[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
PROTECTING THOSE WHO PROTECT US:
ENSURING THE SUCCESS OF OUR
STUDENT VETERANS
=======================================================================
JOINT FIELD HEARING
before the
SUBCOMMITTEE ON ECONOMIC OPPORTUNITY
of the
COMMITTEE ON VETERANS' AFFAIRS
and the
SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE INVESTMENT
of the
COMMITTEE ON EDUCATION AND LABOR
[Serial No. 116-18]
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN EL CAJON, CA, APRIL 24, 2019
__________
Printed for the use of the Committee on Education and Labor
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via: www.govinfo.gov; or
Committee address: https://edlabor.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
36-593 PDF WASHINGTON : 2021
COMMITTEE ON EDUCATION AND LABOR
ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman
Susan A. Davis, California Virginia Foxx, North Carolina,
Raul M. Grijalva, Arizona Ranking Member
Joe Courtney, Connecticut David P. Roe, Tennessee
Marcia L. Fudge, Ohio Glenn Thompson, Pennsylvania
Gregorio Kilili Camacho Sablan, Tim Walberg, Michigan
Northern Mariana Islands Brett Guthrie, Kentucky
Frederica S. Wilson, Florida Bradley Byrne, Alabama
Suzanne Bonamici, Oregon Glenn Grothman, Wisconsin
Mark Takano, California Elise M. Stefanik, New York
Alma S. Adams, North Carolina Rick W. Allen, Georgia
Mark DeSaulnier, California Francis Rooney, Florida
Donald Norcross, New Jersey Lloyd Smucker, Pennsylvania
Pramila Jayapal, Washington Jim Banks, Indiana
Joseph D. Morelle, New York Mark Walker, North Carolina
Susan Wild, Pennsylvania James Comer, Kentucky
Josh Harder, California Ben Cline, Virginia
Lucy McBath, Georgia Russ Fulcher, Idaho
Kim Schrier, Washington Van Taylor, Texas
Lauren Underwood, Illinois Steve Watkins, Kansas
Jahana Hayes, Connecticut Ron Wright, Texas
Donna E. Shalala, Florida Daniel Meuser, Pennsylvania
Andy Levin, Michigan* William R. Timmons, IV, South
Ilhan Omar, Minnesota Carolina
David J. Trone, Maryland Dusty Johnson, South Dakota
Haley M. Stevens, Michigan
Susie Lee, Nevada
Lori Trahan, Massachusetts
Joaquin Castro, Texas
* Vice-Chair
Veronique Pluviose, Staff Director
Brandon Renz, Minority Staff Director
------
SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE INVESTMENT
SUSAN A. DAVIS, California, Chairwoman
Joe Courtney, Connecticut Lloyd Smucker, Pennsylvania
Mark Takano, California Ranking Member
Pramila Jayapal, Washington Brett Guthrie, Kentucky
Josh Harder, California Glenn Grothman, Wisconsin
Andy Levin, Michigan Elise Stefanik, New York
Ilhan Omar, Minnesota Jim Banks, Indiana
David Trone, Maryland Mark Walker, North Carolina
Susie Lee, Nevada James Comer, Kentucky
Lori Trahan, Massachusetts Ben Cline, Virginia
Joaquin Castro, Texas Russ Fulcher, Idaho
Raul M. Grijalva, Arizona Steve C. Watkins, Jr., Kansas
Gregorio Kilili Camacho Sablan, Dan Meuser, Pennsylvania
Northern Mariana Islands William R. Timmons, IV, South
Suzanne Bonamici, Oregon Carolina
Alma S. Adams, North Carolina
Donald Norcross, New Jersey
COMMITTEE ON VETERANS' AFFAIRS
MARK TAKANO, California, Chairman
DAVID P. ROE, Tenessee, Ranking Memberulia Brownley, California
Gus M. Bilirakis, Florida Kathleen M. Rice, New York
Aumua Amata Coleman Radewagen, American Samoamb, Pennsylvania, Vice-
Mike Bost, Illinois Chairman
Neal P. Dunn, Florida Mike Levin, California
Jack Bergman, Michigan Max Rose, New York
Jim Banks, Indiana Chris Pappas, New Hampshire
Andy Barr, Kentucky Elaine G. Luria, Virginia
Daniel Meuser, Pennsylvania Susie Lee, Nevada
Steve Watkins, Kansas Joe Cunningham, South Carolina
Chip Roy, Texas Gilbert Ray Cisneros, Jr.,
W. Gregory Steube, Florida California
Collin C. Peterson, Minnesota
Gregorio Kilili Camacho Sablan,
Northern Mariana Islands
Colin Z. Allred, Texas
Lauren Underwood, Illinois
Anthony Brindisi, New York
Ray Kelley, Democratic Staff
Director
Jon Towers, Republican Staff
Director
C O N T E N T S
----------
Page
Hearing held on April 24, 2019................................... 1
Statement of Members:
Davis, Hon. Susan A, Chairwoman, Subcommittee on Higher
Education and Workforce Investment......................... 1
Prepared statement of.................................... 3
Levin, Hon. Mike, Subcommittee on Economic Opportunity....... 4
Statement of Witnesses:
Muth, Mr. Robert F., J.D. Professor In Residence: Managing
Attorney, Veterans Legal Clinic, University of San Diego
School of Law, San Diego, CA............................... 9
Prepared statement of.................................... 11
Oakley, Mr. Eloy O., Chancellor, California Community
Colleges, Sacramento, CA................................... 22
Prepared statement of.................................... 24
Rodriguez, Ms. Kristyl, Student Veteran Attending Bellus
Academey-Poway, Oceanside CA............................... 26
Prepared statement of.................................... 29
Shireman, Mr. Robert, Director of Higher Education Excellence
and Senior Fellow, The Century Foundation, New York, NY.... 31
Prepared statement of.................................... 34
Additional Submissions:
Chairwoman Davis:
Letter dated April 2, 2019............................... 94
Letter dated April 22, 2019.............................. 96
Chairman Takano:
Letter from National Student Legal Defense Network....... 81
Letter dated April 22, 2019.............................. 87
Lee, Hon. Susie, a Representative in Congress from the State
of Nevada:
Letter dated April 22, 2019.............................. 70
PROTECTING THOSE WHO PROTECT US:
ENSURING THE SUCCESS OF OUR
STUDENT VETERANS
----------
Wednesday, April 24, 2019
House of Representatives,
Subcommittee on Higher Education and Workforce Investment,
Committee on Education and Labor,
Joint with the
Subcommittee on Economic Opportunity,
Committee on Veterans' Affairs,
El Cajon, CA
The subcommittees met, pursuant to notice, at 10:33 a.m.,
at Grossmont College, 8800 Grossmont College Dr., Griffin Gate,
Building 60, 1st Floor, El Cajon, CA, Hon. Susan Davis
(Chairwoman of the committee) presiding.
Present: Representatives Davis (Ed & Labor Committee),
Takano (Both Committees), Levin, Mike - CA (Veterans' Affairs
Committee), and Lee (Ed & Labor Committee).
Staff Present: Tylease Alli, Chief Clerk (Education and
Labor Committee); Claire Viall, Professional Staff (Education
and Labor Committee; Justin Vogt, Staff Director, Economic
Opportunity Subcommittee (Veteran's Affairs Committee); Jon
Clark, Director of Economic Opportunity Subcommittee (Veterans
Affairs Committee)
Mrs. Davis. Good morning. The Committee on Education and
Labor will come to order. We want to welcome everybody here. We
are delighted that you are with us today.
I want to note that a quorum is present, and the committee
is meeting today for a legislative field hearing to hear
testimony on Protecting Those Who Protect Us: Ensuring the
Success of Our Student Veterans.
I want to thank everybody, including our wonderful
witnesses, for attending this hearing today, and I appreciate
the efforts taken on behalf of all of those involved to have
this important field hearing. It is crucial that this
committee, and thereby all of Congress really, hear directly
from the public about matters in our jurisdiction that are
affecting constituents in their communities and across the
country.
This is an official congressional hearing, and I want to
thank Anne Krueger, Communications and Public Information
Director; Cindy Miles, the Chancellor of Grossmont; Kree Maka,
Community College District; and Abu-Ghazaleh, Grossmont College
President, for the use of this facility at Grossmont College
for this purpose.
As this is an official congressional hearing, we are
required to follow the rules of the committee and the House of
Representatives, including the rules on decorum. So I want to
remind our guests that demonstrations from the audience,
including applause, actually--you cannot applaud--and verbal
outbursts, as well as the use of signs or placards, are a
violation of the rules.
The committee has invited witnesses to speak at this
hearing, and guests are here to observe the proceedings. In
addition to that, the use of cameras and the taking of
photographs and/or videos is limited to accredited press only,
and we thank the press for being here as well.
Pursuant to Rule 7(c), opening statements are limited to
the Chair and the Ranking Member. However, given that this is a
joint subcommittee hearing, Chairman Levin and Chairman Takano
will also be giving opening statements, and we will then hear
from our witnesses, and all members will have adequate time to
ask questions.
I recognize myself now for this purpose of making an
opening statement.
Today, we are here to discuss how to better protect
students, veterans, and taxpayers from predatory, low-quality
institutions of higher education.
Through their service to our country, returning veterans
earn GI Bill benefits that provide access to quality colleges
and universities and a pathway to success in civilian life.
Unfortunately, far too many veterans have become victims of
unscrupulous, low-quality, for-profit institutions.
For-profit institutions, by definition--by definition--
have a fiduciary duty to stakeholders to maximize profits,
often at the expense of students. Research clearly indicates
that for-profit college students borrow more often, take out
larger loans, and default at a higher rate than students in
similar programs at public and non-profit colleges. Veterans
are no exception. In fact, student veterans are
disproportionally affected by low-quality institutions.
Although most student veterans do not attend for-profit
institutions, these schools take in over 40 percent of all GI
Bill funds. Between 2009 and 2017, eight of the top ten
recipients of GI Bill tuition and fees went to for-profit
schools, including now-shuttered college chains such as ITT
Technical Institute, Education Corporation of America, and
Dream Center Education Holdings, which consumed billions of
taxpayer dollars, only to leave students with crushing debt and
no degree.
The Art Institute of California, a Dream Center school
located here in San Diego, disrupted the education and finances
of nearly 200 student veterans, and that was just at one
campus.
The connection between for-profit institutions and student
veterans is, unfortunately, not a coincidence. For-profit
institutions deliberately target student veterans because of
loopholes in Federal law that incentivize them to do so.
The 90/10 rule, which requires for-profit schools to
demonstrate their value by earning 10 percent of their revenue
from non-Federal sources, counts GI Bill benefits as a non-
Federal source. This makes GI Bill dollars extremely valuable
to for-profit schools and created a system in which student
veterans are consistent targets of aggressive recruiting.
To make matters worse, the Department of Education under
this Administration has repeatedly abandoned both its
responsibility to protect students and taxpayers from low-
quality schools and in fact, Secretary DeVos has even loosened
the regulations holding for-profit schools accountable.
Student veterans who have been victimized by predatory
institutions and lax Federal oversight have also been fleeced a
second time by the Department's refusal to enforce vital
protections for defrauded students.
Specifically, despite a court order, the Department has
failed to implement the Borrowers Defense to Repayment rule,
and many in the audience know what that is, which ensures that
students can obtain relief from student loans if their college
or university defrauds them. can get help.
