Committee Meetings - 02/18/22 1 

DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION

INSTITUTIONAL AND PROGRAMMATIC

ELIGIBILITY COMMITTEE

SESSION 2, DAY 5, MORNING

February 18, 2022
Committee Meetings - 02/18/22 2 

1 PROCEEDINGS

2 MS. JEFFRIES: Hey, good morning, I'm Commissioner 

3 Cindy Jeffries, and I am just going to do the roll call this 

4 morning and do an opening statement to address the committee 

5 and then Brady Roberts, will take it from there to facilitate 

6 this morning session. So, with that, let's get going with our 

7 roll call. For accrediting agencies, we have Jamie Studley as 

8 primary.

9 MS. STUDLEY: Good morning and happy Friday.

10 MS. JEFFRIES: Good morning. And Dr. Laura Rasar 

11 King.

12 DR. KING: Good morning.

13 MS. JEFFRIES: Good morning. Civil rights 

14 organizations and consumer advocacy organizations, Carolyn 

15 Fast.

16 MS. FAST: Good morning.

17 MS. JEFFRIES: Good morning. And Jaylon Herbin.

18 MR. HERBIN: Good morning.

19 MS. JEFFRIES: Good morning. Financial aid 

20 administrators at postsecondary institutions, we have Samantha 

21 Veeder.

22 MS. VEEDER: Good morning.

23 MS. JEFFRIES: Morning. And David Peterson.
Committee Meetings - 02/18/22 3 

1 MR. PETERSON: Good morning.

2 MS. JEFFRIES: Good morning. Four-year public 

3 institutions of higher education, Marvin Smith.

4 MR. SMITH: Morning.

5 MS. JEFFRIES: Morning. And Deborah Stanley as the 

6 alternate.

7 MS. STANLEY: Morning.

8 MS. JEFFRIES: Morning. Legal assistant organizations 

9 that represent students and/or borrowers, we have Johnson 

10 Tyler as primary. Alright, we'll circle back to Johnson, he 

11 may not be here yet. And Jessica Ranucci as the alternate.

12 MS. RANUCCI: Good morning.

13 MS. JEFFRIES: Good morning. For minority-serving 

14 institutions, we have Beverly Hogan as the primary who will 

15 not be joining the committee today, so Ashley Schofield, the 

16 alternate, will be at the table all day. Ashley?

17 MS. SCHOFIELD: Good morning, everyone.

18 MS. JEFFRIES: Morning. Private nonprofit 

19 institutions of higher education, Kelli Perry as primary.

20 MS. PERRY: Morning, everyone.

21 MS. JEFFRIES: Morning. Emmanual Guillory as 

22 alternate.

23 MR. GUILLORY: Morning, everyone. Happy Friday.
Committee Meetings - 02/18/22 4 

1 MS. JEFFRIES: Morning. Proprietary institutions of 

2 higher education, Bradley Adams.

3 MR. ADAMS: Good morning.

4 MS. JEFFRIES: Good morning. As the primary and 

5 Michael Lanouette as the alternate.

6 DR. LANOUETTE: Good morning.

7 MS. JEFFRIES: Morning. State attorneys general, Adam 

8 Welle is the primary.

9 MR. WELLE: This is Adam Welle. Good morning.

10 MS. JEFFRIES: Good morning. And Yael Shavit is the 

11 alternate.

12 MS. SHAVIT: Good morning.

13 MS. JEFFRIES: Good morning. State education 

14 executive officers and state authorizing and/or state 

15 regulators of institutions of higher education and/or loan 

16 servicers, Debbie Cochrane is the primary.

17 MS. COCHRANE: Good morning.

18 MS. JEFFRIES: Good morning. And David Socolow is the 

19 alternate.

20 MR. SOCOLOW: Good morning.

21 MS. JEFFRIES: Morning. Students and student loan 

22 borrowers, we have Ernest Ezeugo as primary.

23 MR. EZEUGO: Good morning, everyone.
Committee Meetings - 02/18/22 5 

1 MS. JEFFRIES: Good morning. And Carney King as the 

2 alternate. Looks like Carney isn't with us yet, we'll circle 

3 back. Two-year public institutions of higher education, Dr. 

4 Anne Kress.

5 DR. KRESS: Morning.

6 MS. JEFFRIES: Good morning. She is the primary and 

7 Will Durden is the alternate.

8 MR. DURDEN: Happy Friday, good morning.

9 MS. JEFFRIES: Happy Friday, good morning. U.S. 

10 military service members, veterans or groups representing 

11 them, Travis Horr is the primary.

12 MR. HORR: Good morning, everybody.

13 MS. JEFFRIES: Morning. And Barmak Nassirian is the 

14 alternate.

15 MR. NASSIRIAN: Morning.

16 MS. JEFFRIES: Morning. For civil rights, the primary 

17 is Amanda Martinez.

18 MS. AMANDA MARTINEZ: Morning.

19 MS. JEFFRIES: Good morning. The general council 

20 representative sitting in this morning is Donna Mangold.

21 MS. MANGOLD: Morning.

22 MS. JEFFRIES: Good morning. And for the Department 

23 is Gregory Martin.
Committee Meetings - 02/18/22 6 

1 MR. MARTIN: Good morning,

2 MS. JEFFRIES: Good morning. In addition to that, we 

3 have two esteemed advisors. David McClintock is a compliance 

4 auditor with experience auditing institutions that participate 

5 in the Title IV HEA programs. David?

6 MR. MCCLINTOCK: Happy Friday, everyone.

7 MS. JEFFRIES: Good morning. And Dr. Adam Looney is 

8 the advisor for labor economic or an individual with 

9 experience in public research, accountability and/or analysis 

10 of higher education data. It doesn't look like Dr. Looney is 

11 with us. I'm just going to circle back to see if Johnson has 

12 now joined the table?

13 MR. TYLER: Sorry for being late, hello.

14 MS. JEFFRIES: No worries, no worries. And has Carney 

15 King joined us? It doesn't look like Carney has. So that 

16 completes the roll call, did I miss anyone? Oh, it's a good 

17 day. So, with that, I just want to take a few minutes of your 

18 time to address the committee on what our agenda is and the 

19 expectations for today as we go into the break time, which 

20 would be the final break before the third and final session. 

21 And we appreciate all of the hard work that this committee has 

22 done both this weekend and the last session and in between. 

23 There remains important work to be completed today. And that 

24 being the completion of changes of ownership and change and 

25 control issue paper, as well as the 90/10 issue paper. The 

26 Department desires to gather as much information from this 

27 committee as possible for consideration going into the period 

28 before the final session in March, as they work through their 
Committee Meetings - 02/18/22 7 

1 potential amendments to the currently proposed text based on 

2 your feedback and your new proposals. In an effort to 

3 facilitate the committee's ability to convey to the Department 

4 as many of your significant concerns and/or proposals on the 

5 changes in the amended text before you for these two 

6 documents, we are asking the following. Per the protocols that 

7 you all agreed to negotiators, three minutes should be used 

8 only to relay new concerns and offer any new proposals to 

9 change that would be that would help get you to consensus in 

10 week three. We ask that the time not be used to restate 

11 previously stated concerns, revisit already discussed text or 

12 sections, items not on the table for this negotiated 

13 rulemaking or to express support for something already stated. 

14 The intent here is to try to help you focus on the changes 

15 that the Department has made in the text of the two issue 

16 papers’ text before you today. We also want to encourage you 

17 to continue to utilize the chat to express your support and 

18 for questions. We also encourage you to follow up with written 

19 proposals as soon as possible to the Department, which can be 

20 read-lined regulatory text, bullet point documents, etc. And 

21 preferably you will submit them in a Word format for their 

22 consideration. Questions may also be placed in the chat as the 

23 Department may not be able to provide an immediate answer to 

24 them. They will strive to address them at a later date and/or 

25 consider them for their final set of proposals. So, the 

26 questions that you have are still important to submit because 

27 even if they can't get an answer to you right away, it is 

28 something that they are going to be utilizing and considering 

29 amending any final text that will be sent your way. We will be 

30 assisting you with the above focus to keep you moving through 
Committee Meetings - 02/18/22 8 

1 the changes in the text before you. The intent is not to limit 

2 dialog, but it is instead intended to help you best utilize 

3 the remaining time in this session to enable a process 

4 following the protocols to concisely articulate concerns for 

5 the Department to hear and take into consideration in the time 

6 before that final session. So, it is our expectation that you 

7 will complete the changes of ownership issue paper, as well as 

8 begin the 90/10 review this morning and the 90/10 will be 

9 picked up and completed this afternoon. Before we close out 

10 the session this afternoon, whether we have time before public 

11 comment, we ask that you not immediately leave the meeting 

12 because we'll have additional guidance available to assist you 

13 on your submission of proposals to enable the Department to 

14 have them in as much time as possible to give them the 

15 consideration your proposals deserve and the Department has 

16 committed to giving them. Keep in mind that the Department 

17 wants to have the amended text to you one week prior to the 

18 start of the final session. So, I thank you for your time, I 

19 thank you for listening. I'm going to turn it over to Brady to 

20 get you going and jump right back into changes of ownership. 

21 Brady?

22 MR. ROBERTS: Alright. Thank you, Cindy. And I am 

23 actually very quickly going to turn it back over to Greg. 

24 Greg, do you just want to tee up exactly what we discussed at 

25 the conclusion of yesterday's meeting? I believe it was 600.4. 

26 Did we get to section (g) or did we just talk about that first 

27 change in subparagraph (a)?

28 MR. MARTIN: Well (g) goes into 600.20. But we were 

29 talking about 600.4 and we were referencing the change in (a) 
Committee Meetings - 02/18/22 9 

1 and this was where we had deleted the word private to match 

2 the statute in light of some confusion from a negotiator about 

3 what we meant there. And I think Donna had spoken to that a 

4 little bit before we had to break off for public comments. So, 

5 I don't think we got to explore that completely. So, there 

6 might be some more comments related to 600.4 (a) and so, I'd 

7 be willing to entertain those now and then we can take a 

8 temperature check on that.

9 MR. ROBERTS: Sure. Anything new for the Department 

10 to consider or to comment on for 600.4? Yes, Marvin.

11 MR. SMITH: Yeah, I had a colleague reach out trying 

12 to understand what the Department is trying to convey there by 

13 changing private to other. And if it's just trying to match 

14 the regulatory language, I can circle back with them. But can 

15 you give us some insight, Greg?

16 MR. MARTIN: Well, we changed it because there was 

17 some there was concern that what we had here did not match 

18 what was in statute. So that's why we changed the language. I 

19 think, I don't know, Donna did you have any comments about 

20 that? You may have made them yesterday before we cut off, you 

21 might want to reiterate.

22 MS. MANGOLD: This just tracks the statute. The word 

23 private was put in there inadvertently. We were trying to 

24 track the statute language and other tracks the statute 

25 language.

26 MR. MARTIN: Thank you.
Committee Meetings - 02/18/22 10

1 MR. ROBERTS: Okay, thank you. Anything else on 

2 600.4? Alright, not seeing anything. Vanessa, could you bring 

3 down the document? And we'll take a quick temperature check on 

4 just this section, then we will move on. With apologies, (g) 

5 does go into the next the next section, so we'll go to that 

6 next. But for 600.4, if I could just see the committee's 

7 thumbs. Jamie, would you mind I'm not, okay, there we go, 

8 sorry. Didn't mean to rush you. Not seeing any thumbs down, 

9 oh, and Ashley, I didn't see your thumb. I apologize. Okay, 

10 great. Not seeing any thumbs down. Thank you for that. Greg, 

11 I'll turn it back over to you and Vanessa for the next 

12 section.

13 MR. MARTIN: Thank you. And Vanessa is going to queue 

14 up 600.20. And I know how you feel Brady with these numbers, 

15 it starts to I'm starting to see this in my sleep at night.

16 MR. ROBERTS: Why don't we do (g). Because there's 

17 changes in (g) and then we'll just stop at (h).

