in schools that -- or programs 

10 that serve higher fractions of Pell students 

11 perversely we're going to allow them to 

12 accumulate more debt as a fraction of their 

13 income than we would otherwise. So I think it is 

14 really counter to the original intent of the rule 

15 of protecting students from taking on 

16 unsustainable amounts of debt. 

17 You know, Jeff's idea about throwing 

18 out the bottom 25 percent, I also -- I think it's 

19 conceivable that this addresses some of the kind 

20 of problems in the way that you describe. We're 

21 basically going from looking at median earnings 

22 to looking at the 63rd percentile of earnings. 
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1 Okay? And it's conceivable that the person, the 

2 63rd percentile across different programs looks 

3 more demographically homogenous than the median 

4 student does, but that's not necessarily true. 

5 Okay? 

6 We're just kind of moving up the 

7 distribution. Most of these kinds of issues 

8 about particular programs serving more 

9 disadvantaged students, it just depends on what 

10 the fraction is. If the fraction is above kind 

11 of -- if that kind of heterogeneity across 

12 programs goes from top to bottom in terms of the 

13 students; in other words, compared to students at 

14 Cornell, students at some other college, are kind 

15 of universally shifted down in the distribution, 

16 then just picking out a different point in the 

17 distribution and comparing them across different 

18 institutions isn't going to solve that problem. 

19 So I don't -- I basically see that as 

20 just kind of picking the higher number for 

21 earnings rather than really addressing some of 

22 these problems in a fundamental way.
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1 MR. RAMIREZ: Sandy, Neal, Tony and 

2 Jeff.

3 MS. SARGE: We're trying to get --

4 this is Sandy. We're trying to get to a place 

5 where -- I think how I'm seeing this is we want 

6 to find a balance between not punishing schools 

7 who take the risk right from the beginning of 

8 engaging in students that are otherwise not 

9 accepted at other schools for a variety of 

10 reasons, anything from the state budget to their 

11 high school academic performance. So they're --

12 a lot of these students are already behind the 

13 eight ball. 

14 And you have schools that have chosen 

15 to say, well, 30 percent of high school students 

16 get into the top tier colleges or the state 

17 colleges. There's another 70 percent of students 

18 out there that may want some sort of education 

19 and now you're going to punish them, in essence.

20 So it's such a fine line when we're 

21 dealing with this -- we're trying to make sure 

22 that we don't throw the baby out with the bath 
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1 water. 

2 I think Jeff's suggestion is trying to 

3 solve for many components that have made the D/E 

4 ratio unappealing and basically disregarded in a 

5 lot of ways because it's like, oh, God, you're 

6 missing so much. It's just not even relevant. 

7 If you try to address that part of it, 

8 we get back on a table towards consensus. If we 

9 try to take into consideration all these other 

10 things -- and we have to ask ourselves -- I mean, 

11 put it on the table, people. If we're going to 

12 allow students that come from disadvantaged 

13 backgrounds who may or may not have had any 

14 family experience with borrowing money, from 

15 understanding the excitement of a great 

16 economically-advantaging job, then we shouldn't 

17 be allowing them to borrow at all because they're 

18 -- you know, that's the real question then.

19 So if we're not going to take 

20 borrowing to disadvantaged students off the 

21 table; which I don't think anybody's doing, like 

22 give everybody grants for that, then we have to 
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1 start moving forward in how to get to the right 

2 -- something that we can move forward on this.

3 MR. RAMIREZ: Neal?

4 MR. HELLER: Yes, Neal here. Isn't 

5 this better when we sit down, Jordan, because you 

6 and I were the only two standing.

7 (Laughter.)

8 MR. HELLER: It's much better. 

9 I think that the comments that Sandy 

10 made are right on point. As we've gone around 

11 and around and around with the debt-to-earnings 

12 ratio, I think Jeff has come up with a very 

13 simple solution with data that can actually be 

14 collected rather easily and that can be 

15 interpreted in a pretty fair way. And I had not 

16 heard that until he expressed it a few minutes 

17 ago.

18 But one of the things that we always 

19 looked at -- I mean, again, we're the -- we are 

20 the sector, the cosmetology schools, under21 reported income, unreported income. How do we 

22 adjust for that? I think that actually takes 
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1 care of it. 

2 One of the things that always 

3 confounded me when the earnings and the loan data 

4 came out was zeroes count in earnings even though 

5 we have no idea why they have no income. We know 

6 that they pay rent, we know that they have a car,

7 we know that they have other expenses and yet 

8 they have zero earnings. And that counts. And 

9 yet when we have a student; and I have a few, 

10 that actually don't take out a loan, don't get a 

11 Pell grant. They didn't count in the ratio. And 

12 to me that was patently unfair. Give us credit 

13 for having students that actually pay out of 

14 pocket if you're going to discredit us with 

15 students that, quote, "have zero income."

