[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
EXAMINING MID-SEMESTER SCHOOL CLOSURES
IMPACT ON STUDENT VETERANS
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HEARING
BEFORE THE
SUBCOMMITTEE ON ECONOMIC OPPORTUNITY
OF THE
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
WEDNESDAY, JUNE 19, 2019
__________
Serial No. 116-18
__________
Printed for the use of the Committee on Veterans' Affairs
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
40-767 PDF WASHINGTON : 2021
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COMMITTEE ON VETERANS' AFFAIRS
MARK TAKANO, California, Chairman
JULIA BROWNLEY, California DAVID P. ROE, Tenessee, Ranking
KATHLEEN M. RICE, New York Member
CONOR LAMB, Pennsylvania, Vice- GUS M. BILIRAKIS, Florida
Chairman AUMUA AMATA COLEMAN RADEWAGEN,
MIKE LEVIN, California American Samoa
MAX ROSE, New York MIKE BOST, Illinois
CHRIS PAPPAS, New Hampshire NEAL P. DUNN, Florida
ELAINE G. LURIA, Virginia JACK BERGMAN, Michigan
SUSIE LEE, Nevada JIM BANKS, Indiana
JOE CUNNINGHAM, South Carolina ANDY BARR, Kentucky
GILBERT RAY CISNEROS, JR., DANIEL MEUSER, Pennsylvania
California STEVE WATKINS, Kansas
COLLIN C. PETERSON, Minnesota CHIP ROY, Texas
GREGORIO KILILI CAMACHO SABLAN, W. GREGORY STEUBE, Florida
Northern Mariana Islands
COLIN Z. ALLRED, Texas
LAUREN UNDERWOOD, Illinois
ANTHONY BRINDISI, New York
Ray Kelley, Democratic Staff Director
Jon Towers, Republican Staff Director
SUBCOMMITTEE ON ECONOMIC OPPORTUNITY
MIKE LEVIN, California, Chairman
KATHLEEN M. RICE, New York GUS M. BILIRAKIS, Florida, Ranking
ANTHONY BRINDISI, New York Member
CHRIS PAPPAS, New Hampshire JACK BERGMAN, Michigan
ELAINE G. LURIA, Virginia JIM BANKS, Indiana
SUSIE LEE, Nevada ANDY BARR, Kentucky
JOE CUNNINGHAM, South Carolina DANIEL MEUSER, Pennsylvania
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Veterans' Affairs are also
published in electronic form. The printed hearing record remains the
official version. Because electronic submissions are used to prepare
both printed and electronic versions of the hearing record, the process
of converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
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Wednesday, June 19, 2019
Page
Examining Mid-Semester School Closures Impact On Student Veterans 1
OPENING STATEMENTS
Honorable Mike Levin, Chairman................................... 1
Honorable Gus M. Bilirakis, Ranking Member....................... 2
WITNESSES
Ms. Charmain Bogue, Executive Director for Education Service,
U.S. Department of Veterans Affairs............................ 4
Prepared Statement........................................... 25
Ms. Robin Minor, Deputy Chief Operating Officer for Partner
Participation and Oversight, Federal Student Aid, U.S.
Department of Education........................................ 5
Prepared Statement........................................... 27
Ms. Melissa Emrey-Arras, Director, Education, Workforce and
Income Security, U.S. Government Accountability Office......... 7
Prepared Statement........................................... 29
Mr. Joseph Wescott, National Legislative Liaison, National
Association of State Approving Agencies........................ 8
Prepared Statement........................................... 38
STATEMENT FOR THE RECORD
Veterans Education Success (VES)................................. 41
MATERIAL SUBMITTED FOR THE RECORD
From: Representative Susie Lee................................... 48
EXAMINING MID-SEMESTER SCHOOL CLOSURES IMPACT ON STUDENT VETERANS
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Wednesday June 19, 2019
Committee on Veterans' Affairs,
U. S. House of Representatives,
Washington, D.C.
The Subcommittee met, pursuant to notice, at 10:30 a.m., in
Room 210, House Visitors Center, Hon. Mike Levin [Chairman of
the Subcommittee] presiding.
Present: Representatives Levin, Rice, Brindisi, Pappas,
Luria, Lee, Cunningham, Bilirakis, Bergman, and Banks.
OPENING STATEMENT OF MIKE LEVIN, CHAIRMAN
Mr. Levin. Good morning, everybody. I call this hearing to
order. Thank you for bearing with our delay. We had a name card
issue, which I think we are fixing. I think the name card is
coming, this is good.
I want to welcome everybody to today's Subcommittee on
Economic Opportunity hearing, ``Examining the Effect of School
Closures on our Student Veterans.''
Now, we will discuss how the Department of Veterans Affairs
and the Department of Education can prevent students from being
abused and taken advantage of, which includes tracking schools
that are vulnerable to closure. And when schools do close,
Congress and the VA must do all we can to make affected
veterans whole; that is why we are here.
I am pleased we have both the VA and the Department of
Education joining us today. We even got the name placard right.
Thank you. And I would like to make clear from the beginning, I
believe both agencies have a long way to go in protecting our
students' veterans.
The VA must better monitor schools and act when they are
using deceptive practices to abuse veterans and take advantage
of their GI Bill benefits. And, as prospective students'
veterans make key decisions about their education, the VA must
more fully educate them about the quality of education that
schools are offering, so they can avoid problematic
institutions. Our work will not be complete until every student
veteran is informed in their choices and earns an education
that is valued in their chosen field.
And the Department of Education must use its robust data
collection to crack down on bad actors throughout the system. I
am extremely concerned that Secretary DeVos has undermined
Federal protections to hold predatory for-profit schools
accountable; I am worried that we are going in the wrong
direction. This includes the Gainful Employment and Borrower
Defense rules, two of the best tools to defend students against
fraud in higher education.
According to a 2017 analysis of Education Department data,
for-profit colleges accounted for more than 98 percent of
Borrower Defense claims, but only 10 percent of enrollment.
Think of that, 98 percent of the claims from only 10 percent of
the enrollment.
We expect the Department of Education to enforce tough
standards on institutions of higher learning, because when
students are defrauded by schools, the process of starting over
is time-consuming and incredibly difficult. You don't want that
to happen.
Between 2014 and 2018, about 22,000, 22,000 GI Bill
recipients were enrolled at for-profit colleges when they shut
down. These students are often left unable to transfer their
credits. Twenty two thousand people that served their country
unable to transfer credits.
Last Congress, due to the severe impact on student
veterans, this Committee was forced to act, ultimately
providing over $300 million in relief. And in no way is this
problem behind us, let's make that clear. Countless schools are
expected to close or go bankrupt in the coming years. So we
know that to be true. So we have to prevent students from
experiencing the worst of this, the worst of these school
closures, and we have got to help them if they find themselves
in the same position that some of our witnesses here today have
experienced. That is why our work here today is so critically
important.
Mr. Levin. With that, I would like to recognize my friend
Ranking Member Bilirakis for 5 minutes for any opening remarks
he may wish to make.
OPENING STATEMENT OF GUS M. BILIRAKIS, RANKING MEMBER
Mr. Bilirakis. Thank you, Mr. Chairman, and thanks for
addressing this issue. Thanks for having this hearing. And,
again, thank you for joining us at this hearing.
It saddens me that we must be here today, and it saddens me
to hear the stories of how school closures have continued to
impact student veterans' dreams of earning their degree.
School closures are something that we all must try to
avoid; however, they don't happen in a vacuum and we should ask
ourselves what caused a school to close in the first place. Is
it due to the increased costs associated with complying with
over-burdensome regulations and requirements? Is the school
closing due to market pressures or simply bad management?
Whatever the reason, we must do what we can to limit the impact
of these closures on student veterans and taxpayers.
In the Forever GI Bill, Congress did extend new protections
for student veterans who are impacted by school closures, but
we can do more, and I know my Chairman feels the same way. I am
convinced that once appropriate mandatory offsets are
identified, we should provide full restoration of entitlement
to students whose school closed in the middle of the semester
and who are unable to transfer their credits to another
institution. At the very minimum, we should do that.
Section 109 of the Forever GI Bill did authorize full
restoration to certain veterans, notably for students from ITT
Tech and Corinthian College, but not for current students due
to cost constraints.
Mr. Chairman, my staff has begun working on a bill to
extend full restoration, as well as to get to the heart of how
these students were affected in the first place. As the old
saying goes, an ounce of prevention is worth a pound of cure,
and the other sections of the bill I am working on would try to
prevent student veterans from getting caught up in these
closures in the first place.
The bill would memorialize the best practices found in VA's
Principles of Excellence, which good schools already meet, by
putting them in statute and making adherence to these
principles a requirement for the GI Bill approval.
The bill would also require additional coordination of
enforcement activities between the Department of Education, VA,
and the state approving agencies. While an action by one of
these entities shouldn't force an action by another, we should
require that an enforcement action trigger a review of a school
or program.
I do not believe we need new burdensome regulations or
requirements on the books to prevent school closures, we just
need to do a better job enforcing the ones we already have.
That is why I believe that enhanced coordination between these
agencies is a critical piece in the protection of student
veterans.
I am just beginning to work on this bill, and I would like
to thank Veterans Education Success and other veterans' groups
for their suggestions. I would certainly welcome the Chairman
and other Members of the Committee; I welcome their ideas and
thoughts as we move forward with the bill.
As I said at the beginning, Mr. Chairman, it saddens me
that we must be here today, and I hope we can come out of this
hearing with solutions and not pointing fingers. And I know you
are not that type of guy, you are a solution-oriented guy, and
I appreciate it very much. That is why I like working with you.
And this is a real problem throughout our country, these school
closures, and it is affecting our veterans.
We must remember, again, that school closures impact
students no matter if the school was public, non-profit, or
for-profit. We must work together and do the right thing for
our veterans, and not worry about the political agenda, and I
know we are going to do the right thing here.
I look forward to hearing from our witnesses today. Thank
you for being here and I appreciate it so very much.
And I yield back, Mr. Chairman.
Mr. Levin. Thank you, Mr. Ranking Member. And I appreciate
those comments and I think we share the same desire, which is
to figure out the best path forward to solve the problem. And
some of the stories we have heard from our veterans that have
faced these closures are heartbreaking. So we are all on the
same page with regard to that.
And we have got a great group joining us today to discuss
and address some of these issues. We have Ms. Charmain Bogue,
the Executive Director--not Acting Executive Director, so
congratulations on your confirmation--for Education Service at
the U.S. Department of Veterans Affairs. Ms. Robin Minor,
Deputy Chief Operating Officer for Partner Participation and
Oversight of Federal Student Aid at the Department of
Education. That is quite a title, that is very good. Ms.
Melissa Emrey-Arras, Director for Education, Workforce and
Income Security at the U.S. Government Accountability Office.
Thank you for being here. And Mr. Joseph Wescott, National
Legislative Liaison for the National Association of State
Approving Agencies. Thanks for being here.
I am also glad that some of our veterans who were willing
to tell their stories did so on the record. The stories were
heartbreaking and I think we all know the impact, the real-
world impact of the decisions that we all make and the things
that we discuss on this Subcommittee today are having on
veterans' lives.
With that, I look forward to your opening statements, and I
would like to begin by recognizing Ms. Bogue for 5 minutes.
STATEMENT OF CHARMAIN BOGUE
Ms. Bogue. Good morning, Chairman Levin, Ranking Member
Bilirakis, and Members of the Subcommittee. I appreciate the
opportunity to discuss the effects of permanent school closure
on student veterans who are using VA education benefits.
VA is aware of the impacts school closures have had on
thousands of student veterans actively attending classes. For
example, in April 2015, Corinthian College closed its 28
remaining schools and subsequently filed for bankruptcy. In
September 2016, ITT Technical Institute closed between terms,
impacting the plans of about 11,000 student veterans. Most
recently, 18 Art Institute and Argosy University campuses
approved for GI Bill benefits closed in March of this year, and
VA identified over 1700 student veterans who may have been
affected by these closures.
VA relies on its partnerships with state approving agencies
to formally notify VA of a school closure. VA contacts impacted
students within 5 days of a school closure notification to
provide information on the qualifications for restoration of
benefits and instructions on how to make restoration of
benefits. The information is also made available on the GI Bill
website.
For qualifying closures and disapprovals, Section 109 of
the Colmery Act authorizes VA to restore some, if not all
entitlement. This provision now gives VA the authority to
extend Post-9/11 GI Bill housing allowance payments when a
school closes or is disapproved during an active term. VA
formed a dedicated team in the Muskogee Regional Office to
process these cases.
As of June 18, VA restored more than 16,000 months of
entitlement for approximately 2,000 beneficiaries who attended
schools closed prior to August 16, 2017, and restored nearly
1500 months of entitlement for over 550 beneficiaries who
attended schools closed on or after August 16, 2017.
Additionally, over $700,000 of monthly housing allowance
benefits were paid to student veterans.
VA maintains a close working relationship with Department
of Education, the Department of Justice, the Department of
Defense, the Consumer Financial Protection Bureau, and the
Federal Trade Commission. Together, these Federal entities
establish a strategy for sharing information through
independently developed processes and tools that provide
tailored information related to graduation rates, tuition
costs, and academic programs.
For example, VA and ED had an open communication where ED
reached out to VA prior to the ECA closure. However, VA still
has limited legislative authority to take action against the
school to protect students prior to a school closure. VA only
has the authority to gather allegations, keep students informed
of the current state of a school, and refer issues to other
offices such as FTC and VA's Office of Inspector General.
SAAs also have limited authority for suspension or
withdrawal actions for certain concerns related to accredited
schools. For example, financial stability is an approval
requirement for non-accredited programs, but is not in the
statutory provisions covering the approval of accredited
programs. As we have seen, a number of large schools closed
over the last several years.
VA has taken a more proactive approach to get information
out to students enrolled in at-risk schools. Specifically, VA
alerted students by putting caution flags on the VA GI Bill
Comparison Tool indicating when a school has been designated
for heightened cash monitoring or may lose approval for Federal
student aid. VA continues to look for ways to improve the GI
Bill Comparison Tool to provide up-to-date, robust information
to student veterans.
In addition, VA utilizes direct email campaigns and social
media platforms to provide information and resources to
potentially-impacted student veterans.
Also, I would like to take this opportunity to thank our
VSO partners for their assistance in getting the word out and
assisting student veterans in need.
Thank you, Chairman Levin and Ranking Member Bilirakis, for
the opportunity to address the effects of permanent school
closures on student veterans using their VA education benefits.
This concludes my testimony and I look forward to answering
any questions you or the Members of the Committee may have.
[The prepared statement of Charmain Bogue appears in the
Appendix]
Mr. Levin. Thank you, Ms. Bogue.
I would now like to recognize Ms. Minor for 5 minutes.
STATEMENT OF ROBIN MINOR
Ms. Minor. Good morning. Chairman Levin, Ranking Member
Bilirakis, Members of the Committee, thank you for the
opportunity to appear before you today on behalf of the U.S.
Department of Education, Office of Federal Student Aid.
Our veterans and their families represent the best of this
country, and the education benefits they receive as a result of
their service are hard-earned and well-deserved. Veterans are
not limited in using their benefits at institutions that
participate in Title IV or are accredited; however, we know
that for many veterans they view Title IV participation and
accreditation as a stamp of approval that allows them to invest
wisely in programs that will meet their needs. Therefore, while
Title IV and Veterans Affairs benefits programs are operated
independently, there is considerable overlap between the
population of students served.
I would now like to address the Department's role in
monitoring and our activities related to school closures.
Some college closures are well planned and orderly, meaning
the institution provides an opportunity for currently-enrolled
students to complete their programs through a teach-out or
transfer to a comparable program at a similar institution.
Others' precipitous closures are highly disruptive to students
and may leave them unable to complete their program or earn a
credential.
With respect to Federal student loans, students who do not
complete their program of study because the school closed while
they were enrolled, or who recently withdrew from the
institution and who do not complete the program of study at
another institution, are entitled to a closed-school loan
discharge of their Federal loans associated with the enrollment
at the closed school.
The Department also restores eligibility for students who
receive Pell Grants during their enrollment at the closed
school. Moreover, we recently implemented regulations issued in
2016 that provide closed-school discharges for borrowers
automatically without an application.
While the Department may end an institution's participation
in Title IV, it does not have the authority to close an
institution or to prevent it from offering educational
opportunities to students. When warranted, the Department may
place an institution under heightened cash monitoring to
restrict an institution's ability to draw down Federal Title IV
funds. This step enables the Department to provide additional
oversight of a variety of Federal or financial compliance
issues. Heightened cash monitoring coupled with additional
oversight helps safeguard taxpayer funds and promote
institutions' proper stewardship of the Federal student
financial aid programs, thereby protecting the interests of the
Nation's students, including those who are veterans.
The Department's tools to identify financially unstable
institutions primarily depends upon the institution's financial
composite score, which is designed to measure the financial
health of an institution. Institutions that fail the composite
score test are required to post letters of credit that provide
the Department with a guaranteed source of funds to pay an
institution's liability stemming from improperly disbursed
Federal student aid. The Department cannot always predict how
an institution will respond to certain sanctions and it cannot
always predict which institutions will close. In many cases,
institutions have operated for years despite being subject to
heightened cash monitoring.
