[Senate Hearing 113-206]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 113-206

  THE 90/10 RULE: IMPROVING EDUCATIONAL OUTCOMES FOR OUR MILITARY AND 
                                VETERANS

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

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS


                             FIRST SESSION

                               __________

                             JULY 23, 2013

                               __________

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

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                  THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan                 TOM COBURN, Oklahoma
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                  MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin             KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota         JEFF CHIESA, New Jersey

                   Richard J. Kessler, Staff Director
               John P. Kilvington, Deputy Staff Director
      Gohar Sedighi, Legislative Fellow, Office of Senator Carper
                    Walter S. Ochinko, GAO Detailee
               Keith B. Ashdown, Minority Staff Director
         Christopher J. Barkley, Minority Deputy Staff Director
     Catharine A. Bailey, Minority Director of Governmental Affairs
                     Laura W. Kilbride, Chief Clerk
                     Lauren Corcoran, Hearing Clerk























                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator Coburn...............................................     4
    Senator McCaskill............................................    22
Prepared statements:
    Senator Carper...............................................    35
    Senator Coburn...............................................    37

                               WITNESSES
                         Tuesday, July 23, 2013

Curtis L. Coy, Deputy Under Secretary for Economic Opportunity, 
  Veterans' Benefits Administration, U.S. Department of Veterans' 
  Affairs; accompanied by Robert M. Worley, II, Director, 
  Education Services.............................................     7
Hollister K. Petraeus, Assistant Director, Office of Service 
  Member Affairs, Consumer Financial Protection Bureau...........     9
Hon. Steven C. Gunderson, President and Chief Executive Officer, 
  Association of Private Sector Colleges and Universities........    11
Tom Tarantino, Chief Policy Officer, Iraq and Afghanistan 
  Veterans of America............................................    13
Sergeant Christopher J. Pantzke, USA, Ret., Veteran..............    16

                     Alphabetical List of Witnesses

Coy, Curtis L.:
    Testimony....................................................     7
    Prepared statement...........................................    38
Gunderson, Hon. Steven C.:
    Testimony....................................................    11
    Prepared statement with attachment...........................    53
Pantzke, Sergeant Christopher J.:
    Testimony....................................................    16
    Prepared statement with attachment...........................    80
Petraeus, Hollister K.:
    Testimony....................................................     9
    Prepared statement...........................................    48
Tarantino, Tom:
    Testimony....................................................    13
    Prepared statement...........................................    77

                                APPENDIX

Chart referenced by Senator Coburn...............................    95
Additional statements for the Record:
    American Public University System............................   101
    Education Management Corporation.............................   104
Response to request for information from ITT Technical Institute.   111
Response to testimony from the Art Institute of Pittsburgh.......   123
Responses to post-hearing questions for the Record:
    Mr. Coy......................................................   124
    Ms. Petraeus.................................................   126
    Mr. Gunderson................................................   128
    Mr. Tarantino................................................   159

 
                       The 90/10 RULE: IMPROVING
           EDUCATIONAL OUTCOMES FOR OUR MILITARY AND VETERANS

                              ----------                              


                         TUESDAY, JULY 23, 2013

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:33 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Committee, presiding.
    Present: Senators Carper, Pryor, McCaskill, and Coburn.

              OPENING STATEMENT OF CHAIRMAN CARPER

    Chairman Carper. The hearing will come to order. I 
understand that our fifth witness, Sergeant Pantzke, is looking 
for parking. Hopefully he found it, and is on his way to join 
us.
    I want to welcome everybody this morning to our hearing. 
This hearing focuses on a very considerable amount of money 
that we are providing in high-quality education benefits to our 
servicemembers and to our veterans. In examining this issue, 
the Committee is asking a couple of questions. One of them is, 
are we getting the results to taxpayers that servicemembers and 
veterans deserve?
    The G.I. Bill helped me to afford the cost of getting a 
Masters of Business Administration (M.B.A.) at the University 
of Delaware (UDEL) after I transitioned off of active duty in 
the U.S. Navy near the end of the Vietnam War. And while I was 
grateful for that financial support--I think it was about $250 
a month--those benefits pale in comparison to the very 
considerable taxpayer investment that the new G.I. Bill makes 
toward an education for our servicemembers and for our 
veterans.
    For years through the service academies and through 
programs like the Reserve Officer's Training Corps (ROTC) and 
the G.I. Bill and tuition assistance, we have sought to raise 
the skill levels of those who serve in our armed forces as well 
as the skill levels of those who later return to civilian life.
    However, in 2008, it became clear to Congress that after 
years of multiple tours of duty in Iraq and Afghanistan, a 
modern day military needed a modern day G.I. Bill to ease 
soldiers' transition to civilian work here at home.
    That is why we passed the post-9/11 G.I. Bill, to help our 
modern day veterans afford the cost of college and put them on 
a path toward getting a good-paying job. The modern day G.I. 
Bill 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.
    I like to say in Delaware, you can go to the University of 
Delaware, Delaware State University (DSU), Wilmington 
University, Delaware Technical Community College (DTCC), and a 
variety of other schools in our State tuition-free, books, fees 
paid for, tutoring paid for, plus a $1,500 a month housing 
allowance. And for those of us who came back at the end of the 
Vietnam War, I think we got about $250 a month. So this is 
quite a rich benefit and I do not deny them it for a moment.
    Since it was enacted, though, $29.4 billion has been spent 
to send veterans back to school. In addition, the Department of 
Defense (DOD) offers military servicemembers the opportunity to 
pursue a high quality education through the Tuition Assistance 
Program (TAP). Service members and veterans taking advantage of 
the benefits available to them under the G.I. Bill are free to 
pursue the educational path of their choice. They can go to 
public school like I did when I studied at the University of 
Delaware, or they can attend a private, non-profit school, or a 
for-profit school.
    However, recent reports show that many veterans, too many 
veterans have been subjected to highly questionable recruitment 
practices--we have heard about those--exposed to deceptive 
marketing and substandard educational instruction in some of 
the schools they attended, particularly among the for-profit 
schools. Not all of them. Some of the for-profit schools are 
excellent, we know that, I know that, but not all. And frankly, 
some of the same could be true of the public schools and the 
private schools.
    But what I am interested in is uniform excellence across 
the board. I want to make sure that at least all these Federal 
dollars that we are spending on these programs, that we are 
going to end up with veterans and active duty personnel who 
actually have the skills that they need to get a job, keep a 
job, and be self-sufficient. That is what my goal is.
    Under current law, in order for a for-profit school to 
receive Federal student aid from the Department of Education 
(ED), the school must ensure that no more than 90 percent of 
its revenues come from Federal funding. The definition of 
Federal funding, as it applies to this limit, is not as 
straight forward as one might expect. It turns out that under 
current law, Federal funding means only money that comes 
through the Department of Education.
    Other Federal funds such as G.I. Bill benefits that come 
from the Department of Veterans' Affairs (VA) and military 
education benefits that are offered through the Department of 
Defense are excluded from the 90 percent limit that makes up 
the Federal share of a school's revenue.
    That means that a school that maxes out on its 90 percent 
limit can bring in federally funded military and veterans' 
education benefits in order to skirt the limit, and in some 
cases, get 100 percent of their funding from the Federal 
Government. I choke on that. The idea that any college or 
university, I do not care if they are profit, public, for-
profit that gets 100 percent of its revenues from the Federal 
Government for me is troubling. It is just troubling.
    As several reports have shown, this loophole has, in some 
cases, put a target on the backs of our military and veteran 
students, and then once students enroll, they are often not 
obtaining the knowledge and skills that they need to get a job, 
that will enable them to earn a livable wage and sound 
benefits.
    Clearly, the incentives at some for-profit schools are 
misaligned. These institutions are rewarded for enrolling more 
students, especially veterans with a fully paid-for education, 
but have too little incentive to make sure that their graduates 
are prepared to join the workforce and begin productive 
careers.
    Having said that, this is not an issue solely for for-
profit schools, as I said already. There are also too many 
public and private non-profit 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 quality education and have a history of 
success with placing students in well-paying jobs.
    I believe we have a moral imperative to ensure that abusive 
practices, no matter where they occur, are stopped so that 
those who have sacrificed for our country can obtain an 
education that will equip them with the skills they need to 
find a good job, repay their loans, college loans or others 
that they have taken out, and go on to live productive lives.
    Two years ago I chaired a couple of hearings on this issue 
in the Subcommittee on Federal Financial Management (FFM). 
Today I am holding this hearing to learn what is being done by 
the Department of Veterans' Affairs and others, to protect our 
military and our veteran students from the predatory practices 
of some bad actors, not totally--but primarily in the for-
profit industry.
    This hearing will also focus on what the association that 
represents for-profit schools has done to address concerns 
raised about the industry that it represents. My goal for 
today's hearing is to learn how we can fix this problem by 
better incentivizing schools to deliver a higher quality 
education to our military and veteran population that will 
enable them to be successful in work and in life.
    We have a very good panel, I think a terrific panel here 
today, and we are grateful to you for joining us. Before I turn 
to Dr. Coburn, I just want to say this: When I was on active 
duty--I was on active duty for close to 5 years, and Commander 
Coy, you were on active duty for a lot longer than that. I 
think we had about 12 permanent changes of station in not a 
very long period of time.
    I got an undergraduate degree at Navy ROTC at Ohio State 
(OSU), and 5 years later I moved to Delaware and got an M.B.A. 
with the G.I. Bill. It would have been great, all those times 
that I was traveling around the world with my squadron being 
deployed to different places, it would have been great if I 
could have worked on a Master's degree at that time, or maybe 
just taking courses. We did not have that opportunity.
    We did not have the Internet, did not have the opportunity 
for distance learning. And it is a great tool. It is a great 
benefit if done well. For folks who are on active duty, the 
folks that are deployed or activated, Reserves, Guard, it is 
potentially a very valuable tool, not only in helping them 
improve their skills, but also making them more valuable to our 
country, to the branch of service in which they are serving.
    So I am not interested in the blame game here, I am not 
interested in demeaning any particular schools. I just want 
better results for less money. We have to get better results 
for less money in everything we do. It includes this area 
because we are spending a lot of money. Dr. Coburn.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Well, thank each of you for being here. As 
I think about costs for the American public, we looked at 
health care costs, and we all know that they have risen 
uncontrollably. They are somewhat slower now due to the economy 
and a couple of other factors, but there is one thing that has 
risen faster than health care costs in this country and that is 
the cost of a college education. It is the fastest growing 
thing.
    At the heart of today's hearing are questions about the 
appropriate role of the Federal Government in higher education. 
In 1958, the National Defense Education Act (NDEA) was 
established and the Federal Government began its foray into the 
private sector of public education, higher education.
    Not everyone agreed with this bill's passage. Some feared 
that it would lead to Federal intrusion into the halls of 
higher learning, and boy, has it. Barry Goldwater said, if 
adopted, the legislation will mark the inception of age 
supervision, ultimately, the control of the higher education in 
this country by Federal authorities. Fast forward to today and 
the prophecy is manifest.
    Higher education today is dramatically more expensive 
despite hundreds of billions of dollars, Federal dollars, being 
poured into the system-loans, Pell Grants, G.I. benefits, 
research dollars, tax benefits and more. More money has brought 
more Federal interference. Washington seemingly wants to 
regulate everything, even what constitutes a credit hour, 
something that is fundamentally the job of colleges.
    There is a lot to be said about the larger topic of the 
current state of higher education. However, when it comes to 
the 90/10 Rule, it is arbitrary and government engineering at 
its worst. Let us ask ourselves a few questions, Mr. Chairman.
    If 90/10 is sound policy, why not apply this rule to all 
schools regardless of control type? After all, graduation rates 
at many non-profit schools around the country leave much to be 
desired, and I would like to submit for the record both the 
public and private profit, non-profit education graduation 
rates\1\ for the State of Delaware and the State of Oklahoma 
for the record. Both are abysmal.
---------------------------------------------------------------------------
    \1\ The chart submitted by Senator Coburn appears in the Appendix 
on page 95.
---------------------------------------------------------------------------
    Chairman Carper. Without objection.
    Senator Coburn. I would also like to submit at this time 
statements\2\ from other individuals who would like to have 
their words as a part of the record.
---------------------------------------------------------------------------
    \2\ Additional statements submitted for the Record appear in the 
Appendix on page 101.
---------------------------------------------------------------------------
    Chairman Carper. Without objection.
    Senator Coburn. And if the 90/10 Rule is sound policy, why 
stop at 10 percent? Why not lower the threshold? How does 50 
percent sound? Fifty percent applied to all schools, all 
Federal dollars. We would see some miraculous changes, would we 
not? Non-profit schools and Congress, of course, would never 
agree to this.
    The truth is, the 90/10 Rule is the government picking 
winners and losers among colleges that have already proven 
themselves by being accredited, approved by State-approving 
agencies, eligible for Title IV, and by complying with a myriad 
forms of compliance and levels of compliance.
    I look forward to our hearing. The real problem is, whether 
it is in private or public, profit or non-profit, we have 
abysmal graduation and completion rates. We ought to take the 
fraud out of the system. Nobody would disagree with that. We 
ought to take the shysters out. There are those both in public 
and private, if you look at graduation rates.
    But we ought to be concerned about what the cost is to get 
an education, to enable somebody to have a life skill that will 
support them. And that would be where I would hope that we 
would focus. 90/10 is an arbitrary rule. It is arbitrary. It 
causes us to focus on not fixing the right problem. With that, 
I yield back.
    Chairman Carper. Believe it or not, Dr. Coburn and I 
probably have more agreement in this area than you might think, 
having heard his comments and mine. Neither of us like to waste 
money. We do not like to waste real money. We do not like to 
waste taxpayers' money. And what we want to make sure of at the 
end of the day is we are not wasting money on the G.I. Bill, we 
are not wasting money on tuition assistance for folks on active 
duty.
    I am one of those people that likes to see how we can 
properly align incentives in order to get the kind of results 
that we are looking for. So we will work on this and we are 
going to keep working on this until we get a better result.
    Dr. Coburn asked. Mr. Coy, I said you spent like 20 years 
in the Navy, I think, Academy graduate in the Class of 1975, 
and I said, when you finished up, what was your rank? He says, 
he is a Commander. So he is Commander Coy and that is the way I 
will introduce him today. My favorite rank in the Navy was when 
I was a Commander. I loved saying to people, I am Commander 
Carper. Who are you? I am Commander Carper.
    But Commander Coy, we are grateful that you are here. We 
are grateful for all your years of active duty service in the 
United States Navy. You now serve, as I understand it, as the 
Under Secretary for Economic Opportunity in the Department of 
Veterans' Affairs, overseeing all education benefits, loan 
guarantee service, and vocational, rehabilitation and 
employment services for America's veterans.
    And prior to that appointment in the V.A., you have had 
quite a career. Mr. Coy served in a variety of key positions at 
the Department of Health and Human Services (HHS), including 
Deputy Director for Operations in the Office of Consumer 
Information and Insurance Oversight. We are grateful for your 
service in those regards, and also in the United States Navy, 
where I understand you started off in Athens, Georgia, after 
you left the Naval Academy.
    I thought about going to supply school, too, and ended up 
taking a detour and went to Pensacola instead. But we are 
grateful for your service there and welcome your testimony 
today.
    Hollister K. Petraeus, known as Holly, great to see you 
again, Assistant Director of Service Member Affairs of the 
Consumer Financial Protection Bureau (CFPB), which actually has 
a Director now. Our second witness, Assistant Director of the 
Consumer Financial Protection Bureau, is head of the Office of 
Service Member Affairs. She partners with the Pentagon to (1) 
help ensure that military families receive a strong financial 
education, (2) monitor their complaints, and (3) coordinate 
Federal and State consumer protection measures for military 
families.
    Prior to joining the CFPB, she was the director of a 
program at the Council of Better Business Bureaus (CBBBs) 
providing consumer education advocacy for military families. A 
military spouse of 37 years. We thank you for your service. And 
a former Department of Army civilian employee, Mrs. Petraeus 
also has extensive experience as a volunteer leader in military 
family programs.
    A graduate of Dickinson College, not that far from where I 
live, and a recipient of the Department of Defense Medal for 
Distinguished Public Service. Mother to several, including a 
guy named Steven, who is a fraternity brother of my son, 
Christopher, at Massachusetts Institute of Technology (MIT). So 
you turned out some pretty good kids as well, so thanks for 
joining us today.
    Next, Steve Gunderson, a colleague of mine. Did you serve 
with Steve in the House?
    Mr. Gunderson. I did.
    Chairman Carper. A colleague of ours and someone I enjoyed. 
He is not just a colleague, he is a friend. So we welcome him 
as both. He has been President and Chief Executive Officer 
(CEO) of the Association of Private Sector Colleges and 
Universities since January 2012. Prior to his appointment, he 
served as President of the Council on Foundations where he 
placed a high priority on education and workforce development.
    At the age of 23, elected to the Wisconsin State 
legislature--I do not know if Tammy Baldwin is going to join us 
today, but I think she started as a pup as well. That is a 
pretty young age.
    Mr. Gunderson went on to serve for 16 years with a couple 
of us in the U.S. House of Representatives where education was 
one of his areas of focus. A graduate of the University of 
Wisconsin, a Badger, the Brown School of Broadcasting in 
Minneapolis, and we are delighted to see you today. Welcome. 
Thank you.
    Tom Tarantino, sitting alongside of Steve, is the Chief 
Policy Officer at the Iraq and Afghanistan Veterans of America 
(IAVA). As Chief Policy Officer, Mr. Tarantino provides 
strategic guidance for and leadership of Iraq and Afghanistan 
Veterans of America as the Legislative Research and Political 
Departments.
    Mr. Tarantino is a former Army captain who left after 10 
years of service in 2007, returned from Iraq in 2006 after 1 
year of deployment with the 11th Armored Cavalry Regiment where 
he served in combat as both the cavalry and mortar platoon 
leader. Awarded the Combat Action Badge and the Bronze Star. 
Thank you for all that you did in uniform and all that you have 
done since. Delighted to welcome you here.
    I will introduce Sergeant Christopher Pantzke and our 
expectation is that he will join us shortly. But he is our 
final witness, Sergeant Pantzke, who served in the Minnesota 
Army National Guard from October 2002 until April 2004. He was 
promoted from Private First Class to Specialist after 6 months 
of serving in the National Guard.
    Sergeant Pantzke enlisted in the U.S. Army in April 2004 
and was promoted to Sergeant in the following year. In 2005, 
his unit was deployed to Iraq. Sergeant Pantzke was medically 
retired from the Army in 2009 after serving his country for 6 
years. And we welcome all of you. Your entire testimony will be 
made part of the record and you are invited to proceed at this 
time. Commander Coy, welcome.

