Committee Meetings - 03/16/22 1 

DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION

INSTITUTIONAL AND PROGRAMMATIC 

ELIGIBILITY COMMITTEE 

SESSION 3, DAY 3, AFTERNOON

March 16, 2022 

On the 16th day of March, 2022, the following meeting

was held virtually, from 1:00 p.m. to 4:00 p.m., before Jamie 

Young, Shorthand Reporter in the state of New Jersey.
Committee Meetings - 03/16/22 2 

PROCEEDINGS 

MR. WAGNER: Welcome back. I hope everyone had a good 

lunch [audio] noon session. Before we jump back to where we 

were before lunch, just have a couple quick reminders. One is 

that there will be public comment both today and tomorrow 

starting at 3:30. There will be no public comment on Friday. 

And if you are going to be participating in the public 

comment, please join the sessions 10 to 15 minutes beforehand, 

your assigned time, and log in under the name you are 

registered under. And one other reminder is that the in terms 

of this afternoon for the negotiators that the three minutes 

be used to be for new concerns, comments, or questions to help 

to try to get to a consensus. And that time should not be used 

to restate previously stated concerns and to be for things on 

the table. So that being said, I think based on my notes, I 

think and I'll turn it back over to Greg, I think we were on 

financial responsibility, recalculating composite scores, but 

I'll defer to Greg to where he wants to pick up.

MR. MARTIN: That's correct, Kevin, we're at, E, 

paragraph E, recalculating composite scores. And I know we 

were experiencing some difficulty with transmission, so 

hopefully that's not going to be too much of a problem here as 

we go forward. But if it is and my picture freezes up at an 

awkward moment, please forgive that. It's interesting how when 

your picture freezes, it stays at a moment you don't want, the 

look on your face is always like rather upsetting. So 

hopefully that won't happen here. So, we're starting with E, 

recalculating composite scores. And we have added here a 

reference to recalculating the composite score for the 
Committee Meetings - 03/16/22 3 

contributions and distribution under paragraph C1 10, which we 

were discussing prior to the break, some more information on 

that forthcoming, but don't have that right now. So, I 

understand what the concerns were related to that particular 

requirement. So, I don't usually need to reiterate those as it 

relates to recalculating the composite scores, since we've 

already spoken about those. And then the [audio] here is still 

under E in 3. If we look at three for a, if we can just arrow 

down just a little bit to get to three there, I think. Great. 

Could we, could you, Renee, could you arrow down just a little 

bit? There we go. Three. Thanks. I appreciate it. So, this 

change here, we've, a missing word here to this item. So, I'll 

just, this is from proprietary institution, the withdrawal of 

equity in the entity whose financial statements were submitted 

in the prior fiscal year to meet the requirements of 668.23 in 

the year following the change of ownership in the entity whose 

financial statements were submitted to meet the requirements 

of 620-600.20 G or H will be adjusted as follows. And that is 

all that is in E. I'm going to go through F and then go back

and comment since E was so, so brief. So, let's move on to F, 

which is reported requirements and after that I'll allow for 

comments and discussion. So, we're moving into F, which is 

reporting requirements. And the first change is in F1 

romanette four on page 17. And we see it there. And this is 

just we've corrected a cross-reference and clarified the 

language. So, for a contribution and distributions, again 

described in paragraph C1 10 of this section and/or repayment 

or short-term borrowing in paragraph D10 of this section, no 

later than ten days following each transaction. And then 

moving down to romanette five. We have revised here to provide 
Committee Meetings - 03/16/22 4 

for simpler language by removing the duplicate cross-reference 

and correcting reporting requirement to refer to publicly 

listed rather than publicly traded entities for consistency. 

So, five now reads for the provisions relating to a publicly 

listed entity under paragraph C6 of this section, C romanette 

six of this section no later than ten days after the date that 

such event occurs. And there is a change in romanette six, 

which is updating a cross cross-reference here to refer to D 

to D9. And we've also updated a cross-reference and then if we 

move on to romanette ten. In romanette ten here we've updated 

this item with cross-reference to C1, romanette nine and D11 

to reflect the fact that we now have both a mandatory and 

discretionary trigger tied to the loss of eligibility for 

Federal educational programs. So, intend for the loss of 

eligibility for another Federal education assistance program 

described in paragraph C1, romanette nine or D11 of this 

section no later than ten days following the action. And in 

looking at three in number in three C, we just added a missing 

word to the item here. So that's not much there and that is 

pretty much all for reporting. So, I'll open the floor for 

discussion at this point.

MR. WAGNER: Alright. Thank you, Greg. Thank you, 

Renee.

MR. MARTIN: It could be anything for E, anything for 

E and F.

MR. WAGNER: Yes, on E and F. Let's see. Kelli, I see 

your hand up.
Committee Meetings - 03/16/22 5 

MS. PERRY: Thank you. I have a couple of questions 

and then I just would like to make a statement. In as it 

relates to contributions and distributions for the ten days 

following each transaction. Does that, do you take those 

together so it would be ten days after the distribution? 

Because I don't know that you care about the contribution by 

itself, because what we're looking at is the contribution and 

the distribution. So, is it ten days following the 

distribution?

MR. MARTIN: Yeah. Taking the totality when the 

distribution occurs after the contribution.

MS. PERRY: Okay. So, contribution and distribution 

are looked at as one transaction as opposed to separate. 

MR. MARTIN: Yeah, I believe. Yes.

MS. PERRY: Okay. And then the second question has to 

do with, I think it's 12. So, it says for failure to meet any 

of the standards in paragraph B of this section not later than 

ten days. So, within B, if I'm referring to the correct B 

[ph], that's where the composite score calculation is. So, is 

the intent of the Department that once an institution school 

calculates their composite score when they're doing their 

audit, do they have to notify you within ten days, or is the 

reporting that they're doing through the Clearinghouse/eZAudit sufficient? Like do schools have to notify you if they 

know that they failed the composite score, I guess is the 

question? Because that's what this implies.

MR. MARTIN: Just, I'm having trouble with a little 

bit of break up here. So, you're looking at romanette 12?
Committee Meetings - 03/16/22 6 

MS. PERRY: Yes.

MR. MARTIN: Right before two for failure to meet any 

of the standards in paragraph B of this section. No later than 

ten days after the institution ceases to meet to meet the 

standard.

MS. PERRY: Right.

MR. MARTIN: What again? Could you, I'm sorry. I 

didn't hear you.

MS. PERRY: So, B includes the composite score. So,

the question is, do institutions have to notify you within ten 

days of calculating their composite score when they do their 

audits and do their calculations that they have not passed it? 

Or is the reliance going to be on when the audits and such get 

submitted through the clearinghouse/eZ-Audit?

MR. MARTIN: Steve, do you have anything to add to 

that? I'm going to see if Steve is, Steve can respond.

MR. FINLEY: So, you're talking about a, are we 

talking about a single audit submission that's been finished, 

but it's finished prior to the nine-month deadline for 

submission?

MS. PERRY: No, I'm saying like so when I do my audit 

right, I calculate my composite score. We go through, we have 

to provide it to the auditors. It's a piece of audit evidence 

that we give them. So, when I do that, I know whether or not 

my score is passing or failing. And so, I guess my question is 

this is saying that I have to tell you within ten days whether 
Committee Meetings - 03/16/22 7 

or not I failed. Or are you, or does that not equate and 

you're simply relying on the information that's submitted with 

the easy audit when you do that, when you redo those 

calculations?

MR. FINLEY: So, my understanding is we want the 

audit submitted with that calculation within ten days of when 

the institution has it in-hand, not necessarily you know, if 

that's earlier than the nine-month deadline, we want it 

earlier. And I don't think we were talking about a separate 

reporting of the composite score calculation.

MS. PERRY: Okay. So maybe suggest that when it says 

meets the paragraph, the standards of paragraph B that you say 

B2 and B3 and 4 and exclude 1.

MR. FINLEY: Yeah, we'll look at that. There's also 

just a possibility I'm wrong, Kelli, but we'll check on it. 

MS. PERRY: Okay. And then the last thing is, and I 

know I didn't get it in time for session two. So, I have 

submitted some language for number three as it related to a 

possible appeal process, as it related to the composite score 

calculations. And I know it's not in here, so. I guess, one, I 

just would like to understand the rationale for not having an 

appeal for the composite score, but two, I just want again to 

say, and I know we're not talking about the composite score in 

this neg reg, but it is a very important calculation, 

obviously. And I think we've talked about the fact that there 

are some challenges with it, and you know the Department has 

agreed, I think, that there are some challenges with it, but 

there's real concern over what was added in the last 
Committee Meetings - 03/16/22 8 

rulemaking as it relates to refinancing debt. Institutions who 

fail financial responsibility because ofMS. JEFFRIES: You have 30 seconds, Kelli.

MS. PERRY: -the fact that they've made those 

decisions to refinance debt, this is something that is going 

to potentially affect students. Schools are not potentially 

going to be making the right business decisions because it 

could change their calculation in their composite score. So, I 

would strongly encourage, if any way, if there's some way to 

add an appeals process for the composite score so that these 

can be looked at before a school is determined to not be 

financially responsible as it relates to sound business 

decisions that they've made relating to recalculating their 

debt.

MR. MARTIN: Thank you. I'll take that back.

MS. PERRY: Thank you.

MR. MARTIN: And I think I will say we, you know, as 

we've said before, that we were not, I understand that there 

are concerns about the composite score and that there is a 

great deal of appetite out there to have that looked at again, 

but it's not within the scope of this negotiation. So, I don't 

think we're going to entertain anything related to that, 

including the appeals process. But I will take it back.

MS. PERRY: Thank you.

MR. WAGNER: Thank you, Kelli, I see our esteemed 

advisor, Dave McClintock.
Committee Meetings - 03/16/22 9 

MR. MCCLINTOCK: I'm glad I got Kevin on board;

Brady's next. I just, a point of clarification, I think. 

Steve, you mentioned statements needing to be submitted within 

ten days. And I think it says there's a new requirement they 

have to be submitted within 30 days of the completion of the 

audit. I just want to confirm that that's. Accurate. So, it's 

not 10 days, it's 30 days, is that right?

MR. FINLEY: Yeah. Like I said, I was not sure.

MR. MCCLINTOCK: Okay. I just wanted to make sure I'm 

on the same page and I guess I would say I would just build on 

what Kelli said you know going through an audit, there's lots 

of testing and adjustments being made, and it would be tough 

to know exactly when the school determined that they failed a 

composite score or fell in the zone for the composite score 

for the prior year until the report gets issued. And so, to 

add requirements beyond the issuance of the audit, it would be 

just tough to track and understand. That's the purpose of the 

audit report being submitted.

MR. WAGNER: Thank you, Dave. Thanks for that. I

don't see any other hands. We'll turn it back to you, Greg.

MR. MARTIN: Great. And I want to say that we appear 

to be having some trouble with the with the audio with the 

video feed. You probably notice that you can't see all the, I 

like to call them Hollywood Squares, that come up here so that 

we are having some issues. We're trying to resolve that as we 

speak. But I think that audio, while there are some issues, is 

sufficient to continue. So, I will continue and we, I believe 

we finished F, and so we'll be moving to G, there are no 
Committee Meetings - 03/16/22 10

changes in G. So, I'd like to move on to H, which is audit 

opinions and disclosures. Thank you, Renee. And we have 

further clarified the language in this section to streamline 

reading and further express our intent. So just reading 

through this, this is even if an institution satisfies all of 

the standards of financial responsibility under paragraph B of 

this section, the Secretary does not consider the institution 

to be financially responsible if the institution's audited 

financial statements include an opinion expressed by the 

auditor that was adverse, qualified or disclaimed opinion 

unless the Secretary determines that the adverse, qualified or 

disclaimed opinion does not have a significant bearing on the 

institutions of financial condition. And that is the changed 

language there. And I'll just continue to read that because it 

carries over to the end. So, or include a disclosure about the 

institution's ability to continue as a going concern unless 

the unless the condition unless the condition has been 

alleviated. And then the Secretary may conclude that 

diminished liquidity, ability to continue operations, or 

ability to continue as a going concern has not been 

alleviated, even if the disclosures in any way provide that 

those concerns have been alleviated. So basically, just some 

wordsmithing there to clarify our intent and make that a 

little more streamlined. And that is everything that we have 

for H of the opinions and disclosures. I know it was rather

brief. But I will take any comments on H because I would like 

to not have too many paragraphs or at least finish out that 

section before we move to a different section.

MR. WAGNER: Thanks, Greg. Thanks, Renee. Does anyone 

have any comments on subsection H? Yes, Kelli.
Committee Meetings - 03/16/22 11

MS. PERRY: So, if, basically what this is saying is 

that your auditors are going to say that you don't have any 

issues as it relates to going concern or liquidity, diminished 

liquidity, but that the Department has the ability to say that 

you do. So, is there any way you could give some examples of 

why if the audit isn't producing that result, that you would 

feel that it was?

MR. MARTIN: I don't know that I have specific 

examples, I can try to get those from our audit group if that 

would be instructive. The purpose here is you know that simply 

because the individual auditor that even if that audit shows 

that they have been alleviated, the Department still has the 

discretion to say that it questions the end of this bill to 

continue as a going concern. It gives the Department, the 

Department's not held or tied by that particular auditor's 

evaluation. Steve, do you want to add to that?