However, just two weeks ago, Secretary DeVos revealed to
the committee not a single application for loan relief from
defrauded for-profit college students has been approved in the
last six months.
Finally, the Department has failed to establish a
transparent process for for-profit schools seeking to gain non-
profit status. We cannot allow for-profit institutions to skirt
accountability rules just by changing a tax designation on
paper.
We want all student veterans to attend institutions that
meet their needs and lead to good-paying jobs and Congress here
has a rare opportunity to reform Federal higher education
policies so that student veterans are empowered to meet the
needs of our modern workforce. But those reforms must also push
the Department of Education to ensure that schools receiving
taxpayer dollars are financially stable and are not defrauding
students, students and certainly our veterans. And in cases
where students are cheated, the Department must provide relief
so that veterans have a new start without the burden of debt
for an education that, unfortunately for them, went nowhere.
Simply put, we have a responsibility to protect those who
protect us.
I look forward to working with my colleagues to find
solutions that ensure veterans both adequate protection against
predatory schools and access to quality college degrees that
lead to a rewarding career. I am sure that is something that we
all want.
Thank you to all our witnesses for being here with us
today. I look forward to your testimony and the discussion that
will follow.
It is now my great pleasure to yield to the Chairman of the
Veterans' Affairs Subcommittee on Economic Opportunity,
Congressman Mike Levin, for his opening statement.
[The statement of Chairwoman Davis follows:]
Prepared Statement of Hon. Susan A. Davis, Chairwoman, Subcommittee on
Higher Education and Workforce Investment
Today, we are here to discuss how to better protect students,
veterans, and taxpayers from predatory, low-quality institutions of
higher education.
Through their service to our country, returning veterans earn GI
Bill benefits that provide access to quality colleges and universities
and a pathway to success in civilian life. Unfortunately, far too many
veterans have become victims of unscrupulous, low-quality for-profit
institutions.
For profit institutions, by definition, have a fiduciary duty to
stakeholders to maximize profits, often at the expense of students.
Research clearly indicates that for-profit college students borrow more
often, take out larger loans, and default at higher rates than students
in similar programs at public and non-profit colleges. Veterans are no
exception. In fact, student veterans are disproportionally affected by
low-quality institutions.
Although most student veterans do not attend for-profit
institutions, these schools take in over 40 percent of all GI Bill
funds. Between 2009 to 2017, eight of the top ten recipients of GI Bill
tuition and fees went to for-profit schools, including now-shuttered
college chains--ITT Technical institutes, Education Corporation of
America, and Dream Center Education Holdings--which consumed billions
of taxpayer dollars, only to leave students with crushing debt and no
degree.
The Art Institute of California, a Dream Center school located here
in San Diego, disrupted the education and finances of nearly 200
student veterans. And that's just one campus.
The connection between for-profit institutions and student veterans
is not a coincidence. For-profit institutions deliberately target
student veterans because of loopholes in federal law that incentivize
them to do so.
The 90/10 rule, which requires for-profit schools to demonstrate
their value by earning 10 percent of their revenue from non-federal
sources, counts GI Bill benefits as a non-federal source. This makes GI
Bill dollars extremely valuable to for-profit schools and created a
system in which student veterans are consistent targets of aggressive
recruiting.
To make matters worse, the Department of Education under this
Administration has repeatedly abandoned both its responsibility to
protect students and taxpayers from low-quality schools. In fact,
Secretary DeVos has even loosened the regulations holding for-profit
schools accountable.
Student veterans who have been victimized by predatory institutions
and lax federal oversight have also been fleeced a second time by the
Department's refusal to enforce vital protections for defrauded
students.
Specifically, despite a court order, the Department has failed to
implement the Borrowers Defense to Repayment rule, which ensures that
students can obtain relief from student loans if their college or
university defrauds them. Just two weeks ago, Secretary DeVos revealed
to the Committee not a single application for loan relief from
defrauded for-profit college students has been approved in the last six
months.
Finally, the Department has failed to establish a transparent
process for for-profit schools seeking to gain non- profit status. We
cannot allow for-profit institutions to skirt accountability rules just
by changing a tax designation on paper.
We want all student veterans to attend institutions that meet their
needs and lead to good paying jobs. Congress has a rare opportunity to
reform federal higher education policies so that student veterans are
empowered to meet the needs of our modern workforce. But those reforms
must also push the Department of Education to ensure that schools
receiving taxpayer dollars are financially stable and are not
defrauding veterans. And, in cases where students are cheated, the
Department must provide relief so that veterans can have a new start
without the burden of debt for an education that went nowhere.
Simply put, we have a responsibility to protect those who protect
us.
I look forward to working with all my colleagues to find solutions
that ensure veterans both adequate protection against predatory schools
and access to quality college degrees that lead to a rewarding career.
Thank you to all our witnesses for being here with us today. I look
forward to your testimony and the discussion that will follow.
I now yield to the Chairman of the Veterans Affairs Subcommittee on
Economic Opportunity, Congressman Mike Levin, for his opening
statement.
______
Mr. Levin. Thank you, Chair Davis.
It is great to be with all of you this morning. It is great
to see you, Mr. Chairman.
I appreciate the opportunity to have a joint hearing today
between our Veterans' Affairs Subcommittee on Economic
Opportunity, and Chair Davis' Subcommittee on Higher Education.
I am glad to be doing it here in Southern California, where we
all represent, and I am grateful to you all for attending
today.
This region is home to several hundred thousand veterans,
many of whom depend on the GI Bill to obtain higher education
as they transition from the military back to civilian life.
When we ask our service members to defend our nation, we do so
understanding that we owe them a great debt. One way we begin
to repay that debt is by offering benefits like the GI Bill.
But beyond providing financial support, we have a
responsibility to protect student veterans from unscrupulous
institutions that seek to take advantage of the benefits that
they have earned, institutions that prioritize profits over
quality.
We must be sure that when our veterans get a degree, they
are not just getting a piece of paper but valuable
qualifications that prepare them for a career.
And that brings us to the issue at hand. We must ensure
that GI Bill benefits are being used to serve veterans and not
line the pockets of bad actors.
A little bit of history; in 1992, Congress began to crack
down on bad actors by creating the 85/15 rule. This is all the
way back in 1992. The 85/15 rule mandated that each higher
education institution could only receive up to 85 percent of
its revenues from the Federal Government, since high-quality
programs should be able to attract other sources of funding.
Think about that: 85 percent. It is hard to believe that a
college or university would rely that heavily on Federal aid.
Yet, some institutions argued even that was too onerous, and in
1998, six years later, the rule was rolled back to 90/10.
But that still was not a low enough threshold for bad
actors, so they found a loophole. Veteran and military benefits
are currently not counted as Federal aid under the 90/10 rule,
making GI Bill funding a target for low-quality institutions.
These bad actors use aggressive and often deceptive marketing
techniques to recruit vets. They call veterans repeatedly, rush
them into a decision, and even stoop as low as recruiting at VA
hospitals and Wounded Warrior centers in order to enroll
students. They make false promises that their schools' credits
are transferable, their policies accommodate deployments, or
even falsely guarantee that the veteran will secure a great job
upon graduation.
These practices cannot be allowed to stand as they are.
I was encouraged by the Department of Veterans Affairs'
Secretary, Mr. Wilkie, in our budget hearing last month when he
recognized that the 90/10 rule needs to be looked at more
closely, and I hope our hearing here this morning can further
those efforts, as well as explore other ways we can prevent the
exploitation of our student veterans, including by
reestablishing gainful employment standards.
The Obama Administration finalized the gainful employment
rule in 2014 to improve the accountability and transparency of
higher education programs, and those regulations track whether
higher education institutions were awarding degrees that were
valued in the workforce to ensure that the institutions were
not just degree factories built on exploiting students.
Sadly, the current Administration does not share this goal.
Instead of building on this work, President Trump and Secretary
DeVos have undermined the gainful employment standards and are
no longer tracking this important information. These cracks in
the system are adding up, making it harder and harder for
veterans to find a quality education. We cannot allow this to
continue.
It is incumbent upon us, all of us, to come together in the
best interests of our student veterans to address these issues.
I want to thank our witnesses for joining us today as we
determine where to focus our efforts. I am especially glad to
have Kristyl Rodriguez, who is a constituent and a student
veteran, on the panel, and I am also pleased we could be joined
by my friend, Bob Muth, who first educated me about these
issues years ago. He has done extremely important work.
So I look forward to hearing your testimony today, grateful
to be here with you, and I will yield back.
Mrs. Davis. Thank you very much, Mr. Levin.
It is my pleasure now to yield to Chairman Takano of the
House Committee on Veterans' Affairs for his opening statement.
He is the Chairman of the Veterans' Affairs Committee. I want
to make particular note of that as well.
Mr. Takano. Yes. To the public it may be confusing that you
have three Chairs up here.
[Laughter.]
Mr. Takano. But let me explain a little.
I want to express my gratitude to Susan Davis, who chairs
the Education and Labor Subcommittee on Higher Education, and
Mr. Levin, who chairs the Subcommittee on Economic Opportunity
for the committee I chair, the full committee I chair, which is
the Veterans' Affairs Committee.
I want to thank these two subcommittee chairs for taking
the initiative to organize and put together this very important
hearing on the topic that we are going to discuss today on the
for-profit college industry and its impacts on student
veterans.
I will concede that there may be good experiences that some
veterans have and that there are some good actors out there,
but that does not contradict the basic premise I think that we
are going to set out here today, is that the industry, the for-
profit college industry, is fundamentally able to take
advantage systemically of a loophole in the 90/10 loophole for
veterans. While one good experience for a veteran in a for-
profit school is great for that particular veteran, it does not
erase the many, many, many bad experiences that veterans have
had being at the hands of a rapacious for-profit school.
Even 100 good experiences does not erase a blunted
transition or an unfulfilled promise of reintegration into
civilian life for a veteran. One hundred percent perfect
transitions and reintegrations into civilian society are
probably impossible to achieve, but we have to hold ourselves
to a very high standard. We have to aim for that 100 percent as
we try to design that transition process.
Unfortunately, we have seen too many for-profit schools
close their doors abruptly, leaving student veterans holding
credits that they cannot transfer and financially crippling
student loan debt.
From the recent closures of Argosy schools to the closures
of ITT Tech and Corinthian Colleges in 2015 and 2016, the
sudden and unplanned closures of for-profit schools have been a
constant occurrence since the passage of the post-9/11 GI Bill.
Congress passed the Servicemen's Readjustment Act in 1944
to help service members and veterans close the opportunity gap
with their civilian peers who did not have to step away from
their life at home to go and serve the nation during World War
II. That is the history of all of this.
That legacy has been continued and improved over the years,
specifically in the education space with the Montgomery GI Bill
and the post-9/11 GI Bill, and most recently in 2017 with the
Forever GI Bill. The whole reason why we fund the GI Bill is to
provide opportunities to our veterans, not just to thank them
for their service but to close the gaps in opportunity and
mitigate the disadvantages they faced for choosing to serve
their country and putting their community before themselves.
While graduation rates and post-graduation employment rates
are not a perfect measure of the opportunities afforded to our
veterans by the GI Bill, they are the best approximation we
currently have. Schools closing their doors mid-semester with
no teach-out plan and not providing the students with the
ability to transfer their credits to another institution to
complete their degree completely undermines the goal of and the
reason we have the GI Bill.
It is incumbent on Congress to ensure that the GI Bill
funding provides the reintegration and readjustment
opportunities for our veterans not only as stewards of taxpayer
money but also to fulfill the promise of a decent civilian
existence and the promise that we have made to our service
members upon leaving the military.
