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



 
                    PROTECTING THOSE WHO PROTECT US:
                      ENSURING THE SUCCESS OF OUR
                            STUDENT VETERANS

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

                          JOINT FIELD HEARING

                               before the

                  SUBCOMMITTEE ON ECONOMIC OPPORTUNITY

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS


                                and the

       SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE INVESTMENT

                                 of the

                    COMMITTEE ON EDUCATION AND LABOR

                          [Serial No. 116-18]

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

              HEARING HELD IN EL CAJON, CA, APRIL 24, 2019

                               __________

      Printed for the use of the Committee on Education and Labor
      
      
      
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]     
      


                   Available via: www.govinfo.gov; or
              Committee address: https://edlabor.house.gov
              
              
              
              
                           ______                       


             U.S. GOVERNMENT PUBLISHING OFFICE 
36-593 PDF            WASHINGTON : 2021 
 
 
 
 
 
 
               
              
                    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



                     COMMITTEE ON VETERANS' AFFAIRS

 MARK TAKANO, California, Chairman

DAVID P. ROE, Tenessee, Ranking Memberulia Brownley, California
Gus M. Bilirakis, Florida            Kathleen M. Rice, New York
Aumua Amata Coleman Radewagen, American Samoamb, Pennsylvania, Vice-
Mike Bost, Illinois                  Chairman
Neal P. Dunn, Florida                Mike Levin, California
Jack Bergman, Michigan               Max Rose, New York
Jim Banks, Indiana                   Chris Pappas, New Hampshire
Andy Barr, Kentucky                  Elaine G. Luria, Virginia
Daniel Meuser, Pennsylvania          Susie Lee, Nevada
Steve Watkins, Kansas                Joe Cunningham, South Carolina
Chip Roy, Texas                      Gilbert Ray Cisneros, Jr., 
W. Gregory Steube, Florida           California
                                     Collin C. Peterson, Minnesota
                                     Gregorio Kilili Camacho Sablan, 
                                     Northern Mariana Islands
                                     Colin Z. Allred, Texas
                                     Lauren Underwood, Illinois
                                     Anthony Brindisi, New York
                                     
                                     
                    Ray Kelley, Democratic Staff 
                              Director
                      
                   Jon Towers, Republican Staff 
                              Director
             
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on April 24, 2019...................................     1

Statement of Members:
    Davis, Hon. Susan A, Chairwoman, Subcommittee on Higher 
      Education and Workforce Investment.........................     1
        Prepared statement of....................................     3
    Levin, Hon. Mike, Subcommittee on Economic Opportunity.......     4

Statement of Witnesses:
    Muth, Mr. Robert F., J.D. Professor In Residence: Managing 
      Attorney, Veterans Legal Clinic, University of San Diego 
      School of Law, San Diego, CA...............................     9
        Prepared statement of....................................    11
    Oakley, Mr. Eloy O., Chancellor, California Community 
      Colleges, Sacramento, CA...................................    22
        Prepared statement of....................................    24
    Rodriguez, Ms. Kristyl, Student Veteran Attending Bellus 
      Academey-Poway, Oceanside CA...............................    26
        Prepared statement of....................................    29
    Shireman, Mr. Robert, Director of Higher Education Excellence 
      and Senior Fellow, The Century Foundation, New York, NY....    31
        Prepared statement of....................................    34
Additional Submissions:
    Chairwoman Davis:
        Letter dated April 2, 2019...............................    94
        Letter dated April 22, 2019..............................    96
    Chairman Takano:
        Letter from National Student Legal Defense Network.......    81
        Letter dated April 22, 2019..............................    87
    Lee, Hon. Susie, a Representative in Congress from the State 
      of Nevada:
        Letter dated April 22, 2019..............................    70


                    PROTECTING THOSE WHO PROTECT US:

                      ENSURING THE SUCCESS OF OUR

                            STUDENT VETERANS

                              ----------                              


                       Wednesday, April 24, 2019

                       House of Representatives,

       Subcommittee on Higher Education and Workforce Investment,

                   Committee on Education and Labor,

                             Joint with the

                 Subcommittee on Economic Opportunity,

                    Committee on Veterans' Affairs,

                              El Cajon, CA

    The subcommittees met, pursuant to notice, at 10:33 a.m., 
at Grossmont College, 8800 Grossmont College Dr., Griffin Gate, 
Building 60, 1st Floor, El Cajon, CA, Hon. Susan Davis 
(Chairwoman of the committee) presiding.
    Present: Representatives Davis (Ed & Labor Committee), 
Takano (Both Committees), Levin, Mike - CA (Veterans' Affairs 
Committee), and Lee (Ed & Labor Committee).
    Staff Present: Tylease Alli, Chief Clerk (Education and 
Labor Committee); Claire Viall, Professional Staff (Education 
and Labor Committee; Justin Vogt, Staff Director, Economic 
Opportunity Subcommittee (Veteran's Affairs Committee); Jon 
Clark, Director of Economic Opportunity Subcommittee (Veterans 
Affairs Committee)
    Mrs. Davis. Good morning. The Committee on Education and 
Labor will come to order. We want to welcome everybody here. We 
are delighted that you are with us today.
    I want to note that a quorum is present, and the committee 
is meeting today for a legislative field hearing to hear 
testimony on Protecting Those Who Protect Us: Ensuring the 
Success of Our Student Veterans.
    I want to thank everybody, including our wonderful 
witnesses, for attending this hearing today, and I appreciate 
the efforts taken on behalf of all of those involved to have 
this important field hearing. It is crucial that this 
committee, and thereby all of Congress really, hear directly 
from the public about matters in our jurisdiction that are 
affecting constituents in their communities and across the 
country.
    This is an official congressional hearing, and I want to 
thank Anne Krueger, Communications and Public Information 
Director; Cindy Miles, the Chancellor of Grossmont; Kree Maka, 
Community College District; and Abu-Ghazaleh, Grossmont College 
President, for the use of this facility at Grossmont College 
for this purpose.
    As this is an official congressional hearing, we are 
required to follow the rules of the committee and the House of 
Representatives, including the rules on decorum. So I want to 
remind our guests that demonstrations from the audience, 
including applause, actually--you cannot applaud--and verbal 
outbursts, as well as the use of signs or placards, are a 
violation of the rules.
    The committee has invited witnesses to speak at this 
hearing, and guests are here to observe the proceedings. In 
addition to that, the use of cameras and the taking of 
photographs and/or videos is limited to accredited press only, 
and we thank the press for being here as well.
    Pursuant to Rule 7(c), opening statements are limited to 
the Chair and the Ranking Member. However, given that this is a 
joint subcommittee hearing, Chairman Levin and Chairman Takano 
will also be giving opening statements, and we will then hear 
from our witnesses, and all members will have adequate time to 
ask questions.
    I recognize myself now for this purpose of making an 
opening statement.
    Today, we are here to discuss how to better protect 
students, veterans, and taxpayers from predatory, low-quality 
institutions of higher education.
    Through their service to our country, returning veterans 
earn GI Bill benefits that provide access to quality colleges 
and universities and a pathway to success in civilian life. 
Unfortunately, far too many veterans have become victims of 
unscrupulous, low-quality, for-profit institutions.
    For-profit institutions, by definition--by definition-- 
have a fiduciary duty to stakeholders to maximize profits, 
often at the expense of students. Research clearly indicates 
that for-profit college students borrow more often, take out 
larger loans, and default at a higher rate than students in 
similar programs at public and non-profit colleges. Veterans 
are no exception. In fact, student veterans are 
disproportionally affected by low-quality institutions.
    Although most student veterans do not attend for-profit 
institutions, these schools take in over 40 percent of all GI 
Bill funds. Between 2009 and 2017, eight of the top ten 
recipients of GI Bill tuition and fees went to for-profit 
schools, including now-shuttered college chains such as ITT 
Technical Institute, Education Corporation of America, and 
Dream Center Education Holdings, which consumed billions of 
taxpayer dollars, only to leave students with crushing debt and 
no degree.
    The Art Institute of California, a Dream Center school 
located here in San Diego, disrupted the education and finances 
of nearly 200 student veterans, and that was just at one 
campus.
    The connection between for-profit institutions and student 
veterans is, unfortunately, not a coincidence. For-profit 
institutions deliberately target student veterans because of 
loopholes in Federal law that incentivize them to do so.
    The 90/10 rule, which requires for-profit schools to 
demonstrate their value by earning 10 percent of their revenue 
from non-Federal sources, counts GI Bill benefits as a non-
Federal source. This makes GI Bill dollars extremely valuable 
to for-profit schools and created a system in which student 
veterans are consistent targets of aggressive recruiting.
    To make matters worse, the Department of Education under 
this Administration has repeatedly abandoned both its 
responsibility to protect students and taxpayers from low-
quality schools and in fact, Secretary DeVos has even loosened 
the regulations holding for-profit schools accountable.
    Student veterans who have been victimized by predatory 
institutions and lax Federal oversight have also been fleeced a 
second time by the Department's refusal to enforce vital 
protections for defrauded students.
    Specifically, despite a court order, the Department has 
failed to implement the Borrowers Defense to Repayment rule, 
and many in the audience know what that is, which ensures that 
students can obtain relief from student loans if their college 
or university defrauds them. can get help.
    However, just two weeks ago, Secretary DeVos revealed to 
the committee not a single application for loan relief from 
defrauded for-profit college students has been approved in the 
last six months.
    Finally, the Department has failed to establish a 
transparent process for for-profit schools seeking to gain non-
profit status. We cannot allow for-profit institutions to skirt 
accountability rules just by changing a tax designation on 
paper.
    We want all student veterans to attend institutions that 
meet their needs and lead to good-paying jobs and Congress here 
has a rare opportunity to reform Federal higher education 
policies so that student veterans are empowered to meet the 
needs of our modern workforce. But those reforms must also push 
the Department of Education to ensure that schools receiving 
taxpayer dollars are financially stable and are not defrauding 
students, students and certainly our veterans. And in cases 
where students are cheated, the Department must provide relief 
so that veterans have a new start without the burden of debt 
for an education that, unfortunately for them, went nowhere.
    Simply put, we have a responsibility to protect those who 
protect us.
    I look forward to working with my colleagues to find 
solutions that ensure veterans both adequate protection against 
predatory schools and access to quality college degrees that 
lead to a rewarding career. I am sure that is something that we 
all want.
    Thank you to all our witnesses for being here with us 
today. I look forward to your testimony and the discussion that 
will follow.
    It is now my great pleasure to yield to the Chairman of the 
Veterans' Affairs Subcommittee on Economic Opportunity, 
Congressman Mike Levin, 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 how to better protect students, 
veterans, and taxpayers from predatory, low-quality institutions of 
higher education.
    Through their service to our country, returning veterans earn GI 
Bill benefits that provide access to quality colleges and universities 
and a pathway to success in civilian life. Unfortunately, far too many 
veterans have become victims of unscrupulous, low-quality for-profit 
institutions.
    For profit institutions, by definition, have a fiduciary duty to 
stakeholders to maximize profits, often at the expense of students. 
Research clearly indicates that for-profit college students borrow more 
often, take out larger loans, and default at higher rates than students 
in similar programs at public and non-profit colleges. Veterans are no 
exception. In fact, student veterans are disproportionally affected by 
low-quality institutions.
    Although most student veterans do not attend for-profit 
institutions, these schools take in over 40 percent of all GI Bill 
funds. Between 2009 to 2017, eight of the top ten recipients of GI Bill 
tuition and fees went to for-profit schools, including now-shuttered 
college chains--ITT Technical institutes, Education Corporation of 
America, and Dream Center Education Holdings--which consumed billions 
of taxpayer dollars, only to leave students with crushing debt and no 
degree.
    The Art Institute of California, a Dream Center school located here 
in San Diego, disrupted the education and finances of nearly 200 
student veterans. And that's just one campus.
    The connection between for-profit institutions and student veterans 
is not a coincidence. For-profit institutions deliberately target 
student veterans because of loopholes in federal law that incentivize 
them to do so.
    The 90/10 rule, which requires for-profit schools to demonstrate 
their value by earning 10 percent of their revenue from non-federal 
sources, counts GI Bill benefits as a non-federal source. This makes GI 
Bill dollars extremely valuable to for-profit schools and created a 
system in which student veterans are consistent targets of aggressive 
recruiting.
    To make matters worse, the Department of Education under this 
Administration has repeatedly abandoned both its responsibility to 
protect students and taxpayers from low-quality schools. In fact, 
Secretary DeVos has even loosened the regulations holding for-profit 
schools accountable.
    Student veterans who have been victimized by predatory institutions 
and lax federal oversight have also been fleeced a second time by the 
Department's refusal to enforce vital protections for defrauded 
students.
    Specifically, despite a court order, the Department has failed to 
implement the Borrowers Defense to Repayment rule, which ensures that 
students can obtain relief from student loans if their college or 
university defrauds them. Just two weeks ago, Secretary DeVos revealed 
to the Committee not a single application for loan relief from 
defrauded for-profit college students has been approved in the last six 
months.
    Finally, the Department has failed to establish a transparent 
process for for-profit schools seeking to gain non- profit status. We 
cannot allow for-profit institutions to skirt accountability rules just 
by changing a tax designation on paper.
    We want all student veterans to attend institutions that meet their 
needs and lead to good paying jobs. Congress has a rare opportunity to 
reform federal higher education policies so that student veterans are 
empowered to meet the needs of our modern workforce. But those reforms 
must also push the Department of Education to ensure that schools 
receiving taxpayer dollars are financially stable and are not 
defrauding veterans. And, in cases where students are cheated, the 
Department must provide relief so that veterans can have a new start 
without the burden of debt for an education that went nowhere.
    Simply put, we have a responsibility to protect those who protect 
us.
    I look forward to working with all my colleagues to find solutions 
that ensure veterans both adequate protection against predatory schools 
and access to quality college degrees that lead to a rewarding career.
    Thank you to all our witnesses for being here with us today. I look 
forward to your testimony and the discussion that will follow.
    I now yield to the Chairman of the Veterans Affairs Subcommittee on 
Economic Opportunity, Congressman Mike Levin, for his opening 
statement.
                                 ______
                                 
