Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

U.S. Department of Education (ED)

Office of Postsecondary Education (OPE)

Negotiated Rulemaking for Higher Education 2013

U.S. DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION

PUBLIC HEARING

TUESDAY

MAY 21, 2013

The Public Hearing was held in the Eighth Floor 

Conference Room at the U.S. Department of 

Education, 1990 K Street, N.W., Washington, 

D.C., with Under Secretary Martha Kanter 

presiding.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

PRESENT FROM DEPT. OF EDUCATION:

MARTHA KANTER, Under Secretary for Education

LYNN MAHAFFIE, Senior Director for Policy 

Coordination, Development, and Accreditation 

Service, Office of Postsecondary Education

JULIE MICELI, Deputy General Counsel

PUBLIC COMMENTERS LISTED CHRONOLOGICALLY:

ANGELIA N. MILLENDER, Vice President for 

 Student Affairs and Enrollment, Broward 

 College

ABIGAIL BOYER, Director of Communications and 

 Outreach, Clery Center for Security on 

 Campus

NANCY ZIRKIN, Executive Vice President, 

 Leadership Conference on Civil and Human 

 Rights

TOM SNYDER, President, Ivy Tech Community 

 College of Indiana

RORY O'SULLIVAN, Policy Director, Young 

 Invincibles

CARRIE WOFFORD, Veterans Education Success

MICHAEL L. LOMAX, President and CEO, United 

 Negro College Fund

ANNE HEDGEPETH, American Association of 

 University Women

JOHN EBERSOLE, President, Excelsior College

SUZANNE ROSS, Chief Compliance Officer, Higher

 One, Inc.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

MARVIN SILVER, Outreach Director, Americans 

 for Financial Reform

ANNE JOHNSON, Director of Campus Progress, 

 Center for American Progress

TODD LEATHERMAN, Executive Director, Office of

Consumer Protection, Office of the Attorney

General, Kentucky

MEG BENKE, Acting President, SUNY Empire State

 College

RICK WEIDMAN, Executive Director for Policy 

 and Government Affairs, Vietnam Veterans of 

 America

KIM GANDY, President and CEO, National Network

 to End Domestic Violence

CHRISTINE LINDSTROM, Higher Education Program 

 Director, U.S. Public Interest Research 

 Group

DANIEL J. TOUGHEY, President, TouchNet 

 Information Systems, Inc.

JEFFREY KEITH, Sterling Capital Partners

VICKIE SCHRAY, Senior Vice President, 

 Regulatory Affairs and Public Policy, 

 Bridgepoint Education

MEGAN McCLEAN, The National Association of 

 Student Financial Aid Administrators

BRAD CARD, Dutko Grayling/Association of 

 Proprietary Colleges

JENNIFER BLUM, Senior Vice President for 

 Government Relations and Public Policy, 

 Laureate Education, Inc.

DAVID BAIME, Senior Vice President for 

 Government Relations and Policy Analysis, 

 American Association of Community Colleges
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

LEZLI BASKERVILLE, President and CEO, National

Association for Equal Opportunity in Higher

Education

SUSAN K. HATTAN, National Association of 

 Independent Colleges and Universities 

THE HONORABLE CORRINE BROWN, Representative, 

 5

th Congressional District of Florida

JAMES BOLOGA, CEO, Porter and Chester 

 Institute

CHRISTOPHER E. BARTO, Assistant Vice President

 for Student Finance and Chief Compliance

 Officer, LIM College and Association of 

 Proprietary Colleges

GEORGE A. PRUITT, President, Thomas Edison 

 State College

MARIE CINI, Provost, University of Maryland 

 University College

RUSSELL S. KITCHNER, Vice President, Office of

 Regulatory and Governmental Relations, 

 American Public University System, American

 Military University

SOPHIA ZAMAN, Vice President, United States 

 Student Association

PAUL SHIFFMAN, The President's Forum at 

 Excelsior College

ARISTEA WILLIAMS, Associate Director, 

 Financial Aid Office, Johns Hopkins 

 University School of Education

ELAINE M. NEELY, Chief Regulatory Officer, 

 Medtech Colleges

STEVE GUNDERSON, President and CEO, 

 Association of Private Sector Colleges and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

 Universities

ALEXANDRA BRODSKY (speaking on behalf of Laura

 Dunn, SurvJustice)

GAIL daMOTA, Senior Vice President and Chief 

 Operating Officer, Education Finance Council

DON MROZ, Provost and Dean, Malcolm Baldrige 

 School of Business at Post University

NEIL RIDLEY, Senior Policy Analyst, Center for

 Law and Social Policy, Inc.

TERRENCE P. MAHER, General Counsel, Network-

 Branded Prepaid Card Association

KARENANN CARTY, Associate Vice President for 

 Academic Affairs, Monroe College

DANA BOLGER AND ALEXANDRA BRODSKY, Title IX 

 Action Network/Know Your IX

S. DANIEL CARTER, Director, 32 National Campus

 Safety Initiative/VTV Family Outreach 

 Foundation

BETHANY LITTLE, America Achieves: Results for 

 America Initiative

DIANE ROSENFELD, Law Lecturer and Director, 

 Gender Violence Program, Harvard Law School

THE HONORABLE DANNY K. DAVIS, Representative, 

 7

th Congressional District, Illinois

THE HONORABLE CEDRIC L. RICHMOND, 

 Representative, 2nd Congressional District, 

 Louisiana
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

T-A-B-L-E O-F C-O-N-T-E-N-T-S

Introduction and Welcome Remarks 

 Under Secretary Martha Kanter ......... 6

Lynn Mahaffie ............................ 14

Angelia Millender ......................... 15

Abigail Boyer ............................ 22

Nancy Zirkin .............................. 29

Tom Snyder ................................ 35

Rory O'Sullivan .......................... 40

Carrie Wofford ........................... 46

Michael Lomax ............................ 53

Anne Hedgepeth ........................... 59

John Ebersole ............................ 66

Suzanne Ross ............................. 81

Marvin Silver ............................ 87

Anne Johnson ............................. 84

Todd Leatherman .......................... 88

Meg Benke ................................. 98

Rick Weidman ............................. 104

Kim Gandy ................................ 110

Christine Lindstrom ...................... 115

Daniel J. Toughey ........................ 122

Jeff Keith ............................... 130

Vickie Schray ............................ 139
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

Megan McClean ............................ 144

Brad Card ................................ 150

Jennifer Blum ............................ 159

David Baime ............................. 166

Lezli Baskerville ....................... 176

Susan K. Hattan ......................... 187

Honorable Corrine Brown ................. 193

James Bologna ........................... 199

Christopher E. Barto .................... 209

Dr. George A. Pruitt .................... 216

Dr. Marie Cini .......................... 224

Russell S. Kitchner ..................... 230

Sophia Zaman ............................ 237

Paul Shiffman ........................... 242

Aristea Williams ........................ 247

Elaine M. Neely ......................... 251

Steve Gunderson ......................... 256

Alexandra Brodsky ....................... 262

Gail daMota ............................. 266

Don Mroz ................................ 270

Neil Ridley ............................. 277

Dr. Karenann Carty ...................... 292

Dana Bolger ............................. 300

And Alexandra Brodsky
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

Daniel Carter ........................... 306

Bethany Little .......................... 312

Diane Rosenfeld ......................... 319

Honorable Danny Davis ................... 334

Honorable Cedric Richmond ............... 339

Adjourn
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

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

2 (9:00 a.m.)

3 DR. KANTER: Good morning, 

4 everyone. I am Martha Kanter. I am the Under 

5 Secretary of the U.S. Department of Education 

6 and I would like to welcome you to the first of 

7 four public hearings that we will be holding.

8 In today's global economy, a 

9 college education is no longer just a privilege 

10 for some but rather a prerequisite for all. In 

11 the last year, 60 percent of jobs went to those 

12 with at least a baccalaureate degree and 90 

13 percent to those with at least some college. 

14 Over the next decade, as many as two-thirds of 

15 all new jobs will require education beyond high 

16 school. And this is why the President's plan 

17 for a strong middle class and a strong America 

18 calls for expanding the availability of 

19 postsecondary education for every American who 

20 wants the opportunity.

21 Providing every American with a 

22 quality education isn't just a moral imperative 

23 but an economic necessity. And we want to make 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 sure that all students, regardless of income, 

2 race, or background, have the opportunity to 

3 cross the finish line. And we know that 

4 crossing the finish line is just one step along 

5 a trajectory of a lifetime.

6 So today marks the beginning of our 

7 public hearings. This gives us an opportunity 

8 to begin conversations about higher education 

9 with the higher education community, those who 

10 have a stake in postsecondary education on the 

11 rules that will ensure that colleges and 

12 universities are giving students a high quality 

13 education that prepares them for the workforce 

14 and lifelong success.

15 These hearings are meant to be 

16 comprehensive and will include a discussion of 

17 topics like state authorization for online 

18 programs, issues surrounding institutions' 

19 management of Federal Student Aid Funds and how 

20 to define gainful employment. This process 

21 builds upon previous steps to develop 

22 regulations to protect taxpayer funds and 

23 ensure that all students are able to access and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 afford a quality higher education.

2 We know college is one of the best 

3 investments anyone could make but we want to 

4 ensure that students and taxpayers both are 

5 investing in programs that prepare graduates 

6 with the skills and knowledge they need to 

7 compete for high paying jobs and to be active 

8 and engaged citizens.

9 The work of the people in this room, 

10 the contributions and feedback that we have 

11 received over the past four years has raised our 

12 awareness about a number of issues. And we are 

13 interested in learning more through these 

14 conversations with all of you.

15 Last year, the Department held 

16 discussions about rules that would be designed 

17 to prevent fraud and abuse of Title IV, Federal 

18 Student Aid Funds, especially within the 

19 context of current technologies.

20 In particular, the Department 

21 announced its intent to propose regulations to 

22 address the use of debit cards for disbursing 

23 federal student aid, as well as to improve and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 streamline the campus-based federal student 

2 aid programs.

3 As our interest in fraud concerns 

4 and the use of debit cards continues, we are now 

5 considering adding several other very 

6 important topics to the regulatory agenda. 

7 These include:

8 Cash management. The Department is 

9 interested in looking at the regulations 

10 governing when and how institutions disburse 

11 federal student aid, how institutions invest 

12 and manage those funds, and other issues on this 

13 topic.

14 State authorization for distance 

15 education programs. The Department had 

16 previously regulated on this issue but a court 

17 vacated the rule on procedural grounds in 2011. 

18 With that regulation no longer in place, the 

19 Department is interested in ideas for how to 

20 address the requirement that States authorize 

21 the institutions that provide distance 

22 education to its residence when an institution 

23 is not physically located in the State. 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 State authorization for foreign 

2 locations of domestic institutions, that is 

3 another. Similarly, the Department is 

4 interested in ideas for how foreign locations 

5 of domestic institutions should be treated 

6 under the state authorization regulations, 

7 since the current rules don't specifically 

8 address foreign locations.

9 Clock to credit hour conversion. 

10 Given concerns raised by institutions of higher 

11 education, the Department is interested in 

12 whether regulations governing the conversion 

13 of clock hours in a program to credit hours 

14 should be reviewed.

15 Gainful employment. Last June, a 

16 U.S. District Court vacated regulations 

17 defining what it meant for a program to provide 

18 gainful employment in a recognized occupation, 

19 but it affirmed the Department's authority to 

20 regulate in this area. The Department is now 

21 interested in public input on other potential 

22 approaches to distinguish between successful 

23 and unsuccessful programs that seek to prepare 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 students for gainful employment, on what the 

2 best measure or thresholds should be and how to 

3 best construct an accountability system.

4 Campus safety and security 

5 reporting. The reauthorization of the 

6 Violence against Women Act made some changes 

7 relating to the information institutions are 

8 required to collect and disclose as part of the 

9 Clery Act. The Department is proposing to 

10 develop regulations to implement these new 

11 requirements. 

12 Definition of adverse credit for 

13 the Direct PLUS Loan Program. The PLUS Loan 

14 Program requires that applicants not have an 

15 adverse credit history to receive a loan. What 

16 constitutes adverse credit was defined in 

17 regulations published in 1994, when credit 

18 conditions and consumer markets were different 

19 and loans were made through two different 

20 programs. Since these conditions have 

21 changed, the Department is interested in 

22 comments on whether it would be appropriate to 

23 modify the definition of adverse credit and if 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 so, what changes should be made.

2 Additional hearings on these 

3 subjects will be held during the next few weeks 

4 in San Francisco, Atlanta, and Minneapolis. 

5 Based on the comments gathered at all of these 

6 hearings, the Department will draft a list of 

7 topics to be considered by rulemaking 

8 committees. It is likely that negotiations 

9 will begin this fall and, prior to that, we will 

10 issue a Federal Register notice seeking 

11 nominations for negotiators.

12 I thank you all for dedicating your 

13 time and expertise to this very important 

14 process. And I look forward to a fruitful 

15 discourse and appreciate all of your 

16 contributions. 

17 And with that, I am going to turn 

18 this over to Lynne Mahaffie, of the Department 

19 of Education. Thank you, Lynn.

20 MS. MAHAFFIE: Thank you, Martha.

21 Hi, I am Lynne Mahaffie. I am 

22 Senior Director for Policy Coordination, 

23 Development and Accreditation Service here in 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the Office of Postsecondary Education. And I 

2 am here with my colleagues Dr. Kanter, and also 

3 Julie Miceli, who is our Deputy General 

4 Counsel. We are really pleased to see so many 

5 people here and such a great interest here.

6 We are eager to get started but I 

7 just wanted to tell you a couple of things. We 

8 have a very full agenda today. There are a 

9 handful of spots left. If there is anybody who 

10 wants to testify who is not registered, please 

11 speak with the women at the table outside the 

12 door and they will try and find a spot for you.

13 Also, we ask that anybody who is 

14 testifying limit their testimony to five 

15 minutes. This will enable everybody who is 

16 registered to have an opportunity to testify 

17 and I will keep an eye on the clock and remind 

18 you if you are getting close to your time. 

19 And with that, we will start. Is 

20 Angelia Millender here?

21 MS. MILLENDER: I am.

22 MS. MAHAFFIE: Thank you. You can 

23 come up.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 MS. MILLENDER: Good morning. My 

2 name is Angelia Millender and I am the Vice 

3 President for Student Affairs at Broward 

4 College. Broward College serves 67,000 

5 students annually and is the third largest 

6 community college in the Florida College 

7 System. Over 75 percent of our degree-seeking 

8 students receive some type of financial aid 

9 assistance. As such, several of the proposed 

10 regulatory changes will impact our 

11 institution.

12 Numerous institutions, including 

13 Broward College, make student-centric 

14 decisions in determining which third-party 

15 provider it chose to manage the funds that are 

16 disbursed to students. Electronic options 

17 have taken financial aid money management into 

18 the 21st Century and further regulations should 

19 not burden these processes or threaten the 

20 continuation of them.

21 Many students appreciate that they 

22 have an option to choose their methods of 

23 payments, whether ACH, check, or debit card, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 and that they get funds sooner using these 

2 methods over the traditional check method. 

3 The regulations already provide options for 

4 students and institutions to manage financial 

5 aid funds. Large institutions cannot handle 

6 the volume or the cost internally without the 

7 option to outsource. Just because voices who 

8 speak loudly and often through various 

9 stakeholders does not mean there is a global 

10 systemic problem that requires regulatory 

11 change.

12 There is another part of this 

13 conversation not always mentioned. Not only 

14 how the students get their funds using most of 

15 these systems, but how they can read to use the 

16 debit card correctly and can choose whether or 

17 not they incur fees related to POS transaction. 

18 Or students can elect to open bank accounts and 

19 we certainly want to encourage them to do that, 

20 to learn responsible management of their funds. 

21 They can manage their own funds through an ACH 

22 transfer directly to their bank account or they 

23 can make no choice and a check is the default. 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 How many more options should be provided?

2 The Department should recognize 

3 that institutions bear much of the cost of this 

4 set up and do not pass that cost onto students.

5 Competition through third-party 

6 vendors will likely introduce new innovation 

7 and improvement for these services to students, 

8 whereas regulations may likely restrict 

9 creativity and innovation. No doubt, there 

10 are those entities who have abuse their 

11 responsibilities but, in general, more 

12 institutions are handling this correctly and we 

13 have enough burdensome regulations. If the 

14 Department chooses to modify the regulations, 

15 simply add language to sanction those who are 

16 bad players and who do not take their 

17 responsibilities seriously when leading and 

18 making decisions on behalf of our students.

19 The clock to credit hour conversion 

20 impacts Broward College staff who work on 

21 behalf of students and is one of the most 

22 burdensome, labor-intensive processes and 

23 regulations outside of R2T4. The staff left 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the workshop provided by the Department in need 

2 of heavy sedation in order to return to their 

3 job title that required them to manage this area 

4 of financial aid processing. Managing 

5 clock-hour programs were much more manageable 

6 when a simple conversion of clock hours to 

7 credit hours was computed. The required 

8 formula is complicated and burdensome, 

9 especially if the school's financial aid 

10 management system cannot perform the 

11 calculation, we are doing this manually. If 

12 the Department does not seek to simplify 

13 clock-hour conversion as part of the negotiated 

14 rulemaking process, then don't discuss it at 

15 all.

16 Relative to gainful employment 

17 programs, these should be defined as those 

18 students who enter with the intent to become 

19 gainfully employed upon completion of their 

20 training. These are programs that are 

21 typically short-term certificate or diploma 

22 programs that do not normally lead to a degree 

23 at some institution offering that same program. 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Community colleges, however, often ladder 

2 these certificates to lead to degrees. 

3 Because this structure allows 

4 students to continue their education and 

5 enhance their career-ready skill set, these 

6 ladder programs should not be defined as 

7 gainful employment programs. Any tighter 

8 definitions may jeopardize institutions' 

9 ability or motivation to create or maintain 

10 these short-term programs at this time, when 

11 many states are encouraging these offerings 

12 tied to performance-based funding. Florida is 

13 one of them.

14 Finally, I would like for the 

15 Department to consider redefining adverse 

16 credit as it relates to PLUS Loan eligibility. 

17 This current definition, as Dr. Kanter 

18 indicated does not align with current economic 

19 conditions, the credit history and the cash 

20 management of most Americans. These 

21 regulations should consider the present state 

22 of affairs, current debt-to-income ratio, or 

23 some measure that assesses recency, rather than 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the past.

2 From January 2008 through February 

3 2010, 8.8 million Americans lost their jobs. 

4 As of November 2011, one in eleven American 

5 workers were unemployed. Many life-long 

6 careers were ended and the financial impact on 

7 families was enormous. Economic conditions in 

8 these past five years inclusive in this window 

9 deem one in five Americans ineligible to 

10 receive a parent loan for their children, 

11 which, in turn, can make financing a college 

12 education impossible for some.

13 Incremental disbursement for loans 

14 to ensure that the loans are being used for the 

15 appropriate educational use could be an option 

16 worth consideration. The current definition 

17 assumes that one person is involved, instead of 

18 a system that contributed to this crisis. The 

19 credit report does not show everything about a 

20 person and does not tell the full story of a 

21 person's current willingness and ability to 

22 repay a loan.

23 Thank you for considering my 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 comments.

2 MS. MAHAFFIE: Abigail Boyer.

3 MS. BOYER: Good morning. My name 

4 is Abigail Boyer and I am the Director of 

5 Communications and Outreach for the Clery 

6 Center for Security on Campus. The Clery 

7 Center was co-founded by Howard and Connie 

8 Clery following the brutal rape and murder of 

9 their daughter, Jeanne, at her institution by 

10 another student whom she did not know.

11 The Center is the first national 

12 non-profit organization dedicated to the 

13 prevention of violence, substance abuse and 

14 other crimes at colleges and universities. 

15 Today, the Center is the non-profit leader in 

16 Clery Act compliance and best practices 

17 education and is proud to partner with 

18 individuals and institutions across a broad 

19 swath of industries and geographies to promote 

20 safer campus communities. Our organization 

21 fosters relationships among campus law 

22 enforcement, administrators, students, and 

23 families to promote effective partnerships for 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 campus safety.

2 We also offer education and support 

3 for students, families, and higher education 

4 professionals, provide advocacy and referral 

5 services to victims of crime and support policy 

6 initiatives, aligned with our core goal of 

7 building safer campus communities nationwide.

8 Our unique position in relationship 

9 with multiple constituencies in higher 

10 education offers both anecdotal and 

11 evidence-based information on challenges and 

12 success in Clery Act compliance.

13 As you know, the Campus Sexual 

14 Violence Elimination Act was born out of 

15 collaboration between advocacy groups in 

16 victim services and higher education. And it 

17 is our hope that collaboration will continue 

18 through the rulemaking process.

19 The passage of this law reflects the 

20 devastating impact of sexual assault, domestic 

21 violence, dating violence, and stalking within 

22 our nation's campus communities.

23 What we have learned through 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 conversations with students, parents, and 

2 survivors of campus crime, as well as with 

3 colleges and universities to whom we provide 

4 training and technical assistance, is that the 

5 effective prevention of and response to these 

6 crimes requires campus policies and practices 

7 that are thoughtful, consistent, and 

8 comprehensive, created by institutions who lay 

9 a groundwork of accountability and are 

10 dedicated to protecting students and 

11 supporting victims.

12 Other training, we need individuals 

13 working in campus safety and security, student 

14 affairs, and in other departments on campus who 

15 are truly committed to student safety and are 

16 looking for information resources and 

17 direction while dealing with challenges such as 

18 limited budgets or staff.

19 Since the goal of Campus SaVE is to 

20 help a victim of campus sexual assault, 

21 domestic violence, dating violence or 

22 stalking, receive the critical support he or 

23 she deserves, regardless of what institution he 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 or she attends, we find it necessary to keep 

2 these challenges in mind.

3 A crucial piece of the legislation 

4 is education for students, faculty and staff 

5 about the dynamics of these crimes and the 

6 impact on the campus community. Bystander 

7 intervention continues to prove to be an 

8 evidence-based practice to educate students to 

9 help their peers.

10 On our campuses, safety should be 

11 considered a community effort as students play 

12 a vital role in both the prevention of and 

13 response to victimization. In fact, they are 

14 often the first responders.

15 Institutions should proactively 

16 invest in and have a strategic plan for 

17 prevention. However, those with fewer 

18 resources need information on how they can 

19 incorporate meaningful bystander intervention 

20 programming on a limited budget.

21 Institutions have also shared with 

22 us that they are looking for guidance, 

23 particularly in how to define and classify 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 domestic violence, dating violence, and 

2 stalking, and how to make information most 

3 available to students and campus crime victims.

4 Providing written information is 

5 extremely valuable to survivors, as they have 

6 many options available to them which can be 

7 overwhelming, following a victimization. In 

8 addition, a survivor could choose to disclose 

9 to a number of different people on campus. So 

10 having information in writing helps the entire 

11 campus community be better prepared and 

12 connected with resources, should someone 

13 disclose a victimization.

14 Colleges and universities benefit 

15 from guidance as to what information is most 

16 useful to students, faculty, and staff, and the 

17 most effective way to share this information. 

18 Furthermore, suggestions for resources on how 

19 to train individuals who will be hearing cases 

20 of student misconduct will aid institutions in 

21 implementing a campus process that is 

22 thoughtful and equitable.

23 Institutions vary in size, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 geography, and demographics. And these unique 

2 needs should be considered when determining 

3 regulations and guidance. Conversations with 

4 faculty, staff, and students at colleges and 

5 universities, as well as with organizations 

6 that advocated for Campus SaVE and regularly 

7 work with victims, will help ensure the needs 

8 of victims are met while proactively 

9 identifying solutions to possible 

10 implementation challenges at colleges and 

11 universities.

12 The compilation and dissemination 

13 of best practices about prevention and response 

14 included within the Act will also prove to be 

15 extremely valuable, as institutions examine 

16 their own campus climate and practices.

17 Campus SaVE will have a tremendous 

18 impact within campus communities and we thank 

19 you for allowing us to be a part of this 

20 dialogue.

21 MS. MAHAFFIE: Nancy Zirkin.

22 MS. ZIRKIN: And good morning, 

23 everyone. I am Nancy Zirkin, Executive Vice 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 President of the Leadership Conference on Civil 

2 and Human Rights, our nation's premiere civil 

3 and human rights coalition with over 200 member 

4 organizations. I am going to address mostly 

5 the issue of gainful employment and then talk 

6 very briefly about violence on college 

7 campuses. 

8 Thank you for the opportunity to 

9 speak on why the civil and human rights 

10 community strongly urges Secretary Duncan to 

11 enact a strong gainful employment rule to 

12 improve higher education and career 

13 opportunities for all Americans.

14 The Leadership Conference believes 

15 that all students enrolled in postsecondary 

16 education programs, whether public, non-profit 

17 or for-profit, deserve high quality, 

18 affordable education.

19 In the career and job training 

20 sector, this means effectively preparing 

21 students for careers that pay competitive wages 

22 and enable them to pay off their student loans.

23 Despite the ever increasing 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 importance of higher education, college has 

2 become prohibitively costly. Today, student 

3 loan debt totals over one trillion dollars 

4 nationally. Currently, two-thirds of 

5 students who graduate with a four-year degree 

6 have more than $25,000 in loan debt. College 

7 affordability is particularly important to the 

8 communities that the leadership conference 

9 represents. The burden of the increasing cost 

10 of college is keenly felt by communities of 

11 color. In the 2007-8 school year, 81 percent 

12 of African-American students and 67 percent of 

13 Latino students who earn bachelor degrees 

14 graduated with debt, compared to 64 percent of 

15 white students. And for women, attending 

16 college is increasingly difficult since the 

17 student loan burden significantly impacts 

18 their finances due to the issue of unequal pay.

19 The need for strengthening the 

20 Gainful Employment Rule is particularly urgent 

21 for students enrolled in for-profit colleges. 

22 Students enrolled in these institutions make up 

23 only 13 percent of all postsecondary students 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 in the United States but they account for 47 

2 percent of all student loan defaults.

3 Furthermore, students who earn 

4 bachelor's degrees at for-profit colleges have 

5 far more debt on average, $31,000 than do 

6 students who graduate from public institutions 

7 with an average debt of $8,000 or from 

8 non-profit with an average debt of $17,000. 

9 The failure of for-profit colleges has been 

10 even worse for students of color, low-income 

11 students, women and armed services members and 

12 veterans. African-Americans and Hispanic 

13 students are disproportionately represented at 

14 for-profit college. They make up 28 percent of 

15 all undergraduates but they represent nearly 

16 half, 46 percent of undergraduates, at 

17 for-profit college.

18 And according to the Senate Health, 

19 Education, Labor and Pensions Committee, 20 

20 for-profit colleges pulled in $520 million in 

21 taxpayer-funded, military and veterans' 

22 tuition assistance in 2010. That is nearly 

23 eight times more than in 2006.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 The high concentration of students 

2 of color, low-income students, women, 

3 nontraditional students and veterans at 

4 for-profit colleges is not an accident. 

5 Rather, it is a product of pernicious 

6 recruitment practices that actually target 

7 vulnerable populations to capture taxpayer 

8 financed federal tuition aid. We recognize 

9 that our country's future depends to a large 

10 degree on how well we educate the next 

11 generation. However, permitting for-profit 

12 institutions to charge exorbitant tuitions and 

13 collect a disproportionately high volume of 

14 federal dollars with little return on our 

15 collective investment is a travesty and a 

16 recipe for disaster.

17 For these reasons, we urge the 

18 Secretary to strengthen the gainful employment 

19 rule and to take all other necessary steps to 

20 enforce current laws and to improve higher 

21 education and career opportunities for all 

22 Americans.

23 Let me just say a couple words about 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the Violence Against Women Act, which was 

2 passed by Congress, as all of you know, signed 

3 into law by the President earlier this year. 

4 But we are concerned, given the recent reports 

5 of the failure of colleges and universities to 

6 actually take strong action in a variety of 

7 cases of sexual assault and other types of 

8 violence against women. It is critical that 

9 the Department of Education issue strong 

10 guidance to implement the new requirements in 

11 VAWA, with specific attention to traditionally 

12 under-served communities such as students of 

13 color, and LGBT students. We also urge the 

14 Department of Civil Rights and the Office for 

15 Civil Rights to strongly enforce these 

16 provisions and ensure accurate collection of 

17 the data and audit the reporting requirements. 

18 These actions --

19 MS. MAHAFFIE: Could you wrap up 

20 your comments, please?

21 MS. ZIRKIN: Yes. These actions 

22 will assist colleges and universities to fully 

23 implement the legislation.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Thank you.

2 MS. MAHAFFIE: Thank you.

3 Tom Snyder.

4 MR. SNYDER: Good morning, my name 

5 is Tom Snyder. I am president of Ivy Tech 

6 Community College of Indiana. Indiana has a 

7 statewide community college system, singly 

8 accredited. We have 200,000 students, 175,000 

9 for-credit and 25,000 non-credit.

10 I am also here speaking on behalf of 

11 RAMC, Rebuilding America's Middle Class. It 

12 is a coalition of ten states and individual 

13 community colleges from across the country. 

14 We represent over 120 colleges and 1.5 million 

15 students in support of the activity with RAMC.

16 We share a common belief that 

17 community colleges are one of America's primary 

18 solutions for building a strong more 

19 competitive workforce and, therefore, a strong 

20 middle class. The Department has proposed a 

21 number of issues for negotiated rulemaking that 

22 will impact community colleges. As the 

23 Department embarks upon this new round, it is 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 important to keep in mind that these demands may 

2 place burdens on colleges from a compliance and 

3 paperwork perspective. And on behalf of the 

4 member colleges, we urge the Department to keep 

5 this in mind as we move forward.

6 I am going to comment on three 

7 areas: distance education and the state 

8 authorization; gainful employment; and Title 

9 IV studies over the coming years.

10 With regard to state authorization 

11 for distance education, the Department's 

12 original regulations in this area vacated by 

13 the court placed large burdens on institutions 

14 seeking to serve students in multiple states. 

15 Our review of these regulations raise questions 

16 on the value of the additional burden that it 

17 would have placed upon these institutions. It 

18 seems overly complex that the institutions 

19 would have to seek authorization to operate in 

20 each state for which their students are 

21 studying and placing a lot of burden on the 

22 institutions.

23 At Ivy Tech, we offer over 350 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 online courses, 12 online programs, serving 

2 over 40,000 students this semester. Many of 

3 the students come from the home state of 

4 Indiana. But of course, they are increasingly 

5 mobile so they may start in Indiana but they may 

6 move to other states. And then we think, as the 

7 prior speaker just addressed, that the cost of 

8 college would actually make it much more useful 

9 if students from all states could take online 

10 from community colleges from across the 

11 country, fitting their own schedule and fitting 

12 credits that need to be.

13 So as the Department proposes 

14 additional regulation, we would hope that the 

15 Department would not require institutions to 

16 seek authorizations through multiple states 

17 for online programs.

18 Gainful employment. RAMC members 

19 certainly appreciate the goal of the Department 

20 in promulgating its regulations on gainful 

21 employment and making sure that graduates do 

22 have a meaningful career once they have 

23 graduated. Our goal at Ivy Tech is students 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 find employment and will be able to afford their 

2 student loan payments.

3 Programs at community colleges did 

4 not drive the need for gainful employment 

5 regulations but would be significantly 

6 impacted had not the courts intervened. 

7 Particularly, the focus was on short-term 

8 certificates (one year) and, of course, that is 

9 being increasingly important as we strive to 

10 achieve the Lumina goal of competitive college 

11 attainment by 2025.

12 So, as the Department of Education 

13 goes forward on the new set of gainful 

14 employment regulations, community colleges 

15 wish not to be treated in exactly the same 

16 fashion, given that their role in workforce 

17 development is so critical.

18 And the final thing I would like to 

19 comment on is Title IV and the studies in the 

20 upcoming years.

21 First, we want to add our support 

22 that the Department of Education does need to 

23 propose regulations through negotiated 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 rulemaking process to address the fraud that 

2 was uncovered by the Inspector General. Not 

3 addressing Pell Grant fraud will make it harder 

4 for Congress to fund the program and address the 

5 financial needs of the students, especially 

6 those attending community colleges.

7 Next, we want to make sure that we 

8 study the maximum Pell and the tradeoffs that 

9 may be necessary not this year, not next year, 

10 but perhaps in coming years. We believe that 

11 max Pell is not critical to the community 

12 college or its students. Indiana is typical in 

13 the data. Half of our students, 49 percent 

14 receive Pell but only 16 percent of those or 

15 less than 10 percent of the entire student body 

16 receive max Pell.

17 When we look at our four year 

18 schools, they range from 20 percent Pell 

19 recipients at IU Bloomington to 35 percent into 

20 more open access schools. But only one-third 

21 of those, that's less than ten percent of the 

22 student body, receive maximum Pell.

23 In the past, there have been 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 tradeoffs that have impacted the most needy 

2 students, typically those going to community 

3 colleges. That would be those graduating from 

4 high school, free and reduced lunch, 

5 low-income, and those low-income adults 

6 seeking to build a second career at a community 

7 college.

8 So we respectfully submit these 

9 three items for your consideration. Thank 

10 you, very much.

11 MS. MAHAFFIE: Rory O'Sullivan.

12 MR. O'SULLIVAN: Good morning. My 

13 name is Rory O'Sullivan. I am the Policy 

14 Director at Young Invincibles. And we are a 

15 young organization whose mission it is to 

16 expand opportunity for 18- to 34-year-olds 

17 across the country.

18 I wanted to start with a story this 

19 morning. Someone who wrote in in response to 

20 a recent survey of ours at Young Invincibles, 

21 and she is talking about going to a for-profit 

22 college. She said, “I accumulated over 

23 $150,000 in debt. The school I went to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 defrauded students in Denver, Colorado and did 

2 not have the practicum and internships in place 

3 that it had marketed and promised. So, I had 

4 to switch to another university.

5 I am very concerned about my 

6 financial future and the potential financial 

7 devastation now due to the actions of the 

8 for-profit university. My payment, and I am 

9 assuming she is talking here about her student 

10 debt payment, will be estimated to be more than 

11 my mortgage and my earning potential will 

12 likely not be enough to handle both payments.” 

13 So stories like this continue to come in to us 

14 every day. And you could understand why. Our 

15 generation knows that getting a college degree 

16 is more important than it has ever been. Eight 

17 out of ten young people across the country will 

18 tell you that they need education and training 

19 nowadays to succeed in the 21st century 

20 economy.

