Conference Call with 

Deputy Undersecretary Robert Shireman of the U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

Coordinator: At this time all participants' lines will be in a listen-only mode for the duration 

of today's presentation. 

I'd now like to turn the call over to Mr. Massie Ritsch. 

Massie Ritsch: Thanks, Christian. 

Good afternoon - good morning, still, folks from Washington. This is Massie 

Ritsch, Deputy Assistant Secretary for External Affairs and Outreach at the 

U.S. Department of Education. 

Thanks for making yourselves available from the industry to join us on this 

call. 

We've got about 30 minutes set aside. We're going to hope to take some 

questions, some clarification questions toward the end. And you will be able 

to press star 1 to ask those. We'll have instructions at the end. 

I should let you know the call is being recorded. If that's a problem for you 

please hang up. We are hoping to make a recording transcript available as 

we're able to get that. 

So now I'd like to turn things over to our Deputy Undersecretary, Bob 

Shireman. Bob? 

Robert Shireman: Thank you very much, Massie, and thank you all for getting on the line. 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

We were getting some questions about the Federal Register notice that was 

published on Tuesday. And so I asked for Massie’s help in reaching out to the 

higher education community to make sure that folks had an explanation of 

where some of the items came from there and why we're doing that. So that's 

the purpose for this call. 

Some of you have asked why we also scheduled a call for Wall Street 

analysts. And that was basically because we were getting calls from them, and 

generally I try to avoid talking to them. But it seemed like that is was 

important for there be generally available information about the notice and 

what's behind it. 

I'll just mention that when I testified last week somebody came up to me and 

asked me a question. I answered it. Then I said, and you're with? And they 

were a Wall Street analyst. And I realized that I don't think I said anything 

that really mattered but we just want to make sure that information broadly 

available. 

Our interest overall in the Administration and with this particular Federal 

Register notice is to make sure that students, potential students have access to 

post-secondary education. That it's as highest quality that it can be. They have 

the information that they need. And that ultimately students and taxpayers are 

well served by the program. 

And I've been asked, you know, is this about any particular type of school or 

sector or anything like that? And really it's broadly wanting to make sure that 

students and taxpayers are served well, whether the schools are public, 

nonprofit, for profit, 2-year, less than 2-year, 4-year, graduate school, all of 

the above. 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

The public hearings that we have announced involve a day and a half of public 

input and the first day is specifically the first step of a possible rule-making 

process. 

The half day that comes the next morning is a kind of broader input. And let 

me take a minute to describe that second half day. There are two sessions 

we're having simultaneously on two different topics. 

The first is we want input on the information and communications and 

processes that the Department of Education makes available, provides, puts 

out there into the world. So that includes things like the FAFSA and 

simplifying the FAFSA of making it something -- it's an easier process for 

people. 

But we know that, that the issue of the FAFSA is really a broader issue of how 

do we get people information that is useful to them to take important life steps 

at different stages in their lives? And we want to know how effective is what 

we do, how can we do a better job? So it could be our Web site, our 

publications, any of those including FAFSA. And welcome positive as well as 

constructive comments about all of that. 

The second part is asking the question how could we make our program more 

fruitful in bringing about high levels of student persistence and completion. 

The President laid out in February a bold new goal of returning to the day 

where our nation is number one in the world in terms of the adults with postsecondary degrees. 

And a part of achieving that means that we've to make our current programs 

operate more effectively. And that can be in Title IV programs. It can be Title 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

III, Title V, strengthening institutions, minority-serving institution 

programs. 

And the kind of input that we're interested in is really any type. So if can be - 

it could be regulatory ideas, but we're not asking people to come necessarily 

knowing whether the idea they have is something that has to be done as to a 

regulatory process, as to a legislative process or a funding process. We want 

input; we want ideas, unfiltered by the question of exactly what the process is 

for getting from here to there. How can we improve our program, is really that 

general question. 

The first day of the three hearings is more specifically for input on possible 

rule makings going forward. And I'll go through some of the issues that we 

mentioned. But we welcome, and the public may bring up, any issues that 

people think are items that we should be changing or adding rules on. And 

then with that public input we would make decisions about how to move 

forward in some cases. That means that may be what's known as negotiated 

rule-making and setting teams around particular topics in the comings months. 

The items on the list that we gave as examples of the kinds of things that we're 

interested in receiving input on are just that. We're interested in information 

that might help us to make the decisions about what teams to set up on what 

topics or what not to move forward on. 