MR. FINLEY: Yeah. Thanks, Greg. Since it's been a 

few minutes since I've put my foot in my mouth, my 

understanding is we are talking about situations where there 

will be some kind of paragraph from the auditor acknowledging 

that an issue was looked at in some detail and the Department 

is pretty much taking the position it's going to also look at 

that issue in detail and reach its own conclusion about the 

impact on the institution. But I don't think we're talking 

about situations where there's no comment from the auditor at 

all about there being an issue with liquidity or whether the 

entity's ability to continue operating as a going concern was 

not mentioned or something like that. I know there was a 

change in the audit standards for going concerns where it 
Committee Meetings - 03/16/22 12

became less of the auditor's opinion that was being expressed 

and more of the auditor's evaluation of management's assertion 

on that. And we're just trying to acknowledge that if we see 

these paragraphs, we're going to also take a closer look at it 

and have the Department make its own determination. 

MS. PERRY: Okay. That explanation made sense. I 

mean, it might just be the way that it's worded that was 

confusing. Thank you.

MR. MARTIN: I would go back and just to reiterate 

[inaudible] you know, in support of what Steve was saying, it 

says, you know, the financial statements do include the 

opinion expressed by the auditor. So, it starts with the 

opinion being expressed by the auditor. And then the Secretary 

can determine that adverse or qualified or disclaimed opinion 

does not have a significant effect. So, we have latitude that 

way as well. And so, it would only be where there was an 

opinion expressed and then that was resolved, and the 

Department has the discretion to conclude that it still has 

concerns. So, I think the way it's written, I mean, if there 

are suggestions as to how it could be worded better, we'd be 

willing to take those. But as I look at it, I think it does 

make it clear that this all stems from the opinion expressed 

by the auditor that was adverse, qualified, or disclaimed. 

Okay. Do we have anybody else?

MR. WAGNER: Kelli, you have your hand still up or?

MS. PERRY: Yeah, I just. I'll look at it. I just, I 

think we're getting hung up that we're saying that the 

Secretary determines that it has been alleviated. And then it 
Committee Meetings - 03/16/22 13

goes on to say that the Secretary has the ability to say that 

it hasn't been alleviated. I think it's just the combination 

of those two sentences together, and maybe there's just so 

many words in there that are crossed out that I'm not reading 

it right. So let me take another look at it.

MR. MARTIN: That could be. That's a problem for me. 

I know after a while you get so many, words that are that are 

crossed out, but. Yeah, you're talking about so the Secretary 

determines the diminished liquidity to continue operations or 

ability ongoing concern has been alleviated. Yes. So, the 

Secretary can conclude, even with the adverse opinion that it 

has been alleviated, we can also, as stated in romanette one, 

determine that the adverse or disclaimed adverse, qualified, 

or disclaimed opinion has no significant bearing. So, I think 

what it's really showing is that we have discretion about the 

opinion going both ways. But I agree with all the strikeouts 

it can get a little harrowing after a while to figure out 

what's there. But I think it works as written. But if there 

are suggestions to make the intent clearer than weMR. WAGNER: Thank you for that. Brief announcement, 

David Socolow is going to be coming to the table for state 

agencies for the remainder of the day. Are there any other 

comments on H specifically to H? Okay. Greg, back to you.

MR. MARTIN: Thanks. And again, there seems to be a 

little bit of problem even with the audio. So, I do apologize 

if anything breaks up. And if I have to ask anybody to repeat 

themselves, it's because it didn't come through. It didn't 

come through well. So, moving on to 174 past performance, 

there's nothing new in past performance. The next section is 
Committee Meetings - 03/16/22 14

alternative standards and requirements. And in here there's 

nothing in there as well, nothing new in that one either. And 

then the last section we move on to 176 change in ownership. 

And in 176, let's make sure I get this correct in 176, in 176C 

we have some changes. 

MR. FINLEY: Hey, Greg.

MR. MARTIN: So, let's go down to 176. Yes.

MR. FINLEY: Yeah, let me interrupt. Donna Mangold is 

going to be representing the general counsel's office on this 

issue. Can you wait until she confirms she's ready? She was 

having to change rooms and establish a new connection, I 

think. It should just be a second.

MR. MARTIN: Okay. No problem. We'll hold.

MR. FINLEY: And if she has trouble connecting, we 

can, I'll fill in till she gets here. It'sMR. MARTIN: Okay. Alright, fine. So, yeah. Okay. 

Well, we can go back to C. Steve, you are, you are going to 

stay on until it joins, correct?

MR. FINLEY: Yeah. Yeah. I'm sorry. I was justMR. MARTIN: Alright. No problem. No problem. So, in 

and then C this is acquisition debt. We have made a subsection 

to and added cross-references to ensure the language is 

sufficiently clear. So, this is now a subsection acquisition 

debt notwithstanding paragraphs B3, romanette one A through C 

of this section, the Secretary may determine that the 

institution is not financially responsible following a change 
Committee Meetings - 03/16/22 15

in ownership. If the amount of debt assumed to complete the 

change in ownership requires payments, either periodic or 

balloon that are inconsistent with available cash to service 

those payments based on enrollments for the period prior to 

when the payment is or will be due. And in paragraph D terms 

of the extension, we just note in D1 romanette one B that we 

have corrected the reference in this section to refer 

appropriately to the GAO. And that was in B the same day 

balance sheet or statement of financial position must be 

prepared in accordance with generally accepted accounting 

principles or GAAP accepted accounting principles, rather GAAP 

published by the Financial Accounting Standards Board and 

audited in accordance with Generally Accepted Government's 

Auditing Standards or GAGAS published by the U.S. Government 

Accountability Office. So, we did make that change there. And 

that is everything. 176 is severability, 177 seven rather, 

severability. So, I'll take any final comments on 176, which 

is change of ownership.

MR. WAGNER: Any comments on 176? Yes, Barmak, you 

have the floor.

MR. NASSIRIAN: Thank you. Just so I'm clear, the 

changes of ownership contemplated here or within sector, or do 

they involve change of control as well? Meaning, meaning the 

change from for-profit to nonprofit or otherwise?

MR. MARTIN: I'll ask Steve to confirm but I think it 

would be any change, of ownership action.
Committee Meetings - 03/16/22 16

MR. FINLEY: Yeah, it's any change of ownership 

resulting in a change of control under the statute and 

regulations.

MR. NASSIRIAN: So, this does include conversions, 

acquisitions, that cross sector lines?

MR. FINLEY: Yes, those come within that category.

MR. NASSIRIAN: Okay. If that is the case, I'm just 

curious about subsection C acquisition debt at the bottom. I'm 

not sure how the Department is going to calculate the amount 

of future cash available for a future payment, regular or 

balloon payment based on future enrollments. How would the 

Department do that? That's not a cash flow analysis. That's a 

forecast, right? The forecast based on another forecast.

MR. FINLEY: I could treat that as a rhetorical 

question.

MR. NASSIRIAN: It's not a rhetorical question.

MR. FINLEY: Yeah, I know, I understand, Barmak.

MR. NASSIRIAN: Let me be more specific. If this is 

intended to be a cash flow analysis that circumvents the prior 

conditions that what the Department appears to be 

contemplating here, quite rightly so, is the possibility, 

particularly now that I know you could cross sector lines, is 

the possibility that the new entity, however its categorized, 

could satisfy the requirements that you have already put in 

place with regard to the composite store and could go through 

all of the various financial responsibility metrics that 
Committee Meetings - 03/16/22 17

normally apply, but that it could still be of sufficient 

concern for the Department to flag it as not financially 

responsible. And what you're citing here is it's, I guess, the 

cash flow analysis that indicates the deal is not tenable. And 

my problem with it is that it really is based on true 

estimates that I'm not sure the Department would be in any 

position to either make or defend.

MR. MARTIN: I don't have any further clarification 

to make on that.I'll ask for some additional clarification 

from our people who deal with audits to see if we can get some 

more detail on that.

MR. NASSIRIAN: If I may, and I've said this before, 

I'll say it again here. One good marker that this thing could 

prove to be potentially problematic would be the involvement 

of former owners in the financing of the deal. To me that's

much more meaningful because what you don't have there, you 

don't have the validation by a third party who puts their 

wallet on the table to say this deal is tenable. So, so I'm 

really worried hereMS. JEFFRIES: Barmak, 30 seconds.

MR. NASSIRIAN: Okay, I'll stop.

MR. WAGNER: Thank you, Barmak.

MS. JEFFRIES: Before you get going, Kevin, I just 

want to let Steve and Greg know that Donna is in the meeting 

now. She has joined if you need to make that switch.
Committee Meetings - 03/16/22 18

MR. FINLEY: Yeah, I think it will happen with a 

change in the issue paper. Thanks, Cindy. I was jumping the 

gun before for some reason.

MR. WAGNER: No worries, Steve. Welcome, Donna. Okay, 

is there any other or any other comments related to 176? Yes, 

Kelli.

MS. PERRY: I can put this in the chat, but I think I 

echo as I read this, I think I echo Barmak's concerns on this 

because as I look at all the requirements in this change of 

ownership section, you're looking for financial statements for 

the, you know, the new owner, right? So, you don't have what 

those financial statements are going to look like consolidated 

unless you use the same-day balance sheet, assuming that 

you're combining it, assuming that means that you're combining 

the two there, but you don't have any income statement. You 

don't have a complete set of financial statements to determine 

whether or not the resources that that new institution has to 

pay their debt is sufficient. And I would question whether or 

not the Department would have the purview to determine whether 

or not they have the resources to pay that debt because that 

new institution could restructure a number of things after 

they emerge.

MR. WAGNER: Steve. 

MR. FINLEY: Yeah, so another concern I think that's 

addressed by this, but it's not I don't think it's the sole 

reason this is being proposed are transactions were pretty 

much all the equity is sucked out of an institution to try to 

finance the acquisition by the purchaser. And so, it's the 
Committee Meetings - 03/16/22 19

institution that's left with a lot of the debt on the books. 

But Kelli, I think we'll take your concern back too.

MS. PERRY: Yeah, if it's an equity concern, maybe 

there's a way to write it such that the equity the equity is 

used. I don't know.

MR. WAGNER: Thanks, Kelli. Barmak, something new to 

add?

MR. NASSIRIAN: I'm curious, the scenario that Steve 

just painted is, of course, the one to be concerned about. 

Would that entity then pass financial responsibility based on 

the preexisting metrics, even though we know that it would 

inevitably because that failure is not because of erroneous 

forecasts of future revenues, that the scenario you are 

attempting to address here is based on the fact that equity is 

gone. Right?

MR. FINLEY: And the situation I described usually 

results in a multi-year financial responsibility failure by 

the institution.

MR. NASSIRIAN: Right. So again, my interest is to 

make sure that this thing you have here is A) doing something 

which I'm not sure it is, and B) that something significant is 

lacking here to control for the kind of scenario the 

Department seems to be worried about, which is an entity that 

superficially satisfies the requirements of its composite 

score, but has nevertheless fundamental structural issues that 

should give you concern. And to me, the source of that 

financing is at the root of it, because essentially, I don't 

care what appraisal they put on the table, you have no third-
Committee Meetings - 03/16/22 20

party verification that the deal is tenable because it's the 

owner who is rolling the dice and hopefully sort of exiting 

over time. Maybe that's their game plan.

MR. WAGNER: Barmak. Dave, I see your hand up.

MR. MCCLINTOCK: Yeah, Barmak shared some of what I 

was going to say is I'm trying to figure out what is new being 

covered here. So, if it's debt coming up in the next year at 

the change of ownership, you do the acid test and you compare 

your cash to your current liability. So, if you have to pay it 

in 12 months, it would already be caught by the acid test 

ratio. And then the tangible net worth test historically 

identifies the issue that Steve was talking about. If it's a 

high, highly leveraged deal with significant debt and not 

enough equity, the deal would have composite or would have not 

met the tangible net worth test which would already be covered 

in other statutes, I think.

MR. WAGNER: Thanks, Dave. I don't see any other 

hands. Greg, would you like to take a consensus check on 

financial responsibility? 

MR. MARTIN: I would like to do that, but I have a 

couple of things I'd like to discuss internally. So, if it 

pleases the negotiators and the facilitators, I'd like to take 

about a 10-minute break here and just come back. I'd like to 

just discuss the acquisition debt issue, because I know it's 

been raised. I don't want to be dismissive of it and just move 

to a vote of consensus without having properly addressed it 

beyond what you see here. So, if I could request that.

MR. WAGNER: Yeah, that'd be fine.
Committee Meetings - 03/16/22 21

MR. MARTIN: Back at 2:00?

MR. WAGNER: Sure. We'll break, it's 1:40, almost 

1:49. We'll break at 2:00, we'll come back live at 2:00 p.m. 

Eastern so we can go offline. Welcome back. It's 2:08 Eastern. 

Back from our break. I'm going to turn it back over to Greg. 

Greg, take it away.

MR. MARTIN: Thank you. So, before we continue to a 

consensus vote here, I just wanted to clarify, I did get 

confirmation that we, and going back to, I want to make sure I 

get this, I get this correct. Under the discretionary 

triggering events in, yeah in 10 in C, I'm sorry, in D. That's 

correct [inaudible] hold on a second. [Inaudible] to be there. 

And now I've lost my place. Hold on [inaudible]

MR. NASSIRIAN: D10 is page 15.

MR. MARTIN: Oh yeah, okay. Institutions [inaudible]. 

Yes. I'm sorry. I just was drawing a mental, a mental blank 

there. I don't know why I'm having so much trouble with this. 

