[Congressional Record Volume 157, Number 70 (Thursday, May 19, 2011)]
[Senate]
[Pages S3153-S3160]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FOR-PROFIT EDUCATION COMPANIES
Mr. HARKIN. Mr. President, over the past 6 months, I have come to the
floor several times to discuss the findings of an ongoing investigation
by the Health, Education, Labor, and Pensions Committee into the for-
profit education sector, and the growing role they play in higher
education. This investigation has been now ongoing for over a year.
Today, I want to focus my remarks on our men and women in uniform and
how the for-profit schools are focusing on recruiting them to their
schools, and what this means for the taxpayers of America.
The first GI bill made it possible for many of the servicemembers
returning from World War II to go to college and get ahead in life. In
the process, that ushered in a new era of American prosperity. That GI
bill continued, of course, with Korea, through the Cold War, and
through Vietnam. I myself used the GI bill after my service time so I
could go to law school.
Over the decades, we have built on that success by extending Federal
financial aid to active-duty members of our Armed Forces, and indeed to
all Americans who seek to build a better life through higher education.
On the whole, this has proved to be one of the Federal Government's
smartest investments--an investment in human capital that has produced
huge dividends for our Nation. We in Congress have been eager to ensure
that this new generation of veterans returning from Iraq and
Afghanistan--those who sacrificed so much for our country--are getting
the education benefits they earned and the quality of education they
deserve.
Led by Senator Webb and others, we have enacted new laws and expanded
existing programs to provide generous new educational benefits to
veterans, to active-duty servicemembers, and to their families. This is
a historic achievement, and I am sure all of us were proud to support
it.
Implemented in August of 2009, the post-9/11 GI bill provides that
veterans who serve 90 days or more on active-duty effort, after
September 10, 2001, are eligible for up to 36 months of educational
benefits; and for the first time ever in history, veterans can transfer
these benefits to a spouse or to a child. Over the last decade, the
Department of Defense has also expanded aid available to active-duty
soldiers, sailors, and airmen through its tuition assistance program.
This program will pay up to a maximum of $4,500 a year toward a
servicemember's classes.
Also in 2009, Congress created the military spouse career advancement
account, designed to expand employment and career opportunities for
active-duty spouses, and that provides for a grant of $4,000 over a 3-
year period of time.
When the Congress acted to give new and better benefits to veterans
and active-duty members and their families, we fully expected that for-
profit schools might have an important role to play in providing higher
education. Obviously, they are flexible, and some of the primary work
done is suited to veterans and active-duty soldiers and students
juggling work and family obligations.
During my time in the military, of course, we had the University of
Maryland, which still obviously provides a lot of online work. At that
time, it was called ``distance learning,'' and you did it by mail. The
University of Maryland provided a lot of educational benefits for many
years to active-duty personnel serving in far-flung places around the
world. Of course, that was not a for-profit school; that was a
nonprofit school.
Unfortunately, when we enacted this whole new benefits package for
servicemembers and veterans and their families, we didn't anticipate
what would happen by opening up a new stream of funding to the for-
profit schools. We didn't foresee that the for-profit sector, which is
eager to please Wall Street investors, would go after student funding
aggressively, in ways not in the best interests of veterans and
servicemembers. We didn't recognize that by allowing servicemembers to
combine, transfer, and borrow against these various Federal benefit
packages we were giving for-profit schools an opening to enroll
servicemembers, veterans, and family members in very expensive
educational programs.
My committee's investigation over the past year has revealed an
industry dominated by the very same Wall Street companies and equity
investors who brought about the subprime mortgage crisis. These
investors are focused on rapid growth and quick profits. In relatively
short order, for-profit colleges and universities have succeeded in
enrolling 10 percent of the students and claiming fully 25 percent of
the Federal financial aid budget, including $7 billion a year in Pell
grants. So the for-profit sector has 10 percent of all of the students
in the country and gets 25 percent of all Federal financial aid.
Many of these companies generate big profits, and there is a big
problem. The committee has compiled data for 30 companies that own for-
profit schools, including the 15 largest publicly traded ones, showing
that more than half of the students these institutions enroll drop out
within the first year. Two-thirds of the students who are there for a
2-year program drop out in the first year. Some of the worst performing
institutions have been the most aggressive to enroll servicemembers and
veterans.
Because profitability and the for-profit education industry is driven
by enrollment growth, my committee's investigation has focused largely
on the extraordinarily aggressive marketing and recruitment practices
at these schools. Building on the findings of last year's undercover
investigation by the GAO, which found abusive recruitment practices at
each of 15 campuses visited, we have uncovered additional evidence that
misleading and deceptive recruiting tactics are not the exception but
the norm.
Several months ago, on the floor of the Senate, I spoke about
documents uncovered in my investigation. Those documents instruct
recruiters in tactics designed to manipulate and emotionally exploit
potential students in order to convince them to enroll. As I will
demonstrate later in my speech they are going after the military by
exploiting fear, uncertainty, and doubt.
We should be concerned that Congress may have unintentionally created
an opening for the current generation of veterans and active-duty
servicemembers to be victimized by these abuses simply because of their
eligibility for expanded Federal aid that we enacted in the Congress.
My committee found evidence that large for-profit schools are
aggressively recruiting active-duty servicemembers and veterans
expressly because of their generous educational benefits packages. It
is not just that these military benefits provide a new revenue stream
for the companies. The point is that it is an especially valuable kind
of revenue stream for these companies--more valuable than even going
after nonveterans and non-GIs. Why is that?
Well, military money helps these for-profit schools to meet a key
statutory requirement that no more than 90 percent of their revenue can
come from Federal financial programs. That is in the law. No more than
90 percent of the income coming into a for-profit school can be from
Federal financial programs. If a school is getting close to that 90
percent, guess what they do. They go after military people. Why is
that? Because a military person, active duty or veteran, enrolled in a
for-profit school doesn't count towards the 90 percent; it counts
towards the 10 percent. So the school could actually have--and there
are some--92 or 94 percent of all their money coming from Federal
financial programs, even though the law says you can only get 90
percent, because military doesn't count. So you can see why, when close
to 90 percent, they would want to go after the military. And that is
exactly what is happening.
With their eyes on this 90/10 ratio, the for-profit schools have
moved aggressively to exploit this opportunity. They have created
marketing plans and a sales force specifically designed to target and
enroll as many veterans, servicemembers, and family members as
possible. Schools spend billions on sophisticated marketing campaigns
and large sales teams to get those students in the door. Documents
obtained by the HELP Committee paint a picture of an industry with a
laser-like focus on enrolling military students.
For example, I have a 56-page document from Kaplan. This lays out
their strategy for recruiting military students. If you go through it,
you will see
[[Page S3154]]
their objective. As I said, they have a laser-like focus on enrolling
military students.
Objective No. 1:
Grow our military enrollments to 9,000 per year by 2011.
At the time, Kaplan signed up about 2,200 military students each
year. They were aiming at more than a four-fold increase in the
military. The document goes on to lay out the marketing and sales plan
for achieving this enormous growth. This is in this document:
Drive awareness via print advertising in key military
publications and targeting key military installations.
