responsive documents - department of education: regarding for-profit education: 8/17/2011 - ...

8/4/2019 Responsive Documents - Department of Education: Regarding For-Profit Education: 8/17/2011 - 11-00026-F 2Wood

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Page 1 of 212Woodward, Jenn iferFrom: Woodward, JenniferSent:To: Sunday, November 14 , 2010 10:10 AMMinor, Robin ; Gust, MarySubject: FW: another ABC News undercover investigationFYI.

From: Y u a n ~ GeorgiaSent: S u n d a y ~ November 1 4 ~ 2010 8:55 AMTo: W o o d w a r d ~ Jennifer; WolffJ RussellSubject: FW: another ABC News undercover investigationFYIFrom: K v a a l ~ JamesSent: S a t u r d a y ~ November 13J 2919 10:56 AMTo: K a n t e r ~ Martha; H a m i l t o n ~ Justin ; O c h o a ~ Eduardo; YuanJ Georgia; F i n l e y ~ Steve; M i l l e r ~ Tony; W e i s s ~ JoanneCc: B e r g e r o n ~ DavidSubject: FW: another ABC News undercover investigationABC found a college recruiting felons for a criminal justice program. Video is online.

http://abcnews.go. com/Thelaw/abc-news-investigates-profit-education - recruiters-caughtoffering/story?id=12122004&page=1\ABC News Investigates For-Profit Education Again: Recruiters Caught Offering Bad AdviceDespite ABC News' Previous Report, Some Recruiters Stil l Give Grossly Misleading InformationAs a former Criminal Justice professor for the for- profit Remington Coll ege in Houston,Larry Stewart said he was shocked when he discovered several convicted fe l ons in his criminaljustice classes."My very f i rs t class, I had a husband and wife who, he had done 13 years at the TexasDepartment of Corrections for a home invasion, robberyJ" he said."And his wife had done three years for trafficking drugs across state lines."According to Stewart, the felons in his class told him that recruiters for the school saidthey could work in law enforcement."I said, 'And you want to do what?'" he said. "They said, 'Well, we want to go into criminaljustice. ' And I said, 'You can never ge t a job in criminal j ustice . ' And they said, 'Well,the recruiters said that we can.'"I t isn ' t the first time recruiters for for-profit school s have been accused of misleadingpeople. ABC News conducted an investigation in August that exposed recruiters from thecountry's biggest for-profit college, University of Phoenix, for giving incorrect advice toprospective education majors.In that investigation, we sent in one of our producers undercover who asked about becoming ateacher in New York State. The recrui ter told him a degree from th e University of Phoenix

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would enable him to take the state c e r t i f i c ~ ~ d n ~ ~ a m s and become a certified teacher in NewYork. This was not true. The recruiter also encouraged the ABC News producer to take out themaximum amount of financial aid allowabl e, including interest-bearing student loans -- eveni f i t was more t han he needed.Experts say students who have attended for-profit schools are defaulting on their federalstudent loans at an alarming rate, which, they add, may contribute to the next big financialcrisis.After speaking with Stewart, ABC News conducted another undercover investigation recently,this time at Remington College. We sent in a prospective student with a felony conviction,undercover, to talk to a recruiter about enrolling in the college's criminal justice program.Student: "I have -- a felony from 2ees."Recruiter: "OK, 2005, OK . And what is i t?"Student: "Theft"Recruiter: "We will definitely work with you, especially when you know i t up front. And thathelps us a lot.When we know your history and your situation up front. We know exactly what, you know, kindof a target area you wanna be in -- sheriff 's department, corrections."The recruiter also told our undercover student that he couldn't be a cop, but there were avariety of opportunities in law enforcement for people with felony convictions.Remington College Recruiter Caught Giving False InformationRecruiter: "Sheriff 's, corrections, jail ers -- we put everybody in all those places all thetime . . . even border patrol, i f you ever thought about i t . Because, see, that ' s somethingelse that you could do that 's s t i l l in the realm of criminal justice."Despite the recruiter ' s assurances, that ' s actually not true for the state of Texas .According to the Texas Department of Public Safety, a person with a felony conviction cannotwork for any sheriff 's department, or as a corrections officer in the state of Texas, andgenerally that 's the case for border patrol positions as well.A spokesman for Remington told ABC News that before students enroll in their criminal justiceprogram, they must sign a document acknowledging that they may not be ab l e to work in lawenforcement with a criminal record .This particular recruiter at Remington made her misleading statements just mont hs afterHarris Miller, a spokesman for the Associ ation of Private Sector Colleges and Universities ,admitted that for-profit schools need to clean up their act.When asked why he thought the for-profit industry was in the hot seat, Miller said at thetime, "We're under fire for a couple of reasons. One reason is we're making mistakes."He added, "our schools and my board of directors is committed to making changes . . .we have azero tolerance policy. That means once in a while you have to take an employee and take himout in the back and shoot him-- not l i tera l ly-- but you have to dismiss employees."ABC News f i rs t talked to Miller in August after the init ial investigation, when he promisedto improve the for -profit industry's recruiting standards. But despite hi s assurances, ABCNews found that Remington wasn't the only for-profit college whose recruiters were s t i l ltrying to sell misleading information to prospective students.

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Page 3 of 212DeVry Col l ege Recruiter Touts Overblown Success RateAt DeVry College of New York, ABC News sent a producer undercover to speak with one of theschool's recruiters about becoming a certified teacher in New York through i ts program.Recruiter: "Last year, 88 percent of our graduates were actually workin' in their fieldwithin six months of graduation, OK? So, when we go through i t later, you know, we'll showyou the breakdown by, you know, degree and by program and everything like t hat, so you cankinda understand what, you know, where the number's coming from. But, I mean, 88 percent in,you know, 2ee9 -- I guess, dependin' on where you come from. But with the economy andeverything, you know, most people look at that as--"Producer: "That's pretty good."Recruiter: "--a pretty good rate."But the recruiter's claims were grossly misleading.Based on DeVry's numbers, many of the graduates the recruiter was referring to had jobs tobegin with that DeVry was taking credit for.A spokeswoman for the DeVry College of New York sent a statement sent to ABC News via emailin response to our investigation of the college's numbers, saying, "We make no apologies forcounting these employed students in our employment statistics and disclose this fact openlyin our print collateral, web site and admissions materials. We have been consistentlyreporting our employment statistics in a similar fashion fo r over 3a years. Many, i f not mostinstitutions of higher education also treat these employed students as part of their employedpopulation."Click HERE to read a letter to ABC News from DeVry College of New York.In a statement to ABC News about the issues with for- profit colleges, Sen. Tom Harkin, D-Iowa, the c hairman of the Senate Committee on Health, Education, Labor and Pensions, said:"Each aspect of for-profit colleges ' relationships with their students that I 've investigatedso far often features msrep resentation or manipu lation -- i t appears job placement claimsare no different.Misleading students and the American public about job placement rates is yet another exampleof for- profit colleges putting their shareholders before their students . Just as a lendershouldn't mislead an advertisement American into a mortgage they can't afford, aninstitution of higher education should not lead a prospective student into loan debt withmisleading promises of post -graduation job prospects."When we spoke with him i n August, Miller attempted to explain what happened with recruitersat other for- profit colleges."In some cases . . . for whatever reason, because of poor training, because of rogue employees orbecause they're getting the wrong message from above -- whatever the reason, somebody isdoing things wrong too widespread and we're going to change that," he told ABC News.Some critics of for-profit schools believe the industry is out to enroll students because i tmeans big money for them. An enormous, publically-traded industry, for-profit collegesreceived $24 billion in federal funds in 2ee9 and had an enrollment of 1.4 million students,according to the Government Accountability Office. Tuition for some is more than $2e,eee perschool year.