The single greatest threat to the all-volunteer force is
the situation in which our nation's citizens no longer want to
serve, and that could happen when future generations see our
nation breaking the promises we have made to previous and
current generations of service members.
This hearing is not about right versus left, free market
versus regulation, or Democrat versus Republican. This hearing
is about national security and upholding our faith to our
service members, the faith our service members have placed in
the United States Government.
The Obama Administration attempted to address this through
the gainful employment rule that went into effect in July 2015.
Programs were required to make sure that graduates are
gainfully employed and make enough to repay their loans. This
rule was intended to protect students and taxpayers from waste
and fraud. It is one of the most effective accountability tools
that measures opportunities for student veterans upon
graduation.
It is unconscionable that the Trump Administration has
proposed rescinding the rule in favor of for-profit
institutions. This Administration's own estimates show that
eliminating the rule will cost the government $4.7 billion over
10 years.
Another way we can ensure quality is what I mentioned
earlier in my remarks, enforcing the 90/10 rule. For those that
are unaware, Congress implemented this rule to ensure that for-
profit institutions of higher education offered high-quality
programs. For-profit institutions of higher education are
required by statute to produce 10 percent of their revenue from
non-Title IV Federal dollars.
Earlier this month we had Secretary Wilkie testify before
our full committee, and he recognized that the 90/10 loophole
is something that we must seriously review.
Including GI Bill benefits in the 90/10 calculations is not
a perfect measure of schools who provide opportunities to
veterans, but the ones that fail it are the ones that fail
veterans. We know that these schools are targeting veterans to
stay in compliance with the 90/10 regulations, not out of the
pure desire to help veterans.
So I urge us to take action today and remove the incentive
to target veterans for the wrong reasons. Let's close this 90/
10 loophole.
I look forward to hearing from the witnesses on the impact
that targeting student veterans has on those student veterans
and what we can do to address the issue.
I would like to welcome the student veteran we have here on
the panel today. Ms. Rodriguez, welcome. Thank you for serving
your community and for serving our country, and thank you for
continuing to serve your community by being a willing witness
here to address us today. It is great to hear that you are
having a good experience at your school, and your school may be
a good actor in this space, and I will be interested to hear if
the Marines you served with and the veterans you know have been
impacted by bad actor schools and for-profit schools that have
shut down due to funding issues.
Thank you, Madam Chair, and I yield back.
Mrs. Davis. Thank you very much, Chairman Takano.
I also wanted to just note that, without objection, all
other members who wish to insert written statements into the
record may do so by submitting them to the Committee Clerk
electronically in Microsoft Word format by 5 o'clock on May
7th, 2019.
I also wanted to acknowledge our colleague from Nevada,
Mrs. Susie Lee. We are just delighted that you have joined us
today as well. Thank you.
And now I would like to introduce our witnesses.
Mr. Robert Muth is the Professor-in-Residence and Managing
Attorney of the Veterans Legal Clinic at the University of San
Diego School of Law. He served as a Judge Advocate in the
United States Marine Corps, where he handled a wide range of
criminal matters. While serving as Captain in the Marine Corps,
he was deployed to Fallujah as part of Operation Iraqi Freedom.
He received his bachelor's degree from Northwestern University
and his law degree from Duke University.
Thank you for being with us.
Chancellor Eloy Ortiz Oakley was appointed by the
California Community Colleges Board of Directors in December of
2016. He is best known throughout California and the nation for
implementing innovative programs and policies to help students
succeed in college. He served four years in the U.S. Army and
then enrolled at Golden West College. Chancellor Oakley went on
to receive his bachelor's degree and Master of Business
Administration from the University of California at Irvine.
Thank you for being with us.
And Ms. Kristyl Rodriguez served in the U.S. Marine Corps
from 2014 to 2018. She served in the field of 3051 as a
warehouse supply clerk and ascended to the rank of Sergeant E5
prior to separating. She is currently enrolled at Bellus
Academy in Poway under the post-9/11 GI Bill. Kristyl is
studying at the barber and cosmetology program at Bellus
Academy, and she previously attended a community college.
Kristyl is originally from Queens, New York, but she now
resides in Oceanside, California.
Thank you for being with us, Kristyl, Ms. Rodriguez.
Mr. Robert Shireman is the Director of Higher Education
Excellence and Senior Fellow at the Century Foundation. He
previously served in the Clinton White House as a Senior Policy
Adviser to the National Economic Council, and in the Obama
Administration as Deputy Under Secretary of Education. Mr.
Shireman holds a bachelor's degree in economics from the
University of California at Berkeley, a Master's of Education
from Harvard, and a Master's in Public Administration from the
University of San Francisco.
If I could give instructions now to our witnesses, we
appreciate again all of you being here and we look forward to
your testimony. I want to remind you that we have read your
written statements, and they will appear in full in the hearing
record.
Pursuant to Rule 7(d) and committee practice, each of you
is asked to limit your oral presentation to a five-minute
summary of your written statement. Pursuant to Title 18 of the
U.S. Code, Section 1001--we have to get all this out there--it
is illegal to knowingly and willfully falsify any statement,
representation, writing, document, or material fact presented
to Congress, or otherwise conceal or cover up material fact.
Before you begin your testimony, please remember to press
the button on the microphone, which I have obviously had
trouble doing, so I hope you will do better, so that it will
turn on and the members will hear you.
As you begin to speak, the clock on the screens above will
count down from five minutes until the time is up. We will let
the entire panel make their presentations before we move to
member questions, and when answering a question please remember
once again to turn on your microphone.
I will first recognize Mr. Muth. Thank you again.
STATEMENT OF ROBERT F. MUTH, J.D., PROFESSOR-IN-RESIDENCE;
MANAGING ATTORNEY, VETERANS LEGAL CLINIC, UNIVERSITY OF SAN
DIEGO SCHOOL OF LAW, SAN DIEGO, CA
Mr. Muth. Thank you. Chairwoman Davis, Chairman Levin,
Chairman Takano, and Representative Lee, thank you for inviting
me to offer testimony at this important joint hearing on
ensuring the success of student veterans.
In 2012, I founded the Veterans Legal Clinic at the
University of San Diego School of Law to provide pro bono legal
representation to veterans harmed by utilizing their veterans'
education benefits. Thus far, clinic attorneys and law student
interns have assisted hundreds of veterans and military
personnel. Virtually all of our clients attended for-profit
schools. They have reported problems with recruiting and after
enrollment.
In the recruitment process, they have been lied to with
respect to virtually everything you could be lied to about a
program. They have been told false job placement rates. They
have been told false expected salaries. They have been told
schools were accredited when they were not.
With respect to after they have enrolled, the students have
been told misrepresentations as to the quality of the
instruction and the credentials of the instructors that would
be providing them their teaching.
They have also been misrepresented with respect to the
total cost of the program and the length of the program. We
have even had veterans who have been told that the school could
accommodate their serious service-connected disabilities when
they could not.
Two examples I think are illustrative of these concerns.
The first is a client we represented who was a United States
Marine Corps veteran who was medically retired after sustaining
a devastating traumatic brain injury in an enemy attack while
serving in Iraq. The Marine attempted to utilize his GI Bill
benefits at a for-profit school in order to gain skills that
would allow him to be gainfully employed despite his serious
service-connected disabilities. The veteran was misled by the
school with respect to the overall length and cost of the
program. He was also misled with respect to whether the school
was accredited or not.
After the veteran left the school, we discovered that the
school continued to run his GI Bill benefits even though he was
no longer enrolled. Many months after he was no longer
enrolled, the Department of Veterans Affairs, through its state
approving agency, conducted a compliance audit on the school.
They determined that the school should never have been approved
for accepting GI Bill benefits in the first place and
retroactively disapproved the school. They then sent our
veteran a letter saying that because the school was no longer
approved, even though it was approved at the time he was
enrolled, he would be responsible for paying back all of the GI
Bill benefits that the school continued to hold. The veteran
has no funds, and so the VA instead garnished his disability
compensation benefits.
In another case, our clinic represented a United States Air
Force veteran who attended a large, now-closed for-profit
school. The school deliberately misrepresented to the veteran
critical information such as job placement rates for the
program, average graduate salaries, and the quality of the
instruction provided by the school.
After spending more than $100,000 on his now-worthless
degree, the veteran learned that he had been misled. Virtually
none of his fellow classmates were able to get jobs in their
chosen field. It was an IT-related program, and the information
that they had been trained was more than a decade out of date.
Abrupt school closures in the for-profit sector are another
common phenomenon and will likely continue. In recent years,
more than 22,000 veterans enrolled at for-profit colleges have
found themselves left in the lurch when the school they were
attending closed. For instance, when the large nationally
branded Corinthian Colleges closed, our clinic's intake line
was overwhelmed by the number of veterans seeking assistance
navigating the destruction left in the wake of the school's
closure.
In addition to the immediate shock that a student veteran
faces when they try to attend class to find the doors closed
and a sign in the window saying that the school was closed,
veterans often have immediate academic and non-academic
concerns. Academically, students often have great difficulty
transferring to a quality institution in a timely fashion.
Furthermore, student veterans are often unable to acquire their
academic transcripts; and even if they are able to do so, they
are often bitterly disappointed to discover that no quality
institution will accept transfer credits from their for-profit
school.
Veterans are uniquely harmed in non-academic ways as well
when their for-profit school closes. Most student veterans rely
upon the housing allowance they receive in conjunction with
their GI Bill tuition benefits. When a school closes, many
veterans will not only immediately face the closure of their
school but also potentially the loss of their home.
There are countless other examples of student veterans who
tried to use their GI Bill benefits at for-profit schools to
better their career prospects but were ultimately left with
nothing more than empty promises. The action of bad actors in
the for-profit school sector are unfair to student veterans and
to the American taxpayers who are grateful for our veterans'
service and want to see them succeed.
The Department of Education, the VA, and state agencies can
and must do more to protect the rights of those who have
sacrificed greatly to protect and defend their fellow citizens.
Thank you very much for the opportunity to testify today,
and I would be happy to answer any questions you may have for
me.
[The statement of Mr. Muth follows:]
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Mrs. Davis. Thank you.
Mr. Oakley, Chancellor Oakley.
STATEMENT OF ELOY ORTIZ OAKLEY, CHANCELLOR, CALIFORNIA
COMMUNITY COLLEGES, SACRAMENTO, CA
Mr. Oakley. Yes. Good morning to our distinguished Chairs
and members of Congress. Thank you for inviting us here to
testify.
My name is Eloy Ortiz Oakley, and I have the pleasure of
being the Chancellor of the California Community Colleges, and
my story is very similar to the nearly 2.2 million students
that we serve in the California Community Colleges.
Coming out of high school, I did not have a clear
understanding of how to navigate higher education, nor did I
have the resources in my family or my community to provide me
clear direction. Instead of attending college, I proudly joined
the United States Army on the heels of the Grenada invasion.
President Reagan was my Commander-in-Chief, and I served in
America's Honor Guard, the 82nd Airborne Division, for most of
my enlistment.
By the time I found my way to college, I was a father and
the primary provider in my family. I worked full time, attended
school part time, and eventually made it through Golden West
College, on to earning my MBA at the University of California
at Irvine. Through hard work, perseverance, the support of
committed faculty and staff, and a lot of luck, I am here today
proudly serving the nation's largest system of higher
education.