To do this, the document suggests that Kaplan plans to spend $30
million over 3 years for new military-specific recruiting staff,
advertising, and public relations--just on the military.
In a later brainstorming exchange between Kaplan executives, the No.
1 item on the list of initiatives to deal with Kaplan's 90/10 because
they were getting close to that 90 percent was:
Accelerate military billings/collections. Go to DC and pick
up the check if you have to.
Go get that military money so we do not go over that 90-percent
limit.
At Education Management Corporation--another for-profit school--the
story is similar. Let me quote from a 2010 memorandum prepared by a
consultant to the CEO of EDMC, Education Management Corporation. The
memo begins:
Thanks for the call outlining the interest of EDMC in
learning more about potential areas of funding that could add
revenue that would also address the 90/10 issue.
No. 1 on the list says:
Probably one of the most important potential short and
long-term targets for EDMC are the 800,000-plus military
spouses who have been authorized--
And this is in italics--
for the first time in history, for a one-time entitlement of
up to $6,000 . . . An aggressive effort to reach these
spouses at the military bases with various career fairs,
direct communications, and visibility with the Office of
Military Families in Washington would be very important.
A subsequent e-mail message between EDMC's executives recommends that
the company should be ``leveraging military spouse benefits to the
fullest extent possible'' in order to overcome the 90/10 regulation.
Executives of for-profit schools are candid about the value of
military students in trying to ease investors' concerns about
regulatory compliance. The CEO of Bridgepoint Education told investors:
Our military enrollment grew from 1 percent in 2007 to 17
percent at the end of September 2009.
He went on to say:
We believe that when we are able to report our 90/10 for
2009 that it should decrease due to our penetration in
particular into the military market.
We know these for-profit schools, in their own words, are
aggressively pursuing military personnel and their families. How are
they enticing them to enroll? A Kaplan training manual entitled
``Military Learning Modules'' tells recruiters how to utilize fear,
uncertainty, and doubt in the sales process with regard to competitors'
offers and teaches them to overcome objections that potential students
may raise in signing an enrollment agreement.
This is the one from Kaplan:
Fear, uncertainty, doubt. This technique was originally
created within the computer hardware industry and uses these
emotions to attempt to influence perceptions or beliefs. The
technique is especially effective when prospects introduce
the ``need'' to examine other online schools.
In other words, a Kaplan recruiter calls up a veteran or a military
person on Active Duty and wants to get them to enroll. If that person
says: I have seen some ads for Phoenix, I have seen ads for ITT and
others, maybe I will look them up, they want to use fear, uncertainty,
and doubt when prospects introduce the need to examine other online
schools.
Statements such as the following:
instill fear, uncertainty and doubt regarding the features of
competitors' programs.
It is one thing if you are selling a keyboard or hard drive. That is
one thing. But when you are doing it to enroll a young man or woman
whose family may never have gone to college--they enlisted in the
military out of a patriotic sense of duty; they have had no college
experience whatsoever; maybe they did not do all that well in high
school, but now they are thinking about what they are going to do, and
they get hit with this. And I find really objectionable when these for-
profit schools exploit fear, uncertainty, and doubt in our young
military people.
I will have more to say about how onerous it is when they do this to
get them to sign up with their school, to get students take taxpayers'
money and turn it over to the school, only to find out they do not have
any support, nothing to help them, and they drop out within a year.
They have debt. They went through all their military benefits, which
they can never get back, and the for-profit schools have the money.
A military recruiter at Colorado Technical University--another for-
profit school--owned by the publicly traded Career Education
Corporation, told the New York Times:
There is such pressure to simply enroll more vets--we knew
that most of them would drop out after the first session . .
. Instead of helping people, too often I felt like we were
almost tricking them.
Robert Songer, the coordinator of all education programs for
servicemembers at Camp Lejeune Marine Corps Base in North Carolina,
expressed his reservations to the Bloomberg news service.
Some of these schools prey on Marines . . . Day and night,
they call you, they e-mail you. These servicemen get caught
in that. Nobody in their families ever went to college. They
don't know about college.
These recruiting tactics are nothing short of disgraceful. When
students are enrolled through deception or fear, not only are they
being tricked, they are also more likely to be unprepared for the
challenges of college. These strong-arm, emotionally abusive tactics
are indicative of schools that see students strictly as a means to an
end of higher profits. They appear to have little or no interest in
providing students the academic help and support they need to succeed.
The end result is that servicemembers, veterans, and their spouses end
up enrolling in high-cost programs, dropping out in staggering numbers,
often winding up with a mountain of student debt. This often happens
despite the availability of similar or better quality programs in the
public and nonprofit sectors of higher education.
The tactics have certainly paid off for the company's bottom line. I
released a report last December documenting the absolutely tremendous
increase in the amount of money these companies are receiving from
military education programs. Building on the already substantial growth
in revenues generated from the traditional financial aid programs--
which went, by the way, from $14 billion in 2005 to $29 billion in
2009--the relentless focus for-profits have brought to military
recruiting has yielded an astonishing growth in the funds they get both
from the Department of Defense and the Department of Veterans Affairs.
Again, keep in mind we are talking about two entities: Active-Duty
personnel and veterans.
As the new post-9/11 GI bill was implemented, 18 large for-profit
operators pushed their intake of VA dollars from $26 million in 2006 to
an astonishing $286 million in 2010. This is what happened. This chart
illustrates what happened in VA. Here we are at $26 million in 2006;
$25 million in 2007; $27.6 million in 2008; and in 2009, when we passed
the bill, it goes up to $55 million. Look what happened in 1 year,
2009, $55 million up to $285.8 million in 1 year. That is the amount of
money they took in. That is just the Veterans Affairs funds.
The same companies increased their collection of Department of
Defense benefits by 337 percent--$40 million in 2006 to $175 million in
2010. Again, this is for Active Duty. We see the steady increase all
the way into 2010--$40 million in 2006 to $175 million in 2010.
This did not just happen; it happened because the for-profit
companies decided they were going to go after the military because they
were getting close to their 90-percent threshold. Keep in mind, these
dollars do not count towards the 90-percent, so they can keep under the
threshold by getting more military students.
Let's be clear. These exorbitant amounts of Federal dollars are not
going to small, family-owned institutions. They are going to some of
the largest Wall Street-owned companies. Out of the $640 million in
post-9/11 GI benefits that flowed to for-profit schools just in 2009
and 2010--that is $\1/2\ billion; $640 million, $\1/2\ billion in 1
[[Page S3155]]
year--$439 million went to the 15 publicly traded companies. This
amount is equal to 69 percent of the military money going to for-profit
schools and 25 percent of all post-9/11 GI bill benefits.
Let me repeat that. Let's just say this: 25 percent--one-fourth--of
all of the GI bill benefits post-9/11 went to 15 publicly traded
companies. It would be one thing if the for-profit schools were using
this for educational expenses, but unfortunately the lion's share of
that money--taxpayers' dollars--went into profits, marketing, and--
guess what--Wall Street executive salaries and bonuses.
