Responsive Document - CREW: Department of Education: Regarding For-Profit Education: 8/16/201111-00026-F (Ginns Redactions2) (PART 3)

From: Yuan Georgia
To: Clark. Teresa

CC: Rosenfelt. Phil
Rogers. Margot
Date: 4/28/2010 11:11:58 AM
Sub,iect: Media reports- background for noon meeting
Teresa-
(b)(5)
Georgia Yuan
DeVry leads eel. stocks lower as Credit Suisse downgrades on regulatory, job market concerns
Associated Press
04/26/10 9:30 AM PDT
NEW YORK -DeVry led decliners in education stocks Monday after a Credit Suisse analyst said the for-profit
school could be hurt by proposed regulatory changes and an improving job market that could slow enrollment.
The administration has pushed hard for gainful employment regulations, which stipulate that graduates of schools must not
spend more than 8 percent of their income on paying student loans.
It's meant to help improve school quality- making sure students are qualified and the courses help increase their
incomes- as student loan defaults soar.
If schools failed to pass this test, the government could block their access to federal loans for students, the bulk of their
revenues.
In early April, the Education Department said schools with 50 percent graduation rates and 70 percent job placement
rates would be exempt from a proposed rule linking graduates' incomes to required debt payments.
Analyst Kelly Flynn, however, said Washington sources believe the more lenient proposal might not wind up in a draft of
the law that will be posted by mid-'May or June.
Flynn downgraded DeVry and ITT Educational Setvices Inc. to "neutral" from "outperf01m," cutting target prices to $65
from $75 and $110 from $135, respectively.
Shares ofDeVry Inc. fell $4.59, or 6.6 percent, to $64.87, while ITT stock dropped fell $2.07, or 1.8 percent, to
$109.71.
Shares of Apollo Group Inc., which runs the largest for-profit school, the University ofPhoenix, also slid 93 cents, or
1.5 percent, to $62.60, while Corinthian Colleges Inc. stock fell 59 cents, or 3.3 percent, to $17.30. Career Education
Corp. fell 61 cents, or 1.8 percent, to $33.49 and Strayer Education Inc. dropped $2.54, or 1 percent, to $250.49.
Meanwhile, Flynn cited DeVry's warning on slower enrollment growth in one of its divisions and liT's warning on higher
advertising spending.
For-profit schools have seen big gains in enrollment because of the recession and high unemployment. As the job market
improves, people may not feel as much as a need to bolster their resumes.
APRIL 26, 2010, 10:57 A.M. ET
Debt, Job Rule Uncertainty Hits Shares OfFer-Profit Colleges
NEW YORK (Dow Jones)--A goverrunent proposaJ to hold colleges accountable for graduating students with high debt
loads and low income levels came front and center, again, after Credit Suisse analysts reversed their assumption that the
Department ofEducation had softened its stance on the subject.
Monday morning, Credit Suisse issued a note saying the Department of Education has returned to a stiffer set of rules on
post-graduation debt and gainful employment levels that colleges must meet. The news hit share prices offor-pro:fit
universities that had rallied on expected softer rules.
Credit Suisse downgraded ITT EducationaJ Services Inc. (ESI) and DeVry Inc. (DV) to neutraJ from outperform and
slashed their price targets, citing the potential fallout from their new take on gainful employment as well as concerns of
countercyclicality. ITT recently was off2.9% to $108.53, while DeVry was down 6.5% to $64.96. Credit Suisse had
upgraded the schools two weeks ago.
Other for-profit schools, including Strayer Education Inc. (STRA), Career Education Corp. (CECO), Corinthian
Colleges Inc. (COCO) and Apollo Group Inc. (APOL), were also trading down.
The Department of Education originaJly said schools could face scrutiny that could put federaJ assistance--often the
primary revenue stream for for-profit colleges--at risk if they did not have at least a 70% graduation rate and 70% job
placement in field of study. Two weeks ago, Credit Suisse, and others, sent out notes saying they believe the Department
of Education had softened the graduation level to 50%, sending shares higher, with some hitting 52-week highs.
"Oddly, we suspect the big upward move the stocks had when the investment community found out about the 50%
exemption may have led to pressure on the DOE to remove the 50% exemption," the firm wrote Monday.
Some education insiders have had mixed feelings on predicting the gainful-employment measure, arguing that it's
improper to say what the Department of Education will put forth and it's best to wait until the official proposaJ is released
for public comment. That will happen by mid-June.
"I'm not sure who thinks they have what access to what's in this draft," said one for-profit school official, but "I would
reaJl y not be jumping to any conclusions just yet." He said there's no way of knowing "whether it's been hardened,
softened, pureed, whatever."
Representatives from the Department of Education weren't immediately available for comment.
http://online. wsj .com/article/BT-C0-201 00426-71 0339.htmJ?mod=rss-'Hot_ Stocks
Georgia Yuan
Deputy General Counsel
Postsecondary Education and Regulatory Service
U.S. Department of Education
400 Maryland Avenue SW 6E341
Washington, DC 20202
202-40] -6000
From: Yuan Georgia
To: Miller. Tony
CC:
Date: 3/31/2010 1L27:32AM
Subject: Meeting follow-up Attorney-Client Communication
ATTORNEY -CLIENT COMMUNICATION
PRIVJLEGED AND CONFIDENTIAL
(b)(5)
Georgia
Georgia Yuan
U.S. Department ofEducation
400 Maryland A venue SW 6E341
202-401-63 99
From: Miller, Tony
Sent: Wednesday, March 31, 2010 10:22 AM
To: Yuan, Georgia
Subject: Gainful Employment follow up
(b)(5)
Thanks,
Tony
From: Bergeron, David
To: Yum Georgia
Kvaa}. James
CC:
Date: 9/24/2010 8:06:30 AM
Sub.iect: Meetings and Public Hearing Oct 2010 dab.docx
Thanks. Here are my edits.
(b)(S)
DRAFT 2 *INTERNAL DOCUMENT* DELIBERATIVE PROCESS
CONFIDENTIAL
(b)(S)
1
(b)(5)
1
David
(b)(5)
Georgia
From: Yuan Georgia
To: Bergeron. David
CC: Kvaal. James
Date: 9/24/2010 7:36: 12 AM
Subject: Meetings Draft
(b)(5)
CONFIDENTIAL
1
(b)(5)
1
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1
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From: Manheimer Ann
To: M.adzelan, Dan
Bergeron David
CC: Shireman. Bob
Yuan Georgia
Dannenberg Michael
Arsenault Leigh
Picoult. Francine
Smith. Kathleen
Manheimer Ann
Date: 4/7/2010 6:07:16PM
Subject: Neg Reg Update and Next Steps
Attachments: GE2.ppt
l(b)(5)
From: Hamilton Justin
To: Cunningham, Peter
Rogers. :.Margot
Martin. Ca1mel
Gomez, Gabriel.la
Miller, Tony
Kanter, Martha
Weiss Joanne
Abrevaya, Sandra
Yuan Georgia
CC:
Date: 6/16/2010 12:40:32 AM
Subject: Neg-Reg Press
NYT: U.S. Education Dept. Delays Rules on For-Profit Colleges
WSJ/DOW JONES: US Education Dept A voids 'Gainful Employment' In Reform Draft
AP: Proposed new rules for college recruitment
USATODA Y: Education Department takes aim at for-profit colleges
Reuters: U.S. to go after deceptive colleges, delays job rule
POLITICO: Eyes on for-profit college oversight
BLOOMBERG: Obama Targets For-Profit College Recruiting Practices in Proposed Rules
U.S. Education Dept. Delays Rules on For-Profit Colleges
ByTAMARLEWIN
The Education Department said Tuesday that it had split off and delayed a decision on the most controversial part of
proposed new student-aid regulations- the treatment of for-profit college programs whose graduates do not earn
enough to repay their loans.
While a package of proposed new student-aid regulations was released Tuesday, a department official said no decision
had been reached about what debt-to-income ratio would make for-profit programs ineligible for federal aid.
"This is about accountabili ty, and protecting students," said Education Secretary Arne Duncan . "We have many areas of
agreement where we can move forward. But some key issues around gainful employment are complicated, and we want
to get it right so we will be coming back with that shortly."
In the original draft of the gainful employment rules released this year, the department suggested cutting off federal aid to
programs whose graduates could not repay their student loans in 10 years with 8 percent of the income.
Consumer advocates and many education groups say that the rules wi ll protect students and taxpayers alike from
expensive programs that eat up billions of dollars of federal money, and leave graduates struggling in dead-end jobs.
But the Career College Association, which represents the for-profit institutions, aggressively lobbied against that
proposal, saying it would not solve any problem but would lead to the closing of important job-training programs for
needy students.
For-profit colleges get the bulk of their revenues from federal aid, and their students are far more likely to default on their
loans than those at nonprofit or public colleges. With for-profit colleges booming, and getting $20 billion in federal aid,
the government has been taking a closer look at how that money is used. Last week, Tom Harkin , the Iowa Democrat
who is chairman of the Senate Committee on Health, Education, Labor and Pensions, announced that he would hold
hearings on the issue.
"I am pleased to see the Department ofEducation releasing proposed regulations around for-profit higher education," he
said on Tuesday. "For-profit colleges must work for students and taxpayers, not just shareholders."
At a briefing on Tuesday, Deputy Under Secretary Robert Shireman said that the department still intended "to hold
programs accountable with some metrics that will come in a proposal later this summer' ' - but that to avoid delaying the
whole regulatory package, it had decided to go ahead with everything but the specific gainful employment measures.
The new regulations, to be published in the Federal Register on Friday, would require for-profit colleges to disclose their
programs' job-placement rates and graduation rates, and provide information that would let the department calculate
graduates' debt load and income.
The new regulations also help protect students from aggressive or misleading recruiting practices and ensure that only
eligible students receive aid.
The regulations also tighten the prohibition against paying recruiters by the number of students they enroll - a practice
that has sometimes led to boiler-room call centers that pressure those with little chance of academic success to enroll.
While incentive compensation was already illegal, the current rules allowed some exceptions that the department said had
been abused. The new rules would eliminate those exceptions.
After a 45-day comment period, the department expects to publish final rules by Nov. 1, to take effect beginning July
2011.
WSJ/DOW JONES: US Education Dept Avoids 'Gainful Employment' In Reform Draft
NEW YORK (Dow Jones)-The U.S. Department of Education on Wednesday will propose sweeping reforms to a
number of issues governing higher education, including attempting to define a credit hour, penalizing schools for
misrepresenting their qualifications or offerings and tightening rules governing recruiter compensation.
Most notable about the recommendations, known as a Notice ofProposed Rulemaking, is what's absent, as the
Education Department chose not to tackle a hotly debated measure that would punish schools for graduating students
with high debt-to-income ratios in an attempt to measure how well they prepare students for gainful employment in a
recognized occupation. For-profit schools have warned they may need to cut tuition or shut programs if that proposal
were pushed through.
The Education Department will return to the measure later this summer, the agency said. "Some key issues around gainful
employment are complicated and we want to get it right so we will be coming back with that shortly," Education
Secretary Arne Duncan said in a statement.
The Education Department said it is stilJ developing metrics to hold programs accountable for their ability to prepare
students for gainful employment. For now, it is recommending schools disclose graduation and job-placement rates and
their students' median debt levels.
For months, shares of schooling companies have sighed and swooned with every rumor of what would or wouldn't be
included in the draft proposal. Investors have remained anxious since the final of three discussions ended without
resolution on a handful of issues, and analysts say continued uncertainty could mean more voJatiJjty.
Even without the meatiest gainful-employment measure included in the proposal, a number of schools may face
fundamental operational changes. For example, the department recommends tightening oversight of"Ability to Benefit"
tests, exams on which many 1nstitutions rely to enroll students who don't have high school diplomas. The tests came
under scrutiny last year when a Government Accountability Office found proctors willing to help students cheat.
The department also recommends strengthening the metrics by which students must show academic progress so schools
can't receive federal-aid funds, from students who continue to post near-failing grades.
In addition, the Education Department proposes to eliminate 12 "safe harbors" from a ban on incentive compensation,
which an agency official referred to as "loopholes" to the originall992 rule. A number of for-profit schools have been
the subject of lawsuits alleging overzealous recruiting tactics.
The draft also proposes a new definition of a credit hour, the fundamental measure of a program's rigor. Students are
assigned part- or full-time status based on how many credits they take, and some schools have been accused of 1nflating
their creclits in order to receive more federal funds. A major accrediting agency was recently slammed by the Education
Department's Office oflnspector General for accrediting Career Education Corp.'s (CECO) American Intercontinental
University despite having concerns about its credit-hour structure. The House Committee on Education and Labor will
hold a hearing Thursday on accreditation and credit hours.
The Education Department's draft rules will be open to public comment for 45 days, and the Education Department
plans to issue a final rule by Nov. 1. Any changes will take effect beginning July 1, 2011.
AP: Proposed new rules for college recruitment
By DONNA GORDON BLANKINSHIP

Colleges would no longer be allowed to pay recruiters for students or engage in aggressive or mjsJeading recruitment
under proposed new federal regulations that target the practices off or-profit colleges.
The proposed new Department ofEducation rules were to be announced Wednesday. They apply to all colleges but are
of particular interest to the for-profit world, where some institutions have been accused of misleading students about the
cost and value of their programs.
"This is about accountability and protecting students," said Education Secretary Arne Duncan, in a statement.
The "notice of proposed rulemaking" is set to be published in the Federal Register on Friday and will be open to public
comment until Aug. 2. Final rules are scheduled to be announced in November and would take effect in July 2011.
Under the proposed new rules, colleges would be required to do the following:
-Give prospective students their graduation and job placement rates.
- Supply data to the federal government that would allow officials to determine student debt levels and incomes after they
graduate.
-Make sure only students with valid high school diplomas are enrolled.
-Ensure students are making satisfactory academic progress.
The new rules would strengthen the federal government's ability to take action against institutions that engage in deceptive
advertising, marketing and sales practices. All loopholes in rules that already prohibit colleges from paying recruiters for
students would be closed.
The role of individual states in monitoring colleges would be clarified. The rules would also more clearly define the
courses eligible for financial aid and the amount of aid that is appropriate.
Studies show students at for-profit schools- the fastest growing sector of higher education- are much more likely to
default on their loans than students at other kinds of colleges.
The federal government is paying more attention to these schools as large amounts of federal aid go to these schools in
the form of student loans and grants.
Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, has said he plans
to hold hearings starting June 24 to look at federal education spending at for-profit colleges.
The rules were not released until after the stock markets closed Tuesday, but investors have driven down the value of
for-profit colleges as concern over the rules mounted. The worry is that schools like the University of Phoenix or ITT
Technical Institutes could lose students and revenue ifloans are tougher to come by.
"Investors are nervous across the board," said Corey Greendale, an analyst with First Analysis Securities Corp. in
Chicago. ''Nobody knows exactly what this is going to do."
Shares of Apollo Group Inc., which owns the University of Phoenix, have sunk about 22 percent since April 1, while
shares of ITT Educational Services are down 13 percent.
Schools most at risk of losing business are those that offer longer programs, which translate into more debt for students,
Greendale said.
Representatives from for-profit colleges and their business associations were among those who negotiated the new rules
during meetings this past winter.
One major area of contention was left out of the proposed regulations.
To qualify for financial aid, most career colleges and vocational training programs need to show they are giving students
the skills they need for "gainful employment." The definition of gainful employment will be set in another set of proposed
rules to be issued later this summer, the department said.
Harris Miller, president of the Career College Association, said he was glad to hear the federal government plans to
keep negotiating about gainful employment, but noted one other area of contention in the rules proposed this week.
The plan to eliminate all kinds of recruitment pay instead of a more subtle reform of the practice does not make sense
and will hurt students and legitimate institutions, Miller said.
Miller said he assumes his organization and the Obama administration are in agreement on the other proposed rules.
USATODA Y: Education Department takes aim at for-profitcolleges
By Mary Beth Marklein
The Education Department is proposing a number of rules today designed to protect college students and taxpayers from
abusive or fraudulent practices, inducting aggressive recruitment tactics and allowing ineligible students to enroll and
receive aid.
Though all colleges that receive federal aid would be affected by the changes, the most controversial proposals are
aimed at for-profit colleges, which have come under more scrutiny as their enrollments have increased.
In an effort to rein in student debt and high default rates, for example, one proposal would require colleges to disclose
graduation and job placement rates and information about the effectiveness of their career and technical programs.
Federal data show that 44% of2007 graduates who defaulted on loans within three years attended for-profit institutions.
Most of the 14 key issues, outlined in a 503-page document shown to reporters Tuesday, were developed through
negotiations over the past year with the higher education community. A final version of the rules would take effect in July
2011.
Education officials will follow up this summer with details on a proposal that would cut off federal aid to for-profit
colleges whose graduates can't earn enough to repay their loans.
The issues are complicated "and we want to get it right," Education Secretary Arne Duncan says. "This is about
accountability, and protecting students."
Next week, a Senate education committee will examine federal spencting at for-profit schools.
Advocates of stricter regulations are encouraged by a preliminary review of the proposals.
"There's a real concern that taxpayers are subsidizing programs that are overpromising and under-delivering," says
Pauline Abernathy of the California-based Institute for College Access & Success.
Harris Miller , president of the Career College Association, which represents about 1,450 for-profit institutions, said the
group doesn't agree with all the proposals, but "we agree that students need to be protected at all times from schools that
color outside the lines."
REUTERS: U.S. to go after deceptive colleges, delays job rule
Diane Bartz
Under proposals unveiled on Tuesday, the department partially addressed the issue by requiring for-profit schools to
release data to students on graduation and job placement rates.
But it stopped short of requiring for-profit institutions to demonstrate that they prepare students for jobs before students
would be eligible for federal grants and loans, a step advocated by Robert Shireman, a deputy undersecretary at the
Department ofEducati on.
Education Secretary Arne Duncan said in a statement that the gainful employment issue was complicated: "we want to
get it right so we will be coming back with that shortly."
Proposals affecting all colleges and universities would tighten rules against deceptive advertising and would dose
loopholes on paying recruiters in hopes of removing incentives for them to enroll unqualified people or deceive
prospective students.
The institutions would be required to ensure that their students have a valid high school diploma or otherwise show that
they are ready for college.
Shireman has repeatedly called for tightened regulation of companies such as Corinthian Colleges Inc and Career
Education Corp.
Shares in the for-profit sector got a boost last month on word that Shireman plans to step down on July 1, although he
will remain an advisor to the department.
Jeff Silber, a stock analyst with BMO Capital Markets, said a delay in the gainful employment rule should be welcomed
cautiously.
"If this thing is being delayed, it doesn't mean that it's going away," he said. "I don't think it's bad news. (But) I wouldn't
declare victory here."
Corinthian Colleges spokesman Kent Jenkins called the announced rules and the delay on gainful employment "a step in
the right direction."
"We don't know where they will come down (on gainful employment) but the fact that they are being very careful and
very cautious speaks well for them," he said.
Efforts to reach other for-profit schools for a reaction to the proposed rules were unsuccessful.
The schools, which offer higher education programs in fields like healthcare and criminal justice, have been criticized for
their student loan practices and the quality of the education students receive.
The for-profit industry has also been criticized because students, who tend to be low-income, are most likely to end up
with outsized -- and sometimes unpayable -- debt.
Fifty-three percent ended up owing more than $30,500, compared with 12 percent for students who attended a public
four -year college, according to a study by the College Board.
U.S. Senator Tom Harkin, an Iowa Democrat, said he was pleased with the announced rules.
"The federal governrnent must ensure that the more than $20 billion in student aid that these schools receive is being well
spent and students are being well informed and well served," he said. "For-profit colleges must work for students and
taxpayers, not just shareholders."
The draft regulations will be put out for public comment on Friday. There will be a 45-day comment period. The goal is
to issue a final rule by November l , which would go into effect on July l , 20 ll.
POLITICO: Eyes on for-profit college oversight
The Obama administration will propose tightening oversight offer-profit colleges on Wednesday to thwart misleading
recruiting and reign in federal funding.
The new rules will be released for public comment after a year of negotiations between the Education Department and
higher education community. While the regulations encompass all higher education institutions, for-profit universities like
Kaplan, DeVry and University ofPhoenix are likely to bear the brunt of the changes.
"This is about accountability, and protecting students," said Education Secretary Arne Duncan, who aims to finalize the
rules by November, in a statement. The rules will go after aggressive recruiting practices. It will grant the department new
powers to take action against deceptive advertising. marketing and sales. [t also will end the practice of schools
compensating admissions recruiters based on securing student enrollment.
The proposed regulations will ensure only eligible students - those that have a high school diploma or pass an
equivalence test- receive federal funds. And they will clarify what courses are eligible for federal aid and how much
taxpayer money they can obtain.
But the department only partially addresses the much-debated "gainful employment" proposal that would cut off federal
funding to programs whose graduates don't earn enough to pay off their student loans. The new rules order institutions to
provide their prospective students graduation and job placement rates, as well as hand over data on student debt and
incomes after graduation. But the department won' t unveil the metrics to hold them accountable until later this summer.
"Given controversy, we want to make sure we get it right," a department official told reporters.
Fighting the proposal is already the top cause of Students for Academic Choice, a grassroots-sounding group backed by
the Career College Association, a lobbying group for 1,400 for-profit schools. More than 32,000 people signed a
petition saying it would "treat career college students as separate and inherently unequal," as well as limit vocational and
technical programs for more than 300,000 students who want to go into fields like health care.
Enrollment in for-profit universities is on the rise, jumping from 673,000 students nationwide in 2000 to 1.8 million in
2008. And federal aid to students at for-profit colleges soared to $26.5 billion in 2009 from $4.6 billion in 2000.
While these schools offer people an educational alternative, they often come with a mountain of debt, observers say. A
recent College Board study concluded that students who attend for-profit colleges graduate on average with bigger
student loans than those who attended private nonprofit or public schools. More than half of bachelor' s degree recipients
left school at least $30,500 in debt .
Harris Miller, president of the Career College Association, has repeatedly rejected the idea that for-profit schools leave
students will unmanageable debt. He said the default rate on loans for students at for-profit institutions is about the same
as students who attend community colleges and other non profits. "Let's try to tum this into a fact-based conversation,"
he said.
Meanwhile Congress is also jumping into the conversation. Beginning next week Sen. Torn Harkin (D-Iowa) will hold a
series of hearings to examine federal education spending at these institutions.
Read more: http://www.politico.com/news/stories/0610/38598.html#ixzz0qzFnXDyJ
BLOOMBERG: Obarna Targets For-Profit College Recruiting Practices in Proposed Rules
By JohnHechinger- Jun 16,2010
The Obarna administration proposed banning for-profit colleges from tying recruiters' pay to the number of people they
enroll, saying high-pressure sales tactics induced students to take out government loans they can' t afford.
The rules would prohibit paying sales incentives at Apollo Group &ticker=APOL:US> lnc., liT Educational Services
&ticker=ESI:US> Inc., Career Education Corp &ticker=CECO:US> . and other for-profit colleges, according to a
copy of the proposal by the U.S. Department ofEducation to be made public today. At for-profit colleges, recruiters
contact potential students, often after they express interest over the Internet.
U.S. Secretary ofEducation Arne Duncan
&client=wnews&proxystylesheet=enl 0 _ wnews&output=xrnl_no _ dtd&ie=UTF-8&oe=UTF-
8&filter=p&getfields=wnnis&partialfi el ds=-wnni s:NO A VSYND&sort=date:D: S :d 1 &I r=-langja&q= Arne%20Duncan>
is seeking to protect taxpayers from loan defaults and to stop students from taking on debt for programs that don' t lead
to higher incomes. For-profit colleges can receive up to 90 percent of their revenue from federal grants and loans.
Federal aid to for-profit colleges jumped to $26.5 billion last year from $4.6 billion in 2000, according to the Education
Department.
"This is about accountability and protecting students," Duncan said in a statement.
The Obama administration delayed the release of a proposed rule that would disqualify for-profit colleges from receiving
federal aid if their graduates spend more than 8 percent of their starting salaries repaying student loans.
The Education Department is still analyzing the proposal and expects to release the rule, known as gainful employment,
between now and August, the agency said in a statement.
Industry Opposition
For-profit colleges lobbied against the gainful-employment rule, which could disqualify programs enrolJing 300,000
students, according to an April study commissioned by the Washington-based Career CoiJege Association, which
represents more than 1,400 for-profit colleges.
Education stocks last week rallied on analysts' reports citing the potential delay of the gainful employment rule. Apollo,
based in Phoenix, rose 70 cents, or 1.5 percent, to close at $48.30 in Nasdaq Stock Market composite trading
yesterday. Career Education, based in Hoffman Estates, lllinois, rose 71 cents, or 2.7 percent, to $26.91. ITT, based in
Carmel, Indiana, rose $1.39, or 1.5 percent, to $97.18 in New York Stock Exchange Composite trading.
Colleges would no longer be allowed to tie recruiters' pay to enrollment under any circumstances, according to the new
rules. The current regulations prohibit the practice while allowing exceptions, or "safe harbors."
'Unscrupulous Actors'
"Unscrupulous actors routinely rely on these safe harbors" to get around the law, the Education Department said. While
the proposed rules apply to all colleges, they are designed to target abuses among for-profits, the department said.
The Education Department's description of recruiting violations among for -profits amounts to "a lot of hyperbole," Hanis
Miller &client=wnews&proxystylesheet=en 10 _ wnews&output=xml_ no_ dtd&ie=UTF-8&oe=UTF-
8&ftlter=p&getfields=wnnis&partialfields=-wnnis:NOA VSYND&sort=date:D: S: d l&lr=-langja&q=Harris%20Miller>
, the Career College Association's president, said in an interview. Colleges should be allowed to continue taking
enrollment into account among other factors in compensating recruiters, Miller said.
The new rule on recruiter pay could have a broad impact on the industry, Matt Snowling
&client=wnews&proxystylesheet=enl 0 _ wnews&output=xml_ no_ dtd&ie=UTF-8&oe=UTF-
8&filter=p&getfields=wnnis&partialfields=-wnnis:NOAVSYND&sort=date:D:S:d1&1r=-
langja&q=Matt>/o20Snowling>, an analyst with FBR Capital Markets in Arlington, Virginia, said in a phone interview.
"The incentive compensation rule is probably a bigger threat to the industry than gainful employment," Snowling said. "By
limiting the schools ability to market themselves, it takes away some of their ability to grow."
Apollo Settlements
Apollo' s University of Phoenix last December agreed to pay $67.5 million to the U.S. and $11 million in legal fees to
plaintiffs to settle a wrustleblower suit arising from allegations from former employees that that company improperly paid
recruiters based on enrollment numbers. Apollo admitted no wrongdoing. The company, without admitting fault, paid
$9.8 million in 2004 to the Department of Education to settle similar claims.
Apollo started reviewing recruiter compensation 18 months ago, with a focus on "enhancing student satisfaction and
student experience," spokeswoman Sara Jones said in an e-mail.
"We anticipate that our new compensation will be in compliance with the forthcoming regulations by the U.S.
Department ofEducation but cannot confirm until the rules are finalized," Jones said.
Today's proposed rules also would require colleges to disclose information about employment prospects to students and
strengthen the Education Department's authority to take action against institutions engaging in "deceptive, marketing and
sales practices," the department said in a statement. The proposed rules, being issued for public comment, could be
made final November 1 and take effect in July 2011.
(b)(S)
From: Yuan Georgia
To: Rose, Charlie
CC:
Date: 4/27/2010 4:49:56 PM
Subject: NPRM
DeVry leads ed. stocks lower as Credit Suisse downgrades on regulatory, job market concerns
Associated Press
04/26/10 9:30AM PDT
NEW YORK- DeVry led decliners in education stocks Monday after a Credit Suisse analyst said the for-profit
revenues.
the law that will be posted by mid-May or June.
Flynn downgraded De Vry and ITT Educational Services Inc. to "neutral" from "outperform," cutting target prices to $65
$109.71.
Corp. fell 61 cents, or 1.8 percent, to $33.49 and Strayer Education Inc. dropped $2.54, or 1 percent, to $250.49.
Meanwhile, Flynn cited DeVry's warning on slower enrollment growth in one of its divisions and liT's warning on higher
-----Original Message-----
From: Rose, Charlie
Sent: Tuesday, April 27, 2010 4:29PM
To: Yuan, Georgia
Subject:
l(b)(S)
Charlie
Sent using BlackBerry
(b)(5)
Harold
From: Babel, Tom [mailto:Tbabel@devry.com]
Sent: Friday, February 19, 2010 10:55 AM
To: Shireman, Bob
Subject: Meeting follow-up
Bob,
From: Jenkins Harold
To.: Rose. Charlie
CC: Yuan, Georgia
Date: 2/25/2010 6:53:30 PM
Subject: Our 9:30 meeting Friday
Thanks for making the time to talk Tuesday morning. I appreciate the opportunity, especially given the impact the
weather had to have on your schedule. I also appreciate the insight into the Department' s timeline in putting together
draft regulations for the Notice ofProposed Rulemaking and appreciate the urgency in providing input into that process.
As I mentioned, we (DeVry) are working with other institutions and within CCA to develop "guidance" on regulations
for both the definition and measurement of Gainful Employment and prohibitions of Incentive Compensation. We are part
of a small group that has a meeting tentatively scheduled with Michael Drumenberg next week to discuss the Gainful
Employment objectives and solutions and hope to have a recommendation that we can share with you shortly after that
meeting.
With regard to Incentive Compensation, as I mentioned, the issue with the proposed regulation is less the actual language
(although some of it is certainly contentious among our colleagues), than the clarification provided by the general
counsel' s office in the quad following the Department's last iteration of the proposed rules. Specifically, his remarks
extended the prohibition to include:
o Pro hi bi tion of incentive compensation applies to merit increases provided as part of an employee's annual performance
evaluation, if they contain any quantitative measurements related to enrollment of students or awarding of financial aid.
o Prohibition of compensation based on success in securing student enrollments is meant to read "in whole or in part".
o Prohibition of incentive compensation to persons and entities includes supervisory and management personnel and 3rd
parties. The Department did not dispute examples that included Presidents ofUniversities.
o "Indirectly" reference can be extended to prohibit incentive compensation determined on factors such as revenue if it
can be shown that revenue is derived from successfully enrolling students.
o Success in securing enrollment extends to any quantification of enrollment objectives and performance, including
minority recruiting, specific academic programs and athletics.
o Quantitative metrics related to the recruiting or enrolling of a student or the awarding of financial aid may not be used
for merit-based adjustments. This extends to scheduling appointments, attending college nights, making telephone calls
and number of financial aid awards in addition to counting applications and enrollments.
o Prohibition includes measuring the performance of an admissions officer in contributing to a non-profit institution's
enrollment growth goal.
o 40'1K/403B contributions may be prohibited. The assumption is that the OGC official was referring to a discretionary
contribution made from revenue received from success in enrolling students.
o Prohibition extends to compensation based on successful persistence or graduation.
We think this extension of the prohibitions goes far beyond and is even contrary to Congressional intent and makes
problematic the actual performance evaluation of people involved in recruiting and financial aid functions as well as some
very legitimate enrollment programs specifically designed to diversifY higher education by addressing underrepresented
students.
DeVry looks forward to working with the Department to assure that students receive accurate and clear information as
they choose the institution and program that best serves their educational goals.
Tom
Thomas Babel
Vice President
Student Finance Policy and Industry Relations
DeVry Inc.
3005 Highland Parkway
Downers Grove, 1L 60515
p: 630.515.3133
m: 630.776.4614
f: 630.353.9903
e: tbabel@devry.com
www.devry.edu
From: Fine Stephanie
To: Yale, Matt
CC: Yuan Georgia
Martin Carmel
Date: 4114/2010 11:40:24 AM
Sub.iect: Participants in tomorrow's Gainful Employment Meeting
Kaplan: Andrew Rosen, Chairman and CEO, and Rebecca Campoverde, VP, Government Relations
US Chamber of Commerce: Arthur Rothkopf, Senior Vice President and Counselor to the President
EDMC: Governor Jock McKernan, Chairman of the Board of Directors, and Anthony Guida, Senior Vice President,
Todd Nelson, CEO
Corinthian Colleges: Mark Pelesh, Executive Vice President, and Jack Massimino, Executive Chairman of the Board
Rasmussen: Michael Locke, CEO
DeVry: Daniel Hamburger, President and CEO, and either Sharon Thomas Parrott, Sr. VP, Government and Regulatory
Affairs, or Tom Babel , Vice President, Student Finance Policy and Industry Relations
From: Yale, Matt
Sent: Wednesday, April 14, 2010 11:38 AM
To: Fine, Stephanie
Subject:
Can you send me the list of attendees for the gainful employment mtg?
Thanks,
my
Matthew A. Yale
Deputy Chief of Staff
Washington, D.C.
From: Kvaal James
To.: Duncan. Arne
Bergeron. David
Kanter, Martha
Martin Carmel
Mi11er.Ton.y
Ochoa, Eduardo
Rose. Charlie
Weiss. Joanne
Yua.n, Georgia
Ferguson, Keith
Arsenault Leigh
Broin. Allie
Schmidt, Greg
Muenzer:. Melanie
Sova. Alexandra
Friedlander Rob
Ham. Adrian
DayY.Earl
Powell, James
Roppel, Robert
Tucci, Richard
White Malachi
Wilson. Lennie
Finley, Steve
Smith Zakiya
CC: Duran, Matibel
Salk Sam
Myers Sam
Shelton Betsy
Date: 9/15/2010 4:36:06 PM
Subject: RE: 8:00-9:00 September 16th Gainful Employment Prep
Attachments: 09'14'10 GE slidesl(b)(S) I ppt pptx
(b)(5)
-----Original Appointment-----
From:Duncan, Arne
Sent: Tuesday, September 14, 2010 12:17 PM
To: Duncan, Arne; Bergeron, David; Kanter, Martha; Kvaal, James; Martin, Carmel; Miller, Tony; Ochoa, Eduardo;
Rose, Charlie; Weiss, Joanne; Yuan, Georgia; Ferguson, Keith; Arsenault, Leigh; Brain, Allie; Schmidt, Greg; Muenzer,
Melanie; Sova, Alexandra; Friedlander, Rob; Haro, Adrian; Davy, Earl; Powell, James; Rappel, Robert; Tucci, Richard;
White, Malachi; Wilson, Lennie; Finley, Steve; Smith, Zakiya
Cc: Duran, Maribel ; Salk, Sam; Myers, Sam; Shelton, Betsy
Subject: 8:00-9:00 September 16th Gainful Employment Prep
When: Thursday, September 16, 2010 8:00AM-9:00AM (GMT-05:00) Eastern Time (US & Canada).
Where: Secretary's Conference Room (OS Managed)
When: Thursday, September 16, 2010 8:00AM-9:00AM (GMT-05:00) Eastern Time (US & Canada).
Where: Secretary's Conference Room (OS Managed)
Note: The GMT offset above does not reflect daylight saving time adjustments.
Internal Staff Attending:
David Bergeron
Steve Finley
Martha Kanter
JamesKvaal
Carmel Martin
Tony Miller
Eduardo Ochoa
Charlie Rose
Zakiya Smith
Joanne Weiss
Georgia Yuan
POC:
Briefing Materials- James K vaal
Scheduling- Tia Borders 205.4595
Conference Room -Hannah
Update as of9/15/10: The date and time of this meeting has been changed from today to tomorrow at 8:00am. Thank
you, Tia
Update as of9/14/l0 at 4:15pm: The time of this meeting has been changed from 5:00-6:00 pm to 5:15-6:15 pm.
Thank you, Tia
Update as of 9/14110 at 1 :01 pm: Zakiya and Steve were added. Thank you, Tia
From: Finley Steve
To: K vaal, James
Kanter, :.Martha
Ochoa, Eduardo
Beuwron David
Kolotos, John
Sellers Fred
Yuan, Georgia
Chesley, Susan
CC:
Date: 9/2/2010 7:40:30 PM
Subject: RE: A Message from Dr. John Sperling, Founder- University ofPhoenix
(b)(5)
From: Kvaal, James
Sent: Thursday, September 02, 2010 6:31PM
To: Kanter, Martha; Ochoa, Eduardo; Bergeron, David; Kolotos, John; Sellers, Fred; Yuan, Georgia; Finley, Steve;
Chesley, Susan
Subject: FW: A Message from Dr. John Sperling, Founder- University ofPhoenix
The powerpoint is worth a read
September 2, 201 0
Attn. Legislative Director
Dear Congress Member,
As founder of the University ofPhoenix, I am writing to you and to every Member of Congress concerning recent
actions by the U.S. Department ofEducation and the Senate Committee on Health, Education, Labor and Pensions. The
Department ofEducation, seconded by the HELP Committee, has proposed new rules that will seriously undercut the
ability of the nation to remain globally competitive by undermining a vital sector of our higher education system-for-
profit colleges and universities.
I am writing to you because I am confident that every Member of Congress, whether or not they are a member of a
committee that deals with higher education, would like quality higher education to be available to every American who
seeks to earn a college degree. That is the stated goal of President Obama. However, we will not be able to reach the
President's goals without for-profit colleges. The states do not have the funding needed to increase capacity whereas
private sector colleges like ours can provide the necessary capacity. For-profit colleges already provide flexibili ty and
access for millions ofunderserved and nontraditional students who could not complete their education in a traditional
institution.
The attached power point has been prepared by NEXUS, a research and policy institute whose primary focus is the for-
profit sector of higher education. Given its commitment to fact based research, not spec1al pleading, the power point
presents a rationale for the need to rethink the reforms proposed by USDOE and the HELP Committee using as an
example the case of the University ofPhoenix, whose massive database on its operations and its academics has been
made available to NEXUS researchers.
As the largest institution in the sector--465,000 students with 90,000 graduates last year-the University ofPhoenix
illustrates the strengths and weaknesses of for-profit colleges and universities. The NEXUS study documents the financial
system that sustains it, the quality of the University' s programs, the 1nnovations it has brought to higher education and
where it has failed to meet regulatory standards and its own code of conduct. It also documents the steps the University
has taken to insure future compliance with all regulatory standards.
Perhaps the most important finding of the case study is the fact that for-profit institutions operate at no cost to taxpayers
because the interest students pay on their federal loans plus the taxes paid by the institutions is greater than the Pel!
Grants and all of the other state and federal subsidies received by the students and the institutions. Further, the study
shows that not only will the proposed reforms require a mcYor increase in Department ofEducation oversight staff, they
will greatly lower the efficiency and raise the costs of the institutions in the sector-all at the expense of taxpayers.
It would seem wiser to restore the status quo ante when the Department ofEducation was pursuing a reform that would
truly benefit taxpayers, namely to require all institutions of higher education to measure the learning outcomes of their
students and to publish those results on an annual basis. Overseeing the measurement protocols used by institutions in
order to expose cheating on the tests, would be a far more productive use of Department of Education resources than
what is presently contemplated. Only when learning outcomes are measured and published will taxpayers know what
they are getting for their money and the "bad actors" be easily identified-namely the institutions whose students are low
performers.
When you have finished reviewing the power point, we hope you will be persuaded that for-profit colleges and
universities are a vital sector of the American higher education system that deserve the support of the Department of
Education and the Congress, along with responsible oversight, rather than a set of regulations that will instead inhibit their
efficiency, their growth, their culture of innovation and, most impmtantly, their ability to deliver a quality education to
millions of! ow-income Americans now denied access to the education they need to give them a chance to join the
middle class.
The worst of these regulations concerns the definition of"gainful employment" and a new regulation that sets the
minimum rates at which students in a program must be repaying on the principal of their student loans. The new definition
of gainful employment is so onerous it would make it impossible for the sector to offer many programs that prepare
students for certification in such occupations as teachers, nurses, counselors and public safety officers. The repayment
percentage requirements, apparently arrived at with insufficient attention to their potential negative consequences, would
have a devastating impact on institutions that enroll low-income students who often require several years in the
workforce before they can begin repaying the principal on their student loans. For example, if these requirements were
applied to Historically Black Colleges and Universities, over 90% of them would have to close their doors.
Representative Robert Andrews (New Jersey - 01) has proposed a definition of gainful employment that would correct
the many faults of the definition proposed by the Department ofEducation. He has written to Education Secretary Arne
Duncan setting forth the negative consequences resulting from the Department' s definition while proposing an alternative
which would remove these negative consequences and still gain the same objectives. Many of the institutions in the for-
profit sector support Congressman Andrews' s initiative and we are asking all Members of the Congress to lend their
support as well. I have attached a draft of a letter of support which we hope you will use as a model for a letter from you
to Secretary Duncan with copies to Speaker Nancy Pelosi and to Congressman Andrews. The University and every
institution in the sector would very much appreciate your support.
Thank you for your time and consideration of this important issue.
[cid:image001 .git]
John G. Sperling
Founder
University ofPhoenix
From: Sellers, Fred
To: K vaal, James
Kanter, :.Martha
Ochoa, Eduardo
Beuwron David
Kolotos, John
Yuan, Georgia
FinJ ey, Steve
Chesley, Susan
CC:
Date: 9/2/2010 7:07:42 PM
Nonresponsive
From: ICvaaJ, James
To: Kanter, Martha; Ochoa, Eduardo; Bergeron, David; Kolotos, John; Sellers, Fred; Yuan, Georgia; Finley, Steve;
Chesley, Susan
The powerpoint is worth a read
September 2, 2010
Attn. Legi sl ati ve Director
As founder of the University ofPhoenix, I am writing to you and to every Member of Congress concerning recent
private sector colleges like ours can provide the necessary capacity. For-profit colleges already provide flexibility and
institution.
profit sector of higher education. Given its commitment to fact based research, not special pleading, the power point
system that sustains it, the quality of the University' s programs, the innovations it has brought to higher education and
shows that not only will the proposed reforms require a m ~ o r increase in Department ofEducation oversight staff, they
what is presently contemplated. OnJy when learning outcomes are measured and published will taxpayers know what
performers.
universities are a vi tal sector of the American higher education system that deserve the support of the Department of
efficiency, their growth, their culture of innovation and, most importantly, their ability to deliver a quality education to
millions of low-income Americans now denied access to the education they need to give them a chance to join the
middle class.
workforce before they can begin repaying tl1e principal on their student loans. For example, if these requirements were
Representative Robert Andrews (New Jersey - 0 l) has proposed a definition of gainful employment that would correct
Duncan setting forth the negative consequences resulting from the Department's definition while proposing an alternative
Thank you for your time and consideration oftlUs important issue.
John G. Sperling
Founder
From: Finley Steve
To: Yum Georgia
CC:
Date: 9/8/2010 7:50:26PM
Nonresponsive
From: Yuan, Georgia
Sent Wednesday, September 08, 2010 6:42PM
To: Finley, Steve
Cc: Kanter, Martha
l(b)(S)
-----Ori gi nat Message-----
From: Kanter, Martha
Sent Tuesday, September 07, 2010 11:36 PM
To: Yuan, Georgia
Subject FW: A Message from Dr. John Sperling, Founder- University ofPhoenix
l(b)(S)
From: Kvaal, James
Sent: Tuesday, September 07, 2010 7:35PM
To: Cunningham, P e t e r ~ Kanter, Martha; Hamilton, Justin
(b)(S)
(b)(5)
From: Cunningham, Peter
Sent: Friday, September 03, 2010 7:40AM
To: Kanter, Martha
Cc: Kvaal, James
(b)(5)
Subject: FW: A Message from Dr. John Sperling, Founder- University ofPhoen.ix
Sent: Thursday, September 02, 2010 10:24 PM
To: Weiss, Joanne; Martin, Cannel ; Yuan, Georgia; Rose, Charlie; Gomez, Gabriella; Ochoa, Eduardo; Miller, Tony;
peter.cunn.igham@ed.gov
Subject: FYI: A Message from Dr. John Sperling, Founder- University ofPhoenix
September 2, 2010
Attn. Legislative Director
As founder of the University ofPhoen.ix, I am writing to you and to every Member of Congress concerning recent
seeks to earn a college degree. That is the stated goal ofPresident Obama. However, we will not be able to reach the
private sector colleges like ours can provide the necessary capacity. For-profit colleges already provide flexibility and
institution.
profit sector of higher education. Given its commitment to fact based research, not special pleading, the power point
As the largest institution in the sector-465,000 students with 90,000 graduates last year-the University of Phoenix
system that sustains it, the quality of the University' s programs, the innovations it has brought to higher education and
because the interest students pay on their federal loans plus the taxes paid by the institutions is greater than the Pell
shows that not only will the proposed reforms require a major increase in Department of Education oversight staff, they
It would seem wiser to restore the status quo ante when the Department of Education was pursuing a reform that would
order to expose cheating on the tests, would be a far more productive use ofDepartment ofEducation resources than
performers.
efficiency, their growth, their culture of innovation and, most importantly, their abitity to deliver a quality education to
millions oflow-income Americans now denied access to the education they need to give them a chance to join the
middle class.
The worst of these regulations concerns the definition of"gainful employment'' and a new regulation that sets the
applied to Historically Black Colleges and Universities, over 900/o of them would have to close their doors.
Representative Robert Andrews (New Jersey- 01) has proposed a definition of gainful employment that would correct
[ cid:imageOO l .gif]
John G. Sperling
Founder
From: Finley Steve
To: Yum Georgia
CC:
Date: 9/9/2010 11:14:30 AM
Non responsive
From: Yuan, Georgia
Sent: Wednesday, September 08, 20'10 6:42PM
To: Finley, Steve
Cc: Kanter, Martha
Subject: FW: A Message from Dr. John Sperling, Founder- University of Phoenix
l(b)(S)
To: Yuan, Georgia
l(b)(S)
From: Kvaal, James
To: Cunningham, Peter; Kanter, Martha; Hamilton, Justin
(b)(S)
(b)(S)
Sent: Friday, September 03, 2010 7:40AM
To: Kanter, Martha
Cc: Kvaal, James
(b}(S}
Sent: Thursday, September 02, 2010 10:24 PM
To: Weiss, Martin, Yuan, Rose, Gomez, Ochoa, Miller, Tony;
peter.cunnigham@ed.gov
Subject: FYI: A Message from Dr. John Sperling, Founder- University of Phoenix
September 2, 201 0
Attn. Legi sl ati ve Director
As founder of the University of Phoenix, I am writing to you and to every Member of Congress concerning recent
actions by the U.S. Department of Education and the Senate Committee on Health, Education, Labor and Pensions. The
Department ofEducation, seconded by the HELP Committee, has proposed new rules that wi ll seriously undercut the
President' s goals without for-profit colleges. The states do not have the funding needed to increase capacity whereas
private sector colleges like ours can provide the necessary capacity. For-profit colleges already provide flexibili ty and
access for millions of underserved and nontraditional students who could not complete their education in a traditional
institution.
profit sector of higher education. Given its commitment to fact based research, not spec1al pleading, the power point
system that sustains it, the quality of the University' s programs, the 1nnovations it has brought to higher education and
shows that not only will the proposed reforms require a mcYor increase in Department ofEducation oversight staff, they
performers.
efficiency, their growth, their culture of innovation and, most impmtantly, their ability to deliver a quality education to
millions of! ow-income Americans now denied access to the education they need to give them a chance to join the
middle class.
Representative Robert Andrews (New Jersey - 01) has proposed a definition of gainful employment that would correct
[cid:image001 .git]
John G. Sperling
Founder
(b)(5)
From: Wanner, Sarah
Sent: Friday, Aprill6, 2010 9:40AM
To: Finley, Steve
Subject: RE: Application of GE
(b)(5)
From: Finley, Steve
From: Finley Steve
To: Wanner, Sarah
CC:
Date: 4/16/2010 9:45:24 AM
Subject: RE: Application ofGE
To: Wanner, Sarah; Yuan, Georgia; Jenkins, Harold
(b)(5)
(b)(S)
From: Wanner, Sarah
Sent: Friday, April16, 2010 8:45AM
To: Fin]ey, Steve; Yuan, Georgia
Cc: Jenkins, Harold
(b)(S)
(b)(S)
From: Finley, Steve
Sent: Thursday, April 15, 2010 4:28PM
To: Wanner, Sarah; Yuan, Georgia
Cc: Jenkins, Harold
Subject FW: Application ofGE
(b)(S)
From: Manheimer, Ann
Sent: Thursday, April 15, 2010 9:47AM
To: Finley, Steve
Subject: FW: Application ofGE
(b)(5)
From: Kolotos, John
Sent: Thursday, Aprill5, 2010 9:16AM
To: Manheimer, Ann
(b)(5)
To: Kolotos, John
(b)(5)
From: Pauline Abernathy [mailto:pabernathy@ticas.org]
To: Manheimer, Ann
Right. My understanding is that HEOA was intended to exempt UofPhoenix'sLiberal Arts BA only. The question is did
it only exempt their liberal arts BA or did it incorrectly exempt all Phoenix programs? And, can you also confirm that if a
nonprofit is purchased by a for -profit, all of the school's programs would be subject to GE because it is now for-profit,
regardless of whether it used to be regionally accredited and was offering a BA in liberal arts before it was purchased?
Thank you.
From: Manheimer, Ann [ mailto:Ann.Manheimer@ed.gov]
Sent: Thursday, April 15,2010 8:41AM
To: Pauline Abernathy
Cc: Manheimer, Ann
Pauline - hang on - I want to double check on an exception for liberal arts programs in the HEOA 2008
Sent: Wednesday, Aprill4, 2010 5:00PM
Here is what l have come up with- is this helpful? Enough info (1 have boiled it down)?
GE applies to certificate programs at all schools and to all programs offered at for-profit schools.
In the case where a proprietary school buys a nonprofit, the BA programs (which were not previously subject to GE)
would now be subject to GE.
Sent Monday, April12, 2010 11:00 AM
To: Manheimer, Ann
Cc: Debbie Franlde Deanne Loonin
Subject: Application ofGE
Ann,
Per our conversation, it would help to understand to which entities the GE standard currently applies. The confusion
appears to stem in part from the provisions added in the HEOA and in part from reported differences among the FSA
Handbook, regs and statute. I wrote up the questions and issues based on information from Deanne and Debbie, but any
inaccuracies are my own. Thank you!
The FSA Handbook, I am told, says in order to be considered an 'institution of higher education' for title IV purposes,
an institution has to offer programs no Jess than one year in length, along with being non-profit. Other institutions are in a
separate category, as proprietary or vocational institutions. But once the institution is eligible, each individual program
may or may not be eligible. Gainful employment pertains solely to program eligibility, not institutional eligibility (we
believe). This would suggest that gainful employment would apply to everything at proprietary and vocational colleges,
and all sub-degree (less than two year programs) at institutions of higher education.
The HEOA added a category that allows a proprietary institution to offer programs leading to a baccalaureate degree in
liberal arts if the school previously provided such programs and is regionally accredited. There is no gainful employment
requirement here.
Questions:
*If a proprietary school like Univ. of Phoenix meets the HEOA provision standards, are then none of its programs
subject to the GE requirement, or is just their BA in liberal arts not subject to GE? I believe Congress intended the latter
but is this how ED interprets it as well?
*If a proprietary school buys a nonprofit that has previously offered a BA in liberal arts and is regionally accredited, are
all of the proprietary school's programs now exempt from GE? I don' t believe Congress ever intended this to apply to
for-profits that purchased a nonprofit, but is this how ED interprets it?
For the nonprofit schools, there could be an argument that a general eligibility stamp of approval would flow to all of their
programs, even non-degree programs. However, the FSA handbook reportedly states that a school's eligibility does not
necessarily extend to all of its programs. The school must ensure that a program is eligible before awarding FSA funds.
There is, however, another distinction that may be important. The provisions in 101 (b) state that a non-profit may be an
eligible institution of higher education if it provides not less than a one-year program of training to provide students for
gainful employment. This section does not say that it must be an eligible program. The same issue arises in the regulations
at 34 C.F.R. 600.4. The regs say only that these institutions must provide an educational program, not an eligible
educational program. However, the eligible program regulations at 668.8(c) use the term "eligible program" in referring to
non-profit institutions of higher education, but do not specify time requirements as is the case for proprietary institutions.
Clearly non-profits may offer non-degree programs that by definition must prepare students for gainful employment. This
should be sufficient to conclude that the definition of gainful employment would apply here. However, there is some
ambiguity because the statute does not specifically say that the program must be "eligible." Does this just mean that they
do not have to refer to the definitions in 1088 re: clock hours? One would think that the school cannot qualify to offer
non-degree programs based on their eligibility qualifications offering degree programs and so they must independently
ensure that each program is eligible. This would mean that if it is a non-degree program at an institution of higher
education (meaning a non-profit), the program must be independently eligible and so must prepare students for gainful
employment. Is this how ED sees it? Margaret Reiter asked this question in an e-mail to Fred Sellers during the neg reg.
In contrast, in order to be an eligible PROPRIETARY institution of higher education, the school must provide an
ELIGIBLE program of training to prepare students for gainful employment in a recognized occupation.
It is therefore clear that the proprietary institutions must also offer "eligible" programs. These are defined in section
1 088(b). As Margaret pointed out, this section does not explicitly refer back to section 1002. These are mostly time-
related categories.
Pauline Abernathy
Vice President
The Institute for College Access & Success
www.ticas.org and www.projectonstudentdebt.org
We moved! TICAS' main number is now 510.318.7900. My direct line is 510.318.7903.
(b)(5)
From: Pinley, Steve
To: Wanner Sarah
Yuan. Georgia
Jenkins, Harold
CC:
Date: 4/16/2010 9:26:36 AM
Subject: RE: Applicati on ofGE
Steve
From: Wanner, Sarah
Sent: Friday, April 16, 2010 8:45AM
To: Finley, Steve; Yuan, Georgia
Cc: Jenkins, Harold
(b)(5)
From: Finley, Steve
Cc: Jenkins, Harold
(b)(5)
(b)(5)

