II

ANDREWS. ROSEN
(halrmtJS lrtd CED
The Honorable C8ss R. Sunstein, Administrator
Office of Information and Regulatory Affairs
Office of Management and Budget
125 11ttt Street, NW
Washing1on, DC 20503
October 21, 2010
Re: ED-OPE 1840-AD04, Proaram Integrity: Gainful Employmeot
Dear Mr. Sunstein:
As you know, the U.S, Department of Education (ED) has bifurcated its proposed final regulations
regarding program inte&rity in federal financial aid programs. Curre'ntly before OMB are the ED's
proposed regulations covering fifteen sections of proposed new regulations, including two sections
dealing with the ED's so-called "Gainful Employment., (GE) proposal. I refer to this set of proposed
as "Reg L." Reg I is scheduled for publication on or around November l, 20 LO, and is
scheduled to go into effect on July 1, 2011. The remainder oftb.e ED's GB proposal is not scheduled
to be published until early 201 1. I refer to the latter proposal as 2.''
The two sections of the GE proposal that are included in Reg 1 relate to: (a) graduation rate and job
placement disclosures; and {b) ED's proposal that it a,pprove all additional programs based on ED's
determination of whether such programs lead to gainful employment (Program Approval). Because
Kaplan's comments regarding Program Approval were included in its response to the Notice of
Proposed Rulemaking for Reg 2, I write to ensure that our concerns regarding the proposed Program
Approval language are brought to OMB 's attention.
Kaplan participated in the ED's rule making sessions and supports the ED's efforts to ensure that
studentS achieve their outcomes without incurring overly burdensome debt obligations.
While we support several ofth.e ED's proposals, we have submitted comments expressing concerns
with certain items contained in both sets of proposed regulations: Kaplan's general objection is that
the proposed rules will have unintended consequences that hinder or impede a school's ability to
provide students high-quality educational programs that prepare students to obtain jobs and
commence careers that may transform their lives. A case in point is the ED's Program Approval
proposal.
Kaplan, Inc.
6301 1Caplan UnlveTSity fort uudttdlle, FL )3309
The Honorable Cass R. Sunstein
October21, 2010
Page2
The ED's Program Approval propOsal requires proprietary schools to obtain approval from the ED
before offering any additional programs that are eligible for Title IV aid. To obtain approval,
schools would have to provide ED the following infonnation:
( 1) the enrollment for the program for the next five years for each school
location that will offer the program.
(2) documentation from employers not with the school, attesting that the
program's curriculum aligns with recognized occupations at those employers'
businesses, and that there are projected job vacancies or expected demand for those
occupations at those businesses, and
(3) if the additional program constitutes a substantive change (as defined under
existing regulations), documentation of the approval of the substantive change from
its agency.
75 Fed. Reg. 43616,43624 (July 26, 2010).
In essence, the ED proposes that it must approve all new programs and that any such aj,prove.l would
include a gainful employment analysis. This costly approval step is redundant and \lllriecessary.
State regulatory bodies and accrediting agencies are already responsible fot oversight and approval
of new programs. In fact, in the NPRM for Reg I, the ED proposed to require State regulatory
bodies to take an added role in program oversight
The additional administrative bl.U'den that the Program Approval requill!ments will impose will
result in delays in creating new programs of study and increasing their costs. Kaplan alone
implemented scores of new progrtunS over the last year. The ED is not staffed to efficiently review
the anticipated numbers of programs with the speed required for educational institutions to function
effectively or students to take best advantage of changes in workforce demand. In fact, there is a
significant danger tbat new and needed programs will be indefinitely delayed.
The proposed Program_ Approval rules appear to require that schools obtain local businesses support
to demonstrate the demand for any new program. 75 Fed. Reg. 43.624; Proposed Section
668. 7(gXii) & (iii). The requirement that an institution must prove that there are projected job
vacaooics or1hat employers are predicting that they will experience certain levels of demand for
those oocupations at their bwinesses is unrealistic. Few, if any, employers will be willing or able to
predict future demand- especially in these economic times. In addition, such a requirement does
not fall within any reasonable understanding ofthe statutory requirement that progrem.s prepare
students for gainful employment. Moreover, the proposed roles do not adequately explain how the
process of employer affinnation will be conducted or how the ED will verify or review that
affirmation.
The Honorable Cass R. Sunstein
October2l, 2010
Page3
The proposed Program Approval rule's employer attestation requirement also does not discuss how
this requirement would be applied to on-line or other national schools. Because this requirement
lacks any defined objective metric that the ED must use to detennine whether cr not a program is
acceptable, it leaves the ED with vague and arbitrary ultimate power to a_pprove or deny a program.
Finally, the proposed Program Approval rules effectively make the ED- not the demands of the
economy or students - the arbiter of postsecondary cfferings. Such a will be costly end
inefficient; it also is not designed to result in programs that will best serve students and our nationa1
economic interestB.
Proprietary schools serve millions of students and are at the forefront of innovation, particularly
innovaticn in the delivery of education. We are pioneers of online education and blended academic
programs, of 'the use of data analysis to support student retention, and of new methods for measuring
student learning. See, fur CX8lllple, Clayton M. Christensen, Scott D. Anthony, Erik A. Roth, Seeing
Wlwt's Next, Harvard Business School Press, at Chapter Five (2004). The proposed Program
Approval rules will significantly impede our schools' ability to ccntinue providing students with
current, innovative and needed programs and will have significant negative consequences for
millions of students. I respectfully urge the OMB to direct ED to withdraw its Program Approval
proposal
Finally, I note that, while the ED's full package of proposed rules had previously been labeled
"economically significant"' Reg 1 appears to now have been reclassified as not economically
significant. As stated in a voriety of Kaplan's prior submissions and letters to ED and OMB, ED's
proposed regulations, whether in Reg 1 or Reg 2 wilf affect over 2. 7 million students at proprietary
schools. According to IPEDS
1
data, the average tuition for a proprietary sector program is $10,000-
$14,000. If one simply multiplies the number of students affected by the average tuition, it becomes
abundantly clear that the ED's proposals' annual effect on postsecondary institutions in all sectors
and the U.S. economy could easily nm in the billions of dollars. It is difficult to &!hom how Reg 1
could have been re-labeled as not "economically significant regulatory action". Under Executive
Order 12866, Section 3(!)(1), a regulation is significant. and requires a higher level of
economic scrutiny, if it is likely to result in a regulation that may:
Have an annual effect on the economy of$100 million or more or adversely affict in a
material way the economy, a sector of the economy, productivity, competilfon, jobs,
environmenl, publtc health or safety, or State, or tribal governments or communities.
Clearly, Reg 1 will have an annual effect well in excess of$100 million. Kaplan respectfully
requests that the OMB re-classify the ED,s draft regulations and subjcx,1 them to the required level of
scrutiny.
1
Integrated Posts"oudary Education Data System (IPEDS) is the cora education data coJlection program
for tho National Center for Education Statistics (NCES).
The Honorable Cass R. Sunstein
October21,2010
Page4
I greatly appreciate the opportunity to provide K a p l a n ~ s perspective and am looking fmward to
meeting with your staff and others in the Executive Branch to discuss Reg 1, in particular the
proposed Program Approval .language. 'While the ED's GE proposal has received the most attention
from commentators and the media, Kaplan remains deeply concemed about the tmintended and
economically significant consequences of the ED's entire proposal (Reg 1 and Reg 2). We
respectfully request that your Office at a minimum (1) direct the ED to withdraw the Progrmn
Approval language in Reg 1, and 2) classify Rcgl as an economically signiflcant .regulatory action
and subject it to the required level of scrutiny.
Since.rely,
AndrewS. Rosen
Cbalnnan and CEO, Kaplan, Inc.
Cc: The Honorable Arne Duncan
The Honorable Anthony Miller
II
Ben Smallwood
Tom Harkin
Senator
United States Senate
731 Hart Senate Office Building
Washington, DC 20510
August 25, 2010
Dear Senator Harkin:
I write to offer both rrrv gratitude for your efforts to better regulate for-profit colleges and my
suggestions for areas of further inquiry within propri etary higher education. For more than a year, l
have been employed as a Generai Education Instructor by the Riverside campus of Kaplan College- one
of the four Institutions at which the Government Accountability Office {GAO) recently uncovered
evidence of "fraudulent practices" within the admissions and financial aid departorents. While I a g r e ~
with the recent assessments made by Barmak Nassl rlan and others that the proposed US Department of
Education regulations could be more effectively strl ngent, I also believe these regulations are an
i mportant step necessary to protect future students at for-profitcoileges. Your efforts in this regard will
have posJti ve reai world consequences for a multitude of people; for that I admire and applaud you.
I hope, however, that your efforts at reform do not stop at the coilegi ate " front end." As chairman of
the Senate Health, Education, Labor and Pensions (HELP) Committt!e, I am certain you have encountered
a number of complaints about the quality of education at for-profit colleges. Still, I would like to add my
voice to the cacophony and hope that my observations may flnalry tip the scales and spur you to even
more action.
I cannot speak to the practices of the entire for-profit industry. Nor can I deflnitlvely speak to the
practices of Kaplan College In general. But t can provide you with my limited observations and
experi ences as an Instructor at Kaplan Coilege. I believe that my experience as a Kapl an College
Instructor Is not si ngular, and as such I hope to provide you with first-hand Insight into the educational
experience at Kaplan College, Riverside.