What are we getting in return for this enormous investment of
taxpayers' dollars? We are getting a lot of questions.
We know student outcomes for the general population at for-profit
schools are pretty dismal. On average, 55 percent of students who
attend these schools drop out within a year, and there is no evidence
that military students are faring better. Eight of the ten top
recipients of VA dollars see more than half of the associate degree
students they enroll drop out within the year, and five of the schools
see more than a 60-percent drop.
This is what our investigation revealed. Here are the 10 schools
receiving the most Department of Veterans Affairs funds. You see ITT,
and they got the most--$79.2 million, and that is a 1-year amount. Of
those who enrolled for a 4-year degree program, 44 percent withdrew; of
those who signed up for a 2-year program, 53 percent withdrew. We look
down here to Kaplan, and they got $17.3 million. On their bachelor's
degree, 68.2 percent withdrew--69 percent of the 2-year students
withdrew in the first year.
Here is with what is startling. That is bad enough as it is, but our
investigation showed that neither the Department of Defense nor the
Department of Veterans Affairs has any method to assess what is
happening to these students. The money flows out, and neither the
Department of Veterans Affairs nor the Department of Defense has any
way to assess whether they are getting a good education.
I might also add, Senator Carper has looked into this in his
subcommittee. He has looked into this, and we have discussed the
possibility of working on something to get the Department of Defense to
start taking better care of their Active-Duty personnel and the
Department of Veterans Affairs to take better care of veterans. We need
to have better assessment of what is happening to these students, how
much debt they are accumulating, and what is happening to their
education.
We are basically handing over huge and growing sums of military money
to for-profit schools without any ability to assess whether these
schools are giving our Active-Duty members or veterans the kind of a
quality education they deserve.
The complaints I have gathered in the course of our investigation
point to a deeply disturbing willingness on the part of for-profit
schools to exploit veterans. I repeat, our investigation shows clearly
that a number of these for-profit schools are out to exploit veterans.
I received this letter from a veteran who attended ITT Technical
Institute, the greatest recipient of VA funds. Here is what he said:
Unlike other institutions I reached out to, as soon as I
expressed interest in ITT Tech, they began to actively and
aggressively pursue me. Minutes after I filled out an online
form, a recruiter called me. He then called every day,
telling me it was urgent for me to enroll.
The letter writer notes that due to the high cost of tuition, he had
to take out loans. But he writes:
The expensive tuition did not seem to go toward a quality
education.
He concludes with this:
Within 2 months of leaving ITT Tech, they sent me a bill
for $2,000 and a transcript that showed clear signs that it
was altered in a way to specifically make my positive balance
disappear and create a negative balance.
This letter writer ends with these chilling words:
I regret attending ITT Tech. The institution provided at
best an absolute minimum education and left me with nearly
insurmountable debt.
This is a veteran.
Here is another veteran who attended Bridgepoint Education Inc.'s
Ashford University who wrote the following:
I was extremely disappointed, confused and angry. I felt I
had been misled, deceived or even outright lied to in an
effort to gain my contractual agreement.
He was repeatedly assured by Bridgepoint recruiters that his post-
9/11 GI bill benefits would cover the entire cost of his degree, only
to find out after he was enrolled that he would owe close to $11,000.
Another student, this one at the University of Phoenix, sent this
letter to the Arizona attorney general after trying to resolve his
complaint with the school:
I have been a police officer for over 20 years. I am also
an Iraq war veteran. I believe that the University of Phoenix
is using deceptive practices in order to lure students into
the school. The enrollment counselors tell students that they
should be complete with their course of study in a short
period of time fully knowing exactly how long it is going to
take. The enrollment counselors eventually tell the student
it is going to take a lot longer to finish their program but
not until the student has committed all of his financial aid
and invested so much money that it would be senseless to
leave and waste his invested time and money.
A letter to the attorney general of Arizona.
What are the consequences for a student who enrolls at one of these
schools but is not satisfied with their experience? The post-9/11 GI
Bill benefit package can be depleted rapidly. If benefits are used up
without completing a program or for credits that can't be transferred,
the benefits cannot be recovered. In fact, because of the high tuition,
many students, have to apply for additional grants or loans to pay for
school. That means many veterans are pressured into signing up for one
of these for-profit schools, told they have free money to pay for their
tuition and then, all of a sudden, they find that is not quite enough
money. Now they have to apply for a loan. They get a loan, they drop
out within 1 year or so, the schools keep the money--some of it grant
money, some of it loan money--and the GI or the military person is left
with debt and no diploma.
Here is a letter addressed to the Ohio for-profit school regulator
that just tears your heart out. This is from a mother:
Normally, a 26-year-old man doesn't need his mom advocating
for him. But this is anything but a normal situation. I
expected my son to be changed by his tour of duty in Iraq.
But I could not have been prepared for the reality of those
changes. My son struggles on a daily basis with symptoms from
PTSD (post-traumatic stress disorder) and TBI (traumatic
brain injury). He suffers from bouts of depression, anxiety,
headaches, nightmares, vision problems, mental confusion,
insomnia, and many other symptoms. You have to pretty much
``bottom-line'' your conversations with him. He can't
mentally process a lot of details. If you continue with your
details, he is done with the conversation, unless you can
return to a quick ``bottom-line.''
The mother goes on:
It is my belief that the ITT Representative may have
quickly figured this out and taken advantage of the
opportunity. I remember when he called from ITT because I was
on my way out to an important occasion. He said the
Representative told him he needed a co-signer just so he
could start school immediately, but not to worry about it,
because the military was going to pay for everything, even
give him money to live on and pay his expenses. He sounded so
hopeful, something I hadn't heard from him since before the
war. It was really hard for him to admit he couldn't continue
going to school. He said he just couldn't retain the
material. It became too stressful for him to continue. My son
is a proud, young man. He is not looking for pity or charity.
He is embarrassed that he believed what he was told by the
ITT Rep. He could hardly come around me when he found out
that Sallie Mae was calling me for payment of his loan.
Veterans with PTSD commonly isolate themselves from family
and friends. This made it even worse. As a mother and a human
being, I am outraged this kind of predatory lending tactic is
used on anyone, but especially on an American soldier who
gave everything he had and almost lost his life many times,
and who continues to suffer. I will pursue this, on my son's
behalf, until someone listens and forgives these loans. Thank
you all for all of your effort, it is very much appreciated.
This situation is unacceptable. It is unacceptable that Active-Duty
military personnel and veterans using their hard-earned benefits are
becoming victims of these kind of high-pressure tactics of the for-
profit schools--enticing them to enroll, taking their money, causing
them to go even further into debt, and then not giving them any support
whatsoever.
As I said before, the agencies distributing this money do not
investigate or
[[Page S3156]]
act on the reported abuses of for-profit schools. They just don't.
Earlier this month, the GAO released a report concluding that the VA
still faces numerous challenges in implementing a program to start to
begin interventions. Many for-profit schools have succeeded in building
a highly profitable business structure while failing to provide the
student services, a learning environment, and career services that
would enable their students to graduate and succeed.
