[Senate Hearing 114-669]
[From the U.S. Government Publishing Office]









                                                        S. Hrg. 114-669

    REAUTHORIZING THE HIGHER EDUCATION ACT: EXPLORING BARRIERS AND 
                    OPPORTUNITIES WITHIN INNOVATION

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

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                                   ON

EXAMINING REAUTHORIZING THE HIGHER EDUCATION ACT, FOCUSING ON EXPLORING 
              BARRIERS AND OPPORTUNITIES WITHIN INNOVATION

                               __________

                             JULY 22, 2015

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions





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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                  LAMAR ALEXANDER, Tennessee, Chairman

MICHAEL B. ENZI, Wyoming            PATTY MURRAY, Washington
RICHARD BURR, North Carolina        BARBARA A. MIKULSKI, Maryland
JOHNNY ISAKSON, Georgia             BERNARD SANDERS (I), Vermont
RAND PAUL, Kentucky                 ROBERT P. CASEY, JR., Pennsylvania
SUSAN COLLINS, Maine                AL FRANKEN, Minnesota
LISA MURKOWSKI, Alaska              MICHAEL F. BENNET, Colorado
MARK KIRK, Illinois                 SHELDON WHITEHOUSE, Rhode Island
TIM SCOTT, South Carolina           TAMMY BALDWIN, Wisconsin
ORRIN G. HATCH, Utah                CHRISTOPHER S. MURPHY, Connecticut
PAT ROBERTS, Kansas                 ELIZABETH WARREN, Massachusetts
BILL CASSIDY, M.D., Louisiana

               David P. Cleary, Republican Staff Director
         Lindsey Ward Seidman, Republican Deputy Staff Director
                  Evan Schatz, Minority Staff Director
              John Righter, Minority Deputy Staff Director

                                  (ii)

 










                            C O N T E N T S

                               __________

                               STATEMENTS

                        WEDNESDAY, JULY 22, 2015

                                                                   Page

                           Committee Members

Alexander, Hon. Lamar, Chairman, Committee on Health, Education, 
  Labor, and Pensions, opening statement.........................     1
Murray, Hon. Patty, a U.S. Senator from the State of Washington, 
  opening statement..............................................     3
Cassidy, Hon. Bill, M.D., a U.S. Senator from the State of 
  Louisiana......................................................    36
Warren, Hon. Elizabeth, a U.S. Senator from the State of 
  Massachusetts..................................................    38
Bennet, Hon. Michael F., a U.S. Senator from the State of 
  Colorado.......................................................    40
Baldwin, Hon. Tammy, a U.S. Senator from the State of Wisconsin..    42
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode 
  Island.........................................................    44
Franken, Hon. Hon. Al, a U.S. Senator from the State of Minnesota    46

                               Witnesses

Merisotis, Jamie P., President and Chief Executive Officer, 
  Lumina Foundation, Indianapolis, IN............................     6
    Prepared statement...........................................     7
Gellman-Danley, Barbara, President, Higher Learning Commission, 
  Chicago, IL....................................................    14
    Prepared statement...........................................    16
LeBlanc, Paul J., President, Southern New Hampshire University, 
  Manchester, NH.................................................    20
    Prepared statement...........................................    22
Horn, Michael B., Co-Founder and Executive Director, Education 
  Programs, Clayton Christensen Institute, San Mateo, CA.........    27
    Prepared statement...........................................    29

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Response by Jamie P. Merisotis to questions of:
        Senator Casey............................................    54
        Senator Whitehouse.......................................    55
    Response by Barbara Gellman-Danley to questions of:
        Senator Casey............................................    56
        Senator Whitehouse.......................................    57
    Response by Paul J. LeBlanc to questions of:
        Senator Casey............................................    57
        Senator Whitehouse.......................................    58
    Response by Michael B. Horn to questions of:
        Senator Casey............................................    59
        Senator Whitehouse.......................................    59

                                 (iii)

  

 
    REAUTHORIZING THE HIGHER EDUCATION ACT: EXPLORING BARRIERS AND 
                    OPPORTUNITIES WITHIN INNOVATION

                              ----------                              


                        WEDNESDAY, JULY 22, 2015

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:01 a.m., in 
room 430, Dirksen Senate Office Building, Hon. Lamar Alexander, 
chairman of the committee, presiding.
    Present: Senators Alexander, Cassidy, Murray, Casey, 
Franken, Bennet, Whitehouse, Baldwin, and Warren.

                 Opening Statement of Senator Alexander

    The Chairman. The Senate Committee on Health, Education, 
Labor, and Pensions will please come to order.
    Clark Kerr was the president of the University of 
California, and he wrote a book in 2001 which he called The 
Uses of the University. He said this, that of 85 human 
institutions founded before 1520 and largely unchanged today, 
70 are universities. Of 85 institutions founded before 1520 and 
largely unchanged today, about 70 are universities. As for the 
other institutions, well, among them are the Catholic Church 
and the Isle of Man.
    Kerr wrote,

          ``Universities are among the most conservative of all 
        institutions in their methods of governance and conduct 
        and are likely to remain so.''

    If that's true, maybe we ought to pack up and head home, 
but I don't think so. The purpose of this is to point out that 
universities are changing, and certainly the world around 
universities is changing. First, there are more people 
attending. At the end of World War II, only about 5 percent of 
the population 25 and older had earned a college degree. When 
the Higher Education Act was signed in 1965, it was only about 
10 percent of the population that had a college degree. Thirty-
two percent of Americans 25 and up have a college degree.
    Second, our campuses have students that are much more 
diverse. Forty percent are 25 years or older, come to college 
having experiences in the workforce. Of the 21 million students 
in higher education, only one-third are full-time 
undergraduates under 22 years of age. Only 19 percent live on 
campus. They come from a wide array of backgrounds.
    And third, employers need workers with post-secondary 
degrees more than they did before. A Georgetown University 
economist says we'll be 5 million short in 2020 of people with 
proper post-secondary skills.
    Congress needs to help colleges and universities meet those 
needs, and we may need to consider new providers of education 
that don't fit the traditional mold.
    I have two questions for today's hearing, and I'm looking 
for some answers from our distinguished panel. How can we help 
colleges find new ways to meet students' changing needs? Are 
there any practices we have that discourage colleges and 
universities from innovating? And second, should the Federal 
Government be considering a new definition for the college or 
university? There are many new learning models that are 
entering the landscape, thanks to the Internet. We need to 
consider what role they play in our higher education system and 
whether financial aid ought to be available to students who are 
learning outside our traditional institutions.
    I'd like to put my entire statement in the record, but let 
me summarize just a few points that are in the remaining part 
of it.
    On the question of innovation, one of the most promising 
innovations is called competency-based learning. How do we deal 
with that? A working mom studying at the University of 
Wisconsin has an Associate's degree in nursing, wants to get 
her Bachelor's in nursing to increase her earning potential. 
Through the university's new flexible option, she's able to 
earn credits and finish tests and assignments on her own time, 
including between her shifts and her son's baseball game. 
Because the degree program is based on her ability to 
demonstrate knowledge of the subjects rather than her ability 
to sit through courses, she might finish a biology course in 8 
weeks but only 3 weeks in a mathematics course.
    The task force that Senators Mikulski, Bennet, Burr and I 
commissioned, said that government regulation is a barrier to 
innovation. They cited a 2010 Department of Education 
regulation establishing a Federal definition of a credit-hour 
as a minimum of 1 hour of classroom instruction and 2 hours of 
outside work. How that definition affects student aid and the 
organization of our colleges and universities ought to be a 
subject that we talk about today.
    The Congress recognized this before in 2005 when, we 
authorized something called ``direct assessment,'' but it's 
only been used six times for six institutions to try to find a 
way to include competency-based learning into the way we do 
business.
    The other barrier to innovation may be accreditation. 
Accreditation is old-fashioned in many ways. We haven't figured 
out a real alternative to the way we do accreditation, but 
there may be ways to improve it.
    On the second point of providing new providers for higher 
education, there are organizations that don't look like the 
traditional college and university, places like General 
Assembly, schools that hire industry experts from places like 
Apple and Cisco, to teach adult students skills that today's 
employers value, or StraighterLine where students pay under a 
monthly subscription fee with credentialed teachers, or 
attending a Massive Open Online Course, a MOOC. Those are 
different ways. The Mozilla Foundation develops and gives 
digital badges for those new learners.
    We Senators and President Obama have made suggestions about 
how to create new ways that higher education can provide 
education. The President in his 2013 State of the Union address 
talked about a new system that would provide pathways for 
higher education models and colleges to receive Federal student 
aid based on performance and results. Senator Lee, Senator 
Bennet and Senator Rubio all are working on legislation with a 
similar goal. I look forward to hearing what today's witnesses 
have to say.
    Senator Murray.

                  Opening Statement of Senator Murray

    Senator Murray. Thank you very much, Mr. Chairman. We had a 
successful last week on our bipartisan K-12 bill on education, 
and that bill I think really showed that we can break through 
the gridlock and work together, and I'm looking forward to 
continuing to work with you to get that through a conference 
committee and get a bill that the President will sign into law, 
so thank you for that. I hope that we can continue that 
bipartisan spirit as we now work on higher education as well.
    To me, this is an important piece of work that we're 
talking about today to help us grow our economy from the middle 
out. In the years ahead, our country will need a highly 
educated workforce to compete in the 21st century global 
economy, and most jobs will require education or training 
beyond a high school diploma. But today there are significant 
barriers, from the high cost of college to the crushing burden 
of student debt that our students face.
    In addition, the traditional model of higher education 
doesn't always work for students who need to hold down a job or 
care for a child while trying to advance their education. 
Because of those barriers, far too many students, particularly 
our students from low-income backgrounds and non-traditional 
students, end up dropping out of college and not completing 
their degrees.
    I'm certainly interested in innovative ways that would help 
us solve those challenges so that more students from all walks 
of life have strong, clear pathways into and through higher 
education, and I'm open to a conversation about how Federal 
rules and funding can best incentivize the motivation that has 
proven results.
    Over the last several years, some colleges have developed 
programs for students to gain knowledge and skills at their own 
pace. These competency-based programs focus on student learning 
rather than how many credit-hours a student has completed, and 
they hold a great deal of promise. The Department of Education 
is running some experimental sites on new ways of measuring 
student learning as we speak. I look forward to seeing those 
results.
    We've also seen some companies and providers begin to 
provide education and training outside of accredited colleges 
and universities. Some argue that these new providers of higher 
education should have access to Federal student aid from title 
IV. From my perspective, the best test of innovation is in its 
outcomes. In other words, before an innovative model of higher 
education ever becomes eligible for Federal student aid, we 
should be sure that it leads to good results for the students 
and helps us break down the barriers, like the ones I just 
mentioned.
    Today I'm looking forward to hearing from our witnesses on 
how we can test innovations to make sure that they will lead to 
good student outcomes. I'd also be interested in if the 
research from those innovative programs shows they actually 
expand opportunities for students from low-income backgrounds 
and our non-traditional students.
    Finally, I know that several of our Republican colleagues 
are interested in shaking up the current higher education 
system, the sooner the better, but I think we really have to 
tread carefully. We need to make changes, but we need to make 
sure those changes move us in the right direction and protect 
students and their interests.
    Through research and demonstration projects, we should make 
sure these new ideas are making a positive difference in 
students' lives. Simply opening up access to Federal student 
aid without any accountability for any company or institution 
that offers an alternative to traditional higher education 
would fail to protect consumers, and Congress has already given 
tools to the Department of Education to test some new ideas to 
see if they work through what we call experimental sites.
    Recently we've seen some institutions lure in students, and 
their Federal aid with them, with misleading and outright false 
information about their job placement prospects. We can't let 
that happen with these alternative models for higher education. 
It would be too risky for students who would acquire mountains 
of student debt without the ability to repay it and without a 
widely recognized credential or degree. Without strong 
accountability measures, allowing companies and institutions to 
accept Federal student aid would be irresponsible to our 
taxpayers.
    If these new models were to receive Federal student aid, 
I'm especially interested in making sure they are accountable 
to their students and to Federal taxpayers.
    Throughout our discussion today and as we continue our work 
to reauthorize the Higher Education Act, I will continue to be 
focused on how best to reduce the crushing burden of student 
debt, how to make college more affordable, and to make sure 
students from all walks of life get the chance to further their 
education. Achieving those goals is an economic imperative, and 
it will pay off for generations to come.
    I look forward to our witnesses who are here today. I thank 
all of you for coming and testifying and look forward to what 
you have to say.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Murray.
    I want to acknowledge Senator Murray's comments about 
legislation that passed the Senate 81 to 17 on Thursday to fix 
No Child Left Behind. I don't want to embarrass Senator Murray, 
but she suggested the way we should proceed on that, and it 
worked. I took her advice. She gave me good advice, and I took 
it, and it turned out to be good advice, which was that she and 
I would offer a draft, a bipartisan draft, and then let the 
full committee work on it and offer whatever amendments they 
needed to, and then go to the Senate floor and let the Senators 
do the same, and let Senator McConnell and Senator Reid create 
an environment where we could do that. We ended up with about 
100 amendments on that bill, 29 in committee that were adopted, 
75 or so that were adopted on the Senate floor.
    I think for complex legislation like elementary and 
secondary education and the reauthorization of the Higher 
Education Act, I think we should try to proceed in the same 
way. Senator Murray and I will, after consulting with our 
committee members, will suggest a draft of a bipartisan bill in 
the early fall, and then we'll have plenty of opportunity to 
debate it, amend it here in committee, and hopefully we'll 
report it, and we'll do the same on the Senate floor.
    I think it's important for Congress to come to conclusions 
on these big pieces of legislation, and obviously the way to do 
it is to do it in a bipartisan way and to allow as many 
Senators as possible to have their say.
    Our witnesses today, some have been here before, and we 
welcome them back. Mr. Jamie Merisotis is president and chief 
executive officer of Lumina Foundation in Indianapolis. He has 
served in that role since 2008, providing leadership and 
strategy to achieve its ambitious and specific goal, which is 
to ensure that by 2025 60 percent of Americans hold high-
quality degrees, certificates, or other credentials.
    The next witness, Dr. Barbara Gellman-Danley, president of 
the Higher Learning Commission in Chicago, one of six regional 
accrediting agencies in the United States, reviewing 
institutions across 19 States in the Midwest. She served in a 
number of leadership positions in higher education.
    Our next witness is Dr. Paul LeBlanc, president of Southern 
New Hampshire University in Manchester, NH. There's probably a 
lot of traffic in Manchester, NH these days----
    [Laughter.]
    The Chairman [continuing]. Some from many members of the 
U.S. Senate, and other people.
    Under Dr. LeBlanc's 10 years of leadership, Southern New 
Hampshire has quadrupled in size. They're now the second-
largest non-profit provider of online higher education in the 
United States. Earlier this year he took leave for a while to 
serve as Senior Policy Advisor to Undersecretary Ted Mitchell 
at the U.S. Department of Education.
    Our final witness is Michael Horn, co-founder and executive 
director of Education Programs at the Clayton Christensen 
Institute in California. He works to educate policymakers and 
community leaders on the power of disruptive innovation in 
education systems, with the goal to transform those systems 
into student-centered design. He's an author of well-read 
books, and we look forward to his comments.
    We will just begin here and go down the line. If each of 
you would summarize your remarks in about 5 minutes, that would 
give the Senators more time to have a conversation with you 
about your testimony.
    Please, go ahead.

STATEMENT OF JAMIE P. MERISOTIS, PRESIDENT AND CHIEF EXECUTIVE 
          OFFICER, LUMINA FOUNDATION, INDIANAPOLIS, IN

    Mr. Merisotis. Thank you very much for the opportunity to 
be here. For better or worse, I've been involved in higher 
education policy for a very long time, really my entire 
professional career. I've been involved in every Higher 
Education Act reauthorization one way or the other since 1986, 
and I can say without reservation that the next 
reauthorization, the one that you're now considering, will be 
the most consequential that I've seen, by far.
    The fact is, American higher education is at a critical 
juncture. That means the decisions that you make will be vital. 
They can set the stage for the next chapter in our national 
success story and build the foundation of talent that we need 
to power our economy and to strengthen our democracy.
    The Federal Government is just one actor in the national 
talent development and deployment story of our country, but the 
Higher Education Act has certainly helped write that story 
during the second half of the 20th century. Of course, the 20th 
century is over. Here we are in the 21st century, and now 
things are quite different.
    What's most different? That's easy. Mr. Chairman, you made 
this point earlier; it's the students. Today's student is 
nothing like the student that the 1965 law and most of its 
subsequent iterations, or really higher education in general, 
was designed to serve. By and large, today's students are 
working. They're adults. They're low income, people of color, 
military veterans, and they have responsibilities and 
commitments that extend well beyond the classroom.
    It's becoming ever more clear that the Nation needs a 
redesigned post-secondary education system, one that serves far 
more students, the highly diverse and often disadvantaged 
students in today's post-secondary programs, and serves them a 
lot better. By doing more and better, I'm convinced that we 
will all benefit by having a more talented society. By taking a 
thoughtful approach to reauthorization, an approach that 
encourages innovation and supports student success, you can 
help immensely with this much-needed redesign project.
    As you approach this task, I suggest that you take three 
basic steps, all of them directly linked to the needs of 
today's students. These steps aren't sequential, but they are 
interrelated, and so we have to tackle them together.
    First, as you seek to encourage innovation, look to create 
policies that will support and expand clear pathways to high-
quality degrees and other credentials. This means recognizing a 
wider array of post-secondary education providers, 
experimenting with new ways for students to earn credentials, 
and directing Federal funds to the providers who best serve 
those students.
    Today's post-secondary system presents a wide range of 
learning opportunities, far more than were available to the 
students of the 1960s or 1970s. Each of these levels of 
learning should be recognized. Given the reality of today's 
post-secondary landscape, the definition of ``provider'' must 
be broadened beyond the confines of what today we call an 
institution of higher education. That definition must include 
more online programs, competency-based education approaches, 
college-corporate partnerships, as well as efforts to explore 
how libraries, apprentice programs, and community-based 
learning centers might be included in our post-secondary 
provider definition.
    Students need to be able to access new, high-quality, low-
cost delivery post-secondary models and credentials, and 
changes in Federal policy could aid immensely in that process. 
For instance, rules governing financial aid could be updated to 
allow students access to year-round aid to pay for learning 
rather than just time, and to encourage accelerated programs to 
a degree or credential.
    The second step that you must take to foster innovation is 
to focus on educational quality. That means you must structure 
the system so that it focuses on outcomes, on actual learning, 
not on inputs such as time spent in the classroom. This is a 
critical conversation for all of higher education, but it's 
especially critical as you consider those new entrants to the 
marketplace.
    Finally, the third step in fostering productive innovation, 
and it's a critical one, you must take steps to address rising 
costs. New approaches to post-secondary education hold great 
promise in reducing costs, and they should be encouraged. To 
maximize student success, college costs don't just need to be 
reduced, they need to be demystified. I urge you to use Federal 
policy to make those costs more transparent, more predictable, 
and more accessible to students and their families.
    I'm happy to explore these steps in more detail. Thank you 
very much for the chance to be here.
    [The prepared statement of Mr. Merisotis follows:]
                Prepared Statement of Jamie P. Merisotis
                                summary
    American higher education is at a critical juncture. That means the 
decisions you make in the coming weeks and months will be vital; they 
can set the stage for the next chapter in our national success story 
and build the foundation of talent we need to power our economy and 
strengthen our democracy.
    The HEA has already played a major part in that story. In fact, 
it's had an almost immeasurable positive impact since it was first 
passed in 1965. By extending educational opportunity to tens of 
millions of Americans, the Act played a vital role in the success of 
this Nation in the second half of the 20th century.
    But the 20th century is over; and here in the 21st century, things 
are different.
    The fact is, our current higher education system, despite its many 
strengths and its past successes, won't get us to the future. It cannot 
properly serve this diverse array of students--certainly not in the 
numbers that we need to succeed as a Nation.
    To encourage innovation and support student success in the next 
reauthorization, I suggest you take three basic steps--all of them 
directly linked to the needs of today's students. One note here: The 
steps aren't meant to be sequential. The issues they seek to address 
are interrelated and must therefore be tackled together. The steps are:

     Build clear pathways.
     Focus on quality.
     Address costs.

