1

UNITED STATES DEPARTMENT OF EDUCATION

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GAINFUL EMPLOYMENT

NEGOTIATED RULEMAKING COMMITTEE 2017-2018

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SESSION 2

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MONDAY,

FEBRUARY 5, 2018

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The Negotiated Rulemaking Committee 

met in the Barnard Auditorium, U.S. Department of 

Education, 400 Maryland Avenue, S.W., Washington, 

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

and Javier Ramirez, Facilitators, presiding.

PRESENT

RAMONA BUCK, Federal Mediation and Conciliation 

Service, Facilitator

ROZMYN MILLER, Federal Mediation and 

Conciliation Service, Facilitator

JAVIER RAMIREZ, Federal Mediation and 

Conciliation Service, Facilitator

JEFF ARTHUR, Vice President of Regulatory 

Affairs & Chief Information Officer, ECPI 

University

WHITNEY BARKLEY-DENNEY, Senior Policy Counsel, 

Center for Responsible Lending

JESSICA BARRY, President, School of Advertising

Art

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

External Relations and Public Policy, 

Laureate Education, Inc.

STEPHEN CHEMA, Ritzert & Leyton, PC

JENNIFER DIAMOND, Program Associate, Maryland 
2

Consumer Rights Coalition

DANIEL ELKINS, Legislative Director, Enlisted 

Association of the National Guard of the 

United States

RYAN FISHER, Intergovernmental Relations 

Division, State of Texas Office of the 

Attorney General

PAMELA FOWLER, Executive Director of Financial 

Aid, University of Michigan - Ann Arbor

CHRISTOPHER GANNON, Vice President, United 

States Student Association

ANDREW HAMMONTREE, Director of Financial Aid and 

Scholarships, Francis Tuttle Technology 

Center

NEAL HELLER, CEO/President, Hollywood Institute 

of Beauty Careers

MARC JEROME, President, Monroe College

C. TODD JONES, President, Association of 

Independent Colleges & Universities in 

Ohio

ROBERTS JONES, President, Education & Workforce 

Policy, LLC

JOHN KAMIN, Assistant Director, The American 

Legion's National Veterans Employment & 

Education Division

KIRSTEN KEEFE, Senior Attorney, Consumer Finance 

and Housing Unit, Empire Justice Center

CHRISTOPHER MADAIO, Assistant Attorney General, 

Office of the Attorney General of Maryland

JORDAN MATSUDAIRA, Nonresident Fellow, Urban 

Institute; Assistant Professor, Cornell 

University

MARK MCKENZIE, Executive Director, Accreditation 

Commission for Acupuncture and Oriental 

Medicine

LAURA METUNE, Vice Chancellor of External 

Affairs, California Community Colleges

ANTHONY MIRANDO, Executive Director, National 

Accrediting Commission of Career Arts and 

Sciences

MATTHEW MOORE, Director of Financial Aid and 

Scholarships, Sinclair Community College

KELLY MORRISSEY, Director of Financial Aid, 

Mount Wachusett Community College 

CHAD MUNTZ, Director of Institutional Research, 

Office of Administration and Finance, The 
3

University System of Maryland

JONATHAN K. PIERRE, Vice Chancellor for 

Institutional Accountability and Evening 

Division, Southern University Law Center

TIM POWERS, Director of Student Aid Policy, 

National Association of Independent 

Colleges and Universities

THELMA L. ROSS, Interim Director of Student 

Financial Aid, Prince George's County 

Community College

SANDY SARGE, SARGE Advisors

AHMAD SHAWWAL, Student, University of Virginia

DAVID SILVERMAN, Chief Financial Officer and 

Director of Business Affairs, The American 

Musical and Dramatic Academy

JOHNSON M. TYLER, Senior Attorney, Consumer and 

Foreclosure Units, Brooklyn Legal Services

CHRISTINA WHITFIELD, Associate Vice President, 

State Higher Education Executive Officers 

Association

STAFF

STEVEN FINLEY, Office of General Counsel

GREGORY MARTIN, Office of Postsecondary 

Education

ANNMARIE WEISMAN, Director of Policy

Coordination Group, Office of 

Postsecondary Education
4

A-G-E-N-D-A

Page

Opening Comments .............................. 5

Review Agenda ................................. 9

Review Meeting Summary for Session One ....... 14

Issue - Technical and Conforming Changes ..... 18

Issue #1 Scope and Purpose ................... 22

Issue #2 Gainful Employment Metrics ......... 112

Issue #3 Debt Calculations .................. 168

Adjourn ..................................... 335
5

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

2 (9:00 a.m.)

3 MR. RAMIREZ: All right. So let's go 

4 ahead and get started. There's one group that 

5 still is yet to come, but by the time we get through 

6 all of the beginning items here, hopefully they 

7 will be in attendance. So let's go ahead and get 

8 on the record for the gainful employment negotiated 

9 rulemaking. This is the second round and welcome 

10 everyone. 

11 I hope everyone got some rest after that 

12 exciting game. It took me a lot to wind down after 

13 the game, but hopefully everyone had a chance to 

14 rest. A few important things. Women's restrooms 

15 on that side, men's restroom on that side. Food, 

16 cafeteria, back in there. Okay, so get that one 

17 out of the way.

18 And I could see that many of you, as 

19 I think most of us, creatures of habit. We noticed 

20 we caused quite a stir by changing your seats. 

21 But understand, we do that just so that we could 

22 get our notes straight of where people are sitting 

23 as well as the recorder, so that it makes it a little 
6

1 bit easier on us. If we wait until the last minute 

2 when everyone sits down, it just makes it a little 

3 bit more complicated.

4 So no other things going on there. So 

5 a few reminders. Table tents, pop them up if you 

6 want to speak. State your name for the record 

7 before talking, and alternates, if you want to make 

8 a comment, just make sure you get up to a mic so 

9 that the recorder as well as everyone else can hear 

10 you. 

11 MS. BUCK: And when you do put your 

12 name tag up, excuse me Javier, make sure that you 

13 put it up to the side so that we can see it from 

14 the front. Thank you.

15 MR. RAMIREZ: All right. So is there 

16 anyone that's livestreaming today? 

17 (Off mic comments.)

18 MR. RAMIREZ: Okay, all right. So we 

19 have a designated area, so if anyone changes their 

20 mind and wants to do that, there's a designated 

21 area for that, and we would ask that you also pause 

22 it during any breaks so that way any private 

23 conversations remain private.
7

1 A quick reminder on the consensus 

2 piece. We're going to be taking some temperature 

3 votes today. At least, that's the way I anticipate 

4 it going, and it's your responsibility to make sure 

5 you put the thumb down if you are not in agreement, 

6 okay, and these are temperature checks. So if your 

7 thumb is down, again remember that I'm going to 

8 most likely call on one or two of you to clarify 

9 why.

10 Let's understand what the issue is. 

11 Maybe I just didn't state the question clearly. 

12 You just need a little time to digest it, or there's 

13 an issue and you need to explain that as well as 

14 possible offer an alternative, okay. So it's not 

15 just no, no, no, no. If it's no, is there an 

16 alternative that we could review?

17 The discussion was great last time and 

18 I would remind you to remain hard on the issues, 

19 not on the people, okay. I think you all did a 

20 great job of not mentioning any organization names. 

21 We would ask that you continue to do that, and 

22 let's really just stay focused on the actual issues.

23 You all still remain empowered with the 
8

1 ELMO, Enough Let's Move On, so if we're beating 

2 a dead horse and I'm not catching it, anyone could 

3 say let's move on. We've heard enough. There was 

4 one suggestion last go-around, because we had asked 

5 you that look, if somebody makes a point, don't 

6 line up at the mic to say the exact same thing.

7 We would ask that you do that again, 

8 because there was a request that we would like to 

9 at least let the Department know that we are in 

10 agreement with that, so that they could get a feel 

11 for how many people may be supporting or against 

12 something. So if you wish to just say second that, 

13 you know, fine, right. We could -- that doesn't 

14 take much time.

15 But to have to repeat everything that 

16 somebody just said just to make sure that it's on 

17 the record and you're in agreement with it, that's 

18 going to take up a little bit too much time. And 

19 to that point, those were suggestions -- that was 

20 a suggestion that you all gave us, and we're trying 

21 to incorporate the suggestions that make sense.

22 So if you have any other ideas, let us 

23 know and we'll do what we can to try to incorporate 
9

1 them. Another suggestion that was given was the 

2 public comment. So if we could give the people 

3 in the public an opportunity in the morning as well 

4 as in the evening. So we'll go ahead and do that 

5 again this go-round.

6 But let me just do a quick agenda 

7 review before I open the floor for public comment, 

8 as well as comments from the Committee. So we're 

9 going to start off with comments from Committee 

10 or alternates, then public comment. A quick review 

11 of the protocols, and actually it's just to make 

12 sure that everyone's agreement with them, that you 

13 saw the final printed version. There was no changes, 

14 so that should be pretty quick, as well as the 

15 meeting summary, and I have comment on the meeting 

16 summary when we get to that point.

17 An update on data requests, and then 

18 we're going to jump into the issues. When we go 

19 into the issues, I'm going to ask Greg to review 

20 the summary that he put on the top of each one of 

21 them, and to also give a rationale for that, for 

22 the changes that were made.

23 We'll go through all of the issues and 
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1 then close with member comments as well as public 

2 comments, okay? Any questions on the agenda? 

3 Okay. 

4 Before I get into member comments, I 

5 would ask that if we can, if you could silence your 

6 devices, just so that we don't have any disruptions. 

7 I'm going to do the same. I made the mistake last 

8 time of being called out on that when my phone rang. 

9 Okay, all right. So I would open up the floor. 

10 Are there any public -- I'm sorry, comments from 

11 the members, whether it be alternates or leads? 

12 Yeah. Go ahead, Mark.

13 MR. McKENZIE: Good morning, everyone. 

14 I'm just opening. I was on the treadmill this 

15 morning getting ready to arrive, and someone 

16 informed me that, which I'm not sure why or how, 

17 some of the research I've submitted to the 

18 Department is mentioned today in the Wall Street 

19 Journal, and I just want my fellow negotiators to 

20 know that research is not intended to endorse one 

21 proposal or another or any point.

22 I always put out any of my research 

23 number one to get good policy, number two always 
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1 to protect students and student borrowers, and 

2 maybe most important for this week, to make sure 

3 the Department's policies don't lead to any 

4 unintended consequences. So I just want you to 

5 know that, because I'm not really -- I haven't even 

6 seen it yet, but I got a bunch of emails this 

7 morning. So thank you.

8 MR. RAMIREZ: All right, thank you. 

9 Any comments from the public before we get started?

10 (No response.)

11 MR. RAMIREZ: Okay, and again there 

12 will be another opportunity in the evening. So 

13 just for the record, let's go around and make sure 

14 that we just introduce ourselves, so that we know 

15 everyone who's here. This is Javier Ramirez with 

16 Federal Mediation.

17 MS. MILLER: Rozmyn Miller with 

18 Federal Mediation. 

19 MR. JONES: Bob Jones, Education 

20 Workforce.

21 MS. SARGE: Sandy Sarge, Sarge 

22 Advisors.

23 MS. FOWLER: Pamela Fowler, University 
12

1 of Michigan.

2 MR. ELKINS: Daniel Elkins, Enlisted 

3 Association of the National Guard.

4 MS. ROSS: Good morning. Thelma Ross, 

5 Prince George's Community College.

6 MS. WHITFIELD: Christina Whitfield, 

7 SHEEO.

8 MS. KEITH: Kirsten Keith, Empire 

9 Justice Center. I'm the alternate for Johnson 

10 Tyler with Brooklyn Legal Services.

11 MR. MADAIO: Christopher Madaio, 

12 Maryland Attorney General's Office.

13 MS. METUNE: Laura Metune, California 

14 Community Colleges.

15 MR. FINLEY: Steve Finley from the 

16 General Counsel's office.

17 MR. MARTIN: Greg Martin, Office of 

18 Postsecondary Education.

19 MR. MIRANDO: Tony Mirando from 

20 NACCAS.

21 MR. GANNON: Chris Gannon, United 

22 States Student Association.

23 MR. JONES: Todd Jones, Association of 
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1 Independent Colleges and Universities of Ohio.

2 MS. MORRISSEY: Kelly Morrissey, Mount 

3 Wachusett Community College.

4 MR. ARTHUR: Jeff Arthur, ECPI 

5 University.

6 MS. BARRY: Jessica Barry, School of 

7 Advertising Art.

8 MS. BLUM: Jennifer Blum, Laureate 

9 Education.

10 MS. BUCK: Ramona Buck, Federal 

11 Mediation and Conciliation Service, and behind me 

12 is Crystal Smith, also from FMCS.

13 MR. RAMIREZ: Yeah. Crystal is the 

14 person behind the curtain for us, so she runs the 

15 show. I just want to note that the consumer advisory 

16 organizations, they're not here right now. We 

17 anticipate that they will be here, so when they 

18 come we'll have them introduce themselves just for 

19 the record.

20 All right. So the first thing I would 

21 ask the group is on the protocols. Did anyone 

22 notice anything that needed any corrections on the 

23 protocols? I wouldn't anticipate that there is. 
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1 There was nothing -- I really just added the names 

2 of everyone. All right. Let me see a show of 

3 thumbs if we're okay with what was passed out on 

4 the protocols.

5 (Show of thumbs.)

6 MR. RAMIREZ: Okay. So we have 

7 consensus there. And then on the meeting summary, 

8 the one thing that I wanted to note on that was 

9 the one that was emailed out had the wrong footnote 

10 in there. I don't know if anyone caught that or 

11 not, but in your -- in the hard copies that are 

12 in your packet, the corrected version is there. 

13 So any other corrections or comments on the meeting 

14 summary?

15 (No response.)

16 MR. RAMIREZ: Okay. Let me see a show 

17 of thumbs if everyone is okay with the meeting 

18 summary.

19 (Show of thumbs.)

20 MR. RAMIREZ: Okay, and just for your 

21 benefit. That's not the, you know, official 

22 record. We have the official record being recorded 

23 and typed up right now. So all right. So there 
15

1 was consensus with that. 

2 Data requests. I would ask Greg or 

3 somebody that Sarah probably to give an update on 

4 the request of data.

5 MR. MARTIN: Thanks Javier. Yes. 

6 I'm going to request Sarah Hay from our office to 

7 come up and she'll give you an update on the data 

8 requests. Sarah's one of our directors and she's 

9 the one who's most involved with preparation of 

10 data.

11 MS. HAY: Good morning, everyone. How 

12 are you doing today? Good morning. I'm Sarah Hay. 

13 I'm the director of Policy Analysis and 

14 Forecasting in the Office of Postsecondary 

15 Education. We are working on data requests for 

16 you. We're working through very final clearance 

17 with upper management, and we hope to have something 

18 for you this week. So I'm sorry I don't have 

19 anything for you this morning, but we're hoping 

20 to get it to you really soon, okay.

21 MR. RAMIREZ: Any questions of Sarah?

22 MS. HAY: I know that's sort of 

23 non-answer today. I apologize.
16

1 MR. RAMIREZ: Sarah, any estimated 

2 ballpark?

3 MS. HAY: So we're hoping for tomorrow. 

4 It really is sort of final clearance things that 

5 we have to go through at the Department.

6 MR. RAMIREZ: Okay, great. 

7 MR. MADAIO: I do have one question. 

8 If other data requests are made during this 

9 session, do you expect that they would be able to 

10 be potentially produced by the subsequent next 

11 session in March?

12 MS. HAY: So we absolutely will try and 

13 do that. I can't make any promises, but yeah. 

14 We are still considering data requests that you 

15 are submitting to us.

16 MR. RAMIREZ: Okay, and that 

17 question's from Chris, Chris Madaio. Anything 

18 else? 

19 MS. HAY: Okay. Thank you very much, 

20 and thank you for your patience with us. I 

21 appreciate it.

22 MR. RAMIREZ: Okay. Whitney, could 

23 you introduce yourself for the record real quick?
17

1 MS. BARKLEY-DENNEY: Yes, I'm sorry. 

2 Traffic delays are bad this morning. I am Whitney 

3 Barkley-Denney, and I am a consumer negotiator, 

4 and my colleague Jan is also on her way, stuck on 

5 the MARC train. So she should be here soon. Okay, 

6 great.

7 MR. RAMIREZ: All right. So let's go 

8 to -- now we have all the groups that are 

9 represented, which is nice. All right. Then 

10 let's go ahead and jump into the issues, and for 

11 that I'm going to pass it over to Greg, and ask 

12 him that he review the summary as well as give some 

13 rationale for those changes.

14 MR. MARTIN: Okay. Thanks, Javier. 

15 We're going to start with the Issue Paper that's 

16 technical and conforming changes. So I'll give 

17 you a chance to get that out.

18 (Pause.)

19 MR. MADAIO: What we've done here is 

20 you can see we have a summary, and then we've 

21 presented the regulations with the strike through, 

22 so you can see the original text or how it's --

23 and how it's been altered. Hopefully we won't have 
18

1 to spend too much time on this one. 

2 This is technical and conforming 

3 changes based on the proposed regulatory language, 

4 as well as those disclosure items in 668.41 that 

5 are pertinent to borrower defense and financial 

6 responsibility for consideration by the Committee. 

7 For the reader's convenience, we have 

8 also included pertinent sections of the 

9 Department's regulations for which we are not 

10 proposing any changes, just to give you context. 

11 We were, as I think I pointed out in the previous 

12 session, we were tasked with dealing with 

13 disclosure items not only for our topic, but also 

14 those pertinent to financial responsibility.

15 So we're not going to spend too much 

16 time on that, but you will see in here how, you 

17 know, that language will be in here. It's a little 

18 confusing and I do apologize for that, but we'll 

19 take a look at it and entertain any questions. 

20 Oh, I should point out that we 

21 will -- we'll have more on the disclosure later 

22 on this afternoon as Scott informs me, so can we 

23 just look through these conforming changes here? 
19

1 I don't want to spend a lot of time with this, 

2 but what we've done is put these in here to conform 

3 those sections of the regulation that needed to 

4 be changed to accommodate the changes we've made 

5 with respect to gainful employment.

6 You can walk through this with me. You 

7 can see, for instance, under educational programs, 

8 we've struck references to gainful employment. 

9 This accommodates the change to the regulation 

10 where we will be calculating the rates not only 

11 for gainful employment programs but for all 

12 educational programs. So you can see those 

13 conforming changes there.

14 I'm trying to think if there's anything 

15 else we should talk about. Oh, we did make -- we 

16 did make a change in 668.10. You'll see down there 

17 under C, romanette 3, for an undergraduate program 

18 that has at least 300 clock hours, for less than 

19 600 clock hours and does not admit as regular 

20 students only persons who have completed the 

21 equivalent of an associate degree, that's obtaining 

22 the Secretary's approval.

23 That regulation is simply one that we 
20

1 inadvertently removed earlier in the previous set 

2 of regulations and we're just putting back. Make 

3 our way through, I'm trying to think. The main 

4 one, let's go over to 668.41, reporting and 

5 disclosure of information. There you'll see under 

6 (h) that we've struck all the language for loan 

7 repayment for a proprietary institution for 

8 calculation of loan repayment rate.

9 So that strikes the disclosure for loan 

10 repayment rate, as we've removed that. We've 

11 removed the loan repayment rate from the 

12 regulations. I think you'll see that. I'm trying 

13 to think if there's anything else here that we need 

14 to look at, because again these are just technical 

15 and conforming changes.

16 That's all I wanted to say on that 

17 particular paper, unless we have comments, 

18 questions. But we will be dealing with the actual 

19 changes as we go through the Issue Papers 

20 themselves. 

21 MR. RAMIREZ: So let me make a 

22 suggestion on that then. We could come back and 

23 take a temperature check on this one, right. Let's 
21

1 go through the actual issues, because I think that 

2 once we dig into that a little bit more, then that 

3 will probably give a little bit more context for 

4 this paper here. Does that make sense to everyone? 

5 Okay. 

6 MR. MARTIN: Yeah, I think that will 

7 work, because we actually go through the papers, 

8 the issue papers and we can go back and focus on 

9 those technical and conforming changes.

10 MR. RAMIREZ: Okay, sounds great. 

11 Okay. So at this point then, any questions for 

12 Greg on this? And we'll revisit it, but for now? 

13 MR. MARTIN: All right. We'll move on 

14 to Issue Paper 1. This is Scope and Purpose, and 

15 in here you'll see an overview of what we propose 

16 to do writ large with these regulations. We 

17 propose to change the focus of the regulations from 

18 programs that prepare students for gainful 

19 employment and a recognized occupation to all 

20 programs. So you'll see those changes made 

21 throughout the regulations. I should say all 

22 educational programs.

23 Significantly, we propose to remove the 
22

1 provision of 668.401 that provides that Subpart 

2 Q establishes procedures under the -- under which 

3 the Secretary determines whether a program is 

4 eligible for Title IV program funds. We discussed 

5 this substantive change, changes to definitions 

6 and the issue papers corresponding to the topic 

7 of the defined item. 

8 So we'll work our way through here. 

9 You can see starting in Subpart Q, changes from 

10 gainful employment or GE programs to simply 

11 "educational programs, disclosures and 

12 certifications." Working our way down, 403, again 

13 gainful employment struck and simply it becomes 

14 a debt to earnings framework.

15 You'll see -- and again, we're going 

16 to go through a lot of this in all the individual 

17 papers, so some of this I don't want maybe would 

18 be discussion. A detailed discussion should be 

19 reserved for those issue papers. But just as an 

20 overview here, you can see in 406 we've struck the 

21 DE rates alternate earnings appeal. As proposed, 

22 the regulations would have no appeal, would contain 

23 no appeal language and we've reserved that section.
23

1 Moving on to the next page, you'll note 

2 under 411 that we have struck the reporting 

3 requirements for GE programs. That section of the 

4 regulations is now reserved. Under these proposed 

5 rules, there would be no reporting requirements 

6 necessary for institutions. We'll discuss that 

7 as we get to that particular paper.

8 Disclosure requirements for GE 

9 programs simply becomes disclosure requirements. 

10 Disclosure requirements would pertain to all 

11 educational programs. 413, calculating, issuing, 

12 challenging completion rates, withdrawal rates, 

13 repayment rates, loan debt and program cohort 

14 default rate has been struck. That section is now 

15 reserved.

16 You'll see in 414 again, GE programs 

17 becomes educational programs. Subpart Q is 

18 changed from gainful employment to educational 

19 programs, disclosures and certifications. Moving 

20 down to Scope and Purpose, see again the reference 

21 to gainful employment has been removed, and we just 

22 refer now to programs offered by an eligible 

23 institution.
24

1 And procedures by which the Secretary 

2 calculates. We've removed -- as you'll note there, 

3 it previously read that the program is eligible 

4 for Title IV HEA program funds. There's no more 

5 determination of program eligibility under these 

6 proposed regs. So it's the program's debt to 

7 earning rates. We have also removed institutional 

8 reporting about the program to the Secretary, since 

9 as I mentioned earlier, no more reporting is 

10 required from institutions. No additional 

11 reporting other than what you do under -- currently 

12 under NSLDS reporting.

13 We have program level disclosure and 

14 certification requirements there. I'm trying to 

15 think of anything else. Going through 402 under 

16 definitions, again you'll see consistently GE 

17 program removed and replaced with educational 

18 program. The next major change that we talk about 

19 here, and again these will be discussed in more 

20 detail as we move on throughout the week, is our 

21 cohort period.

22 So you'll note that we have removed the 

23 four year cohort period. We are now using only 
25

1 or propose to use only a two year cohort period, 

2 and we note that the -- that the cohort period covers 

3 consecutive award years, the third and fourth award 

4 years prior to the award year for which DE rates 

5 are calculated under 668.404, and we give an example 

6 there.

7 If DE rates are calculated for the award 

8 year 2016-2017, the two year cohort period would 

9 be 2012-2013. 2013-2014 award, and then we talk 

10 about the fact that for medical and dental 

11 internship or residencies, it's the sixth and 

12 seventh year prior to the award year for which rates 

13 are calculated. We give an example for that also, 

14 which I won't go into there.

15 I'm trying to find anything else that 

16 we should -- if you go down to the bottom where 

17 we talk about the discretionary income rates, we've 

18 removed GE program. It's now the percentage of 

19 an educational program's annual loan repayment 

20 compared to the discretionary income of students 

21 who completed the program.

22 Again, this is calculated under 404. 

23 You'll see the removal of the four year cohort 
26

1 period. Let's move on. Let's see here. If you 

2 go to, let's see, we don't have these pages 

3 numbered, so second to the last little page on the 

4 flip side, where we talk about Metropolitan 

5 Statistical Area, we made some changes there. 

6 The Metropolitan Statistical Area, 

7 which is published by the U.S. Office of Management 

8 and Budget, we made some additions there for an 

9 educational program offered by a foreign medical 

10 school. 

11 The applicable MSAs are the MSAs of the 

12 program's clinical sites. For an educational 

13 program offered by any other type of foreign school, 

14 the MSA is Washington, D.C. So that just makes 

15 it easier for the schools to, when they did their 

16 disclosures, to report that. I'm trying to think 

17 of anything else.

18 Again, you see we've removed references 

19 to GE and just simply replaced that with educational 

20 program. Okay, and that's about it for the Scope 

21 and Purpose. So entertain any discussion.

22 MR. RAMIREZ: Whitney.

23 MS. BARKLEY-DENNEY: Yeah. I have 
27

1 some questions about sort of the Department's 

2 thinking on this, you know. When we were here in 

3 December and we went around the table to get a 

4 temperature check on whether this should become 

5 a disclosure-only program, my recollection is that 

6 the majority of negotiators here felt that some 

7 sanctions were indeed appropriate, and that the 

8 discussion should really around what those metrics 

9 look like.

10 And so I have to admit that I was pretty 

11 shocked to get what seems to be a 

12 conversation-ender, which is a disclosure-only 

13 structure. So I was just hoping to get an idea 

14 of what the Department was thinking and kind of 

15 where we even go from here, given that the 

16 temperature check in this room was not favorable 

17 to or at least the majority was not favorable to 

18 a disclosure-only structure in these rules.

19 MR. MARTIN: Yeah. The decision to 

20 adopt a protocol here where we no longer have --

21 we no longer have program sanctions is of course 

22 I think the major change that is proposed. This 

23 does reflect the thinking of the Department that, 
28

1 in a couple of areas here, that we feel that the 

2 rates that we've had previously has had a profound 

3 effect on students and on programs.

4 A lot of schools have revisited the 

5 types of programs that they offer. We have also 

6 considered that the use of one, basically one metric 

7 to determine whether or not an institution's 

8 program will retain eligibility and have -- are 

9 convinced that that's not -- that applying that 

10 one metric to determine whether a school's program 

11 is eligible is not appropriate.

12 The other thing here is that we are 

13 expanding the rates calculation to all educational 

14 programs. So there -- and then we felt strongly 

15 about doing that, so that students and the 

16 community at large can compare -- can compare the 

17 rates across programs, that these rates shouldn't 

18 apply only to one specific part of the community. 

19 It should be that all programs should be subject 

20 to this, so people can compare it back and forth, 

21 especially students.

22 So the sanctions, the sanction part of 

23 this was limited only to gainful employment 
29

1 programs. So we feel that in this way there will 

2 be -- the information will be calculated for all 

3 programs. It will be disseminated. There will 

4 be language related to the -- or putting the DE 

5 rate into context.

6 We also feel that we still have the 

7 certification requirements as a check, and this 

8 represents basically the philosophy of the 

9 Department, currently where we want to go with this.

10 MR. RAMIREZ: Todd.

11 MR. JONES: I'm going to disagree with 

12 the description of the change of the rule here, 

13 and I know I'm probably going to get disagreement 

14 around the table, that I actually don't think the 

15 major issue is dropping of sanctions. I wouldn't 

16 go on as to why from a philosophical perspective 

17 and actually applicability of state laws and other 

18 reasons.

19 I think it's actually the Department's 

20 futile attempt to apply this to all programs under 

21 the federal aid program. It has diluted the idea 

22 of regulatory application so much that it will be 

23 almost impossible for the Department to, in any 
30

1 useful way, categorize what goes on.

2 I say that because there are very 

3 different reasons that we have higher education 

4 degrees. I know that seems obvious to anyone who 

5 gives it more than about three seconds' thought, 

6 but there is a fundamental difference between 

7 teaching somebody a certificate -- well, an 

8 associate's degree focus skill for a particular 

9 career, which is not intended to have a larger 

10 educational purpose for their life, and a doctoral 

11 degree or a law degree, which also has a great deal 

12 of specificity but also involves a much more 

13 comprehensive program of study.

14 I point to those examples because those 

15 in some ways, you could say there's a connection 

16 between what the educational program is and what 

17 people ultimately do. And then the big middle, 

18 which is the idea that baccalaureate programs 

19 somehow fit under a disclosure metric as being 

20 described here. The reality is that the purpose 

21 of a larger baccalaureate program, which is the 

22 majority of students who are going to be covered 

23 by -- or well not a majority. 
31

1 A very large percentage of students 

2 covered by this, the connection between course of 

3 study and a particular job as projected forward 

4 is remote in many cases, but then it's not intended 

5 to be. So in fact the idea that one-third of 

6 students who enter teaching when they leave a 

7 baccalaureate program end up not being teachers 

8 three years later, which is a fact that has existed 

9 for a number of years, is not an indication that 

10 the degree has somehow failed them.

11 In fact, it's an indication that the 

12 degree was put to its intended use, that the student 

13 was educated in such a way that they are not required 

14 for their own self support to continue in the 

15 profession of teaching, which they have decided 

16 they no longer want to participate in. 

17 The idea that someone receiving a 

18 History degree could go work for Google or could 

19 go work for the U.S. Department of Education, or 

20 could seek to spread the word of God in a remote 

21 part of the United States or Brazil and earn 

22 practically nothing, is an indication that there 

23 isn't an effective measure you can put to what 
32

1 earnings are intended to be from the degree program 

2 in most cases when you're dealing with that big 

3 middle of baccalaureate degree programs.

4 I could step back for a second and say, 

5 you know, and look at this from the 60,000 foot 

6 level. Is the real purpose of this proposal to 

7 not achieve consensus and then allow the Department 

8 to write whatever it actually wants for its own 

9 rules when those are released? That's what the 

10 Obama administration did. Maybe that's what the 

11 Trump administration wants to do.

12 That's fine. I mean that's a perfectly 

13 legitimate position for an administration to take 

14 about a negotiated rulemaking. But from that 

15 sense, this is not a serious proposal because it 

16 makes the suggestion that we can somehow apply these 

17 metrics to programs that they don't apply. It's 

18 as if you're asking a group of people, a large number 

19 of whom are missing their hands, to express what 

20 gloves are your preference.

21 That's not -- that's simply not 

22 something that functions within the physical 

23 limitations of the people you're talking about. 
33

1 To attempt to apply these metrics to people who 

2 are -- to programs that are not intended to have 

3 a specific work outcome is simply not tenable 

4 either.

5 MR. RAMIREZ: All right. I have 

6 Kirsten, Whitney, Jeff, Sandy and Jennifer. So 

7 Kirsten.

8 MS. KEEFE: Here we go. So I agree. 

9 My point was back more towards the sanctions and 

10 just wondering are there under what was drafted 

11 with the removal of sanctions, and I appreciate 

12 that from a legal services standpoint? I probably 

13 understand the intricacies of the metrics the least 

14 at the table.

15 But are there any schools that wouldn't 

16 qualify now for higher ed dollars? You know, I 

17 think back to when I first started out in Legal 

18 Services, I had a client who, you know, his wages 

19 were getting garnished at the time for a 

20 correspondent truck driving school that you didn't 

21 need a license to attain, you know, like sort of 

22 the really bad trade schools of old.

23 And I appreciate that I'm in New York 
34

1 and we have good certification requirements in New 

2 York state, so that might not be able to happen 

3 in New York state because of state level 

4 protections. But on the federal level, would 

5 somebody like that now be, you know, if there's 

6 a program like that be eligible for higher ed 

7 dollars?

8 MR. MARTIN: I'll respond to that. 

9 First of all, I certainly welcome all of the 

10 opinions around the table and I'm not -- I don't 

11 -- that's not my place to sit here and refute 

12 everyone as everybody comes up with that. I will 

13 give the Department's position. Regarding those 

14 safeguards that are in place, I do want to point 

15 out that the potential loss of program eligibility 

16 under gainful employment is not and never was the 

17 only tool the Department has at its disposal to 

18 remove non-performing programs from or 

19 non-performing institutions, I should say.

20 We never -- we can look at individual 

21 programs and we have said certain programs are 

22 ineligible. We have a lot of tools at our disposal 

23 to remove institutions from the program that are 
35

1 -- that are problematic and not administering the 

2 programs in accordance with statute and 

3 regulations. 

4 So I don't think that regardless of 

5 where anybody stands on the use of program sanctions 

6 for gainful employment, that that is the only 

7 mechanism that we have to look at the viability 

8 of programs.

9 So when talk about the truck driving 

10 programs that -- the abuses that occurred 

11 with -- the famous one was the person missing a 

12 leg or whatever that was in a truck driving program. 

13 Yes. Certainly, I think the Department, while 

14 we're not perfect, has made a lot of strides in 

15 removing those institutions from the programs that 

16 caused a great deal of problems.

17 So I don't -- I don't think we should 

18 look at this in the context of -- with a lot --

19 if we don't have the program sanctions for gainful 

20 employment, that somehow the entire system of 

21 regulating institutions that are holding them 

22 accountable falls apart.

23 I would point out we still have -- for 
36

1 instance, we have limitations and termination, 

2 suspension, termination provisions. We routinely 

3 conduct program reviews. We've put, we've limited 

4 schools' ability to -- schools' abilities to 

5 expand. We use the program participation 

6 agreement. We still are going to have 

7 certification requirements. I should point that 

8 out as well.

9 MR. RAMIREZ: Whitney.

10 MS. BARKLEY-DENNEY: Yeah. I'm 

11 really interested in wondering if the Department 

12 can share the documentation they have that shows 

13 that the disclosures-only regime is effective for 

14 borrowers? That seems to go against a lot of social 

15 science and a lot of the research that we heard 

16 around this table.

17 So I'm wondering if that's something 

18 that we can see, the number of programs that altered 

19 the way they were operating due to a 

20 disclosures-only regime and even decided not to 

21 offer that program anymore, and not just the first 

22 release of gainful employment numbers, which we 

23 know actually did affect folks because of potential 
37

1 loss of eligibility but actually the ones that 

2 changed only because of a disclosure regime.

3 MR. MARTIN: Well, yes. I mean if 

4 you're asking me is there some way to sort out which 

5 -- those programs which were dropped or altered, 

6 I guess your point that you're making, your point 

7 is that they did that mostly because of the threat 

8 of loss of program eligibility. So to what extent 

9 loss of program eligibility or what extent was just 

10 simply having the rates for those programs 

11 disclosed?

12 I don't know that I'm willing to be able 

13 to produce data which will show which it was. I 

14 don't think I can do that.

15 MR. RAMIREZ: Jeff.

16 MR. ARTHUR: Yeah. I agree. There 

17 certainly may be programs where sanctions are not 

18 appropriate or perhaps the debt to earnings 

19 measurement is not as strong a consideration for 

20 those entering the program. But we really can't 

21 entertain sanctions until we have the data across 

22 all of higher ed, and while the current rule does 

23 exempt the vast majority of programs that are 
38

1 designed to lead a particular career, that's 

2 clearly true.

3 We have to start with the data. I mean 

4 that's a commonsense approach. But there's a real 

5 misunderstanding I believe about the number of 

6 students that are currently attending for-profit 

7 institutions. I think it's been -- some data has 

8 been presented that isn't anywhere near accurate 

9 currently.

10 If you look at the fall of 2016 and IPEDS 

11 enrollment data, which the most recent data on 

12 enrollments, I mean for-profit colleges only 

13 represent six percent of the 20 million students 

14 enrolled in higher ed. When you -- and that's after 

15 you take out schools that have closed, and I believe 

16 when you look at the fall 2017, it's going to be 

17 down to five percent.

18 So if we truly want to inform and 

19 provide students a framework to make -- for better 

20 decision-making, I mean it is appropriate to do 

21 this across higher ed. And again as I stated, how 

22 can you have a sanction until you understand the 

23 data for all programs that are similar related?
39

1 MR. RAMIREZ: Sandy, then Jennifer.

2 MS. SARGE: I think one of the things 

3 that has been -- what I appreciate about the 

4 Department going towards this way is that -- is 

5 it seems to have moved itself back into its position 

6 in the triad, where they are the lender of record 

7 and being a lender of record is not necessarily 

8 the area where -- where you would also then want 

9 to step into quality and purpose and intent.

10 I'll give you an example. If you're 

11 buying a home, for the most part lenders are going 

12 to assume you're going to live in it, or someone's 

13 going to live in it. It doesn't go down and look 

14 whether you're going to also have a massage studio 

15 in it or a yoga studio. It's not going to go in 

16 and look at it at the point of the lending, whether 

17 or not you're going to open a crack house in it.