The Federal Government must be vigilant to ensure that poor
performing for-profit schools with huge dropout and student default
rates are not allowed to continue to receive billions of dollars in
Federal taxpayer money every year. We owe this to taxpayers, but we
also owe this to the men and women who served and sacrificed for our
Nation in uniform. That is why I wanted to take the time on the floor
today to point out this new and disturbing finding of our committee,
how much these schools are targeting military personnel, how they are
using high-pressure tactics to get them to enroll because they know
they can get the money to help keep them below the 90-percent
threshold.
It is shameful that these for-profit schools are allowed to get by
with this. They continue it today. They continue reaping huge profits,
paying their CEOs and their executives enormous amounts of money. Yet
our men and women in uniform, our GIs, who are taken in are not
provided any help or support but now are saddled with a lot of debt or
have used up their GI bill benefits. Maybe now they want to go to a
community college, somewhere to really get a good education, and they
find out they cannot get any more GI bill money. They are done. They
gave it all to one of these for-profit schools.
Mr. HARKIN. I ask unanimous consent to have the documents I referred
to printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. HARKIN. I am delighted to yield to my friend from Illinois, who
has been a strong fighter for students and also, I would say, over the
last several years has focused a lot of attention on these abuses of
the for-profit schools.
Exhibit 1
Excerpts from KHE 267362 Kaplan Military University Agenda
Objectives Our Military Value Proposition The Pricing Pilot
The phases of the military strategy plan Field team
deployment Staffing Plan Appendix A. Pricing Analysis B.
Marketing Elements C. Public Relations Marketing D Web
Strategy E. American Military University Objectives Grow our
military enrollments to 9K per year by 2011 2009 increase
from 2.2.K to 6K enrollments 2010 8.8K enrollments 2011 10.5
K enrollments Over 3 years: Bring retention rate on par with
traditional students (28 to 34) Improve 90/10 by 5% Provide
incremental revenue of $XYZ in year 3 Objectives Transition
Kaplan into a ``top of mind'' educator within the active duty
& veteran military segments, penetrating the key decision
maker and influence (education service officers) Evolve our
product offering to attract, retain, and better educate
military students Transition current low converting lead &
poor retaining student base into highly profitable segment
Engage DOD/DHS in custom development of Kaplan Inc. solutions
Our Military Value Proposition We have dedicated ourselves to
serving our military students with advisors at each step who
understand military challenges (admission/FA/Academic
Advising/Career Counseling) We have designed our educational
platform to help you take full advantage of your military
training, experience and any previous college credit We are
integrated into military educational system, making it easier
for you to enroll and attend Kaplan Go Army Ed, SOC, AEX
Portal, Air force ABC program We've built in the flexibility
a military lifestyle demands Military Friendly LOA and
coursework extension policies We're committed to your success
and provide innovative tools to help you succeed in your
studies and career such as Kaplan MyPath helping you
customize your education We value the sacrifice you have made
to our country and provide all active duty and veterans
tuition packages, so you can get the quality education you
deserve and books are included so there are no unforeseen
expenses along the way We recognize that serving is a family
commitment, and also offer reduced tuition rates to military
spouses We support your lifetime learning needs, including an
online high school completion programs, professional
development programs, and higher degree programs Tactics
Drive awareness via print advertising in key military
publications and targeting key military installations ESO
Relationship Manager ESO outreach effort leveraging, phone,
web, DM, and supporting key military events and periodic base
events Target veteran and spousal community via key
publications and including military elements in traditional
student marketing Continuous development of military
offerings, providing tools for high conversion and referral
rates Leverage MSG field team in regional areas to drive
military events Community College Partners Educational
Liaisons to attend military events Business Development
efforts at Federal and DOD level Business Development
Activities DoD Activities Representing All of Kaplan, Inc.
Meeting with High Level Pentagon Officers Pursue Deeper
Relationships with branches Veteran Associations Financial
Plan Growth Projections Enrollments/Rev 2009 2010 2011
Expense Enrollment Total 6,196 8,848 10,526 MSGField
Marketing Expense Total $7,247,975 $10,139,450 $11,632,550
MSG Marketing Net Revenue--Total $4,277,301 $7,957,358
$11,768,938 MSG Lead Generation MSGField NonAggregation
Marketing 20082009 Military Marketing Impressions Total
Investment Print Out of Home Marketing eNewsletter Direct
Mail Total Impressions Operational (Events/Sponsorships)
CollateralBase & ESO Booth & Graphics Web Integration and
Landing Pages Development Costs Research Pricing Analysis
$1,596,050 Marketing Staffing Plan Roles & Definitions
Director of Military Marketing & Strategy Oversight over
all military marketing including: Lead Generation Web
strategy DM/EM Print Collateral Campaign management B2B
Marketing (ESO/DOD etc) Product Marketing Direct Product
Development Efforts Feasibility on new programs SOCAD/
SOCGUARD/SOCMAR etc Develop Sales Tools VA & other
military student programs Single Course Offerings
Alternate Delivery Modes Military Newsletter Coordinate
Military Research Field Support Marketing Operates on
shared services and with 1 direct report Military
marketing manager
Excerpts from KHE 271429 From: [High-level Executive] Sent:
Wednesday, November 11, 2009 4:55 PM To: [High-level
Executive]; [High-level Executive] Cc: [High-level
Executive]; [High-level Executive]; [High-level Executive];
[High-level Executive]: RE: KU 90/10 Issue [High-level
Executive], This has been an area of intense focus over the
last 30 days. In mid October we ([High-level Executive],
[High-level Executive] and I) projected our 90:10 at year end
based on current run rates to be 89.6%. We shared our
analysis and actions plans with [High-level Executive],
[High-level Executive] and [High-level Executive] and the
decision was made to switch SES from an automatic submission
process to a manual process. We needed the ability to
throttle our submissions based on our cash intake. Although
we have implemented a number of initial steps that will help
us increase our cash intake in the future, we have a larger
list of additional initiatives that we are continuing to move
forward and I could walk you through those at your
convenience. In response to your suggestions we have added
comments below: Accelerate military billings / collection at
KU. We have streamlined our internal process on timely
billings for our military students. The population of
military folks that are awaiting TA vouchers is approximately
$400K. Although our records indicate that we are current, we
are currently reconciling the entire military group to see if
we have any legacy items that were not billed correctly.
From: [High-level Executive] Sent: Wednesday, November 11,
2009 12:07 PM To: [High-level Executive]; [High-level
Executive] Cc: [High-level Executive]; [High-level
Executive]; [High-level Executive]; [High-level Executive];
[High-level Executive] Subject: KU 90/10 Issue Importance:
High Other areas to look at quickly/aggressively before
yearend: 1. Accelerate military billings / collection at KU.
Go to D.C. and pick up the check if you have to.
