[Senate Hearing 112-446]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 112-446

      IMPROVING EDUCATIONAL OUTCOMES FOR OUR MILITARY AND VETERANS

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


                                HEARING

                               before the

                FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                   INFORMATION, FEDERAL SERVICES, AND
                  INTERNATIONAL SECURITY SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 22, 2011

                               __________

         Available via the World Wide Web: http://www.fdsys.gov

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs








                  U.S. GOVERNMENT PRINTING OFFICE
72-482 PDF                WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001








        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                  Michael L. Alexander, Staff Director
               Nicholas A. Rossi, Minority Staff Director
                  Trina Driessnack Tyrer, Chief Clerk
            Joyce Ward, Publications Clerk and GPO Detailee
                                 ------                                

 SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, 
              FEDERAL SERVICES, AND INTERNATIONAL SECURITY

                  THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan                 SCOTT P. BROWN, Massachusetts
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
CLAIRE McCASKILL, Missouri           RON JOHNSON, Wisconsin
MARK BEGICH, Alaska                  ROB PORTMAN, Ohio

                    John Kilvington, Staff Director
                William Wright, Minority Staff Director
                   Deirdre G. Armstrong, Chief Clerk









                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     3
    Senator Brown................................................     6
Prepared statements:
    Senator Carper...............................................    47
    Senator Brown................................................    49

                               WITNESSES
                      THURSDAY, SEPTEMBER 22, 2011

Hon. Jim Webb, A U.S. Senator from the State of Virginia.........     1
Curtis L. Coy, Deputy Under Secretary for Economic Opportunity, 
  Veterans Benefits Administration, U.S. Department of Veterans 
  Affairs; accompanied by Keith Wilson, Director of the Education 
  Service, Veterans Benefits Administration, U.S. Department of 
  Veterans Affairs...............................................     6
Theodore L. Daywalt, President, VetJobs..........................    23
Ryan M. Gallucci, Deputy Director, National Legislative Service, 
  Veterans of Foreign Wars of the United States..................    25
Russell S. Kitchner, Vice President for Regulatory and 
  Governmental Relations, American Public University System......    27
Greg Von Lehmen, Provost and Chief Academic Officer, University 
  of Maryland University College.................................    29

                     Alphabetical List of Witnesses

Coy, Curtis L.:
    Testimony....................................................     6
    Prepared statement...........................................    51
Daywalt, Theodore L.:
    Testimony....................................................    23
    Prepared statement...........................................    56
Gallucci, Ryan M.:
    Testimony....................................................    25
    Prepared statement...........................................    67
Kitchner, Russell S.:
    Testimony....................................................    27
    Prepared statement...........................................    72
Von Lehmen, Greg:
    Testimony....................................................    29
    Prepared statement...........................................    83
Webb, Hon. Jim:
    Testimony....................................................     1

                                APPENDIX

Questions and responses for the Record from:
    Mr. Coy......................................................    89
    Mr. Daywalt..................................................    95
    Mr. Gallucci.................................................    97
    Mr. Kitchner.................................................   100
    Mr. Lehmen...................................................   106
Statement of Hollister K. Petraeus, Assistant Director, Office of 
  Servicemember Affairs, Consumer Financial Protection Board.....   110
Letters referenced by Senator Carper.............................   115
Chart referenced by Mr. Kitchner.................................   129

 
      IMPROVING EDUCATIONAL OUTCOMES FOR OUR MILITARY AND VETERANS

                              ----------                              


                      THURSDAY, SEPTEMBER 22, 2011

                                 U.S. Senate,      
        Subcommittee on Federal Financial Management,      
              Government Information, Federal Services,    
                              and International Security,  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 1:34 p.m., in 
Room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Subcommittee, presiding.
    Present: Senators Carper and Brown.
    Senator Carper. I was going to say this hearing should come 
to order, but this is about the quietest crowd I have seen, 
Senator Webb, in quite a while. I think we are just going to 
lead off here and we will forego our opening statements and 
just come right to you.
    Thank you so much for being here with us today. Thanks a 
lot for your service to our country all those years, and for 
your service today. It is just an honor to be your colleague. 
Thank you for coming today.

 TESTIMONY OF HON. JIM WEBB, A UNITED STATES SENATOR FROM THE 
                       STATE OF VIRGINIA

    Senator Webb. Thank you very much, Mr. Chairman, and I want 
to say I appreciate your taking the time to hold this hearing. 
I think you and I both, as military veterans, got a good bit of 
our own education taken care of by Uncle Sam and we know how 
valuable that can be in terms of building the rest of 
somebody's professional life.
    We are here today to try to make sure that the GI Bill that 
we passed can continue in the form that we passed it and still 
address some of these issues that are now challenging the 
program.
    I understand one of the primary purposes of this hearing is 
to examine the 90/10 rule in place for for-profit schools and 
how it would be modified or could be modified to better serve 
veterans and active duty military students. I would like to 
commend you and Senator Harkin for your focus on that issue and 
look forward to the outcome of this hearing.
    This year marked the second anniversary of the 
implementation of the Post-9/11 GI Bill. I introduced this 
legislation on my first day in office, starting with a simple 
concept, having spent 4 years of my earlier life as committee 
counsel in the House Veterans Committee, and that was that we 
owe those people who have served since September 11, 2001 the 
same type of quality educational benefits that those who served 
in World War II received, which was to have their tuition paid 
for, their books bought, and to receive a monthly stipend which 
is a much more generous benefit than those who served in 
Vietnam had received.
    I am very proud to say that we were able to do that and it 
continues to be a great investment in the future of our country 
through the people who have served, and as of August the 1, our 
GI Bill had helped to educate 587,000 beneficiaries. I am very 
proud of that statistic.
    And as the Chairman will remember, the passage of this 
legislation was not a simple process, but I think it has turned 
out to be a very, very good thing for the country and for our 
veterans. When we look at World War II, for every dollar that 
was spent on the World War II GI Bill, $7 were generated for 
our economy because of the successful careers that people were 
able to have after they had gone through more schooling.
    I am here today to ensure that we continue that concept. 
For-profit schools, by statistics that have been given to me by 
my staff, have collected more than one-third of all of these 
Post-9/11 GI Bill benefits over the 2009 to 2010 school year. 
But they train one-quarter of our veterans.
    We have all received letters from Veterans of Foreign Wars 
(VFW), Amvets, Paralyzed Veterans, Student Veterans of America, 
Blue Star Families, VetFirst, Military Association of America, 
all stating their concern about this trend line, and if they 
have not been entered in the record, I would ask that they be 
entered into the record during this hearing.
    Senator Carper. They will be.
    Senator Webb. The World War II GI Bill, history shows, had 
a similar problem. In 1951, a Government Accountability Office 
(GAO) report found that a 1,700,000 veterans had enrolled in 
courses offered by for-profit schools, 5,000 of which sprang up 
after the creation of the GI Bill, and about 20 percent of the 
people who had gone to those schools had completed their 
course. There was, to quote from that report, no information 
available as to the number of graduates who actually were able 
to be placed in jobs for which they had been trained.
    Congress, at that time, responded to concerns of waste, 
fraud, and abuse by establishing specific standards for on-the-
job training programs and made them subject to State education 
approving agencies.
    But the abuses of the World War II program, especially 
among for-profit vocational schools, led to follow-on 
restrictions of that program and to even stricter restrictions 
under the program established after the Korean Conflict, and 
then eventually to the somewhat parsimonious GI Bill given to 
those who served during the Vietnam War, which began with a $50 
a month straight stipend, at its height reached $340 a month 
just straight stipend, no tuition paid for, no books, none of 
the things that the people who came back from World War II had 
and none of the things that people in our Post-9/11 GI Bill now 
have.
    Data we have been given shows that eight out of the top 10 
recipients of Post-9/11 GI Bill benefits in 2010-2011 were for-
profit education companies. These eight for-profit education 
companies, out of a larger pool of for-profits, collected a 
billion dollars, 24 percent of all the benefits.
    For-profits at large collected 37 percent of GI Bill funds, 
according to the data given to my office, and they trained only 
19 percent of the veterans.
    I would like to point out that this problem is not 
necessarily the growth of the for-profit sector. There are for-
profit institutions that are providing our non-traditional 
population a great service, but with this amount of Federal 
dollars being spent in this sector, we owe it to the taxpayers 
and to our veterans to carefully monitor and provide adequate 
oversight.
    Money that goes to a for-profit for tuition does not really 
go to the veteran. It enables the veteran to get an education. 
So fixing this problem is not taking anything away from the 
veteran. In fact, it is ensuring the continuation of the 
program.
    My goals are first to ensure that we are providing a high 
quality education to our veterans, and giving them access to 
critical information that will help them make their own 
informed decisions. Total cost of program, transferability of 
credits, default rates, graduation rates, job placement rates 
upon graduation are a few ways to ensure transparency.
    Second and most important, I hope we can look more closely 
at the role that our State Approving Agencies (SAA) play in 
approving educational programs in order to ensure that the 
Department of Veterans Affairs (VA) is being aggressive in 
their own executive capacity to further strengthen these 
requirements.
    I believe this is, at bottom, a leadership issue that can 
be best addressed through the structure of the Department of 
Veterans Affairs and I hope you will encourage that process 
during your hearing.
    I know you will be receiving testimony today from many who 
are knowledgeable about the 90/10 rule and these other issues, 
and I again thank you for holding this hearing and for allowing 
me to testify. Thank you, Mr. Chairman.
    Senator Carper. Not at all. Thank you for being the author 
of the Post-9/11 GI Bill and for working with us and providing 
really great leadership to try to make sure that the promise, 
the potential of that GI Bill and preparing folks when they 
come back from Iraq and Afghanistan or some other place----
    Senator Webb. Thank you very much.
    Senator Carper [continuing]. Have the opportunity to 
actually complete their education, get a job, become productive 
members of our society. So thank you so much.
    With that, I am going to invite the next panel to come 
forward, and as you come forward, I am going to go ahead and 
begin an opening statement.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. As we hold this hearing, our Nation's debt 
stands at over $14.6 trillion. Ten years ago, it stood at less 
than half that amount, around $5.7 trillion. If we remain on 
our current course, our debt may double again by the end of 
this decade.
    Currently, the Joint Select Committee on Deficit Reduction 
is working to provide us with a roadmap to reduce our 
cumulative Federal deficits over the next decade by more than 
$1.2 trillion. I believe that it's imperative that we do better 
than that, and we have had, as recently as last year, a couple 
of different deficit commissions, including one led by Erskine 
Bowles and Alan Simpson who provided what I thought was a 
pretty good roadmap to get us on the right path out of this 
fiscal morass. In the end, I hope that it is the roadmap that 
we will still end up using.
    With that goal in mind, the Subcommittee repeatedly has 
asked the question. Is it possible to get a better result for 
less money in almost every Federal program, or at least a 
better result for the same amount of money.
    Oftentimes I have said in this hearing room that Americans 
believe that we operate under a culture of spendthrift here in 
Washington, and those people are not entirely wrong. We need to 
establish a different kind of culture--a culture of thrift. We 
need to look in every nook and cranny of Federal spending: 
defense program, domestic spending, tax expenditures, and find 
places where we can do more with less or more with the same 
amount of money. This Subcommittee has spent the last 6 years 
under Democrat and under Republican leadership, to explain this 
mission.
    Most of us in this room today, however, understand that we 
simply cannot cut our way out of debt, tax our way out of debt, 
or save our way out of debt. We must also grow our way out of 
debt, and we can do so, in part, by making investments, smart 
investments in research and development, in infrastructure, and 
also in education, investments in education that will enable 
Americans to become more productive workers so we can compete 
with the rest of the world.
    For years, the GI Bill helped us to achieve this goal by 
raising the skill levels of hundreds of thousands of Americans 
who have served in our military and were returning to civilian 
life. Senator Webb alluded to the fact that he has received 
help from taxpayers to get an education.
    I went to Ohio State University as a Navy ROTC Midshipman 
to get my undergraduate education after the Vietnam War. Came 
back to the United States and moved from California to 
Delaware, got an M.B.A. at the University of Delaware on the GI 
Bill, and as he suggested, it was not a lot of money. I was 
happy to have every dime of it. But I think we received about 
200 bucks a month at that point in time.
    And when you compare that with the GI Bill benefits that 
are enured to those coming home from Iraq or Afghanistan today, 
it is a whole lot different, and I think it is a change for the 
better.
    But for years, the GI Bill helped us to achieve this goal 
by raising the skill levels of hundreds of thousands of 
Americans who are coming home from serving abroad and returning 
to civilian life. However, in 2008, it became clear to Congress 
that after years of multiple tours of duty in Iraq and 
Afghanistan, the modern day military needed a modern day GI 
Bill to ease our troops' transition into civilian life.
    That is where Jim Webb, newly elected Senator, came in and 
that is why we passed the Post-9/11 GI Bill that he authored, 
which pays for the tuition and housing costs of any member of 
the military who served more than 90 continuous days on active 
duty since September 10, 2001, and who has accrued some 36 
total months of active duty service.
    Since passing this bill, $11.5 billion have been spent to 
send veterans back to school under this program. However, 
recent reports show that too many veterans have been subjected 
to highly questionable recruiting practices by some schools, 
subjected to deceptive marketing and substandard education 
instruction. Not in all, but in some of the schools that they 
attend, including some for-profit schools. And, I might add, 
some public schools and some private schools.
    These problems highlight a key flaw in our higher education 
system. Currently, the incentives that some schools, for-
profits, non-profits, privates, but especially the for-profits, 
I think are just misaligned.
    These institutions are rewarded for enrolling more 
students--especially veterans with a fully paid for education--
but these schools have too little incentive to make sure that 
their graduates are prepared to join the workforce and begin 
productive careers and productive lives.
    Having said that, let me say as clearly as I can, that this 
is not an issue solely at for-profit schools. There are many 
public schools and some private colleges and universities that 
experience similar issues with extremely low degree completion 
rates, high default rates, and a poor record of serving our 
veterans. And to be fair, there are also a number of for-profit 
institutions that offer a quality education and schools that 
have a history of success with placing students in well-paying 
jobs.
    We are here today because I believe that we have a moral 
imperative to ensure that these abusive practices, where they 
do occur, wherever they occur, are stopped so that those who 
have sacrificed for our country can obtain an education that 
will equip them with the skills that will enable them to find a 
good job, repay any college loans that they have incurred, and 
go on to live productive lives as productive citizens, both in 
the workforce and in their communities.
    Today's hearing will focus on how we can fix this problem 
by better incentivizing schools to deliver a high quality 
education to our military and to our veteran population. We 
will examine what efforts have improved educational outcomes 
and enhanced the ability of veterans and our military to 
receive good-paying jobs upon the completion of their 
education. We will also examine what has not worked and why 
flawed Federal policies might encourage schools to continue 
with practices that do not serve students well. We have, I 
think, a terrific line-up of witnesses here today who I will 
introduce shortly. We look forward to a productive hearing, to 
a hearing more about this issue, and to learning more about 
this issue.
    First I want to turn to a fellow who has just joined us at 
my right and that is Senator Scott Brown for any comments that 
he would like to add. Thank you.

