[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                      STRENGTHENING ACCOUNTABILITY
                     IN HIGHER EDUCATION TO BETTER
                      SERVE STUDENTS AND TAXPAYERS

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

                                HEARING

                               BEFORE THE

       SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE INVESTMENT


                         COMMITTEE ON EDUCATION
                               AND LABOR
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION
                               __________

             HEARING HELD IN WASHINGTON, DC, April 3, 2019
                               __________

                           Serial No. 116-15
                               __________

      Printed for the use of the Committee on Education and Labor


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                              ___________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
36-590 PDF                  WASHINGTON : 2019               
              
              
              
              
                    COMMITTEE ON EDUCATION AND LABOR

             ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman

Susan A. Davis, California           Virginia Foxx, North Carolina,
Raul M. Grijalva, Arizona            Ranking Member
Joe Courtney, Connecticut            David P. Roe, Tennessee
Marcia L. Fudge, Ohio                Glenn Thompson, Pennsylvania
Gregorio Kilili Camacho Sablan,      Tim Walberg, Michigan
  Northern Mariana Islands           Brett Guthrie, Kentucky
Frederica S. Wilson, Florida         Bradley Byrne, Alabama
Suzanne Bonamici, Oregon             Glenn Grothman, Wisconsin
Mark Takano, California              Elise M. Stefanik, New York
Alma S. Adams, North Carolina        Rick W. Allen, Georgia
Mark DeSaulnier, California          Francis Rooney, Florida
Donald Norcross, New Jersey          Lloyd Smucker, Pennsylvania
Pramila Jayapal, Washington          Jim Banks, Indiana
Joseph D. Morelle, New York          Mark Walker, North Carolina
Susan Wild, Pennsylvania             James Comer, Kentucky
Josh Harder, California              Ben Cline, Virginia
Lucy McBath, Georgia                 Russ Fulcher, Idaho
Kim Schrier, Washington              Van Taylor, Texas
Lauren Underwood, Illinois           Steve Watkins, Kansas
Jahana Hayes, Connecticut            Ron Wright, Texas
Donna E. Shalala, Florida            Daniel Meuser, Pennsylvania
Andy Levin, Michigan*                William R. Timmons, IV, South 
Ilhan Omar, Minnesota                    Carolina
David J. Trone, Maryland             Dusty Johnson, South Dakota
Haley M. Stevens, Michigan
Susie Lee, Nevada
Lori Trahan, Massachusetts
Joaquin Castro, Texas
* Vice-Chair

                   Veronique Pluviose, Staff Director
                 Brandon Renz, Minority Staff Director
                                 ------                                

       SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE INVESTMENT

                 SUSAN A. DAVIS, California, Chairwoman

Joe Courtney, Connecticut            Lloyd Smucker, Pennsylvania
Mark Takano, California                Ranking Member
Pramila Jayapal, Washington          Brett Guthrie, Kentucky
Josh Harder, California              Glenn Grothman, Wisconsin
Andy Levin, Michigan                 Elise Stefanik, New York
Ilhan Omar, Minnesota                Jim Banks, Indiana
David Trone, Maryland                Mark Walker, North Carolina
Susie Lee, Nevada                    James Comer, Kentucky
Lori Trahan, Massachusetts           Ben Cline, Virginia
Joaquin Castro, Texas                Russ Fulcher, Idaho
Raul M. Grijalva, Arizona            Steve C. Watkins, Jr., Kansas
Gregorio Kilili Camacho Sablan,      Dan Meuser, Pennsylvania
  Northern Mariana Islands           William R. Timmons, IV, South 
Suzanne Bonamici, Oregon                 Carolina
Alma S. Adams, North Carolina
Donald Norcross, New Jersey



                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on April 3, 2019....................................     1

Statement of Members:
    Davis, Hon. Susan A., Chairwoman, Subcommittee on Higher 
      Education and Workforce Investment.........................     1
        Prepared statement of....................................     3
    Smucker, Hon. Lloyd, Ranking Member, Subcommittee on Higher 
      Education and Workforce Investment.........................     5
        Prepared statement of....................................     6

Statement of Witnesses:
    Hillman, Mr. Nicholas, Ph.D., Associate Professor, University 
      of Wisconsin-Madison.......................................     8
        Prepared statement of....................................    11
    Emrey-Arras, Ms. Melissa, Director, Education, Workforce, and 
      Income Security Issues, U.S. Government Accountability 
      Office (GAO)...............................................    15
        Prepared statement of....................................    17
    Ortega, Mr. Noe, Deputy Secretary, Office of Postsecondary 
      and Higher Education, Pennsylvania Department of Education.    34
        Prepared statement of....................................    36
    Brittingham, Ms. Barbara E., Ph.D., President, New England 
      Commission of Higher Education.............................    45
        Prepared statement of....................................    47

Additional Submissions:
    Adams, Hon. Alma S., a Representative in Congress from the 
      State of North Carolina:
        Letter dated April 1, 2019 from Southern Methodist 
          University.............................................    88
        Letter dated April 3, 2019 from the Center for American 
          Progress...............................................    90
        Letter dated April 3, 2019 from the National Association 
          for College Admission (NACAC)..........................    93
        Letter dated April 3, 2019 from the National Consumer Law 
          Center (NCLC) and Student Loan Borrower Assistance 
          (SLBA).................................................    95
        Letter from the Institute for College Access and Success.    98
        Prepared statement of from CLASP.........................   102
    Courtney, Hon. Joe, a Representative in Congress from the 
      State of Connecticut:
        Letter dated February 14, 2019...........................   104
        Statement for the record.................................   108
        Public Comment from Veterans Service Organizations and 
          Military Service Organizations.........................   111
    Chairwoman Davis:
        Letter dated April 1, 2019 from The Century Foundation...   117
    Foxx, Hon. Virginia, a Representative in Congress from the 
      State of North Carolina:
        Article: National Affairs Accountability for Higher 
          Education..............................................   123
    Mr. Smucker:
        Article: We Must Support Veterans and Politicize Their 
          Education..............................................   153
        The Bennett Hypothesis Turns 30..........................   155
        Toward a Better Future: Exploring Outcomes of Attending 
          Career Colleges and Universities.......................   168
        Link: Credit Supply and the Rise in College Tuition: 
          Evidence From the Expansion in Federal Student Aid 
          Programs...............................................   193
    Takano, Hon. Mark, a Representative in Congress from the 
      State of California:
        Letter dated April 22, 2019 from The George Washington 
          University.............................................   195
    Trahan, Hon. Lori, a Representative in Congress from the 
      State of Massachusetts:
        Letter dated April 1, 2019 from the Legal Services of 
          Harvard Law School (LSC)...............................   200
        Letter dated April 2, 2019 from the National Education 
          Association (NEA)......................................   203
    Questions submitted for the record by:
        Chairwoman Davis.........................................   206
        Sablan, Hon. Gregorio Kilili Camacho, a Representative in 
          Congress from the Northern Mariana Islands...........208, 210
        Mr. Takano..............................................    208 
        Watkins, Hon. Steve, a Representative in Congress from 
          the State of Kansas....................................   206
    Responses to questions submitted for the record by:
        Ms. Brittingham..........................................   211
        Ms. Emrey-Arras..........................................   213
        Mr. Hillman..............................................   216

 
                    STRENGTHENING ACCOUNTABILITY IN
                    HIGHER EDUCATION TO BETTER SERVE
                        STUDENTS AND TAXPAYERS

                              ----------                              


                        Wednesday, April 3, 2019

                       House of Representatives,

                   Committee on Education and Labor,

       Subcommittee on Higher Education and Workforce Investment,

                            Washington, DC.

                              ----------                              

    The subcommittee met, pursuant to notice, at 9:20 a.m., in 
room 2175, Rayburn House Office Building. Hon. Susan A. Davis 
[chairwoman of the committee] presiding.
    Present: Representatives Davis, Courtney, Takano, Jayapal, 
Harder, Levin, Omar, Lee, Trahan, Castro, Sablan, Bonamici, 
Adams, Norcross, Smucker, Guthrie, Grothman, Stefanik, Banks, 
Walker, Comer, Meuser, and Timmons.
    Also present: Representatives Scott and Foxx.
    Staff present: Katie Berger, Professional Staff; Nekea 
Brown, Deputy Clerk; Ilana Brunner, General Counsel--Health and 
Labor; Jacque Chevalier Mosely, Director of Education Policy; 
Christian Haines, General Counsel--Education; Ariel Jona, Staff 
Assistant; Jaria Martin, Staff Assistant; Max Moore, Office 
Aide; Merrick Nelson, Digital Manager; Veronique Pluviose, 
Staff Director; Katherine Valle, Senior Education Policy 
Advisor; Banyon Vassar, Deputy Director of Information 
Technology; Claire Viall, Professional Staff; Marty Boughton, 
Minority Press Secretary; Courtney Butcher, Minority Coalitions 
and Members Services Coordinator; Bridget Handy, Minority 
Legislative Assistant; Blake Johnson, Minority Staff Assistant; 
Amy Raaf Jones, Minority Director of Education and Human 
Resources Policy; Hannah Matesic, Minority Director of 
Operations; Kelley McNabb, Minority Communications Director; 
Alex Ricci, Minority Professional Staff Member; and Mandy 
Schaumburg, Minority Chief Counsel and Deputy Director of 
Education Policy.
    Chairwoman DAVIS. Good morning. The Subcommittee on Higher 
Education and Workforce Investment will come to order.
    Today we are here to discuss the need to have stronger 
college accountability, which we all know is critical to 
ensuring students are accessing a quality higher education.
    Our higher education system maintains its integrity through 
three unique entitles, the Federal Government, states, and 
accreditors. And together these entitled form the 
accountability triad, charged with protecting students and 
ensuring that they receive a quality education.
    The accountability triad is intended to provide robust 
oversight of colleges and universities. But the recent wave of 
for-profit college closures raises some serious questions about 
its effectiveness, and unfortunately, students and taxpayers 
are paying the price.
    While some say there are ``bad actors'' in every sector, 
history clearly demonstrates that predatory behavior has only 
been rampant in the for-profit sector. For-profit colleges 
have, by definition, a fiduciary duty to its stakeholders to 
maximize profits, often at the expense of students.
    We can just tell by looking at the data. And if you can all 
see the screen, or several screens around--please look at 
those--as you can see, the data clearly show that for-profit 
colleges have wreaked havoc on students and taxpayers.
    Students in for-profit colleges borrow more often, they 
take out larger loans, and default at higher rates than 
students in similar programs at public and non-profit colleges.
    Even with these abysmal outcomes, students are still 
attending these schools and we must ask ourselves why. Is it 
because they don't have all the information in front of them? 
Well, perhaps that is true. These companies spend a lot of 
money aggressively marketing to and targeting students, 
particularly students of color, low-income students, and 
veterans. So perhaps having better information would help 
students make a more informed decision. However, improving 
consumer information is in no way a substitute for 
accountability. Regardless of how much information is available 
to students, most students are inherently constrained by 
geography, by place.
    Over the last 4 years, we have seen several large for-
profit colleges, college companies collapse, leaving tens of 
thousands of students with no degree and high debt loads. And 
although we have seen some small, non-profit schools close, the 
closure impacts fewer students and are often related to 
enrollment declines, not predatory actions.
    So to maintain the integrity of our higher education 
system, we must examine and strengthen each entity of the 
triad, not as independent members but as interdependent members 
actively coordinating to achieve the goal of ensuring students 
receive a quality education.
    Accreditors, traditionally the guardians of higher 
education quality, must be more effective at upfront 
gatekeeping and ongoing monitoring. And that means setting 
standards that vary by institutional mission, using data to 
hold schools accountable, and standardizing procedures.
    So while I understand that an accreditor's role is to help 
institutions improve, accreditors are also charged with 
ensuring quality for students today. And if it takes 10 years 
before an institution collapses due to its practices, it means 
we are failing today's students.
    States also play an important role in the accountability 
triad, but that role is not well defined. Some states have 
taken aggressive steps to conduct proactive oversight, while 
others have done little to protect students and taxpayers. So 
we must encourage states to enforce minimal standards related 
to consumer protections. Reviewing marketing practices and 
enrollment contracts when authorizing colleges are just a few 
areas where states could take a more active role.
    And when the state finds concerning patterns, the state 
should, at the very least, bring those concerns to the 
attention of accreditors and the Department of Education.
    The Federal Government, as one of the three entities in the 
triad, must also do more. The Department of Education must 
ensure that schools receiving access to Federal student aid are 
financially stable and are not defrauding students. And in 
cases where students are cheated, the Department must provide 
relief so that students can have a new start without the burden 
of debt for an education that unfortunately went nowhere.
    Under this Administration, the Department has consistently 
failed to fulfill the Federal Government's critical role in 
keeping colleges accountable, particularly for for-profit 
colleges. Under Secretary DeVos, this Department has failed to 
implement rules--that are established to protect consumers from 
the worst performing schools. And it is then no surprise that 
three major college chains abruptly collapsed without warning 
to students.
    Specifically, the Department has: neglected to intervene 
when schools are putting students and taxpayers at risk; 
reinstated the troubled Accrediting Council for Independent 
Colleges and Schools; and failed to oversee low-quality, career 
programs; decreased college transparency, making it harder for 
students to make informed decisions; and finally, failed to 
quickly provide relief to defrauded students despite being 
ordered to implement this protection by a Federal Court Judge.
    So the Department has not only abandoned its critical role 
in college accountability but has actively worked to undermine 
the integrity of the triad through negotiated rulemaking. The 
Department is proposing to reduce its own footprint while 
providing accreditors with greater flexibility. And ultimately, 
these proposed changes would allow low-quality schools to 
flourish and leave accreditors with little to no responsibility 
for accrediting bad actors.
    So as we together consider ways to modernize the Higher 
Education Act to meet the needs of our modern work force, we 
must strengthen accountability and ensure our current problems 
aren't exacerbated in the next reauthorization.
    I look forward to working with my colleagues to find 
solutions that ensure all students have access to a quality 
postsecondary education that leads to a rewarding career.
    I want to thank the witnesses for being with us today. I 
look forward to your testimony and the discussion that will 
follow.
    I now yield to the ranking member, Mr. Smucker, for his 
opening statement.
    [The statement of Chairwoman Davis follows:]

Prepared Statement of Hon. Susan A. Davis, Chairwoman, Subcommittee on 
               Higher Education and Workforce Investment

    Today, we are here to discuss the need to have stronger college 
accountability, which is critical to ensuring students are accessing a 
quality higher education.
    Our higher education system maintains its integrity through three 
unique entities: the Federal Government, States, and accreditors. 
Together, these entities form the `accountability triad' charged with 
protecting students and ensuring that they receive a quality education.
    The accountability triad is intended to provide robust oversight of 
colleges and universities. But the recent wave of for-profit college 
closures raises serious questions about its effectiveness, and 
unfortunately, students and taxpayers are paying the price.
    While some say there are ``bad actors'' in every sector, history 
clearly demonstrates that predatory behavior has only been rampant in 
the for-profit sector. For-profit colleges have, by definition, a 
fiduciary duty to its stakeholders to maximize profits, often at the 
expense of students.
    We can tell just by looking at the data.
    As you can see on the slide, the data clearly show that for-profit 
colleges have wreaked havoc on students and taxpayers. Students in for-
profit colleges borrow more often, take out larger loans, and default 
at higher rates than students in similar programs at public and non-
profit colleges.
    Even with these abysmal outcomes, students are still attending 
these schools and we must ask ourselves why. Is it because students 
don't have all the information in front of them? Maybe.
    Or maybe it's because these for-profit institutions make it easier 
for students to enroll due to their flexible schedules? Perhaps.
    But the reality is that these companies spend a lot of money 
aggressively marketing to and targeting students, particularly students 
of color, low-income students, and veterans. And their budgets are much 
larger than the local community college that is also open access and 
charges students a lot less than the for-profit company.
    So perhaps having better information would help students make a 
more informed decision. However, improving consumer information is in 
no way a substitute for accountability. Regardless of how much 
information is available to students, most students are inherently 
constrained by geography.
    For-profit institutions tout their flexible schedules and online 
education. But the truth is that for-profit institutions often spend a 
big part of their budget on recruiting students
    Over the last 4 years, we have seen several large for-profit 
college companies collapse, leaving tens of thousands of students with 
no degree and high debt loads. Although we have seen some small, non-
profit schools close, the closure impacts fewer students and are often 
related to enrollment declines not predatory actions.
    To maintain the integrity of our higher education system, we must 
examine and strengthen each entity of the triad not as independent 
members but as interdependent members actively coordinating to achieve 
the goal of ensuring students receive a quality education.
    Accreditors--traditionally the guardians of higher education 
quality--must be more effective at upfront gatekeeping and ongoing 
monitoring. That means setting standards that vary by institutional 
mission, using data to hold schools accountable, and standardizing 
procedures.
    While I understand that an accreditor's role is to help 
institutions improve, accreditors are also charged with ensuring 
quality for students today. And if it takes 10 years before an 
institution collapses due to its predatory practices, it means we are 
failing today's students.
    States also play an important role in the accountability triad. But 
that role is not well defined. Some States have taken aggressive steps 
to conduct proactive oversight, while others have done little to 
protect students and taxpayers.
    We must encourage States to enforce minimal standards related to 
consumer protections. Reviewing marketing practices and enrollment 
contracts when authorizing colleges are just a few areas where States 
could take a more active role.
    And when the State finds concerning patterns, the State should, at 
the very least, bring those concerns to the attention of accreditors 
and the Department of Education.
    The Federal Government, as one of the three entities in the triad, 
must also do more. The Department of Education must ensure that schools 
receiving access to Federal student aid are financially stable and are 
not defrauding students. And, in cases where students are cheated, the 
Department must provide relief so that students can have a new start 
without the burden of debt for an education that went nowhere.
    Under this Administration, the Department has consistently failed 
to fulfill the Federal Government's critical role in keeping colleges 
accountable, particularly for-profit colleges.
    Under Secretary DeVos, this Department has failed to implement 
rules established to protect consumers from the worst performing 
schools. It is then no surprise that three major college chains 
abruptly collapsed without warning to students. Specifically, this 
Department has:
    * Neglected to intervene when schools are putting students and 
taxpayers at risk;
    * ReinStated the troubled Accrediting Council for Independent 
Colleges and Schools or A-C-I-C-S;
    * Failed to oversee low-quality, career programs;
    * Decreased college transparency, making it harder for students to 
make informed decisions; and
    * Failed to quickly provide relief to defrauded students despite 
being ordered to implement this protection by a Federal court judge.
    The Department has not only abandoned its critical role in college 
accountability but has actively worked to undermine the integrity of 
the triad through negotiated rulemaking. The Department is proposing to 
reduce the its own footprint while providing accreditors with greater 
flexibility. Ultimately, these proposed changes would allow low-quality 
schools to flourish and leave accreditors with little to no 
responsibility for accrediting bad actors.
    As we consider ways to modernize the Higher Education Act to meet 
the needs of our modern work force, we must strengthen accountability 
and ensure our current problems aren't exacerbated in the next 
reauthorization.
    I look forward to working with all my colleagues to find solutions 
that ensure all students have access to a quality postsecondary 
education that leads to a rewarding career.
    I want to thank the witnesses for being here with us today. I look 
forward to your testimony and the discussion that will follow.
    I now yield to the Ranking Member, Mr. Smucker, for his opening 
Statement.
                                 ______
                                 
