Subject: Location: Start: End: Recurrence: Meeting Status: Organizer

:

FW: Briefing on the Program Integrity package for ACE and groups NCHE Conference Rooms A/B/C Fri 6/25/2010 3:00 PM Fri 6/25/2010 5:00 PM (none) Accepted Shireman, Bob

When: Friday, June 25, 2010 3:00 PM 5:00 PM (GMT 05:00) Eastern Time (US & Canada). Where: NCHE Conference Rooms A/B/C Note: The GMT offset above does not reflect daylight saving time adjustments. *~*~*~*~*~*~*~*~*~* In case you want to join us….

Original Appointment From: Shireman, Bob Sent: Thursday, June 17, 2010 5:03 PM To: Shireman, Bob; Bergeron, David; Kolotos, John; Kvaal, James Subject: Briefing on the Program Integrity package for ACE and groups When: Friday, June 25, 2010 3:00 PM 5:00 PM (GMT 05:00) Eastern Time (US & Canada). Where: NCHE Conference Rooms A/B/C

When: Friday, June 25, 2010 3:00 PM 5:00 PM (GMT 05:00) Eastern Time (US & Canada). Where: NCHE Conference Rooms A/B/C Note: The GMT offset above does not reflect daylight saving time adjustments.
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ACE is helping to coordinate the briefings. John, Kathleen said you would be out of the office but I wanted to be sure to share the invitation with you too.

News Stories From: Shannon Gallegos [sgallegos@ticas.org] Sent: Tuesday, May 18, 2010 3:28 PM To: Shannon Gallegos Subject: News Stories Attachments: 5-17-10 California Watch.doc; 5-17-10 The Chronicle.doc; 5-18-10 Inside Higher Ed.doc Federal Proposal Could Jeopardize For-Profit Programs, Especially Bachelor's Degrees, Jennifer Gonzalez, The Chronicle of Higher Education, 5/17/10 Noting high tuition costs and rising student loan defaults, article profiles the upcoming proposal to define “gainful employment” for for-profit colleges. (Pauline quoted, the Institute cited) Mission Accomplished, Doug Lederman, Inside Higher Ed, 5/18/10 Article profiles Bob Shireman’s recent stint in Washington, profiling his list of accomplishments over such a short period of time. (The Institute cited) For-profit colleges have legacy of recruiter compensation, Erica Perez, California Watch, 5/17/10 California Watch looks at the issue of recruitment compensation at for-profit colleges, past and present. California Plan Would Help Higher Ed, But May Not Pass, Quick Takes, Inside Higher Ed, 5/18/10 California Gov. Arnold Schwarzenegger, a Republican, unveiled his latest proposed budget for 2010-11 on Friday and it doesn't propose cuts (and actually includes restoration of funds) for the state's three higher education systems. The news led to praise from leaders of the systems, but it is unclear whether the budget will survive. The governor's proposals may reflect a growing consensus in the state that cuts to higher education have been debilitating. However, the governor's budget plan includes such measures as the complete elimination of the state's major welfare program and of the main program to provide state subsidized child care -- and many legislators are vowing to save these and other programs. Shannon Gallegos Communications Associate The Institute for College Access & Success 405 14th St., Suite 1100 Oakland, CA 94612 (510) 318-7915 sgallegos@ticas.org www.ticas.org