Right, that's correct. In D10, so where we, in the 

discretionary triggers where we have the institution's 

financial statements submitted to this part, I include a 

credit or loan borrowing from the last quarter of the fiscal 

year that was then repaid during the first two quarters of the 

next fiscal year. We did have, there seemed to be a relative 

amount of agreement among the negotiators that they'd like us 

to look at this again. And in the interest of reaching 

consensus and being attentive to the concerns of the 

negotiators, we are willing to remove 10. So, I just want to 

make that clarification. And then before we move on, I'm going 
Committee Meetings - 03/16/22 22

to turn it over to Steve to address some acquisition debt back 

in 176C.

MR. FINLEY: So what I, what I understand now is that 

we have had some situations in change of ownership reviews 

where the review of the same-day [audio] sheet appeared to 

yield a passing score and then that was due in large part to 

certain debt arrangements not being finalized that were that 

when they were put on the books a few days later for the 

acquisition debt, it was really clear that the entity should 

have failed the same-day balance sheet. And so, this is going 

to provide the Department with the ability to look at these 

finalizations for acquisition debt and take that into 

consideration when evaluating the institution's financial 

responsibility after a change of ownership. 

MR. MARTIN: Thanks. So, with that, I'll turn it over 

to the facilitators and we'll move to a consensus [audio]

MR. WAGNER: Thank you, Greg. Thank you, Steve. 

[Audio] I see one hand, Kelli, is there something new to add?

MS. PERRY: I just, they were going to clarify 

something for me in the [audio] section, I believe it was, 

F112 [ph], for reference, the composite score and having to 

notify within ten days when we're aware of a failing score or 

change the reference from B to B2 through 4 and exclude 1?

MR. MARTIN: Right. I don't think we brought that 

one, we may have neglected to discuss that when we were on 

break.
Committee Meetings - 03/16/22 23

MR. WAGNER: Greg, do you want to take a short break 

to look that over if you haven't or?

MR. MARTIN: Just give me, just, yeah, just give me 

about a minute offline, [audio] minutes offline, see if I can 

get through a chat on that one. Thank you.

MR. WAGNER: Can we stop the live feed? Okay, we're 

back live. It's 2:20 Eastern. Thank you for, that break. And 

I'm going to get back to Greg.

MR. MARTIN: Thank you. So, we had a question 

regarding before we move to vote for consensus on reporting 

requirements and that was in F. Just make sure we get this 

right now. F1 It's under romanette 11 and remember that we had 

some concerns about failure to meet the standards and 

originally, we had referenced all of B of this section and 

there were concerns about having to make these do these 

reports within 10 days as concerns composite scores since it 

is the Department calculating those. So, we have agreed that 

we will change the reference in here in in romanette 11 where 

it reads for failure to meet any of the standards of paragraph 

B that will now read for failure to meet any of the standards 

in paragraph B3.

MR. WAGNER: Thank you, Greg. We do have two 

comments, new comments. We have Barmak and then Kelli and then 

we can go ahead and do a consensus check. So, Barmak, you 

have-[audio]

MR. NASSIRIAN: Thank you. This is just a suggestion. 

I defer to the Department's legal judgment, whatever your 

decision is. But, Steve, the comment you made just alarmed me 
Committee Meetings - 03/16/22 24

because the scenario you are concerned, rightly concerned 

about, about potential changes to the same-day balance sheet 

data, because of the addition of new debts, obviously the 

Department should have authority to fail a program or to take 

action against it if that is so. I'm just concerned that the 

acquisition debt language here seems to restrict that only to 

those cases where cash flow projections don't support the 

deal, where, in fact, this particular scenario you mentioned 

had to do with the addition of a debt that wasn't accounted 

for on the same-day balance sheet. So however, you resolve it, 

that doesn't change my intent to support this language, this 

section. But I just wanted to make sure that this doesn't end 

up actually restricting the Secretary from taking action in 

those cases, because it only seems to address changes that are 

due to you know financial shift as a result of enrollment 

changes, soMR. MARTIN: Thank you, Barmak.

MR. WAGNER: Thank you, Barmak. And we have Kelli. 

Kelli, you're up.

MS. PERRY: Brad and I both put this in the chat, but 

with the removal of D10, there needs to be a change in the 

reporting section F [inaudible] romanette four to remove that 

part about the short-term borrowing.

MR. MARTIN: Right. Yeah. Thank you for pointing that 

out. That was in my head, and I was trying to think of where 

that was, but yeah.

MS. PERRY: The other thing there too though, in the 

last sentence it talked about not later than 10 days following 
Committee Meetings - 03/16/22 25

each transaction. I think that needs to be changed to the 

transaction because you had said earlier that a contribution 

and a distribution were considered one transaction. So,

there's not multiple anymore.

MR. MARTIN: Thank you.

MS. JEFFRIES: Greg, I'll just point out, I think 

Kelli stated it, but both of those things are in the chat, so 

you'll have reference to them.

MR. MARTIN: Okay, great, thank you.

MR. WAGNER: Thank you, Kelli. Thank you, Brad. Thank 

you, Greg. I think it's time for a consensus check on 

financial responsibility. Does that make sense [audio]?

MR. MARTIN: Yes. Yes, absolutely.

MR. WAGNER: Okay.

MR. MARTIN: I apologize for the back and forth 

there, everything. I just wanted to make sure we got 

everything in before- [audio]

MR. WAGNER: No problem. I wantMR. MARTIN: Thank you very much.

MR. WAGNER: You were just freezing a little bit. I 

want to make sure you weren't speaking, so.

MR. MARTIN: Oh, no.

MR. WAGNER: We're going to go ahead and take a 

consensus check on issue paper number four, if you could 
Committee Meetings - 03/16/22 26

please vote with your thumbs and hold them up high so we can 

see them. I'll go through a roll call and if we are if there 

are any dissents that, please articulate what your issue would 

be, how will you be able to reach consensus and focus on a 

list of needs. But before we go to that, let's see, let's take 

a consensus check. So, everybody hold them up so I can see 

them, and I'll announce them [audio]. Let's see, we have 

Kelli. She's voting for it sideways. Brad is down. Anne is 

voting for. Jamie is for. Sam is for. Marvin, David is for. 

Barmak is for. Carolyn is for. Yael is for. [Inaudible] 

Jessica is a yes, Amanda's a yes. Ernest is a yes and Ashley 

is towards the side, which is for consensus. So, thank you for 

that. Brad, if you have something you'd like to articulate on 

what you'd need to reach consensus, or do you have a list of 

something that would make that possible? 

MR. ADAMS: Yes, so thank you, Kevin. As discussed 

throughout the past three sessions, there's a couple pieces of 

the mandatory triggers and a few in discretionary that I'm 

struggling with. On the mandatory, in particular, the Gainful 

Employment revenue reduction of 10 percent, which could equal 

one program with no consideration of any bottom-line expense 

reductions and impacts on the bottom-line income. The fact 

that any credit event, even if it's a short-term borrowing 

line of credit being pulled by a bank, is significant enough 

to create a mandatory trigger. And the fact that any lawsuit 

from a state, regardless of materiality, is considered a 

mandatory trigger. On the discretionary trigger, my issues 

were the two discretionary automatically being a mandatory, 

especially when discretionary triggers like changes in Title 

IV revenue, which include increases and high dropout rates yet 
Committee Meetings - 03/16/22 27

are still yet to be defined and really no one knows what those 

mean. So those are my main concerns in order to get me to a 

sideways vote.

MR. WAGNER: Thanks, Brad. Okay. So, I think we're 

onto issue paper number five, changes of ownership. So, I will 

turn it back to Greg to start going through them.

MR. MARTIN: Thanks a lot, Kevin. And just want to 

reiterate that Donna Mangold is here for representing the 

Office of General Counsel for the Department. She'll be taking 

over for Steve Finley on this issue paper. And before we get 

started, I just want to thank everybody for the discussion on 

financial responsibility, even though we did not reach 

consensus and we had a lot of good discussion, got a lot out 

of it. The Department got a lot of ideas going forward. So 

again, I want to express my appreciation for all of your 

efforts there. So, we are moving on to issue paper five, which 

is a change in ownership and control. And the first place that 

we have changes here in, under our definition, is 600.2. 

Moving to the definition of a nonprofit institution. So, let's 

go there. And for those of you following on paper, that would 

be the top of page three. So here we are, a nonprofit 

institution. There are changes here to the first part of the 

definition that are intended to be non-substantive changes 

just to further clarify, clarify the language. And that begins 

with in one, romanette two, we have proposed some additional 

changes that will further clarify the meaning of these 

requirements. The language says that nonprofit institutions 

are not going to be an obligor, on a debt owed to a former 

owner, and will not maintain a revenue sharing agreement that 
Committee Meetings - 03/16/22 28

is inconsistent with reasonable market value with any party, 

including a former owner, and will not maintain leases that 

are inconsistent with fair market value with a former owner of 

the institution. So just to go through this section, again, 

this is a definition of a not-for-profit of a nonprofit 

institution as an institution that meets the requirements in 

either paragraph one or two of this definition and paragraph 

one, a private nonprofit institution that is owned or operated 

by one or more nonprofit corporations or associations, and no 

part of the net earnings benefits any private, individual 

entity or individual, as determined by the Secretary, is 

legally authorized to operate as a nonprofit organization by 

each state in which it is physically located, and is 

determined by the U.S. Internal Revenue Service to be an 

organization which contributions are tax deductible in 

accordance with Section 501c3 of the Internal Revenue Code, 

except that in determining whether the requirements of 

paragraph one romanette 1A of this definition have been met, 

the Secretary considers the entirety of the relationship 

between the institutions, the entities in its ownership 

structure and other parties by way of, for example, for 

purposes of participating in the Federal Student Aid programs, 

a nonprofit institution is generally not an institution that 

is an obligor, either directly or through any entity in its 

ownership chain on a debt owed to a former owner of the 

institution or natural person or entity related to or 

affiliated with the former owner of the institution. And then 

moving into B, either directly or through any entity in its 

own chain enters into or maintains a revenue sharing agreement 

with any party, including related or unrelated parties, or a 
Committee Meetings - 03/16/22 29

former owner of the institution, or a natural person or entity 

related to or affiliated with the former owner of the 

institution unless the institution demonstrates that payments 

under the revenue sharing agreement are reasonable based on 

the market price for such services or materials, including 

demonstrating a reasonable relationship to the cost of the 

services or materials provided or, in C, is a party, either 

directly or indirectly, to any other agreements, including 

lease agreements with a former owner of the institution, or a 

natural person or entity related to or affiliated with the 

former owner of the institution under which the institution is 

obligated to make any payments unless the institution 

demonstrates that payments under the agreement are comparable 

to payments in an arm's length transaction at fair market 

value. So, there's a lot there. So, we are at the end of the 

definitions of 600.2. So, I'll stop there and open it up for 

discussions or comments.

MR. WAGNER: Thank you. Greg, real quick, before we 

get to the negotiator’s comments, Johnson is coming back to 

the table with legal aides, so welcome back, Johnson. And then 

let's see, we have Carolyn, you're first. So, you have the 

floor.

MS. FAST: Thank you. We are concerned about the 

addition of language in this section that refers to fair 

market value and reasonableness, because those are exactly the 

sorts of things that have been used to in the past where we've 

seen conversions that were actually the exact kinds of things 

that we're trying to prohibit with this rule. So, the new 

language would permit institutions that to obtain nonprofit 
Committee Meetings - 03/16/22 30

status in a conversion deal that includes ongoing payments as 

long as those were, market prices are reasonable. But this 

sort of valuation is easily manipulated. And so, the new 

language is creating a safe harbor for the exact type of deals 

that are problematic and deals in which the value of the 

institution or services is inflated at the time of the 

purchase. What we would suggest to address this concern is to 

return to the language that was proposed in the earlier 

version of the issue paper, which provides flexibility to the 

Department to look at a situation and it doesn't prohibit all 

situations where there is an agreement with a former owner, 

but is they're generally going to be considered problematic. 

But we strongly suggest returning to the former language and 

eliminating in B and C the language that says unless, 

everything after the unless, because that is what we consider 

to really render the whole provision useless as a- [audio]

MR. MARTIN: [Audio] or ask Donna rather to, to add 

more if she feels the need to do so. We, in looking at this, 

you know we can't anticipate every circumstance that's going 

to come up. So, we believe that this language gives us more 

leeway to apply the requirement where appropriate. And we also 

want to point out that we have expanded the application of the 

provision beyond just the former owner and to instead address 

any revenue sharing agreement with any party, which does allow 

us to assess a broader range of institutional agreements. But 

I'll ask Donna if she wants to comment here.

MS. MANGOLD: My comment would be that we do assess 

the reasonableness of what is being put before us to 

demonstrate market value, because there has to be some space 
Committee Meetings - 03/16/22 31

for looking at a transaction that just because it's with the 

former owner or an affiliated party may make sense. For 

example, a lease, you know, you have a building and it's 

already outfitted and maybe there's no market to sell the 

building and to not allow that lease to go forward could 

potentially cause problems. But what we do is we require 

valuations. We vet the valuations for reasonableness. We have 

rejected valuations that we deem to be not reasonable; the 

comps are wrong; the market size is wrong. We have rejected 

valuations of leases because of the credentials of the party 

doing the valuation was not adequate. So, we really do have a 

lot of flexibility here and we are simply not going to take a 

piece of paper that says this is the market value and deem 

that to be an adjudication of market value. So, we wrote it 

this way to try to build in as much flexibility for us as 

possible, but to allow that there may be certain circumstances 

when related party transactions are at market and are 

appropriate.

