[Congressional Record (Bound Edition), Volume 161 (2015), Part 12]
[Senate]
[Pages 16703-16706]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         UNIVERSITY OF PHOENIX

  Mr. McCAIN. Mr. President, I come to the floor for a very unusual 
reason this afternoon. It has to do with an attack on for-profit 
colleges by a longstanding campaign by certain groups and individuals 
who have been opposed to for-profit colleges. They were able to destroy 
one out in California, and they are continuing to attempt to make those 
attacks work on other for-profit colleges.
  This is a very unusual situation because what we are seeing take 
place are conclusions being drawn and action being taken--in this case 
by the Department of Defense--without due process, as a result of 
pressure exerted by a Member and Members of the Senate, which then has 
resulted in action without due process.
  Last week there was a very interesting editorial in the Wall Street 
Journal entitled ``Obama's For-Profit Stealth Attack. The Pentagon 
punishes Phoenix on orders from Senate headquarters.''

       Earlier this month the Defense Department cut off military 
     tuition assistance to new students at the for-profit 
     University of Phoenix, which enrolls about 9,300 
     servicemembers at its 105 campuses nationwide.
       Defense's reasons for discharging Phoenix are vague: A 
     review ``in response to allegations published by the Center 
     for Investigative Reporting'' in a June drive-by on the 
     college found minor breaches in decorum.

  Let me emphasize that. I say to my colleagues, there was a story 
written by an outfit called the Center for Investigative Reporting--I 
don't know anything about them, and I am sure the Department of Defense 
does not. But as a result of an investigation by an outfit that none 
have ever heard of, then action was taken by the Department of Defense. 
It was not a Department investigation. There was no scrutiny. This is a 
remarkable case of the Senate exerting influence in a way which is, I 
think, almost unprecedented.


[[Page 16704]]

       To wit, Phoenix had distributed unauthorized ``challenge 
     coins,'' which commonly denote tokens of recognition, with 
     military insignia. Yet many non-military outfits including 
     the University of Miami, Boeing and Intel--

  And I would point out Southern Illinois University--

     hand out such coins.

  It is not an uncommon practice to hand out coins.

       Phoenix's real offense, according to the Center for 
     Investigative Reporting--

  Remember, this has nothing to do with the Government of the United 
States--

     is using the coin to ``imply military support'' for the 
     college.

  My friends, at least 100 institutions in America give out challenge 
coins. I wonder if those institutions have committed grievous crime in 
the view of the CIR.

       Defense also censured Phoenix for failing to obtain 
     approvals from the ``responsible education advisor'' to 
     sponsor events on military bases.

  First, it is good to sponsor military events on military bases. Lots 
of organizations, lots of companies, lots of corporations sponsor 
events on military bases. In this case, although the responsible 
education advisor was not consulted, the commanding officer of the base 
was consulted and gave his approval.

       Yet as the CIR article showed, military officials have 
     welcomed the university onto their bases.

  They welcomed them because they were honoring those who serve--
remarkable.

       Phoenix didn't navigate all the correct bureaucratic 
     channels.
       In any case, as Defense acknowledges, ``the University of 
     Phoenix has responded to these infractions with appropriate 
     corrective action at this time.''

  So as minor as these offenses may have been and technical in nature, 
they have taken the corrective action, but still a Senator wants them 
punished.

       But political general Dick Durbin, the Illinois Democrat 
     who is leading the charge against for-profits in the Senate, 
     nonetheless commanded the Pentagon to ``bar the company from 
     further access to servicemembers.''
       So the department is putting Phoenix on ``probation'' 
     because it finds the ``scope of these previous violations'' 
     to be ``disconcerting.'' What's really disconcerting--

  According to the Wall Street Journal.