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For-profit colleges have legacy of recruiter compensation May 17, 2010 | Erica Perez Some for-profit education companies' practice of compensating recruitment officials based on the number of students they enroll has drawn increased scrutiny from the media and from the federal government. The idea is that incentive compensation can result in high-pressure recruiting tactics, where enrollment counselors try to rope in as many students as possible into high-priced programs with scant regard for their chances of success. Yet, as a recent Higher Ed Watch blog post illuminates, the practice is anything but new. Congress banned colleges from providing incentive compensation to employees in 1992 after reports of abuse, including a 1991 report by the Permanent Subcommittee on Investigations of the U.S. Senate Committee on Governmental Affairs. The report sounds eerily similar to some of the cases making headlines today. "Dishonest elements" have exploited "both the ready availability of billions of dollars of guaranteed student loans and the weak and inattentive system responsible for them, leaving hundreds of thousands of students with little or no training, no jobs and significant debts that they cannot possibly repay," the report reads. A couple examples from the report: The American Career Training Corp. held contests where sales representatives earned incentive awards for enrolling the highest number of students. Loan counselors won cash, color televisions and other awards. At the Culinary School of Washington, many students incurred about $8,000 in student loan debt only to find that their training consisted of working without pay in a cafeteria in a water treatment facility. Higher Ed Watch reports that incentive compensation rules created in the early '90s were weakened by a series of 12 exceptions to the ban. These "safe harbors" could disappear under new regulations being considered by the U.S. Department of Education. Fast forward to this year, when Bloomberg revealed some colleges were recruiting students in homeless shelters. In the latest in a string of similar lawsuits, a former recruiter with an online subsidiary of Education Management Corp. said employees won free iPods for bringing in the

most students. The bigger context: Federal funding to proprietary colleges has grown from $4.6 billion in 2000 to $26.5 billion in 2009, while median graduation rates are at about 38 percent, according to USA Today.

May 17, 2010 Federal Proposal Could Jeopardize For-Profit Programs, Especially Bachelor's Degrees By Jennifer Gonzalez

Mildred Elley, a two-year proprietary college that opened its doors in Albany, N.Y., in 1917, prides itself on helping people get back to work. But Faith A. Takes, the college's owner and president, fears that a new federal proposal that would evaluate for-profit colleges by comparing their students' borrowing to their graduates' earnings will jeopardize her college's high-demand nursing, medical-assisting, and information-technology programs at the very time more adults are turning to the institution for training. The U.S. Department of Education is expected to unveil its plan in the next few weeks, and forprofit colleges like Ms. Takes's are scrambling to squash the idea. Administrators at those institutions say the department's proposal would force for-profit colleges to shut down educational programs. Programs in nursing, engineering technologies, and culinary arts are among those that could be affected because graduates in those fields may not make enough to satisfy the department's proposed debt-to-earnings ratio. Bachelor's-degree programs, experts say, would be most at risk because students in those programs tend to borrow more than students in shorter-term ones. Officials at DeVry, Kaplan, and Keiser Universities all agree that the department's proposal could seriously jeopardize their bachelor's-degree programs. "The bachelor's degree as we know it would be gone," said Arthur Keiser, president of Keiser University, which is based in Florida. The department has said its goal is to crack down on colleges that overcharge and underdeliver in training students for jobs right after graduation. Education Secretary Arne Duncan has said that former students of vocational programs have reported that they were enticed into poor-quality programs and are now saddled with loads of student-loan debt they can't repay because they have no jobs. Mr. Duncan wrote in a recent opinion piece for AOL News that the problems afflict only a small minority of vocational and career programs. But, he added, the problems "will fester unless steps are taken to protect students and taxpayers."