The Department takes quick action when an institution
closes to provide students and related regulatory agencies with
the most accurate and timely information possible. Among other
things, the Department makes every effort to work with school
officials, as well as the school's state authorizing agencies
and accreditors, to understand and communicate the school
closures process. We post fact sheets and other information to
studentaid.gov/closures. We work as closely with all impacted
state agencies and accreditors and, where possible, we
participate in transfer fairs intending to help students
understand their options, and we issue emails to impacted
students to provide information about their options and direct
them to resources designed to assist them.
When working through these steps, the Department considers
the VA to be a critical partner and routinely includes the VA
in outreach and information-sharing efforts. We have enjoyed a
cooperative and collaborative relationship with our Federal
colleagues at VA, and we look forward to continuing our
partnership.
The Department of Education embraces the responsibility to
have student veterans navigate the higher education system;
stands ready to work with Congress, the VA, and other agencies
on initiatives that put students, including student veterans
first.
Thank you for the opportunity to testify. I look forward to
answering your questions.
[The prepared statement of Robin Minor appears in the
Appendix]
Mr. Levin. Thank you, Ms. Minor.
I now recognize Ms. Emrey-Arras for 5 minutes.
STATEMENT OF MELISSA EMREY-ARRAS
Ms. Emrey-Arras. Good morning. Chairman Levin, Ranking
Member Bilirakis, and Members of the Subcommittee, I am pleased
to be here today to discuss the effect of school closures on
student veterans. My remarks will focus on three issues: one,
the distribution of Post-9/11 GI Bill tuition and fee payments
among schools; two, the outcomes of students at schools that
receive the most payments; and, three, how school closures can
affect student veterans.
Nearly 700,000 student veterans received Post-9/11 GI Bill
benefits to attend almost 6,000 schools in 2017. We found that
VA paid about 40 percent of the money to public schools, 30
percent to non-profit schools, and 30 percent to for-profit
schools.
A relatively small number of schools received a large share
of Post-9/11 GI Bill payments. In 2017, the 50 schools that
received the highest amount of payments accounted for over 30
percent of all such benefits. These 50 schools consisted of 14
public, 16 non-profit, and 20 for-profit schools. The 50
schools received between $11 million and $191 million each in
payments, and enrolled hundreds or thousands of student
veterans with GI Bill benefits. In contrast, most school's
student veterans attended enrolled fewer than 15 veterans with
Post-9/11 GI Bill benefits.
Moving on to student outcomes. We found that the outcomes
at the 50 schools that received the most Post-9/11 GI Bill
tuition and fee payments were on the whole generally comparable
to the national average. Since available data on student
veteran outcomes is currently limited, we analyzed outcome
measures for the broader student populations at each school. We
found that the average 4-year program graduation rate at the
top-funded schools was 61, the same as the national average.
However, outcomes varied by sector. For example, these
graduation rates were 73 percent at the public schools, 66
percent at the non-profit schools, and 22 percent at the for-
profit schools in the top-funded school group.
Now turning to school closures. Although a relatively small
number of schools close each year, these closures can affect
thousands of student veterans. In 2017, we reported that about
95 schools closed in school year 2015-'16, which was higher
than in previous years, primarily due to a rise in for-profit
school closures.
Schools can close in different manners and for a variety of
reasons, including declining enrollments, financial problems,
loss of accreditation, and legal actions. When a school ceases
operations in an orderly process over several months, it gives
students time to complete their current school term and make
arrangements to transfer and continue their education at
another school. The effect of school closures is often worse,
however, when the closures occur abruptly with little or no
advance warning, because these schools generally do not have
time to establish transfer arrangements that allow students to
easily continue their education at another school.
For example, more than 7,000 veterans receiving Post-9/11
GI Bill benefits were attending schools operated by Corinthian
Colleges and ITT when they abruptly closed in 2015 and '16.
More recently, closures at Education Corporation of America in
2018 and Dream Center Education Holdings in 2019, which
operated several schools under multiple brands, including
Argosy University and several campuses of The Art Institutes,
affected tens of thousands of students, including thousands of
Post-9/11 GI Bill recipients.
Although veterans affected by school closures may qualify
to have their GI Bill benefits restored, these closures can
create hardships for these veterans. For example, veterans can
face challenges transferring credits and continuing their
education at a new school. This may make it more difficult for
veterans to complete their degrees before exhausting their
benefits.
Many student veterans are also trying to balance school
with family and work obligations, or dealing with the effects
of combat-related physical and psychological injuries. When a
school closes, the burden of finding and enrolling in a new
school may be especially difficult for these veterans. School
closures also pose a financial risk for the Government and
taxpayers due to the costs associated with restoring benefits.
VA restores Post-9/11GI Bill benefits to eligible veterans
affected by school closures and, moreover, many student
veterans also receive Federal Student Aid grants or loans from
Education, and school closures can result in hundreds of
millions of dollars in financial losses for the Government and
taxpayers.
As the number of school closures increases, the risks
associated with these closures are significant for student
veterans, their families, and the Government.
Thank you.
[The prepared statement of Emrey-Arras appears in the
Appendix]
Mr. Levin. Thank you.
I would now like to recognize Mr. Wescott for 5 minutes.
Mr. Wescott, could you hit the microphone button?
Mr. Wescott. Ah.
Mr. Levin. There we go. Perfect. Thank you.
STATEMENT OF JOSEPH WESCOTT
Mr. Wescott. Good morning. Chairman Levin, Ranking Member
Bilirakis, and Members of the Subcommittee on Economic
Opportunity, I am pleased to appear before you today on behalf
of the member agencies of the National Association of State
Approving Agencies and appreciate the opportunity to provide
comments to this Committee pertaining to the impact of mid-
semester school closures on student veterans, and particularly
how we can work together with Federal and state agencies to
protect students from substandard programs and predatory
practices.
I am accompanied today by our Legislative Committee Vice
Chair, Ms. Trish McGowan.
Shortly after passage of the Servicemen's Readjustment Act
of 1944, Congress recognizing it was the responsibility of the
states within our Federal system of government to oversee the
education of its citizens, required that each state establish a
state approving agency. These state agencies were to establish
standards for and to approve programs of education in which
eligible individuals could use GI Bill benefits.
Over time, SAAs have evolved to become the primary means of
assuring institutional accountability. Federal law is clear
that SAAs are the primary governmental body through which
approval of education and training for veterans' educational
benefits is to occur. Today, 51 SAAs in 48 states, as well as
the District of Columbia and the Territory of Puerto Rico,
composed of approximately 215 professional and support
personnel, are supervising well over 14,000 active facilities.
SAAs work in collaboration with the VA and our other partners
to promote and safeguard quality education and training
programs for veterans and other eligible persons, and assist
the VA in preventing fraud, waste, and abuse in the
administration of the GI Bill.
NASAA believes the primary responsibility and focus of the
SAAs is and should continue to be program approval. In 2018
alone, SAAs across our Nation approved almost 195,000 programs
of education and training at universities, colleges, and
training institutions. We do this through an approval process
that allows us to carefully evaluate many factors, including
curriculum, instructors, policies, facilities, and advertising.
In 2011, with the implementation of Section 203 of Public
Law 111-377, we began assisting VA with their requirement to
perform compliance survey visits at SAA-approved institutions.
An unintended consequence of Section 203 has been a diminution
of the ability of SAAs to devote adequate time to approvals and
robust oversight to ensure student veterans are being provided
quality education and training.
Prior to 2011, SAAs generally visited in excess of 80
percent of all institutions with approved programs in their
states annually. Today, most SAAs visit less than 25 percent of
these institutions.
To address these negative consequences and refine the SAA's
role, we believe that SAAs should primarily conduct risk-based
survey visits as mandated by Congress in the Colmery Act. This
will allow us to better identify schools that are at risk of
closure due to substandard programming, fraudulent advertising,
or improper practices. By performing robust risk-based surveys,
in conjunction with ongoing risk assessments as part of the
approval function, we would gain the ability to better protect
veterans by identifying high-risk behavior at institutions we
approve.
We also believe the time has come to work with our VA and
VSO partners, and of course Congress, to look at ways we can
enhance and strengthen approval requirements. We need to look
more rigorously at accreditation issues, enrollment practices,
and, where possible, employment data. As trained educators, we
are best suited to provide this important, rigorous oversight
and in-depth evaluation. Though we maintain the approval of
non-federal programs is correctly vested in the states, we do
believe the VA should ensure states are properly protecting the
integrity and independence of SAAs, and ensuring Federal funds
are properly expended.
Mr. Chairman, today, 51 SAAs composed of approximately 215
personnel are diligently working to protect the GI Bill, and
provide for a better future for our veterans and their
families, who have sacrificed so much for this great Nation.
I thank you again for this opportunity and I look forward
to answering any questions that you or Committee Members may
have.
[The prepared statement of Joseph Wescott appears in the
Appendix]
Mr. Levin. Thank you, Mr. Wescott. Thanks to all of our
witnesses for your opening statements and for your very helpful
written testimony as well.
With that, I would like to recognize myself for 5 minutes
to begin the question portion of the hearing. The title of
today's hearing, as you may have seen, is ``Examining Mid-
Semester School Closures Impact on Student Veterans.'' So I
would like to begin with a question to address just that.
Ms. Bogue, does the VA monitor the impact of school
closures on veterans and, if they do, what metrics do you use?
Do they include associated costs to those veterans? And how
does VA react and act upon those metrics to the extent that
they are calculated?
Ms. Bogue. So, thank you for that question. So we actually
do monitor in terms of school closures, when the school closes,
exactly what is going on with the veteran; how much benefits
have they utilized at that particular program, how much time
have they spent at that program, as well as the benefits that
we have restored to that individual.
I will tell you, a common concern from students is that
right now we only have the authority to restore benefits for
that particular term, versus giving them back the benefits for
the entire time that they have spent at that school to utilize
those benefits at some other school.
Mr. Levin. So you have said, and I have heard this a few
times, that VA has no authority to enforce against predatory
schools. Could you expand on the limitations, whether they be
statutory, jurisdictional, or otherwise, that prevents VA from
taking actions to prevent and address the school closures?
Ms. Bogue. So a great example is the recent closures of--or
the recent Title IV being revoked for the ECA schools, the Art
Institutes and the Argosy Universities, that is a great
example. Title IV was revoked, the Department of Ed notified us
that they revoked the Title IV; however, we have no authority
to go in and remove GI Bill approval from those schools. So
that is a great example of, if there was some connection there
for us to go in and take a similar action, then we could
protect students sooner in the process, versus waiting for a
school to slowly die out.
Mr. Levin. So what you are saying is that VA is limited in
its control over state approving agencies as well, but as I
understand it, in some situations VA has actually overridden
SAA decision-making.
So I would like to ask Mr. Wescott if you agree with Ms.
Bogue's assessment?
Ms. Bogue. Well, I would certainly agree in the sense that
the primary responsibility for approval rests with the SAAs.
And I would also refer to a case which happened in South
Carolina where we had a law school that was put under
monitoring for its accreditation, and the SAA there leaned
forward and took action to suspend that school. There were
other things going on as well.
I certainly understand the constraints that we face in
suspending or moving against a school, but of course the VA
does have the authority to suspend enrollment if there is a
question, if they can do that within--if they can find grounds
for doing that, and that would be an effective tool to move
against institutions.
It does concern me that Title IV could be removed, and a
school would remain approved, that would be of concern for us
at our level as well.
Mr. Levin. Ms. Bogue, do you generally agree with that
assessment?
Ms. Bogue. I generally agree with that assessment. I will
also state that we have not been in the business of overriding
an SAA's decision on an approval, we don't have that authority
to do so, but if we have concerns with a particular approval,
we will address that with an SAA to ask them to reconsider when
they bring an approval package our way. But at the end of the
day, if they state that they feel this is a sound approval,
then we still move forward with approving that school. The only
authority that we have is as it relates to disenrollment's for
the student, which is unfortunate that it would have to come to
that.
Mr. Levin. Ms. Bogue, if you could wave a wand and
magically have that authority, is that something that you think
would be helpful to our student veterans?
Ms. Bogue. I think it is something we would be happy to
talk with you more about in terms of the implications and
impacts, in terms of the roles of state approving agencies, as
well as the role of VA when it comes to approval of programs.
Mr. Levin. All right. I look forward to that conversation.
Mr. Wescott, a different question for you. You have a lot
of these institutions, the for-profit in particular, that are
doing a lot of things online and are based in multiple states.
Could you explain how SAAs coordinate approval of these types
of institutions that have multiple states involved?
Mr. Wescott. Certainly. Some of it, of course, Mr.
Chairman, is informal. SAA directors know one another, SAA
directors work together; we inform one another of issues that
may be occurring within our state because we know that campus
is in another state.
Generally, distance learning is approved in the state from
which it originates if it is an online institution, and so that
SAA is responsible for that approval. But we of course do
coordinate through our various committees and through our
regular calls to make sure that we are aware of what is going
on in that state that would impact institutions within our
state as well. It is challenging to oversee that online
community.
Mr. Levin. My last question, because I am out of time. Is
there one particular state where most of these online
institutions are based or is it sort of all over the country?
Mr. Wescott. It is sort of all over the country. And of
course then there are cases where you have got an institution
that is--has a bricks-and-mortar campus and they are offering
training there, but then they have a large online contingent as
well, and so that presents a different challenge as well.
Mr. Levin. Got it. I appreciate your answers to my
questions. And, with that, I will recognize the Ranking Member
for 5 minutes.
Mr. Bilirakis. Thank you very much, I appreciate it very
much, Mr. Chairman.
Again, Mr. Wescott, you just talked about the brick-and-
mortar, we have a particular school, a non-profit school in my
district that has a large number of veterans that actually
attend classes brick-and-mortar, but they also have a vast
online program. So what is the percentage of schools or how
many schools, for example, you know, have that practice, and
how successful are they?
Ms. Bogue. Well, Congressman, I couldn't give you an exact
percentage; I wish I could. I can tell you from my experience
in working in higher education that many institutions are
moving into the online area. As the Chair of the Veterans
Committee on Education, the advisory committee, that is one of
the things that we are looking at is the expansion of online
learning and giving veterans access to quality online learning.
So it is a challenge for SAAs, but it has worked well in
many cases in that, where that main campus is housed, that is
the SAA that oversees all of that activity. But I would say
that, even though I don't know the exact percentage, that that
percentage is growing, because online learning is the way of
the future and it is a valuable method of delivering education,
as long as the quality is there, and it meets all the
accreditation standards.
Mr. Bilirakis. I appreciate that. Thank you.
Next question for Ms. Bogue. What is examined in a VA
compliance survey, what real value do these bring to students
as compared to other types of reviews?
Ms. Bogue. Thank you. So that is a great question. So a
compliance survey is looking at different aspects, so one
aspect is looking at student records. It is looking at making
sure that the school-certifying official or that particular
entity has certified that individual correctly for the terms,
also that they are charging VA the correct amounts as it
relates to tuition and fees from that aspect. Also, it is also
re-engaging the original approval package itself on some of
those aspects as it relates to instructional design, the
program curriculum, making sure all those things are aligned.
They are actually teaching classes where they say they are
teaching classes from that aspect.
And the intent of a compliance survey is, one, to help to
identify issues quickly at a particular school. If we realize
that it is a training issue, then we will work with that school
certifying official to train them up. If it is something that
may be more egregious, then we will take the appropriate
action, along with our state approving agency partners, to take
the appropriate action that is necessary.
We conduct about--last year, we conducted about 4,000
compliance surveys and to date, for this year, we have
conducted about 2,000 compliance surveys across the Nation.
Mr. Bilirakis. Thank you.
To follow up, Dr. Wescott, what is your view of compliance
surveys and do you believe that what is being examined is
really helping student veterans? You know, focus on the quality
of education, if you can. Is there oversight as far as that is
concerned? You know, to what extent is there oversight? I know
that we got an answer, a good answer from Ms. Bogue, but if you
can elaborate on that, I would appreciate it.
Mr. Wescott. Certainly, Mr. Ranking Member, and I do
appreciate the opportunity to. I would agree with what my
colleague and friend has stated about compliance surveys, but I
think there is more that needs to be done, and particularly
when you talk about the quality of education.
A compliance survey by its very nature has historically
been primarily a financial audit. You are looking at the
records to see how veterans are paid and if there were
overpayments or underpayments. What we are interested in doing
and what Congress has said that we should be doing is risk-
based surveys that would be veteran-centric, programmatic in
nature, and would be broader in what we looked at.
So we would be looking at accreditation issues; we would be
looking at rates of graduation; we would be looking at
percentage of veterans, is it growing or reducing; we would be
looking at, if the school provided it, what type of employment
veterans were going into. We would be talking to veterans and
we would be looking at the resources that are available at the
school. Sure, we would be looking at some files as well, but
the main focus wouldn't be there. Our interest is to get at the
quality of education, not just how the payments were made. And,
again, I know that compliance doesn't just look at, but in many
cases I think that is the primary focus, and we can do more.
Mr. Bilirakis. Yeah, we want to help you do more in the
interest of the veteran. Thank you.
And I yield back.
Mr. Levin. Thank you for your questions, Mr. Ranking
Member.
I would now like to recognize Ms. Luria for 5 minutes.