    1. First, look for ways to build or expand clear pathways to high-
quality degrees and other credentials. This includes recognizing a 
wider array of post-secondary education providers, experimenting with 
new ways for students to earn credentials, and directing Federal funds 
to the providers who best serve their students.
    2. The second step you must take to foster innovation--again, not a 
sequential step, but one to take in concert with the others--is to 
focus on educational quality. You must do that, not with the provider 
in mind, but from the students' perspective--with their characteristics 
and their needs at the forefront. Students must be confident that the 
credentials they earn have genuine value--that those credentials 
reflect knowledge and skills that employers need and that they, as 
students, can build on throughout their lives.
    3. Finally, the third step in fostering productive innovation--and 
it's a crucial one. None of this innovation will matter much if higher 
education is out of financial reach for too many students. That means 
you must take steps to address rising costs. To maximize student 
success, college costs don't just need to be reduced, they need to be 
demystified and more widely shared. Also, make sure that those costs 
are structured so that they align with attainment goals--especially for 
low-income students.
                                 ______
                                 
    Chairman Alexander, Ranking Member Murray, members of the 
committee, thank you for the opportunity to testify this morning. I 
very much appreciate the opportunity to speak with you--particularly at 
this critical time, as you consider reauthorization of the Higher 
Education Act.
    I am Jamie Merisotis, president and CEO of Lumina Foundation. 
Lumina, based in Indianapolis, is the Nation's largest private 
foundation focused specifically on increasing students' access to and 
success in post-secondary education. I've been at Lumina since 2008, 
and before that I founded and served 15 years as president of the 
Institute for Higher Education Policy, a nonpartisan research 
organization here in Washington. I also served as executive director of 
a bipartisan congressional commission on student financial aid that 
operated in the early 1990s.
    My point in sharing this biographical background is to show that 
I've been focused on higher education policy for a very long time--
really my entire professional career. I've been involved, in one way or 
another, with every HEA reauthorization effort since 1986. And I can 
say without reservation that the next reauthorization--the one you're 
now considering--will be the most consequential I've seen by far.
    The fact is, American higher education is at a critical juncture. 
That means the decisions you make in the coming weeks and months will 
be vital; they can set the stage for the next chapter in our national 
success story and build the foundation of talent we need to power our 
economy and strengthen our democracy.
    The HEA has already played a major part in that story. In fact, 
it's had an almost immeasurable positive impact since it was first 
passed in 1965. By extending educational opportunity to tens of 
millions of Americans, the Act played a vital role in the success of 
this Nation in the second half of the 20th century.
    But the 20th century is over; and here in the 21st century, things 
are different.
    For one thing, America is no longer the unquestioned world leader 
in post-secondary education. According to the Organisation for Economic 
Co-operation and Development, young adults (ages 25-34) in 10 other 
developed nations are earning post-secondary degrees at higher rates 
than Americans in that age group. What's worse, though our attainment 
rates have edged up in recent years, they are increasing far more 
slowly than in other countries. In short, we are losing ground in the 
battle to remain globally competitive--and we're doing so at a time 
when our economy and our society are increasingly global.
    There are other changes as well. College costs continue to rise, 
and State funding for higher education continues to fall well short of 
what's needed. New technologies, new delivery modes and new approaches 
such as competency-based learning have created major opportunities for 
higher education--though they also present new challenges.
    But the biggest change in higher education--the one that should 
really focus your efforts and drive your decisions--is the monumental 
change we see in America's students.
    When HEA originally passed, it was designed with a particular type 
of student in mind: an 18- to 22-year-old, right out of high school, 
attending full-time at a 4-year residential college or university. For 
many of us, that image may still be what springs to mind when we hear 
the term ``college student.'' But that's all it is these days--an 
image. Reality looks far different.
    There are more than 20 million students enrolled in the Nation's 2- 
and 4-year institutions. Of these, only about 7 million fit the image 
of the traditional college student. About 40 percent are 25 years old 
or older. More than one-third attend part time, and nearly 20 percent 
are holding down full-time jobs as they attend college. About 40 
percent of today's students attend community colleges or for-profit 
schools--and this is true of a much higher percentage of first-
generation students, and those who are African American or Latino, and 
those who come from low-income families.
    By and large, today's students are working, they are adults, they 
are our military veterans, and they have responsibilities and 
commitments that extend far beyond the classroom.
    In other words, today's ``typical'' student, if such a thing even 
exists, is nothing like the student that HEA--or higher education in 
general--was originally designed to serve. That means it's time--past 
time, really--for a redesign. We need a system that serves today's 
students far better than it does right now. What's more, with economic 
experts insisting that some form of post-secondary credential is a must 
for anyone who hopes to maintain a middle-class lifestyle, we need a 
system that has the capacity to serve far more students--millions more 
in the coming decade.
    Right now, only about 40 percent of Americans hold at least a 2-
year college degree, and only about 45 percent hold any sort of post-
secondary credential at all. We at Lumina are convinced--and economists 
and other experts back us up on this--that this figure must rise to 60 
percent by 2025 if the United States is to remain globally competitive. 
And demographic trends make it clear that many, if not most, of these 
new credential holders must come from low-income, first-generation, 
minority, and adult populations.
    The fact is, our current higher education system, despite its many 
strengths and its past successes, won't get us to the future. It cannot 
properly serve this diverse array of students--certainly not in the 
numbers that we need to succeed as a Nation.
    Redesign is vital. And by taking a thoughtful and bold approach to 
reauthorizing the Higher Education Act, an approach that encourages 
innovation and supports student success, you can help immensely with 
this much-needed redesign project.
    As you take up the reauthorization task, I encourage you to enact 
policies that are as savvy, varied and forward-thinking as today's 
students.
    The Act should promote development of a more affordable, more 
equitable, high-quality post-secondary education system that leads to 
higher attainment rates that will significantly improve our economic 
and social well-being as a Nation.
    I encourage you to think beyond the current set of players and to 
craft policies that not only incorporate the innovative models we are 
seeing today, but also allow for innovations and learning providers 
that aren't yet conceived. We don't know what the next big thing will 
be, and this law should be written in such a way to foster and permit 
whatever that next leap forward is, as long as it is in the best 
interest of students.
    To encourage innovation, I suggest you take three basic steps--all 
of them directly linked to the needs of today's students. One note 
here: The steps aren't meant to be sequential. The issues they seek to 
address are interrelated and must therefore be tackled together. With 
that, I'll first list the three steps, and then I'll expand on each: 
The steps are:

     Build clear pathways.
     Focus on quality.
     Address costs.

    The first step, then, as you seek to encourage innovation: Look for 
ways to build or expand clear pathways to high-quality degrees and 
other credentials. This includes recognizing a wider array of post-
secondary education providers, experimenting with new ways for students 
to earn credentials, and directing Federal funds to the providers who 
best serve their students.
    Today's post-secondary system presents a wide range of learning 
opportunities--far more than were available to the student of the 1960s 
or 1970s. Each of these levels of learning should be recognized. Given 
the reality of today's learning landscape, the definition of 
``provider'' must be broadened; it must go beyond the current scope of 
institutions of higher education or job-training programs. Broadening 
this definition would aid the development of more and different post-
secondary pathways--discrete but interconnected routes to educational 
achievement and career success. These pathways would lead to 
``stackable'' credentials--credentials that encourage students to 
pursue educational opportunities throughout their careers, while also 
challenging providers to meet changing market demands for different 
knowledge levels and skills.
    Many interesting, innovative and promising approaches to post-
secondary delivery are already occurring. Foremost among these has been 
the growth of competency-based education--programs that award 
credentials based on a student's demonstration of actual knowledge and 
skills, not merely on the time they spend in labs or classrooms.
    Western Governors University is probably the longest-running and 
best-known of these competency-based programs, but more are being 
developed all the time. In fact, more than 30 institutions have formed 
a nationwide network--the Competency-Based Education Network, or C-
BEN--to keep the momentum going. These models are meeting students 
where they are, recognizing the learning that they've already 
obtained--whether in classrooms, on the job, in the military or through 
life experience.
    But this is not the only creative approach being taken to build new 
pathways for students. Another example is the innovative partnership 
between Starbucks and Arizona State University. Under that partnership, 
any part-time or full-time employee of the coffee company can pursue a 
bachelor's degree through ASU's online degree program and get full 
tuition reimbursement from Starbucks.
    Other ideas, less developed, are worth considering. What about 
libraries, apprenticeship programs, and community-based learning 
center? Do they have a role in the post-secondary provider landscape? 
How do we adequately assess prior learning, whether it be in an 
educational, work, or military setting? In the search for high-quality 
learning opportunities, we should seek out new and better ways that 
serve students well.
    Moreover, the various post-secondary providers need to be able to 
develop new high-quality, low-cost delivery models and credentials. And 
changes in Federal financial aid policy could help tremendously in that 
process. For instance, rules governing financial aid could be updated 
to allow students to access aid year-round, to pay for learning, rather 
than time, and to encourage accelerated paces to a degree or 
credential. If rules governing financial aid were updated to be more 
flexible, the stage would be set for several positive steps. For 
instance:

     Postsecondary providers would have more incentive to 
develop new approaches to degrees and credentials that could be tested 
at scale. When proven effective, these new models could then be used to 
adapt other Federal programs without being stymied by concerns over 
denying Federal aid to students.
     It would be easier to award credentials based on actual 
learning, not on time. As educators hone their ability to assess 
students on the basis of genuine learning, our Federal aid policies 
should be reformed to match.
     Students would be much more able to take their learning 
with them and to pursue higher education how, when and where they are 
most likely to succeed--through online programs, by studying at an 
accelerated pace, by attending nights and weekends, etc.

    Outdated financial aid rules aren't the only ones that deserve a 
second look. In fact, there needs to be a much broader conversation 
about the regulations that apply to higher education. The current set 
of regulations are playing a role in stymieing innovation and progress 
in higher education as institutions need to navigate ever-changing and 
burdensome rules in order to operate. That said, regulation plays an 
essential role in protecting the rights and interests of students, who 
should be at the center of the system. That's why this conversation 
shouldn't be about reducing burdens on institutions. Rather, it should 
focus on reducing barriers to innovation, because those barriers too 
often block the pathways we must build--the pathways leading to student 
success. One approach to addressing this is to examine the 
possibilities of risk-informed regulations, and allow providers with 
lower risk profiles more flexibility to design and implement 
educational approaches that best fit the needs of their students.
    The second step you must take to foster innovation--again, not a 
sequential step, but one to take in concert with the others--is to 
focus on educational quality. And you must do that, not with the 
provider in mind, but from the students' perspective--with their 
characteristics and their needs at the forefront. Students must be 
confident that the credentials they earn have genuine value--that those 
credentials reflect knowledge and skills that employers need and that 
they, as students, can build on throughout their lives.
    As you seek to expand the post-secondary ecosystem, make sure that 
appropriate safeguards are in place to ensure that students are 
actually learning, and that the Federal investment is well stewarded. 
That means Federal funds should be directed to programs and 
institutions that best serve their students--especially low-income 
students, minority students, first-generation students and working 
adults. Through responsible use of metrics, validators can assess 
educational quality based on student learning rather than seat time or 
other inputs. And providing public access to these metrics will help 
protect students and taxpayers from waste, fraud and abuse.
    Establishing new modes of validating quality for non-traditional 
providers of post-secondary education will help in this regard. For 
example, certification agencies and industry groups might be able to 
provide new ways of validating quality by linking skills taught in the 
classroom to skills needed in particular jobs. Based on our research, 
establishing new methods and means of validating quality--as a 
complement to the current institutional accreditors--could benefit all 
post-secondary education providers, traditional or new. More important, 
it would help ensure that students obtain high-quality education that 
is best suited for their career goals.
    Finally, the third step in fostering productive innovation--and 
it's a crucial one. None of this innovation will matter much if higher 
education is out of financial reach for too many students. That means 
you must take steps to address rising costs.
    New approaches to post-secondary education hold great promise in 
this regard. Competency-based, online and accelerated programs have all 
shown that they can reduce the cost of delivery, shorten the time 
required to earn a credential, and create healthy competition in the 
marketplace. These types of approaches, and other creative efforts, 
need to be supported and encouraged.
    More needs to be done as well. To maximize student success, college 
costs don't just need to be reduced, they need to be demystified and 
more widely shared. I urge you to find ways to make those costs more 
clear and transparent, more predictable and more accessible to students 
and their families. Also, make sure that those costs are structured so 
that they align with attainment goals--especially for low-income 
students. Student aid should be easily accessed, monitored, and able to 
be used at a wide variety of education providers.
    In closing, let me reState my gratitude for the opportunity to 
testify this morning. The Higher Education Act has had a tremendous 
impact--on my own personal and professional life, to be sure, but more 
important, on the life and health of this Nation over the past five 
decades. It may well have an even bigger impact in the decades to 
come--and your part in reauthorizing that act is hugely important.
    As you approach that task, I urge you to do so, not so much as 
experts or Senators or even concerned citizens. Instead, look at these 
issues from the perspective that matters most: that of a college 
student. Not the student you were, but the one you'd likely be today, 
or the one you'll meet next year or 5 years from now.
    As a Nation, we need those students to succeed--and they need your 
help to do so.
    Thank you.
                                 ______
                                 
                       Additional Recommendations
    At the request of Chairman Alexander, as well as Senator 
Whitehouse, I'm submitting as part of my written testimony provided to 
the committee a series of policy recommendations regarding innovation 
and regulation in this critical reauthorization of the Higher Education 
Act. I very much appreciate the opportunity to share this additional 
content and it is my hope that these ideas inform and advance the work 
of the committee.
    As previously stated in my full written testimony, I am Jamie 
Merisotis, president and CEO of Lumina Foundation. Lumina, based in 
Indianapolis, is the Nation's largest private foundation focused 
specifically on increasing students' access to and success in post-
secondary education.
    As I discussed in my testimony, students attending post-secondary 
education today are dramatically different from even a few years ago. 
They are more likely to be older, have their own families and be 
working. They are more socioeconomically and racially diverse. To 
address the needs of today's students, I suggest you focus on three 
basic areas which will foster and promote innovation. These steps 
aren't meant to be sequential as the issues they seek to address are 
interrelated and must therefore be tackled together. The steps are: 
address costs and promote affordability, focus on quality, and build 
clear pathways that lead to increased outcomes. What follows are 
specific recommendations within each of these discrete barriers to 
college completion.
               risk-informed approaches to accreditation
    The role of accreditation should be to evaluate providers based on 
their success in achieving student attainment goals, rather than on 
some of the often extraneous evaluation metrics, or on topics that are 
more appropriately evaluated by the other two members of the ``triad'' 
that have responsibility for oversight of higher education: the Federal 
Government and the States. This accreditation evaluation should be 
particularly focused on accounting for differences in the student 
populations served at various institutions and measuring the academic 
progress of underserved students. Research indicates that strengthening 
the role of accreditation helps improve the quality of higher education 
institutions, promotes competition, and spurs innovation by ensuring 
that institutions of all types are held accountable for producing 
results for their ultimate stakeholders: students and taxpayers. Our 
studies suggest that accreditation could be strengthened with a greater 
focus on quality and student outcomes.
    All Federal regulatory activities should tie directly to the 
Federal Government's interest as an investor in the higher education 
system on behalf of students and taxpayers. Our goal should be for 
improved experiences and outcomes for students to be placed at the 
center of the system, meaning that policymakers must take care to start 
with clarity around the ``what'' of the regulatory regime and tailor 
the ``how'' and ``who'' of the regime to the most efficient and 
effective way of achieving this end. This means eliminating unnecessary 
regulation that is hampering this focus.
    To this end, we would recommend that the government:

     Amend current law to orient the Federal recognition 
process for accreditors around risk-informed reviews of each 
accrediting agency. These reviews should prioritize an examination of 
the accreditor's oversight of student learning and outcomes at its 
member institutions and the Federal Government should differentiate the 
extent of recognition reviews based on this information. This 
recognition process should continue to be overseen by an independent 
advisory committee that is fully representative of the array of post-
secondary stakeholders; NACIQI (the National Advisory Committee on 
Institutional Quality and Integrity) currently does an able job 
fulfilling this purpose. Streamlining the recognition process for 
accreditors with strong records could free up resources within 
accrediting agencies, which could allow accreditors to devote more 
resources to helping institutions improve outcomes for students on a 
continuous improvement model. Acknowledging that while the creation of 
a risk-informed system is permissible now, it would still be necessary 
to pursue a change in law to allow for the appropriate and necessary 
inputs.
     Provide greater regulatory flexibility so that high-
performing education providers earn expedited accreditation reviews. 
The current regulatory system for accreditation is both overly 
burdensome and far too complicated; as a result, the current system 
reduces the true value and effectiveness of accreditation's role in the 
``'triad.'' Ensuring flexibility for high-performing providers is a 
valuable means of allowing and supporting innovation in post-secondary 
education aimed at improving outcomes for students. This flexibility 
then allows for innovation within the higher education field that 
specifically leads to a greater focus on student outcomes and lower 
future costs.
    Maintaining quality remains of the utmost importance, however, and 
a crucial tool to ensure quality would be to allow accreditors to 
employ a risk-informed approach to assessing institutional quality. 
Accreditation should be re-oriented around a risk-informed process, 
with institutions subject to different levels of scrutiny based on 
their student learning and outcomes data. Institutions that demonstrate 
strong records of student results could receive expedited reviews, 
while those where data on student outcomes indicate room for 
improvement would warrant a more robust review. Such an approach could 
allow accreditors to focus more on student outcome data, as well as 
allocate time and resources to working with those institutions that 
need the most attention. In addition, holding all post-secondary 
programs directly accountable for value and affordability measures is 
likely to slow down or halt enrollment in programs that provide little 
value to the students that invest time and resources in them.
    A process so described would reduce the barriers to entry for new 
institutions and providers that demonstrate successful student outcomes 
and ultimately provide students with more effective options for quality 
post-secondary education. More robust accreditation reviews would be 
triggered where data on student learning and outcomes indicate need for 
improvement or more significant concerns, with the accreditation 
process expecting and facilitating a data-driven continuous improvement 
process at each provider that warrants or wants it.
     Establish clear and purposeful accountability and quality 
metrics, with a focus on student outcomes. Completion outcomes are 
likely to be improved dramatically by holding accreditors accountable 
for measuring student outcomes, encouraging providers to develop more 
innovative higher quality, lower cost programs, and, most importantly, 
by requiring both accreditors and providers to report their results in 
a more transparent and accessible manner. The Federal Government can 
assist in these efforts by making concerted efforts to eliminate 
overlapping roles, responsibilities and regulations unrelated to 
quality outcomes. While we recognize that some accreditors have 
increased their emphasis on student learning outcomes, the more 
incentives that are built into the system to make student learning even 
more central to accreditors' institutional reviews, the clearer the 
message to institutions that they will be held directly accountable for 
higher quality, lower cost programs of study. A more transparent, 
accessible and understandable set of metrics is needed to drive a focus 
on student outcomes.
                   establish and support new pathways
    In order for today's students to succeed, Federal policies need to 
support a much wider range of pathways to a credential. This would 
include an assurance that all post-secondary learning is recognized, 
regardless of where it was obtained; creating pathways to ``stackable'' 
credentials; and putting in place regulations and incentives for 
stakeholders in the system to continually improve and shoulder some of 
the risk that currently falls to students and the Federal Government. 
In terms of specific actions in pursuit of this objective, we would 
recommend that the government:

     Allow for broad, long-lasting demonstration projects that 
allow for innovation at scale. This type of experimentation can advance 
the field and test new approaches to high-quality post-secondary 
delivery that increase student outcomes and lower costs, while 
protecting students and the taxpayer investment from waste, fraud and 
abuse. Ultimately what matters is not permission for any specific 
innovation; what matters is the ability to prove outcomes for students: 
Are they completing, are they achieving their academic and employment 
goals? Demonstration programs should give the Secretary the authority 
to set performance metrics, and create the process for outcomes-based 
validation.
     Encourage providers to use a transparent credentialing 
method that identifies and rewards student learning, not seat time. 
Currently the meaning of degrees, certificates and other credentials is 
rarely validated outside academia; this makes it difficult for any 
stakeholder to understand and compare varying credential programs. 
Encouraging providers to use a transparent method that identifies and 
rewards student learning, not seat time, as the core basis for 
assessing student outcomes should increase the ability of stakeholders 
to compare varying credential programs. States, providers and 
organizations, including accreditors, can help with this process by 
developing meaningful and comparable measures of student learning, 
employment and other outcomes.
     Consider allowing title IV aid to be used for prior 
learning assessments and direct assessments, with appropriate 
constraints on cost (i.e., cost of assessment or review materials). 
Focus on hybrid innovations through demonstrations such as direct 
assessment and prior learning assessments that will provide an easy 
crosswalk to earning credits or demonstrating competencies. These 
innovations may be provided by new providers who would be title IV 
eligible.
     Recognize new validators, to better support new pathways. 
With new types of providers and pathways, we should foster the creation 
of new validators, able to serve as assessors of educational quality 
for a variety of different programs. In doing so, we can ensure that 
validators best suited to assess a program are matched with that 
program. In turn, these new validators can and should be held 
accountable for measuring student outcomes, being transparent and 
encouraging providers to innovate toward higher quality, lower cost 
programs.
     Repeal the student unit record ban. The obvious and 
growing need for more accurate and comprehensive data on the behavior 
of today's student can most effectively be addressed through the 
thoughtful and deliberate development of a student unit record system. 
Allowing student-level data to be sent directly to the Department of 
Education, in contrast to the current system of aggregated 
institutional data, will facilitate the assessment of student success 
as they move to, between and through providers of post-secondary 
learning and on into the workforce.
                address costs and promote affordability
    College affordability is a major national issue and receives 
extensive coverage in the media. One of the more dramatic figures that 
has been reported is that total student loan debt has reached over $1 
trillion in aggregate. In part, this number has grown because of 
increased college-going rates across the board--a positive trend 
overall. But it is also fueled by the fact that college has become less 
affordable, with college prices increasing by 45 percent on average 
over the past decade, while household income declined by 7 percent in 
the same period. One of the most oft-repeated rationales for innovation 
in higher education is to lower costs for students. However, we have no 
clear guidepost for how much lower those costs should be, or for whom.
    We, at Lumina, believe that it should be possible not just to 
define affordability more clearly, but also to use this definition to 
benchmark performance of higher education systems in terms of making 
college opportunities affordable to students. To move toward this 
college affordability goal we feel it necessary to:

     Create an affordability benchmark. A benchmark of this 
nature should be a viable way for higher education leadership and 
policymakers to assess progress toward affordability goals with a 
collective unit of measurement. Of course, there will be differences in 
individual contexts and situations, which means that the benchmark will 
not be appropriate for every person in every situation. However, this 
benchmark should provide a general guideline to frame broad 
discussions. In the same way that not everyone spends a third of their 
monthly income on housing payments, not everyone will pay for college 
in exactly the same way. To be clear, the described benchmark is not 
itself a policy proposal, but instead provides an outline for future, 
more detailed interpretive work that could inform policy and practice. 
So knowing, we would recommend that an affordability benchmark be based 
on a combination of reasonable work and savings expectation among 
students and their families. We are currently conceiving of the 
benchmark in the following three components:

          Out-of-pocket spending limited to 10 years' worth of 
        reasonable savings. Students should have to pay out-of-pocket 
        no more than what they or their families can reasonably save 
        over a 10-year period. Considering that a college education is 
        something that can be saved for over time, particularly given 
        the relatively high college-going rates of high school 
        graduates, families and individuals with the ability to save 
        should be encouraged to do so. Many higher income families 
        already save for college; unfortunately there is little 
        discussion around what an appropriate amount to save might be. 
        Lower income families may have less capacity to save, which is 
        why we suggest that savings be limited to a ``reasonable'' 
        amount. For students who are also the primary breadwinner of 
        their own families, this benchmark can also suggest a path 
        forward, particularly when coupled with the next component.
          Savings/Repayment amount limited to 10 percent of 
        income. We believe that individuals can reasonably afford to 
        contribute 10 percent of their discretionary income to post-
        secondary education, for a limited amount of time. Ten percent 
        of one's discretionary income has emerged as the standard for 
        determining the amount of ``affordable'' loan repayment, and it 
        follows that 10 percent of discretionary income is reasonable 
        to expect to be committed for post-secondary education expenses 
        more generally, when including an exclusion for those who don't 
        make enough to have any ``discretionary'' income. The 
        affordability benchmark is calculated based on the assumption 
        that individuals and families making above 200 percent of the 
        poverty rate can afford to save 10 percent of their income. 
        This line also serves as an income exclusion, so that no one is 
        expected to save until they reach at least 200 percent of the 
        poverty level. Then, a small portion (10 percent) of any income 
        earned above 200 percent of poverty would be expected to be 
        saved for college.
          Working 10 hours a week while in school. College 
        affordability should include an expectation of a student 
        working an average 10 hours per week, or 500 hours per year. 
        Ten hours of work at minimum wage for approximately 50 weeks 
        would be $3,625 annually or $14,500 over the course of 4 years. 
        After taxes, this amount would be available to help cover the 
        full costs of college, while enrolled, including living 
        expenses.