Within weeks of my inltlal employment, I recognized that the sdlool seemed willing to enroll any
student so long as those students oouid procure loans for tuition. Moreovet, I qul cldy realized that the
education of these students was not merely a secondary or terti ary priority among the campus
administration; it was not even a blip on their collective radar. During mY t enure at Kaplan College,
Riverside, I have never had a serious conversation about pedagogy or subj ect matter with my immediate
supervisor, the Education Department Program Director, or any other member of the administration. i
should note that pedagogy Is discussed during monthty in-service meetings required of the college to
maintain accreditation; however, these pedagogical lectures and discussions are led by people who have
no background in educational theory and who, more often than not, misrepresent pedagogical theory
and practice. These meetings are unproductive In terms of professional development and only exist, I
believe, to maintain campus accreditation which, in turn, maintains the college's eligibility to receive
federal student loans.
While the college administration seems to have little interest in fostering serious pedagogical
discussions with and among Instructors, they do manage to have dally discussions and meetings about
student attendance and retention. I am required to call students multiple times to try to convince them
to show up to class, if only for a moment. As long as my class attendance rosters show no absences, my
supervisors are content. Kaplan Instructors are constantly rewarded with public recognition and
certificates for low student absence rates - I have never witnessed a similar award for excellence in
teaching. SlmlfarJy, Kaplan Instructors are continually notified publically and privately when absence
rates for any Instructor rise too high. Instructors with high absence rates must o:>mplete additional
paperwork, must attend additlonal meetings about student retention, and even run the r isk of
termination.
Most of the contact between the administration and centers around some form of
the question, "How can you improve the attendance within your classes?" My general response to this
question, both orally and In writing, has been to tell administrators that the attendance issues at l<aplan
are largely a symptom of unethical practices In the recruitment and admission of students. For Instance,
in a February 17, 2010 email correspondence with my immediate supervisor, l stated that I had "grave
concerns about the admissions" practices at Kaplan college. Not surprisingly, the school administrators
have continually dismissed rrrt claims as unfounded and have renewed their efforts to inspire me to
become an attendance-oriented Instructor. However, as the GAO report confirms, many students
to proprietary schools have little chance of achieving academic or professk>nal success within
the fields for which they are Neducated.,.
This attendance-based reward and punishment system effectively trains instructors not to provide
students with challenging instruction, but to instead provide them with incentives to show up to dass.
Within the administrative ethos, educators at Kaplan College do not exist to further student education.
Instead Kaplan Instructors exist to ensure that students remain eligible for federal loans. instructors
become babysitters and students become cash cows to be managed, not taught.
I have remained with Kaplan College tor the past year having convinced myself that I might further my
students' education despite the unethicaf administrative policies which focus on retention of student
monies at the expense of student intellectual capital. Whlle I still hope that my classes have provided
value to my students' Jives, I no longer believe that I best serve those students by remaining with them
under the yoke of an oppressive corporate culture. The GAO report revealed tx> me the pervasive nature
of thls problem, and I will not continue to serve a system that will tether many of my students to debts
they cannot repay for an "'education" that will not serve them after graduation. So, shortiy before
sending this letter, I submitted my resignation to Kaplan College.
While the "gainful employment'' provision within the current proposed regulations mlght provide some
improvement with regard to educational quality at proprietary colleges, it will not resolve the systematic
failure of these institutiOns to value education above profit. You, however, might very well be able to
find a place for education within the for-profit business modeJ using a similar strategy to that so well
implemented with the clandestine investigation of for-profit admisstons and financial aid departments.
I suggest that you conduct a secret student, rather than secret shopper, investigation. The results of
such an investigation would, I have no doubt, reveal unethical, if not fraudulent practices within for-
profit higher education. More Importantly, I think, such an Investigation would provide a stark contrast
between the quality of education provided at traditional, non-profit Institutions and the quality of
education provided at for-profit coileges.
! wish 1 could do more for my students. 1 wish that I heid a position of power from which I might fight
for them. But as a soon-to-be unemployed teacher, there is little I might do. So I put my hope in you,
Senator. Your actions with regard to the current proposed regulations bespeak your investment in this
Issue. I implore you to further that investment by more diligently considering how students are
educated after they pass through f o r ~ p r o f i t admissions halls.
I . ~

Cc: Ame Duncan, Secretary, US Department ot Education
II
/
Sunday, August 22,2010
Secretary Arne Duncan
U.S. Department of Education
Docket ID: ED-20100PE0012
1990 K Street, NW Room 8031
Wash]ngton, DC 200068502
Mcintyre. 1
Dr William Mdntyre
EDMC Art Institute, Inland Empire
The University of Phoenix, Southern California
22422 Glenwood Dr
#2200
CrestHne CA 92325
Email: wmcintyre@aii.edu
: .:
-->
RE: Gainful Employment Rule Denies Student Access, Costs Critical Jobs
Dear Secretary Duncan:
The various metrics in the proposed "Gainful Employment Rule" are in some cases
arbitrary and unfair. For instance, some years ago, I graduated with a Bachelor's degree in
English Literature from U.C. Berkeley, a toprated university. What job did this degree
prepare me for? Writing 18th century novels? Writing Shakespeareanera iambic
pentameter plays? Certainly, not teaching for that, I needed additional credentials. By the
proposed rule, because I and almost all other English majors were not able to find a job in
my "field," this program would be disqualified, as would many programs in the Arts and
social sciences.
Later, I acquired a master's degree in English literature, with an emphasis in creative
writing from Cal State University San Francisco. Again, my degree did not allow me to
obtain a job as a best-selling novelist (or anything selling novelist) or a paid screenwriter.
Would you disqualify this program?
Additionally, the rules you propose are grossly unfair in that they apply to one category of
schools but not another. You establ ish a false opposition between private and public, for
profit and not-for-profit. The same rules should apply to all colleges and universities
because you fail to take into consideration that the forproflt sector serves a studentbody
population that has not been served by traditional schools. The sectors do not stand in
opposition to one another; they complement one another.
For instance, one of the schools at which l teach the Uhiversity of Phoenix- has been one
of the innovators of online education, which has carried the opportunities of education to
students outside of the demographic and geographic areas normally served by traditional
Mclnryre- 2
schools. Additionally, the University of Phoenix also has structured its "on-ground" courses
around two principles: 1) take the school to the students, and 2)arrange for class times that
make the education accessible to working adults. Atthe University of Phoenix, I have
encountered countless students for whom higher education is only a possibility because of
the innovative scheduling and modalities.
On more than 45 campuses, The Art Institutes' faculty and staff prepare students for a
successful career in their preferred field- from culinary arts to photography to graphic
design. We take great pride in our skilled faculty's ability to educate students, and I have
closely followed the Department of Education's consideration of a Gainful Employment rule
t hat - as currently proposed- could bar thousands of our students and millions nationwide
from receiving an education of their choice.
Having worked so closely with our students and the academic programs in which they are
enrolled, I can attest that t he quality of a higher education cannot be judged by an arbitrary,
one-sizefitsall metric test. ln fact, the rule proposed by the Department Is biased against
the quality degree programs offered at The Art Institutes, in favor of less costly certificate
or diploma p rograms.The Department of Education's proposed rule would block students
from academic programs that position them for success in the job market. Over the years, I
have seen countless students come through The Art Institutes and leave with practlcal
skills that translate into real world experience and a job. Without student aid, thjs would
not be possible. This is an unwise and inadvisable r.ou rse of action at a time of high
unemployment across the country. Career education should be encouraged, not
discouraged.
The proposed rules fail to consider that many of the students whom we serve are non-
conventional and otherwise ~ a t risk." At the Art Institute, for instance, most of our students
have not been prepared by our (mostly) public education system for traditional academic
study or are just not indined to such study- which is in traditional venues taught in a
pedagogic style that is more than 1,000 years old and is heavily focused on content which
many contemporary students find irrelevant to their needs. One of the prime virtues of
such for-profit schools is that they focus on lhe perceived needs and interests of the
students. This is why they have grown exponentially over the past years -- not because they
have "tricked" people Into enrolling.
The Gainful Employment rule will have a particularly adverse effect on degree programs
offered to low-income, minority, women, working adult, and other at-risk students. This
will result in reduced access, less opportunity, and fewer choices for these students.
The students who enroll at the for-profit schools do so well aware of the other educational
opportunities available to them. At the Art Institute Inland Empire and the Southern
California campus of the University of Phoenix, for instance, l teach students are well aware
of the much lower cost colleges and universities in the vicinity. Within a 20 minute drive of
each campu-s at which I teach, there are a half-a-dozen (at least) public venues for higher
education. Yet. these students chose to en roll with us. They do so for a variety of reasons--
the for-profit schools offer courses of study not offered at more conventional schools. The
Mcintyre- 3
modality of instruction is often times much more "user friendly." Often, the for-profit
schools are smaller, which l ends them to more interpersonal interaction -- student to
student and student to instructor: for instance, it is not uncommon that in astngle walk
down a hallway 1 encounter half-a-dozen students whom I know (and whom I will greet ...
often by name); this personal closeness possible at a school with a 1,500 population but not
possible at a university with 30,000 students.
Should abuses be cor rected? Yes. Should enrollment counselors be regulated so they tell
the truth to prospective students? Yes, undoubtedly. But should the for-profit educational
sector be governed by unfair and unevenly applied rules. Absol utely not.