Defining a Rule

The Higher Education Act of 1965 requires that proprietary and vocational colleges, other than those clearly designated as "liberal arts" and vocational programs not designed to lead to a degree, provide "an eligible program of training to prepare students for gainful employment in a recognized occupation." Compliance with the rule is a condition for those colleges' students to be eligible to receive federal financial aid. The rule took on more prominence in the late 1980s, when it was used to fight problems that arose after some for-profit colleges were found to be recruiting near welfare offices, low-income housing complexes, and homeless shelters. The colleges enrolled ill-prepared students who brought with them thousands of dollars in federal loans and grants that the colleges received upfront as payments for tuition. The for-profit sector's most-egregious abuses may be behind it, but problems persist. The sector continues to be called out on its high tuition costs, and the average default rate of borrowers who attended for-profit colleges, 11.9 percent, is higher than that of students who attended public colleges, which averages 6.2 percent, or private, nonprofit colleges, at 4.1 percent. Aggressive recruiting practices continue to plague the industry, an issue highlighted in a recent PBS television documentary. In fact, the University of Phoenix settled a lawsuit last year that accused the university of improperly compensating its recruiters, in violation of laws governing federal student aid. The department's attention to the sector has a lot to do with its fast growth, too. Enrollment in the nation's nearly 3,000 for-profit colleges has grown faster than in the rest of higher education, by an average of 9 percent per year over the past 30 years. For-profit institutions now educate about 7 percent of the nation's roughly 19 million students who enroll at degree-granting institutions each fall. The higher-education act does not currently define "gainful employment" as described by the proposed rule. So the Education Department set out to do that late last year, convening a panel that included consumer advocates, for-profit-college officials, and student advocates to reexamine the rule. Because the panel could not agree on a gainful-employment definition, the department is now free to propose its own. The department has not yet finalized its proposal, but officials are considering requiring that a program's students do not take on loan payments that exceed 8 percent of graduates' expected earnings based on a 10-year repayment plan and Bureau of Labor Statistics earnings data. The rule would apply to programs at proprietary colleges and any institution with programs less than two years in length. Under proposals the department has floated, programs that exceed the

8-percent limit could still be eligible for federal financial aid by showing that their graduates' true earnings were higher than the government averages or that 90 percent of all graduates repaid their loans; by documenting that students have at least a 75-percent repayment rate on federal loans; or by demonstrating a program-completion rate of at least 70 percent and a 70-percent jobplacement rate. Last month analysts at Credit Suisse reported that the department was considering lowering the completion rate to 50 percent. However, it is unclear exactly which exemptions, if any, will be part of the department's final proposal. The department is expected to release its final draft in the next few weeks, which includes 13 other rules related to for-profit colleges, with public comment to take place over the summer. Final rules will be set by November and go into effect in July 2011.

What's the Problem? For-profit-college officials and their supporters say they are not clear what the department is trying to accomplish through the proposed gainful-employment regulation. If the department wants to regulate the sector's "bad actors," the proposal may do more harm than good, the advocates say. It may shut down some unscrupulous colleges, but it may also eliminate worthy programs and leave students without a college to attend. As part of its lobbying efforts, the for-profit sector is throwing around large numbers about how many programs and students would be affected by the change. But there are no good estimates of what the impact will actually be. One study at the center of the debate was commissioned by the Career College Association, which represents 1,400 colleges, most of them for-profit. That study, conducted by a professor of economics at the University of Chicago and a consulting company, was based on data from about 10,000 programs enrolling more than 640,000 students. It found that 18 percent of the programs, enrolling one-third of the students, would not pass muster under the proposed rule.

Although a report on the study notes that the programs evaluated were not necessarily representative of the range of programs offered by for-profit colleges, the report's authors projected the impact of the rule, assuming that it would affect one-third of all students who enroll at for-profit institutions each year. Using that assumption, and historical trends on enrollment growth for the sector, the Career College Association has argued that the rule could eliminate programs for 360,000 students by next year, and a total of more than 5.4 million by 2020.

Supporters of the rule view the study findings differently, arguing that they show that only a minority of programs would even be affected and that the proposed rule wouldn't necessarily mean the end of the students' chance to pursue higher education because they could enroll in different programs that might result in their earning higher wages, or find colleges where the tuitions costs, and debt, are not as high. If the department's aim is to curb excessive student debt, for-profit college officials say, then it should deal with individual students rather than propose a rule that would affect large numbers of students across an entire sector of higher education. "The department assumes that every institution with a high debt-to-income ratio among its students is a bad actor," says Harris N. Miller, president of the Career College Association. "That's unfair." The department's plan, he and others say, will ultimately limit access and student choice, which runs counter to President Obama's call to increase the number of Americans with college degrees. Other supporters of for-profit colleges accuse the department of using the rule-making process to try to regulate tuition at for-profit colleges. For the 2009-10 academic year, average tuition and fees range from $7,020 at public four-year colleges to $14,174 at for-profit institutions and $26,273 at private nonprofit colleges, according to the College Board. Because salaries for a given occupation vary regionally, programs of equal cost and quality in different locations may have different abilities to meet the 8-percent threshold. For-profit colleges also have limited control over how much loan debt a student takes on and cannot stop students who agree to take on thousands of dollars in loans if they are eligible for those amounts. "Our hands are tied," said Ms. Takes, of Mildred Elley, which has campuses in New York and Massachusetts. "But we are the ones being held responsible." For-profit colleges have complained that the department is focusing on the sector without examining the huge amount of debt that students, especially those studying the liberal arts, incur at nonprofit colleges. Mark Kantrowitz, publisher of FinAid, a Web site that provides student-aid advice, said that if the department is serious of about curbing excessive student debt, then all of higher education should be subjected to the federal proposal. In fact, he says, nonprofit colleges should be worried because some have graduation rates in the single digits and it's an open question whether they are providing value for the money students are spending. He said nonprofit colleges should not be surprised if they become the department's next focus.

