[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
EDUCATION REGULATIONS: ROADBLOCKS TO STUDENT CHOICE IN HIGHER EDUCATION 

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 17, 2011

                               __________

                           Serial No. 112-13

                               __________

  Printed for the use of the Committee on Education and the Workforce



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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Dale E. Kildee, Michigan
Judy Biggert, Illinois               Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania    Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Duncan Hunter, California            Lynn C. Woolsey, California
David P. Roe, Tennessee              Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania         Carolyn McCarthy, New York
Tim Walberg, Michigan                John F. Tierney, Massachusetts
Scott DesJarlais, Tennessee          Dennis J. Kucinich, Ohio
Richard L. Hanna, New York           David Wu, Oregon
Todd Rokita, Indiana                 Rush D. Holt, New Jersey
Larry Bucshon, Indiana               Susan A. Davis, California
Trey Gowdy, South Carolina           Raul M. Grijalva, Arizona
Lou Barletta, Pennsylvania           Timothy H. Bishop, New York
Kristi L. Noem, South Dakota         David Loebsack, Iowa
Martha Roby, Alabama                 Mazie K. Hirono, Hawaii
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania
[Vacant]

                      Barrett Karr, Staff Director
                 Jody Calemine, Minority Staff Director







































                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 17, 2011...................................     1

Statement of Members:
    Heck, Hon. Joseph J., a Representative in Congress from the 
      State of Nevada, submissions for the record:
        Heffner, Van, president and chief executive officer, 
          Nevada Hotel and Lodging Association, prepared 
          Statement of...........................................    36
        Hinchliffe, John, past chairman, Nevada Restaurant 
          Association, prepared Statement of.....................    37
    Kline, Hon. John, Chairman, Committee on Education and the 
      Workforce..................................................     1
        Prepared statement of....................................     3
    Miller, Hon. George, senior Democratic member, Committee on 
      Education and the Workforce................................     4
        Prepared statement of....................................     6

Statement of Witnesses:
    Barreto, Catherine, MBA, graduate, Monroe College............     8
        Prepared statement of....................................    10
    Herrmann, Jeanne, chief operating officer, Globe University/
      Minnesota School of Business...............................    20
        Prepared statement of....................................    22
    Jennings, Travis, electrical test department supervisor, 
      Orbital Sciences Corp., Launch Systems Group...............    11
        Prepared statement of....................................    13
    Mitchem, Arnold, president, Council for Opportunity in 
      Education..................................................    14
        Prepared statement of....................................    16


EDUCATION REGULATIONS: ROADBLOCKS TO STUDENT CHOICE IN HIGHER EDUCATION

                              ----------                              


                        Thursday, March 17, 2011

                     U.S. House of Representatives

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The committee met, pursuant to call, at 10:00 a.m., in room 
2175, Rayburn House Office Building, Hon. John Kline [chairman 
of the committee] presiding.
    Present: Representatives Kline, Petri, McKeon, Biggert, 
Platts, Foxx, Hunter, Roe, Walberg, DesJarlais, Hanna, 
Barletta, Heck, Kelly, Miller, Payne, Andrews, Scott, McCarthy, 
Tierney, Wu, Davis, Grijalva, Bishop, and Hirono.
    Staff present: Katherine Bathgate, Press Assistant; James 
Bergeron, Director of Education and Human Services Policy; 
Colette Beyer, Press Secretary-Education; Kirk Boyle, General 
Counsel; Casey Buboltz, Coalitions and Member Services 
Coordinator; Heather Couri, Deputy Director of Education and 
Human Services Policy; Daniela Garcia, Professional Staff 
Member; Jimmy Hopper, Legislative Assistant; Amy Raaf Jones, 
Education Policy Counsel and Senior Advisor; Barrett Karr, 
Staff Director; Brian Melnyk, Legislative Assistant; Alex 
Sollberger, Communications Director; Linda Stevens, Chief 
Clerk/Assistant to the General Counsel; Alissa Strawcutter, 
Deputy Clerk; Tylease Alli, Minority Hearing Clerk; Jody 
Calemine, Minority Staff Director; John English, Minority 
Presidential Management Fellow; Sophia Kim, Minority 
Legislative Fellow, Education; Brian Levin, Minority New Media 
Press Assistant; Megan O'Reilly, Minority General Counsel; 
Helen Pajcic, Minority Education Policy Advisor; Julie Peller, 
Minority Deputy Staff Director; Alexandria Ruiz, Minority 
Administrative Assistant to Director of Education Policy; 
Melissa Salmanowitz, Minority Press Secretary; and Daniel 
Weiss, Minority Special Assistant to the Chairman.
    Chairman Kline [presiding]. A quorum being present, the 
committee will come to order.
    I want to make an administrative announcement. I have 
talked to some of the witnesses. I want to make sure all my 
colleagues understand that we are expecting votes--how this 
place works--somewhere around 10:15.
    It is my intention that we will have opening remarks, Mr. 
Miller and I. And we will move as far down witness testimony as 
we can and, and then we will break for votes--I think there are 
two--and come back and resume.
    Well, good morning, and welcome to the fourth hearing in 
our series to examine federal rules and regulations that 
undermine the strength of our nation's educational system.
    I would like to thank our witnesses for joining us today. 
Your time is valuable, and we appreciate the opportunity to 
hear from you about the impact of the Department of Education's 
proposed gainful employment regulation.
    The Higher Education Act states that in order to receive 
Title IV funding, programs at proprietary colleges must prepare 
students for ``gainful employment in a recognized occupation.''
    Congress has purposely never defined the term ``gainful 
employment,'' despite its presence in the statute for the past 
50 years. It was decided that any attempt to define such an 
evolving concept could have unintended consequences.
    However, some in the administration seem to believe they 
know better than Congress. Last year, the Department of 
Education issued a new regulation that attempts for the first 
time to define ``gainful employment.''
    Under the regulation, proprietary colleges would be 
required to seek pre-approval from the federal government 
before creating new programs and adhere to a confusing formula 
that utilizes the debt-to-income ratio and loan repayment rates 
of program graduates to determine eligibility for federal 
student aid. Additionally, these institutions would face a host 
of new and unprecedented reporting requirements.
    This gainful employment regulation is yet another example 
of federal overreach into the nation's colleges and 
universities that will reduce access to higher education for 
millions of students, undercut our efforts to re-energize our 
economy and, frankly, destroy jobs.
    More than 3 million students attend proprietary colleges 
each year. These colleges, also known as for-profit colleges or 
career colleges, provide students with skills that can be 
applied immediately to specific jobs in the workplace. As our 
unemployment rate continues to hover around 9 percent, and more 
than 13 million Americans remain out of work, proprietary 
colleges address a critical need in today's economy.
    These colleges are uniquely geared toward underserved, non-
traditional students, such as single parents, first-generation 
college students and working adults, who require training, but 
are not able to attend traditional colleges or universities.
    These institutions are flexible and able to adapt to the 
needs of the American workforce, and they prepare a new 
generation of jobseekers to meet the demands of a changing 
local economy. For example, if a community lacks trained nurses 
or qualified auto mechanics, proprietary colleges can quickly 
develop programs to fill those needs.
    More and more Americans are realizing the value of 
obtaining an education from a proprietary college. 
Unfortunately, the proposed gainful employment regulation could 
force many of these valuable institutions to close their doors, 
denying millions of potential students access to key job 
training programs.
    This poorly conceived regulation would allow the federal 
government to control program expansion by restricting 
financial aid eligibility, limiting initial enrollment and 
requiring schools to document the demand for workers with 
specific skills. According to one report, as many as 5.4 
million students could be shut out from higher education by 
2020 as a result of this regulation.
    I should note, these are concerns shared by members on both 
sides of the committee. Last month, an overwhelming bipartisan 
majority of members of the House of Representatives voted to 
put an end to the regulation before it hurt students and our 
economy. I have repeatedly asked Secretary Duncan to withdraw 
this regulation.
    At its heart, the issue is about student choice. We all 
support transparency and accountability, and we should have 
more of it.
    We realize there are some bad actors that should be rooted 
out. But we should not deny students the opportunity to attend 
the college of their choice and gain the valuable skills they 
need to compete in the workforce. That is why we are here 
today--to have a thoughtful discussion about the gainful 
employment regulation.
    This morning, we will hear from one young woman who 
graduated from a proprietary college and is now a successful 
professional. Without access to the proprietary college, she 
would not be where she is today.
    Rather than restrict access to an entire sector of 
colleges, we need to empower individuals to make informed 
decisions about their education and career goals.
    The President has laid out a bold vision to lead the world 
in college graduates by the end of the decade. We cannot meet 
this goal by launching an assault against an entire sector of 
higher education. Instead, we should encourage a strong and 
competitive workforce by providing opportunities for 
individuals to gain the skills and training they need to 
succeed in the workplace.
    Again, I would like to thank our witnesses for joining us.
    And I will now recognize my distinguished colleague, George 
Miller, the senior Democratic member of the committee, for his 
opening remarks.
    [The statement of Chairman Kline follows:]

            Prepared Statement of Hon. John Kline, Chairman,
                Committee on Education and the Workforce

    A quorum being present, the committee will come to order.
    Good morning and welcome to the fourth hearing in our series to 
examine federal rules and regulations that undermine the strength of 
our nation's education system. I'd like to thank our witnesses for 
joining us today. Your time is valuable and we appreciate the 
opportunity to hear from you about the impact of the Department of 
Education's proposed gainful employment regulation.
    The Higher Education Act states that in order to receive Title Four 
funding, programs at proprietary colleges must prepare students for 
``gainful employment in a recognized occupation.'' Congress has 
purposely never defined the term ``gainful employment,'' despite its 
presence in the statute for the past 50 years. It was decided that any 
attempt to define such an evolving concept could have unintended 
consequences. However, some in the administration seem to believe they 
know better than Congress. Last year, the Department of Education 
issued a new regulation that attempts for the first time to define 
``gainful employment.''
    Under the regulation, proprietary colleges would be required to 
seek preapproval from the federal government before creating new 
programs and adhere to a confusing formula that utilizes the debt-to-
income ratio and loan repayment rates of program graduates to determine 
eligibility for federal student aid. Additionally, these institutions 
would face a host of new and unprecedented reporting requirements.
    This gainful employment regulation is yet another example of 
federal overreach into the nation's colleges and universities that will 
reduce access to higher education for millions of students, undercut 
our efforts to reenergize our economy, and destroy jobs.
    More than three million students attend proprietary colleges each 
year. These colleges, also known as for-profit colleges or career 
colleges, provide students with skills that can be applied immediately 
to specific jobs in the workforce. As our unemployment rate continues 
to hover around nine percent and more than thirteen million Americans 
remain out of work, proprietary colleges address a critical need in 
today's economy.
    Proprietary colleges are uniquely geared toward underserved, non-
traditional students, such as single parents, first-generation college 
students, and working adults, who require training but are not able to 
attend traditional colleges or universities. These institutions are 
flexible and able to adapt to the needs of the American workforce, and 
they prepare a new generation of job-seekers to meet the demands of a 
changing local economy. For example, if a community lacks trained 
nurses or qualified auto mechanics, proprietary colleges can quickly 
develop programs to fill those needs.
    More and more Americans are realizing the value of obtaining an 
education from a proprietary college. Unfortunately, the proposed 
gainful employment regulation could force many of these valuable 
institutions to close their doors, denying millions of potential 
students access to key job-training programs. This poorly conceived 
regulation would allow the federal government to control program 
expansion by restricting financial aid eligibility, limiting initial 
enrollment, and requiring schools to document the demand for workers 
with specific skills. According to one report, as many as 5.4 million 
students could be shut out from higher education by 2020 as a result of 
the gainful employment regulation.
    I should note these are concerns shared by members on both sides of 
the committee. Last month, an overwhelming bipartisan majority of 
members in the House of Representatives voted to put an end to the 
regulation before it hurts students and our economy. I have repeatedly 
asked Secretary Duncan to withdraw his regulation.
    At its heart, this issue is about student choice. We all support 
transparency and accountability. We realize there are some bad actors 
that should be rooted out. But we should not deny students the 
opportunity to attend the college of their choice and gain the valuable 
skills they need to compete in the workforce. That's why we're here 
today--to have a thoughtful discussion about the gainful employment 
regulation. This morning, we will hear from one young woman who 
graduated from a proprietary college and is now a successful 
professional. Without access to a proprietary college, she would not be 
where she is today.
    Rather than restrict access to an entire sector of colleges, we 
need to empower individuals to make informed decisions about their 
education and career goals. The president has laid out a bold vision to 
lead the world in college graduates by the end of the decade. We cannot 
meet this goal by launching an assault against an entire sector of 
higher education. Instead, we should encourage a strong and competitive 
workforce by providing opportunities for individuals to gain the skills 
and training they need to succeed in the workplace.
    Again, I'd like to thank our witnesses for joining us, and I will 
now recognize my distinguished colleague George Miller, the senior 
Democratic member of the committee, for his opening remarks.
                                 ______
                                 
    Mr. Miller. Thank you, Mr. Chairman. And thank you for 
holding this hearing.
    You mentioned that this is one in a series of hearings 
about the role of regulations in undermining--or impacting 
education.
    This might also be a hearing this morning about what 
happens to you in the absence of regulation, and what happens 
to taxpayers, and what happens to students, and what about the 
product that is being offered to some of those students in 
terms of quality.
    The topic we are discussing this morning is one that is not 
new to us on this committee, and it is not new to the higher 
education industry. But it is one of significant impact in many 
communities across the country.
    For-profit or career colleges play a very important role in 
our economy. Many career colleges provide job training 
opportunities that Americans need to get ahead. Taxpayers 
subsidize these opportunities through federal student loans, 
Pell Grants and through other state programs, which students 
use in some of these schools to get the education they need.
    It has become apparent, however, that a handful of bad 
programs and schools are not only failing their students, but 
they are also wasting taxpayer dollars. Instead of students 
earning a certificate from these programs better prepared for 
the workforce or for a career, they are only leaving with 
crippling amounts of debt.
    In fact, a recent report by the Department of Education 
showed that nearly one in four borrowers at for-profit colleges 
default on repaying their loans within 3 years. This number is 
staggering.
    These are taxpayer subsidies that are being given away 
without any real accountability. In some cases, these 
institutions take 90 percent of their revenues from federal 
student loan programs, the Pell Grant program and, as I 
mentioned before, other state taxpayer programs.
    With this taxpayer money in play, we have an obligation to 
the students and to the taxpayers to conduct the oversight, as 
does the department. And I think that is what they are trying 
to do with this regulation.
    Whether this regulation will be successful or not, whether 
this regulation addresses the exact problem, remains to be seen 
when they are finished and ready to publish it.
    It is completely fair to expect that institutions profiting 
from federal taxpayer money to have a standard to meet in terms 
of what their schools need to provide for their students. It is 
a tragedy to see that so many students from some of these 
schools graduate with much higher debt and then very high 
default rates--as I mentioned before, almost 25 percent of the 
time.
    And some of these programs simply do not provide the kind 
of educational opportunity or atmosphere and the success rate 
that they should. In fact, only 22 percent of the students 
graduating from for-profit colleges compared to 65 percent of 
the private colleges, or 55 percent of students in public 
universities.
    A recent report from Ed Trust reported that 24 percent of 
all Pell Grant recipients are at for-profit colleges, even 
though they represent 12 percent of the total college 
enrollment. This number has nearly doubled in 10 years. That 
may be a good thing; it may not be.
    The report also shows that for-profit colleges account for 
43 percent of all federal student loan defaults.
    Given the growing reliance on taxpayer dollars, the 
performance of for-profit schools should be a concern to every 
member of this Congress. It should be a concern to the 
taxpayers and a concern to the administration. And I think that 
is what the administration is reflecting.
    When we see the kinds of scandals that have erupted in the 
past in some of these institutions--again, not all of them--you 
have to ask, ``What is going on? And what do we need to do to 
fix it?''
    This is not about what you end up doing in your career over 
time, but about whether or not you got what you paid for, and 
whether the institution you attended delivered the services 
that they promised. In this economy, graduating from a career 
education program should mean a job, not stifling debt. It is 
irresponsible not to insist on some level of accountability 
when billions of federal dollars and student financial security 
are at risk.
    The case is very clear. We have to demand more quality and 
affordability from schools on behalf of students and the 
taxpayers, not less. And I look forward to hearing from our 
witnesses.
    [The statement of Mr. Miller follows:]

  Prepared Statement of Hon. George Miller, Senior Democratic Member, 
                Committee on Education and the Workforce

    Thank you Mr. Chairman and thank you for holding this hearing.
    The topic we're discussing this morning is one that isn't new to us 
on this committee and isn't new to the higher education industry.
    But it is one that has a significant impact on many communities 
across this country.
    For-profit or career colleges play an important role in this 
economy.
    Many career colleges provide job training opportunities that 
Americans need to help get ahead. Taxpayer subsidize these 
opportunities through federal student loans, which students use at some 
of these schools to get the education they need.
    It has become apparent, however, that a handful of bad programs are 
not only failing their students, but they're also wasting taxpayer 
dollars.
    Instead of students earning a certificate from these programs 
better prepared for the workforce or for a career, they're only leaving 
with crippling amounts of debt.
    In fact, a recent report from the Department of Education showed 
that nearly one in four borrowers at for-profit colleges default on 
repaying their loans within three years.
    This number is staggering.
    These are taxpayer subsidies that are being given away without any 
real accountability.
    In some cases, these institutions take in 90 percent of their 
revenue from federal student loans.
    With federal money in play, we have an obligation to both the 
students and the taxpayers.
    Ensuring accountability with this money is what the administration 
is trying to do with their new gainful employment regulation.
    It is completely fair to expect institutions profiting from federal 
taxpayer money to have a standard to meet in terms of what their 
schools need to provide for their students.
    It is a tragedy to see that many students from some of these 
schools graduate with much higher debt and default in excess of 45 
percent of the time. Some of these programs simply do not provide the 
kind of educational atmosphere and the success ratio that they should.
    In fact, only 22 percent of students graduated from for-profit 
colleges, compared with 65 percent at private colleges or 55 percent of 
students at public universities.
    A recent report from Ed Trust showed that 24 percent of all Pell 
Grant recipients are at for-profit colleges even though they only 
represent 12 percent of total college enrollment. This number has 
nearly doubled from 10 years ago.
    The report also shows that for-profit colleges account for 43 
percent of all federal student loan defaults.
    Given their growing reliance on the taxpayer dollar, the 
performance of for-profit schools should be a concern to every member 
of this congress.
    It should be a concern to the taxpayers, and it is a concern to 
this Administration.
    When we see the kinds of scandals that have erupted in the past at 
some of these institutions, again not all of them, you have to ask 
what's going on and what can we do to fix it?
    This isn't about what you end up doing in your career over time but 
about whether or not you got what you paid for and whether the 
institution you attended delivered the services that they promised.
    In this economy, graduating from a career education program should 
mean a job, not stifling debt.
    It is irresponsible to not insist on some level of accountability 
when billions of federal dollars and students' financial security are 
at risk.
    The case is very clear. We have to demand more quality and 
affordability from schools on behalf of students and taxpayers, not 
less.
    I look forward to hearing from our witnesses and continuing this 
conversation.
                                 ______
                                 