     --is the Obama Administration's politicization of military 
     policy. Defense also cites ``inquiries'' by the Federal Trade 
     Commission and California Attorney General Kamala Harris.
       To be clear, Phoenix hasn't been charged with wrongdoing. 
     According to the Defense Department, 96% of the university's 
     servicemembers successfully completed courses, a higher rate 
     than the public Central Texas College . . . and nonprofit 
     Liberty University. . . . In essence, the Obama 
     Administration's military tribunal is punishing Phoenix for 
     being a target of the political left.
       Yet this is the White House standard of due process, so 
     Phoenix should be nervous.

  I say to my friends and colleagues, they are nervous.

       Last year the Education Department, Consumer Financial 
     Protection Bureau and Ms. Harris mounted a coordinated 
     campaign that drove for-profit Corinthian College out of 
     business without ever proving misconduct.

  This is why I say to my colleagues that I am on the floor because 
clearly, without any proof of misconduct, with the power of the U.S. 
Senate, the Department of Education, the Consumer Financial Protection 
Bureau, and Ms. Harris, they were able to drive a college out of 
business. And it is obvious what this is really all about. This is all 
about the constant attacks on for-profit colleges, which is an anathema 
to some.
  Continuing:

       Over the last five years, Phoenix enrollment has dropped by 
     half to 220,000 students due largely to the left's assault on 
     for-profit education, which has knee-capped recruiting. . . . 
     Military tuition assistance makes up less than 1% of 
     Phoenix's revenues. However, many servicemembers who are 
     seeking vocational skills later pursue bachelor's and masters 
     degrees at the university under the GI Bill. Veterans make up 
     20% of the university's enrollment, and many need the 
     flexibility of Phoenix's online courses as they earn a living 
     while going to school.

  Most of our veterans, because of their age, have to earn a living 
while going to school.
  The article continues:

       The Administration's ostensible goal is to discredit 
     Phoenix and choke off veteran recruitment. But the casualties 
     of its attack will be servicemembers who will now have fewer 
     educational options and opportunities.
       Meantime, General Durbin has commanded the Education 
     Department and Department of Veterans Affairs to ``take 
     appropriate action'' against the company. Bombs away.

  I wish to point out that recently Senator Alexander, the chairman of 
the HELP Committee, Senator Flake, and I wrote a letter to Secretary 
Carter. I will quote from it:

       We strongly believe that these earned benefits and 
     educational opportunities for our servicemembers should not 
     be jeopardized because of political or ideological opinions 
     of some Members of Congress regarding the types of 
     institutions that provide postsecondary education to our 
     troops. . . . However, it is our understanding that Ms. 
     Bilodeau's decision--

  She is the person who is the DOD's voluntary education partnership 
head--

     and threats of termination of participation in the TA program 
     rely on overly technical violations of the MOU.

  What we are saying is we want due process, and these questions that 
have been asked--we hope we can get an answer sooner rather than later.
  Because Senator Durbin wrote also to other agencies of government, we 
are also writing to them.
  Mr. President, I ask unanimous consent to have printed in the Record 
the letter to the Secretary of Defense from Senator Alexander, Senator 
Flake, and me.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                  U.S. Senate,