18 It's not going to go down into that 

19 level as the lender. It's going to -- the lenders 

20 are going to depend on the states and the laws of 

21 the area in which that house is built, to determine 

22 whether or not the activities within that house 

23 are appropriate. 
40

1 So for me, from a finance perspective, 

2 I look at the fact that you're stepping back into 

3 or moving into a role that is, in my opinion, more 

4 suited to the lender of record. I think this was 

5 a good move. 

6 So Todd, to your point about intent, 

7 that's not the lender's role necessarily. That's 

8 the accreditors and the state authorizers, of 

9 looking at whether or not there are programs not

10 intended to have a work outcome.

11 The question to a lender would be 

12 whether or not you should be lending for that 

13 purpose then, and that's between the lender. It's 

14 why 80 percent of the banks got out of lending to 

15 students, because it was an unsecured loan where 

16 they had very little recourse. The Department is 

17 pulling back and wanting to see data, so I'm going 

18 to -- I'm in favor of what I've seen. Thank you.

19 MR. RAMIREZ: All right. Let me get 

20 Jennifer, the two Chrises, first Gannon, and then 

21 Madaio, and then Todd and Kirsten.

22 MS. BLUM: Thanks. This is Jennifer 

23 Blum. So first with regard to Todd's reference 
41

1 to diluting regulatory application, I would say 

2 that, you know, I'm sure we'll probably have another 

3 conversation about this later. But the Department 

4 does have broad statutory authority over 

5 disclosure.

6 In fact, you know, I would say that this 

7 is -- this approach is actually less diluted than 

8 the twisting of gainful into pretzels over how to 

9 apply gainful in a way that makes sense from a 

10 metrics standpoint. So you know, I do think that 

11 there's -- you know, it seems pretty clear and of 

12 course the Department has done other disclosures, 

13 some of which we don't love either like the 

14 Scorecard. 

15 But, you know, it seems pretty clear 

16 that they have the opportunity to do this and to 

17 apply it to anybody and so for that, you know, in 

18 terms of the applicability to everyone, I think 

19 that makes sense from a consumer standpoint, a 

20 consumer understanding standpoint.

21 Having said that, I will agree with Todd 

22 on another point, which is -- and I'm sure we'll 

23 get into the weeds of the metric and different issue 
42

1 papers. But the Department did go backwards as 

2 it relates to the metric a little bit and made it 

3 very, very one-size-fits-all.

4 So I hope that there is an opportunity, 

5 unlike you know, I don't want to approach this as 

6 the Department did this in order not to reach 

7 consensus. I do think regardless of consensus, 

8 there are areas where we can work together to get 

9 to a point where it makes some sense. In that 

10 regard, I do agree with Todd. Having the same 

11 metric for a vocational program as you do a doctoral 

12 program makes zero sense.

13 I also do think that as it relates to 

14 the rationale for having a disclosure, even if just 

15 a disclosure having a metric around debt to earnings 

16 when you have a degree like a doctoral degree 

17 requires some additional conversation. So I do 

18 agree with Todd that a one-size-fits-all disclosure 

19 without any regard to the type of program makes 

20 -- does not have a rationale behind it.

21 So I do look forward to that 

22 conversation, and I do agree with Todd that 

23 understanding the bachelor's piece in particular 
43

1 is, you know, I think the hardest actually. So 

2 you know, and the rationale behind that and 

3 earnings. So I do agree with that.

4 And then finally, I just wanted to 

5 address Whitney's question about data. I can speak 

6 from experience. I know it's pretty public, so 

7 I don't have any -- I'm not unabashed about it, 

8 and I think I brought it up at the last rulemaking. 

9 A good example for us at Walden of a program that 

10 we decided to teach out because of the metric, not 

11 because we didn't think it was a terrific program 

12 actually is the RBSCD, our bachelor in Early 

13 Childhood Development. 

14 I think I mentioned this in the last 

15 go-around, that every single program was I 

16 think -- there may have been one in the nation that 

17 passed, but every other one was zone or fail. I 

18 think if this goes go to disclosure, bachelor of 

19 Early Childhood Development will be a perfect 

20 example to see at the bachelor level to Todd's point 

21 actually, what we're measuring here. 

22 Early childhood teachers sadly don't 

23 make what they should and protecting all of our 
44

1 children and educating our children at an early 

2 age, and yet the states and accreditors require 

3 bachelor's degrees most of the time. So that's 

4 a very good example of a very specific bachelor's 

5 in Education where I suspect the Department will 

6 find nationally that there will be a lot of very 

7 good programs and low-performing.

8 And so that does require, like I said, 

9 a lot of attention in the metric. I'm not 

10 questioning actually whether or not there should 

11 be a disclosure around that program, but I'm just 

12 saying we better get it right. 

13 MR. RAMIREZ: Gannon.

14 MR. GANNON: I believe that we left 

15 negotiations last time with the consensus that we 

16 need sanctions as part of this rule. I just find 

17 it very hard to believe that this Committee is here 

18 to do anything, that these negotiations are leading 

19 to anything if the Department's just going to go 

20 ahead and write their own rule and not take any 

21 of the recommendations, especially something we 

22 had total consensus on that the Committee has put 

23 forth.
45

1 MR. RAMIREZ: Greg, did you want to 

2 respond to that?

3 MR. MARTIN: Yes. First of all, I want 

4 to state unequivocally that it's not our intention 

5 to propose regulations to bait non-consensus. 

6 That is not our intention at all. Obviously, as 

7 with any administration, the issue papers, the 

8 proposed rules do reflect the feelings of the 

9 administration. That's perfectly understandable, 

10 and they are considered ones.

11 We are not in any way trying to seek, 

12 to put something out there which will ensure that 

13 there's no consensus, to allow us to write whatever 

14 we want to do. That's not what we have in mind 

15 at all, and we are here to entertain-- these 

16 represent proposed rules. 

17 So we are here to hear your responses 

18 and your thoughts on whether or not you agree with 

19 these, and in what ways you do or don't agree with 

20 them. So that's why we're having this session.

21 If it were our intent just to write the 

22 rules, you know, I wouldn't entertain any of it 

23 or walk away, and we're not doing that. So you 
46

1 have the opportunity here to express your opinions 

2 on them and why you feel they're good or bad or 

3 what changes should be made, and we're here to 

4 listen to that.

5 MR. RAMIREZ: And similar to the first 

6 paper that we reviewed, I think that this is one 

7 that we would have to set aside and start getting 

8 into the components of each of them before try to 

9 take a temperature vote on the scope piece, right, 

10 because let's see how some of those discussions 

11 go. But Chris Madaio.

12 MR. MADAIO: Thank you. Christopher 

13 Madaio. All right, here we go. I have three 

14 points. I think first, obviously I want to go back 

15 to the Higher Education Act. That to me is the 

16 statute that triggers the need for all of these 

17 rules. It's the statutory cites that we've been 

18 looking at in this session and the last session, 

19 and the Higher Education Act contemplates that GE 

20 programs are different than non-GE programs.

21 I mean that's what the statute says. 

22 If, you know, we feel at this table that that's 

23 not accurate, then that should be changed 
47

1 statutorily and obviously there's discussions on 

2 the Hill that that's going to happen. But right 

3 now, the Higher Education Act is the law.

4 So to me, it is shocking and I disagree 

5 strongly that all programs should be treated 

6 similarly in this rule, because to me this rule 

7 is supposed to arise out of the Higher Education 

8 Act's gainful employment statutory language. 

9 So the fact that that language itself 

10 contemplates that programs, as defined under the 

11 term gainful employment programs, right, they're 

12 for-profits and your non-degree programs at other 

13 institutions, have to lead to gainful employment. 

14 So what Todd was talking about, I think that's 

15 an important point, is that those are programs that 

16 should lead to a job, a job in that field.

17 And this rule doesn't accomplish that, 

18 and it doesn't support that law when there's no 

19 way of if a program does not accomplish that, then 

20 what? I mean we just expect that students should 

21 be able to look at the disclosure and choose not 

22 to go there and the program just dies on its own? 

23 I think we know that that's really not the case. 
48

1

2 What the case would be is that program 

3 will continue obtaining taxpayer dollars and 

4 putting students through a program that just 

5 doesn't comply with the Higher Education Act. So 

6 to me, if this rule doesn't accomplish that, I don't 

7 see why again we have a rule that doesn't do that. 

8

9 And you know, I was thinking about it 

10 too. You look at even commercials or advertising 

11 that maybe a public institution does when it talks 

12 about its programs and you know, usually those are 

13 commercials that talk about the learning that a 

14 student does. And then you look at commercials 

15 done by some of the for-profit institutions, when 

16 they're obviously very specifically targeted at 

17 the career that that student is going to get from 

18 that institution.

19 So I think, I mean it's well known that 

20 for-profits, even ones that have bachelor's and 

21 master's and, you know, degrees that are not very 

22 hyper-vocational, right, your criminal justice or 

23 things like that, those are and there's a reason 
49

1 that the Higher Education Act requires even those 

2 programs, your bachelor programs at a for-profit 

3 institution from --

4 The Higher Education Act would require 

5 that those programs lead to gainful employment, 

6 compared to those same programs perhaps at a 

7 non-GE program. So I think that's a really 

8 important distinction that this proposed rule 

9 totally misses.

10 So my second point, it goes to whether 

11 the Department is the lender of record and therefore 

12 should completely wash its hands of any regulatory 

13 guidance and oversight whatsoever. So first of 

14 all, I disagree with that wholly. I mean that 

15 wouldn't accomplish a triad, if one part of the 

16 triad is completely separate from the other two 

17 parts.

18 They're an equal triad. The 

19 Department certainly has a regulatory role. I mean 

20 there's many regulations and rules and laws like 

21 the Higher Education Act that stand for that 

22 proposition. The Department has a responsibility 

23 to protect students. The Department has a 
50

1 responsibility to protect taxpayer money. The 

2 Department has a responsibility to ensure fairness 

3 and protect good institutions, and I don't think 

4 this rule accomplishes any of that.

5 I think many of the good institutions 

6 helmed by folks here at this table I think should 

7 be concerned at this rule, which will let bad actors 

8 in the field continue to propagate, continue to 

9 obtain Title IV money and put students through poor 

10 education that does not lead to gainful employment.

11 And lastly, you know obviously borrower 

12 defense is another rule that's being negotiated, 

13 and there was some publications about students who 

14 are successful in borrower defense claims not 

15 obtaining full forgiveness, but obtaining limited 

16 forgiveness based upon gainful employment data.

17 So I guess, you know, although I 

18 disagree with that concept, actually that's not 

19 why we're here, my question I guess for the 

20 Department would be is if they think that gainful 

21 employment data is appropriate to limit students' 

22 recovery from schools that are found to have 

23 committed misrepresentations and other forms of 
51

1 bad conduct, if that is sufficient for that why 

2 it is would be insufficient or inappropriate then 

3 to use that data to limit schools' access to Title 

4 IV aid.

5 MR. RAMIREZ: Okay. We have about six 

6 people in the queue. Todd is next, then Whitney.

7 MR. JONES: I like not having to 

8 intervene back in the conversation where I think 

9 I've said what I want to say, but I really need 

10 to respond to comments made about what I presented. 

11 The reality is that this data has no value for 

12 baccalaureate degree programs as I've said, and 

13 I'm sorry I have to state direct opposition to the 

14 idea that there is any serious value even for CFOs, 

15 even for lenders.

16 The U.S. made a decision -- the Congress 

17 and the President made a decision to nationalize 

18 this sector of banking a few years ago. That's 

19 a policy decision. It's been made. But the 

20 suggestion that there's value in this data for the 

21 federal government as lender is I think reasonably 

22 bogus, given the long-term period that we had a 

23 variety of other forms of lenders making loans, 
52

1 both private and guaranteed, from -- to students 

2 under these programs.

3 This was not the kind of data that 

4 anyone collected at that time, and lenders were 

5 fully -- had the full ability to ask for this kind 

6 of data. They made it on an institutional basis 

7 and they did it in broad categories. It was not 

8 done institution by institution. There was no need 

9 to drag this data out.

10 And to the extent it sounds like, and 

11 we also have the comment that of course because 

12 we can collect this data, it might have some value. 

13 I'm sorry. I just am not willing to ascribe to 

14 that any more than I am the idea that, you know, 

15 we can collect various forms of other data and 

16 distribute them widely and think it's going to have 

17 some sort of value about students' judgment for 

18 programs.

19 The reality is that there's recent poll 

20 data, I couldn't find it on my app, that there's 

21 a division among people who -- the public. What 

22 is the purpose of higher education, of a degree 

23 program? Is it to lead to a specific kind of 
53

1 employment, or is to lead to providing you with 

2 the thinking and educational tools you need to do 

3 better at life generally, including employment?

4 And if you have that kind of division, 

5 that means there are some people that believe that 

6 and some people that don't. But if you have data 

7 that doesn't have any relationship in a serious 

8 way to that kind of decision-making process, and 

9 I would argue applicability of this to 

10 baccalaureate programs does, lacks that, then 

11 you're not collecting data that has any use or 

12 value, and it creates a burden.

13 I mean any time you have a federal 

14 government imposition of data collection or 

15 regulatory authority, it creates a burden on the 

16 operation of the enterprise. It's something that 

17 Congress absolutely agrees with until the next time 

18 it wants to add just another reporting requirement 

19 because it's necessary.

20 Well that's true, but you have to 

21 understand that you shouldn't -- just because you 

22 can seek additional data because it's not, in this 

23 case it's not proving valuable and I'm waiting. 
54

1 I'm waiting to find where exactly this data has 

2 been collected in a useful way about baccalaureate 

3 programs and distributed, and it has proved any 

4 value whatsoever for the enterprise we're talking 

5 about, which is the decision whether to attend or 

6 not attend.

7 I have -- I'm sorry. I had to say my 

8 piece, because those comments were directly 

9 addressed.

10 MR. RAMIREZ: Okay. Let me get 

11 Whitney, then Bob.

12 MS. BARKLEY-DENNEY: Yeah. So as 

13 Center for Responsible Lending's parent company 

14 is Self Help Credit Union, which is one of the 

15 fastest-growing CDFIs or community development 

16 financial institutions in the country. So I just 

17 felt like I needed to say something on behalf of 

18 our parent company, which is that as a lender, just 

19 as the Department of Education is a lender, we 

20 absolutely look at the debt to income ratio of a 

21 borrower before they borrow the house.

22 In fact, would posit that much of the 

23 mortgage crisis of 2008 was caused by lax lenders 
55

1 who didn't adequately evaluate whether a borrower 

2 could afford their loan. So as to the 

3 applicability of bachelor's degree programs or 

4 other things, we can disagree. But as a lender 

5 and just speaking up for an institution that is 

6 a lender, we absolutely do evaluate whether 

7 somebody can afford to pay off the debt that they 

8 have taken out.

9 MR. RAMIREZ: Bob.

10 MR. JONES: I just think as we go 

11 through the rest of these papers, it's going to 

12 be increasingly important to recognize that this 

13 is not about a judgment; it's about disclosure, 

14 and disclosure in fact is going to happen either 

15 through this process, the accreditation process, 

16 the changes in the Congress, whatever. 

17 Secondly, the issue of disclosure for 

18 all programs is valid. The purpose and the quality 

19 of the program is a separate point that will be 

20 dealt with in the accreditation process. But the 

21 point of the not public knowing any program for 

22 any purpose, how long or how valid it is to repay 

23 is essential information.
56

1 MR. RAMIREZ: Okay. Let me get Mark 

2 and then Jordan.

3 MR. McKENZIE: All right, just a couple 

4 of comments. First, I guess to Chris. I 

5 appreciate your comments about the statutory 

6 origin. I guess what I'd ask you to and our members 

7 to think about is that the statute had not been 

8 defined for about 50 years, and as a result, these 

9 identical degree programs, particularly bachelor 

10 and above, emerged in the proprietary sector that 

11 were not vocational in nature. 

12 To suddenly turn that rule on was a very 

13 typical thing for those of us who offer degree, 

14 bachelor and master's degrees to address. I guess 

15 the second issue is just the overall higher ed 

16 policy, which I think is very important to my 

17 colleagues at the table who actually work at other 

18 institutions.

19 The GE rule by defining a program with 

20 a debt to earnings at eight percent, as Todd has 

21 said, has either low performing and so poor that 

22 it's worthy of closure, has an impact on the rest 

23 of higher ed, and I think it's only coming clear 
57

1 now how big an impact. 

2 I'm not going to get into the debate 

3 about whether it should have applied to litigation 

4 with borrower defense, but overall I think it's 

5 a fairly untenable policy to label a degree program 

6 in one sector low-performing and deserving of 

7 closure, and having the exact same degree program 

8 in another sector with worse outcomes untouched 

9 and still receiving the fountain of federal 

10 financial aid.

11 And so for a student, the data's the 

12 data, and I think that's something this group should 

13 reflect on. Two other things. I'm generally open 

14 to sanctions if in fact we were able to correctly 

15 identify high performing and low performing 

16 programs, and I'm not sure -- I think that's a very 

17 difficult task.

18 And then the third thing, the last thing 

19 for the group to consider is should the rule really 

20 focus on borrowers rather than programs? Because 

21 in my mind the rule is a little too lax right now, 

22 and I'm one of the few people who argues that.

23 MR. RAMIREZ: I'm going to get Jordan, 
58

1 then Jennifer.

2 MR. MATSUDAIRA: Thank you, good 

3 morning. I guess I wanted to just follow up on 

4 something that Greg had said in describing why the 

5 Department had decided to kind of propose an all 

6 disclosure no sanctions sort of rule, and that was 

7 the notion that the use of one metric for 

8 establishing eligibility is not appropriate.

9 And just building off of something that 

10 Mark was alluding to, you know, what the proposal 

11 really is here is not just that one metric's not 

12 appropriate, but that no metric is appropriate, 

13 that essentially it's not possible. There could 

14 be alternative universes where we had a couple 

15 of existing metrics that establish eligibility.

16 So I'd ask you both to comment on that, 

17 and then also recognizing that we're not, as Mark 

18 was saying, trying to decide kind of high 

19 programming versus low -- high performing versus 

20 low performing institutions. We're really trying 

21 to establish some sort of lower, kind of lower bound 

22 to, you know, whatever space that we're talking 

23 about for consumer protection purposes, and saying 
59

1 that in a particular --

2 There's some category of programs that 

3 can be identified by some existing metrics that, 

4 you know, are sufficiently low quality that we don't 

5 want to allow students to borrow from the government 

6 or receive Pell grants to attend. So I guess what 

7 I'd ask is a combination of -- is it the Department's 

8 position that there's no data that are appropriate 

9 for making that decision, and that's true, you know, 

10 in the extreme.

11 There's no level of debt to earnings 

12 that the Department would find unacceptable for 

13 students to take on and attend a program.

14 MR. RAMIREZ: Okay, thank you. 

15 Jennifer, and Kirsten.

16 MS. BLUM: So Mark made the statutory 

17 point in response to Chris, but I do want to go 

18 a bit deeper on that just to be clear about the 

19 statutory provisions on gainful employment. So 

20 50 years was the first time it was referenced. 

21 It was then added again the term in '92 in Section 

22 481.

23 To be honest with you, the Department 
60

1 in the last administration struggled, admittedly 

2 I think, with the applicability. 481 says nothing 

3 about tax status, and yet it mentions it in a couple 

4 of different places, and with no reference to 

5 for-profit or non-profit. The only place that 

6 that's done is in Section 101 and 102.

7 So the two have to correlate, and it's 

8 almost impossible to make them correlate, in part 

9 for the reasons that Mark said, that the -- that 

10 actually the for-profit sector grew up and started 

11 offering, which they were allowed to do, and started 

12 offering different types of programs at different 

13 degree levels.

14 So the provision no longer actually --

15 they don't correlate anymore, and in fact that's 

16 demonstrated in just on my finer point on graduate 

17 programs. In 1992 at the same time that they added 

18 gainful employment in Section 481, they actually 

19 created a different provision for graduate programs 

20 and did not mention the words "gainful employment."

21 So which is why I've constantly said 

22 that the graduate programs should not be part of 

23 the mix, because they weren't ever in the mix since 
61

1 1992. So I just want to put a finer point on the 

2 statutory pieces of gainful. It's incredibly 

3 complex for the Department to be able to maneuver 

4 in a way that makes, to Mark's point, good policy 

5 sense, which is to have consumers, and this is going 

6 to be my next point, to have the consumers have 

7 an understanding across higher education of what 

8 a data point is.

9 And whether it's a good point or not, 

10 we'll have that conversation later. But any data 

11 point for a consumer to truly understand how it 

12 compares, it has to compare at this point across. 

13 Chris, you brought up advertising, and I just --

14 with all due respect to "for-profit advertising," 

15 I would say that there are institutions in your 

16 own state and not to mention also New Hampshire 

17 and some western institutions, that do a fair bit 

18 of advertising that looks actually quite a bit like 

19 the advertising that any institution. 

20 So I don't want to put even a tax label 

21 on it. But institutions advertise. They do, and 

22 getting that right and on the misrep piece 

23 completely agree. Getting misrep right makes a 
62

1 ton of sense in that proceeding. 

2 But to talk about, you know, one group 

3 of institutions as if they advertise in manners 

4 at other institutions don't advertise makes no 

5 sense. That goes to my point about for the consumer 

6 protection purposes, we've got to figure out a way 

7 to have accountability across the board.

8 MR. RAMIREZ: Kirsten.

9 MS. KEEFE: Well my first comment is 

10 really a hear hear to what Whitney said about 

11 disclosure only, and harkening back to the subprime 

12 mortgage lending crisis. At that point in time, 

13 there were no mortgage practices that were 

14 prohibited. 

15 Now there are. You have to make loans 

16 with an ability to repay and some other acts are 

17 prohibited. But that was the disclosure-only era, 

18 and that's where it got us.

19 The other thing that I would say is 

20 disclosures might work for a majority of the people, 

21 for a lot of people, a majority, whatever. But 

22 for a significant minority, disclosures will not 

23 work, and they will certainly not work for people 
63

1 who are also being targeted by the worst of the 

2 bad actors.

3 No one's ever going to be able to be 

4 or a lot of people are not going to be able to be 

5 self-informed or just understand the disclosures, 

6 and so I think we need also real protections to 

7 make sure that those folks, you know, aren't scammed 

8 and just, you know, given choice by disclosures 

9 but really don't understand it, or being targeted 

10 by the worst actors.

11 MR. RAMIREZ: Thank you. Mark.

12 MR. JEROME: Just a quick, I guess I'm 

13 going to float a proposal, and it really goes to 

14 Jordan and a little bit to the consumer groups. 

15 How about the Department, that the members consider 

16 limiting the disclosure to the degree programs that 

17 there's overlap between the sectors and that are 

18 generally considered career-related? And that 

19 would address some of Todd's concern. Not all of 

20 it; I understand that. 

21 But the reason why it's important is 

22 because I think the data's clear that there just 

23 are certain majors where no institution would pass 
64

1 this metric, and you know, whether it's in 

2 for-profit, not for profit or even public, and I'm 

3 thinking of the Fine Arts. 

4 So I'm floating the idea, especially 

5 to make sure consumers are not misled, that the 

6 disclosure goes to -- and we'll deal with sanctions 

7 later, the programs where there is the most overlap 

8 between the sectors, you know, bachelor of 

9 business, accounting. 

10 That would deal with -- that would 

11 address the consumer issue. That may limit the 

12 concerns about the very liberal arts programs that 

13 people tend not to go into for salaries.

14 MR. RAMIREZ: All right. Let me --

15 just for the record, that was Marc Jacobs. We have 

16 two -- Marc Jerome, sorry. We have two Marks here, 

17 so that's Marc with a C I guess. And then let me 

18 throw out a suggestion here, because I guess the 

19 way that I'm looking at it is that the Scope and 

20 Purpose is somewhat setting the table, and the 

21 specific proposal that Marc or idea that Marc had 

22 thrown out there would be covered in one of the 

23 later papers, right?
65

1 So could I ask that we hold off on that 

2 one. Let's bring it back during that. Let's 

3 finish out these comments here. We'll take a 

4 break, and then we'll come back and start getting 

5 into the details of each of the papers, and then 

6 somewhat like we did with the first paper, come 

7 back to the scope and purpose.

8 I think that if we could nail down some 

9 of the -- at least get an idea of where there might 

10 be areas of agreement in the other -- in each of 

11 the papers, that might help us lock down the Scope 

12 and Purpose issue paper. Does that make sense?

13 MR. MARTIN: Yeah, I've written that 

14 down. We can certainly revisit that, and I think 

15 even maybe the issue paper, too. We can discuss 

16 that.

17 MR. RAMIREZ: Okay, all right. So 

18 let's -- let me get Mark McKenzie, and then we will 

19 -- then we'll take a little break and then come 

20 back and hit the first one, I'm sorry the second 

21 issue paper.

22 MR. McKENZIE: Thank you. Actually, 

23 I'm just going to -- this is a fairly in the weeds 
66

1 issue, but under 668.402 definitions, under the 

2 cohort period there was new language about -- under 

3 subparagraph two. "For an educational program, 

4 students can" --

5 MR. RAMIREZ: Mark, I'm sorry. Where 

6 are you at?

7 MR. McKENZIE: I'm sorry in the 

8 definitions section, 668.402, Issue Paper 1. 

9 MR. RAMIREZ: Okay.

10 (Off mic comments.)

11 MR. McKENZIE: So in the definition 

12 under Cohort Period.

13 MR. RAMIREZ: Okay.

14 MR. McKENZIE: Okay. Just under the 

15 subparagraph two there, that it's limited to 

16 medical or dental. There may be medical, dental 

17 or other graduate health care issues that have 

18 residency. 

19 We just want to pull that out as a 

20 potential, and then under the supervised training 

21 program, just a little lower, that the student 

22 required to hold a degree a doctor of medicine, 

23 osteopathy or as a doctor or dental science. 
67

1 There also may be other doctoral 

2 degrees in other health care fields. So I just 

3 want to bring that to your attention.

4 PARTICIPANT: I'm sorry, can you 

5 repeat that question/comment?

6 MS. MILLER: I'm sorry. Mark, before 

7 you -- Mark. I'm sorry. Before you said, would 

8 you clarify what you were bringing to our attention 

9 about the medical or dental or residency?

10 MR. McKENZIE: Yeah. The new language 

11 is limited to just medicine, medicine, osteopathy 

12 or a doctor of dental science. There may be other 

13 graduate health care professions, director of 

14 chiropractic. We're looking at things in 

15 acupuncture where there may be doctoral degrees 

16 that also have residencies.

17 So if we're going to have that kind of 

18 a definition, I think it should be expanded to 

19 include the other graduate health care professions 

20 or doctoral degrees in health care that allow --

21 that have that same requirement.

22 MS. MILLER: Thank you.

23 MR. RAMIREZ: Jennifer.
68

1 MS. BLUM: So on this point, I'm sorry. 

2 I for some reason didn't know that we were going 

3 into the definitions section. So if we are, I just 

4 would second Mark actually on this point. I was 

5 planning on raising this as well, and again this 

6 again goes to the graduate issue. There are 

7 actually even masters that require residencies and 

8 internships as well.

9 Doctoral, certainly residencies or 

10 something like that, that do impact length of time. 

11 So I was, you know, obviously my, as everybody 

12 sort of already knows, you know, the applicability 

13 of any of this to doctoral I think is questionable. 

14 But if we're going to include doctoral and first 

15 professional degrees like medical, then they ought 

16 to be treated similarly because they actually have 

17 similar sort of roads to hoe as students, if you 

18 will.

19 So I would second Mark. I think we have 

20 to have a conversation about what we mean by --

21 I don't want to have this conversation necessarily, 

22 but residencies and internships. Those are pretty 

23 broad terms, and they exist across higher ed, at 
69

1 especially the graduate, well in particular at the 

2 graduate level.

3 MR. RAMIREZ: Okay. Anything else 

4 generally on Issue 1 before we take a break? Yeah, 

5 Craig.

6 PARTICIPANT: You know, I just thought 

7 this is going to be a little bit maybe tedious to 

8 do, but since we're referencing these papers, just 

9 we don't have page numbers on these papers. So 

10 what I'd ask everybody to do is in your spare time 

11 whatever, number them, 

12 one-two-three-four-five-six because it will be a 

13 lot easier when people are referencing things. 

14 They can say it's on page five and we can all turn 

15 there.

16 So if you wouldn't mind doing that at 

17 the break, or just going through your papers and 

18 putting some numbers on them that would be great.

19 MR. RAMIREZ: Well let's -- I'll get 

20 Chris in just a second. But when we break, let's 

21 take a 20 minute break to allow people to take a 

22 break and then also to number their pages. But 

23 Chris.
70

1 PARTICIPANT: Well, I just had a point. 

2 I mean Jordan I think had a few questions that 

3 seemed directed to the Department, that I don't 

4 know whether they had an opportunity to answer. 

5 So I was hoping maybe they could respond to those 

6 points.

7 MR. MARTIN: I will respond after the 

8 break.

9 PARTICIPANT: All right, thank you.

10 MR. RAMIREZ: All right. So let's go 

11 ahead and take a 20 minute break, and then we will 

12 --

13 PARTICIPANT: Jennifer has a question.

14 MS. BLUM: So I just want to like ask 

15 a procedural question. Are we proposing that we 

16 leave Issue 1 after the break, because there 

17 are -- I mean the definitions. I don't know about 

18 others, but I do have -- I mean I think I have a 

19 couple of other --

20 MR. RAMIREZ: Yeah. We'll come back

21 then and we'll do that.

22 MS. BLUM: Okay.

23 MR. RAMIREZ: I guess the point that 
71

1 I was looking at was that it seems like we need 

2 to get into some of the meat of the issues before 

3 we could take temperature checks on most of what 

4 is under Issue 1. So we'll come back and finish 

5 off with 1. Okay, so 20 minutes.

6 (Whereupon, the above-entitled matter 

7 briefly went off the record.)

8 MR. RAMIREZ: Okay. Let's go ahead 

9 and get started back up here, and when we had broke, 

10 Jennifer had mentioned that there was a question 

11 or a comment on the definitions. So let's start 

12 off with that. Jennifer.

13 MS. BLUM: I just had technical -- well 

14 I think it's a technical question.

15 MR. RAMIREZ: What page are you on?

16 MS. BLUM: I'm going to be on page five, 

17 if we all numbered -- if all numbered similarly. 

18 It's the strikeout of -- well, it's the now new 

19 definition of educational program, and Greg I had 

20 emailed you and Scott because I thought I saw this, 

21 I think a couple of saw this pretty quickly and 

22 thought that there was a technical error. 

23 But I wanted to confirm because -- and 
72

1 this may go to the conforming technical changes 

2 too. So I just wasn't sure, and I don't want to 

3 get into the weeds, but I did want to highlight 

4 the reference to 668.8(c)(3) or (d). Those are 

5 not -- I think you want to strike that, but I'm 

6 not 100 percent sure. So I'm just highlighting 

7 that.

8 MR. MARTIN: Was that the point that 

9 those -- that regulation references GE programs; 

10 correct?

11 MS. BLUM: Correct.

12 MR. MARTIN: Right. Yeah. We'll 

13 take a look at that. I think you're probably --

14 you might be right, but we're definitely -- I don't 

15 want to say 100 percent, but we'll take a look at 

16 that, and I thank you for bringing it to our 

17 attention.

18 MS. BLUM: Okay, sure. I just wanted 

19 to -- that was it.

20 MR. RAMIREZ: Okay, great. Greg, 

21 right before the break there were a couple of 

22 questions that folks were hoping to get responses 

23 from you.
73

1 MR. MARTIN: Yes, and there were. 

2 This is Greg. There were a couple of questions. 

3 The most important one is are the Eagles the best 

4 team ever and the answer to that is unequivocally 

5 yes.

6 (Laughter.)

7 MR. MARTIN: Sorry, we're not going to 

8 have any consensus. It's a done deal. I made the 

9 decision from here, although I shouldn't say that. 

10 One of my supervisors would definitely disagree. 

11 So just I'll quit while I'm ahead. All right.

12 So the first, we had a couple of 

13 questions. One of them was the use of -- well no, 

14 wrong set of questions. Here we go. One of them 

15 was regarding the use of GE data for making 

16 decisions in borrower defense, and whether if 

17 that's the case, if it was decided to do that, then 

18 if it's used for those students by student decisions 

19 then why not use it for determinations of program 

20 eligibility?

21 First of all, we don't -- I don't see 

22 that the two are the same. It is an apples and 

23 oranges comparison. We do feel that the GE data 
74

1 is useful data, and for that reason it is being 

2 considered in making borrower defense decisions. 

3 We regarding our compliance efforts and borrower 

4 defense -- and GE rather, though we don't propose 

5 to have any program sanctions we -- this also goes 

6 to the other question of would there be a program, 

7 could there be a program whose debt to earnings 

8 is so bad that it would prompt us to --

9 I think the question was phrased that 

10 that program would lose eligibility. We're not 

11 proposing a protocol where there are -- where this 

12 is loss of program eligibility for certain, at 

13 certain break points in DE measures, as is currently 

14 the case with the regulations.

15 However, we do have ongoing compliance 

16 efforts. If a program was that bad, we could 

17 include these measures in our metric for risk 

18 analysis and whether or not we're going to do 

19 program reviews at institutions. So I don't --

20 the Department is not precluded from looking at 

21 that data or considering that data in other ways.

22 I'm trying to think if there was 

23 anything else. Did I have any other outstanding 
75

1 questions? I was trying to remember all that I 

2 was asked, and if I didn't ask them, answer them 

3 rather, please remind me of what they were, because 

4 I want to make certain I addressed everything.

5 MR. JEROME: For those of us who 

6 weren't there, it's Marc Jerome, can you just 

7 clarify? Is the Department -- is there a proposal 

8 at the BDR that GE data will be used in connection 

9 with that regulation?

10 MR. MARTIN: I want to call on the 

11 borrower defense people in the back. Hold on a 

12 second. I don't want to speak to borrower defense, 

13 because I'm not involved with it. The question 

14 again was is there a proposal in borrower defense 

15 to use GE data for purposes of determining loan 

16 discharges is the question?

17 MR. JEROME: That is the question.

18 MR. MARTIN: Okay.

19 MR. RAMIREZ: All right. So while

20 they're getting that response, Laura.

21 MS. METUNE: I had a follow-up question 

22 regarding the ongoing compliance efforts that were 

23 mentioned. So my understanding of the difference 
76

1 when you look at GE is we're looking program 

2 specific and that information can help an 

3 institution evaluate a very specific program and 

4 what they might want to do to address it failing 

5 the metric.

6 So I was just wondering if you could 

7 talk through a little bit more about the other 

8 compliance methods the Department has, and whether 

9 or not those are institution-wide or program-wide. 

10 Yeah, that was my question.

11 MR. MARTIN: Yeah. With respect to 

12 other compliance activities, I mean I don't want 

13 to -- again, I'm not in any way disparaging 

14 anybody's opinions about the necessity for program 

15 sanctions if you feel they should be there or not. 

16 But I do want to point out that I don't think we 

17 should look at this in terms of this being the only 

18 -- that absent this, that there's no compliance, 

19 there's no accountability for schools either at 

20 a program level or institutional.

21 Most of our efforts, admittedly most 

22 of our efforts in compliance are geared towards 

23 the institution itself. Are we going to 
77

1 review -- if we're going to review an institution, 

2 if we're going to limit an institution's ability 

3 to expand. But we do within the context of looking 

4 at an institution's compliance and the 

5 participation in the programs, look at individual 

6 programs they have and what goes on in those 

7 programs.

8 For instance, we have often deemed 

9 individual programs to be ineligible for a various 

10 number of reasons, and we continue to do that as 

11 well. No, there's no -- there's no metric that's 

12 applied other than GE to a particular program. 

13 So it would -- so but the individual program I think 

14 has to be viewed within the context of the 

15 institution when you're looking at compliance 

16 efforts. 

17 So I don't -- anybody that would think 

18 that we would just -- that if -- that the earnings 

19 rate were terrible for a school, that we would be 

20 precluded from considering that information in any 

21 way in looking at our compliance efforts for the 

22 program, I think for the institution as a whole 

23 would be an error.
78

1 MR. RAMIREZ: Let me get Whitney than 

2 Dan.

3 MS. BARKLEY-DENNEY: Yes. I just 

4 wanted to follow up and make sure that I understand. 

5 So I'm actually going to defend institutions, 

6 which is something I don't usually do. 

7 But so if a program, so the things that 

8 you have to use enforcement Greg are 

9 institution-wide. So is that possible that you're 

10 throwing the baby with the bath water, out with 

11 the bath water, when you could use a much more 

12 precise way through sanctions of GE to actually 

13 identify poorly performing programs instead of 

14 denying something to entire institution or shutting 

15 down an entire institution.

16 MR. MARTIN: I'm going to let our 

17 counsel address that.