    Chairman Kline. I thank the gentleman.
    Pursuant to Committee Rule 7c, all committee members will 
be permitted to submit written statements to be included in the 
permanent hearing record.
    And without objection, the hearing record will remain open 
for 14 days to allow statements, questions for the record and 
other extraneous material referenced during the hearing to be 
submitted in the official hearing record.
    I always pause a little bit at that ``other extraneous 
material.'' Sometime somebody will explain that to me.
    Or maybe you know. It is one of our mysteries here. I do 
not know.
    Okay. It is now my pleasure to introduce our distinguished 
panel of witnesses.
    First, Ms. Catherine Barreto is a senior sales manager at 
the Doubletree Hotel in Jersey City. Ms. Barreto received her 
associate's degree in hospitality management at Monroe College 
in 1996, and her bachelor's degree from Monroe in 2002. She has 
also earned an MBA from Long Island University.
    She has served as an area sales manager representing six 
Hilton Hotels, as well as a business travel sales manager at 
the Hilton Rye Town.
    Mr. Travis Jennings has been with Orbital Sciences 
Corporation for the past 13 years. Prior to his current job as 
electrical supervisor of the manufacturing launch systems 
group, he worked at Intel Corporation and spent 6 years in the 
United States Navy.
    He has an associate and science degree from Mesa Community 
College, a bachelor's of science in operations management 
technology from Arizona State University, and has credits 
towards his MBA at Grand Canyon University.
    Dr. Arnold Mitchem has served as the president of the 
Council for Opportunity in Education, the organization that 
represents the interests of the federal TRIO programs in 
Washington since 1986.
    Prior to serving at the council, Dr. Mitchem served on the 
history faculty and as a director of the Educational 
Opportunity Program at Marquette University. He received his 
Ph.D. in foundations of education from Marquette University in 
1981.
    Ms. Jeanne Herrmann became chief operating officer of Globe 
University/Minnesota School of Business in 2004. In 2009, she 
was appointed to the board of directors of the Accrediting 
Council of Independent Colleges and Schools. She is past chair 
of the Minnesota Career College Association and is a member of 
the Minnesota Higher Education Advisory Council and P-16 
Partnership.
    Always a pleasure to welcome all of you, particularly 
someone from Minnesota. And congratulations on getting out of 
there this week. If your house is like mine, there are still 
several feet of snow.
    The light system, when you start your testimony, there will 
be a green light that comes on. When you have been speaking for 
4 minutes, there will be a little yellow light that comes on. 
And when you reach 5 minutes, a red light will come on.
    Please try to wrap up your testimony shortly after that red 
light comes on. Your entire testimony will be entered into the 
record.
    We are ready to go.
    Ms. Barreto, you are recognized for 5 minutes.

           STATEMENT OF CATHERINE BARRETO, GRADUATE,
                         MONROE COLLEGE

    Ms. Barreto. Chairman Kline, Ranking Member Miller and 
distinguished members of the committee, good morning, and thank 
you for this opportunity to share my story with you. I consider 
this an extreme honor to make this presentation to you all 
today.
    My name is Catherine Barreto. I am a first generation of my 
family born in this great nation. My mother was from the 
Dominican Republic, and my father was from Peru.
    I was raised in the Harlem section of New York City, along 
with my sister, by my single mother. My mother taught me strong 
standards and the importance of a good education, respect 
towards others and faith. I remember my mother telling me that 
our neighborhood did not define us, and that an education can 
never be taken away.
    With this guidance, I have overcome many challenges. I am 
proud to say that I am now employed as a senior sales manager 
at the Doubletree Hotel Jersey City, and now I am supporting my 
family.
    After high school, I enrolled in the Borough of Manhattan 
Community College. I was the first female in my family to 
attend college. Unfortunately, I found BMCC a bit overwhelming. 
Class size was too large, and I felt like a number.
    It also seemed like every consumer goods company you can 
imagine came to promote their products and have a huge party.
    While at BMCC I considered transferring, and a friend told 
me she was enrolled at Monroe College and liked it. I did my 
research, and I enrolled at Monroe College as a transfer 
student.
    I was impressed by the enrollment process. They answered 
all my questions and treated me well.
    This was an extreme difference from BMCC where I had to 
stand in multiple lines for enrollment. My friend from Monroe 
College told me she enjoyed the hospitality management courses 
she was taking, so I decided to pursue my degree in hospitality 
management.
    Classes were a good size, and I received close attention 
from my professors. They did not only teach me, they seemed to 
be interested in my success.
    I recall receiving a letter asking me to meet with my 
accounting professor, Professor Jacob Lamar. I was having 
difficulties in this class, and he recommended I go to 
tutoring. I took advantage of the free tutoring, and I did well 
in the class.
    Later, I was offered an internship by my housekeeping 
teacher at the U.N. Park Hyatt Hotel, because I was one of the 
top students in my class. This was a tremendous opportunity.
    With one semester to go, I needed further financial 
assistance, because I used up all my TAP funds. I met with a 
loan officer at Monroe College, and he told me I had three 
options.
    The first he told me, I had an option to take a semester 
off, save the money for the semester that I needed. Second, he 
told me I can take a loan from a family member. Third, he 
mentioned I could take out a student loan.
    I had to come up with approximately $800. This was a lot of 
money for me since I only made $5 an hour. My internship was 
non-paying at the time. I was assisting my family.
    My mother had already made significant sacrifices for my 
sister and me, so I decided to take out a loan. I am very 
proud, as I graduated with my associates in 1996.
    After graduation, I started to pay off my loan. However, I 
ended up defaulting. I was now a single mother living at home, 
supporting my elderly mother and assisting my sister. I always 
intended to repay my loan, but it was either to live or to pay 
back the loan.
    My internship began as non-paying, and later turned into a 
paying position. As soon as I could afford it, I repaid my loan 
in full.
    Looking back, I realize how difficult it was to pay the 
loan back at that time. I wish I would have had more time to 
make my payments.
    Working for The Boston Consulting Group, I found a position 
I wanted to pursue, which required a bachelor's degree. I did 
not hesitate to call my long-time adviser at Monroe College, 
Dean Goldstein. With my employer's assistance, they had a 
tuition reimbursement program. I enrolled in Monroe College and 
sought my bachelor's degree.
    I worked full-time, went to college part-time, and 
supported my 2\1/2\-year-old daughter. I was very proud that I 
did not take out any loans, and I graduated at Monroe with a 
bachelor's degree in June 2002.
    I realized that I needed a master's degree to advance in my 
career, so again, I met with Dean Goldstein at Monroe College 
for more advice. We discussed options, and after our discussion 
I enrolled in Long Island University-Brooklyn Campus.
    Working full-time, I enrolled at LIU part-time. With one 
semester left, a class I needed to finish my MBA was not 
offered at the campus.
    I learned that Monroe College now had a master's program 
that offered the class I needed. I took this class at Monroe 
and juggled my other classes at LIU. Despite working full-time 
and being a parent, I graduated with my MBA in 4 years.
    On June 10, 2007, my 70-year-old mother, who was legally 
blind and on my dialysis, was at my graduation along with my 
younger sister and my 8-year-old daughter. We celebrated my 
huge accomplishment. This was the best day of my life.
    Several months after receiving my master's degree, I 
received an e-mail from Monroe College regarding a job fair. 
Since I was with my current employer 8 years, I decided to see 
what other opportunities were out there. I attended the job 
fair in the fall of 2007, and I was later hired for the 
position of business travel sales manager at the Hilton Rye 
Town.
    Since taking this job, I have received two promotions, and 
I am currently the senior sales manager at the Doubletree Hotel 
Jersey City.
    I am here because I want you to know my story. I have not 
fully explained the difficulties I have had to endure in my 
life. But I would not have been able to do this without the 
opportunities provided by Monroe College.
    Testifying before you today is proof that I have come a 
very long way. And I am very thankful for the opportunity to 
speak to you today. I welcome your questions.
    [The statement of Ms. Barreto follows:]

 Prepared Statement of Catherine Barreto, MBA, Graduate, Monroe College

    Chairman Kline, Ranking Member Miller, and distinguished Members of 
the Committee, good morning and thank you for this opportunity to share 
my story with you. I consider this an extreme honor to make this 
presentation to you all today.
    My name is Catherine Barreto. I am the first generation of my 
family born in this great nation. My mother was from the Dominican 
Republic and my father was from Peru.
    I was raised in the Harlem section of New York City along with my 
sister by my single mother. My mother taught me strong standards and 
the importance of a good education, respect towards others and faith. I 
remember my mother telling me that our neighborhood did not define us 
and that an education could never be taken away. With this guidance I 
have overcome many challenges and I am proud to say that I am now 
employed as a Senior Sales Manager at the Doubletree Hotel Jersey City 
and I am supporting for my family.
    After High School I enrolled in the Borough of Manhattan Community 
College (BMCC). I was the first female in my family to attend college. 
Unfortunately, I found BMCC a bit overwhelming. Class size was too 
large and I felt like a number. It also seemed like every consumer 
goods company you can imagine came to promote their products and have a 
huge party.
    While at BMCC, I considered transferring and a friend told me she 
was enrolled at Monroe College and liked it. I did my research and 
enrolled in Monroe College as a transfer student. I was impressed with 
the enrollment process. They answered all my questions and treated me 
well. This was a better experience than I had had at BMCC as I had to 
wait in multiple long lines to enroll.
    My friend from Monroe College told me she enjoyed the Hospitality 
Management courses she was taking so I decided to pursue my Associates 
Degree in Hospitality Management. Classes were a good size and I 
received close attention by my professors. They did not only teach me, 
they seemed interested in my success. I recall receiving a letter 
asking me to meet with my accounting professor, Professor Jacob Lamar. 
I was having difficulties in this class and he recommend I go to 
tutoring sessions. I took advantage of the free tutoring and did well 
in the class.
    I was offered an internship by my Housekeeping Professor at the UN 
Park Hyatt Hotel, because I was one of the top two students in my 
class. This was a tremendous opportunity. With one semester to go, I 
needed further financial assistance because I had used all my TAP 
(state aid) funds. I met with a loan officer at Monroe College and he 
told me I had three options. First, he told me I could take a semester 
off and save the money to pay for my remaining semester. Second, he 
told me I could take a loan from a family member; third, I could take 
out a loan.
    I had to come up with approximately $800. This was a lot of money 
for me since I only made $5 per hour. My internship was non-paying at 
that time and my family was not in a position to contribute anything to 
me. My mother had already made significant sacrifices for my sister and 
me so I decided to take out a loan. I was very proud as I graduated 
with my Associates in 1996.
    After graduation, I started paying off my loan; however, I ended up 
defaulting on the loan. I was now a single mother, living at home, 
supporting my elderly mother and assisting my younger sister. I always 
intended on repaying my loan but it was either live or pay back my 
loan.
    My internship began as non-paying and later turned into a paying 
position. As soon as I could afford to, I repaid my loan in full. 
Looking back I realize how difficult it was to pay the loan back at 
that time. I wished I had more time to make my payments.
    Working for The Boston Consulting Group, I found a position I 
wanted to pursue which required a Bachelors degree. I did not hesitate; 
I called my long-time advisor at Monroe College Dean Goldstein. With 
help of my employer's tuition reimbursement program, I enrolled in 
Monroe College and sought my Bachelors Degree. I worked full-time, went 
college part-time and supported my 2\1/2\ year old daughter. I am also 
very proud that I did not take out any loans and I graduated with my 
Bachelors Degree from Monroe College in June 2002.
    I realized that I needed a Masters Degree to advance my career so I 
again met with Dean Goldstein at Monroe College for more advice. We 
discussed options and after our discussions, I enrolled in Long Island 
University-Brooklyn Campus. Working full-time I enrolled part-time at 
LIU. With one semester left, a class I needed to finish my MBA was not 
offered at that campus. I learned that Monroe College now had a masters 
program and that offered my class. I took this class at Monroe College 
and juggled my other classes at LIU. Despite working full-time, and 
being a parent, I graduated with my MBA in four years.
    On June 10, 2007 my 70 year old mother, who was legally blind and 
on dialysis, was at my graduation along with my younger sister and my 8 
year old daughter. We all celebrated my huge accomplishment. This was 
best day of my life.
    Several months after receiving my Master's Degree, I received an 
email inviting me to a Monroe College Job Fair. Since I had been with 
my employer for eight years I decided to see what other opportunities 
were out there. I attended the job fair in the fall of 2007 and I was 
later hired in the position as Business Travel Sales Manager at the 
Hilton Rye Town. Since taking this job I received two promotions and am 
currently the Senior Sales Manager at the Doubletree Hotel Jersey City.
    I am here because I wanted you to know some of my story. I have not 
fully explained the difficulties I have had in my life and troubles I 
have endured but I want you to know that I could not have done it 
without the opportunities provided to me from Monroe College.
    Testifying before you today is proof that I have come a long way 
and I am thankful for this opportunity to speak with you. I welcome 
your questions.
                                 ______
                                 
    Chairman Kline. Thank you very much, Ms. Barreto. You have 
indeed come a long way.
    Mr. Jennings, you are recognized.

     STATEMENT OF TRAVIS JENNINGS, ELECTRICAL SUPERVISOR, 
   MANUFACTURING LAUNCH SYSTEMS GROUP, ORBITAL SCIENCES CORP.

    Mr. Jennings. Good morning. My name is Travis Jennings.
    I am the electrical test department supervisor at Orbital 
Sciences Corporation, Launch Systems Group, Chandler, Arizona. 
My responsibilities include managing electrical test 
technicians engaged in the process of validating the 
acceptability of flight and ground support hardware for complex 
multi-stage missile systems.
    I am representative of a typical line manager within a 
manufacturing organization, frequently tasked with the 
responsibility of locating qualified employees.
    Employing graduates from both public and private 
postsecondary technical programs, I find their technical 
capabilities to be indiscernible. However, I have found it 
difficult to recruit from the three community colleges in the 
Phoenix metropolitan area offering the technical degree 
programs. I would like to explain some of the reasons.
    Several barriers seem to impede our recruitment of public 
school students. Typically, public schools operate within a 
traditional 16-week semester, two semesters per year, with 
limited summer attendance and staff. Recruitment is only 
possible during regular semesters.
    Additionally, career placement duties are assigned as a 
collateral responsibility to existing staff with other 
responsibilities, rather than to a dedicated department as seen 
in the career colleges.
    My last attempt to recruit from a local community college 
required an extraordinary amount of time away from work 
presenting the employment opportunity. These tasks are normally 
performed by placement specialists in career colleges, who take 
the job information from the hiring manager and, in turn, 
provide a pool of qualified candidates.
    This attempt was at the community college that I graduated 
from, and I was unsuccessful at recruiting from it.
    The career placement services in career colleges are 
absolutely a valued commodity offered to employers in search of 
qualified technical candidates. It has been my experience that, 
within these schools, there is a genuine customer-supplier 
relationship that exists between the students, faculty and 
staff.
    The students understand from the beginning of their 
enrollment that the tuition he or she pays is compensation for 
contributions far beyond classroom instruction. There is an 
understanding by both students and staff that the services 
provided do not end with just a diploma.
    It is clearly evident that career placement for graduating 
students is a high priority for these career colleges. 
Employers, like Orbital Sciences Corporation, managers, such as 
myself, need only reap these ancillary benefits.
    In addition, the career colleges seem to understand the 
needs of their customers; that is, the potential employers. As 
I have witnessed, private postsecondary institutions actively 
practice continuous improvement through the use of industry 
advisory committees.
    I am currently a standing member of ITT Technical 
Institute's Tempe, Arizona campus, School of Electronics, 
Technology Industry Advisory Committee, and have just recently 
received an invitation to participate in DeVry University's 
electronics program industry advisory committee for the 
Phoenix, Arizona campus.
    These advisory committees allow industry leaders the 
opportunity to provide constructive feedback and 
recommendations for curriculum enhancement based on graduate 
performance in the industry. This approach has an immediate 
benefit for employers, as new graduates enter the industry 
armed with the skills and knowledge to solve real issues in the 
workplace.
    In Orbital's manufacturing electrical test department, the 
ideal candidate for an entry level position is a recent 
graduate of a 2-year technical program. Orbital strongly 
encourages advancement and growth through continued formal 
education coupled with on-the-job training.
    The rate of return for continuing education is 
immeasurable, as each team member will return to the workplace 
with an increased knowledge, skills, and expertise, fostering 
innovation and driving the organization to the next level. 
Career colleges accommodate working adults with flexible 
schedules, frequently offering evening, weekend, and compressed 
classes.
    This is mutually beneficial to employees and employers, 
allowing employers to retain a skilled workforce while the 
employee is increasing their potential for growth in their 
respective technical disciplines.
    As our workforce expands, I find myself instinctively 
contacting one of the private sector technical schools in the 
area first. I typically get an immediate response from career 
service professionals that provide me with an applicant pool 
meeting my job specifications. This allows me to fill positions 
quickly and maintain production schedules and, ultimately, 
customer commitments.
    Additionally, my employees are encouraged to pursue greater 
opportunities within the company, and know that this is only 
achievable with increased formal education. Many of these 
employees know this can be accomplished with the flexible 
schedules offered by career colleges.
    Thank you for this opportunity. I certainly welcome any 
questions.
    [The statement of Mr. Jennings follows:]