My goal as Chancellor of the California Community Colleges
is to ensure that all students have the opportunity to benefit
from high-quality, affordable college education. Each year the
California Community Colleges serve nearly 80,000 veterans and
active-duty service members. Like the Veterans Resource Center
here at Grossmont College, we provide more than academic and
career training. We also assist with the often difficult
transition to civilian life after military service,
particularly after combat service.
Our colleges are part of an integrated post-secondary
education structure here in California, one that relies on both
public and private partners to ensure access for all students.
When one sector of higher education is consistently failing our
students, it affects our entire system here in California.
In recent years, California has been particularly hard hit
by the fraudulent practices and abrupt closures of a number of
for-profit providers, many of which are nothing more than
profiteers whose leadership has never donned our nation's
uniform. And because of the benefits provided by the post-9/11
GI Bill and the loopholes in the Federal 90/10 rule, our
veteran students are particularly vulnerable to these
circumstances.
It has been and will continue to be within the mission of
the California Community Colleges to serve students affected by
these closures. When the Corinthian Colleges shut its doors, my
office performed direct outreach and worked with our colleges
to serve approximately 16,000 former Corinthian students living
in California, about 1,200 of whom were veterans. We offered
training and resources, participated in webinars and outreach
events, and provided information on transfer credit, loan
forgiveness, and tuition recovery. We found that many of these
students had received a poor quality education that could not
easily transfer. Many faced the expiration of financial aid
benefits, and many had massive debt loads.
The California Community Colleges are committed to
providing students high-quality, low-cost pathways to
meaningful college degrees and credentials, and our system
certainly will continue to find ways to help students pick up
the pieces of their educational goals in the aftermath of the
closures.
At the same time, we hope Congress will take swift action
to support students by providing meaningful oversight,
accountability, and student protections, actions that are
commensurate with the sacrifices that our veterans have made.
From our perspective, meaningful accountability structures must
hold colleges responsible for measureable outcomes, ensure
career training programs result in wage gains that allow
students to at least repay any loan debts they incurred, and to
provide students access to reliable, comparable, and consumer-
friendly information about cost and performance.
To that end, we are in strong support of the consumer
protections contained in the Pro-Students Act, as well as those
in the Protect Students Act of 2019. Please count on the
California Community Colleges as a partner in your efforts to
correct these abuses and better serve all of our students,
veterans and non-veterans alike.
I very much thank you for the opportunity to speak today,
and in closing I will just remind us all that our veterans are
trained to set aside fear and go directly into the line of
fire. I ask us all to set aside the fear that we may have in
changing these rules and go directly into the line of fire and
make the changes that we need to make to support our students,
especially our veteran students.
Thank you.
[The statement of Mr. Oakley follows:]
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Mrs. Davis. Thank you, Chancellor.
Ms. Rodriguez?
STATEMENT OF KRISTYL RODRIGUEZ, OCEANSIDE, CA
Ms. Rodriguez. Thank you so much, Chairwoman Davis,
Chairman Levin, and Chairman Takano, and all the Members of
this committee, for allowing me to share my experience as a
student veteran.
My name is Kristyl Rodriguez, and I am currently enrolled
at the Bellus Academy campus in Poway, California. My program
of study is barbering and cosmetology. This is not a
traditional college experience, and that is exactly what I love
about Bellus Academy. The programs are very hands-on and apply
to the work I eventually want to do professionally.
In our traditional classroom settings, I was rarely a great
student. In fact, what pushed me to even attend was just the
chance to play sports in school. I was more of a hands-on and
visual learner, and I loved to be creative. When I was younger,
I used to be very focused on the creative arts, like drawing
and painting, then eventually cutting my own hair. Sadly, as I
entered my teenage years, I tuned out that creativity and
became consumed with just wanting to be accepted. I struggled
with an identity crisis, drug addiction, destructive behavior,
alcoholism, and so much violence. I pretty much looked at
anything to numb me mentally, and at that time my current
reality.
Sitting alone in my high school cafeteria one day in my
senior year, I decided I needed to take control of my life.
This was the beginning of my journey to joining the Marine
Corps, but unfortunately I did not get in right away. It took
me two years before I could enlist because I kept failing the
ASVAB. The ASVAB is the test required to get into the military.
I know I am smart, I am just not a test taker. Academics,
the kind you find in most college classrooms, were never my
thing. But I was committed to pursuing this goal and becoming a
Marine.
Although I stuck with it and eventually received a passing
score, I still did not meet the standard required for women.
For months, getting a ship date was my only concern.
One random evening I walked into the recruiting office
after a night class in the community college I was currently
attending at the time, and the Sergeant Majors of the
recruiting station happened to be there. My recruiter told me
to get up to the pull-up bar and do some pull-ups. I did 15
pull-ups, and the Sergeant Major approved my ASVAB score and
waived my access into the military. I qualified for a date, and
at the age of 19 I enlisted into the Marines.
This is where my passion for hair cutting started to
develop, and I really thought I could turn it into a successful
venture. We were doing a field operation in Korea, and every
Sunday a barber would come into this rugged tent where she set
up and cut Marines. When she left, I would cut my own hair. One
day, a Marine Sergeant came up to me and asked me if I could do
his haircut. I took the opportunity, knowing I had never cut
anybody's hair before. He loved his haircut and eventually told
other Marines about me. I got very little sleep between guard
duty and cutting hair, but it was worth the experience.
When I decided to get out last year, I immediately asked
myself: ``What is next?'' And the answer was to cut hair and
become an entrepreneur through this work. When I transitioned
out, I went to a community college and through research I found
Bellus Academy. I knew traditional college was not for me.
Personally, I do not believe people should have to get a
bachelor's or a master's degree to be successful in life. I
knew what I wanted to do, and at this point, when I found
Bellus Academy, it has a look and feel of top-tier education in
the beauty industry, so I enrolled. The administration staff at
Bellus Academy are very knowledgeable about VA benefits. I was
not sure what to expect when enrolling, but it was pretty
smooth.
I have been at Bellus Academy for about eight months now
and expect to graduate around August of this year. I love that
it is a focused program that will get me on track to my career
very fast. I am also the proud recipient of the Beauty Changes
Life Scholarship. Their mission is to empower the next
generation of beauty entrepreneurs, influencers, and
visionaries, and it aligns perfectly with my mission.
I even have a target date for starting my next venture, a
service-disabled, veteran-owned business. I aim to open my own
barber salon on May 16th, 2020, which is my mother's birthday.
Finally, I would like to highlight some of the
recommendations I made in my written remarks. I did not want to
come here today without sharing some observations from my
recent transition out of the military and on using educational
benefits.
I suggest that Congress focus on improving the Transition
Assistance Program for getting out of the military, as it can
be extremely overwhelming.
Also, communications between the VA and veterans should be
greatly improved.
My last recommendation is on the timely processing of VA
education benefits. Not one veteran should have to wait for
benefits like housing allowance to pay rent and bills, as I
did. Fortunately, I had my emergency savings fund to help me
cover expenses while I waited, but not everyone has money saved
up like I did.
Thank you so much for the opportunity to share my story and
for allowing me to make a few recommendations at this hearing.
I look forward to your questions.
[The statement of Ms. Rodriguez follows:]
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Mrs. Davis. Thank you, Ms. Rodriguez, and thank you for
sharing your journey with us.
Mr. Shireman, thank you for being with us. Please proceed.
STATEMENT OF ROBERT SHIREMAN, DIRECTOR OF HIGHER EDUCATION
EXCELLENCE AND SENIOR FELLOW, THE CENTURY FOUNDATION, NEW YORK,
NY
Mr. Shireman. Thank you for the opportunity to testify.
In this country, we have experienced at least four
escalations of rampant abuses by for-profit schools fueled by
Federal money. The first was after World War II. The 1944 GI
Bill is rightly remembered as one of the most effective social
policy programs in U.S. history. It gave millions of returning
soldiers, including my father, the opportunity to enroll in
college. But it also led to systematic abuses at thousands of
businesses that sprang up to take advantage of what was
essentially a government voucher with no strings attached.
After analyzing what had happened, the Eisenhower
Administration, in designing the Korean-era GI Bill, included
guardrails that seemed to have worked. But by the 1970s, as the
nation prepared for veterans returning from the war in Vietnam,
for their return to civilian life, the memories of those abuses
seemed to have faded. The head of the VA at the time said, in
1971, that the industry had matured and the bad actors were
gone.
Two years later, though, the abuses reappeared. These scams
were carried out not only at storefront schools but also in the
burgeoning correspondence school market, the precursor to some
versions of today's online schools, and this time it was not
just the GI Bill that fueled the sketchy schools but also the
new grant and loan programs that had been created in the Higher
Education Act of 1965.
Congress had initially excluded for-profit schools from the
HEA, but lobbyists insisted that if they were held to
measureable outcomes, like graduates getting jobs, they would
be safe to include for-profits.
The new HEA programs undermined one of the guardrails that
had worked with the Korean-era GI Bill, a requirement that the
school show that it is charging a fair market price by having
at least 15 percent of its students supported by private funds.
This is the GI Bill precursor to what is today the 90/10
loophole.
Also, since the Korean-era GI Bill, accreditation was
adopted as one component of oversight. But after that, for-
profit schools created their own accrediting agencies that they
basically controlled, which then weakened the effectiveness of
accreditation as an oversight mechanism.
One of the unreliable accreditors in the 1970s was the
agency that is now known as ACICS, which in the 2000s gave us
Corinthian and other scandals. Secretary King in the previous
administration made it clear that inept or corrupt accreditors
would not be tolerated. Secretary DeVos has reversed that
decision, allowing ACICS to continue as a gatekeeper to the
U.S. Treasury.
Reforms that were adopted in the Ford Administration
disappeared by the time of the Carter Administration. So when
there was an expansion of Federally-guaranteed student loans in
the 1980s, the scandals reemerged again, with student loan
default rates going through the roof. A bipartisan inquiry by
the Senate Permanent Subcommittee on Investigations led to a
series of hearings, one of which I attended as a young Senate
staffer, and multiple volumes of evidence. Reforms were
ultimately adopted in 1992, contributing to the closure of more
than 1,200 schools.
With this history, lawmakers should have known better than
to believe it would be safe to relax regulations, but that is
exactly what happened. As noted, Congress in 1998 weakened the
85/15 rule that had been adopted in the 1992 reforms. In 2002,
after testimony from ITT Tech, which has since gone out of
business, the administration declared that the abuses in the
student aid programs were no longer possible today, and they
created loopholes in the ban on commission-paid sales, the
incentive compensation rules.
In 2006, after testimony from Corinthian Colleges, Congress
adopted a provision that opened the floodgates to unlimited
online education. Then we had the return of soldiers from Iraq
and Afghanistan, which undermined the effectiveness of 90/10.
All of these things combined created the hundreds of
thousands of former students who have now filed for their
Borrower Defense, have been blocked from getting that return of
funds, and on top of that we have an administration that is
pulling back on the oversights that were intended to prevent
yet another repeat of these abuses.
I look forward to your questions.
[The statement of Mr. Shireman follows:]
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Mrs. Davis. Thank you very much, Mr. Shireman.
Under Committee Rule 8(a), now we are going to question our
witnesses under the five-minute rule. I will start, and then
followed by Chairman Levin, Chairman Takano, and Representative
Lee.
Chancellor Oakley, if I could start with you, please, we
greatly appreciate that you are joining us. The California
Community Colleges is the largest system of higher education in
the country, serving 2.2 million students, and our institutions
like Grossmont here ensure that our students, in particular our
student veterans, have the supports that they need to achieve
academic success.