Because if you shut down the for-profit educational sector, you are doing more than
shutting down a few businesses. You are shutting down the hundreds of thousands of
students who depend on us and who find considerable value in what we have to offer.
liam Mcintyre
EDMC -Art Institute, Inland Empire
The University of Phoenix, Southern California
22422 Glenwood Dr
# 2200
Crestline CA 92325
Email: wmcintyre@aii.edu
ANDREWS. ROSEN
Otalrmaund ao
Kapil, Inc.
September 8, 2010
The Hcmorablc Arne Duncan
Secretary of Education
U.S. Department of Education
400 Maryland Avenue, SW
Washington, DC 20202.{)008
Re: Docket Number ED261 0-0PE-0012
Dear Mr. Secretary:
Readers of recent news reports and casual obsetvers might conclude that private sector
("for-profit") colleges and the federal government are adversaries, with different views
about the needs of our students. I believe the contrary is true.
I write to you from the point of view of someone who shares your dedication to
expanding access to high-quality education. I believe there are far more similarities in our
goals than points of contention. Neither of us wants to see students take on debt they will
have difficulty discharging, nor taxpayers bearing undue burden. We both want to
provide access to undersetved students, especially low-income working adults who may
have been left behind by traditional post-secondary institutions. We both believe deeply
that all students deserve consistent access to educational excellence. And we both
recognize the value that competition can continue to play in creating a world-class higher
education system. None of us claim to. have all of the answers, but I think we both see
how new learning approaches and innovation strengthen our country's education system.
Kaplan Higher Education has graduated more than a quarter-million students over the
past ten years, and I'm consistently moved when I see at our graduations the pride and
sense of accomplishment in our students' faces. Frequently the voices of celebration in
the audience are those of our graduates' children, who look upon their parents as role
models for the proposition that hard work and study really matter. Our graduates- often
from limited means - have taken their place as important contributors to the Amerjcan
story.
Kaplan' s roots as an education company go back more than 70 years. From the
beginning, our focus has been on expanding to education. Stanley Kaplan, our
company' s fotmder, enabled immigrant famili es to gain entrance into competitive
colleges. by demonstrating merit on standardized tests. That mission is no less central to
6301 Kaplan University Fort Laudetdale, FL 33309
Kaplan today. Our entry into JXlSt-secondary education ten years ago was based on
serving non-traditional students who found traditional college pathways poorly suited to
their needs. Over 60 percent of our post-secondary students are low-income. Many are
the first in their families to pursue a college education.
I am writing this letter because of the recent Notice of Proposed Rulemaking of"Gainful
Employment" rules. While I applaud the efforts of the Administration and the
Department of Education to improve higher education standards and I welcome the
Department's oversight, I am confident there are better ways of accomplishing the
Department's goals.
There has been a lot of talk about "good actors" and "bad actors" in for-profit education,
without a clear definition of what those references mean. What this talk frequently fails to
consider is the fact that diverse student populations exist among institutions. In the non-
profit world, what might constitute excellence on certain metrics at Chicago State
University. for example, might be far below expectations at DePaul University or
Northwestern University. This differentiation holds true at for-profit institutions as well
I would 311ggest that a ''good actor" is one that condstently delivers strong metritS
when cmnpared to institutioltS with similar Shldenl popuJtUionY. Institutions whose
students average fewer than two of the Department's ''risk factors"
1
should be compared
to other "low risk" institutions; those with students averaging between two and four of
the "risk factors" other ''medium risk" institutions; and those with more than foUr
with a "high risk" cohort. Within these cohorts, this common yardstick would distinguish
among those institutions that are serving their sndents well and those that are coming up
short. Comparisons within cohorts on a range ofmetrics- graduation, placement, default,
income change, etc. - would be appropriate.
I \Wuld, argue that all institutions, regardless of tax status, should be compared by cohort
on these same metrics. After all, to the extent the goal of regulation is to protect students,
it should not matter whether an institution is non profit or for-profit. Even so, to the
extent the political environment dictates thal you focus only on forprofits, at least the
detennination of whether the institution is a "good" or "bad" actor should take into
accoWlt bow that institution performs relative to all providers serving similar populations.
I would further suggest that a actor'' Is one that ensures that students have an
lnfomu!d understanding of the program of study they are utulertakmg- including,
among other things, cost, anticipated debt burden, and likely outcomes - and an
opportunity to knowingly agree to those expectations. At Kaplan Higher Education, we
are absolutely committed to furthering these goals, and we have recently taken significant
steps to reduce the chances of any individuals violating that commitment. I would
weJcome the opportunity to discuss these steps with you or members of your staff.
l The Department's National Center for Educa\lon Statistics (NCES) defines a hlgh-rlsk studeat as having
t'our or more of the following facton: (l) delayed enrollment, (2) part-time attendanoe, (3) financial
indepcndeoce, (4) lurviog other than a spouse, {5) working full-lime while enrolled. {6) lacking
a high school diploma, and (7) single parenthood.
2
Kaplan's goal, however, is to go even further by making an introductory portion of our
program "risk free" to our students. That is, we want to enable any students who choose
to enroU in our programs to have a multi-week period, depending on the length of their
program, in which they can assess whether the program is right for them. If they decide
for any reason it is not, we will refund all tuition payments to the student or to the
Department of Education. This approach, assuming it meets with regulatory and other
approvals (and we invite your office's help to ensure that it does), will not only Jet
students get a real experience with our courses before incurring any expenses or future
debt, but will diminish any motivation to "oversell" students into programs. While this
approach will be expensive for us to implement, it will help us meet our goal of ensuring
that every one of our students is in class because he or she is committed to being there
after fully understanding the commitment he or she is making. At the same time, it will
serve as an important protection for taxpayers.
I believe these are more appropriate ways to discern the difference between "good" and
"bad" actors than the proposed Gainful Employment (OE) regulation, which serves
primarily to punish institutions that have taken on the task of serving high risk
populations. Private sector institutions would be pushed by this regulation to seek to
serve the same mote-aftluent student populations that are already well-ser\red in the
marketplace, rather than the more needy students who can most benefit from our help.
Kaplan Higher Education will submit its fonnal Comments to the July 26; 2010 Notice of
Proposed Rulemaking, and I refer you to those Comments. However, I wish to make the
following brief comments about the reasons we think the proposed Gainful Employment
regulation will lead to unintended and unwanted consequences:
GE will dramatically reduce educational options for low-income students.
1be correlation between violations of the GE standards and low-income student
population is very high, suggesting on its face that the proposed regulation serves
less to distinguish between good and bad actors, and more to distinguish between
those who welcome \Ulder-served students and those who do not.
GE will result in slgnificalltly lligher costs for taxpayen. Several recent studies
have concluded that for-profit education is the most tax-efficient of all sectors of
higher education. Public institutions receive between 90% (at two-year
institutions) and 590% (four-year institutions)
2
mlll'e in combined federal, state
and local taxpayer support per student than do for-profit institutions. Any attempt
to shift students from private sector to public institutions will require dramatically
higher taxpayer contributions - at a time of significant pressure on government
resources.
GE wm dlmiuJsb educational outcomes for Che reduced number of students
who are able to continue their edcation. Even for those students forced out of
private sector schools who are able to find slots in public institutions, the
2
"Taxpayers' Costs to Support Hiiher A Comparison ofPub1ic, Private Notfor-Profit, and
Private ForProfitln!litutions,'' Robert J. Shapiro and Nam D. Phatn. Septomber 2010.
3
prospects are not promising. Recent studies have demonstrated that graduation
rates for students at two-year for-profit institutions are nearly triple that of
commwtity colleges,
3
and earnings increases for private sector students outpace
those of public two-year institutions.
4
GE wiU reduce competition and ianovation in higher education. The
American higher education system became the best in the world when our funding
system put money in the hands of students, so they could choose the institutions
that best served their needs. That approach has made students the winners as
institutions innovate and compete for student loyalty. Overriding student choice
through the regulatory process will only weaken American higher education and
reduce the healthy competition that has been cx:ntral to its sue<:ess.
GE will place the Department in tbe uncomfortable and inappropriate
position of setting tuition prices, determiningwhidl programs schools can
offert and dktatlug which students schools can accept to remain compliant.
The proposed regulations are troubling in the extent to which tliey turn the
Department into a decision maker in areas that previously were assumed to be-
and that Congress expressly wanted to be -within the prerogatives of students or
institutions. Beyond the questionable leg8l basis for such a step, this move toward
federaliz.i.ng higher education is ve:ry poor policy, and will undennine the vitality
of institutions America needs to retain its economic pre-eminence.
1 believe that Kaplan's goals and those of the Department are aligned in most areas.
Although I disagree strongly with some of the approaches presented in the NPRM as a
way to achieve those goals, I am fully committed to the proposition that in addition to
educational excellence, students deserve a full Wlderstanding of their responsibilities and
obligations; they should never be matched with programs unsuited to their skills or
aspirations; and students should never be encouraged to take out loans that they will not
be able to repay.
We embrace the challenge ofhelping President Obamameet his goal of restoring our
country to leadership in educational attainment. We believe his goal is achievable, can be
realized at a price our COWl try can afford, and will have very important positive
implications for our society and economy in coming decades. At Kaplan, we have
invested significantly in technology, pedagogy, and research into student learning, all of
which we think can be helpful in achieving this goal, and we are eager to share our
experience, research, data and capabilities to assist you. To reach important goals like
this, our country needs all of us pulling together. I urge you to slow down the sprint to
implement-regulations that are so contrary to the President's goals. and instead substitute
new regulation that would encourage "good actor'' institutions to continue their good
1
NCES: Enrollment in Postsecondary Insrltutloos, Fall2008; Gra.duatJon Rstcs 2002 and 2005 Cohorts;
and Financial Statistics FY 2008, Published April 2010, page 14.