Sent: Thursday, April15, 2010 9:47
To: Finley, Steve
(b)(5)
From: Kolotos, John
Sent: Thursday, April15, 2010 9:16
To: Manheimer, Ann
(b)(5)
Sent: Thursday, April15, 2010 8:52AM
To: Kolotos, John
(b)(5)
To: Manheimer, Ann
Right. My understanding is that HEOA was intended to exempt UofPhoenix's Liberal Arts BA only. The question is did
nonprofit is purchased by a for-profit, all of the school's programs would be subject to GE because it is now for-profit,
regardless of whether it used to be regi onally accredited and was offering a BA in liberal arts before it was purchased?
Thank you.
From: Manheimer, Ann [mailto:Ann.Manheimer@ed.gov]
Sent: Thursday, April IS, 2010 8:41AM
Cc: Manheimer, Ann
Pauline- hang on- I want to double check on an exception for liberal arts programs in the HEOA 2008
Sent: Wednesday, April 14, 2010 5:00PM
Here is what I have come up with- is this helpful? Enough info (I have boiled it down)?
From: Pauline Abernathy [mailto:pabemathy@ticas.org]
Sent: Monday, Aprill2, 2010 11:00 AM
To: Manheimer, Ann
Cc: Debbie Frankle Cochrane; Deanne Loonin
Subject Application ofGE
Ann,
The FSAHandbook, I am told, says in order to be considered an 'institution of higher education' for title IV purposes,
an institution has to offer programs no less than one year in length, along with being non-profit. Other institutions are in a
may or may not be eligible. Gainful employment pertains solely to program eljgibility, not institutional eligibility (we
requirement here.
Questions:
* If a proprietary school like Univ. ofPhoenix meets the HEOA provision standards, are then none of its programs
* If a proprietary school buys a nonprofit that has previously offered a BA in liberal arts and is regionally accreilited, are
all of the proprietary school' s programs now exempt from GE? I don't believe Congress ever intended this to apply to
at 34 C.P.R. 600.4. The regs say only that these institutions must provide an educational program, not an eligible
non-profit institutions of higher education, but do not specifY time requirements as is the case for proprietary institutions.
do not have to refer to the definitions in 1088 re: clock hours? One would think that the school cannot quality to offer
In contrast, in order to be an eligible PROPRJET AR Y institution of higher education, the school must provide an
1 088(b ). As Margaret pointed out, this section does not explicitly refer back to section 1002. These are mostly time-
related categories.
Pauline Abernathy
Vice President
thanks
From: Wanner, Sarah
To: Finley, Steve
From: Finley, Steve
To: Wanner, Sarah
(b){5)
From: Wanner, Sarah
To: Finley, Steve
From: Finley Steve
To: Wanner, Sarah
CC:
Date: 4/16/2010 9:46:38 AM
(b)(5)
From: Finley, Steve
To: Wanner, Sarah; Yuan, Georgia; Jenkjns, Harold
(b)(5)
(b)(S)
From: Wanner, Sarah
Sent Friday, Apri116, 2010 8:45AM
Cc: Jenkins, Harold
(b){S)
From: Finley, Steve
Sent: Thursday, Apri115, 2010 4:28PM
Cc: Jenkins, Harold
(b)(5)
To: Finley, Steve
(b)(5)
From: Kolotos, John
To: Manheimer, Ann
(b)(5)
To: Kolotos, John
(b)(S)
To: Manheimer, Ann
it onJy exempt their liberal arts BA or did it incorrectly exempt all Phoenix programs? And, can you also confirm that if a
Thank you.
Cc: Manheimer, Ann
Pauline - hang on- I want to double check on an exception for liberal arts programs in the HEOA 2008

Sent: Monday, April 12, 2010 11:00 AM
To: Manheimer, Ann
Cc: Debbie FrankJe Cochrane; Deanne Loonin
Subject: Application of GE
Ann,
requirement here.
Questions:
* If a proprietary school buys a nonprofit that has previously offered a BA in liberal arts and is regionally accredited, are
all of the proprietary school' s programs now exempt from GE? I don' t believe Congress ever intended this to apply to
necessarily extend to al l of its programs. The school must ensure that a program is eligible before awarding FSA funds.
There is, however, another distinction that may be important. The provisions in 101(b) state that a non-profit may be an
at 34 C.F .R. 600.4. The regs say only that these institutions must provide an educational program, not an eligible
educational program. However, the eligible program regulations at 668.8(c) use the term "eligible program" in refening to
do not have to refer to the definitions in 1088 re: clock hours? One would think that the school cannot qualifY to offer
employment. Is this how ED sees it? Margaret Reiter asked this question in an e-mai l to Fred Sellers during the neg reg.
related categories.
Pauline Abernathy
Vice President
The Institute for Coll ege Access & Success
Thanks.
From: Wanner, Sarah
Sent: Friday, April 16, 2010 11:48 AM
To: Finley, Steve
(b)(5)
From: Finley, Steve
To: Wanner, Sarah
thanks
From: Wanner, Sarah
To: Finley, Steve
From: Finley Steve
To: Wanner, Sarah
CC:
Date: 4/16/2010 12:00:28 PM
From: Finley, Steve
To: Wanner, Sarah
(b)(5)
From: Wanner, Sarah
Sent: Friday, Apri116, 2010 9:40AM
To: Finley, Steve
(b)(5)
From: Finley, Steve
To: Wanner, Yuan, Jenkins, Harold
(b)(5)
(b)(5)
Steve
From: Wanner, Sarah
Sent Friday, Apri1 16, 2010 8:45AM
Cc: Jenkins, Harold
(b)(S)
From: Finley, Steve
Sent: Thursday, April 15, 2010 4:28 PM
Cc: Jenkins, Harold
(b)(5)
(b)(S)
To: Finley, Steve
(b)(S)
From: Kolotos, John
To: Manheimer, Ann
(b)(S)
To: Kolotos, John
(b)(S)
To: Manheimer, Ann
regardless of whether it used to be regionally accredited and was offering a BA in 1 iberal arts before it was purchased?
Thank you.
Sent: Thursday, April 15, 2010 8:41 AM
Cc: Manheimer, Atm

Sent: Wednesday, April14, 2010 5:00PM
To: Pauline Abemathy
To: Manheimer, Ann
Cc: Debbie FrankJe Cochrane; Deanne Loonin
Ann,
The FSA Handbook, I am told, says in order to be considered an 'institution of higher education' for title N purposes,
requirement here.
Questions:
*If a proprietary school like Univ. ofPhoenix meets theHEOA provision standards, are then none of its programs
There is, however, another distinction that may be important. The provisions in lOl(b) state that a non-profit may be an
1 088(b ). As Margaret pointed out, this section does not explicitly refer back to section l 002. These are mostly time-
related categories.
Pauline Abernathy
Vice President
(b)(5)
From: Finley Steve
To: N.lanheimer Ann
CC:
Date: 4/16/2010 12:20:52PM
l(b)(5)
Steve
Steve
To: Finley, Steve
(b)(5)
From: Kolotos, John
To: Manheimer, Ann
(b)(5)

To: Kolotos, John
(b)(5)
From: Pauline Abernathy [ mailto:pabernathy@ticas.org]
To: Manheimer, Ann
nonprofit is purchased by a for -profit, all of the school's programs would be subject to GE because it is now for -profit,
Thank you.
Cc: Manheimer, Ann
Sent: Wednesday, Apri114, 2010 5:00PM
GE appljes to certificate programs at all schools and to all programs offered at for-profit schools.
To: Manheimer, Ann
Cc: Debbie Frankie Deanne Loonin
Ann,
Handbook, regs and statute. 1 wrote up the questions and issues based on information from Deanne and Debbie, but any
inaccuracies are my own. Thank you I
requirement here.
Questions:
programs, even non-degree programs. However, theFSA handbook reportedly states that a school's eligibility does not
related categories.
Pauline Abernathy
Vice President
(b)(S)
From: Finley, Steve
To: Wanner, Sarah
thanks
From: Wanner, Sarah
To: Finley, Steve
From: Wanner, Sarah
To.: Finley, Steve
CC:
Date: 4/16/2010 11:48:00 AM
We need to find this out to finalize your points. I will ask.
From: Finley, Steve
To: Wanner, Sarah
(b)(5)
From: Wanner, Sarah
To: Finley, Steve
(b)(5)
From: Finley, Steve
(b)(5)
(b)(5)
Steve
From: Wanner, Sarah
Cc: Jenkins, Harold
(b)(5)
(b)(S)
From: Finley, Steve
Sent: Thursday, April15, 2010 4:28PM
Cc: Jenkins, Harold
(b)(5)
To: Finley, Steve
(b)(5)
From: Kolotos, John
To: Manheimer, Ann
(b)(5)
To: Kolotos, John
(b)(5)
From: Pauline Abernathy [ mailto:pabernathy@ticas.org]
To: Manheimer, Ann
Thank you.
Cc: Manheimer, Ann

To: Pauline Abemathy
To: Manheimer, Ann
Cc: Debbie Frankie Cochrane; Deanne Loonin
Ann,
requirement here.
Questions:
*If a proprietary school like Univ. ofPhoenix meets theHEOA provision standards, are then none of its programs
There is, however, another distinction that may be important. The provisions in 1 Ol(b) state that a non-profit may be an
related categories.
Pauline Abernathy
Vice President
(b)(5)
From: Finley, Steve
From: Wanner, Sarah
To.: Finley, Steve
CC:
Date: 4/16/2010 9:40:14 AM
To: Wanner, Sarah; Yuan, Georgia; Jenkjns, Harold
(b){5)
s
(b)(5)
Steve
From: Wanner, Sarah
Cc: Jenkins, Harold
(b)(5)
From: Finley, Steve
Cc: Jenkins, Harold
(b)(S)

To: Finley, Steve
(b)(S)
From: Kolotos, John
Sent: Thursday, Aprill5, 2010 9: 16AM
To: Manheimer, Ann
(b)(S)
)
(b)(5)
To: Kolotos, John
(b)(5)
To: Manheimer, Ann
it on1y exempt their liberal arts BA or did it incorrectly exempt all Phoenix programs? And, can you also confirm that if a
Thank you.
Cc: Manheimer, Ann
Pauline- hang on- I want to double check on an exception for liberal arts programs in the HEOA 2008
Sent Wednesday, April 14, 2010 5:00PM
Sent Monday, April 12, 2010 11:00 AM
To: Manheimer, Ann
Cc: Debbie Frankle Deanne Loonin
Ann,
and all sub-degree Qess than two year programs) at institutions ofhigher education.
requirement here.
Questions:
ELIGJBLE program of training to prepare students for gainful employment in a recognized occupation.
1 088(b ). As Margaret pointed out, this section does not explicitly refer back to section 1002. These are mostly time-
related categories.
Pauline Abernathy
Vice President
l(b)(S)
From: Finley, Steve
To: Wanner, Sarah
(b)(S)
From: Wanner, Sarah
To: Finley, Steve
(b)(S)
From: Finley, Steve
From: Wanner, Sarah
To.: Finley, Steve
CC:
Date: 4/16/2010 9:46:24 AM
(b)(5)
Steve
From: Wanner, Sarah
Cc: Jenkins, Harold
(b)(5)
From: Finley, Steve
Cc: Jenkins, Harold
(b)(5)
(b)(S)
To: Finley, Steve
(b)(S)
From: Kolotos, John
To: Manheimer, Ann
(b)(S)
To: Kolotos, John
{b)(S)
To: Manheimer, Ann
Thank you.
Cc: Manheimer, Ann
Pauline - hang on - I want to double check on an exception for liberal arts programs in the HEOA 2008
Sent Wednesday, April 14, 2010 5:00PM
Here is what I have come up with - is this helpful? Enough info (I have boiled it down)?
To: Manheimer, Ann
Cc: Debbie Frankle Cochrane; Deanne Loonin
Ann,
requirement here.
Questions:
*If a proprietary school like Univ. of Phoenix meets the HEOA provision standards, are then none of its programs
all of the proprietary school's programs now exempt from GE? I don't believe Congress ever intended this to apply to
For the nonprofit schools, there could be an argument that a general eligibility stamp of approval would .flow to all of their
related categories.
Pauline Abernathy
Vice President
(b)(5)
From: Finley, Steve
To: Wanner, S a r a h ~ Yuan, Georgia
Cc: Jenkins, Harold
(b)(5)
From: Wanner Sarah
To: Finlev, Steve
.
Yuan. Georgia
CC: Jenkins. Harold
Date: 4/ 16/2010 8:44:52 AM
Sub.iect: RE: Application ofGE
(b)(5)
To: Finley, Steve
Subject: FW: Application of GE
(b)(5)
From: Kolotos, John
Sent: Thursday, April15, 201 0 9:16AM
To: Manheimer, Ann
Subject RE: Application of GE
(b)(5)
To: Kolotos, John
Subject: FW: Application of GE
To: Manheimer, Ann
regardJess of whether it used to be regionally accredited and was offering a BA in liberal arts before it was purchased?
Thank you.
Cc: Manheimer, Ann
Sent Monday, April 12, 2010 11:00 AM
To: Manheimer, Ann
Cc: Debbie Frankie Cochrane; Deanne Loonin
Subject Application of GE
Ann,
an institution has to offer programs no less than one year in Iengtl1, along with being non-profit. Other institutions are in a
requirement here.
Questions:
necessarily extend to all of its programs. The school must ensure tl1at a program is eligible before awarding FSA funds.
It 1s therefore clear that the proprietary institutions must also offer "el1gible" programs. These are defined in section
1088(b ). As Margaret pointed out, this section does not explicitly refer back to section 1002. These are mostly time-
related categories.
Pauline Abernathy
Vice President
We moved! TICAS' mainnumberisnow 510.318.7900. My direct line is 510.318.7903.
(b)(5)
From: Finley, Steve
Sent: Friday, April16, 2010 12:21 PM
To: Manheimer, Ann
(b)(5)
To.: Finley, Steve
CC:
Date: 4/20/2010 9:58:40 AM
(b)(5)
Steve
Steve
To: Finley, Steve
(b)( 5)
From: Kolotos, John
To: Manheimer, Ann
(b)(5)
To: Kolotos, John
(b)(5)
To: Manheimer, Ann
Thank you.
Cc: Manheimer, Ann
To: Manheimer, Ann
Cc: Debbie Frank:le Deanne Loonin
Ann,
Handbook, regs and statute. 1 wrote up the questions and issues based on infonnation from Deanne and Debbie, but any
an institution has to offer programs no less than one year in length, along with being non-profit Other institutions are in a
requirement here.
Questions:
all of the proprietary school' s programs now exempt from GE? I don' t believe Congress ever intended this to apply to
educational program. However, the eligible program regulations at 668.8( c) use the term "eligible program" in refening to
non-profit institutions of higher education, but do not specifY time requirements as is the case for proprietary institutions.
related categories.
Pauline Abernathy
Vice President
From: Finley Steve
To: Woodward, Jennifer
Wolff Russell
CC:
Date: 5/29/2009 1:11:06 PM
Sub.iect: RE: CONFERENCE CALL FOR ANALYSTS and INVESTORS with Bob Shireman
(b)(5)
-----Origi nat Message-----
From: Woodward, Jennifer
Sent: Friday, May 29, 2009 1:04PM
To: Finley, Steve; Jenkins, Harold; Wolff, Russell
Cc: Marinucci, Fred
Subject: RE: CONFERENCE CALL FOR ANALYSTS and INVESTORS with Bob Shireman
(b)(5)
From: Finley, Steve
Sent: Friday, May 29, 2009 11:27 AM
To: Jenkins, Harold; Woodward, Jennifer; Wolff, Russell
Cc: Marinucci, Fred
glad you were already in the loop.
From: Jenkins, Harold
To: Finley, Steve; Woodward, Jennifer; Wolff, Russell
Cc: Marinucci, Fred
Fred and I will be there.
From: Finley, Steve
To: Jenkins, Harold; Woodward, Jennifer; Wolff, Russell
Subject: CONFERENCE CALL FOR ANALYSTS and INVESTORS with Bob Shireman
In case you have not heard about this, I just found out that ED is holding a conference calJ for the investment community
this afternoon to discuss the upcoming negotiated rulemaking ---
The Department ofEducation announced a conference call at 12:30 ET tomorrow, Friday, May 29, to discuss the
recently announced upcoming negotiated rulemaking sessions. Please find the details below:
**CONFERENCE CALL FOR ANALYSTS and INVESTORS: UPCOMING HIGHER EDUCATION
RULEMAKING SESSIONS**
The U.S. Department of Education' s Office ofPostsecondary Education published a notice in the Federal Register on
Tuesday, May 26th regarding three upcoming negotiated rulemaking sessions and forums.
The Department will host a conference call for analysts and investors who monitor the career college and education
industry on Friday, May 29th at 12:30 PMET. Deputy Undersecretary Robert Shireman will discuss the purpose and
nature of these sessions. We invite you or a representative to participate in this call.
CALL DATE: Friday, May 29, 2009
CALL TIME: 12:30PMET
CALL INSTRUCTIONS:
Dial-in: 888-469-0789
Passcode: 4732472
We recommend dialing in a few minutes beforehand to sign in with the operator.
You can read more about the issues that the upcoming rulemaking sessions will address in the Federal Register:
http://edocket.access.gpo.gov/2009/E9-12092.htm
From: Macias, Wendy [mailto:Wendy.Macias@ed.gov]
Sent Friday, May 29, 2009 10:54 AM
To: Yang, Bruno (Annalex Capital)
Subject: RE: email distribution list
Mr. Yang,
I'm not sure what list you are referring to. If you can provide me with a little more specific1ty I can track it down and
have you added.
Thanks,
Wendy
From: Yang, Bruno (Annalex Capital) [byang@annalexcap.com]
To: Mac1as, Wendy
Subject: email distribution ljst
Wendy,
I would like to get on the postsecondary DOE email distribution list,? Can you put the following people on the list?
byang@annalexcap.com
jyang@annalexcap.com
Thank you for your help.
Regards,
Bruno
Annalex Capital Management 1666 Fifth Avenue I 27th Floor I New York, NY 10103 I phone: 212-708-46421 email:
byang@annalexcap.com
The information contained in this communication is confidential, may be subject to legal privilege, and is intended only for
the individual named. If you are not the named addressee, please notify the sender immediately and delete this email from
your system. The views expressed in this email are the views of the sender only. Outgoing and incoming electronic
communications to this address are electronically archived and subject to review and/or disclosure to someone other
than the recipient.
The information contained in this communication is confidential, may be subject to legal privilege, and is intended only for
the individual named. If you are not the named addressee, please notify the sender immediately and delete this email from
your system. The views expressed in this email are the views of the sender only. Outgoing and incoming electronic
communications to this address are electronically archived and subject to review and/or disclosure to someone other
than the recipient.
From: Yuan Georgia
To: Shireman. Bob
Jenkins. Harold
CC:
Date: 2/5/201 o 5:35:34 PM
Sub.iect: RE: CONFIDENTIAL attorney communication
From: Shireman, Bob
Sent: Friday, February 05, 2010 4:29PM
To: Jenkins, Harold; Yuan, Georgia
Subject CONFIDENTIAL attorney communication
Harold, Georgia:
(b)(5)
-Bob
Robert Shireman, Deputy Undersecretary
400 Maryland Ave., S.W.
Room 7E310
Washington, D.C. 20202
(202) 260-0101
Fax: 202-205-0063
bob .shireman@ed.gov
From: Shireman Bob
To: Yum Georgia
Jenkins. Harold
CC:
Date: 2/1 9/2010 10:06:08 PM
Sub,iect: RE: CONFIDENTIAL attorney communication
(b)(5)
From: Shireman, Bob
Subject: CONFIDENTIAL attorney communication
(b)(5)
(b)(5)
-Bob
Room 7E310
(202) 260-0101
Fax: 202-205-0063
bob .shireman@ed.gov
To: Shireman. Bob
Yuan Georgia
CC:
Date: 2/20/2010 11:42:40 AM
Sub.iect: RE: CONFIDENTIAL attorney communication
From: Shireman, Bob
To: Yuan, Georgia; Jenkins, Harold
Subject: RE: CONFIDENTIAL attorney communication
(b)(S)
From: Shireman, Bob
Subject: CONFIDENTIAL attorney communication
(b)(S)
(b)(S)
-Bob
Room 7E310
(202) 260-0101
Fax: 202-205-0063
bob.shireman@ed.gov
From: Yuan Georgia
To: Minor, Robin
CC:
Date: 9/7/2010 3:59:20 PM
Subject:
RE: Confidential Memorandum on l(b)(5)
l<b)(5) I L__ ______________ ____J
(b)(5)
Georgia
From: Minor, Robin
Sent Tuesday, September 07, 2010 9:10AM
To: Yuan, Georgia
Subject: FW: Confidential Memorandum onl(b)(5)
l<b)(5) I ,_ ______________ _,
(b)(5)
Robm
From: Holland, Linda
Sent: Tuesday, September 07, 2010 8:48AM
To: Minor, Robin
Subject: FW: Confidential Memorandum onl(b)(5)
~ 5 : \ ~ ~. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~
Re: Apollo meeting ...
From: Yuan, Georgia
Sent Friday, September 03, 2010 5:33PM
To: Holland, Linda
Subject: FW: Confidential Memorandum on meetings during the period between the publication of proposed rules and
final rules
(b)(S)
Thanks,
Georgia
From: Yuan, Georgia
Sent: Wednesday, August 11, 2010 4:25PM
To: Rose, Charlie; Weiss, Joanne; Kanter, Martha; Kvaal, James; Miller, Tony; McFadden, Elizabeth; Gomez,
Gabriella; Ochoa, Eduardo; Bergeron, David; Martin, Carmel
Cc: Arsenault, Leigh; Adams, Kristen; Miceli, Julie