18 MR. MARTIN: Yeah, we'll just, I'm going to begin 

19 with (g). We'll start with (g) here and a couple of things 

20 with respect to (g). When I say that we appreciated the 

21 suggestion from a negotiator during our first session that the 

22 Department consider charging fees to institutions for 

23 applications, for changes to ownership, so we did take that 

24 back. We are continuing to assess what might be feasible in 

25 this area. So we do want to say that we have heard you there. 

26 What we would ask here is if anybody has the ideas for, you 

27 know, what type of a schedule would be an appropriate fee 

28 schedule applicable for a change in ownership? So, I do want

29 to see if anybody has any comments about that particular 
Committee Meetings - 02/18/22 11

1 suggestion. I think Brad brought that up before. But if 

2 anybody wants to talk to that, I'll open the floor for that.

3 MR. ROBERTS: Any suggestions or comments to the 

4 Department? Brad, yes, please. And Vanessa, would you mind 

5 bringing down the document? Thank you.

6 MR. ADAMS: Yes, we definitely would support some 

7 sort of fee structure if it led to the ability to know a 

8 timeframe to be able to receive a response on a review. I 

9 think that's a good approach and one that we would definitely 

10 support. I have forgotten and I didn't come prepared with what 

11 that structure would look like. I think it was around .15 

12 percent of Title IV aid? But I need to confirm that. But I 

13 think we also proposed it being capped around 50 to 60k. So 

14 let me let me just write that to you.

15 MR. MARTIN: That's great. You can just put that in 

16 writing and give us some if you have any ideas or anybody else 

17 on the committee has ideas about that.

18 MR. ADAMS: Great. That's something, though, that I 

19 appreciate you all looking into.

20 MR. MARTIN: Thank you.

21 MR. ROBERTS: Any additional considerations for the 

22 Department on this? Johnson.

23 MR. TYLER: Yeah, just on the fee. You know, having 

24 tried to understand high finance without an MBA, I have to 

25 think if the agencies are inundated with such applications, 

26 they're going to have to outsource some of this and that may 
Committee Meetings - 02/18/22 12

1 cost quite a bit in terms of hiring consultants and so forth. 

2 So, you know, I just want to say maybe 60 grand is about a 

3 week's worth of work for some of the people, but I don't know.

4 MR. MARTIN: Thanks. I'm not going to talk, I 

5 collecting comments, I can't really respond to it because, I 

6 must be honest with you, I have no idea what would be a 

7 applicable fee structure. So, we're just soliciting any ideas 

8 that you have that we can take back and look at. But thank you 

9 very much.

10 MR. ROBERTS: I appreciate it. Brad, please.

11 MR. ADAMS: I'll just add to Johnson's comment, I 

12 support the Department hiring more people to help them, so 

13 that would be good, that would help in the time when they send 

14 the response and maybe these fees could go to pay for some of 

15 their salaries. I hope they're not making $60,000 for one 

16 review, though. But anyways, hire more people and the 

17 timeframe will improve, I hope. Thank you.

18 MR. MARTIN: Thanks.

19 MR. ROBERTS: Greg, I'm not seeing anything 

20 additional on (g).

21 MR. MARTIN: Okay.

22 MR. ROBERTS: So, I'm just looking back at the 

23 document, it doesn't look like there's anything huge in age. 

24 Do you want to take.

25 MR. MARTIN: No, we'll see, I have a couple more 

26 things in (g) before we get there. So, I just wanted that 
Committee Meetings - 02/18/22 13

1 because that was a direct question. I wanted to get that I 

2 wanted to get out of the way. So, one of the things that to 

3 look at here we have updated, we look at (g)(1) romanette one. 

4 We have updated this suggestion to clarify that institutions 

5 must report any changes in their proposed new ownership 

6 structure at least 90 days prior to the change of ownership. 

7 This will help to ensure the Department has final materials 

8 that will allow us to assess whether institutions will be 

9 prepared to submit and materially complete the application 

10 shortly after the transaction. And here you can see that this 

11 is under (1), if a private, not for profit institution or 

12 private, private for-profit institution or public institution 

13 participating undergoes a change in ownership, the results in 

14 a change of control. The Secretary may continue the 

15 institution's participation in those programs if and there you 

16 have no later than 90 days prior to the change in ownership. 

17 The institution notifies the Secretary of the proposed change 

18 on a fully completed form designated by the Secretary and 

19 supported by state authorization and accrediting agency 

20 documents. So that's reflected there, and I want to draw 

21 people's attention to (g)(2). We made some technical revisions 

22 here. We bumped out this paragraph rather than to make it a 

23 romanette and to update the cross references to the prior 

24 paragraph and change the word approved to continued. Since 

25 this, section refers to a continuation of participation in the 

26 Title IV programs. And we have also renumbered the next 

27 paragraph so there you can see it was a romanette, but has 

28 been changed to (2). So, notwithstanding the submission of 

29 items required in Paragraphs (g)(1) romanette one and two of 

30 this section, the Secretary may determine that participation 
Committee Meetings - 02/18/22 14

1 of the institution should not be continued following the 

2 change in ownership. And if we move over to three, I want to 

3 go to romanette four, no, nothing there. No, I wanted to go to 

4 romanette five. I'm sorry. So, we move down to romanette five, 

5 at a negotiator's suggestion, we have added language 

6 clarifying that the letter of credit may be based not just on 

7 the Title IV volume of the institution, but also other 

8 institutions under common ownership. If an entity in the new 

9 ownership structure has at least 50 percent interest in that 

10 institution. So, let's look at five, if deemed necessary by 

11 the Secretary financial protection and the amount of at least 

12 an additional 10 percent of the institution’s prior year 

13 volume of Title IV aid or a larger amount as determined by the 

14 Secretary. If any entity in the new ownership structure holds 

15 a 50 percent or greater direct or indirect voting or equity 

16 interest in another institution or institutions, the final 

17 protection may also include the prior year volume of Title IV 

18 aid or a larger amount, as determined by the Secretary for all 

19 institutions under such common ownership. So that concludes 

20 everything that is for 600.20 (g). I'll open the floor for 

21 comments.

22 MR. ROBERTS: As I turn it over to committee, I just 

23 want to welcome Carney King who's representing students and 

24 student loan borrowers. Welcome, Carney. Barmak, please.

25 MR. NASSIRIAN: So, in (3), romanette four and five. 

26 I sound like a broken record, but the proper indexation is not 

27 to prior year’s volume, but to the potential liabilities that 

28 the institution may have. And, with regard to five, I don't 

29 quite understand where the magic number of 50 percent came 
Committee Meetings - 02/18/22 15

1 from. I think the concern ought to be with significant 

2 overlapping ownership. It really doesn't need to be 50 percent 

3 if you see there is a significant overlapping ownership then 

4 other entities have to be pulled in, in my opinion. Thank you.

5 MR. ROBERTS: Thank you, Barmak. Brad.

6 MR. ADAMS: Yes, good morning. I just had two 

7 questions here on (g)(1), I guess it was romanette one, but 

8 now it's been struck, which I believe are important for for9 profits, but also due to the increasing number of change of 

10 controls with nonprofits. I really think it covers us both 

11 here. But does this 90-day notice requirement mean that if a 

12 school elected not to pursue preacquisition review, which is 

13 currently optional, is the Title IV, would the Title IV 

14 eligibility be terminated and the change of ownership or 

15 control not considered for approval? Is the first question?

16 MR. MARTIN: I'll refer that one to Donna, it's more 

17 operationally, I'll offer that to her.

18 MS. MANGOLD: 600. let me break it down, Brad, you're 

19 right, changes, preacquisition reviews of changes of ownership 

20 are not required. What we're trying to eliminate by this 

21 traditional provision here in section one is to avoid fire 

22 drills. Because under the HEA and under 600.31, the school 

23 that undergoes a change of ownership loses eligibility unless 

24 it submits a materially complete application. What we're 

25 trying to incur, what we're mandating now, is that we get a 

26 heads up that we know that when they change ownership within 

27 10 days, they can actually meet those requirements. As opposed 

28 to what we're finding now as schools go through it and then 
Committee Meetings - 02/18/22 16

1 they don't have financial statements or they do not usually 

2 it's easy enough to get the accreditation and the state 

3 licensing authorization documentation. It's the financial 

4 statements that are a problem. So, this gives us the heads up 

5 so we can send them a letter saying, this is what you must 

6 submit ten days after, 10 business days. Otherwise, you lose 

7 eligibility and you can't continue. The last romanette, let's 

8 see. Did you move on to two actually number two or were you 

9 just talking about (g)(1)?

10 MR. ADAMS: I was just talking about (g)(1) at this 

11 point. So, I guess the real question, though, that I was 

12 looking for is if the 90-day notice is more on the termination 

13 of the of the Title IV eligibility, is what I was really 

14 looking for.

15 MS. MANGOLD: You must, this would be a prerequisite 

16 to going through your change of ownership.

17 MR. ADAMS: Okay, so a prerequisite so that helps. So 

18 then if this is a prerequisite, this 90-day notice, does it 

19 have to occur before then or any other preacquisition review 

20 application that is filed? Because right now, I believe 

21 schools that are waiting well in excess of 90 days up and six 

22 to 12 months. The department is taking six to 12 months to 

23 process these preacquisition review applications now. So, are 

24 we going to have to wait another 90 days before that process 

25 begins?

26 MS. MANGOLD: No. Just as long as it's, no. It's not 

27 another 90-day period. So, as long as you don't change your 

28 deal, because that's another thing. We do a pre-acq and then 
Committee Meetings - 02/18/22 17

1 they change their deal and maybe different financials are 

2 necessary. So, this doesn't add another 90-day cushion to do 

3 it.

4 MR. ADAMS: So, it's just in addition to if you still 

5 choose that pre- acquisition review is still optional.

6 MS. MANGOLD: Yes, this is protection more for the 

7 institutions that don't want to do a pre-acquisition review. 

8 That they at least give us a 90 days heads up.

9 MR. ADAMS: Okay, I understand now. Thank you, that's 

10 very helpful.

11 MR. ROBERTS: Thank you. I also want to welcome Dr. 

12 Adam Looney to our meeting, but Johnson, you are up next.

13 MR. TYLER: Okay, thank you. So going down to (g)(2), 

14 is it two or three, no (g)(3) romanette five, so this is what 

15 Barmak discussed about the 50 percent provision here of 

16 ownership and the General Accounting Office when they wrote 

17 this report, and it's either in 2020 or 2021 on scrutinizing 

18 changes in ownership of for-profit schools to nonprofit, they 

19 were using 35 percent ownership as a trigger for their 

20 analysis and their findings. So, you know, it might be worth 

21 looking at that report because they were using a lower number, 

22 I think, 50 percent seems pretty high. So, that's one thing, 

23 and then at the risk of really sounding like I've been asleep 

24 at the wheel during earlier parts of this, going back to a 

25 question Brad I had asked earlier on, in (g)(1), it says, 

26 private nonprofit institution and private for-profit 

27 institution, then it has the change of ownership or a public 

28 institution. Ownership is only applying to private for-
Committee Meetings - 02/18/22 18

1 profits, right? The nonprofits aren't owned by people nor the 

2 public. I know that's not language you guys created now. I 

3 just want to make sure I understand this.

4 MS. MANGOLD: If I can jump in, Greg. When you have a 

5 nonprofit, there's always some state entity that is set up. 

6 It's a nonprofit, it's typically a very rare event when this 

7 does not apply. And I can't even think of an event where it 

8 didn't apply. There is a state entity organized as a nonprofit 

9 under state law. What sometimes, they don't, there are human 

10 shareholders, but you can also have in a lot of these 

11 entities, a sole corporate member. For example, there'd be an 

12 entity set up under state law. And then there is another 

13 entity, a foundation, for example. That is the sole corporate 

14 member of that state law entity. If that foundation changes, 

15 we treat that as a change of ownership, resulting in the 

16 change of control because you could have completely different 

17 control at that point. So, yeah, there aren't shareholders, 

18 but there is an ownership change.