                                 Washington, DC, October 22, 2015.
     Hon. Ashton Carter,
     Secretary, Department of Defense,
     Defense Pentagon, Washington, DC.
       Dear Secretary Carter: We write to ask that you review an 
     October 7, 2015, decision by Ms. Dawn Bilodeau, Chief of 
     Voluntary Education for the Department of Defense (``DoD''), 
     to place the University of Phoenix (``the University'') on 
     probationary and potential termination status with respect to 
     its participation in the DoD Tuition Assistance (TA) Program 
     for active duty military personnel. We strongly support 
     efforts to monitor the integrity of colleges and universities 
     serving our nation's servicemembers. However, based on our 
     review of the relevant documents associated with this 
     decision, we are concerned that the DoD's decision is unfair, 
     requires additional review, and may warrant reconsideration.
       The TA program is an important benefit that enables active 
     duty military personnel to choose a postsecondary education 
     program that best fits their needs to enhance both career and 
     personal goals. The program also serves as an important tool 
     for the DoD to further the recruitment and retention efforts 
     of our nation's volunteer armed forces. We strongly believe 
     that these earned benefits and educational opportunities for 
     our servicemembers should not be jeopardized because of 
     political or ideological opinions of some Members of Congress 
     regarding the types of institutions that provide 
     postsecondary education to our troops.
       As you know, the University of Phoenix participates in the 
     TA program through the DoD's Voluntary Education Partnership 
     Memorandum of Understanding (MOU), which conveys the 
     commitments and agreements between colleges and universities 
     and DoD and ensures that the TA funds are spent wisely to 
     support servicemembers attending quality educational 
     programs. However, it is our understanding that Ms. 
     Bilodeau's decision and threats of termination of 
     participation in the TA program rely on overly technical 
     violations of the MOU, fail to acknowledge any of the 
     University's corrective action or pledged cooperation and are 
     based, in part, on unsubstantiated allegations associated 
     with inquiries not initiated by the DoD.
       With respect to the University's violation of DoD policies 
     on the use of official seals or other trademark insignia with 
     ``challenge coins,'' Ms. Bilodeau's letter concedes that 
     ``the University of Phoenix has responded to infractions with 
     appropriate corrective action at this time.'' While the 
     University has remedied this infraction, we are concerned 
     that traditional public or private, non-profit universities, 
     including Southern Illinois University, utilize similar 
     challenge coins with impunity. (See attached photographs.) We 
     remain skeptical that the DoD is evenly and uniformly 
     enforcing its policies on all institutions of higher 
     education and appears to be unfairly singling out certain 
     institutions of higher education based on a letter from the 
     Vice Chairman of the Defense Subcommittee of the Senate 
     Appropriations Subcommittee. (See Letter to Secretary of 
     Defense, June 30, 2015, attached.) It has also come to our 
     attention that on the evening of October 20th, DoD issued 
     additional new guidance on the

[[Page 16705]]

