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UNITED STATES DEPARTMENT OF EDUCATION

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GAINFUL EMPLOYMENT

NEGOTIATED RULEMAKING COMMITTEE 2017-2018

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SESSION 3

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WEDNESDAY,

MARCH 14, 2018

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The Negotiated Rulemaking Committee 

met in the Potomac Center Plaza Auditorium, U.S. 

Department of Education, 550 12th Street, S.W., 

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

Rozmyn Miller, and Javier Ramirez, Facilitators, 

presiding.

PRESENT

RAMONA BUCK, Federal Mediation and Conciliation 

Service, Facilitator

ROZMYN MILLER, Federal Mediation and 

Conciliation Service, Facilitator

JAVIER RAMIREZ, Federal Mediation and 

Conciliation Service, Facilitator

JEFF ARTHUR, Vice President of Regulatory 

Affairs & Chief Information Officer, ECPI 

University

WHITNEY BARKLEY-DENNEY, Senior Policy Counsel, 

Center for Responsible Lending

JESSICA BARRY, President, School of Advertising

Art

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

External Relations and Public Policy, 

Laureate Education, Inc.
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STEPHEN CHEMA, Ritzert & Leyton, PC

JENNIFER DIAMOND, Program Associate, Maryland 

Consumer Rights Coalition

DANIEL ELKINS, Legislative Director, Enlisted 

Association of the National Guard of the 

United States

RYAN FISHER, Intergovernmental Relations 

Division, State of Texas Office of the 

Attorney General

PAMELA FOWLER, Executive Director of Financial 

Aid, University of Michigan - Ann Arbor

CHRISTOPHER GANNON, Vice President, United 

States Student Association

ANDREW HAMMONTREE, Director of Financial Aid and 

Scholarships, Francis Tuttle Technology 

Center

NEAL HELLER, CEO/President, Hollywood Institute 

of Beauty Careers

MARC JEROME, President, Monroe College

C. TODD JONES, President, Association of 

Independent Colleges & Universities in 

Ohio

ROBERTS JONES, President, Education & Workforce 

Policy, LLC

JOHN KAMIN, Assistant Director, The American 

Legion's National Veterans Employment & 

Education Division

KIRSTEN KEEFE, Senior Attorney, Consumer Finance 

and Housing Unit, Empire Justice Center

CHRISTOPHER MADAIO, Assistant Attorney General, 

Office of the Attorney General of Maryland

JORDAN MATSUDAIRA, Nonresident Fellow, Urban 

Institute; Assistant Professor, Cornell 

University

MARK MCKENZIE, Executive Director, Accreditation 

Commission for Acupuncture and Oriental 

Medicine

LAURA METUNE, Vice Chancellor of External 

Affairs, California Community Colleges

ANTHONY MIRANDO, Executive Director, National 

Accrediting Commission of Career Arts and 

Sciences
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MATTHEW MOORE, Director of Financial Aid and 

Scholarships, Sinclair Community College

KELLY MORRISSEY, Director of Financial Aid, 

Mount Wachusett Community College 

CHAD MUNTZ, Director of Institutional Research, 

Office of Administration and Finance, The 

University System of Maryland

JONATHAN K. PIERRE, Vice Chancellor for 

Institutional Accountability and Evening 

Division, Southern University Law Center

TIM POWERS, Director of Student Aid Policy, 

National Association of Independent 

Colleges and Universities

THELMA L. ROSS, Interim Director of Student 

Financial Aid, Prince George's County 

Community College

SANDY SARGE, SARGE Advisors

AHMAD SHAWWAL, Student, University of Virginia

DAVID SILVERMAN, Chief Financial Officer and 

Director of Business Affairs, The American 

Musical and Dramatic Academy

JOHNSON M. TYLER, Senior Attorney, Consumer and 

Foreclosure Units, Brooklyn Legal Services

CHRISTINA WHITFIELD, Associate Vice President, 

State Higher Education Executive Officers 

Association

STAFF PRESENT

STEVEN FINLEY, Office of General Counsel

GREGORY MARTIN, Office of Postsecondary 

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

2 MR. RAMIREZ: All right, we're still 

3 missing a couple of folks but I think that we can 

4 get started and see if there's any remarks at 

5 least from the negotiators that are present, as 

6 well as any public remarks. 

7 So let's get started with the 

8 Department of Education, Negotiator rule making 

9 on gainful employment. And this is Session 3, 

10 Day 3. 

11 Just a quick reminder on any of the 

12 live streaming, that please stop any of the live 

13 streaming during any of the breaks. And same 

14 rules apply for the security or the escort 

15 situation in the building. So please continue to 

16 honor that. I think we haven't really had any 

17 issues with that. 

18 FEMALE PARTICIPANT 1: And then if we 

19 could just take a moment to silence our devices 

20 so that we can concentrate today. Thank you. 

21 MR. RAMIREZ: Okay, so yesterday we --

22 well let me ask the group, is there any -- from 
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1 the negotiators at present, are there any 

2 negotiators that have any comments they'd like to 

3 make? Marc? 

4 MR. JEROME: Just one comment to open 

5 up the session. I gave great thought to 

6 yesterday. And I'd like today's session to think 

7 about two things. The first is that whatever 

8 metrics we end on are metrics that institutions 

9 can have an impact on and take positive action. 

10 And it would follow a little bit more of the 

11 philosophy of the creditors.

12 And to that end, I'm asking us to 

13 truly think about adding to the loan repayment 

14 rate any type of income based repayment plan, 

15 whatever the proper definition of that is. I 

16 think that's something we can talk about. 

17 My second comment is a little broader. 

18 I thought about my colleague, Todd's comments 

19 yesterday, looking at the data. And I'd just 

20 like the group to think about whether the two 

21 metrics we're working on now are actually getting 

22 to the issue of students, you know, suffering 
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1 with student debt and poor performance. 

2 And essentially what I'm concerned 

3 about is that the current rule is going to have 

4 the effect of unintentionally affecting programs 

5 that are very high performing and more elite 

6 institutions in the certain fields that we've 

7 spoken about yesterday. You know, the Arts 

8 fields, teaching fields and it's actually not 

9 capturing at all the programs that are 

10 objectively doing poorly with no one graduating, 

11 very high default rates and things like that. 

12 And so I'm just going to open with 

13 that to keep that in mind as we go through the 

14 negotiation today. 

15 MR. RAMIREZ: All right. Thank you, 

16 Marc. Any other comments from any of the 

17 negotiators? Johnson? 

18 MR. TYLER: I'm not sure how to say 

19 this. I want to address this issue of how we all 

20 got here. We all came here because we have 

21 constituents that we care deeply about. And the 

22 proposed rule concerned the proprietary, the non-
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1 public sector of schools. That's what we came to 

2 talk about, policing that group. 

3 And I know I'm saying controversial 

4 things here but I see clients -- there have been 

5 senate investigations on that sector of industry. 

6 And I guess I'm just really frustrated with how 

7 this negotiation has resulted in it having 

8 essentially no or very limited sanctions 

9 regarding that problem that has existed since at 

10 least 1945. Where Congress has tried to deal 

11 with this over and over again. And I think this 

12 -- I have to say, I think bringing in the other 

13 sectors conflates all these issues in ways that 

14 the statute actually never contemplated. 

15 So I do think we all came here trying 

16 to protect and trying to work. And I think we 

17 really actually in Session 2, we got towards 

18 something more meaningful that we could -- we all 

19 seem to be able to live with. 

20 And the proposals that came out after 

21 that were so different than what we talked about 

22 that I guess -- I don't -- I just want to be able 
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1 to say we have tried to work on this together. I 

2 think everyone's tried to work on this together 

3 and I appreciate Greg and Steve for all the hard 

4 work they've done. 

5 But I really also feel like this is 

6 kind of -- things have been kind of stacked 

7 against us. And I also feel this way about, you 

8 know, even the issue of our idea of trying to 

9 protect the institutions that may have a bad debt 

10 to earnings ratio. And we brought in this idea 

11 of looking at the repayment rates. 

12 And Sarah brought in this sort of very 

13 important thing with respect to statistics as to 

14 what's statistically valid, what may end up 

15 passing scrutiny if this case -- if the end 

16 result would go into the court system, whether it 

17 was arbitrary and capricious. And when you do 

18 the math, it seems to me that metric wouldn't 

19 capture anyone. In other words, everyone would 

20 pass it just based on the math because the way 

21 the numbers line up. 

22 And I feel like why are we discussing 
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1 these two-part things if the Department of 

2 Education knows from a statistical standpoint 

3 that the repayment rate -- metric actually, can't 

4 be used? Or if they're concerned about it being 

5 statistically valid, why isn't there a discussion 

6 where the Department of Education says, hey you 

7 guys all talked about this, but we have to 

8 actually really think about how this is going to 

9 work because it may not work, if that was the 

10 goal. 

11 Because I feel like we're churning 

12 around and if we were to come out and say okay, 

13 we're going to use those whisper boxes, the 

14 second level of review here would be meaningless. 

15 So -- and no one's really providing us that 

16 information to show us that. So I feel -- you 

17 know, I just feel very frustrated by this 

18 process. 

19 MR. RAMIREZ: Okay. So again, this is 

20 an opportunity for just some quick negotiator 

21 comments. Obviously we'll have time to get into 

22 more detail on the actual components of it. So 
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1 we have Jennifer, Daniel, Tony and Sandy. 

2 Jennifer. 

3 JENNIFER PARTICIPANT: I'll keep it 

4 short. So Johnson, I appreciate your comments. 

5 I do want to clarify one thing about why we all 

6 came to the table. So definitely on the bad 

7 actor front, so I totally agree with you on that. 

8 But I will say that having data across the board 

9 of all institutions, frankly will highlight that 

10 -- the issue of bad actors in a brighter light, 

11 A. And B, across the board. 

12 And so I think that, that's really 

13 important and I don't really want to get into a 

14 big conversation about it. But the fact of the 

15 matter is, is that if you look at higher ed, tax 

16 status is becoming something that's very blended. 

17 And you know, we'll see what the future looks 

18 like. And so there's a very strong policy 

19 argument for applying any accountability metric 

20 across the board at this point. 

21 So I just -- so that actually is one 

22 of the reasons I came to the table so is to see 
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1 that we -- if we could come up with an 

2 accountability metric that worked for everybody 

3 as it relates to --

4 And then the other point I want to 

5 make is I think we can all agree that Congress, 

6 when they wrote the statute did not know what the 

7 future today would look like. It was -- I mean 

8 when they talked about and we don't need to 

9 rehash this but we're well beyond what Congress 

10 intended 50 years ago in general. I don't mean 

11 as it relates to this -- I don't mean in terms of 

12 statutory authority. I mean just in terms of 

13 higher ed. And so I think maybe the one place of 

14 consensus that we all have is that the higher ed 

15 act needs some hard core work done to it to bring 

16 it up to where we are.

17 And I think that this effort has the -

18 - you know, there's an opportunity here to bring 

19 the department's regulations, short of having 

20 higher ed reauthorization, there is an 

21 opportunity here to bring the department's 

22 regulations up to a modern place as it relates to 
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1 accountability across the board. 

2 MR. RAMIREZ: Okay, thank you. 

3 Daniel?

4 MR. ELKINS: I want to just offer a 

5 military perspective to everyone around the table 

6 when it comes to constraints of resources and in 

7 the balance between trying to protect everyone 

8 and potentially not protecting anyone. So I 

9 think that people come into the military with an 

10 understanding that, you know, in a situation of

11 dire need, there's only a limited amount of 

12 resources, i.e., you only have so many medic 

13 bags, you only have so many bullets. I think 

14 everybody understands that.

15 An important thing to remember though 

16 is within those situations, you do the best you 

17 can for everyone. You leave no man behind. And 

18 I do think that there are reasonable arguments to 

19 suggest that, you know, potentially we're over20 protecting people or you know, we have a duty or 

21 a fiduciary responsibility to, you know, tax 

22 payers to not overburden the system. But at the 
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1 same time, I think human collateral are more 

2 important than any sort of budget. And I think 

3 that we just need to keep that in mind where 

4 these protections, although they may be a little 

5 bit arduous or burdensome, I think that the goal 

6 is to do the best we can to protect students. 

7 MR. RAMIREZ: Okay, thank you. Mark?

8 MR. MCKENZIE: Thank you. Mark 

9 McKenzie. I stayed up way too late last night 

10 thinking about this and wasn't even sure whether 

11 I was going to talk about this, this morning. But 

12 you know, I started out yesterday, I was pretty 

13 skeptical that we'd, as a group would get to a 

14 consensus on pretty much anything. And so I 

15 spent a lot of time actually going back. I took 

16 the flow chart and reworked it from my 

17 perspective. And in doing that, I actually came 

18 to the realization that I think we're closer than 

19 any of us realize right now to being able to 

20 achieve consensus.

21 And What I want to go back to is just 

22 recall that at the beginning of Session 2, the 
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1 department had taken a position where GE was 

2 gone. That's not coming back. They come up with 

3 a debt to earnings ratio and the automatic loss 

4 of Title 4 sanction was gone with the department 

5 just opting for disclosure. And the regulation 

6 was expanded to include all program across all 

7 sectors. 

8 Because of the work of this committee 

9 -- well, actually before I get that -- actually, 

10 you know, with that point clearly many of the 

11 people in the room were dissatisfied or 

12 disappointed with those changes. And I think, 

13 Johnson, that's exactly what you're pointing to 

14 is we started here and this is a completely 

15 different game now. 

16 And the rules have changes and you 

17 know, there a couple of reasons for that. I 

18 actually think that's influenced by the current 

19 administration. It's influenced by their 

20 philosophy. It was input from the first 

21 listening session that we all participated in. 

22 And it's also, I believe, a recognition that the 
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1 GE regulations were having unattended 

2 consequences. 

3 Yes, they were capturing some "bad 

4 actors" but they were also penalizing 

5 institutions that were not. And that's the 

6 inherent unfairness of the rule and the metric 

7 and the way it was devised. And I actually think 

8 that it was based on the work of the committee in 

9 the second session and the willingness of the 

10 department staff to actually listen and consider 

11 the suggestions. That now coming in this 

12 session, there is still inclusion of 

13 notifications to ensure students have accurate 

14 information and sanctions, which were completely 

15 off the table at the beginning of the second 

16 session are actually back on the table. 

17 The difference is it's not an 

18 automatic sanction. It's a progressive sanction 

19 that is based on a deeper level of review or 

20 additional level of review. And I think that's 

21 important. I think we could all agree that the 

22 department has within it's authority, the ability 
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1 to remove Title 4 access from any institution for 

2 cause. 

3 And what we're trying to do is how do 

4 we identify those institutions that should have 

5 their Title 4 eligibility removed because of the 

6 actions that they're taking that are inherently 

7 against student welfare in this case. So I 

8 actually think that we're pretty close and we can 

9 agree on certain information. 

10 One, I think we all want to provide 

11 accurate information to students, first and 

12 foremost. There's nobody sitting around this 

13 table that is advocating for students to get bad 

14 information or to be treated poorly. 

15 And we've had -- this discussion has 

16 become a part -- almost like a partisan divide 

17 and that might be inherent in being in Washington 

18 D.C. But the reality is everybody here has some 

19 basic tenants and student protection, I think is

20 first and foremost for everybody around the 

21 table. I don't think anybody wants to see 

22 students harmed through this process. And if we 
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1 keep that in our mind going forward, I think we 

2 can get there. 

3 I think also that we've talked about 

4 this as advocates for students is kind of one 

5 side, which inherently positions the rest as 

6 advocates against student interest. And that is 

7 absolutely an unfair characterization. I don't 

8 think it's accurate at all. And I think we need 

9 to get away from that and kind of bring students 

10 back in. That's our primary focus.

11 At the same time, you don't want 

12 unintended consequences of having schools that 

13 end up because they don't meet a metric for which 

14 the metric has not been fully tested, ultimately 

15 being penalized by either a notification -- an 

16 automatic notification without some kind of 

17 ability to have a conversation with the 

18 department. 

19 So I don't want to spend more time now 

20 but I've thought a lot about this and I think we 

21 actually can get closer and potentially to 

22 consensus because we all put students first. 
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1 Thank you. 

2 MR. RAMIREZ: Okay, great. Thank you. 

3 So with that, let's go ahead and open the floor 

4 up for public comment. I understand that we have 

5 at least one. So I'll ask Representative Takano 

6 to come up and make some comments. 

7 FEMALE PARTICIPANT 1: And please be 

8 careful when you're -- and don't trip over the 

9 wire there. 

10 MR. TAKANO: Thank you. Well good 

11 morning. My name is Mark Takano and I have the 

12 privilege of representing Riverside, California 

13 and the surrounding areas that comprise 

14 California's 41st congressional district. I was 

15 a public school teacher for 24 years and a 

16 community college trustee for more than two 

17 decades. And I'm intensely focused on ensuring a 

18 fair and effective higher education system. And 

19 as evidence, this is my third appearance on the 

20 negotiator rule making session to discuss my 

21 concerns with the direction of the department's 

22 policy toward the for-profit education industry.
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1 In my previous appearances, I have 

2 highlighted the mountain of data showing that 

3 for-profit schools are more expensive and less 

4 effective than their public and non-profit 

5 counterparts. I have shared the findings of 

6 Senate committee reports and independent analysis

7 that document patterns of deception and fraud.

8 I have shared stories of student veterans who 

9 were robbed of the GI bill benefits they earned 

10 by predatory for-profit schools. 

11 This morning instead of rehashing 

12 those data points, I want to speak directly to 

13 the for-profit colleges represented in this room. 

14 My comments today are intended for the schools 

15 that feel unfairly smeared by the behavior of a 

16 few bad actors. The schools that claim to follow 

17 the rules and give students the education that 

18 they promise. Because the schools I just 

19 described should be the most forceful champions 

20 for the gainful employment rule. 

21 The entire point of this rule is to 

22 assess each school and each program on its 
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1 individual merits. By setting the minimum 

2 standard for, for-profit schools and non-degree 

3 programs, it provides an opportunity for your 

4 institutions to demonstrate their value to 

5 students. 

6 For several years, I have heard 

7 industry leaders object to broad 

8 characterizations of for-profit education. In 

9 light of these objections, I'm frustrated that 

10 the schools represented here today are not 

11 eagerly embracing a platform to solidify their 

12 credibility and separate themselves from the bad 

13 actors that have fleeced students and tax payers 

14 out of billions of dollars. The reality is that 

15 no for-profit enterprise is entitled to collect 

16 tax payer money and that is particularly true for 

17 an industry with such a checkered history. 

18 The pattern of unethical behavior by 

19 for-profit institutions should put the burden on 

20 them for providing quantitative evidence of 

21 student success, which is exactly what the 

22 gainful employment rule aims to collect. It 
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1 collects data on debt to earning ratios. 

2 I'm also frustrated by objections to 

3 this rule on the basis of ensuring access to 

4 higher education or the idea that the marketplace 

5 can regulate the industry because they 

6 fundamentally misrepresent the government's 

7 priorities and interests. The government's 

8 overriding interest is its responsibility to 

9 protect students and tax payers. 

10 According to numerous studies and the 

11 Department of Education's own inspector general, 

12 the existing gainful employment rule is critical 

13 to satisfying that interest by holding for-profit 

14 schools and non-degree programs accountable. 

15 Your own inspector general report. 

16 I am surely one of the last people 

17 that the for-profit industry would ask for 

18 advice, but I'll offer it anyway. In the long 

19 run, the industry's intense resistence to the 

20 gainful employment and borrows defense rules will 

21 be profoundly damaging to its future. By 

22 shielding the bad actors in the for-profit 
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1 education sector from accountability, you become 

2 responsible for the students and the tax payers 

3 they defraud. 

4 With each new story of a veteran that 

5 is cheated out of the future they earned, with 

6 each new study that suggests students would be 

7 better off not going to any school, rather than 

8 enrolling at a for-profit college, with each 

9 abrupt closure of a for-profit campus, the 

10 industry loses credibility and jeopardizes its 

11 role in higher education. 

12 The gainful employment rule provides a 

13 critical opportunity to align the goals of 

14 students, tax payers, regulators and for-profit 

15 institutions. I sincerely hope the schools 

16 represented here will reconsider their opposition 

17 to this rule and instead use it as a platform to 

18 demonstrate their commitment to serving students 

19 and respecting tax payers. 

20 I once again appreciate the 

21 opportunity to provide input and encourage the 

22 Department of Education to fulfill its 
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1 responsibility and protect the effectiveness and 

2 the integrity of our higher education system. 

3 Thank you very much. 

4 MR. RAMIREZ: Great. Thank you, 

5 representative. Any other public comment? Yes, 

6 I'm not sure I would want to follow that up 

7 either. I'm sorry. Neal, do you --

8 (inaudible) 

9 MR. RAMIREZ: Mr. Representative, the 

10 question is you do have time to listen to a 

11 response.

12 (inaudible)

13 MR. RAMIREZ: Okay, thank you. Okay, 

14 so with that, we have three papers that we still 

15 need to get through. We have Number 6 on 

16 disclosures, Number 8 on certification 

17 requirements, as well as a technical and 

18 conforming changes. 

19 But in where we left yesterday and 

20 what I was hoping to do this morning was to 

21 really find out where are we at, right? As far 

22 as the items that are separating us. And I hear 
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1 -- yesterday during some of the breaks, I'm 

2 floating around. I'm listening to the 

3 conversations that are going on. I'm thinking to 

4 myself, there's solutions here. Right? There's 

5 a possibility that we could find some type of 

6 agreement. 

7 And so that was my hope with this 

8 morning, was to see what can we do to really 

9 unjam this log jam. And one of the ideas that I 

10 had was to see if we could put something up on 

11 the board here that could identify what are those 

12 ticking points and what we could really do to get 

13 there. Ahmad had asked if we could put something 

14 up on the board to help clarify or focus the 

15 discussion. I think that was a really good idea. 

16 So unless there's any major 

17 objections, I'd like to take a little bit of time 

18 and see what type of progress we can make going 

19 through that approach with the understanding that 

20 we do have to get through issues, Papers 6, 8 and 

21 technical and conforming changes. 

22 Sandy, do you have a comment on that?
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1 MS. SARGE: This is Sandy. Yes, 

2 actually I was wondering the same thing. I think 

3 that would be very helpful. I thought Ahmad's 

4 idea yesterday was great. Maybe we could even 

5 just list the issue papers and then in literally 

6 a quarter of a sentence or three words or less, 

7 each person do kind of a quick round table, what 

8 if anything, is your issue in this paper. 

9 So for example if we're on Sanctions, 

10 then the fact that immediate loss is off the 

11 table. The fact that ... ..., you know, 

12 something like that. So then we all are sort of 

13 re-centered back on where the concerns really 

14 lie. 

15 And I have one other, just sort of 

16 general question. The representative brought a 

17 very -- made me think about something and I was 

18 going to ask the department, based on GE 

19 regulations, how many, if any, of the bad actors 

20 that have been taken out of the industry here has 

21 it been because of the GE regulations? Just a 

22 question. 
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1 MALE PARTICIPANT 1: No school has 

2 lost eligibility yet as a result of that. But 

3 that's only because the next rates would have to 

4 come out for that to happen. 

5 MS. SARGE: Okay. 

6 MALE PARTICIPANT 1: So there's not 

7 been a mechanism through which that would occur 

8 yet. 

9 MS. SARGE: Okay. That's what -- I 

10 just wanted to make sure, just because I was a 

11 little bit confused. But then also then the 

12 current existing capabilities that the department 

13 have been effective it sounds like based on what 

14 he was saying because there have been people --

15 so you guys, that's good to remember is that we 

16 have a lot of tools in our tool bag and making 

17 sure that we get to those tools as Mark put on.

18 We want to be able to give you guys 

19 the ability to use the tools that have been 

20 effective to some degree because many of them are 

21 gone, which is great. We want to make sure that 

22 we remember all of us, that this isn't our only 
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1 tool and we want to make sure the department has 

2 the use of all the others. 

3 MR. RAMIREZ: Okay, thank you. Chris? 

4 PARTICIPANT CHRIS: So Sandy, I think 

5 you make a great point there on us knowing what 

6 the effects of the current rule has already 

7 started to have. Right clearly that no programs 

8 were automatically prohibited from Title 4 

9 funding. However, a substantial or a certain 

10 number of programs were certainly closed after 

11 the numbers came out in January. 

12 I made a data request to the 

13 department asking for the number and the name and 

14 types of those programs because I thought it 

15 would be useful information for us to see. I 

16 mean I haven't gotten a response yet, so -- you 

17 know, obviously -- and I would ask the department 

18 to make that data available even after we're 

19 done. I mean, they'll be public comment that 

20 would be made on notice of proposed rule. So, 

21 you know, I think that is really important 

22 information for us as negotiators and also for 
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1 the public. 

2 MR. RAMIREZ: Let me get Jennifer, 

3 then Johnson. 

4 JENNIFER PARTICIPANT: I agree that 

5 would be an interesting data point as long as 

6 people recognize that schools made decisions to 

7 close programs, not necessarily because they were 

8 bad but because of the pressures that, that puts 

9 on students in terms of the go forward and the 

10 lack of clarity. So decisions that were made by 

11 some including Harvard to close their music 

12 program are decisions that were made because they 

13 didn't want to harm the students, not necessarily 

14 because of the lack of quality to the programs. 

15 MR. RAMIREZ: Johnson?

16 JENNIFER PARTICIPANT: It's not the 

17 same thing, Chris. It's not. I mean a Bachelor 

18 in Child Development is, you know, not 

19 necessarily a bad program. It's just that they 

20 don't -- the poor teachers in this country don't 

21 make what they deserve to make. 

22 MR. RAMIREZ: Johnson? 
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1 MR. TYLER: This is anecdotal but the 

2 story we heard yesterday at the closing about 

3 TCI. They failed 17 out of 13. They weren't 

4 planning to close. They closed. That was the 

5 company where two people took six million dollars 

6 from ten million dollars of investment a month 

7 after the institutional investors invested in the 

8 company and then were consequently sued by the 

9 investors. That's where 24 percent of the 

10 student -- only 24 percent of the students were 

11 paying down the debt by a dollar. That's where 

12 only 24 percent of the students complete the 

13 program. 

14 So it did have an effect and in fact, 

15 there's a New York Times article where a reporter 

16 was looking into what is the effect of GE. 

17 Looked at all those schools that were failing --

18 or programs that were failing and found when he 

19 was trying to do the research that a lot of the 

20 programs had closed down and that would probably 

21 include the one at Harvard. But the ones at 

22 Harvard were a tiny percentage of the schools 
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1 that are identified as failing. A tiny one. The 

2 ones in the non-profit sector were a tiny 

3 percentage. I think it was one percent maybe. 

4 So that did have an effect and we are 

5 trying to influence the marketplace. That's what 

6 for-profit education is about. It's like we 

7 should be able to play in the same sphere so I do 

8 think, you know, a metric that informs investors, 

9 informs students is a useful thing for that 

10 reason. 

11 MR. RAMIREZ: Okay, so I did 

12 originally have an idea similar to what Sandy was 

13 talking about as far as trying to go through the 

14 issues and see what are the sticking points. And 

15 so what we did was we tried to capture where, at 

16 least to start it, right? Where we identified 

17 some of the sticking points were and we put those 

18 up on that map up there. 

19 And again, these maps kind of -- they 

20 go in -- when they're in this format, we call it 

21 radiant, they go clockwise, right? So you look 

22 at the top right institution and programmatic and 
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1 then it just goes clockwise from there. 

2 And so that was one issue, right? Are 

3 we talking about is it institutional or 

4 programmatic? We need to make a decision on 

5 that. And then is that through the entire rule 

6 or do we parse it out in different places? I 

7 think that might muddy it up but is it 

8 institution or programmatic wide?

9 Then under the DE, we have the DE 

10 calculations. And one of the ideas that was 

11 thrown out there was the 1:1 ratio idea. And 

12 with that idea, it's clean. It eliminates some 

13 of the other aspects of the rule. 

14 Where the other avenue is the original 

15 DE calculation and if we go that route, then we 

16 also have to look at interest rates, amortization 

17 years and proportion of income to debt. And if 

18 we look in the amortization years, then we have 

19 to decide is it 15 for all programs and ten for 

20 certification and Associate or is it some other 

21 option? And under the portion of income to debt, 

22 is it 0.08 or 0.12 of debt? Where again if the 
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1 other route of the 1:1 ratio eliminates the need 

2 to go into that type of detail. 

3 Under income, the number of years 

4 after completion, is it six years or is it ten 

5 years or some other alternative? The issue paper 

6 before you right now has it that it would be the 

7 top 50 percent. And there was an idea thrown out 

8 there that it would be the meeting of the top 75 

9 percent or another way you would say that would 

10 be that 62.5 percent, right, of those folks. 

11 And then types of debt. Is it just 

12 Title 4? And then there was some discussion of 

13 the need to include private or institution or and 

14 institutional debt. 

15 Repayment, the percentage of repayment 

16 was an outstanding issue. And then if we are 

17 able to -- this essentially is that grey box that 

18 was in that chart, right? And then if we get 

19 some of these issues resolved, then we go into 

20 the corrective actions. Then we start going down 

21 the flow chart, right? Yes, Sandy? 

22 MS. SARGE: So if we go back to the 
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1 chart that you just had up -- your what you call

2 it? 

3 MR. RAMIREZ: My map. 

4 MS. SARGE: Yes, your -- the Javier 

5 map. 

6 MR. RAMIREZ: Yes. 

7 MS. SARGE: So one thing that might be 

8 helpful also is noting on there where there are 

9 current constraints that would make it difficult. 

10 So for example, one of the things that the 

11 department said yesterday is they currently -- in 

12 order for us to minimize the burden of reporting, 

13 they've made certain decisions, right? Or 

14 they've proposed certain things is a better way 

15 to put that. 

16 For one, private and institutional 

17 debt would be something that the school would 

18 have to report because they don't already have 

19 that data. So knowing already got it, already 

20 got it, already got it. So that -- because we 

21 can sit there and everybody can agree that 

22 institutional or private debt is a good thing to 
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1 add in. But then you have to weigh that with the 

2 fact that everybody would have to try to get it. 

3 MR. RAMIREZ: Crystal, could you add 

4 branches off of those two, need institutional 

5 reporting -- private and institutional debt. 

6 Yes. We'll roll it up so it doesn't take up as 

7 much space but we'll go ahead and get that in 

8 there. 

9 FEMALE PARTICIPANT 2: Sorry. You 

10 could even just say data not available right now. 

11 As it stands today, it's not available. Maybe 

12 that would make more sense. 

13 MR. RAMIREZ: So having this up here, 

14 are there things on here that we could agree to? 

15 Or are there alternatives that we could explore 

16 that would get us to an agreement, at least on 

17 these elements here? We can continue to go 

18 through other sticking points but are there areas 

19 of agreement here? 

20 And I want you all to keep in mind, 

21 both what the representative said, as well as 

22 some of your opening comments, that if there is 
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1 no agreement, what's the fallback, right? I 

2 guess the term for that is the best -- what's 

3 your best alternative to an negotiated agreement, 

4 right? 

5 What is really going to happen here if 

6 there is no deal? And I want you to keep that in 

7 mind. Instead of fighting for positions, what 

8 are some options here that we could actually get 

9 to an agreement on? Whitney, you have an idea? 

10 MS. BARKLEY-DENNEY: Yes. I mean I 

11 think that part of our problem with a lot of this 

12 is just not having the numbers to see what the 

13 different changes would look like. And I was 

14 wondering if someone, you know, it would probably 

15 have to be Jordan who can better mathematically 

16 explain the 1:1 ratio and what that would 

17 actually look like if we set a threshold, could 

18 put those numbers up so we can look at them. 

19 And that might be too big of a request 

20 but in the interest of getting the ball rolling 

21 on some real discussion -- It's just hard for me 

22 to see -- to understand the concept and how it 
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1 would work with the threshold if we don't have 

2 actual numbers on the board. 

3 MR. RAMIREZ: Jordan, is that 

4 something that you have? 

5 MR. MATSUDAIRA: (inaudible)

6 MR. RAMIREZ: The mic, the mic. Could 

7 you say that in the mic? 

8 MR. MATSUDAIRA: If you give me a 

9 little bit, I could probably put something 

10 together. 