    Mr. SMUCKER. Thank you, Madam Chair, for yielding.
    A postsecondary education has long been one of the surest 
pathways to a good paying job and lifelong success. Attending 
college is a dream for so many Americans and we have made great 
strides in reducing barriers to making that dream a reality. It 
is something we should all celebrate. But, unfortunately, as 
student access has improved, program accountability and 
completion of college by students have struggled to keep up. We 
do have a completion problem, and students are paying the 
price.
    Even though we pour billions of taxpayer dollars into 
postsecondary education, we have seen modest problems grow into 
significant challenges. Easy access to tax payer funded student 
loans has indeed driven up tuition and fees. Over the last 30 
years the cost of attending a 4 year public education has 
increased 213 percent. Meanwhile, completion rates have lagged 
behind. Only 58 percent of full-time students at 4 year 
colleges graduate within 60 years--only 58 percent.
    And today aggregate student debt stands at more than $1.4 
trillion, surpassing both national auto loan and credit card 
debt.
    The absence of downward pressure on rising costs, paired 
with the fact that postsecondary institutions don't share in 
the risk of students non completion has harmed students' 
chances of future success.
    Studies show that college is a worthwhile investment for 
graduates, but for the students who don't complete their 
education, their prospects are actually worse than if they 
never attended college in the first place. College too often 
has become a risk. Many ask themselves, will enrollment put me 
on the path to success or strand me with thousands of dollars 
in debt and no degree to show for my efforts.
    It is clear that the Federal, State, and accreditors' roles 
in postsecondary education must be reformed to protect 
taxpayers and promote student success.
    Accreditation agencies, independent bodies made up of 
members from accredited colleges and universities, provide 
quality control in the higher education space. Accreditors are 
responsible for judging whether institutions are fulfilling 
their duties and providing students with a high quality 
education. Unfortunately, accreditors are often back on their 
feet having to focus on bureaucratic compliance more than on 
promoting innovation and academic integrity.
    Committee Republicans believe the accreditation process 
should be reformed to foster institutional innovation and 
strong educational outcomes for students. Preserving the 
current accreditation framework is important. The Federal 
Government is not and should never be responsible for 
prescribing academic standards for institutions, but there is 
room to reform the system for greater accountability and 
quality.
    The Higher Education Act should be reformed to provide 
prospective students and their families with better 
information. Higher education is an investment and students 
deserve access to metrics, like graduate rates, average debt 
per pupil, and employment outcomes by university and by field 
of study.
    Choosing the right school and study area are decisions that 
will have a lasting impact on a student's life. We should 
empower students with the information they need to make a fully 
informed decision.
    Today's postsecondary education system looks a bit like a 
tangled ball of yarn. From rising tuition, student debt, to 
lagging innovation and low graduation rates, every problem is 
interconnected. But if we strengthen our accountability in 
higher education and reform accreditation to focus on quality 
and results, we can begin to restore the balance of flexibility 
for institutions to innovate and accountability for students 
and taxpayers.
    Thank you, Madam Chair.
    [The statement of Mr. Smucker follows:]

Prepared Statement of Hon. Lloyd Smucker, Ranking Member, Subcommittee 
              on Higher Education and Workforce Investment

    Thank you for yielding.
    A postsecondary education has long been one of the surest pathways 
to a good-paying job and lifelong success. Attending college is a dream 
for so many Americans and we've made great strides in reducing barriers 
to making that dream a reality. This is something we should celebrate 
but unfortunately as student access has improved, program 
accountability and completion of college have struggled to keep up.
    We have a completion problem and students are paying the price.
    Even though we've poured billions of taxpayer dollars into 
postsecondary education, we've seen modest problems grow into 
significant challenges. Easy access to taxpayer-funded student loans 
has driven up tuition and fees.
    Over the last 30 years, the cost of attending a 4-year public 
institution has increased 213 percent.
    Meanwhile, completion rates have lagged behind. Only 58 percent of 
full-time students at 4-year colleges graduate within 6 years, and 
today, aggregate student debt stands at more than $1.4 trillion, 
surpassing both national auto loan and credit card debt.
    The absence of downward pressure on rising costs paired with the 
fact that postsecondary institutions don't share in the risk of 
students' noncompletion has harmed students' chances at future success. 
Studies show that college is a worthwhile investment for graduates; but 
for the students who don't complete their education, their prospects 
are worse than if they'd never attended college in the first place.
    College has become a risk for many. Many students ask themselves: 
``Will enrollment put me on the path to success, or strand me with 
thousands of dollars in debt and no degree to show for my efforts?''
    It's clear that the Federal, State, and accreditors roles in 
postsecondary education must be reformed to protect taxpayers and 
promote student success.
    Accreditation agencies, independent bodies made up of members from 
accredited colleges and universities, provide quality control in the 
higher education space. Accreditors are responsible for judging whether 
institutions are fulfilling their duties and providing students with a 
high-quality education.
    Unfortunately, accreditors are often on the back foot, having to 
focus on bureaucratic compliance more than on promoting innovation and 
academic integrity.
    Committee Republicans believe the accreditation process should be 
reformed to foster institutional innovation and strong educational 
outcomes for students.
    Preserving the current accreditation framework is important the 
Federal Government is not and never should be responsible for 
prescribing academic standards for institutions. But there is room to 
reform the system for greater accountability and quality.
    The Higher Education Act should be reformed to provide prospective 
students and their families with better information. Higher education 
is an investment, and students deserve access to metrics like graduate 
rates, average debt per pupil, and employment outcomes by university 
and field of study.
    Choosing the right school and study area are decisions that will 
have a lasting impact on a student's life. We should empower students 
with the information they need to make a fully informed decision.
    Today's postsecondary education system looks a bit like a tangled 
ball of yarn. From rising tuition and student debt to lagging 
innovation and low graduation rates, every problem is interconnected.
    But if we strengthen our accountability in higher education and 
reform accreditation to focus on quality and results, we can begin to 
restore the balance of flexibility for institutions to innovate and 
accountability for students and taxpayers.
                                 ______
                                 
    Chairwoman DAVIS. Thank you, Mr. Smucker.
    And, without objection, I just wanted to mention that all 
members who wish to insert their written statements into the 
record can do so by April 16.
    I wanted to just correct the record here because I think we 
want to be very clear that--we need to clarify that grant aid 
and loans have been driven up, the price at college, but only 
at for-profit institutions. So we haven't seen that. Research 
has found time and time again that this is not true at public 
institutions. So we want to just make sure that we are clear. 
And we can go back and take a look at that record together if 
you would like. No problem.
    Okay. And I now want to introduce our witnesses. Dr. 
Nicholas Hillman is an associate professor of education 
leadership and policy analysis at the School of Education of 
the University of Wisconsin-Madison. Dr. Hillman's research 
examines how Federal student aid and state performance based 
funding policies affect educational opportunity and outcomes. 
Dr. Hillman earned his doctorate in educational leadership and 
policy studies from Indiana University.
    Welcome.
    Ms. Melissa Emrey-Arras is the director of education, work 
force, and income security issues at the U.S. Government 
Accountability Office, that we know as GAO. Ms. Emrey-Arras has 
been with the GAO for nearly 2 decades and oversees GAO's work 
on higher education. Ms. Emrey-Arras received a master's degree 
in public policy from Harvard and holds a bachelor's degree 
from Swarthmore College.
    Welcome, as well.
    Mr. Noe Ortega is the commissioner of postsecondary and 
higher education and is deputy secretary for the Office of 
Postsecondary and Higher Education at the Pennsylvania 
Department of Education. In this role Mr. Ortega oversees 
higher education for the Commonwealth of Pennsylvania.
    Mr. Ortega holds a master of science in education 
psychology from Texas A&M University-Corpus Christi, and a 
bachelor's degree from St. Edward's University.
    Welcome.
    And Dr. Barbara Brittingham is the president of the New 
England Commission of Higher Education. Her commission 
accredits 226 institutions of higher education, most of which 
are private, nonprofit in the 6 New England states.
    Dr. Brittingham received her doctorate from Iowa State 
University.
    We appreciate all of you being here today and look forward 
to your testimony.
    I wanted to just remind the witnesses that we have read 
your written statements and they will appear in full in the 
hearing record. Pursuant to committee rule 7d and committee 
practice, each of you is asked to limit your oral presentation 
to a 5 minute summary of your written statement.
    I also want to remind the witnesses that pursuant to Title 
18 in the U.S. Code, Section 1001, it is illegal to knowingly 
and willfully falsify any statement, representation, writing 
document, or material fact presented to Congress or otherwise 
conceal or cover up a material fact.
    Before you begin your testimony please remember to press 
the button on the microphone in front of you so that it will 
turn on and the members can all hear you. As you begin to speak 
the light in front of you will turn green and, after 4 minutes 
the light will turn yellow to signal that you have 1 minute 
remaining. When the light turns red your 5 minutes have expired 
and we ask that you please wrap up.
    So after all that is said, we will certainly let the entire 
panel make their presentations before we move to member 
questions. And when answering a question, please remember to 
once again turn your microphone on.
    I will first recognize Dr. Hillman.

   STATEMENT OF PROFESSOR NICHOLAS HILLMAN, PH.D., ASSOCIATE 
           PROFESSOR, UNIVERSITY OF WISCONSIN-MADISON


    Mr. HILLMAN. Chairwoman Davis, Ranking Member Smucker, and 
Members of the committee, thank you for inviting me to this 
hearing on strengthening accountability in higher education. I 
am honored to participate and I look forward to continuing 
these conversations with the Committee and your staff.
    Across our Nation's 4,300 degree-granting colleges and 
universities and the 19 million students that they serve, there 
is a wide range of educational missions, types of colleges, and 
students' needs. There is also a high degree of inequality in 
student access and outcomes that are driven by two main forces, 
unequal educational opportunities outside of college, and 
unequal resources among colleges.
    So a challenge for any accountability system is to ensure 
that it does not reinforce the very inequalities that it seeks 
to resolve. So improving accountability should, in my opinion, 
focus on improving outcomes for all students, especially those 
who have been traditionally underserved and poorly served by 
colleges and universities.
    The accountability triad plays a central role here in 
identifying the shared commitments among the Federal 
Government, States, and accreditation agencies.
    Each member of the triad has a role to play. For example, 
accreditors conduct the in-depth peer review to ensure that 
colleges and academic programs meet minimal quality standards 
and that they have appropriate financial and human resources. 
Neither the states nor the Federal Government conduct these 
reviews. Instead, governmental agencies rely on accreditors' 
expertise as a form of professional accountability.
    For quality assurance at the Federal level, accountability 
policies come in three main varieties. The first is consumer 
information. So via tools such as the college score card and 
the college navigator. The second is through regulatory action 
where through negotiator rulemaking the U.S. Department of 
Education implements program integrity rules, such as gainful 
employment. And the third is the legislative action that 
codifies accountability policies, such as the Cohort Default 
Rate, the Financial Responsibility Standards, the ``90/10 
rule'' into the Higher Education Act itself.
    In states, accountability comes in different forms, 
primarily around academic program review, state authorization, 
and performance management. State higher education executive 
agencies and governing boards ensure academic programs are not 
unnecessarily duplicated. They also determine which 
institutions are authorized to operate in their territorial 
state boundaries. States have taken many actions to incorporate 
performance management into their accountability systems, most 
notably performance-based funding, which has been found to have 
very mixed results in improving student outcomes.
    And this is one of my research areas where the best 
evidence to date finds that performance-based funding states do 
not typically outperform other states and may even reinforce 
inequality in some cases.
    When well-coordinated, each of these three members of the 
triad can leverage their shared commitments to create better 
educational environments for students. The triad's differential 
accountability system is designed to hold different 
institutions, programs, and sectors accountable for different 
outcomes. This is one of the system strengths and requires 
ongoing coordination and maintenance.
    More can be done to hold the poorest performing 
institutions and their programs accountable that are fair, 
effective, and that promote better student outcomes.
    So, I will conclude with a few examples. First, few 
accountability efforts adjust outcomes based on students' 
inputs. States are trying to address this by incorporating 
premiums and bonuses into their performance-based funding 
models when colleges serve targeted populations like low-income 
students, older students, or students of color, when they serve 
them well. And well-designed input adjustment can paint a 
fairer picture of the role that colleges play in promoting 
student success.
    Second, accountability efforts tend to focus on consumer 
information and financial incentives that overlook capacity 
building as a way to promote improvement. Ensuring that 
colleges have adequate resources to improve outcomes may be an 
effective complement to the triad's suite of accountability 
policies.
    And, finally, well designed accountability policies must 
link policy and practice. In my work at the University of 
Wisconsin-Madison we have developed an innovative research 
practice partnership with our financial aid office where my 
research team uses data and analysis to help improve the 
administration of financial aid programs to support students' 
success on campus. Our work connects policy and data with on 
the ground practices to better support students and to provide 
a feedback loop that is sometimes missing from accountability 
conversations.
    To conclude, I believe public policy problems concerning 
unequal college completion rates, quality assurance, 
affordability, and burdensome student loan debt would be worse 
without the accountability triad's oversight. I also believe 
these problems can be solved, or at least improved, via better 
accountability that addresses the root problems, incorporates 
promising design features, focuses on students, and keeps an 
eye toward inequality.
    I hope my testimony provides useful guidance for your 
committee and I commend you for your service in addressing 
these important accountability issues to promote better student 
outcomes.
    Please know it is my honor and privilege to be a resource 
today and into the future.
    Thank you.
    [The statement of Mr. Hillman follows:]
    
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    Chairwoman DAVIS. Thank you. And you stayed within your 
time well.
    Ms. Emrey-Arras, please.