     use of these coins clearly indicating that the regulatory 
     field remained vague and was not settled.
       With respect to the University's apparent failure to obtain 
     specific approval for conducting partnership activities at 
     several military installations, it is our understanding that 
     the University obtained approval from the respective base 
     leadership to sponsor, sometimes at their request, 
     partnership events. While the University may have technically 
     violated the MOU's requirement that the University coordinate 
     with the Education Services Officer, those who have served in 
     the military readily understand and respect the chain of 
     command. Approval from the base leadership should be 
     sufficient to meet the requirements of the MOU regardless of 
     the Education Services Officer's involvement and, should not 
     be cited as a basis for probation and possible termination.
       More concerning, however, is Ms. Bilodeau's rationale to 
     suspend participation in the TA program based on requests for 
     University documents by two government agencies that are not 
     in fact the DoD. It is worth noting that a request of 
     documents does not indicate a violation or admittance of 
     guilt. In fact, Ms. Bilodeau appears to agree, indicating 
     that the allegations by other entities have not yet been 
     substantiated. However, without fair warning or a sufficient 
     opportunity to be heard, the DoD informed the University of 
     Phoenix that, among other things, ``no new or transfer 
     students at your institution will be permitted to receive DoD 
     [tuition assistance]'' and it is actively considering 
     terminating its MOU with the University. Ms. Bilodeau's 
     decision to give the University fourteen (14) days to respond 
     to the probation decision effectively puts the University in 
     the position of having to respond to reviews undertaken by 
     agencies other than the DoD. These actions seemingly assume 
     the guilt of the University before they are proven and ignore 
     the remedied infractions identified by and directly within 
     the jurisdiction of the DoD.
       The University of Phoenix has a long history of serving 
     working adults and others for whom traditional university 
     schooling is unavailable, including more than 200,000 
     enrolled civilian and military students spread out across 
     more than 100 locations in 17 states. With almost 20,000 
     faculty and 8,800 staff in every state and the territories as 
     well as just over 1,400 faculty and 6,300 staff in Arizona 
     alone, the University of Phoenix is a significant member of 
     the Arizona and broader higher education community. Like any 
     organization that chooses to partner with the DoD to serve 
     our servicemembers, the University has a legitimate 
     expectation to be dealt with fairly and reasonably. Given our 
     aforementioned concerns, we believe that the DoD's decision 
     should be evaluated for considerations of fairness and 
     cooperation and ask that you independently and carefully 
     review this bold decision.
       To help us obtain a better understanding of the DoD's 
     actions in this matter, and to help ensure that all 
     institutions of higher education--for-profit, public and 
     private, non-profit colleges and universities--are held to 
     the same standard of conduct relative to DoD rules and 
     regulations, we ask that you provide us with the following 
     information by October 30th before you take any additional 
     action on this matter:
       1) What are the specific, factual, and evidentiary bases 
     for the DoD's recent decision to place the University of 
     Phoenix on probationary status?
       2) Did anyone besides Ms. Bilodeau review this decision? 
     Please provide any internal decision memorandum that reflects 
     that decision when it was originally made.
       3) Please describe why the DoD official who reviewed the 
     decision believes he/she can place the University on 
     probation when, as Ms. Bilodeau stipulates in her October 7th 
     letter, the University has already remedied identified 
     infractions of the MOU?
       4) Please provide all documents, including communications 
     from Members of Congress, or their staff, and any outside 
     party regarding the University of Phoenix and this matter. 
     Also, provide the guidelines relating to the establishment of 
     a probation sanction or imposition of probationary status 
     against the University of Phoenix.
       5) Please provide a list of all institutions of higher 
     education participating in the DoD's Voluntary Education 
     Partnership and/or Tuition Assistance programs that have been 
     placed on probationary status in connection with a violation 
     of their MOU; the reasons each of those schools were placed 
     on probationary status; and whether each such school was 
     given opportunity to make corrective actions before being 
     placed on probationary status.
       6) Please provide a list of those schools where the DoD MOU 
     was terminated and the reasons for such termination.
       7) Is it the DoD's practice to place both for-profit and 
     not-for profit universities on probation when another federal 
     or state agency makes a civil investigative demand for 
     documents? If so, please identify other instances where this 
     has taken place and the reasons for taking such action.
       8) Please list those schools that currently use or 
     previously used challenge coins with DoD official seals or 
     other trademark insignia; indicate whether such schools 
     obtained prior DoD authorization for such use; describe any 
     sanctions imposed for such use; and provide any documents or 
     correspondence relating to such use or sanction 
     determination.
       9) Please describe the military chain of command as it 
     relates to the MOU and a decision by the base leadership to 
     permit an institution to sponsor an event on base.
       10) If this probationary period is extended or the MOU with 
     the University of Phoenix is terminated, how many active duty 
     military personnel do you estimate will be impacted by this 
     decision?
       The TA program is critical to our nation's servicemembers' 
     educational and career opportunities, primarily to prepare 
     them to serve in positions of increased responsibility within 
     the military, but also to prepare them to transition to 
     productive civilian careers. While we support efforts to root 
     out waste, fraud, and abuse, we hope that you will review 
     this situation with great caution and care. The Senate 
     Committee on Health, Education, Labor and Pensions is 
     additionally in the process of reauthorizing the Higher 
     Education Act and exploring ways to ensure quality at all of 
     our colleges and universities is of utmost importance and 
     concern.
       We look forward to your timely response and should you have 
     additional questions, please feel free to ask your staff to 
     contact our Chiefs of Staff Pablo E. Carrillo (Senator 
     McCain), at (202) 224-7123; Chandler Morse (Senator Flake), 
     at (202) 224-4521; and David Cleary (Senator Alexander) at 
     (202) 224-8798.
           Sincerely,
                                                      John McCain,
                                                     U.S. Senator.
                                                       Jeff Flake,
                                                     U.S. Senator.
                                                  Lamar Alexander,
                                                     U.S. Senator.