     Create a single portal for Department of Education, 
Veterans Administration, Department of Defense, Department of Labor and 
other Federal post-secondary education benefits, run by the Department 
of Education. Gaining access to the full array of Federal post-
secondary education benefits can be a confusing process for students. A 
single portal to view and learn about these benefits, as well as a 
common application for these programs spread across multiple agencies, 
would break down process barriers faced by prospective students and 
families and ensure that they can gain access to the full range of 
post-secondary benefits afforded to them. By knowing about multiple 
benefits, students may be more likely to apply to a post-secondary 
program and are more likely to attend full-time.

    The Chairman. Thank you.
    Dr. Gellman-Danley.

STATEMENT OF BARBARA GELLMAN-DANLEY, PRESIDENT, HIGHER LEARNING 
                    COMMISSION, CHICAGO, IL

    Ms. Gellman-Danley. Thank you very much. I am Barbara 
Gellman-Danley, and I represent the Higher Learning Commission 
and my colleagues from the other regional accreditors. It's a 
pleasure to be with you here today. Collectively, we accredit 
over 5,000 institutions.
    I want to thank Chairman Alexander, Ranking Member Murray, 
and members of the committee for inviting me here to provide 
testimony on this absolutely critical issue--innovation in 
higher education.
    Innovation can change the future of our institutions and 
the lives of the students they serve. The benefit of good 
innovation is tremendous and can help solve vexing issues in 
higher education. It can inspire us and breathe new life into 
our colleges and universities.
    I was asked to address three issues today, the approval 
process, the barriers in our way, and ways to address these 
barriers.
    As to the process, there are a great many innovative ideas 
that come forward that we do not have to approve. They do not 
have to go in front of accreditation because our existing 
policies allow that flexibility. In other words, the process 
begins and ends at the university. In other cases where more 
nuance exists, the process may take 3 to 6 months. The 
institution submits an application which is reviewed thoroughly 
by seasoned, trained peer reviewers and experts and results in 
an action letter to the institution. That's how it works in a 
great majority of cases.
    There's always another side to the story. Innovation has 
its challenges. Imagine the excitement when an institution 
embraces change, the dreams and hopes of a different way of 
looking at business beyond the horizon. Yet soon, practical 
realities will hit, including the high cost of research and 
development, attracting talent to bring the idea to fruition, 
blending the old and new ways of how we do our business, not to 
mention the regulatory and statutory requirements.
    Accreditors cannot serve yet another one of these barriers. 
We cannot be one of them. All accreditors are well aware of the 
concerns about the way we do our business, and they've been 
expressed quite vocally. I am here today to tell you that when 
it comes to innovation, we are not a barrier. We are committed 
to creative new ways of serving our students. To do that with 
integrity, however, we must assure quality by looking at each 
innovation. We have to take some risks. It is a delicate 
balance.
    Regional accrediting agencies have been on the front line 
of innovation for decades. Consider the movement of the 
community colleges into access and what they've done for this 
country, certainly distance education, competency-based 
learning has been mentioned, and many of the amazing, hugely 
disruptive innovations of the past decade. We cannot, however, 
support a rush to fulfill greater needs for enrollment to fill 
the budget gaps simply on the face of what may be smoke and 
mirrors of innovation.
    Challenges exist even when we embrace new ways. These 
challenges could stem from Federal micro-management. 
Accreditors are increasingly less able to provide a safe 
harbor. When our institutions come to us with new ideas, we 
find ourselves dealing with possible judgment by the U.S. 
Department of Education and the Office of the Inspector 
General, who sometimes don't agree with each other, and we are 
caught in the middle.
    Under certain circumstances, I think it's very possible 
that we could bring great new ideas that will deliver change 
and innovations, but with these barriers it has a chilling 
effect. I shudder to think if Ben Franklin could have kept the 
lights on under these circumstances.
    Let the reauthorization of the Higher Education Act be a 
lightning rod to the future of higher education and innovation 
in this country. We ask you to consider giving regional 
accreditors more freedom to promote innovation. The 
experimental sites is a great start. We believe there should be 
separate experimental sites run strictly by accreditors, 
allowing us to come out from underneath the heavy burdens of 
statutory and regulatory barriers.
    The Council of Regional Accreditors stands ready and is 
prepared to sit down with you and each of your staff to go over 
this idea.
    Good innovation cannot be legislated. It takes place when 
government steps back and lets creative people do what they do 
best. I urge you to develop a reauthorization that allows for 
innovations that we cannot possibly predict today so that we do 
not prevent them from being realized in the future. I encourage 
you to open your mind and ours to transformation. What you do 
with this act, Senators, may be exactly what is needed and more 
transformative even than the original act.
    Let me tell you something, we can as accreditors be a very 
important part of this solution. One voice can make a 
difference, but a collective voice, that can change the world.
    Thank you.
    [The prepared statement of Dr. Gellman-Danley follows:]
              Prepared Statement of Barbara Gellman-Danley
                                summary
    HLC is one of seven regional accrediting agencies across the United 
States, which collectively oversee accreditation for more than 5,000 
colleges and universities. Regional accreditors must seek recognition 
by the Secretary of Education to serve as ``reliable authorities as to 
the quality of education.''
    Innovation has been a critical part of strengthening our Nation's 
system of higher education. Innovations, such as distance education are 
now nearly ubiquitous in higher education, and have vastly expanded 
access to higher education over the past decade far beyond any early 
predictions of growth and impact. Other efforts, such as the expansion 
of competency-based education (CBE) programs, direct assessment (DA) 
programs, and the increasing use of third parties working with 
institutions, are more examples of these innovations.
    But to innovate is not without its challenges. Institutions often 
face challenges to innovate--including internal capacity, State and 
Federal laws and regulations, and the financial risks inherent in 
investing in new approaches to serving students.
    Accreditors have worked hard not to create additional barriers to 
innovation. However, we have our own challenges that go along with our 
responsibility to ensure that the risks of a particular innovation are 
in line with their potential benefit.
    In recent years, these challenges have more and more stemmed from 
increased Federal micromanagement into the work of accreditors, 
stemming from both the law and regulations under HEA. Many accreditors 
feel increasingly less able to provide a safe harbor to evaluate and 
recognize innovative programs of good quality without fear that those 
judgments may be later questioned by the U.S. Department of Education 
or the Office of Inspector General.
    The reauthorization of HEA provides an opportunity to address some 
of these challenges. For example, the experimental sites initiative 
authorized under HEA is leading to expansion for participating 
institutions in areas such as CBE and DA. We believe there should be a 
separate experimental sites program for accreditors--allowing us to 
come out from underneath the statutory and regulatory barriers, which 
hold us back in working with institutions promoting innovation.
    Overall, we believe that: Congress and the Department need to trust 
accrediting agencies to evaluate and approve good quality innovation; 
Good innovation cannot be legislated and takes place when government 
steps back and let's people be creative. Congress and the Department 
should be looking for ways to remove barriers in the system that 
function to limit, slow or chill innovation. We stand ready to be a 
strong partner in assuring quality and welcome ways to work 
collaboratively with the committee.
                                 ______
                                 
    Good morning, my name is Barbara Gellman-Danley, and I serve as 
president of the Higher Learning Commission. I want to thank Chairman 
Alexander, Ranking Member Murray, and the members of the committee for 
inviting me here to provide testimony from the perspective of 
accreditors on the opportunities and barriers of innovation in higher 
education.
    My comments this morning are informed from my more than 35 years of 
experience in higher education as an institutional president, a vice 
chancellor of two separate State coordinating boards and as a faculty 
member. I also speak to you from the perspective of my strong personal 
interest in the issue of innovation in higher education.
    HLC is one of seven regional accrediting agencies across the United 
States, which collectively accredit over 5,000 colleges and 
universities. These institutions include small private seminaries, 
bible colleges and liberal arts colleges, and encompass large and small 
community college districts, mid-size regional State universities, and 
large private and public research universities. The Higher Learning 
Commission is the largest of these commissions and covers 19 States of 
the north central region and currently accredits, or has granted 
candidate status to, 1,007 institutions. The Council of Regional 
Accrediting Commissions (or C-RAC as you may hear it called) is the 
organization through which the presidents and board chairs of these 
agencies work together on issues of mutual interest including the 
sharing of best practices.
    Accrediting agencies perform an important role in ensuring these 
institutions are of good quality. The Higher Learning Commission (or 
HLC as I may call it from time to time in my remarks) is recognized by 
the U.S. Department of Education based on statutory and regulatory 
requirements that govern recognition of accrediting agencies as 
authorities on institutional quality. HLC, like other regional 
accrediting agencies, has standards by which it determines which 
institutions are of appropriate quality such as to merit the granting 
of accreditation. These standards, many of which are required under the 
Higher Education Act, have been developed in consultation with 
institutions as well as with State higher education agencies, the 
business community, the public and other groups with a strong interest 
in institutional quality.
    I applaud your efforts to look for ways to encourage innovation in 
higher education. I congratulate you on last week's Senate passage of a 
bill to reauthorize the Elementary and Secondary Education Act and the 
broad bipartisan work that was instrumental in its passage. I 
appreciate your stated desire to use this same approach in 
reauthorizing the Higher Education Act and taking on the important 
questions of how the revised statute and accompanying regulations can 
encourage meaningful and necessary innovation in higher education.
    We can all agree on why innovation is so important. The benefit of 
``good'' innovation is tremendous and can help solve vexing issues in 
higher education such as how to increase access for students, make 
college more affordable, and improve outcomes--particularly related to 
retention and completion.
    While our system of higher education is always focusing on 
improving its operations and outcomes, innovation has contributed to 
making it the envy of the world. Looking back through my own lens, I 
have seen a plethora of these innovations over the years. Some of these 
innovations have been simple, for example, introducing courses at 
night, while others have been creative. Regardless of their complexity 
these changes have been transformative and disruptive to the entire 
higher education system. They moved the needle and increased access, 
which resulted in institutions becoming increasingly competitive in 
serving students.
    The intersection of access and market demand brought in hundreds of 
thousands of students who may have never availed themselves of a higher 
education--including the inspiring introduction of the community 
college movement. In the 1960s and 1970s more than 1,000 community 
colleges were established, and today more than half of incoming 
freshmen enter our portals through that sector. Distance learning, once 
anticipated to be the potential destruction of campuses across the 
country, is now nearly ubiquitous in higher education and today nearly 
three-quarters of post-secondary students are enrolled in at least one 
online course. This innovation alone has vastly expanded access to 
higher education over the past decade far beyond any early predictions 
of growth and impact.
    While there was some State, Federal and private stimulus for some 
of this innovation, most of it came from smart people at institutions 
who simply wanted to find better ways to serve students.
    But to innovate is not without its challenges.
    As accreditors, we are well aware that these challenges often 
begin--but do not end--at the institutional level. Institutions face 
challenges in paying for the cost of developing and implementing good 
innovation, not to mention the many risks associated with innovation--

          `'Will a new cyber-tech program fly in the education 
        marketplace? Will students be willing to enroll? Will employers 
        hire graduates of the new program or prefer to hire graduates 
        from academic programs that are more familiar and thus more 
        comfortable? ''

    Institutions are also facing a long list of mandates, internal and 
external, to do more with fewer resources, sometimes leading to a 
frenzy of projects at institutions to meet these mandates and to an 
accompanying sense of frustration and exhaustion. With such risks and 
challenges, innovation can be daunting for institutions.
    We also have bureaucracies borne from State and Federal legislation 
and regulations that simply are not set up to recognize and support 
innovation. They are tethered to statutory and regulatory language that 
over time has left them in a darkened closet holding a flashlight--
trying see beyond the horizon to the future. But often, there is no 
sunlight.
    Institutions may be reluctant to champion innovation when it 
requires challenging these regulatory systems. The report released 
earlier this year by the Task Force on Federal Regulation of Higher 
Education, which you, Chairman Alexander and other members of this 
committee deserve credit for spearheading, provides ample evidence of 
these types of regulatory barriers.
    Innovation in the education marketplace faces another challenge: it 
has to be good. It must result in good academic quality and outcomes. 
Remember the Apple Newton or the Betamax? However innovative, they did 
not make it in the marketplace because they were not very good; 
consumers were disappointed, and investors and inventors lost money. In 
the academic marketplace the stakes are much higher. Instead of being 
stuck with an expensive piece of obsolete technology, students adopting 
a new innovation in higher education can be stuck with a mountain load 
of debt, with little to show for it. Lives are profoundly affected by 
higher education, as we know, for better or for worse because so many 
people--students, families and employers--rely on it. We have an 
obligation to all stakeholders to assure that innovation in higher 
education is the best it can be.
    Accreditors do not seek to be yet another of these barriers to 
institutional innovation--or for that matter--a barrier to entities 
seeking to become an institution of higher education in the first 
place. Accreditors support innovation that is of good quality and that 
is able to demonstrate integrity. However, all accreditors are well 
aware of the concerns that have been expressed by those individuals who 
firmly believe innovation stops at our door. I am here today to tell 
you it does not.
    The fact is, regional accrediting agencies have been on the front 
lines of innovation in higher education for many years. The expansion 
of distance education, which I spoke of earlier in my testimony, 
happened with the collaboration of accreditors working with 
institutions as well as State and Federal agencies.
    Under our watch competency-based and direct assessment programs are 
also gaining increased momentum and acceptance. Through competency-
based programs, students demonstrate competencies toward graduation 
even while they continue to complete credit-hours and earn grades. In 
direct assessment programs credit-hours and grades are gone, and the 
basis for the student's attainment of the degree is demonstration of 
competencies. Over just the past 2 years, HLC approved five 
institutions to offer direct assessment offering nine programs among 
them. The Southern Association has approved three institutions, also 
offering nine programs among them. The New England Association and 
Middles States Association have each approved one institution to offer 
direct assessment. The time is particularly opportune for new 
competency-based and direct assessment programs as institutions have 
become more skilled at, and more comfortable with, assessment of 
student learning. All of us get calls regularly from other institutions 
that are interested in offering a direct assessment program but are 
carefully considering the risk and the value of such programs.
    While competency-based and direct assessment programs are of great 
interest currently, there are other forms of innovation taking place in 
higher education, which we as accreditors have been very involved in 
facilitating. Within HLC's region there are increasing numbers of 
partnerships among public and private institutions like ReBUILD 
Detroit, which is a partnership among accredited institutions intended 
to foster access and success for minority students in biomedical 
fields. Another example is a project at an institution in Oklahoma 
working on finding non-traditional approaches to help improve the 
outcomes of remedial education. These cases are two examples of the 
hundreds of projects out there right now working to bring new 
innovative approaches to chip away at the difficult challenges of 
access, affordability and attainment in higher education. Next week, I, 
along with several of my regional accreditation colleagues will be 
participating in a meeting at the White House to discuss how to expand 
such partnerships while ensuring quality and integrity.
    I was asked today to also speak to the specific process of how 
accreditors review new innovations. Each regional accrediting agency 
has policies and procedures to review and approve new initiatives 
before they are launched at institutions if they require such approval 
under the policies of those agencies. These policies and procedures, 
while varying to some degree in the specific details, involve the 
submission of an application or some sort of explanatory materials by 
the institution about the proposed program, review of the proposed 
program typically involving peer reviewers, and a formal decision by 
the agency to approve the program. There may be a followup report or 
visit after the program has been operating for about 6 to 12 months. 
Regardless of the details, these policies and processes are structured 
to achieve two important goals: (1) ensure that the initiative is of 
good quality such that it meets the standards of the agency; and (2) 
assure that Federal concerns, as reflected in the Federal recognition 
requirements for accrediting agencies, have been thoroughly addressed 
by the agency in the approval process. Increasingly this latter goal 
has become a focus in the review processes of new innovative programs 
and other substantive changes by accrediting agencies, as I will 
outline in greater detail below with regard to direct assessment 
programs.
    This process of how accreditation works with institutions seeking 
to drive innovation has worked well over the years. However, as 
accrediting agencies, we have our own challenges, which go along with 
our responsibility to ensure that the inherent risks of a particular 
innovation are in line with their potential benefit.
    In recent years, these challenges have more and more stemmed from 
increased Federal micromanagement into the work of accreditors. For 
many of us, we feel increasingly less able to provide a safe harbor to 
evaluate and recognize innovative programs of good quality without fear 
that those judgments may be later questioned by the U.S. Department of 
Education (``the Department'').
    The review of competency-based and direct assessment initiatives 
provides a good example of this challenge. Federal regulations set 
certain precise expectations of the approval process at accrediting 
agencies. The regulations require program by program approval of each 
new such program at an accredited institution, regardless of the 
institution's experience in offering the exact same program on-ground 
or in other settings or even in offering other programs through direct 
assessment. The regulations further require that accrediting agencies 
determine whether reasonable credit-hour equivalencies have been 
established for these new direct assessment programs even though such 
programs are intended to function outside the traditional credit-hour 
system. In addition to what the regulations expressly require, 
interpretations of regulations by the Department or its Office of 
Inspector General (``the OIG'') may require additional accrediting 
agency focus. For example, the December 2014 Dear Colleague letter set 
the expectation that was not expressly stated in the regulations that 
accrediting agencies evaluate whether there is sufficient faculty-
student engagement to ensure that the programs are NOT correspondence 
programs as defined by Federal regulations.
    Procedural expectations in the Federal regulations for accrediting 
agencies also dictate other aspects of the review of new initiatives at 
institutions. These regulations include the mandate that an appropriate 
federally recognized agency decisionmaking body make the formal 
decision to approve the new program, and that the action letter issuing 
the decision have sufficient details regarding, for example, for direct 
assessment the appropriateness of credit-hour equivalencies established 
for the direct assessment program. Increasingly these Federal details, 
while not unimportant, have dictated many aspects of the approval 
process and its timing at accrediting agencies. If we don't ensure we 
fulfill Federal expectations with regard to these details, we worry 
that institutions will be at risk even to the extent of losing access 
to title IV for these programs.
    Even when the Department provides a good faith effort to be 
supportive of innovative programs in higher education, as we have seen 
with the new Direct Assessment programs and Experimental Sites 
Initiative, its Office of Inspector General (the ``OIG'') may take a 
very different position because of what seems to be its inherent 
skepticism that Federal laws and regulations allow for innovation or 
that taxpayer dollars won't be wasted on such programs because they 
look different. And when there is a dispute between the Department and 
its OIG regarding what the rules are regarding innovation, time goes by 
while each side martials its arguments and revises its position, as we 
saw in the long wait for the Dear Colleague letter in December 2014 
that followed the OIG's report in September 2014 regarding the 
Department's handling of direct assessment. Accreditors inevitably get 
caught in the middle of these disputes and may ultimately be forced to 
revise policies and procedures mid-stream not only to maintain their 
own recognition but also to ensure that institutions offering these 
innovative programs and students enrolled in them do not lose access to 
title IV as the ultimate price. Under such circumstances the process of 
innovation inevitably stalls, and institutions that had moved ahead 
quickly to embrace innovation may be frustrated. Frank Herbert 
explained it well when he wrote,

          ``Bureaucracy destroys initiative. There is little that 
        bureaucrats hate more than innovation, especially innovation 
        that produces better results than the old routines.''

    As an accreditor, we are also responsible for making the difficult 
judgment of determining when an ``innovation'' is one with integrity 
and quality and is likely to serve the best interests of students. 
Higher education is no more immune than any other industry to an idea 
gone wrong. Accreditors stand between the public and every crazy idea 
anyone may have, however ``innovative'' it might seem.
    We are pulled in conflicting directions--we support innovation--we 
create flexible pathways for low-risk institutions to go out on a 
limb--we are then criticized for not serving the tightening regulatory 
and compliance environment. I implore you to help us find ways to 
remove barriers that are territorial and often a myopic view of the 
possibilities and that interfere with the transformation of higher 
learning.
    The reauthorization of HEA provides an opportunity to address some 
of these challenges.
    At a minimum, regional accreditors need to be given more freedom in 
working to promote innovation. The Experimental Sites Initiative 
authorized under HEA for institutions has led to expansion in areas 
such as competency-based and direct assessment programs. We believe 
there should be a separate experimental sites initiative for 
accreditors--allowing us to come out from underneath the statuary and 
regulatory barriers, which hold us back in working with institutions to 
promote innovation. My colleagues and I are prepared to sit down with 
you and your staff and discuss specific language, which we believe can 
help make this a reality.
    In closing, let me leave you with three key requests:

    1. Congress and the Department need to trust accrediting agencies 
to evaluate and approve good quality innovation. That's our job, and I 
think we do it well and with efficiency. New congressional or 
departmental mandates in this area are only likely to lead to longer 
review times and increased time and expense for institutions going 
through our approval processes and not to improved quality.
    2. Good innovation cannot be legislated. While institutions no 
doubt appreciate the seed money from the Department and private grant 
foundations, good innovation takes place when government steps back and 
lets people be creative.
    3. Congress and the Department should be looking for ways to remove 
barriers in the system that limits, slows or chills innovation. C-RAC 
has provided a separate proposal to this committee to eliminate 
portions of the statute that create such barriers for accreditors.

    C-RAC is prepared to move forward with you to find ways to serve 
learners better while continuing to ensure that these new ways still 
provide learners with an education of good quality. I encourage you 
today to open your minds (and ours) to possibilities we may have never 
imagined.

    The Chairman. Thank you.
    Dr. LeBlanc.