               OPENING STATEMENT OF SENATOR BROWN

    Senator Brown. Thank you, Mr. Chairman. I apologize for 
being late. We have been running around dealing with some 
issues back in the home district. I do have a statement. I will 
just offer it for the record due to my being tardy. I want to 
hear what the witnesses have to say. So I would submit my 
opening statement for the record.
    Senator Carper. OK, thanks so much.
    Our first witness is Curtis Coy and he is the Deputy Under 
Secretary for Economic Opportunity in the Department of 
Veterans Affairs. In this role, Mr. Coy oversees all education 
benefits, loan guarantee services, and vocational 
rehabilitation and employment services for America's veterans.
    Prior to his current position, Mr. Coy served, I believe, 
as Acting Deputy Commissioner, Chief Financial Officer (CFO) of 
the Food and Drug Administration (FDA). Another great job.
    Additionally, from 2002 to 2009, Mr. Coy held the position 
of Deputy Assistant Secretary for Administration at the 
Department of Health and Human Services (HHS). Mr. Coy also 
served as an officer in the United States Navy, and before 
that, I believe he was an enlisted member of the U.S. Air 
Force.
    He retired from the Navy in 1994 with the rank of 
Commander, and as a retired Navy Captain, my favorite rank in 
the Navy was Commander, Commander Coy, Commander Carper. Those 
were good days.
    We have asked Mr. Coy to discuss how the Department of 
Veterans Affairs prevents against abuse of the Post-9/11 GI 
Bill and how we can better incentivize the provision of high 
quality education to our Nation's students.
    Mr. Coy, we thank you for being here. And I believe 
accompanying you today is Keith Wilson. Mr. Wilson, are you 
also going to testify?
    Mr. Wilson: I will.
    Senator Carper. Oh, good. Well, then once Mr. Coy has 
completed his comments, I will come to you and I will give an 
introduction for you as well. But, Mr. Coy, please proceed. 
Your entire testimony will be made part of the record and you 
are welcome to summarize if you wish.