[lli}[]
(b)(S)
(b)(5)
Georgia
Georgia Yuan
Postsecondary and Regulatory Service
LBJ 6E341
202-401-6399
From: Chesley Susan
To: Bergerm David
Kvaal James
Kolotos John
Sellers Fred
CC: Madzelan Dan
Yuan, Georgia
Finley. Steve
Date: 8/14/2010 638:22 PM
Subject: RE: Data request related to repayment rate
(b)(5)
Sent: Saturday, August 14, 2010 4:26PM
To: Chesley, Susan; Kvaal, James; Kolotos, John; Sellers, Fred
Cc: Madzelan, Dan; Yuan, Georgia; Finley, Steve
Subject: FW: Data request related to repayment rate
(b){5)
Thanks!
David
From: Kelly Bozarth [Kelly.Bozarth@strayer.edu]
Sent Saturday, August 14, 2010 4:24PM
To: Bergeron, David
Subject: Data request related to repayment rate
Dave,
Thank you for your time on the call today. Per your request, I'm forwarding this data request to your attention. We are
requesting the following items to assist us in reconstructing the published rate repayment calculation. Please contact me
with any questions regarding this request.
1. Please confirm the date ranges used in the FY09 calculation
* Numerator: repayments during 10/1/08-9/30/09
*Denominator: loans entering repayment 10/1/04-3/31/08
1. Numerator: Please provide the Date Entered Repayment (DER001) reports as of October 1, 2008 and as of
September 30, 2009 so that we can calculate the RPL using the same reports used in the Department's calculation.
These reports are not available at this point in time via NSLDS.
1. Denominator: Please provide the data or reports used to calculate the denominator in the published calculation. When
we pull the School Cohort Default Rate History (DRC 035) reports for the last four federal fiscal years, we calculate a
different denominator (even after removing in-school deferments).
l. Repayment Rate excluding consolidations- per your suggestion, please provide our repayment rate calculation
excluding the impact of all consolidation loans. This will help us reconcile our pre-consolidation calculations.
1. Infonnation on consolidated loans
*The percentage of consolidated loans with one vs multiple consolidations
*The repayment detail of consolidation loans (showing repayments by consolidated loan, ideally by student)
1. Consolidation Loan Question: Please confinn that the numerator of the published calculation includes the OOPB of all
underlying loans that were subsequently consolidated. In our analysis, we found it difficult to isolate each underlying loan
for a student that was subsequently consolidated. Given the significant impact to our calculation, please provide the detail
on consolidation repayments:
a. Please provide data that would allow us to verify that the OOPB's of all underlying loans were included in the
numerator when a repayment was made
b. Specifically, please provide (1) the list of consolidated loans by student name, (2) reduced principle payments (RPL)
on these loans for the period measured, and (3) the OOPB of the original loan added back to the numerator related to
these RPL' s.
Please contact me directly, or feel free to have your team contact me directly, if we can provide further clarifications on
these requests. We appreciate your attention to this request.
Regards,
Kelly
Kelly Bozarth
Strayer Education, Inc.
SVP & Corporate Controller
Direct: 703-248-6775
Mobile: 571-289-1457
Kelly .Bozarth@strayer. edu
From: Finley Steve
To: Chesly. Susan
Bergeron. David
Kvaal, James
Kolotos John
Sellers, Fred
CC: Madzelan Dan
Yuan, Georgia
Date: 8/14/2010 8:11:48 PM
(b)(S)
From: Chesley, Susan
To: Bergeron, David; K vaal, James; Kolotos, John; Sellers, Fred
(b)(S)
To: Chesley, Susan; Kvaal, James; Kolotos, John; Sellers, Fred
Subject: FW: Data request related to repayment rate
(b)(S)
(b)(5)
Thanks!
David
From: Kelly Bozarth [Kelly.Bozarth@strayer.edu]
To: Bergeron, David
Subject: Data request related to repayment rate
Dave,
Thank you for your time on the call today. Per your request, I'm fOiwarding this data request to your attention. We are
requesting the following items to assist us in reconstructing the published rate repayment calculation. Please contact me
with any questions regarding this request.
1. Please confirm the date ranges used in the FY09 calculation
* Numerator: repayments during 1 0/1/08-9/30/09
* Denominator: loans entering repayment 10/1/04-3/31/08
1. Numerator: Please provide the Date Entered Repayment (DEROO!) reports as of October 1, 2008 and as of
September 30, 2009 so that we can calculate the RPL using the same reports used in the Department' s calculation.
These reports are not available at this point in time via NSLDS.
1. Denominator: Please provide the data or reports used to calculate the denominator in the published calculation. When
we pull the School Cohort Default Rate History (DRC 03 5) reports for the last four federal fiscal years, we calculate a
different denominator (even after removing in-school deferments).
1. Repayment Rate excluding consolidations- per your suggestion, please provide our repayment rate calculation
excluding the impact of all consolidation loans. This will help us reconcile our pre-consolidation calculations.
1. Information on consolidated loans
* The percentage of consolidated loans with one vs multiple consolidations
*The repayment detail of consolidation loans (showing repayments by consolidated loan, ideally by student)
1. Consolidation Loan Question: Please confirm that the numerator of the published calculation includes the OOPB of all
underlying loans that were subsequently consolidated. In our analysis, we found it difficult to isolate each underlying loan
for a student that was subsequently consolidated. Given the significant impact to our calculation, please provide the detail
on consolidation repayments:
a. Please provide data that would allow us to verify that the OOPB' s of all underlying loans were included in the
numerator when a repayment was made
b. Specifically, please provide (1) the list of consolidated loans by student name, (2) reduced principle payments (RPL)
on these loans for the period measured, and (3) the OOPB of the original loan added back to the numerator related to
these RPL' s.
Please contact me directly, or feel free to have your team contact me directly, if we can provide further clarifications on
these requests. We appreciate your attention to this request.
Regards,
Kelly
Kelly Bozarth
Strayer Education, Inc.
SVP & Corporate Controller
Direct: 703-248-6775
Mobile: 571-289-1457
Kelly.Bozarth@strayer.edu
(b)(5)
Martha
Sent: Thursday, May 06, 2010 5:51PM
To.: Cunningham,Peter
CC: Yuan. Georgia
Date: 5/6/2010 11 :33:54PM
Subject: RE: devry speech
To: Hoff, David; Whitman, David; Martin, Carmel ; Kanter, Martha; Shireman, Bob; Gomez, Gabriella
Cc: Rogers, Margot; MilJer, Tony; Rose, Charlie
Subject: devry speech
(b)(5)
Peter Cunningham
Assistant Secretary for Communications and Outreach
U S. Department ofEducation
peter.cunningham@ed.gov
202-401-2563 (office)
202-230-2404 (cell)
(b)(5)
(b)(5)
(b)(5)
(b)(5)
(b)(5)
(b)(5)
(b)(S)
From: Rogers, Margot
Sent: Monday, May 10, 2010 1:28PM
From: Qmningham, Peter
To: Rogers Margot
Rose, Charlie
Gomez. Gabriella
Martin Cannel
Kanter. Martha
Shireman. Bob
Miller Tony
Yuan. Georgia
CC:
Date: 5/10/2010 2:28:04 PM
Subject: RE: devty speech
To: Rose, Charlie; Gomez, Gabriella; Martin, Cannel; Cunningham, Peter; Hoff, David; Whitman, David; Kanter,
Martha; Shireman, Bob
Cc: Miller, Tony
Subject: Re: devty speech
(b)(S)
From: Rose, Charlie
To: Gomez, Gabriella; Martin, Carmel; Cunningham, Peter; Hoff, David; Whitman, David; Kanter, Martha; Shireman,
Bob
Cc: Rogers, Margot; Miller, Tony
Sent Mon May 10 12:18:38 2010
(b)(S)
Charlie
From: Gomez, Gabriella
To: Martin, Carmel ; Cunningham, Peter; Hoff, David; Whitman, David; Kanter, Martha; Shireman, Bob
Cc: Rogers, Margot; Miller, Tony; Rose, Charlie
Sent: MonMay 1012:16:55 2010
(b)(S)
Gabriella Gomez, Assistant Secretary
Office ofLegislation and Congressional Affairs
(202) 401-0020
From: Martin, Carmel
To: Cunningham, Peter; Hoff, David; Whitman, David; Kanter, Martha; Shireman, Bob; Gomez, Gabriella
Sent: MonMay 1012:03:312010
Subject: RE: devty speech
(b)(S)
(b)(5)
Sent: Thursday, May 06, 2010 5:52PM
To: Hoff, David; Whitman, David; Martin, Carmel; Kanter, Martha; Shireman, Bob; Gomez, Gabriella
Subject: devry speech
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<< File: Devry.doc >>
Peter Cunningham
U. S. Department of Education
202-401-2563 (office)
202-230-2404 (cell)
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From: Adams, Kristen
To: Bergeron. David
Arsenault. Leigh
Yuan Georgia
Kvaaf, .Tames
Smith Kathleen
CC:
Date: 9/29/2010 5:08:32 PM
Subject: RE: draft list of invitees
Sent Wednesday, September 29, 2010 8:30AM
To: Arsenault, Leigh; Yuan, Georgia; Adams, Kristen; K vaal, James; Smith, Kathleen
Subject: RE: draft list of invitees
l(b)(S)
From: Arsenault, Leigh
To: Bergeron, David; Yuan, Georgia; Adams, Kristen; Kvaal, James; Smith, Kathleen
Subject: draft list of invitees
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Thanks!
Leigh
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CONFIDENTIAL
2
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2
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From: Arsenault, Leigh
From: Bergeron David
To: Arsenault. LeiW
Yuan, Georgia
Adams, Kristen
Kvaal James
Smith, Kathleen
CC:
Date: 9/29/2010 8:30:02 AM
Subject: RE: draftlistofinvitees
To: Bergeron, David; Yuan, Georgia; Adams, Kristen; K vaal, James; Smith, KathJeen
Subject draft list of invitees
(b)( 5)
Thanks!
Leigh
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CONFIDENTIAL
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1
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Sent: Tuesday, June 23, 2009 10:47 AM
To: Wolff, Russell; Finley, Steve
Subject: FW: Fallout from speech
l(b)(5)
From: Finley Steve
Wolff Russell
CC:
Date: 6/23/2009 3:15:30PM
Subject: RE: Fallout from speech
From: rob@al tresearch [ mai lto:rmacarthur@al tresearch .com]
Sent: Tuesday, June 23, 2009 10:08 AM
To: rob@altresearch
Subject Fall out from speech
Chronicle ofHigher Education Article today ...... .
"Later, Robert Collins, vice president for student financial aid for the Apollo Group, accused short-sale investors, who
would profit if the share price of the company's stock fell , of spreading misinformation about his company to deflate the
value of its stock.
"It' s unfortunate that many short-sellers make their living by sh01ting Apollo stock," he said, before addressing issues
raised in a 2004 Education Department program review and an inspector general' s report."
It will be interesting to see exactly which statement I made that is "misinformation." Bring it on ...
I referred to the for-profit institution as the next Countrywide Credit. This is where that thought came from:
Below this message is theCA State AG's official press release re their initial complaint against Countrywide.
"The company sold ever-increasing numbers of complex and risky home loans, as quickly as possible. Countrywide was,
in essence, a mass-production loan factory, producing ever-increasing streams of debt without regard for borrowers.
Today's lawsuit seeks relief for Californians who were ripped off by Countrywide's deceptive scheme."
Also from the Chronicle Article:
"Competitive team environments encourage recruiters to think of students as points to be earned," said Jill ian L. Estes, a
lawyer who is representing students in a case against Westwood College, which has campuses in six states. "They toe
the line of propriety while ignoring the impact on students."
Officials from two for-profit institutions used the hearing as an oppmtunity to defend their institutions against allegations
of impropriety. M. Lauck Walton, a regional vice president of Westwood College, said he was deeply offended by Ms.
Estes' s "frivolous" claims and vowed to disprove them "in the appropriate forum. " ...... this jerk was fairly senior at
Computer Learning Centers. I still have my employee list. It's not the first time I have found other f01mer employees of
CLCXQ working for other for profit schools. The Department should ban people from working at other schools. JoAnn
Meron, eg, was named as a defendant in a case against Career Education a few years back, also a CLCX employee.
Robert MacArthur
Alternative Research Service, Inc.
Rmacarthur@altresearch.com
203-244-5174
This material has been prepared by Alternative Research Services Inc., a Connecticut-registered Investment Adviser,
employing appropriate expertise, and in the belief that it is fair and not misleading. The information upon which this
material is based was obtained from sources believed to be reliable, but has not been independently verified. We do not
guarantee its accuracy. This information is not to be used as the primary basis of investment decisions. Copying, faxing,
replicating, or quoting from this report without the express written consent of Alternative Research Services Inc. is
forbidden. This is not an offer or solicitation of an offer to buy or sell any security or investment. Any opinion or
estimates constitute our best, and are subject to change without notice. This material is intended for use only by
professional or institutional investors and not the general investing public. The firm does not make a market or hold
positions in the securities mentioned herein, nor does the firm maintain any investment banking relationships in such
securities.
From:
To:
CC:
Date:
Subject:
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Finley Steve
:Martin, Phil
7/28/2010 12:20:00 PM
RE: FAQ -final edit
http :1 /www .ibj .com/senator -forprofit-colleges-require-tougher -oversight/P ARAMS/articl e/20728
For-profit colleges need tougher oversight, according to a report from a Democratic Senate committee chairman that
questions the industry's advertising spending, tuition costs and reliance on taxpayer dollars.
The criticism of higher-education companies was made in a 17-page report released Thursday by Sen. Tom Harkin, the
Iowa Democrat who chairs the US. Senate Health, Education, Labor and Pensions Committee. Harkin's report called
for the government to require disclosure of for-profits' spending of federal money.
The Senate oversight inquiry is part of the growi ng scrutiny of the education companies, including Carmel-based ITT
Educational Services Inc., Apollo Group Inc.'s University of Phoenix and Career Education Corp. President Barack
Obama's administration on June 16 proposed regulation of the industry because of concern that recruiters are signing up
unqualified students and leaving them with loans they may be unable to repay.
"There are growing questions about whether all students-and taxpayers by extension-are receiving value for their
educational dollar," Harkin said at the hearing.
Concerns about student debt and academic quality apply to nonprofit and public colleges, not just for-profits, Sharon
Thomas Parrott, senior vice president and chief compliance officer with Devry Inc., a for-profit based in Oakbrook
Terrace, TIL, said in her testimony. For-profit colleges serve students who don' t have access to traditional schools:
minorities, recent immigrants and working adults, she said.
"Institutions like ours grow for a reason," Parrott told the committee. "There is an enormous unmet need."
The for-profit industry contains "bad actors," such as those who recruit in homeless shelters and misrepresent education
quality and job placement, Sen. Michael Enzi of Wyoming, the ranking Republican on the committee, said in his
testimony.
"In combating this behavior, it is essential that we use a scalpel and not a machete," he said. "Whatever protections are
put in place must eliminate bad actors and ensure that we do not unintentionally harm students in legitimate programs."
The committee entered into the record a Bloomberg News article about for-profit college recruiting in homeless shelters,
as well as stories about targeting the military and the growth of Apollo' s University ofPhoenix.
The number of students attending for-profit colleges rose to 1.8 million in 2008, from 550,000 in 1998, according to
Harkin' s report. Federal aid to for-profit colleges jumped to $26.5 billion in 2009 from $4.6 billion in 2000, according
to the Education Department. The five largest publicly traded for-profit companies received 77 percent of their revenue
from federal financial aid programs in 2009, up from 63 percent in 2002, the report said.
Harkin' s report said one unnamed company had 2009 operating profit of$489 million on revenue of$1.3 billion, a 37
percent operating margin-almost double that of Apple Inc. liT reported those revenue and profit figures in securities
filings, but liT spokeswoman Lauren Littlefield declined to comment.
Eight publicly traded companies-those that break out such data-spent half their budgets on education, 31 percent on
recruiting and marketing and 15.7 percent on undefined administrative expenses, Harkin' s report said.
At least one company spent more on marketing than on education, the report said. Bridgepoint Education Inc., based in
San Diego, spent $145.7 million on marketing and promotional expenses last year, compared with $120.1 million on
instructional costs and services, according to a securities filing. A Bridgepoint spokeswoman, Shari Rodriguez, didn' t
respond to messages seeking comment.
For-profit colleges are more expensive than comparable non-profit schools and leave students with heavier debts, the
report said. "Staggering" numbers of student leave for-profits each year, presumably without degrees, according to
Harkin's report. Default rates on government loans in the industry are also higher than similar public and nonprofit
institutions, the report said.
The disparities reflect the lower socioeconomic background of students, Harris Miller, president of the Career College
Association, which represents more than 1,400 for-profit colleges, said in an interview Wednesday.
The hearing featured testimony from Steven Eisman, a hedge-fund manager whose bet against the housing market was
chronicled in a best-selling book. Eisman compared for-profit colleges with the sellers of subprime mortgages. Both
industries leave customers with heavy debts they can' t repay, yet don't bear the risk of defaults, he said. Eisman, who is
shorting, or betting against, education stocks, made a similar presentation at a May 26 investment conference.
"If nothing is done, then we are on the cusp of what I believe is a new social disaster," Eisman told the committee.
The analogy between the two industries is "as silly as it is simplistic" because degrees from for-profits benefit the
economy, and the institutions must provide value to protect their reputations, the Career College Association's Miller
said in a speech Wednesday at the National Press Club in Washington.
Two other witnesses, Margaret Reiter, former supervising California deputy attorney general, and Department of
Education Inspector General Kathleen S. Tighe, criticized industry marketing practices, including the recruiting of the
homeless.
Recruiters from Career Education' s Sanford-Brown Institute in White Plains, N.Y., pressured former student Yasmine
Issa to enroll, then left her with $20,000 in debt and unable to find a job as an ultrasound technician, the mother of two
said in her testimony.
"It's hard to find work without a marketable skill , but going to Sanford-Brown to get one has left my family and me
worse off than ifl had never gone back to school," she said.
Career Education can' t discuss an individual student's experience because of privacy laws, a company spokesman, Jeff
Leshay, said in an interview Wednesday. The comments at the hearing about Career Education "don' t reflect a full
understanding and appreciation for the quality of education we provide," he said.
From: Martin, Phil
Sent: Wednesday, July 28, 2010 11 :24 AM
To: Kolotos, John
Cc: Finley, Steve
Subject: RE: F AQ- final edit
l(b)(5)
From: Kolotos, John
Sent: Wednesday, July 28, 2010 11 :05 AM
To: Martin, Phil
Cc: Finley, Steve
Subject: RE: F AQ -final edit
l(b)(5)
From: Martin, Phil
Sent: Wednesday, July 28, 2010 9:59AM
To: Kolotos, John
Cc: Finley, Steve
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From: Finley, Steve
Sent: Wednesday, July 28, 2010 9:28AM
To: K vaal, James; Martin, Phil; Bergeron, David; Kolotos, John
Cc: Yuan, Georgia
(b)(5)
Fron1: FCvaal, Jan1es
Sent: Tuesday, July 27, 2010 5:32PM
To: Finley, Steve; Martin, Phil; Bergeron, David; FColotos, John
Cc: Yuan, Georgia
(b)(5)
Fron1: Finley, Steve
To: Martin, Phil ; Bergeron, David; Kolotos, John; K vaal, Jan1es
Cc: Yuan, Georgia
Subject: RE: F AQ- fmal edit
(b)(5)
From: Martin, Phil
To: Bergeron, David; Kolotos, John; Finley, Steve; Kvaal, James
Cc: Yuan, Georgia
Thanks,
Phil
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Sent: Tuesday, July 27, 2010 12:53 PM
To: Kolotos, John; Finley, Steve; Martin, Phil ; Kvaal, James
Cc: Yuan, Georgia
Subject: RE: F AQ- fmal edit
http :1/www. career. org/iMISPublid AM/CM/ContentDisplay. cfm?
ContentFil eiD= 123 92&MicrositeiD=O&FusePreview= Yes
l(b)(S)
From: Kolotos, John
Sent: Tuesday, July 27, 2010 11:41 AM
To: Bergeron, David; Finley, Steve; Martin, Phil ; Kvaal, James
Cc: Yuan, Georgia
(b)(S)
Sent: Tuesday, July 27, 2010 11:17 AM
To: Finley, Steve; Martin, Phil; Kvaal, James
Cc: Yuan, Georgia; Kolotos, John
Subject Re: F AQ - final edit
l(b)(S)
David A Bergeron
From: Finley, Steve
To: Martin, Phil; Bergeron, David; K vaal, James
Cc: Yuan, Georgia; Kolotos, John
Sent: Tue Jul2710:16:16 2010
(b)(5)
From: Martin, Phil
Sent: Monday, July 26, 2010 11:09 AM
To: Bergeron, David; Kolotos, John; Finley, Steve
Cc: Kvaal, James
(b)(5)
Thanks,
Phil
From: Martin, Phil
Sent: Thursday, July 22, 2010 3:58PM
To: Bergeron, David; Kolotos, John; Finley, Steve
Cc: Kvaal, James
Subject: F AQ - final edit
(b)(5)
Many thanks,
Phil
[(b)(5)
From: Yuan, Georgia
Sent: Tuesday, April27, 2010 12:20 PM
To: Bergeron, David; Shireman, Bob
Subject: FYI
To: Yuan. Qeorgia
Shireman. Bob
CC:
Date: 4/27/2010 12:22:08 PM
Sub.iect: RE: FYI
http://online.wsj.com/article/BT-C0-20100426-710339.html?mod=rss_Hot_Stocks
APRIL 26, 2010, 10:57 A.M. ET
Debt, Job Rule Uncertainty Hits Shares OfF or-Profit Colleges
NEW YORK (Dow Jones)--A government proposal to hold colleges accountable for graduating students with high debt
Monday morning, Credit Suisse issued a note saying the Department ofEducation has returned to a stiffer set of rules on
post-graduation debt and gainful employment levels that colleges must meet. The news hit share prices of for-profit
Credit Suisse downgraded liT Educational Services Inc. (ESI) and DeVry Inc. (DV) to neutral rrom outperform and
slashed their price targets, citing the potential fallout rrom their new take on gainful employment as well as concerns of
The Department of Education originally said schools could face scrutiny that could put federal assistance--often the
improper to say what the Department of Education will put forth and it's best to wait until the official proposal is released
for public comment That will happen by mid-June.
"I'm not sure who thinks they have what access to what's in this draft," said one for -profit school official, but "I would
really not be jumping to any conclusions just yet." He said there's no way of knowing "whether it's been hardened,
JBD Industry Themes
Rumors Swirl, Lift And Sink School Stocks
By VICTOR REKLAlTIS, INVESTOR'S BUSINESS DAILY
Posted 04/26/201 0 06:23 PM ET
News of a regulatory exemption provided a big boost on April l3 to De Vry (DV), ITT Educational Services (ESI) and
other school stocks.
So much for that exemption.
On Monday, DeVry and ITT tumbled amid reports that they might not get a pass in new Education Department rules
after all.
The Education Department is working on regulations that would link graduates' income to their student-loan payments.
Creclit Suisse said on April 13 that there could be an exemption for schools with a 50% completion rate and a 70% job-
placement rate.
That exemption likely would help DeVry and liT, the bank said two weeks ago as it upgraded those two school stocks
to outperform.
But on Monday, Credit Suisse said its Washington sources think the exemption may not make it in the new regulations.
The bank downgraded DeVry and ITI to neutral.
Credit Suisse also expressed concern about a recent De Vry warning about slowing enrollment in one unit, as well as an
ITT warning about increased advertising expenses. Enrollment has been rising for for-profit educators, but that trend
could end as the job market improves.
DeVry slid 5.8% to 65.45 on Monday, dropping below its 10-week moving average in heavy turnover. It had climbed
as high as 74.36 after a rebound off its 10-week line.
ITT Educational also fell hard and sliced through its 1 0-week line, though it recovered to end the day down just 1.2%.
Another school stock that slid was top-rated Grand Canyon Education (LOPE), down 1.1% in below-average volume.
The stock stands 9% below a high reached on April l3. It has not been in a proper buying range for several weeks, but
it may be nearing its 1 0-week moving average.
DeVry falls after analyst downgrade
BloombergNewsPublished: 4/26/2010 12:13
m Educational Services Inc. and De Vry Inc. fell in New York trading after a Credit Suisse Group analyst said the U.S.
government may make it harder for the companies' students to get financial aid.
DeVry, based in Oakbrook Terrace, fell $4.58, or 6.6 percent, to $64.88 at 12:01 p.m. in New York Stock Exchange
composite trading after the Boston-based analyst, Kelly Flynn, cut her rating to "neutral" from "outperform." ITT
Educational, based in Carmel, Indiana, fell $2.37, or 2.1 percent, to $109.41 after it was also cut to "neutral."
Department of Education rules may require education companies to show that graduates earn enough to afford
repayment of their student loans. An exemption to the regulations that would have eased restrictions on students' access
to loans may be dropped from the proposal, which may be made public in May or June, Flynn said today.
"We expect sector to remain volatile in coming weeks as regulatory process plays out," Flynn wrote in a note to clients.
The recovering economy may also hurt the for-profit colleges if students can get jobs rather than sign up for classes,
Flynn said.
Great
Sent using BlackBeny
From: Kvaal, James
From: Qmningham, Peter
To: KvaaJ, James
N.liller. Tony
Weiss, Joanne
Rose Charlie
Gomez Gabriella
Yuan Georgia
CC: Kanter. Martha
Ochoa. Eduardo
Date: 9/312010 9:51:24 PM
Subject: Re: gainful employment
To: Miller, Tony; Weiss, Joanne; Rose, Charlie; Cunningham, Peter; Gomez, Gabriella; Yuan, Georgia
Cc: Kanter, Martha; Ochoa, Eduardo
Sent: Fri Sep 03 17:37:10 2010
Subject gainful employment
(b)(5)
thanks
Nonresponsive
Sent Saturday, September 04, 2010 4:47PM
To: Finley, Steve
Subject: FW: gainful employment
From: Kvaal, James
Sent Friday, September 03, 2010 6:37PM
From: Pinley, Steve
To: Kanter, Martha
CC:
Date: 9/4/2010 9:03 :48 PM
Subject: RE: gainful employment
Subject: gainful employment
(b)(5)
From: Kanter Martha
To: Ferguson, Keith
Ochoa, Eduardo
iv!iller. Tony
Kvaaf, .Tames
Yuan! Georgia
Bergeron David
CC:
Date: 9/4/2010 4:35:14 PM
I Nonresponsive
From: Ferguson, Keith
Sent: Saturday, September 04, 20'1 0 2:12PM
To: Ochoa, Eduardo; Kanter, Martha; Miller, Tony; Kvaal, James
Hello all,
I have set up the following number:
Phone: 877-937-6173
I will not be able to activate the line personally. Martha, will you handle the leader code?
You should be set Let me know if you have questions.
Keith
From: Ochoa, Eduardo
Sent: Saturday, September 04, 2010 10:45 AM
To: Kanter, Martha; Miller, Tony; Kvaal, James
Cc: Ferguson, Keith
6 pm it is. Let us know the conference call number and participant code.
Eduardo M. Ochoa
Assistant Secretary for Postsecondary Education
1990 K Street, NW
Sent: Saturday, September 04, 201 0 10:21 AM
To: Miller, Kvaal, James
Cc: Ochoa, Ferguson, Keith
OK-6pm
From: Miller, Tony
To: Kanter, Martha; K vaal, James
Sent: Sat Sep 04 08:01:22 2010
I Nonresponsive
To: Miller, Kvaal, James
Sent: SatSep0407:36:172010
From: Miller, Tony
To: Kvaal, James
Cc: Kanter, Ochoa, Eduardo
Sent: Fri Sep 03 21:05:33 2010
(b)(5)
Thanks,
Tony
From: Kvaal, James
Sent: Friday, September 03, 2010 6:37PM
Subject: gainful employment
(b)(S)
5:30's best
Martha Kanter
Under Secretary
From: Kanter Martha
To: Shireman, Bob
CC: Yuan. Georgia
Date: 3/31/2010 12:25:22PM
Subject: Re: Gainful Employment follow up
"The future belongs to those who believe in the beauty of their dreams!"
--Eleanor Roosevelt
On Mar 31, 2010, at 8:39AM, "Shireman, Bob" wrote:
430 or 530?
From: Yuan, Georgia
To: Shireman, Bob; Kanter, Martha
Sent: WedMar3110:16:542010
Subject: FW: Gainful Employment follow up
(b)(5)
(b)(5)
Georgia
From: Miller, Tony
Sent Wednesday, March 31, 2010 10:22 AM
To: Yuan, Georgia
(b)(5)
Thanks,
Tony
430 or 530?
From: Yuan, Georgia
Sent Wed Mar 31 10: 16:54 2010
(b){5)
Georgia
From: Shireman, Bob
To: Yuan, Georgia
Kanter. Martha
CC:
Date: 3/31/2010 11 :39:22 AM
Sub.iect: Re: Gainful Emp]oyment follow up
From: Miller, Tony
To: Yuan, Georgia
(b)(S)
Thanks,
Tony
I Nonresponsive
G
From: Shireman, Bob
To: Yuan, Georgia; Kanter, Martha
430 or 530?
From: Yuan, Georgia
Sent Wed Mar 31 10:16:54 2010
(b)(5)
From: Yuan Georgia
To: Shireman, Bob
CC:
Date: 3/31/2010 12:09:46 PM
Subject: RE: Gainful Employment follow up
(b)(5)
Georgia
From: Miller, Tony
Sent Wednesday, March 31, 2010 10:22 AM
To: Yuan, Georgia
(b)(5)
Thanks,
Tony
5:30 it is
Sent: Wednesday, March 31, 2010 12:25 PM
To: Shireman, Bob
Cc: Yuan, Georgia
5:30's best
Martha Kanter
Under Secretary
From: Yuan, Georgia
To: Kanter, Martha
Shireman. Bob
CC:
Date: 3/31/2010 1:09:56 PM
Sub.iect: RE: Gainful Employment follow up
"The future belongs to those who believe in the beauty of their dreams!"
--Eleanor Roosevelt
On Mar 31, 2010, at 8:39AM, "Shireman, Bob" wrote:
430 or 530?
From: Yuan, Georgia
Sent: Wed Mar 31 10:16:54 2010
(b)(5)
Georgia
From: Mi ll er, Tony
To: Yuan, Georgia
(b)(5)
Thanks,
Tony
(b)(S)
From: Hamilton, Justin
Sent: Friday, July 23, 2010 1:18AM
From: Weiss Joanne
To: Hamilton. Justin
Kanter, Martha
Yuan, Georgia
Kvaal James
Gomez, Gabriella.
Peter
Bergeron David
CC: Miller, Tony
Private - Duncan Ame
Date: 6:32:10 AM
Subject: RE: Gainful Employment Press Coverage
To: Heather Higginbottom; Roberto Rodriguez; Gavin, Tom; Gannet Tseggai; Robert Gordon; Zelman, Allison L.;
Kanter, Martha; Yuan, Georgia; Kvaal, James; Gomez, Gabriell a; Weiss, Joanne; Cunningham, Peter; Bergeron, David
Subject: Gainful Employment Press Coverage
(b)(S)
* WSJ: U.S. to Scrutinize For-Profit Career Colleges (Good)
*Bloomberg: Obama Cracks Down on For-Profit Colleges, Links Loans to Income (Good)
* AP: Proposed federal rules target for-profit colleges (Evenly mixed review)
* NYT: U.S. Releases Rules on For-Profit Colleges (The least flattering quote: Barmak saying "You' re kidding me, 45
percent and you're golden?" )
*Chronicle ofHigher Ed: Education Department Takes Aim at For-Profits With Student-Debt Rule (Good)
*Washington Post: Administration proposal aims to tighten oversight of for-profit colleges (Good)
*Reuters: U.S. rule would force education companies to show work (Good)
*Not online as of midnight: USAToday, Inside Higher Ed
WSJ: Department of Education to Scrutinize For-Profit Career Colleges
The U.S. Department ofEducation on Friday will propose a measure to penalize for-profit career colleges for graduating
students with high debt-to-income ratios.
The proposal, which will undergo a 45-day comment period that is expected to include opposition from industry
lobbyists, is an effort to ensure schools are training students for gainful employment in a recognized occupation. It comes
at a time when for-profits are under new scrutiny as they capture a growing share of federal student-aid dollars.
"Some proprietary schools have profited and prospered but their students haven't," Secretary ofEducation Arne Duncan
said. "While career colleges play a vital role in training our work force to be globally competitive, some of them are
saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use."
Under the proposal, training programs would be judged on whether former students are repaying the principal on federal
loans, and the relationship between total student loan debt and average earnings upon graduation. The recommendation
sets up three tiers of eligibility, with those in the middle tier facing enrollment restrictions and debt-to-income disclosure
requirements, and the weakest tier losing access to federal student aid for new students.
According to the Education Department, if career colleges made no changes, 5% of all programs would no longer be
eligible for federal aid and 55% would be required to warn students about high debt-to-income ratios. Many publicly
traded schools derive close to 90% of their revenue from federal aid.
The recommendation, known as a Notice of Proposed Rulemaking, has been a long time corning, with federal officials
and industry representatives meeting for a year to discuss new higher -education regulations. The government put forth its
first proposal in late January and the stocks offer-profit colleges have soared and swooned since, propelled by rumors
of how programs could gain exemption from the regulation.
The Education Department said that this version is "thoughtful," with income calculations based on actual graduate
earnings rather than Bureau of Labor Statistics figures. To give time for program improvement, the agency proposed that
the 2012-2013 academic year be the earliest that programs could be found ineligible for federal aid.
The Education Department had released 13 other proposals in June but said it needed more time for this one.
"Some key issues around gainful employment are complicated and we want to get it right," Mr. Duncan said at the time.
The earlier recommendations included proposals on incentive compensation for student recruiters, a clearer definition of
a credit hour and a new metrics by which students must show academic progress in order to continue receiving federal
aid.
The colleges' programs include training for students to work in the culinary arts, as medical assistants, and in criminal
justice.
Write to Melissa Korn at melissa.korn@dowjones.com
Obama Cracks Down on For-Profit Colleges, Links Loans to Income
By John Lauerman- Jul23, 2010
The Obama administration released a proposal that would tighten for-profit colleges' access to federal student aid,
threatening growth in the industry that received $26.5 billion in U.S. funds last year.
The proposed rules released today by the U.S. Department ofEducation would link U.S. student aid eligibility at Apollo
Group Inc., ITT Educational Services Inc., Career Education Corp. and other education companies to former students'
salaries and debt repayment rates. The rules may cut off access to federal student grants and loans at about 5 percent of
all for- profit education programs, Secretary Arne Duncan said in a telephone call with reporters yesterday.
Students earning two-year associates' degrees at for-profit colleges had an average student-loan debt of$14,000 in
2007- 2008, about twice that of students at nonprofit colleges, the department said in a statement. While most education
companies provide valuable training and skills, high-cost education programs that lead to low-wage jobs are harming
students, leaving them with hard-to-pay debts, Duncan said.
"We want to hit the ones at the bottom, those that simply aren' t working for students," Duncan said in the press briefmg.
"The 5 percent would frankly be the bottom of the barrel ."
Tuition Impact
If the rules were in effect today, programs enrolling about 8 percent of the students at for-profit colleges nationwide
would lose eligibility, the Education Department said. There were about 1.8 million students enrolled in education
companies' programs in 2008, according to a June 24 report from Iowa Democratic Senator Tom Harkin, chairman of
the Senate Health, Education, Labor and Pensions Committee.
The rules may hurt Carmel, Indiana-based ITT Educational, Hoffman Estates, lllinois-based Career Education and Santa
Ana, California-based Corinthian Colleges Inc., because they may not meet the repayment standard and they offer high-
priced programs, said Trace Urdan, an analyst with Signal Hill Capital Group in San Francisco. Expensive courses of
study that lead to relatively low-paying careers, such as those in criminal justice, may begin to disappear, he said
yesterday in a telephone interview.
"You will see some programs being terminated," Urdan said. "No one' s going to be kicked out into the street, but
programs that are no longer profitable at contemplated prices will be ended."
Stocks Decline
Under the proposed rules, the Education Department would monitor loan repayments and starting salaries among
graduates of for-profit colleges. To remain fully eligible for student loans, education companies would have to show the
agency that at least 45 percent of their former students are paying off their student loans, or that graduates pay less than
8 percent of their total income or 1 ess than a fifth of their " discretionary income" on student loan payments.
When a program' s repayment levels and debt-to-income ratios both miss those targets, its access to federal student aid
may be restricted, the statement said. That may mean that the program would have to limit enrollment growth or warn
applicants that the program' s graduates have high debt levels. About 55 percent of for-profit college programs would
have to issue such warnings if the proposed regulations were now in effect, the statement said.
Lose Eligibility
Companies would lose their eligibility for aid ifless than 35 percent of former students are repaying and their educational
debt is at least 12 percent of their annual total income or 30 percent of discretionary income, the statement said. No
more than 5 percent of programs nationally will lose U.S. aid access under the regulations during their first year, the
department said.
Average annual tuition at for-profit colleges was $14,000 in 2009, compared with $2,500 at community colleges,
Harkin' s report said.
Education companies have been hurt as investors have waited for the Education Department to write its regulations. The
Standard & Poor' s 1500 Education Services Sub-Industry Index, which tracks nine education companies, fel113
percent over the past 12 months as of yesterday' s close. Apollo, the Phoenix- based operator of the University of
Phoenix and the biggest U.S. education company, fell 32 percent over the past 12 months in Nasdaq Stock Market
composite trading.
Industry Reaction
Congressional staffers who were briefed on the proposed rules said they expected the education industry to fight them.
The Career College Association, a Washington-based industry group, didn' t respond to telephone calls and e-mails
requesting comment. Apollo company officials declined to comment because they hadn' t seen the new regulations.
"Apollo cautions against policy with the potential for unintended consequences that could restrict educational access,
limit students' choices or unfairly disadvantage hundreds of thousands of historically underserved students," Manny
Rivera, a spokesman, said in an e-mail.
Robert Jaffe, a spokesman for Corinthian, Lauren Littlefield, a spokesman for ITT Educational and JeffLeshay, a
spokesman for Career Education, didn't immediately return telephone calls seeking comment.
While the proposed rules are a step in the right direction that may eliminate many abuses of the student financial aid
system, the government may have set the standard for loan repayment too low, said Bmmak Nassirian, associate
executive director of the American Association of Collegiate Registrars & Admissions Officers in Washington.
' Rampant Waste'
"I defy anyone to say that an institution with a 45 percent loan-repayment rate represents the gold standard," he said in a
telephone intetview. "This says something about how rampant waste and fraud and abuse are in this sector."
While the expectations for repayment appear low, the rules appear to have some "real teeth" in them, said Pauline
Abernathy, who oversees policy and advocacy for the Institute for College Access and Success in Washington. Her
group will urge the administration to strengthen the regulations in the 45- day comment period that starts today.
"This regulation is plain common sense," Harkin said in a statement. "If a school can' t show that its students are repaying
their college debt and not defaulting, this is a sure sign that the school is failing to prepare its students for gainful
employment, as the law requires."
An earlier draft of the proposal said that starting salaries would be estimated using data from the U.S. Bureau ofLabor
Statistics. The proposed rules instead call for the salary data to come directly from graduating students' Internal Revenue
Setvice filings, the Education Department said.
' Actual Wages'
"Therein lies the problem for the sector given that actual wages are generally lower than the Bureau ofLabor Statistics
data," said Jarrell Price, an analyst with Height Analyti cs in Washington who follows the for -profit education sector.
"There' s a lot ofuncertainty about the income levels of graduates of for profit colleges."
Federal aid to for-profit colleges jumped to $26.5 billion last year from $4.6 billion in 2000, according to the Education
Department. About 96 percent of students who graduated from for- profit colleges in 2008 had taken out student loans,
and 24 percent of that graduating class had more than $40,000 in U.S. student loan debt, according to the June report
from Harkin.
Taxpayers' Right
"These schools -- and their investors -- benefit from billions of dollars in subsidies from taxpayers, and in return,
taxpayers have a right to know that these programs are providing solid preparation for a job," Duncan said in the
statement. "The rules we' ve proposed today will help ensure that career college and training programs use federal
student aid to prepare students for success."
The government has been determining for-profit programs' eligibility for student grants and loans in part by monitoring
default rates. Those rates underestimate the proportion of students who don't pay back loans on time, because many
receive postponements known as forbearances or deferments. The new rules link a program' s eligibility for federal aid to
the percentage of former students who are repaying principal on their loans three years after leaving school, the
department said.
To contact the reporter on this story: John Lauerman in Boston atjlauerman@bloomberg.net.
Proposed federal rules target for-profit colleges
By ERIC GORSKI (AP) - 38 minutes ago
The Education Department will propose much-anticipated regulations Friday that would cut off federal aid to for-profit
college programs if too many of their students default on loans or don't earn enough after graduation to repay them.
"Some proprietary schools have profited and prospered but their students haven't, and this is a disservice to students and
to taxpayers," Education Secretary Arne Duncan said Thursday in a briefing with reporters. "And it undermines the
valuable work, the extraordinarily important work, being done by the for -profit industry as a whole."
To qualify for federal student aid programs, career college programs must prepare students for "gainful employment."
The Obama administration, amid intense lobbying from both for-profit college officials and consumer and student
advocates, is proposing a complicated formula that would weigh both the debt-to-income ratio of recent graduates and
whether all enrolled students repay their loans on time, regardless of whether they finish their studies.
Although the rules would provide schools more roads to compliance than an earlier proposal, a senator and for-profit
colleges' chief lobbying group warned that it would make college less accessible.
Republican Sen. Lamar Alexander of Tennessee, a former Education secretary, ridiculed it as "a surprisingly wacky
proposal from one of the president's best cabinet members." The government could in effect "institute price controls on
certificate and degree programs at thousands of institutions of higher education," Alexander said in a statement.
Underscoring the partisan divide on the issue, Sen. Tom Harkin ofiowa, a Democrat who is holding oversight hearings
on for-profit colleges, praised the proposed regulations as "plain common sense."
For-profit colleges have faced increased scrutiny in recent months for some questionable recmiting tactics, high loan
default rates, and low graduation and job placement rates. The government is taking notice because for-profit colleges
are bringing in record amounts of federal aid money -$26.5 billion last year, up from $4.6 billion in 2000.
Under the Obama administration proposal , vocational programs would fall into one of three categories:
_Programs fully eligible for aid will either have at least 45 percent of their former students paying down the principal on
their federal loans- or their graduates will have a debt-to-earnings ratio of less than 20 percent of discretionary income
or 8 percent of total income.
_Ineligible programs will have less than 3 5 percent of their former students paying down the principal on their federal
loans- and their graduates will have a debt-to-earnings ratio above 30 percent of discretionary income and 12 percent
oftotal income.
_Those programs that don't fit either definition would be restricted- meaning they would be subject to limits on
enrollment growth and schools would be required, among other things, to warn of their high debt levels.
Duncan said the department estimates that if schools make no changes, 5 percent of for-profit college programs would
be ineligible for aid in 2012- affecting 8 percent of all students in the fast-growing sector.
If the rules went into effect now, 55 percent of for-profit schools would be required to disclose unflattering loan data in
their promotional materials, making for a strong consumer protection tool, the agency said.
To give schools time to improve and to target "the bottom of the barrel," Duncan said the administration would cap the
number of programs it would strip of aid eligibility at 5 percent in fall 2012, when that penalty would first be available.
The Career College Association, the for-profit college sectors main lobbying group, said establishing a ratio between
student debt and anticipated graduate earnings is unwise, unnecessary and unproven.
"Amounts borrowed today do not indicate what you will be able to repay in five years, ten years or over a working
lifetime," the association's president, Harris Miller, said Thursday in a statement.
Others who were hoping for tougher rules were disappointed, as well.
Pauline Abernathy, vice president of the Institute for College Access & Success, said while the proposal is significant
and has teeth, programs could continue to profit from federal aid when more than half their students can't afford to pay
down the principal on their loans.
"It is not as strong as it should be to protect students and taxpayers from getting ripped off by career education programs
that over-promise and under-deliver," she said.
The proposed rules will be published Friday in the Federal Register and a 45-day public comment period will follow.
The final rules are scheduled to be announced in November and would take effect next year, although enforcement
action that would strip schools of aid eligibility would not begin until the 2012-2013 school year.
Copyright 2010 The Associated Press. AJI rights reserved.
U.S. Releases Rules on For-Profit Colleges
ByTAMARLEWlN
The Obarna administration on Thursday released its controversial proposed regulations to end federal student aid to for-
profit colleges whose graduates do not earn enough to repay their loans.
Since most for-profit programs get the vast majmity of their revenues from federal student aid, the regulations could
effectively shut down the programs whose students have the most debt and the least likelihood of finding good jobs.
The for-profit colleges have lobbied strongly against the new "gainful employmenf' regulations. And in a statement
Thursday evening, the Career College Association, which represents the colleges, called the proposed regulations
"unwise, unnecessary, unproven" and said they were likely to harm students, employers, institutions and taxpayers. The
Department ofEducation estimates that the rules would cut off federal aid to about 5 percent of for -profit college
programs, representing about 8 percent of students, and that about 55 percent of the programs would be required to
warn applicants and students that they may have trouble repaying their loans.
The coalition of education groups, student groups and consumer groups that have pushed for stronger regulations said
they were glad to have regulations proposed in time to go into effect next year- but not impressed with their toughness.
"We are particularly concerned that programs could continue to profit from federal student aid when half their students
with loans can' t afford to pay the principal," said Pauline Abernathy, vice president of the Institute for College Access
and Success.
Barmak Nassirian of the Amen can Association of Collegiate Registrars and Admissions Officers said the new regulations
were a step in the right direction. But like Ms. Abernathy, Mr. Nassirian was particularly unhappy about the standard
allowing aid to colleges where 45 percent of the graduates are repaying their principal on their loans.
"You're kidding me, 45 percent and you' re golden?" he said.
The for -profit sector has mushroomed in the last decade. While overall postsecondary enrollment increased 31 percent
from 1998 to 2008, the for-profits' enrollment grew by 225 percent. Although for-profit colleges, which can get up to
90 percent of the revenues from federal student aid, enroll less than 10 percent of the nation' s higher-education students,
they get almost a quarter of the federal aid. In 2008-9, for-profit co!Jeges got $4.3 billion in Pell grants and $19.6 billion
in Stafford loans.
The new regulations essentially create green, yellow and red zones, based on students' debt levels and repayment
records.
To be in the green zone, fully eligible for federal aid, programs would either have to have at least 45 percent of their
former students paying down the principal on their federal loans or graduates with debt-to-earnings ratios ofless than 8
percent of their total income, or 20 percent of their discretionary income.
Programs in the red zone, ineligible for federal aid for new students, would have less than 3 5 percent of their former
students paying down the principal, with graduates carrying a debt-to-earnings ratio above 12 percent of their total
income and 30 percent of discretionary income.
Those in between would be subject to limits on enrollment growth, and required to warn applicants and students that
they may have difficulty repaying their loans.
The proposed regulation will be published Friday for a 45-day comment period, with final rules issued in November.
Chronicle of Higher Ed: Education Department Takes Aim at For-Profits With Student-Debt Rule
By Kelly Field
After a five-week delay, the Education Department will release a rule Friday that would penalize for-profit colleges that
saddle students with unmanageable amounts of debt.
The proposed "gainful employment" rule, which has been anticipated by for-profit colleges and short-sellers alike, would
cut off federal aid to programs whose students have the highest debt burdens and lowest loan-repayment rates, while
limiting enrollment growth at hundreds of other programs. For-profit lobbyists are calling the rule "unwise and
unnecessary."
In a conference call with reporters, the Education Department said it was seeking to protect students and taxpayers from
the high costs of student-loan defaults.
"While career colleges play a vital role in training our work force to be globally competitive, some of them are saddling
students with debt they cannot afford in exchange for degrees and certificates they cannot use," said Secretary of
Education Arne Duncan in a written statement.
Department officials estimated that 5 percent of programs would become ineligible for student aid under the rule, while
55 percent would be subject to growth restrictions and required to warn consumers and current students about the
dangers of excessive borrowing.
The share of borrowers defaulting on their student loans in the first two years of repayment has climbed steadily in recent
years, reaching a 1 0-year high of7.2 percent this year, according to the Education Department.
For-profit colleges, which educate less than 10 percent of students but receive close to a quarter of federal-student-loan
dollars, account for a disproportionate share of those defaults. Two years into repayment, roughly 12 percent of
borrowers who attended for-profit colleges have defaulted on their federal loans, compared with 6 percent of those who
attended public coJJeges and 4 percent who attended private colleges.
When the government is unable to collect on defaulted loans, taxpayers are on the hook for the losses. Borrowers,
meanwhile, face damaged credit histories, are ineligible for additional federal aid, and may have their wages and tax
refunds seized by the government.
Though federal law has long required for-profit colleges to demonstrate that they are preparing their students for "gainful
employment," that term has never been defined. The Education Department tried to do so late last year, convening a
panel that included consumer advocates, for-profit-college officials, and student advocates to re-examine the rule. But
the panel was unable to reach agreement, leaving the department free to offer its own definition.
Turning Up the Heat
The new rule comes as Congress is turning up the heat on the for-profit sector, raising doubts about the cost and quality
of some proprietary institutions. In late June, Sen. Tom Harkin, Democrat oflowa, chairman of the education committee,
held a hearing in which lawmakers vowed to crack down on "bad actors" in the rapidly growing sector. A second
hearing is planned for early August.
Still, lawmakers and Education Department officials recognize that for-protit colleges will be critical to achieving
President Obama's goal ofleading the world in college completion by 2020, and are wary of taking steps that could
cripple the sector. Today's rule does not go as far as the department's original proposal, which would have ended aid to
programs in which a majority of students' loan payments exceeded 8 percent of the lowest quarter of graduates'
expected earnings, based on a l 0-year repayment plan.
For-profit colleges lobbied vigorously against that proposal, warning that it would force them to shutter thousands of
program serving millions of students. The colleges have spent hundreds of thousands of dollars pushing an alternative that
would require programs to provide prospective students with more information about their graduates' debt levels and
salaries.
The department's revised rule would replace the 8-percent cap with a tw<rpart test that would take into account the
share ofborrowers repaying their federal student loans and the relationship between total student loan debt and average
earnings.
Under that approach, programs whose graduates carried debt-to-earnings ratios ofless than 20 percent of discretionary
income or 8 percent of total income, or where at least 45 percent of former students (graduates and nongraduates) were
paying down the principal on their loans, would be fully eligible for aid.
Programs whose graduates carried debt-to-earnings ratios above 30 percent of discretionary income and 12 percent of
total income, and where fewer than 35 percent of former students were paying down principal on their loans, would be
ineligible for aid.
Programs that fell somewhere in between would face restrictions on enrollment growth, would be required to
demonstrate that employers support their program, and would have to warn consumers and current students of high debt
levels.
In the press call, department officials said their goal was to separate the "bad actors" from the good.
"The many good actors should be protected from being tainted or tarnished by the small minority that are doing a
disservice to the industry," Mr. Duncan said.
But lobbyists for for-profit colleges say they're unhappy that the department stuck with its "metrics based" approach to
measuring gainful employment, rather than simply requiring more disclosures, as the colleges suggested. In a statement,
Harris N. Miller, the president of the Career College Association, called the department's proposal"unwise,
unnecessary, unproven," and "likely to harm students, employers, institutions, and taxpayers."
"Adjusting the numbers in the original gainful-employment formulation is not the issue," he said.
Groups representing students and consumers, meanwhile, welcomed the proposal, saying it would protect students and
taxpayers from programs that overpromise and underdeliver.
"It is encouraging that the administration has proposed a regulation with some teeth," said Pauline Abemathy, vice
president of the Institute for College Access and Success.
The gainful-employment rule is one of 14 that the department and college stakeholders have been negotiating over the
past nine months. The other regulations, including one that would tighten a ban on incentive compensation for college
recruiters, were published in mid-June. After a period for public comment, they will likely be combined in a package of
final rules due out in November.
Administration proposal aims to tighten oversight of for-profit colleges
By Daniel de Vise
Washington Post StaffWriter
Friday, July 23, 2010; A02
Education Secretary Arne Duncan proposed Thursday that for-profit colJeges be required to show through certain new
measures that their graduates are not saddled with too much debt, an initiative he said was meant to protect students
from "a few bad actors" in the industry.
Through the proposal, the Obama administration aims to tighten oversight of the fastest-growing sector of higher
education. The for-profit sector enrolled 1.8 million students in 2008, more than triple the number of a decade earlier.
Starting in the 2012-13 academic year, for-profit colleges would have to demonstrate that they prepare students for
"gainful employment" in order to remain eligible for federal aid.
They could do this in two ways. One would be to show that at least 45 percent of former students are paying down the
principal on their federal loans. The other would be to show that graduates are paying no more than one-fifth of their
discretionary income, or 8 percent of total income, toward student debt.
Colleges that fail to meet those tests would face potential limits on enrollment growth and would be required to warn
students about potential debt. They would become ineligible for aid ifless than 35 percent offom1er students are paying
down their principal and if graduates pay more than 30 percent of discretionary income-- and more than 12 percent of
total income-- toward student loans.
The rule would become final Nov. 1, after a public comment period. Duncan estimated that it would disqualify 5 percent
of the for-profit industty from receiving federal aid.
"That 5 percent would be, frankly, the bottom of the barrel," he told reporters in a phone briefing. "The industry as a
whole, unfortunately, has been given a black eye by a few bad actors."
The Career College Association, an industry group, said in a statement that the proposed regulation was "unwise,
unnecessary, unproven and is likely to harm students, employers, institutions and taxpayers." Kaplan University, owned
by a subsidiary of The Washington Post Co., belongs to the for-profit sector. A Kaplan spokesman declined to
comment pending a review of the proposal . Representatives from other for-profit colleges could not be reached for
comment.
The Education Department released 13 other regulatory changes related to higher education in mid-June. The agency
had delayed action on the last and most controversial rule to settle lingering industry objections.
U.S. rule would force education cos to show work
Thu Jul22, 2010 I 1:59pm EDT
WASHINGTON, June 22 (Reuters)- For-profit education companies could soon have to prove that their former
students are either paying off their loans or capable of doing so, the Department ofEducation said on Thursday.
The proposal has for months weighed on stocks in the sector including Apollo Group Inc (APOL.O) and DeVry Inc
(DV.N ), as it could cut off access to federal funding for some types of training.
The proposed rule is part of a broader overhaul of the industry, which has been criticized for producing poorly prepared
students with big debts.
The Education Department issued on June 15 a series of other rules that required the schools to give prospective
students their graduation and job placement rates. The schools are often aimed at lower-income or minority students.
But the department left the toughest rule for last-- the monitoring of federal loan default rates -- which could lead to a
crippling loss of federal funds, and therefore profits.
Education Secretary Arne Duncan predicted that five percent of programs would lose those funds.
"Ninety percent of revenues in many for-profit schools come from student loan programs," Duncan told reporters on a
conference call, adding that default rates approached 25 percent.
"Strong career colleges should welcome our proposal," he said. "Overall I firmly believe that for-profit schools are doing
a good job of training their students."
The Career College Association, representing 1,500 schools, 95 percent of which are for-profit, said the Department of
Education proposal "is unwise, unnecessary, unproven and is likely to harm students, employers, institutions and
taxpayers."
"Amounts borrowed today do not indicate what you will be able to repay in five years, ten years or over a working
lifetime," CCA President Hanis Miller said in a statement.
Programs would lose their eligibility if more than 65 percent of former students failed to pay the principal on federal
loans, and if their graduates' debt was more than 30 percent of discretionary income and 12 percent of total income, the
department said.
Schools would be declared fully eligible for loans if they can show that 45 percent of former students are paying down
their debt, or that their debt is less than 20 percent of former students' discretionary income or 8 percent of total income,
the department said.
Other schools would fall into a middle ground and may have to warn students about incuning heavy debts, the
department said.
The rules are subject to a 45-day comment period, and are slated to go into effect for the 2012-2013 school year,
officials said.
The schools, which offer higher education programs in fields like healthcare and criminal justice, have come under
increased scrutiny for their student loan practices and the quality of their education services.
Seventy percent of the Education Department's investigations are into problems at for-profit schools, department
inspector general Kathleen Tighe told the Senate's Health, Education, Labor and Pensions Committee recently.
Fifty-three percent ended up owing more than $30,500, compared with 12 percent for students who attended a public
four-year college, according to a study by the College Board.
The for-profit education business can be lucrative.
Apollo Group Inc posted better-than-expected quarterly results in late June, helped by 13 percent growth in enrollments
at its University ofPhoenix. It forecast revenue growth in the high single digits in fiscal 2011.
(b}(5}
David A Bergeron
----- Original Message -----
From: Ochoa, Eduardo
To: Ochoa, Eduardo
Kvaal, James
Chesley, Susan
Kolotos John
Finley, Steve
Kanter Martha
Baker, Jeff
Yuan, Georgia
Hamilton, Justin
l\tlcFadden, Elizabeth
Sellers Fred
CC: Madzelan. Dan
Date: 8/ 19/2010 8:40:34 AM
Subject: Re: gainful employment Q&A
To: K vaal, James; Chesley, Susan; Kolotos, John; Finley, Steve; Kanter, Martha; Baker, Jeff; Yuan, Georgia; Hamilton,
Justin; McFadden, Elizabeth; Sellers, Fred
Cc: Bergeron, David; Madzelan, Dan
Sent: Wed Aug 18 17:25:04 2010
Subject: RE: gainful employment Q&A
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Eduardo M. Ochoa
Assistant Secretary for Postsecondary Education
Department ofEducation
1990 K Street NW
(202) 502-7750
Fron1: FCvaal, Jan1es
Sent: Wednesday, August 18,2010 6:17PM
To: Chesley, Kolotos, Finley, Kanter, Baker, Jeff; Yuan, Georgia; Ochoa, Eduardo;
Hamilton, McFadden, Sellers, Fred
Cc: Bergeron, Dav1d; Madzelan, Dan
Subject: RE: gainful en1ployn1ent Q&A
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From: Chesley, Susan
Sent Wednesday, August 18, 2010 5:02PM
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Hamilton, Justin; McFadden, Elizabeth; Sellers, Fred
Cc: Bergeron, Madzelan, Dan
Subject: RE: gainful en1ployn1ent Q&A
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From: Kvaal, James
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Cc: Bergeron, David
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Martha
From: Kvaal, James
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Cc: Bergeron, David
Subject: gainful employment Q&A
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Thanks
From: Kvaal James
To.: Speer, Jam in D.
CC:
Bergeron. David
Chesley, Susan
Weko Tom
Martin, Phil
Arsenault Leigh
Ochoa. Eduardo
Madzelan, Dan
Shedd, Jessica
Miller, Elise
Yuan, Georgia
Graham_ William
Bustamante. Andres
Kahn, LisaB
Rouse_ Cecilia E.
Date: 9/27/2010 3:53:52 PM
Subject: RE: GE discussion with CEA
Attachments: Repay Thresholds Summarized Q9242010.xlsm
From: Speer, JaminD. [mailto:Jamin_D._Speer@cea.eop.gov]
Sent: Monday, September 27, 2010 2:00PM
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Rouse, Cecilia E.
Subject: RE: GE discussion with CEA
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Best,
Jamin
From: James.K vaal@ed.gov [ mailto:James.K vaal@ed.gov]
Sent: Friday, September24, 2010 5:13PM
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Shedd, Jessica; Miller, Elise; Yuan, Georgia; Graham, William; Bustamante, Andres; Kahn, Lisa B. ; Rouse, Cecilia E.;
Speer, Jarnin D.
Subject: GE discussion with CEA
When: Monday, September 27, 2010 5:30PM-6:30PM (GMT-05:00) Eastern Time (US & Canada).
Where: 1-877-784-4150 participant passcode 2918463
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U.S. DEPARTMENT OF EDUCATION AUGUST 2010 NW 2010175
What Is the Price
of College?
Sticker, Net, and
Out -of-Pocket Prices
in 2007-08