The Parthenon Group: Perspec\lves on Private Se;ctor Post-Secondary Schools, Do They Deliver Value to
Students and Society?; Robert Lytle, Roger Brinner, Chris R o s s ~ Febnwy 24,2010.
4
work across all of our cowttry's student populations and become full partners in the effort
to achieve our nation's pressing goals.
Andrew S. Rosen
Cc: The Honorable Anthony Wilder Miller
Ms. Jessica Finkel
s
Ill
DeVry _,
DeYry IlK.
Parkway

fi0515-S199
ll0-51 s-noo
800-? ll-!an.

November 11. 2010
The Honorable Arne Duncan
Secretary, U.S. Department of Education
400 Maryland Avenue, SW
Room7W31'1
Washington, DC 20202
Dear Secretary Duncan:
: c :- c:= U!UCATI Otl
.
1
''' OS/ES/CCCU
ZOIO NOV 15 A lO: 02
I wanted to thank you, Anthony Miller, Georgia Yuan, and Eduardo Ochoa for
taking the tlnie to meet with us recently. We appreciate that the
Administration is open to continuing the discussion on Gainful Employment,
Incentive Canpensation and other issues currently being debated in higher
education.
Ultimately, we all share the same goats: increasing access to higher
education, providing quality outcomes for students, building a wor1<force that
can compete in a global economy, and meeting the President's 2020 initiative.
We believe DeVry is well-positioned to help on all those fronts.
I would like to expand on our conversation and provide you with more details
on our Gainful Employment and Incentive compensation proposals, and
specifically elaborate on BLS data as It relates to DeVry programs.
Gainful Employment Proposal:
1. Use eStablished metrics, like CDR and BLS earnings by occupation.
We like the proposed metrics, but the quality of the data, as of now,
lacks transparency and therefore is not ready for in mediate
implementation. For example:
Discrepancy in Keller data that essentially has them going from
5% default in one measure, to 65% in another. Ills our
understanding that ED cannot account for this dlscrepancy.
Discrepancies between cohorts in repayment rate calculations
vs. CDR calculation that undercoonts DeVry University by
27,000 students (30%).
Actual earnings information is not available to either ED or
schools to would have to rely on government to be
inerrant, which is not the case.
We propose an interim measure for loan repayment and debt-to-
income. Use a 3-year CDR of 30% at program level (to see potential
impact, look at schools with 30% 3year COR) and use BLS data
adjusted for educational level.
I also wanted to provide you with BLS data as it relates to DeVry
program offerings to give you a more concrete example of our
approach.
Using the BLS crosswalk, OeVry's Bachelor's in Business
Administration degree maps to a group of twelve occupations. These
occupations include relatively obscure titles such as cost estimators to
more prevalent titles such as operations managers. ACtual
employment positions for DeVry Business graduates go well beyond
the occupations in this mapping. However, the weighted average
earnings for this group at the percentile (about $43,000) is
proximate to the eamings of our fl!l This relationship
holds for the two other mappings for OeVry undergraduate degrees
(Management, Computer Information Systems) that havea broader
result in employment positions. So, while the actual occupational titles
are not reflective of ttle range of positions our graduates attain, the
earnings from these titles are.
2. Debtto-income: Differentiate regulations by education level - a
welding certificate should not be held to the same economic outcome
standard as a Bachelor's In Business or a Master's in Nursing.
Certificates - use BLS percentile, 10 year repayment term
at 8%. Same as the EO proposal, just using BLS data.
AAS/BS- use BLS soh percentile, 20 year repayment term
(longer perspective reflects greater economic return on
programs); for degrees, a higher percent of ear1y income
makes sense. Oebttc:rincome is fine, but students get a degree
for the debt to liretime Income, not ear1y income.
Graduate- reinforce disclosure requirements so graduates
(who have already been educationally successful) can make
fully informed decisions on gainful employment opportunity that
is relevant to their situation.
3. Prospective lmplement atbn: We all have the same goal- increase the
number of good performers and, by extension, our educational
capacity. To do that, we need to give fatting or marginally performing
programs a chance to improve. There Is precedence for this approach
In virtually all EO rules.
Incentive Compensation: We appreciate the clarifications and changes
made in the final rule. However, there is still the potential for unwarranted
litigation which will ultimately Increase costs and debts for students. The
Misrepresentation Rule is the more appropriate enforcement mechanism for
ED to use. We would note the following inconsistencies below and make the
appropriate recommendations:
1. The definition of the 2 words "securing enrollment" would extend to
include program completlon and graduation. This appears to
contradict the President's a11d Secretary's challenges to increase
graduation. And it goes against state financing initiatives which reward
public colleges and universities for increasing the number of students
they graduate. We support the performance metrics that are
encouraged In K-12 programs like Race to the Top and think they
would also be appropriate for higher education.
o We recommend that aseeuring enrollment" means enrollment,
not retention/graduation. . .
2. The total ban on being able to do an annual performance review that in
any way acRnowledges the person's performance in their job -whether
a recruiter, an academic advisor, or a provost - would prevent colleges
from holding people accountable for student outcomes. Worse, the
unintended consequence will be increased litigation that could dilute
schools' focus and resources away from education. This is an active
area for trial lawyers, turning routine employee terminations into claims
of violation of this law.
o We recommend that annual merit-based salary adjU$,tments
that contain some, even diminimus, qvantltaUve measurements
of performance are not included in the restriction on incentive
compensation.
3. The new rules ban recruiters from being able to participate in
discretionary payments, such as profit-sharing contributions to 401 (k)
retirement plans, even if such payments are the same for all
employees in an institution. This seems to be an overs ight, but needs
to be corrected, or these people will miss out on an important part of
their retirement savings.
o We reoommend that discretionary contributions to pansion and
retirement accounts should be permissible to all employees as
long as they are calculsted on the same basis for each
employee, regardless of their position within the institution.
We look forward to your feedback on these issues. We also look forward to
completing the regulatory process and moving on to more comprehensive
measures of educational outcomes. Please feel free to contact me if you have
any questions.
Sincerely,
President and CEO
THE SECRETARY OF EDUCATION
WASHTNCTON, DC 2020'2
Mr. Daniel Hamburger
President and CEO
DeVrylnc.
3005 Highland Parkway
Downers Grove, IL 60515-5799
Dear Mr. Hamburger:
January 11, 2011
Thank you for your letter regarding our meeting concerning the Department's recent and current
regulatory activities pertaining to program integrity regulations, particularly issues surrounding
gainful employment and incentive compensation.
I very much appreciate receiving the additional clarifications provided in your letter regarding
your format comments on our proposed rule relating to gainful employment, and your
suggestions for implementation in relation to both the gainful employment and incentive
compensation issues. I appreciate the from you and others in the higher education
community with whom we have met. We are striving for the best outcome for students,
institutions, and taxpayers, and we appreciate your willingness to work with us to achieve that
goal.
Thank you again for taking the time to write as a follo<.v-up to our discussion. We look forward
to working with you we implement initiatives that benefit our postsecondary studenL'i.
Sincerely,

Arne Duncan
II
9/26/2010
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Mr. David Pauldine, President
Devry
1
Inc.
3005 Highland Parkway
Downers Grove, IL 60515-5799
. , . , I : : :; " t.
Re: Comments by Harris Miller, APSCU CEO, to the Atlanta Journal- Constitution
Dear Mr. Pauldine:
As much as I consider De Vry tre only McUniversity that I would pay money to attend, some comments
by Mr. Harris in Defaults lmpqct schools, Atlanta Journal-Constitution Sept. 26, 20 LO are most
unhelpful and serve to clarify the need to do something about the bounty of crooked for-profit schools.
be able as a grown-up to decide to enroll. The Department of Education thinks
.. knows best- better even than well informed consumer . ., As a taxpayer, my view is that if a
has his or her own money to pay for training he/she may enroll in any school he/she
choosei"to attend. I can not make an agenda of people's decision when they spend their own money .
.. ... .. . .
.. .
Howev.er, .if that individual intends to spend my money for an education I demand that the Department
of Education insist that the individual receive a meaningful and gainful education- enough tbr the
graduate to enjoy employment and return of my money to the US Treasury. This point is not negotiable.
I do not want to hear an)1hing about the color or ineptitude of the student body, because large
organizations have a long and proud history of running to any minority concentrated poverty abatement
government initiative to set up fronts, frauds, surrogates, and button men to rip off the initiative.
Invariably, the minorities are left in debt, with a criminal record, ruined reputation, and even more
poverty. if you do not believe this Google "HUB Zone Abuses," "Empowerment Zone fraud." Hope
VI fraud," and "student loan abuses!' You wiLl see why taxpayers arc sick and tired of your industry.
Perception is reality. Fact is that the for profit education industry has a more squalld reputation than a
skunk in attendance at the queen's candle light dinner party. We have images of industry boiler room
recruiting process enrolling criminals, who could not get a job with four Ph. Ds. We have footage of
industry lying to innocent working class people, trying to educate their way out of poverty. We have
footage of industry employees slamming doors on when the former could not explain abusive
acts. We have footage of enrollment officers helping unqualified applicants to lie about the latter
1
s
eligibility to get a student loan- all in the name of getting these people's government funded tuition.
Government should not butt out, and I will work in the political process to terminate any government
that fails to crack down on for-profit schools and force them into a place where they are part of the
solution and not part of the problem. Mr. Harris should not be deluded.