   TESIMONY OF CURTIS L. COY,\1\ DEPUTY UNDER SECRETARY FOR 
 ECONOMIC OPPORTUNITY, VETERANS BENEFITS ADMINISTRATION, U.S. 
  DEPARTMENT OF VETERANS AFFAIRS ACCOMPANIED BY KEITH WILSON, 
     DIRECTOR OF THE EDUCATION SERVICE, VETERANS BENEFITS 
      ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Mr. Coy. Yes, sir, thank you. Good afternoon, Chairman 
Carper, Ranking Member Brown. I appreciate the opportunity to 
appear before you today to discuss the Post-9/11 GI Bill and 
educational outcomes for Veterans and military students. I am 
accompanied today by Mr. Keith Wilson, as you indicated, who is 
the Director of the Department of Veterans Affairs Education 
Service. My full written statement has been submitted for the 
record.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Coy appears in the appendix on 
page 51.
---------------------------------------------------------------------------
    From August 1, 2009 to June 15, 2011, the VA paid 
approximately $4.4 billion in tuition and fees and Yellow 
Ribbon program payments under the Post-9/11 GI Bill to 
institutions of higher learning. This amount does not include 
the monthly housing allowances and the books and supplies 
stipends paid directly to Post-9/11 GI Bill 
beneficiaries.During this period, approximately $1.6 billion 
was paid to private, for-profit schools on behalf of more than 
145,000 students. Students attending private, for-profit 
schools made up approximately 23.8 percent of the 
beneficiaries, while 36.4 percent of the tuition and fee 
dollars are paid on their behalf.
    Under the 90/10 rule, proprietary institutions may not 
receive more than 90 percent of their revenue from funds under 
Title IV of the Higher Education Act (HEA) of 1965. While VA 
defers to the Department of Education (ED) on the 90/10 
calculation, there is an argument for including the Post-9/11 
GI Bill in the 90 percent limit on Federal funding or related 
proposals. Under the present structure, some institutions may 
be targeting Veterans because of the Federal education benefits 
they received and are treated the same way as private funds in 
the 90/10 calculation. VA believes Veterans should not be 
aggressively recruited by institutions, principally because of 
financial motives, and that Federal and State statutes and VA's 
oversight activities provide a strong monitoring in this area.
    Modifications to the 90/10 rule could, however, provide 
additional tools to assist in this area. However, such a change 
could cause some schools to exceed the 90 percent threshold and 
be at risk of losing eligibility to receive Federal student 
aid. To ensure that Veterans are not adversely affected, the 
manner in which such a change would be implemented is 
important. VA would welcome the opportunity to work 
collaboratively with the Department of Education and the 
Subcommittee as it consider changes in this area. VA is aware 
of concerns raised regarding for-profit institutions and 
fraudulent activities.
    Under existing VA statutes, for-profit institutions are 
held to the same standards and criteria as non-profit 
institutions for the purpose of approval for use of VA 
education benefits. VA believes veterans and their eligible 
dependents should be able to use and choose to use their 
education benefits at the academic institution--public, 
private, non-profit, or private for-profit--that best meets 
their specific needs and is approved by the State Approving 
Agency of jurisdiction.
    As of August 1, 2011, standard degree programs offered at 
accredited public and private not-for-profit schools are deemed 
approved for VA educational benefits without separate SAA 
approval per Public Law (PL) 111-377. In other cases, SAAs 
evaluate programs offered by each academic institution to 
determine whether their quality and offerings are similar to 
other programs offered in the State. If they are not, the SAA 
will not approve the program. This takes into account 
compliance with State and VA statutes, including those 
pertaining to misrepresentation or deceptive marketing.
    Additionally, Public Law 111-377 expanded VA's authority to 
utilize SAAs for oversight of programs and institutions. VA 
will begin to use the SAAs for compliance reviews for this 
authority in fiscal year 2012. A primary focus of these SAA 
reviews will be to conduct compliance reviews and increased 
oversight for for-profit schools. It is important for vets and 
their eligible dependents to make informed decisions concerning 
their VA benefits. VA provides free consulting services and 
assists veterans in determining their aptitudes, interests, and 
abilities in locating an appropriate educational program.
    Mr. Chairman, this concludes my statement. We look forward 
to working with the Subcommittee to provide the very best 
support possible to our veterans and beneficiaries as they 
pursue their educational goals. I would be pleased to answer 
any questions you or Senator Brown may have. Thank you, sir.
    Senator Carper. Not at all. Thank you very much for that 
testimony. Mr. Wilson, I understand that you are not here to 
testify, but you are here to respond to any questions?
    Mr. Wilson. That is correct and I apologize for any 
confusion. I will not be providing testimony.
    Senator Carper. That is OK. We are glad that you are here. 
Mr. Wilson, just a real quick, little bio on you. I understand 
you are the Director of Education Service at the Department of 
Veterans Affairs. Is that correct?
    Mr. Wilson. That is correct, Mr. Chairman.
    Senator Carper. And as Director there, I understand that 
you provide executive level oversight in development of policy, 
of planning, and integration of educational programs that are 
administered by the Veterans Benefit Administration.
    And there are approximately half a million veterans, 
servicemembers, and other dependents pursue educational 
opportunities annually under the programs that Mr. Wilson 
administers. And I think you have been at the VA for about, 
what, 20 years and worked all over, actually, in a number of 
places around the country.
    And also a Navy veteran and served 8 years, I am told, as 
an operational specialist. We thank you for that service and 
for being here today and your willingness to answer questions 
for us.
    Since Senator Brown was good enough to not give a statement 
and to go right to the witnesses, I am going to give him the 
opportunity, if he would like to, to just lead off with the 
questions. Senator Brown.
    Senator Brown. Thank you, Mr. Chairman. So probably for 
both of you, I would think, as the lead agency on the GI Bill, 
it is the VA's special responsibility to ensure that post-
service military benefits are used effectively. Obviously we 
would not be here today if these programs were serving all of 
our servicemembers and veterans effectively as they should be.
    In previous hearings, and obviously today, we have had 
veterans groups, and we have some in our next panel, and they 
will highlight some of the concerns regarding the poor 
oversight and lack of counseling services, et cetera.
    In your opinion--I will start with you, Mr. Coy--what do 
think the VA could do better, No. 1? And how long would it take 
to implement the changes you would suggest? And then, what type 
of support do you need from us?
    Mr. Coy. Thank you, Senator Brown. We take any of these 
allegations that our student vets are somehow being 
misrepresented or being charged inappropriately or any abuse 
that is there. I think one of the things that we are most proud 
of is, we have revamped our compliance and survey program for 
our State Approving Agencies.
    Keith has some very specific details on the length and 
breadth and scope of that program, but we look--you had asked 
what we can do and how long it would take. We would very much 
look forward to working with the Subcommittee, the Department 
of Education, Department of Defense (DOD) for their tuition 
assistance program to implement any of these changes that the 
Committee may deem appropriate.
    Senator Brown. Mr. Wilson, do you have anything to add?
    Mr. Wilson. A few comments, yes. Thank you. We have had a 
long-standing relationship with our State Approving Agencies 
since 1948, actually. It has been a very effective 
relationship. The State Approving Agencies, on many fronts, are 
essentially the boots on the ground when it comes to the GI 
Bill at the State level.
    As occurs over time, we would like more. We would like more 
flexibility, additional resources, et cetera. And we were able 
to achieve additional efficiencies and more flexibility in 
terms of how we can use those State Approving Agencies under 
Public Law 111-377.
    We are now able to use those State Approving Agencies for 
full-blown compliance surveys, much as we currently have been 
doing with our VA employees. And what that does is give us more 
resources to actually go into areas that we have concerns or 
want to provide additional oversight and take some good deep 
dives into these areas.
    Our goal, beginning fiscal year 2012, is to provide a 
compliance survey at every for-profit institution every year. 
We have completed a large part of the training with the State 
Approving Agencies to do that, and come October 1, they will 
begin doing those compliance surveys in conjunction with our 
own staff, and then begin doing their work on their own.
    Senator Brown. According to some, and in Mr. Ryan 
Gallucci's testimony, the VFW has found that many of the SAAs 
are undermanned and under-trained. In one State, there is only 
one employee to carry out this function. They do it as 
collateral duty, not as a primary mission. And other States 
only have a handful of staff.
    What I have heard from veteran students is that there seems 
to be a disconnect from the time that they actually apply and 
then get the funding, making sure the funding is properly 
credited, and they get the other benefits they are entitled to.
    Why does there seem to be kind of a disproportionate amount 
of oversight from one State to another and one system to 
another? How do you resolve that? How do you do it better?
    Mr. Coy. I will let Keith elaborate, but our budget for the 
SAA contracts that we do every year is about $19 million and 
that is in statute. There is a formula that is used to allocate 
those funds across the States and territories. Keith is more 
than willing to talk about how we go about doing that 
allocation. He is certainly the expert there.
    Mr. Wilson. The funding amount available for the SAAs is 
set by statute. Over the last several years, it has gone up 
from about $12 million to the current level of about $19 
million. We have about 62 State Approving Agencies we contract 
with. Some States organizationally are split up separate so we 
will have more than one contract in some of the States.
    The allocation of that money is divided up by active 
institutions essentially within the State. So basically, the 
number of schools that have active GI Bill participants will 
govern the amount of funding that they receive under those 
benefits.
    If I could loop back and just touch on your comment about 
delays and benefits, et cetera, we are very proud of what we 
have been able to accomplish over the last couple of years in 
terms of standing up the Post-9/11 GI Bill. We are very current 
right now on processing claims. Largely processing of claims is 
unrelated to work in the SAA area.
    We are processing enrollments in about 10 days right now 
for the fall enrollment. We have received about 350,000 
enrollments for students, about 320,000 of those are already 
paid. So, but of course, that is one step. In order to make 
sure that our veterans are succeeding, the first thing we 
focused on is the necessity to make sure they are in school, 
they are being paid dependably, accurately, timely.
    We believe they are there. We want to continue to increase 
our work on making sure that the outcomes, as a result of those 
enrollments, do occur.
    Senator Brown. So if somebody actually has problems that 
maybe you are not aware of, what is the best way for the 
individual student, veteran, to deal with it?
    Mr. Coy. Problems academically or problems from----
    Senator Brown. No, just the things we were talking about, 
the flow of the registration, the pay, the benefits, just 
implementation thereof.
    Mr. Coy. There is a variety of different areas. We have an 
800 number that students can call.
    Senator Brown. Do you have it handy? Maybe at some point 
you can get it and we can just announce it because some people 
watch this, do they not?
    Mr. Wilson. I would be happy to announce it.
    Senator Brown. OK.
    Mr. Wilson. 1-888-GIBILL1.
    Senator Brown. OK, good.
    Mr. Wilson. And individuals can also e-mail us directly 
from our Web site which is gibill.va.gov.
    Senator Brown. Great. Well, I have another round, but I 
will just defer to you, Mr. Chairman.
    Senator Carper. Before I ask my question, I am just going 
to try to make real clear what I am trying to do here, what I 
think we are trying to do here. We have a huge budget deficit, 
as we know, $1.3 trillion this year, huge increase--a decade 
ago we had a balanced budget and a surplus. And here we are 
with these huge deficits and deficits as far as the eye can 
see.
    And we know if want to be competitive with the rest of the 
world, which is getting tougher, they are different competitors 
these days. And it sort of like at the end of World War II or 
the end of the Vietnam War. But if we want to be competitive, 
we have to specialize, that is to say we have to out-educate, 
out-innovate, out-compete everybody else.
    And part of doing that is making sure we do a better job in 
research and development that can be commercialized and turned 
into products we can sell around the world. Part of that is 
making sure we have an infrastructure, not just roads, highways 
and bridges, but rails, port, water, sewer, all kinds of 
infrastructure including broadband.
    And the third is to make sure we have a workforce. Students 
coming out of our schools not just colleges and universities, 
but out of our high schools who can read, write, think, do 
math, familiar with technology. We have to do all those things. 
And we don't have a lot of money to spare given the size of our 
budget deficit, so we want to get a better result, a better 
result for the same amount of money, and hopefully maybe a 
better result for less money in terms of our workforce 
preparedness.
    I think one of our next witnesses for our next panel, Ted 
Daywalt, who is the President of VetJobs, a fellow you know, 
stated in his testimony that veterans need to have better 
information available to them in order to make more informed 
decisions about which schools to attend.
    I think you may have mentioned in your testimony, Mr. Coy, 
that the Department of Veterans Affairs offers counseling and 
guidance on your Web site about the options available to 
veterans. Let me just ask you, any idea, is this somehow 
required reading for all veterans seeking to use their GI Bill 
benefits? And to your knowledge you have exit counseling that 
the Department of Defense requires military personnel to 
participate in while transitioning to veteran status.
    I remember when my squadron came home at the end of the 
Vietnam War to come back to California, and then when I 
separated in the middle part of 1973, as I am sure somebody, 
somebody said something to me about veterans benefits because I 
knew I was eligible for some financial aid through the GI Bill 
and I knew that we were eligible for like dental benefits of 
some kind for the first year or two.
    But I do not recall really a kind of structured debriefing 
or a structured briefing with materials that we should take 
with us and commit to memory. I do not know. Maybe it is 
different today. Give us some idea of how does it work today 
and the stuff that is on your Web site on counseling and 
guidance, obviously it is available to veterans. Do we have any 
idea if they actually look at it and understand it?
    Mr. Coy. Yes, sir. We are very concerned about making sure 
that our veterans choose the right school. Keith and his 
organization send out letters at least twice a year, I believe, 
to veterans and they reference choosing the right school. In 
fact, Mr. Wilson here is the author of Choosing the Right 
School that is on the Web site and has received quite a bit of 
acclaim for doing just that.
    With respect to sort of monitoring and watching students as 
they progress through, we do that through a number of different 
ways. Most certainly the schools' certifying officers and 
officials have a feel for that. This past June we started 
having schools report to us graduations and success rates and 
students that are on academic probation. We have a program that 
we can get counseling as soon as we know a student is having 
any difficulties or problems, whether it be in payments, 
whether it be in academics, and we can offer them that 
counseling through some of our Chapter 36 counseling.
    In addition to that, we have started a pilot program at 
eight schools. We plan on expanding to another nine this coming 
year. That is called VetSuccess on Campus. In the program, we 
have put a full-time counselor on campus to provide any sort of 
counseling or help with respect to those vets that are on 
there. It is been very successful and very, very well-received 
at the schools and by our veteran students.
    Senator Carper. So those are schools like brick-and-mortar 
schools as opposed to those that are available maybe over the 
Internet?
    Mr. Coy. Yes, sir. There are eight pilot schools right now.
    Senator Carper. How many schools in the whole universe of 
schools where GI's can go?
    Mr. Coy. For Post-9/11 Bill, the latest numbers I have seen 
is about 6,000 schools. Is that correct, Keith?
    Mr. Wilson. Yes.
    Senator Carper. So in terms of the meaningfulness of 8 or 
17, that is just a drop in the bucket, isn't it?
    Mr. Wilson. Absolutely, yes, sir. And it is a pilot program 
and we are putting it out there and we are looking at ways to, 
in fact, expand that program across-the-board.
    Mr. Coy. I guess finally to answer your other question 
directly, as you probably know, the President has called for a 
joint DOD and VA task force to take a look at the entire 
transition process and employment issues across the board. Both 
Keith and I have been asked to serve on that and, in fact, we 
left the task force meeting at an offsite to come here to 
testify. So there are a number of different things that are 
being worked right now. We are looking at a number of things in 
the future with respect to providing that sort of support to 
our vets on campus.
    Senator Carper. Good. Mr. Wilson, do you want to add 
anything?
    Mr. Wilson. Just a couple points. We could not agree with 
you more concerning the veterans, servicemembers also, needing 
the right information to make decisions on schools. Our 
approach is early intervention and redundancy. We do direct 
mailings to individuals beginning one year into active service.
    We direct mail to every individual once they have been on 
active duty. We do that again at 2 years, we do that at the 6-
month mark prior to graduation, and then we do that again at 
separation, in addition to providing them the specifics on how 
to choose schools, questions that they should ask during the 
transition assistance briefing.
    So we want to reach the individuals while they are still 
servicemembers because a lot of times, that is really when they 
are making the decisions on where they could potentially go to 
school. Just from a personal level, I have an interest in that. 
My son, Noah, is with the 82d Airborne.
    Senator Carper. What is his name?
    Mr. Wilson. Noah Wilson.
    Senator Carper. Noah?
    Mr. Wilson. Yes, sir.
    Senator Carper. Like, Noah, I think it is starting to rain?
    Mr. Wilson. Absolutely, yes. He has heard that once or 
twice.
    The important thing, though, is reaching those individuals 
while they are on active duty because that is where they are 
forming their opinions on where they want to go to school. So 
we want to get that information to them early and often.
    Senator Carper. Good, all right. Senator Brown.
    Senator Brown. Thank you, Mr. Chairman. So I want to turn 
for a minute to the consumer education piece of what we are 
doing to ensure that veterans and servicemembers are, in fact, 
informed consumers. In your statement, you state that the VA is 
significantly expanding their engagement with students 
throughout their educational experiences, but I did not here 
any specific examples.
    What are you doing in terms of expanding the services and 
how you are doing it and what has the response from the 
students been? If you could just walk us through that, I will 
start with you, Mr. Coy.
    Mr. Coy. Absolutely. We are very concerned about----
    Senator Brown. If somebody walks in, Hi, I just completed a 
tour of duty, I am eligible for benefits, what do you tell them 
on the way in?
    Mr. Coy. In the transition phase or on campus?
    Senator Brown. Transition and on campus.
    Mr. Coy. In the transition phase, as I indicated earlier, 
Senator, we are in the process of editing the entire transition 
process.
    Senator Brown. What happens now, though? Because during the 
during the transition you are doing something.
    Mr. Coy. Right now during the transition, we do a 4-hour 
presentation for departing servicemembers with respect to all 
of their benefits that they are eligible for within the VA. And 
so, that is a 4-hour presentation. We have another 2 hours of 
what we call DTAP, or transition assistance, for our disabled 
veterans so that adds on another 2 hours. And it lays out all 
of their educational benefits for each of the departing 
servicemembers.
    Senator Brown. Do they get a handout? Do they get a 
breakdown, a physical breakdown or is this just an in-class 
presentation, they have to take notes?
    Mr. Coy. Well, they get a copy of the presentation. There 
are a number of brochures that are given. Keith, can you be 
specific about the exact brochures?
    Senator Brown. Well, let me just kind of tell you what I am 
getting at. So I am in the Guard, and we have a pretty good 
educational program in Massachusetts for State schools and the 
like. And when our soldiers come home from doing their duty, 
they actually go through an out-processing or a demobilization 
where it is A to Z, mental health, physical, financial, et 
cetera, educational benefits and the like.
    We not only give them that type of presentation, but we 
give them a packet with the actual hardcore numbers and a 
breakdown, because with all due respect, when the soldier has 
done his duty, his or her duty, they just want to get home. 
They want to take off the uniform, they want to have some 
relaxation time, however they do that, and they are not 
focused.
    Then all of a sudden it is coming August and they say, Oh, 
my gosh, honey, you have to go to school, you have these great 
opportunities. And like, Oh, I got a nice briefing, but I do 
not remember a thing. So is there a packet, a presentation that 
is professionally done and easy to understand that they get?
    Mr. Coy. I would suggest that we are very much interested 
in making sure that our vets that are coming back have that 
information. With respect to the specific packet of 
information, there is a number of different brochures, as well 
as on the Web site. But in terms of a specific package that we 
hand out, I am not so sure that we provide that.
    Senator Brown. Yes, I would be curious to see whether, in 
fact, a handout--because I think it is important to know. I 
mean, the Web site is great, certainly, but how do they even 
ultimately know to go to the Web site to get that information? 
So I have noticed that there seems to be a little bit of a 
disconnect. So once they get on campus, then what?
    Mr. Coy. Once they get on campus, it depends on which 
campus they are at, certainly.
    Senator Brown. Well, the average campus.
    Mr. Coy. The average campus does not have a VetSuccess on-
campus counselor. They have the school certifying official and 
we have--and the school certifying official is required to sort 
of keep track of those students. There is also counseling 
benefits that students are eligible for and we get them in 
touch with counselors in one of the 57 regional offices the VA 
has, as well as other counselors that are out-stationed across 
the board.
    Keith, do you want to elaborate a little bit more?
    Mr. Wilson. Just to amplify on a couple points. We 
mentioned earlier the redundancy in the information we provide 
veterans. We agree, when they are ready to separate, they want 
to go home. That is why we try to reach out earlier during the 
lifetime of their career to provide them GI Bill information 
earlier.
    Just to touch on a couple of the things that Mr. Coy 
mentioned earlier in his testimony, what we have done with the 
schools is create more of a proactive relationship by having 
them provide us information that we previously did not have. 
For instance, we provide information on how to apply for 
benefits, et cetera, to veterans.
    What we began requiring schools to report to us this fall 
are situations where the veteran may be under some type of 
challenge. Academically, they do not seem to be succeeding. 
Schools are required now to report to us when a student is 
placed on academic probation or when they are terminated for 
academic reasons.
    What we do with that information is circle back to them 
once again and make them aware of the Chapter 36 counseling 
that Mr. Coy talked about earlier. We have the resources to sit 
down with these veterans, if they choose, and help them 
determine aptitudes, interests, and abilities, and perhaps 
recommendations on some type of programs that fit.
    So if a person chooses a school or a program, they are 