Among 2007-8 bachelor's-degree recipients who borrowed, median debt was about $17,700 at public, four-year colleges, $22,380 at private, nonprofit colleges, and $32,650 at for-profit institutions, according to the College Board. "A lot of theater-arts students rack up thousands of dollars of student-loan debt," he said. "No one can pay that back waiting tables."

Focus on the For-Profit Sector? Pauline M. Abernathy, vice president of the Institute for College Access and Success, a California-based nonprofit group that advocates for affordable higher education, dismissed the idea that the department is out to get the for-profit sector. She says that community-college workforce programs would also be affected by the department's proposal. But unlike its for-profit counterpart, the two-year and technical-college sector welcomes the department's proposal. Both the Florida College System Council of Presidents and the National Alliance of Community and Technical Colleges have written letters to Mr. Duncan supporting the department's efforts to define gainful employment. The council called the proposal a "fair measure that will help prevent students from borrowing more money than they could realistically repay, given the expected starting salary in the occupation for which they trained." Susan M. Lehr, vice president for government relations at Florida State College at Jacksonville, a two-year college, said the benefit of the department's proposal is that it allows institutions to get a better handle on which programs are producing students who can earn enough money to support themselves. "They come to us for gainful employment. That's the whole point," she says. Ms. Lehr, who usually works on state rather than national education policy, got involved with the federal gainful-employment issue because, she says, she has seen firsthand the devastation left behind when students graduate from a for-profit with huge debt and no job. "They usually end up coming to our college for help," she says. Many higher-education officials and analysts say that Robert M. Shireman, deputy under secretary of education, is the driving force behind the proposal. Mr. Shireman, who did not return numerous calls and e-mail messages seeking comment on this story and who will be leaving his post at the department this summer, has long advocated for reform of student-borrowing policies and increased protections for borrowers. Before joining the department, he was president of the Institute for College Access and Success. During his tenure, the nonprofit group brought public

attention to the issue of rising student debt, prompting Congress to adopt income-based repayment options for federal student loans. Higher-education analysts say he is not interested in waiting for the next reauthorization of the higher-education act, which is not scheduled to come up until 2013, to make sure that federal student-aid money is used properly. At a recent address before the National Association of State Administrators and Supervisors of Private Schools, Mr. Shireman acknowledged the efforts of the for-profit sector to meet the "critical demands from people out there who need higher education." However, he also made it clear that the colleges need to be good stewards of the federal money they receive. The Career College Association has offered its own gainful-employment proposal, which focuses on expanding required disclosures to prospective students. Students would be informed of the consequences of taking on too much debt and be required to sign a document stating that they understand the risk. The association's plan would also require programs to prove that they prepare students for employment by vetting the programs with employers in the field and making sure students are better prepared to pass licensure and certification tests. When asked about the association's alternative proposal last month, the department issued a written statement saying it was "pleased that many participants in the program community have expressed views and presented information in this important area." The statement went on to say that the department looks forward to the association's comments on the draft the department proposes. However, it is highly unlikely that the department would abandon its own proposal in favor of a disclosure-only rule as suggested by the association.