   Prepared Statement of Travis Jennings, Electrical Test Department 
        Supervisor, Orbital Sciences Corp., Launch Systems Group

    Good morning. My name is Travis Jennings. I am the Electrical Test 
Department Supervisor at Orbital Sciences Corporation, Launch Systems 
Group, in Chandler, Arizona. My responsibilities involve managing 
electrical test technicians engaged in the process of validating the 
acceptability of flight and ground support hardware for complex multi-
stage missile systems.
    I am representative of the typical line manager, within a 
manufacturing organization, frequently tasked with the responsibility 
of locating and hiring qualified employees.
    Employing graduates from both public and private sector 
postsecondary technical programs, I find their technical capabilities 
to be indiscernible. I have however; found it difficult to recruit from 
the three community colleges in the Phoenix metropolitan area offering 
technical degrees programs.
    Several barriers seem to impede our recruitment of public school 
students. Typically, public schools operate within a traditional 
sixteen week semester, two semesters per year, with limited summer 
attendance and staff. Recruitment is only possible during regular 
semesters. Additionally, career placement duties are assigned as a 
collateral responsibility to existing staff rather than a dedicated 
department as seen in the private sector. My last attempt to recruit 
from a local community college required an extraordinary amount of time 
away from work presenting the employment opportunities. These tasks are 
normally performed by placement specialists in the private sector, who 
take the job information from the hiring manager and, in turn, provide 
a pool of qualified candidates.
    The career placement services, in private sector schools, are 
certainly a valued commodity offered to employers in search of 
qualified technical candidates. It has been my experience that within 
these private postsecondary educational institutions there is a genuine 
customer-supplier relationship between the students, faculty and staff. 
The students understand from the beginning of their enrollment that the 
tuition he or she pays is compensation for contributions far beyond 
classroom instruction. There is an understanding by both students and 
staff that the service provided doesn't end with a diploma. It is 
clearly evident that career placement for graduating students is a high 
priority for the private postsecondary education sector. Employers, 
like Orbital Sciences Corporation, need only reap these ancillary 
benefits.
    In addition, the private sector strives to understand the needs of 
their end customers; potential employers. As I've witnessed, private 
postsecondary educational institutions actively practice continuous 
improvement through the use of industry advisory committees. I am 
currently a standing member of ITT Technical Institute, Tempe, Arizona, 
School of Electronics Technology, Industry Advisory Committee, and have 
recently received an invitation to participate on the advisory 
committee for DeVry University, Phoenix, Arizona. These advisory 
committees allow industry leaders the opportunity to provide 
constructive feedback and recommendations for curriculum enhancement 
based on graduate performance in the industry. This approach has an 
immediate benefit for employers as new graduates enter the industry 
armed with the skills and knowledge to solve real issues in the 
workplace.
    In Orbital's Manufacturing Electrical Test Department, the ideal 
candidate for an entry level position is a recent graduate of a two 
year technical program. Orbital strongly encourages advancement and 
growth through continued formal education coupled with on-the-job-
training. The rate of return for continuing education is immeasurable, 
as each team member will return to the workplace with increased 
knowledge, skills and expertise, fostering innovation and driving the 
organization to the next level. Private postsecondary schools 
accommodate working adults with flexible schedules, frequently offering 
evening, weekend and compressed classes. This is mutually beneficial to 
employees and employers, allowing employers to retain a skilled 
workforce while the employee is increasing their potential for growth 
in their respective technical disciplines.
    As our work force expands, I find myself instinctively contacting 
one of the private sector technical schools in the area, first. I 
typically get an immediate response from a career services professional 
that provides me with an applicant pool meeting the job specifications. 
This allows me to fill positions quickly and maintain production 
schedules and ultimately customer commitments. Additionally, my 
employees are encouraged to pursue greater opportunities within the 
company and know that this is only achievable with increased formal 
education. Many of these employees know this can be accomplished with 
the flexible schedules offers by the private sector postsecondary 
institutions.
    Thank you for this opportunity to provide these comments.
                                 ______
                                 
    Chairman Kline. Thank you, Mr. Jennings.
    As you can tell by the lights and the buzzers and things, 
there is a vote underway. I would like to get Dr. Mitchem's 
testimony before we break.
    And so, that will be our expectation for my colleagues 
here. Then we will break, come back, and get Ms. Herrmann's, 
and go into questions.
    So, Dr. Mitchem, you are recognized.

            STATEMENT OF ARNOLD MITCHEM, PRESIDENT,
              COUNCIL FOR OPPORTUNITY IN EDUCATION

    Mr. Mitchem. Thank you very much, Mr. Chairman, Ranking 
Member Miller and members of the Education and Workforce 
Committee. I deeply appreciate the opportunity to testify this 
morning.
    My name is Arnold Mitchem, and I am the president of the 
Council for Opportunity in Education, an organization 
representing over 1,000 colleges and over 5,000 administrators, 
counselors, and teachers, who work every day to provide low-
income and first-generation students a realistic chance to 
enter and succeed in college.
    In developing my testimony, I spoke with many of these 
educators, and I also drew upon my own experience of nearly 40 
years of working directly with low-income young people and 
adults.
    Throughout these 40 years, I have tried to govern my 
interactions with students by a simple maxim: Work so that 
other people's children have the same range of options that my 
own children had, and now my grandchildren have.
    I believe this view is consistent with President Johnson's 
closing remarks as he signed the Higher Education Act 45 years 
ago: Tell your children, and tell your grandchildren, that the 
doors of opportunity are now open.
    At the time, he was advancing an equal educational 
opportunity policy, a policy that envisioned access to and 
inclusion of all segments of the American family in all 
categories of colleges and universities.
    Mr. Chairman, I and many others are troubled today by the 
overconcentration of low-income Americans in for-profit 
schools. This class, ethnic and racial stratification is 
troubling for two reasons.
    First, there is little evidence that this stratification is 
the result of the informed choice of these students or their 
families.
    Second, in far too many instances, the enrollment in a 
program does not adequately prepare these students for the 
workforce, but simply allows them to accumulate large amounts 
of private and federal college loans--in many instances, 
leading students to default on these loans.
    According to the Career College Association's own research, 
students attending for-profit institutions are twice as likely 
as students at other institutions to default on their loans.
    Let me elaborate.
    What do we know about the circumstances surrounding 
students' decisions to attend for-profit institutions?
    First, we know that, in most instances, the low-income 
student and his or her family come to the table with limited 
information about college. We all know that discussions about 
the relative ranking of colleges, the sticker price of college 
as opposed to the actual price, transferability of credits, or 
how financial aid works, are confusing even to families with 
resources.
    Middle- and upper-income families invest a great amount of 
time and financial resources in ensuring the path to college 
admission and completion for their children.
    Families at the lower end of the economic ladder and 
without college experience most often do not even know the 
right questions to ask.
    In short, when low-income and first-generation students 
enter the for-profit college marketplace, they think they are 
dealing with counselors. But far too often, they are dealing 
with salespeople.
    So, on one side of the table we have a poorly informed 
consumer, and on the other side of the table we have a business 
that is marketing its product using sophisticated, state-of-
the-art techniques.
    Over and over again we were told stories of students being 
subjected to high-pressure marketing to enroll in for-profit 
institutions. In some cases, I heard from students who, once 
cornered by for-profit recruiters, were pushed to register for 
courses and apply for financial aid within a single sitting.
    Some would argue that these situations are rare, that there 
are only a few bad apples in the for-profit sector who engage 
in these marketing tactics.
    Mr. Chairman, I believe this is a fair point.
    For example, Ms. Herrmann's testimony, to my left, points 
up the various ways in which her own institution works to 
provide students with the guidance needed to emerge from their 
course of study and into the job market. Also, the most 
egregious behaviors uncovered by the GAO are limited.
    Yet the basic inequity in the relationship between the low-
income consumer and the industry is inherent. A sophisticated 
business with a high-cost product it wants to sell, for 
example, and a poorly informed consumer is a cocktail for 
abuse.
    As I said earlier, our second major concern about the 
current regulations governing low-income students and for-
profit institutions is that in too many instances, a student's 
enrollment is not a real opportunity, but instead results in a 
situation where the individual is worse off than they were 
before they enrolled. In short, we stand opportunity on its 
head.
    Mr. Chairman, thank you again for the opportunity to 
testify and for your addressing these serious and complex 
concerns.
    [The statement of Mr. Mitchem follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                                ------                                

    Chairman Kline. Thank you, Dr. Mitchem.
    Thanks to the witnesses.
    When we come back, we will pick up with Ms. Herrmann.
    You can see by the screen there that the time remaining for 
us to vote is 7 minutes and 44 seconds. It turns out that is 
just another one of the big lies here on Capitol Hill. But we 
will be back as quickly as we can.
    We are in recess.
    [Recess.]
    Chairman Kline. Welcome back. We will resume with witness 
testimony.
    And Ms. Herrmann, you are recognized for 5 minutes. Please.

 STATEMENT OF JEANNE HERRMANN, CHIEF OPERATING OFFICER, GLOBE 
              UNIVERSITY/MINNESOTA BUSINESS SCHOOL

    Ms. Herrmann. Chairman Kline, Ranking Member Miller, and 
other distinguished members of the committee, my name is Jeanne 
Herrmann, and I am the chief operating officer at Globe 
University/Minnesota School of Business, Globe MSB.
    Both schools are owned by the Kaye and Terry Myhre family, 
and I would like to acknowledge their attendance with me today.
    Thank you for the opportunity to testify regarding the 
gainful employment regulations proposed by the Department of 
Education. We believe they pose serious roadblocks to students' 
choice in higher ed.
    As a member of the Globe executive team since 1997, I am 
accountable to ensuring successful outcomes for our students, 
which is a goal central to our strategic plan.
    I work with Chancellor McCormick's office as a founding 
member of the state's P-20 Partnership that looks to improve 
the connections between early childhood education and graduate 
school. I have worked with other state leaders to create a data 
accountability system.
    I am very committed to the education field and proud to 
work for a school that truly cares about its students and their 
success.
    The schools were established in 1885 and 1877. Both 
institutions are private, tax-paying institutions with 20 
campuses in Minnesota, Wisconsin and South Dakota, and we serve 
over 11,000 students. We offer a range of programs from 
certificate through master degree level, and the schools are 
accredited by the Accrediting Council for Independent Colleges 
and Schools, ACICS.
    I will address three main points today.
    First, Globe's commitment to providing a quality education 
is demonstrated by our strong outcomes.
    Second, we understand that the department wants to ensure 
the highest quality and accountability of programs that benefit 
from Title IV funds. But we believe the proposed rule would 
adversely impact students' choice of postsecondary education.
    Third, there are other alternatives that could better 
address consumer protection, quality, and student loan debt 
concerns that may be driving the G.E. rule.
    To my first point, our retention and placement rates are 
strong. In 2010, our average placement retention rates were 
over 70 percent.
    At Globe, we make certain students acquire essential 
knowledge, skills, and abilities to succeed in their chosen 
career fields by setting specific learner outcomes in every 
program, by having closer relationships with employers to help 
design curriculum, and through a strong commitment to community 
engagement.
    In 2010, Globe students and staff participated in 3,600 
community events, totaling more than 24,400 volunteer hours.
    Our commitment to student achievement and financial 
literacy of our students have had a positive effect on our 
default rates. In fiscal year 2008, Globe MSB campuses had an 
average default rate of 5.7 percent.
    We take compliance with the federal, state, and accrediting 
body triad of regulation very seriously, and compliance best 
practices are part of our culture.
    To my second point, we support the department's desire to 
ensure the highest quality and accountability of Title IV 
programs. But the proposed metric is an unnecessary, complex 
regulation not based on sound analysis.
    Under the proposed rule, programs with marginally 
successful outcomes in terms of graduation and job placement 
could continue, while programs with outstanding results in 
preparing students for high-demand occupations could fail.
    Among other flaws, the Charles River Associates study found 
that the metric may reduce access to programs that would have 
conferred significant benefits to students in terms of higher 
life-time earnings, would foreclose between 1.2 and 2.3 million 
students from any postsecondary option through 2020.
    In contrast, the department's claim that 90 percent of 
students in programs closed as a result of the proposed rule 
would find replacement programs, actually, only 25 to 50 
percent of those displaced students would be able to find other 
programs.
    For Globe, it is difficult to anticipate which programs 
would be impacted by the metric, because schools do not have 
access to Social Security earnings, and this is information 
that is needed to calculate the metric.
    The programs most likely to be impacted include those that 
have strong placement rates, because starting salaries are not 
at pay levels that will meet the department's metric.
    In addition, certain medical and business programs, 
including registered nursing, are among the 15 most high-demand 
occupations over the next decade. And yet, they are likely to 
be negatively impacted by the proposed rule.
    To my third point, it is unclear what problem the 
department is trying to solve. If the objective is consumer 
protection, provide all students with information relevant to 
choosing career-focused programs, such as the total cost of 
education and understanding of how they will pay for these 
costs and reasonable expectations for employment.
    Many of these disclosures are already required under the 
2008 amendments to Higher Education Opportunity Act, and just 
became effective.
    If better metrics of quality are the concern, then 
requiring outcome measures, such as placement and graduation 
rates and licensure passage rates, are better measures of value 
and quality than loan debt or repayment rates. It is not for 
the department to direct students to specific types of jobs.
    Let me be clear. We are not opposed to regulation per se, 
but we support reasonable, fact-based regulation focused on 
improving outcomes.
    Students are customers who vote with their feet. If schools 
do not perform, we risk losing student enrollment, Title IV 
eligibility and accreditation.
    Mr. Chairman, the proposed G.E. rule is so bad for our 
students and for our country, that we have no alternative but 
to ask Congress to stop.
    We thank you for your leadership in the bipartisan 
amendment that passed the House with a strong vote recently. 
That would put a necessary pause in the department's 
implementation of this rule and allow a more thoughtful 
approach to these issues.
    I am grateful for the opportunity today. Thank you so much.
    [The statement of Ms. Herrmann follows:]

    Prepared Statement of Jeanne Herrmann, Chief Operating Officer,
             Globe University/Minnesota School of Business