    STATEMENT OF MELISSA EMREY-ARRAS, DIRECTOR, EDUCATION, 
    WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GOVERNMENT 
                     ACCOUNTABILITY OFFICE


    Ms. EMREY-ARRAS. Chairwoman Davis, Ranking Member Smucker, 
and members of the subcommittee. I am pleased to be here today 
to discuss the Federal Government's role in ensuring 
accountability in higher education.
    In Fiscal Year 2018 nearly 13 million students and their 
families received over $122 billion to help them pursue higher 
education through programs authorized under the Higher 
Education Act. Education administers these programs and is 
responsible, with the rest of the triad, for maintaining 
accountability and protecting the Federal investment in higher 
education.
    Among Education's responsibilities are recognizing 
accreditors to oversee educational equality, determining which 
schools are financially responsible and can participate in 
Federal student aid programs, and ensuring that schools comply 
with laws and regulations. However, news reports about students 
attending low quality schools, an increasing number of schools 
closing due to financial difficulties, and the substantial 
amount of student loans in default have raised questions as to 
whether this existing accountability system is sufficient for 
protecting students and taxpayers.
    My remarks today focus on our prior GAO work and 
Education's role in (1) recognizing accreditors, (2) overseeing 
the financial condition of schools, and (3) overseeing school 
student loan default rates.
    To begin with Education's recognition of accreditors. 
Accreditors are independent agencies responsible for ensuring 
that schools provide a quality education and must be recognized 
by the Department. Accreditors must have their recognition 
renewed by Education at least every 5 years, and Education 
reviews, among other things, whether the accreditor applies its 
own standards when it accredits schools. The accreditors, in 
turn, can issue sanctions, including terminations and 
probations to schools that do not meet the accreditor's 
standards.
    However, we previously found that schools with weaker 
student outcomes were on average no more likely to be 
sanctioned by accreditors than schools with stronger student 
outcomes. And Education does not make consistent use of 
sanction data that could help it identify insufficient 
accreditor oversight. In 2014 we recommended that Education use 
accreditor data in its recognition process to determine whether 
accreditors are consistently applying their standards to ensure 
schools provide a quality education. The Department agreed with 
the recommendation but has yet to implement it.
    Now turning to financial accountability. Education uses a 
financial composite score to measure the financial health of 
schools and to enable it to increase its oversight of schools 
and help protect against the risk of school closures. School 
closures, although rare, can result in hundreds of millions of 
dollars in unrepaid Federal student loans and the displacement 
of thousands of students. However, the composite score has been 
an imprecise risk measure, predicting only half of the school 
closures we looked at. This is partly due to the fact that the 
composite score does not reflect changes in accounting 
practices, relies on outdated financial measures, and is 
vulnerable to manipulation.
    Despite these limitations, Education has not updated the 
scores since it was created more than 20 years ago. In 2017 we 
recommended that Education update the score. Education has 
proposed some revisions, but changes have not yet been 
implemented and they do not fully address the problems with the 
composite score.
    Now, turning to the issue of student loan defaults. 
According to Federal law, schools may lose their eligibility to 
receive Federal student aid if a significant percentage of 
their borrowers default on their loans within the first 3 years 
of repayment. However, we found that some schools manage these 
default rates by hiring consultants that encourage borrowers 
with past due payments to put their loans in forbearance, an 
option that allows borrowers to temporarily postpone payments 
and bring past due loans current. We found that this practice 
can increase borrowers loan costs. For example, a typical 
borrower with $30,000 in loans who spends the first 3 years of 
repayment in forbearance would pay over $6,700 in additional 
interest.
    Pushing borrowers into forbearance also helps schools avoid 
accountability because borrowers are then more likely to 
default in the fourth year of repayment when schools are not 
held accountable for defaults. This practice shows the weakness 
of the Federal Cohort Default Rate to hold schools accountable.
    In 2018 we suggested that Congress consider statutory 
changes to strengthen schools' accountability for student loan 
defaults. However, legislation has yet to be enacted.
    We believe that fully implementing our recommendations will 
improve Federal accountability and help students.
    Thank you.
    [The statement of Ms. Emrey-Arras follows:]
    
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    Chairwoman DAVIS. Thank you very much. Right on the button.
    Mr. Ortega.

     STATEMENT OF NOE ORTEGA, DEPUTY SECRETARY, OFFICE OF 
 POSTSECONDARY AND HIGHER EDUCATION, PA DEPARTMENT OF EDUCATION


    Mr. ORTEGA. Chairwoman Davis, Ranking Member Smucker, and 
members of the committee, thank you for the opportunity to 
provide remarks to the committee today on the importance of 
strengthening accountability for the system of higher 
education.
    In some ways the centrality of higher education to the 
wellbeing of our Nation has resulted in greater public interest 
in the outcomes of higher education. When you consider new 
entrants coming into the field every day, the commitment of 
states to create postsecondary attainment goals has created, 
and public investment as well, has generated a great deal of 
interest in the public in higher education. Ultimately, 
accountability represents a renewal of trust in the belief that 
institutional performance and the value of postsecondary 
credentials are worthy of the tax investments.
    Let me talk a little bit about the role of the state in 
accountability as it works now. States provide authorization 
for all credential granting institutions. And the process for 
providing authorization varies from state to state. In fact, I 
could probably characterize it as pretty disparate in terms of 
both the processes of doing it and the criteria being used.
    The process may be as simple as successful submittal of an 
application or it could involve a little more rigorous review 
among some of the applicants to the state.
    In Pennsylvania the authorization process is exclusively 
done by the State Education Agency. We collect the 
applications, we review it, provide a visit, and then prior 
to--providing a final determination we do put the applications 
out for public comment, and eventually the Secretary of 
Education will sign off on authorization.
    Once an institution is authorized the next step is clearly 
the maintenance and renewal for state authorization for an 
institution, which also varies from state to state. In some 
cases, many cases, the variation in this is problematic in 
terms of being able to ensure the quality of an institution.
    While state authorization is necessary to operate in 
states, I want to be clear to point out that state 
authorization does not serve as a confirmation of educational 
quality of an institution. This is something that is reserved 
for the accreditation process, which is run by accreditors. 
While the processes somewhat work together in that state 
authorization and degree granting, credentialing granting 
authority is provided before an institution can seek to get 
approval. This is essentially how the relationship of the state 
works with the other members of the triad, right.
    So, in short, states authorize, accreditors provide 
education quality, and, ultimately, the Federal Government is 
responsible for overseeing the maintenance of the financial aid 
program.
    I want to talk a little bit about a concept that I have 
been terming as ``accreditation bloat.'' Essentially it 
suggests that over time, as more concerns have emerged in the 
system of higher education, many of these concerns have sort of 
been addressing these concerns has sort of become a role that 
we bestowed on accreditors over time. Things like thinking 
about student loan debt, thinking about quality and outcomes, 
and even more recently, thinking about the impact on students 
with closure, have become some of the things that have in some 
ways been put on the accreditors today.
    For this reason, I feel like it is important that we 
rethink the roles of each of the members of the triad. More 
specifically, the role that the state can play in enhancing and 
sharing some of the accountability expectations around assuring 
quality for institutions of higher education. We must be 
intentional about creating these roles and we must understand 
the benefits of being able to engage the state, particularly in 
some of the upfront determinations that need to be made in 
order to help institutions navigate and maintain quality 
assurance.
    So how do we accomplish this? I think there are already a 
number of things that we can begin to build on. As I mentioned 
before, states are putting together accountability state 
attainment goals that are useful. Many of them are even going 
as far as implementing strategies for how to hold these 
institutions accountable for increasing postsecondary 
attainment, particularly as it relates to high quality 
educational opportunities for a number of students.
    There is also the opportunity to build on some of the--
levers available to states as well, levers around financial aid 
that is provided by various states. You can have additional 
criteria that states can begin to use to hold institutions 
accountable for some of the state investment that they are 
receiving.
    There are a number of levers that are already in place that 
can be utilized for states, but most importantly, states are 
positioned uniquely to understand the context, especially the 
political, economic, and social context of institutions that 
can be useful to make determinations of the long-term quality 
assurance of the institutions.
    New stakeholders are entering the field all the time. While 
state investment has been declining, I think it is important to 
begin to leverage some of the resources that are currently 
available.
    While there may be an infrastructure in place currently 
that was created several years ago, that doesn't necessarily 
apply to a number of things. I think that there are some things 
that we can begin to do to create standards uniform across the 
states on this accreditation process.
    Thank you for the opportunity to provide comments. I look 
forward to answering your questions.
    [The statement of Mr. Ortega follows:]
    
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    Chairwoman DAVIS. Thank you very much.
    Dr. Brittingham?

  STATEMENT OF BARBARA E. BRITTINGHAM, PH.D., PRESIDENT, NEW 
             ENGLAND COMMISSION OF HIGHER EDUCATION


    Ms. BRITTINGHAM. Yes, thank you. Chairwoman Davis, Ranking 
Member Smucker, members of the committee, thank you for the 
opportunity to testify today.
    I am president of the New England Commission of Higher 
Education, one of seven regional accrediting agencies in the 
U.S. Our Commission is keenly aware of its responsibility to 
the public to ensure taxpayer dollars are going to support 
students at institutions that provide them with a solid 
education and degrees that have value.
    Collectively, regional accreditors serve as a gatekeeper 
for Federal financial aid to approximately 3,000 public, 
independent, and for-profit colleges and universities. Other 
institutional accreditors are known as national accreditors. 
They accredit about 4,800 faith based and career related 
institutions. Also, the Department of Education recognizes 40 
programmatic accreditors in areas such as medicine, law, and 
dance. All recognized accreditors serve as the gatekeepers for 
Federal financial aid for students or other Federal funding.
    Together with the states and the Department, accreditors 
are members of the triad. We work regularly with the Federal 
Government and individual states, we meet twice a year with our 
state higher education executive officers to increase 
communication and coordination. States can send observers on a 
comprehensive evaluation visits and we also work with Federal 
financial aid staff regarding institutional closure and program 
confirmation.
    Before an institution becomes accredited it must be found 
eligible and become a candidate, which involves a self study 
against our standards, validated by a team of peer evaluators 
trained by our agency. Within 5 years the institution must 
repeat that process to become accredited.
    Accreditation decisions are made by our Commission, a group 
of 27 volunteers, including institutional members, presidents, 
academic officers, finance officers, and trustees, and members 
of the public. By Federal regulation, at least one of every 
seven members is a public member.
    Our relationship with each institution is ongoing. Every 
institution has a comprehensive evaluation every 10 years and a 
significant interim report at the midpoint. To monitor 
institutions between these points the Commission uses a variety 
of special purpose--reviews and visits to assist in the 
institutional improvement and to ensure quality of the 
institution. Annually every institution submits a report, 
including information on enrollment, finances, and student 
debt. This information can determine whether the institution 
requires additional monitoring, which happened about 15 times 
last year.
    When the Commission has reason to believe that an 
institution is no longer meeting one or more of the nine 
standards it will ask the institution to show cause why it 
should not be placed on probation or have its accreditation 
withdrawn. Probation and withdrawal decisions can be appealed 
on procedural grounds, and there is a provision for new 
evidence which can lead the Commission to reconsider its 
decision.
    When the Commission does when appropriate withdraw 
accreditation, our job is not to shut down every institution 
that encounters a problem. Our role is to monitor and assist 
institutions, ensure they are making necessary changes in a 
timely fashion, while at the same time being prepared to 
withdraw accreditation if the institution can no longer provide 
a solid education to its students.
    When an institution has its accreditation withdrawn or 
decides to close, we work with them to make sure they have 
signed teach-out agreements with other institutions, so 
students continue their education with minimal disruption.
    Regional accreditation focuses on student outcomes, 
retention and graduation rates, loan default, and repayment 
rates, and whether students are achieving the learning goals of 
their programs. Licensure passage rates, going onto the higher 
degree, and employment rates are also important.
    Institutions also look at outcomes central to their 
mission. For public institutions the percent of graduates who 
are employed in the state, for an arts institution, the percent 
of students who make their living from their art, for a faith-
based institution, the percent of its graduates who report 
attending church regularly. As with K-12 education, there is no 
single measure of success and no bright line that can assure 
quality.
    With respect to reauthorization, we have been following the 
congressional efforts, including the PROSPER Act and Aim 
Higher, and hope you are able to achieve your goal of 
bipartisan agreement this year.
    In so doing, we urge you to continue to maintain the 
centrality of peer review. The 30,000 volunteers who 
participate in accreditation each year provide a level of 
expertise and reasonable cost structure that could not be 
otherwise duplicated in any other system.
    We hope that the reauthorized HEA regional accreditation 
can continue to fulfill its dual responsibilities of quality 
assurance for the public and quality improvement for 
institutions. We also believe in allowing for more flexibility 
and innovations so institutions can focus on outcomes that 
matter most.
    Finally, we hope that the reauthorization includes 
provision for accreditors to innovate and experiment to ensure 
it remains a robust and responsive member of the triad dealing 
with issues and challenges that may not yet be before us.
    I look forward to our conversation.
    Thank you.
    [The statement of Ms. Brittingham follows:]
    