Ms. Luria. Well, thank you to the panel for being here
today to answer our questions. And sort of out of experience I
have had talking to students at for-profit institutions within
my district, and as well as some of the faculty and staff that
operate those institutions, one of their concerns is that, you
know, there is not only bad actors within this sphere, and I
find that within our region there are several institutions that
provide technical training, training that is very much skills-
based for a profession that leads to licensure such as nursing
or certification such as aviation mechanics for the FAA, and
those seem to have relatively high graduation rates, high
success rates of receiving the requisite certification to
proceed within that profession.
But I was wondering, what more can be done to inform
veterans on the decision-making process before enrolling in a
school as to what their outcomes can be expected? Is there a
tool that is publicly available that is required for the
veterans to see this information and say that it is favorable
or unfavorable during that decision-making process before
attending a school?
Ms. Bogue. Thank you for that question. So we actually have
the GI Bill Comparison Tool and that is available on the GI
Bill website. That tool has had over 1 million unique visitors
to that tool. It is not just for prospective students, but it
is also for current students as well.
Ms. Luria. So does that include Department of Labor
statistics as well about earning--
Ms. Bogue. It has some Department of Labor statistics, but
it also has Department of Education information on there as
well as it relates to accreditation. We have some limited
information as it relates to outcome measures on that tool. We
understand there is more work to be done on that tool and we
are working with our OIT partners right now to build a roadmap
for the next year. We will have some changes coming December
1st of this year with the Comparison Tool and then next year we
will have some more changes from that perspective.
But we think that that is a great starting point for
students to go to, not only when they are interested in a
program to find out information about that school and what
resources are available on the campus, whether it--
Ms. Luria. Okay. In the interest of time, I just wanted to
cut in--
Ms. Bogue. Okay.
Ms. Luria. --because I would like to know how we can assist
in helping codify those measures that would be the most useful
for students in that decision-making process.
And I wanted to go back to the GAO report, because in that
report it seemed like most of the data that was analyzed was on
4-year college completion rates, and a lot of these schools are
not necessarily providing 4-year college education, they are
providing those technical and workplace skills that are
necessary for people to move into a second career after their
military career.
So I wonder, do you have any data analyzing other programs
than 4-year college degrees?
Ms. Emrey-Arras. Yes, I have data on 2-year graduation
rates, which often gets at those more limited pathways. And we
found, for example, that for all schools that receive GI Bill
funding, the overall graduation rate for 2-year programs was 33
percent.
Ms. Luria. Well, so a lot of these programs that I am
familiar with that provide people into the workforce in our
district are not even 2-year degrees. They take a military
skill, for example, as an aviation technician, and then
transfer that into FAA licensure in a very short period of
time, same thing with nursing programs, the Corpsman and Medic
to Medical Professional-type programs, are frequently much less
than 2-year programs, but seem just on the surface,
anecdotally, to have the highest value to veterans to
transition their military skills, you know, into a civilian
job.
So I just want to continue to have the discussion with you
about we can translate that outside the model of just 2 and 4-
year degrees. And the same thing applies as well, because I saw
in your data you reference the calendar year, you know,
enrollment from one fall to the next fall, but a lot of these
are on rolling-enrollment bases and since they are shorter
curriculums they don't just happen during the standard
structure of a fall-to-spring school year.
So the next thing I wanted to talk about for the
accrediting agencies was the lack of transferability of
credits. So the numbers seem, you know, staggering that the
credits that students who went from a for-profit institution to
a public institution, 94 percent of their credits were lost.
And so it seems as though you are getting at certain things
that are not necessarily indicative of the value of that
education. And you just alluded to this, because you said that
you are really looking at a financial audit, risk-based
surveys, but are we really getting down to the value of the
education the students are receiving and does it meet--and this
could be a Department of Education thing as well--a standard
that is transferrable amongst universities? If you thought of
our largest public state universities, it seems that you would
just assume that credits would be transferred almost
universally between those schools that had, you know, an
assumed level of educational value, and are you capturing that
and is there a national standard to evaluate that
transferability? Even between public-to-public, because that
was not referenced in your data.
Ms. Emrey-Arras. So there are agreements sometimes at a
state level or between colleges that provide for what is needed
to transfer credits, but there is no national standard, in
answer to your question.
Ms. Minor. And with the proposed rules out there for
accreditation, I know that there are options in there that
would allow institutions to accept more transferred credits
than what is currently permitted.
Ms. Luria. So, when you say allow institutions, is there a
prohibition for institutions? Say the largest state university
in the state that I live in, is there a prohibition about them
accepting credits, or is that their own decision based off of
educational standards that they have established?
Ms. Minor. My understanding, even though this is outside of
the purview of my scope, is that the accreditation standards
limit the amount of transferred credits institutions can accept
into programs, and so some of the proposed regulations would
address that.
Ms. Luria. Did you have anything to add from your
perspective?
Mr. Wescott. Yes, ma'am, I do. One of the things I wanted
to mention was that we have a different set of standards that
we apply for accredited institutions verses unaccredited
institutions, and this is an area where sometimes our hands can
be a little more tied in that for the unaccredited institutions
the questions we ask, the things we look at, they are more
robust and far-reaching.
So when we talk about maybe changing or enhancing approval
authority, this area might be an area that we want to look into
for potential changes.
Mr. Levin. Thank you, Ms. Luria. Sorry.
I would now like to recognize Mr. Bergman for 5 minutes.
Mr. Bergman. Thank you, Mr. Chairman, and thanks to the
panel.
Standardization amongst the SAAs. How many SAAs are there,
one per state?
Mr. Wescott. There is supposed to be one. There are two
states at present that do not have an SAA, Congressman.
Mr. Bergman. Okay. So--
Mr. Wescott. Yes, one per state.
Mr. Bergman. So the bottom line is we have roughly 48?
Mr. Wescott. Yes.
Mr. Bergman. Okay. How do you standardize, if I am--let's
say I go into the education business and I want to provide a
very veteran-centric educational opportunity that would involve
both hands-on in class and an online combination, how do I--if
I know I have got a model, because of my decades in military
service, I have got a model that I believe is the right thing
for the veterans that are transitioning, whether it is after 2
years, 4 years, or 20 or 30 years, how do I get that model
approved in such a timely manner that I can actually implement
it, provide the educational experience, and continue in
business?
Mr. Wescott. Well, certainly, Congressman, therein is the
challenge. There are certain things that come into play. It is
true that we are state agencies and as such must abide by our
state laws and regulations, as well as the Federal
requirements. It is equally true that we are applying Federal
rules and regulations. The CFR, the Code of Federal
Regulations, is our bible, and so that should bring some
measure of uniformity to how we apply that. Of course, looking
the way it has worked out in the religious sphere, you can
understand the challenges we have in applying the bible,
because different states will interpret things differently on
occasion, not often. It is the challenge of NASAA to bring that
uniformity and to bring states together, and that is what we
have tried to do for 70 years now.
Basically, one of the first things you would do to get that
program approved is you would have to be in existence for 2
years successfully--
Mr. Bergman. Okay. So I hate to cut you off here, because
time is finite--
Mr. Wescott. Yes, sir.
Mr. Bergman [continued]. --so Catch-22, we can't do it
until we have done it. You have got to have 2 years of
experience--
Mr. Wescott. That is correct.
Mr. Bergman [continued]. --before you can get approved.
Mr. Wescott. Yes.
Mr. Bergman. And therefore, again, as we look at what is
the goal, the goal is to get veterans in a position where they
can take advantage of an educational model that fits them going
forward after their military service. And as I look at the
Committee here, the Subcommittee in this case, and our role as
the Federal Government--not the state government, but the
Federal Government--do we even have a role in the ability to in
effect make that occur, allow that business model? What do we
do as a Committee or as a Congress, whether it be in policy or
in law, to make that happen?
Mr. Wescott. Well, certainly we are all constrained by that
Federal system and the different state laws, and we try to
fast-track good programs by working together among our agencies
when they come into existence. We also have seen cases where,
like in the Colmery Act, the VET TEC program was rolled out,
and there was a case where a solid program, which was, you
know, could get vets in meaningful technical jobs, was fast-
tracked, if you will. So there--
Mr. Bergman. So--
Mr. Wescott [continued]. --is a role, but I think it is--
Mr. Bergman. Okay. And I am with you here and I really
appreciate this dialogue, because I look at the VA and what
they are trying to do, and you are trying to do the right
thing, how do we put, if you will, the three of us--or maybe
there is more in a room, because you have got the Veterans
Administration, you have got the SAAs, you have got the person
who is--or the entity who is trying to provide the education,
whether it is public, private, for-profit, non-profit, whatever
it happens to be, how do we get the right people in the room to
sit down and hammer out a plan that we can all to the 80-
percent level agree to going forward, and do it in an
expeditious manner that has, number one, quality-control
integrity when it comes to providing value for the dollar? And
so then, you know, when GAO starts looking into it, they go,
yeah. But what do we do? Can we get everybody in the room?
Mr. Wescott. Yes, Congressman, I think you have put your
finger right upon the issue and the answer, and that is to get
those people in the room and to talk about the changes that
need to take place, whether they are regulatory or statutory,
so that we can work together to, you know, move good programs
at a faster pace. But you are right, we must safeguard our
veterans from the bad actors in whatever sector of education.
Mr. Bergman. Well, you know, I know my time has run out,
but in safeguarding the veterans, they are pretty savvy, we
need to give them tools so they can--if it smells like a duck,
walks like a duck, quacks like a duck, it is a duck, and give
them the tools. They have already got some of the skills in
their military time that allow them to assess a good or bad
situation.
Mr. Chairman, I yield back.
Mr. Levin. Thank you, Mr. Bergman. My grandfather, who was
a World War II veteran, used to use that saying all the time.
[Laughter.]
Mr. Levin. With that, I would like to recognize Ms. Lee for
5 minutes.
Ms. Lee. Thank you, Mr. Chair, and thank all of the
witnesses for being here.
Ms. Minor, when schools abruptly close frequently the
students are entitled to relief under the 2016 Borrowed Defense
regulations. So I would like to discuss the Department's
struggle to act on this.
When Principal Deputy under Secretary Jones testified
recently, she stated that the Department would not approve
borrower defense claims because the Department cannot
``determine the level of harm or the level of relief due to the
ongoing litigation in California.''
Can you confirm that the Department is not completing
adjudication of borrower defense claims due to the Cavio
litigation ongoing in California?
Ms. Minor. Currently, the Department is continuing to
review and process the applications, but that litigation has
prevented the Department from utilizing the tier of methodology
that is currently in place. So we are in the process of trying
to identify a new methodology to determine the amount of the
relief to be granted to the students.
Ms. Lee. I want to hit on this. The Cavio decision states,
``Nothing in this order prohibits the secretary from fully
discharging the loans of any borrower who has successfully
completed or who successfully completes an attestation form.''
To clarify, the Department can discharge borrowed defense
claims under this order, but the Department have chosen not to
do so; is that correct?
Ms. Minor. The Department's decision at this point is to
determine the amount of harm, and that was the purpose of the
tiered methodology. And so the litigation did not prohibit the
use of tiered methodology. It was the actual data that was
being utilized in order to complete that calculation.
So what the Department is currently in the process of doing
is trying to come up with a different mechanism for determining
what that methodology would be and that determination for the
amount of relief would be.
Ms. Lee. So how many borrowers has the Department
determined eligible for relief, partial or full under borrower
defense for whom the Department has not granted relief? Do you
know that number?
Ms. Minor. I can get the exact number for you, but as we
are continuing to review the applications there are a
significant number that we have made a determination on.
Ms. Lee. I believe the number is 160,000 approximately. So
can we expect the Department to discharge any of these claims
before the litigation is concluded?
Ms. Minor. Thank you for the question. I cannot respond as
to the timing of that because it would be based upon when a
determination is made on a new methodology.
But as I indicated, the review process is ongoing. So there
are applications that are being reviewed and processed and they
are simply pending until we can determine what the relief
methodology will be.
Ms. Lee. Okay. Well, I hope we can get some closure for
some of those--
Ms. Minor. We do, too.
Ms. Lee. --students.
I am going to move on to another issue with respect to the
Dream Center Education Holdings who closed most of its
institutions on December--between December 2018 and March 2019.
One of these schools, the Art Institute of Phoenix, provides an
example of, I'm just going to say the improper handling of
this.
The Art Institute closed on December 28th, 2018. This date
is significant because students who were enrolled up to 120
days prior to that date are then eligible to have their loans
discharged.
Unfortunately for these students, the Department's web page
has provided misinformation on the date of closure,
specifically stating that AI Phoenix closed on March 8th, 2019
and that students are ``not eligible for a closed school loan
discharge if they withdrew from classes before November 8th,
2018.''
And from a review of the Department's web page it appears
that this is not the only school for which the Department has
misinformed students of their rights.
Ms. Minor, is the Department denying students closed school
discharge claims if they withdrew from classes before November
8th but after August 30th the appropriate school discharge
window specified in the regulation?
Ms. Minor. Respectfully, I am not aware that we had an
incorrect date posted, so I would have to go back and confirm
what the information is and what would be the eligibility
determination.
Ms. Lee. Okay. Well, I can confirm that the Department is,
in fact, denying these claims.
And, Chair, I would like to submit documentation of two
students whose claims were denied for this exact reason, Ms.
Brandy Landy and Ms. Christine Anderson. Both students applied
for a closed school discharge through their servicer where they
were clearly indicated that they had attended AI Phoenix. The
letters I plan to enter into the record are what their
servicer, Cornerstone, sent back to them incorrectly informing
them that they do not qualify when they do.
And, you know, it is just hard to overstate the personal
risks and stakes here. Being told that they don't qualify for
full discharge when, in fact, they do is the difference between
a lifetime of financial ruin or a lifetime of freedom. It is
essential that the Department of Education and its servicers
they contract with correct this error. Advocates have
repeatedly called the Department and opened cases with the FSA
Ombudsman Group. But this problem persists under your watch.
Can you personally commit to looking into the claims of Ms.
Landy and Anderson to ensure that their issues are handled?
Ms. Minor. Yes. I will personally commit to look into
those. We want to ensure that every student who is eligible for
a closed school discharge receives it.
Ms. Lee. Great. Thank you.
Mr. Levin. Thank you, Ms. Lee, and without objection we
will include the documents into the record.
Mr. Levin. And with that I would like to recognize Mr.
Banks for 5 minutes.
Mr. Banks. Thank you, Mr. Chairman.
Ms. Minor, is it correct that DOE recently achieved
consensus on a comprehensive list of regulations to streamline
the accreditation process as well as broader quality assurance
issues for all colleges and universities across the country?
Ms. Minor. Respectfully, sir, that is outside the scope of
my purview.
Mr. Banks. So that is or is not correct?
Ms. Minor. I cannot respond because it is not something
that I work on.
Mr. Banks. Okay.
Ms. Bogue, is it accurate to say that the VA relies heavily
on the accreditors and DOE regulations in determining approval
of programs and institutions?
Ms. Bogue. That is correct. For accredited programs we rely
on the information from Department of Education. We do approve
non-accredited programs and those rules are slightly different
from that aspect.
Mr. Banks. Okay. Then, Ms. Minor, then as the agency with
authority over recognition of accreditors and all universities
participating in Title VI, shouldn't your department take the
lead to ensure consistency in regulations, definitions and
coordination of oversight activities to ensure there is no
duplication or conflict of efforts?
Ms. Minor. Respectfully, sir, anything regarding
accreditation is outside the scope of my purview as I am from
Federal student aid.
Mr. Banks. Okay, then.
Dr. Wescott, how has the focus on compliance surveys
impacted your ability to visit schools and provide training to
schools, to schools certifying officials?
Mr. Wescott. Well, as I mentioned in my testimony, sir, it
certainly hasn't impacted it in a negative fashion without
question.
I used to be a program specialist and an SAA back in 2005
and we would go to 80, 90 percent of our schools and visit them
in the course of a year. As you can see from the testimony, we
are way down now. The average would be 25 percent nationwide.
So that impacts not only our ability to know what is going
on there at the schools, but it impacts our ability to provide
on the spot technical assistance. And that face to face
technical assistance is very valuable for the schools. And I
can assure you they would like to see more of us in that regard
and for that reason.
Mr. Banks. Okay.
Ms. Bogue, how many claims for restoration of entitlement
have you received and how many have you granted?
Ms. Bogue. So there is two aspects to that. For the schools
that closed before August 16, 2017, that would be an example of
ITT or Corinthian. We have actually restored over 16,000 months
of entitlement to about 2,000 individuals.
For schools that have closed after August 16 of 2017 we
have restored about 1,400 months of entitlement to about 550
students.
Mr. Banks. Okay. And what are the top three reasons that
you would say there are for a denial of a restoration of
entitlement claim?
Ms. Bogue. The top three reasons, so number one is that
they were able to transfer credits. That is the number one
reason. They were able to transfer credits to another school.
The second reason is that that school actually did not
close from that perspective.
And then the third reason from the perspective of the
student was never enrolled at the time of the closure.
Mr. Banks. Okay. Thank you very much. I yield back.
Mr. Levin. Thank you.
Miss Rice is now recognized for 5 minutes.
Miss Rice. Thank you, Mr. Chairman.
Ms. Minor, a for profit institution has a questionable
business model. If a school's main goal is to maximize profits,
providing a high quality education will never be the top
priority.
Can you explain how such a business model can lead to
anything other than financial instability or predatory low
quality institutions?