Going through items the list several of them have actually been mentioned in 

Inspector General Reports in recent years. And so it seemed like they were 

items that we should get input on. 

A couple of them came up in the context of the discussion of the new Pell 

Grant, two Pell Grants in a year. In figuring out how someone gets a second 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

Pell Grant, it raises questions about satisfactory academic progress as well as 

the definition of a credit hour. So when you kind of think through how might 

the ability to earn, to have a second Pell Grant in one award year, be 

potentially abused. 

Some of the looseness around satisfactory academic progress and around 

credit hour could potentially be, you know, an area of abuse. We wanted input 

on is that something that we should be taking a closer look at? And if so, what 

might that involve? 

Incentive compensation in an area where some Safe Harbors were carved out 

several years ago and with the experience we now have over the last number 

of years, we're interested in input on whether those Safe Harbors meet well 

with the statutory prohibition against any direct or indirect incentives. And so 

we're interested in input on whether to move forward with any possible 

changes or discussions of changes on that item. 

Congress made changes to the definition of for profit institutions -- actually 

rewrote the whole definition, and added items around liberal arts education, 

which we've handled already. But the other piece of the definition has to do 

with gainful employment in a recognized occupation, and we've never said 

much in our rules about what that means. And the question is is that an area 

where it might make sense to have some clarifications? 

 State authorization. 

Generally the Higher Education Act requires that an institution be accredited 

by an agency recognized by the Secretary. Be approved by the Department of 

Education, which mostly has to do with the financial capability and things like 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

that, and then also authorized by the State to provide education beyond a 

secondary education. 

And in some circumstances there are schools that are in essence a state has 

decided to not have an authorization for them and they do participate in Title 

IV. And so the question there is what kind of standards should we have in 

terms of a state authorizing an institution of higher education? That might be 

something that's regulatory, might not be but we're interested in input on that 

question. 

 Verification is really, you know, this is what happens after somebody applies 

on their FAFSA and people get flagged for verification for various reasons. 

We have not reviewed those regulations in a long time. It might be an area 

where there can be some reduced burden on institutions, and so it seems 

worthy as an area too for possible improvements in effectiveness and perhaps 

reduction of burdens. 

And high school diploma is an area that has come up in Inspector General 

Reports around perhaps in some cases being too easy for someone to get an 

online high school to get around ability to benefit and things like that. And so 

again the question is is it something we should do something about? And if so, 

what might that be? 

As I said they are open public hearings where people can bring up other items. 

So if there are other items that any of you feel that we should open up in a 

rule-making and make some changes, whether they are reduced regulatory 

burden or improved program integrity, this will be a good opportunity for you 

to make those suggestions at the these hearings. 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

I am open to questions -- really clarifications, any clarifications you might 

need around this particular regulatory notice. 

Massie Ritsch: Okay. Operator if we could open up the line for the questions Bob just laid 

out. 

Folks, you dial star 1 on your phone to indicate you'd like to ask a question. 

We'll take just a minute for folks to get in the queue and then we'll come right 

back. 

Coordinator: Thank you. 

Once again if you'd like to ask a question or make a comment please press star 

1. Please unmute your phone and record your name clearly when prompted. 

To withdraw a request you may press star 2. One moment please. 

Our first question comes from Mr. (Scott Fleming). Sir, your line is open. 

(Scott Fleming): Thanks. 

Bob, thanks for taking the time today for the call. I think we're all very 

interested and relieved to have direct line of communication to you guys. 

One thing you said is that the department was looking into the issue of 

placement in a recognized occupation or gainful employment in a recognized 

occupation, that's not new to the definition of an institution of higher 

education. It's actually been in the law for some time. So I just wanted you to 

clarify that statement if you could? 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

Robert Shireman: The Congress actually replaced the whole definition when it added the liberal 

arts portion of the definition. So it's not new, but the definition overall was 

revised with the liberal arts item. 

And the addition of the liberal arts kind of raised the question of, well does 

that mean that liberal arts does not provide gainful employment? I'm kind of 

joking about that. But it brought up the question of what does the first part of 

the definition mean? 

(Scott Fleming): Okay. Thanks. 

Massie Ritsch: Next question please, operator? 

Coordinator: Thank you. One moment please. 

Our next question comes from Harris Miller. Your line is open. 

Harris Miller: Thank you. 