11 MR. RAMIREZ: Start putting. 

12 MS. BARKLEY-DENNEY: And by actual 

13 numbers, I mean actual made up numbers that 

14 Jordan makes up since we don't have any data. 

15 MR. JEROME: Sorry, it's Marc Jerome. 

16 I actually have the spreadsheet of all the 

17 colleges with the ratio. I haven't analyzed it 

18 but I'm happy to send it to you, Jordan and send 

19 it to the team to circulate. In other words is I 

20 actually have the score card downloaded, earnings 

21 and annual debt, highest to lowest and I just 

22 haven't looked at it. 
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1 MR. RAMIREZ: Yes, but go ahead and 

2 send it out. Jennifer? Could you put the map 

3 back? It's coming up. 

4 JENNIFER PARTICIPANT: Okay, well 

5 actually I think I can speak to it without --

6 MR. RAMIREZ: Go ahead. 

7 JENNIFER PARTICIPANT: So just to 

8 simplify things, I don't remember -- I mean I 

9 know we looked at 10 year earnings but I don't 

10 remember anybody putting that -- I mean that 

11 would make the metric really backward looking, 

12 which I don't think anybody was --

13 (inaudible)

14 JENNIFER PARTICIPANT: I know but for 

15 the purposes of this conversations in terms of 

16 what we're talking about, in terms of the metric, 

17 I don't think --

18 MR. RAMIREZ: We can put a strike 

19 through on that. 

20 JENNIFER PARTICIPANT: Yes, so I don't 

21 think it's ten years and so I just wanted to --

22 and then also, the number of years -- I'm not 
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1 sure what you mean by number of years, three/four

2 and then five/six. I mean, the department's 

3 proposal and correct me if I'm wrong, is that 

4 they're looking at student in the five to six 

5 year cohort with earnings in that sort of fifth, 

6 sixth year, so I would delete the three/four too. 

7 I mean, I think -- I'm not saying we shouldn't 

8 discuss it. I'm not saying for consensus, but I'm 

9 just saying for simplification, the conversation 

10 that's been discussed is 5th, 6th year. 

11 MR. RAMIREZ: Well, let me ask the 

12 group -- the only reason the three/four is up 

13 there because that what --

14 JENNIFER PARTICIPANT: The old. 

15 MR. RAMIREZ: Yes, that's the old one. 

16 So let me ask the group, is five/six the number 

17 of years after completion, is that workable? 

18 Tim? 

19 MR. POWERS: I think I'd just caution 

20 us if we're looking at Bachelor's programs that 

21 there is an intersection point where those with 

22 Bachelor's degrees sort of out pays the earnings 
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1 of those with a lower credential. So I think if 

2 that's continuing to be a part of the 

3 conversation, which we know we're uncomfortable 

4 with but seems to be the direction in which this 

5 conversation is headed, I think we have to be 

6 careful about cutting off the earnings number too 

7 early. Because the Bachelor's degree investment 

8 is one that typically pays off over a longer 

9 timeframe than the shorter certificate program. 

10 It's not a value proposition, it's just a fact. 

11 MR. RAMIREZ: Okay. Jennifer? 

12 JENNIFER PARTICIPANT: So, I mean, 

13 while of course, I -- I mean one thing that I 

14 think I said in Session 1, which does this rule 

15 in itself is counterintuitive to the long-term 

16 investment that higher ed is supposed to bring. 

17 So intuitively I agree with Tim, but I will say 

18 we can't forget about the loan repayment rate. 

19 And so from a debt to earning 

20 standpoint, the problem with ten years earnings 

21 is that you create -- and especially if we're 

22 going to have sanctions, you create an extremely 
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1 backward looking metric, which I think -- and 

2 maybe this is -- I feel strongly that if we're 

3 going to have sanctions and even from a 

4 disclosure standpoint, if you're looking ten 

5 years back, you run into, you know, a real issue 

6 in terms of the sort of accountability piece of 

7 the metric. And so that's why I personally have 

8 landed on five to six years as being sort of --

9 that makes sense. 

10 And then on the repayment, I think, 

11 because we've added in the loan repayment rate, I 

12 think we could have a conversation about, you 

13 know, because we've already established that the 

14 cohorts are not the same. You know, you could 

15 have a conversation on the repayment front about 

16 whether -- and again, ten years might be too long 

17 for the purposes of accountability but could have 

18 a conversation about five versus seven or 

19 something like that. I'm glad the department 

20 didn't land on three for the loan repayment --

21 MR. RAMIREZ: So on repayment -- off 

22 of that arm on the left there, Crystal. Could 
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1 you put years off of the repayment? Not there --

2 year of measure. 

3 JENNIFER PARTICIPANT: You also don't 

4 have any other little -- I don't know what you 

5 call those. I was going to call them whiskers 

6 but that's different. The branches off of 

7 repayment because I do think that there is an 

8 issue about, you know, principle only versus 

9 including what is reality and IDR. So I think 

10 you need to say what is included in the nominator 

11 -- or numerator rather. Whatever.

12 MR. RAMIREZ: Okay. So we just put up 

13 there numerator, right, as far as repayment goes? 

14 All right, let me see. We have Sandy, Johnson, 

15 and then Jordan. 

16 MS. SARGE: This is Sandy. So I think 

17 Jennifer's point's a good one. I know where it 

18 came from. I think yesterday the scorecard 

19 information, I believe, and you know I'm not an 

20 expert but I think it says ten years after you 

21 start a program, whereas GE is six years after 

22 you end a program, which is why Mark was saying 
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1 that it basically gets you close to the same 

2 timeframe. 

3 To Jennifer's point then, I think we 

4 maybe could take a vote on taking ten years after 

5 graduation off of this. Would everybody -- to 

6 Tim's point, yes the longer -- I think going to 

7 the 1:1 ratio, like if you just think about that, 

8 there is going to be differences. I think you 

9 may want 2:1 for a Bachelor's, right? It makes 

10 sense that you'd pay twice as much as one year at 

11 five years out because it is a longer. So there 

12 are things that, you know, we would want to 

13 examine if you will on that side. 

14 But if we just took the ten years 

15 after completion, could we all say that we were 

16 comfortable at five to six? Maybe we get a 

17 temperature check on that. 

18 MR. RAMIREZ: So -- well, let's take a 

19 temperature -- do you want to comment on that 

20 before we take a vote? Go ahead, Johnson. 

21 MR. TYLER: Okay, so we're talking 

22 about -- I think Tim's point is a really 
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1 important one. I mean it's a much bigger 

2 investment. I rode a bicycle after graduating 

3 from college for a while. I didn't make much 

4 money. I think that's not atypical. People are 

5 struggling with this transition from one part of 

6 life to another, the working life. Why not 

7 divide it between certificates of two-year 

8 programs and have a different metric for them? 

9 They're going to school to come out and start 

10 earning money right away. 

11 (simultaneous speaking)

12 MR. RAMIREZ: So Crystal, could you 

13 put a --

14 MR. TYLER: I got Neal going here. 

15 MR. RAMIREZ: So Johnson --

16 MR. TYLER: But that would be my idea. 

17 Why not measure these two groups differently? 

18 And it also goes to I think what Sarah was 

19 suggesting, which was are we really going to be 

20 able to have a whole repayment rate, which is 

21 just all students? Or are you going to have to 

22 divide it up and Jennifer was alluding to that as 
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1 well. 

2 MR. RAMIREZ: So looking at the map up 

3 there, if you were to have -- are you talking 

4 about two year/certification and then everyone 

5 else? 

6 MR. TYLER: (inaudible)

7 FEMALE PARTICIPANT: So two year or 

8 less degrees, Associate and below? 

9 MR. RAMIREZ: Associate and 

10 below/certification. 

11 MR. TYLER: Associates and below, I 

12 guess I would do it. Yes. 

13 MR. RAMIREZ: Different from 

14 undergrad. Okay. Jeff, you had --

15 MR. ARTHUR: Yes, principle -- I don't 

16 have a problem with that concept but it depends 

17 on what period you're going to use for each. The 

18 way the math works, the current three year look 

19 back or look forward look back, is effectively 

20 because of the timing of the cohorts, 19 months 

21 to approximately 40 some months. It's a very 

22 short time period. That's not workable for 
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1 Associate Degrees either. So if it went to four 

2 to five years or five to six for Associate and 

3 six or seven for Bachelor, I would agree with 

4 that. But if we go anything less than five 

5 years, because of the timing, it really isn't 

6 five years. It's such a narrow window that it 

7 doesn't work well at all.

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

9 try to put that up there just so we can see what 

10 it looks like. So Crystal, off of DE, could you 

11 just add two branches? One of them for -- that 

12 one where you're at right there -- one for 

13 Associates and below and then the other one for 

14 Bachelors. 

15 So under Associates and below, I heard 

16 four to five years. 

17 MR. ARTHUR: Five to six. 

18 MR. RAMIREZ: Five to six. And then 

19 Bachelor's was what? 

20 MR. ARTHUR: Six and seven. 

21 MALE PARTICIPANT: I think the 

22 conversation's heading in a good place but I 
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1 still don't know -- and you know, we have to 

2 balance, right? There are tradeoffs between 

3 getting this information out to students, which 

4 we support but also just making sure that we're 

5 providing the necessary context so that we sort 

6 of recognize the differences in the programs, 

7 which is fine. So I still don't think seven is 

8 enough. 

9 I'd be willing to entertain the 

10 thought but, you know, there is just certainly a 

11 time horizon issue. And I think we all can 

12 recognize that. And I don't know what the 

13 solution is. I'm sorry I can't offer a better 

14 one because there are tradeoffs here. But I 

15 still don't think seven years is necessarily 

16 enough. Maybe we can look into some data and 

17 research. I known Georgetown University has some 

18 -- the Center for Educational Workforce has some 

19 stuff, so let me look into that. But I 

20 appreciate Jeff's suggestion because I -- you 

21 know, I like where the conversation is heading.

22 MR. RAMIREZ: Okay, Jeff. 
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1 MR. ARTHUR: And for whatever reason, 

2 I'm sure there is some scientific reason behind 

3 it, maybe Jordan can explain -- he might have 

4 some idea, but the score card started at seven as 

5 the low point when they decided to look at wages. 

6 Now I know that's from the time you started so 

7 maybe when you -- it's what? Yes, seven, eight, 

8 nine, and ten years was the range that the score 

9 card looked at for wage data. 

10 FEMALE PARTICIPANT: Our expert, 

11 Brian, that was here earlier from the department, 

12 might have some insights too. 

13 MR. RAMIREZ: So the map that's up 

14 there, Jeff, how are you proposing that, that 

15 would have to be modified?

16 (inaudible)

17 MR. RAMIREZ: Okay, okay. Johnson, 

18 did you have a comment? 

19 MR. TYLER: I have a question for --

20 that's okay. Do you know how long -- if we took 

21 these timeframes, does this mean we're delaying -

22 - if we ever got to agreement and implementation 
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1 of this for five, six, seven years. 

2 MALE PARTICIPANT: It's poignant you 

3 should ask that question. This is Craig from the 

4 department. Yes, it does delay it because 

5 remember, we're not -- a couple things. As I 

6 said, I think it's important for us to say what 

7 we're not going to do. We're not going to

8 require schools to report retroactively for 

9 previous years or anything like that. We're not 

10 doing that. So we're looking at, at what point 

11 we would have data to calculate the rates 

12 administratively. 

13 So as Cynthia's pointed out, the first 

14 year for which we have programmatic information 

15 is 2014. So the longer you extend that look back 

16 period, the longer it's going to take us to 

17 produce those rates. Now if you go out seven 

18 years, I think we'd be looking at what, 2026? 

19 MR. RAMIREZ: 2025.

20 MALE PARTICIPANT: 2026. So I mean 

21 we're going -- so I mean, I just want everybody 

22 to consider that. So then you're going to have a 
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1 longer lag time there, a hiatus between when 

2 those rates are able to be calculated. 

3 MR. RAMIREZ: Okay. Neal? Let me get 

4 Neal, then Whitney, then Marc.

5 MR. HELLER: Good morning, Neal. I 

6 actually like Johnson. 

7 (off the record comments) 

8 MR. HELLER: I just think that there 

9 is a basically lack of understanding for -- let's 

10 call us what we are, the stepchild of higher 

11 education. You know, and to try to lump in, 

12 again cosmetology and barber and beauty-related 

13 professions with welding or HVAC, et cetera. 

14 It's not the same world. You know, if somebody 

15 graduates and they have their certificate and 

16 they can go and work on air conditioning or 

17 heating, they're going to get a job that's going 

18 to give them an entry level pay. And they're 

19 going to get a paycheck and that's the end of the 

20 story. 

21 So from that perspective, I understand 

22 where you're going. But in our industry, that 
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1 person who comes right out of school has to build 

2 a clientele. So I mean it's a different world. 

3 And it will take, you know, several years to get 

4 to where their level of income is more or less 

5 what it's going to be for the rest of their 

6 professional lives. 

7 So you can't just give short shrift to 

8 well, throw all the certificate programs and the 

9 heck with them. I mean, these people have to 

10 build their clientele and it takes years. And 

11 there's nothing wrong with that. You know, and 

12 also again, they're not getting a paycheck. 

13 But I also want to remind the group 

14 and you know, I've had this conversation before, 

15 gainful employment did not come to be because of 

16 certificate programs. I'm sorry. I mean again, 

17 the average debt somewhere between, you know, 

18 $8,000 and $10,000 and I'm not scoffing at that. 

19 That's a real number. 

20 But it did not cause the damage that 

21 degree granting programs and especially online 

22 degree granting programs created. That's where 
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1 the $80,000, $90,000, $100,000 debt came from 

2 quite frankly for what I would consider to be 

3 damn near worthless degrees. And that's why 

4 gainful employment came to the forefront. So 

5 let's not forget that and please give some little 

6 bit of respect to the world of cosmetology and 

7 beauty. Thanks. 

8 MR. RAMIREZ: Thank you, Neal. Greg?

9 MR. MARTIN: I just want to point out, 

10 you know, and again, the discussion is fine where 

11 we're going with this. It is possible -- I 

12 pointed out earlier that there would be quite a 

13 hiatus with looking at seven years but there's 

14 also the possibility that we could phase that in. 

15 So, you know, in order to generate rates, we 

16 could for the first couple of years, look at 

17 three, four and then go out to the longer period 

18 of time at such point as we have the data to do 

19 that. 

20 MR. RAMIREZ: So Crystal, off of that 

21 -- six or seven years after the Bachelor's, could 

22 you put after that, phase in with a question 
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1 mark? Like another branch off of that. Thank 

2 you. Whitney, then Mark and then Jeff. 

3 MS. BARKLEY-DENNEY: Yes, so I feel 

4 like I'm just winding up and I'm going to say 

5 data at this point. But it would be really nice 

6 if we had some ability to see how salaries 

7 actually increase across work sectors, right? So 

8 that we actually make a decision to say well, 

9 we're looking at five years of welding and it 

10 doesn't actually -- it's around the same time. 

11 You know, they're making around the same money 

12 versus five years of an English degree of five 

13 years of a cosmetology degree. 

14 So just to put back out there, I wish 

15 we had something we could look at, BLS -- yes, I 

16 mean, if we could get that data to see what 

17 actual movement looks like, that would be great. 

18 So one more data request is not going to be 

19 fulfilled. 

20 MR. RAMIREZ: Mark, then Jeff. 

21 MARK PARTICIPANT: So I have a 

22 question. Did I understand, Greg, that the 
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1 department has debts to earnings for all sectors 

2 starting with 2014 graduates? 

3 MR. MARTIN: I didn't say debt -- I 

4 said we have -- 2014 marks the beginning of 

5 reporting to us at a programmatic level. So if 

6 we're going to do administrative calculations, 

7 then that's the earliest year we're going to have 

8 for that. So the further out you -- the further 

9 back you want to walk, then you know, that means, 

10 the longer -- more years have to elapse before 

11 you get -- before the first year begins to 2014. 

12 I guess that's what I'm trying to say. 

13 MARK PARTICIPANT: Okay. So from the 

14 start of this negotiation, you know, I have been 

15 consistent that the current gainful employment 

16 metric of eight percent with the amortization 

17 rates and the 18 months to three years is 

18 unworkable across higher education because it 

19 will result in the closure of so many programs. 

20 I believe the single best and most 

21 helpful thing the department could do -- it would 

22 be to put out three year earnings data for the 
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1 group that you have now. And that will 

2 fundamentally change the entire conversation that 

3 we're having at this table. And so if there's 

4 any way that you could accomplish that, I'm 

5 making my most impassioned request that you do 

6 that in a very nice voice. 

7 MR. RAMIREZ: And also send it via 

8 email to Scott. 

9 MARK PARTICIPANT: I'm not saying --

10 pardon me. I understand it may not be part of 

11 the negotiation but essentially during the first 

12 GE way back, it was very helpful when the 

13 department put out informational repayment rates 

14 and now I'm understanding you actually have data 

15 for '14, which we could then get earnings three 

16 years out, which is just so you know, the tail 

17 end of the current GE rule. 

18 The current GE rule is 18 months to 

19 three years, so it would be on the more generous 

20 side. And it would let us know how the current 

21 metric works to all the advocates who believe the 

22 current GE rule should be applied, you know, to 
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1 our sector. It's a great rule. Let's just go 

2 with it. But, I mean -- so any comment on that? 

3 MR. MARTIN: This is Greg again. Greg 

4 for the record. So if I take you carefully, you 

5 want -- you would like to see social security 

6 earnings data for -- going three years back to 

7 2014, for us to do that?

8 MARK PARTICIPANT: A little more 

9 specifically, I would actually like you to run 

10 whether it's your proposal now or the current GE 

11 metric with that data because it will absolutely 

12 inform the conversation for the independents, the 

13 public, all the policy makers and now that I'm 

14 understanding what you have, there's a path for 

15 you to get the information out that will lead to 

16 good policy. 

17 MALE PARTICIPANT: Yes, you know, I 

18 want to -- I'll just take that back and talk to 

19 Cynthia first and see how feasible that is. 

20 MR. RAMIREZ: And Mark, I want to try 

21 to understand though, you had said that, that 

22 wouldn't necessarily impact what we're doing 
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1 right now? 

2 MARK PARTICIPANT: What they are doing 

3 right now. You know, what the department's 

4 doing. Because essentially you have the dynamic 

5 of -- you have two competing dynamics. We have 

6 institutions that already failed GE, which are 99 

7 percent of the proprietary sector are perceived 

8 to be so poor that they're deserving of closure. 

9 I'm of the firm belief that data shows 

10 that if that metric was applied across sectors, 

11 it impacts thousands of programs. And it's too

12 broad and it would make policy people rethink the 

13 metric because it would affect too many programs 

14 that are universally considered, you know, 

15 respectable and good. But if the department, now 

16 I understand that they have the data, if they run 

17 that informational rate before they take comments 

18 on a proposed metric, because this whole process 

19 runs past us.

20 MR. MARTIN: Greg for the record 

21 again. So I want to state one thing that --

22 remember that we have to look at cohorts of 
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1 completers. So just because we have data for 

2 2014, that's our first year for data but that 

3 doesn't necessarily mean we're going to have, you 

4 know -- when we look at completers, you know? 

5 And that's how you calculate this all. 

6 MALE PARTICIPANT: So are you -- just

7 so I'm clear, are you saying that you could not 

8 isolate your completers from your --

9 (simultaneous speaking)

10 MR. MARTIN: We may be able to do 

11 that. I'm not going to make that promise here 

12 now. I will take it back and discuss it with the 

13 people who --

14 MALE PARTICIPANT: But this is really 

15 the essence of what we're all about. And if you 

16 have that data, any set of completers of cross 

17 sectors that you can get debt and earnings in any 

18 form, three years, five years, however you do it, 

19 it is going to be the single, most beneficial 

20 thing you can do for -- forget about us -- for the 

21 department to get good policy on the matter.

22 MR. RAMIREZ: All right, let me go to 
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1 Jeff and then Johnson. Jeff?

2 MR. ARTHUR: I was going to make the 

3 comments that Greg made. But I also wanted to add 

4 that what I suggest that we do is when we do the 

5 five, six -- if that's what we do, five or six 

6 year rates for Associate degree, that why not 

7 publish an informational interim rate for Bachelor 

8 degrees so we can at least get a first look at 

9 that. Get some idea of where it is. And the 

10 official rates would be at the -- let's say 

11 seventh year. 

12 MR. RAMIREZ: Versus a phase-in for 

13 Bachelor's?

14 MR. ARTHUR: The official rate would 

15 be a phase-in but if we're going to do the 

16 calculations, let's go ahead and do the Bachelor 

17 calculation at the fifth and sixth year. And it 

18 kind of falls in line with what Mark is saying. 

19 Let's get the data whenever we can. So --

20 MR. RAMIREZ: Then off of Bachelor's, 

21 six and seven years, we need another arm right 

22 below phase-in to say informational data at five 
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1 to six years. 

2 MR. ARTHUR: Yes, and you can still 

3 publish it at the program level on the scorecard 

4 is the data at that timeframe. It just wouldn't 

5 be covered under this rule as far as any 

6 particular sanctions, notifications, things like 

7 that. So it would be informational at that point. 

8 MR. RAMIREZ: And Crystal could you 

9 put that below phase-in? Thank you. Okay, 

10 Johnson. 

11 MR. TYLER: Greg, I just have a 

12 question or maybe Steve. So does the Department 

13 of Education already have for example, what a 

14 History degree is worth at CACE University from 

15 2014 going forward? I'm just trying to understand 

16 what data you actually have. 

17 MR. MARTIN: Well I would say no, we 

18 don't. We cannot make any characterizations as to 

19 what a History degree from CACE University is 

20 worth. I would say we have data. We have data 

21 reported at the programmatic level, starting with 

22 2014. 
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1 MR. TYLER: Okay. 

2 MR. MARTIN: But we don't have any --

3 so all I'm talking about here is when we talk 

4 about administratively calculation DE rates, you 

5 know, what's the point at which we can -- the 

6 first year where we have data to do that and 

7 that's 2014. No other characterizations about 

8 programs. 

9 MR. TYLER: Okay, I guess I didn't ask 

10 that question that well. My question is do you 

11 have to actually --

12 (inaudible)

13 MR. MARTIN: Yes, there's no 

14 completers list that's been generated. 

15 MR. TYLER: Okay. 

16 MR. MARTIN: No earnings information -

17 -

18 MR. TYLER: Okay. 

19 MR. MARTIN: That's what -- maybe 

20 Steve --

21 MR. TYLER: Right. 

22 MR. MARTIN: -- can try to clarify 
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1 that's what you're actually asking. No, we don't 

2 have any of that. 

3 MR. TYLER: So you would have to in 

4 essence get a completer's list, verify it with an 

5 institution, then go to social security and get 

6 the completers. 

7 MR. MARTIN: Yes, you have to have 

8 completers. When you -- you have to have a cohort 

9 far enough out to look back the four of five 

10 years, do the completer's list. Get -- you know, 

11 do the earnings match. And then that would be --

12 in order to produce -- I wouldn't categorize it as 

13 showing what it's worth --

14 MR. TYLER: Yes. 

15 MR. MARTIN: -- in order to produce 

16 rates --

17 MR. TYLER: Right. 

18 MR. MARTIN: -- we would need to do 

19 that, yes. 

20 MR. TYLER: Okay, so just -- so to 

21 make sure I understand. So you have all the raw 

22 data but you have to make multiple steps to then 
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1 translate it into a debt to earnings for a 

2 particular program in a public school?

3 MR. MARTIN: Yes. 

4 MR. TYLER: A public institution. 

5 MR. MARTIN: You know, what I'm going 

6 to -- I'm going to let Cynthia jump in here 

7 because she can probably give a little more detail 

8 than I can. 

9 MS. HAMMOND: So -- Cynthia Hammond. 

10 Okay, so we started collecting program level data 

11 for all enrollment reporting for all institutions, 

12 all types of programs in the '14, '15 award year. 

13 I will tell you guys right now, it's not great 

14 data. Not all schools did it. But we at least 

15 have some data for that. And it gets better year 

16 by year as more and more schools report program 

17 level enrollment. 

18 So if we were to do a debt to earnings 

19 rate using that 2014, '15 award year data. Let's 

20 say we used it even though it's not complete. The 

21 five and six year out earnings year for that would 

22 be 2019. And because it's a calendar year 
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1 earnings, it wouldn't actually be available from 

2 social security until a year and one month after 

3 the end of the calendar year. So that makes it 

4 February of 2021. Now currently -- for 2019, it 

5 would be 2021. 

6 So for three year, -- well 2019 -- so 

7 if we use that one year of '14, '15 data, it 

8 really -- it's not complete but it's at least 

9 something, that would compare to the 2017 award 

10 year. And if we did three or four years as we're 

11 doing now, then it wouldn't be available for us 

12 until February of 2019. 

13 MR. JEROME: Is there any way -- this 

14 is Marc Jerome, I'm sorry. It's Marc Jerome. Is 

15 there any way for you -- because you know this 

16 better than anyone, just to find a piece of 

17 representative data that will inform the debate, 

18 especially where there's been no data before, 

19 whether you do -- especially with three years 

20 earnings or even a little less? Just so we can 

21 see -- so that the department can get a sense of 

22 the data and the public can get a sense of it. 
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1 MS. HAMMOND: I will talk to my data 

2 guys but I can tell you, they're not very 

3 comfortable with that one year's worth of data as 

4 being representative because it was the first year 

5 schools reported it. 

6 But to finish answering Johnson's 

7 questions, so the way the process works is schools 

8 report enrollment in this case or GE in the past, 

9 every year. They report it. We look back the 

10 three or four -- in the current case of five or 

11 six if we go that way. So we look back, pick the 

12 two year cohort period and go the number of years 

13 forward in order to get the earnings year. 

14 And once we have that two year cohort 

15 period, we exclude students based on our 

16 exclusions, you know, death, disability, in-school 

17 or military. And with those exclusions, we send 

18 schools a completers list. This is their one and 

19 only chance to tell us that we got something 

20 wrong. Because once we send the data to Social 

21 Security, that's it. We can't change it after 

22 that. 
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1 So then Social Security gives us the 

2 mean or medians back and we match it with our 

3 attributed loan debt for that program and do a 

4 draft debt to earnings rates. Again, schools get 

5 a chance to challenge that and then we'll produce 

6 final rates. 

7 Currently we have told schools that 

8 they need to get all corrections in by the end of 

9 this month so that we can do the completers list 

10 in the early spring. And we actually just put out 

11 an electronic announcement on that today, or maybe 

12 it's going out tomorrow. But we have said that in 

13 our web (inaudible) reporting and correcting data. 

14

15 So that's kind of where we are in the 

16 process, both now and what we can reasonably be 

17 expected to do. So I'm not sure we're going to be 

18 able to get any data before we do a final but we 

19 certainly have our data guys looking into that. 

20 MR. JEROME: Just one last thing in 

21 clarity. So in 2014, if there was a senior who 

22 got a grant and they were graduating from college, 
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1 then you would be asking now -- you would be 

2 trying to match -- once you got the completers 

3 list approved, you would then be going to Social 

4 Security and getting that person's earnings now?

5 MS. HAMMOND: Yes. 

6 MR. JEROME: Okay. 

7 MS. HAMMOND: So if we had -- yes, if 

8 we had a -- well, right now we're not doing 2014, 

9 '15 though. Right now we're looking at the 2011, 

10 2012, and 2012-2013 earnings year. But we're 

11 talking about what we're going to be doing going 

12 forward. 2014 is the earliest time we have 

13 enrollment reporting by programs would be all 

14 schools, all programs. 

15 MR. JEROME: Okay. 

16 MS. HAMMOND: So yes, if a -- if 

17 someone reported a senior as graduating in 2014-

18 '15, you know, after July of 2014, then we would 

19 take that individual, barring he wasn't in school 

20 during the earnings year, we would create a 

21 completers list, send that individual to Social 

22 Security Administration. 
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1 MR. JEROME: Okay, thank you. 

2 MR. RAMIREZ: All right, so I have 

3 Chad, David, Jennifer and Jeff. Chad? 

4 MR. MUNTZ: All right, Chad. So I 

5 don't see our little wheel up there anymore but I 

6 have a suggestion. 

7 MR. RAMIREZ: Please. 

8 MR. MUNTZ: I don't know what you guys 

9 think. Can we -- we might have to do this 

10 multiple rounds. So I'm proposing a process here. 

11 I don't know if we can get this printed. One for 

12 each of -- all the representatives and we can 

13 highlight or circle the path that we want to go. 

14 You guys can tabulate it and then find out how 

15 many votes we have in each area or what areas we 

16 have to discuss so we can kind of focus that 

17 discussion. 

18 MR. RAMIREZ: Let me see if we can do 

19 it even a little quicker, okay? And what I mean 

20 by that is that -- look, there's a number of 

21 pieces on here, right? So we're looking at the 

22 duration of Associates and below and Bachelor's. 
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1 And I think there's been some good discussion 

2 there, especially with the possibility that we're 

3 going a little bit longer on the Bachelor's, you 

4 know, with the phase-in. 

5 And then, I understand that if we're 

6 going to talk about the ratio piece, that we may 

7 have to see some additional numbers on that. And 

8 I know that I could see some smoke coming out of 

9 Jordan's computer and ears. So I know he's 

10 working on that right now.

11 And then -- so let's see -- let's do a 

12 temperature check on the Associates and below and 

13 Bachelor's, right? So Associates and below, five 

14 to six years. Let's do a temperature check on 

15 that. Let me see where folks are at on that. 

16 MS. BARKLEY-DENNEY: Can you say it 

17 again? 

18 MR. RAMIREZ: Just the Associates, 

19 we'll go to the Bachelor's of six and seven. But 

20 Associates and below, five/six years. Yes, 

21 Associates being treated differently than 

22 Bachelor's. So I'll go to the Bachelor's next but 
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1 --

2 MS. BARKLEY-DENNEY: Okay, treated 

3 differently or specifically the five year --

4 Treated differently or specifically the ratios 

5 that are on --

6 (inaudible) 

7 MR. RAMIREZ: What's the difference 

8 there? 

9 MS. BARKLEY-DENNEY: So I might agree 

10 that there's some room to talk about treating them

11 differently but not agree with the years that are 

12 up on the board. 

13 MR. RAMIREZ: Okay. All right, so I 

14 did see some thumbs down. So let me go through 

15 and see the thumbs down. David? 

16 MR. SILVERMAN: Yes, I was going to 

17 talk about this. So I was going to say my like 

18 for Johnson's now in the past tense so I liked 

19 Johnson. Just kidding. 

20 So what I was going to say before this 

21 came out, I was like please don't treat two-year 

22 programs differently than four-year programs. So 
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1 everything I've spoken about since Session 1, I'm 

2 in a not-for-profit organization. If the 

3 representative stuck around, I would have told him 

4 and he's not too far from my Hollywood campus so 

5 we might be in touch from L.A. and, you know, we 

6 have a pretty robust L.A. campus as well. So I'm 

7 sorry he left in a huff. 

8 You know, Performing Arts, I'm not 

9 going to get back into it again. But we need the 

10 years to build -- our kids need the years to build 

11 a career. It's not going to happen Day one. It's 

12 not going to happen Day two but it does happen. 

13 We have many success stories. I'm not going to 

14 mention the Jason Derulo's of the world again and 

15 all the success they have. 

16 So please if you can -- I mean, 

17 yesterday I just said -- Yesterday, I said two18 year programs are -- these are fields that aren't 

19 going to be making big money to, you know, to --

20 the certificate programs, these guys -- people are 

21 claiming manicures. People are claiming 

22 Performing Arts and Visual Arts. These aren't big 
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1 paying fields to start with. 

2 So these people are going out and 

3 trying to better themselves. Trying to get a job. 

4 Trying to earn a living. Trying to have gainful 

5 employment. Please don't treat the two years 

6 different. I'm still going to be -- Yesterday, I 

7 asked for the fifteen year amortization. Please 

8 keep it the same number of years. Thank you. 

9 MR. RAMIREZ: Thank you. Whitney, 

10 would you mind telling me what you were thinking 

11 as far as maybe treating them different, but not 

12 necessarily the years?