As Chancellor for all 115 community colleges in California,
we know you have a lot to share with us.
Could you start by just talking--and anytime you say
``history,'' you know it is going to be more than just a
quickie. But I wanted you to talk just a little bit about the
California Community Colleges system, why it was founded and
what is its mission.
Mr. Oakley. Well, thank you for the question. The
California Community Colleges were founded--originally, our
first college was Fresno City College in the early 1900s, and
it was founded to provide greater access for students
throughout the state, throughout the country.
The history of the community colleges in California is very
similar to the history of the community colleges in the nation.
It was founded to provide greater access to more Californians
and more Americans more broadly. Many Americans, particularly
those who were coming to California, still had very limited
access to higher education institutions, and then more broadly
when the master plan for higher education was created in the
1960s, the California Community Colleges were given a direct
mission to serve the workforce needs of California, to serve as
a preparatory place to transfer students to our four-year
university systems, the CSU, the UC, and our private non-
profits.
Today, it provides the greatest access possible. We have
the great privilege because of our mission to serve the top 100
percent of students. You do not have to buy your way into the
California Community Colleges. You do not have to take a
picture on the crew team to get into the California Community
Colleges.
[Laughter.]
Mr. Oakley. You get to be in the California Community
Colleges regardless of what your background is. That is the
greatest part of our mission, is to provide access in places
like Grossmont, to provide access to a community, whether it is
your first time going to college or it is your third or fourth
attempt to go to college.
Mrs. Davis. Could you then speak to the oversight of the
community college system? What does that look like? Do you have
to meet state and Federal requirements?
Mr. Oakley. Yes. The oversight has many layers. Because we
are a public system of higher education, we are subject to all
the rules and regulations of any public institution in the
state of California.
So, for example, here in the Grossmont Community College
district, there is direct oversight by the community through
the elected members of the Board of Trustees. Each of our 73
districts has members who are either appointed in one case, or
in 72 others elected directly by the members of the community
that the colleges serve. That is direct accountability and
oversight.
We also have my office and the Board of Governors for the
California Community Colleges, which oversees regulation,
appropriation for the community colleges. We work with the
governor and the legislature to ensure that our colleges have
the greatest access possible and the highest quality education
possible through promulgating regulations and supporting
legislation.
Our fees are set by the California state legislature. They
are not set locally. We have the lowest tuition in the
country--$46 per unit--by far. And Federally, we fall under the
same rules as any other public system of higher education. We
access Pell for our students and follow all the rules and
regulations regarding Pell, as well as all of the other--well,
formerly some of the gainful employment regulations as well, as
well as Title 9 and every other regulation promulgated by
either Congress or a state legislature.
Mrs. Davis. Thank you. I appreciate that.
Mr. Shireman, could you just talk to us a little bit about
for-profit institutions and whether or not they follow the same
oversight at the Federal and state level as community colleges?
Mr. Shireman. Yes. The oversight is very different at for-
profit institutions. There is no public body, no elected or
appointed entity that actually controls that budget. The
control of the pricing, spending, any revenue generated that
might be above and beyond what is spent, where that can go,
they have complete freedom with that money. That is a positive
word, freedom. That is a good thing about capitalism. It also
is what creates these dynamics where the less you spend on the
education, the more you as an owner of that college, the person
that controls it, can pocket for themselves. I am sure that Mr.
Oakley could make a lot of money if he could do that at the
community colleges, but that is not allowed at public
institutions or at non-profit institutions, and it is those
totally different rules about how you can use your money, the
fact that at non-profit institutions the money all has to go
back into the institution and cannot be extracted, that is what
causes the behavior to be so different, why we have the bulk of
the abuses in the for-profit sector.
Mrs. Davis. And we know that the state assembly recently
passed a series of bills, a package of bills really, on the
gainful employment rule, and certainly to close the 90/10
loophole.
Just to follow up with you, Mr. Shireman, for a second, why
did the state legislature see the need to increase that
accountability for for-profit institutions? I think in many
ways we have already talked about that, but specifically why
did they feel a need to really ----
Mr. Shireman. So, a year or so ago there were some
discussions about some legislation like that, and they decided
to wait and see what is happening at the Federal level. There
was some indication that this Administration might roll back
rules and regulations at the Federal level. That has now become
very, very clear that most of the guardrails at the Federal
level are being pulled back, the enforcement.
So the California legislature feels that it is time, that
if the Federal Government is not going to do its job in terms
of overseeing student loans, the GI Bill, that the state needs
to step in and have its own version of a gainful employment
rule, make sure that we do not have fake non-profit and public
institutions, that we close the 90/10 loophole, strengthen
incentive compensation.
Mrs. Davis. Thank you. We will probably be talking a little
bit more about that.
Mr. Muth, are the veteran groups supporting that
legislation?
Mr. Muth. They are, and I think the reason is pretty clear,
that these kinds of protections implemented by the state are
going to take the target off the backs of veterans to some
extent. I think that is one of the driving problems, that we
have incentivized bad behavior at the Federal level. So some of
these schools are going to engage in that bad behavior, and so
the purpose of, I think, this legislation is to try to curtail
some of that.
Mrs. Davis. Thank you very much.
I do have a letter from Assembly Member Chu and other
Members just taking a look at that and why they felt it was
necessary to create that.
And, if I may, for those of you in the audience, we usually
go along with this five-minute rule, so you are trying to talk
very fast and ask all of your questions, and they kind of
extended me. So I wanted to just get very quickly to Ms.
Rodriguez, briefly.
You have shared some of your transition to civilian life,
but I just wanted to ask you as well about how you decided to
go back to school, and you touched on this a little bit. But
maybe just share with us, in addition to what you mentioned,
which is some homework for us actually, what the greatest
challenge is, and what is it about your experience that helped
you to address it.
Ms. Rodriguez. Thank you for the question. My transition
was more mental. When you are transitioning out, you literally
have to recreate yourself. When you are trying to find what
school you fit in or what fits for you, you do not really know
how to choose, and you are going about the counselors and the
employees at the school to help you and guide you, but
sometimes not everybody knows exactly what they want to do. So
then they go and they do these four-year routes, and then they
change their minds.
But for me in particular, I did not know I wanted to make
hair cutting a profession. It was fun for me, and I knew that
the traditional college experience was not for me, it was not
speaking to me. For me, I want to follow my intuition and my
passion, so I said, why not? And that is when I found--for me,
high quality is very important, and I did a lot of extensive
research on which schools to go to, what schools offered what
programs, and then I found that Bellus offered a wide variety.
And I said, why not? Instead of just choosing one thing, they
have more things that I can choose from. Who knows?
Mrs. Davis. Right, and they absolutely fit your need.
Thank you so much, all of you.
I am going to turn now to Chairman Levin for his questions.
Thank you.
Mr. Levin. Thank you, Chair Davis.
Thank you all for sharing your testimony with us this
morning. I really appreciate it.
I wanted to dig into several items that you raised,
Professor Muth, both in your written testimony and then that
you reinforced here.
The Colmery GI Bill included funding to make veterans
impacted by school closures whole, at least that was the idea.
But because of unscrupulous actors, U.S. taxpayers paid more
than $300 million. That is a pretty stunning figure. And even
this funding does not truly make up for the closures, as you
stated in your written testimony, and I quote: ``We cannot give
them back the time and effort they have wasted in pursuit of a
worthless degree.'' And I certainly agree with that.
You also stated that part of the reason for this trend of
school closures is variability in oversight across state
approving agencies.
So my question for you, my first question for you is: what
standards do you think state approving agencies should meet in
order to ensure uniformity across the country, and how should
those standards be enforced?
Mr. Muth. Thank you very much for your question. It is a
wonderful question. It is a complicated problem.
I think right now the way in which the VA is conducting
oversight over which schools will be approved to receive GI
Bill education dollars is fraught with problems, and it is
specifically in the way they have out-sourced this oversight
capacity to state approving agencies, as you alluded to in your
question, which allows the VA to point at the state approving
agencies to say it is their fault when a bad school is allowed
to continue enrolling student veterans, and the state approving
agencies turn around and point back at the VA and say, ``You
have not given us good guidance.'' And also when you have state
approving agencies such as here in California that have a
reputation for being more aggressive in protecting the rights
of student veterans, the VA has come back and undercut those
attempts and essentially allowed those schools to continue
enrolling student veterans.
So I think the first step would be we need more uniformity
with respect to what are the expectations that the VA is going
to set for the state approving agencies. They need to do a
better job supporting those state approving agencies. Right
now, I believe that they are underfunded. When you look at the
tasks of what they are expected to do with respect to approving
schools, they are doing it on a shoestring budget, and in
reality I think it is a case of an ounce of prevention will
solve us a pound of problems later on down the road in the
sense that, as you alluded to, $300 million just for that
specific bill to try to solve an issue where veterans were
going to schools that they should not have been attending in
the first place. If we expand that budget on the front end,
hopefully we will be able to ensure that taxpayers are not
footing the bill after we have to deal with a devastating loss
of a school on the back end.
Mr. Levin. Thank you for that.
I wanted to follow up. In your written testimony, I was
struck by your discussion of a situation in which a state
approving agency performed an audit on a school, and then based
on the audit's findings the state retroactively disapproved a
school that one of your veteran clients attended, and then the
VA informed him that he would be responsible for paying back
his benefits. I know you alluded to that this morning as well.
That is a completely unacceptable situation, a horrible
circumstance when you burden a veteran with the cost of their
education benefits in this way, and particularly after the
failures that you pointed to from the VA and the approving
agency at the state level to move forward initially.
So my questions are as follows. Should there be a ban on
retroactive denial of benefits to ensure a similar situation
does not happen to another veteran in the future?
Mr. Muth. It is a great question, and actually I described
it in the context of that one specific veteran, but this is
actually a pretty widespread problem. I have multiple clients
who are in this situation where they were enrolled in a school,
it was approved at the time they were enrolled, and then all of
a sudden the VA comes back after the fact and says you should
never have been allowed to enroll in that school. I have had
clients who only picked that school because it was approved at
the time they enrolled by the VA.
So then the VA has a situation: how do we go back and
recover those benefits? And they have a choice, I think. They
have a choice. They can either go after the school, which is
where I think they should be. Why should the school get to keep
its ill-gotten gains? But instead, time and time again, they go
after the veteran. Why? Because many of my veteran clients are
also receiving disability compensation, so you can simply
garnish that benefit, which is designed to ensure they are able
to meet their living expenses. And instead, the veteran then at
that point essentially has to fight through the interminable
process of the VA appeals game.
So the veteran I mentioned in my oral statement, and also
in my written testimony, is still in the appeals process that
has been going on now for probably roughly two years. We have
been able to negotiate with the VA a payment plan so they take
less of his 100 percent disability compensation for his
traumatic brain injury, but he is still on the hook as of now
for those benefits.
Mr. Levin. Unbelievable. If they live in my or Susan's
district, maybe we can work on that.
Last question for you, and hopefully we will have another
round for the others.
Mrs. Davis. Yes.
Mr. Levin. There was a recent audit conducted by the VA's
Office of the Inspector General which reviewed the Veterans
Benefits Administration's oversight of state agencies charged
with ensuring the quality of education and training programs.