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"Every institution of higher education has t ~ ~ in more money than goes out, otherwisethe school'll close down," Miller said in his interview after our init ial investigation."Your tax status has nothing to do with whether you're Harvard Universi ty . . . or whether you'rea ' tax-status: for-profit ' institution."Miller added that despite aggressive recruiting methods, money is not the biggest goal ofthese for- profit institutions."It can't be profit first , because if you're not turning out a quality student, you're notgonna be able to continue in business-- because students have choices," he said . "They don'thave to go to one of our institutions. They can choose to go to a state college i f they haverelatively open enrollment. They can choose to go to a community college. So unless we canshow quality outcomes systematically, there's no way these schools will be able to continueto operate."After ABC News' first investigation into the University of Phoenix, i t seems as though someimprovements h ave been made at that particular for-profit institution. University of Phoenixpresident Bill Pepicello told ABC News that the college has stopped compensating i tsrecruiters based on the number of students they enroll.University of Phoenix Changed Recruiting Policy After First ABC News InvestigationUpon learning of the change, ABC News again, twice, sent in an undercover producer to speakwith a University of Phoenix recruiter to ask about getting a teaching certificate in NewYork through the school ' s program. This time, the recruiter did not offer any misleadingadvice.Recruiter: "If you live in the state of New York, we can't enroll for education for youbecause the New York requirement for education is totally different than what we can enrollfor."Despite the change at University of Phoenix, Remington's former Criminal Justice professor,Larry Stewart, said he remains skeptical of the for-profit college industry because i t makesso much money."They're more concerned about the bottom line. What is the bottom figure on this student," hesaid. "They look at, 'How much money did we make this term or this quarter?'"Click HERE to read 20e9 employment data submitted to ABC News from DeVry College of New York.ABC News' Lauren Effron contributed to this report

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Woodward , JenniferFrom:Sent:To:Subject:

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[email protected] on behalf of [email protected], August 19, 2010 3:07PMWoodward, JenniferFor-Profit Education: ABC News Goes Undercover to Investigate Recruiters at the Universityof Phoenix - ABC News

Pretty soon you'll te l l me not to send you any more emails - I wondered though i f you hadseen this?http://abcnews.go.com/Thelaw/profit-education-abc-news-undercover-investigate-recruitersuniversity/story?id=ll411379

This message was sent by nanshep12@gmail . com via http://addthis.com . Please note thatAddThis does not verify email addresses.Make sharing easier with the AddThis Toolbar: http://www . addthis.com/go/toolbar-em

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Page 6 of 212Woodward, JenniferFrom: [email protected] . omSent:To:Subject:

Friday, May 28, 2010 12:32 PMWoodward , Jennifer; Russei.Wolff@ed .gov(RE KaplanFYIJOHN ANDREWS813 8771867- - -- -- - Forwarded message follows ------- http:/jmotherjones.com/mojo/2010/05/steve-eismanbig- short-michael -lewisSteve Eisman's Next Big Short : For-ProfitCollegesn By Andy KrollThu May. 27, 2010 4:55AM PDT

Steve Eisman, the outspoken investor whose huge wager against thesubprime mortgage market was chronicled by author Michael Lewis in hisbestselling book The Big Short, has set sights on a new target : for-profit colleges ofthe kind of you might see advertised on daytime TV and at bus stops. Think ITTEducational Services, Corinthian Colleges, or Education Management Corporation .In a speech t i tled "Subprime Goes to College, " delivered Wednesday at the IraSohn Investment Research Conference, Eisman bl asted the for-profiteducation industry, likening these compan i es to the seamy mortgage brokerswho peddled explosive subprime loans over the past two decades. "Untilrecently, I thought that there would never again be an opportunity to beinvolved with an industry as socially destructive and morally bankrupt as thesubprime mortgage industry. I was wrong," Eisman said . "The fo r - profiteducation industry has proven equal to the task . " (All of Eisman's remarks herecome from a copy of his prepared remarks obtained by Mother Jones.)Eisman, a blunt, no-frills portfolio manager at FrontPoint Financial Services Fund , aMorgan Stanley subsidiary, became an overnight sensation as one of the maincharacters in Lewis ' latest . After witnessing the f i rs t wave of subprime madness inth e 1990s, Eisman grew skeptical of the industry as a whole, Lewis writes . Then,when subpri me surged again in th e 2000s, he put his knowledge to work. Needlessto say, he's a lot richer than he was t wo years ago.The for - profi t education sector has soared over the past decade, makingcompanies like ITTand Apollo Group into heavyweights . Driving much of thegrowth, Eisman explained, was th e sector's easy access to federallyguaranteed debt through Title IV student loans. In 2009, he said, for-profiteducators raked in almost one-quarter of the $89 billion in available Title IVloans and grants, despite having only 10 percent of th e nation'spostsecondary students.Ei sman attributes the industry's success to a Bush administrati on thatstripped away regulations and increased the private sector's access to publicfunds . "The government, the students, and the taxpayer bear all the risk andthe for-profit industry reaps all the rewards,"Eisman said . "This is similar to

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the subprime mortgage sector in that the s u b p ~ 1 ~ e 8 f i g i n a t o r s bore far lessrisk than the investors in their mortgage paper." (Calls to several for-profitc o l l e g e s ~ including ITTand C o r i n t h i a n ~ were not immediately returned.)Another similarity between subprime lending and for-profit education is t h i s ~ Eisman said: Both push low-income Americans into something they can'tafford"in the schools ' c a s e ~ pricey programs that leave the students heavilyin debt; what's m o r e ~ the degrees they ge t mean l i t t le in the real world: "Withbillboards lining the poorest neighborhoods in America and recruiters trollingcasinos and homeless shelters"and I mean that literally"the for-profits havebecome increasingly adept at pitching the dream of a better l i fe and higherearnings to the most vulnerable."Eisman went on to cite the industry ' s dropout rates of 50-plus percent asanother sign of poor quality; the numbers are likely u n d e r s t a t e d ~ he a d d e d ~ giventhat the industry reports them voluntarily . "How good could the product be i f dropoutrates are so stratospheric?" he asked. "Default rates are already starting toskyrocket . I t ' s just like subprime"which grew at any cost and kept weakening i tsunderwriting standards to grow."How does this kind of industry even stay in business? T h a t ~ Eisman a s s e r t e d ~ has much to do with accreditation. There are two main tiers of collegeaccreditation: national and regional"the latter being the more valuable. (Big schoolslike Yale and the University of Michigan are regionally accredited.) As Pulitzer Prizewinner Dan Golden has reported 1 for-profit colleges with the weaker nationalaccreditation have started acquiring financially troubled colleges for their regionalaccreditation. In a Bloomberg r e p o r t ~ Golden cites ITT's acquisition of NewHampshire-based Daniel Webster College in June 2009 for $20 million) a purchasethat could ultimately reap $1 billion or more for ITT .Eisman saved the ugliest part for last: As he sees i t , the industry's era ofmassive profits"ITT is more profitable on a margin basis than A p p l e ~ henotes"are about to end, thanks to new government regulations in thepipeline . He predicts big hits to the per-share earnings of Apollo G r o u p ~ ITT,Corinthian Colleges, Education Management Corporation, and the WashingtonPost Company"which owns and relies on Kaplan for profitability. For ITT andCorinthian, Eisman foresees 2010 losses of nearly 40 to S0 percent . RegardingEDMC, he noted in his prepared remarks that the company's 2010 fiscal estimate is"massively negative."Eisman ended with a warning:Are we going to do this all over again? We just loaded up one generation ofAmericans with mortgage debt they afford to pay back. Are we going toload up a new generation with student loan debt they can never afford to payback? The industry is now 25 percent of Title IV money on i ts way to 40percent. If i ts growth is stopped now and i t is policed, the problem can bestopped. I t is my hope that this administration sees the nature of the problemand begins to ac t now. If the gainful employment rule goes through as i s ~ thenthis is only the beginning of the policing of this industry.But i f nothing is done, then we are on the cusp of a new social disaster.Not all experts on the for-profit education foresee such an ominous future.Trace Urdan, a managing director at Signal Hill who analyzes the industry, toldMother Jones earlier this week that pending regulation from Washington couldindeed complicate the future for for-profit colleges. He added, however, that " if you'reshort on the industry right now1 you think there's a game-over scenario on theway""something Urdan himself doesn't necessarily see happening. Should theEducation Department strongly crack down on for-profit schools, Urdan said hepredicted losses of 8 to 12 percentnfar less than Eisman's 40 to S0 percentprojection.

--- ---- End of forwarded message -------2


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John W Andrews, Esq .Andrews Law Group3220 Henderson Blvd.Tampa, Fl 33609ph. 813-877-1867fx. [email protected]

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Page 9 of 212Woodward, JenniferFrom: Guthrie, MartySent: Friday, August 06, 2010 7:55AMWoodward, Jennifer; Wolff, RussellMcCullough, CarneyTo:Cc:Subject: FW: Student Lending Analytics Slog

FYI

From: [email protected] [mailto:[email protected]] On BehalfOf Student LendingAnalytics BlogSent: Friday, August 06, 2010 4:27AMTo: Guthrie, MartySubject: Student Lending Ana lytics Blog

Student Lending Analytics Blog

The Difference Five Weeks MakesPosted: 05 Aug 201o 11:48AM PDTJune 23, 2010: President and CEO of Career College Association, A Response to Steve Eisman, at NationalPress Club

"It is no secret that the career education sector is under attackby shor t sellers, trial lawyers, self-styledconsumer advocates, and some traditional academics. Although they should know better, these critics useanecdotes to generalize and to make sweeping condemnations of ou r sector. They seize on admittedlyflawed government data to make the most extreme statistical arguments. They exploit the same smallcadre of so-called third party experts to generate critical comments. And they recycle old news to givecurrency to new allegations. In short, they twist the truth to serve their self-interest ."