    Mr. Chairman and other distinguished Members of the Committee, my 
name is Jeanne Herrmann and I am the Chief Operating Officer at Globe 
University/Minnesota School of Business. On behalf of the students, 
faculty and administration of Globe University and the Minnesota School 
of Business (referred to jointly as ``Globe'' below), which are both 
owned by the Terry and Kaye Myhre family, I thank you for the 
opportunity to submit testimony to the House Committee on Education and 
the Workforce on the topic of regulations proposed by the Department of 
Education (``the Department'') that pose roadblocks to students' choice 
in higher education. My testimony is directed specifically to the 
Department's proposed regulation to define ``gainful employment'' 
(``GE'') for purposes of determining Title IV student financial aid 
eligibility of programs offered by proprietary institutions of higher 
education and postsecondary vocational institutions, as published in 
its July 26, 2010 Notice of Proposed Rulemaking (NPRM).
    I joined Globe in 1994 and I have responsibility for providing 
oversight and leadership to our campus operations. I have a team of six 
regional directors who work with each campus on a daily basis to ensure 
that compliant, consistent and caring practices are in place to serve 
every student. I provide oversight to our academic, student, career 
services and military support teams. I am a member of the executive 
team that sets our strategic, organizational goals each year and I have 
responsibility for ensuring successful outcomes for our students, which 
is a goal central to our strategic plan.
    Outside of my immediate responsibilities at Globe, I serve on the 
Minnesota Higher Education Advisory Board, which includes four higher 
education sector leaders and the commissioner of K-12. I also serve in 
an advisory role to the governor-appointed executive director of the 
Minnesota Office of Higher Education, participate actively with the 
Minnesota Career College Association and serve on several state 
committees that focus on education and workforce development. I am 
proud to be one of the founding members of the Minnesota P-20 
Partnership that looks to improve the connections between early 
childhood education and graduate school. I have worked with other 
leaders in Minnesota to create the State Longitudinal Educational Data 
Systems (SLEDS) so that we can more accurately account for students and 
their college attainment rates, as well as their success in entering 
the workforce.
    On a national level, I serve as a Commissioner of the Accrediting 
Council for Independent Colleges and Schools (ACICS), a national 
institutional accrediting body, where I work to ensure the standards of 
accreditation are upheld, best practices are shared and quality 
improvement is a continuous focus of member institutions. In my 
capacity as Chair of the Institutional Effectiveness Committee (IEC), I 
am currently working with staff at ACICS and the United States 
Department of Education to develop a student success initiative project 
that focuses on everything from graduation rates to default prevention.
    As detailed above, I am deeply committed to the education field. I 
am very proud to work for a school that truly cares about the success 
of its students. I do a great deal of training of internal staff 
regarding our accreditation and compliance responsibilities and I 
always end my training by saying to our employees that we have an 
obligation to do our very best for our students. That is why I 
appreciate the opportunity to appear before this Committee, knowing 
there are people who are not always supportive of or do not have a 
complete understanding of private sector higher education, to explain 
the valuable educational and other services we provide our students and 
our concerns about the harm that the GE proposal would have on 
students.
    My testimony focuses on three main points. First, private sector 
colleges and universities (PSCUs) are committed to providing a quality 
education, just as their counterparts in traditional higher education, 
and to observing both the letter and the spirit of the myriad laws that 
govern them. Independent research of PSCUs demonstrates very positive 
outcomes. Globe is one among many PSCUs that bring great value to 
students, employers and communities.
    Second, the Department's proposed GE regulation will detrimentally 
impact students' access to, and choice of, postsecondary programs 
nationally and at Globe. We fully support the President's objective of 
regaining the nation's premier rank in proportion of citizens with at 
least one year of postsecondary education by 2020, but the GE proposed 
rule will actually work against that objective by restricting choice 
and access. Moreover, if the metric is designed to solve the problems 
of student debt load, quality of programs, or directing students to 
programs that will prepare them for the highest-demand occupations, it 
fails in being the best route to all three objectives. Under the 
proposal, programs with marginally successful outcomes in terms of 
graduation and job placement could continue, while programs with 
outstanding results in preparing students for high-demand occupations 
could fail. For these reasons, it should be abandoned.
    Third, if the Department had better defined the problem it was 
trying to solve through the proposed GE rule, more common sense 
solutions could be implemented. For example, if the objective is 
consumer protection, transparency through enhanced disclosure of key, 
relevant information to consumers is far more effective in assisting 
students in choosing career-focused programs than the application of a 
convoluted, complex metric. If student debt loads are the concern, then 
financial aid officers could be given the discretion to limit federally 
guaranteed student borrowing when the amount borrowed exceeds the 
educational costs, as it does all too often. If better metrics of 
quality are the concern, then requiring minimum outcomes measures such 
as placement and graduation rates are better measures of value and 
quality of education for students than debt load or repayment rates. We 
stand ready to work with the Committee to develop such common sense 
legislative proposals.
I. Globe's Commitment to Career Education and the Community
    Globe is not new to career education. Globe University (then, Globe 
College) was established in 1885 in downtown St. Paul with the goal of 
providing ``practical'' education to students. The Minnesota School of 
Business was established in 1877 to teach bookkeeping, shorthand, 
English and penmanship in downtown Minneapolis. Both institutions are 
private, tax-paying, accredited postsecondary institutions based in 
Woodbury, Minnesota, with twenty (20) campuses throughout Minnesota, 
Wisconsin and South Dakota. A list of campus locations is included as 
Attachment A to this testimony. As of March 2011, 11,175 students were 
enrolled at our schools. Our schools offer masters', bachelors', 
associates', diploma and certificate programs that help prepare 
students for careers in multiple fields, including accounting, health 
fitness, medical assisting, business administration, paralegal 
services, criminal justice, information technology, network support, 
registered nursing, veterinary technology, and health care management.
    Globe University and Minnesota School of Business are accredited by 
the Accrediting Council for Independent Colleges and Schools (ACICS), a 
national accrediting agency recognized by both the Department and the 
Council for Higher Education Accreditation. Schools accredited by ACICS 
are required to meet and maintain high standards of faculty 
qualification, student retention and student placement. Specifically, 
to maintain national accreditation, our schools are required to meet 
minimum placement rates and to submit annual reports tracking 
enrollment, retention, and default rates. These requirements are a 
focus of our efforts and, as a result, a majority of our students stay 
in school, complete their programs and get jobs.
    Finding suitable employment, our students are able to repay their 
loans. Although not all the students who enroll in our programs end up 
graduating, we are proud that our federally guaranteed student loan 
default rates are in the single digits for many of our programs. In 
Fiscal Year 2008, Globe University had an average Cohort Default Rate 
(CDR) of 6.6% and Minnesota School of Business had an average CDR of 
5.5%. In addition, our retention and placement rates are strong. In 
2009, the average retention rate at the ten Minnesota Business School 
campuses was 73.1% and the average placement rate was 77.1%. For the 
ten Globe University campuses, in 2009 the average retention rate was 
70.3% and the placement rate was 78.1%. We achieve these positive 
outcomes through student supports to keep students in school, default 
management and financial literacy training to educate students about 
loan repayment obligations, and well-staffed placement offices that 
have longstanding relationships with local and national employers. To 
put it simply, we must have positive outcomes for our students. 
Otherwise, we cannot continue to operate, both because our reputation 
will suffer, making it difficult to recruit new students, and because 
our accrediting body will remove our ability to continue to accept 
students with Title IV funds.
    The required ACICS reports also include audited annual financial 
statements to verify that adequate fiscal resources back our programs 
and student support services. Compliance with ACICS requirements are 
linked to Globe's eligibility to accept Title IV student financial aid, 
including Stafford Loans, federal PLUS loans, Pell Grants, Academic 
Competitiveness Grants, National SMART Grants, federal SEOG grants and 
other Title IV grant and loan assistance. In addition, many of our 
programs are programmatically accredited by specialized accrediting 
bodies, such as the Commission on Collegiate Nursing Education (CCNE) 
for our Bachelor of Science in Nursing, the Accrediting Bureau of 
Health Education Schools (ABHES) and the American Veterinary Medical 
Association (AVMA). In addition to accrediting body oversight, our 
schools are also subject to a variety of other Title IV regulations, 
including required minimum Cohort Default Rates, as well as state 
oversight. We take compliance with the federal-state-accrediting body 
``triad'' of regulation very seriously and compliance best practices 
are part of our culture at Globe.
    Globe's philosophy as a career-focused educational institution is 
to invest in our students by providing knowledge, skills and 
credentials to support their immediate employment goals and to build a 
foundation for continued career opportunities. Our 21st Century economy 
is a knowledge economy, and skilled workers are a central driver of 
business and prosperous communities. We search for faculty and staff 
who are passionate about learning. We provide, and keep up to date, 
pedagogical resources to help students acquire the skills and knowledge 
needed to succeed in their chosen field. To ensure students are 
acquiring essential knowledge, skills and abilities to succeed in their 
chosen career fields, every program has learner outcomes specific to 
that career path that are assessed in courses throughout their 
educational program using a variety of assessment tools.
    We are both a career-centered and a community-focused institution 
by mission. Globe believes that citizens' quality of life and ability 
to contribute to communities is tied to educational attainment. Our 
institutional mission statement is centrally tied to the community. It 
states: ``We will demonstrate We Care by preparing career-focused, 
community-minded graduates for the global workforce.'' Globe evidences 
this shared career and community focus in the following ways:
    Strong Employer Collaboration. We have close, established 
relationships with employers to help design our curriculum and to make 
sure that it is kept current. Our Program Advisory Committees (PACs) 
ensure that our curricula meet employers' industry standards and needs. 
Each campus maintains a PAC with appropriate membership for every 
program offered at the campus. PAC members cannot be employed by the 
school. Membership is diverse and includes a minimum of 15 members, at 
least three of whom are employers, who can provide multiple points of 
view. In 2010, 521 employers or practitioners were active members of 
our PACs. In addition, we monitor annually and, when appropriate, end 
enrollments in specific programs in order to ensure that the number of 
graduates of a program in a geographic area is compatible with employer 
demand for those graduates.
    Globe Community Engagement: Globe is committed to building 
communities through education. We accomplish this through service-
learning and community partnerships, memberships, sponsorships, and 
charitable support and outreach initiatives. In 2010, our campus 
students, faculty and staff participated in 3,612 community events 
totaling 24,412 volunteer hours.
    Service Learning: Through service-learning, our students learn how 
to be engaged, ethical and responsible citizens of their communities. 
Students apply their learning to real-world situations, which benefits 
them and our community partners including employers, the government and 
nonprofit organizations. In the process, students hone their critical 
thinking skills and learn the value of community engagement. Community 
partners benefit by having access to energetic individuals with sharp 
minds and volumes of great ideas. As of November 15, 2010, Globe 
courses that had a service-learning component applied this concept to 
1,113 projects that provided a real world learning experience for our 
students and a service to community partners.
    Memberships: Globe is a member of twenty-three Chambers of 
Commerce, twelve industry-specific professional organizations related 
to our program fields, the Association of Private Sector Colleges and 
Universities, the Better Business Bureau, the Dakota Association for 
College Admission Counseling, Distributive Education Clubs of America 
(DECA), Minnesota Association of Financial Aid Administrators, 
Minnesota Career College Association, Minnesota Library Association, 
National Association of Colleges & Employers, National Association of 
Student Financial Aid Administrators, numerous Rotary and Kiwanis 
Clubs, the South Dakota Association of Student Financial Aid 
Administrators, the South Dakota Career Planning & Placement 
Association and the Wisconsin Council for Independent Education. And 
when we join these organizations, we play an active role, learning from 
them and giving back.
    Charitable Support & Outreach Initiatives: Globe supports the 
American Cancer Society and other cancer research and awareness 
organizations, the Children Heritage Foundation, the Correctional 
Facility Education Initiative, India Higher Education Outreach, Luther 
Seminary, Make-a-Wish Foundation, Peace House Africa, Salvation Army, 
Vision Slovakia, and Youth Frontiers, among other charitable and 
community service organizations.
    Sponsorship: Globe has been a sponsor of the Minnesota Chamber of 
Commerce Luncheon, ``Best in Class: Building a World Class Education 
System'' featuring the U.S. Secretary of Education, the Madison Area 
Music Association Awards, numerous Chamber of Commerce Business 
Development Luncheons, the TechFuse Technology Conference, the Veteran 
of the Month radio program, charitable golf tournaments, and numerous 
community parades, festivals and sporting events.
    Globe has received a Certificate of Recognition from the Minnesota 
Governor and a Certificate of Appreciation from the Minnesota 
Department of Veterans Affairs for support of veterans. We have been 
designated a Yellow Ribbon Campus from the State of Minnesota and were 
voted a Top 100 ``Best for Vets'' College from Military Times EDGE. 
Career education and community service are inextricably bound together 
at Globe and we are committed to being both a fine institution of 
higher education and a responsible and valuable member of the 
community.
II. The Proposed GE Rule Would Severely Limit Student Choice and Should 
        Be Abandoned
    We support the desire of the Department and this Committee to 
ensure the highest quality and accountability of programs that benefit 
from Title IV funds and to prevent abuse, for both students and 
taxpayers. However, the proposed GE rule that would tie a program's 
Title IV student financial aid eligibility to debt/income and repayment 
rate metrics is an overly burdensome, unnecessarily complex regulation 
not based on sound data and analysis. At the heart of the problem is 
the fact that it is not clear what problem the rule is trying to solve, 
yet it will have the unintended consequence of precluding students, 
many of whom are ones who need training the most--like Globe students 
who are working parents, young adults, military personnel, veterans, 
career-changers and other non-traditional students--from receiving the 
education they want and need.
    Is the goal of the rule to limit loan indebtedness, eliminate poor 
quality programs, or direct students to certain occupations and away 
from others? If the goal is controlling student loan indebtedness, a 
much better approach is to permit institutions to limit the amount of 
loan funds a student may borrow to that which is needed to pay for the 
student's educational charges, such as tuition and fees. This would 
require Congressional authorization, and we would be happy to work with 
the Committee to advocate for such legislation. In addition, Congress 
could require that private loan funds be disbursed directly to the 
institution, rather than the student, to allow one final opportunity to 
counsel students about financial literacy, the benefits of federal 
loans over private loans, and the dangers of over-borrowing and 
default. We would be happy to work with the Committee on such a 
proposal if it is of interest. Congress is best equipped to be making 
these types of loan indebtedness decisions, not the Department through 
a convoluted metric with damaging unintended consequences.
    If the goal is to measure the quality of the program through the 
costs and benefits to the students, the rule does not do that either, 
as explained in more detail below. Moreover, the General Education 
Provisions Act (GEPA), 20 U.S.C. Sec. 1232a provides that the 
Department is prohibited from such qualitative assessments by 
``exercise[ing] any direction, supervision, or control over the 
curriculum, program of instruction, administration, or personnel of any 
educational institution, school, or school system limitations.'' The 
proposed rule would run afoul of this provision by unnecessarily 
encumbering the process of designing and offering to students 
innovative academic programs that are responsive to rapidly shifting 
economic and social conditions.
    In the absence of key research by the Department itself, Charles 
River Associates (CRA), a well-respected research organization, 
conducted the most exhaustive analysis done thus far about the 
potential impact of the proposed GE rule on programs and students, 
using data from over 10,000 programs and more than 600,000 students.\1\ 
It did the initial analysis in large part because the data used in 
support of the Department's published proposed GE rule was very limited 
and the analysis lacking. The CRA study concluded the following, among 
other things:
---------------------------------------------------------------------------
    \1\ Public Comment of Charles River Associates, filed September 9, 
2010 with the Department of Education.
---------------------------------------------------------------------------
     the GE metric underestimates the economic benefits that 
students receive from postsecondary education and, as a result, ``has 
the potential to reduce access to programs that would have conferred 
significant benefits to students in terms of higher lifetime earnings'' 
without being a measure of the quality of those programs;
     between 1.2 and 2.3 million students could be foreclosed 
from any postsecondary option through 2020, including mostly female and 
minority students who stand to gain most socio-economically from 
additional schooling;
     between 18.4% and 22.6 % of all programs would fall within 
the ineligible or restricted Title IV categories under the metric and 
between 27.1% and 46.6% of students are currently in programs that 
would either fail or be deemed ineligible under the metric;
     despite the Department's claim that 90% of students in 
programs closed as a result of the proposed rule would find replacement 
programs, only 25% to 50% of displaced students would find replacement 
programs, leaving others with no further access to postsecondary 
programs; and
     despite the Department's assumption that programs with a 
higher debt-to-income ratio also have a higher default rate, in fact if 
a student graduates from a program with a higher debt-to-income ratio, 
he or she is less likely--not more likely--to default on their student 
loans, undermining a fundamental assumption of the metric.
    Finally, if the goal of the metric is to set forth a methodology 
for directing students to specific types of jobs, social engineering of 
that type would never work. Nor is it the appropriate role for the 
federal government to determine how many graduates are needed in a 
particular field and manage the labor force to that end. The market, 
along with various accreditation standards such as placement rates, is 
much better at anticipating and measuring workforce demands. In a 
market economy, students are customers who vote with their feet--if we 
cannot perform and the programs cannot prepare students for careers, we 
risk our institutional accreditation, our Title IV eligibility, and 
future student enrollment because our reputations will suffer. Nor is 
it the role of the federal government to get involved in price fixing, 
by telling schools they must lower their tuition to maintain the 
designated ratios, as some in the Department have suggested. And, 
because schools cannot limit the amount a student borrows, even if a 
school would lower its tuition to try to meet the metric, as long as 
students are allowed to borrow the maximum, the school will still fail 
the GE metric. Many schools would also have a significant problem in 
meeting the 90/10 test if they were forced to lower tuition primarily 
to meet the GE proposed rule. That rule requires proprietary schools to 
receive no more than 90% of their revenue from Title IV funds and the 
rule has the unintended effect of making tuition reductions difficult 
without impacting that ratio negatively.
    Why, we must ask, would the Department pursue a rule with such 
significant impacts on student choice at a time when the gap in 
economic well-being between the rich and the poor is increasing, and 
education is the one path to bridge that gap? At Globe, it has been 
extremely difficult to anticipate exactly which programs would be 
deemed restricted or ineligible for Title IV funding because schools do 
not have access to the average annual earnings information by which the 
debt/income metric is calculated. Specifically, the proposed rule is 
structured in a way that schools do not have access to Social Security 
earnings used to calculate the metric, which are understandably 
classified as private. We view that lack of transparency and notice as 
a violation of our due process rights. In addition, the Department, in 
its proposed rule, makes Title IV eligibility contingent on past years' 
data--data from as long as three years ago--and thus does not provide 
us with an opportunity to adjust programs to comply with the rule or 
access that data.
    That said, we believe that among many other programs, our allied 
health, medical assisting, veterinary technician, massage therapy, and 
paralegal programs are most vulnerable to negative impact by the 
proposed rule. Yet, we have high placement rates for these programs, 
indicating students are getting jobs despite what is, at the start of 
their careers, often pay levels that will not meet the Department's 
metric. In addition, medical and clinical assistants, registered 
nursing, medical office management/administration and business 
administration, business management and operations, programs which we 
also offer, are among the 15 most high-demand occupations over the next 
decade, and yet they are likely to be negatively impacted by the 
proposed rule. We simply do not understand why the federal government 
would, especially at this time in our country's history, seek to 
implement a rule that would impact job placement in fast-growing 
occupations. In short, the Department could not have contrived a more 
anti-student and thereby anti-employer and anti-taxpayer proposed rule.
    One other point, Mr. Chairman and Members of the Committee, which 
is more about process than outcomes, but I think is critical to 
thinking about the GE proposal. This Congress took ten years to 
reauthorize the Higher Education Act, including countless hearings and 
reports. During that time, both parties held the gavel in this 
Committee. The final product was the 2008 reauthorization, which, 
though it had a few controversial elements, was fundamentally 
bipartisan. In several areas, it included additional student and 
taxpayer protections in response to concerns this Committee heard. 
Implementing those changes has added costs to our operation, but we 
have complied because the Congress came to those changes after fair 
deliberations based on the record that was established.
    During those ten years, as far as we have been able to determine, 
no hearings were held, no suggestion was made by this Committee or 
anyone else in the Congress that the term ``gainful employment,'' which 
has been in the statute for more than four decades, needed to be 
redefined. No indication existed that there was a substantial problem 
in the relationship between graduates' earnings and the amounts 
borrowed or that establishing a metric as in the Department's GE 
proposed rule would solve the problem. Not being from Washington, I do 
not claim to understand everything that goes on here, but it seems that 
if the problem really existed and if a solution was apparent, it would 
have surfaced sometime during that ten year period. But it did not. To 
me, that indicates the GE rule is a solution in search of a problem. 
The fact that the proposed rule generated an unprecedented 90,000 
comments, the majority negative, many from Members of Congress, 
indicates that the proposed solution is far from accepted. So, again as 
an educator, not a policy expert, I would offer that a change in policy 
as dramatic as the GE proposed regulation should be dealt with through 
the legislative process, so that this Congress can determine whether it 
has merit.
III. If the Goal of the Proposed GE Rule were Clear, a More Common 
        Sense Solution Could be Implemented
    We are not opposed to regulation per se, but we support reasonable, 
fact-based regulation focused on improving outcomes for students. We 
believe that instead of a misguided regulation, like the GE proposed 
rule, there are steps that can be taken to protect and inform consumers 
and taxpayers. For instance, educational outcomes--retention, 
placement, passage of post-graduation licensure examinations--are 
direct measures of quality, as opposed to the convoluted and ultimately 
harmful measures such as the proposed GE metric. Institutions that 
perform well should continue to participate fully in Title IV programs. 
Institutions that are poor performers should be required to improve and 
adhere to regulatory requirements. Abusers should have their 
eligibility suspended or terminated.
    Further, transparency is critical. All students should have 
information available to them regarding their total cost of education, 
an understanding of how they will pay for those costs and reasonable 
expectations for employment or graduate school following completion of 
their undergraduate studies, as has been provided for in the 2008 
amendments to the Higher Education Opportunity Act (HEOA) addressing 
enhanced consumer disclosure that just became effective in 2010. These 
outcome and transparency improvements stand to benefit all of higher 
education, not just the proprietary sector, if adopted widely. We would 
support a more comprehensive approach to solving these problems and 
offer to work with the Committee as requested. The time has come to put 
aside different treatment of postsecondary institutions based on tax 
status and to work together to protect students while also preserving 
choice so that we can meet the demands of preparing our nation's 
workforce to be globally competitive now and into the future.
    In conclusion, Mr. Chairman, Globe supports the idea of reasonable 
and fair regulation. Our job is to provide a quality education while 
adhering to the rules. We understand the Department's role is to 
oversee the rules, make sure any and all needed improvements, and to 
propose new or modified rules when the current system lapses. The 
proposed GE rule is so bad, however, in our estimation, for our 
students and our country that we have no alternative but to ask the 
legislative branch to stop it being implemented. We appreciate the 
overwhelming, bipartisan vote in the House to push the pause button on 
this regulation through the Kline/Foxx/Hastings/McCarthy/Payne 
amendment to the Continuing Resolution, and hope that the amendment 
will appear in the final Continuing Resolution that is signed by the 
President.
    Thank you, Mr. Chairman and other distinguished Members of the 
Committee for this opportunity. We stand ready to assist you further in 
any way requested.
      attachment a: globe university/minnesota school of business
                            campus locations
    Each of our campuses is handicapped accessible and has facilities 
and equipment that comply with federal, state and local ordinances and 
regulations, including those required for safety, building safety and 
health. Based on the programs offered, a variety of equipment and 
technologies provide students with training that is current with 
existing professional practices.
                            globe university
Appleton Campus
    Globe University-Appleton campus is located at 5045 West Grande 
Market Drive, Grand Chute, Wisconsin.
Eau Claire Campus
    Globe University-Eau Claire campus is located at 4955 Bullis Farm 
Road in Eau Claire, Wisconsin.
Green Bay Campus
    Globe University-Green Bay campus is located at 2620 Development 
Drive in Bellevue, Wisconsin, a suburb of Green Bay.
La Crosse Campus
    Globe University-La Crosse campus is located at 2651 Midwest Drive 
in Onalaska, Wisconsin, a suburb of La Crosse.
Madison East Campus
    Globe University-Madison East campus is located at 4901Eastpark 
Blvd in Madison, Wisconsin.
Madison West Campus
    Globe University-Middleton campus is located at 1345 Deming Way in 
Middleton, Wisconsin, a suburb of Madison.
Minneapolis Downtown Campus
    Globe University-Minneapolis Downtown campus is located at 80 South 
8th Street, Suite 51, in downtown Minneapolis, Minnesota. The site 
occupies 20,000 square feet in the concourse level of the IDS Center.
Online Division
    Globe University-Online Division is located on the third floor of 
Minnesota School of Business-Richfield at 1401 West 76th Street, 
Richfield, Minnesota, a suburb of Minneapolis.
Sioux Falls Campus
    Globe University-Sioux Falls campus is located at 5101 South 
Broadband Lane in Sioux Falls, South Dakota.
Wausau Campus
    Globe University-Wausau campus is located at 1480 County Highway Xx 
in Rothschild, Wisconsin.
Woodbury Campus
    Globe University-Woodbury campus is located at 8089 Globe Drive in 
Woodbury, Minnesota, a suburb of St. Paul.
                      minnesota school of business
Blaine Campus
    Minnesota School of Business-Blaine campus is located at 3680 
Pheasant Ridge Drive Northeast in Blaine, Minnesota, a northern suburb 
of Minneapolis.
Brooklyn Center Campus
    Minnesota School of Business-Brooklyn Center campus is located at 
5910 Shingle Creek Parkway in Brooklyn Center, Minnesota, a northern 
suburb of Minneapolis.
Elk River Campus
    Minnesota School of Business-Elk River campus is located 11500 
193rd Avenue in Elk River, Minnesota, a northern suburb of Minneapolis.
Lakeville Campus
    Minnesota School of Business-Lakeville campus is located at 17685 
Juniper Path in Lakeville, Minnesota, a southern suburb of Minneapolis.
Moorhead Campus
    Minnesota School of Business-Moorhead campus is located at 2777 
34th Street South in Moorhead, Minnesota.
Online Division
    Minnesota School of Business-Online Division is located on the 
third floor of Minnesota School of Business-Richfield at 1401 West 76th 
Street, Richfield, Minnesota, a suburb of Minneapolis.
Plymouth Campus
    Minnesota School of Business-Plymouth campus is located in the 
center of the Plymouth Plaza at 1455 County Road 101 North in Plymouth, 
Minnesota, a western suburb of Minneapolis.
Richfield Campus
    Minnesota School of Business-Richfield campus is located at 1401 
West 76th Street in Richfield, Minnesota, a suburb of Minneapolis. The 
campus has additional classrooms and labs at a nearby location, 4445-
4555 West 77th Street in Edina, Minnesota.
Rochester Campus
    Minnesota School of Business-Rochester campus is located at 2521 
Pennington Drive Northwest in Rochester, Minnesota.
Shakopee Campus
    Minnesota School of Business-Shakopee campus is located in Shakopee 
Town Square at 1200 Shakopee Town Square in Shakopee, Minnesota, a 
southwestern suburb of Minneapolis.
St. Cloud Campus
    Minnesota School of Business-St. Cloud campus is located at 1201 
2nd Street South in Waite Park, Minnesota, three miles west of St. 
Cloud.
                                 ______
                                 