16 So actually I think that this is a 

17 pretty simple way and an effective way to take 

18 all of the stuff that we've talked about and take 

19 the language that Steve alluded to in terms of 

20 not even needing it anymore, the disclaimers, if 

21 you will, which I think are kind of worthless, 

22 out of the equation and have a very simple way to 
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1 address all of those issues with one simple way 

2 to do it. 

3 So, Jeff, thank you. That was great.

4 MR. RAMIREZ: Thanks, Neal. I have 

5 Tony and Jeff in the queue, but let me ask the 

6 group here, you all want to take a temperature 

7 check on that and see where we're at on it?

8 So let --

9 MR. ARTHUR: (Inaudible)?

10 MR. RAMIREZ: Yes, go ahead, Jeff.

11 MR. ARTHUR: Yes, and just to point 

12 out, Jordan, too, yes, it's effectively the 62nd 

13 percentile, but also we're talking about a very 

14 low 8 percent debt to earnings threshold. So 

15 we're talking about a pretty low threshold. 

16 And then when you look at the data, if 

17 you've got a less-diverse, more-lead school, I 

18 mean, that variance between the 50th and 62nd 

19 certainly I'm sure we'll see is extremely tight. 

20 For schools that are serving a diverse 

21 population and are subject to some of these 

22 things, it will be a little more meaningful. 
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1 It's not hugely meaningful on the salary, but 

2 it's enough to help mitigate some of those 

3 differences and something I think we could 

4 embrace.

5 MR. RAMIREZ: All right. Let's do a 

6 temperature check and let's see where we're at on 

7 that. So it would be clean this up considerably 

8 and doing 75 -- the top 75 percent of earners. 

9 Let's --

10 PARTICIPANT: Basically saying take 

11 the cohort, the entire -- the cohort, send it to 

12 -- those Social Security number to SSN and ask 

13 SSN to gather the data and send back the median 

14 and mean of the top 75 earners in that cohort.

15 PARTICIPANT: Rather than the 50 

16 percent like the Department proposed.

17 PARTICIPANT: Right.

18 PARTICIPANT: This is a little tougher 

19 than that.

20 MR. RAMIREZ: Laura, you have a 

21 clarification on that?

22 MS. METUNE: I feel like I was 
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1 listening to two different conversations. I 

2 thought what we were taking a temperature check 

3 on was the idea that we would look at a student 

4 population beyond those students for whom federal 

5 financial aid was provided. No?

6 PARTICIPANT: (Inaudible) into 

7 consideration.

8 MS. METUNE: You're saying that it 

9 takes -- I'm sorry.

10 MR. RAMIREZ: Neal, could you get to a 

11 mic?

12 MR. HELLER: I'm sorry. I think it 

13 just cleans up all of those other potential 

14 factors in one sweep, if you will, with Jeff's 

15 alternative. And I think it is a better 

16 alternative than what's on the screen right now, 

17 which was to only include those that were the 

18 higher echelon of grades in a program.

19 MS. METUNE: I'm still confused. So 

20 Jeff's proposal is to take the top 75 percent of 

21 federal aid participants? 

22 PARTICIPANT: No.
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1 MS. METUNE: But you're -- okay. 

2 Those seem like two different things.

3 MR. RAMIREZ: Jeff, could you restate 

4 it?

5 (Simultaneous speaking.)

6 MR. ARTHUR: I basically stated that 

7 we're taking the median of the 75 percent of the 

8 highest earners that are sent to the Department 

9 for a median wage return.

10 MR. RAMIREZ: All right. So let's do 

11 a temperature check on that. Let's see where 

12 folks are at.

13 Tony, you have a question?

14 MR. MIRANDO: Yes, so again I just 

15 want to make sure. So that's in lieu of you're 

16 saying the disclosures about the tips and the --

17 or that's staying in there?

18 PARTICIPANT: I said disclaimers. 

19 Don't call them disclosures. They're disclaimers 

20 in the notification.

21 MR. MIRANDO: Okay. Disclaimers. 

22 You're saying that that's -- are you saying that 
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1 you would consider that? Are you saying that can 

2 still stay in? What are you --

3 PARTICIPANT: We would give those up.

4 PARTICIPANT: Yes.

5 MR. MIRANDO: Just want to know before 

6 I give my thumbs.

7 MR. RAMIREZ: Yes, so -- but, Jeff, 

8 restate what it would include and not include.

9 MR. MIRANDO: I'm hearing -- I just 

10 wanted to clarify it.

11 MR. RAMIREZ: I just want to make sure 

12 everyone else does though. Can you do it again?

13 MR. ARTHUR: What it would include, it 

14 includes everything it does now.