Ms. Minor. Thank you for the question.
We conduct our oversight activities based upon our
regulations and statute, and there are very defined criteria
regarding the financial responsibility and administrative
capability. So we don't have the authority to go in simply
based on a business model if it has an impact on the financial
statements that are submitted or on their administrative
capability that is identified through a program review, a
compliance audit or any of the items we are looking at doing
eligibility.
But, for example, we don't have a regulatory standard
regarding how much funding is devoted to marketing. So we are
limited in how we conduct the oversight activities.
Miss Rice. I believe that in your testimony you noted that
the Department is working to develop new policies and practices
to identify troubled institutions. Can you provide some more
information about that?
Ms. Minor. Yes. Thank you for the question.
We are constantly looking at our oversight activities and
our risk based approach. I can't go into details without
jeopardizing the integrity of the program. The comments,
however, were referring to some of the items that are included
in our proposed regulations that will provide opportunities for
us to go in earlier at the indication that a school is closing
and take additional actions at that particular point that
aren't available to us now as far as requiring teach out plans
and things of that nature.
Miss Rice. And that can happen internally, you can make
those changes?
Ms. Minor. It's based upon the proposed regulations that
are published now.
Miss Rice. Oh, okay. Okay.
Ms. Bogue, the 90-10 loophole requires four profit schools
to demonstrate their value by earning ten percent of their
revenue from non-federal sources. But they count GI Bill
benefits as a non-federal source.
Are you aware of how many universities would not meet the
90-10 requirements if GI Bill money was counted as federally
sourced?
Ms. Bogue. I do not have that number on hand, but I would
be happy to get you that.
Miss Rice. Yeah. Could you, because I think that's--
Ms. Bogue. Yes.
Miss Rice [continued]. --key.
Also, 38 United States Code 3696 requires VA to cut off GI
Bill funds if a school utilizes advertising sales or enrollment
practices of any type which are erroneous, deceptive or
misleading either by actual statement or mission or intimation.
One cause of closed schools is predatory institutions that
are caught defrauding students. They happen--they then are
fined millions of dollars by Federal and state law enforcement.
So my question is why is VA failing to act sooner to cut
off these fraudulent schools? I mean, it can't be that fining
an institution like that and not doing away with its charter or
its ability to stay in existence is--should be paramount?
Ms. Bogue. So I will state that we have found schools in
terms of--that were in violation of 36-96. And, one, we have
the ability to refer to Federal Trade Commission, which we do.
We have an MOU with Federal Trade Commission to refer to do
further investigations, if needed.
If there is something that is very out there in terms of it
is blatant that there is a violation, then we will refer it to
the state approving agency to take the appropriate action to
disapprove that program
Miss Rice. And so that is the agency that actually has to
do--to take away the program.
And so what rate of success do you have when you make that
referral? How often, what percentage of those cases actually
results in an action taken against the school?
Ms. Bogue. I will have to get you those numbers.
Miss Rice. Okay. Please.
Ms. Bogue. Okay.
Miss Rice. If you could.
Ms. Emrey-Arras, you noted in your testimony the drastic
increase in school closure since 2013, and forgive me if
someone--if you already said this, but what is the top reason
that you attribute this increase in closures to?
Ms. Emrey-Arras. We don't mention a specific top reason,
but we talk more about an assortment of reasons in terms of
financial issues, loss of accreditation and litigation as being
some of the factors that lead to school closures.
Miss Rice. I mean, it seems to me that there is--that we
have to work together on this because there are certain things
that we can do obviously through legislation that will make it
easier for you to do your job because this pattern of allowing
veterans to be taken advantage of, and the taxpayer, quite
frankly, to be taken advantage of when schools that are purely
for profit. I mean, there has to be--in my opinion there should
be a big question mark after that, but that is me.
So I think it is--thank you all for being here. And I think
it is really important that we work together to make sure that
you are the eyes and ears, you are the first line of defense.
But certainly there is a lot that we can do as well.
And I thank you, Mr. Chairman, for holding this hearing. I
yield back.
Mr. Levin. Thank you, Miss Rice. I appreciate those
comments and questions, and particularly look forward to the
follow up information as it pertains to the GI Bill loophole
and other areas that Miss Rice covered.
If there is no further questions, we can begin to bring the
hearing to a close. However, before I make my closing statement
I would like to turn to my friend, the Ranking Member, Mr.
Bilirakis, for any closing remarks.
Mr. Bilirakis. Well, thank you very much. This was a very
informative hearing and I want to thank those who testified
this morning as well, and I want to thank the Members for some
very good questions.
Yeah. Our veterans only get one shot at it. And we want to
make sure that they have the opportunity to make the best of
it. So this is very important in the transition process so they
can, you know, move on to new career opportunities.
So, you know, we have to focus on the quality of education
that is available to them. And then, of course, they are savvy,
but just like the General said and our Chairman says, what is
it, if it looks like a quack--a duck--
Mr. Levin. Yeah.
Mr. Bilirakis [continued]. --and quacks like a duck, then
it is a duck.
Mr. Levin. It's a duck.
Mr. Bilirakis. So that is all they are looking for. And
then they will make their own decisions.
Thank you very much. And I yield back the balance of my
time.
Mr. Levin. Thank you, Mr. Ranking Member, and thank you to
our witnesses again for coming today. And I would like to thank
the Members for coming today. We actually had almost perfect
attendance, and there is a lot going on this week in Washington
with appropriations and all the rest. So I am very grateful to
my colleagues for joining us and for coming prepared with
excellent questions.
You are all here obviously representing your various
agencies, whether it be the VA or the Department of Education,
the GAO or SAAs, and my hope is that you are not just coming
together today because Congress has called you together. If we
are going to solve this problem, we need you to continue to
have these discussions, not just when we ask you to come and
testify, but because of the day to day duties and
responsibilities of your respective jobs and agencies.
My great hope is that we can stop pointing fingers. If you
need the authority to make better decisions with regard to some
of these institutions to proactively prevent the problem, then
that is something that we need to address perhaps here in
Congress.
And I am very open to that as I know the Ranking Member is.
I think everybody on this Committee, we operate a little
differently. We all just want to solve the problem. And in this
instance when you talk about the thousands and thousands of our
veterans who got caught up in these failing schools and now are
devastated financially and otherwise, they have served our
country. The GI Bill is there as an amazing resource for them.
But, you know, obviously 22,000 people, that is just far too
many. And we have got to do better.
So I look forward to your answers to many of our questions.
I also would recommend if any of my colleagues have additional
questions that they submit them for the record. And our
Committee will just continue to closely monitor the situation.
And we look forward to working with you as we develop, whether
it is legislative proposals or other policies. But please keep
talking. Not just when we, you know, bring you all to testify
before our Subcommittee and our Committee.
With that I will say that all Members have 5 legislative
days to revise and extend their remarks and include additional
materials. And, again, I encourage my colleagues to submit
written questions for the record.
And, again, I thank you everyone for coming. And without
objection the Subcommittee stands adjourned.
[Whereupon, at 1:12 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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Prepared Statement of Charmain Bogue
Good morning Chairman Levin, Ranking Member Bilirakis, and Members
of the Subcommittee. I appreciate the opportunity to appear before you
today to discuss the effects of permanent school closures on student
Veterans who are using education benefits from the Department of
Veterans Affairs (VA). My testimony today will focus on school
closures; the restoration of entitlement authority in the Harry W.
Colmery Veterans Educational Assistance Act of 2017 (Colmery Act) or,
as it is more commonly referred to, the Forever GI Bill; the current
partnership between VA, State Approving Agencies (SAAs), and other
Federal agencies; the identification of, and dissemination of
information about, at-risk schools; and VA's ongoing efforts to ensure
effective oversight of approved educational institutions.
School Closures
The permanent closure of educational institutions at which GI Bill
beneficiaries are actively pursuing approved programs of education or
training negatively impacts student Veterans and eligible dependents in
several ways. First, these individuals are unable to complete their
programs of education at their chosen schools. Also, in many cases,
they will not be able to graduate on time because some or all of their
credits do not transfer to another educational institution.
Consequently, there is a greater likelihood that some individuals will
exhaust all of their GI Bill entitlement before completing their
programs. Second, monthly benefit payments will be terminated, abruptly
removing an important source of income that beneficiaries often rely on
to pay a mortgage, rent, or other bills.
VA is aware of numerous institutions that closed their doors since
2013 while students were actively attending classes - disrupting the
education plans of thousands of students. Specifically, in Fiscal Years
2013 and 2014, 70 VA-approved schools closed, impacting approximately
1,600 Post-9/11 GI Bill beneficiaries actively pursuing an approved
program of education or training. On April 27, 2015, Corinthian
Colleges, Inc., closed its 28 remaining schools and subsequently filed
for bankruptcy. On September 6, 2016, ITT Technical Institute closed
between terms, impacting the plans of approximately 11,000 GI Bill
beneficiaries. Most recently, 18 Art Institute and Argosy University
campuses were approved for GI Bill benefits when they closed on March
8, 2019. As of April 10, 2019, VA identified 1,782 students who may be
affected by these closures.
Restoration of Entitlement
Prior to the enactment of section 109 of the Colmery Act, (38
U.S.C. Sec. Sec. 3680(a) and 3699), VA had no authority to continue
benefit payments or restore benefit entitlement in the event of a
permanent school closure, regardless of the reason for closure. Section
109 authorizes VA to restore benefits and provide relief to
beneficiaries affected by school closures and certain program
disapprovals. For qualifying closures and disapprovals, VA is able to
restore some, if not all, entitlement used in pursuit of the
interrupted program of education. This provision applies to
beneficiaries receiving benefits under chapters 30, 32, 33, and 35 of
title 38, United States Code (U.S.C.), and chapters 1606 and 1607 of
title 10, U.S.C., for programs of education discontinued after January
1, 2015. For courses or programs discontinued during the period
beginning January 1, 2015, and ending on August 16, 2017, an individual
who does not transfer any credits can have his or her entitlement used
for the entire period of enrollment in the program of education
restored. However, for programs discontinued after August 16, 2017, VA
is only authorized to restore the entitlement used only for the
interrupted term, and only if no credit is earned for that period. In
addition, VA contacts impacted students within 5 days of notification
of a school closure to provide information on the qualifications for
restoration of benefits and instructions on how to make a request for
restoration. The information is also available on the GI Bill Web site
accessible at https://benefits.va.gov/GIBILL/FGIB/Restoration.asp. VA
relies heavily on its SAAs to provide official notification of a
closure to VA. As of April 26, 2019, VA restored 14,252 months of
entitlement for 1,380 beneficiaries who attended schools that were
closed prior to August 1, 2017 and restored 1,218 months of entitlement
for 506 beneficiaries who attended schools that were closed on or after
August 1, 2017.
Section 109 also allows for the extension of the Post-9/11 GI Bill
monthly housing allowance (MHA) payments when a school closes or is
disapproved during an active term. In these instances, enrolled
beneficiaries may be eligible to continue receiving MHA payments until
the original end of the term or 120 days, whichever occurs sooner. This
provision was effective on August 1, 2018 and applies to courses and
programs of education discontinued on or after August 16, 2017. VA does
not have the authority to extend monthly benefit payments under the
other GI Bill programs following permanent school closures.
Partnerships
VA maintains a close working relationship with the Department of
Education (ED), the Department of Defense, the Department of Justice,
the Consumer Financial Protection Bureau, and the Federal Trade
Commission (FTC). Together, these Federal entities engineered a broad
strategy for sharing information through independently developed
processes and tools that provide tailored information related to an
institution's graduation rates, tuition costs, and academic programs.
An interagency agreement facilitates this information sharing across
the agencies, which benefits students and provides a network of
relevant information students need to make informed decisions on the
educational institution that best fits their respective needs. However,
VA still has limited authority to take action against a school to
protect students prior to a school closure. VA only has authority and
resources to gather allegations, keep students informed of the current
state of a school, and refer issues to other offices (such as the FTC
or the VA's Office of Inspector General) for investigation, or wait for
information to be provided to VA by another source (e.g., SAAs,
Veterans Service Organizations, ED, State Attorney General's office,
etc.).
At Risk Schools
VA also looks at indicators to identify if a school is likely to
close. These indicators include ED's heightened cash monitoring
designations and ED's revocation of participation in Federal Student
Aid (FSA) programs. Our experience has shown that economic factors,
such as revocation of FSA participation, are generally the number one
indicator for school closures. However, it is important to note that
neither financial stability nor FSA participation are approval
requirements for accredited programs and, consequently, VA and SAAs
lack the authority to disapprove a program, or the enrollment of
eligible Veterans, merely because a school appears to be in economic
distress.
Nonetheless, as we have seen a number of large schools close over
the last several years, VA has taken a more proactive approach to get
information out to students enrolled in at-risk schools. Specifically,
VA puts caution flags on the VA GI Bill Comparison Tool indicating when
a school has been designated for heightened cash monitoring or may lose
approval for FSA benefits, as a way of alerting students to potentially
at-risk schools. In addition, VA sends emails and uses social media to
provide information and resources to potentially impacted Veteran and
dependent students. For example, we sent two emails to Art Institute
and Argosy students prior to the school closures, and we subsequently
sent additional correspondence to inform them of their potential
eligibility for entitlement restoration. As of April 25, 2019, VA has
received 265 applications for restoration and granted entitlement
restoration to 95 of these students.
Government Accountability Office (GAO) Report
The GAO report, ``VA Education Benefits: VA Needs to Ensure That It
Can Continue to Provide Effective School Oversight'' (GAO-19-3,
November 14, 2018), accessible at https://www.gao.gov/products/GAO-19-
3, recommends that the Secretary of Veterans Affairs direct the Under
Secretary for Benefits to: (1) identify and assess risks related to
future withdrawals by state agencies in overseeing schools, and (2)
address these risks by preparing a contingency plan for how VA will
oversee additional schools if more states choose not to renew their
oversight contracts.
VA agrees with this recommendation. VA has assessed the risks
associated with state agencies not renewing their contracts. VA has a
long history of fulfilling the role of SAA during gaps in SAA coverage,
historically, on a limited scale for either one state at a time or, for
a couple smaller-scale states simultaneously. Recognizing the risk of
having to fulfill this role on a larger scale VA has developed a formal
contingency plan for assuming and accomplishing additional oversight
responsibilities. The contingency plan was approved by the Veterans
Benefits Administration (VBA) on April 15, 2019. In addition, the VBA's
Education Service initiated discussions with the National Association
of State Approving Agencies in the summer of 2018, regarding VBA's
interest in using the services of one or more individual SAAs to work
with VBA's Education Service to complete field work (i.e., school site
visits, compliance visits, and other appropriate actions). This work
will be completed by the non-contracting SAA, to be paid with
unallocated annual SAA funding. VBA expects to finalize the
communication that will go out to all of the SAAs by July 31, 2019.
However, VBA has concerns that it may not be adequately resourced to
effectively carry out SAA responsibilities in multiple states, or a few
large states, simultaneously, and we would be willing to discuss the
issue and possible solutions in greater depth with the Subcommittee.
Finally, VBA will continue to fund $3 million in its GOE account to
ensure the work of SAA's is administered appropriately; this allows VBA
to address the work of any SAA that does not enter into a cooperative
agreement with VA for any portion of the year.
Mr. Chairman, this concludes my testimony. I am prepared to respond
to any questions you or other Members of the Subcommittee may have.
Prepared Statement of Robin Minor
Chairman Levin, Ranking Member Bilirakis, Members of the Committee.
Thank you for the opportunity to appear before you today on behalf of
the U.S. Department of Education (the Department) Office of Federal
Student Aid (FSA).
Our veterans and their families represent the best of this country,
and the education benefits they receive as a result of their service
are hard-earned and well-deserved. Veterans use their education
benefits to pursue credentials that will allow them to transition their
military profession to the civilian world, pursue career advancement,
or adjust to the new realities of life following service-related
injuries and disabilities. In some instances, military spouses utilize
these education benefits to advance their own career opportunities,
which may have taken a back seat to the demands of military life. It is
essential that veterans have the freedom to pursue the educational
opportunities of their choice, at the institutions they believe will
best serve their interests and needs. And it is important that
institutions deliver on their promises to provide these students with a
good opportunity to learn and succeed.
Although veterans are not limited in using their benefits to
programs and institutions that participate in the Department of
Education's Federal Student Aid programs, which are authorized under
Title IV of the Higher Education Act, or institutions or programs that
are accredited by an agency recognized by the Secretary of Education,
we know that many veterans view Title IV participation and
accreditation as a stamp of approval that allows them to invest wisely
in programs that will meet their needs. Therefore, while Title IV and
Veterans Affairs (VA) benefits programs are operated independently,
there is considerable overlap between the populations of students
served.
Since the inception of the Servicemen's Readjustment Act of 1944 -
the G.I. Bill - colleges and universities have played an important role
in expanding educational opportunities for veterans to assist them
transitioning to and succeeding in the civilian workforce. It is now
well recognized that the G.I. Bill is largely responsible for providing
unprecedented access to higher education and home ownership among the
many WWII veterans.