   TESTIMONY OF CURTIS L. COY,\1\ DEPUTY UNDER SECRETARY FOR 
 ECONOMIC DEVELOPMENT, VETERANS' BENEFITS ADMINISTRATION, U.S. 
   DEPARTMENT OF VETERANS' AFFAIRS; ACCOMPANIED BY ROBERT M. 
            WORLEY, II, DIRECTOR, EDUCATION SERVICE

    Mr. Coy. Good morning, Mr. Chairman, Ranking Member Coburn, 
and other Members of the Committee. Thank you for the 
opportunity to be here today to discuss the 90/10 Rule and the 
Department of Veterans' Affairs efforts to safeguard veteran 
students from questionable practices by some institutions. 
Accompanying me this morning is Mr. Robert Worley, our Director 
of VA's Education Service.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Coy appears in the Appendix on 
page 38.
---------------------------------------------------------------------------
    While VA defers to the Department of Education on the 90/10 
calculation, we recognize the argument for including post-9/11 
G.I. Bill in the 90 percent limit on Federal funding. 
Modifications to the 90/10 calculation could assist in 
protecting some veteran students. However, such a change could 
cause some schools to exceed the 90 percent threshold and be at 
risk of losing eligibility.
    Our concern is to ensure that veterans are not adversely 
affected by any proposed changes or, if so, to mitigate them to 
the extent possible. VA is happy to work collaboratively with 
the Department of Education and the Committee as it considers 
changes in this area.
    VA is acutely aware of concerns raised regarding for-profit 
institutions and potential fraudulent activities, and in VA's 
oversight of for-profit institutions they are held to the same 
standards and criteria as non-profit institutions for the 
purpose of approval for use of VA education benefits.
    Since testifying on this issue in 2011, VA has done 
significant work to ensure veteran students are informed 
consumers when using their well-deserved and hard-earned G.I. 
Bill benefits. In conjunction with the Veteran Employment 
Initiative Task Force (VEIT) directed by the President, along 
with the Vow to Hire Heroes Act of 2011, we have collaborated 
with multiple agencies to redesign the Transition Assistance 
Program (TAP) for departing servicemembers. The redesigned TAP 
transforms the previous VEIT powerpoint presentation into a 
truly informative session for servicemembers.
    During the day-long VA benefits overview, we provide 
servicemembers with detailed information on VA education 
benefits, Federal financial aid programs, and factors to 
consider when applying for school. We are also piloting a 2-day 
special session called Accessing Higher Education dedicated to 
providing information on education and training opportunities.
    The new TAP program is truly transformative. The Veterans 
Opportunity to Work (VOW) Act mandates that TAP be a mandatory 
requirement now reaching all departing servicemembers and that 
will be over one million in the next several years.
    Through our Integrated Disability Evaluation System (IDES) 
program, we are placing 200 vocational rehabilitation 
counselors at over 75 military installations across the country 
to provide a full range of vocational, rehabilitation, and 
employment counseling and benefit services to members during 
earlier in their transition process, including counselors 
counseling those wounded warriors and disabled veterans on 
their educational benefits.
    Of particular importance to the Committee, VA has greatly 
increased oversight of all schools, including for-profit 
schools. Some specific actions include, but are not limited to, 
in fiscal year (FY) alone, our State Approving Agency (SAAs) 
completed over 38,000 approvals of for-profit schools. In 
fiscal year 2, we completed 2,418 compliance reviews of for-
profit institutions representing over 96,000 students.
    We should note that these reviews also survey students and 
review marketing material of those institutions. Overall, with 
our SAA partners, we completed over 4,700 reviews last year. 
This year through the end of May, we have already conducted 
over 3,000 compliance reviews. We have withdrawn approval for 
nine institutions representing 177 veteran students due to 
erroneous or misleading practices.
    We continue to work to improve our oversight, including 
work groups with our SAA partners, hotlines, et cetera. VA is 
also undertaking significant efforts to implement the 
provisions of the Principles of Excellence, Executive Order 
(EO) and Public Law 112-249, Improving Transparency of 
Education Opportunities Act.
    As part of the Executive Order, VA, with Department of 
Education, Defense, in consultation with the Department of 
Labor and the Consumer Financial Protection Bureau, we are in 
the process of implementing the Principles of Excellence. I am 
pleased to report that over 6,300 schools have already 
voluntarily agreed to comply with the Principles.
    In conjunction with DOD, Education, CFPB, and the 
Department of Justice (DOJ), we are also developing student 
outcome measures that are comparable, to the extent possible, 
across Federal educational programs and institutions. With our 
agency partners, we continue to work on the development of a 
centralized complaint system for veteran servicemembers and 
family members to submit complaints about schools that are 
engaged in deceptive or fraudulent practices.
    We expect this tool to be available by late summer. 
However, veteran students are always able to use our toll-free 
G.I. Bill hotline or our G.I. Bill website to report complaints 
to us. Additionally, we have successfully registered the term 
G.I. Bill as a trademark to help prevent its use in a deceptive 
or fraudulent manner.
    VA provides a wealth of resources and guidance on our G.I. 
Bill website. For example, the site contains our Choosing the 
Right School handbook which provides potential veteran students 
with factors to consider when choosing a school. We have also 
integrated the Department of Education's College Navigator onto 
our G.I. Bill website. Since integrating the tool in May 2013, 
it has already received over 27,000 hits.
    VA also plans to pilot an online assessment tool called 
CareerScope that allows veterans or servicemembers to assess 
whether he or she is ready to engage in post-secondary 
education and determine his or her likely vocational aptitude. 
In addition, we are promoting our Chapter 36 program, resources 
that emphasize sources of financial aid and other choices.
    Finally, VA has strengthened our on-campus presence. 
Started in 2008, our VetSuccess on Campus program placed an 
experienced Vocational Rehabilitation and Employment (VR&E) 
counselor at colleges and universities. This program has grown 
from 8 to 32 campuses, and by the end of this fiscal year, 
counselors will be on more than 90 campuses across the country.
    With our partner agencies, VA is working hard to ensure 
veterans are informed consumers and that schools meet their 
obligations in training this generation's next greatest 
generation. Mr. Chairman, this concludes my statement. Thank 
you for the opportunity to appear before you today and we would 
certainly be pleased to respond to any questions you or other 
Members of the Committee may have.
    Chairman Carper. Good. Well, that was a much welcomed bit 
of testimony and encouraging testimony.
    Mr. Coy. Thank you, sir.
    Chairman Carper. We are appreciative of the effort that is 
going in, his report he shared with us and we are anxious to 
find out all that we are doing, all that you are doing, what is 
actually working, what is actually working the best, what do we 
need to do more of. Thank you. Welcome.
    Mrs. Petraeus, please proceed. It is great to see you.