19 MR. TYLER: That's very helpful. Thank you.

20 MR. ROBERTS: Thank you. Brad.

21 MR. ADAMS: I just had one other clarification type 

22 question in (g)(3) romanette two, about the accrediting 

23 association. So, it says we added in a recently updated copy. 

24 And so, I'm just really curious on the reason for adding the 

25 words recently updated. And I know it was in the first 

26 session. I just missed it. Does that mean that a school must 

27 ask its accrediting agency or state agency to update a new 

28 document that's outside of its normal processes? Because 
Committee Meetings - 02/18/22 19

1 states and others typically issue licenses annually and do not 

2 issue interim updates. So, I just want to make sure the latest 

3 issued document from the state would be what this is 

4 referencing.

5 MS. MANGOLD: We really want something more updated 

6 because anything can happen. If you lose your license for some 

7 reason, if you lose your accreditation. And so, and we've had 

8 not a real big problem of getting these things, it could be a 

9 screenshot with a date. It could just be an email from the 

10 state authorizing agency. They're still in good standing. We 

11 have not had problems with having this be satisfied.

12 MR. ADAMS: So, an email from the accreditor 

13 satisfies the Department?

14 MS. MANGOLD: Yes. Yep.

15 MR. ADAMS: To go along with, I guess, the official 

16 license that was done?

17 MS. MANGOLD: Yes, because, you know, some of these 

18 are three years longer, so we need to make sure that there 

19 hasn't been a change. And the regulation says as of the day 

20 before, that has been the consistent language in this 

21 regulation. So, we are getting stale documents and this way it 

22 makes it clear we're not taking stale documents. This is not 

23 the approval. That doesn't come until later in (h). This is 

24 just you are accredited. You have state authorization.

25 MR. ADAMS: That made sense. I agree with that, 

26 Donna. I just not sure if the Word documents are correct, but 

27 I'm fine with it so we can move on. But.
Committee Meetings - 02/18/22 20

1 MS. MANGOLD: We've been flexible.

2 MR. ADAMS: Okay, perfect. Thank you.

3 MR. ROBERTS: Alright. Thank you all. Greg, I'm not 

4 seeing any more hands. So, do you want to take a check on the 

5 entirety of 600.20? The one other change. Okay, we can just 

6 do, I only see one other modification in (h), and it looks 

7 just to be numerical.

8 MR. MARTIN: There's nothing new in (h), so we can 

9 just do it on well, so what we discussed was (g) but that's 

10 the entirety of 600.20.

11 MR. ROBERTS: Right, right. Okay. If I could see the 

12 committee's thumbs on 600.20 changes in (g). Thank you, 

13 everyone. I am not seeing any thumbs down. Feel free to 

14 correct me if I misspoke. Good. Thank you for that discussion. 

15 Greg, I'll turn it back over to you for 600.21.

16 MR. MARTIN: Thanks. So, Vanessa's queuing up 600.21. 

17 This is updating application information. And we'll start with 

18 (a)(6) romanette one. Here we have restructured reporting 

19 requirements to further clarify how they connect specifically, 

20 we've deleted paragraph 15 and moved it here into paragraph 

21 (6) romanette one. This says that institutions must report any 

22 change in the ownership of at least five percent, ensuring far 

23 greater transparency. We have bumped the existing elements in 

24 (6) to a new romanette two, which explains which changes in 

25 ownership constitute a change in control. So, the changes 

26 there in that we see in (6) romanette one, changes in 

27 ownership, an eligible institution must report any change in 

28 the ownership of an institution that does not result in a 
Committee Meetings - 02/18/22 21

1 change of control, as described in 600.31 and subject to the 

2 requirements of 600.20 (g) and (h), whereby a natural person 

3 or entity acquires at least five percent ownership interest, 

4 direct or indirect in the institution. And our next change, if 

5 we go down to romanette 2D, here at the negotiators’ 

6 suggestion, we have specified that this includes a director or 

7 other officer along with existing categories. So, this 

8 includes the natural person becomes a general partner, 

9 managing member, chief executive officer or chief financial 

10 officer, director or other officer of the institution of an 

11 entity which has at least a 25 percent ownership or 

12 controlling interest in the institution. Direct or indirect. 

13 And that, those are all the changes for 600.21 (a) and in 

14 fact, that's everything we have in 600.21. So, I'll open the 

15 floor for discussion.

16 MR. ROBERTS: Thank you. Any new consideration or 

17 questions for the Department on 600.21? Jamie?

18 MS. STUDLEY: Very simply, renew the comment that I'm 

19 wondering why five percent was chosen and whether it might go 

20 too far in flooding the Department with notifications that 

21 don't mean very much. Just wondering why that number was 

22 chosen or whether it is really helpful to understand changes 

23 of control. I don't know what the source of the five percent 

24 level was, whether it keys to something where you just wanted 

25 something lower than what you had, which I can understand, but 

26 it seems a big, that it will generate a lot of notifications. 

27 And I wonder how you'll identify the important ones for that.

28 MR. MARTIN: I think it's an awareness thing on our 

29 part to lower to that so that we were made aware of when these 
Committee Meetings - 02/18/22 22

1 occur, and I can ask Donna if there was a why we settled on 

2 five percent, exactly. I'm not 100 percent certain about that 

3 number, but I know that we wanted to make it more all 

4 encompassing.

5 MS. MANGOLD: Seems to be actually sort of an 

6 efficient number for us in terms of the kinds of changes that 

7 we're seeing. And what happens is we have these smaller 

8 changes, you know, in the delta between 25 and 15 that we can 

9 look at a situation a few years later is completely different 

10 than what's in the records. Because what happens, particularly 

11 when they go through a change of ownership, we ask for pretty 

12 complete ownership information. And sometimes we're looking at 

13 structures that there are no relationship to what's in the 

14 records because there have been different changes at lower 

15 level. So, it's just it's really a recordkeeping mechanism and 

16 I don't think from in terms of how I've seen these 

17 transactions, that that would be exceedingly burdensome for 

18 the Department.

19 MR. MARTIN: Thanks, Donna.

20 MR. ROBERTS: Thank you. Not seeing any more hands at 

21 this time. Greg, do we want to take a temperature check on 

22 600.21?

23 MR. MARTIN: Sure.

24 MR. ROBERTS: Alright. Thank you. Committee if I 

25 could see your thumbs. I don't believe I'm seeing any thumbs 

26 down, but again, as always, if I'm misstating, please feel 

27 free to come off of mute and tell me, but no thumbs down on my 
Committee Meetings - 02/18/22 23

1 screen. Thank you. And Greg, I believe, I'll turn it back over 

2 to you, but I think there's one other section with changes.

3 MR. MARTIN: Yes, we're going into 600.31, changes in 

4 ownership resulting in a change in control for private, 

5 nonprofit, private or for-profit and public institutions. So, 

6 you see in section here, we're going down to (b), it's rather 

7 it's a rather lengthy section on definition. So, moving to, 

8 I'm sorry, we want to go to (c). I'm sorry, we're going to go 

9 to (c), standards for, there's nothing in (b) that has 

10 changed, standards for identifying changes in ownership. And 

11 you'll see that we have (c)(1), (c)(2), and then (c)(3), which 

12 is other entities. So, start with, this numbering is kind of 

13 convoluted so just to walk everybody through this. So, we're 

14 in (c)(3) other entities and you can see here that they are 

15 identified by romanettes. So, then you have romanette one and 

16 then in romanette two, you have a series of letters starting 

17 with A, B, C, D, E, and then the first one we're going to 

18 reference here is F. There we go. And I was only able to do 

19 that because there were no I's, J's or L'S involved. So here 

20 we are at F, I'm sorry. I actually meant G, not F. So, in G, 

21 we have in response to questions from negotiators, we have 

22 further clarified this language to explain that we are 

23 interested in the changing of a sole member of an institution, 

24 member owner of an institution, but are not looking to capture 

25 the circumstance of a sole member moving from 100 to 99 

26 percent. So, you can see there in G, notwithstanding its 

27 voting interests, a person becomes the sole member of a 

28 shareholder or limited liability company or other entity, in 

29 which it has 100 percent or equivalent direct or indirect 

30 interest in the institution. The next change, we go down to 
Committee Meetings - 02/18/22 24

1 romanette three, slightly below that, where it says the

2 Secretary deems the following interest to satisfy the 50 

3 percent threshold, as described above. And here in romanette 

4 3A, we have revised the language to capture informal 

5 agreements as proposed by a negotiator during session one. So, 

6 we'll take a look at that and we're now in that again, that's 

7 romanette 3A. The combination of persons, although each with 

8 less than 50 percent voting or controlling interest in an 

9 entity, hold a combined voting interest of at least 50 percent 

10 as a result of proxy agreements, voting agreements or other 

11 agreements. Whether or not the agreement is set forth in a 

12 written document or by operation of state law. And that, I 

13 believe, is everything that we have. So, we can go back and 

14 I'll open up the floor for discussion.

15 MR. ROBERTS: Okay. Thank you, Greg. Committee, 

16 anything new for Department to consider on section 600.31? 

17 Barmak?

18 MR. NASSIRIAN: Sorry. This is with regard to (c)(3), 

19 it's not new language for this round, but it is new language 

20 compared to current regs. I just want to make sure that that 

21 we are we are comfortable with the 50 percent threshold will 

22 not apply to publicly traded entities. That just strikes me as 

23 a very high bar to clear. You know, you can control a publicly 

24 traded entity with far less, even in combination than 50 

25 percent ownership.

26 MR. MARTIN: Well, I'll let Donna address that issue. 

27 She had some thoughts on that last time, about the 50 percent
Committee Meetings - 02/18/22 25

1 MS. MANGOLD: We've got, on a publicly traded, if you 

2 look at romanette two, it's at 25 percent. Okay.

3 MR. ROBERTS: Thank you for clarifying. And, Greg, 

4 not seeing any additional hands, do we want to close out issue 

5 paper five with the temperature check on 600.31?

6 MR. MARTIN: Yes.

7 MR. ROBERTS: Alright. Thank you all. If I could see 

8 your thumbs for one final time on changes of ownership. Not on 

9 the whole document, just this section. Alright, not seeing any 

10 thumbs down. Thank you all for the discussion. Greg, do you 

11 want to jump right into issue number seven, the 90/10 rule?

12 MR. MARTIN: Uh, you know what, let's take about five 

13 minutes.

14 MR. ROBERTS: A five-minute break? Okay. Committee, I 

15 have 10:44 on my phone. If we could come back at 10:49, that 

16 would be great.

17 MR. MARTIN: Thank you.

18 MR. ROBERTS: Thank you all. Alright, welcome back, 

19 everyone. I hope you enjoyed this short break. Greg, I'm going 

20 to immediately turn it over to you to introduce 90/10 and walk 

21 us through the Department's changes for this round of 

22 discussion.

23 MR. MARTIN: Thanks, Brady. So, we'll be queuing up 

24 issue paper seven. And this is Title IV revenue and non25 Federal education assistance funds on 90/10. And the statutory 

26 sites are there for you again, the regulatory site 34, CFR 
Committee Meetings - 02/18/22 26

1 668.28 and we change from Title IV to Federal revenue 

2 reference there. What I want to do in this discussion is 

3 because of the way that 668.28 is structured, we'll, I'm not 

4 going to discuss an entire, we're not going to go over an 

5 entire section before, or paragraph rather, before we discuss. 