15 PARTICIPANT: No. No, no, no.

16 MR. ARTHUR: You explain it. I don't 

17 know what he's asking.

18 PARTICIPANT: He's asking if the 

19 proposal on the table is to -- not just on the 

20 taking the 75 percent earners of the Title IV 

21 borrowers. But he's also asking whether in -- as 

22 part of this consensus or this temperature check 
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1 we would also -- you would also include the 

2 removal of the disclaimers on tips and geography, 

3 because to your point earlier in making the 

4 argument for this it would resolve those issues 

5 so you no longer need the disclaimers. That's 

6 the --

7 MR. RAMIREZ: It would clean 

8 everything up.

9 PARTICIPANT: It would clean 

10 everything up. Steven Finley made that point 

11 earlier.

12 PARTICIPANT: So I think our proposal 

13 is to --

14 PARTICIPANT: Well, he asked the 

15 question. 

16 PARTICIPANT: Yes.

17 PARTICIPANT: I won't say made the 

18 point. Sorry.

19 PARTICIPANT: So the proposal is to 

20 exclude those as something that we're going to 

21 give up in lieu of that consideration and -- yes.

22 MR. RAMIREZ: Is that correct?
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1 (No audible response.)

2 MR. RAMIREZ: Yes? Okay. 

3 So with that clarification and 

4 understanding, let's -- and this is a temperature 

5 check, right, so at least the Department could 

6 get a feel for where you're at on it. So let's

7 see a show of thumbs on that.

8 (Show of thumbs.)

9 PARTICIPANT: There are three at least 

10 --

11 MR. RAMIREZ: No. Yes, I got four. 

12 Yes, four thumbs down. 

13 Okay. All right. 

14 PARTICIPANT: I also want to say I --

15 I'm sorry. I just don't feel comfortable making 

16 a decision of a thumbs up or thumbs down right 

17 now without thinking through this. And it's late 

18 in the day, my brain is kind of fried, so --

19 MR. RAMIREZ: All right. So it's not 

20 necessarily a no, but -- and understand, that 

21 wasn't a formal (inaudible). That was just a 

22 temperature check. 
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1 Greg, you wanted to add something on 

2 that?

3 MR. MARTIN: Yes, just one question 

4 for those that proposed it. So we would be 

5 taking 75 percent, the top 75 percent of earners, 

6 right, in that cohort? And is there any 

7 disconnect between still using the debt for 100 

8 percent of the cohort but not the -- you don't 

9 see any?

10 PARTICIPANT: No, because it's average 

11 on average.

12 MR. MARTIN: Okay.

13 PARTICIPANT: (Inaudible).

14 MR. MARTIN: But the intent was --

15 your intent -- just to clarify, your intent was 

16 to maintain the debt the same way, right, just to 

17 take the top 75 percent?

18 PARTICIPANT: Yes, I think -- yes, I 

19 should say that this top -- the lowest 75 percent 

20 of debt, but I mean, how do you disconnect that? 

21 I think it's -- your median debt is your median 

22 debt of your cohort. I don't see any other way 
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1 to look at that, I guess.

2 PARTICIPANT: So debt of 100 

3 percent --

4 PARTICIPANT: Yes.

5 PARTICIPANT: -- of the borrowers?

6 PARTICIPANT: Yes, the debt's the 

7 debt.

8 MR. RAMIREZ: All right. So I have 

9 Johnson, Thelma, Neal and Laura.

10 MR. TYLER: Just very quickly, I think 

11 the repayment rate was a way to deal with some of 

12 these irregularities in terms of the debt-to13 earnings ratio and to -- for example, David was 

14 -- David Silverman was saying how his group was 

15 -- his school was poorly affected. And in fact 

16 his repayment rate is almost at the median level 

17 of the school. And that would have gotten him 

18 out of that. 

19 So I would like to see some more data 

20 about this idea which is -- was thrown out today. 

21 I really have to echo that debt is debt and 

22 there is yet another metric out there that is 
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1 designed to -- or the purpose here was to 

2 insulate those people, those schools that may 

3 have been incorrectly put in this group.

4 MR. RAMIREZ: All right. Thelma?

5 MS. ROSS: Thelma. I am not in 

6 agreement with the 50 percent, using 50 percent 

7 of the students completing a program. I think 

8 that if we're going to look at them, we look at 

9 everybody. But I also -- in this context. 

10 But I am curious to hear more, Jeff, 

11 and to get a better understanding of what you 

12 proposed, because I think it has some merit. I 

13 appreciate the rationale behind what you're 

14 attempting to do, but I do want to hear some 

15 more. That's why my hand -- my thumb was 

16 sideways.