Augus t 4 , 2010: From Career College Association press release "GAO Report Deem ed Deeply Troubling:""The Career College Association (CCA) said the recent findings of a Government AccountabilityOffice(GAO) repor t on admissions and financial aid practices at several private sector colleges and universitiesis deeply troubling and, notwithstanding multiple safeguards that schools already take, and the oversightprovided by the "triad" of federal and state regulators and accrediting bodies, it will institute a series ofimmediate steps to help its members assure full compliance with regulations and accreditationrequirements in all areas."Even i f he problems cited in the GAO report are limited to a few individuals at a few institutions, we canhave zero tolerance for ba d behavior," said CCA President and CEO Harris N. Miller. "As educators, ourcommitment must always be to put students first, even if that means taking action against individual

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Page 10 of 212employees or institutions that color outside the lines. We understand that employees can make mistakes,but it is up to employers to take the set ofcomprehensive and multifaceted preventative and correctiveactions that minimize the risk of such problems and correct those that occur.

Wondering What Happened When Incentive Compensation Rules WereTightened in 1992?Posted: 05 Aug 2010 11:32 AM PDTFrom SLA post in November 2009 (which includes a table showing the percentage of student loanscoming from students a t for-profit institutions:

At 22.1% in 2008-09, the proprietary sector is nearing their two decade high of 24.2% share of federalstudent loan volume which they reached in 1990, just prior to the Nunn report and the ban onincentive compensation in 1992 .

In the decade where this ban on incentive compensation was weakened through the introduction oftwelve "safe harbors" in 2002 , the percentage of federal loans going to proprietary schools has grownfrom 12% in 2000 to 22. 1% in 2008-09. I can't prove causality, bu t it is interesting to note that in theperiod following the ban from 1993 to 2000, the proprietary sector's share of the federal loan market,despite annual gyrations, remained almost unchanged from 11.5 % in 1993 to 12.0% in 2000.

The Department of Education has proposed regulations to eliminate the safe harbors and go back tothe earlier ban on incentive compensation. Following the GAO report and hearing, University of Phoenix in a pressrelease today indicated that they would be making the following changes to their compensation plans:

"In addition, as previously announced, beginning November 1 of this year the University plans to roll out anew s tudent counselor compensation framework, which has been in development and testing for morethan a year... A firm decision to change the way counselors are evaluated and compensated, including acommitment to completely eliminate admission targets as a component of compensation."

Three questions: What will the admissions counselors compensation be based upon (and what behaviors will this

compensation structure encourage)? As anyone who has managed salespeople knows, they respond toincentives!

Will competitors be following suit with compensation changes or just waiting until they are forced to whenthe new regulations take effect?

How sharply will enrollment growth decline as a resul t of the new compensation str uctures (and all thenegative publicity swirling in the sector)?

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Woodward, JenniferFrom:Sent:To:Cc:Subject:

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Guthrie, MartyFriday, August 06, 2010 7:55AMWoodward, Jennifer; Wolff, RussellMcCullough, GarneyFW: Student Lending Analytics Slog

FYI-Wanted to share this in case you guys haven't seen this from SLA. Incentive comp info toward the end.I'll forward today's SLA message (which also includes incentive comp info) shortly.From: [email protected] [mailto:[email protected]] On Behalf Of Student LendingAnalytics BlogSent: Thursday, August 05, 2010 4:24AMTo: Guthrie, MartySubject: Student Lending Analytics Blog

Student Lending Analytics Blog

Pell Grants Rise 61% in 2009 -10 Academic Year; 45% ofStudents Now Receiving PellGrants

What's Happening In Private Student Loan Land? Reactions to Senate Hearing on For-Profit Marketing Practices Highlights from Hearing on For-Profit Marketing Tactics

Pell Grants Rise 61% in 2009-10 Academic Year; 45% of Students NowReceiving Pell GrantsPosted: 05 Aug 2010 12:10 AM PDTI might have titled this post: A Sign of the Times ..The Federal Student Aid Data Center site updated figures last month for Pell Grants. Here are stats onrecipients, grants an d average grant size for the past four years with annual changes in the right hand columns:

Acad. Yr.06-0707-0808-09

Recipients(in millions)5.295.696.32

Grants Average(In $MM) Grant Size$12,792 $2,419$14,675 $2,580$18,284 $2,892

1

AvgRecipients Grants Grant Size

8%11%

15%25% 7%12%


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09-10 8.23 $29,361 Page 13 of 212$3,566 30% 61% 23%

Observations: The 61% growth in Pell Grants to an annual figure of $29-4 billion was driven by both a 30% increase in

recipients to 8.23 million and a 23% increase in average grant size to $3,566. The maximum Pell Grantfor the 2009-10 academic year was $5,350. The maximum grant is $5,550 for the 2010-11 academic year.

With NCES estim ating that 18 .4 million studen ts would attend two year and four-year institutions infall 2009, that would mean almost 45% of those in attendance received a Pell Grant for 2009-10. I fyouassume 100% of students at proprietary schools are Pell-eligib1e, that suggests that about 1 in 4 studentsat public and private non-profi ts are Pell-eligible.

For those wondering how the percentage of recipients and grants broke outby sector, 63% ofgran trecipients and 62% of the grant volumes came from students at public institutions with for-profits next at25% of recipients and dollar value of grants (Recipients and Grants in Millions):

School Type Recipients G rantsPRIVATE-NONPROFIT 1.01 $3,877PROPRJETARY 2.06 $7,339PUBLIC 5. 16 $18,1458.23 $29,361PRIVATE-NONPROFIT 12% 13%PROPRIETARY 25% 25%PUBLIC 63% 62%100% 100%What's Happening In Private Student Loan Land?Posted: 04 Aug 2010 11=44 PM PDTI thought I would provide a brief update of several new developments with private student loans:Two states have formalized their fixed-rate private student loan products for 2010-11:

Vermont Student Assistance Corporation (VSAC) is offering a private student loan with fixed ratesranging from 6.9% to 7.75% [dependent on repayment option selected] and fees ranging from o% to 5%[dependent on credit scores]. Applications will be available in early August.

Ma ine Education al Loan Authority (MELA.) is offering a private student loan with a fixed rate of 7-75%and a 4% guarantee fee. Interest payments are required during the in-school period.

Several lenders have recently tweaked (or announced an upcoming change) the range of interest rates on their2


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private loan products (each dropping below the % ' r ; v ~ 1 ~ n b e minimum or "as low as" interest rate on theirloans):

Discover reduced the minimum starting interest rate on their variable-rate private loans to 3.75% (from4.25%). This is Discover's first change to interest ra te ranges since June ts t of last year.

Chase will be reducing their minimum starting interest rate on theirvariable-rate private loans to 3-94%(from 4.14%). Chase has changed their interest rate ranges on several occasions this year (note that someof the changes were driven by an increase in UBOR during the year):

Pre-March 1st: 4-40% to 9-75% March 1st: 4.15% to 8.75% July 1st: 4.14% to 9-79% As ofAugust 6th: 3-94% to 9-79%

And in other news...In late July, the New York Post reported that Sallie Mae had hired Goldman Sachs to help it explore "options." Thecompany has made no secret that they are carefully evaluating their restructuring options (from New York Times):

"According to The Ne w York Post the student lender hired Goldman Sachs to advise on a sale orspinoffof its student-loan servicing business and its $145 billion government-subsidized loan portfolio.The company is also mulling the possibility of converting part i f ts platform into a traditional deposittaking bank, The Post said."

Citibank's Student Loan Corporation reported a 40% decline in private loan originations in the quarter endingJune 30, which is traditionally a seasonally slow quarter. For 2009-10 academic year, Student Loan Corporationoriginated close to $900 million in private loans, a 47% reduction from the 2008-09 academic year. I also cameacross an article citing a banking aualyst, Di ck Bove, who expressed this opinion of whether Student Loan Corp. wouldbe so ld:

''The ability to sell Student Loan at this time is nil," he said, noting that perhaps in two or three years,after the financial markets settle, a sale may occur."

Reactions to Senate Hearing on For-Profit Marketing PracticesPosted: 04 Aug 2010 u:oo PM PDTUS Names Ap ollo, Corinthian, Kaplan In For-Profit Probe (Wall Street Journal) includes company and the

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n . . , . th Paoe 15 o career co ege associations reactions to e GAO report ana .Senate hearing: Kaplan: "A Kaplan spokesman said in an emailed statement the company had initiated investigations at the

two schools named by the GAO "immediately upon learning of the incidents" and has suspendedenrollment at its Pembroke Pines, Fla., campus. Investigations at that campus and the Riverside , Calif.,campus continue. The spokesman said Kaplan "will take all necessary actions" against employees violatingthe company's standards and code of conduct."

University of Phoenix: "An Apollo representative said the company has initiated an internal investigationand it, too, would take "immediate and decisive disciplinary action" i f t finds employees in violation ofpolicies meant to protect students."