21 When someone holds out a key to the 

22 door of higher education and sells you a key to 

23 the door of higher education, that road to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 opportunity, and it doesn't work, people are 

2 angry and frustrated. The career college 

3 ought to prepare you for a career, not mire you 

4 in debt that you can't repay. And so it is 

5 under this idea of basic fairness that compels 

6 us to ask the Department to force a strong 

7 gainful employment rule, provide some 

8 protection to students like these, like the one 

9 I just mentioned.

10 We need basic standards to ensure 

11 that students are able to repay their loans and 

12 that their incomes they receive after 

13 graduation are high enough to finance the debt 

14 that they frequently incur. Otherwise, we are 

15 going to continue to go on like we are. So 

16 for-profits right now, even though they just 

17 have ten percent of students in all of higher 

18 education take in over a quarter of Pell Grant 

19 and Stafford Loan dollars. They also take 38 

20 percent of GI Bill dollars, costing taxpayers 

21 twice as much to educate each veteran as public 

22 universities and community colleges.

23 Now, despite this enormous and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 disproportionate level of investment, more 

2 than half of the students who enrolled in these 

3 colleges in 2008 and 2009 left without a degree 

4 or diploma within a median of four months.

5 For-profits are expensive. They 

6 cost six to eight times more than the high 

7 quality of public universities and community 

8 colleges up the road. Because of the cost, 

9 students lucky enough to earn bachelor degrees 

10 from a for-profit leave with almost four times 

11 the debt of students at public universities and 

12 almost double the debt of non-profit private 

13 colleges. And that is the ones that are lucky 

14 enough. Remember, most of the people don't 

15 graduate.

16 More than one in five students who 

17 attend a for-profit default on their loans 

18 within just three years of entering repayment. 

19 And that is compared to just ten percent at a 

20 public college and 7.5 percent at a non-profit, 

21 private colleges. 

22 So the status quo just isn't good 

23 enough right now. The incentive is to enroll 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 students and take Title IV dollars, but there 

2 is no incentive in the system to ensure student 

3 success. And so, again, we urge the Department 

4 to include strong new gainful employment 

5 standards, as part of the upcoming negotiated 

6 rulemaking.

7 The other one thing I wanted to 

8 mention is that we are also pleased to see the 

9 parent PLUS Loans on the agenda. As you know, 

10 hundreds of students are dropping out of HBCUs 

11 after a Department switch in underwriting and 

12 we appreciate the opportunity to negotiate 

13 publicly on these standards. Including the 

14 student and consumer perspective is going to be 

15 key in these negotiations. And, as all of us 

16 know, representatives from different types of 

17 schools and often different offices within 

18 schools are included in negotiations. And so 

19 we think it is fair that the student population, 

20 which is similarly diverse, that we would also 

21 have adequate slots for negotiators 

22 representing students from all different types 

23 of backgrounds.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 As I said, our generation is very 

2 aware that the road to economic opportunity 

3 runs through the halls of higher education. So 

4 it is essential that we have fair rules of the 

5 road and keep it open and safe for everyone.

6 Thank you again for the opportunity 

7 to speak today.

8 MS. MAHAFFIE: Carrie Wofford.

9 MS. WOFFORD: Hi, I'm Carrie 

10 Wofford with Veterans Education Success, a new 

11 non-profit founded by the major veterans groups 

12 in town to focus exclusively on the promise of 

13 the GI Bill.

14 We are here to urge you in the 

15 strongest terms to institute a strong, 

16 meaningful gainful employment rule and to stop 

17 the manipulation of the cohort default rate and 

18 the 90/10 rule.

19 I want to remind you that as the New 

20 York Times reported, there was, the lobbyists 

21 for the for-profit spent 12 million dollars 

22 lobbying you only on this gainful employment 

23 rule. That wasn't to mention the lobbying they 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 did to Congress on other issues. You are going 

2 to be under a lot of pressure but I think you 

3 have to keep in mind the taxpayer interest and 

4 the veteran's interest.

5 For the past two years, veteran 

6 advocates and Senate staff have met multiple 

7 times with the Departments of VA and DoD. And 

8 guess what VA and DoD have told us for two years 

9 running? That they are not the ones to make 

10 judgment calls about educational quality. 

11 That only you, the Education Department, know

12 where to draw the line. So we need you to draw 

13 that line.

14 Take a look at this from the point 

15 of view of a vet. He has just come back from 

16 Afghanistan. Maybe he lost his leg. He can't 

17 go back to his job on a construction site. He 

18 needs a new career. Good news! We have the GI 

19 Bill. It is the ticket to the American dream. 

20 It is the promise of a high quality education. 

21 Maybe he can become a businessman, a lawyer. 

22 But here is the kicker. Our loyal vets trust 

23 the government to protect them from being 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 scammed. They assume that you would not let 

2 them go to a school where graduates can't get 

3 jobs.

4 Now look at this from the point of 

5 view of a taxpayer. Taxpayers assume that you 

6 are not going to waste their hard-earned 

7 dollars on schools whose graduates can't find 

8 a job. They expect a little old fashioned 

9 return on investment. In the GI Bill, it costs 

10 taxpayers twice as much to send a vet to a 

11 for-profit college as it does to send a vet to 

12 a public university or community college. And 

13 I am going to submit to you the Senate data and 

14 all the studies that have been out there.

15 And where does that money go? On 

16 average, 20 percent gets set aside for Wall 

17 Street profit. That doesn't happen, 

18 obviously, at community colleges and public 

19 universities. A quarter gets set aside for 

20 marketing and advertisements, which is really 

21 these high-pressured call centers where they 

22 train recruiters to engage in emotional 

23 manipulations and pain points. And I am going 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 to show you the pain funnel and pain puzzle, 

2 four different of the big for-profits use these 

3 things. They use fear and pain to create 

4 urgency. It is ugly stuff. Ugly, ugly, ugly. 

5 And then what else do they do with their money? 

6 They give their CEO's an average of eight to 

7 nine million dollars a year. That is the 

8 average. Non-profit college presidents, on 

9 average, is under $400,000. And the 

10 education? They spend less than one-fifth of 

11 what they get from the federal spigot, a tiny 

12 fraction of what community colleges and public 

13 universities spend. When Bridgepoint bought 

14 St. Mary's, which was a legitimate school, they 

15 slashed spending on education from $5,000 per 

16 year per student to $700. Seven hundred. 

17 What kind of an education is that? That same 

18 year they paid their CEO $20 million, almost 20 

19 times the amount that the President of Harvard 

20 gets. Now, was the educational college as good 

21 as Harvard? Not so much.

22 They take 38 percent of GI Bills but 

23 educate a much lower percentage of GI Bill 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 students. Eight of the ten schools raking in 

2 the most GI Bill dollars are for-profits. Only 

3 two public universities even make that list, 

4 the University of Maryland and UT, Texas. The 

5 entire U-Cal system and Cal State don't even 

6 make the list. 

7 They also take half of all DoD 

8 tuition assistance and 60 percent of the MyCAA 

9 funds for service member spouses. And what do 

10 we get? Dropout rates of 50 to 60 percent of 

11 those for-profits in that top ten, compared to 

12 only 13 percent at Maryland and 26 percent at 

13 Texas.

14 The fifth largest recipient of DoD 

15 MyCAA funds is an online animal behavior 

16 college. An online animal behavior college. 

17 And do you know why for-profits are targeting 

18 GI Bills and DoD? Because of the 90/10 

19 loophole. You are familiar with that. As 

20 Holly Petraeus says, vets and military are 

21 nothing more than dollar signs in uniform.

22 Why are vets signing up? These 

23 massive call centers. Vets receive literally 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 hundreds of phone calls and emails by the 

2 recruiters. One of our colleagues at the VFW 

3 decided to test the system. So he put his name 

4 in to see what would happen. He got 350 emails 

5 and phone calls in a week, harassing him. And 

6 he still gets them. He got one during a meeting

7 with for-profits and showed them.

8 Now I am going to surprise you. 

9 Some students who actually graduate from these 

10 for-profits then find out that they are not even 

11 eligible to sit for the licensing exam for the 

12 jobs that are part of licenses. You think of 

13 lawyers, electricians, plumbers, most of the 

14 medical field. Kaplan was just nailed just 

15 last year by an NBC affiliate in Charlotte, 

16 North Carolina for convincing students to 

17 attend a dental assistance program. And they 

18 knew that the graduates would never, ever be 

19 able to get a license as a dental assistance. 

20 You have got to weed these programs out. You 

21 have got to create a stronger rule this time. 

22 You know more now. You have got the Senate 

23 investigation, DOJ filing lawsuits, you have 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 got CFPB complaints, and you have 32 states 

2 Attorney Generals investigations. And you 

3 have got data from the first round. You see 

4 schools failing miserably on two out of your 

5 three tests and yet they continue on. You have 

6 to do better than nine strikes and you are out. 

7 Taxpayers would be outraged if they had any idea 

8 that GI Bill dollars are being spent on 

9 millionaire salaries, fancy TV ads, and 

10 predatory call centers. The vets groups who 

11 have learned it are beyond outraged. VA and 

12 DoD have said you are the only ones equipped to 

13 know where to draw the line to weed out sub-par 

14 career colleges. Please draw that line. Vets 

15 should not be coming home and getting scammed.

16 Thank you. Should I submit, all 

17 the papers, later?

18 MS. MAHAFFIE: If you could give 

19 them to the women at the table.

20 Dr. Lomax.

21 DR. LOMAX: Good morning. I am Dr. 

22 Michael Lomax, President and CEO of the United 

23 Negro College Fund, which represents 38 private 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Historically Black Colleges and Universities 

2 and 55,000 students who are disproportionately 

3 low-income and the first to represent their 

4 families in college.

5 We have helped more than 400,000 

6 students earn a college degree, moving them 

7 from poverty and underemployment to the active 

8 workforce and the middle class. I am here to 

9 talk about a barrier now being placed in the way 

10 of many of those same families, namely the 

11 Department's unfortunate decision to change 

12 the rules for the parent PLUS Loan Program.

13 As the UNCF institutions prepare 

14 for the 2013/2014 academic year, we fear that 

15 thousands of additional low-income and 

16 minority students will be harmed this fall. 

17 These students rely disproportionately on 

18 federal grants and loans to pay tuition and 

19 their direct educational expenses, in order to 

20 earn a college degree that in today's economy 

21 is an essential ladder out of unemployment and 

22 poverty and into the 21st Century workforce.

23 On behalf of these students and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 their parents, we urge that: 1) the Department 

2 review all parent PLUS Loan applications for 

3 the current and upcoming academic year under 

4 the credit standards that existed prior to 

5 October 2011, while appropriate eligibility 

6 criteria are considered and studied under the 

7 2013 negotiated rulemaking process; 2) the 

8 Department consider fair, flexible, and 

9 reasonable credit criteria for parent PLUS 

10 Loans under the 2013 negotiated rulemaking. 

11 These criteria should not, disproportionately 

12 penalize families who have been impacted by the 

13 great recession and the housing crisis. They 

14 are hardworking Americans whose credit history 

15 may have been disproportionately impacted by 

16 devastating job losses that were felt most in 

17 low-income and minority communities.

18 In addition, the Department should 

19 consider regulations that do not rely solely on 

20 backward-looking past credit history to 

21 determine loan eligibility, but reflect a 

22 forward-looking balanced approach, one that 

23 takes into consideration other factors, such as 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 current credit status and employment; and 3) 

2 should the Department proceed with negotiated 

3 rulemaking on this topic, UNCF requests a seat 

4 at the table, considering that educational 

5 access for students at UNCF institutions, 

6 Historically Black Colleges and Universities 

7 and minority-serving institutions has been 

8 undermined by the Parent PLUS Loan standards.

9 The actions UNCF recommends are 

10 essential and fair. We were stunned that the 

11 Department implemented a significant change in 

12 Parent PLUS Loan eligibility with no advance 

13 notice, no open communication, and no real 

14 understanding of the devastating impact of this 

15 policy shift. The end result of this terrible 

16 policy shift has been the following: More than 

17 28,000 Historically Black College and 

18 University students and their families denied 

19 access to the parent PLUS Loans; a dramatic 

20 one-year drop, over 50 percent, in approved 

21 Parent PLUS Loan applications; more than $50 

22 million in revenue losses, which resulted in 

23 forced cuts in institutional budgets and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 layoffs because of lost enrollment and good 

2 faith efforts to assist new and returning 

3 students who could not now pay tuition.

4 We appreciate that the Secretary 

5 agreed to reconsider the 400,000 applications 

6 in total that were denied Parent PLUS Loans, 

7 including the 28,000 denials at Historically 

8 Black Colleges and Universities; however, this 

9 process still has not produced significant 

10 results. As of February 2013, fewer than ten 

11 percent of the denied HBCU applications have 

12 been approved.

13 While UNCF shares the Department's 

14 concern about not burdening families with 

15 excessive debt, we do not believe the answer is 

16 to restrict access to college for poor families 

17 who have been hit hardest by the challenging 

18 economy. These families now face a Catch-22 

19 situation. Their credit history may have been 

20 impaired due to the country's massive job 

21 losses over the past five years. But now the 

22 government says they must have an unblemished 

23 credit history in order to obtain a federal loan 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 to pay for the education that is necessary to 

2 obtain a good job in the economy.

3 Introducing harsh credit history 

4 standards is a perverse solution when other 

5 more thoughtful actions can be taken through 

6 this rulemaking process to ensure appropriate 

7 levels of borrowing and loan repayment.

8 UNCF and the larger HBCU community 

9 are ready and willing to participate in the 

10 upcoming rulemaking process. However, 

11 rulemaking takes time. Our students and 

12 families are in crisis now. Students have been 

13 sent home and have insufficient resources to 

14 re-enroll. They need relief from the 

15 Department's ill-considered credit standards 

16 and they need it now. Education is their one 

17 sure way out of poverty and into the workforce. 

18 That doorway is being slammed in their faces. 

19 Thank you for your consideration of 

20 these recommendations and facts. Thank you.

21 MS. MAHAFFIE: Anne Hedgepeth.

22 MS. HEDGEPETH: Hi, I'm Anne 

23 Hedgepeth. I am the government relations 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 manager at the American Association of 

2 University Women. On behalf of the more than 

3 165,000 bipartisan members and supporters, a 

4 thousand branches nationwide, and over 800 

5 college and university partners at AAUW, I 

6 would like to thank you for holding this hearing 

7 about the upcoming regulatory issues the 

8 Department of Education is considering.

9 We will be submitting detailed 

10 written comments as well, but I appreciate the 

11 opportunity to speak to you today.

12 Specifically, AAUW urges the 

13 Department to again undertake the issuance of 

14 strong gainful employment regulations to 

15 protect students and taxpayers. In addition, 

16 we urge the Department to quickly negotiate and 

17 issue strong regulations regarding the changes 

18 to campus safety and security reporting that 

19 were included in the Violence Against Women 

20 Act.

21 AAUW has weighed in time and time 

22 again about the importance of strong rules to 

23 ensure that career education programs that 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 receive federal funds do not take advantage of 

2 students and taxpayers. AAUW supports this 

3 work in particular because we know that women 

4 struggle with student debt more than men. Loan 

5 repayment is an even more significant burden 

6 for women, who earn less on average over the 

7 course of their lives than their male 

8 counterparts. AAUW's new research, 

9 Graduating to a Pay Gap, found that the median 

10 student loan debt burden was slightly higher in 

11 2009 for women than for men. In addition, 

12 among full-time workers who are repaying their 

13 loans in 2009, nearly half of women one year out 

14 of college were paying more than eight percent 

15 of their earnings towards their student loan 

16 debt. Only 39 percent of men were in the same 

17 position.

18 Furthermore, just over half of 

19 women were paying a greater percentage of their 

20 income toward student loan debt than we 

21 estimated a typical woman could afford.

22 The original gainful employment 

23 rule uses sound framework to support the goal 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 of ensuring that schools offering federal 

2 student aid did not saddle their students with 

3 unmanageable debt. 

4 AAUW supported the combination of 

5 measuring debt-to-income ratios for payment 

6 rates, default rates, to understand which 

7 schools were failing their students and should 

8 be ended, which needed improvement and which 

9 are serving students well. The data collected 

10 in the initial year of the rule found that 65 

11 percent of the programs failed at least one of 

12 the tests and five percent failed all three; 193 

13 programs at 93 different schools.

14 While the rule was struck down by 

15 the court, the decision made clear that the 

16 Department can issue these regulations. 

17 Indeed, the two concerns that were raised can 

18 be easily addressed and we urge the Department 

19 to move through the process quickly to remedy 

20 the concerns and reinstate the rule.

21 In the rule, repayment rate of 35 

22 percent is required for a program to pass. And 

23 AAUW stands by the need for such a threshold 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 and, with support, an even stronger one. The 

2 idea that it is acceptable to continue a program 

3 where 65 percent of former students cannot pay 

4 down their loans year after year is frustrating 

5 to those of us who work with or hear from 

6 students daily.

7 In addition, concerns that data 

8 collection may be a problem can be resolved by 

9 focusing on programs with specifics 

10 characteristics. There is a way forward to 

11 reinstate these rules.

12 Overall, there is no reason to 

13 weaken the gainful employment rule. With 193 

14 programs where students have borrowed at high 

15 amounts relative to their income, are having 

16 trouble repaying and are very likely to be in 

17 default, we must do something to ensure that 

18 federal taxpayer dollars do not continue to 

19 flow to these programs.

20 To respond to another issue that is 

21 scheduled to be addressed in the upcoming 

22 rulemaking, AAUW urges the Department to 

23 quickly move through issuing rules around the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 new campus safety provisions, which amend the 

2 Clery Act and the Higher Education Act and were 

3 passed as a part of the Violence Against Women 

4 Act. When campus environments are hostile 

5 because of sexual harassment, assault or 

6 violence, students cannot learn and miss out on 

7 true educational opportunities. AAUW's own 

8 research revealed that two-thirds of college 

9 students experience sexual harassment. In 

10 addition, the Department of Justice found that 

11 around 28 percent of women are targets of 

12 attempted or completed sexual assault while 

13 they are college students. 

14 AAUW supports the changes to the 

15 Campus Safety Law. A rulemaking will need to 

16 address things like new definitions, which are 

17 included in the statute, including use of 

18 definitions from the Violence Against Women 

19 Act, make clearer to schools how often certain 

20 ongoing activities must take place and who is 

21 covered. The existing Clery Act framework 

22 regarding reporting of crime data is strong in 

23 this case. Ensuring the students are covered, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 informed, and that schools are already familiar 

2 with reporting this type of information.

3 In addition to reporting, schools 

4 will also be making public policies and 

5 procedures regarding instances of sexual 

6 assault, dating violence, domestic violence 

7 and stalking. Key to these rules is the fact 

8 that every school may need to institute 

9 policies and procedures that are unique to 

10 their communities but that must, at the same 

11 time, ensure that students are safe and that 

12 they are in compliance with the law -- that the 

13 school is in compliance with the law. There 

14 are many schools that are already doing so.

15 In addition, there are good 

16 examples of existing policies, procedures, and 

17 trainings out there. AAUW has developed a 

18 program in a box for campus advocacy around this 

19 issue. Students Active for Ending Rape works 

20 with students in schools to improve campus 

21 sexual assault policies. And the Department's 

22 own work around Title IX and the resolution 

23 agreements that stand as best practices for 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 schools in dealing with sexual harassment and 

2 sexual assault are all places to look.

3 Additionally, it is important that 

4 organizations that represent students and 

5 victims, as well as advocates and experts on 

6 sexual assault, domestic violence, dating 

7 violence, stalking, bystander intervention and 

8 Title IX, for example, be included in the 

9 negotiated process. These groups may not 

10 traditionally be a part of rulemaking on, say, 

11 financial aid or other things being discussed 

12 today but are an invaluable part of the 

13 conversation around the campus safety rules.

14 Thank you again for the opportunity 

15 to speak.

16 MS. MAHAFFIE: John Ebersole.

17 MR. EBERSOLE: Good morning. I'm 

18 John Ebersole. I am President of Excelsior 

19 College in Albany, New York. Excelsior is a 

20 comprehensive not-for-profit college serving 

21 37,000 students at a distance. Of these, 

22 nearly 40 percent come from under-served 

23 populations. I would like to thank the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Department for your time this morning and for 

2 the opportunity to come and speak before you.

3 Of the regulatory issues that are to 

4 be considered in the rulemaking process, I 

5 would like to speak very briefly to four of 

6 these: state authorization, clock to credit 

7 hour conversion, gainful employment, and 

8 campus safety. In each case, I have offered 

9 written testimony which expands upon these 

10 particular comments.

11 Under state authorization, the 

12 effort to obtain state authorization in 54 

13 separate jurisdictions, as has been required 

14 under the previously issued program integrity 

15 rules, has been burdensome and expensive. The 

16 result has been both a reduction in access and 

17 a source of pressure through increased tuition, 

18 without added value for students or 

19 institutions.

20 The President's Forum of Excelsior 

21 College, the Council of State Governments, the

22 Commission on Regulation of Postsecondary 

23 Distance Education, and the four regional 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 higher education compacts have, over the past 

2 six years, developed an effective framework to 

3 simplify and streamline the process for 

4 authorizing online degree programs that 

5 operate across state lines. The resulting 

6 State Authorization Reciprocity Agreement, 

7 SARA, as it is now being referred to, is a 

8 voluntary approach for both states and 

9 institutions. It was jointly drafted by these 

10 organizations with funding from the Lumina 

11 Foundation. This agreement allows states and 

12 institutions to work together to address an 

13 existing patchwork of regulations, while 

14 strengthening the state's role in protecting 

15 students from unfair or illegal practices. It 

16 is intended to streamline the regulatory 

17 process and to increase access to higher 

18 education, while protecting consumers and 

19 reducing the compliance costs.

20 Representatives of the Department 

21 have indicated a willingness to encourage and 

22 recognize interstate reciprocity agreements 

23 for purposes of verifying compliance with state 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 law and participation in Title IV programs. I 

2 ask the Department to encourage and recognize 

3 such reciprocity agreements as a means to 

4 satisfy the requirements for institutional 

5 participation in Title IV financial aid 

6 programs. Further, I ask the principles 

7 embodied in this SARA approach be considered as 

8 the foundation for any other regulatory 

9 initiatives in this particular arena.

10 In regard to the state 

11 authorization for foreign locations of 

12 institutions located in the state, I believe 

13 that there is a need for greater clarity is what 

14 this refers to and it is unclear from the 

15 Federal Register description as to the type of 

16 locations involved and to the regulations 

17 envisioned.

18 Now speaking to the credit hour, it 

19 is recommended the Department consider 

20 alternative procedures for measuring student 

21 entitlement under Title IV where seat time is 

22 not appropriate. The current focus on clock 

23 hours, while customary and convenient, is not 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 thought an appropriate approach to measuring 

2 learning, whether online or as an element of a 

3 competency-based program. An alternative 

4 would be to request a certification of 

5 substantial equivalency, whereby an 

6 institution offering new forms of instruction 

7 delivery -- and those might include accelerated 

8 learning, adaptive learning programs, new 

9 forms such as competency assessment and MOOCs 

10 -- these would be certified to the Department 

11 that the learning outcomes produced equal or 

12 exceeding expectations from a traditional 

13 approach, based upon some form of valid 

14 assessment. Such a certification could be 

15 made at either the course or program level by 

16 an institution's chief academic officer.

17 An additional or alternative 

18 approach would be for the Department to sponsor 

19 demonstration projects that include a variety 

20 of post-traditional approaches. Such 

21 projects would determine appropriate measures 

22 for learning instead of credit or clock hours. 

23 Such projects could also measure outcomes as 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 evidenced by demonstrations of specific 

2 competencies or other appropriate forms of 

3 measurement.

4 Relative to gainful employment, 

5 while the desire for information related to 

6 program costs and return on investment is 

7 understood, the ability of institutions to 

8 obtain such information as salary data, one of 

9 the metrics often mentioned, is by no means 

10 assured. The intended use of such data to 

11 distinguish between successful and 

12 unsuccessful programs needs to be considered 

13 against multiple variables to be truly accurate 

14 or useful.

15 The Department is urged to consider 

16 the following in arriving at its regulations in 

17 this arena. What is the minimum amount of 

18 information needed to appropriately ensure 

19 that aid is flowing to programs that result in 

20 success in hiring? What sources exist for this 

21 information beyond the academic institution? 

22 And why is it assumed that a college or 

23 university actually has this information?
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Finally, and perhaps most 

2 importantly, fully consider the cost of 

3 obtaining the desired information and its 

4 impact on tuition.

5 I will give an example here. Last 

6 year, my institution spent over $300,000 to 

7 comply with state authorization requirements 

8 as they now exist. In the process of 

9 evaluating past gainful employment proposals, 

10 we estimate that the cost for my institution 

11 would be roughly $200,000 to collect, monitor, 

12 and report all of the data required by the 

13 proposals that have been submitted but not yet 

14 put into effect. If these two costs, state 

15 authorization plus gainful employment, are 

16 applied to all recently accredited 

17 institutions, of which there are approximately 

18 5,000, the total cost of higher education 

19 increases by some two and a half billion 

20 dollars. Most institutions have nowhere to go 

21 to recover such costs, except to the student in 

22 the form of increased tuition and fees.

23 MS. MAHAFFIE: Please wrap up your 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 comments.

2 MR. EBERSOLE: Okay, thank you. 

3 Finally, in regard to campus security, the 

4 intent of this requirement is understood for

5 the traditional brick and mortar campus, 

6 however, there needs to be criteria for an 

7 exemption. Excelsior and many other 

8 post-traditional institutions have no campus 

9 and no on-site students. To require the same 

10 policies and reporting as for a traditional

11 campus with physically present students serves 

12 no purpose and is a waste of our time and 

13 resource. Thank you.

14 MS. MAHAFFIE: Rick Weidman. Is 

15 Rick Weidman here?

16 (No audible response.)

17 MS. MAHAFFIE: Suzanne Ross.

18 MS. ROSS: Good morning, everyone. 

19 I am Suzanne Ross and I am the new Chief 

20 Compliance Officer at Higher One and we welcome 

21 the opportunity to submit our comments today.

22 Since 2000, Higher One has provided 

23 enhanced services to students to help college 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 and university business offices manage their 

2 operations. We developed the first widely 

3 adopted refund disbursement solution designed 

4 exclusively for higher education to ensure that 

5 students receive financial aid refunds and 

6 credit balances securely and quickly. 

7 Students are never charged fees to receive 

8 their refunds and may have their refunds 

9 distributed to a bank account of their 

10 choosing. More recently, Higher One added the 

11 Campus Labs suites and we provide data 

12 analytics to our universities as part of our 

13 product offering, and we include tools to help 

14 institutions of higher education leverage data 

15 to identify at-risk students early in the 

16 process and hopefully improve the graduation 

17 completion rates. Approximately 13 million 

18 students at more than 1,600 campuses nationwide 

19 use one or more of our services.

20 Historically, the disbursement of 

21 federal student aid refunds has been 

22 paper-based, which is a costly and inefficient 

23 way for higher education institutions to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 deliver those refunds. The Department of 

2 Education has worked to modernize refund 

3 disbursements through the use of electronic 

4 funds transfers to improve efficiency, 

5 mitigate fraud, reduce expense and improve 

6 service to the students.

7 In 2008, negotiated rulemaking of 

8 FSA programs, the Department acknowledged the 

9 emergence of EFTs in the disbursement of Title 

10 IV funds and facilitated their use through 

11 regulations. Since that time, the use of EFTs 

12 has continued to expand as more and more 

13 institutions have come to realize the benefits 

14 of these services. We believe that this trend 

15 is essential to reinforce a more 

16 cost-effective, sustainable and secure 

17 environment. Higher One would encourage the 

18 Department to ensure that students continue to 

19 have these choices for their preferred method 

20 of refund delivery. Now that we have entered 

21 the 21st century, we encourage the use of 

22 electronic distribution of refunds, in line 

23 with practices adopted by other federal 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 agencies. This approach removes the 

2 additional cost of potential check cashing fees 

3 for those students who do not have a traditional 

4 banking relationship. It also provides a more 

5 secure platform to reduce the risk of financial 

6 aid fraud.

7 Higher One agrees with the 

8 Department's decision to explore the ways in 

9 which EFTs can be used to streamline operations 

10 and mitigate fraud risks. Fraud impacts 

11 federal and state governments and higher 

12 education institutions, as well as students and 

13 their families, with taxpayers assuming the 

14 ultimate final burden. We cannot afford or 

15 tolerate the abuse of programs vital to our 

16 national interest, especially at a time when 

17 families around the country are struggling 

18 through economic hardships and institutions 

19 are facing budget cuts.

20 For many students and families, the 

21 lack of eligibility and accessibility of 

22 banking services represents a significant 

23 barrier to establishing a financial anchor. 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 It is important that all students have access 

2 to financial services that support them. An 

3 electronic refund disbursement service is 

4 incomplete if students who are unable to 

5 qualify for traditional banking services are 

6 denied the means to receive their electronic 

7 refunds, essentially shutting them out of the 

8 mainstream banking system and depriving them of 

9 FDIC insurance and fraud protections. The 

10 fees and risks associated with disbursement 

11 alternatives, such as check cashers, are not in 

12 the best interest of students. The Department 

13 should examine how the un-banked and 

14 under-banked student population can manage 

15 their financial help, which includes financial 

16 aid refunds and day to day financial 

17 obligations. This approach establishes the 

18 foundation for a viable fiscal future and 

19 promotes financial literacy.

20 We agree with the Department's 

21 recommendation that the fees, terms, and 

22 conditions of a third-party servicer's account 

23 should be transparent and clearly communicated 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 to students in a way they understand. All 

2 financial service providers charge for the 

3 services they offer. However, not all banks or 

4 financial institutions charge the same for 

5 those services. Each affords students a 

6 choice of various products that may fit their 

7 particular need. Every student must be 

8 presented with options that afford them the 

9 opportunity to select a product or service that 

10 best meets financial needs and budget 

11 constraints of those students.

12 We support the recommendation to 

13 recognize the importance of EFTs in the 

14 delivery of refunds and the value of accessible 

15 student oriented checking accounts. Any new 

16 rules should be carefully enacted to prevent 

17 unnecessary barriers to the use of EFTs and 

18 post-disbursement money management options in 

19 such processes. At the same time, we agree 

20 that the negotiating committee should explore 

21 whether enhanced disclosure of checking 

22 account fees to students is appropriate.

23 We also recommend that the current 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 time frames in which an institution must be 

2 disbursing funds should be shortened, in order 

3 to avail students of their funds in a more 

4 timely fashion. Higher One has always made the 

5 student focus a priority and the issuance of 

6 paper checks has, by its very nature, delayed 

7 the availability of ready access to funds for 

8 all of our students. We call for a change in 

9 the regulation.

10 Ultimately, third-party servicers 

11 provide EFT disbursements and we play an 

12 important role in helping students avoid more 

13 costly and risk-laden alternatives to access 

14 refunds and manage their daily finances. 

15 These providers also help assist the Department 

16 and institutions in the detection and 

17 prevention of fraud and reduce overall 

18 administrative costs in higher education.

19 Thank you for your time and 

20 attention to this most important matter.

21 MS. MAHAFFIE: Marvin Silver.

22 MR. SILVER: Good morning. My 

23 name is Marvin Silver. I serve as the Outreach 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Director with Americans for Financial Reform, 

2 which is a public interest coalition of 250 

3 organizations made up of state, national and 

4 local groups, consumer organizations, labor, 

5 economic and policy research groups.

6 We come this morning to express our 

7 strong support for an effective gainful 

8 employment rule. We recently joined 50 

9 organizations in signing a letter on this 

10 particular issue. Since the final gainful 

11 employment regulations were issued in June 

12 2011, new information about for-profit 

13 colleges' fraudulent conduct have been made 

14 clear, as clear as the sky. High tuitions and 

15 bad student outcomes have reinforced the urgent 

16 need for a strong gainful employment rule. 

17 While there are some responsible companies 

18 providing quality programs, we believe the 

19 latest facts, including the comprehensive 

20 report from the Senate Health, Education, Labor 

21 and Pension Committee's two year investigation 

22 of a for-profit college industry issued last 

23 year show that the problems are egregious and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 widespread and certainly not limited to a 

2 handful of bad actors.

3 The effects on students are clear. 

4 More than half of students who enroll in 

5 for-profit colleges in the recent year dropped 

6 out within about four months without a degree 

7 or certificate. For-profit colleges have 13 

8 percent of the students but 47 percent of 

9 student loan defaults and 23 percent of their 

10 borrowers default on their loans within three 

11 years of graduating or dropping out.

12 Abuses by for-profit colleges 

13 imperil efforts to help Americans to 

14 successfully train for careers at prices they 

15 can afford. These schools have consumed as 

16 much as $32 billion in federal financial aid in 

17 a single year, about 25 percent of all such aid. 

18 Fifteen big publicly traded companies in this 

19 sector receive about 86 percent of their 

20 revenue from taxpayers. And at this time of 

21 fiscal challenge, we cannot afford to divert so 

22 many education dollars to programs that are 

23 wasteful and, indeed, harmful to our students.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Many of the organizations in our 

2 coalition are concerned about students in 

3 career education programs being left with debts 

4 that they cannot repay.

5 Today, I ask that this letter that 

6 we signed with other organizations be submitted 

7 for the record, as well as a list of news 

8 articles and editorials that ran since the 

9 gainful employment regulations issued in June 

10 2011 on the need for greater oversight and 

11 regulation of career education programs be 

12 added to the record.

13 Also, finally I would say that we 

14 ask that you would amend any regulations to 

15 prevent schools from evading other current laws 

16 designed to protect students and taxpayers, 

17 such as laws limiting cohort default rates and 

18 the share of revenue that can come from federal 

19 student aid.

20 Thank you for the opportunity to 

21 share today.

22 MS. MAHAFFIE: Aristea Williams. 

23 Aristea Williams?
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 (No audible response.)

2 MS. MAHAFFIE: Anne Johnson.

3 MS. JOHNSON: Good morning. My 

4 name is Anne Johnson. I am the Director of 

5 Campus Progress at the Center for American 

6 Progress. Campus Progress strives to voice 

7 the concern of students and other young people 

8 nationwide and to fight for their interests, 

9 both here in Washington and in their local 

10 communities. We are pleased to see that the 

11 Administration remains focused on program 

12 integrity in the federal student aid programs. 