Excerpts from EDMC916000228224 Memorandum Confidential TO:
[Director] FROM: [Outside Consultant] DATE: July 8, 2010
SUBJECT: Possible Opportunities for EDMC ``90:10'' Thanks for
the call outlining the interest of EDMC in learning more
about potential areas of funding that could add students and
revenue that would also address the ``90:10'' issue. In light
of that dual set of interests, let us briefly review the
opportunities we see among recurring sources of government
funding, plus some other prospects to consider. THE FEDERAL
GOVERNMENT There are a number of emerging opportunities that
may present short, medium, and longerterm opportunities that
should also be carefully considered, given their size and
scale. The Military 1. Military Spouses. Probably one of the
most important potential short and longterm targets for
EDMC are the 800,000 plus military spouses who have been
authorized, for the first time in history, for a onetime
entitlement of up to $6,000 that can be used for training,
as well as for counseling and other ways to assist them in
finding work. We are told by the DOD that the largest
demand among the spouses is for healthcare related
training, although it can also cover almost all other
occupational areas. The Department of Defense has also
informed military personnel and their spouses that under
the most recent G.I. Bill, they can authorize up to 50
percent of his/her education benefits for the spouse to
continue their education. Therefore, in theory, every
spouse has access to two separate sources of funding. As
you probably know, military spouses are a particularly
attractive group of prospective students. Nearly twothirds
have at least some college education. The average age is
36, they have strong support systems with the military
bases and operations and, of course, they tend to be very
stable. The big issue that is driving these new training
funds is that
[[Page S3157]]
when the military do their surveys, the primary reason
people give for leaving the military is that their
``spouse is not happy.'' When the military spouses are
surveyed, they say the reason they are not happy is that
they cannot find a job or, more often, they cannot find a
good job for which they believe they are qualified with
their background and experience. This is the reason for
the focus on providing training and other forms of
assistance: so that they can get better jobs and, in turn,
encourage their spouses to stay in the military. The ``My
CAA'' (My Career Advancement Account) program for the
$6,000 entitlement for all 800,000 spouses, however, has
been thoroughly bungled. The entire webbased system for
enrollment literally collapsed in January. Therefore, the
DOD is not authorizing any new CAAs at the moment, and
they have spent months trying to restore the system. At
least 100,000 military spouses had gained eligibility when
the system ``crashed.'' Those are approved for their
training. Once My CAA gets up and running, one can safely
assume an enormous demand will follow, given all the
interest that has been shown by the spouses. EDMC was
provided information on becoming a ``Military Spouse
Friendly School'' in the past. We would strongly encourage
this to be a first step since that is the first stop the
spouses see on their websites. No doubt, EDMC is already
benefiting from some of this, but an aggressive effort to
reach the spouses at the military bases with various
career fairs, direct communications, and visibility with
the Office of Military Families in Washington would be
very important. 2. Enlisted Personnel. Of course, there is
the longstanding tuition and other support for most
members of the military as an entitlement. 3. Veterans
also have a variety of tuition and other benefits, plus
preferred eligibility for almost all other Federal
programs.
Excerpts from EDMC916000228222 From: [High-level
Executive]: Friday, July 30, 2010 9:22:51 PM To: [High-level
Executive] Subject: FW: Possible Opportunities for EDMC
``90:10'' Attachments: [High-level Executive] 0708 re
Opportunties.doc Hi I attended the call yesterday with
[Director] [High-level Executive] and [High-level Executive]
(Strategic Partnerships). The call as expected was to review
the areas that had been highlighted on the report as
potential opportunities for 90/10 impacting funding sources.
The outcome of the call was a followup call with [High-level
Executive] and [High-level Executive] on opportunities on
the local Workforce Boards and I took the action item for
a followup discussion on ensuring we are leveraging the
military spouse benefits to the fullest extent possible. I
plan to include [High-level Executive] in the next
discussion Do you recommend anyone else? [High-level
Executive] Original Message From: [High-level Executive]
Sent: Monday, July 12, 2010 6:47 PM To: [High-level
Executive]; [High-level Executive] Subject: FW: Possible
Opportunities for EDMC ``90:10'' [High-level Executive]
and [High-level Executive], After you have had a chance to
review please give me a call. I know you are probably
wondering why the two of you. [High-level Executive]
because of the potential match with BMC and [High-level
Executive] because of the impact on OHE. [High-level
Executive]
Excerpts from KHE 094984 LEARNING OBJECTIVES Define and
demonstrate (through role play) each step in the A.C.T.I.O.N.
model Differentiate between Outcome Based and Process Based
Selling Utilize Outcome Based Selling language effectively
Differentiate between Feature, Advantage and Benefit (FAB)
Differentiate between Needs and Wants Utilize Open Ended
Questioning and Active Listening techniques Utilize Fear,
Uncertainty and Doubt (FUD) in the sales process Handle and
overcome objectives Utilize trial close techniques KAPLAN
UNIVERSITY A.C.T.I.O.N. FOCUSED SALES MODEL ACTIVATE INTEREST
(Introduction) Recognize, Acknowledge, Congratulate Establish
rapport and credibility Ask effective questions CONNECT AND
DISCOVER Ask open ended questions Dig for motivators
Establish needs and wants Listen actively TIE IN THE SOLUTION
Satisfy needs and wants Use Feature, Advantage, Benefit
technique Use Fear, Uncertainty, Doubt technique Make the
solution fit INITIATE AND EXPLAIN THE PROCESS Recognize
buying signals Trial close Outline next steps OVERCOME
OBJECTIONS Use LISTEN model Use Outcome Based language Show
empathy Active listening involves taking note of key points
that you can further explore, asking questions,
investigating, digging deeper, resulting in longer, more
meaningful conversations. For example, the prospect says she
is worried about her financial position. The advisor might
ask, ``Do you think in a few years, when you decide you want
to pursue an education, you will be in a better or worse
financial position?'' TRANSITION STATEMENT Confirm your
understanding of what the student has told you. ``So if I
understand you correctly . . .'' or ``Let me summarize what
I've heard.'' TIE IN THE SOLUTION How the Solution Fits
Listen for specific information about the prospective
student's dissatisfaction with life as it is now, and tailor
solutions specifically for him or her. Pique the prospect's
interest and arouse enthusiasm! Feature, Advantage, Benefit
Feature WHAT IS IT Advantage WHAT IT DOES Benefit WHAT IT
DOES FOR ME The Benefit is Important! The features and
advantages of individual schools can often look alike. The
key is the value. The advisor must address the benefit each
feature brings to the students. Not every feature has a
benefit for every student. When showing benefits, choose the
features that are meaningful and relevant. Presenting
benefits paves the way to what the solution offers. INITIATE
AND EXPLAIN THE PROCESS It is at the point in the ACTION
sales model where the advisor closes the sale. An
effective closer pays attention to buying signals, trial
closes, outlines next steps and moves toward gaining
commitment. OVERCOME OBJECTIONS An objection is generally
a reason or argument presented in opposition or a feeling
or expression of disapproval. People usually object when
they encounter: A misunderstanding Incorrect information
Lack of information Fear or doubt Something which is
keeping them from making a commitment to move forward. The
Admission Advisor's role is to help prospective students
overcome objections when making the decision to achieve
their educational goals. Types of Objections As a general
rule, objections fall under one of five categories: TIME I
don't have time in my life to fit school into it. MONEY I
can't afford the deposit, much less the tuition. SUPPORT
My friends and family don't think I need to go back to
school. COMPETITION XXX school is cheaper, faster, easier.