struggling, we want to try to redirect them into a program that 
may be a better fit so they can succeed.
    Senator Brown. And in extension of what the Chairman said 
about trying to get the best value for our dollar and find out 
how we can do it better, some of the figures about college loan 
debt and default rates are pretty alarming. What kind of 
counseling is the VA doing with veterans about the financial 
implications of their educational choices, specifically about 
the amount of in-kind debt that they are taking on? Either one 
of you.
    Mr. Wilson. For debt, I am not aware of anything we 
specifically refer to concerning debt.
    Senator Brown. The educational choices you just noted, do 
you have the post--when they are at a point where they are--do 
you have a pre-enrollment that you, say, sit down with that 
soldier and say--that veteran, and say, Hey, you really cannot 
be a cook, but boy, you would be a great engineer? I mean, do 
you have that?
    Mr. Wilson. It is not a requirement when one goes through 
the process. It is a mechanism that is made available to the 
individuals. Last year we had about 12,000 individuals that we 
provided this type of what we refer to as Chapter 36 
counseling.
    Senator Brown. I am all set, Mr. Chairman. Thanks.
    Senator Carper. If I could, I want to go back to one of my 
earlier questions where we were talking about the guidance or 
support that is offered to GIs, particularly those that are 
coming home to return to civilian life. Has any of this 
guidance or support, is it required for all vets using the GI 
Bill? Do they have to participate? Do they have to attend? Do 
they have to acknowledge that they have gone through certain 
transitioning before they are allowed to participate in the 
program?
    Mr. Coy. I will answer that, I guess, a couple different 
ways. The information that Mr. Wilson talked about in terms of 
sending the information to those servicemembers while they are 
still on active duty, so all of them get that information.
    With respect to the Transition Assistance Program, which is 
the counseling session that is sponsored by the Department of 
Labor (DOL), it is a 2\1/2\ to 3-day session with respect to 
the entire gamut of servicemembers getting out. That is 
currently not really a mandatory attendance required. The 
Marines make it mandatory, but the rest of the services do not 
make it mandatory.
    Senator Carper. Well, why do you suppose the Marines do and 
the others do not?
    Mr. Coy. That would be a subjective judgment, but I think 
that is how Marines are structured. They want all their troops 
to go to the Transition Assistance Program and they make it so.
    Senator Carper. And another part of what we are doing here 
in this Subcommittee is trying to make sure the Department of 
Defense actually is able to produce auditable and audited 
financials, and they do not and they do not even expect to be 
auditable until like maybe 2017.
    We always like to say, what you cannot measure, you cannot 
manage. So we are working on it real hard. Secretary Panetta is 
providing great leadership there to put a fire under their 
people. The Marines are actually trying to be first on the 
beach in that regard as well, and they are trying to lead the 
way and show the other services how it is done. I hope they are 
going to be successful because we need that.
    I am very much encouraged to hear what you say they are 
doing, and maybe we can look to them to provide a model to the 
Army, the Air Force, and the rest of their Navy brothers and 
sisters. A question for Mr. Coy. Maybe for Mr. Wilson. I am 
going to come back to the issue of the State Approving 
Agencies.
    As I understand it, these agencies for each State are the 
only entity that make firm decisions about whether a veteran 
can use GI Bill benefits to pay for their tuition for specific 
school programs, and as I understand, the State Approving 
Agencies are formed and staffed by State governments, not by 
the Federal Government, by State governments.
    Any idea how many programs currently are approved by a 
State Approving Agency, but are not part of an accredited 
institution? Any idea there?
    Mr. Coy. I do not have that information in front of me. 
Senator Carper. I am going to just ask you to answer that for 
the record, if you will. How many programs currently are 
approved by State Approving Agencies, but are not part of 
accredited institutions, if you would. You may not be able to 
answer this one either, but I will ask it again. How do State 
Approving Agencies' certification requirements change from 
State to State? Can you just help me with that?
    Mr. Coy. We have recently put out a guide for State 
approving officials. We also have a VA State Approving Agencies 
joint peer review process that we meet with them once a year to 
provide that consistency. Keith, do you want to give a little 
bit more meat on that?
    Mr. Wilson. The compliance surveys and the approval 
criteria that State Approving Agencies apply are actually 
codified in Federal statute. So in terms of the things that 
they are looking at from a Federal perspective, it is exactly 
the same in every State. Now, that would be supplemented by 
anything the States individually would have codified within 
State statutes, which the State Approving Agencies, of course, 
also could enforce.
    Senator Carper. And do you have a situation where some of 
these State Approving Agencies are probably doing a pretty good 
job, well-staffed, people who know what they are doing that are 
religiously executing their responsibilities and some of them 
are not? Do we have any idea if that is case?
    Mr. Wilson. We do. I would say the vast majority of State 
Approving Agencies are very well-trained, highly motivated 
individuals that do a superb job. As with any group of 
individuals, we have those that we really consider our go-to 
people and people we work with to improve their performance.
    We conduct an annual performance review on every one of 
them.
    Senator Carper. This is a question for both of you, if I 
could. If I am a veteran coming home using the Post-9/11 GI 
Bill and I have a complaint about the school, with whom do I 
address this concern? Is it my regional VA office? Is it the 
State Approving Agency? How does the VA track these complaints 
and how do you share them with the Department of Defense and 
the Department of Education? Any idea of how many complaints 
you have shared with the DOD and the Department of Ed since the 
creation of the Post-9/11 Bill? Can you just help me with that 
outline of questioning, please?
    Mr. Wilson. Sure. If students have concerns about their 
school, there are several ways they can reach us. No. 1, they 
can call us on our 888-GIBILL1 number. No. 2, they can e-mail 
us. No. 3, when we go out and do compliance surveys at these 
schools, the schools are required to tell the students, The VA 
is going to be there, and they can meet face to face with our 
compliance survey people that go out to the schools.
    Additionally, beginning in fiscal year 12 our customer 
satisfaction survey that goes out to every one of our 800,000 
students has had additional information in it where they report 
to us specific responses concerning their experience with their 
school.
    Previously, that survey was more on how well we were 
meeting their needs in terms of timely payment. We have 
expanded that to begin diving down into their experiences with 
their school.
    Senator Carper. Thank you for that. Senator Harkin and I 
were joined at a press conference earlier this morning on the 
subject that relates very much to what we are looking at today. 
A fellow named John Elliott, an Army veteran, an Iraq veteran, 
he told us about applying for benefits, in this case, at a 
proprietary school.
    It ended up the school claimed that they were signed up 
with the VA and that he could get his education through the 
school using the GI Bill. It turned out to be not true. And 
then they ultimately sent him a bill for $9,600 for tuition to 
pay back for the benefits. But yet, the school said clearly 
that, ``We work in conjunction with the GI Bill, we work with 
VA.'' However it was not true, and they ended up dunning him 
$9,600. The night before this morning's press conference, he 
got word from the school, proprietary school, that his $9,600 
in debt was forgiven.
    Well, let me just ask you and sort of following onto that, 
are these State Approving Agencies that we are talking about in 
charge of cracking down on schools that incorrectly claim, like 
the one I just described, that incorrectly claim that they are 
eligible to accept veterans assistance benefits? Whose job is 
to crack down on an institution like that, whether they are 
proprietary, public, or private?
    Mr. Wilson. Yes, Mr. Chairman. Ultimately, it is the VA's 
responsibility. The State Approving Agencies act as our agents 
in this area. They do have the enforcement authority by law in 
this area, but they are acting as our agent, so it is a 
cooperative relationship. Specifically on the individual you 
are referring to, I do know about the specifics of that case. I 
am a little bit reluctant to talk about it obviously publicly, 
but I would be happy to talk a little bit one-on-one. There are 
a little bit more issues involved.
    Senator Carper. Good.
    Mr. Wilson. But I would be happy to talk to you about that.
    Senator Carper. All right, appreciate that.
    Mr. Wilson. But ultimately, it is the State Approving 
Agency's authority to pull approval when those situations do 
occur. They do exercise that authority. We have had 
specifically one situation recently where we have pulled 
approval. That approval is still under suspense, so we do 
exercise that authority.
    Senator Carper. All right. Any idea--and you may have to 
answer this for the record since the implementation of the 
Post-9/11 GI Bill, how many schools have been barred from 
receiving GI Bill payments? And what was the nature, just in 
general, what was the nature of these violations that may have 
led to these actions?
    Mr. Coy. We were just talking. I think this fiscal year we 
have one school that we barred from getting GI Bill payments.
    Senator Carper. And tell me again how many schools are 
there that are eligible for GI Bill reimbursement, how many?
    Mr. Coy. I think we mentioned about 6,000.
    Senator Carper. So out of 6,000, one has been barred?
    Mr. Wilson. If I could amplify a little bit?
    Senator Carper. Please.
    Mr. Wilson. We are aware of specifically one case this 
fiscal year. One of the things that we have recognized is that 
nationally we didn't do a good job of collecting information.
    Senator Carper. So you did do a good job or did not?
    Mr. Wilson. What we did----
    Senator Carper. No, no, I just misunderstood what you said.
    Mr. Wilson. I'm sorry.
    Senator Carper. I could not tell if you said we did a good 
job or we did not do a good job nationally.
    Mr. Wilson. One thing that we did not do a good job 
nationally on is collecting information at the national level 
specifically on the compliance, et cetera. Up until this fiscal 
year, that information was stored, collected independently 
within each of the States on however they did it within their 
State. So it made it difficult for us to respond to those type 
of questions from a national perspective, from a programmatic 
perspective.
    We do, beginning this fiscal year 2011, we started 
collecting that information nationally and the one school that 
we mentioned is the one that we are specifically aware of in 
fiscal year 2011.
    Senator Carper. Well, I would just urge you to look harder. 
Let us talk for a little bit before we wrap up and move to our 
second panel about the incentives for veteran recruitment. And 
as I mentioned earlier, I believe our higher education 
incentives are misaligned. Too often we incentivize schools to 
recruit high quantities of students without necessarily 
incentivizing those same schools to provide a high quality of 
education.
    I think that is especially true with our veterans, and I 
would like to refer to something that Holly Petraeus said in 
her statement that you also discussed, I think, when you were 
talking about the 90/10 rule. There is an op-ed that she wrote 
in today's New York Times. And she is the wife of a veteran, 
David Petraeus, and the mother of a veteran, Stephen. But Ms. 
Petraeus stated that, under the 90/10 rule, a for-profit school 
has to make sure that it obtains at least 10 percent of its 
overall revenue from a source other than the Department of 
Education funds. And therefore, no more than 90 percent of a 
school's revenues contracting can come from Federal student 
aid, in this case through the Department of Education.
    However, because revenues from the Post-9/11 GI Bill or the 
DOD Tuition Assistance Program (TAP), which is assistance that 
accrues to active duty personnel, military personnel, those are 
not counted as Federal student aid. And they are treated as 
other revenues, really equivalent to private dollars.
    I am going to paraphrase what Ms. Petraeus stated, but 
something to this effect. For every servicemember that a for-
profit college recruits who will be using DOD Tuition 
Assistance or GI Bill funds, the for-profit college can then go 
out and enroll nine other students who are using Federal 
student aid from the Department of Education. This has given 
some for-profit colleges an incentive to see servicemembers as 
nothing more than dollar signs in uniform, and they use some 
very unscrupulous marketing techniques to draw them in.
    My next question would be, do you agree with this statement 
by Mrs. Petraeus about the negative incentives that we have 
created under the current 90/10 rule?
    Mr. Coy. Thank you. We certainly recognize that an argument 
could be made to include the GI Bill and Tuition Assistance 
Programs under the 90 percent rule, and we would be happy to 
work most certainly with the Subcommittee. I think our most 
significant concern would be if there was a policy change, a 
change of this nature, how it would be implemented and what 
effects it may or may not have on our veterans.
    Short of that, we would be absolutely delighted to work 
with the Subcommittee, Department of Education, and Department 
of Defense to implement such a policy if that is what was 
decided upon.
    Senator Carper. Mr. Wilson, do you want to add anything to 
that?
    Mr. Wilson. I think that is a very good summary. We are 
actively engaged with DOD and Department of Education talking 
specifically about this.
    Senator Carper. What incentives does the Department, your 
Department, the Department of Veterans Affairs, have in place 
to motivate schools not just to recruit veterans, but to 
provide them with a quality education that leads to good-paying 
jobs?
    Mr. Wilson. I am having a little bit of a difficult time 
getting my head around that because there are so many things at 
work here. Ultimately, we consider that a school should be 
honored to be able to train these individuals. These are our 
best and brightest in the country. I think everybody recognizes 
that. They deserve the best education this country has to 
offer.
    Our experience has been that most institutions have the 
same philosophy on that. We do have statutes in place that hold 
all schools to the same level of accountability statutorily.
    One of the things that we are looking at, as Mr. Coy talked 
about in the task force, is going beyond. One of the things 
that we are specifically looking at is how do we identify best 
practices, where are the schools, what are they doing to 
maximize the veterans' experience on campus and doing a good 
job of handing them off to become employable individuals who do 
become employed. That is core to what we are talking about in 
this task force.
    Senator Carper. I think it is important for us to identify 
best practices. One of the things we try to do on this 
Subcommittee, as Senator Brown knows, we try to identify best 
practices. We try to put a spotlight on best practices in the 
Federal Government from A to Z. And we also try to put a 
spotlight on worst practices, and in part to use positive 
reinforcement to encourage worst practice to become better 
practices and maybe ultimately best practices.
    In closing my questioning here, I would just say it again. 
Our country faces huge budget deficits. We are not sure how we 
are going to get out of it. I think at the end of the day, it 
has to be a combination of cutting spending, a combination of 
raising some revenues, a combination of growing the heck out of 
the economy, in combination of getting better results for less 
money in every nook and cranny in this government, and that 
includes in these programs.
    It includes to make sure that we are getting our money's 
worth out of Pell grants and out of student loans, out of GI 
Bill, out of Tuition Assistance. We are spending money here and 
not getting a very good result, in too many cases where we do 
not have the money to spend in the first place. We simply 
borrow it from other countries, borrow it overseas in too many 
cases. We are wasting it.
    We are going to hear from some schools here in a few 
minutes in this second panel where they are, in one case, a 
for-profit, but they both work all over the country, in fact, 
around the world providing educational opportunities who 
actually get a pretty good result. And what we want to do is 
incentivize a lot more of that.
    This needs to be, as we used to say in the Navy, all hands 
on deck. I know I can do a better job here, so can Senator 
Brown, so can the Members of our Subcommittee making sure that 
the behavior that is untoward, unethical, that kind of behavior 
stops. And that we need everybody in the VA, particularly for 
those that are working with you that are doing the Lord's work 
on this front in trying to make sure that we get on the right 
track. I thank you for that.
    But we need the folks that are on active duty, the people 
that are doing the transitioning, making sure that the people, 
when they are leaving the Guard or coming home, the Army, Navy, 
Air Force, Marines, that they are getting the kind of 
transitioning and turn over that they needed to make wise 
decisions.
    And at the end of the day, there is a moral imperative 
here. It is not just an economic imperative, like we do not 
have the money to pay for this and the taxpayers are getting 
screwed. There is a moral imperative here because we have been 
saying to people who have been willing to lay down their lives, 
if they have to, and if they are asked to, that when you come 
home, you are going to get a GI Bill that Jim Webb and others 
worked really hard to create that is not worth the paper that 
it is written on, and that is just morally wrong and we are 
going to change that. Senator Brown.
    Senator Brown. Mr. Chairman, one of the reasons I have 
enjoyed being on this Subcommittee is to try to identify a lot 
of the things that are actually now being worked on by the 
Administration and by both parties to try to get more value out 
of our dollars. So I appreciate you bringing this forward and I 
look forward to the next hearing as well.
    Senator Carper. Gentlemen, give us a closing statement, 
please, just a closing comment, both of you.
    Mr. Coy. My only closing comment, Mr. Chairman, is aye, 
aye, we hear you. It is an honor to testify and it has been an 
honor to work at the VA for those wonderful vets that you just 
described.
    Senator Carper. A closing thought, Mr. Wilson.
    Mr. Wilson. I think it is clear we have the same desire. We 
want the veterans to get the best education they can and we 
look forward to working with the Subcommittee to achieve those 
goals.
    Senator Carper. Good, thank you both. And we welcome our 
next panel of witnesses and would ask, as Mr. Coy and Mr. 
Wilson weight anchor, that our third panel actually come to the 
table, please. I am going to begin giving a brief introduction 
of them.
    Ted Daywalt, the first witness, President and CEO of 
VetJobs. VetJobs is the leading military jobs board on the 
Internet. It connects veterans transitioning from the military 
or completing their post-military education with employers 
across the country. Mr. Daywalt has worked with veterans of all 
backgrounds and has helped them to find good paying jobs in 
successful careers.
    In addition to his work with VetJobs, Mr. Daywalt served on 
active duty in the U.S. Navy. There seems to be a recurring 
theme here, Senator Brown. We have to get some Army guys in 
here.
    Mr. Wilson. I object. We need to have more Army guys, Mr. 
Chairman.
    Senator Carper. I promise.
    Mr. Wilson. Pulling rank on me here.
    Senator Carper. Mr. Daywalt served on active duty in the 
Navy for 7 years before transitioning to the Naval Reserve 
Intelligence Program in 1978, and he retired from the U.S. Navy 
with 28 years of service at the rank of captain. Mr. Daywalt 
also sits on the board of the College Educators for Veterans in 
Higher Education, has previously sat on the board of Emory 
University and the International Association of Employment Web 
sites (IAEWS) and testified before the President's Commission 
on the National Guard and Reserves. Thank you for your service 
as a member of the Navy and for the work that you are doing as 
a citizen.
    Ryan Gallucci is the Deputy Director of the National 
Legislative Service for the Veterans of Foreign Wars. With 2.1 
million members nationwide, the VFW is the largest veterans 
service organization for combat veterans in our country. I am 
honored to be a life member, and I suspect others on our 
Subcommittee are as well.
    Mr. Gallucci served as the education expert for the 
Veterans of Foreign Wars and is responsible for carrying out 
the organization's efforts to help transitioning servicemembers 
and veterans pursue higher education and viable career paths 
following their military service. Here we go. In addition, Mr. 
Gallucci served 8 years in the U.S. Army Reserve leaving the 
military in 2007 as a Civil Affairs sergeant.
    He was awarded the Meritorious Bronze Star, the Army 
Commendation Medal, and Combat Action Badge for his actions 
while deployed to Iraq in 2003 and 2004. We thank you 
especially for that service.
    Upon returning statewide, Mr. Gallucci earned a bachelor's 
degree in journalism and political science from the University 
of Rhode Island using his GI Bill benefits. Mr. Gallucci, 
again, we thank you for being here today and for your service.
    Next is Dr. Russell Kitchner and our third witness, the 
Vice President for Government Affairs, Regulatory Affairs for 
the American Public University System (APUS). The American 
Public University System is the parent organization of two for-
profit colleges, the American Public University (APU) and the 
American Military University (AMU).
    The American Public University System serves more than 
83,000 students with 64 percent of its student population 
currently serving in the military. Dr. Kitchner is joining us 
today because by all accounts, American Military University is 
a for-profit school that does a good job of serving the active 
duty military personnel of our country. Dr. Kitchner is here 
today to discuss some of the keys we discussed, describe that 
his school has adopted on educating our military.
    Dr. Kitchner, we have talked a little bit about the bad 
actors in the for-profit education industry, and frankly, in 
the non-profit and private non-profits, too. But I want to 
thank you for agreeing to come today and share with us a 
different perspective, from a school's perspective, a school 
that appears to be doing it right.
    And finally Dr. Greg Von Lehmen. Our last witness, but 
certainly not our least. Greg Von Lehmen, Provost, Chief 
Academic Officer of the University of Maryland University 
College (UMUC). The University of Maryland University College 
is a non-profit public college and one of 11 accredited degree-
granting institutions in the University of Maryland system 
offering courses on 130 military installations across the globe 
and serving over 90,000 students.
    The University of Maryland University College is one of the 
largest distance learning institutions in the world. Prior to 
becoming Provost, Dr. Von Lehmen worked for the University of 
Maryland University College's Asia office serving as the Area 
Development for Japan, I believe, for about 4 years and also 
spent time in a classroom teaching constitutional 
administrative law, political philosophy, political 
administration at Georgia, Southwestern State University and 
Troy University.
    Dr. Von Lehmen is here today to talk about the University 
of Maryland University College service and how the college 
serves its military and veterans population and the initiatives 
they have undertaken to improve the education provided to these 
students. Doctor Von Lehmen, great to see you and thank you for 
coming before us and for your testimony.
    Let me just say before we all start, when you think about 
it, Senator Brown and I have spent a fair amount of our lives 
and years in uniform. I remember in my 5 years of active duty, 
13, I think permanent duty station changes and just a whole lot 
more of temporary active duty, we will go here or there, all 
over Southeast Asia and other parts of the world. And it is 
really hard to get an education when you are doing that.
    And the idea of being able to do distance learning, it is a 
great idea, particularly for folks in the military, if it is 
done right. And at the end of the day, we want to make sure it 
is done right, not just in a couple States in this country. We 
want to make sure it is done right all over the world for 
economic reasons and for moral reasons. Thank you.
    Mr. Daywalt, your whole testimony will be made part of the 
record. Please summarize and proceed as you wish. Thank you.