13 MS. BARKLEY-DENNEY: Yes. I mean I 

14 haven't really formulated, you know, how I think 

15 they should be treated differently yet. But I 

16 think there is an argument to be made that 

17 Bachelor's degrees and possibly some other degrees 

18 take a little bit longer to, you know, actually 

19 meet the salary expectations of the degree. 

20 Whereas something like a Welding degree, you know, 

21 you're probably going to make as a welder, pretty 

22 much the same thing in the couple of years after 
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1 graduation. 

2 So that's sort of my uncomfortableness 

3 with it. And I'm also uncomfortable with -- you 

4 know, we're already talking about extending out 

5 the amortization period. So then we're also 

6 extending out the look back period and you know, 

7 it's just -- Again, I'll just reiterate, it's hard 

8 to vote on this piece meal even to give a 

9 temperature check without knowing, you know, what 

10 the final thing is going to look like because 

11 these are all components of a rule that come 

12 together. And they matter in the way that they 

13 interact. 

14 MR. RAMIREZ: So Chad, is that why you 

15 were thinking that if they had the map, they could 

16 identify the package that may look suitable? 

17 MR. MUNTZ: Yes, (inaudible). And you 

18 know, I don't know where all these bright lines 

19 are but it's hard to follow because we jump around 

20 so much. That's why I was suggesting it. 

21 MR. RAMIREZ: Okay, so if we were to 

22 do something like that, are there other elements 
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1 that need to be up here for consideration? And 

2 I'll ask Crystal if -- Crystal, could you isolate 

3 just the DE for now? You can go to view and --

4 yes, more to the right. There you go and then 

5 local centering. And then double click on that. 

6 And can you expand the pluses so we could see the 

7 different components on there? 

8 Okay. All right, so this is more or 

9 less what we up there right now for the DE piece. 

10 And this is where most of the discussion is 

11 happening right now. So are there other elements 

12 up there that we would need to add before we were 

13 to do something along the lines of Chad's 

14 suggestion there of bringing out and have folks 

15 look at that? 

16 So is a combination of what's up there 

17 a deal? So not hearing any other ideas, what that 

18 tells me is there is a deal up here. We just need 

19 to find the right combination. 

20 FEMALE PARTICIPANT: Oh, Javier. 

21 MR. RAMIREZ: Someone has to be the 

22 optimist in here, right? All right. And to that 
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1 point though, I think before we print it out 

2 though, because Whitney, you had mentioned as far 

3 as then what we look at, we have to look at the 

4 amortization years and things like that. But 

5 again, if I understand correctly, that goes away 

6 if we're exploring the possibility of a ratio. 

7 MS. BARKLEY-DENNEY: Right. So that 

8 kind of highlights what I'm saying is that we need 

9 to understand what the full package would be like 

10 before we wed ourselves to one piece that, you 

11 know, maybe I'm okay with it if I like everything 

12 else and this is one thing I'm willing to give up. 

13 Not saying I am, but that could be, you know, a 

14 perspective that somebody has.

15 MR. RAMIREZ: Okay, Chad? Yes. 

16 MR. MUNTZ: Just to be clear, we don't 

17 know what any of this looks like because there's 

18 no data. So whatever path we go, we don't really 

19 know. 

20 MR. RAMIREZ: The path that we were 

21 exploring originally, as well as the other ratio. 

22 MR. MUNTZ: No. What I'm saying is 
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1 we're opting in two huge segments that we don't 

2 even know what that impact is. 

3 MR. RAMIREZ: Okay. So we have 

4 Jennifer and then Kirsten. 

5 JENNIFER PARTICIPANT: Well on that 

6 very last point, that's why starting, I think 

7 yesterday or earlier this week, I suggested that, 

8 you know, whatever we do, that there could be a 

9 phase. That's where the phase end piece comes 

10 into play where you get that data. You provide 

11 the department in the regulation some discretion 

12 to pick the -- whatever, you know, we pick the 

13 median, mean, average, whatever and that's what 

14 they go with on the sanctions piece down the road. 

15

16 So I just would say that I feel like 

17 we need to be careful on the data conversation not 

18 to get like that, that becomes the thing that 

19 keeps us from the conversation. Because I think 

20 there's a way to resolve for that, you know, in 

21 terms of how the sanctions piece gets written. 

22 But the question I did have for the 
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1 department on the data point on earnings, so I'm 

2 going a little bit back on earnings, is so for I 

3 know, get the department difficulties on the 

4 department actual data. But of course, when we 

5 started this many, many moons ago, the department 

6 relied on BLS data and it would not be hard and we 

7 can do it. I can have our folks do it if the 

8 department can't do it today. 

9 But if we were to pick, not every 

10 single profession but perhaps like a lot of the 

11 professions we've been talking about over the 

12 course of these few months as a sample, we could 

13 easily at least get the BLS data. I mean that's 

14 easy to get. And you know, again pick a bunch of 

15 professions. Have it in a chart. Here's what it 

16 looks like, three, five, seven -- and I get that 

17 BLS is not perfect but to me, that's a 

18 straightforward request and for whatever reason 

19 the department can't satisfy it, I'm guessing that 

20 either I or somebody else could satisfy that 

21 request. 

22 MR. RAMIREZ: All right, I have --
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1 JENNIFER PARTICIPANT: Well can the 

2 department respond to the request? 

3 MR. RAMIREZ: I'm sorry, go ahead. 

4 JENNIFER PARTICIPANT: Sorry. 

5 MALE PARTICIPANT: I will inquire. 

6 I'm not going to obligate any of the people who do 

7 the requests up here by saying yes, we definitely 

8 will. But Scott has that and we'll ask. 

9 JENNIFER PARTICIPANT: Okay. And then 

10 if we could get that answered quickly, that way 

11 one of us could get it if you can't. 

12 And the request would be for BLS data 

13 and you could do it, because I think the BLS has 

14 it, in different year segments. So you could look 

15 at three years out, five years out, seven, 

16 whatever the BLS -- they break it out, I can't 

17 remember exactly in what years but they do short18 term and longitudinal on earnings and you could 

19 pick -- I'm leaving it to the department, although 

20 I'm happy to create the list of different 

21 professions, you know, starting with Arts and 

22 Music and some of those -- Graphic Design and then 
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1 go up sort of into different categories like 

2 Business, Teaching, Education. And so if you 

3 did a sampling along the lines of the various 

4 different professions, so it's a good spread of 

5 professions, we would at least have the BLS data 

6 to work from in both three year, five -- like I 

7 said, you know, whatever the segments are that the 

8 BLS gives. 

9 MR. RAMIREZ: Okay. I have Kirsten, 

10 then Tony. 

11 MS. KEEFE: This is Kirsten. So this 

12 suggestion is sort of along the lines of what you 

13 were saying, Jennifer. But without the data, I 

14 think people feel really uncomfortable agreeing to 

15 anything without hard data. So in asking these 

16 questions, would it be helpful to put a caveat 

17 that a five to six year timeframe should apply if 

18 the data shows that somebody just coming out of 

19 school is making substantially the same or 

20 nominally the same income as somebody in that 

21 profession, ten years out? 

22 So then it doesn't require data to be 
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1 given between today and tomorrow but folks can 

2 come to consensus conceptionally on the ideas, you 

3 know, and what you would want the data to look 

4 like. 

5 MR. RAMIREZ: Okay. Yes, so remind me 

6 of that when I'm taking the next temperature 

7 check. Okay. Tony. 

8 MR. MIRANDO: Thank you. This is 

9 Tony. So I know that I'm going to be repeating 

10 what others have said this morning. But I just 

11 feel like I have to get it off my chest. 

12 So lots of people are sitting around 

13 the table being -- that are very, very frustrated 

14 including myself. Like many in the room, if not 

15 all of us, we're trying to get rid of the bad 

16 actors. I get it. And I think we ought to work 

17 really hard at doing that.

18 But when I look up at this chart, it 

19 appears to me that we're trying to fit everybody 

20 into one group here. You know, one size fits all 

21 kind of a situation. And that's when I become 

22 uncomfortable. Because when you try to do that, 
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1 you're missing things because you can't force 

2 everything into one metric unless the metric is so 

3 amazing, which I still have not heard. And I've 

4 been saying that since Day 1. If it's a flawed 

5 metric, you've got to get rid of it because it's 

6 not getting to the problem, which is to get rid of 

7 the bad actors. 

8 This just doesn't seem to be a way to 

9 get there. But I'm here. I'm open. I'm trying 

10 to understand. 

11 One of the things that would make me 

12 feel a bit more comfortable and I'm saying just a 

13 bit, is that if you're going to require me to 

14 wear sneakers when I want to wear dress shoes or 

15 you want me to live in a yellow house when I 

16 really want a blue house, that I have an

17 opportunity -- or there should be an opportunity 

18 for people to have a review before anything is 

19 done. So some kind of a mechanism so that the 

20 non-individuals and non-institutions that are 

21 being unfairly grouped together have an 

22 opportunity to claim hey, this doesn't fit me. 
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1 And I think if we could at least get 

2 that piece off the table -- or get it on the table 

3 in this instance, I think those of us who kind of 

4 try to play the middle ground here or look at 

5 institutions in a way that's pretty objective, I

6 think I would get to a win faster. Because all I 

7 keep seeing when I look up here -- yes, but what 

8 if? Okay, but what if? And there is no mechanism 

9 here for what if before something happens and then 

10 it's like you're being accused unfairly of 

11 something before you have an opportunity to say 

12 yes, but that's not me. 

13 And that's my biggest concern. So if 

14 we could somehow and I think my colleague this 

15 morning, alluded to it, and so I want to 

16 reemphasize that again because it was the problem 

17 I had yesterday in the last session and the 

18 session before, which is we've got to have some 

19 mechanism to handle that. 

20 MR. RAMIREZ: Tony, we haven't gotten 

21 to the corrective actions yet and I think that 

22 what you're talking about would be an element 
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1 within that. And so we have corrective action up 

2 there. We'll put review period under corrective 

3 action, okay? And that's more of the flow there. 

4 But I've gotten a couple of requests for breaks. 

5 Okay, so let's go ahead and let's take a full 15-

6 minute break. And we'll see if we can print out 

7 what we have so far. 

8 (Whereupon, the above-entitled matter 

9 went off the record at 10:49 am and resumed at 

10 undisclosed time.) 

11 MR. RAMIREZ: Okay. I know that that 

12 was quite a bit longer than 15 minutes, but the 

13 groups were actually pulling together some 

14 information that I think was worth the extended 

15 break so that way you all could have some data, 

16 right, some information to help with your 

17 decisions.

18 And I want to start off with Tim 

19 Powers who was able to pull together a chart that 

20 shows the income over a period of time. And we 

21 put the chart -- it was passed out. The chart's 

22 up on the screen as well. And I'm going to ask 
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1 Tim if he could tell us what we're looking at and 

2 what it really means.

3 MR. POWERS: Sure. So, thanks very 

4 much. You know, it's just sort of in the -- yeah, 

5 this is Tim Powers, for the record.

6 Just sort of living in the environment 

7 in which we're living in which data is difficult, 

8 I think, for the department to pull here, I had 

9 mentioned earlier that this -- that there was some 

10 information from Georgetown Center on Education 

11 and Workforce on lifetime earnings, you know, 

12 based relative on major and all this sort of 

13 information pulled from the Census Bureau.

14 But in particular there is -- the 

15 chart that was passed around sort of shows 

16 year-over-year, and I'll recognize in a moment 

17 some of the issues with the chart, but I just want 

18 to speak a little bit about what we're looking at 

19 here.

20 So, first and foremost, I think the 

21 biggest flaw when you're looking at the chart in 

22 front of you is that it breaks it down by age 
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1 rather than by year after completing. 

2 That is a major flaw because we know 

3 that there -- you know, non-traditional students

4 are enrolling and graduating at different times in 

5 their lives and traditional students are a 

6 shrinking percentage of college. So, recognizing 

7 that flaw first. 

8 And also recognizing that -- my 

9 understanding is that, and I think this is 

10 unfortunate, that certificate programs are 

11 reported in the some college/no degree category. 

12 That's my understanding, which again I 

13 think is unfortunate because I think when you get 

14 a certificate that is a worthwhile, very valuable 

15 credential and it shouldn't be associated with 

16 some college/no degree. So, recognizing that flaw 

17 as well. 

18 What we're looking at here is just 

19 sort of a year-over-year estimate, again, pulled 

20 from the Census Bureau on what earnings look like 

21 at different ages for a person. And so, the -- it 

22 kind of -- the sort of legend here on the top, if 
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1 we work backwards in some ways you can sort of see 

2 how each of these lines is defined.

3 So, for those in the public and for 

4 those at the table -- oh, and I'll also mention if 

5 you want to just Google it, the name of this 

6 report is The College Payoff: Education, 

7 Occupations, Lifetime Earnings.

8 And again Georgetown Center on 

9 Education and Workforce. I'll repeat it, the 

10 College Payoff: Education, Occupations, Lifetime 

11 Earnings so everyone can look that up and I'm not 

12 pulling this data from a hat somewhere. 

13 But what the chart shows is that, 

14 first and foremost, we will be eliminating, for 

15 purposes of this discussion, the top three lines 

16 there because those there lines -- the top line is 

17 professional programs.

18 And, as it's reported, professional in 

19 this scenario means MDs, MBAs, JDs, those with the 

20 professional degree beyond a bachelor's. that's 

21 what that top line is. The line under that is 

22 doctoral programs. And the line under that, that 
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1 third dark green line, is your master's program.

2 So, again, for the purposes of the 

3 discussion of where we've sort of gone in this 

4 conversation, those programs would not be 

5 considered under gainful employment.

6 So, the line we're really focusing on 

7 is the bachelor's line, which is sort of that -- I 

8 don't even know how you describe it, but the 

9 lightest shade green of all of the lines. And 

10 we're looking at that credential on down, okay? 

11 And the reason I pull this out and the 

12 whole point I'm trying to make with this little 

13 monologue here is the value of just sort of 

14 differentiating the time horizons between programs 

15 because if you look at this chart and you look at 

16 the slope of that line for a bachelor's degree, 

17 the slope is significantly steeper for a 

18 bachelor's degree program over those first ten 

19 years. 

20 Again, it's age not years, but using 

21 age as a proxy that slop is much steeper 

22 indicating to me significant marginal changes and 
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1 incremental changes year-over-year in those first 

2 ten years for a bachelor's degree recipient 

3 compared to the other programs.

4 So, that's the point of this, which is 

5 just to show that, you know, it might be easiest 

6 to just look at a five-year snapshot for 

7 everybody, but I think the point of this is that 

8 we really need to take a more holistic look at the 

9 differences and the wages over a certain amount of 

10 time. 

11 And the value of the bachelor's degree 

12 just takes a little bit longer based on those 

13 incremental year-over-year changes, which is why 

14 we would support some sort of a differentiated 

15 look at those sort of two differing credentials.

16 Again, given the lack of data, I think 

17 that this is the best way that we can possibly 

18 show it recognizing that, of course, there are 

19 flaws in the data and, you know, that this could 

20 probably be done a little bit better.

21 But if you Google the whole report, 

22 there is a wealth of information on lifetime 
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1 earnings and earnings by degree broken down by 

2 certificate, bachelor's, associate's, and -- it's 

3 got some really great information in there.

4 So, that's sort of the point of this. 

5 I'll be happy to take any questions on it. But, 

6 again, living in the world that we're living in 

7 with the limited data, I think that this is the 

8 best we can do to provide some sort of 

9 justification for why we think that there should 

10 be a differentiation. 

11 MR. RAMIREZ: Great. Thank you so 

12 much, Tim. So, are there any questions for Tim? 

13 Jordan also has some information that we're going 

14 to ask him to put on the screen and look at, but 

15 for now are there any questions for Tim on this 

16 chart? Okay, great. That was helpful. Thank 

17 you, Tim. 

18 All right. And we're going to take 

19 just a quick minute here for Jordan to plug in and 

20 project. Gerbil on the wheel. Okay, thank you. 

21 So, Jordan, can you explain to us what we're 

22 looking at and walk us through some of your data?
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1 MR. MATSUDAIRA: Is this on?

2 MR. RAMIREZ: Yeah.

3 MR. MATSUDAIRA: Okay. Yeah, so I, at 

4 Whitney's request, just wanted to kind of talk 

5 through the difference between the way the rule is 

6 currently structured where there is annual debt 

7 service payments are estimated and then the ratio 

8 of that is kind of compared to a .08 standard or 

9 then there's a discretionary earnings standard as 

10 well of .2 versus Chad's suggestion of just using 

11 a sum ratio of the total debt amount borrowed to 

12 your earnings.

13 So, what I've depicted here in the 

14 chart -- and unfortunately I don't think the color 

15 of my -- the laser pointer actually shows up over 

16 there, does it? Well, it kind of does. Okay.

17 So, Chad's idea was, why don't we just 

18 take the ratio of your earnings relative to -- or, 

19 sorry, take the ratio of your total loan amount, 

20 the total loan principal at repayment compared to 

21 your earnings, okay? And, for example, take a 

22 ratio of 1 and say that as long as that ratio is 
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1 below 1 you pass. 

2 So, what I've drawn in this picture is 

3 the way that that earnings rule works in general 

4 under either one of the metrics, either the 

5 existing one or Chad's suggestion, is just to say 

6 for any given loan amount there is a minimum 

7 average earnings that your graduates need to earn 

8 in order for you to pass the metric, okay?

9 So, the way this figure is drawn is to 

10 try to focus in on that kind of idea. So, as a 

11 function of the total loan balance that students 

12 have at repayment on the X axis here, there is a 

13 minimum earnings level that's implied that those 

14 -- that your student graduates need to pass in 

15 order for the program to be deemed passing. 

16 So, under Chad's suggestion, the line 

17 here is just, you know, a 45-degree angle. 

18 Meaning, you know, if students have a loan balance 

19 of $10,000 they need to make at least $10,000 on 

20 average in order for the program to be deemed 

21 passing, okay? And then that just goes up. So, 

22 that's the dashed line depicted in the picture.
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1 The other two lines in the picture are 

2 showing the annual debt-to-earnings rate and the 

3 discretionary debt-to-earnings rate under the 

4 assumptions that I think are true under current 

5 law, which is to say a 4.45 percent interest rate 

6 on unsubsidized loans, and in this particular 

7 shown for a ten-year amortization rate.

8 And what I'm showing here is the 

9 earnings levels -- okay, the minimum earnings 

10 level that a program's graduates would need to 

11 pass in order for the program to be passing. The 

12 way the two lines interact are the one that's more 

13 steeply slopes is the annual debt-to-earnings 

14 line.

15 So, in order to pass annual DTE, you

16 need to have earnings that are above that blue 

17 line. In order to pass the discretionary DTE, you 

18 need to have earnings that are above the more 

19 shallowly sloped, the flatter red line.

20 And so, you can see because you only 

21 need to pass one of the two, effectively what the 

22 discretionary part of the rule says is that if you 
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1 have programs that produce relatively high 

2 earnings we're going to allow you to effectively 

3 have a higher kind of debt burden because, you 

4 know, if you're making more earnings then even a 

5 higher debt burden is more affordable is the gist 

6 of it.

7 Okay. So, what I've done is plotted 

8 this under a variety of different scenarios just 

9 so you can get a sense for just how Chad's 

10 suggestion of a 1-to-1 total debt-to-earnings 

11 ratio would compare just in the general strictness 

12 of the rule, if you like, to the existing law. 

13 And I'm going to do that first for 

14 assuming a ten-year amortization rate, which under 

15 the current program would apply to programs below 

16 the bachelor's level, and then for a 15-year 

17 amortization rate.

18 And then I'm going to show it to you 

19 separately assuming the 8 and 20 thresholds that 

20 are in existing law in 8 percent annual 

21 debt-to-earnings rate, and then show you what it 

22 looks like under a 12 to 30 rate just because some 
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1 people have thought about that as it relates to 

2 the zone or to pass rules.

3 Okay. So, you can see this is 

4 ten-year amortization again and the 8 and 20. You 

5 can see that the kind of red and blue lines are 

6 both above that debt-to-earnings line, which 

7 means that, you know, at every kind of line 

8 balance amount up to 50,000, the current rule is a 

9 little bit more strict.

10 And you can see that, you know, like 

11 if you pick 20,000 you need a higher minimum 

12 earnings level for your program graduates than you 

13 would under just a 1-to-1 ratio of total 

14 debt-to-earnings under the existing rule. 

15 This is the same picture but now 

16 assuming that debt-to-earnings -- or, sorry, but 

17 now assuming a different threshold required to 

18 pass. So, the dashed line hasn't changed at all, 

19 okay? 

20 The dashed line is still just where 

21 earnings are just a, you know, 1-to-1 ratio with 

22 your loan principal amount, but you can see that 
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1 now that kind of dashed line is almost exactly on 

2 top of the annual debt-to-earnings line before. 

3 And this is what I was trying to say 

4 the other day, that there's really this 1-to-1 

5 correspondence between this kind of idea of just 

6 using total debt-to-earnings relative to the way 

7 the current rule works, which is amortizing that 

8 over a certain schedule.

9 And there's always going to be some 

10 ratio of the kind of yearly debt payments relative 

11 to income that would make a fully equivalent rule 

12 to the kind of 1-to-1 debt-to-earnings ratio, and 

13 in this case the ratio is really similar to .12. 

14 It's really similar to the 12 percent standard, 

15 assuming the 10 percent amortization rate.

16 What you can see is different about 

17 the way the current rule works is that it gives 

18 essentially a break. It makes the rule a little 

19 bit less strict for programs that serve higher 

20 earners, right?

21 So, towards the right-hand side of 

22 this graph you'll see that that red line falls 
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1 below that 1-to-1 line where total debt is equal 

2 to the loan balance -- or, sorry, to your 

3 earnings.

4 And so, you know, the way the current 

5 rule works is to say that, you know, for students 

6 who are earning above that's about $30,000 or so, 

7 you can actually allow those students to acquire 

8 more debt than you would under a strict -- the 

9 kind of 1-to-1 ratio that Chad was suggesting. 

10 Okay. So, that's for ten-year amortization. 

11 So, just to summarize, you know, at a 

12 8 percent annual debt-to-earnings ratio and a 20 

13 percent debt-to-earnings ratio, the kind of 1-to-1 

14 ratio would be less strict than current law would 

15 be. 

16 Let's look at what things look like 

17 for 15-year amortization, which is kind of 

18 appropriate for thinking about what would happen 

19 to bachelor's degree programs.

20 Okay. So, what you see is that with 

21 the 15-year amortization rate, so we're amortizing 

22 debt over a longer time period, so the rule 
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1 essentially becomes less strict, right? Like if 

2 you're amortizing debt over a long time period 

3 your yearly payments are lower than they would be 

4 otherwise, and so the minimum level of earnings 

5 required for you to pass the debt-to-earnings 

6 threshold is lower.

7 So, you can see that assuming, okay, 

8 the current standards of 8 percent and 20 percent 

9 for bachelor's programs, a 1-to-1 ratio comes 

10 pretty close to mirroring the annual 

11 debt-to-earnings ratio, it's just a little bit 

12 less strict than current law would be at the 

13 annual debt-to-earnings ratio. 

14 But again, you can see that when you 

15 get to higher earning programs with higher 

16 earnings, the 1-to-1 ratio becomes a little bit 

17 more strict, okay, because it doesn't factor in 

18 the allowing those programs to have a lower debt 

19 burden -- or, sorry, a higher debt burden at 

20 higher levels of earnings. 

21 So, this is at 8 and 20 percent 

22 thresholds. If you look at 15 and 20 percent 
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1 thresholds, you can see that the 1-to-1 burden 

2 becomes substantially more strict than would be 

3 true under the current structure of the rule.

4 So, I put together a program that can 

5 kind of simulate like any number of permutations 

6 of these kinds of things and I'll share that with 

7 Ed, and if people kind of have other questions 

8 about other permutations I'm going to guess that 

9 they could crank those out for people, but I'm 

10 happy to answer any questions. 

11 MR. RAMIREZ: Yeah, Chad.

12 Mr. MUNTZ: So, just my observation. 

13 So, the 1-to-1 will work better for bachelor's 

14 degrees no matter what we do, correct, or about 

15 the same?

16 MR. MATSUDAIRA: So, it depends on 

17 what your criteria for work better is, of course.

18 MR. MUNTZ: Okay. All right. Well, 

19 let me ask you this. From simplicity --

20 MR. MATSUDAIRA: Fewer programs will 

21 fail the standard under a 1-to-1 threshold.

22 Mr. MUNTZ: Right, okay. And at the 
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1 higher debt balance a 1-to-1 protects the students 

2 better the higher the debt, right, because of the 

3 discretionary income gives you kind of an out to 

4 pass, whereas a 1-to-1 at high debt balances, 

5 which cripple the students, this would be a harder 

6 standard to pass?

7 MR. MATSUDAIRA: Correct. 

8 MR. MUNTZ: Okay.

9 MR. RAMIREZ: Mark (phonetic), you had 

10 a question?

11 PARTICIPANT: Jordan, when Chad and I 

12 discussed this we actually were using just the 

13 1-to-1 to begin the discussion. Did you feel if 

14 you did then .8 it more closely mirrors the 

15 current rule?

16 MR. MATSUDAIRA: On this one it would 

17 be 8-year -- I mean, 8 and 12 -- I mean, 8 and 20 

18 over ten years.

19 MR. RAMIREZ: Can you use the mic?

20 MR. MATSUDAIRA: Yeah. So, you know, 

21 if you look at the graph here, okay, look at -- we 

22 basically have to think about what the slope of 
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1 that blue line is, right? So, the blue line has a 

2 loan principal of 30,000 at about a little bit 

3 more than $40,000, okay? So, that means like, you 

4 know, in the neighborhood of .7 in terms of the 

5 ratio of the total debt-to-earnings, okay? 

6 So, in this case for assuming ten-year 

7 amortization in an 8 percent annual 

8 debt-to-earnings threshold, a ratio of total 

9 debt-to-earnings of about .7 would mirror the 

10 annual debt-to-earnings threshold. 

11 PARTICIPANT: Okay.

12 MR. MATSUDAIRA: Yeah. 

13 MR. RAMIREZ: Jeff.

14 MR. ARTHUR: Yeah, Jordan, it would be 

15 real interesting to see how this chart looks if 

16 you modeled it using, say, 5-1/2 -- I mean, we 

17 know the interest rates are going to vary and this 

18 is this year's rate and just what -- I mean, 

19 currently they really use the 6.8 for the current 

20 cohorts.

21 And so, it would be kind of 

22 interesting to see how a 3.6 and a 5 and a 6-1/2 
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1 might look just to understand as those fluctuate 

2 how that, you know, how that impacts that.

3 MR. MATSUDAIRA: So, like I said, I'll 

4 share this with Ed, but this is, you know, for the 

5 same thought experiment that I just did at a 6-1/2 

6 percent interest rate. 

7 So, you know, in general what happens 

8 is that 6-1/2 interest rate, your annual -- your 

9 yearly debt payments are, you know, a little bit 

10 higher than they would be under the 4.5, so the 

11 red and blue lines shift up. 

12 As a result of that, you need higher 

13 earnings and able to be -- in order to be able to 

14 afford the higher debt payments. And for a lower 

15 interest rate those lines would shift a little bit 

16 down. And exactly how much they do, you know --

17 MR. ARTHUR: Yeah. So, this does seem 

18 to --

19 MR. MATSUDAIRA: -- the program that I 

20 wrote can help you figure it out. 

21 MR. ARTHUR: -- does seem to help 

22 stabilize that influence from year-to-year as it 
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1 varies.

2 MR. RAMIREZ: Okay. Jessica, do you 

3 have a question?

4 MS. BARRY: I do.

5 MR. RAMIREZ: Okay, Jessica then 

6 Laura.

7 MS. BARRY: Sure. And it, actually, 

8 was just a clarification on this map.

9 PARTICIPANT: Don't forget your mic.

10 MS. BARRY: Thanks. So, Jessica 

11 Barry. I just wanted to ask a question to clarify 

12 something on the map. Over here at the 75 percent 

13 or 62.5 percent, however you look at it, did we 

14 say that we are going to take the highest of the 

15 median or mean? I wasn't sure of it just didn't 

16 make the sheet or --

17 MR. RAMIREZ: Chad, do you --

18 MR. MUNTZ: I don't know the answer.

19 PARTICIPANT: That's the -- I think 

20 that's Jeff's suggestion, right?

21 MR. ARTHUR: Yeah, so the --

22 MR. RAMIREZ: Oh, I'm sorry, that's 
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1 right.

2 MR. ARTHUR: Yeah, the income 

3 comparison in general I think has been the highest 

4 of the mean or median, whichever one is higher. 

5 So, I don't know if that's also the case in 

6 Jeff's proposal.

7 MR. ARTHUR: I would assume so. I 

8 mean --

9 PARTICIPANT: Move the mic closer.

10 MR. RAMIREZ: (Inaudible)?

11 MR. ARTHUR: It feels like it's really 

12 echoing, so. Yes, I didn't propose any change to 

13 how you determine the median, other than the --

14 eliminating the variable, the noise. 

15 MR. RAMIREZ: So, to clarify, I think 

16 what you're saying, Jessica, is when you put the 

17 highest mean/median?

18 Ms. BARRY: Yes.

19 MR. RAMIREZ: Okay. Yeah, so we put 

20 it up on the board just so you could see where the 

21 correction needs to go. Thank you. Laura, you 

22 had a question for Jordan?
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1 MS. METUNE: I'm trying to understand 

2 how the decision to eliminate private debt from 

3 the calculation affects the calculations 

4 themselves. 

5 And I'm not sure if this is a question 

6 for Jordan or for the Department, but how do we 

7 know what percentage of debt that's currently 

8 being reported as private and should not 

9 incorporating that change the metrics, and in what 

10 way? 

11 MR. RAMIREZ: Jeff?

12 MR. ARTHUR: I can only share 

13 anecdotal insight in that. When I looked at our 

14 data that less than half of the borrowers had 

15 private debt, it was about 25 percent. And all of 

16 those were above the median so it didn't change 

17 our median debt by -- whether you included private 

18 or not, but I can't speak for any other.

19 MS. METUNE: I think the other part of 

20 the question is, there are limitations to how much 

21 Title IV loan debt a student can take on that 

22 should probably be factored into where that line 
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1 should be. 

2 If we're -- if the line ultimately 

3 exceeds the amount of loan debt a student can take 

4 out for a program, the line becomes -- the 1-to-1 

5 becomes meaningless, right? 

6 PARTICIPANT: Can you say that again?

7 MR. RAMIREZ: Yeah, can you repeat it?

8 MR. METUNE: There is limitations for 

9 Title IV debt that students can take out based on 

10 program costs. So, how does that relate to the 

11 determination of the metric?

12 PARTICIPANT: Annual (inaudible).

13 MS. METUNE: So, what you're saying is 

14 the 57.5 of -- I think that's what the current 

15 amount is, right, 57,500 of maximum undergraduate 

16 debt you can take, the fact that if you have to 

17 borrow above and beyond that is that in essence 

18 affecting our view of it because we're not 

19 including the added debt?

20 PARTICIPANT: Yes.

21 MR. RAMIREZ: Jennifer?

22 PARTICIPANT: Actually, Laura has a 
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1 good point because I'm just -- and I'm just going 

2 to add to it that, I mean, we don't really know 

3 what the new debt would look like because we're 

4 also -- there are institutions that used tuition 

5 and fees instead of the total loan amount, so 

6 there is also that. So, we are in a different 

7 universe. 

8 Now, I don't know if that's true on 

9 the bachelor and below as much. My guess is that 

10 they -- that it was pretty on par in the loan 

11 amount probably, but the point -- the larger point 

12 is we're redefining what debt is so it's a little 

13 hard to know. So, I think, Laura, it's a fair 

14 point.

15 MR. RAMIREZ: Jordan.

16 MR. MATSUDAIRA: Yeah. I mean, I 

17 think the rule will continue to work in the way 

18 that I've described it, it's just what kinds of 

19 things filter in to either debt or earnings change 

20 as we change the concepts behind either of those 

21 things. 