  TESTIMONY OF HOLLISTER K. PETRAEUS,\1\ ASSISTANT DIRECTOR, 
          OFFICE OF SERVICE MEMBER AFFAIRS, CONSUMER 
                  FINANCIAL PROTECTION BUREAU

    Ms. Petraeus. Chairman Carper, Ranking Member Coburn, and 
distinguished Members of the Committee, thank you for the 
opportunity to testify before you today concerning higher 
education for our Nation's servicemembers and their families.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Petraeus appears in the Appendix 
on page 48.
---------------------------------------------------------------------------
    The government has provided a number of benefit programs to 
assist servicemembers and, in some cases, their family members 
to gain a post-secondary education, most significantly the G.I. 
Bill and the Military Tuition Assistance program.
    Today's servicemembers and veterans are eager to earn 
advanced degrees, and many for-profit colleges are eager to 
enroll them as students, due in no small part to the 90/10 Rule 
created by the 1998 amendments to the Higher Education Act 
(HEA). Put simply, the Rule says that a for-profit college has 
to obtain at least 10 percent of its revenue from a source 
other than Title IV Federal education funds.
    Although tuition assistance (TA) and the G.I. Bill are 
federally funded, they are not Title IV, and that puts them 
squarely into the 10-percent category of the 90/10 Rule.
    This has given some for-profit colleges an incentive to see 
servicemembers as nothing more than dollar signs in uniform, 
and to use some very unscrupulous marketing techniques to draw 
them in.
    A military spouse at Fort Campbell, Kentucky, told me that 
she was attending a ``military-affiliated college.'' It was 
not. It was a for-profit school with no official military 
status, but she had been given this impression by the 
recruiter. After she filled out an interest form, she was 
called multiple times per day until she enrolled. But when she 
had trouble logging on to her online class, she could not get 
anyone from the college to help her. She failed the class due 
to lack of access, but was charged the full fee anyway.
    National Guard education officers in Ohio and North 
Carolina told me that they are besieged by for-profit colleges 
desiring access to the troops. If they hold a job fair, over 
half the tables may be for-profit colleges, an implied promise 
that you are likely to get a job if you graduate from that 
school.
    In Nevada, a woman from the VA overseeing vocational 
rehabilitation for veterans told me that she had patients with 
traumatic brain injury (TBI) and post-traumatic stress disorder 
(PTSD) who had been persuaded to sign up for classes at for-
profit colleges, and did not even remember doing so. That did 
not stop the colleges from pressing them for full payment, even 
though they were not regularly attending classes. Some of the 
schools were also pushing her patients to enroll in Master's 
Degree programs even though they were not capable of doing the 
work. Their tactics were aggressive enough that she described 
it to me as ``tormenting veterans.''
    The overall cost to the government of the G.I. Bill and TA 
has soared in recent years. While the number of individuals 
using VA education benefits has roughly doubled since 1998, the 
monetary cost has grown ten-fold, and the cost of TA has also 
grown exponentially, with for-profit colleges taking an 
increasing share. In 2011, for-profit colleges collected one of 
every two TA dollars.
    President Obama has taken an interest in the issue, signing 
Executive Order 13607 in April 2012, ``Establishing Principles 
of Excellence for Educational Institutions Serving 
Servicemembers, Veterans, Spouses, and Other Family Members.'' 
Pursuant to the order, the VA, DOD, and Education, in 
consultation with the CFPB and the Department of Justice, are 
poised to launch a centralized complaint system for students 
receiving TA and G.I. Bill benefits. They are also working on a 
crosswalk system to share data about schools, improve consumer 
information for beneficiaries, and track outcomes.
    At CFPB, we have developed products for our website, 
consumerfinance.gov, that give useful information about student 
loan issues. They include a financial aid shopping sheet and an 
online G.I. Bill benefits calculator.
    So there are some very worthwhile efforts underway to help 
military personnel, veterans, and their families learn more 
about the schools where they may spend their hard-earned 
education benefits. However, it also seems prudent for Congress 
to examine the 90/10 Rule. As long as it adds a significant 
extra incentive for for-profit colleges to enroll military 
students, concerns will remain.
    Although there may be some for-profit colleges with solid 
academic credentials and a history of success for their 
graduates, others have low graduation rates and a poor gainful 
employment history. They also tend to have a higher-than-
average student loan default rate, which can be an indicator 
that students are being recruited with little concern for their 
ability to do the course work, graduate, and repay their loans. 
Although the Association of Private Sector Colleges and 
Universities recently convened a blue ribbon task force to make 
recommendations for best practices for military and veteran 
students, one of the recommended best practices was simply that 
schools ``consider assessing academic readiness prior to 
enrollment,'' which indicates that there is still plenty of 
room for improvement.
    The G.I. Bill and TA are supposed to provide the 
opportunity to build a better future. The wonderful education 
benefits provided to our military and their families should not 
be channeled to programs that do not promote and may even 
frustrate this outcome.
    Thank you for the opportunity to testify before the 
Committee.
    Chairman Carper. Thank you so much for testifying before 
the Committee. Congressman Gunderson, welcome.

  TESTIMONY OF THE HON. STEVEN C. GUNDERSON,\1\ PRESIDENT AND 
CHIEF EXECUTIVE OFFICER, ASSOCIATION OF PRIVATE SECTOR COLLEGES 
                        AND UNIVERSITIES

    Mr. Gunderson. Chairman Carper, Ranking Member Coburn, 
Members of the Committee, thank you for this opportunity. We 
share your commitment to ensuring that every post-secondary 
institution provides the highest level of service to every 
student, especially active duty military, veterans and their 
families. We take great pride in our institutions that they are 
designing and delivering education in ways that meets the needs 
of today's military and veteran students.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Gunderson appears in the Appendix 
on page 53.
---------------------------------------------------------------------------
    According to the Department of Defense, 762 of our 
institutions have been approved to offer courses to active duty 
military. The Department of Veterans' Affairs reports that more 
than 325,000 veterans and their families have been served by 
our institutions using the post-9/11 G.I. benefits.
    Although veterans make up less than 10 percent of our 
students, we are proud to serve those who choose our schools. 
Why do veterans and active duty military choose to attend our 
schools? The answer lies in our customer service to veterans. 
Returning from duty, most veterans do not want to live in a 
dorm and take five different three-credit courses at a time. 
They want a focused and accelerated delivery of academic 
programs that can support their transition from the front lines 
to full-time employment as soon as possible.
    Because of our longer school days and year-around academic 
programming, our students can often complete an associate's 
degree in 18 months, or a bachelor's degree in just over 3 
years. As Mr. Coy said in his opening testimony, of their 3,000 
compliance reviews, they have identified only nine problem 
schools.
    But we take the position that one veteran who is mis-served 
is one veteran too many. And that is why we created this set of 
best practices on veteran's education. I do want to followup 
with Mrs. Petraeus's suggestion on the comments on enrollment 
because I want you to hear the whole section.
    To ensure students are appropriately placed and prepared 
for the programs in which they enroll, consider employing any 
of the following practices: Access academic readiness prior to 
enrollment, offer appropriate remediation if necessary, offer 
limited course loads, offer a reasonable trial period for 
enrollment, offer penalty-free drop/add periods upon 
enrollment. So I want the total story to be understood in terms 
of our best practices.
    Because the government's Integrated Postsecondary Education 
Data Systems (IPEDS) systems only follows first-time, full-time 
students right out of high school, last year we invested in a 
survey of our institutions to better understand the path of our 
veteran students. In this survey, we looked at 16,500 veteran 
graduates and found 24 percent are single parents, 50 percent 
attend part-time, 80 percent are over 25 and independent, 33 
percent are female, 46 percent have dependents, 29 percent are 
African-American, and 12 percent are Hispanic.
    As for what they pursued, we found that 75 percent earned 
certificates and/or associate degrees, while 25 percent earned 
bachelor's or higher. 40 percent of the veterans graduated, 
earned credentials in the health care field; 20 percent in the 
skilled trades such as construction, maintenance, and 
engineering; 10 percent earned credentials in computer 
information programs.
    Just as important as the programs we offer is the spending 
on instruction by institutions of higher education. According 
to the latest Department of Education data, instruction 
expenses are a percent of total expenses. It is 32 percent for 
public institutions, 33 percent for private non-profit 
institutions, and 27 percent for our institutions.
    Considering that our schools have fewer tenured and 
research faculty, our spending on instruction is very 
comparable to our post-secondary colleagues. Today we now see 
the majority of post-secondary students attend more than one 
institution before completing their education. When students 
transfer, they often face the nerve-wracking and uncertain task 
of having their credits accepted by a new institution.
    All too often, institutions will simply not accept credits 
earned at an institution accredited by a different 
organization, especially when that sending institution happens 
to be a nationally and not a regionally accredited school.
    We encourage the Congress to examine policies that 
facilitate credit transfer so that completion is not delayed 
and extra debt massed as a result of repeating course work, 
especially when it comes to our active duty military and 
veterans.
    Finally, Mr. Chairman, I would like to comment specifically 
on 90/10 in the context of today's student veterans attending 
our schools and the skill demands of our future workers. The 
90/10 Rule is not a measure of institutional quality. It is a 
financial calculation that is a measure of the socioeconomic 
position of the student population served by that institution.
    An institution that is close to the 90 percent threshold is 
enrolling low-income students in the need of post-secondary 
education, but simply dependent upon Title IV funding to make 
that dream a reality. The government should be encouraging this 
behavior, rather than penalizing those institutions that serve 
a majority of low-income students. This metric simply undercuts 
the very reason we have Federal loan and grant programs.
    Further, across this country, because of cuts in public 
funding for public institutions like community colleges, they 
have reached their capacity and simply cannot accept more 
students for post-secondary education, especially in the 
skilled trades like I was discussing earlier.
    Imposing changes that make 90/10 more punitive endangers 
student access and choice because schools will be forced to 
limit enrollment of low-income students. We should judge all 
schools, including private sector colleges and universities 
(PSCUs), based on outcomes, retention, graduation, employment; 
based on appropriate metrics that look at those students. But 
we should not judge any institution on the financial net worth 
of the students they serve.
    Mr. Chairman, thank you for this opportunity to testify. I 
look forward to answering your questions and discussing the 
important issues later.
    Chairman Carper. Good. Thanks for your testimony and for 
joining us today. Mr. Tarantino.