Christina Chang Wei
MPR Associates, Inc.
PROJECT OFFICER
Tracy Hunt-White
National Center for Education Statistics
Students and parents see
college attendance as a pri ncipal avenue
to middle-cl ass life, and, given the risi ng
price of postsecondary education, they
are apprehensive about their ability to af-
ford it.
1
In a recent survey of college
freshmen, about two-thirds (66 percent)
reported having concerns about bei ng
able t o finance thei r educat ion.
2
Many U.S.
policymakers and researchers share their
concern, and are explori ng ways to make
college more affordable.
3
Legislators have
required colleges and universities t o pro-
vide more extensive information about
tuition and prices, and in the 2008 Higher
Education Opportuni ty Act mandat ed a
host of price-related measures, includi ng
institutional disclosure of net prices
charged to students, the reporting of net
price data to the U.S. Department of Edu-
cat ion, and the creation and di sclosure of
"tuit ion wat ch li sts."
4
This Statistics in Brief shows the amounts
U.S. undergraduates pay on average for
postsecondary education, wi th and wi th-
out fi nancial aid. Drawi ng upon data f rom
the National Postsecondary Student Aid
Study (NPSAS), a nat ionally representat ive
survey of all postsecondary students, in-
cl uded in this report are the average pric-
es for public 2-year, public 4-year, privat e
nonprof it 4-year, and for- profit institu-
tions at all levels.
5
Most of the fi gures in this Brief display da-
ta only for f ull-time undergraduates
6
who
attended one institution. These students
comprised about one-t hird (35 percent) of
00
0
1
e
5
FOR
o EDUCATION STATISTICS
I nstitute o f Education Sciences
STUDY QUESTIONS
What are the average
prices paid by full-time
undergraduate students
and how do these prices
vary by the type of insti-
tution attended?
all undergraduates in 2007-08? Of all
full-time undergraduates, 18 percent
were enrolled in public 2-year institu-
tions, 43 percent attended public 4-
year institutions, 21 percent were at
private nonprofit 4-year institutions,
and 8 percent were enrolled in for-
profit institutions (table 1).
8
Focusing
on full-time students who attended on-
ly one institution allows for compari-
sons in tuition, price of attendance,
and financial aid. Those attending full
time generally have higher overall ex-
penses than do all students. They also
generally qualify for federal aid and
other assistance not available to many
part-time students (table 2).
What factors are re-
lated to variations in
average sticker and
net prices among
those attending these
institutions?
KEY FINDINGS
There is a wide range of prices for
postsecondary education. This Brief
shows the sticker price (total price of
attendance including both tuition
and living expenses), the net price
after grants (total price of atten-
dance minus all grants), and the out-
of-pocket net price (total price of at-
tendance minus all financial aid),
for the four major types of postse-
condary institutions.
Students enrolled at public 2-year
institutions had the lowest average
sticker price ($12,600).
9
Those at
public 4-year institutions had an av-
erage sticker price of $18,900, those
at for-profit institutions had an av-
erage sticker price of $28,600, and
those at private nonprofit 4-year in-
stitutions had the highest average
sticker price ($35,500).
After all financial aid is received, (in-
cluding grants, loans, and work-
2
How do the net
prices paid by under-
graduates vary by
family income?
study), the average out-of-pocket
net price ranged from $9,100 at
public 2-year institutions to $10,300
at public 4-year institutions, $16,000
at for-profit institutions, and
$16,600 at private nonprofit 4-year
institutions.
Lower sticker prices often mean a
lower need-or eligibility-for fi-
nancial aid. Those attending private
institutions had the highest tuition
but they also received the most fi-
nancial aid. Undergraduates at pri-
vate nonprofit 4-year institutions
received the greatest amount of in-
stitutional grant aid while those at
for-profit institutions had the largest
proportion of borrowers.
For low-income undergraduates
enrol led full time, their average net
prices (both after grants and after all
aid received) were highest at for-
profit institutions.
TABLE 1.
UNDERGRADUATE ENROLLMENT, TUITION, AND STICKER PRICE
for all undergraduates and full-time undergraduates, by type of
institution attended: 2007- 08
All undergraduates Full-time
1
Average tuition and average sticker price estimates
Average Average
are 5hown for those attending one institution only.
Percentage Average sticker Percentage Average sticker
NOTE: full-time is defined as having been enrolled
distribution tuition
1
price' distribution tuition' price
1 in a institution for 9 months or more
full time. "Tuition includes all tuition and fees.
"Sticker price" is the total prtce of attendance which
Total 100.0 $5,800 $14,000 100.0 $10,300 $22,400 includes tuition and fees, books and supplies, hous
ing, meals, transportation, and other miscellaneous,
or personal, "Forprofit" includes less-than-
Type of institution
2-year, 2-year, and 4-year institutions. Estimates
Public 2-year 40.0 1,200 7,000 17.8 2,400 12,600
include students enrolled in Title IV eligible postse-
condary institutions in the 50 states, District of Co-
Public 4-year 29.2 5,500 15,200 42.7 7,100 18,900
lumbia, and Puerto Rico. Detail may not sum to totals
because of rounding. Standard error tables are avail
Private nonprofit 4-year 13.0 17,800 28,200 20.6 23,400 35,500 a bleat
For-profit 9.0 10,200 20,600 8.5 11,900 28,600
SOURCE: U5. DepartmentofEducation, National Cen
ter for Education Statistics, 2007-08 National Postse
Other, or more than condary Student Aid Study (NPSIIS:08).
one institution 8.8 4,800 12,300 10.5 7,000 18,000
TABLE 2.
FINANCIAL AID
for all undergraduates and full-time undergraduates,
by type of institution attended: 2007- 08
Any grants Any loans Any work-study Any aid
NOTE: "Grants" include scholarships
Percent Average Percent Average Percent Average Percent Average
and tuition waivers. "loans include
federal, state, institutional, or private
received amount received amount received amount received amount student loans, excluding Parent PLUS
loans. "Total" aid includes grants,
loans, job training, veterans benefits,
All undergraduates 51.7 $4,900 38.5 $7,100 7.4 $2,400 65.6 $9,100
employer aid, and Parent PLUS loans.
"All undergraduates" include those
attending more than one institution.
Type of institution
"Full -timl'" is defined as having been
enrolll'd in one postsecondary institu
Public 2-year 39.6 2,200 13.2 4,100 3.3 3,000 47.6 3,400
tion for 9 months or more full time.
Public 4-year
"forprofit" includes less-than-2-
52.9 5,200 46.2 6,600 7.7 2,500 71.3 9,400
year, 2year, and 4-year institutions.
Private nonprofit 4-year 73.6 10,200 58.9 9,100 23.2 2,100 84.7 17,400
Average aid amounts are calculated
only for students receiving a particu-
For-profit 70.4 3,200 91.6 8,100 2.0 3,500 96.3 10,800 lar type of aid. Those not receiving a
specific type of aid (i.e., zero values)
are not included in the average for
Full-time 65.3 7,200 53.1 8,000 13.7 2,300 80.1 12,900
that aid. Estimates include
enrolled in Title IV eligible postsecon-
dary institutions In the 50 states, Dis
Type of institution
trict of Columbia, and Puerto Rico.
Sti!ndard error tables are available at
Public 2-year 55.7 3,700 22.5 4,900 6.9 2,600 65.7 5,400
bttallom ed
reoorts.asp.
Public 4-year 60.4 6,100 52.7 7,100 10.5 2,400 78.3 11,000
SOURa: US. Department of Education,
National Center for Education Statistics,
Private nonprofit 4-year 81.2 12,300 65.0 9,800 31.5 2, 100 89.4 21,100
2007-08 National Postsecondary Sru-
For-profit 71.9 4,000 91 .6 9,600 2.0 3,600 96.7 13,100
drot Aid Study (NPSIIS:08).
3
1
What are the average prices paid by full-time
undergraduate students and how do these
prices vary by the type of institution attended?
This Brief discusses three different
measures of the price of an undergra-
duate education: the sticker price, the
net price after grants, and the out-of-
pocket net price.
The Sticker Price
The sticker price is the total price of an
undergraduate education including
tuition'
0
and all other nontuition and
living expenses such as books, sup-
plies, and housing. The sticker price va-
ried widely by the type of institution
attended in 2007-08, ranging from an
average of $12,600 among undergra-
duates enroll ed full time at public 2-
year institutions, to $18,900 at public 4-
year institutions, $28,600 at for-profit
institutions, and $35,500 at private
nonprofit 4-year institutions (figure 1 ).
FIGURE 1.
THE PRICE OF AN UNDERGRADUATE EDUCATION
for full-time undergraduates,
Price
$40,000
30,000
20,000
10,000
0
Public 2-year Public 4-year For-profit
Type of institution
Private nonprofit
4year
8Avcrage sticker DAveragc net price DAverageoutof
price after grants pocket net price
NOTE: The "sticker price" is the total price of attendance which includes tuition, baoks and Slip plies, housing, meals, trans
portation, and other miscellaneous, or personal, expenses. The "net price is the price that mustbe paid after receiving
grants. The out-of-pocket net price" subtracts from the sticker price all forms of financial aid, including grants, student
loans, Parent PLUS loans, work-study, employer aid, job training benefits, veterans benefits, and any other financial aid
received. Both the net price after grants and the out-of-pocket net price are calculated for all full-time students, regardless
of whether or not they received any financial aid. "Full-time'' is defined as having been enrolled in one postsecondary in
stitution for9 months or more full time. for-profit" includeslessthan2year, 2-year, and 4year institutions. Estimates
include students enrolled in Title IV eligible postsecondary i n s t ~ u t i o n s in the 50 states, District of Columbia, and Poerto
Rico. Standard error tables are available at httol/nces ed goy!das/libr;uyfreoorts aso.
SOURCE: U.S. Department of Educatian, National Center for Education Statistics, 2007 -{)8 National Postsecondary Student
Aid Study (NPSAS:OS).
4
For some institutions (private nonprofit known in financial aid parlance as the supporting families (Wei 2010, table
4-year institutions in particular), the "student budget." Student budgets 5.1-A), which raises their nontuition
tuition is a large component of the vary according to students' attendance expenses as compared with students
sticker price. In 2007-08, average tui- and dependency status, family respon- who have no family responsibilities.
tion was $2,400 at public 2-year institu- sibilities, and residence (e.g., living at
tions, $7,100 at public 4-year home with parents, in an on-campus Students attending public 2-year insti-
institutions, $11,900 at for-profit insti- dormitory, or in off-campus housing). tutions-mostly community colleges-
tutions, and $23,400 at private non-
profit 4-year institutions (figure 2).
Nontuition expenses, which include
books and supplies, housing and
meals, transportation, and personal
(or miscellaneous) expenses, also can
vary by institution type. College or uni-
versity financial aid officers usually de-
velop an estimate of the sticker price,
In-state vs. tuition
At rnost public 4-year
institutions, tuition charges are
generally higher for qut-of-state
students than for in-state
residents, reflecting the state
subsidies public institutions
receive. In 2007- 08, the average
in-state tuition was $6,200 and
the average out-of-state tuition
was $15,100 for full-time
undergraduates enrolled in
public 4-year institutions.*
NPSAS:OS Data Analysis System (data not shown).
In 2007-08, students enrolled full time
in for-profit institutions had the high-
est average nontuition expenses
($16,700), when compared with those
at other types of institutions (where
average nontuition expenses ranged
from $10,200 to $12,1 00). Many stu-
dents at for-profit institutions are fi-
nancially independent and are
FIGURE 2.
TUITION AND NON TUITION EXPENSES
had the lowest nontuition expenses. A
larger proportion lived at home with
their parents, which reduces costs for
room and board, as compared with
students at for-profit institutions (many
of whom are supporting themselves or
their own families) and those at 4-year
institutions (where a larger proportion
lived on campus or in off-campus hous-
ing) (Wei 2010, table 5.1-C).
Price
$40,000
30,000
20,000
10,000
0
Type of institution
Private
nonprofit
4-year
OAverage
nontuition
expenses
Average
tuition
NOH: "Full-time is defined as having been enrolled in one postse<ondary institution for 9 months or more full time. "Tui-
tion" indudes all tuition and fees. "Non tuition expenses include books, supplies, hoosing, meals, transportation, and
mis<ellaneoos or personal expenses. "For-profit" indudes lessthan-2-year, 2-year, and 4-year institutions. Estimates in-
dude students enrolled in Title IV eligible postsecondary institutions in the 50 states, District of Columbia, and Puerto Rico.
Standard error tables are available at htto:/lnces.ed.gov/dasflibrarv/reports aso.
SOURCE: U5. Department of Education, National Center for Education Statistics, 2007-{)8 National Postsecondary Student
Aid Study (NPSAS:OS).
5
The Net Price After Grants those at public 4-year institutions,
Policymakers and researchers generally grant aid to full -time undergraduates
subtract grants from the sticker price lowered the average sticker price of
when discussi ng the net price of at- $18,900 to an average net price after
tending a postsecondary institution. grants of $15,200.
For example, Congress recently re-
quired institutions t o make public both
the sticker price and the average net
price of attendance, calculated as the
total price of attendance mi nus all
grants received. In this Brief, two
measures of net price are discussed:
the "net price aft er grants" and the
"out-of-pocket net price," which is the
price af ter all f inancial aid (including
loans, which must be repaid} is t aken
into account.
11
Grant aid helped to lower the average
st icker price among full-time under-
graduates at public 2-year institutions
from $12,600 to an average net price
after grants of $10,600 (figure 1 ). For
For those at private institutions (both
for-prof it and nonprofit), the average
net price after grants was about
$25,700. For those attending for-profit
institutions, the di fference between
the average sticker price and the net
price af ter grants was about $2,800. At
private nonprof it 4-year instit utions,
however, that difference was $10,000.
The Out-of-Pocket Net Price
The "out-of-pocket net price," defined
as the sticker price less all fi nancial aid
received, takes into account all forms
of financial aid, incl uding grants, loans,
work-study, and other aid (as well as
Parent PLUS loans). The out-of-pocket
6
net price represents t he amount that
must be paid immediately to enroll in a
postsecondary institution for that aca-
demic year.
12
Because the out-of-
pocket net price subtracts loans f rom
the sticker price, it measures the net
price only in the short term. Loans off-
set immediate costs to students and
their families, but they must be repaid
overti me.
Full-time undergraduates enroll ed at
public 2-year institutions had the low-
est average out-of-pocket net price
($9,100), ref lecting the already lower
sticker price at these institutions (figure
1}. Those at public 4-year institutions
had a slightly higher average out-of-
pocket net price ($1 0,300). Students at
private institutions had the highest av-
erage out-of-pocket net prices ($16,000
at for-profit institutions and $16,600 at
private nonprof it 4-year inst it utions}.
2
What factors are related to variations
in average sticker and net prices among
those attending these institutions?
Prices vary by institution type for sev-
eral reasons. Institutions charge differ-
ent levels of tuition (based on whether
they are public or private and the
amount of state and local subsidies re-
ceived); the demographic characteris-
tics of students (and thus their
non tuition expenses and eligibility for
federal and state grant aid) vary by
type of institution; and institutional
policies for awarding institutional aid
differ.
As noted previously, the amount of tui-
tion charged by institutions is a prima-
ry factor in the total price of
attendance, but students also incur dif-
ferent nontuition expenses depending
on their family responsibilities and liv-
ing arrangements.
Average net prices are further affected
by differences in the proportion of aid
recipients at each type of institution.
For example, the number of students
eligible for federal Pel I Grants or state-
funded grant aid at a particular school
will affect the average net price after
grants, as will a school's policies for
awarding grants from institutional
funds. The out-of-pocket net price fur-
ther depends on the level of borrowing
among students and their parents and
other types of aid received, such as
work-study.
Public 2-Year Institutions
Full-time students attending public 2-
year institutions had the lowest aver-
age sticker price ($12,600), net price af-
ter grants ($1 0,600), and out-of-pocket
net price ($9, 1 00) among all undergra-
duates (figure 1 ).
Because students at public 2-year insti-
tutions had a lower average sticker
price initially, their average net prices
also were lower-even though they
had the smallest proportions of grant
recipients (56 percent) and students
who borrowed (23 percent took out a
student loan) (table 2).
7
Public 4-Year Institutions
Tuition at public 4-year institutions was
higher than at public 2-year institu-
tions, but not as high as at the private
institutions (figure 2). Students at these
institutions also have slightly higher
nontuition expenses than those at
public 2-year institutions, with a larger
proportion living on campus or away
from home (see Wei 2010, table 5.1 -C).
Among those enrolled full time at pub-
lic 4-year institutions, 60 percent re-
ceived grant aid, about one-half (53
percent) took out student loans, and 10
percent received work-study support
(table 2). Grant aid helped to lower the
net price after grants to an average of
$15,200, and the addition of loans,
work-study, and other aid resulted in
an average out-of-pocket net price of
$10,300 (figure 1 ). This compares to an
average out-of-pocket net price of
$9,100 at public 2-year institutions-a
difference of $1,200 in the average out-
of- pocket net price, even though the
difference in the average sticker price
was $6,300.
For-Profit Institutions
For-profit institutions are privately
owned and operated and the profits
they generate benefit individual own-
ers and shareholders. The programs
can range from less than 1 year to 4-
year bachelor's and graduate degrees.
Most undergraduates enrolled in less-
than-4-year for-profit institutions are
pursuing certificates or associate's de-
grees in occupational training pro-
grams (Staklis 2010). Undergraduates
at for-profit institutions also tend to be
older, financially independent, and
have family responsibilities. This in-
creases their nontuition expenses and
hence, their average sticker price. More
undergraduates at for-profit institu-
tions received federal grants (62 per-
cent) than did students in any other
type of institution in our analysis (fig-
ure 3). However, a smaller percentage
of for-profit students received state, in-
stitutional, or private grants than stu-
dents in other sectors. On average,
these students had a net price after
grants of $25,800-not measurably dif-
ferent than that of private nonprofit 4-
year institutions, and higher than that
of public institutions (figure 1 ).
FIGURE 3.
SOURCES OF GRANT AID
Percent
100
80
62
60
40
20
0
Type of institution
67
Private nonprofit
4year
Federal grants OState grants II Institutional grants 0 Privat e source grants
NOTE:vGrants'' include scholarships and tuition waivers. full-time" is defined as having been enrolled in one postsecon-
dary institution for9 months or more full time. "For-profit" includes lesHhan-2-year, 2-year, and 4-year institutions. Es
timates include students enrolled in Title IV eligible postsecondary institutions in the 50 states, District of Columbia, and
Puerto Rico. Standard error tables are available at http:l/ncey.ed.gov/dasllib@!vlreoorts.aso.
SOURCE: U5. Department of Education, National Education Statistics, 2007-{)8 National Postsecondary Student
Aid Study (NPSAS:08).
8
Student loans were critical to reducing Private Nonprofit 4-Year Institutions next highest sticker price: for-profit in-
the average out-of-pocket net price for Even though they had the highest av- stitutions ($25,800 and $16,000, re-
al I undergraduates, but particularly for erage sticker price ($35,500) of the four spectively) (figure 1 ).
those at for-profit institutions. For-
profit institutions had the largest pro-
portion of full-time undergraduates
with at least one loan in their financial
aid package: 9 out of 10 (92 percent)
received an aid package containing a
loan (table 2 and figure 4), compared
to 65 percent of those at private non-
profit 4-year institutions, 53 percent at
public 4-year institutions, and 23 per-
cent at public 2-year institutions. The
high level of student borrowing at for-
profit institutions resulted in an aver-
age out-of-pocket net price of $16,000
(figure 1 ).
FIGURE 4.
TYPE OF AID PACKAGE
major sectors, financial aid recipients at
private nonprofit 4-year institutions al-
so received the largest average amount
of total aid ($21,100), when compared
with those at for-profit institutions
($13, 1 00}, public 4-year institutions
($11 ,000}, and public 2-year institutions
($5,400) (table 2).
In fact, aid received by undergraduates
at private nonprofit 4-year institutions
resulted in an average net price of
$25,500 and an average out-of-pocket
net price of $16,600, both of which
were not measurably different from
undergraduates at schools with the
for full-time undergraduates, by aid package received
and type of institution attended: 2007- 08
Percent
100
80
60
40
20
0
Percent dimibution receiving aid
16
Type of institution
Private
nonprofit
4year
Aid package
OGrants, work-
study, or other
aid, with loans
II Loans only
o Grams, work-
study, or other
aid, without loans
No aid received
NOTE: Grants" include scholarships and tuition waivers. "loans include federal, state, ins1itutional, or private student
loans, excluding Parent PLUS loans. "Other'' aid includes job training, veterans benefits, employer aid, and Parent pLUS
loans. "Full time" is defined as having been enrolled in one postsecondary institution for 9 months or more full time. "For
profir includes less-than-2-year, 2-year, and 4-yearinstitutions. Estimates include students enrolled in Title IV eligible
postsecondary institutions in the 50 states, District of Columbia, and Puerto Rico. Detail may not sum to totals because of
rounding. Standard error tables are available at hno://nces.ed.gov/dasflibrarv/reports.asp.
SOURCE: U.S. Department of Education, National Center tot Education Statistics, 2007 ~ 8 National Postsecondary Student
9
The receipt of institutional grants, in
particular, was critical in lowering the
price for those attending private non-
profit 4-year colleges and universities.
About two-thirds (67 percent) of stu-
dents in private nonprofit +year
schools received institutional grants or
tuition waivers, a larger proportion
than at any other type of institution (30
percent at public 4-year institutions, 17
percent at public 2-year institutions,
and 7 percent at for-profit institutions)
(figure 3). The average institutional
grant received by those attending pri-
vate nonprofit 4-year institutions was
$10,400,
13
which helped reduce the av-
erage sticker price to an average net
price after grants of $25,500 (figure 1 ).
Work-study was also an important
source of aid to those at private non-
profit 4-year institutions. Nearly one-
third (31 percent) of all full-time un-
dergraduates at private nonprofit 4-
year institutions received work-study
aid, the highest percentage among all
full-time undergraduates (between 2
and 1 0 percent of undergraduates at
other types of institutions received
work-study aid) (table 2). With the aid
of student loans, work-study, and other
types of support, full-time undergra-
duates at private nonprofit 4-year insti-
tutions had an average out-of-pocket
net price of $16,600-not measurably
different from those attending for-
profit institutions ($16,000) (figure 1 ).
3
How do the net prices
paid by undergraduates
vary by family income?
Figure 5 shows the average net price
after grants among dependent under-
graduates by their family income and
type of institution attended. Among
low-income and low middle-income
dependent students, those with the
highest average net price after grants
were enrolled at for-profit institutions.
In contrast, among high middle-
income and high-income students, the
average net price af ter grants for those
at for-profit institutions was not mea-
surably different from those at private
nonprofit 4-year institutions.
FIGURE 5.
NET PRICE AFTER GRANTS BY INCOME
for full-time dependent undergraduates, by family income
category and type of institution attended: 2007-08
Price
$40,000
30,000
20,000
10,000
0
Low-income
Average net price after grants
Low
middlcincomc
High
middleincome
High-income
Public 2-year Cl Public 4-year II For-profit OPrivate nonprofit4-year
NOH: The "net price after grants" is the price of attending a postsecondary institutioo after all grants have been received.
This amoont is calculated by subtracting total grant aid from the 5ticker price. The sticker price is the total price of atten-
dance and includes tuition, books and supplies, housing, meals, transportation, and other miscellaneous, or personal, ex
penses. Grant aid indudes grants, scholarships, tuition waivers, and other gift aid that does not need to be repaid. The net
price after grants is calculated for all students, regardless of whether or not they received any grant aid. Family income
categories were based upon parents' annual income in 2006. Dollar cutoffs are based on the distribution among all depen-
dent undergraduates: "Low-income was the lowest 25th percentile (less than ~ 3 6 , 100); "Low middle-income" was the
26th to 50th percentile ( ~ 6 , lOQ-$66,600); "High middle-income was the 51st to 75th percentile($66,600- $104,600);
and "High-income was the highest 25th percentile ($104,600 or more). ''Full-time" is defined as having been enrolled in
one postsecondary institution for 9 months or more full time. "For-profit' includes lessthan-2-year, 2-year, and 4-year
institutions. Estimates include students enrolled in Title IV eligible postsecondary institutions in the 50 states, District of
Columbia, and Puerto Rico. Standard error tables are available at htto1/nces ed gov{dasflibrarv/reoorts asp.
SOURCE: U.S. OepartmentofEducatioo, National Center for Education Statistics, 200Hl8 National Postsecondary Student
10
The average out-of-pocket net price,
on the other hand, shows a slightly dif-
ferent pattern (figure 6). After borrow-
ing, low-income and low middle-
income undergraduates enrolled at for-
profit institutions continued to have
the highest average out-of-pocket net
price, when compared with those at
other institutions. However, among
those with incomes above the median
(i.e., high middle-income and high-
income students), the average out-of-
pocket net price was highest for those
enrolled at private nonprofit 4-year in-
stitutions.
FIGURE 6.
OUT-OF-POCKET NET PRICE BY INCOME
for full-time dependent undergraduates,
by family income: 2007- 08
Price Average outofpocket net price
$40,000
30,000
20,000
10,000
0
Low-income Low
middle-income
High
middle-income
High-income
Public 2-year D Public 4-year For-profit OPrivate nonprofit 4-year
NOTE: The "out-of-pocket net price" is the price of attending a postsecondary institulion after all aid has been received.
This amount is calculated by subtracting total financial aid from the sticker price. The sticker price is the total price of at-
tendance and includes tuition, books and supplies, housing, meals, transportation, and other miscellaneous, or personal,
expenses. Financial aid includes grants, student loans, Parent PLUS loans, work-study, employer aid, job training benefits,
veterans benefits, and any other type of aid. The out-of-pocket net price is calculated for all students, regardless of wheth
er or not they received any aid. Family income categories were based upon parents' annual income in 2006. Dollar cutoffs
are based on the distribution among all dependent undergraduates: "Low-income" was the lowest 25th percentile (less
than $36,100); ''Low was the 26th to 50th percentile ($36,10Q-$66,600); "High middle-income was the
51st to 75th percentile ($66,60Q-S 104,600); and "High-income" was the highest 25th percentile (S 104,600 or more).
"Full time" is defined as having been enrolled in one postsecondary institution for 9 months or more full time. "For-profit"
includes lesstban-2-year, 2-year, and 4-yearinstitutions. Estimates include students enrolled in Title IV eligible
condary institutions in the 50 states, District of Columbia, and Puerto Rico. Standard error tables are available at
htto:{/nces.ed.gov/das/ljbrardreoorts.aso.
SOURCE: U.S. Department of Education, National Center for Education Statistics, 2007 -{)8 National Postsecondary Student
11
FIND OUT MORE
For questions about content, ordering additional copies of this Statistics in Brief,
or to view this report online, go to:
http:/ /nces.ed.gov/pubsearch/pubsinfo.asp?pubid=201 017 S
More detailed information on the price of undergra-
duate education and undergraduate financing can be
found in Web Tables produced by the National Center
for Education Statistics (NCES) using the 2007-08 Na-
tional Postsecondary Student Aid Study (NPSAS:08)
data. These Web Tables are a comprehensive source of
information on financial aid awarded to undergra-
duate students during the 2007-08 academic year. In-
cluded are estimates of tuition, price of attendance,
and financial aid. Additional information on the de-
mographic characteristics of 2007-08 undergraduates
can be found in a second set of Web Tables.
Web Tables-Student Financing of Undergraduate Edu-
cation: 2007-08 (NCES 2010-162). (link will be added)
Web Tables-Profile of Undergraduate Students in U.S.
Postsecondary Institutions: 2007-08 (NCES 2010-205).
(link will be added)
Readers may also be interested in the following
NCES products related to the topic of this Statistics in
Brief:
2007-08 National Postsecondary Student Aid Study
(NPSAS:08): Student Financial Aid Estimates: First Look
(NCES 2009-166).
http://nces.ed.gov /pubs2009/2009166.pdf
Undergraduate Financial Aid Estimates by Type of Insti-
tution in 2007-08 (NCES 2009-201).
http://nces.ed.gov/pubs2009/2009201.pdf
-------------------------------------- 12 --------------------------------------
TECHNICAL NOTES
Survey Methodology
The estimates provided in this Statistics
in Brief are based on data collected
through the 2007-08 National Postse-
condary Student Aid Study (NPSAS:08}.
NPSAS covers broad topics concerning
student enrollment in postsecondary
education and how students and their
families finance their education. In
2008, students provided data through
instruments administered over the In-
ternet or by telephone. In addition to
student responses, data were collected
from the institutions that sampled stu-
dents attended and other relevant da-
tabases, including U.S. Department of
Education records on student loan and
grant programs and student financial
aid applications.
NPSAS:08 is the seventh administration
of NPSAS, which has been conducted
every 3 to 4 years since 1986-87. The
NPSAS:08 target population includes
students enrolled in Title IV postsecon-
dary institutions in the United States
and Puerto Rico at any time between
July 1, 2007 and June 30, 2008.
14
This
population included about 21 million
undergraduates and 3 million graduate
students enrolled in over 6,000 institu-
tions.
The institution sampling frame for
NPSAS:08 was constructed from the
2004-05 and 2005- 06 Institutional
Characteristics, Fall Enrollment, and
Completions files of the Integrated
Postsecondary Education Data System
(IPEDS). The sampling design consisted
of first selecting eligible institutions,
then selecting students from these in-
stitutions. Institutions were selected
with probabi lities proportional to a
composite measure of size based on
expected 2007- 08 enrollment. With
approximately 1,700 institutions partic-
ipating in the study, the weighted insti-
tution unit response rate was 90
percent. Eligible sampled students
were defined as study respondents if at
least 11 key data element s were avail-
able from any data source. Approx-
imately 114,000 undergraduates and
14,000 graduate students were study
respondents, and the weighted stu-
VARIABLES USED
dent unit response rates for both levels
were 96 percent. Estimates were
weighted to adj ust for the unequal
probability of selection into the sample
and for nonresponse.
Two broad categories of error occur in
estimates generated from surveys:
sampling and nonsampling errors.
Sampling errors occur when observa-
tions are based on samples rather than
on entire populations. The standard er-
ror of a sample statistic is a measure of
the variation due to sampling and indi-
cates the precision of the statistic. The
complex sampling design used in
All estimates presented in this Statistics in Brief were produced using the
Data Analysis System (DAS}. See "Run Your Own Analysis" for more informa-
tion on the DAS and other web-based software applications that enable us-
ers to generate tables for most of t he postsecondary surveys conducted by
NCES. The program files that generated the statistics presented here can be
found at http://nces.ed.gov/lnsert-u_r_ILThe variables used in these analyses
include the following:
Label
Attendance status
Family income for dependent students
Federal grants
Institutional grants
Net price after grants
Non-tuition expenses
Out-of-pocket net price
Private grants
State grants
Sticker price
Total financial aid
Total grants
Total student loans
Tuition
Type of aid package
Type of institution
Work-study
Name
ATINSTAT
PODEP
TFEDGRT
INGRTAMT
NETCST3
BUDNONAJ
NETCSTl
PRJVAID
STGTAMT
BUDGETAJ
TOT AID
TOTGRT
TOTLOAN
TUITION2
AIDTYPE
SECTOR4
TOTWKST
13 --------------------------------------
NPSAS:08 must be taken into account
when calculating variance estimates
such as standard errors. NCES's onllne
Data Analysis System (DAS), which
generated the estimates in this report,
uses the balanced repeated replication
(BRR) method to adjust variance esti-
mation for the complex sample design.
Nonsampllng errors can be attributed
to several sources: incomplete informa-
tion about all respondents (e.g., some
students or institutions refused to par-
ticipate, or students participated but
answered only certain items); differ-
ences among respondents in question
interpretation; inability or unwilling-
ness to give correct information; mis-
takes in recording or coding data; and
other errors of collecting, processing,
sampllng, and imputing missing data.
For more information on NPSAS:08 me-
thodology, see appendix B of 2007- 08
National Postsecondary Student Aid
Study (NPSAS:08): Student Financial Aid
Estimates for 2007- 08: First Look (.b.llJ2;LL
nces.ed.gov/pubs2009/2009166.pdt).
Item Response Rates
NCES Statistical Standard 4-4- 1 states
that "[a)ny survey stage of data collec-
tion with a unit or item response rate
less than 85 percent must be evaluated
for the potential magnitude of nonres-
ponse bias before the data or any anal-
ysis using the data may be released"
(U.S. Department of Education 2003). In
the case of NPSAS:08, this means that
nonresponse bias analysis could be re-
quired at any of three levels: (a) institu-
tions, (b) study respondents, or (c)
items. Because the institutional and
study respondent response rates were
90 and 96 percent, respectively, non-
response bias analysis was not required
at those levels.
Although many NPSAS variables were
derived exclusively from administrative
sources or from both administrative
sources and student interviews, there
were some variables that came exclu-
sively from student interviews. Since
the student interview response rate
was 71 percent, those variables based
solely on student interviews required
nonresponse bias analysis. In this re-
port, 7 variables required nonresponse
bias analysis: AIDTYPE (60 percent),
NETCSTl (58 percent), NETCST3 (59
percent), PCTDEP (55 percent}, TOT AID
(60 percent), TOTGRT (61 percent), and
TOTLOAN (67 percent). For each of
these variables, nonresponse bias ana-
lyses were conducted to determine
whether respondents and non respon-
dents differed on the following charac-
teristics: institution sector, region, and
total enrollment; student type, gender,
and age group; whether the student
had Free Application for Federal Stu-
dent Aid (FAFSA) data, was a federal
aid recipient, was a Pel l Grant recipient,
or borrowed a Stafford Loan; and the
amount, if any, of a student's Pel I Grant
or Stafford Loan. Differences between
respondents and nonrespondents on
these variables were tested for statis-
tical significance at the 5 percent level.
Non response bias analyses of the va-
riables in this report with response
rates less than 85 percent indicated
t hat respondents differed from non-
respondents on 71 to 80 percent of the
characteristics analyzed, indicating that
there may be bias in these estimates.
Any bias due to nonresponse, however,
is based upon responses prior to sto-
chastic imputation. The potential for
bias in these estimates is tempered by
two factors.
First, potential bias may have been re-
duced due to imputation. Because im-
putation procedures are designed
specifically to identify donors with
similar characteristics to those with
missing data, the imputation is as-
sumed to reduce bias. While item-level
bias before imputation is measurable,
such bias after imputation is not, so
whether the imputation affected the
bias cannot be directly evaluated.
Therefore, the item estimates bef ore
and after imputation were compared
to determine whether the imputation
changed the biased estimate, thus
suggesting a reduction in bias.
For continuous variables, the differ-
ence between the mean before impu-
tation and the mean after imputation
was estimated. For categorical va-
riables, the estimated difference was
computed for each of the categories as
the percentage of students in that cat-
egory before imputation minus the
percentage of students in that catego-
ry after imputation. These estimated
differences were tested for statistical
significance at the 5 percent level. A
significant difference in the item
means after imputation implies are-
duction in bias due to imputation. A
14 ----------------------------------------
nonsignificant difference suggests that
imputation may not have reduced bias,
that the sample size was too small to
detect a significant difference, or that
there was little bias to be reduced.
Second, for some composite variables,
the components of the variables from
which the composites are constructed
often constitute a very small propor-
tion of the total variable, attenuating
the potential bias introduced by non-
response. For example, most of the
components ofTOTAID (total amount
of all financial aid received) were ob-
tained from federal databases and in-
stitutional records and have very high
response rates. Some components of
TOT AID, however, are types of financial
aid that are often disbursed directly to
students and not through institutions
(e.g., employer aid and private loans).
Because the primary source of informa-
tion about such types of aid is the stu-
dent interview, these variables were
missing for interview nonrespondents.
In the case of missing information from
the student interview, values were sto-
chastically imputed and the imputed
values were used to construct the
composite variables. In the example
cited above, both employer aid and
private loans were received by relative-
ly few students and were smal l compo-
nents of the total. For example, 52
percent of all undergraduates received
any grants (TOTGRT), a primary com-
ponent ofTOTAID, and the average
among all undergraduates was $2,500.
In comparison, 8 percent received any
employer aid (EMPL YAM3), with an av-
erage among all undergraduates of
$200. Therefore, despite the low re-
sponse rates of these components, any
bias they contribute is likely to be mi-
nimal.
For more detailed information on non-
response bias analysis and an overview
of the survey methodology, see ap-
pendix B of the report 2007-08 Nation-
al Postsecondary Student Aid Study
(NPSAS:08): Student Financial Aid Esti-
mates for 2007-08: First Look (1mQ;LL
nces.ed.gov/pubs2009/2009166.pdt).
Statistical Procedures
Comparisons of means and propor-
tions were tested using Student's t sta-
tistic. Differences between estimates
were tested against the probability of a
Type I error
15
or significance level. The
statistical significance of each compari-
son was determined by calculating the
Student's tvalue for the difference be-
tween each pair of means or propor-
tions and comparing the t value with
published tables of significance levels
for two-tailed hypothesis testing. Stu-
dent's tvalues were computed to test
differences between independent es-
timates using the following formula:
where f 1 and E2 are the estimates to be
compared and se1 and se2 are their cor-
responding standard errors.
There are hazards in reporting statistic-
al tests for each comparison. First,
comparisons based on large t statistics
may appear to merit special attention.
This can be misleading since the mag-
nitude of the t statistic is related not
only to the observed differences in
means or percentages but also to the
number of respondents in the specific
categories used for comparison. Hence,
a small difference compared across a
large number of respondents would
produce a large (and thus possibly sta-
tistically significant) t statistic.
A second hazard in reporting statistical
tests is the possibility that one can re-
port a "false positive" or Type I error.
Statistical tests are designed to limit
the risk of this type of error using a val-
ue denoted by alpha. The alpha level of
.OS was selected for findings in this re-
port and ensures that a difference of a
certain magnitude or larger would be
produced when there was no actual
difference between the quantities in
the underlying population no more
than 1 time out of 20.
16
When analysts
test hypotheses that show alpha values
at the .OS level or smaller, they reject
the null hypothesis that there is no dif-
ference between the two quantities.
Failing to reject a null hypothesis, i.e.,
detect a difference, however, does not
imply the values are the same or
equivalent.
-------------------------------------- 15 --------------------------------------
REFERENCES
The College Board (2008). Fulfilling the
Commitment: Recommendations for
Reforming Federal Student Aid: TheRe-
port from the Rethinking Student Aid
Study Group. Retrieved on January 1 5,
2010, from .b!!J;tiL
professionals.collegeboard.com/
profdownload/rethinking-stu-aid-
fulfilling-commitment-
recom mendations.pdf.
The College Board (2009). Trends in
College Pricing 2009. Retrieved on
February 11, 2010, from
http://www.trends-col legeboard.
com/college pricing/pdf/
2009 Trends College Pricing.pdf.
Harvey, J., Williams, R.M., Kirshstein, RJ.,
O'Malley, A.S., and Wellman, J.V.
(1998). Straight Talk About College
Costs and Prices. Report of the National
Commission on the Cost of Higher Edu-
cation. Phoenix, AZ: Oryx Press.
lmmerwahr, J., Johnson, J., Gasbarra, P.,
Ott, A., and Rochkind, J. (2009).
Squeeze Play 2009: The Public's Views
on College Costs Today. New York and
San Jose, CA: Public Agenda and The
National Center for Public Policy and
Higher Education.
Lewin, T. (2009, October 20). College
Costs Keep Rising, Report Says. The
New York Times.
Marchand, A. (201 0, January 21 ). Cost of
College Is a Big Worry of Freshmen in
Nat ional Survey. The Chronicle of High-
er Education.
Pryor, J.H., Hurtado, S., DeAngelo, L., Pa-
lucki Blake, L., and Tran, S. (2009). The
American Freshman: National Norms
Fa/12009. Los Angeles: Higher Educa-
tion Research Instit ute, Universit y of
California, Los Angeles.
Staklis, S. (201 0). Web Tables- Profile of
Undergraduate Students: 2007-08
(NCES 201 0-205). National Center for
Educat ion Statistics, Instit ute of Edu-
cation Sciences, U.S. Department of
Education. Washingt on, DC.
U.S. Department of Education, Nat ional
Cent er for Educat ion Statistics. (2003).
NCES Statistical Standards (NCES 2003-
601 ). Washington, DC.
Wei, C. (201 0). Web Tables- Student Fi-
nancing of Undergraduate Education:
2007-08 (NCES 201 0-162). National
Center for Educat ion Stat ist ics, Insti-
tute of Education Sciences, U.S. De-
partment of Education. Washington,
DC.
16 --------------------------------------
ENDNOTES
1
A recent public opinion poll showed that in-
creasing numbers of Americans view college
as a necessity for success (lmmerwahr et al.
2009). The College Board (2009) reports that
the published, or sticker, price of college has
increased more rapidly than the price of other
goods and services over the past three dec-
ades. See also Marchand (2010), which re-
ported on these findings.
2
The Higher Education Research Institute at
the University of California, Los Angeles, has
conducted a survey offreshmen each year
since 1973 (Pryor et al. 2009). See also recent
media attention to the issue (Lewin 2009).
3
Both governmental and nongovernmental
study commissions have convened to address
this. See, for example, The College Board
(2008) and Harvey et al. ( 1998).
4
Public Law 110-315, title I, Sec. 132. August
14, 2008. Higher Education Opportunity Act.
5
For-profit institutions include less-than-2-
year, 2-year, and 4-year institutions.
6
"Full-time" status is defined as having been
enrolled full time in one postsecondary institu-
tion for 9 months or more during the academ-
ic year.
7
National Postsecondary Student Aid Study
(NPSAS:08) Data Analysis System.
8
The remaining students were enrolled in
other types of institutions or in more than one
institution during the academic year.
9
All comparisons of estimates were tested for
statistical significance using the Student's t-
statistic, and all differences cited are statistical-
ly significant at the p < .OS level. No adjust-
ments for multiple comparisons were made.
The standard errors for the estimates can be
found at http://nces.ed.gov/das/library/
reports.asp.
10
In this report, the term "tuition" includes
both tuition and fees. Sometimes institutions
treat tuition and fees as a single charge, and
sometimes as separate charges. Tuition is de-
fined as the price of instruction and fees as the
price of other services provided by the school.
The tuition amounts shown here include those
charged to all undergraduates: both in-state
and out-of-state students enrolled in public 4-
year institutions, and both in-district and out-
of-district students enrolled in public 2-year
institutions.
11
Both net price and out-of-pocket net price
averages are calculated for all students, re-
gardless of whether they received any finan-
cial aid. This method of calculating net price
averages for all students differs from that used
to calculate average aid amounts in this report
(see table 2). Average aid amounts are calcu-
lated only for students receiving a particular
type of aid. Those not receiving a specific type
of aid (i.e., zero values) are not included in the
average for that aid. The average grant, there-
fore, will be greater than the difference be-
tween the sticker price and the net price after
grants.
17
12
Since 1998, the federal government has also
provided postsecondary students and their
families with various federal tax benefits.
These are not included in the definition of fi-
nancial aid and are not used in the calculation
of net price in this study.
13
NPSAS:08 Data Analysis System (data not
shown).
14
The target population of students was li-
mited to those enrolled in an academic pro-
gram, at least one course for credit that could
be applied toward an academic degree, or an
occupational or vocational program requiring
at least 3 months or 300 clock hours of instruc-
tion to receive a degree, certificate, or other
formal award. The target population excluded
students who were also enrolled in high
school or a high school completion (e.g., GED
preparation) program. "Title IV institutions"
refers to institutions eligible to participate in
federal financial aid programs under Title IV of
the Higher Education Act.
15
A Type I error occurs when one concludes
that a difference observed in a sample reflects
a true difference in the population from which
the sample was drawn, when no such differ-
ence is present.
16
No adjustments were made for multiple
comparisons.
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even create your own. Data lab has several different tools that allow you to
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www.ed.gov ies.ed.gov
(b)(5)
Georgia
From: Yuan Georgia
To: Bergeron. David
K vaal. James
Martin. Phil
Arsenault L e i ~ h
CC:
Date: 7/21/2010 9:47:44 AM
Subject: RE: GE document control
To: Kvaal, James; Yuan, Georgia; Martin, Phil; Arsenault, Leigh
Subject: RE: GE document control
(b)(5)
From: levaal, James
To: Bergeron, David; Yuan, Georgia; Martin, Phil; Arsenault, Leigh
Subject: GE document control
(b)(5)
(b)(5)
(b)(5)