Thank you, Bob for doing this. It's been extremely helpful to have. 

Massie Ritsch: Harris, did we lose you? 

Hello, do we have our operator? 

Coordinator: Yes sir. I apologize. The participant disconnected. One moment please. 

Massie Ritsch: We can move on to the next question. I'm sure Harris will get back in the 

queue. 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

Coordinator: Our next question comes from (Rebecca Compleverde). And your line is 

open. 

(Rebecca Compleverde): Hello, Bob. Thanks again. 

I have to echo what others have said. We appreciate your making the effort to 

reach out and have the conference call. We very much appreciate it. 

As you mentioned at the beginning there is a conference call that follows this 

one with investment analysts. And of course I know that you've seen probably 

both the reports that they have written as well as some of the trade press items 

that have come out that have indicated that the department is trying to target 

our sector in raising these issues as a part of another round of negotiated rulemaking. Can you tell us what you're going to say to them in response to that? 

Robert Shireman: Really the same thing that I said at the top of the call, that our interest is 

making sure that students and taxpayers are well served regardless of sector, 

whether it's public, private, for profit, nonprofit, 2-year, 4-year, that that's 

really our top focus. 

(Rebecca Compleverde): Thank you. 

Robert Shireman: Sure. 

Massie Ritsch: Operator we'll take the next question. If Mr. Miller is back in the queue we'd 

love to hear from him. 

Coordinator: Thank you. Our next question comes Harris Miller. Sir, your line is open. 

Harris Miller: Massie, that wasn't nice of you to kick me off. 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

No seriously, Bob we've been talking about a couple of issues back and forth 

and I wonder whether you thought they might be appropriate for us to raise in 

the open hearings you're going to be having. 

One is that the additional federal aid to students generally is extremely helpful 

to many students who attend our schools. But as you know while many of our 

schools are somewhat higher tuition, we also have many programs that are 

lower tuition. 

And our schools are concerned about students over-borrowing and borrowing 

more than we believe they need to pay for their education. So I wonder 

whether you thought it might be appropriate for us to raise that topic during 

the upcoming dialogue? 

And then the second question is I know that the Administration has 

recommended $500 million a year for the next five years to improve 

completion and graduation rates. And I'm wondering whether these open 

hearings again might be a place for organizations to make recommendations 

on how that money should be allocated? 

Robert Shireman: Sure. 

On your first question, on the over-borrowing, there probably are some 

potential regulatory issues there. And so that first day certainly is the perfect 

opportunity to bring up that issue and suggest it be one that we get into. At, 

you know, whether if you have specific regulatory recommendations or not, 

it's a good way to bring that up. 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

One the second item I would say that on the second day, that second morning, 

the session on Persistence and Completion, we would welcome at that session 

and put on our fund, with the state fund that we're creating. 

Harris Miller: Thank you, very much. 

Robert Shireman: Sure. 

Coordinator: Our next question comes from Mr. (Henry Harrison), (Harrison University). 

Sir, your line is open. 

(Henry Harrison): Hello. Thank for taking questions. 

And I guess Harris preempted me a little bit with his first statement. 

I'm greatly concerned about students over-borrowing. We seem to be in a vice 

between the extremes of the Department of Education insisting that a student 

should be able to borrow monies up to the absolute limit and our concern 

about students borrowing for the wrong purposes, being able to repay it, you 

know, causing default rates and costing the government more money. 

It seems to be, you know, a rebirth of the perfect storm we had in the housing 

market where, you know, people are pushing money at borrowers. And, you 

know, we just seem to be in a bind when we try real counsel students and 

restrain them from borrowing too much, it goes fine until they find other 

students that "are getting money" and then it becomes a problem. 

We're in states like Ohio where a lot of our students, you know, we're not in 

the city, we have a very nice facility, we're not trying to target any groups and 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

we have an extremely high percentage who are Pell eligible and sometimes 

maybe they do have some real needs but sometimes they don't. 

And we should have more flexibility in trying to really work with the students 

and not just be forced by the Department of Education to give them every last 

cent that they possibly can legally get. 

It becomes a real problem and I don't think we're doing the students, I don't 

think we're doing the country a service by just, you know, marching on these 

orders from the Department of Education to give them every cent to which 

they're entitled. 