 TESTIMONY OF TOM TARANTINO\1\ CHIEF POLICY OFFICER, IRAQ AND 
                AFGHANISTAN VETERANS OF AMERICA

    Mr. Tarantino. Chairman Carper, Ranking Member Coburn, 
distinguished Members of the Committee, on behalf of Iraq and 
Afghanistan Veterans of America (IAVA), I would like to extend 
our gratitude for being given the opportunity to share with you 
our views and recommendations regarding this issue that affects 
the lives of thousands of servicemembers and veterans.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Tarantino appears in the Appendix 
on page 77.
---------------------------------------------------------------------------
    My name is Tom Tarantino. I am the Chief Policy Officer for 
IAVA and I proudly served 10 years in the Army. Although my 
uniform is now a suit and tie, I am proud to work with this 
Congress to continue to have the backs of America's 
servicemembers, veterans, and military families.
    The World War II G.I. Bill was one of the most successful 
government programs in our Nation's history, doubling the 
number of degrees awarded by colleges and universities from 
1940 to 1950, and resulting in a fivefold increase in the 
percentage of Americans with bachelor's degrees. It is 
estimated that for every dollar invested in America's veterans 
through the World War II G.I. Bill, the government took in $7 
in increased tax revenue.
    And much of the success can be traced to Congress wisely 
protecting the World War II G.I. Bill from predatory actors in 
education by enacting what was called the 85/15 Rule that 
allowed the free market to weed out bad actors in the education 
sector.
    As the student population changed, the protections offered 
by the 85/15 Rule lived on in the current 90/10 Rule as the 85/
15 was a head count model that existed when 50 percent of all 
college students were G.I.s. Now with an all-volunteer force 
and a head count that is much lower, the 90/10 Rule is a 
revenue-based model. But there is one major exception between 
the spirit of the 85/15 and the 90/10 Rule is that tax dollars 
that fund the G.I. Bill are counted under private funds that 
are supposed to allow the market to regulate the for-profit 
industry.
    The proposed reforms that IAVA strongly support seek to 
make educational institutions accountable to free market 
principles by counting the post-9/11 G.I. Bill funds as 
government-sourced funds under the 90/10 Rule. The intent of 
Congress with regard to the 90/10 Rule and its predecessor was 
not only to decrease instances of fraud and predatory targeting 
of veterans by educational institutions, but also to ensure 
that these institutions provided a quality product to students 
by making them accountable to free market forces.
    Unfortunately, due to a loophole in the law, or the fact 
that the G.I. Bill just simply did not exist when they wrote 
the 90/10 Rule, military and veteran's benefits are counted as 
part of the 10 percent of revenue that is supposed to come from 
private sources.
    This ends up putting a target on every single veteran's 
back. Because of this loophole, every veteran that a for-profit 
school recruits is worth nine additional students on Federal 
financial aid, potentially raising revenue up to $125,000 per 
veteran recruited.
    IAVA believes that in order to protect the future of the 
post-9/11 G.I. Bill, Congress must act to classify G.I. Bill 
dollars as government funds subject to the 90 percent 
restrictions, if for any other reason than because the G.I. 
Bill are unquestionably government funds. The goal of the 
proposed reform is not to penalize educational institutions, 
but to ensure that America's veterans are receiving a quality 
education that will help them transition successfully from 
military to civilian life.
    Unfortunately, as a result of the actions of some bad 
actors in the system, this transition is being made more 
difficult for too many of our Nation's veterans. Although less 
than 20 percent of veterans are attending a for-profit school, 
a lot of these schools are taking over a third of all G.I. Bill 
dollars. Drop-out rates at for-profit schools are above 60 
percent on average, and even though they account for 13 percent 
of all college students in the country, they produce half of 
all student loan defaults.
    In this period of deficit cutting and waste reduction that 
we are seeing in Congress, the failures of the handful of bad 
actors in the for-profit school industry with regard to 
providing quality job training and education programs to 
servicemembers represents an unacceptable threat to the future 
of the G.I. Bill.
    One IAVA member, Maggie Crawford, expressed frustration 
with a for-profit school on IAVA's Defend the New G.I. Bill web 
page. After serving a tour of duty in Afghanistan, Maggie, a 
member of the Army National Guard, enrolled in ITT Tech to 
study nursing. It was not until the second quarter of her 
program that they informed her that she was not eligible for 
the Yellow Ribbon Scholarship that she was told she was 
originally eligible for and she could not cover the full cost 
of her degree.
    According to Maggie, ITT was also dishonest about its 
nursing accreditation, first telling her that they were an 
accredited program, and then later telling her, as she was 
going through her program, that the accreditation was still 
pending. She quit ITT and is still to this day working to pay 
off the debt she incurred. She is actually enrolled at another 
for-profit school in a nursing program and is extremely pleased 
with her experience thus far.
    Another IAVA member, Howard Toller, expressed a similar 
frustration. He enrolled in ITT in 2010 for a degree in 
computer networking services, and later admits that he was 
``duped'' by their high pressure recruiting tactics. A couple 
of months after his enrollment, he learned that ITT was not 
properly accredited for him to get a job in the field that they 
were training him for, thereby, rendering his degree completely 
worthless.
    The experiences of these veterans and thousands like them 
demonstrate the need for more effective policies to protect 
military and veterans' education benefits from the practices of 
a handful of predators in the higher education system. And I 
agree with the rest of my panel. We do have to increase 
outcome-based metrics, but the 90/10 Rule is one piece of that 
puzzle.
    Many for-profit institutions, I would argue most, are 
valued participants in education, and as has been pointed out 
earlier, they actually provide veterans with a service that is 
not widely available by traditional non-profit universities, 
including online vocational programs that offer highly 
technical degrees.
    Unfortunately, it is difficult to separate the good actors 
from the bad actors in for-profit education without closing the 
90/10 loophole. This loophole undermines the spirit and intent 
of the G.I. Bill and should be closed this year. IAVA stands 
ready to assist Congress in closing a loophole that virtually 
every veterans', educational, and consumer advocacy group 
agrees should be closed. Thank you for your time and attention.
    Chairman Carper. Mr. Tarantino, thanks so much. It is good 
to see you. Thank you for joining us on this occasion.
    We have been joined as well by Sergeant Christopher--is it 
Pantzke?
    Sergeant Pantzke. Yes, sir.
    Chairman Carper. We are happy that you are here and 
appreciate the time and effort you have made to get here. 
Welcome. Your whole testimony will be made part of the record. 
If you would like to summarize that, feel free. Thanks. We are 
just delighted that you could join us.