22 So, if we get rid of institutional and 
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1 private debt, the debt number is going to be lower 

2 and that effectively is changing the rule. You 

3 know, if people have -- you know, if ten percent 

4 of all debt everywhere is made up of private and 

5 institutional debt, then that's effectively, you 

6 know, lowering the debt-to-earnings standard by 

7 ten percent.

8 MR. RAMIREZ: Chad.

9 MR. MUNTZ: So, just a couple 

10 comments. I mean, one, you know, to go back to 

11 the 1-to-1 ratio is what do the institutions have 

12 control over? They don't have control over 

13 interest rates and they don't know what they will 

14 be in the future. So, that's one reason why the 

15 simplicity of removing it.

16 The second is a lot of the debt from 

17 the score card was between 20 and 35,000 for the 

18 bachelor's degree. And if you remember -- I wish 

19 we had Jordan's lines up there, those thresholds 

20 are very close to each other regardless of which 

21 direction you go. 

22 And from a perspective to the consumer 
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1 or to the student, what is easier for them to 

2 understand is one thing that I'm trying to 

3 consider in trying to explain to them what they 

4 need to do or how much debt they can have. 

5 Do they understand that in this year 

6 the interest rates look good, so you can have 

7 $30,000 in debt because your payment might be 

8 lower over the next ten years, but this year you 

9 could have 28,000 because your interest rate is 

10 going to go up. 

11 And how do you manage that in 

12 institution and when we consider the threshold of 

13 declaring if a program is doing well or not, 

14 you're basically saying the program is doing well 

15 as long as the interest rates are low and our 

16 economy is not doing very well and we have to keep 

17 the interest rates low, and your program is not 

18 doing well if the institution is -- I mean, if the 

19 economy is thriving. 

20 So, just those are kind of the outside 

21 our control issues with using an interest rate, 

22 but we can set that ratio different. If the group 
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1 thinks that it should be .8 loan balance to one 

2 income, you can do it that way and solve for those 

3 issues if you want it more strenuous.

4 MR. RAMIREZ: Sandy, do you have 

5 something on that?

6 MS. SARGE: This is Sandy. So, trying 

7 to put out a thought about private debt. Private 

8 debt comes from banks. Is there a way or a 

9 current mechanism -- I'm trying to think through 

10 like we report out on 1098s and things like that. 

11

12 Like is there a way that we could ask 

13 or get from banks at some point, if we're going to 

14 look at the universe, to report out by Social 

15 Security number what the debt is of current --

16 what's the current debt of their students that are 

17 taking the money?

18 So, I'm trying to figure out a way 

19 that -- these guys are in the business of doing 

20 loans, the private institutions. Would they be 

21 able to -- would we be able to get that 

22 information from them somehow?
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1 MR. MARTIN: This is Greg. I think 

2 that would be highly unlikely. I can't imagine 

3 how -- I mean, as setting up I guess a protocol 

4 for that to occur or having even the authority to 

5 have banks relate that information to us, and then 

6 they would be relating it to us but they wouldn't 

7 know what program it was against necessarily.

8 I don't think there's any -- as I said 

9 before, I'm going to maintain this position, there 

10 is no practical way currently for us to receive 

11 that information, other than future, and they're 

12 not promised, future potential modifications to 

13 NSLDS reporting that would allow us to collect 

14 that information easily from you.

15 And we don't have it know, and we 

16 don't have a prospect of having it in the near 

17 future. 

18 MR. RAMIREZ: All right. Let me get 

19 Whitney then Johnson.

20 MS. BARKLEY-DENNEY: So, I understand 

21 why that's true of banks and private loans hat are 

22 coming from banks, but I still don't understand 
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1 why that's true of institutional loans that 

2 should, I would imagine, be tracked by the 

3 institution, whether they are collecting those 

4 loans on their own or they are giving them to a 

5 collector to collect. 

6 The institution should have that 

7 information pretty readily available as far as 

8 loans that are coming directly from them, right?

9 MR. MARTIN: Greg again for the 

10 record. I agree with that statement, however the 

11 problem is still in having it conveyed to us. 

12 They might have ready -- schools might have more 

13 ready access to it. 

14 I would suggest, yes, they absolutely 

15 should know what their institutional debt is, but 

16 what would be the means of conveyance to us absent 

17 the current GE (phonetic) reporting that needs to 

18 be done by -- for GE programs. 

19 I mean, unless we're to impose that on 

20 all schools, all programs, which we're just not 

21 willing to do, how would you suggest that they get 

22 that data to us? 
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1 I mean, there's no mechanism to do 

2 that. There's no -- I mean, people say well, 

3 there's got to be something, but there isn't 

4 something. You know, think about how schools 

5 report to us. 

6 They report NSLDS data, they report 

7 via COD, those are the primary reporting 

8 mechanisms to us and absent reporting something 

9 that way -- and we don't have a mechanism now to 

10 capture that.

11 So, it certainly wouldn't be 

12 appropriate under -- it's not a COD reporting 

13 thing, it wouldn't be that, so it would be -- it 

14 would have to be NSLDS.

15 So, I want to change my statement to 

16 say we basically have NSLDS for this and right now 

17 it doesn't accommodate that. 

18 MR. RAMIREZ: All right. Jessica, is 

19 your tent still up or -- okay. Jordan, is yours 

20 up or -- okay. So, we have Whitney -- Whitney 

21 just went. Jennifer and then Johnson.

22 PARTICIPANT: So, totally understand 
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1 on the difficulties on the go forward, but I do 

2 have a question about -- from a sort of -- I guess 

3 I'm following up on Laura's question a little bit. 

4

5 In terms of impact knowing that we're 

6 changing the debt, you probably, from the previous 

7 reporting, have some data on what percentage of 

8 the debt was impacted by the private or 

9 institutional loans. And even just on an 

10 aggregated basis of understanding like, did it 

11 impact the debt number? 

12 I mean, that would -- I think actually 

13 that would be helpful to understand on a -- in 

14 terms of -- well, as we try to grapple with like 

15 what the threshold should be, it would be good to 

16 know what the impact had been on, you know, on 

17 that so you do have the backward-looking data. 

18 So, in theory, that breakout would be helpful.

19 MR. MARTIN: I'll talk to Cindy 

20 (phonetic) about that. I don't want to say 

21 anything -- I don't want to obligate myself.

22 MR. RAMIREZ: Okay, Johnson.
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1 MR. TYLER: I have a question just 

2 about the interest rate. Can you describe how it, 

3 in the regs, it's supposed to happen, the existing 

4 regs, in terms of calculating it for 

5 debt-to-earnings? Is it looking back at what the 

6 cohorts average or median interest rate was or is 

7 it just some number that gets thrown out?

8 MR. MARTIN: Yes, it depends. It's a 

9 -- there's a three and a six-year rolling average. 

10 I could get you the exact -- I'll get you the 

11 exact, I'll get you the exact language on that if 

12 you want. I can read it, it'll just take me about 

13 a minute to pull it up.

14 MR. TYLER: Okay. Thank you.

15 MR. RAMIREZ: Okay. All right. Any 

16 other questions or comments right now? All right. 

17 So we're pretty close to the lunch hour. Greg, 

18 is there any other comments or direction you would 

19 like to share at this moment or should we break 

20 for lunch right now?

21 MR. MARTIN: We can break for lunch. 

22 When we come back I'm going to have Sarah 
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1 (phonetic) come up and have a brief discussion 

2 about data limitations with you before we proceed.

3 MR. RAMIREZ: Okay.

4 MR. MARTIN: But other than that, yes.

5 MR. RAMIREZ: Okay, great. So then, 

6 let's look at 90 minutes and then we'll be back 

7 and jump right back in. Thanks, everyone. 

8 (Whereupon, the above-entitled matter 

9 went off the record.) 

10 MR. RAMIREZ: Okay, so the Department

11 has been pretty busy during lunch and they're, 

12 what we're going to do this afternoon is, Sarah is 

13 going to lead off giving us some additional 

14 information on some of the data. And then we're 

15 going to go through and, I understand the 

16 Department has some additional guidance and 

17 direction for us.

18 Once we go through that, then we're 

19 going to jump back in so that we make sure that we 

20 review Issue Papers 6, 8 as well as technical and 

21 conforming changes.

22 And hopefully that will give you all 
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1 sometime between the additional direction to chew 

2 on that for a little bit and see where we go from 

3 there. Okay, so, Sarah, do you want to share what 

4 information you have for us?

5 MS. HAY: Sure. Good afternoon, 

6 everyone, I hope you had a good lunch.

7 Today's March 14th, right?

8 PARTICIPANT: Oh, yes.

9 MS. HAY: So happy pie day everybody.

10 (Off microphone comment)

11 MS. HAY: I am. So you should all go 

12 home and have a piece of pie and derive pie for 

13 yourself with whatever round object you happen to 

14 have. Measure circumference, measure diameter, 

15 divide circumference by diameter and you should 

16 get a number close to three.

17 So --

18 (Off microphone comment)

19 MS. HAY: Right. So, we got a number, 

20 a couple of data requests yesterday. I'm not sure 

21 that they're entirely pertinent to the discussion 

22 today but we wanted to be responsive, so Brian did 
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1 run the numbers in Stata yesterday, I validated 

2 them today in SAS.

3 We're in the process of printing them 

4 and we'll put them on the back table. We don't 

5 have super great access to a printer in this 

6 building so we're going to do what we can, but 

7 we're going to get them to you before the end of 

8 the day.

9 And if you have questions, Brian and I 

10 are available and we can answer those questions 

11 sort of during breaks or things like that, okay?

12 But I wanted, you know, since it's 

13 publicly available data and we had the ability to 

14 do it, we wanted to get it for you, okay?

15 I want to talk some about data driven 

16 decision making and modeling. And I agree with 

17 all of you, I would love to have the data.

18 So I could have done the modeling, 

19 presented where it looks like the thresholds fall 

20 and you could say, yes, that model is robust, 

21 good, let's do that. But the fact of the matter 

22 is, I don't have it.
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1 We did look at BLS data before we 

2 started this process. There's a big mess of 

3 trying to match CIP codes to SOC codes, which is 

4 how BLS data is done.

5 BLS data is also done by percentile. 

6 It is not done by how many years out you are from 

7 graduating. There is no information about what 

8 kind of degree you got or what level it was at.

9 There is no guarantee, for example, if 

10 you are working as a computer scientist that you 

11 have any kind of degree or certificate in computer 

12 science. I actually know many agriculture PhDs 

13 who now work as database admins and computer 

14 coders.

15 So, we made the determination, both 

16 from a production perspective, the messiness of it 

17 made it untenable. And we spoke with BLS and 

18 asked, are there other things we're missing 

19 because it's your data, not ours, and we just 

20 don't understand.

21 And no, we didn't see a good way to 

22 apply it for research basis either. So that left 
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1 us in a situation of, we don't have earnings. And 

2 that, again, just sort of is the situation we're 

3 in.

4 So, what I want to say about modeling, 

5 that I think it's important to put out there and 

6 be clear about, is that the model should be driven 

7 by the data not by the outcome you want it to give 

8 you.

9 So, we would never be in a position,

10 whether I had the data or not, being up here and 

11 saying, oh, well these particular schools are the 

12 ones that we think are bad and therefore we draw 

13 the line here.

14 The way you build a robust model is 

15 you run, you look at the distribution of the data, 

16 you look at the statistics of the data, you apply 

17 commonsense, you use standard, statistical and 

18 mathematical modeling technics against the data 

19 that are appropriate for the type of data and for 

20 the distribution of the data. And the thresholds 

21 are data driven.

22 And from the Departments perspective, 
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1 that threshold should be chosen by statistics or 

2 mathematics. And any program below that threshold 

3 is below the threshold.

4 We're not going to pick a threshold so 

5 that some percentage of institutions or programs 

6 or below or above, we're going to pick one that is 

7 based off of what the data say. Okay.

8 So, I just wanted to sort of talk some 

9 about that because over the course of the past 

10 couple of days I've heard a lot of people saying, 

11 if we had the data we could pick the threshold 

12 that we think would give us the right institutions 

13 or the wrong institutions.

14 And I think, from the mathematical 

15 modeling perspective, where my background is in 

16 mathematics and modeling, you do it the other way 

17 around and your output is based off of the data 

18 you put in. Okay?

19 And it's unfortunate, I don't have the 

20 data. And I wasn't able to bring it to you to 

21 show you what it would look like. I agree, I 

22 would have loved to have done it for you, okay?
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1 So, that's really all I wanted to say. 

2 I just wanted to sort of help frame that 

3 conversation that I've heard some of about how one 

4 would set a threshold.

5 You look at what goes into the model 

6 to get data that is of high quality. You pick a 

7 model that fits those data from a distribution and 

8 sort of a mathematical perspective and then you 

9 apply an outlier identification technic.

10 So it could be box plots, it could be 

11 something else that would be appropriate to the 

12 distribution of the data. And then where math and 

13 statistics tell you that threshold should fall, 

14 that's where that falls. And then we act upon 

15 that.

16 So, I don't need to repeat myself, but 

17 I just wanted to sort of provide that perspective 

18 to folks based off of what we've been hearing over 

19 the course of the past couple of days of what our 

20 intentions would be, once we do have data. Okay?

21 MR. RAMIREZ: Okay, thank you. Are 

22 there any questions for Sarah? Jennifer.
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1 PARTICIPANT: Sarah, really appreciate 

2 it. I guess first of all, on BLS, I would say 

3 that the piece about not assigning it to a degree 

4 level, we sort of got past that point anyway a 

5 long time ago on the metrics because the earnings 

6 aren't tied to a particular profession anyway 

7 because it's the students. So they could go off 

8 and be a whatever and not, so that piece of it.

9 But I totally hear you on the fact 

10 that it's not based on years it's based on 

11 percentiles and that's important. We still might 

12 pull it just because it's interesting to 

13 understand.

14 Your larger point though is something 

15 I just wanted to, this is where I sort of landed a 

16 few days ago on the, if we could construction a 

17 regulation or at least give, because I don't know 

18 if we're going to reach consensus, but at least, 

19 and I think we're already doing this, giving the 

20 Department guidance on what we think the 

21 methodologies, is it debt-to-earnings and loan 

22 repayment is a one-to-one ratio, you know, those 
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1 pieces and construction on this.

2 Because I am really attuned to the 

3 sanction piece of it too. But sort of construct a 

4 framework that is created now rather than going 

5 back to another dang NEG REG, that allows for the 

6 Department, once it receives the data, house a 

7 couple of, a year a two of understanding around 

8 that data. And, again, mean, median, average, 

9 whatever.

10 And then would become the effective 

11 piece on, you must disclose it or notify or 

12 whatever. So it's written today but it's based on 

13 the receipt of the data.

14 I mean, that's kind of, so what you're 

15 saying is sort of along the lines of what I kind 

16 of put out there as a concept a few days again. 

17 And, Kirsten also raised today too as a 

18 possibility. So I just wanted to reiterate that 

19 this, that's sort of where my head is on all of 

20 this.

21 MR. RAMIREZ: Okay, great, thank you. 

22 All right, if that's it for Sarah, thank you. 
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1 Appreciate it.

2 MS. HAY: If there are questions, I'll 

3 be here till the end of the day today. Okay.

4 MR. RAMIREZ: Thank you. All right, 

5 so what we'd like to do next is we're going to 

6 work off of the chart that the Department had 

7 passed out.

8 I know that Mark spent quite a bit of 

9 time providing an alternative there, but the 

10 Department has looked at that and is more 

11 comfortable working off of this chart here. And 

12 so we're going to go ahead and get that put up on 

13 the screen.

14 I'm not sure if Aaron is escorting 

15 somebody. Do you want to put it up for us, 

16 Crystal?

17 It's the one without all the fancy 

18 colors. It's the one without all the fancy 

19 colors.

20 (Off record comments)

21 MR. RAMIREZ: The other one is the one 

22 that Mark had worked on as an alternative idea. 
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1 Mark McKenzie.

2 But that's not the one that we're 

3 working off of, we're working off of the one that 

4 is more government looking.

5 (Laughter)

6 MR. MCKENZIE: It was the one I passed 

7 out yesterday evening before we left.

8 (Off record comments)

9 MR. MARTIN: Greg for the record. 

10 Over the lunch period, and prior to that, we took 

11 a lot of this back, had some discussions with our 

12 senior leadership and we've reached a couple of 

13 points that we would like to offer as our, as 

14 where we currently stand. And I'll present those 

15 to you.

16 So, looking at the chart, obviously, 

17 did your program have a D/E rate, that stays in 

18 place.

19 For, did your program meet the D/E 

20 benchmark, or more appropriately, measure at this 

21 point. We, having heard the discussion prior to 

22 lunch, and listen to Jordan's excellent 
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1 presentation, by the way, you have a very lilting 

2 lecture voice. I was really, I can see myself 

3 sitting in your class. Not doing well, but 

4 sitting in your class.

5 (Laughter)

6 MR. MARTIN: The class in 18 Century 

7 poetry at Cornell I do quite well in. I don't 

8 know about Jordan's classes though.

9 So, did your program meet the D/E 

10 benchmark. So, we're inclined to go with, and now 

11 present as our offer, the one-to-one ratio. And 

12 that's debt-to-earnings.

13 We would make the one-to-one a 

14 benchmark. Understanding that we have to come 

15 down somewhere on understanding.

16 What Sarah was just talking about, the 

17 dearth of data that we currently have. But 

18 regardless of that, we're tasked with making a 

19 decision one way or another.

20 So, I think the time has come we have 

21 to just consider that. So we're going to offer 

22 that at one-to-one.
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1 As the, I don't think we have to 

2 change the chart. It still is a debt-to-earnings 

3 benchmark, it just becomes a different, it's 

4 different than what we have had in the past.

5 We reserve the right or privilege to 

6 go back to what we previously had in the table 

7 should consensus not be reached, but we are 

8 willing to put that out there and see if there's 

9 consensus around that.

10 So, the rest of the chart. Looking at 

11 the repayment rate benchmark, we have heard what 

12 people said about some of the problems with 

13 repayment rate and we're not deaf to those or 

14 unappreciative of it.

15 But we chose, going back to why we did 

16 this to begin with. Remember that repayment rate 

17 was not originally a metric that we were going to 

18 look at, repayment rate is essentially, if you saw 

19 a defacto appeal if you don't meet the other 

20 benchmark.

21 I do understand there are issues 

22 surrounding income-based repayment and such the 
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1 way that we have presented the repayment rate, but 

2 we have presented, I think, a known repayment 

3 rate, a defensible repayment rate. We're inclined 

4 to stick with that repayment rate as presented.

5 We feel that the box, box chart way of 

6 looking at the, looking at the rates the way Sarah 

7 described them is appropriate and provides a 

8 sufficient amount of latitude in that it doesn't, 

9 it doesn't necessarily mean that there always will 

10 be people who don't meet the outliers the way you 

11 would have it with using a standard deviation, so 

12 it avoids the arbitrary nature of that and it is a 

13 statistically defensible way of doing it, so we 

14 are inclined to stay with that. So we keep that 

15 on the table.

16 We, oh, I should point out to that, I 

17 neglected to point out that with going back to the 

18 D/E benchmark, the Department is very interested 

19 in the concept of looking at the top 75 percent of 

20 earners defined as the, using 62 point --

21 MR. CHEMA: Let me do this part.

22 MR. MARTIN: Yes, you know, I'm going 
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1 to let, Steve enjoys this a lot so I'm going to 

2 him describe this.

3 MR. CHEMA: So, what we're interested 

4 in looking at is not necessarily the proposal to 

5 remove the lower 25 percent and then take a new 

6 mean or median, we're interested in looking at the 

7 pool we're already using and looking at the mean 

8 and median. And in addition to that, also 

9 looking, as a data point, at the 62.5 percent 

10 measure.

11 And subject to getting some more 

12 comfortable with that being a defensible approach 

13 as well. But we, antidotally it sounded like 

14 there is some reasons it could be used to support 

15 it.

16 MR. RAMIREZ: Does anyone have any 

17 questions on that one piece, just because I want 

18 to make sure that folks understand. Because 

19 you're saying both pieces in there, right, so I 

20 just want to make sure that folks are clear on 

21 that.

22 Jordan, it looked like you had a 
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1 question on that?

2 MR. MATSUDAIRA: Just a quick comment 

3 about the, looking at both the median and the 62.5 

4 percent percentile. It's just something that you 

5 might want to consult with SSA about, like about 

6 their privacy provisions.

7 So, it has to be the case that any 

8 statistic has at least ten people behind it for 

9 their privacy rules. But if you're doing things 

10 like reporting two different numbers from a group 

11 of ten people, for example, that's the kind of 

12 thing that they wouldn't allow you to do and there 

13 needs to be, usually, like ten people on either 

14 side of a number like that.

15 So, that might have pretty large, like 

16 if you try to compute two percentiles that are so 

17 closely close together, like a 62nd percentile and 

18 a 20th or in a 50th percentile, which in a group 

19 of ten are like next door neighbors to one 

20 another, that might not be feasible.

21 So that probably means that your 

22 effect, like minimum cohort side, would at least 
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1 double and maybe more than that. But that's the 

2 kind of thing that SSA could advice on.

3 MR. MIRANDO: Yes, Tony for the 

4 record. Steve, can you just kind of go over again 

5 what you just said about using both and what would 

6 that look like? So that I understand it a little 

7 bit better.

8 MR. CHEMA: Right. So the paint is 

9 still wet on this because we're still reacting to 

10 the suggestion, so I don't have a polished 

11 response, but right now we're thinking that it 

12 would be useful to have two different data points.

13 Because I think there still would be 

14 an interest in seeing what the standard would be 

15 that everyone else was using for the mean or 

16 median for the same data.

17 But then also knowing how different it 

18 would be because it could be that there would be 

19 institutions that did not meet the measure of 

20 using the lower one but it would be acceptable if 

21 they met the higher one. But we'd want to see 

22 both.
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1 MR. RAMIREZ: Jennifer.

2 PARTICIPANT: Okay, so I'm just trying 

3 to wrap my head around. So, in effect, because 

4 you're talking about an effect for -- well, okay, 

5 no, because we're going one-to-one, okay.

6 So you'd have two debt-to-earnings 

7 measures. So in effect, would you be placing the 

8 economically disadvantaged appeal in effect using 

9 the --

10 MR. MARTIN: Well, I think that's a 

11 good question.

12 PARTICIPANT: I'm sorry?

13 MR. MARTIN: I think that's a good 

14 question.

15 PARTICIPANT: Well, right, because do 

16 --

17 (Off microphone comment)

18 PARTICIPANT: Okay, got it.

19 MR. RAMIREZ: Okay, Daniel.

20 MR. ELKINS: I just wanted to applaud 

21 the Department for listening genuinely to the 

22 discussion around the table and coming back with 
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1 this. I'm very, very excited.

2 PARTICIPANT: Actually, I want to ask 

3 a --

4 MR. RAMIREZ: Okay. And then, Greg, I 

5 just want to back up quickly on the box plotting 

6 piece because there was a question there as was 

7 well as far as using the institutional or 

8 programmatic level. Can you speak to that piece?

9 MR. MARTIN: Sure. as regards to 

10 whether or not to use an institutional, I mean, to 

11 look at it as per the universe for, or measure 

12 programs against programs, we have heard the 

13 discussion around the table and concern that we 

14 should be attentive to types of programs students 

15 are going into and not measure those programs 

16 necessarily against other programs.

17 There are different reasons why people 

18 go into dance or social work as opposed to 

19 engineering or computer science.

20 So our proposal would be to do it, to 

21 do that rate by CIP, by four digit CIP code. We 

22 looked at the CIP numbers and thought six would be 
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1 a little too complicated, a little too narrow, but 

2 we would be included to go with four digits to 

3 calculate that.

4 PARTICIPANT: For repayment?

5 MR. MARTIN: That's for repayment, 

6 right. Yes.

7 MR. RAMIREZ: Jeff, did you have a 

8 question on that?

9 MR. ARTHUR: No, my comment is on the 

10 repayment rate formula. Just to point out that 

11 it's possible Congress could come up with a, or 

12 have a different formula --

13 MS. MILLER: I'm sorry, Jeff, hang on 

14 one second there is some feedback. Jennifer, is 

15 your mic on?

16 PARTICIPANT: Nope.

17 MS. MILLER: Okay.

18 PARTICIPANT: Oh, Jeff's is though. 

19 Oh, he's speaking.

20 MR. ARTHUR: I'm using it.

21 (Laughter)

22 MR. ARTHUR: I don't know what the 
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1 answer is, I just want to point out that could we 

2 wind up with some confusion if we have two 

3 different repayment rate formulas out there that 

4 have consequences and just, I don't know if 

5 there's a mechanical way to address that if it 

6 happens.

7 I know you can't really anticipate 

8 that now and you go with what you have, but I 

9 don't know if there is some way to have a 

10 conforming clause that would align if Congress 

11 determines a particular formula. Maybe you can't, 

12 I don't know if you can.

13 But I'm just throwing it out there as 

14 something that could be confusing to the public if 

15 we've got one rate you've got to calculate for 

16 what, however Congress might use it and another 

17 for this regulatory purpose.

18 MR. MARTIN: And Greg for the record. 

19 I think those are excellent points. We've 

20 always, in negotiating roles, have always taken 

21 the type that we don't, we don't negotiate rules 

22 and expectation of what Congress might do because 
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1 Congress does what Congress does.

2 So, there are proposals out there that 

3 may or may not become law in near future. We 

4 can't predict that so we move ahead as if there 

5 was nothing out there in the ether, we all know 

6 there is.

7 If something like that occurred, we'd 

8 have to, of course, turn it over to counsel and 

9 see how we would deal with that. But, no, your 

10 point is well taken. But we have to proceed as 

11 if, you know.

12 (Off microphone comment)

13 MR. RAMIREZ: Okay, thank you. 

14 Jennifer.

15 MR. MARTIN: Yes, we would have, yes, 

16 I want to point out what Steve just said. We 

17 would obviously comply.

18 (Laughter)

19 MR. RAMIREZ: Jennifer than Johnson.

20 PARTICIPANT: So I have two questions. 

21 One on loan repayment.

22 I know you said that you think it's 
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1 defensible, of course in the history on loan 

2 repayment rate is iffy.

3 I support, and I think I've been clear 

4 about this, I support conceptually a loan 

5 repayment rate if it's reflective of what the 

6 world looks like in higher ed.

7 Unfortunately, I think we have 

8 something along the lines of like, at least a 

9 quarter of all students are borrowers. It's some 

10 very high percentage at this point are in IBR.

11 And if you're either excluding or 

12 treating them negatively, I'm not sure how that's 

13 not considered arbitrary. If they're considered 

14 to be an active repayment for all other intensive 

15 purposes under the law, I'm not sure how it's not 

16 arbitrary to treat them in the reverse.

17 And so, I just want to point that out 

18 again that I think that you might have an 

19 arbitrariness issue by not favorably treating at 

20 least IBR students who actually pay something.

21 Zero, you might have an argument for 

22 the zero piece, but if they're actually paying 
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1 something and their considered to be an active 

2 repayment, I'm not sure how you can all of a 

3 sudden define active repayment for the purposes of 

4 a rate differently. So I just want to, because 

5 you said it was defensible, that I'm actually not 

6 sure it is.

7 The second question I had is, is this 

8 sort of, you've, not in this session but in other 

9 sessions, you've heard me talk about the CIP code 

10 issue and I'm really attuned to this as it relates 

11 to the disclosures to students.

12 Because the students think we're 

13 disclosing program data and we're actually 

14 technically not, we're disclosing CIP code.

15 And so now I have a question, are you 

16 keeping the debt-to-earnings at six digit CIP but 

17 you would have a loan repayment at a four digit 

18 CIP because that would really confuse, I mean, so 

19 I just want to understand what you're thinking 

20 about in terms of like the CIP code aspect. If 

21 you go to a one-on-one in direct.

22 MR. MARTIN: I think an answer to the 
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1 question of defensibility, I mean, there's always 

2 going to be arguments about whether it is or not.

3 And as I said before, we do understand 

4 those concerns that you have about students in 

5 IBR. Again, I go back to the reasons why we 

6 instituted, why we put this in here at all.

7 It was never meant to be, never

8 intended to be a metric that had to be meet. The 

9 metric that has to be meet is the 

10 debt-to-earnings. That's the one that must be 

11 meet.

12 This is simply in there. If you do 

13 not meet that measure as a indication of program 

14 outcomes that would result when you're not having 

15 to provide a notice or in any future potential 

16 action that Department would take.

17 PARTICIPANT: But if it would trigger, 

18 because it would in effect. I mean, I have to 

19 disagree with you on that point too because if 

20 you're now creating, which I support the inclusion 

21 of some form of sanctions, it does matter.

22 Because it becomes an, if you're 
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1 constructing it that way and it doesn't reflect 

2 the reality of borrower behavior, it does become 

3 an important, and it does need to meet, it still 

4 needs to meet a standard that passes arbitrary and 

5 capricious.

6 MR. MARTIN: I'm going to have Steve 

7 address that.

8 MR. CHEMA: So, my understanding of 

9 using a four digit CIP for the repayment rate is 

10 just for purposes of getting a peer group 

11 comparison for the program. It's going to be the 

12 programs repayment rate compared to a repayment 

13 rate calculated for comparable programs at the 

14 four digit CIP.

15 And that is because you may have 

16 programs that have a relatively poor repayment 

17 rate compared to every other program, right? But 

18 within their peer group, they're actually doing 

19 okay.

20 And so this is why we're at least open 

21 to the idea of doing this kind of analysis.

22 PARTICIPANT: Oh no, on the four, so 
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1 let me just clarify. On the CIP code issue, I 

2 understand and I'm not disagreeing with you on the 

3 four digit CIP for loan repayment. On the whole 

4 defensible piece. That was more about IBR.

5 On the CIP code issue my concern is 

6 different. My concern is, relates to the, and 

7 we're going to get to the disclosure section but 

8 it relates to what you're saying to students on 

9 the template.

10 And this is an issue that I've had on 

11 an ongoing basis with the score card even. 

12 Because each data point on the score card, almost 

13 every single one of them is based on a different 

14 cohort or something different about each one.

15 And so you're telling students about 

16 something different in each. And I think the 

17 student thinks that you're dealing in one set of a 

18 cohort or one type of program.

19 And so my concern with the four digit 

20 is not that you're using four digit, it's that if 

21 you're going to do a, I don't know what you're 

22 basing the debt-to-earnings piece on, but I do 
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1 feel like there needs to be some consistency 

2 around what we're talking about.

3 And so it wasn't to say that you 

4 shouldn't use four, but what are you doing with 

5 that on the debt-to-earnings, is that four digit 

6 CIP or is that six digit CIP?

7 MR. MARTIN: It means six digit CIP.

8 PARTICIPANT: Yes. So then I think 

9 you might have a disclosure issue in terms of what 

10 you're informing the student about. That's my 

11 point.

12 Because you're zeroing it in to, 

13 because on the disclosure pages, and this has also 

14 been an issue for me, the disclosure pages are a 

15 program. Which could be more than one program 

16 actually.

17 And then when we go to four to six 

18 your roll-ups are going to be different. That's 

19 my only point.

20 MR. RAMIREZ: All right. Johnson.

21 MR. TYLER: So, I just want a little 

22 clarity. The repayment rate is institutional 
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1 rate, correct?

2 MR. MARTIN: No. The repayment would 

3 be by programmatic by CIP code.

4 MR. TYLER: Programmatic. Okay.

5 MR. MARTIN: As defined by four digit 

6 CIP.

7 MR. TYLER: Okay, thank you.

8 MR. RAMIREZ: And then, Chad.

9 MR. MUNTZ: So, what I understand 

10 here, I'm just going to say this simply, my 

11 program has a debt and a earnings ratio at the 

12 program level six digit CIP.

13 PARTICIPANT: Four.

14 MR. MUNTZ: Or is it at --

15 (Off microphone comment)

16 MR. MUNTZ: -- no, the 

17 debt-to-earnings is six digits, okay.

18 PARTICIPANT: Six.

19 MR. MUNTZ: So from a perspective 

20 student, if I want to major in math, I'm going to 

21 see if it's a one-to-one or not. Later, if that 

22 wasn't met at the program level, then the 
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1 Department will find out if they are repaying so 

2 we can determine if people within all CIP codes, 

3 that include math, statistics, operational 

4 research, whatever, are they repaying. And if 

5 that's not the case, then we'll go to sanctions.