The findings estimated that 17,000 students who enroll in the
GI Bill program within the next five years will attend more
than 5,400, and I quote, ``ineligible or potentially ineligible
programs due to poor oversight.'' The VA disputed those
numbers, arguing that the data from the IG was flawed.
So my question for you is, given your experience working
with student veterans affected by poor quality programs, how
would you respond to the VA's assessment?
Mr. Muth. I think, broadly speaking, the IG got it right. I
think if you look at the examples I have laid out just here
today where you had veterans attending schools that should
never have been approved, and instead that money has gone to
those for-profit schools, and at the back end the VA has then
tried to recoup that money from the individual veterans. So I
think the IG is correct, and they also identified just broader
oversight issues that I think go directly to the heart of this
problem. If we do not solve it before the veteran enrolls in
the first place, we are going to end up paying for it on the
back end. Either it is going to be the taxpayers or it is going
to be the individual veteran, and neither one of those options
is acceptable.
Mr. Levin. Well, I really appreciate your testimony. I
yield the balance of my time and look forward to working with
you on this for many months and years to come.
Mr. Muth. Thank you.
Mrs. Davis. Thank you.
Chairman Takano?
Mr. Takano. Thank you, Madam Chair.
Ms. Rodriguez, can you share with us what you like most
about what you are studying?
Ms. Rodriguez. What I like most about where I am currently
at with Bellus Academy is the diversity and the culture. For
me, being a part of something much bigger than yourself, and
then their out-source, so their relationships with other
salons, other barbershops are very strong. A lot of those shops
are aware of Bellus students and are very accepting for Bellus
students to start working at their shops and salons.
And to add, I would say just the passion that everyone
carries in that school. Again, it makes you feel like it is not
just traditional. This is something that we are all a part of
and we are making it better, and they are really invested in
their students and their future. The biggest thing for me is
providing opportunity. You can talk a good game, but if you can
provide opportunity, that is where you catch my attention. So,
I love where I am at.
Mr. Takano. Thank you.
Mr. Oakley, are you aware of any of your community college
districts spending--what percentage would you say their
marketing budgets are to market?
Mr. Oakley. Well, the California Community Colleges,
fortunately, have such an exceptional reputation in their
communities that they have to spend very little on marketing
relative to their overall budgets. Typically, you know I'll
take for example my last college, with a general fund budget of
about $80 million, we are probably spending around $200,000 to
$250,000 specifically on marketing. This is primarily on
marketing to communities within the area that have a hard time
gaining information about going to college. So it is relatively
small in comparison to other institutions.
Mr. Takano. Mr. Shireman, can you comment on the marketing
budgets of typical for-profit colleges?
Mr. Shireman. Yes. Typically, a for-profit college's
marketing is easily 20, 30, sometimes 40 percent of their total
budget, frequently spending more on marketing than on
instruction, for example.
Mr. Takano. Mr. Oakley, I understand that--I was a Trustee
for many years, and California has a 50 percent law, which
actually prohibits by law spending more than 50 percent of the
college's funds on administration. Fifty percent at least has
to be spent on instruction. Are you aware of any case in the
California Community Colleges where more money is spent on
marketing and advertising than instruction?
Mr. Oakley. No, I am not aware of any situation where that
would even come close.
Mr. Takano. What would be the reaction of, say, the Board
of Trustees or the public if they found out that a college
president was doing that?
Mr. Oakley. It would be a very difficult reaction for the
college president.
Mr. Takano. Do you think that if the American taxpayer knew
that this is what for-profit colleges typically do, that they
would be similarly outraged?
Mr. Oakley. I think they would. Clearly, there is a need to
communicate with families and students, but to the extent that
they are marketing with the budgets that they have just means
that they are not putting their resources toward supporting
students.
Mr. Takano. Thank you.
When Secretary DeVos testified in front of the Education
and Labor Committee a few weeks ago, I asked her about the
Department's failure to process Borrower Defense applications
despite a court order to do so. It was revealed that the
Department has failed to process any claims since that court
order in October. We know that at least 160,000 applications
are pending and that some of these applications are from
student veterans who took out loans on top of their GI Bill to
pay for their education.
Mr. Muth, you mentioned in your testimony that you have
worked with defrauded students whose institutions took out
loans in their name unbeknownst to them. How does this happen,
and what recourse does a student have to address this?
Mr. Muth. That is a great question. I think it happens in
two ways. One is just out and out fraud, where the student
veteran will discover after the fact that there were loans and
they had no idea that this was going on, and the challenge
there oftentimes is by the time they figure it out, the school
might have already declared bankruptcy and there is really not
somebody we can go after. And then in that period of time, the
other potential way that happens is the student will be induced
to sign promissory notes and told these loans are not really
going to ever be due to you, it is just a matter of a bridge
until the GI benefits come in. So the veteran is signing
paperwork, is not paying attention to the dense words, and ends
up walking into something they did not have any idea that they
were acquiring.
Mr. Takano. Have you worked with students who are waiting
for their Borrower Defense applications to be processed?
Mr. Muth. Absolutely. There are dozens upon dozens of those
160,000 that you mentioned that are veterans that our clinic
has assisted with filing those applications, and none of them
have heard anything back, positive or negative. They are just
simply waiting.
Mr. Takano. Madam Chair, may I ask one more question?
Mrs. Davis. Sure, go ahead.
Mr. Takano. Thank you.
Mrs. Davis. We have been a little more flexible with this
because we are all here and we want you to hear everything that
is available to you.
Mr. Takano. I am still rapidly trying to say these things.
[Laughter.]
Mr. Takano. In the House, we try to move things along.
The VA did not have the authority to restore the GI Bill
benefits to defrauded veterans, and so Congress passed the
Forever GI Bill to grant that authority. Secretary DeVos
already has the authority to process these applications and has
failed to do so.
Chancellor Oakley, how does the Department of Education's
failure to process these applications affect your ability to
serve students who want to pursue their education at a
California community college?
Mr. Oakley. In California, we have the great fortune of
being able to waive fees, waive tuition for needy students, and
that is a great benefit. However, the cost of attending college
is not the cost of tuition. So access to Federal financial aid
is critically important for any of our students to be able to
attend college and be able to be successful in college. So this
particular challenge makes it much more difficult for student
veterans to be able to meaningfully participate in their
education.
Mr. Takano. Mr. Shireman, as a follow-up, beyond granting
relief to students, what other protections were included in the
Borrower Defense rule to better monitor institutions?
Mr. Shireman. The Borrower Defense rule in addition
included prevention efforts. Some of those had to do with
warnings to accreditors and the Department of Education when
there are lawsuits, other kinds of actions that are indicators
of problems at schools; also some warnings to students. But I
think one of the most important in there had to do with
students' legal rights. Mr. Muth mentioned all that fine print
that a student signs when they are enrolling in a school at
that moment when they are excited about this education that
they are going to take, about this future that they are
planning for themselves. They sign all those pages and pages.
Usually at for-profit schools, but not at public and non-profit
schools, hidden in that fine print is something called a forced
arbitration clause, a pre-dispute arbitration clause and other
provisions that basically say if you have a complaint, you have
to come to us first, you cannot complain jointly with other
students, and you have to arbitrate and not go to court.
All of this means that when there are complaints and
problems, students do not get the benefit of knowing that other
students have had similar situations where they felt misled,
and then regulators do not get information about what is
actually happening at the school until it has been going on for
years and somebody finally finds a lawyer who is willing to try
to challenge the arbitration provisions.
So prohibiting that kind of pre-dispute arbitration with
regard to Federal aid I think is one of the most important
elements of the Borrower Defense rule, and that is threatened
by this current administration that does not agree with that.
Mrs. Davis. Yes. Thank you very much.
Representative Lee?
Mrs. Lee. Thank you, and thank you all for your testimony.
I come from Las Vegas, Nevada, where in Nevada we have
220,000 veterans, in my district alone 50,000. I am also the
product of, the daughter of my father, who was a veteran who
got his education quite successfully with the GI Bill and went
on to raise a family of eight. So the GI Bill and its intent
does produce great results when it is used the way it was
intended.
Mr. Shireman, I wanted to talk to you a little bit about
governance issues, particularly when it comes to for-profit
colleges, as well as the accrediting agencies. So many times I
have found that the accrediting commissions end up having a
majority representation of for-profit presidents, vice
presidents, people who have a fiduciary responsibility to their
for-profit institution. They then serve on these accrediting
agencies.
I wanted to ask you, my concern is how can we mitigate
against any individual accrediting agency or commission whose
boards are comprised of these individuals, especially if they
are attempting to oversee pretty much themselves? Is it your
recommendation that we should have stricter standards or
guidelines on who sits on these boards?
Mr. Shireman. I think with regard to for-profit schools, as
you said, they are very different when it comes to who they
have a responsibility to, and we know that in education
sometimes the thing that brings in the most money or the most
students is not what is right for the community and not what is
right for students. So it becomes very difficult, maybe
impossible, for a board of an accrediting agency made up of
school owners to impose requirements that will undermine the
bottom line of the institutions by suggesting, for example,
that maybe they should spend more on instruction, maybe they
should have more full-time faculty rather than adjuncts, maybe
they should give the faculty a voice in the academics even
though that involves some process and some academic freedom,
maybe they should spend less on instruction, maybe the owners
should take less of the profits, all of those kinds of things
that are a direct conflict of interest of the people who are
running the accrediting agency.
You do not have that situation with public and non-profit
institutions. It would be far better if the accrediting
agencies for for-profit career schools had employers that were
on the boards that were running them, who could vouch for, we
are getting great employees trained by these schools, we as
employers are putting money into these schools, we believe in
them. That would be, I think, a powerful change, and it is up
to Congress to decide.
The national accrediting agencies that we have were created
because of what is allowed by the Federal Government. They did
not pre-exist the Federal use of accrediting agencies. So if
Congress were to change what qualifies to be an accrediting
agency, they would follow suit and I think we would have better
oversight from accreditors.
Mrs. Lee. So is it your recommendation that you have no
representation of for-profit schools on these agencies?
Mr. Shireman. I think the nature of boards is they tend to
kind of operate in a--they tend to kind of defer. They do
things unanimously. And when someone has a fundamental conflict
of interest like that, I think it makes sense to bring input
from for-profit investor schools' owners, but I am not sure
that being on the board is the right way to have that input
because of that fundamental conflict of interest.
Mrs. Lee. Yes. It is like a self-regulating issue.
Mr. Shireman. Exactly, yes.
Mrs. Lee. Just one other question about your work on what
you call the covert for-profits, for-profit institutions that
then have converted to non-profit tax status. I represent the
Art Institute in my district, and there has been a lot of
confusion about whether or not this is going to become a non-
profit institution.
Can you expand on your work and elaborate how the incentive
structures are different for for-profit institutions in
comparison to public and private non-profit institutions?
Mr. Shireman. Sure. The two fundamental differences between
a for-profit and non-profit is at a non-profit you have to put
the money back into the institution. It cannot be extracted.
And secondly is the control. The control has to be in the hands
of what we think of as trustees who are there acting on behalf
of the community and the students. Those differences completely
change how the--I think some people think, well, what is the
big deal if you take 8 or 10 percent off the top for some
profit? But that is not the point. The point is that the DNA of
the institution is different, so the behavior is different, in
much the same way that the behavior of a bobcat is different
from the behavior of a tomcat. They are both cats, but one is
much more dangerous than the other one, and that is because of
that fundamental difference in their control mechanisms.
What we have seen happen with these covert for-profits is
that they are basically taking a shell non-profit and inserting
the DNA of a for-profit. The folks who had been in control of
the prior for-profit have a contract or they own the property.