Career CollegeAssociation: "The Career College Association, a trade group, announced late Tuesday inresponse to the GAO's findings that it would enhance it s top-down compliance training programs andinstitute a "mystery shopper" program immediately in the hopes of heading off some criticism. "Even ifthe problems cited in the GAO report are limited to a few individuals at a few institutions, we can havezero tolerance for bad behavior," President and Chief Executive Harris Miller said in a statement. "We willcontinue to add to this 'zero tolerance' program until all such doubts about ou r sector are removed."

GAO: 15 for-profit coll eges used deceptive recruiting tactics (Washington Post) had this reaction fromWAPO executives (the Washington Posts owns Kaplan , one of the schools cited in the report):

"In a joint statement, Donald E. Graham, chairman and chiefexecutive ofThe Washington Post Co., andAndrewS. Rosen, chairman and chief executive of Kaplan Inc., described the tactics revealed in thevideotaped interviews as "sickening.""They violate in every way th e principles on which Kaplan is run," they said in a statemen t posted on TheWashington Post Co.'s Web site. "The GAO and the Senate [Health, Education, Labor and PensionsCommittee] have done us a favor. We will do everything in our power to eliminate such conduct fromKaplan's education institutions."

WAPO also highlighted the fact that most of he companies investigated were the largest in the industry[representing almost 43% of the 1.8 million students enrolled in for-profits]:

"Many of the largest for-profit entities were named among the 15 sites targeted by GAO investigators:University of Phoenix, with more than 400,000 students; Argosy University, part of the 136,000-studentEducation Management Corp.; Kaplan College, part of the 119,000-student Kaplan Higher Educationoperation owned by The Washington Post Co.; and Everest College, part of the uo,ooo-studentCorinthian Colleges."

Lawmakers Focus Ire on Accreditors for Abuses a t For-Profit Colleges (Chronicle of Higher Education)noted the failings of oversight and enforcement at the Dept. of Education and accreditation bodies:

'The rest of the hearing focused on assigning blame for th e abuses. Pressed by la\vmakers, Mr. Kutzfaulted the Education Departmen t, saying it has failed in its oversight of the sector. While there are

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. . Pag' 16 of 212regulanons m place to protect students from misleaaing and aggressive sales, they're not being enforced,he said. "It certainlyseemed like a wild, wild West out there," he said, urging government regulators tostep up their monitoring offor-profit recruiting and to punish colleges whose employees violate therules ..

As for the accreditation process, here is one exchange that the Chronicle captured:"Do you think maybe your rigorous standards aren't rigorous enough?" asked Senator Franken, ofMinnesota."I believe the standards themselves are rigorous," Mr. McComis replied. "In these cases, the schools'compliance with the standards fell short."Asked by Senator Harkin why the accreditor hadn't found problems at the three institutions, Mr.McComis replied that the accreditation process isn't designed to catch "the sort of fraud the GAO basalleged."'W e don't secret shop," he said. "So in the normal course of an evaluation, I'm not sure we'd find thoseoccurrences."That answer appeared to infuriate Mr. Harkin, who said it was "apparent to me that we need a hearing onaccreditation."

Senator to Review Accreditation of For-Profit Colleges (NYTimes) highlighted Harkin's cal1 for a focus onthe accreditation process:

"As part of the expanding Congressional scrutiny of for-profit colleges, Senator Tom Harkin announcedat a hearing on Wednesday that he plans to examine their accreditation process .. Mr. Harkin questionedMichale McComis, executive director of the Accrediting Commission of Career Schools and Colleges,about why his group had found so few violations over the last two years in more than 6oo visits toinstitutions it accredits when the Government AccountabilityOffice found problems at every one itvisited."

'Tight' Rules Sought for For-Profit Colleges (USA Today) noted that some lawmakers are seeking a morecomprehensive look across all types of higher education institutions:

"Some lawmakers called for an expanded exploration to include practices of raditional non-profit publicand private colleges. 'Th e for-profit sector should not be examined in a vacuum," said Sen. Mike Enzi,R-Wyo."

Ironic that on the day of the Senate hearing about misleading recruiting tactics, Career Education filed an 8-K withthe SEC that contained the following (from WaJl Street Journal, emphasis is mine):

"Career Education said in a filing with the Securities and Exchange Commission Wednesday that thegovernment's recommendations could "materially and adversely affect our business," with proposals

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d. . . inful !P age 17 of 2_,2 fregar mg recruiter compensation, ga emp oyment, the definition o a credit hour and liability formaking misrepresentative statements having the most potential impact."

For-Profit Colleges Hit with Claims of Fraud, Aggressive Recruiting (Christian Science Monitor) provideddetails of the testimony of the former recruiter at Westwood College:

"Another witness at the hearing was Joshua Pruyn, who spoke about working as an admissionsrepresentative for Alta College Inc. in Denver. He was trained in sales tactics, including interviewingstudents to find the "pain points" in their lives that couldbe used to pressure them to enroll, such asworries about being in a dead-end ob. Misleading potentialstudents to make enrollment targets wasstandard practice and was rewarded with incentives such as trips, he said.Mr. Pruyn quit after nearly 6 months. The final straw, be said, was discovering that students who wantedto withdraw and clearly would eventually dropout (including a military person who was called up foractive duty) were pressured to stay enrolled for at least 14 days because after that point, the school couldkeep federal money that the student had been awarded."

Highlights from Hearing on For-Profit Marketing TacticsPosted: 04 Aug 2010 11:42 AM PDTJust finished watching a few hours of the Senate HELP committee hearing: For-Profit Schools: The StudentRecruitment Process.

Highlights:

The first half of he hearing focused on the GAO report which hit yesterday and included videotape (here isa link to the video) demonstrating the fraudulent and deceptive marketing practices uncovered. Senator Harkin will be sending an information and document request to 30 for-profit schools tomorrow. He

is planning on holding another hearing in September to "get to the bottom of this." He seemed mostinterested in graduation rates and churn rates bu t I would be surprised if he didn't ask about recruitmentpractices also.

Harkin also seemed interested in finding a legislative solution to this issue. He described the Dept. ofEducation regulations on program integrity to be a good "first step" bu t expressed concern thatregulations can be changed too easily by future administrations, using the "safe harbors" of incentivecompensationas an example.

The accreditation process also will be coming under additional scrutiny too with Senator Franken, inparticular, focusing his line of questioning on the issue of how well accreditors are ensuring that theirrigorous standards are being adhered to.

I missed the first 30 minutes of the hearing bu t the committee "named names" of the colleges investigated in6


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the GAO report (from Barrons): Page 18 of21 2

Case 1: University of Phoenix, Arizona Case 2: Everest College, Arizona Case 3: Westech College, California

Case 4: Kaplan College, California Cases: Potomac College, Washmgton, DC Case 6: Bennet College, Washington, DC Case 7: Medvance Institute, Florida Case 8: Kaplan College, Florida Case 9: College ofOffice Tech, illinois Case 10: Argosy College, lllinois Case u: U ofPhoenix, Pennsylvania Case 12: Anthem Institute, Pennsylvania Case 13: Westwood College, Texas Case 14: Everest College, Texas Case 15: ATI Career Training, Texas

Other notes that I scribbled down (hope to have a transcr ipt up in 24 hours): Here is a transcript of the video provided at the hearing: http:/ v.ww.gao.govjvideofilesjgao-I0-948t/gao

I0-948t.txt with some statements made by admissions reps.: "You gotta look at it- I owe $8s,ooo to University of Florida. Will I pay it back? Probably not. I look

at life a little differently than most people. I look at life as tomorrow is never promised." "Most doctors are walking around with over $250,ooo in student loans ..bu t it's workable, you

know, it's really workable. And the ..a lot of people have student Ioans ..bu t the best thing aboutit, it's not like a car note, where ifyou don't pay they're gonna come after you.''

When a prospect wanted to learn more about financial aid, the admission supervisor had this to saybefore tearing up their application: "So, honestly, I gotta tell you, I totally understand your

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Page 19 of2"2 . concern, bu t I really, With all due respect, I don't bebeve you're ready to take that step, penod.That paper could say $40,000. And in your situation, and at your stage in life, you should beready to make your investmentof time and money necessary to get you to where you should be atthis point. But you're not. And we're trying to help you get there and trying to help you ..understand it, but there's ..What are you really afraid of? There has to be something more."

GAO investigation showed that 6 of the 15 admission counselors would not provide financial aid informationuntil the student bad signed an enrollment agreement and paid an application fee. Investigator said it It'snot not hard to find fraudulent and deceptive practices; the big difference is the vast amount of money iscoming from American taxpayers.

Isakson suggested that there should be a focus on enforcing current laws and asked what Dept. of Educationwas going to do to enforce Program Participation Agreements.