6 I think I'll take it in smaller blocks as we go through. So, I 

7 will probably change from what we've been doing over the past 

8 couple of days. So, bear with me there. I just want to give 

9 people the opportunity to comment. Some of this is, it's 

10 pretty complex and I don't want to go too far before we give 

11 people the opportunity to discuss it. So, we're going to start 

12 with 668.28(a)(1) calculating the revenue percentage. And just 

13 an introduction here, the proprietary institution meets the 

14 requirement in 668.14 (b)(16). That's the reference in the 

15 program participation agreement that at least 10 percent of 

16 its revenue is derived from sources other than Federal funds 

17 by using the formula and appendix C of this subpart to 

18 calculate its revenue percentage for the latest complete 

19 fiscal year. And for purposes of this section, we move into 

20 romanette one and we've made some changes here. Our edits in 

21 this section clarify that funds that go to the student 

22 directly should be counted, except for funds expressly 

23 designated for purposes that do not include tuition and fees. 

24 For programs administered by the VA that include housing 

25 benefits, those programs already provide tuition directly to 

26 the institution, which would be counted. We've also added the 

27 clause at the end of the paragraph to clarify expectations on 

28 the publication of the list of programs. So, let's look at 

29 that then in romanette one, for any annual audit submission 

30 for a proprietary institution institutional fiscal year 
Committee Meetings - 02/18/22 27

1 beginning on or after January 1 of 2023. Federal funds used to 

2 calculate the revenue percentage include Title IV HEA program 

3 funds and any other educational assistance funds provided by a 

4 Federal agency directly to an institution or a student, 

5 including the Federal portion of any grant funds provided by 

6 or administered by a non-Ffederal agency, except for non-Title 

7 IV Federal funds provided directly to the student to cover 

8 expenses other than tuition, fees, books and supplies. The 

9 Secretary identifies the Federal agency and other educational 

10 assistance funds provided by that agency and a notice 

11 published in the Federal Register, with updates to that list 

12 published as needed. And I do want to point out before we open 

13 the floor for discussion on this, that we are still working on 

14 preparing an updated Appendix C to reflect our changes here, 

15 but we will have that ready for you prior to the third 

16 session. So, with that, I'll open it up for discussion, Brady.

17 MR. ROBERTS: Okay. Just a few changes at the table 

18 to announce. Jaylon is here on behalf of consumer and civil 

19 rights organizations. Travis is here on behalf of U.S. 

20 military service veterans, and Carney, I believe, is in for 

21 students and student loan borrowers. So welcome to the three 

22 of you. Why don't we just keep it to point number one. Brad, 

23 please, you are up.

24 MR. MARTIN: Before we start, can I add one thing, 

25 Brady? Steve Finley is back as our counselor.

26 MR. ROBERTS: Oh okay, welcome Steve. Oh and Emmanual 

27 is here for private nonprofits. Sorry. All coming together. 

28 Brad, go ahead.
Committee Meetings - 02/18/22 28

1 MR. ADAMS: All good, sir. Alright, so just real 

2 quick, because this is just going to help my point throughout 

3 this issue paper, but when I was at TVA, a federally owned 

4 nine billion dollar utility company, the TVA executives would 

5 always get excited about their utility rates they charged 

6 customers being in the top quartile for lowest rates. My 

7 response would always be why are we celebrating? We should be 

8 number one with the lowest rates because all the competitors 

9 are paying taxes. Now I've flipped into the world where about 

10 10 percent of the students in 10 institutions that pay taxes 

11 and 90 percent attend institutions that do not pay taxes. It 

12 should be an immediate advantage right out of the gate if you 

13 do not have to pay 40 percent of your bottom line in state and 

14 federal taxes. But instead of the nonprofits lowering their 

15 tuition rates and investing in high demand programs, they 

16 support creating a rule that just puts their competitors out 

17 of business. The 90/10 rule has no indication of the quality 

18 of a school and if you want to have an actual impact, then it 

19 must be set up in a way we can administratively follow. I'll 

20 be pointing out various pieces of this rule that will prohibit 

21 schools from being able to actually perform this metric as it 

22 is intended. Also, the points we're discussing today may at 

23 best make up a tenth of a percent of the funding categories at 

24 most proprietary institutions. So, waiting on a book allowance 

25 stipend from the VA is not going to be the reason why a school 

26 fails 90/10. But it will be the reason why a school cannot 

27 ever, ever accurately calculate their 90/10. I'll start with 

28 that and then I can get back in line, but it doesn't look like 

29 there's anybody else in line.

30 MR. ROBERTS: Yes, please continue.
Committee Meetings - 02/18/22 29

1 MR. ADAMS: Alright. So, switch here. So, on the 

2 actual very, let's see here, I'll start with why the very end 

3 of what we, so I'm in one romanette one and we say in the 

4 yellow edition, expenses other than tuition, fees, books and 

5 supplies. I'll let you catch up, Greg, and give me a thumbs up 

6 when you're there.

7 MR. MARTIN: I'm there, I'm looking at it.

8 MR. ADAMS: Why did we put it in the words books and 

9 supplies when right below in three romanette one, we say 

10 tuition, fees and other institutional charges? As you know, 

11 most schools do not include books as part of their tuition and 

12 mandatory charges. Most students today are not buying their 

13 books at campus bookstores. I mean, Amazon is [30 seconds] got 

14 their reason for their start was buying books. So how in the 

15 world can we, as an institution, know what students are paying 

16 for books? If anyone's ever been to a bookstore, there are six 

17 ways you can get a book today. You can rent a digital book, 

18 you can buy a digital book, you can rent a used book, you can 

19 buy a used book, you can rent a new book, you can buy a new 

20 book. Those are all different prices, for a chemistry book for 

21 a student. How in the world do we know what they pay for and 

22 why do we care if it's not on their ledger card?

23 MR. MARTIN: In looking at what we're saying here, 

24 Brad, so what we're clarifying here is that we're actually 

25 allowing for those funds not to be included. So, to go back to 

26 this again, for purposes of this, so back to the STEM. At 

27 least 10 percent of the revenue derived from sources other 

28 than Federal funds. And it's for purposes of this section, you 

29 know, for any annual audit submission, proprietary 
Committee Meetings - 02/18/22 30

1 institutional, for a proprietary institutional fiscal year 

2 beginning on or after January 1, 2023, the Federal funds used 

3 to calculate the revenue percentage will include. So, at 

4 first, we're saying include Title IV HEA funds and any other 

5 educational assistance funds provided by a Federal agency 

6 directly to an institution or student, and including the 

7 Federal portion of funds provided or administered by a Federal 

8 agency. These would be funds to the student, except for the 

9 non Title IV rather Federal funds provided directly to the 

10 student to cover expenses and tuition other than books and 

11 supplies. So here we're, I think this is a beneficial thing in 

12 that we're saying that those funds that are provided to 

13 students that are specifically to cover those expenses other 

14 than other than tuition, fees, books and supplies are not 

15 counted..

16 MR. ROBERTS: Steve, did you want to weigh in?

17 MR. FINLEY: I just want to ask Brad a question for 

18 clarification, if that's okay. Brad, are you concerned that 

19 there might be an allowance paid to a student that would cover 

20 books and supplies? And we're talking about an institution 

21 that was not actually selling books and supplies to the 

22 student.

23 MR. ADAMS: That is the concern that the student's 

24 getting a book allowance through the GI Bill and then spending 

25 that allowance wherever they choose outside of the 

26 institution. I mean, we don't charge students for books. 

27 Students have the options freely to get books wherever they 

28 want to in the country. And frankly, we do a pretty good job 

29 of not requiring students to have to buy a newly published 
Committee Meetings - 02/18/22 31

1 books that every year, like the publics do. We actually make 

2 sure they're buying books that they can afford. So, I'm not 

3 following this piece.

4 MR. FINLEY: Yeah. We would entertain a suggestion to 

5 take a look at that to try to clarify the issue you're 

6 raising.

7 MR. ADAMS: Okay. I'll submit. I think you just need 

8 to change it to institutional charges to only books and 

9 supplies.

10 MR. MARTIN: So, is what you're saying, just to 

11 clarify, Brad, so you're saying this has be instances where 

12 the books and supplies are not institutional charges, correct?

13 MR. ADAMS: Yes. Yes, that's probably the case for 

14 most institutions. I don't know of many that charge them for 

15 it. So, and through their ledger card, I mean it's all off 

16 balance sheet.

17 MR. MARTIN: So, your suggestion would be to change 

18 that institutional reference to institutional charges?

19 MR. ADAMS: Yeah, as it's worded in (3) romanette 

20 one.

21 MR. MARTIN: Okay, I think I understand what you're 

22 saying now,

23 MR. ROBERTS: I want to give Dave just an opportunity 

24 to weigh in.
Committee Meetings - 02/18/22 32

1 MR. MCCLINTOCK: Yeah, I was just going to share 

2 that. I think institutional charges is the standard term for 

3 90/10 right now, and this is a nuance. So, if students pretty 

4 much need to buy their books or a kit or something like that 

5 through the school, it is included as an institutional charge. 

6 And that definition applies both in calculating 90/10 and when 

7 calculating the refund calculation through the R2T4. If 

8 schools have the option that they can go buy those books and 

9 supplies other places, they're not included as institutional 

10 expenses in 90/10 or on the R2T4 calculation. So, I do think 

11 just using that, that's a standard defined term right now. I 

12 think.

13 MR. ROBERTS: Thank you. Steve, I also see your hand 

14 is up if you wanted to respond. Oh, you're muted right now.

15 MR. FINLEY: I was just saying, I apologize, this 

16 isn't directly on point, but can you confirm that we're live 

17 on the public stream again? I've gotten a comment from someone 

18 that says they're seeing that we're still on break.

19 MR. ROBERTS: Oh, shoot! Patrick or Christian, could 

20 you confirm if we are live or not?

21 MALE SPEAKER: We are live.

22 MR. FINLEY: Okay, they may need to reboot. Thank 

23 you.

24 MR. ROBERTS: Not a problem. Carney, please.

25 MR. KING: Yeah, I just wanted to respond to the 

26 books. I use the chapter 31 GI Bill, the book rehab benefits 
Committee Meetings - 02/18/22 33

1 and that goes directly to the school. I had to buy my books 

2 and supplies through the bookstore. And that even included my 

3 parking pass, all that stuff was all paid through a memorandum 

4 from the VA directly through the bookstore and university. So, 

5 I think it's more common than you would expect it to be, that 

6 it goes directly through. Also, most people, sorry, my dog is 

7 right under me, most people that were on the GI Bill that I, 

8 you know, went to school with and before I even used chapter 

9 31, we all went through the bookstore just because it was the 

10 easiest, quickest option. So, I know a lot of the GI Bill 

11 funding is still buying books from the bookstore, so I 

12 recommend keeping that in.

13 MR. MARTIN: I think I want to just point out that, 

14 you know, with reference to both these things that it, there 

15 are differences across, you know, different schools. There are 

16 reasons I don't want to go into it now, but with required 

17 proration of charges by payment period, why a lot of 

18 institutions have, I think, going back to Brad's point have I 

19 think you would find that recently that there's more of a 

20 transition to having those as non-institutional charges than 

21 maybe you saw in the past. But I think it does vary in some 

22 cases, yes, you're right, students are charged for all those 

23 tuition, fees, books and supplies when they sign an enrollment 

24 agreement and it is all those are all institutional charges, 

25 and sometimes they're not. But I think it does vary and we 

26 could look into accounting for both circumstances.

27 MR. ROBERTS: Thank you. Dave, you want to respond.

28 MR. MCCLINTOCK: I just wanted to confirm for Carney 

29 that in that situation, if the school is charging you and 
Committee Meetings - 02/18/22 34

1 you're buying all of the books through the school, it is 

2 captured in 90/10. So, it becomes institutional charges that 

3 are included in 90/10 and then also need to be incorporated 

4 when the R2T4 calculation is done.

5 MR. KING: So, if I was just using chapter 33 

6 benefits where they just give me cash and tell me to buy books 

7 wherever; ould that end up on there or only if I’m paying 

8 directly through the VA?