18 MR. FINLEY: Yes. So the answer is 

19 there's a lot of oversight tools available to the 

20 Department if a program has very low debt to 

21 earnings ratios, and it's looked at for other 

22 reasons. You can still -- I've addressed 

23 enforcement actions against schools for specific 
79

1 programs when the problem was at a program. 

2 There's no license to lie to students, 

3 to misrepresent the students. The outcomes on a 

4 program and that's the kind of question we would 

5 ask if we were looking at this. Were the, you know, 

6 were the students properly informed? Were 

7 misrepresentations made to them when they were 

8 enrolling. There are a lot of things we could look 

9 at where an institution would run afoul of other 

10 requirements of the program.

11 MS. BARKLEY-DENNEY: So these are kind 

12 of general Unfair Deceptive Practice Act 

13 principles, lying or misleading a student, versus 

14 like a specific statutory metric that you're 

15 looking at?

16 PARTICIPANT: Yes, and based on what's 

17 in front of you, just a score on the debt to earnings 

18 ratio is not going to be a basis for an enforcement 

19 action.

20 MR. RAMIREZ: Thank you. Daniel.

21 MR. ELKINS: Similar line of questioning 

22 to Whitney's, this is Daniel Elkins. I was just 

23 curious to, you know, have you elaborate just a 
80

1 little bit more on what current enforcement you're 

2 able to exact against programs versus the school 

3 as a whole. If you could just clarify that just 

4 a little bit more for me.

5 MR. MARTIN: This is Greg. We do, just 

6 to reiterate what Steve was saying. When we look 

7 at compliance actions with institutions, we have 

8 -- we have oftentimes looked at an individual 

9 program that a school offers. 

10 If we're looking at an institution and 

11 the problems we have at an institution revolve 

12 around a given program, we'll take action against 

13 the school based on the problems with that 

14 particular program.

15 We've had issues with locations a 

16 program is offered at or we've had issues 

17 other -- I'll give you another example. We've had 

18 issues where an institution has claimed that they 

19 are offering a certain internship or experience 

20 of a program, and we have found that the school 

21 doesn't really offer that.

22 The students are left on their own to 

23 try to find that internship. So it's not what we 
81

1 consider to be legitimate, and we've taken action 

2 against a school based on that particular program's 

3 issue. As Steve pointed out, we're not going to 

4 use -- we don't propose to use debt to earnings 

5 as a determiner, determining factor as to the 

6 eligibility of a particular program based on those 

7 rates.

8 But again, I think your compliance 

9 efforts, they run the gamut, and they -- and we 

10 do target those oftentimes to individual programs.

11 PARTICIPANT: And I'm going to add to 

12 that. I mean it's quite possible that a low debt 

13 to earnings rate is really just an indicator of 

14 other significant problems of an institution or 

15 at the program, and those are the kind of things 

16 we'd be looking at for root causes.

17 It could be that an institution's 

18 practice to identify unearned funds to be returned 

19 to the program are just not being done correctly 

20 in a program. It's leading to lots of students 

21 that are actually dropping early. So we're going 

22 to -- by dealing what the R2T4 problem, you're 

23 actually dealing with the problem associated with 
82

1 that program. There is an overlap of things that 

2 get considered.

3 MR. ELKINS: Thank you. This is 

4 Daniel again. Could you make one more 

5 clarification? Do you feel you have the statutory 

6 authority currently to revoke Title IV from a school 

7 that is -- meets any of these criteria, or is that 

8 an oversight? I just am trying to get a better 

9 understanding as its germane to this, what 

10 protections or what actions you are able to take 

11 against a school that you deem as, you know, abusing 

12 students.

13 PP Well, as far as our statutory 

14 authority goes, it's fairly broad. I mean we have 

15 currently under GE there's the regulatory authority 

16 to -- where a program loses eligibility based on 

17 rates. Under the proposed rules, that would --

18 under these rules, that would no longer exist. 

19 So without that no, we would not be in 

20 a position to go to a school and say, look at that 

21 given program and say based on a debt to earnings 

22 ratio alone, we're going to for instance terminate 

23 or limit that school. We can limit schools and 
83

1 say we'll limit you and you can't use that program. 

2

3 We wouldn't have any -- we would no 

4 longer have any regulatory -- there would be no 

5 regulatory loss of program eligibility. But that 

6 wouldn't preclude us from using this data to form 

7 more of an overall picture of a school or look to 

8 where there were other problems.

9 Generally, when we seek to limit a 

10 school's eligibility to participate, there are a 

11 lot of -- there are other factors involved. We 

12 don't have anything where it would just be like 

13 you're below a certain threshold. So no, I don't 

14 think -- we wouldn't carry those old rules over 

15 to say that that would be a compliance action. 

16 But it certainly is something we could use to 

17 evaluate the school or program as a whole.

18 MR. RAMIREZ: Let me get Jordan then 

19 Johnson.

20 MR. MATSUDAIRA: Thank you. It's 

21 Jordan Matsudaira from Cornell. I just wanted to 

22 follow up about the kind of existing compliance 

23 oversight regime, and ask whether, you know, if 
84

1 we look backwards at the set of institutions that 

2 were operating over the last, you know, ten years 

3 or so, those institutions, you know, that would 

4 end up populating the data that we have about the 

5 performance of GE programs.

6 Obviously it survived the oversight and 

7 compliance review that the Department had. So I 

8 guess I just want to ask the question that I asked 

9 before, with a little bit of a finer point to it, 

10 which is you know, is there no existing metric that 

11 we have, whether it's debt to earnings or otherwise, 

12 that you think could be used to establish that some 

13 of those programs about which we have data in the 

14 past, you know, given that they did pass oversight 

15 and so on, that there no kind of measure that would 

16 have shown you that those programs would be 

17 unacceptable from the Department's standpoint to 

18 offer students financial assistance? 

19 MR. RAMIREZ: Jordan, can I make -- I 

20 want to make sure that I understand. Are you 

21 saying, are you asking is there one specific metric 

22 or a combination of metrics, or is the question 

23 truly just one specific metric?
85

1 MR. MATSUDAIRA: Greg had earlier said 

2 that the Department's view was that there was no 

3 one metric that was appropriate for establishing 

4 eligibility. 

5 And so what I want to ask, since the 

6 Department's proposal is for no metrics to be used 

7 to establish eligibility beyond the existing 

8 oversight and compliance review, is that given that 

9 we've kind of seen the performance of the existing 

10 compliance kind of set up at Ed as history as kind 

11 of shown it to us, is that the Department's 

12 position, that all the programs that were operating 

13 before should be receiving federal financial aid?

14 MR. MARTIN: Well first of all, this 

15 session is about hearing what all of you have to 

16 say, and you certainly are welcome to propose 

17 anything. We'll take -- we definitely will take 

18 that into consideration. I think that, you know, 

19 going back prior to any GE regulations, that the 

20 Department had a fairly robust compliance 

21 functionality, and just because there would be no 

22 loss of program eligibility per these metrics, I 

23 don't think that changes.
86

1 And also, to put it into that context 

2 would also be to say that every program, then every 

3 program in the country which has DE metrics which 

4 might be low, should be -- should lose eligibility. 

5 We don't feel that's the case, and there are --

6 I think there are programs which the DE rates are 

7 low that are not -- that are not bad programs.

8 That's been pointed out around this 

9 table, where that it's not the case that they don't 

10 prepare students well for occupations. There are 

11 other things, other matters in play. So I don't 

12 -- I don't agree with the assertion that the DE 

13 rate, the DE metric itself would suggest a program 

14 is "bad" in the compliance sense of the term or 

15 should be removed.

16 So I don't -- I don't ascribe to that. 

17 So therefore I wouldn't say that, you know, our 

18 compliance efforts in the past were remiss.

19 MR. RAMIREZ: Johnson then Wendy.

20 MR. TYLER: Hi. I would -- I'd like 

21 to backtrack a little bit and just tell you my -- my 

22 first impression about for-profit schools came out 

23 in the Frontline piece in 2010 about Corinthian, 
87

1 and you guys were working very hard to get them 

2 into compliance, to monitor them and they did not 

3 go under until 2014.

4 I thought the whole idea behind gainful 

5 employment was to create ways of doing things, so 

6 you don't have to rely on very time-consuming, 

7 people-intense investigations of talking to 

8 employees about what was offered, how many people 

9 are getting compensated for attracting people to 

10 programs, that sort of stuff.

11 There's been a lot of hearings about 

12 this in the Senate and other legislative bodies, 

13 and many attorney generals doing this. So I'm 

14 wondering, are you guys going to put more resources 

15 into this if there's going to be no sanction related 

16 to, you know, coming out with a bad score?

17 Because you've got to -- it seems to 

18 me you have to have a lot more employees, a lot 

19 more attorneys.

20 MR. MARTIN: Well Greg again. With 

21 that particular institution, I mean obviously their 

22 problems went way beyond having one or two programs 

23 or, you know, that had poor, that would have poor 
88

1 debt to earnings rates. 

2 So I don't think that -- I don't think 

3 we should look at this as neither we're saying that 

4 -- I don't think that GE was ever meant to be a 

5 substitute for other types of compliance.

6 You know, regarding the resources the 

7 Department has put into compliance, I don't want 

8 to recount all of them. But recently we have, we 

9 have stepped up our efforts. We have -- we have 

10 a multi-regional review team that looks at certain 

11 larger types of institutions. We have an 

12 Enforcement Division.

13 So I think that we have -- we have done 

14 that. I mean I agree, it is complex. It takes 

15 time to take even a bad player out. There are a 

16 lot of -- there's a lot of due process, which I 

17 think is a good thing. But I don't -- I don't --

18 again, and you know you don't --

19 You can either agree with this or not 

20 and I don't know that it does much good to continue 

21 to debate it, except for the fact that I'm not going 

22 to -- I don't concede, because I don't believe it's 

23 true, that absent these metrics being applied to 
89

1 program eligibility that somehow we're bereft of 

2 any compliance. 

3 MR. RAMIREZ: Okay, thank you. 

4 Whitney, then Daniel.

5 MS. BARKLEY-DENNEY: Sure. I don't 

6 want to belabor the points since Johnson said some 

7 of what I was going to say. But I just kind of 

8 want to recenter this conversation. Nobody on the 

9 consumer side or the AG side, or Johnson at the 

10 legal services side, is suggesting that sanctions 

11 require only the debt to earnings ratio.

12 I think that all of this would be open 

13 to discussing other ways of evaluating a program's 

14 effectiveness. Whether that includes debt to 

15 earnings ratio plus figuring a way a repayment rate 

16 could be compliant or plus something else that could 

17 be used to evaluate a program. The problem is the 

18 complete lack of teeth and accountability in this 

19 structure.

20 I for one would like to recenter this 

21 conversation on the very people that Johnson was 

22 talking about who were at that school, which I think 

23 we're not supposed to say but it rhymes with 
90

1 Corinthian Colleges from 2010 to 2014, who are now 

2 having to fight tooth and nail to be relieved from 

3 those loan payments. 

4 Those are the people that we should be 

5 concerned about in this conversation, and those 

6 are the people that we should be talking about 

7 because nobody tells them well we evaluated this 

8 for years and it took a long time to comply it and 

9 now we don't need to just use one metric.

10 All they know is that they have a 

11 $50,000 price tag on education that they can't use, 

12 and that's who we need to be thinking about and 

13 talking about as we go through this, and also can 

14 stop -- we need to stop talking about this as sort 

15 of well, it's -- because we don't like the metric, 

16 we can't have sanctions, when in fact we are around 

17 this table to figure out a way to make the metrics 

18 work.

19 MR. RAMIREZ: Daniel, Mark, Ahmed and 

20 Jennifer.

21 MR. ELKINS: I want to second what 

22 Whitney just said, and I -- there are an incredible, 

23 astronomical number of veterans who were 
91

1 unfortunately severely impacted by one sector, and 

2 I am a very strong advocate of the proprietary

3 sector. I think that they do serve students, in 

4 some cases very, very well.

5 But students still need to be 

6 protected. So I just -- I think that we need to 

7 figure out how to make the GE metrics work. I think 

8 that I understand, you know, to Mr. Silverman's 

9 point last session that the current rates maybe 

10 don't do it justice. Maybe there needs to be a 

11 different appeal process. Maybe we need to factor 

12 some other things in.

13 But at the end of the day, the 

14 compliance prior to this wasn't working, and 

15 students were being taken advantage of.

16 MR. RAMIREZ: Thank you. Ahmad.

17 MR. SHAWWAL: Ahmad Shawwal, 

18 University of Virginia. Thank you Whitney and 

19 Daniel. Can someone explain to me the philosophy 

20 behind the suggestion that we probably not ought 

21 to name specific bad actors, etcetera? I feel that 

22 if we are here negotiating, we have to be fully 

23 transparent. If we don't do that, it's incredibly 
92

1 easy to make very normative statements that don't 

2 really get us anywhere. Thank you.

3 MR. RAMIREZ: I believe that you could 

4 address the issue, the facts behind it, without 

5 necessarily having to get into the individual 

6 names.

7 MR. SHAWWAL: Why is that?

8 MR. RAMIREZ: I don't want it to start 

9 bleeding off into -- again, hard on the issues, 

10 not on the people. I don't want to expand the 

11 argument.

12 MR. SHAWWAL: I'm sorry. I don't 

13 think that makes sense.

14 MR. RAMIREZ: Okay. Greg.

15 MR. MARTIN: I agree with what Javier 

16 just said, and the reason why we ask that is in 

17 previous negotiation sessions, we've had different 

18 names of -- it's all well and good, especially when 

19 you're talking about a large one that we can all 

20 agree did a huge disservice to students and is 

21 closed. That's one thing.

22 But in the past, we've had a lot of 

23 school names bandied back and forth, where people 
93

1 felt that their school was tarnished, their 

2 reputation was tarnished by someone bringing up, 

3 just using that school's name as an example. So 

4 I think that it's not to suggest that there aren't 

5 schools out there which are doing students a 

6 disservice.

7 It's just to -- just I think for 

8 protocol sake and so that we all can get along here, 

9 it's just best if we don't, if we don't raise names. 

10 I don't think that's necessary to make a point. 

11 I don't concede that, and in the past it's caused 

12 -- it has caused a lot of problems.

13 MR. RAMIREZ: I also do believe that 

14 was one of the protocols that you all had agreed 

15 to as well. But let me get to Marc, Jennifer and 

16 then John.

17 PARTICIPANT: So I guess I'm going to 

18 agree with Whitney and Johnson and address Ahmad's 

19 comment, because I think it all goes together. 

20 We all would love a regulation that got to bad 

21 behaving institutions. The thing this group has 

22 to think about is GE, is about outcomes data. Has 

23 nothing to do with behavior, and maybe that's a 
94

1 problem.

2 And then when you go to outcomes, low 

3 outcomes are endemic across all sectors for any 

4 institution that serves low income students. 

5 That's why we get to Ahmad, why you don't want to 

6 name the institutions, because right now you're 

7 focusing just on debt to earnings in the proprietary 

8 sector.

9 If you started going to the other 

10 sectors, there are institutions that poorly 

11 perform. There are other institutions that poorly 

12 perform on graduation rates, default rates and you 

13 go on and on and on, and then it becomes a very 

14 unpleasant experience. 

15 So that's why, especially when you come 

16 to outcomes. So I'd ask this group to think about 

17 it. I'm not sure I know the answer, and maybe 

18 there's a combination of how you get to a rule that 

19 combines outcomes and behavior.

20 But with it just being on outcomes, the 

21 Department goes down the slippery slope of 

22 identifying some good programs in all sectors that 

23 would be designated poor performers, and that's 
95

1 what happens.

2 MR. RAMIREZ: Jennifer.

3 MS. BLUM: Yeah. Just a quick 

4 technical point. I do, without referencing 

5 anybody, I do just want to point out and the metric 

6 that existed, both metrics, Gainful 1 and Gainful 

7 2, that it would have taken several years for a 

8 program actually to close. So to the extent that 

9 you're talking about it as if it were some new 

10 immediate tool of losing Title IV eligibility, the 

11 soonest the program would have lost eligibility, 

12 unless they on their own decided to close it was 

13 Year 3 and Year 4 for a zone.

14 So I just want like level set, that it 

15 was not an immediate loss of Title IV eligibility, 

16 and I think that that's -- and there are lots of 

17 reasons around that because there was trying to 

18 be a sense of recovery, if you will, for the program 

19 and other reasons. So I just want a level set on 

20 the facts of what the metric was. 

21 It's not really that relevant for 

22 today, but I do think that how it gets portrayed 

23 is relevant, because it was not -- to be honest 
96

1 with you it wasn't that much more immediate than 

2 what the tools in the toolbox already have in terms 

3 of time frames.

4 And then I did want to ask a procedural 

5 question. I thought we were moving to Issue 2. 

6 So I mean I just think a lot of this gets meted

7 out, you know, when we get to the next part.

8 MR. RAMIREZ: So let's close out with 

9 Bob and then Whitney, and then we'll move on to 

10 that issue. I'm sorry. 

11 PARTICIPANT: John.

12 MR. RAMIREZ: John was first, yeah.

13 MR. KAMIN: Oh, I'm sorry. You say I 

14 was first? 

15 PARTICIPANT: Yeah.

16 MR. KAMIN: Yeah. I just -- this is 

17 definitely an interesting environment for us to 

18 be in, because I feel like most of the negotiators 

19 are kind of on the same page here. Personally, 

20 I agree with Jennifer about the concerns for 

21 bachelor degrees versus career training. I think 

22 Mark brought up an excellent point that needs to 

23 be reiterated over how for-profits have overgrown 
97

1 a rule when this was initially designed.

2 I guess in my heart of hearts, I thought

3 that we would be able to or in a dream world be 

4 able to surgically the deficiencies within this 

5 rule. Then once we apply this test, kind of patient 

6 zero framework on proprietary rules as it stands, 

7 we can say all right, now it's time to look at all 

8 institutions or institutions that are 

9 career-related, regardless of what HEA looked like 

10 originally.

11 What I think the bewilderment comes 

12 through is how this rule can be applied when we 

13 strike all definitions of gainful employment within 

14 the gainful employment rule, and how we can even 

15 call it a gainful employment rule when there's no 

16 remaining factors within it. Perhaps it's worth 

17 discussing what do we want to rename it, and that's 

18 going to have pretty significant implications over 

19 what the intent is.

20 So even -- if we were to take consumer 

21 groups, veterans groups, non-profits out of this, 

22 I would appreciate an understanding over what the 

23 Department of Education views as the precise 
98

1 utility of the proposed rule as it stands, and maybe 

2 from that we could better define that it is we can 

3 accomplish within that paradigm. 

4 Now just to throw a bone, the 2014 

5 gainful employment negotiation's intent seemed to 

6 be to establish an accountability and transparency 

7 framework for gainful employment programs. Can 

8 you clarify if that remains the intent for this 

9 negotiated rulemaking or if it's changed?

10 MR. MARTIN: I think these, you know, 

11 these rules -- first of all yes. To the point that 

12 it does change the whole -- regulation as a whole, 

13 yes it does. These are no longer -- you saw we 

14 renamed the subpart. It's no longer Gainful 

15 Employment. 

16 So yes, I'd stipulate that. Is this 

17 still about transparency? Absolutely. We will 

18 continue to calculate DE rates, publish those 

19 rates. Schools will still have to disclose those 

20 rates.

21 If anything, we've expanded the number 

22 of programs for which students will now be able 

23 to obtain those rates. As far as accountability 
99

1 goes, obviously we have proposed to change the 

2 program sanctions aspect of this. But I don't 

3 think that it's -- that there's -- that 

4 accountability goes away. There is, I think, 

5 accountability associated with the calculation and 

6 publication of these rates.

7 So it is perhaps not the same as it was 

8 before, but I don't think -- I don't think that 

9 goes away. But yes, the nature of the rules has 

10 definitely changed from GE.

11 MR. RAMIREZ: Okay. So I'm trying to 

12 get to the issues, and understanding that we're 

13 going to get deeper into all these as we go through

14 to the issues. Let's hope we can close it out with 

15 the remaining three tents that are up. Bob.

16 MR. JONES: Yes, and my comment really 

17 does go to the next paper. But I think it's really 

18 important for us all to focus on the fact that the 

19 word "low performing" has nothing to do with GE. 

20 All we're doing is describing in a transparent 

21 way to everybody what the programs you're looking 

22 at are above average, average or below average and 

23 time it takes to pay it back. 
100

1 It is not a quality descriptor. 

2 Quality will be determined by the standards, the 

3 accreditation process and whole series of 

4 indicators about that. Some programs, as Todd 

5 points out, may take a longer time to pay because 

6 of their relationship to employment. It has 

7 nothing to do with the fact that those are good, 

8 bad or indifferent quality programs, just the 

9 difference in time it takes to pay.

10 So we need to carefully look at our 

11 language, and separate performance from GE. 

12 MR. RAMIREZ: Okay, thank you. 

13 Whitney.

14 MS. BARKLEY-DENNEY: Yeah. Just 

15 really quickly, because this is also going to come 

16 up in 2. But I just wanted to address Mark's 

17 comments really briefly, which I think that again, 

18 just to reiterate what I said earlier, all of us 

19 around here understand that the institutions have 

20 some issues with the way DE was calculated, and 

21 all of us are realists enough to know that it's 

22 going to have to change in some way and that we 

23 would like to work together on that.
101

1 The problem with this proposal is that 

2 it leaves folks who are consumer groups, legal 

3 services groups and attorney generals groups with 

4 absolutely nothing, by removing all of the teeth 

5 from this rule and allowing the folks to come to 

6 our door to continue to enroll in programs that, 

7 you know, have a 20 percent annualized debt to 

8 earnings ratio and a 990 percent, which doesn't 

9 in fact exist on the GE spreadsheet discretionary 

10 debt to earnings ratio.

11 So that's our problem is we're not 

12 starting from a place where the worst programs would 

13 somehow be sanctioned by the Department.

14 PARTICIPANT: Just one quick question, 

15 just one response. Are you open to having a 

16 sanctions framework for the worst performing 

17 programs across all sectors?

18 MS. BARKLEY-DENNEY: So I can't speak 

19 for everybody. But I think that that would be a 

20 much more constructive conversation than what we 

21 are having with simply saying there are no teeth 

22 in these regulations.

23 MR. RAMIREZ: So let me just remind 
102

1 folks as well that although these papers are 

2 intended to give some direction, we normally call 

3 these positions straw man positions. It's a place 

4 to begin the negotiations or the discussion. It 

5 is intended to give some direction, but it's not 

6 a final position, okay. 

7 So just keep that in mind, that these 

8 are -- it's not -- the Department's not coming in 

9 and saying take it or leave it, right. So with 

10 that, I'll go with Todd and then circle back to 

11 Greg, to see if there's a response on the borrower 

12 defense question. Okay, Todd.

13 MR. POWERS: This is actually Tim 

14 Powers for the private non-profits. So I just have 

15 a question, and this might be a Paper 3 issue, but 

16 one of the things we haven't discussed, and I don't 

17 think it came up in sort of the framing sessions 

18 last time around, was on changing the sort of cohort 

19 reporting size from 30 students all the way down 

20 -- I think in Paper 3 it's down to ten.

21 And then getting rid of that four year 

22 rolling cohort and just having that two year cohort. 

23 I'm truly just looking for maybe some 
103

1 justification or some explanation for why that 

2 change is proposed, because I don't think it was 

3 discussed. So again, I'm just -- it's truly a 

4 question, and if you can provide some illumination 

5 on that. But again, it might be -- it might be 

6 an issue for later. 

7 MR. MARTIN: Yeah. I'll definitely 

8 entertain that when we get to Issue Paper 3. 

9 MR. POWERS: Okay.

10 MR. MARTIN: If I don't, then feel free 

11 to remind me.

12 MR. RAMIREZ: You want to go ahead? 

13 Do you have a response on that borrower defense 

14 question?

15 MR. MARTIN: No. I would like to wait 

16 til after lunch. I get to confer with our borrower 

17 defense people and --

18 MR. RAMIREZ: And you don't even have 

19 to answer it if it wasn't relevant. I just brought 

20 it up because you brought it up.

21 MR. MARTIN: No, I'll definitely 

22 answer it. I just want to make sure I -- I'm not 

23 on the borrower defense team. So gainful 
104

1 employment is taken up enough of my mind that I 

2 don't have anything left. So I have to -- have 

3 to defer to my colleagues on that.

4 MR. RAMIREZ: Okay. Johnson, you're 

5 going to close this out then?

6 MR. TYLER: Thank you. First, from a 

7 legal aid perspective, people who come in with no 

8 skills and a lot of debt, whether they go to a 

9 for-profit or a non-profit, it's a tragedy. It 

10 is a tragedy, and so the earnings certainly controls 

11 how that GE, the debt to income ratio would work 

12 itself out.

13 But so does the tuition, and having 

14 schools charge a huge amount of tuition when they're 

15 not providing -- when they have an open admission 

16 policy, where everyone comes in and they just sign 

17 papers away and take out a lot of loans, Parent 

18 Plus loans too, really does a disservice for those 

19 people.

20 So I -- so from a legal aid perspective, 

21 I think we would be in favor if there was a metric 

22 that could be used that influences the way people 

23 charge tuition and the selectivity of their 
105

1 process. We would go for that. 

2 The other thing is low performing. I 

3 mean everyone who doesn't go to Harvard, Yale, 

4 whatever, in their mind they're going to a low 

5 performing school. It is not a transparent --

6 excuse me. It's not a transparent. It's a 

7 meaningless, it's a meaningless label --

8 PARTICIPANT: Descriptor, I agree.

9 MR. TYLER: --for people who are going 

10 to community colleges, who are going to another 

11 school. They know. So I just don't think it has 

12 any meaning from a consumer standpoint, because 

13 everyone would want to go a higher-performing 

14 school, and they're accepting that.

15 MR. RAMIREZ: All right. Then I would 

16 say let's go ahead and move on to Issue No. 2. 

17 Greg, you want to start us off?

18 MR. MARTIN: Sure. This is Greg. 

19 We're looking at Issue Paper #2, DE Rates. We 

20 propose to amend Section 668.403 so that programs 

21 are no longer considered to be passing or failing 

22 based on their debt to earnings rates. 

23 Instead, we propose to refer to 
106

1 programs as acceptable if they meet the established 

2 standards, and low performing if they do not meet 

3 the established standards.

4 We also propose to remove the concept 

5 of a zone from the regulations. Finally, we 

6 propose to remove the provision that a program is 

7 no longer eligible to participate in the Title IV 

8 HEA programs based on poor debt to earnings rates. 

9 We also propose that if the Secretary does not 

10 calculate or issue DE rates for an award year, an 

11 educational program would disclose the program's 

12 DE rates for the previous year.

13 Looking through the regulations 

14 themselves on page one, you can see that we've 

15 struck 403, Gainful Employment Framework, and 

16 that's where the -- it was not an eligible program. 

17 If it was not an eligible -- it was the program 

18 eligibility reference rather was there.

19 Moving onto page two, at the top of page 

20 two you'll note the change from passing to consider 

21 to have an acceptable DE rates measure, and the 

22 retention of the rates measures we currently use. 

23 You'll see below that an educational program. 
107

1 We've struck "failing" and "is deemed to be a low

2 performing program" under the DE rates measure, 

3 if the discretionary income rate is 20.

4 And remember, we've eliminated that. 

5 We've eliminated the zone. So all references to 

6 that are taken out on three -- on page two, rather. 

7 And then yeah -- and then page three just continues 

8 with the program, the program outcome. So the 

9 combination of how many years a program can fail 

10 for have a combination zone failing rate has been 

11 struck because it's no longer applicable.

12 And then you see finally we talk about 

13 if an award year, that Secretary does not calculate 

14 or issue DE rates, that they would disclose the 

15 rate for the previous year if that rate is 

16 available. I would point out one thing too, you 

17 know. With reference to the comment before about 

18 whether or not a -- about low performing.

19 When we use the term "low performing" 

20 here, we're not -- we're not intending that to be 

21 is the school low performing academically or how 

22 does it compare to a more prestigious, a more 

23 prestigious. It simply is as it relates to these 
108

1 rates, and the regulation makes that quite clear. 

2 So I wanted to point that out.

3 MR. RAMIREZ: So let me -- let me see 

4 if we can take a slightly different approach, and 

5 I'll ask the group are there -- is there any 

6 low-hanging fruit in here? Is there anywhere that 

7 we could possibly say that yeah, we're okay with 

8 these modifications, and then save the more -- with 

9 greater discussion after that? Jeff, you have an 

10 idea on that?

11 MR. ARTHUR: Yeah, I think so. You 

12 know, I think we can embrace -- we've heard the 

13 concerns about how a program's labeled, and I think 

14 regardless of what the intent is of a -- using only 

15 a one-size-fits-all debt to earnings metric to 

16 declare something is -- on either side acceptable 

17 or lower performing is going to be misleading to 

18 students.

19 But I think we can embrace the format 

20 of the College Scorecard and be consistent. As 

21 Bob mentioned, in the way it's done there, you can 

22 present the information and use a standard or a 

23 median or an average for all of -- in this case 
109

1 you'd want to do it for all related programs, all 

2 the same zip code and level, and present that as 

3 a below average, about average, above average 

4 performance.

5 But when you're presenting that they're 

6 on the Scorecard, it's alongside the other data. 

7 We've got, you know, average annual cost. You've 

8 got graduation rate. You've got salary after 

9 attending. We've got a number of things that are 

10 all presented in that same format in a bar graph. 

11 I think when you put it alongside that data, it 

12 allows somebody to put it in perspective, because 

13 if you -- you could have a program with a four 

14 percent graduation rate, and the Department's 

15 labeled it as passing.

16 Or you could have a program with a 58 

17 percent graduation rate that's -- when the average 

18 across all sectors is 42 percent and declare it 

19 low-performing. I think this is really the format 

20 that we talked about last time, and it's referenced 

21 in the disclosures later to leverage the Navigator 

22 Scorecard platform.

23 So this is the place to put this 
110

1 information, and as we take the whole scorecard 

2 to the program level, to the -- and even when you 

3 talk about salaries and all that. So you want to 

4 be able to see the performance of a program across 

5 all these metrics in one place, and that's the way 

6 to do it.

7 MR. RAMIREZ: Let me -- you know, let 

8 me show of thumbs if you all would be okay with 

9 using that approach that Jeff had lined out?

10 (Show of thumbs.)

11 MR. RAMIREZ: All right. Jennifer, 

12 what are you thinking?

13 MS. BLUM: That with all due respect 

14 to the Department on the Scorecard, I have about 

15 a two page list of issues with the Scorecard as 

16 it relates to each metric is based on a different 

17 cohort, and so it actually in terms of student 

18 information, it actually currently really doesn't 

19 provide accurate data. It's interesting, and the 

20 data points are the right conceptual data points.

21 But in execution we have, you know, 

22 their earnings could be based on three students 

23 and the loan debt could be based on another 
111

1 different, by the way, ten students. There's no 

2 correlation between cohorts on each of the data 

3 points on the Scorecard. Of course, and Jeff did 

4 point this out, it doesn't work also currently 

5 because it's at the institutional level and here 

6 we're talking about the programmatic level.

7 And so the point that I was going to 

8 make, if I can since my card was up, I completely 

9 agree with the term "low-performing." I don't 

10 think that that term has meaning. I understand 

11 Greg what you're saying about you just mean against 

12 the metric as a whole, but not in terms of 

13 necessarily quality or whatever as it relates to 

14 the program, but tell that to a consumer who's 

15 looking at it.

16 So we have to be very careful about 

17 that. And then the second point I wanted to make 

18 is because it is at the program level and I'll just 

19 keep coming back, and maybe I'll change a different 

20 program. Maybe I won't keep using Early Childhood; 

21 maybe I'll use Social Work just for a change of 

22 pace.

23 So a bachelor's in Social Work -- you 
112

1 know, and I think ours is fine by the way, just 

2 for the record. But I'm just saying that those 

3 are going to be low earning students right off -- I 

4 mean low earning, sorry, graduates right off the 

5 bat. They just are, and so if at that zip code 

6 and we'll have a conversation later about zip codes 

7 and programs, but if we at that zip code level every 

8 program in the country.

9 We won't say every, but let's just say 

10 the majority. So let's just say, you know, 52 

11 percent of the programs that offer -- the programs 

12 in the country in bachelor's in Social Work, I don't 

13 know if this is true or not, so forgive me. But 

14 let's just say in any program that more than 50 

15 percent are low performing, then is our program 

16 low performing against what the -- every other 

17 program is? 

18 So I think that if we're going to stick 

19 with programmatic, which I don't disagree with by 

20 the way. I'm just saying that then there's a 

21 different analytic to what the measure is. And 

22 so that's why, you know, the Scorecard is this huge, 

23 and I think actually the Department may have even 
113

1 had -- I think I've had conversations, just because, 

2 again, there's no graduate programs. The 

3 Scorecard is only undergrad only, just for the 

4 record, too.

5 And that is part of the reason the data 

6 gets very skewed in weird ways too. So that's my 

7 hesitation. It's not that I don't think the format 

8 is nice and whatever. But when you peel back the 

9 onion on the Scorecard, the data is not particularly 

10 accurate with all due respect again. So that's 

11 my issue.

12 And then just my point on low 

13 performing. You know, I think low performing 

14 against what is really the question here.

15 MR. RAMIREZ: Okay. So what would be 

16 the alternative?

17 MS. BLUM: Well I was -- so one of the 

18 things I was going to say is it's very hard to talk 

19 about -- and I'm happy to do it -- but it's kind 

20 of hard to talk about Issue 2 without talking about 

21 Issues 3 and 4. So I mean I reserved my language 

22 on -- I do have ideas about low, and I think other

23 people will too, about the language in Issue 4, 
114

1 which is really where the disclosure --

2 I don't want to use disclosure, because 

3 that's Issue 6. But the -- no, the sanction. They 

4 call it still "sanctions." But the warning or I 

5 don't want to call it warning either. The 

6 disclaimer that you have to release about each of 

7 your programs is in Issue 4. So I mean I don't 

8 want to offer. 

9 But like I said, I think it's going to 

10 be hard to juggle back and forth between Issue 2, 

11 3 and 4. I don't know how you -- so I can propose 

12 it now, but it's in Issue 4. I think we should 

13 wait.

14 MR. RAMIREZ: Sorry. Just hold on 

15 then. Let's go to Daniel.

16 MR. ELKINS: I think that it would be 

17 great to get a consensus on removing the concept 

18 of the zone. I think that that might be low-hanging 

19 fruit. I think that --

20 MR. RAMIREZ: Okay.

21 MR. ELKINS: --everyone may agree on 

22 that.

23 MR. RAMIREZ: What do you think? 
115

1 Let's see a show of thumbs if everyone's okay with 

2 the elimination of zones, and these are temperature 

3 checks, right? Laura, it's hard to tell where that 

4 thumb is at. Oh, sideways. Okay, okay. 

5 (Show of thumbs.)

6 MR. RAMIREZ: Yeah. I don't think I 

7 saw any thumbs out. Is that accurate? All right. 

8 So there's a -- there's an area of agreement. 

9 So thank you. All right. So you found the first 

10 jewel. All right. Let's continue the treasure 

11 hunt here. Bob. Okay. Kelly. Oh yeah. Go 

12 ahead, Bob.

13 MR. JONES: No, I'll stay. I'll wait.

14 MR. RAMIREZ: All right. Kelly.

15 MS. MORRISSEY: Kelly Morrissey. I 

16 just think it's important to react to Jeff and 

17 Jennifer's comments about the Scorecard. I think 

18 that my immediate reaction was that the Scorecard 

19 would perhaps be more meaningful for students 

20 because it does provide some basis for comparison, 

21 whereas otherwise the two labels that are being 

22 proposed do not.

23 However, I think that in terms of 
116

1 students at community colleges, for example, where 

2 borrowing rates are very low, the cohorts when 

3 you're looking at a programmatic level, the cohorts 

4 are very small and the measures become less 

5 meaningful. So I think that we would probably have 

6 to refine the way that the Scorecard is being used 

7 if we decided to instead move in that direction.

8 MR. RAMIREZ: And there was actually 

9 -- the Scorecard idea had significant buy-in, not 

10 full. So when we get over there, maybe we could 

11 see if there's tweaks that could be done to some 

12 of the metrics that might allow for that to happen. 

13 We'll see what other alternatives there might be. 

14 Let me get Chris next, Chris Madaio.

15 MR. MADAIO: Chris Madaio. As far as 

16 -- well I guess one, first a preliminary point, 

17 you know. It seems to me that if we're not going 

18 to be addressing programs that people have like 

19 a criticism with, I'm not sure it will be 

20 appropriate for people to be addressing programs, 

21 even their own, for folks who represent a specific 

22 program that they feel positive about, right.

23 So if we're not addressing a program, 
117

1 it probably wouldn't be appropriate to address them 

2 from a positive light and a negative light. Is 

3 that accurate?

4 MR. RAMIREZ: Uh-huh. Well, let me 

5 ask the -- could you restate it?

6 MR. MADAIO: Sure. I mean you know for 

7 instance, if someone was here representing a 

8 school, right? If you're here from a program, you 

9 know, we've heard folks today kind of say well, 

10 you know, my program is like this, or give an 

11 anecdote based on, you know, their own institution.