Much-Needed Money Michael Gutierrez, director of the for-profit Bryant & Stratton College's campus in Albany, N.Y., said the Education Department's proposal only considers what a student will earn in the early years after graduation for the purposes of repaying loans. That overlooks the fact that graduates will probably earn more in their careers over time and the value of their education will multiply, Mr. Gutierrez said. He said he was concerned that some of his college's popular programs, such as those in medical assisting, criminal justice, and business, could be in jeopardy if the Education Department's plan takes effect. Job-placement rates in those programs are about 90 percent, he said, but starting salaries are often low and many students will have borrowed more than 8 percent of their initial

earnings. For example, annual tuition in the medical-assistant program is $7,335, and the starting salary in that field is about $24,000 a year. The proposal would basically force colleges to either lower tuition or get rid of some programs, he said. The main revenue source at for-profit colleges is tuition. So if revenue per student drops at a career college, which it will if tuition must be reduced to meet a debt-to-income ratio, it would likely lead to cuts in programs and student-support services, said Mr. Miller, of the Career College Association. For-profit-college officials have long argued that the many nontraditional students their colleges enroll need to take out loans to pay for tuition and living expenses. Their students tend to be older than traditional students and are often low- to middle-income working adults with families. Few have the luxury of dipping into their parents' coffers. Nancy A. Kyer, of Schaghticoke, N.Y., has worked as a medical secretary for 30 years. After her employer cut her hours last year, she decided to enroll in a licensed-practical-nursing program at Mildred Elley. She wanted to make sure she had job security for the future. Ms. Kyer, who is 52, said she investigated other programs before selecting the proprietary school. She liked the program's flexibility because it allowed her to keep her day job while attending evening classes. Ms. Kyer's 54-credit program will cost a total of $19,116 in tuition, and she expects to graduate with more than $15,000 in loans. "Is it a risky thing to do? Maybe," said Ms. Kyer, who expects to finish her studies early next year. "But everybody should have the opportunity to further their education."

News Mission Accomplished May 18, 2010 WASHINGTON -- If politics were as data-driven as baseball, and scorekeepers kept a statistic to measure how much impact a person had per day or week or month, Robert Shireman would almost certainly have made the all-star team. The U.S. Education Department confirmed today that Shireman, the U.S. deputy under secretary of education, will leave his position in early July after 14 months in the job. Shireman's departure was widely expected, given that he and his family had been happily ensconced in the Bay Area for more than a decade and that the primary goal that drew him back to Washington -- the prospect of securing the future of the government's Direct Student Loan Program and ending all lending through the competing Federal Family Education Loan Program -- was accomplished when Congress passed budget legislation in March. But as Shireman prepares to end his second (and much shorter) stint in the nation's capital, fans and critics alike -- with either enthusiastic appreciation or grudging admiration/agitation, depending on their perspectives -- are taking note of just how much he got done in his time in the Obama administration. The effective dismantling of the lender-based guaranteed loan program, which was made possible by several environmental factors as well as Shireman's political skills, was by far the signature achievement. But he also made major progress in expanding a nascent federal program -- for which Shireman had advocated in his previous job, as founder of the Institute for College Access and Success -- that allows borrowers to repay student loans based on their postgraduation incomes. Financial aid experts also hailed the progress that the department, under Shireman, made in simplifying the financial aid application process. And at Shireman's urging, the department also took on a less obvious but also highly visible cause: tougher regulation of the for-profit higher education sector, which is expected to lead to the release any day now of new rules that could force some college companies to improve their student outcomes, cut their tuition prices, or face the loss of federal student aid funds. Given the brave new world of higher education policy making, in which for-profit colleges educate nearly 10 percent of all students and the companies are a force on Wall Street, Shireman's every action toward and utterance about the sector -- many of which have been perceived as critical -has had the potential to move the stock market. So it was perhaps fitting that when news broke of his pending resignation late Monday afternoon, stocks of the 10 publicly traded higher education companies shot up by between 1 and 13 percent before the closing bell. Wall Street analysts speculated that Shireman's departure "would remove the largest advocate" (as one put it) of formulas the department is planning to propose to gauge the ratio of their graduates' loan debt to the salaries they earn -- though the assumption