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    Chairwoman DAVIS. Thank you very much, Dr. Brittingham, and 
all of you for your testimony.
    And we are going to turn to our question and answer session 
now where all members have a chance to really engage in these 
issues. And, as I was saying to our witnesses earlier, kind of 
a dry subject and yet, you know, we know how critical, how 
important it is, and all of us--you know, we don't live in that 
world, and so trying to really understand the complexity, where 
the problems lie and where we can really have an effect.
    So I wanted to begin that under the 5 minute rule of 
course. I will start, followed by the ranking member.
    And I will recognize myself for 5 minutes.
    Mr. Ortega, I am going turn to you first. It is my 
understanding, and I think you have mentioned this in your 
testimony as well, that state approval can vary by sector. We 
understand that. But also, some states make public institutions 
meet a higher bar than for-profit colleges. Why is that?
    Mr. ORTEGA. So one thing to keep in mind is when you move 
toward--oh, I think I--no problem--one thing to keep in mind is 
when we think about the state authorization process, 
particularly when it relates to the traditional sector of 
higher education, versus the for-profit emerging sector, one of 
them has been around for a longer time. So you have been able 
to sort of develop processes that are tied to a number of 
things that create legitimacy at the institution.
    Within the for-profit sector you have got new processes 
that are emerging all the time, new lessons that we are 
learning with regard to behaviors and practices at the 
institutions. And so one of them is not as fully developed.
    If you think about it that way, I think the process is more 
rigorous as it stands now, but it is becoming in some places, 
you are developing some standards for how you could be more 
effective. But I would say the process is different. In some 
ways it is inhibited by the prescribed roles of how we work 
with regards to quality assurance and accountability. But I 
would be remiss if I didn't say that in some cases states have 
sort of punted on quality assurance and determinations of 
quality and accountability for institutions, to folks like the 
accreditors. And I think that is something that needs to be 
improved.
    Chairwoman DAVIS. Yes, and looked at. Thank you. I 
appreciate that. I mean given that they actually do engage 
more, have more oversight over public and nonprofit 
institutions, the Federal Government then, perhaps--and I guess 
in our discussion--needs to step in with additional oversight 
of the for-profit institutions, because otherwise, as you said, 
it is not happening, or it is not happening soon enough.
    I wanted to ask unanimous consent right now to just enter 
into the record a letter from the Century Foundation explaining 
the need to have different accountability standards for 
institutions seeking to profit off of our students. And, if 
there is no objection, I will submit that for the record.
    So ordered.
    So despite the need for increased oversight of for-profit 
institutions, the Department, under this Administration, has 
actually stepped away from implementing regulations such as 
gainful employment and ensuring that risky institutions provide 
sufficient financial surety to protect taxpayers.
    Given the void that has been left by the Department of 
Oversight, State attorneys general in some cases have actually 
stepped in to fill this role.
    So if I could turn to you again, Mr. Ortega, just, you 
know, can you tell us about how your state AG supports 
oversight and enforcement in the higher ed space.
    Mr. ORTEGA. Sure. Consumer protections have become 
extremely important at the state level. Credit recovery is one 
of the areas that has grown increasingly important in our 
state. This is making sure that the credits that students have 
earned are in some way protected and held on to. You would be 
surprised how many of those documents over time have just gone 
missing in some cases.
    And so moving in that direction is something that we have 
been thinking about significantly. Tuition recovery is another 
effort in Pennsylvania that we have been looking at closely, 
working with members of the general assembly, the State 
Attorney General, other folks who are vested in making sure 
that students are protected, and whatever behaviors are 
happening out in the system, they don't put the students and 
their families at risk.
    Chairwoman DAVIS. And the authorizers working hand in hand 
with State AGs, is that something as well? I mean that is where 
that need has to come in.
    Mr. ORTEGA. In many cases that is where it--because of the 
pressure coming into the Attorney General as folks raise more 
lawsuits--but I think truly it is emanating from a number of 
areas, including really good partnerships that currently exist 
between states and new emerging players, especially as they are 
trying to get better organized to ensure the quality of the 
entire system of higher education. You have folks who are 
stepping up thinking that these are things that should be 
prioritized.
    Chairwoman DAVIS. And what about working with accreditors 
as well? The state role in that? You had mentioned that they 
can't be the sole arbiters of quality, but--my time is going to 
run out in about 2 seconds. I want to just have a few issues 
that you could address there.
    What do you think the minimum standards that we should be 
requiring states to adopt and what about the collaboration, can 
it be improved?
    Mr. ORTEGA. Sure, sure. And the state higher education 
association for executive officers has done a really good job 
in bridging those conversations. I think more players have to 
come into the table in those discussions. I think there is an 
understanding of sharing that responsibility of accountability 
and I think we are beginning to see more movement in that area.
    If I may, I think the Federal Government does play a 
significant role in nudging that along further.
    Chairwoman DAVIS. And why doesn't it happen more?
    Mr. ORTEGA. It is a good question. I am not exactly sure. I 
think it is just the newness, maybe sometimes the aversion to 
taking on a little bit of risk, but I see some movement that 
maybe--
    Chairwoman DAVIS. Thank you. Thank you. We can perhaps get 
at a little bit more of that as we go on.
    And I want to now recognize the ranking member for his 
questions.
    Mr. SMUCKER. Thank you. I would like to thank all the 
witnesses for their testimony.
    Secretary Ortega, good to have you here. Always a pleasure 
to have an expert from Pennsylvania to highlight the great 
system of higher education that we have in the state--
    Mr. ORTEGA. I appreciate it--
    Mr. SMUCKER. So I appreciate the strides that we are making 
in the state to hold institutions accountable and to set 
students up for success. So thank you--
    Mr. ORTEGA. You are welcome--
    Mr. SMUCKER. I do have a question. Postsecondary education 
is changing--
    Mr. ORTEGA. Sure--
    Mr. SMUCKER. People are learning throughout their entire 
lifetime. So I would like to have you discuss how we think 
about that, the lifelong nature of postsecondary education, and 
also how Pennsylvania is relying on our institution of higher 
education to promote career readiness and success.
    Mr. ORTEGA. Sure, sure. And so I think it is important, and 
we have seen this movement across a number of states, for folks 
to buy into the fact that the economic vitality, the social 
vitality, all the outcomes associated with postsecondary 
educational attainment are really important in terms of 
ensuring that folks are productive citizens in the state. So 
Pennsylvania has really doubled down on its investments in 
education in general, including post-secondary education, which 
is a really, really great thing to hear from me as the Deputy 
Secretary in Higher Education.
    It is important that we also understand that in terms of 
being able to both attract new folks, especially business and 
industry, to come into the state, lots of the frameworks around 
how this could be done is focused on emphasizing the importance 
of postsecondary education. So in many ways that has happened. 
It has moved even further along. I think that in Pennsylvania 
they have demonstrated, as have other states, the importance of 
sort of cradle to the grave strategies. Putting postsecondary 
or career pathways in place early on to make sure that more 
folks go into some sort of postsecondary opportunity. All these 
efforts in some way elevate the importance of making sure that 
when folks do enter the postsecondary pathway of their choice, 
that they enter something that is emphasizing high quality and 
rigor in the postsecondary opportunities to make sure that 
folks who exit have the skills needed to do well in particular 
areas, but also continue to promote sort of the wellbeing and 
vitality of the postsecondary structure--
    Mr. SMUCKER. Thank you--
    Mr. ORTEGA. Thank you--
    Mr. SMUCKER. Dr. Brittingham, I believe that innovation, 
for instance, competency-based education, can be a factor in 
driving down the cost of college for today's students.
    Do you believe that the Federal Government constricts your 
ability to allow your member institutions to test new methods 
of delivering education? Do you think we constrict that?
    Ms. BRITTINGHAM. I think it is important to have some 
safeguards there, but I think speaking for New England at 
least, our institutions are continuously innovating and we look 
forward to that. The largest institution in New England, 
Southern New Hampshire University, has a very large online 
program and a significant direct assessment competency-based 
program that is a very important and fascinating innovation 
that came along. Our commission met together with the president 
of Southern New Hampshire to learn about what they were doing. 
They prepared an excellent substantive change in term of our 
report for approval of that. And Southern New Hampshire 
recently had its comprehensive evaluation, and the team and the 
commission were impressed with the success there.
    Mr. SMUCKER. Is there anything we should be considering as 
we are looking at reauthorization to allow more innovation by 
institutions?
    Ms. BRITTINGHAM. I think that is a great question. And part 
of the problem is that often times I think we try to solve the 
problems that are in front of us and it is hard to anticipate 
what is going to be coming down the line. So I am hoping that 
the Higher Education Act has room for institutions and 
accreditors to experiment, again, with some safeguards there to 
make sure that those experiments are looked at. I think often 
the experimental programs at the Department are good efforts, 
but there hasn't always been an effort to go back and look and 
see what have we learned there, what has worked, what hasn't 
worked. So I think we need it on both ends.
    Mr. SMUCKER. Thank you. I will try one more question.
    Ms. Emrey-Arras, I am concerned about the extent to which 
the current financial composite score fails to capture an 
institution's true fiscal capacity, but I am equally concerned 
about mandating a fix within the HEA.
    What can Congress or the Department do to update the 
financial composite score measurement to account for future 
accounting practices while still protecting taxpayer funds?
    Ms. EMREY-ARRAS. We also believe that the Department needs 
some discretion in how to set the composite scores. So we were 
purposely not prescriptive when we recommended that they update 
the scores. So we didn't say you need to do A, B, C, D, E, F, 
G, we said you just need to make sure that you update it so it 
can more accurately reflect the financial health of schools. So 
we would leave that to the Department.
    Mr. SMUCKER. Thank you.
    Chairwoman DAVIS. Thank you very much.
    And we are pleased that both the chairman of Ed & Labor and 
the ranking member are both here to ask questions. I am going 
to start with Mr. Scott and then we will turn to the ranking 
member.
    Mr. SCOTT. Thank you, Madam Chair.
    Dr. Brittingham, who in the triad should review the costs 
of education? Some of the schools are charging tuitions that I 
think by any measure are unreasonably high.
    Ms. BRITTINGHAM. I think we all have some responsibility in 
that regard. And I think part of what we need to look at is the 
published cost and the actual cost that students pay and see 
the extent to which our colleges and universities are able to 
enroll students along the economic spectrum and have costs that 
leave them with debt that is manageable after they graduate.
    Mr. SCOTT. Is that something the accreditors are looking 
at?
    Ms. BRITTINGHAM. I will speak for New England, we do not 
look directly at costs, but we do look--we look every year at 
loan default, and this past year we have also started looking 
at loan repayment rates. And we have set cut scores for 
institutions to submit reports if their loan repayment rates 
are below a certain level. So it is something that we have been 
doing. We have looked at loan default rates for 6 or 7 years 
and ask institutions to report on what they are doing to lower 
the loan default rate.
    Mr. SCOTT. Thank you. And can you say a word about the--
importance of using the credit hour as a measure for student 
aid and also how that would affect someone taking remedial 
courses?
    Ms. BRITTINGHAM. Yes, thank you. I think the credit hour 
is, it is certainly an imperfect measure, but it is the only 
currency we have right now. We know that three credits should 
represent more learning than one credit, and we know that a 
course offered at the 400 level should be more advanced than a 
course offered at the 100 level. I think someone else would 
probably be better than I am to talk about credits and 
remedial, but I know a lot of our institutions are looking at 
having experiences that happen alongside credit bearing courses 
so that students don't get stuck in remedial courses where they 
get discouraged and use up their Federal financial aid too 
quickly.
    Mr. SCOTT. Thank you.
    Ms. Emrey-Arras, you mentioned Cohort Default Rate reform. 
What does that look like?
    Ms. EMREY-ARRAS. We would recommend that the Congress 
consider a legislative fix to the metric. We think that the 
metric is currently being gamed by schools and the consultants 
that they hire, and that it needs to change.
    Mr. SCOTT. Change to what?
    Ms. EMREY-ARRAS. Change to something that doesn't allow 
schools and their consultants to put borrowers into long-term 
forbearance, which means that they are racking up interest 
while not making any payments and then defaulting often in the 
fourth year after schools are no longer held accountable.
    Mr. SCOTT. Do you mean that if they are in forbearance that 
wouldn't count as the 3-years?
    Ms. EMREY-ARRAS. There are a variety of ways of fixing it, 
but I think one proposal is to think about not allowing schools 
to exempt these students during that time period.
    Mr. SCOTT. Thank you.
    Professor Hillman, on distant learning, why is it important 
to have regular and substantive interaction with instructors 
and what would happen if you got rid of those regulations?
    Mr. HILLMAN. For distance education, the work that I am 
familiar with consistently shows--let me preface it by saying 
the research takes a while to produce and the innovation in 
this space happens a lot more quickly than the research, so we 
have sort of a lag there. But the research I am familiar with, 
that is the higher standards that I would say, consistently 
finds that distance education works well for students who are 
really well prepared, like Georgia Tech students who are doing 
master's degrees in computer science. There is a study showing 
it works well for them, and you would think that is probably 
right, that is the student who it works well for.
    The other end of the spectrum, commuter students and 
students of color, generally tend to struggle when it is just 
an online presence of a course. And so when there is the face 
to face contact, there is a little bump there. I think there is 
a lot of research still to go to really disentangle all of 
this.
    But I would say though, to answer the--so what here is--is 
that it is incredibly important to have that contact with the 
faculty member, a professor. To have faculty members and 
students interacting and learning together is critical.
    Mr. SCOTT. And if you got rid of that regulation, what do 
you think would happen?
    Mr. HILLMAN. Well, I could speculate, but I don't see a lot 
of upside. I think it would probably disproportionately have 
negative effects on a lot of our most marginalized students in 
the first place.
    Mr. SCOTT. Thank you.
    I yield back.
    Chairwoman DAVIS. Thank you.
    Now I turn to Ms. Stefanik.
    Ms. STEFANIK. Thank you, Chairwoman Davis.
    Mr. Ortega, as we know, the student bodies on our campuses 
have changed dramatically over the last decade. The traditional 
first time, full-time student is now the minority on campus.
    Increasingly in my district, we are seeing students come 
back to college or career and technical training to retool and 
change their careers in response to the changing needs of their 
families and also in response to the jobs available in their 
local economy. One of the reasons this is happening is because 
our regional economies are becoming more diverse and 
specialized. Many states, including New York, where I am from, 
are looking to increase job placement in key areas of growth 
and need.
    You discussed in your testimony how states are looking to 
hold institutions accountable for the performance of specific 
student subgroups in meeting the state's postsecondary 
education or career goals. What do some of these efforts look 
like in practice, and how are states taking into account the 
unique mission and capacity of each institution and the local 
community?
    Mr. ORTEGA. Sure. And so I think that is one of the 
situations where states are positioned advantageously with 
regard to being able to make those determinations. In 
Pennsylvania, specifically, it begins by the way that we go 
about making meaning of the data that is presented to us. So 
making sure that when something is put up front in terms of a 
postsecondary educational attainment goal, what does that mean 
for all the subgroups involved, new and emerging, some of them, 
many of them that we have yet to even move to discover, what 
does that mean for each one of those groups in relation to the 
overarching goal. Which is something that we are seeing move at 
a number of different states.
    With regard to the system, we are really taking a step back 
to say what was the system's original mission and who was it 
set up to serve. So the whole idea that you have some 
institutions that serve a particular group of students, in some 
cases, I am going to use the example the University of 
Pennsylvania and the students who enroll there, but we all have 
a comprehensive state system that is supposed to serve a lot of 
the underserved communities and making sure that mission 
continues to be elevated and not conflated with sort of 
aspirational tendencies that we have to make sure that we treat 
the system all as one.
    And so those are some of the things that are happening. 
Also, understanding that when we talk about postsecondary 
attainment that it should be inclusive of all the pathways that 
are available for students at the moment when they need them.
    And these are the ways that we have begun to sort of 
reframe the narrative, so--that way it captures a wider group 
of folks who have aspirations for postsecondary success as 
well.
    Ms. STEFANIK. Thank you very much.
    I yield back.
    Chairwoman DAVIS. Thank you.
    Mr. Courtney.
    Mr. COURTNEY. Thank you, Madam Chairwoman, for holding this 
hearing and, again, one of the important steps toward getting a 
new higher education reauthorization.
    The issue regarding transparency and accountability for 
for-profit institutions in particular, again, is critical for 
one population--that I think a lot of us have heard about your 
work on the personnel subcommittee and the House Armed Services 
Committee, my friend, Mr. Takano, chairs the veterans 
committee--is the veterans population. Holly Petraeus, the wife 
of four-star General David Petraeus, testified before the 
Consumer Financial Protection Bureau back in 2012, where she 
said that for-profit institutions ``see service members as 
nothing more than dollar signs in uniform.'' This morning we 
have a letter from the Veterans Education Success and Student 
Veterans of America, which again I would ask to be submitted to 
the record, again saying how important some of the issues that 
we are talking about this morning in terms of a new higher 
education bill is critical to veterans so that their post-9/11 
GI Bill benefits are not going to be squandered. I ask that it 
be entered into the record.
    Chairwoman DAVIS. Without objection.
    Mr. COURTNEY. As well as two letters, comments that were 
submitted to the Department of Education and the Department of 
Veterans Affairs back in 2017 regarding the weakening of the 
Borrower Defense Rule in the Gainful Employment Standards, 
again, signed by over 30 veteran services organizations, as 
well as a letter to the VA regarding the inspector general's 
report at the VA that showed that the lack of enforcement on 
deceptive advertising and recruiting by for-profit colleges 
would squander about $2.3 billion over the next 5 years.
    And again I would ask that those be submitted for the 
record.
    Chairwoman DAVIS. Without objection.
    Mr. COURTNEY. So, obviously, an issue that we struggled 
with back in 2008, the last time the higher ed bill was 
authorized, was the 90-10 rule, which again basically says that 
at least 10 percent of the revenue going into for-profits has 
to be non Title IV moneys, Stafford loans, Pell Grant loans. 
However, the GI Bill benefits were not treated as government 
funds under that 90-10 rule, which is again one of the reasons 
why I think Mrs. Petraeus, you know, noted that the GI Bill is 
like a magnet for for-profit institutions because that counts 
toward the 10 percent in the 90-10 rule.
    I just would ask the witnesses to go down the desk here, 
just about whether it is time to treat those government funds 
in the post 9/11 GI Bill as in fact part of the government 
funding that the 90-10 rule was intended so that there would be 
actually real private dollars and market-based investment in 
the for-profit institutions.
    And I would start with you, Professor Hillman.
    Mr. HILLMAN. It makes me think of two things in response. 
One would be the origins of this discussion. It happened in the 
1940's with the GI Bill originally and how colleges would take 
advantage of students then and there were then lessons learned 