  Mr. McCAIN. We sent these letters to the Veterans' Administration and 
to the Department of Education requesting that they notify us if 
further action is taken against the university. We sent these letters 
because we feel that the Department of Defense's decision and threats 
of termination of participation by the University of Phoenix in this 
program were done simply because the Senator from Illinois sent a 
letter to the Department of Defense highlighting an outside 
investigative report--an outside investigative report--suggesting 
wrongdoing on the part of the University of Phoenix.
  Let's be clear again. There was no due process here. That is what I 
want--due process. If the University of Phoenix is guilty of some 
wrongdoing, I want to be one of the first to make sure the proper 
penalties are enacted. I do not--I repeat--I do not believe that on the 
basis of a single investigative report, that action should be taken.
  With this in mind, I was stunned to hear once again that the Senator 
from Illinois is insisting that the DOD not reverse its decision. Given 
his own involvement in the matter, his suggestion that the DOD not 
reverse its decision just because Members of this body conveyed concern 
about the merits of its probationary decision and the fundamentally 
unfair way that the DOD made it is, in fact, ridiculous.
  The whole matter arose from the Senator from Illinois pressuring the 
DOD to take adverse action against the university. His case was based 
not on an affirmative finding by the Department that the university 
engaged in any newly identified acts of substantial misconduct but a 
report by an outside investigative group. He then sent letters to the 
Department of Education and Department of Veterans Affairs asking for 
similar action.
  After further review of the DOD's decision, it is my opinion that, 
No. 1, it relies on overly technical violations of a memorandum of 
understanding that the university signed with the Department of Defense 
regarding its participation in the Tuition Assistance Program; No. 2, 
it fails to reflect the actions the university has taken to correct and 
identify violations; and No. 3, it is based in part on unsubstantiated 
allegations associated with inquiries for information by other 
agencies, not findings of new violations.
  In other words, with our letter, we asked Secretary Carter to review 
a lower level decision to put the university on probation where even 
the DOD conceded, in its very letter to the university announcing its 
decision, that ``the University of Phoenix has responded to infractions 
with appropriate corrective action at this time.''
  With respect to the university's proposed violations of DOD policies 
on the use of official seals or other trademark insignia with 
``challenge coins,'' we understand the university has remedied

[[Page 16706]]

this infraction. But it is worth noting that traditional public or 
nonprofit universities, including Southern Illinois University, utilize 
similar challenge coins with impunity. I remain skeptical that the DOD 
is evenly and uniformly enforcing its policies on all institutions of 
higher education and appears to be unfairly singling out certain 
institutions of higher education based on a letter from the Senator 
from Illinois.
  With respect to the university's apparent failure to obtain specific 
approval for conducting partnership activities at several military 
installations, it is our understanding that the university obtained 
approval from the respective base leadership to sponsor, sometimes at 
their request, partnership events. While the university may have 
technically violated the MOU's requirement that the university 
coordinate with the education services officer, those who have served 
in the military readily understand and respect the chain of command. 
Approval from the base leadership should be sufficient to meet the 
requirements of the MOU regardless of the education service officer's 
involvement.
  By the way, the education service officer did not turn this down; 
they just were not consulted.
  In the absence of significant, substantiated findings regarding new, 
uncorrected violations, the Department of Defense decided to suspend 
the university from participating in the Tuition Assistance Program 
based on document requests by two government agencies that are not, in 
fact, the Department of Defense and does not indicate a violation or 
admittance of guilt.
  We call on our service men and women to serve and protect our 
interests, often at great cost to themselves and their families. Yet 
the Senator from Illinois suggests that they are not capable of 
choosing their own path when determining their postsecondary 
educational needs.
  By the way, on a technical violation of the budget agreement, the 
Senator from Illinois was one of the leaders in voting against the 
Defense authorization bill, which was the result of many years of work.
  In all cases, opinions should absolutely not be used to essentially 
target a valued member of Arizona's education community. The University 
of Phoenix has a long history of serving nontraditional students, such 
as Active-Duty military and others who tend to delay enrollment after 
high school, work full time, have dependents, or are single parents for 
whom traditional university schooling is unavailable. The University of 
Phoenix has graduated more than 80,000 military and veteran students 
with postsecondary degrees.
  A recent Wall Street Journal article I quoted--and contrary to the 
preference of this administration, and for the sake of our 
servicemembers who earned and rely on this educational benefit, I 
promise I will not let this issue go.
  The State of Arizona is proud to have the University of Phoenix as a 
member of its higher education community.
  As the questions that I posted in this letter show, I will continue 
to look into this action based on the merits of DOD's decision, not 
ideological grandstanding.
  Recently, as a result of this, I received letters from three students 
who recently graduated from the University of Phoenix.
  Andrew Workman of North Carolina said:

       University of Phoenix allowed me to work 50 hours a week 
     and pursue my degree at the same time.

  Ryan Zulkoski of Nebraska received his master's in nursing 
informatics in 2013. He said:

       I loved my experience and UOPX has opened so many doors for 
     me.

  Jim Wallace of Florida said:

       I am a UOPX graduate, MBA 2006 and veteran of the US Navy 
     Reserve. In my opinion UOPX led the way in educating working 
     professionals. At the time I started my program, no other 
     institutions offered the ability for me to successfully 
     complete my studies, care for my family and work a demanding 
     job. The bottom line is that it was challenging and I worked 
     hard to complete my degree.

  Mr. President, I ask unanimous consent to have these comments by 
graduates printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Andrew Workman (North Carolina) joined the United States 
     Navy in 2006. After serving 4 years on active duty he is 
     transitioned into the United States Navy Reserve in which he 
     continues to serve not only his country but his fellow 
     Sailors through the Hire Heroes USA organization. 
     ``University of Phoenix allowed me to work 50 hours a week 
     and pursue my degree at the same time.'' Andrew attended a 
     ground campus and found the classes to be diverse and 
     challenging. ``The team projects and presentations helped 
     build my confidence and laid a foundation for me to be 
     successful in the workplace. You have to work with people 
     from all walks of life in the real-world and University of 
     Phoenix built that into their curriculum.''
       Ryan Zulkoski (Nebraska) received his Master's in Nursing 
     Informatics in 2013. Ryan has been in the Army National Guard 
     for 12 years and served one deployment to Iraq in 2005 and 
     has many other accomplishments and memberships, including a 
     humanitarian deployment to Nicaragua and participation in 
     Army Honor Guard. He used every last benefit to receive his 
     bachelor's in nursing from University of Nebraska and his 
     master's degree with UOPX. ``UOPX has helped me build an 
     educational foundation to work in a field that I am extremely 
     passionate about.'' Ryan found the quality of the program to 
     be on par with his undergraduate from University of Nebraska. 
     ``I graduated from UOPX in 2013 and have doubled my salary as 
     a Nurse in less than 2 years. I also have 4 children and a 
     wife, so attending a traditional onsite program was 
     impossible. I loved my experience and UOPX has opened so many 
     doors for me.''
       Jim Wallace (Florida)--``I am a UOPX graduate, MBA 2006 and 
     veteran of the US Navy Reserve. In my opinion UOPX led the 
     way in educating working professionals. At the time I started 
     my program, no other institutions offered the ability for me 
     to successfully complete my studies, care for my family and 
     work a demanding job. The bottom line is that it was 
     challenging and I worked hard to complete my degree.''

  Mr. McCAIN. Mr. President, again, I can only point out what the Wall 
Street Journal said. This is Obama's for-profit stealth attack. It is 
being orchestrated and carried out by the Senator from Illinois, who 
has a well-known record of not supporting the men and women who are 
serving in the military by his latest opposing of the Defense 
authorization bill on the grounds of OCO. So the men and women who are 
serving in the military and those who have served with honor obviously 
have a lower priority for him than his vendetta against for-profit 
universities. I think it is shameful.
  I yield the floor.
  The PRESIDING OFFICER. The majority leader is recognized.

                          ____________________