Sen. Burr made two comments: Department of Education should look at elimination of incentives and theirrole in the willingness of counselors to break the law. Also, rattled off statistics on graduation rates atboth for-profit and non-profit institutions in his state.

GAO investigator's take on current oversight and enforcement regime: "Given what we saw it looked like the"wild, wild west."

Sen. Mikulski referred to admissions counselors as "bounty hunters" and described students encountering a"black hole ofdebt, disappointment and heartbreak."

With several admissions counselors in the investigation recommending that prospects falsify their FAFSA,several senators recommended linking the FAFSA forms to the IRS database for verification purposes.

Panel2David Hawkins of the National Association for College Admission Counseling highlighted the informationasymmetry between prospect and admissions counselor akin to the subprime mortgage industry which makesstudents vulnerable to being misled in the process. Also highlighted the role of the "safe harbors" that were added tothe incentive compensation ban as "effectively gutting" that ban and "providing a roadmap for institutions tocircumvent the law as originally designed" and leading to these "boiler room sales tactics."

GAO found 32 violations of ncentive compensation since 1998 Here is history of incentive pay issue as posted earlier

Michael McComis , Executive Director, Accrediting Commission of Career Schools and Colleges,Arlington, VAdiscussed the accreditation process including the triad system which includes federal and state regulators in additionto accreditors. He described a multi-step process including student surveys, on-site visits, interim reviews and arobust compliant process. He concluded by saying thatACCSC would look forward to working with Congress to

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strengthen the process. Page20of212

Joshua Pruyn , former Admissions Representative, Alta College, Inc., Denver, CO described the daily grind ofbeing on the front lines of selling on-line education to the masses. He described being trained in a 7-step salesprocess, described the interview with a prospect as "psychological game" after initial training. Prospective studentsare referred to as "leads." He described the importance of "starts" with the focus on having a student in program forat least 14 days, after which the schools keeps the federal financial aid. Described how one Asst. Director receivedthe "Best Liar award" at team celebration. Also discussed the obfuscation behind the internal private loan programoffered by Westwood including a) not to call it a loan but instead "Westwood would step in to help" b) need to pay$150 while in school (which didn't keep loan balance from increasing) and 3) 12% interest on the loans.

Questions to panelists Compensating admissions directors based on students enrolled is common practice; what's wrong with

that?Hawkins: Since safe harbors, we have been collecting stories; lawsuits, media reports. We have 10 pages of bulletsummaries of this evidence. There is no doubt in my mind because of safe harbors that there is preponderance ofevidence that this is industry practice. How much more evidence do we need? There is significant need forcounseling for low-income students and when you don't provide it they are at a disadvantage and when you givethem misinformation ..

What are the rigorous standards used by accreditors to ensure schools only admit students that areaccurately and fully informed?

McComis: rrhis was the most pointed line of questioning with Senator Franken highlighting the fact thatthree of the schools from the GAO investigation were accredited byACCSC]. In the end, McComis said that hiscommission will look to see if there is more they can do on diligence [Later Sen. Harkin made the point thatACCSC made 629 on-site evaluations and didn't find any substantial non-compliance while GAO randomlysampled 3 institutions and had adverse findings at all of them]. You are subscribed to email updates from Student Lending Analvtics BlogTo stop receiving these emails, you may unsubscribe now.

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Woodward, JenniferFrom:Sent:To:

Subject:

Page 21 of 212

Finley, SteveWednesday, June 23, 2010 9:08 AMSiegel, Brian; Burton, Vanessa; Scaniffe, Dawn; Morelli , Denise; Marinucci, Fred; Jenkins,Harold; Woodward, Jennifer; Wolff, Russell; Sann, Ronald; Wanner, Sarah; Varnovitsky,Natash aChronicle ar ticle

Interesting article in the Chronicle about the upcoming oversight hearing on for-profit institutions, possible effects onother schools, and the general lackof information about life-time default rates for institutions.http ://chronicle.com/article/New-Grilling-of-For-Profits/66020/Worth reading for that discussion, but also interesting to see that some large for-profit schools are starting to givestudents a form of "tr y it and see if you like it" option:

Kaplan is cautiously testing out one solution. Beginning thi s past March, Mr. Smith said, the university began apilot program in which new students ca11 emoll conditionally and then leave after three \>.1eeks, without anv debtor any transcript, if they find they canno t handle the work."It is a substantia l hit to revenue," he said of the tria l course structure, "but the fact of the matter is it'sabsolute ly the right kind of thing to do ." The for-profit Universitv ofPboenix, the nation's largest universitysystem, is advertising a similar trial svstem.

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Page 22 of 212Woodward, Jennife rFrom: Woodward, JenniferSent: Friday, November 12, 2010 11 :20 AMTo: Jenkins, Harold; Marinucci, Fred; Siegel, Brian; Wolff, Russell; Finley, Steve; Morelli, Denise;Wanner, Sarah; Yuan, Georgia; Sann, Ronald; Thompson, Lauren; Kolotos, John;McCullough, Carney; Guthrie, MartySubject: FW: Academe Today: For-Profit Colleges May Be at Brink of a Major Reset

Note the first article by Ms. Blumenstyk. There are links within that article to other articles about the GE public hearingslast week.The comments are very interesting.

From: The Chronicle [[email protected]]Sent: Friday, November 12, 2010 5:00AMTo: The ChronicleSubject: Academe Today: For-Profit Colleges May Be at Brink of a Major Reset

Friday November 12 , 2010 Subscribe to the Chronicle!..J

Subscribe to this newsletter J Stop receiving this newsletter JTop Stories

For-Profit Colleges May Be at Brink of a Major ResetByGoldie BlumenstykCompanies are seeing slower enrollment growth, tempering expectations, and adopting new strategies.Analysts say this is just the beginning.ADA Compliance Is a 'Major 0Vulnerability' fo r Online Programs xAt most colleges, meeting standards is in thehands of individual faculty members or theirdepartments, rather than any central office, asurvey found.

ndiana U. Anatomy Programo-


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Page 23 of 212perpetrators of he storming of ConservativeParty headquarters.More NewsNew NCAA Pres ident Hints at His Pt;orities in Remarks to Faculty Reps

1 California Community-College Leaders to Recommend One Million New Graduates by 2020IA Composer's Muse Takes the Form of a Technology InstituteThe Ticker: News From Around the WebProvost at Bowie State Who Drew Faculty Complaints WiU LeaveWedding Announcement Costs Gay Administrator Her Job at a Catholic CollegeTrustees Fall Short in Fun d Raising, Survey FindsAP Italian Is Coming BackPostcards: Great College Towns Across AmericaNever a Bad Meal, or a Meal That's Bad fo r the CommunityA visit to Beloit College's slow-food co-op, where studen t members take control of what they eat.From the New Global EditionIndia's Bus iness Leaders Applaud Progress on Higher Educat ionBy Shailaja NeelakantanAt a recent summit, the country's higher-education minister asked the private sector to take part inimproving the system.WorldWise: Why Brazil's Standardized Entrance Test Deserves to Be SalvagedDespite major problems, the exam is worth saving to help make highe r education more accessible, saysBen Wildavsky.Commentary

'The Washington Post' and the Perils of For-Profit CollegesBy Stephen BurdThe news pape r's parent company owns Kaplan Inc. and a share of Corinth ian Colleges,presenting a conflict of interest in its coverage of the for-profit ind ustry.

The Chronicle Review

tudent Bodiesy Jill Silos-RooneyWhat's the appropriate reaction to students who expose themselves to more thanknow ledge?Brainstorm: Printing Money BluesSensible social safety nets would be better than desperate monetary stunts for stabilizing our economy,writes Teresa Ghilarducci.Brainstorm: Imagine a University Run by Demons From the ldIn what ways would a Second Life University differ from an actual one? asks Gina Barreca.Advice

iIi. G r a n t - W r i t i n g Tips fo r Graduate Students., Lisa Patrick Bentleyi . i ~ ~ a t if you take the reviewers' advice, revise your proposal , and it still getst . clown?