Most institutions have embraced the opportunity to serve military
veterans and recognize the unique talents and experiences they bring to
the classroom. Some institutions have worked hard to create veteran-
friendly policies that include awarding academic credit for learning
that took place during their military service and accepting credits
toward degree requirements that may have been earned at several
different institutions as the servicemember has moved around the
country and the world. Veteran-friendly institutions create campus or
on-line learning environments that provide a sense of community to
these students, honor the veterans' contributions, recognize their
unique challenges, hire faculty and staff who are military veterans,
offer academic programs that provide clear pathways from military to
civilian careers, provide flexible scheduling that is attractive to
otherwise busy adults, and value the sacrifices veterans and their
families have made and their unselfish love of country.
Unfortunately, some institutions have closed abruptly and without
warning and, consequently, have been unable to deliver on the promises
they made to students. Changes in population demographics coupled with
low unemployment has forced the merger of some institutions and the
closure of others and may lead to additional closures in the future.
Some college closures are well-planned and orderly, meaning the
institution provides an opportunity for currently enrolled students to
complete their programs or transfer to a comparable program at a
similar institution.
Precipitous closures are highly disruptive to students and may
leave them unable to complete their program or earn a credential. The
Department is working to develop new policies and practices to identify
troubled institutions earlier and to ensure the students have more
advanced notice and options when a school closes.
With respect to Federal student loans, when an institution closes,
students who did not complete their program of study because the school
closed while they were enrolled or who left the institution no more
than 120 days prior to closure, and who did not complete the program of
study through a teach-out at another institution, are entitled to a
closed school loan discharge.
Students who apply and are eligible for closed school discharges
are relieved of their responsibility for repaying any of the Federal
student loans associated with the enrollment at the closed school.
Because students are limited in the number of Pell grants they may
receive, the Department also restores eligibility for students who
received Pell grants during their enrollment at the closed school.
Regulations implemented in late 2018 also provide ``automatic'' closed
school loan discharges for any borrower who enrolled at the time of an
institution's closure or up to 120 days prior to the institution's
closure, and who did not enroll at another Title IV- participating
institution within three years. These discharges are provided to
eligible students without requiring them to submit an application.
Although school closures are frequently the result of financial
challenges, there are instances in which a school closes because its
accreditor withdraws accreditation, or a State removes the
institution's authorization to operate with the State. While the
Department may end an institution's participation in Title IV, it does
not have the authority to close an institution or to prevent it from
offering educational opportunities to students.
When warranted, the Department may place an institution under
heightened cash monitoring (HCM) payment method to restrict an
institution's ability to draw down Federal Title IV funds from the
Department's disbursement system. This step enables the Department to
provide additional oversight over a variety of financial or Federal
compliance issues, some of which may be serious and others that may be
less troublesome. There are two levels of Heightened Cash Monitoring-
HCM 1 and HCM 2. Under HCM 1, an institution draws down Federal funds
after it has submitted disbursement records to the Department and
disbursed aid to students using its own funds. Under HCM 2, an
institution makes disbursements to students using its own funds, and
then submits a reimbursement payment request to the Department.
Institutions may be placed on HCM 1 or HCM 2 as a result of
compliance issues including accreditation issues, late or missing
annual financial statements and or audits, outstanding liabilities owed
to the Department, concerns about an institution's administrative
capability, concerns about an institution's financial responsibility,
and possibly severe findings uncovered during a program review. Thus,
HCM, coupled with additional oversight, helps safeguard taxpayer funds
and promote institutions' proper stewardship of the Federal student
financial aid programs, thereby protecting the interest of the Nation's
students, including those who are veterans.
Two recent closures that have captured considerable news attention
involved institutions placed into receiverships in Federal district
courts. Such proceedings, which may arise under Federal or state law,
have rarely been used by creditors of Title IV eligible institutions
and provide creditors with the opportunity to request a court to
appoint a ``receiver'' to manage the assets and liabilities of an
institution for the benefit of the creditors. Prior to these
proceedings, the Department had had little experience with institutions
seeking such protection from creditors. Although the Higher Education
Act makes clear that if an institution declares bankruptcy it may no
longer participate in Title IV programs, the law is silent on
receiverships, as are the Department's regulations. The Department is
currently examining the extent to which receiverships affect its
ability to provide effective oversight of the Title IV program.
The Department cannot always predict how an institution will
respond to certain sanctions, and it cannot always predict which
institutions will close. In many cases, for example, institutions have
operated for years despite being subject to HCM 2. Further, while in
some instances, a single problem may result in the rapid deterioration
of an institution's finances, in other instances an institution on the
brink of financial disaster may launch a successful fund-raising
campaign that saves it. The decision to remove Title IV funding,
accreditation or state authorization is difficult, especially because a
number of institutions go through periods of financial distress but go
on to recover and continue serving students. Even a financially
troubled institution may still be providing strong opportunities for
the students it serves, including providing the only options available
to students in certain geographic areas or the only institution
providing programs that prepare students for high-demand fields.
The Department's tools to identify financially unstable
institutions primarily depends upon the institution's financial
``composite score'' which is designed to measure the financial health
of an institution. Institutions that fail the composite score test are
required to post letters of credit that provide the Department with a
guaranteed source of funds to pay an institutions liability stemming
from improperly disbursed Federal student aid. In some instances an
institution may have already resolved a financial challenge by the time
a Letter of Credit (LOC) is provided and in other instances a LOC may
be beyond the institution financial wherewithal to obtain, forcing an
unstable institution into closure. The Department has, however,
routinely worked with institutions experiencing challenges in obtaining
letters of credit to find alternatives ways of providing the Department
with financial protection.
The Department takes quick action when an institution closes to
provide students and related regulatory agencies with the most accurate
and timely information possible. Among other things, the Department
Makes every effort to work with school officials, as well
as the school's state authorizing agency(ies) and accreditor(s) to
understand and communicate the school's closing closure process,
including whether teach-outs will be available and how transcripts will
be made available to students;
Posts fact sheets and other information to
StudentAid.gov/closures. This portal houses closed school information,
common closure-related Q&As including information for students
receiving GI benefits, institution-specific fact sheets, and other
avenues to access information (webinars and transfer fairs, where
applicable);
Works as closely as possible with impacted state agencies
and accreditors to inform them of the Department's web resources for
students and ask them to share the resources with students. Often,
these partners' closure sites incorporate the Department's closed
school loan discharge messaging and include links to Department
outreach resources;
Participates, when possible, in state-sponsored or
institution-hosted transfer fairs intended to help students understand
their options; and
Emails directly with students who were enrolled that time
of the closure or those who recently withdrew to provide information
about their options and direct them to other information and resources.
When working through these steps, the Department considers the VA
to be a critical partner and routinely includes the VA in outreach and
information sharing efforts. We have enjoyed a cooperative and
collaborative relationship with our Federal colleagues at VA and we
look forward to continuing our partnership.
The Department of Education embraces the responsibility to help
student-veterans navigate the higher education system, stands ready to
work with Congress, the VA and other agencies on initiatives that put
students - including student-veterans - first.
Thank you for the opportunity to testify. I look forward to
answering your questions.
Prepared Statement of Melissa Emrey-Arras
POST-9/11 GI BILL
Veterans Affected by School Closures
Chairman Levin, Ranking Member Bilirakis, and Members of the
Subcommittee:
I am pleased to be here today to discuss the effect of school
closures on student veterans. The Department of Veterans Affairs (VA)
has provided $94 billion in education benefits under the Post-9/11
Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill) to over
2 million veterans since the program began in 2009, according to VA.\1\
This program provides funding that helps cover eligible veterans'
tuition and fees (that VA pays directly to schools), as well as monthly
housing benefits and book stipends (that VA pays directly to veterans).
These benefits enable veterans to pursue a higher education and develop
skills to help them re-enter the workforce. However, recent news
reports about school closures have raised questions about the effect of
these closures on student veterans' education benefits.
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\1\ See Pub. L. No. 110-252, tit. V, 122 Stat. 2323, 2357. In this
testimony we generally refer to Post-9/11 GI Bill beneficiaries as
veterans, although under certain circumstances, veterans can transfer
their Post-9/11 GI Bill benefits to their spouses and children. 38
U.S.C. Sec. 3319.
---------------------------------------------------------------------------
My remarks today address three objectives: (1) the distribution of
Post-9/11 GI Bill tuition and fee payments among schools, (2) the
outcomes of students at schools that receive the most Post-9/11 GI Bill
tuition and fee payments, and (3) how school closures can affect
student veterans. To answer objective one, we analyzed school-level
data from VA on Post-9/11 GI Bill beneficiaries, tuition and fee
payments, and school characteristics for fiscal year 2017, the most
recent data available. For our second objective, we analyzed school-
level 4-year program graduation rates, retention rates, and school
characteristics from the Department of Education's (Education)
Integrated Postsecondary Education Data System (IPEDS) for school year
2017-2018, the most recent data available.\2\ In addition, to estimate
how many student veterans receive Federal student aid we reviewed data
from Education's National Postsecondary Student Aid Study (NPSAS) for
school year 2015-16, the most recent data available. We assessed the
reliability of the VA and Education data by performing electronic tests
on specific data elements used in our analyses and by reviewing
documentation about the specific data systems and our prior work that
assessed the reliability of similar data. As a result of this
assessment, we concluded that the VA and Education data were
sufficiently reliable for our reporting purposes. My testimony related
to objective three is based on our prior reports on this topic issued
between 2013 and 2017 and cited throughout this statement. We used
multiple methodologies to develop the findings, conclusions, and
recommendations for these reports. A more detailed discussion of the
objectives, scope, and methodologies, including our assessment of data
reliability, is available in each report.
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\2\ Graduation rates are as of August 2017 and measure the percent
of first-time full-time bachelor's (or equivalent) degree/certificate-
seeking undergraduate students who completed a program within 150
percent of the program length (6 years). Retention rates are as of fall
2017. The retention rate is the percent of first-time bachelor's (or
equivalent) degree/certificate-seeking students who enrolled in one
fall and either successfully completed their program or re-enrolled in
the next fall.
---------------------------------------------------------------------------
We provided a copy of the applicable new information that we are
reporting in this testimony to VA and Education for comment. VA and
Education provided technical comments, which we addressed as
appropriate.
The work upon which this statement is based was conducted in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Background
Post-9/11 GI Bill Benefits
VA has been providing veterans educational assistance benefits
since 1944. We previously reported that these benefits have been put in
place over time to compensate for compulsory service, encourage
voluntary service, avoid unemployment, provide equitable benefits to
all who served, and promote military retention.\3\ The Post-9/11 GI
Bill, which took effect on August 1, 2009,\4\ is now VA's largest
educational program. This program generally provides benefits to
veterans who served on active duty for at least 90 days beginning on or
after September 11, 2001. Full benefits are generally available to
those who served on active duty for 36 months, for which VA will pay
the net cost for in-state tuition and fees at public schools and up to
an annual maximum amount at nonprofit and for-profit schools ($24,477
in academic year 2019-2020).\5\ VA pays schools directly for tuition
and fees and sends additional payments for housing and books directly
to veterans who are eligible for these payments. To receive education
benefits through the Post-9/11 GI Bill, students submit applications to
VA, schools certify enrollments, and VA processes claims and payments.
---------------------------------------------------------------------------
\3\ GAO, VA Education Benefits: VA Needs to Improve Program
Management and Provide More Timely Information to Students, GAO 13 338
(Washington, D.C.: May 22, 2013).
\4\ Pub. L. No. 110-252, tit. V, Sec. 5003(d), 122 Stat. 2323,
2378.
\5\ The Post-9/11 GI Bill provides up to 36 months of education
benefits. Veterans can also receive full benefits if they served on
active duty for at least 30 continuous days beginning on or after
September 11, 2001 and were discharged or released for a service-
connected disability, and in some situations in which a veteran was
awarded the Purple Heart. Veterans who served on active duty for less
than 36 months beginning on or after September 11, 2001 are eligible
for a portion of the maximum tuition amount based on their time served.
Certain veterans attending participating nonprofit or for-profit
schools may receive additional benefits to cover tuition and fees
through the Yellow Ribbon G.I. Education Enhancement Program. Through
this program, schools enter into voluntary agreements with VA to pay a
portion of the tuition and fees that exceed an individual's Post-9/11
GI Bill benefit and VA matches the schools' contribution. 38 U.S.C.
Sec. 3317.
---------------------------------------------------------------------------
Other Sources of Student Aid
For help covering the costs of their postsecondary education,
veterans may also be eligible for grants and loans available from
Federal student aid programs administered by Education, such as Pell
Grants and Direct Loans.\6\ According to Education data, an estimated
32 percent of student veterans had received Pell Grants and 28 percent
had taken out Direct Loans, during school year 2015-16.\7\ VA education
payments, such as Post-9/11 GI Bill benefits, are not considered when
calculating eligibility for Federal student aid and do not affect the
amount of aid a veteran can receive from Education. Student veterans
may also be eligible for state and institutional aid (scholarships from
state governments or schools, for example).
---------------------------------------------------------------------------
\6\ Pell Grants are awarded to undergraduate students with
financial need to help finance their postsecondary education. Education
issues several types of loans under the William D. Ford Federal Direct
Loan program, including subsidized and unsubsidized loans.
\7\ Data are from NPSAS and results are within a +/-2 percentage
point margin of error. NPSAS data are based on a nationally
representative sample of college students and are collected from
multiple sources, including school records, government databases, and
student interviews. School year 2015-16 data are the most recent
available.
Student Veterans Attend a Wide Range of Schools, but a Small Number of
---------------------------------------------------------------------------
Schools Receive a Large Share of Post-9/11 GI Bill Payments
Nearly 700,000 student veterans received Post-9/11 GI Bill tuition
and fee benefits to attend almost 6,000 schools in fiscal year 2017.\8\
VA paid about 40 percent of the Post-9/11 GI Bill tuition and fee
payments to public schools, 30 percent to nonprofits, and 30 percent to
for-profits (see fig. 1).\9\
---------------------------------------------------------------------------
\8\ We calculated the total number of schools using VA and
Education data. VA's data include tuition and fee payments at the
campus level, meaning schools that have multiple campuses have unique
data for each campus. To roll up campus-level data to the school-level,
we matched VA campus-level payment data with campus- and school-level
identifiers in IPEDS when available. Some schools that receive Post-9/
11 GI Bill payments are not in IPEDS because they do not participate in
Education's Federal student aid programs. In these cases, we treated
each non-matched campus-level record as a school in our aggregate
count.
\9\ VA paid less than one percent to other types of institutions,
including foreign, correspondence, and flight schools, in fiscal year
2017.
[GRAPHIC] [TIFF OMITTED] T0767.001
Most student veterans used Post-9/11 GI Bill tuition and fee
payments to attend schools that provided 4-year undergraduate programs
(see fig. 2). Veterans may also use Post-9/11 GI Bill benefits for
training opportunities at schools that do not offer college degrees,
including training in areas such as driving, emergency medical
training, and barber or beautician skills. These programs received
about $360 million Post-9/11 GI bill tuition and fee payments in fiscal
year 2017.
[GRAPHIC] [TIFF OMITTED] T0767.002
A relatively small number of schools received a large share of
Post-9/11 GI Bill tuition and fee payments. In fiscal year 2017, the 50
schools that received the highest total amount of Post-9/11 GI Bill
tuition and fee payments accounted for over 30 percent of all such
benefits, collectively receiving $1.4 billion for over 190,000
beneficiaries. These 50 schools consisted of 14 public, 16 nonprofit,
and 20 for-profit schools (see fig. 3). In fiscal year 2017, the 50
schools received between $11 million and $191 million each in tuition
and fee payments and enrolled between around 350 and 28,000 Post-9/11
GI Bill beneficiaries. In contrast, among all schools receiving Post-9/
11 GI Bill benefits in fiscal year 2017, the majority of them enrolled
fewer than 15 veterans.
[GRAPHIC] [TIFF OMITTED] T0767.003
Student Outcomes Varied Among Schools That Received a Large Share of
Post-9/11 GI Bill Payments
Student outcomes at the 50 schools that received the most Post-9/11
GI Bill tuition and fee payments were, on average, generally comparable
to the national average, but varied more widely across sectors. Since
available data on student veteran outcomes is currently limited, we
analyzed common outcome measures for the broader student populations at
each school:\10\
---------------------------------------------------------------------------
\10\ VA has several efforts underway to collect more specific data
on student veteran outcomes. Federal law requires that as a condition
of approval of a course offered by a school, each year such school that
received a payment in that year on behalf of an individual entitled to
relevant educational assistance must submit to VA information regarding
the academic progress of the individual. 38 U.S.C. Sec. 3326(a). In
June 2018, VA notified schools that receive Post-9/11 GI Bill payments
that they are required to submit graduation and completion data as a
condition of receiving certain benefits.
4-year program graduation rates: the percent of first-
time full-time students who completed a 4-year program within 6
years.\11\
---------------------------------------------------------------------------
\11\ The graduation rate only includes degree- and certificate-
seeking students. Seven of the 50 schools were not included in the 4-
year program graduation rate because they did not offer 4-year programs
or did not report graduation rate data.
---------------------------------------------------------------------------
Full- and part-time retention rates: the percent of
first-time students who enrolled in one fall and either successfully
completed their program or re-enrolled in the next fall.\12\
---------------------------------------------------------------------------
\12\ The full- and part-time retention rates only include
bachelor's (or equivalent) degree- and certificate-seeking students.