that Shireman's colleagues in the department don't share his support for the approach is questionable. Not only that, but a department spokesman said that Shireman will "stay on in an advisory capacity to ensure a smooth transition." So he is expected to continue to hold sway in the Obama administration going forward. Supporters say Shireman has left a huge imprint on federal policy making in higher education, with a focus on the needs of students. "The amount that he has accomplished in a very short period of time is truly remarkable," said Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education. "He has been as effective as any executive branch appointee I can recall in moving a postsecondary agenda forward." "Every good thing that has happened in federal higher education policy over the course of the last 20 years has had Bob Shireman’s fingerprints on it," said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. He includes in that list the creation of the direct loan program (in which Shireman joined while an aide to the late Sen. Paul Simon of Illinois), several programs he helped create while in the Clinton White House, and the "program integrity" rules he is pursuing now -- and, of course, the changes in the student loan program. "The elimination of the parasitical student loan industry from the higher education financing system would sound surrealistic had I not lived to see it," Nassirian said, in his typically understated way. "But the income-based repayment system may well be a more lasting contribution than the structural changes in the loan programs, because it will help address the student debt crisis decades into the future." Many representatives of the targets that Shireman has sought to transform -- the student loan and for-profit college industries -- demurred from talking publicly about Shireman's influence, perhaps because they believe he will still have the ear of Obama administration officials when he returns to the Left Coast. But they generally shared his fans' view of his effectiveness, though they often thought his policies were wrongheaded and often viewed him as an ideologue who, when it suited him, engaged in demagoguery. In other words, he was a politician. Political Skill or Good Fortune? Figuring out just how much credit Shireman deserves for the monumental changes wrought by the Obama administration can be tricky, because his formal involvement began only in November 2008, when he became an adviser to President-elect Obama during the transition. Candidate Obama had already called for ending lending through the bank-based student loan program (as had his Democratic opponents), but Shireman, as one of the foremost Democratic higher ed policy experts, has had the ear of many Democratic presidential candidates in the last decade. The idea of ending the guaranteed loan program might have seemed like a long shot during the campaign, but events had already conspired in Obama's (and Shireman's) direction in 2008 when the financial markets collapsed and the Bush administration had to step in to prop up the student loan programs. That move (along with the student loan influence scandal of 2007-8) severely weakened the student loan industry's sway on Capitol Hill, and Obama's coattails helped Democrats expand the control of Congress that they had more narrowly won in 2006. Those developments opened the door for Obama's bold budget plan in 2009, which called for using tens of billions of dollars in savings from ending the lender-based program to greatly expand Pell Grants for needy students.

The fiscal and political environment may have given Shireman's idea a smoother path, but it was his combination of external geniality and internal single-mindedness (to his admirers) or intransigence (to his critics) that helped the administration achieve so many (if not all) of its goals. The administration notably failed in the loan makeover to turn the Pell Grant into an entitlement. What happens next with Shireman's position is unclear. Education Secretary Arne Duncan appointed him to the newly created position of deputy under secretary in part because, unlike the traditional top federal higher ed jobs of under secretary and assistant secretary for postsecondary education, it did not require Senate confirmation, which some thought Shireman might struggle to win because of his history of critiquing the student loan industry. So Shireman would not necessarily have to be replaced, given that Under Secretary Martha J. Kanter and the newly confirmed assistant secretary, Eduardo M. Ochoa, are in place. That seems possible, since the administration is expected to focus on elementary and secondary education in the next year or two anyway, given the need to renew the Elementary and Secondary Education Act, better known in recent years as No Child Left Behind. But with President Obama having set the ambitious (and difficult, if not impossible, to achieve) goal of increasing the proportion of Americans with postsecondary credentials to 60 percent by 2020, and the Education Department facing the task of absorbing huge numbers of colleges and student borrowers into the direct loan program, a decision not to replace the key idea man in the Education Department could send a message that the administration is backing away from its goals, a signal it is unlikely to want to send. Speculation about who might replace Shireman under that scenario has centered on a few people: Michael Dannenberg, who joined the Education Department this year after a career as an aide to the late Sen. Edward M. Kennedy and as founding director of the New America Foundation's Education Policy Program, and James Kvaal, who worked with Shireman in the Clinton White House and now works on higher education and other social issues as a senior director at the White House National Economic Council. — Doug Lederman © Copyright 2010 Inside Higher Ed