through time that got incorporated into the Higher Education 
Act. So this history is repeating in many ways.
    But I think though the second point is that the 90-10 rule 
as I understand it ensures that colleges have a diverse array 
of revenue streams, and I think this differential 
accountability is really important because, for example, the 
state public universities have the full backing of the state, 
and so to have a diverse revenue stream especially important in 
this particular sector.
    Ms. EMREY-ARRAS. Although we haven't done work specific to 
this issue that you raise, I would point out that we have done 
work looking at the experience of veterans using their GI Bill 
benefits. And we did a representative sample a number of years 
ago that found that many of them felt pressured, harassed, by 
school recruiters and felt that they were given misleading 
information.
    Mr. ORTEGA. More closely that we can tie funding to 
ensuring that we have consumer protections in place to protect 
vulnerable populations to me is a very important step to take 
in any of the recommendations that we put forward. I do feel 
that in large part it is necessary for institutions who are 
operating in the states to look for ways to be able to recruit 
and offset costs for students. And so I feel like more and 
more, as more players enter the field, the more we have to 
think about putting things in place, a protection. And if that 
means coupling things in policy, then I think it is something 
that we should certainly consider.
    Ms. EMREY-ARRAS. This is not something that our commission 
has dealt with directly, but I will say that the ability of any 
institution or enterprise to attract people who will pay some 
of their own money to attend I think is an important indicator 
of quality.
    Mr. COURTNEY. Great. Well, thank you. Again, this was a 
struggle in `08 and your testimony this morning I think will 
help us make sure that we really have to rebalance that formula 
so that it achieves the goal that, again, that Professor 
Hillman described back in the origins of the GI Bill.
    I yield back.
    Chairwoman DAVIS. Thank you.
    Mr. Timmons.
    Mr. TIMMONS. Thank you, Ms. Chairwoman, and thank you to 
the distinguished panel for taking the time to come before the 
committee.
    First question is for Dr. Hillman. Your testimony notes the 
shocking number of borrowers who default within the first 5 
years of entering repayment. And one correlation of high 
default rates is low graduation rates.
    How much emphasis should each member of the triad put on 
considering college completion rates in order to improve 
accountability to students and taxpayers?
    Mr. HILLMAN. That is a great question. I mean college 
completion is central to not just the ability to repay a loan, 
but also for students to take full advantage of their full 
education and thrive. So I think completion certainly plays an 
important role here.
    I think to me, from the research perspective, I really want 
to disentangle the sort of causes of default. Like we don't 
know enough about sort of the mechanisms that cause a student 
to default in the first place. In the `80's there is some 
research saying that default was a preexisting condition that 
institutions weren't responsible whatsoever, that students were 
just going to default anyway. And I think that the consensus 
now is that is not the case, that there are mechanisms along 
the way that can help students know how to manage their debts 
better, but also be well prepared for a career that can also 
pay off.
    So all of those are entangled. I think part of it is 
financial literacy, part of it is resources of campuses to be 
able to deliver high quality education, and part of it is the 
local context of labor markets. Labor market discriminations 
that sometimes are outside the control of institutions. So it 
is tricky.
    Mr. TIMMONS. Thank you, thank you.
    Mr. Ortega, it is my understanding that Pennsylvania is 
currently implementing performance-based funding for new 
dollars invested into the system. What outcomes are you 
measuring and what was the reason the general assembly moved to 
this funding model? And how are institutions reacting to the 
new policy? And what will the ultimate impact be on students?
    Mr. ORTEGA. Sure. So as I move into the answer, I just want 
to preface it by saying that there has been some changeover in 
the state system from time to time with regard to leadership, 
which I think influences some of the direction that this takes.
    But in terms of what outcomes are being looked at more 
closely, in exchange for flexibility for institutions to be 
able to implement enrollment strategies, there is a need to 
make sure that in doing so, particularly when they are making 
changes around tuition, et cetera, that they are held 
accountable for student success goals. And in some ways this is 
a way to privilege and make sure that institutions think about 
this more effectively.
    If I can sort of circle back to the question that you asked 
to Dr. Hillman before, it seems that as we go through the 
different phases of postsecondary access, we are in a phase now 
that is sort of responding to an increase of influx of new 
students coming into the system. And so in some ways we are now 
moving to better understanding the completion agenda. This is 
not to suggest that it was not something that was handled 
before, but this is becoming extremely important and something 
that most institutions need to move more toward prioritizing. 
In some ways the diminished pool of students available to go 
into postsecondary education, high default rates, rising 
tuition costs, means that folks who come in and express some 
motivation and interest need to be pushed to completion.
    So the performance funding really privileged that aspect of 
it, including how institutions are tying strategies on how they 
are spending their money to the mission that has been stated 
for the system at large.
    So those are two examples of some of the things that come 
out of this.
    Mr. TIMMONS. Thank you.
    And my last question is for Dr. Brittingham. One of the 
complaints Members of Congress often hear from their 
institutions is that accreditation takes a lot of time and is 
unnecessarily costly. How do you respond to that?
    Ms. BRITTINGHAM. I think a lot of what accreditation asks 
institutions to do is to compile and analyze things that they 
should be doing along the way. So I think some of the cost 
studies that I have seen, it is not clear that they represent 
the actual cost of preparing for accreditation as they do also 
representing the cost of things that feed into accreditation. 
And I will use the institutional research office as an example. 
That is something that every institution should have good 
capacity for.
    I think also the volunteer structure of accreditation keeps 
the overall cost much lower than it would be any other way. An 
inspection system, like is run in some other countries, where 
the people who do the actual visits and looking are paid civil 
servants, is inherently going to be much more expensive than a 
volunteer system of peer review.
    Mr. TIMMONS. Sure. Thank you.
    I yield back, Ms. Chairwoman.
    Chairwoman DAVIS. Thank you.
    Mr. TAKANO.
    Mr. TAKANO. Thank you, Madam Chair.
    In August 2017 the GAO released a report examining how the 
Department of Education assesses the financial health of for-
profit and private nonprofit institutions in the wake of 
multiple abrupt closures of larger for-profit chains.
    In 2015 Corinthian Colleges, Inc. abruptly shut down 
leaving about 16,000 students without many options to finish 
their degrees and with large amounts of debt. Many of those 
students, I would like to add, are still waiting for the loan 
relief that they are entitled to under the borrower defense 
rule, which this Administration was ordered to implement by a 
Federal Judge in October 2018. And yet we have seen virtually 
no progress.
    Ms. Emrey-Arras, how did Corinthian Colleges, Inc. 
manipulate its composite score to avoid sanctions from the 
Department of Education?
    Ms. EMREY-ARRAS. So what they did was they took out 
millions of dollars in short-term loans at the end of the 
fiscal year, in one case it was the last day of the fiscal 
year, and then repaid it shortly thereafter at the beginning of 
the next fiscal year. But the beauty of it was that they 
classified this as long-term debt on their materials to 
education and that enabled them to boost their composite score 
and therefore avoid having to get a bank to issue them a letter 
of credit, which would have given the Department money to help 
pay for some of the costs associated with those student loans.
    Mr. TAKANO. Oh, my goodness. Could the Department of 
Education improve the composite score to avoid this type of 
manipulation? And, if so, how?
    Ms. EMREY-ARRAS. Yes. We think that it can definitely do 
things to improve it. And I think dealing with a long-term debt 
issue is a significant way to do that. There are other issues 
with the score that are also faulty. I mean I think 
fundamentally this is an archaic composite score. It was 
created more than 20 years ago. Times have changed and the 
score has not kept up with, like bad actors, it has not kept up 
with changes in the financial industry, and the Department 
needs to update it.
    Mr. TAKANO. So is the Department open to these changes?
    Ms. EMREY-ARRAS. They have--they initially were not as 
open. Since we issued the recommendation, they have made some 
progress in trying to implement some changes, however they 
missed the regulatory deadline to create those changes and 
things are still as they were. There has been no fundamental 
shift in the score as of today.
    Mr. TAKANO. I am disappointed to hear that.
    Last year Representative Rosa DeLauro and I requested a GAO 
report investigating how institutions use consultants to manage 
the Cohort Default Rate, or CDR. The CDR is an important metric 
that ensures institutions do not have too many students 
defaulting on their student loans. And, as we know, student 
loan default has a disastrous consequence for a borrower, 
including damaging their credit, and in some cases leading to 
wage garnishment.
    Ms. Emrey-Arras, what did your report find about these 
consultants encouraging borrowers to enter into forbearance?
    Ms. EMREY-ARRAS. We found that for five of the nine 
consultants which served 800 schools, they were really focusing 
on pressuring the borrowers to pick forbearance over other 
options that could have been better for them, like income 
driven repayment. And some of them did that in ways where they 
provided incomplete information to borrowers.
    So they might, for example, send an unsolicited letter to a 
borrower who is behind with only a forbearance application, 
nothing else. So it was clear that they were pushing one 
option. So it made it so that borrowers thought that they had 
only perhaps one choice to reconcile things.
    Mr. TAKANO. Why would consultants do this?
    Ms. EMREY-ARRAS. They had a financial incentive. They 
were--some of them were paid based on each account that they 
brought current, and doing a forbearance is very quick. They 
can do it in some cases in like 5 minutes over the phone, no 
documentation, no application.
    Mr. TAKANO. This sounds incredibly, a terrible system that 
really takes advantage of students to profit for the sake of 
profit.
    Why are some of the tactics these consultants use to 
encourage borrowers into forbearance?
    Ms. EMREY-ARRAS. Well, in addition to, you know, putting 
forth only a forbearance application, we found in one situation 
that a consultant was out and out, lying to borrowers. The 
consultant was telling them that they would lose their access 
to food stamps if they defaulted on their Federal student loan, 
which is just--it is not true. So that was a concern of ours.
    Mr. TAKANO. So, in 2017 the Dream Center purchased Argosy 
and a few other institutions from Education Management 
Corporation. This required approval from accreditors and the 
Department of Education.
    Ms. Brittingham, why would accreditors approve this?
    Ms. BRITTINGHAM. I can't speak to the specifics of that 
because that happened in a different region. So I really don't 
have a lot of information about that. I apologize.
    Mr. TAKANO. Okay. I yield back, Madam Chair.
    Chairwoman DAVIS. Thank you.
    Mr. Guthrie.
    Mr. GUTHRIE. Thank you very much, Madam Chair. Thank you 
all for being here. Sorry I am in another hearing as well, so 
going back and forth.
    My first question is for Professor Hillman. Dr. Hillman, I 
want to ensure students and families make informed decisions 
about their education. Student loan debt has surged to more 
than $1.4 trillion, surpassing both auto loan and credit card. 
Unfortunately, many students enter into binding loan contracts 
without fully appreciating the gravity of the financial 
decision they are making and the consequences it will have on 
their futures.
    Last week, working with Chairman Elijah Cummings, I 
introduced the Net Price Calculator Improvement Act. And I 
plan--re-introducing the Empowering Students Through Enhanced 
Financial Counseling Act.
    So in your experience at the University of Wisconsin-
Madison's financial aid office, which financial aid practices 
have been the most helpful for students in improving their 
financial decisionmaking?
    Mr. HILLMAN. Great question. I think two things come 
immediately to mind. The first is simplicity, focusing on 
simplicity. And so one thing that we did at the University of 
Wisconsin-Madison was we developed what we call Bucky's tuition 
promise--Bucky is our mascot. Bucky's tuition promise to assure 
the students from Wisconsin whose family income is less than a 
threshold--$56,000 in this case--could be assured in a very 
simple way--you just have to meet that measure and get 
admitted--that you could have your tuition and fees covered by 
the University. And so that kind of commitment I think helps 
give students some degree of assurance that they need to know 
how much it is going to pay, at least on the tuition side of 
the house.
    A lot of non-tuition expenses, room, board, a number of 
other factors here, that are hard to calculate and hard to 
know. So this information--so the point here is this better 
information is important to sort of get the full scope of what 
else it takes to stay enrolled in college and succeed.
    But I would say though that the sort of complement to this, 
and the second point here, is that it is not enough to just 
provide that information, you have to also let people know 
about it, know how to navigate the system, and do so in a way 
that is extremely supportive and takes a proactive approach.
    And so just putting information out there is a necessary 
but insufficient condition here.
    Mr. GUTHRIE. Do you see students come in with like sticker 
shock? Not that you haven't explained or let them know what, 
but they show up and when they are ready to go, we didn't 
realize it was going to be this expensive. I mean, as they show 
up--I know they get all the information that you provide, how 
much you are going to--tuition, what the family is responsible 
for, those types of things, but then they show up and they 
still can seem to be kind of shocked, one, that it is a loan 
not a grant, after you have told--I mean after you have 
explained that. Do you see that? And how can we better explain 
that information?
    Mr. HILLMAN. You know, I think this is a fundamental 
challenge of our sort of awkward economics of higher ed finance 
where you don't often times know what you pay until you are 
through the system, and the longer you stay in school you got 
to do these sort of exchanges every year. So there is some 
volatility here that matters. But at the same time I am not 
sure if I would say it was a shocker, just sort of, you know, 
sort of inconsistency with respect to how expensive it really 
is going to be.
    I guess the point here is that across the spectrum, folks 
are going to be wrong when they guess how much it costs, 
because you can't always be precise. Your family situation 
changes, you have health emergencies, and whatever it might be, 
that could throw things off for you.
    And so I think there is going to be a degree of volatility 
here that is sort of baked into the system.
    Mr. GUTHRIE. Okay. Thanks.
    And so this is for Mr. Ortega. Following along the same 
lines as Dr. Hillman, what is Pennsylvania doing to help 
counsel students about Federal and state based opportunities 
and obligations?
    Mr. ORTEGA. Sure, sure. And so Pennsylvania is really 
investing in making sure that, first of all, students are 
really financially literate in terms of being able to 
understand what it means to borrow student loans, but also 
being able to distinguish early on the difference between need 
based aid that are grants, but also the difference between 
scholarships, making sure that they are equipped responsibly.
    One of the interesting strategies is you move into support 
staff in the educator work force, who normally folks don't 
think about. Counselors are a perfect example of how you could 
really begin intervening early on to provide students with this 
sort of foundational knowledge when they move to decisions. But 
also they are now looking into trying to create mandatory 
requirements around courses that students take at the secondary 
level, or the way that it is infused into the first year 
experience at institutions. And so they are really trying to 
make sure that information is up front.
    We recently, like many states, passed what essentially is 
called a loan summary notification that is given to students 
every year informing them of the amount of debt that they have 
accumulated up until that point. Interested in figuring out 
when it goes in place how we can evaluate it to make sure it is 
achieving the outcomes. But the whole idea is how much how you 
can get to students, to them, that is not the technical 
language that you often receive when you go to borrow your 
first student loan. Something that is a lot simpler to 
understand.
    So, like Dr. Hillman, simplification as well.
    Mr. GUTHRIE. Okay. Thank you--
    Mr. ORTEGA. You are welcome--
    Mr. GUTHRIE. And I have used my time, so I yield back.
    Chairwoman DAVIS. Thank you.
    Mr. Sablan.
    Mr. SABLAN. Thank you, Madam Chair, for holding today's 
hearing. Good morning, everyone.
    I come from a district where we have a 2-year college and 
they do offer 2, 4-year degrees in education, and business 
administration. But for the most part, many people in the work 
force already are taking online courses from--and I haven't yet 
figured out how many are affected by the recent closing of 
Argosy.
    But, Dr. Hillman, thank you very much for your statement 
about the correlation of--where 29 states have data systems 
linking postsecondary education with K-12 in the work force--so 
making it difficult for states to identify problems and 
solutions for their educational needs. I am going to ask that 
question of our school system, if they have that.
    But, Ms. Emrey-Arras, if I have that correct. Do I have 
that correct?--
    Ms. EMREY-ARRAS. Yes--
    Mr. SABLAN [continuing]. Let me ask you, because, you know, 
the use of consultants to game the system for many nonprofits, 
if that system, that game, is not available, how much worse do 
you think the problem is with for-profit colleges?
    Ms. EMREY-ARRAS. Well, default rates have been 
traditionally higher for for-profits. I would like to say 
though that we did find that it wasn't just for profits that 
were hiring consultants. There were other sectors represented 
as well. And we think that the metric, the Cohort Default Rate, 
which is one of the government's fundamental ways of keeping 
the schools accountable and having them have skin in the game, 
is flawed, as demonstrated by our work. And we think it needs 
to change.
    Mr. SABLAN. Yes. Because, you know, as you stated in your 
testimony, although a relatively small number of schools close 
each year, these closures can affect tens of thousands of 
students and result in hundreds of millions of dollars in 
financial losses for the Federal Government and taxpayers from 
unrepaid student loans.
    So say the consultants, the game consultants reform in--is 
taken out of the--how much more in disclosures and in terms 
of--if you could answer that, I would appreciate it.
    Ms. EMREY-ARRAS. I would say that there would be more 
accountability and more financial controls for the Federal 
Government if the financial composite score was updated as we 
recommended. Because right now, one of the key tools to help 
deal with closures is this bank letter of credit that schools 
need to provide when they fail their composite score. And so if 
the composite score is being manipulated and schools are 
avoiding posting those letters of credit, then Education 
doesn't have that sort of check to cash when a school goes 
under and, you know, then does not have like coverage for like 
potentially millions of dollars in student loan discharges--
    Mr. SABLAN. Yes--
    Ms. EMREY-ARRAS [continuing]. So I think one of the things 
that can be done is to really shore up that metric to make sure 
that the Department is able to accurately gauge the financial 
health of schools and then demand that schools who are failing 
the financial composite score post that letter of credit. And 
they have to post a minimum of 10 percent of their Federal 
student aid funds, but they can require more, depending on the 
circumstances. And that can be financially helpful for the 
Department to cover the cost of the closures.
    Mr. SABLAN. Right. And I am actually--you know, I took note 
of your conversation with Mr. Takano in saying that it takes 5 
minutes sometimes for a consultant to get a letter of 
forbearance or that an institution would go to a bank and get a 
short-term note, loan and represent that in their balance sheet 
as a long-term debt. I mean that accountant's license should be 
taken.
    My time is up. I do have questions that I will submit for 
the record.
    Thank you, everyone. Have a good morning.
    Chairwoman DAVIS. Thank you.
    Mr. Grothman.
    Mr. GROTHMAN. Yes, first of all a question for Mr. Hillman. 
You talked about that Bucky's promise and how you are making a 
promise depending upon the child's family income, correct? How 
do they compute that family income?
    Mr. HILLMAN. I am sorry, I didn't catch the--
    Mr. GROTHMAN. How do they compute the family income?
    Mr. HILLMAN. This is based off of adjusted gross income 
from the--off the tax forms.
    Mr. GROTHMAN. Okay. If a child's parents are living 
together at home then you combine the income of mom and dad and 
they both count towards the income?
    Mr. HILLMAN. I could confirm, but so far as I understand, I 
think the answer is yes, but I can followup.
    Mr. GROTHMAN. Okay. And if the parents aren't living 