    Mr. Levin. Thank you, Chair Davis.
    It is great to be with all of you this morning. It is great 
to see you, Mr. Chairman.
    I appreciate the opportunity to have a joint hearing today 
between our Veterans' Affairs Subcommittee on Economic 
Opportunity, and Chair Davis' Subcommittee on Higher Education. 
I am glad to be doing it here in Southern California, where we 
all represent, and I am grateful to you all for attending 
today.
    This region is home to several hundred thousand veterans, 
many of whom depend on the GI Bill to obtain higher education 
as they transition from the military back to civilian life. 
When we ask our service members to defend our nation, we do so 
understanding that we owe them a great debt. One way we begin 
to repay that debt is by offering benefits like the GI Bill.
    But beyond providing financial support, we have a 
responsibility to protect student veterans from unscrupulous 
institutions that seek to take advantage of the benefits that 
they have earned, institutions that prioritize profits over 
quality.
    We must be sure that when our veterans get a degree, they 
are not just getting a piece of paper but valuable 
qualifications that prepare them for a career.
    And that brings us to the issue at hand. We must ensure 
that GI Bill benefits are being used to serve veterans and not 
line the pockets of bad actors.
    A little bit of history; in 1992, Congress began to crack 
down on bad actors by creating the 85/15 rule. This is all the 
way back in 1992. The 85/15 rule mandated that each higher 
education institution could only receive up to 85 percent of 
its revenues from the Federal Government, since high-quality 
programs should be able to attract other sources of funding.
    Think about that: 85 percent. It is hard to believe that a 
college or university would rely that heavily on Federal aid. 
Yet, some institutions argued even that was too onerous, and in 
1998, six years later, the rule was rolled back to 90/10.
    But that still was not a low enough threshold for bad 
actors, so they found a loophole. Veteran and military benefits 
are currently not counted as Federal aid under the 90/10 rule, 
making GI Bill funding a target for low-quality institutions. 
These bad actors use aggressive and often deceptive marketing 
techniques to recruit vets. They call veterans repeatedly, rush 
them into a decision, and even stoop as low as recruiting at VA 
hospitals and Wounded Warrior centers in order to enroll 
students. They make false promises that their schools' credits 
are transferable, their policies accommodate deployments, or 
even falsely guarantee that the veteran will secure a great job 
upon graduation.
    These practices cannot be allowed to stand as they are.
    I was encouraged by the Department of Veterans Affairs' 
Secretary, Mr. Wilkie, in our budget hearing last month when he 
recognized that the 90/10 rule needs to be looked at more 
closely, and I hope our hearing here this morning can further 
those efforts, as well as explore other ways we can prevent the 
exploitation of our student veterans, including by 
reestablishing gainful employment standards.
    The Obama Administration finalized the gainful employment 
rule in 2014 to improve the accountability and transparency of 
higher education programs, and those regulations track whether 
higher education institutions were awarding degrees that were 
valued in the workforce to ensure that the institutions were 
not just degree factories built on exploiting students.
    Sadly, the current Administration does not share this goal. 
Instead of building on this work, President Trump and Secretary 
DeVos have undermined the gainful employment standards and are 
no longer tracking this important information. These cracks in 
the system are adding up, making it harder and harder for 
veterans to find a quality education. We cannot allow this to 
continue.
    It is incumbent upon us, all of us, to come together in the 
best interests of our student veterans to address these issues.
    I want to thank our witnesses for joining us today as we 
determine where to focus our efforts. I am especially glad to 
have Kristyl Rodriguez, who is a constituent and a student 
veteran, on the panel, and I am also pleased we could be joined 
by my friend, Bob Muth, who first educated me about these 
issues years ago. He has done extremely important work.
    So I look forward to hearing your testimony today, grateful 
to be here with you, and I will yield back.
    Mrs. Davis. Thank you very much, Mr. Levin.
    It is my pleasure now to yield to Chairman Takano of the 
House Committee on Veterans' Affairs for his opening statement. 
He is the Chairman of the Veterans' Affairs Committee. I want 
to make particular note of that as well.
    Mr. Takano. Yes. To the public it may be confusing that you 
have three Chairs up here.
    [Laughter.]
    Mr. Takano. But let me explain a little.
    I want to express my gratitude to Susan Davis, who chairs 
the Education and Labor Subcommittee on Higher Education, and 
Mr. Levin, who chairs the Subcommittee on Economic Opportunity 
for the committee I chair, the full committee I chair, which is 
the Veterans' Affairs Committee.
    I want to thank these two subcommittee chairs for taking 
the initiative to organize and put together this very important 
hearing on the topic that we are going to discuss today on the 
for-profit college industry and its impacts on student 
veterans.
    I will concede that there may be good experiences that some 
veterans have and that there are some good actors out there, 
but that does not contradict the basic premise I think that we 
are going to set out here today, is that the industry, the for-
profit college industry, is fundamentally able to take 
advantage systemically of a loophole in the 90/10 loophole for 
veterans. While one good experience for a veteran in a for-
profit school is great for that particular veteran, it does not 
erase the many, many, many bad experiences that veterans have 
had being at the hands of a rapacious for-profit school.
    Even 100 good experiences does not erase a blunted 
transition or an unfulfilled promise of reintegration into 
civilian life for a veteran. One hundred percent perfect 
transitions and reintegrations into civilian society are 
probably impossible to achieve, but we have to hold ourselves 
to a very high standard. We have to aim for that 100 percent as 
we try to design that transition process.
    Unfortunately, we have seen too many for-profit schools 
close their doors abruptly, leaving student veterans holding 
credits that they cannot transfer and financially crippling 
student loan debt.
    From the recent closures of Argosy schools to the closures 
of ITT Tech and Corinthian Colleges in 2015 and 2016, the 
sudden and unplanned closures of for-profit schools have been a 
constant occurrence since the passage of the post-9/11 GI Bill.
    Congress passed the Servicemen's Readjustment Act in 1944 
to help service members and veterans close the opportunity gap 
with their civilian peers who did not have to step away from 
their life at home to go and serve the nation during World War 
II. That is the history of all of this.
    That legacy has been continued and improved over the years, 
specifically in the education space with the Montgomery GI Bill 
and the post-9/11 GI Bill, and most recently in 2017 with the 
Forever GI Bill. The whole reason why we fund the GI Bill is to 
provide opportunities to our veterans, not just to thank them 
for their service but to close the gaps in opportunity and 
mitigate the disadvantages they faced for choosing to serve 
their country and putting their community before themselves.
    While graduation rates and post-graduation employment rates 
are not a perfect measure of the opportunities afforded to our 
veterans by the GI Bill, they are the best approximation we 
currently have. Schools closing their doors mid-semester with 
no teach-out plan and not providing the students with the 
ability to transfer their credits to another institution to 
complete their degree completely undermines the goal of and the 
reason we have the GI Bill.
    It is incumbent on Congress to ensure that the GI Bill 
funding provides the reintegration and readjustment 
opportunities for our veterans not only as stewards of taxpayer 
money but also to fulfill the promise of a decent civilian 
existence and the promise that we have made to our service 
members upon leaving the military.
    The single greatest threat to the all-volunteer force is 
the situation in which our nation's citizens no longer want to 
serve, and that could happen when future generations see our 
nation breaking the promises we have made to previous and 
current generations of service members.
    This hearing is not about right versus left, free market 
versus regulation, or Democrat versus Republican. This hearing 
is about national security and upholding our faith to our 
service members, the faith our service members have placed in 
the United States Government.
    The Obama Administration attempted to address this through 
the gainful employment rule that went into effect in July 2015. 
Programs were required to make sure that graduates are 
gainfully employed and make enough to repay their loans. This 
rule was intended to protect students and taxpayers from waste 
and fraud. It is one of the most effective accountability tools 
that measures opportunities for student veterans upon 
graduation.
    It is unconscionable that the Trump Administration has 
proposed rescinding the rule in favor of for-profit 
institutions. This Administration's own estimates show that 
eliminating the rule will cost the government $4.7 billion over 
10 years.
    Another way we can ensure quality is what I mentioned 
earlier in my remarks, enforcing the 90/10 rule. For those that 
are unaware, Congress implemented this rule to ensure that for-
profit institutions of higher education offered high-quality 
programs. For-profit institutions of higher education are 
required by statute to produce 10 percent of their revenue from 
non-Title IV Federal dollars.
    Earlier this month we had Secretary Wilkie testify before 
our full committee, and he recognized that the 90/10 loophole 
is something that we must seriously review.
    Including GI Bill benefits in the 90/10 calculations is not 
a perfect measure of schools who provide opportunities to 
veterans, but the ones that fail it are the ones that fail 
veterans. We know that these schools are targeting veterans to 
stay in compliance with the 90/10 regulations, not out of the 
pure desire to help veterans.
    So I urge us to take action today and remove the incentive 
to target veterans for the wrong reasons. Let's close this 90/
10 loophole.
    I look forward to hearing from the witnesses on the impact 
that targeting student veterans has on those student veterans 
and what we can do to address the issue.
    I would like to welcome the student veteran we have here on 
the panel today. Ms. Rodriguez, welcome. Thank you for serving 
your community and for serving our country, and thank you for 
continuing to serve your community by being a willing witness 
here to address us today. It is great to hear that you are 
having a good experience at your school, and your school may be 
a good actor in this space, and I will be interested to hear if 
the Marines you served with and the veterans you know have been 
impacted by bad actor schools and for-profit schools that have 
shut down due to funding issues.
    Thank you, Madam Chair, and I yield back.
    Mrs. Davis. Thank you very much, Chairman Takano.
    I also wanted to just note that, without objection, all 
other members who wish to insert written statements into the 
record may do so by submitting them to the Committee Clerk 
electronically in Microsoft Word format by 5 o'clock on May 
7th, 2019.
    I also wanted to acknowledge our colleague from Nevada, 
Mrs. Susie Lee. We are just delighted that you have joined us 
today as well. Thank you.
    And now I would like to introduce our witnesses.
    Mr. Robert Muth is the Professor-in-Residence and Managing 
Attorney of the Veterans Legal Clinic at the University of San 
Diego School of Law. He served as a Judge Advocate in the 
United States Marine Corps, where he handled a wide range of 
criminal matters. While serving as Captain in the Marine Corps, 
he was deployed to Fallujah as part of Operation Iraqi Freedom. 
He received his bachelor's degree from Northwestern University 
and his law degree from Duke University.
    Thank you for being with us.
    Chancellor Eloy Ortiz Oakley was appointed by the 
California Community Colleges Board of Directors in December of 
2016. He is best known throughout California and the nation for 
implementing innovative programs and policies to help students 
succeed in college. He served four years in the U.S. Army and 
then enrolled at Golden West College. Chancellor Oakley went on 
to receive his bachelor's degree and Master of Business 
Administration from the University of California at Irvine.
    Thank you for being with us.
    And Ms. Kristyl Rodriguez served in the U.S. Marine Corps 
from 2014 to 2018. She served in the field of 3051 as a 
warehouse supply clerk and ascended to the rank of Sergeant E5 
prior to separating. She is currently enrolled at Bellus 
Academy in Poway under the post-9/11 GI Bill. Kristyl is 
studying at the barber and cosmetology program at Bellus 
Academy, and she previously attended a community college. 
Kristyl is originally from Queens, New York, but she now 
resides in Oceanside, California.
    Thank you for being with us, Kristyl, Ms. Rodriguez.
    Mr. Robert Shireman is the Director of Higher Education 
Excellence and Senior Fellow at the Century Foundation. He 
previously served in the Clinton White House as a Senior Policy 
Adviser to the National Economic Council, and in the Obama 
Administration as Deputy Under Secretary of Education. Mr. 
Shireman holds a bachelor's degree in economics from the 
University of California at Berkeley, a Master's of Education 
from Harvard, and a Master's in Public Administration from the 
University of San Francisco.
    If I could give instructions now to our witnesses, we 
appreciate again all of you being here and we look forward to 
your testimony. I want to remind you that we have read your 
written statements, and they will appear in full in the hearing 
record.
    Pursuant to Rule 7(d) and committee practice, each of you 
is asked to limit your oral presentation to a five-minute 
summary of your written statement. Pursuant to Title 18 of the 
U.S. Code, Section 1001--we have to get all this out there--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 material fact.
    Before you begin your testimony, please remember to press 
the button on the microphone, which I have obviously had 
trouble doing, so I hope you will do better, so that it will 
turn on and the members will hear you.
    As you begin to speak, the clock on the screens above will 
count down from five minutes until the time is up. We will let 
the entire panel make their presentations before we move to 
member questions, and when answering a question please remember 
once again to turn on your microphone.
    I will first recognize Mr. Muth. Thank you again.