  TESTIMONY OF SERGEANT CHRISTOPHER J. PANTZKE,\1\ USA, RET., 
                            VETERAN

    Sergeant Pantzke. Greetings to the Committee and panel 
Members. My name is Christopher James Pantzke, formerly known 
as Sergeant Pantzke. I am a 100 percent disabled Iraq combat 
veteran. In 2005, one of the convoys that I was in was attacked 
by a vehicle-borne improvised explosive device (IED). After 
coming back to the States, I found I had trouble adjusting to 
everyday life. From 2006 to 2008, I received intensive therapy.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Pantzke appears in the Appendix 
on page 80.
---------------------------------------------------------------------------
    In 2008, I was placed in the Wounded Warrior Transition 
Unit at Fort Lee, Virginia, to heal and make the transition 
back into civilian life. In March 2009, I was medically retired 
and placed on temporary disability retired list (TDRL) status. 
And this is my story.
    To begin with, I believe that anyone can take a picture, 
but a photograph is created. I wanted to learn how to take a 
photograph. So in March 2009, I contacted an enrollment advisor 
at the Art Institute of Pittsburgh (AIP) and I informed her 
that I was a disabled veteran, and I specifically mentioned 
what my disabilities were. I started their enrollment process 
right away and within 48 to 72 hours later, I was notified that 
I was accepted into school.
    I believe it was July 2009 when I started my classes. 
Almost immediately I started having trouble with my classes and 
I started to fall behind. I struggled with my classes on a 
daily basis, especially my math classes. I was forced to find 
an alternative source to help me with my math assignments.
    I notified the academic advisor and told her that I was 
having trouble in keeping up with my classes and I asked her if 
there was any type of face-to-face tutoring or remedial classes 
that I could take to help me. She told me that tutoring 
services were not available for me because I had not applied 
for disability services through the Art Institute. I was livid.
    Why was I not referred to or informed of disability 
services when I first enrolled into the school? So I was 
granted accommodations for my disabilities. The accommodations 
granted me one extra day to submit my assignments. That was it 
and I still struggled.
    During my attendance at the Art Institute of Pittsburgh 
online, my post-traumatic stress disorder was raging. I was so 
frustrated with the Art Institute Online (AIO). Anyone and 
everything was a target. The Art Institute of Pittsburgh had 
placed me on academic probation several times and withdrew me 
twice, once because I had a bought with depression, and the 
second time because of my grade point average (GPA), which I 
disputed. I was readmitted both times.
    I did several written and televised interviews hoping to 
effect change on how for-profit colleges dealt with and treated 
veterans. While I was being interviewed by Natalie Morales from 
the National Broadcasting Company (NBC), she asked me why I had 
not withdrawn from school because it was causing such suffering 
and pain for myself and my family.
    So in late October 2011, I officially withdrew from the Art 
Institute of Pittsburgh online, stating that I felt that the 
Art Institute had failed to provide me with proper disability 
services and that they were unable to provide me with an 
education to become a viable and credible photographer. And 
topping it all off was that they were overcharging my G.I. Bill 
benefits for a worthless degree.
    After doing the interview, Educating Sergeant Pantzke, I 
believe it was my digital image management class that I did one 
of my assignments in 3 hours and submitted it, knowing that it 
was a sloppy job, but I did not have time to do the assignment 
properly. To my amazement, I received an A for this assignment.
    When I last checked my account for the breakdown of the 
costs of my tuition, which was on February 18, 2011, it was 
roughly $91,000. And just the other day, on July 17, 2013, I 
rechecked the tuition costs again. The costs went down to 
$34,000. I would like to know what happened to the rest of the 
$57,000. I also have $26,000 in student loan debit.
    In closing, I learned more about photography on my own than 
I did while I was in attendance at the Art Institute. Also, 
education should never be for sale or traded on the public 
market. The only person that should profit from education 
should be the student who is striving for a better life for 
themselves and/or their family. I thank you for your time.
    Chairman Carper. Sergeant Pantzke, thank you for sharing 
that sad story with us.
    Let me just ask, Commander Coy, talk about--what was that, 
4 years ago? Was it roughly 4 years ago where you went through 
the ordeal that you just described? Commander Coy, what is in 
place today to better ensure that other G.I.s coming home, 
whether it is from Afghanistan or other places around the 
world, enrolling in a college or post-secondary education, what 
do we have in place today to better ensure that this kind of 
story is not going to be told and retold again and again?
    Mr. Coy. Yes, sir, Senator. And I feel for Sergeant 
Pantzke's plight, and we certainly would like to help in any of 
those kinds of instances. What we have in the VA is our 
Vocational Rehabilitation and Employment Service. In that 
service, we provide case management for individual veterans. As 
you might imagine, with respect to G.I. Bill benefit payments, 
we have done close to a million post-9/11 G.I. Bill payments, 
but none of that is done on a case management basis.
    But for our disabled veterans or wounded warrior veterans, 
we provide, when they come into our office at Case Management--
I would further suggest that for those students like the 
sergeant that was in need of some additional help or 
counseling, we would be able to provide that as well. So I do 
not know if the sergeant is or continues to be in our VR&E 
program.
    Chairman Carper. I am going to ask you to go back in your 
testimony, Commander, and to talk a little bit more about some 
of the changes that have been adopted in the last year or two 
within the VA to address some of the abuses that I think most 
of us are aware have existed. I said in my comments, and Dr. 
Coburn has said, we have problems, not just with for-profit 
colleges. We have problems with a quality education and 
preparation for jobs, job readiness, in public schools and in 
private schools as well.
    But just talk to us about, again, some of the changes that 
you mentioned earlier in your testimony, safeguards in place to 
reduce the likelihood they are going to be wasting money for 
veterans and helping ensure that we do not waste their lives.
    Mr. Coy. Yes, sir. We work very hard in the VA to ensure or 
hopefully ensure that veterans are informed consumers, and we 
try and provide them with as much information as possible. We 
have also initiated a number of things in the last year or two 
that I related in my oral testimony, and I will sort of flip 
through some of those as well.
    On our G.I. Bill website, we have a wealth of information 
that is on there and we continue to build on that. We have a 
handbook that is a wonderful handbook called Choosing the Right 
School, and it talks about things like employment, graduation 
rates, credit transfer, military credit. It asks a whole realm 
of questions that the veteran should consider when they are 
choosing a school.
    As well, we put together, as I mentioned in my oral 
testimony, we have put up the Department of Education's College 
Navigator which provides a wealth of information about schools. 
Across the board, we work very close with our partners at 
Department of Education, Department of Defense, CFPB, 
Department of Justice to implement a number of things.
    Just to go through some of those, we have developed an 
increased partnership with out State approving agencies in just 
the last couple of years. We have launched a 64-hour training 
module on compliance reviews. We have rewritten our School 
Certifying Official (SCO) manual. The School Certifying 
Official is really the front line on most schools that deal 
with veteran issues.
    And so, we have rewritten our entire School Certifying 
Official manual. We have established a School Certifying 
Official hotline that is just for them, that they can call in 
and do those kinds of things.
    I mentioned the compliance reviews. Last year we did over 
2,400 compliance reviews of for-profit schools, but we also did 
overall about 4,700 compliance reviews. We, by the end of May, 
have done over 3,000 compliance reviews this year alone. So 
just the ramp-up of the number of compliance reviews we do. 
Just to give a perspective, in fiscal year 2011 we did about 
1,900 compliance reviews. Last year we did over 4,700, and our 
target this year is over 6,300. So we really have ramped up our 
compliance review process with our SAA partners.
    I mentioned the withdrawals that we talked about, but with 
respect to the Principles of Excellence, working with our 
colleagues, we have trade-marked the G.I. Bill and added 
College Navigator. We are developing outcome measures. I would 
be happy to talk in depth about those. But those outcome 
measures were developed with our partners at Department of 
Education, DOD, and CFPB.
    We are developing a comparison tool for schools that sort 
of racks and stacks whether or not a school is veteran-friendly 
or not. We have also been working very hard in the TAP program.
    Chairman Carper. I am going to ask you just to hold just 
for a moment, if you would.
    Mr. Coy. Yes, sir.
    Chairman Carper. I want to give Mrs. Petraeus an 
opportunity during this round just to comment, if you would. We 
have heard from Commander Coy some of the changes that have 
been made, adopted at the VA, that are being implemented at the 
VA. My dad used to talk to my sister and me a lot about common 
sense, and said, You just use some common sense. Which of these 
measures that he has described do you think meet, if you will, 
a common sense test, which is likely to give us a better result 
for the veterans and for the taxpayers, in your judgment?
    Ms. Petraeus. Well, I think we need to take a multifaceted 
approach, really. I certainly applaud the work that is being 
done at this point by the VA, the Department of Defense, and 
the Department of Education in concert to see if they can 
address these issues to some degree. I think it is important 
that while Congress may look at the 90/10 Rule, that the VA and 
the Department of Education work to make it easier really for 
servicemembers, veterans, and their families to see what they 
are getting when they go to apply for a school.
    I think there are a number of steps in place to do that. I 
also think the single complaint portal is going to be very 
helpful because it will allow folks to go to one place to 
complain, to have their issues addressed in a systemic way, 
and, for those of us who take an interest in this, to see what 
the trends are, to really be able to have some metrics about 
complaints.
    It has been kind of on an informal basis by each agency. So 
I think that is a very important step. We are also trying to do 
some common sense things at the CFPB. We have a financial aid 
shopping sheet that tries to make it easier for someone to see 
what it is actually going to cost, where can I get the money to 
pay for school, and we have a G.I. Bill calculator as well on 
our side, and I know we are working with the VA who are also 
going to design one.
    I think we also need to work together to stop some of the 
very aggressive marketing tactics. One thing I was pleased to 
see was the copyrighting of the term G.I. Bill. So you no 
longer have websites that are able to give the misleading 
impression that they are an official source of G.I. Bill 
information when they are not.
    So I think there are a lot of ways we can approach this. I 
think accreditation is another important one. Mr. Gunderson 
mentioned that there are different types of accreditation and 
some of them will not get you the job you want or get your 
credits transferred. That is another thing, I think, that is 
very important, that the accreditation process be looked at as 
well.
    So there are a number of steps that can be taken, 
basically, so students choose schools not based on which one 
has the best marketing, but on which one has the best potential 
for them to have a positive outcome.
    Chairman Carper. Thanks very much. Dr. Coburn.
    Senator Coburn. Thank you. Mr. Tarantino, I think you 
testified a moment ago that the other veteran service 
organizations have endorsed this?
    Mr. Tarantino. Yes, they have.
    Senator Coburn. I checked with the American Legion and the 
Veterans for Foreign War (VFW) and they did not endorse it this 
last year, so would you want to correct your testimony?
    Mr. Tarantino. No, I am happy to talk with them again, but 
the three of us were all working together, along with Small 
Business Administration (SBA), and we had endorsed Senator 
Carper's bill from last year.
    Senator Coburn. There was no letter of endorsement from the 
American Legion or the VFW on that bill.
    Mr. Tarantino. Well, I will check with our staff, but I was 
sitting in multiple meetings with them.
    Senator Coburn. One of the things you testified about is a 
quality education. And so, one of the things I try to do as a 
Senator is try to fix the right problem. We now have nine 
schools that have been deleted based on the 90/10 Rule. I think 
that was Commander Coy. Or was that through your assessment 
of----
    Mr. Coy. It was through compliance reviews, sir, not 90/10.
    Senator Coburn. OK. But since 2007, I think three schools 
have been eliminated. The question I would ask is, what if the 
three schools that were eliminated under the 90/10 Rule had an 
80 percent graduation rate and an 80 percent job placement 
rate? Which is higher than every other institution, on average, 
in this country. What would we do then?
    I mean, they are doing the job. They are giving a quality 
education, have great placement, but because they do not meet 
the rule, they no longer qualify. If we are looking for quality 
education, we ought to be looking for different metrics, much 
like Ms. Petraeus had testified. It ought to be quality.
    And so, when we get hung up, whether it be the 85/15 Rule 
that we had before, or the 90/10 Rule now or the expanded 90/10 
Rule that we are going to make, it does not direct us toward 
the problem. It may solve one problem of taking pressure off 