    Chairman Kline. Thank you, Ms. Herrmann, and all the 
witnesses.
    We will move into our give-and-take discussion now, with 
members of the committee asking questions and occasionally 
making speeches. And we look forward to your responses, your 
discussion and your thoughts.
    We will try--I am going to put myself--I am making a 
speech, but will put myself on the 5-minute clock here.
    Ms. Herrmann, since this rule first started rolling out, it 
has concerned me, and I have been very outspoken in my 
criticism of the part of the rule that says, if you are a for-
profit college, like Globe, and you want to start a new 
program, you have to get approval from the U.S. Department of 
Education.
    One of the strengths of this sector, in my opinion, is its 
ability to be nimble and to quickly address the needs of the 
workplace. So, for example, if there is a shortage of nurses in 
an area, the for-profit sector has been very quick to establish 
a new nursing program, so that you have new nurses entering the 
field and taking those positions.
    This rule would not allow you to do that until you got 
approval from the U.S. Department of Education.
    So, can you talk about what problems that might cause for 
you and other institutions? And I am a little bit concerned, 
because I have been looking at the possibility that this might 
be potentially in violation of the General Education Provisions 
Act.
    So, please take some time and talk about that aspect of 
this rule.
    Ms. Herrmann. Thank you, Chairman Kline.
    Indeed, it will add another layer. And there are already 
extensive processes in place when we look to add a new program 
at our schools.
    The one that you spoke to specifically was nursing. It 
already has an additional layer, because there is a state 
regulatory board associated with reviewing nursing curriculum 
specifically.
    Secondly, it would then go to the regular state board of 
higher education and have another thorough review. And then, 
finally, it goes to our accreditors.
    And all through that process, we have to be able to provide 
information that shows we have used outside experts, that we 
are working with industry in developing that curriculum, that 
there are positions available.
    More specifically, as you mentioned nursing, we would have 
to be able to prove that we have practicum and clinical sites 
in contracts set up with local hospitals, so that we are able 
to ensure our curriculum will be able to be followed as nurses 
progress through their training with us. So, there are already 
very stringent processes in place for curriculum and new 
program approval.
    But I feel it would be very burdensome. And as you said, it 
does not allow us to be responsive to the workforce like we 
need to be, by putting yet another approval, stamp of approval.
    I feel like it is already a very good process.
    Chairman Kline. What about your concerns about the General 
Education Provisions Act, and possible violation of that? Have 
you given that any thought at all?
    Ms. Herrmann. Well, I do not know that I am, you know, able 
to speak to the legal side of that. But again, putting the 
additional barrier there would be difficult for us.
    Chairman Kline. With the federal government making 
decisions about what----
    Ms. Herrmann. Exactly.
    Chairman Kline [continuing]. Goes in the----
    Ms. Herrmann. Which, typically, they are not involved in 
academic decisions.
    Chairman Kline. And have typically been purposely barred 
from entering into that curriculum.
    Ms. Herrmann. Exactly.
    Chairman Kline. Ms. Barreto, your story, as we knew it 
would be, was particularly poignant and touching. And we thank 
you for being here and for your testimony, and for sharing your 
story of your travels through higher education.
    When you think about when you started and the decisions 
that you had to make, what kind of information do you think 
would be most helpful for students--traditional students or 
non-traditional students--as they start on this journey of a 
higher education?
    Ms. Barreto. Well, they need to know their options. For 
example, whether just getting materials--back then, when I 
started at Monroe, online was not big.
    So, just being able to be knowledgeable, get the 
information about the school or the courses you are going to 
take, knowing--like, I was an evening student. And just 
knowing--by reading the material that was given to me, I knew 
that the school, Monroe, was a school that was centered around 
students.
    I knew that, you know, just because I went to evening 
classes--you know, offices were open. I knew if I had a 
question about financial aid, bursar, registrar, they were all 
open. All the counselors were there, even though I was an 
evening student.
    So, just more resources available. That is really helpful 
towards--you know, for students.
    Chairman Kline. Okay. Thank you very much.
    In an always futile effort to set the example here in 
timing, I see my time is about to expire.
    I yield back, and I recognize Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman.
    And thank you again to the witnesses.
    If the stories that Ms. Barreto and Mr. Jennings in their 
testimony related to the committee are accurate, that is the 
way the system is supposed to work. But unfortunately, for an 
awful lot of students, that is not the way the system is 
working.
    And when that experience is financed almost with more than 
90 percent federal dollars, I think the Congress has to ask a 
question.
    And Mr. Mitchem, you raise a number of these questions that 
are of concern to me and others. And that really is--it goes to 
both the default rate on loans and the completion rate in 
colleges.
    In the Ed Trust report, they point out that, at a 4-year 
for-profit, low-income students must find a way to finance 
almost $25,000 each year with a 22 percent chance of 
graduation, completion of their programs. Or on the other hand, 
at a 4-year private non-profit institution, it is $16,000 a 
year.
    That is a big chunk of difference per year. And the 
graduation rates of 4-year--for 4-year graduation rates of 22 
percent versus 55 percent, let us say, for publics, is a very 
different outcome for a huge sector of those individuals who 
are--or most all of them--who are taking out loans or using 
other federal resources.
    Mr. Mitchem. Well, these differentials are a concern. And 
that is what prompts me to be here this morning.
    The mission of my organization is to advance and defend the 
interest of low-income and first-generation Americans. And we 
got into this issue because, as we talked with our 
practitioners around the country, we kept running into these 
issues that, from our perspective, were abuses.
    And really, the federal government got into the business of 
assisting low-income, first-generation Americans to give them 
and provide them upward mobility.
    And what we saw was something in the reverse happening. 
Oftentimes, these students--particularly because of the loan 
issues--were in sort of a permanent bondage. And this is our 
concern.
    Mr. Miller. Well, you know, I think----
    Mr. Mitchem. For those who----
    Mr. Miller. And I guess I am chiming in with you on that 
concern.
    I have been a very strong proponent of for-profit schools. 
I think that they have developed an alternative education model 
that fits the needs of many, many adults----
    Mr. Mitchem. I agree.
    Mr. Miller [continuing]. Especially working adults.
    But I am also deeply concerned about the overall results.
    And, you know, it is interesting. The legislation that 
passed on the floor also said that the department could not 
regulate in this area in the future.
    So, I appreciate--everybody says, well, there are always 
these few bad apples. There are a few things. We ought to do 
something about them.
    At first, when the department first announced what they 
were doing, there was a complete--you know, just stop it in its 
tracks--reaction at the outset.
    I finally encouraged some of the schools to work with the 
department, to meet with them, and that process has taken 
place.
    But, you know, the idea that somehow, because of the 
successes, we cannot examine the overall system, to me is just 
counterintuitive to the role of this committee.
    I wonder if we would start involving--when we have schools 
who enroll a couple hundred thousand students, and they have a 
completion rate at 6 years of 9 percent--would that trigger our 
interest? Or 16 percent, or 18 percent, or 8 percent, or 13 
percent?
    Now, there are schools there that have very good completion 
rates. But each one of those is carrying a federal dollar with 
them. And in many instances, that completion rate also reflects 
the inability to pay back that loan.
    Mr. Mitchem. Exactly.
    Mr. Miller. And that is a very, very worrisome thing, 
because the banks and the lenders a number of years ago got a 
change, so you could not discharge this debt in bankruptcy.
    Mr. Mitchem. Exactly.
    Mr. Miller. So you now do not have the occupation, you do 
not have the job opportunity you thought you were seeking. And 
it may be your fault, you know.
    But the fact is, for very, very--I mean, if 9 percent of 
the people are completing, we have to ask the question about 
the other. But you do not have an ability to discharge that 
debt.
    Now, you are a poor student with a poor education and a 
poor credit record, and you are trying to survive in American 
society.
    Mr. Mitchem. Absolutely. They made the wrong choice, 
because they did not have good information to begin with. That 
is how they got themselves into that situation.
    Mr. Miller. They got themselves into that situation. And 
you can say, well, that is their fault.
    We also know there is a very active recruiting process 
going on. There has to be a development of that next year's 
class.
    And again, in many instances, that information is very 
valuable. Our two witnesses found it valuable. But in many 
instances, it is also the subject of settlements of lawsuits by 
the Justice Department and others.
    Mr. Mitchem. Right. That is one of our principal concerns.
    Mr. Miller. Thank you.
    Chairman Kline. I thank the gentleman. His time has 
expired.
    Just a sort of a clarification. Mr. Miller talked about the 
department could not regulate in the future. That language in 
the C.R. only applied to September 30th. We would all hope that 
we would look at the opportunity to provide more information to 
students.
    And Dr. Foxx, you are recognized for 5 minutes.
    Mrs. Foxx. Thank you very much, Mr. Chairman.
    And I want to thank all the members of the panel. Dr. 
Mitchem and I have known each other for a long time.
    Mr. Mitchem. Long time.
    Mrs. Foxx. I was director of an Upward Bound/Special 
Services Program many years ago.
    And I want to thank all of you for coming.
    I do not want to make a long speech, but I do need to 
respond just a little bit to a couple of comments that Mr. 
Miller has made.
    I think nobody, again, wants there to be bad actors out 
there. But we have mechanisms for going after the bad actors. 
And earlier, I think someone said that some of these 
institutions--it may have been Dr. Mitchem who said it does not 
prepare them for jobs.
    But I will tell you that we have lots of people graduating 
from well-known institutions in this country, 4-year 
institutions, graduate schools, who have not been prepared for 
jobs either. So, it is not just a phenomenon that occurs in one 
segment.
    And I would say, it is not perfect anywhere. No institution 
is perfect anywhere.
    I was in a university for 15 years. I was at a community 
college for seven. And I know other schools very well. And we 
have a lot of public schools who have a much worse track record 
than for-profit schools.
    And I think that, if we are going to look at the results, 
we need to do it for everybody. But let me stop there.
    Ms. Barreto, I want to say to you that you are truly an 
inspiration. And I hope lots of people get to hear your story.
    Mr. Jennings, I would like to ask you a question. In your 
testimony, you mentioned that you sit on the advisory council 
of one of the proprietary colleges.
    Can you discuss what your service on that council entails? 
And what is the school hoping to gain from your service? And 
what benefits do you or others in your profession gain?
    Mr. Jennings. Well, I sit on the ITT Technical Institute's 
Tempe, Arizona campus industry advisory committee. We break 
into disciplines. I sit on their electronics board.
    We discuss some of the things we are seeing that work well 
and some of the shortcomings, maybe, that we see. We bounce it 
off of their other industry managers that come and meet. It is 
twice a year.
    We talk about maybe some of the technical skills that we 
could see improved. We are sitting there with the instructors, 
and we discuss ways that maybe they could put that into their 
curriculum, or maybe how they can enhance existing classes to 
beef up certain areas, whether it be soft skills, data 
manipulation, you know, programming--things that we are seeing.
    And usually, typically what it is, is the technology is 
changing. We are constantly evolving, constantly changing out 
there in the world. So, we need to be able to tune those 
curriculums up just a little bit. So, that happens twice a 
year.
    We are also asked to give a--to do a critique, if you will. 
I know that ITT has gone with a national database type critique 
system. They go through and ask very specific questions. Would 
you like to see more training in this area versus that area?
    And what they do is, they will adjust their national 
curriculum based on that. When they see an overwhelming 
response in a certain area, they will actually adjust their 
curriculum throughout the--at the national level. And that is 
maybe even adjust classes, drop a class and add a class.
    Regionally, locally what they will do is just say, you know 
what? Maybe we should do another project in this area, so they 
get more experience in a specific technical area.
    Mrs. Foxx. So, the goal is to make sure that when the 
students come out, they have the skills that they need to get a 
job in the industry.
    Mr. Jennings. Oh, yes, ma'am. Yes, ma'am.
    I give them very honest and accurate feedback. Look, this 
is what I see, you know, this is what I am having to train 
these folks to do once they reach my department. Once they 
reach my production floor, this is what I would like to see 
them train to do before they reach me.
    Mrs. Foxx. Right.
    Mr. Jennings. This is what I would like to see happen in 
the college classroom.
    Mrs. Foxx. Right. And if community colleges are doing their 
jobs, they would have advisory councils like this and bring 
them in. And the better community colleges do do that.
    Mr. Jennings. Yes. I have not heard from my alma mater yet.
    Mrs. Foxx. Okay. So, you do not get asked to do the same 
thing----
    Mr. Jennings. I am a--yes. I don't. I do not, no.
    Mrs. Foxx. Okay.
    Mr. Jennings. No, ma'am.
    Mrs. Foxx. Well, again, having been at a community college, 
I know the better ones do that. Not all of them do that.
    Ms. Herrmann, I have a question for you, but my time is 
over. So, I will check with you later, and I will get it in the 
record.
    Thank you very much.
    Chairman Kline. Thank the gentlelady.
    Mr. Payne, you are recognized.
    Mr. Payne. Thank you very much. Let me certainly commend 
the four witnesses here.
    And I would like to certainly also add my accolades to Ms. 
Barreto. Not only have you shown by example what perseverance 
and opportunity will give you, but, secondly, you work in my 
congressional district, so that is very important. [Laughter.]
    We are tax-and-spenders, you know, so you are helping 
America. [Laughter.]
    Let me say that, of course, my good friend, Dr. Mitchem, of 
the work that you have done for so many, many years, I think 
your greatest achievement is probably catching Ms. Gwen Moore 
and telling her she should go to college, and she went on to 
Marquette where you were. And she is one of our rising stars. 
So, I would like to give you credit for that, also.
    Let me just, Dr. Mitchem, in your testimony--and this is 
certainly an issue that we are really grappling with.
    First of all, if our students--we know they are usually not 
able to get into traditional 4-year colleges. They are either 
too expensive or the students do not meet the requirements. 
Many of our community colleges do not prepare them for a job 
immediately.
    And many of the people--being older and non-traditional, 
veterans, older persons--are looking, really, basically for 
training for a job, not particularly for a general education as 
an 18-year-old coming out of high school would be.
    And so, this is probably one of the most difficult issues 
that I have confronted in my many years, even as a former 
elementary and secondary school teacher--my first career for 
the first 10 years of my life, which I really enjoyed and miss. 
And if I ever get pushed out, I guess I might see if I could 
reapply and teach again.
    But let me just say that, in your testimony, you said that 
you consulted with teachers, counselors and administrators who 
work with TRIO programs, and that these individuals reported 
that it was rare that they found for-profit programs to be the 
best for their students. They counseled, because they could 
identify less expensive, publicly supported alternatives in the 
same area that would not require the student to assume as high 
a loan burden, and that admissions counselors were not fully 
forthcoming.
    You said a concern repeatedly raised by TRIO counselors was 
the difficulties many low-income individuals had distinguishing 
between the value of a particular program and the value of 
college. I understand that to be the benefit of the TRIO 
programs, and you are certainly providing the needed service to 
your students.
    Now, your testimony highlights the information and guidance 
needed for low-income and first-generation college students 
that called the Department of Education to action to issue the 
proposed gainful employment rule.
    While I am supportive of the effort to provide greater 
protection for such students, my concern remains that the 
department's rule as proposed will limit access to a wide range 
of proprietary programs, not only the bad actors. And so, the 
issue as I see it is not to attack one particular sector, but 
to equip students with the guidance and support needed to make 
informed decisions.
    Can you speak to the guidance and support that TRIO 
programs provide for students? And in your discussing 
roadblocks to students' choices in higher education, can you 
share the roadblocks that would be cemented if the proposed 
cuts to the TRIO program were implemented?
    Mr. Mitchem. Surely. Thank you for the question.
    The way our Talent Search and EOC programs operate--they 
are situated, typically, right within the communities where you 
have high concentrations of low-income and first-generation 
students. And they are open access, open door. People reach 
out.
    In addition to that, they also populate the high schools 
and middle schools in providing advice and counseling and 
information to the students. And in the evenings they work with 
the parents, and then on Sundays, providing them information 
about financial aid, and also, trying always to match students 
to the appropriate college or experience.
    In other words, making judgments about the students' 
capabilities or potentials, and trying to align those with the 
appropriate institution.
    So, it is a very intensive, holistic approach that they use 
to intervene with the students. And they do various ingenious 
things, for example, to get the parents involved, which is 
always a complaint. People say, ``we cannot get the low-income 
parents involved.''
    Well, they have potluck dinners and other things to try to 
attract parents to get them involved. They go to churches and 
try to meet low-income adults where they are, where they are 
comfortable, and so forth.
    And they always try to employ individuals who are, in 
quotes, ``culturally competent;'' that is, able to deal and 
understand and negotiate the cultures of the groups that they 
are working with. So, there is, yes, a very systematic outreach 
effort to deal with that.
    Now, you asked me a question with respect to proposed cuts 
in H.R. 1. I assume that is where you are going.
    At this point, it would be a big blow. But we cannot talk 
in terms of specifics. I mean, how the department would 
allocate the cuts is unclear. For example----
    Chairman Kline. I hate to interrupt, but the gentleman's 
time has expired, and we have many members who want to engage 
in this dialogue.
    I understand that Dr. Heck wants to be recognized for just 
a moment. You want to enter something in the record. Is that 
correct?
    Mr. Heck. Yes. Thank you, Mr. Chair.
    I appreciate the panel being here. I apologize for having 
missed the testimony due to a competing meeting, but I have 
read your statements.
    I thank you, Mr. Chair.
    And I ask for unanimous consent to enter testimony from 
both Mr. Van Heffner of the Nevada Hotel and Lodging 
Association, and Mr. John Hinchliffe, the past chairman of the 
Nevada Restaurant Association, into the record.
    [The information follows:]