STATEMENT OF PAUL J. LeBLANC, PRESIDENT, SOUTHERN NEW HAMPSHIRE 
                   UNIVERSITY, MANCHESTER, NH

    Mr. LeBlanc. Chairman Alexander, Ranking Member Murray, I 
appreciate the opportunity to appear before the committee and 
share my perspective on innovation in higher ed both in terms 
of opportunities and barriers.
    I'm not sure we've seen a period of innovation quite like 
this in higher education. Senator Alexander, you have alluded 
to many of the advances, certainly huge advances in the quality 
of online learning, learning science, adaptive learning 
technologies, MOOC, State analytics, and perhaps most 
profoundly competency-based education. You may have seen 2 
weeks ago that Southern New Hampshire University's modestly 
named College for America's competency-based program was the 
first competency-based program to be embraced by a major 
corporation. Anthem Insurance has rolled it out to all 55,000 
of its employees, giving them a free college education all the 
way through the Bachelor's degree.
    It's an enormously exciting time. It's hard to keep up 
with. I would also point out that, with the exception of online 
learning, the advances that we've been talking about have yet 
to make a substantial impact, especially for those students who 
need the most help, not because they're not exciting, and not 
for great promise, but because they're still largely in their 
infancy and we are still in the development and learning phase, 
which is why today's topic is so important.
    These innovations are trying to take hold within a 
regulated industry that is meant to keep institutions within 
pretty rigid guardrails. Title I, for example, requires that 
students have ``regular and substantive interaction with 
faculty members,'' a rule originally written to distinguish 
correspondence programs from traditional college programs. It 
was written before advances in the online world, adaptive 
learning and the other things that we've talked about, and it 
is rigorously applied by the Office of the Inspector General, 
with a chilling effect on programs that might more dramatically 
re-imagine the role and use of faculty.
    We know now that teaching and learning is so much more than 
subject-matter expertise when it comes to designing high-
quality learning environments and assessment. In defense of the 
OIG, they're simply doing their job. The rule does constrain 
innovative program design, and experimental sites authority in 
education does not extend to title I.
    Another example, title IV allows for the ``direct 
assessment of student learning,'' as you mentioned, as an 
alternative to the credit-hour. While the legislative language 
allows for an alternative to the credit-hour, virtually all the 
title IV rules for disbursement of aid are tied to time. 
Innovative new CBE programs trying to have learning trump time, 
which is a very good thing in terms of the quality goal, still 
have to grapple with technical rules around satisfactory 
academic progress, term structures, definitions of full time, 
and other time-based rules that constrain program design and 
make no sense for what people are trying to do.
    Time is a poor proxy for actual learning and quality. On 
the other hand, I am most emphatically not arguing that we 
dramatically overhaul all the rules for higher ed in general. 
We don't know enough yet. For example, if competency-based 
education offers a new currency of learning, it still does not 
have an established exchange rate. We have, as of yet, little 
idea of how to create a transfer system for CBE. While a 
credit-hour-based system of transfer is inefficient and 
problematic, we have nothing upon which to base a transfer 
system for competency-based education.
    Also, if the credit-hour is a measure of time, it also 
reflects a unit of learning, and without a new system of 
exchange, there really is no way for the Federal Government to 
know what it's paying for, a potential disaster. While the 
regular and substantive interaction rule may not allow for some 
of the more innovative delivery models we see being developed, 
no one wants to go back to the abuses of the old correspondence 
programs of the 1980s.
    I worry a little bit about some of the policy discussions 
to which I have been party. No. 1, I don't think we know enough 
about the new programs and innovations to make good 
comprehensive policy. The danger is we write policy for 
innovation version 2015, when some of what we are doing now 
will improve and evolve.
    No. 2, if in the interest of allowing more innovation we 
make policy too lax, we risk seeing bad actors emerge and 
students ill-served. We saw it with online learning, and we see 
some evidence of it today already with CBE, for example in 
proposals that would allow 65 percent mastery of competencies 
to count as passing--we don't want our nurses to be good at 
only 65 percent of the things they should know--or providers 
who care too little for rigorous assessment, which is one of 
the two pillars of high quality, trustworthy CBE. Consumer 
protection advocates are right to be wary of innovation without 
important safeguards and quality assurance. Those need to be 
simultaneous activities.
    The question is, then, what do we do to stimulate 
innovation and take better advantage of the energy and openness 
to change earlier described? What does good innovation policy 
look like?
    I would urge you to think in terms of creating safe 
innovation spaces. You could create demonstration projects that 
remove time-based constraints on programs. You could create 
demonstration projects that allow non-IHEs into the title IV 
ecosystem, creating market pressures on incumbent higher ed. 
You could expand the Department's experimental site authority. 
It was meant to do small tweaks and disbursement. In fact, it 
should be expanded to title I also. Then we could do things 
around things like substantive interaction.
    In similar fashion, I would agree with Barbara that you 
should give accreditors safe space to try very different 
approaches to quality assurance, and if you allow for more 
flexibility, then most importantly we ought to demand a greater 
level of transparency and a focus on outcomes and assessment. 
Assessment is the great field of need right now in our 
industry. When you have transparency and rigorous assessment, 
you will know and cull out the poor players much earlier, and 
you will know if you have high quality. These things have to 
happen side by side.
    I'll stop now and chime in during the discussion. Thank 
you.
    [The prepared statement of Dr. LeBlanc follows:]
                 Prepared Statement of Paul J. LeBlanc
    Chairman Alexander, Ranking Member Murray and committee members, I 
appreciate the opportunity to offer testimony to the Committee on 
Health, Education, Labor, and Pensions (HELP) and to share my 
perspective on innovation in higher education, both in terms of 
opportunity and barriers. We are in a period of extraordinary change 
and innovation in my industry, driven by a combination of necessity (as 
institutional business models are breaking down for a variety of 
reasons) and advances in learning science, technology, and emerging 
delivery models.
    First, a note about myself. My family immigrated to this country 
when I was a child. My father worked as a stone mason and my mother 
worked in a factory until she was 76. They had 8th grade educations. I 
am a first generation college student, the first and only member of my 
family to attend. My college education changed everything. My 
daughters, both doctoral students, are living a life my parents could 
scarcely imagine because I was able to attend college, paying for it by 
working construction jobs every summer. I made a final payment on my 
student loans when I was in my late forties. Loans that were reasonable 
in amount. I have experienced the promise of the American Dream and my 
college education was the key--affordable, high quality, and 
meaningful. The mission of my university--and my personal calling--is 
to find innovative ways to make sure that a college degree continues to 
be within the reach of Americans with modest means, so they can improve 
their lives and the lives of their families and communities.
    Now, a word about my university. SNHU is a private non-profit 
university of over 70,000 students with a traditional campus in 
Manchester, NH, a large online presence, and a new ground-breaking 
competency-based education (CBE) degree program. This last, dubbed 
College for America, was in April 2013 the first CBE degree program to 
be approved under the ``direct assessment'' provisions of the Higher 
Education Act, allowing the disbursement of Federal financial aid for 
actual learning outcomes rather than the accumulation of time-based 
credit-hours.
    SNHU is widely known for its innovative work in providing to 
students multiple degree pathways that improve quality and lower cost. 
These include:

     A competency-based 3-year bachelors program created 15 
years ago (with FIPSE support) that cuts the cost of a degree by 25 
percent;
     The SNHU Advantage Program, with a flat $10,000 per year 
cost for the first 2 years program that saves 35 percent of the cost of 
our regular degree program;
     Our growing online programs (which offer a 4-year degree 
for under $40,000);
     The aforementioned College for America (CfA), which 
provides fully self-paced competency-based Associates and Bachelors 
Degrees for as little as $1,250;
     A recent $3.9m Federal First in the World Grant to develop 
just-in-time approaches to remedial education.

    CfA made headlines last month when Anthem Insurance announced that 
it would make the degree program free to all 55,000 of its employees, 
the first national corporation to embrace a CBE program as the college 
program of choice for its employees. Over 75 major corporations and 
other employers now use College for America, including Partners Health 
(the largest employer in Massachusetts) and the State of New Hampshire.
    Never has higher education seen a period of innovation like one we 
find ourselves in today. Consider the range of advances:

     Ten and fifteen years ago we used to ask how to make an 
online course as good as one delivered traditionally. Today, that 
question is reversed and the best designed online courses are superior 
to much of what happens in traditional course settings (though that 
claim still startles some).
     Learning science is giving us new insights into how the 
brain works and students learn most effectively.
     Adaptive learning technologies, using Artificial 
Intelligence and learning science, are allowing for effective learning 
environments that wrap around individual student capabilities and 
struggles, creating highly individualized and effective learning 
pathways.
     MOOCs are proliferating as a form of very high quality, 
high brand value learning content and we are beginning to better 
understand how they can be useful in a larger teaching and learning 
context, such as flipped classrooms.
     Data analytics is providing new optics into every facet of 
educational delivery, with potentially far-reaching impacts on 
advising, assessment, and quality. Today, for example, we can use 
predictive analytics to yield very fine tuned and individualized 
assessments of at-risk students and then much better tailor for them 
their learning plan and support, greatly increasing their likelihood of 
success.
     Game inspired learning environments, engaging and using 
the kind of built intelligence that we see in adaptive learning, hold 
the promise of rich-immersive learning worlds and simulations. Any of 
you who have watched teenagers lost in their game consoles recognize 
the power of well-developed programs to engage and challenge users and 
many of those same techniques and technologies can be used in designing 
learning environments.
     On the margins of higher education, we see a growing ed-
tech sector developing a variety of support services, new tools, 
learning platforms, and more. Some of those are actual education 
providers with excellent results, though they are not institutions of 
higher education (IHEs) and thus not in the title IV eco-system.
     And perhaps most profound, competency-based education 
(CBE) is taking hold with startling speed, with over 300 institutions 
working on CBE, from community colleges to flagship universities. Next 
generation CBE represents a paradigm shift in higher education, 
measuring what students actually know and can do rather than how long 
they sat (while the credit-hour makes time fixed and learning variable 
and hazy), better aligning education with workforces needs, and 
promising that elusive combination of higher quality and lower cost.

    It is an enormously exciting time in higher education. And hard to 
keep up with. It is also important to point out that with the exception 
of online learning, the advances just listed have yet to make a 
substantial impact on higher education, especially for those students 
who most need help. Not because they are not exciting and offer great 
promise, but because they are still largely in their infancy and we are 
still in the development and learning phase. That is why today's topic 
is so important.
    With over $150b of Federal financial aid at stake and vulnerable 
students who need protection, higher education is a highly regulated 
industry and innovation tends to be more difficult in that context. 
That is simply an objective observation and not an argument for more or 
less regulation. Existing regulatory bodies have never really been 
asked to support innovation. It's not the problem for which they are 
designed, so we have seen accreditors and the Department of Education, 
and State commissions of higher education all struggle to accommodate 
and support innovation. Higher education's own culture tends to the 
conservative and that gets reflected in accreditation standards and a 
just desire to protect students. Unfortunately, there are also 
providers who are unscrupulous or of poor quality or both. On the other 
end of the spectrum, the more elite and wealthy the institution or 
sector, the more resistant to innovation and change. When online 
learning started to take off in the mid-1990s, non-profits looked down 
their noses at that innovation and for-profit providers rushed into the 
space, eventually taking 12 percent of overall market of college 
students (and 25 percent of all Pell Grant dollars) and we saw great 
new providers, as well as unscrupulous ones offering poor quality 
programs. We are still cleaning up those messes. In sum, it is a 
complex environment in which to consider innovation, one that needs a 
balance of regulatory breathing room to invite trying new things with a 
watchful eye to ensure quality and protect students.
    All of that said, the Federal Government has had notable successes 
in seeding innovation, including:

     FIPSE and more recently First In The World grants, which 
helped scale and/or improve Western Governors University and our 
College for America programs ;
     By creating regulatory space in which to allow innovation, 
as it did in the 1990s with the 50 percent demonstration project that 
led to amazing innovation in online learning (and in not establishing 
parallel quality assurance, admittedly allowed abuse as well);
     By providing room within legislation, such as experimental 
site authority and the ``direct assessment provision'' of title IV that 
we and others are now using to develop new CBE programs.

    Indeed, unlike the experience of the 1990s, higher education seems 
more ready and embracing of innovation. For example, CBE programs are 
being rapidly developed and announced. Even elite institutions are 
finding ways to innovate, with the first MOOC providers coming out of 
Stanford, Harvard, and MIT (albeit as spin-offs and not within). 
Pressured to find new delivery models, institutions are more willing to 
look to new technologies. The ed-tech sector is finding a ready 
audience for their innovations, a willingness to try new things. It is 
a very good time for innovation in higher education.
    It is useful to distinguish between sustaining and disruptive 
innovation, as Harvard professor Clay Christensen uses the terms (full 
disclosure: he is Trustee Emeritus at SNHU). Sustaining innovation is 
an improvement in what one is already doing. It is playing the game by 
the same rules, but playing it better, and higher education has a 
superb record of sustaining innovation. Disruptive innovation means 
changing the rules of the game to lower cost, improving what one does, 
and reaching more people. The committee has asked how higher education 
innovation can result in more affordable programs of higher quality 
serving more students. The incumbent models cannot do that without 
massive infusions of capital and some dramatic rethinking of what they 
do and how. So the committee is essentially asking for disruptive 
innovation: how can we change the rules of the game to get our desired 
results?
    Therein lies the problem with a regulated industry. The rules are 
many, detailed, often complex, and really built to keep all 
institutions within pretty rigid guard rails. Title I, for example, 
requires that students have ``regular and substantive interaction'' 
with faculty members, a rule originally written to distinguish 
correspondence programs from traditional college programs. It was 
written before advances in the online world, adaptive learning, data 
analytics, and more and it is rigorously applied by the Office of the 
Inspector General, with a chilling effect on programs that might more 
dramatically reimagine the role/use of faculty. We know now that 
teaching and learning is so much more than subject-matter expertise 
when it comes to designing high quality learning environments and 
assessment. In defense of the OIG, they are simply doing their job. But 
the rule constrains innovative program design and experimental sites 
authority in ED does not extend to title I.
    Another example. Title IV allows for the ``direct assessment of 
student learning'' as an alternative to the credit-hour. This 
provision, clumsily named since all CBE should directly assess student 
learning, should really be called ``non-credit-hour CBE''. In all 
events, while the legislative language allows for an alternative to the 
credit-hour, virtually all the title IV rules for disbursement of aid 
are tied to the credit-hour. Innovative new CBE programs, trying to 
have learning trump time (a very good thing in terms of the quality 
goal) still have to grapple with technical rules around satisfactory 
academic progress (SAP), term structures, definitions of full-time, and 
other time-based rules that constrain program design and make no sense 
for what people are trying to do.
    Similarly, most accreditation is more focused on inputs--governance 
models, faculty roles, library resources, and so on--than outputs. CBE 
programs, with their focus on outcomes (What can students do with what 
they know?) and assessment (How do you know they have that mastery?), 
invite a very different kind of quality assurance process. Little in 
existing accreditation dives deep into competencies and the myriad 
questions that need to be asked:

     Why those competencies?
     Who values them?
     Do they have labor market value?
     Relevancy? And more.

    Nor does most accreditation look hard at assessment. Indeed, many 
would argue that the state of assessment in higher education is very 
poor, and when it comes to performance-based assessment, necessary when 
looking at what students can do, it is even worse. A regulated industry 
with rules really built for one kind of educational program or delivery 
(credit-hour based, informed by traditional residential learning) will 
obviously struggle with the kind of disruptive innovation you call for 
now, innovation that wants to--actually, needs to--break the existing 
rules. From the institutional side, nothing scares and thus constrains 
like the specter of a full-blown financial aid audit or the OIG coming 
down on an institution, never mind the kinds of sanctions available to 
State regulatory bodies and accreditors. Regulators and accreditors, 
whether Federal or State or accreditors, are not ill-intended or bad 
actors. They are mostly doing the job they have been asked to do and 
innovation of the kind now being demanded has never been part of the 
charge.
    On the other hand, I am most emphatically not arguing that we 
eliminate those rules for higher education in general. We do not know 
enough yet. For example, if competency-based education offers a new 
currency of learning (actual things students can do with what they know 
instead of how long they sat), it still does not have an established 
``exchange'' rate. We have as of yet little idea of how to create a 
transfer system for CBE, and while our credit-hour-based system of 
transfer is inefficient and problematic, we have nothing upon which to 
base a transfer system for CBE. Also, if the credit-hour is a measure 
of time, it also reflects a unit of learning, and without a new system 
of ``exchange,'' there is really no way for the Federal Government to 
know what it is paying for--a potential disaster. While the ``regular 
and substantive interaction'' rule may not allow for some of the more 
innovative delivery models we see being developed, no one wants to go 
back to the abuses of the old correspondence programs of the 1980s.
    I find this discussion and the interest in better supporting 
innovation timely and incredibly encouraging, but I also worry about 
some of the policy discussions now underway. For two reasons:

     No. 1, we do not know enough about the new programs and 
innovations to yet make good comprehensive policy. The danger is we 
write policy for Innovation V.2015 when some of what we are now doing 
will prove to be ineffective and we have not yet discovered 
breakthroughs that will improve what we do today. I am not a 
policymaker and don't pretend to understand it really, but it seems 
that policymaking wants to be informed by the best knowledge and 
thinking possible. We are still learning.
     No. 2, if in the interest of allowing more innovation we 
make policy too lax, we risk seeing bad actors emerge and students ill-
served. We saw it with online learning and we see some evidence of it 
today with CBE. For example, in proposals that would allow 65 percent 
mastery of competencies to count as passing (Do you want your nurse to 
be good at only 65 percent of the things he/she needs to know?). Or 
providers who care little for rigorous assessment (one of the two 
pillars of high quality, trustworthy CBE). Consumer protection 
advocates are right to be wary of innovation without important 
safeguards and quality assurance. Those need to be simultaneous 
activities.

    So the question is, ``what can we do?'' to stimulate innovation and 
take better advantage of the energy and openness to change earlier 
described? What does good innovation policy look like?
    I would urge you to think in terms of creating ``safe innovation 
spaces.'' In other words, find ways to allow institutions to try things 
outside of their regular regulatory space. You can do this in the 
following ways:

     Create a Demonstration Project that removes time-based 
constraints on programs.
     Create a Demonstration Project that allows non-IHEs into 
the title IV ecosystem, creating market pressures on the incumbent 
institutions and providing support for poor students so they can access 
the high quality providers.
     Expand the Department of Education's experimental site 
authority. ED's experimental site authority was originally intended to 
allow for more modest tweaks in disbursement rules and is now being 
used in somewhat more ambitious ways. That effort should be supported 
and authority expanded to explicitly acknowledge the goals of the 
committee, to include title I as well as title IV, and should give more 
``air cover'' to institutions when they get things wrong (and if they 
are truly innovating, they will indeed get some things wrong).

    For all of these ``safe spaces,'' allow separate reporting and 
auditing of the programs, so they do not have an adverse effect on the 
institution's key reporting metrics. On the other hand, participation 
in such projects should demand more evidence, more evaluation, and not 
simply be a waiver to try new things with little means for 
understanding what works and what doesn't. I am arguing for good 
experimentation and that requires good methodologies and I fear that 
past attempts have been lax in this regard. Moreover, with better 
evidence-based experimentation, we can better protect student 
interests.
    In similar fashion, you might give accreditors ``safe space'' to 
try very different approaches to quality assurance and similar ``air 
cover'' for when they get it wrong. If an accreditor believes they will 
be hauled before this committee and harangued if an innovative program 
falls short or their new quality assurance approach is found wanting, 
there is little incentive for them to try something new or work closely 
with innovative providers. On the other hand, if you allow for more 
flexibility, insist that new innovation accreditors shift their focus 
to outcomes and transparency of data. Doing so will tell us much more 
quickly what is and isn't working, will cull out the poor players. Make 
room for new accreditors using very different outcomes-based approaches 
or for existing accreditors to create outcomes-based alternative 
pathways to approval. Whatever criticisms might be leveled at 
accreditors and regulators, there remains very little incentive for 
them to take chances. Only bad things happen to them as they get little 
to no credit for successes and take on a lot of risk with failure. If 
you want them to act differently, create the space for them to do so 
and some protection for the mistakes that come with innovation--and 
often, it is the mistakes that lead to breakthroughs, by the way.
    In terms of protecting students, as suggested above, there is much 
that can be done to make participation in safe space innovation 
incumbent on transparency of data, access to programs for reviewers 
(and online technology makes optics into program performance so much 
more powerful), and success in lowering costs, and limiting the number 
of enrollments. You might also consider some risk-sharing elements and 
varying levels of latitude depending on provider track record and other 
factors. In a more open, more experimental innovation space, access to 
aid and lending might be differently structured and tiered depending on 
the provider, the program, and other factors. I believe, Mr. Chairman, 
that you have explored these ideas.
    Finally, we need any policy supporting innovation to focus on 
assessment, evidence, and genuine outcomes (what individual students 
can do and what they know) and outputs (program results like job 
placement, increase in earnings, level of debt, and more). For the 
former, we need to improve our practice, especially in performance-
based assessment. When our lives matter, as in medicine, we do not rely 
solely on board scores, we insist on clinicals under the watchful eye 
of expert practitioners. Pilots can take exams, but we put them in 
flight simulators for hours, under the gaze of expert pilots, before 
they ever get behind the controls of a plane full of people. And even 
then, they work their way up. There is a general crisis of faith in the 
labor market: too many college graduates that can't write, read a 
balance sheet, calculate percentages, stand up and present to a room 
full of people. We need to work hard on assessment and know that when 
we say a graduate can X or Y, that the assessment we used gives us 
confidence to stand behind that claim.
    If we can shift our focus to outcomes and clear claims for learning 
and rigorous assessment, we can far better serve the interests of 
students, of quality, of the workforce. We may have to come to grips 
with lower completion rates for a while--there are too many college 
graduates being passed along today--until we learn how to deploy the 
full array of advances described earlier, many of which allow us to use 
human support in more impactful ways. We can rethink our definitions of 
quality and how we know, allowing us to then rethink accreditation. 
Today we have an alignment of need, of desire, of willingness, and of 
new advances that can result in a new higher education system that 
holds onto the best of what we have today, while creating new and 
effective delivery models.
    In closing, I urge you as policymakers to find a balance 
appropriate to where we are as an industry. It is a balance between 
creating safe spaces for innovation (for both institutions, new 
providers, and quality assurance entities), giving the Department of 
Education a mandate and the tools to be more expansive and expeditious 
in supporting innovation, and demanding better evidence, more data, and 
greater transparency than traditional higher education generally 
provides today. There is much to learn in the next 2 to 3 years and 
with that learning in hand, you can write policy for a new American 
higher education that provides the advances in affordability, quality, 
and access you seek, and more importantly, keeping the American Dream 
alive for the millions of Americans who feels it increasingly out of 
reach today.

    The Chairman. Thank you.
    Mr. Horn.