13 However, we need to make sure that reforms that 

14 were pursued in the first term aren't weakened 

15 in the second term.

16 The strength of our economy depends 

17 on the quality of our workforce. Therefore, it 

18 is vital that we protect the interests of 

19 students by ensuring that higher education is 

20 both affordable and of high quality. In order 

21 to preserve quality within the framework of 

22 gainful employment, we believe that this issue 

23 must be pursued carefully, using the best 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 available data. 

2 Metrics and thresholds should not 

3 be set based on what is politically palatable. 

4 For example, oftentimes job placement data from 

5 certain institutions has depended on loose 

6 metrics that skew data inappropriately. This 

7 is because of a lack of a clear and standard 

8 definition of gainful employment. By focusing 

9 policy on clearly defined data matrix, we can 

10 effectively change this and ensure that the 

11 students that we work with have access to the 

12 information that they need to be able to make 

13 important decisions about where to pursue an 

14 education. 

15 These students need protections 

16 beyond what currently exist and gainful 

17 employment regulations are a strong step in 

18 that direction. 

19 Existing regulations should be 

20 reviewed and improved. For example, the 90/10 

21 rule has resulted in too many heartbreaking 

22 stories of veterans who have been exploited as 

23 a method for schools to avoid hitting the 90 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 percent cap. We have brought these stories to 

2 D.C. many times and further action is needed to 

3 be taken.

4 In terms of ensuring affordable 

5 quality higher education, we believe that part 

6 of the answer lies in refinancing and lowering 

student interest rates. On July 1st 7 , the 

8 interest rates on subsidized Stafford loans are 

9 scheduled to double from 3.4 to 6.8 percent. 

10 As a result of this impending deadline, there 

11 have been several bills introduced in the House 

12 and Senate to address both short-term and 

13 long-term fixes that will protect students from 

14 incurring thousands upon thousands of 

15 additional debt. This topic is especially 

16 relevant for students who attend for-profit 

17 colleges, since the data clearly indicates that 

18 those students have almost double the amount of 

19 debt when compared to students who attend 

20 non-profit institutions. That is a comparison 

21 of $31,000 of debt versus $17,000 of debt. 

22 This debt can have a ripple effect on the 

23 economy. And we hear frequently from 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 borrowers that this impact is having -- the debt 

2 is having an impact on their daily lives.

3 Creating sustainable systems for 

4 student debt is multifold and must include 

5 provisions regarding interest rates, 

6 strengthening rather than eliminating the 

7 federal grant programs, and ensuring that there 

8 are more protections for parents and students 

9 who are having difficulty with their debt.

10 Campus Progress stands ready to 

11 continue to help raise the voice of students on 

12 these issues. Thank you for your time.

13 MS. MAHAFFIE: Todd Leatherman.

14 MR. LEATHERMAN: Good morning. My 

15 name is Todd Leatherman and I am the Executive 

16 Director of the Office of Consumer Protection 

17 for the Kentucky Office of the Attorney 

18 General. Thank you for the opportunity to 

19 comment on the Department's upcoming 

20 negotiated rulemaking, which focuses largely 

21 on issues related to postsecondary for-profit 

22 institutions.

23 In addition to these oral comments, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 we will be submitting additional written 

2 comments prior to the conclusion of the final 

3 public hearing on June the 4th.

4 Since 2009, our office has been 

5 investigating and pursuing violations of 

6 Kentucky's Consumer Protection Act by certain 

7 for-profit colleges. We are currently in 

8 litigation against three for-profit colleges 

9 with several other investigations pending.

10 In addition, Kentucky Attorney

11 General Jack Conway leads a 32 state working 

12 group of attorneys general who are 

13 investigating issues involving for-profit 

14 schools. We have now heard from hundreds of 

15 dissatisfied students of for-profit colleges 

16 and our experience investigating and 

17 litigating consumer protection cases has 

18 provided our office and other attorneys general 

19 with first-hand knowledge of several abuses of 

20 our laws, as well as federal regulations, by 

21 for-profit colleges and the consumer harm 

22 resulting therefrom. We appreciate this 

23 opportunity to share some of what we have 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 learned, in hopes that it further informs the 

2 Department in this rulemaking process.

3 Based on our experience, we have 

4 several recommendations. First, reduce the 

5 time by which an institution must deliver a 

6 student's federal student aid credit balance to 

7 the student to ensure students are able to 

8 access Title IV aid when it is needed, and not 

9 allow schools to delay release of those funds 

10 merely to serve the purposes of the 

11 institution.

12 Second, require institutions to 

13 make specific written disclosures to students 

14 which clearly explain the students' 

15 entitlement to receive the financial aid 

16 exceeding tuition and fees and the students' 

17 rights concerning use of those funds.

18 Third, prevent institutions and 

19 their agents from manipulating information 

20 provided to students and data to evade the 

21 consequences under other Department 

22 regulations, such as the 90/10 rule and 

23 calculation of the cohort default rate.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Four, adopt strengthened gainful 

2 employment regulations. 

3 Five, require institutions and 

4 accreditors to better substantiate with 

5 independent data and research the extent of the 

6 need for postsecondary education for the 

7 "recognized occupation" as a part of obtaining 

8 approval for a program.

9 Six, develop a standardized 

10 methodology for calculating job placement 

11 rates or, at a minimum, define certain factors 

12 that must be included or that shall not be 

13 permitted to be included in the calculation of 

14 job placement rates.

15 Time restrictions on oral comments 

16 prevent me from giving in-depth explanation for 

17 all these recommendations. However, I would 

18 like to explain the reason for a couple of them.

19 Our office strongly favors reducing 

20 the time it takes an institution to deliver 

21 credit balances to students so that students 

22 may obtain their books and educational supplies 

23 in a timely manner at competitive prices. 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Current regulations provide schools an 

2 opportunity to delay delivering credit 

3 balances, even to returning students, for more 

4 than 14 days after the first day of classes. 

5 Schools holding onto the students' credit 

6 balances until after the term commences are in 

7 a position to coerce students into buying their 

8 books and supplies from the school at 

9 exorbitant prices. While it is a service to 

10 students to allow them to obtain their books at 

11 the school bookstore by charging books to their 

12 accounts, a school delaying the release of a 

13 credit balance is free to charge much higher 

14 prices than competitors because the student 

15 does not have the aid available to purchase 

16 books from another vendor.

17 This very practice led us to sue a 

18 company operating schools in four states, 

19 including Kentucky. It is clear from our 

20 dealings with the school that it purposefully 

21 misread the Department's regulations in order 

22 to ensure that students had no alternative but 

23 to spend their financial aid at the school's own 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 bookstore for books and supplies that were 

2 priced well above prices readily available from 

3 other vendors.

4 The same school also adopted a 

5 hyper-technical and manipulative definition of 

6 credit balance to unfairly delay delivery of 

7 the student's financial aid. The school would 

8 draw down the federal student aid and deposit 

9 it into the student's school accounts. 

10 However, to avoid creating a credit balance 

11 prior to the term commencing, the school 

12 purposefully did not post its tuition charges 

13 to the students' accounts until sometime after 

14 the term had commenced. According to the 

15 school, a credit balance owing to the student 

16 was not created prior to the term commencing 

17 because it had not yet paid itself tuition, so 

18 there were no federal student aid dollars to 

19 deliver to this student. Consequently, 

20 students who needed their financial aid to 

21 purchase books were forced to buy their books 

22 at exorbitant prices from the school's 

23 bookstore. This, obviously, is harmful to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 consumers because they are incurring more debt 

2 than they need but it is also a fiscal issues 

3 for taxpayers and the Department because the 

4 school obtained more federal student aid 

5 dollars than if the students had funds 

6 available to purchase items from lower cost 

7 vendors.

8 Finally, in our experience, a major 

9 contributor to student complaints, withdrawal 

10 rates, and default rates is that students are 

11 enrolled in programs for jobs that do not 

12 require much, if any, postsecondary education. 

13 Thus, students complained the education was 

14 useless and a waste of time. Students withdraw 

15 because they realize the classes are not 

16 substantive and students default because the 

17 cost of the education for the career far exceeds 

18 the amount of money they can earn because the 

19 jobs do not really require postsecondary 

20 education. High school graduates without any 

21 postsecondary education are hired for the same 

22 jobs, yet these programs are accredited and 

23 substantial amounts of federal student aid are 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 available to the schools for providing these 

2 expensive and unnecessary career programs.

3 For example, one large healthcare 

4 employer in our state explained that it hires 

5 persons with only a high school diploma to train 

6 them for a "billing and coding" position and 

7 that there is no expectation of any additional 

8 certification. This is essentially an entry 

9 level data entry position, yet a billing and 

10 coding diploma from an accredited Title 

11 IV-approved for-profit college in our state 

12 cost $27,000 and an associate of applied 

13 science degree in billing and coding costs 

14 $36,000. ONET describes billing and coding 

15 jobs as only requiring a high school diploma.

16 Obviously, one must question 

17 whether such programs truly prepare students 

18 for gainful employment in a recognized 

19 occupation within the meaning of the statute. 

20 To the extent it is able, the Department should 

21 consider placing a greater burden on 

22 institutions and accreditors to justify and 

23 substantiate with independent data and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 research the need for postsecondary education 

2 to prepare students for an identified, 

3 recognized occupation as a part of obtaining 

4 approval for the program.

5 Further, the Department should 

6 adopt regulations requiring that the cost of 

7 the program correlate in a reasonable fashion 

8 to the rate of pay expected from the employment, 

9 including the rate of pay needed for repayment 

10 of loans in a timely manner.

11 Policy makers and taxpayers are 

12 rightfully concerned about the skyrocketing 

13 amount of student loan debt. Putting an end to 

14 predatory programs that charge students 

15 exorbitant tuition for meaningless, 

16 unnecessary degrees should be a high priority 

17 for the Department.

18 We hope these comments are useful to 

19 the Department and help guide it through the 

20 negotiated rulemaking process. Thank you.

21 MS. MAHAFFIE: We will now take a 

22 break until 10:40.

23 (Whereupon, the above-entitled 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 matter went off the record at 10:24 a.m. and 

2 resumed at 10:40 a.m.)

3 MS. MAHAFFIE: Meg Benke.

4 MS. BENKE: I am Meg Benke, 

5 President of Empire State College, which is 

6 part of the State University of New York. 

7 Empire State College was founded in 1971 by 

8 educational visionary Ernest Boyer, then the 

9 Chancellor of the State University of New York, 

10 who went on to become U.S. Commissioner of 

11 Education.

12 Dubbed "The College without walls 

13 of New York," we continue now, more than 40 

14 years later, to provide flexible, high quality 

15 public education at a low cost for 20,000 

16 students. It is within this context I offer my 

17 thoughts today about the non-traditional 

18 student, state authorization, and cash 

19 management.

20 As you know, there has been growth 

21 in the students over 25. The percentage of 

22 increase in the number of younger students in 

23 this pattern is expected to continue. For 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 example, between 2000 and 2010, the percentage 

2 of students in college age 25 or older increased 

3 by 42 percent. Adult students now make up a 

4 large portion of students enrolled in higher 

5 education.

6 However, when state and federal 

7 regulations are created, it is rarely with the 

8 student population in mind; rather, the focus, 

9 legislators and regulators continue to treat 

10 them as the exception. The regulations 

11 authored and approved thus far seem to be based 

12 on the idea that most students are full-time, 

13 18 years old, and going on campus. And the 

14 statistics that we need to report on these 

15 students do not account for part-time students' 

16 rate.

17 While there are many younger 

18 students who can stop out and go to school 

19 full-time, we need to find ways to continue to 

20 help students to go to school while working 

21 full-time, tending to family, and meeting civic 

22 obligations.

23 We are seeing a greater number of 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 students in their twenties working and going to 

2 school part-time. Aiding adults to return and 

3 finish school is a missed opportunity, 

4 particularly those in their twenties who are 

5 pursuing this path.

6 And this is repeated at the state 

7 and federal level by an educational bureaucracy 

8 that puts a premium on the 18 to 22-year-old 

9 student and focuses much of its attention on the 

10 needs of that group when crafting legislation.

11 State authorization for distance 

12 learning is an example of how the Education 

13 Department hadn't thought through what 

14 students are being served by flexible, 

15 high-quality, public distance education 

16 institutions.

17 Generally, for working adults with 

18 few other options for study, our programs 

19 provide an accredited alternative. Through 

20 these regulations, many good public 

21 institutions of higher education are burdened 

22 with the costly and, in some cases, 

23 insurmountable endeavor of registering.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 If consulted, institutions like 

2 ours could have provided more guidance to help 

3 solve the problems these regulations sought to 

4 improve and, in fact, we have. This past year 

5 I served on the SHEEO Commission for Regulation 

6 of Postsecondary Distance Education, which was 

7 chaired by former U.S. Secretary of Education 

8 Richard Riley on distance education and state 

9 authorization.

10 We have produced what I think is a 

11 solid recommendation for a way to meet the needs 

12 of states without unduly burdening accredited 

13 colleges. I believe this report provides an 

14 appropriate roadmap forward.

15 We were also heartened to read the 

16 letter sent to the Department by certain 

17 members of the Committee on Education and the 

18 Workforce asking the Department to curtail 

19 enforcement of certain regulations and defer to 

20 the upcoming reauthorization process for the 

21 Higher Education Act. We agree with this and 

22 thank those Members for sending this letter. 

23 We also humbly ask the Department to defer from 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 any further action until the reauthorization 

2 process is fully underway.

3 I want to take a moment to make a 

4 special note of the consideration being given 

5 to including competency-based programs for 

6 financial aid. We believe that this form of 

7 education is valid and necessary to meet the 

8 goals of the Obama Administration to increase 

9 completion rates and decrease time to 

10 completion. We have engaged in this type of 

11 education for more than 40 years and can provide 

12 evidence of its effectiveness. We thank the 

13 Department for its forward thinking on this 

14 important issue.

15 With regard to cash management, one 

16 of the topics today is the current 

17 regulation of 14 days to assignment of the 

18 financial aid resources. We actually think 

19 that this is a fair way to approach giving aid 

20 to the appropriate students, to giving 

21 institutions the time to disburse the aid.

22 There are ways to deal with the 

23 issues related to students buying books. 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Colleges like ours provide foundation grants, 

2 so that students can purchase their books from 

3 any source, our institution where we provide 

4 books or others through many grants that are 

5 no-interest grants.

6 So, there are some anomalies that we 

7 need to do to give accurate financial aid, and 

8 we think there should be a retaining of the 14 

9 days.

10 In closing, I want to thank you for 

11 your time. Institutions like ours, Thomas 

12 Edison College, Charter Oak, University of 

13 Maryland, and Western Governors have begun 

14 working together on issues related to adult 

15 learners and public higher education.

16 We look forward to giving feedback 

17 on these proposals as you move forward from 

18 Empire State College or from this consortium of 

19 institutions.

20 Thank you.

21 MS. MAHAFFIE: Thank you.

22 Rick Weidman.

23 MR. WEIDMAN: First of all, I thank 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the panel for the opportunity to speak here 

2 today and will not dwell as much as others might 

3 have on prescriptive remedies, but rather talk 

4 about why Vietnam Veterans of America was 

5 founded.

6 We were founded because, make no 

7 mistake about it, our fathers' generation 

8 threw us away and people didn't care, by and 

9 large. It was only a fluke that we had the Cold 

10 War GI bill which started out at 60 bucks a pop 

11 per semester for everything -- or per month for 

12 everything, including tuition, books, fees.

13 We have, since our founding in 1978, 

14 pushed hard for a GI bill for those who would 

15 come after us like that which my father had 

16 coming from a very poor background where he 

17 joined the military at 16 just to get enough to 

18 eat. And that was not atypical. But he was 

19 able to go to a college, in fact, to a very 

20 prestigious private college, as a result of 

21 that GI bill.

22 But that was not handed down to my 

23 generation and we were adamant that we hand it 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 down to this generation, only to see the 

2 guarantees that should be of keeping the 

3 rascals out, those guarantees turn to smoke.

4 In the seventies, the same problem 

5 that exists now with unscrupulous individuals, 

6 both in the public sector and in the private 

7 sector taking off veterans existed. And yet, 

8 that is why at that time in the early seventies 

9 enough pressure was applied from both students 

10 and from others to ensure that information was 

11 gathered about graduation rates, about course 

12 completion rates -- and that is perhaps the most 

13 important -- as well as progress toward a degree 

14 or certificate.

15 The course completion rate is 

16 really the one that you need to zero-in on 

17 because people drop out when there is nothing 

18 of value. Essentially, they vote with their 

19 feet, and that doesn't matter whether they are 

20 a veteran or not, although I will tell you that 

21 we are most concerned about the young men and 

22 women who have fought in the two wars our nation 

23 has been waging for the last decade.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 They are coming back after having 

2 been exposed to much more combat than any of the 

3 wars of the 20th century. The average exposure 

4 to combat of a combat MOS in World War II was 

5 less than 30 days. In Vietnam, it was 271 days.

6 We have young people that I have met 

7 in the Wounded Warrior units at Fort Belvoir and 

8 at Walter Reed who have been back on the fifth 

9 involuntary tour. And they cannot continue to 

10 be soldiers or service persons from this point 

11 on because we are drawing down the forces and 

12 because in many cases they have been impaired 

13 and lessened by virtue of their military 

14 service in the name of us all.

15 So, they have to retrain for what 

16 they are going to do with their lives. In many 

17 cases, their life changed in an instant 

18 literally. They were fine, young athletes one 

19 moment, and the next moment, all of a sudden, 

20 they will never walk again under their own 

21 power.

22 They need the GI bill. They need 

23 this training to be of worth in order to move 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 forward into new professions. Because, quite 

2 bluntly, our society needs them, and it is not 

3 just something nice we do for them.

4 Our organization was founded on 

5 this principle that we keep coming back to: 

6 never again shall one generation of American 

7 veterans abandon another generation. I want 

8 to say that one again, because for everybody in 

9 this room over the age of 40 -- and there are 

10 a few of us -- never again shall one generation 

11 of American veterans abandon another, and it 

12 should be true of Americans.

13 And frankly, we don't care whether 

14 it is a for-profit or not-for-profit. If there 

15 is not value in a particular course of study 

16 that an individual has intrinsically acquired 

17 from that study, to take from them is to steal 

18 their future. It is bad enough to do that to 

19 any American, but to do that to the young men 

20 and women who have put their life on the line 

21 literally in defense of the Constitution of the 

22 United States -- and I want to stress, when you 

23 join the military, that step forward is 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 pledging life and limb in defense of the 

2 Constitution of the United States, not a 

3 particular war, not a particular policy, not a 

4 particular government, but of the Constitution 

5 which begins with "We, the people...."

6 And therefore, everyone in this 

7 room has a covenant with those young men and 

8 women who have placed themselves in harm's way, 

9 whereby they have been lessened 

10 physiologically, neuropsychiatrically, 

11 emotionally, spiritually, or economically, to 

12 help make them as whole again as humanly 

13 possible. And part of that is to go ahead and 

14 do what has already been affirmed in the courts, 

15 not to wait for the Reauthorization Act, but to 

16 go ahead and promulgate a rule on gainful 

17 employment that is needed.

18 Because VA has walked away from 

19 their responsibility. DoD has walked away 

20 from their responsibility. And I beseech all 

21 of you at the Education Department to not join 

22 them in abandoning this generation; and, 

23 rather, to stand with them and help safeguard 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 that education which they have paid for so 

2 dearly in terms of spending their life and in 

3 many cases their blood.

4 I thank you for the opportunity, and 

5 I would appreciate the opportunity to follow 

6 with a written statement.

7 MS. MAHAFFIE: Thank you.

8 MR. WEIDMAN: Thank you.

9 MS. MAHAFFIE: Kim Gandy.

10 MS. GANDY: Thank you for this 

11 opportunity to provide testimony on the 

12 implementation of the Violence Against Women 

13 Act reauthorization provisions regarding 

14 college campuses.

15 The National Network to End 

16 Domestic Violence is a membership and advocacy 

17 organization representing the 56 state and 

18 territorial coalitions against domestic 

19 violence.

20 NNEDV is the national voice of these 

21 coalitions. There are more than 2,000 local 

22 domestic violence programs and millions of 

23 domestic violence survivors who turn to them 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 for services.

2 As the Department of Education 

3 issues regulations under the campus provisions 

4 of VAWA, we recommend that colleges and 

5 universities be encouraged to work in 

6 partnership with experienced state domestic 

7 violence and sexual assault coalitions and 

8 their local programs in the community.

9 VAWA 2013 requires all campus 

10 grantees to create a coordinated community 

11 response that includes both the relevant 

12 divisions of the Institute -- it is still not 

13 working.

14 PARTICIPANT: We can hear it.

15 MS. GANDY: You can hear it? I 

16 will just talk loudly.

17 The relevant divisions of the 

18 institution and organizations external to the 

19 institution, the State Domestic Violence and 

20 Sexual Assault Coalitions and their local 

21 programs are precisely the external 

22 organizations that institutions should 

23 collaborate with in developing campus-based 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 responses.

2 As colleges and universities work 

3 to shape their policies and protocols, they 

4 should draw on the substantial expertise of 

5 State Domestic Violence and Sexual Assault 

6 Coalitions not only in victim advocacy, but 

7 also in working with law enforcement, 

8 healthcare providers, and others.

9 Coalitions have long experience in 

10 working with all of the relevant community 

11 stakeholders to shape responses and policies 

12 that are victim-centered, evidence-based, and 

13 guided by applicable legal standards.

14 Campuses, in many ways a microcosm 

15 of the surrounding community and with many of 

16 the same stakeholders, would benefit from the 

17 assistance of state coalitions as they bring 

18 stakeholders to the table to create and 

19 implement internal policies and protocols.

20 Furthermore, coalitions are 

21 ideally situated to be part of these efforts, 

22 as they have extensive experience with the 

23 Coordinated Community Response Model through 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the Violence Against Women Act's STOP program 

2 and, thus, are uniquely able to assist campuses 

3 as they develop their own coordinated community 

4 response.

5 Additionally, it is vitally 

6 important for there to be a strong and 

7 collaborative relationship between 

8 institutions and programs in the surrounding 

9 community of the campus, so that each is aware 

10 of the services and resources offered by the 

11 other in order to best position both to make 

12 needed referrals.

13 While a student who is a victim of 

14 dating violence or sexual assault may choose to 

15 access campus-based resources first, it is also 

16 possible that a community-based service 

17 provider could be a student's first point of 

18 contact. In either case, the program that the 

19 student initially reaches out to first may not 

20 be able to provide all of the needed services. 

21 For this reason, institutions should work with 

22 state coalitions and local programs for 

23 domestic violence and sexual assault to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 understand how campuses and students might be 

2 able to take advantage of those existing 

3 resources.

4 It is, likewise, important for 

5 state coalitions and service providers to be 

6 engaged in the campuses' processes as they 

7 develop new policies and responses, so that 

8 these external organizations can stay 

9 up-to-date and informed on the campus resources 

10 available for survivors. This kind of ongoing 

11 partnership will allow for effective and 

12 streamlined referral mechanisms as well as 

13 strengthen the ability of both to provide 

14 services for students.

15 As campuses work to respond to the 

16 new requirements of the Violence Against Women 

17 Act reauthorization, they will benefit from 

18 collaborating with, and drawing on the 

19 expertise of, state coalitions and local 

20 service providers, especially in developing 

21 policies and procedures that are coordinated 

22 across the campus as well as the surrounding 

23 community.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Therefore, we urge regulations 

2 issued by the Department to reflect the 

3 importance of these partnerships.

4 And thank you again for the 

5 opportunity to testify.

6 MS. MAHAFFIE: Christine 

7 Lindstrom.

8 MS. LINDSTROM: The trick 

9 microphone keeps the witnesses on our toes.

10 Thank you in advance for 

11 consideration of my remarks. I am Christine 

12 Lindstrom. I am the Higher Education Program 

13 Director for the U.S. Public Interest Research 

14 Group. We are a federation of state-based 

15 consumer organizations with 75 college campus 

16 chapters across the country.

17 Students are now graduating with an 

18 average of $27,000 in loan debt. The country 

19 carries $1 trillion in student loan debt, and 

20 that has consequences for the individual 

21 borrowers as well as for the social and economic 

22 health of our country.

23 Therefore, I ask that during this 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 round of rulemaking the Department of Education 

2 act boldly on several important items that are 

3 necessary to drive down costs for our student 

4 members and to protect them as consumers.

5 The first is campus debit cards. 

6 The USPIRG Education Fund released a report 

7 last May, "The Campus Debit Card Trap," which 

8 detailed the extent to which students are using 

9 debit cards of many kinds on campus with very 

10 little consumer protection.

11 We estimate that 9 million students 

12 now have campus debit cards. Most receive 

13 their financial aid refunds on these cards, 

14 which hits students with high fees that can be 

15 hard for them to avoid and deduct those fees 

16 from their student aid.

17 For these students, access to their 

18 federal financial aid is now controlled by a 

19 private financial institution which uses 

20 monetary controls and imposes other limits on 

21 those students to generate their profits. 

22 That is their business model.

23 In the report, we raised a number of 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 problems that can be solved with stronger rules 

2 from the Department of Education, and we look 

3 forward to engaging on those concerns, as the 

4 Department has already agreed to raise these 

5 issues in the upcoming negotiation.

6 However, students are being 

7 overcharged right now to access their aid and 

8 simply cannot wait until July 2015 for the final 

9 rules to actually be implemented. So, 

10 therefore, we ask that the Department act 

11 swiftly to further guide rules around debit 

12 cards that already are in existence.

13 Specifically, the rule surrounding 

14 the placement of ATM machines on campus states 

15 that access should be fee-free and that 

16 students should have convenient access. 

17 Because these criteria are not defined, 

18 financial institutions are able to comply with 

19 the letter of the rule; yet, violate the spirit 

20 of it.

21 In one example, a financial 

22 institution simply located one ATM machine on 

23 one campus, despite the fact that the college 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 actually has nine campus locations in total. 

2 Thus, the campus generates a windfall in profit 

3 from foreign ATM surcharges that students, 

4 again, are paying with their financial aid 

5 dollars. So, by issuing further guidance now, 

6 the Department of Education can remedy this 

7 problem as soon as this fall for the incoming 

8 class.

9 If the ATM issue can be expedited, 

10 then we can spend valuable time in negotiation 

11 dealing with new dynamics in the marketplace 

12 that aren't touched upon in statute. For 

13 instance, companies are engaging in aggressive 

14 marketing tactics such as sending debit cards 

15 to all students in the mail before they have 

16 even made a choice to have one, essentially 

17 making the decision for them.

18 Second, I would like to add USPIRG 

19 to the numerous voices you are hearing today 

20 praising the Department of Education for its 

21 ongoing efforts to rein in student abuse at 

22 for-profit colleges by defining the gainful 

23 employment criteria through which colleges can 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 access financial aid dollars.

2 For-profit colleges leave students 

3 with too much debt. Nearly one in five 

4 students from a for-profit college default on 

5 their loans. So, a strong rule helps to curb 

6 the abuse.

7 USPIRG found the initial gainful 

8 employment rule to be weaker than it could have 

9 been initially, but we agreed with the overall 

10 framework, including the debt-to-income 

11 metrics. So, we urge you to stand by that 

12 framework, to tweak it slightly to satisfy the 

13 courts, and to further strengthen the rule on 

14 behalf of student loan borrowers. Another 

15 part of the solution is to buttress borrowers 

16 from 90-10 rule manipulation by for-profit 

17 colleges.

18 Private loans have become more 

19 important over the past decade to finance 

20 higher education in conjunction with the rise 

21 in for-profit colleges. By law, for-profit 

22 colleges can earn up to 90 percent of their 

23 revenue from government aid, and the other 10 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 percent has to come from other sources. So, 

2 for-profit colleges are targeting students 

3 with little savings or accumulated wealth. 

4 And so, "other sources" means private student 

5 loans.

6 For-profit colleges are pushing 

7 students into these loan products without 

8 taking into account their need or their ability 

9 to repay. According to the Project on Student 

10 Debt, more than half of private loan borrowers 

11 are eligible for more federal loan aid. But 

12 these schools needed the 10 percent in private 

13 revenue on their books, so that motivates them 

14 to push the expensive and risky products onto 

15 students.

16 Given that these loans have very 

17 little consumer protections for students, they 

18 are more likely to create financial stress for 

19 borrowers. In essence, we think this rule 

20 needs to be strengthened.

21 So, in short, the Department of 

22 Education has a fundamental role to play in 

23 reining in abusive practices that have 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 contributed to the students' current student 

2 debt crisis -- or the country's current student 

3 debt crisis. So, please make this upcoming 

4 round of rulemaking a defining one in terms of 

5 taking bold and necessary action to alleviate 

6 that debt.

7 Thank you.

8 MS. MAHAFFIE: Daniel Toughey.

9 MR. TOUGHEY: Good morning.

10 I am Dan Toughey. I am President of 

11 TouchNet Information Systems. We specialize 

12 in providing software and software solutions 

13 for college and universities to automate 

14 business processes, including the financial 

15 aid excess credit balance distribution process 

16 as well.

17 One of our products is called 

18 eRefunds. Basically, it uses the ACH direct 

19 deposit system, much like your paychecks are 

20 deposited every day. It is very successful for 

21 hundreds of our colleges around the country.

22 How to do this is very simple. It 

23 is easy. It is cost effective for students, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 and it is cost effective for schools as well.

2 But there is kind of a disturbing 

3 trend in the market, and that is moving more 

4 towards third-party service providers that are 

5 banks or financial institutions that are 

6 partnered with banks in issuing debit cards for 

7 the purpose of distributing these financial aid 

8 credit balances.

9 This process is being sold to 

10 schools as the answer to going electronic and 

11 eliminating the paper checks, but more often 

12 than not, it is creating more problems for both 

13 the students and the higher education community 

14 in general. This is impacting millions of 

15 students around the country right now.

16 And I testified last year about this 

17 time, when this subject was also brought up. I 

18 would like to report that things have gotten 

19 better, but, in fact, they really haven't. 

20 With the recent acquisition by Higher One, the 

21 leader in the market in this 

22 third-party-service-provider-to-debit-card 

23 process, with their recent acquisition of 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Sallie Mae Campus Solutions, they now are 

2 joining forces. And so, once again, the 

3 hearings are very timely.

4 There are basically four problems 

5 with the whole financial-aid-to-debit-card 

6 process that we see in the market today. The 

7 first one is overly aggressive marketing. At 

8 these campuses, many of these campuses I should 

9 say, students, new students coming in, 

10 everybody is receiving in the mail a debit card 

11 with the school logo on it, and it looks like 

12 a product that has been endorsed by the school. 

13 Of course, it is encouraging the students to 

14 immediately go sign up for their new debit card 

15 or their bank account that goes with that debit 

16 card. Again, it looks like it is endorsed by 

17 the schools themselves.

18 This is kind of an end-around, if 

19 you will, from the Credit Card Act of 2010 that 

20 the Congress passed that eliminated the 

21 marketing of credit card products on campuses 

22 like this. But, of course, this is a debit card 

23 and, again, it is kind of a loophole in the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 process. Unfortunately, the Congress missed 

2 the Credit Card Act by one word in not adding 

3 "debit".

4 Once a student goes off to these 

5 service providers' websites to select their 

6 options or to sign up for the program, what they 

7 are finding is they are being heavily steered 

8 to the bank product. In one particular case, 

9 the leading provider, about 50 percent of the 

10 students on their campus sign up for a brand-new 

11 bank account to get one of these debit cards.

12 Now there are plenty of studies out 

13 there in the market that show -- in fact, even 

14 one that they funded themselves called "Money 

15 Matters on Campus" -- that 86 percent of 

16 freshmen students come to campus with a bank 

17 account. So, there is really no good free 

18 market explanation why 50 percent of those 

19 students would be signing up for a brand-new 

20 bank account just to get their financial aid 

21 disbursements.

22 The fact of the matter is direct 

23 deposit that you and I get our paychecks through 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 is being difficult to choose for students. 

2 They have to print a form and either mail it or 

3 fax it back to that service provider. Of 

4 course, students don't probably know fax 

5 machines today and, of course, carrying stamps 

6 is not very easy, either. So, there is a 

7 steering process that is taking place once they 

8 get to the website.

9 Then, once a student has the card, 

10 which 50 percent of these students have this 

11 card in this particular case, once they have it, 

12 they begin to understand what capitalism is all 

13 about because the fee schedules are extremely 

14 complex and confusing. I would just highlight 

15 three different fees very quickly here.

16 One is what I call a pay-to-pay fee 

17 where a student is charged 50 cents per 

18 transaction if they enter a pin number at the 

19 point-of-sale. This is kind of a historic thing 

20 in the debit card market. It is very unusual, 

21 but it is still in effect there.

22 ATM machines, the same thing 

23 happens there. If they have to go to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 out-of-network ATM machines, they are charged 

2 $2.50 to check their balance, $2.50 to withdraw 

3 money, or $2.50 if they are declined on a 

4 transaction, that together with the cost that 

5 the ATM owner charges them as well.

6 And then, the third area is 

7 inactivity fees or monthly account service fees 

8 that also begin to add up.

9 So, we have aggressive marketing, 

10 we have steering to bank products, and we have 

11 high fee schedules that our students are faced 

12 with.

13 And then, the fourth item is 

14 exclusive contracts with schools. The schools 

15 can't get out of these contracts and they are 

16 stuck with them, typically, for five years. 

17 And five years in the banking and financial 

18 service industry is a very long time to be stuck 

19 with a particular product.

20 So, the result out there is students 

21 are protesting. They are pushing back on many 

22 campuses. You can check the blogs. You can go 

23 out there and do the research. Just hit Google 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 and hit this topic and you will see what is going 

2 on in the marketplace.

3 And just in the last year, there 

4 were six class action lawsuits filed by 

5 students against one of the providers. So, it 

6 is really time for federal action. I mean the 

7 market forces are not going to take care of 

8 this, especially with the recent acquisition of 

9 Sallie Mae Campus Solutions by Higher One, now 

10 making them by far the largest provider in this 

11 space.

12 And the result of this is taxpayer 

13 money is being harvested and students are being 

14 coerced into bank accounts and debit cards that 

15 they don't want and they don't need.