9 MR. MCCLINTOCK: It would, well, there’s a lot of 

10 nuance to this, so you have to determine what all the 

11 institutional charges are for the entire year, and then 

12 there’s something called the presumptive rule and you start 

13 assigning payments. So, it's you don't match up, okay, here 

14 was a charge and a payment came in and you count that as 

15 either 90 or 10 money. And so, I'm not trying to dodge your 

16 question, but it's not, you can't decide, okay, exactly this 

17 charge happened and then this payment occurred and it gets 

18 assigned to.

19 MR. KING: Yeah, I get it because there's nothing 

20 connecting the student to, you know, just cash transactions at 

21 the bookstore or whatever. But.

22 MR. MCCLINTOCK: Right.

23 MR. KING: Yeah.

24 MR. MCCLINTOCK: Well, it's also, it's not a timing 

25 so that I think rightfully so, you can't post tuition charges 

26 and have money come in that post money that meets the 10 first 

27 and say that's resolving charges and then draw down the Title 
Committee Meetings - 02/18/22 35

1 IV later on to say that [inaudible]. So, there's a priority of 

2 all the charges and all the payments for the entire year. And 

3 so, what gets counted could actually change as you go through 

4 the the12-month period again because you have to look in the 

5 aggregate when it started. That's what makes it tough for any 

6 one transaction, et cetera.

7 MR. ADAMS: May I add one point to Carney's question, 

8 is that okay? I also just want to mention that bookstore 

9 revenue does not count in 90/10. So, if buying whatever you 

10 buy, the bookstore shirts, cups, whatever, that's not in 90/10 

11 either, just clarifying that.

12 MR. ROBERTS: I do see you as also having your hand 

13 up next in the queue, if you wanted to continue offering 

14 material for the subcommittee.

15 MR. ADAMS: Yeah, no worries. Amanda was in front of 

16 me, but she may be good now. So, I had another question, same 

17 added language, where it says provided by or administered by a 

18 nonFederal agency. Just pausing to make sure you catch up. 

19 That this is troubling to me, and I'm assuming this is 

20 directed towards states. And WIA funds. I'm assuming that's 

21 why it's written this way. But if money is coming from the 

22 state, it shouldn't be Federal money, and I understand they 

23 may contribute a portion of it, but let's think about this big 

24 picture. The states get a significant amount of funding every 

25 year for everything from the government. So, at the end of the 

26 day, if it's a state payment and we'll get into another debate 

27 and for on how you how you apply it, maybe apply some portion 

28 to state and some portion of Federal, that's coming up here in 

29 four, which is going to be impossible for us to do. I just 
Committee Meetings - 02/18/22 36

1 have a problem with the language right here that's saying a 

2 non-Federal agency, the definition that Congress passed was

3 it's a Federal fund. And now we're saying money received from 

4 a non-Federal agency counts against you. I'm struggling.

5 MR. MARTIN: What we're saying is including the 

6 Federal portion of any grant funds provided by or administered 

7 by a non-Federal agency. So those would be Federal funds if 

8 that grant includes Federal funds, then it's our position that 

9 they would be included in what the statute requires to be 

10 counted.

11 MR. ADAMS: And you could argue every state grant has 

12 some portion of it, this Federal and I don't understand how in 

13 the world we can do this. But in the point in four and we're 

14 going to get into this debate at four and I'll save it for 

15 that. There is no way we can go, grant by grant, every single 

16 one of these that comes in and say, 90 percent state, 10 

17 percent Federal. This one's 88 percent state, 12 percent 

18 Federal. The next one 75 percent state, 25 percent Federal. 

19 That is going to be impossible. Anyone that's ever been in 

20 financial aid and maybe Sam can speak to this, there is no way 

21 they're going to be able to do that, and it doesn't make sense 

22 to me to do that. And I'm sorry, that's if it's coming from 

23 the state, it should stay on the state side. Thank you.

24 MR. ROBERTS: Thank you, Jaylon. You are up next.

25 MR. HERBIN: Yeah, I think so, the comment that Brad 

26 is making just for clarity, Greg, when it comes from the state 

27 that sort of speaking on like the foster care or say, for 

28 instance, like I know the DMV, they give a tag [ph] to their 
Committee Meetings - 02/18/22 37

1 students to assist with some of these institutional fees. Is

2 that what we're clarifying that that's what you are meaning in 

3 the sense of that is coming from the state as part of the 

4 90/10?

5 MR. MARTIN: What we're essentially getting out here 

6 is there are state grants that include a portion of Federal 

7 money. And if that grant contains, it does have Federal money 

8 in it, then remember we're talking, this is, we're looking at 

9 Federal, you know, it's the Federal, it's Federal revenues. So 

10 that does become as opposed to it used to be just Title IV 

11 revenue, now it's Federal revenue and that is revenue derived 

12 from a Federal source.

13 MR. HERBIN: I agree, I think that the language is 

14 fine. I support the language right there. Thank you.

15 MR. ADAMS: And Greg, can I add one other point to 

16 that exact comment? So, you know, stepping back on this whole 

17 thing, you know, our financial aid compliance audit, a big 

18 component of that audit is the 90/10 calculation. And if 

19 you're off by a penny, it's an actual finding on that audit. 

20 This is going to set up Dave McClintock and the firms of the

21 world an opportunity to just hammer us on, how did you come up 

22 with that pro rata breakdown? And every single state grant now 

23 we're going to have to determine if any portion of that was 

24 Federal? That's what we're trying to do here, this nickel and 

25 diming these schools that already have so much to deal with 

26 from a financial aid compliance perspective. I just, I'm sorry 

27 that is that is a burdensome task that nobody here should be 

28 expected to have to perform. Thank you.
Committee Meetings - 02/18/22 38

1 MR. ROBERTS: Okay. Johnson, your hand is up next.

2 MR. TYLER: Yeah, I can't say I understand how the 

3 states report what portion of the support they're giving is 

4 Federal, but I do see that, I'm familiar with public benefits 

5 for the SSI recipients are told what percentage is being given 

6 by the state and what's coming from the feds. So, I mean, if 

7 people are reporting it and it's calculable that way, I mean, 

8 those things just come on a statement. All of my clients can 

9 see what's coming from the feds, what's coming from New York 

10 state? I think that's not burdensome. If it requires a lot of 

11 other analysis, maybe it is. I just I don't understand enough 

12 about it. If it's on a piece of paper, you should be able to 

13 calculate it.

14 MR. ROBERTS: Thank you, Johnson. Jamie.

15 MS. STUDLEY: I fully support the underlying 

16 objectives of 90/10. I am moved on this one to ask what the 

17 purpose of 90/10 to see whether this particular calculation 

18 issue maybe could be illuminated by thinking about the 

19 underlying purpose of 90/10, which in the simplest old fashion 

20 sense I have, is to make sure that there are other decision 

21 makers choosing to support students in these programs, in 

22 addition to the Federal programs that students can carry with 

23 them. And if the state is making the decision that it has a 

24 separate program where it controls the funding, even if the 

25 feds have contributed toward that stream of funding, I wonder 

26 if it might be appropriate for that for the 10 to include the 

27 money that the state is directing and not require the 

28 accounting that Brad is describing. So, you know, this is one 

29 case in which if we, you know, where burden is necessary, we 
Committee Meetings - 02/18/22 39

1 should require burdensome things if they're needed to get to 

2 the purpose. This may be one where the purpose that we're 

3 looking at really goes to whether the state is making a choice 

4 about the allocation of funds that it controls, whether it 

5 comes out of this year's budget or reserves or the Sunshine 

6 Fund or from a Federal pass through that the state gets to 

7 decide. This may be one place in which those comments are well 

8 taken.

9 MR. MARTIN: Thank you.

10 MR. ROBERTS: Thank you, Jamie. Johnson, I have your 

11 hand is up next.

12 MR. TYLER: You know, I'm not quite sure I get my 

13 head around what Jamie is proposing, but to the extent that 

14 states are voting where good money is going and whether they

15 think with 90/10 design to, you know, that the marketplace is 

16 supposed to be driving decisions on what institutions have/are 

17 of value. I only know one state that will not give state money 

18 to proprietary schools, and that's California. So, the states 

19 are basically, you know, the states that give grants, they're 

20 giving it to every type of institution and it's a grant no 

21 different than a Title IV grant. And so, if Jamie's proposing 

22 just count all the money, I think that's a fair thing to do 

23 because there is no discerning pattern of whether you're going 

24 to get state aid. Your state aid is as long as the school is 

25 accredited and eligible for Title IV money, it doesn't matter 

26 what the institution is. So, it is public money that's funding 

27 you.
Committee Meetings - 02/18/22 40

1 MR. MARTIN: I want to clarify here that, you know, 

2 our interest in this is Federal money so that obviously we 

3 don't count any state, any state money toward that. And I 

4 would welcome any comments if any of you are more familiar 

5 with state grants than perhaps I am, if you know how routinely 

6 those are broken down with states informing publishing which 

7 percentage of their of their grants comes from, what 

8 percentage of their grants comes from a Federal source.

9 MR. ROBERTS: Steve, did you want to, I'll go Steve 

10 and then Dave. But did you want to speak on that or is that it 

11 was at a different point?

12 MR. FINLEY: I was just going to echo what Greg said, 

13 which is our understanding is the Federal portion of a lot of 

14 these state grants is readily ascertainable and does not vary 

15 from student to student.

16 MR. ROBERTS: Then, Dave.

17 MR. MCCLINTOCK: Yeah. I don't know the size of the 

18 Federal portion, I was just going to add, this might have been 

19 15 years ago, I forget, there's a period of time where schools 

20 can utilize state grants as part of the SEOG match required. 

21 And there was a table that outlined how much of the state 

22 grant was a Federal portion, and you could not include that in 

23 it. My recollection is I see Greg and David nodding their 

24 heads that they were pretty small percentages that were 

25 included, I mean, under five percent was my recollection. So, 

26 there is a piece that's Federal, it was not a significant 

27 portion, at least then I don't know if it's changed since that 

28 time.
Committee Meetings - 02/18/22 41

1 MR. ROBERTS: Okay. Brad, I see your hand. I just 

2 want to say that David is coming to the table to ask the 

3 question on behalf of the state agencies. But Brad, take it 

4 away.

5 MR. ADAMS: Yeah, I'll stay on this point because I 

6 know David will have a point on this. But there are many 

7 states that exclude for-profits from grants. And it is not, 

8 Steve, you're making it sound like to me that just because one 

9 grant may be easy to determine that the Federal portion that 

10 should be the case for everything and it's not. You know, at 

11 the end of the day, we're getting all kinds of grants from all 

12 kinds of different places, and we operate in all 50 states. 

13 And for the Department to say it should not be hard to do and 

14 should be able to easily be calculated it's just wrong. Until 

15 you live in a financial aid administrative place, you can't 

16 say that. You know, and I'm sorry this is going to be why 

17 we're not able to finish Title IV. This and, you know, if any 

18 money having to come from VA is why we're not going to be able 

19 to finish Title IV or our 90/10 calculation on time, and I'm 

20 just completely against it.

21 MR. ROBERTS: Thank you. Jaylon, I have your hand up 

22 next.

23 MR. HERBIN: Yeah, I think I really just want to 

24 bring back the point that what we're trying to do here is 

25 prevent the gaming of the institutions from this matter. So, I 

26 think we're trying to say from our standpoint with this is 

27 that we brought this up to prevent any loopholes from 

28 occurring. So, one, yeah, we closed the loophole. But now 

29 there's other loopholes that can possibly reopen. So, with the 
Committee Meetings - 02/18/22 42

1 Department of Education doing this, I actually agree with 

2 this.

3 MR. ROBERTS: I think that there are some funds that 

4 do come from the Federal government that are sent down to this 

5 state and that they can administer it as far as funds from 

6 grants. But when they are doing this, we have to take into 

7 account what percentage of that is being sent over to the 

8 school that the schools are using as dimmable Federal funds. I 

9 think that should be kept in mind here throughout the 

10 conversation. So again, like I said, I want to reiterate that 

11 we do support this because we think that the foster care 

12 program students leaving out of the foster care system are 

13 able to go to institutions where they actually have programs 

14 set up for them to attend when they age out. But we need to 

15 make sure that funds are included in the 10 and not the 90.