    STATEMENT OF MICHAEL B. HORN, CO-FOUNDER AND EXECUTIVE 
         DIRECTOR, EDUCATION PROGRAMS, CLAYTON CHRIST-
                 ENSEN INSTITUTE, SAN MATEO, CA

    Mr. Horn. Good morning, Chairman Alexander and Ranking 
Member Murray, and distinguished members of the committee. 
Thank you so much for the opportunity to speak with you about 
the opportunities and barriers for innovation in higher 
education, which has been my work at the Clayton Christensen 
Institute for nearly a decade now.
    As we're gathered here to explore innovation in higher 
education, it's appropriate that we focus on the concept of 
disruptive innovation, which is a catch phrase that is 
certainly on the minds of many in traditional higher education 
institutions.
    Although it's true that disruptive innovation has arrived 
in higher education, the concept is all too often misunderstood 
and misapplied. I wanted to spend a little bit of time up front 
just clarifying what the concept actually means.
    Disruptive innovation is the force that transforms sectors 
where the products or services were expensive, complicated, 
inconvenient, and inaccessible and therefore only served a 
limited population with expertise or wealth, into services and 
products that can serve many more people because they're far 
more affordable, convenient, accessible, and simple to use. 
It's the process that's transformed and made computing, 
automobiles, retail, service industries, non-profit, 
governmental, and highly regulated industries far more 
affordable and accessible.
    There are four rules that I want to focus on around 
disruptive innovation that are worth noting for this 
conversation. First, disruptive innovations tend to start 
outside of the mainstream, in areas of what we call non-
consumption, where the alternative for those users is quite 
literally nothing at all.
    Second, they tend to be simpler than existing services, and 
therefore the elite and leading organizations in a field tend 
to dismiss them. They also redefine the notion of what is 
quality and performance and, as such, they fit poorly in 
existing regulatory structures.
    Third, incumbent organizations cannot successfully 
introduce them within their core operations.
    And finally, although disruptions start by addressing those 
simple problems, they predictably and reliably improve to serve 
more complex problems over time and transform sectors.
    As we've studied the challenges and opportunities in higher 
education, what we've observed is that online learning, broadly 
defined, is the first disruptive innovation in higher education 
since the advent of the printing press and, combined with 
competency-based learning, has extreme transformational 
potential for students.
    I want to focus on a class of institutions emerging outside 
of traditional higher ed today, as you've already heard from an 
online competency-based university.
    One group is broadly known as the coding bootcamps, 
although they've extended beyond coding. A classic example is 
General Assembly, which offers brick and mortar co-working 
experiences combined with online learning which offers students 
short, intensive, focused programs to help students find jobs 
with their new skill set. General Assembly reports having a 95 
percent job placement rate into a student's field of study and 
is already graduating over 1,000 students per month.
    Another group is powered exclusively by online learning and 
helps students skill up in their career journeys. Udacity 
presents an interesting case because they have pivoted to teach 
the IT skills that employers need today, and they've created a 
credential, the nanodegree, that many employers have endorsed. 
It also created the Open Educational Alliance, an industry-wide 
alliance of educators and employers that amounts to a de facto 
accrediting organization.
    Finally, some of these new programs are serving students 
who do not already have traditional degrees. I want to focus on 
one called LearnUp, which educates entry-level job seekers in 
America through leveraging online technology and has now 
trained over 95,000 people for entry-level jobs who perform 
better than their peers in those organizations. It was born 
from the experience its founders had spending 6 months in 
unemployment lines in 2011 to understand why these people were 
struggling to get and maintain jobs.
    With an understanding of the theory of disruption in place, 
there are a few important policy implications that challenge 
our existing regulatory structure that I want to conclude my 
remarks with.
    First and unsurprisingly, given disruptive innovation 
theory, traditional accreditors were not built to assess these 
new types of innovations, and we shouldn't be surprised if 
their existing processes would struggle to judge their quality.
    Second, because these programs are emerging in a variety of 
fields, taking the tack of government-mandated assessments that 
are common to all these programs would likely stunt innovation, 
but focusing on new accrediting organizations or new financing 
mechanisms around these programs would be a potential pathway 
to guarantee their quality.
    And third, these institutions collectively challenge the 
definition of higher education enshrined in current law as they 
are programs and courses but not institutions. So in the years 
ahead they will increasingly push us to ask: What is college?
    Thank you for your time today, and I look forward to the 
conversation.
    [The prepared statement of Mr. Horn follows:]
                 Prepared Statement of Michael B. Horn
                                summary
    Disruptive innovation is the force that transforms sectors where 
the products or services were expensive, complicated, inconvenient, and 
inaccessible and therefore only served people with the most expertise 
or the most wealth into ones where the products and services are 
affordable, convenient, accessible, and decentralized such that many 
more people can benefit from them.
    Online learning is a disruptive innovation. Combined with 
competency-based learning--in which students progress upon true mastery 
of their learning--there is a big opportunity to transform our higher 
education system into a more affordable, student-centered one that is 
able to serve many more students.
    Disruptive innovations have four features worth noting. They start 
by serving nonconsumers outside of the mainstream. They tend to be 
simpler than existing services and don't fit neatly into existing 
regulatory structures. Incumbent organizations cannot successfully 
adopt them within their core operations. And they predictably and 
reliably improve over time to tackle more complex problems.
    There are many new types of organizations emerging with disruptive 
potential.
    One such group is broadly known as the coding boot camps. They 
combine online learning with brick-and-mortar co-working experiences to 
offer students short, intensive, focused programs to help students find 
jobs with their new skill set. General Assembly reports having a 95 
percent job placement rate into a student's field of study and is 
already graduating over a thousand students per month to transform 
higher education from a destination into an experience that one returns 
to over and over again through a journey of lifelong learning.
    Another group is powered by online learning and also helps students 
skill up in their career journeys. Udacity teaches the IT skills that 
employers need today and has created a credential--the nanodegree--that 
many employers have endorsed. It created the Open Education Alliance, 
an industry-wide alliance of educators and employers that amounts to a 
de facto accrediting organization.
    Finally, some of these new programs are serving students who do not 
already have traditional degrees. LearnUp educates entry-level job 
seekers in America through leveraging online technology and has now 
trained over 95,000 people. Its employer partners pay for the training.
    These disruptions challenge the existing regulatory framework in 
three ways. Traditional accreditors were not built to assess them. 
Using government-mandated common assessments to judge their quality 
could create barriers to innovation, but alternative financing and 
accreditation systems could be useful. And these organizations 
challenge the definition enshrined in current law of what is a college.
                                 ______
                                 
    Good morning, Chairman Alexander, Ranking Member Murray, and 
distinguished members of the committee. Thank you for giving me the 
opportunity to speak about barriers to and opportunities for innovation 
in higher education today.
    My name is Michael Horn, and I am the cofounder and executive 
director of the education program at the Clayton Christensen Institute, 
a non-profit, non-partisan think tank with offices in Lexington, MA and 
San Mateo, CA that seeks to transform our education system into a 
student-centered one that allows all students to fulfill their 
potential.
    As we are gathered here today to explore the topic of innovation in 
higher education, it is appropriate that we address the concept of 
``disruptive innovation''--a catch phrase that is on the minds and 
tongues of many in colleges and universities.
    Although it is true that disruptive innovation has arrived in 
higher education, the concept is all too often misunderstood and 
misapplied, so in my testimony today I am going to first define and 
explain the theory; talk about how it applies to higher education; then 
give some examples of potential disruptors emerging in higher 
education; and finally mention some of the policy implications.
    Disruptive innovation is the force that transforms sectors where 
the products or services were expensive, complicated, inconvenient, and 
inaccessible and therefore only served people with the most expertise 
or the most wealth into ones where the products and services are 
affordable, convenient, accessible, and decentralized such that many 
more people can benefit from them.
    It is the process that transformed computing. Before disruptive 
innovation, big mainframe computers that cost a couple million dollars 
to own and were limited to an elite population dominated the industry 
some 50 years ago. Thanks to disruption, computing is now a sector in 
which the majority of us carry around mobile devices in our pockets and 
pocketbooks that can do things no mainframe computer on the face of 
this earth could possibly have done over half a century ago.
    Disruption is widespread. It is the process that has made 
everything from automobiles to retail and from service industries to 
non-profit, governmental, and highly regulated industries more 
affordable and accessible.
    There are a few rules of disruptive innovation worth noting. 
Disruptions typically start in areas of what we call nonconsumption--
areas where the alternative is nothing at all--outside of the 
mainstream. For example, the first Apple personal computers were sold 
as toys to hobbyists and children who couldn't afford a quarter-million 
dollar minicomputer and therefore, prior to the personal computer, had 
no access to computing. Second, they tend to be simpler than existing 
services; as a result, they take root in undemanding problems at the 
outset, and the sector's leading organizations tend to dismiss them 
because they don't look terribly good in comparison to the way people 
have traditionally thought of quality. But they also redefine the 
notion of what is quality and performance. As such, they don't fit 
neatly into existing regulatory structures and often create new ones 
over time. Third, not only do incumbent organizations dismiss them 
because they at first appear to be primitive, but incumbent 
organizations also cannot successfully introduce them within their 
existing models, as the steps to doing so are counterintuitive for most 
parts of the mainstream organization. Finally, although disruptions 
start by only addressing simple problems, because they are driven by a 
core technology, they predictably and reliably improve over time to 
tackle more and more complex problems. As they do so, they retain their 
initial value proposition around affordability, accessibility, and 
simplicity and gradually serve more and more people until, at some 
point in the future, they supplant the old way of doing things for most 
people.
    As we have studied the challenges and opportunities in higher 
education, what we have observed is that online learning, broadly 
defined, is the first disruptive innovation to appear in education 
since the advent of the printing press. Combined with competency-
based--learning--in which students progress upon true mastery of their 
learning, not because of an arbitrary time-based measure--we see huge 
opportunities to seize this disruptive innovation and transform our 
higher education system into a more affordable, student-centered one 
that, as a consequence, is able to serve many more students and 
transform our notion of quality and performance from measures of time 
and selectivity to learning and outcomes for all students.
    True to form, we are seeing a variety of potentially disruptive 
organizations powered by online learning emerge from outside 
traditional higher education. These upstarts are reaching those 
students who need more education but for reasons having to do with 
convenience and accessibility, simplicity, and cost, are, at that point 
in their lives, nonconsumers of traditional higher education. The 
organizations are generally simpler, more focused institutions than our 
traditional colleges and universities and do not look like traditional 
higher education; they do not have 4- or even 2-year programs, they 
lack breadth, they do not do academic research, and they don't have 
grassy green quads. Accordingly, the existing regulatory structures do 
not know how to judge them. Even as many of our traditional 
institutions of higher education have paid lip service to the 
innovations these new entities are unlocking, by and large they have 
not harnessed their disruptive potential themselves. And although they 
are starting by solving simple problems, we can predict with certainty 
that this upstart sector as a whole will improve to solve more complex 
problems over time and further blur the lines around what is higher 
education. What's exciting is that with the help of these disruptions 
from the fringe, we have the opportunity to make a quality higher 
education fundamentally affordable and thereby allow many more people 
access to its benefits.
    This committee is aware of the emerging class of online, 
competency-based universities, and is hearing from one today. Many of 
these institutions are following the classic patterns of disruptive 
innovation. I am going to focus my remarks on three other groups of 
organizations that are, in classic disruptive fashion, emerging from 
the fringe outside of traditional colleges and universities.
    One such group is broadly known as the coding bootcamps--
institutions ranging from General Assembly to Galvanize and from 
Flatiron School to Dev Boot Camp. These boot camps, which are beginning 
to move beyond simply teaching coding skills, generally combine online 
learning with brick-and-mortar co-working experiences to offer students 
short, intensive, focused programs to help students find jobs with 
their new skill set. And they are growing fast. One recent survey by 
Course Report found that in 2014, 6,714 students graduated from coding 
boot camps specifically, a number that is expected to rise by 138 
percent in 2015 to 16,056 graduates. To put that number into 
perspective, there were roughly 48,700 undergraduate computer science 
graduates from accredited universities in 2014. The average price of 
these coding bootcamps is $11,063, and the average length of a program 
is 10.8 weeks. As a result of their length and focus, they are far more 
accessible than traditional higher education for thousands who cannot 
go or return to a traditional institution of higher education for the 
length of time it would take to receive the corresponding skillset. In 
many cases, this just-in-time education is offering learning 
opportunities that would not even be available on many traditional 
campuses. And alternative financing mechanisms are emerging to help 
students afford the experience and send students signals about which 
programs offer the more promising pathway to success.
    General Assembly is arguably the poster child for the sector. It 
offers full-time courses to help students make a career change, part-
time courses to help students level up in their career, online courses, 
and online tutorials in topics ranging from web development to product 
management and from digital marketing to business foundations. Its 
full-time and part-time courses run 8 to 12 weeks, and it works hard to 
connect students and employers, as it reports having a 95 percent job 
placement rate into a student's field of study. With campuses in 14 
cities and five countries, General Assembly is already graduating over 
a thousand students per month and transforming higher education from a 
destination into an experience that one returns to over and over again 
through a journey of lifelong learning.
    Another group of emerging programs is powered strictly by online 
learning and also helps students skill up in their career journeys. 
From Udemy to Udacity and Lynda.com, these programs are growing fast 
and have generally chosen to avoid playing in the traditional higher 
education arena. As an organization that emerged from a traditional 
university, Udacity presents an interesting case study, as it pivoted 
to teach the IT skills that employers need today--sometimes with 
employers building the courses themselves--and it has created a 
credential--the nanodegree--that many employers have endorsed and takes 
6 to 9 months to complete for a student studying 10 to 15 hours per 
week. The content in Udacity's online courses is free; enrolling in a 
course for credit costs roughly a couple hundred dollars per month. 
With enrollment in a course comes a much more immersive experience with 
hands-on projects and active coaching while still maintaining the 
inherent flexibility of online learning by having the courses available 
on-demand. And a new feature of the Nanodegree program will give 
students half the tuition back if they graduate within 12 months of 
enrollment. What's particularly noteworthy about Udacity besides that 
it is also seeking to turn education from a one-time event to a 
lifelong experience, is its work in creating the Open Education 
Alliance, an industry-wide alliance of educators and employers that 
include Google, AT&T, and Intuit. This alliance amounts to a de facto 
accrediting organization, as the employers' participation lends 
credence to the nanodegree credential that Udacity offers, such that 
traditional accreditation's seal of approval is far less meaningful 
outside of the access to Federal dollars it brings. In other words, 
organizations like Udacity will ultimately build their credibility not 
from traditional accreditation, but from the reputations they develop 
based on the success of their students with employers.
    Finally, some critics of these new programs observe that many of 
them are serving students who already have traditional degrees and 
therefore are well-prepared to take advantage of the offerings, but 
that these programs are not useful for the majority of students who 
have not completed a college degree. Disruptive innovation theory 
suggests that there are several reasons that this pattern may not hold 
in the future, and, at least in some programs, that future is already 
present. A new program called The Guild is launching that explicitly 
plans to give adult students the skills and support to succeed in the 
middle skills economy. Another organization, LearnUp, presents an even 
starker counter-example, as it educates entry-level job seekers in 
America through leveraging online technology. Born from the experience 
its founders had in 2011 when they spent months in unemployment lines 
to understand why potential employees were struggling to get hired, the 
team concluded that job seekers not only often lack the skills they 
need to succeed in jobs, but also don't know what they need and what 
different jobs entail. LearnUp has now trained over 95,000 people for 
entry-level jobs, who, according to the company, stay longer and are 78 
percent more effective than their peers. It also reduces the risk for 
its students because its employer partners, such as Staples and Old 
Navy, pay for the training and students can experience what a 
particular job is like quickly through LearnUp before actually being 
hired to ensure the fit is right.
    With an understanding of the theory of disruptive innovation in 
place, it is unsurprising that all these potential disruptors are 
emerging outside of traditional higher education. And as U.S. 
Department of Education Under Secretary Ted Mitchell has noted, they 
pose particular problems to the existing regulatory structure that has 
long governed post-secondary education. With my remaining testimony, I 
will note three specific challenges.
    First, and unsurprisingly given disruptive innovation theory, 
traditional accreditation was not built to assess these new kinds of 
providers, nor as incumbent institutions built around the existing 
order of higher education should we expect them to be able to do so in 
the future.
    Second, these programs are emerging in a wide variety of fields 
that are constantly changing. As such, if the government is interested 
in funding low-income students to attend them, determining their 
quality through common, government-mandated assessments will be 
difficult and unwieldy at best and could stunt innovation. But my 
testimony suggests two other paths that could aid in judgments around 
quality: new financing mechanisms and employer-led de facto 
accreditation. Moving beyond today's all-or-nothing access to Federal 
dollars that allows many students to avoid making rational quality-cost 
tradeoffs may be important as well.
    Third, these institutions collectively challenge the definition of 
higher education enshrined in current law, as they are programs and 
courses but not institutions. In the years ahead, they will 
increasingly push us to ask the question: what is college?
    Thank you for your time today. I am excited that the committee is 
taking seriously the innovation emerging in higher education and asking 
how we can harness it to create a better future for all students.

    The Chairman. Thank you for very interesting testimony.
    We'll now have 5-minute rounds of questions.
    Mr. Horn, in General Assembly and Udacity, are those 
students eligible for Federal aid?
    Mr. Horn. No, they are not.
    The Chairman. They're not.
    Dr. LeBlanc, are 55,000 students from a single 
corporation----
    Mr. LeBlanc. Fifty-five thousand employees, 35,000 of them 
without college degrees.
    The Chairman [continuing]. Will they earn college degrees 
from your university?
    Mr. LeBlanc. All can have, and in the first hour after we 
announced it within the company we had 900 inquiries.
    The Chairman. What would be the cost of that per student?
    Mr. LeBlanc. None to the student, and our program is $2,500 
a year.
    The Chairman. Versus a $10,000 degree?
    Mr. LeBlanc. Yes, and less than their annual tuition 
remission program provides.
    The Chairman. Are those students eligible for Federal 
loans?
    Mr. LeBlanc. Yes, because our program was approved by the 
U.S. Department of Education. It is title IV eligible under the 
direct assessment rules.
    The Chairman. Under direct assessment. Was it also approved 
by an accrediting agency?
    Mr. LeBlanc. Yes, yes. That's required before one can come 
forward for direct assessment and approval.
    The Chairman. The opportunities--your testimony seems to 
suggest a way to deal with this. Senator Murray may have, too, 
in her remarks.
    Dr. Gellman-Danley, I think I hear you saying give us a 
little more room in the accrediting agencies and we can allow 
more--we can deal with these innovations as they come through 
the process. That's what you're saying, right?
    Ms. Gellman-Danley. Exactly. We are on the ground every day 
with these institutions, and we find brilliant ideas----
    The Chairman. What keeps you from doing that now?
    Ms. Gellman-Danley. There are a lot of Federal regulations 
that----
    The Chairman. Like how many?
    Ms. Gellman-Danley. There's over 100. I mean, there's a 
lot.
    The Chairman. Could you give us a list of the obstacles 
that keep accreditors from doing what you just described?
    Ms. Gellman-Danley. In time, and I would be----
    The Chairman. I don't mean today.
    Ms. Gellman-Danley. Right. I will say that time to do our 
business will correlate directly with that list, and we will be 
very glad to provide that.
    The Chairman. That would be helpful to see that.
    Do I hear from Dr. LeBlanc that you're suggesting that just 
opening the door to everything could lead to disastrous, 
unanticipated consequences, but that perhaps more flexibility 
for accreditors, perhaps larger experimental programs, perhaps 
more demonstration projects would be the way we should be 
thinking about this. Is that right?
    Mr. LeBlanc. That's correct. I think you need to create 
safe space for all the players to try new programs, and the 
issue with competency-based education, I would argue, is that 
higher education is not yet nearly as good as it needs to be in 
the area of assessment. Two key questions, which is what are 
the claims they make for student learning, and how do you know? 
We're not as good as we will be in the future on the how do we 
know, and we see great advances. That's what's going to 
determine quality. It's what's going to cull out providers. It 
ultimately will protect students and employers.
    The Chairman. Colleges haven't really spent a lot of time 
on assessment. I mean, when I was at the University of 
Tennessee I appointed the first vice president for assessment, 
and the question from a lot of people was, well, what is there 
to do, because you assess class by class and do lots of things.
    Why have there been so few applicants for the direct 
assessment? Or approvals maybe I should say.
    Mr. LeBlanc. I won't speak for the Department, but I 
certainly speak for many of my peers who are working in this 
area. I think the title IV rules about disbursement are very 
onerous. You've got a fundamental mismatch, right? Which is 
you're asking us to design programs that are untethered to the 
credit-hour time, yet all of the ways that we will disburse aid 
are connected to the credit-hour time.
    The Chairman. That's right. Let me talk about that just a 
minute, because here we're talking about reauthorizing higher 
education. This affects how the Federal Government, from its 
taxpayers, distributes about $135 billion a year, $100 billion 
in loans, $35 billion in aid. All these definitions, I guess 
all, are really based on the credit-hour concept, how much time 
you spend in school rather than what you learn. That means you 
have to go all the way through that and change those 
definitions. But at the same time, if we do that for 
everything, we might open the door to the unanticipated bad 
consequences that you mentioned and that Senator Murray talked 
about.
    How do we change the definitions? In the time you spent 
with Ted Mitchell, did you figure out how to change the 
definitions of the credit-hour in such a way that we could 
responsibly begin to allow competency-based education to occur?
    Mr. LeBlanc. Let me say that we don't have right now a 
credible system of transfer credit or unit measures. Time 
everyone understands. A credit-hour is about time. It's also a 
unit of measurement. It's a unit of learning. While it's an 
ill-defined one, most of us who have worked in higher ed know 
it when we see it.
    We have a system. That doesn't exist in competency-based 
education today, nor do we have a system of reliable micro-
credentials and badges of the kind that Michael and you and 
others have alluded to. A lot of good work is being done on 
this front right now. Lumina just funded a major project at GW 
that's looking at an ANSI standards-based approach to micro-
credentials and how we start to rationalize the system.
    It's a new movement, so there's not any agreed-upon 
taxonomy. You hear all kinds of terms being used. This isn't 
emblematic of failure in this new movement. It is reflective of 
how early it is. What I think I'm arguing for here is more time 
to innovate and experiment and to give people more space to do 
that than they currently enjoy given the systems and rules we 
work with. You will make better policy in a couple of years. 
You will know a lot more about this in a couple of years.
    The Chairman. Thank you.
    Senator Murray.
    Senator Murray. Thank you, Mr. Chairman.
    Dr. LeBlanc, I believe really strongly that our 
policymaking should be based on evidence and on data, and with 
higher education the results of any innovation should tell us 
how a program works, for whom, and for how much, especially 
when it comes to serving our students most in need. I wanted 
you to expand on your suggestion that Congress create some safe 
innovation spaces and evaluate outcomes. What would those 
spaces look like, and how could we ensure that we safeguard 
student interests while we foster innovation?
    Mr. LeBlanc. Sure. In terms of the tools you have available 
to use, certainly demonstration projects. If you remember, it 
was a demonstration project in the 1990s that really opened the 
door for innovation in higher education. Any of this expansion 
of safe space, it seems to me, needs to be accompanied by a 
different approach to quality assurance.
    One might be quick to point out that that same kind of 
spurring of innovation--genuine, substantial, changing our 
industry--also invited a lot of bad agents and players, and 
there was a lot of student abuse that's still being cleaned up. 
Both those things happened.
    I think we can learn a lesson from that and think about 
safe spaces that require a greater level of transparency from 
the players. If you want in as an institution, demand more data 
than higher ed is generally willing to provide. There's a great 
resistance to that level of transparency in my industry, 
unfortunately.
    I think we need to demand more rigorous and better 
assessment. I think we have tools now to give regulators better 
optics into the work itself. If you're looking at an online 
program, like CBE is, give the accreditors the ability to go in 
and look at the data and the systems. Data analytics is so 
powerful, and system people come forward with proposals that 
they outline the kinds of things they can know and how they'll 
know. There are really powerful tools now that weren't 
available 10 and 15 years ago.
    The idea of the site visit is rather an antiquated notion 
in my mind. It's an artificial act. That ability to go in and 
take a look at actual student data and the kinds of things that 
are going on in those learning experiences, is very powerful.
    You also right now don't have the underlying systems that 
would allow a lot of the innovation that people are demanding. 
There is no student information system in the market today that 
can handle CBE adroitly. There is no financial aid system, with 
one exception of a program that's emerging, that can handle 
financial aid in the ways it needs to be handled. We've got to 
allow some of this experimentation, some of this evolution, and 
have a lot of quality control alongside it.
    I think Barbara's point--one of the things I was asked to 
do by Ted is to work on ways to stand up new quality assurance 
processes, and maybe even new quality assurance providers, and 
there's a lot of interest in this right now. What was 
encouraging is that the regionals, hearing this, actually stood 
up and said we'd be interested, can we try some of that new 
approach, and can we carve out space in which to do it. Many 
accreditors are really concerned about things like the OIG 
swooping in and saying the Department may have said you can do 
this, but this is what the rules of the game are, and we're 
going to enforce them.
    Demonstration projects, expanded ex-sites. Ex-sites are 
really only meant to tweak, to make small tweaks in Federal 
disbursement, things like if we get 5 days instead of 2 days, 
does that change the efficacy of the system. We have an 
expanded effort to use ex-site authority more broadly. That 
should expand to title I as well.
    Senator Murray. OK. I appreciate that.
    Mr. Merisotis, given the astounding increase in college 
costs over the last decade and the student debt that continues 
to increase, many of our students and families are really 
looking to pathways of higher education that are much more 
affordable. How important do you think it is for innovative 
models of higher education to bring down costs for students?
    Mr. Merisotis. I think it's very important. I think it's 
one of the great promises of these innovations, which is that 
if you can lower the cost, you can actually serve the students 
better. I think that the model of Federal policy has to be 
centered around this idea of the student. The fundamental 
problem is that it's centered around this idea of the 
institution. The institution is really the driver of Federal 
policy today.
    If you look at these new types of providers of post-
secondary learning, the kinds of things that are taking place 
in existing institutions like Southern New Hampshire University 
and the new efforts, the General Assembly's, the examples that 
I mentioned of great types of post-secondary learning existing 
in other types of cultural institutions like libraries, 
community-based learning centers, et cetera--this is not all 
technology driven--it's very important for us to see these as 
opportunities to bring down the cost and bring up the quality. 
In other words, we've got an opportunity here to actually put 
the students at the center and put their learning, the outcomes 
that they get, the results that they achieve, at the center of 
the process, as opposed to trying to figure out whether or not 
this provider or that provider is the right one to do the work.
    If we can be clear about what the student outcomes are, we 
can then have an array of providers who get rewarded for 
serving those students well in the process, and those rewards I 
think will help to bring down these prices and the higher cost 
to families.
    Senator Murray. Will this just be saving time? Should we 
just be focused on that? Or on returning some of these dollars 
to the students themselves?
    Mr. Merisotis. Yes. The money's got to go back to the 
students. That's the key. Saving the time--if the cost savings 
aren't going back to the students, then we are not serving 
their best interests. Their best interests have to be at the 
heart of this. I think that's the most critical element of the 
entire equation.
    Senator Murray. OK. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Murray.
    Senator Cassidy, and then Senator Warren.