16 And so, we respectfully ask --

17 MS. MAHAFFIE: Your time is running 

18 out.

19 MR. TOUGHEY: Okay. Thank you.

20 We respectfully ask the Department 

21 to proceed with a negotiated rule committee on 

22 this and to bring the rules forward faster than 

23 two years, which is a long time in this market.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Thank you very much.

2 MS. MAHAFFIE: Thank you.

3 Jeff Keith.

4 MR. KEITH: I appreciate the 

5 opportunity to speak today.

6 Good morning.

7 My name is Jeffrey Keith. Before I 

8 begin my brief remarks, let me first describe 

9 my background a bit.

10 I have had the unique opportunity to 

11 understand higher education through a variety 

12 of lenses: as a peer evaluator, 

13 administrator, student, investor, and trustee. 

14 I have worked in both non-profit institutions, 

15 where I was the chief architect of an innovative 

16 system with independent non-profit colleges 

17 known as the TCS Education System, and 

18 proprietary institutions.

19 I am currently the Chairman of the 

20 Board of two institutions, Spartan College of 

21 Aeronautics and Technology in Tulsa, Oklahoma, 

22 and Tribeca Flashpoint Media Arts Academy, 

23 located in Chicago, both of which are 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 proprietary institutions.

2 I am also a member of the Board of 

3 two non-profit institutions, the University of 

4 Dubuque in Iowa and Calumet College of St. 

5 Joseph in Indiana, which is a Catholic 

6 institution.

7 In addition, I am a member of the 

8 Board of Educate Online, a private company that 

9 provides students with personalized online 

10 instruction, both at the K-12 and higher 

11 education level, and is really concentrated on 

12 preparing students for college.

13 I also work for Sterling Capital 

14 Partners, an investor group with an established 

15 history of owning and operating institutions, 

16 including Spartan and Tribeca, Florida Coastal 

17 College of Law, Phoenix International School of 

18 Law, and the Charlotte School of Law.

19 I believe that my experiences 

20 working with these various educational 

21 institutions, both non-profit and proprietary, 

22 provide me with a comprehensive understanding 

23 of some of the issues that will be discussed 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 during this negotiated rulemaking. Briefly, I 

2 will address the following topics: regulation 

3 of clock-and-credit hour programs, state 

4 authorization issues for distance education, 

5 and restrictions on the use of certain bundled 

6 services resulting from the interpretation of 

7 the incentive compensation rule.

8 With respect to any new regulation 

9 regarding clock-to-credit-hour conversion or 

10 clock-hour requirements, I am firmly behind 

11 Secretary Duncan's push to expand 

12 competency-based learning opportunities to 

13 more students. The Secretary said, and I 

14 quote, "The century-old practice of awarding 

15 degrees based on seat time in the classroom 

16 rather than on demonstrated competence is now 

17 at odds with the world in which the internet 

18 offers perpetual opportunities for learning 

19 and gaining skills at your own pace."

20 I couldn't agree more. Programs 

21 that allow students to progress at their own 

22 pace after they have demonstrated mastery of 

23 the required subject matter, rather than by 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 their age or amount of time in class or seat 

2 time, are an important element of higher 

3 education going forward.

4 A competency-based system puts 

5 students at the center, replacing rigid 

6 time-based structures with flexible learning 

7 environments that ensure students receive the 

8 support and time that they need to successfully 

9 master content standards. This highly 

10 personalized approach provides clear 

11 individualized pathways to student proficiency 

12 with the ultimate goal of graduating highly 

13 skilled, career ready students.

14 One of the most significant 

15 barriers to more fully developing a 

16 competency-based learning system is the 

17 Federal Student Aid Program's reliance on 

18 time-based accountability and assessment 

19 systems that conflict with the core elements of 

20 competency education.

21 The most recent changes to clock and 

22 credit-hour regulations have required more 

23 programs than in the past to be measured for 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 federal student aid purposes solely based on 

2 seat time, even while Secretary Duncan has 

3 advocated for the expansion of 

4 competency-based learning. These recent 

5 regulatory changes have created conditions 

6 where the Department has substituted its own 

7 interpretation of state agencies and 

8 educational program approval and licensing 

9 requirements for that of the state, resulting 

10 in the imposition of clock-hour assessment 

11 methods for federal student aid purposes, even 

12 where a state considers a program to be a 

13 credit-hour program.

14 The Department should, instead, 

15 show proper deference to state education 

16 agencies' interpretation of their own laws and 

17 regulations, particularly where doing so is 

18 consistent with the Secretary's push to 

19 implement more competency-based learning into 

20 existing curriculum.

21 With respect to state authorization 

22 for distance education programs, to the extent 

23 that the Department decides it remains 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 necessary to implement such requirements, any 

2 new regulations must provide states with the 

3 flexibility to enter into reciprocity 

4 agreements on both a regional and national 

5 level, and must also provide incentives for 

6 states to do so.

7 I understand the Department's 

8 reliance upon the regulatory triad includes a 

9 robust oversight system that is administered by 

10 state education agencies. However, any 

11 implementation of state authorization 

12 regulations must balance effective state 

13 oversight with recognizing that certain state 

14 regulations of schools with a very light 

15 footprint in state due to distant education 

16 activities could be ineffective and 

17 duplicative.

18 In my experience working with a 

19 variety of schools, and the aftermath of the 

20 final program integrity rules that were 

21 published in October 2011, there was a great 

22 deal of confusion among schools and state 

23 education agencies with regard to what state 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 authorization regulations required. This 

2 affected not only distance education 

3 providers, but also schools that offer course 

4 and programs with clinical placements, 

5 externships, student teaching, faculty 

6 mentoring of students, and other outside 

7 classroom activities that occur outside of the 

8 school's home state.

9 The communication that we have with 

10 the state agency staff confirmed that they were 

11 confused by what was expected of them, very much 

12 overwhelmed by the large number of inquiries 

13 that it received from schools regarding state 

14 authorization regulations.

15 Further, due to understaffing at 

16 some state education agencies as a result of 

17 state fiscal crises, some schools waited for up 

18 to two years to receive responses with regard 

19 to what states require from out-of-state 

20 schools.

21 There are currently some state 

22 education agencies that are still trying to 

23 address and clarify the requirements for 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 schools with some sort of limited physical 

2 presence in their states, including those that 

3 offer distance education. Therefore, based on 

4 my past experience, I recommend that any state 

5 authorization rulemaking more fully involve 

6 state agency education policymakers, as the 

7 ability to successfully implement a state 

8 authorization regulation in this area is 

9 dependent upon the ability of states to 

10 administer such a process.

11 I would also like --

12 MS. MAHAFFIE: Wrap up your 

13 remarks, please.

14 MR. KEITH: Oh, I have to wrap it 

15 up?

16 (Laughter.)

17 Sorry.

18 So, in regard to one other thing, 

19 which is the bundled services on the program 

20 integrity rules, I just want to say that the way 

21 that they are structured now is actually 

22 inhibiting the ability of non-profits to work 

23 with a variety of institutions. And I believe 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 that the intent of the rule is not being 

2 fulfilled by the way it is being structured 

3 right now. So, I would encourage a review of 

4 that as far as allowing non-profit institutions 

5 to work more closely with a larger variety of 

6 organizations out there to launch and enhance 

7 online programs.

8 But, again, thank you for the 

9 ability to speak today. Thank you.

10 MS. MAHAFFIE: Thank you.

11 Vickie Schray.

12 MS. SCHRAY: Good morning.

13 Can you hear me back there? Okay.

14 My name is Vickie Schray, Senior 

15 Vice President for Regulatory Affairs and 

16 Public Policy for Bridgepoint Education. 

17 Bridgepoint Education is a higher education 

18 company which has re-engineered the modern 

19 student experience with innovative solutions 

20 that advance learning. Its academic 

21 institutions, Ashford University and the 

22 University of the Rockies, provide progressive 

23 online platforms and have traditional 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 campuses.

2 The majority of our distance 

3 education students are independent, working 

4 adults that represent the non-traditional 

5 students and those that historically have been 

6 underrepresented in higher education.

7 Thank you for the opportunity to 

8 offer recommendations on the proposal to hold 

9 negotiated rulemaking. When the Department 

10 originally announced its intent to launch 

11 rulemaking last year, I offered testimony and 

12 commended the Department for their approach in 

13 responding to the Inspector General's 

14 Investigative Program Advisory Report 

15 regarding student identity theft and fraud.

16 Rather than immediately launching 

17 into rulemaking, the Department sought to 

18 better understand the issue by meeting with 

19 institutions and creating an internal task 

20 force to explore the issue.

21 I encourage the Department to 

22 continue this collaborative approach to 

23 addressing important issues that affect 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 taxpayer investment in higher education and our 

2 nation's students, and ask that you postpone 

3 the negotiated rulemaking session until after 

4 Congress reauthorizes the Higher Education 

5 Act.

6 Rather than initiating negotiated 

7 rulemaking at this time, the Department could 

8 use this opportunity to engage the broader 

9 higher education community and key 

10 stakeholders in a national, not federal, dialog 

11 regarding regulatory challenges and seek to 

12 identify areas for improvement to help improve 

13 both policies and practices aimed at improving 

14 student access and success.

15 The announcement proposing another 

16 round of rulemaking comes at a time when 

17 government regulation of colleges and 

18 universities has grown exponentially. Since 

19 the last reauthorization of the Higher 

20 Education Opportunity Act in 2008, the 

21 Department has published 19 final or interim 

22 regulations, totaling 779 pages in the Federal 

23 Register, and has distributed a plethora of 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 sub-regulatory guidance that continues to be 

2 issued as recently as this week.

3 In the April 16, 2013 Federal 

4 Register, the Department announced that their 

5 intent to hold negotiated rulemaking over the 

6 next several years will be to address more 

7 directly access to and the affordability of 

8 higher education and possible steps to improve 

9 the quality of higher education in the United 

10 States and to better encourage students to 

11 complete their education.

12 We support the need to address these 

13 important issues, as there is a growing demand 

14 for higher education, especially from 

15 non-traditional students who want even greater 

16 options in the delivery of high quality 

17 education.

18 The need to increase access and 

19 affordability and find more cost-effective 

20 solutions in every aspect of higher education 

21 is critical at the institutional, state, and 

22 federal level. There is a continued call for 

23 increased accountability for all institutions, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 and we are witnessing a major shift in policy 

2 from access to success with an emphasis on 

3 education and employment outcomes.

4 Finally, there is the changing 

5 structure and delivery of higher education, 

6 including new types of educational 

7 institutions and the increasing use of distance 

8 learning that allows institutions to operate 

9 not only on a national, but a global scale.

10 Again, I recommend that the federal 

11 government use this time and the bully pulpit 

12 to convene, collaborate, and to help 

13 rationalize the work underway by institutions, 

14 states, and accreditors as a means to identify 

15 promising practices that can inform the 

16 reauthorization discussions to the benefit of 

17 our nation's students and families.

18 Development of burdensome 

19 regulations that lack best practices would be 

20 detrimental to the promise of innovation and 

21 access to our nation's students, especially 

22 those that have been underserved by 

23 traditional institutions.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 If the Department decides to move 

2 forward with negotiated rulemaking, I have 

3 included a number of specific recommendations 

4 that I will submit as part of my written 

5 testimony for your consideration.

6 Again, thank you for the 

7 opportunity to share my comments today.

8 MS. MAHAFFIE: Megan McClean.

9 MS. McCLEAN: Good morning.

10 Thank you for this opportunity to 

11 comment on the need for negotiated rulemaking 

12 on areas of concern. On behalf of our nearly

13 3,000 member postsecondary educational 

14 institutions, the National Association of 

15 Student Financial Aid Administrators, NASFAA, 

16 extends strong support for the negotiated 

17 rulemaking process.

18 We have always found that 

19 negotiators, including those represented by 

20 the Department of Education, are strongly 

21 motivated to achieve consensus and that this 

22 process results in far better proposed rules.

23 In terms of specific topics, we 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 believe Return of Title IV Funds when a student 

2 withdraws is a complex set of issues that needs 

3 its own negotiating team devoted to all aspects 

4 of that topic, with a mandate to simplify it and 

5 think in larger terms about how we can decrease 

6 burden for schools rather than simply chasing 

7 down pennies.

8 For example, institutions must make 

9 post-withdrawal disbursements even to a 

10 student who lived at home and only attended for 

11 one day. For a student who received more funds 

12 than he or she earned based on time in school, 

13 the current order of return is not always the 

14 most beneficial to the student.

15 The last time that the Return of 

16 Funds topics were slated for revision, the 

17 negotiating team had so little time to discuss 

18 the issues that the resultant rules were not 

19 truly negotiated. There is still a great deal 

20 of confusion on the treatment of modules, as a 

21 result.

22 The relationship between course 

23 load reduction and subsequent withdrawal needs 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 to be examined, and the issue of liability for 

2 funds paid based on registration data, when the 

3 student fails to begin attendance in all of 

4 those classes, is a related issue with broader 

5 implication.

6 We still hear from our members about 

7 the classification of on-campus daycare 

8 centers for students and faculties as 

9 non-community service. We would like to see a 

10 conversation about changing that 

11 interpretation related to the community 

12 service requirement of Federal Work Study.

13 We agree with the Department's 

14 suggestion to tune up the cash management 

15 rules, so long as they remain flexible enough 

16 to balance institutional and student needs in 

17 our technological world.

18 We believe that one of the issues 

19 under student notifications that should be 

20 revisited is a payment of prior year charges. 

21 Schools should be permitted to provide notice 

22 of the school's policies regarding use of a 

23 limited amount of current year aid to pay prior 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 year charges with an opt-out option available 

2 to students.

3 The current adverse credit 

4 definition for borrowers is a topic of concern 

5 to our members. We agree that a review and 

6 possible updating is timely. For example, 

7 negotiators might consider some form of 

8 debt-to-income ratio assessment for parents 

9 and more emphasis on the practicability to 

10 repay the loan.

11 It is important to keep in mind, 

12 however, that what is appropriate for a parent 

13 borrower might be different from what is an 

14 appropriate measure for a graduate student 

15 borrower. Any changes to PLUS Loan 

16 underwriting standards must be implemented in 

17 a way that does not disrupt current student 

18 enrollment.

19 We also agree that the rules 

20 governing clock-hour measurements and 

21 clock-credit-hour conversions have been 

22 confusing to schools and could benefit from 

23 review in the negotiated rulemaking setting.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 State authorization is a tricky 

2 subject. We believe a key factor in successful 

3 resolution in this area is knowledgeable 

4 advisors and suitable representation from 

5 states, especially in the area of foreign 

6 locations and crediting agencies.

7 We urge the Department to tread 

8 lightly in matters that are related to state 

9 purview and to find reasonable alternatives 

10 that do not price a program out of existence or 

11 add such administrative burden as to compound, 

12 rather than resolve, any true problem that may 

13 exist.

14 We live in an era where electronic

15 and technological communication has become the 

16 norm and changes rapidly and sometimes 

17 profoundly to alter the educational landscape.

18 Our members continue to be 

19 concerned about the Department's intent to 

20 define gainful employment without clearer 

21 direction from Congress or giving schools the 

22 ability to limit borrowing or require 

23 additional counseling.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 We would also like to offer a broad 

2 comment. The number and complexity of the 

3 topics that a single team has been expected to 

4 negotiate in recent years has become 

5 increasingly unrealistic. Besides time 

6 management issues, concentrating widely 

7 diverse issues into one negotiating team 

8 committee renders the consensus approach 

9 difficult. We, therefore, strongly urge the 

10 Department to establish multiple negotiating 

11 committees, so that each team may, to the extent 

12 possible, focus on related issues in-depth.

13 Finally, in conducting the upcoming 

14 negotiations, we urge the Department to 

15 regulate only where necessary and only to the 

16 extent required to achieve agreed upon goals.

17 Thank you for your time.

18 MS. MAHAFFIE: Brad Card.

19 MR. CARD: Good morning.

20 My name is Brad Card, and I am a 

21 managing partner at Dutko Grayling. I am here 

22 on behalf of the Association of Proprietary 

23 Colleges in New York.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 APC includes 27 accredited, 

2 degree-granting colleges and operates on 41 

3 campuses throughout the State of New York. Our 

4 institutions enroll over 60,000 students in a 

5 diverse range of academic programs and employ 

6 more than 6,300 people. APC membership 

7 includes small and mid-sized institutions 

8 located in urban and rural areas. Uniquely, 

9 the majority of APC colleges are still family 

10 owned, with several institutions being third11 and fourth-generation family members.

12 Additionally, based on the degree 

13 programs, our institutions are approved under 

14 a stringent standard of the New York State Board 

15 of Regents. Many of our colleges hold regional 

16 accreditation from the Middle States 

17 Commission on Higher Education.

18 We appreciate this opportunity to 

19 present today.

20 APC looks forward to being an active 

21 participant in the negotiated rulemaking 

22 process and delving into the technical issues 

23 involving cash management, debit cards, and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 other subjects on the agenda. APC was an 

2 active member in the 2009 program integrity 

3 rulemaking process, submitting comments, 

4 hosting campus visits, meeting with Department 

5 representatives, and having an Association 

6 member serve as an alternate negotiator.

7 At this stage, however, when the 

8 Department is preparing to launch a multi-year 

9 series of rulemakings prior to pending 

10 reauthorization of the Higher Education Act, 

11 APC believes it is useful to take a step back 

12 from the details and take a more holistic view 

13 of higher education and the federal student aid 

14 process.

15 We appreciate your consideration of 

16 these suggestions and we believe that the 

17 guidelines and the negotiating process should 

18 be viewed as a whole. Regulation of higher 

19 education should apply to all sectors. Our 

20 higher education system is stronger based on 

21 diversity in multiple sectors, including the 

22 proprietary sector.

23 APC, for instance, our proprietary 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 colleges have developed robust student 

2 services, cutting edge programs, and flexible 

3 schedules. Our student outcomes compare 

4 favorably with our peers in the public and 

5 non-traditional, non-profit sectors.

6 We agree all institutions, 

7 including proprietary colleges, should be held 

8 fully accountable for the use of federal funds. 

9 However, too much of the public recent debate 

10 seems to be aimed at tarnishing the proprietary 

11 sector. Good rulemaking should start by 

12 recognizing that proprietary colleges have 

13 brought value and bettered the lives of 

14 millions of students.

15 Consistent with this view, the 

16 Department should be encouraging responsible 

17 growth in all sectors. We could have a lively 

18 debate on the meaning of responsible growth, 

19 but, at a minimum, we urge the Department to 

20 steer clear of regulations that are targeted at 

21 any particular sector. If the Department 

22 believes that certain types of institutions 

23 should be held to a certain rate of growth or 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 subject to additional scrutiny, if they need a 

2 certain rate of growth, then it should make a 

3 proposal, and we can discuss that subject in a 

4 straightforward manner. Consumer information 

5 should be transparent and uniform across all 

6 sectors.

7 We should recognize that students 

8 are the ultimate customers for all of us, the 

9 colleges and the Department. All students 

10 begin as applicants who are choosing whether to 

11 pursue their education and where to enroll. It 

12 is critical to provide these applicants with 

13 clear, simple information about their 

14 enrollment opportunities, including cost of 

15 their program, whether they choose public or 

16 non-profit or proprietary institutions. In 

17 other words, we believe the Department can do 

18 more to encourage and require clear, upfront 

19 disclosures to bring transparency to the cost 

20 of the programs across all sectors as well as 

21 the expected outcomes of those programs.

22 Simplifying Title IV regulatory 

23 scheme, as I am sure you know, a printout of the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Title IV regulations now produces a 

2 3-to-4-inch-thick stack of paper. A printout 

3 of the Department's Federal Student Aid 

4 Handbook runs 10 to 12 inches. These 

5 regulations and related guidance are 

6 incredibly intricate and full of traps for the 

7 unwary that can lead to inadvertent violations. 

8 I would suggest that we all need to aim for 

9 quality with regulations that are simpler and 

10 cleaner rather than more voluminous.

11 Go slow with the rulemaking 

12 process. We all went through an extensive 

13 rulemaking process three to four years ago, and 

14 we are living with a series of new regulations 

15 that went into effect in 2011. In many cases 

16 the Department has not yet issued promised 

17 guidance to clarify important issues under some 

18 of those rules, such as questions about state 

19 authorization and credit regulations that are 

20 vague and troublesome for many institutions.

21 With all of these unsettled issues 

22 from previous rulemaking, and with so little 

23 experience with the Department's ability to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 enforce those recently-issued rules, we again 

2 strongly suggest going slowly. It is always 

3 worth asking if the Department can achieve its 

4 public policy goals by enforcing the existing 

5 regulations rather than creating new ones. 

6 Limit Title IV funding to truly educational 

7 related expenses.

8 In launching a new rulemaking, we 

9 also have to recognize the limits of federal 

10 funding available to student aid. It is more 

11 important to ensure that federal student aid 

12 funds are used to pay the core cost of higher 

13 education, tuition, and fees, and legitimate 

14 living expenses. We believe the Department 

15 needs to pay more attention to the fact that the 

16 vast amounts of student aid are more available 

17 for students to spend for other purposes.

18 At the same time that the headlines 

19 indicate a growing concern over student 

20 debt, Title IV regulations force -- yes, 

21 force -- colleges to award federal grant and 

22 loan funds even when colleges have real concern 

23 that those funds are not necessary to support 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 legitimate living expenses.

2 APC colleges would gladly join the 

3 Department in developing responsible ways for 

4 colleges to help their students avoid over

5 borrowing and avoid trapping into federal funds 

6 for extraneous spending that is not necessary 

7 to support the student's core educational 

8 expenses.

9 Do not --

10 MS. MAHAFFIE: If you could wrap up 

11 your comments, please?

12 MR. CARD: Sure.

13 Do not relive the gainful 

14 employment regulation. We have entered into a 

15 series of reruns, it seems. The gainful 

16 employment regulation is complex and 

17 redundant, extends the federal government's 

18 reach into higher education, and looks like a 

19 backdoor to restrict the proprietary sector 

20 based on metrics that do not work.

21 We all have a history in gainful 

22 employment rulemaking. We dedicated enormous 

23 time and resources into the rulemaking. We 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 have participated in the process. We have 

2 acted as a negotiator often in the negotiated 

3 rulemaking process. And this gainful 

4 employment regulation simply does not work. 

5 Let's let the Congress act in the new 

6 reauthorization of the Higher Education Act, 

7 and we stand ready to help you.

8 Thank you.

9 MS. MAHAFFIE: Thank you.

10 Jennifer Blum.

11 MS. BLUM: Good morning.

12 I am Jennifer Blum, Senior Vice 

13 President of Government Relations and Public 

14 Policy at Laureate Education. On behalf of 

15 Laureate and our network, Laureate 

16 International Universities, I want to thank you 

17 for the opportunity to speak.

18 Laureate is a unique global network 

19 of 70 institutions in 29 countries. Together, 

20 these institutions share a global commitment to 

21 access and quality for students in each of their 

22 own countries and localities. We have five 

23 distinct institutions in the United States: 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Walden University, which is entirely online; 

2 Kendall College in Chicago; Santa Fe University 

3 of Art and Design, one of the oldest 

4 institutions in New Mexico; New School of 

5 Architecture and Design in San Diego, with 600 

6 students, and the National Hispanic University 

7 in San Jose, California, with 800 students.

8 With access and institutional 

9 accountability as our primary goals here and 

10 abroad, we appreciate each opportunity for 

11 dialog with policymakers on these issues. In 

12 fact, today Laureate and one of its 

13 institutions in Spain, is hosting a European 

14 Economic Summit on Youth and Jobs with the 

15 Clinton Global Initiative, government 

16 officials, and employers in that region.

17 In the U.S., Laureate continues to 

18 believe any accountability effort should be 

19 applied to all institutions. Recent shifts in 

20 higher education and innovation are seismic. 

21 These initiatives are largely positive 

22 developments for students. However, they 

23 underscore the need for ensuring that our laws 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 and regulations are equitable and consistent.

2 Before commenting on a number of 

3 agenda items, I would first like to mention a 

4 couple of concerns regarding the Department's 

5 initiative. First, implementation of any new 

6 regulations promulgated coincide with HEA 

7 reauthorization. We strongly urge the 

8 Department to coordinate regarding which 

9 issues should be addressed through the 

10 regulatory process and which Congress should 

11 address.

12 Second, the range of issues 

13 presented by the Department is broad in nature, 

14 requiring different types of expertise. 

15 Laureate suggests appointing two negotiating 

16 committees, one that is focused on the 

17 technical changes to Title IV and another to 

18 address specific policy issues. This will 

19 allow the Department to appoint members with 

20 definitive expertise and interest.

21 I will now comment on specific 

22 topics presented.

23 During the 2010 regulatory process 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 on state authorization, Walden raised concerns 

2 regarding the enforceability of these rules. 

3 While we appreciate the Department's most 

4 recent time extension, Laureate and Walden 

5 expect that HEA reauthorization will provide a 

6 better opportunity to provide clarity around 

7 the roles of the current statutory triad. 

8 Laureate, however, is uniquely positioned to 

9 provide insight on distance education and on 

10 foreign locations.

11 On distance education, Laureate and 

12 Walden continue to support the concept of 

13 reciprocity between states, and the recent work 

14 by the Riley Commission should provide helpful 

15 input. As an international community of 

16 universities, Laureate noted with interest the 

17 Department's proposal to examine whether state 

18 authorization is necessary for, quote, 

19 "Foreign locations of institutions located in 

20 a state". Many of our U.S. students, 

21 particularly at Kendall, Santa Fe, and New 

22 School, benefit from exchange opportunities 

23 with our very separate foreign institutions.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 It is essential that all 

2 institutions continue to provide students with 

3 a rich and global education. Laureate is 

4 interested in learning more about the 

5 Department's scope and intent in this area, and 

6 we look forward to providing our insight and 

7 expertise.

8 With our focus on default rates and 

9 outcomes, our institutions share the 

10 Department's interest in an accountability 

11 system that improves the ability of students to 

12 distinguish between the quality of 

13 institutions and programs. However, we firmly 

14 believe that the Department remains too 

15 narrowly focused on accomplishing the 

16 significant policy goals through the lens of 

17 gainful employment provisions which are 

18 applicable only to a limited subset of 

19 institutions and programs.

20 It is also important to recognize 

21 the tremendous steps being taken toward 

22 understanding and analyzing how best to use 

23 data. This week the House is likely to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 consider legislation that would require the 

2 Department to study this area.

3 In response to the Department's 

4 request for input, however, Laureate does offer 

5 two suggestions regarding existing regulatory 

6 tools the Department might better utilize.

7 First, the Department and the 

8 Administration have created several disclosure 

9 requirements recently which supplement already 

10 existing disclosure requirements under HEA. 

11 While Laureate strongly supports the 

12 Department's goal of disclosure and 

13 transparency, we are concerned that these 

14 multiple efforts actually increase student and 

15 consumer confusion. Streamlining disclosure 

16 requirements should be a critical component of 

17 the Department's accountability goals.

18 Second, Laureate encourages the 

19 Department to examine its current new program 

20 approval processes and, also, its 

21 certification requirements in the context of 

22 its existing accountability measures. The 

23 Department's guidance in this area has shifted 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 back and forth, and some processes seem 

2 inconsistent with the goal of establishing 

3 distinctions in the quality of institutions.

4 Finally, we are also interested in 

5 the Department's discussion of Title IV 

6 management. Regarding the issue of fraud, we 

7 believe the current regulations on 

8 verification and unusual enrollment history 

9 have significantly helped institutions monitor 

10 and combat this problem when suspected. 

11 Laureate is very interested in discussing 

12 current practices and learning more about any 

13 additional measures available to combat this 

14 serious problem.

15 Laureate's institutions also agree 

16 with the need for clarity regarding the 

17 definition of adverse credit. Guidance has 

18 created confusion and burdens for 

19 institutions, students, and parents. 

20 Laureate appreciates the Department's 

21 inclusion of this issue and is hopeful there 

22 will be more flexibility in its appeals process 

23 and more consistency and clarity for all 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 interested parties.

2 In conclusion, we hope the 

3 Department will consider these suggestions, 

4 and we look forward to participating in any such 

5 process. Thank you again for this 

6 opportunity.

7 MS. MAHAFFIE: David Baime.

8 MR. BAIME: Good morning and thanks 

9 for having me.

10 I am David Baime, Senior Vice 

11 President for Government Relations and Policy 

12 Analysis, American Association of Community 

13 Colleges.

14 We have a little bit under 1100 

15 members. So, unlike Jennifer, I am not going 

16 to mention all of them this morning.

17 I want to talk primarily about the 

18 gainful employment issue, but I did want to 

19 touch upon a couple of other topics that were 

20 mentioned in the notice about this session.

21 First of all concerns fraud. 

22 Community colleges feel that we are, in fact, 

23 particularly vulnerable to so called Pell 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 runners and fraud rings. And as a result of 

2 that, we feel a great need to be involved in any 

3 process the Department undertakes to try to 

4 address this issue.

5 We would note that the instances of 

6 fraud are still quite limited and are a very 

7 small fraction of the overall student 

8 population. We would not want to see policy 

9 being changed too dramatically to address this 

10 particular issue. I would say that our 

11 institutions are already doing many things 

12 themselves for their own reasons to make sure 

13 that this does not occur.

14 The second thing I wanted to talk 

15 about is the state authorization issue. It has

16 been mentioned a number of times already here. 

17 For our institutions, the Department's new 

18 interpretation and proposed enforcement of the 

19 regulation -- related institutions that offer 

20 distance education programs outside of the 

21 state in which they are physically located --

22 has been extremely problematic for our 

23 institutions, precisely because they have so 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 few resources and in many cases have one or two 

2 or literally just a handful of students 

3 enrolled in a given state.

4 And what we have found as an 

5 unfortunate outcome of the regulations that 

6 have been currently held in abeyance is that, 

7 in a number of states, institutions have simply 

8 chosen not to offer programs. So, rather than 

9 resulting in enhanced or improved access for 

10 students, what we have seen is actually a 

11 diminishment of access for students.

12 We are encouraged by the efforts 

13 that have been undertaken to develop 

14 regional/state compacts or arrangements for a 

15 series of institutions, and we think that that 

16 is a process the Department should continue to

17 develop rather than issuing new regulations on 

18 distance education.

19 The last thing I wanted to talk 

20 about in a little bit more detail is the gainful 

21 employment regulations. You have heard people 

22 this morning talking about the impact of 

23 gainful employment regulations on the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 for-profit sector. And, of course, the 

2 for-profit sector received the bulk of the 

3 attention as the gainful employment 

4 regulations were promulgated and, then, 

5 debated in different ways in Congress.

6 But I would like to remind the 

7 Department that community colleges, in fact, 

8 have far more programs that qualify under the 

9 gainful employment definition than the 

10 for-profit sector does, about 30,000, to the 

11 best of our count, community colleges compared 

12 to 13,000 at for-profit institutions.

13 And the number of certificate 

14 programs that community colleges are offering 

15 is growing very rapidly. It is part of the 

16 completion agenda and encouraging students to 

17 get onto career ladders and career pathways, 

18 giving them some tangible sign of academic 

19 accomplishment that keeps them enrolled.

20 We do have high numbers of students 

21 who don't complete their programs, and offering 

22 more certificates is one of the ways to address 

23 that. So, consequently, if the gainful 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 employment regulations were reinstated in some 

2 way, we would probably see even more programs 

3 falling under its purview.

4 I don't want to spend too much time 

5 revisiting the past, but we do think it is 

6 important to outline my membership's 

7 extraordinary frustration over the gainful 

8 employment regulations as they were enacted and 

9 disclosure regulations that still remain 

10 formally in place.

11 This process has been a debacle for 

12 community colleges. The Department, we feel, 

13 has acted insensitively, and we don't think it 

14 is an exaggeration to say irresponsibly, in the 

15 series of issue updates and increased numbers 

16 of communications to institutions who have been 

17 trying to implement these rules.

18 If you go on the IFAP website, you 

19 now see 44 "Dear Colleague" letters and 

20 electronic communications on gainful 

21 employment. And again, we think that it is 

22 simply irresponsible for a federal agency to 

23 expect that institutions of higher education, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 certainly not institutions such as community 

2 colleges which don't have heavy administrative 

3 resources at their disposal, to manage that 

4 continual change in implementation procedures. 

5 So, we hope the Department learns from this and 

6 whatever it does in the future is much more 

7 focused in the direction that it gives 

8 institutions.

9 Did I lose this altogether? 

10 Thanks. I guess it is working a bit.

11 Another unfortunate outcome in 

12 gainful employment that we do encourage the 

13 Department to look at is to consider the fact 

14 that for community colleges only less than a 

15 quarter of all the programs for which data were 

16 provided ultimately had income earnings 

17 generated for them. So, less than about 23 

18 percent of all the programs that institutions 

19 dutifully provided data to the Department 

20 ultimately received the earnings information 

21 that would have been useful to not just the 

22 consumers, but to institutions themselves in 

23 evaluating program effectiveness.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 So, as the Department looks at 

2 taking another pass at this, we think that some 

3 methods need to be devised, perhaps 

4 consolidating some of the programs so that 

5 there is greater data reported out on 

6 particular groups of programs, and perhaps 

7 career cluster areas.

8 We also, picking up what a number of 

9 other commenters have said this morning, it 

10 would be foolish for the Department to ignore 

11 the broader environment of the Higher Education 

12 Act reauthorization that is currently getting 

13 underway. We know that Congress will be 

14 looking at outcomes across all institutions of 

15 higher education for all types of programs. It 

16 is very likely that Congress will be looking at 

17 ensuring that institutions and the public get 

18 better data about the earnings and workforce 

19 side of higher education, which is something 

20 that my Association supports.

21 Therefore, the Department should 

22 examine very carefully the direction that 

23 Congress is going in, as it looks or at least 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 considers putting forward regulations again on 

2 gainful employment. And this is irrespective 

3 of whether or not the definition itself for 

4 statutory treatment of gainful employment 

5 programs is altered at all, and just this 

6 broader issue of providing greater information 

7 is addressed.

8 In terms of some of the things that 

9 were done in the last regulation, we said it 

10 before -- I will say it again -- an on-time 

11 graduation rate of 100 percent for community 

12 college students, many of whom, about 60 

13 percent on average enroll part-time, says very 

14 little about the nature of the program and the 

15 quality of the program. We would urge you to 

16 use another approach if you go forward in this 

17 general area.