MS. FAST: Would it be okay for me to respond again,

or should I get back in the queue?

MR. WAGNER: You can respond back. You still have 

some time remaining.

MS. FAST: I was just going to say, thank you, sorry. 

It just seems to me that there is more flexibility in the 

language that was used in session two, which we did not have 

this objection to, because it still said it still gave the 

Department the ability to make a determination that just 

didn't create sort of this sort of weird presumption that we 

see here, that if you know someone comes in and can point to 
Committee Meetings - 03/16/22 32

you know one person or whatever that says this is fair market, 

then that was going to be okay. So, we suggest that there's 

actually more flexibility in the other in the prior version 

and [audio]

MR. WAGNER: Thank you, Carolyn. Did you get that 

last part? It kind of cut off for me.

MS. MANGOLD: It cut off for me too. But I think we 

can go back and look at that at the second version language. 

We can go back and look at that language again. I just don't 

have it in front of me right now.

MR. WAGNER: Thank you, Carolyn. Thank you, Donna. 

Okay. Let's see, we have Yael, you're up.

MS. SHAVIT: Thanks. I'd like to just agree with what 

Carolyn said, that I think the previous language did give the 

Department more flexibility, and it did it without creating 

what to me appears to be an incentive for precisely the type 

of misconduct that we've seen. And you know, speaking as a 

representative of the attorneys general, that our offices see 

consistently with these types of [audio] problematic 

conversion. Where the creation of continued relationships with 

former owners that can create incentives for the operation of 

purported nonprofits for the benefit of the former owners, I 

think is something that should be dissuaded. And I think 

that's one of the reasons why this issue is on the agenda for 

this rulemaking. We know that valuation is subject to 

manipulation. We know that's difficult. To the extent that the 

Department has expectations about how to establish valuation, 

I'm also concerned that the Department will include language 
Committee Meetings - 03/16/22 33

that's you know both this specific, without including a clear 

outline of third party, unbiased, extrinsic evaluations of 

fair market value that institutions would be required to bear 

the burden of demonstrating here. But my very strong 

suggestion, I'd like to note that this is language, the 

addition of which is deeply concerning to me, my very strong 

suggestion is to revert to previous language here. I think the 

additions, though I understand that they're well-intentioned, 

create incentives for really problematic behavior.

MR. WAGNER: Thank you, Yael. Let's see. I'm just 

making sure. Okay, we have, Kelli you're up.

MS. PERRY: Thank you. I am going to echo the thought 

of going back to the language in the previous version, session 

two. We are concerned that with the addition of in romanette 

2B the concept of agreement with any party, including related 

or unrelated parties, that this may have unintended 

consequences to private nonprofits as it relates to some of 

the agreements that they have. You know, there are agreements 

that they have where third parties have helped them maintain 

and launch you know online programs, including HBCUs. There 

are many agreements as it relates to revenue sharing 

agreements, as it relates to food service or bookstores or 

things like that. You know, there's large research 

institutions have partnerships with or relationships with LLCs 

for different types of subsidiary structures, etc. So, I'm 

concerned that the addition of this language will create 

unintended consequences there. So again, I would agree with 

the other two negotiators that we revert back to the language 

from the- [audio]
Committee Meetings - 03/16/22 34

MR. WAGNER: [Audio] Kelly. Let's see, Brad. I see 

you, you're up next. 

MR. ADAMS: Yeah, I'd like to just start with a 

general comment and basically you know state on the record 

that you know I don't know how many folks on this committee 

have ever been through a change of ownership within the higher 

education realm. I have not. I've been through several outside 

of higher education. And I will tell you, reading the regs 

here are extremely complicated. And I really think we could 

have used a corporate merger and acquisition advisor on the 

committee like we requested in week one to help us through 

some of these complications. So, with that, I just wanted to 

ask a question on number six, right above this nonprofit, 

private, nonprofit definition. Again, it's because of the 

burdensome impact that this is going to have. And I just want 

to make sure the Department has a real good reason for making 

this change that we're going to now require that if your 

online campus differs from your main campus, you are going to 

now require that to be changed, which means you have to seek 

approvals from accreditors and states and other entities to 

come into compliance with this requirement. There's going to 

be a lot of paperwork and it's going to be a headache, and I 

honestly don't know what the difference is on why we're doing 

this item for having the distance ed be associated with the 

main campus or associated with these administrative offices if 

it's in a different state. Is there a reason that we're making 

that change?

MR. MARTIN: Are you talking about six, in six, Brad? 

MR. ADAMS: Yeah. 
Committee Meetings - 03/16/22 35

MR. MARTIN: Yeah [audio] 

MR. ADAMS: [Inaudible] yeah.

MR. MARTIN: I'll ask Donald to comment. But it is we 

feel that you know for the institution that offers the oncampus programs and distance that we need with the offering of 

distance education programs, we those need to be associated 

with the main entity of the institution. So, you know, in 

being able to hold the institution accountable for those 

programs, we believe it's important to make sure that those 

are associated with the main campus of the institution. Donna, 

do you have any comment?

MR. ADAMS: There's no reason else other than you 

think it needs to be, there's no legal reason why it has to 

be?

MR. MARTIN: [Inaudible] a legal reason. I would 

yield to Donna on any legal.

MS. MANGOLD: No specific legal reason. But it just 

in terms of accountability to actually have a location, have a 

deemed location.

MR. ADAMS: Okay. And then the second question and 

just confirming because this was discussed in week two that 

the reason why we changed the definition in one romanette one 

to a private nonprofit institution is because we're now 

excluding publics from the definition now, is that the reason 

for the change?
Committee Meetings - 03/16/22 36

MS. MANGOLD: [Audio] consistent with the statute. 

[Audio] statutory language.

MR. ADAMS: In I think this is section 103 313 but 

I'm just confirming, is by this change, publics are now not 

subject to the definitions in section one, is that accurate?

MS. MANGOLD: Brad, I'm sorry I missed the question. 

That they are or aren't? You're looking at 600.4?

MR. ADAMS: Let's see, I'm right here in thisMR. MARTIN: Definition of a nonprofit institution 

still, right, right, Brad? Number one.

MR. ADAMS: Yeah, it's above six [interposing] it's 

one romanette I right above that. [Interposing]

MR. MARTIN: The definition of- [audio]

MR. ADAMS: It used to just say a nonprofit. Now we 

added the word private.

MS. MANGOLD: Hold on. It was to, I see where you're 

going and I need to double check on something, because what 

we're trying to do is distinguish that private nonprofits had 

to be 501c3 and other and publics do not. I need to, I need to 

take that back and take a look at it, Brad.

MR. WAGNER: Okay. Thank you, Donna. Thank you, Brad. 

Let's see, I see, Johnson, you're up. 

MR. TYLER: Yeah. I just want to go to this thing 

about the market price reasonable and how difficult that is to 

assess. I mean, there's, you know, unlike even power plants 
Committee Meetings - 03/16/22 37

and cars and all this stuff, there's not a huge market for 

for-profit institutions out there to make this sort of 

assessment. I appreciate Donna's statement that the Secretary 

takes this very seriously, but I think there's more 

flexibility in the original provision in issue paper two is 

better. And I just want to add one other example here of what 

can happen. There was a school in Colorado where the owner 

created a loan, a loan agreement where he carried $400 million 

of revenue. This was in 2012. The school was certified as a 

nonprofit by the Department of Education and the IRS. The 

Colorado Attorney General then sued them for lots of deceptive 

stuff and the result was, in 2020, so six years after the 

suit, a $3 million settlement and about 10,000 students were 

affected by the deceptive practices that were going on in that 

institution. So, you know looking providing more flexibility 

for the Secretary to look into whether something actually is a 

real transaction is really important. I think the new language 

is detrimental to that rule. Thank you.

MR. WAGNER: Thank you, Johnson. Before we get to 

you, Barmak, I do see Donna's hand up.

MS. MANGOLD: I just want to clarify that the 

situation that you're talking about, the Department initially 

took the position toward [audio] when it actually did its 

review of that requested nonprofit conversion. It was denied 

at that point in 2016. Eventually, there was a complete change 

in the transaction afterwards, and it was only after 

significant changes took place that the decision was made to 

allow nonprofit status. So, at the point of $400 million, it 
Committee Meetings - 03/16/22 38

was of goodwill essentially, it was not approved as a 

nonprofit. So, I just wanted to make sure that was clear.

MR. WAGNER: Thanks for that, Donna. Johnson is that 

[audio]?

MR. TYLER: Yeah, I didn't read that part of the 

decision. It's 150 pages. The judge spent a lot of-. 

MR. WAGNER: Thanks, Johnson. Let's see. Barmak, 

you're next.

MR. NASSIRIAN: Yeah, I want to echo the concerns 

that have already been expressed by Carolyn and Yael and 

Johnson and Kelli about the addition of this language. I have

to say, you know it's always nice in a capitalist system to 

create the altar of market-based pricing, but it again strains 

credulity that in these kinds of one-off transactions that 

anybody is in any position to question an actual deal on the 

basis of what comparables. There are no comparables. 

Somebody's handing over an entire campus to a fake nonprofit. 

And the two parties seem to be in agreement to exchange some 

cash. I don't see the Department being able to refer to any 

objective reality to contest that. It is, and again, the 

language allows for those exceptional cases that I do know can 

occur where you don't want to disrupt somebody's operations 

because it generally describes those transactions as suspect. 

That is the right description. This is as close to a deal 

breaker as anything the Department has done in this rulemaking 

for me. So, I would really encourage you to remove the 

additional qualifier on this, the institution demonstrates, 

etc., etc. I would also suggest that Kelli sort of brought 
Committee Meetings - 03/16/22 39

this up and I agree with her that certainly transactions with 

unrelated third parties that are charitable or below market 

should be accommodated. Transactions that are that go in the 

opposite direction by a nonprofit, even if it's with an 

unrelated party, are problematic. If we had a robust Internal 

Revenue Service, those transactions would be flagged as 

violating intermediate sanctions as excess benefit 

transactions. And because the Department of Education tends to 

be the only financier of these potentially fake nonprofits, I 

would actually modify the previous language to capture 

transactions with unrelated parties if they represent excess 

benefit transactions. This would accommodate Kelli's concern 

that if somebody wants to do a charitable donation of services 

that's okay and they're not related to the former owners, 

that's fine. But if the entity is being set up to benefit some 

third party, the Department is the only, remember, these are 

not viable nonprofits. Nobody else except the Department is 

giving them a dime. And therefore, the Department must, must 

take the position of a donor, not of just an agency shoveling 

money out the door, and therefore excess benefit transactions 

that simply require a penalty by the covered individual should 

actually result in loss of eligibility by the sole funder of 

these entities, which is you.

MR. WAGNER: Thank you, Barmak. Let's see, Jamie.

MS. STUDLEY: I'm happy to defer to Kelli and others 

who want to speak specifically to that. Do you wantMR. WAGNER: It's up to you, Jamie. Or you can go 

ahead.
Committee Meetings - 03/16/22 40

MS. STUDLEY: Not seeing them react, I'll weigh in. I 

think that Carolyn made an interesting point when she used the 

word presumption as we're struggling with all of this. It 

seems to me that the regulation actually ends in to, the point 

after it says the Secretary considers the entirety of the 

relationship between the institutions, etc. and other parties, 

period. By way of example, are truly examples that go to the 

Secretary's determinative determination about the entirety. 

And so, it doesn't change what the Secretary can do, but it 

does change the tilt. Now, is it, you know, who's arguing 

which, you know, in what order? So, I think it is important as 

a signal, but it doesn't, this is a neutral comment, to what 

degree does it really work to balance appropriate arrangements 

and arrangements that the Secretary should determine don't 

fit? Excuse me, I apologize. Barmak is focusing on how to 

solve a particular set of problems, and others; he was the 

most recent. One of the things I'm also trying to do is think 

about where it will bite on arrangements that should not be 

burdened or complicated and whether those can also be handled 

in the entirety or whether there should be more changes. For 

example, we are looking at an institution separating from a 

public institution, and the public institution may want to 

capture some of the value that the entity is taking to be 

repaid to the people if that piece with the [inaudible] on 

both sides decides to part. If I'm the school within a museum 

and we all agree that it makes more sense for my school to be 

a separate nonprofit entity from the nonprofit museum should A 

be changed is an obligor on a debt owed to a former for-profit 

owner of the institution? Or will the Department's answer be, 

we can look at all those variables within the entirety of the 
Committee Meetings - 03/16/22 41

relationship, we don't need to specify here? So, this is 

really in the as applied and what is regulation and what [30 

seconds] descriptive that the Department feels would be 

helpful to put into the regulations so we understand the 

context and what they will look at for entirety. But what 

legal weight does it have either way? Thank you.

MR. WAGNER: Thank you, Jamie. Let's see, I see 

Kelli, you're up next.

MS. PERRY: Jamie, thank you for the offer to skip. I 

actually wanted to bring up something else. So, the number 

[audio] above the nonprofit definition. Brad, I didn't catch 

this the first time around. I'm glad Brad brought this up. But 

when it says that the distance education program are 

associated with the main campus, what is associated mean? So, 

for example, you know you have your main campus, and you might 

have a branch campus and that branch campus might be solely 

responsible for your distance learning program. So, doesn't 

then fall into what you're proposing here, because it's not 

technically the main campus? So, I guess the question is what 

is associated with? And if the distance ed programs are being 

run out of the branch campus, this could potentially create 

problems for a lot of private nonprofits as well. So, I don't, 

I kind of agree with Brad. I'm not sure what the intent of 

what this is trying to do, because it may create unintended 

consequences for distance programs in private nonprofits.