When examined as a whole, the average student outcomes for the 50
schools that received the most Post-9/11 GI Bill tuition and fee
payments were generally comparable to the national average. For
example, the average 4-year program graduation rate at the top 50
schools was 61-the same as the national average. For one of the outcome
measures-full-time retention rate-the average was higher for the top 50
schools (83 percent) than the national average (75 percent).
Within the 50 schools that received the most Post-9/11 GI Bill
tuition and fee payments, student outcomes varied across schools in
different sectors (see fig. 4). For-profit schools had lower 4-year
program graduation and retention rates compared to public and nonprofit
schools among these 50 schools, although there was wide variation among
schools in each sector.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
a The 4-year program graduation rate indicates the percent of
first-time full-time bachelor's (or equivalent) degree/certificate-
seeking undergraduate students who completed a 4-year program within
150 percent of the program length. Graduation rates are from
Education's Integrated Postsecondary Education Data System as of August
2017. Seven of the 50 schools were not included in the 4-year
graduation rate because they did not offer 4-year programs or did not
report graduation rate data.
b The retention rate is the percent of first-time bachelor's (or
equivalent) degree/certificate-seeking students who enrolled in one
fall and either successfully completed their program or re-enrolled in
the next fall. Retention rates are from Education's Integrated
Postsecondary Education Data System as of fall 2017. Retention rates
are calculated separately for full-time and part-time students.
School Closures Affect Thousands of Student Veterans
Although a relatively small number of schools close each year,
these closures can affect thousands of student veterans. In 2017 we
reported that about 95 schools closed in school year 2015-16, according
to Education data, which was higher than in previous years, primarily
due to a rise in for-profit school closures (see fig. 5).\13\
---------------------------------------------------------------------------
\13\ GAO, Higher Education: Education Should Address Oversight and
Communication Gaps in Its Monitoring of the Financial Condition of
Schools, GAO 17 555 (Washington D.C.: Aug. 21, 2017).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Schools can close in different manners and for a variety of
reasons, including declining enrollments, financial problems, loss of
accreditation, and legal actions. When a school ceases operations in an
orderly process over several months it gives students time to complete
the current school term and make arrangements to transfer and continue
their education at another school. The effect of school closures is
often worse when the closures occur abruptly with little or no advance
warning, because these schools generally do not have time to establish
transfer arrangements that allow students to easily continue their
education at another school.
Abrupt closures of large schools, although infrequent, can affect
thousands of student veterans and result in large financial losses for
the Federal government and taxpayers. For example, Corinthian Colleges
Inc.\14\ (Corinthian) enrolled more than 72,000 students before its
closure in April 2015. The following year, ITT Educational Services
Inc. (ITT), another large for-profit provider of higher education,
closed all of its 136 campuses in September 2016, affecting more than
35,000 students. More than 7,000 Post-9/11 GI Bill students were
pursuing educational programs at schools operated by ITT and Corinthian
at the time of their closures, according to VA. More recently, closures
at Education Corporation of America in 2018 and Dream Center Education
Holdings in 2019, which operated schools under multiple brands,
including Argosy University and several campuses of The Art Institutes,
affected tens of thousands of students, including thousands of Post-9/
11 GI Bill recipients.
---------------------------------------------------------------------------
\14\ The vast majority of schools that closed in the 5 years from
school years 2011-2012 to 2015-2016 enrolled fewer than 500 total
students.
---------------------------------------------------------------------------
Student veterans attending a school that closes may be eligible to
have some or all of their Post-9/11 GI Bill benefits restored. As a
result of the Harry W. Colmery Veterans Educational Assistance Act of
2017, VA restores GI Bill entitlements to eligible beneficiaries
affected by recent and future school closures.\15\ Student veterans may
also be entitled to a discharge on eligible Federal student loans they
may have received from Education or to have their Pell Grant
eligibility restored if they are unable to complete a program because
their school closed.\16\
---------------------------------------------------------------------------
\15\ Pub. L. No. 115-48, Sec. 109, 131 Stat. 973, 978, codified at
38 U.S.C. Sec. 3699. According to VA, for schools that close after
August 16, 2017, the term, quarter, or semester the veteran was
attending when the school closed will not count against their 36 months
of benefit eligibility. Veterans attending schools that closed from
January 1, 2015 to August 16, 2017, may also qualify for restoration of
their GI Bill benefits if they have not transferred any of their
credits to another college.
\16\ The Pell Grant program imposes a lifetime limit equivalent to
6 years of eligibility. In late 2017, Education implemented a statutory
requirement to restore periods of Pell Grant eligibility to students
who were unable to complete their course of study due to the closure of
their school, according to Education.
---------------------------------------------------------------------------
Despite these options for having benefits restored and loans
discharged, school closures can still create hardships for veterans. As
we have previously reported, college students in general can face
challenges transferring credits and continuing their education at a new
school under any circumstances.\17\ Students who transferred lost, on
average, an estimated 43 percent of their credits, and credit loss
varied depending on the transfer path, based on data from 2004 to 2009.
For example, students who transferred between public schools-the
majority of transfer students-lost an estimated 37 percent of their
credits. In comparison, students who transferred from for-profit
schools to public schools-which happens less frequently-lost an
estimated 94 percent of their credits.\18\ Even if a student's credits
transfer, they may not apply toward fulfilling degree requirements for
their intended major. In these cases, a student will likely have to
take additional courses at their new school, which could potentially
delay graduation and result in additional costs to pay for repeated
courses. Further, some student veterans with credits that do not
transfer may exhaust their Post-9/11 GI Bill benefits before completing
their degree.
---------------------------------------------------------------------------
\17\ GAO, Higher Education: Students Need More Information to Help
Reduce Challenges in Transferring College Credits, GAO 17 574
(Washington, D.C.: Aug. 14, 2017).
\18\ Of the students who transferred, an estimated 62 percent of
them transferred between public schools. Students who transferred from
for-profit schools to public schools accounted for 4 percent of
students who transferred.
---------------------------------------------------------------------------
School closures can also exacerbate other challenges veterans may
face pursuing their education. As we have previously reported, many
student veterans already cope with challenges transitioning from the
military to an academic environment.\19\ For example, they can face
challenges navigating the academic bureaucracy, whether in attempting
to receive transfer credit for previous college courses or in
determining what other sources of financial aid may be available to
them. Many student veterans are also trying to balance school with
family and work obligations or dealing with the effects of combat-
related physical and psychological injuries. When a school closes, the
burden of finding and enrolling in a new school may be especially
difficult for these veterans.
---------------------------------------------------------------------------
\19\ GAO 13 338.
---------------------------------------------------------------------------
Closures can also pose a financial risk for the government and
taxpayers to the extent that Post-9/11 GI benefits are restored and
Federal student loans are discharged. For example, in 2017 the
Congressional Budget Office estimated that restoring Post-9/11 GI Bill
benefits and other VA education benefits to student veterans who attend
schools that closed will increase direct spending by $320 million over
the 10 year period from 2018 to 2027.\20\ School closures can also
result in hundreds of millions of dollars in financial losses for the
Federal government and taxpayers due to discharged Federal student
loans.
---------------------------------------------------------------------------
\20\ This estimate was for enactment of section 109 of the Harry W.
Colmery Veterans Educational Assistance Act of 2017 which restores
certain benefits to student veterans who attend schools that close.
According to the Congressional Budget Office, most of the estimated
increased spending is a result of restored Post-9/11 GI Bill benefits,
but some other VA education programs that are used by fewer individuals
and cost less per person than the Post-9/11 GI Bill are also included
in the total spending estimate. Congressional Budget Office, Cost
Estimate: H.R. 3218 Harry W. Colmery Veterans Educational Assistance
Act of 2017, (Sept. 6, 2017).
---------------------------------------------------------------------------
In conclusion, the Post-9/11 GI Bill has provided valuable
education benefits to millions of veterans who attend a wide range of
schools. However, when schools abruptly shut their doors, it can leave
student veterans-who already face unique challenges in an academic
environment-without a clear path to continuing their education and can
force taxpayers to cover the cost of restoring their benefits and
discharged student loans. Student veterans who continue their education
at another school may also find that many of the credits they earned
will not ultimately help them after they transfer, delaying their
degrees and resulting in additional costs. As the number of school
closures has increased in recent years, the risks and challenges
associated with such closures are particularly salient for student
veterans, their families, and the Federal government.
Chairman Levin, Ranking Member Bilirakis, and Members of the
Subcommittee, this completes my prepared statement. I would be pleased
to respond to any questions that you may have at this time.
GAO Contact and Staff Acknowledgements
If you or your staff have any questions about this testimony,
please contact Melissa Emrey-Arras, Director, Education, Workforce, and
Income Security Issues at (617) 788-0534 or [email protected].
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this statement. GAO staff who
made key contributions to this testimony include Will Colvin (Assistant
Director), Brian Schwartz (Analyst-in-Charge), and Jeffrey G. Miller.
In addition, key support was provided by James Bennett, Deborah Bland,
Benjamin DeYoung, Alex Galuten, Theresa Lo, John Mingus, Corinna
Nicolaou, and Michelle St. Pierre.
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GAO HIGHLIGHTS
Why GAO Did This Study
The Post-9/11 GI Bill is VA's largest educational program. It
provides payments for eligible veterans to cover tuition and fees,
housing and other costs while they pursue a higher education. However,
for some veterans this pursuit is interrupted when the school they
attend unexpectedly closes.
This testimony addresses (1) the distribution of Post-9/11 GI Bill
tuition and fee payments among schools, (2) outcomes of students at
schools that receive the most Post-9/11 GI Bill payments, and (3) how
school closures can affect student veterans.
To address these topics, GAO reviewed VA data on Post-9/11 GI Bill
tuition and fee payments to schools for fiscal year 2017, the most
recent school-level data available. GAO analyzed student outcome
measures for these schools using Department of Education data reported
for school year 2017-2018. GAO also reviewed its prior reports issued
between 2013 and 2017 on school closures, credit transfers, and related
challenges faced by student veterans.
POST-9/11 GI BILL
Veterans Affected by School Closures
What GAO Found
In fiscal year 2017, nearly 700,000 student veterans used their
Post-9/11 GI Bill benefits from the Department of Veterans Affairs (VA)
to attend programs at almost 6,000 schools. Of the almost $4.5 billion
in Post-9/11 GI Bill tuition and fee payments VA made to schools in
fiscal year 2017, about 40 percent went to public schools, 30 percent
to nonprofits, and 30 percent to for-profits. A small number of schools
received a large share of the tuition and fees paid, with 30 percent of
payments totaling $1.4 billion going to 50 schools that enrolled over
190,000 veterans in fiscal year 2017.
The average student outcomes at the 50 schools that received the
highest total amount of Post-9/11 GI Bill tuition and fee payments in
fiscal year 2017 were generally comparable to the national averages,
but varied widely when examined by school sector. For example, the
average 4-year program graduation rate for the top 50 schools was the
same as the national average (61 percent). Within the top 50 schools,
average graduation rates varied between public (73 percent), nonprofit
(66 percent) and for-profit schools (22 percent).
Although a relatively small number of schools close each year,
these closures can affect thousands of student veterans. School
closures, which have increased in recent years, are particularly
harmful when they involve large schools that close abruptly with little
or no advance warning. For example, more than 7,000 veterans receiving
Post-9/11 GI Bill benefits were attending schools operated by
Corinthian Colleges and ITT Educational Services when they abruptly
closed in 2015 and 2016, respectively. Although veterans affected by
school closures may qualify to have their GI Bill benefits restored,
these closures can create hardships for veterans and significant costs
for taxpayers. For example, veterans can face challenges transferring
credits and continuing their education at a new school. This may make
it more difficult for veterans to complete their degrees before
exhausting their eligibility for Post-9/11 GI Bill benefits. School
closures also pose a financial risk for the government and taxpayers
due to the costs associated with restoring benefits.
Prepared Statement of Dr. Joseph W. Wescott
Introduction
Chairman Levin, Ranking Member Bilarakis and Members of the
Subcommittee on Economic Opportunity, I am pleased to appear before you
today on behalf of the fifty-one member state agencies of the National
Association of State Approving Agencies (NASAA) and appreciate the
opportunity to provide comments to this committee pertaining to
``Examining Mid-Semester School Closures Impact on Student Veterans,''
and particularly how we can work together with Federal and state
agencies to protect students from substandard programs and predatory
practices. I am accompanied today by our Legislative Committee Vice
Chair Trish Gordon-McGown..
Role of the State Approving Agencies: Past and Present
State Approving Agencies (SAAs) play a critical role in the
administration of GI Billr benefits. Shortly after passage of the
Servicemen's Readjustment Act of 1944, or the GI Bill of Rights,
Congress, recognizing it was the responsibility of the states within
our Federal system of government to oversee the education of its
citizens, required that each state establish a ``State Approving
Agency.'' In response, the governor of each state designated a state
bureau or department as the SAA. The SAA was to be supported through
reimbursement of its expenses by the US Department of Veterans Affairs
(VA). Thus evolved a truly cooperative federal-state partnership that
maintains the rights of the states while monitoring and protecting a
federally-sponsored program administered under the terms and conditions
of Federal law.
The original GI Bill, as enacted in 1944, relied on state agencies
to establish standards for and to approve programs of education in
which eligible individuals could use GI Bill benefits. Over time SAAs
have evolved to become the primary means of assuring institutional
accountability. Federal law is clear in that SAAs are the primary
governmental body through which approval of education and training for
Veterans' educational benefits is to occur. With specialized
authorization under the Code of Federal Regulations and state statutes,
they exercise the state's authority to approve, disapprove and monitor
education and training programs. The SAA brings to this mission
knowledge of state law and regulations as well as knowledge of the
local environment and needs of the state. SAAs also assist the states
and VA with exposing fraudulent and criminal activity involving the
payment of Veteran's benefits.
In 1948, SAA representatives met to form a professional
organization to promote high professional standards, create a forum for
the exchange of best practices, and to promote uniformity of purpose
and practice. For more than seventy years now, NASAA has worked with
our VA partners, the VSOs, and all agencies to ensure the greatest
numbers of quality programs are available to those eligible for
education and training benefits. We do this through our primary mission
of program approval and our related efforts; compliance, oversight,
training, liaison and outreach. Indeed, with the exception of Federal
facilities, the State Approving Agencies are the sole authority
responsible for the approval of all programs of education and training
within the nation.
Practice and Partnership
Today, fifty-one SAAs in 48 states, as well as the District of
Columbia and the territory of Puerto Rico (One state has two SAAs),
composed of approximately 215 professional and support personnel, are
supervising well over 14,000 active facilities and nearly 195,000
programs. The Subcommittee is no stranger to our fundamental role as it
is the same today as when we were created by Congress. SAAs work in
collaboration with the VA and our other partners to promote and
safeguard quality education and training programs for Veterans and
other eligible persons and assist the VA in preventing fraud, waste and
abuse in the administration of the GI Bill. NASAA believes the primary
responsibility and focus of the SAAs is, and should continue to be, to
review, evaluate, and approve programs at schools and training
facilities, utilizing state and Federal criteria.
It is critical that, as Congress intended, each state has a SAA to
protect the integrity of the GI Bill. In 2018 alone, SAAs across our
nation completed over 300,000 approval actions for all of NASAA Core
Functions: Approval, Compliance, Technical Assistance, Outreach, and
Liaison. Almost 195,000 programs of education and training at
universities, colleges, training institutions, flight schools, and
correspondence schools were approved. We do this through an approval
process that allows us to carefully evaluate many factors including
curriculum, instructors, policies, facilities, equipment and
advertising. After a careful review of the completed application, we
schedule an inspection visit to the facility to ensure the institution
understands Federal and state requirements and has the capability to
oversee and administer the program. If we find that they do, we provide
training on the approval process and our continuing expectations. We
continue to review the approvals on a recurring basis as schools add or
change programs and policies. Also, as a part of this approval process,
where applicable, we ensure that schools are in compliance with Public
Law 112-249 and are not providing any ``commission, bonus, or other
incentive payment based directly or indirectly on success in securing
enrollments or financial aid to any persons or entities engaged in any
student recruiting or admission activities.'' For schools who are
signatories of the ``Principles of Excellence (POE),'' we provide
training and information to them as well. We also explain important
requirements such as the 85/15 rule, notification to us if there are
negative accreditation finding and like areas of concern.
In 2011, with the implementation of Section 203 of Public Law 111-
377, the Post-911 Veterans Educational Assistance Improvements Act, we
began assisting VA with their requirement to perform compliance survey
visits at SAA-approved institutions. Last year alone, we conducted
2,069 survey visits. An unintended consequence of Section 203 has been
a diminution of the ability of SAAs to devote adequate time to
approvals and robust oversight to ensure student veterans are being
provided quality education and training. Prior to 2011, SAAs conducted
the initial approval of all programs of education through in-depth
reviews. P.L. 111-377, specifically Section 203, established ``deemed
approved'' programs that do not require an in-depth review because
another agency with an established process and related mission has
approved them. As interpreted and implemented by VA, an unfortunate and
unforeseen consequence was all programs at institutions meeting such
``deemed approved'' criteria did not receive the rigorous oversight
required by the SAA approval process. This hindered our oversight of
these approvals, in certain cases to the extent that certain contracted
programs, particularly flight training, became approved costing
taxpayers millions and graduating Veterans who were hard pressed to
find meaningful employment. Furthermore, the increased focus on
compliance surveys also adversely impacted the SAA's ability to
dedicate time and personnel to our critical approval and oversight
functions, as codified by law. Prior to 2011, SAAs generally visited in
excess of 80 percent of all institutions with approved programs in
their states annually. Today, most SAAs visit less than 25 percent of
these institutions.