URGENT - Sign on to letter to Secy Duncan re quality education by Tues. May 18 From: Pauline Abernathy [pabernathy@ticas.org] Sent: Friday, May 14, 2010 5:03 PM To: Pauline Abernathy Cc: Debbie Frankle Cochrane; Luke Klipp Subject: URGENT - Sign on to letter to Secy Duncan re quality education by Tues. May 18 Attachments: Neg reg coalition letter for circulation.doc Attached is a sign-on letter to Secretary Duncan urging the Obama Administration to propose new regulations to protect students and taxpayers from high-pressure and deceptive sales tactics for expensive educational programs of little or no benefit to them. We hope your organization will join the Institute for College Access & Success and the other student, consumer and higher education organizations already on the attached letter. Please let us know by COB Tuesday, May 18. As you may know, the Department of Education is getting ready to propose new regulations on a number of program integrity issues, including incentive compensation and gainful employment. Unfortunately, the trade association representing for-profit colleges has launched a pre-emptive campaign to discourage the Department from even proposing a meaning rule. Without endorsing any particular proposal, the attached letter expresses support for the Department proposing draft rules that will more effectively protect students and taxpayers from unscrupulous schools. To sign onto the attached letter, please reply to this email and cc Luke Klipp at lklipp@ticas.org by COB Tuesday, 5/18. If you have questions about the letter, please call 510-318-7900 and ask for Pauline Abernathy, Debbie Cochrane or Luke Klipp. Thank you! <<Neg reg coalition letter for circulation.doc>> Pauline Abernathy Vice President The Institute for College Access & Success www.ticas.org and www.projectonstudentdebt.org We moved! TICAS' main number is now 510.318.7900. My direct line is 510.318.7903.

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Dear Secretary Duncan: As organizations representing students, higher education, consumers and civil rights, we write to express our support for the Department of Education’s efforts to make its regulations more consistent with the program integrity provisions in Title IV of the Higher Education Act. In particular, we urge you to propose regulations on incentive compensation and gainful employment that will more effectively protect students from high-pressure and deceptive sales tactics for educational programs of little or no benefit to them, and will ensure that taxpayer dollars do not subsidize such practices and programs. To protect both students and taxpayers, federal law prohibits “any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid,” and requires vocational programs and nearly all programs at for-profit institutions to “prepare students for gainful employment in a recognized occupation.” Yet, examples of overly aggressive recruiting are plentiful. Some for-profit institutions recently made headlines by targeting homeless shelters in their recruitment efforts.i Another forprofit institution paid $78.5 million to settle a whistleblower False Claim Act lawsuitii and another $9.8 million to the Department of Education to resolve claims that it was paying improper incentive compensation to its recruiters.iii Yet another large for-profit institution paid $6.5 million to settle a lawsuit brought by the California Attorney General charging “a persistent pattern of unlawful conduct,” including the inflation of job placement and starting salary information in order to recruit students to enroll in costly vocational programs, and falsification of records provided to the government.iv While most schools may not engage in such practices, federal data suggest these are not isolated incidents. Students at for-profit schools are the most likely to borrow and borrow the most. According to the most recent federal data, one in five for-profit school students defaults on their federal loans. A full 44% of all defaulters attended for-profit institutions, even though just 7% of all students attend for-profit schools.v Low-income, firstgeneration and minority students attend for-profit institutions at disproportionate rates, making them particularly vulnerable to illegal or unscrupulous acts by these schools.vi Incentive Compensation. In direct conflict with federal law prohibiting institutions of higher education from providing “any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid”, current regulations permit incentive payments that are not “based solely” on the number of students recruited, admitted, enrolled or awarded financial aid. As one would expect, some schools have aggressively exploited this and other loopholes in the current regulations to do just what the statute was intended to prohibit. Consistent with the Department’s proposals during the negotiated rulemaking process, the proposed new regulations should conform to the law and prohibit any employee or contractor compensation “based directly or indirectly” on successfully securing student enrollments or aid. To avoid creating additional loopholes, it is important that the prohibition include compensation based