Mr. Harris is speaking as if government money is free money and government is like a spoiling
interloper who has come to disinfect this economic cesspool and spoil the stinking fun. WelJ, he shouid
be clear that the boom has come to town and is corning down on McSchools where his mentality
pervasive adminisliative currency.
I must admit that all these schools are not like American InterContinental University. De Vry is a
shining example, with a long record of training people successfully and cthlcaJly and then putting them
to work making good money and making a real difference in their respective industries .. So, I am not
against for-profit schools per se. I am against the red light district reputation of the industry, and its
view that the US Treasury is a plantation to be raped, plundered and burned.
Mr. Harris continued, "You could have hundreds of thousands of thousands of students no longer
longer given the opportunity of enrolling in these programs." What he is weeping about is that his
industry's abuses will be stopped. This bleeding heart nOtion has nothing to do with the academic
success of poor people- he already said they are black and overworked, meaning that low expectations
arc justified. It is about his for-profit heart breaking, at 1he prospect that business as usual in his
industry will fmalJy come to a day of reckoning.
Fact is that the national return on investment (ROI) is not trere for this $30 billion industry. 88% of
these students borrow from the government. They borrow twice as much as government school and non
profit school students. They default twice as often. A Phoenix degree boost the graduates income an
anemic 9%, and at the end of fifteen years a full 30%, or twice as much as the and
government school students, will default In some countries people like Mr. Harris would be sent to a
labor camp in a place like Nev.ada or Alaska for these kinds of rnetrics.
Mr. Harris shows a proverbially worst weakness of an incompetent or dishonest producer, who is not
committed to positive changes, quality assurance, and imitating great benchmarks- 'they blame the raw
material; his students, he cites, arc minorities (read stupid) and have mortgages and juggling families. It
is quite foolish to make these claims because the majority of the graduate degrees, in this cow1try, are
awarded to women with children, husband, jobs, and community participation. So, the rotten apple
inventory is purely and excuse to continue robbing the taxpayers blind.
cc: Robert Herzog, Treasurer Harrison College
Harris Miller, CEO, APSCU
Arne Duncan, Secretary of Education, United States Of America
Steven J. Tober, CEO, AmericaninterContinental University
David J Kaufman, ID, Board Vice Chair, Duane Morris, LLP
...
NANCY J. KlNG
3'Jrb f {)iJrricr
( :Cunr;;
!lmutpolis Offirr
S.:narc: Office Building
11 Srm:t, Room 121
M:uybnd 2.1,.01
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( Strl>c;nrnmiuc:c
!icJith, F.duc.nion, 300
Human &sour<:o;s Sulx-cnnmitt'c
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Childrt:n. 'rou:h. :wd
September 29, 201 0
THE SENATE OF MARYLAND
ANNAf>OLlS, MARYLAND 2.140l
The Honorable Arne Duncan
Secretary of the Department of Education
400 Maryland Avenue, S.W.
Washington. D.C. 20202
Dear Secretary Duncan,
l:'xr 361!6
liwo: .JI084IJ67o
Na rty.Kinl'\@,..,nau:.starc.md. us
Dis1Yic1 Offir"
9901 Shrewsbury Coull
Vill;Il(c. :'IAar)bnJ 10111!6
Fnx
As the Department of Education works to finalize its regulations on "gainful
employment", I wanted to share with you some information about one for-profit school i.n
Maryland- The University of Phoenix.
The University ofPhoenix has over 11,000 Maryland students studying online and clooe
to 1000 students attending classes at four campuses situated throughout Mary land. As a
State Senator in Montgomery County, Maryland, I am very aware ofthe positive role that
the University plays in our community in providing jobs for faculty, administrative and
staff support as well as paying thousands of dollars in both state and local taxes. I am also
aware of the positive impact the University has had in providing working adults in our
community the ability to obtain degrees which will prepare them for careers or career
advancement.
During these difficult economic times, I hope that all proposed regulations will carefully
consider the impact that the regulations will have on employment in our states. I applaud
the Department for their work on behalf of higher education in our country and appreciate
your consideration of my concerns.
-
MARK HASS
STATE SENATOR
DISTRICT 14
September 13, 2010
The Arne Duncan
OREGON STATE SENATE
Secretary of the Department of Education
400 Avenue, S.W.
Washington, DC 20202
Dear Secretary Duncan:
Committees:
Education and General
Government, Chair
Environment and
Natural Resources
Finar"'ce and Rovcnue
As chair of the Senate Education Committee, I have a good understanding ofthe vital role University of
Phoenix plays in the spectrum of higher education options in Oregon. About 3,000 students, many of
who are women and minorities, attend classes here, working on college degr'ee completion or graduate
degrees. These students are working full time, and for many, this is the only viable option for them to
improve their employment opportunities.
By increasing their skills and knowledge, and by obtaining that diploma, they are not only enhancing
their pef"S<)nal chances at success ln. life, but are adding to the number of Oregonians who can compete
in this world of ever-increasing demand for knowledge-based jobs.
I know that University of Phoenix students have an extremely challenging task in carrying a full load of
higher education classes while working full-time. I know because I was once an instructor there and I've
found the school is genuinely committed to their success.
I'm an advocate of all levels of learning pte-k-to-grey and I know UP has a strong support system that
helps their students complete their goals and become more productive citizens.
Sincerely,
Mark Hass
Oregon State Senator
District 14- Washington County, Aloha, Beaverton, SW Portland
Office Address: 900 Court Sl. NE S-419, Salem, OR 97301 Phone: (503) 9661714 - Email : sen.mali<hass@state.or.us

{ :N:TE() S'f A I'ES DFPART\1 FNT Or n!X:C::'\TrON
CH iC'I OJ' r-o:-TSF(.OI\l),\gY !1DW::\'! J()i\
Tbe Honorable Mark
State Sc::nuror - Disrrict 14
Oregon Sta:c Senate
900 Court Street, NE S-119
Salem, OR 97301
Dear Senator Hass:
Thank you for your letter to Duncan 1hc Depart.n11::nt's pruposcd
intcgri.ty focust!d on lht! of gainfnl en\ployment in <l
letter bas forw-.u:d.::d to the Office of Postset:.vndary Educauun .md
I am pkased respond.
The Dejn"lrtmcnt is cunenCy in the rwc:css of sorting and the many
submitted by Cnngres5 and of the public regarding the of Proposed
tNPRM) on this is..,ut: purlished in the Federal on JuJy' 26, 2010.
The pub!ic camr.ncnt period for the l\TRM clos(!d on 9, 2010. We an:
committed to gi vmg every consideration to all the commcllts received on or before the
comment period clo:;ed. U:.til those commcul:> have been full y reviewed and it
would be premature to :\pe2k to what the final nde may or may r.ot
Please: be assured chat we value ycmr inplll and thnnk you fur yourlhougbts on tnc
proposed rule witt us.
.Sincerely.
//l j

M. Ochoa
Assi:-tant for
Postsecondary due ation
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t'C!I,ari:m.:d .C! .1!1Lt < . .'fi.lUt ing i:'((U.J!
From: Yuan, Georgia
Sent: Monday, January 24,2011 11:07 A1\1
To: Mayes, Edgar; Private - Miller, Anthony
Cc: Arsenault, Leigh
Subject: RE: Follow up from our conversation
T think the meeting request should go to David Bergeron directly.
Georgia
From: Mayes, Edgar
Sent: Monday, January 24, 20 ll l l :0 I AM
To: Private- Miller, Anthony
Cc: Arsenault, Leigh; Yuan, Georgia
Subject : RE: Follow up from our conversation
Hi - Alex
It appears Mr. Hamburger is requesting a meeting in the last paragraph. Should we assigned to you?
Thanks,
Edgar
From: Sova, Alexandra On Behalf Of Private- Miller, Anthony
Sent: Monday, January 24,2011 10:58 AM
To: Mayes, Edgar
Cc: Arsenault, Leigh; Yuan, Georgia
Subj ect: FW: Follow up from our conversation
Hi Edgar,
Please log this under gainful employment. It is unclear whether a response is needed. Cc'ing Leigh for James Kvaal
and Georgia because her name is mentioned.
..
Thank y o ~
Alex
From: Hamburger, Daniel [mailto:dhamburger@devry.edu)
Sent: Friday, January 21,2011 1:28PM
To: Private - Miller, Anthony
Cc: Hamburger, Dani el
Subject: Follow up from our conversation
Tony,
It was great catching up with you during the Aspen Institute conference. As prdmised, let me follow up with a quick summary of the key
things we discussed:
First, re: "gainful employment" I would like to stress that De Vry agrees with the need for regulation and oversight. Poor-quality programs
should be held accountable, including shutting them down where appropriate. We're j ust very concerned that with the best of intentions, the
proposed regulations will "throw the baby out with the bath water" and actually reduce access to high-quality programs. The regulations are
too indiscriminate in which programs are affected. Regardless of how nimble and effective we can be, there are some fundamental flaws in the
proposed regulation that cannot be overcome, such as an 8% debt-income threshold for baccalaureate level programs. DeVry has made a
straightforward proposal that we believe will help "get it right." That is:
it accomplishes the goal of holding poor-quality programs accountable,
'
while avoiding the risk of shutting quality programs, and
has quality providers like De Vry, and others, that will actually support it, which bas to be helpful to the process. We know there are some
who arc preparing for a fight, which could tic the whole matter up for years. We don't think that would be gdod for anyone.