                      Statement of Senator Cassidy

    Senator Cassidy. I don't know who to direct this to, so 
I'll open it up and whoever wishes to reply.
    I teach with LSU Medical School. We actually, in the second 
2 years of medical training, have competency training. The 
young student comes with me and I help her examine an abdomen, 
and then we discuss the differential diagnosis.
    Of course, there's the first 2 years of intensive classroom 
training, and then there's 4 years typically before that. On 
the other hand, we do have competency training, at the end of 
which I grade the student as honors, high pass, pass, fail, and 
then there's a test.
    We have all these issues of how we reimburse based upon 
competency, but it seems as if, at least in medical school and 
I presume veterinary school, this has been worked out. If this 
paradigm has been worked out in some situations, by the way, 
whenever I tell people I teach but I'm not lecturing, I'm not 
writing on a board, I'm not with a PowerPoint, they don't 
comprehend it. I will tell that among my colleagues. I'm saying 
that this is a different paradigm.
    Tell me, if we do have that paradigm, and we have all these 
definitions we have to change, and yet in this one situation 
the definition is perfect, some of it needs to be reconciled, 
those two schools of thought?
    Mr. LeBlanc, I'm from Louisiana. I will never call you Mr. 
LeBlanc.
    Mr. LeBlanc. Thank you.
    [Laughter.]
    Senator Cassidy. I don't know how you pronounce it, but 
back home we say LeBlanc.
    You spoke of this earlier. How would you comment? We do 
have a paradigm. Can we apply that paradigm of medical school 
to other fields?
    Mr. LeBlanc. That paradigm exists in all those fields where 
we care the most. We also have pilots who take exams, but we 
don't let them get behind the controls of a plane until they've 
been in a simulator for X number of hours. And then, like you, 
they work under the eyes of an expert supervisor in the right-
hand seat before we let them pilot.
    You evoke the critical challenge in assessment right now 
for these new programs, which is they really are less about 
what you know and far more about what you can do with what you 
know. This helps bridge the gap for employers who, in the Pew 
study of about 18 months ago, it was revealed that about 75 
percent of university provosts believe their graduates are 
ready on Day 1, but only 11 percent of employers agree with 
them. There's a yawning gap, and we can talk about why that's 
true.
    Senator Cassidy. How do we take this paradigm, which is 
being used in medicine, veterinary, and pilot training, and we 
take it into engineering or dietetics? Dietetics has an 
apprenticeship as well.
    Mr. LeBlanc. Employers would say let's take it to writing. 
We're sick of hiring people with 4-year college degrees who 
can't write. We're sick of hiring people with 4-year college 
degrees who can't read a spreadsheet. I think that's where we 
need to do a lot of work, on performance-based assessment. If 
the State of assessment, as Senator Alexander alluded to, is 
not very good in higher education, the State of performance-
based assessment is----
    Senator Cassidy. Can I suggest something?
    Mr. LeBlanc. Yes.
    Senator Cassidy. In medicine, if we send somebody to a 
private hospital, they'll actually reimburse the physician for 
the time she spends instructing as opposed to seeing patients. 
Could we have a novel sort of higher ed program where the 
engineering firm takes on internships that actually have a 
designated teacher, and they will actually spend a portion of 
their time instructing as opposed to strictly engineering? Do 
you follow what I'm saying?
    Mr. LeBlanc. We're seeing lots of new delivery models that 
do much of what you have just described, and like our effort to 
get CBE to work within a time-based system, these programs have 
to work their way through standards of quality approval and 
accreditation. The accreditors have been pretty good about 
allowing a lot of that flexibility. I still think you're now 
almost pointing further down the road to how do we pay for it, 
and I think there are interesting models of performance-based 
funding, risk-sharing models----
    Senator Cassidy. Except that the Federal Government heavily 
subsidizes medical education. In terms of paying for it, the 
Federal Government is actually paying for competency training 
right now for these sorts of things we've been discussing.
    Sir, you had a comment?
    Mr. Merisotis. Yes. I just wanted to add that the other 
element of competency here is, as Paul said, what you know is 
equally important, and part of competency is generalizable 
skills. Every degree, every credential that you get from a 
post-secondary institution should not only tell you something 
about engineering or graphic design or medicine, it should also 
give you the tools that you need to be a critical thinker, a 
problem solver, a communicator. Those things are very 
important. Employers actually value those things more than the 
content knowledge in an awful lot of jobs in this country. 
Figuring out how to develop these systems so that all of the 
degrees that have students at the center have those 
competencies that are both generalizable and content specific 
is going to be an important part of this broad, large-scale 
demonstration that we're talking about here.
    Senator Cassidy. I'm basically out of time. I yield back. 
Thank you.
    The Chairman. Thanks, Senator Cassidy.
    Just for the record, in Tennessee we have Lafayette and La 
Follette.
    [Laughter.]
    And up the road in Illinois and in Missouri they have 
Cairo, IL and Cairo, MO.
    Senator Cassidy. In Louisiana we also say you're a bunch of 
Yankees, but that's OK.
    [Laughter.]
    The Chairman. In east Tennessee we are, really.
    [Laughter.]
    Senator Warren.

                      Statement of Senator Warren

    Senator Warren. Thank you, Mr. Chairman.
    In your testimony, several of you talked about Federal 
regulations driving up the costs and preventing colleges from 
innovating in ways that would make college more affordable. If 
that's so, then we absolutely should consider changes. If we're 
going to loosen Federal regulations, we ought to be sure that 
the colleges are going to pass those savings on to the 
students, and it seems that some colleges are not willing to do 
that.
    At a hearing 2 years ago, I asked Dr. LeBlanc to explain 
why his college offered an online program that ran a 22 percent 
profit margin, and Dr. LeBlanc responded that his university 
uses the profits to subsidize the college's campus-based 
program. Bloomberg, the Chronicle of Higher Education and 
others have reported that the profits helped build a new 
student center, a dining hall, and an Olympic-sized swimming 
pool. In other words, the lower cost of an online education 
wasn't passed along to the students who got the online 
education. Online education was a cash cow for whatever else 
the school wanted to buy.
    This year in a hearing on the cost of compliance with 
Federal regulators, the president of Vanderbilt said that they 
could save a lot of money if Federal regulations were cut. 
During the hearing I asked him would he commit to using the 
savings from reduced regulatory cost to bring down the prices 
for students, and the president wouldn't agree to do that. 
Instead, he said the university should have the freedom to 
spend the savings wherever they wanted to spend the savings.
    Mr. Merisotis, you're an expert on higher education policy. 
Does current law provide enough incentives for colleges to 
reduce costs for students?
    Mr. Merisotis. No.
    Senator Warren. That was easy.
    [Laughter.]
    Mr. Merisotis. Part of the problem is that there are not 
incentives to lower costs and prices built into the Federal 
formula. There should be rewards built into the way in which 
the aid approval process works so that the institutions that 
are doing a better job of serving students by producing better 
outcomes, learning outcomes, employment outcomes, student 
satisfaction outcomes, that should be a part of the equation.
    I think the bigger question here, Senator Warren, is that 
we really don't have a common understanding of what 
affordability is in higher education.
    Senator Warren. I want to stop you there. I want to 
underline what you just talked about before we go into the 
different definitions of affordability, because the Chairman 
quite rightly pointed out the Federal Government is putting 
$136 billion into our schools every single year, and I think 
what you just described is the schools have no skin in the 
game, that whether they do a good job or a bad job, as long as 
they can skirt past their accreditors, they're going to be just 
fine. They're going to keep 100 percent of the money, and their 
incentives, then, are to attract students in other ways, 
whether it's Olympic-sized swimming pools or whatever else it 
is they're going to offer. That's where the incentives lie for 
the schools right now. If we don't have schools with some skin 
in the game, that's not going to change.
    Mr. Merisotis. Increasing competition so that we expand our 
understanding of who the providers are of post-secondary 
learning I think is one way to help bring down those costs. 
Creating some incentives so that there is more competition for 
the colleges and universities to actually do exactly what 
you're talking about is very important.
    My point about affordability is pretty simple, which is 
that we're all for it but none of us actually knows what it 
means. It's hard to find someone who can say I'm not for a more 
affordable system, but when we then ask the question what does 
affordability mean, we have no common understanding of what 
that is.
    I think that is a very important part of the Federal policy 
dialog. What is an affordable education? What does it actually 
mean from the student perspective? What is an appropriate 
amount of money that you could contribute, either from earnings 
or savings, to your own education? If you can't do that, then 
how do we allocate resources to make sure that if you're low 
income, if you're a working mother, if you're someone who 
doesn't have the capacity to do that, that the government is 
going to be able to support you?
    Affordability is an eye-of-the-beholder issue for us right 
now. You can get a Bachelor's degree for a few thousand dollars 
a year in tuition or for tens of thousands of dollars a year in 
tuition. This issue of defining affordability I think is one of 
the most important issues we've got to tackle in national 
policy.
    Senator Warren. I appreciate that you may be able to say 
that we can't say exactly where the center of the bulls-eye is 
and exactly where the resting point is that we can say a 
college education has become affordable, but I guarantee we can 
say that it is becoming less and less and less affordable every 
year. The numbers are pretty clear on that. When it keeps 
getting more and more expensive and more and more middle-class 
families are having to borrow more and more money just to get 
their kids through school, I think we can say this is a problem 
that is getting worse and we need to turn it around and start 
pushing it in the other direction.
    I just want to say, because I'm going to run out of time 
here, if we reduce regulatory costs for college, those savings 
must be passed on to our students, and right now colleges will 
not commit to doing that. Our colleges face a lot of different 
pressures, to recruit more applicants, to raise academic 
standards, to beat out their competitors, but there is almost 
no pressure to improve affordability, and Federal policy does 
not help on that. It's easy to prioritize a swimming pool or a 
dining hall or a climbing wall over decreased tuition because 
the Federal Government is right there with the grants and with 
the loans to make it possible. We need the Federal Government 
to back us up. When it comes to Federal loans and Pell Grants, 
colleges need some skin in the game.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Warren.
    Senator Bennet.

                      Statement of Senator Bennet

    Senator Bennet. Thanks. I'd like to pick up a little bit on 
the discussion we just were having around affordability.
    By the way, I want to congratulate both of you for your 
leadership on elementary and secondary school. It gives me a 
lot of confidence that we're going to be headed in the right 
direction in higher education as well. It's really a privilege 
to serve on this committee with your leadership, Mr. Chairman 
and Senator Murray.
    On affordability, the University of Pennsylvania has 
released a study recently that reflected on the average net 
price against the average income of people in this country, and 
if you are in the bottom quartile of income earners, the 
average net price of college--that's after you account for 
student loans and grants--is 84 percent of your income. That is 
clearly not affordable.
    If you are lucky enough to be in the top quartile of income 
earners in this country, it's 15 percent of your average 
income. That's probably affordable. It should come as no 
surprise, if that's what people are facing, that 77 percent of 
folks in the top quartile finish college, whereas 9 percent of 
people in the bottom quartile finish a 4-year college. That's 
what we're facing.
    Today, we're not only kind of short of getting it right, 
we're in the completely wrong direction. Today, if you're in 
the top quartile of income earners, your chance of getting a 
Bachelor's degree are eight times higher than if you're in the 
bottom quartile. In 1970, that number was five times higher.
    I believe that a lot of this has to do with how we think 
about paying for college and the way these Federal programs are 
structured. There is, as Senator Warren said, literally no 
incentive for institutions to keep costs low, although it's 
pleasing to hear about the innovation that's happening here.
    I guess I'd start with you, Dr. LeBlanc. You mentioned but 
weren't able to go into the idea of risk-based or performance-
based payment, and thank you for your work with me and Senator 
Rubio on our competency-based education bill. I wonder if you 
could talk a little bit more about what that looks like and 
does that brave new world yet exist, and then with whatever 
time is left I'd love to hear your great ideas for how we 
change that equation, because that is the central problem.
    I'd say that, and the assessment issues all of you have 
talked about as we move into this new world, how do we promote 
quality, and how do we also think about a continuum from that 
4-year Bachelor's degree or whatever is post-4-year Bachelor's 
to the coding bootcamps that Mr. Horn is talking about? All 
that stuff should count, in my view. I don't actually know why 
we treat--I'm not here long enough to know. I'm sure there's a 
great reason. I don't know why we treat job training as 
different than higher education, for example, if we're talking 
about competency-based things.
    Sorry to go on so long. Dr. LeBlanc, let me start with you.
    Mr. LeBlanc. I think a lot of the interesting conversations 
right now about shared risk and performance-based funding are a 
way of getting at some of the institutional skin in the game 
and quality protections that we want for students, and to 
disincent some of the bad players, if you will.
    I've seen proposals that talk about institutions that have 
a more established track record who are able to provide more 
evidence, more documentation on outcomes, being able to get 
greater access to greater levels of aid and approval, and I 
think those models are promising because I was struck by 
something you said, Senator Murray, in the very beginning 
comments, which is that as we look at innovation, of course, we 
want to get it right. We want to get it right from the 
beginning. True innovation often learns best from some of its 
stumbles and its mistakes. You want quick turnarounds, and you 
want good evidence. You need to know, and you can't hide behind 
the bush of those mistakes or behind the bush of innovation.
    I think the kind of shared risk that you're talking about 
is a way to build an infrastructure that doesn't prescribe how 
a program has to look, but it says we're going to reflect and 
understand the ways in which you are making progress or not, 
the ways by which you have a track record or not, and I think 
those are very powerful ways of thinking about that.
    Senator Bennet. Dr. Gellman-Danley.
    Ms. Gellman-Danley. Yes, if I might. I would be remiss if I 
didn't mention there's a very important sector of higher 
education that's doing exactly that to which you all address, 
and that is the community colleges. Keep in mind that those 
institutions are low cost. They're working hard every day to 
fill both the general education and liberal arts mission, 
transfer as well as immediate job entry.
    I think as we talk about these experiences, I've been in 
community colleges for a number of years myself, and it's very 
exciting what happens to those students. They can go on and 
transfer to a university in Pennsylvania.
    Senator Bennet. To me, I hear that, and I strongly support 
our community colleges, I really do. Our completion rates are 
terrible. The amount of money that community colleges are 
having to spend on remediation because of our failures in K-12 
is disgraceful. The system isn't aligned in a way that is 
generating the kind of outcomes that we need for students, 
especially students living in poverty in this country. That 
lack of alignment I think has a lot to do with the Federal 
Government's complete lack of focus on outcomes.
    Instead of treating all of this as a continuum and having a 
set of incentives aligned to that, we're treating these 
separate institutions and levels of government as silos, and I 
think we're not getting the job done as a result.
    I apologize, Mr. Chairman. I went over my time.
    The Chairman. Thank you, Senator Bennet.
    Senator Baldwin.

                      Statement of Senator Baldwin

    Senator Baldwin. Thank you, Mr. Chairman, Ranking Member, 
for this hearing.
    I also want to echo Senator Bennet's words of 
congratulations on our passage of the reauthorization of ESEA 
last week. It does give me a lot of hope and encouragement 
moving forward to the Higher Education Act reauthorization.
    I also want to thank our panelists here for your testimony.
    I think the central question for this hearing and also in 
the reauthorization should be how we can best, strategically 
and effectively, support students, especially our low-income, 
first-generation, and minority students in having access to 
high-quality, lower cost higher education.
    I believe in exploring innovation in higher education, but 
coupled with guardrails to protect our most vulnerable 
students. I think innovation is necessary to ensure that the 
Federal Government supports the learning and workforce demands 
of our 21st century.
    I look forward to lessons shared from the panel and 
learning more about innovations throughout the country, some 
that we've heard a bit about this morning and some that we have 
yet to hear about.
    Dr. LeBlanc, in your testimony you speak to your college 
education being the key to the American Dream in the sense that 
it was affordable, high quality, and meaningful. In Wisconsin, 
my State, the University of Wisconsin offers an innovative 
model for learning called the UW Flexible Option, or UW Flex 
for short. This is an accredited competency-based education 
model that allows students to work at their own pace toward 
their chosen degree or certificate.
    As we work to support quality innovative programs, many 
have called for an expansion of the demonstration sites to 
allow space for trial and error, and ultimately learn what 
works best for students. I'd like to hear specifically about 
quality metrics and outcomes-based reporting that you'd like to 
see in these sites and other projects to guide us. What should 
we be looking at?
    Mr. LeBlanc. When we look at programs like Wisconsin's--I 
know my colleagues there very well and admire the work--I think 
the quality hinges on two questions, and it moves us away from 
the traditional sense of inputs mattering most--as I would 
argue, have argued--that a lot of higher education is a faith-
based initiative, that if you have enough Ph.D.'s on the 
faculty and books in the library and students with high SAT 
scores, we have faith that what would come out on the other end 
would be OK, and I think that's the faith that has eroded in 
many ways.
    Really, what we now want to see I think is a shift toward 
looking at clarity about the claims we make for the student 
learners. How do you know? Do they have labor market traction? 
Are they things that matter? What are they based on? The second 
question is, how do you know students have mastered those 
things? How do you know what's the nature of your assessment? 
What sorts of questions are you asking about the learning? This 
is a place where I think we have a lot of work to do and a lot 
of rigor.
    When you shift to that sort of ``I can stand behind my 
claims,'' you can worry a whole lot less about the inputs. You 
can then get much more innovative about how you get students 
across that finish line because you have genuine markers of 
quality. It is not an act of faith to be able to look and say I 
see it in the data, I see the kinds of jobs students get, I see 
job placement rates, I see the way they can perform. As one of 
the other Senators said, experts have attested to the ability 
to do the things the institution has said they can do.
    That's the real great promise, I think, of these new 
models, is that they really shift us to genuine claims for 
learning and what students can do, how we know.
    Senator Baldwin. Let me try to fit in another quick 
question on this same topic, because I'm also concerned with 
those guardrails. I want to innovate, but I'm also concerned 
with that.
    This is innovation. This is new. Do we currently have 
enough information from our experimental sites and other non-
Federal endeavors to ensure that innovative models like 
competency-based education can be broadly expanded and will 
meet the unique needs of especially the more vulnerable 
students that I was talking about earlier--low-income, 
minority, first-generation college students, et cetera?
    Mr. Horn.
    Mr. Horn. No, I don't think we do. What we would want to 
see is a set of experimental sites that were experimenting on 
different ways to judge these outcomes and create those 
guardrails that let a few in but not open it up, like we did 
with the online debacle on the other side of it. I would be 
looking at various risk-sharing agreements. We've proposed a 
quality value index that would allow you to get more of your 
financing from Federal title IV dollars the better you did 
against certain student outcomes, accreditor-led ways of doing 
this, transparency ways of doing this.
    Really set up four or five controlled experiments that 
experiment with different incentives to see do they work or do 
they create unintended consequences.
    The Chairman. Thank you, Senator Baldwin.
    Senator Whitehouse.