MR. MARTIN: I'll take back the question about a 

branch campus as opposed to you know a true institution that 

meets the true definition of a of a branch campus with its own 

administrative authority. And I don't know if I can clarify 
Committee Meetings - 03/16/22 42

that now, but I will try to get clarification on that. I still 

want to reiterate that that with the increasing popularity of 

distance education, that the Department feels it's necessary 

to be able to associate you know programs with an institution 

and with the main, where an institution has several additional 

locations that it still must take responsibility for its 

distance education programs. This is especially important 

where you have you know students from different states 

attending via distance, some type of telecommunication. So, we 

do have a real interest in being able to know where those 

programs are. But I will take back the question about as it 

relates to a true branch campus.

MS. PERRY: Thank you.

MR. WAGNER: Thank you. Brad, you're next.

MR. ADAMS: And my comment was similar to Kelli’s,

and I'll add to it. I'm getting significant pushback from my 

constituency group because our read based on what Donna just 

said and read of the text is that if distance education is 

taught out of a branch campus, you've got to go through all 

the state and accreditation and programmatic approvals to move 

that to your main campus. And so, I'm hopeful that that can be 

changed. If not, given the site visits and the amount of 

paperwork we're talking about here, I'm getting asked if we 

could at least get a one-year period of time to go through the 

process of getting this done because it is going to be 

incredibly burdensome to do this. So, at a minimum, if you're 

going to force this, we would like at least a year, year, I 

guess, policy to let us get into compliance. 
Committee Meetings - 03/16/22 43

MR. WAGNER: Thanks, Brad. Alright, let's see. 

Barmak, you're next.

MR. NASSIRIAN: On this issue of location, I had 

originally submitted language that the Department chose not to 

take. That's fine. But let me just note that in setting up a 

system that ties location to where the institution is as 

opposed to where its students are, you can set up a form of 

forum shopping that is probably not advantageous to program 

integrity because it's very easy to set up a mascot campus in 

a state of your choice and then reach out and enroll huge 

numbers of students elsewhere. I do think it makes some sense 

to whatever extent the Department still believes the triad is 

meaningful and state authorization add something to ensure 

that to do a look-back provision and simply say you know 

wherever you had the largest numbers of students during the 

last five years or whatever, some look-back that ties state 

supervision, direct state supervision, as opposed to 

circuitous and generally ineffective reciprocity agreements to 

where the students are. Because you know the state of Iowa 

didn't have a lot of skin in the game when a particular 

institution went from 600 students to 60,000 students, they 

were not in Iowa. They were in California and New York, most 

of them. So, tying that level of state authorization to where 

the students are. And again, I realize it fluctuates. It may 

change year to year. So do a gross kind of look back and tie 

it to where the most students are because the AG in that state 

is more likely to be your ally and the institution is more 

likely to be perceived as a problem if it's engaging in 

predatory practice. You know, the AG in Iowa may not have the 
Committee Meetings - 03/16/22 44

resources to protect people in California. So just for what 

it's worth.

MR. MARTIN: Thanks.

MR. WAGNER: Thank you, Barmak. Jamie, you're next.

MS. STUDLEY: Just to repeat what I put in the 

sidebar, if the Department could help us understand what the 

problem is in identifying what Donna mentioned, we need to 

have a deemed location or we need to have clarity about it. If 

we can understand what the problem is that you've seen, then 

we might be able to be more helpful about how to do it without 

the kind of burden that Brad was talking about for stable 

situations where D/E is, the responsibility for it is assigned 

to do that efficiently. I credit that there is something that 

led you to feel a need to do this, but it's a little hard to 

craft the solution without knowing what ties it.

MR. WAGNER: Thanks, Jamie.

MR. MARTIN: With respect to that question, you know 

we with any programs, it's important for us to be able to 

especially with institutions, to have many additional 

locations, to be able to trace back programs to where they 

actually are based. And especially with the increasing advent 

of online program managers, things, things like that, where we 

have a lot of other agreements with other entities. We believe 

it is important to be able to, to track that back to the main 

institution. And so, we do have some concerns there. I can 

flesh that out for you more. I will take back the concerns 

you've expressed about this, and we can have a discussion 

about it. And maybe I can come back a little more tomorrow 
Committee Meetings - 03/16/22 45

about where, if any, where the Department is willing to go on 

this. But I certainly have heard everybody's considerations 

and I promise to discuss that.

MR. WAGNER: Carolyn, I see your hand. Jamie, is 

that, are you finished with your comment?

MS. STUDLEY: I think Greg's comment was helpful and 

maybe there's something that could be done with either. I 

mean, first of all, the main institution is always ultimately 

responsible, including for what happens at its branches. But 

maybe there is some designation or clarity that could be 

helpful with you. And I know that at least as accreditors, 

whatever a third party is doing, institution is responsible 

for it. So that doesn't allow for us to distribute the 

identity. But whether it's for your purposes or students 

understanding of where things are coming from, there may be a 

more direct through-line. So, thank you for takingMR. WAGNER: Okay, thanks, Jamie. Carolyn, I see your 

hand.

MS. FAST: Yes. I just wanted to add that if it would 

be possible to get perhaps before a vote of response on 

whether the Department might consider going back to the 

language from the earlier session on the nonprofit definition, 

also just to add that to the list. ThankMR. WAGNER: Okay. I don't see any other hands on 

600.2. Real quick announcement, though, it is 3:07. I know 

there's, just want to make sure everyone understands there is 

a public comment at 3:30. For those that are going to be 

commenting, please log in 10 to 15 minutes before your 
Committee Meetings - 03/16/22 46

allotted time and please log in under the name your registered 

under. So, with that being said, I'll turn it over to you, 

Greg.

MR. MARTIN: We did have, there was a request to 

gauge the group, take a temperature check to see if it was 

about the Department making changes to what is in the 

definition of a nonprofit institution. Do we want to do 

anything like that or, just wondered where we were with that?

MR. WAGNER: Just on that one issue on the 

temperature, the temperature check on- [interposing]

MR. MARTIN: Yeah, it was requested. I don't have a 

problem with a with a temperature check on that if people want 

to show, remember, just to make it very clear, we're not 

voting for any consensus.

MR. WAGNER: Correct.

MR. MARTIN: Or anything like that. This is strictly 

on whether or not the Department should reconsider the 

language in under the definition of not-for-profit

institution, nonprofit institution in one romanette 2B. 

MR. WAGNER: Okay. And, Carol, before we take that 

temperature check, do you have a comment?

MS. FAST: No. No, I don't. Sorry.

MR. WAGNER: Kelli. 

MS. PERRY: Yeah, I just want to clarify that my 

recommendation when I said to revert to the language was for 
Committee Meetings - 03/16/22 47

everything in this in number one, as it relates to the 

definition of the private nonprofit, so not just B, it would 

be eliminating C, it would be eliminating some of the changes 

that were made in the other romanettes as well.

MR. MARTIN: I'm sorry, that would include, yeah, I 

just restrict it to B, I should have phrased it that way to go 

back to the, you're talking about going back to the original 

language in its entirety from the previous paper, right?

MS. PERRY: Yes.

MR. WAGNER: Johnson.

MR. TYLER: I just wanted to say that you know I 

looked at the language more closely in issue paper number two, 

it really provides a tremendous amount of discretion that's 

more defensible for the Department of Education, who really 

are the experts here in terms of seeing bogus transactions or 

not. If you with the new language, it becomes something for an 

administrative law judge who may not have the same amount of 

expertise to deal with experts from well-financed institutions 

that are trying to make this transaction. It becomes just a 

very different standard of review. I think, you know, the 

Department of Education is creating a problem for itself here 

that's unnecessary. I think initially, you know, people view 

that as broad, but this is an issue with paper, too, the 

language being maybe too broad, since virtually every 

institution has to do distance learning and is contracting 

with entities that have a profit motivation involved. But, you 

know, there's a general world [ph] word in there. So, you 

know, if an institution is only contracting with a small 
Committee Meetings - 03/16/22 48

portion of people to do this, which is important for their 

students, you know, there's no issue here for the Secretary, 

but by switching it this way, they really create a lot of 

leverage for a lot of mischief, it seems to me. And students 

will not be protected.

MR. WAGNER: Thank you, Johnson. Carolyn.

MS. FAST: I just want to say I agree with Johnson,

and I agree that the language in, from issue paper from 

session two is the way to go here and would recommend it. The 

only thing that I want to point out is one thing that would be 

lost in reverting entirely to that language is that C would 

come out completely, in C, it talks about other kinds of 

agreements besides revenue-based agreements. So that is 

something to consider and an easy fix for that, I think be to 

just take out the word revenue in B so that it would go back 

to whatever was in session two except it would be [audio] or 

inclusive of other agreement revenue sharing, but could be, 

for example, a lease kind of agreement.

MR. MARTIN: Thank you.

MS. STUDLEY: The, the sound went out at a key moment 

in Carolyn's comment.

MS. FAST: Oh, sorry. Just to say, I don't need to 

repeat myself. I'm not sure which part you missed, but I just 

wanted to say that the only thing that I think would be lost, 

that would be a problem if we just went back completely to the 

identical language from session two is in C as it's more 

broader. It talks about agreements other than just revenuebased agreements. So, for example, a lease kind of agreement, 
Committee Meetings - 03/16/22 49

which is arguably that you know, revenue-based and that is 

important, and I don't want us to lose that. So, I think a 

really easy way to fix that is just to maybe take out the word 

revenue and just have it in B from the issue of session two 

issue paper, so it would just refer to agreements with former 

owners.

MR. WAGNER: Thank you for that. Greg, in light of 

the clarification, [inaudible] would like to a temperature 

check on that particularMR. MARTIN: Yeah, I understand that people have some 

concerns about the language. Since it was requested, we can go 

ahead and do it.

MR. WAGNER: Okay. Alright, so could we take a 

temperature check on that one specific issue we mentioned? 

Yes, Jamie. And then Carolyn, and Jamie, you are on mute. 

MS. STUDLEY: Yeah. I think Carolyn's suggestion was 

important, but I think we should really read what the words 

are that you're getting a temperature check on. Is it enters 

into or maintains an agreement with any party unless, because 

that would raise Kelli's concerns about over [inaudible] so 

and Carolyn said agreement with any former- anyway, what is it 

thatMR. MARTIN: You know though, let me just say that 

since we're close to the end of the day and obviously we're 

having some issues here with exactly what the language would 

be. So, if, I forget who asked for the temperature check, but 

could just request that maybe I take this back and I think it 

might be more efficacious if I just came back tomorrow with 
Committee Meetings - 03/16/22 50

you know what the Department is willing to do here with 

respect to this language? That might be better than to 

continue to debate this tonight.

MS. JEFFRIES: I would make an additional 

recommendation that, rather than [inaudible] going back 

looking at that language from the proposal in week two, the 

negotiators should take the time this evening to review that 

as well, so they know exactly what you know how to discuss it 

tomorrow morning when they start when we start in.

MR. WAGNER: Thank you. Alright. In light of that, do 

you want to continue, I guess, on 600.4, Greg?

MR. MARTIN: Yeah, so we're moving to 600.4 and there 

is nothing in, there are no changes in 600.4. So, we're going 

to move down to 600.20. I'll go through 600.20. If not, 

obviously, if there's something in 4 that as we go through 20 

that anybody determines they want to make a comment about, 

we'll entertain that when we finish with 600.20. So, moving 

into 600.20, notice and application procedures for 

establishing and reestablishing, maintaining or expanding 

institutional eligibility and certification, we in G is where 

we'll start. In G1, we have added changes just to clarify the 

structure of the language. And there are no substantive 

changes here. We included in romanette one no later than 90 

days prior to the change of ownership, the institution 

provides the Secretary notice of the proposed change on a 

fully completed form designated by the Secretary. So that was 

the change there. And we move on to let's see where we if we 

move on to, we were just in one and moving to two, this is 

we've simply slightly simplified the cross-references in the 
Committee Meetings - 03/16/22 51

language in this item. So just a few changes to the to the 

cross-references is all that has changed here. And then going 

down to two, also three romanette four. Three romanette four. 

So, we appreciate the suggestion from the negotiator to 

clarify the financials that financial statements must be 

acceptable. And we have reworked the language slightly to 

ensure that that is reflected here. And then in number for, we 

have proposed to add a disclosure requirement to students to 

ensure they are aware of a change in ownership and its 

potential implication for students. So, in four we have the 

institution must notify enrolled and prospective students of 

the proposed change in ownership and submit evidence that such 

disclosure was made no later than 90 days prior to the change. 

And I'll move on to H, which is terms of the extension rather. 

And moving on to H three, we just have a minor correction 

here. We've corrected a cross-reference to the second 

reference to H2, romanette three. And it's now corrected to H2 

romanette one. And those are the only changes that we had for 

600.20. So, I'll stop there and see if there are any comments 

on that section before moving on.

MR. WAGNER: Okay. I see your hand, Brad, you're up.

MR. ADAMS: Yeah, I've got a small request on, it's 

in 600.2 G3 romanettes one and two, where it says a recently 

updated copy. And I know in our February session, Donna 

mentioned an email would be okay and suffice this. So, I'll 

drop a potential change language change into the chat. But I 

would like it to state that as long as that document or let's 

see current language supplemented with documentation that such 

licensure accreditation remains into effect as at the day 
Committee Meetings - 03/16/22 52

before the change of ownership just to make sure that it's 

kind of written in a way where we know emails and things are 

suffice. So, I'll put it in the chat and let you consider it 

for an update.