~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - J2


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Page 24 of 212ProfHacker: Use RSS to Keep Up With Favorite Online ServicesFrom Gmail to YouTube, Tungle to Remember the Milk, many of he most popular online servicesmaintain blogs that provide news, tips, and tutorials covering how to use their product.From The Chronicle's SlogsBuildings & GroundsRanking the Most-Affordable College TownsIf you want to live cheaply, try living near Ball State University, the University ofBuffalo, or nearlyanywhere in Ohio.PlayersLeaders in College Sports RemainLargely White and MaleOf the 120 athletic directors at the nation'smost-competitive college sports programs, allbut 19 are white men, a new report says.Arts & AcademeArt Students' Mental Health: AComplicated PictureThe need "to be creative on demand" entailsstresses that are particular, and particularlyintense, therapists say.From Arts & Letters DailyWe can't say we didn't know enough. Our recent L-- - - - - - - - - - - - - - - - - - - 'housing bubble was inflated despite-partlybecause of-amazing computer power, reams ofdata, and sophisticated models. MoreAnnouncements

Will the Classroom of the Future Be Virtual, Face to Face, or a Hybrid?The Chronicle's special report takes a close look at how virtual education has gone mainstream in theclassroom. Purchase Instant Delivery of the 20 l 0 Online Learning report at The Chronicle Store.The Chronicle's Home Page INews IOpinion ILatest Jobs ICareer Advice IBlogs

Did a fr iend send you this? Go here fo r your own copy.In addition to this report, The Chronicle publishes free e-mail newsletters on technology, community colleges,hiring, and the world of ideas. You can also create an unlimited number of search agents so that you receive email notification of available jobs in academe that meet your criteria.The Chronicle of Higher Education website contains a mix of free and premium content For full access to thepremium content, please purchase a subscription to our weekly newspaper.Manage your account:Retrieve user name 1Reset your password 1(c) 2010 The Chronicle ofHigher Education1255 23 rd Street NWWashington, DC 20037

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Page 25 of 212Woodward, JenniferFrom: McDade, JohnSent:To : Monday, October 26, 2009 6:28 PMWoodward, JenniferSubject: Re: Article

FSL:Congratulations! Job well done - I can't wai t to read it.Regarding IC, I'll try to take a look at it.Talk later,John Me .Sent from my BlackBerry Wireless Handheld

From: Woodward, JenniferTo : McDade, JohnSent: Mon Oct 26 17:02:43 2009Subject: RE: ArticleFeel free to stop over anytime with that bleach .. my place sure could use a little TLC. Anyway, I got the Brieffrom Hell fi led at 5. My head hurts! I'll send you a pdf of it tomorrow. Thanks again fo r all you insights. If youhave any on the big IC, (Incentive Comp), please le t me know, as that is my most specific assignment asattorney-advisor.

From: McDade, JohnSent: Monday, October 26, 2009 8:39AMTo: Woodward, JenniferSubject: ArticleF L.

Good morning!Interesting article below from the Inside Higher Ed websiteFYI - my apartment floors needed a drastic cleaning (even broke out the bleach), and I did not get a chance to review anyof the items.Talk later,

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Page 26 of 212

YF w+++++++++++++++++++++++++++++++

In the Crosshairs?October 26, 2009Share This Storyhttp://www.insidehighered.com/news/2009/10/26/regs#Education Department officials have been insisting for months that, despite the warnings of someWall Street analysts to the contrary, the federal government is not intent on intensifying its regulationof for-profit higher education.That assertion got a little harder to believe on Friday, when the department announced thecomposition of a committee charged with negotiating a set of new federal regulations related to theintegrity of federal financial aid programs. Given the issues on the panel's agenda, its membershipleans notably toward critics of the for-profit sector of higher education, and decidedly short onrepresentatives 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 rule making process (which is explained here), thedepartment's September 9 announcement inviting nominations for the committees said it wouldpopulate the panels with people who "represent the interests significantly affected by the topicsproposed for negotiations."In this case, the topics under the overall rubric of the integrity of federal financial aid programs includesuch things as incentive compensation for college recruiters and the use of tests 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 goa l of negotiating committees like this one (and another the department is creating to look atforeign institutions) is to try to reach unanimous agreement on a set of recommendations forproposed regulatory changes, to provide to the education secretary. Disapproval from any singlenegotiator can torpedo the whole process, giving the federal agency that sponsors the session- inthis 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 potentialfinancial aid fraud and abuse would contain some people who don't like for-profit colleges. Theinstitutions have long been viewed with skepticism by consumers' rights groups that (citing manyhistorical examples and a smaller number of high-profile recent ones) accuse some of the institutionsof preying on low-income students by charging comparatively high tuitions and underdelivering ontheir promises of good jobs.

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So it's no surprise that the committee a p p o i n t e ~ r g y t ~ ~ l = d u c a t i o n Department contains consumer andstudent advocates with a track record of criticizing for-profit colleges. The student members (oneprimary representative and an alternate) come from two student groups, U.S. PIRG and the UnitedStates Student Association, that frequently take aim at for-profit colleges. Both groups signed a letterthis month, for instance, that urged Congress to toughen its regulation of private student loans madeby for-profit colleges.The panel also features two consumer advocates. One, Margaret Reite r, is a lawyer who, as deputyattorney general in California, sued Corinthian Colleges. Inc., for "a persistent pattern of unlawfulconduct" 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 NationalConsumer Law Center, which published a 2005 study called "Making the Numbers Count: WhyProprietary School Performance Data Doesn't Add Up and What Can Be Done About lt."What's more unexpected, perhaps, is that the group gathered by the department to negotiate a set ofissues that relate heavily to for-profit institutions contains so many other members with a clearlystated 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) fromeach of the major sectors of higher educat ion-- public two-year (Richard Heath of Anne ArundelCommunity College), public four-year (Philip Asbury of the University of North Carolina at ChapelHill), private four-year (Todd Jones of the Association of Independent Colleges and Universities ofOhio) and for-profit colleges (Elaine Neely of Kaplan Higher Education). Aside from Neely, who canbe counted on to advocate for the career college sector, none is known to be particularly a friend orfoe of for-profit higher education.But bas.ed on their track records or previous statements, it's fair to expect several of the officialsselected by the department to represent various other "communities of interest" to take a sharplyskeptical view of for-profit colleges.Jim Simpson, associate vice president of workforce development and adult education at Florida StateCollege (formerly Florida Community College at Jacksonville), was appointed to fill a slot designed torepresent the interests of "work force development." Simpson traveled to Denver in June to speak atone of three regional hearings the department held to solicit views on the issues it should explore innegotiated rule making, and he closed his presentation (which can be found on Page 35 of thistranscript} 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 takeadvantage of lax regulations." He then recounted the story of a student who applied to his institutionafter having made the honor roll at an un identified for-profit un iversi ty-- "despite later test results ...that placed the student at an elementary school level in mathematics, language and read ing ,"Simpson said."This student and their family took out $16,000 in student loans to pay for a two-year degree from afor-profit university that was clearly only interested in tuition money obtained from federally backedstudent loans," he said. "It is a travesty that they were encouraged to take out huge student loanswhen their daughter has almost no chance of getting a job that would allow the eventual repayment ofthose loans."College presidents are represented in the negotiation process by Terry W. Hartle, senior vicepresident for government and public affairs at the American Council on Education. Hartle typically

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stays above the fray in the regular political s k i r , ; ; 1 s ~ ~ e t w e e n traditional colleges and for-profithigher education . But ACE, as the lead lobbying group for higher education, almost always sides withtraditional colleges in policy debates, and the Career College Association , the leading lobbying groupfor 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 Associationfor College Admission Counseling, to represent the interests of admissions officers on the negotiatingteam. Like several major higher education associations, NACAC does not let for-profit colleges into itsmembership.And Hawkins, who writes widely about ethics and other issues in higher education, wrote a 2007article challenging the notion that for-profit institutions are doing a good job of serving students fromlow-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 universitiesare 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 environmentcharacterized 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 oninvestment' for many students lured in by the publicly traded for-profit colleges' massiveadvertisement complex."Apart from Neely, the Kaplan senior vice president of regulatory affairs, and her alternate, DavidRhodes, president of the School of Visual Arts, the only other negotiator who appears likely toadvocate for for-profit institutions is , by design, is Anthony Mirando, who as president of the NationalAccrediting Commission of Cosmetology Arts and Sciences was appointed to represent nationalaccrediting 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 notdisproportionately affect those institutions. The loan team contained multiple lenders, and theaccreditation team three or four accrediting officials.)Officials of the for-profit higher education sector had argued --to no avail --that given the growth offor-profit colleges and the emphasis in this round of rule making on issues that could directly affectthem, the department should consider appointing more than one person from the institutions to thenegotiating team.Harris N. Miller, president and CEO of the Career College Association, declined to comment on themakeup 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 ofthis committee is similar to past committees and we remain committed to ensuring that it reflects keyconstituencies," said Justin Hamilton, a spokesman.But Barmak Nassirian, associate executive director of the American Association of CollegiateRegistrars and Admissions Officers, vigorously challenged the assertion that the negotiating teamappointed by the department is tilted against for-profit colleges, and that the department has it in forthe sector.