To summarize, the 2 key points of our proposal (details attached) are:
1. Wl1ile further work is done on the "repayn1ent" rate, use the 3-year cohort default rate (CDR) as an in.terim measure of debt repayment; it
has been shown to be highly correlated with the repayment concept, and carries far less risk of throwing out the baby;
2. . Use different debt I income metrics by level of education; usc BLS data rather than individual income data. BLS can be regionalized, and
has the advantage of transparency, consistent with the President's recent Executive Order.
The second area we discussed is the growing concern over "incentive compensation" and "misrepresentation." To summarize what we have
discussed with Georgia, the concerns revolve around 4 areas:
1. The definition oftbe 2 words "securing enrollment" would extend to include program completion and graduation. This contradicts the
President's and Secretary's challenges to increase graduation. And it goes against state financing initiatives which reward public colleges and
universities for increasing the number of students they graduate. It makes no sense that performance metrics that are encouraged in K-12
programs like Race to the Top would be banned in higher ed.
o We recommend that "securing enrollment " means enrollment- not retention I graduation. Persistence, and ultimately graduation is the
ultimate proof that students were appropriately enrolled in the right programs. But, we understand the potential for entities to abuse
graduation measurements for short-term programs in pe1[ormance evaluations and compensation decisions. Thus, we recommend this
restriction be only applied to those short-term programs. The concern is diminished as students persist in longer term programs and certainly,
baseless, as they graduate from associate and baccalaureate programs.
2. The definition of covered employees would extend "all the \vay to the top." Combined with the extension of the definition of"securing
enroltment," this restricts an institution's ability to implement strategies to improve access, diversity and other successful outcomes.
o We recommend that covered employees should be only those directly engaged in recruiting, admissions and financial aid activities as
originally expressed by Congress. This would include any leadership roles for whom those activities comprise a substantial portion of their
position responsibilities.
3. The total ban on being able to do a performance evaluation that in any way acknowledges recruiting and fmancial aid personnel's
quantitative performance in their job would prevent colleges from holding people accountable for student outcomes. Worse, the unintended
consequence will be increased and perhaps frivolous litigation that would take all schools focus and resources away from education. This is an
active area for trial lawyers, tuming routine employee terminations into claims of violation of this Jaw. The commentary in the preamble
suggests that some minimum standards of performance not only are allowed, but expected to be a part of any employee's performance
expectations. How such should be used and included in the evaluation is left ambiguous and if used, will certainly be the basis for litigation.
o We recommend that annual merit-based salary adjustments that are based on a pe1[ormance evaluation with some quantitative
measurements as minimum standards o[pe1[ormance not be included in the restriction on incentive compensation.
4. The restriction on profit-sharing payments to recruiting and financial aid personnel. We believe this restriction is a misunderstanding of
the nature of most profit-sharing plans. For most organizations, for-profit and not-for-protit alike, profit-sharing distributions are made in the
way of discretionary contributions to employee retirement plans. The contribution amounts are typically formula-driven treating all employees
within any employment categorization (full-time, part-time, etc.) alike. The restriction on distributions to some employees may run afoul of
ERISA compensation rules.
o We recommend that the restriction on profit-sharing payments not apply to discretionary contributions made to employees' retirement
accounts if those contributions are made to alf employees and are calculated similarly for all employees within a certain employment
categorization.
The third issue has to do with international medical schools. During the negotiated rulemaking process, discussions were held, separately to
spcci fically discuss the Ross Bahamas situation, and at the table to discuss the impact on student Title-IV eligibility with enrollment at
ineligible sites. We supported the proposed rule, but with a clear understanding of the impact on Ross students as explained by David
Bergeron to our staff. This was based on meetings we bad with David, and we have provided a summary of those conversations to him. But in
December he sent us a letter that is not congruent with the agreement we bad reached. Can we set up a meeting to discuss this and hopefully
reach a resolution? This is an issue that would have a significant negative impact on current as well as future medical students, so it is a matter
of some
Thanks for having given so much time to the conference, and for sharing your thoughts and insighls.
Best regards,
Daniel
Daniel Hamburger
President & CEO
DcVry Inc.
3005 Highland Parkway
Downers Grove, fL 60515-5799
(630) 725-1931
dhamburger@devry.edu
Assistant: Pat Derby x1930
Our Purpose: Empowering our students to achieve their educational and career goals.
From: Sova, Alexandra
Sent: Thursday, January 27, 2011 1:36 PM
To: Mayes, Edgar
Subject: FW: Follow up from our conversation
He])o Edgar,
Please add this to Lhe chain we created on 1/24/20 I 1. Based on our last email, we decided to assign it to OPE!
Thank you,
Alex
From: Hamburger, Daniel [mailto:dhamburger@devrv.edu]
Sent: Thursday, January 27, 201 1 1:26PM
To: Private -Miller, Anthony
Su bjcct: RE: Follow up from our conversation
Thanks, Tony. Completely understood; we will follow your direction.
If we can be helpful to the process in any way, of course please let me know.
J?est regards,
Daniel
Daniel Hamburger
President & CEO
DeVry Inc.
3005 Highland Parkway
Downers Grove, lL 605 l 5-5799
(630) 725-1931
dham burger@devrv.edu
Assistant: Pat Derby xI 930
Our Purpose: Empowering our students to achieve their educational and career goals.
From: Sova, Alexandra [mailto:Aiexandra.Sova@ed.gov I On Behalf Of Private - Miller, Anthony
Sent: Thursday, January 27,201 I 9:05AM
To: Hamburger, Daniel
Subject: RE: Follow up from our conversation
Daniel,
I have passed along the feedback to the appropriate staff and supporting attorneys regarding the issues with the international medical schools. I
encourage you to continue to follow up directly with our Office ofPost Secondary Education as wel l.
Regarding the gainful employment concerns, we recognize well the issues and have crafted a process to capture and record the various
concerns of the many stakeholder involved. Please understand that further correspondence/communication on the topic outside our formal
process will not be officially recognized. Our intent is not to be resistant to input, but quite the contrary, to ensure that all concerned parties
have fair and equal access.
Lastly, <;orrespondence/communication on topics associated with any pending or ongoing litigation will be handled similarly for obvious
reasons.
I hope you will understand our need to adhere to strict protocols, especially in the current environment.
Thanks,
tony
From: Hamburger, Daniel [mailto:dhanlburger@devry.edu]
Sent: Friday, January 21,2011 1:28 PM
To: Private- Miller, Anthony
Cc: Hamburger, Daniel
Subject: Follow up from our conversation
Tony,
It was great catching up with you during the Aspen Institute conference. As promised, let me foJlow up with a quick summary of the key
things we discussed:
First, re: "gainful employment'' l would like to stress that DeVry agrees with the need for regulation and oversight. Poor-quality programs
should be held accountable, including shutting them down where appropriate. We're just very concerned that with the best of intentions, the
proposed regulations will "throw the baby out with the bath water" and actually reduce access to high-quality programs. The regulations are
too indiscriminate in which programs are affected. Regardless of how nimbl e and effective we can be, there are some fundamental flaws in the
proposed regulation that cannot be overcome, such as an 8% debt-income threshold for baccalaureate level programs. DeVry has made a
straightforward proposal that we believe will help "get it right." That is:
it accomplishes the goal of holding poor-quality progrdl1ls accountable,
while avoiding the risk of shutting quality programs, ~ n d
has quali ty providers like DeVry, and others, that will actually support it, which has to be helpful to the process. We know there are some
who arc preparing for a fight, which could tie the whole matter up for years. We don't think that would be good for anyone.
To summarize, the 2 key points of our proposal (details attached) are:
l . While further work is done on the "repayment'' rate, use the 3-year cohort default rate (CDR) as an interim measure of debt repayment; it
has been shown to be highly correlated with the repayment concept, and carries far less risk of throwing out the baby;
2. Usc different debt I income metrics by level of education; use BLS data rather than individual income data. BLS can be regionalized, and
has the advantage of transparency, consistent with the President's recent Executive Order.
The second area we discussed is the growing concern over " incentive compensation" and "misrepresentation." To summarize what we have
discussed with Georgia, the concerns revolve around 4 areas:
1. The definition of the 2 words "securing enrollment" would extend to include program completion and graduation. This contradicts the
President's and Secretary's challenges to increase graduation. And it goes against state fmancing initiatives which reward public colleges and
universities for increasing the number of students they graduate. It makes no sense that performance rnetrics that are encouraged in K-12
programs like Race to the Top would be banned in higher ed.
o We recommend that "securing enrollment " means enrollment- not retention I graduation. Persistence, and ultimately graduation is the
ultimate proof that s t u d ~ n t s were appropriately enrolled in the right programs. But, we understand the potential for entities to abuse
graduation measurements for short-term programs in performance evaluations and compensation decisions. Thus, we.recommend this
restriction be only applied to those short-term programs. The concern is diminished as students persist in longer term programs and certainly,
baseless, as they graduate from associate and baccalaureate programs.
2. The definition of covered employees would extend "all the way to the top." Combined with the extension oflhe definition of"securing
enrollment," this restricts an institution's ability to implement strategies to improve access, diversity and other successful outcomes.
o We recommend that covered employees should be only those directly engaged in recruiting, admissions and financial aid activities as
originally expressed by Congress. This would include any leadership roles for whom those activities comprise a substantial portion of their
position responsibilities.