12 Which I don't have a problem with, but 

13 my point is that if we mention that it would not 

14 be appropriate to mention say an anecdote from a 

15 low performing program, you know, it seems to me 

16 we should also not be giving anecdotes from, you 

17 know, ones that people consider to be high 

18 performing or good programs.

19 MR. RAMIREZ: You know, that's fine. 

20 That's fair, right. So we'll just -- and you all 

21 are going to have to help me, right? If a name 

22 pops up every now and then, we'll just keep each 

23 other in check. Let's try to keep institution
118

1 names out of it.

2 MR. MADAIO: Okay.

3 MR. RAMIREZ: Okay, thank you.

4 MR. MADAIO: So sure. I mean I agree, 

5 I think, with a lot of what's been said about our 

6 issues with acceptable versus low performing. I 

7 mean to me they're just such different words that 

8 don't even relate to each other. I mean to me, 

9 the opposite of acceptable is unacceptable, and 

10 if we're going to be telling students that a set 

11 of programs is acceptable, sorry, then why are we 

12 not telling those students that programs that are 

13 failing the metric are unacceptable or that they're 

14 failing?

15 I mean I think that's a big problem for 

16 me is that we put a lot of work into, you know, 

17 I'm sure and the Department is going to be putting 

18 a lot of work into coming up with some set of numbers 

19 and some programs, I'm sure, will not be 

20 successful in those numbers, i.e. they will fail 

21 the test that is constructed.

22 To me, right, it's a big problem for 

23 a student to see the words "low performing" and 
119

1 really get anything out of that, and to really 

2 accomplish what -- I think Greg said at the 

3 beginning one of the points of this is to be a check 

4 on the schools and be a protection for students. 

5 If this -- I don't think low performing comes 

6 anywhere close to accomplishing that.

7 I think we're almost -- maybe we'll take 

8 a temperature check on that, because I think that 

9 might be something that a lot of us would agree 

10 with.

11 MR. RAMIREZ: Yeah. You know what, 

12 and I'm just going to bypass that just because I 

13 think you're right, and I think that the group is 

14 looking at the possibility of finding the right 

15 verbiage that captures where you want to go.

16 MR. MADAIO: Great. Well, I'll throw 

17 a few out there. Unacceptable or failing. I mean 

18 those are words. Failing was in the last rule. 

19 I mean it's either -- so those are words that I 

20 put out.

21 And then right. I just agree with a 

22 thing, something that Johnson said earlier about, 

23 you know, this rule needing to look at and ensure 
120

1 that the cost is something that is also taken into 

2 account, right? I mean that's something students 

3 don't always understand, right, that high cost, 

4 are they going to be able to pay that back with 

5 the job that they're going to be able to get, 

6 especially when they're going to an institution 

7 where their primary goal is to receive an occupation 

8 in that field.

9 I think that's again what the Higher 

10 Education Act was contemplating when permitting 

11 proprietary institutions to participate in Title 

12 IV aid. So again, I mean I hear you, that 

13 proprietary institutions have changed a lot in 

14 years, in many years. But you know, there's the 

15 same set of rules and, you know, you kind of change 

16 at your own peril if the rules stay the same, i.e., 

17 the Higher Education Act.

18 So if the Higher Education Act needs 

19 to change to reflect the changes in the proprietary 

20 sector, you know, again I think that would be fine. 

21 We're just not the body to do that obviously, and 

22 because of that I think there is a purpose of that. 

23 When we see a third approximately of all student 
121

1 loan defaults are in the proprietary sector. 

2 So there is a reason, I do think, for 

3 why there are -- the proprietaries are different 

4 and why the HEA is like it is. So again, I think 

5 the rule should accomplish what the HEA is trying 

6 to accomplish.

7 MR. RAMIREZ: Okay, thank you. 

8 Johnson. 

9 MR. TYLER: Yeah. I was thinking if 

10 you wanted to make low performing and put it out 

11 there, why not say what it is, which is basically 

12 more than half the students are having great 

13 difficult repaying their debt when they went to 

14 this program. That's what it measures. That's 

15 what it measures, and that's what gets someone's 

16 attention.

17 That doesn't compare you to another 

18 school or whatever. That's a warning sign.

19 MR. RAMIREZ: Johnson, what's the 

20 headline of that? What's the headline version?

21 MR. TYLER: Difficulty repaying loan, 

22 or extreme difficulty repaying the loan. I mean 

23 that's what I would say, and I would point out I 
122

1 spent a lot of time with one client looking at a 

2 school he went to. The CEO got paid $2 million 

3 annually while the head of Harvard got paid $600,000 

4 a year.

5 The investors were getting a 15 percent 

6 return on their investment, which you cannot get 

7 in other parts of the economy, taking on risk. 

8 That's a huge return annually. My student paid 

9 twice the average cost to go to this auto mechanics 

10 school, and no one at the school earned more than 

11 $25,000 thereafter, which is the equivalent of a 

12 high school diploma, and he now owes about $30,000.

13 So it does, you know, cost is all about 

14 what gainful employment is about. It's not just 

15 what is the, you know, are people able to capitalize 

16 on their education. It's also what is the debt 

17 that they're stuck with thereafter, and so, you 

18 know, I just think you need to put low performing 

19 in a word that someone would understand that maybe 

20 they should look at another place.

21 MR. RAMIREZ: Yeah, and it seems like 

22 we have to come back on the naming. Is there 

23 another area where there might be agreement? 
123

1 Whitney?

2 MS. BARKLEY-DENNEY: So I was going to 

3 suggest, partially for my own benefit, that we take 

4 a temperature check to see how people would feel 

5 about agreeing to put a sanction regime back in 

6 place, and then focusing on how we define and where 

7 we place those sanctions? So I was just wondering 

8 if we could get a temperature check on that 

9 question.

10 MR. RAMIREZ: Okay.

11 PARTICIPANT: When you say sanction 

12 check, do you mean like Title IV, I mean a Title 

13 IV? You're not talking -- because they still do 

14 have a sanctions, which is you're meaning Title 

15 IV?

16 MS. BARKLEY-DENNEY: Right, Title IV 

17 sanctions.

18 MR. RAMIREZ: Yeah. So yeah, I'm 

19 hearing that that is a specific issue, one of the 

20 issue papers. So when we get to that, that would 

21 be the first question then?

22 MS. BARKLEY-DENNEY: That's fine.

23 MR. RAMIREZ: Okay. Any other -- you 
124

1 know, let me jot down a note real quick. 

2 (Pause.)

3 MR. RAMIREZ: Are there any other 

4 possible areas of agreement? Yeah, Daniel.

5 MR. ELKINS: I wonder if the group 

6 would be amenable to the idea that whatever terms 

7 we do establish, that they be correlated to each 

8 other? I.e., passing, failing, high performing, 

9 low performing, acceptable, unacceptable, good, 

10 bad. Like that there be a correlation between the 

11 two words.

12 MR. RAMIREZ: Okay. You know, if I 

13 could see a show of thumbs to have the words 

14 "correlate" in some way. Okay. Let's see a show 

15 of thumbs. 

16 PARTICIPANT: Can you rephrase the 

17 questions one more time?

18 MR. RAMIREZ: I think the idea there 

19 was just that when we get to that point, let's try 

20 to make sure that the words are relational. So 

21 that way if -- you could tell the opposite. If 

22 a school is failing, the opposite would be passing. 

23 So whatever terminology that we end up coming up 
125

1 with, that there should be some relation to them, 

2 to each other.

3 Okay. So these are temperature 

4 checks. So I think it's more let's keep that in 

5 mind as we eat probably, right? We can come back 

6 and talk. Sandy, you had an idea of where we might 

7 find some?

8 MS. SARGE: No. I have another 

9 comment.

10 MR. RAMIREZ: Okay. Then let me go 

11 back to the queue here then. Jennifer.

12 MS. BLUM: Well, I'm with Sandy. I 

13 actually just have a question about the language.

14 MR. RAMIREZ: Yeah. You're next in 

15 the queue, so go ahead. 

16 MS. BLUM: Oh okay. So I just wasn't 

17 sure, sorry. So moving on from the do we have 

18 consensus, sorry. I did want to -- I don't have 

19 a proposal or anything, but I did want to point

20 out, and this goes again to my sort of what's 

21 one-size-fits-all on the metric, even if it's for 

22 disclosure purposes. I do still have concerns.

23 So very, very appreciative of the 
126

1 getting rid of zone, which I said last time yeah, 

2 it was like this black hole for I think both the 

3 consumer and the institutions frankly. So very 

4 appreciative of that. But I would like to ask, 

5 and I hate to ask a data question, because I try 

6 to avoid those.

7 But was there analysis done by the 

8 Department relative to the 30 versus 20 and the 

9 8 versus 12? And again, for some programs, I mean 

10 I know there's a lot of data already out there. 

11 But for some programs at some credential levels, 

12 totally agree with what the Department did. But 

13 again, you know, to the extent that you're including 

14 this for doctoral and for professional degrees, 

15 I would say that, you know, there's a different 

16 look-see there.

17 So I was just curious whether you broke 

18 out any analysis by degree level or anything like 

19 that.

20 MR. RAMIREZ: Yes, Steve.

21 PARTICIPANT: So the question is 30 

22 versus 10. A very high level answer is --

23 MS. BLUM: 30 versus 20 on the 
127

1 discretionary, and 8 versus 12 on the --

2 PARTICIPANT: I don't think we have any 

3 additional information or analysis to share, other 

4 than what has been done cumulatively for the 

5 development of those break points in the GE regs.

6 MR. RAMIREZ: Okay, Sandy.

7 MS. SARGE: This is Sandy Sarge. 

8 We've had a couple of times through this part of 

9 the discussion where cost has been brought up, and 

10 I just want to make the point that tuition charges 

11 are a function of many things not -- they're not 

12 arbitrarily decided upon just to make a profit 

13 or -- they are intended -- I'd like to almost say 

14 that the first level of determination when you're 

15 thinking about what to charge is to cover your 

16 costs.

17 For-profit can be anything above zero, 

18 right, and also state schools and private schools 

19 also try to be at least at zero or above in covering 

20 their costs. So when we say that -- I don't want 

21 anybody to have the impression that the tuition 

22 charges are arbitrarily done. An example that just 

23 came up last week when I was in California is that 
128

1 the state had voted on a 2-1/2 percent increase 

2 or three percent increase in its budget to the 

3 California state system.

4 The legislators had decided on that in 

5 the budget and then the schools themselves were 

6 adding another 2.5 percent increase above and 

7 beyond what they were already getting in addition 

8 to the state funding and students were up in arms, 

9 you know. Why are you -- why are you wanting to 

10 go up in money?

11 Now there's a lot of reasons, right? 

12 The tax base might be down in the state. So the 

13 state, even though it raised it 2-1/2 percent or 

14 3 percent, that may not have been the equal dollar 

15 amount that they had had in the past. So my point 

16 is just that we have to be very careful in throwing 

17 out generalizations or impressions or perceptions 

18 that need to have a harder look sometimes, so that 

19 we really get to what we're trying to accomplish 

20 here, which I agree with everybody is we want to 

21 get bad players out of ed.

22 Or we at least want to give students 

23 neutral data points that are not there to give 
129

1 an impression of quality or not quality. That is 

2 not our decision. It's their decision how they 

3 deem something. But that gives them a good data 

4 point to make an informed decision.

5 And I'm -- you know where I stand on 

6 other issues pertaining to cost, and I'll respect 

7 the group's last meeting asking us not to bring 

8 it up, and I'll respectfully ask that you guys walk 

9 away from cost in lieu of the fact that I'm choosing 

10 not to bring up what I think are some of the reasons 

11 for that. Thank you.

12 MR. RAMIREZ: Gannon, Laura and then 

13 Jordan.

14 MR. GANNON: Yeah. So when students 

15 don't do what's required for a class, they don't 

16 low perform in that class. They fail the class, 

17 and I think that maybe pass and fail are appropriate 

18 terms.

19 MR. RAMIREZ: Okay, thank you. Laura.

20 MS. METUNE: I just wanted to say that 

21 I really appreciated the question Whitney raised 

22 earlier about trying to get a temperature check 

23 on this overall question regarding meaningful 
130

1 sanctions. I understand that we will be discussing 

2 that later. But part of the reason I had sort of 

3 the sideways leaning down thumb when we asked the 

4 earlier temperature check is because my reactions 

5 to these earlier papers are really within the 

6 context, of whether or not there will be meaningful, 

7 actionable sanctions incorporated in the overall 

8 structure.

9 So I'm happy to accept that we'll get 

10 to it later. But I do just want to say it's really 

11 hard to give my opinion about these concepts without 

12 knowing whether sanctions are completely real 

13 sanctions, meaningful sanctions that will result 

14 in actionable items by the Department are off the 

15 table for this group. Thank you.

16 MR. RAMIREZ: I could really 

17 appreciate the difficulty in knowing whether to 

18 agree to one item without knowing where other pieces 

19 fall in. The only problem is that if we don't go 

20 in some type of order, we, I guarantee, we will 

21 never get done, and that's a difficulty that we 

22 have, okay. Jordan, Mark and then Daniel.

23 MR. MATSUDAIRA: Yeah. I mean I'll 
131

1 just, the same kind of sentiment here. It is 

2 awkward to talk about these things outside of the 

3 context of whether there will be sanctions or not. 

4 That said, in a world where we're only 

5 contemplating these kinds of disclosures and then 

6 categorizing schools into failing, passing and so 

7 on, I want to make a suggestion about, you know, 

8 at the risk of muddying the waters, adding like 

9 another category or a way of differentiating 

10 between pass-fail and that's with regards to 

11 history, how many times a program has passed or 

12 fail in the past, you know.

13 Just decide on some kind of lookback 

14 period. That's partly wrapped up in the 

15 conversation over the Department's kind of decision 

16 to think about measuring these indicators for 

17 programs down to an N size of 10, where I suspect 

18 --

19 But the Department could produce 

20 analysis on that, that when you do that the measures 

21 are going to get to be quite variable and so could 

22 become a little bit of a noisy measure for whatever 

23 underlying concept is being presented.
132

1 So kind of showing a little bit of 

2 history over the last couple of years, like say 

3 three-five years, something like that, could help 

4 with that.

5 MR. RAMIREZ: Thank you, Mark.

6 PARTICIPANT: So a couple of things. 

7 Number one, just for Johnson, just to be clear, 

8 we had a lot of comment that the rule gets to 

9 students whether they pay their loans or not. But 

10 gainful employment, the current metric, has nothing 

11 to do with whether students pay their loans. In 

12 fact, one of our objections is programs that have 

13 very, very high loan repayment rates often can fail 

14 the rule, so I just want the room to know that.

15 Two, with this discussion about what 

16 to label the program, I think the discussion will 

17 matter a lot when and if the Department releases 

18 the data and how the rule actually comes out. So 

19 I've always believed the rule should only apply 

20 to borrowers and not to non-borrowers, and we should 

21 see the data.

22 But if the data's going to show that 

23 a huge swath of higher ed would fail the eight 
133

1 percent, which I am absolutely confident it's going 

2 to show, then failing or low performing I think 

3 is not necessarily helpful. I think the accurate 

4 term is "high debt, low earnings." There are high 

5 debt/low earnings programs that are incredibly high 

6 performing, because everyone went into government 

7 or everyone got an internship, and that is included 

8 in the proprietary sector.

9 But it's certainly in the 

10 not-for-profit and public sector, and I'd just ask 

11 you to think about it, because the discussion does 

12 move. If the rule's only on proprietary, the group 

13 seems to want the most damaging label. But if the 

14 rule goes to all sectors, I think there will be 

15 a different consideration of what the label should 

16 be. For me, I would just want the label to be 

17 accurate and to be helpful. 

18 MR. RAMIREZ: Thank you. Whitney.

19 PARTICIPANT: Yeah. I just want to 

20 make sure I'm not misunderstanding something. I 

21 don't think anyone is contemplating only 

22 proprietary schools be included in this. From my 

23 understanding, community colleges will also be 
134

1 included and they are certainly public 

2 institutions.

3 MR. RAMIREZ: So just one comment back. 

4 It does get back to the N factor. So the reason 

5 I think maybe the Department consider this is I 

6 had done some research that essentially showed 90 

7 percent of actually the statutory gainful 

8 employment programs are not judged, because they 

9 do not graduate 30.

10 So that's just getting back to is the 

11 statute effective? Should graduation and 

12 completion rates be part of this metric, you know? 

13 Should we be scrapping debt to earnings. I mean 

14 I'm not going to go crazy with this in looking at 

15 graduation rates, default rates, whatever it may 

16 be.

17 But understand, under the statutory 

18 definition, and this current definition of gainful 

19 employment, a huge percentage of programs were not 

20 -- were not reached. To me, that's a shame for 

21 consumers, because they don't get the information.

22 MR. RAMIREZ: Whitney.

23 MS. BARKLEY-DENNEY: Yeah, just really 
135

1 quickly, thank you for that Mark. I think that 

2 that's a different question than what we are 

3 considering when we are saying this, which is the 

4 fact that community colleges are covered by this 

5 rule. I just want to make sure that my views aren't 

6 mischaracterized, that I think this is only about 

7 proprietary institutions, because when I am

8 envisioning how this rule works, it in fact includes 

9 community college programs.

10 MR. RAMIREZ: Okay. Daniel.

11 MR. ELKINS: We would agree that with 

12 Mark's proposed language of high debt, low debt, 

13 high earnings, low earnings, I think that that 

14 communicates the intent of what this -- what this 

15 ratio is meant to communicate.

16 MR. RAMIREZ: Okay. Let me -- we're 

17 close to lunch, but there was one piece in here. 

18 It talks about "We also provide that if the 

19 Secretary does not calculate or issue DE rates for 

20 an award year, an educational program would 

21 disclose the program DE rates for the previous 

22 year." Are there major concerns or issues with 

23 that piece? Okay. 
136

1 PARTICIPANT: I mean I'm actually not 

2 that -- I assume that what you mean there is if 

3 -- I mean I assume that it's going to be a cohort 

4 issue, or something that somehow the data changed 

5 from like a cohort. I mean I assume the 

6 Department's not going to just with one program 

7 decide not to --

8 So I assume it would either be that the 

9 Secretary just decided not to do it for one -- I 

10 don't know how they decide this, but not to do it 

11 for one year, or it's because the program, you know, 

12 reduced its cohort size somehow. In that case, 

13 I have no problem with doing the prior year, as 

14 long as it's clear on the template or whatever 

15 format that that's -- that it's for that cohort, 

16 and that in the current year there was not a 

17 sufficient cohort.

18 So you know, so some sort of disclosure 

19 that's very transparent that you're just carrying 

20 over from the prior year, because this year there 

21 was no cohort. So I assume that that's what was 

22 meant there, yeah.

23 MR. RAMIREZ: Greg, that's correct?
137

1 MR. MARTIN: That is correct.

2 MR. RAMIREZ: Okay. So let me just --

3 PARTICIPANT: So then I would just be 

4 clear up that there would be that disclaimer, so 

5 that there's clarity to the student that it, you 

6 know, what the reasoning was. It wasn't the fault 

7 of the school or whatever. It's just literally 

8 the lack of cohort.

9 MR. RAMIREZ: Sandy.

10 MS. SARGE: This is Sandy. I think 

11 that was kind of somewhat my question also, is would 

12 this be the decision by the Secretary to not 

13 calculate. If it's across the board, like you just 

14 decide we're not going to do it this year, I would 

15 think there would have to be some sort of an 

16 explanation to the public as to why.

17 So for example, in the years during the 

18 Great Recession, for example, students have already 

19 incurred debt, the market tanks or the economy 

20 tanks. Nobody's employed. Perhaps that's a 

21 reason why they wouldn't put that information out, 

22 because it would have a skewed impact potentially 

23 because the whole economy is being impacted by 
138

1 earnings deficiencies.

2 So I'm just questioning whether that 

3 might be a reason that the Department would decide.

4 MR. MARTIN: The way we saw this was 

5 basically that if a program's numbers, numbers 

6 didn't slip below the N size. We never -- we didn't 

7 view this as a rule because the Department would 

8 decide one year not to calculate rates. Under 

9 this, we would be calculating. We would continue 

10 to calculate rates.

11 MS. SARGE: Okay.

12 PARTICIPANT: So just one quick 

13 suggestion then Greg. So in addition to what I 

14 already said, I would just clarify at the start 

15 of the, and I can think about language, but just 

16 that that's the -- in the event that a program 

17 doesn't have the, you know. I would put that 

18 language in and the Secretary therefore doesn't 

19 do a rate then blah. You know what, and then 

20 allowing for the program or maybe it's just standard 

21 language, whatever, but that explains that that's 

22 the situation, you know, to the public.

23 MR. RAMIREZ: Pamela.
139

1 MS. FOWLER: My question is at what 

2 point does whatever you're publishing become, you 

3 know, not effective? I mean you know, ineffective? 

4 It becomes, you know, if you don't do it this year 

5 and I publish the rate from the year before, how 

6 many times can I publish the rate from the year 

7 before before I publish a new rate?

8 PARTICIPANT: That's a great question.

9 MR. MARTIN: The regulations just call 

10 for the previous year, the one previous year.

11 PARTICIPANT: The one year.

12 MS. FOWLER: Okay. So it's just one 

13 year?

14 MR. MARTIN: One year.

15 MS. FOWLER: And then what do I publish 

16 in future years?

17 MR. MARTIN: If there's no rate, you 

18 wouldn't have. You wouldn't --

19 MS. FOWLER: I wouldn't publish it?

20 MR. MARTIN: --have it. You wouldn't 

21 have a rate. No rate would be --

22 MS. FOWLER: And I appreciate the fine 

23 print that Jennifer's talking about, but people 
140

1 don't read the fine print. 

2 PARTICIPANT: Well so now Pamela's --

3 you're raising a good point. So if it's an annual 

4 disclosure and let's say for three years the program 

5 had a cohort of -- I can't believe I'm saying ten, 

6 but ten or above, and they had a rate, and then 

7 the following year it slips to nine and so it doesn't 

8 have a rate. But you're saying that the prior year 

9 has to be, continue to be listed.

10 I think Pamela raises a good question 

11 though still, because let's say it never gets back 

12 to ten. So I'd say that the Department should 

13 consider that if the program stays that small for 

14 that long a period, then publishing a five year 

15 -- I'm just making it up, but a five year old rate 

16 no longer makes sense for the consumer.

17 MR. MARTIN: Right, right.

18 PARTICIPANT: I think that we're 

19 talking about a very rare situation I would imagine, 

20 but I don't know that for sure.

21 MR. MARTIN: Well, to be honest with 

22 you, I don't think we -- we didn't parse it out 

23 that far which is the previous year. We're 
141

1 certainly willing to entertain any ideas anybody 

2 has. What I was just pointing out and Steve 

3 indicated too was that the way the reg is written 

4 now, it's just a previous year and that's what it 

5 says. So it had to be interpreted that way.

6 But we're not averse to any discussion 

7 on that or if anybody has any other ideas, we would 

8 certainly entertain them.

9 MR. MARTIN: Well you know, if after 

10 one year you feel that this should be -- if there's 

11 no rate then that's -- it's only relevant for that 

12 one year and certainly shouldn't carry over 

13 indefinitely. I can see your point there. But 

14 we'd be willing to hear anybody else's opinions 

15 as well.

16 MR. RAMIREZ: Sandy.

17 MS. SARGE: I think this might be, 

18 could be resolved with Jordan's suggestion, that 

19 perhaps if we had several years reported at the 

20 same time or a few years at least, then you could 

21 see that in one year it went to N/A or no difference 

22 from the prior year, but you would see the pattern 

23 over time.
142

1 So maybe as we get into the 

2 nitty-gritty, we can bring that back around to 

3 resolve this issue too.

4 MR. RAMIREZ: All right. So let's do 

5 this. Let's go ahead and break for lunch, and what 

6 I'd like to do though is when we come back, let's 

7 look and see if there are areas where either we 

8 could propose some suggested alternatives or 

9 tweaks, right, so that we could get -- do 

10 temperature checks and try to knock out some of 

11 this stuff.

12 But if I'm hearing the group correctly, 

13 there is some desire to try to find the correct 

14 terminology that everyone could live with. But 

15 am I to understand that we need to discuss probably 

16 down into four before we come back and try to find 

17 that correct terminology? Is that accurate?

18 All right. So apart from the 

19 terminology then or the label, let's see if there's 

20 any other areas where we could close out Issue No. 

21 2 and then move on to 3 when we get back from lunch. 

22 Greg, is one hour enough?

23 MR. MARTIN: Yeah, one hour should be 
143

1 enough. We have quite a few places around, around 

2 here. So I think that will be adequate, yeah.

3 MR. RAMIREZ: Okay, and I believe that 

4 there is a sheet in the back over there with some 

5 eating places. So all right, thank you.

6 (Whereupon, the above-entitled matter 

7 went off the record.)

8 MR. RAMIREZ: All right. Let's go 

9 ahead and get started. Greg, I see that Annmarie's 

10 with us. Did you want to get into the BD issue 

11 first, or did you want to close out the issue on 

12 -- skip the calculation. 

13 MR. MARTIN: No, Annmarie's up here 

14 now. So I think I'll turn it over to Annmarie to 

15 discuss the BD issues.

16 MR. RAMIREZ: Okay. All right, great. 

17 Annmarie, for the record, you just want to 

18 introduce yourself and then jump right in.

19 MS. WEISMAN: Sure. Good afternoon. 

20 I'm Annmarie Weisman. I'm the Director of the 

21 Policy Coordination Group here at the Department 

22 of Education, in the Office of Postsecondary 

23 Education. I am also serving as the Department's 
144

1 negotiator for the borrower defense to repayment 

2 regulation package.

3 For those of you who are still in town 

4 and would like to see more negotiated rulemaking, 

5 feel free to join us next week in the same location. 

6

7 So I was asked to come to address some 

8 questions, if you have any, but also just to provide 

9 some general background about how borrower defense 

10 is using gainful employment data. 

11 I will start out by saying we are using 

12 it in a very limited capacity. We are using it, 

13 just so you're aware too. There is a press release 

14 coming around for your records dated December 20th, 

15 2017.

16 Some of you I see already have it. We 

17 describe a process, and it says on here "New Process 

18 Fairly Compensates for Damage." Keep in mind we 

19 did this with a limited group of borrowers where 

20 we had data that we would not necessarily normally 

21 have from typical borrower defense claims.

22 This was from a closure of a large 

23 institution, where that institution provided data 
145

1 to another institution who then worked with us. 

2 That's not the circumstance that we typically are 

3 in with borrower defense claims or expect to be 

4 in in the future. 

5 So what we're doing is we're looking 

6 at the current earnings, and if those current 

7 earnings are less than 50 percent of what their 

8 peer group within a GE program have earned, that 

9 individual borrower would receive full relief on 

10 their borrower defense to repayment claim.

11 If the earnings are 50 percent or more, 

12 then they would get tiered relief or partial relief. 

13 So again, we're using this for claims that we 

14 already have in our possession, where we already 

15 have information on file, that we would expect we 

16 would not have for the typical claim.

17 So it's not something where we envision 

18 using this going forward. We haven't closed the 

19 door to that possibility should a similar situation 

20 occur in the future. But it's not something that 

21 we've set up as part of our normal process, or 

22 outlining it in regulation. 

23 So hopefully that helps to give you a 
146

1 bit of a flavor of what our intent is. I'm 

2 definitely happy to take questions if I can help 

3 to answer additional items, and I see one tent is 

4 already up. But I'll let Javier address that.

5 MR. RAMIREZ: Yeah, go. No, go ahead. 

6 Jennifer.

7 MS. BLUM: So just to clarify Annmarie, 

8 just to really hone in, it's not the debt to earnings 

9 metric on which you're relying. It's the earnings 

10 data that you happen to have because of that 

11 rulemaking?

12 MS. WEISMAN: That's correct.

13 MS. BLUM: Okay. So I just think 

14 that's an important distinction, so that everybody 

15 understands. It's not a reliance on the results 

16 of the metric. It's a reliance on the earnings 

17 data that you happen to have because of that prior 

18 metric? 

19 MS. WEISMAN: Uh-huh.

20 MS. BLUM: Okay, thank you. 

21 MR. RAMIREZ: Any other questions? 

22 Johnson.

23 MR. TYLER: Hi. So the earnings on 
147

1 gainful employment is the median of all the people 

2 in the cohort. So when you say 50 percent, the 

3 earnings of the individual filing is 50 percent. 

4 That means that it's half of what the median is 

5 for the cohort?

6 MS. WEISMAN: That's correct.

7 MR. MADAIO: And my question, 

8 Christopher Madaio. The earnings comes from 

9 Social Security Administration, from the gainful 

10 employment data, right?

11 MS. WEISMAN: Yes.

12 MR. MADAIO: And obviously I know 

13 there's been the appeals for the previous numbers 

14 are still kind of coming in. I suppose they're 

15 still being adjudicated. Was there any 

16 determination on any of the appeals, anything like 

17 that?

18 MS. WEISMAN: In this case, we did not 

19 have an appeal on the data that we were using, so 

20 we went ahead and used it. But again, this was 

21 specific to one institution.

22 MR. RAMIREZ: Annmarie, I think we'll 

23 extend you the same courtesy. If you'd like to 
148

1 hang around, you're more than --

2 (Laughter.)

3 MR. RAMIREZ: More than welcome to hang 

4 around. But it doesn't seem like there are any 

5 more questions. So you're truly free to hang 

6 around if you like, but thank you for coming by.

7 MS. WEISMAN: I do have another call 

8 that I need to take in my office. But I can 

9 certainly be available later in the day or 

10 throughout the week if additional questions come 

11 up.

12 MR. RAMIREZ: Okay, thank you.

13 PARTICIPANT: Sorry, one more quick 

14 one.

15 MR. RAMIREZ: Sorry, sure, sure. Go 

16 ahead.

17 PARTICIPANT: Do students have a right 

18 to appeal the determination or the amount of 

19 earnings if they don't think that they're correct 

20 based on the calculations being put out?

21 MS. WEISMAN: We did not anticipate an 

22 appeal process for that item. Certainly, if a 

23 student came back with additional information, we 
149

1 would review that information. But again, this 

2 is a very limited circumstance. So we are just 

3 starting to grant these now, and that experience 

4 may yield information about how we want to do this 

5 in the future.

6 But again, we're not committing to 

7 using this structure going forward. It's not 

8 something we expect that we would necessarily be 

9 doing.

10 PARTICIPANT: Limited, but of course 

11 a significant number of students, right? Did you 

12 have an estimate on how many students maybe was 

13 in here? More than 20,000, right, pending claims?

14 MS. WEISMAN: Yes. I don't have the 

15 exact number with me here. But yes, it was a 

16 significant number of -- it was a group of students. 

17

18 The action that we took at this time 

19 was 12,900 that were pending, and then 8,600 claims 

20 that had already been denied. So yes, we 

21 considered the structure for over 20,000 borrowers. 

22 But again, that was a very large cohort of 

23 borrowers.
150

1 MR. RAMIREZ: Go ahead, Sandy.

2 MS. SARGE: So on that, did you go and 

3 ask the SSA to pull that particular group of 

4 students' earnings to be able to do the comparison?

5 MS. WEISMAN: It was data that we 

6 already had available to us as part of obtaining 

7 gainful employment rates.

8 MR. RAMIREZ: Okay. Better hurry up.

9 PARTICIPANT: So actually sorry. 

10 Yeah. You stay too long and then we'll have other 

11 questions.

12 (Laughter.)

13 PARTICIPANT: So when you mentioned 

14 peer groups, because you said I can't compare it 

15 against a peer group, which is interesting because 

16 we talked earlier when we were talking about 

17 disclosures or what is low performing against 

18 peers. So I'm just curious on the peer group that 

19 you're analyzing this against, are you saying just 

20 peer earnings from other gainful programs 

21 specifically, for which you also had earnings? 

22 Is that what you mean by "peer"?

23 MS. WEISMAN: We looked at the group 
151

1 that that borrower would have been in. So if they 

2 were in, I don't want to use a specific program, 

3 but if they were in Program A, then we looked at 

4 other people that were in that same program. 

5 PARTICIPANT: At that same school or 

6 just across gainful? That's what I'm asking.

7 MS. WEISMAN: At that institution.

8 PARTICIPANT: Okay, got it. That's 

9 what I was asking. Thanks.

10 MR. RAMIREZ: Yeah. 

11 PARTICIPANT: I thought the data was 

12 not individualized by individual from Social 

13 Security. So it couldn't be you compared earnings 

14 by student.

15 PARTICIPANT: The student gave the 

16 data and you use the median.

17 MS. WEISMAN: It's not individual data 

18 to that borrower. We're looking at that borrower 

19 versus the group's earnings. 

20 PARTICIPANT: Got it, compared --

21 MS. WEISMAN: The program, yes.

22 PARTICIPANT: Sorry. 

23 MR. RAMIREZ: Go ahead, Chris.
152

1 PARTICIPANT: Sure, and of course raised 

2 -- the student finds a job completely outside the 

3 field in which they were studying, right, outside 

4 that program field because they were unable to find 

5 such a job because that program did not lead to 

6 gainful employment. 

7 That has no bearing, right? If they're 

8 having a job, a minimum wage job, you know, at a 

9 fast food place, that income would obviously if 

10 it would offset, if it was more than 50 percent, 

11 it would offset the amount of recovery they would 

12 get even though their degree provided zero 

13 additional ability for them to make income. 

14 MS. WEISMAN: That's correct.

15 MR. RAMIREZ: Johnson.

16 MR. TYLER: One last question. So if 

17 you didn't -- if the peer group doesn't have a 

18 passing, they're not in a passing gainful 

19 employment program, how does that impact on --

20 MS. WEISMAN: We were looking strictly 

21 at earnings. We really weren't looking at it from 

22 the perspective of did the earnings pass, did they 

23 not pass. We were specifically looking at a group 
153

1 and trying to put a value on the education. It's 

2 not a perfect system. 

3 It's what we had available and it was 

4 a way to try to make a determination on a large 

5 number of claims that would at least be, in our 

6 estimate, a fair way to value. Again, there are 

7 going to be outliers. There are going to be people 

8 that in some cases choose not to work or take a 

9 job outside of a field. But it was -- it was a 

10 method that we used for that group.

11 MR. TYLER: But it assumes there's some 

12 value, earning capacity value in the program if 

13 you're comparing one student against the aggregate.

14 MS. WEISMAN: Yes, it is based on that 

15 assumption.

16 MR. TYLER: Okay.

17 MR. RAMIREZ: Okay. Thank you very 

18 much. All right. So to -- at least for what we 

19 think we could close out here on Issue No. 2, it 

20 seemed like there was a possibility of getting some 

21 type of agreement on the last sentence of the 

22 summary there, where what happens in the event that 

23 the Secretary skips a year of the DE rates, and 
154

1 that there was possibly adding a disclaimer and 

2 some other considerations. 

3 But who would like to try and tighten 

4 that up, to see if we could thumb something on that 

5 topic? Or were the clarification questions enough 

6 and you all would be okay with that? Sandy.

7 MS. SARGE: I think that perhaps our 

8 lack of comment is because we would think we might 

9 have to come back to it after we dig into a few 

10 other things potentially.

11 MR. RAMIREZ: All right. Jennifer.

12 MS. BLUM: I actually -- the reason I 

13 wasn't commenting is is that I felt like the 

14 Department, I mean I'm happy to work with Pamela, 

15 because I think you raised some good points. I'm 

16 happy with on language with a small -- I mean it's 

17 not a -- it shouldn't take that long.

18 But I'm actually looking at Steve, 

19 because it felt like you guys had understood the 

20 issue and might craft that language. But if you 

21 want us to do it, I mean we can come up with. It's 

22 I think fairly straightforward disclaimer 

23 language. So how are --
155

1 PARTICIPANT: We're willing to take 

2 any suggestions for any language you want around 

3 that.

4 MR. RAMIREZ: So I'll take it then. 

5 So yeah, work with Pamela. Okay, all right, thank 

6 you.

7 PARTICIPANT: That would be within the 

8 context of it being one previous year, right?

9 MS. BLUM: So I think there's -- I mean 

10 the way I would break it out is I would start the 

11 section differently by saying "in the event that" 

12 or somehow making it clear that the only 

13 circumstance under which the Secretary is not doing 

14 an annual is if there's a low cohort, you know, 

15 below whatever, below appropriate cohort or not 

16 below appropriate, but below the necessary cohort, 

17 you know, block, and then the language.

18 And then, you know, in the even that 

19 that occurs, that institution would have the 

20 following, you know, would use the following 

21 disclaimer for the next year. And then there would 

22 need to be language that discusses how, and this 

23 is where the Pamela piece, which was well pointed 
156

1 out. 

2 That's why for one year, I'd say after 

3 one year it becomes sort of, you know, then you 

4 don't have to report would you? It doesn't make 

5 sense for longer than that. So something along 

6 those lines is what I was, you know, what I think 

7 we discussed.