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Nassirian specifically disputed the notion that R a \ ~ \ r ~ s and others (including Nassirian himself} whohave criticized for-profit colleges in the past are biased against the colleges. Hawkins has criticizedthe colleges' use of incentive compensation for recruiters, Nassirian said, because he believes suchpayments "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 onthe for-profit sector than the nonprofit sector," Nassirian said. Like many experts on financial aid andhigher education, Nassirian said, Hawkins believes "it's in everybody's interest that these programsbe able to demonstrate accountability and program integrity, or else the billions of dollars that arebeing devoted to them could be redirected elsewhere."For-profit colleges have "legitimate concerns ... that they not be subjected to utterly destructiverequirements," 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 Departmentwere soft on the sector, greatly softening the very same regulations on executive compensation thatare now under review in the upcoming negotiations."I can understand why, from the perspective of the last eight years of the Bush administration, anychange can only be perceived as a change for the worse" for for-profit colleges, Nassirian said. "Butwhen you judge the matter from the perspective of the taxpayers who fund the system, all thedepartment has asked them to do is to be more reasonable. There is a new mindset in thisadministration that every dollar needs to be reasonably accounted for, and that money is not beingwasted . I don't believe that the good for-profit schools want to contest that view."-Doug Lederman

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Woodward, JenniferFrom:Sent.:To:Subject:

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Woodward, JenniferThursday, December 09, 2010 12:07 PMWolff, Russell; Fin ley, Steve; Yuan , Georgia; Kvaal , James ; Bergeron, DavidRE: Follow-up [DeVry]

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- - ~ - - - - ------ --- ------------- - P a o e . . S 2 - c H - - - - - ~ - - - - - - - - - - - - - - - -from: Sova, Alexandra -Sent: Tuesday, December 07, 2010 9:53AMTo: 'Thomas Parrott, Sharon'; Yuan, GeorgiaSubject: RE: Follow-upDear Sharon,Thank you for your email. I am happy to hear you had a beneficial meeting with the Department.

Sincerely,Alexandra Sova

Alexandra SovaAssistant to the Deputy SecretaryU.S. Department of EducationAlexandra [email protected] - - - - - - - - -From: Thomas Parrott, Sharon [mailto:[email protected]]Sent: Monday, December 06, 2010 6:37PMTo: Yuan, GeorgiaCc: Private - Miller, AnthonySubject: Follow-upHi Georgia,It was great to visit with you during DeVry's meeting with Secretary Duncan a few weeks ago. I was particularly pleasedto hear that we share the process of "side by side" review of new regulations to further our understanding of what theyreally say.I am following up with you at Secretary Miller's suggestion, regarding ou r recent discussion at the Departmentconcerning the new program integrity rules. I would very much appreciate an opportunity to share some thoughts thatwe have on solutions that meet both the letter and spirit of the new rules, whi le providing additional clarity to collegesand universities. I am happy to call or visit with you at your earliest convenience.Best,SharonSharon Thomas ParrottSenior Vice PresidentGovernment and Regulatory AffairsChief Compliance OfficerDeVry Inc.3005 Highland ParkwayDowners Grove, l l 60615-5799p: 630.515.3146f: 630-353-3968c: 312-485-3225e: [email protected] devryinc.com

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Woodward, JenniferFrom: Wo lff, RussellSent:To: Thursday, January 07, 2010 4:16PMFinley, SteveSubject: FW: UOP meeting

W hat the f-- does t hat mean? And, no, I was not a " bee".- ------ - - - - - - - - -- - - - - - - -From: Jenkins, HaroldSent: Thursday, January 07, 2010 3 :59 PMTo: Sann, RonaldCc: Marinucd, Fred; Finley, Steve; Wolff, Russell; Woodward, JenniferSubject: RE: UOP meetingThanks to all who commented. I passed the comments on to Bob.From: Sann, RonaldSent: Thursday, January 07, 2010 2:05 PMTo: Jenkins, HaroldCc: Marinucci, Fred; Finley, Steve; Wolff, Russell; Woodward, JenniferSubject: RE: UOP meeting

Harold,I agree. I think it's up to Bob whether to meet with them, but to the extent this covers issues in thecurrent reg.-neg., we should avoid providing UOP, or any other school, with special access. If ameeting is held, we should be included.Ron

From: Jenkins, HaroldSent: Thursday, January 07, 2010 1:17 PMTo: Marinucci, Fred; Wolff, Russell; Woodward, Jennifer; Finley, Steve; Sann, RonaldSubject: FW: UOP meetingImportance: HighComments invited. I would highly recommend that he include someone from this office, but I don'tknow a basis for recommending against a meeting. Steve and Ron, I am including you in view ofongoing reg neg; could we say that in view of reg neg it would be inappropriate now to give oneschool a private channel for propounding its proposals?I want to get back to Bob this afternoon. Thanks.HaroldFrom: Shireman, BobSent: Thursday, January 07, 2010 1:09PM

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To: Jenkins, HaroldSubject: UOP meetingImportance: High

From: Julie Shroyer To: Shireman, BobSent:Thu Jan 07 11:54:23 2010Subject: Hello and Meeting RequestDear Bob,

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I hope the new year is t reating you we ll. Just left you a voice mai l message but realize it may be easier to send you anote via email. Would love to tell you about my family's visit to ou r friends the Kim/Paterson family in the Netherlands(Dec. 26-Jan. 1). Feel free to have lucinda call me too because she may be even more interested. All of us should figureout how to do time overseas.As I indicated in my voice mail, I would also like to submit a formal meet ing request for Apollo. We are hoping that youmay have time in your schedule sometime over the next few weeks. Here are the specifics:Meeting Participants:Greg Cappelli, CEO, ApolloTerr i Bishop, Director/Vice President External Affairs, Apo lloJulie Shroyer, Sr VP, Wheat Government Relations (consultant to Apollo/University of Phoenix)Purpose:To discuss ideas for implementing various student/consumer protections (e .g., re la ted to borrowing practices,disclosures, etc.) and the technology that Apollo is developing to support compliance and academic quality andinnovation.When:Preferably as soon as possible or within the next few weeks.Thank you so much fo r your consideration of the request. I look forward to hearing from you and see ing you soon.Best,JulieJulie E. ShroyerSenior VPWheat Government Re lations1201 S. Eads St reet, Suite TwoArlington, VA 22202(703) [email protected]

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Page 35 or 212Woodward, JenniferFrom: Wolff, RussellSent:To: Tuesday, December 08, 200910:17 AMWoodward, JenniferSubject: FW: article on the proposed elimination of the incentive comp safe harbors

-----Original Message-- --From: Shireman, BobSent: Monday, December 07, 2089 8:35 PMTo: Wolff, RussellCc: Woodward, JenniferSubject: RE : article on the proposed elimination of the incentive comp safe harbors

From: Wolff, RussellSent: Monday, December 87, 2889 3:11 PMTo: Shireman , BobCc: Woodward, JenniferSubject: FW: article on the proposed elimination of the in centive comp safe harborsBob:

Russhttp : //higheredwatch. newamerica . net/blogmainAt Long Last, Department of Education Puts th e Interests of StudentsFirst* By* Stephen SurdDecember 3, 2999

At Higher Ed Watch, we have repeatedly called on federal policymakers to strengthenregulations that aim to prevent unscrupulous for-profit colleges and trade schools from takingadvantage of financially needy students . Our calls , however, have gone largely unheeded asCongress, under both Republican and Democratic leadership, has continued t o weaken theserule s< http : / /higheredwatch . newamerica.net/blogposts/2008/ our_bi ggest_disappointments_with_final_higher_ed_bill-19290> . At the same time, the Department of Edu cation has long coddled thefor - profi t higher education sector by continually t urning a bli nd eye to widespreadallegations of fraud and abuse at some of the na t ion' s l argest cha in s of proprietary schools.But this week, the Obama administration le t the sector know, i n no uncertain terms, thatthose days are over.