                    Statement of Senator Whitehouse

    Senator Whitehouse. Thank you, Mr. Chairman.
    Let me ask members of the panel, for starters, a question 
for the record. We have, I think, considerable momentum in this 
committee and wind at our backs after the very successful 
leadership of Chairman Alexander and Ranking Member Murray on 
the Secretary of Education bill, and one of the things that we 
discovered in that process is that there's actually quite a lot 
of bipartisan support on various issues.
    I think that one of them is over-regulation in the 
education space. The Chairman and a number of his colleagues 
are fond of bringing in, as demonstrative exhibits, great heaps 
of regulations to demonstrate the burden, and I think from our 
side there's a very considerable sense that out of all that 
vast effusion of information there's no clear picture for a 
student or their family. I think there's considerable overlap 
in looking at reducing, simplifying, and consolidating some of 
these regulations so that they present, when the work is all 
done, a clearer and more coherent picture to the actual user, 
the prospective student and their family members.
    My question for the record would be that you take a moment, 
if you're willing to do it, and just put in writing where you 
think our opportunities are in that space so that we can build 
on that. We don't have time in my 3\1/2\ minutes to go through 
all that, but I think it would be a helpful tool for us as we 
look at the Higher Education Act.
    I would ask you to consider specifically some of the 
protections around student aid and whether they're actually 
serving their purpose in a more sort of modern and dynamic 
student environment. We've had a whole separate hearing on 
accreditation and where that goes. It was not a very successful 
hearing from the point of view of the accreditors, I don't 
think. To the extent that accreditation has been used to keep 
out competitors and protect incumbents and thereby suppress 
innovation, it's obviously exactly going backward from where 
this hearing is directed.
    I'd be interested in your thoughts in those areas.
    My specific question is to Dr. LeBlanc because Southern New 
Hampshire University is working with one of our more wonderful 
Rhode Island products, Dennis Littky, who Rhode Islanders know 
as the founder of the Met School, which is a very, very 
successful alternative high school model. So he's steeped in 
innovation. In fact, he walks in the door and he looks like 
innovation.
    [Laughter.]
    I'm interested in your assessment of how things are going 
with the College Unbound program and what lessons specifically 
we can learn from that. As a Senator representing Rhode Island, 
that would have particular impact for me. You've got 2 minutes.
    Mr. LeBlanc. I'm a big admirer of Dennis' work and I think 
there's a willingness in Dennis' case to serve highly 
marginalized students, students that other people don't want. 
What's interesting about that and what I think Michael could 
speak to on this is that all the research on innovation shows 
that it takes place and flourishes most often with marginalized 
markets, or in this case groups of students who are not 
otherwise being served by their system. Necessity breeds 
innovation and invention. I think Dennis is a master at it, the 
kind of creativity he brings to that work.
    I think Dennis would tell you that he has struggled 
mightily to get approval for his programs. A little bit of that 
is Dennis, as we know, because he's creative and sort of all 
over the place. It also speaks to the difficulty in getting 
very conserved input-based notions about what models should 
look like approved for the kind of work he wants to do. In some 
ways it's a very good illustration of the issue that the 
Chairman has put on the table for us today.
    Senator Whitehouse. What's happening now at your 
university, at Southern New Hampshire University, with the 
College Unbound program? Give me a 1-minute update.
    Mr. LeBlanc. I think what we've been able to do, and this 
is what happens, the original model that we thought we had 
right proved to be challenging for us in a variety of ways, but 
yet the things that worked really well in that have now come to 
permeate across our institution, sort of lifting the game of 
the traditional program in a really important way. That's one 
of the best things about this. When you innovate in safe 
spaces, what you often get is not only a new and exciting 
model, but you also get the lift to the incumbent model. Does 
that make sense?
    What we've done with College Unbound is we've actually 
taken the principles of workplace, hands-on experiential 
learning and we're now spreading that across our curriculum, so 
we don't need to call it out separately. It's actually having 
this dramatic impact.
    Senator Whitehouse. In terms of the approvals that you 
need, is it relatively straightforward to build into the 
program the flexibility to make those dynamic changes that 
innovation requires, or do you have to keep constantly going 
back and getting re-approvals?
    Mr. LeBlanc. I think that's a program-by-program scale and 
substance question. There's no easy--it's easy or it's not 
easy. It really depends on the nature of the program. For 
something as ambitious and so different as CBE, we go back to 
our accreditor with substantial changes. With something like 
Dennis' program, I think there's a lot more room for that 
tweaking as you go and continuous improvement.
    Senator, if I could respond to Senator Warren's comments, 
if you will allow me a moment before we go on?
    The Chairman. Sure.
    Mr. LeBlanc. We can do this after.
    The Chairman. Fair enough.
    Mr. LeBlanc. Thank you.
    The Chairman. No, you can go ahead. If your name is 
mentioned----
    Mr. LeBlanc. I'll keep this brief, but it may speak to the 
inability of a kid from a State college to educate a Harvard 
professor. We had this conversation the last time, and the 
Senator continues to, I think, not understand the complexity of 
universities and the nature of cross-subsidies, which are both 
common and pervasive.
    I would point out that the university's overall surplus is 
under 10 percent, and that's sort of a normal target for many 
universities, and we use our surplus to do things like create 
College for America. That program costs $2,500 a year, and it's 
aimed at the lowest 10 percent of wage earners and very large 
organizations, people who often don't make a family sustaining 
wage. It's also the program that has allowed us to not 
increase--that success has allowed us to not increase tuition 
for online students for the last 4 years, and it's already a 
more affordable program.
    A student in an online program can earn an undergraduate 
degree for $40,000 for the whole of that. I think that would be 
an admirable target for most institutions.
    We did not build an Olympic-sized swimming pool. The 
Senator surely knows that those reports are sometimes 
inaccurate, and I think it's an unfair criticism to level. 
Ninety percent of our students receive some level of aid. We 
serve a lot of first-generation students. I think we serve a 
lot of the students that the Senator cares about with the same 
sense of passion and zeal, though with a lot more accuracy 
about the facts and the data.
    Thank you.
    The Chairman. Thank you, sir.
    Senator Franken.

                      Statement of Senator Franken

    Senator Franken. Thank you, Mr. Chairman. I would reiterate 
what Senator Whitehouse said about your leadership and Senator 
Murray's leadership and the success of getting the bill we got 
passed last week. Congratulations on that, on the ESEA 
reauthorization.
    I apologize for not being here. I read the testimony last 
night. I was in a Judiciary hearing. A Minnesota judge was 
there.
    This competency-based education really fascinates me, and I 
wish I had been here for this whole thing. I don't want to ask 
questions that have already been asked and answered.
    I wonder, in reading this testimony, I wonder what issues 
arise from competency-based education, because one is testing. 
I think, Mr. Merisotis, you may have spoken to this in the 
hearing here, but I want to know how do you prevent, if someone 
is taking a test online, how do you prevent them from cheating 
and having someone else take the test? That seems like just an 
obvious, off the top of your head question, but I'm wondering 
what other kinds of questions arise from competency-based 
education.
    Mr. Merisotis. There are sophisticated technology tools 
that are now used to be able to assess with retina recognition, 
with fingerprint recognition. They actually have, believe it or 
not, programs that can assess whether or not the person typing 
is the same person typing a few minutes later. There's actually 
technology tools that are very sophisticated that allow us to 
do that.
    I think the big issue, Senator, in terms of competency-
based learning is that we don't have all of the answers. What 
we know is that it shows a lot of promise to put students at 
the center and to put their learning objectives, their outcomes 
at the center of the equation, as opposed to what the 
institutions say, which is that a credit-hour is defined in 
this certain way based on this certain approach.
    Putting students at the center I think is really the 
critical element of it, and in a competency-based approach you 
can take learning into account, you can take employment 
outcomes into account, you can take things like student 
satisfaction into account in defining what you should expect of 
the institution, what you should expect of the provider of 
post-secondary learning. It's very different than what we do 
now.
    Senator Franken. OK. I just wonder what some of the--if you 
can have somebody typing and someone telling them what the 
answers are. I just worry about this. I'm just wondering how 
much work is being done just on that. As you said, you have 
retina and biometrics.
    Mr. Merisotis. Yes.
    Senator Franken. I also worry about what you called the 
digital debacle or the online debacle, repeating that. We don't 
want to do that, right?
    Mr. Horn. Yes, we certainly do not.
    Senator Franken. So many debacles.
    Mr. Horn. There are many lessons to be learned from that.
    Senator Franken. That actually is the theme of our 
committee.
    [Laughter.]
    Mr. Horn. There's a lot of lessons to learn from that 
debacle. Incentives do matter, and you could have predicted 
those behaviors ahead of time with those universities when you 
incentivized just the enrollments, now what you actually did 
once those students were enrolled. Playing with a variety of 
experiments in a controlled way to actually figure out what 
works. We haven't run these in States or the Federal Government 
level to know if you're using government dollars, how does this 
impact this.
    The other thing quickly to say is we also always talk about 
the cost to the student, but we ignore the total expenditure of 
the institution itself, which includes all of the revenue 
sources. The challenge with ignoring that is it creates some of 
the worries that Senator Warren was talking about in terms of 
cross-subsidizing behavior; or, if dollars retreat later on, 
passing on costs to students. A big part of that is about the 
total expenditure, not just the cost.
    Mr. LeBlanc. Could I just address your primary concern? 
Because this is one that goes all the way back to the 1990s, 
and I think it's exceedingly well addressed in the new models. 
Right now----
    Senator Franken. Can I go a little longer, Mr. Chairman? 
Thanks.
    Mr. LeBlanc. I would encourage you not to worry about this 
one. The reality is that if you think about the traditional 
delivery of a course, a student walks into the classroom and 
hands in a paper, how do you know that they wrote that paper? 
Most faculty would know by saying this is not commensurate with 
the level of work, the kind of engagement of this student, et 
cetera.
    We have more robust ways of engaging students in an online 
environment, including predictive data analytics, including 
very strong adviser models, including triangulating what we're 
seeing in the discussion boards with the kind of paper we're 
writing.
    All the technology solutions aside, really well-developed, 
robust programs don't have the same problem. This has really 
been well addressed for the last 20 years.
    Senator Franken. OK.
    Mr. LeBlanc. Poor programs do have that problem. Well-
designed programs don't.
    Senator Franken. What programs?
    Mr. LeBlanc. Poor programs may suffer from that, but well-
designed programs have addressed this quite well.
    Senator Franken. Oh, poor.
    Mr. LeBlanc. Poor, yes.
    Senator Franken. Of course.
    Mr. Merisotis, you wrote in your testimony, or it may be in 
a summary of your testimony, ``to maximize student success, 
college costs don't just need to be reduced, they need to be 
demystified,'' and I couldn't agree more. Senator Grassley and 
I wrote a bill that would improve the use of net price 
calculators so that any time you went on a college website 
you'd be able to see that right away. I think there are a lot 
of kids who take themselves out of contention for schools 
because they think it's above their ability to get to in terms 
of cost, and if they went to the net price calculator it would 
demystify, if you would, that.
    Senator Grassley and I also have a bill that when you get 
your award letter, it just says that all the colleges have to 
use the same terminology, a uniform award letter, because you 
get award letters from different institutions that refer to a 
Stafford subsidized loan. As a Stafford subsidized loan, for 
example, one school, and another will call it an F5601. If 
schools would just use uniform--because most people don't think 
of a loan as an award. They think of it as a loan. They get it 
in their award letter.
    Does anybody have any strong feelings about either of 
those?
    Mr. Merisotis. Your point is exactly right, which is that 
there's a cacophony of information that confuses consumers. 
Tuitions have been increasing at nearly twice the rate of 
inflation for close to three decades. The train wreck of 
college affordability is something that's been coming down the 
track for a very long period of time.
    The problem is that people don't understand sticker price, 
net price, cost versus price. All of these things are very 
complicated. I do think that we need to come to some common 
understanding about what affordability really looks like. We 
need to have some sort of benchmark, some sort of understanding 
of what, from your income and your savings, you should 
reasonably be able to contribute to support your education.
    We do not have that kind of a standard in Federal policy 
and State policy or in the way that we talk about higher 
education nationally in this country. We're working on some of 
this right now at Lumina Foundation and hope to advance some of 
these ideas to you in the coming months. I think it is a very 
important, necessary precondition to talking about which 
Federal strategies, which policies are the most important way 
to deal with what is obviously a crisis in affordability for 
students in this country.
    Senator Franken. I am abusing my time. Mr. Horn, you said 
in your testimony that a look at higher education is something 
you should be able to return to over and over again through a 
journey of lifelong learning, and I agree with that, and I 
think we have to think of models, Mr. Chairman, as we go 
forward in this, because technology is accelerating so fast, of 
how people can get jobs and then throughout their life continue 
to get a higher education. I apologize for going so long.
    The Chairman. No, no. I'm glad you asked the questions.
    I want to thank the witnesses. This has been very 
interesting, very helpful. Several Senators as they left said 
that.
    In just a moment I want to ask each of you to take 1 minute 
and say anything you didn't get to say while we were all here. 
I want to ask you to take Senator Whitehouse's question 
seriously. We really have two efforts going on to try to 
simplify and make more effective the Federal regulation of 
higher education.
    First, is the Kirwan Zeppos Commission, which has already 
made its report, 59 recommendations; and Senators Mikulski, 
Bennet, and Burr and I have asked for that 2 years ago.
    And second, is a group I met with this morning that came 
out with a 2008 higher education bill that's spending a year 
looking at Federal regulation of research outside of the 
Department of Education. It's chaired by the former chancellor 
of the University of Texas at Austin. I know that President 
Obama has been interested in this really since he arrived.
    Over the next year, let's say the next 6 months, we have an 
unusual opportunity to do something that's rarely done in 
Washington, which is to actually deregulate, simplify, make 
more effective these regulations that have just piled up over 
the last eight reauthorizations of the Higher Education Act, 
and take into account all this innovation that's coming at us.
    Dr. Gellman-Danley, for example, we'd ask you--you 
mentioned the obstacles in the law that might permit you from 
doing a better job of having the flexibility we've been talking 
about. What we need from each of you, if you will please do it, 
is your 5 or 10, or more if you want, but 5 or 10 very specific 
recommendations. If you were members of this committee, what 
would you put in our legislation that would simplify, 
deregulate, save money, make more effective the government's 
involvement with higher education?
    I'd like to give you each a minute or so just to sum up or 
say anything that you'd like to say. Dr. Gellman-Danley, I'd 
like to ask you--and if you need another minute to do that, 
that's fine--I believe your website says that the Higher 
Learning Commission has removed its application for any new 
competency-based program using direct assessment and is waiting 
for further Department of Education guidance.
    If you're for more innovation, and direct assessment is one 
way to do that, why are you not doing that? That would be my 
question, and why don't you answer that, and then say anything 
else you'd like to say, and then we'll go right down the line 
and conclude the hearing.
    Ms. Gellman-Danley. I'm actually delighted you asked that. 
It will be a great moment of catharsis. In fact, the bus had 
left the station, we were ready to go, and we had some 
interference from the Department of Education based on their 
visit from the Office of the Inspector General, and then again 
from the Office of the Inspector General. We did not have the 
terms and guidelines that we needed. We were ready to go. We 
spoke repeatedly with the Department of Education, and they're 
good people, and they're very committed, and the relationship 
is improving.
    In effect, along the way some definitions were changed. Our 
institutions asked us--and we wanted to do this for them--that 
they did not have to submit and then re-submit based on not 
getting the information we needed.
    The good news is we'll check our website because we can 
look back. That's been resolved. We've gotten the definitions. 
We were collaboratively--I've known Paul for a long time. Paul 
actually did something that's unusual from the Department of 
Education.
    The Chairman. Paul.
    Ms. Gellman-Danley. Paul LeBlanc.
    The Chairman. Paul LeBlanc.
    Ms. Gellman-Danley. Whatever. Paul, right?
    The Chairman. Ask him, which LeBlanc?
    Ms. Gellman-Danley. The guy you see on the commercials all 
the time, right? Coming in from Southern New Hampshire.
    The Chairman. Not Fred Thompson.
    Ms. Gellman-Danley. There you go.
    The bottom line is that we talked together collaboratively, 
two parts of the triad working to resolve this. We can move 
forward now, but the reason we hesitated----
    The Chairman. It was a difference of opinion between the 
Inspector General and the Department about definitions.
    Ms. Gellman-Danley. Actually, frankly, the way it went is 
exactly that, and then followed up by holding us accountable to 
definitions we did not already have. We're used to that. We're 
a large accreditor, obviously, and we sat back and we looked 
at--you mentioned excellent programs like Wisconsin, mentioned 
repeatedly. We didn't want to ask the University of Wisconsin 
to fill out one application, then have to fill out another one, 
and a third, until that was resolved.
    The Chairman. The reason this is important, we don't want 
to create in our legislation safe harbors or whatever you might 
want to call them, new methods of experimentation, and have 
them not work because the Department of Education or its 
Inspector General, or both, come up with regulations that are 
inconsistent or confusing or don't follow our intentions.
    A part of that would be good suggestions from you about how 
we could write our language so that it made it most likely that 
accreditors would be able to do these things and exercise that 
flexibility, and the Department itself would be able to expand 
its programs that are demonstration programs or experimental 
programs.
    Why don't we start with you, Mr. Merisotis, and go right 
down the line. Anything else you'd like for us to----
    Mr. Merisotis. Thanks, Senator. I'm delighted to have the 
opportunity to send you more specific suggestions following the 
hearing.
    Two important things that I think are worth emphasizing. 
The first is use Federal policy to really incentivize the kind 
of competition that's going to democratize learning in this 
country. If we put students at the center, we've got an 
opportunity here to actually create a different model where we 
can have new providers who are being held to very high quality 
standards so that we can actually democratize the learning 
process, creating competition so that we serve more students 
and we serve them better. In a risk-based regulatory model, we 
should reward or incentivize those institutions that serve the 
students best in terms of their learning outcomes, their 
employment outcomes, their satisfaction, et cetera.
    The second thing I think we need to do in this model is 
make sure that in the student-centric approach, we put our 
thumb on the scale of equity. Federal policy has to emphasize 
the fact that low-income, adult, first-generation minority 
populations are the fastest growing and need to be the ones 
that are rewarded most through this system. In this model, we 
have to make sure that these regulatory structures actually 
create more incentives for those students and help them 
succeed. Their success will result in our collective well-being 
as a country.
    Thank you.
    The Chairman. Thank you.
    Ms. Gellman-Danley. Briefly, I'd like to say as educators, 
CRAC is pleased to report we've already done our homework. 
We've spent the last 3 months, as you requested, looking at 
legislation and the wording, and we'll be giving that to your 
office and the committee soon.
    The Chairman. Terrific.
    Ms. Gellman-Danley. I'd like to point out that we might 
want to consider the good models of some States that have done 
performance-based funding and looked at higher education a 
little differently, and we all have to be very concerned about 
the State disinvestment in higher education.
    I would like to thank you for being here today on behalf of 
the greatest board with which I've ever worked, the Higher 
Learning Commission. As the folks back home say, ``the best 
damn staff.'' They're committed, they're passionate, they're 
very interested in doing good work for you.
    As somebody, frankly, who comes from a total innovation 
background--distance learning, community colleges, et cetera--I 
stand ready to help you. I say let's get together, let's take a 
chance and do right.
    The Chairman. Dr. LeBlanc.
    Mr. LeBlanc. I come to my closing comment with the happy 
opportunity to have multiple vantage points, having worked for 
a regulator, the Department of Ed, for the recent 3 months, 
heading up an institution that's passionately committed to 
students from colleges not a guarantee, and then also from 
discussions with many people on the Hill who are working on 
policy.
    The thing that I'm heartened by is that it feels like the 
success you all enjoyed last week in K-12 is within reach. They 
even sent to the comments an astute balancing of wanting to 
drive more innovation, remove some of those regulatory burdens, 
but also protect students and assure quality. That triangle of 
quality constant completion has been elusive. Most institutions 
can deliver two, but they really struggle to deliver all three.
    I think the profound opportunity you have before you today 
is to shift our conversation, shift the focus of higher 
education back to actual student learning and away from a lot 
of the noise, a lot of the noise that has been a mask for poor 
quality and a lot of the noise in the system that has driven up 
cost, but to actually get to the question of what students 
actually know. That's a profound change, and I wish that our 
timing was a little bit better because reauthorization is 
happening now, and our field is not as far along as we'd like 
it to be.
    I think finding that balance of the kinds of things we 
talked about today is critical, but it's really heartening. 
This is an amazing opportunity, as Jamie suggested earlier.
    The Chairman. Reauthorization may be happening now, but 
reauthorization could include structures that permit it to 
adjust and adapt as things go on. You really don't want the 
U.S. Congress writing very strict rules about this kind of 
thing. A, things change. And B, we don't know that much.
    Mr. Horn.
    Mr. Horn. Thank you again for the opportunity, and it's 
heartening to see so many of the committee members so excited 
about the opportunity for innovation to improve student 
learning, as Paul LeBlanc was talking about, but also to 
address the cost and affordability questions that were before 
the committee.
    I just want to focus on a couple of things. One of the 
reasons we've seen the inflation above inflation rates that 
Jamie was talking about is because in sectors where there is no 
disruptive innovation, you just see continued cost increases, 
and actually competition does not lead to lower costs.
    The other second point of that is, a lot of policy in the 
past has created an effective price floor beneath which is very 
unattractive to price because students aren't compelled to make 
those cost/quality tradeoffs in their own decisionmaking in a 
way that's transparent around the actual outcomes.
    The last thing I would say is be very careful about what 
outcomes are chosen that we're trying to incentivize toward. We 
see a lot of experimentation right now in the States, which is 
interesting and from which we should learn in a more considered 
way, but a lot of it, for example, is one simple graduation 
rate, completion. That in itself is actually a fairly easy 
problem to solve. We can just give out diplomas. The really 
interesting question is, is it a weighty credential that 
actually helps that student succeed in life, both career as 
well as their civic life? That's a much more difficult question 
to address in a thoughtful way.
    I think that's why there's a lot of thought between using 
the experimental sites to learn a lot in the next several 
years. Thank you.
    The Chairman. Thank you, Mr. Horn.
    As I listened to you and the others, it reminded me of the 
analogy to the American automobile industry and David 
Halberstam's book in 1987 called The Reckoning, because 
basically the Big Three and the United Auto Workers were 
sitting pretty and making big, expensive cars, and making a big 
profit, and the Japanese were selling one funny looking little 
car a week from Los Angeles called the Datsun, and the Germans 
were selling Beetles, and people were laughing at them, and it 
brought our American automobile industry to its knees. Even 
though our colleges are the most conservative institutions we 
know in the world, they could be brought to their knees if they 
don't respond well to innovation. I hope that we can create an 
environment in which they can.
    Thank you very much for your time. I'd like to invite you 
to say more if you want to in written testimony. The hearing 
record will remain open for 10 days for additional comments and 
any questions for the record Senators may have.
    We'll hold the next hearing on reauthorizing the Higher 
Education Act on Wednesday, July 29, when we'll discuss sexual 
assault on college campuses.
    Thank you for being here.
    The committee will stand adjourned.
    [Additional Material follows.]