18 There are currently three 

19 graduation rates for institutions, as you know, 

20 under IPEDS. So, we question whether this is 

21 necessary.

22 We also -- and this relates to the 

23 issue I just mentioned about the paucity of data 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 on earnings -- for more than 75 percent of our 

2 programs, we had many of our programs, no data 

3 was provided because we either had too few 

4 borrowers or too few students in those 

5 programs. So, you need to devise a framework 

6 in which institutions aren't responsible for 

7 providing data for the Department that is never 

8 going to be revealed to the public or otherwise 

9 used in a way that provides some benefit on the 

10 back-end.

11 In terms of the actual loan metrics 

12 that were used for gainful employment -- we, 

13 community colleges, thought that they were 

14 reasonable ways of looking at public policy. 

15 We continue to emphasize the great importance 

16 of limiting student debt. We have heard a 

17 tremendous amount about this issue. We see 

18 defaults arising under a more accurate 

19 three-year rate at an alarming amount. And we 

20 think that institutions should be given 

21 encouragement for ensuring that students limit 

22 their borrowing. And we do support giving 

23 institutions the ability to limit borrowing, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 but also giving them incentives to keep their 

2 tuitions low. And therefore, the policy 

3 should reflect and approve of institutions that 

4 are able to keep student borrowing minimized.

5 Thank you for your time. We look 

6 forward to being active participants in that 

7 process.

8 MS. MAHAFFIE: Thank you.

9 Wagatwe Wanjuki.

10 (No response.)

11 Lezli Baskerville.

12 MS. BASKERVILLE: Good morning, 

13 Department executives and colleagues.

14 I am Lezli Baskerville, President 

15 and CEO of the National Association for Equal 

16 Opportunity in Higher Education, NAFEO, which 

17 is the nation's only membership association of 

18 all of the 105 Historically-Black Colleges and 

19 Universities and 50 Predominantly Black 

20 Institutions.

21 Our institutions are richly 

22 diverse. They are two- and four-year 

23 institutions, public and private institutions. 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 They are Land Grant institutions, sectarian and 

2 nonsectarian institutions; undergraduate,

3 graduate, and professional schools.

4 Our institutions represent just 

5 three percent of the nation's colleges and 

6 universities, but they are graduating about 15 

7 percent of African Americans graduating from 

8 college today.

9 In growth and high needs areas, our 

10 institutions are doing much better in the areas 

11 of STEM. Historically Black Colleges and 

12 Universities are graduating 40 percent of 

13 African Americans who are graduating with a 

14 four-year degree in STEM.

15 With regard to teacher education, 

16 our institutions are graduating 50 percent of 

17 African Americans coming out in teacher 

18 education today and 60 percent of African 

19 American health professionals.

20 I cite these data at the outset 

21 because at the time when the nation is 

22 concerned, and we have all been concerned, 

23 about cost-effectiveness, cost of college and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 effectiveness of college, the College Board's 

2 reports indicate that the cost of college at an 

3 HBCU, for private institutions is on average 10 

4 percent less than their historically white 

5 counterparts. For public institutions, 

6 public HBCUs are about $2500 less than their 

7 historically white counterparts.

8 And let me just say, also, that our 

9 institutions are economic engines of their 

10 communities, $13 billion short-term 

11 enterprises.

12 So, with this significant chunk of 

13 America's colleges and universities, without 

14 which this nation cannot realize its goal of 

15 having Americans with two- or four-year 

16 degrees, 60 percent of Americans attaining a 

17 two- or four-year degree, our institutions, the 

18 fiber, the infrastructure of our institutions 

19 was shaken when the Department, without 

20 notification, shifted its interpretation of 

21 the parent PLUS regulations. 

22 As a result, you heard from my 

23 colleague this morning, Michael Lomax, who is 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 President and CEO of a subset of our 39 private 

2 institutions that as a result, tens of 

3 thousands of our students were not allowed to 

4 return to college, and we lost tens of millions 

5 of dollars.

6 I incorporate by reference the 

7 comments with regard to Dr. Lomax this morning, 

8 and I would like to add just a few supporting 

9 observations.

10 What occurred was that the 

11 Department made adjustments in its 

12 interpretation of adverse credit. And again, 

13 it did so without notification, without an 

14 opportunity for public engagement. It made 

15 this adjustment to the adverse credit 

16 interpretation at a time when our institutions 

17 were already reeling from about four major 

18 factors.

19 The shift in interpretation was 

20 unanticipated. Our institutions have 

21 disproportionate percentages of low-income and 

22 first-generation students. Disproportionate 

23 percentages of HBCU have small endowments that 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 prevented many of our institutions from 

2 standing in the gap and offering funding to 

3 those students who lost their parent PLUS Loan 

4 due to the shift in the regulatory 

5 interpretation. And the loss of the parent 

6 loan funding came as disproportionate numbers 

7 of HBCUs were reeling from the loss of Title III 

8 and SAFRA funds, the loss of summer Pell and 

9 other Pell funds, the loss of additional funds 

10 due to sequestration, drastic cuts in state 

11 funding.

12 And for most HBCUs, they have a 

13 majority African American student population, 

14 and the financial foundations of the families 

15 in our institutions was shaken severely as the 

16 result of the great recession. For example, 

17 according to the Pew Foundation, the families 

18 at HBCUs, primarily African Americans, lost 53 

19 percent of their wealth, as compared with 13 

20 percent of the wealth for white Americans. A 

21 combined $200 billion wealth loss for African 

22 Americans and Latinos, with a typical African 

23 American household with just $5700 in wealth; 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Latinos, $6300 in wealth, and white Americans 

2 with $113,000 in wealth. This is important 

3 because, as you know, wealth is what most of our 

4 families draw on to pay for college in times 

5 when such things as the loss of a parent PLUS 

6 Loan takes place.

7 The shift of the regulatory 

8 interpretation also happened at a time when the 

9 net worth, the wealth gap between 

10 African-Americans and white Americans 

11 increased from $20,000 to $90,000, according to 

12 the Bureau of Labor Statistics.

13 So, with these things going on, the 

14 shift had a destabilizing impact. We worked 

15 with the Department of Ed from August through 

16 October to try to come up with a plan that would 

17 return the nearly 20,000 students in good 

18 standing that were forced to leave our 

19 institutions, but, unfortunately, we have not 

20 been able to get most of the students back.

21 At this point, as we are approaching 

22 the next year, we are hoping that the Department 

23 will revert back to the pre-October 11th 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 interpretation. From our perspective and our 

2 discussions with the Department, we found that 

3 the program was not broken. If the program was 

4 not broken, we respectfully request that the 

5 program not be fixed.

6 The parent PLUS pipeline, prior to 

7 the shift in regulatory interpretations, had 

8 loans evaluated under criteria that were 

9 working effectively for most students at the 

10 time. If the Department decides to do 

11 something, it should clearly define 

12 extenuating circumstances to account for major 

13 and sustained economic recessions that cause 

14 persons who otherwise have good credit 

15 histories to experience an anomaly and fall 

16 behind as a direct result of such things as 

17 recessions. They should take into 

18 consideration financial resilience, parents 

19 who perhaps lost a house in the great recession, 

20 people who lose houses and other things due to 

21 natural and manmade disasters, but they are 

22 able to rebound. The criteria should be more 

23 liberal and allow for considerations of those 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 things.

2 Again, I embrace by reference the 

3 recommendations of Dr. Lomax, but I want to add 

4 one thing, that when the parent PLUS debacle, 

5 for lack of a better word, hit the HBCU 

6 community, in addition to showing the need for 

7 return to the pre-October 11th regulatory 

8 interpretation, it pointed out that which NAFEO 

9 and the HBCU community has been saying for 

10 years; namely, that America needs to invest 

11 more of its sparse dollars in those 

12 institutions that are graduating 

13 disproportionate percentages of low-income, 

14 first-generation, traditionally underserved 

15 students, the growth populations of today.

16 Our institutions were able to 

17 absorb the students because their endowments 

18 are low and their infrastructures, their 

19 dollars are few. If we invest of our dollars 

20 in those institutions that are doing the lion's

21 share of educating growth and high needs 

22 students, we could have a buffer against such 

23 huge drops of students who are doing what they 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 are supposed to do and matriculating on time.

2 There is a need for the federal 

3 government, states, and the private sector to 

4 provide greater incentives for other 

5 institutions to enroll and graduate large 

6 numbers of high needs students as well. 

7 Although the details are still scant, it 

8 appears as though the Administration's 

9 proposal to, quote, "Keep tuition from 

10 spiraling too high and drive greater value and 

11 to shift aid away from colleges that fail to 

12 keep net tuition down and toward those colleges 

13 and universities that do their fair share to 

14 keep tuition affordable, provide good value, 

15 and serve needy students," this appears to be 

16 aligned with NAFEO's sense that we must invest 

17 more of our dollars in those institutions that 

18 are serving the needy, that are underfunded, 

19 and that are growing, educating the lion's 

20 share of today's and tomorrow's students.

21 NAFEO looks forward to working with 

22 the Department as we continue to think through 

23 and come up with a reasonable solution, but the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 immediate solution is, and we urge and request, 

2 that for the fall semester you respectfully 

3 revert back to the pre-October 11 

4 interpretation and afford us an opportunity to 

5 be at the table with the negotiators, so that 

6 we can have a voice on behalf of all of America's 

7 Historically Black Colleges and Predominantly 

8 Black Colleges to make sure that our students 

9 are doing right, doing what we expect them to 

10 do, are matriculating and in good standing; do 

11 not have to drop out because of unnoted shifts 

12 in policies.

13 Thank you so very much for affording 

14 me the opportunity.

15 MS. MAHAFFIE: Thank you.

16 Congresswoman Brown.

17 (No response.)

18 We have one more person to speak 

19 before lunch. So, we are going to wait a couple 

20 of minutes. She is on her way.

21 If there is anybody scheduled for 

22 the afternoon session who would like to speak 

23 now, you are welcome to. We have a few minutes 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 before our next speaker.

2 MS. HATTAN: I am Susan Hattan. I 

3 am here testifying on behalf of the National 

4 Association of Independent Colleges and 

5 Universities, or NAICU.

6 NAICU serves as the national voice 

7 of independent higher education. With more 

8 than a thousand members nationwide, NAICU 

9 reflects the diversity of private, non-profit 

10 education in the United States.

11 My comments today address the two 

12 topics related to state authorization and the 

13 gainful employment issue. In response to a 

14 court decision issued last year, the Department 

15 is considering developing new regulations 

16 relating to state authorization for programs 

17 offered through distance education or 

18 correspondence education. Given the 

19 substantial work being done across the country 

20 in this area, NAICU believes it would be 

21 premature to develop federal regulations in 

22 this area.

23 Although the prior distance 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 education regulation was struck down in court, 

2 its issuance has had a marked effect in 

3 increasing awareness of the breadth and variety 

4 of state requirements affecting distance 

5 education providers. It has also underscored 

6 the complexity of addressing regulatory issues 

7 in a manner that is understandable to, and 

8 affordable for, institutions seeking to comply 

9 with state requirements.

10 The difficulties in navigating 

11 these various requirements have spurred 

12 conversation regarding ways in which 

13 compliance could be simplified. As we have 

14 heard earlier today, the most significant of 

15 these efforts is the work being done on the 

16 State Authorization Reciprocity Agreement, or 

17 SARA. Certainly, the President's Forum, the 

18 Council of State Governments, regional 

19 education boards, APLU and SHEEO, among others, 

20 have been engaged in this effort for some time 

21 now.

22 A SARA framework has been developed 

23 and work is beginning to flesh out on how such 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 an agreement might be implemented. There is 

2 still a long road ahead. While being generally 

3 supportive of this effort, NAICU is concerned 

4 about some of the specific features and will 

5 continue to work on behalf of appropriate 

6 investment as that process continues.

7 So, in brief, there is a lot of work 

8 going on now by a variety of individuals with 

9 deep knowledge of state laws and practices. 

10 Given this high level of involvement, it 

11 doesn't seem to be an appropriate time to 

12 introduce new federal requirements into the 

13 mix.

14 We suggest that the Department 

15 defer regulatory action in this area in order 

16 to allow the current work to proceed in a manner 

17 that will maintain the ability to make 

18 adjustments. At this point, it may simply not 

19 be possible to develop uniform federal 

20 requirements to capture all the moving parts 

21 that will be required to establish a better 

22 means to regulate distance education 

23 providers.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 The second state authorization 

2 issue raised in the April 16th notice relates 

3 to authorization for foreign locations of 

4 institutions located in a state. Given the 

5 confusion that has been created by the general 

6 regulations related to state authorization, we 

7 urge that the Department not compound that 

8 confusion by trying to regulate foreign 

9 locations of U.S. institutions via the states.

10 Experience with the existing state 

11 authorization regulations have shown that 

12 states have chosen a variety of ways in which 

13 to recognize and regulate the institutions 

14 within their borders. Superimposing a vague 

15 set of federal requirements over the state 

16 activity has led to massive confusion with no 

17 discernible impact on improving program 

18 performance or integrity.

19 Equally troubling are the shifting 

20 and inconsistent interpretations of what the 

21 regulation requires. It is for this reason 

22 that NAICU has advocated for the repeal of the 

23 existing state authorization regulation. By 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the same token, we believe attempts to expand 

2 this regulation to incorporate rules related to 

3 state regulation of foreign locations would 

4 only compound the substantial problems and 

5 confusion that we are seeing today.

6 And finally, with respect to 

7 gainful employment, the gainful employment 

8 regulations are exceedingly complex and 

9 include significant reporting and disclosure 

10 requirements relating to the employment and 

11 economic success of gainful employment program 

12 students.

13 The Department's original intent 

14 was to publish regulations aimed at eliminating 

15 fraud and other deleterious practices of these 

16 programs. However, while sanctions under the 

17 final regulations were delayed and weakened, 

18 the substantial reporting and disclosure 

19 requirements require that all gainful 

20 employment programs remain in place. These 

21 requirements have been made more complicated by 

22 recent court decisions.

23 We urge the Department to take a 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 comprehensive look at the gainful employment 

2 regulations and target them more appropriately 

3 on areas of high risk. Specifically, we 

4 recommend that certificate programs which meet 

5 some sort of a first-test standard that does not 

6 require additional reporting by institutions, 

7 such as the newly formulated repayment 

8 standard, be exempted from the burdensome 

9 collecting, reporting, and disclosure 

10 requirements.

11 Under this framework, only schools 

12 that fail this first test would be required to 

13 gather additional information or meet 

14 additional standards, such as the minimum 

15 debt-to-earning level, in order to avoid 

16 negative action. This would be a simple way to 

17 deregulate satisfactorily performing 

18 institutions while also targeting enforcement 

19 actions at programs that are performing under 

20 par.

21 We appreciate having this 

22 opportunity to present our views.

23 MS. MAHAFFIE: Thank you.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Congresswoman Brown.

2 REP. BROWN: Good morning.

3 I am Congresswoman Corrine Brown. 

4 I represent Florida's 5th Congressional 

5 District, but, basically, I feel like I 

6 represent all of Florida.

7 I am here concerning the PLUS Loan 

8 Program, but let me just give you a little of 

9 my background. I have been elected to 

10 Congress, the United States Congress, for 20 

11 years. I was the first African American 

12 elected from Florida in 129 years, but I have 

13 been an elected official for 30 years.

14 I am very concerned about the PLUS 

15 Loan Program. Let me just tell you I represent 

16 Jacksonville, Orlando, Gainesville. And so, I 

17 am speaking, first of all, about the 400,000 

18 students that are being kicked out of school 

19 because of the PLUS Loan Program and, in 

20 particular, the 28,000 from Historically Black 

21 Colleges.

22 I don't understand why it is that 

23 the Department of Education came up with this 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 additional or new policy, first of all, without 

2 talking to the stakeholders. And I am very 

3 pleased that you are having this hearing today, 

4 and I want my entire statement committed to the 

5 record.

6 And in the statement, one of the 

7 statements pertains to the article that came 

8 out in the paper on Friday pertaining to the 

9 fact that this PLUS, the educational loan 

10 program, has made over $53 billion, wherein the 

11 student interest rate from the Department of 

12 Education is worse than it was under the banks. 

13 I never thought I would be sitting here talking 

14 about the Department of Education that has a 

15 policy that is worse than the loan sharkers. 

16 And I know that the President could not know 

17 about this.

18 When I was first elected in 1992, Ed 

19 Waters College had a problem, and President 

20 Clinton was the President. And it was one that 

21 we was able to sit down and work it out.

22 Then, when President Bush was the 

23 President, Historically Black Colleges had 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 problems. We was able to sit down and work it 

2 out.

3 And now, I don't understand what is 

4 the problem that for six months the Black 

5 Colleges, the Presidents, and the 

6 Congressional Black Caucus have not been able 

7 to work out this problem. We have had numerous 

8 meetings with the Secretary, and evidently, the 

9 internists are telling them one thing, but my 

10 position as far as the internists are 

11 concerned, since I educated one, they tell you 

12 what you want to hear. And if they are not 

13 telling you what needs to be told, then you need 

14 to get you a new set. And I told the Secretary 

15 that.

16 We need to work this out. It is 

17 unacceptable that 28,000 black students, 

18 African Americans, have been kicked out of 

19 college, and they were kicked out -- school 

20 started in August -- and they were kicked out 

21 in September.

22 Now there is supposed to be a policy 

23 that the Secretary of Education can forgive 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 these students or work it out, but that hasn't 

2 been worked out. And so, I am suggesting that 

3 the Department of Education, it is just totally 

4 unacceptable to continue in this pathway.

5 Maybe some of that $51 billion or 

6 $53 billion needs to go into Pell grants. I 

7 like grants. I like grants programs. So, 

8 students and families don't have to worry about 

9 paying it back.

10 But one thing I want to say is that 

11 failure is not an option. Now I hope that you 

12 can work it out with the stakeholders or else 

13 I can promise you that I will be joining the 

14 majority party in Congress to work it out. 

15 Failure is not an option for our children.

16 Education is the key. This is the 

17 worst economic times in the history. And to 

18 say that your standard is worse than the banks 

19 is unacceptable.

20 I want to thank you for giving me the 

21 opportunity to just say a few words. But all 

22 of my statement, I want it put in the record, 

23 including the report that indicates how much 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 money that the Department of Education has made 

2 on the interest of the student loans and how 

3 many students have been disenfranchised 

4 because of this new policy.

5 Thank you very much.

6 MS. MAHAFFIE: Thank you.

7 We are going to take a break now 

8 until one o'clock. Thank you.

9 (Whereupon, the above-entitled 

10 matter went off the record at 12:16 p.m. and 

11 resumed at 1:04 p.m.)

12
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 A-F-T-E-R-N-O-O-N S-E-S-S-I-O-N

2 (1:04 p.m.)

3 MS. MAHAFFIE: James Bologa.

4 MR. BOLOGA: Do I need to keep a 

5 timer on me or --

6 MS. MAHAFFIE: I will let you know 

7 if you go over your time.

8 MR. BOLOGA: You will? All right.

9 Let's see, can you guys hear me in 

10 the back? You can. Great. Fantastic.

11 All right. Good afternoon.

12 Thank you for the opportunity to 

13 share my comments with all of you.

14 My name is Jim Bologna. I am the 

15 President and CEO of Porter and Chester 

16 Institute. We are a small postsecondary 

17 vocational training school with nine campuses, 

18 five in Connecticut, four in Massachusetts. We 

19 have been in existence since 1946. We offer 10 

20 programs overall, one in transportation, three 

21 in skilled trades, two in technology, and four 

22 in the healthcare field. We have approximately 

23 3,000 students enrolled in our school.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 The main objective of my 

2 recommendations is to create a level playing 

3 field for all educational institutions 

4 regardless of sector, public, private, 

5 non-profit, for-profit, regardless of 

6 degree-granting or certificate-granting.

7 I will begin with my remarks around 

8 the parent PLUS Loan Program. My objective in 

9 addressing the parent PLUS Loan is to promote 

10 borrowing caps for parents and to recommend that 

11 we offer them the same repayment options that are 

12 available to student borrowers. Currently, 

13 parents don't qualify for income-based 

14 repayment plans, and this has created a 

15 financial hardship for many parents. 

16 Consequently, we are seeing an increase in 

17 defaults because parents are borrowing more than 

18 they can afford to pay.

19 We have an opportunity to 

20 significantly reduce defaults if we can offer 

21 parents the same repayment options that we offer 

22 the students. A student's future shouldn't be 

23 limited by the financial resources of his or her 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 parents, nor should a household budget be 

2 jeopardized by loan payments that are out of 

3 reach.

4 I would like to now move on to the 

5 clock-to-credit-hour conversion. At the heart 

6 of the clock-to-credit-hour conversion is the 

7 need for consistency. This is corroborated by 

8 three scenarios.

9 First, if it is mandated that a 

10 program be measured in clock hours because of 

11 state licensure wording, then it should apply to 

12 all programs, whether they are certificate or 

13 degree programs.

14 Second, the fact that a state refers 

15 to clock hours in the regulations does not 

16 automatically make all the programs in that 

17 state clock hour programs.

18 And lastly, if the state allows a 

19 school to measure in credit hours, the federal 

20 government should not have the ability to 

21 disagree and impose a clock hour limitation. As 

22 we all know, Title IV aid is based on the correct 

23 enrollment status. An inconsistency in how we 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 measure programs could have a negative impact on 

2 financial aid and on access to education for many 

3 students. When discussing the credit hour 

4 regulations, the Department of Ed regularly 

5 insists that it is not all about seat time, but 

6 that credit hour regulations are not meant to 

7 place limits on schools, but clock hours are all 

8 about seat time. None of the homework or other 

9 outside study or preparation required of 

10 students in certain programs counts if those 

11 programs must be measured in clock hours.

12 The Department's continuing effort 

13 to transform more and more programs into 

14 clock-hour programs is, indeed, an effort to 

15 place limits on schools and students. For 

16 academically-challenged certificate 

17 programs -- we have one, for example, practical 

18 nursing -- it is unfair to artificially force 

19 these programs to a clock-hour model where the 

20 students' extensive outside study, up to four to 

21 six hours of homework a night, are not accounted 

22 for in the calculation of the financial aid 

23 eligibility.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 I would now like to move on and have 

2 a few brief comments about state authorization 

3 for distance education. There are two key 

4 issues that need to be addressed in connection 

5 with the regulatory changes regarding state 

6 authorization for distance ed.

7 The first issue has to do with 

8 licensing and fees associated with the number of 

9 students enrolled in distance ed programs. The 

10 value of distance ed is that it allows a greater 

11 number of students to have access to education, 

12 students who may not be able to pursue an 

13 education via the traditional method of 

14 traveling to a school.

15 To ensure that we can offer distance 

16 ed to as many students as possible, we recommend 

17 a cap on the number of licensing fees that an 

18 institution would have to incur. Without a cap, 

19 many institutions would have to limit the number 

20 of students in order to meet their budget 

21 constraints.

22 The second issue has to do with state 

23 requirements. Distance ed allows schools to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 provide education to students who may reside in 

2 states in which the school doesn't have a 

3 physical presence. In these cases, the school 

4 would have to meet the educational requirements 

5 of the state in which the student resides. We 

6 agree with this regulation, but recommend that 

7 it be modified to allow the school to meet the 

8 educational requirements of the state in which 

9 the student resides at the time of enrollment.

10 Without this time of an enrollment 

11 modification, there is the potential for 

12 negative ramifications for a student who moves 

13 to another state before completing his or her 

14 education. Differences in educational 

15 requirements from state to state may result in 

16 students not being able to meet the licensing 

17 standards for which his or her curriculum had 

18 originally been planned. This will pose a 

19 hardship to many students, and for some it may 

20 prove to be a deterrent to pursuing their 

21 education.

22 I will briefly comment with regard 

23 to cash management disbursement of Title IV 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 funds. We believe that disbursement of Title IV 

2 funds by a debit card should be an option 

3 available to schools.

4 I would also like to move on and talk 

5 a little bit about gainful employment. We do 

6 not feel the Department should be readdressing 

7 gainful employment through negotiated 

8 rulemaking. Let this subject be addressed 

9 through reauthorization if Congress feels it 

10 needs to be incorporated into law.

11 Here, too, we feel that a focus on 

12 a level playing field is necessary. If 

13 debt-to-earnings ratios or repayment rates or 

14 other measures are needed to define successful 

15 programs, then they should be used to define all 

16 programs at all schools, degree or non-degree, 

17 regardless of whatever we call the excess left 

18 over after delivering our education, net income 

19 for-profits or surplus for not-for-profits, 

20 since we all have to generate revenue in excess 

21 of our expenses to remain viable and responsible 

22 institutions.

23 In fact, we already have a level 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 playing field metric. The cohort default rate 

2 is that measure. In loan repayments, loan 

3 repayment rates are at heart simply the inverse 

4 of default rates. If additional oversight is

5 needed, why not strengthen and expand the cohort 

6 default rate calculations to look at the life of 

7 loan performance, rehabilitated loans, or loans 

8 paid in full after default, and the dollar 

9 amounts of defaults per school, instead of 

10 simply the number of defaulters?

11 We believe that the cohort default 

12 rate is one of the most misunderstood education 

13 metrics out there read about by the media and 

14 others due to measuring a very, very short period 

15 of time versus looking at the actual loan 

16 performance.

17 And as we have seen recently, the 

18 Department of Ed has actually just generated $51 

19 billion of profit. We could call it surplus if 

20 you are not-for-profit or profit if you are 

21 for-profit.

22 In closing, I would like to conclude 

23 my remarks with one final thought about refining 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 and enforcing the regulations we currently have. 

2 I suggest that we can help schools remain in 

3 compliance and do the right things for their 

4 students by implementing periodic reviews, 

5 perhaps making them part of the annual audit 

6 process.

7 I believe that the last time that 

8 there was some talk and revisions was about 13 

9 years ago. Rather than add more regulations, 

10 just let's reinforce the ones that are on the 

11 books.

12 Thank you and I am available for any 

13 questions.

14 Hopefully, I did it in five minutes.

15 MS. MAHAFFIE: You did great. 

16 Thank you.

17 Christopher Barto.

18 MR. BARTO: Thank you, and good 

19 afternoon.

20 My name is Christopher Barto. I am 

21 the Assistant Vice President for Student Finance 

22 and Chief Compliance Officer at LIM College in 

23 Manhattan.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 I bring to the discussion 23 years 

2 of administrative experience overseeing student 

3 financial aid programs at prestigious 

4 non-profit institutions prior to joining my 

5 current proprietary institution, which is a 

6 third-generation, family-owned college that is 

7 specializing in the business of fashion, 

8 bachelor's programs, master's programs. The 

9 institution was founded in 1939, and we 

10 currently enroll about 1500 students.

11 The college provides a well-rounded 

12 education through a combination of high-quality 

13 instruction in the traditional classroom 

14 setting along with hands-on experience in the 

15 business of fashion via required internships, a 

16 model that many public and non-profit 

17 institutions are increasingly pursuing in the 

18 form of co-op and other experiential education 

19 programs, a model that we have long employed to 

20 the success of our graduates.

21 In addition to the longstanding 

22 accreditation by Middle States, the strength of 

23 the college's curriculum and academic programs 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 were further affirmed in 2012 via accreditation 

2 of our undergraduate and graduate programs by 

3 the Accreditation Council for Business Schools 

4 and Programs, ACBSP. We are also a member 

5 institution of the New York Association of 

6 Proprietary Colleges.

7 In spite of difficult economic 

8 conditions that we are all familiar with the last 

9 several years, the employment rate of LIM 

10 College graduates has remained consistently 

11 high. For the class of 2011, 95 percent of 

12 graduates seeking employment were gainfully 

13 employed within 12 months, and over 90 percent 

14 were seeking employment within their fields and 

15 found, as I said, 95 percent found employment in 

16 their related fields within 12 months.

17 LIM College's most recent cohort 

18 default rate, for two-year, the cohort, the 

19 default rate was 5.2 percent; our 2009 

20 three-year rate is 7.7 percent, both well below 

21 the national averages and significantly below 

22 the averages for proprietary institutions. Our 

23 graduation rate for freshmen is 54 percent and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 for transfer students is 72 percent.

2 It is against this background and 

3 with a 74 year history of successfully educating 

4 students and preparing them to become gainfully 

5 employed in the retail fashion and related 

6 industries that we respectfully share our 

7 ongoing concerns regarding gainful employment 

8 provisions that the Department is continuing to 

9 propose further regulation for.

10 Let me first say we agree with the 

11 sentiments expressed by Representatives Kline, 

12 Foxx, Andrews, and others in their letter of 

13 April 18th to Secretary Duncan urging him to 

14 abandon what has amounted to costly failed 

15 regulatory efforts in both gainful employment 

16 and state authorization.

17 At LIM College, we have 

18 conservatively determined that we have spent at 

19 least 1500 man hours over the last three years 

20 working to understand and comply with the 

21 gainful employment rules. Yet, in spite of the 

22 tremendous added burden placed on affected 

23 institutions, an outpouring of public comments 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 addressing the flawed nature of these 

2 regulations, significant congressional 

3 opposition, and court rulings that have severely 

4 limited the ability of the Department to move 

5 forward on these already promulgated 

6 regulations, the Department proposes to 

7 essentially go back to the drawing table.

8 Given the rapidly changing 

9 environment of higher education in the U.S. and 

10 many other pressing national education policy 

11 concerns, many of which that have been discussed 

12 today, it appears quite stubborn, and perhaps 

13 foolhardy, of the Department to continue to 

14 devote public dollars in pursuing this agenda.

15 Perhaps a well-developed, 

16 thoughtful placement template for employment 

17 data that all colleges could adhere to might be 

18 better spent time. As I know, that is an agenda 

19 that has continued to be delayed by the 

20 Department.

21 Given your persistence in doing so, 

22 and thus, this hearing, we feel compelled to 

23 continue to comment as part of the public record 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 on this matter of gainful employment.

2 HEA language originally focused in 

3 a limited way on the programs and schools that 

4 were identified as those that needed to result 

5 in gainful employment in a recognized 

6 occupation, primarily in the vocational and 

7 certificate programs, technical education, and 

8 other short-term non-degree programs.

9 HEA further changed the language to 

10 separate the definition, as many of us know, the 

11 designation of schools, into vocational and 

12 institutions of higher ed. Congress in 1992 

13 amended the HEA to replace that vocational 

14 school categorization with two designations, 

15 proprietary institutions of higher ed, defined 

16 as for-profit, and postsecondary vocational 

17 institutions as those that the GE rule applied 

18 to.

19 Yet, in the application of the GE 

20 rules, the Department seems to ignore this 

21 definition change and continues to describes all 

22 degree programs of proprietary institutions as 

23 somehow vocational in nature, as evidenced by 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the revised version of the PPA which required 

2 schools, proprietary institutions, 

3 recertifying or making any other updates, to 

4 register all existing degree programs and any 

5 new degree programs under the designation 

6 "vocational".

7 The Department seems to be ignoring 

8 the recognition by Congress that proprietary 

9 institutions offer instruction and programs of 

10 study that span all academic areas and degree 

11 levels, and that there is nothing inherent in 

12 their for-profit status that makes these 

13 programs vocationally-oriented.

14 The Department's 2010 NPRM refers to 

15 the GAO findings that, quote, 

16 "Occupation-specific training programs that 

17 lacked a general education component made 

18 graduates of for-profit proprietary 

19 institutions less versatile and limited their

20 opportunities for employment outside their 

21 field." I believe the GAO was focusing their 

22 attention on vocational and technical 

23 certificate programs and other non-degree 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 programs.

2 Unfortunately, the Department 

3 appears to be assuming this assertion applies to 

4 all degree programs at proprietary institutions 

5 and ignores the fact, again, that a large number 

6 of colleges and universities in this sectors 

7 primarily offer degrees, or exclusively offer 

8 degrees, at associate, baccalaureate, and 

9 master's or professional degree levels, and 

10 have --

11 MS. MAHAFFIE: Could you wrap up 

12 your comments, please?

13 MR. BARTO: Okay. And have 

14 comprehensive liberal art core curriculum 

15 requirements.

16 I will just briefly also comment 

17 with regard to Judge Contreras' ruling in 

18 relation to the disclosure of gainful employment 

19 information. He stated that the government may 

20 require the commercial disclosure of purely 

21 factual and uncontroversial information as long 

22 as there is a rational justification for the 

23 means of disclosure and is intended to prevent 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 consumer confusion.

2 We would posit that, in order to 

3 ensure equal levels of transparency and avoid 

4 further consumer confusion, the application of 

5 GE disclosures and any renewed GE metrics must 

6 be uniform across all degree programs/areas of 

7 studies regardless of institution type. 

8 Otherwise, they could violate this principle.

9 We would also, lastly, posit that, 

10 if the Department continues to move forward in 

11 promulgating regulations in this area, that it 

12 be limited to the narrow scope that was intended 

13 with the original regulation, and that was a 

14 focus on certificate and vocational or technical 

15 programs.

16 Thank you very much.

17 MS. MAHAFFIE: George Pruitt.

18 DR. PRUITT: Good afternoon.

19 I am George Pruitt, President of 

20 Thomas Edison State College of New Jersey.

21 Are you the guys, the Department 

22 representatives or your colleagues? You are 

23 it? You drew the short straws?
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 MS. MAHAFFIE: There are some other 

2 Department people in the audience.

3 DR. PRUITT: Can you raise your 

4 hands if you are here from the Department? I 

5 just want to see who you are.

6 (Show of hands.)

7 Okay. Good. So, you guys drew the 

8 short straw. Okay.

9 (Laughter.)

10 All right. I just wanted to know 

11 who I am talking with.

12 I am going to be brief. My 

13 intention is to speak to four points in five 

14 minutes and give you some of the time back.

15 I want to say that I know that the 

16 people, the staff of this Department, I know them 

17 to be honorable, good people, decent people of 

18 goodwill, professional educators that work very 

19 hard at serving the public interest. And I want 

20 to say that upfront.

21 I also want to say that you got it 

22 wrong this time, guys, on the institutional 

23 integrity rules, and we need to find a way to fix 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 them.

2 I want to speak specifically to two 

3 of the regulations and, then, two contextual 

4 comments. The first is on the credit-hour rule. 