directly or indirectly on applications or enrollment up to and including completion, as well as payments for prospective student contact information. Gainful Employment. Each year, students borrow and taxpayers spend billions of dollars to subsidize attendance at programs required to “prepare students for gainful employment in a recognized occupation.” Yet, the Department’s current regulations include no official definition of “gainful employment.” We urge you to develop regulations that define gainful employment in a way that is measurable, enforceable, not overly burdensome to schools, and is aligned with the following principles: x Include all debt incurred at any affiliated school. All debt incurred at a school under the same control structure must be included in any measure of gainful employment that considers debt. Otherwise, schools controlled by the same company could simply move students from one school or program to another. Excluding debt from unaffiliated schools also has the benefit of allowing low-cost schools to enroll and graduate students with high debt from unaffiliated schools without fear of penalty. Include all private loans known to the school and its affiliates. Debt-related measures of gainful employment must include all private loans which should be known to the school. Excluding private loans would create a perverse incentive for schools to promote risky private loans before students have exhausted their safer federal loan options. Private loans which should be known to the school must include all credit provided by any school under the same control structure as well as any loans provided by lenders with which the school has a preferred lender arrangement. Avoid loopholes for programs with both high student borrowing and low completion rates. A low completion rate is one of the ways schools can fail to prepare students for gainful employment. Students who borrow but do not complete are often left carrying substantial debt without the increased earning power that should come from a completed degree or certificate. The definition of gainful employment should not create a loophole for schools to discourage completion by students they consider likely to have trouble repaying their loans. Use only data that are accurate and consistent across colleges and programs. Existing requirements for the calculation and reporting of completion and placement rates are not sufficient for use in any success-based measure of gainful employment. Accrediting agency requirements vary widely and allow for substantial variation in the calculation of rates, and some schools have been found to have falsified and manipulated their placement data. It is therefore essential that the data and reporting standards are clear, consistent and independently verified.

x

x

x

Again, we applaud your initiative in reviewing the Department’s current program integrity regulations to ensure their consistency with federal law and to protect both students and

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taxpayers. We support your efforts and stand ready to assist you in improving the Department’s regulations. Sincerely, American Association of Collegiate Registrars and Admissions Officers Florida State College at Jacksonville The Institute for College Access & Success and its Project on Student Debt National Association for College Admission Counseling National Consumer Law Center (on behalf of its low income clients) Public Advocates Inc. U.S. PIRG United States Student Association
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Golden, Daniel, “Homeless Dropouts From High School Lured by For-Profit Colleges,” Bloomberg.com, April 30, 2010. Available online at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aA2_FlVDs2Sk ii O’Reilly, Cary and Daniel Golden, “Apollo Settles University of Phoenix Recruiting Suit,” Bloomberg.com, December 14, 2009. Available online at http://www.bloomberg.com/apps/news?pid=20601087&sid=a0_TscSKjRBI&pos=5 iii Gilbertson, Dawn, “Student-recruitment tactics at University of Phoenix blasted by feds,” The Arizona Republic, September 14, 2004. Available online at http://www.azcentral.com/specials/special42/articles/0914apollo14.html?&wired iv California Attorey General’s office July 31, 2007 press release on settlement with Corinthian Schools at http://ag.ca.gov/newsalerts/release.php?id=1444 v TICAS press release available online at http://projectonstudentdebt.org/pub_view.php?idx=537 vi Based on calculations by the Project on Student Debt on data from the 2008 National Postsecondary Student Aid Study (NPSAS).

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