  STATEMENT OF ROBERT F. MUTH, J.D., PROFESSOR-IN-RESIDENCE; 
  MANAGING ATTORNEY, VETERANS LEGAL CLINIC, UNIVERSITY OF SAN 
               DIEGO SCHOOL OF LAW, SAN DIEGO, CA

    Mr. Muth. Thank you. Chairwoman Davis, Chairman Levin, 
Chairman Takano, and Representative Lee, thank you for inviting 
me to offer testimony at this important joint hearing on 
ensuring the success of student veterans.
    In 2012, I founded the Veterans Legal Clinic at the 
University of San Diego School of Law to provide pro bono legal 
representation to veterans harmed by utilizing their veterans' 
education benefits. Thus far, clinic attorneys and law student 
interns have assisted hundreds of veterans and military 
personnel. Virtually all of our clients attended for-profit 
schools. They have reported problems with recruiting and after 
enrollment.
    In the recruitment process, they have been lied to with 
respect to virtually everything you could be lied to about a 
program. They have been told false job placement rates. They 
have been told false expected salaries. They have been told 
schools were accredited when they were not.
    With respect to after they have enrolled, the students have 
been told misrepresentations as to the quality of the 
instruction and the credentials of the instructors that would 
be providing them their teaching.
    They have also been misrepresented with respect to the 
total cost of the program and the length of the program. We 
have even had veterans who have been told that the school could 
accommodate their serious service-connected disabilities when 
they could not.
    Two examples I think are illustrative of these concerns. 
The first is a client we represented who was a United States 
Marine Corps veteran who was medically retired after sustaining 
a devastating traumatic brain injury in an enemy attack while 
serving in Iraq. The Marine attempted to utilize his GI Bill 
benefits at a for-profit school in order to gain skills that 
would allow him to be gainfully employed despite his serious 
service-connected disabilities. The veteran was misled by the 
school with respect to the overall length and cost of the 
program. He was also misled with respect to whether the school 
was accredited or not.
    After the veteran left the school, we discovered that the 
school continued to run his GI Bill benefits even though he was 
no longer enrolled. Many months after he was no longer 
enrolled, the Department of Veterans Affairs, through its state 
approving agency, conducted a compliance audit on the school. 
They determined that the school should never have been approved 
for accepting GI Bill benefits in the first place and 
retroactively disapproved the school. They then sent our 
veteran a letter saying that because the school was no longer 
approved, even though it was approved at the time he was 
enrolled, he would be responsible for paying back all of the GI 
Bill benefits that the school continued to hold. The veteran 
has no funds, and so the VA instead garnished his disability 
compensation benefits.
    In another case, our clinic represented a United States Air 
Force veteran who attended a large, now-closed for-profit 
school. The school deliberately misrepresented to the veteran 
critical information such as job placement rates for the 
program, average graduate salaries, and the quality of the 
instruction provided by the school.
    After spending more than $100,000 on his now-worthless 
degree, the veteran learned that he had been misled. Virtually 
none of his fellow classmates were able to get jobs in their 
chosen field. It was an IT-related program, and the information 
that they had been trained was more than a decade out of date.
    Abrupt school closures in the for-profit sector are another 
common phenomenon and will likely continue. In recent years, 
more than 22,000 veterans enrolled at for-profit colleges have 
found themselves left in the lurch when the school they were 
attending closed. For instance, when the large nationally 
branded Corinthian Colleges closed, our clinic's intake line 
was overwhelmed by the number of veterans seeking assistance 
navigating the destruction left in the wake of the school's 
closure.
    In addition to the immediate shock that a student veteran 
faces when they try to attend class to find the doors closed 
and a sign in the window saying that the school was closed, 
veterans often have immediate academic and non-academic 
concerns. Academically, students often have great difficulty 
transferring to a quality institution in a timely fashion. 
Furthermore, student veterans are often unable to acquire their 
academic transcripts; and even if they are able to do so, they 
are often bitterly disappointed to discover that no quality 
institution will accept transfer credits from their for-profit 
school.
    Veterans are uniquely harmed in non-academic ways as well 
when their for-profit school closes. Most student veterans rely 
upon the housing allowance they receive in conjunction with 
their GI Bill tuition benefits. When a school closes, many 
veterans will not only immediately face the closure of their 
school but also potentially the loss of their home.
    There are countless other examples of student veterans who 
tried to use their GI Bill benefits at for-profit schools to 
better their career prospects but were ultimately left with 
nothing more than empty promises. The action of bad actors in 
the for-profit school sector are unfair to student veterans and 
to the American taxpayers who are grateful for our veterans' 
service and want to see them succeed.
    The Department of Education, the VA, and state agencies can 
and must do more to protect the rights of those who have 
sacrificed greatly to protect and defend their fellow citizens.
    Thank you very much for the opportunity to testify today, 
and I would be happy to answer any questions you may have for 
me.
    [The statement of Mr. Muth follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    Mrs. Davis. Thank you.
    Mr. Oakley, Chancellor Oakley.

    STATEMENT OF ELOY ORTIZ OAKLEY, CHANCELLOR, CALIFORNIA 
               COMMUNITY COLLEGES, SACRAMENTO, CA

    Mr. Oakley. Yes. Good morning to our distinguished Chairs 
and members of Congress. Thank you for inviting us here to 
testify.
    My name is Eloy Ortiz Oakley, and I have the pleasure of 
being the Chancellor of the California Community Colleges, and 
my story is very similar to the nearly 2.2 million students 
that we serve in the California Community Colleges.
    Coming out of high school, I did not have a clear 
understanding of how to navigate higher education, nor did I 
have the resources in my family or my community to provide me 
clear direction. Instead of attending college, I proudly joined 
the United States Army on the heels of the Grenada invasion. 
President Reagan was my Commander-in-Chief, and I served in 
America's Honor Guard, the 82nd Airborne Division, for most of 
my enlistment.
    By the time I found my way to college, I was a father and 
the primary provider in my family. I worked full time, attended 
school part time, and eventually made it through Golden West 
College, on to earning my MBA at the University of California 
at Irvine. Through hard work, perseverance, the support of 
committed faculty and staff, and a lot of luck, I am here today 
proudly serving the nation's largest system of higher 
education.
    My goal as Chancellor of the California Community Colleges 
is to ensure that all students have the opportunity to benefit 
from high-quality, affordable college education. Each year the 
California Community Colleges serve nearly 80,000 veterans and 
active-duty service members. Like the Veterans Resource Center 
here at Grossmont College, we provide more than academic and 
career training. We also assist with the often difficult 
transition to civilian life after military service, 
particularly after combat service.
    Our colleges are part of an integrated post-secondary 
education structure here in California, one that relies on both 
public and private partners to ensure access for all students. 
When one sector of higher education is consistently failing our 
students, it affects our entire system here in California.
    In recent years, California has been particularly hard hit 
by the fraudulent practices and abrupt closures of a number of 
for-profit providers, many of which are nothing more than 
profiteers whose leadership has never donned our nation's 
uniform. And because of the benefits provided by the post-9/11 
GI Bill and the loopholes in the Federal 90/10 rule, our 
veteran students are particularly vulnerable to these 
circumstances.
    It has been and will continue to be within the mission of 
the California Community Colleges to serve students affected by 
these closures. When the Corinthian Colleges shut its doors, my 
office performed direct outreach and worked with our colleges 
to serve approximately 16,000 former Corinthian students living 
in California, about 1,200 of whom were veterans. We offered 
training and resources, participated in webinars and outreach 
events, and provided information on transfer credit, loan 
forgiveness, and tuition recovery. We found that many of these 
students had received a poor quality education that could not 
easily transfer. Many faced the expiration of financial aid 
benefits, and many had massive debt loads.
    The California Community Colleges are committed to 
providing students high-quality, low-cost pathways to 
meaningful college degrees and credentials, and our system 
certainly will continue to find ways to help students pick up 
the pieces of their educational goals in the aftermath of the 
closures.
    At the same time, we hope Congress will take swift action 
to support students by providing meaningful oversight, 
accountability, and student protections, actions that are 
commensurate with the sacrifices that our veterans have made. 
From our perspective, meaningful accountability structures must 
hold colleges responsible for measureable outcomes, ensure 
career training programs result in wage gains that allow 
students to at least repay any loan debts they incurred, and to 
provide students access to reliable, comparable, and consumer-
friendly information about cost and performance.
    To that end, we are in strong support of the consumer 
protections contained in the Pro-Students Act, as well as those 
in the Protect Students Act of 2019. Please count on the 
California Community Colleges as a partner in your efforts to 
correct these abuses and better serve all of our students, 
veterans and non-veterans alike.
    I very much thank you for the opportunity to speak today, 
and in closing I will just remind us all that our veterans are 
trained to set aside fear and go directly into the line of 
fire. I ask us all to set aside the fear that we may have in 
changing these rules and go directly into the line of fire and 
make the changes that we need to make to support our students, 
especially our veteran students.
    Thank you.
    [The statement of Mr. Oakley follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
  

    Mrs. Davis. Thank you, Chancellor.
    Ms. Rodriguez?