5 Credit hour, since Bologna, has been a measure 

6 of academic substance and has never been a 

7 measure of seat time or clock hours or input. It 

8 is a fairly disruptive and un-useful distortion 

9 of that concept to link it to seat time and credit 

10 hour.

11 I believe that this is a matter that 

12 is appropriately left to the faculty and 

13 institutions at the campuses. There should not 

14 be a federal intrusion in everything in the 

15 academy, and I know that is a complaint that you 

16 guys hear all the time, that nothing should be 

17 a federal purpose. Well, there are things where 

18 there is a federal purpose, but credit hours 

19 should not be one of them. And I urge you to 

20 repeal that regulation in its entirety.

21 As to the state authorization, I 

22 have served in advisory capacities to four 

23 Secretaries of Education under three Presidents 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 of both parties, and I have never seen a more 

2 destructive regulation promulgated than the 

3 state authorization rule. I know that was not 

4 the intent. I understand the purpose of it. 

5 But the impact of it has serious consequences for 

6 our country, and we need to revisit it.

7 I have heard other speakers refer to 

8 the work of the State Reciprocity Agreement, or 

9 SARA. I encourage you to read it and pay 

10 attention both to its spirit, but also its 

11 language. I think the quickest way to fix this 

12 thing is to adopt the definition of physical 

13 presence contained in the SARA report. If you 

14 were to do that, 98 percent of the controversy 

15 would go away.

16 The question in your notice is, how 

17 does a state regulate distance education from 

18 colleges and universities that have no physical 

19 presence in the state? The answer is you don't. 

20 You have to rely on the goodwill and offices of 

21 the state in which the institution is licensed 

22 and you have to rely on the credibility of the 

23 accrediting bodies that accredit it.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 I hope you saw the story about the 

2 lawsuit that Barry University has filed against 

3 the State of Tennessee. This is just the 

4 beginning of thousands of such disruptors. For 

5 those of you that are looking puzzled, Barry 

6 University is a private institution in Georgia. 

7 It has no presence in the State of Tennessee, but 

8 it put a billboard up in Tennessee advertising 

9 its presence. The State of Tennessee said, 

10 "You've got to get licensed in Tennessee." 

11 Barry is suing Tennessee. I think a lot of 

12 people will be willing to join that suit. But 

13 we are going to have countless disruptions like 

14 that which are just counterproductive and 

15 disruptive if we don't fix that.

16 The two contextual things. I know 

17 this Department well. The Department needs to 

18 change its culture. The culture of the 

19 Department is regulatory compliance, template, 

20 and conformance.

21 One of the values of our system is 

22 the diversity of it. There are diverse 

23 institutions of high quality that deal with 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 diverse student bodies and produce wonderful 

2 results. You cannot create a template and have 

3 a compliance strategy without hurting the 

4 diversity of those institutions. If we do that, 

5 we will hurt public higher education in our 

6 country.

7 So, we need to change the culture. 

8 We need to have a culture in the Department that 

9 enforces accountability, but also supports 

10 innovation.

11 President Obama called for this 

12 nation to resume its role as the No. 1, for our 

13 citizens to be No. 1 in the world in the 

14 percentage of our students with college 

15 educations.

16 There was a Commission formed to 

17 respond to the President's call. I had the 

18 privilege of serving as one of the Vice Chairs 

19 of that Commission. I want the President to be 

20 successful. I want his call to the country to 

21 be successful. I want this Department to play 

22 a role in helping that happen. What I don't want 

23 is to have the Department to become an impediment 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 in achieving the President's objective.

2 Finally, I didn't come here to curse 

3 the darkness; I came here to light a candle. 

4 There is a group of institutions that came 

5 together, public institutions, Thomas Edison 

6 State College, Empire State College, the 

7 University of Maryland-University College, 

8 Charter Oak College, Troy State College in 

9 Alabama. These public institutions were 

10 created to serve adult learning, were pioneers 

11 in distance education, prior learning 

12 assessment, military education.

13 And our record of quality and public 

14 service is unimpeachable. We are exemplars and 

15 field leaders in this area, and we honestly and 

16 openly come to you with our hand to say, "Let us 

17 help you." We want to work with you, figuring 

18 out rational, reasonable, effective solutions 

19 to the abuses that you are trying to respond to 

20 and the problems you are trying to solve.

21 We invited two other institutions to 

22 join us, Excelsior University and Western 

23 Governors. They are not public institutions, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 but they were created by the public. Excelsior 

2 was created by the Regents of New York, and 

3 Western Governors was organized by six governors 

4 to try to do some very important things.

5 So, we want to help you. You have 

6 been beat up a lot. I have been a part of beating 

7 you up, not because I don't love you, but because 

8 I want you to do better.

9 (Laughter.)

10 So, we stand to assist you in any way 

11 we can. And I wish you well in this because the 

12 consequences in states are very high.

13 Thank you.

14 MS. MAHAFFIE: Marie Cini.

15 DR. CINI: Good afternoon.

16 When you are short, you have to just 

17 take things into your own hands.

18 (Laughter.)

19 Good afternoon.

20 I am Marie Cini, Provost for the 

21 University of Maryland University College. I 

22 want to thank you for the opportunity to address 

23 you today.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 And I intend to speak briefly about 

2 the need to adjust the traditional measure of 

3 academic achievement, the credit hour, which is, 

4 at best, an indirect measure of academic 

5 achievement that equates the number of hours a 

6 student spends in a classroom with the level of 

7 learning that he or she attains.

8 Since 1947, UMUC has served adult 

9 students who seek to attain a college or graduate 

10 degree, but who did not have the means to do so 

11 or who would not finish or could not finish a 

12 traditional campus-based experience. With 

13 94,000 students worldwide enrolled in programs 

14 of study and a median age of 31, our students are 

15 adults who have amassed significant knowledge 

16 and experience and who juggle family, career, 

17 community, and education.

18 Time in a classroom does not 

19 necessarily equate with a certain level of 

20 learning achieved. And UMUC respectfully 

21 requests that the Department consider a change 

22 in how student learning progress is measured to 

23 include direct learning assessments and that the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 federal financial aid rules be overhauled to

2 align this new model of measuring academic 

3 achievement. And there are steps already 

4 moving in that direction, as we know.

5 Even for traditional age students 

6 who begin college immediately following high 

7 school and who are seeking and can afford a 

8 traditional campus experience, the idea that all 

9 college-level learning occurs in a classroom has 

10 been challenged for some time now, even for 

11 traditional-age students with limited life 

12 experience.

13 Many students learn a tremendous 

14 amount through internships, service learning, 

15 work study, and extracurricular leadership 

16 activities, such as writing for the school 

17 newspaper, heading student political 

18 organizations, or organizing a volunteer 

19 activity.

20 But, for adult students, the idea 

21 that all college-level learning occurs only in 

22 the classroom is even more unfounded. UMUC's 

23 adult students have learned on the job in a range 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 of career fields, as they raised children, as 

2 they took care of their elders, and as they 

3 improved their communities. This is real world

4 learning, something we hope to prepare our 

5 younger undergraduates for through the 

6 traditional college experience.

7 In addition, UMUC is known for our 

8 service to the U.S. military in Europe, Asia, and 

9 the Middle East. These men and women are 

10 leading very adult lives, even if they are in the 

11 18-to-22-year-old range. Their exposure to the 

12 world, to new cultures, to the ethics of life and 

13 death decisions, to the diversity of their 

14 peers, all contributes to learning that many 

15 traditional age undergraduates only learn from 

16 books.

17 As you know, the credit hour was 

18 established over 100 years ago by the Carnegie 

19 Foundation, primarily as a measure of workload, 

20 so that faculty could receive appropriate credit 

21 for retirement funding. It was never intended 

22 to measure student learning achievement.

23 Learning needs to be active, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 interesting, and applicable to the individual's 

2 experience. It does not matter where the 

3 learning occurs as long as the conditions for 

4 learning are met.

5 We all know many learned individuals

6 who have no college degree because they read 

7 veraciously, they discussed current events with 

8 family and friends, and they exposed themselves 

9 to new knowledge in the greater world.

10 And with a tip to Dr. Pruitt, Thomas 

11 Edison, one of the most innovative and 

12 influential individuals in our recent history, 

13 had no college degree. His learning was on the 

14 job, in his laboratory, and with others who 

15 shared his passions.

16 Similarly, the number of hours and 

17 the methods to achieve learning are secondary to 

18 its demonstration. The only measure by which we 

19 should trust that a person has achieved a certain 

20 level of learning is its demonstration.

21 An accounting student should be able 

22 to explain a balance sheet. A cyber security

23 major should be able to prevent cyber-attacks to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 an organization's computer network. A 

2 communications major should be able to develop 

3 a communication plan for a company.

4 Things are changing rapidly. The 

5 Carnegie Foundation is currently reexamining 

6 the Carnegie unit. The Department of Education 

7 has recently allowed for a process whereby 

8 federal financial aid can be granted for direct 

9 assessment achievement, rather than time spent 

10 in class.

11 Now is the time to take a hard look 

12 at the applicable regulations to see how else we 

13 can assess an individual's learning instead of 

14 counting time that she spends in the classroom 

15 as the only measure.

16 Thank you.

17 MS. MAHAFFIE: Thank you.

18 Russell Kitchner.

19 MR. KITCHNER: Good afternoon.

20 I am Russell Kitchner. I am the 

21 Vice President for Regulatory and Government 

22 Relations at American Public University System. 

23 We are a for-profit university that was founded 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 in 1991 by a Marine Corps major specifically to 

2 serve the military, utilizing, taking advantage 

3 of the technology of the day to serve the 

4 educational interests of military students 

5 around the world who otherwise would be 

6 restricted from educational opportunities 

7 simply because of their duty stations and the 

8 change in duty responsibilities.

9 We currently serve 70,000-plus 

10 military students and veterans around the world, 

11 plus another 40,000 or so civilians. And we 

12 think that we do a very good job of it. So does 

13 the Sloan Foundation. So does the Gates 

14 Foundation. But not everyone is in agreement on 

15 that, and that is part of the reason that we are 

16 here, and that is part of the reason the 

17 Department of Education determined a number of 

18 years ago to establish some program integrity 

19 rules. They related to how institutions of 

20 higher education perform.

21 I had made a note to myself, when I 

22 signed up for one of these in the future, not to 

23 follow the President of Edison State. The man 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 said everything I was going to say, and said it 

2 well. That said I have five minutes. So, I am 

3 going to take them.

4 There are two topics that are close 

5 to our heart at this point. One of them is state 

6 authorization for programs offered through 

7 distance education and correspondence 

8 education. And the second is the matter of 

9 gainful employment.

10 Regarding state authorization, 

11 while the deadline for compliance recently has 

12 been moved back a year, my plea is simply that, 

13 whenever this provision is fully implemented, 

14 that all of higher education be expected to 

15 operate according to a common set of standards 

16 and practices that lack any substantive 

17 differentiation between sources of 

18 institutional funding.

19 In this regard, to the extent that 

20 the Department has the prerogative to mandate 

21 that the individual states establish and 

22 implement policies related to the 

23 certification, authorization, and/or approval 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 of distance education institutions, I would 

2 respectfully ask that the Department further 

3 stipulate that those state provisions be void of 

4 any regulatory distinctions based solely on 

5 funding models.

6 Furthermore, such state provisions 

7 should not be overly burdensome, either in terms 

8 of financial investment or regulatory 

9 complexity. The current regulatory landscape 

10 in this regard reflects a wide range of 

11 state-based initiatives, some of which, 

12 frankly, suggest questionable practices or 

13 ancillary objectives.

14 In particular, the practice of 

15 establishing measures ostensibly designed to 

16 protect the interests of residents who choose to 

17 take courses online from out-of-state 

18 institutions, while not invoking any such 

19 consumer protection prerogatives regarding 

20 residents who cross state lines to enroll in 

21 brick and mortar institutions, appears to be on 

22 its face a capricious exercise and somewhat 

23 specious reasoning.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 The Department is well positioned, 

2 in my opinion, to provide useful guidance and 

3 appropriate guidelines in this regard. And I 

4 believe institutions and state agencies alike 

5 would welcome its engagement in this context.

6 On the matter of gainful employment, 

7 bipartisan congressional voices indicated 

8 nearly a year ago that they would welcome the 

9 option of working with the Secretary of 

10 Education and the Department in an effort to 

11 incorporate the spirit of institutional 

12 accountability that is inherent to gainful 

13 employment, and to do so in the context and 

14 during the process of the higher education 

15 reauthorization.

16 Having both the Congress and the 

17 Department devoting time and resources and 

18 duplicative efforts or, worse, conflicting 

19 efforts does not appear to serve any public 

20 interest. And moreover, that approach would 

21 likely further taint the already divisive 

22 political environment associated with 

23 institutional accountability, this plea for the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Department to defer to HEA reauthorization 

2 notwithstanding.

3 If it is determined to move forward 

4 in an effort to plant its own flag on the matter 

5 of postgraduate employment, I would 

6 respectfully recommend that it do so with a 

7 corresponding willingness to avoid recasting 

8 higher education as the simple pursuit of a 

9 paycheck.

10 Absent an institutional commitment 

11 to programs that are vocation-specific, I do not 

12 believe that American higher education was ever 

13 intended to be an exercise in preparing for 

14 gainful employment. The Department's past 

15 practice of considering proprietary higher 

16 education to be synonymous with career education 

17 does not reflect the reality of the whole cloth 

18 of the for-profit community, nor does it do 

19 justice to the thousands of students whose 

20 academic pursuits at for-profit institutions is 

21 substantively identical to those being pursued 

22 at traditional not-for-profit institutions.

23 In both contexts, the attainment of 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 an associate's or baccalaureate degree 

2 represents an individual journey of 

3 intellectual enlightenment and an expansion of 

4 both personal and cultural knowledge. In short, 

5 a personal preparation for a meaningful life 

6 with employment and career considerations being 

7 singular dimensions of that life, but not the sum 

8 total of its value or its purpose.

9 I will close with a final comment. 

10 The American Public University System has a 

11 longstanding commitment to providing access to 

12 high-quality higher education, and it can point 

13 to a correspondingly enviable record of success 

14 in that regard. Our interests are congruent 

15 with those of the Department. And in making 

16 that statement, I am also petitioning for 

17 internal consistency in matters of departmental 

18 policies and their supplement implementation.

19 Whatever policy initiatives 

20 associated with the concept of gainful 

21 employment, as the term has been or in the future 

22 may be defined by the Department, should be 

23 applied equally at all higher education 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 institutions, irrespective of the funding 

2 model.

3 Policies ostensibly designed to 

4 measure and ensure the quality and integrity of 

5 educational options themselves lack integrity 

6 if they incorporate discriminatory standards.

7 As a beneficiary of not-for-profit 

8 higher education, I expect my alma mater to be 

9 willing and able to demonstrate the same 

10 attributes of quality and integrity for which 

11 for-profit institutions are held.

12 In the context of an environment 

13 dominated by the somewhat ungainly concept of 

14 gainful employment, anything less than a level 

15 playing field is politically disingenuous and 

16 socially inequitable.

17 I thank you for the opportunity to 

18 speak with you.

19 MS. MAHAFFIE: Sophia Zaman.

20 MS. ZAMAN: All right. I like what 

21 the sister said before me. I am pretty short. 

22 So, I have got to take the microphone off.

23 So, good afternoon.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 First, I would like to thank the 

2 Department for initiating the negotiated 

3 rulemaking process and allowing our 

4 organization to provide comments in today's 

5 hearing.

6 My name is Sophia Zaman, and I am the 

7 Vice President of the United States Student 

8 Association. We are the nation's oldest and 

9 largest student-run, student-led organization, 

10 representing over 4 million undergraduate, 

11 graduate, and professional students across the 

12 country.

13 We fundamentally believe that 

14 education is a right and have identified several 

15 recommendations around making college more 

16 affordable and accessible. Some of the areas to 

17 address in a negotiated rulemaking process 

18 include:

19 No. 1, financial literacy. 

20 Oftentimes, we hear from students that loan 

21 documents are pages and pages long with language 

22 that is difficult to comprehend in its entirety. 

23 Taking out a loan is one of the biggest financial 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 decisions a student will make upon entering 

2 college. We believe that the Department should 

3 facilitate a partnership with states and 

4 institutions of higher education to provide 

5 financial literacy support for students as well 

6 as addressing college affordability. This is a 

7 problem the federal government cannot solve 

8 alone.

9 Secondly, TRIO and Pell Grant 

10 programs. We have seen large reductions in the 

11 federal TRIO program, and USSA believes that 

12 there needs to be an increase from its current 

13 funding level. TRIO programs are geared toward 

14 serving students from under resourced

15 communities, oftentimes students of color, 

16 providing them with a pathway to higher 

17 education.

18 Additionally, recent changes in 

19 eligibility for the Pell Grant program will 

20 limit low-income, minority students from under 

21 resourced communities from completing a higher 

22 education degree. This poses a large problem 

23 for many students across the country who rely on 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the grant to afford a college education.

2 For example, a former University of 

3 California student, Karina Cyprien, was 

4 separated from her parents for over a decade and 

5 was raised by her grandmother. Under current 

6 regulations, Karina was not eligible for student 

7 aid because the Free Application for Federal 

8 Student Aid, or FAFSA, only considered her 

9 parents' income, despite the fact that she was 

10 raised by her grandmother. We need the 

11 Department to expand access for the neediest 

12 students and families across the country.

13 Thirdly, relief for current 

14 borrowers. USSA is concerned about the growing 

15 number of graduates who are unable to pay their 

16 student debt. Student debt in the U.S. 

17 currently stands at approximately $1.1 

18 trillion. We believe that the expansion of the 

19 Income-based Repayment Program, loan 

20 modification, and refinancing options can help 

21 ease the burden for existing borrowers with 

22 unmanageable levels of debt.

23 Fourthly, gainful employment. 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 USSA appreciates the efforts the Department has 

2 taken to defend the rules in the courts. Like 

3 many other groups here today, we are urging the 

4 Department to provide a strong gainful 

5 employment rule to ensure career education 

6 programs receiving federal funding do not 

7 consistently leave students with debts they 

8 cannot pay.

9 And finally, unemployment for 

10 recent graduates. Unemployment rates for 

11 college graduates remain very high. This is an 

12 issue we look forward to working on with Members 

13 of Congress, and we hope that the Department can 

14 play a role in urging Congress to address this 

15 issue as quickly as possible. Our students are 

16 very eager to contribute and participate in our 

17 country's economic recovery.

18 USSA recognizes that, in addition to 

19 student debt relief, there must be adequate jobs 

20 available that enable students to deal with 

21 their debt. For instance, under IBR, if a 

22 borrower is unemployed, he or she will owe zero 

23 dollars per month. That is neither beneficial 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 for the borrower nor the federal government. 

2 Creating jobs for graduates is just as important 

3 as providing federal relief for borrowers with 

4 unmanageable student loan debt.

5 So, we understand that the 

6 jurisdiction to address these issues may fall 

7 largely within lawmakers on Capitol Hill. 

8 However, we look forward to working with the 

9 Department throughout the negotiated rulemaking 

10 process to strengthen regulations and to make 

11 strong recommendations to Congress.

12 Thank you for your time.

13 MS. MAHAFFIE: Paul Shiffman.

14 MR. SHIFFMAN: Good afternoon.

15 I am Paul Shiffman, Executive 

16 Director of the President's Forum at Excelsior 

17 College in Albany, New York, and I appreciate 

18 this opportunity to speak with you today.

19 The President's Forum at Excelsior 

20 College, now in its 10th year of operation, is 

21 a collaboration of accredited national adult 

22 serving institutions and programs which have 

23 embraced the power and potential of online 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 education. The mission of the President's 

2 Forum is to advance the recognition of 

3 innovative practice and excellence in online 

4 learning.

5 Today I would like to address an 

6 issue of concern to the entire distance 

7 education sector, that being state 

8 authorization and the Title IV requirements for 

9 institutional compliance.

10 As a result of the Department's 

11 continued emphasis on state authorization, 

12 institutions must address an expanding 

13 patchwork of state statutes and rules regarding 

14 the authorization and regulation of higher 

15 education, most of which generally date to a 

16 period when instruction occurred only 

17 physically on a campus within state boundaries.

18 To complicate matters, no two states 

19 dictate the same approach to authorizing and 

20 regulating online higher education providers. 

21 Today institutions require an efficient, 

22 cost-effective, and expeditious way to receive 

23 state approval for multiple states, and in the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 case of my institution, from all states and 

2 territories.

3 And states need an efficient process 

4 to assure that institutions offering higher 

5 education to their residents are providing a 

6 quality program and that students are protected 

7 from substandard practices.

8 With the support of the Lumina 

9 Foundation for Education, the President's 

10 Forum, the Council of State Governments, the 

11 Commission on the Regulation of Postsecondary 

12 Distance Education, and the four existent 

13 Regional Higher Education Compacts -- the 

14 Midwestern Higher Education Compact, the New 

15 England Board of Higher Education, the Southern 

16 Regional Education Board, and the Western 

17 Interstate Commission for Higher 

18 Education -- have developed an effective 

19 framework to simplify and streamline the process 

20 for authorizing online degree programs that 

21 operate across state lines.

22 The State Authorization Reciprocity 

23 Agreement, SARA, a voluntary approach for both 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 states and institutions, was jointly drafted by 

2 these organizations. The State Authorization 

3 Reciprocity Agreement, or SARA, is being 

4 advanced by all of the leadership organizations 

5 that represent the breadth of American higher 

6 education.

7 The SARA agreement meets the 

8 Department's Title IV agenda to have 

9 institutions remain in full compliance with 

10 state law where they serve students. It 

11 encourages states and institutions to work 

12 together to address the existing patchwork of 

13 regulation across states while strengthening 

14 the state's consumer protection role in 

15 shielding students from unfair or illegal 

16 practices. And it is intended to streamline the 

17 regulatory process and increase access to higher 

18 education while effectively protecting 

19 education consumers.

20 The Department has indicated that it 

21 is willing to encourage and recognize interstate 

22 reciprocity for authorization agreements for 

23 the purposes of verifying institutional 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 compliance with state law for participation in 

2 Title IV federal student financial aid programs.

3 I strongly urge the Department to 

4 encourage and to recognize state authorization 

5 reciprocity agreements as a means to satisfy the 

6 requirements for institutional participation in 

7 Title IV student financial aid programs, and 

8 that the principles and structure for 

9 reciprocity embodied in the state-centered, 

10 voluntary SARA approach be incorporated within 

11 any forthcoming regulatory initiative for state 

12 authorization.

13 I am furnishing copies of the final 

14 report of the Commission on the Regulation of 

15 Postsecondary Education, which is a joint effort 

16 amongst the groups I have mentioned, called 

17 "Advancing Access through Regulatory Reform," 

18 that details both the principles and the 

19 structure for the state authorization 

20 reciprocity agreement. I hope that you will see 

21 fit to include this in any considerations that 

22 you have in the future.

23 Thank you.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 MS. MAHAFFIE: Thank you.

2 Aristea Williams.

3 MS. WILLIAMS: Good afternoon, and 

4 thank you to the Department for allowing us to 

5 speak today.

6 My name is Aristea Williams, and I 

7 am here to greet you on behalf of Johns Hopkins 

8 University, which sounds really great, but I am 

9 here on behalf of the Johns Hopkins University 

10 School of Education.

11 We are all from different 

12 associations and different places, but one thing 

13 that we all have in common is that we all had a 

14 teacher. I am here to represent the teachers.

15 At the School of Education at Johns 

16 Hopkins University, we have a lot of people who 

17 are changing careers. We have a lot of people 

18 who are straight from undergrad, but we have a 

19 lot of people who have excelled in their industry 

20 and now want to reach and teach a lot of our 

21 underrepresented groups, like our Baltimore 

22 programs and our D.C. programs.

23 I want to offer for consideration 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the change in the PLUS Loan Program. A lot of 

2 our students, because they did change careers or 

3 maybe because of the recession, they took a hit 

4 on their credit. So, we get calls all the time 

5 that we are like, "Okay, you might need this, but 

6 you may need to also apply for a PLUS Loan." And 

7 sometimes that just stops. So, it very much 

8 adversely affects the people who are trying to 

9 help the people who are trying to make the future 

10 better.

11 Also, it is not one of the topics 

12 that is addressed, but I want to make sure that 

13 through the process of negotiated rulemaking 

14 that we push to keep the TEACH Grant Program how 

15 it is. A lot of our students go into special 

16 education programs, and it is a great 

17 opportunity for us to offer aid in grants that, 

18 hopefully, they will continue in special 

19 education and it won't become a loan. That will 

20 help them to affect our neediest students, a lot 

21 of our students with special education issues.

22 Also, with state authorization, 

23 Johns Hopkins School of Education is expanding 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 our programs nationwide. A lot of our students 

2 who are not able to afford to come to Baltimore 

3 who live in Montana or live in Alabama or other 

4 places would still like to benefit from an 

5 education at the Johns Hopkins School of 

6 Education. We are setting everything up to make 

7 that available for them, but state authorization 

8 is somewhat of a barrier for us to be able to give 

9 a streamlined process and to be able to give them 

10 the certifications that they need for each state 

11 that they plan to teach in.

12 We also offer internship 

13 opportunities with our Baltimore education 

14 scholars that we would like to offer to students 

15 and teachers nationwide, but because of state 

16 authorization, we are not necessarily able to 

17 offer that program.

18 So, just those are the couple of 

19 things that I have on my plate. And next time 

20 you see a teacher, give them a hug because they 

21 are working really, really hard.

22 (Laughter.)

23 Thank you.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 MS. MAHAFFIE: Thank you.

2 Elaine Neely.

3 MS. NEELY: Thank you.

4 Good afternoon.

5 I am Elaine Neely, the Chief 

6 Regulatory Officer for Medtech Colleges. We 

7 have 11 campuses located in the Midwest, the 

8 Southeast, and in the Washington, D.C. area. We 

9 serve approximately 4300 students in allied 

10 health and nursing programs.

11 I would like to thank the Department 

12 of Education for allowing the opportunity to 

13 provide my comments today concerning the 

14 proposed negotiated rulemaking sessions and the 

15 topics to be discussed.

16 As I have been fortunate to be a 

17 negotiator on numerous negotiated rulemaking 

18 panels, I understand -- and the most recent being 

19 the program integrity issues -- I am very 

20 familiar with the process.

21 I would like to encourage the 

22 Department to postpone the proposed negotiating 

23 rulemaking sessions until after Congress has had 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the opportunity to reauthorize the Higher 

2 Education Act. As you know, the Act will expire 

3 at the end of 2013, and the reauthorization 

4 process is expected to be addressed by Congress 

5 within the next 18 months.

6 Based on the timeframe suggested by 

7 the Department for negotiated rulemaking and the 

8 requirements of the master calendar, rules 

9 negotiated by the proposed panels could not be 

10 implemented until July 1st, 2015 at the very 

11 earliest. This timeframe, along with the 

12 timeframe anticipated for the reauthorization 

13 of the Higher Education Act, could make the 

14 rulemaking process proposed useless, as 

15 Congress is likely to address many of the issues 

16 during reauthorization.

17 As you have heard already today, 

18 many Congressman have addressed both the state 

19 authorization and gainful employment 

20 regulations --

21 (Siren outside is interrupting the 

22 presentation.)

23 MS. MAHAFFIE: I will add a minute.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 (Laughter.)

2 MS. NEELY: Okay. Well, I think I 

3 have it under five.

4 As a former negotiator, I know 

5 firsthand about the time and money and effort 

6 which is involved in the negotiated rulemaking 

7 process, and I appreciate all the efforts which 

8 the Department has allocated to this process, 

9 but I respectfully request that you delay the 

10 process and allow Congress to first address 

11 these issues, saving both time and money.

12 As you know, the final regulations 

13 have not yet been issued for either of the most 

14 recent rulemaking sessions. These sessions 

15 include the changes to the student loan process 

16 and to the TEACH Grant Programs.

17 I would like to suggest that, rather 

18 than engage in a new round of negotiated 

19 rulemaking, the Department finalize these 

20 previously negotiated rules.

21 In the event that you wish to proceed 

22 with negotiated rulemaking, renegotiating 

23 gainful employment, state authorization, and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 clock-credit conversion rules will have little 

2 chance of success. During the program 

3 integrity rulemaking process which produced 

4 these rules, the negotiators were unable to 

5 reach consensus, which ultimately resulted in 

6 rules which are difficult to understand and 

7 implement and have caused controversy with 

8 institutions from all sectors of higher 

9 education and, also with state authorizing 

10 agencies.

11 Although repeated attempts have 

12 been made for clarification of the rules, the 

13 Department has not responded to these requests, 

14 leaving the question surrounding these rules 

15 unanswered. Also, two of the rules have 

16 successfully been challenged in court and are 

17 better left to Congress to address during 

18 reauthorization.

19 In the event that you proceed with 

20 the negotiated rulemaking, I suggest you limit 

21 the negotiations to the following topics:

22 First, include negotiations for the 

23 recently-authorized Violence Against Women Act, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 as both consumers and educational institutions 

2 could benefit from a streamlined process for 

3 reporting and disclosures which will be required 

4 by the Act, as well as the Clery Act.

5 Second, address the adverse credit 

6 for PLUS borrowers, as many previously eligible 

7 borrowers are being denied loans based on the 

8 administrative process currently in place for 

9 evaluating the credit ratings of borrowers.

10 And finally, address the issues 

11 surrounding fraud and distance education, in 

12 particular, a collaborative effort between the 

13 Department and educational institutions to 

14 easily identify suspected violators through the 

15 use of technology.

16 In closing, I again want to thank you 

17 for the opportunity to speak today, and I look 

18 forward to working with the Department. I have 

19 limited my talk to five minutes. And if you have 

20 additional information you would like, I would 

21 be glad to clarify.

22 Thank you.

23 MS. MAHAFFIE: Thank you.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Steve Gunderson.

2 MR. GUNDERSON: I am Steve 

3 Gunderson, President and CEO of the Association 

4 of Private Sector Colleges and Universities. I 

5 am here today representing approximately 4 

6 million students and the thousands of dedicated 

7 educators and staff who work at our member 

8 institutions. Our schools provide the full 

9 range of higher education programs to students 

10 looking for career-focused education.

11 Recently, we presented a 

12 comprehensive proposal for HEA reauthorization. 

13 Our proposal focuses on students and positive 

14 student outcomes, centered on three goals: 

15 simplicity, affordability, and transparency. 

16 We call upon both the Department and the Congress 

17 to recognize the need to move in this direction.

18 On behalf of our students and 

19 institutions, we encourage the Department to 

20 consider postponing new negotiated rulemaking 

21 sessions, particularly on the controversial 

22 topics likely to be impacted by reauthorization. 

23 It is our hope that the Department and the
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Congress will work out complementary schedules 

2 for both reauthorization and the regulations to 

3 implement that reauthorization.

4 As the higher education sector seeks 

5 to maximize student service while holding down 

6 cost and confusion, it would be important for the 

7 Department and the Congress to collaborate. In 

8 challenging economic times, all institutions, 

9 you, the Department, and all colleges and 

10 universities should focus available funds on 

11 educating students and not on navigating the 

12 conflicting directions from the Legislative and 

13 Executive Branches.

14 Today none of us can predict what the 

15 House or Senate will do, but I believe it is safe 

16 to predict the focus will be on holding down 

17 costs, simplifying the process for students, and 

18 promoting transparency.

19 Our proposal calls for the 

20 Department to use its current existing authority 

21 for demonstration projects as a means for 

22 innovation in higher education. We strongly 

23 encourage this, recognizing no new regulations 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 are required for such initiatives.

2 If the Department chooses to 

3 proceed, however, we would urge you to carefully 

4 consider improvements in the rulemaking 

5 process.

6 First, implement the 

7 recommendations from the IG's final audit 

8 report.

9 Second, participants selected as 

10 negotiators must represent the viewpoints of all 

11 parties involved in postsecondary education.

12 And third, create more teams to 

13 address fewer issues and have the proper 

14 negotiators for the topics at hand.

15 Allow me to make some specific 

16 reference to some of the proposed topics that 

17 were suggested.

18 The promulgation of state 

19 authorization for programs offered through 

20 distance education or correspondence education 

21 as part of the program integrity rules is an 

22 example of the Department issuing rules that the 

23 negotiating committee was unable to fully 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 discuss because of time constraints and too many 

2 topics before one team. It is a prime example 

3 of rules the Department is issuing that the 

4 Congress may not support.

5 Since the state authorization for 

6 distance education provision was overturned by 

7 the courts, many states and organizations have 

8 taken the time to thoughtfully consider the best 

9 ways to approach this topic, including the 

10 Commission on the Regulation of Postsecondary 

11 Distance Education. Their recommendations 

12 propose a voluntary system of reciprocity with 

13 the states, reflecting existing state and 

14 federal structures.

15 We want to acknowledge our 

16 appreciation of the Department's decision to 

17 delay until 2014 the state authorization rules. 

18 Unfortunately, the guidance does not yet provide 

19 the information about which states are 

20 considered compliant by the Department. We ask 

21 the Department to take on this task and make the 

22 information and departmental decisions on state 

23 compliance public.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 It has been almost two years since 

2 the clock-credit hours rules have been in 

3 effect, and we are still waiting for some 

4 guidance on the issue. At this point, the best 

5 outcome may be for the Department to leave 

6 determinations related to clock and credit hours 

7 to the accreditors who are also working on this 

8 issue with institutions.

9 On the PLUS Loan Program, a more 

10 common-sense approach during the initial review 

11 and approval process could result in 

12 substantially fewer denials and appeals, easing 

13 the burdens on the Department and anxiety for 

14 parents and students. We would encourage the 

15 Department to ensure deserving PLUS Loan 

16 applicants are being carefully considered and 

17 assisted before being denied.

18 I sincerely hope the Department 

19 chooses to spend its current time and resources 

20 working with institutions to help all of us 

21 reduce costs, reduce regulatory burdens, and 

22 advance innovative solutions to help all 

23 institutions serve all our students better.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Thank you for the opportunity.

2 MS. MAHAFFIE: Laura Dunn.

3 MS. BRODKSY: Hi. So, I am 

4 actually not Laura Dunn. I am Alexandra 

5 Brodsky. She was, unfortunately, unable to 

6 make it at the very last minute. So, forgive me 

7 for the full reading, but this is what she had 

8 hoped she would be able to say today.

9 "Good afternoon.

10 "My name is Laura Dunn."

11 (Laughter.)