3. The tolal ban on being able to d o ~ performance evaluation that in any way acknowledges recruiting and fmancial aid personnel's
quantitative performance in their j ob would prevent colleges from holding people accountable for student outcomes. Worse, the unintended
consequence will be increased and perhaps frivolous litigation that would take all schools focus and resources away from education. This is an
active area for trial lawyers, turning routine employee terminations into claims of violation of this law. The commentary in the preamble
suggests that some minimum standards of performance not only are allowed, but expected to be a part of any employee's performance
expectations. How such should be used and included in the evaluation is left ambiguous and if used, will certainly be the basis for litigation.
o We recommend that annual merit-based salary adjustments that are based on a pelj"ormance evaluation w i t h ~ quantitative
measurements as minimum standards of performance not be included in the restriction on incentive compensation.
4. The restriction on profit-sharing payments to recruiting and financial aid personnel. We believe this restriction is a misunderstanding of
the nature of most profit-sharing plans. For most organizations, for-profit and not-for-profit alike, profit-sharing distributions are made in the
way of discretionary contributions to employee retirement plans. The conlTibution amounts are typically formula-driven treating all employees
within any employment categorization (full-time, part-time, etc.) alike. The restriction on distributions to some employees may run afoul of
ERISA compensation rules.
o We recommend that the restriction on profit-sharing payments not apply to discretionary contributions made to employees' retirement
accounts if those contributions are made to all employees and are calculated similarly for all employees within a certain employment
categorization.
The third issue has to do with international medical schnols. During the negotiated rulemaking process, discussions were held, separately to
specifically discuss the Ross Bahamas situation, and at the table to discuss the impact on student Title-IV eligibility with enrollment at
ineligible sites. We supported the proposed rule, but with a clear understanding of the impact on Ross students as explained by David
Bergeron to our staff. This was based on meetings we had with David, and we have provided a summary of those conversations to him. But in
December he sent us a letter that is not congruent with the agreement we had reached. Can we set up a meeting to discuss this and hopefu1ly
reach a resolution? This is an issue that would have a significant negative impact on current as well as future medical students, so it is a matter
of some urgency.
Thanks for having given so much time to the confer ence, and for sharing your thoughts and insights.
Best regards, .
Daniel
Daniel Hamburger
President & CEO
DeVry Inc.
3005 Highland Parkway
Downers Grove, JL 60515-5799
(630) 725-1931
dhamburger@devry.edu
Assistant: Pat Derby x 1930
Our Purpose: Empowering our studenJs to achieve their educational and career goals.
DeVry VJ
o.VfyhK.
3005
OOWntPl G
ntlnois 6051 s-sm
I 5 7700

Septerrber 8, 2010
The Honorable Ame Duncan
Secretary, U.S. Department of Education
400 Maryland Ave SW, Room 7W311
Washington, DC 20202
Dear Secretary Duncan,
I would like to share my concems with the proposed "Gainful Employment"
rules and also offer an alternative strategy. Your consideration of these
recofTYTlendatlons is appreciated. We will also offer a formal response to the
proposed rule that will further articulate our concerns as well as elaborate on
our recoflTJlendations.
For 80 years, DeVry has been a leader in private-sector education. We have
developed a strong reputation by focusing on developing quality programs,
managing our institutions and the public trust with accountability and integrity,
_and maintaining a commitment of service to our students. We support your
efforts to improve academic outcomes in higher education as well as in
elementary and secondary education, as exemplified by our DeVry University
Advantage Academy, a partnership with public school districts In Chicago and
Columbus.
We understand that the objectives of the proposed rules are to control for
three concerns:
A disproportionate amount of debt taken on by students to complete
their program of study as compared to their economic expectations as
graduates, including expected earnings and employment opportunities;
A misalignment of the economic expectations of new institutional
owners compared to the educational and career expectations of that
institution's students; and
Inappropriately aggressive marketing practices and misrepresentation
of programs or institutions to prospective students.
We have a long history of working with the Department to effect positive
change to the benefrt of students and taxpayers. We continue to seek to do
so. With changes along the lines of the following six simple recommendations,
we are in support of the Department's proposed rule.
DeVry's former Chairman and CEO, Dennis Keller, liked to start these sorts of
communications with the recommendation first, and follow that with the
rationale and commentary. Since that has served us well In the past. I will offer
you the same approach.
Recommendations
1. Use 3year cohort default rates (at the program level) Instead of
the proposed repayment rate. and use BLS data for the debt-
service rate.
DeVry has a number of concerns with the proposed repayment rate,
many of which mirror some of the public comments you have received
so far. Some of our larger concerns are discussed In the second
section of this letter.
As an alternative, the 3-year default rate has alrl:lady been legislated
as a means to address the possibility of manipulation'' of default rates
through ttle use of deferments and forbearances. We recommend
using the established 30% rate af a programmatic level fo Identify
programs that n ~ d fixing.
As noted in the second section of this letter, we also have concerns
with using actual earnings data, the periods in which earnings data
would be captured and the lack of a known process for capturing those
earnings. Also concerning is the lack of transparency into the earnings
calculation. As an alternative, we recommend that BLS data be used
initially for the debt-seNice calculation. It Is knowable Information, It
can be mapped to specific occupations and does not penalize a school
for temporary decreases in earnings that may result from parental,
medical or other leaves of absences that all families experience from
time-to-time.
2. Regulate degree and non-degree programs differently by using
metrics that are consistent with the level of education and thtt
long-term value of that education.
DeVry schOols offer programs of study at all levels of higher education
-from undergraduate certificate programs to graduate and
professional degree programs. We note that there are significant
differences among these students in terms of tneir expectations tor
their education, their need for support services. including their need for
financial assistance and their understanding of the Implications of
using debt. and their vision of how their education will impact their
careers. Measurements ofgainful employment" should correlate
meaningfully to the student attributes and expectations that are
predominant at each of the various levels of education.
We ffiCOmmend that the default and debt--service me tries be used for
non-degree undergraduate certificate programs, but not for degree
programs, which are better assessed by a test of employment after
graduation.
Throughout the Tit1e IV statute and regulations, there are precedents
for variances in how eligibility, student and Institutional performance
are measured according to program level and student status. For
example, academic progress is measured differently for students
enrotled in clock hour v. credit hour programs and even differently for
students enrolled in standard-term v. nonstandard-term credit hour
programs. We recommend you extend this concept, measuring
whether a program successfully prepares a student for gainful
employment differentfy for different levels of programs.
Department of Labor data shows that the expected earnings for
graduates with only an undergraduate certificate will be just slightly
higher than earnings for someone with only a nigh school diploma. ()Ne
note, of course, that there are other benefits to the certificate graduate,
such as lower unemployment rates and better employment benefits.)
This earnings data is summarized in the dlart below.
$50,000 Previousw&Jges (light color}
Current wages (Dark color)
$40,000 J $91,782
$29,224
$30,000 $24,856 $25,958
$20,000 ....
510,000
s o . . _ _ ~
(Control) No
Degree,
Considered School
(rr=20BI
Certificate
(n=159}
$39.478
Associate's
(n::67}
$44.262
Bachelor's
(n=372}
This study was conducted by The Cicero Group from one Institution's prospective
student pool from 2003. The study shows the ch8nge in earnings from 2003 to 2010 by
level of progrsm attainment.
Thus, we believe it reasonable to control unaffordable debt and
unqualified enrollment in non-degree programs ihrough metrics such
as those proposed by the Dc'partment.
However, expected eamings begin to substantially Increase with
degree attainment, and thus the proposed GE metrics become less
functional as a measure of gainful employment. The return on almost
all degrees is substantial, and that return must be measured over the
long period for which an individual's investment in a degree is
appropriately amortized. Put differently, unlike a student's investment
in a certificate course of study, which is generally amortized over a
relatively few number of years, a student' s Investment in a degree
program Is generally amortized over the lifetime of that Individual's
career. As such, near-term measurement of earni ngs as it relates to
the debt taken on to obtain that degree is inappropriate.
Altematively, In order to assess degree programs, we recommend
measvrement of how well graduates of those programs obtain
employment In their of study. Specifically. we recommend that a
standard like that used by the Accrediting Council for Independent
Colleges and Schools (ACICS) be used as the test of whether an
undergraduate associate or baccalaureate degree program meets the
"gainful employment" requirement.
Further. we recommend that graduate certificate and degree programs
not be subjected to new tests - such programs simply do not lend
themselves to a "Gainful Employment" type of metric. Alternatively, the
Higher Education Opportunity Act (HEOA) included new requirements
tor surveying employment outcomes of graduates and disclosing this to
prospective students. And we believe disclosure of this Information Is
an appropriate step at thi s level, as graduate students themselves are
typically the best judge of whether a program supports their
employment objectives.
Please note that the DeVry family of institutions includes those at every
level, from doctoral to certificates. We are proposing regulations that
would Impact all of our schools and programs. Some of our certificate
programs may need to show improvement based on these standards
and we are committed to achieving such improvements.
In summary, we recommend the followi ng standards as tests for the
"gainful employmene requirement:
Program Level Debt-servlc:e.to BLS Percentile
Income threshold
Certificate 8%

Associate & 60% of graduates emplOyed iltheir field of
Baccalaureate Degrees study
Graduate certificates & DisClosure of position titles and efl'4)1oyers of
Degree
3. Failure to hit minimum thresholds should result !n l'equirement to
develop specific Improvement plans, not immediate program
tennination.