(b)(S)
(b)(5)
(b)(S)
(b)(5)
From: Yuan, Georgia
To: Finley, Steve
Subject: Fw: GE schedule on a spreadsheet
FYI
Frorn:lCvaal, James
From: Finley, Steve
To.: Yuan. Georgia
CC:
Date: 9/16/2010 9:08:34PM
Subject: RE: GE schedule on a spreadsheet
To: Yuan, Georgia; Bergeron, David; McFadden, Elizabeth
Sent: Thu Sep 16 19:01:57 2010
Subject: RE: GE schedule on a spreadsheet
(b)(5)
(b)(5)
(b)(5)
From: Yuan, Georgia
To: Bergeron, D a v i d ~ Kvaal, James; McFadden, Elizabeth
Subject: GE schedule on a spreadsheet
(b)(5)
(b)(S)
Georgia
Georgia Yuan
Postsecondruy and Regulatory Setvice
LBJ 6E341
202-401-63 99
Georgia,
(b)(5)
From: Kyaal James
To: Yuan, Georgia
Bergeron. David
McFadden, Elizabeth
CC:
Date: 9/16/2010 8:01:58 PM
Sub.iect: RE: GE schedule on a spreadsheet
(b)(S)
From: Yuan, Georgia
To: Bergeron, David; Kvaal, James; McFadden, Elizabeth
Subject: GE schedule on a spreadsheet
David, Elizabeth and James
Attached is a spreadsheet (you can tell I am not an expert at creating spreadsheets!) that displays the various things we
(b)(5)
Georgia
Georgia Yuan
Postsecondaty and Regulatoty SeiVice
LBJ 6E34l
202-401-6399
From: Kanter Martha
To: Yuan, Georgia
CC:
Date: 8112/2010 11:16:46 PM
Subject: RE: Heads up on Gainful Employment
He's been added.
From: Yuan, Georgia
Sent Thursday, August 12, 2010 11:01 PM
To: Kanter, Martha
Subject: Re: Heads up on Gainful Employment
Martha. Do you want to include Eduardo? G
To: Rose, Charlie; Yuan, Georgia; Kvaal , James
Sent: Thu Aug 12 21:24:10 2010
I sent a calendar request to each of you.
Martha
From: Rose, Charlie
Sent: Thursday, August 12, 2010 1 0:22 PM
To: Kanter, Martha; Yuan, Georgia; K vaal, James
Sounds good. Thx.
Charlie
To: Rose, Charlie; Yuan, Georgia; Kvaal , James
Sent: Thu Aug 12 21:20:43 2010
Yes- how about right after the 8-8:30 communications meeting?
From: Rose, Charlie
Sent Thursday, August 12, 2010 10: 18 PM
Subject Re: Heads up on Gainful Employment
(b)(5)
Charlie
To: Weiss, Rose, Cunningham, Martin, Gomez, Miller, Yuan,
K vaal , James
Sent: Thu Aug 12 21:13:48 2010
Subject FW: Heads up on Gainful Employment
Sent Thursday, August 12, 2010 5:45PM
To: Gannet Tseggai; Dan Pfeiffer; Roberto Rodriguez; Heather Higginbottom; K vaal, James; Kanter, Martha;
Cunningham, Peter; Abrevaya, Sandra; Jennifer Psaki
Subject Heads up on Gainful Employment
(b)(5)
From: Kanter Martha
To.: Rose. Charlie
Yuan, Georgia
K vaal, James
CC:
Date: 8/12/2010 10:20:44 PM
Yes- how about right after the 8 - 8:30 communications meeting?
From: Rose, Charlie
Sent Thursday, August 12, 2010 1 0:18 PM
To: Kanter, Martha; Yuan, Georgia; Kvaal, James
Subject Re: Heads up on Gainful Employment
(b)(S)
Charlie
To: Weiss, Joanne; Rose, Charlie; Cunningham, Peter; Martin, Carmel; Gomez, Gabriella; Miller, Tony; Yuan, Georgia;
Kvaal, James
Sent Thu Aug 12 21:13:48 2010
Subject FW: Heads up on Gainful Employment
Sent: Thursday, August 12, 2010 5:45PM
To: Gannet Tseggai; Dan Pfeiffer; Roberto Rodriguez; Heather Higginbottom; K vaal , James; Kanter, Martha;
Subject Heads up on Gainful Employment
(b)(5)
(b)(5)
From: Kanter Martha
To.: Rose. Charlie
Yuan, Georgia
K vaal, James
CC:
Date: 8/12/2010 10:24:10 PM
Martha
From: Rose, Charlie
Sent: Thursday, August 12, 2010 10:22 PM
Sounds good. Thx.
Charlie
To: Rose, Charl ie; Yuan, Georgia; Kvaal, James
Sent: Thu Aug 12 21:20:43 2010
From: Rose, Charlie
(b)(5)
Charlie
To: Weiss, Joanne; Rose, Charli e; Cunningham, Peter; Martin, Carmel; Gomez, Gabriella; Miller, Tony; Yuan, Georgia;
Kvaal, James
Sent: Thu Aug 12 21: 13 :48 2010
Subject: FW: Heads up on Gainful Employment
To: Gannet Dan Roberto Rodriguez; Heather Kvaal, James; Kanter,
Cunningham, Abrevaya, Sandra; Jennifer Psaki
Subject: Heads up on Gainful Employment
(b)(S)
From: Kanter Martha
To.: Yuan. Georgia
CC:
Date: 8/12/2010 11:13:46 PM
l(b)(S)
From: Yuan, Georgia
Sent: Thursday, August 12,2010 11:01 PM
To: Kanter, Martha
Martha. L--1 (b_)(_
5
) _____ _____JI G
To: Rose, Charlie; Yuan, Georgia; Kvaal, James
Sent: Thu Aug 12 21:24: 10 2010
Martha
From: Rose, Charlie
Sounds good. Thx.
Charlie
Sent: Thu Aug 12 21:20:43 2010
Yes - how about right after the 8 - 8:30 communications meeting?
From: Rose, Charlie
Sent: Thursday, August 12, 2010 10: 18 PM
(b)(5)
Charlie
----- Original Message-----
To: Weiss, Joanne; Rose, Charlie; Cunningham, Peter; Martin, Carmel; Gomez, Gabriella; Mi ller, Tony; Yuan, Georgia;
Kvaal, James
Sent: Thu Aug 12 21:13:48 2010
(b)(5)
(b)(5)
Charlie
Sent using Black:Beny
From: Rose, Charlie
To: Kanter, Martha
Yuan. Georgia
Kvaal, James
CC:
Date: 8/12/2010 10:18:44 PM
Kvaal, James
Sent: Thu Aug 12 21:13:48 2010
(b)(5)
From: Rose, Charlie
To: Kanter, Martha
Yuan. Georgia
Kvaal, James
CC:
Date: 8/12/2010 1022:22 PM
Sounds good. Thx.
Charlie
Sent using Black:Beny
Sent: Thu Aug 12 21:20:43 2010
Yes -how about right after the 8 - 8:30 communications meeting?
From: Rose, Charlie
Sent: Thursday, August 12, 201 0 10: 18 PM
(b)(5)
Charlie
Kvaal, James
Sent: Thu Aug 12 21:13:48 2010
Sent Thursday, August 12, 2010 5:45PM
To: Gannet Tseggai; Dan Pfeiffer; Roberto Rodriguez; Heather Higginbottom; Kvaal, James; Kanter, Martha;
(b)(5)
From: Yuan, Georgia
To: Kanter, Martha
CC:
Date: 8/ 12/2010 11:01:34 PM
Martha. L--1 (b_)(_5) ______ __JIG
Sent: Tbu Aug 12 21:24:10 2010
Martha
From: Rose, Charlie
Sounds good. Thx.
Charlie
Sent using Black.Beny
Sent: Thu Aug 12 21:20:43 2010
Subject RE: Heads up on Gainful Employment
From: Rose, Charlie
(b)(5)
Charlie
Sent using Black.Beny
Kvaal, James
Sent Thu Aug 12 21: 13 :48 2010
(b)(5)
J ~ e
(b)(S)
Charli e
From: Yuan, Georgia
To: Rose, Charlie
Sent: Wed Mar 31 18:28:47 2010
Subject: RE: Kaplan and devry meeting
(b)(S)
Georgia
From: Rose, Charl ie
Sent: Wednesday, March 31, 20 10 5:5 7 PM
To: Yuan, Georgia
Cc: Borders, Tia
Subject: Kaplan and devry meeting
(b)(S)
From: Rose Charlie
To.: Yuan. Georgia
CC:
Date: 3/3112010 7:32:46PM
Subject: Re: Kaplan and devry meeting
(b)(5)
Charlie
l(b)(S)
Georgia
From: Rose, Charlie
Sent: Wednesday, March 31, 2010 5:57PM
To: Yuan, Georgia
Cc: Borders, Tia
(b)(S)
Charlie
From: Yuan Georgia
To: Rose, Charlie
CC: Borders. Tia
Date: 3/31/2010 7:22:54 PM
(b)(S)
Georgia
From: Rose, Charlie
Sent: Wednesday, March 31, 2010 5:57PM
To: Yuan, Georgia
Cc: Borders, Tia
(b)(S)
Charlie
From: Yuan Georgia
To: Rose, Charlie
CC:
Date: 3/31/2010 7:28:48 PM
From: Yuan Georgia
To: Miller. Tony
CC:
Date: 4/13/2010 5:59:06 PM
Subject: RE: Kaplan, DeVry, EDMC Letter to Dep. Sec. Miller
From: Miller, Tony
Sent: Tuesday, April l3, 2010 5:58PM
To: Yuan, Georgia
Subject: FW: Kaplan, DeVty, EDMC Letter to Dep. Sec. Miller
(b)(5)
From: AndrewS. Rosen [mailto:andrew.s.rosen@kaplan.com]
Sent: Monday, Aprill2, 2010 11:04 AM
To: Miller, Tony
Cc: Kanter, Martha; Shireman, Bob; Fine, Stephanie; Rebecca Campoverde
Subject: Kaplan, DeVry, EDMC Letter toDep. Sec. Miller
Dear Tony:
Attached, in advance of our meeting on Thursday, is a letter on behalf of Kaplan, DeVty and Education Management
Corp. in response to your request for suggestions regarding the issue of excessive student debt. We look fOiward to
discussing these and other issues when we meet.
Best regards,
Andy
Andrew S. Rosen
Chairman and CEO
Kaplan, Inc.
6301 Kaplan University Avenue
Fort Lauderdale, Florida 33309
(954) 515-3888
www.kaplan.com
From: Yuan Georgia
To: Erce.g. Marta
CC:
Date: 4/28/2010
Subject: RE: Media reports- background for noon meeting
(b)(S)
Georgia
From: Erceg, Marta
Sent: Wednesday, April28, 2010 7:02PM
To: Yuan, Georgia; Mitchelson, Mary
Subject: Fw: Media reports- background for noon meeting
(b)(S)
To: Erceg, Marta
Sent: Wed Apr 28 11:02:21 2010
Subject: FW: Media reports- background for noon meeting
From: Yuan, Georgia
Sent Wednesday, April 28, 2010 11: 12 AM
To: Clark, Teresa
Cc: Rosenfelt, Phil; Rogers, Margot
Subject: Media reports- background for noon meeting
(b)(5),(b)(7)(E)
Georgia Yuan
Associated Press
04/26/10 9:30AM PDT
NEW YORK -DeVry led decliners in education stocks Monday after a Credit Suisse analyst said the for-profit
incomes - as student loan defaults soar.
revenues.
Flynn downgraded DeVry and ITT Educational Services Inc. to "neutral" from "outperfonn," cutting target prices to $65
$109.71.
Corp. fell61 cents, or 1.8 percent, to $33.49 and Strayer Education Inc. dropped $2.54, or 1 percent, to $250.49.
Meanwhile, Flynn cited DeVry's warning on slower enrollment growth in one of its divisions and ITT's warning on higher
APRJL 26,2010, 10:57 A.M. ET
Debt, Job Rule Uncertainty Hits Shares Of For-Profit Colleges
NEW YORK (Dow Jones)--A government proposal to hold colleges accountable for graduating students with high debt
Credit Suisse downgraded ITT Educational Services Inc. (ESI) and DeVry Inc. (DV) to neutral from outperform and
improper to say what the Department of Education will put forth and irs best to wait until the official proposal is released
http://online.wsj .com/article/BT -C0-201 00426-71 0339.htrnl?mod=rss _Hot_ Stocks
Georgia Yuan
202-401-6000
April 13, 2010
Trace Urdan
turdan@signalhill.com
415.364.0365
Business Services - Education Services
Industry Update
Relief: Gainful Employment Gains Alternative Measure
Our Call:
As anticipated, Department of Education (USDOE) draft regulations went to the Office of
Management & Budget (OMB) last Friday 4/9 for review prior to their publication in the Federal
Register -- likely 5/15. A credible source close to OMB tells us that while the 8% median
debt/income measure, and the 90% student loan repayment measures appear to be essentially
unchanged from the terms presented by the USDOE in January, a third alternative measure has
been added. This measure would allow programs with a graduation rate of 50% or better and a
subsequent job placement (in the relevant field) of 70% or better to qualify out of the other two
measures.
Though the devil will certainly be in the details, including how these items are to be considered
for students that are transferring credits and may be already employed, the new measure
effectively removes the significant threat the rules had created for nationally-accredited degree
programs with typically high default rates. The new measure, in fact, seems to closely resemble
rules already imposed by national accrediting bodies. And while we might anticipate that the
terms could be stricter in USDOE's conception, they should be eminently achievable with
minimal disruption for all programs.
According to USDOE analysis, (in process of being reviewed by OMB,) the rules themselves
would only affect 6-8% of all for-profit programs, with culinary, automotive tech, and nursing
programs hardest hit. (We note that this seems out of keeping with our knowledge of these
programs as represented by publicly-traded schools, but nevertheless appears to represent a
conclusion reached by USDOE.) Our contact indicated that the University of Phoenix (NASDAQ:
APOL; Buy) was not seen as affected at all in the USDOE analysis.
While we expect all post-secondary school stocks to benefit from the news, we believe that the
those names that had been most challenged by the existing terms are likely to see the biggest
benefit as a result of the change. These include ITT Educational Services (NYSE: ESI ; Buy) ,
Corinthian Colleges (NASDAQ: COCO; Buy), and Career Education (NASDAQ: CECO; Buy)
which recently heralded graduation rates comfortably above 50%. Though some individual
programs may still fail all three tests, we believe these are likely to be isolated, rare and fixable.
We view this apparent concession as evidence of a desire by Secretary Duncan to defuse what
was promising to be an area of real contention, as evidenced by House Republicans, members
of the Congressional Black Caucus, and Senator Lamar Alexander all calling out the Secretary
on this issue. Secretary Duncan needs, in our opinion, a diverse coalition of supporters to pass
his signature issue: K-12 education reform. Because the Secretary's K-12 proposals do not
easily fall within typical party boundaries, he really does need a bipartisan coalition in both the
House and Senate education committees to pass his version of ESEA (NCLB) . No concession
at all would have kicked off a loud and publicized summer of public commentary. Because it is
very difficult to argue that a 50% graduation rate and a 70% employment rate is an onerous
burden, we think USDOE has effectively neutered the campaign to ditch the rule entirely.
We still expect industry to challenge the rule in public and likely later in court, but based on our
reli able source, we believe investors need no longer fear that significant revenues could be at
risk in the event that the rules are passed.
Please see important disclosure information on page 2 of this report.
April13, 2010
Important Disclosures
Analyst Certification
I, Trace Urdan, hereby certify that all of the views expressed in this research report accurately reflect my
personal views about the subject securities or issuers. I also certify that no part of my compensation was, is or
will be directly or indirectly related to the specific recommendations or views expressed in this research
report.Signal Hill does not compensate its equity research analysts based on specific investment banking
transactions. Signal Hill Equity research analysts receive compensation based on several factors, including
overall profitability and revenues of the firm, which include investment banking revenues.
Meaning of Ratings
Signal Hill uses a three-tiered rating system defined as follows:
BUY: We expect this stock to outperform its peers over the next 12 months:
HOLD: We expect this stock to perform in line with its peers over the next 12 months:
SELL: We expect this stock to underperform its peers over the next 12 months:
Rating
BUY
HOLD
SELL
Disclaimer
Distribution of Ratings/IS Services
Signal Hill
Count
77
47
1
Percent
61.6
37.6
0.8
18 Serv./Past 12 Mos.
Count
72
38
Percent
93.5
80.9
100.0
This report has been prepared using sources we deem to be reliable but we do not guarantee its accuracy and
it does not purport to be complete. This report is published solely for information purposes and is not intended
to be used as the primary basis for making investment decisions, which should reflect the investment objectives
and financial situation of the investor: The opinions expressed herein are subject to change without notice. This
report is not an offer or the solicitation of an offer to buy or sell securities. Additional information is available
upon request.
Post-Secondary Education 2
From: Erceg_ Marta
To: Yum Georgia
CC:
Date: 4/29/2010 9:30:00 AM
Thanks, Georgia.
From: Yuan, Georgia
To: Erceg, Marta
(b)(5)
Georgia
From: Erceg, Marta
To: Yuan, Georgia; Mitchelson, Mary
Subject: Fw: Media reports- background for noon meeting
(b)(5)
To: Erceg, Marta
Sent: Wed Apr 28 11:02:21 2010
Subject: FW: Media reports- background for noon meeting
From: Yuan, Georgia
Sent: Wednesday, Aptil 28,2010 11:12 AM
To: Clark, Teresa
Cc: Rosenfelt, Phil; Rogers, Margot
Subject: Media reports- background for noon meeting
Teresa-
(b)(5)
Georgia Yuan
Associated Press
04/26/10 9:30AM PDT
NEW YORK- De V ry led decliners in education stocks Monday after a Credit Suisse analyst said the for-profit
incomes - as student loan defaults soar.
revenues.
Flynn downgraded DeVry and ITT Educational Services Inc. to "neutral" from "outperfonn," cutting target prices to $65
$109.71.
Meanwhile, Flynn cited DeVry's warning on slower enrollment growth in one of its divisions and ITT's warning on higher
APRIL 26, 2010, 10:57 A.M. ET
Debt, Job Rule Uncertainty Hits Shares OfF or-Profit Colleges
NEW YORK (Dow Jones)-A government proposal to hold colleges accountable for graduating students with high debt
Credit Suisse downgraded ITT Educational Services Inc. (ESI) and DeVry Inc. (DV) to neutral from outperform and
improper to say what the Department of Education will put forth and irs best to wait until the official proposal is released
http://online.wsj .com/article/BT-C0-20100426-710339.html?mod=rss_Hot_Stocks
Georgia Yuan
202-401-6000
(b)(5)
Sent: Tuesday, Apri l 20, 2010 2:32PM
From: Finley, Steve
To: Jenkins, Harold
Yuan, Georgia
CC: Sann. Ronald
Wolff Russell
Marinucci, Fred
Wanner Sarah
Date: 4/20/2010 3:15:42 PM
Sub,ject: RE: Memo
Cc: Sann, Ronald; Wolff, Russell; Marinucci, Fred; Wanner, Sarah
Subject: RE: Memo
(b)(5)
From: Finley, Steve
Cc: Sann, Ronald; Wolff, Russell
Subject: RE: Memo
(b)(5)
(b)(5)
Steve
From: Yuan, Georgia
Sent: Tuesday, April 20, 2010 12:38 PM
To: Finley, Steve; Wolff, Russell; Jenkins, Harold
Subject: FW: Memo
(b)(5}
(b)(5)
Georgia
From: Gregory Ferenbach [mailto:Gregory.Ferenbach@strayer.edu]
Sent: Tuesday, April20, 2010 11:12 AM
To: Yuan, Georgia
Subject: Memo
Attached is the legal piece we discussed in our conversation this morning. As I mentioned, we started to look into this
issue many months ago after our outside counsel advised us that the "gainful employment" provision did not apply to
Strayer.
Please let us know your thoughts after you have had a chance to review.
Hope this is helpful.
Best.
Greg
(b)(S)
From: Wanner, Sarah
From: Finley, Steve
To: Wanner. Sarah
Jenkins. Harold
Yuan, Georgia
CC: Satm Ronald
Wolff Russell
Marinucci Fred
Date: 4/20/2010 3:59:32 PM
Sub.iect: RE: Memo
To: Finl ey, Steve; Jenkins, Harold; Yuan, Georgia
Cc: Sann, Ronald; Wolff, Russell ; Marinucci, Fred
Subject: RE: Memo
(b)(S)
From: Finley, Steve
Subject: RE: Memo
(b)(S)
(b)(5)
From: Jen}jns, flarold
Sent: Tuesday, April20, 2010 2:32PM
Cc: Sann, Ronald; Wolff, Russell ; Marinucci, Fred; Wanner, Sarah
Subject: RE: Memo
(b)(5)
From: Finley, Steve
Subject: RE: Memo
(b)(5)
(b)(5)
Steve
From: Yuan, Georgia
Subject: FW: Memo
(b)(5)
Georgia
Sent: Tuesday, April 20, 2010 11:12 AM
To: Yuan, Georgia
Subject: Memo
Strayer.
Best.
Greg
(b)(5)
Steve
From: Pinley, Steve
To: Yuan, Georgia
Jenkins, Harold
CC: Sann. Ronald
Wolff, Russell
Date: 4/20/2010 1:07:54 PM
Subject: RE: Memo
From: Yuan, Georgia
Subject: FW: Memo
(b)(5)
Georgia
To: Yuan, Georgia
Subject: Memo
Strayer.
Best.
Greg
.................................................................................................................................................................................................................................................................................................
(b)(S)
From: Wanner, Sarah
From: Finley Steve
To: Wanner, Sarah
CC:
Date: 4/20/2010 3:29:16 PM
Subject: RE: Memo
To: FinJey, Steve; Jenkins, Harold; Yuan, Georgia
Cc: Sann, Ronald; Wolff, Russell; Marinucci, Fred
Subject: RE: Memo
(b)(S)
From: Finley, Steve
Sent: Tuesday, April20, 2010 3: 16PM
Subject: RE: Memo
(b)(S)
To: Fin]ey, Steve; Yuan, Georgia
Subject: RE: Memo
(b)(5)
From: Finley, Steve
Sent: Tuesday, Apri l 20, 2010 1:08PM
Subject: RE: Memo
(b)(5)
Steve
From: Yuan, Georgia
Subject: FW: Memo
(b)( 5)
Georgia
Sent: Tuesday, April20, 2010 11:12AM
To: Yuan, Georgia
Subject: Memo
Strayer.
s
Best.
Greg
(b)(5)
From: Finley, Steve
Cc: Sa.nn, Ronald; Wolff, Russell
Subject: RE: Memo
(b)(5)
To: Finley. Steve
Yuan, Georgia
CC: Sann. Ronald
Wolff Russell
Marinucci, Fred
Wanner Sarah
Date: 4/20/2010 2:31:30 PM
Sub,ject: RE: Memo
(b)(5)
Steve
From: Yuan, Georgia
Sent Tuesday, April 20, 2010 12:38 PM
To: Finley, Wolff, Jenkins, Harold
Subject: FW: Memo
(b)(5)
Georgia
Sent Tuesday, April20, 2010 11:12 AM
To: Yuan, Georgia
Subject Memo
Strayer.
Best.
Greg
From: Wanner, Sarah
To.: Finley, Steve
CC:
Date: 4/20/2010 3:30:42PM
Subject: RE: Memo
l(b)(S)
From: Finley, Steve
To: Wanner, Sarah
Subject: RE: Memo
(b)(5)
From: Wanner, Sarah
To: FinJ ey, Steve; Jenkins, Harold; Yuan, Georgia
Cc: Sann, Ronald; Wolff, Russell ; Marinucci, Fred
Subject: RE: Memo
(b)(5)
From: Finley, Steve
Subject: RE: Memo
(b)(5)
l(b)(5)
From: Jen}jns, flarold
Subject: RE: Memo
(b)(5)
From: Finley, Steve
Subject: RE: Memo
(b)(5)
(b)(S)
Steve
From: Yuan, Georgia
Subject: FW: Memo
(b)(S)
Georgia
To: Yuan, Georgia
Subject: Memo
Strayer.
Best.
Greg
(b)(5)
From: Finley, Steve
From: Wanner Sarah
To: Finley. Steve
Jenkins. Harold
Yuan, Georgia
CC: Satm Ronald
Wolff Russell
Marinucci Fred
Date: 4/20/2010 3:25:54 PM
Sub.iect: RE: Memo
Cc: Sann, Ronald; Wolff, Russell ; Mari nucci, Fred; Wanner, Sarah
Subject: RE: Memo
(b)(5)
Subject: RE: Memo
(b)(5)
From: Finley, Steve
Cc: Sa.nn, Ronald; Wolff, Russell
Subject: RE: Memo
(b)(5)
Steve
From: Yuan, Georgia
Sent: Tuesday, April20, 2010 12:38 PM
Subject: FW: Memo
(b)(S)
Georgia
Sent Tuesday, April 20, 2010 11 :12 AM
To: Yuan, Georgia
Subject: Memo
Strayer.
Best.
Greg
Sent: Monday, October 26, 2009 9:47AM
To.: Woodward, Jennifer
CC:
Date: 10/26/2009 9:48: 16 AM
Subject: RE: Neg Reg Article
To: Jenkins, Harold; Marinucci, Fred; Siegel, Brian; Wanner, Sarah; Wolff, Russell; Morelli, Denise; Finley, Steve;
Sann, Ronald
Subject: Neg Reg Article
In the Crosshairs?
October 26, 2009
Share This Story
http :1 /www.insi dehighered.com/news/2009/1 0/26/regs#
Education Department officials have been insisting for months that, despite the warnings of some Wall Street analysts to
the contrary, the federal government is not intent on intensifying its regulation of for-profit higher education.
That assertion got a little harder to believe on Friday, when the department announced the composition of a committee
charged with negotiating a set of new federal regulations related to the integrity of federal financial aid programs. Given
the issues on the panel's agenda, its membership leans notably toward critics of the for-profit sector of higher education,
and decidedly short on representatives of the colleges.
Department officials, however, reject the idea that the panel they've appointed is unbalanced.
As is typically the case in the federal negotiated ruJe making process (which is explained here), the department's
September 9 announcement inviting nominations for the committees said it would populate the panels with people who
"represent the interests significantly affected by the topics proposed for negotiations."
In this case, the topics under the overall rubric of the integrity of federal financial aid programs include such things as
incentive compensation for college recruiters and the use oftests to gauge students' "ability to benefit" from a higher
education, which are heavily used by for-profit universities, community colleges, and other open-access institutions.
The goal of negotiating committees like this one (and another the department is creating to look at foreign institutions) is
to try to reach unanimous agreement on a set of recommendations for proposed regulatory changes, to provide to the
education secretary. Disapproval from any single negotiator can torpedo the whole process, giving the federal agency
that sponsors the session -in this case the Education Department-- free rein to propose whatever it wants.
It was inevitable that any group of officials deemed to have an interest in issues related to potential financial aid fraud and
abuse would contain some people who don't like for-profit colleges. The institutions have long been viewed with
skepticism by consumers' rights groups that (citing many historical examples and a smaller number of high-profile recent
ones) accuse some of the institutions of preying on low-income students by charging comparatively high tuitions and
underdelivering on their promises of good jobs.
So it's no surprise that the committee appointed by the Education Department contains consumer and student advocates
with a track record of criticizing for-profit colleges. The student members (one primary representative and an alternate)
come from two student groups, US. PIRG and the United States Student Association, that frequently take aim at for-
profit colleges. Both groups signed a letter this month, for instance, that urged Congress to toughen its regulation of
private student loans made by for-profit colleges.
The panel also features two consumer advocates. One, Margaret Reiter, is a lawyer who, as deputy attorney general in
California, sued Corinthian Colleges, Inc., for "a persistent pattern of unlawful conduct" that included allegedly inflating
job placement data and falsifying government records. (Corinthian settled for $6.5 million in 2007.) Her alternate,
Deanne Loonin, represents the National Consumer Law Center, which published a 2005 study called "Making the
Numbers Count: Why .Proprietary School .Performance Data Doesn't Add Up and What Can Be Done About It."
What's more unexpected, perhaps, is that the group gathered by the department to negotiate a set of issues that relate
heavily to for-profit institutions contains so many other members with a clearly stated antipathy toward the sector, and so
few members from for-profit institutions themselves.
As is common, the financial integrity committee includes one representative (plus an alternate) from each of the major
sectors of higher education- public two-year (Richard Heath of Anne Arundel Community College), public four-year
(Philip Asbury of the University ofNorth Carolina at Chapel Hill), private four-year (Todd Jones of the Association of
Independent Colleges and Universities of Ohio) and for-profit colleges (Elaine Neely ofKaplan Higher Education).
Aside from Neely, who can be counted on to advocate for the career college sector, none is known to be particularly a
friend or foe of for-profit higher education.
But based on their track records or previous statements, it's fair to expect several of the officials selected by the
department to represent various other "communities of interest" to take a sharply skeptical view of for-profit colleges.
Jim Simpson, associate vice president of workforce development and adult education at Florida State College (formerly
Florida Community College at Jacksonville), was appointed to fill a slot designed to represent the interests of"work
force development." Simpson traveled to Denver in June to speak at one of three regional hearings the department held
to solicit views on the issues it should explore in negotiated rule making, and he closed his presentation (which can be
found on Page 35 of this transcript) with a stinging critique of for-profit colleges.
He flew to Denver, Simpson said, in part to "put a human face on what happens when schools take advantage oflax
regulations." He then recounted the story of a student who applied to his institution after having made the honor roll at an
unidentified for-profit university-- "despite later test results .. . that placed the student at an elementary school level in
mathematics, language and reading," Simpson said.
"This student and their family took out $16,000 in student loans to pay for a two-year degree from a for-profit university
that was clearly only interested in tuition money obtained from federally backed student loans," he said. "It is a travesty
that they were encouraged to take out huge student loans when their daughter has almost no chance of getting a job that
would allow the eventual repayment of those loans."
College presidents are represented in the negotiation process by Terry W. Hartle, senior vice president for government
and public affairs at the American Council on Education. Hartle typically stays above the fray in the regular political
skirmishing between traditional colleges and for-profit higher education. But ACE, as the lead lobbying group for higher
education, almost always sides with traditional colleges in policy debates, and the Career College Association, the
leading lobbying group for for-profit institutions, withdrew from ACE in a public spat earlier this decade.
The Education Department chose David Hawkins, director of public policy at the National Association for College
Admission Counseling, to represent the interests of admissions officers on the negotiating team. Like several major higher
education associations, NACAC does not let for-profit colleges into its membership.
And Hawkins, who writes widely about ethics and other issues in higher education, wrote a 2007 article challenging the
notion that for-profit institutions are doing a good job of serving students from low-income backgrounds.
"During the long-running debate over the current reauthorization of the Higher Education Act, lobbyists for the for-profit
institutions would have you believe that 'traditional' colleges and universities are fighting against the for-profit colleges in a
spiteful legislative contest," Hawkins wrote. "In reality, the 'contest' in Washington is one to preserve the integrity of
student-aid programs in an environment characterized by increasingly aggressive recruiting, indiscriminate admissions and
loan financing-- often with little to no regard for the student's ability to benefit or repay-- and questionable 'return on
investment' for many students lured in by the publicly traded for-profit colleges' massive advertisement complex."
Apart from Neely, the Kaplan senior vice president of regulatory affairs, and her alternate, David Rhodes, president of
the School of Visual Arts, the only other negotiator who appears likely to advocate for for-profit institutions is, by
design, is Anthony Mirando, who as president of the National Accrediting Commission of Cosmetology Arts and
Sciences was appointed to represent national accrediting agencies.
(Other negotiating teams in the recent past contained just one representative of for-profit colleges, too, but they were
focused on topics-- such as accreditation and student loans-- that did not disproportionately affect those institutions.
The loan team contained multiple lenders, and the accreditation team three or four accrediting officials.)
Officials of the for-profit higher education sector had argued-- to no avail-- that given the growth of for-profit colleges
and the emphasis in this round of rule making on issues that could directly affect them, the department should consider
appointing more than one person from the institutions to the negotiating team.
Harris N. Miller, president and CEO of the Career College Association, declined to comment on the makeup of the
negotiating panel, which begins its work a week from today.
Officials at the Education Department offered only a one-line statement in response. "The make-up of this committee is
similar to past committees and we remain committed to ensuring that it reflects key constituencies," said Justin Hamilton,
a spokesman.
But Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions
Officers, vigorously challenged the assertion that the negotiating team appointed by the department is tilted against for-
profit colleges, and that the department has it in for the sector.
Nassirian specifically disputed the notion that Hawkins and others (including Nassirian himself) who have criticized for-
profit colleges in the past are biased against the colleges. Hawkins has criticized the colleges' use of incentive
compensation for recruiters, Nassirian said, because he believes such payments "inevitably lead to abuse" in the
admissions world that Hawkins's group oversees.
"But on the rest of the issues, he is a fairly moderate guy, and I don't know that he is any harsher on the for-profit sector
than the nonprofit sector," Nassirian said. Like many experts on financial aid and higher education, Nassirian said,
Hawkins believes "it's in everybody's interest that these programs be able to demonstrate accountability and program
integrity, or else the billions of dollars that are being devoted to them could be redirected elsewhere."
For-profit colleges have "legitimate concems ... that they not be subjected to utterly destructive requirements," Nassirian
said. But if the institutions are feeling picked on by the new administration, that may have more to do with the fact that
the previous White House and Education Department were soft on the sector, greatly softening the very same regulations
on executive compensation that are now under review in the upcoming negotiations.
"I can understand why, from the perspective of the last eight years of the Bush administration, any change can only be
perceived as a change for the worse" for for-profit colleges, Nassirian said. "But when you judge the matter from the
perspective of the taxpayers who fund the system, all the department has asked them to do is to be more reasonable.
There is a new mindset in this administration that every dollar needs to be reasonably accounted for, and that money is
not being wasted. I don't believe that the good for -profit schools want to contest that view."
-Doug Lederman
From: Macias, Wendy
To: Finley, Steve
CC:
Date: 5/4/2010 12:32:08 PM
Subject: RE: New Bloomberg article today: Obama Plans New Rules as For-Profit Colleges Mobilize
Nonresponsive
From: Finley, Steve
Sent: Tuesday, May 04, 2010 12:01 PM
To: Macias, Wendy
Subject: FW: New Bloomberg article today: Obama Plans New Rules as For-Profit Colleges Mobilize
FYI
*********************************************************************
Obama Plans New Rules as For-Profit Colleges Mobilize for Fight
2010-05-04 04:02:00.0 GMT
By John Hechinger, Daniel Golden and John Lauerman
May 4 (Bloomberg)-- The Obama Administration is gearing up
to produce tougher regulations that may reduce the amount of
federal financial aid flowing to for-profit colleges, cutting
the companies' annual revenue growth by as much as a third.
In response, the $29 billion industry and its supporters
including Republican Senators have enlisted top Washington
lobbyists and are courting black and Hispanic legislators to
fight the proposed rules scheduled to be released as early as
this month. The companies draw students from low-income and
minmity communities.
Federal aid to for-profit colleges has become an issue as it
has jumped to $26.5 billion in 2009 from $4.6 billion in 2000,
according to the Education Department, prompting concern that
these students are taking on too much debt. Twelve higher-
education stocks fell an average of7.4 percent for the week
ended April 30, according to Bloomberg data, following an April
28 speech by an Education Department official critical of for-
profit colleges. In the same period, the Standard & Poor' s 500
Index dropped 1.7 percent.
"There' s an attempt to manage" for-profit colleges by the
Obama administration, Robert Wetenhall, an analyst with BMO
Capital Markets in New York, said in a telephone interview. The
education companies' influence in Washington has "radically
changed," from the years of the Bush administration, he said.
The tougher rules, which are expected to be released for
public comment in the next several weeks, would require ITT
Educational Services Inc., Career Education Corp. and Apollo
Group Inc.'s University of Phoenix to show that their graduates
earn enough money to pay off their student loans. If for-profit
colleges can' t meet the standard, they could lose federal
financial aid, which typically makes up three-quarters of their
revenue.
Tuition Increases
The proposed rules may disqualifY for-profits from
receiving federal financial aid if their graduates must spend
more than 8 percent of their starting salaries on repaying
student loans. The regulations may slow or even halt tuition
increases at ITT, Education Management Corp., Lincoln
Educational Services, Universal Technical Institute, and Career
Education because many graduates take low-paying jobs in
criminal justice, cooking and medical office work, Trace Urdan,
an analyst at Signal Hill Capital Group in San Francisco, said
in an interview.
Education companies have increased revenue by as much as 15
percent and enrollment by 8 to 10 percent on an annual basis,
while raising tuition about 4 to 6 percent a year, Urdan said.
The new rules may slow their revenue growth by one third by
limiting their ability to raise tuition.
Pricing Power
"The days of 4 to 6 percent annual tuition price increases
are over," Urdan said. "The new proposed rules will bring some
school ' s power to increase prices down to zero."
Apollo closed at $58.32, up 91 cents, or 1.6 percent, in
New York Stock Exchange composite trading yesterday. liT closed
at $104.22, up $3.09, or 3 .1 percent. Career Education rose $97
cents or 3.3 percent to $30.24.
The Education Department plans to issue the regulations
without Congressional approval, unlike student-loan legislation
which passed in March.
"Congress has not held a single hearing on these new
enforcement mechanisms," Alexa Marrero, spokeswoman for John
Kline, the ranking Republican on the House education committee,
said in an e-mail. "No research has been offered by the
department to justify the controversial proposal ."
U.S. Senator Lamar Alexander, who chairs the Senate
Republican Conference, is trying to persuade U.S. Education
Secretary Arne Duncan to reconsider the regulations, said a
Republican aide on the education committee. If that doesn' t work,
Alexander, who is on the education and appropriation committees,
would try to kill the regulations by cutting off funding, the
aide said.
Enrollment in for-profit colleges increased to 1.8 million
in 2008 from 673,000 in 2000. [ndustry revenue will rise to
$29.2 billion this year from $9 billion in 2000, said Jeffrey
Silber, an analyst for BMO Capital Markets in New York. The
industry has grown in part by marketing to low-income students,
including the homeless, who qualify for federal grants and loans.
Regulations' Impact
The new regulations would shut 300,000 students out of
classes and eliminate 2,000 educational programs, according to a
study commissioned by the Washington-based Career College
Association, which represents more than 1,400 for-profit
colleges.
The proposal would reduce opportunities for women and
racial minorities who want to go to college, the group said.
For-profit colleges have proposed alternative regulations that
would require companies to disclose more information about
students' debt and job prospects.
The Career College Association has retained the Podesta
Group, a Washington lobbying fum headed by Anthony Podesta,
whose brother, John, was President Bill Clinton's chief of staff,
according to federal filings. Clinton will be a keynote speaker
at the association' s annual meeting in June. Podesta's Paul
Brathwaite, former executive director of the Congressional Black
Caucus, is also lobbying on the association's behalf, records
show.
Phoenix Scholarships
The University ofPhoenix, the largest for-profit college
in the US. by enrollment, awarded 25 full-tuition scholarships
worth $1.25 million in the fiscal year ended August 31 to the
Congressional Black Caucus Foundation, which selects the
recipients, Apollo spokeswoman Sara Jones said in an e-mail.
More minority students earn degrees from Phoenix than from any
other US. university, she said.
In March, several members of the Congressional Black Caucus
sent a letter to Duncan, saying the regulations would reduce
educational opportunity.
Regulators need more tools to oversee publicly-traded
education companies receiving increasing amounts of federal
money, Robert Shireman, deputy undersecretary of the education
department, said in a speech on April 28.
"I don't think we have the firepower that we need," he
said, according to a transcript of his remarks.
The speech was "highly negative" and was "drawing
inappropriate and unwarranted parallels between developments in
higher education and the causes of the recent financial
crisis," Harris Miller, president of the Career College
Association wrote in an April 29letter to Duncan.
For Related News and Information:
Stories about education: NI EDU
U.S. colleges and universities: USUV
Education organizations: EDOR
Stories about the Department ofEducation:
NIEDN
--Editors: Robin D. Schatz,Jonathan Kaufman
To contact the reporters on this story:
John Hechinger in Boston at + 1-617-210-4614 or