        TESTIMONY OF TED DAYWALT,\1\ PRESIDENT, VETJOBS

    Mr. Daywalt. Thank you, sir. Good afternoon, Chairman, 
Ranking Member Brown, staff of the Subcommittee. Let me first 
thank you for the opportunity to come before the Subcommittee 
today to share with you information that is relevant to the 
Subcommittee's discussions on improving veterans education 
outcomes. It is an honor to be here.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Daywalt appears in the appendix 
on page 56.
---------------------------------------------------------------------------
    VetJobs has a unique vantage point on these discussions 
just by the nature of our business. VetJobs deals with veterans 
and their family members on a daily basis who are pursuing 
employment, but also the education necessary to obtain 
meaningful employment.
    As I mentioned in my written testimony, veteran education 
prospects have improved greatly with the new Post-9/11 GI Bill, 
but when one looks at the evidence, the current Post-9/11 GI 
Bill has truly been usurped by predatory for-profit schools. 
Note I use the term predatory for-profit schools as not all 
for-profit schools have engaged in less than ethical behavior.
    I would not put schools like the University of Phoenix and 
American Military University in the same category as Kaplan and 
Education Management Corporation. You may seen the New York 
Times story that Education Management is being sued by the 
Department of Justice (DOJ) in four States for $11 billion of 
fraud.
    The actions and behaviors of these predatory for-profit 
schools like Kaplan and Education Management need to be 
stopped. I first became aware of the issue while working with 
the veterans who thought they had earned the credible associate 
or bachelor degree only to learn that their degree was 
worthless and they had no chance to recover their now lost GI 
Bill.
    For example, Stephen Kimball of McComb, Illinois had 
obtained a bachelor's in business administration from the 
University Management in Technology while he was on active 
duty. When he left service, he applied to many graduate schools 
but was rejected because his degree was not recognized as a 
legitimate degree. As Stephen told me, in order to go to 
graduate school, he needs another bachelor's degree, which 
could take years since he no longer has his GI Bill. Kimball's 
experience is unfortunately typical of many veterans who have 
been deceived by the predatory for-profit schools.
    Besides the deceptive practices used by the predatory for-
profit schools, I learned that the fees charge by the predatory 
for-profit schools are outrageous. A bachelor's degree from the 
University of Florida costs $24,458, but a bachelor's degree 
from the predatory for-profit school Everest College in Florida 
costs $81,680. And the predatory for-profit schools degree are 
not recognized by the traditional brick and mortar schools.
    The students who attend these schools----
    Senator Carper. I am sorry. Would you just say that again?
    Mr. Daywalt. You can get a bachelor's degree from the 
University of Florida as an in-state student for $25,000. It is 
actually $24,458. The Everest College which is based down in 
Florida, your bachelor's degree would be $81,680.
    Senator Carper. OK, thank you.
    Mr. Daywalt. I could have put both my kids through Emory 
for that.
    The students who attend these schools are wasting their GI 
Bill benefits due to not understanding the system and not 
receiving guidance from their command educational counselors. 
And many of the veterans who are snarled in this quagmire are 
aggressively encouraged to take on more debt by the predatory 
for-profit schools. This ultimately leads to many veterans and 
their spouses defaulting on their college notes.
    Since over 60 percent of companies now run credit checks on 
prospective employees, it becomes very hard for any of these 
veterans and their spouses to be able to obtain employment. And 
that is why VetJobs involves itself in this issue. The 
predatory for-profit schools are hindering our veterans and 
their spouses from being able to obtain gainful employment. I 
have also learned of predatory for-profit schools that target 
military spouses on bases, setting up a recruiting table at the 
post exchanges and commissioners. I have been told they have 
admitted spouses who did not have a high school diploma or an 
acceptable SAT.
    But what really bothers me, Chairman, is that after last 
year's GAO undercover investigation that found 15 predatory 
for-profit schools had made deceptive or otherwise questionable 
statements to GAO's undercover applicants, and four schools 
actually encouraged personnel to falsify their financial aid 
forms to qualify for Federal aid, the VA and DOD did nothing to 
decertify the schools or ban them from receiving GI Bill or 
Tuition Assistance monies.
    VA continues to allow these predatory for-profit schools to 
enroll active duty, veterans, and spouses. These predatory for-
profit schools continue today to target veterans and their 
spouses. There obviously is no effective oversight of the 
educational programs at DOD and VA!
    As a businessman and a retired senior officer and a 
taxpayer, I have to ask, how does this situation be allowed to 
persist, and more importantly, why? To be fair, yesterday there 
was a report in the Chronicle of Higher Education that DOD is 
stepping up its oversight of online learning amid growing 
congressional scrutiny of its tuition benefit program. But I 
think it is a shame that it took congressional and press 
pressure to get DOD to do its job.
    It is obvious to me that many predatory for-profit schools 
see military students as dollar signs in uniforms. The actions 
of the predatory for-profit schools need to be stopped. 
Veterans, the very people who have defended our country and 
protected our Constitutional Republic and given us the free 
market society that we in business so dearly enjoy, deserve 
better treatment.
    In conclusion, I now want to point out that had DOD and VA 
provided the proper oversight, we would not be here today, and 
veterans and their family members would not have been 
encountering they myriad of problems discussed above. Any 
solution considered by this Subcommittee and Congress to the 
above problems must include a way to ensure DOD and VA are held 
accountable. Thank you for your time, sir.
    Senator Carper. You bet. And before you start, Mr. 
Gallucci, thanks for that testimony, very much. Some of you are 
familiar with the Gainful Employment Rule that the Department 
of Education has worked on, tried to update and to put in 
place, and I know we tend to blame in some cases the VA, DOD or 
whatever. They have been--their efforts to make the 
meaningful--Gainful Employment Rule meaningful and more 
rigorous have been, as you may know, not supported, not 
endorsed, not welcomed here in our Legislative Branch. There 
have been too many instances, especially I think in the House, 
strongly opposed.
    So there is plenty of blame to go around, that none of us 
is without blame. All of us have to be part of the solution, 
and my hope is that following today's hearing, we will be more 
inspired to do that.
    Mr. Gallucci, thank you.

   TESTIMONY OF RYAN GALLUCCI,\1\ DEPUTY DIRECTOR, NATIONAL 
  LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED 
                             STATES

    Mr. Gallucci. Thank you. Chairman Carper, Ranking Member 
Brown, and Members of the Subcommittee staff. On behalf of more 
than 2 million members of the Veterans of Foreign Wars and our 
auxiliaries, the VFW would like to thank this Committee for our 
opportunity to present our views on this critical issue.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Gallucci appears in the appendix 
on page 67.
---------------------------------------------------------------------------
    During tough economic times, military and veterans' 
education benefits provide a critical tool in ensuring that our 
Nation's heroes can compete in a cut-throat job market. 
Unfortunately, certain schools, particularly predatory for-
profit, have chosen to prey on those eligible for military and 
veterans education benefits, failing to deliver a quality 
education.
    When schools prey on veterans, they quite literally steal 
their benefits. For example, a veteran may enroll in a 
predatory school using up to 2 years of their GI Bill. At this 
point, the veteran realizes that the program is worthless, 
withdraws, and seeks education elsewhere. Unfortunately, 
credits from the predatory school do not count. The veteran 
must start over. With 4 years of school ahead, but only 2 years 
of benefits to pay for it, the veteran must now pay out-of-
pocket, wasting time and taxpayer dollars, while the predatory 
school walks away with cash to find their next victim.
    We are only 2 years into the new GI Bill, so the VFW 
believes that we have not yet seen the worst of this 
phenomenon. Some say that this is just the free market at work 
and that the government should stay out of this fight since 
only quality for-profits will survive. The VFW disagrees since 
both quality and the predatory schools have been shown to 
profit off government benefits regardless of the outcomes for 
student vets.
    The VFW equates GI Bill funds to Federal contracts since 
both are paid for by the taxpayer which is why outcomes are 
paramount. As an example, when the military contracted to build 
a new hospital at Fort Belvoir, a for-profit company earned a 
healthy payday from the taxpayers as a result of the project. 
However, at Fort Belvoir a new fully functional hospital is 
serving soldiers.
    Similarly, when students use the GI Bill, the VFW expects 
schools to be able to deliver degrees or certificates with 
which veterans can find jobs. If the school's business model 
ensures that veterans cannot receive such credentials, the 
school should not receive further Federal funding. Two rules 
that attempt to address the free market issue are VA's 85/15 
rule and is companion 90/10 rule in the Higher Education Act, 
which my written remarks explain in detail.
    These rules set government funding caps for schools at 90 
and 85 percent respectively, but operate independently of each 
other. 90/10 includes only higher education funds, while 85/15 
only includes VA and military funds. To the VFW, this creates a 
perfect storm through which predatory schools can master a 
complex cycle of compliance.
    Should they approach the 90 threshold, aggressively 
targeting military students will ensure compliance, yet revenue 
still comes entirely from Federal sources. The VFW believes 
that predatory schools recognize that consumers will not invest 
in their product so they look for government funds to insure 
solvency.
    To protect military and veterans education benefits, the 
VFW would recommend changing these rules to ensure that all 
taxpayer-funded programs fall under a single umbrella, as they 
were intended to do, creating an incentive for schools to 
deliver a product that can survive at least some free-market 
scrutiny.
    As I mentioned before, VFW's primary concern is student 
outcomes. To some, this means graduation rates. The VFW would 
not recommend legislating graduation or default rate thresholds 
to improve outcomes. Rather, the VFW believes that the 
Department of Education and VA must insist on transparency for 
institutions to receive taxpayer dollars, providing incentives 
for schools to do better.
    The VFW makes several recommendations on how to improve 
transparency in our written remarks with the help of some for-
profits who have chosen to do business the right way. Most 
notably, we recommend that VA implement specific Memorandums of 
Understanding (MOU) for schools to be eligible for funding, 
building on the Department of Defense's model, and ensuring 
that student veterans have all the information up front to make 
an informed decision.
    Unfortunately, the approval process for veterans and 
academic programs create two more hurdles for those seeking to 
use GI Bill. First, VA solely verifies eligibility for veterans 
based on military service. Today veterans are allowed to enroll 
in programs for which they never satisfied prerequisites, only 
to rack up bills that VA cannot pay. Given the new pay models 
for the Post-9/11 GI Bill, the VFW believes that VA could also 
play a role in verifying a veteran's eligibility to enroll in a 
program.
    Second, many State Approving Agencies tasked with ensuring 
education program compliance are understaffed or inadequately 
trained. For example, the agent in Rhode Island took on her 
role as a collateral duty. This is not an isolated incident, 
with more than 16 States facing similar circumstances and 
agencies literally screaming for more resources. Approving 
agencies are the first line of defense against predatory 
schools and need the right tools to do their jobs.
    In recent months, discussions over fiscal responsibility 
have us concerned about the continued viability of the new GI 
Bill should veterans not receive the educational opportunities 
they were promised. Our veterans have earned these benefits and 
it is our duty to ensure that predatory companies cannot 
exploit them.
    The VFW looks forward to working with this Subcommittee and 
the education community on developing solutions to better serve 
our veterans. Mr. Chairman, this concludes my remarks and I 
would be happy to answer any questions you may have.
    Senator Carper. Very good testimony, thank you, Mr. 
Gallucci. Thanks a lot. Dr. Kitchner, please proceed.

 TESTIMONY OF RUSSELL S. KITCHNER,\1\ PH.D, VICE PRESIDENT FOR 
    REGULATORY AND GOVERNMENTAL RELATIONS, AMERICAN PUBLIC 
                       UNIVERSITY SYSTEM

    Dr. Kitchner. Mr. Chairman, Senator Brown, please accept my 
sincere thanks for the privilege of sharing with you and the 
other members of this Committee our perspectives on the 
important subject of how institutions of higher education can 
better serve our Nation's military personnel and their 
families.
---------------------------------------------------------------------------
    \1\ The prepared statement of Dr. Kitchner appears in the appendix 
on page 72.
---------------------------------------------------------------------------
    If I may, before beginning my formal comments this 
afternoon, I would like to acknowledge the presence behind me 
and to over my left shoulder, two members of our APUS Board of 
Trustees, General Julius Becton and Dr. Kate Zatz.
    Senator Carper. Would you all raise your hand, please? 
Good, nice to see you both. Thank you for joining us.
    Dr. Kitchner. And also our APUS Vice President for 
Strategic Initiatives, Colonel Phil McNair.
    Senator Carper. Who is that? OK, thanks. Thanks so much.
    Dr. Kitchner. I also sit here as a representative of more 
than 60,000 members of our armed forces and veterans whom we 
support as students. They have entrusted their educational 
futures to us as we, in this room, entrust our safety and 
security to them. Retired Marine Corps Major James P. Etter 
founded American Military University in 1991 as a graduate 
school to provide military officers with the opportunity to 
earn an advanced degree in a discipline associated with their 
military professions.
    The American Public University System was chartered in 2002 
in response to the educational needs of the public service 
community, particularly in such fields as criminal justice, 
public safety, and national security. AMU and APU share a 
common curriculum, facilities, faculty, and staff, and a common 
mission which is to provide access to an affordable, high-
quality post-secondary education with an emphasis on educating 
the Nation's military and public service communities.
    The university is both regionally and nationally 
accredited. It offers more than 80 associate's, bachelor's, and 
master's degree programs including many specifically 
established to respond to the career interests and objectives 
of military personnel and their families. All of its courses 
are offered exclusively online in a format that enables 
students and faculties to interact asynchronously regardless of 
location or time zone.
    Today APUS serves more than 90,000 military and public 
service professionals and other civilians studying from all 50 
States and 130 foreign countries. APUS has maintained its 
historical commitment to monitoring and assessing its 
performance. Our efforts in this regard have not gone unnoticed 
and our written testimony points to some noteworthy examples.
    However, whatever success we have enjoyed in terms of 
program assessment and evaluation would be of little 
consequence unless the resulting data were applied to 
institutional performance as measured by student success. It is 
due to this dedication and commitment that we are pleased and 
honored to be present at this hearing and to share this table 
with representatives of our Nation's servicemembers and the 
University of Maryland which, as many of us know, is a pioneer 
in extending educational opportunities to America's military 
personnel.
    I would like to offer five straightforward strategies that 
we have found to be helpful in serving military students and 
veterans. No. 1, maintain affordable prices and reduce the time 
to completion by not placing unwarranted limits on a certified 
or other forms of transfer credit.
    No. 2, encourage a one-course-at-a-time approach to 
enrollment, particularly among students studying online for the 
first time. No. 3, recognize that active duty military are 
working adults, as are most veterans, and as such, they deserve 
an appropriate institutional investment in academic counseling 
and other support services.
    No. 4, design, develop, and implement courses, curricula, 
and programs that align with military-related careers and 
professional vocations outside the military that are relevant 
to this special population of students. And finally, 
participate in nationally benchmarked surveys and studies and 
openly publish institutional metrics that effectively inform 
prospective students, as well as education service officers and 
commanding officers.
    I have been asked to address the relative merits of two 
proposals relating to the so-called 90/10 rule. One proposal 
would shift DOD and VA funds to the 90 side of the formula and 
the other would eliminate it from the formula altogether. The 
only fundamental difference between these two suggestions is 
that the impact of the first would be felt sooner. In the end, 
the effect of 90/10 is that it likely will unnecessarily 
increase the cost of and access to education options available 
to our servicemembers.
    Academic quality and institutional performance are issues 
that warrant at least as much attention, but at this time I 
would ask that we consider the chart\1\ that is before you. 
Note that given equal amounts of Federal financial aid for 
which a student qualifies, Institution A whose tuition is 50 
percent less than Institution B would be out of compliance with 
90/10 unless it increases its tuition by slightly over 11 
percent.
---------------------------------------------------------------------------
    \1\ The chart referenced by Mr. Kitchner appears in the appendix on 
page 129.
---------------------------------------------------------------------------
    A thoughtful analysis of the actual impact of 90/10 reveals 
that it does nothing to enhance the prospects for student 
success, it is not reward operational efficiency, it does not 
extend access to traditionally under-served populations, and it 
does not reduce educational costs to students or taxpayers. If 
anything, it inhibits initiatives that support or have the 
potential to support those objectives.
    In a generous spirit expressed by this Subcommittee in 
calling for this hearing, we would like to work toward 
meaningful alternatives to 90/10, alternatives that place 
greater emphasis on institutional performance regardless of 
funding models. To that end, we would welcome the opportunity 
to work with the Department of Defense and the Veterans 
Administration to ensure that America's military personnel have 
access to high-quality educational programs.
    And I would emphasize the importance of the concept of 
cooperative efforts in this regard. Clearly our interests are 
not mutually exclusive. And we have a duty to do a better job 
for those whose duty continues to be to serve us and protect 
us. Thank you, Mr. Chairman, and I do welcome your questions.
    Senator Carper. Great testimony and thank you for those 
great and very thoughtful suggestions.
    Dr. Kitchner. Thank you.
    Senator Carper. Dr. Von Lehmen, please proceed.