         STATEMENT OF KRISTYL RODRIGUEZ, OCEANSIDE, CA

    Ms. Rodriguez. Thank you so much, Chairwoman Davis, 
Chairman Levin, and Chairman Takano, and all the Members of 
this committee, for allowing me to share my experience as a 
student veteran.
    My name is Kristyl Rodriguez, and I am currently enrolled 
at the Bellus Academy campus in Poway, California. My program 
of study is barbering and cosmetology. This is not a 
traditional college experience, and that is exactly what I love 
about Bellus Academy. The programs are very hands-on and apply 
to the work I eventually want to do professionally.
    In our traditional classroom settings, I was rarely a great 
student. In fact, what pushed me to even attend was just the 
chance to play sports in school. I was more of a hands-on and 
visual learner, and I loved to be creative. When I was younger, 
I used to be very focused on the creative arts, like drawing 
and painting, then eventually cutting my own hair. Sadly, as I 
entered my teenage years, I tuned out that creativity and 
became consumed with just wanting to be accepted. I struggled 
with an identity crisis, drug addiction, destructive behavior, 
alcoholism, and so much violence. I pretty much looked at 
anything to numb me mentally, and at that time my current 
reality.
    Sitting alone in my high school cafeteria one day in my 
senior year, I decided I needed to take control of my life. 
This was the beginning of my journey to joining the Marine 
Corps, but unfortunately I did not get in right away. It took 
me two years before I could enlist because I kept failing the 
ASVAB. The ASVAB is the test required to get into the military.
    I know I am smart, I am just not a test taker. Academics, 
the kind you find in most college classrooms, were never my 
thing. But I was committed to pursuing this goal and becoming a 
Marine.
    Although I stuck with it and eventually received a passing 
score, I still did not meet the standard required for women. 
For months, getting a ship date was my only concern.
    One random evening I walked into the recruiting office 
after a night class in the community college I was currently 
attending at the time, and the Sergeant Majors of the 
recruiting station happened to be there. My recruiter told me 
to get up to the pull-up bar and do some pull-ups. I did 15 
pull-ups, and the Sergeant Major approved my ASVAB score and 
waived my access into the military. I qualified for a date, and 
at the age of 19 I enlisted into the Marines.
    This is where my passion for hair cutting started to 
develop, and I really thought I could turn it into a successful 
venture. We were doing a field operation in Korea, and every 
Sunday a barber would come into this rugged tent where she set 
up and cut Marines. When she left, I would cut my own hair. One 
day, a Marine Sergeant came up to me and asked me if I could do 
his haircut. I took the opportunity, knowing I had never cut 
anybody's hair before. He loved his haircut and eventually told 
other Marines about me. I got very little sleep between guard 
duty and cutting hair, but it was worth the experience.
    When I decided to get out last year, I immediately asked 
myself: ``What is next?'' And the answer was to cut hair and 
become an entrepreneur through this work. When I transitioned 
out, I went to a community college and through research I found 
Bellus Academy. I knew traditional college was not for me.
    Personally, I do not believe people should have to get a 
bachelor's or a master's degree to be successful in life. I 
knew what I wanted to do, and at this point, when I found 
Bellus Academy, it has a look and feel of top-tier education in 
the beauty industry, so I enrolled. The administration staff at 
Bellus Academy are very knowledgeable about VA benefits. I was 
not sure what to expect when enrolling, but it was pretty 
smooth.
    I have been at Bellus Academy for about eight months now 
and expect to graduate around August of this year. I love that 
it is a focused program that will get me on track to my career 
very fast. I am also the proud recipient of the Beauty Changes 
Life Scholarship. Their mission is to empower the next 
generation of beauty entrepreneurs, influencers, and 
visionaries, and it aligns perfectly with my mission.
    I even have a target date for starting my next venture, a 
service-disabled, veteran-owned business. I aim to open my own 
barber salon on May 16th, 2020, which is my mother's birthday.
    Finally, I would like to highlight some of the 
recommendations I made in my written remarks. I did not want to 
come here today without sharing some observations from my 
recent transition out of the military and on using educational 
benefits.
    I suggest that Congress focus on improving the Transition 
Assistance Program for getting out of the military, as it can 
be extremely overwhelming.
    Also, communications between the VA and veterans should be 
greatly improved.
    My last recommendation is on the timely processing of VA 
education benefits. Not one veteran should have to wait for 
benefits like housing allowance to pay rent and bills, as I 
did. Fortunately, I had my emergency savings fund to help me 
cover expenses while I waited, but not everyone has money saved 
up like I did.
    Thank you so much for the opportunity to share my story and 
for allowing me to make a few recommendations at this hearing. 
I look forward to your questions.
    [The statement of Ms. Rodriguez follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
  

    Mrs. Davis. Thank you, Ms. Rodriguez, and thank you for 
sharing your journey with us.
    Mr. Shireman, thank you for being with us. Please proceed.

  STATEMENT OF ROBERT SHIREMAN, DIRECTOR OF HIGHER EDUCATION 
EXCELLENCE AND SENIOR FELLOW, THE CENTURY FOUNDATION, NEW YORK, 
                               NY