   Prepared Statement of Van Heffner, President and Chief Executive 
             Officer, Nevada Hotel and Lodging Association

    For the record, my name is Van Heffner. I am President and CEO of 
the Nevada Hotel and Lodging Association (NHLA). The NHLA is the 
unifying voice of Nevada's multi-billion dollar hospitality industry. 
Serving Nevada since 1979, this trade association represents more 
nearly 300 hotel casinos statewide with approximately 150,000 rooms and 
over 200,000 employees.
    Nevada's hospitality industry is heavily dependent on a 
knowledgeable and well-trained workforce. Southern Nevada's tourism and 
hospitality industry have been well served by graduates of the 
institutions that will be harmed by the Department of Education's 
proposed ``Gainful Employment'' regulation. These institutions have 
provided students the education that has given them the essential 
skills and talents that have supported Nevada's economy.
    Private sector post-secondary schools like the Art Institute of Las 
Vegas provide career training for the jobs they need to succeed in 
today's economy. This institution provides a broad range of education 
options that provide a skilled workforce to the hospitality industry in 
Nevada. In Las Vegas, the entertainment capital of the world, the Art 
Institute of Las Vegas and the Culinary Institute of Las Vegas have 
graduated over 1,000 students in past 8-years. And many employers are 
eager to express the important role the Art Institute plays for their 
business.
    Nevada has the dubious distinction of having the highest 
unemployment rate in the nation at over 14.2% according to the Bureau 
of Labor Statistics rankings and the U.S. Department of Education's 
proposed rule would prevent hundreds of Nevadans as well as future 
students from acquiring the job skills they need to work in and support 
our critical tourism industry to help reduce this troubling statistic. 
Unfortunately, the proposed ``Gainful Employment'' rule is 
discriminatory. Our industry is particularly concerned about the bias 
this proposed rule holds against students who must borrow money to 
attend college.
    The Gainful Employment rule proposed by the Department of Education 
would render many of these career-oriented degree programs ineligible 
for Title IV financial aid if students fail to meet a debt service-to-
income ratio test.
    This rule is arbitrary and unfair to those who want to pursue 
careers with lower starting salaries in the culinary arts for example. 
Essentially, these students would be ineligible to qualify for the same 
federal funding as classmates who opt for careers that may initially 
pay better starting salaries. Because this rule discriminates against 
those who must borrow to attend college, access to post-secondary 
education may move out of reach for many low-income and minority 
students.
    Not all students are meant to attend traditional four-year colleges 
and universities. Fortunately, for-profit institutions provide these 
students with an alternative to traditional schools in the form of a 
high quality education. The Gainful Employment rule is unacceptable and 
I believe the Department of Education has overstepped its statutory 
authority with this ruling and should rescind it. Matters of education 
policy should be administered by Congress, on the advice or counsel of 
the Education Department.
    The Nevada Hotel and Lodging Association was encouraged to see the 
passage of an amendment co-sponsored by Representatives Kline, Foxx, 
Hastings and McCarthy to defund this detrimental rule. Even more 
encouraging than the bipartisan support this amendment gained, all 
three House members of the Nevada Congressional delegation voted in 
support of the measure--illustrating just how important career colleges 
are to Nevada.
    Without proprietary schools, Nevada's hospitality industry cannot 
fill its jobs with qualified graduates. The Art Institute of Las Vegas 
and the Culinary Institute of Las Vegas work hard to educate students 
so that they are career-ready upon graduation. However, if the 
``Gainful Employment'' rule is implemented, it will make creating new 
jobs for these qualified individuals and decreasing Nevada's 
unemployment rate next to impossible.
    Thank you for the opportunity to address you on this important 
issue to the industry that I represent.
                                 ______
                                 

         Prepared Statement of John Hinchliffe, Past Chairman,
                     Nevada Restaurant Association

    As past Chairman of the Nevada Restaurant Association, I know 
firsthand the importance of quality chefs and the importance of the 
culinary arts programs that prepare them for their careers. Southern 
Nevada is the now the home of many famous world known chefs and 
restaurants and our industry in ``Las Vegas'' is the envy of many 
cities and regions.
    The Nevada Restaurant Association represents, educates and promotes 
a rapidly growing industry that is comprised of some 5,000 restaurant 
and foodservice outlets employing over a hundred thousand people in 
this state. We have nearly 300 member companies represent more than 
1,000 restaurant establishments. Our Association provides it members 
with many services. Among those have been the advancement of the 
culinary arts profession.
    Our industry depends on a well-trained and skilled workforce--
heavily relying on students who graduate from culinary arts programs, 
such as the Las Vegas Art Institute. Through this program, Las Vegas 
has been able to maintain and further support and develop its renowned 
culinary reputation. More importantly, however, the Institute has 
answered the call of many aspiring students who desire to develop their 
skills and profession in the art of culinary services and restaurant 
management.
    Unfortunately we fear that proposed regulations from the Department 
of Education will create barriers for students with a passion for the 
culinary arts. We have been very vocal on our opposition to the 
department's ``Gainful Employment'' rule as we believe it unfairly 
targets career colleges, especially those with culinary arts programs. 
As proposed, the rule would punish the learning institutions, the 
industry's they support and the very students it purports to serve.
    Students in our state should be able to choose which programs and 
degrees they want to pursue. The government should not be limiting 
critical funding for students who wish to attend career colleges. We 
fear the Gainful Employment rule will hurt the exact population of 
students we need to be helping the most: those from low-income and 
minority communities. A significant source of our skilled workforce has 
come from career-oriented colleges; we've found that these schools 
provide education and training in a specific career path for students 
who are not a fit for, or who do not want to attend a traditional four-
year college. If a student in Nevada wants to go to the Art Institute 
of Las Vegas, they should have that opportunity.
    In collaboration with the Institute that serves our industry, we 
recently filed comments during the Notice of Proposed Rulemaking 
Process with the Department and corresponded with Nevada's 
Congressional members making the following points:
     The rule should use the higher of the Bureau of Labor 
Statistics or actual earnings for debt to income tests--it is the most 
accurate income data;
     The rule should use a 15 year repayment schedule--it best 
approximates an average real life educational repayment period;
     The rule should be phased in to commence no sooner than 
2015 so as to not adversely affect students and schools;
     The rule should exclude graduate programs.
    We understand the Departments objective through this rule is to 
protect students, among other things. However, the rule as promulgated 
will have in our opinion, many negative consequences to the very 
institutions that support career development, job growth, industry 
economic enhancements and most important personal individual 
fulfillment.
                                 ______
                                 