12 "I am a survivor of campus sexual 

13 assault who filed a Title IX complaint against 

14 the University of Wisconsin-Madison back in 

15 2007. Currently, I am a third-year law student 

16 at the Maryland Carey School of Law, where I am 

17 focusing on victims' rights and education law.

18 "I'm also a member of the IX Network, 

19 a growing national coalition of students working 

20 together to fight sexual violence at schools 

21 across the country, and the founder of 

22 SurvJustice.

23 "In 2011, I lobbied on Capitol Hill 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 for the passage of the Campus SaVE Act. As a 

2 survivor, I spoke behalf of the bill and stood 

3 by while Senator Patrick Leahy for a Senate 

4 Judiciary Committee press conference. I spoke 

5 again in 2013 with Minority Leader Nancy Pelosi 

6 and the House Democratic leadership in support 

7 of SaVE.

8 "This bill enjoyed my support for 

9 one main reason. It bridges the gap between 

10 Title IX and the Clery Act to ensure 

11 comprehensive federal obligations for schools 

12 to address campus sexual violence.

13 "In meeting with key congressional

14 members, I continually pointed out the 

15 significance. The 2011 `Dear Colleague' letter 

16 by OCR set forth progressive standards for 

17 schools to address campus sexual violence in 

18 accordance with Title IX.

19 "However, these standards lacked 

20 the force of law needed to make a difference to 

21 survivors like me. Hence, the Campus SaVE Act 

22 was born.

23 "The Campus SaVE Act has the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 potential to be a powerful tool to ensure 

2 colleges and universities comprehensively 

3 address sexual violence.

4 "My proposal is one the Department 

5 of Education needs to seriously consider: to 

6 create a joint task force to review any complaint 

7 regarding campus sexual violence under both 

8 Title IX and the Clery Act. A joint task force 

9 recognizes the importance of the Campus SaVE Act 

10 as a bridge between Title IX standards and the 

11 existing Campus Sexual Assault Victims' Bill of 

12 Rights under the Clery Act.

13 "This ensures proactive 

14 enforcement, since many victims are filing 

15 complaints on their own without legal guidance 

16 and are unaware of the overlapping federal 

17 obligations to address campus sexual assault 

18 under both Title IX and Clery.

19 "Additionally, it ensures thorough 

20 and consistent reviews and resolutions from the 

21 Department of Education, so schools are clear 

22 about all their federal obligations. Likewise, 

23 it unifies the two independent federal statutes 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 to model for universities the need to address 

2 sexual violence comprehensively, rather than 

3 through disjointed and separated processes.

4 "A joint task force will also 

5 maximize limited resources at the Department of 

6 Education. Since the 2011 `Dear Colleague' 

7 letter, there has been a significant increase in 

8 Title IX complaints, and after the Campus SaVE 

9 Act is enacted, the Department of Education 

10 should anticipate even more.

11 "Between increasing media attention 

12 on campus sexual violence and survivor-led 

13 groups such as the IX Network educating other 

14 students, there will be even more complaints, 

15 given the epidemic of sexual violence on campus.

16 "The Campus SaVE Act empowers the 

17 Clery Act by mimicking Title IX to ensure more 

18 procedural rights for victims. However, unlike 

19 Title IX, the Clery Act has intermediate 

20 sanctions, meaning the Campus SaVE Act will be 

21 a powerful tool to the Department of Education's 

22 hands to levy fines against offending and often 

23 unapologetic universities.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 "For these reasons, the Department 

2 of Education decreed a joint task force as part 

3 of the implementation of the Campus SaVE Act to 

4 ensure its union of the Clery Act and Title IX 

5 obligations addressing sexual violence on 

6 campus.

7 "Thank you."

8 MS. MAHAFFIE: Gail daMota.

9 MS. daMOTA: Hi. My name is Gail 

10 daMota. I represent Education Finance Council, 

11 the association of non-profit and state agency 

12 student loan companies. Our public purpose 

13 mission is to increase postsecondary education 

14 access, affordability, and success.

15 Thank you for the opportunity today 

16 to speak on the topics for negotiated 

17 rulemaking. Ours are going to be focused on the 

18 definition of adverse credit history for the 

19 PLUS Loan Program.

20 EFC requests that, as part of any 

21 discussion to modify the credit criteria of the 

22 PLUS Loan Program, that the Department of 

23 Education also include the reporting of the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 delinquency and default rates for the PLUS 

2 program as well as improve the transparency of 

3 the program through greater disclosures.

4 We believe it is imperative that the 

5 policymakers be aware of the performance of the 

6 existing portfolio before altering the credit 

7 standards for borrowers. Default and 

8 delinquency data can indicate whether the credit 

9 criteria should be eased or tightened. A PLUS 

10 Loan made to a borrower that does not have the 

11 ability to repay may or may not increases college 

12 access for their child, but at what cost to the 

13 family?

14 There are already indicators out 

15 there that are pointing to possible default 

16 problems in this program. One such indicator is 

17 the examination of the student loan debt held by 

18 senior citizens and retirees. The Federal 

19 Reserve Board of New York reported that, by the 

20 end of 2012, older Americans owed $43 billion in 

21 college debt and 12.5 percent of those seniors 

22 were 90 days or more delinquent.

23 In addition, The Wall Street Journal 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 "Smart Money" reported in August of 2012 that 

2 data they obtained from the Treasury Department 

3 revealed that from January through August 6th of 

4 2012 the government had garnished Social 

5 Security payments of approximately 115,000 

6 retirees in an effort to collect past-due 

7 student loan debt. The New York Times reported 

8 that, by the end of September that number had 

9 jumped to 119,000.

10 Social Security garnishments 

11 indicate that that debt is federal. However, 

12 the data does not identify whether it is a PLUS 

13 Loan or a Stafford. Without available default 

14 rate and delinquency data on the PLUS Loan 

15 Program, the Department of Education cannot make 

16 an accurate analysis of the current PLUS credit 

17 criteria, much less make an informed or 

18 intelligent modification to it.

19 These statistics on older federal 

20 loan borrowers are also an indicator that better 

21 disclosures for PLUS Loans are also necessary. 

22 Parents need to understand that the PLUS Loans 

23 do not have the same repayment options as found 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 in the Stafford Loan Program, and the interest 

2 rates and fees are higher. PLUS Loans are not 

3 held to the same transparency and disclosure 

4 standards as private education loans. Yet, in 

5 some cases the PLUS Loan is more costly and less 

6 flexible than other options, such as those 

7 offered by state-based and non-profit student 

8 loan organizations.

9 Parents have the right to fully 

10 understand the risks that are involved with 

11 borrowing under the federal PLUS Loan Program, 

12 and the disclosure and transparency disparity 

13 between federal and private loan program is 

14 unwarranted and should not exist.

15 In addition to our PLUS comments, 

16 EFC plans on submitting written comments to 

17 include a proposal to ease the preferred lender 

18 list rules to allow institutions to better 

19 inform borrowers of more affordable loan 

20 options.

21 Thank you for your time.

22 MS. MAHAFFIE: Thank you.

23 Don Mroz.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 MR. MROZ: Thank you to the 

2 Department of Education for these hearings.

3 My name is Don Mroz, and I am the 

4 Provost and the Dean of the Malcolm Baldrige 

5 School of Business at Post University in 

6 Waterbury, Connecticut.

7 This past year we were fortunate 

8 enough to receive that name of Malcolm Baldrige 

9 for our Business School from the Baldrige 

10 family. As you probably know, our namesake, 

11 Malcolm Baldrige, was a successful business 

12 leader and, of course, Secretary of Commerce 

13 under the Reagan Administration.

14 Through his focus on quality, 

15 leadership, innovation, and integrity, the 

16 National Baldrige Quality Awards were founded. 

17 After receiving the name of Malcolm Baldrige and 

18 in speaking with family members, we found that 

19 one of the beliefs and practices of Mac, as he 

20 was often called, was to try to simplify the 

21 complex. And he was a man of few words, but when 

22 he spoke, people listened. And he was not 

23 afraid to roll up his sleeves and make things 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 happen quickly and efficiently. He also had a 

2 great sense of humor, which I think maybe we 

3 could use a little bit more of in education right 

4 now.

5 I would like to pose that there is 

6 another way to look at the issues being discussed 

7 here today. If our goal is to provide better and 

8 more options to students -- and I believe it 

9 is -- then we need to approach this with a 

10 holistic, consistent way of thinking about what 

11 we are all trying to achieve.

12 Current regulations are unbalanced 

13 in their approach, difficult to understand, and, 

14 of course, difficult and costly to execute. 

15 They also single out certain institutions over 

16 others rather than address the underlying issues 

17 we all face.

18 Our university, which is a small, 

19 for-profit university, does take this all very 

20 seriously, and we generate programs to that end. 

21 We are not publicly-traded. We are not a 

22 mom-and-pop organization. Rather, we are a 120 

23 year old institution that was about to go 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 bankrupt and saved by private equity about eight 

2 years ago.

3 Private-equity-owned schools -- and 

4 there aren't many of us around -- do not take 

5 money out of the institution. Trust me, we 

6 don't have those high salaries that I heard 

7 quoted earlier. Instead, they reinvest the 

8 money into the school.

9 Our university has a now-thriving 

10 main campus and an online program. This school 

11 that was about to go bankrupt has had $40 million 

12 put back into the main campus, renovating 

13 dormitories that were not maintained; built a 

14 new multi-sport field to support our NCAA 

15 Division II teams; hired a team of scholar 

16 practitioners with advanced degrees and more 

17 than 1200 years of collective real-world 

18 experience in their fields; developed new 

19 outcomes-based educational programs; developed 

20 an honors program which now has 20 percent of our 

21 students engaged in it; totally redeveloped 

22 classrooms; established a faculty center, and 

23 continue to upgrade the entire campus. But we 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 have refused to engage in the traditional 

2 college campus arms race to build country club 

3 facilities that do not improve student learning.

4 At the same time, this year we made 

5 the decision to keep our campus tuition at the 

6 2012 tuition levels and had a zero percent 

7 increase in tuition and room-and-board fees, and 

8 have among the lowest five-year tuition increase 

9 rate of any school in our state.

10 We have also built a reputation for 

11 high-quality, truly student focused, online 

12 programs specifically to meet the growing 

13 populations of working adults looking to earn 

14 undergraduate and graduate degree online 

15 programs.

16 In the fall of 2011, we were before 

17 the NEASC Commission for approval and 

18 accreditation of two new master-level degree 

19 programs. Toward the end of the hearing, one of 

20 the Commissioners, who happened to be a Senior 

21 VP of Research from MIT, said, "We all know 

22 you're one of the very best concerning online 

23 programs, and I am wondering how you are helping 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 other universities." You can imagine our 

2 surprise. Since that time, we have been 

3 supporting a number of other not-for-profit 

4 organizations with implementation of online 

5 programs, at their request.

6 The boundaries have changed when it 

7 comes to education. And as it has been 

8 mentioned, it is the adult population where the 

9 growth is for education and for a new 

10 technological environment.

11 It is our belief that students 

12 should have choice. Distance, for-profit, 

13 not-for-profit, community colleges, four-year 

14 institutions, technical schools -- the key 

15 should be quality programming, not where the 

16 student receives their education.

17 Just as all tall people don't play 

18 basketball, all for-profit universities are not 

19 the same. Painting them all with the same brush 

20 and subjecting them to costly, burdensome 

21 regulations is risky at best and irresponsible 

22 and discriminatory at worst.

23 Ninety percent of our students are 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 excluded from IPEDS calculations. So, the data 

2 being used to evaluate us and, also, being shared 

3 by more and more sites is completely misleading 

4 and not at all helpful to the very students it 

5 is meant to inform.

6 We respectfully ask the Department 

7 of Education to take a more balanced approach to 

8 ensure that all students have access to quality 

9 education options in a variety of formats from 

10 an array of colleges and universities.

11 I say all this to ask the Department 

12 to certainly put in guidelines for quality, just 

13 as Mac Baldrige would recommend, but also to not 

14 make blanket statements or regulations 

15 concerning only for-profits, but, rather, hold 

16 all higher education institutions to the same 

17 standards. These include gainful employment 

18 and state-by-state authorization.

19 State-by-state fees and regulations 

20 seem out of control. Or should I say there are 

21 no controls on what the states are now asking 

22 for? Having to meet various state regulations 

23 as they are disparate and very inconsistent is 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 not only expensive, but also very 

2 time-consuming.

3 Thank you, and I look forward to 

4 seeing a common-sense approach to ensuring all 

5 schools support students in their pursuit of a 

6 quality higher education. Thank you.

7 MS. MAHAFFIE: Neil Ridley.

8 MR. RIDLEY: Hello. I am Neil 

9 Ridley from CLASP, Center for Law and Social 

10 Policy.

11 Thank you for the opportunity to 

12 speak today in support of negotiated rulemaking, 

13 and specifically on the gainful employment 

14 issue.

15 Last month we joined over 40 other 

16 organizations in calling on the Administration 

17 to quickly begin rulemaking, so that the 

18 Department can better enforce the statutory 

19 gainful employment requirement for career 

20 education programs. We commend the Department 

21 for including it as one of the additional topics 

22 for the negotiated rulemaking committee to act 

23 on and strongly support its inclusion.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 As our coalition letter pointed out, 

2 a strong gainful employment rule is essential 

3 for curbing abuses in certain career education 

4 programs that routinely leave students with 

5 debts they cannot repay. The Department's 

6 gainful employment metrics, such as the loan 

7 repayment rate and the debt-to-income ratio, 

8 were a sound way to measure how former students, 

9 both completers and non-completers, fare 

10 financially after leaving a program.

11 The program data that the Education 

12 Department published last year demonstrate 

13 precisely why a strong gainful employment rule 

14 is so urgently needed. Sixty-five percent of 

15 the career education programs failed at least 

16 one of three minimal tests aimed at protecting 

17 students, and 5 percent, 193 programs at 93 

18 different for-profit colleges, failed all three 

19 tests.

20 The Institute for College Access and 

21 Success, TICAS, has suggested several ways in 

22 which the Department could largely maintain the 

23 original gainful employment framework while 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 responding to the court's concerns. These 

2 include providing more incentives for 

3 improvement through intermediate consequences 

4 for programs that fail two out of three gainful 

5 employment tests. TICAS also recommends 

6 narrowing the population of students for which 

7 metric data must be collected.

8 We think the TICAS recommendations 

9 make sense as a way to move forward within 

10 existing legal constraints on the important 

11 question of how to effectively enforce the 

12 statutory gainful employment requirement. We 

13 especially support the idea that the enforcement 

14 goal could be met with less data collection by 

15 deeming programs to have met the gainful 

16 employment test if a majority of their students 

17 do not borrow to pay for college. This would 

18 also relieve a large administrative burden, the 

19 regulations imposed on institutions for which 

20 student debt burden is not a significant 

21 problem.

22 Beyond enforcing the gainful 

23 employment requirement, public reporting of 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 employment and earnings outcomes and debt 

2 burdens for career education programs serves 

3 another important purpose. It helps 

4 prospective students and parents make informed 

5 choices about which programs represent the best 

6 value. The stakes are high, given the 

7 skyrocketing cost of college and a 

8 stubbornly-weak job market.

9 For this reason, CLASP supports 

10 collecting employment net earnings and debt 

11 burden information for a wider set of programs 

12 than those subject to the gainful employment 

13 provision of the Higher Education Act. Our 

14 recent paper for the Gates Foundation 

15 initiative, "Reimaging Aid Design and 

16 Delivery," makes a number of recommendations for 

17 improving metrics for higher education, 

18 including expansion of employment and earnings 

19 reporting for occupational programs.

20 This expansion could be 

21 accomplished either by direct data collection 

22 and matching by the federal government or by the 

23 federal government working with the states to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 supplement existing data collection 

2 capabilities.

3 While this broader question of 

4 collecting and sharing higher education 

5 performance data is being sorted out, the 

6 Department, through the negotiated rulemaking 

7 committee, could move forward immediately on a 

8 strengthened gainful employment regulation. 

9 We encourage the Department and the Committee to 

10 do all that they can to address this important 

11 issue.

12 Thank you very much.

13 MS. MAHAFFIE: We are now going to 

14 take a 20-minute break until 2:40.

15 (Whereupon, the above-entitled 

16 matter went off the record at 2:19 p.m. and 

17 resumed at 2:39 p.m.)

18 MS. MAHAFFIE: Terrence Maher. 

19 Did I butcher your name?

20 MR. MAHER: Maher.

21 MS. MAHAFFIE: Maher. Sorry.

22 MR. MAHER: No problem.

23 Good afternoon.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 My name is Terry Maher. I am the 

2 General Counsel to the Network-Branded Prepaid 

3 Card Association, or the NBPCA.

4 The NBPCA is the primary trade 

5 association, and our members include the various 

6 payment networks, the banks or financial 

7 institutions which issue prepaid cards which 

8 hold the underlying funds, balances on the 

9 prepaid card, and which also are responsible for 

10 legal compliance and regulatory compliance with 

11 respect to the prepaid card programs; the 

12 program managers, which are retained by the 

13 banks for purposes of helping to market and 

14 manage the prepaid card programs, as well as the 

15 processors, which are involved in handling the 

16 data that is associated with the prepaid card 

17 account.

18 We appreciate this opportunity to 

19 speak with the committee today. We also will be 

20 submitting written comments with the Department 

21 on the negotiated rulemaking.

22 Network-branded prepaid cards are a 

23 convenient and safe means for consumers to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 access funds with pricing that is in many cases 

2 less than that for similar financial tools.

3 Over the past two years, there have 

4 been several studies where prepaid cardholders 

5 have expressed significant satisfaction with 

6 their prepaid cards as well as with the fee 

7 structures that are associated with their 

8 prepaid card programs. And there have been 

9 other studies which show that the cost that the 

10 consumer incurs in connection with having a 

11 prepaid card account is often less than the same 

12 cost for maintaining a low balance checking 

13 account, because, again, a lot of banks are 

14 requiring fairly high deposit amounts or fairly 

15 high transaction activities to waive monthly 

16 fees, and so forth, as well as those consumers 

17 who don't have a bank account, and they are 

18 incurring fees for check-cashing, purchase of 

19 money orders, and also the cash and carry. They 

20 don't have the safety of having their funds in 

21 a financial institution.

22 Prepaid cards bear the logo of one 

23 of the payment networks, which includes American 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Express, Discover, MasterCard, Visa. While 

2 they in many ways look or are similar to a 

3 checking account or to a debit card that is 

4 associated with a checking account, there are 

5 differences. Unlike credit cards, they are 

6 prepaid. There is no need to go through a credit 

7 application process. There are no subsequent 

8 payments required in connection with the 

9 account. You can only spend as much as what is 

10 preloaded into the prepaid card account, and you 

11 avoid the pitfalls of credit as well as payment 

12 of finance charges.

13 They are also different from debit 

14 cards. We have heard a lot of talk about debit 

15 cards today. A debit card is usually tied to a 

16 particular consumer account, such as a 

17 transaction account. We refer to them as a DDA, 

18 or a Demand Deposit Account, a checking account.

19 And in a prepaid card account, the 

20 funds are deposited into a pooled account at the 

21 financial institution which issues the card, and 

22 they qualify for FDIC pass-through deposit 

23 insurance to the full amount available to the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 cardholders. And the cardholders do not incur 

2 NSF or overdraft fees because they can't 

3 overdraft their accounts. In fact, we are not 

4 aware of any prepaid card programs associated 

5 with campus cards which are assessing any type 

6 of overdraft or negative balance type of fees in 

7 connection with their prepaid cards for their 

8 campus cards.

9 Prepaid cards are issued by 

10 financial institutions, and they could be used 

11 by students to pay for purchases at the 

12 point-of-sale or online -- and we all know how 

13 important that is today -- to pay bills and to 

14 access cash at ATMs or even cash back at the 

15 point-of-sale that is frequently available from 

16 various retailers.

17 The financial institutions that 

18 issue prepaid cards are highly regulated. They 

19 are banks. You know, it is not an unbanked 

20 entity. And they are subject to the same types 

21 of consumer protections as are associated with 

22 a Demand Deposit Account. And in fact, the 

23 Treasury Fiscal Services Rule requires that, if 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 you are going to receive federal funds into a 

2 prepaid card account, you have to have 

3 pass-through deposit insurance available and 

4 consumer protections that are equivalent to 

5 those of Regulation E issued by the Federal 

6 Reserve Board.

7 They are also subject to FDIC 

8 Deposit Insurance requirements, as well as the 

9 banking regulators and the CFPB's requirements 

10 with respect to unfair, deceptive, or abusive 

11 acts or practices, as well as the privacy 

12 provisions of the Gramm-Leach-Bliley Act, and 

13 all the regulations that would apply under the 

14 Department of Education rules.

15 The banks which issue prepaid cards 

16 also have a significant obligation to oversee 

17 the program managers and processors that they 

18 engage in connection with the management and 

19 operation of their prepaid card programs.

20 The prepaid cards intended for use 

21 on campuses share all the same benefits and 

22 features as other prepaid cards, but offer 

23 significant additional benefits over other 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 types of financial relationships. Campus cards 

2 can serve as an effective financial management 

3 tool, a teaching tool for students, many who have 

4 no or limited experience with managing a bank 

5 account or financial management in general prior 

6 to entering college.

7 Campus cards allow students to place 

8 their wages, their Title IV funds and other funds 

9 into one device or one account, and they can 

10 monitor their balances on a real-time basis 

11 through apps that are available on their 

12 smartphones, text alerts, or other types of 

13 online access. And in fact, they offer a much 

14 broader array of products and services to allow 

15 real-time balances than what you would see with 

16 your traditional checking account.

17 As a result of these features and 

18 benefits, they promote financial literacy and 

19 they can serve as a stepping stone as the student 

20 progresses into further financial 

21 relationships, including mortgages, credit 

22 cards, or automobile loans.

23 The NBPCA does believe that students 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 should make fully-informed decisions about how 

2 they receive their student aid disbursements and 

3 the financial institutions with which they do 

4 business. We support complete transparency of 

5 the terms associated with both campus card 

6 programs as well as the other options made 

7 available to students to receive their Title IV 

8 fund refunds.

9 Ultimately, educational and 

10 financial institutions should market campus 

11 card programs so the students are aware of the 

12 benefits offered under the program, ensure that 

13 the terms of the programs are fully disclosed to 

14 the students and to the parents, and the student 

15 understands that the programs are not their only 

16 option to receive their Title IV fund refunds.

17 Turning to the rulemaking, we 

18 believe that many of the issues that are sought 

19 to be addressed in the rulemaking with respect 

20 to disbursement of Title IV funds, at least as 

21 they pertain to prepaid cards, are already 

22 adequately addressed.

23 And turning to the significant 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 protections required in such free access to 

2 funds underlying the account, as well as 

3 on-campus ATM access, the current regulations 

4 require the protection of prior authorization 

5 with full disclosure. Written authorization 

6 from a student or parent is required to obtain 

7 a campus card. Further, the written 

8 authorization comes only after full disclosure 

9 of all the terms and conditions applicable to the 

10 campus card program.

11 Under the Department's current 

12 regulations, and under Dear Colleague letters, 

13 holders of Title IV funds, including the 

14 providers of campus cards, are basically in the 

15 role of a fiduciary. They have to look out for 

16 the best interests of the student.

17 And the role the fiduciary imposes 

18 on these holders, they hold them to the highest 

19 standard of care possible in administering and 

20 accounting for the Title IV funds. And again, 

21 the funds are held in a financial institution 

22 which is examined by the banking regulators and 

23 subject to FDIC Deposit Insurance.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 As far as the duty to disburse Title 

2 IV credit balances as soon as possible, but no 

3 later than two weeks from the date that the 

4 balance is determined, we believe that, as we 

5 found out with the IRS and some of their tax 

6 refund programs, sometimes when you speed things 

7 up, it creates opportunities for fraud. So, 

8 just be careful with that.

9 The universities, and so forth, need 

10 to make sure that, if you accelerate that 

11 two-week process that it doesn't lead to more 

12 opportunities for fraud in connection with the 

13 programs.

14 We thank you for the opportunity to 

15 provide the Committee with information on this 

16 important topic, and we look to answer any 

17 questions you may have. We also recommend that 

18 you review our comment letter when we submit it.

19 Thank you.

20 MS. MAHAFFIE: Thank you.

21 Karenann Carty.

22 DR. CARTY: Good afternoon, and 

23 thank you for the opportunity to speak today.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 My name is Karenann Carty, and I have 

2 been an educator for 30 years. I have taught 

3 elementary and high school. In higher 

4 education, I have worked at a private, liberal 

5 arts, religious-affiliated college and at a 

6 proprietary college, Monroe College. And I 

7 just sent my younger of two daughters off to 

8 college last year. So, I am all too familiar 

9 with the joys and pitfalls of the college search 

10 and selection process.

11 You should know why I have chosen to 

12 make Monroe College my professional home. One 

13 simple reason, every conversation starts with a 

14 single question: What is best for our students?

15 As a professional, and especially as 

16 a mother, I have found this approach to education 

17 to be comforting, but, unfortunately, uncommon. 

18 I say "unfortunately" because all too often 

19 people in our profession lose track of what 

20 should be our highest priority, our students.

21 This year Monroe College celebrates 

22 its 80th anniversary of its founding. We began 

23 in 1933 in the Bronx by offering seven women the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 opportunity to sharpen their skills to enter the 

2 workplace in the height of the Depression.

3 Today we educate nearly 7,000 

4 students on two campuses in New York. Our main 

5 campus is still in the Bronx, and we have a 

6 thriving residential campus in New Rochelle.

7 Just a few facts about Monroe:

8 Seventy-six percent of our students 

9 receive Pell.

10 Our students' median family income 

11 is $21,000.

12 Monroe's main campus is in the 16th 

13 Congressional District in the Bronx, the poorest 

14 in the nation.

15 While our New Rochelle campus 

16 attracts hundreds of international students in 

17 addition to many students from the Northeast, 

18 the student body on our Bronx campus reflects the 

19 realities of its surrounding community, where we 

20 serve as an anchor institution.

21 Yet, despite the strained 

22 circumstances -- financial, personal, 

23 educational -- our college has had remarkable 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 success. We are ranked No. 1 in New York State 

2 in the number of undergraduate degrees awarded 

3 to Black and Hispanic students. Our graduates' 

4 placement rates are impressive, 85 percent for 

5 2012. We place over 1600 interns each year in 

6 businesses, non-profit organizations, health 

7 facilities, and government agencies.

8 And despite the fact that we are 

9 surrounded, fully surrounded, by public and 

10 independent colleges, thousands of students 

11 choose us as the place to pursue their education. 

12 That is because they can feel the Monroe culture 

13 of care as soon as they walk in the door, and 

14 students know that we are with them every step 

15 of the way.

16 Often, a student faced with a choice 

17 of a program offered at Monroe and at a 

18 neighboring public institution, they choose 

19 Monroe, mostly because of the personalized 

20 service we provide.

21 From the beginning, Monroe has been 

22 actively engaged in the national conversation 

23 surrounding gainful employment. This will be 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the focus of my remarks.

2 The gainful employment effort has 

3 been helpful to the extent that it provided us 

4 with data to craft better strategies for helping 

5 students finance their education, particularly 

6 with respect to student loans.

7 We have taken the opportunity to get 

8 a handle on over-borrowing, to intensify our 

9 student loan counseling, and implement a 

10 comprehensive financial literacy program. 

11 Additionally, data related to the 

12 debt-to-income measure by program has allowed us 

13 to examine our offerings and assure that 

14 students are aware before and during their 

15 studies of certain realities of the industry 

16 they plan to enter.

17 Much less helpful, however, were the 

18 repayment rates. These rates have simply told 

19 us that students of lower-economic status 

20 initially have more difficulty repaying their 

21 loans in the first few years out of college. The 

22 Department's own initial data demonstrated that 

23 almost all colleges serving a majority of 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 low-income students have a low repayment rate.

2 At Monroe College, our low repayment 

3 rate does not reflect the long-term repayment 

4 behavior of our students or the quality of our 

5 education. At 10 years out, our students have 

6 an 82 percent repayment rate.

7 For students, including my elder 

8 daughter who recently graduated, few of them 

9 have an easy time in the first couple of years 

10 out of college in terms of repaying their loans.

11 While the Obama Administration has 

12 taken positive steps to add options, such as Pay 

13 As You Earn and income-based repayment, these 

14 programs designed to assist students just like 

15 ours, the regulation is designed to penalize 

16 institutions when they take advantage of these 

17 options, when students take advantage of these 

18 options.

19 Ultimately, the great flaw of 

20 gainful employment was that it was not developed 

21 from the student's perspective. What do I mean?

22 Any measurement of the quality of an 

23 education should help perspective students and 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 their parents make an informed decision about 

2 college. If that measurement is not applied 

3 across the full range of institutions, then how 

4 could a student make an informed decision?

5 If the measurement is so complex 

6 that a prospective student can't understand it, 

7 then how can it contribute to an informed 

8 decision? If the student has no simple way of 

9 looking at the data, how can they make an 

10 informed decision? They can't.

11 However, there were two specific 

12 tools the Department provided to help us to be 

13 clear and transparent. The shopping sheet 

14 passes the test, right? The shopping sheet is 

15 a simple, standardized way to look at tuition and 

16 cost of attending an institution, graduation 

17 rates, average default rates, and loan amounts 

18 that graduates will incur, all contained on a 

19 single page. That was a worthwhile 

20 accomplishment.

21 The College Scorecard, provided by 

22 the Department to provide better information to 

23 students and parents about college 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 affordability and value, is another helpful 

2 tool. It provides meaningful information and 

3 is simple, clear, and consumer-friendly. 

4 Another worthwhile step.

5 The gainful employment regulatory 

6 process has been a taxing one for us, and we have 

7 spent countless hours trying to understand the 

8 regulations and trying to figure out their 

9 impact. Despite the difficulty, we have felt 

10 that our college, which for 80 years has been 

11 focused solely on doing what is best for our 

12 students, has been heard at the federal level, 

13 and we are enormously grateful.

14 As we enter this new season of open 

15 hearings and negotiated rulemaking, if I were to 

16 offer advice, it would be simply this: before 

17 developing or enacting any new regulations, 

18 start by seeing their impact from the 

19 perspective of the students. Make it easier for 

20 students and families to make an informed 

21 decision about which college will serve them 

22 best. Doing so respects the great strength of 

23 our country's higher education system, its 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 expansive diversity, while also assuring 

2 clarity and transparency.

3 Monroe College would be happy to 

4 work in partnership with the Department on 

5 determining how any future regulations 

6 specifically impact institutions serving a 

7 majority of urban Pell-eligible students.

8 Thank you for the opportunity.

9 MS. MAHAFFIE: Thank you.

10 Diane Rosenfeld.

11 (No response.)

12 Diane Rosenfeld.

13 MS. BRODKSY: She says she is 

14 walking up the stairs right now. We are right 

15 after her.

16 MS. MAHAFFIE: Okay. Okay. Why 

17 don't you come up?

18 MS. BOLGER: Good afternoon.

19 I am Dana Bolger. I am a senior at 

20 Amherst College, where I work with fellow 

21 student activists to reform campus 

22 anti-violence policies and practices.

23 MS. BRODKSY: I am Alexandra 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Brodsky. Actually, this time I am an incoming 

2 student at the Yale Law School and an alum of Yale 

3 College.

4 While an undergrad, I was a 

5 signatory on the 2011 Title IX complaint against 

6 the University.

7 We are both survivors and members of 

8 the IX Network, a coalition of students working 

9 together to fight sexual violence at schools 

10 across the country.

11 MS. BOLGER: When I left home for 

12 college four years ago, I thought I would be 

13 spending my days writing research papers and 

14 staying up late talking to friends. I didn't 

15 know that I would be raped, stalked, and harassed 

16 during my time there. I didn't know that my 

17 fellow survivors and I would spend every day 

18 fighting for our rights to an education.

19 The past few years have brought 

20 story after story of school administrations 

21 standing by while students endure rampant sexual 

22 violence on their campuses. Too often, when 

23 students turn to their universities for the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 protections and accommodations to which they are 

2 legally entitled, they are, instead, ignored, 

3 silenced, pressured to drop out, or forcibly 

4 institutionalized.

5 In response, we are working with a 

6 group of survivor activists from across the 

7 country to develop Know Your IX, a campaign to 

8 educate students about their rights under the 

9 1965 Higher Education Act, Title IX, the Clery 

10 Act, and the Campus SaVE Act.

11 Armed with this basic legal 

12 education, students will be empowered to 

13 pressure their colleges and universities to meet 

14 their legal responsibilities to combat sexual 

15 violence and to accommodate survivors' needs.

16 MS. BRODKSY: However, the burden 

17 of enforcing the law shouldn't rest on student 

18 shoulders. Department of Education, that's 

19 your job.

20 We are unspeakably proud of our 

21 partners across the country who, while juggling 

22 full course-loads and campus jobs, are making 

23 headlines with their anti-violence activism. 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 But every hour of studying a student has to 

2 sacrifice to fight his or her university's cruel 

3 policies is another reminder of how much more the 

4 Department of Education needs to do.

5 MS. BOLGER: If the Campus SaVE Act 

6 is to effect real change and make American 

7 campuses safer, the Department of Education must 

8 be proactive. Men, LGBTQ students, 

9 undocumented survivors, and young people of 

10 color are particularly unlikely to come forward 

11 with their stories of violence.

12 Given this reality, the government 

13 cannot rely on students to bring official 

14 federal complaints. Instead, the Department of 

15 Education must take the initiative to actively 

16 monitor schools and investigate dangerous 

17 environments.

18 The mainstream media is doing half 

19 the job already, researching and highlighting 

20 injustices across the country. But the 

21 Department too rarely responds to documented 

22 abuse with action.

23 You have read the horror stories 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 coming out of Amherst. Why haven't you done 

2 anything yet?

3 MS. BRODKSY: Further, the 

4 Department and its coordinated bodies must 

5 deliver real sanctions to schools out of 

6 compliance with the law. While the National 

7 Institute of Justice estimates that 63 percent 

8 of universities shirk their legal 

9 responsibilities to address sexual violence, 

10 and though the Department of Education has 

11 investigated dozens of these institutions, 

12 uncovering unambiguously illegal abuses, no 

13 school has ever faced serious repercussions.