    Mr. Shireman. Thank you for the opportunity to testify.
    In this country, we have experienced at least four 
escalations of rampant abuses by for-profit schools fueled by 
Federal money. The first was after World War II. The 1944 GI 
Bill is rightly remembered as one of the most effective social 
policy programs in U.S. history. It gave millions of returning 
soldiers, including my father, the opportunity to enroll in 
college. But it also led to systematic abuses at thousands of 
businesses that sprang up to take advantage of what was 
essentially a government voucher with no strings attached.
    After analyzing what had happened, the Eisenhower 
Administration, in designing the Korean-era GI Bill, included 
guardrails that seemed to have worked. But by the 1970s, as the 
nation prepared for veterans returning from the war in Vietnam, 
for their return to civilian life, the memories of those abuses 
seemed to have faded. The head of the VA at the time said, in 
1971, that the industry had matured and the bad actors were 
gone.
    Two years later, though, the abuses reappeared. These scams 
were carried out not only at storefront schools but also in the 
burgeoning correspondence school market, the precursor to some 
versions of today's online schools, and this time it was not 
just the GI Bill that fueled the sketchy schools but also the 
new grant and loan programs that had been created in the Higher 
Education Act of 1965.
    Congress had initially excluded for-profit schools from the 
HEA, but lobbyists insisted that if they were held to 
measureable outcomes, like graduates getting jobs, they would 
be safe to include for-profits.
    The new HEA programs undermined one of the guardrails that 
had worked with the Korean-era GI Bill, a requirement that the 
school show that it is charging a fair market price by having 
at least 15 percent of its students supported by private funds. 
This is the GI Bill precursor to what is today the 90/10 
loophole.
    Also, since the Korean-era GI Bill, accreditation was 
adopted as one component of oversight. But after that, for-
profit schools created their own accrediting agencies that they 
basically controlled, which then weakened the effectiveness of 
accreditation as an oversight mechanism.
    One of the unreliable accreditors in the 1970s was the 
agency that is now known as ACICS, which in the 2000s gave us 
Corinthian and other scandals. Secretary King in the previous 
administration made it clear that inept or corrupt accreditors 
would not be tolerated. Secretary DeVos has reversed that 
decision, allowing ACICS to continue as a gatekeeper to the 
U.S. Treasury.
    Reforms that were adopted in the Ford Administration 
disappeared by the time of the Carter Administration. So when 
there was an expansion of Federally-guaranteed student loans in 
the 1980s, the scandals reemerged again, with student loan 
default rates going through the roof. A bipartisan inquiry by 
the Senate Permanent Subcommittee on Investigations led to a 
series of hearings, one of which I attended as a young Senate 
staffer, and multiple volumes of evidence. Reforms were 
ultimately adopted in 1992, contributing to the closure of more 
than 1,200 schools.
    With this history, lawmakers should have known better than 
to believe it would be safe to relax regulations, but that is 
exactly what happened. As noted, Congress in 1998 weakened the 
85/15 rule that had been adopted in the 1992 reforms. In 2002, 
after testimony from ITT Tech, which has since gone out of 
business, the administration declared that the abuses in the 
student aid programs were no longer possible today, and they 
created loopholes in the ban on commission-paid sales, the 
incentive compensation rules.
    In 2006, after testimony from Corinthian Colleges, Congress 
adopted a provision that opened the floodgates to unlimited 
online education. Then we had the return of soldiers from Iraq 
and Afghanistan, which undermined the effectiveness of 90/10.
    All of these things combined created the hundreds of 
thousands of former students who have now filed for their 
Borrower Defense, have been blocked from getting that return of 
funds, and on top of that we have an administration that is 
pulling back on the oversights that were intended to prevent 
yet another repeat of these abuses.
    I look forward to your questions.
    [The statement of Mr. Shireman follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
       Mrs. Davis. Thank you very much, Mr. Shireman.
    Under Committee Rule 8(a), now we are going to question our 
witnesses under the five-minute rule. I will start, and then 
followed by Chairman Levin, Chairman Takano, and Representative 
Lee.
    Chancellor Oakley, if I could start with you, please, we 
greatly appreciate that you are joining us. The California 
Community Colleges is the largest system of higher education in 
the country, serving 2.2 million students, and our institutions 
like Grossmont here ensure that our students, in particular our 
student veterans, have the supports that they need to achieve 
academic success.
    As Chancellor for all 115 community colleges in California, 
we know you have a lot to share with us.
    Could you start by just talking--and anytime you say 
``history,'' you know it is going to be more than just a 
quickie. But I wanted you to talk just a little bit about the 
California Community Colleges system, why it was founded and 
what is its mission.
    Mr. Oakley. Well, thank you for the question. The 
California Community Colleges were founded--originally, our 
first college was Fresno City College in the early 1900s, and 
it was founded to provide greater access for students 
throughout the state, throughout the country.
    The history of the community colleges in California is very 
similar to the history of the community colleges in the nation. 
It was founded to provide greater access to more Californians 
and more Americans more broadly. Many Americans, particularly 
those who were coming to California, still had very limited 
access to higher education institutions, and then more broadly 
when the master plan for higher education was created in the 
1960s, the California Community Colleges were given a direct 
mission to serve the workforce needs of California, to serve as 
a preparatory place to transfer students to our four-year 
university systems, the CSU, the UC, and our private non-
profits.
    Today, it provides the greatest access possible. We have 
the great privilege because of our mission to serve the top 100 
percent of students. You do not have to buy your way into the 
California Community Colleges. You do not have to take a 
picture on the crew team to get into the California Community 
Colleges.
    [Laughter.]
    Mr. Oakley. You get to be in the California Community 
Colleges regardless of what your background is. That is the 
greatest part of our mission, is to provide access in places 
like Grossmont, to provide access to a community, whether it is 
your first time going to college or it is your third or fourth 
attempt to go to college.
    Mrs. Davis. Could you then speak to the oversight of the 
community college system? What does that look like? Do you have 
to meet state and Federal requirements?
    Mr. Oakley. Yes. The oversight has many layers. Because we 
are a public system of higher education, we are subject to all 
the rules and regulations of any public institution in the 
state of California.
    So, for example, here in the Grossmont Community College 
district, there is direct oversight by the community through 
the elected members of the Board of Trustees. Each of our 73 
districts has members who are either appointed in one case, or 
in 72 others elected directly by the members of the community 
that the colleges serve. That is direct accountability and 
oversight.
    We also have my office and the Board of Governors for the 
California Community Colleges, which oversees regulation, 
appropriation for the community colleges. We work with the 
governor and the legislature to ensure that our colleges have 
the greatest access possible and the highest quality education 
possible through promulgating regulations and supporting 
legislation.
    Our fees are set by the California state legislature. They 
are not set locally. We have the lowest tuition in the 
country--$46 per unit--by far. And Federally, we fall under the 
same rules as any other public system of higher education. We 
access Pell for our students and follow all the rules and 
regulations regarding Pell, as well as all of the other--well, 
formerly some of the gainful employment regulations as well, as 
well as Title 9 and every other regulation promulgated by 
either Congress or a state legislature.
    Mrs. Davis. Thank you. I appreciate that.
    Mr. Shireman, could you just talk to us a little bit about 
for-profit institutions and whether or not they follow the same 
oversight at the Federal and state level as community colleges?
    Mr. Shireman. Yes. The oversight is very different at for-
profit institutions. There is no public body, no elected or 
appointed entity that actually controls that budget. The 
control of the pricing, spending, any revenue generated that 
might be above and beyond what is spent, where that can go, 
they have complete freedom with that money. That is a positive 
word, freedom. That is a good thing about capitalism. It also 
is what creates these dynamics where the less you spend on the 
education, the more you as an owner of that college, the person 
that controls it, can pocket for themselves. I am sure that Mr. 
Oakley could make a lot of money if he could do that at the 
community colleges, but that is not allowed at public 
institutions or at non-profit institutions, and it is those 
totally different rules about how you can use your money, the 
fact that at non-profit institutions the money all has to go 
back into the institution and cannot be extracted, that is what 
causes the behavior to be so different, why we have the bulk of 
the abuses in the for-profit sector.
    Mrs. Davis. And we know that the state assembly recently 
passed a series of bills, a package of bills really, on the 
gainful employment rule, and certainly to close the 90/10 
loophole.
    Just to follow up with you, Mr. Shireman, for a second, why 
did the state legislature see the need to increase that 
accountability for for-profit institutions? I think in many 
ways we have already talked about that, but specifically why 
did they feel a need to really ----
    Mr. Shireman. So, a year or so ago there were some 
discussions about some legislation like that, and they decided 
to wait and see what is happening at the Federal level. There 
was some indication that this Administration might roll back 
rules and regulations at the Federal level. That has now become 
very, very clear that most of the guardrails at the Federal 
level are being pulled back, the enforcement.
    So the California legislature feels that it is time, that 
if the Federal Government is not going to do its job in terms 
of overseeing student loans, the GI Bill, that the state needs 
to step in and have its own version of a gainful employment 
rule, make sure that we do not have fake non-profit and public 
institutions, that we close the 90/10 loophole, strengthen 
incentive compensation.
    Mrs. Davis. Thank you. We will probably be talking a little 
bit more about that.
    Mr. Muth, are the veteran groups supporting that 
legislation?
    Mr. Muth. They are, and I think the reason is pretty clear, 
that these kinds of protections implemented by the state are 
going to take the target off the backs of veterans to some 
extent. I think that is one of the driving problems, that we 
have incentivized bad behavior at the Federal level. So some of 
these schools are going to engage in that bad behavior, and so 
the purpose of, I think, this legislation is to try to curtail 
some of that.
    Mrs. Davis. Thank you very much.
    I do have a letter from Assembly Member Chu and other 
Members just taking a look at that and why they felt it was 
necessary to create that.
    And, if I may, for those of you in the audience, we usually 
go along with this five-minute rule, so you are trying to talk 
very fast and ask all of your questions, and they kind of 
extended me. So I wanted to just get very quickly to Ms. 
Rodriguez, briefly.
    You have shared some of your transition to civilian life, 
but I just wanted to ask you as well about how you decided to 
go back to school, and you touched on this a little bit. But 
maybe just share with us, in addition to what you mentioned, 
which is some homework for us actually, what the greatest 
challenge is, and what is it about your experience that helped 
you to address it.
    Ms. Rodriguez. Thank you for the question. My transition 
was more mental. When you are transitioning out, you literally 
have to recreate yourself. When you are trying to find what 
school you fit in or what fits for you, you do not really know 
how to choose, and you are going about the counselors and the 
employees at the school to help you and guide you, but 
sometimes not everybody knows exactly what they want to do. So 
then they go and they do these four-year routes, and then they 
change their minds.
    But for me in particular, I did not know I wanted to make 
hair cutting a profession. It was fun for me, and I knew that 
the traditional college experience was not for me, it was not 
speaking to me. For me, I want to follow my intuition and my 
passion, so I said, why not? And that is when I found--for me, 
high quality is very important, and I did a lot of extensive 
research on which schools to go to, what schools offered what 
programs, and then I found that Bellus offered a wide variety. 
And I said, why not? Instead of just choosing one thing, they 
have more things that I can choose from. Who knows?
    Mrs. Davis. Right, and they absolutely fit your need.
    Thank you so much, all of you.
    I am going to turn now to Chairman Levin for his questions. 
Thank you.
    Mr. Levin. Thank you, Chair Davis.
    Thank you all for sharing your testimony with us this 
morning. I really appreciate it.
    I wanted to dig into several items that you raised, 
Professor Muth, both in your written testimony and then that 
you reinforced here.
    The Colmery GI Bill included funding to make veterans 
impacted by school closures whole, at least that was the idea. 
But because of unscrupulous actors, U.S. taxpayers paid more 
than $300 million. That is a pretty stunning figure. And even 
this funding does not truly make up for the closures, as you 
stated in your written testimony, and I quote: ``We cannot give 
them back the time and effort they have wasted in pursuit of a 
worthless degree.'' And I certainly agree with that.
    You also stated that part of the reason for this trend of 
school closures is variability in oversight across state 
approving agencies.
    So my question for you, my first question for you is: what 
standards do you think state approving agencies should meet in 
order to ensure uniformity across the country, and how should 
those standards be enforced?
    Mr. Muth. Thank you very much for your question. It is a 
wonderful question. It is a complicated problem.
    I think right now the way in which the VA is conducting 
oversight over which schools will be approved to receive GI 
Bill education dollars is fraught with problems, and it is 
specifically in the way they have out-sourced this oversight 
capacity to state approving agencies, as you alluded to in your 
question, which allows the VA to point at the state approving 
agencies to say it is their fault when a bad school is allowed 
to continue enrolling student veterans, and the state approving 
agencies turn around and point back at the VA and say, ``You 
have not given us good guidance.'' And also when you have state 
approving agencies such as here in California that have a 
reputation for being more aggressive in protecting the rights 
of student veterans, the VA has come back and undercut those 
attempts and essentially allowed those schools to continue 
enrolling student veterans.
    So I think the first step would be we need more uniformity 
with respect to what are the expectations that the VA is going 
to set for the state approving agencies. They need to do a 