8 MR. RAMIREZ: Okay. Thank you, 

9 Jennifer. Anything else that we need to touch on 

10 on Issue No. 2 before we go on to 3? 

11 (No response.)

12 MR. RAMIREZ: All right. So before we 

13 get on -- go on to 3, just a friendly reminder. 

14 I'm trying to call everyone's names, but there's 

15 time where the exchanges go. 

16 Just if you could state your name for 

17 the record, just so it's clear that would be 

18 helpful. And as you get into this next issue, as 

19 Greg is going through the summary and I would also 

20 ask Greg if in addition to the summary, if you could 

21 give some context or rationale for the summary.

22 Be thinking about where might be some 

23 of those quick areas of agreement. When I say that, 
157

1 I don't mean what you would like for someone else 

2 to agree to, but where you truly think that it's 

3 not a controversial issue and we should be able 

4 to get some of the pieces out of the way, okay. 

5 So Greg, number 3.

6 MR. MARTIN: Thank you. This is Greg. 

7 We propose or again, we're looking at debt 

8 calculations. This is Issue Paper #3, and we 

9 propose to use an amortization period of 15 years 

10 in the DE rate calculation for all educational 

11 programs, regardless of program length.

12 We propose using the annual statutory 

13 interest rate on federal direct unsubsidized loans 

14 that were in effect during the last award year of 

15 the cohort period. We propose to exclude private 

16 educational debt and debt owed to the institution 

17 from the calculation of a student's debt in the 

18 DE rate. 

19 We propose to no longer exclude from 

20 the numerator and the denominator of the DE rates 

21 calculation students who have one or more Title 

22 IV loans and a military-related deferment status. 

23 We also propose to remove the language related 
158

1 to the transition period, due to other proposals 

2 made related to sanctions, and that transition 

3 rates are not needed as programs are receiving 

4 actual DE rate calculations.

5 We also propose to require that a 

6 student be enrolled for at least 60 days for that 

7 individual to be counted as an exclusion to the 

8 DE rates calculation. As noted in the regulatory 

9 language of Issue Paper 1, we propose to use a single 

10 two-year cohort period in calculating DE rates and 

11 remove the four-year cohort rate.

12 As far as our rationale for doing --

13 for doing this, starting with the amortization 

14 period of 15 years, as you recall part of the reason 

15 for doing new regs is simplification. This is

16 partly related to that. 

17 We wanted to introduce a 

18 straightforward period without applying different 

19 amortization periods to different lengths of 

20 programs. So we thought about what would be an 

21 appropriate length and settled on 15 years. 

22 We also proposed that the interest rate 

23 to use would be that one in effect during the last 
159

1 cohort, last year of the cohort period. Again, 

2 this lends some simplification and uniformity to 

3 the rate. 

4 Excluding private educational debt and 

5 debt owed to the institution from the calculation 

6 of the DE rate. This, as you're aware if you read 

7 the issue papers and we get in -- we'll get into 

8 this a little bit later, but we've moved to a DE 

9 calculation that does not require schools to do 

10 any additional reporting beyond what is in NSLDS 

11 currently, and as you're also aware, NSLDS does 

12 not collect that data. 

13 So if we're going -- and simplifying 

14 the rule so that -- and reducing burden so a school 

15 is no longer required to report. Remember, we're 

16 talking about not just GE programs now that have 

17 been reporting, but all educational programs at 

18 all institutions. 

19 So to not have that, then we're using 

20 the data that we currently have and the data related 

21 to educational debt and debt owed the institution 

22 as not available to us. So under this proposal, 

23 we would not include that. 
160

1 Title IV loans to military-related 

2 deferment status. We didn't think that was 

3 necessary. Students in the military deferment 

4 status are earning, so we didn't feel that was 

5 necessary to include. 

6 The transition period. Due to the fact 

7 that we no longer have -- we no longer have 

8 sanctions, proposed sanctions related to DE rates, 

9 we concluded that the transition period was no 

10 longer necessary. 

11 Okay. Why don't we move into the 

12 regulations themselves? Moving on to the first 

13 major area that's more than just cursory changes 

14 is the moving to a 15-year, or amortizing over a 

15 15-year period, as opposed to what was previously 

16 -- what is in the current regs. What you see there, 

17 we've given you those lines. It's struck out. 

18 But you can see what it is currently. So maybe 

19 we should start with that, that topic.

20 MR. RAMIREZ: What are your thoughts 

21 on that 15-year? 

22 (Off mic comment.)

23 MR. RAMIREZ: Oh, you go ahead. Go 
161

1 ahead.

2 MR. MIRANDO: Tony Mirando with 

3 NACCAS. Thank you. Thank you Gregory. So in 

4 listening to you describe this debt calculation 

5 and repayment process, is it that we should assume 

6 that the earnings metrics is still going to remain 

7 the same?

8 MR. MARTIN: The question was will the 

9 earnings remain the same, and the answer is yes. 

10 We would collect earnings from Social Security 

11 the way -- or that matches the same way we do now, 

12 yes.

13 MR. MIRANDO: So all the flaws that 

14 came with that remain the same?

15 MR. MARTIN: Well, I don't know if I'll 

16 quite bite on that, but yeah. The protocol remains 

17 the same, yes.

18 MR. MIRANDO: Is that something that 

19 you all would consider looking at, again because 

20 -- and again, I'm just kind of trying to look at 

21 this from a very middle of the road kind of process. 

22 If, you know again if people belong to a -- or 

23 people work in an area where a good portion of their 
162

1 income could be income that they choose not to 

2 claim, then are you using again a metrics that is 

3 going to be, you know, one that one could be assured 

4 that you're getting the right information.

5 MR. MARTIN: Some of this gets into 

6 other issue papers that we're going to go -- going

7 to look at, and you'll see how we -- to be honest 

8 with you, we've struggled with that concept and 

9 where do you get the earnings from? If not Social 

10 Security, I mean some people have posited BLS data. 

11

12 But again, this is a program-specific 

13 calculation. We could probably argue ad nauseam 

14 about how useful BLS is or whether it should be 

15 used. But we did consider that and we put that 

16 aside in doing, proposing these regs. 

17 So then looking at what you have, that 

18 leaves you with a Social Security, with the Social 

19 Security earnings that admittedly don't reflect 

20 sometimes income people have had from gratuities, 

21 and especially in those industries where that's 

22 quite common.

23 We, as you'll see later on, we did 
163

1 remove the appeals. We do have some disclaimer 

2 language in the notices that will replace warnings 

3 that we'll get to when we get to that portion. 

4 But in large part to answer your question yes we, 

5 in considering all of the alternatives, decided 

6 to retain Social Security earnings as the best, 

7 as the best measure of earnings.

8 MR. RAMIREZ: Jennifer.

9 MS. DIAMOND: This is Jennifer 

10 Diamond. I think with the issue of the 15 year, 

11 bringing everything to a 15-year amortization 

12 period, I mean considering that so many of the 

13 programs currently covered by the rule are, you 

14 know, one year programs for certificates, for 

15 associate's degrees, the idea that a student 

16 signing up for a one year program, it's reasonable 

17 to think that 15 years would be reasonable for them 

18 to have loans throughout that period feels really 

19 excessive to me.

20 I understand the need for 

21 simplification, but you know we're talking about 

22 a lot of students who are again like vulnerable, 

23 low income borrowers, and keeping them under the 
164

1 pressure of a loan for 15 years and calling that 

2 a success feels irresponsible. 

3 So I think being more nuanced about it 

4 and considering that there are very different 

5 kinds of programs, the vast majority of which are 

6 short-term right now is important to consider in 

7 the rule.

8 MR. RAMIREZ: Chris.

9 MR. MADAIO: Thank you. Chris Madaio. 

10 I agree with what Jennifer just said. I mean I 

11 think -- I mean the Department, right, calls the 

12 ten years a standard repayment plan. I mean that's 

13 what students are kind of defaulted into, and 

14 obviously there's a lot of -- many students 

15 obviously are on much longer repayment plans than 

16 that.

17 But it kind of seems weird that if ten 

18 years is kind of the default standard for students, 

19 that it's not the default standard amortization 

20 here, especially for associate's degrees or 

21 certificates, that I don't think those students 

22 are contemplating paying those off in 15 years. 

23 So and then definitely there is something different 
165

1 about doctoral and professional degrees. 

2 I'm sure Jennifer is ready to say this, 

3 that those students know they're going to be paying 

4 those off for longer than ten years, right. I mean 

5 especially lawyers clearly, you know, generally 

6 think about that. 

7 So I mean as Jen just said, the need 

8 for distinguishment is important. I don't think 

9 15 years is an appropriate catch-all for everyone. 

10 I think the 10 and the 20 from the prior rule was 

11 the appropriate metric.

12 MR. RAMIREZ: Okay, Todd.

13 MR. JONES: Just wanted to cover a 

14 couple of issues here. In talking about where to 

15 get earnings, and I think we have to -- we have 

16 to address that, because it's really not addressed 

17 elsewhere, the answer of what other data can we 

18 use really simply begs the question as to whether 

19 this is an effective metric.

20 It was a flawed metric when it was done 

21 eight years ago, but it's a more flawed metric when 

22 you expand it to include a larger pool of programs, 

23 particularly programs that are not designed to one 
166

1 specific discipline, because of the differences, 

2 the wonderful differences in the lives that people 

3 choose to have after obtaining an education.

4 So let's use a few examples. If you 

5 want to be a forester, you want to be a forest ranger 

6 and live in the middle of nowhere and earn very 

7 little but you get free housing and you get to 

8 commune with nature, see the seasons pass, there's 

9 a quality of work that is a trade-off for the pay 

10 you get, because you don't earn much.

11 You want to watch for fires out in 

12 Alaska or Washington. It's a wonderful life for 

13 those who want it. But this would create a bias 

14 against those who are choosing that, because only 

15 cash remuneration is what counts, or that which 

16 we can translate into forms of cash compensation. 

17 You want to join the military, you know? Part 

18 of the trade-off of military pay, just as a pay 

19 issue, is you do get free housing. 

20 You get free education for your spouse 

21 and your children if you serve a significant length 

22 of time. You get a wonderful pension system with 

23 a set retirement date, and you get to go to the 
167

1 PX. Those things offset the fact that you might 

2 be able to get higher compensation elsewhere. 

3 If you're from an institution that 

4 serves a significant chunk of those who in the 

5 market are choosing lower levels of compensation, 

6 you may see a skewing. What about acting? I 

7 talked about this last time. 

8 Are we telling people you're no longer 

9 -- because implicitly, to an institution, it is 

10 wrong for you to train people in the fine arts 

11 knowing that some of your folks are going to wait 

12 tables for five years waiting to make it? 

13 You know, how many of the people who 

14 stand up and get trophies on stage and are shown 

15 in glamor magazines talk about yeah, I was a 

16 carpenter, a carpenter's assistant to make ends 

17 meet. I waited tables. I was a nanny. I mean 

18 these are not highly compensated forms of work, 

19 but it's also a trade-off for the career that you 

20 choose.

21 So the if not, why not reminds me of 

22 the old story about the drunk looking for his keys 

23 under the lamp. You say well why are you looking 
168

1 for your keys there? Didn't you lose them in the 

2 alley? The answer is well yeah, but the light's 

3 better here. Well, the data's better here, but 

4 it's not where compensation actually is. 

5 The other is about like the programs, 

6 and we talked about, you know, the 15 year standard. 

7 Should it be 20, should it be 10? My only concern 

8 about that has to do with the ability to accurately 

9 reflect what it's going to look like for a 

10 particular person and attempt to apply that is 

11 absolutely unfair. 

12 If you were a specialized surgeon and 

13 remember, because of the decision the Department 

14 made, we're now scooping up a whole range of people 

15 we didn't use to take into this accounting.

16 If you're a specialized surgeon, you 

17 could be well into your late 30's before you start 

18 paying off your loans because you're still in 

19 school. Now you may be making a million dollars 

20 a year after that; you may be making $300,000 a 

21 year to pay out some very large sum of loans. But 

22 you're choosing that, and yet we're supposed to 

23 look at debt to income.
169

1 So the first thing you want to do is 

2 go work for the Public Health Service and make less. 

3 We're creating a bias against that. 

4 Simultaneously, when we have programs set up to 

5 forgive loans for people who go into public service. 

6 The problem isn't that there aren't answers to 

7 these, the Department isn't doing the best that 

8 it can. 

9 The Department is doing the best that 

10 it can. But it's attempting to achieve a goal with 

11 tools that it lacks the ability to draw fair and 

12 reasonable conclusions. I think the reason for 

13 that is that the Department chose, instead of 

14 casting as it did in the past, a small flawed net 

15 over a small group of institutions to instead try 

16 and capture all institutions.

17 So when you say it's only equitable that 

18 we try and get everyone in and we have to apply 

19 a standard to one because we have to apply it to 

20 the other, that's nonsense. Because if you're 

21 applying it to all with standards that don't have 

22 any connection to the reality of life and choices 

23 people should be encouraged to make, then we have, 
170

1 you know, a system that will only breed frustration 

2 and frankly cynicism about, you know, the meaning 

3 of this entire process.

4 MR. RAMIREZ: So we're bouncing back 

5 and forth between two things, right, the earnings 

6 and amortization. At least right now that's what 

7 we're doing. What do you all think of focusing 

8 on the amortization, to see if there's a way that 

9 we could find some common ground? Everyone 

10 comfortable with that. 

11 So yes. Let me see a show of thumbs 

12 for everyone who is okay with focusing on that piece 

13 right now?

14 (Show of thumbs.)

15 MR. RAMIREZ: So what I'm -- and Todd 

16 if I could, if I could maybe keep it on you for 

17 just a second. What would you -- what would you 

18 suggest in that, because I heard that -- actually 

19 I'm not sure what I heard, because I heard that 

20 it's unfair to just put one scale on everybody, 

21 but then how do you --

22 On the other hand I heard just scooping 

23 in a bunch of people and to think that you're going 
171

1 to find the one or the one that applies to each 

2 individual could be overly burdensome for the 

3 institutions as well. So where's that common 

4 ground?

5 MR. JONES: I think the problem is that 

6 there is no effective way to do this with debt to 

7 earnings, and I think it's because how different 

8 programs are. I'll just use a few that are broadly 

9 under the scope of institutions I work with.

10 An RN to BSN program that goes full time 

11 for 15 months is fundamentally different than a 

12 BSN, Bachelor of Science in Nursing, those who are 

13 not getting that, for a traditional aid student 

14 who is going to go six years part-time while they're 

15 working at Target to help pay for the cost of 

16 supporting their family and pay for the cost of 

17 tuition.

18 Which is fundamentally different than 

19 somebody who is going to school full time to be 

20 a stage actor, which is also different than somebody 

21 who is entering, attempting to go full-time with 

22 the full intention that they immediately go to law 

23 school or dental school.
172

1 These are all very different ways of 

2 seeking a bachelor's degree. They're going to have 

3 very different debt ratios and that's without 

4 getting into what is the financial situation of 

5 those who are coming into that. My child will have 

6 a, because I have a professional job, has a very 

7 different likely debt to earnings ratio than a 

8 student who is supporting a child and a younger 

9 sibling, and so as a single parent with a sibling 

10 who is attempting to work their way through at the 

11 same time.

12 It's just a radically different 

13 construct, and I don't think or at least I'll put 

14 it -- I have to reverse the other way. The 

15 Department has to think and come up with a system 

16 that addresses these variables. I don't think it 

17 can be done, but I'm also modest enough to know 

18 that I'm not smart enough to come up with something 

19 better. 

20 But I know this doesn't capture it, and 

21 I can't offer a suggestion to something I actually 

22 think is too flawed to fix. That's another issue. 

23 If they can come up with something, then maybe 
173

1 they're all our alternatives.

2 MR. RAMIREZ: So it sounds like that 

3 regardless of what the group decides on, it's going 

4 to be somewhat -- it won't be very tasteful, I guess, 

5 to everyone in the room. Does somebody have --

6 does somebody want to try to serve something up 

7 that is at least palatable?

8 MR. JONES: And again, I don't mean 

9 that it can't be done.

10 MR. RAMIREZ: Right.

11 MR. JONES: And maybe it's five 

12 different or ten different metrics. Boy, wouldn't 

13 that be nice and confusing. But nonetheless, maybe 

14 that is the answer, because what happened before 

15 is we had a flawed program structure that applied 

16 to a finite, small finite number of institutions. 

17

18 As a percentage of total institutions, 

19 small. Maybe the answer here is to come up with 

20 different segments with different kinds of 

21 analyses. Maybe there's a -- if the Department 

22 really thinks there's a horrible issue of medical 

23 schools, defrauding students, then what we need 
174

1 to is have a medical school ratio.

2 I don't think that will be a good 

3 policy, and I don't think that's probably likely, 

4 but at least you could come up with that as a 

5 separate metric.

6 MR. RAMIREZ: Johnson.

7 MR. TYLER: Thank you, Johnson Tyler. 

8 I was just going to say I don't -- given that we're 

9 not sure even whether these regulations are going 

10 to apply, or it sounds like they can apply to 

11 everyone, I think you have to have a better 

12 targeting of amortization period. It's -- one size 

13 does not fit all. 

14 So while it adds complexity, I think 

15 you know, the devil's in the details. It's not 

16 fair to use a 15 percent, 15 year period for 

17 everyone.

18 MR. RAMIREZ: Jen, Jennifer.

19 MS. BLUM: So I put my tent up a while 

20 ago, but so I do want to appreciate Jen Diamond 

21 and Chris and now Johnson on the amortization, and 

22 I agree with a lot of what Todd said too. I'm 

23 hearing what Johnson just said, I do think that 
175

1 there may be some form of consensus around the 

2 amortization piece.

3 So I will just say more broadly that 

4 appreciate that the Department, you know, is trying 

5 to sort of make it straightforward or something. 

6 But by making it straightforward, you're actually 

7 making it less real for the consumer who's going 

8 to be looking at the data. So I think -- and you're 

9 hearing that around the room right now on 

10 amortization.

11 But I could say the same actually about 

12 the interest rate. The fact of the matter is we 

13 don't have a fixed interest rate. We have a sort 

14 of hybrid fixed variable rate. So relying on just 

15 one interest rate for the cohort period is also 

16 inaccurate. 

17 And then tuition and fees, which I mean 

18 maybe we'll reserve tuition and fees, because I 

19 imagine I'm not the only person who has that 

20 comment. But my overall point is in the effort 

21 to over-simplify the metric and now with it, as 

22 Todd is so eloquently pointing out, now with its 

23 applicability to every single type of program, now 
176

1 is not the time to over-simplify the metric. Now 

2 is the time that actually you, I hate -- I mean 

3 I hate to say it on the one hand, which is sort 

4 of what Todd's saying too.

5 I hate to say it because actually the 

6 complexity becomes very real, and so all of the 

7 sudden -- not all of the sudden, but I think we're 

8 all realizing this is extremely complex. And so 

9 just to go back on amortization, of course I agree 

10 with what Chris and Jen Diamond said about doctoral, 

11 but not just doctoral but, you know, at the first 

12 professional degree, you know, just to make sure 

13 we're clear about it.

14 That needs to be back at 20 where it 

15 was and so, you know, I think they're -- I don't 

16 know if there's consensus around the specific 

17 numbers of amortization, but at a very broad level 

18 it sounds at this table like, I don't know about 

19 the Department, but everybody else seems to have 

20 some consensus around recognizing that one 

21 amortization rate doesn't make sense.

22 MR. RAMIREZ: Temperature check. Let 

23 me see a show of thumbs as far as if the group thinks 
177

1 that there would have to be multiple, more than 

2 one amortization rate. Jeffrey, what are you 

3 thinking?

4 MR. ARTHUR: Well, this goes to the 

5 comment I wanted to make. If we approach gainful 

6 or we approach debt to earnings as a disclosure 

7 item, and then we present the data in a -- we talked 

8 about the Scorecard format, we present it as it 

9 relates to the same program at other institutions, 

10 I don't think the amortization period would matter 

11 that much, because we're going to --

12 In fact, I would even go to the point 

13 where I would suggest to be more helpful that the 

14 better discussion would be at what point the 

15 earnings should be used. But I think we could look 

16 at a 3 through 10 year, even like a line graph, 

17 where here's this institution's line graph, debt 

18 to earnings for their program and here's the 

19 standard for this program, for all the programs 

20 in the country, and then I think you're getting 

21 into some meaningful data.

22 I don't think the amortization period 

23 would matter that much. Whatever would make it 
178

1 simpler, 10, 15, whatever. But if you introduce 

2 sanctions, then I'm very interested in the 

3 amortization period.

4 MR. RAMIREZ: Bob. Sandy.

5 MS. SARGE: This is Sandy Sarge. So 

6 correct me if I'm wrong. My understanding is that 

7 the amortization periods and the interest rates 

8 of every loan that is taken out by a student is 

9 captured, and the reason why I'm making that 

10 assumption is because they actually make their 

11 payments and that's how they calculate the 

12 payments. So why can't we use actuals? 

13 MR. MARTIN: I could have, and I may 

14 just because of a bigger issue maybe have Cynthia 

15 come up, one of our experts from FSA. But the 

16 reason why we didn't go with that initially, I mean 

17 you can see the way the regs work, are now is not 

18 using every student's loan.

19 The level of -- for calculating the 

20 rates, the level of complication involved in 

21 looking at capturing what the actual interest rates 

22 students are paying or amortization would be fairly 

23 daunting, which I believe is one of the reasons 
179

1 we didn't go there before. 

2 So I don't think that's going to be a 

3 -- we can certainly take that suggestion back. 

4 Whether or not that's viable, I think based on what 

5 I've been told thus far no. But I will certainly 

6 take that back.

7 MS. SARGE: You know, I think that if 

8 I were to think about this ten years ago or 15 years 

9 ago when computer programming wasn't where it is 

10 today, the robustness that we have with systems, 

11 I would say that potentially when you are hand 

12 calculating that, that would be difficult. But 

13 it is calculated today and that is how students 

14 know what.

15 So I would -- I would say that the data's 

16 probably there and once the calculation is done, 

17 then it can be applied and then it would be just 

18 the system doing it. But I -- so I don't want to 

19 -- I mean I would think we have the technology to 

20 do it. The question was more do we have the data, 

21 and I think we do, so I would throw that out as 

22 an option.

23 MR. RAMIREZ: Chad, Jen and then 
180

1 Jordan.

2 MR. MUNTZ: I guess we haven't used it 

3 enough. Chad Muntz. I think this plays into the 

4 amortization period, that it's going to be the size 

5 of debt. It's on page five. It's Section 3. 

6 This impacts public universities 

7 specifically. I'm in a system. But it says that 

8 "The Secretary may include loan debt incurred by 

9 enrollment in all programs, any institutions if 

10 the institution's under the same control." So some 

11 systems have community colleges and public, four 

12 years; some just have public four years like mine.

13 But with the swirling, is that really

14 going to be part of the loan calculation as you 

15 switch between programs or earn your associate's, 

16 go to the bachelors and how would that play into 

17 the overall metric? And then of course then that 

18 will impact the amortization time, because you're 

19 going to have a larger loan debt balance here as 

20 well. So we might want a longer period of time.

21 MR. MARTIN: Longer meaning than 15?

22 MR. MADAIO: More than 15. Well it 

23 depends on just how much swirling or how do you 
181

1 know which program has been completed? So if 

2 you're under the same control and you've done the 

3 two year, then the four year, then the master's, 

4 then the doctorate, what are we going to combine 

5 in, because my institutions have all programs in 

6 all different levels there?

7 MR. RAMIREZ: Jen and then Jordan.

8 MS. DIAMOND: Actually I might --

9 (Off mic comment.)

10 PARTICIPANT: I actually think Greg, 

11 if you don't mind, I think this was -- this was 

12 intended to address systems where students at the 

13 same degree level moved within a control, and they 

14 were concerned about certain institutions that were 

15 not ethical, moving students from one associate 

16 to another.

17 But I believe the rule still reads that 

18 the exclusion from associate to bachelor or 

19 undergrad to grad remains. Associate to bachelor 

20 may be more of a problem, but it's the Secretary's 

21 discretion I guess. Am I reading it right Greg?

22 MR. MARTIN: Yeah. That's an accurate 

23 assessment. This was not -- this has been there 
182

1 before and remains basically as the tool. 

2 Remember, it says here the Secretary, "However, 

3 the Secretary may include loan debt." It's 

4 basically an anti-gaming.

5 PARTICIPANT: It's an anti-gaming, 

6 anti-fraud issue. It's not going to address --

7 MR. MARTIN: We reserve the right to 

8 do that where we -- where we find that this is 

9 happening in institutions. I don't think we've 

10 done -- I don't think we've invoked it thus far, 

11 but it is there as a stop gap to that.

12 PARTICIPANT: Great, thanks.

13 MR. MARTIN: Not intended to be any 

14 more than that. 

15 MR. RAMIREZ: Yeah. 

16 PARTICIPANT: So I wanted to address 

17 -- I forgot for a second what I wanted to address, 

18 but Jeff's reference again to the Scorecard. So 

19 I do want to point out the Scorecard perhaps 

20 purposefully by the Department only applies to 

21 undergrad. So I just want to -- so it would be 

22 a whole new universe for the Scorecard.

23 So just when we talk about the 
183

1 Scorecard, it doesn't cover the extent of programs 

2 that would be -- that were covered under gainful. 

3 So I just want to make sure that we all know that. 

4 I do think that's relevant.

5 And then on the sort of -- I have to 

6 respectfully disagree with Jeff about the use of 

7 one amortization. I mean if the whole point is 

8 to educate the consumer about what their own 

9 situation might look like, and of course it's always 

10 going to be a "might," because each student is 

11 different and each situation is different. 

12 But if we're trying to create the median 

13 or the -- what something might look like, that 15 

14 doesn't make sense for all programs. It just --

15 I mean it just doesn't. So the sort of -- and the 

16 over-simplification for consumer purposes in my 

17 view just whether it's in the Scorecard or wherever 

18 it is, just really doesn't make sense, and it again, 

19 just to Todd's point, it just does not take into 

20 account the richness of what we offer in the country 

21 in terms of educational programs.

22 MS. MILLER: Mark, did you have a 

23 response?
184

1 PARTICIPANT: Just Greg, I guess I have 

2 a question, because we're kind of not getting to 

3 the point. Does the Department -- well, I'm going 

4 to say it to you differently. I believe the date 

5 is going to show that graduate programs overall 

6 are going to have very, very high debt to earnings. 

7

8 So in order to address amortization, 

9 as Todd's point we'd have to address what year we're 

10 looking at the earnings, because the earnings 18 

11 months after most graduate degrees is sometimes 

12 lower. 

13 And so I'm trying to figure out how we 

14 can address the complexity of the whole thing. 

15 I've been talking to some of my fellow members, 

16 but because all the points are interrelated, it's 

17 hard to have the discussion.

18 MR. MARTIN: Yeah. I can see there's 

19 not -- and we didn't come up with an easy way of 

20 doing it either. I mean I think any way you do 

21 it, you give something on one side or give something 

22 on another. We're certainly willing to take any 

23 suggestions anybody has. This is our proposal. 
185

1 We're not 100 percent wedded to it. 

2 So if you have a better way of doing 

3 it or can find another way of doing this that we 

4 can accommodate or accomplish, then we're willing 

5 to entertain it.

6 PARTICIPANT: So can I ask a broader 

7 question then. Do you think that -- does the 

8 Department have a sense that broad swaths of higher 

9 ed will be defined as a low performing under this 

10 proposal?

11 MR. MARTIN: No, we didn't consider 

12 what -- in crafting these proposed rules, we didn't 

13 consider that a specific group of programs would 

14 be considered low performing.

15 PARTICIPANT: So you crafted it 

16 theoretically without really looking at the 

17 underlying impact first?

18 MR. MARTIN: We looked -- we crafted 

19 it with the underlying premise being that we would 

20 provide this information to all students in all 

21 programs.

22 PARTICIPANT: Okay, thank you.

23 MR. MARTIN: And didn't really go 
186

1 beyond. That was our -- that was the premise we 

2 started from.

3 MR. RAMIREZ: Jennifer, you wanted to 

4 comment on that?

5 MS. BLUM: Actually, I just want to 

6 correct something that Mark said about the doctoral 

7 level and above in terms of the debt to earnings 

8 ratio. Actually the fact of the matter is is that 

9 under the current metric with 20-year amortization, 

10 only five doctoral and first professional programs 

11 in this country failed.

12 So I actually -- the whole reason I'm 

13 sitting here talking about doctoral is actually 

14 not because I'm concerned about the results as a 

15 nation. The reason I'm bringing it up is that I 

16 think that the focus of where we should be from 

17 a student and consumer standpoint is not at those 

18 who have already gotten their bachelor's and 

19 master's degrees first, because their level of 

20 education and knowledge about the loan system is 

21 quite different.

22 I'm not saying, by the way, that there 

23 shouldn't be transparency around debt. I'm not 
187

1 saying that there shouldn't be some form of 

2 disclosure requirement in general. I'm just 

3 talking about the debt to earnings metric is a 

4 different -- it's a different consideration for 

5 the consumer, when they're applying for a doctoral 

6 or first professional degree.

7 So I just want to be really clear. The 

8 results and I'm looking at them now, there are five 

9 failing programs at the doctoral, and only eight 

10 at the master's level. So at the -- and I haven't 

11 done the math admittedly on the 15, you know. If 

12 you move it downward, I know what it is currently.

13 So I just want to clarify just in case 

14 there was confusion about why I'm suggesting it. 

15 Now I understand that there are high debt programs 

16 for medical. You know, I understand that it does 

17 get to be. But I will say the consumer of those 

18 loans is a different consumer by the time they get 

19 to that point.

20 MR. RAMIREZ: Let me get Jordan, Sandy 

21 and then Tony.

22 MR. MATSUDAIRA: So I wanted to offer 

23 a couple of different thoughts. One was just about 
188

1 the consequence of this particular aspect of the 

2 rule, which feels pretty technical. So you know, 

3 perhaps for people that haven't waded through the 

4 data site of this as much as others. So the 

5 amortization rate, you know, one way to think about 

6 it now is take certificate programs now, which 

7 currently have a ten year rate and you're going 

8 to make it a 15 year rate instead. 

9 So essentially what that does is it 

10 gives you 50 percent more time to pay off a loan, 

11 a given amount of debt that you've accumulated over 

12 time. So your monthly payments roughly speaking 

13 is not quite right, but roughly speaking are going 

14 to be about 50 percent less. So the debt to 

15 earnings ratio is going to decline by 50 percent. 

16 

17 So if you have a 12 percent rate before 

18 now, it's going to look like you have a six percent 

19 rate or something like that. And the opposite will 

20 be true for graduate programs, where essentially 

21 instead of 15 years you have 20 percent longer. 

22 So you know, it increases your debt to earnings 

23 ratio by like a third basically.
189

1 So that's kind of the implication here, 

2 is that this makes the rule tougher for certificate 

3 programs, or sorry, easier for certificate programs 

4 and tougher for graduate level programs overall, 

5 and you could have accomplished the same thing by 

6 jut having different acceptability thresholds for 

7 the different things. 

8 I think rather than having a different 

9 threshold, I want to ally myself with others who 

10 have said having a different amortization rate 

11 makes sense and one reason, there are others. But 

12 one reason that that's true is that the longer the 

13 length of a program, you know, people who study 

14 the labor market recognize that, you know, people's 

15 wages usually go up, you know, both if you are 

16 exposed to high quality training programs, but also 

17 just with experience on the job.

18 Generally speaking this isn't always 

19 true, but when you're in a longer program, you 

20 usually accumulate less labor market experience 

21 over time. 

22 So it takes a little bit longer for the 

23 investment to pay off for that reason, because your 
190

1 earnings kind of take a hit for not having exposure 

2 to just, you know, be working and having your wages 

3 go up just from having more experience.

4 And having different amortization 

5 rates is one kind of way to handicap for that, you 

6 know, a very sensible way to handicap for that kind 

7 of phenomenon in general. I wanted to speak to 

8 Sandy's point about why don't we just use the 

9 actuals of what people are paying, so that it's 

10 absolutely feasible to do that in the context of 

11 the Department of Education data that we have.

12 One reason why you might not want to 

13 do that is suppose you have two programs that people 

14 have exactly the same amount of debt, but one 

15 program was less high quality and so people struggle 

16 to repay their loans going forward. So they might 

17 switch into longer repayment periods precisely 

18 because, you know, they aren't earning as much and 

19 they're having more difficulty paying.

20 So it's going to look like they have 

21 lower kind of monthly or yearly debt service ratios, 

22 but that's going to be an artifact of the fact that 

23 they're struggling. So that doing the actual thing 
191

1 could actually help low performing programs in that 

2 sense, which is why we don't do that in the current 

3 rule.

4 Let me just say one other thing about 

5 Todd's point about debt earnings, kind of the whole 

6 structure of the rule not being useful overall. 

7 So here, I agree that earnings is a limited view 

8 of the value of higher education. But that's not 

9 what this rule is about. The rule is about consumer 

10 protection. If you borrow to go to school, you 

11 need to repay it with dollars, like not kind of 

12 sunshine and good feelings.

13 And the rule is just identifying 

14 programs where you might not earn enough to repay 

15 the debt that you acquired, and I think that's very 

16 relevant and it's relevant across the full sector.

17 MR. RAMIREZ: Thank you. Sandy.

18 MS. SARGE: So from a -- there's -- I 

19 understand what the Department is saying about ease 

20 and I hear everybody's point. I mean to some degree 

21 we have a lot of moving elements of these 

22 calculations, and mathematically if you start to 

23 like stop the movement on some of the elements, 
192

1 potentially it allows you to then highlight the 

2 parts of the calculation that really are 

3 detrimental. 

4 So for example if we left it -- if we 

5 say okay, we're all going to use the same rate and 

6 we're all going to use the -- in that cohort, we're 

7 all going to use the same rate. We're all going 

8 to use the same amortization period. Now you 

9 eliminate fluctuations that give people the 

10 opportunity to say yeah, but I really took ten years 

11 but, you know, whatever it is.

12 Jordan, I appreciate your point. You 

13 make a good one, but I think that applies no matter 

14 what way we try to get this right. There's always 

15 going to be somebody who's going to figure out a 

16 way to get around it. It's just the way it is. 

17 So then the question comes back to his I thought 

18 very relevant point, is what are we trying to --

19 Maybe it's just me. There's so many 

20 good ideas and thoughts going on that I'm almost 

21 losing track of what's the real point here. Are 

22 we supposed to be providing students with 

23 information that allows them to make good decisions 
193

1 about where to go to school? Are we supposed to 

2 be giving students information about whether or 

3 not they'll make enough money to repay their debt? 

4 Are we trying to say that these programs that fail 

5 or not acceptable or below performing or bad? Are 

6 we -- I'm sorry. I'm just -- I just would like 

7 to hone it back and maybe somebody could help me, 

8 remind me what are we really trying to do here? 

9 Maybe I'll throw it to Greg.

10 MR. MARTIN: Well, I mean the way we 

11 see this is we're providing, under this -- under 

12 this disclosure regime here, is to provide 

13 information to students at all that would be 

14 attending any program at any institution, giving 

15 them meaningful information on which they can base 

16 decisions to attend or not to attend that program. 

17 That's really what we -- what we're -- how we're 

18 approaching this.

19 And then I mean everything --

20 basically, you know, how we term the rates, whether 

21 it's passing, failing, whatever. How to -- we did 

22 determine we need to contextualize whatever the 

23 information we give students to some way, as to 
194

1 make it as meaningful as possible. That's really 

2 where we're -- where we're going with it. 

3 I mean what will be -- we start with 

4 the premise that we'll produce the rates. They 

5 will be published, they will be disclosed. At that 

6 point, what do they mean? What do they mean to 

7 students, and how can we make that as meaningful 

8 a measure as possible. 

9 MS. SARGE: So just to follow up on 

10 that, thank you. That does kind of bring it back. 

11 I think I'd like that on a white board somewhere, 

12 so we can point to it throughout the week and then 

13 the next week that we're here. But with that being 

14 said, we are trying to -- and maybe this goes back 

15 to Issue 1 about the language that we're choosing 

16 to use.

17 By using -- in my opinion by -- what 

18 you're doing is you're establishing an arbitrary 

19 or I'll say from my perspective potentially an 

20 arbitrary percentage, upon which this calculation 

21 will be compared. 

22 Eight percent on annual income; 20 

23 percent on discretionary income. So that's your 
195

1 benchmark we're going to compare to, and then these 

2 calculations however they're done, are going to 

3 be either below or above that benchmark.

4 That would need to be explained to some 

5 degree. We're saying, you know, clearly stating 

6 to a student we don't think you should spend more 

7 than eight percent of your annual income paying 

8 back your debt to get an education. Now some would 

9 argue, especially these days where one year of 

10 education equates to one car in some cases. Paying 

11 $25,000 for a car was never imaginable 50 years 

12 ago either.