recruiting of veterans, and I agree that is something we ought 
to look at, but do we really solve the problem?
    And so, our whole hearing focusing on the 90/10 Rule, as 
long as we focus on that, we are not focusing on what is really 
going to make a difference for our veterans. What we ought to 
be saying is, across the board, if you are going to get 
government help and government payment, you ought to perform.
    There ought to be a metric. We ought to know how well you 
do in terms of graduating students, what your matriculation 
rate is, what your job placement rate is, what is the quality 
of your education? And we are talking about everything except 
that. We are talking about the symptoms of the problem instead 
of the problem.
    The other thing that concerns me, Mr. Tarantino, in your 
testimony, ITT, although accredited, was not accredited for the 
things they marketed. That is fraud.
    Mr. Tarantino. Yes.
    Senator Coburn. And so, where is the Justice Department in 
terms of going after fraud? If, in fact, they are marketing 
something that is accredited when it is not, that is deception. 
And so, we ought to be talking about it. We should have 
somebody from the Justice Department saying, ``Why have you not 
gone after this? ''
    Congressman Gunderson, do you all have a sanction procedure 
within your organization for bad actors?
    Mr. Gunderson. Any school that is not licensed by the 
State, approved for Title IV by the Department of Education, 
and accredited is not allowed to be a member of our 
association. So you have to meet all three standards to be 
eligible for membership in the Association of Private Sector 
Colleges and Universities.
    When we take the issue of veterans and, specifically, our 
veterans' education best practices, people ask me, Do you have 
an enforcement measure in there? And I said, We endorse the 
President's Executive Order. We supported the Bilirakis 
legislation last year. We drafted these, our best practices, 
and we believe that the VA and the complaint process will 
determine whether or not we are meeting that standard.
    If the records show that there is a disproportionate number 
of complaints targeted at our schools, then we have work to do.
    Senator Coburn. Can any of you think of any untoward event 
if we were to incorporate the TA and new G.I. Bill in this 90/
10? It seems to me there might be an economic incentive for 
people not to participate with the new G.I. Bill and tuition 
assistance, and force people who have a good program to say go 
student loan rate. In other words, a perverse incentive to not 
use what is available and send people in another direction 
because of the 90/10 Rule. Any worries about that?
    Mr. Gunderson. Mr. Coburn, we have a number of schools that 
fit the description you discussed earlier, and let me just name 
one of them for you. It is called Praxis Institute, Miami, 
Florida, 100 percent Hispanic student body, graduation rate is 
86 percent, default rate is 9.5 percent; yet, they receive 89.8 
percent of their funding from Title IV because of the economic 
circumstances of that Hispanic community.
    If you were to move this into the 90/10 ratio, that school 
would simply have to turn away every veteran who applied.
    Senator Coburn. Any comments, Holly?
    Ms. Petraeus. I would just suggest that one alternative 
idea might be not to move the military money into the 90 
percent, but just take it off the table altogether so it is not 
part of the calculation, take it out of 10 percent, but do not 
put it in the 90 percent. That could address the issue you have 
mentioned.
    Senator Coburn. OK. I want to go back. Mr. Tarantino, did 
you want to comment on that?
    Mr. Tarantino. No, I am good.
    Senator Coburn. OK. I want to go back to what I mentioned 
earlier. Does anybody here disagree that what we really ought 
to do is change it to outcomes-based? Anybody disagree with 
that?
    Mr. Tarantino. Senator, I do not think the two are mutually 
exclusive, though, but I absolutely agree. I think we should 
have outcomes-based. I think that should be the first thing. 
The problem is, is that we should be talking largely about how 
the Department of Education does not measure graduation rates 
properly.
    There is a large argument about community colleges having a 
low graduation rate. That is because community colleges have 
five different types of students, from guys who take adult 
education to people who get vocational and transfer degrees. 
Not one of those students are technically graduates. According 
to the Department of Education, I have dropped out of college 
twice because I deployed to Bosnia and transferred from 
community college to the University of California.
    Senator Coburn. I agree. That is a good point. Well, my 
time is up.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Chairman Carper. Senator McCaskill.
    Senator McCaskill. Mr. Gunderson, is the online Video Game 
Developer School a member of your association that is 
advertised so frequently? Become a video game developer online.
    Mr. Gunderson. I have to plead guilty that I do not follow 
the media advertising at all. We have schools that are 
accredited, that are members of our association that provide 
instruction in the gaming skill set, but I do not know that 
particular school.
    Senator McCaskill. I will send you a clip----
    Mr. Gunderson. Yes.
    Senator McCaskill [continuing]. And I would like to find 
out if it is a member, and I would also like to find out if it 
qualifies for this G.I. Bill money. What percentage of the 
revenue do your members get from taxpayers, of their overall 
revenue, Mr. Gunderson? What percentage is provided by 
taxpayers?
    Mr. Gunderson. Very small, because we have no public 
subsidies. If you compare community college to one of our 
schools, there is no public subsidy in that regard.
    Senator McCaskill. But of all the revenue that is taken in, 
what percentage of that--if you are worried about 90/10----
    Mr. Gunderson. Yes.
    Senator McCaskill. I mean, what----
    Mr. Gunderson. It varies by school.
    Senator McCaskill. Right.
    Mr. Gunderson. There is no one set.
    Senator McCaskill. But if you took them all together, all 
of your members.
    Mr. Gunderson. I do not know that we have ever done that 
calculation because it rotates by year.
    Senator McCaskill. Well, it seems to me it is really 
relevant. One, because if more than half of the money that your 
schools are realizing is coming from the public sector, then I 
think Congress has a right to be more aggressive in terms of 
oversight. If it is a smaller percentage, then I think the 
argument that many of my colleagues might make, that it is none 
of our business, might apply.
    And it is interesting to me that is a figure that you do 
not know, because if we are worried about 90/10, what does that 
tell us?
    Mr. Gunderson. Well, the problem, Senator, is there are 
schools, as I mentioned, that are right at that 90 percent 
criteria.
    Senator McCaskill. Which means 90 percent of their revenue 
is coming from that.
    Mr. Gunderson. That means that exactly 90 percent would 
come from Title IV.
    Senator McCaskill. Right. So how can it be very small if 
you are worried about 90/10?
    Mr. Gunderson. There are also schools that are well below 
50 percent. What?
    Senator McCaskill. How could the percentage of revenue you 
receive be very small if you are worried about 90/10?
    Mr. Gunderson. I am worried about 90/10 for the same reason 
a Senator from Missouri would be worried about 90/10. I come 
from rural Wisconsin. If you look at rural America and if you 
look at the inner city, you will find a population that, based 
on economics, is dependent upon financial aid in order to 
pursue their education.
    We need to be very careful. The reality is, my schools, 
because they are for-profit, they are private sector schools, 
they can move where they want, they can move where the 
enrollment is best available to their mission. I had a 
conversation with the president of a college in one of our 
large inner cities in the Midwest. I said to him exactly what 
you are saying to me.
    I said, You have very high Federal financial numbers. You 
have low graduation rates. You have high default rates. What is 
going on? What he said to me? He said, Steve, I can fix that 
tomorrow. I said, You can fix it tomorrow? Why do you not do 
that? He said, Well, I would fix it tomorrow by closing the 
school and moving to the suburb and dealing with upper middle-
income students and I would not have any issue at all. But the 
students that I am serving in this inner city school would have 
no opportunity for the very career skills I am trying to 
provide.
    Senator McCaskill. Well, listen, I am sure that there are 
many altruistic people among your members, and I am sure there 
are many of them that are answering a calling. But it is 
interesting to me that we are arguing about 90/10, and I would 
make the argument, if graduation rates were high, if the 
metrics were high, they would not worry about 90/10 because 
they would not have any problem with 10.
    If this was a quality school, they would not have any 
problem attracting at least 10 percent of their revenue from 
something other than the government. What is the average--first 
of all, I would like to get the number of what the overall 
percentage of your schools, how much of it is public money. And 
then I would like the average salaries of these folks that are 
in the inner city because they are worried about that.
    I mean, I am not usually one to care about salaries in the 
private sector, and everybody has the right to make a profit. 
This is a free market economy.
    Mr. Gunderson. Sure.
    Senator McCaskill. But when the taxpayers are footing the 
bill, there becomes a requirement of a level of accountability 
that I do not sense is there. It is like all these institutions 
want our money. Would you support your institutions not getting 
their money from veterans until the veteran graduates?
    Mr. Gunderson. The reality is, Senator, that if you will 
look at that survey we did of our 16,500 veterans, we had a 
graduation rate on 2-year certificates of 63 percent----
    Senator McCaskill. So would you accept----
    Mr. Gunderson [continuing]. For our veterans.
    Senator McCaskill. Then----
    Mr. Gunderson. If you would look at the Department of 
Education statistics on 2-year institutions, we are at 62.7 
percent graduation rate. The public schools are at a 21.9 
percent graduation rate. We do incredibly well in the career 
certificate in 2 years program, but because we are dealing with 
an adult population coming back to school that often has----
    Senator McCaskill. Let me ask you this question.
    Mr. Gunderson [continuing]. To drop out and go back and 
startup again----
    Senator McCaskill. I understand.
    Mr. Gunderson [continuing]. The 4-year program----
    Senator McCaskill. Believe me, I understand. My son is----
    Mr. Gunderson [continuing]. Graduation rates are not great.
    Senator McCaskill [continuing]. My son is back in school at 
25. I get it.
    Mr. Gunderson. But the 2-years are incredibly good.
    Senator McCaskill. Let me ask you this: Would you tell us, 
what would be the metrics--let us assume that Senator Carper 
decides to draft a different bill, a bill that maybe Senator 
Coburn has in mind in his testimony. What are the metrics that 
your association would endorse today as a requirement that you 
must achieve before you can receive VA benefits? What would 
that metric be?
    Mr. Gunderson. The best set of metrics that I have seen is 
probably the National Governors' Association (NGA) in their 
development of what is called Complete to Compete. And they 
have set up a series of metrics that look at outcomes based on 
those particular metrics. I think my association would endorse 
those particular metrics as a standard for outcomes for all 
students, all schools in this country.
    We stand ready, Senator, and let me emphasize this as 
clearly and as loudly as I can. We absolutely support being 
judged by the same set of risk-based metrics that every other 
college and university in America is in terms of outcomes. What 
we do not want to happen is, simply because we are for-profit 
in our organizational structure that we are denying students 
with multiple risks the opportunity to ever even pursue that 
career-based education that gets them a path to the middle 
class.
    Senator McCaskill. And your average cost is three times 
higher than the not-for-profits?
    Mr. Gunderson. What you need to stop and do here is say, 
Are you looking only at tuition charge----
    Senator McCaskill. Well, I was looking at your testimony.
    Mr. Gunderson [continuing]. Or are you looking at total 
public dollars, because if you look at----
    Senator McCaskill. I was looking at your testimony. The 
mean cost was $928 versus $3,000-some.
    Mr. Gunderson. You are looking at my written testimony in 
terms of the----
    Senator McCaskill. The mean cost for a student, $928 versus 
$3,000-some.
    Mr. Gunderson. The cost of producing the education?
    Senator McCaskill. Correct.
    Mr. Gunderson. Yes.
    Senator McCaskill. Three times as high.
    Mr. Gunderson. Times what?
    Senator McCaskill. Three times as high.
    Mr. Gunderson. Well, of course, we are going to be higher 
in terms of tuition because we do not have any public 
subsidies.
    Senator McCaskill. Obviously, except for the fact that you 
are worried about more than 90 percent of your money coming 
from the public.
    Mr. Gunderson. Yes, but here is the problem, Senator, as I 
said in my testimony. Because of the cutback, and we have seen 
in the last decade a 25 percent----
    Senator McCaskill. I know.
    Mr. Gunderson [continuing]. Per capita reduction in public 
support for 2-year and 4-year institutions in this country. If 
you are pursuing allied health or the career trade skills, you 
have two opportunities. One is the community college, and I am 
a big fan of community colleges, or it is our schools. Most 
community colleges in this country have no ability to expand to 
meet the demand for increased education in those areas. If we 
do not exist, there is no opportunity for those students. That 
is the real tragedy.
    Senator McCaskill. Well, I would look forward to working 
with your organization. I have found a reluctance to accept 
metrics by your organization, so maybe I have it wrong, and I 
look forward to working with you----
    Mr. Gunderson. Well, I cannot speak for the staff, but we 
stand ready----
    Senator McCaskill. OK.
    Mr. Gunderson [continuing]. To work with you on those----