They figure out how they can have people on the boards who
basically are funneling money back to them, and it is
undermining the integrity of non-profit control.
The reason we call it tax status is that we had this good
situation in the country where it just so happened that it was
the IRS that was the one doing a good job of enforcing the
integrity of non-profit status, and that has been undermined by
budget cuts at the IRS, so they are basically not doing it
anymore. So we have to figure out something else so that we can
use non-profit and public status as the effective guardrail
that it has been.
Mrs. Lee. Thank you.
Before I yield my time, I just would like to ask unanimous
consent to enter into the record a letter from 20 Attorneys
General, including the AGs from Nevada and California, on the
role that Attorneys General play in consumer protection and
their deep concerns about these for-profit conversions.
[The information referred to follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. Davis. Thank you very much.
Mrs. Davis. We are going to do hopefully a no more than
five-minute second round here. Actually, it is nice not to feel
so rigorously watching the clock, because there is a lot to
say, and you all have been terrific.
We know that students at for-profit institutions are likely
to take on more debt, default on that debt, and not complete
their degrees. We also know that the Obama Administration took
an important step to provide more information to students about
student outcomes at institutions across the sector, and that is
important for any student and any family that is looking at the
opportunities for their son or daughter. So this is important
information, I think, to students about student outcomes at
institutions across a number of sectors.
So I think we can do a lot in this area, and you have
talked a little bit about how much money some of the for-
profits spend on advertising versus on instruction and those
issues.
Mr. Shireman, would removing the ban on collecting student-
unit record-level data, would that help students make more
informed choices? And how could that help Congress provide
better oversight of for-profit institutions as well?
Mr. Shireman. I think removing the ban would help produce a
lot of useful data. In some ways it may not be directly helpful
because there is so much information that students get that
they have a hard time processing it all and comparing
everything. But when those kinds of data are available to
counselors and experts who can study it and look at what are
the patterns, what is working, what is not working, what are
the signs that you have churning going on at a school, students
borrowing and then replacing, we would get much earlier
warnings on those kinds of problems and be able to better
analyze what is happening and take action sooner. So it would
absolutely help students directly, and also indirectly by
helping the field of advisers and educators and researchers.
Mrs. Davis. Would anybody else like to comment on that?
This is important information. Sometimes you can put so much
information into one of these so-called report cards that maybe
confuse people, but there are certain things that are really
critical and important. What would you say?
Mr. Muth. Yes, Chairwoman. Thank you for the opportunity. I
agree with Mr. Shireman that I think this increased access to
consumer protection information is important for individuals
who are trying to make a wise decision as to how to use their
GI benefits, although I do think there is an important role for
regulators because there is a danger that somebody who is
leaving active duty, particularly in the context of a student
veteran, is going to be simply overwhelmed by the volume of
data.
And also I think it is important to understand what that
data means in context. So we can provide all the data we want,
but if we do not help provide tools for young students or
student veterans who are going to try to use that data, I am
afraid there could be a danger that it is just simply too much.
But I do think, at the end of the day, it would be an important
piece of information for consumer advocates, and also for
students trying to make a wise investment.
Mrs. Davis. Thank you.
Ms. Rodriguez, we certainly again appreciate your personal
story today, and we also know--I think, Mr. Muth, you mentioned
it, and I think everybody did--that we have students attending
today for-profit and not-for-profit schools that are not
necessarily traditional students. They may be married, they may
be needing housing in a different way, taking care of children,
needing child care. So when they lose benefits, when they put
out their GI benefit and it has not done what they needed it to
do, and, in fact, it has really hurt them, what are the
supports that are needed for those students? How should we best
address that?
Ms. Rodriguez. That is a great question. I think when-- my
personal opinion, when I was in the military, I have always
tried to put input on Marines, or just in general service
members that are transitioning, more that mentorship, and I
feel like a lot of active-duty military, they are so--hey, stay
in, stay in, stay in, and then you forget about you. You forget
about what you want and what you need. And then what happens is
you are so committed to finishing your term or your enlistment,
and literally days before you are about to get your EAS, it is
like, okay, now it is me, and you really do not know what to
do, you do not know what choices to make.
So what I think is on both ends, active-duty sector and
leadership in general, be more in-depth and more one-on-one
with each and every service member as far as what they want to
do, maybe providing options as far as, hey, this is who you
are, I see that you are very strong in this, and I see that you
are pretty weak in this, but maybe this would be better for
you, and really setting out a plan instead of pushing them.
I took the Transition Assistance Program two times because
of how overwhelming it was, and because I wanted to be
prepared. I wanted--who does not want to be successful? But I
think just being more intact and who am I leading and how can
we get them to the next step. That is what I would say.
Mrs. Davis. Thank you very much.
I want to thank all of you again.
We are going to go to Chairman Levin now.
I personally just greatly admire the fact that you have all
been here and doing the work that you do today. Thank you.
Mr. Levin. Thank you.
Ms. Rodriguez, I wanted to say I am honored that you are
one of our constituents in the 49th district in Oceanside. I
hope that when you open your barbershop next year, I hope that
you open it in the 49th district, and I would like to be there
to cut the ribbon. I would also like to introduce you and all
the veterans in our district--that applies to Professor Muth as
well--to Andy Ortega from our Oceanside district office. It is
really important to me that we had a veteran in the district
office to serve the veterans in our community, and I am
grateful that Andy is doing that for us.
I think I speak for everyone here when I hope that all
veterans have the opportunity to do what they want to do, as
you are doing. In your testimony you expressed that the
Transition Assistance Program can be overwhelming, to the point
where you did it twice, and stressful given the volume of
information.
Our committee, the Veterans' Affairs Committee, is working
on legislation to create off-base transition assistance
programs, and I wanted to ask you about that. The goal of the
legislation is to make the transition process easier for
service members by giving them more time to access resources
and to digest the information while living in their new
community off base.
So in your mind, with the option of attending off-base
transition assistance, would that have benefitted you or your
peers in similar situations? And what advice can you share with
us as we work to develop this program?
Ms. Rodriguez. I think off base or on base would be
effective, and then I think the biggest thing is digesting the
information. The amount of information that is given is
valuable, very valuable. There are tons of resources that are
offered, if you know what you want to do. But when you do not,
it is not.
I would say yes and no to off and on, because it is not a
matter of making more. It is how can we make better what we
have now, and kind of switching that up maybe, and how
effective that is. But whether there is more or less, it can
equally be effective, in my opinion.
Mr. Levin. Fair enough. I appreciate that.
Mr. Shireman, I wanted to get to a couple of things that
you said in your written testimony where you detailed how
predatory schools manipulate the cohort default rate by placing
students into temporary forbearance during the three years in
which defaults are monitored, really unbelievable.
How can we prevent this gaming of the system, and should
the cohort default rate be altered so that students in
forbearance are included?
Mr. Shireman. Yes, this is one of those situations that
seems to happen a lot where you create a measure, and then the
industry responds to the measure by finding ways to kind of
figure their way around it. We started with a two-year default
rate, basically a snapshot after two years of how many people
had defaulted, and discovered that it was a bit too easy for
schools to kind of push students, because default takes 270
days, and they just push them a bit further, push them past
that two years. Then a few years after that two years, Congress
recognized we need to change that, changed it to three years,
and now we are seeing the same thing happen again. So I think
we do need to see some underlying changes to the default rate
to prevent some of the gaming count forbearance.
The Institute for College Access and Success has made a
number of recommendations about improvements to the default
rate measure. I think that is important.
I think at the same time we should not reject it. I have
heard some people say, well, it has not caught many schools
recently, but I think a high default rate at a school with a
lot of borrowers is still a warning sign. I think we need to
know right now that a low three-year rate is not a green light.
Until we fix it, we need to keep that in mind, but maintain it
and improve it as a measure.
Mr. Levin. Thank you.
I have one final question, with forgiveness in advance.
Mr. Oakley, House Veterans' Affairs is committed to
reducing veteran suicides, something we take very seriously, to
ensure all service members have the access to mental health
services that they need. We have a variety of legislative
proposals in that regard. Prevention not only consists of
comprehensive health care but also setting veterans up for a
successful transition as they leave the service.
A 2011 survey found that almost half of veterans at
colleges and universities in the U.S. reported thinking about
suicide.
So my question for you, Chancellor, is: how is suicide
prevention a top priority for you, and how do your colleges
address suicide risk for students, and in particular veterans?
Mr. Oakley. Thank you for the question. It is an
unfortunate state of the situation that we find ourselves in,
but I think there are several things we are doing as a system
and as a state.
First and foremost, it is important to remember that our
veterans were driven by mission, the opportunity to understand
what their mission is on a daily basis, on a weekly basis. They
are driven by mission. So when we separate them from that
mission and they are trying to figure out what is the next
mission, that is a hard transition. We need to do more to
ensure that we capture those veterans early, get them into our
institutions, give them the support that they need, and help
them understand what their next mission in life is.
The second thing is we have created veteran resource
centers throughout our system. The California state legislature
has provided funds to our system to provide specifically mental
health services, which are sorely needed by our veterans. Many
of them are coming from combat situations. They are trying to
make a very difficult transition, and they need access to
quality mental health services. So we are trying to provide
that.
In addition, our veteran resource centers are providing
them guidance, support, camaraderie, helping them ensure that
we can keep moving them forward.
So those are some of the ways we are working with our state
legislature. We need more support for mental health services.
This is just a drop in the bucket considering the issues that
our veterans come with, so we would certainly continue to
advocate for more resources to help our veterans with mental
health issues. Thank you.
Mrs. Davis. Thank you.
Chairman Takano?
Mr. Takano. Thank you, Madam Chair.
Secretary DeVos is actively reducing oversight of higher
education institutions. In my opinion, this threatens veterans
and non-veterans alike.
Mr. Muth, if the 90/10 loophole is not closed and Secretary
DeVos does not uphold gainful employment regulations, what
would it take for an educational institution to lose
eligibility to receive Federal dollars?
Mr. Muth. It is a great question. I think the major problem
with not having gainful employment and a 90/10 loophole still
in existence is it puts a target on the backs of veterans,
particularly with respect to the 90/10 rule. It incentivizes
recruiters to go seek out veterans to be able to offset that 10
percent of the 90/10 that they need to fix.
So at that point, if you stop enforcing any of these
regulations, it makes it almost impossible for a school to
actually be precluded from receiving GI Bill benefits,
especially when that is combined with the current
Administration's Department of Education's unwillingness to
hold accreditors accountable. That was something that was taken
into affect at the end of the previous administration, where
they were going to hold accreditors such as ACICS, who has been
responsible for accrediting a number of these schools that have
been problematic. And now, by letting them off the mat to
continue to accredit schools, it creates a scenario where it is
really the wild west. There is no reason for these schools ----
Mr. Takano. Well, I see it as a vicious circle, an
unvirtuous circle. It would incentivize targeting of veterans,
so it would count toward the 10 percent. It would increase and
enlarge that institution's ability to then begin to prey upon
low-income students on Pell grants. It just means the mal-
education of a wider swathe of people.
Mr. Shireman, if gainful employment protections are not
kept in place, do you expect more for-profit institutions to
target prospective veteran students without concern about the
quality of education they are offering?