13 You weren't even paying that for a home. 

14 So it's like who's to say that that eight percent 

15 or whatever that judgment is, and I'm not trying 

16 to get into the nitty --

17 VOICES: Gritty.

18 MS. SARGE: Thank you about this. But 

19 what I'm just trying to say is we're really trying 

20 to provide a statement of context to potential 

21 students. So all of this, what's the ah-ha moment? 

22

23 What is it that a student's going to 
196

1 read or see in these calculations that go ooh, I 

2 need to think about that? Is it hey, I know you're 

3 really passionate about educating or being part 

4 of early childhood education, but it's going to 

5 take you longer to pay back this debt.

6 Are we saying that if you work really 

7 hard and become a doctor and you're going to spend 

8 15 years in school, you're 15 years out of the 

9 market. You're going to get in there. It's going 

10 to take you a while to pay back all of the 

11 educational debt. You should be prepared for that. 

12 A lot of this that we're trying to 

13 regulate here, and I'm sorry I swear I'll get off 

14 my soapbox. But a lot of this is forgetting the 

15 fact that none of us in this room, with the exception 

16 of those representing the workforce, can influence 

17 things about earnings that are really relevant, 

18 you know.

19 There was -- we just got out of a Great 

20 Recession. While unemployment is at some of the 

21 lowest rates it's been certainly in the last eight 

22 to ten years, the average wage has not gone up 

23 significantly, barely covering cost of living 
197

1 increases. So those are things we can't control. 

2 So what are we really saying to a student? 

3 Oh, and by the way, the information is 

4 looking backward, not forward. So I want us to 

5 remember that we're trying to make -- we want to 

6 make these regulations where they are meaningful. 

7 I agree with Todd, you know. What Todd was saying 

8 earlier is we're taking what was in his words, I'll 

9 put it on him, a flawed metric and trying to spread 

10 it across every. We need to get to a better place 

11 all the way around. I think that's it.

12 MR. RAMIREZ: So --

13 PARTICIPANT: I just want to respond 

14 to that, and I'll just say this from our 

15 perspective. First of all, with respect to any 

16 benchmark or any, you know, and I -- maybe I'm being 

17 a little too philosophical here. But we ought --

18 every, any benchmark you apply to anything, 

19 certainly there should be data and research 

20 involved with how you reach that.

21 I think that in the preamble to our 14 

22 regs and to the proposed rules for that, final 

23 rules, we did give a lot of -- provide a lot of 
198

1 data and reasoning for using those amounts. 

2 Ultimately, whenever you're going to come up with 

3 any rate you're going to apply to anything, why 

4 is the speed limit 65 and not 90? Why is the 

5 drinking age 21 and not 20 and 245 days?

6 I mean people could come up with a lot 

7 of data maybe to support why we've done what we've 

8 done. But and I think in any society, any 

9 governmental structure, benchmarks are applied. 

10 We're trying to, and again, I don't think there's 

11 any way once we have those benchmarks, publish this 

12 data. I would agree there's no way to 100 percent 

13 contextualize it for students.

14 We'll try to put some context around 

15 it. But in order to take into account all these 

16 intangibles you bring up or what the meaning of 

17 the program is to somebody or we had the example 

18 of the forestry student who -- to whom being out 

19 in the open and having that type of a job is more 

20 important than material things.

21 I get all that. But at the end of the 

22 day, students still have to repay debt, and they 

23 have a certain amount of earnings to repay that 
199

1 debt. I think that's -- and we need to inform them 

2 of what that is, and to a certain extent they're 

3 going to draw their own conclusions around that, 

4 and I think that's where we are. I'll leave it 

5 at that.

6 MS. SARGE: And just -- I just want to 

7 just say one little thing, I promise.

8 MR. RAMIREZ: Quickly.

9 MS. SARGE: I agree with you completely 

10 on benchmarks, and that's the whole point why I 

11 feel pretty strongly about not opining, as we will 

12 be, based on language we choose, that that benchmark 

13 is anything more than just a line in the sand, and 

14 you're either above it or below it. Putting on 

15 any kind of quality language or quality descriptor 

16 would potentially be not fair to anybody, the 

17 student or too, because it's not a quality measure. 

18

19 It's simply a comparative to a 

20 benchmark established for good reason potentially, 

21 and that should be explained why, and then that 

22 student can decide if that works or doesn't work 

23 for them without it being a quality indicator.
200

1 MR. RAMIREZ: So we have Tony, Todd, 

2 Javier, Neal and Kelly.

3 MR. MIRANDO: Thank you, Tony Mirando. 

4 So again as usual, I'm sitting back here and I'm 

5 listening to everybody go round and round in 

6 circles, and you know, everybody's got a good point 

7 of view. 

8 I'm sitting here and I keep coming back 

9 to the student. I was a student for so many years 

10 and I remember what that was like, and this gets 

11 very confusing.

12 But what you're proposing to do is to 

13 provide students, potentially provide students 

14 with potentially flawed, inaccurate information 

15 for them to make a determination as to where and 

16 what they want to do with their lives, and lives 

17 which at the time they're making this decision may 

18 not be -- they may not be in a good place to begin 

19 with, and they're hoping that the education will 

20 take them from where they are to where they need 

21 to be.

22 And that just really doesn't feel good to 

23 me, that we would be potentially giving students 
201

1 information that may or may not really help them. 

2 And so you're looking at words like pass and fail 

3 based on information again which may or may not 

4 be accurately reflecting a good program, because 

5 the information you're using to determine that is 

6 based on information that's -- we're not really 

7 quite sure how you got to that.

8 Repayment process, payment years that 

9 somebody's just coming up with. How do you get 

10 the earnings? 

11 They may or may not be accurate based 

12 on whether or not they're full time students, part 

13 time students, earning a W-2 or self-employed, 

14 whether or not it's a single mom working in an inner 

15 city or some other individual working out in the 

16 burbs, working part-time but has a spouse that's 

17 making lots of money and this is just something 

18 to keep them busy while the kids are in school or 

19 maybe for some other reason.

20 But for me it looks like you're 

21 potentially going to penalize good schools that 

22 would help good students get from where they are 

23 to where they need to be, and if we don't do this 
202

1 right, we're not really fixing the problem. That's 

2 what I'm afraid is happening here. 

3 We're not really fixing the problem and 

4 it's just -- it really hurts, it really bothers 

5 me. I just can't see how we take this information, 

6 which is what we're seeming to wanting to do and 

7 make a good system out of it, when it's supposed 

8 to be doing one thing: helping students. I don't 

9 see how that happens here.

10 MR. RAMIREZ: So Tony, the way I'm 

11 understanding is we're trying to balance, right? 

12 We're trying to balance to get the students that 

13 information that they need without creating a 

14 burden on institutions as well, right? So how do 

15 we find that sweet spot where we get that relevant 

16 information to them?

17 So I'm going to leapfrog over Todd for 

18 a second to ask this question. For this, for this 

19 issue here, because I am hearing the complexity 

20 of it, does it make sense to see if there's a 

21 subcommittee that wants to work on this, and try 

22 to bring back a recommendation to the full group? 

23 We could try to incorporate some time into --
203

1 whether it be that we break an hour early or 

2 something along those lines.

3 But then give -- if there's any other 

4 subcommittees that form, give them a little bit 

5 of time to talk and bring back a recommendation?

6 MR. MIRANDO: And I appreciate us 

7 wanting to do that. But like I said the first week 

8 we were here, and I'm the guy that likes to use 

9 analogies, only because I'm a very simple person. 

10

11 It's like trying to say to me I want 

12 to buy a car that's never been in accident. So 

13 you're saying let's go take that car there that's 

14 got a bad -- had been in a bad car accident, and 

15 let's just give it to the best auto body people 

16 in the country, to see if we can make it look like 

17 that.

18 The problem is you can't take what 

19 appears to me, and I'm not hearing anybody here 

20 say so far that the old GE that we're trying to 

21 get rid of was a good system -- I've not heard one 

22 person here say this is a good system -- and try 

23 to make it a good system. And again, I know that 
204

1 you're saying all right. Well then what do you 

2 think we should do? I don't know. I don't have 

3 an answer. 

4 But I can tell you this. So far, I've 

5 not heard one person come up with a good system. 

6 If it's to protect students, I don't see it 

7 happening.

8 MR. RAMIREZ: So what do you all think 

9 though, because I don't think one of the choices 

10 was do nothing. So with that understanding, what 

11 do you all think of the idea of a subcommittee for 

12 this?

13 PARTICIPANT: Subcommittee for what, 

14 the amortization piece?

15 MR. RAMIREZ: Yes, yes, amortization.

16 PARTICIPANT: But I mean --

17 MR. RAMIREZ: If you have another 

18 suggestion.

19 PARTICIPANT: Well, I mean I just think 

20 that we're all saying -- I mean we aren't all in 

21 agreement, and I'm not sure you're going to reach 

22 consensus. But I think most of us, not all us, 

23 but most of us have said you shouldn't have a 
205

1 one-size-fits-all, and we have a prior reg. 

2 So I'm not sure -- I mean with all due 

3 respect, I'm not sure we need a subcommittee, 

4 because I think we know roughly what the numbers 

5 were from the data last time. I mean I'm 

6 not -- unless you want us to come up with a whole 

7 different set of amortization rates. So I'm not 

8 sure -- I mean just my own opinion, and I mean we 

9 haven't even -- not to amortization rates. We 

10 haven't even gotten to tuition and fees, interest 

11 rates. 

12 I mean I have a list under this issue. 

13 So I mean we can do a subcommittee on each one, 

14 but I'm not sure how fruitful that is. 

15 MR. RAMIREZ: So I -- all right, Greg.

16 MR. MARTIN: I would like, if we could, 

17 irrespective of the interest in the subcommittee, 

18 if there is interest in that or if people want to 

19 put something forward, I kind of view the 

20 amortization and the interest rates as linked, you 

21 know. So I mean if you have -- obviously I think 

22 objections to one would probably flow over into 

23 the other as well.
206

1 So if we could view those -- they're 

2 separate, but I -- I know that. But if we could 

3 look at them as sort of one issue. What I'm hearing 

4 is, and maybe I got this wrong, is that most folks 

5 would prefer -- most, not everybody -- would prefer 

6 that we individualize it per student amortization 

7 and interest. Barring that, people would be more 

8 inclined to keep what we've got rather than move 

9 to what is proposed. Is that -- that's not what 

10 -- okay. 

11 PARTICIPANT: I mean I'll speak for 

12 myself. The per student, although I understand 

13 that it would be perhaps most accurate, I actually 

14 think that's complex for different reasons. I mean 

15 I'd have to do the analysis, because we've never 

16 done that analysis. But that's complex --

17 MR. MARTIN: And the current rule?

18 PARTICIPANT: Under the current -- oh, 

19 and now you're asking about the current rule? I'm 

20 sorry.

21 MR. MARTIN: Yeah, about the current 

22 rule.

23 PARTICIPANT: I mean, I'll only speak 
207

1 to the 20 percent for the doctoral and first 

2 professional. I mean I think that there's 

3 consensus around that 20 percent so --

4 MR. RAMIREZ: So I understand that 

5 solely amortization may not work. So linking 

6 amortization and interest as a subcommittee, to 

7 try to bring something forward. And even if the 

8 recommendation is to keep it more aligned, more 

9 along the lines of what is currently in place, so 

10 be it, right, if that's what the group ultimately 

11 decides on. 

12 But at least to help hone this down, 

13 because I don't know if we get there doing what 

14 we're doing right now.

15 MR. ARTHUR: This is Jeff. But 

16 doesn't also the time period that we're looking 

17 at after somebody graduates coming to the -- I mean 

18 it's the same equation. So I think we're talking 

19 about at what point incomes is measured, interest 

20 rate and amortization. They're all tied.

21 MR. RAMIREZ: A point that the 

22 calculation starts? Is that what you're saying? 

23 Sandy.
208

1 MS. SARGE: So I was just -- this is 

2 Sandy. Tony to your point, I put myself back in 

3 my student shoes and said what would have been 

4 interesting for me to hear going to school? And 

5 I don't -- it dawned on me that maybe what I would 

6 have liked to have heard would have been how long 

7 is it going to take me to really pay back this debt.

8 Not what the debt to earnings ratio is, 

9 but we're looking -- I'm looking at 15 years. But 

10 if I do this degree, if I do an RN degree versus 

11 an accounting degree, same school let's just say, 

12 different costs, whatever, I'm going to -- it's

13 going to take me eight years to pay back this debt 

14 under one program, and it's going to take me 15 

15 years under another.

16 Maybe at that point I'm not really 

17 married to accounting. I could be a nurse. You 

18 know, I might change my decisions. That's an 

19 easy-peasy type of thing to think about. Maybe 

20 we do away with this complicated calculation and 

21 go to something that's more straightforward.

22 The calculation is behind the scenes. 

23 You'd still have to get there, to figure out how 
209

1 long is it. But we would have that data. We have 

2 that data that says how long has it taken people 

3 in the past to pay back this loan. We have actuals 

4 on that and potentially we could come up with a 

5 calculation.

6 But then at least that would -- might 

7 be something that a student would look at and go 

8 maybe I'll make a different decision based on that. 

9 Just a thought, throwing it out there.

10 MR. RAMIREZ: Yeah, Tony, go ahead.

11 MR. MIRANDO: So thank you for saying 

12 that. I mean, you know, and this was a long time 

13 ago when I was going to school for my doctorate. 

14 But I remember when I was in the admissions office, 

15 and you know I was the type of kid that would 

16 definitely go and check things out, as I want to 

17 believe most students today are, you know. They're 

18 smart and they're going to look, is that you know 

19 you say, you know, here's the average career person. 

20

21 This is what they make in the field, 

22 and this is the average debt across the whole 

23 industry, and do your math and let you know. 
210

1 Because again, it depends on where you come in, 

2 how you come into the program, where you're at, 

3 whether you plan to work your butt off when you 

4 get out or whether or not you're going to work 

5 part-time, whether or not this is something you 

6 want to do now because you have the time, but you 

7 have no plans on working and maybe until five years 

8 from now. But you know, I'm not getting any younger 

9 so I want to get it out of the way now, and these 

10 are real-life decisions people are making. 

11 So you know, instead of coming up with 

12 things which are negative, potentially untrue, 

13 creating havoc in people's lives, come up with just 

14 generic, true statements that the average 

15 individual is going to understand and be able to 

16 make an informed decision. I mean, what's wrong 

17 with that? It's how I think most people do things 

18 today.

19 MR. RAMIREZ: All right, thank you. 

20 Todd.

21 MR. JONES: Well, I guess in a sense 

22 we're moving back and forth around the issue whether 

23 we're having a subgroup or not. So I'm going to 
211

1 go back to some of my original comments about what 

2 I want to get to, because I think they go to this. 

3 But I also want to end with a question for the 

4 Department.

5 You know, going back to Jordan's 

6 comment, I think that ties into this. The issue 

7 is not debt per se; is it? I mean I think we're 

8 all very comfortable with the idea that people can 

9 take on huge amounts of debt if they end up having 

10 huge amounts of income to overcome that, and even 

11 for certain professions it is more than appropriate 

12 to stretch that out for a period of time.

13 I would say what makes -- so really the 

14 issue here is more debt default -- is it not --

15 and percentage of income. Because if you're making 

16 a half-million dollars a year as an orthopedic 

17 surgeon, and your debt payoff is still a very long 

18 one, that's okay because at that percentage, at 

19 that level of income, you're more comfortable 

20 paying a higher percentage of your income of debt 

21 than you are if you make 20,000 a year, presumably.

22 So it's really about default, and I 

23 guess that then takes us to: the calculation of 
212

1 these rates keys on percentage of program 

2 completers. Because if you have a program where 

3 those who complete and are successful earn money 

4 and do well, and you have another chunk though of 

5 that, of students who don't complete the program, 

6 who then skew the data down, what you end up having 

7 is a higher default rate and you have a higher debt 

8 to income rate because average income is depressed 

9 because you have a number of people who dropped 

10 out of the program -- presumably they're being 

11 calculated as a part of that -- that may or may 

12 not be a true portrait of the program.

13 Now that's true in the existing system, 

14 but it's also true when you expand it to the myriad 

15 of other programs that we're talking about here. 

16 And that's why this is -- I reject the premise 

17 that just because the Department has thrown this 

18 out there as that we must have this kind of structure 

19 and this kind of analysis.

20 I think one of the things we're talking 

21 here, it's not that there's consensus that we 

22 shouldn't have this. I know that's not the case, 

23 but I also know there's -- I do believe there's 
213

1 a consensus that this is incredibly complex and 

2 what the Department has offered is nowhere near 

3 the level of analysis and sophistication we're 

4 going to need to do this, and I'll come to that 

5 with my question.

6 I want to respond to Greg's comment 

7 about, well, we have to have a standard and we have 

8 many standards and it's what are they based on, 

9 and that is absolutely true. We have drinking 

10 ages, we have draft age, we have age you can drive. 

11 Some of those vary by state. Some of them are 

12 imposed by the will of the federal government, 

13 conditioned on federal receipt of funds. 

14 But all of those that we're talking came 

15 through a democratic process where that's the great 

16 thing about legislators. They and the executive 

17 have the ability to be arbitrary to a certain 

18 extent, making judgments based on whatever data 

19 satisfies them. An administrative agency has to 

20 use, in a sense, a higher standard and there needs 

21 to be some definitional relationship between the 

22 standard and what one's seeking to be achieved.

23 Let's use housing for example. There 
214

1 is a maximum percentage of debt that one can have 

2 compared to income as part of the calculation as 

3 to whether your home loan is federally secured. 

4 You can't cross that threshold. Now where do these 

5 numbers come from? The numbers for these come from 

6 what is the likelihood of default as calculated 

7 by agencies based on historical practice of who 

8 is most likely to default. The agencies came up 

9 with numbers that were based on historic practice.

10 I would love to see the analysis the 

11 Department has done to justify the numbers that 

12 were picked out of the air for this. I would love 

13 to see it from the previous administration that 

14 picked the previous numbers out of the air.

15 I think as a practical matter, just 

16 putting a judgment on -- even if they can explain 

17 why this line, it tipped below this percent, or

18 we saw this is an inflection point. I would be 

19 more than satisfied with that, which then leads 

20 me to -- and that, I know, is a difficult 

21 calculation.

22 Which leads me to a question that I 

23 don't think has been asked yet, and so I'm going 
215

1 to ask the Department. If we're taking every 

2 program -- educational program in this country --

3 and cohorts of ten, we are probably talking hundreds 

4 of thousands of program calculations per year, 

5 maybe a million. But at minimum, hundreds of 

6 thousands. 

7 Has the Department done a run to see 

8 it could actually accomplish this and do so in an 

9 effective, timely manner and dealing with data 

10 quality issues, and dealing with posting it? And 

11 how many FTE is that going to take, and how long 

12 does the Department think it will take to move to 

13 do it? Because it's not like we're going -- it's 

14 like we're going from building five cars a week 

15 to 5,000 cars a week. 

16 This is a very serious undertaking, and 

17 I think it's incumbent upon the Department to tell 

18 us how is it prepared to accomplish this if it's 

19 -- the Department is proposing this? 

20 MR. MARTIN: Oh, I can say no. Today 

21 we haven't done a run to see, to -- I assume what 

22 you're asking is have we tried to look at every 

23 program at every institution in the country and 
216

1 see how that would play out in advance. No, we've 

2 not done that. We would be taking the data from 

3 a system that we already have up. It would be from 

4 NSLDS.

5 The data, there is data in there. 

6 Yeah, it is admittedly a more -- a complex task. 

7 We at this point don't -- we do understand rather 

8 that there are some things we have to consider 

9 surrounding, you know, majors and things like that. 

10 If students are in it, it becomes more complex 

11 as you go -- as you go to taking into consideration 

12 more traditional programs.

13 But we do believe we can do it. We 

14 don't -- nothing so far to suggest that we can't. 

15 But no, if the answer -- if your question is simply 

16 have we done it. Thus far, it's only on a test 

17 basis, no.

18 MR. JONES: Well, to follow up that 

19 question, one of the things if you look at schools: 

20 schools change the nature of majors and majors every 

21 year. So every cohort, we're going to have 

22 subdivisions of existing cohorts. We're going to 

23 have the creation of new programs. That's going 
217

1 to happen every year, and School X will say we're 

2 doing this and the Department's going to say no, 

3 you really didn't change the program there. I'm 

4 keeping you at Cohort Y.

5 That's -- I understand using the 

6 student loan data system to make calculations. 

7 That's the easier part. The harder part is making 

8 the qualitative calculus about the nature of 

9 programs and the quality control the Department 

10 will have to run.

11 MR. MARTIN: We are aware there are 

12 challenges involved with that, and I -- you know, 

13 I can probably speak to that in greater detail. 

14 I'd need some time to talk to our staff, but I can 

15 speak to that in greater detail if you want. But 

16 yes, we -- to again, you know, admittedly we haven't 

17 done it for -- no, we haven't looked at every program 

18 and done those numbers yet for the entire universe. 

19 But I will -- I will talk to some of our people 

20 and get you more information.

21 MR. RAMIREZ: So I'm looking at 

22 basically one of three avenues that we could go 

23 down right now. One of them is just keep continuing 
218

1 and go through the queue, do a subcommittee or 

2 finish out the folks that we have here right now 

3 and then do a series of temperature checks. In 

4 this way, the Department could get a feel for 

5 where's the greatest area of agreement and then 

6 use that information as they go forward.

7 So those are the three avenues that I 

8 see right now. Is there a preference for one or 

9 the other? Just to continue going through the 

10 queue. 

11 Yeah. So we could do a subcommittee 

12 or we could take a series of temperature votes and 

13 give that -- so that way, the Department has that 

14 information.

15 (Off-mic comment.)

16 MR. RAMIREZ: Oh okay, yeah. So let's 

17 see who's in favor of doing a series of temperature 

18 checks. That we'll be doing a series of temperature 

19 checks, right? We'll just see where you're at on 

20 certain positions within the amortization, and that 

21 way the Department has that information to move 

22 forward. So show of thumbs if you're okay with 

23 that approach.
219

1 (Show of thumbs.)

2 MR. RAMIREZ: All right. So I didn't 

3 see any thumbs down on that, right? Let's finish 

4 out. We have Neal, Kelly, Jen and Laura. No more 

5 -- Gannon's on there, right? 

6 (Off-mic comment.)

7 MR. RAMIREZ: Okay, and Gannon, and 

8 then we'll close it out there and then we'll just 

9 take a series of temperature checks and see where 

10 we're at, okay. So Neal.

11 MR. HELLER: Good afternoon. Neal 

12 Heller. I guess I just wanted to speak up for us 

13 non-degree-granting institutions, those 

14 certificates and diplomas that some have alluded 

15 to, and say that I think in many cases, we're giving 

16 short shrift to those diploma and certificate 

17 programs.

18 I think that it's all relative, and I'm 

19 certainly happy with the 15-year amortization that 

20 the Department has proposed, because it is a much 

21 fairer assessment of how our students are going 

22 to repay their loans. I don't think, and I'm not 

23 going to say it has nothing to do with it, but, 
220

1 you know, the length of program is just one factor 

2 in how we determine what the amortization schedule 

3 should be, and how we judge the repayment.

4 I mean my students have no expectation 

5 of becoming a doctor or a lawyer or an accountant, 

6 going to school for six, seven, ten years, going 

7 into debt for hundreds of thousands of dollars and 

8 thinking that's okay because they're going to make 

9 a half a million dollars a year. 

10 So the average debt for my student is 

11 probably right around $10,000, to use round 

12 numbers. They go to school for a year, and what 

13 is the harm if they were judged as -- or the school 

14 is judged in terms of them repaying that over a 

15 15-year period as opposed to a 10-year period?

16 Jordan stated it very clearly. It's 

17 a 50 percent reduction in their monthly payment. 

18 Well that is extremely meaningful for a graduate 

19 of a cosmetology school. They don't have an 

20 expectation of making a gazillion dollars. 

21 They'll be very happy if they're making 40, 50 

22 thousand dollars a year. That is a success story, 

23 a huge success story, depending upon where they 
221

1 came from before.

2 So I certainly don't want us to go back 

3 to the current 10- and 20-year amortizations, and 

4 I also think that 15 years is much more reasonable 

5 and realistic for certificate programs. 

6 I'd also would like to say that there 

7 are many around this table that, really, their only 

8 experience is with degree-granting institutions, 

9 master's degrees, doctorate degrees et cetera, and 

10 let's not forget about, you know, sort of the real 

11 essence of what vocational training was supposed 

12 to be all about.

13 And that was specific training to get 

14 a specific career path started, and that is what 

15 these certificate programs and non-degree-granting 

16 programs do, and do very well. I think that that 

17 15-year schedule is perfectly acceptable, and I 

18 certainly would not want to go back to 10-year and 

19 20-year.

20 And I understand what the Department 

21 is trying to do. It is a very complex issue, and 

22 I frankly don't know how you come up with a 100 

23 percent fair way to do this. But certainly I'd 
222

1 just like people to realize that everything is 

2 relative, and that certificate or diploma is just 

3 as important to a graduate from a cosmetology school 

4 or a beauty school or a welding school, what have 

5 you, as a degree is from many of the schools that 

6 are being represented here today. Thank you.

7 MR. RAMIREZ: Kelly.

8 MS. MORRISSEY: So I think what's 

9 happening here is we have a paradigm shift from 

10 a rule under which we used to apply sanctions, to 

11 a disclosure regime. And as we look at it through 

12 that lens, what we're doing is measuring the quality 

13 of a program using the outcomes of only the 

14 borrowers who attend that program.

15 So in doing that, I think that there 

16 are some data points that are really absent in these 

17 metrics, and that is informing students about how 

18 many of the attendees of each program have borrowed 

19 in order to attend that program, and there are many 

20 reasons why there could be a high number of 

21 borrowers or very few borrowers, and those relate 

22 to the cost of the program, the economic background 

23 of the students who attend a certain school.
223

1 So I think that I hear Greg continue 

2 to say that the Department would be contextualizing 

3 the data that is being supplied. But I think that's 

4 of the utmost importance here, because you could 

5 have two sets of data from the same program at 

6 different schools, but at one school you could have 

7 a very high percentage of students who have borrowed 

8 in order to complete that program, and at another 

9 school you could have the same program where you 

10 have a very small cohort of borrowers.

11 But at the end of the day, you're 

12 applying a quality standard to both of those 

13 programs that really includes a very different 

14 cohort in both regards. 

15 MR. RAMIREZ: Okay, Jennifer.

16 MS. BLUM: So I actually -- sorry, 

17 Jennifer. So I actually will probably do -- I want 

18 to keep my tent card up or reserve the right later. 

19 But I actually wanted to move -- not move on. 

20 But I had other questions not about amortization. 

21

22 So if we're going to do 

23 temperature-taking, I wanted to ask questions about 
224

1 the tuition and fees, you know, the Department's 

2 reliance on other areas in this issue paper. So 

3 I want to -- obviously I don't want to go off 

4 subject, so I can come back to it.

5 MR. RAMIREZ: Would that impact your 

6 decisions on the amortization piece?

7 MS. BLUM: That's a good question. I 

8 don't think so.

9 MR. RAMIREZ: Okay, all right.

10 MS. BLUM: So I'll put my card down, 

11 but there are a couple of other issues other than 

12 amortization in this section.

13 MR. RAMIREZ: Yeah, yeah. We're not 

14 going to be moving off of this paper yet.

15 MS. BLUM: Okay.

16 MR. RAMIREZ: Yeah, okay. Gannon.

17 MR. GANNON: Yeah. I agree that -- I 

18 think a one-size-fits-all program isn't right. 

19 But I also think that a 15-year repayment period 

20 for a one- to two-year program, that just doesn't 

21 -- that doesn't make sense to me. I think that 

22 disclosures are great, but disclosures without 

23 sanctions I think they're pointless, and 
225

1 disclosures aren't going to protect students. If 

2 we want to protect them, we need sanctions and 

3 disclosures aren't going to do it.

4 MR. RAMIREZ: Okay. We're going to 

5 close out with Jeff and then Tim.

6 MR. ARTHUR: Yeah, I'd just point out 

7 that the Department's already compiled 1700 fields 

8 of data without negotiated rulemaking to do that. 

9 That includes data on income, debt, all kinds of 

10 success metrics. A lot of entities have built, 

11 third parties have built engines around that 

12 database to present data however they wanted to 

13 present it.

14 And I would just suggest that when you 

15 look at debt to earnings, if you include the debt 

16 in there by the program and you include the earnings 

17 at whatever level, that in a few hours I could build 

18 a debt to earnings engine based on 10, 15, 20, 25, 

19 whatever number -- whatever amortization period 

20 the person would want to see. Dropdown. Okay, 

21 here it is for that. It's very easy to present 

22 this. When you have the data, those calculations 

23 will be done by, if not the Department, other 
226

1 entities.

2 Now what's prescribed in regulations 

3 is that that might be what we're talking about. 

4 But I'd just like to point out that those 

5 measurements are going to be easy to do when the 

6 data's there for any time frame that anybody would 

7 care to see it. 

8 MR. RAMIREZ: And then Tim.

9 MR. POWERS: Just -- this is Tim 

10 Powers. Just a thought on this very real issue 

11 of calculating rates for programs that have large 

12 numbers of non-borrowers. I'm sure the folks 

13 behind us can illuminate more. But I think under 

14 the current Title IV cohort default rate 

15 calculations, there is a loan partition rate index 

16 appeal process, which basically allows an 

17 institution that has large numbers of enrolled 

18 students, very few of whom are actually taking out 

19 money, to be able to go to the Department and 

20 basically say to them, hey, can you please take 

21 a deeper look at us. 

22 Only ten percent of our students are 

23 actually borrowing money. Yes, we realize that 
227

1 we have a slightly high default rate, but let's 

2 look at this within the context of the larger 

3 program.

4 So I would just put that on the table 

5 as something to perhaps consider, as a means to 

6 sort of get at this question of programs that are 

7 doing a good job of enrolling students, putting

8 skin the game, educating them, but then get kind 

9 of caught up in this regulatory crossfire, having 

10 a not so great debt to earnings ratio or a not so 

11 great covert default rate in the other 

12 circumstance, just based on the small number of 

13 borrowers in the program.

14 MR. MARTIN: This is Greg. Just to 

15 clarify, you mean the participation rate index for 

16 cohort for CDR, right?

17 MR. POWERS: Yeah, yes. Okay.

18 MR. RAMIREZ: So I'm seeing at least 

19 the first two temperature checks, and then we'll 

20 see which other ones you want to go from there. 

21 But the first one is the 15-year amortization 

22 schedule that is in the straw man proposal here. 

23 So let me see a show of thumbs for how you feel 
228

1 on a 15-year for everyone amortization schedule.

2 (Show of thumbs.)

3 MR. RAMIREZ: Yeah. It's a 

4 temperature check, but I got the thumb behind you 

5 right.

6 PARTICIPANT: You may not be asking it 

7 right, because the thing is, is like for Jennifer, 

8 it matters whether it's undergrad versus grad.

9 MR. RAMIREZ: But if I understand 

10 what's on here, it's a 15-year for everyone, right? 

11 So let's ask the question. 

12 PARTICIPANT: What was yours, Robert? 

13 I didn't see yours.

14 MR. RAMIREZ: So yeah. If I could see 

15 the thumbs again and hold them there for just a 

16 second. So we got -- all right, yeah. So there's 

17 11 that were down. And it's not that -- we're just 

18 trying to do that, so that way the Department can 

19 get a feel for the acceptability of it. It wasn't 

20 a vote, right? 

21 All right, and then the next one is the 

22 current, what's under the former proposal, which 

23 is the 10 and 20, and does anyone need to --
229

1 PARTICIPANT: It's not 10 and 20. 

2 It's 10, 15 and 20.

3 MR. RAMIREZ: 10, 15, 20?

4 PARTICIPANT: But also I would, to 

5 Mark's point, I would actually --

6 PARTICIPANT: Break it down undergrad, 

7 postgrad.

8 MR. RAMIREZ: All right. Who's most 

9 comfortable explaining what that is right now? 

10 And what I'm trying to capture is what would be 

11 considered the status quo.

12 PARTICIPANT: So while I think that --

13 I mean I'll take a whack at the 20, but so I think 

14 that there's an understanding that at the, you know, 

15 after the length of education and all of that, and 

16 the amount of debt, that the time to repay for 

17 graduate level is different. And so I think that's 

18 where the 20 comes in. But I don't -- I think we 

19 have to be careful to lump 10, 15, 20 together.

20 MR. RAMIREZ: Okay. So currently it's 

21 20 years for graduate level?

22 (Off mic comment.)

23 PARTICIPANT: Doctoral. It's 
230

1 doctoral and first professional.

2 PARTICIPANT: First professional, 

3 right. Doctoral or first professional degree. 

4 It's all in there under 10 year for a program that 

5 leads to an undergraduate certificate, a post 

6 baccalaureate certificate, associate degree or 

7 graduate certificate, and over 15 years for a 

8 program that leads to a bachelor's degree or 

9 master's degree. Twenty years for a program that 

10 leads to a doctoral or first professional degree.

11 PARTICIPANT: So I think there are a 

12 couple of ways to look at this. You can go back 

13 to the current regs and -- I mean I'm not saying 

14 we should. I'm just saying, like in terms of your 

15 questions. You could do what you're doing, which 

16 is by credential level. There could be a 

17 conversation about, you know, whether undergrad 

18 and grad. So whether it's 15 and 20 become the 

19 new paradigm. 

20 MR. RAMIREZ: What I want to do is 

21 capture the status quo, and see where that's at. 

22 And then if we want to do a temperature check on 

23 a variation of that, then we could do that, okay. 
231

1 So is everyone clear on what the status quo is? 

2 Let me see a show of thumbs for how you feel on 

3 maintaining the status quo numbers.

4 (Show of thumbs.)

5 MR. RAMIREZ: Ten, 15, 20. Four 

6 thumbs down? Okay. Then we'll see which 

7 alternates you all want to propose, and we'll do 

8 temperature checks just so that we can see what 

9 they are. So you want -- Jennifer, you had a 

10 variation of that? What would that look like?

11 MS. BLUM: I mean I'm -- first of all, 

12 I just want to be really clear that I'm not 

13 necessarily advocating for it. I'm just saying 

14 that instead of looking at one or the other, there 

15 are -- we can do something different than what the 

16 Department proposed and what is in the prior rule.

17 MR. RAMIREZ: I see.

18 MS. BLUM: So one concept is undergrads 

19 at 15 and all grads -- and I would say all graduates. 

20 So I know that that's a change for master's, and 

21 again I'm not advocating for it. But just for 

22 clarity and I'll use the Department's term 

23 simplification, could do 15 and 20.
232

1 (Off mic comment.)

2 MS. BLUM: Fifteen, and graduate, all 

3 graduate 20. And again, I just want to be really 

4 clear. I'm just putting something on the table 

5 just for putting something on the table.

6 PARTICIPANT: And the certificate 

7 would be 15 as well?

8 MS. BLUM: Anything below. Sorry, I 

9 should say undergrad and below 15, and then -- and 

10 then anything above a bachelor's at 20. 

11 MR. RAMIREZ: All right. So let me see 

12 a show of thumbs for that option?

13 (Show of thumbs.)

14 MR. RAMIREZ: Yeah, seven thumbs is 

15 what I'm seeing is down. Okay. Diamond, you had 

16 a question on that?

17 MS. DIAMOND: I was just going to ask 

18 if we could get a count, like a stated count of 

19 how many thumbs up and thumbs down for each 

20 question, just so we can kind of keep track of the

21 trends?

22 MR. RAMIREZ: Yeah. That was -- that 

23 one was seven down. But let's see here. We had 
233

1 two, four, six, eight, ten, twelve, fourteen, 

2 sixteen, seventeen. We have 18 total potential 

3 votes, okay. So for Option 1, which was the 15-year 

4 for everyone, how many thumbs down were there? 

5 PARTICIPANT: Eleven.

6 MR. RAMIREZ: Eleven thumbs down for 

7 that. The status quo? Four thumbs down, and this 

8 variation of 15 for undergrad and below, 20 percent 

9 for grad and above is seven down, okay? What other 

10 temperature checks would you like to take on this? 

11 Yeah, go ahead.

12 MS. SARGE: Could we get --

13 MR. RAMIREZ: Sandy.

14 MS. SARGE: I'm sorry, thank you. 

15 This is Sandy. I'd love to -- I asked Pamela, as 

16 a side note. But it might be helpful for others 

17 to ask what's the hesitation. Where are off 

18 between us on the proposed one, the 15 for 

19 undergraduate and the 20 for graduate? Where are 

20 we -- are we off because of the graduate side or 

21 we are off because of the -- where are we off?

22 MR. RAMIREZ: So there were some thumbs 

23 -- the folks, some of the folks who put their thumbs 
234

1 down may want to chime in on that. Laura.

2 MS. METUNE: Sure. Actually, I was 

3 going to ask a similar question from the other 

4 perspective, like what is the problem we're trying 

5 to solve and what's wrong with the current 

6 structure. I'll just say the reason I put my thumb 

7 down was because there's a huge variation in all 

8 of our undergraduate level programs.