16 MR. ROBERTS: Okay, thank you. David, welcome. 

17 Please, go ahead.

18 MR. SOCOLOW: Yeah, I was just going to say that the 

19 document that Dave mentioned in terms of showing that 

20 percentage of state money that's blended in with Federal funds 

21 for grants that states give out, you know, that's created 

22 because the states are required very strictly to do cost 

23 accounting under OMB circular A-87. And so, the state can 

24 easily tell everyone the public exactly what percentage of a 

25 WIOA grant or some, you know, community development block 

26 grant or other funds that the state has. They blend that with 

27 some of their own state money, they can say what percentage 

28 because they have to in order to report to back to the Federal 

29 agency, Labor Department or Health and Human Services or 
Committee Meetings - 02/18/22 43

1 whoever gave them that money. And so, I think that there might 

2 be a way to write this to say to the extent that the state 

3 does the cost accounting. So, you put this on the state, not 

4 the school. I mean, I hear what's being said about financial 

5 aid offices being burdened with having to go forensically find 

6 this out. But the state could very easily tell for the vast 

7 majority of cost accounting under OMB circular A-87 grants, 

8 what percentage was their money and what percentage came from

9 a Federal agency.

10 MR. ROBERTS: Thank you, David. Brad, your hand is up 

11 next.

12 MR. ADAMS: Thank you, David. I don't have any other 

13 comments on that particular piece. But I do see Debbie just 

14 raised your hands, so maybe I'll get behind her if she wants 

15 to speak to the state issue and then I've got one other 

16 comment in romanette I.

17 MR. ROBERTS: Sure. Debbie, welcome back on behalf of 

18 state agencies. Take it away.

19 MS. COCHRANE: Thank you. I just actually really 

20 appreciate David's comment about whether there's a place where 

21 there's a role there for the state to take on some of this 

22 burden, because I do you think that the workability of the 

23 rule is important. And I wondered if the Department has a 

24 sense of what would be on this list now? I mean, are we 

25 talking about a dozen programs or are we talking about one 

26 hundred? I'm just trying to get a sense of what that would 

27 look like.
Committee Meetings - 02/18/22 44

1 MR. MARTIN: As to how many of these there are. I 

2 don't know that we've identified that number. The regulations 

3 meant to be inclusive of them, I think primarily it would be 

4 state grant that we would be concerned with here. But the reg 

5 was written to include any type of assistance funds that would 

6 include a Federal portion. So, I don't know, I can answer 

7 exactly that we have a number for that.

8 MR. ROBERTS: Okay. Brad, take it away.

9 MR. ADAMS: Thank you. My last comment, maybe my 

10 skeptical nature, but you can argue that any state grant, if 

11 they're getting any money from the Federal government could 

12 end up being some percentage Federal. And I'm not talking we 

13 I'm talking like, you know, Tennessee student assistant grants 

14 that come directly from the state budget. But some of the 

15 state budgets funded from the Federal. So again, my skeptical 

16 hat. So, the Federal Register, my next comment here is the 

17 very last sentence of basically Federal Register with updates 

18 to that list as needed. I appreciate the added language, I did 

19 request that. I still struggle, though, if you're in the 

20 middle of your fiscal year and a new Federal fund source gets 

21 added like we'll just call it HEERF funding. It all happened 

22 to us in COVID, we all got HEERF funding. If that came in in 

23 the middle of our fiscal year, then all of a sudden that's 

24 determined to have met this rule. All of those funds that were 

25 dispersed prior to knowing that would then hit your 90/10 and 

26 so you could be on the last day of your fiscal year, you find 

27 out that some fund source all year you didn't think was 

28 Federal, now has been deemed Federal. So, I do think we need 

29 to have a list that's regularly updated. And again, I 
Committee Meetings - 02/18/22 45

1 appreciate the language, but I do think it needs to be 

2 whatever the list is at the start of your fiscal year, that's 

3 the list. And or if you're going to add something in the 

4 middle of fiscal year, it's added before the funds from that 

5 fund source type like a HEERF it's known that those funds are 

6 Federal. So, I mean, we just need to know, I guess is the 

7 point, and I appreciate the language that's added.

8 MR. MARTIN: I'll take that point, Brad, and I think 

9 we do need to look, we can go back and look at what the, you 

10 know, how I think that's a very legitimate question, how it 

11 would implement when this was when the Federal Register was 

12 published, what sources are on there and when the school is 

13 responsible for knowing those, especially if the publication 

14 of that registry falls in the middle of a fiscal year. So, 

15 we'll take that by for discussion.

16 MR. ROBERTS: Okay. Thank you, Marvin, I have your 

17 hand is up next.

18 MR. SMITH: I've never worked at a proprietary 

19 school, and I don't know if there's already a carve out, but I 

20 just point out that a campus-based aid is a Federal aid 

21 program, but 25 percent of the funds come from the 

22 institution. So, is that already being accounted for and 

23 excluded in the 90/10 calculation?

24 MR. ADAMS: That's in. Federal work study money is in 

25 it. It's in the 90.

26 MR. SMITH: This sets up an exclusion, doesn't it, 

27 the way it's worded that 25 percent of the funds come from 

28 non-Federal funds?
Committee Meetings - 02/18/22 46

1 MR. ADAMS: Institutional funds don't count, but Dave 

2 you take it.

3 MR. ROBERTS: Dave, do you want to weigh in?

4 MR. MCCLINTOCK: Right now, the only the Federal 

5 portion of SEOG is included in 90/10. 75 counts 25 does not. 

6 And it doesn't get included either way because it's not if 

7 it's through the institution, it's not outside money.

8 MR. ROBERTS: Okay, thank you. Travis, please.

9 MR. HORR: Yeah, thank you. On the Federal Register 

10 point, I just want to advocate for adding specific agencies 

11 that the Department of Education knows are already big 

12 spenders like Department of Defense and VA. I don't think we 

13 should rely on the Federal Register being updated continuously 

14 or if it's missed or something in the future. I know, I think 

15 you guys said that you're working on that, but I just want to 

16 point that out that we would like specifically added, you 

17 know, those mentioned in there. Thanks.

18 MR. MARTIN: Thank you, I think the intention would 

19 be to publish a Federal Register that would include, say so, 

20 at least initially anyway. Of course, you know, the largest 

21 sources with the VA and DOD, and those would be on there and 

22 there would be published updates as needed. But that, for 

23 instance, the VA and DOD, they would roll forward. So, you 

24 would know that from the very get go. And that would be that 

25 we would publish that early, and it would be hopefully, we 

26 would have one of these out before the regulation took effect 

27 so that would be there. And you know, and if we needed to 

28 update, we'd be adding to that list as we updated.
Committee Meetings - 02/18/22 47

1 MR. HORR: Okay, so it wouldn't, so things won't be 

2 able to be removed in the future or it would just be 

3 continuously added?

4 MR. MARTIN: I can imagine, you know, it may be that 

5 there are sources that would get removed if those sources were 

6 no longer providing this type of assistance. I can't imagine 

7 that the major ones VA, DOD that would ever occur.

8 MR. HORR: Right. Okay, thank you.

9 MR. ROBERTS: Brad, please.

10 MR. ADAMS: Sorry. I'm trying to type in the chat 

11 what my proposed language is, but I just want to say I do 

12 support Travis's comment there that, you know, VA should be 

13 included. I think that's good.

14 MR. ROBERTS: Thank you. Not seeing any new hands. 

15 Greg, I'll turn it back over to you.

16 MR. MARTIN: Ok, yeah, I do want to say that, you 

17 know, we're aware of the point that Brad made earlier about 

18 institutional charges versus books and supplies, so we'll 

19 definitely take that back. And so yes, that's the only thing I 

20 wanted to say. If there are no more comments or discussion we 

21 can move on. We could take a temperature check just for (a)1, 

22 why don't we do that.

23 MR. ROBERTS: Before we do that, Amanda, I do see 

24 your hand is up. Did you want to speak on that?

25 MS. AMANDA MARTINEZ: Sorry, I just have one question 

26 to the Education Department. So, are you saying that never in 
Committee Meetings - 02/18/22 48

1 the calculation of 90/10 books were never included in that 

2 calculation? Because any books, there's no contracts with 

3 institutions with professors and their books are there. Now we 

4 have, there's like an access code online books. Are you saying 

5 that the Education Department is saying that books are never 

6 were never included and they are, are they unaware that 

7 potentially institutions make contracts with professors and 

8 the bookstores so that they do receive a portion of those 

9 funds or access codes provided to students? Is that what 

10 you're saying that you do not see that as institutional, 

11 students providing institutions funds?

12 MR. MARTIN: What we're talking about here is that is 

13 the Federal funds, as the Federal funds to go to pay for 

14 institutional charges. And as was explained from some of the 

15 other negotiators, I think David, and also Brad, that that 

16 books and supplies can be an institutional charge or not. So, 

17 if it's an institutional charge like that it means that would 

18 be a situation where the institution would require these 

19 students to buy to purchase the books from the institution. So 

20 generally, when that happens, there's some type of an 

21 enrollment agreement whereby the institution, the student 

22 signs that and is liable for, owes that certain amount of 

23 money and then that would be revenue to the school. In 

24 situations where it just would be usually always is the case 

25 with your more traditional college university where you just 

26 go purchase the books on your own. You know, you have a 

27 bookstore, but you can purchase them. It doesn't have to do 

28 with whether you're required to purchase the book that's 

29 written by a certain professor. We've all been down that path, 

30 but it has to do with how the books and supplies are charged. 
Committee Meetings - 02/18/22 49

1 Are they part of the of the charges that you pay at your 

2 institution? And in most, what you're familiar with probably 

3 is that you could purchase the books at the bookstore and you 

4 were allowed to charge them to your account at the school. But 

5 that's not the same thing as a school requiring you to do 

6 that. So, this is the difference we're talking about here. And 

7 when Brad raised that point, he was talking about the 

8 situation that is increasingly the case at proprietary schools 

9 as well, where books and supplies are not part of 

10 institutional charges, so they're not lumped in with tuition 

11 fees. I hope that that answers your question. 

12 MS. AMANDA MARTINEZ: Sorry, can I respond to that. 

13 And maybe this is an emerging issue and maybe people aren't 

14 really understanding what's happening. But like, and I 

15 understand in contract probably also hard to administer, try 

16 to catch what books are actually. Yes, maybe in contract to an 

17 institution we did not say as a student. I'm like, we're 

18 forced to buy these books, but technically by proxy, like 

19 nowadays, especially with like online education, you cannot 

20 complete your homework assignments without an electronic 

21 access code, and especially with now it's online. Most 

22 students who have now been going to online school, I assume. I 

23 don't have the data to back this up. I don't really like to 

24 speak about things without data to back it up, but I know from 

25 anecdotes and also from my own personal experience. Yes, I did 

26 not sign a contract with the institution that I would have to 

27 buy that access code. But if I did not buy that access code, I 

28 could not finish my coursework and that was mandated and 

29 required by the course that I signed up with. So yes, maybe 

30 this is this can't be solved today in this specific 
Committee Meetings - 02/18/22 50

1 regulation, but I do want to bring it bring up to demystify 

2 and counter arguments that institutions are not requiring you 

3 to buy books or other things through the bookstores. But there 

4 is this emerging issue, and I would say it's prevalent now 

5 that students are required to finish their courses through 

6 online access codes that they can't get through Amazon or 

7 these other ways. So online, there are online barriers and 

8 there are, I would say, books are now becoming a more, I would 

9 say, like online courses or online books, is a problem, and 

10 students aren't paying it towards other outsourced resources, 

11 it's directly with institution, contracted with. But again, I 

12 get this is a new issue, I just want the Education Department 

13 and people to be aware of this issue, and it's going to be 

14 prevalent and maybe we can't solve it today, but it's going to 

15 be, it's a necessary thing for college affordability, 

16 especially with this as well that needs to be solved, 

17 potentially in the future.