together, do you combine the family income?
    Mr. HILLMAN. That is a good question. Yes, I don't know 
those--I can followup for sure and answer.
    Mr. GROTHMAN. Why don't you find out? I would like to know. 
I just want to make sure we are not penalizing parents for 
staying together. So can you get back to me on that?--
    Mr. HILLMAN. Okay--
    Okay. Now, Dr. Brittingham, as you know, dual enrollment 
classes are becoming a bigger bigger thing in Wisconsin and 
nationwide. And one of the problems we have over time is 
credentialism for people who are teaching these students, 
correct? Are you aware of that problem?
    Ms. BRITTINGHAM. It's something that we look at, that is 
right.
    Mr. GROTHMAN. Right. And dual enrollment is a tremendous 
thing. It allows people to get through college quicker, right? 
Kids who participate in dual enrollment classes have a tendency 
to do better, but there is a concern among both high schools 
and colleges affiliated with them, as you put more and more 
credentialism on some of these teachers, you begin to find a 
hard time finding the teachers to teach these classes.
    And I wondered if you could comment on that, or whether 
there is anything you think we can do about this. I mean, in my 
opinion, sometimes credentialism is meaningless, right, and it 
is a shame that people are dissuaded or they find it impossible 
to participate in these dual enrollment classes because of 
credentialism. It might not show a teacher is better.
    Do you have any comments on that or can you think of 
anything we can do about it?
    Ms. BRITTINGHAM. I am not sure what the long-term solution 
is. It is something that our commission looks at. I think there 
are variations in dual enrollment. And I think one of the 
things that is greatly needed is some kind of empirical study 
that follows up on these students. We have got sporadic 
studies, but we really don't have a lot of information about 
where the students go, how many of the credits transfer, and 
can the dual enrollment be validated by the student's success 
in subsequent courses. So I think there is much more to do.
    That said, I think that students do benefit by having well 
qualified teachers and faculty members. And I think distance 
education offers us an opportunity to make sure that anybody 
who is teaching a college level class is prepared to do that.
    Mr. GROTHMAN. Will you agree that sometimes a master's 
degree does not make you at all a better teacher?
    Ms. BRITTINGHAM. Yes, alas, I would agree with that.
    Mr. GROTHMAN. Yes. So do you think there is some way we can 
find alternative means of accreditation to make sure these kids 
are able to get into dual enrollment classes?
    Ms. BRITTINGHAM. Again, I think distance education offers 
us some great opportunities, both for students in high schools 
to take courses offered through distance education by the 
colleges in their community, and have teachers in the high 
schools work alongside them perhaps. It is a problem.
    Mr. GROTHMAN. Okay. Do you think it can be solved to a 
certain extent by finding alternative credentialism for some of 
these teachers?
    Ms. BRITTINGHAM. I am not sure what you mean by alternative 
credentials.
    Mr. GROTHMAN. Well, maybe credentials--I mean alternative 
accreditation. You know, if you could find a teacher being 
accredited. Maybe right now you are requiring a masters degree, 
but finding some other way to say this is a good teacher even 
though they don't have a master's degree.
    Ms. BRITTINGHAM. There may be. I am not aware of anybody 
doing that right now.
    Mr. GROTHMAN. Do you think it would be a good thing to look 
into?
    Ms. BRITTINGHAM. Sure.
    Mr. GROTHMAN. Good. And I guess I will yield the remainder 
of my time. And I will look forward, Professor Hillman, to make 
sure that we are not discriminating against parents that stay 
together.
    Chairwoman DAVIS. Okay. Thank you.
    Our next speaker is Ms. Bonamici. And after that we are 
going to take a break and come back probably around 12?--after 
the speech in the joint meeting with the Senate this afternoon. 
So if you could just--we will try and contact you. Be sure and 
have your contact numbers, Okay? Thank you so much. If you are 
able to stay with us, we appreciate that.
    Ms. Adams will be conducting the hearing at that time.
    Thank you.
    Ms. Bonamici?
    Ms. BONAMICI. Thank you. Thank you to the Chair and the 
ranking member and to all of our witnesses.
    I am glad we are discussing this important issue. I come to 
it with a consumer protection lens. I spent some time at the 
Federal Trade Commission and appreciate the role of consumer 
protection laws.
    The triad we talked about today, I want to focus on the 
role of the accreditors. Last year I expressed concern to the 
Department of Education following their decision to fully 
reinstate Federal recognition of ACICS, the controversial 
accreditor that has now overseen several of the largest 
collapses, including Corinthians, ITT Tech, ECA, the Education 
Corporation of America, and just last week Virginia 
International University, where they found unqualified 
teachers, which they had also found in 2010 and 2014, rampant 
plagiarism, and patently deficient online classes.
    So these unscrupulous and unsound institutions take 
advantage of too many people here in our country who are trying 
to get ahead. And my concern, they have been allowed to operate 
as accredited schools for too long. Some of them shuttered 
without providing sufficient guidance to students who want to 
continue their education. In some cases the teach-out plan was 
a link to a website to another predatory for-profit college.
    So given the ability of ACICS to inflict so much harm on 
students I am concerned about the Department of Education's 
attempt to provide more flexibility to accreditors and even 
less Federal oversight through the negotiated rulemaking 
process.
    Dr. Hillman, accreditors have consistently missed warning 
signs from for-profit colleges. I just mentioned a few, 
including financial issues, lawsuits, poor outcomes. Would you 
agree that accreditors need to take these warning signs more 
seriously during the process and our students equipped to judge 
the quality of institutions based on accreditation alone? What 
else should they be looking at?
    Mr. HILLMAN. Yes. To respond to the question, and what else 
could they look at, I think there are examples of including 
those long-term loan repayment outcomes that also seem to be of 
interest to many accreditors.
    Ms. BONAMICI. Thank you.
    And also, Dr. Hillman, I noticed you recently published a 
book, ``Accountability and Opportunity in Higher Education: the 
Civil Rights Dimension.'' I chair the civil rights and human 
services subcommittee here in the Education & Labor Committee. 
So can you talk a little bit about--I haven't had an 
opportunity to read your book--can you talk about what is the 
civil rights dimension and accountability and opportunity in 
higher education?
    Mr. HILLMAN. This book was co-edited with Gary Orfield, the 
director of the civil rights project at UCLA. And we convened a 
number of authors to write about, from different angles, how 
civil rights might be strengthened or eroded by our 
accountability policies in higher education. And some of the 
examples that we illustrate throughout the book is when we have 
accountability measures that are poor measures of any sort of 
performance or any accountability that can sometimes 
disproportionately have negative effects for minority serving 
institutions and for students--serving low income students in 
some colleges.
    Ms. BONAMICI. And to followup, what have you found in the 
research--again on for-profit colleges there are some students 
who might enter one of these institutions and then actually be 
worse off after attending. What have you found about that in 
your research?
    Mr. HILLMAN. My review of the research is that there is 
good evidence that students who participate in certificate 
programs at for-profit colleges end up defaulting at extremely 
high rates, half I think are some of the estimates right now. 
But also that these effects last in many cases years and years 
and years into their life course.
    Ms. BONAMICI. So they have the debt but they don't have the 
certificate or diploma.
    I want to move to Dr. Brittingham. Did I say that 
correctly? Something in your written testimony caught my 
attention and I want to followup on it, because I found it a 
bit concerning. You said in arts institution reports what 
percent of students make their living from their art. As 
someone who is a strong supporter of arts education, I know 
that many people who study in the arts don't traditionally work 
in the arts, but they may use what they learned from studying 
in the arts, for example, to work for a tech company. Or around 
the corner there is today there's an exhibit about innovation 
in footwear design. If somebody goes to work for a footwear 
company or a tech company, does that mean they didn't get a 
good education at an art school?
    Ms. BRITTINGHAM. No, not at all. But I think because the 
mission of the art school is to prepare students in art, it is 
one of the measures that they want to use.
    Art schools also do other interesting things. For example, 
we have one that has a relationship with a coding boot camp, so 
that students who want to pursue their art on something that 
may not necessarily pay very well, can have another way to make 
a living to supplement that.
    So we see a lot of creativity there.
    Ms. BONAMICI. Terrific. Thank you.
    And I see my time is about to expire. I yield back.
    Thank you, Madam Chair.
    Chairwoman DAVIS. Thank you very much. I want to thank all 
of you for your presentations. There is a lot there for us to 
work on and you have provided some very valuable suggestions 
about ways to make some fixes, and on the other hand, maybe 
restructure entirely to try and come up with something that is 
going to work better throughout. And particularly, I think, as 
you have heard, you know, the concern really is because of the 
numbers, because of the data, that we want to be sure that 
students who are attending for-profit colleges are getting 
their money's worth and the taxpayers are as well.
    So, thank you so much.
    As I said, after the joint session we will convene again 
and it should be, you know, in the neighborhood I think of 
around 12:15 pm, so.
    Thank you very much.
    [Recess]
    Ms. ADAMS.
    [Presiding] I want to welcome everyone back to our hearing 
on strengthening accountability in higher education. Thank you 
all very much for joining us again.
    I want to now recognize Ranking Member Foxx.
    Ms. FOXX. Thank you, Madam Chairman. And I want to thank 
our witnesses for being here today. This is an issue that we 
are all very much concerned about and it is an issue that is 
getting a lot of attention.
    But I have to be honest, I have been very disappointed in 
what I have heard from my colleagues in what was supposed to be 
a bipartisan hearing. So I would like to take a step back from 
all this partisan dialog here and remind my colleagues why we 
are here and why we are holding this hearing--at least why I 
thought we are having this hearing.
    I thought we were here for students. We want to make sure 
there is accountability in how institutions are serving 
students. It is too easy to group bunches of institutions 
together and say these schools aren't serving students. But in 
reality, we are talking about people's lives. Every student 
that isn't served well is a life that is losing time, losing 
potential, losing its impact. That is why we are here. These 
individuals are the reason we should be here. And to sit here 
and grind a tired old ax against certain types of institutions 
you don't like is just disgraceful. This should be a 
conversation about all students, all institutions, all taxpayer 
dollars.
    We need to look at some stats. College X has a graduation 
rate of 44 percent and its graduates make an average of $34,600 
after they graduate. College Y has a graduation rate of 10 
percent and its graduates make an average of $28,700 after 
graduation. College Z has a graduation rate of 27 percent and 
its graduates make an average of $31,300 after graduation. In 
my examples, ECPI, a 2 year for-profit is College X. Hudson 
Community College is a 2 year public school and that is College 
Y. And Savannah State University is a 4 year public. And if my 
colleagues on the other side of the aisle want to talk about 
protecting taxpayer dollars, we should be talking about 
protecting all taxpayer dollars, which includes the 
approximately $50 billion a year public--public institutions 
across the country get from the hardworking taxpayers in their 
states in addition to the $76 billion taxpayer dollars at the 
Federal level. Approximately 20 million lives are at stake 
here. And for a majority of this population, if they fail, the 
chances are small that they will ever try again.
    Therefore, it is really disappointing that my colleagues 
have spent the entire hearing talking about a sector that 
enrolls only approximately 10 percent of the total population.
    I have said from the beginning of our process that 
postsecondary education systems are not serving students well. 
And that is what we need to be talking about in these hearings. 
And that is why we need comprehensive reform.
    I thought there was bipartisan agreement around the idea of 
wholesale reform, but I am now seeing that really that isn't 
the case and that is a true shame.
    Dr. Brittingham, I would like to ask you a question. Can 
you provide the committee with more information about how 
graduation, retention, loan default, and loan repayment rates 
will be used as part of your organization's review process? Why 
did your agency decide to undertake this effort and what 
successes have you seen from it so far? To what extent are 
other crediting bodies beginning to use the student outcome 
metrics in their respective processes?
    Ms. BRITTINGHAM. Thank you. I think first of all, all of 
the regional accreditors use them but probably in somewhat 
different ways. Our commission has looked at financial 
information on loan defaults for probably 7 or 8 years now. We 
write institutions that meet a trigger that we have set that is 
far more conservative than the ones set by the Department and 
ask them to explain what they are doing to help lower the 
student default rate.
    The last couple of years we have started looking at student 
repayment rates. You have heard before that student loan 
default rates can be ``jiggered'' shall we say, although I have 
no evidence that has happened at our institutions, but the loan 
repayment rate is cast in a more positive way because it means 
students are making at least minimum progress on repaying their 
loans.
    I see I have run out of time. Okay. And the rest was on 
retention and graduation rates. A couple of years ago the 
regional accreditors together decided to look at institutions 
with low graduation rates. So we looked at 2 year institutions 
that had 3 year graduation rates at or below 15 percent and 4 
year institutions that had 6 year graduation rates at or below 
25 percent. We each did it a little bit differently, which lets 
the approaches converge. You can find the report on our 
website, which is C-RAC.org, C-RAC.org. In New England we wrote 
each of those institutions, there were 28 of them, and we asked 
them to each write a short report explaining were the data 
correct, what else did they know about student retention and 
graduate rates, what were they doing to help improve those 
rates, what did they know about how effective that was, and 
what else were they planning to do. I think those were all very 
informative. Almost all of them were community colleges and 
adult serving public institutions. We had some followup with a 
couple of them. We learned some things, including I would say 
the great importance of local institutional research capacity 
to help institutions understand where the students are having 
problems.
    Ms. FOXX. Thank you. And thank you, Madam Chairman, for 
your indulgence.
    Ms. ADAMS. Thank you very much.
    Let me just respond real quickly. Due in part to these 
differences in structure and incentives, for-profit colleges 
and institutions have consistently worse outcomes. For example, 
only about a quarter of students enrolled at for-profit 
colleges complete a bachelor's degree within 6 years compared 
to 59 percent at public and 66 percent at nonprofits. Among 
students enrolled in 2 year programs, those attending for-
profits are nearly 4 times as likely to default on their loans 
compared to their counterparts at community colleges.
    Let me now recognize Representative Jayapal.
    Ms. JAYAPAL. Thank you, Madam Chair.
    Last month I met with students from a for-profit college in 
my district called the Art Institute of Seattle. After 73 years 
in operation, the school shut down just 2 weeks before the end 
of the quarter because Wall Street investors who had taken over 
its management had suddenly decided it was no longer 
profitable. And I heard heartbreaking stories from multiple 
students who didn't even know whether their credits would 
transfer. In most cases it sounded like they wouldn't transfer, 
including one who was just seven credits short of a degree and 
had actually transferred from another investor owned school 
that also shut down abruptly. All of them are getting zero 
support from this Administration as they face the difficult 
decision between attempting to transfer or applying for a loan 
discharge for, in some cases, tens of thousands of dollars. In 
this case, and unfortunately in so many others, Federal student 
aid dollars have benefited the rich and the powerful more than 
they have helped students.
    So let me start, Dr. Hillman, with you. Nonprofit and 
public schools are required to spend all of their money towards 
education. Are for-profit schools different?
    Mr. HILLMAN. Yes, for two reasons. The first is the 
economics of nonprofit organizations have a non distribution 
constraint, so all the money has to go to the mission, not the 
shareholders. That is one. I think the second is more of an 
empirical one. When colleges spend more money on students, on 
student support services, they see positive outcomes.
    Ms. JAYAPAL. So in the case of for-profit entities, the 
interests of the shareholders are coming before the interests 
of the students. Would you agree with that?
    Mr. HILLMAN. I don't think I would agree wholesale. I think 
that there is truth to that.
    Ms. JAYAPAL. Great. Thank you. And when profits--in my 
view, that is what I see happening, and I accept your answer--
when profits come before students my concern is that the result 
is lower completion rates, higher default rates, and higher 
costs for comparable public programs. So nationwide, just 9 
percent of students attend a for-profit program, but the 
schools account for 34 percent of the students that default on 
student loans.
    And what is more, data from the Federal Reserve Bank of New 
York's research and statistics group and the National Bureau of 
Economic Research suggests that on average students attending 
for-profit programs earn no more than if they had attended no 
school at all.
    So given the very clear differences in cost outcomes and 
default rates between for-profit and public and nonprofit 
schools, does it make sense, Dr. Hillman, to have a one size 
fits all accountability system? Or does it make more sense for 
for-profits to undergo a higher level of scrutiny?
    Mr. HILLMAN. I think an answer to that would be it is going 
to depend on policy goals, first of all. But I would say that 
differential accountability is a strength of the current 
system. I think that my understanding of a rationale for 
differential accountability is that in the public sector public 
colleges have the full faith and credit of their state. For 
example, they have oversight coming from other places and other 
governance agencies that are accountable to public and elected 
officials. And I don't see the same governance structure in the 
for-profit sector. And I say that reason alone would warrant 
differential accountability.
    Ms. JAYAPAL. Thank you. I am particularly concerned about 
how the lack of accountability for for-profit colleges 
disproportionately affects people of color. So while black and 
Latino students make up 36 percent of all students enrolled in 
college, they actually make up more than half of undergraduates 
at for-profit colleges. So black and Latino students at for-
profit colleges pay more than twice as much as they would to 
attend a public 2 year college and leave with $10,000 more debt 
on average.
    Dr. Hillman, how does the overrepresentation of students of 
color at for-profit institutions contribute to racial 
inequality and the wealth gap?
    Mr. HILLMAN. It certainly contributes. I think that those 
proportions that you just referenced are very important to keep 
in mind, both on the front end of the wealth inequality that 
requires particularly black families to borrow at higher rates 
than any other groups. And then it has downstream effects as 
well in terms of the fragility of the black middle class, as 
some of my colleagues, Fennaba Addo and Jason Houle, would say. 
So I would be happy to connect you with some folks who are 
doing really good research in this area.
    Ms. JAYAPAL. That would be great.
    And maybe in my last 40 seconds or so, if you could give me 
some sense of how we ensure that we are protecting all students 
that go to for-profit colleges that receive Federal aid, and 
particularly students of color, do you have suggestions for 
this committee around that?
    Mr. HILLMAN. I do. And I am happy to continue the 
conversation. I think that two important ones I think are core 
here. One is thinking about the capacity and the sort of 
operations that happen at a college. I think that different 
processes have different outcomes for students. And so caring 
about that matters. But I also think that getting measurements 
right, accountability measures right is also going to matter 
here.
    Ms. JAYAPAL. Thank you. I so appreciate that. And, Madam 
Chair, I think we should be looking at whether this predatory 
industry is deserving of Federal aid at all.
    Thank you. I yield back.
    Ms. ADAMS. Thank you. I went to recognize Representative 
Omar at this time.
    Ms. OMAR. Thank you, Chairwoman.
    So I just kind of wanted to follow with what my colleague 
sort of was reviving here. Dr. Hillman, you mentioned in your 
testimony that some colleges and universities conserve to 
reproduce and reinforce inequality. As my colleague alluded to, 
black students are three times more likely to complete a 
college degree program within 6 years at a public college 
compared to black students attending a nonprofit--for-profit 