                          ADDITIONAL MATERIAL

     Response by Jamie P. Merisotis to Questions of Senator Casey 
                         and Senator Whitehouse
                             senator casey
    Question 1. Close to 100 million people are learning foreign 
languages from the Pittsburgh-based startup DuoLingo. The data gathered 
from the company suggests that they are learning at a much faster rate 
than traditional coursework. DuoLingo's effectiveness comes from its 
ability to capture and apply data in real time to constantly improve 
the learner's experience. These capabilities buildupon decades of 
federally funded research in the science of learning at Carnegie 
Mellon.
    As we look ahead toward a future for higher education that could 
integrate technology-enhanced learning into traditional education 
settings to improve outcomes, improve access, and potentially reduce 
costs, what kind of infrastructure will we need to securely enable the 
power of data-driven education to serve the needs of our students?
    Answer 1. In order for today's students to succeed, Federal 
policies need to support a much wider range of pathways to a 
credential. This would include: an assurance that all postsecondary 
learning is recognized, regardless of where it was obtained; a system 
that is reoriented around outcomes, not arbitrary measures of time; 
creating pathways to ``stackable'' credentials; and putting in place 
regulations and incentives for stakeholders in the system to 
continually improve and shoulder some of the risk that currently falls 
to students and the Federal Government. In terms of specific actions in 
pursuit of this objective, we would recommend that the government:

     Allow for broad, long-lasting demonstration projects that 
allow for innovation at scale;
     Encourage providers to use a transparent credentialing 
method that identifies and rewards student learning, not seat time;
     Consider allowing title IV aid to be used for prior 
learning assessments and direct assessments, with appropriate 
constraints on cost (i.e., cost of assessment or review materials); and
     Recognize new validators, to better support new pathways.

    Question 2. In Pittsburgh, Carnegie Mellon University's Online 
Learning Institute has been doing tremendous work on these issues for 
over a decade. Part of their success has stemmed from the ability to 
analyze data from their online courses. Obviously, privacy and the 
protection of our students' information is paramount, so how do we 
balance those concerns while still allowing for important research to 
continue as we move these kinds of projects to scale? Are our current 
laws up to the task or will we have to make changes?
    Answer 2. The immediate change that would need to be made to 
current law is to repeal the ban on the student unit record. The 
obvious and growing need for more accurate and comprehensive data on 
the behavior of today's student can most effectively be addressed 
through the thoughtful and deliberate development of a student unit 
record system. Allowing student-level data to be sent directly to the 
Department of Education, in contrast to the current system of 
aggregated institutional data, will facilitate the assessment of 
student success as they move to, between and through providers of 
postsecondary learning and on into the workforce.

    Question 3. As our economy shifts, we know there are millions of 
workers who are unfortunately left behind and could use retraining or 
new credentials in order to effectively re-enter the labor market. How 
effective could some of these platforms be for retraining laid-off or 
displaced workers? What are the barriers that are in place and how do 
we ensure the quality?
    Answer 3. Currently the meaning of degrees, certificates and other 
credentials is rarely validated outside academia; this makes it 
difficult for any stakeholder to understand and compare varying 
credential programs. This lack of understanding is a barrier for 
learners and employers alike; a barrier that is particularly acute for 
laid-off workers that need to retrain and re-enter the workforce as 
quickly as possible. Encouraging providers to use a transparent method 
that identifies and rewards student learning, not seat time, as the 
core basis for assessing student outcomes should increase the ability 
of stakeholders to compare varying credential programs. The sped up 
time to degree resulting from measuring learning and not seat time 
makes these models a particularly effective platform for retraining 
displaced workers.
    In pursuit of this goal, Lumina is working with the Corporation for 
a Skilled Workforce and the Center for Law and Social Policy to create 
a credentials framework that seeks to enhance the utility of 
credentials and reduce costs borne by individuals and employers. Simply 
put, we want to connect the dots among diverse credentials by using 
common language to describe what recipients of each credential should 
know and be able to do. Additionally, this fall we will be launching a 
national dialog about how to transform our credential system. More 
information about both the framework and the dialog can be found at 
http://connectingcredentials
.org/.
    Likewise, when enabling new types of providers and pathways, we 
should foster the creation of new validators, able to serve as 
assessors of educational quality for a variety of different programs. 
In doing so, we can ensure that validators best suited to assess a 
program are matched with that program. In turn, these new validators 
can and should be held accountable for measuring student outcomes, 
being transparent and encouraging providers to innovate toward higher 
quality, lower cost programs.
                           senator whitehouse
    Question 1. Talking with higher education stakeholders in Rhode 
Island, I have seen broad agreement that regulation in higher education 
could be reduced, simplified, or consolidated. What are some specific 
ways in which we can address overregulation in higher education?
    Answer 1. All Federal regulatory activities should tie directly to 
the Federal Government's interest as an investor in the higher 
education system on behalf of students and taxpayers. The goal should 
be for improved experiences and outcomes for students to be placed at 
the center of the system, meaning that policymakers must take care to 
start with clarity around the ``what'' of the regulatory regime and 
tailor the ``how'' and ``who'' of the regime to the most efficient and 
effective way of achieving this end. This means making a concerted 
effort to eliminate overlapping roles, responsibilities and regulations 
unrelated to quality outcomes. To determine quality outcomes though, it 
is necessary to establish clear and purposeful accountability and 
quality metrics, with a focus on student outcomes. Only with a more 
transparent, accessible and understandable set of metrics can train the 
focus squarely on student outcomes.
    An additional approach is to consider a system of risk-informed 
regulations, which would allow additional flexibility to those 
providers who have demonstrated less risk, allowing them the freedom to 
design and implement educational approaches most suited for the needs 
of their students.

    Question 2. I'm concerned that accreditors can serve to protect 
incumbent institutions and practices, and stifle innovation. How can we 
ensure that we have an accreditation system that maintains quality and 
protects Federal student aid, while fostering innovation to address the 
evolving needs of students?
    Answer 2. The role of accreditation should be to evaluate providers 
based on their success in achieving student attainment goals, rather 
than on some of the often extraneous evaluation metrics, or on topics 
that are more appropriately evaluated by the other two members of the 
``triad'' that have responsibility for oversight of higher education: 
the Federal Government and the States. This accreditation evaluation 
should be particularly focused on accounting for differences in the 
student populations served at various institutions and measuring the 
academic progress of underserved students. Research indicates that 
strengthening the role of accreditation helps improve the quality of 
higher education institutions, promotes competition, and spurs 
innovation by ensuring that institutions of all types are held 
accountable for producing results for their ultimate stakeholders: 
students and taxpayers. Our studies suggest that accreditation could be 
strengthened with a greater focus on quality and student outcomes.
    As we previously shared in a set of recommendations submitted to 
this hearing record, there are two specific things that you might 
consider in striving to achieve this goal:

     Amend current law to orient the Federal recognition 
process for accreditors around risk-informed reviews of each 
accrediting agency. These reviews should prioritize an examination of 
the accreditor's oversight of student learning and outcomes at its 
member institutions and the Federal Government should differentiate the 
extent of recognition reviews based on this information. This 
recognition process should continue to be overseen by an independent 
advisory committee that is fully representative of the array of 
postsecondary stakeholders; NACIQI (the National Advisory Committee on 
Institutional Quality and Integrity) currently does an able job 
fulfilling this purpose. Streamlining the recognition process for 
accreditors with strong records could free up resources within 
accrediting agencies, which could allow accreditors to devote more 
resources to helping institutions improve outcomes for students on a 
continuous improvement model. Acknowledging that while the creation of 
a risk-informed system is permissible now, it would still be necessary 
to pursue a change in law to allow for the appropriate and necessary 
inputs.
     Provide greater regulatory flexibility so that high-
performing education providers earn expedited accreditation reviews. 
The current regulatory system for accreditation is both overly 
burdensome and far too complicated; as a result, the current system 
reduces the true value and effectiveness of accreditation's role in the 
``triad.'' Ensuring flexibility for high-performing providers is a 
valuable means of allowing and supporting innovation in postsecondary 
education aimed at improving outcomes for students. This flexibility 
then allows for innovation within the higher education field that 
specifically leads to a greater focus on student outcomes and lower 
future costs.
    Maintaining quality remains of the utmost importance, however, and 
a crucial tool to ensure quality would be to allow accreditors to 
employ a risk-informed approach to assessing institutional quality. 
Accreditation should be re-oriented around a risk-informed process, 
with institutions subject to different levels of scrutiny based on 
their student learning and outcomes data. Institutions that demonstrate 
strong records of student results could receive expedited reviews, 
while those where data on student outcomes indicate room for 
improvement would warrant a more robust review. Such an approach could 
allow accreditors to focus more on student outcome data, as well as 
allocate time and resources to working with those institutions that 
need the most attention. In addition, holding all postsecondary 
programs directly accountable for value and affordability measures is 
likely to slow down or halt enrollment in programs that provide little 
value to the students that invest time and resources in them.
    A process so described would reduce the barriers to entry for new 
institutions and providers that demonstrate successful student outcomes 
and ultimately provide students with more effective options for quality 
postsecondary education. More robust accreditation reviews would be 
triggered where data on student learning and outcomes indicate need for 
improvement or more significant concerns, with the accreditation 
process expecting and facilitating a data-driven continuous improvement 
process at each provider that warrants or wants it.
   Response by Barbara Gellman-Danley to Questions of Senator Casey 
                         and Senator Whitehouse
                             senator casey
    Question 1. As our economy shifts, we know there are millions of 
workers who are unfortunately left behind and could use retraining or 
new credentials in order to effectively re-enter the labor market. How 
effective could some of these platforms be for retraining laid-off or 
displaced workers? What are the barriers that are in place and how do 
we ensure the quality?
    Answer 1. Gellman-Danley: It is very insightful to focus on the 
millions of workers who are left behind and need retraining or new 
credentials. Our colleges and universities offer a variety of courses 
and certificate programs that are targeted for these adults. Community 
colleges are particularly nimble in serving this important group of 
students. A large percentage of universities across the country serve 
this audience. These programs are already in place, and the more 
responsive institutions act quickly to meet the needs of displaced 
workers, which are often managed from the continuing education 
departments. It is very common that a local college or university will 
work directly with a business to help employees when there is a 
reduction in force during difficult economic times. Programs (courses, 
certificates) can be offered for credit or non-credit. Quality is 
ensured through the overall institutional review--versus by program.
    A limiting barrier is the credit-hour requirement written in law. 
Such regulations do not take into account the advantages of direct 
assessment (often competency-based education which may not be aligned 
to a clock-hour mandate). For institutions located in States with 
performance-based funding, there may be instances where these learners 
are considered ``non completers'' if they simply need a few courses and 
do not enroll in a full degree (or certificate) program.
    The quality is assured through each institution, as accreditors do 
not review individual programs, but rather the entire institution. In 
most cases, these are responsive and of strong quality. Some 
universities build these kinds of programs to be ``stackable'' and the 
courses may lead toward a degree if so desired and courses are credit 
bearing. Further, some national higher education associations work to 
encourage institutional members to serve those in need of retraining 
programs and may work to create the opportunities. Accreditation 
standards apply to the overall institution, thereby providing a quality 
framework for all initiatives.
    Some interesting articles that may inform this discussion: http://
www.hamiltonproject.org/files/downloads_and_links/
10_displaced_workers_la
londe.pdf; http://www.dol.gov/odep/pdf/CommunityColleges.pdf; http://
extranet
.cccco.edu/Portals/1/TRIS/Research/Research/Abstracts/WorkforceDev/
displaced
_worker.pdf.
                           senator whitehouse
    Question 1. Talking with higher education stakeholders in Rhode 
Island, I have seen broad agreement that regulation in higher education 
could be reduced, simplified, or consolidated. What are some specific 
ways in which we can address overregulation in higher education?
    Answer 1. The Council of Regional Accreditors (C-RAC) has submitted 
a full review of the current legislation and suggested changes to HELP 
Committee Chairs (Senators Alexander and Murray). This is the best 
resource to respond to the above question.

    Question 2. I'm concerned that accreditors can serve to protect 
incumbent institutions and practices, and stifle innovation. How can we 
ensure that we have an accreditation system that maintains quality and 
protects Federal student aid, while fostering innovation to address the 
evolving needs of students?
    Answer 2. Accreditors have strong standards and processes to 
protect from any institutional biases. Accreditors celebrate 
innovations that are done with good quality. They actually do not 
attempt to stifle innovation. However, accreditors are required to 
follow Federal regulations and the directives of the Department of 
Education. In so doing, there are very rigid and limiting regulations 
to which colleges and universities must comply--and the accrediting 
agencies are required to assure compliance. An excerpt from one 
regulation follows from the Higher Learning Commission website. 
Frankly, these regulations are built on centuries-old higher education 
versus the current environment and are overly prescriptive:

     Federal Credit Hour Definition: A credit-hour is an amount 
of work represented in intended learning outcomes and verified by 
evidence of student achievement that is an institutionally established 
equivalency that reasonably approximates not less than:

    (1) 1 hour of classroom or direct faculty instruction and a minimum 
of 2 hours of out-of-class student work each week for approximately 15 
weeks for one semester or trimester hour of credit, or 10 to 12 weeks 
for one quarter hour of credit, or the equivalent amount of work over a 
different amount of time; or (2) at least an equivalent amount of work 
as required in paragraph (1) of this definition for other activities as 
established by an institution, including laboratory work, internships, 
practica, studio work, and other academic work leading toward the award 
of credit hours. 34CFR 600.2 (11/1/2010).

    The Higher Learning Commission is working on a strategic plan, 
which will be released in April 2016. The plan includes extensive input 
from membership through surveys and listening sessions at our March 
2015 annual conference. Overwhelmingly, respondents encouraged us to do 
everything possible to move away from the perception of serving as 
regulators--due to the burden of the Federal compliance standards.
    Members also encouraged HLC to focus on innovation. As a result, we 
are forming a blue ribbon Think Tank (likened to Lockheed Martin's 
groundbreaking Skunk Works) to work with us on new disruptive 
innovations for higher education. It will consist of both educators and 
business representatives. The intent is to dispel the myth about 
accreditors stopping innovation, but moreover to bring vibrant new 
ideas to improve the opportunities for the learners.
       Response by Paul J. LeBlanc to Questions of Senator Casey 
                         and Senator Whitehouse
                             senator casey
    Question 1. Close to 100 million people are learning foreign 
languages from the Pittsburgh-based startup DuoLingo. The data gathered 
from the company suggests that they are learning at a much faster rate 
than traditional coursework. DuoLingo's effectiveness comes from its 
ability to capture and apply data in real time to constantly improve 
the learner's experience. These capabilities build upon decades of 
federally funded research in the science of learning at Carnegie 
Mellon.
    As we look ahead toward a future for higher education that could 
integrate technology-enhanced learning into traditional education 
settings to improve outcomes, improve access, and potentially reduce 
costs, what kind of infrastructure will we need to securely enable the 
power of data-driven education to serve the needs of our students?
    Answer 1. There are three dimensions to keep in mind here:

    1. One is simple access to technology (bandwidth and computing). 
Lots of poor students have outdated or no technology and often limited 
bandwidth.
    2. Title IV regs include things like ``regular and substantive 
interaction'' as a requirement--the regulatory frameworks need to be 
rethought as they are based on old models of delivery (in this case, 
the idea of student sitting in a classroom with a faculty member);
    3. We should demand greater transparency of results if we are to 
use these new tools: there'll be a lot of promises about technology and 
some will work really well, as in the example of CMU's programs, and 
others won't. We should invite the innovation, but balance it with 
accountability and that requires transparency of data and results.

    Question 2. In Pittsburgh, Carnegie Mellon University's Online 
Learning Institute has been doing tremendous work on these issues for 
over a decade. Part of their success has stemmed from the ability to 
analyze data from their online courses. Obviously, privacy and the 
protection of our students' information is paramount, so how do we 
balance those concerns while still allowing for important research to 
continue as we move these kinds of projects to scale? Are our current 
laws up to the task or will we have to make changes?
    Answer 2. Higher education has resisted the transparency of data 
suggested here. Minimally, we can aggregate data to protect it. But 
realistically, we need a uniform student record.

    Question 3. As our economy shifts, we know there are millions of 
workers who are unfortunately left behind and could use retraining or 
new credentials in order to effectively re-enter the labor market. How 
effective could some of these platforms be for retraining laid-off or 
displaced workers? What are the barriers that are in place and how do 
we ensure the quality?
    Answer 3. A lot of the new innovations are not now title IV 
eligible. We need to bring them into the title IV eco-system, which 
means changes in title I eligibility. We've seen the effectiveness of 
coding boot camps, for example. Again, if we are allowing them in, we 
need (A) new and better forms of quality assurance (accreditation) that 
focus on outcomes and (B) transparency of data, so we can really know 
if they are performing as they claim.
                           senator whitehouse
    Question 1. Talking with higher education stakeholders in Rhode 
Island, I have seen broad agreement that regulation in higher education 
could be reduced, simplified, or consolidated. What are some specific 
ways in which we can address overregulation in higher education?
    Answer 1. Congress could stop piling on new regulatory demands. 
When stuck in a hole, the first rule is ``stop digging.'' We could 
define ``good standing'' and then allow institutions who have earned 
that designation more time between reports.

    Question 2. I'm concerned that accreditors can serve to protect 
incumbent institutions and practices, and stifle innovation. How can we 
ensure that we have an accreditation system that maintains quality and 
protects Federal student aid, while fostering innovation to address the 
evolving needs of students?
    Answer 2. We need an accreditation system that is built around 
outputs, not inputs. The later, the basis for most accreditation, is a 
poor proxy for measuring actual outcomes and performance. If we shift 
to outcomes-based accreditation, we should ask for three critical 
things:

     The claims being made for the learning.
     How provider really knows (the assessment question).
     Transparency of results.

    If we are VERY clear about the claims we make for learning and how 
we know and share the results, we ought not to care much how providers 
get students there. That will invite a range of innovative new 
approaches. This would be a dramatic change in how accreditation 
happens today.
       Response by Michael B. Horn to Questions of Senator Casey 
                         and Senator Whitehouse
                             senator casey
    Question 1. As our economy shifts, we know there are millions of 
workers who are unfortunately left behind and could use retraining or 
new credentials in order to effectively re-enter the labor market. How 
effective could some of these platforms be for retraining laid-off or 
displaced workers? What are the barriers that are in place and how do 
we ensure the quality?
    Answer 1. These new programs are ideal for the millions of workers 
who could use retraining or new credentials in order to effectively re-
enter the labor market. As disruptive innovations, they will target 
ideally people who were nonconsumers before--that is, unable to access 
the traditional offerings--which is exactly this segment, and given 
that they are shorter programs typically and directly targeted at 
connecting students to employment in many cases, this is a huge 
opportunity. The challenge has been helping employers see the value 
that competency-based programs provide, as it's such a novel idea that 
most H.R. departments and companies are still filtering by traditional 
credentials instead of something that could be of far greater value to 
them. One idea might be to help employers bestow quality directly on 
these new providers through the de facto accrediting associations they 
create.
    In addition, per my additional testimony already provided, I have 
listed many of the barriers that exist in terms of treating these 
programs as traditional ones and regulating them by traditional 
regulations that do not at all fit these new opportunities and would 
not help with quality assurance.
                           senator whitehouse
    Question 1. Talking with higher education stakeholders in Rhode 
Island, I have seen broad agreement that regulation in higher education 
could be reduced, simplified, or consolidated. What are some specific 
ways in which we can address overregulation in higher education?
    Answer 1. Whenever a disruptive innovation emerges--and online, 
competency-based learning deployed in the right business model is a 
disruptive innovation--it doesn't look as good as existing services 
according to the old metrics of performance. Disruptions tend to be 
simpler than existing services; they start by solving undemanding 
problems. As a result, the sector's leading organizations often dismiss 
them because they don't look terribly good in comparison to the way 
people have traditionally thought of quality. But they also redefine 
the notion of what is quality and performance. As such, they don't fit 
neatly into existing regulatory structures and often create new ones 
over time. Judging them by the old regulations can also limit their 
innovative potential by trapping and confining them to replicate parts 
of the existing value propositions of the old system rather than 
deliver on their new value proposition.
    For online, competency-based programs, the old metrics are those 
focused on inputs. These new programs often lack breadth, generally do 
not do academic research, and they don't have grassy green quads and 
traditional libraries. Assessing them based on these criteria along 
with specifying their faculty members' academic credentials and course 
requirements doesn't make much sense, nor does one-size-fits-all 
regulations that govern how students interact with faculty online, 
especially given that more interaction in online courses isn't always 
better for students. Regulations limiting the geography in which 
approved programs can serve students are counter-productive as well for 
a medium that knows no geographic boundaries.

    Question 2. I'm concerned that accreditors can serve to protect 
incumbent institutions and practices, and stifle innovation. How can we 
ensure that we have an accreditation system that maintains quality and 
protects Federal student aid, while fostering innovation to address the 
evolving needs of students?
    Answer 1. I am concerned about the same thing. The evidence from 
our research on innovation shows that these bodies do not have the 
resources, processes, and priorities to shift and judge these new forms 
of higher education emerging.
    Some have suggested a government-driven assessment program to drive 
quality, but that is unlikely to work. These competency-based programs 
are emerging in a wide variety of fields that are constantly changing--
from IT fields to the liberal arts. Using common, government-mandated 
assessments will be difficult and unwieldy at best and could stunt 
innovation. Even pegging program quality to a broader assessment--the 
Collegiate Learning Assessment, for example, is a favorite of many 
people for its assessment of underlying critical thinking, analytic 
reasoning, problem solving, and written communication skills--may not 
be much better because those underlying skills that employers say they 
need manifest themselves in very different ways depending upon the 
domain in which someone is working. The assessment may miss out on 
assessing the very reason why students attend certain programs. For 
example, the CLA is likely to tell us very little about the program 
quality for students studying in accredited cosmetology colleges--
incidentally, a type of school that is begging for competency-based 
learning to free students from what can be akin to an apprenticeship 
for which they are paying even once they've mastered the craft if the 
full time of the program has yet to elapse.
    A better path forward would be for the Federal Government to 
encourage a variety of experiments over the coming years that try out 
different approaches in a controlled way, all while releasing programs 
from the current input-based constraints to learn what works, in what 
combinations and circumstances, and what are the unintended 
consequences. A key tenet of all the efforts is that employers along 
with students are likely best positioned to determine program quality--
and programs that align their assessments to the competencies employers 
need will likely be in a strong place. Some possible paths forward for 
regulating competency-based programs include creating risk-sharing 
programs with the new institutions and broadening the use of income 
share agreements; giving students the dollars up front and creating far 
more data transparency around program outcomes so students can make 
more informed choices; paying programs based on student outcomes in 
accordance with a concept we had a while back called the QV Index that 
aligns to employment and broader student satisfaction outcomes; 
experimenting with accreditors that operate like charter authorizers or 
employer organizations that operate as de facto accrediting bodies; and 
encouraging States to try more experimentation themselves across a 
broader range of ideas. Moving beyond all-or-nothing access to Federal 
dollars that can create race-to-the-bottom incentives and only 
considering the tuition cost of a program as opposed to all of its 
expenditures so that students capture real savings when costs are 
reduced is also critical.
    Per my suggestion to Senator Casey's question as well as my 
original testimony, given that new de facto accrediting employer-led 
bodies are emerging, such as the Open Education Alliance, harnessing 
them as quality markers in some way might also be worth exploring.

    [Whereupon, at 11:41 a.m., the hearing was adjourned.]

                                   [all]