   TESTIMONY OF GREG VON LEHMEN,\1\ PH.D., PROVOST AND CHIEF 
  ACADEMIC OFFICER, UNIVERSITY OF MARYLAND UNIVERSITY COLLEGE

    Dr. Von Lehmen. Good afternoon, Chairman Carper. On behalf 
of our President, Dr. Susan Aldridge, I thank you for the 
opportunity to appear today to discuss improving educational 
outcomes for our military and veteran populations.
---------------------------------------------------------------------------
    \1\ The prepared statement of Dr. Von Lehmen appears in the 
appendix on page 83.
---------------------------------------------------------------------------
    The University of Maryland University College was 
established in 1947 to meet the unique academic needs of 
working adults. As you have noted, it is one of 11 public 
degree-granting institutions that form the University System of 
Maryland. And today, UMUC serves 94,000 students in 28 
countries, all 50 States, about 40,000 of whom are active-duty 
members, veterans, or family members.
    In fact, it is accurate to say that UMUC's focus on adult 
students started with its service to active-duty members which 
began largely with face-to-face programs on military 
installations in Europe in 1949 and Asia in 1956, and continues 
to this day at 130 locations around the world. These locations 
include sites in Iraq, Afghanistan, Africa, elsewhere in the 
Middle East where the University has had faculty and staff in 
harm's way to offer face to face educational opportunities for 
servicemembers in those countries.
    My submitted testimony points to a few of UMUC's processes 
that were instituted to increase positive educational outcomes 
for all of our students, but especially for our military and 
veteran students. These included measures of accountability 
that have been instituted, long-standing measures that have 
been instituted within our Office of Enrollment Management 
(OEM), the academic support service that we provide by our 
Effective Writing Center, our 24/7 library support that is 
available to our students, among others.
    I will not duplicate those details here, but wish to use 
the remainder of my time to directly discuss the areas in which 
UMUC believes the Federal Government can support improved 
educational outcomes for military and veterans student 
populations.
    First, while mindful of the fiscal exigency which you have 
underscored several times, Mr. Chairman, we believe that 
military tuition assistance is essential to the success of our 
military students. Veterans are coming home to a highly 
competitive job market and as the unemployment numbers 
indicate, far too many are unemployed and countless others are 
underemployed. When competing against non-veterans, the key 
differentiator is often a college degree.
    The military services have made significant investments in 
narrowing this gap by funding the cost of college through the 
Tuition Assistance Program. This program has catapulted a 
significant number of active-duty members toward educational 
goals that they once had thought were impossible.
    The impact of increased investments in tuition assistance 
is substantial. In fiscal year 2002, the first year of 100 
percent tuition assistance, there was an increase of 32 percent 
in individual enrollments DOD-wide, and this increase has been 
sustained in subsequent years. We ask this Subcommittee to 
continue its leadership in this area and to closely examine the 
impact of proposed changes to the Tuition Assistance Program.
    Second, we believe that there should be continued support 
for the American Council on Education (ACE) and Service Members 
Opportunity College's (SOC) programs. These programs can 
jumpstart the veterans' academic progress toward degree 
completion by evaluating and certifying military training for 
academic credit, ensuring reciprocal acceptance of credit 
across participating institutions, and accelerating the entry 
of military members and veterans into the workforce by 
shortening their time to degree completion.
    Third, we recommend that the Federal Government create and 
implement a regime that would produce real consequences for 
institutions that are significantly out of compliance with the 
Military Voluntary Education Review Program (MIVER). DOD 
Directive 1322.25 requires that all institutions participating 
in the military Tuition Assistance Program sign a memorandum of 
understanding with DOD committing these institutions to 
participate in the review of all their programs according to 
the MIVER best practices.
    In the past, this program has resulted in team visits to 
installations, review of academic programs, team 
recommendations about issues or problems to be addressed. But 
historically, there's been little real consequence for 
institutions that did not observe these principles or address 
the recommendations. So consequences for noncompliance could 
include suspension of eligibility to participate in the DOD 
Tuition Assistance Program for institutions that are seriously 
out of compliance.
    Fourth, we have seen that the funding shortfalls have 
resulted over the years in a drastic reduction in providing 
servicemembers and veterans with easy and convenient access to 
highly qualified education counselors. Despite the very best 
efforts of the military service, this latest generation of 
largely first-time college students are often left to their own 
devices to make a decision that should be preceded by unbiased 
and highly qualified advising.
    We ask that the Subcommittee look at the importance of 
education counselors as it considers how best to assure sound 
Federal investments in educational programs that serve our 
military and veteran populations.
    So in conclusion, the University of Maryland University 
College strongly supports the work of this Subcommittee in 
exploring proven practices and improving education outcomes for 
those who have honorably volunteered to support and defend this 
country. They deserve nothing less than the best. This 
concludes my remarks, Mr. Chairman. I am happy to answer any 
questions that you may have.
    Senator Carper. Great, thanks very much for that testimony. 
Really, uniformly excellent testimony from this panel. Thank 
you. Thank you all.
    I want to come back to the 90/10 rule in just a moment. 
Before I do that, I just want to draw the attention of our 
Subcommittee to a number of letters that many of our top 
veterans groups have sent us calling on Congress to fix the 90/
10 rule so that GI Bill benefits are counted toward the 90 
percent limit on Federal funding. We realize there are other 
alternatives to that.
    But we received letters\1\ from, among others, American 
Veterans, Student Veterans of America, Veterans of Foreign Wars 
(VFW), the Vietnam Veterans of America (VVA), Military Officers 
Association, Blue Star Families, Paralyzed Veterans of America, 
VetsFirst, and I would, without objection, want to submit those 
letters for the record.
---------------------------------------------------------------------------
    \1\ The letters referenced by Senator Carper appears in the 
appendix on page 115.
---------------------------------------------------------------------------
    I want to come back to solutions, if we could for a couple 
of different ideas here for how to address the 90/10 rule, keep 
it as it is, change it so that the monies that are government 
funds meant to help veterans, or active duty personnel, 
actually become a part of the 90 percent. There is a variety of 
things that could be done. We have heard from some. I think we 
heard from Dr. Kitchner here that suggest that maybe simply 
fixing the 90/10 rule is not quite so easily as just making 
sure that we count all the veterans assistance and all the 
active duty military assistance in the 90 percent. Maybe that 
is something, another way to deal with this.
    I just want each of you to take a minute or so and just 
talk about, if you were in our shoes and you are looking at 
this problem with the perverse incentives that we are getting 
from the 90/10 rule, among the perverse incentives is that 
there is no skin in the game. There is no skin in the game for 
the colleges and universities, whether they are proprietary, 
private, public, no skin in the game.
    And I am reminded a little bit here of the subprime lending 
episode that we went through this last decade where you had, in 
some cases, mortgage brokers are getting people who were really 
not in any position to become homeowners, did not have the 
wherewithal to become homeowners, folks buying homes on which 
the appraisals were not worth the paper they were written on, 
and the mortgage folks did not have any skin in the game 
because they handed off the application to a mortgage bank and 
the mortgage bank ultimately hands it off maybe to Fannie Mae 
or Freddie Mac to get securitized.
    These mortgages were bundled together and you have a whole 
string of players there who had no skin in the game. And when 
you have no skin in the game, market forces do not work very 
well. I am reminded a little bit of that situation here.
    Let me just start with Mr. Daywalt. Let us say you are on 
this side of the dais and you have to figure out what to do in 
this instance with the 90/10 rule. What would you do? Why would 
you do it?
    Mr. Daywalt. Do you want us to only address the 90/10 or--
--
    Senator Carper. Start just with 90/10, but then we will go 
beyond that.
    Mr. Daywalt. As I put in my written statement, sir I think 
all of the Federal funds should be put on the 90 percent side, 
because I think you will find that the way some of these 
predatory for-profits are operating, there is no skin in the 
game from non-Federal funds. It is all Federal funds. I know 
everybody talks 90/10. I would not have a problem going to 80/
20 and push it back some more. That may put some of them out of 
business, but if they cannot act as a normal university, then 
maybe they should not be in business.
    Senator Carper. All right, thank you. Mr. Gallucci.
    Mr. Gallucci. As the VFW mentioned in our written 
statement, we would also support bringing all Federal funds on 
the 90 side, and as I stated, this was the intention of the 
law. If you look at the legislative history of 85/15, where it 
came from, why it was started, it was designed to make sure 
that school solvency was not strictly reliant on Federal funds. 
What we have now with the two stovepiped regulations is a 
situation where a school can manipulate one population simply 
to fall into compliance with the other rule.
    85/15 is still on the books in Title 38, part of Chapter 36 
in how the GI Bill is administered, but it is relatively 
irrelevant just because of the number of veterans who are 
eligible for benefits and how robust higher education benefits 
are these days. So to fall in line with the original intention 
of the law, we feel it is perfectly appropriate to bring that 
money on the 90 side.
    Senator Carper. All right. Thank you. Dr. Kitchner.
    Dr. Kitchner. Thank you, Mr. Chairman. I prefer to point to 
the fact that it is our position--I believe that we should 
first differentiate between Federal student aid and VA or DOD 
funds. The GI Bill is what we consider to be an earned benefit. 
It is not financial aid. It is not something that someone 
qualifies for because of financial status or any other 
determination. It is an earned benefit that I think most of our 
military people were very well aware of when they enlisted.
    This was a part of the inducement to enlist, would be to 
take advantage of the Post-9/11 GI Bill or the Montgomery Bill 
before it. I think that is an important distinction that we 
should maintain and keep that in front of our mind because that 
is part of the reason why I think the original higher education 
authorization wrote the law the way it did.
    I also would not want to encourage any kind of a policy 
change that ended up with unintended consequences such as 
reducing the amount of opportunities and access to higher 
education that our veterans enjoy and deserve.
    I think it is very important that we not let a policy 
decision that could affect the number of students that an 
institution could enroll or would involve having an institution 
have to go out and find more cash paying students in order to 
avoid a 90/10 trigger when, in fact, those cash-paying students 
are neither part of their fundamental mission, historical 
mission, nor for that matter would they necessarily be 
available unless we went to an international market which does 
nothing, quite frankly, to help support the President's 
objective to further educate America's civilian and military 
population.
    So I think we want to make sure that as we struggle through 
this challenge of identifying bad actors and promoting good 
practices, that we focus on the academic dimension of this 
question and not simply the economic one. Thank you.
    Senator Carper. Good, thank you. Doctor Von Lehmen.
    Dr. Von Lehmen. Thank you, Mr. Chairman. As an institution, 
we would support including all Federal funds on the 90 percent 
side of the formula. We do not think it is unreasonable that 
institutions receiving Federal funds should be able to 
demonstrate, by some consequential measure, that other 
stakeholders have confidence in them. So we have reservation 
about including veterans benefits and military tuition 
assistance on the 90 percent side with Title IV.
    Senator Carper. All right. Thank you. That question that I 
just gave you is pretty narrow, how would you fix the perverse 
incentives provided by the current 90/10 rule. Mr. Daywalt, I 
think you were prepared to go just a little bit beyond that 
specific question. Do you want to go back and pick that up? If 
not, I have another more specific question.
    Mr. Daywalt. Sure. I have some other recommendations that 
you can consider. I look at it from a business perspective and 
from having sat on the boards of different schools. These 
schools are using Federal funds--I'm talking about the 
predatory for-profits. They are using Federal funds to fund 
their marketing and sales and commission campaigns. Some of 
them as much as 50 percent of the revenues coming in are being 
used to advertise, which I see them all over the place.
    If they are going to use Federal monies--our taxpayer 
dollars--I do not think they should be allowed to use any more 
then 10 percent of their total revenue for marketing and sales 
campaigns. I was on one school's board when the new dean of the 
business school asked to raise the marketing funds for the 
business school from 5.5 to 7 percent. You would have thought 
that he had raped the Queen and killed the President. I mean, 
the board members were going nuts. What do you mean, 7 percent? 
But he wound up getting 8, by the way.
    But limiting it to 10 percent, I think, would be very 
important. I think the agencies should make better use of their 
mechanisms that they have. There was a school that was 
suspended earlier this year, but it was reinstated, and it goes 
back to the things with the GAO. If they take people that are 
blatantly violating the law, why are we still giving them 
money? Something tells me that there is something wrong.
    And the issue that has been brought up several times about 
having better information available for the veterans through 
the command curriculum counselors through the TAP and ACAP 
centers is very important because a lot of these people came 
into the military when they were 18 and they have no idea what 
higher education is all about. They did not stick around to 
talk to the kids who went to college. They came straight into 
the military. So they are flying blind and they do need some 
help and assistance.
    Senator Carper. Is it fair to say that some of their 
parents never went to college either?
    Mr. Daywalt. I think that is very fair to say. I came from 
a family where I was the first one that went to college and 
then my mom and dad got their degrees after my dad retired 
after 30 years of working.
    Senator Carper. My parents had an expectation for their son 
and daughter, my sister and me, to go to college, but also we 
had to figure out how to pay for it.
    Mr. Daywalt. Yes, we did.
    Senator Carper. All right. Did you want to continue?
    Mr. Daywalt. No. I think the other suggestions I have in 
here stand--there is one and that is the accreditation issue. I 
know it is not popular to say that some of these for-profits 
put together what is called, on the Internet, fake accrediting 
agencies, but we need to look at that issue very hard. If they 
are running a business school program and they cannot get 
accepted by the American Association of the Collegiate Schools 
of Business, why are we putting Federal dollars into it?
    Senator Carper. OK. Good point, sir. Mr. Gallucci, do you 
want to speak more about it? I want to give Mr. Daywalt a 
chance to do that. Do you want to speak more broadly on how to 
proceed on a strictly 90/10 rule fix?
    Mr. Gallucci. Absolutely. So you are talking about some 
other ways that the VFW believes we could solve this problem?
    Senator Carper. Yes, sir.
    Mr. Gallucci. Basically, it is improving oversight 
mechanisms. 90/10 is really just one facet of this. We also 
spoke about memorandums of understanding with colleges. That is 
one avenue that you could go down. VA eligibility, also, State 
Approving Agency resources, and this is really one of the 
largest ones that I wanted to touch on, because as I mentioned 
in my testimony and as we heard from the previous panel, that 
they are the boots on the ground for enforcement.
    And what we found is basically they have been broken, they 
have been broken for a long time. They do a great job with the 
resources they have, but they haven't had enough since 2006. 
They have not had a funding increase since 2006. The new GI 
Bill came in place in 2009 and dictated that State Approving 
Agencies were going to have to take on even more work as a 
result.
    This benefit is too robust and their responsibilities are 
too great that at 2006 funding levels, there is no possible way 
that they can accomplish their mission successfully. The VFW 
testified on this back in 2009 before the House. Our concerns 
were reiterated last year before the Senate VA Committee by the 