Robert Shireman: That's exactly it. You've provided everyone on the call with a perfect example 

of the kind of thing that we need to hear at the hearings. So your concerns like 

that, the public hearings that we're having is a perfect place to make that 

statement or there is also an email address where you can send that to in the 

Federal Register notice. 

So, you know, exactly those kinds of things that you are facing, where you 

think things could be done in better ways that might involve regulatory 

changes, let us know. That's perfect. Thank you. 

Massie Ritsch: All right. Next question, operator. 

Coordinator: Our next question comes from Ms. (Nancy Rossman), (ITT). Ma'am, your line 

is open. 

(Nancy Rossman): Hello, Bob. Again, thanks for doing this call. Really been helpful. 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

I'm wondering how you're going to be selecting the people to participate in the 

second half day session. (Its books have been) noted that you're going to have 

some people selected to speak and then have kind of an opportunity for public 

to speak afterwards? 

Robert Shireman: Yes. I don't think we're going to be doing some picking and choosing. And I 

think it will kind of depend on what kind of a situation we have in terms of 

people showing up. If it's a small number of people and can be somewhat less 

formal than the first day and involve some discussion, fine. But if it's a lot of 

people, you know, we'll probably have to do it kind of like we do the first day, 

where there's a certain amount of time and we try to make sure everybody has 

a chance to at least get a few words in. 

Massie Ritsch: All right. Operator, our next question please? 

Coordinator: Our next question comes from (Elaine Miley). Ma'am, your line is open. 

(Elaine Miley): Hello, Bob. Thank you for taking my call and again thank you for having this 

call and helping us understand the complexity of these issues. 

I'm with Kaplan Higher Education and was recently one of the negotiators on 

Team Five. So your comments about the Pell are very appropriate and near 

and dear to our hearts. 

I would like, if possible, to ask you to comment again on the state 

authorization component of institutional eligibility? This is an area where we 

have great interest and would like to come prepared to hearings to address 

what your concerns are. 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

Robert Shireman: Yes. Really I would just repeat what I said, is that the question there is what 

should be our standard for whether an institution has been authorized by a 

state. 

(Elaine Miley): Because as you probably know there are some states that don't authorize. 

There are some states, for instance Iowa, that doesn't have an authorizing 

agency. And at current time California doesn't as well. So I didn't know if you 

were looking to 

((Crosstalk)) 

Robert Shireman: Exactly. Your answer to that question of in those circumstances what should 

we do? We'd love to have your input on that. 

(Elaine Miley): Okay, great. Thank you. 

Massie Ritsch: All right. If there are other questions, again press star, 0, on your phone and 

we will try to take some. We just have a couple of more minutes here. 

Coordinator: Once again, please press star 1, to ask a question. One moment, please? 

Massie Ritsch: Okay. Looks like we have answered your - do we have one question that just 

popped in here? 

Coordinator: Yes sir. Our next question comes from (Mark Felish). Sir, your line is open. 

(Mark Felish): Yes, hello. And again, I'll repeat the thanks that everyone else has expressed 

for being transparent about the notice and what your intentions are. 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

I wonder if you could speak a little bit to what you envision for the timelines 

for this process? Obviously we know about the public hearings that are 

scheduled. 

Do you have any sense of when you'd be then making decisions about whether 

to go ahead with a negotiated rule-making process, when we might see some 

notices and reflecting decisions made about whether to proceed and what 

you'll be proceeding on? 

And generally speaking, what sort of timelines you might project for that if 

you were to go forward with another (unintelligible)? 

Robert Shireman: Sure. The tentative schedule we laid out in the notice is that any committees 

that we created would begin negotiations at September of this year. Have the 

usual three sessions and then eventually complete their consideration of items 

over the months that follow that. 

Massie Ritsch: All right. 

Folks we really appreciate you taking the time today and asking good 

questions and also for the schedule that Bob had laid out and it's laid out in the 

register providing the input. 

We very much want to hear from you and hope you will make your audiences 

aware of this opportunity to provide public input as well. 

We will do our best to share the recording and transcript as we get it. It's not 

an immediate thing but we'll have one as needed. 
Conference Call with 

Deputy Undersecretary Robert Shireman,U.S. Department of Education 

May 29, 2009 

11:45 AM ET 

And with that we thank you for your participation this morning and wish you 

a very good weekend. 

Thanks so much, everyone. 

Robert Shireman: Thank you, everyone. 

Coordinator: Thank you for participating. 

Today's conference has concluded. Please disconnect. 

END