6 MR. MARTIN: Yes. So the chart would 

7 be, as its presented to you, you'd have to provide 

8 the notification and then it would go to, for the 

9 Department to consider. To consider sanctions.

10 MR. MUNTZ: Sure. So then one 

11 question we have had with the sanctions is, this 

12 would prevent, or could potentially prevent, 

13 someone from changing their six digit CIP code, 

14 because they would have to leave the four digit 

15 family.

16 So it's a way of being able to hold 

17 back a bad performing program that's switching six 

18 digit CIP codes all the time. Which I think is a 

19 good thing. I think that's one of the advantages 

20 here. Is that right? Okay.

21 PARTICIPANT: I think so. I mean, 

22 it's hard for me because, to be honest with you, 
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1 the whole CIP thing is just really confused. And 

2 so you can, I mean, to be honest, and this sounds 

3 really awful, the thought has definitely, you can 

4 either expose programs or hide programs through 

5 the CIP process.

6 So to your point if you think that, 

7 and I have to think about this some more because I 

8 didn't expect the four CIP thing, so now I have to 

9 think about what the ramifications could be on it.

10 MR. RAMIREZ: And, we have Mark and 

11 then Jordan. But if we can also, to what Chad was 

12 talking about there, if anyone has any idea of 

13 what that timeline might look like as opposed to 

14 how it's being done under the, well, under the 

15 current way it's written.

16 But, Mark, you want to go next.

17 MR. MCKENZIE: So, it sounds like 

18 you're on a really good path, but are you saying 

19 that you're going to have different standards of 

20 repayment for four digit CIP codes depending on 

21 the outcome within that CIP code?

22 MR. MARTIN: Well, where the outliers 
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1 are will be different, yes. By programs.

2 It could be, that actual repayment 

3 rate that would be the cutoff, if you looked at it 

4 just that way, could be different for an 

5 engineering program than it would be for a 

6 teaching program. Yes.

7 MR. MCKENZIE: So, I mean, that is an 

8 issue we all addressed. And I guess what we're 

9 getting is, so if acting had low repayment rates

10 across the board, in that area, you would set it 

11 at a mathematic rate. And if engineering has a 

12 very high rate, you would set it there. That's 

13 where we're going?

14 MR. MARTIN: Essentially. Yes.

15 MR. MCKENZIE: Okay.

16 MR. MARTIN: But remember, and I may 

17 have to have Sarah come up and reexplain that. 

18 The way it works, just because there are, a 

19 program has a number of, is high performing in 

20 those regards does not necessarily mean that there 

21 will be, there will be programs that don't make 

22 it. Yes.
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1 MR. MCKENZIE: But you're setting a 

2 rate within in a universe of academic programs?

3 MR. MARTIN: Yes. Essentially.

4 MR. MCKENZIE: Okay.

5 MR. MARTIN: Yes.

6 MR. MCKENZIE: So, my last question 

7 then is, because I think it's actually the 

8 absolutely right policy, what's the reason we 

9 wouldn't pursue the same policy with 

10 debt-to-earnings rate?

11 Because it's actually much more 

12 relevant with debt to earning rates where we know 

13 acting has the low earnings and engineering is 

14 making 80 and the one size fits all clearly 

15 doesn't work. So I'm so enthused by this that I'm 

16 asking you to --

17 PARTICIPANT: And for consumer 

18 disclosure purposes.

19 MR. MCKENZIE: -- and for consumer 

20 disclosure. It's hard for me to see a reason not 

21 to extend. And in fact, it's much more 

22 compelling, there's a much more compelling 
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1 argument to extend this to debt-to-earnings.

2 MR. RAMIREZ: Okay.

3 MR. MCKENZIE: Right?

4 MR. RAMIREZ: Greg, did you want to 

5 chew on that or did you have a response?

6 MR. MARTIN: I want to take a three 

7 minute purpose break please, I'll be right back.

8 MR. RAMIREZ: Okay.

9 (Whereupon, the above-entitled matter 

10 went off the record for a short recess.)

11 MR. RAMIREZ: Okay, let's have 

12 everyone take their seats so we can get started. 

13 Okay, Greg. Yes, whenever you're ready, Greg.

14 MR. MARTIN: Thank you, Javier. This 

15 is Greg for the record.

16 We took it back and we discussed this 

17 issue with respect to two things here. The 

18 debt-to-earnings and the repayment rate.

19 So I'll address, Stephen and I'll 

20 address debt-to-earnings and then we'll have Sarah 

21 address repayment rate. Because I can only do one 

22 thing. One thing at a time.
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1 So, where, in looking at -- so, the 

2 question came up, why did we propose to do, to 

3 look at debt-to-earnings with using the box plots, 

4 why we're going that way with it and then why 

5 didn't we apply the same logic to looking at the 

6 debt-to-earnings. Basically, the one-to-one ratio 

7 as opposed to just saying that the one-to-one is 

8 what will be the measure.

9 And we're inclined to stick with the 

10 one-to-one measure. I think we have to look at 

11 this in terms of what we're talking, with 

12 debt-to-earnings.

13 First of all, the two are completely 

14 separate measures, debt-to-earnings versus 

15 repayment rate. Debt-to-earnings is the metric.

16 Remember the repayment rate, even 

17 though, hesitant to call it an appeal because it 

18 really isn't an appeal per say but it does act as 

19 an appeal. And I want to point out that we don't 

20 view it as anything other than that, we would not 

21 require it to be disclosed. It is simply out 

22 there as a way of demonstrating a program outcome 
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1 if you do not meet the debt-to-earnings.

2 With regard to the debt-to-earnings 

3 being the debt and then the earnings at the 

4 one-to-one ratio, we feel that that's a, that the 

5 amount of debt a student has, I mean in the 

6 earnings, is rather a, it doesn't really, it 

7 doesn't matter which program a student is in.

8 So in other words, if you have a 

9 certain amount of debt that you've accrued for 

10 attendance in a program, it still has to be 

11 repaid. And that's really what debt-to-earnings 

12 is about.

13 Do you have the earning sufficient to 

14 repay the debt that you have incurred to attend 

15 the program?

16 So in that regard, we don't think that 

17 there is, looking at it that way, that there is 

18 any difference between someone in engineering or 

19 somebody in cosmetology or someone in social work 

20 or welding or what have you. We're simply looking 

21 at what is, what do the earnings look like in 

22 comparison to what the debt is.
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1 So I think it's a very straightforward 

2 and clean measure the way it was presented. And 

3 we are, we took it back and discussed it though, 

4 it was a valid point and I did take it back to 

5 leadership but we are staying with the one-to-one 

6 measure.

7 And I'll now turn it over to Sarah Hay 

8 to discuss repayment rate.

9 MR. RAMIREZ: So, it looks like 

10 there's a question though on that piece before we 

11 pass it over to Sarah.

12 So, I have a queue here but I'm going 

13 to go with Jennifer for that clarification 

14 question.

15 PARTICIPANT: Well, I'm just confused 

16 because, and maybe it's just me and it's the 

17 afternoon or whatever, but I'm confused. I didn't 

18 think that the question was so much about the 

19 one-to-one ratio I thought it was about CIP codes 

20 and what CIP codes you were using for the 

21 debt-to-earnings versus the loan repayment rate.

22 MR. MARTIN: Steve will address that.
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1 (Laughter)

2 MR. CHEMA: No, really, I knew he was 

3 going to do that so that's fine.

4 (Laughter)

5 MR. CHEMA: So I think, we believe 

6 that the debt-to-earnings measure, just comparing 

7 student's total debt to their earnings and then 

8 using this one-to-one metric, makes sense. It 

9 provides some consistency in the concept being 

10 carried forward from gainful employment.

11 We also note that there's always been 

12 this issue of, we don't really know what jobs are 

13 being held by the people whose earnings we're 

14 getting to use for these comparisons. So for the 

15 repayment rate it may make sense that we're 

16 looking at the repayment performance relative to a 

17 peer group of other people in a similar CIP code.

18 But we think that all the literature 

19 on debt is how much debt is too much. People are 

20 kind of looking at total debt and total earnings 

21 and that that's another reason we're still landing 

22 where we are here.
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1 MR. RAMIREZ: Okay. Sandy, you have a 

2 follow-up on that?

3 MS. SARGE: Okay, so Jennifer is much 

4 smarter than me on all of this stuff, so I'm going 

5 to ask in a layman's term.

6 My understanding is, first we have to 

7 get a cohort of students. And what I think 

8 everybody is asking is, do you lump together 

9 students in a program based on six digit, which is 

10 more precise i.e. than in concept a lower end or 

11 do you go with four which lifts up the net, 

12 enlarges the net, of who you capture to then send, 

13 gather the debt information on and gather the 

14 earnings information on?

15 MR. MARTIN: The program still remains 

16 a six digit CIP code --

17 MS. SARGE: That's --

18 MR. MARTIN: -- six or a seven. And 

19 so keep that in mind for what Steve just talked 

20 about, what I'm talking about now. And then when 

21 Sarah discusses repayment, I think it will become 

22 a little bit clearer to you where we are with 
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1 respect to the CIP code.

2 MR. RAMIREZ: Jennifer.

3 PARTICIPANT: Actually, you know what, 

4 I'll hold it till the loan repayment conversation.

5 MR. RAMIREZ: All right, Sarah, go 

6 ahead and do your piece.

7 (Off microphone comment)

8 MR. RAMIREZ: Oh, I'm sorry, Chad, you 

9 still had a follow-up on that one?

10 MR. MUNTZ: I wanted to follow-up on 

11 that. We have very few graduates at the six digit 

12 level and very small programs. By moving it up to 

13 four digit you actually get more students. So you 

14 actually can produce --

15 (Off microphone comment)

16 MR. MUNTZ: -- yes, more 

17 debt-to-earnings ratios. Otherwise, a lot will be 

18 exempt. Many programs.

19 PARTICIPANT: Well, I agree with you 

20 but I think, so, this is the quandary. And, 

21 again, I'm not voicing an opinion I have a issue 

22 about consistency between the loan repayment rate 
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1 and the disclosure, which I'll get to when we get 

2 to the loan repayment.

3 But I will say this. You might have 

4 end size on your four but it's a lot of programs 

5 rolling up. And so, again, when your unfolding to 

6 disclosure to students, and I'll just take 

7 education for an example.

8 Education, as looked at the break, 

9 education has a bachelors that's directed towards 

10 teaching higher ed, I'm sorry, teaching somebody 

11 to how to be a principle in school and early 

12 childhood. They're in the same CIP. Okay, 

13 different programs, same CIP.

14 So, it's all about what you want to 

15 disclose to the student. Like, if you want to 

16 roll it up and have it, but then I think you are 

17 in an area of not clearly defining what the 

18 debt-to-earnings looks like for the actual six 

19 digit program. So that's the quandary.

20 I agree with you in terms of 

21 conceptually. I'm not voicing, I'm just saying, 

22 like, there are a lot of choices here to make in 
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1 terms of the, and I think the consumer disclosure 

2 piece is frankly what, in my view, it is what 

3 should lead the conversation.

4 MR. RAMIREZ: Chad.

5 MR. MUNTZ: And I would just respond 

6 to that. I think we would make our disclosures 

7 consistent as well. And I don't know how that 

8 would look, I just throw that out there, but 

9 everybody who is majoring in education would get 

10 the same disclosure.

11 And I get that there's going to be 

12 English and math and elementary ed put in there, 

13 but that would just be one way to help solve this 

14 solution. I mean, if it's not good, take it off 

15 the table. But that would be my idea.

16 MR. RAMIREZ: Okay, thank you. Sarah.

17 MS. HAY: Okay, so from the 

18 Departments perspective, a program is defined at 

19 the six digit CIP. Because we don't have data I 

20 don't know how many programs fall within a 

21 specific CIP and that concerns me.

22 So, for example, if we have a CIP and 
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1 there are three programs in it, I don't want to 

2 have to try and set an outlier threshold based off 

3 of three programs. Because I don't think that 

4 necessarily would give us meaningful results.

5 So, I don't think that changes the 

6 Department's definition that a program is at the 

7 six digit CIP. So, not knowing what the data are 

8 --

9 (Off microphone comments)

10 MS. HAY: Right. I feel your 

11 frustration.

12 My thought process is, I don't want us 

13 to say we have to set the threshold at the six 

14 digit CIP because I don't want to have to set a 

15 threshold at a six digit CIP where there are three 

16 or four programs in that group.

17 So, once we have the data, we can 

18 determine the counts broken down at the six digit 

19 CIP. And if we have enough that we get reasonable 

20 distributions at the six digit CIP, then we set it 

21 at the six digit CIP.

22 If we have to, we roll-up to a four 
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1 digit CIP so that we get enough programs to set 

2 the threshold. But what I want you guys to know 

3 is that the repayment rate that would be used for 

4 your programs, as your defense against sort of the 

5 one-to-one debt-to-earnings, would be the 

6 repayment rate at your six digit CIP.

7 So it would be the repayment rate for 

8 your program. And if I have to, we'll roll-up 

9 sort of the threshold setting to a higher-level 

10 CIP so that we get enough programs in the group 

11 that the threshold is meaningful.

12 MR. RAMIREZ: Okay, so let me go over 

13 here. I have Jordan, Johnson, Chris, Steve and 

14 Jennifer. Okay, Jordan.

15 MR. MATSUDAIRA: I have a broader 

16 comment, so maybe if there are questions for Sarah 

17 then I can come back.

18 MR. RAMIREZ: So, starting a new queue 

19 as far as specific questions for Sarah. Does 

20 anyone have any, Jennifer?

21 (Off microphone comment)

22 MR. RAMIREZ: Okay. Let's start off 
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1 with Chris then and then Jennifer. Oh, Stephen.

2 (Off microphone comment)

3 MR. RAMIREZ: For Sarah? All right. 

4 Let me get Jordan, Steve and then Jennifer.

5 (Off microphone comment)

6 MR. RAMIREZ: Johnson.

7 MR. TYLER: Johnson here. So, Sarah, 

8 is the concern on the, so I understand this, is it 

9 basically that you need a enough people in the 

10 repayment rate, enough scoring so you can actually 

11 make it statistically valid and so you're saying 

12 we'll start with four because then we'll get 

13 enough institution so we can do this and then if 

14 there's a problem you --

15 MS. HAY: So, I think it would go the 

16 other way around.

17 MR. TYLER: Okay.

18 MS. HAY: I would look at it at six 

19 because I think if you're being measured at six, 

20 ideally the threshold would be set at six. Right?

21 But not having seen the data that 

22 makes me a little nervous, right. And I would 
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1 want to be sure that we had enough data that we 

2 were setting a fair threshold based off of having 

3 enough data from a statistical perspective that 

4 we're setting a reasonable threshold from a 

5 statistical perspective.

6 So, that is sort of why I think the 

7 Department is considering the possibility of

8 giving themselves the flexibility to roll the 

9 threshold setting up to the six digit CIP so that 

10 we --

11 (Off microphone comments)

12 MS. HAY: Thank you, I misspoke. 

13 Sorry, to the four digit CIP so that we make sure 

14 that we have enough information to set a 

15 reasonable threshold for institutions. Okay.

16 MR. RAMIREZ: Okay, thank you. Steve.

17 MR. CHEMA: Steve Chema for the 

18 record. Sarah, I'm nervous too.

19 Whenever I look into the CIP codes I, 

20 you burrow in and you get to the four digit 

21 intermediate grouping and sometimes its collapsed 

22 and it's really focused and other times it's not. 
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1 And the one I have in front of me is this 1304 

2 and it's the one that Jen referenced. It's 

3 supervision of school administration.

4 And that includes community college, 

5 it includes principle of an elementary school, 

6 principle of a secondary school, all the way up to 

7 higher head. So you're talking about provost 

8 chancellors, presidents.

9 There's so many diverse labor market 

10 outcomes amongst those occupations that I think 

11 would crosswalk, that I don't know if we're losing 

12 something pretty significant from the disclosure 

13 aspect. And I don't know how to get comfortable 

14 with this. I know that NCES is in this building. 

15 Maybe somebody from that office could talk to us.

16 MS. HAY: So, I have a couple of 

17 thoughts. The first is relative to teaching 

18 programs.

19 I don't think you're going to have a, 

20 like, I wouldn't see a problem with teaching 

21 programs having a problem at the six digit CIP 

22 level. Knowing what I know about teaching 
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1 programs. Having been a teacher and having gone 

2 through one.

3 But what I am worried about is that 

4 there might be some CIPs out there where there 

5 really, and I don't know, right, because I don't 

6 have the data, so I don't know that anyone at NCES 

7 would be able to tell us that either because the 

8 first question is going to be, well, I have to 

9 know what the counts are and know what the 

10 distribution of the data look like. Right?

11 So, they would sort of be in the same 

12 position we are in, in asking some of the very 

13 same questions. But my fear is that, and I'm not 

14 an expert in every single academic subject that's, 

15 and non-academic, technical, vocation program, 

16 taught in the United States.

17 So my fear is that there might be a 

18 six digit CIP out there that has three or four 

19 programs in the United States. And that, because 

20 I don't know, I think that's why the Department is 

21 contemplating rolling up to four so that we could 

22 get coverage there.
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1 My preference would be to do it at the 

2 six digit CIP so that what you're being measured 

3 against is what sets your threshold. Does that 

4 answer your question? I mean, I know it's not an 

5 ideal answer but --

6 MR. CHEMA: And I understand the 

7 limitations that we're all working under here. It 

8 answers my question.

9 It's probably not that satisfying of 

10 an answer --

11 (Laughter)

12 MR. CHEMA: -- but what I'm wondering, 

13 or maybe even struggling with here is, is if we're 

14 talking about doing this to increase numerosity of

15 programs rolling up, because we want to be able to 

16 calculate a rate for every program, is that really 

17 a better tradeoff to make if we're pulling in a 

18 lot of information in order to do that, for a lot 

19 of other programs that doesn't really belong there 

20 or distorts the information that we're trying to 

21 present to students. And I know that's hard to 

22 answer too.
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1 MS. HAY: Right. So I think the 

2 Departments position is that the repayment rate 

3 really is a way to satisfy, from sort of an 

4 appeals perspective, the debt-to-earnings. And 

5 what I heard them say was that they wouldn't 

6 necessarily require the repayment rate to be 

7 published and disclosed. Okay?

8 So there is a difference there. And I 

9 know that sort of is a new thought for the table. 

10 Okay?

11 MR. CHEMA: Thank you.

12 MS. HAY: Yes, you're welcome.

13 MR. RAMIREZ: Okay, Jennifer.

14 PARTICIPANT: So, that's the perfect 

15 segue because that was my question. So you just 

16 said that the intention is not to disclose the 

17 LRR, but I'm just really confused, so let's play 

18 this out.

19 You have a program that doesn't pass 

20 the debt-to-earnings, but then the department 

21 knows that it passes the programmatics LRR. But 

22 then there is on the, and we haven't talked about 
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1 the disclosure section yet, but if I remember 

2 correctly in the disclosure section, there is a 

3 disclosure of the D/E metrics.

4 So would you report your failing D/E 

5 but not disclose, I don't understand what would 

6 you, but it's not a notification. I'm not talking 

7 about the notification I'm talking about on the 

8 template.

9 MR. MARTIN: One thing on the 

10 disclosure template, remember, you do not 

11 disclosure the D/E metric.

12 PARTICIPANT: Oh, that's right. Okay.

13 MR. MARTIN: You disclose your debt 

14 and your earnings.

15 PARTICIPANT: Got it. Got it, got it.

16 MR. MARTIN: We're still moving 

17 forward with that, so you wouldn't do that.

18 We have eliminated repayment rate from 

19 the, you'll see in the disclosure paper, we've 

20 eliminated it from disclosure area. So we would 

21 not be requiring disclosure of repayment rate.

22 PARTICIPANT: Got it.
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1 MR. RAMIREZ: Okay. Then any other 

2 questions for Sarah? Mark.

3 MR. MCKENZIE: Just one other 

4 question. This is back to the original GE rates. 

5 I recall that.

6 And I think this is related, that 

7 about 70 percent of the certificates in the 

8 for-profit sector had below the 30 and about 90 

9 percent in the public sector. And so was this, 

10 are you addressing this totally separate from that 

11 issue?

12 MS. HAY: I think the answer is yes.

13 MR. MCKENZIE: Okay. Okay. So I 

14 guess I would suggest, without going down the road 

15 of separate metrics by CIP, there is something 

16 here, there is something here, which I won't 

17 belabor, to address it in the D/E metric.

18 MS. HAY: So, I think the Departments 

19 position is they want to do what makes sense based 

20 off of some of the data we've seen and what we 

21 heard at the table that is best for what we think 

22 removing the GE context, right? What's best for 
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1 all programs at all schools.

2 And I think that's the philosophy 

3 behind the decisions. And now I'm talking policy 

4 and I'm not supposed to do that.

5 (Laughter)

6 MS. HAY: All right.

7 MR. RAMIREZ: Okay.

8 MS. HAY: Any other mathy questions 

9 for me?

10 MR. RAMIREZ: Yes, I think Sandy has a 

11 question.

12 MS. SARGE: I love math too. Okay, so 

13 I just want to make sure. My understanding is 

14 when we go out to gather the debt and earnings 

15 information, one of the, the lower we go the more 

16 precision we have, in essence, to that, 

17 theoretically to that profession.

18 And you all would get then the mean, 

19 the median and the 62.5 on the earnings lumped 

20 together at that lower component, right? That 

21 group.

22 I'm still looking at the cohort of 
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1 students. So, let's say, theoretically, the six 

2 digit is going to have ten, let's say 12, has 12. 

3 If you rolled them up into four they'd have 75.

4 But by getting the information down at 

5 the lower level and seeing whether we pass at that 

6 lower level, what would you do, you can't go back 

7 to SSA because they don't give you the detailed 

8 information.

9 MR. MARTIN: I should point out, we 

10 didn't propose the roll-up for D/E rates, it was 

11 repayment rate.

12 MS. SARGE: Okay.

13 MR. MARTIN: It's just repayment rate.

14 MS. SARGE: Okay.

15 MR. MARTIN: Debt-to-earnings has 

16 remained the same cohort, same, remember, we 

17 addressed the problems with, well, we addressed 

18 some of it with debt-to-earnings with small 

19 program size by dropping our end size, but we have 

20 not moved away to looking at different CIP ranges. 

21 Six digit CIP.

22 MS. SARGE: Got it.
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1 MR. RAMIREZ: All right, I think 

2 that's it, Sarah, so thank you very much, that was 

3 helpful.

4 MR. MARTIN: I think we need to ask 

5 Sarah. If a pole was 35 high and the sun is at a 

6 20 degree angle, what's the shadow it casts off?

7 MS. HAY: It is 3 o'clock.

8 (Laughter)

9 MR. RAMIREZ: All right, so I'm going 

10 to jump back into the queue to ask some questions, 

11 just about the chart in general. So we have 

12 Jordan, Chris and then Tim.

13 MR. MATSUDAIRA: This is Jordan for 

14 the record. I just wanted to make a couple of 

15 comments about the broad kind of changes or kind 

16 of structure being contemplated here.

17 So, first of all, the change to just 

18 measuring total debt relative to earnings. And I 

19 just want to make sure that everybody is kind of 

20 aware of how this changes the rule relative to 

21 current law. Just on the off chance that the 

22 graphs I made earlier weren't like 100 percent. 
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1 The last word on that.

2 So, going to this total 

3 debt-to-earnings, like a ratio of one-to-one, 

4 makes the rule a lot easier on short-term 

5 programs. So, less than four year programs.

6 So it would be, again, it's about the 

7 same as giving those programs a debt-to-earnings 

8 threshold of 12 percent instead of eight. It 

9 basically makes it 50 percent. It makes the rule 

10 50 percent more lenient for them than the current 

11 structure of the rule for four year programs.

12 Just total debt-to-earnings ratio is 

13 broadly similar unless your students make over 

14 about $30,000 to $35,000. If your students make 

15 over that amount then the rule is quite a bit 

16 stricter than it was.

17 The consequence of this kind of going 

18 to just one overall debt-to-earnings measure in 

19 general is that we're kind of now ignoring the 

20 differences in earnings growth that Tim was 

21 pointing out, which were the rationale for things 

22 like different amortization periods in the rule, 
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1 and so one.

2 And so I find it a little bit puzzling 

3 that people whose used to be criticizing the 

4 current structure as a one size all kind of rule, 

5 we're now embracing one size fits all when in my 

6 opinion it doesn't apply.

7 So I just want to state, for the 

8 record, that I'm strongly against this change. I 

9 think it makes the rule more lenient in exactly, 

10 for exactly the institutions where most of the 

11 students who struggle with debt are concentrated. 

12 And it makes the rule significantly more strict 

13 for institutions where there tend not to be as 

14 many students struggling with debt.

15 So I find the change entirely perverse 

16 given the original rationale for the rule.

17 I also want to comment on the outlier 

18 method. I really want to push back against the 

19 idea that this is a reasonable way of kind of 

20 establishing which institution, or which programs 

21 meet measures, are kind of not living up the 

22 standard in the rule.
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1 In the example that Sarah was 

2 presented yesterday, again, it's about one half of 

3 one percent of programs fail relative to the 

4 current structure of debt-to-earnings. There are 

5 about ten percent of programs, is my recollection, 

6 that outright failed.

7 The 12 percent measure another ten to 

8 15 percent or so that were in the zone. So about 

9 25 percent of programs overall that were flagged 

10 as failing. So we're going from a measure that, 

11 remember, you pass either debt-to-earnings or 

12 repayment.

13 We've made it, the proposed changes 

14 make it much less likely that you don't meet 

15 measures on debt-to-earnings, they make it, under 

16 this kind of outlier identification, really close 

17 to impossible to fail the repayment rate or not 

18 meet the repayment rate measure. Of course we 

19 don't know exactly without the data.

20 But this is basically just getting rid 

21 of the kind of failing programs altogether. And 

22 for that reason, I'm really against it.
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1 I really want to urge the Department 

2 to consider establishing an absolute level of 

3 repayment that it considers acceptable and use 

4 that as the threshold for the rule.

5 I mean, I think we have to ask 

6 ourselves, is a program with one percent, one 

7 percent of its students, 99 percent of its 

8 students not able to pay down $1 of their debt 

9 over five years, is that the kind of thing that we 

10 want to consider acceptable performance of a 

11 program?

12 Is it the kind of thing that's 

13 acceptable as long as there are enough other 

14 really poor programs in the CIP code perhaps?

15 You know, I don't kind of accept that 

16 logic and I really think the Department needs to 

17 think more about an absolute level of 

18 acceptability in this for the repayment rate 

19 metric.

20 MR. RAMIREZ: Thank you. We have 

21 Chris, Tim, Sandy, Jennifer Chad.

22 MR. MADAIO: Thank you. Chris. I 
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1 agree with everything that Jordan said so I'm not 

2 going to repeat that.

3 Obviously, a few points I would add. 

4 So, I mean first, I think the repayment rate 

5 should be made public, I don't know, even if it's 

6 a backstop.

7 I don't see why we wouldn't still be 

8 reporting that to students and the public if it's 

9 something that we're calculating and we feel that 

10 there is a fair method of doing that.

11 Obviously it's useful for students, 

12 but this information is useful in lots of other 

13 ways too. Research, data, experts should be 

14 looking at it.

15 So I don't think it's right to be 

16 withholding any information. And I also agree 

17 that the repayment rate should incorporate some 

18 element of principle.

19 I mean, an income based repayment 

20 plan, while great for many students, shouldn't be 

21 what we kind of consider being the default, 

22 surely, for most students. I mean, really, it's a 
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1 safety valve for students that can't make payments 

2 on a ten year repayment plan.

3 And for most students hopefully it's 

4 not something they're in for the entirety that 

5 they're paying back those loans. I mean I'm sure, 

6 because otherwise there's going to be a lot of 

7 debt forgiven by the government if the law still 

8 allows for that.

9 So, on the one-to-one ratio, I also 

10 disagree that it's appropriate for the reasons 

11 Jordan said. I think that the eight and 12 

12 capture the idea that a high earning, high debt 

13 program would be okay because of the discretionary 

14 earning rate.

15 So, I agree with the principle that a 

16 program can have very high debt if it also has 

17 very high earnings. And it seems like, as Jordan 

18 said, a one-to-one ratio would punish such 

19 program. So I don't think that's appropriate.

20 But again, I don't think a one size 

21 fits all is appropriate. And I think that, as the 

22 Department said, eight and 12 was something that 
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1 the courts upheld, I don't see why that's 

2 something to go away from to just seem to lower 

3 the bar for the areas where we've seen problems in 

4 the past.

5 And then lastly, with the proposed 

6 second "median" being a 62.5 percent median, 

7 obviously that's really not a median it's just 

8 another, it's essentially just raising the floor 

9 on what we will allow as far as, I guess the 

10 amount of debt.

11 And, I mean, my problem with that is, 

12 if we feel like there are students with low 

13 earnings for reasons outside the schools control, 

14 whether they're voluntarily out in the workforce 

15 or voluntarily part-time or tipped wages, those 

16 people would all be below the median and therefore 

17 ignored in a median. And that's the whole point 

18 of a median and not a mean.

19 So, I think that, obviously unless a 

20 program has more than 50 percent of people that 

21 are part-time, that would be problematic if that 

22 was the case.
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1 So, I think that creating a new higher 

2 number that we might use is just, again, an 

3 inappropriate and artificial way to, I think, be 

4 less strict on the programs. So I would oppose to 

5 that.

6 MR. RAMIREZ: Okay, thank you. Tim.

7 MR. POWERS: Tim Powers for the 

8 record. I have a question first and then I just 

9 want to make one comment. So my question is, with 

10 these proposed changes from the Department, just 

11 to clarify, we're still considering tuition and 

12 fees, not full cost of attendance, correct?

13 It's tuition and fees still, that has 

14 not changed?

15 MR. MARTIN: Yes. We don't have 

16 tuition and fees. We don't have that information.

17 MR. POWERS: So it's total --

18 MR. MARTIN: The only thing we used 

19 tuition and fees for was the cap.

20 MR. POWERS: Okay.

21 MR. MARTIN: Was to cap the debt. 

22 It's a similar situation to institutional debt, I 
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1 mean, institutional debt and private debt. We 

2 don't have those figures either.

3 MR. POWERS: Okay.

4 MR. MARTIN: So, basically just 

5 calculating administratively on the data that we 

6 have.

7 MR. POWERS: Just, that's fine. I 

8 just wanted to clarify. I appreciate that.

9 And in terms of my comment, first of 

10 all, I appreciate Jordan's comments because I 

11 think that they mostly summed up what I was going 

12 to say. But I do just want to make the point on 

13 sort of the relativity of the debt-to-earnings 

14 ratio for our sector in particular.

15 We do think that there are relativity 

16 concerns, and we appreciate the one-to-one. 

17 Because relatively, we have a totally different 

18 financing model where we don't get state 

19 appropriations in most cases.

20 Some of our students can participate 

21 in state grant programs, but we know that our 

22 students have the highest amount of debt. We know 
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1 that.

2 So on a relative scale, every outlier 

3 would likely be a private college. Either 

4 for-profit or non-profit. Because we know that we 

5 have higher debt burdens.

6 So, I appreciate the sort of 

7 one-to-one look because we're sort of comparing 

8 apples and oranges when we look at state 

9 appropriations and sort of how our institutions 

10 charge tuition and fees and financing versus just 

11 the differences between the sectors of public and 

12 private.

13 So, thank you for that because I think 

14 it does make a difference and I do think it 

15 provides a more realistic snapshot of what we're 

16 actually charging. So, just wanted to raise that 

17 point as well.

18 MR. RAMIREZ: Okay. I have Sandy, 

19 Jennifer, Chad, Neal.

20 MS. SARGE: So, I guess my question 

21 would be, okay, what is an alternative solution to 

22 what your disagreeing with?
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1 Both to Jordan and to Chris. So, you 

2 guys have talked about that. So, that's my basic 

3 question.

4 But then, Jordan, I have a question 

5 also. I didn't look at it so much on the fact 

6 that, yes, the 12 percent does lineup.

7 You know, I saw that and that made 

8 sense to me, but what, did you show us what it did 

9 at 15 year amortization?