17 MR. RAMIREZ: Okay. Neal?

18 MR. HELLER: Yes, Neal. Yes, I just 

19 want to again remind everybody -- because our 

20 issue from a cosmetology school standpoint -- and 

21 again one of the reasons we're all gathered here 

22 for this wonderful exercise is because of the 
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1 lawsuit that the American Association of 

2 Cosmetology Schools brought against the 

3 Department. These are real issues. The under4 reported income, the unreported income, the 

5 demographics, the type of students that we serve 

6 and etcetera, etcetera, etcetera, that you've 

7 heard me talk about for the last three sessions 

8 are real issues.

9 How we address them, everybody has 

10 kind of a thought. I mean, we obviously don't 

11 like the eight percent threshold. We'd like to 

12 see some sort of factor, some number factored 

13 into income which would increase the income to 

14 make up for what is clearly under or unreported 

15 income. 

16 And now for Jeff to come up with 

17 something like this which sort of wipes that all 

18 clean in one fell swoop and we don't have to deal 

19 with all of those issues individually or try to 

20 deal with it by articulating it in the written 

21 word and using real data and using real numbers, 

22 I think it's an opportunity. I think it's a real 
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1 opportunity for us to actually come to consensus 

2 on something and at least address what is a real 

3 issue. 

4 And it's not going to be addressed by 

5 a disclaimer. What does that do? We all pretty 

6 much know that students aren't going to read the 

7 disclaimers any more than they're going to read 

8 the disclosures or the warnings or etcetera. 

9 So here's a chance to actually have a 

10 -- data that means something and have numbers 

11 that actually mean something. And I just think 

12 it's an opportunity for us to come to consensus 

13 on something that actually makes sense and 

14 addresses a lot of the issues that many of our 

15 schools, and certainly the schools I'm here 

16 representing have. And they're real issues. 

17 Thank you.

18 MR. RAMIREZ: All right. So we have 

19 Kelly here closing out and then I'll make a quick 

20 comment. 

21 Kelly?

22 MS. MORRISSEY: I just wanted to 
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1 expand on why my thumb was down. I certainly can 

2 get behind the simplicity of what Jeff is 

3 proposing; I really enjoy that part of that, but 

4 I'm just wondering why 25 percent? I mean, I 

5 just want to know in the data where does it make 

6 sense to eliminate a certain floor of students 

7 and under which point would it even make sense to 

8 exclude them? Because when we're looking at an 

9 incomplete cohort, at what point are we really 

10 addressing the root problem by not including 

11 those students?

12 I mean, I know from looking at some of 

13 the data from the students I work with we have 

14 many, many students who just opt out of the 

15 workforce entirely. And this would be a way to 

16 address that issue, but I'm just not sure that 

17 the 25 percent point is the way to do that 

18 without seeing the data to inform that decision.

19 MR. RAMIREZ: Okay. And I think 

20 that's a good segue for what I was going to say. 

21 I think that this is a good place to 

22 end, right, because I think that the reason that 
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1 there were quite a few thumbs down is more just 

2 that there's a lot to think about with that. It 

3 was an idea that was just thrown out there for 

4 the first time.

5 So we could pick this up again 

6 tomorrow, give you a chance to really think about 

7 it and see where we go from there.

8 So to close out, are there any 

9 additional comments from any of the negotiators 

10 before we open it up to the public?

11 (No audible response.)

12 MR. RAMIREZ: Okay. Any public 

13 comment?

14 (No audible response.)

15 MR. RAMIREZ: Okay. No public 

16 comment.

17 And then what I would leave off with 

18 is that this week we want to try to leave with as 

19 many agreements as possible, if not a full kind 

20 of agreement. And I agree with what Mark was 

21 saying, is that we don't want to rehash arguments 

22 that have already been made, right? Either we 
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1 could make it work or we can't at this point. 

2 It's kind of hard to tell when we're going to end 

3 up going down a rabbit hole. 

4 But we are going to have to take some 

5 clear votes and in as much detail as we can on 

6 this language. And you did get some of that 

7 stuff today. So bear with us. Hopefully we get 

8 through the entire agenda by the end of Thursday.

9 Reminder about security. You might 

10 want to come in a little bit earlier tomorrow. 

11 It seems like it does take a little bit longer 

12 than anticipated. Seventh floor closed off. And 

13 we're going to ask folks to allow the Department 

14 staff to move you through to the bottom floor as 

15 quick as possible. So Amy's back there waiting 

16 to take the first round, so if you're ready --

17 PARTICIPANT: (Inaudible).

18 MR. RAMIREZ: I'm sorry?

19 PARTICIPANT: (Inaudible).

20 MR. RAMIREZ: Oh, yes, and please take 

21 your trash.

22 (Whereupon, the above-entitled matter 
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1 went off the record at 5:09 p.m.)

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