To address these negative consequences and refine and refocus the
SAA's role, we support a proactive compliance system that utilizes risk
based analysis solutions to better monitor school performance. Ideally,
such a process would allow SAAs to visit more schools and potentially
identify systematic failures that could prevent student veterans from
receiving quality education or training. This refined process would
eliminate the extensive amount of time spent in preparation for
conducting a compliance survey visit while at the same time providing
opportunity to identify and thus prevent problems before they begin,
rather than simply reacting to problems discovered after the fact.
After all, the integrity of the GI Bill and the success of student
veterans are the primary mission of the SAAs. We believe that having
SAAs conduct these Risk Based Survey visits, as mandated by Congress in
the Colmery Act, will allow us to better identify schools that are at
risk of closure due to substandard programming, fraudulent advertising
and/or improper practices.
State Approving Agency personnel are required by their cooperative
agreements with the VA to possess rigorous levels of education and
experience. Moreover, they must develop a thorough knowledge of both
Federal and state laws and regulations governing the approval of
programs of education and training. As such, we consider an important
part of our mission to be the training and professional development of
our newly hired SAA personnel, in addition to the VA's Educational
Liaison Representative (ELR) staff members. Each year we offer our
National Training Institute (NTI) utilizing our National Training
Curriculum, developed over years and regularly updated. Our NTI
Curriculum provides information on policies and procedures relating to
the SAA mission. Last year, we trained a total of 54 students, 36 SAA
personnel and 18 VA personnel utilizing this curriculum. Additionally,
through the development of the NASAA Mentorship Program, we work to
develop an agency management strategy and plan for new SAA directors
and their staff. This program allows NASAA's Regional Vice Presidents
to review established quarterly performance measurements for potential
deficiencies across their regions and offer assistance and support
where needed. This program utilizes NASAA's structure and years of
knowledge and experience to ensure each SAA provides the best possible
oversight, guidance and support to achieve our overarching mission to
protect Veteran's hard earned education benefits.
In regard to SAA performance measures, NASAA partnered with VA to
develop a Compilation Report designed to effectively measure the
performance of each SAA. This report aligns our yearly work with our
end of year performance evaluation and identifies potential areas that
may need strengthening. The goal of this report and the NASAA
Mentorship program initiative is to identify, assist, and improve all
SAA functions.
NASAA has steadfastly maintained through the years that the primary
focus of SAAs should be to ensure programs of education and training
meet both Federal and state laws and regulations for approval. Prior to
2011 and the implementation of P.L. 111-377, in accordance with
statute, compliance surveys were conducted by VA Education Compliance
Survey Specialists. P.L. 111-377 granted VA authority to utilize SAAs
for compliance surveys and other oversight activities. SAAs assumed
responsibility for VA-assigned compliance surveys in FY2012. Compliance
surveys are designed to ensure each facility and its approved programs
are in compliance with all applicable statutory, regulatory, and policy
provisions and the facility understands those provisions. In practice,
these reviews focus on reviewing student records to ensure proper
payments through a financial accountability perspective. If during that
visit, an approval issue is discovered, the VA staff refers that issue
to the SAAs for follow up action.
Unfortunately, through this shift of responsibility for completion
of compliance surveys from the VA to the SAAs, the focus of SAAs has
changed from a predominant role of ensuring programs of education and
training meet both Federal laws and regulations for approval to a role
with a heavy emphasis on conducting compliance survey visits. This
shift has impacted our ability to properly accomplish our intended
primary function. NASAA's position is that review of financial process
oversight should reside primarily with the VA. We maintain that by
placing a large part of the responsibility of the VA's obligation to
review financial oversight and compliance upon the SAAs, the
consequence has been to diminish the SAA's ability to adequately
perform their congressionally intended role; to promote and safeguard
quality education and training programs for veterans and other eligible
persons through review, evaluation, and approval of programs at
educational institutions and training facilities, utilizing state and
Federal criteria.
Diverting limited SAA resources to performing compliance surveys
has proven problematic and left no one to adequately fulfill the SAA's
historic role of providing rigorous in-depth approval functions along
with sufficient training, oversight and supervision to facilities.
Compliance surveys have a different focus compared to training and risk
based supervisory visits, each serving its own important purpose. The
two approaches also require different skills sets and training that are
not currently optimized. Should the compliance survey role be returned
primarily to the VA, SAAs could then perform robust risk based
supervisory visits combined with ongoing risk based assessments as part
of the approval and oversight function of the SAAs. The SAA would gain
the ability to better protect Veterans by identifying high risk
behavior of the institutions we approve. SAAs' focus on approval and
oversight, instead of primarily financial accountability, will help
proactively identify red flags at the institutions and entities we
oversee and thus enable SAAs to properly identify systematic issues so
as to prevent educational harm to our veterans and loss of taxpayer
funds. As such, NASAA strongly believes the VA and SAAs must adopt a
more proactive approach that identifies the correct balance between
program approvals, supervision, and compliance surveys for SAAs. In the
long term, this proactive approach would best protect the integrity of
the GI Bill and taxpayer interests in our combined efforts to serve
Veterans and their families.
We also believe the time has come to work with our VA and VSO
partners to look at ways we can enhance and strengthen approval
requirements. We need to look more rigorously at accreditation issues,
enrollment practices and where possible, employment data. As trained
educators, we are best suited to provide this important rigorous
oversight and in-depth evaluation. Though we maintain the approval of
non-federal programs is properly vested in the States, we do believe
the VA should ensure states are properly protecting the integrity and
independence of SAAs and ensuring Federal funds are properly expended.
Recent occurrences in Oklahoma and North Carolina indicated a need for
the VA to be prepared to respond appropriately when states take actions
which diminish or destroy the ability of an SAA to protect our
Veterans.
Conclusion
Mr. Chairman, today, fifty-one SAAs, composed of approximately 215
professional and support personnel are supervising over 14,000 active
facilities with almost 195,000 programs. We are extremely grateful for
the opportunity to once again appear before this committee to share our
positions on the important topic of protecting our veterans and the GI
Bill. We remain committed to working closely with our VA partners, VSO
stakeholders and educational institutions on these and other
initiatives designed to protect the quality and the integrity of the
various GI Billr programs and the Veterans and family members who have
sacrificed so much for this great Nation. I thank you again for this
opportunity and I look forward to answering any questions that you or
committee members may have.
STATEMENT FOR THE RECORD
VETERANS EDUCATION SUCCESS (VES)
Chairman Levin, Ranking Member Bilirakis, and Members of the
Subcommittee:
Veterans Education Success (VES) is a non-profit organization with
a mission to advance higher education success for veterans,
servicemembers, and military families, and to protect the integrity and
promise of the GI Bill and other Federal education programs.
In addition to research, providing free case work to students
having trouble accessing their GI Bill benefits or impacted by
predatory schools, and elevating the voices of students to share with
policy makers both their positive and negative experiences in higher
education, we are focused on addressing ways to increase the continued
academic success of military-connected students who are pursuing their
academic goals.
School Closures
The purpose of the Post 9/11 GI Bill is to aid servicemembers and
veterans in the transition from military service into the civilian
workforce. Since its inception, hundreds of thousands of military-
connected students have had the opportunity to take advantage of this
generous benefit in hopes of increasing their economic mobility and the
socioeconomic standing of their families.
When military-connected students use their hard-earned GI Bill
benefits to attend institutions of higher learning, they do so with the
understanding that the Federal government's approval of degree programs
at a school is an endorsement of those programs or training. In other
words, they trust that the Federal government has done its ``due
diligence.'' As we have seen, and as thousands of military-connected
students across the country have unfortunately experienced, that is not
always the case. At times, schools are barely hanging on financially
and military-connected students who rely on their GI Bill not just to
pay for their education but also for their living expenses, show up to
class one day and are told the school is closing.
VES has helped thousands of military-connected students who have
been impacted by school closures. As a result, we see first-hand the
negative impact that comes along with such closures. Students face
serious hardships when the schools that they are attending suddenly
close. We receive phone calls every month from students who are facing
homelessness due to losing the housing allowance that they are no
longer eligible to receive as a result of the school closure, or
students who were merely one month away from graduating when their
school abruptly closed. The students also often face the additional
challenge of finding a school to transfer to that will accept the
credits that they have earned at the closed institution. Since it is
exceedingly rare that any other institution will accept these credits,
the students must either choose to (1) completely start over at another
institution, where they will likely incur debt as a result of having
already used some portion of their GI Bill benefit and spend additional
time obtaining a degree; or (2) try to find a job without a degree
which is almost always a struggle. As a result of school closures,
military-connected students are ultimately left with worthless credits,
diminished GI Bill funds, and time wasted that they can never get back.
This is why Congress must act to ensure that further protections are
put into place to protect military-connected students from school
closures.
Recommendations
VES has the following recommendations to provide greater
protections for military-connected students from school closures:
1.Full reinstatement of GI Bill benefits for students impacted by
school closures - Under the current law, GI Bill students are eligible
to have only the current, interrupted semester of their GI Bill
benefits restored when a school closes, regardless of how many
semesters they had already been enrolled at that school. This means
they lose out on all the previous semesters they spent at the school.
In contrast, the Education Department (ED) provides its students full
restoration of their Pell Grants and full forgiveness of Federal loans
when their school closes. ED also provides loan forgiveness if a school
wrongly enrolls a student who cannot benefit or otherwise defrauds the
student. Parity is needed across the agencies. GI Bill students use
their GI Bill to pay for school just as civilian students use Pell
Grants and student loans. As such, veterans should receive the same
treatment.
Congress could pay for this by authorizing VA to mirror the
Education Department (ED) on ``Letters of Credit.''\1\ ED requires
colleges to post a Letter of Credit (guaranteed by a bank or financial
institution) for assorted reasons, including financial stability; the
letters range in amount from 10% of the Federal student aid received by
the school to a higher percent. If the school closes, ED then draws on
the bank's Letter of Credit to cover student refund reimbursement and
loan cancellation costs. VA should be automatically triggered to
require a letter of credit to protect VA funds if, and in the same
percent as, ED requires. There would be no burden on VA. Instead, VA
would simply be triggered to follow ED's lead. For example, if ED
determines a school is a financial risk and requires the school to
secure a letter of credit worth 10% of the Title IV funds the school
receives, then VA should be triggered to require that school to secure
a letter of credit worth 10% of VA funds the school receives. This
would give VA cash-on-hand in case of a school closure or case of
fraud, which would enable VA to reinstate the veterans' GI Bill funds.
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\1\ Letters of Credit at the Education Department are explained
here: https://studentaid.ed.gov/sa/about/data-center/school/loc
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Alternatively, Congress could consider creating a VA ``student
tuition recovery fund'' like those in 21 states.\2\ Like Unemployment
Insurance, all schools (or only ``risky'' schools, defined by law
enforcement action or ED Heightened Cash Monitoring status) would pay
in a tiny percent of their GI Bill funds into an insurance pool
controlled by VA, available for pay-out to students.
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\2\ Veterans Education Success, ``Student Tuition Recovery Funds
and Other State Programs,'' available at: https://vetsedsuccess.org/wp-
content/uploads/2018/09/state-tuition-recovery-programs.pdf
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2. Heed the Warning Signs - It is fiscally irresponsible to fail to
ignore obvious warning signs about a crumbling school. Congress should
consider rigorous safeguards to guarantee that the schools that are
receiving GI Bill funds are providing quality education, producing
gainful employment, and are not in jeopardy of shutting down. In a
recent study conducted by VES, ``Could Education Corporation of
America's Sudden Closure Have Been Avoided?,''\3\ we identified six
warning signs that should have made it abundantly clear that the
schools owned by Education Corporation of America (ECA) were in serious
danger of closing:
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\3\ Veterans Education Success, Issue Brief #7: Could Education
Corporation of America's Sudden Closure Have Been Avoided? (Dec. 2018),
available at: https://vetsedsuccess.org/wp-content/uploads/2019/01/
could-education-corporation-of-america-sudden-closure-have-been-
avoided.pdf
a.Dismal Student Outcomes - Students who complete a post-secondary
program should, more often than not, be better off than a high school
graduate and be on par with similar certificate- and degree-granting
institutions. At ECA, for example, only one in three students earned
more than the average high school graduate.
b. Degree Programs that Do Not Lead to Jobs, in Violation of
``Career Ready Student Veterans Act'' - In 2016, Congress passed P.L.
114-315, which, in section 409, prohibits GI Bill approval for programs
that do not meet state licensure and certification requirements. This
provision is referred to as the ``Career Ready Student Veterans Act.''
This law is not being implemented. In VES' research report, ``Despite a
2016 Statute, the GI Bill Still Pays for Degrees That Do Not Lead to a
Job,''\4\ VES found that half of the problematic degree programs
identified in a 2015 report\5\ are still enrolling GI Bill students
even though they fail to prepare graduates for the licensure or
certification required to get a job, and an additional 49 degree
programs in fields such as law and dental/medical assisting that are
also not preparing beneficiaries for licensure and certification but
are GI Bill eligible - in violation of PL 114-315. When ECA recently
shuttered, their campuses were approved for GI Bill benefits, however,
nineteen of their 32 programs failed to meet state licensure and
certification requirements including the dental assisting programs
offered by Brightwood College campuses.
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\4\ Veterans Education Success, ``Despite a 2016 Statute, the GI
Bill Still Pays for Degrees That Do Not Lead to a Job'' (April 2018),
available at: https://vetsedsuccess.org/wp-content/uploads/2019/01/
2018-career-ready-act-update.pdf.
\5\ Veterans Education Success, ``The GI Bill Pays for Degrees That
Do Not Lead To a Job'' (Sept. 2015), available at: https://
vetsedsuccess.org/wp-content/uploads/2015/09/gi-bill-pays-for-degrees-
that-do-not-lead-to-a-job.pdf.
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This law was put in place to protect students from wasting
education benefits at low performing schools that cost a significant
amount of money yet provide worthless degrees that do not allow them to
work in the career field they are studying for.
c.Lack of a Respected Accreditor - ECA was accredited by the
Accrediting Council for Independent Colleges and Schools (ACICS) which
was derecognized as an accreditor by the Department of Education in
2016 -the same ACICS that told Congress that Corinthian was in
compliance with its accreditation standards until the day it closed.
Most ACICS-approved schools found new accreditors when ACICS was
formally terminated in December 2016, and ACICS-accredited schools were
given 18 months to find a new accreditor.
ECA was among 85 schools that remained accredited by the
discredited ACICS, only, a likely indication that no other accreditor
was willing to approve its schools.\6\ At a bare minimum, programs
approved by discredited accreditors or those under scrutiny should be
going through regular risk-based reviews by SAAs to ensure programs
approved for GI Bill benefits are indeed offering high quality programs
and outcomes.
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\6\ Center for American Progress, ``The 85 Colleges That Only ACICS
Would Accredit,'' (July 3, 2018) available at: https://
www.americanprogress.org/issues/education-postsecondary/news/2018/07/
03/453079/85-colleges-acics-accredit/
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d. Student Complaints - Student complaints filed with VA's GI Bill
Comparison Tool and the Education Department provide another warning
sign about a failing school. In the case of ECA, VA and the Education
Department had significant student complaints, especially about
financial improprieties. Schools that receive regular complaints about
the quality of education they are receiving as well as the
institution's handling of tuition and fees should be automatically
flagged for a risk-based reviews by SAAs.
e. Over-reliance on Taxpayer Support - Schools that are unable to
attract employer investment or private paying students and are instead
almost completely reliant on Federal funds should be flagged for
further review. Any school that cannot attract employer or private
students and instead relies on Federal funds to stay in business should
be closely monitored for its financial viability.
f. Indications of Financial Instability and an Unsustainable
Business Model - Since June 1, 2015, ECA was regularly subject to
Heightened Cash Monitoring by the Department of Education (ED). Despite
communicated concerns by ED, the school maintained its ability to
received Federal funds right up until it shuttered.
3. Better communication between Veterans Affairs (VA) and the
Department of Education when a school is put on warning by an
accreditor or by the Department of Education - The VA is not always
aware that a school is at risk of closing or that a school has been
reprimanded in some way. It is important that VA be made aware of such
findings as it is their role to disburse GI Bill funds. If VA has no
knowledge of such problems, it is impossible for measures to be taken
that protect military-connected students and their GI Bill benefits. It
is also important to identify ways in which VA can proactively get
information to maintain awareness of state and Federal agency actions
against a school.
4. More Caution Flags on the Comparison Tool - The Comparison Tool
is a resource for students when deciding what institution of higher
learning to attend. By providing students with transparent information
about problems institutions are facing, students will be better able to
make an informed decision as to whether or not they want to take a risk
by attending such schools. Currently, VA caution flags on the
Comparison Tool are inadequate. Despite letters from Congress -
including HVAC Chair Takano - calling on VA to expand the use of its
Caution Flags and to create a ``risk index'' for students,\7\ it has
not. Students remain in the dark when a school is under law enforcement
action for defrauding students or when it is under Federal or state
agency penalty or action.