10 I'm sorry, maybe I forgot that. What, 

11 at eight percent and 15 year, did it get closer? 

12 I can't remember.

13 MR. MATSUDAIRA: I don't remember the 

14 patterns --

15 MS. SARGE: Yes, so I would just be --

16 MR. MATSUDAIRA: I don't remember the 

17 patterns off the top of my head but I did forward 

18 the graphs and everything to Scott who I hope will 

19 redistribute.

20 MS. SARGE: Okay. Yes, so I just want 

21 to make sure that we understand.

22 If we say things like, like I think 
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1 the Department is trying to find or respect the 

2 concerns that Neal and others of us have brought 

3 up about the earnings, these are legitimate 

4 situations that we have. We can't determine 

5 whether or not the earnings coming from Social 

6 Security or an annual full year.

7 So, you have the denominator and the 

8 numerator not being in the same period of time. 

9 You have unreported stuff. This is just reality.

10 So to hold, when we're trying to come 

11 up with a way that gets us where we're looking, if 

12 we adjust slightly we end up being able to resolve 

13 for some of those issues that we know exist.

14 We know some much so that in fact, I 

15 think it's BLS or whoever describes jobs out there 

16 in the marketplace, they say in those 

17 descriptions, this profession relies heavily on 

18 cash, you know, they talk about which professions 

19 have tips and things like that.

20 So we're trying to come up with 

21 something that could work mathematically and still 

22 be, we're trying to, quite frankly I'll put it to 
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1 you, we're trying to take excuses off the table.

2 You have to, so instead of arguing 

3 every time a number comes out, oh, I fail because 

4 my students have lots of tips, well, move it up a 

5 little bit and say, now you can't use that excuse. 

6 Or, most of my people work part-time so now we're 

7 going to move it up a little bit to take that 

8 excuse off the table.

9 That's what we're trying to do is move 

10 some of the noise off the table. And that is 

11 going to mean making some calculated mathematical 

12 concessions so that we can get into a relatively, 

13 a relative area.

14 So, I'm going to make that point on 

15 the 62 and then ask you guys how you, what would 

16 your suggestion be to not be one-to-one.

17 MR. RAMIREZ: Okay. Jennifer, Chad, 

18 Neal, Johnson.

19 PARTICIPANT: So, I have I guess a 

20 question and a request. I guess I have to admit 

21 I'm a little bit confused on the one, not confused 

22 but I guess I'm hearing like different things that 
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1 I want to take seriously and then it causes me to 

2 not know what my position is any more.

3 Because I hear Jordan, and I'm 

4 listening to it, and then I hear Tim, and of 

5 course we're sort of in a similar place. And yet 

6 I think about, like an, and I keep going back to 

7 education, but I think it's a good national 

8 example because there are a lot of programs, it 

9 doesn't matter what sector you're in or anything, 

10 there are a lot of education programs we all care 

11 about, a lot, about teachers and so on.

12 I think about like that type of 

13 profession or nursing. You know, one of those 

14 professions.

15 And it seems like, I might not be 

16 understanding the one-to-one exactly and so I have 

17 one question which is, did I hear correctly that 

18 on the one-to-one you would use that as the 

19 methodology but you would still sort of collect 

20 the data and it's come up, I don't know, benchmark 

21 threshold measure?

22 Whatever the term of art is going to 
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1 be. But once you have that data. So that's for 

2 the question.

3 And then the other request is, we've 

4 been talking a lot about the one-to-one and I know 

5 Jordan did a great job on the charts and the 

6 presentation, but is there something, a narrative 

7 description of it that could be written?

8 No, but I mean, I mean, Sandy, you 

9 laugh, but I got to take it back internally. I 

10 mean, I am definitely not the expert to describe 

11 it internally so it would be helpful, overnight, 

12 to have something in writing that describes what 

13 the one-to-one is so that we could describe it to 

14 our constituencies.

15 MR. RAMIREZ: Jordan, do you have a 

16 response on that?

17 MR. MATSUDAIRA: I just wanted to add. 

18 So, I'm not sure whether everybody has access to 

19 somebody who can play around with the program, but 

20 the program that I used to create the charts, 

21 which you can tweak around and kind of assume 

22 different total debt-to-earnings ratios and 
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1 different interest rates and different 

2 amortization periods and see how everything 

3 compares.

4 PARTICIPANT: Okay.

5 MR. MATSUDAIRA: I included that in my 

6 email to Scott. It's written in the statistical 

7 programs data. So if you have people who have 

8 access to that, then you can use the program to 

9 play around with it.

10 PARTICIPANT: Okay, that's helpful. 

11 But I still think it would be helpful to have a 

12 narrative if that's possible. I mean, thank you, 

13 Christopher.

14 Just for those of us who are not 

15 numerical people, it would just be helpful to 

16 understand in a narrative what, and it has to be 

17 written into a regulation anyway, so since it has 

18 to be written into a regulation it would be very 

19 helpful. And then I just do have that threshold 

20 question for the Department.

21 MR. MARTIN: Greg for the record. 

22 Yes, we are looking at the one-to-one as the 
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1 measure, or threshold, benchmark. That would be 

2 what we would --

3 We're still looking at that as, that 

4 measure as having a benchmark at against which we 

5 would set the benchmark at one-to-one. So, 

6 essentially the chart remains the same it's just, 

7 yes.

8 You know, with respect to why we 

9 propose this, and we heard around the table that 

10 there was interest in it, I think in reaction to 

11 that, we took it back, senior leadership thought 

12 it was a good idea to pursue this. We will ask 

13 for consensus on that, and that's the table can 

14 either grant that or not.

15 If we don't get consensus on this then 

16 we still have what we feel are defensible 

17 debt-to-earnings rates. Which we would, I don't 

18 want to say retreat to, but which we would, that 

19 would be our position essentially.

20 So, I mean, as far as where the 

21 Department stands, we picked this, we saw that 

22 there was interest in this around the table, we 
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1 want to propose it as, we're willing to support it 

2 if there's consensus at the table. If not, we 

3 have the D/E rates that we proposed for this 

4 session.

5 MR. RAMIREZ: Okay, thank you. Chad.

6 MR. MUNTZ: I've been usually pretty 

7 brief and I kind of get to the point but I just 

8 kind of want to talk for a minute.

9 (Laughter)

10 MR. MUNTZ: So, everybody else has, 

11 it's my turn.

12 (Laughter)

13 MR. MUNTZ: So we entered this 

14 meeting, the Department said a measure is going to 

15 apply to everyone. We don't have data, we don't 

16 know what that is, just do it, make it good. And 

17 we all want to protect students, we all want to 

18 get the bad actors out.

19 I come from a public institution. We 

20 are transparent, there is actually push to have

21 more programmatic level information available to 

22 our students. This kind of fits with policy.
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1 We can't be perfect with it. And I'll 

2 liken the, we're trying to do surgery with a 

3 chainsaw blindfolded, okay? I'm trying not to 

4 kill the host here, right?

5 So we don't know what, everything is 

6 going to shake out. But I do see some benefits to 

7 all of this.

8 One is, sanctions are on the table. 

9 They weren't on the table when we started. They 

10 are now on the table and there's interesting going 

11 down this path.

12 And I think that that's extremely 

13 important that we're creating a mechanism to cause 

14 the Department to investigate a program. At least 

15 they have a reason to now investigate, and we can 

16 get that out.

17 Now, is there a perfect measure? I 

18 mean, we can propose a, in analytics we can do 

19 like an SVM model, which no one will know it's a 

20 black box but we will get it exactly right and we 

21 can't explain it.

22 Or, we can try and do a threshold 
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1 where we can, to look at it. So, if my program is 

2 failing and no one is earning any money, they're 

3 going to fail every kind of metric that we have. 

4 One-to-one or if we do eight percent of income or 

5 if we do 20 percent, it doesn't matter, there is 

6 no money, they failed.

7 It's just a base point for us to try 

8 and have the discussion start. And I also think 

9 that there is value.

10 Especially in my sector where debt can 

11 get higher, that this is a way to try and help 

12 students decrease debt in general. Because, yes, 

13 the examples we have heard with certificates at 

14 the automotive industry, this is life changing bad 

15 information, but it's on a scale of like $10,000.

16 What you hear from the people making 

17 really bad decisions on the scale of $60,000. I 

18 think we need to put something in place to make

19 sure that income also lines up with that high 

20 amount of debt.

21 And I think that that's important. 

22 Under the old rule, you can get away with it with 
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1 a discretionary income. And it can just keep 

2 increasing.

3 Now, also, I need to, I want to think 

4 about this in general as not, this is the only 

5 time we ever do anything. This is the beginning.

6 There is a point here that we're 

7 trying to create a threshold or a measure, or 

8 whatever you want to call it for everybody, that's 

9 going to create policy discussions going forward.

10 I don't know if 50 percent of income 

11 is the best or 62.5 or maybe it's 30 percent, but 

12 it's going to be a discussion point. The data is 

13 there. And then we can look and see what is going 

14 to happen.

15 With that reason, that's why I don't 

16 want to propose like very strict or outlandish 

17 kinds of sanctions when we don't even know where 

18 everything is going to fall. But I want to start 

19 with the process.

20 The process is here that we can 

21 beginning investigating when institutions and 

22 programs are failing. We could lose that without 
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1 consensus. Because that wasn't part of the whole 

2 rule.

3 So, without, I mean, if it's not 

4 one-to-one, which I hear a lot of support for, 

5 then is it 80 percent debt-to-earnings? I mean, 

6 we got to have something out there.

7 But if we're just going to do platform 

8 speeches, we got one day left, we can start doing 

9 platform speeches. And remind you, that you 

10 weren't even supposed to be part of this. And we 

11 being the public sector.

12 We weren't supposed to be part of this 

13 at all. And there is some give here to get more 

14 information in, for students and consumers that if 

15 we have to be a part of it, we just want it to be 

16 right.

17 And I think there is wisdom in 

18 listening to ten years, 13 year's worth of 

19 information from people who have been subject to 

20 this rule, who were good actors, who did things 

21 well, that they're telling us that there is, for 

22 the other 90 percent of us, that there are fatal 
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1 flaws in the metric. And here's ways to correct 

2 it.

3 So, if it wasn't good with eight 

4 percent or nine percent of the institutions and we 

5 want to say, well, that's not good but let's make 

6 it not good for 100 percent, that just doesn't 

7 make sense. And I think that we can learn from 

8 that and we can move forward.

9 But if we don't want to move forward, 

10 then let's just go back to work tomorrow, I've got 

11 plenty of stuff to do. So, that's all I have.

12 MR. RAMIREZ: Okay, thank you, Chad. 

13 Greg. Greg, did you have a response on that?

14 MR. MARTIN: No. I mean, it's 

15 definitely in the spirit of reaching consensus so 

16 I would be, I support everything that was said.

17 MR. RAMIREZ: Okay. Yes, I didn't 

18 know if you put your tent up for that, sorry. All 

19 right.

20 MR. MARTIN: Oh yes, the fault lies 

21 with me, absolutely. I'm sorry about that.

22 MR. RAMIREZ: Okay, Neal.
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1 MR. HELLER: Yes, Neal. I definitely 

2 could not have said it any better, Chad. So thank 

3 you.

4 MR. RAMIREZ: All right, next.

5 (Laughter)

6 MR. RAMIREZ: Okay, Neal, go ahead. 

7 Go ahead.

8 (Laughter)

9 MR. HELLER: However, just to more or 

10 less piggyback on Chad's comments. I think there 

11 is an element of perspective that is missing, and 

12 I think that's what Chad was also trying to allude 

13 to.

14 You know, where did we start. And 

15 Chad told us where we started, right? The 

16 Department came in here in session one and 

17 basically had a mandate to say, GE is gone, boom.

18 And we've now come back to a point 

19 where there are sanctions back on the table. 

20 Whether or not some of the people here are

21 completely thrilled with them, the fact remains 

22 that, and I remember these words, sanctions are 
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1 off the table at the beginning of session two.

2 Well, some how we've managed to bring 

3 them back. And I'm not opposed to that.

4 So, I mean, I also think the 

5 perspective is, where did these ideas come from. 

6 The one-to-one ratio came from public university 

7 representative, Chad, who's also had some very 

8 good ideas.

9 The 75 percent or the 62 percent of 

10 income median came from Jeff, the for-profit 

11 sector.

12 Having sanctions back on the table and 

13 then adding the repayment metric as a secondary 

14 metric to consider came from, I believe the 

15 consumer advocate side of the table.

16 So, when you think of it, everybody 

17 has contributed to where we are right now. And I 

18 have to say that I've got to complement the 

19 Department for listening. They didn't have to.

20 And I can tell you that there has been 

21 times that they don't. Just look at the original 

22 GE rule. Which was going to wipe out entire 
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1 sectors of higher education anyway.

2 So I do complement the Department for 

3 actually listening and very quickly coming to 

4 where we are right now. Because they realize that 

5 time is of the essence, tomorrow is our last 

6 chance.

7 So for those who aren't completely 

8 happy, none of us are completely happy here. As 

9 Chad said, they weren't even supposed to be here, 

10 right?

11 Tim, same thing. I mean, how did they 

12 end up in this room, right. But they are here and 

13 they're part, they were invited to the party, so 

14 to speak. And we're all here and none of us are 

15 completely happy.

16 But I know that in Chris' other life, 

17 here he is a prosecutor of sorts, there are many, 

18 many times where I'm sure you've had to make deals 

19 with people that you couldn't even stand to look 

20 at. I don't think we're quite that bad.

21 (Laughter)

22 MR. HELLER: So I really, again, as 
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1 Chad said, I would urge us to really look at this 

2 and say, you know what, there's a lot to like, 

3 there is a lot not to like, but it's a starting 

4 point and it's not the end, but it gives us a 

5 basis to move forward. And then when data is 

6 collected, to adjusted accordingly. So, thank 

7 you.

8 MR. RAMIREZ: Thank you. I have heard 

9 that a sign of a good deal is when both sides walk 

10 away equally dissatisfied, so maybe he's on to 

11 something.

12 So I have Mark and then Johnson and 

13 then I think we'll take a break. But, Mark.

14 MR. MCKENZIE: Thank you. So, on a 

15 very serious note I want the group to know, while 

16 there has been a lot of discussion that the rule 

17 has been eased. In a very serious way, the rule 

18 is much, much tougher.

19 The current GE rule, if an institution 

20 has eight percent, has to fail that eight percent 

21 for four years in a row, and then there is an 

22 appeal. And in reality, it's a very, very long 
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1 road for the Department to take any action.

2 PARTICIPANT: Two out of three.

3 MR. MCKENZIE: Is it two out of three?

4 PARTICIPANT: Well, it's three years 

5 of failure, four --

6 MR. MCKENZIE: Department, what is it?

7 MR. MARTIN: Yes, she's correct.

8 MR. MCKENZIE: Three out of four for 

9 zone?

10 MR. MARTIN: For zone failure.

11 MR. MCKENZIE: So, if you keep getting 

12 zone, at eight percent, how many years would it 

13 take until you've lost Title IV?

14 PARTICIPANT: Fourth year.

15 MR. MCKENZIE: Fourth year.

16 PARTICIPANT: It's a combination of 

17 zone --

18 MR. MARTIN: Yes.

19 MR. MCKENZIE: I stand by my comments. 

20 It's more than four years with an appeal. And in 

21 the original GE, I felt that was too long and we 

22 weren't able to do anything.
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1 In the currently proposal from the 

2 Department, if an institution has over eight 

3 percent debt-to-earnings and whatever does not 

4 meet whatever the repayment rate, the Department 

5 can take action in a much quicker way and can do 

6 it in a much more, in my mind, nimble way.

7 So I want you to know, in that 

8 respect, this rule is much stricter and much 

9 quicker acting than the current gainful employment 

10 rule.

11 MR. RAMIREZ: Okay, thank you. 

12 Johnson.

13 MR. TYLER: Yes, I just have to 

14 express my concern that the fallback, the repay 

15 metric, is not going to capture a single school or 

16 program. And I've look at all the school related 

17 data and I've done the analysis, if you use the 

18 whiskers and all that, and everybody is going to 

19 pass. Every single institution would pass.

20 So we have the repayment rate for 

21 institutions for five years. And I'm not an 

22 expert on statistics but I got a tutorial from 
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1 Sarah.

2 And so I do think if we're going to do 

3 this, if it's going to have any meat to it, there 

4 has to be some thinking about, when I'm talking 

5 about this I'm talking about the one point, the 

6 enter quartile range, I can barely say it, whether 

7 you're going to use that and multiple it by one 

8 and a half.

9 Because when you do that math, 

10 everything ends up below zero. And if its below 

11 zero than it becomes zero. And the lowest 

12 repayment rate per institution is nine percent, 

13 the highest is 95 percent.

14 And so, that is institution specific, 

15 but a lot of these institutions do one or two 

16 things. They do healthcare, they do, 

17 unfortunately they do barber stuff. But I don't 

18 want this whole discussion to end up where no one 

19 gets warned.

20 And I understand the appreciation of 

21 statistics and all that but Jordan has said, why 

22 do we need to go to the 1.5 percent enter quartile 
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1 range formula to locate the outliers. Because if 

2 there are going to be no outliers, we have a 

3 problem.

4 And I just want to also just talk 

5 briefly about, on the repayment rate and Jennifer 

6 said, why are we counting the people who are in 

7 income based repayment. If they're in income base 

8 repayment they're actively repaying even if it's 

9 zero.

10 And the idea is, for repayment is, are 

11 you spending down the principle. So, I counsel a 

12 lot of clients about income based repayment is and

13 do the math on them. So I've done the math.

14 Just as an example. If you have 

15 $10,000 of debt and your income is $22,500 and the 

16 interest rate is 4.5 percent and you pay $0, you 

17 pay $0, I'm sorry, you don't pay $0 you pay $35, 

18 which just covers your interest, so you're not 

19 paying down your debt.

20 And the whole idea behind the backstop 

21 is designed to, in order to reinforce the idea 

22 that this is a bad investment for a student. With 
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1 that sort of repayment rate, you're going to be 

2 repaying for the rest of your life until 20 years 

3 kick in and you don't have to pay anymore. And 

4 it's a bad investment for taxpayers.

5 So, I don't think you can include the 

6 IBR people who are paying $0 or paying, are not 

7 paying down their principle. Because it indicates 

8 that there just, it was, it's a bad investment. 

9 At least at that time that that calculation is 

10 being made.

11 MR. RAMIREZ: All right. So, it looks 

12 like I have Jennifer then Mark.

13 But one thing that I would ask is that 

14 if there are concerns like that that would prevent 

15 a group that would not be able to say yes, in 

16 remembering the levels of consensus, right, that 

17 you may not necessarily agree with it but you 

18 would still support it because you understand what 

19 the alternatives would be if we couldn't reach 

20 agreement, something along those lines, right, 

21 that lowest level of consensus.

22 But what tweaks would be necessary in 
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1 order to, and I say tweaks, necessary in order to 

2 make it acceptable. And the reason I say that is 

3 because I know the Department is really trying to 

4 listen to what the concerns are and try to offer 

5 something that they know that they could get 

6 approved as well, right?

7 So if it deviates too far, then they 

8 have certain positions that would probably be 

9 implemented. So I need for you all to keep that 

10 in mind as well.

11 So with that, we have Jennifer and 

12 Chris and then hopefully we'll finish up with 

13 those and then be able to take a break. So, 

14 Jennifer.

15 PARTICIPANT: So, Johnson, I hear you 

16 and actually I think there is value to a principle 

17 based loan repayment rate for certain purposes. 

18 But, again, on the income base, and I agree with 

19 you about zero by the way.

20 And that's why the House bill, if you 

21 look at the House bill, they don't include zero 

22 payments positively either they only treat IBR 
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1 where there are payments being made positively. 

2 So that's one.

3 So you're looking for solutions, 

4 that's one. But I also feel like there is just a 

5 fundamental, and again, this is a legal issue to 

6 some degree, and I would I phrase it as a legal 

7 issue for the Department, where the minute you put 

8 sanctions back in, and I need to be honest with 

9 you with respect to the Department, they can say, 

10 as many times as they want, that the metric is 

11 debt-to-earnings.

12 But the minute they put in loan 

13 repayment to be like the sort of way out or 

14 whatever, loan repayment becomes a metric too. It 

15 just does. And so then that's when sort of, is it 

16 arbitrary or not.

17 We don't, we the institutions, aren't 

18 making the decisions around income based 

19 repayment. The servicers, and we had a long 

20 conversation about that, the servicers and the 

21 borrowers are making the decisions about their 

22 repayment plans after the fact.
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1 And I've asked the Department what 

2 percentage of students, borrowers, are in IBR. I 

3 think that would be a really relevant data point.

4 I know the Department won't be able to 

5 satisfy another request, which would be, and I'm 

6 not asking for it because I know they can't, but 

7 it does also relate to the earnings question. A 

8 lot of students who are in IBR are in fields like 

9 teaching or counseling or social work.

10 And a lot of them are in it. And I 

11 agree, the premise behind, the original, original 

12 premise around IBR was to be sort of a safety net 

13 for bad situations. You know, to help borrowers 

14 out of the bad situations.

15 But it's become something more than 

16 that. For better or for worse. I'm not taking a 

17 position on it, it's just fact.

18 And so, to me this is a, literally a 

19 legal conversation about whether the Department 

20 can actually exclude X percentage of borrowers 

21 from a rate, exclude or treat negatively, X 

22 percentage of borrowers from a rate for which the 
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1 schools might ultimately be penalized.

2 That to me -- so, I'm not, I don't 

3 want to have a policy conversation about it. I 

4 agree with you, the gold star is a principle based 

5 loan repayment rate, but it's not my decision 

6 about what loan repayment process a borrower ends 

7 up in. So that's the piece that I am struggling 

8 with.

9 MR. RAMIREZ: Okay, thank you. Chris 

10 Gannon.

11 MR. GANNON: You know, I am glad that 

12 we've negotiated to the point where there are 

13 sanctions still on the table and that sanctions 

14 are an option, but I'm just worried that these are 

15 discretionary sanctions because just everything I 

16 read is framed with language like, options include 

17 and the Department may.

18 So, it's my understanding that the 

19 Department can opt not to implement these 

20 sanctions. And I'm just worried that they're 

21 entirely superficial.

22 MR. RAMIREZ: Okay. Mark.
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1 MR. MCKENZIE: Just some data back 

2 from Jordan. I think I heard you say that the 

3 original eight percent debt-to-earnings rate 

4 reached about 25 percent of programs. Is that 

5 what you, because you refer to that.

6 MR. MATSUDAIRA: I don't want to 

7 swear, but that's based on my loose recollection. 

8 I hope that --

9 MR. MCKENZIE: But --

10 MR. MATSUDAIRA: -- but that's based 

11 on like the 2015 rates --

12 MR. MCKENZIE: Yes.

13 MR. MATSUDAIRA: -- so somebody in the 

14 Department ought to be able to --

15 MR. MCKENZIE: So that's consistent 

16 with my memory. The reason I'm bringing it up is 

17 back to Johnson.

18 I actually believe, depending where 

19 they land, you do have the opposite problem. At 

20 eight percent it's at 25 percent with only the 

21 proprietary sector.

22 I believe the data shows it's going to 
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1 be a higher percentage for the independent sector. 

2 And having more than a quarter of all American 

3 programs fail on metric, it's just too much.

4 And so that's where there has got to 

5 be some balance. And that's why I don't think the 

6 current proposal is without teeth, we'll have to 

7 see the answer to it.

8 With repayment rates, the teeth are, 

9 just depending where they, if they set in 

10 absolutely metric, they can set a metric that 

11 almost no one makes. The proposal that was 

12 originally from the Department at 50 percent was a 

13 very tough proposal.

14 And they have not proposed actually a 

15 metric yet with the repayment rates, but the 

16 Department has the ability to propose something 

17 that effects a large number of institutions or a 

18 small. But just to know, the current D/E rate, at 

19 eight percent, would reach a large number of 

20 programs.

21 MR. RAMIREZ: Okay, thank you. So 

22 let's go ahead and take a 15 minute break and then 
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1 when we come back we're going to get into, see how 

2 much of the final three papers we can get through 

3 before tomorrow.

4 (Whereupon, the above-entitled matter 

5 went off the record for a short recess.)

6 MR. RAMIREZ: Okay, so what we'd like 

7 to do is try and get through as much of these 

8 papers as we can, but also, to Jennifer's point as 

9 far as wanting to see something written up on 

10 this, the Department's willing to do it if it's 

11 something that you all are willing to accept, 

12 right? I guess why go through the exercise, why 

13 go through the work if it's something --- if it's 

14 dead on arrival anyway, right?

15 So, I know that it was a lot for you 

16 all to digest, and that's why I was thinking that 

17 maybe we'd go through some of the issue papers and 

18 save some time at the end to take a vote on it and 

19 see if it's something that is worth taking the 

20 time for the Department to draft up. Jennifer? 

21 PARTICIPANT: See, I'm sorry, but I 

22 think the opposite is true. I can't vote on it 
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1 without being able to take it back to my crowd and 

2 do some math, like understand it. And I did send 

3 Jordan stuff on to -- but it takes them time, too, 

4 to understand the analysis, and I'm just one 

5 person, so in terms of the organization. 

6 So I actually would prefer the opposite 

7 where we have something that we can take back to 

8 our constituencies to digest overnight and vote 

9 tomorrow. That's just my own -- obviously I'll do 

10 what everybody else does, but that's actually why 

11 I was asking for something in writing, so that we 

12 could take whatever it is now, 18 hours, to digest 

13 it and vote tomorrow on that concept. 

14 MR. RAMIREZ: Greg? 

15 MR. MARTIN: Two things. I can 

16 understand that. I was hoping to get a sense of 

17 if it's a non-starter, irrespective of whether we 

18 write something up, that would be good to know. 

19 We could go back and write it up as proposed today 

20 and have you vote on it tomorrow if you want to. 

21 Yeah, we could do that if that's the way the table 

22 would like to go. Hold on a second. 
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1 Yeah, I'd also like to hear some other 

2 people around the table. I'm not asking you to 

3 vote up or down, but you know, if it's a 

4 non-starter for you, I'd like to know. Nothing 

5 personal, I'd just like to hear it, because it 

6 would help us. It would definitely help us. 

7 MR. RAMIREZ: Okay. Let me get Pamela 

8 and then Tony, then Thelma. 

9 MS. FOWLER: It's not a non-starter 

10 for me, but I did want to address Johnson's 

11 concerns about people not -- no one would fail the 

12 repayment rate. If you fail -- you only get to 

13 the repayment rate if you fail the debt to 

14 earnings, and if you go ahead and you somehow or 

15 another pass the repayment rate, that doesn't mean 

16 there's not a problem there. 

17 And the Department said, the first day 

18 we were here, that they had other tools. And 

19 that's no reason that they can't use those other 

20 tools on those schools, even though they don't get 

21 to sanctions or LS&T or whatever we're going to 

22 call it. And perhaps that's been the problem in 
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1 the past. 

2 There's been one indicator that there 

3 was a problem, but you appeal that indicator and 

4 then the assumption is all is good. And that's 

5 not the assumption that should be made. So I 

6 guess we would have to rely on the Department to 

7 take all those schools who fail the debt to 

8 earnings and use these other tools that they talk 

9 about to remedy the situation one way or the 

10 other. 

11 MR. RAMIREZ: Let me get Tony, Thelma, 

12 and then John. 

13 MR. MIRANDO: Tony, for the record. 

14 So this is for you, Greg. So I think the way we 

15 left off before we went to break, I heard you kind 

16 of spout something out and then we stopped, and 

17 that is, is it the intention that if this proposal 

18 that you all are willing to put into writing if 

19 there's a need, I mean, if there's enough of us, I 

20 guess. 

21 Is it the intention to go back to 

22 potentially the first document that you all 
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1 proposed in, you know, week one, which nobody 

2 really -- just asking the question.

3 MR. MARTIN: For purposes of voting, 

4 you know, up or down, consensus on the whole 

5 package here, we would retreat to our position 

6 offering these papers for round two. Using debt 

7 to earnings the way we had them, for this round, 

8 that you see presented, the way the papers look 

9 now. 

10 Again, I reiterate that we did this --

11 we're doing this because we saw that there was 

12 some interest around the table in moving in this 

13 direction. Whether that represents consensus 

14 around the table, we'll find out. 

15 MR. RAMIREZ: Okay. Thank you, 

16 Thelma. 

17 MS. ROSS: Thank you, Thelma, for the 

18 record. I do want to thank the Department for 

19 listening. I am supportive of the path that has 

20 been taken, and I think with my institution's way, 

21 it probably would give me pause where they may 

22 fail, some would fail one and maybe not the other. 
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1

2 I do understand that, but I think as a 

3 whole, it would be a more viable option than what 

4 has been presented before for my institutions. 

5 MR. RAMIREZ: Thank you. John?

6 PARTICIPANT: Yes, thank you. I 

7 appreciate the proposals here, and for the box 

8 plots. And it actually reminds me of something 

9 the DoD is doing in voluntary education with their 

10 institutional compliance program where they're 

11 showing a similar angle of looking at it on a bell 

12 curve and then taking the outliers. 

13 That being said, it is a very outside 

14 the box thing to do, and there --- you don't need 

15 a history lesson of over -- looking at a normative 

16 approach versus a criterion-based approach and 

17 some of the issues that could develop with that. 

18 You just have to look at the issues 

19 with grading on a bell curve and see the 

20 limitations and, you know, fifth grade to 

21 understand what the issues are. 

22 Adding in the math that is involved 
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1 with this and the statistical analysis makes it 

2 that much more challenging for us to provide any 

3 assurances on whether this would be appropriate or 

4 not, and I think it is worth returning the 

5 question of is this a proposal that is good in a 

6 supplemental way or in a way that potentially has 

7 legs down the road. 

8 And if that's the case, I would return 

9 to something a little bit more simple that has 

10 more practical effects that we can use right now. 

11 Thank you. 

12 MR. RAMIREZ: Okay. Jordan, Mark, and 

13 Kelly.

14 MR. MATSUDAIRA: So just broadly, I 

15 wanted to just make a comment, which is that it's 

16 kind of hard, for me anyway, to vote one at a time 

17 about the kind of different changes that are being 

18 proposed either to the kind of overall structure 

19 of the metric, whether it's total debt or kind of 

20 annualized debt using some amortization formula in 

21 isolation from other changes like how we're going 

22 to measure earnings or how we're going to measure 
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1 debt and all those things, because directionally, 

2 you know, each one of these things incrementally 

3 go in certain ways. So there are some 

4 changes that I think make the rule less strict 

5 overall, but that I'm sympathetic to, like 

6 measuring earnings a little bit later on to kind 

7 of give a chance to see people's earning potential 

8 reflected perhaps a little bit better. 

9 But there's also just the issue of 

10 like, how kind of -- what ultimately is happening 

11 to the structure of the rule and the protection 

12 that it's providing in terms of identifying 

13 potentially poor-performing programs. 

14 So, you know, I think some my 

15 standpoint, voting on an overall structure of the 

16 rule where the definition of how earnings are 

17 measured, data is measured, and how those things 

18 are all going to be mapped into a decision about 

19 whether a program's meeting standards or not, it's 

20 kind of necessary to look at those things all in 

21 conjunction. 

22 One specific thing that I wanted to 
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1 just ask, or put to the table about this debt to 

2 earnings calculation overall, is one of the 

3 concerns about the current structure of the rule 

4 that I hear is that the interest rate kind of in 

5 the amortization I think Jeff has said kind of 

6 adds a little bit of noise to that and makes it 

7 hard to anticipate what the standard will be over 

8 time. 

9 And whether there are modifications 

10 such as only updating that interest rate 

11 relatively infrequently, say every five years or 

12 something like that, would be an alternative way 

13 to get the kind of stability and the threshold 

14 that you might be desiring by looking at just the 

15 total debt to earnings ratio. 

16 MR. RAMIREZ: Mark?

17 MR. MCKENZIE: Thank you. Mark 

18 McKenzie. Greg, I think you were asking for 

19 specific feedback on the debt to earnings request, 

20 to actually write that up as far as the one-to-one 

21 ratio, is that what you were --

22 MR. MARTIN: Oh, okay. No, we would 
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1 be asking for your -- what we would be asking for 

2 today would be eventually a vote or your opinion 

3 on now would be everything up through -- it would 

4 be the repayment rate, the change debt to 

5 earnings, the repayment rate benchmark of 

6 one-to-one, all of that would be what we would be 

7 asking for. 