Daniel Go! den in Boston at + 1-617-210-4610 or
dlgolden@bloomberg.net;
John Lauerman in Boston at +1.-617-210-4630 or
jlauerman@bloomberg.net.
To contact the editor responsible for this story:
Jonathan Kaufman at+ 1-617-210-4638 or Jkaufman17@bloomberg.net.
(b)(5)
Thanks,
Georgia
From: Finley, Steve
To: Yuan, Georgia
From: Yuan, Georgia
To: Finle.,v, Steve
CC: Jenkins, Harold
McFadde.n. Elizabeth
Higgins Shannan
Sann Ronald
Date: 4/6/2010 6:07:22 PM
Subject: RE: Next steps on gainful employment
Attachments: GE 2.ppt
Cc: Jenlcins, Harold; McFadden, Elizabeth; Higgins, Shannan; Sann, Ronald
Subject: Next steps on gainful employment
Georgia--
(b)(5)
Steve
(b)(5)
1
(b)(5)
1
(b)(5)
1
(b)(5)
1
(b)(5)
1
(b)(S)
1
(b)(5)
1
(b)(5)
1
(b)(5)
1
(b)(5)
1
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1
l(b){S)
Charlie
From: Yuan, Georgia
To: Rose, Charlie
Sent: Tue Apr 27 15:49:56 2010
Subject NPRM
(b)(5)
From: Rose Charlie
To.: Yuan. Georgia
CC:
Date: 4/27/2010 4:52:38PM
Subject: Re: NPRM
Associated Press
04/26/10 9:30AM PDT
NEW YORK- DeVry led decliners in education stocks Monday after a Credit Suisse analyst said the for-profit
revenues.
Flynn downgraded DeVry and ITT Educational Services Inc. to "neutral" from "outperform," cutting target prices to $65
$109.71.
Meanwhile, Flynn cited DeYry's warning on slower enrollment growth in one of its divisions and ITT's warning on higher
From: Rose, Charlie
To: Yuan, Georgia
Subject
l(b)(5)
Charlie
To: Finley, Steve
CC:
Yuan Georgia
McFadden. Elizabeth
Kyaal James
Date: 8/16/2010 3:22:36PM
Subject: RE: Repayment rate data-- WSJ articles and FOIA requests
(b)(5)
From: Finley, Steve
To: Yuan, Georgia; McFadden, Elizabeth; Bergeron, David; Kvaal, James
Subject: Repayment rate data-- WSJ articles and FOIA requests
(b)(5)
Dow Jones Newswires' Melissa Kom reports:
A number of for-profit colleges may be in more danger than first believed of running afoul of a regulation proposed by
the U.S. Department ofEducation that would force on them harsh penalties for graduating students with high debt loads,
according to data the agency released late Friday.
The department, in an attempt to show some of the rule' s potential impact were it to be implemented, posted to its
website late Friday a listing of the fi scal 2009loan repayment rates at more than 8,000 for-profit schools nationwide.
The numbers, disputed by some institutions as being based on faulty or unclear calculations, pushed schools' shares
down sharply premarket as investors weighed how it would translate to the program-level figures on which the rule
would ultimately be based.
Strayer Education Inc.' s stock was off 16%. Shares ofiTI Educational Services Inc. were down 9.6%, DeVry Inc. slid
7.7% and Washington Post- due to its important Kaplan unit -was down about 12% in early trading.
Some for-profit colleges are objecting to U.S. Department of Education data that suggest students are paying back loans
at surprisingly low rates.
Earlier this summer, the department proposed a rule intended to measure how well for-profit schools train students for
gainful employment in a recognized occupation. Late Friday, the department issued its calculations on loan- repayment
rates for more than 8,000 schools in an attempt to preview the rule's potential impact were it to be implemented. Schools
could "pass" based on student loan repayment rates, or by maintaining a debt-to-income ratio below a certain percent.
The schools could face tough new regulations stripping them of access to federal funds if their students are found to have
heavy debt burdens and if they don't land jobs earning enough to handle the debt. The regulation sets a 45% repayment
rate as the threshold to qualify for student aid. Some argue the department is punishing schools for having graduates
enroll in loan-deferment programs that the government itself supports.
Some of the schools are arguing their internal estimates ofloan repayment rates are better than the department's findings
and are expressing frustration with what they say is the agency's unwillingness to share data supporting the calculations.
The rule would also apply to non-profit schools with vocational programs, though the government expects for-profit
schools to bear the brunt of any penalties.
"Community colleges are subject to the rule, but we don't believe that they're going to be impacted by the rule because
the vast majority of community college students do not borrow," said David Bergeron, acting deputy assistant secretary
for policy, planning and innovation at the Department's Office of Postsecondary Education.
Based on Friday's data, Universal Technical Institute Inc., Grand Canyon Education Inc., American Public Education
Inc. and Bridgepoint Education Inc. had the highest repayment rates among publicly traded for-profit schools, all above
the 45% threshold. Corinthian , Washington Post Co.'s Kaplan and ITT were among the lowest performers.
Washington .Post Co., whose Kaplan unit had a weighted average repayment rate of28%, expressed concern Monday
about the implications of the department's data. The company said if program-level repayment rates are similar to the
data provided Friday, a significant number of Kaplan schools could become ineligible for federal student aid, which
"could have a materially adverse effect on the future results of the Company's higher education division."
Shares offer-profit schools sank Monday as investors digested the data, with at least two school operators hitting new
52-week lows.
Strayer Education Inc., considered among the most shielded from the proposed rule because of its large proportion of
students in bachelor's and graduate degree programs and historically low loan default rate, was trading off 15% to
$169.78. Corinthian Colleges Inc. was down 24.8% to $5.01 after reaching a year low of$4.94, ITT Educational
Services Inc. was off 11.7% to $56.80 after hitting a new 52-week low of $54.75 and Capella Education Co. was
down 16.5% to $58.60.
Strayer, which late last month said it believed its programs would clear the department's highest proposed hurdle of loan
repayment by 45% of graduates, scored a 25% school-wide. The company had noted last month that it was difficult to
measure rates exactly because loan consolidation complicates the measure of repayment.
The school said on a conference call early Monday that it would file a Freedom oflnformation Act request to see some
of the data on which the Department based its calculations, calling the data "inaccurate," "nonsensical" and "arbitrary."
"This discrepancy has significant operational, financial , and public policy implications," Strayer said in a statement
Saturday.
Capella Education also questioned the data, saying the 40% repayment rate across its schools was inconsistent with
findings from an internal analysis it had conducted of its larger programs. According to that calculation, the programs
would have a repayment rate above the 45% threshold. Capella said it has requested to see the Department's underlying
data and methodology.
Apollo Group Inc. shares were up 6% as the company's University ofPhoenix posted a repayment rate of 44.2%,
higher than most analysts expected, and Universal Technical Institute shares rose 7.4% to $15.94 as its 52% repayment
rate also pleased investors.
From: Finley Steve
To: Bergerm David
Yuan Georgia
McFadden. Elizabeth
Kyaal James
CC:
Date: 8/16/2010 3:26:50PM
(b)(S)
To: Finley, Steve; Yuan, Georgia; McFadden, Elizabeth; Kvaal, James
(b)(S)
From: Finley, Steve
To: Yuan, Georgia; McFadden, Elizabeth; Bergeron, David; Kvaal, James
Subject: Repayment rate data-- WSJ articles and FOlA requests
(b)(5)
Dow Jones Newswires' Melissa Kom reports:
A number of for-profit colleges may be in more danger than first believed of running afoul of a regulation proposed by
the U.S. Department ofEducation that would force on them harsh penalties for graduating students with high debt loads,
according to data the agency released late Friday.
The department, in an attempt to show some of the rule's potential impact were it to be implemented, posted to its
website late Friday a listing of the fiscal 2009loan repayment rates at more than 8,000 for-profit schools nationwide.
The numbers, disputed by some institutions as being based on faulty or unclear calculations, pushed schools' shares
down sharply premarket as investors weighed how it would translate to the program-level figures on which the rule
would ultimately be based.
Strayer Education Inc.'s stock was off 16%. Shares ofiTT Educational Services Inc. were down 9.6%, DeVry Inc. slid
7.7% and Washington Post- due to its important Kaplan unit - was down about 12% in early trading.
Some for-profit colleges are objecting to U.S. Department of Education data that suggest students are paying back loans
at surprisingly low rates.
Earlier this summer, the department proposed a rule intended to measure how well for-profit schools train students for
gainful employment in a recognized occupation. Late Friday, the department issued its calculations on loan- repayment
rates for more than 8,000 schools in an attempt to preview the rule's potential impact were it to be implemented. Schools
could "pass" based on student loan repayment rates, or by maintaining a debt-to-income ratio below a certain percent.
The schools could face tough new regulations stripping them of access to federal funds if their students are found to have
heavy debt burdens and if they don't land jobs earning enough to handle the debt. The regulation sets a 45% repayment
rate as the threshold to qualify for student aid. Some argue the department is punishing schools for having graduates
enroll in loan-deferment programs that the government itself supports.
Some of the schools are arguing their internal estimates ofloan repayment rates are better than the department's findings
and are expressing frustration with what they say is the agency's unwillingness to share data supporting the calculations.
The rule would also apply to non-profit schools with vocational programs, though the government expects for-profit
schools to bear the brunt of any penalties.
"Community colleges are subject to the rule, but we don't believe that they're going to be impacted by the rule because
the vast majority of community college students do not borrow," said David Bergeron, acting deputy assistant secretary
for policy, planning and innovation at the Department's Office of Postsecondary Education.
Based on Friday's data, Universal Technical Institute Inc., Grand Canyon Education Inc., American Public Education
Inc. and Bridgepoint Education Inc. had the highest repayment rates among publicly traded for-profit schools, all above
the 45% threshold. Corinthian , Washington Post Co.'s Kaplan and ITT were among the lowest performers.
Washington Post Co., whose Kaplan unit had a weighted average repayment rate of 28%, expressed concern Monday
about the implications of the departrnent's data. The company said if program-level repayment rates are similar to the
data provided Friday, a signjficant number of Kaplan schools could become ineligible for federal student aid, which
"could have a materially adverse effect on the future results of the Company's higher education division."
Shares of for-profit schools sank Monday as investors digested the data, with at least two school operators hitting new
52-week lows.
Strayer Education Inc., considered among the most shielded from the proposed rule because of its large proportion of
students in bachelor's and graduate degree programs and historically low loan default rate, was trading off 15% to
$169.78. Corinthian Colleges Inc. was down 24.8% to $5.01 after reaching a year low of$4.94, ITT Educational
Services Inc. was off 11.7% to $56.80 after hitting a new 52-week low of $54.75 and Capella Education Co. was
down 16.5% to $58.60.
Strayer, which late last month said it believed its programs would clear the departments highest proposed hurdle of loan
repayment by 45% of graduates, scored a 25% school-wide. The company had noted last month that it was difficult to
measure rates exactly because loan consolidation complicates the measure of repayment.
The school said on a conference call early Monday that it would file a Freedom of Information Act request to see some
of the data on which the Department based its calculations, calling the data "inaccurate," "nonsensical" and "arbitrary."
"This discrepancy has signjficant operational, financial, and public policy implications," Strayer said in a statement
Saturday.
Capella Education also questioned the data, saying the 40% repayment rate across its schools was inconsistent with
findings from an internal analysis it had conducted of its larger programs. According to that calculation, the programs
would have a repayment rate above the 45% threshold. Capella said it has requested to see the Department's underlying
data and methodology.
Apollo Group Inc. shares were up 6% as the company's University of Phoenix posted a repayment rate of 44.2%,
higher than most analysts expected, and Universal Technical Institute shares rose 7.4% to $15.94 as its 52% repayment
rate also pleased investors.
To: Yuan. Georgia
CC: Wolff. Russell
Finley, Steve
Date: 4/2/2010 9:15:04 AM
Subject: RE: Request for Follow Up Meeting This Week to Discuss Gainful Employment
Attachments: attach 0
(b)(5)
Harold
From: Yuan, Georgia
To: Manheimer, Ann; Jenkins, Harold; Shireman, Bob
Subject: Re: Request for Follow Up Meeting This Week to Discuss Gainful Employment
(b)(5)
To: Harris Miller
Cc: Brian Moran ; Tammy Halligan ; Bergeron, David; Madzelan, Dan; Kanter, Martha; Shireman, Bob; Wolff, Russell;
Jenkins, Harold; Madzelan, Dan; Picoult, Francine; Finley, Steve; Yuan, Georgia; Smith, Kathleen; Arsenault, Leigh
Sent: Fri Apr02 07:56: 15 2010
Harris- from the Office of the Under Secretruy, Bob Shireman, Leigh Arsenault and I will be attending; from the Office
of Postsecondary Education, Dan Madzelan and David Bergeron will be attending, and from the Office of General
Counsel, Harold Jenkins, Steve Finley, Russ Wolff, Steve Finley, and possible, Georgia Yuan, will be attending. We
look forward to hearing your presentation- Ann Manheimer, 260-1488
From: Harris Miller [mailto:HarrisM@career.org]
To: Shireman, Bob; Kanter, Martha; Madzelan, Dan; Bergeron, David
Cc: Brian Moran; Tammy Halligan; Manheimer, Ann
Bob, et.al.: We look forward to the meeting Monday morning at 9 AM at the Department to discuss the gainful
employment issue. Attending as part of the CCA delegation will be, in addition to me, Brian Moran, CCA' s Executive
Vice President for Government Relations, Dr. Jonathan Guryan, University of Chicago, and Dr. Matthew Thompson of
Charles River Associates, the leads on the research we will be presenting, Rebecca Campoverde from Kaplan, Anthony
Guida from EDMC, and Tom Babel from Devry.
If you could please let me know who will be in attendance from the Department, that would be appreciated.
Attached you will find three documents. The first is the Executive Summary of the research findings. I will send you the
full report tomorrow, Friday. Last minute editing on the full report was delayed by the Passover holiday.
Second is the proposal CCA is putting forward as an alternative to the gainful employment proposal put forth by the
Department during the negotiated rulemaking.
Third is a document that summarizes the extensive tools the government already has to take actions against "bad actors"
in our sector.
Please let me know if you have any questions or comments. I look fmward to a productive conversation Monday. Enjoy
the spectacular weather.
Harris
From: Shireman, Bob [mailto:Bob.Shireman@ed.gov]
Sent: Monday, March 29, 2010 10:48 AM
To: Harris Miller; Kanter, Martha; Madzelan, Dan; Bergeron, David
Work with Ann Manheimer on arranging the meeting. Please send your research and alternative prior to the meeting so
we can get concrete and specific in the discussions.
Thanks,
-Bob
To: Kanter, Martha; Shireman, Bob; Madzelan, Dan; Bergeron, David
Cc: Brian Moran; Tammy Halligan
Subject: Request for Follow Up Meeting This Week to Discuss Gainful Employment
Martha/Bob/Dan/David:
CCA would like to have a follow on meeting with you this week to the one Brian Moran and I had with Dan and David
ten days ago to discuss a) the results of our research (which was not complete when we met) on the impact of the
Department's gainful employment proposal on students in higher education, and b) an alternative (which we discussed in
general concept with Dan and David) to the Department ofEducation proposal. We can make ourselves available at
almost any time starting tomorrow. Please let me know whom I should contact to arrange a meeting. Thanks in advance.
Harris
*****************************************************************
Harris N. Miller
CEO/President
Career College Association
1101 Connecticut Avenue, NW, Suite 900
harri sm@career.org
+ 1 202 336 6754
Executive Assistant: Jackie McWilliams
j ack:i em@career. org
+ 1 202 336 6706
www. career.org
l(b)(5)
Sent: Monday, March 29, 2010 2: 17 PM
From: Yuan. Georgia
To: Manheimer, Ann
Madzelan, Dan
Bergeron, David
Shireman Bob
Ranis Miller
Jenkins. HarQld
W Q]ft: Russell
CC:
Date: 3/29/2010 2:41:00 PM
Subject: RE: Gainful Employment
To: Madzelan, Dan; Bergeron, David; Shireman, Bob; Hanis Miller; Yuan, Georgia; Jenkins, Harold; Wolff, Russell
Subject: Gainful Employment
When: Monday, April OS, 2010 9:00 AM-10:00 AM (GMT-05:00) Eastern Time (US & Canada).
Where: LBJ 7E312 or call in
(b)(5)
To: Manheimer, Ann
Yuan Georgia
CC: Srureman, Bob
Date: 4/2/2010 9:24:08 AM
Sub.iect: RE: Request for Follow Up Meeting This Week to Discuss Gainful Employment
(b)(5)

To: Yuan, Georgia
Cc: Jenkins, Shireman, Bob
Subject: RE: Request for Follow Up Meeting Tllls Week to Discuss Gainful Employment
(b)(5)
From: Yuan, Georgia
To: Manheimer, Jenkins, Shireman, Bob
(b)(5)
To: Harris Miller
Cc: Brian Moran Tammy Halligan Madzelan, Kanter, Martha; Shireman, Wolff,
Jenkins, Harold; Madzelan, Picoult, Finley, Yuan, Smith, Arsenault, Leigh
Sent: Fri Apr02 07:56:15 2010
Harris- from the Office of the Under Secretary, Bob Shireman, Leigh Arsenault and I will be attending; from the Office
look forward to hearing your presentation - Ann Manheimer, 260-1488
Sent: Thursday, April 01 , 2010 6:04PM
lf you could please let me know who will be in attendance from the Department, that would be appreciated.
Department during the negotiated rulemak:ing.
in our sector.
Please let me know if you have any questions or comments. I look forward to a productive conversation Monday. Enjoy
Hams
Thanks,
-Bob
Department' s gainful employment proposal on students in higher education, and b) an alternative (which we discussed in
general concept with Dan and David) to the Department ofEducation proposal . We can make ourselves available at
Harris
*****************************************************************
Harris N. M:iller
CEO/President
hanism@career.org
+ 1 202 336 6754
j acki em@career. org
+1 202 336 6706
www.career.org
To: Woiff,Russell
CC: Finley. Steve
Date: 4/2/2010 9:37:20 AM
[(b)(5)
From: Wolff, Russell
To: Jenklns, Harold
Cc: Finley, Steve
Subject: RE: Request for Follow Up Meeting Trus Week to Discuss Gainful Employment
(b)(5)
To: Wolff, Russell
Cc: Finley, Steve
Subject: FW: Request for Follow Up Meeting Trus Week to Discuss Gainful Employment
(b)(5)
Harold
To: Manheirner, Ann
Cc: Yuan, Georgia; Wolff, Russell; Finley, Steve
(b)(5)
Harold
Sent Friday, April 02, 2010 8:56AM
To: Hanis Miller
Cc: Brian Moran; Tammy Halligan; Bergeron, David; Madzelan, Dan; Kanter, Martha; Shireman, Bob; Wolff, Russell;
Jenkins, Harold; Madzelan, Dan; Picoult, Francine; Finley, Steve; Yuan, Georgia; Smith, KathJeen; Arsenault, Leigh
Subject: RE: Request for Follow Up Meeting Ths Week to Discuss Gainful Employment
Sent Thursday, April 01 , 2010 6:04PM
employment issue. Attending as part of the CCA delegation will be, in addition to me, Brian Moran, CCA's Executive
in our sector.
Harris
Thanks,
-Bob
Harris
*****************************************************************
Harris N. Miller
CEO/President
11 01 Connecticut A venue, NW, Suite 900
harri sm@career.org
+ 1 202 336 6754
j ackiem@career. org
+1 202 336 6706
www.career.org
To: Manheimer, Ann
CC: Yuan. Georgia
Wolff. Russell
Finley Steve
Date: 4/2/2010 9:02:50 AM.
(b)(5)
Harold
To: Hanis Miller
ofPostsecondaty Education, Dan Madzelan and David Bergeron will be attending, and from the Office of General
Counsel, Harold Jenkins, Steve FinJey, Russ Wolff, Steve Finley, and possible, Georgia Yuan, will be attending. We
in our sector.
Harris
Sent: Monday, March 29,2010 10:48 AM
Thanks,
-Bob
From: Harris Miller [ mailto:HarrisM@career.org]
To: Kanter, Shireman, Madzelan, Bergeron, David
almost any time starting tomorrow. Please let me know whom l should contact to arrange a meeting. Thanks in advance.
Hams
*****************************************************************
Hams N. Miller
CEO/President
harrism@career.org
+ 1 202 336 6754
+ 1 202 336 6706
www.career.org
From: Manheimer Ann
To: Yum Georgia
CC: Jenkins. Harold
Srureman, Bob
Date: 4/2/2010 9:21:38 AM
Sub,iect: RE: Request for Follow Up Meeting This Week to Discuss Gainful Employment
(b)(5)
From: Yuan, Georgia
Subject Re: Request for Follow Up Meeting Trus Week to Discuss Gainful Employment
(b)(5)
To: Harris Miller
Sent: Fri Apr02 07:56:15 2010
Subject: RE: Request for Follow Up Meeting Thi s Week to Discuss Gainful Employment
Charles River Associates, the leads on the research we will be presenting, Rebecca Can1poverde from Kaplan, Anthony
in our sector.
Harris
Thanks,
-Bob
Subject Request for Follow Up Meeting This Week to Discuss Gainful Employment
Department' s gainful employment proposal on students in higher education, and b) an alternative (which we di scussed in
generaJ concept with Dan and David) to the Department ofEducation proposaJ. We can make ourselves available at
aJmost any time starting tomorrow. Please let me know whom I should contact to arrange a meeting. Thanks in advance.
Harris
*****************************************************************
Harris N. Miller
CEO/President
harri sm@career.org
+ 1 202 336 6754
+ 1 202 336 6706
www. career.org
From: Manheimer Ann
To: Jenkins, Harold
CC: Yuan. Georgia
Wolff. Russell
Finley Steve
Date: 4/2/2010 9:04:44 AM.
Thanks
To: Manheimer, Ann
Cc: Yuan, Georgia; Wolff, Russell; Finley, Steve
Subject: RE: Request for Follow Up Meeting Thi s Week to Discuss Gainful Employment
(b)(5)
Harold
To: Ranis Miller
ofPostsecondary Education, Dan Madzelan and David Bergeron will be attending, and from the Office of General
lf you could please let me know who will be in attendance from the Department, that would be appreciated.
in our sector.
Harris
Subject: RE: Request for Follow Up Meeting Th.is Week to Discuss Gainful Employment
Work with Ann Manheimer on ananging the meeting. Please send your research and alternative prior to the meeting so
Thanks,
-Bob
Sent: Monday, March 29,2010 10:04 AM
To: Kanter, Shireman, Madzelan, Dan; Bergeron, David
Cc: Brian Tammy Halligan
general concept with Dan and David) to the Department ofEducation proposal .. We can make ourselves available at
Harris
*****************************************************************
Harris N. M:iller
CEO/President
harrism@career.org
+ l 202 336 6754
j ack:i em@career. org
+ 1 202 336 6706
www.career.org
From: Shireman Bob
To: Yum Georgia
CC:
Date: 4/2/2010 9:16:04 AM
l(b)(6)
[(b)(S)
From: Yuan, Georgia
Sent: Friday, April 02, 2010 9: 10AM
(b)(5)
To: Harris Miller
Sent: Fri Apr02 07:56:15 2010
Harris - from the Office of the Under Secretary, Bob Shireman, Leigh Arsenault and I will be attending; from the Office
in our sector.
Harris
Subject: RE: Request for Follow Up Meeting Ths Week to Discuss Gainful Employment
Thanks,
-Bob
From: Harris Miller [ mailto:HanisM@career.org]
To: Kanter, Shireman, Madzelan, Bergeron, David
Cc: Brian Tammy Halligan
general concept with Dan and David) to the Department of Education proposal. We can make ourselves available at
Harris
*****************************************************************
Harris N. Miller
CEO/President
hanism@career.org
+ 1 202 336 6754
+ 1 202 336 6706
www.career.org
To: Jenkins, Harold
CC: Finley. Steve
Date: 4/2/2010 9:34:36 AM
(b)(5)
To: Wolff, Russell
Cc: Finley, Steve
Subject: FW: Request for Follow Up Meeting This Week to Discuss Gainful Employment
(b)(5)
Harold
To: Manheimer, Ann
Cc: Yuan, G e o r g i ~ Wolff, Russell; Finley, Steve
(b)(5)
Harold
Sent: F1iday, April 02, 2010 8:56AM
To: Harris Miller
Sent: Thursday, Apri 1 01, 201 0 6:04 PM
in our sector.
Harris
Thanks,
-Bob
Hams
*****************************************************************
Ranis N. Miller
CEO/President
harrism@career.org
+ l 202 336 6754
j ackiem@career. org
+ 1 202 336 6706
www. career.org
From: Yuan Georgia
To: Manheimer, Ann
Jenkins. Harold
Shireman, Bob
CC:
Date: 4/2/2010 9:09:48 AM.
(b)(S)

To: Hanis Miller
Cc: Brian Moran; Tammy Halligan ; Bergeron, David; Madzelan, Dan; Kanter, Martha; Shireman, Bob; Wolff, Russell ;
Sent: Fri Apr 02 07:56:15 2010
Ranis- from the Office of the Under Secretary, Bob Shireman, Leigh Arsenault and I will be attending; from the Office
ofPostsecondary Education, Dan Madzelan and David Bergeron will be attending, and from the Office of General
Counsel, Harold Jenkins, Steve Finley, Russ W ol:ff, Steve Finley, and possible, Georgia Yuan, will be attending. We
Cc: Brian Moran; Tammy Halligan; Manheimer, Pu1n
in our sector.
Harris
Thanks,
-Bob
Harris
*****************************************************************
Harris N. Miller
CEO/President
110'1 Connecticut Avenue, NW, Suite 900
harrism@career.org
+ 1 202 336 6754
jackiem@career.org
+1 202 336 6706
www. career.org
(b)(5)
Sent: Thursday, February 25, 2010 12:56 PM
To: Finley, Steve
Cc: Marinucci, Fred
Subject: RE: request for meeting
(b)(5)
From: Finley, Steve
To: Jenkins, Harold; Sann, Ronald
Cc: Wolff, Russell; Woodward, Jennifer
(b)(S)
From: Finley, Steve
To: Jenkins, Harold
CC: Marinucci. Fred
Date: 2/25/2010 1:58:04 PM
To: Yuan, Georgia; Finley, Steve; Sann, Ronald
Cc: Wiegner, Ashley; Rose, Charlie; Miceli, Julie; Wolff, Russell; Woodward, Jennifer
(b)(5)
From: Yuan, Georgia
To: Jenkins, Harold; Finley, Steve; Sann, Ronald
Cc: Wiegner, Ashley; Rose, Charlie; Miceli, Julie
Subject: FW: request for meeting
(b)(5)
From: Broff, Nancy [mailto:BroftN@DicksteinShapiro.COM]
Sent: Thursday, February 25, 201010:25 AM
To: Rose, Charlie
Cc: Yuan, Georgia; Miceli, Julie; Wiegner, Ashley
Hi Charlie-
I am writing to renew my request for a meeting. The meeting would be
with the CEOs of three higher education companies:
Daniel Hamburger ofDeVry
Clark Elwood ofiTT Educational Services, Inc.
Andrew Clark ofBridgepoint Education
They would like to meet on March 11 if you have an availability that
day. The agenda would be to discuss some of the issues from the
recently completed negotiated rulemaking.
Thanks so much,
Nancy
JRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the JRS, we inform you that any tax
advice contained in this communication (including any attachments) was not intended or written to be used, and cannot
be used, for the purpose of (i) avoiding penalties under the .Internal Revenue Code or (ii) promoting, marketing or
recommending to another party any transaction or matter addressed herein.
From: Rose, Charlie [mailto:Charlie.Rose@ed.gov]
Sent: Monday, February 15, 2010 10:52 PM
To: Broff, Nancy
Nancy: Thanks. Let me check and I will follow-up with you regarding
the meeting. By the way, even by Chicago standards, the DC snow is
tough to deal with. Charlie
From: Broff, Nancy [mailto:BroffN@DicksteinShapiro.COM]
Sent: Tuesday, February 09, 2010 1 1:54AM
To: Rose, Charlie
Subject: request for meeting
Hello Charlie -
I hope you are doing well in all this snow. I guess you Chicagoans have
an advantage in the area of coping with real winter.
I am writing to request a meeting with you for the CEO of my client,
Bridgepoint Education, lnc. Andrew Clark will be in town on the morning
ofFebruary 25th and would very much appreciate an opportunity to
discuss some concerns arising out of the recent negotiated rulemaking
sessions. Bridgepoint owns two institutions: Ashford University and
University of the Rockies. I will be happy to provide some background
information on both universities in advance of the meeting. Those of us
in the higher education bar very much appreciated your openness to
hearing from members of the community, and this is an important topic on
which I think it is important for you to hear directly from a school
official.
In the interest of full disclosure, I want to mention that Ashford is in
the midst of an OIG audit (not an investigation), but we have not yet
received a draft report and would not plan to discuss that at this
meeting.
I hope you can make time in your schedule for this meeting.
Best regards,
Nancy
IRS Circular 230 Disclosure: To ensure compliance with requirements
imposed by the IRS, we inform you that any tax advice contained in this
communication (including any attachments) was not intended or written to
be used, and cannot be used, for the purpose of (i) avoiding penalties
under the Internal Revenue Code or (ii) promoting, marketing or
recommending to another party any transaction or matter addressed
herein.
This e-mail message and any attached files are confidential and are
intended solely for the use of the addressee(s) named above. This
communication may contain material protected by attorney-client, work
product, or other privileges. If you are not the intended recipient or
person responsible for delivering this confidential communication to the
intended recipient, you have received this communication in error, and
any review, use, dissemination, forwarding, printing, copying, or other
distribution of this e-mail message and any attached files is strictly
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From: Finley Steve
To: Jenkins. Harold
Sann. Ronald
CC: WoLff, Russell
Woodward. Jetmifer
Date: 2/25/2010 L53:42PM
Sub.iect: RE: request for meeting
(b)(5)
Cc: Wiegner, Ashley; Rose, Charlie; Miceli, Julie; Wolff, Russell ; Woodward, Jennifer
(b)(5)
From: Yuan, Georgia
(b)(5)
From: Broff, Nancy [mailto:BroflN@DicksteinShapiro.COM]
Sent: Thursday, February 25, 2010 10:25 AM
To: Rose, Charlie
H.i Charlie-
Daniel Hamburger ofDe Vry
Thanks so much,
Nancy
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we infoiiD you that any tax
be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or
To: Broff, Nancy
tough to deal with. Charlje
Sent: Tuesday, February 09, 2010 11 :54 AM
To: Rose, Charlie
Hello Charlie-
Bridgepoint Education, Inc. Andrew Clark will be in town on the morning
official.
In the interest of :full disclosure, I want to mention that Ashford is in
meeting.
I hope you can make time in your schedule for tlus meeting.
Best regards,
Nancy
herein.
communication that is created, received, or sent on its network. If you
postmaster@dicksteinshapiro. com
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dissemination, forwarding, printing, copying, or other distribution of this e-mail message and any attached files
received, or sent on its network. If you have received this confidential communication in error, please notify the
sender immediately by reply e-mail message and permanently delete the original message.
To: Yuan, Georgia
Finley, Steve
Sann. Ronald
CC: Wie.gner Ashley
Rose Charlie
Miceli Julie
W olfL Russell
Woodward. Jennifer
Date: 2/25/2010 1:50:48 PM
(b)(5)
-----Ori gi nat Message-----
From: Yuan, Georgia
Sent Thursday, February 25, 2010 12:08 PM
Cc: Wiegner, Ashley; Rose, Charlie; Micel i, Julie
(b)(5)
From: Broff, Nancy [mailto:BrofiN@DicksteinShapiro.COM]
Sent Thursday, February 25, 2010 10:25 AM
To: Rose, Charlie
Hi Charlie-
Clark Elwood oflTT Educational Services, Inc.
They would like to meet on March ll if you have an availability that
Thanks so much,
Nancy
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax
Sent Monday, February 15, 2010 10:52 PM
To: Broff, Nancy
Nancy: Thanks. Let me check and I wilJ follow-up with you regarding
Sent: Tuesday, February 09, 2010 11:54 AM
To: Rose, Charlie
Hello Charlie-
University of the Rockies. I wilJ be happy to provide some background
official.
meeting.
Best regards,
Nancy
JRS Circular 230 Disclosure: To ensure compliance with requirements
imposed by the JRS, we inform you that any tax advice contained in this
herein.
postmaster@di ckstei nshapi ro.com
http:/ /www.Dickste.inShapiro. com
- ----- - -----------------------------------------------------------------
dissemination, forwarding, printing, copying, or other distribution ofthis e-mail message and any attached flies
(b)(5)
From: Finley, Steve
To: Jenkins, Harold
Cc: Marinucci, Fred
(b)(5)
To: Finley, Steve
Cc: Marinucci, Fred
From: Finley, Steve
(b)(S)
To: Finl{}y. Steve
CC: Marinucci. Fred
Date: 2/25/2010 1:59:48 PM
From: Jen1jns, IIarold
(b)(S)
From: Yuan, Georgia
(b)(S)
To: Rose, Charlie
IIi Charlie-
Danielliamburger ofDeVry
Thanks so much,
Nancy
To: Broff, Nancy
From: Broff, Nancy [mailto:BrofiN@DicksteinShapiro.COM]
Sent: Tuesday, February 09, 2010 11:54 AM
To: Rose, Charlie
Hello Charlie-
ofF ebruary 25th and would very much appreciate an opportunity to
official.
In the interest offutl disclosure, I want to mention that Ashford is in
meeting.
Best regards,
Nancy
herein.
person responsible for deliveting this confidential communication to the
dist:tibution of this e-mail message and any attached files is strictly
postmaster@di cksteinshapi ro.com
is sttictly prohibited. Dickstein Shapiro reserves the right to monitor any communication that is created,
To reply to our email administrator directly, send an email to postrnaster@dicksteinshapiro.com
To: Finl{}y. Steve
CC: Marinucci. Fred
Date: 2/25/2010 1:55:52 PM
-----Ori ginal Message-----
From: Finley, Steve
(b)(5)
(b){5)
From: Yuan, Georgia
(b)(5)
From: Broff, Nancy [mailto:BroflN@DicksteinShapiro.COM]
To: Rose, Charlie
Subject RE: request for meeting
Hi Charlie-
Daniel Hamburger ofDe V ry
They would like to meet on March ll if you have an availability that
Thanks so much,
Nancy
IRS Clrcular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax
To: Broff, Nancy
To: Rose, Charlie
Hello Charlie-
University of the Rockies. I wilJ be happy to provide some background
official.
meeting.
Best regards,
Nancy
herein.
------------------------------------------------------------------------
received, or sent on its network. lfyou have received this confidential communication in error, please notify the
To: Finley, Stev!(
Sann. Ronald
CC: WoLff, Russell
Woodward, Jetmifer
Marinucci Fred
Date: 2/25/201 o 1:5 5:22PM
l(b)(5)
From: Finley, Steve
Sent Thursday, February 25, 20'1 0 12:54 PM
(b)(5)
To: Yuan, Georgia; FinJey, Steve; Sann, Ronald
Cc: Wiegner, Ashley; Rose, Charlie; Miceli, Julie; Wolff, Russell ; Woodward, Jennifer
(b)(5)
From: Yuan, Georgia
Cc: Wiegner, Ashley; Rose, Charlie; Miceli, JuJie
(b)(5)
y
To: Rose, Charlie
Hi Charlie-
Daniel Hamburger ofDe V ry
Thanks so much,
Nancy
lRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the lRS, we inform you that any tax
To: Braff, Nancy
Nancy: Thanks. Let me check and I wilJ follow-up with you regarding
To: Rose, Charlie
Hello Charlie-
sessions. B1idgepoint owns two institutions: Ashford University and
hearing fiom members of the community, and tills is an important topic on
which I trunk it is important for you to hear directly from a school
official.
received a draft report and would not plan to discuss that at tills
meeting.
I hope you can make time in your schedule for tills meeting.
Best regards,
Nancy
IRS Circular 230 Di sclosure: To ensure compliance with requirements
imposed by the IRS, we inform you that any tax advice contained in tills
herein.
Tills e-mail message and any attached files are confidential and are
intended solely for the use of the addressee(s) named above. Tills
person responsible for delivering tills confidential communication to the
intended recipient, you have received tills communication in error, and
dissemination, forwarding, printing, copying, or other distribution ofthis e-mail message and any attached flies
sender immediately by reply e-mail message and peimanently delete the original message.
From: Yuan, Georgia
To: Jenkins. Harold
CC:
Date: 2/25/2010 1:53:50 PM
l(b)(S)
(b)(5)
From: Yuan, Georgia
Cc: Wiegner, Ashley; Rose, Charlie; Miceli, Jul1e
(b)(5)
To: Rose, Charlie
H Charlie-
Thanks so much,
Nancy
To: Broff, Nancy
Sent: Tuesday, February 09, 2010 ll :54 AM
To: Rose, Charlie
Hello Charlie-
official.
meeting.
Best regards,
Nancy
herein.
priviJeges. If you are not the intended recipient or person responsible for delivering this confidential
received, or sent on its network. If you have received this confidential communication in error, please notify the
To reply to our email administrator directly, send an email to postrnaster@dicksteinshapiro.com
(b)(5)
From: Kvaal, James
Sent: Monday, August 16, 2010 9:17AM
To: K vaal, James
Kanter. Martha
Yuan, Georgia
CC:
Date: 8/16/2010 9:22:18 AM
Subject: RE: Reuters on Strayer call
To: Kanter, Martha; Yuan, Georgia; Bergeron, David
Subject: Reuters on Strayer call
UPDATE 2-Strayer, Capella dispute DoE data on loan repayment
12:00amEDT
Mon Aug 16, 2010 8:47am EDT
* Cos say DoE data differs significantly from own analysis
* Cos say they still qualify for federal aid
*Strayer, Capella shares fall in premarket trade (Recasts throughout; adds comments from Capella, Apollo)
Aug 16 (Reuters)- Strayer Education Inc (STRA.O) and Capella Education (CPLA.O) questioned the U.S.
Department of Education's findings on loan repayment rates regarding the proposed gainful employment regulation, and
said their programs still qualify for federal aid tbr students.
Strayer said the data released by the DoE on Strayer University was significantly at odds with its own analysis.
"This discrepancy has significant operational, financial, and public policy implications, and we would like to address it
immediately," Strayer said in a ftling with the U.S. Securities and Exchange Commission.
On Friday, the DoE released data on estimated student loan repayment rates of some for-profit schools, as part of a
drive to tighten oversight of the industry. [ID:nN13232515]
The schools have to meet a proposed federal threshold of 45 percent repayment to be fully eligible for federal aid.
Strayer University averaged in the low twenties, placing it in the ineligible zone by that metric.
Capella, which the DoE said has a 40 percent repayment rate, concurred with Strayer and said its programs would
continue to qualify for federal student aid participation and have a repayment rate of over 45 percent.
Both the companies said they will reach out to the DoE to fmd out the data and methodology used in its calculation of the
repayments rates.
According to data released on Friday, different locations ofpeerDeVry Inc's (DV.N) DeVry University averaged
around 40 percent, while Washington Post Co's (WPO.N) Kaplan programs and Corinthian Colleges' (COCO.O)
Everest colleges and institutes averaged in the low twenties.
Shares of Arlington, Virginia-based Strayer were trading down 5 percent at $189.90 before the bell. The shares, which
closed at $200.01 Friday on Nasdaq, have fallen about 31 percent since their lifetime high in April.
Capella shares were down about I percent at $69.24. They closed at $70.20 on Nasdaq. Corinthian Colleges shares
were down about 9 percent at 6.08.
The stocks have been impacted due to the uncertainty regarding the proposed gainful employment regulation.
Separately, sector bellwether Apollo Group (APOL.O) said its University of Phoenix has received a letter from the
Higher Learning Commission (HLC) requiring it to provide some information and evidence of its compliance with HLC
accreditation standards.
"The letter indicates that if the response by University ofPhoenix is unsatisfactory, HLC may impose additional
monitoring or sanctions at its meeting in November 2010," Apollo said in a regulatory filing.
The HLC letter relates to an investigation on for-profit schools' enrollment and recruitment practices.
Apollo shares were up 2 percent at $39.80 in premarket trade. (Reporting by A.Ananthalakshmi and Megha Mandavia
in Editing by Maju Samuel)
From: Finley Steve
To: Siegel, Brian
CC:
Burton. Vanessa
Jenkins, Harold
Marinucci Fred
Morelli, Denise
Sann Ronald
Scaniffe Dawn
Vamovitsky, Natasha
Wanner, Sarah
Wolff, Russell
Woodward Jennifer
Date: 5/4/2010 8:05:18 AM
Subject: RE: Set your TIVO or DVR --Frontline on PBS takes on For-profit higher ed
Nonresponsive
Tenor OfF or-Profit School Discussion Gets Toned Down
By Melissa Kom
OfDOW JONES NEWSWIRES
NEW YORK (Dow Jones)--This week's sell-off in for-profit school stocks, prompted by a report of a U.S.
Department ofEducation official's speech, may have been overblown, some analysts say now that they have read a full
transcript of the comments.
The sector's shares fell sharply Thursday after trade Web site Inside Higher Ed reported that Robert Shireman, deputy
undersecretary for education, spoke harshly of market-funded colleges at a meeting of state school administrators and
accreditors Wednesday. The article, citing sources at the meeting, said Shireman compared the schools to Wall Street
firms whose actions helped cause the recent financial crisis. Inside Higher Ed, which didn't have a reporter at the
meeting, attempted to confirm the comments with Education Department officials, who declined comment for the article.
Shireman did make that comparison, according to a transcript of his speech, which analysts believe was relatively even-
handed and wide-ranging. He also said regulators could do abetter job. Shireman devoted much of his speech,
delivered at the National Association of State Administrators and Supervisors ofPrivate Schools meeting, to proposed
changes in rules governing all of higher education.
The Inside Higher Ed article sparked a nearly universal sell-off in higher-education shares, but some recovered ground
Friday. Career Education Corp. (CECO), which fell more than 12% Thursday, was recently trading up 1.1% to $29.59.
ITT Educational Services Inc. (ESI), which lost 6.6% the previous day, was off a fraction in recent trading at $102.78.
Apollo Group Inc. (APOL), which fell 6.1% Thursday, was up 0.4% at $57.98.
Analysts who have read both Inside Higher Ed's report and a transcript of Shireman's speech say the comments were
mostly in line with his earlier stance, which has generally accepted the role offer-profit schools in the Obama
administration's plan to increase access to higher education.
Doug Lederman, editor of Inside Higher Ed and author of the article, said the story "made pretty clear that it was based
on accounts from people in the room. There was no question that they interpreted his comments in a certain way."
Lederman has heard a recording of the full speech since publishing the article.
"Shireman was laying out a case for greater government regulation given increased investments in Pell Grants," Wedbush
Securities analyst Ariel Sokol said in an email message after reviewing the meeting transcript. "He seemed amenable to
forming bridges with the sector."
Shireman commended the schools for "making sure that there was capacity to be able to serve additional students"
during the recession, according to a transcript provided by Career Education Review. Shireman cited year-over-year
percentage increases in Pel! grant funds for 11 publicly traded school companies, including Corinthian Colleges Inc.
(COCO), DeVry Inc. (DV), and American Public Education Inc. (APEI).
Most for-profit schools derive the majority of their revenue from federal student aid.
A Department of Education spokesman reiterated Shireman's comments, saying in an emailed statement: "For-profit
colleges play a critically important role in helping to ensure so many Americans have access to education and training tl1at
can improve their job prospects and lives."
To be sure, Shireman did liken the relationship between schools and accrediting groups to that between banks and
ratings agencies, which have an "inherent conflict of interest," as the agencies are paid by the companies they are
supposed to regulate.
"Are there regulators in the room who feel like you do have the analytical firepower you need to assess what is going on
with the entities you regulate in higher education," Shireman asked. "I don't think we feel we have the firepower we
need."
Lederman said the speech was "a much strongerindictmentofthesystem ofhighereducation accreditation than ofthe
sector."
Trace Urdan of Signal Hill Capital Group wrote in a note to clients, regarding the full transcript, that Shireman's "tone in
general is much less severe" toward schools specifically. "He presents as a reasonable person struggling with
accountability gaps that he perceives exist in the system."
According to the transcript, Shireman devoted a portion of his speech to detailing the process by which the Department
ofEducation formulates new rules governing higher education, known as negotiated rulemak:ing. He stressed that there
were productive discussions on many fronts, though he said college representatives weren't particularly constructive
when it came to a measure to quantify how well the schools prepare students for "gainful employment" in a recognized
occupation.
Concerns over that proposal have upended the for-profit school industry over the past few months, with a trade group
estimating the government's early version would displace hundreds of thousands of students as their programs lose
access to federal funds. During a question-and-answer session, Shireman said there is no final proposal yet, and he is
open to suggestions to ensure the rule is fair.
-By Melissa Kom, Dow Jones Newswires; 212-416-2271; melissa.kom@dowjones.com
From: Siegel, Brian
Sent: Tuesday, May 04, 2010 7:54AM
To: Burton, Vanessa; Finley, Steve; Jenkins, Harold; Marinucci, Fred; Morelli, Denise; Sann, Ronald; Scaniffe, Dawn;
Vamovitsky, Natasha; Wanner, Sarah; Wolff, Russell; Woodward, Jennifer
Subject: Set your TIVO or DVR --Frontline on PBS takes on For-profit higher ed
From the schedule on-line it looks like WETA is showing it tonight at 10 and MPT has it tonight at 10:30.
Public TV Takes on For-Profit Colleges
Airing tonight on PBS at 9 p.m. is Frontline's College, Inc., an hour-long look at for-profit higher education, its investors,
and the U.S. Department ofEducation's efforts to regulate it. For close readers of Inside Higher Ed, the documentary
won't bring much new to the table. It tells stories of students plunging deep into debt and unable to get jobs, touches on
traditional academe's criticisms, and looks at the negotiated rule-making process aimed at reining in abuses of the Title
IV federal financial aid system, with a particular focus on career colleges.
But it is likely to gamer lots of attention-- from ordinary Americans, think tankers and Congressional staffers- and to
stir up press releases, editorials and conversations that will skew against the for-profit institutions just as the Education
Department ratchets up its criticisms of the sector. The storyline is more balanced than many major-media examinations
of for-profit colleges, but it's still a less-than-favorable depiction of the sector.
(b)(5)
Sent: Thursday, January 07, 2010 1:17PM
From: Finley Steve
To: Jenkins. Harold
Marinucci. Fred
WoLff, Russell
Woodward, Jetmifer
Sann, RDnald
CC:
Date: l/7 /2010 2:28:26PM
Subject: RE: UOP meeting
To: Marinucci, Wolff, Woodward, Finley, Sann, Ronald
Subject: FW: UOP meeting
Importance: High
(b)(5)
Harold
From: Shireman, Bob
To: Jenkins, Harold
Subject: UOP meeting
Importance: High
(b)(5)
From: Julie Shroyer
To: Shireman, Bob
Sent: Thu Jan 07 11:54:23 2010
Subject: Hello and Meeting Request
Dear Bob,
I hope the new year is treating you well. Just left you a voice mail message but realize it may be easier to send you a note
via email. Nonresponsive