FEAR I doubt that I'd be able to succeed
Expect Objections Objection management is an integral part
of the advisor's job. Objections may happen during every step
of the admissions process. Advisors encounter objections of
varying kinds. Successful advisors are able to approach
objections systematically. Overcome Objections with
Fundamental Skills Listen Actively--to the student's
objections and concerns. Interpret the Objection Repeat
objection, then empathize. ``I understand your concern about
finding 20 hours a week to study.'' Solve Together Jointly
find a solution. Ask probing questions to divulge the true
nature of the person's objection. ``How do you spend your
time?'' ``Can you walk me through a typical day?'' ``What are
you willing to sacrifice to fulfill you dream? Get the
student involved in overcoming his own objection. Establish
Buy in Gain the student's commitment. Ask reaffirming
questions. ``Which of these solutions would work best for
you?'' ``Do you feel more comfortable now?'' Move person
forward. ``Great, let's move on to the next step.'' Don't
hesitate! Next Step Lead student to the next step with
confidence.
Excerpts from ITT00007708 Dear This letter is in response
to the concern you filed regarding ITT Technical Institute
(``ITT''). In your complaint, you voiced concern over your
financial obligation and in particular the Montgomery GI Bill
funding you thought you would be receiving. The Board
initiated an investigation into this matter and reviewed all
of the financial documents involved in your enrollment. In
response to the Board's request for information, ITT
submitted the attached response to the concerns you raised.
The documentation submitted by ITT shows that you completed
one term with the school and withdrew late in the second
term. When a student withdrawals from school, the school is
required to calculate a tuition refund in accordance with
Ohio Revised Code Sec. 3332110 and the school may also be
required to calculate a refund of federal loan money in
accordance with applicable federal regulations. According to
the refund calculations, your total financial obligation to
the school for those two terms equaled $10,709.68. This
tuition charge was financed through two loans for your
education, one for $5,760.80 and one for $4,417.00. In
addition to the loans that were used to pay your tuition
costs, it appears that between March 2007 and July 2007, you
received a total of six payments for veteran's education
benefits in accordance with the Montgomery GI Bill to
subsidize your tuition costs, totaling $6,808.33. For
students who receive Montgomery GI Bill funding, It is
standard procedure for a school to set up loans or other
funding mechanisms for a student before they begin
classes. This is due to the fact that the GI Bill funds
are dispersed directly to the student after the student
has already begun classes. The school cannot control
whether the student uses that money to reduce their
student loan obligations or whether it is used for other
purposes. As such the loans that you applied for while you
were enrolled at ITT were properly attributed to your
tuition charges and it was within your discretion to use
your GI Bill funds to reduce your loan obligations. There
is no evidence that ITT is in violation of any law or rule
under the jurisdiction of this Board. Finally, I would
also note that ITT has served 155 veterans during the last
two years and during a visit to the school in December,
the State Approving Agency for Veterans Training conducted
a review of the ITT's administration of veteran's benefit
and nothing out of the ordinary was noted. ITT has offered
to meet with you and your mother and assist you in
exploring any deferment or forbearance options you may
have with your lenders. If you wish to accept their offer,
you may contact [Campus Director], School Director, to set
up an appointment. Sincerely,
Excerpts from ITT00007722 I am writing in response to your
August 4, 2008 correspondence. I appreciate you bringing your
concerns related to your enrollment at our campus to my
attention. I am sorry to hear of your difficulties following
your service in our nation's military. However, after
reviewing the available information, the facts do not
substantiate the refund or waiver of the tuition and fees
related to your enrollment in the Information Technology
Computer Network Systems program. In your letter,
[[Page S3158]]
you claim you were told that the military would pay for your
schooling. This statement cannot be substantiated. While our
institution assists students in seeking financial aid for
which he or she may qualify, we do not represent to a student
that he or she will have their education paid for by a
particular entity. The Catalog you received at the time you
enrolled at our campus outlined this further. Specifically,
the Financial Assistance section of the Catalog states in
pertinent part: The school may, from time to time, provide
the student with (I) information on federal, state and other
student financial aid for which he or she may apply to
receive and/or (II) estimates of the amount of federal, state
and other student financial aid for which he or she may
qualify, but: (a) the federal, state and other authorities,
and not the school, determine the student's eligibility for
any federal, state or other student financial aid; (b) the
federal, state and other authorities, and not the school,
determine the amount of any federal, state or other student
financial aid the student may receive. . . . As this language
states, the school makes no representation or promise of aid
which a student will receive. Rather, such a final
determination is that of the agency providing the aid. In
speaking with the Financial Aid Administrator (FAA) who
assisted you, the FAA does not recall any discussions that
the military would be paying the full cost of your education.
Rather in assisting you with the financial aid process, there
were discussions pertaining to your possible eligibility to
receive benefits from the Veterans Administration (VA). For
your information, I have enclosed a copy of your Enrollment
Agreement and related Cost Summary and Payment Addendum
(CSPA). The CSPA provides an outline of the expected cost and
funding for your first three quarters of attendance at the
campus. Further our records also indicate that you did apply
for VA benefits. Any such benefits would have been paid
directly by the VA to you. Our school does not receive these
funds on your behalf. Again I appreciate you bringing your
concerns to my attention for review and response. While I
sympathize with the circumstances you have endured since
leaving the military, I must review each matter based upon
its own merits. In this instance, the facts do not
substantiate a refund or waiver of tuition and fees. If you
have any questions or wish to provide any further
information, please do not hesitate to contact me. Sincerely,
[Campus Director]
Mr. DURBIN. I thank the Senator from Iowa. He has led the way. His
committee investigation on this industry is a clarion call to every
Member of the Senate of both political parties. Are we going to
continue to waste taxpayers' money? Are we going to continue to allow
these schools to exploit veterans and students across America?
You cannot turn on the local television here in Washington, DC, where
there are a lot of military families, without running into ITT ads
trying to lure these young veterans into their programs that are
virtually worthless, that end up saddling many of them with debt, if
not saddling the government with debt before it is all over.
I ask the Senator from Iowa, is it not a fact that when the new
leadership came into the new House of Representatives, that in the
first few weeks of activity, one of the first things they did was to
attempt to stop the Department of Education from regulating this for-
profit school industry?
Mr. HARKIN. The Senator is right on the mark. The House wanted to
keep the Department of Education from issuing what we call a gainful
employment rule, which basically is a rule saying, if you are going to
take all this money and you are supposed to be educating kids to get a
job or career, what is happening to them? We want to know if they are
actually getting jobs. What could be more innocent than that? We want
to know how they are doing. Yet the Republican leadership in the House
of Representatives wanted to stop the Department from issuing that
rule.
Mr. DURBIN. I might ask the Senator from Iowa, at the end of the day
is it not true that while these for-profit schools have about 10
percent of the students in America, they take in almost 25 percent of
all Federal aid to education?
Mr. HARKIN. The Senator is absolutely right.