    Senator McCaskill. And I will look forward to getting that 
number from you for the overall percentage of the revenue for 
for-profit schools coming from taxpayers.
    Mr. Gunderson. OK.
    Senator McCaskill. Thank you.
    Chairman Carper. Dr. Coburn and I have focused for a couple 
of years now in another area of the Federal Government, Federal 
expenditures. I think there is actually a correlation here. One 
of our concerns has been the money we spend in Medicare, 
especially, but also in Medicaid, dollars that are spent 
improperly for services provided by dead doctors, maybe to dead 
beneficiaries. There is a lot of money in fraud, in tens of 
billions of dollars in fraud every year, tens of billions of 
dollars in improper payments every year in Medicare.
    And what we have done for years is, Medicare has actually 
paid the money and then chased the dollars. It is called pay 
and chase. I want to make sure that if an institution is 
screwing up or behaving in a way that is harmful to our 
veterans, I want us to punish them. I want us to pursue them 
and punish them if we can.
    By the same token, I want to make sure that up front we are 
not paying that money in the first place to an institution that 
has a reputation, maybe well-deserved, for not doing a good job 
of screening, preparing, educating, helping to place, 
supporting, the veteran that has gone through that school.
    I want to take just a moment and talk about the kind of 
metric that we ought to be looking for. Among the metrics that 
I think are appropriate, and I think you said this as much 
today, to make sure that we are working with the veteran to 
make sure that he or she is prepared for the work that they are 
expected to do.
    Some students work perfectly well over the Internet. That 
is fine. Some need to be face-to-face with a professor, a 
teacher on a regular basis. Some do well with a combination of 
the two. The metric that I am most interested in is not just 
well-screening people, offering a curriculum, making sure that 
they actually get to a graduation or a certificate.
    I want to make sure they get a job and I want to make sure 
that they get a job that actually relates to their education, 
in many cases, and that they will be gainfully employed. I seem 
to recall a couple of years ago the Department of Education 
actually worked on a regulation. I think it was called the 
Gainful Employment regulation, and I think it was, their effort 
was to say, how do we actually create a metric that enables us 
to look at a school and what is happening with their graduates, 
those that receive their certificates, that actually enables us 
to measure whether or not did he get a job. Was it a decent 
job? Was it the kind of job they hoped and expected, that they 
were led to believe they could get.
    Ms. Petraeus, I do not know if you have any thoughts about 
that, but if you do, I would welcome your thoughts, Ms. 
Petraeus.
    Ms. Petraeus. Yes. I believe the Department of Education is 
poised to take another look at the gainful employment rule.
    Chairman Carper. I hope so, because what they came up with 
was pitiful, and, as I recall, there was push back, huge push 
back from some of the institutions that we are talking about 
here today. Not all, but some.
    Ms. Petraeus. I think as with what you described with 
Medicare, when there is a great deal of money at stake, and 
certainly I would say $10.5 billion is a great deal of money, 
and that is, at this point, what is being spent on the G.I. 
Bill. When there is a lot of money at stake, there will be a 
lot of people who will fight tooth and nail to get a piece of 
that money and to fight any restrictions or limitations on how 
they access it. So they are looking again at gainful 
employment.
    I want to go back a little bit to what Dr. Coburn mentioned 
about schools that market themselves improperly and do not have 
consequences. I would like to mention that the State Attorneys 
General have done a very good job, in many cases, going after 
those schools. There is one I can think of in Chicago that was 
advertising a Criminal Justice degree saying, You could get a 
job as an Illinois State trooper or a Chicago city policeman, 
but that particular school did not have regional accreditation. 
It was nationally accredited and those organizations would not 
even look at their graduates.
    So she did file suit against them for false, deceptive 
advertising. So there are some efforts to go after those 
practices. I wanted to mention that while it was still in my 
head.
    Chairman Carper. Commander Coy, you talked a little bit 
about the VA doing compliance reviews, and I think the numbers 
that you mentioned were actually quite impressive. I think you 
said you were looking at about 6,000-some this year over 4,000 
last year, over 2,000 the year before that. Just talk to us 
about, what is a compliance review? What does it entail? Why is 
it relevant here and should we be encouraged by those numbers?
    Mr. Coy. Compliance review covers a broad waterfront of 
things. It certainly looks at all of the administrative pieces 
of the 
post-9/11 G.I. Bill specifically. What kind of information do 
they have and all their procedures and internal-type 
procedures.
    It also takes a look at all of the marketing material that 
the school has, compares it against what they are actually 
doing. And then finally, the third piece of the compliance 
reviews are, we actually survey students that go to that school 
and get feedback directly from them. So it is sort of those 
three general areas.
    I will let Mr. Worley elaborate, if he has some additional 
information. But it is generally those three areas, sir.
    Chairman Carper. Mr. Worley.
    Mr. Worley. Thank you, Mr. Chairman. I would add that 
during a compliance survey, a number of student records are 
looked at. The enrollment term, for example, is looked at. The 
policies for progress are examined. There is direct contact 
with the school's certifying official and other officials at 
the school as needed. They look at prior credit granted to a 
particular student, if that is done properly and in accordance 
with school policy.
    There is a whole host of things that are looked at with the 
ultimate goal of making sure that the school is complying with 
all the statutory and regulatory requirements for serving those 
veterans, and that ultimately, the information provided to the 
VA by which VA pays these veterans is accurate and proper and 
timely.
    You mentioned, if I could add one other thing, Senator, at 
the beginning of the process, approval of programs is the first 
step. When a school wants to have a program approved, they come 
in with a written request to the State approving agency. The 
State approving agency looks over many of the items I just 
mentioned, standards of progress, standards of conduct, and so 
forth, to make sure that school is meeting the statutory 
requirements to gain approval for G.I. Bill benefits.
    Chairman Carper. I have heard of the State approval process 
that you referred to, and I will be generous and say that the 
approval process, from what I understand, is uneven. In some 
States, there is rigor; in other States, there is not much at 
all. And that is something I would like to come back the next 
round and talk a little bit more about. Thank you. Dr. Coburn.
    Senator Coburn. Thank you. Commander Coy--I like that name. 
That is great. It goes well.
    Mr. Coy. Thank you, sir.
    Senator Coburn. You are working on the centralized 
complaint process and eventually with the hopes of making that 
a live interactive site, correct?
    Mr. Coy. Yes, sir.
    Senator Coburn. Talk to me a little bit about when you see 
that coming to fruition. You have talked a little bit about it, 
but tell me a little detail about that, if you would.
    Mr. Coy. Thank you. We are looking at this complaint system 
and we are working with our partners over at the Department of 
Defense, as well as CFPB. There are a number of loops and steps 
that one has to go through to get a system like this up and 
running. There is the system of record notification. There is 
the Paperwork Reduction Act. In other words, you cannot 
literally survey people without getting approval for that 
process.
    And then there is the actual IT piece of it. And so, all of 
those things, as we walk down that path. The interesting thing 
that the complaint tool, as we are at the final stages of 
trying to launch this, is accepting that complaint, and it will 
be on our G.I. Bill website, it will be on our E-Benefits 
website, and it will also be on the DOD website as well, and we 
are going to encourage schools to also put the link on their 
websites as well.
    And then collecting the information that basically we want 
to know what your complaint is, what do you think has happened. 
Then we want to know what you think is a fair resolution to 
that issue. We then need to take that complaint. There needs to 
be a centralized place for them all to be in one place, and we 
will probably be using a centralized database that is already 
in existence.
    Then we need to have a feedback mechanism for the school. 
In other words, in the case of a school, we need to either send 
that issue or complaint to the school or we will send it to an 
SAA, or in some cases, we may refer it to the Department of 
Justice for something that is extreme.
    Then we also need another mechanism to get feedback back to 
the student or the person that made the complaint, and then a 
place to register all of those complaints. So our initial look 
was, Gee, this is going to be pretty easy to do, and then we 
looked at it and it is a process.
    Senator Coburn. Did I understand from Ms. Petraeus that the 
CFPB has something like that working now?
    Ms. Petraeus. Of course, we do take consumer complaints and 
we do take consumer complaints about private student loans, and 
we also have a student loan ombudsman. So just based on that 
experience, we do have someone who is working very closely with 
the VA on how to help them tailor their efforts. And then we 
also have a suite of tools at consumerfinance.gov, our website.
    We developed a financial aid shopping sheet and then worked 
in concert with the Department of Education to get one that 
they were comfortable with that could be given to schools to 
use on a voluntary basis, and a number of them have adopted it, 
as well as the G.I. Bill calculator, which the VA is also--we 
are going to work with them so they can----
    Senator Coburn. You have the G.I. Bill calculator already 
up?
    Ms. Petraeus. Yes, it is.
    Senator Coburn. So you cannot just hand that to them?
    Ms. Petraeus. The devil is in the details always. It sounds 
easy. As you said, it sounded easy when they were talking about 
their process. We are certainly working with them to share that 
information so they do not have to replicate. They do not have 
to start from scratch.
    Senator Coburn. Right. Mr. Coy, a recent report by the 
American Action Forum found that our Nation's veterans are 
being overwhelmed by Federal paperwork. For example, a disabled 
veteran seeking health and educational benefits could encounter 
up to 49 different forms, 49 different forms, more than--to 
fill those out, a minimum of 4 hours, $125 it cost. If you just 
do the income net worth and employment statement, it has 40 
questions, takes over an hour to complete, and you get 104,000 
of those a year.
    What can Congress and the agencies do to cut down on the 
duplication and the requirements for our veterans? If you go 
through all 49 forms, there is a terrible amount of redundancy, 
the same question asked in multiple forms.
    Mr. Coy. I would agree that certainly the redundant forms 
are a challenge and we are taking that on head-first. General 
Hickey, the Under Secretary for Benefits, is approaching this 
in a transformative way, and her transformative plan looks at 
doing a number of different things.
    Internal to VA, we are establishing a central database for 
veterans. One would think that would be easy; it is certainly 
not and it is a challenge. In a benefits piece, the disability 
claim process is being automated with the Veterans Benefits 
Management System (VBMS). That is a paperless system that is 
now online at all 56 of our regional offices.
    Within education, we have a computer system that is called 
the Long-Term Solution. In that, we just launched automation of 
supplemental claims. Supplemental claims are those claims where 
people actually get paid their housing allowance and school. We 
are now averaging about 50 percent of all supplemental claims 
going through the system without being touched by human hands.
    What that has done is it has driven down our supplemental 
claim processing time from about 20 days to currently 5 days. 
By doing that, the original claims, which is where we look at a 
veteran's eligibility for various programs, that has been 
reduced from 40 to 50 days down to 17 currently. So we are 
attacking the automation front from about four or five 
different angles.
    But I would agree with you that the paper process that we 
have is being mitigated now with some of these automation 
systems.
    Senator Coburn. All right. Thank you.
    Chairman Carper. Senator McCaskill.
    Senator McCaskill. I neglected last time to thank all of 
you for your public service. I think you have all served the 
public in various capacities, and I thank you all for that.
    Mrs. Petraeus or maybe Mr. Tarantino, do you get a sense 
that there is enough education--and maybe, Sergeant Pantzke, 
you could talk about this? It is one thing for there to be 
information if a veteran tries to seek it out. Are we making 
any effort, as people are leaving the service, as these 
benefits accrue to them, are we making sure our active becoming 
veteran population learns about.
    They have a Byzantine number of things they need to figure 
out, both from what is their status going to be, in terms of 
disabilities, which is another whole really difficult process. 
I am sure you could educate us about that, Sergeant Pantzke. I 
am sure.
    But are we making an effort as, for example, the National 
Guard come back, to actually educate these--our military and 
their families about some of these pitfalls that they need to 
be watching for? If they are not seeking it out, are they 
getting it anyway?
    Ms. Petraeus. I think there are a lot of folks attempting 
to see that they get that information. We did work with the 
Department of Defense and the VA. They revamped the Transition 
Assistance Program that Secretary Coy was talking about. We 
wrote the financial piece for that. So I think it is a vast 