18 MR. MARTIN: Yeah, I think the point is well taken. I 

19 think there are a lot of, you know, certainly with increased 

20 use of these types of codes or whatever. But I want to point 

21 out that and it's important to remember here that this 90/10 

22 rule applies only to proprietary institutions. So, we're not 

23 talking about the general what you might be familiar with 

24 where the college university used to go to the bookstore, now 

25 they have these access codes. I will, which is not say it's 

26 not a problem. I do think that it could be a problem. We do 

27 say that our guidance has been that any institution where the 

28 student does not have a real and reasonable opportunity to 

29 purchase books and supplies from another source that the 

30 charges do become institutional. So do want to point that out. 
Committee Meetings - 02/18/22 51

1 But I think the issue you're pointing out here is a very 

2 important one, but sort of is much, much larger because it 

3 goes beyond what we're addressing here with 90/10. I don't 

4 want to belittle it at all because it certainly is 

5 increasingly an issue for students that, you know, used to be 

6 you could buy the books when you use the used books or 

7 whatever from the use book exchange and maybe save a lot of 

8 money. But where you have to purchase those codes, that 

9 doesn't become possible. So, I take your point. Thank you.

10 MR. ROBERTS: Thank you. Jaylon, is this I just, feel 

11 free to speak, but is on what we're about to take a 

12 temperature check on?

13 MR. HERBIN: Yeah, and it's just sort of what Amanda 

14 had just alluded to and even Johnson's comment here. If you 

15 look at it now and I know Brad will say that this isn't like 

16 Greg just said it's proprietary schools, they have required 

17 courses that you have to take, you have to purchase certain 

18 books and stuff from that actual bookstore, but at traditional 

19 universities, they're also not requiring that and I think what 

20 we need to also take an eye at looking from the Department of 

21 Education can hopefully look into its the requirements when 

22 the account hits the ledger the student accounts after they 

23 refund the money to let's say the student doesn't purchase it 

24 from the bookstore. Is that still going to be considered part 

25 of the 10 or is that considered part of the 90 as well?

26 MR. MARTIN: Well, those are usually funds which are 

27 above and beyond the institutional charges that are given to 

28 students for living expenses and those don't count in the 

29 calculation. Those are not held against institutions. It's 
Committee Meetings - 02/18/22 52

1 only the revenue, it's only tuition if it's only the up to, 

2 I'm sorry, up to institutional charges. Does that, I'm trying 

3 to answer your question there, but yeah. And in the case where 

4 you can see we don't have it here in front of us. But when you 

5 look at the way that it's actually calculated, which appears 

6 in Appendix C, if we had this, it would probably make more 

7 sense. But when you do the actual calculation itself, you look 

8 at Title IV revenue, which is adjusted and you look at 

9 adjusted student in the in the numerator and then you look at 

10 adjusted student Title IV revenue. And so, there are 

11 adjustments to those amounts and the amount of aid above 

12 institutional charges is an adjustment. Also, I know that Mr. 

13 McClintock does have a lot of experience in this, and maybe he 

14 has a more direct way of describing what I just described. So, 

15 I'll ask David if he wants to take a shot at that.

16 MR. MCCLINTOCK: I don't know if it's more direct, 

17 but I could try. So again, part of what we talked about before 

18 was where you don't use the definition books, in this the 

19 qualifier institutional charges get included in 90/10. And at 

20 a school, if you are required to buy the books or kits from 

21 the school, you don't have access to go buy them somewhere 

22 else, then they are defined as an institutional charge and 

23 they are included in the 90/10 calculation. If you're 

24 attending a school where you do have the opportunity, you can 

25 buy it through the school, or you can find other places that 

26 might be cheaper to buy the books, then they're not included 

27 as an institutional charge. The books are not always or never. 

28 It depends.
Committee Meetings - 02/18/22 53

1 MR. HERBIN: And that was my question right there, 

2 Dave, because we all have the professor that, you know, they 

3 get cut a nice check because they wrote the book and they'd 

4 say, hey, I need you to go and it's required that you read 

5 this book as part of the course. So that was my question right 

6 there. But thank you. And then, Greg, do you know when we'll 

7 be able to get the Appendix C out so that we can review it 

8 before then?

9 MR. MARTIN: Yeah. We'll, we will have Appendix C for 

10 you before the next meeting we have in March. And yeah, 

11 Appendix C does help. Appendix C showed you as David 

12 McClintock pointed out earlier that the calculation is done on 

13 a student-by-student basis in the aggregate. So, with the 

14 appendix, you can and I can, you know, if anybody wants to 

15 look at it, it isn't the current regulations now, I believe 

16 someone correct me if I'm wrong, Appendix C to subpart B. You 

17 can pull that up or you can just get that, just Google it to 

18 subpart B of 668, it would show you how, the appendix works. 

19 But yeah, with respect to the books and supplies, the other 

20 thing I want to point out to is that 90/10, the rules are 

21 written, of course with changes that have occurred over the 

22 past number of years, there are a lot of for-profit 

23 institutions that that offer four-year programs or whatever, 

24 so it's not quite as maybe homogeneous as it was at one time. 

25 But the whole tuition, fees, institutional charges, thing with 

26 respect to proprietary education generally went back to the 

27 way it always used to be, was that if the books and supplies 

28 were included and in the past they were more often. I think 

29 that Brad's right to point out that increasingly that's not 

30 the case, but it used to be that they were all included in an
Committee Meetings - 02/18/22 54

1 enrollment agreement the students signed. So, when the 

2 students signed for a certain amount of money it included 

3 tuition, fees, books and supplies. So from the standpoint of 

4 auditing it or calculating it, it was probably a lot simpler 

5 than perhaps it is now. I know that's probably confusing.

6 MR. ROBERTS: Thank you for the exchange. Are we 

7 still okay to take a temperature check just on number one 

8 right now?

9 MR. MARTIN: Yes.

10 MR. ROBERTS: Okay. Could I see the committee's 

11 thumbs? I see one thumb down. If I missed anyone, let me know. 

12 And then Brad anything new that you'd like the Department to 

13 consider on section one.

14 MR. ADAMS: Yeah, I submitted my language in the chat 

15 and just to Jaylon and Amanda's earlier points, I fully 

16 understand your concerns and I also fully support not 

17 requiring students to have to buy books from their own 

18 professors. Thank you.

19 MR. ROBERTS: Thank you. Alright. Greg, are we ready 

20 for section or number two, rather?

21 MR. MARTIN: Yes, we are ready for number two. And I 

22 think we all remember the buying the books from the 

23 professors, I do want us to commiserate on that because I had 

24 a couple that thought their books were the [inaudible] but 

25 certainly were not. Okay, so we're looking here at in number 

26 two, which is disbursement rule, formerly it was cash 

27 accounting. So, an institution must use the cash basis of 
Committee Meetings - 02/18/22 55

1 accounting in calculating its revenue percentage, and the 

2 edits here in this section clarify the language and specify 

3 that we are including Federal funds used to pay tuition and 

4 other institutional charges. So here again, we do reference 

5 institutional charges. And let's look at romanette one. For 

6 each eligible student counting the amount of Federal funds, go 

7 up to the top rather, institutions must use the cash basis of 

8 accounting in calculating its revenue percentage by, for each 

9 eligible student, counting the amount of Federal funds that 

10 were used to pay tuition fees and other institutional charges 

11 the institution received during its fiscal year. And if we go 

12 down to romanette two, the edits in this section clarified the 

13 language and specify that we are including Title IV funds used 

14 to pay tuition, fees, institutional charges again. So down 

15 here we have, for each eligible student, to calculate the 

16 amount of Title IV HEA program funds the institution received 

17 to pay tuition, fees, and other institutional charges during 

18 the fiscal year. However, before the end of its fiscal year, 

19 the institution must request funds under the advance payment 

20 method in 668.162 (b)(2) or the heightened cash monitoring 

21 method in 668.162 (d)(1), that the students are eligible to 

22 receive and make any disbursements to their students by the 

23 end of the fiscal year. And here we have and then below that 

24 in (b), for institutions under reimbursement or heightened 

25 cash monitoring methods in 668.162(c) or (d) must make 

26 disbursements to those students by the end of the fiscal year 

27 and report as Federal funds in the revenue calculations the 

28 funds those students are eligible to receive before requesting 

29 funds. So, we've reordered the sentence to clarify our intent 

30 as we just saw now begins with the reference to reimbursement 
Committee Meetings - 02/18/22 56

1 or rates/payments. And I will stop there for comments, since 

2 that's a pretty significant regulation.

3 MR. ROBERTS: Thank you. Brad, take us away.

4 MR. ADAMS: To start, I'm okay with the changed 

5 language. But I do want to repeat a concern, and I just really 

6 am struggling with romanette (ii)(A) and so we have to request 

7 funds that the student are eligible to receive and make any 

8 disbursements to those students by the end of the fiscal year. 

9 Operationally, let me just describe something that's true at 

10 my institution. We've got about 6,000 students that will start 

11 a semester right before the end of a fiscal year, right? So 

12 fiscal year is 9/30, we may have a start on September 25th. 

13 The students may be eligible to receive those funds on 

14 September 25th, but for me to get 6,500 hundred or 6,000 

15 students paid in five days, just as administratively not 

16 feasible, and it's just not worded in a way that I'm 

17 comfortable with. I mean, for us, our institution, we don't 

18 even truly, we require students to get to a census date, which 

19 is two weeks after the start before there ever gets charged. I 

20 guess before they ever owe any money, I guess would be the 

21 best way to say it. And so, you know, the census [inaudible] 

22 report. So again, I'm just struggling with how in the world 

23 and maybe Sam could better describe it, how in the world we 

24 can comply with A as written? I read it as any student that's 

25 eligible regardless if your quarter starts or your semester 

26 starts in the very last day of your fiscal year has to be 

27 received those funds by the end of the fiscal year. I just 

28 don't see that as possible.
Committee Meetings - 02/18/22 57

1 MR. MARTIN: I mean, going back to what the reason 

2 why we did this again, I think it's relatively apparent why we 

3 did it, because just to remind or to reiterate that that 90/10 

4 is done on the cash basis of accounting, so it is possible for 

5 institutions to and by no means suggesting every institution 

6 does this, but we have seen it where they essentially 

7 circumvent or game the calculation by, since it is cash based, 

8 by delaying a drawdown of funds in one fiscal year and moving 

9 it to another, which can have serious consequences if the 

10 institution failed in the previous year and was looking like 

11 they'll fail again. Then, they could avoid that by simply not 

12 having that money counted as Federal revenue in the fiscal 

13 year, for which it would cause the institution to fail by 

14 bucking it forward into the next year. So, it's a serious 

15 concern we have that we feel a loophole that we feel needs to 

16 be addressed. I do understand your point, Brad, that there 

17 could be situations where your disbursements are occurring or 

18 your start of a new payment period falls directly right at the 

19 right at the time of the end of the fiscal year and where it 

20 might be difficult for the institution to make those 

21 disbursements prior to actually make or draw the cash, right, 

22 actually prior to that point. But I if you want to provide 

23 language that you think would put some parameters around that 

24 or account for those situations, we'd be happy to take a look 

25 at it, but we're pretty resolved with the rule because we feel 

26 it's necessary to prevent a situation where institutions are 

27 avoiding the consequences of 90/10.

28 MR. ADAMS: Greg, I fully respect that comment and 

29 loophole. I proposed initially to strike it all. Maybe I can 

30 work on some language there that helps. My concern is, though, 
Committee Meetings - 02/18/22 58

1 is everyone, and when you start a new term, everyone becomes 

2 eligible on day one and you can't get everyone paid on day 

3 one. It just feasibly it's not possible. Anybody that's ever 

4 worked in G5 tell you it's not an easy process. And so I hear 

5 you. I just think it's set up right now that and I don't know 

6 how an auditor could even audit this, but I read it as on day 

7 one, you have to give everybody that's eligible, which is 

8 everybody an institution funds on day one, and you just can't 

9 do that the way that G5 Federal system works today.