Mr. DURBIN. Is it not also true that we requested, I think together,
that the GAO do a study of the amount of money that was being spent on
behalf of our veterans at for-profit schools, and did we not find that
the cost to the Federal Government was often two or three times as much
for the same education that was being offered at community colleges and
public colleges? Isn't it true that the for-profit industry, by all
objective measures, is exploiting our GI bill at the expense of our
taxpayers, our government in debt, and these veterans who are
unwittingly signing up for these worthless courses?
Mr. HARKIN. I say to my friend, yes, we did. On December 8, our
committee issued a report, December 8, 2010, a report on, partially--
what the Senator is saying now, how much more expensive these programs
are in these schools compared to what they could get, say, at a
community college or a nonprofit school in their States. The Senator is
right, it is three to four times as much.
Plus there is one other thing, I say to my friend. He knows this.
When these students go to a small not-for-profit school that you would
have in Illinois or the colleges I have in Iowa, such as Simpson or
Graceland or Central College--a number of our small private colleges--
they do a great job. They do a wonderful job in helping poor students
who need a lot of Pell grants. What these colleges do when students
come in and they borrow money and use Pell grants, is provide a lot of
support from the university. The university is there to help them with
their studies, to make sure they get the kind of help and support they
need. A lot of these students come from families who have never gone to
college, they never had that kind of experience. They come to college,
and they get that support. What the for-profits do is they sign the
kids up, and once they get the money, good luck in ever getting any
help or support from the for-profit colleges.
Mr. DURBIN. I might say to the Senator from Iowa, the next time you
are in Chicago and headed out to O'Hare Airport, right before the
O'Hare exit, look to your right. You will see a tall office building,
and on the top it says ``Westwood College.'' This has been one of my
favorites because I have met many of their so-called students, despite
their best efforts, who have been exploited by Westwood College. I want
to share with the Senator one story to show it can go from bad to worse
in Westwood College.
There was a veteran named Carlos. He served in Iraq, came home, and
wanted to get a degree. He saw the ad for Westwood College on
television. He went to sign up, and they said: Don't worry about it,
Carlos, because at the end of the day, your GI bill is going to pay for
everything. He signed up and started going out to this Westwood College
and was disappointed at how awful the courses were and how the teaches
didn't teach anything. He didn't feel he was learning anything.
After a year, Westwood called him in and said: Carlos, you are on the
road to your degree, but we have run into a problem--the GI bill will
not cover all the expenses.
If I am not mistaken, I ask the Senator from Iowa, doesn't the GI
bill pay about $17,000 a year?
Mr. HARKIN. That is right. Starting in August, that's about how much
the GI Bill will pay per year.
Mr. DURBIN. They said to Carlos: You need to take out student loans
on top of the GI bill.
He ended up taking out the GI loans, going $21,000 in debt over and
above the GI bill, and he couldn't finish. He didn't want to go further
into debt.
I might say to Carlos that he got off easy. I had a young woman who
went to Westwood College for a criminal justice degree. After 5 years
of extra effort to get her diploma, she ended up with a worthless
diploma that she couldn't turn into a job anyplace, at any sheriff's
office or anyplace related to criminal justice. I might say to the
Senator from Iowa, she was $90,000 in debt at the age of 26, with a
worthless diploma from Westwood College, this for-profit school. She is
living in her parents' basement because she cannot get a job that pays
anything, and whatever she makes goes to the student loans, and she
cannot borrow a nickel now to get a real education.
Mr. HARKIN. Of course not.
Mr. DURBIN. Think about this poor girl. She was doing the right
thing.
I will say something to the Senator from Iowa and ask him to comment
on this. I think the Federal Government is at fault here too. Somewhere
along the way, Westwood College ended up qualifying for college student
loans and Pell grants. Who said they are qualified? I would challenge
that based on these experiences.
Are we doing our job as a Federal Government to make sure these are
truly accredited colleges and universities? I ask at this point, is
there more we can do to make sure these are real
[[Page S3159]]
schools teaching real courses that can lead to jobs?
Mr. HARKIN. I say to my friend, first of all, Westwood was one of the
schools that the GAO had an undercover investigation into that had one
of the most deceptive programs of getting students to sign up. That is
all documented on film.
Second, the accrediting agency that accredits Westwood was out at
Westwood about the same time. Yet they found none of the things the GAO
found. I talked to them. I had a hearing. I had them before our
committee. I asked the accrediting agency: How could it be that on the
one hand the GAO finds out all this, yet you say they are fine and they
get accredited?
They did admit there was some laxness or some loopholes, some things
they were not paying attention to, that they needed to do a better job
in accrediting.
I say to my friend, what the Federal Government does is we say to a
school: To be able to be eligible for Federal financial aid so you
could accept Pell grants and get the guaranteed student loans, you
would have to be accredited. The Federal Government doesn't do that
accrediting. That is done by private agencies.
Here is another one, I say to my friend from Illinois, that we need
to look into. Get this. The accrediting agencies that accredit let's
say a Westwood, do you know where they get their funding? From the
schools they accredit. Talk about a fox in the chicken coop. They go
out to accredit Westwood, but it is Westwood that is paying them to
accredit them.
This is something that I think we as a Federal Government have to get
into. To me, this is a system that has kind of run amok, this whole
accrediting system. I think there needs to be a better system of
accrediting schools. I can assure my friend this is something else our
Committee on Education will be looking at in the future.
Mr. DURBIN. I ask the Senator from Iowa, is it not true that when our
GAO undercover agents went out to look at 15 for-profit colleges along
the lines the Senator discussed, they found all 15 made deceptive or
questionable statements to potential applicants, including recruiters
at the so-called Westwood College? Investigators found admissions
representatives at Westwood misstating the cost of the program, failing
to disclose the graduation rates, even suggesting falsification of
Federal financial aid forms.
As with the experience of the young veteran I described, the GAO
report found the recruiters overstated what it would cost to go to
public college. On film, as you said--this is on videotape--when asked
the cost, this recruiter from Westwood said: Well, it depends on the
program. Usually with a bachelor's program, coming in with no college
credits, this could be--it could range from $50,000 to $75,000, he
said. Most schools, more traditional schools, you are looking at
$100,000, $150,000, $200,000.
I might say to the Senator from Iowa, isn't it true that to obtain
the same degree he was offering at Westwood from a public university
degree in Texas would cost $36,000? Isn't that what the GAO came in and
said?
These people are deliberately misleading these youngsters and new
veterans trying to make a life for themselves, piling debt on them with
a worthless diploma and ripping off the taxpayers. Why don't we have a
sense of some rage here in Congress that this is going on?
I would say to the Senator, it strikes me first and foremost that we
should protect the young people in America and we ought to make an
equally high, if not higher, priority of protecting our veterans. We
created the GI bill with a great source of pride--I know you are a Navy
veteran yourself--great source of pride that we were standing up for
this generation of veterans. Senator Jim Webb led the way on that. We
were good about keeping our word to veterans. Now these same veterans
are being ripped off because we are not doing our job in Congress.
I say to the Senator, when it comes to some of these recruiting
practices that are being used by Kaplan University, what you have
disclosed here on the floor is embarrassing, that we allow this to
occur to our veterans.