improvement over what was provided to folks before when they 
were transitioning out.
    We are working on initiatives to talk to folks before they 
enter the military to give them a little bit of education so 
they are aware, if they enter with student loans, some of what 
they might do with that. I know the National Guard, when they 
come back from deployment, has what they call Yellow Ribbon 
events, not related to the government funded Yellow Ribbon for 
Education. But they also have a variety of folks come to those 
and provide information.
    Senator McCaskill. You know what I found in those, though? 
Everyone is so anxious to get to their families. They are not 
always listening as carefully as they might, maybe, in another 
setting, but I do not know.
    Ms. Petraeus. That is true. You are kind of standing 
between them and the gate sometimes.
    Senator McCaskill. That is exactly right.
    Ms. Petraeus. They do bring them back, often 30 days later 
to say, ``OK, how is it going? Here is some more information.''
    Senator McCaskill. That is great.
    Ms. Petraeus. So I think there are a lot of initiatives. 
Different people are going to process the information better at 
different times, so we need to try to reach them at different 
moments.
    Senator McCaskill. Is there a reason, Commander Coy, that 
you could not just put a link over to the CFPB website up right 
now? I do not know about your organization, Mr. Tarantino, or 
any of the other Veterans Service Organizations (VSOs). Is 
there some ridiculous rule that says that you cannot put a link 
right now, if somebody went to the American Legion website or 
went to your website or went to the VA website that could not 
link over to the G.I. Bill calculator and all the things that 
they have online right now and available?
    Mr. Coy. No, ma'am, there is not, the short answer. One of 
the first things that Holly mentioned to me is we had one of 
her staff members detailed to us to help us work through this, 
and the first thing she said to me is, You are not allowed to 
steal him. And so, the short answer is yes, we can do that 
link, but what we want to do is make sure, because there are 
some other things that we want to put in there, so we want to 
take, if you will, the bones of what they have and then bring 
it over to us and put some modifications on it.
    Senator McCaskill. Well, in the meantime, it seems to me 
that the link would be helpful. Do you all have the link on 
your website and can you put it up?
    Mr. Tarantino. Well, Senator, actually IAVA created the 
G.I. Bill Calculator back in 2008 and, I think, it is still the 
most comprehensive one you can find and it is on the 
newgibill.org as well as tons of information that links to 
various sources.
    But I think we are kind of on step two before we have 
actually fixed step one. This whole thing starts with better 
consumer education, which was the focus of efforts last year by 
the President with his Executive Order, as well as H.R. 4052. 
We are still living in a world today where I can pull out my 
iPhone to go get lunch, I can go on Yelp, and I can look at all 
the criteria based on my individual needs and figure out where 
to go have lunch.
    There is nothing. We are not even close to doing that for 
education, because the first thing you have to ask a veteran 
is, What do you want?
    Senator McCaskill. Right.
    Mr. Tarantino. Do you want an English degree? Do you need 
to get a mechanical degree? Are you just going because you want 
to learn poetry and it is interesting to you? You have to start 
with that and then be able to give them tools to make good 
consumer choices based on those needs, and we are nowhere near 
that. I think we are getting there, but it is going to take 
some time before we have the data and the tools and the 
transparency to actually get there.
    Senator McCaskill. Yes, I agree with you. It does seem to 
be hard. Do all the VSOs have a G.I. Bill Calculator on their 
websites? Do you know?
    Mr. Tarantino. As far as I know, we are the only one.
    Senator McCaskill. Yes. I think it would be good to reach 
out to them and see if we could--because, with all due respect, 
Commander Coy, I have heard a lot in my other life on the Armed 
Services Committee. There is a tendency of people in the 
military to want to do their own requirements. And we have seen 
some bad things happen when something is supposed to be joint, 
but every branch has their own requirements, and before you 
know it, you have a system that has taken twice as long and 
costs twice as much because everybody keeps tweaking their 
requirements as opposed to just going all in, in one system.
    We have seen this in IT over and over in the military. I do 
not probably need to tell any of you of the horror stories of 
IT in the military with every branch wanting their own 
requirements and not talking to each other. So the simpler we 
can make this for everybody to be on the same platform the 
better it would be. I do not begrudge you wanting to put 
additional things on, but I certainly would encourage you to 
use the work that has been done by either Mr. Tarantino's group 
or CFPB.
    I thank you all for being here today. I learned a lot and, 
hopefully, we can work together so that there are not very many 
veterans that find themselves as frustrated by their 
educational opportunities as they have been by other parts of 
their recovery from a very, very difficult service to our 
Nation. Thank you.
    Chairman Carper. Thank you, Senator McCaskill. I want to 
come back, if I could, Sergeant Pantzke, and just to ask you 
to, first of all, just share with us, if you would, a little 
bit about your life since your experience with the Art 
Institute. Just share with us what has happened in terms of 
education, employment, and so forth.
    Sergeant Pantzke. Of course, I did a lot of interviews 
hoping to effect a change of for-profits, deal with veterans of 
all eras. So what I did, after my very last interview, I went 
around my area that I live in to several photography studios, 
media, stuff like that, and I asked them, what would you rather 
have, a degree from a brick-and-mortar or a degree from an 
online college? And every time, I would say, 95 percent of them 
said they would rather have a degree from a brick-and-mortar 
traditional school.
    So, that really kind of cut my hopes down quite a bit. The 
thing is, with the Art Institute program, it was supposed to be 
a 2-year degree program, a bachelor of science in photography. 
My classes were 6\1/2\ weeks long, two classes per 6 weeks.
    That was really condensed. I would have four to five 
assignments per class. So my days ran from 8 a.m. to 4 a.m. the 
next morning. I would only get 4 hours sleep and it would start 
all over again. And it was just tearing my family apart.
    So like I said, Ms. Morales had asked me--well, both my 
wife and my individual therapist told me, You need to quit, but 
I did not want to give up. I had that mentality of, do not 
surrender, keep driving forward, and I did not realize the pain 
that I was causing myself and my family. So it came to a head 
where actually I was in an auto accident on Easter Sunday in 
2011. I had to withdraw from school for medical reasons because 
my right arm was messed up.
    So I had a lot of thinking during that time. I just had to 
withdraw because there was no--there was no way I could 
complete the degree program. And actually, I really did a lot 
of self-learning, I guess, through other Internet resources 
such as learnmyshot.com. There is a gentleman out in Oregon, I 
believe it is, and I do not remember his name, but he has got 
an eBook out called Photo Extremists, which I have been using 
and I have learned so much more from those two sources than I 
did my entire enrollment.
    Chairman Carper. OK, thank you. Let me go back and let us 
talk, if we could, about sort of quality assurance at the front 
end for these institutions, whether they are for-profit, non-
profit, private, but in terms of licensure, by whom, 
accreditation, by whom, the standards used across the different 
States, among different agencies, whether State or Federal. 
Commander Coy, can you talk a little bit about that?
    Mr. Coy. Yes, sir, and I will ask Mr. Worley to also 
address that. In terms of the accreditation or approval process 
for schools at the VA, if you are a public school and already 
accredited, it is generally accepted as being deemed approved.
    Chairman Carper. Accredited by? You said if you are already 
accredited, accredited by whom?
    Mr. Coy. By a recognized accrediting agency.
    Chairman Carper. Within a State?
    Mr. Coy. Most of them are national.
    Chairman Carper. OK. All right.
    Mr. Coy. Rob, do you want to----
    Mr. Worley. Recognized by an accreditation recognized 
nationally by the Department of Education. So this is under 
Public Law 111-377, so public accredited institutions and 
private non-profit institutions are deemed approved if they are 
accredited by a recognized--nationally recognized accrediting 
agency.
    Chairman Carper. Well, what I am trying to get at is the 
rigor of the accreditation or the rigor of the licensure 
process. Ms. Petraeus, do you have anything that you could 
share with us on that?
    Ms. Petraeus. I am certainly not an expert in that area, 
but I would say simply that once it is accredited, then I 
believe the VA is obligated to, by law, to put that school on 
their list of a place where benefits can be spent, which to me 
really points out the importance of a rigorous accreditation 
process so you do not have schools that are able to accept that 
G.I. Bill and TA money and have very poor outcomes for their 
students.
    Chairman Carper. Please, go ahead.
    Mr. Coy. The accreditation process is a process that is run 
by the Department of Education, so I would defer any specific 
questions on the accreditation issue to them.
    Chairman Carper. OK. Mr. Worley?
    Mr. Worley. If I could just add one more qualifier, that is 
for standard degree programs at those institutions. Some of 
those institutions provide----
    Chairman Carper. A standard degree program would be what, a 
2-year degree, an associate's degree, or a B.S., B.A.?
    Mr. Worley. Correct.
    Chairman Carper. OK. Not a certificate program?
    Mr. Worley. There are non-college degree--programs offered 
at those institutions as well. Those have to go through a 
review and approval process by the State approving agencies.
    Chairman Carper. All right. I think we are running out of 
time here and I think we have a vote underway. Does anybody 
know how much time is left? Five minutes? On the clock? Dr. 
Coburn, do you want to add anything else?
    Senator Coburn. No. I just wanted to thank Sergeant Pantzke 
for his service, and I have a query of you. I have read your 
testimony this morning early, and one of the things--I think 
one of the ways you solve problems is get all sides of the 
story, and I wonder if you would give the Committee a release 
so that we can get the information the school has on you?
    Sergeant Pantzke. Oh, definitely.
    Senator Coburn. So we can see the full story and see where 
the problems land.
    Sergeant Pantzke. Oh, definitely, though when Educating 
Sergeant Pantzke was released, the Vice President gave me a 
call from 99 Division and asked me--well, actually, I am sorry. 
That was the wrong thing. They had mentioned that they had 
offered me extensive tutoring services. I did not receive one 
phone call or one email about those tutoring services.
    Senator Coburn. That is why I would like you to give us a 
release so we can have your information----
    Sergeant Pantzke. Oh, yes, definitely.
    Senator Coburn [continuing]. So we can look at the whole 
side of it. I thank you very much for that. Thank you, Senator 
Carper.
    Chairman Carper. You bet. Let me just close by using a term 
that we used a fair amount in the Navy and that is, all hands 
on deck and a call for general quarters when we were under 
attack. When a country is running a deficit of about $750 
billion, we need all hands on deck. When we are looking down 
the road in another 10 years or so, the deficit is going down, 
but it eventually is going to come right back up. So I say that 
is an all hands on deck.
    When we have not just a handful of veterans but hundreds, 
probably thousands who have gone through the kind of experience 
not unlike what Sergeant Pantzke has explained and shared with 
us, it is all hands on deck. I am encouraged today that after 
several years of feeling that not a whole lot of attention or 
time or effort or energy was going into making sure that we are 
righting this wrong, I am encouraged that a good deal is being 
done.
    And part of it is being done by the VA and part of that 
effort is being led by the Department of Education. Part of it 
is being led by a new agency, the CFPB. Part of it is being led 
by the efforts that Congressman Gunderson talked about, and, 
frankly, some of our veterans organizations, particularly the 
one that is represented here today is part of the all hands on 
deck.
    Are we where we need to be in cleaning up this problem? No. 
I think as Congressman Gunderson said, as long as one veteran 
is being disadvantaged or taken advantage of, that is one too 
many. And unfortunately, it is not just one that is still being 
taken advantage of. It is not just one taxpayer, it is all of 
us. We have plenty of work to do.
    The driving force for me on the 90/10 Rule is that I find 
it abhorrent that the Federal Government is going to be paying 
100 percent of any post-secondary schools' revenues. I just do 
not get that. That makes no sense to me. And are there changes 
that could be made to the 90/10 Rule that we are talking about 
here? Yes. Can we improve on it? Yes, we can.
    I am interested in that being part of the all hands on deck 
and part of the, if you will, all the above kind of approach to 
solving this problem. For those of you who are working on it, 
for those of you who shared your life's experiences with us to 
help better inform what we do going forward, I want to thank 
you. And while I think we are making progress, I like to say if 
it is not perfect, let us make it better. It is not perfect 
yet. I think it is getting better.
    With that, this hearing is almost adjourned, but we are 
going to announce that the hearing record will remain open for 
15 days, that is until August 7, at 5pm, for the submission of 
statements and questions for the record. With that, we are 
adjourned. Thanks so much.
    [Whereupon, at 12:19 p.m., the Committee was adjourned.]






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