As I indicated in my voice mail, I would also like to submit a formal meeting request for Apollo. We are hoping that you
may have time in your schedule sometime over the next few weeks. Here are the specifics:
Meeting Participants:
Greg Cappelli, CEO, Apollo
Terri Bishop, DirectorNice President External Affairs, Apollo
Julie Shroyer, Sr VP, Wheat Government Relations (consultant to Apollo/University ofPhoenix)
Purpose:
To discuss ideas for implementing various student/consumer protections (e.g., related to borrowing practices,
disclosures, etc.) and the technology that Apollo is developing to support compliance and academic quality and
innovation.
When:
Preferably as soon as possible or within the next few weeks.
Thank you so much for your consideration of the request. I look forward to hearing from you and seeing you soon.
Best,
Julie
Julie E. Shroyer
SeniorVP
Wheat Government Relations
1201 S. Eads Street, Suite Two
Arlington, VA 22202
(703) 271-8760
jshroyer@wheatgr.com
From: Finley Steve
To.: Woodward, Jennifer
CC:
Date: 1/7/20102:38:18PM
To: Finley, Jenkins, Mari nucci, Wolff, Sann, Ronald
(b}(5}
From: Finley, Steve
Sent Thursday, January 07, 2010 1:28PM
To: Jenkins, Marinucci, Wolff, Woodward, Sann, Ronald
(b)(5}
From: Jen}jns, Harold
To: Marinucci, Fred; Wolff, Russell; Woodward, Jennifer; Finley, Steve; Sann, Ronald
Importance: I-Iigh
(b)(5)
Harold
From: Shireman, Bob
To: Jenkins, Harold
Importance: I-Iigh
l(b)(5)
From: Julie Shroyer
To: Shireman, Bob
Sent: Thu Jan 07 11:54:23 2010
Dear Bob,
I hope the new year is treating you well . Just left you a voice mail message but realize it may be easier to send you a note
via email.
Nonresponsive
Nonresponsi
ve
.
Q r"OQ
As I indicated in my voice mail, I would also li ke to submit a formal meeting request for Apollo. We are hoping that you
Greg Cappelli , CEO, Apollo
Terri Bishop, Director/Vice President External Affairs, Apollo
Julie Shroyer, Sr VP, Wheat Government Relations (consultant to Apollo/University of Phoenix)
Purpose:
innovation.
When:
Best,
Julie
Julie E. Shroyer
Senior VP
Arlington, VA 22202
(703) 271-8760
(b)(S)
To: Finley, Steve; Wolff, Russell
From: Finley, Steve
From: Finley Steve
Wolff Russell
CC:
Date: 1/7/2010 2:46:22 PM
To: Finley, Steve; Jenkins, Harold; Marinucci, Fred; Wolff, Russell; Sann, Ronald
(b)(S)
(b)(5)
From: Finley, Steve
To: Jenkins, Harold; Marinucci, Fred; Wolff, Russell ; Woodward, Jennifer; Sann, Ronald
(b)(5)
To: Marinucci, Fred; Wolff, Russell; Woodward, Jennifer; Finley, Steve; Sann, Ronald
Importance: High
(b)(5)
Harold
From: Shireman, Bob
To: Jenkins, Harold
Importance: High
(b)(5)
From: Julie Shroyer
To: Shireman, Bob
Sent: Thu Jan 07 11:54:23 2010
Dear Bob,
via email. i<b)(6); (b)(7(C)
(b)(6); (b)(7(C)
Purpose:
innovation.
When:
Best,
Julie
Julie E. Shroyer
SeniorVP
Arlington, VA 22202
(703) 271-8760
j shroyer@wheatgr.com
l(b)(S)
From: Sann, RonaJd
To: Jenkins, Harold
To.: Sann. Ronald
CC: Marinucci. Fred
Finley. Steve
Wolff Russell
Woodward, Jennifer
Date: 1/7/2010 4:59:22 PM
Cc: Marinucci, Fred; Finley, Steve; Wolff, Russell; Woodward, Jennifer
(b)(5)
Sent: Thursday, January 07, 2010 1 : 17 PM
To: Marinucci, Fred; Wolff, Russell; Woodward, Jennifer; Finley, Steve; Sann, RonaJd
Subject FW: UOP meeting
Importance: High
(b)(5)
Harold
From: Shireman, Bob
To: Jenkins, Harold
Importance: High
l(b)(5)
From: Julie Shroyer
To: Shireman, Bob
Sent: Thu Jan 07 11:54:23 2010
Dear Bob,
via emaiJ. jNonresponsive
1",,.,,,,,. I
I
Purpose:
innovation.
When:
Best,
Julie
Julie E. Shroyer
SeciorVP
Arlington, VA 22202
(703) 271-8760
(b)(5)
Ron
From: Sann, Ronald
To.: Jenkins. Harold
CC: Marinucci. Fred
Finley. Steve
Wolff Russell
Woodward, Jennifer
Date: 1/7/2010 3:05:16PM
To: Marinucci, Wolff, Woodward, Finley, Sann, Ronald
Importance: High
(b)(5)
Harold
From: Shireman, Bob
To: Jenkins, Harold
Importance: High
(b)(5)
From: Julie Shroyer
To: Shireman, Bob
Sent: Thu Jan 07 11:54:23 2010
Dear Bob,
I hope the new year is treating you well . Just left you a voice mail message but realize it may be easier to send you a note
via email. INonresponsive
I
Greg Cappelli , CEO, Apollo
Purpose:
innovation.
When:
Thank you so much for your consideration of the request. I look fmward to hearing from you and seeing you soon.
Best,
Julie
Julie E. Shroyer
SeniorVP
Arlington, VA 22202
(703) 271-8760
(b)(5)
Finley, Steve
Jenkins, Harold
Marinucci Fred
Sann, RDnald
CC:
Date: l/7/2010 3:02:44 PM
To: Finley, Steve; Jenkins, Harold; Marinucci, Fred; Wolff, Russell; Sann, Ronald
Subject RE: UOP meeting
(b)(5)
From: Finley, Steve
To: Jenkins, Harold; Marinucci, Fred; Wolff, Russell; Woodward, Jennifer; Sann, Ronald
(b)(5)
(b)(5)
From: Jenkins, Ilarold
To: Marinucci , Fred; Wolff, Russell; Woodward, Jennifer; Finley, Steve; Sann, Ronald
Importance: Iligh
(b)(5)
Ilarold
From: Shireman, Bob
To: Jenkins, Ilarold
Importance: H.igh
(b)(5)
From: Julie Shroyer
To: Shireman, Bob
Sent: Thu Jan 07 11:54:23 2010
Dear Bob,
I hope thP. nP.w van a . .buLI:ealize..i.t:.lnaY..h.e..easi.erJ:o...&erui.lmu.ano!f
. , !Nonresponsive
vta emrul j
Nonresponsive
As I illdicated in my voice mail, I would also like to submit a formal meeting request for Apollo. We are hoping that you
Julie Shroyer, Sr VP, Wheat Government Relations (consultant to Apollo/University ofPhoenix)
Purpose:
innovation.
When:
Best,
Julie
Julie E. Shroyer
SeniorVP
120 l S. Eads Street, Suite Two
Arlington, VA 22202
(703) 271-8760
j shroyer@wheatgr.com
From: Yuan, Georgia
To: Wolff, Russell
Subject: FW: Visit with Bill
Sent: Friday, September 03, 2010 3:35 PM
To: Yuan, Georgia
(b)(5)
From: Mitchelson, Mary
To: Holland, L i n d a ~ Minor, Robin
Subject: RE: Visit with Bill
(b )(5),(b)(7)(E)
To: Minor, Robin; Mitchelson, Mary
I (b)( 5)' (b )(7)(E)
To.: Yuan. Georgia
CC:
Date: 9/4/2010 9:13:06 AM
Subject: RE: Visit with Bill
From: Joseph D'Amico [mailto:joe.damico@apollogrp.edu]
Sent: Tuesday, August 24, 2010 8:05PM
To: Holland, Linda
Cc: Gregory CappeJlj
Subject: Visit with Bill
Hi Linda .. .I hope you are well. Our Co CEO, Greg Cappelli, who Bill has met, and I would like to set up an
appointment to meet with Bill and review with him some of the things we are doing to address the GAO report and
related matters. If we can get an hour of his time, we would really appreciate it and I know it wou]d be ofva.lue to him,
especially with all that is going on in the sector. We will do our best to meet his dates. Thanks and look forward to
seemg you soon.
Warm regards, Joe
Sent from my iPad
This message is ptivate and confidential. If you have received it in error, please notify the sender and remove it from your
system.
(b)(5)
Stephanie
From: Fine Stephanie
To.: Yuan. Georgia
CC:
Date: 3/26/2010 7:14:04 PM
Subject: Response needed
Attachments: attach 0
attach 1
attach 2
From: Andy Rosen <arosen@kaplan.edu>
To: Plivate -Miller. Anthony
CC: Fine, Stephanie
Rebecca Campoverde
Date: 3/25/2010 11:29:52 PM
Sub,ject: Thanks and next steps
Tony: Thank you for making time to meet with me on Tuesday regarding gainful employment and other issues of
importance to Kaplan's students and postsecondary schools. I am encouraged that you are engaged in the important
policy discussions taking place within the Department and the Administration. As I indicated, your proposal to create a
small sector group to work with you and the Department on gainful employment makes a great deal of sense. I am glad
to help organize such a group and suggest that our staff talk regarding the number of participants, time frame, and
specific dates on which you would be available for such a meeting. I look forward to hearing back from you regarding
proposed next steps.
Again, many thanks for your interest and attention.
Best regards,
Andy
Andrew S. Rosen
Chairman and CEO
Kaplan, Inc.
Tony,
From: McKernan, John <jmckeman@edmc edu>
To: Private- Miller Anthony
CC: Guida. Anthony
Rothkopf, Arthur J
Date: 3/25/2010 9:02:34 PM
Subject: Thank you
Thank you for meeting with Arthur and the gang yesterday! 1 hope it was clear from our meeting that we at EDMC are
supportive of the Department's goals of giving more higher education opportunities for more of our citizens.
We especially appreciated your openness and candor, and we look f01ward to being constructive participants in our future
discussions. I, in particular, believe there is a need for appropriate regulation of our industry given the amount of tax dollars
supporting students in higher education.
We want to make sure, however, that the proposed regulations address identified problem areas in a way that is both
consistent with the authority delegated to the department and narrow enough to avoid unintended consequences which coul
reduce student opportunities and access to legitimate and beneficial programs.
Our SVP for Regulatory Affairs, Tony Guida, and Mark Pelesh from Corinthian will be following up with your office as we
discussed. I will be monitoring the various proposals being considered and am wiJling to be as involved as you would like.
Please feel free to include me in the discussions to the extent you feel I can be helpful .
Again, thanks for your involvement. We hope this will be the beginning of a very important dialogue about how best to
regulate an industry that needs to be a significant provider of post secondary education services if, as the President envision
millions of additional students in America are to have the educational opportunities they need and deserve.
With best wishes.
Jock McKernan
CONFIDENTIALITY NOTICE: This email and any files transmitted with it are confidential and intended solely for the use
of the individual or entity to which they are addressed. If you are not the intended recipient, you may not review, copy or
distribute this message. If you have received this email in error, please notify the sender immediately and delete the original
message. Neither the sender nor the company for which he or she works accepts any liability for any damage caused by an
virus transmitted by this email.
From:
To:
CC:
Date:
Pelesh Mark <MPelesh@cci edu>
Private- Miller, Anthony
)mckeman@edmc.edu'
Massimino, Jack
'Guida, Anthony'
Rothkopf, Atthur J
3/25/2010 7:26:04 PM
Subject: Follow-up Meeting-- Gainful Employment
Thank you again for meeting with us, our colleagues from EDMC, and Arthur Rothkopf yesterday. We are anxious to
follow-up on our constructive discussion regarding the gainful employment proposal under consideration at the
Department. We very much want to take you up on your suggestion for a foll ow-up meeting in the near future to discuss
other approaches to address the concerns that may have led to the development of the gainful employment proposal, as
well as a more comprehensive long range approach to accountability.
As we discussed, it would also be very helpful if we could get a full statement of the problems the Department is seeking
to solve. This will allow us to develop better approaches to address those problems than the gainful employment
proposal, which we continue to believe is deeply flawed, and to make the meeting as productive as possible.
We have reviewed our calendars and suggest the following dates for the follow-up meeting: (April 6, 12, 13, 14, 15, or
16). I will ask Stephanie Johnson at the Chamber to be in touch with your scheduler to make the arrangements. We look
forward to continuing our dialogue.
MarkPelesh
Executive Vice President, Corinthian Colleges
(b)(5)
-Bob
Room 7E310
(202) 260-0101
Fax: 202-205-0063
bob.shireman@ed.gov
From: Shireman, Bob
To: Arsenault, Leigh
l\1anheimer Ann
CC: Yuan. Georgia
Dannenberg, Michael
Date: 4/6/2010 4:59:04 PM
Subject: revised deck
Attachments: GE 2 ppt
(b)(5)
Thanks,
Georgia
Georgia Yuan
From: Yuan, Georgia
To: Kvaal. Jam((s
Bergeron. David
McFadden, Elizabeth
CC:
Date: 9117/2010 1:49:10PM
Sub.iect: Schedule for meetings
Postsecondary and Regulatory Service
LBJ 6E341
202-401-6399
(b)(S)
CONFIDENTIAL
1
(b)(S)
1
(b)(5)
1
(b)(5)
(b){S)
To: Kolotos. John
Sellers. Fred
Harris, Nikki
Finkel, Jessica
CC: Kvaa:l James
Yuan Georgia
Finley Steve
Date: 9/21/2010 3:58:18 PM
Subject: Suggestions.docx
(b)(5)
(b)(5)
(b)(5)
(b)(5)
(b}(5}
Georgia
From: Yuan, Georgia
To.: Cunningham,Peter
CC:
Date: 5/3/2010 3:02:14 PM
Subject: The actors #1
Your Taxes Supporting For-Profit Firms as They Acquire Colleges
Share Business Exchange Twitter Facebookl Email I Print I A A A
By Daniel Golden
March 4 (Bloomberg)-- ITT Educational Services Inc. paid $20.8 million for debt-ridden Daniel Webster College in
June. In return, the company obtained an academic credential that may generate a taxpayer-funded bonanza worth as
much as $1 billion.
ITT Educational, the U.S.'s third-biggest higher education company with a market value of $3.8 billion, may increase it
by 26 percent, or $1 billion, within five years because of the purchase of 1,200-studentDaniel Webster in Nashua, New
Hampshire, according to Michael Clifford, an investor in Del Mar, California, who has participated in the acquisitions of
four nonprofit colleges. At least 75 percent of new revenue would come from access to the more than $100 billion a
year in financial aid the U.S. hands out to college students, he said.
Key to tapping that money is Webster's regional accreditation, which is the same gold standard of academic quality
enjoyed by Harvard University and helps students transfer course credits from one college to another. Daniel Webster' s
accreditation was its "most attractive" feature to ITI Educational, said Michael Goldstein, an attorney at Dow Lohnes, a
Washington law firm that has long represented the company.
"Companies are buying accreditation," said Kevin Kinser, an associate professor at the State University ofNew York at
Albany, who studies for -profit higher education. "You can get accreditation a lot of ways, but all of the others take time.
They don' t have time. They want to boost enrollment 100 percent in two years."
Exploiting Loopholes
The nation' s for-profit higher education companies have tripled enrollment to 1.4 million students and revenue to $26
billion in the past decade, in part through the recruitment oflow-income students and active-duty military. Now they're
taking a new tack in their quest to expand. By exploiting loopholes in government regulation and an accreditation system
that wasn't designed to evaluate for-profit takeovers, they' re acquiring struggling nonprofit and religious colleges-- and
their coveted accreditation. Typically, the goal is to transform the schools into online behemoths at taxpayer expense.
For-profit education companies, including ITT Educational Services, based in Carmel, Indiana, and Laureate Education
Inc., in Baltimore, have purchased at least 16 nonprofit colleges with regional accreditation since 2004, according to
corporate announcements and filings with the U.S. Securities and Exchange Commission. Jack Welch, the former chief
executive of General Elect:tic Co., and Michael Mil ken, the U.S. junk bond pioneer, have invested in for-profit
companies that bought or formed partnerships with nonprofit, regionally accredited schools.
Academic Status
By acquiring regional accreditation, trade and online colleges gain a credential usually associated with the traditional
academic culture ofliberal arts, faculty scholarship and selective admissions. Normally the accreditation process takes
about five years and requires evaluations by outside professors. The regional bodies examine financial stability, academic
rigor and commitment to "teaching, learning, service and scholarship," according to the Web site of the Commission on
Institutions of Higher Education, which accredits colleges in New England.
Enrollment at Grand Canyon University, a Christian college in Phoenix bought by investors in 2004, has soared to
37,700, as of Dec. 31, up from 1 ,500, said Brian Mueller, chief executive of Grand Canyon Education Inc. Ninety-two
percent of students now take classes online, according to the company' s most recent 10-K. Bridgepoint Education Inc.,
based in San Diego, has boosted enrollment of two regionally accredited colleges it bought in 2005 and 2007 to 53,688
students as of Dec. 31, up from 400 combined, according to a company filing. Ninety-nine percent of those students
take courses exclusively online.
Growth Potential
Daniel Webster "could parallel Grand Canyon or Bridgepoint's growth cutve," said Clifford, who was part of the
investor group that purchased Grand Canyon.
ITT Educational Services declined to comment. The company plans to open more Daniel Webster campuses and also
expand online offerings, Kevin Modany, ITT Educational's chairman and chief executive officer, said in a Feb. 22
presentation to analysts. The company expects to introduce programs including accounting, education and health
sciences, he said.
Daniel Webster will attract more students "a little on the higher end" in income whose tuition would be paid by private
employers rather than federal financial aid, Modany said.
New Regulations
The U.S. Department ofEducation, which doled out $129 biiJion in federal financial aid to students at accredited
postsecondary schools in the year ended Sept. 30, is examining whether these kinds of acquisitions circumvent a federal
law that new for-profit colleges can' t qualify for assistance for two years, Deputy Undersecretary of Education Robert
Shireman said in a telephone interview.
Under federal regulations taking effect July 1, accrediting bodies may also have to notify the secretary of education if
enrollment at a college with online courses increases more than 50 percent in one year.
"It' s an area that we are watching closely," Shireman said. "It certainly has been a challenge both for accreditors and the
Department of Education to keep up with the new creative arrangements that have been developing."
Buying accreditation lets the new owners benefit immediately from federal student aid, which provides more than 80
percent of revenue for some for-profit colleges, instead of having to wait at least two years. Traditional colleges are also
more inclined to offer transfer credits for courses taken at regionally approved institutions, making it easier to attract
students nationwide.
Scant Scrutiny
The six nonprofit regional accrediting bodies, which rely on academic volunteers, bestow the valuable credential with
scant scrutiny of the buyers' backgrounds, Barmak Nassirian, associate executive director of the American Association
of Collegiate Registrars & Admissions Officers in Washington, said in a telephone interview.
While accrediting bodies treat these purchases as changes of ownership, the acquisitions, in reality, create new colleges
that should be required to earn certification from scratch, Kinser said.
For accreditation to continue once the college is sold, the buyer must promise not to change its mission, Steven Crow,
former executive director of the Chicago-based Higher Learning Commission, the largest regional body, said in a
telephone interview. Once accreditation is maintained, the acquirer seeks permission, which is usually granted, to start
branch campuses and online programs, Crow said.
New Plan
"You knew by month six they would come back to you with a new game plan," said Crow, now a consultant to publicly
traded Corinthian Colleges Inc., based in Santa Ana, California. It acquired regionally accredited San Francisco-based
Heald College on Jan. 4.
Obama administration officials have recently questioned whether the accreditation system is effective in protecting
academic standards. Accrediting decisions lack transparency and take too long, Undersecretary of Education Martha
Kanter said in a Jan. 26 speech in Washington to the annual meeting of the Council for Higher Education Accreditation.
The inspector general of the Education Department in December urged the agency to consider terminating recognition of
the Higher Learning Commission, which has approved more for- profit colleges than its counterparts around the country.
The inspector general criticized the commission' s decision to accredit Career Education Corp.'s online American
Intercontinental University , citing concerns about how much time students spent in class. The approval was appropriate,
the commission and Hoffman Estates, lllinois-based Career Education said.
Growth Deterrents
More vigilance by the Education Department and accrediting groups is likely to slow enrollment growth and the share
prices of higher education companies that rely on acquisitions, said Clifford. While publicly held postsecondary education
companies rose 25.6 percent in the 12 months ended March 2, they lagged behind the S&P 500, which increased 59.6
percent over the same period. The shortfall reflected investors' fears of tighter federal regulation of for-profit colleges,
said Jeffrey Silber, an analyst for BMO Capital Markets in New York.
Regional accreditation is worth $10 million to a for-profit acquirer, Clifford said in a telephone interview. That's how
much it would cost to start a regionally accredited college, a process that can take 10 years and has only a 50-50
chance of success, he said. On top of the $10 million, buyers typically pay $23,000 to $50,000 per enrolled student,
making the purchase ofDaniel Webster a bargain, Clifford said.
' Same Institution'
Clifford and his fellow investors popularized the strategy of acquiting nonprofit colleges with regional accreditation by
purchasing Grand Canyon University in 2004 and building online enrollment.
Grand Canyon "is the same institution," Mueller said in an e-mail. "It was important to the new leadership group that the
mission of providing a high-quality Christian-based education remain intact."
Grand Canyon, which went public in November 2008, derived 83 percent of its revenue from federal financial aid in
2009, according to a company filing.
Bridgepoint Education bought the regionally accredited Franciscan University of the Prairies in 2005 and Colorado
School ofProfessional Psychology in 2007. It renamed them Ashford University and University of the Rockies,
respectively, and refocused them online. Ashford gained 86 percent of its revenue from federal student aid in 2009 and
University of the Rockies got 85 percent, according to a 1 0-K filing by Bridgepoint, which went public in April.
'Meaningful Continuities'
"There are several meaningful continuities" from the colleges before they were acquired, including campus athletic and
social events, Shari Rodriguez, a Bridgepoint spokeswoman, wrote in an e-mail.
Clifford participated in the 2008 purchase of Myers University in Cleveland, which was renamed Chancellor University.
Chancellor attracted Welch as an investor last year and named its new online management institute after him. Welch
collaborated with faculty in developing curricula for a master' s program in business administration, Clifford said.
"We chose to work with Chancellor University because it gave us the flexibility to start something new," Welch said
through a spokeswoman, Betsy Linaberger. "As a for-profit venture, we have the resources to invest in the student
experience and the very best faculty, and we want to provide a high quality business education."
Mlken Investment
Knowledge Universe Learning Group, chaired by Milken, entered into a partnership in 2007 with regionally accredited
Sierra Nevada College in Incline Village, Nevada, agreeing to provide as much as $15 million in return for an
opportunity to share in online revenue, Geoffrey Moore, a senior adviser to Mil ken, said in an e-mail. The company is a
unit of Santa Monica, California-based Knowledge Universe Inc., of which Milken is co-founder and chainnan.
Knowledge Universe Learning Group has three seats on the nonprofit college' s nine-member board, Moore said.
"This partnership preserved the existing character of Sierra Nevada College," he said. "That was important to us and the
college."
A 2006 regulatory change fostered online growth and made takeovers more attractive, said Silber, the BMO analyst.
That year, Congress eliminated a rule prohibiting colleges that offered more than half of their courses online from
receiving federal financial aid.
Red Brick
ITT Educational Services Inc. didn' t buy Daniel Webster just for its 52-acre red-brick campus and science and
technology programs including training pilots and air traffic controllers.
"Regional accreditation was very important'' to the company, said Goldstein, co-leader of the higher education practice
at Dow Lohnes. "I don't think there's any question that was the most attractive element."
Of the $20.8 million purchase price, $20.6 million went to pay off the college' s debt, according to an ITT Educational
1 0-Q filing.
ITT Educational Services, which was spun off from ITI Corp. in the 1990s, wasted no time making changes at Daniel
Webster. It renovated a main building and razed a dilapidated dormitory. It also dismissed one fourth of the staff, fired
President Robert Myers, and has been accused by faculty members of misleading the New England accreditor, the
Commission on Institutions ofHigher Education, based in Bedford, Massachusetts.
'Fundamental Nature'
"ITT didn' t really have much interest in anything other than having acquired a regionally accredited institution," said
Myers, now president of the New England Cut inary Institute in Montpelier, Vennont. " If I had it to do all over again, I
wouldn't have gone anywhere near m . The fundamental nature of the college has changed."
Modany, the ITT Educational CEO, declined to comment for this story.
"We' re making fantastic progress with the cultural assimilation" ofDaniel Webster, Modany said in a Jan. 21 call with
analysts. "Things are going really well there, great group of staff and faculty, and everybody is getting on board."
Barbara Brittingham, director of the Commission on Institutions of Higher Education, declined to comment on its
approval of the Daniel Webster sale.
In general, "when these institutions are bought, they are not at the moment successful in the financial sense or they
wouldn' t be for sale," Brittingham said. "There' s an understanding that whoever buys them is going to want to do
something different."
Self-Regulation
Accreditation is higher education' s way of regulating itself The nonprofit associations set standards on financial stability,
governance, faculty and academic programs and use volunteers from college presidents to professors to assess quality. It
is a peer review system: a marketing professor is more likely than a poet to evaluate a business school.
For more than a century, regional organizations have evaluated most public and private universities. Starting in the 1950s,
leaders of for-profit colleges, which were then ineligible for regional approval, established seven national accrediting
bodies for career education and training. The regions dropped their for-profit ban in the 1960s.
Apollo Group Inc.'s University of Phoenix, whose enrollment of 4 55,600 makes it the nation' s second-largest university
behind the State University ofNew York system, is accredited by a regional body, the Higher Learning Commission.
Students enrolled at both regionally and nationally accredited colleges can receive federal grants and loans.
Cachet, Credits
Regional accreditation is important to for-profit colleges because students are attracted to its cachet and can transfer
course credits more easily. Only 14 percent of nonprofit universities accept credits transferred from nationally certified
schools, according to a 2006 study by the University Continuing Education Association, in Washington.
The six regional associations scrutinize takeovers of nonprofit colleges in advance, and then follow up afterward,
accrediting officials said in telephone interviews. They could cite few, if any, cases in which they refused to continue
accreditation, they said.
Corinthian Colleges' past difficulties with California state regulators didn' t matter to accreditors when it purchased Heald
Capital LLC, parent company ofHeald College, for $395 million. Corinthian, the country' s seventh-largest higher
education company by market value, has more than 100 campuses in North America, and had 106,052 students as of
Dec. 31, including Heald, said Anna Marie Dunlap, a Corinthian spokeswoman.
$6.5 Million
Corinthian paid a $6.5 rnilli on settlement in July 2007 to the California attorney general' s office, over allegedly
misrepresenting graduates' job placement rates and salaries. It also agreed to cease enrolling students in 11 programs at
nine campuses. The Santa Ana, California-based Corinthian said in a 10-K filing that it didn' t admit wrongdoing.
"We strongly disagreed with the Attorney General ' s conclusions, but we are pleased to have settled the matter," Dunlap
said in an e-mail.
Regionally accredited Heald College had 11 campuses with 12,900 students, primarily in two-year health-care and
business programs, as of Dec. 31. The college was nonprofit before its purchase in 2007 by Palm Ventures LLC , a
Greenwich, Connecticut, investment company. Heald expects to start enrolling exclusively online students this year,
Corinthian ChiefExecutive Peter Waller wrote in an e-mail.
Approved Change
The Accrediting Commission for Community & Junior Colleges in Novato, California, which certifies two-year
institutions in California and Hawaii, approved the change in Heald' s ownership.
"We judge the college we accredit," said Barbara Bene, president of the commission. "It would be unfair to say, ' Heald,
you' ve been bought by a parent corporation that doesn' t have as fine a track record as you do. Therefore, we' ll
condemn you,"' she said in a telephone interview.
Heald will "continue to meet ACCJC' s accreditation standards and eligibility requirements," Waller said.
The scrutiny "doesn' t remotely satisfy the sloppiest of due-diligence requirements," said Nassirian of the American
Association of Collegiate Registrars & Admissions Officers. "There is no methodical review of who has bought the
college. If the Cosa Nostra applied, you would think you' d take a look."
The nation' s biggest regional accreditor is starting to take a closer look. The Higher Learning Commission, which
certifies more than 1,000 colleges from Arkansas to Wisconsin, stiffened its rules on ownership changes last year.
' Same Animal'
Buyers must wait from one to four years to reapply for accreditation if the college won' t stay "the same animal ,"
President Sylvia Manning said in a telephone interview. The commission now charges $10,000 for ownership changes to
pay for more extensive research. New owners must be approved by its board, rather than at the staff level, Manning
said.
The commission applied its newfound rigor to Mayes Education Inc.'s purchase of Waldorf College in Forest City,
Iowa, putting the brakes on online expansion. A subsidiary of online privately held Columbia Southern University in
Orange Beach, Alabama, Mayes agreed in May to buy the assets of Waldorf, an Evangelical Lutheran college with 500
students, for an undisclosed sum. The deal closed on Jan. 8.
Approval Condition
As a condition of approval, the commission stipulated that Waldorf can't offer online-only degrees at least until 2011-
2012. Mayes Education plans to boost Waldorfs enrollment to 2,300 students in three years through programs
combining online classes with face-to-face instruction at temporary sites around the country, Jessica Brown, a
spokeswoman for Columbia Southern, said in a telephone interview.
The sale "barely made it through" the commission, former Waldorf president Richard Hanson said in a telephone
interview.
"Columbia Southern wanted to ramp up the online program quickly. The commissioners said, 'If we maintain
accreditation, Waldorf has to remain the college we know."'
Columbia Southern wasn' t the only for-profit that expressed interest in buying Waldorf, Hanson said. Another company
that lacked regional accreditation also contacted him: ITT Educational Services.
ITT Educational, runs 120 nationally accredited technical institutes with 80,000 students, most of whom pursue associate
degrees. ITT Educational' s shares closed at $109.78 on March 3, down 1.4 percent in the past 12 months.
Graduation Rate
The cost of attending an ITT Technical Institute, including tuition, fees and off-campus room and board, was $26,775 in
2008-09, according to the National Center for Education Statistics. Of students who entered ITT' s two-year schools in
2004, 29 percent graduated. ITI derived 70 percent of its 2009 revenue from federal financial aid, according to a
company filing.
ITT Educational is in the preliminary stages of seeking regional accreditation for its technical institutes through the Higher
Learning Commission, which sent a team to visit the company in late 2009, a commission spokeswoman, Susan Van
Kollenburg, said in an e-mail. The commission hasn' t acted on this evaluation, she said.
Daniel Webster is ITT Educational ' s first regionally accredited campus. Founded in 1965 as the New England
Aeronautical Institute, the college is tucked beside Nashua' s municipal airport, and keeps its fleet ofPipers and Cessnas
there. The campus includes an aviation center, a library, an administration building, classrooms, dormitories, and a
student center called the Common Thread.
' Good Reputation'
Over the years, the college expanded from flight instruction into training air traffic controllers and airline managers, as
well as teaching computer science, engineering, and business.
It has "a longstanding good reputation," said Gary Kiteley, executive director of the Aviation Accreditation Board
International in Auburn, Alabama, which licenses the college' s aviation programs.
Financially, Daniel Webster never enjoyed a cushion. With an endowment that peaked at about $3 million in 2008, it
relied on tuition revenue, Myers said. The airline industry' s decline after 9/ 11 and the collapse of Internet stocks hurt
enrollment in aviation and computer science, said former provost Michael Fishbein, who said he suffered a heart attack
from the stress of keeping the college alive.
Just as trustees reached consensus on a strategic plan in 2008, fuel costs skyrocketed, and "we were running red ink
again," Rodney Conard, the former chairman of the board, said in a telephone interview.
Jeopardizing Aid
The Commission on Institutions ofHigher Education and the U.S. Department ofEducation expressed concerns that
Daniel Webster didn' t meet their financial standards, placing its accreditation and eligibility for federal aid in jeopardy,
according to a fiting last April 23, by the college in a New Hampshire court.
ITT Educational contacted Myers in December 2008, he said. Modany visited Daniel Webster the next month, and the
parties reached agreement in April. The acquisition would enable the company to target a more upscale audience,
Modany told Wall Street analysts on April 23.
While ITT Educational' s institutes drew unskilled "career changers," the regionally accredited college would appeal to
"career advancers" seeking to enhance their capabilities, Modany said.
The Commission on Institutions ofHigher Education approved the sale that same month.
'Public Interest'
"It's in the public interest to have these small institutions continue to function," said Bruce Mallory, a commission member
and education professor at the University ofNew Hampshire in Durham. "If a proprietary school can come in, continue
to provide the same level of education and assure viability, that' s all for the better."
Modany promised to leave Daniel Webster' s administrators in charge because they were experts in running a four -year
residential college, Myers and Fishbein said. At a campus event introducing the ITT Educational chief executive to the
college community, Modany said the company was growing and there would be ample job opportunities, said Myers.
As Myers negotiated the sale, he came to suspect that the company wasn' t being forthright about its intentions, he said.
When he and Conard, who chaired the college' s board of trustees, worked out at a YMCA a week before the June
closing, they discussed canceling the deal, Myers said. Only after consulting colleagues did they decide to go through
with it, he said.
Not Comfy
"We had lots of conversations when it was on the table," said Conard, a management consultant. "Should we take it?
We didn' t have to take it. There was a point where we realized, they were going to be more businesslike about it. It
didn' t feel as comfy as we were hoping."
Going through with the sale was the right decision, Conard said.
"ITT is in this for the long haul, and I'm very comfortable with where they plan to take Daniel Webster," Conard said.
Another former trustee, Cathy Trower, went along with the sale as a last resort to save the college and honor
commitments to students, she said.
"A for-profit should not be able to buy accreditation," Trower, a research director at Harvard University' s Graduate
School ofEducation in Cambridge, Massachusetts, said in a telephone interview. "To me, that's almost like buying a
degree and not actually earning it."
Duplicating Functions
In July, ITT Educational dismissed more than 20 Daniel Webster employees, Myers said. It believed they were
duplicating functions that the company' s corporate offices in Indiana could provide, two people familiar with the
company' s thinking said. ITT Educational also replaced Conard, Trower and the other trustees.
Appointees to the college' s new board included Charles Cook, former director of the Commission on Institutions of
Higher Education, which accredits Daniel Webster. Cook soon resigned because of a potential conflict of interest with
his position as a director of Corinthian' s Heald College, he said in a telephone interview.
"I was never substantively involved with Daniel Webster," Cook said.
At the time of the firings, Myers was circulating a draft report questioning whether some of ITT Educational' s changes
were in accord with the standards of the accreditation commission, which call for a faculty role in curriculum and
governance, he said.
"ITT came in and said, ' We only want faculty to teach,"' Myers said. "We' ll develop curricula in Carmel, Indiana, and
give them to you."
Myers Fired
On August 5, ITT Educational ousted him, Myers said. Nadine Dowling, director of the Woburn, Massachusetts,
campus ofiTT Tech, became interim president.
In an unusual move in credential-conscious academia, ITT Educational also named an assistant professor without an
advanced degree to a deanship. When Triant Flouris, who has a doctorate and has written four books, resigned as dean
of aviation sciences, he was replaced by David Price, who only has a bachelor's degree.
Price is weeks away from completing a master' s degree at Daniel Webster, and will enroll in a doctoral program in the
coming academic year at President Dowling' s request, he said in a telephone interview. "ITT has continued the strong
emphasis we' ve always had on getting a higher degree," he said.
Fewer Worries
The biggest difference at Daniel Webster under new ownership is "worrying Jess," Price said.
"There are a lot of schools that would just go under, students would be out of a school, faculty and staff would be out of
a job that they love passionately. I'm allowed to stay in the position I'm in because ofiTT."
In November, faculty members told a team from the New England commission visiting the campus that ITI Educational
had rewritten a college self-study report prepared by professors and staff for the accrediting group. Faculty members
complained that the company' s revisions glossed over inadequacies in such areas as governance, according to two
people who attended the session.
When asked about the allegations concerning the self-study report, Richard Schneider, president ofNorwich University
in Northfield, Vermont, who chaired the team, said that in his experience colleges don' t try to deceive accrediting
bodies.
F acebook Group
About 450 people have joined a Facebook group entitled, "I went to Daniel Webster before it sold out," including Chad
Los Schumacher, 20. After his sophomore year at Daniel Webster, where he majored in homeland security and joined
the paintball club, Los Schumacher transferred for the current academic year to Saint Leo University in Saint Leo,
Florida.
"It was a very hard decision to come to, but I knew I could not stay there," Los Schumacher said.
Los Schumacher was bothered by an ITT Educational policy that students receiving financial assistance through work-
study programs sign an agreement that the company owned their intellectual output, he said.
"If I created the next Facebook or Twitter, it would be theirs," Schumacher said.
Matthew Mcinnis, a flight operations major, stayed at Daniel Webster.
"A lot of big names in aviation have come through here and taught here," the senior from Beverly, Massachusetts, said as
he headed to the aviation center on Jan. 27. "Looking in the long term, the ITT buyout should add value. Hopefully, it
will attract better professors and more students."
Personnel Moves
The personnel moves took New Hampshire regulators aback, the officials said.
ITT "did give me the sense they would continue as before," said Kathryn Dodge, executive director of the New
Hampshire Postsecondary Education Commission, in Concord, which approved the sale in May. "We did not expect to
see the turnover in staffing happen when it happened."
As a result of the Webster case, Dodge said, she is proposing to require colleges in ownership transition to outline plans
for faculty and staff contracts and internal governance.
"It's a culturaJ issue," Dodge said. "Unless we're extremely specific in our requests, for-profits aren't as forthcoming as
nonprofits."
To contact the reporter on this story: Daniel Golden in Boston at dlgolden@bloomberg.net
Last Updated: March 4, 2010 00:00 EST
Tem1s of Setvice I Privacy Policy I Trademarks
(b){S)
From: Finley, Steve
To.: Yuan. Georgia
CC:
Date: 4/30/2010 3:02:56PM
Subject: Transcript ofBob's speech
(b)(5)
Robert Shireman
Speech to NASASPS
ApriJ 28, 2010
Transcript provided by the Career Education Review
Michael J. Cooney, Editor
mcooney@workforce-com.com
. .. And I had forgotten to put the FAFSA simplification applause line into my actual
remarks so I have applaud when he said it so it never fails and of course- it's not often-
sometimes it's the thing I get questions about but more often its about things like two Pell
awards, two programs in an award year, things more detailed like that. But thank you so
much for that introduction.
Two and a half or three years ago, we started to see a serious economic slide downward
in this country, credit markets had seized up, the sub prime mortgage issue was a major
cause of that and we stmied seeing ppllosing their jobs. We saw ppl in their jobs feeling
much more insecure, much less secure about their ability to invest in higher education,
their ability to buy a home w the collapse of the credit markets and the way to solve that
- long term- is to invest in improving our nations economy, to invest in the kind of
innovation that comes from education, the productivity increases that come from job
training.
Jn order to follow up on that President Obama laid out a bold goal for he country, he said
that by 2002 we want to regain our place as the number one country in the world in terms
of adults with post sec credentials, college degrees, certificates and other job training
programs. In the recovery legislation, now about a yr and a half ago, that included an
expansion of the tax credits that [x] hoping to create in the 90s, an expansion of that tax
credit to $2500, making it for 4 yrs and actually covering more of the types of expenses
that students and families have for higher education. Increases in Pell grants- the usual
approach and what you have seen in your own states, are in an econ downtum, more ppl
are poor, more ppl want to go to school , but instead of following up on that need by
putting more money onto the grant and scholarship programs actually less money goes
into the grant and scholarship programs be of the state budgets.
Fed govt took the opposite approach really, what needs to be countercyclical spending
that helps- like unemployment insurance- spending that needs to follow up on and help
to address the new gaps that families are seeing - so the tax credits were part of that, the
increases in Pell grants are not only meeting the new demand for Pell grant dollars but
actually increasing he size of the Pell grants and proving those increases into the future
with the follow up legislation passed a few weeks ago. Also restoring some certainty to
the student loan program, and making sure that no one has any reason to doubt whether
they will be able to get the federal student loans that they need, again with the refmms
that were implemented a few weeks ago.
I mentioned that when people are losing their jobs, when ppl become insecure in their
jobs, they look for higher education, they look to find what kind of job training can I get,
what kind of skills can I add to my repertoire, what are the skills that I have, how can I
make them better so that ill keep my job, so that ifl lose my job I'll have options. And at
the same t ime, while we saw this increase in demand, which is helpful and useful given
what the President had to say about the need to train our population, we saw state tax
revenue declining in all but a few states, we saw resulting cuts in the budgets of state
colleges and universities and community colleges, resulting in a combination of very
large increases in tuition in some cases and reduced enrollments, fewer seats. So
increased demand - ppl wanting more education and training, and public institution either
had fewer seats and charging more tuition or might not declare going to be enrolling
fewer ppl but their course offerings are cut, fewer kinds of course offerings, so the result