Mr. Shireman. I think that is what happened. We saw a lot
of schools said the gainful employment rule did help them to
pay more attention to the actual outcomes of their students
rather than just the ones they were using in their marketing
and advertising, and that prompted them to analyze how they
were helping students get good jobs and the amounts that they
were charging and the links of their programs, and they
revamped a lot of that. I think without the gainful employment
rule, we would see the recruitment of veterans into programs
that then become more like they were before GE, with longer
programs, higher costs, and lower quality. It is that quality
that helps people get the jobs that bring financial security.
Mr. Takano. Thank you.
Madam Chair, I ask unanimous consent to enter a letter for
the record from the National Student Legal Defense Network
about the need for Secretary DeVos to fully implement the
gainful employment rule to better protect students and
taxpayers.
Mrs. Davis. So ordered.
[The information referred to follows:]
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Mr. Takano. A common argument we hear against the 90/10
loophole is that it would limit a student's choice because for-
profit institutions might not be able to admit as many student
veterans. However, I really disagree with that premise because
I think closing the loophole would protect students from
fraudulent and aggressive practices such as the ones that Mr.
Muth mentions in his testimony.
Mr. Muth, do you think that closing the loophole would
better protect student veterans? Would it limit their
educational choices?
Mr. Muth. I am in complete agreement with you, Chairman
Takano. I think that it absolutely would not limit veterans'
choices, and I think the framing of the question that is raised
by those who are opposed to closing this loophole is really the
problem. No one is saying that a veteran cannot go to that
school. It is a question really of should we as the taxpayers
be paying for inferior education to be provided to veterans.
So nobody would seriously say we should not have some
limits on the types of schools that you can go to, and I think
closing that 90/10 loophole is really just one of those metrics
to ensure that the veterans are receiving a quality education.
Mr. Takano. Thank you for that.
Chancellor Oakley, research from Cellini, Darolia and
Turner found that students attend public institutions after a
shutdown of a for-profit school, and that borrowing and default
rates declined as students shifted to higher-quality
institutions.
Do you think that closing the 90/10 loophole would help
community colleges better recruit student veterans?
Mr. Oakley. Yes. The California Community Colleges provide
high-quality, low-cost pathways for students to post-secondary
education. We are the largest workforce education providers. So
we feel the 90/10 loophole has made our student veterans a
target for predatory colleges. And in closing the loophole, we
stand ready to serve those students in our system.
Mr. Takano. Madam Chair, before I yield back, I would like
to ask unanimous consent to enter a letter for the record from
Stephanie Cellini highlighting her work on outcomes in the for-
profit sector.
Mrs. Davis. So ordered.
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Mr. Takano. I yield back.
Mrs. Davis. Thank you.
Before I go to Representative Lee, we keep talking about
90/10. I think the legislature looked at 85/15. That has been
in the law before. What is ideal? What creates the incentive
and yet is not perhaps burdensome?
Mr. Shireman. The 85/15 that is in the GI Bill was actually
very different from the 90/10 that the Department of Education
uses. Not only is it a different number, but it is actually
program based. So one downside of the 90/10 measure is it is
the entire institution. If you have a huge institution, you
might have programs that are not really proving themselves, but
in the context of the entire institution they pass 90/10. The
program-based, that is one benefit of the program basis of the
85/15 rule in that it still exists in the GI Bill but does not
really have much impact because of the loopholes that are
included in it.
But I think examining some of the possibilities for perhaps
looking at both, perhaps looking at an institution-wide and a
program-based could be useful guardrails as we go forward.
Mrs. Davis. Great, looking at the facts.
Mr. Shireman. Yes.
Mrs. Davis. Representative Lee?
Mrs. Lee. Thank you.
Ms. Rodriguez, I just wanted to ask you a quick question
listening to your recounting of the Transition Assistance
Program. One, I heard you try to express that there is a need
for it to become service-member-centered. And secondly, I
wanted to ask you, do you think that maybe splitting it up--I
mean, it seems like right now it is all condensed into one
week, or I do not know what the timeframe is. Is it your
opinion that maybe splitting it up into segments might offer a
better retention for you?
Ms. Rodriguez. That is a great question. I do think
separating, kind of having some brackets where it is maybe two
days here on one week, and then two days another week, because
it is five days long, and it is from 7:00 in the morning until
4:30 p.m., and you get an hour lunch. But it is all, again,
very repetitive, and it is so much information. I think we look
at statistics, and the average span of our attention is, what,
3 seconds? And then I am sitting there and listening to all
this and I am like trying to get everything down.
Yes, I think separating it up. They do have options where
if you feel like you are more the entrepreneur type, you have a
two-day course of that. If you want more information about
education, higher education, it is more constructive with that
as well, but like I said, still vague. It is still information,
but it is not constructive. It is not specific to the student,
or to the veteran, the service member and their mission and
what they want to do. So I would say separating it out.
Mrs. Lee. Great. Thank you.
Fortunately for you, it seems like your educational
experience has worked out, or is working out, but for so many
veterans and, sadly, their families, it is not, with over 1,200
college campuses that have closed in the last five years alone.
It makes me think of Kendrick Harrison, who is a Nevadan. He
was a veteran who fought in Iraq. He was recruited, encouraged
to quit his job and then was recruited by a pretty aggressive
Argosy University recruiter, and as we know, Argosy closed.
During his enrollment, Mr. Harrison was deprived of the
critical stipend check to cover rent and other expenses as a
result of Argosy illegally keeping nearly $13 million of
stipend funds that were originally intended for students.
Another example, NBC just aired a story about Andres
Figueroa, who is an Army drill sergeant enrolled at Full Sail
University to study film, and he was told he was virtually
guaranteed employment. However, he found out that jobs never
materialized, and it will take him about 10 years to pay off
his debt from that experience.
I wanted to ask Mr. Muth, Full Sail University ranks fourth
on a list of nearly 1,600 schools with official complaints
filed at the Department of VA. Is there more the VA could be
doing to monitor these institutions?
Mr. Muth. That is a great question. The answer is
absolutely, yes, there is. I think right now it gets back to
that problem in the way the VA is trying to do oversight with
essentially out-sourcing it to that state approving agency.
Some are going to be better than others. And also, I think
right now when you look at it, when a veteran makes a complaint
to the VA, it essentially gets dumped into the consumer
database, which is great. It allows the FTC and other agencies
to potentially take action. But there is nothing being done by
the VA to actually investigate those beyond just simply taking
in that information and trying to resolve the problem. When you
have a school like you described where there are so many
complaints--people have been hearing about Full Sail for years,
quite frankly, as far as some of the challenges veterans have
had there--it seems obvious that would be a great place for the
VA to start, those kind of schools that are at the top of the
peak as far as students having bad experiences at those
institutions.
Mrs. Lee. Thank you.
I just want to really hit very quickly on cost. Full Sail
University costs almost five times as much as a comparable
program at a local community college. Chancellor Oakley, can
you just expand on why you think there is such a discrepancy in
the cost between comparable programs at a school like Full Sail
and a community college?
Mr. Oakley. Well, first, the California legislature has a
specific interest in keeping costs affordable in the State of
California. This is true not just of community colleges, which
it sets tuition for, but the California State University, the
University of California. We have some of the lowest debt
levels in the country. That is a good thing.
The flip side to that is a university like Full Sail can
raise a lot more money per student than we can at times. So it
is important that the public continue to invest in higher
education, particularly public higher education. Otherwise, we
fall victim to the challenges we face today, which is being
able to compete on a per-student funding basis with some of
these for-profits.
There is a reason why veterans are attracted to for-
profits. For-profits are offering them something that they want
and that they feel that they need. Our colleges, our publicly-
funded colleges need to do a better job of responding to that
need, and I think greater emphasis on public investment would
help us do that, as well as a specific call to action to our
colleges to do a better job of responding to the needs of
veterans.
Mrs. Lee. I yield back.
Mrs. Davis. Thank you very much.
I guess I would add to that is convenience as well.
Mr. Oakley. Absolutely.
Mrs. Davis. We need to be very responsive to that.
Thank you. Thank you all again.
I want to remind my colleagues that pursuant to committee
practice--I am going to give a little boilerplate right here,
if you do not mind--materials for submission for the hearing
record must be submitted to the Committee Clerk within fourteen
days following the last day of the hearing, and they must
follow the subject matter of the hearing. Only a Member of the
committee or an invited witness may submit materials for
inclusion in the hearing record. Documents are limited to 50
pages each. Documents longer than 50 pages will be incorporated
into the record via an Internet link that you must provide to
the Committee Clerk within the required timeframe, but please
recognize that years from now that link may no longer work.
Again, I wanted to thank all of our witnesses here today.
We know that what we have heard is very valuable, and Members
of the committee may have some additional questions for you,
and we ask the witnesses to please respond to those questions
in writing, and the hearing record will be held open for about
fourteen days in order to receive those responses.
I also wanted to remind my colleagues that pursuant to
committee practice, witness questions for the hearing record
must be submitted to the Majority Committee Staff or Committee
Clerk within seven days. Questions submitted must address,
again, the subject matter of the hearing.
I now want to just close, and so that you all know where we
are as a committee in addressing these issues. Nearly two years
ago, I voted to pass the Forever GI Bill to ensure that our
nation's veterans can access the benefits of the social
mobility that come with a high-quality post-secondary
education. But we know, for too many student veterans, that is
just not the case. As our witnesses laid out, loopholes in
Federal law and weak enforcement have allowed unscrupulous for-
profit institutions to aggressively recruit student veterans
and then defraud them all on the taxpayer's dime.
Despite this, the Department of Education under this
Administration has failed to protect students against low-
performing institutions, abdicating its responsibility to hold
predatory institutions accountable and left students and
veterans to fend for themselves. We believe that these
consequences are devastating and we want to note that for-
profit institutions have continued to treat veterans, as some
have chosen to put it, as dollar signs in uniforms to take in
tens of billions of Federal aid dollars.
Three major for-profit chains have suddenly closed, leaving
thousands of student veterans without vital housing assistance,
transferrable credits, or degrees, and the victims of these
abrupt closures have grappled with the Department of Education
unwilling to provide the basic consumer protections and loan
relief that they are entitled to.
Congress must provide student veterans access to
institutions and empower them to succeed in civilian life, not
defraud them. In the 116th Congress, the House Education and
Labor Committee will pursue reforms of the following: closing
that 90/10 loophole to prevent for-profit colleges from
aggressively recruiting vulnerable student veterans at the
taxpayer's expense; protect students from low-performing
institutions that leave graduates worse off than before they
enrolled--that is quite a statement, worse off than before they
enrolled; ensure loan relief for students impacted by abrupt
for-profit closures; prevent for-profit schools from skirting
accountability rules by seeking non-profit status; and most
importantly, holding the Department of Education accountable
for working on behalf of student veterans, not for-profit
schools.
All of us here today know that our nation's veterans
deserve not just our thanks, and certainly that, but a true
commitment towards improving their access to higher education
and well-paying jobs. So our discussion today, we believe, is
an important step. There will be many more discussions and
hearings of this nature towards ensuring that no institution
can jeopardize the future of its students, like Argosy
University did, to the 181 defrauded student veterans who once
took classes only 20 minutes away from here. After all, as Mr.
Muth reminded us, and I quote, ``We must do more to protect and
defend the rights of those who have answered the call to
protect and defend their fellow citizens.''
Thank you all so much for believing in this shared goal.
If there is no further business, without objection, the
committee stands adjourned. Thank you all.
[Applause.]
[Additional submissions by Chairwoman Davis follow:]
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[Whereupon, at 12:21 p.m., the subcommittees was
adjourned.]