National Association of State Approving Agencies. So this is 
not a new problem. We know that our front line troops, the 
State approving agents, do not have the resources they need and 
predatory schools are obviously slipping through the cracks.
    Senator Carper. All right. Dr. Kitchner, I am going to ask 
if we could just hold it right there and I will come back and 
ask you and Dr. Von Lehmen to just sort of pick up where we are 
leaving off.
    Senator Brown, would you like to proceed with your 
questions? Thanks.
    Senator Brown. Sorry. I am bouncing back and forth. I am 
working on a couple of things back home that are very serious.
    So, Mr. Gallucci, first of all, thanks for your testimony 
and your service. I do not believe you answered this question, 
but you described today's 90/10 and 85/15 rules ineffective, 
stovepiped regulations. And I can kind of understand that being 
here in Washington, now how we have a regulatory process that 
is broken and needs to be done better.
    It seems to be a point of agreement amongst most 
stakeholders. I do not think there is much argument. How do we 
stop viewing each program and its own independent like entity 
and start realizing that all these programs are just a means to 
educate our military and veterans? No. 1. And do you think this 
weakens oversight of these programs and where do you think we 
can make improvements?
    Mr. Gallucci. With respect to 90/10 and 85/15, we feel that 
going back to the original intent of the rules is what we 
really want to do. 85/15 was really one of the original rules 
to rein in fly by-night schools, and as it has been eroded over 
the decades as we have heard, higher education developed a very 
similar rule, 90/10, which covers higher education funds, work-
study programs, but there is no interplay.
    What we have heard is that 85/15 is effectively irrelevant. 
It is still in Title 38, but it does not really apply these 
days because there are enough veterans going to school and 
higher education dollars are a much more lucrative source of 
revenue. We do not feel that bringing the VA and military 
dollars onto the 90 side would have an adverse effect on 
oversight.
    VA is still authorized to--the State Approving Agencies are 
still authorized to do their jobs. The military is still 
authorized to monitor its education programs and how its 
dollars are spent. This is simply making sure that schools 
cannot solely rely on taxpayer dollars for solvency.
    Senator Brown. And Dr. Kitchner.
    Dr. Kitchner. Yes, sir.
    Senator Brown. Considering the challenges that have been 
described, what are the challenges in administering these 
financial aid programs from an institutional perspective? And 
then Dr. Von Lehmen, if I could have you answer that question 
as well.
    Dr. Kitchner. Thank you, Senator. One of the jobs that my 
wife said she would never touch is being a financial aid 
director, and I feel exactly the same way. Financial aid 
administration is a complex business and it is not actually one 
of those areas that I have a great deal of expertise in. I 
think the issue that we have been trying to address, both in 
the context of this hearing and, I think, in some broader 
context with the Department of Education program integrity 
rules, is that we ultimately want to see whatever form of 
policy and rules are established, that they end up 
accomplishing the objectives for which they are being proposed, 
and that is, program integrity and quality of the instruction. 
It is our sense that 90/10 does not deal with that at all.
    Senator Brown. Let us take it a step further then as a 
followup. What is the suggested streamlined process that we can 
use from an administrative perspective while ensuring also that 
Federal oversight is maintained?
    Dr. Kitchner. Well, one option I think would be to 
establish academic metrics, meaningful academic metrics that 
would reflect institutional performance, publish those metrics 
so that we have an opportunity to compare institutions to 
institutions, providing prospective students and other members 
of the public with useful and relevant information to make 
decisions about colleges and programs that they may be 
interested in.
    I think another opportunity that we have is to identify 
what Chairman Carper referred to as skin in the game. There 
needs to be an opportunity for institutions to show that they 
are going to be accountable for what they do not do well, and I 
think some of us have reasonably good opportunities to make 
changes or to modify practices so that we do not have to bump 
up against accountability issues that will end up costing 
institutions money.
    Senator Brown. Thank you. Doctor Von Lehmen.
    Dr. Von Lehmen. Like my colleague, Dr. Kitchner, I am not 
one who is well-schooled in all the details of financial aid 
advisement, but I do know from where I sit that it is extremely 
complicated to administer, very complicated for the student, 
and I think that recent regulations that have been implemented 
by the Department of Education make it even more complicated 
still and more difficult to administer.
    From the standpoint of our institution, I think the 
fundamental issue is that these regulations are designed for 
more traditional colleges and universities that do not have, as 
their principal mission, serving adult students. They are 
designed for the kind of traditional enrollment patterns that 
you find on traditional colleges and universities where you 
have three opportunities to enroll, fall, spring, and summer.
    What the changes might be I could not say in detail, but I 
think if you ask any college administrator or any student, they 
would say the same thing about the complexity and difficulty of 
administration.
    I would like to reinforce some comments that Dr. Kitchner 
made. I think that as a Nation, we need to take stronger steps 
toward accountability in higher education, and I think that the 
first step is agreeing on what the metrics are. And that is a 
complicated question because depending on what the differences 
among institutions are, the metrics might be the same, but now 
they are applied might be different.
    I will say from my institution, our student population is 
very different from the population that is captured by the 
IPEDS data which looks at traditional college cohorts and how 
many of them graduated in a 6-year period. Our experience is it 
takes students on average maybe 10 years to graduate. We have 
people who walk across our platform, including active duty 
members who may have been at it for 12, 13 or 14 years before 
they graduate.
    So I think this area of metrics is very important. In fact, 
there are efforts underway to achieve some clarity about what 
these metrics should be, especially as they are applied in the 
context that we are talking about, active duty members and 
veterans. The servicemembers' opportunities consortium has 
formed a group representing colleges and universities, 
including American Military University, to discuss this very 
issue and to produce some recommendations about what these 
metrics should be.
    Senator Brown. Thank you for those thorough answers. I must 
say I will come back if it is appropriate.
    Senator Carper. Well, it will be. Dr. Kitchner, Dr. Von 
Lehmen, I am going to go back. Mr. Daywalt and Mr. Gallucci had 
a chance to respond more fully. And if you would like to as 
well, to my earlier question. If not, I will just come up with 
a somewhat different question for Mr. Daywalt. Dr. Kitchner.
    Dr. Kitchner. Chairman Carper, would you mind repeating the 
question?
    Senator Carper. I am not sure that I can. I said, beyond a 
90/10 fix, what are some other things we ought to be doing? You 
have already cited this to some extent, beyond a 90/10 fix. 
What are some other things that we ought to be doing, we being 
the Legislative Branch?
    Dr. Kitchner. OK. Mr. Chairman, I think that one of the 
things that I think you are already doing, and I commend you 
for that, is monitoring carefully what the Department of 
Education has attempted to do with its program integrity rules. 
I think many of us in this room, if perhaps not everyone in the 
room, would recognize that those rules are subject to 
refinement and perhaps reconsideration in some cases.
    But nevertheless, they have the potential of getting at the 
core issues here, which is program integrity, which is, in 
fact, institutional performance. And I believe, for example, 
while gainful employment is a very controversial issue and 
perhaps one of those that does need some thoughtful tweaking, 
if not more, the fact is, gainful employment has the effect or 
the potential effect of driving down the cost of higher 
education; that it will force institutions to manage very 
carefully their finances in order to not have an issue with the 
formula between the cost of instruction and the employment 
opportunities of their graduates.
    Ironically, at the same time that we look at gainful 
employment as maybe having that potential, it then bumps right 
up against 90/10, which as I have tried to demonstrate in that 
brief poster next to me, has precisely the opposite effect of 
driving up the costs.
    So we have two initiatives, both appropriate in many 
respects, but they are working at cross purposes. And so I 
would suggest that working closely with the Department of 
Education, working closely with the higher education community. 
There is much that we can do, and to Dr. Von Lehmen's point, I 
think we need to look thoughtfully at whether or not rules that 
were in place 20 years ago, for that matter 10 years ago, if 
they still have relevancy, given the fact that we have an 
entirely different population that is looking at higher 
education as an opportunity that they can take advantage of 
because the methodologies and the technology are out there to 
do so. Thank you, sir.
    Senator Carper. Good, thank you, sir. Dr. Von Lehmen.
    Dr. Von Lehmen. I have no further comments.
    Senator Carper. OK, good. We are back to Mr. Daywalt, if I 
could. I just want to give you an opportunity to respond to 
what our friends from the Department of Veterans Affairs said 
earlier about barring only one school out of, I think, 6,000 
from receiving GI Bill benefits or funds. Do you think the VA 
is doing a good enough job at policing schools?
    Mr. Daywalt. Well, that kind of puts me on the spot, but my 
personal feeling says no, they have not, and I speak as a 
person who--I mean, I am responsible for bottom line where I 
work at. If we cheat, I am going to wind up in front of the 
SEC. If you have 15 colleges that are cheating and basically 
lying, committing fraud, why were they not suspended? Why are 
they even allowed on the military bases? They should have been 
thrown off.
    That seems to be common sense, but common sense does not 
seem to be ruling things right now. And as a businessman, I 
have to ask, if these 15 were really doing all this to whose 
benefit is it to have them still there? Does not someone who 
commits fraud supposed to not be able to get access to Federal 
funds?
    Senator Carper. I think the answer is self-evident. Thank 
you. All right.
    In my old job as Governor of Delaware, one of the things we 
used to do, when we had a problem--I will give you a couple of 
examples. We had a problem in Delaware where we raise a lot of 
chickens in our State. There are 300 chickens for every person 
who lives in Delaware. And on the Delmarva Peninsula which 
includes the Eastern shore of Maryland and the Eastern shore of 
Virginia, poultry is a huge industry. Eighty percent of our ag 
industry in Delaware is poultry.
    And we have a lot of chickens living in chicken houses and 
every so often the chicken houses are cleaned out and the 
nutrients that are high in phosphorus, high in nitrogen and we 
have to do something with it. For years the farmers just spread 
the nutrients very thickly across farm fields across Delmarva.
    When it rains or when this stuff is stacked up in the 
middle of a field and it rains and washes off into our rivers, 
lakes, streams, eventually finds its way over to the Chesapeake 
Bay. There is a large expense of the Chesapeake Bay where there 
is nothing living. It is just dead, in part because of the high 
nutrient loads.
    About 10 or 12 years ago, we pulled all the farmers 
together in our State and said, ``Look, we have a big problem 
here.'' It is a problem. Now, you guys and gals and environment 
stewards, help us figure this out, and they did. They took off, 
if you will, maybe the darker hat and they put on a white hat 
and said, ``We ought to have rules on how much of these 
nutrients can be spread for every farm.''
    We are going to have a nutrient application program 
designed for that farm, given what the soils are like. We are 
going to make sure that everybody is trained who are going to 
be spreading these nutrients, and we are going to come up with 
ways to take nutrients and treat them under high temperatures 
in a special manufacturing situation. We take about 15 percent 
of the chicken waste now to a facility run by Perdue, Perdue 
Poultry, where they actually transform them into an organic 
fertilizer which is pelletized, sold all over the country by 
Scott and just get it off the Peninsula.
    But that was a problem where the folks who were helping to 
create the problem--it was not just the farmers. It is golf 
courses, it is other people who put fertilizer on their lawns. 
The farmers helped us come up with a solution.
    We have a problem in Delaware with welfare, in fact, in the 
country. I spent a lot of time on this as Governor with the 
National Governors Association (NGA). When we incentivize 
people not to go to work, people on welfare not to go to work, 
just to have more kids, because when they went to work, they 
lost their health care benefits, they didn't have anybody to 
help look after their kids. All the incentives were just 
misaligned. So we asked to help solve the problem? We asked 
people on welfare.
    Welfare moms and dads it is not a good situation. Help us 
solve this. We did the same thing with teen pregnancy. We got a 
lot of kids, a lot of high school students to help us solve 
that problem. Part of the problem here is proprietary schools 
and, frankly, the private and the public schools who are not 
doing the kind of job they need to with respect to delivering 
the results, that is, people who get an education and are 
unable to go out and make a living, be productive citizens. 
They are not doing their share.
    I hope that some of them feel ashamed. I hope some feel 
very proud, some of the folks. The representatives in your 
State would be very proud of the job that you do, but some of 
the other folks that are out there offering these so-called 
services ought to feel ashamed.
    But they can be part of the solution and we need for them 
to be part of the solution. My hope is that going forward, that 
they more and more will feel like, I am part of the problem 
here, everything I do, everything I know I do I can do better, 
the same is true of them. And we need for them to be part of 
that solution.
    Let me stop there and go back to Senator Brown.
    Senator Brown. I just have a few questions. I am just going 
to read something. I think it was either yesterday's or today's 
New York Times, Holly Petraeus notes that there are some of 
for-profit colleges with a long record of serving the military, 
solid academic credentials, and a history of success for their 
graduates. But compared with other schools, for-profit colleges 
generally have low graduation rates and a poor record of 
gainful employment for their alumni.
    So Mr. Gallucci, with those results, it does not really 
seem like a sustainable business model. And if so, why have 
some of these bad actors in the for-profit industry persisted?
    Mr. Gallucci. Well, thanks for the question, Senator Brown. 
We would have to believe that some of these institutions have 
persisted because of poor oversight and poor regulations.
    Senator Brown. And the thing that Mr. Daywalt just said 
about not kicking them out and actually following through with 
the threats, I think, is critical.
    Mr. Gallucci. Exactly, and that comes back to who is 
actually vetting the processes and what I had said about the 
State Approving Agencies. This is one of the reasons that we 
had suggested that VA possibly adopt something similar to the 
memorandums of understanding that the Department of Defense 
uses. There are positive actors who are out there, who are 
doing this right.
    We had the opportunity to sit down with some folks from the 
University of Phoenix who had launched a 2-year pilot on an 
orientation program. They saw that in the 2-years that they 
implemented this pilot program, 20 percent of students just 
walk away right then. It is free of charge. They realize they 
cannot handle it and they walk away. They decided to institute 
that nationwide. This is a step that they have taken to say 
that, We are focused on the outcomes that our students receive.
    Another step that they have taken was an online 
questionnaire to determine whether or not you are ready for it. 
With some healthy skepticism, I went online and took it myself 
and discovered that given my time requirements, I am not ready 
to attend one of their programs. Your time available for your 
studies is of serious concern. Your reasons for going to school 
are a reasonable concern.
    Your support and resources are a reasonable concern. I 
thought that was incredibly transparent. Some of these 
memoranda, if they are comprehensive enough, if you are 
transparent about graduation rates, job placement rates, 
accreditation, and also your student services to veterans, can 
improve these outcomes.
    Senator Brown. So Dr. Kitchner, how is AMU doing it 
differently, other than other for-profits that have been 
criticized for putting profits over students' success.
    Dr. Kitchner. Senator Brown, I am not able to speak to a 
lot of our colleagues, but I will say that I think one of the 
strategies that we have in place and we have had it in place 
historically is very similar to what Mr. Gallucci referred to 
in terms of making sure that, No. 1, that the students that 
enroll are prepared to succeed.
    I think anything short of some kind of a process, a vetting 