MR. MARTIN: Alright. Thanks, Brad.

MR. WAGNER: Thank you, Brad. Let's see. Jamie. 

Jamie, you're on mute.

MS. STUDLEY: You'd think by now. I'm looking over 4, 

notifying enrolled and prospective students. We have, and I 

believe it's common among accreditors, but I can't speak for 

all of them that we have in some transaction situations 

insisted that a prospective change of ownership or control be 

made known to the campus in order to get input to satisfy 

accreditation requirements not just of notice, but actual 

engagement with those audiences. I can say that they're, the 

school's a very great deal. Some are able to talk to their 

campus you know for multiple years about transitions that may 

be coming, and some others have been stressed by this. I 

wonder whether institutions think that requirement is 

appropriate, and I do think giving students as much notice as 

possible. But I'm thinking of the nonprofit situations where 

there have been you know, discussions that change the 

Transformation Partnerships Fund, is trying to get people to 

think about these things earlier. But whether 90 days is 

workable, I know it matches the 90-day notice to the 

Department. And maybe that's fine. I just don't want us to 

move past something that I know is an effort to balance notice 

to students with complicating fluid situations for 

institutions, including some of the small colleges that we've 
Committee Meetings - 03/16/22 53

seen exploring multiple options. I guess my colleagues from 

the private nonprofits or proprietaries didn't have a concern. 

I've done my share by just flagging the issue.

MR. WAGNER: Thank you, Jamie. I see Kelli.

MS. PERRY: Yeah, I can see what Jamie might be 

saying from the perspective of, if you, let's say you had two 

private nonprofits that were going to merge. The 90 days 

notification to students 90 days prior might be a long period 

of time because the details of that might not be worked out 90 

days prior to whatever the merger might be. I don't know. I 

don't know that I have anything additional to add. I do agree 

that with what Jamie's saying. 

MS. STUDLEY: And it may be that the notification is 

fine, and the Department needs to be sensitive to what degree 

of detail is possible, because once those things are shared, 

the campus says, well, exactly what's going to happen and how 

is it going to work? And not and not every detail may be 

available, but the alerts of things changing may be necessary 

for student planning. And what this, while it doesn't require 

notification to faculty and staff, notifying students would 

have the effect of notifying the community.

MR. WAGNER: Thank you, Jamie. Johnson, I see your 

hand up. Just to give everyone a heads up. It's about 3:23. We 

don't have a whole lot more time before public comment, but 

take it away, Johnson.

MR. TYLER: I just think it's problematic to be 

telling the Department of Education about a plan and not 

telling your faculty and students, I can't see how that would 
Committee Meetings - 03/16/22 54

be. I understand it might you know alienate the institution 

from those entities, but I just feel like it's you know I 

don't understand. I could see that really backfiring, 

honestly. You know, having read some of the complaints out of 

among some professors out west about a merger and how they 

felt about it affecting their institution's reputation, I 

don't know why you'd want to hide it from them, but those are 

just my thoughts as a person, not an advocate.

MR. WAGNER: Thank you, Johnson. Brad, you're up. 

MR. ADAMS: Yeah. Just quickly, on the same point 

here. When does the 90-day clock, like what is it? Is it tied 

to the effective date in the contract? Help me understand, 

because sometimes we don't know when the change is going to 

happen by the Department. So, when does the 90-day clock 

start?

MR. MARTIN: I also would, [inaudible] ask Donna to 

correct me here if I'm, from the way I look at it would be, so 

it says 90 days prior to the change, whatever is proposed in 

the contract the institution has for the change of ownership 

that it be disclosed irrespective of how long it would take 

the Department to act on that would have to be disclosed or 

that there would have to be evidence of such disclosure made 

no later than 90 days prior to that date that was set.

MS. MANGOLD: The closing date, the closing date of 

the transaction.

MR. ADAMS: Closing date. At that point, it's been 

approved then. And my concern is that you notify students, and 

it doesn't go through if you notify them too early.
Committee Meetings - 03/16/22 55

MS. MANGOLD: Well, the issue is that we don't 

approve anything. We don't approve changes of ownership before 

they happen. Maybe we do a pre-acquisition review, that's not 

an approval. It doesn't happen until afterwards. So, it's 90 

days back from the closing date.

MR. ADAMS: Right. Okay. Thank you. And then the 

notification doesn't specify, I'm assuming email and website 

and things of that nature justify versus snail mail?

MR. MARTIN: Any time, any time with the Department 

that requires a notification that we don't specifically 

indicate that it must be in paper. Electronic means are 

acceptable.

MR. WAGNER: Okay. Thank you for that. Let's see. 

Greg, we have three minutes. Do you want to tee up the next 

section or do you want to hold that off until tomorrow?

MR. MARTIN: I think we'll hold that off for 

tomorrow. But just as a reminder to everybody, we will be 

beginning with 600.21, updating application information. I'll 

come back tomorrow, and I owe everybody some further 

discussion on what is in the definition of a nonprofit 

institution under one, under one and I'm sorry, under yeah, 

under one romanette two. So, we'll come back tomorrow morning, 

have a discussion of that and then move into updating 

application information.

MR. WAGNER: Real quick, Brad.
Committee Meetings - 03/16/22 56

MR. ADAMS: Yeah, just Greg if you could also check 

on the distance education at branch versus main just to- 

[interposing]

MR. MARTIN: Oh, yes, I will. That's the other that's 

the other issue. Thank you very much, Brad.

MR. WAGNER: Thanks a lot, Brad, I appreciate that. 

Alright. It's almost 3:29. So, let's see, I think we can go 

ahead and start with public comment. Brady, who do we have as 

our first public commenter?

MR. ROBERTS: Our first speaker was just admitted. It 

is just Jeffrey Thomas representing themselves. Looks like 

he's just got to enable audio.

MR. WAGNER: Jeffrey, welcome. Can you hear us? 

MR. THOMAS: There we go. 

MR. WAGNER: There you go. Welcome, Jeffrey. You have 

three minutes for your public comment and that will begin when 

you start speaking. You have the floor.

MR. THOMAS: Thank you. Thank you for the opportunity 

to speak to you all today. My name is Jeffrey Thomas. As you 

can see, I'm grateful for the opportunity to share my 

perspective as someone who has attended both traditional and 

nontraditional universities as a veteran. I hope you walk away 

with understanding why non-traditional school worked for me, 

and I believe it's important to keep this option available for 

veterans. I am a United States Air Force veteran. After I got 

out the military in 1990, I enrolled in Coppin State 
Committee Meetings - 03/16/22 57

University in Baltimore. At the time, I was married with 

children and working a full-time job as an operator and 

mechanic at a production factory. This was a lot to handle. My 

degree program was very demanding instruction and required a 

lot of unnecessary time. With all my other responsibilities, 

it became a little too much and I stopped my degree program 

then. About seven years later, I decided to get back to get a 

business [ph] degree with the hope that I could reclaim my 

life and career path. While I worked on my degree, I was 

working full-time and taking classes in-person at the 

University of Phoenix Maryland campus. It was a completely 

different experience from Coppin for me, where I was at work 

with [inaudible] and helped me succeed and reach my goals. 

This is something I didn't feel while at Coppin. I earned my 

degree in business information systems from Phoenix and was 

taught by a skillful faculty who worked in the discipline that 

taught. I went with the goal of finding a better career path. 

And I got that just, I got just that. Once I earned my degree, 

I immediately got a promotion and became a supervisor and 

manager. I feel my education at Phoenix gave me an advantage 

throughout my career. I ask today that you approach rulemaking 

fairly with all students in mind. Please do not limit muchneeded options for veterans who have earned the right to 

choose a quality education that befits the need. Thank you for 

your time. One thing I would like to add. My job is just 

relocated to Delaware, so I'm looking for a new job, which I 

feel my degree is giving me advantage in finding a new job. I 

have a number of options now because of this degree. Thank you 

for your time again.
Committee Meetings - 03/16/22 58

MR. WAGNER: Thank you, Jeffrey. Just a reminder, 

before we get to the next public commenter, that if you're 

going to be part of the public comment to please log in now 

and you don't have to wait till your scheduled time. Brady, 

who do we have next?

MR. ROBERTS: I just submitted Travis Petersen, who's 

a veteran representative themselves, and I believe they are, 

they're logged in.

MR. WAGNER: Alright. Travis, can you hear me?

MR. PETERSEN: Yep, I can hear you.

MR. WAGNER: Great. You have three minutes for your 

public comment, and that will begin when you start speaking. 

You have the floor.

MR. PETERSEN: Alright. Thank you. My name is Travis 

Petersen and thank you for the opportunity to speak before you 

today. I'm a former student veteran and founding member of the 

Moral Compass Federation. I'm retired from the Air Force after 

21 years flying combat search and rescue, and then foreign 

internal defense combat aviation advisor. I'd like to thank 

the Department for caring about and safeguarding our veterans' 

earned benefits. I see many drawbacks to the 90/10 rule, and I 

wonder if there might be a better path forward. When I look at 

the student outcomes at these schools affected by 90/10, I do 

not see substantial differences between for-profit colleges 

and many public schools. And yet 90/10 seems to ding these 

for-profits that they're underperforming or taking advantage 

of the veteran students. But in fact, some of these forprofits have even better outcomes in public schools. 
Committee Meetings - 03/16/22 59

Unfortunately, these private schools will likely have to close 

their doors to veterans because of the changes being discussed 

today. It's apparent that the 90/10 doesn't care about student 

outcomes, which in my opinion means it doesn't actually care 

about protecting student veterans' earned benefits. It doesn't 

improve transparency about student outcomes for veteran 

students, and it doesn't even apply to the majority of schools 

that veterans attend. If this rule is going to be anything but 

harmful to veterans, there needs to be mechanisms in place 

that do account family and school student outcomes and will 

allow veterans to still use their benefits that the school has 

good outcomes. Coming from the SOF community, we are trained 

to rely on intelligence. If we're making any significant 

decisions, that is a necessary advantage, and the more data we 

have, the better. To truly safeguard my fellow veterans would 

be a data-driven policy that focuses on what matters like 

student outcomes and which applies to all institutions of 

higher education. Of the many downsides of the 90/10 rule, one 

of the most problematic is that it only applies to one sector 

of higher education. The public or nonprofit schools are being 

judged by this revenue test, and if this is a good regulation, 

why would we also apply it to them? I am very thankful that 

there's more on the table to improve the lives of veteran 

students, and it seems that many others will agree with me 

that it is a great idea to provide better transparency and 

pragmatic outcomes. Incurred debt and future earnings may be 

what is most important and relevant to veteran students 

because essentially regulation policy is a snapshot of current 

market forces, trends and behavior, which cannot take into 

account future changes and innovation in higher education. A 
Committee Meetings - 03/16/22 60

regulation necessary can quickly become outdated or in effect, 

prioritize balancing the free market by empowering veterans’ 

readily available student outcome data. This implementation of 

transparency to inform veterans does allow for future changes 

and innovations within higher education. Releasing this 

pragmatic gainful employment data for all schools will give 

veterans what they need because now it allows veterans to 

choose their education based on real merit.

MS. JEFFRIES: 30 seconds, Travis.

MR. PETERSEN: I'm finished. And I again, I want to 

thank you all for allowing me to represent.

MR. WAGNER: Thank you, Travis. Alright, Brady, who 

do we have next?

MR. ROBERTS: Alright. I just admitted Kevin Mackay, 

who is representing themselves.

MR. WAGNER: Kevin, can you hear- [interposing]

MR. MACKAY: Can you hear me?

MR. WAGNER: Yes, I can hear you. You have three 

minutes for your public comment and that will begin when you 

start speaking. You have the floor.

MR. MACKAY: Excellent. Thank you. Well, good 

afternoon, everyone. My name is Kevin Mackay. I'm a veteran of 

the U.S. Marine Corps and a proud graduate of the University 

of Phoenix. I'm sharing my personal experience in higher 

education with you today because I believe higher education 

can help veterans advance in their careers regardless of 
Committee Meetings - 03/16/22 61

industry. I do find it a bit odd that we're not looking at 

other schools, such as nonprofit schools, and not questioning 

the return on investment there as well. I get that's not in 

your scope, but I feel we should be looking at all schools 

equally. And when evaluating, I think we also need to look at 

some other factors as well. My sister chose to pursue social 

work rather than a high-paying law degree, even though her 

grades were excellent. And although she has a master's degree 

and runs a large nursing home, her pay is substantially lower 

than other fields. This does not mean she did not receive a 

quality education. Potential students should also have access 

to counseling to help them make an informed decision and 

answer the question, does higher education make sense for me 

or do other options exist? Again, maybe outside the scope of 

today, but please make sure we account for these factors when 

exploring our why and guidance for students. But here's why 

the University of Phoenix worked well for me. After completing 

my service in the US Marine Corps as an infantry squad leader, 

my passion for service continued, and I became a police 

officer in the city of Stanford in 1998. But completing a 

college degree was also a long-term goal of mine, and that 

goal became increasingly more challenging to achieve after 

becoming a father and raising a family while working full 

time. I began a Bachelor of Science in Criminal Justice at the 

University of Phoenix in 2002, and I went on to complete it in 

2005, and it wasn't easy. But the flexibility of the online 

program enabled me to immediately put theory to practice, and 

in my day-to-day responsibilities, it had a profound impact on 

my advancement within our Department. As a matter of fact, I 

went on to help create our Department's computer forensic 
Committee Meetings - 03/16/22 62

division and lead technology training initiatives. Since 

retiring from the city of Stanford, I've gone on to complete 

my master's in digital forensic science at Champlain College, 

and I have been an adjunct professor there, even creating 

online courses for them. The quality of my Phoenix education 

and the support provided to me as a working father and police 

officer has inspired me to share my story as one of the many 

testaments of how higher education can change the trajectory 

of veterans' careers. I hope that a key part of your 

rulemaking will ensure that Americans can attain a more cost 

effective and career-relevant higher education, regardless of 

what type of institution a veteran decides to enroll in. 