9 Even, you know, certificate programs 

10 at our own community colleges versus baccalaureate 

11 level programs at our institutions in our state 

12 can vary widely. So it seemed inappropriate to 

13 me to have one amortization period for all of those 

14 programs.

15 MR. RAMIREZ: Okay, Johnson.

16 MR. TYLER: Hi, Johnson. I was just 

17 thinking that the sophistication between a graduate 

18 student, whether you're going to a for-profit 

19 graduate school or a non-for-profit graduate school 

20 is very different than someone entering a 

21 certificate program or an associate's program or 

22 a program that may lead to a B.A.

23 They're much younger, and hence having 
235

1 a shorter amortization period that then reflects 

2 what the payment would be if you were to complete 

3 your degree is much more important for that younger 

4 person. The older person's sort of already in the 

5 game. They already know this stuff.

6 MR. RAMIREZ: Okay, Christina.

7 MS. WHITFIELD: I have a question about 

8 -- sure, thank you. The question of why did I put 

9 my thumb down. I think that the 15 years is too 

10 long for short-term certificate programs.

11 MR. RAMIREZ: Okay, Christopher.

12 PARTICIPANT: The same. I think it 

13 destroys the whole metric if essentially no one 

14 is going to fail. I think Jordan explained it 

15 really well, about how it essentially increases 

16 50 percent the debt, the way that it shows and 

17 exhibits the debt.

18 So you know, this is kind of the essence 

19 of the whole calculation. We talked a lot about 

20 how the calculation isn't going to be accurate. 

21 But this will really make it inaccurate for a 

22 student to look at this and think the debt to 

23 earnings that will happen to them are very low, 
236

1 when in essence they're not because a 15-year 

2 repayment period for a certificate or an 

3 associate's degree I don't think is accurate.

4 MR. RAMIREZ: Okay. So we'll get 

5 these three. We have Diamond, Kelly and Mark, and 

6 then we'll see if there's another temperature check 

7 idea that's out there. Diamond.

8 MS. DIAMOND: Yeah. Just to add, the 

9 type of borrower that's looking for a certificate 

10 program is looking for something quite different, 

11 usually to be employed and making a 

12 family-sustaining wage a lot more quickly. But 

13 also just the amount of interest that's accumulated 

14 if we're looking at a longer amortization period 

15 as being the typical expectation.

16 MR. RAMIREZ: Okay, thank you. Kelly.

17 MS. MORRISSEY: Just quickly and 

18 simply stating the matter. If you look at the data, 

19 I think that overwhelmingly undergraduate students 

20 are opting into a standard repayment plan with a 

21 ten-year repayment period. So I think that just 

22 to give students realistic metrics, we should be 

23 using what the majority of the students are opting 
237

1 into.

2 MR. RAMIREZ: Mark.

3 MR. McKENZIE: So I think to some 

4 extent we -- and I'm going to ask the group about 

5 this -- we're missing one major point. While I'm 

6 absolutely in the belief that the community college 

7 programs that have low percentage of borrowers, 

8 that should be noticed to the public. The current 

9 rule seems to me to be totally anti-consumer and 

10 totally missing the point of the regulation by 

11 perfectly exempting any program that has less than 

12 50 percent of borrowers.

13 So I'm just asking the group, and this 

14 is something that is essentially against my own 

15 institution's interest, but I think it's the right 

16 policy. The Scorecard gives the debt only of 

17 borrowers, and because borrowers are the one who 

18 are worried about the effect of student debt.

19 I would suggest the Department 

20 consider, when making the student debt number, it 

21 considers only borrowers and it gives a disclosure 

22 for the community colleges and other low percentage 

23 borrowing institutions so they know that. 
238

1 But in reality, huge numbers of 

2 programs and thousands of students are not being 

3 served, and the public interest isn't being served 

4 because the programs, as long as less than 50 

5 percent borrow, get a zero DTE, a zero debt to 

6 earnings rate.

7 That's why the amortization and these 

8 other things matter, because the metric as Jordan 

9 noted, just moves with each movement of all these 

10 parts. At some point, we're going to have to have 

11 a holistic discussion of what gets to whether the 

12 program is right or wrong.

13 MR. RAMIREZ: Is there another option 

14 that anyone would like to put forward based on the 

15 discussion that we heard? 

16 (No response.)

17 MR. RAMIREZ: All right. Ramona's 

18 bringing up a good question as far as the status 

19 quo one seemed to have the least what I'd say 

20 dissent, or had four thumbs down. For those of 

21 you that had a thumbs down, the status quo one. 

22 (Off mic comments.)

23 MR. RAMIREZ: Yeah, the 10, 15, 20. 
239

1 Someone who had their thumbs down on there, what 

2 was -- what was your thinking there? Yeah, 

3 Jessica.

4 MS. BARRY: Jessica Barry. I'm taking 

5 into consideration what the Department said from 

6 the very beginning, that they would like to simplify 

7 the regulation, and that's why I put my thumb down.

8 MR. RAMIREZ: Okay, anyone? David, 

9 David. Yeah.

10 MR. SILVERMAN: David Silverman. 

11 You're also taking away the zone. So there's a 

12 portion between 8 and 12 now that are sort of in 

13 the middle. So by increasing the -- increasing 

14 the amortization period, you're going to and only 

15 have -- right now, you only have a pass/fail. So 

16 the zone had a third -- it wouldn't be fair to have 

17 the lower amortization and take away the zone.

18 MR. RAMIREZ: Yeah, please.

19 MR. SILVERMAN: You're going to have 

20 more of -- you'll have more fail. You'll have more 

21 of a fair shake at who passes and who fails, as 

22 opposed to there was people in the zone. So raising 

23 it to 15 makes it fair to take away the zone and 
240

1 have only a pass/fail.

2 PARTICIPANT: So David raises a good 

3 point, and that's actually why I asked earlier in 

4 I think the prior issue paper, why 20 and 8 and 

5 not 12 and 30? They are -- the two do correlate. 

6 I'm not sure how they correlate. I'm just, you 

7 know, I'm not exactly -- I'm not good at math and 

8 all of that. 

9 But they do -- there is a correlation 

10 between the two. So that -- I don't know what the 

11 solution is, but I actually think David raises a 

12 good point in terms of thinking about the two 

13 contextually together. 

14 You know, if you're going to keep 8 and 

15 12, which is the sort of -- that low, you know, 

16 that pass that's pretty solid and you don't have 

17 zone anymore, then I think that is the argument 

18 for the 15, to sort of compensate for the 8 and 

19 12.

20 MR. RAMIREZ: Yeah, Jeff.

21 MR. ARTHUR: Just to clarify on the 

22 discretionary in the regular debt to earnings. 

23 It's not both that are applied; it's once you hit 
241

1 -- once you hit 30,000 in income, it flips to 

2 discretionary. That's frankly the way it is if 

3 your income is with a 6.8 percent interest rate. 

4 Now that will vary with the interest 

5 rate, but just so we know, that if your median debt 

6 is 30,000 or below, it's the -- it's the regular 

7 debt to earnings. If it's above that, 

8 discretionary plus. That's where the graph turns.

9 MR. RAMIREZ: All right. So any other 

10 options you want to throw out, and the way that 

11 we stand right now then is that the Department will 

12 just have that knowledge going forward, or is there 

13 also a desire to have a subcommittee explore this 

14 a little bit more? Sandy.

15 MS. SARGE: It feels very black and 

16 white, and I know what you guys are trying to 

17 accomplish. I think we would probably -- I would 

18 probably say that, one, I'd be glad to try and be 

19 on a subcommittee. So I would put myself out there. 

20 I'm not doing anything else, because I'm not at 

21 home, so I'm sitting in a hotel. So I'll be glad 

22 to do it.

23 But the other thing is -- this is so 
242

1 complex that I would say we would all reserve the 

2 right that this would be a negotiating point later 

3 if we come up with something, other things. So 

4 right now we may say, you know, yeah, we're good 

5 to move on. But we reserve the right to come back 

6 and use it a point of --

7 MR. RAMIREZ: Yeah, and understand, 

8 there was no consensus vote to say that you were 

9 locked into it.

10 MS. SARGE: Sure.

11 MR. RAMIREZ: We were doing 

12 temperature checks.

13 PARTICIPANT: Can I say it 

14 differently? The need for a subcommittee would 

15 be on how the pieces go together. So the 

16 subcommittee would be, okay, twelve percent, the 

17 current amortization and borrowers only, and each 

18 of those things moves the metric in different ways, 

19 and you know, you have to hear from each group how 

20 it affects them.

21 So that would be the subcommittee that 

22 would probably be the most useful, and it may be 

23 too early. It may be too early.
243

1 PARTICIPANT: Can I offer maybe we do 

2 it -- let's throw it out there. How many would 

3 be in favor of getting rid of the D/E ratio 

4 completely and coming up with something else?

5 (Show of thumbs.)

6 MR. RAMIREZ: Elimination of the D/E 

7 ratio.

8 PARTICIPANT: And coming up something 

9 else. Don't --

10 MR. RAMIREZ: And coming up with 

11 something else.

12 PARTICIPANT: We would have to come up 

13 with something else. But there seems to be so much 

14 contention around these fine points. Is that 

15 really the right metric?

16 MR. RAMIREZ: Let me see a show of 

17 thumbs on that.

18 PARTICIPANT: Come on.

19 (Show of thumbs.)

20 MR. RAMIREZ: Okay.

21 PARTICIPANT: All right. No downs, so 

22 I'm happy with that.

23 MR. RAMIREZ: Yeah, yeah. I was 
244

1 reading some body language. As the facilitator 

2 I would say --

3 (Off mic comments.)

4 MR. RAMIREZ: All right. I'm striking 

5 the question. How's that? Okay. So let's go 

6 ahead and move forward then, because there's other 

7 items within this issue paper. But what I also 

8 want to do is take a break, right? So let's take 

9 a 15-minute break and then we'll come back and we'll 

10 see where want to move forward.

11 (Whereupon, the above-entitled matter 

12 briefly went off the record.)

13 MR. RAMIREZ: Okay. Which other items 

14 on Issue Paper Number 3 do we need to discuss before 

15 moving on to Issue Number 4? 

16 MR. MARTIN: This is Greg. We need to 

17 discuss -- so I think we have -- we have a feel 

18 for where people stand on amortization and interest 

19 rate, and we'll certainly take all that back. 

20 Thank you for your input on that. 

21 We need to look at -- see where I am 

22 here. We're going to move on to annual earnings, 

23 which there's not much of a change there, and then 
245

1 we need to look at loan debt and assessed charges 

2 on page four. So I would like to do that, and 

3 there's a correction I'd like to give you before 

4 we go there, because it's kind of necessary to --

5 for context as we move there.

6 On page two, page two, I find it 

7 interesting that I admonished all of you to number 

8 your papers, and then guess what? I didn't number 

9 mine, but do as I say, not as I do, right? So at 

10 the top where we talk about -- it's under (b)(1), 

11 right, Annual Loan Repayment. 

12 So you'll note at the top there it 

13 currently says, determining median loan debt of 

14 students who completed the program during the 

15 cohort period, based on the lesser of loan debt 

16 incurred by each student as determined in paragraph 

17 (d)(1) of this section and the total amount for 

18 tuition and fees, books, equipment and supplies 

19 for each student as determined under paragraph 

20 (d)(2)(iii).

21 So what you want to do is strike to be 

22 based on the loan debt. So strike the lesser. 

23 So it should be based on the loan debt incurred 
246

1 by each student, as determined in paragraph (d)(1) 

2 of this section, period, strike the rest. And that 

3 will be -- that will be made a little more clear 

4 hopefully as we go through. 

5 Sure. I'll repeat it one more time. 

6 Determining the median loan debt of students who 

7 completed the program during the cohort period, 

8 comma, based on -- strike the lesser of. So it 

9 should be just based on the loan debt incurred by 

10 each student as determined under paragraph (d)(1) 

11 of this section, period. And strike the rest.

12 (Off mic comments.)

13 MR. MARTIN: No, I'm sorry. They're 

14 not stricken. My mistake. So go to the end of 

15 -- the period's still at the end of romanette 3. 

16 Just strike what I -- just strike -- the part that 

17 should be stricken is, and the total amount of 

18 tuition and fees, books, equipment -- through the 

19 word section. We'll take a look at that in more 

20 detail and try to get a better handle on that.

21 I just thought that as we go on, 

22 someone's going to notice that and come back and 

23 say what about that section? So that will be a 
247

1 little more clear in a moment as we talk 

2 about -- well, I'll just start with annual 

3 earnings. It's not much different there as we had 

4 this discussion earlier, and we are retaining the 

5 annual earnings calculation in its current form. 

6 We did change GE to educational programs.

7 Now we can move on to D, Loan Debt and 

8 Assessed Charges. 

9 PARTICIPANT: Page four.

10 MR. MARTIN: On page four, on page 

11 four, where it says Loan Debt and Assessed Charges. 

12 So looking at determining loan debt, the first 

13 part there under 1, nothing is changed there. We 

14 simply took out GE program. So the amount of Title 

15 IV loans the student borrowed less cancellations 

16 or adjustments. We retain the current language 

17 for enrollment in the program, just striking GE.

18 And then let's go down to the parts that 

19 we have struck in romanette 2. So we propose to 

20 remove from the calculation any private education 

21 loans, including private education loans made by 

22 the institution if the student borrowed for 

23 enrollment in the program and were required to 
248

1 report under 668.411. Remember that reporting has 

2 been removed and reserved.

3 And the amount as the date the student 

4 completes the program of any other credit extended 

5 by or on behalf of the institution. Basically 

6 that's debt, non-loan debt to the institution. 

7 You'll note as well that, and what we talked about 

8 earlier, the part I told you to strike, and where 

9 it talks about in 3 on page five, the Secretary 

10 attributes all the loan debt incurred by the 

11 students for any enrollment period, for any 

12 enrollment rather.

13 That we're also eliminating from the 

14 calculation the concept of capping debt at tuition, 

15 fees and books and supplies that we had previously. 

16 And I can give you, as we -- before we go into 

17 a discussion of this, remember that --that 

18 underlying a lot of this is the desire on the part 

19 of the Department to simplify these rules to reduce 

20 burden.

21 So one of the primary burden points here 

22 would be reporting, which was -- which was and is 

23 a fairly complex process for schools. So what 
249

1 we've done with these proposed regulations is 

2 remove the requirement for institutions to report 

3 anything more than what you currently do with NSLDS. 

4

5 So if you think about what's reported 

6 via NSLDS, there's no way that we have currently 

7 to capture institutional debt or private loan debt. 

8 That's not captured through NSLDS.

9 Likewise, we cannot capture on a 

10 program-level tuition, fees, books and supplies. 

11 So because of that, those would be eliminated from 

12 the calculation, so that we can use information 

13 that is currently being reported to NSLDS. 

14 You will note at the bottom of page four 

15 in (d)(2), the Secretary may elect to include in 

16 the calculation institutional loan debt, private 

17 loan debt, tuition, fees, books and supplies by 

18 publishing a notice of such election and in the 

19 manner in which institutions must report in the 

20 Federal Register. 

21 So in these proposed rules, we retain 

22 the option of using that data. But in order to 

23 do that, NSLDS would have to be altered to capture 
250

1 that. That process, even if begun today, we'd 

2 probably be looking at 18 months to two years. 

3 That would be if it were approved and 

4 we had the funds to do it. So not knowing that 

5 we would be able to do that, we wrote these regs, 

6 these proposed rules excluding again the 

7 institutional debt, private debt and the tuition 

8 and fees, books and supplies.

9 So maybe we should -- I thought we'd 

10 maybe discuss that topic.

11 MR. RAMIREZ: Yeah, because I saw quite 

12 a few tents pop up. So I have Jen, Sandy, Whitney, 

13 Daniel and Kelly. So Jen.

14 MS. BLUM: So this is Jennifer. So I 

15 definitely had all of this on my list of questions. 

16 So just to go back to the edit on page two, so 

17 you no longer mean the lesser of. You just mean 

18 that based on loan debt?

19 MR. MARTIN: Correct, Title IV loan 

20 debt.

21 MS. BLUM: Okay. So this is another 

22 example of oversimplification resulting in 

23 inaccuracy, or my fear that it would, because when 
251

1 we talk about the amount of -- well, there are lots 

2 of different. Maybe I'll peel back just focus 

3 first on tuition and fees.

4 While again I appreciate, you know, 

5 that the reporting piece has a lot of burdens, and 

6 God knows we spend hours, you know, we all do on 

7 reporting. Having said that, on the reporting of 

8 tuition and fees, there is real value in -- on a 

9 per-student basis reporting what the student 

10 actually faces in terms of tuition. 

11 Of course as we discussed at the last 

12 session, there was a lot of conversation by a lot 

13 of us about the need to continue to do that, but 

14 actually to allow for net tuition and fees rather 

15 than just gross tuition and fees. So that it was 

16 truly documented for the cohort period that the 

17 student may have received, for example, some form 

18 of scholarship or tuition reduction for a number 

19 of different reasons, and lots and lots of schools 

20 do this. In fact, all schools I think to some 

21 degree do it at this point.

22 So the very accurate reporting of that 

23 debt in the form of the actual tuition, you know, 
252

1 is exactly -- that is how you would measure the 

2 cohort. Doing what I think the Department is 

3 suggesting, which is just to rely on the loan debt 

4 that's reported in NSLDS, I'm concerned about 

5 because one thing that's not clear here, and I guess 

6 I want to ask about it, is are you including all 

7 loan debt including the piece that goes to the 

8 students for living expenses?

9 MR. MARTIN: Correct. We'd be 

10 including all loan debt, and before we go on with 

11 the conversation, what I'd like to ask is when you 

12 criticize that decision, number one, I understand 

13 that to include the other items that we're talking 

14 about; we need to hear how you propose to obtain 

15 that information. 

16 Of course there's the current reporting 

17 process that GE schools are required to do. We 

18 would be then and understand that we have no way 

19 of collecting that by simply getting those few 

20 elements from schools. If we were to require it, 

21 then that means every program, every school would 

22 have to do the current reporting, be under the 

23 current reporting structure that GE programs are 
253

1 in order for us to capture that information.

2 So if any of you have any alternate ways 

3 of obtaining that information short of what I just 

4 said, we would be interested in hearing it.

5 MS. BLUM: I was just going to suggest 

6 that we go back to the current rule and have the 

7 reporting requirements, except for I would actually 

8 adjust it to allow for the actual tuition rather 

9 than the sticker price tuition for each student. 

10 I know that's a ton of work, and I know -- and 

11 I guess I'm, you know, obviously I'm very 

12 sympathetic that we're applying this to all 

13 programs at all institutions.

14 But if we're going to do an accurate 

15 reporting system of what the debt looks like at 

16 for a program, then we ought to do that because 

17 the debt for the program -- or, I guess if you're 

18 not going to do tuition and fees, then the debt 

19 amount somehow has to be broken out between the 

20 actual debt that --

21 You've still going to have a tuition 

22 and fees issues, because the debt ought to align 

23 with the institutional charges, the tuition, the 
254

1 educational services provided and not the debt as 

2 a whole from a student, you know, that's given in 

3 a form of a lump to a student.

4 MR. RAMIREZ: Sandy.

5 MS. SARGE: Oh yay, I'm so happy you 

6 asked that question, Greg. So what I would -- I 

7 would offer up is the fact -- as we all know, if 

8 we use the total debt, then we are including a part 

9 of it that is part of student choice. It's not 

10 about the school; it's about whether the student 

11 wants to borrow money.

12 You're asking how could we figure that 

13 out? My suggestion and thought process is I think 

14 that our systems are sophisticated enough now with 

15 Ed Connect and other things to be able to house 

16 more than one bank account set of information on 

17 a student's record. 

18 So that you could bifurcate, and you 

19 guys could send the money directly to the student's

20 bank account and send our money to us that's used 

21 to educate the student and send the living expenses 

22 directly to the student, and get us out of the mix 

23 altogether, and then your information would already 
255

1 be separated.

2 PARTICIPANT: No, it's not. They send 

3 100 percent --

4 MR. RAMIREZ: I'm sorry.

5 MR. MARTIN: Okay. I think the thing 

6 is, what you're talking about here is that under 

7 the -- currently the way Title IV works with --

8 MS. BLUM: Well, that's part of the 

9 problem. That's part of the biggest issue, right? 

10 The biggest issue right now is that we, schools 

11 cannot advise a student not to take out that debt.

12 MR. MARTIN: Well, just to clarify. 

13 You can always counsel a student not to take it, 

14 but you can't arbitrarily cap what students can 

15 borrow.

16 MS. BLUM: Right.

17 MR. MARTIN: But that's another issue.

18 MS. BLUM: Right.

19 MR. MARTIN: I'm like everybody else, 

20 when everybody gets into an area you know really 

21 well, that's what you want to talk about. So I 

22 have to fight that urge. So but going back to the 

23 question at hand, I mean what you propose is 
256

1 probably a possibility. I think it's been -- it's 

2 out there and I think FSA has data, a card kind 

3 of powered program they're doing it, whatever.

4 But understand that what we're tasked 

5 with here is calculating rates with what we 

6 currently have. So if we're projecting, you know, 

7 well maybe even if we went a certain way, that we 

8 would have that -- we would have that in place, 

9 and understand that that requires system changes.

10 We're talking about the hiatus that 

11 would occur in calculating rates, until such time 

12 as we had that system in place. So when we wrote 

13 these proposed rules here we're putting in front 

14 of you, we're looking at what we have now, currently 

15 go ahead and continue to calculate risk. 

16 So bear that in mind, that whatever you 

17 suggest has to be within the context of what's 

18 currently, what's currently available.

19 MS. BLUM: So this would be a perfect 

20 example as to where because that would 

21 automatically -- in many cases that we would not 

22 be able to lower the debt on the numerator, then 

23 extending the amortization rate to 15 years may 
257

1 be an offset that we would think about, to do that. 

2 It wouldn't be perfect science, but it would 

3 potentially negate that impact.

4 MR. RAMIREZ: Okay, Whitney.

5 MS. BARKLEY-DENNEY: Yeah. I just 

6 wanted to add my voice in support for going back 

7 to the previous way that this was calculated. I 

8 think private and institutional loan debt is an 

9 incredibly important part of this calculation, 

10 particularly because, you know, if a borrower or 

11 if a program is getting, looks like people are 

12 taking out too much debt and they are whatever we 

13 want to call it, failing or not thriving or whatever 

14 we decide to name this metric, you know, that could 

15 be a way that those who want to manipulate the rule 

16 are able to manipulate it, by making sure that 

17 borrowers are taking out more private and 

18 institutional loan debt and less federal loan debt.

19 I think that all of us around here know 

20 that some of the institutional programs have been 

21 the biggest problem for borrowers, to the point 

22 that, you know, they were shut down by the federal 

23 government. So I just want to make sure that we 
258

1 don't get into a scheme where that's happening, 

2 and where we're truly getting a picture of what 

3 a borrower's loan debt looks like in order for them 

4 to attend the program.

5 MR. RAMIREZ: Whitney, what would be 

6 your thinking on Jennifer's current -- using the 

7 current system as well but instead of gross, using 

8 net tuition and fees?

9 MS. BARKLEY-DENNEY: I think that 

10 there's definitely room to discuss that by going 

11 back. I think we have to include the institutional 

12 and private lender when we're talking about what 

13 borrowers are taking out.

14 MR. RAMIREZ: Okay, thank you. 

15 Daniel.

16 MR. ELKINS: Could we just have a 

17 little bit more guidance from the Department as 

18 to the reason why we're all of a sudden going to 

19 exclude the private loan debt? Is it just your 

20 belief that that is overburdensome to institutions, 

21 and that's why it's now being excluded?

22 MR. MARTIN: Our reasoning for it. So 

23 a couple of things here. Number one, in the 
259

1 interest of maintaining of a debt calculation each 

2 year, and what elements we have to do that. Using 

3 the current, the current regulations you see here 

4 would then -- and remember what a program is, about 

5 six digits separate, right?

6 So consider, for example, a large 

7 university and how many of those there are going 

8 to be. So then using the current reporting, the 

9 current reporting for every program, that school 

10 would be required to report to us all of those 

11 elements. That we -- given that part of this effort 

12 is to reduce burdens on institutions, that would 

13 be increasing by many-fold the burden collectively

14 on institutions.

15 So then we move from that to what can 

16 we do if we calculate the rate administratively, 

17 meaning with what we have at hand? And we 

18 entertained using NSLDS, but making modifications 

19 to NSLDS to collect private debt, institutional 

20 debt, tuition fees, room and board. Which is 

21 certainly doable; it certainly can be done, but 

22 there are some problems there with number one 

23 getting the funding to do that, moving forward with 
260

1 those changes. 

2 And even if we did start right away with 

3 those changes, the amount of time it would take 

4 to get that into place such that we could do the 

5 calculations. That's really what drove --- what 

6 drove this decision here.

7 MR. RAMIREZ: Kelly.

8 MS. MORRISSEY: I'm in agreement with 

9 reducing the administrative burden of reporting 

10 this data, and I also mentioned during our last 

11 session that I think NSLDS makes perfect sense, 

12 because we are already reporting data and I think 

13 collecting it in that way. It just streamlines 

14 the entire process.

15 However, I'm just wondering about the 

16 wording of the last paragraph on page four, in terms 

17 of stating that the Secretary may elect to return 

18 to collecting the items that we would no longer 

19 be reporting. There is no reference to the fact 

20 that that would occur by adding that information 

21 to NSLDS reporting. And my concern lies in the 

22 fact that this implies that at any time we could 

23 be required to go back to reporting again, which 
261

1 is okay. 

2 But there's no time frame notice 

3 included in this, and I'm just thinking back to 

4 the first time we had to report multiple years' 

5 worth of data that we were not collecting in the 

6 format in which we needed to report it in. So it's 

7 more just the wording rather than the intention 

8 of this paragraph. 

9 It would be more reassuring to have a 

10 time frame built into this, so that institutions 

11 would have some notice in terms of getting their 

12 data in order before we're required to report it.

13 MR. MARTIN: Okay, thank you for that. 

14 We're more than willing to take suggestions about 

15 how this would be done. This was just to give us 

16 -- I mean I think that it's acknowledgment of the 

17 fact that obviously having that data would lead 

18 to a more complete calculation.

19 But as with many things, there's a give 

20 and take, you know how -- and one of the reasons. 

21 You pointed out the necessity to go back. Nobody 

22 enjoyed having to do, report for previous years. 

23 We don't want to be in that position again, to 
262

1 say well we don't do it, you know, until we have 

2 all this data. Then by the way, you've got to go 

3 back and report for previous years. So trying to 

4 not do that.

5 So I understand your concerns, and 

6 we'll definitely make a note of that.

7 MR. RAMIREZ: Okay, thank you. Jeff.

8 MR. ARTHUR: Yeah, Jeff. I believe 

9 the issue over capping tuition or capping debt, 

10 that the tuition is a bit of a red herring. The 

11 analysis I've done of all of our programs -- and 

12 I suspect it would be extremely rare for this to 

13 be a different result for anybody else's. 

14 But doing that doesn't move the median 

15 debt a nickel. I mean frankly it doesn't move it 

16 a nickel, the way it was calculated previously. 

17 So that tradeoff for not changing our median debt 

18 and not reporting, I'm all for that. I also 

19 appreciate that the burdens of reporting are 

20 tremendous. I can't even see that you could 

21 possibly get there, bringing all these institutions 

22 into the fold.

23 You've got to start somewhere, and I 
263

1 think you've taken a practical approach to set that 

2 aside as something if we could accommodate it. 

3 But we've got to start somewhere. We've got to 

4 be able to collect the data. The best way to start 

5 this is having little to no reporting burden on 

6 all institutions.

7 And then over time, I mean that was one 

8 of the big problems. We were trying to collect 

9 data that we had never designed to collect, seven 

10 years retro and retro. It just wasn't possible, 

11 and I think I've heard some opinions from certain 

12 individuals that I don't think the data that was 

13 reported was very accurate, that was used to create 

14 these current rates.

15 And we've got to start. We've got to 

16 plan to do something ahead. You can't just do it 

17 retroactively and have good results. So I do think 

18 this is a practical approach, and again it does 

19 not move the median debt by capping at tuition, 

20 the way it was done previously.

21 MR. RAMIREZ: Johnson.

22 MR. TYLER: I have more of a question. 

23 I don't really understand this concept of net debt 
264

1 versus the actual debt on the National Student Loan 

2 Database.

3 (Off mic comment.)

4 MR. TYLER: Wouldn't you just --

5 wouldn't you just take out less of a loan then?

6 PARTICIPANT: Actually, I'll explain 

7 it to you this way. In New York where there's --

8 I'm sorry -- where there's a grant program that's 

9 pretty generous, many, many students attend the 

10 institution and the grant programs pay for their 

11 entire tuition, and they have no need for a loan. 

12 But because of the current regulatory 

13 framework, they can take -- they can borrow for 

14 other things, living expenses and the like. And 

15 so this was -- this rule gave some relief to that. 

16 Very little, but some.

17 MR. TYLER: So the proposed rule would 

18 count the Stafford and the loans that they take 

19 out?

20 PARTICIPANT: Yes.

21 MR. TYLER: Okay. I mean I'm in favor 

22 of that. We're not here just to protect consumers, 

23 but there's also taxpayers who are paying for the 
265

1 University of Phoenix stadium and excuse me, I said 

2 it, and other things. So that is an issue. It's 

3 not simply a disclosure for purposes of consumers.

4 MR. RAMIREZ: All right. We have 

5 Daniel, Whitney, Laura, Jen and Jordan. Daniel.

6 MR. ELKINS: I think from a veteran 

7 perspective, we're very sympathetic to the fact 

8 that some of these reporting requirements are very 

9 burden under the current metrics. But I do think 

10 that I have to at least good faith talk about how 

11 institutional, you know, or private loans really 

12 impacted veterans in a negative way.

13 I understand that it's -- it would be 

14 burdensome to track those things. But I think 

15 that that -- I would hate to see those programs 

16 pop back up again. 

17 MR. RAMIREZ: Okay, Whitney.

18 MS. BARKLEY-DENNEY: Thank you for 

19 that, Daniel. That's a lot of what I was going 

20 to say. I just want to make sure as we're talking 

21 about this, and I think this is true of everyone 

22 around the table, that we do a little bit of a values 

23 check. I mean we're not only talking about, you 
266

1 know, wanting to lessen institutional burden. 

2 That's not our only purpose here.

3 We also want to protect students, and 

4 make sure that they aren't getting into loan debt 

5 that they can't repay. So I just kind of want to 

6 recenter. I feel like I'm always using that word. 

7 But you know, pull back a little bit from the value 

8 being well, we don't want institutions to be 

9 burdened, to making sure that our value is we need 

10 to strike a balance between what institutions are 

11 reporting and the way students are being protected.

12 MR. RAMIREZ: Okay, thank you. Laura.

13 MS. METUNE: I was going to make a 

14 similar comment, and I think I said this last time, 

15 that we have to be careful about the incentives 

16 that we're putting in place as we enact these types 

17 of provisions. I'm totally sympathetic to the 

18 concern about how we track private student loan 

19 debt, and whether or not there's ways we can put 

20 in place processes that would make it easier for 

21 us to do that.

22 But one thing that's happened in 

23 California, as colleges saw rising student loan 
267

1 debts on the federal loan side, is that they just 

2 pulled out of the loan program. So what that meant 

3 is that many of our students weren't able to have 

4 the great options that come along with getting a 

5 federal loan, right?

6 They would take out credit card debt 

7 and they would take out private loans. So I think 

8 it's really important that we don't set up a 

9 structure that encourages colleges not to 

10 participate in the federal loan program. I do 

11 think, as was mentioned earlier, that this could 

12 have a real impact on the students' livelihoods 

13 and their ability to be successful after they 

14 graduate.

15 So I would really be open to a 

16 conversation about how maybe we could make that 

17 a better process for institutions that are seeking 

18 to comply. But I just want to add my voice to those 

19 that believe that private loan debt should be 

20 included in the calculation. Thank you.

21 MR. RAMIREZ: Okay, Jen.

22 MS. BLUM: So moving away from that for 

23 a second and not -- I mean I agree, actually. But 
268

1 moving a way back to the sort of the debt for 

2 educational for the tuition and fees, relative to 

3 the debt for living expenses. If the purpose, and 

4 again I keep going back to: what is the purpose 

5 of this metric?

6 If the purpose of the metric is to 

7 inform the students about how much it will cost 

8 to attend that institution in terms of the education 

9 that they will be receiving, and for the -- in theory 

10 the student to be able to compare that against 

11 another institution, then the level of debt that 

12 should be disclosed is the amount of debt that's 

13 for tuition and fees.

14 Because living expenses, and you know 

15 this is an area where because it's not really --

16 you know Greg to your point. Because there's sort 

17 of flexibility there, you know, schools can advise, 

18 and I do agree with you. Schools can certainly 

19 advise. But the fact of the matter is living 

20 expenses are sort of all over the map in this 

21 country, and both geographically and for other 

22 reasons at different degree levels, I mean all over 

23 the map.
269

1 So the piece that's not all over the 

2 map is the tuition and fees piece, you know. 

3 Obviously institutions offer different levels of 

4 tuition. But that's the piece that's most -- for 

5 the purposes of this metric and talking about the, 

6 you know, to the extent that we're in some form 

7 even through disclosure assessing a program, that's 

8 the amount of the debt that's relevant.

9 The decision of a student to then decide 

10 that they need X amount, which I totally respect 

11 the student's decision that they decide that they 

12 need X amount for living in addition to that, that 

13 money is not related to their -- specifically to 

14 their education that they're receiving. So I just 

15 would urge that we figure out a way to be talking 

16 about it, and I hear Jeff, too.

17 Of course, I don't really want to go 

18 back to -- you know, I mean I get the -- so we need 

19 to be able. I think the Department has the, should 

20 have the ability to break out the loan. Certainly 

21 the institutions, at least I mean I think the 

22 institutions have some knowledge over what --

23 because they're, obviously they're taking some of 
270

1 it for tuition, and they're giving the rest of it 

2 to the student.

3 So the knowledge exists on that 

4 breakout of data. I mean it's there; it just needs 

5 to be used.

6 MR. RAMIREZ: Okay. 

7 MR. MARTIN: I would put out it needs 

8 to be -- in order for us to incorporate it into 

9 the calculation, it needs to be obtained by us too. 

10 I mean you know, we need to -- it needs to be 

11 reported in some way. I think that's an issue. 

12 I mean regarding, and I would just point 

13 out, too, regarding the idea of tuition and fees 

14 versus other expenses, I'm not taking one position 

15 or another here because I quite frankly can see 

16 both sides of it.

17 I think the Department in doing this 

18 sees both sides of it. Yes, those living expenses 

19 are not something the school can directly control. 

20 However, I would -- I just would point out and 

21 put on the table that the cost of attendance, the 

22 budget if you want to call it that, is fixed by 

23 you at your school. 
271

1 You determine what a reasonable amount 

2 is for those -- for those areas, such as living 

3 expenses, which are part and parcel of a student's 

4 attending school. They have to live. So you know, 

5 and they do have to repay the loan debt that's 

6 attendant to those living expenses. So that's not 

7 to shoot down what you're saying or to refute it. 

8 I just want to throw that out there too as another 

9 -- as another consideration.

10 MS. BLUM: The total image -- just to 

11 respond to that. So totally agree. I mean this 

12 is the quandary, right. But again, going to the 

13 purpose of what this metric is, which is to inform 

14 the student about the cost of that institution, 

15 if they attend a different institution they still 

16 might take the same amount out for living expenses.

17 So the differentiator as it relates to 

18 the educational program of that school is the 

19 tuition -- is the amount that they're paying for 

20 the educational services. The living expense 

21 piece, they might take the same amount out at a 

22 different institution for themselves. So the 

23 variable for the student from a consumer protection 
272

1 standpoint to me -- and I hear you on the cost of 

2 attendance piece.

3 But the reality of it is I really do 

4 think that the debt piece that we're talking about 

5 here is what it costs to attend that institution. 

6 MR. RAMIREZ: Jordan.

7 MR. MATSUDAIRA: I had two simple 

8 questions. One was just a point of information 

9 about whether Grant Plus loans are part of loans 

10 that are included in the debt measure overall, and 

11 so it says in the document that Plus loans made 

12 by parents are not, which makes sense. But I was 

13 just wondering about Grant Plus made by students.

14 And then the other question is just, 

15 you know, a lot of kind of technical tweaks that 

16 we're talking about here I think would be -- we'd 

17 be better able to have a conversation about it if

18 we kind of knew the consequence. Like Jeff's 

19 saying, if capping these things doesn't really 

20 matter, then why put institutions through the 

21 burden of doing that?

22 So for a lot of these things, it seems 

23 like Ed has the ability to produce informational 
273

1 rates, particularly on the debt side. But also 

2 presumably under some different variations for DE 

3 overall. And I was just wondering, you know, not 

4 to be impatient, I know you said tomorrow we'd have 

5 more information about data requests.