    Mr. Heck. I have serious concerns with this new gainful 
employment regulation. The state of Nevada has the highest 
unemployment rate in the nation. And because of the State's 
heavy reliance on the tourism industry, which has taken a 
significant hit during this recession, there is a definite 
need, now more than ever, for Nevada to diversify its industry.
    I have many private colleges, such as the ones under 
discussion today, in my district, which are critical to this 
process of diversifying our economy. One is the Art Institute 
of Las Vegas, which works closely with both those entities I 
previously mentioned, in making a ready and willing workforce 
for our community.
    It is schools like the Art Institute of Las Vegas, which 
provides extensive training programs and hospitality in the 
culinary arts, do not have the flexibility in modifying 
existing programs and creating new ones to rapidly meet 
industry's needs. Nevada's ability to experience economic 
recovery and get people back to work will be hindered 
considerably.
    Additionally, I am a strong believer in student choice and 
student access to educational and training programs that fit 
their individual needs. These schools provide the flexibility 
necessary for non-traditional students to fulfill their 
educational goals.
    This new gainful employment regulation severely limits 
this, especially in a time when emphasis on an educated and 
skilled workforce is critical to advancing our country as a 
whole. I fully expect to be engaged in examining this gainful 
employment regulation further.
    I would like to thank Chairman Kline for holding this 
hearing today, and for his consideration in allowing me to 
provide my testimony. And I yield back.
    Chairman Kline. I thank the gentleman.
    Without objection, the two statements will be entered in 
the record.
    Mr. Grijalva? According to my list here, Mr. Grijalva, you 
are recognized for 5 minutes.
    Mr. Grijalva. Thank you, Mr. Chairman. And I am going to 
follow your encouragement and give a short speech. [Laughter.]
    I wanted to--you know, having all this discussion, all this 
talk here about government needing to tighten its belt, we have 
to ensure that all our programs are effective, and the taxpayer 
money is being used very efficiently and prudently.
    So, it is amazing to me in this hearing that many of the 
same people that are saying that also do not seem to care about 
the efficiency of the taxpayer's money in this particular 
instance.
    And I have not in this hearing heard anything about the 
gainful employment regulation, so let me maybe ask some 
questions about that.
    Ms. Herrmann, does Globe University have a program where 
more than two-thirds of its students are not paying down their 
loans?
    Ms. Herrmann. Congressman, no, we do not.
    Mr. Grijalva. And that is my point. Then, the restriction 
under the rule would not apply to you, because your programs 
are meeting the criteria and are doing the job they are 
supposed to do.
    Ms. Herrmann. As I understand the rule, it is two-part. And 
the other part is the debt-to-earning ratio that would be 
problematic.
    Mr. Grijalva. It is either/or, is my understanding. And so, 
in support of the--and you mentioned your support for the Kline 
amendment. And that amendment would have blocked disclosure of 
placement, graduation, debt levels for all career education 
programs.
    How does this square with your testimony where you mention 
that transparency is critical, that all students should have 
information available to them regarding the total cost of 
education? And how does that square with that comment in 
support of that amendment?
    Ms. Herrmann. Congressman, we believe that we do need to be 
transparent. Students need to have the right information to 
make an informed choice about where to go to school.
    But giving them information about the results and about 
efficiencies and effectiveness, I can tell you that is 
something that is core to our educational business.
    I see that there are problems with the rule, as I 
mentioned, even with the either/or. As you speak to, are they 
not paying their loans down, there are problems there, as well.
    And there are government-sponsored programs out there, 
including forbearance and deferral, that are put in place for 
students, or interest-bearing-only payments, that students will 
take advantage of when they graduate college. I did.
    Mr. Grijalva. And the rule speaks to programs, not schools. 
So, if there was a dysfunctional program that is not passing 
that two-thirds, either/or, that program could continue in that 
school. It just would not get any federal support in terms of 
student loans and Pell Grants.
    Ms. Herrmann. Which, Congressman, would mean that students 
would not be able to choose to go to that specific program. And 
there are many fields where entry level pay is not indicative 
of what their future earnings is going to be.
    So, if a student starts as a medical assistant, the 
salaries can be rather low. But placement is high, and there 
are good job opportunities for them. And they will continue to 
grow and be promoted.
    Mr. Grijalva. But your university passes all the criteria 
that are in the rule at this point. I am just making that 
point.
    Mr. Jennings [continuing]. And thank you--you said that 
for-profits, in your experience, have so many placement staff 
that they are able to respond, able to provide the industry and 
where you work with the appropriate referrals in terms of 
students prepared for those employment opportunities. And I 
think that is the way it should be, and I applaud that.
    But that is not the uniform rule. We have one publicly 
traded for-profit, Ashford University, that has 78,000 students 
and one career placement person.
    Any comment on that in terms of the efficiency of that 
program being able to track their students and put them in the 
right place?
    Mr. Jennings. I am certainly not aware of--I certainly have 
not encountered any of the career colleges that have a 
department of career--a career counselor, or a career placement 
services that is that disproportionate.
    I know in our industry, we have several career colleges in 
the area that I turn to when I need to increase my staff. They 
do have a dedicated--the important part is that they have a 
dedicated career placement services department. Whereas the 
public schools, it is usually a collateral responsibility of a 
staff member who has other responsibilities.
    Mr. Grijalva. You know, all the solutions up to this point, 
Mr. Chairman, have been about reporting requirements. And that 
idea reminds me of products liabilities issues, where we should 
not allow a toaster on the market that has a 66 percent chance 
of exploding in someone's face.
    And so, I think the gainful employment rule is about 
regulating, making sure the taxpayer's money is being used 
efficiently. And those colleges--for-profit, proprietary 
colleges that are doing the exemplary work that Globe 
University is doing--should have the access to continue to 
serve their students.
    Those 5 percent bad apples and programs need to be dealt 
with. We cannot just ignore that and ignore the mounting debt 
that is on those students, and the mounting cost to the 
taxpayers.
    And I yield back, sir.
    Chairman Kline. The gentleman's time has expired.
    Dr. Roe, you are recognized.
    Mr. Roe. Thank you.
    Ms. Barreto, for you.
    Ms. Barreto. Thank you.
    Mr. Roe. And I introduce myself to say that I overdosed on 
education--24 years in school without kindergarten.
    And so, and I served on the foundation board of two state 
universities, one as chairman of the foundation board for a 
state. So, I have never been to a private college or a for-
profit college.
    But let me point out a couple of things during March 
Madness. If you will go back and look at the graduation rates 
of many, many, many major universities, their football teams 
graduate 10, 12, 15 percent of their students. Their basketball 
teams I have seen have graduated--I have seen major 
universities, one that won a national championship that, during 
that coach's tenure, graduated zero African-American students. 
It was abysmal.
    And you see this, but nobody complained until it was made 
public. And finally, NCAA, because of money--I am on my high 
horse here about them--began to notice these atrocities in our 
public schools, and did something about it. Nobody said a word, 
as long as their team was winning.
    So, I simply point that out, a little bit of frustration I 
have had with university presidents at public universities, and 
so forth, about how they manage those things as long as the 
alumni were happy with the winning record.
    So, the for-profit colleges where I have seen in our local 
area, have done exactly what Mr. Jennings said, have noticed a 
niche in the market.
    Business has said, look, we need this type of employee. 
They rapidly do that, and then are able to put those employees 
in. One I remember is a ball bearing plant that they were able 
to do this in our local area.
    So, Mr. Jennings, would you comment on that advantage that 
those colleges have?
    Mr. Jennings. Well, sir, I have seen--I am trying to 
address your question here. As far as adjusting the programs as 
necessary, is that more of what you are asking?
    Mr. Roe. Yes, a business comes to town and says, we need 
this type of program for our particular job needs. A for-profit 
was able to adjust that very quickly----
    Mr. Jennings. Sure.
    Mr. Roe [continuing]. And not have to go through all these 
hoops to get it done.
    Mr. Jennings. Yes, you know, they are able to expand.
    ITT, for instance, in our area has three separate campuses 
in the Phoenix metropolitan area. DeVry has two. One thing that 
they are able to do is expand their laboratory and classroom 
area, so if they needed to increase classroom sizes.
    They can truly finish a 2-year degree in 2 years. I could 
not. I went the community college route, finished an 
associate's degree in electronics. And it took me probably 4 
years part-time.
    And that was because it was a traditional 16-week semester, 
then limited classes during the summer, and the typical class 
scramble that you are left with at a public school.
    So, the private schools definitely are much more flexible. 
The public schools--and this is going through two different 
community colleges and Arizona State University--say, ``Here 
are the classes. Here is the number of seats that we have. Hope 
you make it.''
    The private schools expand. If they see a need, if they see 
students that are being away, they create more classrooms. They 
create more laboratory space.
    So, sir, I hope that is answering your question. And if we 
open a new Intel plant, a new aerospace plant in our area, they 
recognize that need and they increase their space.
    Mr. Roe. Let me also get on this gainful employment.
    When you have private schools now, private universities 
that are $40,000 or $50,000 a year, and let us say you spend 
$250,000, in Tennessee, and you start teaching school, is that 
gainful employment? Because there is no way you could ever pay 
back a quarter of a million dollar loan teaching school in the 
State of Tennessee.
    And I am not saying that is a good thing. I am just saying 
that is the reality.
    I do not know what that even means. It means if you get a 
job, compared with what you did, as Ms. Herrmann was talking 
about--I have seen it in medical practice for years, that 
somebody would come in as a clinical assistant and end up as a 
registered nurse. I have seen that over and over again.
    So, I think the other point I want to make is about debt. 
And I think that is for all students--I mean, not just for-
profit universities, but for all colleges. Now, it is just 
overwhelming.
    I had dinner this week at a restaurant here, and I will not 
say where it was, but I paid more for dinner than I did a 
quarter of college years ago. That is how unaffordable it was 
then, and how unaffordable now.
    We had a student in my office in Kingsport, Tennessee, not 
long ago from a public university with a $72,000 debt. And she 
did not know how she was going to pay that back.
    So, it is not just the for-profits. It all costs so much. 
And then, can you get a job commensurate with what you had 
educated yourself for to pay those loans off?
    So, I do not think it is just in the for-profit market. It 
is all students that have this problem.
    Ms. Herrmann, I have one final thing I wanted to ask you 
right quickly. I Googled all of you all up right here while I 
was sitting here, and read about your universities while I was 
sitting here.
    But can you shed any light on the programs you have had 
that have adjusted quickly at your university?
    My time is up. I am sorry. I yield back.
    Chairman Kline. Thank you. The gentleman's time has 
expired, and we can get that response for the record, if the 
gentleman likes.
    Mr. Bishop, you are recognized.
    Mr. Bishop. Thank you, Mr. Chairman. Thank you very much 
for holding this hearing.
    Let me start by commending Ms. Barreto on your success, and 
to tell you that I had the good fortune to spend several hours 
at Monroe College at the invitation of President Jerome. And I 
left there very impressed.
    And you are the epitome, or the walking example, of what 
happens there. And so, commendations to you----
    Ms. Barreto. Thank you.
    Mr. Bishop [continuing]. And to Monroe.
    I have to say, I am troubled by what we are doing here. 
This is the fourth hearing that this committee has held, or 
subcommittees have held, on the issue of regulation of higher 
education.
    And yet, we have not spent a second dealing with what I 
consider to be the single greatest problem confronting higher 
education today, particularly its students, and that is the 
impending devastation of the student financial aid programs as 
proposed by the Republicans in H.R. 1.
    Republicans have passed a bill that would cut the Pell 
Grant maximum to $4,705 for next year, and to cut it to $4,015 
by 2014. It would eliminate the SEOG program, and it would--if 
we do not act by 2014, we will also no longer have a Perkins 
Loan program.
    Now, the subtitle of this hearing is, ``Roadblocks to 
Student Choice.'' I am a former financial aid administrator. I 
think that, if we were to eliminate or devastate the student 
financial aid program to the extent that is currently being 
proposed, that, too, would constitute a significant roadblock 
to student choice.
    Now, Ms. Herrmann, I just heard you indicate in response to 
Mr. Grijalva's question that students would not be able to 
select certain programs at your school if they did not have 
access to student financial aid. I infer from that, that 
student financial aid programs are absolutely essential to the 
ability of your students to both enroll and to continue their 
enrollment.
    Am I correct in that?
    Ms. Herrmann. You are correct.
    Mr. Bishop. Okay. So, what would be the impact?
    Fast forward to 2014. What would be the impact of a Pell 
Grant maximum of $4,015, no SEOG and no Perkins? What would be 
the impact for your students? And more broadly, what would be 
the impact for your enrollment?
    Ms. Herrmann. Well, it is hard to predict the future. I 
will go to a past experience where we were in a situation in 
Minnesota where there was a tremendous debt that needed to be 
rectified. And so, there was a look at the state grant and its 
availability to students, and the size of it.
    And does that change? And does it change for a specific 
sector? Or does it change for a specific group of students?
    And we understand that cuts have to happen when the economy 
is not giving us what we need. So, in order to go back and grow 
that economy, we have to figure out how to make cuts in the 
meantime. And we have always felt, as long as those cuts are 
fair and across all sectors, that it is something that, 
basically, we all have to do.
    We have to tighten our belts. We are sitting in a bad 
economy. We have to figure out how to change that.
    So, will it be difficult for students to take less grant 
dollars and have to make that up in loan dollars? Absolutely.
    But investing in education, how students will do that for 
themselves, is the one way that helps them improve their 
situation, gets them to work and helps us improve the economy.
    Mr. Bishop. Would your institution freeze tuition if the 
gap between total student cost and available aid continues to 
grow?
    Ms. Herrmann. I am certain that that would be something 
that would be considered.
    Mr. Bishop. Would the institution be willing to put back 
into institutionally funded student aid some portion of the 
profit that the institution makes?
    Ms. Herrmann. It is actually not a decision that I would be 
part of.
    Mr. Bishop. I understand that.
    The issue here is, if we are truly interested in supporting 
student aspiration, it seems to me we have taken our eye off 
the ball.
    The single greatest determinant of a student's ability to 
go to school is whether or not they can pay.
    And would anyone else care to comment on this issue?
    Ms. Barreto, did you receive financial aid when you went to 
Monroe?
    Ms. Barreto. I did. And I also want to note that I started 
at the MCC, so I used TAP and Pell when I was there. And that 
is what helped me, you know----
    Mr. Bishop. Would you have been able to afford Borough of 
Manhattan----
    Ms. Barreto. No, I would not have been, you know, at a 
college, because I did not have any money saved, and that was 
the resource that I had available to me. So if I wouldn't have 
had that, I would not have been able to attend college.
    Mr. Bishop. Okay. Mr. Mitchem, you work with needy students 
all the time.
    Mr. Mitchem. Yes. The financial aid cuts are going to be 
devastating. Already, unmet need is quite high.
    And this would drive it up, indeed, if the Pell Grant 
maximum is reduced. And so, thus, it would force more low-
income and first-generation students out of college. It is just 
quite simple.
    You have to provide financial aid. You have to provide 
supportive services, indeed, if you want to graduate first-
generation and low-income students. That is my experience.
    Mr. Bishop. Okay. Thank you. Thank you, Mr. Chairman.
    Chairman Kline. I thank the gentleman. I apologize for the 
interruption.
    Mr. Barletta, you are recognized.
    Mr. Barletta. Thank you, Mr. Chairman.
    Ms. Herrmann, I think a great feature of the proprietary 
school sector is its unique ability to adapt to the changing 
needs of the local economy. As a former mayor, I could attest 
to the importance of that versatility.
    Can you please provide some examples of how you have worked 
with local community and business leaders to add, change, or 
reconstruct some of the programs, your programs, to ensure they 
are meeting the needs of your community in Woodbury?
    Ms. Herrmann. Absolutely. I can speak specifically in 
Woodbury, or I am happy to speak beyond those boundaries.
    We have found that students go to school where it is 
convenient and accessible to them. When we look at a campus 
growing beyond a certain size, or we see a need from a 
community that is outside of a radius where students would 
drive to, we work towards looking to that community, seeing if 
there is a true need to build a new campus.
    We would work them directly in determining what type of 
industry was there, what type of job opportunities were there. 
And we would develop programs and put programs in those schools 
specific to that new community.
    I can tell you, as Mr. Jennings talked about, we use PAC 
committees that come into our campuses twice a year. They 
review our curriculum. They review our equipment, the things 
that we are doing to ensure that we are meeting their needs.
    We also will close programs. If we know that there is no 
longer a need in a specific community for that program, or we 
will look to see if we have campuses that are close in 
proximity, and there is not enough of an employment market 
surrounding those two campuses, we may not choose to offer all 
of our programs there.
    For instance, we have campuses in Green Bay and Appleton, 
Wisconsin, close proximity, a smaller employment market. So, we 
look very closely at what programs we would offer.
    We limited enrollment in our veterinary technology program 
to ensure that we are--you know, we are very careful on the 
front end to make sure we can meet our commitments on the back 
end. And that is getting our students jobs.
    Mr. Barletta. Thank you.
    Mr. Jennings, could you discuss what you see as the top 
three most harmful aspects of the gainful employment 
regulation?
    Mr. Jennings. Well, my concern is, I ran down a couple of 
numbers--if I could just speak frankly--I ran down a couple of 
numbers of my team. Thirteen of my 19 direct reports are from 
career colleges. I am looking to expand in the future about 5 
percent.
    We have a big contract coming in about 2 years. Well, we 
have landed the contract. Now we are in the design phase. And 
when we get to the production phase, we are going to expand 
about 30 percent.
    As I understand the gainful employment, and as we have 
discussed here, we are certainly going to lose--financial aid 
is going to be a loss. Students are no longer going to have the 
opportunity to attend these colleges.
    I turn to these schools to find employees. These employees 
just are not going to be available to me when I need them. When 
we expand, when we go to execute these programs for our 
customers, for our government, there simply just--we might not 
find the qualified people that we need.
    That is my concern. That is my biggest concern.
    Beyond that, I really--that truly is my primary concern.
    Mr. Barletta. Yes, and I agree with you. These schools play 
a major role for many people in our communities finding 
employment and staying in that community.
    One of the challenges of many communities is keeping people 
there and helping them find employment, because most people 
want to stay home where they live and find work there.
    Mr. Jennings. Yes, sir.
    Mr. Barletta. And it is also a fact that, if we are trying 
to attract businesses to a community, they are looking for a 
workforce to be able to feed off of. So, these schools play a 
major role in economic development, as well.
    Mr. Jennings. They do. They do. The local public schools in 
our area, I have attempted to recruit from them before. And it 
was a difficult process, and I was unsuccessful. It was the 
community college I actually graduated from some years back, 
some 10 years back.
    They will certainly have to change the way they do 
business, if the technical schools start graduating fewer 
people. They will definitely have to do things differently.
    Mr. Barletta. Thank you. I yield back the balance of my 
time.
    Chairman Kline. I thank the gentleman.
    Mrs. McCarthy, you are recognized.
    Mrs. McCarthy. Thank you, Mr. Chairman, and thank you for 
holding this hearing.
    And may I wish everybody a happy St. Patrick's Day.
    The reason you see everybody running is that there is 
actually a Speaker's lunch at 12 o'clock with Speaker Boehner, 
the President, and the Vice President. So, we are rushing, to 
say the least.
    You know, listening to the debate and, you know, hearing 
both sides--and I think that we all agree that we are trying to 
do whatever we can to make sure the bad apples--that we get rid 
of them. If they are not doing the right thing by students, we 
do not want them in the system, nor do we want them part of 
educating those children that have a chance, probably, of 
failing and defaulting.
    But reading the testimony and then hearing Ms. Herrmann's 
testimony, as far as I am concerned, she hits on the central 
points of what this hearing is supposed to be about. You know, 
as she states, the goal of the gainful employment regulation is 
unclear and the logic supporting it is quite fuzzy, to be very 
honest with you.
    If we are concerned about education quality, then we should 
be looking at those issues directly. We should be evaluating 
the schools based on the quality of their education. We should 
be looking at the faculty, their qualifications.
    And we should look at other outside metrics, measures. We 
should be looking at accreditation standards and performance 
measures.
    You know, in my State of New York, we treat institutions, 
whether a career college or a university or community college, 
equally. If you do not do well, you are kicked out. That is the 
bottom line.
    So, it seems strange to use such indirect measures as debt 
loan and repayment rates to get at school quality. And I think 
that is what we should be looking at.
    If we really are concerned about debt loans, then we should 