college. Latino students 6 year graduation rates at public 
colleges are twice that of their peers at a for-profit college. 
Student debt outcomes for students attending these schools are 
worse as well. For-profit colleges account for more than one-
third of all student loan defaults, which is 34 percent, even 
though students attending these schools make up only 9 percent 
of the total postsecondary enrollment.
    So I wanted to know, do you not agree that the Department 
of Education has a duty to protect the students and taxpayers 
from bad actors in higher education and that we should be 
holding some of these for-profit colleges accountable for their 
student success?
    Mr. HILLMAN. Yes. I think, to also qualify this, I think 
that even in the public and nonprofit sectors I would imagine 
they would say we would welcome accountability as well. So that 
context I hope is helpful.
    Ms. OMAR. It is. And I am just wondering what kind of 
accountability measures do you think would be useful in holding 
some of these bad actors accountable?
    Mr. HILLMAN. That is a great question. I think that is one 
that is certainly on the table and I would love to explore 
options. I feel like there must be some things that are working 
well now that could maybe be enforced and maybe there are ideas 
that are happening at the state level or in other places that 
could be incorporated into some of the Federal responses.
    Ms. OMAR. Do you not agree that for-profit colleges 
disproportionately prey on low income students and students of 
color?
    Mr. HILLMAN. I think there is good evidence that has 
happened. And, again, I don't think that wholesale I wouldn't 
say that is the case across the board, but I would say there is 
certainly evidence to support that and I think that is a 
priority for students of color in particular and for consumer 
protection in general.
    Ms. OMAR. And do you not agree that Congress should ban all 
Federal funding to for-profit colleges or institutions where 
the governance and structure allows for a profit motive to 
affect institutional decisionmaking?
    Mr. HILLMAN. That is a great question. I think, again, you 
have got the policy goals of your committee to prioritize, but 
I would say there is a case to be made.
    Ms. OMAR. Students that enrolled in for-profit colleges 
that closed experienced falsified job placements statistics, 
low quality programs, and predatory lending practices. And so I 
would ask do you not agree that these students should be 
awarded full and immediate student debt relief?
    Mr. HILLMAN. I think situations--it is going to be 
situational. But I think the spirit of that, yes, I would agree 
that is fair.
    Ms. OMAR. I appreciate that. We heard at the last hearing 
on college affordability that college degrees continue to be a 
great investment for most students. However, there are 
distressing signs that some institutions and programs leave 
students with debt they can't repay. The Obama Administration 
sought to protect consumers from such programs with its gainful 
employment regulations, which was finalized in 2014. That 
regulation set debt to earnings threshold that institutions had 
to meet and required disclosures to ensure that prospective 
students know what they are getting for their money.
    Although the rule is still in effect this Education 
Department is no longer implementing that rule because it 
served a working relationship with the Social Security 
Administration, the agency that provided the data after DeVos 
violated the Privacy Act last year.
    What can you tell us about these programs that leave 
students with unmanageable debt?
    Mr. HILLMAN. I think there are at least two ways to think 
about unmanageable debt. It is sometimes low levels of debt 
that really matter for students. And we might not think that 
$5,000 is a lot of debt, but it could be very unmanageable for 
families or individuals. And just on the opposite end, it could 
be loads of debt that also is unmanageable. I think that in 
both cases there are concerns about downstream effects of this 
financing model that we have chosen to use in our higher ed 
system of having to be based on loans and credit.
    Ms. OMAR. Yes. So 98 percent of the failing programs were 
offered by for-profit colleges. And so when we are talking 
about predatory practices it is one that is concerning. And I 
hope that we will spend a little bit more time on this 
committee exploring that and figuring out how we hold these bad 
actors accountable and assure that students have access to the 
kind of education that they deserve.
    Thank you and I yield back.
    Ms. ADAMS. Thank you. Thank you very much.
    I want to recognize Mrs. Lee now.
    Ms. LEE. Thank you, Madam Chair, and thank all of the 
witnesses for being here.
    As you know, we have this very pressing issue with for-
profit colleges that aggressively target veterans and their GI 
benefits, as was explained here earlier today with the 90-10 
rule loophole. And this issue hits particularly close to home 
for me and my district and my state of Nevada. In fact, when I 
first came to Congress I had the unique privilege of bringing 
Sergeant Isaac Salvadar as my guest to the State of the Union. 
Sergeant Salvadar had served in the Marine Corps, he was 
deployed to both Afghanistan and Iraq, and now he helps other 
veterans stay active as a coordinator for Merging Vets program.
    But right after his military service he had returned to 
Vegas and enrolled in a for-profit college. When he was just 
three classes away from graduating the institution closed, 
causing him to lose those 2 years of GI benefits. Very 
devastating.
    Dr. Hillman, I wanted to ask you, if we were to close this 
loophole, how would this impact institutions, but also how 
would it potentially help students, veterans like Isaac?
    Mr. HILLMAN. So good question. And I am not sure I have a 
full answer and I would be happy to followup.
    It seems though, my intuition would be that it would be 
beneficial in the long run for students to be at institutions 
that have a diversified revenue stream because I think that 
institutions might have incentives to serve students better 
when they have a wider range of revenue streams and people are 
accountable to.
    Ms. LEE. Thank you. So help me understand this. If these 
for-profit institutions, they have a fiduciary responsibility 
to their shareholders, not necessarily to the public. They are 
overwhelmingly reliant on Federal funds. So why would we let 
them continue on with business as usual? And then do you think 
there is any drawback for students in closing this loophole?
    Mr. HILLMAN. I would be happy to followup on that one as 
well. My instinct is to say that if the outcomes are desirable, 
and if they are getting good outcomes with that situation, then 
I would say maybe it would be less of a concern.
    Ms. LEE. As, you know, we have this conversation today 
about strengthening accountability, I think it is imperative 
that we emphasize and highlight student outcomes and whether or 
not we are positioning our students for success. And along 
these lines, when we think of promoting students' best interest 
in terms of trying to reduce higher debt burdens and default 
rates, I believe we have to assess the personal profit 
incentive of some of these privately held for-profit 
institutions.
    I mean, just as an example, the CEO of ITT Tech, now the 
defunct for-profit chain, earned nine times the salary of the 
president of Harvard University while relying on 100 percent of 
Federal aid programs for revenue. What are your recommendations 
or thoughts on requiring for-profit colleges to disclose salary 
incentives and other bonuses for leadership members at these 
companies?
    Mr. HILLMAN. This is not something I have put much thought 
into. I don't feel totally prepared to respond to that.
    Ms. LEE. Is there any other witness who would like to 
respond?
    No? Okay. Dr. Brittingham, in the past 6 months colleges 
owned be ECA, Vatterott Colleges, and the Dream Center closed 
leaving over 140,000 students stranded. In most cases the 
creditors overseeing the institutions failed to secure teach-
out agreements that would have provided these students options 
to transfer despite many of the warning signs.
    During the midst of the Dream Center closure I was deeply 
concerned regarding the status of the Las Vegas Art Institute, 
which affects many students in my district. Specifically, in 
the case of the Institute, that if it did close, where would 
these students go to resume their course of study. Many of 
these students have families and the question I keep thinking 
about is whether they would be able to find local institutions. 
Some accreditors have sought teach-out plans which do not 
translate into anything meaningful for students without this 
agreement in place.
    Can you tell us what the appropriate point for an 
accreditor to request colleges to submit teach-out agreements 
is?
    Ms. BRITTINGHAM. I can tell you what we do. And I do want 
to take the opportunity to say that my colleagues and I are 
available to any members of the committee and their staff if it 
would be helpful for us to come in and talk with you when we 
are in Washington.
    We were not directly involved in the Dream Center. We had 
one previous institution that was owned by EDMC and they 
decided to close it and taught it out all the way in the Boston 
area before. So I really can't respond to that.
    I will respond when we have institutions that--if the 
commission has to ask them to show cause for probation or 
termination we will ask them to submit a teach-out plan, which 
is what would you do. And as things get worse we ask them for 
teach-out agreements. A good teach-out agreement takes some 
while to do. And so as your question suggests, you can't wait 
until the minute to ask for the teach-out agreement.
    Ms. LEE. Great. Thank you.
    I yield.
    Ms. ADAMS. Thank you very much.
    I want to yield at this time to Representative Levin. You 
have 5 minutes, sir.
    Mr. LEVIN. Thank you so much, Madam Chairwoman. And I thank 
all four of you for sticking with us. In retrospect maybe we 
should have invited you to get to watch the speech of Jens 
Stoltenberg, the Secretary General of NATO. That is why we 
left. And it was an inspiring shot of bipartisanship and we had 
a great time cheering for him. He gave a great speech.
    The Education Department, I think we all agree, has a duty 
to protect students and taxpayers from bad actors in higher 
education by holding institutions accountable for their 
students' success.
    Under Secretary DeVos the Department has proposed several 
versions of regulations that would allow colleges to outsource 
huge swaths of programs to unaccredited, unaccountable 
providers. Although the Department's most recent proposed 
changes set some sort of a threshold for the amount of 
instruction that can be outsourced to other entities, students 
could be paying to attend a university without even knowing 
that significant parts of their programs are being provided by 
an unaccredited, unaccountable entity without any experience or 
expertise in teaching and learning.
    These unaccredited providers would not be subject to the 
few laws and rules that we do have to protect consumers. They 
could operate completely in the shadows without any of the 
transparency or accountability required of colleges and still 
access taxpayer dollars.
    This proposal sounds like a shell game, at least to me.
    Dr. Hillman, do you think this type of outsourcing might 
weaken or undermine the rules and framework Congress has put in 
place through the program integrity triad?
    Mr. HILLMAN. Yes.
    Mr. LEVIN. Are you aware of this and, you know, what is 
your thought?
    Mr. HILLMAN. Yes. My understanding is that a key part of 
the triad is the accreditation process. And if that is--
    Mr. LEVIN. Right.
    Mr. HILLMAN. If that is taken off the table then, yes, 
there would be concerns about that as a professor.
    Mr. LEVIN. Accreditation decisions have significant 
consequences as to whether a school can continue to get Federal 
financial aid. I worry that too often accreditors identify 
problems and raise concerns about institutions internally, only 
to leave students in the dark.
    In a distressing number of recent cases, some of which have 
been referenced by my colleagues here this morning and early 
this afternoon, it seems that accreditors and colleges know 
about dire financial problems well before students do.
    So I wanted to ask you, Ms. Emrey-Arras, about this 2014 
GAO report that looked at accreditors' use of adverse actions. 
Do you find that accreditors commonly take action when a school 
has poor student outcomes?
    Ms. EMREY-ARRAS. No. We found no relationship actually 
between the student outcomes and the sanctions, like 
terminations or probations, that accreditors took. So in 
contrast to the financial side of the house, where if a school 
had poor financial metrics, the accreditors were more likely to 
be on them with sanctions. There was no relationship when it 
came to the quality side of the house with student outcomes.
    Mr. LEVIN. So do you have recommendations for us on this?
    Ms. EMREY-ARRAS. We did have multiple recommendations in 
that report. I think one of the ones that remains open that the 
Department has not implemented is to actually look at that 
sanction data when it is in the process of recognizing 
accreditors, because that is valuable information that they can 
use to assess are accreditors doing their jobs.
    So if you have, for example, an accreditor that is only 
sanctioning, I don't know, maybe 2 percent of their schools, it 
could raise questions about whether or not they are 
appropriately holding schools accountable.
    So it is not the only piece of information to look at, but 
it is something definitely to be mindful of.
    Mr. LEVIN. Thank you.
    More than 30 states currently use some kind of performance 
based funding. These funding systems are designed to reward 
colleges for achieving desired outcomes, like increasing the 
number of degrees awarded or achieving a high graduation rate. 
But they often fail to address underlying differences in 
resources, missions, and student bodies.
    Now, congressional Republicans in the Trump Administration 
are pushing a similar model at the Federal level through 
various risk sharing proposals.
    Dr. Hillman, I understand you have done a lot of research 
in this area. Can you tell us about the impact that performance 
based funding models have had on equity in higher education?
    Mr. HILLMAN. Yes. On equity there are two things that come 
to mind. But I would preface all of this by saying there are 30 
different models, 30 different designs. It is going to vary 
from state to state and within state.
    Mr. LEVIN. Right.
    Mr. HILLMAN. But there are a couple of new very recent 
studies showing that colleges that have the most resources tend 
to be the colleges that get the most money from its funding 
model. So I am worried about sort of the rich getting richer in 
a sense in that space.
    And I am also concerned about some of the metrics that are 
used and whether or not they paint a fair picture of what 
happens in a lot of minority serving institutions and broad 
access colleges.
    Mr. LEVIN. Okay. Well, we would be very concerned if HBCs 
and others and community colleges and other schools that serve 
poor communities were--you know, lost out in this.
    So, all right. Well, I guess my time is up.
    Madam Chairwoman, thank you very much. I yield back.
    Ms. ADAMS. Thank you very much.
    I want to recognize Representative Trahan.
    Ms. TRAHAN. thank you, Madam Chair.
    Good afternoon. As students and their families prepare to 
enroll in college they face mounting costs without any 
guarantee on their return on investment. They are making one of 
the most expensive important decisions of their lives, but they 
have very little information to make an informed decision.
    Federal websites, like the College Scorecard, provide data 
for Federal financial aid recipients, but leave out students 
who go to college without debt. And Federal graduation rates 
consider only first time, full-time students, a measure of 
traditional students who represent a shrinking share of the 
student population.
    Mr. Hillman, how can the Federal Government provide better 
information to students and their families so that they know 
what they can expect out of college before taking on tens of 
thousands of dollars in student debt?
    Mr. HILLMAN. One would be measures of not just averages but 
distributions I think is incredibly important when sharing 
information with students to say that it is--you know, your 
average income might be $30,000 but that distribution around it 
also really matters. So I think that putting information out 
there that helps paint a very full picture is important, and 
especially when that information is disaggregated by race, 
class, gender, for example.
    I think that putting information out there alone serves an 
incredible value, but it also passively doesn't do as much as 
it could when there is a proactive connection between a human 
and an advisor or a coach or something helping students make 
sense of that data or that information.
    Ms. TRAHAN. Does anybody else want to add anything to that? 
I know that--well, just in general, additional data that could 
be useful for students who are making decisions, you know, on 
where to go to college or what to study.
    Mr. ORTEGA. I am happy to provide a little bit more 
context, sort of from a state college access campaign 
perspective.
    I think we have gotten really good at explaining to 
students what the transactional outcomes are from postsecondary 
education and often fail to take a step back to begin to think 
about how you can help them cultivate a successful 
postsecondary guidance plan as they move through K-12 and exit 
into postsecondary. We tend to elevate important careers in 
front of them, but we forget to explain all the details around 
becoming informed about all the necessary steps to take.
    And I think when we think about comprehensive guidance 
planning in that way, from the state level, I think it puts 
students and family in a position to make better decisions.
    But I say that not wanting to put all the onus in educator 
professionals in the K-12 space. I feel like gatekeeper folks 
from higher ed institutions need to play a very similar role 
and not just see their task as recruitment, application, yield, 
and enrollment, but more of a guidance, a counseling sort of 
role as they begin to recruit students, and particularly those 
that serve some of the historically underrepresented students 
as well.
    Ms. TRAHAN. Great. Thank you.
    One of my colleagues had mentioned that, you know, the 
education path has changed dramatically. Not everyone is going 
to a 4 year college and signing up for this college experience. 
And so given that postsecondary students are changing, millions 
of college students are low income, students of color, working 
adults, caregivers, immigrants, et cetera, they don't fit this 
traditional student mold, which is full-time, transitioning 
directly from high school to a 4 year university. It concerns 
me that states and accreditors are not held more accountable or 
doing enough to provide these types of students with their 
return on investment.
    And so I am wondering, Ms. Emrey-Arras, given these 
demographic trends, what can the Federal Government do to 
clarify data measures, that are used as accountability measures 
for institutions of higher ed, and to be more inclusive of 
those who don't fit this traditional mold?
    Ms. EMREY-ARRAS. We have not done work specific to the 
measures. And I understand, you know, the concern about, for 
example, graduation rates being first time, full-time, and the 
like. I would say that our work at GAO is now focusing a lot on 
these populations of older students.
    We recently did some work around food insecurity for 
college students and the fact that many students on campus go 
hungry, and the ways that they could access food support 
through the help of the Federal Government. And we also have 
some ongoing work looking at student parents and their access 
to Federal student aid.
    So we are definitely focused on this population.
    Ms. TRAHAN. Great. Thank you.
    Madam Chairwoman, I ask for unanimous consent to enter a 
letter from the Project on Predatory Student Lending, which is 
an organization that defends and represents students against 
the predatory for-profit industry, into the record.
    Thank you.
    Ms. ADAMS. Without objection, so ordered.
    Ms. TRAHAN. Great. I yield back.
    Ms. ADAMS. Thank you.
    I now recognize myself for the purpose of asking some 
questions. And thank you again to all of the witnesses.
    A report by the Center for American Progress found that 
while regional accreditors collect a lot of data on student 
outcomes, they rarely use it in a review to--or final decision 
to accredit an institution. Too many institutions have 
performance gaps by race and income.
    Dr. Hillman, should members of the triad be concerned with 
outcomes by race, ethnicity, income, and gender?
    Mr. HILLMAN. Yes, in general. And specifically, when it 
comes to the sort of value added of a college, it is really 
important to be able to look at a wide range of outcomes and 
increasingly that matters on the lines of race and class.
    Ms. ADAMS. Thank you.
    Dr. Brittingham, your agency is one of the only agencies to 
collect data on student loan repayment rates from the college 
scorecard. Can you explain how your agency uses this 
information along with other metrics in reviews?
    Ms. BRITTINGHAM. Thank you. This is the first year that we 
tried this on an experimental basis, because we have been 
looking at loan defaults, so now we are looking at loan 
repayments. And the experts around the table for our committee 
agreed, and the commission agreed, that we should also look at 
loan repayment rates. Institutions are asked to write a brief 
report. And so it isn't just us looking at the numbers, it is 
listening to the institutions through the papers that they 
write about how they see the information, what they are doing 
to improve, to forestall loan default, and to improve loan 
repayment rates.
    Ms. ADAMS. Thank you. There are 101 accredited historically 
black colleges and universities. We refer to them as HBCUs in 
our country. And what I have learned from a majority of them--I 
had the pleasure of teaching at one of them, Bennett College 
for 40 years in Greensboro, North Carolina--one of the things 
what I have heard from a majority of them, especially one in 
particular, are stories regarding inequities in the 
accreditation system. If you talk to presidents, some of them 
of HBCUs, you might hear one of the following: that the peer 
review process allows too many personal biases to enter the 