process, an introductory course, which is what we have--which, 
by the way, if a student is not passing it, they are refunded 
the cost of it. The department is not on the hook for it, the 
student is not on the hook for it.
    Senator Brown. That is not the case in all programs?
    Dr. Kitchner. Again, I would not presume to know, but I 
suspect it is probably not. I do not think there are probably 
very many public universities that offer that option, to be 
honest with you, and I am not suggesting everyone should.
    I think it depends on the population you are trying to 
serve and it is one of the variables that often gets lost here, 
is that the for-profit sector, for all of its imagined and real 
faults, is reaching out to an under-served population, an 
historically under-served group of people who probably were not 
particularly academically inclined in high school and perhaps 
not as successful in high school as they ultimately can be and 
will be.
    But they reach out to that population and try to help them 
succeed. I think as we look at metrics, as we look at 
thresholds of performance, we really need to look at an 
institution by institution process, to some extent, to 
determine what kind of students they are working with, what the 
challenges of those students are, and how effective the 
institutions are with those populations. So it needs to be sort 
of population specific, if you will.
    Senator Brown. Thank you. And Dr. Von Lehmen, in your 
opinion, what quality controls and best practices in the public 
education sector can be applied to address some of the concerns 
regarding the for-profit industry, if you can comment?
    Dr. Von Lehmen. Well, let us see. I think that is a big 
question. It involves a number of things which I know some of 
the for-profits do in fact do. Learning outcomes assessment is 
extremely important. This is assessing your programs at an 
institutional level to see whether or not the institution is 
actually engendering the qualities that it promises them that 
they will achieve at institutions. I am talking about things 
like critical thinking, ability to write and speak well, 
quantitative literacy, information literacy, so on and so 
forth, as well as competency in their chosen field of study.
    So I think learning outcomes assessment is extremely 
important to the quality and the effectiveness of academic 
programs. I think it is extremely important, especially for the 
student population that we serve, to try to understand what 
makes successful students successful. The term of art that is 
used these days is data mining. The idea is to use the data 
that you have on your successful students, including their 
behaviors, to the extent those behaviors, and to try to come up 
with actionable conclusions that you can institutionalize in 
some way that will help other students be successful.
    So those are two, I think, key academically centered 
quality control measures, but I think the quality control 
measures extend to student services and other parts of the 
university. Services have a big impact on students and their 
success. A very good example is degree audit.
    It is not uncommon for active duty members to have attended 
a number of different colleges and universities. And so, when 
they come to us and talk to us about our degree programs, 
certainly one question that has to be answered is, not only 
what are the requirements of that program, but where would they 
stand in that program with us in terms of the previous college 
work that they have completed; how much of that would transfer 
into their degree program.
    So it is very important that their previous college work be 
evaluated in a timely manner. We are dependent on them to 
provide us with the information that we can evaluate, but once 
provided, should be evaluated quickly, within a day, or 2, or 3 
days, so that the active duty member or veteran, will know, in 
that 120 semester hour-undergraduate program or that graduate 
program, how much of their prior college work and indeed, 
military training through ACE evaluation, will transfer into 
their degree program.
    So there should be metrics on services like degree audit so 
that once a student's file is complete, there is no excuse for 
that information to sit there for a month, 2 months, 3 months 
or a year. They should be receiving an evaluation within days, 
if that long, so that they know where they stand. The same 
thing is true for processing their applications for veterans 
assistance or financial aid. There should be metrics around how 
quickly those services are provided.
    So metrics are key and I think those metrics need to apply 
not just to academic programs, but across the spectrum 
including student services.
    Senator Brown. Thank you and thank you, Mr. Chairman.
    Senator Carper. Sure. Thank you very much for being part of 
this hearing. Senator Brown and I are supposed to be in another 
meeting in the Capitol in about 15 minutes, so we are going to 
wrap up here in about 10 or 12 minutes.
    The last question I will probably ask of you is just if you 
have a closing thought and it is an opportunity. We already 
asked you to do opening statements and we do not ask you to do 
closing statements, but I will give you that opportunity for 
maybe a minute. So just be thinking about what you might want 
to say.
    I think this will be for Dr. Kitchner and Dr. Von Lehmen. 
There is a recent study, I believe, out of Columbia University 
that showed that students enrolled in online courses control 
for a number of factors, but were more likely to fail or drop 
out of courses than were those who took the same courses in 
person. I am not surprised at that, but it was interesting to 
hear what they reported. Some have suggested we address this by 
requiring students to take a readiness assessment for online 
instruction providing training for faculty members in online 
pedagogy and improving student support services such as round-
the-clock tutoring and academic services, not just technical 
support.
    How do your schools address these areas and what do you 
think about the need for such reforms in order to increase 
online retention and completion? Dr. Kitchner.
    Dr. Kitchner. Thank you, Mr. Chairman. As an online 
university that responds to students and interacts with 
students literally 24/7 from around the world, No. 1, we have 
to staff for that and we have to have an information technology 
backbone that will support that. That is absolutely critical. 
That is where we have a tremendous investment of resources and 
we continue to support that.
    We have a large cohort of individuals who work in student 
support services. I think the number is approaching 50 in 
student support services alone. We have admissions counselors 
who basically handle in-bound calls, not outbound. In other 
words, they are responding to individuals who have an inquiry 
about the institution, whether or not it is going to fit their 
needs, whether or not the program is available and it is going 
to fit their career aspirations.
    We have an online, a very robust online color-coded degree 
audit that an individual who enrolls in a program can literally 
go online and determine whether a course that they might be 
interested in taking will fit into that degree program, so that 
they know that they are not looking at a degree option that 
will not actually meet their long-term expectations. These are 
just examples of what we feel is essential to an online 
environment, that you really have to take advantage of the 
technology, while at the same time, making sure that there is 
this interactivity.
    And our students and faculty both have to go through a very 
rigorous, what you referred to, I think, sort of introductory 
vetting of whether or not they are capable of succeeding. We do 
not want faculty that do not like the mode and they are not 
going to be successful adapting to that mode. And obviously 
students have to be comfortable with it. So we focus very 
intently on making sure that we have a right match there. Thank 
you, sir.
    Senator Carper. All right, thank you. Dr. Von Lehmen.
    Dr. Von Lehmen. Thank you, Mr. Chairman. Well, just to 
respond to the point you made in reference to the Columbia 
University study, let me start by saying UMUC does offer quite 
a few face-to-face classes, especially overseas, under our 
large military contracts. But certainly the majority of our 
enrollments stateside are online.
    I guess the first thing I would say is, the Columbia 
University is right. Online education is not for everyone. And 
so, I do think it is a responsibility of institutions to give 
students an opportunity, before they commit anything, to 
determine whether or not this is a mode in which they can be 
successful.
    At UMUC, we have what we call UMUC 411. We have several 
versions of this. We have a military and veterans UMUC 411, but 
at its core it is the same as what we would offer any other 
student, which is a week-long opportunity at no charge to 
enroll in kind of an online orientation.
    This is an active class. The purpose is really twofold. One 
is to give students an opportunity to experience the platform 
itself and how it works and how an online class would work. 
Through that week, they also have an opportunity to interact 
asynchronously with financial aid advisors, with academic 
advisors, with faculty members so they get some understanding 
of the institution and the people who staff it.
    I mentioned data mining before. What we have found is that 
the retention rate of students who go through the UMUC 411 is 
far higher than students who do not. And so, I think it just 
underscores the point that online education is not for 
everyone.
    Faculty training is key. Online teaching--and I say this as 
someone who taught face to face for many years. I was a tenured 
associate professor at another university some time ago before 
joining UMUC, so I taught face to face for many years, and, in 
fact, was skeptical as a face-to-face instructor. And so, I 
went through the online training myself with UMUC, which at 
that time was a 5-week online training course. There was a 
class, it had an instructor, and we as faculty novices, had 
assignments to complete and readings to do, and I found at that 
time it took me about 15 hours a week, apart from my day job, 
to complete that training from week to week. I have since 
taught online.
    But the point is that even today, we require all of our 
faculty, whether they are full-time or adjunct, to go through 
this training program. And it is not just pedagogy. I like to 
view it as kind of a seminary. The purpose of seminaries is not 
just education, it is formation. And what we try to do is imbue 
our faculty with our values and the value is students first, 
respect for students, excellence, and those are values to which 
we subsequently hold them to.
    We likewise give them some practical pointers. We found--
and this is really maybe a commonplace thing to say, but we 
have actually found through analysis that one of the biggest 
things that correlates with student success and student 
persistence is the engagement of the faculty member in the 
online classroom, being there for the student, providing them 
with very quick feedback on work, being mindful when they are 
not there and going after them, Why were you not in class last 
week, we really missed you. This is critical.
    Good academic advisement, that again is empirically 
informed. Academic advisement does not just mean being fluent 
about what the admission requirements and the degree 
requirements of a given program are. It is being mindful of 
those things that I mentioned before. What does actionable 
research tell us is more likely to make students successful? 
And some of these things should be embedded, and in our 
institution are embedded, in the academic advisement.
    Here is one concrete example, we have found that students 
who have completed their college writing before they come to 
UMUC are far more likely to succeed in an online environment 
than students who have not completed their college writing 
before they come to UMUC. And if you think about that, that 
intuitively makes perfect sense because writing is how much of 
the interaction occurs in the online asynchronous classroom.
    And so, if we have students that come to us or want to 
begin who have not had their college writing course, we advise 
them that this is one of the first courses they should take 
with us in their first semester because we know that it will 
make them more successful in the long run.
    Support is very important. I recently returned from a trip 
to Russia. We have had 20 year agreements with Russian 
universities, one Irkutsk State University in Siberia, another 
in Vladivostok, and they are very interested now in moving 
their programs into the online mode. One of the things my 
President emphasized to them is that it is not just about the 
classroom.
    If you are going to successfully offer online programs at a 
distance, it is different from serving a traditional campus 
residential community with some occasional online courses where 
if they need library support they can walk over to the library, 
or if they need advising, they can just walk over to the 
advising center.
    You have to put your whole campus online so that students 
can access not simply library resources, but have 24/7 
librarian assistance as well; that they can get academic 
advisement when they need it, and help with their writing if 
that is a difficulty for them and so on, as well 24/7 technical 
support. And certainly our university does all of those things.
    Senator Carper. Good. Well, I had said the last thing I 
wanted to ask for you all each to take a short period of time 
and give a benediction. We do not have time. I need to be in 
the Capitol in about 3 minutes, so we are going to have to 
forego that.
    I just want to say, this has been an illuminating hearing, 
troubling to some extent, but also very encouraging. For the 
schools out there, proprietary schools or those that are not 
proprietary schools that are not giving taxpayers what we 
deserve and their students, especially military and veterans 
what they deserve and have earned, You need to start. You need 
to look very carefully at some of the very smart things that 
you are doing at your two institutions and get with it.
    We are just one Subcommittee. We are part of the Committee 
on Homeland Security and Governmental Affairs (HSGAC), but this 
is a Subcommittee that is very tenacious. And in the words of 
Winston Churchill, we do not give up. I mean, when we get our 
teeth into something, we just do not give up. We are not going 
to let up on this one either. There is too much money involved, 
taxpayer money that we do not have, and there are too many 
veterans involved that need a better break than they are 
getting and need a bigger helping hand than they are getting. 
We are there to help our brothers and sisters.
    I just want to thank you for being here. Mr. Gallucci, 
special thanks to you and all veterans groups that have helped 
us prepare for this day, and also to say there are a number of 
other committees, certainly the Education Committee led by 
their Chairman, Tom Harkin, other Members of the Senate and 
House, I am sure, who have an interest in these issues and have 
are anxious to help address the concerns that have been raised 
and solve this problem.
    Part of the solution is going to be, I think, is available 
in the Department of Defense, in the Department of Veterans 
Affairs, Department of Education, the veterans organizations, 
but also in the institutions that are providing these 
educational services, in some cases very well, in some cases 
not well at all.
    I will close with this. In a hearing we had here a month or 
so ago, we had friends from the Department of Defense including 
Marines who were trying to lead the way to be the first on the 
beach and the first of the services to have auditable finances, 
financial statements. We need to look for those good examples. 
We need to look for those best practices and find ways to 
incentivize and do more of that.
    What we cannot measure, we cannot manage. And we talked a 
lot here today about metrics and how do we figure--like I 
always say, how do you measure success? For me, this is kind of 
simple, but it is to make sure that people who use taxpayer 
dollars to get a better education, at the end of the day, that 
education is worth something to them and to our country.
    Sometimes when George Voinovich was here, and he and I 
served together first as Governors and as Senators for many 
years, we would, from time to time, hold round tables. When we 
were trying to get the, interested parties in a room, rather 
than a hearing. That was the kind of structure we were 
interested in really developing a consensus. It can be pretty 
helpful.
    And I think we might want to try to do one here. Lamar 
Alexander, the Senator from Tennessee, another former Governor, 
he likes to say that hearings are where the Senators just talk 
and they do not listen. We do not listen very well. He said, we 
should really call them ``talkings.'' But round tables actually 
give a chance for all the interested parties, the stakeholders, 
including the white hats from the industry and those that do 
not have white hats. And I think it would be a good idea to get 
folks in a room and talk about what we are doing well and what 
we need to do better.
    So with that having been said, my colleagues who were not 
here will have the opportunity for 2 weeks to submit written 
questions. If they do, I would just ask that you respond to 
those promptly. This is not an issue that is going to go away. 
Deficits are not going to go away. Veterans who need a real 
good education, it is not going to go away. Our Nation, which 
needs a good workforce, that need is not going to go away. 
There is a lot here at stake and we are going to get it done. 
Thank you, very, very much. With that, this hearing is 
concluded. Thank you.
    [Whereupon, at 4 p.m., the Subcommittee was adjourned.]




                            A P P E N D I X

                              ----------                              









                                 