8 PARTICIPANT: And the 62.5 percent 

9 (inaudible).

10 MR. MARTIN: And yes, correct. Thank 

11 you, Jennifer.

12 PARTICIPANT: So all three of those 

13 boxes --

14 MR. MARTIN: And the 62.5 percent, 

15 yes. All of those. 

16 PARTICIPANT: So, we actually try to 

17 put the strike-throughs on the area.

18 MR. MARTIN: Yeah, I think it's up 

19 there, isn't it?

20 PARTICIPANT: Yeah, so we -- it would 

21 be programmatic. It would be a one-to-one ratio. 

22 It would be all programs would be five to six 
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1 years as far as the look-back period with the 

2 possible phase in. Income would be the two 

3 measures of 50 percent plus a 62.5. Debt would be 

4 Title IV debt, and then the repayment with the box 

5 plots. 

6 PARTICIPANT: Okay. I guess just 

7 overall, in sitting back and listening, there's 

8 still obviously a lot of concern that Jordan 

9 brought up, Chris brought up, Johnson's brought 

10 up, that the structure or the chances in effect 

11 seem to be watering down the metrics to the point 

12 where the regulation becomes ineffective because 

13 it doesn't capture anybody, if I can paraphrase. 

14 And conceptually, well, I like the 

15 one-to-one conceptually. It may not be a 

16 one-to-one. It might be a 0.8 to one. And so we 

17 come back to the threshold, and the metric is 

18 where the discrepancy is going to be. I actually 

19 like the framework process, you know, of having 

20 those couple of different steps, because I do 

21 think that that has an appeal process kind of 

22 built into it. 
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1 But clarifying where the threshold is, 

2 and so I'm going to come back to the question I 

3 asked yesterday, is can the regulation be crafted 

4 in such a way that it writes in a transition or a 

5 phased-in process to allow these metrics to be 

6 adjusted based on the data that bets collected and 

7 the analysis that gets done two years, three 

8 years, four years down the road. 

9 MR. RAMIREZ: Do you want any response 

10 to that, Greg? 

11 MR. MARTIN: Well, with respect to the 

12 repayment rate metric, I think that's built in, 

13 because you're looking at through a statistical 

14 model and looking for the extreme outliers. So I 

15 think that does, that adjustment does get built 

16 in. And however often it's recalibrated, it does 

17 get built in. 

18 With respect to DE, I mean, we're 

19 proposing -- and I'm telling you, just reiterating 

20 what I said earlier. We're proposing a one-to-one 

21 threshold. That's what it would be, that's what 

22 the standard would be, it's what the benchmark 
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1 would be. We wouldn't be looking at changing that 

2 in response to outcomes. That would be in the 

3 regulation.

4 PARTICIPANT: So, just to clarify, and 

5 I'm not talking about now, I'm talking about once 

6 you've actually then gathered the data and looked 

7 at it, are you saying that because we lock it in 

8 at one-to-one now, it stays one-to-one forever 

9 going forward, even though it doesn't capture any 

10 --

11 PARTICIPANT: What would be the 

12 vehicle to adjust?

13 PARTICIPANT: Yeah, exactly.

14 PARTICIPANT: Yeah, would there be a 

15 vehicle to adjust it at some point in the future? 

16 PARTICIPANT: I think we'd have to 

17 talk to leadership about that. I mean, I'm 

18 inclined to say that you can write a rule that 

19 gives the Department the latitude to, through a 

20 federal register, you know, sort of as we do with

21 verification. We list the verification elements 

22 every year. 
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1 I don't know if the group is 

2 interested in providing us, giving us that, but if 

3 you write it into a rule, hard and fast into a 

4 rule, you know, generally speaking, you have to 

5 renegotiate that rule to change it. 

6 We couldn't have gone -- we certainly 

7 couldn't have gone back and said with the current 

8 rule, we don't like these rates. We'll just 

9 change them. It's in the rule, and the only --

10 and negotiated rule-making is the way we change a 

11 rule. 

12 But I guess it could be built in in 

13 such a way that if you could, through a federal 

14 register maybe, do it that way. But that's about 

15 the only way I can think of to do it. 

16 PARTICIPANT: Yeah, because I think 

17 the challenge is we're never going to be able to 

18 come to consensus on thresholds without the data 

19 and without a time frame. 

20 And so without some mechanism built in 

21 to actually be able to adjust those thresholds up 

22 or down so that they're actually capturing what 
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1 you want to capture, then it actually becomes a 

2 waste of time in some ways. And I think it makes 

3 it much harder to come to consensus in this group 

4 in the next 12 hours or whatever we have. So, 

5 thank you.

6 MR. RAMIREZ: Probably in the next 15 

7 minutes, because I'm going to do a temperature 

8 check. Well, I want to do a temperature check 

9 just to give them an idea if this is --

10 PARTICIPANT: Before you do that, 

11 Javier, I want to say I could check with my 

12 people, but I don't think it's going to be 

13 possible for us to re-write -- I mean, this just 

14 came up this afternoon, so for us, for me to say 

15 that our people get started re-writing this now 

16 and give it to everybody before we leave, I don't 

17 think that's going to happen. 

18 MR. RAMIREZ: Okay.

19 PARTICIPANT:(inaudible).

20 MR. RAMIREZ: Sure, (inaudible), come 

21 on.

22 MR. RAMIREZ: So just to give a sense 
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1 of how this works across the sectors, the 

2 one-to-one does have a disproportionate impact on 

3 the proprietary sector. 

4 It looks like it affects 65 percent of 

5 the institutions, 27 percent in the private sector 

6 and only seven percent in the public sector. I'm 

7 just giving you some rough numbers. Again, that's 

8 institutional, not programmatic. But if you just 

9 want to -- it gives a sense.

10 MR. RAMIREZ: Okay. So we have Kelly, 

11 Matthew, Sandy, Jennifer, Jeff. 

12 MS. MORRISSEY: Kelly, for the record. 

13 Before I make my comments, Mark, can I just ask a 

14 followup to that? So that data that you're 

15 accessing, does that include private loan debt as 

16 well?

17 PARTICIPANT: No.

18 MS. MORRISSEY: That's just based 

19 strictly on federal loan debt?

20 PARTICIPANT: Federal loan debt 

21 directly from the (inaudible).

22 MR. RAMIREZ: Yeah, it's up on the 
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1 board. So type of debt is the Title IV.

2 MS. MORRISSEY: No, I understand 

3 moving forward it's based on Title IV, but I 

4 didn't know if the data he was accessing was only 

5 Title IV.

6 PARTICIPANT: Only Title IV debt, and 

7 only the debt of borrowers.

8 MS. MORRISSEY: Thank you. 

9 MR. RAMIREZ: Okay. Matthew?

10 PARTICIPANT: No, I think she had some 

11 --

12 MR. RAMIREZ: Oh, I'm sorry. You have 

13 one more? Go ahead, Kelly.

14 MS. MORRISSEY: So, I just wanted to 

15 react based on Greg's request to using one-to-one 

16 for the debt to earnings. I think when Chad 

17 presented this as an alternative, I was reacting 

18 to the simplicity of it and having a direct 

19 comparison of debt to earnings leaving out the 

20 variables of amortization period and interest 

21 rate, and I just thought from a student-focused 

22 point of view that it was just very simple to 
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1 explain to students. 

2 However, I didn't think that at that 

3 time we were providing direct agreement, that the 

4 ratio should in fact be one-to-one. I don't know 

5 if that's what it should be. I don't know if 

6 drawing the line there is the place that it should 

7 be just harkening back to Laura's comment earlier 

8 today. 

9 When we're now looking only at Title 

10 IV debt and you're looking at aggregate loan 

11 limits, for a dependent student who can only 

12 borrow $31,000.00 in federal loan debt, think 

13 about that. Everyone who's earning $31,000.00 

14 who's borrowed the maximum possible loans is 

15 meeting the standard. So to me, just that fact 

16 along really weakens the one-to-one argument. 

17 Should it be 0.8? Should it be something else? 

18 I have no idea, because again, this is 

19 not being informed by actual data.

20 MR. RAMIREZ: Okay. Matthew? 

21 MR. MOORE: I put mine down. My 

22 comment was actually the same as Kelly. Just
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1 trying to reconcile all that with private loans 

2 not being in there. I just agree the same way, 

3 that if you're -- I was kind of doing some math. 

4 If you're a dependent student going to 

5 a four-year university, the most you can borrow is 

6 about $27,000.00, if you're borrowing the maximum 

7 each year. So I'm just wondering who actually 

8 meets -- or I guess fail that requirement. 

9 Mark is showing that maybe there are 

10 schools that will, I just have to reconcile that I 

11 guess in my head. But I kind of agree with what 

12 Kelley was saying. 

13 MR. RAMIREZ: Jennifer? Diamond. 

14 MS. DIAMOND: Jen Diamond. I just 

15 wanted to respond to that and say I don't want to 

16 say that the one-to-one is a non-starter, but 

17 until we figure out the repayment method or the 

18 repayment metric, which as others have alluded to, 

19 right now is just not really going to serve as a 

20 safety net for those who make it through one 

21 metric. I just don't feel comfortable solidifying 

22 the other metric. 
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1 MR. RAMIREZ: Okay. Then we have the 

2 other Jennifer, and then Jeff and Mark. 

3 MS. BLUM: So that's kind of funny, 

4 because I think I was about to say the opposite of 

5 Jen, but for maybe the similar reasons. First of 

6 all, I agree with Kelly, I think. 

7 I think without -- I just don't know 

8 that one-to-one works for teachers and nurses and 

9 I mean, just across the board. And until we have 

10 the data, I just think it's really hard to know 

11 that. And frankly, being -- and again, it's just 

12 the lawyer in me wants to see the language. 

13 So I think it's really hard to take a vote 

14 on something that I don't have in front of me to 

15 read. And that's just more about my brain, maybe, 

16 but I just feel like I need to see something in 

17 writing. So I would ask -- and again, setting 

18 aside whether, like for example my constituency 

19 needs to see the narrative or not, they can 

20 certainly, at least in our organization, run 

21 numbers. 

22 But I would like them to be able to 
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1 run numbers overnight so I can be informed by the 

2 impact based on different professions and things 

3 like that. I think I'd know more in the morning. 

4 So I again would ask that maybe we could go on to 

5 the issue paper, the other issue papers, and hold 

6 this vote -- and this is just my request -- until 

7 the morning. 

8 And then the one thing I was going to 

9 say that was different than Jen Diamond is that I 

10 would like -- I would actually also recommend that 

11 perhaps, because you're putting a lot into a 

12 temperature check, because you're putting in this 

13 concept, the loan repayment rate, and this 65, 

14 whatever you want to call that thing, that 

15 whatever, about earnings into one vote. 

16 And I think that we might do better on 

17 if -- and again, I think it's better tomorrow 

18 after we all have a good nights' sleep and can 

19 think about it -- but I think it might be better 

20 to unpack the concepts. But that's the opposite. 

21 So with respect to Jen, like, she 

22 might not -- I mean, it sounds like she wanted to 
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1 get them all nailed down together. Or maybe it 

2 would allow us to nail them all down together and 

3 then unpack them for the purposes of a vote. 

4 MR. RAMIREZ: Yeah, it's a chicken and 

5 egg, right? Because I'm hearing resistance on 

6 both, right? It folks aren't seeing all the 

7 components, then they get hesitant, but then if 

8 it's all of it, it's too much to --

9 MS. BLUM: Well, I'd be happier voting 

10 on the whole package if I had something to look at 

11 and I had run the -- you know, had the opportunity 

12 to actually understand the impact at least 

13 internally before I voted. 

14 So, I would say that if we're going to 

15 vote on the whole thing together, I think we all 

16 need some time to think about the loan, all of the 

17 different factors and take it back before we just 

18 go ahead and vote today. That's just my view. 

19 MR. RAMIREZ: Yeah. And if I 

20 understand correctly, the reason that this came up 

21 was because the Department was trying to listen to 

22 the ideas and discussion that was generated in 
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1 here, and this one-to-one ratio appeared to be --

2 and Kelly, nobody was locked in, right? 

3 I just want to make sure that that was 

4 clear, right? But that there may be some appeal 

5 to exploring this one-to-one idea. And you've had 

6 some discussion to get some clarity on how it 

7 would really look. And I guess with that, I think 

8 the Department's trying to find out, is this 

9 viable, right? 

10 Or no matter what we do here -- and 

11 understanding with the limitations that we have, 

12 right? We have some limitations on we're not 

13 going to get all the data that folks would feel 

14 comfortable with, right? Can we get some 

15 language? Possibly. But even if we got some 

16 language to look at it, is it still going to be an 

17 idea that's going to be killed, right? 

18 Can we get consensus on this thing if 

19 folks were able to look at language on it, or is 

20 it a dead deal? And if so, that's fine, right? 

21 The Department, you all are clear where the 

22 Department will go with this if it's not doable, 
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1 right? So is it worth the exercise for the 

2 Department to draft a language, or is this dead on 

3 arrival? 

4 And that's what the temperature check 

5 would be, right? The temperature check would be 

6 to see is it worth continuing the discussion?

7 PARTICIPANT: I just have some 

8 questions. 

9 MR. RAMIREZ: Yeah, Mark.

10 PARTICIPANT: Just to confirm, some of 

11 the questions I wasn't sure we were on the same 

12 understanding of the proposal. In my 

13 understanding of the proposal, if the programmatic 

14 debt is $20,000.00 where the earnings are 

15 $25,000.00 and the debt is $26,000.00, as long as 

16 the debt is higher than the earnings, that would 

17 be over the one number. Chad? Okay? So 

18 Kelly, I didn't -- so there are plenty of 

19 institutions that are -- that fall in there. They 

20 are disproportionately in one sector. But there's 

21 no doubt there's many institutions that have that. 

22 So I wasn't quite understanding the discussion 
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1 about who -- that no one was going to fail it. 

2 MR. RAMIREZ: Yeah, Chad? 

3 MR. MUNTZ: I mean, to that point, I 

4 mean, Mark, from his sector, just provided data 

5 that 62 percent of the proprietary institutions 

6 are going to be caught up. When we began this in 

7 session one, we identified the sector that has the 

8 issues. I mean, it's still doing that. So I 

9 don't know what better measure. But I mean, I 

10 agree that we need to do something here.

11 PARTICIPANT: So, does he saying 65 

12 percent of the failing programs are in his sector, 

13 or 65 percent of those programs fail?

14 PARTICIPANT: It's the latter.

15 PARTICIPANT: It's institutional.

16 PARTICIPANT: Institutions?

17 PARTICIPANT: The latter.

18 PARTICIPANT: All right, so say that 

19 again?

20 PARTICIPANT: So, 65 percent. 

21 Sixty-five percent of failing institutions are in 

22 the proprietary sector. Or it's not 65 percent of 
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1 the proprietary sector?

2 PARTICIPANT: Right.

3 PARTICIPANT: Okay. But still, we 

4 disproportionately found the area, right? Where 

5 the problems are.

6 PARTICIPANT: But how many failed?

7 PARTICIPANT: How many was that 65 

8 percent?

9 PARTICIPANT: That must mean they 

10 failed it.

11 PARTICIPANT: I offered it. I'm 

12 reluctant to, because I'm doing it too quickly, I 

13 offered it just for a sense of how it has an 

14 impact, but again, this is not hard for the 

15 Department to present, or someone else to present. 

16

17 If you'd like me to really run it, I 

18 will, but at this point, I'm not sure it's helpful 

19 for a member to be constantly doing it. I'm doing 

20 it just to help. So there's no doubt it was 

21 disproportionately of the failing institutions. 

22 It was disproportionately on the proprietary 
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1 sector. 

2 And the public sector is probably 

3 over-represented, because the scorecard is only 

4 looking at borrowers and the actual DE metric 

5 includes non-borrowers, so it's going to have 

6 actually even less of an impact on the public 

7 two-year sector. 

8 So I think I'll leave it at that, that 

9 the disproportionate number of failing 

10 institutions at an institutional level are in the 

11 proprietary sector. There was some in the private 

12 and very few in the public. 

13 MR. RAMIREZ: Chris. 

14 PARTICIPANT: This doesn't feel like a 

15 very good way to do rule-making. I mean, it feels 

16 like we're very rushed, it feels like we're at the 

17 end of the third session with something that's 

18 totally new and doesn't have a lot of time to 

19 either try and run or do some research or some 

20 data. 

21 And the Department, we don't even have 

22 anything written to read. I mean, I agree with 
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1 Jennifer that we're voting on something that was 

2 orally presented, and if we reach consensus, that 

3 will be the rule? I mean, there is details in 

4 there that are -- there probably will be 

5 unintended consequences that will affect consumers 

6 negatively, schools negatively, taxpayers 

7 negatively. 

8 I mean, this really does not feel like 

9 a good way to write a rule. So I just can't vote 

10 on something without seeing the language. And if 

11 the Department feels like it doesn't want to write 

12 that language because it's not sure if we will or 

13 won't approve it, I mean, I just don't know how we 

14 can move forward.

15 PARTICIPANT: What I'm hearing 

16 currently is that there's a very high unlikelihood 

17 of consensus on this. I don't want to say for 

18 sure. I could come back tomorrow technically with 

19 some draft language on it. 

20 Mind you, it would be -- tomorrow is 

21 the last day. So you wouldn't have any more time 

22 to ruminate on it then than you do now. So I 
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1 mean, there would be no opportunity to take it 

2 back. You would see it tomorrow. 

3 I think yes, it is -- I mean, this 

4 part of it is rushed. We took an idea that was 

5 basically voiced a few hours ago and we have it. 

6 I mean, we have -- you have the information that 

7 you have. I've given you our position. 

8 I'm willing to vote consensus on it if 

9 it comes up. If there's no consensus, then we do 

10 have an offer on the table for tomorrow. So, you 

11 know, it's the decision of the group.

12 PARTICIPANT: Yeah, and Chris, I 

13 understand what you're saying. And I think Greg 

14 summed it up properly, is that if this idea that 

15 is interesting, but there's not enough time to 

16 develop based on the time that we have remaining, 

17 and if that's the reason that it won't fly, well, 

18 then so be it, right? 

19 Then that's -- it just doesn't fly, 

20 right? And then we go back tomorrow and that's 

21 what we look at, what was -- what we started with 

22 essentially today. What we started with today.
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1 MR. RAMIREZ: Sandy.

2 MS. SARGE: Oh, Jennifer, do you want 

3 to ---

4 MR. RAMIREZ: Jordan, Jennifer, and 

5 then Sandy.

6 MS. SARGE: Okay. I'll respect that. 

7 Sorry.

8 MR. MATSUDAIRA: I just wanted to 

9 offer a little bit more perspective about my 

10 earlier criticism of the repayment rate. So I 

11 don't know of a better way of looking at this 

12 other than the way that I've done, which is to go 

13 back to the 2011 gainful employment rates, which 

14 had a repayment rate measured. 

15 It's different than the repayment rate 

16 measure that we're contemplating here. But 

17 nonetheless. So what I did was just apply the 

18 outlier method that was suggested by Sarah to try 

19 to identify like, how low the repayment rate 

20 threshold would be, such that programs below that 

21 would be identified as outliers according to that 

22 method. 
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1 So if you look at the data, the median 

2 repayment rate, again, it's different in the 

3 (inaudible) just the gainful employment programs. 

4 But the median was 37 percent. The 25th 

5 percentile is 26 percent of 26 percent repayment 

6 rate. The 75th percentile is a 50 percent 

7 repayment rate. So the interquartile ---

8 PARTICIPANT: Sorry, can you slow 

9 down?

10 PARTICIPANT: Yes, slow down.

11 MR. MATSUDAIRA: Forgive me. 

12 PARTICIPANT: I thought that the 

13 median was 37 percent?

14 MR. MATSUDAIRA: The 25th percentile 

15 was 26 percent, and the 75th percentile was 50 

16 percent. So the interquartile range is 24 

17 percent. We'll subtract 1.5 times the 

18 interquartile range from the 25th percentile in 

19 order to get the lower bound for repayment rates 

20 to identify outliers, and we would find that if 

21 you have a repayment rate that's below negative 

22 nine percent, you would be identified as an 
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1 outlier per that metric. 

2 So I just want to suggest, again, a 

3 repeat -- my concern again that I think this 

4 method is going to result in just eliminating 

5 there being any failing programs. So I don't 

6 think that's a reasonable way to proceed, and 

7 again, want to urge the Department to adopt a 

8 different --

9 PARTICIPANT: If we went to half or 

10 one.

11 PARTICIPANT: I would like to thank 

12 the economist for checking my math, because that's 

13 what I've been doing. That's what I've been 

14 trying to say. 

15 PARTICIPANT: So are we back to my two 

16 standard deviations?

17 PARTICIPANT: Well, but let me 

18 understand though, because is that the method for 

19 whether we go with the original DE calculation or 

20 the one-to-one ratio? Isn't that the same method? 

21

22 PARTICIPANT: But this is the 
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1 repayment rate.

2 PARTICIPANT: Right.

3 PARTICIPANT: The backstop. And if 

4 you --

5 PARTICIPANT: But for the repayment 

6 rate though --

7 PARTICIPANT: You have to fail the 

8 repayment rate. Everyone will pass because it's a 

9 negative number. You don't have to pay anything. 

10

11 PARTICIPANT: Well, the threshold 

12 could be changed, but that's what I've been trying 

13 to say. You have to change the threshold, because 

14 otherwise repayment becomes meaningless. And 

15 everyone passes, and everything beforehand doesn't 

16 matter.

17 PARTICIPANT: So what happens if we 

18 change -- so Sarah's point the other day was that 

19 you do one and a half. So, what if you didn't do 

20 one and a half? What's the worst thing that would 

21 happen? 

22 If it was a half -- now, she gave good 
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1 reasons why she believed that one and a half was 

2 appropriate based on statistical research and 

3 expertise in her field. But if we went to a half 

4 or one, what does that do to change it, and is 

5 that reasonable? 

6 So, what she's trying to do is adjust 

7 for statistical, natural statistical errors that 

8 occur in doing this kind of thing. So if you 

9 tightened that, would that help? And do we have a 

10 way of knowing? 

11 PARTICIPANT: Here's my 

12 recommendation. Greg, can you -- what can you do 

13 to try and get some language for first thing in 

14 the morning? 

15 MR. MARTIN: It's -- I don't know that 

16 it's likely. I'm sensing a -- I mean, I can take 

17 back the repayment issue. I think as far as 

18 changing the method, I think that the methodology 

19 Sarah was talking about, if you start messing with 

20 the numbers, you skew the whole -- that 

21 methodology no longer -- you have to change -- not 

22 use that methodology, you know? 
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1 So I don't know whether we'd be 

2 inclined to pull off of that. The problem, one of 

3 the problems we faced was in coming up with a 

4 benchmark was that we -- it was the legal 

5 challenge that we had to do last time of it being 

6 arbitrary. Finding something, some literature, 

7 something to key that benchmark to. And we were 

8 quite frankly unable to come up with anything that 

9 we thought would work. 

10 So that's why we wound up where we 

11 were. As far as language, as far as whether I can 

12 draft I guess it would be potential language for 

13 you to consider tomorrow morning, but outside of a 

14 vote on full consensus about this, I'd have to 

15 check with my people to see if I can do that. I 

16 don't want to obligate them to it.

17 MR. RAMIREZ: At this point, I don't 

18 know if it -- I don't think there's any benefit to 

19 continue down that -- this path of discussion. I 

20 think we'd benefit more of going through issue 

21 paper number six.

22 MR. MARTIN: I would say you're right. 
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1 MR. RAMIREZ: So at this point -- I 

2 assume you're going to convince me otherwise?

3 PARTICIPANT: Not necessarily, but I 

4 do want to just go back to where we were very 

5 quickly, before lunch, which is I think there was 

6 general agreement on when we slice the data, 

7 looking at bachelor degrees differently from the 

8 other programs.

9 I think just reading body language, it 

10 seemed like there was general consensus on maybe 

11 not setting when, but just at least sort of 

12 codifying the notion that we should just treat the 

13 data of when it's reported separately for 

14 bachelor's degrees versus associates and 

15 certificate programs. Was there -- can we maybe 

16 do just a temperature check on that?

17 Again, not setting, saying when, but 

18 just maybe at least informing the department that 

19 we generally agree with that principle. Would 

20 that be okay? Can I ask for that? 

21 MR. RAMIREZ: So, clearly restate what 

22 is it we would be --- that we would vote on.
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1 PARTICIPANT: That we agree that when 

2 we are looking at this information, that 

3 bachelor's degree earnings reports should be 

4 different -- there should be differentiation 

5 between the time horizon on bachelor's degree 

6 reporting and associates and certificate degree 

7 reporting. No specific date when, just there 

8 should be some differentiation there. 

9 MR. RAMIREZ: Let's see a show of 

10 thumbs. As a temperature check. 

11 (Show of thumbs.)

12 MR. RAMIREZ: All right, yeah, so 

13 there is consensus on that. 

14 PARTICIPANT: I can go back and say I 

15 did something. 

16 MR. RAMIREZ: All right. So, with 

17 that, let's go ahead and put up issue paper number 

18 six, and I'll ask Greg to go through. We're going 

19 to keep on beating this horse, and we have to get 

20 through the issue papers.

21 PARTICIPANT: (inaudible). 

22 MR. RAMIREZ: What's the subject 
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1 matter?

2 PARTICIPANT: It's a general comment. 

3 MR. RAMIREZ: Go ahead.

4 PARTICIPANT: I just want to say that 

5 we should take it a little bit easy on the 

6 Department. They're the ones that have put pen to 

7 paper. They've given it to us every week. It's 

8 our fault as negotiators that we've spent such a 

9 shockingly small amount of time discussing them. 

10 And we've been spit-balling ideas up 

11 until today. And I just want to point out for 

12 everyone, I know we all have our own interested 

13 parties, and you know, I commend everybody for 

14 advocating for them, but I think the 

15 responsibility for why this rulemaking got off 

16 track is less to do with the Department and more 

17 to do with us. 

18 MR. RAMIREZ: Okay. A point of --

19 yeah.

20 PARTICIPANT: I don't know if that's 

21 what it's called. So just it would be helpful for 

22 us to know in terms of the urgency or where we're 
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1 supposed to be thinking of this now. If the 

2 Department of Education could just let us know 

3 what the process is after tomorrow. 

4 Like, what happens next? Is there 

5 going to be rules drafted? Is there going to be a 

6 registry notice on what they are, a chance for 

7 public comment? If you could give us a sense of 

8 the time line. 

9 PARTICIPANT: So, after we reach 

10 consensus.

11 PARTICIPANT: Way to go. 

12 PARTICIPANT: I thought that would be 

13 my chance to blue sky, right? In the event we do 

14 not reach consensus, the Department will very 

15 diligently start working on a proposed regulation 

16 that would be published later this year for public 

17 comment with the goal of publishing a final by 

18 later in the year so it would have an effective 

19 date of next year.

20 PARTICIPANT: So Greg, you want to 

21 walk us through the changes of number six?

22 MR. MARTIN: Sure. I mean, I 
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1 understand it's a little tedious and frustrating 

2 at this point, but we are obligated to go through 

3 the papers, so I will try to be brief.

4 But I feel I need to read every word 

5 in this entire document to you so that you get the 

6 -- I love the resonance of my own voice. All 

7 right. Basically, here's the summary. Just a 

8 narrowing of the disclosure items. And you'll see 

9 how we dealt with that. I mean, when we look at 

10 the first part of this, we're looking at the 

11 disclosure templates. 

12 So we'll start with that portion of it 

13 on page one. And I don't think there's anything 

14 new here. This is pretty much what we presented 

15 to you in the past. There you see undergraduate 

16 educational programs represented. We are not 

17 going to -- meant to tie ourselves to having to 

18 have consumer testing. 

19 Moving on to page two, you see, now, I 

20 want to note that some -- I do want to read this 

21 verbatim, because this is important. I'm on page 

22 one. The Secretary identifies information that 
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1 must be included in the template in a notice 

2 published in the Federal Register. 

3 The information may include but is not 

4 limited to. So understand that what we're going 

5 through here are a list of things that we may or 

6 may not require to be placed on the disclosure 

7 template, and that we also have the -- reserve the 

8 right to add things that you do not see here. 

9 So, just pointing that out. And 

10 that's the current -- that's the way the current 

11 regulation reads.

12 So we can just go through on page two. 

13 All these you should be familiar with, with the 

14 exception of new number six. As calculated by the 

15 Secretary under 668.406, that was a new loan 

16 repayment rate, for any or all of the 

17 institution's programs. 

18 So we could require that the loan 

19 repayment rate be disclosed. As I said today in 

20 conversation with senior management, we would be 

21 disinclined to do that given the way we're going 

22 to use it.
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1 Going through the rest of page two, 

2 there's nothing new there. And on page three, the 

3 percentage of students, we did add just the 

4 percentage of students who receive the Title IV --

5 this is the disclosure, mind you -- or Title IV 

6 loan or private loan or whose parents took a 

7 Parent PLUS loan, just as a disclosure item, which 

8 again, we may or may not require in the Federal 

9 Register for the disclosure for that year.

10 And then we have in the middle of page 

11 three, number 11, the mean or median earnings of 

12 students. So that remains. And then on page 

13 four, we have as calculated, where it says -- I'm 

14 sorry, below that, where it says Roman numeral II 

15 there. If appropriate, the disclaimer -- and we 

16 talked about that previously. 

17 That's the disclaimer that if the 

18 institution believes the earnings may be affected 

19 by a significant numbers, students who completed 

20 the program did not report all their income, such 

21 as tip income or who was self-employed and had 

22 business expenses. Dependent care, selected to 
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1 work part time, that type of thing. 

2 And also, if appropriate, a disclaimer 

3 that states the institution believes the data here 

4 may not reflect earnings potential in your 

5 geographic location, because the institution 

6 enrolls students nationally, and earnings can vary 

7 significantly from one part of the country to 

8 another. So that's an addition there. 

9 Moving on to page five, you'll note at 

10 the top that for programs, preparing students for 

11 fields requiring licensure, a URL linking to any 

12 web page containing the secretary -- the state's,

13 rather, mandatory qualifications for licensure 

14 would be required as well as a link to the 

15 institution's page on the U.S. Department of 

16 Education's college scorecard or any successor.

17 Going down, we do note that the 

18 institution must update the disclosure to include 

19 any required -- we stuck warnings there and 

20 indicated notifications. And if you know the way 

21 the current disclosure template works, the 

22 warnings, the current warnings are included on the 
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1 disclosure template should you be required to 

2 provide that. 

3 Looking down at C, program webpages. 

4 Any webpage containing academic cost, financial 

5 aid, or admissions information about undergraduate 

6 program and on the program page, and not under a 

7 separate webpage dedicated to the institutional 

8 research or other purposes. So the template would 

9 have to be kind of narrowing the scope for the 

10 template to be provided so that it's clear and not 

11 obfuscated in any way. 

12 And we do note that we may require a 

13 notification to modify the webpage if the school 

14 provides a link to the disclosure template and we 

15 don't believe that link to be prominent and 

16 readily accessible or clear and conspicuous.

17 Promotional materials, just there a 

18 chance to undergraduate educational program. The 

19 biggest change, and we look at six, I believe this 

20 was reflected in the previous papers from session 

21 two. That we've eliminated direct distribution to 

22 prospective students of the template. So all of 
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1 the requirements around that have been eliminated.

2 And that was a burden reduction thing. 

3 The Department's convinced that having the 

4 disclosure prominently displayed or accessible is 

5 sufficient. Remember that this is not 

6 notifications. We still do require that the 

7 notifications be distributed.

8 I do want to add one thing that our 

9 senior leadership was concerned to put in. We're 

10 inclined to include -- what was the language used? 

11 Right. That so our leadership is concerned about 

12 the disclosures being clear in all areas, so 

13 especially we were -- we want to include something 

14 about where lead generators are used by 

15 institutions, that in any instance where there is 

16 a lead generator used, that the disclosure 

17 template would either be included or the link to 

18 it provided so that students would be able to see 

19 disclosure information when such a vehicle is 

20 being used.