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\7\ See Letter from Mr. Takano and other Members of Congress to the
Secretary of Veterans Affairs calling on the Secretary to ``add a `risk
index' to the GI Bill Comparison Tool that would rate schools as low-
risk, medium-risk, or high-risk based on factors such as heightened
monitoring by the U.S. Department of Education, investigations and
settlements with state Attorneys General and the Federal government,
failure of credits to transfer, and other appropriate factors. Such an
index would significantly improve the consumer protection information
available to veterans. It is vital not only to veterans but to their
smart use of taxpayer dollars.'' (June 22, 2015), available at: https:/
/www.blumenthal.senate.gov/newsroom/press/release/sen-blumenthal-reps-
brown-takano-and-colleagues-urge-va-to-increase-protections-for-
veterans-against-for-profit-college-predatory-practices
---------------------------------------------------------------------------
5. VA and SAAs Should Not Ignore Other Government Agency Punitive
Actions - When schools fail to perform, there should be triggering
events that preclude institutions from getting access to GI Bill funds.
Congress could legislate better ``risk-based program reviews'' by VA
and SAAs when another government agency has taken punitive action
against a school. One such event should include when the ED revokes
Title IV funding or DOD revokes a school's eligibility for voluntary
education programs. Very recently, ED discovered Argosy schools were
stealing Title IV funds from students and failing to disburse the
funds, so ED cut off the school entirely. Despite such a significant
action by ED for an egregious action, SAAs did not act, and VA, citing
lack of authority to cut a school off without the SAA doing so first,
continued to fund the schools and sent a letter to GI Bill students
saying they could continue to attend. When a school is cut off by a
Federal agency for stealing Federal funds, VA and SAAs should
immediately suspend the school and investigate.
Congress also should stop the flow of funds to fraud. Federal or
state law enforcement lawsuits against a school for defrauding students
or the government should similarly trigger a ``risk-based program
review,'' and depending on the severity of the fraud alleged - should
trigger a suspension or disapproval of GI Bill funds.
6. Clarify the Roles and Authority for VA and SAAs - In
conversations with representatives from VBA and SAAs, both wanted to
take necessary action against Argosy but, based on our understanding,
did not feel they had the clear authority to do so. This leads to
confusion and inaction.
Additionally, in August 2018, VA issued a policy advisory that
advised SAAs to accept the decisions of accreditors and other agencies
regarding whether a school is properly preparing students for licensed
occupations and other Title 38 requirements, rather than having SAAs
come to their own decision about whether a school warrants concern.\8\
While this policy advisory appears to have been published in response
to specific instances where VA believed an SAA was doing duplicative
work outside their scope of expertise, there has been much confusion
around the intent of the advisory and the impact it would have on SAAs
doing their independent investigation.
---------------------------------------------------------------------------
\8\ VBA Policy Advisory, ``Acceptance of Certifications by Other
Appropriately Authorized Agencies or Offices that Applicable Standards
Have Been Met'' (Aug. 30, 2018), available at: https://
static1.squarespace.com/static/556718b2e4b02e470eb1b186/t/
5cdaedba24a6941b952f3abe/1557851579166/
VBA+Aug2018+Policy+Advisory+to+SAAs+on+Accreditor+Actions.pdf (``In all
instances where an agency or office (either Federal, state or
nongovernmental) outside of the SAA has been duly authorized, appointed
or designated by state or Federal law or regulations as the agency or
office responsible for certifying compliance with applicable laws,
regulations, or non-governmental standards, those offices have already
expended resources to ensure compliance with the standards. Therefore,
it is inefficient and a waste of VA resources for a SAA to repeat their
work and expend further resources in an attempt to confirm or overrule
their determinations. Furthermore, these agencies and offices are
presumed to be the authoritative experts on these requirements, and the
same cannot be presumed of the SAA.. Actions Required: SAAs should
discontinue current practices of re-adjudicating certification
(including, but not limited to: certifications; business licenses;
licenses, approvals, or authorizations to operate; accreditation;
authorization to provide postsecondary education; authorization to
confer degrees, etc.) issued by an agency or office duly authorized,
appointed or designated by state or Federal laws or regulations as the
agency or office responsible for certifying compliance with applicable
laws, regulations, or non-governmental standards.'')
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Several SAAs interpreted this advisory to mean that, regardless of
whether an accreditor has put a school on probation or given the school
a deadline to correct the deficiencies, if the school technically
retains its accreditation, SAAs are not allowed to suspend new
enrollment for GI Bill beneficiaries. One SAA was also told their
contract would be terminated because it had suspended a law school that
remained technically accredited despite being on probation and showing
serious warning signs of financial trouble.\9\
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\9\ Letter from Robert Worley, VBA, to Keith Boylan, California
Department of Veterans Affairs (Aug. 24, 2018), available at: https://
static1.squarespace.com/static/556718b2e4b02e470eb1b186/t/
5cdaef219140b7f577f64ce3/1557851937687/
VA+ltr+to+CA+re+disapprovals+Aug2018.pdf (``CSAAVE inappropriately took
action as if the programs were not accredited and advised the school to
request a waiver from VA. Thomas Jefferson School of Law's programs
were accredited at the time, although in a probationary status'').
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In both examples above, there appears to be lack of clarity on the
roles and authority of VA and SAAs. We urge the Committee to clarify
the roles and authority of VBA and the SAAs and to consider the VA
Inspector General's (IG) guidance on this topic.
7. Clarify or Give VA the Ability to Disapprove Schools - VA
believes it has no statutory authority to disapprove schools and that
only the SAAs have such power. This is in part due to how 38 USC is
written.
The VA Inspector General (IG) and Yale Law School both believe
differently.\10\ A recent VA IG report states, ``According to VA OGC,
SAAs have nearly exclusive authority to approve, suspend, or withdraw
programs for the Post-9/11 G.I. Bill, not the VA, and this SAA
authority is largely unchallengeable.''\11\ The IG however ``does not
agree that VBA's responsibility is so narrow''\12\ and outlines four
reasons, for this opinion:
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\10\ U.S. Department of Veterans Affairs, Office of the Inspector
General, ``VA's Oversight of State Approving Agency Program Monitoring
for Post-9/11 GI Bill Students'' (Dec. 3, 2018), available at: https://
www.va.gov/oig/pubs/VAOIG-16-00862-179.pdf; Yale Law School, ``VA's
Failure to Protect Veterans from Deceptive College Recruiting
Practices'' (2016), available at: https://www.insidehighered.com/sites/
default/server--files/files/Yale-VES%20Memo%20.pdf.
\11\ U.S. Department of Veterans Affairs, Office of the Inspector
General, ``VA's Oversight of State Approving Agency Program Monitoring
for Post-9/11 GI Bill Students'' (Dec. 3, 2018).
\12\ Id. at 4.
VBA Has Statutory Program Disapproval Authority under 38 USC 3679:
38 USC Sec. 3679 provides the Secretary program disapproval authority,
in addition to SAAs: ``Any course approved for the purpose of this
chapter which fails to meet any of the requirements of this chapter
shall be immediately disapproved by the Secretary or the appropriate
state approving agency.''
The IG cites this as a prime reason the IG believes VA has the
authority to disapprove programs.\13\
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\13\ IG Report at 28-29 (``The OIG also does not agree with the
statement that that SAAs are primarily responsible for approvals and
are given this authority nearly exclusively under the law. The
provisions of 38 CFR Sec. 21.4152, Control by agencies of the United
States, prohibits VA from supervising or controlling the SAAs, but also
specifically states that VA retains the right to determine whether the
SAAs are complying with Title 38. Furthermore, 38 U.S.C. Sec. 3679,
Disapproval of courses, also allows VA to approve or disapprove
schools, courses, or licensing or certification tests and does not
include any limitations stating VA can only exercise this authority
when acting in the role of an SAA.'')
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This is also the central finding of Yale Law School's report: ``The
VA's statutory authority is clear: The VA is responsible for approving,
disapproving, and suspending G.I. Bill funds for educational
institutions according to various criteria. Although SAAs also have
authority to act, the VA retains authority to disapprove schools or
courses and approve schools `notwithstanding lack of State
approval.'"\14\
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\14\ Yale Law School Report at 6 (quoting 38 C.F.R. Sec.
21.4152(b)(5)). See also Yale Law School at 5, footnote 31 ("38 U.S.C.
Sec. Sec. 3675, 3679 (granting both ``[t[he Secretary or a State
approving agency'' authority to approve and disapprove educational
institutions); see also 38 U.S.C. Sec. 3690(b)(3)(A) (granting
suspension authority to the VA); 38 C.F.R. Sec. 21.4210 (detailing the
process that must accompany a mass suspension of funds, and of
enrollments or reenrollments at educational institutions); 38 C.F.R.
Sec. 21.4259 (granting suspension authority to the SAA); S. REP. NO.
111-346, at 21 (2010) (noting that the 2010 amendments to the G.I. Bill
were intended ``to expand VA's authority regarding approval of courses
for the enrollment of veterans (and other eligible persons) who are in
receipt of VA administered educational assistance programs'') (emphasis
added).
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Under OMB Guidance and the Financial Integrity Act, VBA is
``Ultimately Responsible'' for Stewardship of Taxpayer Funds: As the IG
wrote: ``VBA's position also does not address its responsibilities
under the Federal Managers' Financial Integrity Act of 1982 (FMFIA) and
OMB Circular A-123, which state that agency managers and staff are
responsible for the proper stewardship of Federal resources.''\15\
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\15\ IG Report at 15 (``Agency managers and staff are expected to
ensure programs operate and resources are used to meet agency missions
with minimal potential for waste, fraud, and mismanagement.''); see
also IG Report at 18 (``Although VBA may comply with a strict
interpretation of Title 38 requirements, it is not effectively
overseeing the program to safeguard students' interests and taxpayers'
funds and ensure the proper stewardship of Federal resources as
required by FMFIA and OMB Circular A-123.'')
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VBA Has Overridden SAAs: As the IG wrote: ``The OIG also noted that
the statement about the nearly exclusive authority of the SAAs, except
in cases where the state does not have an SAA, directly contradicts
prior VBA actions: VBA stopped an Arizona college in 2015 from
enrolling additional students in flight training programs approved by
the Arizona SAA until the college complied with Title 38 regulations
and suspended payments to Ashford University after the Arizona SAA
approved the university's programs in 2017.''\16\
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\16\ IG Report at 28-29.
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VBA has power to oversee SAAs: Finally, VBA has central authority
to oversee SAAs to ensure they satisfy Title 38 standards.\17\
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\17\ IG Report at 13-14 (``VBA believed it had a very restricted
role in the SAA oversight process and subsequently did not identify its
weaknesses. The former Executive Director stated VBA is prohibited
under Federal law from exercising control over the SAAs . . . The
former Executive Director stated that the primary responsibility for
the review, approval, and continuous monitoring of the programs resided
with the SAAs and that VBA had no control over what the SAAs did. He
maintained this position even though VBA has the authority to establish
and negotiate contracts with the SAAs [and] the authority to determine
whether an SAA is complying with the standards and provisions of the
law.'')
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Despite the IG and Yale Law School's belief that VA does have
authority to disapprove schools, we ask Congress to clarify VA's
authority in statute:
a. Clarify or Give VBA Authority to Disapprove Schools Even if an
SAA Fails to Do So. This would protect students and taxpayer dollars
from schools that has been cut off by ED for stealing funds.
b. Codify the Principles of Excellence so Schools Must Sign a
Contract to Participate in GI Bill - Both DoD and ED have signed
contracts schools must sign in order to participate in their education
funds.\18\ When a school violates the terms of that contract, DoD and
ED have the contractual authority to disapprove the school. Congress
could strengthen VA's authority to disapprove schools by aligning VA
with DoD and ED by codifying VA's Principles of Excellence (which are
currently voluntary and unenforceable) in a contractual framework
schools must sign, which would empower VA to limit or end a school's
participation in VA education funds. This new VA MOU should incorporate
the elements in DoD's MOU, where appropriate, and should explicitly
incorporate ED's ``program integrity'' requirements - just as DoD did
in its MOU for schools.
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\18\ DoD's ``Memorandum of Understanding'' with schools is
available at https://dodmou.com/. ED's Title IV ``Program Participation
Agreement'' is available at https://ifap.ed.gov/regcomps/doc4072--
bodyoftext.htm.
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c. Strengthen 38 USC 3696 - One reason schools shutter is because
they are engaged in fraud that is exposed by law enforcement.
Bipartisan state and Federal law enforcement is taking action to
protect students, such as the lawsuit brought by 48 states plus the
District of Columbia, against one school for defrauding students. 38
USC 3696 requires the disapproval of schools that engage in misleading
and deceptive advertising and recruiting.\19\ Implementation of this
statute would have disapproved some of the worst bad actor schools
before they shuttered and would have saved tens of thousands of
veterans from wasted time and GI Bill.
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\19\ 38 USC 3696(a) (``The Secretary shall not approve the
enrollment of an eligible veteran or eligible person in any course
offered by an institution which utilizes advertising, sales, or
enrollment practices of any type which are erroneous, deceptive, or
misleading either by actual statement, omission, or intimation.'')
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Congress could strengthen 38 USC 3696 by adding clarifying
language, clear triggers, and giving a time limit on VA to act (e.g.,
``within 90 days of learning of a government agency action, lawsuit, or
settlement, or of more than 50 student veteran complaints filed with VA
about the institution.'' Congress also could strengthen the law by
specifying steps for VA to take, including:
Disapprove the enrollment of future eligible persons, or
disapprove the enrollment of both future and current eligible persons
if, in the Secretary's or SAA's discretion, the situation warrants
such;
Post a caution flag on the GI Bill Comparison Tool;
Alert currently enrolled GI Bill students; and
Refer the matter to the Federal Trade Commission for its
preliminary findings, in accordance with 38 USC 3696(e).
Congress also could specify the time period until a bad actor
school could reapply for approval, such as: ``An institution of higher
education shall not be eligible to enroll new GI Bill students until 24
months have passed and the institution presents independent, third-
party verification that its practices are no longer in violation of 38
USC 3696(a).''
8. VA Can Suspend New Enrollments If It Does Not Want to Disrupt
Current Students - VA officials often explain they do not want to
disapprove schools because they are concerned about displacing current
students. To address this concern and protect new students from being
harmed, we encourage VA to consider stopping new enrollments.
9. Protect GI Bill Funds by Adjusting How VA Disburses Funds - The
US Government Accountability Office reported that GI Bill overpayments
cost $416 million in FY 2014, affecting 1 in 4 GI Bill students.\20\ VA
claws back GI Bill tuition overpayments directly from students,\21\
even though the school received the money. This places the student in
the position of having to ask the school for a refund.
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\20\ U.S. Government Accountability Office, ``Post-9/11 GI Bill:
Additional Actions Needed to Help Reduce Overpayments and Increase
Collections'' (2015), available at: https://www.gao.gov/assets/680/
673230.pdf.
\21\ See 38 USC 3680(e).
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A major cause of the GI Bill overpayment is the way VA differs from
ED on how much tuition a school can keep. VA disburses the entire
semester of Post-9/11 GI Bill benefits directly to the school after a
veteran (or his/her designated beneficiary) sits for just one day of
class. This ``Just 1 Day'' mentality incentivizes colleges to deceive
veterans to get them to enroll for ``Just 1 Day,'' and denies veterans
the opportunity to experience and evaluate the product being provided
without being on the financial hook. Historically, Congress carefully
avoided direct payments to schools because of such fraud.\22\
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\22\ The Century Foundation, ``Truman, Eisenhower, and the First GI
Bill Scandal'' (2017), available at: https://tcf.org/content/report/
truman-eisenhower-first-gi-bill-scandal/.
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In contrast, ED disburses Title IV funding immediately, but
prorates the amount of tuition the school has ``earned'' during the
term, up until 60 percent of the time in a semester has passed; after
the 60 percent cutoff, a school is viewed as having earned 100 percent
of Title IV funds.\23\ ED also maintains a disbursement delay of 30
days for new students (covering a college ``add/drop period''), to
ensure they can find the right school prior to ED's releasing
funds.\24\ ED handles overpayments by adjusting future disbursements to
reflect past overpayments, including situations when a student does not
begin attendance at an institution and when a student withdraws.
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\23\ See US Education Department, ``Withdrawals and the Return of
Title IV Funds,'' available at: https://ifap.ed.gov/sfahandbooks/
attachments/0708Vol5C2a.pdf;
\24\ See 20 U.S. Code Sec. ?1078-7 ``Requirements for disbursement
of student loans.''
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VA should follow ED's pro-rated basis for determining how much
tuition the school has ``earned,'' and follow ED's method of clawing
back tuition overpayments from the school, not the student, since the
school got the tuition money. VA also should immediately comply with
the 8 GAO recommendations on overpayments, including monthly enrollment
verification by each veteran. (Housing allowance overpayments would
still need to be clawed back from the student, but VA should not
clawback a student's monthly housing allowance if a college changes its
zip code/VA facility code, and the student did not change anything.)
We appreciate the amount of time, effort, and attention the
Committee has given to ensure military-connected students are protected
when institutions close. Thank you for considering the views of VES on
this important topic.
MATERIAL SUBMITTED FOR THE RECORD
FROM REPRESENTATIVE SUSIE LEE
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