Please consider how we, veterans, continue to need accessible 

programs that fit our lifestyles, backgrounds, and needs. Do 

not isolate one segment of higher education over another. 

Every veteran has earned the chance to gain a quality degree 

that helps them succeed. Thank you for the time and thank you 

for letting me engage in this important process.

MR. WAGNER: Thank you, Kevin.

MR. MACKAY: Thank you very much.

MR. WAGNER: Alright, Brady, who do we have? 

MR. ROBERTS: Alright. I just admitted Kalli 

Blackwell, who is the general manager representing Aveda Arts 

and Sciences Institutes.

MR. WAGNER: Kalli, can you hear me?

MS. BLACKWELL: Yes. Can you hear me?
Committee Meetings - 03/16/22 63

MR. WAGNER: I can hear you. Welcome. You have three 

minutes for public comment and that will begin when you start 

speaking. Go ahead.

MS. BLACKWELL: Good afternoon. Again, my name is 

Kalli Blackwell. I'm the general manager of the Aveda Arts and 

Sciences Institutes. I do appreciate the opportunity to 

provide public comment and feedback to some of the proposed 

regulatory changes that are being discussed here today. So, we 

are a collective of 18 Aveda Institutes across the country. By 

way of background, we are a family business with three 

generations working in the beauty industry. I opened our first 

cosmetology school 25 years ago and started with 30 students. 

Today, we enroll close to 4000 students a year. So, these 

schools are my life's work and passion, and our singular focus 

is to transform passion into purpose by empowering students to 

achieve their potential through education. So, some benchmarks 

to student success for us are graduation placement and 

licensure and a few of our averages to share, our graduation 

rates on average are 79 percent. Our placement rates are 72 

percent, and our state licensing exam passage rate is 94 

percent. We pride ourselves on the quality of our education,

the strength of our programs, and the success of our students. 

As you consider this rulemaking, I do hope that you'll 

consider thinking about student outcomes and measure any 

proposals on whether our students would have the opportunity 

to complete their programs or whether your rule may risk their 

closure. I'd like to direct my comments to two specific areas, 

certification and Gainful Employment. The Department has 

proposed a set of changes to certification that would limit 

student aid to federally mandated levels. The proposed change 
Committee Meetings - 03/16/22 64

would require states to adopt new state laws to accommodate 

this proposed change. The current regulatory structure allows 

us flexibility to offer programs within certain parameters of 

the state requirements and to make programmatic adjustments as 

needed to comply with those state licensing changes. This 

would be impossible under these proposed changes. With regards 

to Gainful Employment, I do have serious concerns about the 

proposed earnings metric, the 8 percent passing threshold, 

lack of appeal process, and the possible metric tied to high 

school earnings. My concerns about each of these elements, 

quite simply tie to the underreporting of income that is 

prevalent in the beauty and wellness industry. I want to 

emphasize that we support strong accountability metrics that 

ensure students achieve graduation and career goals and 

support the data transparency to ensure students and their 

families have the information they need to make informed 

choices. Thanks for your time today and I would like to close 

with an invitation. I understand that most people do not have 

personalMS. JEFFRIES: 30 seconds, Kalli.

MS. BLACKWELL: Thank you. Most people don't have 

personal experience with our cosmetology schools or our 

programs. So, I would like to welcome each of you to visit our 

schools and to contact with me any questions, because I know 

you could leave feeling just as inspired by our students as I 

am each day. I appreciate the time. Thank you.

MR. WAGNER: [Audio] Kalli. Alright, Brady, who do we 

have next? 
Committee Meetings - 03/16/22 65

MR. ROBERTS: I'm admitting Todd Bloom, who is 

representing themselves.

MR. WAGNER: Alright. Thank you. Todd, welcome. Can 

you hear me?

MR. BLOOM: Yeah, I can hear you.

MR. WAGNER: Okay, great. You have three minutes for 

your public comment, and that will begin when you start 

speaking. Take it away.

MR. BLOOM: Thank you. Hello. And thank you for the 

opportunity to share my story. My name is Todd Bloom, and I 

understand today's public comment is discussing the quality of 

education and many of these conversations have been about 

veteran success in higher education. I am a veteran. I joined 

the Marine Corps immediately after graduating high school and 

proudly serve for four years in active duty and four years 

non-active. After being discharged from the Marine Corps, I 

found a stable job at IBM, and I was navigating being a single 

father. I had the desire to go to college, but I knew I could 

not quit my job or lose time with my son in order to do so. 

Thankfully, my employer at the time encouraged employees to 

pursue higher education and even funded my degree at the 

University of Phoenix. If it were not from my employer's partemployers partnership with the University of Phoenix and the 

University's online program, I do not know where I would be 

today. I proudly received my Bachelor of Science in Business 

Management and Marketing. Upon graduating, I received an 

immediate promotion and raise at IBM, where I worked for over 

20 years. I'm proud of the life that I have built for myself 
Committee Meetings - 03/16/22 66

and my family. As a first-generation college student, veteran, 

working adult and single father, the University of Phoenix was 

the single best and most pivotal, pivotal option for me. The 

University's established online systems were great for my 

coursework. The expert faculty were responsive, and the 

flexibility of the program was encouraging. Today, many 

active-duty military and veteran students attend University of 

Phoenix for these same reasons. Active military and veteran 

students need flexible programs and options for high quality 

programs that are going to help them get on their feet after 

leaving the service. I ask that you use your authority to make 

sure we have more quality, flexible programs for veterans and 

active-duty military. Please take great care not to limit 

options for veterans. That will only force them to forego 

opportunities available or force them into programs that are 

not optimized for nontraditional students. Thank you for your 

time.

MR. WAGNER: Thank you, Todd. Brady, who's next?

MR. ROBERTS: Alright, I just admitted Wade Eyerly, 

who is representing Degree Insurance.

MR. WAGNER: Welcome. Wade, can you hear me?

MR. EYERLY: I can. Can you hear me? 

MR. WAGNER: I can hear you. Welcome. You have three 

minutes for your public comment, and that will begin once you 

start speaking. You have the floor.

MR. EYERLY: Alright, thank you. My name is Wade 

Eyerly, and I'm the CEO of Degree Insurance. I first want to 
Committee Meetings - 03/16/22 67

thank you guys for providing me the opportunity to give some 

input here. I want to introduce you to a relatively new 

development in higher education that I think is pretty 

pertinent here. Today, obviously, college education is the 

largest uninsured investment most individuals or families will 

ever make, which is obviously the impetus for the Gainful 

Employment standard, and what it's trying to get at. Does an 

education from a given institution provide any real return on 

that investment? It's the only place that a parent will 

counsel someone they love to borrow 10 or 20 times their net 

worth and make a single investment with it. Just hoping that 

five years after they graduate, it actually works. What we've 

done is develop a novel type of insurance that guarantees a 

student's earnings in the five years after graduation. I mean, 

truly guarantee as and if you don't earn what we promised, we 

cut, you send us your tax returns, we cut you a check for the 

difference. The student is paid for the earnings shortfall;

however, it didn't deliver up to what it was expected to do. 

And while I recognize that what I'm laying out is a relatively 

new concept, we all know how challenging it is to introduce 

and adapt to regulations once they're written. I think it 

would be wise to consider what we do as well as what others 

may begin to do and include phrasing when we talk about 

Gainful Employment that clarifies that a college guaranteeing 

student salaries across the covered period of time would 

satisfy that requirement, or that a college that can provide a 

guaranteed earnings floor of a specific minimum could be 

exempted from the Gainful Employment requirements, given that 

they're clearly achieving the stated aim, which is to ensure 

that graduates are seeing a return on their educational 
Committee Meetings - 03/16/22 68

investment. Thanks again for letting me make the comment, and 

I hope this will help us all get closer to our goal of seeing, 

making sure every student gets the outcomes that they're 

hoping for here.

MR. WAGNER: Thank you, Wade. Brady, who is next?

MR. ROBERTS: I just admitted Benjamin Larson, who's 

representing themselves. It looks like they're just getting 

hooked up to audio.

MR. WAGNER: Alright. Thanks, Brady. Ben, can you 

hear me?

DR. LARSON: Yes.

MR. WAGNER: Alright. Welcome. You have three minutes 

for public comment, which will begin when you start speaking. 

You have the floor.

DR. LARSON: Alright. Thank you. Hello. My name is 

Dr. Benjamin Larson. I'm a United States Army veteran. I want 

to thank you for allowing me time to speak to you today. I 

joined the Army immediately after high school because college 

was financially out of my reach. And honestly, I wasn't even 

sure what I wanted to study. In the army, I was trained as a 

biomedical equipment technician, which, after I left the Army, 

allowed me a great paying job without needing a college 

degree. So, I just went right to the workforce. About 15 years 

into my career, I was offered a great job opportunity, but it 

required a bachelor's degree. I didn't have one, so I was 

denied the job. And I decided at that point in my career, 

perhaps earning a college degree was the right move to make. 
Committee Meetings - 03/16/22 69

Having a wife and a mortgage, I needed an option that allowed 

me to continue to work full-time while earning my degree. So,

I went, and I spoke to the reps of my local colleges and a few 

online options. I chose the University of Phoenix for the 

following reasons. They gave me generous credit for my 

military training and professional training. Their 

asynchronous learning fit my job. I was working crazy hours at 

a hospital and carrying an on-call pager every other week. 

Finally, their accelerated class schedules meant I could 

complete my degree in under two years. I know that one of the 

important topics being discussed today is defining Gainful 

Employment and evaluating the quality of a degree program. I'm 

here to ask that you use your authority to protect veterans' 

choices and measure quality at all colleges. Veterans need 

viable school programs that fit their unique situations. In my 

degree program at Phoenix, not only did it fit my lifestyle, 

but it helped me get the job I wanted and completely changed 

my perspective on higher ed. I eventually went on to earn my 

master's and my PhD. I am now a successful data scientist with 

Verizon with three degrees under my belt from three different 

universities. Phoenix was the catalyst that helped me exceed 

beyond my own expectations and completely changed the 

trajectory of my life. As a veteran, I respectfully encourage 

that you take this opportunity to take care that you do not 

limit options for other active-duty military and veterans who 

want to change their lives for the better. Thank you.

MR. WAGNER: Thank you, Benjamin. Alright, Brady, who 

do we have next? 
Committee Meetings - 03/16/22 70

MR. ROBERTS: Kevin, I just admitted Luis Luna, who 

is representing themselves. 

MR. WAGNER: Luis, can you hear me?

MR. LUNA: Yes, I can. Hi. 

MR. WAGNER: Great. Hi. Welcome. You will have three 

minutes for your public comment and that will begin when you 

start speaking. You have the floor.

MR. LUNA: Thank you. Dear Members of the Negotiated 

Rulemaking Institutional and Programmatic Eligibility 

Committee. My name is Luis Luna and I live in New Haven, 

Connecticut. I am an organizer with the Connecticut Working 

Families Party, and I am a member of the Student Loan Fund 

Borrowers Collective. When I entered college in the fall of 

2003, I was a low-income immigrant student, hoping to realize 

the dreams of my parents and my dream. As a student in high 

school, I had very little support or guidance to navigate the 

college application process. I knew I was passionate about art 

and design, so I went and saw an ad on my computer for the Art 

Institute of Philadelphia. I was intrigued. I contacted the 

school and they invited me to visit. They talked up their 

photography program and promised that financing would be 

accessible. I submitted an application, and I was immediately 

accepted. The financial aid office encouraged me to fill out 

Sallie Mae student loan applications, telling me not to worry 

because I was sure to secure a high-paying job after 

graduation, which would allow me to easily repay my loans. As 

a young person with English as a second language, I believed 

the optimistic picture they painted of my life and financial 
Committee Meetings - 03/16/22 71

future. Three years later, as a junior in college, my mother 

was injured at work, leaving her incapable of rejoining the 

workforce. I left the Art Institute and returned home to 

support my family. When I started to work at minimum wage, it 

dawned on me how enormous my student loans were compared to my 

eager income. Even worse, when I matriculated, they told me 

that I that I could transfer credits, but when I tried to 

transfer to my local community college in Connecticut, I 

learned that not a single credit from my three years at the 

Art Institute would transfer. To complete my degree, I would 

have to take out even more student loans which left me 

devastated. My student loans have followed me throughout my 

career with an average yearly school cost of over $43,000. My 

loans have grown to a total of over $100,000. This debt has 

made it very difficult for me to live a full life, pursue good 

jobs, and give back to my community. I'm still dreaming of 

finishing my bachelor's degree. I joined the Student Loan 

Bond, Student Loan Fund Borrowers Collective because I wanted 

to change the predatory systems of student debt and higher 

education financing that disproportionately impact people of 

color and first-generation student students like myself. Rules 

need to be put in place to protect students like me from these 

predatory institutions. The Department of Postsecondary 

Education and the Biden Administration must restore Gainful 

Employment rulesMS. JEFFRIES: 30 seconds, Luis.