better job supporting those state approving agencies. Right 
now, I believe that they are underfunded. When you look at the 
tasks of what they are expected to do with respect to approving 
schools, they are doing it on a shoestring budget, and in 
reality I think it is a case of an ounce of prevention will 
solve us a pound of problems later on down the road in the 
sense that, as you alluded to, $300 million just for that 
specific bill to try to solve an issue where veterans were 
going to schools that they should not have been attending in 
the first place. If we expand that budget on the front end, 
hopefully we will be able to ensure that taxpayers are not 
footing the bill after we have to deal with a devastating loss 
of a school on the back end.
    Mr. Levin. Thank you for that.
    I wanted to follow up. In your written testimony, I was 
struck by your discussion of a situation in which a state 
approving agency performed an audit on a school, and then based 
on the audit's findings the state retroactively disapproved a 
school that one of your veteran clients attended, and then the 
VA informed him that he would be responsible for paying back 
his benefits. I know you alluded to that this morning as well.
    That is a completely unacceptable situation, a horrible 
circumstance when you burden a veteran with the cost of their 
education benefits in this way, and particularly after the 
failures that you pointed to from the VA and the approving 
agency at the state level to move forward initially.
    So my questions are as follows. Should there be a ban on 
retroactive denial of benefits to ensure a similar situation 
does not happen to another veteran in the future?
    Mr. Muth. It is a great question, and actually I described 
it in the context of that one specific veteran, but this is 
actually a pretty widespread problem. I have multiple clients 
who are in this situation where they were enrolled in a school, 
it was approved at the time they were enrolled, and then all of 
a sudden the VA comes back after the fact and says you should 
never have been allowed to enroll in that school. I have had 
clients who only picked that school because it was approved at 
the time they enrolled by the VA.
    So then the VA has a situation: how do we go back and 
recover those benefits? And they have a choice, I think. They 
have a choice. They can either go after the school, which is 
where I think they should be. Why should the school get to keep 
its ill-gotten gains? But instead, time and time again, they go 
after the veteran. Why? Because many of my veteran clients are 
also receiving disability compensation, so you can simply 
garnish that benefit, which is designed to ensure they are able 
to meet their living expenses. And instead, the veteran then at 
that point essentially has to fight through the interminable 
process of the VA appeals game.
    So the veteran I mentioned in my oral statement, and also 
in my written testimony, is still in the appeals process that 
has been going on now for probably roughly two years. We have 
been able to negotiate with the VA a payment plan so they take 
less of his 100 percent disability compensation for his 
traumatic brain injury, but he is still on the hook as of now 
for those benefits.
    Mr. Levin. Unbelievable. If they live in my or Susan's 
district, maybe we can work on that.
    Last question for you, and hopefully we will have another 
round for the others.
    Mrs. Davis. Yes.
    Mr. Levin. There was a recent audit conducted by the VA's 
Office of the Inspector General which reviewed the Veterans 
Benefits Administration's oversight of state agencies charged 
with ensuring the quality of education and training programs. 
The findings estimated that 17,000 students who enroll in the 
GI Bill program within the next five years will attend more 
than 5,400, and I quote, ``ineligible or potentially ineligible 
programs due to poor oversight.'' The VA disputed those 
numbers, arguing that the data from the IG was flawed.
    So my question for you is, given your experience working 
with student veterans affected by poor quality programs, how 
would you respond to the VA's assessment?
    Mr. Muth. I think, broadly speaking, the IG got it right. I 
think if you look at the examples I have laid out just here 
today where you had veterans attending schools that should 
never have been approved, and instead that money has gone to 
those for-profit schools, and at the back end the VA has then 
tried to recoup that money from the individual veterans. So I 
think the IG is correct, and they also identified just broader 
oversight issues that I think go directly to the heart of this 
problem. If we do not solve it before the veteran enrolls in 
the first place, we are going to end up paying for it on the 
back end. Either it is going to be the taxpayers or it is going 
to be the individual veteran, and neither one of those options 
is acceptable.
    Mr. Levin. Well, I really appreciate your testimony. I 
yield the balance of my time and look forward to working with 
you on this for many months and years to come.
    Mr. Muth. Thank you.
    Mrs. Davis. Thank you.
    Chairman Takano?
    Mr. Takano. Thank you, Madam Chair.
    Ms. Rodriguez, can you share with us what you like most 
about what you are studying?
    Ms. Rodriguez. What I like most about where I am currently 
at with Bellus Academy is the diversity and the culture. For 
me, being a part of something much bigger than yourself, and 
then their out-source, so their relationships with other 
salons, other barbershops are very strong. A lot of those shops 
are aware of Bellus students and are very accepting for Bellus 
students to start working at their shops and salons.
    And to add, I would say just the passion that everyone 
carries in that school. Again, it makes you feel like it is not 
just traditional. This is something that we are all a part of 
and we are making it better, and they are really invested in 
their students and their future. The biggest thing for me is 
providing opportunity. You can talk a good game, but if you can 
provide opportunity, that is where you catch my attention. So, 
I love where I am at.
    Mr. Takano. Thank you.
    Mr. Oakley, are you aware of any of your community college 
districts spending--what percentage would you say their 
marketing budgets are to market?
    Mr. Oakley. Well, the California Community Colleges, 
fortunately, have such an exceptional reputation in their 
communities that they have to spend very little on marketing 
relative to their overall budgets. Typically, you know I'll 
take for example my last college, with a general fund budget of 
about $80 million, we are probably spending around $200,000 to 
$250,000 specifically on marketing. This is primarily on 
marketing to communities within the area that have a hard time 
gaining information about going to college. So it is relatively 
small in comparison to other institutions.
    Mr. Takano. Mr. Shireman, can you comment on the marketing 
budgets of typical for-profit colleges?
    Mr. Shireman. Yes. Typically, a for-profit college's 
marketing is easily 20, 30, sometimes 40 percent of their total 
budget, frequently spending more on marketing than on 
instruction, for example.
    Mr. Takano. Mr. Oakley, I understand that--I was a Trustee 
for many years, and California has a 50 percent law, which 
actually prohibits by law spending more than 50 percent of the 
college's funds on administration. Fifty percent at least has 
to be spent on instruction. Are you aware of any case in the 
California Community Colleges where more money is spent on 
marketing and advertising than instruction?
    Mr. Oakley. No, I am not aware of any situation where that 
would even come close.
    Mr. Takano. What would be the reaction of, say, the Board 
of Trustees or the public if they found out that a college 
president was doing that?
    Mr. Oakley. It would be a very difficult reaction for the 
college president.
    Mr. Takano. Do you think that if the American taxpayer knew 
that this is what for-profit colleges typically do, that they 
would be similarly outraged?
    Mr. Oakley. I think they would. Clearly, there is a need to 
communicate with families and students, but to the extent that 
they are marketing with the budgets that they have just means 
that they are not putting their resources toward supporting 
students.
    Mr. Takano. Thank you.
    When Secretary DeVos testified in front of the Education 
and Labor Committee a few weeks ago, I asked her about the 
Department's failure to process Borrower Defense applications 
despite a court order to do so. It was revealed that the 
Department has failed to process any claims since that court 
order in October. We know that at least 160,000 applications 
are pending and that some of these applications are from 
student veterans who took out loans on top of their GI Bill to 
pay for their education.
    Mr. Muth, you mentioned in your testimony that you have 
worked with defrauded students whose institutions took out 
loans in their name unbeknownst to them. How does this happen, 
and what recourse does a student have to address this?
    Mr. Muth. That is a great question. I think it happens in 
two ways. One is just out and out fraud, where the student 
veteran will discover after the fact that there were loans and 
they had no idea that this was going on, and the challenge 
there oftentimes is by the time they figure it out, the school 
might have already declared bankruptcy and there is really not 
somebody we can go after. And then in that period of time, the 
other potential way that happens is the student will be induced 
to sign promissory notes and told these loans are not really 
going to ever be due to you, it is just a matter of a bridge 
until the GI benefits come in. So the veteran is signing 
paperwork, is not paying attention to the dense words, and ends 
up walking into something they did not have any idea that they 
were acquiring.
    Mr. Takano. Have you worked with students who are waiting 
for their Borrower Defense applications to be processed?
    Mr. Muth. Absolutely. There are dozens upon dozens of those 
160,000 that you mentioned that are veterans that our clinic 
has assisted with filing those applications, and none of them 
have heard anything back, positive or negative. They are just 
simply waiting.
    Mr. Takano. Madam Chair, may I ask one more question?
    Mrs. Davis. Sure, go ahead.
    Mr. Takano. Thank you.
    Mrs. Davis. We have been a little more flexible with this 
because we are all here and we want you to hear everything that 
is available to you.
    Mr. Takano. I am still rapidly trying to say these things.
    [Laughter.]
    Mr. Takano. In the House, we try to move things along.
    The VA did not have the authority to restore the GI Bill 
benefits to defrauded veterans, and so Congress passed the 
Forever GI Bill to grant that authority. Secretary DeVos 
already has the authority to process these applications and has 
failed to do so.
    Chancellor Oakley, how does the Department of Education's 
failure to process these applications affect your ability to 
serve students who want to pursue their education at a 
California community college?
    Mr. Oakley. In California, we have the great fortune of 
being able to waive fees, waive tuition for needy students, and 
that is a great benefit. However, the cost of attending college 
is not the cost of tuition. So access to Federal financial aid 
is critically important for any of our students to be able to 
attend college and be able to be successful in college. So this 
particular challenge makes it much more difficult for student 
veterans to be able to meaningfully participate in their 
education.
    Mr. Takano. Mr. Shireman, as a follow-up, beyond granting 
relief to students, what other protections were included in the 
Borrower Defense rule to better monitor institutions?
    Mr. Shireman. The Borrower Defense rule in addition 
included prevention efforts. Some of those had to do with 
warnings to accreditors and the Department of Education when 
there are lawsuits, other kinds of actions that are indicators 
of problems at schools; also some warnings to students. But I 
think one of the most important in there had to do with 
students' legal rights. Mr. Muth mentioned all that fine print 
that a student signs when they are enrolling in a school at 
that moment when they are excited about this education that 
they are going to take, about this future that they are 
planning for themselves. They sign all those pages and pages. 
Usually at for-profit schools, but not at public and non-profit 
schools, hidden in that fine print is something called a forced 
arbitration clause, a pre-dispute arbitration clause and other 
provisions that basically say if you have a complaint, you have 
to come to us first, you cannot complain jointly with other 
students, and you have to arbitrate and not go to court.
    All of this means that when there are complaints and 
problems, students do not get the benefit of knowing that other 
students have had similar situations where they felt misled, 
and then regulators do not get information about what is 
actually happening at the school until it has been going on for 
years and somebody finally finds a lawyer who is willing to try 
to challenge the arbitration provisions.
    So prohibiting that kind of pre-dispute arbitration with 
regard to Federal aid I think is one of the most important 
elements of the Borrower Defense rule, and that is threatened 
by this current administration that does not agree with that.
    Mrs. Davis. Yes. Thank you very much.
    Representative Lee?
    Mrs. Lee. Thank you, and thank you all for your testimony.
    I come from Las Vegas, Nevada, where in Nevada we have 
220,000 veterans, in my district alone 50,000. I am also the 
product of, the daughter of my father, who was a veteran who 
got his education quite successfully with the GI Bill and went 
on to raise a family of eight. So the GI Bill and its intent 
does produce great results when it is used the way it was 
intended.
    Mr. Shireman, I wanted to talk to you a little bit about 
governance issues, particularly when it comes to for-profit 
colleges, as well as the accrediting agencies. So many times I 
have found that the accrediting commissions end up having a 
majority representation of for-profit presidents, vice 
presidents, people who have a fiduciary responsibility to their 
for-profit institution. They then serve on these accrediting 
agencies.
    I wanted to ask you, my concern is how can we mitigate 
against any individual accrediting agency or commission whose 
boards are comprised of these individuals, especially if they 
are attempting to oversee pretty much themselves? Is it your 
recommendation that we should have stricter standards or 
guidelines on who sits on these boards?
    Mr. Shireman. I think with regard to for-profit schools, as 
you said, they are very different when it comes to who they 
have a responsibility to, and we know that in education 
sometimes the thing that brings in the most money or the most 
students is not what is right for the community and not what is 
right for students. So it becomes very difficult, maybe 
impossible, for a board of an accrediting agency made up of 
school owners to impose requirements that will undermine the 
bottom line of the institutions by suggesting, for example, 
that maybe they should spend more on instruction, maybe they 
should have more full-time faculty rather than adjuncts, maybe 
they should give the faculty a voice in the academics even 
though that involves some process and some academic freedom, 
maybe they should spend less on instruction, maybe the owners 
should take less of the profits, all of those kinds of things 
that are a direct conflict of interest of the people who are 
running the accrediting agency.
    You do not have that situation with public and non-profit 
institutions. It would be far better if the accrediting 
agencies for for-profit career schools had employers that were 
on the boards that were running them, who could vouch for, we 
are getting great employees trained by these schools, we as 
employers are putting money into these schools, we believe in 
them. That would be, I think, a powerful change, and it is up 