14 In 2012, at the end of an extensive 

15 campus investigation, the Department's Office 

16 of Civil Rights admitted to my co-complainants 

17 and me that Yale had clearly been violating Title 

18 IX for years. However, the OCR refused to risk 

19 controversy by making an official finding of 

20 non-compliance, denying federal funding, or 

21 referring the case to the DOJ.

22 Over two years later, Yale is 

23 finally facing sanctions through the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Department, a fine for violations of the Clery 

2 Act. While $165,000 is less than one student's 

3 tuition, the fine, I hope, represents a new 

4 spirit of enforcement within the Department.

5 Schools, like campus rapists, are 

6 repeat offenders. Those who have the power to 

7 stop their cruelties but do not are complicit in 

8 the abuse.

9 MS. BOLGER: We ask the Department 

10 to take the passage of the Campus SaVE Act as an 

11 opportunity to enforce new and old civil rights 

12 law alike with the necessary force and 

13 precision. We ask you to be courageous, so we 

14 can just be students.

15 As one Amherst alum wrote, "I went 

16 to Amherst to go to school, not to be a crusader."

17 MS. BRODKSY: Thank you.

18 MS. BOLGER: Thank you.

19 MS. MAHAFFIE: Diane Rosenfeld.

20 (No response.)

21 Daniel Carter.

22 MR. CARTER: Good afternoon.

23 I certainly had two very impressive 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 heroes of mine to follow.

2 Thank you for the opportunity to 

3 address you today. This is the third negotiated 

4 rulemaking process that I have had the honor of 

5 being a part of, focusing on campus safety 

6 issues.

7 I helped to develop the original 

8 Campus Sexual Assault Victims' Bill of Rights 

9 back in 1991, when I was a student, and the Campus 

10 Sexual Violence Elimination Act, as a 

11 professional both at Security on Campus, now the 

12 Clery Center for Security on Campus, and in my 

13 current position as Director of 32 National 

14 Campus Safety Initiative, a program of VTV 

15 Family Outreach Foundation.

16 The VTV Family Outreach Foundation 

17 is a national non-profit organization founded by 

18 the families of the victims and survivors of the 

19 April 16th, 2007 shooting tragedy at Virginia 

20 Tech. And the VTV Family Outreach Foundation 

21 and 32 NCSI was created for the purpose of 

22 creating a living legacy to enhance campus 

23 safety across the country.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 And we were honored to be a part of 

2 a vast coalition of experts that came together 

3 to help develop and advocate for the passage of 

4 the Campus Sexual Violence Elimination Act as 

5 part of the Violence Against Women Act 

6 reauthorization.

7 I don't really think I can say more 

8 than what has already been said, but I do have 

9 a few technical details that I would like to 

10 address.

11 Really, the Campus SaVE Act, indeed, 

12 was intended to bridge the gap between Title IX 

13 and Clery, and the different implementation 

14 options that exist within the Clery Act. And it 

15 is also intended to provide a baseline for 

16 institutions of higher education to help them 

17 better respond and, most importantly, to prevent 

18 sexual violence in our nation's college and 

19 university campus communities.

20 I believe that, as we pursue the 

21 regulatory process, there are certain 

22 additional things that do need to be specified, 

23 but I hope -- and I hope this will be something 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 that will be well-received by the 

2 audience -- based on the comments I have heard 

3 today, we certainly need community flexibility. 

4 There is no one-size-fits-all.

5 There are certain things that should 

6 be guaranteed to survivors of sexual violence; 

7 for example, written notification of outcomes. 

8 But prevention initiatives may vary vastly, 

9 depending upon the type of institution, the type 

10 of audience, and institutions are going to need 

11 to have flexibility to fully embrace those 

12 principles in their own community.

13 But there are certain things that 

14 were left out of the statute, and I think largely 

15 left to the Department to address. And this 

16 includes defining certain critical terms. And 

17 for reference -- and we can speak to this more 

18 in detail as the process goes forward -- but the 

19 original legislation did define these terms: 

20 awareness programming; bystander intervention; 

21 significantly, primary prevention.

22 The Campus SaVE Act is an 

23 aspirational title to eliminate sexual 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 violence, and primary prevention is something 

2 adopted from the public health sector, where you 

3 try to eliminate the environment that is 

4 conducive to the adverse consequences, where you 

5 eliminate the tolerance for sexual violence to 

6 begin, so that you don't have more victims; you 

7 have less victims. You don't have more young 

8 ladies like who just spoke before me have to go 

9 through what they have gone through, as brave as 

10 they are, and as honored as I am to know them and 

11 have had the chance to work with them. You know, 

12 it is a sad circumstance that that has had to be.

13 The definition of results of conduct 

14 proceedings can largely be adapted from existing 

15 FERPA guidelines, but I would hope that Clery 

16 regulations would formally fold that in, so that 

17 they are fully integrated and adapted into this 

18 context.

19 Define risk reduction. And in 

20 conjunction with existing Title IX guidelines,

21 define what it means to be prompt, fair, and 

22 impartial, as well as to explain the overlap with 

23 the burden of proof required for conduct cases, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 which the Office for Civil Rights currently 

2 defines to be the preponderance of the evidence 

3 standard.

4 The Campus SaVE Act requires that 

5 institutions disclose the standard used, and 

6 there should be care taken to ensure that there 

7 is consistency between the two interpretations.

8 I would also encourage the 

9 Department to explore what is meant by written 

10 notification in a world where there is an 

11 electronic communication.

12 And I would also encourage the 

13 Department of Education to include in their 

14 negotiated rulemaking process the 

15 anti-retaliation statement which is also a part 

16 of the new amendments to the Clery Act. When the 

17 original anti-retaliation statement was 

18 included in 2008, there was no formal regulation 

19 to implement it. There was also no regulation 

20 implemented to address the new Memorandum of 

21 Understanding requirement. And I would hope 

22 that this might afford us an opportunity to 

23 address both of those two.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 And on behalf of all of us at VTV and 

2 32 NCSI, I greatly appreciate this opportunity 

3 again and look forward to working with the 

4 Department and everyone in this room to help keep 

5 our nation's campuses safe.

6 Thank you.

7 MS. MAHAFFIE: Thank you.

8 Diane Rosenfeld.

9 (No response.)

10 Okay, she is lost.

11 Bethany Little.

12 MS. LITTLE: My name is Bethany 

13 Little, and I am a managing partner at the 

14 non-profit organization America Achieves.

15 Results for America, a key 

16 initiative of America Achieves, is committed to 

17 ensuring that taxpayer dollars are 

18 strategically invested in programs and 

19 initiatives that yield their intended results. 

20 As such, Results for America urges the 

21 Department to move swiftly to promulgate an even 

22 stronger gainful employment rule that will be 

23 more effective in weeding out predatory 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 institutions of higher education to protect 

2 students and taxpayers.

3 Prior to joining America Achieves, 

4 I spent three years as the Chief Education 

5 Counsel of the United States Senate Health, 

6 Education, Labor, and Pensions Committee. In 

7 this role, we undertook an investigation of the 

8 for-profit college sector, resulting in 

9 hundreds of pages of findings and documents that 

10 are available online at harkin.senate.gov.

11 Perhaps more disturbing than any of 

12 the cold facts that have been recounted today and 

13 that can be read; there are the countless 

14 students, veterans, faculty, and recruiters who 

15 spoke to us of the outright fraud and abuse 

16 perpetrated by predatory institutions.

17 When we launched the investigation, 

18 we were told time and again that these stories 

19 were the exception, the result of only a few bad 

20 apples in the barrel. But it became evident 

21 after tabulating millions of numbers and sorting 

22 through millions of pages of documents that 

23 included recruitment training manuals exhorting 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 employees to use the pain points of potential 

2 students to get them to enroll, and pointing out 

3 that mothers on welfare and victims of abuse are 

4 particularly ripe targets for enrollment, was 

5 that the core of this business model is rotten.

6 The financial markets love this 

7 model because the federal largesse makes the 

8 dollars bottomless and easily captured. There 

9 are some institutions that may operate 

10 differently, but, by 2009, at least 76 percent 

11 of students attending for-profit colleges were 

12 enrolled in a college owned by either a company 

13 traded on a major stock exchange or a college 

14 owned by a private equity firm.

15 So, why does that matter? Because 

16 the fiduciary duty of these corporations is not 

17 to the students or the taxpayers, but to the 

18 stockholders. As a result, there is no reason 

19 for them to shut down or improve a program that 

20 ruins lives with debt, but no diploma, so long 

21 as that program can continue to recruit new 

22 students, relieve them of their Pell Grant, 

23 student loans or GI benefits, and send them off 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 with debt but no diploma.

2 Congress has failed to create any 

3 counterincentive to this drive for profit. It 

4 is my understanding that some today have 

5 suggested that Congress is the appropriate place 

6 to handle this. You only hear that suggestion 

7 from those who have millions of dollars to spend 

8 on campaign contributions and lobbying to ensure 

9 that nothing, in fact, happens in Congress.

10 The most intense, pervasive, and 

11 manipulating lobbying I have seen in 20 years of 

12 federal policy work was on this issue. And I 

13 think that the expectation that Congress in this 

14 particular congressional environment is going 

15 to take this on in a meaningful way is laughable.

16 There is today almost no meaningful 

17 check on a business model that victimizes 

18 millions of Americans, absent a gainful 

19 employment rule that finally pushed some 

20 institutions to improve their practices or shut 

21 down the worst programs, a rule that must be 

22 designed to be stronger and tighter than before.

23 Another revelation of this Senate 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 investigation was the length that some companies 

2 are going to manipulate cohort default rates and 

3 90/10 calculations. These practices are 

4 unconscionable and must be added to your agenda 

5 for regulation.

6 I know that you will hear stories 

7 from the other side as well, some likely told by 

8 people who worked hard for the degree from a 

9 for-profit college and who are rightly proud to 

10 have earned it. But the point is that it is not 

11 this Administration's job to decide which 

12 stories are more compelling or even more 

13 prevalent. It is the Department of Education's 

14 responsibility to ensure that taxpayer dollars 

15 and student debt are not accruing to programs 

16 that do not meet the statutory requirement of 

17 preparing students for gainful employment.

18 You have developed metrics to 

19 measure that expectation, and specific changes 

20 can be made to ensure that these metrics are more 

21 viable in a new rule. You have the advantage 

22 this time around of additional information 

23 unearthed by the Senate investigation, the DOJ, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the CFPB, and myriad state attorneys general.

2 The program data yielded by the 

3 short lived application of the rule offers one 

4 of the most critical points. There were schools 

5 miserably failing by wide margins, two of the 

6 three tests, and yet, they were untouched in 

7 their operation.

8 You should not offer a "nine strikes 

9 before you are out" approach again and should 

10 address extremely low performing programs 

11 earlier, with interim steps to push program 

12 improvement. Because, at the end of the day, 

13 that is the point of the gainful employment rule, 

14 to apply data to weed out or force improvement 

15 for those programs that are consistently leaving 

16 almost all who enroll unable to repay the debts 

17 they incurred for a substandard education. 

18 Those programs quite clearly are not preparing 

19 students for gainful employment.

20 In the absence of the gainful 

21 employment rule, more taxpayer dollars will be 

22 spent without yielding any real benefit for 

23 students or contributing to the development of 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 a skilled American workforce. And those few 

2 improvements for students that have been made in 

3 the past few years will likely slip away.

4 Thank you for the opportunity to 

5 speak in support of protecting students and 

6 taxpayers through regulations that must include 

7 a stronger gainful employment rule and 

8 protections from cohort default rate 

9 manipulation and 90/10 manipulation.

10 Thank you.

11 MS. MAHAFFIE: We are going to take 

12 a five-minute break, and we will come back at 

13 3:18.

14 (Whereupon, the above-entitled 

15 matter went off the record at 3:12 p.m. and 

16 resumed at 3:24 p.m.)

17 MS. MAHAFFIE: Diane Rosenfeld.

18 MR. ROSENFELD: Is it on?

19 MS. MAHAFFIE: I think it is on.

20 MR. ROSENFELD: Is this thing on? 

21 This is like one of my classes where 

22 everybody sits in back and I make them all come 

23 to the front, like "No, no, you're still going 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 to get called on back there."

2 (Laughter.)

3 There are plenty of seats in front 

4 if anybody would like to come up. Higher grades 

5 for those who sit in front.

6 (Laughter.)

7 Okay. You win.

8 Good afternoon.

9 I am Diane Rosenfeld. I am very 

10 happy to be here and sorry for being a little bit 

11 late. I actually got kicked out of a cab on the 

12 way here, which was an interesting experience. 

13 Otherwise, I actually love D.C. and was going to 

14 volunteer my services to help with 

15 implementation of this Act, but the next cab 

16 driver was much nicer. So, I think he has 

17 restored my faith.

18 But, on a more serious note, I am a 

19 lecturer on law and the Director of the Gender 

20 Violence Program at Harvard Law School. And for 

21 the past six years, I have taught a special 

22 seminar on Title IX that focuses explicitly on 

23 campus sexual assault and violence elimination, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 and it is the only such seminar in the country. 

2 So, I have been at this for a long time.

3 I want to congratulate the 

4 Department for its groundbreaking work to 

5 promote the civil rights of all students through 

6 this new Campus SaVE Act.

7 I have had the honor of working with 

8 former Assistant Secretary Russlynn Ali over the 

9 past few as she worked on her legal policy 

10 development, and I also served as the senior 

11 counsel to the Office of Violence Against Women 

12 in the Clinton Administration. 

13 So, I think it is fair to say I am 

14 pretty familiar with these issues. I currently 

15 provide legal policy advice to schools and to 

16 students across the country.

17 I can say that this is a complex 

18 problem with which I have dealt from inside the 

19 government and outside government. And it is a 

20 problem that has particular sensitivity around 

21 all of its dimensions. So, it requires really, 

22 really thoughtful approaches and innovation if 

23 we are actually going to effectively stop sexual 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 violence on campus. And I firmly believe that 

2 this new Act is our best hope and strongest tool 

3 for making that happen.

4 The effectiveness of this new law 

5 will depend upon its enforcement and thoughtful 

6 implementation. Anticipating this, the Act 

7 calls for the Secretary of the Department of 

8 Education to seek counsel and guidance from both 

9 the Department of Justice and the Department of 

10 Health and Human Services. Each of these 

11 agencies, in my opinion, is critical to the 

12 successful effort to eliminate sexual violence 

13 on campus.

14 Among the actions that schools need 

15 to undertake immediately to prepare for 

16 compliance by March 2014 is to perform due 

17 diligence with their policies and procedures. 

18 An effective response will have to be reality 

19 based, meaning schools have to really look at the 

20 problem, as it is no longer acceptable or 

21 compliant with Title IX to try to bury your head 

22 in the sand and pretend that the problem doesn't

23 exist at your school.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 We must, instead, confront the 

2 reality that one in five or one in four women will 

3 be sexually assaulted during her time in school. 

4 So, it is happening often on every campus. Most 

5 of us think our campuses are unique, and we don't 

6 confront the reality of that statistic. We 

7 think it happens elsewhere to other schools, to 

8 other people. It is happening at your school. 

9 So, we need a really thoughtful response, and 

10 this Act gives us a very clear roadmap about how 

11 to achieve that.

12 All educational institutions 

13 receiving federal funds should exercise this due 

14 diligence to prevent sexual harassment, protect 

15 its targets and victims, and punish its 

16 perpetrators, including by promptly 

17 investigating all reports, however informal, 

18 and by providing effective remedies for all 

19 resulting harms.

20 In conducting this due diligence, 

21 schools should be mindful of pre-hostile 

22 environments, school cultures that breed the 

23 type of contempt for women that we see acted out 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 in cases such as Steubenville.

2 Schools play an enormously 

3 important role in shaping campus culture and 

4 must intervene affirmatively to teach gender 

5 equality and sexual respect. Moreover, rules 

6 should be instituted and clearly communicated 

7 regarding post-assault retaliation.

8 The lack of school action to prevent 

9 retaliation and gossiping among students has had 

10 tragic consequences in cases such as Lizzy 

11 Seeberg, who was assaulted by an athlete and 

12 threatened by one of his teammates, and Audrie 

13 Pott, who committed suicide in the wake of 

14 multi-perpetrator sexual assault, otherwise 

15 known as a gang rape. And I personally have been 

16 seeing more and more and more of these fact 

17 patterns cross my desk.

18 Schools should learn, moreover, how 

19 to investigate cases using social media. As an 

20 aside, we shouldn't have to rely on Anonymous to 

21 get at social media to prove rape cases that we 

22 should know how to investigate.

23 I think that schools currently seem 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 to miss critically important evidence in their 

2 collections and their investigation when they 

3 don't know what they are doing with social media. 

4 But kids know how to investigate social media. 

5 My students can do an investigation in one hour 

6 and come up with things that could prove a case. 

7 So, I want schools to know how to do this, to get 

8 smart about what we don't know and what we need 

9 to know.

10 The most promising practice, in my 

11 opinion, will involve a top-down, bottom-up 

12 approach. You need presidential leadership. 

13 I have spoken to college presidents across the 

14 country in groups and individually. You need a 

15 really committed president who makes a statement 

16 and means it and backs it up.

17 You need trained administrators who 

18 know how to receive a case and who know what to 

19 do with it, who know how to give resources, who 

20 know how to do the administrative things that a 

21 student will need in order to help her stay in 

22 school, for example.

23 And you need to listen to the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 students. The students know what is going on in 

2 their culture. They know whether they are safe 

3 or not.

4 We are all on the same page, I would 

5 venture to say, on not wanting our students to 

6 get harmed. Students are in school to receive 

7 an education. We all want that to happen. We 

8 all want to create an environment that is as safe 

9 and healthy and thriving, promotive as possible. 

10 We want our students to succeed. And 

11 eliminating sexual harassment, eliminating 

12 sexual violence is the best way to have that 

13 happen.

14 So, schools educate. That is the 

15 most important thing that schools do. And we 

16 can use our role as educators to really stop 

17 sexual violence through changing the culture and 

18 really talking honestly, facing honestly and 

19 plainly and clearly without the kind of blinders 

20 what is going on in our sexual culture.

21 And I think that there is some 

22 anxiety among schools right now concerning 

23 compliance with the new Act, but I think that the 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 government can easily provide guidance to allay 

2 the schools' concerns. Here is one way of 

3 looking at the issue:

4 The three things, the three critical 

5 components that make up an effective Title IX 

6 policy are mandatory preventative education, 

7 strong support services, and academic 

8 accommodations for survivors, and prompt and 

9 equitable adjudication for cases of sexual 

10 misconduct.

11 And interestingly, these areas map 

12 onto the three agencies who are charged with 

13 implementation of the Act, and there is some 

14 overlap between the agencies as well.

15 So, for mandatory preventative 

16 education, that is the Department of Education 

17 primarily. And they are the best suited to 

18 provide guidance on education policies that 

19 ensure equal access to educational 

20 opportunities.

21 This was quite evident in the Dear 

22 Colleague letter that Vice President Biden 

23 announced to the world at the University of New 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 Hampshire in April of 2011. That was an 

2 outstanding guidance to schools about what they 

3 should do. It clarified a great deal.

4 And now, the Department of 

5 Education, in conjunction with the Department of 

6 Justice and HHS, should produce another guidance 

7 on the implementation of this new Act.

8 Regarding support services for 

9 survivors and academic accommodations, the 

10 Department of Health and Human Services can be 

11 especially helpful in teaching us about rape 

12 trauma syndrome in an academic context. We know 

13 about rape trauma syndrome, and there are lots 

14 of studies about it, but there are not 

15 correlative studies on how it affects a survivor 

16 at school. It is really a different world, as 

17 we in the academic world -- we have all been in 

18 the academic world, but we know that there is a 

19 time warp, first of all, because you live your 

20 life in semesters.

21 And there is also the very serious 

22 problem that, if a young woman has been assaulted 

23 and she is in this closed, confined universe with 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 her perpetrator, then she is experiencing 

2 re-trauma every time she sees him in the dining 

3 hall or in a classroom or crossing the quad. So, 

4 we have to be very mindful of that. That is the 

5 kind of information that we can get from HHS. 

6 That is where they can be extremely valuable; 

7 also, in doing a public awareness campaign.

8 So, it is a little analogous to the 

9 problem of having to salute to one's perpetrator 

10 in the military context, as is currently being 

11 discussed in other rooms in Washington right 

12 now.

13 So, the time constraints in an 

14 educational context are more intense because of 

15 the semester, academic calendar, and the

16 responses by the school should be calibrated as 

17 such, which brings us to prompt and equitable 

18 adjudication.

19 Based on my experience, I would say 

20 that this is where schools have the most 

21 difficulty figuring out how to comply. And it 

22 is also my observation that this is not brain 

23 surgery. This is not rocket science. This is 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 really fairly simple.

2 And if you have a good, solid policy 

3 that you have created with a large group of 

4 people, like the top-down, bottom-up approach 

5 that I was talking about, if you have a good 

6 policy, you know the rules of the road, it is not 

7 going to be so hard to implement. And some 

8 schools are doing it already quite well.

9 The area is problematic for schools 

10 because they often operate out of fear of 

11 liability. Therefore, a sound investigation 

12 and adjudication policy is in the best interest 

13 of all schools. All claims should be 

14 investigated promptly and taken as extremely 

15 serious violations because they are.

16 The theory of "He said/she said" 

17 should be replaced by "He said/they said," a term 

18 developed by a colleague of mine, Tom Tremblay, 

19 who was the Director of Public Safety for the 

20 State of Vermont.

21 And there is lots of evidence that 

22 exists to prove by a preponderance of the 

23 evidence whether or not a sexual assault has 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 happened. And, remember -- and I will probably 

2 say this several times, although I am almost 

3 done -- this is a civil rights context. And 

4 everybody who is concerned with this Act has to 

5 take that as the starting point.

6 While the behavior might well also 

7 constitute criminal violations, what we are 

8 concerned with here is school-based behavior is 

9 an educational context where you have a civil 

10 right to equal access to educational 

11 opportunities.

12 The Campus SaVE Act is the strongest 

13 civil rights law in an educational context to 

14 date. For this reason, it is essential that the 

15 Department of Justice Civil Rights Division and 

16 the Office for Civil Rights of the Department of 

17 Education establish a clear, open channel of 

18 communication to foster the most effective 

19 enforcement policy.

20 And having worked at Justice, I can 

21 say that that collaboration would present us 

22 with the best chance of real enforcement of this 

23 act, of true realization of civil rights on 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 campus. I see this collaboration as incredibly 

2 critical.

3 The three Departments should 

4 convene to produce a clear guidance to schools 

5 on the implementation of the Act's provisions. 

6 Just as schools need to let students know the 

7 rules of the road on sexual misconduct, so, too, 

8 should the government guide schools about the 

9 rules and how to best implement them.

10 Likewise, the government should let 

11 schools know what the consequences will be for 

12 violating the civil rights of students by 

13 tolerating, permitting, and failing to 

14 eliminate a hostile environment.

15 In conclusion, I stand ready to 

16 assist the Department in any way possible. 

17 Along with my students, my law students in the 

18 Gender Violence Program at Harvard, we have 

19 great resources and a depth of knowledge that we 

20 are very happy and ready to share with the 

21 Department, should you request it. And I think 

22 that we could be a valuable asset in moving 

23 forward to make equal access to educational 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 opportunities a reality for all.

2 Thank you.

3 Okay. Do I take questions or 

4 anything?

5 Thank you.

6 MS. MAHAFFIE: We are expecting two 

7 other speakers who are not here yet. So, we are 

8 going to break until they come. We will be here 

9 until four o'clock. If anybody else is 

10 interested in speaking, please let Amy know at 

11 the front table.

12 Thank you.

13 (Whereupon, the above-entitled 

14 matter went off the record at 3:39 p.m. and 

15 resumed at 3:50 p.m.)

16 REP. DAVIS: Well, thank you very 

17 much. Let me, first of all, thank the hearing 

18 offices for giving us the opportunity to be here 

19 and holding this until we were able to make it.

20 We always are a bit afraid whenever 

21 we have something timed because generally it 

22 doesn't work quite the way we timed it, and 

23 especially if there are going to be some votes.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 (Laughter.)

2 But I am delighted to be here this 

3 afternoon. I am Representative Danny Davis 

4 from the 7th District of Illinois, but I also 

5 serve as Co-Chair of the Congressional Black 

6 Caucus' Task Force on Education.

7 The PLUS Loan Program was 

8 established to expand college access by 

9 providing low-cost loans to graduate and 

10 professional students and the parents of 

11 undergraduate students. Unfortunately, the 

12 2011 decision by the Department of Education to 

13 reinterpret the definition of adverse credit has 

14 resulted in a profound disproportionate impact 

15 on Historically Black Colleges and Universities 

16 and the African American students they educate 

17 and graduate.

18 Without conducting an impact 

19 analysis or seeking stakeholder comment, the 

20 PLUS Loan changes denied this critical federal 

21 aid to 14,616 HBCU students. In addition to the 

22 personal hardship inflicted on these students 

23 with suddenly attempting to find the dollars to 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 stay in school, this change resulted in revenue 

2 losses of approximately $5 million per HBCU.

3 We know that once the student leaves 

4 college, he or she is very unlikely to return. 

5 Indeed, the Department's own figures indicate 

6 that only about 80 percent of students whose 

7 families are denied PLUS Loans remain in school.

8 I am deeply troubled by the extreme 

9 negative effects this decision is having on 

10 low-income and minority students and 

11 institutions. As HBCUs and Predominantly Black 

12 Institutions prepare for the 2013-2014 academic 

13 year, I and my colleagues in the Congressional 

14 Black Caucus are profoundly concerned that the 

15 current policy will continue to deny the college 

16 dreams of thousands of students. Therefore, 

17 the Congressional Black Caucus strongly 

18 recommends the following:

19 That the Department review all PLUS 

20 Loan applications for the current and upcoming 

21 academic year while new eligibility criteria is 

22 studied under the 2013 negotiated rulemaking 

23 process.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 That the Department consider fair 

2 and flexible credit criteria for the PLUS Loans 

3 under the negotiated rulemaking. The criteria 

4 should not penalize families who have been 

5 impacted by the recession and the housing 

6 crisis.

7 In addition, the Department should 

8 consider regulations that do not rely solely on 

9 credit history to determine eligibility, but 

10 take into consideration other factors, such as 

11 current credit status, income, and employment.

12 In the absence of data that the 

13 previous process for PLUS Loans was broken, 

14 there should be no attempt to simply fix it. The 

15 changes in the market included in the recession 

16 argue for making it easier for parents who have 

17 rebounded from the adversity and are now on 

18 financially-sound, should-be-presumed 

19 creditworthy.

20 The entire parent PLUS pipeline 

21 prior to the shift in regulatory interpretation, 

22 2013 to 2017, should have their loans evaluated 

23 using the pre-2011 criteria. Regulations 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 should be promulgated to ensure our federal loan 

2 programs expand access to higher education and 

3 the goal of American adults attaining a two- or 

4 four-year college education by 2020.

5 We realize that there is no 

6 simplicity in trying to arrive at what we would 

7 call an adequate fix for these students and for 

8 these processes, but we also know that, without 

9 some profound changes, changes that actually 

10 result in the ability of these students to attend 

11 the colleges and universities of their choice, 

12 not only are the students going to be denied an 

13 opportunity for higher education, but also the 

14 institutions who are already hanging by threads 

15 in many instances will be severely financially 

16 impacted.

17 So, once again, we thank the hearing 

18 offices for giving us the opportunity to be here. 

19 We recognize that there are some tough decisions 

20 and tough choices to make. But we believe, in 

21 the end, there are solutions to be found, and 

22 they will be found. And these individuals can, 

23 in fact, continue to dream what for many has been 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the impossible dream, and they will, in fact, be 

2 able to experience the goodness and greatness 

3 that this great country we call the United States 

4 of America has to offer.

5 So, I thank you very much, and we 

6 really appreciate the opportunity.

7 MS. MAHAFFIE: Thank you.

8 Congressman Richmond.

9 REP. RICHMOND: Well, first of all, 

10 let me thank you for having us here as we have 

11 this hearing.

12 In an attempt to not to repeat 

13 everything that Congressman Davis just said, 

14 then I will adopt all of his remarks as my own 

15 remarks. So, everything he said, I will echo 

16 that.

17 But I will take just a different 

18 slant, and I know that the Department, through 

19 this process, and many advocacy groups, we have 

20 talked about four key stakeholders in this 

21 process, the taxpayer, the student, the school, 

22 and the parent. And I would like to focus-in on 

23 those four things.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 And I would start with the school. 

2 We have to make sure that not only our HBCUs which 

3 get an impact of about 28,000 students, but all 

4 of our colleges -- and you are talking about 

5 400,000 students that in the future could be 

6 jeopardized. The fixed costs at universities 

7 don't change much in terms of a fiscal plan and 

8 all those things. So, to take a hit in terms of 

9 students, and then to prepare, properly prepare, 

10 and have strategic plans for universities, you 

11 need some stability and you need to know what the 

12 rules are going to be, and you need to be able 

13 to adequately plan.

14 So, for our schools, both HBCUs and 

15 non-HBCUs, we need to make sure that we have 

16 something that is predictable, something that is 

17 fair, and something that does not hurt them.

18 Second, if we go on to the student, 

19 which I think is the most important part of this 

20 equation and the most important factor should be 

21 what is best for the student. And we all agree 

22 that education is the best path out of poverty, 

23 and having successful members participating in 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 the economy is a plus for everyone.

2 So, the goal should be to make sure 

3 that we as a Department, we as a government, that 

4 we are doing everything we can within our ability 

5 to make sure that a student has the ability to 

6 go to school.

7 And a lot of times we talk about, and 

8 especially with this process, when a kid gets 

9 into college and he makes the grades to 

10 matriculate to the next level, but can't get 

11 there because of funding, then that is a failure 

12 on us and that is a failure on government, in my 

13 opinion, because he has done what we have asked 

14 him to do, and finances should not be a reason 

15 why an otherwise matriculating student should 

16 not be able to matriculate to the next level.

17 And we have to remember that it is 

18 more than just numbers and facts and data; that 

19 at the end of the day, we have to remember that 

20 it is still about purpose and fulfilling a dream 

21 and making sure that you contribute to society; 

22 make sure that you change the world. And you 

23 can't do that without a proper education.
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 The third thing is parents, and I 

2 know a lot of people in here are worried about 

3 the parents, and people come from both sides. 

4 But I think we are all concerned on the financial 

5 burden that we are putting on parents. And I 

6 will just give you my two cents on that from a 

7 person whose mother is from the poorest place in 

8 the country, who did take out PLUS Loans so that 

9 both of her sons could go to Morehouse College 

10 at the same time. And we are worrying about 

11 their ability to pay it back, their ability to 

12 not go into bankruptcy.

13 But I will tell you that my mother 

14 would have went into bankruptcy 10 times if it 

15 meant both of her sons would graduate from 

16 Morehouse because that is a generational change. 

17 That changed our family for years to come.

18 So, I know oftentimes, especially 

19 for people who may not have all the finances, us 

20 educated people like to think for them. But, in 

21 this case, I would say that we can't always think 

22 for other people. So, the fact that some 

23 parents who may be on the borderline of being 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 able to afford it or not afford it, the decision 

2 should be up to them because the only thing that 

3 I know that was important to my mother and to my 

4 grandparents was that both my brother and I 

5 graduate from college. Because she knew that, 

6 if we graduated from college, no matter what 

7 financial difficulty she was in, she would be 

8 okay because her children were going to graduate 

9 from a great institution, get jobs, and be able 

10 to take care of her.

11 So, I am not saying that we shouldn't 

12 at all factor in the debt that parents are 

13 saddled with, but we shouldn't insert our 

14 judgment for theirs, once they make the decision 

15 that this is a priority.

16 And with that, as Congressman Davis 

17 talked about, the things we look at in 

18 determining whether someone should get a loan, 

19 I would also say that we should look at, in terms 

20 of credit history and all of those things, we 

21 should look at their credit history in some 

22 specific ways. So that if they have 

23 demonstrated making education loans a priority, 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 and they may be late on other bills or other 

2 things, but they paid the high school tuition and 

3 they didn't default on that -- so, if a person 

4 has a demonstrated ability of prioritizing 

5 spending on education or on their mortgage, I 

6 think that should bear more weight because 

7 nowadays some high school tuitions are close to 

8 college tuitions, especially in the HBCU area. 

9 So, if a parent has a track record of paying that 

10 tuition at a high school, then I think that 

11 should be used as the No. 1 indicator that they 

12 value education; they put it as a priority, and 

13 they will make their PLUS Loans, too.

14 And then, the last factor is the 

15 taxpayer. This is where it is going to take a 

16 lot of different opinions, but I will just tell 

17 you, from being in a state legislature for 11 

18 years, Chair of Judiciary, and very involved in 

19 criminal justice reform, that we can take a 

20 chance on a student and some parents right now. 

21 And you can take a chance on them. We can assume 

22 any arbitrary you want, and this is purely an 

23 arbitrary number, but you could take a chance on 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 them for $30,000, and we may lose. But if we 

2 don't take a chance on them, it is $30,000 a year 

3 to incarcerate someone.

4 So, when we start talking about the 

5 numbers and the fact that we will have some 

6 people default, and we will, the question 

7 becomes what is a better investment. Do we try 

8 to stop it on the front end? Do we try to produce 

9 a great taxpaying citizen with a bright future 

10 who contributes to society and maybe find that 

11 cure to cancer? Or do we take the very cautious 

12 approach, hold our resources, and pretty much 

13 push someone into other decisions and other 

14 challenges?

15 And not all people will go to 

16 college. Some will be very successful without 

17 going to college.

18 But we should err on the side of 

19 making sure we are as inclusive as possible 

20 because, for every default, there is going to be 

21 more and more costs that we pay other places. 

22 So, if we are going to start comparing, let's 

23 make sure we look at a global picture to make sure 
Negotiated Rulemaking Higher Education 2013 – Public Hearing May 21, 2013

1 that, as a Department, as a government, we are 

2 doing everything we can to give everybody every 

3 opportunity to succeed.

4 So, once again, I will adopt the 

5 recommendations made by both Congresswoman 

6 Corrine Brown and Danny Davis.

7 And thank you again for allowing me 

8 to testify.

9 MS. MAHAFFIE: This concludes our 

10 hearing.

11 Thank you very much for coming.

12 (Whereupon, the above-entitled 

13 matter went at 4:05 p.m.)

14

15

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