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On Monday, the Department of Education r e l e ~ ~ ~ ~ P ~ l i m i n a r y regulatory proposals thataim to strengthen the integrity of the federal student aid programs and prevent unscrupulousfor-profit colleges and trade schools from taking advantage of the low - income and workingclass students they tend to enroll. A top goal for the Obama administration is to stop theseinstitutions from deliberately recruiting and admitting unqualified students, who end uptaking on huge amounts of debt for training from which they are unlikely to benefit.The most significant of these preliminary proposals is one that Higher Ed Watch has longcalled for -- reversing changes that the Bush administration made to th eDepartment of Education,s regulations enforcing a federal law barring colleges fromcompensating recruiters based on their success in enrolling students.As we have previouslyreported, Congress in 1992 added a provision to the HigherEducation Act prohibiting colleges from giving "any commission, bonus, or other incentivepayment based directly or indirectly on success in securing enrollments" to admissionsofficers. The ban on incentive compensation for college recruiters was included as part of abroader effort by lawmakers to crack down on fly -by-night trade schools that had been set upto reap profits from the Title IV federal student aid programs. With reports rampant thattrade schools were enrolling unqualified low-income individuals simply to get access to TitleIV funds, policymakers believed i t was important to bar postsecondary-education institutionsfrom paying recruiters on the basis of how many students they enrolled.A decade later, top Education Department officials with t ies to the for-profit sector set out to weaken thisprohibition. In November 2ee2, the Department issued new regulations that created 12 "safeharbors,, for colleges that wished to provide incentive payments to their admissionsemployees. The agency took this action over th e objections of a negotiated rulemaking panelmade up of college officials, advocates for students, and consumer groups that had beenassembled to consider the rule changes and of the two main national organizationsrepresenting college admissions officers (seehere andhere).Among other things, th e revised rules allowed colleges to adjust the annual or hourly wagesof recruiters up to twice a year, as long as the adjustment was "not based solely on thenumber of students recruited, admitted enrolled, or awarded financial aid'' [emphasis added]iand to provide commission-based recruiting for non-Title IV programs at institutionsparticipating in the federal student aid programs. These exemptions clearly violate both thespiri t and the letter of the law barring commission-based compensation . The net effect ofadding these safe harbors was to allow colleges, particularly for-profit ones, to continue toengage in the type of predatory recruiting practices that the law expressly prohibits.In fact, in the years since the ''safe harbors" were added, some of the largest publiclytraded for-profit higher education companies have been charged with engaging in misleadingrecruiting and admission tactics toinflate their enrollment numbers. In 2004, fo r example, the Department reached a $9.8 millionsettlement agreement with th e University of Phoenix after the agency concluded that thelargest chain of proprietary schools had knowingly violated the incentive compensation ban.The university is now in negotiations to settle a False Claims lawsuit

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P,aoe 37f f 2.12 over allegations by formerrecruiters who say they were compensated solely on their success in enrolling students.Under the Department of Education's new preliminary regulatory proposals, all 12 safe harborswould be eliminated. In offering this recommendation, the Education Department clearlyacknowledges that the regulatory changes that the agency's former leaders made to theincentive compensation ban run counter to the underlying law they are meant to enforce. ((TheDepartment believes that the specific language of the statute is clear, and that theelimination of all of the regulatory


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Page 38 of 212Woodward, JenniferFrom:Sent:To:

Nan Shepard V b) (B\ @gmail.com)Tuesday, September 14,20101:13 PMWoodward, JenniferSubject: Re: RE: higher ed blog post on UOP study about for-profit institutions

On Sep 14,2010 8:15AM, "Woodward, Jennifer" wrote:Click on the link and note the first comment at the end of he piece. It is written by Trace Urdan.who has a financi al stake in Apollo. The last sentence in his conm1ent is qui te telling and, in myopinion. extremely offensive.

From: Finley, SteveSent: Tuesday, September 14,2010 10:34 AMTo: Siegel, Brian; Burton, Vanessa; Scaniffe, Dawn; Morelli, Denise; Marinucci, Fred; Jenkins, Harold; Woodward,Jennifer; Wolff, Russell; Sano, Ronald; Wanner, Sarah; Vamovitsky, NatashaCc: Yuan, GeorgiaSubject: higher ed blog post on UOP study about for-profit institutions

h ttp://higheredwatcb. oewamerica.net/blogm ai o

Guest Post: University ofPhoenix Founder Forgets OneImportant Stakeholder -- StudentsSeptember 14, 20 10By Craig SmithAnyone working on Capitol Hill these days knows that the for-profit higher education industry isspending millions of dollars on lobbying in an effort to defeat, delay or weaken the Departmentof Education 's proposed regulations on gainful employment. This should come as no surprise-like bankers swarming House and Senate offices in an effort to weaken proposed financialreforms in response to the sub-prime meltdown, for-profit colleges are businesses lobbying toprotect their main revenue stream. In this case that is federal tax dollars in the form of federalstudent aid. Nor is it a surprise that the for-profit college sector is enlisting their employees towrite comments opposing the regulations or paying for high profile education summits in aneffort to change people's minds about recent reports of fraud and abuse in their sector.Recently, however, the University of Phoenix has ratcheted up the lobbying blitz with the help ofa recent report issued from the NEXUS Research and Policy Center. Now, as The Chronicle o[

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H . h Ed . d CNBC h dPage.39ot21 2 filg er ucatwn an ave reporte , tms report entitled "For-Pro t Colleges andUniversities: America's Least Costly and Most Efficient System of Higher Education," has raisedsome eyebrows. NEXUS is funded by in-kind support from University ofPhoenix's parentcompany the Apollo Group and grants from the John G. Sperling Foundation-- the foundationset up by the founder of the University of Phoenix and the head of the Apollo Group.Furthermore, the report is authored by Jorge Klor de Alva, President of NEXUS andcoincidentally a past-executive ofUniversity of Phoenix and an Apollo board member.

In an effort to maintain a position of ndependence for the Center and avoid charges ofastroturfmg, Klor de Alva tried to distance the Center and its report from current lobbying effortsaround gainful employment. According to Chronicle coverage:Nexus sees its business as advocacy but "not lobbying, "andMr. Klor de Alva said he has noplans to distribute the report to members ofCongress, where lawmakers are continuing tohold hearings on the for-profit sector. But that doesn't mean the report won't becomeanother piece of odder in the debate. "!suspect,"he said, "that it will get distributed overthere."

Well how prescient of him. Any takers on who would have sent this report to all Congressionalofficers? Why, John Sperling, ofcourse.The report arrived in Congressional staffers ' email boxes as a PowerPoint presentation alongwith a message from Sperling and a sample letter members of Congress could send to EducationSecretary Arne Duncan opposing the gainful employment regulations. Says Sperling:

The attached power point has been prepared by NEXUS, a research and policy institutewhose primary focus is the for-profit sector ofhigher education. Given its commitment tofact based research, not special pleading, the power pointpresents a rationale for the needto rethink the reforms proposed by the Education Department and the HELP Committeeusingas an example the case of he University ofPhoenix, whose massive database on itsoperations and its academics has been made available to NEXUS researchers.

It is unclear how a policy center whose only report is a piece of blatant advocacy for theorganization that funds the center is committed to "fact based research" and not "specialpleading," but that is not the most outlandish claim in the package. No, that comes in a broadfinding of the report, which Sperling highlights in his letter:

Perhaps the most important finding of he case study is the fact that for-profi t institutionsoperate at no cost to taxpayers because the interest students pay on their federal loans plusthe taxespaid by the institutions is greater than the Pell Grants and all of he other stateand ederal subsidies received by the students and the institutions. Further, the study showsthat not only will the proposed reforms require a major increase in Department ofEducation oversight staff, they will greatly lower the efficiency and raise the costs of heinstitutions in the sector -- all at the expense of axpayers.

Let's work through that. According to the Department ofEducation,s proposed rule for GainfulEmployment:

In 2009, the five largest for-profit institutions received 77 percent of heir revenues from theFederal student aidprograms. This figure that does not include revenue received romcertain Federal student loans (not authorized by the Higher Education Act) that are

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page 40 oq 12 .exempted under the so-called 90/10 rwe, or otner revenue denved rom government sourcesincluding Federal Veterans' education benefits, Federal job training programs, and Statestudent financial aidprograms. A recent study completed or the Florida legislatureconcluded that for-profit institutions were more expensive fo r taxpayers on a per-studentbasis due to their high prices and large subsidies.

Let's be clear. For-profit colleges receive the vast majority of their revenue and their profit fromtaxpayer money. They generate this flow by charging high tuition, which results in their studentsreceiving a disproportionate amount of Pell Grant money and borrowing more on average andtherefore carrying higher debt burdens. This leads to more s ignificant interest on those loans andoverall loan repayments. To argue that this model is better because it is "revenue-neutral" for thefederal government is to turn the equation on its head.Yes, the for-profit sector pays corporate taxes which means they must budget for thatexpenditure. How do they do that? By making sure they generate enough revenue and thatmeans making sure tuitionsare high enough which means more federal student aid dollarsflowing to the institution. In short, to make sure they have enough money to pay the federalgovernment, they have to getmore money from the federal government on the front end. Ibelieve that is what we call a zero-sum game. But to even enter into that argument is to miss thereal point. Students.To defend a business model of education in which it is okay for students to take on excessiveloan debt (and, in too many cases, default on those loans) while companies like Apollo makemillions ofdollars by arguing that it doesn't cost the federal government anything is ludicrous ifnot immoral.The goal of our federal financial aid system is not for the federal government and business tomake money with the welfare of students-particularly low-income and minority students- a san afterthought. The financial aid system envisioned in the Higher Ed Ac t is supposed to use theeconomies of scale at the federal government's disposal to help all students get an affordable andequivalent education that will improve their economic and social well-being. If the for-profitsector wants to convince Congress and the public that theyare not the next sub-prime mortgagecrisis waiting to happen and that they are vital to the effort of strengthening our system of highereducation, perhaps they should remember that helping students succeed withoutunmanageableloan debt, and not milking the federal student aid system to improve the