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Subject: RE: Proposal regarding low-cost, low-risk programs

From: Raymond Testa

Sent: 12/10/2013 3:59 PM

To: 'Nassirian, Barmak'; Chip Cameron; Rory O'sullivan; Angela Peoples; Eileen Connor; Whitney Barkley; Margaret

Reiter; Taratino, Tom; Warner, Jack; Sandra Kinney; Justice, Della (KYOAG); Libby DeBlasio; Ted Daywalt; Tom Kriger;

Greenfield, Helga A.; Higgs, Ronnie; Hoblitzell, Barbara A.; Jenny Rickard; tdalton@ Brian Jones; Marc

Jerome; JBerkowitz@ Belle Wheelan Private; nharvison@

Cc: Kolotos, John; charlie pou; Richard Heath; Kevin Jensen; Glen Gabert; Mohr, Rhonda

Subject: RE: Proposal regarding low‐cost, low‐risk programs

Dear Colleague, 

I will be interested to hear reactions from others on the committee on the discussion of how unfair it is to evaluate programs based 

only on Title IV recipients and or only on borrowers. This is one concept discussed in the proposal that warrants serious consideration. 

If I recall, Brian, Marc, and I made this very argument at the outset of negotiations but it apparently went unnoticed or ignored. In fact 

the problem was easily resolved in the original proposal I submitted whereby the cohort could be comprised of all Title IV applicants 

rather than recipients, especially since those applicants are already part of NSLDS so there is no jeopardy of creating a new database 

and running afoul of the court decision. Having all students fill out a FAFSA is a best practice to insure all students receive aid to 

which they are entitled. 

As a matter of principle that I believe should not be taken lightly, we cannot ignore that if the proposed rule is purported to measure 

the quality of programs and the value proposition to taxpayers, and we are looking to identify "low cost" institutions then it is 

necessary to capture all the costs associated with the delivery of education. While community college students may have low 

borrowing levels, additional taxpayer funds in the form of other state and federal subsidies not available to for profit schools are an 

integral part of what it actually costs to educate students. In fact there are numerous arrangements between for profit trade and 

technical schools and community colleges in which the for profit school provides most if not all of the training to the student enrolled 

in the community college because they are capable of doing so at an equal or lower cost. Such arrangements allow the community 

college to offer the program without making substantial investment in facilities and equipment. While borrowing levels may be lower 

for many students the taxpayer investment is actually higher. 

I do not make these comments in an effort to disparage my community college colleagues. I am most sympathetic to the challenges

they face and the student populations they serve. I only seek recognition of the need for risk adjusted metrics that would mitigate the 

intrinsic unfairness of bright line benchmarks as they have been proposed. I look forward to the Department's analysis of how 

implementation of any rule will be impacted by the percentage of independent versus dependent students, and how the metrics are

influenced by the percentage of Pell eligible students. 

Best regards, 

Ray Testa 

-----Original Message----- 

From: Nassirian, Barmak [mailto:nassirianb@ 

Sent: Tuesday, December 10, 2013 2:38 PM 

To: Chip Cameron; Rory O'sullivan; Angela Peoples; Eileen Connor; Whitney Barkley; Margaret Reiter; Taratino, Tom; Warner, 

Jack; Sandra Kinney; Justice, Della (KYOAG); Libby DeBlasio; Ted Daywalt; Tom Kriger; Greenfield, Helga A.; Higgs, Ronnie; 

Hoblitzell, Barbara A.; Jenny Rickard; tdalton@ Brian Jones; Raymond Testa; Marc Jerome; 

JBerkowitz@ Belle Wheelan Private; nharvison@

Cc: Kolotos, John; charlie pou; Richard Heath; Kevin Jensen; Glen Gabert; Mohr, Rhonda (rmohr@

Subject: RE: Proposal regarding low-cost, low-risk programs 

Dear Colleagues, 

While I was not involved in developing the proposal put forth by Rich and Kevin, I'd like to express my strong endorsement of their 
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work. I believe that the rationale they have offered is quite compelling, and that their proposed solution--which is even more strict 

than the original version discussed at our last meeting--would significantly improve the final rule. 

I would also urge the Committee to consider providing an exceptional performer designation, along the lines of the proposal from 

Tom Dalton and Jenny Rickard, for institutions with extremely low default rates, on the reasonable grounds that institutions where the 

vast majority of borrowers are repaying their student loans are extremely unlikely to fail the GE metrics. 

Barmak 

 

________________________________________ 

From: Chip Cameron [fxcameo@ 

Sent: Tuesday, December 10, 2013 1:53 PM 

To: Rory O'sullivan; Angela Peoples; Eileen Connor; Whitney Barkley; Margaret Reiter; Taratino, Tom; Warner, Jack; Sandra 

Kinney; Justice, Della (KYOAG); Libby DeBlasio; Ted Daywalt; Tom Kriger; Greenfield, Helga A.; Higgs, Ronnie; Nassirian, 

Barmak; Hoblitzell, Barbara A.; Jenny Rickard; tdalton@ Brian Jones; Raymond Testa; Marc Jerome; 

JBerkowitz@ Belle Wheelan Private; nharvison@

Cc: Kolotos, John; charlie pou; Richard Heath; Kevin Jensen; Glen Gabert; Mohr, Rhonda (rmohr@

Subject: Proposal regarding low-cost, low-risk programs 

All: 

Attached is a proposal from Rich Heath and Kevin Jensen on low-cost, low-risk programs. 

I have also included here part of their rationale. 

Chip 

 "Richard Heath and I would like to revisit the proposal we submitted during the last session. At that session, the Department 

indicated that it felt that the potential for unintended consequences for certain programs had been mitigated through the definition of 

the minimum size of cohorts and challenge processes within each of the metrics. 

After conferring with many of our colleagues on the negotiating committee during the last session, we still feel strongly that the 

current draft rule does not adequately recognize low-cost, low borrowing rate programs where the cohort of students used to measure 

the program is likely to be unrepresentative of the program in general, therefore unnecessarily threatening the Title IV eligibility of the 

program and burdening both schools and the Department. Furthermore, we are very concerned that, without appropriate recognition 

of low-cost, low-borrowing rate programs the current draft rule will incentivize some schools to leave the Direct Loan program or 

close effective programs. The danger of these possibilities includes limiting access to low-cost programs leaving students with no 

options other than higher-cost programs, or similarly restricting access to affordable federal student loan programs leaving students 

with no options other than private student loan markets or higher cost programs that offer federal student loans. 

Please see the attached memo, where we've presented additional data and information in support of the need to make further 

modification to the draft rule as well as revised proposed language we think will provide institutions with appropriate, positive 

incentives to do everything within their authority to keep both costs and borrowing rates for gainful employment programs low."