MR. LUNA: Thank you. For institutions eligible for 

Federal Aid programs authorized under Title IV of the Higher 

Education Act. Thank you for your time.
Committee Meetings - 03/16/22 72

MR. WAGNER: Thank you, Luis. Alright, Brady, who do 

we have next? 

MR. ROBERTS: I just submitted Matt McCoy, who was 

representing themselves.

MR. MCCOY: Yeah. I'm here.

MR. WAGNER: Alright, Matt, welcome. You have three 

minutes for your public comment, which will begin when you 

start speaking. You have the floor. 

MR. MCCOY: Thanks. I just wanted to join everybody 

today and let you guys know about my experience at Phoenix. I 

graduated high school all the way back in 2003. I went to a 

four-year university traditionally like everybody else did. It 

really wasn't for me and didn't necessarily enjoy the 

experience. So, I went into the Air Force. I did that for four 

years and then moved out to California and realized that you 

know I wanted to use the GI Bill that I had acquired to go 

back to school. And so, I went back to school, and I went to 

University of Phoenix specifically because you know like a lot 

of other members who have gone in the military, when we get 

out, we're forced to transition back into the workplace. We 

don't have a lot of time. We have families. We have a lot of 

other stuff going. I had a job, two internships, and I just 

didn't have the time. And it really wasn't feasible to go to a 

four-year university and sit down in class at 9 a.m. with 

everybody else. And so, the only university that allowed me 

that opportunity was really Phoenix when I looked at it. And 

so, I went to school there. I did an in-class learning once a 

week and then everything else I took over the computer. And 
Committee Meetings - 03/16/22 73

really enjoyed my experience. I feel like the education that I 

got there really was as good of quality as you get anywhere 

else. For the most part, you know, I actually thought it might 

even be a bit more than you have to do on a day to day basis 

because, you know, you're forced to actually, rather than just 

being given a book and saying, read this chapter and then take 

a test, you know, you're forced to get in these forums and 

comment and leave feedback on what you actually just read. And 

so, I forced myself, it basically forces you to do the 

homework and you can't say you just did the homework and then 

take the test and stuff like that. And so, I really felt that 

I had the ability to and was afforded the opportunity to go to 

school when, like I said, I might not have been. So, I really 

enjoyed my experience and it set me up after I got out, you 

know, I got out and I've now been at a nonprofit for the last 

four years where I have a marketing role and position. And all 

that was really due to the flexibility that I received at 

Phoenix to get that education that I needed. So, I'll keep it 

short and brief for you guys. But if you have any questions, 

I'm available for those.

MR. WAGNER: Thank you, Matt, for your comment.

MR. MCCOY: Absolutely.

MR. WAGNER: Alright, who do we have next, Brady?

MR. ROBERTS: I just admitted Matthew Feehan, who's 

representing themselves.

MR. WAGNER: Welcome, Matthew. Can you hear me?

MR. FEEHAN: Welcome. Can you hear me?
Committee Meetings - 03/16/22 74

MR. WAGNER: Yes. You have three minutes for your 

public comment and that will begin when you start speaking. 

You have the floor, Matthew.

MR. FEEHAN: Beautiful. I really appreciate it. So,

I'd just like to continue the conversation. I know the 

Department of Education is going to look at 600 [inaudible] 

and come back tomorrow with some additional comments. But just 

to start with, my name is Matthew Feehan, by the way. The 

disclosure requirement. So, for the Department of Education is 

right here keeping the students in mind and keeping the 

prospective students in mind as far as the disclosure 

requirement. 90 days to the effective action, I don't think 

it's going to cut it. So really, when these discussions start 

happening and we're talking about for-profits and conversion 

to nonprofit status, the prospective students and the current 

students need to be involved in the discussion as early as 

possible. I don't really consider the argument you know, the 

administrative burden argument really that strong. 

Multimillion dollars in revenue, they can just hire 

consultants. So, involving the student body and the faculty in 

that process, in the disclosure process is something we should 

really be looking at. The second thing, so for scrutiny for 

the private non-profits, kind of getting caught in the flak 

here for the regulatory burden. I think that the Department of 

Education's 100 percent correct here in how they're phrasing 

this new regulation. So, a lot of private nonprofits are 

forming these smaller, for-profit contractual relationships 

with the private for-profit sector. And I don't buy the 

argument that it's just a small population of contracts or 

small percentage of business with these private nonprofits. 
Committee Meetings - 03/16/22 75

We're talking about hundreds of millions of dollars here. 

These are massive contracts. So, the Department of Education 

is right to be to be putting that extra scrutiny on these 

relationships. And the conversion relationships are where we 

should be going. The fact that it might inadvertently you know 

cause some extra scrutiny for the private nonprofit sector and 

their third-party relationships. Again, I don't understand how 

that's a problem. Hire consultants, you know? And finally, 

with respect to, the other representative beyond owner. So,

the Department is expanding that that net beyond just the 

owner of the institution and to, you know, existual [ph] 

contractual relationships with other parties within the 

organization. And again, the Department is 100 percent 

accurate, really, their heads are exactly where they should

be.

MS. JEFFRIES: 30 seconds, Matthew.

MR. FEEHAN: Thank you, ma'am. Just trying to better 

encapsulate these third-party agreements with these private 

nonprofits beyond just the simple revenue sharing agreement 

with prior owners. So that's all I really had to say. The 

Department's right. We should keep the language, the proposed 

language that it has. It's addressing the student concerns 

very accurately here. And then as far as the administrative 

burden argument, I don't know, it's hundreds of millions of 

dollars. Just hire some consultants. So that's- [interposing]

MS. JEFFRIES: Your time is up, Matthew.

MR. WAGNER: Thank you, ma'am.
Committee Meetings - 03/16/22 76

MR. WAGNER: We're coming to our last public 

commenter of the day, and who is that, Brady? 

MR. ROBERTS: I just admitted Deborah Dunn, who was 

representing Lancaster School of Cosmetology and Therapeutic 

Bodywork. 

MR. ROBERTS: Thank you. Deborah, can you hear me?

MS. DUNN: Yes, I can, Deborah Dunn.

MR. WAGNER: Yes. Welcome. You have three minutes for 

your public comment, which will begin once you start speaking. 

You have the floor.

MS. DUNN: Thank you. My name is Debbie Dunn. I'm the 

president of the Lancaster School of Cosmetology and 

Therapeutic Bodywork in Lancaster, Pennsylvania. Thank you for 

allowing me the time to speak. I have been in private 

postsecondary career education for 43 years. However, I did 

start in the public sector, and it's a sector I will never 

return to. The reason it does not matter if a two or four-year 

traditional school assists with job placement for any of their 

graduates, it does not matter if only 32 percent of their 

students graduate on time. To me, it's a poor educational 

statement that our traditional two and four-year schools do 

not have to meet any specific completion placement or 

licensure pass rates. I'm not sure what they're afraid of. As 

for this school. For the most recent reportable year 2020, we 

have the following, an 86 percent completion rate, an 84 

percent job placement rate, a 98 percent licensure pass rate, 

all during COVID. We also have a three-year cohort default 

rate of 2.2 percent with a median loan debt of less than 
Committee Meetings - 03/16/22 77

$4,000. In my 43 years, I have yet to determine what was 85/15 

and is now 90/10 has to do with the quality of a career 

school. All this does is discriminate against the low-income 

population. And at a time when Democrats preach no 

discrimination, this could not be more hypocritical. In 

addition, Gainful Employment has different meaning for each 

student, and this is about students. Exactly how a school can 

force a student into a full-time job receiving a certain 

salary and convince them to report all of their income is 

beyond my understanding. We have students who come to school 

for many reasons. Many want to work part-time while raising 

their children. We have retirees who just want to supplement 

income. We have others who are working part-time while they 

attend another type of education. However, somehow all of 

these reasons are not acceptable. A strong school could be 

forced to close due to some random formula that has yet to 

pull accurate data. Continuing to add regulation on top of 

regulation is not a solution. You have made these negotiations 

about the type of school that should follow certain 

regulations, some schools more than others. All negotiators 

should be caring about is the student. It's the student's 

right to use their financial aid however they deem fit. It's 

not the negotiators. It's not the Government's or anyone 

else's. These negotiators, we feel, our students feel like 

they've literally been told they made bad choices by attending 

our school. Well, they do disagree. So, please, as you 

continue to negotiate [30 seconds] try to remember, it's about 

the student's choice, not yours.

MR. WAGNER: Thank you, Deborah, for your comments. 

And I want to thank all the other public commenters this 
Committee Meetings - 03/16/22 78

afternoon. It is 4:01 Eastern. We are wrapped up for day 

number three, we'll be back tomorrow, 10:00 a.m. for day 

number four of this week of our regulatory negotiations. I 

want to thank everyone for their hard work today and we will 

see you all tomorrow. Stay safe and have a good rest of your 

afternoon.
Committee Meetings - 03/16/22 79

Department of Education, Office of Postsecondary Education

Zoom Chat Transcript

Institutional and Programmatic Eligibility Committee

Session 3, Day 3, Afternoon, March 16, 2022

From Bradley Adams (P - Proprietary Institutions) to Everyone:

if the department deletes the short term borrowing 

discretionary trigger we discussed earlier today in paragraph 

d 10 then it would need to delete the second half of new 

section f 1 iv

From Bradley Adams (P - Proprietary Institutions) to Everyone:

+1 Kelli on the composite score driving institutions to 

make bad financial decisions. Specifically around getting bad 

scores to refinance debt and sign long term leases.

From Debbie Cochrane (P), State Agencies to Everyone:

David Socolow is going to come to the table for state 

agencies for the remainder of the day.

From Kelli Perry - (P) Private Non-Profits to Everyone:

also in (f)(1)(iv) - once the reference to B10 is removed 

not later than 10 days following "each transaction" should be 

changed to "the transaction.

From Jessica Ranucci (A)- Legal Aid to Everyone:

Johnson is coming back to the table for legal aids

From Ernest Ezeugo (P) Students and Student Loan Borrowers to

Everyone:
Committee Meetings - 03/16/22 80

+1 Carolyn and Yael

From David Socolow (A) State Agencies to Everyone:

+1 to Carolyn and Yael regarding returning to the 2nd 

session language for definition of "nonprofit institution"

From Amanda Martinez (P) Civil Rights to Everyone:

Strongly urge the Department to revert to previous 

language proposed in Session 2.

From Ashley Schofield (A) - MSIs to Everyone:

+1 to Kelli's comment

From Jamienne Studley--Accrediting agencies (P) she/her to

Everyone:

It would be helpful to know what the problem the Dep tis 

trying to solve with the "associated with" requirement.

From Yael Shavit to Everyone:

+1 Barmak

From Carolyn Fast (P) Consumer/Civil Rights organizations to

Everyone:

+1 with Barmak on distance ed

From Johnson Tyler (P) Legal Aid to Everyone:

+1 with Barmak on distance

From Bradley Adams (P - Proprietary Institutions) to Everyone:
Committee Meetings - 03/16/22 81

+1 Jamie

From Bradley Adams (P - Proprietary Institutions) to Everyone:

can you put the version 2 language on the screen

From Yael Shavit to Everyone:

+1 Johnson

From Emmanual Guillory (A) PNPs to Everyone:

+1 Carolyn

From Yael Shavit to Everyone:

+1 Carolyn

From Ernest Ezeugo (P) Students and Student Loan Borrowers to

Everyone:

+1 Carolyn

From Barmak Nassirian (A) Servicemembers & Vets to Everyone:

+1 Carolyn

From Bradley Adams (P - Proprietary Institutions) to Everyone:

I support current language as proposed. The session 2 

language limits the secretary's discretion on approving 

transactions.

From Bradley Adams (P - Proprietary Institutions) to Everyone:

I would also like to know what "generally" means before 

the vote.
Committee Meetings - 03/16/22 82

From Bradley Adams (P - Proprietary Institutions) to Everyone:

per Donna’s response at the February session that emails 

are okay, the “recently updated copy” language at (g)(3)(i) 

and (ii) should be removed, and the current language 

supplemented with documentation that such 

licensure/accreditation remains in effect as of the day before 

the change in ownership. New language would be:

Documentation that the institution's State license, as of 

the day before the change in ownership, authorized or will 

authorize the institution to provide a program of 

postsecondary education in the State in which it is physically 

located;

Documentation that the institution's accrediting 

association, as of the day before the change in ownership, 

granted or will grant the institution accreditation status, 

including approval of any non-degree programs it offers;

From Barmak Nassirian (A) Servicemembers & Vets to Everyone:

By way of example, for purposes of participating in the 

federal student aid programs, a nonprofit institution is 

generally not an institution that:

(A) Is an obligor (either directly or through any entity 

in its ownership chain) on a debt owed to a former 

owner of the institution or a natural person or 

entity related to or affiliated with the former 

owner of the institution; or
Committee Meetings - 03/16/22 83

(B) Either directly or through any entity in its 

ownership chain, enters into, or maintains, a 

financial agreement or relationship with a former 

owner of the institution or a natural person or 

entity related to or affiliated with the former 

owner of the institution; or

(C) Engages in excess benefit transactions with any 

natural person or entity.

From Jamienne Studley--Accrediting agencies (P) she/her to

Everyone:

Certainly not giving schools room to hide -- but how firm 

does the deal have to be to qualify as "proposed" (agreed to 

by both parties? ? Donna said 90 back from closing -- that's 

hard because closing can be a fluid point. I'm not objecting 

to the provision but noting that it could be difficult for 

institutions.