to Congress to decide.
    The national accrediting agencies that we have were created 
because of what is allowed by the Federal Government. They did 
not pre-exist the Federal use of accrediting agencies. So if 
Congress were to change what qualifies to be an accrediting 
agency, they would follow suit and I think we would have better 
oversight from accreditors.
    Mrs. Lee. So is it your recommendation that you have no 
representation of for-profit schools on these agencies?
    Mr. Shireman. I think the nature of boards is they tend to 
kind of operate in a--they tend to kind of defer. They do 
things unanimously. And when someone has a fundamental conflict 
of interest like that, I think it makes sense to bring input 
from for-profit investor schools' owners, but I am not sure 
that being on the board is the right way to have that input 
because of that fundamental conflict of interest.
    Mrs. Lee. Yes. It is like a self-regulating issue.
    Mr. Shireman. Exactly, yes.
    Mrs. Lee. Just one other question about your work on what 
you call the covert for-profits, for-profit institutions that 
then have converted to non-profit tax status. I represent the 
Art Institute in my district, and there has been a lot of 
confusion about whether or not this is going to become a non-
profit institution.
    Can you expand on your work and elaborate how the incentive 
structures are different for for-profit institutions in 
comparison to public and private non-profit institutions?
    Mr. Shireman. Sure. The two fundamental differences between 
a for-profit and non-profit is at a non-profit you have to put 
the money back into the institution. It cannot be extracted. 
And secondly is the control. The control has to be in the hands 
of what we think of as trustees who are there acting on behalf 
of the community and the students. Those differences completely 
change how the--I think some people think, well, what is the 
big deal if you take 8 or 10 percent off the top for some 
profit? But that is not the point. The point is that the DNA of 
the institution is different, so the behavior is different, in 
much the same way that the behavior of a bobcat is different 
from the behavior of a tomcat. They are both cats, but one is 
much more dangerous than the other one, and that is because of 
that fundamental difference in their control mechanisms.
    What we have seen happen with these covert for-profits is 
that they are basically taking a shell non-profit and inserting 
the DNA of a for-profit. The folks who had been in control of 
the prior for-profit have a contract or they own the property. 
They figure out how they can have people on the boards who 
basically are funneling money back to them, and it is 
undermining the integrity of non-profit control.
    The reason we call it tax status is that we had this good 
situation in the country where it just so happened that it was 
the IRS that was the one doing a good job of enforcing the 
integrity of non-profit status, and that has been undermined by 
budget cuts at the IRS, so they are basically not doing it 
anymore. So we have to figure out something else so that we can 
use non-profit and public status as the effective guardrail 
that it has been.
    Mrs. Lee. Thank you.
    Before I yield my time, I just would like to ask unanimous 
consent to enter into the record a letter from 20 Attorneys 
General, including the AGs from Nevada and California, on the 
role that Attorneys General play in consumer protection and 
their deep concerns about these for-profit conversions.
    [The information referred to follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. Davis. Thank you very much.
    Mrs. Davis. We are going to do hopefully a no more than 
five-minute second round here. Actually, it is nice not to feel 
so rigorously watching the clock, because there is a lot to 
say, and you all have been terrific.
    We know that students at for-profit institutions are likely 
to take on more debt, default on that debt, and not complete 
their degrees. We also know that the Obama Administration took 
an important step to provide more information to students about 
student outcomes at institutions across the sector, and that is 
important for any student and any family that is looking at the 
opportunities for their son or daughter. So this is important 
information, I think, to students about student outcomes at 
institutions across a number of sectors.
    So I think we can do a lot in this area, and you have 
talked a little bit about how much money some of the for-
profits spend on advertising versus on instruction and those 
issues.
    Mr. Shireman, would removing the ban on collecting student-
unit record-level data, would that help students make more 
informed choices? And how could that help Congress provide 
better oversight of for-profit institutions as well?
    Mr. Shireman. I think removing the ban would help produce a 
lot of useful data. In some ways it may not be directly helpful 
because there is so much information that students get that 
they have a hard time processing it all and comparing 
everything. But when those kinds of data are available to 
counselors and experts who can study it and look at what are 
the patterns, what is working, what is not working, what are 
the signs that you have churning going on at a school, students 
borrowing and then replacing, we would get much earlier 
warnings on those kinds of problems and be able to better 
analyze what is happening and take action sooner. So it would 
absolutely help students directly, and also indirectly by 
helping the field of advisers and educators and researchers.
    Mrs. Davis. Would anybody else like to comment on that? 
This is important information. Sometimes you can put so much 
information into one of these so-called report cards that maybe 
confuse people, but there are certain things that are really 
critical and important. What would you say?
    Mr. Muth. Yes, Chairwoman. Thank you for the opportunity. I 
agree with Mr. Shireman that I think this increased access to 
consumer protection information is important for individuals 
who are trying to make a wise decision as to how to use their 
GI benefits, although I do think there is an important role for 
regulators because there is a danger that somebody who is 
leaving active duty, particularly in the context of a student 
veteran, is going to be simply overwhelmed by the volume of 
data.
    And also I think it is important to understand what that 
data means in context. So we can provide all the data we want, 
but if we do not help provide tools for young students or 
student veterans who are going to try to use that data, I am 
afraid there could be a danger that it is just simply too much. 
But I do think, at the end of the day, it would be an important 
piece of information for consumer advocates, and also for 
students trying to make a wise investment.
    Mrs. Davis. Thank you.
    Ms. Rodriguez, we certainly again appreciate your personal 
story today, and we also know--I think, Mr. Muth, you mentioned 
it, and I think everybody did--that we have students attending 
today for-profit and not-for-profit schools that are not 
necessarily traditional students. They may be married, they may 
be needing housing in a different way, taking care of children, 
needing child care. So when they lose benefits, when they put 
out their GI benefit and it has not done what they needed it to 
do, and, in fact, it has really hurt them, what are the 
supports that are needed for those students? How should we best 
address that?
    Ms. Rodriguez. That is a great question. I think when-- my 
personal opinion, when I was in the military, I have always 
tried to put input on Marines, or just in general service 
members that are transitioning, more that mentorship, and I 
feel like a lot of active-duty military, they are so--hey, stay 
in, stay in, stay in, and then you forget about you. You forget 
about what you want and what you need. And then what happens is 
you are so committed to finishing your term or your enlistment, 
and literally days before you are about to get your EAS, it is 
like, okay, now it is me, and you really do not know what to 
do, you do not know what choices to make.
    So what I think is on both ends, active-duty sector and 
leadership in general, be more in-depth and more one-on-one 
with each and every service member as far as what they want to 
do, maybe providing options as far as, hey, this is who you 
are, I see that you are very strong in this, and I see that you 
are pretty weak in this, but maybe this would be better for 
you, and really setting out a plan instead of pushing them.
    I took the Transition Assistance Program two times because 
of how overwhelming it was, and because I wanted to be 
prepared. I wanted--who does not want to be successful? But I 
think just being more intact and who am I leading and how can 
we get them to the next step. That is what I would say.
    Mrs. Davis. Thank you very much.
    I want to thank all of you again.
    We are going to go to Chairman Levin now.
    I personally just greatly admire the fact that you have all 
been here and doing the work that you do today. Thank you.
    Mr. Levin. Thank you.
    Ms. Rodriguez, I wanted to say I am honored that you are 
one of our constituents in the 49th district in Oceanside. I 
hope that when you open your barbershop next year, I hope that 
you open it in the 49th district, and I would like to be there 
to cut the ribbon. I would also like to introduce you and all 
the veterans in our district--that applies to Professor Muth as 
well--to Andy Ortega from our Oceanside district office. It is 
really important to me that we had a veteran in the district 
office to serve the veterans in our community, and I am 
grateful that Andy is doing that for us.
    I think I speak for everyone here when I hope that all 
veterans have the opportunity to do what they want to do, as 
you are doing. In your testimony you expressed that the 
Transition Assistance Program can be overwhelming, to the point 
where you did it twice, and stressful given the volume of 
information.
    Our committee, the Veterans' Affairs Committee, is working 
on legislation to create off-base transition assistance 
programs, and I wanted to ask you about that. The goal of the 
legislation is to make the transition process easier for 
service members by giving them more time to access resources 
and to digest the information while living in their new 
community off base.
    So in your mind, with the option of attending off-base 
transition assistance, would that have benefitted you or your 
peers in similar situations? And what advice can you share with 
us as we work to develop this program?
    Ms. Rodriguez. I think off base or on base would be 
effective, and then I think the biggest thing is digesting the 
information. The amount of information that is given is 
valuable, very valuable. There are tons of resources that are 
offered, if you know what you want to do. But when you do not, 
it is not.
    I would say yes and no to off and on, because it is not a 
matter of making more. It is how can we make better what we 
have now, and kind of switching that up maybe, and how 
effective that is. But whether there is more or less, it can 
equally be effective, in my opinion.
    Mr. Levin. Fair enough. I appreciate that.
    Mr. Shireman, I wanted to get to a couple of things that 
you said in your written testimony where you detailed how 
predatory schools manipulate the cohort default rate by placing 
students into temporary forbearance during the three years in 
which defaults are monitored, really unbelievable.
    How can we prevent this gaming of the system, and should 
the cohort default rate be altered so that students in 
forbearance are included?
    Mr. Shireman. Yes, this is one of those situations that 
seems to happen a lot where you create a measure, and then the 
industry responds to the measure by finding ways to kind of 
figure their way around it. We started with a two-year default 
rate, basically a snapshot after two years of how many people 
had defaulted, and discovered that it was a bit too easy for 
schools to kind of push students, because default takes 270 
days, and they just push them a bit further, push them past 
that two years. Then a few years after that two years, Congress 
recognized we need to change that, changed it to three years, 
and now we are seeing the same thing happen again. So I think 
we do need to see some underlying changes to the default rate 
to prevent some of the gaming count forbearance.
    The Institute for College Access and Success has made a 
number of recommendations about improvements to the default 
rate measure. I think that is important.
    I think at the same time we should not reject it. I have 
heard some people say, well, it has not caught many schools 
recently, but I think a high default rate at a school with a 
lot of borrowers is still a warning sign. I think we need to 
know right now that a low three-year rate is not a green light. 
Until we fix it, we need to keep that in mind, but maintain it 
and improve it as a measure.
    Mr. Levin. Thank you.
    I have one final question, with forgiveness in advance.
    Mr. Oakley, House Veterans' Affairs is committed to 
reducing veteran suicides, something we take very seriously, to 
ensure all service members have the access to mental health 
services that they need. We have a variety of legislative 
proposals in that regard. Prevention not only consists of 
comprehensive health care but also setting veterans up for a 
successful transition as they leave the service.
    A 2011 survey found that almost half of veterans at 
colleges and universities in the U.S. reported thinking about 
suicide.
    So my question for you, Chancellor, is: how is suicide 
prevention a top priority for you, and how do your colleges 
address suicide risk for students, and in particular veterans?
    Mr. Oakley. Thank you for the question. It is an 
unfortunate state of the situation that we find ourselves in, 
but I think there are several things we are doing as a system 
and as a state.
    First and foremost, it is important to remember that our 
veterans were driven by mission, the opportunity to understand 
what their mission is on a daily basis, on a weekly basis. They 
are driven by mission. So when we separate them from that 
mission and they are trying to figure out what is the next 
mission, that is a hard transition. We need to do more to 
ensure that we capture those veterans early, get them into our 
institutions, give them the support that they need, and help 
them understand what their next mission in life is.
    The second thing is we have created veteran resource 
centers throughout our system. The California state legislature 
has provided funds to our system to provide specifically mental 
health services, which are sorely needed by our veterans. Many 
of them are coming from combat situations. They are trying to 
make a very difficult transition, and they need access to 
quality mental health services. So we are trying to provide 
that.
    In addition, our veteran resource centers are providing 
them guidance, support, camaraderie, helping them ensure that 
we can keep moving them forward.
    So those are some of the ways we are working with our state 
legislature. We need more support for mental health services. 
This is just a drop in the bucket considering the issues that 
our veterans come with, so we would certainly continue to 
advocate for more resources to help our veterans with mental 
health issues. Thank you.
    Mrs. Davis. Thank you.
    Chairman Takano?
    Mr. Takano. Thank you, Madam Chair.
    Secretary DeVos is actively reducing oversight of higher 
education institutions. In my opinion, this threatens veterans 
and non-veterans alike.
    Mr. Muth, if the 90/10 loophole is not closed and Secretary 
DeVos does not uphold gainful employment regulations, what 
would it take for an educational institution to lose 
eligibility to receive Federal dollars?
    Mr. Muth. It is a great question. I think the major problem 
with not having gainful employment and a 90/10 loophole still 
in existence is it puts a target on the backs of veterans, 
particularly with respect to the 90/10 rule. It incentivizes 