is they are not able to demand for higher education.
Tuition-driven institutions didn't react that way because they're tuition-driven institutions,
and the non-profit institutions have done pretty well despite significant declines in their
endowments because there continued to be significant demand for higher education. The
public., the non profit private colleges did well and in particular the for profit institutions
have come in with investors making sure that there was capacity to be able to serve
additional students, and they knew that those students would come with those federal
dollars, Pell grants, student loans, tax credits and that hat would help them to not only be
consumers who want higher ed but consumers who can pay for that higher education with
that federal support so the for-profit industry, more than any other in this economic
difficult times, has responded.
I want to give you some specific numbers, we now post now on one of the [X] websites,
the quarterly numbers ofPell grants by different kinds of schools s I looked at what the
first 3 quarters- the total of the first 3 quarters of this award year compared to the last
award year for some of the schools that I knew would be here today. So for example,
Corinthian Colleges- 38% increase for first 3 quarters this year compared to last year for
a total of $800M
DeVry- a couple people here from DeVry?- 42% increase up to $1.78
ITT- you guys here? A 44% increase up to $623M
Strayer- still here? Is that you? Well this one- 95% increase, may be something about
the quarters, but up to $414M
APE!- Wally here? And Russell? 94% increase up to $44M
Kaplan- they here? So this total is actually all the Washington Post owned entities, 33%
increase up to $909M, and again this is the first 3 quarters of the year so the totals for the
year are obviously more than that
Career Education Corporation- 29% increase up to $1B this first three quarters
EDMC- several folks here; a 16% increase, $1.1B
Capella- over there? 40% increase to $378M
And I think I've just got a couple of others:
Grand Canyon- 55% increase to $260M
And University of phoenix- you there?- 9% increase but obviously that's on a larger
base. So probably that increase is as much as a lot of others' total dollars, and that
increase is $2.7b total
And Bridgepoint- you guys here? - 6 l% increase, $393M
I think those were all that I had numbers for, obviously I know that there's a few others
here as well.
So I wanted to begin just by thanking the for-profit industry for responding to the critical
demands from ppl out there who need higher education. I'd like everybody to give them a
hand. Now, others of us in the room have the responsibility for making sure those federal
funds I just listed, for education and training, that it's all totally above board. That those
significant increases in fed spending for higher education- loans, grants- are serving
students and tax payers as well as they possibly can. and that is what the Triad is about-
and I know I can say triad in front of this audience because I heard somebody say it
earlier. I want to talk for a second about some things going on in Washington right now,
and I don't mean negotiated rulemaking- I will get to that in a few minutes, but there is a
wall street reform debate going on right now in Washington. What happened in that
credit crisis a couple of years ago had something to do with credit rating agencies-
agencies like S&P, Fitch, other agencies that were responsible for rating instruments-
:financial instruments, looking at what is the quality of these things that have names that
cause people's eyes to roll over- things like collateralized debt obligations, and other
kinds of securitizations- so what is the quality of the loans, mortgages, are they going to
be repaid, how likely are theses loans to be repaid so that an investor purchasing this,
how confident can they be that when they purchase, when they invest in this particular
instrument, that they will get the money back that they are expecting.
The business model for these rating agencies has come under fire in these meetings in
Washington, part of this has to do with the business model of the rating agencies, on the
one hand, their responsibility, their job, the core of their business was to make sure they
did a good job providing an honest rating tor the instrument that they were analyzing. On
the other hand, they relied on the income from the companies who asked them to rate the
instrument, and ill read to you from- a NYTimes- some of the emails that have been
coming out recently.
In 2004, well before wall street's bets on subprime mortgages became widely known,
employees at Standard & Poor's credit rating agency were feeling pressure to expand the
business. One employee warned in an internal email that the company would lose
business if it failed to give high enough ratings to collateralized debt obligations, the
investments that later emerged at the heart of the financial crisis.
Quote, " we are meeting with your group this week to discuss adjusting criteria for rating
CDOs of Real estate assets be of the ongoing threat of losing deals. Lose the CDO and
lose the base business. A self reinforcing loop"
In other words, if we don't loosen up, we don't loosen up in our assessment of these
instruments, nobody is going to come have their instruments assessed by us anymore.
And this created a conflict which led to instruments that should have been questioned not
being questioned, and [leading] over to the financial crisis that we have been suffering
from for the past couple of years.
The other issue besides the business model was the complexity and fast growth of diff
kinds of instruments and ill read from another of the recent articles. "Email. documents
and other messages suggested that executives and analysts at ratings agencies embraced
new business from Wall Street even though they recognized that they couldn't properly
analyze all of the banks' products. And one of the other quotes ends with, "we were so
overwhelmed."
So I want to actually ask, on that issue, the complexity and growth, and I know we're
feeling this with publicly traded corporations and purchases going this way and that way,
and we're trying to figure out what's going on . Are there regulators in the room who feel
like you DO have the analytical firepower you need to assess what is going on with the
entities you regulate in higher education? Those who do feel you have the firepower you
need? I don't think we feel we have the firepower we need.
So the reform back on the financial instrument side of the equation, what they're really
talking about now in Washington on financial reform, one analyst- an academic looking
at what's going on, said it only tinkers with the workings of the ratings agency, it doesn't
end the inherent conflicts of interest, those cont1icts of interest where the ppl who do the
rating are paid for by those who do the ratings. This whole situation w credit agencies,
credit rating agencies, is, as I see it, very similar to the way accrediting agencies work in
this country. The same kind of inherent conflict of interest. Albeit accrediting agencies
are nonprofit and on top of that, what would this crisis look like ifthe banks had actually
been the ones running the credit agencies and were doing a peer review kind of model,
which is the model we have in accreditation, where it is the regulated who are really
looking at each other rather than an outside entity.
So to borrow from Winston Churchill, accreditation, as a part of that triad, in terms of a
way of assessing quality in higher education, is the worst form of accountability except
for all of the others. What Winston Churchill actually said was, democracy is the worst
form of government, except for all the others. So I am bringing up this issue of
accreditation not to say that we should back away from it or change it, 1 actually don't
have a better system for us for assessing quality in higher education. But it is problematic
and we need to remember that as the other two pieces of the triad, as we figure out how
we can do the best job possible in our responsibilities. Federal and state governments
cannot rely on accreditation to insure that consumers and taxpayers are protected t the full
extent that they need to be- all three legs of that three legged stool need to be working
and working well.
There are a number ofthings that we're doing, you've heard about some ofthem-
elevating, monitoring and enforcement, we're working with the inspector general at the
department of education, taking a much closer look at data than ever before to help guide
our selection for program reviews and investigations when necessary by the inspector
general, working with he federal trade commission to join their consumer complaint
system so complaints they get and other agencies that are on their consumer sentinel,
working on the issue of how we can look more at issues of misrepresentation as we do
program reviews and other kinds of monitoring.
A second area besides the monitoring and enforcement is improving consumer
information. We have put graduation rates, retention rates and transfer rates right on the
F AFSA form when students are choosing colleges, the rates are right there as a reminder
to students that they should do some good shopping, look at various kinds of data that
might help them to compare schools. We're also providing them with a more detailed
financial aid estimate in terms of the financial aid that they can get and this is partly to
make sure that people know they can get that aid wherever they go. Sometimes students
think, oh I can get that $12K because the school costs $12K, and I would only get $3k at
a community college that only cost $3K, not realizing hat in fact if they wanted to get
more than what tuition costs at that community college so that they can focus on their
studies instead of working excessive hours, that that is something that they can have
available to them.
And starting this summer, as a result of a regulatory process that has already completed,
schools will have to begin providing placement information and where the have
placement rates, they actually will need to make students aware on their websites of
placement rates they have for programs that they are offering.
Uh coordination and sharing, I head some of the discussion in prior sessions and I look
forward to this af-temoons discussion. Within the federal government, we are working
with the Fed trade commission, the veterans administration around the GI bill , the SEC
because of the involvement of publicly traded institutions, states we have encouraged
involvement in this group and are looking for other ways that we can help. Happy to
discuss that in q&a here as well as this afternoon because we really need to become good
partners if we' re going to do best by taxpayers and students.
And accreditors, there are some new requirements, we're working on sharing some draft
guidance related to all of the requirements for accreditors and again building that triad
and all working together. In fact, I was actually on the internet looking for a three legged
stool to see if [ could bring one for this, and [ noticed one of the three legged stools had a,
not only the three legs, but it had this connecting piece of wood that held the three legs
together, and I thought, well that would be the perfect prop, because that would
demonstrate it's a strong stool if that connecting- that connector is there, making it as
strong as possible.
Also, may of you have heard, reviewing the rules and regulations and where appropriate
revising, in the process of revising those rules. Let me take a I ittle bit of time to tell you
about some of those. We started about a year ago, doing public hearings where we
basically said, we want to know whether we need to in1prove program integrity, are thee
things we need to be doing? Here's a list of some areas, misrepresentation- definition of
credit hour, state authorization, other kinds of things, and we saw input. We did 3 public
hearings, ppl were able to submit items over the internet, through email, and we got a lot
of input about great schools out there, students who were having a good experience,
people who attended the schools, got a job, had a great experience. We also heard from
forn1er students who felt that they were misled, legal aid attorneys who had clients whose
stories were cause for concern.
That was followed up by- we asked for nominations for ppl to serve on committees- the
way this whole process works is that we do our best to work through possible rule
changes with a committee of stakeholders, recommended, nominated by interested parties,
states, various institutions, student organizations, legal aid.tr 3 weeklong sessions,
December, January and February went through each of 14 issues talking about, changes
that might make sense.
One of them, misrepresentation, clarification really against misrepresentation by schools.
High school diploma- one of those things that you take to somebody and think, how
hard can it be to know if a high school dimple is valid?? As you know, not that easy and
many of you are at the state level so you know that the state isn't necessarily declaring
who is good or bad. And the issue of the federal government declaring what is a valid HS
education, for example, gets into areas where the def government isn't supposed to be
declaring such things, so I think a more complicated issue than I think a lot of ppl
expected. We are making - at least in NegReg session - reached some tentative
agreement around the definition.
I would say the most significant thing we are doing is looking at- and I think this is now
a likelihood, when people apply on the F AFSA and it asks for a HS diploma, a list will
actually pop up and they can enter what that high school is, the name of that high school
based on some feral lists we have. It wont necessarily mean that it will be a valid high
school, but it does give us and you the ability to, if for example a suspected diploma mill,
we would be able to see who are, where are the students going who are using this
particular high school as the place they say they get their diploma from. And if we find
that its some particular colleges, that means that it might b encouraging ppl to go and use
and diploma mill. So it will be a useful took for us and you as well. , and that's the most
important change we'll be making there.
Incentive compensation was a major issue, the issue of paid recruiters. A number of
years ago, a number of safe harbors were created and there was a lot of indication that
they were wider loopholes than are appropriate given the wording of the actual law that
prohibits payment of actual compensation based on enrollment. So that's another one that
we are working on.
State authorization, I heard California mentioned and it was a surprise to me when I came
to Washington and asked about California to discover that a legal interpretation of the
Dept of Ed, well if the school is not not authorized, then it is authorized. So this a raised
question that came up in NegReg about what is at least some minimum standard about
what kind of authorization should count in terms of the state role in that Triad.
Satisfactory academic progress is another area taking attendance. What] used to call
R2D2, return to tile 4. and I'm not mentioning all of the issues, but the final one I will
talk some about is Gainful Employment, and this is the one that's been in the news a lot.
It seems that every time I speak somewhere, something thinks I said something new and
calls a stock analyst who then reports it causing the stocks to go up or down or whatever,
and I assure you I am not going to say anything new. If you are a stock analyst or you
know a stock analyst, the answer when they ask you, What did Shireman say? You say
nothing new.
So the statute, the federal law requires that in order for some programs to be eligible for
federal financial aid, they have to lead to gainful employment in a recognized occupation.
This applies to non degree programs at any type of school and it applies to most programs
at for-profit schools, really all except some BA, liberal arts programs through an
exception, a recently enacted exception, that actually begins this July 1
51
but for the most
part, a for-profit institution, in order to be eligible for federal financial aid, has to show
that the program leads to gainful employment or prepares the student for gainful
employment in a recognized occupation.
So a year ago, we began asking the question, what is the definition, what should db e the
definition of gainful employment in a recognized occupation. We had hoped that perhaps
some schools would come forward and say, well when we start a program, here's how we
determine whether or not it complies .. we didn't get that kind of information.
We brought it up in NegReg and made some suggestions for discussion. We suggested,
maybe there should be some relationship to the debt levels that students are taking on and
the expected earnings that they may have from the occupations that you have identified
that you are preparing people for. We also suggested that perhaps a loan repayment rate
approach could be devised where we would be able to see that federal loans are actually
being repaid at a rate that makes sense if ppl were actually gainfully employed.
We looked at the provision and current regulation that currently applies to very short
programs, the 70/70 mle. So 70% completion rate, 70% placement rate, and asked should
something like that be part of the definition of gainful employment? And then for new
programs, we suggested maybe there should be something from an employer, who
employs ppl in the occupations that the program is preparing people for, that at least
asserts that yes, the cuiTiculum, the program that ive seen at this school is designed in a
way where it would prepare people for the jobs that I have in my particular business, so
we suggested that for new programs.
Now in evety other issue in negreg, we got pretty good discussion at the table, sometimes
we actually got consensus from the group on what we should actually, how regulation
should actually be worked out. But for some reason on the gainful employment issue, we
didn't get the kind of discussion that would at least help to guide in a very constructive
way the direction, and to know well, this would be okay with certain kinds of schools but
wouldn't be okay with other kinds of schools.
Instead the reaction from, in particular those who were representing the for-profit
colleges, was you cant do this, you cant define this term, why are you doing this, and that
continued even after the NegReg sessions. We continued to meet, we have gotten
improved input, improved feedback. And where things stand now with whole regulatory
packed, so everything I've just discussed now including the gainful employment, is that
in the next few weeks there will be proposed rule published in the federal register. There
will be a comment period after that proposed rule is published. That will be the
appropriate time to suggest changes or express support for provisions, suggest
alternatives, and then a final mle, our goal would be to publish a final rule by November
I
51
For rules to take effect in general. next year from this July, they need to be published
by November 1
51
So that's where we will be, that's the tin1eline for the rule going
forward.
I wanted to conclude my remarks before going to some Q&A and some discussion with a
piece that Thomas Frank wrote in the WSJ. The title ofthe article is, "Obama and the
Regulat01y Capture," and it is again, back about the financial regulation.
"It was not merely stmctural problems that led certain regulators to nap through the crisis.
The people who filled regulatory jobs in the past administration were asleep at the switch
because they were supposed to be. It was as though they had been hired for their
extraordinary powers of drowsiness.
The reason for that is simple: There are powerful institutions that don't like being
regulated. Regulation sometimes cuts into their profits and interferes with their business.
So they have used the political process to sabotage, redirect, defund, undo or hijack the
regulatory state since the regulatory state was first invented."
So, he follows that up with one more line here, "And it created a situation where banking
regulators posed for pictures with banking lobbyists while putting a chainsaw to a pile of
regulations. Smiles all around. Let the fellows at IndyMac do whatever they want."
So my closing words, is, we should take the photos, we should smile, but lets not shirk
our responsibility for regulating the industry. The schools will make plenty of money and
students and taxpayers will be better off if we do our jobs as best as we can. Thank you
very much.
Host - Some time for questions and answers, and I know gainful employment will come
up, but first I want to just make a comment. I think most of the states, clearly the states in
the room, because the ones that aren't in the room, there might not be a cognizant agency
that actually is involved in the regulation, if it's a registration with the secretary of state
or what-have-you, but fortunately, there is another state within our state that someone can
go get a better rate at or what have you. So I think that's clearly one thing that I was
thinking about. There is an alternative on per se that the school has if they want to be
serving your students, they want to be in your state. They have a set of laws, a little bit
different, but 1 certainly appreciate the parallel, and I think important to add-
Shireman- I was really more talking about the parallel with accrediting and it's not as
much of an issue with states
Host- right so you know, 1 sympathize with that, good parallel. Did the Dept, was there
any discussion when gainful employment issue was being looked at, to say, can somehow
the Dept tap into infom1ation at the Dept of Labor or at the prior [X]. I understand there
may be some challenges there, but we're trying to measure whether or not this individual
is 1, either employed or perhaps employed and had benefited because of the education or
training that they had received and somehow reached their salary or what have you. Was
there any discussion around that area, because it seems like there may be some ways of
doing that?
Shireman -Yes, one of the areas of discussion, so part of the areas we are looking at.;
some of the criticism that has been out there has been about the use of averages or 25lh
percentile of BLS occupational data. And the reason we suggested use of BLS was not as
- it was actually as a way to reduce the work that would need to be done by whoever is
coming up with the income information. So for example, it's going to be the schools
having to figure out what their graduates eamed, we figured why not just have a level
that's an average based on the industry that will eliminate a lot of the school's need to
follow up and look at their own graduates. In other words, if it meets- if the debt I
income ratio is fine given the earnings in the occupation generally, you don't need to
worry about it as a school. Just look at your debt and if it's okay, flne. You only need to
look more detailed if you don't, if it doesn't beat it that way, because maybe your
graduates are earning something more. It was really to try to reduce the number that
would have to go through a process, either using IRS data or a state data system. States
like FL are in a much better position to be able to look individual programs and have this
kind of information using their U[, unemployment insurance, database. So there's a lot
that can be done there, and the discussion at and since negotiated rulemaking has helped
us to think through those issues.
Host- know there's going to be some questions ...
Michael Cooney- Bob, [patt] of your presentation is, do you believe that for profit
institutions are serving their students well?
Shireman -1 think they have to be given their demand, given the number of people that
are going to for-profit institutions, I think it's, I think they are, absolutely. All of them for
all students, I think that's where our role comes in
Cooney- following up on that, then your gainful employment provisions as we
understand it, according to CCA would approximate 300K students from the possibilities
of receiving an education. Is that an unintended consequence or are you all cognizant of
that?
Shireman - there isn't a proposal, and my argument with the- and ive had these
conversations directly with CCA, is work with us about what the definition should be. So
we can get in- what they've done is say, 8% pure labor statistics, these folks are crazy!
But the reality is, thee only way to get to a rule that makes sense, and we need to have a
definition, is to get down in the weeds and start working out the details. And they and
others have come back with, id say some more constructive thoughts in recent weeks, and
those will be considered in the proposed rule, and then they' ll be further input that I hope
we' ll get in a final rule.
[Ken Miller] -Mr. Shireman, im concerned about national averages. Some states are in
much better shape employment-wise than others. I'm fiom Ohio, a county in Ohio that
has 17% unemployment. Question - how can you adjust this rule, this definition, for
those kinds of anomalies between states, and should you?
Shireman -So using actual data from students as was suggested would deal with that
completely. The BLS data actually is available on a state basis so that could potentially
be another option. So this is where we are, we're open to suggestion and ideas about what
would be the best way, or whether it should be various possibilities that a school might
have an option to use. This is that input-seeking process for what would be the right kind
of approach. Again, part ofthe reason we just used the national average was because, to
eliminate a whole lot of work so that fewer needed to look in a more detailed way, and in
some ways I suppose if we had not suggested an approach to reducing work, we wouldn't
have had the BLS stuff on the table and wouldn't have the criticism, but I think it does
make sense, because it was a reasonable, work-reducing item that we put on the table
during negotiated rulemaking.
[Tom CasseJJ(?)] -have you looked at the idea of a value added concept in the
definition?
Gainful to me means you've gained, improved. So if we looked at our students and
where they came to us and what their earni ngs were afterwards, a measurement of change
of gain as the definition?
Shireman - so specific suggestions about that proposal and how to do it, we welcome
that, I mean that's very useful. So in the proposed rule period, that's especially timely.
Make sure, Especially from this point forward, make sure that ideas are considered, that
comment period after we publish the proposed rules. That's the kind of thing that would
be great to work out the details and suggest it during that comment period.
[Keith Boss (?), Northwest Technical Institute) - layers of control can sometimes
create layers of bureaucracy as you well know, you've got to struggle with that. There's
al ready of default rate, and we're very proud of our very low default rate, was it ever
considered that that 's enough control to see that students have the ability to pay offtheir
student loans and why would there need to be more layers of control, more bureaucracy
than that?
Shireman- the discussion at the table around default rate had to do with the fact that the
federal government has made sure that ppl who take out at least federal student loans
aren't put in a situation where it's a choice between food on the table and paying rent and
paying off your student loan. So we have things like forbearance, and if you ask for
forbearance, you could make no payments at all and you're not in default, there's income
based prepayment where you may be making nothing or next to nothing, but if you're on
income-based prepayment, there's very low repayment or maybe nothing at all and
you're not in default. So default rate doesn't measure whether or not people are actually
earning any money.
[Ray]- one of the problems ppl have come to wrestle with this concept is that any
fommla that is derived that results in the elimination of eligibility for a program has the
potential to have a school on the NE corner vs. a school n the SE corner delivering the
same program at the same level of efficiency and quality, but merely because of the
borrowing characteristics of their student population, one school's program could be
declared ineligible while the other school's program continues ... further, as you go
through this and eliminate program eligibility, the students don't go away, they seek out,
in many cases, the same education, in another institution. You could end up with a deluge
in the public institutions because they're not subject to the sanctions of a loss of
eligibility and yet, so it's okay to continue to train that person and for them to continue to
have debt and for state dollars to continue to subsidize their education at a public
institution but meanwhile the resulting product is the same?
Shireman- so what's your suggestion for a definition of gainful employment?
[Ray]- well I don't know- I always thought it was defined in the IRS code, the Social
Security admin ....
Shireman- I need a citation, tell me what we can do, as the US Dept of Ed, to detennine
whether a program is in or out.
[Ray]- I honestly don't know
Shireman- this is the problem. If you cant give me a definition, we're not making any
progress. So anything- I can respond to the details of your question, things like the 90/10
rule - any time you draw a line, there will be people right on one side and people on the
other side of the line that are very similarly situated. But that's what lines are about, so
your suggestions about what would be, and I think asking your colleagues, your own
institution, how do we decide, how do we know our programs are eligible for finical aid,
would help for you to develop some suggestions for us.
Host- see I knew we should have had a workshop on gainful employment.. we've all sat
around trying to figure it out. .. we have some good thinkers in the room ..
Russell - APEI -I have sort of a detailed question im going to pose for you. You
mentioned earlier [xx] with regard to title IV funds, but those fund are not necessatily
earmarked specifically for education costs, or direct education costs, and I think we all
recognize the reality is that many student do in fact realize substantial amount of money
for impotent, incidental spending, a new car, walking around, whatever. My question is,
lets take a scenario where an individual sent to community college for a couple years
borrows $35-40k, then that graduate comes to APEI system, where it will cost you $30k
to get a BA degree from start to finish, we inherit $35-40K worth of debt and add it to the
$30k the student incurs with us, we've got $75-80k of debt. Is that going to count against
us for the purposes of calculating gainful employment?
Shireman -we haven't proposed a rule yet but what we discussed a the table in
negotiated rulemaking, the answer would be no. That's because we proposed using the
median, and using the median means that all those outliers don't pull up the average. It's
the median, schools don't generally have more than half of their students coming in with
huge amounts of debt from someplace else. Now there's also the option in the rule of
saying, it's only debt you incur at the institution, so in the proposed rule in the comment
period will be the time to look back to a particular issue. There's debt/ income ratio in
the rule, and you can provide commentary. Again this is the kind ofthing, the kind of
discussion we needed a year ago and have begun to get recently and I really do appreciate
because they're useful and constructive discussions to have.
Russell - well the reason, ifl can just add another comment to that, I think it's important
to have [other debt] considered because if you take that approach that im only
accountable for my own debt-
Sh.ireman- Right, so to be clear, it's just a proposed rule. Comment period, final rule.
So we've gotten this kind of input, they'll be a proposed rule. If we haven't addressed
this issue and it needs to be addressed further in your view, there will be another
opportunity for you beyond the opportunities you've had in the last several weeks.
Russell - The one thing I would like not to see happen is that for admissions staff to say
we don't want to admit you because you've got debt.
Shireman - understood.
[NA] - can you tell me how this would apply to a public university or state college?
Shireman- well what we discussed at the table, in negotiated rulemaking- and I keep
repeating that because the "this"- we haven't proposed anything, we brought discussion
items to the table during Negotiated rulemaking, but it would mean that for shorter tem1
certificate programs, if more than half of the completers had debt, then the median debt
level of all completers, in other words not just the debt level of those who borrowed, but
the median debt level of all the people who complete the program, that would be the debt
level that would be compared against the expected earnings in the occupation the
program is preparing people for or the set of occupations. And then the discussion earlier
was about well, do you use actual earnings for people who are in the program or do you
use averages or 25th percentile with BLS so there's that question about what the measures
of income should be, so that would be - the concept was that as a standard. And again, at
the table we also had other suggestions for an institution if they didn't meet that
particular measure like graduation placement rates and loan prepayment rate.
LNAJ -so are you going to be asking them to post their placement rates as well/
Shireman- well placement rates have to be posted starting this July anyway, or
placement information. if you have rates, rates need to be posted.
LNA ) -so if they don't do it now, if they don't have placement info now . ..
Shireman - placement information was done as part of a rule done in - Congress
required all schools to post placement information in the Higher Education Opportunity
Act, and that goes into effect under the rule that was adopted last year so that goes into
effect this July.
[John Weir(?)] -from a state regulatory perspective, appreciate the Dept's effort to try
to address the cost issue, and one of the things that we've found at the state level is that
students don't seem to be price conscious when it comes to education. And what do you
think we can do at the state level to help make students better consumers, particularly as
to the cost issue?
Shireman- I think we've seen some improvement in that because of the economic
downturn, are seeing families chop more and really look at, does it really make sense for
me to spend $30-40K a year, what about the state university ... what about other options?
So I think it has improved somewhat, but more needs to be done. There will be, again
because of the Higher Education Opportunity Act, starting I believe this summer, schools
will now post net tuition - I cant remember if it's net tuition or net cost of attendance-
anyway some net figures by income bands so people will actually be able to go and say,
for someone in my fami ly income background, it's more common to pay this price rather
than the other price. And starting in, I think it' s a year and a half, all colleges will have to
have a net cost calculator, where a person can put in their income and other basic
information and get a basic sense of what their net cost would be. So that helps to deal
with some of the issues, we've provided some more tools to help people get more
information and to help them also deal with reality that sometimes a college that looks
really expensive based on its sticker price for a particular family, especially lower income,
may not actually be that expensive. So there's some new tools coming forward. I do
worry that just more information on the internet doesn't really help that much, and that
figuring out who we can provide tools more directly to teachers, counselors, people at
one stop job training centers. You know, our website, when people are actually applying,
finding those moments, those teachable moments when people are actually thinking
through these issues, so suggestions you have about the ways that we can do that, Pell
programs, state programs- we're certainly interested in ideas. It's important and not
easy to figure out how you teach the vast public things that aren't simple.
[Julie]- I guess this is more of a comment, but im somewhat concerned about the
potential for consumer confusion with the net cost calculator and different types of
disclosers about tuition. I know at the state, I'm in Tennessee, we've required that our
enrollment agreements contain the total cost of the program for a very long time. We now
require that the tuition rate be posted on the internet, we've required disclosure of
completion, referral rate, placement rates for a good while. We now do in depth audits of
placement data, so if student looks at our website, it's likely the numbers that they'll see
are going to be very difierent from maybe what they see on the F AFSA or some other
disclosure on the federal side. So how do we address the very likely possibility of
confusion, not knowing different methodologies and standards?
Shireman- I think you're right, there is going to be confusion. And even me, when I
:first started talking about net tuition, I couldn't remember, is it net tuition, is it net cost?
What's included in the definition? And I think there will be confusion, I guess the
positive side of that is, usually when you take a step and it creates those problems, it then
forces us all to sit down and say, how can we improve on what we had come up with
originally? Sort of like, data that's not perfect. Like, we cant post that data, it's not
totally clean. But the way to get people to clean their data is, you post it. And when we
started posting the student debt data that universities had reported to US News & World
Report, and universities would call and say, well that's not our figure and we'd say, well
that's what you reported to US News. And they'd go back, and sure enough, somebody
had reported something wrong, s I think that you're right, there will be some confusion
but that will probably force the issue to some degree. But id also welcome- I mean I'd
love to look at what Tennessee does and take it to some of our folks and ask about what
we can do, A lot offor some reason Congress in the education space, especially the
higher education space, gets very detailed in the legislation's actual statutory language,
which then makes it very difficult for us in the implementation to do things differently
that what they had prescribed. So we may not have a lot of flexibility in terms of our
implementation but maybe there's some suggestions we could make back to Congress by
pointing out to them these issues for particular states.
[Ray]- there seemed to be a reluctance on the part of Dept officials as well as most
people in the room during the NegReg process to talk about the troublesome aspect of
schools not being able to limit student borrowing,. It seems that we have a statute, a rule
that leaves the amount that students borrow entirely up to them. It's based on fom1ulas,
numbers across[] program lengths are mandated by state laws in many fields of training,
[licensure], all these things are out ofthe control of the institution, they cannot seem to
limit the amount that students borrow except in very specific case-by-case basis, and then
they subject themselves to lawsuits by students claiming they were discriminated against.
Might there be any opportunity to open up and look at some of those rules so that we
might be able to avoid some serious unintended consequences of a formula that could
cause havoc?
Shireman- student loan program and the Pell grant program are entitlements. They are
entitlements for covering tuition, fees, books, supplies, room & board, and to restrict an
entitlement program is a pretty big deal, and that's why it's difficult for us to do in tem1s
of regulations. Now you do have the ability, if you believe someone would default on
their loan, I think that's the ability that the fin aid administrators have ... you're also able
to establish what you feel to be reasonable expenses including in the room & board space.
But restricting loans beyond that would likely be something Congress would need to
consider, and I think part of the reason Congress has had a hard t ime thinking this one
through is higher education has benefitted enormously from Pell grants and student loans,
Pell grants working like an entitlement program on an annual basis, and student loan
programs being an entitlement program. And going down the road of starting to restrict
the entitlement, I think is something to do very cautiously if we want to make sure people
get the need they are eligible for.
END.
(b)(5)
Peter Cunningham
From: Cunningham Peter
To.: Yuan. Georgia
CC:
Date: 5/7/2010 7:59:58 AM
Subject: two things
U S. Department of Education
202-401-2563 (office)
202-230-2404 (cell)
(b)(5)
(b)(5)
(b)(5)
(b)(5)
(b)(5)
(b)(5)
(b)(5)
Bob:
(b)(5)
Russ
To.: Shireman. Bob
CC: Woodward. Jennifer
Jenkins, Harold
Date: 1/8/2010 11:52:20 AM
Subject: UOP 1 0-Q
Table of Contents
APOLLO GROUP, INC. A:W SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
U.S. Department of Education and its eUgibility continues on a month-to-month basis until the U.S. Department of Education
completes its review of the application and issues its decision. We have no reason to believe that the application will not be renewed in
due course.
U.S. Departnumt C!f Education Program Review
The U.S. Department of Education periodically reviews institutions participating in Title IV programs for compliance with applicable
standards and regulations. ln February 2009. the U.S. Department of Education performed a program review of Limversity of
Phoenix's policies and procedures involving Title JV programs. On December 31. 2009. University ofPhoenix received the l;.S.
Department of .Education's Program Review Report, which is a preliminary report of the U.S. Department of Education's findings. We
have until March 31. 2010 to submit a response to these findings. After the U.S. Department of Education receives our response. it
will issue a Final Program Review Determination letter that will specify any required corrective action or amounts owed to the U.S.
Department of Education.
The report contains six findings and one concem. Three of the findings generally relate to our procedures for detennining the date on
which a student withdraws from University of Phoenix, one of which cites exceptions to the U.S. Department of Education's rules
regarding the timing of returning w1earned Title IV funds. No errors were identified in our calculation of the amounts of Title IV
funds to be retumed. Another finding relates to isolated clerical errors in verifying student-supplied [nformation. Tile two remaining
findings were self reported by University of Phoenix in its 2008 Annual Compliance Audit. These involve our calculation of student
financial need in certain cases without taking into account tuition and fee waivers and discounts, principally for employees of Apollo
Group and it<> nftiliates eligible for tuition assistance. and the use of Title TV funds for non-program purposes such as transcript.
application and late fees.
In addition. the U.S. Department of Education expressed a concern that some students enroll and begin attending classes before
completely understanding the implications of enrollment, including their eligibility for srudcnt financial aid. The U.S. Department of
Education stated its belief that prospective students would be better served if they were more extensively counseled prior to incuning
any tuition liability about total program charges, the number of credits that are transferable. the total number of credits required to
complete their chosen program and the financial aid available for each academic year of the program.
We believe that our liability resulting from these findings will be approximately S 1.5 million, which has been accrued in our
November 30. 2009 financial statements. In addition. the U.S. Department of Education's regulations require certain institutions to
post a letter of credit where a preliminary program review repon cites untimely retum of unearned Title N funds for more than I 0%
of the sampled students. Absent relief from this requirement from the U.S. Department of Education. University of Phoenix will be
required to post by January 3(). 20 I 0 a letter of credit in the amount of approximately $125 million, to be maintained until at least
September 30. 2011.
We are reviewing the report in detail and we expect to submit a timely response to the U.S. Department of Education.
Securities and Exchange Commission Informal lnquit}'
During October 2009. we received notification from the Enforcement Division of the Securities and Exchange Commission indicating
that they have commenced an informal inquiry into our revenue recognition practices. Based on the information that bas been
disclosed to us, the scope. duration and outcome of the inquiry cannot be detem1ined at this time. We are fully cooperating with the
Securities and Exchange Commission in connection with the Inquiry.
lnterna( Revenue Sen-ice Audits
Please refer to 1'-'ote I 0, lncome Ta"es, for discllssion oflntemal Revenue Service audits.
25

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