process and have negative impacts, especially for small, low 
resource institutions. You might hear that standards are 
applied without consideration of institutional size, resources, 
or endowments, requiring institutions with minimal resources to 
be evaluated using the same criteria as some of the other best 
endowed institutions in the country. Or you may hear that 
accreditors tend to shift what is required of institutions and 
serve a distinct mission on sanction, leading to a belief that 
when institutions reach a state of extreme difficulty in 
meeting the standards, the accreditor would rather remove them 
from membership instead of providing them with additional 
opportunity to rectify these issues.
    Dr. Brittingham, given your role with the New England 
Commission, can you please share with the committee your 
response to these stories that our HBCUs have experienced with 
their accreditors?
    Ms. BRITTINGHAM. Well, thank you. As you know, New England 
does not have any HBCUs, but we do have financially fragile 
institutions, public and private institutions. And I think the 
role of the accreditor is to certainly approach each 
institution without bias, to be fair, to listen, but to think 
about the importance of resources not in and of themselves, but 
for the stability of the institution and the ability of the 
institution to continue offering a good education for students.
    So while we look at the numbers, I think it is also 
important to think about what is the trajectory, what is being 
reduced or cut, or what is not being made available to 
students, and is that institution still able to offer a quality 
education to the student.
    Ms. ADAMS. Do you believe that accreditors should face 
consequences when they don't do their jobs?
    Ms. BRITTINGHAM. I am sorry, when they don't what?
    Ms. ADAMS. Do their jobs.
    Ms. BRITTINGHAM. Yes.
    Ms. ADAMS. Okay.
    Ms. Emrey-Arras, how can the Department conduct better 
oversight of accrediting agencies?
    Ms. EMREY-ARRAS. One of the things that they could do, for 
example, is to use that sanction data and then compare it to 
the outcome measures that we have been talking about in terms 
of students. So they could look at whether the accreditors are 
actually doing their jobs and holding schools accountable for 
poor student outcomes.
    Ms. ADAMS. Thank you very much.
    Before I yield I want to ask unanimous consent to insert 
into the record a letter from the Center of American Progress 
on the role of accreditation and ensuring that all students 
have access to a high quality postsecondary education.
    And now I would like to yield to Representative Castro.
    Mr. CASTRO. Thank you, Chairwoman. Thank you for all your 
testimony today.
    My question is about how we break up the work-school tug of 
war that you see a lot of students going through where they 
cannot afford to simply go to school, so they have to work. Yet 
they have to work so many hours that it essentially impacts 
their ability to go to school and to finish in a reasonable 
amount of time. And ultimately what I have seen so often is 
that work wins out and people end up dropping out of community 
college or a 4 year university, and many of those folks never 
go back to finish off. And yet they are saddled with the debt 
that they undertook when they went to school.
    What new approaches--and I guess let me also preface that 
by saying when I was in Texas I was vice chair of the higher 
education committee for 4 years and I saw, Mr. Ortega, that you 
worked in Texas for some time. And we encountered this issue 
again and again because students will often make their 
decisions based on cost, but if you make your decision based on 
cost our community colleges are cheapest, but they also have 
the lowest completion rates as compared to other universities.
    So what do we do about those conflicting issues there and 
challenges? And what are we doing, what should we do?
    Mr. ORTEGA. I am happy to chime in. I feel like the 
assumption that you shared with us right now in terms of 
students having to take on jobs, you know, in order to be able 
to afford education is one that we have known for some time. 
And for some reason we seem to not be able to adapt to that in 
the culture of colleges and universities.
    In some ways, you know, a lot of the concerns I have heard 
raised here about the emergence of new players in the for-
profit sector, into that area, has been largely driven by the 
fact that institutions have not been able to meet those needs 
of new populations, what I think is the new traditional student 
coming into colleges and universities. And it is a terrible, 
terrible injustice. I think we need to do more to break the 
traditional structures of higher ed and offer more 
opportunities for students. And you don't see a lot of that 
happening.
    And I think that is why it is easy for folks, particularly 
historically disadvantaged students of color in particular, to 
seek out those opportunities that get offered by in some cases 
even unaccredited institutions. I think we need to do better 
about being able to make sure that the traditional sector 
begins to adapt and creates spaces for these students to come 
in there.
    Mr. CASTRO. Well, because often folks that will go to the 
for-profit institutions are left with a lot of debt, and 
sometimes they can't find jobs either.
    Mr. ORTEGA. Right.
    Mr. CASTRO. Please.
    Mr. HILLMAN. I would only add that in this context, in this 
specific situation, geography matters a lot more than sometimes 
we--in at least the academic side--give credit for. And so 
place matters incredibly. And so looking at the sort of choice 
set locally for individuals to even know if there is a college 
nearby, or what they are, is really important here.
    Ms. BRITTINGHAM. I think a lot of the challenge for some 
people returning to school is that institutions haven't always 
been maybe as good as they could be about making the schedule 
of classes predicable for students. And if somebody has a job 
where the hours of work are unpredictable and the class 
schedule is unpredictable, that is a really hard thing.
    So we see many community colleges, for example, following 
something that is called guided pathways, which is designed to 
increase the predictability of offerings and also help students 
kind of narrow their choices to kind of make it easier for 
them.
    Mr. CASTRO. And how much progress have we made also on 
articulation agreements among universities and community 
colleges?
    In Texas, part of the challenge you have is that locally 
and regionally the agreements are usually pretty strong, but if 
you tried to go from a community college in San Antonio to a 
university in Dallas, there is not necessarily much 
coordination or is not as much as you would like. And so, you 
know, people end up going to school for 2 years and they get 
credit for a year and a half or a year and a quarter, or 
something and they have just lost out on all that time and 
money.
    Ms. EMREY-ARRAS. I would add we have done some work at GAO 
on credit transfer issues and articulation agreement issues and 
one of the challenges is that while schools are required by 
statute to provide that information to students, they are not 
required to do so on line. So we actually made a recommendation 
to the Department of Education to require schools to post there 
articulation agreements on line so that students would have 
access to that information.
    Mr. CASTRO. Thank you.
    I yield back, Chair.
    Ms. ADAMS. Thank you very much. I want to thank all of the 
witnesses as well.
    I want to remind my colleagues that pursuant to committee 
practice, materials for submission for the hearing record must 
be submitted to the committee clerk within 14 days following 
the last day of the hearing, preferably in Microsoft Word 
format. The materials submitted must address the subject matter 
of the hearing and only a member of the committee or an invited 
witness may submit materials for inclusion in the record. 
Documents are limited to 50 pages each. Documents longer than 
50 pages will be incorporated into the record via an internet 
link that you must provide to the committee clerk within the 
required timeframe. Please recognize that years from now that 
link may no longer work.
    Again, I want to thank Dr. Brittingham, Mr. Ortega, Ms. 
Emrey-Arras, and Professor Hillman for your valuable 
participation today. What we have learned certainly has been of 
great value to us.
    Members of the committee may have some additional questions 
for you and we ask the witnesses to please respond to those 
questions in writing. The hearing record will be held open for 
14 days in order to receive those responses.
    I remind my colleagues that pursuant to the committee 
practice witness questions for the hearing record must be 
submitted to the majority committee staff or committee clerk 
within 7 days. The questions submitted must address the subject 
matter of the hearing.
    I now want to recognize the distinguished ranking member 
for his closing statement.
    Mr. SMUCKER. Thank you, Madam Chair. I would like to thank 
the witnesses for their insightful comments and for the 
discussion this morning.
    This is certainly an important conversation. We believe 
this conversation about accountability and about rebalancing 
the triad is critical to a future of students all across the 
country. And so it is not a dry subject, as had been mentioned. 
This is important for the country and for so many students.
    We very much appreciate your time and devotion to making 
sure that students are receiving a high quality education to 
prepare them for a lifelong success.
    I do, Madam Chair, have just--I want to make comments on 
two specific themes that have come forward in the hearings and 
then I will have a few documents which I will ask unanimous 
consent for to submit into the record.
    No. 1 is the issue of for-profits that we have heard from 
multiple times throughout the hearing and I will just say that 
I think we all agree that there are bad actors, there are 
schools that have--we have seen false marketing, we have seen 
price gouging, we have seen inaccurate employment prospects, 
but, you know, this is across all segments and all sectors of 
schools. And so, you know, what I want to be sure that we are 
thinking about is that we are not maligning an entire group of 
schools that truly are serving students and serving them well, 
and that we are not allowing some bad actors to sort of poison 
the whole segment that is helping students. And I know it is 
helping students because I have talked to many students in my 
district who have attended for-profit schools--maybe it was a 2 
year school, whatever it may have been--and who are now engaged 
in careers as a direct result of that education that they have 
received.
    So I just want to caution that we should be very careful 
that we are not removing opportunities that are available for 
students.
    I mentioned I have talked to students, there are also a 
number of studies on this topic. I would like to ask for 
unanimous consent to submit into the record a study that was--
it is entitled ``Toward a Better Future: Exploring Outcomes of 
Attending Career Colleges and Universities''. This was done by 
Gallup.
    Ms. ADAMS. Without objection, so ordered.
    Mr. SMUCKER. And just a very brief highlight of this. It is 
a study that was done for the Association of Career Education 
Colleges and Universities, which are for-profit schools. Again, 
as I said, done by Gallup. And just there are some important 
findings that are worth reviewing.
    But, you know, one that I think is critical is the finding 
was that the majority of all alumni are satisfied with both the 
education and training they received from their school and how 
well the school prepared them for their career and would 
recommend the schools to others.
    So, again, I would like to submit that to the record.
    Ms. ADAMS. Without objection, so ordered.
    Mr. SMUCKER. Thank you. And then there was an article in 
The Hill just I think yesterday, this one is by Daniel Elkins, 
and he is the legislative director of EANGUS, which is the only 
group organized to specifically represent the interests of the 
enlisted men and women of the National Guard since 1972. It is 
entitled ``We Must Support Veterans and Politicize their 
Education''. This is I think a good summary of his views on the 
for-profit sector as well.
    So I ask that we can submit that to the record.
    Ms. ADAMS. Without objection, so ordered.
    Mr. SMUCKER. And then the other issue I would like to 
address was the--there was a comment made earlier in the 
hearing in regards to the effect of public aid on tuition 
costs. And, you know, we know that as the Bennett Hypothesis. 
It has been around for a long, long time. But a comment earlier 
specifically said that only applied to the nonprofits and not 
to the public schools. I have two studies--and the offer was 
made that we should review that together, and I think it is an 
excellent discussion to have.
    So in the interest of doing that, there are two studies 
that I would like to enter into the record that address this 
issue. The first, Madam Chair, is ``The Bennett Hypothesis 
Turns 30'' by Jenna Robinson.
    Ms. ADAMS. Without objection, so ordered.
    Mr. SMUCKER. And the second is done by the Federal Reserve 
Bank of New York in 2015 and then revised in February 2017 
called ``The Credit Supply and the Rise in College Tuition: 
Evidence from the Expansion in Federal Student Aid Programs''. 
I ask that we--
    Ms. ADAMS. Without objection, so ordered.
    Mr. SMUCKER. And just, again, a few comments. The first 
study that we submitted into the record reviewed--it is an 
analysis really--reviewed 25 studies on the Bennett Hypothesis, 
and of those reviewed the clear majority of the reports, 14 of 
25, found some affect on Federal subsidies, on the price of 
higher education in at least 1 segment of the higher education 
market. For example, a 1998 study showed that public colleges 
and universities increased tuition by $50 for every $100 in 
aid. And a 2015 study showed it is even more than that. They 
found a pass through effect on tuition of changes in subsidized 
loan maximums of about $.60 on $1.00.
    So I believe that the Bennett Hypothesis merits further 
consideration and debate as we continue to talk about the best 
way to hold all actors--all actors accountable for taxpayer 
dollars.
    And, finally, billions of hardworking taxpayer dollars 
finance postsecondary education every year. We have been 
talking about this. Yet, as we learned from the GAO's 
testimony, the accountability process today can be ineffective 
and is outdated.
    Dr. Brittingham provided a fresh perspective on the good 
work accreditors can do to measure institutional outcomes as 
well as inputs. Still, more can be done to align incentives so 
that colleges and universities share in the risk of financing a 
student's education.
    Institutions today are largely immune to consequences as 
long as their students do not default in massive numbers. Any 
bill to reform the HEA should consider how students, how every 
institution, and the Federal Government can work in concert to 
ensure high quality education and a return on investment for 
all stakeholders.
    So, again, thank you to each of the witnesses for being 
here today. I think it was an excellent discussion and I look 
forward to continuing this.
    Ms. ADAMS. I want to thank the ranking member.
    And let me just comment. We are aware of the Gallup study 
published in coordination with the Trade Association of For-
Profit Colleges. The report is full of flawed methodologies and 
our staff would be happy to share those concerns.
    Now, I would like to recognize myself for the purpose of 
making my closing statement. And let me again thank all of the 
witnesses for being with us today and dedicating their time and 
energy to this important discussion. It is one that I continue 
to be concerned about, having been an educator for many, many 
years.
    I want to clarify for the record though on what bipartisan 
means. It means that the majority and the minority have 
negotiated all witnesses and negotiated the topics discussed. 
It does not mean that members on either side should temper or 
otherwise alter his or her questioning to avoid exposing areas 
of legitimate policy disagreement. There are areas of 
legitimate agreement, but the role of for-profits is not one of 
them. If Republicans and Democrats were on the same page on 
for-profit companies we would not have to have dueling bills 
during the last Congress.
    Our members are hearing from constituents who were impacted 
by these bad actors and Democrats are here to fight for them, 
not protect certain sectors to achieve bipartisanship. I had a 
situation in my district, in Charlotte, with the Charlotte 
School of Law. Many, many students suffered because of that 
relationship. A strong accountability for our colleges and 
universities is vital to ensuring quality higher education for 
our Nation's students. But there are differences between 
institutional sectors that we cannot ignore. The data show us 
that while, yes, for-profit colleges enroll just 9 percent of 
students, these companies account for 34 percent of student 
loan defaults.
    Thus it is important that we understand where the problem 
lies to create the appropriate solution. For example, when two 
planes crashed recently, did we ground all air travel? No, we 
did not. We looked at the type of planes that had the problems 
and we grounded those. And when there is a house on fire, do we 
ask the firefighters to spray water on all the houses in the 
neighborhood? No, they spray water on the burning houses and 
they do what they can to help the individuals inside that 
house. And as we talk about accountability, it is imperative 
that we focus on the institutions where the outcomes are the 
most devastating.
    But, as we have heard today, the Trump Administration has 
reduced information available to students making it harder for 
students to make informed decisions about where to enroll. This 
Department of Education has failed to implement Obama era rules 
established to protect students from low performing 
institutions. And it has shrinked its responsibility to hold 
predatory institutions responsible for their actions. This 
Department's actions solidify an ecosystem of waste, fraud, and 
abuse.
    The accountability triad the Department of Education, state 
authorizers, and accreditors, can only uphold quality standards 
if all the entities do their part to improve oversight and 
transparency.
    For too long lax accountability measures have failed to 
catch unsustainable low quality schools that put students and 
taxpayers at risk. Fraudulent for-profit schools have 
flourished while devastating students and taxpayers. From 
preying on veterans to abusing Federal aid money, these for-
profit institutions continue to target vulnerable students 
while leaving them with worthless degrees and crushing debt.
    And as this committee considers a comprehensive 
reauthorization of the Higher Education Act, we must take steps 
to strengthen all parts of the accountability triad and restore 
the integrity of our higher education system. The Aim Higher 
Act, H.R. 6543, introduced last Congress, was comprehensive, 
and it focused reforms to strengthen accountability across the 
board. I am happy to send a copy of the bill to the Republican 
staff if interested.
    The reforms we included would strengthen the Cohort Default 
Rate to flag chronologically negligent schools, it would close 
the 90-10 loophole to prevent for-profit colleges who 
aggressively lure vulnerable student veterans at the taxpayers' 
expense. It would ensure that for-profit schools seeking 
nonprofit status cannot skirt accountability rules just by 
changing a tax designation on paper. It would require 
accreditors to set standards and be transparent with the public 
about those standards, and, most importantly, we hold the 
Department of Education accountable for working on behalf of 
students, not companies.
    No matter the party affiliation, I hope that we can all 
agree that the time for action is now. We cannot let Dream 
Center School or Corinthians College waste precious taxpayer 
dollars, or subject students to financial and emotional peril.
    Now, I would like to ask unanimous consent to enter into 
the record the following letters on the need for strong 
accountability in higher education. A letter from the Center 
for Law and Social Policy on strengthening accountability for 
all students, a letter from Dr. Denisa Gandara on state 
performance based funding models, a letter from the Institute 
for College Access and Success on the Cohort Default Rate and 
gainful employment regulation, a letter from the National 
Consumer Law Center on protecting student borrowers, and a 
letter from the National Association for College Admission 
Counseling or incentive compensation.
    Seeing no objection, so ordered.
    So I look forward to working with my colleagues to find 
solutions that, as Mr. Ortega urged, will strengthen the 
accountability of this great system of higher education and 
ensure the highest quality of postsecondary opportunity for all 
members of society.
    If there is no further business, without objection, the 
committee stands adjourned.
    [Additional submission by Ms. Adams follows:]
    
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    [Additional submission by Mr. Courtney follows:]
    
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    [Additional submission by Chairwoman Davis follows:]
    
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    [Additional submission by Mrs. Foxx follows:]
    
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    [Additional submission by Mr. Smucker follows:]
    
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    Credit Supply and the Rise in College Tuition: Evidence 
From the Expansion in Federal Student Aid Programs: https://
www.govinfo.gov/content/pkg/CPRT-116HPRT38005/pdf/CPRT-
116HPRT38005.pdf
    [Additional submission by Mr. Takano follows:]
    
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    [Additional submission by Ms. Trahan follows:]
    
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    [Questions submitted for the record and their responses 
follow:]

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    [Ms. Brittingham response to questions submitted for the 
record follow:]

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    [Ms. Emrey-Arras response to questions submitted for the 
record follow:]

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    [Mr. Hillman response to questions submitted for the record 
follow:]

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    [Whereupon, at 1:22 p.m., the subcommittee was adjourned.]

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