be looking at some of the well-respected universities in this 
country that have annual tuition rates in excess of $500,000. 
And I also would like to know what is their graduation rate or 
likelihood of their students getting a job.
    A lot of students right now, especially during this 
economy, are graduating students, and they are not getting jobs 
either. And we should be looking at that equally.
    It is equally strange to look at repayment rates or default 
rates when attempting to judge the effectiveness of the 
educational program. That is what this committee is about--
quality education.
    So, does it make any sense to punish a school, or schools, 
who has changed nothing about their program, but because of 
outside factors beyond their control, now have lower loan 
repayment rates?
    So, Ms. Herrmann, I am going to ask you again. I know you 
have been asked, but I want you to go a little bit more.
    Can you explain a little bit more about some alternative 
ways that possibly this committee and the Department of 
Education could look at to improve the quality without 
burdening schools, or denying student choice?
    Ms. Herrmann. Thank you, Congresswoman.
    There are very good processes in place right now. We have 
the regulatory triad. We have the state, we have the 
accrediting bodies, and we have the federal government. And 
there are regulations in place now.
    Some of the examples that have been brought about in the 
past 6 to 12 months really are cases where current regulations 
have not been enforced. And if those regulations that are 
already there are enforced, I do not think we run into these 
stories about these bad actors.
    But as far as quality indices, you know, there are things 
that I know our national accreditor looks for. And those are 
things such as the retention rate of students. If they are 
coming, are the staying?
    They also look to the placement rate. And it is very 
prescriptive. It is not just that a student gets a job. They 
need to be placed in a field, a related field, in order for 
them to be counted as placed.
    They will look to our loan default rates. They also, when 
they come in to do visits, they are looking at the faculty 
credentialing.
    And as you mentioned, it is not different whether you are a 
career college or you are a traditional school. Depending on 
the subject matter that that faculty member is teaching, the 
credentialing requirements are the same.
    And so, I believe that the regulations in place can help us 
get through this period where we feel like there are some bad 
actors that need to go away.
    But if there are additional things that we look to for 
measuring quality, then let us look at student outcome. Are 
they getting jobs? To me, gainful employment is a pretty simple 
term. Do they get a job when they finish?
    The salary is not about the quality of the education. It is 
about, really, the field that the student goes into. And for 
the most part, I hope that students are going to college to 
fulfill their dreams and follow their dreams, versus for the 
paycheck that they are going to get.
    Mrs. McCarthy. Thank you.
    And I think that brings me to Ms. Barreto. You went back to 
Monroe College several times?
    Ms. Barreto. Correct.
    Mrs. McCarthy. Do you think the college had anything to do 
with your default rate?
    Ms. Barreto. No, it was life, you know, my circumstances. I 
was a single mom. I had a little baby girl.
    And when I started, had to pay back, I could not, because 
it was surviving, you know. My job was not paying that much, 
and I had to make choices. Survival or, you know, down the line 
I was going to pay it.
    My intention was always to pay it. But life, you know, 
played a huge role in that.
    Mrs. McCarthy. Thank you very much.
    I yield back my time.
    Chairman Kline. I thank the gentlelady.
    Mrs. Biggert, you are recognized.
    Mrs. Biggert. Thank you, Mr. Chairman.
    Mr. Jennings, you have mentioned continuing education in 
training of many of your company's employees, which I assume 
leads to higher salaries over time.
    Can you comment on the entry level salaries of individuals 
you hire, and how a debt-to-income determination of programs' 
effectiveness might affect the availability of high-quality 
graduates?
    Mr. Jennings. I can certainly speak to entry level 
salaries. Debt-to-income I probably will not be able to speak 
to. I am not sure what debt these graduates are coming to me 
with.
    Typically, I hire, as you saw in my statement, that a 
graduate of a 2-year program, zero to 2 years' experience. And 
that is an entry level technician for my department.
    They come to us at just a little over $40,000 a year, is 
their annual salary.
    So, you know, that ratio, of course, obviously, would 
depend on the amount of debt they have accrued to get to that 
point.
    And your question about continuing education, if I could 
speak to that a little bit. Once we hire them at the 
associate's level, at an entry level technician position, we do 
encourage them to continue on through a bachelor's program, 
whether it be a technical bachelor's or whether it be a 
management or non-technical bachelor's.
    The local career colleges having their evening classes, 
having weekend classes, are very accommodating for these 
students to continue on.
    If I could tell you a little of my story. I went the 
community college route and then transferred over to Arizona 
State University. It took me 8.5 years to finish a bachelor's 
degree, going the public school route while working full-time.
    These students are actually able to go from an associate's 
to a bachelor's within 2 years. That was impossible to do--that 
is impossible to do through the public schools.
    Mrs. Biggert. Okay. Thank you.
    If I could move on and, Ms. Barreto, let me just commend 
you for your accomplishments. And you have a great story, and 
thank you for being here.
    Ms. Barreto. Thank you.
    Mrs. Biggert. Then, Ms. Herrmann, in your written testimony 
you indicate that the debt-to-income is a poor way of 
determining whether or not an institution is offering value to 
its students.
    Can you describe some of the fields graduates enter in 
which their income may be initially low, yet likely to result 
in a successful, long-term career?
    Ms. Herrmann. I would be happy to. Thank you.
    I would say, virtually any profession where students are 
starting entry level, the pay is going to be fairly low. It is 
indicative of someone coming in with no experience. And your 
salary, you know, is commensurate with your experience and, of 
course, your training and your academic background.
    Some specific ones that I know as we looked at those ratios 
that come to mind, registered nursing. A 4-year degree in 
registered nursing is an expensive program. And the salaries 
that nurses start with are typically around $40,000 in the 
State of Minnesota. But I know people that, in the field just 2 
and 3 years later, look at close to doubling that salary.
    So, there are great opportunities. Students just do not 
realize those--or anybody going into an entry level position--
are not seeing those types of earnings when they start a job.
    Mrs. Biggert. Then you also note that the private sector is 
better suited to the constant adaptation needed to ensure that 
our workforce is best aligned with the labor demands to 
capitalize on emerging economic opportunities.
    If this regulation restricts or eliminates roughly 20 
percent of proprietary school programs, how do you see the 
future alignment of our nation's workforce with the employer 
demand developing, which we hope it develops soon?
    Ms. Herrmann. It is deeply troubling to me. We know that 
right now what we need to do is produce more and better skilled 
workers, not less. And so, if we look at 20 percent, or even 
greater numbers, depending on which study you might be looking 
at, that is a great hit to our economy and to our workforce.
    It is critical that proprietary schools and the programs 
that we offer can still function and be adaptable and nimble to 
industry, so that we are able to continue to help build the 
workforce.
    Mrs. Biggert. Thank you.
    Then also, Ms. Herrmann, the department has predicated 
gainful employment rules on the assumption that schools are 
responsible for students taking on too much debt. Yet you note 
that your institutions cannot reduce the amount of loans that a 
student receives, which may be more than they need.
    If the idea of student loans is to pay for education, what 
are the other expenses for students using these excess funds?
    Ms. Herrmann. I appreciate you bringing that to light, 
because no matter what our tuition is set at, students always 
have the availability of the loans that they are eligible for. 
And we do not have any way of preventing them from taking out 
those loans.
    Expenses that students find important to them while they 
are in school, that will always be up to them. Sometimes it is 
absolutely necessary. It is transportation to get them to 
school.
    Other times it is, you know, if I can get this big check, I 
might get a nicer car than I would have had before.
    So again, while we can counsel and advise, we have no 
ability to prevent students from taking out those loans.
    Mrs. Biggert. Thank you.
    I yield back.
    Chairman Kline. Thank you.
    Mr. Andrews?
    Mr. Andrews. Thank you, Mr. Chairman.
    I thank the witnesses.
    I think the issue here is not whether we protect students 
and taxpayers against inferior programs; it is how. And I 
wanted to ask the panelists a question.
    Let us assume we have two schools. School A has a 
graduation rate of 90 percent in a duly accredited program--in 
a program, not just the school, but a program--and a placement 
rate of 80 percent. So, in other words, of the students who 
attend a program at school A, 90 percent of them graduate, 80 
percent of them are placed in the job for which they were 
trained.
    School B graduates, from the same program, 70 percent of 
its graduates and places 60 percent of those graduates in the 
field for which they were trained.
    Ms. Barreto, which school do you think is better, school A 
or school B?
    Ms. Barreto. Well, honestly, I would have to know more 
about it, not just straight numbers. There are a lot of things 
that go into it. I would have to learn about what type of 
students they have and what circumstances. Just like----
    Mr. Andrews. Good point.
    Ms. Barreto [continuing]. What I expressed, you know.
    Mr. Andrews. But let us assume all other things like that 
were being equal, do you think A or B is better?
    Ms. Barreto. By straight numbers, I would say A, because 
you are looking----
    Mr. Andrews. Well, I understand.
    Ms. Barreto [continuing]. You are looking just at numbers. 
You are not looking at any other----
    Mr. Andrews. That is right----
    Ms. Barreto [continuing]. But that.
    Mr. Andrews. Controlling for everything else, Mr. Jennings, 
what do you think, school A or school B?
    Mr. Jennings. All things being equal, A certainly would be 
better.
    Mr. Andrews. Dr. Mitchem?
    Mr. Mitchem. I would agree with Ms. Barreto. School A, if 
you are just going to stick to the metrics.
    Mr. Andrews. Right.
    And Ms. Herrmann?
    Ms. Herrmann. Of course, school A.
    Mr. Andrews. Okay, here is my concern about the gainful 
employment rule. If school A charges a tuition that generates a 
debt service-to-income ratio of 9 percent, and school B charges 
a tuition that generates a debt service-to-income ratio of 7 
percent, school A is kicked out of the program, and school B 
stays.
    Does anybody here think that is a good idea?
    I don't either.
    The question I think that we confront, then--and I commend, 
frankly, the Secretary of Education, the administration for, in 
good faith, grappling with this question--is, what would be a 
better measure?
    And I would like people's opinion about a measurement that 
would look at job placement and graduation rates as the guiding 
factors in this.
    Dr. Mitchem, do you think that is a good idea, if we could 
develop a metric that would look at job placement and 
graduation, that that would be a good way to measure 
inferiority versus superiority in these programs?
    Mr. Mitchem. Job placement and graduation rate.
    Mr. Andrews. Right.
    Mr. Mitchem. That was your question.
    In theory, I think it would be, yes.
    Mr. Andrews. What practical impediments do you think might 
get in the way of that theory? That is not a rhetorical 
question, because we are grappling with that very question 
right now.
    How would we measure placement and graduation in a way you 
think would be fair and accurate?
    Mr. Mitchem. It would be complex and difficult. It would be 
above my pay grade, frankly.
    Mr. Andrews. The gainful employment rule is kind of complex 
and difficult, too. The chairman and Mr. Miller and I, and 
others, have been following this issue for an awful lot of 
years. It takes about 15 minutes to explain gainful employment 
to somebody who is involved in this for a long time.
    I agree with you. It is a difficult measure. But do you 
think it is a better measure than debt to income?
    Mr. Mitchem. It is a difficult judgment that I am not 
prepared to make.
    Mr. Andrews. What do you think, Ms. Barreto? Do you think 
it is a better way of measuring the quality of the school?
    Ms. Barreto. Honestly, it is difficult. It is difficult to 
reply to, because you are just switching the scenarios you are, 
you know, checking on now.
    Mr. Andrews. When you chose the school that you went to, 
why did you choose Monroe?
    Ms. Barreto. Well, I am not your traditional student. You 
know, I was a little bit older than everyone else.
    Mr. Andrews. You do not look very old to us, by the way. 
[Laughter.]
    Ms. Barreto. Yes, I am. But I chose that school, because 
what I needed at the time was available to me at the school.
    For example, they mentioned that they had three semesters 
in 1 year. And that fit in my--I was, like, great, you know, I 
can graduate----
    Mr. Andrews. Was your ultimate goal to get the best job 
that you could?
    Ms. Barreto. At the time, I knew I needed a degree to get a 
great job.
    Mr. Andrews. Right.
    Ms. Barreto. You know, that was always instilled in me.
    Mr. Andrews. And would you say a good school is one that 
helps you get that great job, as opposed to one that does not?
    Ms. Barreto. Correct, yes.
    Mr. Andrews. That is what I think we are driving at here. 
And it is a difficult issue to grapple with.
    But I think the grappling with gainful employment, frankly, 
is taking us in the wrong direction. And I think my example 
demonstrates that, and we should continue to work together as 
we have to find a better answer.
    I yield back.
    Chairman Kline. I thank the gentleman.
    Mr. Walberg?
    Mr. Walberg. Thank you, Mr. Chairman.
    It is always a tough act to follow Mr. Andrews. I am 
tempted to just suspend my questioning. But I am not going to 
do that, because we are grappling with that problem, and I 
think it is worthwhile to continue to grapple.
    And Ms. Barreto, I identify to some degree with you, coming 
from a South Side Chicago home, being a first-generation 
college student myself, with the added burden that my twin 
brother wanted to go at the same time, from a family that was 
limited significantly in income. And the two of us had to find 
our own way, to provide our own education through the process. 
And I applaud you for doing what was necessary to complete.
    I assume from what you have said already that you feel the 
institution that you attended--all the institutions you 
attended, but specifically thinking on this issue--that it 
supplied a very adequate education for you to continue your 
achievement.
    However, if enacted, the gainful employment regulation that 
we are considering, thinking of your situation and others that 
would be considering education for their own selves in the 
future with similar concerns, how would this regulation impinge 
upon them, or help them, either way, in getting the education 
that you received?
    Ms. Barreto. I am sorry. Can you just rephrase the 
question?
    Mr. Walberg. How would you feel the new gainful employment 
regulation would affect the student who is currently looking to 
achieve the same kind of career successes that you have 
enjoyed?
    Ms. Barreto. Well, you know, for other students coming, you 
know, going to school, I just see that they would benefit from 
being in a school that gives them that opportunity, that gives 
them, you know, the training, the knowledge, so that when they 
get out and graduate, be at the top of the pile of the resumes, 
because you are competitive. And you have learned through that 
school everything you need to be competitive, you know, in the 
field.
    So, I think it is just the knowledge that is given. That is 
how I believe they would benefit, you know.
    Mr. Walberg. But the gainful regulation, the gainful 
employment regulation that is being proposed, would it keep 
them from having that opportunity, in your viewpoint?
    Ms. Barreto. True. But I think, even with the restrictions 
that we are facing now, I think students like me, you know, you 
reach tough circumstances, whether it is funding getting cut, 
your not being able to attend a school, or anything like that.
    I am an example. It has taken me a long time to finish 
school. And, you know, thinking back, if I wouldn't have those 
opportunities and grants, something--I would have been 
resourceful and used something else.
    Maybe it would have taken me longer to go to school. And I 
would have been here, you know, 10 years down the road. But it 
is just, you know, using--being resourceful, you know.
    Mr. Walberg. And making your own choices and----
    Ms. Barreto. Exactly, just----
    Mr. Walberg [continuing]. Moving forward.
    Ms. Barreto [continuing]. Being more resourceful.
    And being first generation, I knew, you know, just using 
every avenue possible to reach your opportunity.
    Mr. Walberg. Thank you. Thank you.
    Ms. Herrmann, in a recent hearing in this committee, we 
have heard many examples of the burdens placed upon 
institutions, requiring them to spend vast amounts of time 
reporting information to the federal government.
    What kinds of reporting requirements would this gainful 
employment regulation create? And would it detract from the 
productivity of your school?
    Ms. Herrmann. Congressman, I think any time that we are 
required to report and we are looking at a paper process versus 
a people process, it takes us away from our day job.
    That being said, there already are significant reporting 
requirements that are put on our schools, and particularly 
those schools that are nationally accredited.
    So, while it takes additional time to gather that data, it 
is important data--not just for us to show the outside world, 
but for us to focus on our internal operations to see how we 
might improve and make sure that we are continually working to 
improve student outcomes.
    The burden in the gainful employment specifically is such 
that, first of all, we do not know what it is. It is looking 
back versus moving forward, so we would have to have 
information on students from 3 years prior. It requires us to 
have salary information that is not always readily available.
    We always ask our graduates to self-report their earnings. 
But to get that earning report from the Social Security 
Administration would be very difficult. I think that those 
records are not very likely to be released. So, it is the 
matching of those.
    The cross-matching of the specific programs to the CIP 
codes from the SOC, the crosswalk that occurs there, the 
programs do not always make sense.
    For instance, we have a very strong paralegal program. And 
one of the careers that is associated with that, that we would 
have to be transparent and show a student that it is available 
to them, is a religious worker. Students graduating from my 
paralegal program do not have that opportunity.
    So, there are so many convoluted pieces that go into it, 
that it will take a lot of time away from our day job, and that 
is working with students and helping them achieve, and making 
sure that we have quality in the classroom and quality 
outcomes.
    Mr. Walberg. Thank you.
    Thank you, Mr. Chairman.
    Chairman Kline. I thank the gentleman.
    Mr. Scott?
    Mr. Scott. Thank you, Mr. Chairman.
    Dr. Mitchem, what are some of the problems that young 
people have in accessing college, particularly those whose 
parents have not gone to college?
    Mr. Mitchem. The first problem they have is one of 
motivation and in understanding the importance and power of 
going to college.
    The second issue is oftentimes their inability to overcome 
what I would call the consciousness of poverty; that is, that 
they are not always aware of the financial aid opportunities 
that are available from the federal, state, and even from 
institutions.
    The other is confidence in themselves, that they lack that 
confidence oftentimes--which rests in terms of their--
oftentimes in terms of low self-esteem.
    So, it is a cocktail of variables that really work against 
their moving forward and making appropriate choices in the 
process.
    Mr. Scott. And what can Council on Opportunity in Education 
programs do to overcome those problems?
    Mr. Mitchem. The programs that we represent? These programs 
do not deal with the financial aid issues. You are talking 
about the TRIO programs in this instance, I assume.
    These programs do not deal with the financial, but rather, 
they deal with the cultural, social and academic barriers, 
which are absolutely essential that we have to grapple with, 
along with the financial aid, if, indeed, these students are 
going to achieve and graduate.
    Mr. Scott. Once they get into college, are there things 
that can be done to increase the chance that they will actually 
complete college?
    Mr. Mitchem. What can be done to increase the chance of 
students completing college?
    Mr. Scott. Right.
    Mr. Mitchem. I think to make sure that there is adequate 
financial aid, as well as adequate supportive services. I 
think, in the federal equation as we go all the way back to 
1965, the federal policy has missed the importance of 
supportive services.
    If you look at the record where you just provide financial 
aid, the attrition rates and completion rates are not what they 
want. And that is why I applaud the president's initiative now 
in trying to raise the completion rates for all Americans.
    But I think we are going to have to do more than we have 
done historically with respect to supportive services.
    Mr. Scott. And what kind of supportive services increase 
the chance that a student may complete----
    Mr. Mitchem. A, in making sure that there is greater 
preparation for individuals who aspire or can be motivated to 
go to college. Information so that, again, so they make the 
appropriate choices and make the right--so there is a right 
match between individual and institution.
    And then, once individuals are in institutions, a panoply 
of academic, cultural and social services that address whatever 
educational deficiencies the students may bring with them. But 
also, deal with some of the psychosocial issues because these 
students are making a class transition.
    And oftentimes, we do not understand or recognize that 
people are moving from a first-generation underclass into a 
middle-class, bourgeois experience. And we do not always make 
the necessary adjustments.
    Individuals have to feel whole and welcome in an 
environment. They cannot feel alienated and succeed. They are 
motivated if, indeed, they feel included.
    And so, thus, these supportive services become quite 
important indeed, and coupled with the financial aid, which 
provide the floor, the underpinning, so they can move forward.
    Mr. Scott. Thank you, Mr. Chairman. I yield back.
    Chairman Kline. I thank the gentleman.
    It looks like all members have had an opportunity to engage 
in the discussion.
    I want to thank the witnesses for great testimony, great 
dialogue answering the questions, and recognize Mr. Miller for 
any closing remarks?
    No closing remarks.
    In that case, I will just say again, thank you. And we are 
going to continue to grapple with this.
    As Mr. Andrews said, we have got a lot of confusing 
numbers. We have got graduation rates that--the numbers do not 
even work, because you have got to be a first-time, full-time 
student for the numbers to count.
    And a lot for us to do here. Your participation today is 
going to be very helpful. Thank you very much.
    And with that, we are adjourned.
    [Whereupon, at 12:18 p.m., the committee was adjourned.]

                                 
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