21 Okay, I'll stop there. 

22 MR. RAMIREZ: All right. So, what 
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1 questions or comments do you have on disclosures? 

2 Let me start with Laura, Chris, then Jeff. 

3 MS. METUNE: I want to make sure I 

4 understand something first before I make a 

5 comment. So in issue paper eight, we struck the 

6 language around we. By we, I mean the Department. 

7 Struck the language around requiring an 

8 institution to meet the licensure requirements of 

9 the state, requiring that to be included in the 

10 certification. 

11 And now we have what is a potential 

12 but not for certain disclosure that would include 

13 the website, right? Because these all will be 

14 determined in the Federal Register.

15 MR. MARTIN: No, that's -- the actual 

16 -- these requirements for how it's to be disclosed 

17 --

18 MS. METUNE: But it will be included. 

19 MR. MARTIN: Yeah, it's what will be 

20 included in the Federal Register. The items to be 

21 included, not the methodology by which it's --

22 this is all actually in regulation and not subject 
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1 to the Federal Register notice.

2 MS. METUNE: So it's how it will be 

3 included, not whether it will be included?

4 MR. MARTIN: It's what will be 

5 included. You know, for instance, the data, what 

6 data will be included in the template, right? For 

7 instance, completion rates, would that be 

8 included? Not whether or -- the part here that 

9 talks about the website requirements and all that, 

10 that's not something that we update every year. 

11 That's in the regulation.

12 MS. METUNE: And then just so I 

13 understand, I think one of the points that 

14 Jennifer had made was that these change from time 

15 to time. So what is the burden on the institution 

16 to make sure it's accurate and up to date for the 

17 disclosure purposes?

18 MR. MARTIN: Greg again. Well, for 

19 those of you who haven't been subject to it, so 

20 what happens is that we publish a Federal Register 

21 which would indicate -- for instance, if you look 

22 on page one, the Secretary identifies information 
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1 that must be included. 

2 So let's take one of them. The length 

3 of the program in calendar time. So, we generally 

4 have included that on the templates thus far. 

5 These are items which we would generally include 

6 but are not obligated to include given the 

7 language here. 

8 So the Secretary may include, may 

9 include, may include but is not limited to these 

10 items. So you would get -- you will be in the 

11 Federal Register. 

12 We'd also put out in an electronic 

13 announcement, we would -- we announce that the new 

14 template is up for the year, and then there's a 

15 link to that template, and you can go to the 

16 template and there's a quick-start guide which 

17 goes through all of the information that needs to 

18 be put into the template and gives institutions 

19 instruction as to how to do that. So that would 

20 be the process. We would be continuing that 

21 process forward. 

22 MS. METUNE: It's late in the day, so 
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1 I might just not -- it could just be me. So what 

2 you're saying is, it's a choice by the Department 

3 to require this disclosure?

4 MR. MARTIN: No, that's not correct. 

5 It's not a choice by the Department to require 

6 disclosure. The disclosure happens every year. 

7 What is the choice of the Department is --

8 MS. METUNE: The choice is whether 16 

9 and 17 will be included in what's required.

10 MR. MARTIN: No, the elements in the 

11 disclosure template, the elements. For instance, 

12 let's take a look at these. The information may 

13 include but not limited to, the primary 

14 occupations by SOC code that programs prepare 

15 students to enter. We generally do include this, 

16 but we're not obligated to include that. 

17 That's the way the rule has always 

18 been. The length of the program in calendar time. 

19 The repayment rate. Total cost of tuition. 

20 Placement rate for the program. These are all 

21 items which may be included in the template.

22 MS. METUNE: Okay.
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1 MR. MARTIN: You wouldn't find that 

2 out until the Federal Register or the electronic 

3 announcement was issued. But it doesn't mean that 

4 every year we decide whether there will be a 

5 disclosure or how you'll have to do that 

6 disclosure. That's set in regulation.

7 MS. METUNE: Got it. So we went in 

8 week two from ensuring that an institution meets 

9 the licensure requirements of the state in which 

10 it's operating to a conversation where I 

11 recommended we ensure that an institution meets 

12 the licensure requirements for online programs 

13 where that student resides to now what appears to 

14 be only disclosure to the degree that the 

15 Department chooses to put these items in the 

16 Federal Register as disclosable items on the 

17 document that is required but has options in 

18 what's required to be on the document.

19 MR. MARTIN: This is Greg again. 

20 Recall this isn't certifications. We'll be 

21 discussing that next. This is -- they are 

22 related, but this is the disclosure. So, yes, 
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1 this is what is presented. 

2 But I would point out to you that 

3 we've never -- I mean, for those of you who are 

4 robust defenders of the current rule, this mirrors 

5 the current rule, by and large, right? There are 

6 some things we've taken out, but most of this 

7 language comes right from the current rule.

8 MS. METUNE: Does anybody have any 

9 information on how often a student clicks a link 

10 that's provided to them in a disclosure? We won't 

11 know, because there's no efficacy testing of our 

12 disclosure requirements either. 

13 I just -- I think I'm generally 

14 frustrated that it feels like an area where there 

15 was some level of at least understanding that it's 

16 vital that a student is able to sit for licensure 

17 for a program they're paying with the goal of 

18 meeting licensure requirements in that state, and 

19 we've backed away from that to where it's a 

20 disclosure that I think most of us think is a 

21 relatively meaningless disclosure.

22 Jennifer and I had a long conversation 
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1 with a number of people sitting around this table 

2 about how we can make these disclosures in 

3 connection with the certification work in a way 

4 that's a reasonable burden to an institution as 

5 well as be meaningful disclosure and requirements 

6 for the part of the student.

7 And I feel like we made a lot of 

8 progress on that, and I'm just generally 

9 disappointed that it feels like a huge backtrack 

10 from that area of conversation. 

11 MR. RAMIREZ: All right. Jeff? 

12 PARTICIPANT: You said Chris next. 

13 MR. RAMIREZ: I'm sorry. Yeah, Chris. 

14 Yeah, sorry.

15 MR. MADAIO: Thanks, Jeff. Appreciate 

16 it. It's all good. So, I agree with what Laura 

17 just said. I was on that, those meetings, and we 

18 had kind of reached some areas where we all could 

19 agree. So, you know, I feel like just having a 

20 disclosure about license websites is going to be 

21 not very useful for students.

22 Obviously I'm okay with it if it's 
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1 there. It's not like I need it struck. But I 

2 definitely think it's not enough by itself. I 

3 think there should be consumer testing. I'm not 

4 sure why that was struck. I know that was struck 

5 from the last session as well. But I just don't 

6 see the problem with consumer testing to make 

7 disclosure meaningful.

8 Again, I think repayment rates should 

9 be disclosed if we're going through for the 

10 reasons I discussed before. Again, for direct 

11 distribution, I don't feel that the burden, 

12 especially by email, of that distribution 

13 outweighs the benefit of ensuring that a student 

14 actually sees it, because right now, we have a 

15 website, we have I guess on some promotional 

16 materials, but we really don't know that students 

17 are actually going to see all this information 

18 that we're going through so much work to put 

19 together and that the Department will go through 

20 work on a Federal Register to put together.

21 So I mean, again, if we're doing 

22 information, we should really want students to see 
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1 it. And then the disclaimer, obviously -- and I 

2 guess I'm just concerned about it, schools who are 

3 making this disclaimer are making it accurately 

4 and are doing it with -- is something where they 

5 are actually telling students that they do have a 

6 significant number of students that either are 

7 tipped or that it applies to them. 

8 So I think it should be worded in such 

9 a way to ensure that I guess if a school chooses 

10 that it is appropriate for them to make such a 

11 disclaimer that it actually is applicable and is 

12 not something that every school could just choose 

13 to slap on, and it's worded in such a vague way 

14 that it could apply to everyone when we know that 

15 there are a significant number of programs across 

16 the country that really don't result in the 

17 significant number of tipped or students who 

18 aren't having income reported on SSA. 

19 MR. RAMIREZ: Okay. Jeff. 

20 MR. ARTHUR: Yeah, looking at page 

21 two, item seven, the disclosure on the total cost 

22 of tuition and fees, etcetera. In the current 
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1 template, there is a disclosure regarding time to 

2 completion. 

3 And again, I would just reiterate, I 

4 think that this information is misrepresentative 

5 unless you also qualify it with a median time to 

6 completion, because I mean, we saw that and had 

7 mentioned last time that 40 percent of families 

8 that are planning to attend college mis-estimate 

9 the cost of what they're going to spend by 40 

10 percent. 

11 Not 40 percent do, but that on 

12 average, the student spends 40 percent more than 

13 they anticipated. So I think it's important that 

14 we qualify that so it's properly represented so 

15 they can do a calculation to determine what does a 

16 person really spend, not just what does that 

17 perfect person spend that completes on time.

18 And then I'd also just reiterate the 

19 comment that I had last time about getting this 

20 information in to student's hands. We could use a 

21 disclosure platform, FAFSA application responses, 

22 links to heavily promote this information. So I 
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1 think there's real opportunity. 

2 I think when we talked about the 

3 consumer testing, you can actually do that through 

4 technology. If you've got a platform with 

5 information, you can measure what people look at 

6 and what's important and know that we need to 

7 expand that. 

8 MR. RAMIREZ: Okay. Jen Diamond.

9 MS. DIAMOND: I was going to say a lot 

10 of what Chris Madaio said, so I won't repeat it. 

11 But yeah, I would totally reiterate the thought 

12 about bringing back consumer testing and making 

13 sure that those saying that they have tipped 

14 income students are truly having tipped income 

15 students. 

16 The other thing I would suggest is 

17 that we -- that there is added in one of the 

18 potential disclosure pieces is average cost of 

19 living, and that maybe there is a little asterisk 

20 next to medium loan debt that says that does not 

21 include cost of living in the debt calculation, 

22 because students should know that. Or, never mind 
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1 that last part, but including something about cost 

2 of living on the disclosure. 

3 And then I was wondering if the 

4 Department could just answer why cohort default 

5 rate was removed? I mean, I know there's a lot of 

6 issues around that metric, but it is a true poor 

7 outcome for students that would be information 

8 worth knowing.

9 PARTICIPANT: I don't -- hold on a 

10 minute. 

11 MS. DIAMOND: I think it was in the 

12 first round. 

13 PARTICIPANT: So, first and foremost, 

14 we haven't recalculated -- we have not calculated 

15 the cohort default rate, PCDR, Program Cohort 

16 Default Rate. So there was nothing for us to 

17 provide this year. One was not calculated. And 

18 so we haven't -- that's not something we've done. 

19 MR. RAMIREZ: Okay. Kelly. 

20 MS. MORRISSEY: I would also like to 

21 support the idea of consumer testing for these 

22 templates. If we are now moving to disclosures 
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1 for 100 percent of undergraduate programs, just 

2 think about the scale of the amount of work that 

3 this will entail for all institutions and how can 

4 we drive students to actually access this 

5 information?

6 I'm thinking about my 18-year-old 

7 daughter who won't even eat lunch somewhere 

8 without reading a Yelp review, yet we have 

9 students testifying that they made significant 

10 investments in their education without ever 

11 reading information about the schools that they 

12 would attend. 

13 So there's a real disconnect here if 

14 we're providing this information and students 

15 aren't seeing it. Then to what end are we putting 

16 forward all of this effort? 

17 More specifically, in looking at the 

18 items that are being disclosed, I'm wondering 

19 about number nine where now without reporting, we 

20 don't have information about private loans being 

21 used to calculate debt to earnings. 

22 But instead of asking for the 
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1 percentage of students who borrowed private loans, 

2 could we actually provide average amounts that 

3 students are borrowing in private loans?

4 MR. MARTIN: This is Greg. We could. 

5 I mean, you know, just because it's not in here 

6 does not mean we could not require that in a 

7 future disclosure.

8 MS. MORRISSEY: Well, I'm suggesting 

9 very strongly that you consider that, because I 

10 think, you know, to what end are students really 

11 leveraging private loans in order to finance the 

12 experience at a program.

13 MR. MARTIN: And Greg, again. Just 

14 one more thing. And if we did that, and as with 

15 this, the burden is on the institution to 

16 calculate that and provide it. It's not being 

17 provided by the Department.

18 MS. MORRISSEY: Understood. 

19 Understood. But I mean, we'd have to do a similar 

20 calculation just to come up with a percentage. So 

21 I think from the effort standpoint, it would be 

22 more meaningful for students to understand the 
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1 amounts of private loans that students are 

2 accessing. 

3 MR. RAMIREZ: Thank you. Chad. 

4 MR. MUNTZ: This goes to number seven 

5 on page two. I don't want to, in good faith, 

6 trying to provide this information I think 

7 conflicts with governing issues here. We don't 

8 set tuition over the next four years. This is a 

9 year-by-year. It's done by the Board. So I guess 

10 any comment to people who have had to provide 

11 this, how do you do it, and I mean, just that's a 

12 known issue that we have. 

13 MR. RAMIREZ: Andrew. 

14 MR. HAMMONTREE: This is Andrew, and I 

15 just have a quick question. On page five, number 

16 17, where it talks about a link to the 

17 institution's page on the U.S. Department of 

18 Education's college scorecard or successor site or 

19 other similar federal resource. 

20 What do schools that don't have a 

21 college scorecard put there? What is the other 

22 similar federal resource that was being suggested 
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1 there? I thought it was a simple question. 

2 MR. MARTIN: You know, hold on a 

3 moment. Yeah, the navigator.

4 MR. HAMMONTREE: Okay, thank you.

5 MR. MARTIN: Perhaps we should say 

6 that.

7 MR. HAMMONTREE: That would help.

8 MR. RAMIREZ: Okay, Gannon?

9 MR. GANNON: Yeah, so looking at the 

10 bottom of page six, the top of page seven. Just a 

11 question for the Department. What is the 

12 rationale for not having direct distribution of 

13 the disclosures to students just considering you 

14 say you want to get more information and more 

15 people?

16 And I just think that this does the 

17 opposite of that. 

18 MR. MARTIN: One of our reasons for 

19 going down this path was that when thinking about 

20 taking this and applying it to all institutions, 

21 all programs, and understanding how many programs 

22 that's going to be at some schools -- we're no 
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1 longer talking about a school that has five, six, 

2 seven programs. We could be talking about a 

3 school that has 150 programs.

4 So we had just determined that that 

5 would be an undue amount of burden to impose on 

6 schools that have large numbers of programs. So, 

7 you know, obligating their staff to spend hours 

8 getting this stuff out to everybody about all 

9 these different programs as opposed to doing their 

10 jobs. 

11 So and I know financially, staffs are 

12 stressed enough as it is. So that was our 

13 reasoning behind that. Which is part of the whole 

14 idea of how will we adjust these rules now that 

15 the rules are going to be applicable to everybody.

16 MR. RAMIREZ: Okay, I have -- we have 

17 to save about the last five minutes for comment 

18 from negotiators as well as the public. I have 

19 Jennifer, Johnson, Jordan. I'm not sure if I have 

20 Chad, and then Kelly. So, Jennifer.

21 MS. BLUM: So just to follow up on

22 something Jeff said and Chad said about the cost 
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1 and the time. This is a big, big issue that I'm 

2 sure a lot -- everybody in the sector who already 

3 has been doing this, where the time to completion 

4 piece needs to really line up to the cost piece, 

5 because otherwise, the students are I think 

6 genuinely confused.

7 So I know Cynthia said, and we're 

8 abiding by what she said, which is that we're not 

9 discussing the template here. But I would 

10 encourage everybody who has, who sees the issue, 

11 give the Department their -- we definitely have a 

12 list of recommendations as it relates to both 

13 completion time and cost and how the two correlate 

14 on the scorecard.

15 So I would just -- well, not just on 

16 the scorecard, on the disclosure, on the 

17 templates. So that's my -- I mean, just because I 

18 know the Department doesn't want to receive that 

19 here. But it's a definite issue. So Chad, you're 

20 right. You're going to face it, too.

21 I did want to spend a second just 

22 following up on what Laura said, because we did, 
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1 at the end of session two, discuss that we would 

2 have a subcommittee, and we did in earnest have a 

3 subcommittee. We spent a fair amount, Laura and I 

4 spent a fair amount of time editing language and 

5 then having a conversation.

6 And first of all, I would just say 

7 straight off, there was complete consensus on 

8 consumer testing. So I will -- I am going to ask 

9 for a temperature check on consumer testing in a 

10 minute. But I did want to also point out a couple 

11 of -- and we can resume this tomorrow. But I did 

12 want to point out, if it's okay with Laura, too, 

13 the places where, you know, we had some discussion 

14 that made sense.

15 It irks me, and we've had this 

16 conversation before, that the Department -- and 

17 I'm on page four -- the Department refers to 

18 licensure and the state with regard to licensure, 

19 and when they talk about the website, they talk 

20 about the state's website. It's not the state. 

21 The state doesn't regulate licensure. It's a 

22 bunch of licensure boards. It's hundreds of 
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1 licensure boards. 

2 Having said that it's hundreds of 

3 licensure boards, we understand the obligation 

4 that we have to our students. We think that this 

5 language should be modified to clarify that it's 

6 the licensure boards' websites that should be 

7 disclosed, not the state's, because there is no 

8 state website on licensure. It's the licensure 

9 boards' websites on licensure.

10 It is a burden. We actually think 

11 it's a burden that schools, if they're going to 

12 have students -- and it's not just online. If 

13 they are going to have students who are seeking 

14 licensure in other states, that they ought to know 

15 what their licensure rules are. We feel very 

16 strongly about that. It's not perfect. I 

17 discussed this on the call. We are imperfect. It 

18 is very hard to follow.

19 Which takes me to Laura's other 

20 question, because she asked it, and I don't think 

21 she got an answer. What's our obligation to keep 

22 it up to date? This one makes me nervous, and I 
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1 will be forthcoming about that. But they do 

2 change their rules. So that's why we talked about 

3 reasonable efforts on the part of the institution 

4 to keep this piece up to date.

5 It does require a level of monitoring. 

6 This is a place where, because we are now 

7 applying this across institutions and across, you 

8 know, we appreciate, frankly, we feel like we have 

9 had a sort of higher place of feeling obligation 

10 to meet this.

11 And so there were -- the bottom line 

12 is, we did have language. We did -- I won't say 

13 that we took a consensus vote, but there were 

14 clear lines of agreement. And I would ask for a 

15 temperature check on consumer testing. 

16 MR. RAMIREZ: Greg, on the licensure 

17 board versus state, was that oversight, or is 

18 there a reason that it's the way it is now?

19 MS. WHITFIELD: Can I answer that, or 

20 try to? This is Christina Whitfield. There are 

21 some states that license for-profit institutions 

22 to operate within their borders. Not all states 
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1 do, but some states do.

2 MS. BLUM: That's state authorization 

3 in a fact. Some states call it licensure. You 

4 know, but we're talking -- I think in this 

5 section, and I'm looking purposefully at Chris and 

6 Laura. In this section, we're not talking about 

7 that form of licensure. 

8 In this section, we're talking about 

9 whether a student can be licensed in X profession 

10 at the end of their long-haul. I mean, Laura --

11 so, yes, completely agree with you, Christina, on 

12 state authorization, and some states call that a 

13 license to operate. But that's not what this 

14 section is intended to address. 

15 PARTICIPANT: I'll just add what we do 

16 currently is that schools have to update their 

17 disclosures at least annually, and if something 

18 materially changes. 

19 So if you all of a sudden got new 

20 state licensing requirements, if you got new --

21 one of the things that doesn't necessarily match 

22 up with our schedule is the job placement rates. 
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1 So when the new job placement rates come out, if 

2 they are different from the olds ones, that you 

3 need to go ahead and update that, too. 

4 MS. BLUM: So the language, so is that 

5 in something where it says if there is a material 

6 change, you're required to -- I mean, is that 

7 something that's stated somewhere? Maybe it's in 

8 here and we missed it. I mean, I'm not -- but I'm 

9 just curious if that's said anywhere. 

10 PARTICIPANT: Well, we'll look through 

11 the disclosures to try to find it, but if not, I 

12 mean, that is what we've been doing. If you guys 

13 have a proposal to add it, I'm sure -- I shouldn't 

14 speak. I should let Greg speak.

15 MR. RAMIREZ: On the temperature check 

16 for consumer testing, is the question that simple, 

17 or is there other details that need to be thrown 

18 in there?

19 MS. BLUM: I think as a -- I mean, I 

20 can put forward what I think it is. I think I am 

21 going to ask for a temperature check on whether 

22 the sentence should be put back in that was 
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1 deleted from the reg, from the proposed reg. 

2 MR. RAMIREZ: Regarding consumer 

3 testing?

4 MS. BLUM: It's on page one, sorry. 

5 So, on page one, it says the Secretary will 

6 conduct consumer testing to determine how to make 

7 the disclosure template as meaningful as possible. 

8 I'm asking whether there's consensus around going 

9 back to what it was. 

10 MR. RAMIREZ: Let's see a show --

11 Sandy.

12 MS. SARGE: Before we go down that

13 path, I just want to know straight up before we 

14 even try to do that, is this a budgetary 

15 constraint? Is that the reasoning? Is that the 

16 key reason why it came out? Theory is nice, but 

17 if we can't pay for it --

18 MR. MARTIN: I'm sorry, I was thinking 

19 of something. I was trying to find a reg. But 

20 yeah, if this is in respect to the consumer 

21 testing for the template, okay. I'm sorry, that's 

22 got me back on path there, track again. Yes, some 
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1 of it is budget. 

2 Some of it is the fact that we are 

3 under pretty severe budget restraints right now, 

4 and to obligate ourselves to do something in the 

5 regulations that we might not be able to do, I 

6 personally have a problem with that. That you 

7 know, it says we will conduct consumer testing, 

8 and then there's simply no money to conduct 

9 consumer testing. So that is part of an issue.

10 Part of it is that we did do a lot of 

11 extensive consumer testing on the template when we 

12 developed it already. We are restricted when we 

13 do consumer testing to nine people. That's what 

14 you get when you do consumer testing we do, 

15 because to do any more than that requires special 

16 -- so it's -- so we had done consumer testing 

17 previously. 

18 And the template has not change. 

19 Certainly the look of the template has not changed 

20 appreciably in the past couple years. Those were 

21 essentially our reasons for taking that out. 

22 Which is not to say that we couldn't do consumer 
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1 testing in the future. It simply says that we're 

2 not, under this rule, we're not obligated to do it 

3 per the regulation. 

4 MR. RAMIREZ: I have Johnson, Jordan, 

5 Diamond, Chris, and John. And what I'm going to 

6 suggest though is that we ask for public comment, 

7 and then finish out the queue here since our end 

8 time is in four minutes. So let me ask, is there 

9 any public comment? Johnson.

10 MR. TYLER: I'll be quick. My real 

11 concern has to do not so much what's on the 

12 template but how people get it. And the webpage 

13 is how people are going to get it. At one point, 

14 I was trying to understand how this disclosure 

15 works, during session three, and I spent time 

16 going to websites, trying to find this disclosure. 

17 It's very hard to find.

18 And one thing that really makes it 

19 difficult, as soon as you go to a website where, 

20 you know, I'll just say it, where profit is the 

21 motive, a pop-up comes up there. You can't 

22 proceed any further without giving your name, your 
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1 email, your phone number, and now you're going to 

2 have someone calling you day and night.

3 So I think that's what you talked 

4 about, lead generators. So I really think you --

5 if the idea is to get people to make informed 

6 decisions, the disclosure, without the Department 

7 doing something to make it meaningful, it's going 

8 to become meaningless. Maybe due to the pop-ups, 

9 but even because it's hard to find.

10 And I think there is a solution, and 

11 it would be a solution that the marketplace might 

12 encourage people to put it in, which is has to do 

13 with what is the consequence when your webpage is 

14 not adequate? You have a section two here, it's 

15 existing rule. This is on page five under C2. It 

16 says the Secretary may require the institution to 

17 modify the webpage when it's inadequate. 

18 Why not just put in the Secretary will 

19 fine the institution, or something with some meat 

20 to it that says basically, you know, you've been 

21 hiding the ball on this. And I think the pop-up 

22 thing is -- it's a serious problem, because that 
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1 was your chance to get the disclosure. Once 

2 you're talking to someone, a lot of people are 

3 just going to say, this is what's for me. 

4 I think all the data is going to be 

5 meaningless, particularly to my constituents who 

6 are going to degrees where they can increase their 

7 salaries fairly quickly. 

8 MR. RAMIREZ: Thank you. Diamond?

9 MS. DIAMOND: I was going to make more 

10 general comments since I figured we're wrapping 

11 up. Should I hold off though until folks address 

12 this? 

13 MR. RAMIREZ: I'll come back to you, 

14 yeah, if you don't mind. Thank you. Chris? 

15 PARTICIPANT: I just want to point out 

16 that disclosure updates are on page five under B, 

17 in accordance with procedures. And time lines 

18 established by the Secretary, the institution must 

19 update at least annually the information contained 

20 in the disclosure template with the most recent 

21 data available for that program.

22 So at least every year, when they do 
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1 the template, they'd have to update. 

2 MR. RAMIREZ: Jordan?

3 MR. TYLER: My concern is just that no 

4 one's going to see it. 

5 MR. RAMIREZ: Jordan, and then John. 

6 MR. MATSUDAIRA: I just wanted to 

7 quickly echo support for the ideas that Jeff and 

8 Kelly were talking about, about just given that 

9 the rule is removing a lot of the sanctions that 

10 might take bad actors out of the space, and it's 

11 really putting a lot of the onus on students to be 

12 able to look at information to make better choices 

13 about where they're going to school.

14 Just really amplify the importance of 

15 putting the data that the Department can, 

16 especially the data like debt and earnings that 

17 the Department has calculated on their own, 

18 incorporating those into medium like the scorecard 

19 and like the FAFSA on the web tool so that 

20 students can encounter that information when 

21 they're looking for different educational options. 

22
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1 MR. RAMIREZ: Thank you. John. 

2 MR. KAMIN: Yeah, two things. So 

3 first, kind of sticks in my craw that Laura and 

4 Jennifer worked on draft language that we won't be 

5 able to see and didn't appear to be considered 

6 here. So Laura just said that she emailed that to 

7 the Department. I think that we owe it to them to 

8 review that language and share our feedback and 

9 perhaps do a temperature check on it.

10 Second, when it comes to consumer 

11 testing and the cost for this, considering that 

12 this -- at the very least, this is ambitious in 

13 that the proposal is to apply to all sectors, that 

14 would inevitably lead to greater costs being 

15 assumed by the schools who have to invest time and 

16 FTE hours into doing this. 

17 It would stand to reason that that 

18 time is well spent. And the only way to do that 

19 is to ensure that this is done right. And it 

20 seems to be equitable to ask the Department to 

21 provide consumer testing to make sure that that 

22 happens. 
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1 MR. RAMIREZ: Okay. Then Diamond.

2 MS. DIAMOND: Okay. This is Jen 

3 Diamond, for the record. I just wanted to close 

4 out on a thought and a request, and I just wanted 

5 to, for the record, state that even though I think 

6 I've been relatively quiet today, I don't want it 

7 to be a sign that I'm all on board with sort of 

8 the way this has been moving. 

9 And I just wanted to address an 

10 earlier comment that the rule is stronger from 

11 Mark than the previous rule, and note that I 

12 really don't think it is as harsh that, you know, 

13 this is for students going to be -- there's no 

14 triggers for automatic sanctions. 

15 And that there's going to be a longer 

16 path with a limited department capacity to take 

17 care of that. And I know that there have been a 

18 couple of things that have really just been taken 

19 off the table from day one, and obviously we're 

20 all frustrated with the lack of data that we have. 

21

22 And I was hoping to respectfully 
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1 request that perhaps the senior leadership that 

2 has been referred to a number of times could come 

3 and tomorrow address us and talk to the point of 

4 how we are supposed to move forward in this last 

5 day in a transparent process without that data and 

6 with some pieces just taken off the table. 

7 MR. RAMIREZ: Okay. Any -- we'll 

8 close out with the temperature check then on the 

9 consumer.

10 MS. BLUM: So, I hate to do this, but 

11 I want to modify it slightly. I want to add the 

12 sentence back in, but I want it to also be 

13 statistically valid consumer testing. Nine -- I'm 

14 sort of appalled to see that the consumer testing 

15 was only on nine students. 

16 So I actually would like it to -- I 

17 actually would like to not only add the sentence 

18 back in but have it be statistically valid 

19 consumer testing. Because I can't imagine the 

20 consumer testing on nine students. I mean, this is 

21 a very varied, especially if you're applying it to 

22 all institutions, we are an extremely -- which 
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1 we're proud of in this country -- a varied higher 

2 ed. 

3 You could pick nine for-profit 

4 students, you could pick nine public, you know, 

5 students who attend public institutions. Nine is 

6 not enough. So, statistically valid would be sort 

7 of the way to go I think, or representative maybe. 

8 A representative consumer testing. Something 

9 that's a little beefier than nine students.

10 MR. MARTIN: I do want to point out we 

11 make every effort to make the group 

12 representative. 

13 MR. RAMIREZ: Kirsten?

14 MS. KEEFE: So I just wanted to offer 

15 a suggestion. I, first of all, for the record, 

16 agree with the need for consumer testing, but if 

17 that is not feasible or if the consumer testing 

18 that they're going to be doing is not that great 

19 anyway, there might be other ways to put into the 

20 regulation to make sure that the disclosures are 

21 good.

22 Like, you could put in language that 
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1 the Department will provide a template that is 

2 easily read, you could say that the reading level 

3 has to be at eighth grade or under, you know, 

4 clear and conspicuous language. 

5 They can't use all capital letters. 

6 You know, there are other ways to ensure that the 

7 template is easy to ready, can be easily 

8 understood by someone with a low education level, 

9 etcetera. So I just make that recommendation. 

10 MS. BLUM: Yeah, and I agree with you 

11 on that actually, so maybe this is something we 

12 could think about overnight. But I also agree 

13 with what Johnson said, too, about -- so I agree 

14 with you on that piece, but I also think is it 

15 something that actually gets looked at? So I 

16 think there's a two-fold piece of that, and I do 

17 think that nine -- I mean, there's got to be a 

18 bigger cohort. 

19 MR. RAMIREZ: Okay. So --

20 MS. BLUM: We can sleep on it, maybe 

21 we can come back with language tomorrow morning 

22 that we present. 
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1 MR. RAMIREZ: For the temperature 

2 check?

3 MS. BLUM: Yeah. Because I don't 

4 think we have the -- I mean, I think we can put 

5 back in the sentence, but now that we know that 

6 it's only nine students, that's not much of an ask 

7 to the Department actually. 

8 MR. RAMIREZ: All right. I'll see you 

9 all at nine o'clock then.

10 MS. BLUM: I'd like to add one thing. 

11 As the Department talked about its proposal, one 

12 thing that someone said was that maybe there could 

13 be a built-in adjustment mechanism? I hope people 

14 might think about that and maybe come back with 

15 some wording on that.

16 MR. RAMIREZ: Jen, you had one more?

17 PARTICIPANT: Yeah. I was just going 

18 to say, my request was like an actual request. 

19 Could we take a temperature check on that, or 

20 maybe ask the Department to respond?

21 MR. RAMIREZ: Restate the actual 

22 verbiage.
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1 PARTICIPANT: Oh, if senior leadership 

2 who have been making the calls here could address 

3 the negotiators, to hear from them about their 

4 goals and how we're -- the issue of data, 

5 basically.

6 MR. RAMIREZ: I think that's a request 

7 to the Board. I think that even if it was a 

8 unanimous thing, that the Board would have 

9 discretion whether to bring those individuals down 

10 or not.

11 MR. MARTIN: I can ask. 

12 MR. RAMIREZ: Okay.

13 PARTICIPANT: Thank you.

14 MR. RAMIREZ: Thank you, Greg. Okay. 

15 Yeah, take the trash, and same as before. If 

16 folks could expeditiously make their way to be 

17 escorted out, that would be appreciated. Thank 

18 you.

19 (Whereupon, Part 4 of the 

20 above-entitled matter went off the record at 9:10 

21 a.m.) 

22
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