recruiters to go seek out veterans to be able to offset that 10 
percent of the 90/10 that they need to fix.
    So at that point, if you stop enforcing any of these 
regulations, it makes it almost impossible for a school to 
actually be precluded from receiving GI Bill benefits, 
especially when that is combined with the current 
Administration's Department of Education's unwillingness to 
hold accreditors accountable. That was something that was taken 
into affect at the end of the previous administration, where 
they were going to hold accreditors such as ACICS, who has been 
responsible for accrediting a number of these schools that have 
been problematic. And now, by letting them off the mat to 
continue to accredit schools, it creates a scenario where it is 
really the wild west. There is no reason for these schools ----
    Mr. Takano. Well, I see it as a vicious circle, an 
unvirtuous circle. It would incentivize targeting of veterans, 
so it would count toward the 10 percent. It would increase and 
enlarge that institution's ability to then begin to prey upon 
low-income students on Pell grants. It just means the mal-
education of a wider swathe of people.
    Mr. Shireman, if gainful employment protections are not 
kept in place, do you expect more for-profit institutions to 
target prospective veteran students without concern about the 
quality of education they are offering?
    Mr. Shireman. I think that is what happened. We saw a lot 
of schools said the gainful employment rule did help them to 
pay more attention to the actual outcomes of their students 
rather than just the ones they were using in their marketing 
and advertising, and that prompted them to analyze how they 
were helping students get good jobs and the amounts that they 
were charging and the links of their programs, and they 
revamped a lot of that. I think without the gainful employment 
rule, we would see the recruitment of veterans into programs 
that then become more like they were before GE, with longer 
programs, higher costs, and lower quality. It is that quality 
that helps people get the jobs that bring financial security.
    Mr. Takano. Thank you.
    Madam Chair, I ask unanimous consent to enter a letter for 
the record from the National Student Legal Defense Network 
about the need for Secretary DeVos to fully implement the 
gainful employment rule to better protect students and 
taxpayers.
    Mrs. Davis. So ordered.
    [The information referred to follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    Mr. Takano. A common argument we hear against the 90/10 
loophole is that it would limit a student's choice because for-
profit institutions might not be able to admit as many student 
veterans. However, I really disagree with that premise because 
I think closing the loophole would protect students from 
fraudulent and aggressive practices such as the ones that Mr. 
Muth mentions in his testimony.
    Mr. Muth, do you think that closing the loophole would 
better protect student veterans? Would it limit their 
educational choices?
    Mr. Muth. I am in complete agreement with you, Chairman 
Takano. I think that it absolutely would not limit veterans' 
choices, and I think the framing of the question that is raised 
by those who are opposed to closing this loophole is really the 
problem. No one is saying that a veteran cannot go to that 
school. It is a question really of should we as the taxpayers 
be paying for inferior education to be provided to veterans.
    So nobody would seriously say we should not have some 
limits on the types of schools that you can go to, and I think 
closing that 90/10 loophole is really just one of those metrics 
to ensure that the veterans are receiving a quality education.
    Mr. Takano. Thank you for that.
    Chancellor Oakley, research from Cellini, Darolia and 
Turner found that students attend public institutions after a 
shutdown of a for-profit school, and that borrowing and default 
rates declined as students shifted to higher-quality 
institutions.
    Do you think that closing the 90/10 loophole would help 
community colleges better recruit student veterans?
    Mr. Oakley. Yes. The California Community Colleges provide 
high-quality, low-cost pathways for students to post-secondary 
education. We are the largest workforce education providers. So 
we feel the 90/10 loophole has made our student veterans a 
target for predatory colleges. And in closing the loophole, we 
stand ready to serve those students in our system.
    Mr. Takano. Madam Chair, before I yield back, I would like 
to ask unanimous consent to enter a letter for the record from 
Stephanie Cellini highlighting her work on outcomes in the for-
profit sector.
    Mrs. Davis. So ordered.
    [The information referred to follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Takano. I yield back.
    Mrs. Davis. Thank you.
    Before I go to Representative Lee, we keep talking about 
90/10. I think the legislature looked at 85/15. That has been 
in the law before. What is ideal? What creates the incentive 
and yet is not perhaps burdensome?
    Mr. Shireman. The 85/15 that is in the GI Bill was actually 
very different from the 90/10 that the Department of Education 
uses. Not only is it a different number, but it is actually 
program based. So one downside of the 90/10 measure is it is 
the entire institution. If you have a huge institution, you 
might have programs that are not really proving themselves, but 
in the context of the entire institution they pass 90/10. The 
program-based, that is one benefit of the program basis of the 
85/15 rule in that it still exists in the GI Bill but does not 
really have much impact because of the loopholes that are 
included in it.
    But I think examining some of the possibilities for perhaps 
looking at both, perhaps looking at an institution-wide and a 
program-based could be useful guardrails as we go forward.
    Mrs. Davis. Great, looking at the facts.
    Mr. Shireman. Yes.
    Mrs. Davis. Representative Lee?
    Mrs. Lee. Thank you.
    Ms. Rodriguez, I just wanted to ask you a quick question 
listening to your recounting of the Transition Assistance 
Program. One, I heard you try to express that there is a need 
for it to become service-member-centered. And secondly, I 
wanted to ask you, do you think that maybe splitting it up--I 
mean, it seems like right now it is all condensed into one 
week, or I do not know what the timeframe is. Is it your 
opinion that maybe splitting it up into segments might offer a 
better retention for you?
    Ms. Rodriguez. That is a great question. I do think 
separating, kind of having some brackets where it is maybe two 
days here on one week, and then two days another week, because 
it is five days long, and it is from 7:00 in the morning until 
4:30 p.m., and you get an hour lunch. But it is all, again, 
very repetitive, and it is so much information. I think we look 
at statistics, and the average span of our attention is, what, 
3 seconds? And then I am sitting there and listening to all 
this and I am like trying to get everything down.
    Yes, I think separating it up. They do have options where 
if you feel like you are more the entrepreneur type, you have a 
two-day course of that. If you want more information about 
education, higher education, it is more constructive with that 
as well, but like I said, still vague. It is still information, 
but it is not constructive. It is not specific to the student, 
or to the veteran, the service member and their mission and 
what they want to do. So I would say separating it out.
    Mrs. Lee. Great. Thank you.
    Fortunately for you, it seems like your educational 
experience has worked out, or is working out, but for so many 
veterans and, sadly, their families, it is not, with over 1,200 
college campuses that have closed in the last five years alone. 
It makes me think of Kendrick Harrison, who is a Nevadan. He 
was a veteran who fought in Iraq. He was recruited, encouraged 
to quit his job and then was recruited by a pretty aggressive 
Argosy University recruiter, and as we know, Argosy closed. 
During his enrollment, Mr. Harrison was deprived of the 
critical stipend check to cover rent and other expenses as a 
result of Argosy illegally keeping nearly $13 million of 
stipend funds that were originally intended for students.
    Another example, NBC just aired a story about Andres 
Figueroa, who is an Army drill sergeant enrolled at Full Sail 
University to study film, and he was told he was virtually 
guaranteed employment. However, he found out that jobs never 
materialized, and it will take him about 10 years to pay off 
his debt from that experience.
    I wanted to ask Mr. Muth, Full Sail University ranks fourth 
on a list of nearly 1,600 schools with official complaints 
filed at the Department of VA. Is there more the VA could be 
doing to monitor these institutions?
    Mr. Muth. That is a great question. The answer is 
absolutely, yes, there is. I think right now it gets back to 
that problem in the way the VA is trying to do oversight with 
essentially out-sourcing it to that state approving agency. 
Some are going to be better than others. And also, I think 
right now when you look at it, when a veteran makes a complaint 
to the VA, it essentially gets dumped into the consumer 
database, which is great. It allows the FTC and other agencies 
to potentially take action. But there is nothing being done by 
the VA to actually investigate those beyond just simply taking 
in that information and trying to resolve the problem. When you 
have a school like you described where there are so many 
complaints--people have been hearing about Full Sail for years, 
quite frankly, as far as some of the challenges veterans have 
had there--it seems obvious that would be a great place for the 
VA to start, those kind of schools that are at the top of the 
peak as far as students having bad experiences at those 
institutions.
    Mrs. Lee. Thank you.
    I just want to really hit very quickly on cost. Full Sail 
University costs almost five times as much as a comparable 
program at a local community college. Chancellor Oakley, can 
you just expand on why you think there is such a discrepancy in 
the cost between comparable programs at a school like Full Sail 
and a community college?
    Mr. Oakley. Well, first, the California legislature has a 
specific interest in keeping costs affordable in the State of 
California. This is true not just of community colleges, which 
it sets tuition for, but the California State University, the 
University of California. We have some of the lowest debt 
levels in the country. That is a good thing.
    The flip side to that is a university like Full Sail can 
raise a lot more money per student than we can at times. So it 
is important that the public continue to invest in higher 
education, particularly public higher education. Otherwise, we 
fall victim to the challenges we face today, which is being 
able to compete on a per-student funding basis with some of 
these for-profits.
    There is a reason why veterans are attracted to for-
profits. For-profits are offering them something that they want 
and that they feel that they need. Our colleges, our publicly-
funded colleges need to do a better job of responding to that 
need, and I think greater emphasis on public investment would 
help us do that, as well as a specific call to action to our 
colleges to do a better job of responding to the needs of 
veterans.
    Mrs. Lee. I yield back.
    Mrs. Davis. Thank you very much.
    I guess I would add to that is convenience as well.
    Mr. Oakley. Absolutely.
    Mrs. Davis. We need to be very responsive to that.
    Thank you. Thank you all again.
    I want to remind my colleagues that pursuant to committee 
practice--I am going to give a little boilerplate right here, 
if you do not mind--materials for submission for the hearing 
record must be submitted to the Committee Clerk within fourteen 
days following the last day of the hearing, and they must 
follow the subject matter of the hearing. Only a Member of the 
committee or an invited witness may submit materials for 
inclusion in the hearing 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, but please 
recognize that years from now that link may no longer work.
    Again, I wanted to thank all of our witnesses here today. 
We know that what we have heard is very valuable, and Members 
of the committee may have some additional questions for you, 
and we ask the witnesses to please respond to those questions 
in writing, and the hearing record will be held open for about 
fourteen days in order to receive those responses.
    I also wanted to remind my colleagues that pursuant to 
committee practice, witness questions for the hearing record 
must be submitted to the Majority Committee Staff or Committee 
Clerk within seven days. Questions submitted must address, 
again, the subject matter of the hearing.
    I now want to just close, and so that you all know where we 
are as a committee in addressing these issues. Nearly two years 
ago, I voted to pass the Forever GI Bill to ensure that our 
nation's veterans can access the benefits of the social 
mobility that come with a high-quality post-secondary 
education. But we know, for too many student veterans, that is 
just not the case. As our witnesses laid out, loopholes in 
Federal law and weak enforcement have allowed unscrupulous for-
profit institutions to aggressively recruit student veterans 
and then defraud them all on the taxpayer's dime.
    Despite this, the Department of Education under this 
Administration has failed to protect students against low-
performing institutions, abdicating its responsibility to hold 
predatory institutions accountable and left students and 
veterans to fend for themselves. We believe that these 
consequences are devastating and we want to note that for-
profit institutions have continued to treat veterans, as some 
have chosen to put it, as dollar signs in uniforms to take in 
tens of billions of Federal aid dollars.
    Three major for-profit chains have suddenly closed, leaving 
thousands of student veterans without vital housing assistance, 
transferrable credits, or degrees, and the victims of these 
abrupt closures have grappled with the Department of Education 
unwilling to provide the basic consumer protections and loan 
relief that they are entitled to.
    Congress must provide student veterans access to 
institutions and empower them to succeed in civilian life, not 
defraud them. In the 116th Congress, the House Education and 
Labor Committee will pursue reforms of the following: closing 
that 90/10 loophole to prevent for-profit colleges from 
aggressively recruiting vulnerable student veterans at the 
taxpayer's expense; protect students from low-performing 
institutions that leave graduates worse off than before they 
enrolled--that is quite a statement, worse off than before they 
enrolled; ensure loan relief for students impacted by abrupt 
for-profit closures; prevent for-profit schools from skirting 
accountability rules by seeking non-profit status; and most 
importantly, holding the Department of Education accountable 
for working on behalf of student veterans, not for-profit 
schools.
    All of us here today know that our nation's veterans 
deserve not just our thanks, and certainly that, but a true 
commitment towards improving their access to higher education 
and well-paying jobs. So our discussion today, we believe, is 
an important step. There will be many more discussions and 
hearings of this nature towards ensuring that no institution 
can jeopardize the future of its students, like Argosy 
University did, to the 181 defrauded student veterans who once 
took classes only 20 minutes away from here. After all, as Mr. 
Muth reminded us, and I quote, ``We must do more to protect and 
defend the rights of those who have answered the call to 
protect and defend their fellow citizens.''
    Thank you all so much for believing in this shared goal.
    If there is no further business, without objection, the 
committee stands adjourned. Thank you all.
    [Applause.]
    [Additional submissions by Chairwoman Davis follow:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    

    [Whereupon, at 12:21 p.m., the subcommittees was 
adjourned.]