6 But some of these ideas overlapped with 

7 the data request that I'd made. I just wonder 

8 whether this was an area where we might be getting 

9 some information sometime soon, in which case we'd 

10 be able to talk with a little bit more information 

11 about some of the implications.

12 MR. MARTIN: I'm sorry. You're going 

13 to have to clarify that question for me. 

14 MR. MATSUDAIRA: Are we going to have 

15 data about this particular issue? Like if you cap 

16 loan debt at a particular level or not, or if you 

17 include different types of debt overall, has the 

18 Department run different sorts of what would the 

19 median debt side of the DE metric look like? So 

20 that we might be getting that information sometime 

21 this week, for example, so we could be able to talk 

22 about this issue with the data in hand.

23 MR. MARTIN: I know we have looked into 
274

1 that. I'm not going to make -- I need to talk with 

2 my data people first before I commit to that, what 

3 we've done in that regard. 

4 To your other point, the loan debt 

5 assessed charges at the top of page four under (d), 

6 that we've not changed any of that for Title IV. 

7 So as you can see there, it's Federal Plus loans 

8 -- where am I talking? Where am I? These are --

9 yeah, I'm sorry, the exclusions rather. The amount 

10 of --

11 The Department will determine the loan 

12 debt for students using GE programs, loans. Yeah. 

13 It doesn't -- it includes -- it includes Plus loans 

14 but not graduate Plus loans, right?

15 (Off mic comments.)

16 MR. MARTIN: Oh, I'm sorry. Yes, I'm 

17 sorry. Right. So it's Federal Plus loans made 

18 to the parents, parents and students, Direct Plus 

19 loans made to parents and dependent students, I'm 

20 sorry, and direct unsubsidized loans covered, 

21 converted from the TEACH program. 

22 MR. RAMIREZ: Okay, Sandy. 

23 (Off mic comments.)
275

1 PARTICIPANT: I'm sorry, yes. It does 

2 mean -- it does mean Grad Plus loans are in.

3 PARTICIPANT: Sandy.

4 MS. SARGE: Yes, I know. Thank you. 

5 I'm sorry. This is Sandy. So it seems like, and 

6 again I'm just trying to throw out some other ideas 

7 to generate -- given you wanted some suggestions. 

8 So does it make sense at this point? There seems 

9 to be a lot of debate about debt, like how much 

10 debt a student takes out.

11 Now some side would say well, students 

12 are going to take out the amount of debt that's 

13 available to take out. So the question is if 15 

14 years is too long for an undergraduate degree in, 

15 you know, a certificate program, let's say a 

16 short-term program, maybe 57-5 is too much money 

17 if someone's just -- you know, to have available 

18 for students just getting certain degrees.

19 The question is should we be limiting 

20 the amount of debt that a student would have 

21 available to borrow based on the level of education 

22 they're looking to get? So I think Neal earlier 

23 had said, you know, his students are on average 
276

1 getting a one year certificate in cosmetology 

2 borrow about $10,000 to do that. So maybe we 

3 maximize that at 20, you know, something like that.

4 You have different debt levels for 

5 different degree programs. Again, I'm throwing 

6 it out as just let's throw something else on the 

7 wall and see if maybe that might stick.

8 MR. MARTIN: Again, I think anything 

9 -- anything related to those types of things, 

10 limiting debt according to any other -- any other 

11 way in which is done under then is currently the 

12 case under statute now would require -- would 

13 require statutory change. 

14 And so it's, you know, when you look 

15 at what a student's eligible to borrow, it's cost 

16 of attendance, minus CFC and in the case of 

17 subsidized loans, and then minus CFA and then that's 

18 the amount the student's eligible to borrow.

19 There's nothing in there which allows 

20 anybody to cap that or limit it. I'm not saying 

21 there are no legitimate reasons why that might not 

22 happen and who knows? In future legislation, we 

23 may well have that. But right now, I don't think 
277

1 we could entertain any of that around this table. 

2

3 I kind of misspoke before. I just want 

4 to clarify again in (d)(1) that the most confusing 

5 to me is that the regulation is actually written 

6 fairly well, better than my brain was working. 

7 So it's the amount of Title IV loans 

8 to the student borrower is included, and you'll 

9 note that Federal Plus loans make -- parents of 

10 dependent students, Direct Plus loans and direct 

11 unsubsidized loans converted from TEACH are not 

12 included. So those are out, and that was what was 

13 confusing me.

14 I was thinking, and I said those are 

15 included and I was totally flummoxed by that. But 

16 if I had just taken time to read the regulation 

17 was written quite correctly, I would have seen that. 

18 So just to clarify that. 

19 But yeah, again I think could argue or 

20 discuss rather ad infinitum how, you know, the 

21 pluses or minuses to being able to have some control 

22 over what students borrow. But right now, as I've 

23 said in many, many state conferences in the past, 
278

1 that just doesn't exist.

2 MR. RAMIREZ: Okay, Johnson.

3 MR. TYLER: I just wanted to echo the 

4 issue of the private loans. Private loans, unlike 

5 federal loans, do not have the same protections. 

6 You can't get into an income base for payment plan 

7 with a private loan. If you get sued in New York 

8 and they get a judgment against you, which is 

9 generally the case because people don't defend 

10 themselves, that judgment carries a 9 percent 

11 interest for 20 years.

12 That means your wages will be garnished 

13 for the rest of your life really generally, unless 

14 you can vacate that judgment, which is a hard thing 

15 to do. So it's a very different beast, and I don't 

16 think the market supports the sort of predatory 

17 lending that we saw in the mid-2000's in terms of 

18 private loans, where everyone was getting them.

19 People who are -- many of my clients 

20 who were quite low income were getting private loans 

21 from banks you've heard of. But I wouldn't want 

22 to see that happen again, because it's really a 

23 very different sort of debt that really does ruin 
279

1 people's lives, because it's not dischargeable in 

2 bankruptcy. 

3 MR. RAMIREZ: Gannon.

4 MR. GANNON: You know, the cost of 

5 attendance is more than just tuition and fees. 

6 I know students, I know a student at the University 

7 of Michigan at Flint that was homeless during their 

8 four years there and lived in their car because 

9 they couldn't afford housing. 

10 For students that have to pay for 

11 housing, this is all part of their debt. They have 

12 to take out debt for it. It's all part of the cost 

13 of going to school. So if that's all debt to 

14 students, why isn't this calculated as far as school 

15 accountability? 

16 MR. RAMIREZ: Okay, Chris.

17 MR. MADAIO: Yes. Totally agree with 

18 that sentiment. I think living expenses is a 

19 crucial point that needs to be included in the debt. 

20 I mean this is a debt to earnings metric. It's 

21 not a cost of tuition to earnings metric. I mean 

22 if we only included the cost of tuition and compared 

23 that to earnings, it would not be an accurate number 
280

1 for students to look at when they're trying to 

2 determine how much going to that program is going 

3 to cost them, because it's going to cost them a 

4 lot more than that in order so they can live or 

5 eat or support their family or do whatever they 

6 need to do for their personal situation.

7 I mean every student is different, and 

8 the amounts they're going to have to take out may 

9 vary greatly from a student that has parental 

10 support, to help them cover living expenses, to 

11 a student that has -- a single mother with two kids. 

12 I mean I think it's going to vary a lot, and that's 

13 something that needs to be taken into account in 

14 these metrics.

15 I'm sure Jordan or the economists could 

16 tell us ways that it's, you know, that the data 

17 is smoothed out with the numbers of people, or the 

18 fact that it's an important metric in order to be 

19 there for prospective students to be able to see. 

20 I understand I'm sure it's frustrating for school 

21 that the number is not something in their control, 

22 the amounts students take out.

23 I understand that, but I think that it's 
281

1 -- that's what running a school is, is taking people 

2 who have a career and want to better themselves. 

3 I mean more than likely those people aren't going 

4 to be able to maintain their current income while 

5 they're furthering or attempting to obtain this 

6 higher career. So it makes sense that those people 

7 are -- need some sort of additional loans or debts 

8 to be able to cover their living expenses while 

9 they're in school.

10 And my last point is I mean I think a 

11 lot of schools put at least on their website the 

12 amount of estimated living expenses, you know, 

13 estimated room and board. I mean schools tell that 

14 to students on their website. 

15 So I think that if that's something that 

16 they're telling students, I think it's important 

17 as well for it to be included in the debt to earnings 

18 metrics, that we're telling students this is a 

19 number that you should, you know, reasonably take 

20 into account when you're deciding where to go to 

21 school.

22 MR. RAMIREZ: Okay, Pamela.

23 MS. FOWLER: My question is in regard 
282

1 to (d)(2). If at any time that you want private 

2 loans included, is that -- does that include private 

3 loans to international students?

4 (Off mic comments.)

5 MR. MARTIN: Remember the definition 

6 of students is Title IV recipients, and we haven't 

7 changed that. So international students would not 

8 be Title IV recipients unless they were eligible 

9 non-citizens. 

10 MR. RAMIREZ: Jennifer.

11 MS. BLUM: So I just -- this is 

12 Jennifer. So I, you know, obviously as it relates 

13 to living expenses, I agree. From a disclosure 

14 standpoint, it's really, really relevant. So but 

15 I'm taking it back to the metric and the ROI of 

16 the institution, like the debt that you pay for 

17 your education relative to the earnings that you're 

18 receiving.

19 The living expense, if you're going to 

20 have room and board at one school, you're going 

21 to have room and board at another school, or housing

22 or whatever your living expenses are. Again, I 

23 just go back to if the purpose, and it's a question 
283

1 really. 

2 If the purpose of this is to discuss 

3 if you get a degree in X occupation code, whether 

4 your return on that investment through the debt 

5 level is X, then a more accurate way of talking 

6 about it is how much did the program cost, and not 

7 as much on the living.

8 I'm not saying the living expense 

9 shouldn't be disclosed. By the way, by putting 

10 it all together, you're not telling the student 

11 how much it costs to go to that school. You're 

12 telling them how much every student took out in 

13 debt, which is two different things. 

14 And so what I was, you know, what I liked 

15 about the prior rule -- if I can say I liked 

16 something. But what I liked about it is is that 

17 it was really getting to the actual cost of the 

18 educational services provided. 

19 And so to the extent -- and I hate to 

20 bring it up -- to the extent there was a conversation 

21 around tuition and cost and how it would impact 

22 those, that's impacted by looking at least from 

23 a disclosure standpoint a breakout between what 
284

1 the tuition and fees is relative to the rest of 

2 the debt. 

3 So that's my point. I mean I don't 

4 know, I don't have it. But in terms of transparency 

5 and full disclosure, they're two different things, 

6 and the ROI piece to me is much more tied to the 

7 tuition and fees piece.

8 MR. RAMIREZ: Okay. Kelly, and then 

9 Sandy.

10 MS. MORRISSEY: I think it's important 

11 also for us to talk a little bit about what 

12 institutional debt really is, because if we would 

13 be required to report that information in the 

14 future, I think that what has been problematic in 

15 GE reporting to date has been the fact that when 

16 students graduate with a receivable to the 

17 institution, that's considered institutional debt, 

18 which I think is a lot different than a loan taken 

19 out at the institution.

20 I think it's an important distinction, 

21 and I think that we should maybe have the 

22 opportunity to discuss how that affects the outcome 

23 here.
285

1 MR. RAMIREZ: Sandy.

2 MS. SARGE: This is Sandy. I actually 

3 would second that with Kelly. At least right now, 

4 the way that institutional debt is captured is on 

5 the last day that the student's in school. If 

6 they're on a payment plan that maybe goes six months 

7 beyond that and they're current on their payments 

8 and they're banking that, we have to include that 

9 debt in the calculation.

10 But I would definitely -- I'd be 

11 interested in -- I'm not opposed to including all 

12 the other debts as people have said. I just think 

13 I would take debit balances that are under a regular 

14 payment plan that the students were making. I 

15 would differentiate them, as Kelly just said.

16 And I know, I seem to be the one who 

17 wants to keep bringing up things that you can't 

18 change and that are statutory and things like that. 

19 But I do want to go on the record and not gloss 

20 over the whole concept of earnings that's in this. 

21 First of all, the first thing I would do is I would 

22 change the title of this particular issue page to 

23 "Debt and Earnings Calculations", not just the 
286

1 numerator.

2 That's what it implied. I actually 

3 flipped through all the issue pages, looking for 

4 the one that would then talk about earnings 

5 calculations, only to find out that it was in here. 

6 So my concern about the fact, what we're using 

7 for our earnings number, and I know it's extremely 

8 difficult.

9 But the key thing that bothers me is 

10 that numerator in this equation is an annualized 

11 dollar amount, and the denominator is not. So 

12 or it cannot be proven to be an annualized dollar 

13 amount, because as we've talked about for -- there's 

14 a whole other issue with tips reporting and non-wage 

15 reporting type stuff that we deal with in tipped 

16 professions.

17 But for those students that do not work 

18 a full year or work part-time, or for some reason 

19 two or three years, four years out of college, go 

20 in a different direction and don't earn money in 

21 that thing, there's lots of things about that 

22 earnings that doesn't even keep it consistent with 

23 the numerator.
287

1 And that's my problem with the earnings 

2 as much as anything, is how do we -- how can we 

3 get -- is there other information that is gathered 

4 by either SSA, or do they have something that could 

5 help us determine whether or not this is actually 

6 an annualized earnings? 

7 Because then you eliminate all of those 

8 personal choices people have about what they want 

9 to do in their life, like have a baby or go be a 

10 forest ranger part-time and live off the land, you 

11 know, things that they -- and they only work 

12 part-time, and that gives them enough money to live.

13 It takes out a lot of personal choice, 

14 and I don't know what options there are available 

15 between the Department of Ed, the IRS and SSA. 

16 So I'm just throwing that out there. That's my 

17 problem with the denominator. 

18 MR. RAMIREZ: Okay, Johnson. So 

19 Chris.

20 MR. MADAIO: Chris Madaio. Just very 

21 quick, just one other thought on the living expenses 

22 is that, you know, students also aren't always just 

23 deciding one school to one school. They're 
288

1 deciding one school or no school; stay in my current 

2 job or stay in my current amount I'm making. Or 

3 take out loans, including loans to live, and attempt 

4 to, you know, increase it.

5 I think that if we don't include the 

6 loans that the student is going to need to live 

7 while they're maybe not in their current job, 

8 because they're attempting to increase themselves 

9 to make more money, but instead they find out later 

10 wow, I'm in way more debt than I expected, I think 

11 having -- if we're going to this disclosure only 

12 rule, that's not even accomplishing the disclosure 

13 that we were hoping to accomplish.

14 MR. RAMIREZ: Kirsten.

15 MS. KEEFE: Kirsten, yes. Also in 

16 favor of including living expenses and debt 

17 incurred for living expenses. I just think about 

18 if somebody goes to school in New York City, there 

19 are a lot of benefits to going to a school in New 

20 York City because of access to whatever, but it's 

21 also a lot more expensive.

22 And that's part of the whole school. 

23 The experience might be to be in New York City 
289

1 and be close to those internships, etcetera, but 

2 it's part of the cost of going to the school. And 

3 then I just have a question about not including 

4 things like institutional debt and loans that you 

5 may get from the school.

6 My fear is, and I don't -- this is more 

7 of a question. Will that incentivize schools to 

8 give -- to deter individuals from taking federal 

9 loans and incentivize them to take on institutional 

10 debt, because that will not then ultimately be 

11 included?

12 MR. RAMIREZ: Okay. Jessica.

13 MS. BARRY: Jessica Barry. I just --

14 this is a question for the Department. You know, 

15 I totally understand that you're not collecting 

16 a lot of this private loan data and institutional 

17 loan data at this time. Would it be possible that 

18 there's a plan put in place, that over the next 

19 few years this is added to NSLDS, and we realize 

20 that these ratios are going to improve over time? 

21 Is that possible?

22 MR. MARTIN: Well, anything's 

23 possible. No. We did consider all this, and 
290

1 obviously I think in looking at the proposed 

2 language, where we reserve the possibility of doing 

3 that, we took that into consideration. Again, we 

4 had some constraints around continuing to publish 

5 rates every year.

6 So you know, some of the things we 

7 considered was that okay, we have this information 

8 already for GE programs who are currently reporting 

9 that, right. So I don't think it makes any sense 

10 to have a bifurcated rate, where you have one rate 

11 that's being calculated for this group of schools 

12 using this information, but another group of 

13 schools not using that information.

14 So then it came down to well, when would 

15 we have this information available to do it? So 

16 we looked at a horizon of maybe minimally 18 months 

17 to 24 months. That's if we could get -- and that 

18 if everything goes perfectly and we can get NSLDS 

19 changed to accommodate that, and schools start 

20 reporting it and reporting directly. But we don't 

21 know. We can't, we couldn't write these proposals 

22 based on sort of a fait accompli, that it was a 

23 done deal that we'd be able to do this.
291

1 And that's why we didn't do it. We 

2 wrote them based upon what's at our fingertips 

3 today. What can we do now? That's really where 

4 we are.

5 MR. RAMIREZ: Okay, all right. So is 

6 there any other information that you all would like 

7 for the Department to consider, or any other areas 

8 within this Issue No. 3 that we need to discuss? 

9 Jeff.

10 MR. ARTHUR: I'm sorry. You're 

11 thinking of moving off the paper completely?

12 MR. RAMIREZ: No. I'm seeing what 

13 other issues we need to discuss so --

14 MR. ARTHUR: For the paper itself?

15 MR. RAMIREZ: Yes.

16 MR. ARTHUR: Okay, I have -- well, go 

17 ahead. But I think we have one more we need to 

18 discuss briefly.

19 MR. RAMIREZ: Okay, okay.

20 PARTICIPANT: Who's determining, and 

21 I don't know if it's this issue. Again because 

22 there's so much removed, I don't know what, where, 

23 in some cases I don't know which issue paper 
292

1 referenced what question. 

2 But I had mentioned in the last session 

3 that zip codes are actually a little bit complex 

4 in terms of, you know, the institution was choosing 

5 its own zip codes, which on one hand we like, and 

6 on the other hand it's from -- again, from a 

7 disclosure and comparability standpoint can be 

8 inconsistent. Who's picking the zip codes now?

9 MR. MARTIN: Institutions choose the 

10 zip codes for their programs, and report those zip 

11 codes. If we're moving to NSLDS data, you report 

12 the program level zip code we would be using. 

13 That's what we would be using. 

14 PARTICIPANT: Okay. So there would 

15 still be an issue of a disclosure? It's not a huge 

16 issue, but there would still be a little bit of 

17 an issue from a comparative, and again I'm thinking 

18 about the student, what the purpose of the metric 

19 is, just from an apples to apples. There are --

20 there's a roll up.

21 So it's not really by program. In some 

22 cases there are multiple programs in one set, and 

23 actually I suspect that by including the 
293

1 traditional -- I don't want to speak for Todd, but 

2 I suspect actually this could become an issue for 

3 other programs. We talked before about majors and 

4 changing majors and things like that.

5 So the complication of the zip code and 

6 again, if the purpose for the students is to inform 

7 them about a program, but there are multiple zip 

8 codes in a program or one institution chose, not 

9 because they were doing anything wrong, but there 

10 is flexibility in the zip code process to choose 

11 one zip where a different school, where a different 

12 school picks a different zip for the same program.

13 You forego the ability, the comparative 

14 ability for the students. So I just -- I'm putting 

15 it on the table as an issue. It's been an issue 

16 for however many years now. I just wanted to flag 

17 it.

18 MR. MARTIN: I think we will -- we will 

19 definitely -- we will definitely discuss that. 

20 I think there are, there certainly are 

21 considerations around that when you move into 

22 looking at more traditional programs, where the 

23 zip relates to majors and we all know students 
294

1 could, you know, maybe they're not even in a major 

2 for the first two years. They're basically in a 

3 general studies environment and they could switch 

4 majors four or five times throughout the 

5 matriculation.

6 So yeah, we will -- I don't want to get 

7 into that today, but I will just acknowledge that 

8 is an issue.

9 MR. RAMIREZ: Chris.

10 MR. MADAIO: Chris Madaio. I just 

11 wanted to make sure I didn't misunderstand 

12 something. Greg, you said before that there are 

13 constraints that keep the Department from 

14 publishing the rates on an annual basis. Is that 

15 --

16 MR. MARTIN: No, I didn't say that. 

17 What I meant was that in looking at how we could 

18 go to administratively calculating these rates, 

19 meaning no more reporting. That means what we 

20 have. There are constraints involving to continue 

21 to publish these every year with no hiatus. 

22 If we're thinking about how we're going 

23 to obtain this information in a different way from 
295

1 every school about every program, that we did not 

2 want there to be a break, a two year break in rates 

3 or a three year break in rates while we figured 

4 out how to do that.

5 We also didn't want to have a bifurcated 

6 rate, where we were doing a rate that included 

7 elements, different elements for GE programs or 

8 I'm sorry, it wouldn't be that anymore. But what 

9 were formerly GE programs and now everybody else.

10 MR. MADAIO: I just wanted to follow 

11 up on that. Is the Department still contemplating 

12 a release of debt to earnings rate in this -- this 

13 year for previous award years?

14 MR. MARTIN: Yes. We are, we have 

15 committed to calculating another round of rates. 

16 But I cannot give you any time frame right now 

17 as to when that will be accomplished.

18 MR. MADAIO: Okay, and the same for the 

19 debt to earnings list, excuse me, the draft 

20 completers list?

21 MR. MARTIN: Yes, exactly.

22 MR. MADAIO: Okay.

23 MR. RAMIREZ: Jessica, do you have 
296

1 anything? Okay. Greg, where did you want to go 

2 from here?

3 MR. MARTIN: Where do I want to go from 

4 here? I just wanted to -- this should be very 

5 brief. Just at the bottom of page five under (e), 

6 Exclusions. I just want to bring to your attention 

7 the fact that we did eliminate from the exclusions 

8 one or more of the students Title IV loans were 

9 in a military-related deferment status any time 

10 during the calendar year.

11 If anybody has any opinions about that, 

12 I mean you can voice them. Our considerations were 

13 that the military deferment status really wasn't 

14 like the other ones. Students are still in an 

15 earnings status. They may or may not be making 

16 more money during that time than they did in their 

17 other job.

18 We're willing to hear anybody's support 

19 of removing that or objections. We made a couple 

20 of different tweaks to exclusions. One or more 

21 of the student's Title IV loans were under 

22 consideration by the Secretary and have been 

23 approved for discharge. Just adding one or more 
297

1 loans clarifying that, or disability.

2 And we also added in (2) there, "The 

3 student was enrolled for at least 60 days in any 

4 other eligible program." So I just wanted to 

5 clarify those areas. And then one more thing 

6 before we leave. You might want to go to the bottom 

7 of page six as well, DE Rates Not Issued. Note 

8 that we went from the N size of 30 to 10. Those 

9 two things. Now I'll just take any comments people 

10 have about that before we close out the day.

11 MR. RAMIREZ: Okay, Jennifer.

12 MS. BLUM: So I had -- I'm sure I'm not 

13 the only one on the third -- well, I don't know. 

14 So I know that there are mixed reasons for why 

15 you might reduce it down to ten. But it does seem 

16 like that, and I haven't given it -- we haven't 

17 obviously had a chance to analyze or really think 

18 about. 

19 But it does seem like the impact from 

20 year to year, especially on the earnings piece, 

21 could swing wildly in terms of results. I mean 

22 I just -- or maybe not wildly, but it will swing 

23 if you only are looking at ten people's salaries. 
298

1 So -- and I just from a statistic, I'm not a 

2 statistician. But from a statistically valid 

3 standpoint, you know, and not -- 30 is small, too.

4 But ten seems like very low cohort on 

5 which to -- and this gets to Issue 4 when we talk 

6 about the language. But if we're judging by with 

7 the term "low-performing" and we're only talking 

8 about literally ten completer's salaries, I 

9 would -- I mean I just -- I'd give a -- I'm concerned 

10 about ten. It's so low. So I guess I will raise 

11 the sort of statistical validity of having such 

12 a low number. 

13 I know why, or at least I think I know 

14 why the Department considered that. But I guess 

15 I would be interested in hearing what the 

16 Department's thoughts are around ten.

17 MR. MARTIN: Yeah, I could certainly 

18 do that, all right. Tomorrow I can bring one of 

19 our statistics people. 

20 MS. BLUM: That would be helpful 

21 actually. Can we have the statistician, because 

22 I would be -- I mean I definitely think that would 

23 be helpful.
299

1 MR. MARTIN: Miss Hay will be back up 

2 to discuss data again, and so if I can pose -- she's 

3 not here right now, so I can make all these promises 

4 on her behalf. I'm sure she's very skilled in that 

5 area, and would be a lot better person to address 

6 those issues to than me.

7 MR. RAMIREZ: Do you want to chime in 

8 on that Jordan?

9 MR. MATSUDAIRA: Is that okay?

10 MR. RAMIREZ: Yeah.

11 MR. MATSUDAIRA: So I share the same 

12 concern, that just with a low cohort size the 

13 average of earnings with the median or whatever 

14 is going to bounce around a fair amount over time. 

15 I mean I think this is the kind of thing where, 

16 again, the Department has the data from successive 

17 years' data collection, where you could show us 

18 just how much those rates bounce around for programs 

19 of different sizes.

20 And again, we could kind of see 

21 visually, you know, given that you're a program 

22 that has a DE rate in a given range, like in the 

23 next, you know, certain number of years, like how 
300

1 many times does your metric come in at the same 

2 level or not, just as a way of kind of getting a 

3 sense for whether that's true.

4 I know people over in NCS weighed in 

5 on this same issue in the context of developing 

6 the College Scorecard, and so I imagine would be 

7 able to come and talk to us about that. 

8 PARTICIPANT: What's NCS?

9 MR. MATSUDAIRA: I'm sorry, National 

10 Center for Education Statistics.

11 MR. RAMIREZ: All right. I have Todd, 

12 Whitney, Chris, Johnson and Christina. Todd.

13 MR. JONES: I guess I'm going to leave 

14 part of my question for tomorrow when we talk to 

15 the statistical folks about that. I mean I am 

16 interested to the extent that we're getting to a 

17 point where cell size matters here, and protection 

18 of confidentiality. 

19 But I also would think it would be 

20 helpful for the Department to look at how that is 

21 applied, and whether the rolling average is not 

22 the superior option, regardless of the cell size 

23 you take, because of the problems inherent with 
301

1 small cell sizes. 

2 If you have significant swings in any 

3 data set because the standard deviation is too wide, 

4 I mean you know, you're year to year swinging 

5 radically in terms of loan amounts for a small 

6 number of people, or you have wildly disparate 

7 levels of loans, the stat is going to be all over 

8 the place.

9 And with small cell sizes, it's going 

10 to be difficult to even take seriously for anyone 

11 who looks at them that one year it turns out that 

12 50 percent of the students are taking $29,000 in 

13 loans for a two year program, and the next year 

14 they're taking $3,000. That kind of 

15 variability -- I'll just reflect on a speech I did 

16 last week.

17 I did a presentation at one of our --

18 one of my college's boards, and we analyzed what 

19 was the institutional discount rate for entering 

20 freshmen -- the entering freshmen class. Now you 

21 can calculate that across an institution over time, 

22 and this is a traditional four year institution, 

23 and the institutional discount rate varied by 10 
302

1 percent over two years.

2 10 percent. Now that's just in terms 

3 of level of aid being provided by the institution 

4 and the net price being charged. I can only imagine 

5 how much more extreme we're going to see the 

6 whipsawing of small programs. This is a college 

7 which has hundreds and hundreds of students coming 

8 in per year.

9 When we're grinding cell sizes down not 

10 to 30 but to 10, where the change in one person 

11 could swing things radically? I can't conceive 

12 of that unless you have some sort of longer term 

13 norming. Of course, that gets into the problem 

14 that maybe some colleges have enough students in 

15 the program one year and don't the next, and what 

16 do we do if it's been three years since you had 

17 anyone in the program?

18 I would be interested to know if the 

19 Department has done any analysis to the extent that 

20 we're going to have this kind of variability in 

21 dropping from 30 to 10, and have they crunched the 

22 numbers just as a test in any way? Because I would 

23 presume the Department did that before they put 
303

1 a proposal up. But maybe I'm wrong, and we can 

2 find out tomorrow.

3 MR. RAMIREZ: That's going to be on 

4 Hay's list.

5 MR. MARTIN: Yeah. We'll entertain 

6 all data, all data then tomorrow.

7 MR. RAMIREZ: Okay.

8 MR. MARTIN: And I will -- we'll 

9 address that issue as well I should say.

10 MR. RAMIREZ: Okay. Whitney.

11 MS. BARKLEY-DENNEY: Yeah. I just 

12 have an easy question, because I don't see what's 

13 changed. So number one. So where you change 

14 number two, one or more students to number one, 

15 one or more students, and then students is stricken

16 through and reprinted. Was something else 

17 supposed to be there or --

18 (Off mic comments.)

19 MS. BARKLEY-DENNEY: Yeah, yeah, but 

20 then down -- two more lines it's struck through 

21 students --

22 MR. MARTIN: That's simply -- that was 

23 just a -- that's just a formatting issue. Nothing 
304

1 changed there.

2 MS. BARKLEY-DENNEY: Okay. Just 

3 making sure. Thank you.

4 MR. RAMIREZ: Chris Madaio. Oh, 

5 Johnson.

6 MR. TYLER: I guess I kind of agree with 

7 the ten seems like a small number to take a sample 

8 on. On the other hand, it doesn't sound like in 

9 terms of all the stuff we're talking about today. 

10 These are very small programs that have very few 

11 people who are entering them it seems.

12 So it's just -- it's not a -- it doesn't 

13 seem as important to me as other issues we're 

14 talking about today.

15 MR. RAMIREZ: Okay. Christina, then 

16 Mark and Jordan. Jordan already went. Christina, 

17 then Mark.

18 MS. WHITFIELD: This is Christina. I 

19 just wanted to speak in favor of lowering the limit 

20 from 30. I don't know that 10 is necessarily the 

21 right number. But I think one of the weaknesses 

22 of the existing system is the number of programs 

23 that are excluded because of small cohort sizes.
305

1 So I think if we're thinking about this 

2 in terms of a consumer information tool, the more 

3 programs that are included the better. I'd also 

4 like to just point out that some of the metrics, 

5 the other metrics that people have mentioned today 

6 as being valuable like completion rates for 

7 example, or graduation rates, there's no limit on 

8 the cohort size for those.

9 So those rates are reported out, even 

10 if there's only one or two students in those 

11 cohorts. So there's -- I appreciate sort of the 

12 fine points about protecting confidentiality and 

13 small numbers moving around. But I think we can 

14 balance those out, and more complete information 

15 is better.

16 MR. RAMIREZ: Okay, Mark.

17 MR. McKENZIE: So to Christina's 

18 point, I guess I was the one who ran the data that 

19 something like 90 percent of the public certificate 

20 programs didn't graduate the 30 and 70 percent of 

21 the proprietary programs I ran just at the 10. 

22 It's 21,000 of 68,000 undergraduate programs still 

23 don't graduate five students. 
306

1 So it's still a big number, and all the 

2 -- the thing this group should know is: all the 

3 data shows that the students who drop out have the 

4 hardest time with their student debt. So I would 

5 ask the group and the Department to think about 

6 how we could do something with completion, so we 

7 get to the heart of, you know, what I think the 

8 rule and what the consumers are concerned about.

9 MR. RAMIREZ: Pamela.

10 MS. FOWLER: I just want to say I agree 

11 with Christina. I have reviewed a couple of 

12 schools in the fall semester where nothing was 

13 reported on anything. So who are you protecting

14 if nothing ever gets reported?

15 MR. RAMIREZ: Jordan.

16 MR. MATSUDAIRA: Hi, sorry. I should 

17 have added this last time. But you know in the 

18 past, I can't remember whether it was this rule. 

19 But in the College Scorecard, the kind of 

20 compromise over this N size issue and wanting to 

21 still have information be reported on small cohort 

22 programs is just to have some kind of roll up kind 

23 of cohort size that gets triggered when the cohort 
307

1 size is low.

2 So if, you know, for example if a cohort 

3 is below 30, then instead of using just a single 

4 year cohort, you might take the last three years' 

5 worth of cohorts. If that's over 30 then report 

6 it; and if it's not, then you know, whatever the 

7 exact thresholds are that can be dialed up or down. 

8

9 But some sort of roll up cohort to both 

10 try to maintain information and accountability for 

11 those programs, but also respect both the 

12 bounciness of data in small cell sizes and the 

13 privacy concern.

14 MR. RAMIREZ: Chad.

15 PARTICIPANT: Yeah. I just wanted to 

16 clarify. I mean I don't necessarily object to it. 

17 I just had more questions about why than anything 

18 else. But I also -- and also just an understanding 

19 that I think just by sheer fact, the results are 

20 going to vary. 

21 So to the extent that we're trying to 

22 tell students that something is good or bad, you 

23 know, in one year they could be "low-performing" 
308

1 and in the next year it could look terrific, and 

2 then vice-versa the following year.

3 And so I just -- it's more from an 

4 information -- I don't, I mean I'm -- it doesn't 

5 really matter. I mean it's fine. It's just more 

6 from an informational standpoint, and then I'm glad 

7 Jordan just raised it, because I meant to ask 

8 earlier today and then I held it for now and then 

9 I forgot about why did you get rid of the roll up, 

10 because that resolves some of the problems anyway, 

11 so why not just roll up into the four year cohort? 

12 So I think that is a good question.

13 MR. RAMIREZ: Chad.

14 MR. MUNTZ: Chad Muntz. Again, since 

15 we're on page five, I just wanted to highlight. 

16 Now that we're opting in all public universities 

17 for every single problem, I mean every single 

18 program, and we have --

19 (Laughter.)

20 MR. MUNTZ: I don't know if that was 

21 intentional or not. It's a long day. Anyway, we 

22 have a lot of universities under the same governing 

23 control. I know it was in there last time, but 
309

1 we didn't have any gainful employment. We had very 

2 few gainful employment programs. So for -- if you 

3 can roll up all the debt, this could create an issue 

4 for any institution of which debt is attributed 

5 to which program for our universities.

6 So I just wanted to keep that in mind. 

7 Maybe strike "may include" and "not include" for 

8 the public universities -- that debt from other 

9 institutions to the one they graduate. 

10 PARTICIPANT: Johnson.

11 MR. RAMIREZ: Okay. Greg, was there 

12 anything else on this one that we need to hit?

13 MR. MARTIN: No. The only other thing 

14 was I just wanted to point out, and maybe nobody 

15 has any comment on it, the exclusion where we struck 

16 one or more students Title IV loans were in 

17 military-related deferment status. Is there any 

18 reaction to that? That's at the bottom of page 

19 five, Exclusions (e)(1). 

20 I would ask that you look at it within 

21 the context of the other exclusions. 

22 PARTICIPANT: Greg, just so I 

23 understand, you're protecting the student by 
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1 including their debt, and it's in there is the way 

2 I look at it. Because without it, you're 

3 under-estimating the outcome of the program. 

4 MR. MARTIN: Yeah. I mean we just 

5 considered -- I mean when you look at what these 

6 exclusions are, you know, loans under consideration 

7 of discharge or the student died, all of these. 

8 Student was enrolled for at least 60 days in another 

9 eligible program. I mean I -- we just didn't, don't 

10 view the military deferment in that same, in that 

11 same vein. 

12 It's just simply the student's on a 

13 military-related deferment. But we're interested 

14 in hearing what anybody thinks about that one way 

15 or the other.

16 MR. KAMIN: We agree with it and 

17 appreciate it.

18 MR. RAMIREZ: And that was Daniel. 

19 I'm sorry, John. All right. So was that it for 

20 this issue then?

21 MR. MARTIN: Yes.

22 MR. RAMIREZ: Okay. Let me ask the --

23 well, tomorrow we're going to be starting off with 
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1 sanctions, and yeah. So I'm going to ask you to 

2 take a look at that, and again if you could identify 

3 any areas where you're in agreement, right? 

4 Because I think that that would help clear the deck 

5 some, right, instead of just focusing on the items 

6 where there may be some heat around it.

7 That way in the later meetings, we could 

8 just focus on those areas of greater contention, 

9 okay. So let me ask the negotiators as well as 

10 the alternates: are there any comments that you 

11 would like to make before I open up the floor for 

12 public comment?

13 (No response.)

14 Public Comment

15 MR. RAMIREZ: Okay. Anyone from the 

16 public? Any public comment?

17 (No response.)

18 MR. RAMIREZ: All right. Thank you for 

19 staying locked in the whole day. Scott, do --

20 MR. FILTER: If everyone could just 

21 hang around while I -- I'll be passing something 

22 out. It doesn't -- you don't have to do anything 

23 active. Just sort of hang at your desk or your 
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1 spot while I pass out some information related to 

2 borrower defense that we will discuss tomorrow.

3 MR. RAMIREZ: Okay great. Thank you. 

4 Then we will see everyone back here tomorrow at 

5 9:00 sharp. Thanks everyone. Hold out for the 

6 handout though.

7 (Whereupon, the above-entitled matter 

8 went off the record.)

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