Mr. HARKIN. I say to my friend it is. It is embarrassing, and it is
just shameful.
I said earlier this is from Kaplan's recruiting. They call it their
military learning module. They call it ``Fear, Uncertainty, and
Doubt.'' As I said earlier, they say--now, this is an internal
document. This is for the recruiters. This is not something they hand
out through the public. We got this through our investigation. They
say: This technique was originally created within the computer hardware
industry and uses these emotions to attempt to influence perceptions or
beliefs--and on and on.
As I said earlier, it is one thing to use high pressure tactics to
sell someone a hard drive or a new computer or something, but when they
are exploiting fear, uncertainty, and doubt on a GI who may have post-
traumatic stress disorder, who may have served in Iraq, who didn't go
to college, that is another thing. Young people now, they are worried
about their future and what is going to happen to their future. Then
these people come in and put the pressure on them with fear,
uncertainty, and doubt to get them to sign a contractual agreement and
turn over their GI bill benefits. It is just disgraceful.
Mr. DURBIN. Mr. President, I ask the Senator again, this is Kaplan
University, which owns the Washington Post?
Mr. HARKIN. I think it is the other way around. The Washington Post
owns Kaplan University.
Mr. DURBIN. I see. I also think, for the record, that Kaplan
University makes more money than the newspaper, but be that as it may,
they are linked economically.
Mr. HARKIN. Yes, they are.
Mr. DURBIN. I have always respected this newspaper. I just wonder how
they can rationalize this sort of activity--the exploitation of
students and the exploitation of veterans.
I am sure the Senator has been visited by so many people who have
called and said: Senator Harkin, I loved your speech. I loved your
hearing. I have to get in to talk to you because we are the good guys.
We are the good school. We are the ones who don't exploit students.
You know what. I found a couple of them I believe. There are some
that are good.
Mr. HARKIN. That is right.
Mr. DURBIN. But the rest of them, at this point it is an
embarrassment to me. As a person who couldn't have gone to college
without a student loan--and I have voted reflexively now in the House
and the Senate to give the next generation the same chance--I have to
say to the Senator the party is over as far as I am concerned. The next
time we have a debate on Pell grants and college loans, I want this
issue front and center. They are ripping off the taxpayers and ripping
off the students and ripping off the veterans and we are fools to
ignore it.
The House Republicans have announced that they want no part of
reform, that they are going to take this power away from the Department
of Education. I think we have to send a different message.
Mr. HARKIN. I say to my friend, the Senator is right on target. What
has happened as we have looked at this over the last year and a half
now is even the good actors are being sucked into this vortex because
the business model itself is bad.
For example, how many times has my friend heard from the for-profit
industry: Well, the reason we have these high dropout rates--for
example, here is Westwood; 57.6 percent dropped out in the first year.
Here is Kaplan; 69.1 percent dropped out in the first year--the reason
we do is because, see, we serve a lot of low-income students. These are
low-income people we serve, and they have a lot of problems in their
lives. That is why we have such a high dropout rate.
What they are not telling us is, because of the business model, that
is exactly who they go after to recruit. Why do they do that? Because
the lowest income student gets the highest Pell grant and the most
guaranteed student loan. So if you are in the for-profit business and
you want to make the most money, you don't want to recruit Senator
Durbin's son or daughter. You want to recruit somebody whose parents
never went to college, who is probably a minority, maybe doesn't even
speak English all that well, who can get the maximum Pell grant and the
maximum student loan, and once they
[[Page S3160]]
get the money--well, if they stay, fine; if they don't, no big deal.
Mr. DURBIN. Let's stay on that point for a second. I ask the Senator
from Iowa, how long does the student have to stay at the school for the
school to get the Federal money? If they left and didn't finish, would
the school still get paid?
Mr. HARKIN. This is something else we have to look into. Right now,
the Federal laws are that a student has to be in for at least 60
percent of the term. If they are in for 60 percent of a term, then the
school can keep the money.
Now, I ask my friend from Illinois, what is a term? I ask people
that, and they say: well, isn't that a semester? Well, a term is
whatever the school says it is. Some of these schools have a term that
is 6 weeks long. So you sign up, you turn over your money, you spend 4
weeks there, you fulfill 60 percent of the term. If you leave, they
keep the money.
Mr. DURBIN. And you end up with the student loan.
Mr. HARKIN. And, by the way, as the Senator fully knows, these
student loans are not dischargeable in bankruptcy. They are around your
neck forever.
Mr. DURBIN. I might also add, I think Congress made a serious error
in saying that the private loans from the same schools will be treated
the same way. They are not dischargeable in bankruptcy.
Here we have someone who could be 19 or 20 years old signing up for
$4,000, $5,000 or $10,000 worth of student loans. Have they really
thought and reflected on the fact that that debt they have incurred is
going to be with them for a lifetime and, at some point in their lives,
when they can no longer borrow money to go to school, and they are
still facing default on their student loan, they could have their
income tax returns attached, they could be prohibited from Federal
employment? They cannot discharge this loan in bankruptcy. They are
stuck with it.
That poor girl living in her parents' basement with a $90,000 debt
for Westwood College, a rip-off institution, is stuck. She has nowhere
to turn. The college president wrote to me and said I am just being
totally unfair with him about her experience. Well, I know her
experience inside and out.
I said: You want fairness? You step in and forgive her loan. You pay
it back. You have the money. You pay it back. Never heard back from
him.
They don't have the interests of the students at heart. They have the
interests of money at heart. That is why I am glad the Senator is
investigating, and we will continue to speak out.
Mr. HARKIN. I thank the Senator for his great work on this.
I just want to add one other thing about the school and about the
debt of these students. Some have likened what the for-profit school
industry is doing to the subprime bubble we had. But there is a big
difference. Even as bad as the subprime mortgages were, a person who
had a house they couldn't pay for could walk away from that house. They
could always walk away from it, and that is the end of the debt. You
can't walk away from this. No way. That is the difference.
This is not a dischargeable debt, and these students, as the Senator
points out, might end up alone. They might not be able to go to a
legitimate school because they can't get any money for that. They could
be barred from Federal employment. This will follow them for the rest
of their lives until they pay it off. Yet these companies are making
almost obscene profits and paying their CEOs tremendous salaries and
benefits.
As I pointed out earlier, many of these for-profit schools are owned
by the same investment firms on Wall Street that brought us the
subprime problem.
Well, I say to my friend, we just cannot let this go. There is too
much at stake not only for the taxpayers of this country but for these
students, these young kids, these poor kids who are being preyed upon.
So whenever we hear these schools say: Well, the reason we have this
problem is because we are servicing all of these poor kids--don't
forget. That is who they prey on. That is who they go after because
they get the most Pell grants and the most student loans out of the
poor kids. Then after they get the money, hey, if they leave, no sweat.
They don't care. It is not a problem with them.
I thank my friend from Illinois.
Mr. DURBIN. I thank the Senator from Iowa.
Mr. HARKIN. Mr. President, I yield the floor.
Mr. DURBIN. I ask unanimous consent to speak as in morning business.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
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