10 MR. MARTIN: I don’t think we’re saying on day one, I 

11 mean, we’re saying, you know, this has to do with going over a 

12 fiscal year. So right when they’re eligible, however, before 

13 the end for each eligible student the amount of Title IV HEA 

14 funds the institution received to pay tuition fees or other 

15 institutional charges during the fiscal year. However, before 

16 the end of the fiscal year, institution must request those 

17 funds, so it has to do with getting those funds requested 

18 before the end of the fiscal year, not issuing a specific day. 

19 Of course, if the fiscal year does fall at a certain point, it 

20 may effectively put you into that situation. I agree there, 

21 but which is why I would say that you have if you have 

22 language you think could assist with that, we'd be happy to 

23 take a look at it. Steve, do you have any comments you want to 

24 make Steve? I didn't know if your hand was up.

25 MR. FINLEY: No, I understand what Brad's describing, 

26 and I would like to see suggestions he had that we could 

27 discuss within the Department.

28 MR. ADAMS: Yeah. Greg, and I'll just throw this out 

29 there, I mean, to me, I mean, the 30 day is already a metric 
Committee Meetings - 02/18/22 59

1 that's used for HCM1 for new students. I don't know, I'll work 

2 on something there, Greg. But just to me, I read when you say 

3 eligible, that to me says first day of the term, and that's 

4 where I'm struggling. So, thank you though for listening.

5 MR. ROBERTS: Dave, did you did you want to weigh in 

6 on this exchange?

7 MR. MCCLINTOCK: Just to share what Brad mentioned 

8 about the audit and he mentioned before that as an auditor, 

9 you're required to report anything as a finding if the 90/10 

10 is incorrect. And so, the way this is set up, it would be 

11 pretty difficult to determine what should have been drawn down 

12 with drop adds and verification. I understand the difficulty 

13 in defining this and I know you're trying to stop, but also 

14 there's just G5 and there's verifications and lots of moving 

15 parts. And so, without a definition, it would be tough to 

16 state whether they were following this and complying with the 

17 any different needs to be disclosed aspect of it.

18 MR. MARTIN: Dave, I'd invite you as well if you have 

19 any have any suggestions for language to submit that to us.

20 MR. ROBERTS: Okay, thank you. Johnson, I have your 

21 hand up next.

22 MR. TYLER: Yeah, just briefly, I mean, I support the 

23 Department to the extent they're trying to stop gaming, 

24 there's a recent report that ITT Tech changing their CIP codes 

25 to avoid gainful employment and that sort of stuff. On the 

26 other hand, I am sympathetic with Brad's position and also 

27 don't want students to incur institutional debt because 

28 there's been disbursements before they could drop a class 
Committee Meetings - 02/18/22 60

1 without any consequence. So, I do think there needs to be some 

2 getting together on this to make sure it's doable. So.

3 MR. ROBERTS: Thank you. Debbie, you're up next with 

4 your comment noted in chat. Thank you for that.

5 MS. COCHRANE: So, with regards to this point, I 

6 think in the last session there was an idea thrown out that 

7 funds could be included in the calculation for a fiscal year 

8 if they were eligible to be disbursed to students, whether or 

9 not they were in fact disbursed. So, it seems like that would 

10 get to the Department's schools, but also solve for the 

11 administrative issues that Brad was mentioning. So. I'm 

12 wondering if that's something the Department considered.

13 MR. MARTIN: Um, yeah, we did. I mean, there's an 

14 issue here of disbursed and I think and actually the funds 

15 requested and part of where we are is because of 90/10 is this 

16 odd duck with the requirement for cash accounting and most 

17 everybody who's unless, you know, if you've had the standard 

18 accounting classes that most people take, you know, one or 

19 two, you really all you've ever dealt with is accrual 

20 accounting. And that's what's hammered into your head, right? 

21 And so, we do require, you know, disbursement, we do have 

22 disbursement rules and that has to do with when an institution 

23 credits a student's account with Title IV funds or their own 

24 funds, when a student has received a disbursement. But with 

25 90/10, it becomes important when the school and this is really 

26 unique to 90/10, it becomes very important when the school 

27 actually drew the money down. Normally, we don't say we don't 

28 care, we want schools to draw money. But there are plenty of 

29 institutions, especially large publics, sometimes will wait 
Committee Meetings - 02/18/22 61

1 for quite some time to draw their funds down for to cover 

2 disbursements. That's it's very common. But it doesn't really 

3 make much difference in that world. Here, here it does, 

4 because it has to do with when they actually do, not just the 

5 disbursement, but when they actually draw the cash, go into 

6 G5. I think Brad referenced G5, the mechanism through which 

7 you actually go and request the funds. So, when they get the 

8 funds, that's when they're counted under cash basis. So, yes, 

9 we did explore that language with if the disbursement was 

10 made, counting it, as or sort of saying that it would be the 

11 same as if it were received. But there are issues there with 

12 respect to cash basis of accounting. So, that's why we did it 

13 the way we did, but we can certainly take that comment back.

14 MS. COCHRANE: Thank you for that. That's very 

15 helpful.

16 MR. ROBERTS: Thank you. Brad, I think you are a 

17 final comment before lunch so take it away.

18 MR. ADAMS: Yeah. Just to add to Debbie's comment, it 

19 is when it's not when we request the funds from G5, it's 

20 actually when we receive the funds into our bank account. But 

21 once we receive the funds, we have three days to issue the 

22 stipend. And in instances, we encourage students to sign up 

23 for ACHs because that's the easiest way to send students their 

24 money. But we're not unfortunately, I don't know if it's 

25 fortunately or not, but students can still get checks. And so 

26 that does take a little time to process. And so that's why 

27 there's a three-day rule there. But for 90/10, if we requested 

28 money on September 28th and received it on September 30th, it 

29 would count for 90/10 purposes for the 90/10 score. But, then 
Committee Meetings - 02/18/22 62

1 we would have still three days from the 30th to actually get 

2 the check or ACH in the student's hand. And that's how it kind 

3 of works. But when we send the money to the student does not 

4 impact 90/10.

5 MR. ROBERTS: Okay, thank you. Greg, but I'm not 

6 seeing any new hands. Do we want to take a temperature check 

7 on two and then start with fresh with the new section after 

8 lunch?

9 MR. MARTIN: Yeah, we can do that, certainly.

10 MR. ROBERTS: Great. Okay. So, thank you all for 

11 that. If I could just see your hands on section two of this. 

12 Ashley, if you wouldn't mind. Thank you so much. I'm seeing 

13 one thumbs down. Brad, anything new for the Department to 

14 consider on section two?

15 MR. ADAMS: We'll work on language with the 

16 Department. I think we both mutually agree on this.

17 MR. ROBERTS: Thank you so much. Alright.

18 MR. MARTIN: Thank you.

19 MR. ROBERTS: Thank you all for your hard work this 

20 section I know this morning session, I know there's a lot. You 

21 have an hour for lunch. We will see you at the top of the 

22 hour. 1:00 p.m. Eastern. Enjoy. Thank you.

23
Committee Meetings - 02/18/22 63

1 Department of Education, Office of Postsecondary 

2 Education

3 Zoom Chat Transcript

4 Institutional and Programmatic Eligibility Committee 

5 Session 2, Day 5, Morning, February 18, 2022

6 From Kevin Wagner to Everyone:

7 Just as a reminder as we open up discussion...if you 

8 are not speaking please put yourself on mute. Thank you

9 From Brad Adams (P - Proprietary Institutions) to 

10 Everyone:

11 +1 to Greg’s comment about allowing fees for an 

12 expediated review timeframe

13 From Brad Adams (P - Proprietary Institutions) to 

14 Everyone:

15 +1 to Jamie's question

16 From Barmak Nassirian (A) Servicemembers & Vets to 

17 Everyone:

18 Travis Horr will sit in for us on 90/10

19 From Carolyn Fast to Everyone:

20 Jaylon Herbin is coming to the table for 90/10

21 From Kelli Perry - (P) Private Non-Profit 

22 Institutions to Everyone:
Committee Meetings - 02/18/22 64

1 Emmanual will be coming to the table for 90/10

2 From Ernest Ezeugo (P) Students & Student Loan 

3 Borrowers to Everyone:

4 Carney King will be coming to the table for Students 

5 and Student Loan Borrowers through the duration of 90/10.

6 From Brad Adams (P - Proprietary Institutions) to 

7 Everyone:

8 I have three to four points on 1 i, so if you want 

9 to stop before 2:00 that might make sense

10 From Brad Adams (P - Proprietary Institutions) to 

11 Everyone:

12 Carney's referencing things that would count for 

13 90/10 if they run through the student's ledger card

14 From Barmak Nassirian (A) Servicemembers & Vets to 

15 Everyone:

16 +1 on Jamie's comment

17 From Brad Adams (P - Proprietary Institutions) to 

18 Everyone:

19 +1 Jamie

20 From Debbie Cochrane (P), State agencies to 

21 Everyone:

22 David Socolow is joining the table to ask a 

23 question.
Committee Meetings - 02/18/22 65

1 From Ernest Ezeugo (P) Students & Student Loan 

2 Borrowers to Everyone:

3 +1 Jaylon

4 From Johnson (P) Legal Aid to Everyone:

5 +1 on Jaylon's comment

6 From Jaylon Herbin (A) Consumer and Civil Rights to 

7 Everyone:

8 +1 David's comment

9 From Johnson (P) Legal Aid to Everyone:

10 +1 to David's comment on state's obligation to 

11 report what % of its grant $ is fed

12 From Debbie Cochrane (P), State agencies to 

13 Everyone:

14 I agree with Brad that institutions need clarity for 

15 this to be workable.

16 From Brad Adams (P - Proprietary Institutions) to 

17 Everyone:

18 Here is my updated proposed language to (a) (1) (i): 

19 For any annual audit submission for a proprietary 

20 institutional fiscal year beginning on or after January 1, 

21 2023, Federal funds used to calculate the revenue percentage 

22 include title IV, HEA program funds and any other educational 

23 assistance funds provided by a Federal agency directly to an

24 institution or a student including the Federal portion of any 
Committee Meetings - 02/18/22 66

1 grant funds, except for non-Title IV Federal funds provided 

2 directly to a student to cover expenses other than tuition, 

3 fees, and other institutional charges.

4 From Carney King (A) Students and Student Loan 

5 Borrowers to Everyone:

6 Agree with Amanda. Professors often contract with 

7 campus bookstores to sell their books — They aren’t available 

8 on Amazon

9 From Laura Rasar King (A) Accrediting Agencies to 

10 Everyone:

11 Amanda is right - this is an emerging issue. DE 

12 needs to keep up.

13 From Brad Adams (P - Proprietary Institutions) to 

14 Everyone:

15 What Amanda is describing would be part of 90/10 if 

16 they were required through the institution. I understand her 

17 concern, but that is an issue outside of 90/10.

18 From Johnson (P) Legal Aid to Everyone:

19 +1 to Amanda. We need to listen to the reality of 

20 students says a person who hasn't been to school in over 30 

21 years

22 From Amanda Martinez (P-Civil Rights) to Everyone:

23 I was also just trying to understand the rule here.
Committee Meetings - 02/18/22 67

1 From Brad Adams (P - Proprietary Institutions) to 

2 Everyone:

3 I fully support Amanda's concern and it is a problem 

4 for all students. Typically for-profit schools do use their 

5 own professors books either.

6 From Amanda Martinez (P-Civil Rights) to Everyone:

7 + Thanks Brad for hearing us!

8 From Debbie Cochrane (P), State agencies to 

9 Everyone:

10 There appears to be a typo in (ii)(A): heightened, 

11 not heighted

12 From Sam Veeder (she/her/hers) to Everyone:

13 After the break, David Peterson will be at the table 

14 representing Financial Aid Administrators.