Failure to hit minimum thresholds should trigger actions designed to
enable the institution to improve. The objective should be to drive
improved performance and b increase capacity at that improved
performance level - not simply to cut off the weaker performers without
the opportunity for cure, which is akin to ejecting a player after their
first foul. Only those programs that show no ability to improve
performance should be ultimately subject to the Secretary's limitation,
suspension and termination authority. This approach is, of course.
consistent with the Department's historical practices - when an
institution fails to meet either the Cohort Default Rate, the 90/10 or the
financial responsibility thresholds, the institution is given an opportunity
at remediation before the program or institution is terminated from
participation in Title IV.
4. Continue work on repayment rate and use of actual earnings in
the debt-service rate. We like these metrics at the conceptual level.
With development, testing and refinement, we bel ieve they have the
potenlial to be more reflective than the current CDR metrics of actual
performance and risk associated with the programs. But, they are not
. yet ready for use. They have not been clearly defined or scoped. They
are not transparent In their impact, or capable of being monitored by
schools on an ongoing basis. As currently drafted, almost one-half of
all colleges would fail to meet the flrst threshold (45%) for the
repayment rate, including many well-regarded institutions.
We recommend that you defer implementation of these rates, and
assign them to either a special task force or a focused negotiated
rulemaking to develop them to a point that they could serve as the
basis for a regulatory regime that would hold all
accountable for the programs and services they deliver. We would be
eager to work with the Department in that regard.
5. Limit growth for institutions with new, unqualified ownership.
New institutions are prohibited from participating in Title IV programs
until they have been established and operating for at least two years. A
similar restriction could ba imposed on institutions with a change of
control that results in control veste<f in a person or organization that
does not have previous experience in Title IV administration. We
recommend Tille IV assistance be capped at pre-change levels for a
period of two years, and until a program review has been
completed by the Department to assure that no substantial change in
mission or educational outcomes has occurred pursuant to the change.
We believe these proposals would serve to mitigate potential
misalignment of the h1terests of new Institutional owners and the
educational and career expectations of that institution's students.
6. Move forvliard with the new, tougher standard on
"misrepresentation" and increased enforcement actions. We
agree with the proposed rule concerning misrepresentation of
programs. And we applaud the recent announcement of increased
levels of enforcement. Together. we believe these actions will address
the Department's concerns regarding misrepresentation, including
inappropriately aggressive marketing to prospective students.
Concerns with the current proposal
DeVry has a number of significant concerns with the Gainful Employment
proposal, most of which are related to the indeterminable impact of the
proposed rule or the unknown methodologies used in determining the
published and proposed rates. The following represent our most significant
concerns and where we think the most egregious lapses have occurred in the
proposal's development:
a. Repayment Rate
The development of the repayment rate was done outside of the
negotiated rulemaklng process. As such it was Jacking in the
transparency and breadth of contributions that helps assure relevancy
and quality. Despite the follow-up conference call held with the
community and the subsequent publication of a question and answer
document, there is still too much unknown about the rate and too many
unanswered questions as to what populations are Included or
exduded. According to an analysis by Dr. John Guryan of
Northwestern University, at least 300,000 new students each year
enroll in programs that would be eliminated or restricted based on the
proposed rules. The implementation of a requirement with unknown
implications presents too high of a risk to hundreds of thousands of
students, many of whom have few or no other options.
The repayment rate thresholds are completely arbitrary, and appear fo
lack an objective basis tied to the Department's objectJves. There is no
statistical connection to the thresholds to establish any linkage to
program or institutional quality. In fact, t11e mean repayment rate for all
schools is 48%, with a standard deviation of 24 percentage points. This
would indicate that there is no statistically significant difference in the
quality of programs (as it relates to repayment rate) among almost all
Institutions. It would Indicate that variances in performance are as likely
to be due to student attributes and risk factors as institutional or
program quality. Establishment of punitive thresholds within a single
standard deviation of the mean is contrary to the fundamental tenets of
continuous Improvement. It is not a good test of quality when almost
one-half ot the colleges tail to meet the expected performance level.
The overwhelming majority of institutions anti
community colleges, as well as many urban public and independent
colleges and universities, fail to meet the 45% threshold. As such. the
proposed regulatory regime would invariably taint these high--quality
institutions, right abngside a range of high-quality proprietary
providers. The chart below illustrates the unintended consequences of
this arbitrary methodology, as many longestablished, well-regarded
institutions have low repayment rates, including Spelman, Roosevelt
and North Carolina Wesleyan.
Pr1wata Seclor Public>Sedor & Independent
2009 2009
ln&litutian Nama Prepeyment lnaliulion Nlwne
Ratt
Brown Mac* HI COllege 22% [<.;81lll'81 Stet&
EII1Wtst UnlvefSity Metnonal UIWfll'li1y
IStcaver 25% I'-'"" Allanta
27% Long ISIII!ld
15anfofd.Bt0'1111\ 31% Pueblo community Couege
liT T&chni<::al snatilut& 32% IU naveraitv ofT- a1 Browns\111&
Kalter SChool af u.nagamem
35% W.st Vilgi"a UnMir&itv
(OeVty)
Amenc.n lnt.areominonta I Ul1Yel'$ity 36% Hoiward i.k1Neftl1Y
L.ill<:Oin leclln1ca1 J6% Robert Mama Unlvel'$1ly
ID6Vly uruval'1ily 37% [UrwerliiY or Mobil a
tArguy UnMnity 38% NoM C&rolllla Weel8yan COllege
camn!IIQI! Collooa 40"4 [Spelman CO!teoa
Tlla Art I n11litutn 40% JOM f Univar5Hy
I"'OIOMCfO Tecnnleal (Career
-40% Lllloorl Unlvar&tty
Educetiott}
Colpell& \..lnNetlily 40%
N8w YOI1c lflllibl!e 0{ Ted'II'IOIOQy.Oid
Wellbc.IY
ol PhOEilix
.... ,.. rruakegee Unlvertily
Ashford l..lrWvltrslty (Btidgepoil\1) 46% Barry University
Amar1ean 47% Sain11Ao Unlller&lty
Gf&lllf C1nyon Univtraity 52% . Ut!hlersity 0{ Satnt Mary Of the Lalut
Wye T edl (Corinlhilll) . 52'1' Ham ptDf;l UtoiYerllly
Univel$81 T eciWclll 1ns11Me 55% R001eV91t Un!Ytrdy
The proposed definition of "repayment" ignores students who are
repaying. It also penalizes schools for debt incurred at a previous
institution. The proposed rule too narrowly limits the definition of
borrowers in repayment to just those whose outstanding principal
balance is reduced in a given year. This omi1s a number of borrowers
whose loans are in good standing and many of whom are current in
their payment obligations. Last year. you and the President lauded new
Joan repayment plans that helped borrowers be responsible in
repayment, but at the same time reduce the stress of repayment-
especially during this economic crisis. These plans, income-based or
graduated repayment, require reduced payments in early years and
typically end up with the borrower accruing unpaid interest in those
years, resulting in an increase in the principal amount owed. Borrowers
opting for these plans and maintaining a good record of repayment do
not count in the proposed repayment rate methodology as repaying
their loans. These plans are especially attractive to students who want
to consolidate loans ftom multipl e lenders, loans from both the FFEL
Rat&
9%
12'Y
16%
18%_

25'o/o
2V%
32%
32%
32'1'o



37%
38%
38o/o
39%
39'1!.
40%

43o/o
and Direct Loan programs, and loans that were received in
undergraduate as well as graduate programs.
Additionally, borrowers who retum to school and receive deferrrients
on unsubsidized loans Will see interest accrue while they are back in
school. This accrued interest ends up being capitalized and added to
the outstanding principal when they return to repayment The result is
that, even though the borrower is current on their payment obligations,
there has been an Increase in principal balance and their loans fail to
meet the requirements to be considered in the repayment calculation.
All of these situations apply heavlly to DeVry students, and as a restJit,
have a punitive impact on the repayment rate of OeVry schools. 35%
of DeVry University and Chamberlain College of Nursing
undergraduate students enroll with debt incurred from prior schools.
Last year, the average debt from prior enrollments for these students
was almost $14,000. And, of course, the issue is greater at the
graduate school level. Almost 75% of DeWy University graduate
students have prior debt with this debt averaging more than $33,000.
When these students leave DeVry, the combined debt from the
multiple enrollments will influence many of these borrowers to opt for a
repayment plan that may result in a negative amortization in the early
years. Further, fhe proposal for fhe debt-service rate recognized the
unfairness of including prior debt in fhaf calculation, but there is no
suCh exclusion in the repayment rate proposal- there should be.
b. Debt-Service Rate
The Department proposes a single debt-seNice rate (or range) to
apply to all programs, regardless of level or duration. But one size
does not fit aU. Much of the Department's rationale is based on the
study of Sandy Baum and Saul Schwartz. However, Baum and
. Schwartz specifically criticize the use of such a blanket threshold,
asserting that there is a greater capacity to afford higher debt levels as
(expected) earnings increase. This is consistent with the earnings
growth rates that are realized with increased education. Many studies,
induding Department of Labor research, have established that there is
a correlation between earnings growth and education level - the higher
the education level, the higher the earnings growth rate. It is then
inconsistent with this research to assign the same debt-service
thresholds to all levels of education. It is entirely appropriate and
consistent with the research in this area to establish different fonns of
measure and different standards for higher level programs.
Thank you for your consideration of my comments and proposals. I would be
delighted to discuss these matters, and will make myself and my team
_, .
available at your convenience. DeVry stands ready to work with the
Department and is committed to assuring accountability and integrity in the
Title IV programs.
Sincerely,
Daniel Hamburger
President and CEO
DeVry Inc.